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 March 31, 1996
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 682,961 shares as of March 31, 1996.<PAGE>
<PAGE>
TABLE OF CONTENTS
Page No
PART I. FINANCIAL INFORMATION 1 - 5
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 6
ITEM 2. Changes in Securities 6
ITEM 3. Defaults upon Senior Securities 6
ITEM 4. Submission of Matters to a Vote
of Security Holders 6
ITEM 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
PART III. MANAGEMENT'S DISCUSSION AND ANALYSIS 7 - 9 <PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
BATH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
MARCH 31, 1996 AND DECEMBER 31, 1995 (Unaudited)
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 11,372,100 $ 10,218,600
Interest Bearing Deposits
in other banks 3,440,700 3,535,300
Securities Available for Sale 68,452,300 64,936,600
Federal Funds Sold 3,350,000 0
Loans, Gross 150,196,900 150,504,200
Less: Allowance for loan loss 1,650,000 1,650,000
Premises and equipment-Net 5,126,200 5,110,200
Interest Receivable 1,706,600 1,775,100
Other Assets 702,700 735,500
TOTAL $242,697,500 $235,165,500
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 28,892,800 $ 27,397,000
Savings 46,744,100 46,510,300
NOW accounts 36,392,100 32,376,100
Money market deposit accounts 12,133,700 13,300,700
Time deposits (in denominations
of $100,000 or more) 18,637,800 16,222,800
Other time accounts 63,945,900 61,953,100
TOTAL DEPOSITS 206,746,400 197,760,000
FHLB Borrowings 3,000,000 3,000,000
Federal Funds Purchased 0 2,150,000
Repurchase Agreements 2,251,600 1,070,900
Other liabilities 1,851,900 2,630,800
TOTAL LIABILITIES $213,849,900 $206,611,700
STOCKHOLDERS' EQUITY:
Preferred stock:
$10 par value, 300,000 shares
authorized - -
Common stock:
$5 par value, 1,200,000 shares
authorized; issued and outstanding
12/95 - 683,117 shares,
3/96 - 682,961 shares 3,414,800 3,415,600
Surplus 4,914,300 4,923,500
Undivided profits 20,521,100 19,966,400
Unrealized gain/(loss) - Investments (2,600) 248,300
Total Stockholders' Equity 28,847,600 28,553,800
TOTAL $242,697,500 $235,165,500
</TABLE>
See notes to condensed unaudited consolidated financial statements.
1 <PAGE>
<PAGE>
<TABLE>
BATH NATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $3,272,900 $3,171,500
Interest on federal funds sold 34,800 79,600
Interest on investment securities:
US Treasury and Gov Agency 261,500 153,600
State and Municipal obligations 342,500 312,800
Taxable Municipals 49,200 52,500
Mortgage backed securities 312,200 237,800
Interest Bearing due from 52,900 51,300
Other 14,200 12,600
Total Interest Income 4,340,200 4,071,700
INTEREST EXPENSE:
Interest on Deposits 1,676,500 1,383,700
Repurchase Agreement 24,300 15,000
Interest on short-term borrowings 52,400 0
Total Interest Expense 1,753,200 1,398,700
NET INTEREST INCOME 2,587,000 2,673,000
Provision for loan losses (recoveries) (5,000) (9,900)
Net interest income after provision
for loan losses 2,592,000 2,682,900
OTHER OPERATING INCOME:
Service charges 161,800 161,200
Trust department fees 12,200 3,100
Investment gains (losses) 900 300
Other 133,900 102,600
Total other operating income 308,800 267,200
OTHER OPERATING EXPENSES:
Salaries and employee benefits 973,900 963,800
Occupancy 165,100 143,100
Depreciation 97,800 102,000
Other operating expenses 464,400 483,200
Total other operating expenses 1,701,200 1,692,100
INCOME BEFORE INCOME TAXES 1,199,600 1,258,000
INCOME TAXES 372,000 422,000
NET INCOME $ 827,600 $ 836,000
EARNINGS PER COMMON SHARE $1.21 $1.24
DIVIDENDS DECLARED PER COMMON SHARE $ .40 $ .40
</TABLE>
2 <PAGE>
<PAGE>
<TABLE>
BATH NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (Unaudited)
<CAPTION>
March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 827,600 $ 836,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 97,800 102,000
Provision for loan losses (5,000) (9,900)
Provision for deferred taxes (231,700) 265,000
Loan origination costs deferred 4,500 10,400
Bond premium amortized and (discount accrued) 47,100 46,300
(Increase) or Decrease in interest receiv. 68,500 (175,900)
Increase or (Decrease) in other liabil. (778,900) (1,533,300)
(Increase) or Decrease in other assets 32,800 452,900
Net cash provided by operating activities 62,700 (6,500)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturing investment securities 3,142,000 194,000
Proceeds from sales of investment securities 0 0
Purchases of investment securities (6,736,400) (8,520,700)
(Increase) or decrease in federal funds sold (3,350,000) 900,000
Increase or (decrease) in federal funds purch.(2,150,000 0
Increase or (decrease) in Repurchase Agmts. 1,180,700 3,000,000
Net decrease in interest bearing deposits
in other banks 94,600 (199,400)
Principal collected on loans 11,018,300 8,141,900
Loans made to customers (10,706,000) (8,246,500)
Capital expenditures (113,800) (50,000)
Net cash (used) or provided in
investing activities (7,620,600) (4,780,700)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW
MMDA, & savings accounts 4,578,600 236,100
Proceeds from sales of certificates of dep. 8,096,200 10,454,100
Payments for maturing certificates
of deposit (3,688,400) (2,201,900)
Dividends paid (275,000) (127,000)
Net cash provided by financing activities 8,711,400 8,361,300
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,153,500 3,574,100
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 10,218,600 10,608,500
CASH AND CASH EQUIVALENTS AT
END OF THREE MONTHS $11,372,100 $14,182,600
</TABLE>
3 <PAGE>
<PAGE>
BATH NATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995. (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 three month period ended
3-31-96 are not necessarily inductive of the results to be
expected for the full year.
2. INVESTMENT SECURITIES
Investment securities are all classified as available for sale.
The carrying value, fair market value and unrealized gains and
losses of those securities are as follows:
<TABLE>
<CAPTION>
Unreal. Unreal.
Book Market Gains Losses Net
<S> <C> <C> <C> <C> <C>
U.S. Treasury
and other US
agencies 18,836,200 18,707,500 49,100 177,800 (128,700)
States and
Political
Subdivis. 27,520,400 27,847,800 469,100 141,700 327,400
Mortgaged
Backed Sec. 21,216,500 21,013,200 124,500 327,800 (203,300)
Other secur. 883,800 883,800 - - -
TOTAL 68,456,900 68,452,300 642,700 647,300 (4,600)
</TABLE>
3. 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, 1996 $1,650,000
Charge offs (17,000)
Recoveries 22,000
Provision charged to income (5,000)
Balance - March 31, 1996 1,650,000
4<PAGE>
<PAGE>
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.
5<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
None
ITEM 6. Exhibits and Reports on Form 8-K
There were no reports filed on Form 8-K.
6<PAGE>
<PAGE>
PART III.
Discussions and Analysis of Financial Condition and Result of
Operations
(Interim) (Unaudited)
The 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. Other sources of liquidity include federal funds sold and
borrowed, as well as loan repayments and sale of loans. Maturities
of securities and principal payments on mortgage backed securities
provide a constant flow of funds which are available for cash needs.
Interest bearing deposits in other financial institutions maturing
within one year total $1.1 million. High quality securities are
readily marketable and provide another level of liquidity.
Maturities in the loan portfolio provide a steady flow of funds. At
March 31, 1996 loans with an aggregate balance of $12.5 million and
securities of $7.2 million were due to mature in one year or less.
Additional funds flow from payments on installment and revolving
credit loans and from a historically high level of net operating
earnings. Bath National's liquidity also continues to be enhanced by
a relatively stable deposit base. On March 31, 1996, the loan to
deposit ratio was 73% and the ratio of loans to core deposits
(excluding certificates of deposit of $100,000 or more) was 80%.
In addition to the sources of liquidity above, Bath National Bank may
borrow from the Federal Reserve Bank in the event of a short term
liquidity deficiency. The bank has an agreement with our
correspondent bank to borrow overnight federal funds. During 1996,
the bank has had an average daily federal funds sold of $2.8 million.
The bank has recently 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 $7.7 million. As of March 31, 1996, the
bank has borrowed $3.0 million against this line of credit.
The adequacy of the Bank's capital is reviewed on an ongoing basis
with reference to the size, composition and quality of the Bank's
resources. An adequate capital base is important for continued
growth, expansion and added protection against unexpected losses.
7 <PAGE>
<PAGE>
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 8.0%.
Bath National Corporation had primary capital at March 31, 1996 and
March 31, 1995 as follows:
<TABLE>
<CAPTION>
Components of Capital 3-31-96 3-31-95
<S> <C> <C>
Common Equity $28,847,600 $26,178,900
Allowance for loan losses 1,650,000 1,725,000
Subtotal 30,497,600 27,903,900
Less: Goodwill 335,800 377,000
TOTAL PRIMARY CAPITAL $30,161,800 $27,526,900
</TABLE>
The Company's capital to asset ratios for the first quarter of 1996
and 1995 are as follows:
Tier I Risk Based
Required Actual Required
Minimum Ratio Minimum Actual
[S] [C] [C] [C] [C]
March 31, 1996 4.00% 12.43% 8.00% 21.34%
March 31, 1995 4.00% 12.51% 8.00% 19.68%
Net Interest Income
Net interest income for the three months ended March 31, 1996 was
down slightly from the comparable period ended March 31, 1995. Costs
of deposits increased from $1,398,000 to $1,753,000 as depositors
moved their funds from savings and NOW accounts to the higher
yielding certificate of deposits. Loan income has been affected by a
lower prime rate of lending and investment income has also been
affected by a lower prime rate environment.
Provision for Loan Losses
The Company's management is cognizant of 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 recorded net loan recoveries totaling $5,000 for
the quarter ended March 31, 1996 verses net loan recoveries of $9,900
for the comparable quarter of 1995. The reserve for loan loss totals
$1,650,000. The Board of Directors has determined that $1,650,000
is a sufficient reserve for loan losses based on an analysis of past
due loans, historical data and specific identification of problem
loans.
8<PAGE>
<PAGE>
Non-Performing Assets
The Bank's policy is to discontinue the accrual of interest on loans
(other than instalment loans and 1-4 family residential mortgages)
for which principal or interest is past due 120 days or more and
which are not fully collateralized. Such loans are classified as
non-accrual by BNB. This classification does not, however,
necessarily indicate that the principal of the loan is uncollectible,
but does warrant a review of the collectibility. When a loan is
placed on a non-accrual basis, any unpaid interest accrued is
reversed against current income.
On March 31, 1996, total non-accruing assets were $435,000.
Collateral supporting the loans totals approximately $339,000.
Non-Performing Loans
Non-performing loans are summarized as follows:
Other Real Estate $ 402,000
Non-accrual loans $ 435,000
Past due 90 days or more and still accruing $ 321,000
Total $1,158,000
9<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and 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
President
DATE _____________________ _____________________________________
Edward C. Galpin
Vice President and Treasurer
10<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,372,100
<SECURITIES> 68,452,300
<RECEIVABLES> 1,706,600
<ALLOWANCES> 1,650,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,126,200
<DEPRECIATION> 97,800
<TOTAL-ASSETS> 242,697,500
<CURRENT-LIABILITIES> 3,851,900
<BONDS> 0
0
0
<COMMON> 3,414,800
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 242,697,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (5,000)
<INTEREST-EXPENSE> 1,753,200
<INCOME-PRETAX> 1,199,600
<INCOME-TAX> 372,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 827,600
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
</TABLE>
