_______________________________________________________________________________
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 Quarter Ended September 30, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number 0-16839
PEOPLES FIRST CORPORATION
(Exact name of registrant as specified in its charter)
Kentucky 61-1023747
(State or other jurisdiction of (I R S Employer
incorporation or organization) Identification No.)
100 South Fourth Street
P. O. Box 2200
Paducah, Kentucky 42002-2200
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 441-1200
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the Registrant's only class of stock as of
September 30, 1995: Common stock, no par value - 8,730,931 shares outstanding.
______________________________________________________________________________1
INDEX Page
_______________________________________________________________________________
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995,
September 30, 1994 and December 31, 1994 3
Consolidated Statements of Income - Three and Nine
Months Ended September 30, 1995 and 1994 4
Consolidated Statements of Changes in Stockholders'
Equity - Nine Months Ended September 30, 1995 5
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 26
Item 3. Defaults on Senior Securities 26
Item 4. Submission of Matters to a Vote of Securities Holders 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 26
Signatures 27
2
CONSOLIDATED BALANCE SHEETS September 30, December 31,
(unaudited) 1995 1994 1994
_______________________________________________________________________________
(in thousands)
ASSETS
Cash and due from banks $28,334 $37,750 $39,333
Short-term investments 0 200 0
Securities held for sale 143,655 130,418 129,682
Securities held for investment 169,996 214,801 203,845
Loans 897,381 781,907 805,947
Allowance for loan losses (12,885) (11,917) (12,188)
--------- --------- ---------
Loans, net 884,496 769,990 793,759
Excess of cost over net assets
of purchased subsidiaries 9,455 10,285 10,077
Premises and equipment 17,938 16,846 16,980
Other assets 15,129 16,355 16,880
--------- --------- ---------
$1,269,003 $1,196,645 $1,210,556
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $78,684 $86,369 $87,985
Interest-bearing transaction accounts 256,901 239,057 243,910
Savings deposits 85,932 105,289 98,571
Time deposits 601,241 577,291 568,117
--------- --------- ---------
1,022,758 1,008,006 998,583
Federal funds purchased 29,850 27,000 41,500
Other short-term borrowings 72,589 31,355 43,067
Long-term borrowings 7,817 12,173 9,536
Other liabilities 12,228 8,548 7,607
--------- --------- ---------
Total liabilities 1,145,242 1,087,082 1,100,293
Stockholders' Equity
Common stock 6,821 6,410 6,422
Surplus 43,286 34,603 34,859
Retained earnings 73,788 71,254 73,739
Unrealized net gain (loss) on
securities held for sale (26) (2,571) (4,624)
Debt on ESOP shares (108) (133) (133)
--------- --------- ---------
123,761 109,563 110,263
--------- --------- ---------
$1,269,003 $1,196,645 $1,210,556
========= ========= =========
Fair value of securities held
for investment $173,457 $214,732 $200,092
Common shares issued and outstanding 8,731 8,612 8,630
See accompanying notes to consolidated financial statements. 3
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
CONSOLIDATED STATEMENTS OF INCOME September 30, September 30,
(unaudited) 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on short-term investments $48 $22 $107 $155
Taxable interest on securities 3,998 4,459 12,173 13,206
Nontaxable interest on securities 998 1,065 3,040 3,256
Interest and fees on loans 20,498 16,251 57,883 45,864
------ ------ ------ ------
25,542 21,797 73,203 62,481
INTEREST EXPENSE
Interest on deposits 11,732 9,088 33,758 26,045
Other interest expense 1,519 861 4,144 2,122
------ ------ ------ ------
13,251 9,949 37,902 28,167
------ ------ ------ ------
Net Interest Income 12,291 11,848 35,301 34,314
Provision for Loan Losses 452 404 1,343 1,403
------ ------ ------ ------
Net Interest Income after
Provision for Loan Losses 11,839 11,444 33,958 32,911
Noninterest Income 1,930 1,642 5,441 4,963
Noninterest Expense 7,715 8,117 24,302 24,140
------ ------ ------ ------
Income Before Income Tax Expense 6,054 4,969 15,097 13,734
Income Tax Expense 1,894 1,471 4,510 4,081
------ ------ ------ ------
NET INCOME $4,160 $3,498 $10,587 $9,653
====== ====== ====== ======
Earnings per Share $0.47 $0.40 $1.19 $1.09
Cash Dividend per Common Share 0.150 0.114 0.378 0.314
Weighted Average Shares Outstanding 8,925 8,848 8,897 8,853
</TABLE>
See accompanying notes to consolidated financial statements. 4
<TABLE> Unrealized
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES net gain
IN STOCKHOLDERS' EQUITY Common Retained (loss) on ESOP
(unaudited) stock Surplus earnings securities debt Total
______________________________________________________________________________________________________________________
(in thousands, except per data)
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANAURY 1, 1995 $6,422 $34,859 $73,739 ($4,624) ($133) $110,263
Net income 10,587 10,587
Cash dividends declared
Common ($0.378 per share) (3,276) (3,276)
Stock dividend declared (5%) 323 6,928 (7,262) (11)
Stock issued pursuant to shareholder
and employee plans 76 1,499 1,575
Reduction of ESOP debt 25 25
Change in unrealized net gain
(loss) on securities held for sale 4,598 4,598
------ ------ ------ ------ ------ -------
BALANCE AT SEPTEMBER 30, 1995 $6,821 $43,286 $73,788 ($26) ($108) $123,761
====== ====== ====== ====== ====== =======
</TABLE>
See accompanying notes to consolidated financial statements. 5
Nine Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS September 30,
(unaudited) 1995 1994
_______________________________________________________________________________
(dollars in thousands)
OPERATING ACTIVITIES
Net income $10,587 $9,653
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,012 1,816
Net (discount accretion) premium
amortization 698 1,146
Provision for loan losses 1,343 1,403
Net (increase) decrease in loans held for sale 74 471
Provision for deferred income taxes 941 (922)
Other, net 2,631 1,822
------ ------
Net Cash Provided by Operating Activities 18,286 15,389
INVESTING ACTIVITIES
Net decrease in Federal funds sold 0 2,900
Proceeds from sales of securities
held for sale 12,086 8,556
Proceeds from maturities, calls and
prepayments of securities held for sale 8,433 31,902
Proceeds from maturities, calls and prepay-
ments of securities held for investment 33,294 49,562
Purchases of securities held for sale (27,178) (47,639)
Purchases of investment securities 0 (19,892)
Net increase in loans (92,174) (78,458)
Purchases of premises and equipment (2,362) (1,367)
------ ------
Net Cash Used by Investing Activities (67,901) (54,436)
continued
See accompanying notes to consolidated financial statements. 6
Nine Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED September 30,
(unaudited) 1995 1994
_______________________________________________________________________________
(dollars in thousands)
FINANCING ACTIVITIES
Net increase in deposits 24,175 15,111
Net increase in repurchase agreements 2,022 (47)
Net increase (decrease) in Federal funds purchased (11,650) 14,400
Net increase in short-term borrowings 27,500 11,500
Proceeds from long-term borrowings 140 20,877
Repayments of long-term borrowings (1,859) (25,260)
Proceeds from issuance of common stock 1,046 378
Cash dividends paid (2,758) (2,754)
------ ------
Net Cash Provided by Financing Activities 38,616 34,205
------ ------
Cash and Cash Equivalents
Increase (Decrease) (10,999) (4,842)
Beginning of Year 39,333 42,592
------ ------
End of Period $28,334 $37,750
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense $34,497 $27,531
Cash paid for income tax 3,971 4,726
NONCASH INVESTING AND FINANCING TRANSACTIONS
Other real estate transferred to (from) loans, net (20) 84
Dividends reinvested 530 390
See accompanying notes to consolidated financial statements. 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
_______________________________________________________________________________
NOTE A - PRINCIPLES OF ACCOUNTING
Peoples First Corporation (Company) through its subsidiaries, Peoples First
National Bank and Trust Company (Peoples Bank), First Kentucky Federal Savings
Bank (First Kentucky FSB) and Liberty Bank and Trust (Liberty Bank), provides a
full range of banking services to individual and corporate customers in the
western Kentucky and contiguous interstate area. The Company and the subsidiary
banks are subject to the regulations of various Federal and state agencies and
undergo periodic examination by regulators.
The accounting policies and reporting practices of Company are based upon
generally accepted accounting principles and conform to predominant practices
within the banking industry. In preparing financial statements, management is
required to make assumptions and estimates which affect the Company's reported
amounts of assets, liabilities and results of operations. The accompanying
consolidated financial statements are unaudited and should be read in
conjunction with the notes to the consolidated financial statements contained in
the 1994 annual report on Form 10-K. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the periods ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995.
NOTE B - SECURITIES HELD FOR SALE AND INVESTMENT
At acquisition, securities are classified into one of three categories: trading,
held for sale or investment. Transfers of debt securities between categories
are recorded at fair value at the date of transfer. Unrealized gains or losses
associated with transfers of debt securities from the investment to the held for
sale category are recorded and maintained as a separate component of stock-
holders' equity. The unrealized gains or losses included as a separate
component of stockholders' equity for debt securities transferred to the
investment from the held for sale category are maintained and amortized into
earnings over the remaining life of the debt securities as an adjustment to
yield in a manner consistent with the amortization or accretion of premiums or
discounts on the associated securities.
Trading securities are bought and held principally with the intention of
selling them in the near term. The Company currently has no trading securities.
Securities that are being held for indefinite periods of time, including secur-
ities that management intends to use as a part of its asset/liability strategy,
or that may be sold in response to changes in interest rates, changes in prepay-
ment risk, to meet liquidity needs, the need to increase regulatory capital or
other similar factors, are classified as securities held for sale and are stated
at fair value. Fair value is based on market prices quoted in financial publi-
cations or other independent sources. Net unrealized gains or losses are
excluded from earnings and reported, net of applicable income taxes, as a
separate component of stockholders' equity until realized. Securities for which
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
_______________________________________________________________________________
the Company has the ability and positive intent to hold until maturity are
classified as investment securities and are carried at cost, adjusted for
amortization of premiums and accretion of discounts, which are recognized as
adjustments to interest income on the level-yield method.
Realized gains or losses on securities held for sale or investment are accounted
for using the specific security. Mortgage-backed securities represent a
significant portion of the security portfolios. Amortization of premiums and
accretion of discounts on mortgage-backed securities are analyzed in relation to
the corresponding prepayment rates, both historical and estimated, using a
method which approximates the level-yield method.
NOTE C - LOAN REVENUES
Loans receivable held for investment are carried at cost, as the Company has the
ability and it is management's intention to hold them to maturity. Interest on
commercial and real estate mortgage loans is accrued if deemed collectible and
credited to income based upon the principal amount outstanding. Consumer
installment loans are generally made on a discount basis. The unearned discount
attributable to these loans is credited to income using a method which approxi-
mates the level yield method. Mortgage loans originated principally under
programs with the Government National Mortgage Association (GNMA) or the Federal
National Mortgage Association (FNMA) and held for sale are carried at the lower
of cost or market value.
The Company evaluates the collectibility of both contractual interest and
contractual principal of all receivables when assessing the need for a loss
accrual. When in the opinion of management the collection of interest on a loan
is unlikely or when either principal or interest is past due over 90 days, that
loan is generally placed on nonaccrual status and interest is not recognized
unless received in cash. When a loan is placed in nonaccrual status, accrued
interest for the current period is reversed and charged against earnings and
accrued interest from prior periods is charged against the allowance for loan
losses. A loan remains on nonaccrual status until the loan is current as to
payment of both principal and interest and/or the borrower demonstrates the
ability to pay and remain current.
NOTE D - ALLOWANCE FOR LOAN LOSSES
The allowance is increased by provisions for loan losses charged to operations
and is maintained at a level adequate to absorb estimated credit losses asso-
ciated with the loan portfolio, including binding commitments to lend and
off-balance sheet credit instruments. At the end of each quarter, or more
frequently if warranted, management uses a systematic, documented approach in
determining the appropriate level of the allowance for loan losses. Manage-
ment's approach provides for general and specific allowances and is based upon
current economic conditions, past losses, collection experience, risk charac-
teristics of the loan portfolio, assessment of collateral values and such other
9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
_______________________________________________________________________________
factors which in management's judgement deserve current recognition in
estimating potential loan losses.
The Company adopted Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" (FAS 114) and Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" (FAS 118) effective for the year
beginning January 1, 1995. As a result of applying FAS 114, as amended by FAS
118, certain impaired loans subject to the statements are reported at the
present value of expected future cash flows discounted at the loan's effective
interest rate, or at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. There was no financial impact
of the adoption of FAS 114 and FAS 118 in the first quarter of 1995.
The Company recognizes interest income on nonaccrual impaired loans equal to the
amount of interest received in cash. All changes in the present value of
estimated future cash flows are recorded as an adjustment to the allowance for
loan losses and ultimately the provision for loan losses. No interest income is
recognized for changes in present value attributable to the passage of time.
All impaired loans had a specific allocated allowance for loss. At September
30, 1995, the total recorded investment in all impaired loans as defined in FAS
114 and the related allowance for loss, and for the nine months ended September
30, 1995, the average recorded investment in impaired loans, the related amount
of interest income recognized (all cash basis) and contractual interest are as
follows:
<TABLE>
<CAPTION>
Recorded Allowance Average Interest Contractual
Impaired Loans investment for loss investment recognized interest
____________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C> <C>
As of and for the nine months
ended September 30, 1995 $2,260 $451 $2,341 $154 $158
</TABLE>
NOTE E - PER SHARE DATA
Share and per share information have been adjusted to give effect to the June
13, 1995 stock dividend of 5%. Cash was paid for fractional shares. Earnings
per share is determined by dividing net income by the weighted average number of
common shares actually outstanding and common stock equivalents pertaining to
common stock options. The weighted average number of shares outstanding
including common stock equivalents for the nine months ended September 30, 1995
and 1994 were 8,897,131 and 8,852,857, respectively, and for the three months
ended September 30, 1995 and 1994, were 8,925,033 and 8,848,307, respectively.
The impact of common stock equivalents is not material.
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
_______________________________________________________________________________
NOTE F - CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the Company considers
all cash and due from banks to be cash equivalents.
NOTE G - BUSINESS COMBINATIONS
On March 10, 1994, the Company consummated the acquisition of First Kentucky
Bancorp, Inc. (First Kentucky) and First Kentucky Federal Savings Bank, a
wholly-owned subsidiary of First Kentucky. First Kentucky's six locations are
immediately east of the market area served by the Company's other subsidiary
banks, and at September 30, 1995, had total assets of approximately $176.5
million. The acquisition has been accounted for as a pooling of interest, and
accordingly, the accompanying consolidated financial statements have been
restated. A total of 929,794 shares of the Company's common stock was issued in
this business combination.
On October 7, 1994, the Company consummated the acquisition of Libsab Bancorp,
Inc. (Libsab) and Liberty Bank & Trust, a wholly-owned subsidiary of Libsab.
Liberty Bank's three locations are part of the market area served by the
Company's other subsidiary banks, and at September 30, 1995, had total assets of
approximately $154.6 million. The acquisition has been accounted for as a
pooling of interest, and accordingly, the accompanying consolidated financial
statements have been restated. A total of 1,077,853 shares of the Company's
common stock was issued in this business combination.
Merger expenses of approximately $559,000 related to pooling of interest acquis-
itions were charged to expense during the first nine months of 1994. The
after-tax impact of these expenses on earnings per share was $0.06 for the nine
months ended September 30, 1994.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
_______________________________________________________________________________
The purpose of this discussion and analysis is to provide financial statement
readers with information relevant to understanding and assessing the financial
condition and results of operations of Peoples First Corporation (Company).
<TABLE>
<CAPTION>
Table 1
Disaggregated Data First Parent Co
As of and for the nine months Peoples Kentucky Liberty and elimi- Consol-
ended September 30, 1995 Bank FSB Bank nations idated
_________________________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net income $8,634 $1,260 $1,124 ($431) $10,587
Average assets 909,417 176,479 149,797 (363) 1,235,330
Return on average equity 12.81% 12.44% 11.78% 12.17%
Average equity / assets 9.91 7.72 8.54 9.42
Net interest margin 4.46 3.11 3.90 4.19
Provision for loan losses /
average loans 0.24 0.08 0.13 0.21
Allowance for loan loss /
loans outstanding 1.55 0.93 1.12 1.44
Overhead ratio 0.58 0.56 0.63 0.60
</TABLE>
EARNING ASSETS
Average earning assets of the Company for the first nine months of 1995 in-
creased 6.0%, or $66.2 million to $1,174.6 million from $1,108.4 million for the
first nine months of 1994. This compares to average earning asset growth of
5.3% for the first nine months of 1994 over the first nine months of 1993. A
consistently favorable ratio of average earning assets to average total assets
has been achieved. The ratio was 95.1% and 94.5% for the first nine months of
1995 and 1994, respectively.
Loans are the Company's primary earning asset. Management has focused on
increasing consumer and residential mortgage lending activity and loan demand
has been strong. Average loans for the first three quarters of 1995 were 14.8%
greater than average loans for the first three quarters of 1994. Prior to 1993,
loans had been a decreasing portion of earning assets. Average loans for the
first nine months of 1995 were 72.6% of total average earning assets, compared
to 67.1% during the first nine months of 1994. Management attributes the
current reversal of the declining loan composition trend to their focus on
improving the earning asset composition of all the banks, the Company's desire
for promininence in area lending and a slowed growth of deposits.
12
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Table 2 September 30, September 30,
Average Earning Assets 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C>
Total average earning assets $1,199.6 $1,124.8 $1,174.6 $1,108.4
Percent of average earning assets
Average loans 73.5% 68.5% 72.6% 67.1%
Average securities 26.2 31.4 27.1 32.5
Average other earning assets 0.3 0.1 0.2 0.5
</TABLE>
The Company primarily directs lending activities to its regional market from
which deposits are drawn. Management has focused on retail lending and the
growth of residential real estate mortgage loans over the last two years. A
portion of the proceeds from the sale and maturity of securities and the princi-
pal collected on mortgage-backed securities was used to fund loans. The Company
maintains a portfolio of securities held for sale as a partial source of
available funding for loan growth.
Table 3 September 30, December 31,
Types of Loans 1995 1994 1994
_______________________________________________________________________________
(in thousands)
Commercial, financial
and agricultural $120,027 $111,983 $111,929
Real estate
Construction 17,183 16,163 19,421
Residential mortgage 355,615 308,295 318,551
Commercial mortgage 151,782 136,530 139,629
Installment loans to
individuals 258,439 212,119 219,050
Consumer revolving credit 7,094 5,278 6,599
Loans held for sale 82 33 156
Other 1,136 2,434 1,952
------- ------- -------
911,358 792,835 817,287
Unearned income (13,977) (10,928) (11,340)
------- ------- -------
$897,381 $781,907 $805,947
======= ======= =======
FUNDING
Average deposits for the first nine months of 1995 increased 2.1%, or $21.3
million to $1,016.1 million from $994.8 million for 1994. Local markets for
deposits are highly competitive. The Company's core deposit base is its most
important and stable funding source. Management partially relies on brokered
deposits and other borrowings to fund loan growth. Local deposits are a
decreasing portion of average interest-bearing liabilities. For the nine months
13
ended September 30, 1995, average local interest-bearing deposits were 88.5% of
total average interest-bearing liabilities, compared to 91.4% during the first
nine months of 1994. Brokered deposits amounted to $26.5 million, $28.0 million
and $21.5 million at September 30, 1995 and 1994 and December 31, 1994,
respectively.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Table 4 September 30, September 30,
Average Interest-bearing Liabilities 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C>
Total average interest-bearing
liabilities $1,049.7 $985.9 $1,029.0 $971.7
Percent of average total interest-
bearing liabilities
Average core deposits 87.5% 90.4% 88.5% 91.4%
Average Federal funds purchased 1.6 2.4 2.0 1.9
Average other short-term borrowings 4.7 1.2 3.7 0.8
Average long-term borrowings 0.8 1.3 0.8 1.3
</TABLE>
Management anticipates an increasing need to rely on more volatile purchased
liabilities. The Company's subsidiaries have obtained various short-term and
long-term advances from the Federal Home Loan Bank (FHLB) under Blanket
Agreements for Advances and Security Agreements (Agreements). The Agreements
entitle the banks to borrow additional funds from the FHLB to fund mortgage loan
programs and satisfy other funding needs.
NONPERFORMING ASSETS AND RISK ELEMENTS
The level of nonperforming assets at September 30, 1995 remains relatively low,
improving slightly since December 31, 1994. Diversification within the loan
portfolio is an important means of reducing inherent lending risks. At
September 30, 1995, the Company had no concentrations of ten percent or more of
total loans in any single industry nor any geographical area outside of the
Paducah, Kentucky, western Kentucky region, the immediate market area of the
subsidiary banks.
The Company discontinues the accrual of interest on loans which become ninety
days past due as to principal or interest, or when in the opinion of management
the collection of interest is unlikely, unless the loans are adequately secured
and in the process of collection. Other real estate owned is carried at the
lower of cost or fair value less estimated disposal costs, if any. A loan is
classified as a renegotiated loan when the interest rate is materially reduced
or the term is extended beyond the original maturity date because of the
inability of the borrower to service the debt under the original terms.
Management continues to exert efforts to monitor and minimize nonperforming
assets even though the nonperforming totals are significantly lower than peer
bank holding company ratios. Significant focus on underwriting standards is
maintained by management and the subsidiary bank boards.
14
Table 5 September 30, December 31,
Nonperforming Assets 1995 1994 1994
_______________________________________________________________________________
(in thousands)
Nonaccrual loans $1,315 $636 $531
Other real estate owned 661 1,665 1,569
Renegotiated loans 2,909 2,755 2,741
----- ----- -----
$4,885 $5,056 $4,841
===== ===== =====
Loans past due ninety days and still
accruing interest $1,580 $379 $1,838
Ratios:
Nonperforming assets to total
loans and other real estate 0.54% 0.65% 0.60%
Allowance for loan losses to
nonperforming assets 264% 189% 252%
Internal credit review procedures are designed to alert management of possible
credit problems which would create serious doubts as to the future ability of
borrowers to comply with loan repayment terms. At September 30, 1995, loans
with a total principal balance of $13.6 million have been identified that may
become nonperforming in the future, compared to $14.8 million at December 31,
1994. Performance of borrowers has been aided by the relatively low interest
carrying costs. Potential problem loans are not included in nonperforming
assets since the borrowers currently meet all applicable loan agreement terms.
Nonperforming assets at September 30, 1995 were 0.54% of total loans and other
real estate, down from 0.60% at December 31, 1994. A small number of loans and
one tract of undeveloped land in Nashville, Tennessee, a portion of which was
sold in 1995, represent most of the nonperforming balance for the last two
years.
CAPITAL RESOURCES AND DIVIDENDS
The current economic and regulatory environment places increased emphasis on
capital strength. Stockholders' equity was 9.8% of assets at September 30,
1995, up from 9.2% at September 30, 1994. Exclusive of the unrealized net loss
on securities held for sale, net of applicable income taxes, stockholders'
equity increased $8.9 million, or 10.4% (annualized), during the first nine
months of 1995 due to a 68.2% earnings retention rate and the sale of common
stock through shareholder and employee plans ($1.6 million). This compares to
an increase of $7.6 million, or 9.8% (annualized), during the same 1994 period
when the earnings retention rate was 71.2% and proceeds from the sale of common
stock through shareholder and employee plans was $0.8 million.
The quarterly dividend was raised to $0.114 per share in the third quarter of
1994 and to $0.150 per share in the third quarter of 1995 to continue the
dividend payout ratio at greater than 30% of earnings. A 5% stock dividend
15
was declared and paid during the second quarter. The board of directors
develops and reviews the capital goals of the consolidated entity and each of
the subsidiary banks. The Company's dividend policy is designed to retain
sufficient amounts for healthy financial ratios, considering future planned
asset growth and other prudent financial management principles.
Subsidiary bank dividends are the principal source of funds for the Company's
payment of dividends to its stockholders. At September 30, 1995, approximately
$19.3 million, compared to $18.4 million at September 30, 1994, in retained
earnings of subsidiary banks were available for dividend payments to the Company
without regulatory approval or without reducing capital of the respective banks
below minimum standards. Capital ratios of all of the Company's subsidiaries
are in excess of applicable regulatory capital ratios. The Company's and the
banks' September 30, 1995 and December 31, 1994, total capital and leverage
ratios are shown in Table 6.
Bank regulatory agencies' minimum capital guidelines assign relative measures of
credit risk to balance sheet assets and off-balance sheet exposures. Based upon
the nature and makeup of their current businesses and growth expectations,
management expects all of the reporting entities' capital ratios to continue to
exceed regulatory minimums.
Total Leverage Ratio
Table 6 Sep 30, Dec 31, Sep 30, Dec 31,
Risk-Based Capital 1995 1994 1995 1994
_______________________________________________________________________________
Company 14.24% 14.31% 9.13% 8.82%
Peoples First National
Bank 13.34 13.59 9.12 9.00
Liberty Bank & Trust 14.79 15.77 9.28 9.27
First Kentucky FSB 19.60 20.05 8.45 7.89
Regulatory minimum 8.00 8.00 4.00 4.00
RESULTS OF OPERATIONS
For the first nine months of 1995, the Company reported net income of $10.6
million, compared to net income of $9.7 million for the first nine months of
1994. Earnings per share for the first nine months of 1995, increased 9.2% to
$1.19, from $1.09 for the same 1994 period. For the third quarter of 1995, the
Company reported net income of $4.2 million, compared to net income of $3.5
million for the third quarter of 1994. Earnings per share for the third
quarter of 1995, increased 17.5% to $0.47, from $0.40 for the same 1994 period.
The Company's banking subsidiaries received total deposit insurance assessment
refunds of $542,801, equal to $0.04 per share, in the third quarter of 1995
from the Federal Deposit Insurance Corporation (FDIC). Industry stability and
levels of insurance fund reserves, allowed the FDIC to significantly lower
deposit insurance assessments. Legal, accounting and consultant fees of
approximately $559,000, equal to $0.06 per share, relating to two pooling-of-
interest acquisitions were incurred in the first nine months of 1994.
16
Financial performance ratios for 1995 improved because of the deposit insurance
rate reduction and nonrecurring acquisition costs. Return on average stock-
holders' equity for the first nine months of 1995 and 1994 was 12.17% and
12.03%, respectively. Return on average assets for the first nine months of
1995 and 1994 was 1.15% and 1.10%, respectively. Return on average stockhold-
ers' equity for the three months ended September 30, 1995 and 1994 was 13.63%
and 12.82%, respectively. Return on average assets for the three months ended
September 30, 1995 and 1994 was 1.31% and 1.17%, respectively.
NET INTEREST INCOME
The amount by which interest earned on assets exceeds the interest paid on sup-
porting funds, constitutes the primary source of income for the Company. For
the nine months ended September 30, 1995, net interest income (TE) increased
2.5%, or $0.9 million to $36.8 million as compared to $35.9 million for the nine
months ended September 30, 1994. All of 1995's increase is attributable to
growth of average earning assets. A small amount of 1994's increase was
attributable to improved margins. Low levels of nonperforming loans favorably
contributed to margins each period.
Net interest income on a tax-equivalent basis as a percent of average earning
assets was 4.19% and 4.34% for the nine months ended September 30, 1995 and
1994, respectively. Although management has significantly increased the amount
of loans outstanding while decreasing lower yielding debt securities during the
last two years, goals for loan volume and alternative funding costs greater than
traditional deposits has forced the margin down. Expansion of residential real
estate lending and aggressive pricing of loans during the past year has
stimulated demand and hindered margins. For the nine months ended September 30,
1995, interest earned on loans was 4.16% greater than the average funding cost,
down from 4.38% for the nine months ended Septmeber 30, 1994. Margins in 1993,
and in 1994 to a lesser extent, were unfavorably affected by the purchase
accounting recognition of interest income on certain investment securities at
market yields. Net interest income margins continue to benefit from a favorable
change in the mix of earning assets offset by an unfavorable change in the mix
of funding sources.
For 1996, management plans to moderate volume growth to some degree with less
aggressive loan pricing.
17
Table 7
Net Interest Income Analysis Average Average
Nine months ended September 30, 1995 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $853,264 $57,948 9.08%
Securities 318,761 16,633 6.98
Other interest earning assets 2,538 107 5.64
--------- ------
1,174,563 74,688 8.50
Time deposits 599,724 25,415 5.67
All other interest bearing deposits 334,611 8,343 3.33
Other interest bearing liabilities 94,667 4,144 5.85
--------- ------
$1,029,002 37,902 4.92
------ ----
Net interest income (TE) spread $36,786 3.58%
====== ====
Net interest income (TE) as a percent 4.19%
of average interest-earning assets ====
Table 8
Net Interest Income Analysis Average Average
Nine months ended September 30, 1994 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $743,462 $45,936 8.26%
Securities 359,939 18,016 6.69
Other interest earning assets 4,991 155 4.15
--------- ------
1,108,392 64,107 7.73
Time deposits 565,337 18,708 4.42
All other interest bearing deposits 343,868 7,337 2.85
Other interest bearing liabilities 62,495 2,122 4.54
--------- ------
$971,700 28,167 3.88
------ ----
Net interest income (TE) spread $35,940 3.85%
====== ====
Net interest income (TE) as a percent 4.34%
of average interest-earning assets ====
18
Table 9
Net Interest Income Analysis Average Average
Three months ended September 30, 1995 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $881,774 $20,520 9.23%
Securities 314,416 5,460 6.89
Other interest earning assets 3,438 48 5.54
--------- ------
1,199,628 26,028 8.61
Time deposits 605,143 8,826 5.79
All other interest bearing deposits 340,164 2,906 3.39
Other interest bearing liabilities 104,346 1,519 5.78
--------- ------
$1,049,653 13,251 5.01
------ ----
Net interest income (TE) spread $12,777 3.60%
====== ====
Net interest income (TE) as a percent 4.23%
of average interest-earning assets ====
Table 10
Net Interest Income Analysis Average Average
Three months ended September 30, 1994 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $771,038 $16,275 8.37%
Securities 352,916 6,028 6.78
Other interest earning assets 871 22 10.02
--------- ------
1,124,825 22,325 7.87
Time deposits 570,088 6,530 4.54
All other interest bearing deposits 343,379 2,558 2.96
Other interest bearing liabilities 72,388 861 4.72
--------- ------
$985,855 9,949 4.00
------ ----
Net interest income (TE) spread $12,376 3.87%
====== ====
Net interest income (TE) as a percent 4.37%
of average interest-earning assets ====
19
PROVISION FOR LOAN LOSSES
A significant factor in the Company's past and future operating results is the
level of the provision for loan losses. Management desires to provide assurance
through sufficient provision for loan losses that current earnings adequately
reflect the cost of assumed loan risks throughout changing economic cycles. The
provision for loan losses amounted to $1.3 million for the nine months ended
September 30, 1995, a slight decrease when compared to $1.4 million for the nine
months ended September 30, 1994. The annualized provision for loan losses as a
percentage of average loans was 0.21% for the nine months ended September 30,
1995, down from 0.23% and 0.38% for the years ended December 31, 1994 and 1993,
respectively. Levels of providing for loan losses reflect, among other things,
management's evaluation of potential problem loans. Further, management has
focused on retail lending and the growth of residential real estate mortgage
loans over the last two years. These areas of lending have low historical loss
experience.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Table 11 September 30, September 30,
Allowance for Loan Losses 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance at beginning of period $12,518 $11,684 $12,188 $10,715
Provision charged to expense 452 404 1,343 1,403
Loans charged off (155) (232) (866) (469)
Recoveries of chargeoffs 70 61 220 268
------ ------ ------ ------
Net loans charged off (85) (171) (646) (201)
------ ----- ------ ------
Balance at end of period $12,885 $11,917 $12,885 $11,917
====== ====== ====== ======
Annualized Ratios:
Provision for loan losses
to average loans 0.20% 0.21% 0.21% 0.25%
Net chargeoffs to
average loans 0.04 0.09 0.10 0.04
Allowance for loan losses
to period end loans 1.44 1.52 1.44 1.52
</TABLE>
Net chargeoffs as a percentage of average loans were 0.10% and 0.04% for the
nine months ended September 30, 1995 and 1994, respectively, periods of unusally
low net chargeoffs. Net chargeoffs as a percent of average loans were 0.23% for
the five-year period ended December 31, 1994. The allowance for loan losses was
1.44% of outstanding loans at September 30, 1995, which approximates the average
during the last five years. The September 30, 1995 allowance is 264% compared
to 252% at December 31, 1994, of nonperforming assets and is maintained at a
level which management considers adequate to absorb estimated potential losses
in the loan portfolio, after reviewing the individual loans and in relation to
risk elements in the portfolios and giving consideration to the prevailing
economy and anticipated changes.
20
NONINTEREST INCOME
Noninterest income amounted to $5.4 million for the nine months ended September
30, 1995, compared to $5.0 million for the nine months ended September 30, 1994.
Service charges on deposit accounts, the largest component of noninterest
income, increased 2.1% for the first nine months of 1995 from the same 1994
period. The 72.4% increase in insurance commissions for the first three
quarters of 1995 over 1994 is attributable to greater opportunities resulting
from the significant increase in consumer loans as well as better penetration of
this product to consumer loan customers. Fee income from secondary-market
mortgage loan services during 1995 is lower than 1994 due to reduced home
refinancing. The relative improvement in net interest income equals the growth
in fee income. Noninterest income, excluding securities gains, was 13.0% of
total net interest income plus noninterest income for the nine months ended
September 30, 1995 compared to 12.5% for the same 1994 period.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Table 12 September 30, September 30,
Noninterest Income 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C>
Deposit service charges $983 $912 $2,813 $2,754
Net securities gains 6 12 178 62
Trust service fees 354 279 885 885
Insurance commissions 174 94 506 293
Other income 413 345 1,059 969
----- ----- ----- -----
$1,930 $1,642 $5,441 $4,963
===== ===== ===== =====
Annualized Ratio:
Noninterest income
to average assets 0.61% 0.55% 0.59% 0.57%
</TABLE>
NONINTEREST EXPENSE
The ratio of overhead, exclusive of the FDIC insurance refund, to revenue was
60.98% for the nine months ended September 30, 1995, compared to 61.46% for the
nine months ended September 30, 1994. During the second quarter of 1995,
management renewed efforts to increase productivity and improve profitability in
connection with a restructuring plan designed to control the rate of increase of
noninterest expense. The plan provides for a reduction of the number of
employees of approximately 4%. While focused on expense reductions, the plan
does encompass increased revenue volumes designed to gain some operational ratio
efficiencies. There is a constant process of evaluation to attempt to reach the
optimum balance between revenue and overhead. Management currently estimates
that expense reduction efforts will reduce annual noninterest expense by
approximately $1.0 million. The full implementation of the plan will not occur
until the early part of 1996.
21
The annualized ratio of personnel expense has increased as a percentage of
average total assets and was 1.29% for the nine months ended September 30, 1995,
compared to 1.27% for the nine months ended September 30, 1994. Full-time-
equivalent employees at September 30, 1995 were 498, compared to 514 at
September 30, 1994. Pursuant to the terms of the acquisitions, initial steps
have been taken to terminate the retirement plans at the two banks acquired in
1994. The employees of those banks became eligible to participate in the
Company's ESOP and 401(k) plans this year. The previous funding cost for the
defined benefit plans was greater than the Company's existing plans. Approxi-
mately $80,000 of building maintenance expenditures were incurred during the
third quarter of 1995 to provide more uniform appearance of locations that were
previously separate banks. Management expected a double-digit percentage
increase in equipment expenses for 1995. The Company has made investments in
facilities and equipment as technology has advanced and the need to leverage
personnel costs has intensified. Liberty Bank & Trust, the last independent
operating subsidiary other than the lead bank and the savings bank, will be
combined into the lead bank during the fourth quarter of 1995 to allow the
personnel at all locations to better focus on quality customer service and
increasing the volume of business. A small amount of redundant costs will be
eliminated.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Table 13 September 30, September 30,
Noninterest Expense 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C>
Salaries $3,333 $3,152 $10,057 $9,247
Employee benefits 594 625 1,884 1,918
Occupancy expense 512 404 1,367 1,240
Equipment expense 461 423 1,350 1,179
FDIC insurance expense 175 571 1,174 1,681
Data processing expense 541 514 1,605 1,504
Bank share taxes 341 353 1,026 1,038
Goodwill amortization 207 207 622 622
Other expense 1,551 1,868 5,217 5,711
------ ------ ------ ------
$7,715 $8,117 $24,302 $24,140
====== ====== ====== ======
Annualized Ratios:
Overhead ratio 54.25% 60.17% 59.65% 61.46%
Noninterest expense
to average assets 2.43 2.71 2.63 2.75
</TABLE>
The Company's bank subsidiaries are required to pay deposit insurance assess-
ments to the FDIC, to maintain significant noninterest-bearing balances with the
Federal Reserve, and to pay fees to regulatory agencies for periodic examina-
tions by the agencies. The decrease in FDIC insurance expense is attributable
to a reduction in the rate charged. As a result of industry stability and the
level of insurance fund reserves, the insurance rate was significantly lowered
as of June, 1995. Commercial banking subsidiaries' rates were reduced from
$0.23 to $0.04 of applicable deposits.
22
Beginning in 1993, FDIC insurance was based not only on deposits but also on the
risk characteristics of the individual financial institutions. All of the
Company's subsidiaries received the lowest applicable deposit assessment rate
from the FDIC. Recent governmental dicussions about the Savings Association
Insurance Fund (SAIF) may lead to a one-time assessment on all SAIF-insured
deposits. The Company's savings bank subsidiary may have a potential SAIF
assessment as much as $1.4 million in early 1996. Additional data processing
expense was incurred in connection with the consolidation of five subsidiary
banks into one bank during the last quarter of 1994 and the first three quarters
of 1995. Also contributing to the 6.7% increase in data processing expense for
the nine months ended September 30, 1995, is a greater volume of credit card
processing. Routine data processing expense should level off in 1995 from 1994
levels after system conversions are complete. Bankshare taxes imposed by the
State of Kentucky slightly decreased. One of the former subsidiary's high rate
on the separate operations has been corrected by the combination with another
bank. Kentucky has raised the assessment level and is attempting to
significantly increase this taxation, which is based upon capital and net income
of the subsidiaries.
During 1994, the Company was involved in two pooling-of-interests acquisitions.
Included in other noninterest expense for the nine months ended September 30,
1994 was approximately $559,000 of professional fees relating to the mergers
which were completed in the first and fourth quarters of 1994. Several compon-
ents of other noninterest expense have increased primarily as a result of costs
associated with expanding customer volumes and marketing.
INCOME TAXES
The increase in income tax expense for the nine months ended September 30, 1995
from the comparable 1994 period, is attributable to higher operating earnings.
The effective tax rate has increased slightly, and was 29.9% for the nine months
ended September 30, 1995, compared to 29.7% for the nine months ended September
30, 1994. The effective tax rate was 27.0% for the five-year period ended
December 31, 1994. Higher marginal tax rates, generally lower nontaxable
interest and greater nondeductible organizational costs have contributed to the
recent increase in the effective tax rate. The Company manages the effective
tax rate to some degree, based upon changing tax laws, particularly new
alternative minimum tax provisions, the availability and price of nontaxable
investment securities and other portfolio considerations.
LIQUIDITY AND INTEREST-RATE SENSITIVITY
The Company's objective of liquidity management is to ensure the ability to
access funding which enables each bank to efficiently satisfy the cash flow
requirements of depositors and borrowers. Asset/Liability management (ALM)
involves the funding and investment strategies necessary to maintain an
appropriate balance between interest sensitive assets and liabilities as well as
to assure adequate liquidity. The Company's ALM committee monitors funds
available from a number of sources to meet its objectives. The primary source
of liquidity for the banks, in addition to loan repayments, is their debt
securities portfolios. Debt securities classified as held for sale are those
that the Company intends to use as part of its asset/liability management and
23
that may be sold prior to maturity in response to changes in interest rates,
resultant prepayment risks and other factors. The Company's access to the re-
tail deposit market through individual banks located in nine different counties
has been a stable source of funds. Additional funds for liquidity are available
by borrowing of Federal funds from correspondent banks, Federal Home Loan Bank
borrowings and brokered deposits. Various types of analyses are performed to
ensure adequate liquidity, and to evaluate the desirability of the relative
interest rate sensitivity of assets and liabilities. In the past, as was
typical for most financial institutions, the Company's cash flows provided by
financing activities, primarily through core deposit generation, generally
greatly exceeded cash flows from operations and were used to fund investing
activities. During the past two years, due to strong loan demand, financing
activities funding was partially derived from increased levels of brokered
deposits and short-term borrowings. Management considers current liquidity
positions of the subsidiary banks to be adequate to meet depositor and borrower
needs.
<TABLE>
<CAPTION>
Table 14
Interest Rate Sensitivity
Analysis 1-91 92-183 184 days Total at 1 year to
September 30, 1995 Days Days to 1 year 1 year 5 years Total
_________________________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Rate Sensitive Assets
Debt securities
U.S. Treasury
and agencies $6,015 $4,025 $24,516 $34,556 $41,791 $76,347
Mortgaged-backed 13,088 16,292 31,699 61,079 100,440 161,519
Municipal bonds 1,576 680 2,056 4,312 59,268 63,580
Other 7,405 0 400 7,805 4,400 12,205
------- ------- ------- ------- ------- ---------
28,084 20,997 58,671 107,752 205,899 313,651
Loans 249,405 122,563 219,824 591,792 305,589 897,381
------- ------- ------- ------- ------- ---------
277,489 143,560 278,495 699,544 511,488 1,211,032
Rate Sensitive Liabilities
Deposits
Transaction and savings 104,559 553 0 105,112 237,721 342,833
Time 193,204 107,069 101,698 401,971 199,270 601,241
Federal funds purchased 29,850 0 0 29,850 0 29,850
Short-term borrowings 67,091 5,449 49 72,589 0 72,589
Long-term borrowings 201 0 0 201 7,616 7,817
------- ------- ------- ------- ------- ---------
394,905 113,071 101,747 609,723 444,607 1,054,330
------- ------- ------- ------- ------- ---------
Period Gap ($117,416) $30,489 $176,748 $89,821 $66,881 $156,702
======= ======= ======= ======= ======= =========
Cumulative Gap at 09/30/95 ($117,416) ($86,927) $89,821 $89,821 $156,702 $156,702
Cumulative Gap at 12/31/94 ($49,560) $5,222 $125,934 $125,934 $141,779 $141,779
</TABLE>
24
Because banks must assume interest rate risks as part of their normal opera-
tions, the Company actively manages its interest rate sensitivity as well as
liquidity positions. Both interest rate sensitivity and liquidity are affected
by maturing assets and sources of funds; however, management must also consider
those assets and liabilities with interest rates which are subject to change
prior to maturity. The primary objective of the ALM Committee is to optimize
earnings results, while controlling interest rate risks within internal policy
constraints. The subsidiary banks and the Company collectively measure their
level of earnings exposure to future interest rate movements. Currently, the
Company does not employ interest rate swaps, financial futures or options to
affect interest rate risks. Management expects that a slightly greater amount
of assets will reprice than liabilities during the fourth quarter of 1995. This
position is subject to change in response to the dynamics of the Company's
balance sheet and general market conditions. Rising interest rates are likely
to increase net interest income in a positive gap position (greater amount of
repricing assets than liabilities) and falling rates would likely decrease net
interest income. Management has slightly decreased the net asset sensitivity
during the last year. At September 30, 1995, approximately $89.8 million more
assets are scheduled to reprice than liabilities in the following twelve-month
period, compared to approximately $125.9 million at December 31, 1994.
25
PART II
_______________________________________________________________________________
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27.1) Financial Data Schedules (SEC use only)
(b) Reports on Form 8-K
Peoples First Corporation did not file any current
reports on Form 8-K during the period covered by
this report.
26
SIGNATURES
_______________________________________________________________________________
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, therunto duly authorized.
PEOPLES FIRST CORPORATION
11/07/95 /s/ Aubrey W. Lippert
Aubrey W. Lippert
President and Chairman
of the Board
11/07/95 /s/ Allan B. Kleet
Allan B. Kleet
Principal Financial Officer
27
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 28,334
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 143,655
<INVESTMENTS-CARRYING> 169,996
<INVESTMENTS-MARKET> 173,457
<LOANS> 897,381
<ALLOWANCE> (12,885)
<TOTAL-ASSETS> 1,269,003
<DEPOSITS> 1,022,758
<SHORT-TERM> 102,439
<LIABILITIES-OTHER> 12,228
<LONG-TERM> 7,817
<COMMON> 6,821
0
0
<OTHER-SE> 116,940
<TOTAL-LIABILITIES-AND-EQUITY> 1,269,003
<INTEREST-LOAN> 57,883
<INTEREST-INVEST> 15,213
<INTEREST-OTHER> 107
<INTEREST-TOTAL> 73,203
<INTEREST-DEPOSIT> 33,758
<INTEREST-EXPENSE> 37,902
<INTEREST-INCOME-NET> 35,301
<LOAN-LOSSES> 1,343
<SECURITIES-GAINS> 178
<EXPENSE-OTHER> 24,302
<INCOME-PRETAX> 15,097
<INCOME-PRE-EXTRAORDINARY> 15,097
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,587
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
<YIELD-ACTUAL> 4.19
<LOANS-NON> 1,315
<LOANS-PAST> 1,580
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 13,600
<ALLOWANCE-OPEN> 12,188
<CHARGE-OFFS> 1,343
<RECOVERIES> 866
<ALLOWANCE-CLOSE> 12,885
<ALLOWANCE-DOMESTIC> 12,885
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
