<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 March 31, 1998
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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
HIGH POINT FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2426221
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(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)
(973) 948-3300
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(Registrant's telephone number, including area code)
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(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 March 31, 1998 there were 3,786,480 shares outstanding of Common Stock,
no par value.
<PAGE>
HIGH POINT FINANCIAL CORP.
Form 10-Q Index
<TABLE>
<CAPTION>
Part I Financial Information
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets - March 31, 1998 (unaudited) and December 31, 1997 1
Consolidated Income Statements - Unaudited Three Months Ended March 31, 1998 and 1997 2
Consolidated Statements of Changes in Shareholders' Equity - unaudited Three months ended
March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows - Unaudited Three Months Ended
March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
The Securities and Exchange Commission 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.
</TABLE>
<PAGE>
Item 1. Financial Information
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
March 31, 1998 December 31,
ASSETS (unaudited) 1997
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<S> <C> <C>
Cash and due from banks $9,052 $9,789
Federal funds sold 15,200 11,200
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Total cash and cash equivalents 24,252 20,989
Securities:
Available for sale, at fair value 50,439 52,854
Held to maturity, at cost (market value of $22,022 in 1998 and
$24,923 in 1997) 21,873 24,766
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Total securities 72,312 77,620
Loans held for sale 32 88
Loans 132,736 126,687
Add: Deferred expenses 41 35
Less: Allowance for possible loan losses (4,156) (4,120)
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Net loans 128,621 122,602
Land held for sale 1,865 1,865
Premises and equipment - net 3,068 3,135
Accrued interest receivable 1,220 1,315
Other real estate 1,010 989
Cash surrender value of life insurance policies 5,211 5,147
Other assets 2,401 2,578
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TOTAL ASSETS $239,992 $236,328
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Deposits:
Transaction accounts:
Interest bearing $32,752 $31,447
Non-interest bearing 39,346 40,366
Savings accounts 61,411 61,498
Time accounts (includes CDs $100 or over of $9,207 and $7,623 on
March 31, 1998 and December 31, 1997, respectively) 67,890 65,119
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Total deposits 201,399 198,430
Securities sold under agreements to repurchase 7,968 8,201
Long-term debt 5,000 5,000
Accrued expenses and other liabilities 2,718 2,354
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Total liabilities 217,085 213,985
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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, outstanding 3,786,480 shares 18,932 18,932
Additional Paid-in-Capital 5,759 5,767
Accumulated Deficit (2,003) (2,517)
Accumulated other comprehensive income 219 161
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Total stockholders' equity 22,907 22,343
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $239,992 $236,328
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</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
1
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CONSOLIDATED INCOME STATEMENTS - (UNAUDITED)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
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<S> <C> <C>
INTEREST INCOME
Interest income and fees on loans $2,831 $2,541
Interest on securities - taxable 1,196 1,200
Interest on securities -non-taxable 1 -
Interest on federal funds sold and
deposits with other banks 177 53
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TOTAL INTEREST INCOME 4,205 3,794
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INTEREST EXPENSE
Interest on deposits 1,506 1,371
Interest on other borrowed money 103 55
Interest on note payable and other
long-term debt 79 21
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TOTAL INTEREST EXPENSE 1,688 1,447
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NET INTEREST INCOME 2,517 2,347
Less: Provision for possible loan losses - -
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NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE LOAN LOSSES 2,517 2,347
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NON-INTEREST INCOME
Service charges on deposit accounts 327 358
Commissions and fees 248 199
Gain on sale of bank premises and equipment 35 23
Other income 84 136
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TOTAL NON-INTEREST INCOME 694 716
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NON-INTEREST EXPENSE
Salaries and employee benefits 1,221 1,291
Net occupancy expense 226 243
Equipment expense 196 203
Legal expense 68 63
Net cost of operation of other real estate 8 11
Other expenses 631 544
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TOTAL NON-INTEREST EXPENSE 2,350 2,355
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Income before provision (benefit) for income taxes 861 708
Provision (benefit) for income taxes 347 286
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NET INCOME $514 $422
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BASIC EARNINGS PER COMMON SHARE $0.14 $0.11
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DILUTED EARNINGS PER COMMON SHARE $0.13 $0.11
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WEIGHTED AVERAGE COMMON SHARE
AND COMMON SHARE EQUIVALENTS 3,786 3,786
==========================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
2
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive Accumulated Comprehensive Common Additional Treasury
TOTAL Income Deficit Income Stock Paid-in-Capital Stock
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<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 $19,977 ($4,822) $76 $18,932 $5,791 $---
Comprehensive income
Net Income - 1997 422 $422 422 --- --- --- ---
Other comprehensive
income, net of tax
Unrealized losses
on securities
available for sale,
net of ($145) in tax (275) (275) --- --- --- ---
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Other comprehensive
income (275) (275)
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Comprehensive income $147
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BALANCE MARCH 31, 1997 $20,124 ($4,400) ($199) $18,932 $5,791 $---
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BALANCE DECEMBER 31, 1997 22,343 (2,517) 161 18,932 5,767 -
Comprehensive income
Net Income - first
quarter 1998 514 514 514
Other comprehensive
income, net of tax
Unrealized gains on
securities available
for sale, net of
$26 in tax 58 58 --- --- --- ---
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Other comprehensive
income 58 58
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Comprehensive income $572
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Purchase of treasury stock (18) --- --- --- --- (18)
Exercise of stock options 10 --- --- --- (8) 18
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BALANCE MARCH 31, 1998 $22,907 ($2,003) $219 $18,932 $5,759 $---
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</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
3
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CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
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1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $514 $422
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 152 136
Amortization of securities discount, net 71 5
Net cash paid related to discount (premium) on matured securities 74 24
Loan fees amortized, net (6) (5)
Deferred income tax provision 286 282
Gain on sale of premises and equipment (35) (23)
Increase in accrued interest receivable and other assets (125) (386)
Increase in accrued expenses and other liabilities 401 68
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NET CASH PROVIDED BY OPERATING ACTIVITIES 1,332 523
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INVESTING ACTIVITIES
Proceeds from maturity of securities:
Available for sale 3,000 2,077
Held for maturity 2,866 596
Purchase of securities:
Available for sale (619) (4,312)
Net increase of interest bearing deposits with banks - (192)
Net increase in loans (5,957) (3,117)
Capital expenditures (87) (436)
Proceeds from sale of premises and equipment - 6
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NET CASH USED IN INVESTING ACTIVITIES (797) (5,378)
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FINANCING ACTIVITIES
Net increase (decrease) in deposits 2,969 (1,291)
Increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase (233) 5,367
Repayments of long-term debt principal - (146)
Purchase of treasury stock (18) -
Exercise of stock options 10 -
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NET CASH PROVIDED BY FINANCING ACTIVITIES 2,728 3,930
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Net increase (decrease) in cash and cash equivalents 3,263 (925)
Cash and cash equivalents, beginning of period 20,989 14,528
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CASH AND CASH EQUIVALENTS, END OF PERIOD $24,252 $13,603
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
INTEREST PAID $1,639 $1,432
INCOME TAXES PAID - 26
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</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
4
<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 according to the SEC rules
and regulations. These interim financial statements should be read in
conjunction with the consolidated financial statements and accompanying notes
included in the High Point Financial Corp. Annual Report on Form 10-K for the
year ended December 31, 1997.
The results of operations for the periods presented do not necessarily indicate
the results to be expected for the year.
NOTE 2. INTEREST:
Accrued expenses and other liabilities includes accrued interest expense of
$721,000 at March 31, 1998 and $672,000 at December 31, 1997.
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 which owns 6.6%
of the outstanding Common Stock of High Point. Rent paid to FMI, Inc. was
$93,000 for each of the first quarters in 1997 and 1998.
NOTE 4. EARNINGS PER SHARE:
Basic earnings per share is calculated by dividing earnings available to common
shareholders by the weighted average number of common shares outstanding during
each year. Diluted earnings per share is calculated by dividing earnings
available to common shareholders by the average number of common shares and
common share equivalents outstanding during the year. Common share equivalents
consist of outstanding options to purchase common stock. The Company adopted
Statement of Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128")
effective December 31, 1997. All prior periods reported earnings per share have
been restated to reflect SFAS No. 128.
NOTE 5. IMPAIRED LOANS
On January 1, 1995, NBSC adopted Statement of Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" ("SFAS No.114"), and
Statement of Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan, Income Recognition and Disclosures".
NBSC's recorded investment in impaired loans and the related valuation allowance
calculated under SFAS No. 114, at the end of first quarter 1998 and 1997, and
the average recorded investment in impaired loans during each of those quarters
follows:
March 31, 1998:
- - Investment of $2.97 million.
- - Valuation allowance of $392,000.
- - Average recorded investment of $3.04 million during first quarter 1998.
March 31, 1997:
- - Investment of $3.84 million.
- - Valuation allowance of $689,000.
- - Average recorded investment of $3.79 million during first quarter 1997.
5
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Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining investment is doubtful, in which case
payments are recorded as reductions of principal. NBSC recognized interest on
impaired loans of $71,000 in first quarter 1998 and $70,000 in first quarter
1997.
At March 31, 1998, NBSC had $411,000 in loans that resulted from troubled debt
restructurings that occurred prior to the adoption of SFAS No. 114. If NBSC had
recognized interest on these troubled loans at original contractual rates,
rather than at renegotiated rates as required by Statement of Financial
Accounting Standards No. 15, "Troubled Debt Restructurings," the effect on
income for 1998 would not have been material.
NOTE 6. COMPREHENSIVE INCOME
During the first quarter 1998, the Company implemented Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
The objective of SFAS No. 130 is to report a measure of all changes in equity of
an enterprise that result from transactions and other economic events of the
period other than transactions with owners. Comprehensive income is the total
of net income and all other non-stockholder changes in equity. Non-stockholder
changes in equity include the following:
- - Unrealized holding gains/losses on securities classified as available for
sale under Statement of Financial Accounting Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities."
- - Foreign currency translation adjustments.
- - Minimum pension liability adjustments.
The only type of nonowner change in equity that the Company records are
unrealized holding gains/losses on securities classified as available for sale.
The following chart shows the Company's other comprehensive income as of March
31, 1998 and 1997.
<TABLE>
<CAPTION>
(dollars in thousands) March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Unrealized gain/(loss) on securities:
Unrealized holding gains/(losses) arising during
period $84 $(420)
Less: reclassification adjustment for
gains/(losses) included in net income - -
-----------------------------------------
Net unrealized gains/(losses) 84 (420)
Tax expense or benefit 26 (145)
-----------------------------------------
Other comprehensive income $58 $(275)
-----------------------------------------
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This section should be read in conjunction with 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,
1997.
SUMMARY
This Management's Discussion and Analysis provides details about the following:
- - Net income increased 22% from first quarter 1997 to first quarter 1998.
- - Assets increased 1.6% from December 31, 1997 to March 31, 1998.
- - Deposits increased 1.5% from December 31, 1997 to March 31, 1998.
- - Total loans increased 4.8% from December 31, 1997 to March 31, 1998.
RESULT OF OPERATIONS
Net income for the first quarter of 1998 was $514,000 compared to $422,000 for
the same period last year, an increase of $92,000 or 21.8%. Basic earnings per
share were $0.14 for first quarter 1998 compared to $0.11 for first quarter
1997. Return on average assets, defined as annualized net income as a percent
of average assets, was 0.86% for first quarter 1998
6
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compared to 0.77% for the same period in 1997. Return on average equity,
annualized net income as a percent of average equity, was 9.0% for first quarter
1998 compared to 8.3% for first quarter 1997.
Net income increased from first quarter 1997 to first quarter 1998 primarily as
a result of growth in the Company's earning assets and in the deposits that
support those assets.
NET INTEREST INCOME
Net interest income for the first quarter of 1998 was $2.52 million compared to
$2.35 million for the same period last year, an increase of $170,000 or 7.2%.
The increase in net income was the result of a $22.1 million increase in average
earning assets from first quarter 1997 to first quarter 1998. Net interest
income is the difference between interest income on earning assets and the
interest cost of funds supporting those assets.
Total interest income increased from $3.79 million in first quarter 1997 to
$4.21 million in first quarter 1998, an increase of $411,000 or 10.8%. An
increase in average earning assets caused total interest income to increase by
$430,000. A decline in the average yield on earning assets caused an offsetting
decline in interest income of $19,000.
Interest income on loans increased $290,000 primarily as a result of the
increase in average loans outstanding from $116.7 million in first quarter 1997
to $129.6 million in first quarter 1998, an increase of $12.9 million or 11.1%.
As non-performing loans continue to decline, the impact of nonperforming loans
on interest income continues to get smaller. Average non-accrual loans declined
from $3.8 million in first quarter 1997 to $2.8 million in the first quarter
1998. Interest lost on non-accrual loans dropped from $102,000 for the first
three months of 1997 to $74,000 for the first three months of 1998.
Total interest income on securities remained approximately the same at $1.2
million. Average investments outstanding declined slightly from $77.0 million
in first quarter 1997 to $76.4 million in 1998. Interest on federal funds sold
increased from $53,000 in first quarter 1997 to $177,000 in first quarter 1998.
Average balances on federal funds sold increased from $4.1 million in first
quarter 1997 to $13.2 million in first quarter 1998, an increase of $9.1
million.
Total interest expense increased from $1.45 million in the first three months of
1997 to $1.69 million in the first three months of 1998, an increase of $241,000
or 16.7%. The increase in average interest bearing liabilities from $155.5
million in the first quarter of 1997 to $174.9 million in the first quarter of
1998 caused a $185,000 increase in interest expense. The remaining $56,000
increase in interest expense was due to an increase in average rates paid on
deposits.
NON-INTEREST INCOME
Non-interest income for the first quarter of 1998 was $694,000, a decrease of
$22,000 or 3.1% from the same period last year. Declines in service charges
received on demand accounts was a significant portion of the decrease in non-
interest income. Service charges on demand accounts declined from $358,000 in
first quarter 1997 to $327,000 in 1998, a decline of $31,000 or 8.7% resulting
from declines in overdraft charges incurred. Other income declined from
$136,000 in first quarter 1997 to $84,000 in first quarter 1998, a decrease of
$52,000 or 38.2%. The decline in other income resulted from the receipt in the
first quarter of 1997 of $60,000 in proceeds of a life insurance policy covering
a former director.
Partially offsetting these declines in non-interest income were increases in
commissions and fees of $49,000 or 24.6% from the $199,000 reported in first
quarter last year. Commissions and fees increased as a result of the
implementation of a transaction charge on non-customer ATM transactions which
began in third quarter 1997.
NON-INTEREST EXPENSE
Non-interest expense for the first quarter of 1998 was $2.35 million, $5,000 or
0.2% less than reported for first quarter 1997. The largest variation in non-
interest expense is in salary and benefit expense which decreased $70,000 or
5.4% from $1,291,000 in first quarter 1997 to $1,221,000 in 1998. Salary and
benefit expense was higher in first quarter 1997 than first quarter 1998 due to
severance payments that were made to employees whose positions were terminated
in first quarter 1997. Salary and benefit expense was also higher in first
quarter 1997 than in first quarter 1998 because of employee incentives that were
paid in the form of stock grants and other gifts during first quarter 1997.
Partially offsetting the decreases in non-interest expense were increases in
marketing expense and other operating losses. Marketing expense increased from
$78,000 in first quarter 1997 to $97,000 in first quarter 1998, a $19,000 or
24.4% increase
7
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as a result of increased marketing efforts for investment and insurance services
that the bank offers. Other operating losses increased from $1,000 in first
quarter 1997 to $43,000 in 1998 as a result of a robbery at one of NBSC's branch
locations.
FINANCIAL CONDITION
At March 31, 1998, the consolidated assets of the Company were $240.0 million,
an increase of $3.7 million or 1.6% from the $236.3 million reported at year-end
1997.
DEPOSITS
Total deposits increased from $198.4 million on December 31, 1997 to $201.4
million on March 31, 1998, an increase of $3.0 million, or 1.5%. From December
31, 1997 to March 31, 1998, these accounts changed as follows:
- - Non-interest bearing transaction accounts decreased from $40.4 million at
year-end 1997 to $39.3 million at March 31, 1998, a decrease of $1.1 million
or 2.7% due to a cyclical outflow of deposits which generally occurs during
first quarter of each year.
- - Interest bearing transaction accounts increased from $31.4 million on
December 31, 1997 to $32.8 million on March 31, 1998, an increase of $1.4
million or 4.5%.
- - Savings accounts decreased marginally from $61.5 million at year-end 1997 to
$61.4 million on March 31, 1998.
- - Time deposits increased from $65.1 million to $67.9 million, an increase of
$2.8 million or 4.3%. A significant amount of this increase was in time
deposits with balances of $100,000 or over which increased from $7.6 million
at year-end 1997 to $9.2 million on March 31, 1998, a 21% increase due to an
increase in municipal deposits.
The decline in non-interest bearing transaction accounts and the increase in
time deposit accounts show a slight shift from non-interest bearing accounts to
higher costing CD accounts. The result of this is to increase the Company's
cost of funds.
LOANS
Total loans increased from $126.7 million reported December 31, 1997 to $132.7
million on March 31, 1998, an increase of $6.0 million or 4.7%. The composition
of the loan portfolio during that time period changed as follows:
- - Commercial loans decreased from $46.1 million at year-end 1997 to $43.9
million on March 31, 1998, a decrease of $2.2 million or 4.8%.
- - Real estate construction loans decreased from $7.0 million at year-end 1997
to $6.4 million on March 31, 1998, a 8.6% decline.
- - Real estate mortgage loans increased from $45.0 million at year-end 1997 to
$53.3 million on March 31, 1998, an increase of $8.3 million or 18.4%.
- - Installment loans increased from $28.6 million at year-end 1997 to $29.1
million on March 31, 1998, an increase of $483,000 or 1.7%.
Real estate mortgage loans and installment loans have increased because of high
demand in NBSC's market area for these products. Commercial demand has been
low. As commercial loans have been paid off, NBSC has not been able to replace
those loans with new commercial loans.
NON-PERFORMING ASSETS
Non-performing assets increased $179,000 or 4.1% to $4.5 million on March 31,
1998 due to the addition of one loan to loans past due over 90 days.
The following table itemizes non-performing assets each quarter end from March
31, 1997 to March 31, 1998:
8
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<TABLE>
<CAPTION>
Non-performing assets at 3/31/98 12/31/97 9/30/97 6/30/97 3/31/97
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(dollars in thousands)
Loans past due over 90 days $ 183 $ 4 $ 115 $ 101 $ 29
Loans on non-accrual 2,845 2,843 3,696 3,623 3,746
Troubled debt restructurings* 411 413 424 443 447
---------------------------------------------------------------------------------------------
Total non-performing loans 3,439 3,260 4,235 4,167 4,222
Other real estate 1,110 1,110 1,071 1,050 1,136
=============================================================================================
Total non-performing assets $4,549 $4,370 $5,306 $5,217 $5,358
=============================================================================================
=============================================================================================
</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-performing loans: Non-performing loans include loans past due 90 days or
more and still accruing interest, loans on non-accrual, and troubled debt
restructurings as defined by SFAS No. 15. Loans past due 90 days or more
increased from $4,000 at year-end 1997 to $183,000 at March 31, 1998, an
increase of $179,000. All loans past due 90 days or more and still accruing
interest are considered to be "in process of collection" which means that the
loan meets one of two criteria: First, there must be sufficient collateral to
cover the defaulted principal and interest payments. Second, management must be
confident that the loan will be satisfied in the near future--either because
NBSC intends to foreclose or because the borrower has arranged to pay off the
loan with funds from a third party.
Classified loans: Federal banking regulators have created other designations
such as "other assets especially mentioned" and "substandard," for certain loans
that appear to warrant particular attention. Every non-performing loan (as well
as certain performing loans) is in one of these categories. At March 31, 1998,
NBSC had $1.5 million in performing loans classified as "other assets especially
mentioned," and $6.0 million in performing loans classified as "substandard."
NBSC did not have any loans that fit within the regulators' other "adverse"
categories. The Company is not aware of any loan outstanding as of March 31,
1998, other than those already designated "other assets especially mentioned" or
"substandard," that is likely to become non-performing in the future.
Other real estate: Other real estate is property that the NBSC acquires when it
forecloses on the collateral for a defaulted loan. Other real estate remained
unchanged from $1.1 million reported at year-end 1997 compared to March 31,
1998. During first quarter 1998, NBSC acquired no new properties designated as
other real estate. NBSC did not sell any other real estate properties during
first quarter 1998.
Management obtains an appraisal on other real estate when the Company takes
title to the property unless it already has a contract of sale, or an appraisal
that conforms to regulatory guidelines. Thereafter, the Company obtains and
reviews appraisals as often as required by regulators, generally every two
years.
When the Company acquires other real estate, or obtains a new appraisal on other
real estate that it already owns, management records the carrying value of the
property as the appraised value less estimated costs of disposition. If a new
parcel of other real estate is appraised at less than the outstanding balance of
the loan it secured, the difference is charged to the allowance for possible
loan losses when the property is recorded as other real estate. Based on
management's continuing review of market conditions and updated appraisals of
other real estate, the Company will charge any further deterioration of market
value to the net cost of operation of other real estate. For first quarter
1998, there were no charge-offs on other real estate.
When the appraised fair value of a parcel of other real estate does not include
certain costs of disposition, the Company establishes a specific reserve or
allowance for other real estate. Management will make a charge-off to that
reserve when the Company actually incurs disposition costs. The following table
shows the level of provisions made to the allowance for other real estate and
charge-offs made to the specific reserves for the three months ended March 31,
1998 and 1997.
9
<PAGE>
<TABLE>
<CAPTION>
March 31, March 31,
(dollars in thousands) 1998 1997
- -----------------------------------------------------------
<S> <C> <C>
Beginning balance, January 1 $121 $50
Provisions - -
Charge-offs (21) -
------ ------
Ending balance $100 $50
====== ======
</TABLE>
THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses increased from $4.1 million on December
31, 1997 to $4.2 million on March 31, 1998 as a result of net recoveries of
previously charged off loans totaling $36,000. The following chart shows 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) 3/31/98 12/31/97 9/30/97 6/30/97 3/31/97
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $4,120 $4,100 $4,113 $4,060 $3,973
Loans charged-off (82) (41) (58) (28) (52)
Loans recovered 118 61 45 81 139
---------------------------------------------------------------------------------------------
Net (charge-offs) recoveries 36 20 (13) 53 87
Provision - - - - -
---------------------------------------------------------------------------------------------
Ending balance $4,156 $4,120 $4,100 $4,113 $4,060
=============================================================================================
Ratio of allowance for
possible loan losses to
non-performing loans 120.8% 126.4% 96.8% 98.7% 96.2%
=============================================================================================
</TABLE>
No provision for possible loan losses was recorded for the first quarter of
1998. NBSC's ratio of the allowance for possible loan losses to non-performing
loans has increased from 96.2% as of March 31, 1997 to 120.8% as of March 31,
1998 because non-performing loans decreased while the allowance for loan losses
increased slightly.
NBSC's management believes its allowance for possible loan losses is adequate.
Each quarter management makes a recommendation to the Board of Directors
regarding the appropriate level of the allowance for possible loan losses.
Management considers a variety of characteristics when making this
recommendation including present and expected economic conditions within the
market area, delinquency trends, trends in NBSC's loan portfolio versus trends
experienced by NBSC's peers, historical loss experience and results of an
independent quarterly review of certain loans by unaffiliated experts.
Management's quarterly evaluation takes place in three steps. First, management
reviews each troubled loan to estimate future losses for every loan that is
classified as "other assets especially mentioned" or "substandard." The review
assesses the potential loss on each credit in excess of $100,000 after
considering the value of the underlying collateral, recent payment history and
present and prospective conditions that could impact performance. If management
identifies a probable loss, it charges off the related loan to the extent of the
estimated loss. Management may also establish specific reserves for troubled
loans. Second, management uses information from the independent loan review to
monitor the status of larger non-criticized loans for changes that could impact
future collectibility. Third, management makes a general assessment of the
potential for loan losses in groups of performing loans and off balance sheet
credit commitments with similar characteristics based on historical and
projected collection statistics.
Based on such analysis, management believes that it has identified the risk in
the loan portfolio and that the loan loss reserve is adequate on March 31, 1998.
Management also believes that the allowance is adequate to absorb additional or
10
<PAGE>
unanticipated losses. Nevertheless, the Company could sustain losses that could
be substantial in relation to the size of the allowance for possible loan
losses.
SECURITIES PORTFOLIO
Investment securities and securities available for sale consist of the
following:
<TABLE>
<CAPTION>
March 31, 1998
-------------------------------------------------------------------------
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 $24,717 $304 $(8) $25,013
States and other political
subdivisions 307 --- --- 307
Mortgage backed securities:
U.S. agency issued 19,778 81 (57) 19,802
Other investments:
Federal Reserve Bank Stock 516 --- --- 516
Vanguard money market
fund 3,602 --- --- 3,602
Federal Home Loan Bank 1,128 --- --- 1,128
Marketable equity securities 60 11 --- 71
- --------------------------------------------------------------------------------------------------------------------------------
Securities available for sale $50,108 $396 $(65) $50,439
- --------------------------------------------------------------------------------------------------------------------------------
HELD TO MATURITY
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $2,493 $30 $ --- $2,523
Mortgage backed securities:
U.S. agency issued 19,380 135 (16) 19,499
- --------------------------------------------------------------------------------------------------------------------------------
Securities held to maturity $21,873 $165 $(16) $22,022
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
December 31, 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 $26,208 $278 $(11) $26,475
Mortgage backed securities:
U.S. agency issued 21,155 63 (94) 21,124
Other investments:
Federal Reserve Bank Stock 516 --- --- 516
Vanguard money market -
fund 3,790 --- --- 3,790
Federal Home Loan Bank 878 --- --- 878
Marketable equity securities 60 11 --- 71
- --------------------------------------------------------------------------------------------------------------------------------
Securities available for sale $52,607 $352 $(105) $52,854
- --------------------------------------------------------------------------------------------------------------------------------
HELD TO MATURITY
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $3,492 $30 $(1) $3,521
Mortgage backed securities:
U.S. agency issued 21,274 149 (21) 21,402
- --------------------------------------------------------------------------------------------------------------------------------
Securities held to maturity $24,766 $179 $(22) $24,923
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table show the amortized cost and estimated market value of the
securities of the Company at March 31, 1998 by contractual maturity:
<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 $500 $500 $6,483 $6,483
Due after one year through
five years 9,964 10,031 21,881 22,182
Due after five years but within 10
years 10,947 11,011 1,941 1,932
Due after 10 years 462 480 14,497 14,525
Federal Reserve Bank stock --- --- 516 516
Equity Securities --- --- 1,188 1,199
Vanguard money market fund --- --- 3,602 3,602
- --------------------------------------------------------------------------------------------------------------------------------
Securities held to maturity $21,873 $22,022 $50,108 $50,439
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
There is minimal credit risk in the Company's portfolio because all of its
securities are issued by the US Treasury or by a US government agency with the
exception of $60,000 in equity securities and $307,000 in tax exempt securities
issued by states and other political subdivisions. The securities issued by
states and political subdivisions are generally insured.
Although little credit risk exists in the Company's security portfolio, all of
the securities are subject to interest rate risk. If the Company holds fixed
rate securities while interest rates are rising, the Company will be earning
less than a market rate on its investment. The Company attempts to mitigate
that risk by not acquiring fixed rate instruments with a maturity of more than
five years with the exception of tax-exempt securities.
The Company owns a limited number of "agency callables" which are subject both
to interest rate risk and option risk. If interest rates increase after the
Company has purchased a fixed rate callable, the Company will be earning less
than market rate on the security. Because the security can be redeemed by the
issuer before its maturity, if interest rates decline, the issuer will probably
redeem the security before its maturity which will give the Company a return on
its investment which is less than originally expected. The Company mitigates
these risks by buying only callables with maturities of seven years or less.
The Company also owns $39.2 million in mortgage-backed securities issued by
government agencies. In a level interest rate environment, borrowers of the
underlying mortgages may prepay their mortgages at a predictable rate. In a
declining rate environment, borrowers may choose to prepay their mortgages at a
faster pace so that they can refinance. These prepayments reduce the yield on
the related securities. Conversely, when interest rates increase, borrowers may
refrain from prepaying at the expected rate, which will slow the flow of cash to
holders of the related securities. The Company manages "prepayment risk" by
buying mortgage-backed securities with a variety of coupon rates, and minimizes
its "extension risk" by purchasing the majority of its mortgage-backed
securities with balloon payments and original maturities no greater than seven
years.
LIQUIDITY
"Liquidity" measures whether an entity has sufficient cash flow to meet its
financial obligations as they come due. At NBSC, liquidity is provided by net
income, deposits, sales of loans, securities and overnight funds, and by
borrowing overnight funds. At March 31, 1998, NBSC had a portfolio of $50.4
million in securities available for sale and $15.2 million in overnight funds.
NBSC, as a member of the Federal Home Loan Bank, also has the ability to borrow
overnight funds up to $11.7 million as of March 31, 1998. NBSC also has an
arrangement with a brokerage firm that enables NBSC to pledge securities in
exchange for an overnight loan equal to 97% of the value of the securities
pledged. Management believes that NBSC's current level of liquidity is
sufficient to meet its current and anticipated operational needs.
High Point's liquidity requirements include printing expenses, and fees for
legal, auditing and other services. At March 31, 1998, High Point had $5,000 in
cash, and $65,000 in overnight funds available to meet its liquidity needs.
High Point's cash flow comes from three sources. First, High Point receives
dividends from its subsidiary, NBSC. Like all national banks, NBSC is subject
to restrictions on the dividends that it can declare. In particular, NBSC may
not declare dividends in excess of the current year's earnings, plus the
retained earnings from the prior two years, without prior approval from the
Office of the Comptroller of the Currency. In addition, NBSC may not pay
dividends while it has losses that exceed its aggregate retained earnings.
Although NBSC's earnings for first quarter 1998, plus the retained earnings from
the prior two years are $7.6 million, NBSC has aggregate retained earnings of
$3.51 million as of March 31, 1998.
Second, High Point can also generate cash by selling securities. At March 31,
1998, High Point had equity securities with a market value of $17,000. Third,
High Point owns land that is available for sale that could generate cash in the
future. Management believes that High Point's level of liquidity is sufficient
to meet its current and anticipated operational needs.
MARKET RISK
NBSC originates and invests in interest-earning assets and solicits interest
bearing deposit accounts, so interest rate fluctuations could have a dramatic
effect on NBSC's operations. When interest rates change, the rates on NBSC's
interest bearing assets and liabilities also may change, although not
necessarily by the same amounts or in the same proportions. Furthermore,
fluctuations in interest rates may cause borrowers to prepay loans or depositors
to withdraw deposited funds which will alter the Company's mix of interest-
bearing assets and liabilities.
NBSC monitors and controls interest rate risk through a variety of techniques,
including use of traditional rate sensitivity analysis (also known as "gap"
analysis) and an interest rate sensitivity model.
13
<PAGE>
Traditional gap analysis involves arranging NBSC's interest-earning assets and
interest-bearing liabilities by repricing periods and then computing the
difference (or "interest rate sensitivity gap") between the assets and
liabilities that are estimated to reprice during each time period and
cumulatively through the end of each time period.
The following table sets forth, as of March 31, 1998, certain information
regarding the Company's interest-earning assets and interest-bearing
liabilities, interest rate sensitivity gap and interest rate sensitivity gap
ratio. An asset or liability is shown as "rate-sensitive" during a particular
period if it will mature or if it could be repriced during that period.
Investment securities and securities available for sale (including mortgage-
backed securities and callable securities) are shown by maturity date. The
majority of interest-bearing demand deposits and savings deposits are assumed to
be core deposits, or deposits that will remain with NBSC regardless of market
interest rates. Therefore, 80% of the interest-bearing demand deposits and 75%
of the savings deposits are shown to be maturing or repricing in the "after 1
but within 5 years" column.
<TABLE>
<CAPTION>
Maturing or Repricing
-------------------------------------------------------------------------------------------------------
(in thousands)
- ---------------- After 3 After 6
Within three months but months but Total After 1 but
March 31, 1998 months within 6 months within 1 Year Within 1 Year within 5 years After 5 Years Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans $30,430 $6,088 $9,368 $45,886 $34,378 $49,668 $129,932
Loans held for sale 32 --- --- 32 --- --- 32
Investment securities --- --- 500 500 9,964 11,409 21,873
Federal funds sold 15,200 --- --- 15,200 --- --- 15,200
Securities available
for sale 7,800 1,496 2,988 12,284 22,182 15,973 50,439
------------------------------------------------------------------------------------------------------------
Total earning assets 53,462 7,584 12,856 73,902 66,524 77,050 217,476
Non-earning assets --- --- --- --- --- 22,516 22,516
------------------------------------------------------------------------------------------------------------
Total Assets 53,462 7,584 12,856 73,902 66,524 99,566 239,992
------------------------------------------------------------------------------------------------------------
Interest bearing
liabilities:
Deposits:
Interest bearing
demand 1,638 1,638 3,275 6,551 26,201 --- 32,752
Savings accounts 3,838 3,838 7,677 15,353 46,058 --- 61,411
Jumbo certificates 4,555 807 2,593 7,955 901 351 9,207
Other time deposits 18,977 11,805 15,082 45,864 11,438 1,381 58,683
------------------------------------------------------------------------------------------------------------
Total interest
bearing deposits 29,008 18,088 28,627 75,723 84,598 1,732 162,053
------------------------------------------------------------------------------------------------------------
Borrowings:
Repurchase agreements 7,968 --- --- 7,968 --- --- 7,968
Long-term debt --- --- --- --- 5,000 --- 5,000
------------------------------------------------------------------------------------------------------------
Total borrowings 7,968 --- --- 7,968 5,000 --- 12,968
------------------------------------------------------------------------------------------------------------
Non-interest bearing
demand deposits --- --- --- --- --- 39,346 39,346
Other liabilities --- --- --- --- --- 2,718 2,718
Stockholders' equity --- --- --- --- --- 22,907 22,907
------------------------------------------------------------------------------------------------------------
Total liabilities and
equity 36,976 18,088 28,627 83,691 89,598 66,703 239,992
------------------------------------------------------------------------------------------------------------
Interest rate
sensitivity gap $16,486 ($10,504) ($15,771) ($9,789) ($23,074) $32,863 $ -
============================================================================================================
Cumulative rate
sensitivity gap $16,486 $5,982 ($9,789) ($9,789) ($32,863) $ - $ -
============================================================================================================
Interest rate
sensitivity gap ratio 144.59% 41.93% 44.91% 88.30% 74.25% 149.27% ---%
Cumulative interest rate
sensitivity gap ratio 144.59% 110.86% 88.30% 88.30% 81.04% 100.00% ---%
</TABLE>
With the interest rate risk sensitivity model, NBSC projects future net interest
income, and then estimates the effect of various changes in interest rates and
balance sheet growth rates on that projected net interest income. Based on
management's analysis of its interest rate sensitivity, if rates were to
increase 200 basis points, net interest income would decrease $182,000; if
interest rates were to decline, net interest income would increase by the same
amount.
14
<PAGE>
CAPITAL RESOURCES
Stockholders' equity increased by $564,000 during the first three months of 1998
to $22.9 million. The Company's stockholders' equity is a mix of several
components: net income or net loss, issuance of new common stock, net unrealized
gains or losses in securities available for sale, and the acquisition or sale of
treasury stock. The increase in stockholders' equity during first quarter 1998
resulted from net income during the first quarter, and from increases in the
market values of securities available for sale. Unrealized gains on
securities available for sale increased from $161,000 at year-end 1997 to
$219,000 at year-end 1998. Book value per common share of stock (total
stockholders' equity divided by the number of common shares issued and
outstanding) increased to $6.05 on March 31, 1998 from $5.90 on December 31,
1997.
High Point and NBSC are subject to various regulatory capital requirements
administered by federal banking agencies. Failure to meet minimum capital
requirements can lead to certain supervisory actions by regulators that could
have a direct material effect on the Company or NBSC's financial statements.
Management believes, as of March 31, 1998, that the Company and NBSC meet all
capital adequacy requirements to which they are subject.
As of March 31, 1998, the most recent notification from the Office of the
Comptroller of the Currency categorized NBSC as "well capitalized," and the most
recent notification from the Federal Reserve Bank of New York placed the Company
in the same category. Management is not aware of any conditions or events that
have occurred since the Company received those notifications that would affect
the capital adequacy rating of either the Company or NBSC.
The following chart represents the capital ratios of the Company and NBSC on
March 31, 1998 compared to minimum regulatory requirements:
<TABLE>
<CAPTION>
Minimum
Required to be
Minimum Well Capitalized
Required for Under Prompt The
Capital Adequacy Corrective Action NBSC Company
Purposes Provisions 3/31/98 3/31/98
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leverage Ratio 4.00% 5.00% 8.20% 9.00%
Risk Based:
Tier I 4.00% 6.00% 15.72% 17.10%
Tier I plus Tier II 8.00% 10.00% 17.00% 18.38%
</TABLE>
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS No. 131"). This statement is
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires that a company report financial and descriptive information about its
"reportable operating segments." Management has determined that the Company and
NBSC do not have any reportable segments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For this information, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Market Risk."
15
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11. Statement of Computation of Per Share Income (Loss)
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income (loss) applicable to common stock $514,000 $422,000
Weighted average number of common
shares outstanding 3,786,480 3,786,480
Options issued to executive and officers 84,843 57,822
------------------------------------
Weighted average number of common
shares and common share equivalents 3,871,323 3,844,302
Basic earnings per share $0.14 $0.11
-----------------------------------------------------------------------------------
Diluted earnings per share $0.13 $0.11
-----------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Part II Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
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.
17
<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: May 8, 1998
- ------------------------------
By /s/ Rita A. Myers By /s/ Gregory W. A. Meehan
--------------------------- ---------------------------
Rita A. Myers Gregory W. A. Meehan
Comptroller Vice President and Treasurer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,052
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,439
<INVESTMENTS-CARRYING> 21,873
<INVESTMENTS-MARKET> 22,022
<LOANS> 132,736
<ALLOWANCE> 4,156
<TOTAL-ASSETS> 239,992
<DEPOSITS> 201,399
<SHORT-TERM> 7,968
<LIABILITIES-OTHER> 2,718
<LONG-TERM> 5,000
0
0
<COMMON> 18,932
<OTHER-SE> 3,975
<TOTAL-LIABILITIES-AND-EQUITY> 239,992
<INTEREST-LOAN> 2,831
<INTEREST-INVEST> 1,197
<INTEREST-OTHER> 177
<INTEREST-TOTAL> 4,205
<INTEREST-DEPOSIT> 1,506
<INTEREST-EXPENSE> 1,688
<INTEREST-INCOME-NET> 2,517
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,350
<INCOME-PRETAX> 861
<INCOME-PRE-EXTRAORDINARY> 861
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 514
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.13
<YIELD-ACTUAL> 4.65
<LOANS-NON> 2,845
<LOANS-PAST> 183
<LOANS-TROUBLED> 411
<LOANS-PROBLEM> 8,196
<ALLOWANCE-OPEN> 4,120
<CHARGE-OFFS> (82)
<RECOVERIES> 118
<ALLOWANCE-CLOSE> 4,156
<ALLOWANCE-DOMESTIC> 4,156
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
