<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 MARCH 31, 1996 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 MAY 2, 1996
Common stock, par value
$5 per share 2,802,833
<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 MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED) 1
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED) 2
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 31, 1996 AND
1995 (UNAUDITED) 4
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY FOR THE THREE MONTHS
ENDED MARCH 31, 1996 (UNAUDITED) 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 14
PART II. OTHER INFORMATION AND SIGNATURES 20
<PAGE>
-1-
PART I - FINANCIAL INFORMATION
U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
(000's, Except Share Data)
<S> <C> <C>
ASSETS
Cash and due from banks $ 18,538 $ 23,469
Federal funds sold 2,600 13,800
----------- -----------
Cash and cash equivalents 21,138 37,269
Interest bearing deposits in other banks 198 2,069
Securities:
Available for sale (at fair value) 183,609 170,889
Held to maturity (fair value $60,580
in 1996 and $62,684 in 1995) 58,877 60,266
Loans held for sale - 394
Loans, net of allowance for loan losses of
$4,265 in 1996 and $3,904 in 1995 415,238 387,043
Premises and equipment, net 10,485 10,088
Accrued interest receivable 5,419 5,288
Other real estate owned (OREO) 1,309 939
Other assets 4,966 4,538
----------- -----------
TOTAL ASSETS $701,239 $678,783
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing demand deposits $ 70,887 $ 82,363
Interest bearing deposits:
Money Market 50,450 55,672
Savings 202,414 182,567
NOW 39,259 38,111
Time 267,399 251,922
----------- -----------
Total deposits 630,409 610,635
Accrued interest payable 1,890 1,769
Accrued expenses and other liabilities 3,067 5,046
Federal Home Loan Bank advances 14,000 10,000
----------- -----------
Total liabilities 649,366 627,450
Commitments and contingencies (Note 9)
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
2,880,397 in 1996 and 1995 14,402 14,402
Additional paid-in capital 19,187 19,046
Retained earnings 15,823 14,072
Treasury stock at cost, 77,564 shares
in 1996 and 86,316 shares in 1995 (966) (1,075)
Unrealized (loss) gain on available for
sale securities, net of tax (323) 1,138
----------- -----------
Total stockholders' equity 51,873 51,333
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $701,239 $678,783
----------- -----------
</TABLE>
See notes to consolidated financial statements.
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U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
--------- ---------
(000's, Except Share Data)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 9,225 $ 7,716
Interest on federal funds sold 244 273
Interest and dividends on securities:
Mortgage-backed securities 1,763 1,730
U.S. Treasury and Government 784 600
Obligations of states and political
subdivisions 777 886
Corporate and other 223 309
Interest on deposits in other banks 34 25
Dividends on Federal Home Loan Bank stock 30 41
--------- ---------
Total interest income 13,080 11,580
--------- ---------
INTEREST EXPENSE:
Interest on deposits 6,065 5,410
Interest on federal funds purchased and Federal
Home Loan Bank advances 180 185
Interest on long-term debt - 42
--------- ---------
Total interest expense 6,245 5,637
--------- ---------
NET INTEREST INCOME 6,835 5,943
Provision for loan losses 475 200
--------- ---------
Net interest income after provision for
loan losses 6,360 5,743
--------- ---------
NON-INTEREST INCOME:
Gain (loss) on securities transactions - net 447 (57)
Gain (loss) on loans held for sale - net (78) 14
Service charges and fees 621 644
Other income 235 248
--------- ---------
Total non-interest income 1,225 849
--------- ---------
NON-INTEREST EXPENSES:
Salaries 1,582 1,474
Employee benefits 788 648
Occupancy and equipment expense 832 776
Advertising and business development 228 188
Professional fees 223 185
Communications 158 146
Stationery and printing 91 72
FDIC insurance 1 303
Other expenses 339 391
--------- ---------
Total non-interest expenses 4,242 4,183
--------- ---------
Income before income taxes 3,343 2,409
Provision for income taxes 1,093 709
--------- ---------
NET INCOME $ 2,250 $ 1,700
--------- ---------
NET INCOME PER COMMON AND COMMON EQUIVALENT
SHARE $ .74 $ .58
--------- ---------
</TABLE>
<PAGE>
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<TABLE>
<S> <S> <S>
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 2,924,326 2,804,394
--------- ---------
</TABLE>
See notes to consolidated financial statements.
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U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
---------- ----------
(000's)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,250 $ 1,700
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 475 200
Depreciation and amortization 322 357
Amortization/accretion of premiums/discounts on
securities - net 56 18
(Gain) loss on securities transactions - net (447) 57
(Gain) loss on loans held for sale - net 78 (14)
Origination of loans held for sale (950) (598)
Proceeds from sales of loans held for sale - 2,674
Increase in accrued interest receivable (131) (498)
Other - net (1,248) 435
---------- ----------
Net cash provided by operating activities 405 4,331
---------- ----------
INVESTING ACTIVITIES:
Proceeds from sales of securities available
for sale 36,088 22,627
Proceeds from principal paydowns and maturities
of securities available for sale 6,203 7,937
Proceeds from maturities of securities held to
maturity 1,318 6,970
Purchases of securities available for sale (57,080) (39,291)
Purchases of securities held to maturity - (2,087)
Net decrease (increase) in interest bearing
deposits in other banks 1,871 (1,277)
Loans originated, net of principal collections (27,984) (14,269)
Loans purchased - (350)
Purchases of premises and equipment - net (713) (391)
Proceeds from sales of OREO 236 324
---------- ----------
Net cash used for investing activities (40,061) (19,807)
---------- ----------
FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing
deposits, NOW, money market and savings accounts 4,297 (4,573)
Increase in time deposits, net of
withdrawals and maturities 15,477 41,357
Net decrease in federal funds purchased
and Federal Home Loan advances - short-term - (5,400)
Proceeds from Federal Home Loan Bank advance -
long-term 4,000 -
Cash dividends paid (499) (350)
Proceeds from issuance of common stock - 453
Proceeds from issuance of treasury stock 250 -
---------- ----------
Net cash provided by financing activities 23,525 31,487
---------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (16,131) 16,011
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 37,269 24,465
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,138 $ 40,476
---------- ----------
</TABLE>
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U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONT'D)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
---------- ----------
(000's)
<S> <C> <C>
Supplemental Disclosures:
Interest paid $ 6,124 $ 5,112
---------- ----------
Income tax payments $ 1,728 $ 363
---------- ----------
Transfer of assets to OREO $ 580 $ 624
---------- ----------
Transfer of loans held for sale to loans
held to maturity at lower of cost
or fair value $ 1,344 $ -
---------- ----------
Change in unrealized gain/loss on securities
available for sale - net of tax $ (1,461) $ 1,483
---------- ----------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
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U.S.B. HOLDING CO., INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (000's, Except Share Data)
<TABLE>
<CAPTION>
Unrealized
Preferred Gain (Loss)
Stock Common Stock Additional on Available
No Par Shares $5 Par Paid-In Retained Treasury for Sale
Value Outstanding Value Capital Earnings Stock Securities
-------- ----------- ------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1,
1996 $ 3,750 2,794,081 $14,402 $19,046 $14,072 $(1,075) $ 1,138
Net income 2,250
Cash dividends:
Common
($.15 per
share) (420)
Preferred (79)
Issuance of
treasury
stock 8,752 141 109
Change in un-
realized gain
(loss) on avail-
able for sale
securities,
net of tax (1,461)
-------- ----------- ------- --------- -------- -------- ------------
Balance at
March 31,
1996 $ 3,750 2,802,833 $14,402 $19,187 $15,823 $ (966) $ (323)
-------- ----------- ------- --------- -------- -------- ------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
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U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of U.S.B. Holding
Co., Inc. (the "Company"), Union State Bank, (the "Bank"), the Company's
non-bank subsidiary, Ad Con, Inc., and until December 31, 1995, its
wholly-owned subsidiary, Royal Oak Savings Bank, F.S.B. ("Royal"). On
December 31, 1995, Royal was sold to Monocacy Bancshares, Inc., parent
company of Taneytown Bank & Trust Company, Taneytown, Maryland.
2. RECLASSIFICATIONS
Certain reclassifications have been made to prior year accounts to conform
to the current year's 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 March 31, 1996, the results of operations for the three
month periods ended March 31, 1996 and 1995, cash flows for the three month
periods then ended, and changes in stockholders' equity for the three months
ended March 31, 1996. A summary of the Company's significant accounting
policies is set forth in Note 2 to the Consolidated Financial Statements
included in the Company's 1995 Annual Report to Shareholders.
4. ACCOUNTING FOR STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 123 establishes a fair value based
method of accounting for stock-based compensation plans and encourages, but
does not require, entities to adopt that method in place of the provisions
of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees," for all arrangements under which employees receive
shares of stock or other equity instruments of the employer or the employer
incurs liabilities to employees in amounts based on the price of the stock.
SFAS No. 123 also establishes fair value as the measurement basis for
transactions in which an entity acquires goods or services from
non-employees in exchange for equity instruments.
The accounting provisions of SFAS No. 123 are effective for transactions
entered into after December 15, 1995. Effective January 1, 1996, the
Company adopted SFAS No. 123 and has decided that it will continue to
measure compensation cost for employee stock compensation plans in
accordance with the provisions of APB No. 25.
5. ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
SFAS No. 122, "Accounting for Mortgage Servicing Rights," modifies the
treatment of the capitalization of servicing rights by mortgage banking
enterprises. The change eliminates the separate treatment of servicing
rights acquired through loans originated and those acquired through purchase
transactions, as previously required under SFAS No. 65, "Accounting for
Certain Mortgage Banking Activities." SFAS No. 122 requires mortgage
<PAGE>
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U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
5. ACCOUNTING FOR MORTGAGE SERVICING RIGHTS (cont'd)
servicing rights acquired or originated subsequent to December 31, 1995, to
be recorded as assets distinct from the loans to which they relate. SFAS
No. 122 also requires periodic evaluation of capitalized servicing rights
for deterioration of value, due to increases in prepayments and other
factors. The Company's adoption of SFAS No. 122 as of January 1, 1996 did
not have any effect on the Consolidated Financial Statements of the Company
for the quarter ended March 31, 1996.
6. ACCOUNTING FOR IMPAIRMENT OF A LOAN
As of January 1, 1995, the Company adopted 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 requires
recognition of an impairment of a loan when it is probable that either
principal and/or interest are not 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. If the
fair value of the impaired loan is less than the related recorded amount, a
specific valuation allowance is established or the write-down is charged
against the allowance for loan losses if the impairment is considered to be
permanent. Small homogeneous loans such as residential mortgage, home
equity, and installment loans are not separately reviewed for impaired
status. Such loans are typically collateralized by residential or other
personal property and require monthly payments. Separate allocations to
the allowance for loan losses are made based on payment trends and prior
loss experience and the composition of credit risk inherent in these loan
types. The impact of adopting these Statements did not have a material
effect on the Consolidated Financial Statements of the Company.
At March 31, 1996, the recorded investment in loans that are considered to
be impaired under SFAS No. 114 approximated $7.2 million ($6.5 million of
which were in nonaccrual status). Each impaired loan has a related
allowance for credit losses determined in accordance with SFAS No. 114.
The total allowance for credit losses related to impaired loans was $856,000
as of March 31, 1996. The average recorded investment in impaired loans for
the quarter ended March 31, 1996 was approximately $5.6 million. For the
quarters ended March 31, 1996 and 1995, interest income recognized by the
Company on impaired loans was not material.
7. SECURITIES AND LOANS HELD FOR SALE
The Company accounts for securities under SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." 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, are 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.
<PAGE>
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U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
7. SECURITIES AND LOANS HELD FOR SALE (cont'd)
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 Company does not acquire securities for the purpose of engaging in
trading activities.
In December 1995, the Company transferred, at fair value, securities having
a fair value of $68.8 million (amortized cost of $68.1 million) from its
held to maturity security portfolio to its portfolio of available for sale
securities. This was done to enhance the Company's ability to respond to
changes in interest rates. The securities transferred represent all of the
readily marketable securities that were previously classified as held to
maturity, except for obligations of states and political subdivisions. This
transfer was made in accordance with the FASB's "A Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities" issued in November 1995. Concurrent with the adoption of this
guidance, corporations were permitted, through December 31, 1995, to
reclassify their available for sale and held to maturity securities without
calling into question the past intent of an entity to hold securities to
maturity. The effect of this transfer, after tax, was a $.4 million
increase in shareholders' equity.
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
March 31, 1996, the effect of SFAS No. 115 resulted in a reduction of
securities available for sale of $560,000 which, after the applicable tax
effect, resulted in a reduction to stockholders' equity of $323,000,
representing the unrealized loss. At December 31, 1995, the effect of SFAS
No. 115 resulted in an increase of securities available for sale of
$1,971,000 which, after the applicable tax effect, resulted in an increase
to stockholders' equity of $1,138,000, representing the net unrealized gain.
A summary of the amortized cost and fair value of securities and related
gross unrealized gains and losses at March 31, 1996 and December 31, 1995,
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
(000's)
Gross Gross
Amortized Unrealized Unrealized Fair
March 31, 1996: Cost Gains Losses Value
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
U.S. Treasury and Govern-
ment agencies $ 66,094 $ 32 $ 837 $ 65,289
Obligations of states
and political sub-
divisions 3,066 24 - 3,090
</TABLE>
<PAGE>
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U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
7. SECURITIES AND LOANS HELD FOR SALE (CONT'D)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Mortgage-backed
securities 107,532 1,030 1,069 107,493
Corporate bonds 7,418 260 - 7,678
Other 59 - - 59
- ----------------------------------------------------------------------------------
Total available for sale
securities $184,169 $1,346 $1,906 $183,609
- ----------------------------------------------------------------------------------
HELD TO MATURITY:
Obligations of states
and political sub-
divisions $ 58,877 $1,815 $ 112 $ 60,580
- ----------------------------------------------------------------------------------
Total securities held to
maturity $ 58,877 $1,815 $ 112 $ 60,580
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
(000's)
Gross Gross
Amortized Unrealized Unrealized Fair
December 31, 1995: Cost Gains Losses Value
- ----------------------------------------------------------------------------------
AVAILABLE FOR SALE:
U.S. Treasury and Govern-
ment agencies $ 46,011 $ 654 $ 95 $ 46,570
Obligations of states
and political sub-
divisions 3,067 40 - 3,107
Mortgage-backed
securities 109,375 1,169 181 110,363
Corporate bonds 10,406 384 - 10,790
Other 59 - - 59
- ----------------------------------------------------------------------------------
Total available for sale
securities $168,918 $2,247 $ 276 $170,889
- ----------------------------------------------------------------------------------
HELD TO MATURITY:
Obligations of states
and political sub-
divisions $ 60,266 $2,456 $ 38 $ 62,684
- ----------------------------------------------------------------------------------
Total securities held to
maturity $ 60,266 $2,456 $ 38 $ 62,684
- ----------------------------------------------------------------------------------
</TABLE>
During the first quarter of 1996, the Bank transferred residential fixed
rate real estate loans with an aggregate cost of $2,824,000, which includes
commitments not yet closed of $1,445,000, representing its entire held for
sale portfolio, to its held to maturity portfolio. This transfer resulted
in a write-down of $78,000, as the loans were transferred at the lower of
cost or fair value. At December 31, 1995, residential fixed rate real
estate loans held for sale had a cost of $394,000 and fair value of
$393,000.
<PAGE>
-11-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
8. COMMON STOCK, ADDITIONAL PAID-IN CAPITAL, FEDERAL HOME LOAN BANK ADVANCES
AND NET INCOME PER COMMON SHARE DATA
The Bank had $14.0 million of term advances outstanding with the Federal
Home Loan Bank of New York ("FHLB") at March 31, 1996. On February 15,
1996, the Bank took a fully amortizing advance of $4.0 million at a fixed
rate of 5.41 percent for the entire term. This advance, which matures on
March 1, 2001, is subject to a prepayment penalty. At March 31, 1996 and
December 31, 1995, the Bank had a $5.0 million advance from the FHLB with a
final maturity on November 15, 1999, with options to prepay without penalty
in whole or in part semiannually on November 14th and May 14th. The
advance has an interest rate adjusting monthly to 20 basis points over the
one month London Inter-Bank Offer Rate ("LIBOR"). The interest rate at
March 31, 1996 was 5.58 percent. At March 31, 1996 and December 31, 1995,
the Bank also had a $5.0 million advance from the FHLB with a final maturity
of June 22, 1998. The advance, which is subject to a prepayment penalty,
bears interest at 6.20 percent.
The Bank has pledged under a blanket agreement to the FHLB, a security
interest in the Bank's holdings of capital stock in the FHLB, certain
mortgage loans, securities and other assets of the Bank for all FHLB
outstanding advances.
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 month periods ended March 31, 1996 and 1995, the weighted average
dividend rates were 8.4 percent (the minimum rate) for each period. Net
income per common share reflects the preferred stock dividends declared and
accrued totalling $79,000 for each three month period ended March 31, 1996
and 1995, respectively. The Company intends to redeem $250,000 of preferred
stock during the quarter ended June 30, 1996.
In December 1993, the Company implemented a Dividend Reinvestment Plan
("DRIP"). The DRIP allows stockholders to invest cash dividends in shares
of the Company's stock at fair value and, in the third quarter of 1994, a
stock purchase feature was added to allow stockholders to purchase
additional common stock at fair value up to $2,500 per quarter. The DRIP was
temporarily suspended for dividends paid after January 1, 1996. As of March
31, 1996, 200,000 shares of common stock are reserved for issuance in
connection with the Plan, of which 98,020 shares have been issued.
On March 3, 1996, the Company issued 8,752 shares of its treasury stock.
These shares were purchased by the Company's Employee Stock Ownership Plan
(with Code Section 401(k) Provisions) ("KSOP") and Supplemental Employees'
Investment Plan ("SEIP") at fair value.
The Company issued a 10 percent stock dividend to shareholders of record
June 15, 1995, which was distributed on July 1, 1995. In addition, the
Company declared a 10 percent stock dividend on April 24, 1996 to
shareholders of record May 31, 1996, which will be distributed on June
14, 1996. The weighted average shares outstanding and per share amounts
have been adjusted to reflect the stock dividend distributed in 1995.
The Company and the Bank's ability to pay cash dividends in the future are
restricted by various regulatory requirements. The Company's ability to pay
<PAGE>
-12-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
8. COMMON STOCK, ADDITIONAL PAID-IN CAPITAL, FEDERAL HOME LOAN BANK ADVANCES
AND NET INCOME PER COMMON SHARE DATA (cont'd)
cash dividends to its shareholders is primarily dependent upon the receipt
of dividends from the Bank. 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
additional paid-in capital. At March 31, 1996, the Bank could pay dividends
to the Company of $12.3 million without having to obtain prior regulatory
approval.
Net income per common share is based on net income after preferred stock
dividend requirements, the weighted average number of common shares
outstanding and common equivalent shares (for the quarter ended March 31,
1995, adjusted for the common stock dividend distributed in 1995). Shares
granted but not yet issued under the Company's stock option plans are
considered common stock equivalents for earnings per share calculations.
In May, 1995, the Company repaid the $1,800,000 of Series "A" subordinated
notes outstanding that qualified as Tier II capital under risk-based capital
guidelines. Interest on the notes was at prime plus one-half percent,
payable quarterly. The weighted average interest rate for the three months
ended March 31, 1995 was 9.33 percent.
9. COMMITMENTS AND CONTINGENCIES
At March 31, 1996, the Bank was committed under an employment agreement with
a key officer, director and shareholder requiring annual salary and other
payments of $370,000, increasing annually by $30,000 during the term of the
contract, annual stock option grants of 22,000 shares, issued at fair value
(110 percent of fair value if the key officer's ownership of the Company
equals or exceeds 10 percent at the date of grant) and other benefits for
the term of the contract expiring July 1, 1999.
In the normal course of business, various commitments to extend credit are
made which are not reflected in the accompanying Consolidated Financial
Statements. At March 31, 1996, formal credit line and loan commitments
which are primarily loans collateralized by real estate approximated $106.5
million, and outstanding letters of credit totalled $14.0 million. Such
amounts represent the maximum risk of loss on these commitments.
During the three month period ended March 31, 1995, the Bank sold in the
secondary market for cash, mortgage loans with net proceeds totalling $2.7
million. There were no such sales during the quarter ended March 31, 1996.
At March 31, 1996, the principal balance of the loans sold and exchanged
with the FHLMC which remain uncollected approximated $88.8 million. The
Bank is committed to service these loans. At March 31, 1996, the Bank was
also committed to service approximately $624,000 of outstanding mortgage
principal balances relating to the State of New York Mortgage Agency
("SONYMA"). The Bank has recently been notified by SONYMA of its intention
to terminate its servicing relationship with the Bank because of the limited
volume of loans currently being serviced.
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
<PAGE>
-13-
U.S.B. HOLDING CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
9. COMMITMENTS AND CONTINGENCIES (cont'd)
material effect on the Company's consolidated financial position or results
of operations.
In connection with its asset and liability management program, during 1994
the Bank entered into a protected rate agreement ("cap") which has an
aggregate notional amount of $3.5 million at March 31, 1996. The premium
paid in the amount of $85,000 was deferred and is being amortized over the
five year life of the cap. Under the terms of the cap, the Bank will be
reimbursed for increases in one month LIBOR for any month during the term of
the agreement in which such rate exceeds the "strike level" of 8.1875
percent. Interest rate cap agreements allow the Bank to limit its exposure
to unfavorable interest rate fluctuations over and above the "capped" rate.
The purchased cap hedges income payments from a mortgage-backed security
with an interest rate adjusted annually to the one year Treasury rate. This
agreement is subject to the counterparty's ability to perform in accordance
with the terms of the agreement. The Bank's risk of loss is equal to the
original premiums paid to enter into this agreement.
<PAGE>
-14-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 1996, the Company had total assets of $701.2 million, an increase
of 3 percent, or $22.5 million from December 31, 1995. Total deposits increased
$19.8 million for the three month period ended March 31, 1996, to $630.4
million, which represented a 3 percent increase from December 31, 1995. Savings
deposits accounted for the greatest increase in deposits, $19.8 million, as the
Company introduced and promoted a new product, the "Golden Statement" account,
which replaced the "Liquid Gold" account and accounted for the majority of the
increase in the savings deposit category. Time deposits increased $15.5
million overall. Time deposits less than $100,000 increased by $7.6 million,
primarily due to the promotion of time deposits associated with the Stony Point
branch opening, the Bank's seventeenth branch. Time deposits greater than
$100,000 from local municipalities, which are obtained on a bidding basis with
maturities of 30 to 180 days, increased by $6.6 million, while IRAs/Keoghs
increased by $4.2 million due to promotions of this product during the first
quarter of 1996. These increases in time deposits were offset by a decrease in
retail time deposits greater than $100,000 of $2.9 million. NOW accounts
increased by $1.1 million during the first quarter of 1996. Deposit decreases
occurred in money market deposits ($5.2 million), as customers generally
switched their balances to higher yielding deposit products, and demand
deposits ($11.5 million) as seasonal deposits were withdrawn. The deposit net
increase was used primarily to fund loans and security purchases under the
Company's asset/liability policy.
The securities portfolio of $242.5 million and $231.2 million at March 31, 1996
and December 31, 1995, respectively, consists of securities held to maturity at
amortized cost of $58.9 million and $60.3 million, and securities available for
sale at fair market value totalling $183.6 million and $170.9 million,
respectively.
Obligations of U.S. Treasury and other Government agencies increased $18.7
million during the quarter ended March 31, 1996 due primarily to purchases of
$52.6 million, net of sales of $32.0 million and securities called of $.5
million during the quarter. The U.S. Treasuries were sold to take advantage of
market conditions, while the U.S. Government agencies were sold because of the
expectation that they would be called. Obligations of other Government agencies
are often used as collateral for the Company's pledging requirements. Mortgage-
backed securities decreased $2.9 million as principal payments of $3.6 million,
sales of $2.6 million, and amortization and prepayments offset purchases of $4.5
million. The security transactions that took place during the quarter ended
March 31, 1996, resulted in improved overall earnings of the portfolio, while
maintaining the high quality nature of the portfolio. The Bank's investment in
obligations of states and political subdivisions decreased by $1.4 million
during the first three months of 1996 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 Bank also continues to maintain
investments in medium-term corporate debt securities and other securities which
are rated investment grade by nationally recognized rating organizations. For
the quarter ended March 31, 1996, such securities decreased by $3.1 million,
principally due to a sale of $1.0 million of such securities and maturities
during the period.
<PAGE>
-15-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
FINANCIAL CONDITION (cont'd)
The Company continues to exercise its conservative approach to investing by
making high quality investments and controlling interest rate risk by averaging
investments in medium-term maturities.
At March 31, 1996, net loans were $415.2 million, a net increase of $27.8
million or 7 percent over December 31, 1995 due to net increases in all major
loan categories, particularly commercial mortgages. Outstanding loan balances
increased $22.2 million in commercial mortgages, $2.7 million in residential
mortgages, $2.1 million in time secured and unsecured loans, and $1.7 million in
credit card balances outstanding relating to the Visa credit card business which
was sold to the Bank by Royal in December 1995. The Bank had approximately
$106.5 million in formal credit lines and loan commitments outstanding.
Management considers its liquid resources to be adequate to fund future loans in
the foreseeable future, principally by utilizing excess funds temporarily placed
in federal funds sold, increases in deposits and Federal Home Loan Bank
advances, loan repayments and maturing securities.
The Bank has approximately $3.3 million of loans, secured by lease receivables,
to Bennett Funding Group, a lease finance company, which recently filed for
bankruptcy protection. The Bank does not yet know if any loss will be sustained
on these loans. However, based upon Bennett's filing, the loans have been
placed on nonaccrual status. Including the Bennett loans, the Bank's nonaccrual
loans were less than 1.1 percent of total assets at March 31, 1996.
The Bank's allowance for loan losses increased $.4 million or 9 percent to $4.3
million at March 31, 1996, from $3.9 million at December 31, 1995. The
allowance for loan losses represented 1.03 percent of net loans outstanding at
March 31, 1996, compared to 1.01 percent at December 31, 1995. The allowance
reflects a provision of $475,000 and net charge-offs of $114,000 recorded thus
far in 1996. Management takes a prudent and cautious position in evaluating
various business and economic uncertainties in relation to the Bank's loan
portfolio. In management's judgment, at March 31, 1996, the allowance is
considered adequate to absorb potential losses inherent in the credit portfolio.
Stockholders' equity increased to $51.9 million at March 31, 1996, an increase
of $.6 million from the December 31, 1995 balance of $51.3 million. The net
income of $2.3 million for the three month period ended March 31, 1996, was
offset by cash dividends on both preferred stock of $79,000 and common stock of
$420,000. During the first quarter, the Company issued 8,752 shares of treasury
stock at fair market value in the aggregate amount of $250,000. Due to market
conditions that have occurred thus far this year, the effect of SFAS No. 115 for
the three month period ended March 31, 1996, was to decrease stockholders'
equity, net of tax effect, by $1,461,000.
The Company's leverage ratio at March 31, 1996 was 7.53 percent, compared to
7.67 percent at December 31, 1995, well above the "well-capitalized" level of 5
percent. The Company's Tier I and total capital ratios under the risk-based
capital guidelines were 11.10 percent and 12.01 percent at March 31, 1996 and
11.37 percent and 12.26 percent at December 31, 1995, respectively, which
remained above the "well-capitalized" levels of 6 percent (Tier I) and 10
percent (Total Capital).
<PAGE>
-16-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS
EARNINGS
Net income for the three month period ended March 31, 1996, increased $550,000
or 32 percent to $2.3 million, compared to the same period in 1995. Net income
per common and common equivalent share increased to $.74 per share in the first
quarter of 1996 from $.58 per common share recorded in the same period in 1995.
The annualized return on average total assets increased to 1.30 percent for the
three months ended March 31, 1996 from 1.10 percent for the quarter ended March
31, 1995. 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 March 31, 1996, net interest income increased
15 percent to $6.8 million, from $5.9 million in the year earlier period.
Although net interest income increased $892,000 year-to-year due to the volume
increase of average net earning assets, the net interest spread declined to 3.46
percent in the first quarter of 1996 from 3.57 percent in the three month period
ended March 31, 1995, as a flatter Treasury yield curve in the first quarter of
1996 impacted the interest rate spread. The interest spread of 3.46 percent
during the first quarter of 1996 remained the same as the fourth quarter of
1995. Yields on interest earning assets and the cost of funds both decreased
slightly in the first quarter of 1996 compared to the fourth quarter of 1995,
due to prime rate decreases which occurred during the fourth quarter of 1995 and
first quarter of 1996, and a Federal Reserve discount rate decrease which
occurred in the first quarter of 1996. These decreases were somewhat offset by
higher yielding time deposits due to the new Stony Point branch opening
promotion and an IRA/Keogh promotion during the first quarter of 1996. In
addition, a new savings product was introduced during the first quarter of 1996
which replaced the "Liquid Gold" product which paid a rate equal to the Federal
Reserve discount rate. The new product, which has a tiered-rate, paid an
interest rate for the highest tier ($100,000 and over) which was the same as the
Liquid Gold product during the quarter ended March 31, 1996.
PROVISION FOR LOAN LOSSES
The provision for loan losses increased $275,000 to $475,000 for the three month
period ended March 31, 1996, compared to the same period in 1995. Net charge-
offs in the first quarter of 1996 totalled $114,000 relating primarily to real
estate loans, compared to $205,000 of charged-off loans (principally commercial
loans) during the same period in 1995. Nonaccrual loans increased to $7.2
million at March 31, 1996, from $4.0 million at December 31, 1995 and $6.9
million at March 31, 1995. The Bank has approximately $3.3 million of loans,
secured by lease receivables, to Bennett Funding Group, a lease finance company,
which recently filed for bankruptcy. The Bank does not yet know if any loss
will be sustained on these loans. However, based upon Bennett's filing, the
loans have been placed on nonaccrual status at March 31, 1996. 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
<PAGE>
-17-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
PROVISION FOR LOAN LOSSES (Cont'd)
assets of the Bank since, in addition to foregone revenue, it must increase the
level of provision for loan losses, and incur other costs associated with
collections of past due balances.
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 experience. Management has
taken a prudent and cautious position in evaluating various business and
economic uncertainties in relation to the Company's loan portfolio and believes
that the allowance for loan losses at March 31, 1996 reflects the risk elements
inherent in the total loan portfolio at this time. 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 March 31, 1996 increased $376,000
to $1,225,000 from $849,000 in the same period of 1995. The increase in 1996
was due to an increase in the gains on securities transactions, which offset
decreases on gains/losses of loans held for sale, service charges and other
income. The relationship of non-interest income to non-interest expenses
increased to 29 percent for the quarter ended March 31, 1996, compared to 20
percent for the same period in March 1995.
The net gain on securities transactions of $447,000 for the three months ended
March 31, 1996, was a result of activity that occurred during the quarter in
the securities portfolio, which improved the overall earnings of the portfolio
through sales gains and replacement yields, while maintaining high quality
securities. During the quarter, the Bank sold approximately $36.1 million of
securities, principally callable U.S. Government agencies ($12.0 million) and
U.S. Treasuries ($20.0 million). The U.S. Government agencies were sold
because of the expectation that they would be called this year, while the U.S.
Treasuries were sold to take advantage of market conditions. The net loss on
securities transactions of $57,000 for the three months ended March 31, 1995,
was a result of transactions that occurred in the quarter to restructure the
securities portfolio by enhancing yield and improving liquidity, offset by gains
on the sale of certain callable securities which would have been called during
1995.
The net loss of $78,000 during the quarter ended March 31, 1996 for loans held
for sale resulted from the write-down of loans previously held for sale which
were transferred to the held to maturity portfolio. These loans were
transferred at the lower of cost or fair value. The net gain on loans held for
sale in the first quarter of 1995 of $14,000 was principally due to the sale of
$2.7 million of fixed rate residential mortgages.
Service charges decreased $23,000 in the first three months of 1996, compared to
the prior year. Although there were more deposit accounts in the first quarter
<PAGE>
-18-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
NON-INTEREST INCOME (Cont'd)
of 1996 compared to 1995, lower insufficient funds charges and increased
competition impacted increases in fees.
Other income decreased $13,000 to $235,000 in the first quarter of 1996, due
principally to lower mortgage servicing income ($27,000) as a result of a lower
volume of loans serviced, offsetting higher fee income from the Company's Visa
credit card program ($19,000), which was a start-up program in the first quarter
of 1995.
NON-INTEREST EXPENSES
Non-interest expenses rose $59,000 to $4,242,000 for the three months ended
March 31, 1996, an increase over the comparable period in 1995 of $4,183,000.
Salaries, the largest component of non-interest expense, increased $108,000 to
$1.6 million for the quarter ended March 31, 1996, compared to 1995. This
increase occurred due to annual merit increases, the opening of the Stony Point
branch in January 1996, and also additional personnel necessary for the Bank to
accommodate the increases in both deposits and loans and their related services,
which offset the decrease in Royal personnel, as Royal was sold on December 31,
1995. Full-time equivalent employees of 203 at March 31, 1996 represented an
increase from 195 full-time equivalent employees at March 31, 1995.
Employee benefits increased $140,000 to $788,000 for the three month period
ended March 31, 1996, compared to the quarter ended March 31, 1995. The change
occurred primarily because of an increase in incentive compensation programs
which are based upon the Company's net income and overall financial performance,
higher payroll taxes during 1996 due to the higher salary base and increases in
other employee benefit programs such as medical, tuition and training.
The changes in the other components of non-interest expenses for the three month
period ended March 31, 1996 compared to March 31, 1995, were due to the
following:
* Increase of $56,000 (7%) in occupancy and equipment cost was due principally
to increased costs associated with the branch opened in January, 1996,
maintenance expenses associated with the severe winter of 1996, and an
increase in maintenance contracts relating to the Bank's branch and computer
related equipment.
* Increase of $40,000 (21%) in advertising and business development because of
the new branch opening promotions and advertising related to other new
deposit products such as IRAs/Keoghs and "Golden Statement" savings account.
* Increase of $38,000 (21%) in professional fees due to legal fees primarily
associated with loan collections and foreclosures, examination fees for the
New York State Department of Banking examination scheduled for 1996 and other
litigation costs.
<PAGE>
-19-
U.S.B. HOLDING CO., INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT'D)
NON-INTEREST EXPENSES (Con't)
* Increase of $12,000 (8%) in communication expenses due to an increase in
postage and telephone expenses that arose as a result of postal volume, new
branch addition and transfer of credit card operations from Maryland to New
York.
* Increase of $19,000 (26%) in stationery and printing because of the new
branch and increase in deposit and loan volume.
* Decrease of $302,000 (100%) in FDIC insurance premiums as the Bank Insurance
Fund reached its required level of 1.25 percent of insured deposits in 1995,
causing the reduction in annual FDIC premium for the Bank to $2,000 in 1996.
* Decrease of $52,000 (13%) in other expense due to a reduction in foreclosure
related expenses, lower amortization of intangible assets due to intangible
assets becoming fully amortized in 1995, lower insurance expense due to a
refund received in 1996, offset by an increase in credit card expenses in
1996 due to the growth of the program.
INCOME TAXES
The effective tax rates for the three month periods ended March 31, 1996 and
1995 were 33 percent and 29 percent, respectively. The increase in the overall
effective tax rate in 1996 reflects a lower percent of non-taxable security
income due to maturities of these securities during 1995. The 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 risks and maturity.
<PAGE>
-20-
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit XI - Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K. A Form 8-K was filed by the Company during the
quarter ended March 31, 1996. On January 12, 1996, a press release
announced that the sale of the Company's wholly-owned subsidiary,
Royal Oak Savings Bank, F.S.B. to Monocacy Bancshares, Inc. had been
completed effective December 31, 1995. 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 May 10, 1996.
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>
EXHIBIT XI
U.S.B. HOLDING CO., INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<S> <C>
Weighted average number of common
shares outstanding 2,796,870
Assuming exercise of options reduced
by the number of shares which could
have been purchased with the proceeds
from exercise of such options 127,456
-----------
Weighted average common and common
equivalent shares outstanding 2,924,326
-----------
-----------
Net income $2,250,000
Less: Preferred stock dividend requirements 79,000
-----------
Net income available to common shareholders $2,171,000
-----------
-----------
Net Income Per Common and Common Equivalent Share $ 0.74
-----------
-----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18538
<INT-BEARING-DEPOSITS> 193
<FED-FUNDS-SOLD> 2600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 183609
<INVESTMENTS-CARRYING> 58877
<INVESTMENTS-MARKET> 30580
<LOANS> 419503
<ALLOWANCE> 4265
<TOTAL-ASSETS> 701239
<DEPOSITS> 630409
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4957
<LONG-TERM> 14000
0
3750
<COMMON> 14402
<OTHER-SE> 33721
<TOTAL-LIABILITIES-AND-EQUITY> 701239
<INTEREST-LOAN> 9225
<INTEREST-INVEST> 385
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 13080
<INTEREST-DEPOSIT> 6065
<INTEREST-EXPENSE> 6245
<INTEREST-INCOME-NET> 6875
<LOAN-LOSSES> 475
<SECURITIES-GAINS> 447
<EXPENSE-OTHER> 4362
<INCOME-PRETAX> 3343
<INCOME-PRE-EXTRAORDINARY> 330
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2250
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
<YIELD-ACTUAL> 7186
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3904
<CHARGE-OFFS> 122
<RECOVERIES> 8
<ALLOWANCE-CLOSE> 4265
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
