<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995 Commission File No. 010950
-------------
U.S.B. HOLDING CO., INC.
------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3197969
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 DUTCH HILL ROAD, ORANGEBURG, NEW YORK 10962
-----------------------------------------------
(Address of principal executive office with zip code)
914-365-4600
------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT AUGUST 2, 1995
----- -----------------------------
Common stock, par value
$5 per share 2,777,883
<PAGE>
U.S.B. HOLDING CO., INC.
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CONDITION AS
OF JUNE 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED) 1
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED) 2
CONSOLIDATED STATEMENTS OF INCOME FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED) 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1995 AND
1994 (UNAUDITED) 6
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY FOR THE SIX MONTHS
ENDED JUNE 30, 1995 (UNAUDITED) 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 15
PART II. OTHER INFORMATION AND SIGNATURES 21
<PAGE>
-1-
PART I - FINANCIAL INFORMATION
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
-------- -----------
(000's Except Share Data)
<S> <C> <C>
ASSETS
Cash and due from banks $ 24,705 $ 19,464
Federal funds sold 12,500 5,001
-------- --------
Cash and cash equivalents 37,205 24,465
Interest-bearing deposits in other banks and
other temporary investments 2,463 1,186
Securities:
Available for sale at fair value 110,963 75,944
Held to maturity (fair value $138,354
in 1995 and $143,961 in 1994) 137,382 149,580
Loans held for sale 1,833 3,272
Loans, net of allowance for loan losses of
$3,569 in 1995 and $3,320 in 1994 349,234 326,978
Premises and equipment, net 10,778 10,794
Accrued interest receivable 5,122 4,385
Other real estate owned (OREO) 39 544
Other 4,599 5,455
-------- --------
TOTAL ASSETS $659,618 $602,603
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand deposits $ 80,906 $ 78,585
Interest-bearing deposits:
Money Market 58,858 71,200
Savings 135,776 116,404
NOW 41,498 39,777
Time 276,275 237,896
-------- --------
Total deposits 593,313 543,862
Accrued interest payable 1,728 1,108
Accrued expenses and other liabilities 1,503 1,614
Federal funds purchased and Federal Home
Loan Bank advances 18,500 15,900
Long-term debt qualifying as regulatory capital - 1,800
-------- --------
Total liabilities 615,044 564,284
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, no par value; authorized
shares 100,000; outstanding shares:
37,500 3,750 3,750
Common stock, $5 par value; 7,000,000
shares authorized and issued shares of
2,855,961 in 1995 and 2,535,400 in 1994 14,280 12,677
Additional paid-in capital 18,535 12,452
Retained earnings 9,189 13,180
Treasury stock, 86,316 shares (1,075) (1,075)
Unrealized loss on available for sale
securities, net of tax (105) (2,665)
-------- --------
Total stockholders' equity 44,574 38,319
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $659,618 $602,603
-------- --------
-------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
-2-
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30 June 30
1995 1994
-------- --------
(000's Except Share Data)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 8,131 $ 6,659
Interest on Federal funds sold 181 28
Interest and dividends on securities:
U.S. Treasury and Government agencies 2,563 1,604
Obligations of states and political
subdivisions 863 878
Corporate and other 307 416
Interest on deposits in other banks and
other temporary investments 41 10
Dividends on Federal Home Loan Bank stock 40 43
-------- --------
Total interest income 12,126 9,638
-------- --------
INTEREST EXPENSE:
Interest on deposits 5,751 3,577
Interest on Federal funds purchased and Federal
Home Loan Bank advances 211 174
Interest on long-term debt 22 34
-------- --------
Total interest expense 5,984 3,785
-------- --------
NET INTEREST INCOME: 6,142 5,853
Provision for loan losses 225 160
-------- --------
Net interest income after provision for
loan losses 5,917 5,693
-------- --------
NON-INTEREST INCOME:
Gain (loss) on securities transactions - net 41 (100)
Loss on loans held for sale - net - (125)
Service charges and fees 653 653
Other income 240 230
-------- --------
Total non-interest income 934 658
-------- --------
NON-INTEREST EXPENSES:
Salaries 1,491 1,298
Employee benefits 624 643
Occupancy and equipment expense 801 663
Advertising and business development 245 169
Professional fees 286 147
Communications 137 131
Stationery and printing 76 74
FDIC insurance 304 267
Other 656 380
-------- --------
Total non-interest expenses 4,620 3,772
-------- --------
Income before income taxes 2,231 2,579
Provision for income taxes 731 824
-------- --------
NET INCOME $ 1,500 $ 1,755
-------- --------
NET INCOME PER COMMON AND COMMON EQUIVALENT
SHARE $ .50 $ .63
-------- --------
<PAGE>
-3-
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 2,850,680 2,652,653
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
-4-
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30 June 30
1995 1994
-------- -------
(000's Except Share Data)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $15,847 $12,787
Interest on Federal funds sold 454 50
Interest and dividends on securities:
U.S. Treasury and Government agencies 4,893 3,298
Obligations of states and political
subdivisions 1,749 1,745
Corporate and other 616 804
Interest on deposits in other banks and
other temporary investments 66 21
Dividends on Federal Home Loan Bank stock 81 86
-------- --------
Total interest income 23,706 18,791
-------- --------
INTEREST EXPENSE:
Interest on deposits 11,161 6,811
Interest on Federal funds purchased and Federal
Home Loan Bank advances 396 259
Interest on long-term debt 64 63
-------- --------
Total interest expense 11,621 7,133
-------- --------
NET INTEREST INCOME: 12,085 11,658
Provision for loan losses 425 295
-------- --------
Net interest income after provision for
loan losses 11,660 11,363
-------- --------
NON-INTEREST INCOME:
Gain (loss) on securities transactions - net (16) 72
Gain (loss) on loans held for sale - net 14 (360)
Service charges and fees 1,297 1,302
Other income 488 395
-------- --------
Total non-interest income 1,783 1,409
-------- --------
NON-INTEREST EXPENSES:
Salaries 2,965 2,548
Employee benefits 1,272 1,345
Occupancy and equipment expense 1,577 1,364
Advertising and business development 433 303
Professional fees 471 295
Communications 283 257
Stationery and printing 148 120
FDIC insurance 607 533
Other 1,047 697
-------- --------
Total non-interest expenses 8,803 7,462
-------- --------
Income before income taxes 4,640 5,310
Provision for income taxes 1,440 1,713
-------- --------
-------- --------
NET INCOME $ 3,200 $ 3,597
-------- --------
-------- --------
NET INCOME PER COMMON AND COMMON EQUIVALENT
SHARE $ 1.08 $ 1.30
-------- --------
-------- --------
<PAGE>
-5-
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 2,826,746 2,645,628
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
-6-
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30 June 30
1995 1994
--------- --------
(000's)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,200 $ 3,597
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 425 295
Depreciation and amortization 738 642
Amortization/accretion of premiums/discounts on
securities - net 54 519
Loss (gain) on securities transactions - net 16 (72)
(Gain) loss on loans held for sale - net (14) 360
Origination of loans held for sale (1,235) (12,041)
Proceeds from sales of loans held for sale 2,674 10,366
Increase in accrued interest receivable (737) (370)
Other - net 7 (199)
-------- --------
Net cash provided by operating activities 5,128 3,097
-------- --------
INVESTING ACTIVITIES:
Proceeds from sales of securities available
for sale 32,155 34,612
Proceeds from sales of securities held to
maturity 260 -
Proceeds from principal paydowns and maturities
of securities available for sale 10,607 22,643
Proceeds from maturities of securities held to
maturity 14,327 23,720
Purchases of securities available for sale (73,912) (25,683)
Purchases of securities held to maturity (2,401) (57,232)
Net decrease (increase) in interest bearing
deposits in other banks and other temporary
investments (1,277) 397
Loans originated, net of principal collections (22,516) (47,121)
Loans purchased (350) -
Purchases of premises and equipment - net (679) (432)
Proceeds from sales of OREO 652 1,094
-------- --------
Net cash used for investing activities (43,134) (48,002)
-------- --------
FINANCING ACTIVITIES:
Net increase in non-interest bearing deposits,
NOW, money market and savings accounts 11,072 22,284
Increase in time deposits, net of withdrawals
and maturities 38,379 24,148
Net (decrease) increase in Federal funds
purchased and Federal Home Loan advances -
short-term (2,400) 7,750
Proceeds from Federal Home Loan Bank advance -
long-term 5,000 -
Redemption of long-term debt qualifying as
regulatory capital (1,800) -
Cash dividends paid (730) (928)
Proceeds from issuance of common stock 1,225 628
-------- --------
Net cash provided by financing activities 50,746 53,882
-------- --------
<PAGE>
-7-
Six Months Ended
June 30 June 30
1995 1994
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 12,740 8,977
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,465 14,439
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,205 $ 23,416
-------- --------
-------- --------
Supplemental Disclosures:
Interest paid $ 11,001 $ 6,925
-------- --------
Income tax payments $ 1,628 $ 2,333
-------- --------
Transfer of assets to OREO $ 199 $ 469
-------- --------
Loans securitized into mortgage-backed
securities $ - $ 14,064
-------- --------
Unrealized gain (loss) on available for sale
securities - net of ($1,368) and $724 in
deferred tax assets in 1995 and 1994,
respectively. $ 2,560 $ (1,344)
-------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
-8-
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (000's except share data)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Common Common Preferred Additional on Available
Shares Stock Stock Paid-In Retained Treasury for Sale
Outstanding $5 Par No Par Capital Earnings Stock Securities
----------- ------ --------- ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1,
1995 2,449,084 $12,677 $3,750 $12,452 $13,180 $(1,075) $(2,665)
Net income 3,200
Cash dividends:
Common stock
($.23 per
share) (572)
Preferred
stock (158)
Common stock
issued:
Incentive
stock
options
exercised
($6.92 to
$23.00 per
share) 38,610 193 299
Directors'
stock
option
exercised
($9.95 per
share) 3,650 18 18
10% stock
dividend 250,525 1,253 5,198 (6,461)
Dividend
Reinvest-
ment Plan 27,776 139 568
Change in un-
realized loss
on available
for sale
securities,
net of tax
effect 2,560
----------- ------- ------ ------- ------- ------- -------
Balance at
June 30,
1995 2,769,645 $14,280 $3,750 $18,535 $ 9,189 $(1,075) $ (105)
----------- ------- ------ ------- ------- ------- -------
----------- ------- ------ ------- ------- ------- -------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
-9-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION
In 1983, U.S.B. Holding Co., Inc. (the Company) issued on a one-for-one
basis, its common stock in exchange for all of the outstanding stock in
Union State Bank (the Bank), the Company's principal subsidiary. The
financial statements include the accounts of the Company and its
wholly-owned banking subsidiaries (the Banks), Union State Bank and Royal
Oak Savings Bank F.S.B. (Royal) and its non-bank subsidiary, Ad Con, Inc.
All significant intercompany accounts and transactions are eliminated in
consolidation.
2. RECLASSIFICATIONS
Certain reclassifications have been made to prior year accounts to conform
to the current year presentation.
3. BASIS OF PRESENTATION
In the opinion of Management, the accompanying unaudited consolidated
financial statements include all adjustments (comprising only normal
recurring accruals) necessary to present fairly the financial position of
the Company as of June 30, 1995, the results of operations for the three and
six month periods ended June 30, 1995 and 1994, cash flows for the six month
periods then ended, and changes in stockholders' equity for the six months
ended June 30, 1995. A summary of the Company's significant accounting
policies is set forth in Note l to the Consolidated Financial Statements in
the Company's 1994 Annual Report to Shareholders.
4. ACCOUNTING FOR IMPAIRMENT OF A LOAN
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures," which was
adopted by the Company as of January 1, 1995, requires recognition of an
impairment of a loan when it is probable that either principal and/or
interest would not be collectible in accordance with the terms of the loan
agreement. Measurement of the impairment is based on the present value of
expected cash flows discounted at the loan's effective rate or, as a
practical expedient, at the loan's observable market price or the fair value
of the collateral if the loan is collateral-dependent. The impact on the
Company's books as a result of the implementation of SFAS 114 was not
material. Prior to 1995, the allowance for credit losses related to
impaired loans was based on undiscounted cash flows or the fair value of the
collateral for collateral-dependent loans. The Company primarily uses the
cash basis method to recognize interest income on loans that are impaired.
At June 30, 1995, the recorded investment in loans that are considered to be
impaired under SFAS 114 approximated $4.0 million (of which $3.6 million
were in non-accrual status). Each impaired loan has a related allowance for
credit losses determined in accordance with this statement. The total
allowance for credit losses related to impaired loans was $710,000 as of
June 30, 1995. The average recorded investment in impaired loans for the
three and six month periods ended June 30, 1995 were approximately $4.0
million. For the three and six month periods ended June 30, 1995, interest
income recognized by the Company on impaired loans was not material.
<PAGE>
-10-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5. SECURITIES AND LOANS HELD FOR SALE
As of January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which had an after-tax
effect of an increase to stockholders' equity of $919,000, and revised its
securities accounting policy. Securities that may be sold as part of the
Company's asset/liability or liquidity management, or in response to or in
anticipation of changes in interest rates and resulting prepayment risk, or
for other similar factors, were classified as available for sale and carried
at fair value. Securities that the Company has the ability and positive
intent to hold to maturity are classified as held to maturity and carried at
amortized cost.
Realized gains and losses on the sales of all securities are reported in
earnings. Unrealized gains and losses on available for sale securities are
shown, net of taxes, as a separate component of stockholders' equity. At
June 30, 1995 and December 31, 1994, the effect of SFAS No. 115 was a
reduction of securities by $173,000 and $4,101,000, respectively, which
after the applicable tax effect, resulted in a reduction to stockholders'
equity of $105,000 and $2,665,000, respectively, representing the net
unrealized loss.
The decision to sell available for sale securities is based on management's
assessment of changes in economic or financial market conditions, interest
rate risk, and the Company's financial position and liquidity. Fair values
for securities are based on quoted market prices, where available. If
quoted market prices are not available, fair values are based on quoted
market prices of comparable instruments.
The Banks do not acquire securities for the purpose of engaging in trading
activities.
A summary of the amortized cost, and fair value of securities and related
gross unrealized gains and losses at June 30, 1995 and December 31, 1994,
follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
(000's)
Gross Gross
Amortized Unrealized Unrealized Fair
As of June 30, 1995: Cost Gains Losses Value
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury and Govern-
ment agencies $ 39,046 $ 406 $ 24 $ 39,428
Obligations of states
and political sub-
divisions 3,066 34 11 3,089
Other 524 12 - 536
Mortgage-backed
securities 68,500 210 800 67,910
-------------------------------------------------------------------------
Total available for sale
securities $111,136 $ 662 $ 835 $110,963
-------------------------------------------------------------------------
</TABLE>
<PAGE>
-11-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5. SECURITIES AND LOANS HELD FOR SALE (Cont'd)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HELD TO MATURITY:
U.S. Treasury and Govern-
ment agencies $ 3,500 $ - $ 140 $ 3,360
Obligations of states
and political sub-
divisions 65,033 1,547 350 66,230
Corporate bonds 13,390 370 - 13,760
Other 639 2 - 641
Mortgage-backed
securities 54,820 330 787 54,363
--------------------------------------------------------------------------
Total securities held to
maturity $137,382 $2,249 $1,277 $138,354
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(000's)
Gross Gross
Amortized Unrealized Unrealized Fair
As of December 31, 1994: Cost Gains Losses Value
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury and Govern-
ment agencies $ 25,135 $ 10 $ 302 $ 24,843
Obligations of states
and political sub-
divisions 2,000 15 - 2,015
Other 582 8 14 576
Mortgage-backed
securities 52,328 5 3,823 48,510
--------------------------------------------------------------------------
Total available for sale
securities $ 80,045 $ 38 $4,139 $ 75,944
--------------------------------------------------------------------------
HELD TO MATURITY:
U.S. Treasury and Govern-
ment agencies $ 4,500 $ - $ 490 $ 4,010
Obligations of states
and political sub-
divisions 73,116 274 1,515 71,875
Corporate bonds 14,347 105 184 14,268
Other 670 2 - 672
Mortgage-backed
securities 56,947 48 3,859 53,136
--------------------------------------------------------------------------
Total securities held to
maturity $149,580 $ 429 $6,048 $143,961
--------------------------------------------------------------------------
</TABLE>
Residential fixed rate real estate loans held for sale, had an aggregate
cost of $2,696,000 and $3,770,000, with a market value of $2,690,000 and
$3,695,000 at June 30, 1995 and December 31, 1994, respectively. These
loans held for sale, included commitments which had not yet closed as of
that date.
<PAGE>
-12-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. COMMON STOCK, ADDITIONAL PAID-IN CAPITAL, FEDERAL HOME LOAN BANK ADVANCES,
LONG-TERM DEBT QUALIFYING AS CAPITAL AND NET INCOME PER COMMON SHARE DATA
The Bank had $10.0 million of term advances outstanding with the Federal
Home Loan Bank of New York at June 30, 1995. An advance of $5.0 million has
a final maturity of November 15, 1999, with options to prepay without
penalty in whole or in part on November 14, 1995 and semiannually
thereafter. The advance has an interest rate adjusting monthly to 20 basis
points over the one month London Inter-Bank Offer Rate (LIBOR) rate. The
interest rate at June 30, 1995 was 6.27%. An additional advance of $5.0
million was taken on June 22, 1995 at a fixed rate of 6.2% for the entire
term. This advance matures on June 22, 1998.
At June 30, 1995, Royal had outstanding term advances with the Federal Home
Loan Bank of Atlanta in the amount of $8,500,000 with maturities and
interest rates as follows:
<TABLE>
<CAPTION>
Advance Amount Interest Rate Maturity Date
-------------- ------------- -------------
<S> <C> <C>
$1,000,000 6.38% July 12, 1995
3,000,000 6.26 July 26, 1995
2,500,000 6.38 August 25, 1995
1,000,000 6.64 October 2, 1995
1,000,000 6.57 October 6, 1995
</TABLE>
Advances of the Banks are collateralized by stock in the Federal Home Loan
Banks of New York and Atlanta and by certain mortgage loans under a blanket
lien agreement.
The dividend rate on the Company's Series "A" preferred stock issued to a
single investor is determined quarterly and is subject to certain minimum
and maximum per annum dividend rates as specified in the agreement. For the
three and six month periods ended June 30, 1995 and 1994, the weighted
average dividend rates were 8.4% (the minimum rate) for each period. Net
income per common share reflects the preferred stock dividends declared and
accrued totalling $79,000 and $158,000 for each three and six month period
ended June 30, 1995 and 1994, respectively.
In December 1993, the Company implemented a Dividend Reinvestment Plan. The
Plan allows stockholders to invest cash dividends in shares of the Company's
common stock at fair value and in the third quarter of 1994, a stock
purchase feature was added to allow stockholders to purchase common stock at
fair value up to $2,500 per quarter. As of June 30, 1995, 200,000 shares of
common stock are reserved for issuance in connection with the Plan, of which
75,592 shares have been issued.
On May 17, 1995, the Company declared a 10% stock dividend to shareholders
of record, June 15, 1995, distributable July 1, 1995. In addition, the
quarterly cash dividend to shareholders was increased to $.12 per share,
payable to shareholders of record June 30, 1995, on July 14, 1995.
Shares granted but not yet issued under the Company's stock option plans are
considered common stock equivalents for earnings per share calculations;
however, these options had a minor dilutive effect (less than 3%) for the
three and six month periods ended June 30, 1994 and, therefore, are not
reflected in the earnings per share computation for that period. During
<PAGE>
-13-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
6. COMMON STOCK, ADDITIONAL PAID-IN CAPITAL, FEDERAL HOME LOAN BANK ADVANCES,
LONG-TERM DEBT QUALIFYING AS CAPITAL AND NET INCOME PER COMMON SHARE DATA
(Cont'd)
1995, the dilutive effect of stock options granted has been greater than 3%.
Net income per common share is based on net income after preferred stock
dividend requirements and the weighted average number of common shares
outstanding and, in 1995, common equivalent shares, adjusted for common
stock dividends.
The Company and its subsidiaries' ability to pay cash dividends in the
future are restricted by various regulatory requirements. The Company's
ability to pay cash dividends to its shareholders is primarily dependent
upon the receipt of dividends from the Banks. The Bank's dividends to the
Company may not exceed the sum of the Bank's net income for that year and
its undistributed net income for the preceding two years, less any required
transfers to paid-in capital. Royal may pay dividends to the Company, upon
30-day notice to the OTS, if it continues to meet its fully-phased-in
capital requirements, in an amount that would not reduce its surplus capital
ratio by more than one-half at the beginning of the year, plus all of its
net income determined on the basis of generally accepted accounting
principles for that calendar year. Royal must continue to meet all
fully-phased-in capital requirements after the proposed capital
distribution.
The Company issued $1,700,000 in 1991 ($200,000 repaid in July 1993) and
$300,000 in 1992 of the $2.0 million Series "A" subordinated notes
authorized by the Company, to other banking and credit institutions, and
individual investors. These notes, which qualified currently as 80% Tier II
capital under risk-based capital guidelines, were prepaid by the Company in
May, 1995 at face value plus accrued interest. The notes, which paid
interest at a floating rate of prime plus one-half percent, had a weighted
average interest rate of 9.39% for the period of January 1, 1995 through May
17, 1995 (the date the notes were prepaid).
7. COMMITMENTS AND CONTINGENCIES
At June 30, 1995, the Bank was committed under an employment agreement with
a key officer, director and shareholder requiring annual salary and other
payments of $340,000, increasing annually by $30,000 during the term of the
contract, annual stock option grants of 22,000 shares (adjusted for stock
dividend), issued at fair value at the date of grant and other benefits for
the term of the contract expiring July 1, 1999.
During the six month period ended June 30, 1995, the Bank sold in the
secondary market for cash, mortgage loans with net proceeds totalling $2.7
million. During the six months ended June 30, 1995, no fixed rate
residential mortgages were swapped with the Federal Home Loan Mortgage
Corporation (FHLMC) by the Banks for guaranteed participation certificates
in residential mortgage pools.
At June 30, 1995, the principal balance of the loans sold and exchanged with
the FHLMC which remain uncollected approximated $118.8 million. The Banks
are committed to service these loans. At June 30, 1995, the Bank was also
committed to service approximately $784,000 of outstanding mortgage
principal balances relating to the State of New York Mortgage Agency
(SONYMA).
<PAGE>
-14-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES (CONT'D)
In the normal course of business, the Banks make various commitments to
extend credit which are not reflected in the accompanying financial
statements. At June 30, 1995, formal credit line and loan commitments,
which are primarily loans collateralized by real estate at variable interest
rates, approximated $73.1 million and outstanding letters of credit totalled
$7.9 million. Such amounts represent the maximum risk of loss on these
commitments. However, no such losses are currently anticipated.
In the ordinary course of business, the Company is party to various legal
proceedings, none of which, in the opinion of Management, will have a
material effect on the financial position of the Company.
8. PENDING DISPOSITION OF DEPOSITS
On June 14, 1995, the Company announced that it had signed a non-binding
letter of intent with Taneytown Bank & Trust Co. of Taneytown, Maryland,
for the sale of Royal's deposits and certain assets. At June 30, 1995,
Royal had approximately $41.0 million in deposits. Pending review and
approval by various government agencies, the transaction is expected to be
completed by year-end 1995.
<PAGE>
-15-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At June 30, 1995, the Company had total assets of $659.6 million, an increase of
9%, or $57.0 million from December 31, 1994. Total deposits increased $49.5
million for the six month period ended June 30, 1995, to $593.3 million, which
represented a 9% increase from December 31, 1994. Time deposits increased $38.4
million, primarily due to an increase in time deposits less than $100,000
($16.6 million) primarily because of a time deposit promotion associated with
the new Ossining branch opening of the Bank and an increase in time deposits
of $100,000 and over from local municipalities ($15.4 million). Both the
retail time deposits and municipal time deposits, which are obtained on a
bidding basis with maturities of 30 to 180 days, were used to fund loans and
securities under the Company's asset liability policy. Savings deposits also
increased $19.4 million as the Company introduced and promoted new products.
These products included a "liquid gold" account which pays a rate equal to the
Federal Reserve discount rate, and a tiered-rate savings account. Demand
deposits ($2.3 million) and NOW accounts ($1.7 million) increased slightly,
while money market accounts decreased $12.3 million as customers generally
switched their balances to higher yielding deposit products.
Federal funds sold increased by $7.5 million at June 30, 1995, compared to
December 31, 1994 to provide additional liquidity and funding for anticipated
loan closings and security purchases.
The securities portfolio of $248.3 million and $225.5 million at June 30, 1995
and December 31, 1994, respectively, consists of securities held to maturity at
amortized cost of $137.4 million and $149.6 million and securities available for
sale at fair market value totalling $111.0 million and $75.9 million.
Obligations of U.S. Treasury and other Government agencies increased $13.6
million during the six month period ended June 30, 1995, primarily due to
purchases of $47.1 million, net of $9.5 million of called securities, and
sales of $24.0 million of such securities. The securities sold were those
which would have been called during 1995. Obligations of other U.S.
Government agencies are often used as collateral for the Company's borrowing
requirements. Mortgage-backed securities increased $17.3 million as purchases
of $25.3 million of floating rate securities offset sales of $7.7 million of
available for sale securities and principal payments. The purchases took
place to reduce excess liquidity, improve yield and rate sensitivity. The
Bank's investment in obligations of states and political subdivisions
decreased by $7.0 million during the first half of 1995 due to maturities.
Although the Bank still considers such securities as core investments which
are high yielding on a tax equivalent basis and have diversified final
maturities, purchases of these securities are dependent upon their
availability in the marketplace and the yield of such securities on a tax
equivalent basis, compared to other securities of equivalent credit risk and
maturity. The Banks also continue to invest in medium-term corporate debt
securities and other securities which are rated investment grade by
nationally recognized rating organizations. For the six month period ended
June 30, 1995, such securities decreased by $1.0 million, principally due to
maturities of corporate bonds of $3.0 million in the first quarter, which
offset purchases during the period. The Company continues to invest in
securities that provide safety and liquidity, produce income on excess funds
during structural changes in the composition of deposits, as well as during
cyclical and seasonal changes in
<PAGE>
-16-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
FINANCIAL CONDITION (Cont'd)
loan demand, and whose cash flow patterns result in a manageable degree of
interest rate risk.
At June 30, 1995, net loans were $351.1 million, a net increase of $20.8 million
from December 31, 1994. Outstanding loan balances increased $4.9 million in
commercial mortgages, $10.1 million in construction and real estate secured
loans, $1.3 million in residential mortgages (net of mortgage loan cash sales of
$2.7 million), $1.9 million in home equity loans and $2.8 million in time
secured and unsecured loans, offset by net payoffs in installment loans. At
June 30, 1995, the Banks had approximately $73.1 million in loan commitments
outstanding. It is expected that future loans will be funded principally by
excess funds temporarily placed in Federal funds sold, deposits, loan repayments
and maturing securities.
The Banks' allowance for loan losses increased to $3.6 million at June 30, 1995
from $3.3 million at December 31, 1994. The allowance for loan losses
represented 1.02% of net loans outstanding at June 30, 1995, compared to 1.01%
at December 31, 1994. The allowance reflects a provision of $425,000 and net
charge-offs of $176,000 recorded during 1995. Management takes a prudent and
cautious position in evaluating various business and economic uncertainties in
relation to the Company's loan portfolio. At June 30, 1995, management believes
that the allowance is adequate to absorb potential losses inherent in the loan
portfolio.
Stockholders' equity increased to $44.6 million at June 30, 1995, an increase of
$6.3 million from the December 31, 1994 balance of $38.3 million. The net
income of $3.2 million for the six month period ended June 30, 1995, was offset
by cash dividends on both preferred stock of $158,000 and common stock of
$572,000. Under the Company's dividend reinvestment plan, stockholders purchased
27,776 shares of common stock at a value of $707,000 and stock options of 42,260
shares were exercised under the Company's stock option plans, in the aggregate
amount of $528,000. During the second quarter, the Company declared a 10%
common stock dividend to shareholders of record June 15, 1995, distributable on
July 1, 1995. The reinvestment of the cash dividends and the issuance of the
stock dividend have been given effect to in the 1995 consolidated financial
statements and in 1994, in the number of weighted average common and common
equivalent shares outstanding and net income per common and common equivalent
share. Due to market conditions during the first half of the year, the effect
of SFAS No. 115 for the six month period ended June 30, 1995, was an increase
to stockholders' equity, net of tax effect, of $2,560,000.
The Company's leverage ratio at June 30, 1995 of 7.04%, down from 7.21% at
December 31, 1994, was well above the "well-capitalized" level of five percent.
The Company's Tier I and total capital ratios under the risk-based capital
guidelines were 10.83% and 11.70% at June 30, 1995 and 10.58% and 11.82% at
December 31, 1994, respectively, which remained above the "well-capitalized"
levels of six percent (Tier I) and ten percent (Total Capital).
RESULTS OF OPERATIONS
EARNINGS
Net income for the three and six month periods ended June 30, 1995, decreased
$255,000 to $1.5 million and $397,000 to $3.2 million, compared to the same
<PAGE>
-17-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS (Cont'd)
EARNINGS (Cont'd)
periods in 1994, respectively. Net income per common and common equivalent
share decreased to $.50 per share in the second quarter of 1995 from $.63 per
common share recorded in the same period in 1994 and to $1.08 per share during
the six month period ended June 30, 1995 from $1.30 for the comparable period in
1994. The annualized return on average total assets decreased to 1.01% for the
six months ended June 30, 1995 from 1.31% for the same period in 1994. A
discussion of the factors impacting the changes in the various components of net
income follows.
NET INTEREST INCOME
Net interest income, the difference between interest income and interest
expense, is a significant component of the Company's consolidated earnings. For
the three month period ended June 30, 1995, net interest income increased 5% to
$6.1 million, from $5.9 million in the year earlier period. Net interest income
increased $427,000 or 4% to $12.1 million, for the six months ended June 30,
1995, compared to the six month period ended June 30, 1994. Although net
interest income increased in both the quarter and six month periods ending June
30, 1995 due to volume increases of average net earning assets, the net interest
spread declined in each period compared to the prior year. The interest spread
declined to 3.51% in the second quarter of 1995 from 4.08% in the same period of
1994, while the year-to-date interest spread at June 30, 1995 was 3.43% compared
to 4.13% in the year earlier period. During the first quarter of 1995, much of
the effect of seven short-term interest rate increases by the Federal Reserve
during 1994 and 1995 impacted the Company's interest spread. This impact, to a
lesser extent, continued to affect the net interest spread during the second
quarter. The cost of funds have risen during the first half of 1995, as deposit
rates have increased, particularly with the introduction of a new product in the
first quarter of 1995 which paid a rate equal to the Federal Reserve discount
rate. In addition, the cost of time deposits increased due to the new Ossining
branch promotion and the effect of renewals at prevailing higher rates. The
impact of an increased level of nonaccrual loans as discussed below during the
first half of 1995 compared to 1994, also has negatively affected net interest
income.
PROVISION FOR LOAN LOSSES
The provision for loan losses increased $65,000 to $225,000 for the three month
period ended June 30, 1995, compared to the same period in 1994 and $130,000 to
$425,000 for the six months ended June 30, 1995, compared to the year earlier
period. Charge-offs in the first half of 1995 totalled $205,000 relating
primarily to commercial loans, compared to $91,000 of charged-off loans during
the same period in 1994. Nonaccrual loans, which are principally secured by
real estate, increased to $7.5 million at June 30, 1995, from $5.9 million at
December 31, 1994 and $5.5 million at June 30, 1994. It is the Company's policy
to discontinue the accrual of interest on loans when, in the opinion of
management, a reasonable doubt exists as to the timely collectibility of the
amounts due. Net income is adversely impacted by the level of non-performing
assets of the Bank since, in addition to foregone revenue, the Company must
increase the level of provision for loan losses, and incur other costs
associated with collections of past due balances.
<PAGE>
-18-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS (Cont'd)
PROVISION FOR LOAN LOSSES (Cont'd)
An evaluation of the quality of the loan portfolio is performed by management on
an ongoing basis as an integral part of the loan function, which includes the
identification of past due loans, the recognition of the current economic
environment and the review of the historical loan loss experience. Management
has taken a prudent and cautious position in evaluating various business and
economic uncertainties in relation to the Company's loan portfolio. The
changes in the provision charged to income and the allowance for loan losses
reflects such uncertainties on an ever increasing loan portfolio. There is
no assurance that the Company will not be required to make future adjustments
to the allowance in response to changing economic conditions or regulatory
examinations.
NON-INTEREST INCOME
Non-interest income for the three months ended June 30, 1995 increased $276,000
to $934,000 compared to the quarter ended June 30, 1994. For the six months
ended June 30, 1995, non-interest income was $1,783,000, which represented a 27%
increase, or $374,000, over the same period in 1994. The second quarter
increase primarily related to modest security gains for the three month period
ended June 30, 1995, while security losses and losses on loans held for sale of
$225,000, were incurred in the previous year period. The increase in
non-interest income for the first half of 1995 compared to 1994 resulted from a
modest net loss on securities transactions and loans held for sale, compared to
a loss of $288,000 in the prior year period and an increase in other income.
The relationship of non-interest income to non-interest expenses remained at
approximately 20% for both the three and six month periods ended June 30, 1995,
compared to 17% and 19% for the three and six month periods ended June 30, 1994,
respectively.
The $16,000 loss on securities transactions for the six months ended June 30,
1995 was a result of first quarter transactions resulting in a loss of $57,000,
as a part of an overall strategy to restructure the securities portfolio by
enhancing yield and improving liquidity, offset by gains on the sale of
securities that would have been called during 1995. The second quarter gain of
$41,000 in 1995 pertains to the sale of U.S. Treasuries as part of the overall
strategy of increasing yield and extending maturities in the securities
portfolio and additional sales of U.S. Government securities which were
anticipated to be called during the second half of 1995.
The $72,000 gain on securities transactions for the six month period ended June
30, 1994 was primarily comprised of gains of $172,000 from the January 1994 sale
of $4.0 million of mortgage-backed pools originated by the Banks due to
accelerated principal prepayments, offset by losses in April of $100,000 from
sales of $22 million of 30 year mortgage-backed pools to reduce interest rate
risk.
The net gain on loans held for sale in the first half of 1995 of $14,000 was
principally due to the sale of $2.7 million of fixed rate residential mortgages
which occurred during the first quarter.
<PAGE>
-19-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS (Cont'd)
NON-INTEREST INCOME (Cont'd)
Increases in gains on loans held for sale of $125,000 and $374,000 for the three
and six month periods ended June 30, 1995 compared to 1994, were principally due
to write-downs of fixed rate loans held for sale aggregating $127,000 and
$387,000 for the three and six month periods ended June 30, 1994, resulting from
the increased interest rate environment in 1994.
Service charges remained flat in the second quarter of 1995 compared to 1994 and
decreased slightly by $5,000 for the six month period ended June 30, 1995
compared to the prior year, as increases resulting from an increased level of
account activity resulting from a higher deposit base were offset by higher
customer rebates during the period.
Other income increased by $10,000 to $240,000 for the quarter ended June 30,
1995 and $93,000 to $488,000 for the six months ended June 30, 1995, compared to
the same periods in 1994. The increases occurred primarily due to a higher
mortgage servicing income ($24,000 for the six month period) because of
increased volume in loans serviced, increased fee income relating to various
services provided by the Banks ($13,000 increase for the six month period) and
higher commissions from credit cards ($28,000 increase for the six month
period).
NON-INTEREST EXPENSES
Non-interest expenses rose to $4,620,000, an $848,000 increase for the three
month period ended June 30, 1995 over the comparable period in 1994, and to
$8,803,000 which represented a $1,341,000 increase for the six month period
ended June 30, 1995, over the comparable period in 1994.
Salaries are the largest component of non-interest expense. Increases of
$193,000 and $417,000 occurred during the three and six month periods ended June
30, 1995, respectively, compared to the previous year, which represented
increases of 15% and 16%, respectively. Full-time equivalent employees of 199
at June 30, 1995, was an increase of 14 employees from June 30, 1994. This
increase occurred because of the opening of branches in North White Plains in
July 1994 and Ossining in January 1995, and an increase in staff to accommodate
the higher level of deposits and loans being serviced, as well as annual merit
salary increases.
Employee benefits decreased $19,000 to $624,000 and $73,000 to $1,272,000 for
the three and six months ended June 30, 1995, compared to 1994, respectively.
These decreases occurred in both periods because of a reduction in incentive
compensation programs which are based on the Company's net income and financial
performance and a decrease in 1995 in the number of participants in the
executive compensation plan. These decreases offset an increase in payroll
taxes due to the higher salaries base.
The changes in the other components of non-interest expenses for the three and
six month periods ended June 30, 1995, compared to June 30, 1994, were due to
the following:
<PAGE>
-20-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS (Cont'd)
NON-INTEREST EXPENSES (CONT'D)
o Increases of $138,000 (21%) and $213,000 (16%), respectively, in occupancy
and equipment cost were due principally to increased costs associated with
the branches opened in the third quarter of 1994 and January 1995, increases
related to the higher level of furniture and bank equipment owned by the
Banks (depreciation, maintenance, repairs) and increases in real property
taxes.
o Increases of $76,000 (45%) and $130,000 (43%), respectively, in advertising
and business development because of the new branch opening promotions and
advertising related to new deposit products such as "liquid gold."
o Increases of $139,000 (95%) and $176,000 (60%), respectively, in professional
fees due to loan related professional fees associated with loan collections
and foreclosures and litigation costs incurred during the second quarter
pertaining to an ongoing loan related case.
o Increases of $6,000 (5%) and $26,000 (10%), respectively, in communications
due to an increase in postage expense because of postal volume and rate
increases and telephone expense because of new branch additions and the
relocation of certain departments of the Bank to its Corporate Headquarters.
o Increases of $2,000 (3%) and $28,000 (23%), respectively, in stationery and
printing because of the new branch opened in January 1995 and increase in
deposit and loan volume.
o Increases of $37,000 (14%) and $74,000 (14%), respectively, in FDIC insurance
premiums due to an overall 15% increase in deposit levels between June 30,
1995 and 1994.
o Increases of $276,000 (73%) and $350,000 (50%), respectively, in other
expenses due to a settlement with a former executive officer of the Company,
branch charge-offs, and expenses associated with Royal's credit card program.
INCOME TAXES
The effective tax rates for the three month periods ended June 30, 1995 and 1994
were 33% and 32%, respectively, while the effective rates for the six month
periods ended June 30, 1995 and 1994 were 31% and 32%, respectively. The
variance in the effective tax rate in 1995 was due to the recording of deferred
tax benefits in 1995 related to the allowance for loan losses, offset by the
Bank's decrease in investment in tax-exempt securities in the second quarter due
to maturities of these securities.
<PAGE>
-21-
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit XI. Computation of Earnings Per Share
(b) Reports on Form 8-K. A Form 8-K was filed by the Company during the
quarter ended June 30, 1995. On June 14, 1995, a press release
announced that a tentative agreement had been reached for the sale of
the deposits of the Company's wholly-owned subsidiary, Royal Oak
Savings Bank, F.S.B. The premium to be paid for such deposits will be
8-1/2% of deposits transferred, plus accrued interest thereon, as of
the settlement date. A copy of the press release was filed as Exhibit
99 to the Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on August 11, 1995.
U.S.B. HOLDING CO., INC.
/s/ Thomas E. Hales /s/ Steven T. Sabatini
----------------------- --------------------------------
Thomas E. Hales Steven T. Sabatini
Chairman of the Board Executive Vice President Finance
President, Chief Financial Officer and
Chief Executive Officer Assistant Secretary
and Director (Principal Financial and
Accounting Officer)
<PAGE>
-22-
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit XI. Computation of Earnings Per Share
(b) Reports on Form 8-K. A Form 8-K was filed by the Company during the
quarter ended June 30, 1995. On June 14, 1995, a press release
announced that a tentative agreement had been reached for the sale of
the deposits of the Company's wholly-owned subsidiary, Royal Oak
Savings Bank, F.S.B. The premium to be paid for such deposits will be
8-1/2% of deposits transferred, plus accrued interest thereon, as of
the settlement date. A copy of the press release was filed as Exhibit
99 to the Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on August 11, 1995.
U.S.B. HOLDING CO., INC.
----------------------- --------------------------------
Thomas E. Hales Steven T. Sabatini
Chairman of the Board Executive Vice President Finance
President, Chief Financial Officer and
Chief Executive Officer Assistant Secretary
and Director (Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT XI
U.S.B. HOLDING CO., INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
------------ ----------
June 30, 1995
-------------
<S> <C> <C>
Weighted average number of common
shares outstanding 2,746,110 2,723,765
Assuming exercise of options reduced
by the number of shares which could
have been purchased with the proceeds
from exercise of such options 104,570 102,981
--------- ---------
Weighted average common and common
equivalent shares outstanding 2,850,680 2,826,746
========= =========
Net Income Per Common and Common Equivalent
Share $ 0.50 $ 1.08
========= =========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 24,705
<INT-BEARING-DEPOSITS> 512,407
<FED-FUNDS-SOLD> 12,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 110,963
<INVESTMENTS-CARRYING> 137,382
<INVESTMENTS-MARKET> 138,354
<LOANS> 351,067
<ALLOWANCE> 3,569
<TOTAL-ASSETS> 659,618
<DEPOSITS> 593,313
<SHORT-TERM> 8,500
<LIABILITIES-OTHER> 3,321
<LONG-TERM> 10,000
<COMMON> 14,280
0
3,750
<OTHER-SE> 26,544
<TOTAL-LIABILITIES-AND-EQUITY> 659,618
<INTEREST-LOAN> 8,131
<INTEREST-INVEST> 3,814
<INTEREST-OTHER> 181
<INTEREST-TOTAL> 12,126
<INTEREST-DEPOSIT> 5,571
<INTEREST-EXPENSE> 5,984
<INTEREST-INCOME-NET> 6,142
<LOAN-LOSSES> 225
<SECURITIES-GAINS> 41
<EXPENSE-OTHER> 4,620
<INCOME-PRETAX> 2,231
<INCOME-PRE-EXTRAORDINARY> 2,231
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,500
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
