UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-11117
SDNB FINANCIAL CORP.
(Exact name of Registrant as Specified in its Charter)
Incorporated in California - IRS Employer I.D. No. 95-3725079
1420 Kettner Boulevard, San Diego, California 92101
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number including area code: 619-233-1234
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
The number of shares of Common Stock outstanding as of the close of business
on April 30, 1996: 3,073,260
<PAGE>
SDNB FINANCIAL CORP.
INDEX
PART I FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) 1
March 31, 1996 and December 31, 1995
Consolidated Statements of Operations (unaudited) 2
Three months ended March 31, 1996
Three months ended March 31, 1995
Consolidated Statements of Cash Flows (unaudited) 3
Three months ended March 31, 1996
Three months ended March 31, 1995
Notes to Consolidated Financial Statements (unaudited) 4
March 31, 1996
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
SDNB Financial Corp. and Subsidiaries
Consolidated Balance Sheets (unaudited)
(In thousands)
March 31, December 31,
Assets 1996 1995
Cash and due from banks $ 11,404 $ 13,440
Interest bearing deposits in other banks 1,788 2,780
Investment securities held-to-maturity 5,897 7,408
Investment securities available-for-sale 29,286 27,033
Federal funds sold 17,200 24,700
Loans 92,641 92,331
Less allowance for loan losses 1,650 2,002
Net loans 90,991 90,329
Premises and equipment, net 10,929 10,975
Other real estate owned 419 181
Accrued interest receivable and other assets 1,548 1,726
Total assets $169,462 $178,572
Liabilities and Shareholders' Equity
Liabilities:
Deposits
Non-interest bearing $ 46,182 $ 49,505
Interest bearing 94,056 90,904
Total deposits 140,238 140,409
Securities sold under agreement to repurchase 4,050 12,934
Accrued interest payable and other liabilities 579 554
Notes payable 7,956 7,989
Total liabilities 152,823 161,886
Shareholders' equity:
Common stock 20,289 20,314
Accumulated Deficit 3,485 3,587
Net unrealized holding losses on
available-for-sale securities (165) (41)
Total shareholders' equity 16,639 16,686
Total liabilities and shareholders' equity $169,462 $178,572
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
SDNB Financial Corp. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In thousands, except amounts per share)
Three months ended March 31,
1996 1995
Interest income:
Interest and fees on loans $ 2,276 $ 2,581
Interest on federal funds sold 304 200
Interest on investments 484 387
Total interest income 3,064 3,168
Interest expense:
Interest on deposits 814 645
Interest on repurchase agreements 50 76
Interest on notes payable 0 15
Total interest expense 864 736
Net interest income 2,200 2,432
Provision for loan losses (100) 300
Net interest income after provision
for loan losses 2,300 2,132
Other operating income:
Security gains, net 0 11
Building income 224 261
Other non-interest income 269 185
Total other operating income 493 457
Other operating expenses:
Salaries and employee benefits 1,167 1,020
Occupancy 156 110
Professional fees 100 122
Building operating expenses 516 596
Other non-interest expenses 748 676
Total other operating expenses 2,687 2,524
Income before income tax 106 65
Income tax 4 3
Net income $ 102 $ 62
Net income per share $ 0.03 $ 0.04
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
SDNB Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Three months ended March 31,
1996 1995
OPERATING ACTIVITIES:
Net income $ 102 $ 62
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Provision for loan losses (100) 300
Provision for depreciation and amortization 312 320
Amortization of investment security discounts (176) (5)
Other expense not utilizing cash 19 34
Unearned loan fees 22 88
Taxes refundable (11) (5)
Interest receivable and other assets (186) (668)
Interest payable and other liabilities 282 (146)
Total adjustments 162 (82)
Net cash provided (used) by operating activities 264 (20)
INVESTING ACTIVITIES:
Proceeds from maturities of
held-to-maturity securities 2,000 1,494
Proceeds from called held-to-maturity securities 0 395
Proceeds from maturities of
available-for-sale securities 14,875 0
Purchases of held-to-maturity securities (500) 0
Purchases of available-for-sale securities (17,070) (600)
Net change in gross loans (1,654) 3,070
Proceeds from OREO properties 851 0
Purchases of premises and equipment (181) (29)
Net cash provided (used) by investing activities (1,679) 4,330
FINANCING ACTIVITIES:
Net change in deposits (171) (9,064)
Net change in short-term borrowings (8,884) 1,800
Payments of long-term borrowings (33) 0
Proceeds from issuance of common stock 0 2,215
Payments for costs associated with issuance
of common stock (25) (150)
Net cash used by financing activities (9,113) (5,199)
Change in cash and cash equivalents (10,528) (889)
Cash and cash equivalents at beginning of period 40,920 37,317
Cash and cash equivalents at end of period $30,392 $36,428
For the purpose of the statement of cash flows, the Company considers cash
and cash equivalents to be as follows at March 31, 1996 1995
Cash and due from banks $11,404 $12,756
Interest-bearing deposits in other banks 1,788 2,072
Federal funds sold 17,200 21,600
Totals $30,392 $36,428
Supplemental cash flow information for the
period ended March 31, 1996 1995
CASH PAID FOR:
Interest $864 $737
Income Taxes $0 $0
Non-cash items: transfer of loans to OREO $1,034 $553
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
SDNB Financial Corp. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1996
1. In the opinion of Management, the accompanying unaudited interim
consolidated financial statements contain all adjustments (which are
of a normal recurring nature) necessary to present fairly the
financial position as of March 31, 1996, and the results of operations
and cash flows for the three months ended March 31, 1996 and 1995.
Certain prior year amounts have been reclassified to conform with the
current year presentation.
2. Earnings per share for the three and nine months ended March 31, 1996
and 1995 are based on 3,073,260 and 1,561,036 weighted average shares
outstanding, respectively.
3. At March 31, 1996, approximately $3.7 million in securities were
pledged to secure deposits.
<PAGE>
SDNB FINANCIAL CORP.
Form 10-Q
PART I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
For the past several years SDNB Financial Corp. (the "Company") and San Diego
National Bank (the "Bank") have been adversely effected by a number of
factors emanating primarily from the condition of the economy in San Diego.
The first quarter of 1996 saw a cessation of the impact of most of those
factors.
Loan loss provisions have been exceptionally high over the last several years
but a substantial reduction in the amount of classified loans has allowed
for the recovery of a portion of the previously committed loan loss
provisions during the quarter ended March 31, 1996.
The level of OREO property peaked in 1991 and has been generally declining
since that time, therefore reducing losses and expenses in connection
therewith.
Additionally, the Company has incurred substantial expense in connection with
legal fees and the provision for additional costs from the Pioneer Mortgage
litigation which was settled late in 1995.
The Bank has also suffered from a reduction in the level of the loan
portfolio resulting from continuing low loan demand; however, the level of
the loan portfolio has stabilized between December 31, 1995 and March 31,
1996.
Discussion of the individual segments of the Company's operations is
contained in subsequent sections of this report.
LIQUIDITY AND ASSETS/LIABILITY MANAGEMENT
By the nature of its commercial/wholesale focus, the Bank has moderate
interest-rate risk exposure in a declining-rate environment. This phenomenon
can be seen in the "Static Gap Summary" (Table 1). At March 31, 1996,
approximately 69% of the Bank's earning assets adjust immediately to changes
in interest rates. Within three months, this increases to 78% of earning
assets. Consequently, the Bank utilizes deposit liabilities that also adjust
relatively quickly. Within the same three-month period, approximately 91% of
the Bank's interest-bearing liabilities (mostly deposits) adjust to current
rates.
The Bank's cumulative gap position at the three month repricing interval has
decreased approximately $11.7 million, or 33 percent, from $35.8 million at
December 31, 1995 to $24.1 million at March 31, 1996. This change is
attributable primarily to decreases of $13.4 million in securities and $7.5
million in Federal funds sold offset by $8.9 decrease in securities sold
under agreements to repurchase.
During February 1995, the Bank entered into an interest rate swap to hedge
against the effects on income of falling interest rates. If the prime
interest rate falls below eight percent during the life of the contract, the
Bank will receive payments amounting to the difference between the then
existing prime rate and eight percent on the contract amount of $20 million.
These payments continue while the prime interest rate stays below eight
percent or until expiration of the contract, February 3, 1998. This contract
helps to stabilize the Bank's net interest spread which, absent any hedge,
decreases during periods of rapidly falling interest rates. To date, there
have been no payments received under this contract.
The Bank's liquidity needs are projected by comparing anticipated funding
needs against current resources and anticipated deposit growth. Any current
surplus of funds is invested to maximize income while maintaining safety and
providing for future liquidity.
During the three months ended March 31, 1996, cash and cash equivalents
decreased $10.5 million. Approximately $1.7 million cash was used by
investing activities. The two major components were net purchases of
$700,000 of securities ($17.6 million of purchases offset by maturities of
$16.9 million) and increase in gross loans of $1.7 million. Financing
activities used $9.1 million, almost entirely from the decrease in repurchase
agreements of $8.9 million during the period.
Liquidity is provided on a daily basis by federal funds sold and on a longer-
term basis by the structuring of the Bank's investment portfolio to provide
a steady stream of maturing issues. Additionally, the Bank may raise
additional funds from time to time through money desk operations or via the
sale of loans to another institution.
The Bank has never purchased high-yield securities or participated in highly-
leveraged transactions.
CAPITAL RESOURCES
The Comptroller of the Currency ("Comptroller") has established a framework
for supervisory requirements of national banks based upon capital ratios.
Based upon this framework, a bank's capitalization is defined as well as
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized or critically capitalized. Under the Comptroller's
framework, a bank is well capitalized if its ratios are greater than or equal
to 6% and 10% for tier 1 capital and risk weighted capital, respectively.
The Federal Reserve Board ("Reserve Board"), as the regulatory body of the
Company, has capital ratio requirements. Under the Reserve Board's Capital
Adequacy Guidelines, all bank holding companies should meet a minimum ratio
of qualifying total capital to weighted-risk assets of 8 percent, of which
at least 4.0 percentage points should be in the form of tier 1 capital.
The Reserve Board and the Comptroller have also imposed a leverage standard
to supplement their risk based ratios. This leverage standard focuses on a
banking institution's ratio of Tier 1 capital to average total assets
adjusted for goodwill and other certain items. Under these guidelines,
banking institutions that meet certain criteria, including excellent asset
quality, high liquidity, low interest rate exposure and good earnings, and
have received the highest regulatory rating must maintain a ratio of Tier 1
capital to total assets of at least 3%. Institutions not meeting this
criteria, as well as institutions with supervisory, financial or operational
weaknesses, along with those experiencing or anticipating significant growth
are expected to maintain a Tier 1 capital to total assets ratio equal to at
least 4% to 5%.
As reflected in the following table, the capital and leverage ratios of the
Company as of March 31, 1996 and December 31, 1995 exceeded the fully phased-
in regulatory risk-based capital adequacy guidelines and the leverage
standard. As also reflected, at both dates the Bank exceeded the capital and
leverage ratios for a "well capitalized" institution.
Capital Components and Ratios
(dollars in thousands)
March 31, 1996 December 31, 1995
Company Bank Company Bank
Capital Components
Tier 1 Capital $16,804 $13,896 $16,726 $13,656
Total Capital 18,267 15,208 18,218 15,017
Risk-weighted assets
and off-balance sheet
instruments 116,870 106,260 117,967 107,310
Regulatory Capital
Tier 1 risk-based:
Actual 14.38% 13.06% 14.18% 12.73%
Required 4.00 6.00 4.00 6.00
Excess 10.38% 7.06% 10.18% 6.73%
Total risk-based:
Actual 15.63% 14.31% 15.43% 13.98%
Required 8.00 10.00 8.00 10.00
Excess 7.63% 4.31% 7.43% 3.98%
Leverage:
Actual 9.72% 8.56% 9.37% 8.43%
Required 5.00 5.00 5.00 5.00
Excess 4.72% 3.56% 4.37% 3.43%
Funds available for the payment of dividends by the Company would be obtained
from the Bank. There are legal limitations on the ability of the Bank to
provide funds for the Company. Under federal banking law, dividends declared
by the Bank in any calendar year may not, without the approval of the
Comptroller of the Currency, exceed its net income, as defined, for that year
combined with its retained net income for the preceding two years. At March
31, 1996, the Bank had available for dividends to the Company approximately
$1,590,000 without approval of the Comptroller. Federal banking law also
restricts the Bank from extending credit to the Company in excess of 10% of
capital stock and surplus, as defined, of the Bank. Any such extensions of
credit are subject to strict collateral requirements.
The Company and the Federal Reserve Bank of San Francisco ("Reserve Bank")
entered into an agreement on November 20, 1992, pursuant to which the Company
must obtain the approval of the Reserve Bank prior to the declaration of any
cash dividends.
INVESTMENT SECURITIES
During the first quarter of 1996, the gross unrealized losses in the
available-for-sale category increased from $41,000 to $165,000 and in the
held-to-maturity category increased from $75,000 to $95,000. Management
continues to believe that there is sufficient liquidity and available sources
of liquidity to allow all such securities (which are fully guaranteed by
United States Government instrumentalities as to principal) to mature and thus
avoid realization of any material amount of the presently unrealized losses.
NET INTEREST INCOME/NET INTEREST MARGIN
The following is a comparison of the net interest spread between the first
three months of 1996 and the same period of 1995.
1996 1995
Yield on average earning assets
(taxable equivalent) 8.16% 9.44%
Cost of funds 2.30% 2.18%
Net interest spread 5.86% 7.26%
In addition to interest rates, changes in the volumes of assets and
liabilities also affect net interest income. The volume/rate variance
analysis (Table 2) shows the change in net interest income that is
attributable to changes in volume versus changes in rates. As reflected in
Table 2, the comparison of net interest income between the first quarter of
1996 and the similar quarter of 1995 was impacted by the significant decrease
in the prime interest rate (8.33% average in 1996 vs. 8.83% average in 1995)
coupled with a shift in an increased proportion of lower earning investments
as opposed to higher earning loans.
LOANS AND ALLOWANCE AND PROVISION FOR LOAN LOSSES
A summary of the activity in the allowance for loan loss is as follows:
(In thousands)
Three months ended March 31,
1996 1995
Balance at beginning of period $2,002 $2,148
Provision charged (credited) to operating expenses (100) 300
Loans charged off (263) (257)
Recoveries 11 62
Balance at end of period $1,650 $2,253
Management employs a 'migration analysis method' to establish the required
amount of loan loss allowance. This process tracks realized loan losses back
through the prior two years to estimate loss exposure on the classified and
unclassified loan portfolios. Additionally, loss experience is tracked in
pools of loans with similar characteristics to estimate the loss exposure
unique to various loan types. The measured loss exposure is then applied to
the current loan portfolio and further adjusted for 'qualitative factors'.
This method of establishing loan loss reserves complies with the policies of
the Office of the Comptroller of the Currency as reflected in Banking
Circular 201, revised, dated February 20, 1992, and in Banking Bulletin
93-60, dated December 21, 1993. The Company began testing this new method
during 1992 and comparing its results to results reached by the previously
existing procedures employed by the Company. The test proved that the two
methods were comparable, and the Company adopted the new migration analysis
method during 1993.
Accordingly, the Company believes its method for establishing the loan loss
allowance is sound. But no method, however valid, can consistently predict
future events with complete accuracy. In recent years, several factors used
by the Bank to establish loan loss allowances have been subject to
considerable volatility, and this in turn has affected the volatility of
nonperforming loans, charge-offs, and the coverage ratio. In addition, the
Bank's method of reporting, particularly its conservative listing of loans as
nonperforming, is not always an accurate indicator of actual future losses.
These issues are explained in greater detail below.
The economy in San Diego suffered a sharp downturn in recent years,
particularly in the real estate market. The Bank is a community bank with a
relatively small loan portfolio comprised of mostly commercial/real estate
loans that tend to be individually larger in amount than loans made by retail
banks. As a result of these and other factors, the Bank can experience large
swings in nonperforming loans, charge-offs, and the coverage ratio when one
or a few loans are transferred from one category to another. These factors
are not reasons for changing a valid method of determining loan loss
allowances and are not always accurate predictors of losses, but they do have
short-term effect on those allowances and related reported figures.
The volatility of "non-performing" loans is illustrated in the following
chart:
ASSETS REPORTED AS NONPERFORMING
(In thousands)
At At At
March 31, 1996 December 31, 1995 March 31, 1995
CURRENT AND NONCURRENT
Non-accrual loans $4,580 $6,969 $3,523
Restructured loans
(still accruing) 2,116 1,364 2,311
Loans 90 days past due 71 93 1
6,767 8,426 5,835
Other real estate owned 419 181 816
Total $7,186 $8,607 $6,651
NONCURRENT
Non-accrual loans $2,110 $3,160 $1,223
Restructured loans
(still accruing) 0 0 0
Loans 90 days past due 71 93 1
2,181 3,253 1,224
Other real estate owned 419 181 816
Total $2,600 $3,434 $2,040
Loans reported as
nonperforming but which are
current, as a percentage of
total loans reported as
nonperforming 64% 61% 79%
OTHER OPERATING INCOME
Other non-interest income in 1996 includes a gain of $55,000 from sale of
an OREO property.
OTHER OPERATING EXPENSES
Salaries and employee benefits and occupancy expense increased between 1995
and 1996 primarily because of the opening of the Bank's South Bay office and
International Department late in 1995.
SUBSIDIARY DATA
San Diego National Bank
The Bank earned $220,000 in the first quarter of 1996 compared to $246,000
for the same quarter of 1995. Return on average assets (ROA) was 0.54% and
0.66% respectively. Return on average equity (ROE) was 6.47% and 8.20%,
respectively. The reasons for the change in Bank earnings have been
enumerated on the preceding pages.
San Diego National Bank Building Joint Venture
The JV recorded pre-consolidation gross building revenues of $502,000 and
$500,000 in the first quarter of 1996 and 1995, respectively, resulting in
pre-consolidation, pretax losses of $148,000 and $147,000, respectively.
Depreciation and amortization expenses were $140,000 and $143,000 in 1996 and
1995, respectively.
<PAGE>
<TABLE>
<CAPTION>
Table 1
San Diego National Bank
Static Gap Summary
March 31, 1996
(In thousands)
Immediately Non-rate
Adjustable 1 Day 3 6 Sensitive
Or 1 Day Through Through Through And Over
Maturity 3 Months 6 Months 12 Months 12 Months Total
<S> <C> <C> <C> <C> <C> <C>
Loans (net) 83,516 2,508 953 2,069 3,595 92,641
Investment securities - 9,216 13,256 4,839 7,395 34,706
Certificates of deposit in
other banks - 892 498 - - 1,390
Federal funds sold 17,200 - - - - 17,200
Total interest earning assets 100,716 12,616 14,707 6,908 10,990 145,937
Non-interest earning assets - - - - 12,730 12,730
Total assets 100,716 12,616 14,707 6,908 23,720 158,667
Deposits:
Savings, NOW accounts and
money markets 67,975 - - - - 67,975
Time deposits - 17,216 3,956 4,728 335 26,235
Total deposits 67,975 17,216 3,956 4,728 335 94,210
Securities sold under
agreement to repurchase 4,050 - - - - 4,050
Total interest bearing liabilities 72,025 17,216 3,956 4,728 335 98,260
Non-interest bearing liabilities - - - - 46,696 46,696
Shareholders' equity - - - - 13,711 13,711
Total liabilities and
shareholders' equity 72,025 17,216 3,956 4,728 60,742 158,667
Interest rate sensitivity gap 28,691 (4,600) 10,751 2,180 (37,022)
Cumulative interest rate
sensitivity gap 28,691 24,091 34,842 37,022 -
</TABLE>
<PAGE>
Table 2
SDNB Financial Corp.
Volume/Rate Variance Analysis
Three months ended March 31, 1996 and 1995
(In thousands)
1996 compared to 1995
Volume Rate Total
Increase(decrease) in interest on earning assets:
Commercial loans $ (61) $ (108) $ (169)
Real estate loans (47) (114) (161)
Installment loans 27 (1) 26
Ready Money (1) 0 (1)
Total loans (82) (223) (305)
U.S. Treasury securities 152 6 158
Securities of government agencies (57) 1 (56)
State and political obligations (21) (21) (42)
Other securities 7 (3) 4
Total investment securities 81 (17) 64
Interest-bearing deposits in other banks 18 0 18
Federal funds sold 123 (19) 104
Total interest income change 140 (259) (119)
Increase(decrease) in interest paid on liabilities:
Savings accounts (7) 1 (6)
NOW accounts (6) (9) (15)
Super NOW accounts 2 (3) (1)
Money market accounts (25) (21) (46)
Executive money market accounts 89 9 98
Total savings deposits 53 (23) 30
Time deposits under $100,000 59 11 70
Time deposits of $100,000 or above 34 33 67
Total time deposits 93 44 137
Federal funds purchased and securities sold
under agreement to repurchase (23) (2) (25)
Short-term debt (31) (31) (62)
Long-term debt (47) 44 (3)
Total interest expense change 45 32 77
Net change in net interest income $ 95 $ (291) $ (196)
1) Interest income on state and political obligations has been adjusted for
tax effect at current rates. Interest expense on short- and long-term debt
is included in Building Operating Expenses in the Consolidated Statement of
Earnings.
2) Change in interest income or expense can be attributed to (a) changes in
volume (change in volume times old rate), (b) changes in rates (change in
rate times old volume), and (c) changes in rate/volume (change in rate times
the change in volume). The rate/volume variances are allocated
proportionally between the rate and volume variances based on their absolute
values.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities
None
ITEM 3 Defaults Upon Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Information
None
ITEM 6 Exhibits and Reports on Form 8-K
A. Exhibits (listed by number corresponding to the Exhibit Table
of Item 601 of Regulation SK)
27 Financial Data Schedule (submitted only in electronic
format and omitted from paper copies pursuant to
Paragraph (c) (v) of Regulation S-K (17 CFR 220.601(c)
(v)) and Note 2 to Paragraph (c) (1) (vi) of Regulation
S-K (17 CFR 229.601(c) (1) (vi)).
B. Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 9, 1996 SDNB FINANCIAL CORP.
By: /s/ Howard W. Brotman
Howard W. Brotman,
duly authorized officer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,404
<INT-BEARING-DEPOSITS> 1,788
<FED-FUNDS-SOLD> 17,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,286
<INVESTMENTS-CARRYING> 5,897
<INVESTMENTS-MARKET> 5,799
<LOANS> 92,641
<ALLOWANCE> 1,650
<TOTAL-ASSETS> 169,462
<DEPOSITS> 140,238
<SHORT-TERM> 4,050
<LIABILITIES-OTHER> 579
<LONG-TERM> 7,956
0
0
<COMMON> 20,289
<OTHER-SE> (3,650)
<TOTAL-LIABILITIES-AND-EQUITY> 169,462
<INTEREST-LOAN> 2,276
<INTEREST-INVEST> 484
<INTEREST-OTHER> 304
<INTEREST-TOTAL> 3,064
<INTEREST-DEPOSIT> 814
<INTEREST-EXPENSE> 864
<INTEREST-INCOME-NET> 2,200
<LOAN-LOSSES> (100)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 493
<INCOME-PRETAX> 106
<INCOME-PRE-EXTRAORDINARY> 106
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
<YIELD-ACTUAL> 5.04
<LOANS-NON> 4,580
<LOANS-PAST> 71
<LOANS-TROUBLED> 4,118
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,002
<CHARGE-OFFS> 263
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 1,650
<ALLOWANCE-DOMESTIC> 996
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 654
</TABLE>
