UNITED STATES
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, 1999
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 0-11244
German American Bancorp
(Exact name of registrant as specified in its charter)
INDIANA 35-1547518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
711 Main Street, Jasper, Indiana 47546
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code: (812) 482-1314
Indicate by check 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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 10, 1999
Common Stock, No par value 8,713,371
<PAGE>
GERMAN AMERICAN BANCORP
INDEX
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets - September 30, 1999 and
December 31, 1998
Consolidated Statements of Income and Comprehensive Income --
Three Months Ended September 30, 1999 and 1998
Consolidated Statements of Income and Comprehensive Income -- Nine
months ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows -- Nine months ended
September 30, 1999 and 1998
Notes to Consolidated Financial Statements --
September 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GERMAN AMERICAN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited, dollars in thousands except per share data)
<S> <C> <C>
September 30, December 31,
1999 1998
ASSETS
Cash and Due from Banks $ 23,736 $ 18,097
Interest-bearing Deposits with Banks 12,927 31,316
Federal Funds Sold --- 175
----------- -----------
Cash and Cash Equivalents 36,663 49,588
Interest-bearing Time Deposits with Banks 599 1,299
Securities Available-for-Sale, at Market 179,097 151,527
Securities Held-to-Maturity, at Cost 30,049 48,346
Loans Held for Sale 3,208 2,449
Total Loans 676,007 598,936
Less: Unearned Income (397) (848)
Allowance for Loan Losses (8,447) (8,323)
----------- -----------
Loans, Net 667,163 589,765
Stock in FHLB of Indianapolis, at cost 8,627 7,853
Premises, Furniture and Equipment, Net 19,552 17,796
Other Real Estate 2,284 1,156
Intangible Assets 2,241 1,841
Accrued Interest Receivable and Other Assets 25,663 25,305
----------- -----------
TOTAL ASSETS $ 975,146 $ 896,925
=========== ===========
LIABILITIES
Noninterest-bearing Deposits $74,993 $67,218
Interest-bearing Deposits 630,714 597,895
----------- -----------
Total Deposits 705,707 665,113
Short-term Borrowings 19,635 7,028
FHLB Advances and Other Long-term Debt 149,220 124,381
Accrued Interest Payable and Other Liabilities 9,444 9,127
----------- -----------
TOTAL LIABILITIES 884,006 805,649
SHAREHOLDERS' EQUITY
Common Stock, no par value, $1 stated value;
20,000,000 shares authorized 8,758 8,705
Preferred Stock, $10 par value; 500,000
shares authorized, none issued --- ---
Additional Paid-in Capital 48,266 47,844
Retained Earnings 37,109 33,916
Accumulated Other Comprehensive Income (2,993) 811
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 91,140 91,276
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 975,146 $ 896,925
=========== ===========
Common Shares issued and outstanding at end of period 8,757,539 8,704,592
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GERMAN AMERICAN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(unaudited, dollars in thousands except per share data)
<S> <C> <C>
Three Months Ended
September 30,
1999 1998
INTEREST INCOME
Interest and Fees on Loans $13,589 $13,012
Interest on Federal Funds Sold --- 152
Interest on Short-term Investments 126 191
Interest and Dividends on Securities 3,425 2,922
------- -------
TOTAL INTEREST INCOME 17,140 16,277
------- -------
INTEREST EXPENSE
Interest on Deposits 6,955 7,158
Interest on Short-term Borrowings 307 84
Interest on Long-term Debt 1,758 1,395
------- -------
TOTAL INTEREST EXPENSE 9,020 8,637
------- -------
NET INTEREST INCOME 8,120 7,640
Provision for Loan Losses 298 177
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 7,822 7,463
NONINTEREST INCOME
Income from Fiduciary Activities 95 76
Service Charges on Deposit Accounts 453 427
Investment Services Income 97 118
Insurance Premiums and Commissions 470 101
Other Charges, Commissions and Fees 288 339
Gain on Sales of Loans and Other Real Estate 61 301
Net Gain/(Loss) on Sales of Securities --- 1
------- -------
TOTAL NONINTEREST INCOME 1,464 1,363
------- -------
NONINTEREST EXPENSE
Salaries and Employee Benefits 3,307 3,057
Occupancy Expense 450 444
Furniture and Equipment Expense 428 360
Computer Processing Fees 243 276
Professional Fees 200 358
Advertising and Promotions 220 183
Supplies 216 202
Other Operating Expenses 1,034 949
------- -------
TOTAL NONINTEREST EXPENSE 6,098 5,829
------- -------
Income before Income Taxes 3,188 2,997
Income Tax Expense 874 850
------- -------
Net Income $ 2,314 $ 2,147
======= =======
Earnings Per Share and Diluted
Earnings Per Share $ 0.27 $ 0.24
Dividends Paid per Share $ 0.13 $ 0.12
Comprehensive Income $ 1,474 $ 2,537
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GERMAN AMERICAN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(unaudited, dollars in thousands except per share data)
<S> <C> <C>
Nine months ended
September 30,
1999 1998
INTEREST INCOME
Interest and Fees on Loans $39,635 $38,641
Interest on Federal Funds Sold 37 720
Interest on Short-term Investments 827 651
Interest and Dividends on Securities 9,560 8,640
-------- -------
TOTAL INTEREST INCOME 50,059 48,652
INTEREST EXPENSE
Interest on Deposits 20,632 21,444
Interest on Short-term Borrowings 718 203
Interest on Long-term Debt 4,728 4,149
-------- -------
TOTAL INTEREST EXPENSE 26,078 25,796
-------- -------
NET INTEREST INCOME 23,981 22,856
Provision for Loan Losses 939 476
-------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 23,042 22,830
NONINTEREST INCOME
Income from Fiduciary Activities 231 250
Service Charges on Deposit Accounts 1,281 1,194
Investment Services Income 364 392
Insurance Premiums and Commissions 1,309 403
Other Charges, Commissions and Fees 1,001 941
Gain on Sales of Loans and Other Real Estate 364 475
Net Gain/(Loss) on Sales of Securities (6) 30
-------- -------
TOTAL NONINTEREST INCOME 4,544 3,685
-------- -------
NONINTEREST EXPENSE
Salaries and Employee Benefits 9,832 9,062
Occupancy Expense 1,305 1,242
Furniture and Equipment Expense 1,266 1,023
Computer Processing Fees 759 728
Professional Fees 724 771
Advertising and Promotions 542 497
Supplies 586 501
Other Operating Expenses 3,039 2,816
-------- -------
TOTAL NONINTEREST EXPENSE 18,053 16,640
-------- -------
Income before Income Taxes 9,533 9,425
Income Tax Expense 2,713 2,842
-------- -------
Net Income $ 6,820 $ 6,583
======== =======
Earnings Per Share and Diluted
Earnings Per Share $ 0.78 $ 0.75
Dividends Paid per Share $ 0.38 $ 0.33
Comprehensive Income $ 3,016 $ 7,007
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GERMAN AMERICAN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, dollar references in thousands)
<S> <C> <C>
Nine months ended
September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 6,820 $ 6,583
Adjustments to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and Amortization 1,583 1,471
Provision for Loan Losses 939 476
Net Gain (Loss) on Sales of Securities 6 (30)
Gain of Sales of Loans and Other Real Estate (364) (475)
Net Change in Loans Held for Sale 6,480 11,231
Loss on Investment in Limited Partnership 99 81
Change in Assets and Liabilities:
Interest Receivable and Other Assets (4,636) 2,493
Interest Payable and Other Liabilities (503) (871)
---------- ----------
Total Adjustments 3,604 14,376
---------- ----------
Net Cash from Operating Activities 10,424 20,959
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in Time Deposits with Banks 723 400
Proceeds from Maturities of Securities Available-for-Sale 29,221 75,212
Proceeds from Sales of Securities Available-for-Sales 953 45,322
Purchase of Securities Available-for-Sale (66,630) (140,572)
Proceeds from Maturities of Securities Held-to-Maturity 5,186 27,015
Proceeds from Sales of Securities Held-to-Maturity --- 377
Purchase of Securities Held-to-Maturity (3,449) (8,093)
Proceeds from Sales of Loans 4,350 384
Purchase of Loans (8,627) (3,764)
Loans Made to Customers, net of Payments Received (66,723) (50,477)
Acquire Affiliate (310) 3,715
Property and Equipment Expenditures (3,018) (1,916)
Proceeds from Sales of Other Real Estate 1,065 401
Other --- (458)
---------- ----------
Net Cash from Investing Activities (107,259) (52,454)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in Deposits 33,460 (5,859)
Change in Short-term Borrowing 12,607 1,831
Advances of Long-term Debt 58,000 54,996
Repayments of Long-term Debt (16,516) (43,911)
Dividends Paid (3,334) (2,296)
Exercise of Stock Options / Awards 305 ---
Purchase / Retire Stock (737) (305)
Issue Common Stock 133 102
Purchase Fractional Shares (8) (5)
---------- ----------
Net Cash from Financing Activities 83,910 4,553
---------- ----------
Net Change in Cash and Cash Equivalents (12,925) (26,942)
Cash and Cash Equivalents at Beginning of Year 49,588 60,684
---------- ----------
Cash and Cash Equivalents at End of Period $ 36,663 $ 33,742
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
GERMAN AMERICAN BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(unaudited)
Note 1 -- Basis of Presentation
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with Generally Accepted Accounting Principles
have been condensed or omitted. Except for adjustments resulting from the merger
transactions described below, all adjustments made by management to these
unaudited statements were of a normal recurring nature. It is suggested that
these consolidated financial statements and notes be read in conjunction with
the financial statements and notes thereto in the German American Bancorp's
December 31, 1998 Annual Report to Shareholders.
German American Bancorp (referred to herein as the "Company," the
"Corporation," or the "Registrant") is a multi-bank holding company organized in
Indiana in 1982. The Company's principal subsidiaries are The German American
Bank, Jasper, Indiana ("German American Bank"), First State Bank, Southwest
Indiana, Tell City, Indiana ("First State Bank"), First American Bank,
Vincennes, Indiana ("First American"), and German American Holdings Corporation
("GAHC"), an Indiana corporation that owns all of the outstanding capital stock
of both Citizens State Bank, Petersburg, Indiana ("Citizens State") and the
Peoples National Bank, Washington, Indiana ("Peoples"). The Company, through its
five bank subsidiaries, operates 25 banking offices and five full-service
insurance offices in eight contiguous counties in southwestern Indiana.
On June 1, 1998 the Company consummated mergers with the parent companies
of Citizens State and FSB Bank of Francisco, Indiana ("FSB Bank"). FSB Bank and
an existing affiliate, Community Trust Bank of Petersburg, Indiana were merged
into the Citizens State charter on that date. These mergers were accounted for
as poolings of interests. The reported operating results for periods prior to
June 1, 1998 have been retroactively adjusted to give the effect to the merger
with Citizens State. Prior period results do not include the effect of the
merger with FSB Bank, as restatement would not have resulted in a material
change in overall financial results.
In January 1999, the Company issued 2,039,665 shares of common stock for
all the outstanding shares of 1ST BANCORP of Vincennes, Indiana and 62,000
shares of common stock for all the outstanding shares of The Doty Agency, Inc.
(Doty) of Petersburg, Indiana. These mergers were accounted for as poolings of
interests. The reported operating results for periods prior to the 1999 merger
date have been retroactively adjusted to give effect to the merger with 1ST
BANCORP. Prior period results do not include the effect of the merger with Doty,
as restatement would not have resulted in a material change in overall financial
results. 1ST BANCORP's subsidiaries included First Federal Bank, First Financial
Insurance Agency, Inc., and First Title Insurance Company, Inc. First Federal
Bank, now known as First American Bank, is headquartered in Vincennes, Indiana.
First Financial Insurance Agency operates an office in Princeton, Indiana. Doty
is a general multi-line, full-service insurance agency with offices in Pike,
Knox and Dubois counties in Indiana.
Prior to 1999, 1ST BANCORP's financial statements were prepared on a June
30 fiscal year. Accordingly, the Company's calendar period financial statements
for periods prior to 1999 have been restated to include 1ST BANCORP fiscal
period financial statements (i.e., the Company's previously reported December
31, 1998 balances were combined with 1ST BANCORP June 30, 1998 balances). 1ST
BANCORP is combined with the Company on a calendar period basis for all 1999
periods. As a result of 1ST BANCORP'S prior fiscal reporting, the 1999 statement
of cash flows and Note 5 include "acquired affiliate" amounts to adjust from
fiscal to calendar period reporting.
In May 1999, the Company issued 8,000 shares of common stock and
approximately $26,000 in cash for all the outstanding shares of Professional
Insurance Markets, Inc. (which did business as Smith & Bell) of Vincennes,
Indiana. This merger was accounted for as a purchase. Accordingly, reported
operating results for periods prior to the merger have not been restated. Smith
& Bell is a general multi-line, full-service insurance agency with offices in
Knox County, Indiana.
<PAGE>
Comprehensive income includes both net income and other comprehensive
income. Other comprehensive income includes the change in unrealized
appreciation on securities available-for-sale, net of tax.
Note 2 -- Per Share Data
The Board of Directors declared and paid a 5 percent common stock dividend
in December 1998. In lieu of issuing fractional shares, the company purchased
from shareholders their fractional interest. The Company issued 995,678 common
shares related to the mergers with the parent companies of Citizens State and
FSB Bank on June 1, 1998 and 2,101,665 common shares related to the mergers of
1ST BANCORP and Doty in January of 1999. Earnings per share amounts have been
retroactively computed as though these additionally issued shares had been
outstanding for all periods presented. Earnings per share amounts have not been
restated for the issuance of 8,000 common shares related to the purchase of
Smith & Bell in May 1999. The computation of Earnings per Share and Diluted
Earnings per Share are provided as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended
September 30,
1999 1998
Earnings per Share:
Net Income $2,314,000 $2,147,000
Weighted Average Shares Outstanding 8,780,735 8,766,103
Earnings per Share: $0.27 $ 0.24
========== ==========
Diluted Earnings per Share:
Net Income $2,314,000 $2,147,000
Weighted Average Shares Outstanding 8,780,735 8,766,103
Stock Options, net of
Assumed Shares Repurchased upon Exercise of Options 4,278 9,899
---------- ----------
Diluted Weighted Average Shares Outstanding 8,785,013 8,776,002
---------- ----------
Diluted Earnings per Share $0.26 $0.24
========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Nine months ended
September 30,
1999 1998
Earnings per Share:
Net Income $6,820,000 $6,583,000
Weighted Average Shares Outstanding 8,775,247 8,764,908
Earnings per Share: $0.78 $0.75
========== ==========
Diluted Earnings per Share:
Net Income $6,820,000 $6,583,000
Weighted Average Shares Outstanding 8,775,247 8,764,908
Stock Options, net of
Assumed Shares Repurchased upon Exercise of Options 4,008 11,647
---------- ----------
Diluted Weighted Average Shares Outstanding 8,779,255 8,776,555
---------- ----------
Diluted Earnings per Share $ 0.78 $ 0.75
========== ==========
</TABLE>
<PAGE>
Note 3 - Securities
<TABLE>
<CAPTION>
The amortized cost and estimated market values of Securities as of September 30,
1999 are as follows (dollars in thousands):
<S> <C> <C>
Estimated
Amortized Market
Securities Available-for-Sale: Cost Value
U.S. Treasury Securities and Obligations of
U.S. Government Corporations and Agencies $ 91,202 $ 88,070
Obligations of State and Political Subdivisions 26,493 26,705
Asset-/Mortgage-backed Securities 65,739 64,322
-------- --------
Total $183,434 $179,097
======== ========
Securities Held-to-Maturity:
Obligations of State and Political Subdivisions $ 29,008 $ 28,957
Asset-/Mortgage-backed Securities 1,041 1,043
-------- --------
Total $ 30,049 $ 30,000
======== ========
</TABLE>
<TABLE>
<CAPTION>
The amortized cost and estimated market values of Securities as of December 31,
1998 are as follows (dollars in thousands):
<S> <C> <C>
Estimated
Amortized Market
Securities Available-for-Sale: Cost Value
U.S. Treasury Securities and Obligations of
U.S. Government Corporations and Agencies $ 68,201 $ 68,386
Obligations of State and Political Subdivisions 29,103 30,455
Asset-/Mortgage-backed Securities 52,881 52,686
-------- --------
Total $150,185 $151,527
======== ========
Securities Held-to-Maturity:
U.S. Treasury Securities and Obligations of
U.S. Government Corporation and Agencies $ 46,849 $ 47,951
Asset-/Mortgage-backed Securities 1,497 1,511
-------- --------
Total $ 48,346 $ 49,462
======== ========
<FN>
At September 30, 1999 and December 31, 1998, U.S. Government Agency
structured notes with an amortized cost of $5,985,000 and $5,985,000
respectively, and fair value of $5,280,000 and $5,985,000 respectively, are
included in securities available-for-sale.
These notes consist of single-index bonds.
</FN>
</TABLE>
Note 4 -- Loans
<TABLE>
<CAPTION>
Total loans, as presented on the balance sheet, are comprised of the following
classifications (dollars in thousands):
<S> <C> <C>
September 30, December 31,
1999 1998
Real Estate Loans Secured by 1-4
Family Residential Properties $346,863 $303,047
Agricultural Loans 64,564 62,736
Commercial and Industrial Loans 158,597 136,649
Loans to Individuals for Household,
Family and Other Personal Expenditures 105,246 95,683
Lease Financing 737 821
-------- --------
Total Loans $676,007 $598,936
======== ========
</TABLE>
<PAGE>
Note 5 -- Allowance for Loan Losses
A summary of the activity in the Allowance for Loan Losses is as follows
(dollars in thousands):
1999 1998
Balance at January 1 $ 8,323 $ 8,645
Allowance of Acquired Affiliate 356 ---
Provision for Loan Losses 939 476
Recoveries of Prior Loan Losses 365 285
Loan Losses Charged to the Allowance (1,536) (1,372)
-------- --------
Balance at September 30 $ 8,447 $ 8,034
======== ========
Note 6 - Business Combinations
On June 1, 1998 the Company acquired by merger CSB Bancorp of Petersburg,
Indiana (and its wholly owned subsidiary, Citizens State Bank of Petersburg) in
exchange for 928,475 shares of German American Bancorp common stock. Fractional
interests were paid in cash of $3. The transaction was accounted for as a
pooling of interests.
Also on June 1, 1998 the Company acquired by merger FSB Financial
Corporation of Francisco, Indiana (and its wholly owned subsidiary, FSB Bank of
Francisco, Indiana) in exchange for 67,203 shares of German American Bancorp
common stock. Fractional interests for this transaction were paid in cash of $2.
The transaction was accounted for as a pooling of interests; however, results
for 1997 do not include the effect of this transaction, as restatement would not
have resulted in a material change in overall financial results. Total assets
and equity of FSB Bank at the date of merger were $15.5 million and $1.4
million, respectively.
Effective the first business day of January 1999, the Company issued
2,039,665 shares for all the outstanding shares of 1ST BANCORP of Vincennes,
Indiana and 62,000 shares for all the outstanding shares of The Doty Agency,
Inc. (Doty) of Petersburg, Indiana. These mergers were accounted for as poolings
of interests. The reported operating results for periods prior to the 1999
merger date have been retroactively adjusted to give effect to the merger with
1ST BANCORP. Prior period results do not include the effect of the merger with
Doty, as restatement would not have resulted in a material change in overall
financial results.
On May 10, 1999 the Company issued 8,000 shares of common stock and
approximately $26,000 in cash for all the outstanding shares of the corporate
owner of Smith & Bell of Vincennes, Indiana. This merger was accounted for as a
purchase, and resulted in the recording of approximately $250,000 in goodwill.
The fair value of Smith & Bell's assets and liabilities, respectively, at the
date of acquisition were approximately $160,000 and 250,000. Reported operating
results for periods prior to the merger have not been restated.
The following is a reconciliation of the separate and combined net interest
income and net income of German American Bancorp, 1ST BANCORP and Doty for the
period prior to the acquisition:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
GERMAN AMERICAN
BANCORP 1ST
(as previously reported) BANCORP DOTY COMBINED
For the three months ended September 30, 1998
Net interest income $ 5,999 $1,641 $--- $ 7,640
Net income / (Loss) $ 1,588 $ 559 $--- $ 2,147
For the nine months ended September 30, 1998
Net interest income $18,050 $4,806 $--- $22,856
Net income / (Loss) $ 5,132 $1,451 $--- $ 6,583
</TABLE>
<PAGE>
Note 7 - Stock Repurchase Plan
On July 29, 1999, German American Bancorp announced that its Board of
Directors approved a stock repurchase program for up to 425,000 of the
outstanding Common Shares of the Company, representing nearly five percent of
its outstanding shares. Shares are purchased from time to time in the open
market and in large block privately negotiated transactions. The Company
commenced bidding for shares on August 3, 1999 and will conclude bids and
purchases (even if not all shares authorized under the program have been
repurchased) by December 14, 1999. During the period ended September 30, 1999,
37,950 shares of common stock were repurchased at prices ranging from $17.875 to
$23.00 per share.
Note 8 - Subsequent Events
On November 4, 1999 the Company announced that its Board of Directors had
declared its annual 5 percent stock dividend, payable on or before December 15,
1999 to shareholders of record on November 30, 1999. Since this stock dividend
has not yet been issued, earnings and dividends per share amounts have not been
restated for this dividend. The Board of Directors also declared a cash dividend
of $0.13 per share payable on or before November 20, 1999 to shareholders of
record on November 10, 1999.
<PAGE>
ITEM 2.
GERMAN AMERICAN BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
German American Bancorp ("the Company") is a multi-bank holding company
based in Jasper, Indiana. Its five affiliate banks conduct business in 25
offices in Dubois, Daviess, Gibson, Knox, Martin, Pike, Perry and Spencer
Counties in Southwest Indiana. Its full-service insurance agencies operate
offices in Dubois, Gibson, Knox and Pike Counties. The banks and insurance
agencies provide a wide range of financial services, including accepting
deposits; making commercial, mortgage and consumer loans; issuing property and
casualty, title, credit life, accident and health insurance; providing trust
services for personal and corporate customers; providing safe deposit
facilities; and providing investment advisory and brokerage services.
This section presents an analysis of the consolidated financial condition
of the Company as of September 30, 1999 and December 31, 1998 and the
consolidated results of operations for the three and nine month periods ended
September 30, 1999 and 1998. This discussion should be read in conjunction with
the consolidated financial statements and other financial data presented
elsewhere herein and with the financial statements and other financial data, as
well as the Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's December 31, 1998 Annual Report
to Shareholders.
On June 1, 1998 the Company consummated mergers with the parent companies
of Citizens State and FSB Bank of Francisco, Indiana ("FSB Bank"). FSB Bank and
an existing affiliate, Community Trust Bank of Otwell, Indiana were merged into
the Citizens State charter on that date. The reported operating results for
periods prior to June 1, 1998 have been retroactively adjusted to give the
effect to the merger with Citizens State. Prior year results do not include the
effect of the merger with FSB Bank, as restatement would not have resulted in a
material change in overall financial results.
In January 1999, the Company issued 2,039,665 shares for all the
outstanding shares of 1ST BANCORP of Vincennes, Indiana and 62,000 shares for
all the outstanding shares of The Doty Agency, Inc. (Doty) of Petersburg,
Indiana. These mergers were accounted for as poolings of interests. The reported
operating results for periods prior to the 1999 merger date have been
retroactively adjusted to give effect to the merger with 1ST BANCORP. Prior
period results do not include the effect of the merger with Doty, as restatement
would not have resulted in a material change in overall financial results.
In May 1999, the Company issued 8,000 shares of common stock and
approximately $26,000 in cash for all the outstanding shares of Professional
Insurance Markets, Inc. (which does business as Smith & Bell) of Vincennes,
Indiana. This merger was accounted for as a purchase. Accordingly, reported
operating results for periods prior to the merger have not been restated. Smith
& Bell is a general multi-line, full-service insurance agency with offices in
Knox County, Indiana.
<PAGE>
RESULTS OF OPERATIONS
Net Income:
Net income was $2,314,000 or $0.27 per share for the quarter ended
September 30, 1999 compared to $2,147,000 or $0.24 per share for the third
quarter of 1998. Net interest income increased $480,000, or 6.3 percent.
Provision for Loan Losses increased by $121,000. Noninterest income increased
$101,000 or 7.4 percent over 1998. Noninterest expense increased $269,000 or 4.6
percent from the prior year.
Net income for the nine months ended was $6,820,000 or $0.78 per share
compared to $6,583,000 or $0.75 per share for the prior year to date. Net
interest income increased $1,125,000, or 4.9 percent. Provision for Loan Losses
increased by $463,000 or 97.2 percent. Noninterest income increased $859,000 or
23.3 percent over 1998. Noninterest expense increased $1,413,000 or 8.5 percent
from the prior year.
Increases in noninterest income and expense were primarily the result of
three insurance agency acquisitions in 1999, the 1998 operations of which are
not included in the Company's 1998 operating results.
Net Interest Income:
The following table summarizes German American Bancorp's net interest
income (on a tax-equivalent basis, at an effective tax rate of 34 percent for
each period) for each of the periods presented herein (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Change from
Ended September 30, Prior Period
1999 1998 Amount Percent
Interest Income (T/E) $17,573 $16,746 $ 827 4.9%
Interest Expense 9,020 8,637 383 4.4%
------- ------- ------
Net Interest Income (T/E) $ 8,553 $ 8,109 $ 444 5.5%
======= ======= ======
Nine Months Change from
Ended September 30, Prior Period
1999 1998 Amount Percent
Interest Income (T/E) $51,354 $49,898 $1,456 2.9%
Interest Expense 26,078 25,796 282 1.1%
------- ------- ------
Net Interest Income (T/E) $25,276 $24,102 $1,174 4.9%
======= ======= ======
</TABLE>
The increase in net interest income for the three months ended September
30, 1999 compared to the prior year was due to a $577,000 increase in loan
income, a $286,000 increase in investment income and a $203,000 decrease in
interest expense on deposits, offset by a $586,000 increase in interest expense
on borrowings. The increase in net interest income for the year to date ended
September 30, 1999 compared to 1998 was due to a $994,000 increase in loan
income, a $413,000 increase in investment income and a $812,000 decrease in
interest expense on deposits, offset by a $1.1 million increase in interest
expense on borrowings.
Net interest margin, which represents the average net effective yield on
earning assets, is tax-equivalent net interest income expressed as a percentage
of average earning assets. For the third quarter of 1999, the net interest
margin was 3.88 percent compared to 4.00 percent for the comparable period of
1998. Net interest margin for the nine months ended September 30, 1999 was 3.89
compared to 3.99 in the prior year. These declines were due to a more
competitive pricing environment for loans and the effect of capital leverage
strategies employed in the investment portfolio.
<PAGE>
Provision For Loan Losses:
The Company provides for estimated loan losses through regular provisions
to the allowance for loan losses. These provisions are made at levels considered
necessary by management to absorb estimated losses in the loan portfolio. A
detailed evaluation of the adequacy of this loan loss reserve is completed
quarterly by management.
The consolidated provision for loan losses was $298,000 and $939,000 for
the three and nine months ended September 30, 1999. This compares to $177,000
and $476,000 for the same respective periods in 1998. This increase in provision
was primarily due to growth in residential real estate mortgage loans and recent
charge-off experience in non-conforming mortgage and consumer loans. The
provision for loan losses to be recorded in future periods will be adjusted
based on the results of on-going evaluations of the adequacy of the allowance
for loan losses.
Net charge-offs were $340,000 or 0.21 annualized percent of average loans
for the three months ended and $1.2 million or 0.25 annualized percent of
average loans for the nine months ended September 30, 1999. Net charge-offs for
the third quarter and year to date ended September 30, 1998 were $459,000 or
0.10 annualized percent and $1.1 million or 0.25 annualized percent of average
loans, respectively.
Nonperforming loans as a percent of total loans at September 30, 1999 were
1.09 percent of total loans, which represents a decline from 1.28 percent at
June 30, 1999. Also, this is a decrease from 1.16 percent at December 31, 1998.
See discussion under "Financial Condition" for more information regarding
nonperforming assets.
Noninterest Income:
Noninterest income for the third quarter of 1999 increased $101,000 or 7.4
percent over the same period in 1998. The primary factors contributing to the
overall increase were higher levels of Insurance Premiums & Commissions offset
by a lower level of Gains on Sale of Loans & Other Real Estate. The increase in
Insurance Premiums and Commissions of $369,000 was primarily due to 1999
insurance acquisitions. Gains on the Sale of Loans and Other Real Estate, which
fluctuates based on market conditions, declined $240,000 from the prior year.
Year to date noninterest income increased $859,000 or 18.9 percent over
1998. Similar to the quarter ended September 30, 1999, the primary factors
contributing to the overall increase were higher levels of Insurance Premiums &
Commissions tempered by a lower level of Gain on Sale of Loans and Other Real
Estate. Insurance Premiums and Commissions increased $906,000 while the Gain on
Sale of Loans and Other Real Estate declined $111,000 for the year to date
September 30, 1999.
Noninterest Expense:
Noninterest expense for the third quarter of 1999 increased $269,000 or 4.6
percent from the prior year. Most of this increase is attributable to higher
levels of Salaries & Employee Benefits ($250,000), Furniture and Equipment
Expense ($68,000) and Other Operating Expenses ($85,000). These increased levels
of expenses were offset by a decline in Professional Fees ($158,000). The
Company's insurance operations acquired in 1999 and not included in 1998's
results accounted for $269,000 of the net increase in noninterest operating
expenses.
Year to date noninterest expense increased $1.4 million or 8.5 percent from
the prior year. The bulk of this increase occurred in Salaries and Employee
Benefits ($770,000), Furniture and Equipment Expense ($243,000) and Other
Operating Expenses ($223,000). The Company's insurance operations acquired in
1999 and not included in 1998's results accounted for $731,000 or 52 percent of
the total increase.
Salaries and Employee Benefits increased $250,000 and $770,000 for the
quarter ended and nine months ended September 30, 1999, respectively. Excluding
increases due to the Company's acquired insurance operations, these expenses
increased approximately $46,000 and $215,000 for the quarter ended and nine
months ended September 30, 1999.
<PAGE>
Total occupancy, furniture and equipment expense for the three and nine
months ended September 30, 1999 totaled $878,000 and $2.6 million, respectively.
This was approximately $74,000 and $306,000 greater than the same periods of the
prior year. These increases include depreciation on Citizens State Bank's new
main office in Petersburg, and for branch remodeling at another affiliate. Also
included are the costs of upgrading the Company's computer systems at its
existing and new affiliates. This strategy is expected, over the long-term, to
better control employee related expenses and to improve the quality of customer
service provided by all of its affiliate community banks.
Computer processing fees decreased $33,000 for the three months ended and
increased $31,000 year to date, compared to the same periods in 1998. Increases
were due in part to Year 2000 preparation, and also to conversion related
expenses at our newest affiliate, which occurred in a prior quarter. Advertising
expenses increased $37,000 for the third quarter and $45,000 year to date over
comparable periods in the prior year. Supplies expenses for the third quarter
increased $14,000 and $85,000 for the nine months ended over the prior year.
This included expenses at our newest affiliate, and normal increases due to
volume.
Year to date Other Operating Expenses increased $223,000 over 1998. $62,000
of this increase related to a net loss on sale and write-downs in Other Real
Estate Owned and other miscellaneous assets. Other increases occurred in
education and training expenses ($47,000) and telecommunication expenses,
including network charges ($151,000).
Income Taxes:
The Company's effective income tax rate approximates 28% of pre-tax income
and is lower than the combined federal and state statutory rate of 39.6%. This
lower effective rate results from the Company's tax-exempt investment income on
municipal securities and loans, and from net operating loss and other income tax
credits generated from investments in affordable housing projects.
FINANCIAL CONDITION
Total assets at September 30, 1999 were $975 million. This was an increase
of $78 million from the December 31, 1998 total asset position. In comparison to
year-end totals, loans increased $78 million or 13 percent, investments
increased $9 million or 4 percent, and cash equivalents decreased $13 million.
Deposits at September 30, 1999 increased $40 million or 6 percent, and
borrowings increased $37 million or 28 percent.
All of the Company's affiliate banks are members of the Federal Home Loan
Bank System ("FHLB"). The banks' membership in the FHLB provides an additional
source of liquidity for both Long-term and Short-term borrowing needs. The
Company had $149 million in Long-term FHLB borrowings outstanding at September
30, 1999 as compared to $124 million at December 31, 1998.
Nonperforming Assets:
The following is an analysis of the Company's nonperforming assets at
September 30, 1999 and December 31, 1998 (dollars in thousands):
September 30, December 31,
1999 1998
Nonaccrual Loans $ 6,162 $ 5,411
Loans contractually past due 90 days or more 1,180 1,522
Renegotiated Loans --- ---
Total Nonperforming Loans 7,342 6,933
-------- --------
Other Real Estate 2,284 1,156
-------- --------
Total Nonperforming Assets $ 9,626 $ 8,089
-------- --------
Allowance for Loan Loss to Nonperforming Loans 115.05% 120.05%
Nonperforming Loans to Total Loans 1.09% 1.16%
<PAGE>
The increase in non-performing loans occurred primarily in non-conforming
real estate loans. Most of the increase in Other Real Estate related to a group
of agricultural loans to a single borrower.
Capital Resources:
Shareholders' equity totaled $91.1 million at September 30, 1999 or 9.3
percent of total assets. Total equity declined $137,000 from year end due to a
$3.3 million decline in the Company's $210 million investment portfolio. This
decline in market value is due to a rise in interest rates since year end, and
represents less than a 2 percent decline in market value.
Federal banking regulations provide guidelines for determining the capital
adequacy of bank holding companies and banks. These guidelines provide for a
more narrow definition of core capital and assign a measure of risk to the
various categories of assets. The Company is required to maintain minimum levels
of capital in proportion to total risk-weighted assets and off-balance sheet
exposures such as loan commitments and standby letters of credit.
Tier 1, or core capital, consists of shareholders' equity less goodwill,
core deposit intangibles, and certain deferred tax assets defined by bank
regulations. Tier 2 capital is defined as the amount of the allowance for loan
losses which does not exceed 1.25 percent of gross risk adjusted assets. Total
capital is the sum of Tier 1 and Tier 2 capital.
The minimum requirements under these standards are generally at least a 4.0
percent leverage ratio, which is Tier 1 capital divided by defined "total
assets"; 4.0 percent Tier 1 capital to risk-adjusted assets; and, an 8.0 percent
total capital to risk-adjusted assets ratios. Under these guidelines, the
Company, on a consolidated basis, and each of its affiliate banks individually,
have capital ratios that substantially exceed the regulatory minimums.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
requires federal regulatory agencies to define capital tiers. These are: well
capitalized, adequately capitalized, under-capitalized, significantly
under-capitalized, and critically under-capitalized. Under these regulations, a
"well-capitalized" entity must achieve a Tier 1 Risk-based capital ratio of at
least 6.0 percent; a total capital ratio of at least 10.0 percent; and, a
leverage ratio of at least 5.0 percent, and not be under a capital directive
order.
At September 30, 1999 management is not under such a capital directive, nor
is it aware of any current recommendations by banking regulatory authorities
which, if they were to be implemented, would have or are reasonably likely to
have, a material effect on the Company's liquidity, capital resources or
operations.
The table below presents the Company's consolidated risk-based capital
structure and capital ratios under regulatory guidelines (dollars in thousands):
September 30, December 31,
1999 1998
Tier 1 Capital:
Shareholders' Equity as presented
on the Balance Sheet $ 91,140 $ 91,276
Less: Unrealized Depreciation (Appreciation)
on Securities Available-for-Sale 2,993 (811)
Less: Intangible Assets and
Ineligible Deferred Tax Assets (2,241) (1,497)
--------- ---------
Total Tier 1 Capital 91,892 88,968
Tier 2 Capital:
Qualifying Allowance for Loan Loss 7,885 6,328
--------- ---------
Total Capital $ 99,777 $ 95,296
========= =========
Risk-adjusted Assets $630,211 $583,500
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
To be Well
Capitalized
Under Prompt
Minimum for Corrective
Capital Action At At
Adequacy Provisions September 30, December 31,
Purposes (FDICIA) 1999 1998
Leverage Ratio 4.00% 5.00% 9.79% 10.28%
Tier 1 Capital to Risk-adjusted Assets 4.00% 6.00% 14.58% 15.25%
Total Capital to Risk-adjusted Assets 8.00% 10.00% 15.83% 16.33%
</TABLE>
The Company has commenced a stock repurchase program as discussed in
greater detail in Note 7 to the financial statements included in Part I of this
report.
Liquidity:
The Consolidated Statement of Cash Flows details the elements of change in
the Company's cash and cash equivalents. During the first nine months of 1999,
operating activities provided $10.4 million of available cash, which included
net income of $6.8 million. Deposits and borrowings provided $87.6 million of
cash during the period. Major cash outflows experienced during the nine month
period of 1999 included $3.3 million in dividends, $3.0 million in property and
equipment purchases and net loan outlays in the amount of $71.0 million.
Purchases of securities and short-term investments required $34.0 million in
cash above the dollar amount of maturities and sales. Total cash outflows for
the period exceeded inflows by $12.9 million, leaving cash and cash equivalents
of $36.7 million at September 30, 1999.
Year 2000:
All banks and financial institutions are faced with addressing a potentially
materially adverse event should their computer and operating systems fail to
accurately process their customers' deposit, loan and other business in the Year
2000. The Company, like any financial institution, would suffer an interruption
in its ability to transact business should its systems fail due to Year 2000
programming inaccuracy.
During the third quarter, the Company satisfactorily completed testing and
implementation procedures on all mission critical systems to address potential
Year 2000 issues. The Company's Year 2000 process is subject to banking agency
regulatory guidelines and examination. The Company believes itself to be in
compliance with all significant regulatory requirements.
The Company's service provider for all of its loan and deposit account
processing activity is Fiserv, a publicly listed company headquartered in
Milwaukee, Wisconsin. The Company designated Fiserv's systems as mission
critical for the Year 2000 issue, as that term is defined by bank regulatory
requirements. Fiserv is a national service provider for over 3,300 institutions.
While the Company has extensively tested Fiserv's systems for Year 2000
capabilities, it can obviously give no absolute assurance as to the actual
performance of Fiserv's systems in the Year 2000. However, based on this
testing, the Company is unaware of any issues that would cause any material
interruption in its ability to transact business. The Company has also completed
its assessment of the Year 2000 implications of systems other than its "mission
critical" data processing information systems (such as elevators, HVAC, copiers,
and the like).
<PAGE>
The Company expended approximately $500,000 on Year 2000 related items,
including approximately $200,000 in cash outlays in 1999. These outlays exclude
the cost of implementing the Company's state-of-the-art platform and computer
systems upgrade, but include the Company's share of third party systems costs
and all other costs to address the Year 2000 issue. For financial statement
purposes, the depreciation and operating expenses associated with these outlays
will impact the income statement over a period of one to seven years.
The Year 2000 issue could also affect the ability of the Company's customers
to conduct operations in a timely and effective manner, and as such, could
adversely impact the quality of the Company's loan portfolio, its deposits, or
other sources of revenue and funding from customers. The Company has completed
an assessment of its commercial customers' potential exposure to the Year 2000
issue and their plans to minimize any such exposure. While that assessment can
offer no assurances on this matter, the Company is unaware of any specific
significant customer Year 2000 issues that are not expected to be resolved prior
to the end of the year.
The above summary of the Company's Year 2000 preparations includes forward
looking statements, concerning the Company's present expectation that its
operations will not be materially adversely affected by Year 2000 issues.
However, the Year 2000 issue is pervasive, complex and could potentially affect
any computer process, including any equipment utilizing embedded technology like
microprocessors. Although the Company believes it is taking all necessary steps
to address Year 2000 issues, no assurances can be given that some problems will
not occur or that the Company will not incur significant additional expenses in
future periods, any of which could have a material adverse impact on the
Company's results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to market risk is reviewed on a regular basis by the
Asset/Liability Committees and Boards of Directors of the holding company and
its affiliate banks. Primary market risks which impact the Company's operations
are liquidity risk and interest rate risk.
The liquidity of the parent company is dependent upon the receipt of
dividends from its bank subsidiaries, which are subject to certain regulatory
limitations. The affiliate banks' source of funding is predominately core
deposits, maturities of securities, repayments of loan principal and interest,
federal funds purchased, securities sold under agreements to repurchase and
long-term borrowings from the Federal Home Loan Bank.
The Company monitors interest rate risk by the use of computer simulation
modeling to estimate the potential impact on its net interest income under
various interest rate scenarios, and by estimating its static interest rate
sensitivity position. Another method by which the Company's interest rate risk
position can be estimated is by computing estimated changes in its net portfolio
value ("NPV"). This method estimates interest rate risk exposure from adverse
movements in interest rates by using interest rate sensitivity analysis to
determine the change in the NPV of the net present value of discounted cash
flows from assets and liabilities.
NPV represents the market value of portfolio equity and is equal to the
estimated market value of assets minus the estimated market value of
liabilities. Computations are based on a number of assumptions, including the
relative levels of market interest rates and prepayments in mortgage loans and
certain types of investments. These computations do not contemplate any actions
management may undertake in response to changes in interest rates, and should
not be relied upon as indicative of actual results. In addition, certain
shortcomings are inherent in the method of computing NPV. Should interest rates
remain or decrease below current levels, the proportion of adjustable rate loans
could decrease in future periods due to refinancing activity. In the event of an
interest rate change, prepayment levels would likely be different from those
assumed in the table. Lastly, the ability of many borrowers to repay their
adjustable rate debt may decline during a rising interest rate environment.
<PAGE>
The table below provides an assessment of the risk to NPV in the event of
sudden and sustained 1% and 2% increases and decreases in prevailing interest
rates. These estimates were restated from those presented in the Company's 1998
Annual Report for the effect of the January 1999 acquisition, on a pooling of
interests basis, of 1ST BANCORP. The Company does not believe that its risk
profile as of September 30, 1999 differed materially from these year-end
estimates. The table indicates that as of December 31, 1998 the Company's
estimated NPV might be expected to decrease in the event of an increase in
prevailing interest rates, and that a decrease in prevailing interest rates
might have little or no impact on estimated NPV.
Change in Estimated Net Portfolio Value
As of December 31, 1998
Net Portfolio Value
Changes in Rates In Thousands Dollar Change % Change
+2%......................$88,621................$(22,784).............(20%)
+1%.......................99,131.................(12,274).............(11%)
Base......................111,405.....................---...............--
-1%......................112,695...................1,290................1%
-2%......................111,844.....................439...............--
PART II. OTHER INFORMATION
Item 5. Other Information
A.W. Place, Jr., a member of the Board of Directors of the Company since
1990, passed away in September, 1999. The Company has no present plans to fill
the vacancy created by his death.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
3.1 Restated Articles of Incorporation of the Registrant as
amended April 23, 1998 are incorporated by reference to
Exhibit 3 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998.
3.2 Restated Bylaws of the Registrant as amended August 14,
1990, are incorporated by reference to Exhibit 3.2 to
Registrant's Form 10-K for the year ended December 31, 1995.
4 No long-term debt instrument issued by the Registrant
exceeds 10% of consolidated total assets. In accordance with
paragraph 4 (iii) of Item 601(b) of Regulation S-K, the
Registrant will furnish the Securities and Exchange
Commission upon request copes of long-term debt instruments
and related agreements.
27 Financial Data Schedule for the periods ended September 30,
1999 and 1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended September
30, 1999, except for a report filed August 9, 1999, reporting under Item 5 the
Company's adoption of a stock repurchase program.
<PAGE>
SIGNATURES
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.
GERMAN AMERICAN BANCORP
Date November 12, 1999 By/s/Mark A. Schroeder
-------------------------- ----------------------------
Mark A. Schroeder
President/Chief Operating
Officer
Date November 12, 1999 By/s/John M. Gutgsell
--------------------------- ----------------------------
John M. Gutgsell
Vice President/Principal
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 23,716
<INT-BEARING-DEPOSITS> 12,927
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 179,097
<INVESTMENTS-CARRYING> 30,049
<INVESTMENTS-MARKET> 30,000
<LOANS> 678,818
<ALLOWANCE> 8,447
<TOTAL-ASSETS> 975,146
<DEPOSITS> 705,707
<SHORT-TERM> 19,635
<LIABILITIES-OTHER> 9,444
<LONG-TERM> 149,220
0
0
<COMMON> 8,758
<OTHER-SE> 82,382
<TOTAL-LIABILITIES-AND-EQUITY> 975,146
<INTEREST-LOAN> 39,635
<INTEREST-INVEST> 10,387
<INTEREST-OTHER> 37
<INTEREST-TOTAL> 50,059
<INTEREST-DEPOSIT> 20,632
<INTEREST-EXPENSE> 26,078
<INTEREST-INCOME-NET> 23,981
<LOAN-LOSSES> 939
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 18,053
<INCOME-PRETAX> 9,533
<INCOME-PRE-EXTRAORDINARY> 9,533
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,820
<EPS-BASIC> .78
<EPS-DILUTED> .78
<YIELD-ACTUAL> 3.71
<LOANS-NON> 6162
<LOANS-PAST> 1180
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1016
<ALLOWANCE-OPEN> 8679
<CHARGE-OFFS> 1,536
<RECOVERIES> 365
<ALLOWANCE-CLOSE> 8,447
<ALLOWANCE-DOMESTIC> 8,447
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,164
</TABLE>
