SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ending September 30, 1995
Commission file number 2-80325
BATH NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
New York 16-1185097
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
44 Liberty Street, Bath, NY 14810
(Address of principal executive offices) (zip code)
(607) 776-9661
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes __X___ No ______
The number of shares outstanding of the issuer's Common Stock, $5 par
value was 677,766 shares as of September 30, 1995. <PAGE>
<PAGE>
TABLE OF CONTENTS
Page Number
PART I. FINANCIAL INFORMATION 1-4
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 5
ITEM 2. Changes in Securities 5
ITEM 3. Defaults upon Senior Securities 5
ITEM 4. Submission of Matters to a vote
of Security Holders 5
ITEM 5. Other Information 5
ITEM 6. Exhibits and Reports Form 8-K 5
PART III. MANAGEMENTS DISCUSSION AND ANALYSIS 6-8
<PAGE> <PAGE>
<TABLE>
BATH NATIONAL CORPORATION
CONDENSED CONSOLIDATION STATEMENTS OF CONDITION
AS OF SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<CAPTION> September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,231,800 $ 10,607,800
Interest Bearing Deposits in other banks 4,023,200 3,421,300
Federal Funds Sold 3,150,000 2,500,000
Securities
Held to maturity, approx. market value
9/95 $20,009,700, 12/94 $20,115,000 19,653,900 20,920,600
Available for Sale 45,880,600 23,961,000
Total Investments 65,534,500 44,881,600
Loans (Gross) 144,690,300 142,039,800
LESS: Allowance for loan losses 1,725,000 1,725,000
Premises and equipment-Net 4,821,400 4,654,800
Interest Receivable 1,879,700 1,483,700
Other Assets 738,200 1,294,400
TOTAL ASSETS $ 232,344,100 $209,158,400
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 26,358,600 $ 26,666,700
Savings 46,793,500 48,527,900
NOW Accounts 33,543,000 30,676,100
Money Market deposit accounts 12,836,400 15,614,600
Time deposits (in denominations of
100,000 or more) 14,223,900 7,600,100
Other time accounts 61,372,700 51,892,300
Total Deposits 195,128,100 180,977,700
FHLB Borrowings 3,000,000
Repurchase Agreements 4,250,000 0
Other liabilities 1,895,500 2,998,800
TOTAL LIABILITIES 204,273,600 $183,976,500
STOCK HOLDERS' EQUITY:
Preferred Stock: $10 par value;
300,000 shares authorized,
Common Stock: $5.00 par value;
1,200,000 shares authorized.
issued 12/31/94 673,390 shares
issued 9/30/95 680,845 shares 3,404,200 3,367,000
Surplus 4,798,400 4,416,500
Undivided profits 19,859,900 18,216,200
Unrealized gain - (loss) investments 8,000 (817,800)
TOTAL STOCKHOLDER'S EQUITY 28,070,500 25,181,900_
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 232,344,100 $209,158,400
</TABLE>
See notes to condensed unaudited consolidated financial statements. <PAGE>
<PAGE>
<TABLE>
BATH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994.
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 3,301,500 $3,137,700 $9,733,700 $ 8,696,600
Int. on federal funds sold 44,200 4,800 209,500 41,000
Int. on investment securities:
US Treasury & Govern. Agency 297,900 181,600 698,900 549,600
State and Municipal Obligat. 321,100 280,700 938,200 851,300
Taxable Municipal 48,700 13,600 147,600 34,400
Mortgaged Backed Securities 276,000 223,200 812,800 711,100
Interest Bearing due from 60,500 58,700 165,100 207,200
Other 14,700 68,700 44,800 194,000
Total Interest Income $ 4,364,600 $3,969,000 12,750,600 $11,285,200
INTEREST EXPENSE:
Interest Deposits 1,643,900 1,121,300 4,603,100 3,237,800
Int. short term borrowings 45,000 48,700 45,400 59,500
Interest on repurch agreemts 70,200 0 143,200 0
Total Interest Expense $ 1,759,100 $1,170,000 $4,791,700 $ 3,297,300
NET INTEREST INCOME $ 2,605,500 $2,799,000 7,958,900 7,987,900
Prov. loan losses (recovery) 34,400 13,200 129,600 (12,400)
Net interest income after
provision for loan losses 2,571,100 2,785,800 7,829,300 8,000,300
OTHER OPERATING INCOME:
Service charges 167,200 173,800 500,100 505,500
trust department fees 17,000 5,300 21,300 12,600
Investment gains (losses) 1,300 (82,200) 600 20,800
Other 133,900 138,200 386,800 333,300
Total other operating income 319,400 235,100 908,800 872,200
OTHER OPERATING EXPENSES:
Salaries & emp benefits 978,300 806,900 2,888,900 2,401,900
Net occupancy expense of
premises 147,600 164,100 430,900 470,800
Depreciation 102,000 96,000 306,000 296,000
Other 407,100 475,900 1,406,100 1,487,900
Total other oper. expenses 1,635,000 1,542,900 5,031,900 4,656,600
INCOME BEFORE INCOME TAXES 1,255,500 1,478,000 3,706,200 4,215,900
INCOME TAXES (benefit) 447,000 514,000 1,251,000 1,407,000
NET INCOME $ 808,500 $ 964,000 2,455,200 2,808,900
EARNINGS PER COMMON SHARE 1.19 1.48 3.62 4.37
DIVIDENDS DECLARED PER COMMON SHARE .40 .35 1.15 1.05
</TABLE>
See notes to condensed unaudited consolidated financial statements. <PAGE>
<PAGE>
<TABLE>
BATH NATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
<CAPTION>
September 30,
1995 1994
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 2,455,200 $ 2,808,900
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation 306,000 296,000
Provision for loan losses 129,600 (12,400)
Loan origination costs deferred 12,700 (46,900)
Bond premium amortized and (discount accrued) 158,000 148,700
(Gain) or Loss on sale of investments (1,000) (20,800)
(Increase) or Decrease in interest receivable (395,900) (127,700)
Increase or (Decrease in other liabilities (1,103,300) (640,200)
(Increase) or Decrease in other assets 556,200 (538,900)
Increase or (Decrease) in provision for
deferred tax 552,200 (393,100)
Net cash provided by operating activities 2,669,700 1,473,600
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of maturing securities 3,812,900 3,019,000
Proceeds from sales of investment securities 927,300 15,446,400
Purchases of investment securities (25,235,100) (11,415,100)
(Increase) or decrease in federal funds sold (650,000) 0
Increase or (decrease) in federal funds purchased 0 (1,500,000)
Increase or (decrease) in repurchase agreements 4,250,000
Net decrease in interest bearing
deposits in other banks (601,900) 1,259,000
Principal collected on loans 24,466,700 20,431,800
Loans made to customers (27,300,100) (37,937,200)
Capital expenditures (472,600) (452,700)
Net cash used or provided in investing
activities (20,802,800) (11,148,800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW, MMDA
& savings accounts (1,954,100) 5,096,400
Proceeds from sale of
certificates of deposit 27,426,300 18,304,800
Payments for maturing
certificates of deposit (11,322,100) (10,727,600)
Dividends paid (393,000) (329,800)
Proceeds from Borrowings 3,000,000 __________
Net cash provided by financing activities 16,757,100 12,343,800
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,376,000) 2,668,600
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR $ 10,607,800 $ 9,782,600
CASH AND CASH EQUIVALENTS AT END OF SIX MONTHS $ 9,231,800 $12,451,200
</TABLE>
<PAGE>
<PAGE>
BATH NATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994. (Unaudited)
---------------------------------------------------------------------------
1. GENERAL
The accounting and reporting policies followed by Bath National
Corporation, a bank holding company, and its subsidiary, Bath National
Bank, in the preparation of the accompanying interim financial
statements conform with generally accepted accounting principles and
with general practice within the banking industry.
The accompanying financial statements are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of
financial position and results of operations for the interim periods
have been made. Such adjustments are of a normal recurring nature.
The results of operations for the nine month period ended 9-30-95 are not
necessarily inductive of the results to be expected for the full year.
2. INVESTMENT SECURITIES
Investment securities held to maturity and are stated at cost plus
discount accrued and premium amortized. Investment securities
classified as available for sale are stated at market value.
<TABLE>
The carrying value and market value of securities classified as held to
maturity and available for sale as follows:
<CAPTION>
Held to Maturity Available for Sale
Book Market Book Market
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S.
agencies and corporation 38,147,800 37,940,100
States and Polit. Subdivis. 19,653,900 20,009,700 6,912,200 7,134,800
Other securities 805,700 805,700
Total securities 19,653,900 20,009,700 45,865,700 45,880,600
</TABLE>
2. ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is based on management's evaluation of the
relative risks inherent in the loan portfolio and, on an annual basis,
generally exceeds the amount of net loan losses charged against the
allowance.
Balance - January 1, 1995 $ 1,725,000
Charge offs (223,000)
Recoveries 93,000
Provision charged to income 130,000
Balance - September 30, 1995 1,725,000
4. INCOME TAXES
Provision for deferred income taxes are made as a result of timing
differences between financial and taxable income. These differences
relate principally to depreciation of bank premises and equipment,
accretion of discounts on investment securities and provisions for loan
losses.
5. PER SHARE DATA
The per share of common stock information is based upon the weighted
average number of shares outstanding during each period.<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
There were no reports filed on Form 8-K
ITEM 6. Exhibits and Reports on Form 8-K
N/A
<PAGE> <PAGE>
Discussions and Analysis of Financial Condition and Result of Operations
(Interim) (Unaudited)
Bath National Corporation has one subsidiary bank (Bath National Bank).
There are no non-banking subsidiaries.
Liquidity and Capital Resources:
Management has not identified any trends, demands, commitments, events
or uncertainties likely to result in any significant deficiencies or
increases in liquidity.
Liquidity is an important factor in the financial condition of Bath
National Corporation and affects its ability to meet the borrowing needs and
deposit withdrawal requirements of its customers. Assets, consisting
principally of loans and investment securities, are funded by customer
deposits.
The investment portfolio is one of Bath National's primary sources of
liquidity. Maturities of securities and principal payments on mortgage
backed securities provide a constant flow of funds which are available for
cash needs. Also, high quality securities are readily marketable andprovide
a steady flow of funds. At September 30, 1995 loans with an aggregate
balance of $12.7 million and securities of $7.6 million were due to maturein
one year or less. Additional funds flow from payments on installment and
revolving credit loans. Bath National's liquidity also continues to be
enhanced by a relatively stable deposit base. On September 30, 1995, the
loan to deposit ratio was 74% and the ratio of loans to core deposits
(excluding certificates of deposit of $100,000 or more) was 80%.
In addition to the source of liquidity referred to above, Bath National
Bank may borrow from the Federal Reserve Bank in the event of a short term
liquidity deficiency. The bank also has an agreement with our correspondent
bank to borrow overnight federal funds. During 1995, the bank had an
average net daily federal funds sold of $4.4 million.
The bank has also joined the Federal Home Loan Bank (FHLB) system and
based upon the current level of stock ownership, Bath National is authorized
to borrow up to $6.8 million. As of September 30, 1995 the bank has borrowed
$3 million against this line of credit.
The Federal Reserve Board and Office of the Comptroller of the Currency
have guidelines as to the minimum risk based capital requirement of
community banks. This minimum is presently 8.00%. Bath National
Corporation has primary capital at September 30, 1995 as follows:
<PAGE> <PAGE>
<TABLE>
<CAPTION>
Components of Capital 9-30-95 12-31-94
<S> <C> <C>
Common Equity $ 28,070,500 $ 25,181,900
Allowance for loan losses 1,725,000 1,725,000
Subtotal 29,795,500 26,906,900
Less: Goodwill 347,900 394,400
TOTAL PRIMARY CAPITAL $ 29,447,600 $ 26,512,500
</TABLE>
The company's capital to asset ratios for the third quarter of 1994 and
1995 are as follows:
TIER I RISK BASED
Required Leverage Required
Minimum Ratio Minimum Actual
December 31, 1994 3.00% 11.93% 8.00% 20.26%
September 30, 1995 3.00% 12.04% 8.00% 21.49%
Net Interest Income
Net interest income for the three months ended September 30, 1995 declined
by $193,000 or 6.9% over the comparable three months of 1994. Customer
transfers from lower paying deposits such as NOW accounts, savings, and
MMDA accounts into higher yielding Certificate of Deposits lead to an
increase in the bank's cost of funds.
Provision for Loan Losses
The company's management recognizes the fact that there are risks of
loss involved in any lending function. Identifying the extent of the risk
for each loan category, and the probability that losses will be sustained
based on delinquency experience, is part of the overall plan for
establishing an Allowance for Loan Losses.
Bath National Bank recognized net loan recoveries totaling $12,400 for
the nine months ended September 30, 1994 versus a net charge off of
$129,600 for the comparable nine months of 1995. The reserve for loan loss
totals $1,725,000. The Board of Directors has determined that $1,725,000
is a sufficient reserve for loan losses based on an analysis of past due
loans, historical data and specific identification of problem loans.
Non-Performing Assets
The Bank's policy is to discontinue the accrual of interest on loans
(other than installment loans and 1-4 family residential mortgages) for
which principal and interest is past due 120 days or more and which are not
fully collateralized. Such loans are classified as non-accrual by BNC.
This classification does not, however, necessarily indicate that the
principal of the loan is uncollectible, but does warrant a review of the
collectability. When a loan is placed on a non-accrual basis, any unpaid
interest accrued is reversed against current income.
On September 30, 1995, total non-accruing assets were $538,000.
Collateral supporting the loans totals $896,400.
NON PERFORMING LOANS
Non-performing loans are summarized as follows:
Other Real Estate $ 378,000
Non-accrual loans $ 538,000
Past due 90 days or more and still accruing $1,493,000
Total $2,409,000
Other Operating Expenses
Salaries and benefits increased from $806,900 for the third quarter 1994 to
$978,300 for the third quarter of 1995. The increase is due primarily to
the staffing of our new branch in Naples, New York. In addition, accruals
totalling $35,000 of post retirement costs are reflected in third quarter
1995 numbers, whereby no accruals were made during the 1994 calendaryear.
FDIC insurance costs declined by $116,000 due to the refund generated by
the new formula of .04 per hundred versus the previous .23 per hundred.
The FDIC insurance expense will decrease by approximately $30,000 per month
due to the change in the insurance rates.
Other Operating Income
Other operating income remained stable for the three months ended September
30, 1995 from 1994. Securities losses taken in 1994 depressed the 1994
third quarter totals by $82,000.
<PAGE> <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
BATH NATIONAL CORPORATION
DATE _________________ ___________________________________
Robert H. Cole, Sr.
President
DATE
Edward C. Galpin
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 9231800
<SECURITIES> 65534500
<RECEIVABLES> 1879700
<ALLOWANCES> (1725000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8290300
<DEPRECIATION> 3468800
<TOTAL-ASSETS> 232344100
<CURRENT-LIABILITIES> 202273600
<BONDS> 0
<COMMON> 3404200
0
0
<OTHER-SE> 24666300
<TOTAL-LIABILITY-AND-EQUITY> 232344100
<SALES> 0
<TOTAL-REVENUES> 12750600
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4791700
<LOSS-PROVISION> (129600)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3706200
<INCOME-TAX> 1251000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2455200
<EPS-PRIMARY> 3.62
<EPS-DILUTED> 3.62
</TABLE>
