UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file no. 2-26080
CAPITAL BANCORP
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2160717
- ------------------------------------------------------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1221 Brickell Avenue, Miami, Florida 33131
- -------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(305) 536-1500
- -------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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.
X Yes ______ No
As of November 8, 1995, there were 7,379,831 shares of the
registrant's common stock outstanding.
=================================================================
Page 1 of 29 Pages
Exhibit Index Page 26
<PAGE>
<TABLE>
ITEM 1. PART I. FINANCIAL INFORMATION
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(In Thousands of Dollars)
September 30, December 31,
1995 1994
------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 112,985 $ 91,712
Federal funds sold and securities
purchased under agreement to resell 56,000 15,000
---------- ----------
Cash and cash equivalents 168,985 106,712
---------- ----------
Securities held to maturity
(Market value 9/30/95 -
$77,489, 12/31/94 - $ 89,122) 76,599 91,031
Securities available for sale
(at market value) 137,007 130,018
---------- ----------
Total securities 213,606 221,049
---------- ----------
Loans 698,069 648,618
Less allowance for loan losses (12,590) (9,210)
Less unearned income (2,815) (2,771)
---------- ----------
Loans, net 682,664 636,637
---------- ----------
Accounts receivable -
factoring subsidiary, net 329,736 248,142
Premises and equipment, net 33,788 32,358
Due from customers on acceptances 32,577 30,575
Other real estate 8,229 14,710
Accrued interest and other assets 33,406 29,679
---------- ----------
Total assets $1,502,991 $1,319,862
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing deposits $ 286,930 $ 296,599
Savings and money market deposits 290,044 315,323
Time deposits 388,502 264,871
---------- ----------
Total deposits 965,476 876,793
---------- ----------
Funds purchased and securities sold
under agreements to repurchase 74,012 87,236
Bank acceptances outstanding 32,577 30,575
Due to clients - factoring subsidiary
120,898 90,706
Long-term debt 176,650 126,980
Other liabilities 25,738 16,209
---------- ----------
Total liabilities 1,395,351 1,228,499
---------- ----------
Stockholders' equity:
Common stock, $1 par value
Authorized - 20,000,000 shares
Issued - 7,335,676 shares - 9/30/95,
4,821,475 shares - 12/31/94 7,336 4,821
Capital surplus 7,263 8,216
Retained earnings 94,324 83,445
Treasury stock -
80,000 shares - 12/31/94 -- (1,440)
Unrealized loss on securities
available for sale (1,283) (3,679)
---------- ----------
Total stockholders' equity 107,640 91,363
---------- ----------
Total liabilities and
stockholders' equity
$1,502,991 $1,319,862
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
Page 2
- ------------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $18,424 $13,477 $50,690 $37,920
Advances-factoring clients
6,526 4,555 17,920 11,498
Taxable securities 3,132 3,394 9,497 8,424
Tax-exempt securities 57 57 178 228
Dividends -- -- -- 2
Federal funds sold and
securities purchased under
agreements to resell 1,113 977 1,945 2,647
-------- ------- ------- -------
Total interest income 29,252 22,460 80,230 60,719
-------- ------- ------- -------
INTEREST EXPENSE:
Savings and money
market deposits 1,723 1,693 5,133 5,105
Time deposits 5,394 2,831 13,223 7,836
Short-term borrowings 1,062 1,097 3,537 2,587
Long-term debt 2,962 1,616 7,896 1,753
-------- ------- ------- -------
Total interest expense 11,141 7,237 29,789 17,281
-------- ------- ------- -------
Net interest income 18,111 15,223 50,441 43,438
Provision for loan losses 1,700 150 2,450 2,475
Provision for doubtful accounts-
factoring subsidiary 700 700 1,650 2,085
-------- ------- ------- -------
Net interest income
after provisions 15,711 14,373 46,341 38,878
-------- ------- ------- -------
OTHER INCOME:
Factoring revenues 6,390 5,452 17,114 14,708
Service charges on deposits 3,043 3,072 9,603 8,446
Fees on letters of credit 1,065 1,029 3,075 3,084
Securities gains -- 151 12 1,213
Other operating income 1,854 1,234 4,565 3,925
-------- ------- ------- -------
Total other income 12,352 10,938 34,369 31,376
-------- ------- ------- -------
OTHER EXPENSES:
Salaries and
employee benefits 9,645 9,042 28,446 26,288
Occupancy expense, net 1,968 1,869 5,658 5,674
Other operating
expenses, net 8,318 7,444 26,221 21,162
-------- ------- ------- -------
Total other expenses 19,931 18,355 60,325 53,124
-------- ------- ------- -------
Income before income taxes 8,132 6,956 20,385 17,130
Provision for income taxes 3,108 2,762 7,700 6,430
-------- ------- ------- -------
Net income $ 5,024 $ 4,194 $12,685 $10,700
======== ======= ======= =======
Earnings per common & common
equivalent share:
Primary $ .66 $ .58 $ 1.67 $ 1.49
======== ======= ======= =======
Fully diluted $ .65 $ .58 $ 1.61 $ 1.49
======== ======= ======= =======
Cash dividends declared per
share of common stock $ .0833 $ .0833 $ .2499 $ .2499
======== ======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
Page 3
- ------------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,685 $ 10,700
Adjustments to reconcile net income to net
cash provided by operating
activities:
Provision for loan losses 2,450 2,475
Provision for doubtful
accounts-factoring subsidiary 1,650 2,085
Depreciation and amortization 3,033 2,582
Net losses on other real estate 1,731 355
Securities gains (12) (1,213)
Gain on disposal of premises and equipment (32) (20)
Increase in accrued interest
and other assets (5,143) (8,404)
Increase in other liabilities 9,510 5,946
-------- --------
Net cash provided by
operating activities 25,872 14,506
-------- --------
Cash flows from investing activities:
Proceeds from maturities of securities
held to maturity 27,834 28,800
Purchase of securities held
to maturity (13,074) (79,834)
Proceeds from sales of securities
available for sale -- 6,159
Proceeds from maturities of securities
available for sale 16,651 18,439
Purchase of securities
available for sale (20,000) (33,140)
Net increase in loans (48,985) (46,191)
Proceeds from sale of premises & equipment 81 23
Purchase of premises and equipment (4,656) (9,011)
Proceeds from sale of other real estate 6,039 4,648
Improvements to other real estate (781) (442)
Increase in accounts receivable-factoring
subsidiary (net of due to clients)
(53,052) (41,718)
-------- --------
Net cash used in investing activities (89,943) (152,267)
-------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits 88,683 (38,452)
Net increase (decrease) in Federal
funds purchased and securities sold
under agreements to repurchase (13,224) 53,348
Proceeds from issuance of senior
certificates - factoring subsidiary 50,000 97,808
Repayment of debt-factoring subsidiary -- (15,000)
Repayment of long-term debt (330) (625)
Cash dividends (1,787) (1,731)
Proceeds from exercise of stock options 892 623
Redemption of fractional shares after
3-for-2 stock split (2) --
Proceeds from sale of treasury stock 2,112 --
-------- --------
Net cash provided by
financing activities 126,344 95,971
-------- --------
Net increase (decrease) in cash
and cash equivalents 62,273 (41,790)
Cash and cash equivalents
at beginning of period 106,712 156,789
-------- --------
Cash and cash equivalents
at end of period $168,985 $114,999
======== ========
</TABLE>
(Continued)
Page 4
- -----------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(In Thousands of Dollars)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Supplemental Disclosures
Cash paid during the period for:
Interest $ 29,040 $ 17,102
======== =========
Income taxes $ 8,692 $ 10,705
======== =========
Non-cash activities:
Decrease (increase) in the unrealized
loss on securities available for sale,
net of applicable taxes (benefits) in
1995 - $1,416 and in 1994 - ($2,677) $ 2,396 $ (4,531)
======== =========
Loans transferred to other
asset categories $ 1,104 $ --
======== =========
Loans recorded in connection with
sales of other assets $ 596 $ --
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
- -----------------------------------------------------------------
<PAGE>
CAPITAL BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
NOTE 1: Basis of Presentation
- ------------------------------
The Consolidated Statements of Condition for Capital Bancorp and
Subsidiaries (the "Company") as of September 30, 1995 and December
31, 1994, the Consolidated Statements of Income for the nine- and
three-month periods ended September 30, 1995 and 1994 and the
Consolidated Statements of Cash Flows for the nine-month periods
ended September 30, 1995 and 1994 included in Form 10-Q have been
prepared by the Company in conformity with the instructions to Form
10-Q and Article 10 of Regulation S-X and therefore do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The
statements are unaudited except for the Consolidated Statement of
Condition as of December 31, 1994. Certain amounts in the
December 31, 1994 Consolidated Statement of Condition have been
reclassified to conform with the 1995 presentation.
The accounting policies followed for interim financial reporting
are consistent with the accounting policies set forth in Note 1 of
the Company's latest Annual Report to Stockholders, which is
incorporated by reference by the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission. Effective
January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures." Adoption of this Statement did not have a
significant impact on the Company's consolidated financial position
or results of operations.
Common stock per share and average share information for prior
periods have been retroactively restated for the 3-for-2 stock
split in the form of a 50% stock dividend which was effective June
22, 1995.
The consolidated financial statements include the accounts of
Capital Bancorp (the "Parent Company"), Capital Bank (the "Bank")
and its subsidiaries, and Capital Factors Holding, Inc. and its
subsidiaries ("Capital Factors") and Capital Factors Financing
Trust, a special purpose trust. All significant inter-company
transactions and balances have been eliminated in consolidation.
In the opinion of management, the interim consolidated financial
statements reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the
information contained therein. The interim results of operations
are not necessarily indicative of the results which may be expected
for the full year.
NOTE 2: Risk Elements - Loans and Advances
- ------------------------------------------
Foreign Outstandings
- --------------------
Foreign outstandings included in the loan portfolio consisted of
the following (in thousands of dollars):
September 30, 1995 December 31, 1994
------------------ -----------------
Performing trade credits $120,597 $111,150
Other performing loans 3,416 3,832
Nonaccrual loans 2,650 334
-------- --------
$126,663 $115,316
======== ========
Performing trade credits consist primarily of refinanced letters of
credit, acceptances purchased and pre-export financings principally
to banks that are located in foreign countries. Cash collateral
maintained at Capital Bank as offsets to outstanding foreign loans
totaled $16.3 million at September 30, 1995 compared to $14.6
million at year end 1994. In addition to the outstanding foreign
loans, at September 30, 1995 and December 31, 1994 there were $29.3
million and $28.1 million, respectively, due primarily from foreign
customers on acceptances, offset by $5.5 million and $2.2 million
of cash collateral maintained at Capital Bank.
Page 6
- ------------------------------------------------------------------
<PAGE>
The following is a list of cross border outstandings at September
30, 1995 and December 31, 1994 for those countries for which the
total amount of outstandings (loans, acceptances, acceptances
purchased, pre-export financings and other interest bearing
assets), net of (a) any written guarantees of principal or interest
by domestic or other non-local third parties (other than the
foreign government) and (b) the value of any tangible liquid
collateral that may be netted against the outstandings, exceeds 1%
of consolidated total assets at the respective dates (in thousands
of dollars):
September 30, December 31,
1995 1994
----------- -----------
Brazil $22,228 Brazil $18,594
Argentina 19,707 Argentina 15,982
Mexico 13,999
------- -------
$41,935 $48,575
======= =======
At September 30, 1995, Capital Bank had cross border outstandings
to Colombia, El Salvador, Ecuador, Peru and Guatemala, aggregating
$14.8 million, $14.7 million, $14.6 million, $14.5 million and
$12.9 million, respectively, which exceeded .75%, but were less
than 1% of consolidated total assets. At December 31, 1994,
Capital Bank had cross border outstandings to Peru, Ecuador and
Bolivia, aggregating $13.2 million, $12.8 million and $10.9
million, respectively, which exceeded .75%, but were less than 1%
of consolidated total assets.
At September 30, 1995 and December 31, 1994 Capital Bank held other
interest earning assets of $6.8 million and $6.6 million,
respectively, issued by debtors located in foreign countries.
Impaired Loans
- --------------
The Company adopted SFAS 114, as amended by SFAS 118, effective
January 1, 1995. This did not have a material impact on the
Company's results of operations nor on its financial position,
including the level of the reserve for possible credit losses.
Instead, it resulted only in a reallocation of the existing reserve
of possible credit losses.
At September 30, 1995, the recorded investment in loans that was
considered impaired under SFAS 114 was $9,054,000. These loans
required a SFAS 114 reserve for possible credit losses of
$3,978,000. The average recorded investment in impaired loans
during the nine months ended September 30, 1995 was $5,639,000.
For the nine months ended September 30, 1995, the Company
recognized interest revenue on these loans of $384,000.
Non-accrual and Past Due Loans and Advances
- ------------------------------------------
Management evaluates past due and non-accrual loans and advances
regularly in connection with estimating the provisions and the
allowances for loan losses and doubtful accounts, taking into
consideration the value of collateral and the prospects for
repayment of principal and collectibility of interest. Loans and
advances are classified on a non-accrual basis when management
deems that collectibility of interest is doubtful, which is
generally after 90 days of past due status, unless the loan or
advance is well secured and in the process of collection. Charge-
offs to the allowances are made when a loss is deemed probable.
At September 30, 1995 there were $751,000 of loans that were over
90 days past due and still accruing interest, as compared to $1.9
million at December 31, 1994. Included in loans 90 days past due
and still accruing interest were consumer, commercial and real
estate loans of $454,000, $263,000 and $34,000, respectively, at
September 30, 1995 as compared to foreign, commercial and consumer
loans of $1.5 million, $279,000 and $131,000, respectively, at
December 31, 1994. Loans which are over 90 days past due and still
accruing interest are in the process of collection and deemed to be
well secured.
Page 7
- ------------------------------------------------------------------
<PAGE>
Following is a summary of non-accrual loans and advances (in
thousands):
September 30, December 31,
1995 1994
-------- ------------
Commercial loans $ 1,359 $ 2,677
Foreign loans 2,650 334
Real Estate loans 1,141 1,801
Consumer loans 1,344 1,547
------- -------
6,494 6,359
Advances 928 739
------- -------
Total non-accrual loans
and advances $ 7,422 $ 7,098
======= =======
The increase in non-accrual loans and advances is due to the
transfer of several foreign loans with Argentine banks from accrual
status to non-accrual status, offset by charge-offs and
collections. Management has instituted collection procedures in
connection with non-accrual loans and advances and has established
allowances for loan losses and doubtful accounts deemed adequate to
absorb potential losses, based on information currently available.
Many of the factors considered in management's determination as to
the adequacy of the allowances involve a significant degree of
estimation and are subject to rapid changes that may be unforeseen
by management. Changes to these factors could result in future
adjustments to the allowance for loan losses.
NOTE 3: Long-Term Debt
- -----------------------
On July 28, 1995, Capital Factors, Inc., through its wholly-owned
subsidiary C.F. Funding Corp., issued an additional $50,000,000 of
Variable Rate Asset Backed Certificates ("senior certificates")
with a maturity date of January 2001. The senior certificates bear
an interest rate of LIBOR plus 1.25%. The interest rate on
September 30, 1995 was 7.125%. Interest is payable monthly. The
senior certificates which, including previously issued
certificates, aggregate $175,000,000 are secured by interest
earning advances which totaled $218,366,000 at September 30, 1995.
Capital Factors, Inc. services and administers these advances and
related receivables under an agreement entered into by Bankers
Trust Company as Trustee, CF Funding Corp. and Capital Factors,
Inc.
NOTE 4: Litigation
- -------------------
The Company and certain of its present and former directors and
officers are defendants in two lawsuits, one of which is a
shareholder derivative suit. Such suits allege that certain of the
defendants engaged in a number of allegedly improper and illegal
activities. No monetary relief is sought from the Company other
than costs in the non-derivative action. The Company does not
believe that the outcome of the foregoing litigation will have a
material adverse effect on the consolidated financial condition or
results of operations of the Company.
In addition to these lawsuits, various legal actions
and proceedings are pending or are threatened against the
Company, Capital Bank and Capital Factors, some of which
seek relief or damages in amounts that are substantial.
These actions or proceedings arose in the ordinary course of
business. Due to the complex nature of some of these matters,
it may be a number of years before they are ultimately
resolved. After consultation with legal counsel,
management believes the aggregate liability, if any,
to the Company, the Bank and/or Capital Factors resulting
from such pending or threatened actions and proceedings
will not have a material adverse effect on the Company's
consolidated financial condition , results of operations or
liquidity .
Page 8
- ------------------------------------------------------------------
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL BANCORP AND SUBSIDIARIES
INTRODUCTION
- ------------
Capital Bancorp (the "Parent Company") is a bank holding company.
Capital Bancorp and Subsidiaries (the "Company") had total
consolidated assets of $1.5 billion at September 30, 1995. Capital
Bank (the "Bank"), a Florida-chartered commercial bank, is wholly-
owned by Capital Bancorp. Capital Factors Holding, Inc. ("Capital
Factors"), which conducts commercial factoring activities, is
wholly-owned by the Bank.
The following discussion and analysis presents the significant
changes in the financial condition and results of operations for
the periods indicated. The discussion should be read in
conjunction with the consolidated financial statements and notes
included in Part I, Item 1 of this report.
FINANCIAL CONDITION - SEPTEMBER 30, 1995 VS. DECEMBER 31, 1994
- --------------------------------------------------------------
Total assets increased $183.1 million during the
first nine months of 1995, composed of increases of $134.9 million
in interest earning assets and $48.2 million in
non-interest earning assets. The increase in assets was composed
of increases of $81.6 million in net accounts
receivable - factoring subsidiary, $62.3 million in
cash and cash equivalents, $46.0 million in net
loans, $3.7 million in accrued interest and other assets, $2.0
million in due from customers on acceptances and $1.4 million in
premises and equipment offset by decreases of $7.4 million in total
securities and $6.5 million in other real estate.
The increase in accounts receivable - factoring subsidiary was due
to an overall increase in factoring volume. During 1995, Capital
Factors opened an office in Charlotte, North Carolina
in addition to existing offices in Fort Lauderdale, Florida, Los
Angeles, California and New York, New York. Also, Capital Factors
expanded a new service, asset-based lending.
Balances associated with asset-based lending amounted to $27.7
million and $10.4 million at September 30, 1995 and December 31,
1994, respectively, and are included in commercial and industrial
loans in the Company's financial statements. These loans are
collateralized primarily by receivables owned by the borrowers.
The risks associated with asset-based lending are similar to those
involved in Capital Factors' traditional factoring activities and
primarily involve the credit quality of the receivables accepted as
collateral. The experience in monitoring receivables that Capital
Factors has gained through its traditional factoring activities is
expected to be beneficial in managing this new activity.
In its traditional factoring activities, Capital Factors
purchases receivables from its clients and records a liability
payable to the clients at the time of such purchase. From time to
time, the liability is reduced by advance payments by Capital
Factors to the clients, prior to the contractual payment date for
the receivables purchased. Such advance payments are interest
earning balances of Capital Factors. Interest earning advances
amounted to $211.5 million at September 30, 1995 compared to
$159.3 million at December 31, 1994. Non-accrual advances
amounted to $928,000 and $739,000 at September 30, 1995 and
December 31, 1994, respectively, and are considered in the
assessment of the allowance for doubtful accounts for adequacy (see
"Provisions for Credit Losses" on pages 17 and 18).
The increase in net loans primarily consisted of an increase in
loans of $49.5 million offset by an increase of $3.4 million
in the allowance for loan losses. The increase in loans was
comprised primarily of increases of $16.4 million in international
- - commercial loans, $16.1 million in domestic - commercial loans
(primarily asset-based loans at Capital Factors), $11.0 million
in mortgage loans and $8.3 million in installment loans offset by
a decrease of $2.6 million in acceptances purchased. The
growth in international - commercial loans resulted from increased
marketing efforts of foreign trade finance services. The increase
in mortgage loans reflects the results of expanded marketing
efforts. Installment loans increased primarily due to expansion of
indirect automobile financing.
The Company's increased international and indirect automobile
lending activities do not represent new types of lending for the
Company, but an expansion of previously conducted activities. The
risks associated with this lending are typical of these types of
loans and are managed through the Company's underwriting and
monitoring procedures. International loans are primarily made to
financial institutions located in foreign countries, are related to
foreign trade transactions and are generally short-term in nature.
Traditionally, industry-wide credit losses associated with trade-
related foreign lending have been low, resulting in lenders
charging lower rates than non-trade foreign lending and some forms
of
Page 9
- ------------------------------------------------------------------
<PAGE>
domestic lending. Through the five years ended December 31,
1994,
the Company's credit losses associated with trade-related foreign
lending averaged less than one-half of 1% of average foreign loans
outstanding. Notwithstanding this history, unforeseen
circumstances may arise, resulting in losses in excess of
historical trends, as discussed below with respect to two Argentine
banks. Furthermore, loss experience with trade-related lending can
differ significantly from that experienced with non-trade lending.
The Company's indirect automobile financing represents consumer
installment debt generally of 24-60 month terms, secured by new or
used automobiles. Initial applications for these loans are taken
from potential car buyers by automobile dealers, subject to the
Company's underwriting standards. The Company maintains final
approval authority over all applications for these loans. Indirect
automobile financing presents risks typical of consumer automobile
financing, including competitive pressures which may influence the
interest rate charged by the Company as well as the ability to
record new loans, and potential losses due to non-payment or
collateral deficiencies. These risks are influenced most heavily
by underwriting standards, as well as general economic trends. For
the five years ended December 31, 1994, credit losses associated
with this type of lending averaged less than 1.5% of average loans
outstanding and was not unusual for the industry. Rates charged by
the Company for these loans are consistent with the Company's
markets and are believed by management to be commensurate with the
underlying credit risk of this lending activity.
The following table summarizes the Company's non-accrual, past due,
other potential problem loans, restructured loans, and other
restructured assets (excluding non-accrual advances at Capital
Factors) as of the dates indicated (In Thousands of Dollars):
September 30, December 31,
1995 1994
------------- ------------
Non-accrual loans:
Domestic $ 3,844 $ 6,025
Foreign 2,650 334(3)
90 days past due or more:
Domestic 751 410
Foreign -- 1,500
-------- --------
Total non-performing loans 7,245 8,269
Other potential problem loans 6,296 2,006
-------- --------
Total problem and potential
problem loans $ 13,541 $ 10,275
======== ========
Restructured loans (1) $ 8,471 $ 8,559
======== ========
Restructured assets (2) $ 2,753 $ 2,544
======== ========
(1) Represents troubled debt restructurings as defined by Statement
of Financial Accounting Standards No. 15. These loans were in
compliance with terms at September 30, 1995.
(2) Represents bonds received in connection with restructuring
agreements with Mexico and Argentina for defaulted loans.
These bonds were in compliance with terms at September 30,
1995. These bonds are carried at market value and included in
securities available for sale.
(3) Includes $173 of loans that were restructured at December 31,
1994.
Page 10
- ------------------------------------------------------------------
<PAGE>
Domestic non-accrual loans decreased as a result of the collection
of a $1.5 million commercial loan in 1995, combined with charge
offs and new additions since December 31, 1994. Charge offs and
new additions since December 31, 1994 do not reflect any
discernible trends. The increase in foreign non-accrual loans
includes several loans to two Argentine banks aggregating
approximately $2.7 million, offset by repayments. All foreign
loans past-due 90 days or more at December 31, 1994 were repaid
during 1995.
Potential problem loans at September 30, 1995 primarily include one
commercial loan of $1.4 million and one mortgage loan of $4.9
million. Both loans are currently in compliance with terms but are
being monitored due to specific negative indicators.
Following is a summary of activity in the allowance for loan losses
for each of the nine months ended September 30 (dollar amounts in
thousands):
1995 1994
---- ----
Allowance for loan losses at January 1 $ 9,210 $ 18,423
-------- --------
Loans charged off:
Real estate - construction -- --
Real estate - mortgage (17) (2,500)
Commercial and financial (722) (2,526)
Consumer (1,274) (1,586)
Foreign (20) (6,768)
-------- --------
Total charge offs (2,033) (13,380)
-------- --------
Recoveries on loans previously charged off:
Real estate - mortgage 22 58
Commercial and financial 1,010 432
Consumer 299 442
Foreign 1,632 1,523
-------- --------
Total recoveries 2,963 2,455
-------- --------
Net loans recovered (charged off) 930 (10,925)
Additions to allowance charged to
operating expense 2,450 2,475
-------- --------
Allowance for loan losses at
September 30 $ 12,590 $ 9,973
======== ========
Average amount of loans outstanding
for the year to date $673,380 $579,749
======== ========
Ratio of net loans (recovered) charged
off to average loans outstanding for
the period (1) (.18)% 2.52%
======== ========
(1) Before deduction of allowance for loan losses.
During 1995, domestic loan charge offs generally decreased compared
to 1994 as a result of overall improvement in the credit quality of
borrowers. To a lesser extent, recoveries of previously charged
off domestic loans increased for similar reasons. The $2.5 million
in real estate-mortgage loan charge offs in 1994 was related to a
single loan which was subsequently foreclosed and transferred to
other real estate.
Page 11
- ------------------------------------------------------------------
<PAGE>
During the first quarter of 1994, the Company charged off
approximately $6.3 million in non-trade loans to several borrowers
located in Ecuador and Peru. These loans, which were fully
reserved for as of December 31, 1993, had been previously
restructured and at the time of charge off were on non-accrual
status. In the third quarter of 1994, the Company sold its
interest in a $2.5 million loan to a Peruvian borrower, included in
the charge offs above, for net proceeds of $1.5 million. These
proceeds were recorded as loan recoveries at the time of receipt.
In the first quarter of 1995, in exchange for loans with a face
amount of $3.9 million ($3.5 million of which were included in the
charge offs in 1994) plus several years accrued but unpaid
interest, the Company received bonds issued by the government of
Ecuador in connection with a restructuring of that country's
foreign debt. These bonds had a face amount of $6.6 million,
mature in 30 years and had below market interest rates. In the
first and second quarters of 1995, these bonds were sold for net
proceeds aggregating $1.6 million which represented the then
current market price. The proceeds in excess of the remaining
balance not charged off were recorded as loan recoveries at the
time of receipt. The Company has not conducted non-trade foreign
lending of the type which gave rise to these loans since the 1980s
and currently has no plans to do so. At September 30, 1995, the
Company had no restructured or non-performing non-trade foreign
loans. Due to the charge offs and recoveries of foreign loans
during 1994 and 1995, the ratio of net charge offs to average loans
is significantly impacted. Excluding the foreign loan activity,
this ratio would have been .14% in 1995, and 1.41% in 1994.
The allowance for loan losses at September 30, 1995 and December
31, 1994 represented 1.8% and 1.4%, respectively, of loans
outstanding. The allowance represented 194% and 145% of total non-
accrual loans at September 30, 1995 and December 31, 1994,
respectively. The allowance represented 175% and 111% of total
non-performing (non-accrual and 90 days past due) loans,
respectively. The increase in these ratios reflects higher
allowance balances allocated for foreign loans as well as potential
problem domestic loans. At September 30, 1995, the total allowance
included $2.2 million allocated to foreign loans, $9.3 million for
domestic loans and $1.1 million unallocated. At December 31, 1994,
the foreign allocation was $300,000, domestic was $7.9 million and
$1.0 million was unallocated.
The allowance allocated for foreign loans at September 30, 1995
includes $1.8 million for the estimated loss exposure relating to
the $2.7 million in non-accrual loans to two Argentine banks
referred to above and approximately $400,000 for other foreign
exposure. These Argentine bank loans arose from trade-related
transactions, as does substantially all of the Company's foreign
loans. Following the devaluation of the Mexican peso in 1994, some
banks in Argentina (as well as in other Central and South American
countries) experienced liquidity problems due to a shift in
deposits out of the country and from smaller banks to larger banks.
As a result, these two banks ceased operations in 1995 and have
been or are in the process of liquidation. In addition to these
two banks, at September 30, 1995 the Company had loans outstanding
to Argentine borrowers aggregating $8.2 million, all of which was
trade-related and performing. Through the five years ended
December 31, 1994, losses associated with the Company's trade-
related lending averaged less than one-half of 1% of foreign loans
outstanding. Based on an assessment of all information currently
available, including discussions with the Central Bank of
Argentina, discussions with third parties regarding the purchase of
the Company's interest in the non-accrual loans, overall loss
history and cash collateral held by the Company, management
believes the allowance allocated for foreign loans at September 30,
1995 to be adequate. It is possible, however, that future
deterioration in the repayment capacity of Argentine or other
foreign borrowers could result in additional non-performing loans
and additions to the allowance for losses in amounts not
determinable at this time.
The allowance allocated for domestic loans increased as a result of
management's evaluation of the higher level of potential problem
loans in the commercial and real estate mortgage portfolio at
September 30, 1995. Management does not believe these
circumstances represent deteriorating trends, but are isolated to
specific borrowers.
The increase in cash and cash equivalents was composed of increases
of $41.0 million in federal funds sold and securities purchased
under agreements to resell and $21.3 million in cash and due from
banks. The increase in federal funds sold and securities purchased
under agreements to resell resulted primarily from net inflows of
deposits during the second and third quarter. The increase in cash
and due from banks resulted primarily from funds raised by Capital
Factors in the sale of $50.0 million of senior certificates to
outside investors in July, 1995.
The decrease in total securities consisted of maturities and
paydowns during the first nine months totaling $44.5 million offset
by purchases of $33.1 million and a reduction in the unrealized
loss on securities available for sale of $3.8 million. Proceeds
from these maturities and paydowns were used to purchase
securities, as well as fund alternative interest earning assets.
Page 12
- ------------------------------------------------------------------
<PAGE>
Other real estate amounted to $8.2 million and $14.7 million at
September 30, 1995 and December 31, 1994, respectively. The
decrease in other real estate was due primarily to sales of several
properties totaling $7.4 million.
Total liabilities increased $166.9 million composed
of increases of $88.7 million in total deposits, $49.7 million in
long - term debt, $30.2 million in due to
factoring clients, $9.5 million in other liabilities and $2.0
million in bank acceptances outstanding offset by a decrease of
$13.2 million in other funds purchased.
Domestic deposits aggregated $815.7 million or 84.5% of total
deposits at September 30, 1995 compared to $741.3 million or 84.6%
of total deposits at December 31, 1994. Although the Company does
not have any foreign deposits, funds deposited at Capital Bank by
customers who reside outside the United States aggregated $149.8
million or 15.5% of total deposits at September 30, 1995 compared
to $135.5 million or 15.4% of total deposits at December 31,
1994.
The increase in total deposits included an increase of $123.6
million in time deposits offset by decreases of $25.3 million in
savings and money market deposits and $9.7 million in non-interest
bearing deposits. The increase in time deposits reflects the
combined effect of internal marketing efforts to increase overall
deposits and increased customer demand for time deposits due to
higher rates offered. Management believes the decrease in savings
and money market deposits reflects an industry-wide trend whereby
customers have chosen alternative investment and savings products
over low yielding deposit products.
Deposit liabilities represented 68%, 71% and 82% of total
liabilities at September 30, 1995, December 31, 1994 and December
31, 1993, respectively. For the same dates, interest bearing non-
deposit balances represented 18%, 17% and 6% of total liabilities.
Management believes that non-deposit funding sources will continue
to represent a greater percentage of total liabilities when
compared to historical levels for the foreseeable future.
CAPITAL RESOURCES
- -----------------
Stockholders' equity increased $16,277,000 during the first nine
months of 1995 as a result of net income of $12,685,000, proceeds
from the sale of treasury stock of $2,112,000, proceeds from the
exercise of stock options of $892,000 and a decrease in the
unrealized loss on securities available for sale of $2,396,000, all
offset by dividends declared of $1,806,000 and cash redemption of
fractional shares of $2,000 due to the 3-for-2 stock split
effective June 22, 1995.
The Company and the Bank are required by regulations of the Federal
Reserve Board and the Federal Deposit Insurance Corporation,
respectively, to meet minimum ratios of capital to risk-weighted
assets of 4% and 8% for Tier One capital and total risk-based
capital, respectively. The Company and the Bank are also required
to maintain a minimum leverage ratio, defined to be equal to Tier
One capital to average quarterly assets, of 3%. However, the
Federal Reserve Board has publicly stated its expectation that most
banks should maintain a leverage ratio of 1% to 2% above the
minimum requirement. As illustrated in the following table, the
Parent Company and the Bank complied with all regulatory capital
requirements at September 30, 1995.
Company Capital Bank
9/30/95 12/31/94 9/30/95 12/31/94
------- -------- ------- --------
Leverage 7.85% 7.58% 7.61% 7.58%
Tier One
Risk-Based 10.96% 10.32% 10.61% 10.30%
Total
Risk-Based 12.21% 11.53% 11.86% 11.51%
In the opinion of management, these ratios are sufficient to
protect depositors and facilitate future growth. Management of the
Company continuously reviews capital adequacy. The various
alternatives for generating equity from external resources are
constantly under review to ascertain the most effective approach
for the Company. The Company has traditionally provided most of
its capital through retained earnings. For the first nine months
of 1995 and 1994, respectively, the Company's annualized internal
capital generation rate was 15.92% and 14.15%, respectively. The
Company currently pays dividends of 8.33 cents per share per
quarter. This dividend policy is dependent upon the Bank's ability
to continue the payment of dividends to the Parent Company.
Unforeseen changes in the financial condition of the Company or
Capital Bank, or actions by regulatory authorities, could result in
changes in the dividend policy.
Page 13
- ------------------------------------------------------------------
<PAGE>
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
- ----------------------------------------
Liquidity represents the Company's ability to meet customers'
borrowing needs, take advantage of investment opportunities, fund
deposit withdrawals and maintain reserve requirements. On the
asset side, the primary sources of liquidity are cash and due from
banks, interest bearing deposits with banks, Federal funds sold and
other short-term investments, investment securities and scheduled
repayments of outstanding loans and receivables. On the liability
side, the principal source of liquidity is growth in deposits,
purchased funds and other borrowings.
The liquidity position is evaluated daily by management to maintain
the level of liquidity conducive to efficient operations.
Attention is directed primarily to assets and liabilities that
mature or can be repriced within a period of 30 to 365 days. The
Company matches the maturities of a significant portion of its
assets and liabilities to minimize variability in net interest
income within a 12 to 18 month period. This practice serves to
minimize both liquidity and interest rate risks. Prudent risks are
taken, however, by leaving certain assets and liabilities unmatched
in an effort to benefit from the interest rate sensitivity created.
Deposits represent the primary funding source, however, other
sources, including purchased funds and borrowings by the Company's
factoring subsidiary, increased significantly during the second
half of 1994.
Maintenance of satisfactory funding levels allows the Company to
position itself so that the risks of interest rate fluctuations are
decreased. This, together with a high percentage of variable rate
assets, provides a more consistent margin between interest earning
assets and interest bearing liabilities. For the first nine
months of 1995, the average rate paid on interest
bearing deposit liabilities was 3.90%, while the
average rate paid for other interest bearing liabilities
was 6.68%. To the extent that non-
deposit liabilities grow faster than deposits, the
Company's overall cost of funds will likely rise.
At this time, management does not believe these
factors will have a significant adverse impact on net
interest income.
Following is a summary analysis of maturity and
repricing characteristics of the Company's interest earning
assets and interest bearing liabilities (in millions of
dollars) at September 30, 1995. For purposes of this
analysis, regular passbook savings and NOW accounts
are included as repricing in 30 days or less,
based on an assessment of the underlying liabilities.
The difference between the maturities and repricing
intervals applicable to interest earning assets and
interest bearing liabilities is commonly referred to as the
"gap."
Maturity or Repricing
-----------------------------------------
30 days 31-180 181-365 Over one
or less days days year Total
------- ------ ------- ------- -----
Interest Earning Assets:
Securities $ 16.3 $ 77.2 $ 37.6 $ 82.4 $ 213.5
Loans (1) 300.3 37.6 65.2 288.5 691.6
Other earning assets (2) 286.5 -- -- -- 286.5
------ ------ ------ ------ --------
Total interest
earning assets 603.1 114.8 102.8 370.9 1,191.6
------ ------ ------ ------ --------
Interest Bearing
Liabilities:
Interest bearing deposits 199.6 221.0 140.3 117.6 678.5
Short-term borrowings 74.0 -- -- -- 74.0
Long-term debt 176.7 -- -- -- 176.7
------ ------ ------ ------ --------
Total interest bearing
liabilities 450.3 221.0 140.3 117.6 929.2
------ ------ ------ ------ --------
Gap 152.8 (106.2) (37.5) 253.3 $ 262.4
------ ------ ------ ------ ========
Cumulative Gap $152.8 $ 46.6 $ 9.1 $262.4
====== ====== ====== ======
(1) Excludes non-accrual loans totaling $6.5 million.
(2) Excludes non-accrual advances totaling $.9 million.
Page 14
- ------------------------------------------------------------------
<PAGE>
Interest earning assets and interest bearing liabilities are
influenced by both factors outside the control of management, such
as current market interest rates, and factors controlled by
management, such as the rates paid on deposits. If market interest
rates decline and the Company does not make equivalent reductions
in the rates paid on its deposits, short term net interest income
should decline. Conversely, if market interest rates increase and
the Company does make an equivalent increase in deposit rates, net
interest income should increase. The Company's cumulative gap at
September 30, 1995 for the next year was $9.1 million. As a
result, management does not believe that the Company's operating
results will be significantly impacted by changes in interest rates
over the next year.
Liquidity is also necessary at the Parent Company level. The
ability of the Parent Company to meet debt service requirements,
pay dividends to stockholders and satisfy other liquidity needs is
primarily dependent on the Bank's ability to continue the payment
of dividends. The ability of the Bank to pay dividends is
governed by Florida statutes. At periodic
intervals, State and Federal regulatory agencies
routinely examine the Parent Company and the Bank
as part of their legally prescribed oversight of the
banking industry and may further restrict the payment of dividends
or other activities by regulatory action. At September
30, 1995, the Bank was not subject to any
restrictions other than statutory.
For the remainder of 1995, the Parent Company's estimated debt
service and stockholder dividend requirements will total
approximately $650,000. At September 30, 1995, the Parent Company
had available cash balances of approximately $5.1 million.
Management believes the Parent Company's cash position at September
30, 1995 to be satisfactory.
In the normal course of business, the Company utilizes various
financial instruments with off-balance sheet risk to meet the
financing needs of its customers. These off-balance sheet
activities include commitments to extend credit, commercial letters
of credit and standby letters of credit. The credit and market
risks associated with these financial instruments are generally
managed in conjunction with the Company's balance sheet activities
and are subject to normal credit policies, financial controls and
risk limiting and monitoring procedures. Additionally, the Company
may obtain various types of collateral to further reduce risks,
including, but not limited to, cash, time deposits, securities or
other tangible or intangible property of a nature acceptable to the
Company. The maximum risk may exceed the amounts recognized in the
consolidated statements of condition because these amounts vary
depending on the nature of the underlying instrument and the
related accounting policy.
Credit losses may be incurred when one of the parties fails to
perform in accordance with the terms of the contract. The
Company's exposure to credit loss is represented by the contractual
amount of the commitments to extend credit, commercial letters of
credit and standby letters of credit, reduced by the value of any
associated collateral obtained. This is the maximum potential loss
of principal in the event the commitment is drawn upon and the
counter-party defaults. In addition, the measurement of the risks
associated with these financial instruments is meaningful only when
all related and offsetting transactions are considered.
At September 30, 1995, the Company had outstanding commitments to
extend credit, commercial letters of credit and standby letters of
credit amounting to $137.0 million, $99.2 million and $15.1
million, respectively. In the normal course of business, some of
these commitments may expire without being drawn upon. The Company
expects to meet funding requirements resulting from these
commitments by using its traditional sources of liquidity.
RESULTS OF OPERATIONS - Nine Months Ended September 30, 1995 and
1994
- ------------------------------------------------------------------
The Company recorded net income of $12,685,000, or $1.67 per share,
for the nine months ended September 30, 1995, compared to
$10,700,000, or $1.49 per share (adjusted for the 3-for-2
stock split in the form of a 50% stock dividend in June
1995), for the first nine months of 1994. The annualized return on
average assets was 1.22% for the nine months ended
September 30, 1995 compared to 1.14% for the same period in 1994.
The annualized return on average stockholders' equity was 17.05%
for first nine months of 1995 compared to 16.55% for the same
period in 1994. The increase in income was primarily a result of
improved net interest income and higher factoring
revenues , offset by higher other operating
expenses, higher provision for income taxes and lower gains on
securities transactions.
Page 15
- ------------------------------------------------------------------
<PAGE>
Following is a summary of certain operating results of the
Company's major lines of business (in thousands of dollars). For
purposes of this summary, intercompany transactions, the most
significant of which are internal interest income and expense
allocations, have not been eliminated.
Nine Months Ended
September 30,
-------------------------
1995 1994
------------ -----------
Net interest income and
non-interest income:
Domestic banking activities $ 52,692 $ 48,352
Foreign banking activities 6,509 6,695
---------- ----------
Total banking activities 59,201 55,047
Factoring activities 25,609 19,767
---------- ----------
Total $ 84,810 $ 74,814
========== ==========
Income before income taxes:
Domestic banking activities $ 12,154 $ 11,698
Foreign banking activities 3,176 4,455
---------- ----------
Total banking activities 15,330 16,153
Factoring activities 10,833 7,286
General corporate expenses (5,778) (6,309)
---------- ----------
Total $ 20,385 $ 17,130
========== ==========
The activities of Capital Factors contributed significantly to
improved operating results for the nine months ended September 30,
1995, compared to September 30, 1994. Total revenues derived from
factoring activities increased 30% to $25.6 million. Net interest
income at Capital Factors increased from $4.9 million to $8.4
million, reflecting primarily an increase in average interest
earning advances from $142.5 million for the nine months ended
September 30, 1994 to $181.4 million for the nine months ended
September 30, 1995. Non-interest factoring revenues increased from
$14.7 million in 1994 to $17.1 million in 1995, reflecting
commissions earned on $1.5 billion of purchased accounts receivable
in 1995, compared to $1.1 billion of purchased accounts receivable
in 1994. The increased levels of advances, purchased accounts
receivable and related revenues result from new and expanded client
relationships at Capital Factors.
Total revenues derived from the Company's domestic banking
operations increased approximately 9% in 1995, compared to 1994,
primarily due to increases of $2.6 million in net interest income
and $1.7 million in service charges and other income. Net interest
income from domestic banking activities amounted to $38.7 million
and $36.2 million for the nine months ended September 30, 1995 and
1994, respectively, reflecting higher levels of domestic earning
assets, partially offset by higher funding costs. The higher level
of revenues from domestic banking activities was offset by
increases in overdraft losses and other real estate costs of $2.7
million and $1.2 million, respectively. Additionally, based on
management's assessment of the allowance for loan losses, the
provision for domestic loan losses decreased $1.3 million, from
$3.5 million for the nine months ended September 30, 1994 to $2.2
million for the comparable period of 1995.
Total revenues derived from foreign banking activities decreased by
$186,000, reflecting an increase of $1.1 million in net interest
income, offset by a decrease of $1.2 million in non-interest
income. The higher level of net interest income reflects a 40%
increase in average earning assets. Non-interest income in 1994
included one-time securities gains of $1.2 million, resulting from
the sale of certain foreign securities. The provision for foreign
loan losses amounted to approximately $300,000 for the first nine
months of 1995, compared to a credit of approximately $1.1 million
in 1994. Through September 30, 1994 recoveries of
Page 16
- ------------------------------------------------------------------
<PAGE>
$1.5 million resulted in the credit provision. In 1995, through
September 30, recoveries amounted to $1.6 million. Potential
losses on certain Argentine loans resulted in foreign provisions of
approximately $1.8 million being recorded in the third quarter of
1995, offsetting the recoveries. As a result of these factors,
income before income taxes from foreign banking activities
decreased $1.3 million in 1995 compared to 1994. See pages 11 and
12 for additional discussion of the allowance for loan losses.
The following discussion provides additional information regarding
the consolidated results of operations.
Net Interest Income
- -------------------
The following net interest earnings analysis should be read in
conjunction with selected statistical information presented on
pages 22 and
23 .
Net interest income is the difference between interest and fees
earned on loans and investments and interest paid on deposits and
other sources of funds. Net interest income totaled $50.4 million
and $43.4 million for the nine months ended September 30, 1995 and
1994, respectively. Loan fees included in net interest income
amounted to $1.2 million and $1.4 million for the nine months ended
September 30, 1995 and 1994, respectively. Net interest income on
a fully tax-equivalent basis, including loan fees, totaled $51.4
million for the first nine months of 1995 compared to $44.7 million
for the first nine months of 1994.
Net interest income can be viewed as the product of average earning
assets and the net interest margin. Net interest income for the
first nine months ended September 30, 1995 increased $7.0 million
over the comparable period in 1994, as a result of an increase of
$19.5 million in interest income offset by an increase of $12.5
million in interest expense. Interest income and interest expense
increased primarily due to increases in average balances and
interest rates. The annualized net interest margin increased to
6.11% for the nine months ended September 30, 1995 (excluding non-
recurring interest collections) from 5.91% for the nine months
ended September 30, 1994. The increase in net interest income was
due to an increase in average interest earning assets to $1.103
billion for the nine months ended September 30, 1995 from $1.011
billion for the nine months ended September 30, 1994, increased
interest rates and the collection of past due interest which had
not been previously recorded ($975,000). The adjusted annualized
yield on average interest earning assets increased from 8.19% for
the nine months ended September 30, 1994 to 9.72% for the same
period in 1995 primarily due to higher yields on loans, accounts
receivable-advances and federal funds sold and securities purchased
under agreements to resell.
Average interest bearing liabilities increased to $857.9 million
for the first nine months of 1995 from $765.5 million for the same
period in 1994, while the annualized rate paid on these liabilities
increased to 4.64% from 3.02%. The increase in average interest
bearing liabilities occurred primarily in short and long-term
borrowings which averaged $228.8 million in 1995, compared to
$124.5 million in 1994. Capital Factors' average borrowings were
$136.7 million in 1995 compared to $34.4 million in 1994 and
account for most of the increase. Such increase reflects $125.0
million of senior certificates outstanding for nine months in 1995
compared to $100.0 million outstanding for three months in 1994.
Average interest bearing deposits declined by $11.9 million as a
result of a decrease of $62.8 million in the average savings and
money market deposits offset by an increase of $50.9 million in the
average time deposits. Substantially all of the Company's non-
deposit borrowings are floating rate or otherwise reprice in 30
days or less and were thus significantly influenced by increased
market interest rates. The higher rates paid on all liabilities
combined with the increased portion of non-deposit liabilities
resulted in the overall increase in the average rates paid on
liabilities.
The utilization rate, the ratio of average interest earning assets
to average total assets, decreased to 79.25% for
the nine months ended September 30, 1995 from
80.50% for the same period in 1994.
The utilization rate decreased primarily due to higher average non-
interest earning assets, primarily cash and due from banks and
other assets.
Provisions for Credit Losses
- ----------------------------
For the first nine months of 1995, the provision for loan losses
and the provision for doubtful accounts decreased $25,000 and
$435,000, respectively, compared to the same period in 1994. The
decrease in the provision for doubtful accounts reflects, in part,
the general improvement in asset quality at Capital Factors
, as further discussed below. The provision for loan losses in
1994 included the effects of significant foreign recoveries in the
third
Page 17
- ------------------------------------------------------------------
<PAGE>
quarter of 1994. In 1995, the level of provision for loan losses
reflect the net effects of significant domestic and foreign
recoveries, offset by higher levels of provisions for non-
performing foreign loans and potential problem domestic loans.
The provisions reflect management's judgment as to the
amounts deemed adequate to absorb potential loan
losses after evaluating the portfolio ,
current economic conditions, changes in the nature and
volume of the portfolio , past loss experience and
other pertinent factors. See disclosure of the ratio of the
allowance for loan losses to non-accrual and non-performing loans,
as well as discussion on management's basis for significant changes
and or trends in these ratios and other factors on pages 10, 11 and
12.
The adequacy of the provision for credit losses recorded by Capital
Factors is assessed by management based in part on the level of net
charge offs relative to accounts receivable purchased. These
statistics are believed to be significant indicators of inherent
losses since the receivables portfolio turns over approximately six
times each year. This assessment is supplemented by a review of
the recorded allowance for credit losses at period end and relative
to total accounts receivable at period end, taking into
consideration specific potential problem accounts, accounts
purchased with recourse where payment has not been made by Capital
Factors to its clients, and other factors which may be relevant.
For the nine months ended September 30, 1995, and the years ended
December 31, 1994 and 1993, net charge offs as a percentage of
accounts receivable purchased was .05%, .17% and .20%,
respectively. For the same periods, the percentage of provisions
for credit losses to accounts receivable purchased was .11%, .15%
and .20%, respectively. Based on these relationships, and a review
of the recorded allowance and accounts receivable at each period
end, management believes the provisions and allowance to be
adequate to absorb known and inherent losses in the accounts
receivable portfolio.
Non-Interest Income and Expense
- -------------------------------
Other income increased $3.0 million, or 9% for the nine months
ended September 30, 1995 compared to the same period in 1994. The
increase in other income primarily consisted of increases of $2.4
million in factoring revenues and $1.2 million in service charges
on deposits offset by a decrease of $1.2 million in securities
gains.
The Company, through Capital Factors, operates factoring offices in
Fort Lauderdale, Florida, Los Angeles, California, New York, New
York, and Charlotte, North Carolina. Total accounts receivable
factored amounted to $1.5 billion and $1.1 billion during the first
nine months of 1995 and 1994, respectively, representing an
increase of 30.9%. Factoring revenues, primarily representing
commissions earned on factored accounts receivable, increased 16.4%
from $14.7 million in 1994 to $17.1
million in 1995, reflecting volume growth
offset by lower commission rates earned on accounts
receivable factored. This growth is primarily attributable to
overall expansion of factoring activities.
Service charges on deposits increased 13.7% from $8.4
million in 1994 to $9.6 million
in 1995. This increase is primarily due to
the adjustment of the pricing of some services during the
second quarter of 1994.
In 1994, securities gains included the gain on the sale of certain
floating rate Argentine bonds, received in connection with a prior
Brady Plan restructuring.
Other expenses increased $7.2 million, or 14%, consisting primarily
of increases of $5.1 million in other operating expenses and $2.2
million in salary and employee benefits. The increase in other
operating expenses primarily reflects a $2.7
million provision to fully reserve for potential losses resulting
from overdrafts related to one customer (see further discussion
below) and increases of $1.2 million in other real
estate related expenses (primarily due to an increase
in provisions for potential losses).
The increase in salary and employee benefits is due to
merit increases, increased benefit costs and work force
growth. Approximately 84% of the increase in personnel costs is
attributable to expansion of Capital Factors' activities.
For the first nine months of 1995, provisions for losses on
overdrafts, totaled $3.2 million, compared to $403,000 for the
comparable period of 1994. During the first quarter of 1995,
through several related accounts, one customer created net
overdrafts of approximately $2.7 million in connection with
transactions occurring over a period of approximately two weeks.
The overdrafts resulted when checks drawn on another institution
were returned to the Bank for insufficient funds, after the
customer had made withdrawals from Capital Bank. At March 31,
1995, based on consideration of the business affairs of the
customer as well as other matters, losses were estimated at $1.4
million of the total exposure and a provision in that
Page 18
- ------------------------------------------------------------------
<PAGE>
amount was charged to expense. During the second quarter of 1995,
additional creditors asserted claims against this customer,
resulting in the customer being placed in involuntary bankruptcy.
Based on further assessment of all available information, further
provisions for losses were recorded to fully reserve for the
aggregate exposure relating to this customer of $2.7 million. The
Company has a judgement against the customer, which it has been
unable to collect, and a criminal investigation of the customer is
currently ongoing. To mitigate the risk that similar losses may
occur in the future, internal review and approval procedures were
strengthened by management. At September 30, 1995 and December 31,
1994 total overdraft balances amounted to $4.5 million and $3.9
million, respectively, and were included in loans in the
consolidated balance sheets. Management does not anticipate any
material losses associated with overdraft balances at September 30,
1995.
RESULTS OF OPERATIONS - Three Months Ended September 30, 1995 and
1994
- -----------------------------------------------------------------
The Company recorded net income of $5,024,000 or $.66 per share,
for the three months ended September 30, 1995, compared to
$4,194,000 or $.58 per share (includes effect of stock split), for
the same period in 1994. The annualized return on average assets
was 1.36% for the three months ended September 30,
1995, compared to 1.25% for the three months ended September 30,
1994. The annualized return on average stockholders' equity was
19.01% for the three months ended September 30, 1995 compared to
18.78% for the same period in 1994. The increase in income was
primarily a result of improved net interest income, higher
factoring revenue and other operating income offset by increases in
the provision for loan losses, other operating expenses and salary
and employee benefits.
Following is a summary of certain operating results of the
Company's major lines of business (in thousands of dollars). For
purposes of this summary, intercompany transactions, the most
significant of which are internal interest income and expense
allocations, have not been eliminated.
Three Months Ended
September 30,
-------------------------
1995 1994
------------ -----------
Net interest income and
non-interest income:
Domestic banking activities $ 18,792 $ 16,682
Foreign banking activities 2,135 1,996
---------- ----------
Total banking activities 20,927 18,678
Factoring activities 9,536 7,483
---------- ----------
Total $ 30,463 $ 26,161
========== ==========
Income (loss) before income taxes:
Domestic banking activities $ 6,595 $ 5,133
Foreign banking activities (665) 850
---------- ----------
Total banking activities 5,930 5,983
Factoring activities 4,255 3,216
General corporate expenses (2,053) (2,243)
---------- ----------
Total $ 8,132 $ 6,956
========== ==========
Net interest income derived from factoring activities increased
primarily due to higher levels of average earning assets.
Factoring commissions, which amounted to $6.4 million and $5.5
million for the third quarter of 1995 and 1994, respectively, also
contributed to higher factoring revenues. The higher levels of
revenues resulted in an increase in income before income taxes of
32%.
Page 19
- ------------------------------------------------------------------
<PAGE>
Net interest income derived from domestic banking activities
increased $1.6 million to $13.9 million, including $975,000 non-
recurring income related to the collection of a loan previously on
non-accrual status. Non-interest income increased by $491,000.
The provision for domestic loan losses decreased $700,000 for the
third quarter of 1995 compared to the third quarter of 1994 due to
management's assessment of the allowance at the respective period
ends. Non-interest expense increased by approximately $600,000 due
primarily to provision for losses on other real estate.
For the third quarter of 1995, the provision for foreign loan
losses amounted to approximately $1.8 million, compared to $100,000
for the same period of 1994. This increase was primarily due to an
increase in the allowance for losses on certain Argentine loans.
See pages 11 and 12 for additional discussion of the allowance for
loan losses.
The following comments provide additional information regarding the
consolidated results of operations.
Net Interest Income
- -------------------
Net interest income for the three months ended September 30, 1995
increased $2.9 million over the comparable period in 1994, as a
result of an increase of $6.8 million in interest income (primarily
in interest and fees on loans and interest on advances to factoring
clients) offset by an increase of $3.9 million in interest expense
(primarily in time deposits and long term borrowings). The
increase in interest income is primarily due to higher average
balances along with higher average yields on interest earning
assets. Interest income for the three months ended September 30,
1995 also includes $975,000 in non-recurring interest related to
the collection of a loan previously on non-accrual status.
Interest expense was higher primarily due to higher average
interest bearing liabilities and higher average rates paid. The
net interest margin for the three months ended September 30, 1995
increased to 5.97% (excluding non-recurring collections) from 5.91%
for the three months ended September 30, 1994.
Provisions for Credit Losses
- ----------------------------
For the three months ended September 30, 1995, the provision for
loan losses increased $1,550,000 while the provision for doubtful
accounts remained unchanged compared to the same period in 1994.
During the third quarter of 1994, the Company had $1.9 million in
recoveries of loans which resulted in lower loan loss provisions
compared to 1995. The provisions reflect management's judgment as
to the amount deemed adequate to absorb potential loan and
receivable losses in the respective portfolios after evaluating the
portfolios, current economic conditions, changes in the nature and
volume of the portfolios, past loss experience and other pertinent
factors.
Non-Interest Income and Expense
- -------------------------------
Other income increased $1.4 million, or 13% for the three months
ended September 30, 1995 compared to the same period in 1994. The
increase in other income primarily consisted of increases of
$938,000 in factoring revenues and $620,000 in other operating
income. Factoring revenue increased due to expansion of factoring
activities. The increase in other operating income primarily
relates to contract termination payments of $732,000 received upon
data processing conversion.
Other expenses increased $1.6 million, or 9% for the three months
ended September 30, 1995 compared to the same period in 1994. The
increase consisted primarily of increases of $874,000 in other
operating expenses and $603,000 in salary and employee benefits.
Other operating expenses increased primarily in other real estate
expenses due to increased provisions for potential losses. Salary
and employee benefits were higher due to merit increases, workforce
growth and increased benefit costs.
LITIGATION
- ----------
The Company and certain of its present and former directors and
officers are defendants in two lawsuits, one of which is a
shareholder derivative suit. Such suits allege that certain of the
defendants engaged in improper and illegal activities. No monetary
relief is sought from the Company other than costs in the non-
derivative action. The Company does not believe that the outcome
of the foregoing litigation will have a material adverse effect on
the consolidated financial condition or results of operations of
the Company.
Page 20
- ------------------------------------------------------------------
<PAGE>
In addition to these lawsuits, various legal
actions and proceedings are pending or are threatened
against the Company, Capital Bank and Capital Factors, some of
which seek relief or damages in amounts that are substantial.
These actions or proceedings arose in the ordinary course
of business. Due to the complex nature of some of these
matters, it may be a number of years before they are
ultimately resolved. After consultation with
legal counsel, management believes the aggregate
liability, if any, to the Company, the Bank and/or Capital
Factors resulting from such pending or threatened actions
and proceedings will not have a material adverse effect on the
Company's consolidated financial condition , results of
operations or liquidity .
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Statement of Financial Accounting Standards ("SFAS") No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures," is effective for fiscal years
beginning after December 15, 1994. This Statement requires that
certain impaired loans be measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or at the observable market price or the fair value
of collateral if the loan is collateral dependent. Adoption of
this Statement did not have a significant impact on the Company's
consolidated financial position or results of operations.
IMPACT OF INFLATION AND CHANGING PRICES
- ---------------------------------------
The impact of inflation on the Company is reflected primarily in
the increased costs of operations. These increased costs are
generally passed on to customers in the form of increased service
fees. Since the primary assets and liabilities of the Company are
monetary in nature, the impact of inflation on interest rates has
had, and is expected to continue to have, an effect on net income.
In structuring fees, negotiating loan margins and developing
customer relationships, management concentrates its efforts on
maximizing earnings capacity while attempting to contain increases
in operating expenses. In addition, management continually reviews
the feasibility of new and additional fee-generating services to
offset the effects of inflation and changing prices with an
objective of increasing earnings.
Page 21
- ------------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND
SUBSIDIARIES
SELECTED
STATISTICAL INFORMATION
(All Dollar Amounts
in Thousands)
<CAPTION>
For the
Nine Months Ended September 30,
- -----------------------------------------------------------------
- --------------
1995
1994
---------------------------------
-------------------------------------
Average
Average
Average Yield
Average Yield
Balance Interest* Or Rate*
Balance Interest* Or Rate*
---------- -------- --------
--------- --------- --------
<S> <C> <C> <C>
<C> <C> <C>
ASSETS
- ------
Interest earning assets:
Loans, net of unearned income:
U.S. borrowers $ 529,127 $ 40,489 10.23%
$ 464,753 $ 31,729 9.13%
Foreign borrowers 124,055 7,626 8.22%
88,230 4,144 6.28%
Tax-exempt 20,198 2,463 16.31%
26,766 3,149 15.73%
---------- ----------
----------- ---------
Total loans 673,380 50,578 10.04%
579,749 39,022 9.00%
Accounts receivable
advances-factoring
subsidiary, net of due to
clients 181,361 17,920 13.21%
142,453 11,498 10.79%
Securities:
Taxable 205,586 9,497 6.18%
196,110 8,426 5.74%
Tax-exempt 3,451 274 10.62%
4,401 350 10.65%
Federal funds sold and
securities purchased under
agreement to resell 39,391 1,945 6.60%
88,090 2,647 4.02%
---------- ----------
---------- ---------
Total interest earning
assets 1,103,169 80,214 9.72%
1,010,803 61,943 8.19%
---------- ----------
---------- ---------
Less allowance for loan losses
and doubtful accounts (12,912)
(15,925)
Cash and due from banks 103,730
74,576
Due from customers on acceptances 27,915
29,712
Other real estate 11,856
13,941
Other assets 158,293
142,499
----------
----------
Total assets $1,392,051
$1,255,606
==========
==========
</TABLE>
* Yield and interest on tax-exempt loans and securities
have been adjusted to reflect tax-equivalent basis.
Loan fees are included in interest.
Non-accrual loans are
included in interest-earning loans for purposes of
calculating average yields. Yield and interest on loans
to U.S. borrowers exclude $975,000 in interest income relating
to the payoff of a loan which was previously on non-accrual
status.
Page 22
- ------------------------------------------------------------------
<PAGE>
<TABLE>
CAPITAL BANCORP AND
SUBSIDIARIES
SELECTED STATISTICAL
INFORMATION
(All Dollar Amounts
in Thousands)
<CAPTION>
For the Nine Months Ended September 30,
- -----------------------------------------------------------------
- -------
1995 1994
- ------------------------------------
- --------------------------------
Average Average
Average
Yield Average Yield
Balance
Interest* Or Rate* Balance Interest* Or Rate*
---------
- -------- ------- --------- --------- --------
<S> <C> <C>
<C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Deposits:
Savings and money market $ 296,193 $
5,133 2.32% $ 358,999 $ 5,105 1.90%
Time 332,937
13,223 5.31% 282,079 7,836 3.71%
----------
- --------- ---------- ---------
Total interest bearing deposits 629,130
18,356 3.90% 641,078 12,941 2.70%
----------
- --------- ---------- ---------
Federal funds purchased and short-term
borrowings:
Domestic banks --
-- -- 87 2 3.01%
Short-term borrowings 90,189
3,526 5.23% 87,814 2,585 3.94%
----------
- --------- ---------- --------
90,189
3,526 5.23% 87,901 2,587 3.93%
----------
- --------- ---------- --------
Long-term borrowings 138,570
7,907 7.63% 36,568 1,753 6.41%
----------
- --------- ---------- --------
Total interest bearing liabilities 857,889
29,789 4.64% 765,547 17,281 3.02%
----------
- --------- ---------- --------
Non-interest bearing deposits 289,431
271,840
Bank acceptances outstanding 27,915
29,712
Other liabilities 117,332
102,045
Stockholders' equity 99,484
86,462
----------
----------
Total liabilities and stockholders'
equity $1,392,051
$1,255,606
==========
==========
Net interest earnings/yield
$50,425 6.11% $44,662 5.91%
======= ===== ======= =====
Net interest spread
5.08% 5.17%
===== =====
Utilization rate
79.25% 80.50%
===== =====
</TABLE>
*See previous page for explanation.
Page 23
- ------------------------------------------------------------------
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
AGUSTIN CORDERO, OLD CUTLER BAY DEVELOPMENT CORPORATION ET AL.
V.
CAPITAL BANK ET AL., 11TH JUDICIAL CIRCUIT, DADE COUNTY, FLORIDA,
CIV. ACTION 95-010662 (CA 23-DONNER)
Since the date of the June 10-Q, the Bank filed a motion to
dismiss which was granted on November 9, 1995, without prejudice,
allowing the plaintiffs 30 days to amend the complaint.
OTHER LITIGATION
- ----------------
The Company and certain of its present and former directors and
officers are defendants in the following lawsuits, one of which is
a shareholder derivative suit:
NATHAN J. ESFORMES, STANLEY I. WORTON, M.D., AND LEONARD WIEN, AS
INDIVIDUAL SHAREHOLDERS AND ON BEHALF OF ALL OTHER SHAREHOLDERS OF
CAPITAL BANCORP V. ABEL HOLTZ, FANA HOLTZ, DANIEL M. HOLTZ, JAVIER
J. HOLTZ, CAPITAL BANK AND CAPITAL BANCORP, CIRCUIT COURT FOR THE
11TH JUDICIAL DISTRICT IN AND FOR DADE COUNTY, FLORIDA CASE NO. 95-
02515.
STANLEY I. WORTON, M.D. V. ABEL HOLTZ, FANA HOLTZ, DANIEL HOLTZ,
ALEX HALBERSTEIN AND CAPITAL BANCORP, CIRCUIT COURT OF THE 11TH
JUDICIAL DISTRICT IN AND FOR DADE COUNTY, FLORIDA CASE NO. 95-
02520-CA-09.
Such suits allege that certain of the defendants
engaged in
improper and illegal activities. The plaintiffs are seeking
unspecified monetary damages, including treble damages, reasonable
costs and attorney's fees, and certain injunctive relief. No
monetary relief is sought from the Company other than costs in the
non-derivative action. The Company does not believe that the
outcome of the foregoing litigations will have a material adverse
effect on the financial condition or results of operations of the
Company.
The Company has not determined whether, if asked, it will indemnify
the directors and former directors named in these lawsuits if the
plaintiffs are successful. However, the Company is currently
advancing the legal expenses of the outside directors who were
named as defendants, who have agreed to repay such amounts if they
are ultimately found not to be entitled thereto pursuant to
applicable law.
In addition to the matter set forth above, various
legal actions and proceedings are pending or are threatened against
the Company, Capital Bank and Capital Factors, some of which seek
relief or damages in amounts that are substantial. These actions
or proceedings arose in the ordinary course of business. Due to
the complex nature of some of these matters, it may be a number of
years before they are ultimately resolved. After consultation with
legal counsel, management believes the aggregate liability, if any,
to the Company, the Bank and/or Capital Factors resulting from such
pending or threatened actions and proceedings will not have a
material adverse effect on the Company's consolidated financial
condition , results of operations or liquidity .
Item 5. Other Information
- ---------------------------
As of February 14, 1996 , Daniel Holtz, Chairman of
the Board, President and Chief Executive Officer
of the Company, Fana Holtz,
the Vice - Chairman of the Board, and Javier Holtz,
a director of Capital Bank owned and/or had the power to
vote approximately 7%, 40%, 4% (51% in the
aggregate) , respectively, of the Company's
Common Stock (including shares of Common Stock subject to
options exercisable by such individuals within 60 days).
Fana Holtz, Daniel Holtz , and
Javier Holtz have advised the Company that they
have been in discussions with the Florida Department of Banking
and Finance (the "FDBF") as to whether one or more of them was
required under Florida law to file an application to acquire and/or
maintain a controlling interest in Capital Bank through their
ownership and control of the Company. As a result of those
discussions, Fana Holtz, Daniel Holtz and Javier Holtz have advised
the Company that they, both individually and as a group, have
voluntarily filed an application to acquire and/or
Page 24
- ------------------------------------------------------------------
<PAGE>
maintain a controlling interest in the Company , although
they do not believe such an application is legally required
. Fana Holtz, Daniel Holtz and Javier Holtz are also
having discussions with the Board of Governors of the
Federal Reserve System (the "FRB") as to
whether a control filing is required under federal law. The
plaintiffs in the first two legal proceedings
described above and one other shareholder have
filed a Notice of Intent to Appear and
Petition for a Formal Administrative Hearing with the
FDBF in connection with the
disposition of the Florida application. It
cannot presently be determined what effect, if any,
the FDBF's action on the application and
the discussions with the FRB will
have on the Company.
Page 25
- ------------------------------------------------------------------
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit 11 - Calculation of Earnings Per Share - Page
28
Exhibit 27 - Financial Data Schedule
(b) No Current Reports on Form 8-K were filed by the Company
during the quarter ended September 30, 1995.
Page 26
- ------------------------------------------------------------------
<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.
Date: February 22, 1996 By: /s/ Lucious T. Harris
-------------------------
LUCIOUS T. HARRIS
Senior Vice President and
Treasurer
(Principal Financial and
Accounting Officer)
Page 27
- ------------------------------------------------------------------
<PAGE>
EXHIBIT 11
<TABLE>
CAPITAL BANCORP AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
<CAPTION>
Nine Months Ended
September 30,
-------
Primary 1995 1994
- ------- ---- ----
<S> <C> <C>
Weighted average number of
common shares outstanding 7,167,449 6,937,655
Common equivalent shares
outstanding - options 426,692 236,914
----------- -----------
Total common and common
equivalent shares outstanding 7,594,141 7,174,569
=========== ===========
Net income $12,685,000 $10,700,000
=========== ===========
Primary earnings per share $ 1.67 $ 1.49
=========== ===========
Fully diluted
- -------------
Weighted average number of
common shares outstanding 7,167,449 6,937,655
Common equivalent shares
outstanding - options 715,202 236,914
----------- -----------
Total common and common
equivalent shares outstanding 7,882,651 7,174,569
=========== ===========
Net income $12,685,000 $10,700,000
=========== ===========
Fully diluted earnings per share $ 1.61 $ 1.49
=========== ===========
Threee Months Ended
September 30,
-------
Primary 1995 1994
- ------- ---- ----
Weighted average number of
common shares outstanding 7,186,217 6,986,036
Common equivalent shares
outstanding - options 449,941 216,892
----------- -----------
Total common and common
equivalent shares outstanding 7,636,158 7,202,928
=========== ===========
Net income $ 5,024,000 $ 4,194,000
=========== ===========
Primary earnings per share $ .66 $ .58
=========== ===========
Fully diluted
- -------------
Weighted average number of
common shares outstanding 7,186,217 6,986,036
Common equivalent shares
outstanding - options 496,749 216,892
----------- -----------
Total common and common
equivalent shares outstanding 7,682,966 7,202,928
=========== ===========
Net income $ 5,024,000 $ 4,194,000
=========== ===========
Fully diluted earnings per share $ .65 $ .58
=========== ===========
</TABLE>
Page 28
- ------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 112,985
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 56,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 137,007
<INVESTMENTS-CARRYING> 76,599
<INVESTMENTS-MARKET> 77,489
<LOANS> 695,254
<ALLOWANCE> 12,590
<TOTAL-ASSETS> 1,519,006
<DEPOSITS> 965,476
<SHORT-TERM> 74,012
<LIABILITIES-OTHER> 25,738
<LONG-TERM> 176,650
0
0
<COMMON> 7,336
<OTHER-SE> 100,304
<TOTAL-LIABILITIES-AND-EQUITY> 1,519,006
<INTEREST-LOAN> 50,690
<INTEREST-INVEST> 9,675
<INTEREST-OTHER> 19,865
<INTEREST-TOTAL> 80,230
<INTEREST-DEPOSIT> 18,356
<INTEREST-EXPENSE> 29,789
<INTEREST-INCOME-NET> 50,441
<LOAN-LOSSES> 4,100
<SECURITIES-GAINS> 12
<EXPENSE-OTHER> 60,325
<INCOME-PRETAX> 20,385
<INCOME-PRE-EXTRAORDINARY> 20,385
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,685
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.61
<YIELD-ACTUAL> 6.11
<LOANS-NON> 6,494
<LOANS-PAST> 751
<LOANS-TROUBLED> 8,471
<LOANS-PROBLEM> 6,296
<ALLOWANCE-OPEN> 9,210
<CHARGE-OFFS> 2,033
<RECOVERIES> 2,963
<ALLOWANCE-CLOSE> 12,590
<ALLOWANCE-DOMESTIC> 9,300
<ALLOWANCE-FOREIGN> 2,200
<ALLOWANCE-UNALLOCATED> 1,090
</TABLE>
