<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 Commission File Number: 0-15982
NATIONAL MERCANTILE BANCORP
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 95-3819685
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Century Park East, Los Angeles, California 90067
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (310) 277-2265
Indicate by check mark whether the issuer (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
------------- -------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's Common Stock, no par value, as
of May 1, 2000 was 906,593.
<PAGE>
NATIONAL MERCANTILE BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
2000 DECEMBER 31,
(UNAUDITED) 1999
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks-demand ....................................................... $ 10,437 $ 5,789
Federal funds sold and securities purchased
under agreements to resell ...................................................... 8,780 4,450
--------- ---------
Cash and cash equivalents .................................................... 19,217 10,239
Securities available-for-sale, at fair value;
aggregate amortized cost of $70,977 and $71,964
at March 31, 2000 and December 31, 1999, respectively ........................... 68,136 69,489
FRB and other stock, at cost ......................................................... 2,210 1,746
Loans receivable ..................................................................... 79,134 73,843
Allowance for credit losses ..................................................... (1,917) (1,896)
--------- ---------
Net loans receivable ......................................................... 77,217 71,947
Premises and equipment, net .......................................................... 590 626
Other real estate owned, net ......................................................... 241 382
Accrued interest receivable and other assets ......................................... 1,821 1,724
--------- ---------
Total assets ................................................................. $ 169,432 $ 156,153
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand ...................................................... $ 61,707 $ 53,827
Interest-bearing demand ......................................................... 9,726 8,669
Money market .................................................................... 36,024 25,376
Savings ......................................................................... 1,321 3,079
Time certificates of deposit:
$100,000 or more ............................................................. 19,528 19,488
Under $100,000 ............................................................... 5,640 6,545
--------- ---------
Total deposits ............................................................ 133,946 116,984
Other borrowings ..................................................................... 22,500 26,200
Accrued interest payable and other liabilities ....................................... 1,390 1,382
--------- ---------
Total liabilities ............................................................ 157,836 144,566
Shareholders' equity:
Preferred stock: (10,000 shares undesignated)
Series A non-cumulative convertible perpetual preferred stock;
authorized 990,000 shares; issued and outstanding 785,425 shares and
900,000 shares at March 31, 2000 and December 31, 1999, respectively ......... 6,415 7,350
Common stock, no par value; authorized 10,000,000
shares; issued and outstanding 906,345 shares and 677,048 shares
at March 31, 2000 and December 31, 1999, respectively ........................ 25,549 24,614
Accumulated deficit ............................................................. (17,527) (17,902)
Accumulated other comprehensive income .......................................... (2,841) (2,475)
--------- ---------
Total shareholders' equity ................................................... 11,596 11,587
--------- ---------
Total liabilities and shareholders' equity ................................... $ 169,432 $ 156,153
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
NATIONAL MERCANTILE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
2000 1999
------ ------
(DOLLARS IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Interest income:
Loans, including fees .............................................................. $1,800 $1,317
Securities available-for-sale ...................................................... 1,209 1,070
Federal funds sold and securities purchased under agreements to resell ............. 82 42
------ ------
Total interest income ............................................................ 3,091 2,429
Interest expense:
Interest-bearing demand ............................................................ 27 21
Money market and savings ........................................................... 231 152
Time certificate of deposits:
$100,000 or savings ............................................................... 245 187
Under $100,000 .................................................................... 88 185
------ ------
Total interest expense on deposits ............................................... 591 545
Federal funds purchased and securities sold under agreements to repurchase ......... 1 1
Other borrowings ................................................................... 455 269
------ ------
Total interest expense ........................................................... 1,047 815
------ ------
Net interest income before provision for credit losses ........................... 2,044 1,614
Provision for credit losses ........................................................... - -
------ ------
Net interest income after provision for credit losses .............................. 2,044 1,614
Other operating income:
International services ............................................................. 28 17
Investment division ................................................................ 20 14
Deposit-related and other customer services ........................................ 136 128
Gain on sale of OREO and fixed assets .............................................. 10 -
------ ------
Total other operating income ..................................................... 194 159
Other operating expenses:
Salaries and related benefits ...................................................... 910 838
Net occupancy ...................................................................... 249 250
Furniture and equipment ............................................................ 54 55
Printing and communications ........................................................ 70 62
Insurance and regulatory assessments ............................................... 70 75
Customer services .................................................................. 197 176
Computer data processing ........................................................... 76 78
Legal services ..................................................................... 49 40
Other professional services ........................................................ 114 72
Other real estate owned expenses ................................................... 3 -
Promotion and other expenses ....................................................... 64 46
------ ------
Total other operating expenses ................................................... 1,856 1,692
------ ------
Net income before provision for income taxes ....................................... 382 81
Provision for income taxes ............................................................ 7 5
------ ------
Net income ......................................................................... $ 375 $ 76
====== ======
Earnings per share:
Basic ............................................................................. $ 0.47 $ 0.11
====== ======
Diluted ........................................................................... $ 0.15 $ 0.03
====== ======
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
NATIONAL MERCANTILE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE-MONTHS
ENDED MARCH 31,
-------------------------
2000 1999
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Net cash flows from operating activities:
Net income ............................................................................ $ 375 $ 76
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ......................................................... 48 48
Gain on sale of other real estate owned ............................................... (10) -
Net (accretion of discount) amortization of premiums on
securities available-for-sale ........................................................ (8) 30
Net accretion of discounts on loans purchased ......................................... (9) (8)
Decrease (increase) in accrued interest receivable and other assets ................... 103 (26)
Increase (decrease) in accrued interest payable and other liabilities ................. 8 (105)
-------- --------
Net cash provided by operating activities .......................................... 507 15
Cash flows from investing activities:
Purchase of securities available-for-sale ............................................. (464) (2,304)
Proceeds from repayments and maturities of securities available-for-sale .............. 995 3,784
Loan originations and principal collections, net ...................................... (5,496) (517)
Proceeds from sale of other real estate owned ......................................... 186 -
Net purchases of premises and equipment ............................................... (12) (41)
-------- --------
Net cash (used in) provided by investing activities ................................ (4,791) 922
Cash flows from financing activities:
Net increase (decrease) in demand deposits, money market and savings accounts ......... 17,827 (1,606)
Net decrease in time certificates of deposit .......................................... (865) (2,178)
Net decrease in securities sold under agreements to repurchase
and federal funds purchased .......................................................... - (1,000)
Net (decrease) increase in other borrowings ........................................... (3,700) 4,700
-------- --------
Net cash provided by (used in) financing activities ................................ 13,262 (84)
-------- --------
Net increase in cash and cash equivalents ................................................ 8,978 853
Cash and cash equivalents, January 1 ..................................................... 10,239 12,205
-------- --------
Cash and cash equivalents, March 31 ...................................................... $ 19,217 $ 13,058
======== ========
Supplemental cash flow information:
Cash paid for interest ................................................................ $ 1,071 $ 738
Non-cash investing and financing transactions:
Increase in unrealized loss on securities available-for-sale ......................... (366) (7)
Transfer to OREO and other assets-SBA guaranteed loans from
loans receivable, net .............................................................. 235 -
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
NATIONAL MERCANTILE BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
PREFERRED STOCK COMMON STOCK OTHER
---------------------- --------------------- ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT DEFICIT INCOME TOTAL
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 ....... 900,000 $ 7,350 677,195 $ 24,614 $(17,902) $ (2,475) $ 11,587
Preferred stock converted into
common stock on a 2:1 basis .... (114,575) (935) 229,150 935 -
Comprehensive income:
Other comprehensive income:
Unrealized holding losses during
the period .................... (366) (366)
Net income ..................... 375 375
--------
Comprehensive income .......... 9
-------- -------- -------- -------- -------- -------- --------
Balance at March 31, 2000 ........ 785,425 $ 6,415 906,345 $ 25,549 $(17,527) $ (2,841) $ 11,596
======== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
NATIONAL MERCANTILE BANCORP AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATIONS
The unaudited consolidated financial statements include the accounts of
National Mercantile Bancorp (the "Company") and its wholly owned subsidiary,
Mercantile National Bank (the "Bank"). The unaudited consolidated financial
statements reflect the interim adjustments, all of which are of a normal
recurring nature and which, in management's opinion, are necessary for the fair
presentation of the Company's consolidated financial position and the results of
its operations and cash flows for such interim periods. The results for the
quarter ended March 31, 2000 are not necessarily indicative of the results
expected for any subsequent period or for the full year ending December 31,
2000. The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999.
NOTE 2--EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. The weighted average number of
common shares outstanding used in computing basic earnings per share for the
three months ended March 31, 2000 and 1999 was 798,318 and 677,048,
respectively. The weighted average number of common shares and common share
equivalents outstanding used in computing diluted earnings per share for the
three months ended March 31, 2000 and 1999 was 2,482,406 and 2,477,048,
respectively.
6
<PAGE>
The following table is a reconciliation of income and shares used in the
computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
PER SHARE
NET INCOME SHARES AMOUNT
-------------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 2000:
Basic EPS ............................ $ 375 798,318 $ 0.47
=========
Effect of dilutive securities:
Options and warrants .............. 113,238
Convertible preferred stock ....... 1,570,850
---------- ---------
Diluted EPS .......................... $ 375 2,482,406 $ 0.15
========== ========= ========
FOR THE THREE MONTHS ENDED MARCH 31, 1999:
Basic EPS ............................ $ 76 677,048 $ 0.11
=========
Effect of dilutive securities:
Options and warrants .............. -
Convertible preferred stock ....... 1,800,000
---------- ---------
Diluted EPS .......................... $ 76 2,477,048 $ 0.03
========== ========= ========
</TABLE>
NOTE 3--CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks - demand, federal funds sold and securities sold under
agreements to resell.
NOTE 4--COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity during a period
from transactions and other events and circumstances from nonowner sources.
7
<PAGE>
The components of other comprehensive income together with total
comprehensive income are reported in the consolidated statement of changes in
shareholders' equity. The accumulated balance of other comprehensive income is
not reported as a net amount after taxes due to the size and availability of the
Company's net operating loss carry forwards.
NOTE 5--INCOME TAXES
No income tax provision was recorded during the first quarters of 2000 and
1999 (other than alternative minimum tax) due to the utilization of previously
unrecognized tax benefits to offset the current period tax liability.
For tax purposes at December 31, 1999, the Company had: (i) federal net
operating loss carry forwards of $20.3 million, which begin to expire in the
year 2007; (ii) California net operating loss carry forwards of $4.7 million, of
which $3.2 million will expire in 2000, $1.2 million will expire in 2001, and
$300,000 will expire in 2002; and (iii) an Alternative Minimum Tax credit at
December 31, 1999 of $254,000 which may be carried forward indefinitely.
NOTE 6--SUBSEQUENT EVENT
In May 2000, the Bank realized a recovery of approximately $1.2 million
related to a previously charged off loan. Although the entire recovery will
initially be accounted for as an increase to the allowance for credit losses,
a portion of the recovery, may be recognized as income through a reduction in
the provision for credit losses during the quarter ended June 30, 2000, based
on the resulting level of the allowance for credit losses after giving effect
for this recovery. Management has determined that an increase in the
allowance for credit losses is warranted as an increasing portion of the
Bank's loan portfolio is currently represented by large loans (loans with
balances greater than $1.0 million) as compared to prior periods. However,
credit quality is affected by many factors beyond the control of the Company,
including local and national economies, and facts may exist which are not
known to the Company which adversely affect the likelihood of repayment of
various loans in the loan portfolio and realization of collateral upon a
default. Accordingly, no assurance can be given that the Company will not
sustain loan losses materially in excess of the allowance for credit losses.
In addition, the OCC, as an integral part of its examination process,
periodically reviews the allowance for credit losses and could require
additional provisions for credit losses.
NOTE 7--RECLASSIFICATIONS
Certain prior year data have been reclassified to conform with current year
presentation.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
National Mercantile Bancorp (the "Company") is the holding company for
Mercantile National Bank (the "Bank"). In light of the fact that the Bank
constitutes substantially all of the business of the Company, references to the
Company in this Item 2 reflect the consolidated activities of the Company and
the Bank.
RESULTS OF OPERATIONS
The Company recorded net income of $375,000, or $0.15 diluted earnings per
share, for the first quarter of 2000, compared to net income of $76,000, or
$0.03 diluted earnings per share, for the first quarter of 1999. Net income per
basic share was $0.47 and $0.11 for the first quarter of 2000 and 1999,
respectively. The increase in net income resulted primarily from $430,000
increase in net interest income and $35,000 increase in other operating income,
partially offset by $164,000 increase in other operating expense during the
first quarter of 2000 compared to 1999.
This increase in net income translated into improvement in return on
average assets during the first quarter of 2000 to 0.92% compared with 0.22%
during the first quarter of 1999, along with an improvement in return on average
equity during the first quarter of 2000 to 13.15% compared to 2.32% during the
first quarter of 1999.
The increase in net interest income resulted primarily from an increase
of 20.6% or $26.7 million in average interest earning assets to $156.3
million during the first quarter of 2000 compared to $129.6 million during
the first quarter of 1999. This increase was supplemented by an increase in
the net interest margin of 21 basis points to 5.26% during the first quarter
of 2000 compared to 5.05% during the first quarter of 1999 resulting from
increased market interest rates. The increase in average interest earning
assets was driven by a 37.9% increase in average loans receivable which was
funded by a 17.8% increase in average total deposits and a 42.2% increase in
average other borrowed funds. This growth both in average loans receivable
and average deposits was a result of the Company's efforts toward expanding
and building new customer relationships within its existing business and
entertainment banking divisions, and the creation of two additional
departments during the first quarter of 2000 which are focused on healthcare
and community based non-profit organizations.
Average loans receivable increased $21.2 million or 37.9% to $76.9
million during the quarter ended March 31, 2000 compared to $55.8 million
during the quarter ended March 31, 1999. The Company, however, experienced a
slight decrease in the weighted average yield on loans receivable to 9.41%
from 9.58% as a result of higher proportion of average loans yielding
9
<PAGE>
fixed rates during the first quarter of 2000 compared to first quarter of
1999. These fixed rate loans were unaffected by recent increases in overall
market interest rates since the majority of the growth in this portfolio took
place during 1999.
Total average securities available-for-sale increased by $3.3 million to
$73.6 million at March 31, 2000 compared to $70.3 million at March 31, 1999
resulting from an additional purchases of securities during the last quarter of
1999. The weighted average yield on securities available-for-sale increased to
6.60% during the first quarter of 2000 from 6.17% during the first quarter of
1999, primarily due to an increased market interest rates which affected
securities purchased and had an impact on securities yielding variable rates.
Total average deposits increased $18.0 million or 17.8% to $119.2
million during the first quarter of 2000 compared to $101.2 million during
the first quarter of 1999. Total average other borrowings increased $9.2
million or 42.2% to $31.1 million during the quarter ended March 31, 2000
compared to $21.9 million during the quarter ended March 31, 1999. This
increase in other borrowings was needed to fund new loan originations which
outpaced the growth of deposits.
The weighted average cost of interest bearing liabilities increased to
4.35% during the first quarter of 2000 from 4.17% the during the first quarter
of 1999. This was due primarily to an increase in cost (and an increased average
volume discussed above) of other borrowings to 5.89% during the first quarter of
2000 from 5.00% during the first quarter of 1999, brought about by an upward
trend of market interest rates. This increase was partially offset by a decrease
in cost of time certificates of deposit to 5.14% during the first quarter of
2000 from 5.45% during the first quarter of 1999 as a result of Company's
continued effort to replace the maturing high yielding wholesale deposits with
lower yielding retail deposits.
There was no provision for credit losses for the quarters ended March
31, 2000 and 1999. Loan charge-offs during the first quarter of 2000 were
$30,000, compared to $175,000 during the first quarter of 1999. Recoveries
were $51,000 during the first quarter of 2000, compared to $52,000 during the
first quarter of 1999.
Other operating income excluding gains and losses on the sale of securities
and assets totaled $184,000 during the first quarter of 2000, representing an
increase of $25,000 or 15.7% from $159,000 during the first quarter of 1999.
Service charges on deposit accounts increased $8,000 or 6.3% for the quarter
ended March 31, 2000 compared to the first quarter of 1999 due primarily to
increased volume of demand deposit accounts.
The Company recorded a $10,000 gain on sale of OREO during the first
quarter of 2000 with no such gain recorded during the first quarter of 1999.
10
<PAGE>
Other operating expense increased by $164,000 to $1.9 million during the
first quarter of 2000 compared to $1.7 million during first quarter of 1999.
This increase was brought about by the following; (i) salaries and related
benefits increased $72,000 or 8.6%; (ii) other professional services expense
increased $42,000, or 58.3%; (iii) customer services expense increased
$21,000, or 11.9%; and (iv) promotion and other expense increased $18,000, or
39.1%. This increase in salaries and related benefits, other professional
(recruitment fees) and promotion and other expense was due primarily to the
cost associated with the Company's continued expansion of the business
banking and entertainment loan production staff along with the creation of
healthcare and community based non-profit organization departments. The
increase in customer services expense was caused by the increased volume of
transaction type deposit accounts and increased costs associated with
deposits from real estate title and escrow companies.
11
<PAGE>
The following table presents the components of net interest income for the
quarters ended March 31, 2000 and 1999.
AVERAGE BALANCE SHEET AND
ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------
MARCH 31, 2000 MARCH 31, 1999
---------------------------------------- -------------------------------------
WEIGHTED WEIGHTED
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
AMOUNT EXPENSE RATE AMOUNT EXPENSE RATE
--------- --------- --------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold and securities
purchased under agreements to resell ...... $ 5,709 $ 82 5.78% $ 3,513 $ 42 4.79%
Securities available-for-sale ............... 73,625 1,209 6.60% 70,278 1,070 6.17%
Loans receivable (1)(2) ..................... 76,922 1,800 9.41% 55,767 1,317 9.58%
--------- --------- --------- ---------
Total interest earning assets ............ 156,256 $ 3,091 7.96% 129,558 $ 2,429 7.60%
========= =========
Noninterest earning assets:
Cash and due from banks - demand ......... 8,879 6,972
Other assets ............................. 2,761 2,829
Allowance for credit losses and net
unrealized (loss) gain on securities
available-for-sale ...................... (4,801) (2,033)
--------- ---------
Total assets ................................ $ 163,095 $ 137,326
========= =========
Liabilities and shareholders' equity:
Interest-bearing deposits:
Demand ................................... $ 8,600 27 1.26% $ 6,579 21 1.29%
Money market and savings ................. 31,171 232 2.99% 23,149 153 2.68%
Time certificates of deposit:
$100,000 or more ........................ 18,968 245 5.19% 14,133 187 5.37%
Under $100,000 .......................... 6,987 87 5.01% 13,451 184 5.55%
--------- --------- --------- ---------
Total time certificates of deposit ....... 25,955 332 5.14% 27,584 371 5.45%
--------- --------- --------- ---------
Total interest-bearing deposits .......... 65,726 591 3.62% 57,312 545 3.86%
Federal funds purchased and securities
sold under agreements to repurchase ....... 33 1 6.09% 50 1 5.68%
Other borrowings ............................ 31,075 455 5.89% 21,854 269 5.00%
--------- --------- --------- ---------
Total interest-bearing liabilities ....... 96,834 $ 1,047 4.35% 79,216 $ 815 4.17%
========= =========
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits ...... 53,490 43,890
Other liabilities ........................ 1,302 923
Shareholders' equity ........................ 11,469 13,297
--------- ---------
Total liabilities and shareholders' equity .. $ 163,095 $ 137,326
========= =========
Net interest income (spread) ................ $ 2,044 3.61% $ 1,614 3.43%
========= =========
Net yield on earning assets (2) .......... 5.26% 5.05%
</TABLE>
- --------------
(1) Includes average balance of nonperforming loans of $0.8 million and $1.4
million for 2000 and 1999, respectively.
(2) Yields and amounts earned on loans receivable include loan fees of $24,000
and $59,000 for the three months ended March 31, 2000 and 1999, respectively.
12
<PAGE>
The following tables set forth, for the periods indicated, the changes in
interest earned and interest paid resulting from changes in volume and changes
in rates. Average balances in all categories in each reported period were used
in the volume computations Average yields and rates in each reported period were
used in rate computations.
INCREASE (DECREASE) IN INTEREST INCOME/EXPENSE DUE TO CHANGE IN
AVERAGE VOLUME AND AVERAGE RATE
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
2000 VS 1999
----------------------------------------
INCREASE (DECREASED)
DUE TO(1) NET
----------------------------- INCREASE
VOLUME RATE (DECREASE)
------- ------- ----------
<S> <C> <C> <C>
Interest Income:
Federal funds sold and securities purchased under agreements to resell ............. $ 30 $ 10 $ 40
Securities available-for-sale ...................................................... 79 60 139
Loans receivable (2) ............................................................... 506 (23) 483
------- ------- -------
Total interest-earning assets ................................................... $ 615 $ 47 $ 662
======= ======= =======
Interest Expense:
Interest-bearing deposits:
Demand .......................................................................... $ 6 $ - $ 6
Money market and savings ........................................................ 62 17 79
Time certificates of deposit:
$100,000 or more ............................................................. 64 (6) 58
Under $100,000 ............................................................... (82) (15) (97)
------- ------- -------
Total time certificates of deposit .............................................. (18) (21) (39)
------- ------- -------
Total interest-bearing deposits ................................................. 50 (4) 46
Federal funds purchased and securities sold under agreements to repurchase ......... - - -
Other borrowings ................................................................... 138 48 186
------- ------- -------
Total interest-bearing liabilities ........................................... $ 188 $ 44 $ 232
======= ======= =======
Net interest income ............................................................. $ 427 $ 3 $ 430
======= ======= =======
</TABLE>
- --------------
(1) The change in interest income or interest expense that is attributable to
both changes in average volume and average rate has been allocated to the
changes due to (i) average volume and (ii) average rate in proportion to
the relationship of the absolute amounts of changes in each.
(2) Table does not include interest income that would have been earned on
nonaccrual loans.
13
<PAGE>
BALANCE SHEET ANALYSIS
INVESTMENT SECURITIES
The following comparative period-end table sets forth certain
information concerning the estimated fair values and unrealized gains and losses
of investment securities portfolio, consisting of available-for-sale securities:
ESTIMATED FAIR VALUES OF AND UNREALIZED
GAINS AND LOSSES ON INVESTMENT SECURITIES
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
------------------------------------------ ------------------------------------------
TOTAL GROSS GROSS ESTIMATED TOTAL GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSS VALUE COST GAINS LOSS VALUE
--------- ---------- ---------- --------- -------- --------- ---------- ---------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities ............. $ 2,013 $ - $ 24 $ 1,989 $ 2,015 $ - $ 13 $ 2,002
GNMA-issued/guaranteed mortgage
pass through certificates ......... 7,557 4 135 7,426 7,646 15 126 7,535
Other U.S. government and federal
agency securities ................. 1,941 - 13 1,928 1,937 3 - 1,940
FHLMC/FNMA-issued mortgage
pass through certificates ......... 14,854 - 603 14,251 15,185 - 448 14,737
CMO's and REMIC's issued by U.S. .....
government-sponsored agencies ..... 39,606 - 1,978 37,628 40,174 - 1,827 38,347
Privately issued Corporate bonds,
CMO's and REMIC's securities ...... 5,006 - 92 4,914 5,007 - 79 4,928
FRB and other equity stocks .......... 2,210 - - 2,210 1,746 - - 1,746
------- ------- ------- ------- ------- ------- ------- -------
$73,187 $ 4 $ 2,845 $70,346 $73,710 $ 18 $ 2,493 $71,235
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
As indicated in the table above, total amortized cost of investment
securities decreased $523,000 to $73.2 million at March 31, 2000 from $73.7
million at December 31, 1999. This change was due to paydowns on principal
amortizing securities, partially offset by the purchase of additional FHLB
stock to support additional borrowings. The Company has a net unrealized loss
of $2.8 million at March 31, 2000 on its investment security portfolio
compared to a net unrealized loss of $2.5 million at December 31, 1999
primarily due to rising market interest rates.
As of March 31, 2000 the Company held $2.0 million, representing
aggregate amortized cost and estimated fair value, of an investment security
issued by Structured Asset Mortgage Investments, Inc. This represented the
only security from any
14
<PAGE>
issuer other than by the U.S. government and U.S. government agencies and
corporations, in which the aggregate book value exceeded 10% of the Company's
shareholders' equity.
LOAN PORTFOLIO
The following comparative period-end table sets forth certain information
concerning the composition of the loan portfolio.
LOAN PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------------------- ------------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial loans:
Secured by one to four family
residential properties ................... $ 4,189 5% $ 4,405 6%
Secured by multifamily
residential properties ................... 5,332 7 5,355 7
Secured by commercial real
properties ............................... 31,942 40 28,233 38
Other - secured and
unsecured ................................ 34,965 44 33,221 45
Real estate construction and land
development ................................ 105 - 6 -
Home equity lines of credit ................. 307 1 367 1
Consumer installment and
unsecured loans to individuals ............. 2,546 3 2,496 3
-------- ------- -------- -------
Total loans outstanding .................. 79,386 100% 74,083 100%
======= =======
Deferred net loan origination
fees and purchased loan discount ........... (252) (240)
-------- --------
Loans receivable, net ....................... $ 79,134 $ 73,843
======== ========
</TABLE>
Total loans outstanding increased by $5.3 million to $79.4 million
at March 31, 2000 compared to $74.1 million at December 31, 1999. As
indicated in the table above, commercial loans secured by real estate
properties increased $3.7 million and other commercial loans secured and
unsecured increased $1.7 million. These changes are consistent with the
Company's effort to emphasize the growth of commercial loans generated by
business banking and entertainment divisions complemented by the creation of
two additional departments which focus on healthcare and community non-profit
organizations, during the first quarter of 2000.
15
<PAGE>
The following comparative period-end table sets forth certain information
concerning nonperforming assets.
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans ...................................................... $ 580 $ 932
Troubled debt restructurings .......................................... - -
Loans contractually past due ninety or more days with respect
to either principal or interest and still accruing interest .......... - -
------ ------
Nonperforming loans ................................................... 580 932
Other real estate owned ............................................... 241 382
Other assets-SBA guaranteed loans ..................................... 200 150
------ ------
Total nonperforming assets ............................................ $1,021 $1,464
====== ======
Allowance for credit losses as a percent of nonaccrual loans .......... 330.5% 203.4%
Allowance for credit losses as a percent of
nonperforming loans .................................................. 330.5% 203.4%
Total nonperforming assets as a percent of loans receivable ........... 1.3% 2.0%
Total nonperforming assets as a percent of total
shareholders' equity ................................................. 8.8% 12.6%
</TABLE>
Nonaccrual loans decreased by $352,000 during the first quarter of 2000 to
$580,000 from $932,000 at December 31, 1999 due to principal paydowns of
$102,000 and transfers to OREO and other assets-SBA guaranteed loans of
$235,000.
Other real estate owned ("OREO") at March 31, 2000 decreased $141,000 due
primarily to sale of one property representing two undeveloped commercially
zoned parcels realizing a gain of $10,000. Another property representing an
undeveloped multi-family zoned parcel was subsequently sold during April 2000
realizing a gain of $26,000. Other assets - SBA guaranteed loans is represented
by one developed commercial retail property.
As a result of these changes, the amount of nonperforming assets at March
31, 2000 decreased 30.3% from the level at December 31, 1999.
Loan delinquencies greater than 30 days past due decreased to $106,000 or
0.1% of loans outstanding at March 31, 2000 from $184,000 or 0.2% of loans
outstanding at December 31, 1999.
16
<PAGE>
ALLOWANCE FOR CREDIT LOSSES
The following table sets forth information concerning the Company's
allowance for credit losses for the periods indicated.
ANALYSIS OF CHANGES IN ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance, beginning of period ....................................... $ 1,896 $ 2,144
Loan charged off:
Commercial loans:
Secured by commercial real properties .......................... - 128
Other - secured and unsecured .................................. - 42
Consumer installment and unsecured loans to individuals ......... 30 5
------- -------
Total loan charge-offs .......................................... 30 175
Recoveries of loans previously charged off:
Commercial loans:
Other - secured and unsecured .................................. 45 38
Consumer installment and unsecured loans to individuals ......... 6 14
------- -------
Total recoveries of loans previously charged off ................ 51 52
------- -------
Net charge-offs ................................................. (21) 123
Provision for credit losses ..................................... - -
------- -------
Balance, end of period .......................................... $ 1,917 $ 2,021
======= =======
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133." The Company is
required to and will implement the provision of this new standard on January 1,
2001. SFAS No. 133 establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the Statement of Financial Condition
as either an asset or as a liability measured at its fair value and that changes
in the fair value be recognized currently in the Statement of Operations. The
Company has not yet quantified the impact of adopting SFAS No. 133 on its
financial statements but does not believe it will have a material effect of the
Company's financial position or results of operations.
17
<PAGE>
CAPITAL ADEQUACY REQUIREMENTS
At March 31, 2000 the Company and the Bank were in compliance with all
applicable regulatory capital requirements and the Bank was "well capitalized"
under the Prompt Corrective Action rules of the Office of the Comptroller of the
Currency. The following table sets forth the regulatory capital standards for
well capitalized institutions, and the capital ratios for the Company and the
Bank as of March 31, 2000 and December 31, 1999.
REGULATORY CAPITAL INFORMATION
OF THE COMPANY AND BANK
<TABLE>
<CAPTION>
WELL CAPITALIZED MARCH 31, DECEMBER 31,
STANDARDS 2000 1999
---------------- --------- ------------
<S> <C> <C> <C>
COMPANY:
Tier 1 leverage ................... N/A 8.70% 8.98%
Tier 1 risk-based capital ......... N/A 15.32% 16.21%
Total risk-based capital .......... N/A 16.57% 17.47%
BANK:
Tier 1 leverage ................... 5.00% 8.07% 8.32%
Tier 1 risk-based capital ......... 6.00% 14.23% 15.03%
Total risk-based capital .......... 10.00% 15.49% 16.29%
</TABLE>
LIQUIDITY
The Company manages its liquidity through a combination of core
deposits, federal funds purchased, repurchase agreements, collateralized
borrowing lines at the Federal Home Loan Bank of San Francisco, and a
portfolio of securities available for sale. Liquidity is also provided by
maturing investment securities and loans.
Average core deposits (excludes money desk and escrow deposits) and
shareholders' equity comprised 70.7% of total funding in the first quarter of
2000, compared to 77.7% in the fourth quarter of 1999.
ASSET LIABILITY MANAGEMENT
The following table shows that the Company's cumulative one year interest
rate sensitivity gap indicated an asset sensitive position of $26.8 million at
March 31, 2000, a change from an asset sensitive position of $12.7 million at
December 31, 1999. This improvement resulted from the Company's continuing
effort to minimize its exposure to changes in net interest income due to rapid
movements in interest rates. During the last three months, the Company has
increased its available-for-
18
<PAGE>
sale investment securities portfolio that reprice within one year to $22.1
million at March 31, 2000 from $21.2 million at December 31, 1999, increased
its portfolio of loans that reprice within one year to $56.2 million at March
31, 2000 from $48.8 million at December 31, 1999, and decreased its other
borrowed funds that reprice within one year to $20.0 million at March 31,
2000 from $23.7 million at December 31, 1999. This change was offset by an
increase in interest bearing transaction deposit accounts that reprice within
one year to $40.2 million at March 31, 2000 from $38.1 million at December
31, 1999. The Company's asset sensitive position during a period of slowly
declining interest rates is not expected to have a significant negative
impact on net interest income since rates paid on the Company's large base of
interest bearing demand, savings and money market deposit accounts
historically have not changed proportionately with changes in interest rates.
RATE-SENSITIVE ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, 2000
---------------------------------------------------------------------
MATURING OR REPRICING IN
---------------------------------------------------------------------
LESS AFTER THREE AFTER ONE
THAN MONTHS YEAR
THREE BUT WITHIN BUT WITHIN AFTER
MONTHS ONE YEAR 5 YEARS 5 YEARS TOTAL
-------- ------------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Rate-Sensitive Assets:
Federal funds sold and securities
purchased under agreements to resell ............. $ 8,780 $ - $ - $ - $ 8,780
Securities available-for-sale, at amortized cost .... 15,906 6,155 28,830 20,086 70,977
FRB and other stock, at cost ........................ - - - 2,210 2,210
Loans receivable .................................... 45,651 10,581 18,650 4,252 79,134
-------- -------- -------- -------- --------
Total rate-sensitive assets ...................... 70,337 16,736 47,480 26,548 161,101
Rate-Sensitive Liabilities: (1)
Interest bearing deposits:
Demand, money market and
savings .......................................... 5,029 11,316 17,019 13,707 47,071
Time certificates of deposit ..................... 14,450 9,446 1,272 - 25,168
Other borrowings .................................... 20,000 - 2,500 - 22,500
-------- -------- -------- -------- --------
Total rate-sensitive liabilities 39,479 20,762 20,791 13,707 94,739
Interest rate-sensitivity gap ....................... 30,858 (4,026) 26,689 12,841 66,362
======================================================================
Cumulative interest rate-sensitivity gap ............ $ 30,858 $ 26,832 $ 53,521 $ 66,302
======== ======== ======== ========
Cumulative ratio of rate sensitive assets to
rate-sensitive liabilities 178% 145% 166% 170%
======== ======== ======== ========
</TABLE>
(1) Deposits which are subject to immediate withdrawal are presented as
repricing within three months or less. The distribution of other time deposits
is based on scheduled maturities.
19
<PAGE>
RATE-SENSITIVE ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
---------------------------------------------------------------------
MATURING OR REPRICING IN
---------------------------------------------------------------------
LESS AFTER THREE AFTER ONE
THAN MONTHS YEAR
THREE BUT WITHIN BUT WITHIN AFTER
MONTHS ONE YEAR 5 YEARS 5 YEARS TOTAL
-------- ------------- ------------ ------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Rate-Sensitive Assets:
Federal funds sold and securities
purchased under agreements to resell ............. $ 4,450 $ - $ - $ - $ 4,450
Securities available-for-sale, at amortized cost .... 15,991 5,214 30,283 20,476 71,964
FRB and other stock, at cost ........................ - - - 1,746 1,746
Loans receivable .................................... 40,617 8,197 13,018 12,011 73,843
-------- -------- -------- -------- --------
Total rate-sensitive assets ...................... 61,058 13,411 43,300 34,233 152,003
Rate-Sensitive Liabilities: (1)
Interest bearing deposits:
Demand, money market and
savings .......................................... 4,111 9,250 13,406 10,357 37,124
Time certificates of deposit ..................... 11,299 13,425 1,309 - 26,033
Other borrowings .................................... 23,700 - 2,500 - 26,200
-------- -------- -------- -------- --------
Total rate-sensitive liabilities 39,110 22,675 17,215 10,357 89,357
Interest rate-sensitivity gap ....................... 21,948 (9,264) 26,085 23,876 62,646
======================================================================
Cumulative interest rate-sensitivity gap ............ $ 21,948 $ 12,684 $ 38,770 $ 62,646
======== ======== ======== ========
Cumulative ratio of rate sensitive assets to
rate-sensitive liabilities 156% 121% 149% 170%
======== ======== ======== ========
</TABLE>
(1) Deposits which are subject to immediate withdrawal are presented as
repricing within three months or less. The distribution of other time deposits
is based on scheduled maturities.
20
<PAGE>
FACTORS WHICH MAY AFFECT FUTURE OPERATING RESULTS
The Company's results of operations and financial condition are affected by
many factors, including the following.
CHANGING ECONOMIC CONDITIONS
The Company's results of operation and financial condition are strongly
influenced by economic conditions in its market area (principally the Greater
Los Angeles metropolitan area) as well as regional and national economic
conditions and in its niche markets, including the entertainment industry in
Southern California. During the past several years economic conditions in these
areas have been favorable. Should the economic condition in these areas
deteriorate, the financial condition and cash flows of its borrowers could lead
to higher levels of loan defaults and a decline in the value of collateral for
the loans. In addition, an unfavorable economy could reduce the demand for the
Company's loans and other products and services.
INTEREST RATE RISK
The Company's operating results depend to a large extent on its net
interest income. Changes in market interest rates can affect the Company's net
interest income by affecting the spread between its interest-earning assets and
interest-bearing liabilities. This may be due to the different maturities of its
interest-earning assets and interest-bearing liabilities, as well as an increase
in the general level of interest rates. Changes in market interest rates also
affect, among other things:
- The Company's ability to originate loans;
- The ability of borrowers to make payments on loans;
- The value of its interest-earning assets and its ability to
realize gains from the sale of these assets;
- The average life of its interest-earning assets;
- The Company's ability to generate deposits instead of other
available funding alternatives; and
- The Company's ability to access the wholesale funding market.
Interest rates are highly sensitive to many factors, including governmental
monetary policies, domestic and international economic and political conditions
and other factors beyond its control.
RISK OF DECLINES IN ASSET QUALITY
The Company's results of operations depend significantly on the quality of
its assets. While the Company has developed and implemented underwriting
policies and procedures in connection with the making of loans, compliance with
these policies and procedures in making loans does not guarantee repayment of
the loans. If the level of non-performing assets rises, the
21
<PAGE>
results of the Company's operations and financial condition will suffer. A
borrower's ability to pay its loan in accordance with its terms can be adversely
affected by a number of factors, such as a decrease in the borrower's revenues
and cash flows due to adverse changes in economic conditions or a decline in the
demand for the borrower's products and/or services. The Company has devoted and
continues to devote substantial time and resources to the identification,
collection and workout of non-performing assets, which has resulted in a
significant decrease in its nonperforming assets from $12.0 million, or 5.2%, of
total assets at December 31, 1994 to 1.0 million, or 0.6%, of total assets at
March 31, 2000. However, no assurance can be given that the Company will not
have material additional non-performing assets in the future.
ADEQUACY OF ALLOWANCES FOR LOSSES
The Company establishes allowances for credit losses against each segment
of its loan portfolio. At March 31, 2000, its allowance for credit losses
equaled 2.4% of loans receivable and 330.5% of nonperforming loans. Although the
Company believes that it had established adequate allowances for credit losses
as of March 31, 2000, credit quality is affected by many factors beyond the
control of the Company, including local and national economic conditions, and
the possible existence of facts which are not known to the Company which
adversely affect the likelihood of repayment of various loans in the loan
portfolio and realization of the collateral upon a default. Accordingly, no
assurance can be given that the Company will not sustain loan losses materially
in excess of the allowance for credit losses. In addition, the OCC, as an
integral part of its examination process, periodically reviews its allowance for
credit losses and could require additional provisions for credit losses.
Material future additions to the allowance for loan losses may also be necessary
due to increases in the size and changes in the composition of the loan
portfolio. Increases in the provisions for credit losses would adversely affect
its results of operations.
COMPETITION
The banking business is highly competitive. The Company's primary service
area is dominated by a relatively small number of major banks which have many
offices over a wide geographic area and much greater name recognition.
Increasing competition in the markets for the Company's products and services
can reduce the demand for the Company's products and services and require the
Company to originate those products and services on less favorable terms.
REGULATION
Both the Company, as a bank holding company, and the Bank, as a national
bank, are subject to significant governmental supervision and regulation, which
is intended primarily for the protection of depositors. Statutes and regulations
affecting it
22
<PAGE>
may be changed at any time, and the interpretation of these statutes and
regulations by examining authorities also may change. The Company cannot
assure you that future changes in applicable statutes and regulations or in
its interpretation will not adversely affect its business.
23
<PAGE>
PART II--OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On April 27, 2000, the Company held its annual meeting of shareholders.
(b) At the annual meeting, the following directors were elected: Donald E.
Benson, Joseph N. Cohen, Robert E. Gipson, Antoinette Hubenette, M.D., Alan
Grahm, Joseph W. Kiley III, Scott A. Montgomery , Dion G. Morrow, Carl R.
Terzian and Robert E. Thomson.
(c) The following proposals were considered at the annual meeting and the
number of shares voting for or against such proposals are listed below.
Election of Directors
<TABLE>
<CAPTION>
VOTES
NAME VOTES FOR WITHHELD
---- ----------- ----------
<S> <C> <C>
Donald E. Benson......................... 2,169,867 114,619
Joseph N. Cohen.......................... 2,169,867 114,619
Robert E. Gipson......................... 2,169,867 114,619
Alan Grahm............................... 2,169,867 114,619
Antoinette Hubenette, M.D................ 2,169,867 114,619
Joseph W. Kiley III...................... 2,169,867 114,619
Scott A. Montgomery...................... 2,169,867 114,619
Dion G. Morrow........................... 2,169,867 114,619
Carl R. Terzian.......................... 2,169,867 114,619
Robert E. Thomson........................ 2,169,867 114,619
</TABLE>
24
<PAGE>
Approval of Amendment of Paragraph (D) of Article XIII of the Articles of
Incorporation to extend the transfer restriction of the Company's capital stock
from July 1, 2000 to July 1, 2003.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTENTIONS BROKER NON-VOTES
--------- ------------- ----------- ----------------
<S> <C> <C> <C> <C>
1,598,649 44,790 9,793 631,254
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None.
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.
NATIONAL MERCANTILE BANCORP
---------------------------
(Registrant)
DATE: MAY 12, 2000 /s/ SCOTT A. MONTGOMERY
--------------------------- ----------------------------------
SCOTT A. MONTGOMERY
Chief Executive Officer
DATE: MAY 12, 2000 /s/ JOSEPH W. KILEY III
-------------------------- ----------------------------------
JOSEPH W. KILEY, III
Chief Financial Officer
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL
MERCANTILE BANCORP'S MARCH 31, 2000 CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED SCHEDULES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 10,437
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,780
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 70,346
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 79,134
<ALLOWANCE> 1,917
<TOTAL-ASSETS> 169,432
<DEPOSITS> 133,946
<SHORT-TERM> 12,000
<LIABILITIES-OTHER> 1,390
<LONG-TERM> 10,500
0
6,415
<COMMON> 25,549
<OTHER-SE> (20,368)
<TOTAL-LIABILITIES-AND-EQUITY> 169,432
<INTEREST-LOAN> 1,800
<INTEREST-INVEST> 1,209
<INTEREST-OTHER> 82
<INTEREST-TOTAL> 3,091
<INTEREST-DEPOSIT> 591
<INTEREST-EXPENSE> 1,047
<INTEREST-INCOME-NET> 2,044
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,856
<INCOME-PRETAX> 382
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375
<EPS-BASIC> 0.47
<EPS-DILUTED> 0.15
<YIELD-ACTUAL> 5.26
<LOANS-NON> 580
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,896
<CHARGE-OFFS> 30
<RECOVERIES> 51
<ALLOWANCE-CLOSE> 1,917
<ALLOWANCE-DOMESTIC> 1,253
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 664
</TABLE>
