<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 0-12430
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HIGH POINT FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2426221
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Branchville Square, Branchville, New Jersey 07826
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(Address of principal executive offices) (Zip Code)
(201) 948-3300
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of October 31, 1997 there were outstanding 3,786,480 shares of Common Stock,
no par value.
<PAGE>
HIGH POINT FINANCIAL CORP.
Form 10-Q Index
<TABLE>
<CAPTION>
PAGE
<S> <C>
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets - September 30, 1997 (unaudited) and
December 31, 1996 1
Consolidated Income Statements - Unaudited Three Months and Nine
Months Ended September 30, 1997 and 1996 2
Consolidated Statements of Cash Flow - Unaudited Nine Months Ended
September 30, 1997 and 1996 3
Notes to Consolidated Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 5
Part II Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
The Securities and Exchange Commission ( the "SEC") maintains a web
site which contains reports, proxy and information statements and
other information relating to registrants that file electronically at
the address: http:/ / www.sec.gov.
<PAGE>
ITEM 1. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 30, 1997 December 31,
ASSETS (unaudited) 1996
============================================================================================================
<S> <C> <C>
Cash and due from banks $ 8,474 $ 10,503
Federal funds sold 9,600 4,025
- - -------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 18,074 14,528
Interest bearing deposits with banks -- 123
Securities:
Available for sale, at fair value 54,950 53,575
Held to maturity, at cost (market value of $26,754 in 1997 and
$22,698 in 1996) 26,613 22,667
- - -------------------------------------------------------------------------------------------------------------
Total securities 81,563 76,242
Loans held for sale 61 178
Loans 124,692 114,631
Add: Deferred expenses 28 10
Allowance for possible loan losses (4,100) (3,973)
- - -------------------------------------------------------------------------------------------------------------
Net loans 120,620 110,668
Land held for sale 1,885 1,885
Premises and equipment - net 3,222 2,910
Accrued interest receivable 1,322 1,260
Other real estate 946 1,086
Cash surrender value of life insurance policies 5,080 4,939
Other assets 3,045 3,363
- - -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 235,818 $ 217,182
=============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- - -------------------------------------------------------------------------------------------------------------
Deposits:
Transaction accounts:
Interest bearing $ 30,533 $ 26,627
Non-interest bearing 38,964 43,149
Savings accounts 61,406 58,235
Time accounts (includes CDs $100 or over of $8,965 and $6,675 on
September 30, 1997 and December 31, 1996, respectively) 66,294 60,843
- - -------------------------------------------------------------------------------------------------------------
Total deposits 197,197 188,854
Securities sold under agreements to repurchase 9,268 5,054
Long-term debt 5,000 --
Accrued expenses and other liabilities 2,677 2,324
Note payable -- 846
Redeemable subordinated debentures, 8.5% due March 1, 1997 -- 127
- - -------------------------------------------------------------------------------------------------------------
Total liabilities 214,142 197,205
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Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 1,000,000 shares, no shares issued -- --
Common stock, no par value; stated value $5 per share; authorized 5,000,000
shares, issued 3,786,480 shares in 1996 and 1997 18,932 18,932
Additional Paid-in-Capital 5,768 5,791
Accumulated Deficit (3,161) (4,822)
Unrealized gain on securities available for sale, net of taxes 137 76
- - -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 21,676 19,977
- - -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 235,818 $ 217,182
=============================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
1
<PAGE>
CONSOLIDATED INCOME STATEMENTS - (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest income and fees on loans $ 3,050 $ 2,337 $ 8,250 $ 6,906
Interest on securities - taxable 1,333 1,171 3,723 3,228
Interest on federal funds sold and
deposits with other banks 131 156 275 472
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 4,514 3,664 12,248 10,606
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INTEREST EXPENSE
Interest on deposits 1,495 1,386 4,291 4,067
Interest on other borrowed money 163 39 283 114
Interest on note payable and other
long-term debt -- 31 32 101
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,658 1,456 4,606 4,282
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NET INTEREST INCOME 2,856 2,208 7,642 6,324
Less: Provision for possible loan losses -- -- -- --
- - -----------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 2,856 2,208 7,642 6,324
- - -----------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts 367 339 1,073 1,032
Commissions and fees 262 220 660 659
(Loss) on sales of securities -- (18) (9) (28)
Gain on the sales of loans -- -- -- 9
Gain on sale of bank premises and equipment 36 32 97 99
Other income 83 48 350 154
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 748 621 2,171 1,925
- - -----------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 1,227 1,140 3,749 3,401
Net occupancy expense 229 236 696 712
Equipment expense 238 141 655 408
Legal expense 57 53 152 241
Net cost of operation of other real estate 106 179 107 314
Unrealized loss on land held for sale -- 250 -- 250
Other expenses 536 534 1,657 1,708
- - -----------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 2,393 2,533 7,016 7,034
- - -----------------------------------------------------------------------------------------------------------------------
Income before provision (benefit) for income taxes 1,211 296 2,797 1,215
Provision (benefit) for income taxes 496 (2,472) 1,136 (3,086)
- - -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 715 $ 2,768 $ 1,661 $ 4,301
=======================================================================================================================
NET INCOME PER COMMON SHARE
AND COMMON SHARE EQUIVALENT $ 0.19 $ 0.73 $ 0.44 $ 1.14
=======================================================================================================================
WEIGHTED AVERAGE COMMON SHARE
AND COMMON SHARE EQUIVALENTS 3,786 3,786 3,786 3,777
=======================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) Nine Months Ended September 30,
-------------------------------
1997 1996
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,661 $ 4,301
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 433 312
Amortization of securities discount, net 18 118
Net cash paid related to discount (premium) on matured securities 15 (97)
Loan fees amortized, net (18) (33)
Deferred income tax provision (benefit) 408 (3,541)
Loss on sale of securities 9 28
Unrealized loss on land held for sale -- 250
Gain on sale of premises and equipment (97) (99)
(Increase) decrease in accrued interest receivable and other assets (190) 3,247
Increase in accrued expenses and other liabilities 463 97
- - --------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,702 4,583
- - --------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sale of available for sale securities 1,991 4,259
Proceeds from maturity of securities:
Available for sale 12,721 7,880
Held for maturity 3,321 3,429
Purchase of securities:
Available for sale (15,997) (17,885)
Held for maturity (7,302) (10,781)
Net decrease of interest bearing deposits with banks 123 --
Net (increase) in loans (9,817) (6,231)
Capital expenditures (770) (391)
Proceeds from sale of premises and equipment 13 5
- - --------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (15,717) (19,715)
- - --------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in deposits 8,343 10,715
Increase in long-term debt 5,000 --
Increase in federal funds purchased and
securities sold under agreements to repurchase 4,214 2,230
Repayments of long-term debt principal (973) (55)
Net payments for stock options exercised (23) --
Proceeds from conversion of equity contracts -- 396
- - --------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,561 13,286
- - --------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 3,546 (1,846)
Cash and cash equivalents, beginning of period 14,528 22,440
- - --------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,074 $ 20,594
========================================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
INTEREST PAID $ 4,455 $ 4,255
INCOME TAXES PAID (REFUNDED) 728 (3)
========================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
<PAGE>
Notes to Consolidated Financial Statements - (Unaudited)
Note 1. Basis of Presentation:
The accompanying consolidated financial statements of High Point Financial
Corp.("High Point") and its subsidiary, The National Bank of Sussex County
("NBSC"), reflect all adjustments and disclosures which are, in the opinion of
management, necessary for a fair presentation of interim results. All references
in this document to the "Company" refer to the consolidated company which
includes High Point and NBSC. The financial information has been prepared in
accordance with the Company's customary accounting practices and has not been
audited.
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted pursuant to the SEC rules
and regulations. These interim financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the High Point Financial Corp. Annual Report on Form 10-K for the
year ended December 31, 1996.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year.
Note 2. Interest:
Accrued expenses and other liabilities includes accrued interest expense of
$694,000 at September 30, 1997 and $543,000 at December 31, 1996.
Note 3. Related Party Transactions:
Net occupancy expense includes rent on certain properties leased from FMI, Inc.,
a wholly owned subsidiary of Franklin Mutual Insurance Company. Franklin Mutual
Insurance Company owns 6.6% of the outstanding Common Stock of High Point. Rent
paid to FMI, Inc. for each of the first nine months of 1996 and 1997 was
$278,000.
Note 4. Net Income Per Share:
Net income per share is calculated based on the weighted average number of
common share and common share equivalents outstanding during each period,
adjusted for the effects of stock dividends if any. Options granted under the
Company's stock option plans have been excluded from the computation since their
effect is immaterial.
Fully diluted net income per share is not presented because it approximates
primary net income per share.
Note 5. Impaired Loans
As of September 30, 1997, NBSC's recorded investment in impaired loans and the
related valuation allowance calculated under Statement of Financial Accounting
Standards ("SFAS") No. 114 are as follows:
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
-----------------------------------------------------------------------------
Recorded Valuation Recorded Valuation
(in thousands) Investment Allowance Investment Allowance
---------- --------- ---------- ---------
Impaired loans:
<S> <C> <C> <C> <C>
Valuation allowance required $3,802 $599 $4,546 $969
No valuation allowance required --- --- --- ---
-----------------------------------------------------------------------------
Total impaired Loans $3,802 $599 $4,546 $969
-----------------------------------------------------------------------------
</TABLE>
This valuation allowance is included in the allowance for loan losses on the
balance sheet.
The average recorded investments in impaired loans for the nine months ended
September 30, 1997 and September 30, 1996 were $3,826,000 and $4,613,000,
respectively.
Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining investment is doubtful, in which case
payments received are recorded as reductions of principal. NBSC recognized
interest income on impaired loans of $89,000 and $132,000 for the nine months
ended September 30, 1997 and September 30, 1996, respectively.
At September 30, 1997, NBSC had $424,000 of loans that resulted from troubled
debt restructurings that occurred prior to the adoption of SFAS No. 114. The
effect on income if interest on such troubled debt restructurings had been
recognized at original contractual rates during the year was not material.
4
<PAGE>
At September 30, 1997, NBSC was not committed to lend additional funds to
borrowers with loans with terms that have been modified in troubled debt
restructurings.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUMMARY
See Management's Discussion and Analysis of Financial Condition and Results of
Operations included in High Point Financial Corp.'s Annual Report on Form 10-K
for the period ended December 31, 1996.
For the nine months ended September 30, 1997, the Company's net income was
$1,661,000 or $0.44 per share compared to net income of $4,301,000 or $1.14 per
share for the same period in 1996. Net income for the first nine months of 1996
included a $3,086,000 benefit for income taxes representing the partial
recognition of net operating loss carryforwards through the reversal of a
previously established deferred tax valuation allowance. In first nine months of
1997, the Company recorded a tax provision based on prevailing statutory tax
rates.
Income before provision (benefit) for income taxes increased from $1,215,000 in
the first nine months of 1996 to $2,797,000 in the first nine months of 1997
which included an increase in net interest income from $6,324,000 in the first
nine months of 1996 to $7,642,000 in the same period in 1997, an increase of
$1,318,000 or 20.8%.
At September 30, 1997, the consolidated assets of the Company were approximately
$235.8 million, an increase of $18.7 million or 8.6% from the $217.2 million
reported December 31, 1996. Return on average assets for the first nine months
of 1997 was 0.98% compared to the 2.81% reported for the same period last year.
Return on average equity was 10.66% for the first nine months of 1997 compared
to 36.20% for the same period in 1996. Annualized income before provision
(benefit) for income taxes as a percent of average assets for the first nine
months of 1997 and 1996 was 1.65% and 0.79%, respectively. Annualized income
before provision (benefit) for income taxes as a percent of average equity for
the first nine months of 1997 and 1996 was 17.96% and 10.23%, respectively.
RESULTS OF OPERATIONS
Total interest income increased from $10,606,000 reported on September 30, 1996
to $12,248,000 for September 30, 1997, an increase of $1,642,000 or 15.5%.
Average earning assets net of non-accrual loans increased from $184.4 million in
the first nine months of 1996 to $202.6 million in the first nine months of
1997, an increase of $17.9 million or 9.7%. Interest income increased $1,072,000
as a result of an increase in the volume of earning assets and $216,000 due to
an increase in the average yield on earning assets. Interest income also
increased as a result of the payoff of a troubled loan. NBSC received payment of
$354,000 in interest owed on that loan which had not been previously accrued.
Average loans have increased $15.5 million from the first nine months of 1996 to
the first nine months of 1997 while average investments have increased $8.0
million from the first nine months of 1996 to the first nine months of 1997.
Average federal funds sold declined from $11.9 million in first nine months 1996
to $6.8 million in first nine months 1997, a decrease of $5.1 million or 42.9%.
Federal funds sold were permitted to decline as a result of NBSC's membership in
the Federal Home Loan Bank in fourth quarter 1996 giving NBSC greater access to
borrow overnight funds should the need arise. The ability of NBSC to reduce its
federal funds sold gives it the ability to invest more funds in higher earning
investments or loans.
While the amount of loans on non-accrual continues to impact interest income and
fees on loans, average non-accruals continued to decline from $5,340,000 for the
first nine months of 1996 to $3,655,000 for the first nine months of 1997, a
decline of 31.6%. Interest lost on non-accrual loans was approximately $394,000
for the first nine months of 1996 compared to $290,000 for the first nine months
of 1997.
Total interest expense increased from $4,282,000 in the first nine months of
1996, to $4,606,000 in the first nine months of 1997, an increase of $324,000 or
7.6%. The major contributing factor of the increase in interest expense was an
increase in the average volume of interest bearing liabilities from $149.4
million for the first nine months of 1996 to $163.4 million for the first nine
months of 1997. Interest expense increased $392,000 due to an increase in volume
offset by a decline of $68,000 due to a decrease in the cost of funds.
Net interest income for the first nine months of 1997 was $7,642,000 compared to
$6,324,000 for the same period in 1996, an increase of $1,318,000 or 20.8%. No
provision for possible loan losses was recorded for the first nine months of
1996 or 1997. Based on its evaluation of the allowance for possible loan losses
and as a result of continued declines in its non-performing loans and classified
loans, NBSC's management believes its allowance for loan losses is adequate at
this time. For further information, see the discussion under "Financial
Condition" below.
5
<PAGE>
Total non-interest income increased from $1,925,000 for the first nine months of
1996 to $2,171,000 for the first nine months of 1997, an increase of $246,000 or
12.8%. Service charges on deposit accounts increased $41,000 as a result of
increased volume of demand deposit accounts. Other income increased $196,000
primarily due to income earned on life insurance policies and on income
resulting from a death benefit paid with respect to an insurance policy on a
former director.
Total non-interest expense decreased from $7,034,000 reported in the first nine
months of 1996 to $7,016,000 in the first nine months of 1997, a decrease of
$18,000 or 0.3%. Salaries and employee benefit expense increased from $3,401,000
in the first nine months of 1996 to $3,749,000 in the first nine months of 1997,
an increase of $348,000 or 10.2%. The increase in salary and employee benefit
expense is comprised of several items. First, benefit costs increased due to the
implementation during fourth quarter 1996 of an Executive Supplemental
Retirement Plan. The costs of this plan are offset by the increase in other
income as previously mentioned. Second, expense related to employee incentives
and awards including stock grants were made during first quarter 1997. Finally,
salary and, to some extent, benefit expense increased due to merit increases and
additional seasonal staff in 1997.
Equipment expense increased from $408,000 in first nine months of 1996 to
$655,000 in first nine months of 1997, an increase of $247,000 or 60.5% as a
result of an upgrade in the Company's computer system and software which
resulted in increased depreciation and service contract expense. Net cost of
operation of other real estate decreased substantially from $314,000 reported in
the first nine months of 1996 to $107,000 in the first nine months of 1997, a
decrease of $207,000. The decline in net cost of operation of other real estate
results from a decline in the number of properties in other real estate
resulting in less expenses and writedowns on properties. Rental income and gains
on sales of other real estate also increased from the first nine months of 1996
to the first nine months of 1997. Legal expense declined from $241,000 for the
first nine months of 1996 to $152,000 for the same period in 1997 as a result of
less expenses incurred to work out non-performing assets. Other expenses
decreased from $1,708,000 for the first nine months of 1996 to $1,657,000 for
the same period in 1997, a decrease of $51,000 or 3.0%. Included in this
decrease was a $139,000 decrease in FDIC insurance expense from $156,000 in 1996
to $17,000 in 1997 resulting from a reduction in deposit premiums. Offsetting
this decline was an increase in telephone expense from $108,000 in the first
nine months of 1996 to $136,000 for the same period in 1997 as a result of an
upgrade in telecommunications lines. Printing and supply expense increased from
$172,000 in the first nine months of 1996 to $195,000 in the same period in 1997
as a result of costs to reprint forms and brochures necessary to comply with
changing regulations. Training expenses also increased as a result of the data
processing upgrade.
Included in non-interest income in 1996 was an unrealized loss on the Company's
land held for sale of $250,000 which was recorded to reflect estimated costs for
improvements necessary to enhance the marketability of the land and to reflect
an additional impairment on the land based upon the fact that a prior contract
of sale had been terminated.
QUARTER TO QUARTER ANALYSIS
Net income for third quarter 1997 was $715,000 or $0.19 per share compared to
net income of $2,768,000 or $0.73 per share recorded for third quarter 1996. Net
income for third quarter 1997 included a tax expense of $496,000 compared to a
tax benefit of $2,472,000 recorded in third quarter 1996. Income before taxes
was $1,211,000 in third quarter 1997 compared to $296,000 for the same period in
1996.
Total interest income increased from $3,664,000 for third quarter 1996 to
$4,514,000 for the same period in 1997, an increase of $850,000 or 23.2%.
Interest income increased $354,000 from third quarter 1996 to third quarter 1997
as a result of the troubled loan payoff as described above. Interest income on
average earning assets also increased $432,000 due to an increase in volume and
$44,000 due to an increase in yields on earning assets. The average amount of
loans on non-accrual for third quarter 1997 and third quarter 1996 were
$3,648,000 and $4,683,000, respectively. Interest lost on loans on non-accrual
for third quarter 1997 and third quarter 1996 were $95,000 and $113,000,
respectively.
Total interest expense increased from $1,456,000 in third quarter 1996 to
$1,658,000 in third quarter 1997, an increase of $202,000 or 13.9%. Interest
expense increased $193,000 due to the increase in the volume of interest bearing
liabilities and $9,000 due to an increase in average rates paid on interest
bearing liabilities.
Net interest income for the third quarter increased from $2,208,000 in 1996 to
$2,856,000 in 1997, an increase of $648,000. There was no provision for possible
loan losses in the third quarter of 1996 or 1997.
Total non-interest income increased from $621,000 in third quarter 1996 to
$748,000 in third quarter 1997, an increase of $127,000 or 20.5%. Commissions
and fees increased from $220,000 in third quarter 1996 to
6
<PAGE>
$262,000 in third quarter 1997 primarily as a result of an increase in
commissions on full service brokerage and annuity sales from $112,000 in third
quarter 1996 to $135,000 in third quarter 1997. Other income increased from
$48,000 in third quarter 1996 to $83,000 in third quarter 1997, an increase of
$35,000 as a result of income earned on life insurance policies.
Total non-interest expense decreased from $2,533,000 reported in third quarter
1996 to $2,393,000 for the third quarter in 1997, a decrease of $140,000 or
5.5%. Net cost of operation of other real estate declined from $179,000 in net
expenses for the third quarter of 1996 to $106,000 in net expenses for the same
period in 1997, a decrease of $73,000. Total non-interest expense in third
quarter 1996 also included the $250,000 unrealized loss on land held for sale
discussed above. Offsetting these declines in non-interest expense are increases
in salary and benefit expense from $1,140,000 in third quarter 1996 to
$1,227,000 in the same period in 1997, an increase of $87,000. The increase in
salary and benefit expense results from increased benefit expense related to the
Executive Supplemental Retirement Plan put in place at the end of 1996, and due
to merit increases. Equipment expense also increased $97,000 from $141,000 in
third quarter 1996 to $238,000 in third quarter 1997 due to upgrades in computer
systems as discussed above.
FINANCIAL CONDITION
At September 30, 1997, loans were $124.7 million compared to $114.6 million
reported December 31, 1996, an increase of approximately $10.1 million or 8.8%.
The Company had $61,000 loans held for sale as of September 30, 1997, compared
to $178,000 at year-end 1996. Mortgage loans increased $9.3 million, or 27.8%,
from $33.4 million at December 31, 1996 to $42.7 million at September 30, 1997.
Commercial loans declined from $51.1 million on December 31, 1996 to $48.2
million on September 30, 1997, a decrease of $2.9 million or 5.7%. Real estate
construction loans have decreased from their year-end 1996 levels of $7.0
million to $5.9 million on September 30, 1997, a decrease of $1,100,000 or
15.7%. Installment loans increased during this period from $23.2 million to
$27.9 million, an increase of $4.7 million or 20.3%.
Investment securities and securities available for sale consist of the
following:
<TABLE>
<CAPTION>
September 30, 1997
- - ---------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $26,688 $264 $(14) $26,938
Mortgage backed securities:
U.S. agency issued 22,004 69 (115) 21,958
Other investments:
Federal Reserve Bank Stock 516 --- --- 516
Vanguard money market fund 4,593 --- --- 4,593
Federal Home Loan Bank 878 --- --- 878
Marketable equity securities 60 7 --- 67
- - ---------------------------------------------------------------------------------------------------------------------
Securities available for sale $54,739 $340 $(129) $54,950
- - ---------------------------------------------------------------------------------------------------------------------
HELD TO MATURITY
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $3,993 $34 $(1) $4,026
Mortgage backed securities:
U.S. agency issued 22,620 145 (37) 22,728
- - ---------------------------------------------------------------------------------------------------------------------
Securities held to maturity $26,613 $179 $(38) $26,754
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
December 31, 1996
- - ---------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $30,763 $275 $(27) $31,011
Mortgage backed securities:
U.S. agency issued 15,507 40 (180) 15,367
Other investments:
Federal Reserve Bank Stock 516 --- --- 516
Vanguard money market fund 5,855 --- --- 5,855
Federal Home Loan Bank 786 --- --- 786
Marketable equity securities 35 5 --- 40
- - ---------------------------------------------------------------------------------------------------------------------
Securities available for sale $53,462 $320 $(207) $53,575
- - ---------------------------------------------------------------------------------------------------------------------
HELD TO MATURITY
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $3,004 $29 $(1) $3,032
Mortgage backed securities:
U.S. agency issued 19,663 92 (89) 19,666
- - ---------------------------------------------------------------------------------------------------------------------
Securities held to maturity $22,667 $121 $(90) $22,698
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
At September 30, 1997, the contractual maturities of investment securities and
securities available for sale are as follows:
<TABLE>
<CAPTION>
Securities
Investment securities Available for Sale
- - ---------------------------------------------------------------------------------------------------------------------
Estimated Estimated
Amortized Market Amortized Market
(in thousands) Cost Value Cost Value
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $501 $506 $6,456 $6,487
Due after one year through five years 9,010 9,069 24,280 24,498
Due after five years but within 10 years 16,572 16,632 1,737 1,719
Due after 10 years 530 547 16,219 16,192
Federal Reserve Bank stock --- --- 516 516
Equity Securities --- --- 938 945
Vanguard money market fund --- --- 4,593 4,593
- - ---------------------------------------------------------------------------------------------------------------------
Securities held to maturity $26,613 $26,754 $54,739 $54,950
- - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
All securities in the Company's investment portfolio with the exception of
$60,000 in equity securities are either obligations of the U.S. Treasury or
backed by U.S. government agencies. Therefore, management's view is that little
credit risk exists in the portfolio. The Company's available for sale securities
are those which are held for an indefinite period of time which management may
use as part of its operating strategy or which may be sold as part of responses
to changes in interest rates, changes in prepayment risk or other similar
factors. Securities available for sale are recorded on the balance sheet at
their fair value.
Mortgage-backed securities are subject to prepayment risk in a declining rate
environment and to extension risk in an increasing rate environment. Prepayments
can lower the yield on securities that were purchased at a premium. The Company
manages the prepayment risk in its portfolio by purchasing its mortgage-backed
8
<PAGE>
securities with a variety of coupon rates. Extension risk, on the other hand
increases the average life on a mortgage-backed security, without a
corresponding increase in yield. The Company minimizes its extension risk by
maintaining the majority of its mortgage-backed securities in balloon
mortgage-backed securities with original maturities of seven years or less.
Total deposits increased from approximately $188.9 million on December 31, 1996
to approximately $197.2 million on September 30, 1997, an increase of $8.3
million or 4.4%. During this period, non-interest bearing transaction accounts
decreased and interest bearing transaction accounts, savings and time accounts
increased. Balances in non-interest bearing transaction accounts decreased from
$43.1 million at year-end 1996 to $39.0 million on September 30, 1997, a
decrease of $4.1 million, or 9.5%. Interest-bearing transaction accounts
increased from $26.6 million on December 31, 1996 to $30.5 million on September
30, 1997, an increase of $3.9 million, or 14.7%. Savings deposits increased from
$58.2 million to $61.4 million, an increase of $3.2 million or 5.5%. Time
accounts increased from $60.8 million to $66.3 million, an increase of $5.5
million or 9.0%. The increase in time deposits included a $2.3 million or 34.3%
increase in CDs $100,000 or over.
Non-performing loans, as the schedule below indicates, were $4.2 million at
September 30, 1997, a decrease of 4.5% from the $4.4 million reported year-end
1996.
<TABLE>
<CAPTION>
Non-performing assets at 9/30/97 6/30/97 3/31/97 12/31/96 9/30/96
- - -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Loans past due over 90 days $ 115 $ 101 $ 29 $ 0 $ 120
Loans on non-accrual 3,696 3,623 3,746 3,850 4,577
Troubled debt restructurings* 424 443 447 505 512
-------------------------------------------------------------------------------------------------
Total non-performing loans 4,235 4,167 4,222 4,355 5,209
Other real estate 1,071 1,050 1,136 1,136 1,050
-------------------------------------------------------------------------------------------------
Total non-performing assets $5,306 $5,217 $5,358 $5,491 $6,259
=================================================================================================
</TABLE>
* Troubled debt restructurings as defined in SFAS No. 15 "Accounting by Debtors
and Creditors for Troubled Debt Restructurings"; excludes loans classified as
past due over 90 days or non-accrual.
Non-accrual loans decreased from $3.9 million reported at year-end 1996 to $3.7
million at September 30, 1997, a decrease of $154,000 or 4.0%. Other real estate
decreased $65,000 during the first nine months of 1997 and increased $21,000
from September 30, 1996. Generally, other real estate is appraised when title is
taken on the property unless there is a contract of sale or there is a valid
appraisal on file which conforms to regulatory guidelines. Upon transfer or
receipt of a new appraisal, the property's carrying value is adjusted to its
appraised value less estimated costs of disposition if such value is lower than
its existing carrying value. Any reduction of the carrying value of the
underlying collateral is charged to the allowance for possible loan losses when
the property is recorded as other real estate. Appraisals thereafter are
received in accordance with regulatory guidelines. Throughout the year,
properties are generally inspected and marketing efforts reviewed to determine
any potential deterioration in value. Based on this continuing review and
results of updated appraisals as required, any further deterioration to the
market value is expensed to the net cost of operation of other real estate.
During the first nine months of 1997, NBSC classified one new property for
$21,000 as other real estate. There was one property sold for $86,000 and no
writedowns of other real estate in the first nine months of 1997.
It is the Company's policy to establish specific reserves on properties included
in other real estate when the appraised fair value of the property does not
include certain estimated costs of disposition. When the costs that are
estimated are actually incurred, a charge-off is made to the specific reserve.
The following chart shows a comparative analysis of the quarterly level of
charge-offs and provisions made to the specific reserves for other real estate
for the nine months ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
September 30, September 30,
(dollars in thousands) 1997 1996
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Beginning balance, January 1 $50 $-
Provisions 75 50
Charge-offs - -
------------------- -------------------
Ending balance $125 $50
=================== ===================
</TABLE>
Loans classified by management but not included above as non-performing assets
at September 30, 1997 include $1.6 million classified as "special mentioned" and
$7.0 million classified as "substandard". These loans as of September 30, 1997
were not past due over 90 days. As part of management's evaluation for the
allowance for possible loan losses, it has provided specific reserves for these
loans as deemed necessary.
9
<PAGE>
There were no loans as of September 30, 1997 other than those classified as set
forth in this paragraph or those included in the non-performing loan table where
the Company was aware of any credit conditions of the borrower which would
indicate a strong possibility that the borrower could not comply with the
present terms and conditions of repayment and which would result in such loan
being included as a non-accrual, past due or restructured loan at some future
time.
The allowance for possible loan losses increased from approximately $4.0 million
on December 31, 1996 to $4.1 million on September 30, 1997. The following chart
indicates the quarterly levels of loans charged off, recoveries of previously
charged off loans, provisions made to the allowance, quarterly ending balances
of the allowance, and the ratio of the allowance to non-performing loans.
<TABLE>
<CAPTION>
For the quarter ended
-----------------------------------------------------------------------------------------------
(dollars in thousands) 9/30/97 6/30/97 3/31/97 12/31/96 9/30/96
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $4,113 $4,060 $3,973 $3,961 $4,121
Loans charged-off (58) (28) (52) (108) (239)
Loans recovered 45 81 139 120 79
-----------------------------------------------------------------------------------------------
Net (charge-offs) recoveries (13) 53 87 12 (160)
Provision - - - - -
===============================================================================================
Ending balance $4,100 $4,113 $4,060 $3,973 $3,961
===============================================================================================
Ratio of allowance for
possible loan losses to
non-performing loans 96.8% 98.7% 96.2% 91.2% 76.0%
====================================================================================
</TABLE>
No provision for possible loan losses was recorded for the first nine months of
1997. NBSC's ratio of the allowance for possible loan losses to non-performing
loans has increased from the 76.0% reported on September 30, 1996 to 96.8% on
September 30, 1997 because of declines in non-performing loans resulting from
payments in connection with those loans, charge-offs and foreclosures. Net
recoveries of $127,000 in the first nine months of 1997 increased the allowance
for possible loan losses from December 31, 1996 to September 30, 1997. NBSC's
management believes that its allowance for possible loan losses is adequate
because of the nature of its methodology to monitor the allowance for possible
loan losses. NBSC performs the following procedures in order to evaluate the
adequacy of the allowance for possible loan losses: First, NBSC conducts a loan
specific review each quarter. This review assesses the estimated future losses
for every loan classified as non-performing, as well as performing loans which
have been criticized (either internally or by NBSC's regulators) which do not
meet the requirements for non-performing loan status. Second, management
monitors on a periodic basis the status of larger non-criticized credits for
changes and developments which could affect future collectibility. Third, NBSC
assesses the potential for loan losses in performing loans and off balance sheet
credit commitments, which are not specifically reviewed, by estimating general
reserve requirements based on historical and anticipated collection statistics.
The aggregate of specific credit review and general reserve requirements are
monitored at least quarterly to ensure that the level of NBSC's allowance for
possible loan losses is adequate. Management also evaluates the adequacy of the
allowance for possible loan losses based on trends in non-performing loans and
charge-offs, the Company's loan loss experience and present and prospective
economic conditions within the market area. Included in the economic analysis is
a review of appraisals received in accordance with regulatory guidelines.
Management incorporates any trends in the fair value of the collateral of the
underlying loans in its analysis of the adequacy of the allowance for possible
loan losses. As a result of this ongoing analysis, management believes at this
time that the allowance for possible loan losses is adequate to absorb any
additional losses that may arise in the loan portfolio, although no assurances
can be given that the Company will not sustain losses in any given period which
could be substantial in relation to the size of the Company's allowance.
LIQUIDITY
At NBSC, liquidity is typically provided by funds received through customer
deposits, investment sales and maturities, borrowings and net income. NBSC's
management believes the portfolio of securities available for sale, cash and due
from banks and federal funds sold currently provide sufficient liquidity to meet
anticipated operational liquidity requirements at NBSC. NBSC's ability to borrow
up to $17.5 million from the Federal Home Loan Bank also is a potential source
for short-term liquidity needs. In addition, the sale of loans is an alternative
method for meeting liquidity requirements.
At High Point, liquidity is provided by funds received from the subsidiary bank
in the form of dividends and by sale of High Point assets. NBSC, as a national
bank, is subject to dividend restrictions. Under such restrictions, NBSC may
not, without the prior approval of the Office of the Comptroller of the Currency
(the "OCC"), declare dividends in excess of the current year's earnings plus the
retained earnings from the prior two years. NBSC also is restricted from paying
dividends if at any time losses have been sustained by the
10
<PAGE>
bank that exceed its retained earnings. As of September 30, 1997, NBSC's
earnings for the current year plus the retained earnings from the prior two
years are $7,947,000. NBSC has total retained earnings of $2,391,000 (net of the
dividends discussed below) and cannot pay dividends in excess of its retained
earnings.
High Point paid in cash the final interest payment of $3,000 and remaining
$127,000 of Redeemable Subordinated Debentures on March 1, 1997. The Redeemable
Subordinated Debentures are no longer outstanding.
During second quarter, 1997, High Point paid off a Note Payable secured by land.
At the time of payoff, High Point owed $821,000 at an interest rate of prime
plus one percent (9.50%). The lending bank agreed to a settlement on the note of
$770,000 plus outstanding interest. NBSC's Board of Directors declared a
$500,000 dividend to High Point to enable High Point to pay off the note. The
$51,000 of the debt forgiven is included in other income in the income
statement.
At September 30, 1997, High Point had $5,000 in cash and $45,000 in federal
funds sold available to meet its liquidity needs. High Point has securities
available for sale, which at September 30, 1997, had a market value of $13,000.
High Point has periodic expenses including legal fees, printing expenses,
external audit fees and other miscellaneous fees. NBSC's Board of Directors paid
an additional dividend of $100,000 to High Point on June 22, 1997 for payment of
such expenses in 1997.
Another source of cash is the sale of the land held for sale. There is no
assurance that the land will be sold. The land continues to generate buyer
interest.
INTEREST RATE SENSITIVITY
A change in interest rates could affect NBSC's ability to earn net interest
income in the future. One tool that NBSC uses to measure the potential impact
from interest rate changes is the static gap report. The static gap report shows
when certain interest-earning assets and interest-bearing liabilities could
potentially reprice. Traditional gap theory holds that when a bank is
asset-sensitive (meaning that it has more interest rate-sensitive assets
repricing within a given time frame than interest rate-sensitive liabilities)
and interest rates increase, the bank's net interest margin should increase. If
a bank is liability-sensitive (meaning that is has more liabilities repricing in
a given time frame than assets), and interest rates increase, the net interest
margin should decrease. As of September 30, 1997, in a one year time frame, the
Company's interest rate-sensitive liabilities exceeded its interest
rate-sensitive assets by $43.7 million. What gap theory does not take into
account is that when interest rate changes occur they do not always affect
rate-sensitive assets at the same time or proportionately. In addition to gap
analysis, management uses simulation modeling under a variety of scenarios to
estimate its interest rate sensitivity. Based on management's analysis of its
interest rate sensitivity, if interest rates were to increase by 100 basis
points, net interest income would decrease approximately $40,000 in a one year
time frame. Conversely, if interest rates were to decrease by 100 basis points,
net interest income would increase by the same amount.
In third quarter 1997, NBSC borrowed $10 million in repurchase agreements which
included a $5 million 30 day repurchase agreement and a $5 million 5 year
repurchase agreement with a 3 year call (included in long-term debt). The
proceeds of the repurchase agreements were invested in a fixed rate mortgage
backed security. This transaction was done primarily to enhance the Company's
return on equity by increasing net interest income. The blend of the two
repurchase agreements - one with a thirty day maturity at 5.63% and one with a 5
year maturity 3 year call at 5.98% provides some insulation against prepayment
risk while providing some stability in the cost of funds of the transaction.
CAPITAL RESOURCES
Stockholders' equity increased $1,699,000 during the first nine months of 1997
to $21.7 million. The increase in stockholders' equity resulted from recording
net income in the first nine months of 1997. In addition to the positive impact
of net income on capital was an increase in the market value of the Company's
available for sale security portfolio. The Company recorded an unrealized gain
on securities available for sale of $137,000 (net of taxes) at September 30,
1997 compared to an unrealized gain of $76,000 at year-end 1996. The book value
(total of stockholders' equity divided by the number of common shares issued and
outstanding) of the Company's common stock was $5.72 at September 30, 1997
compared to the $5.28 reported at December 31,1996.
High Point and NBSC are subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators, that if undertaken could have a direct
material effect on the financial statements of the Company or NBSC. Quantitative
measures established by regulation to ensure capital adequacy require the
Company and NBSC to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined).
11
<PAGE>
Management believes, as of September 30, 1997, that the Company and NBSC meet
all capital adequacy requirements to which they are subject.
As of September 30, 1997, the most recent notification from the OCC categorized
NBSC as well capitalized under the regulatory framework for prompt corrective
action. Similarly, the most recent notification from the Federal Reserve Bank of
New York categorized the Company as well capitalized. To be well capitalized
NBSC and the Company must maintain minimum total risk based, Tier I risk-based
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institutions' category.
The following chart represents the capital ratios of the Company and its
subsidiary, NBSC, on September 30, 1997, compared to minimum regulatory
requirements:
<TABLE>
<CAPTION>
Minimum
Required to be
Minimum Well Capitalized
Required for Under Prompt The
Capital Adequacy Corrective Action Company NBSC
Purposes Provisions 9/30/97 9/30/97
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leverage Ratio 4.00% 5.00% 8.24% 7.81%
Risk Based:
Tier I 4.00% 6.00% 16.25% 14.88%
Total capital 8.00% 10.00% 17.52% 16.16%
</TABLE>
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share and SFAS No.
129, Disclosure of Information about Capital Structure. The purpose of SFAS No.
128 is to harmonize the earnings per share ("EPS") calculation with those common
in other countries and to simplify the calculation requirements contained in APB
Opinion No. 15, Earnings per Share. The major change to be implemented by SFAS
No. 128 is that primary EPS will be replaced by "Basic EPS." Basic EPS is
computed by dividing earnings available to common shareholders by weighted
average shares outstanding. No dilution for any potentially dilutive securities
is included. Fully diluted EPS will now be called dilutive EPS. When applying
the treasury stock method for diluted EPS, to compute dilution for options and
warrants, a company uses its average share price for the period, rather than the
more dilutive greater of the average share price or end of period share price
required by APB Opinion No. 15.
SFAS No. 128 is effective for financial statements for interim and annual
periods ending after December 31, 1997 with earlier application prohibited.
Management does not anticipate that the adoption of this statement will have an
impact on the financial condition of the Company because the Company's current
EPS calculation method is the same as what the basic EPS calculation will be.
Options granted under the Company's stock option plans have been excluded from
the calculation because their effect is immaterial.
SFAS No. 129 requires the disclosure of the rights and privileges of all
securities other than ordinary common stock. SFAS No. 129 is also effective for
financial statements for periods ending after December 15, 1997. Management does
not expect that the implementation will have any impact on the Company's
financial statements because the only securities the Company has issued and
outstanding is ordinary common stock.
In June 1997, the Financial Accounting Standards Board issued two additional
statements. SFAS No. 130, Reporting Comprehensive Income, establishes standards
for reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. The statement is effective for fiscal years beginning after December
15, 1997; earlier application is permitted. The Company has elected not to adopt
this statement prior to its effective date and has not determined which
financial statement will be utilized to display comprehensive income. The second
statement, SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. The statement
becomes effective for fiscal years beginning after December 15, 1997; earlier
application is permitted. The Company has elected not to adopt this statement
prior to its effective date and has not determined if it has any reportable
segments.
12
<PAGE>
HIGH POINT FINANCIAL CORP. Computation of Net Income Per Share - (Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------------
Net Income Per Share (Primary) 1997 1996
<S> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
Net income $1,661,000 $4,301,000
After-tax interest expense related to the assumed reduction of outstanding debt* --- ---
--------------------------------------------------------------------------------------------------------------------------
(1)Income applicable to common stock $1,661,000 $4,301,000
==========================================================================================================================
Shares used in this computation:
Weighted average number of common shares outstanding 3,786,480 3,776,974
Number of shares issuable on conversion of mandatory stock purchase contracts and
exercise of stock options classified as common share equivalents* --- ---
--------------------------------------------------------------------------------------------------------------------------
(2)Adjusted weighted average number of common shares and common share
equivalents * 3,786,480 3,776,974
==========================================================================================================================
Net income per common share and common share equivalents (primary)
(1 divided by 2) * $0.44 $1.14
==========================================================================================================================
</TABLE>
* The after-tax interest expense related to the assumed reduction of
outstanding debt, the number of shares issuable on conversion of
mandatory stock purchase contracts classified as common share
equivalents are excluded from the 1996 and 1997 computation since
their effect is immaterial.
13
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 11. Computation of net income per share is filed with Part I
of this report.
(b) Reports on Form 8-K.
None.
14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
High Point Financial Corp.
--------------------------
(Registrant)
Dated: November 13, 1997
- - -------------------------------
By/s/ Rita A. Myers By /s/ Gregory W. A. Meehan
- - ------------------------------- -----------------------------------
Rita A. Myers Gregory W. A. Meehan
Comptroller Vice President and Treasurer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8474
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 54950
<INVESTMENTS-CARRYING> 26613
<INVESTMENTS-MARKET> 26754
<LOANS> 124720
<ALLOWANCE> 4100
<TOTAL-ASSETS> 235818
<DEPOSITS> 197197
<SHORT-TERM> 9268
<LIABILITIES-OTHER> 2677
<LONG-TERM> 5000
0
0
<COMMON> 18932
<OTHER-SE> 2744
<TOTAL-LIABILITIES-AND-EQUITY> 21676
<INTEREST-LOAN> 8250
<INTEREST-INVEST> 3723
<INTEREST-OTHER> 275
<INTEREST-TOTAL> 12248
<INTEREST-DEPOSIT> 4291
<INTEREST-EXPENSE> 4606
<INTEREST-INCOME-NET> 7642
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (9)
<EXPENSE-OTHER> 7016
<INCOME-PRETAX> 2797
<INCOME-PRE-EXTRAORDINARY> 2797
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1661
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 4.68
<LOANS-NON> 3696
<LOANS-PAST> 115
<LOANS-TROUBLED> 424
<LOANS-PROBLEM> 10509
<ALLOWANCE-OPEN> 3973
<CHARGE-OFFS> 138
<RECOVERIES> 265
<ALLOWANCE-CLOSE> 4100
<ALLOWANCE-DOMESTIC> 4100
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
