_______________________________________________________________________________
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 June 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
June 30, 1995: Common stock, no par value - 8,674,945 shares outstanding.
______________________________________________________________________________1
INDEX Page
_______________________________________________________________________________
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1995,
June 30, 1994 and December 31, 1994 3
Consolidated Statements of Income - Three and Six
Months Ended June 30, 1995 and 1994 4
Consolidated Statements of Changes in Stockholders'
Equity - Six Months Ended June 30, 1995 5
Consolidated Statements of Cash Flows - Six Months
Ended June 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 25
Item 2. Changes in Securities 25
Item 3. Defaults on Senior Securities 25
Item 4. Submission of Matters to a Vote of Securities Holders 25
Item 5. Other Information 25
Item 6. Exhibits and Reports on Form 8-K 25
Signatures 26
2
CONSOLIDATED BALANCE SHEETS June 30, December 31,
(unaudited) 1995 1994 1994
_______________________________________________________________________________
(in thousands)
ASSETS
Cash and due from banks $36,079 $36,879 $39,333
Short-term investments 0 100 0
Securities held for sale 138,050 126,284 129,682
Securities held for investment 180,630 229,068 203,845
Loans 871,223 758,768 805,947
Allowance for loan losses (12,518) (11,684) (12,188)
--------- --------- ---------
Loans, net 858,705 747,084 793,759
Excess of cost over net assets
of purchased subsidiaries 9,663 10,492 10,077
Premises and equipment 17,434 16,691 16,980
Other assets 13,974 15,085 16,880
--------- --------- ---------
$1,254,535 $1,181,683 $1,210,556
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $81,977 $85,733 $87,985
Interest-bearing transaction accounts 247,725 241,618 243,910
Savings deposits 88,026 110,488 98,571
Time deposits 605,549 568,165 568,117
--------- --------- ---------
1,023,277 1,006,004 998,583
Federal funds purchased 19,950 14,600 41,500
Other short-term borrowings 73,632 32,655 43,067
Long-term borrowings 7,974 13,545 9,536
Other liabilities 9,972 7,734 7,607
--------- --------- ---------
Total liabilities 1,134,805 1,074,538 1,100,293
Stockholders' Equity
Common stock 6,777 6,400 6,422
Surplus 42,491 34,337 34,859
Retained earnings 70,929 68,744 73,739
Unrealized net gain (loss) on
securities held for sale (334) (2,178) (4,624)
Debt on ESOP shares (133) (158) (133)
--------- --------- ---------
119,730 107,145 110,263
--------- --------- ---------
$1,254,535 $1,181,683 $1,210,556
========= ========= =========
Fair value of securities held
for investment $183,432 $229,865 $200,092
Common shares issued and outstanding 8,675 8,600 8,630
See accompanying notes to consolidated financial statements. 3
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
CONSOLIDATED STATEMENTS OF INCOME June 30, June 30,
(unaudited) 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on short-term investments $40 $38 $58 $133
Taxable interest on securities 4,024 4,395 8,175 8,746
Nontaxable interest on securities 1,013 1,078 2,043 2,192
Interest and fees on loans 19,474 15,256 37,385 29,613
------ ------ ------ ------
24,551 20,767 47,661 40,684
INTEREST EXPENSE
Interest on deposits 11,491 8,621 22,026 16,957
Other interest expense 1,427 676 2,625 1,261
------ ------ ------ ------
12,918 9,297 24,651 18,218
------ ------ ------ ------
Net Interest Income 11,633 11,470 23,010 22,466
Provision for Loan Losses 448 480 891 999
------ ------ ------ ------
Net Interest Income after
Provision for Loan Losses 11,185 10,990 22,119 21,467
Noninterest Income 1,905 1,708 3,510 3,321
Noninterest Expense 8,272 8,011 16,586 16,023
------ ------ ------ ------
Income Before Income Tax Expense 4,818 4,687 9,043 8,765
Income Tax Expense 1,408 1,364 2,616 2,610
------ ------ ------ ------
NET INCOME $3,410 $3,323 $6,427 $6,155
====== ====== ====== ======
Earnings per Share $0.38 $0.38 $0.72 $0.70
Cash Dividend per Common Share 0.114 0.100 0.228 0.200
Weighted Average Shares Outstanding 8,930 8,861 8,918 8,855
</TABLE>
See accompanying notes to consolidated financial statements. 4
<TABLE>
<CAPTION>
Unrealized
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>
BALANCE AT JANAURY 1, 1995 $6,422 $34,859 $73,739 ($4,624) ($133) $110,263
Net income 6,427 6,427
Cash dividends declared
Common ($0.228 per share) (1,975) (1,975)
Stock dividend declared (5%) 323 6,928 (7,262) (11)
Stock issued pursuant to shareholder
and employee plans 32 704 736
Reduction of ESOP debt 0 0
Change in unrealized net gain
(loss) on securities held for sale 4,290 4,290
------ ------ ------ ------ ------ -------
BALANCE AT JUNE 30, 1995 $6,777 $42,491 $70,929 ($334) ($133) $119,730
====== ====== ====== ====== ====== =======
</TABLE>
See accompanying notes to consolidated financial statements. 5
Six Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS June 30,
(unaudited) 1995 1994
_______________________________________________________________________________
(dollars in thousands)
OPERATING ACTIVITIES
Net income $6,427 $6,155
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,332 1,188
Net (discount accretion) premium
amortization 393 864
Provision for loan losses 891 999
Net (increase) decrease in loans held for sale (197) 295
Provision for deferred income taxes (579) (519)
Other, net 3,272 1,683
------ ------
Net Cash Provided by Operating Activities 11,539 10,665
INVESTING ACTIVITIES
Net decrease in Federal funds sold 0 3,000
Proceeds from sales of securities
held for sale 12,086 4,873
Proceeds from maturities, calls and
prepayments of securities held for sale 4,594 28,623
Proceeds from maturities, calls and prepay-
ments of securities held for investment 22,799 41,820
Purchases of securities held for sale (18,163) (47,074)
Purchases of investment securities 0 (15,081)
Net increase in loans (65,661) (54,910)
Purchases of premises and equipment (1,345) (811)
------ ------
Net Cash Used by Investing Activities (45,690) (39,560)
continued
See accompanying notes to consolidated financial statements. 6
Six Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED June 30,
(unaudited) 1995 1994
_______________________________________________________________________________
(dollars in thousands)
FINANCING ACTIVITIES
Net increase (decrease) in deposits 24,693 13,107
Net increase in repurchase agreements 2,065 1,253
Net increase (decrease) in Federal funds purchased (21,550) 2,000
Net increase in short-term borrowings 28,500 11,500
Proceeds from notes payable borrowings 140 4,786
Repayments of notes payable (1,701) (7,796)
Proceeds from issuance of common stock 423 258
Cash dividends paid (1,673) (1,926)
------ ------
Net Cash Provided by Financing Activities 30,897 23,182
------ ------
Cash and Cash Equivalents
Increase (Decrease) (3,254) (5,713)
Beginning of Year 39,333 42,592
------ ------
End of Period $36,079 $36,879
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense $22,764 $17,749
Cash paid for income tax 2,768 3,055
NONCASH INVESTING AND FINANCING TRANSACTIONS
Other real estate transferred to (from) loans, net (20) 144
Dividends reinvested 314 241
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
June 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. At
June 30, 1995, the total recorded investment in all impaired loans as defined in
FAS 114 and the related allowance for loss, and for the six months ended June
30, 1995, the average recorded investment in impaired loans and the related
amount of interest income recognized (all cash basis) are as follows:
Recorded Allowance Average Interest
Impaired Loans investment for loss investment recognized
_______________________________________________________________________________
(in thousands)
As of and for the six months
ended June 30, 1995 $848 $319 $873 $42
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 six months ended June 30, 1995 and
1994 were 8,918,448 and 8,855,032, respectively, and for the three months ended
June 30, 1995 and 1994, were 8,929,685 and 8,860,666, respectively. The impact
of common stock equivalents is not material.
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.
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
_______________________________________________________________________________
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 June 30, 1995, had total assets of approximately $177.0 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 June 30, 1995, had total assets of
approximately $147.2 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 $383,000 related to pooling of interest acquis-
itions were charged to expense during the first six months of 1994. The
after-tax impact of these expenses on earnings per share was $0.04 for the six
months ended June 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 six Peoples Kentucky Liberty and elimi- Consol-
months ended June 30, 1995 Bank FSB Bank nations idated
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net income $5,151 $877 $692 ($293) $6,427
Average assets 898,243 175,950 147,674 (239) 1,221,628
Return on average equity 11.65% 13.44% 11.35% 11.36%
Average equity / assets 9.93 7.48 8.33 9.34
Net interest margin 4.43 3.13 3.93 4.17
Provision for loan losses /
average loans 0.24 0.08 0.14 0.21
Allowance for loan loss /
loans outstanding 1.55 0.92 1.15 1.44
Overhead ratio 0.62 0.55 0.65 0.63
</TABLE>
EARNING ASSETS
Average earning assets of the Company for the first six months of 1995 increased
5.6%, or $61.4 million to $1,161.4 million from $1,100.0 million for the first
six months of 1994. This compares to average earning asset growth of 5.3% for
the first six months of 1994 over the first six months of 1993. A consistently
favorable ratio of average earning assets to average total assets has been
achieved. The ratio was 95.1% and 94.4% for the first six 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 two quarters of 1995 were 14.9%
greater than average loans for the first two quarters of 1994. Prior to 1993,
loans had been a decreasing portion of earning assets. Average loans for the
first six months of 1995 were 72.2% of total average earning assets, compared to
66.3% during the first six 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 promini-
nence in area lending and a slowed growth of deposits.
12
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Table 2 June 30, June 30,
Average Earning Assets 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C>
Total average earning assets $1,177.1 $1,107.9 $1,161.4 $1,100.0
Percent of average earning assets
Average loans 72.7% 67.5% 72.2% 66.3%
Average securities 27.2 32.4 27.6 33.0
Average other earning assets 0.1 0.1 0.2 0.7
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>
<TABLE>
<CAPTION>
Table 3 June 30, December 31,
Types of Loans 1995 1994 1994
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
Commercial, financial
and agricultural $121,108 $117,678 $111,929
Real estate
Construction 16,540 10,945 19,421
Residential mortgage 342,913 293,646 318,551
Commercial mortgage 147,479 134,036 139,629
Installment loans to
individuals 248,407 205,189 219,050
Consumer revolving credit 6,366 4,954 6,599
Loans held for sale 353 210 156
Other 1,477 2,884 1,952
------- ------- -------
884,643 769,542 817,287
Unearned income (13,420) (10,774) (11,340)
------- ------- -------
$871,223 $758,768 $805,947
======= ======= =======
</TABLE>
FUNDING
Average deposits for the first six months of 1995 increased 1.9%, or $18.9
million to $1,011.0 million from $992.1 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 six months
13
ended June 30, 1995, average local interest-bearing deposits were 88.9% of total
average interest-bearing liabilities, compared to 91.9% during the first six
months of 1994. Brokered deposits amounted to $26.5 million, $21.4 million and
$21.4 million at June 30, 1995 and 1994 and December 31, 1994, respectively.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Table 4 June 30, June 30,
Average Interest-bearing Liabilities 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C>
Total average interest-bearing
liabilities $1,031.6 $969.9 $1,018.4 $964.7
Percent of average total interest-
bearing liabilities
Average core deposits 88.3% 91.6% 88.9% 91.9%
Average Federal funds purchased 1.9 1.7 2.3 1.6
Average other short-term borrowings 6.5 2.9 5.6 2.6
Average long-term borrowings 0.8 1.5 0.8 1.6
</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 June 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 June 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 June 30, December 31,
Nonperforming Assets 1995 1994 1994
_______________________________________________________________________________
(in thousands)
Nonaccrual loans $827 $868 $531
Other real estate owned 662 2,134 1,569
Renegotiated loans 2,948 2,971 2,741
----- ----- -----
$4,437 $5,973 $4,841
===== ===== =====
Loans past due ninety days and still
accruing interest $2,074 $379 $1,838
Ratios:
Nonperforming assets to total
loans and other real estate 0.51% 0.78% 0.60%
Allowance for loan losses to
nonperforming assets 282% 160% 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 June 30, 1995, loans with a
total principal balance of $14.6 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 June 30, 1995 were 0.51% 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, represent most of the non-
performing 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 9.5% of assets at June 30, 1995, up
from 9.1% at June 30, 1994. Exclusive of the unrealized net loss on securities
held for sale, net of applicable income taxes, stockholders' equity increased
$5.2 million, or 9.1% (annualized), during the first six months of 1995 due to a
68.3% earnings retention rate and the sale of common stock through shareholder
and employee plans ($0.7 million). This compares to an increase of $4.8
million, or 9.3% (annualized), during the same 1994 period when the earnings
retention rate was 71.4% and proceeds from the sale of common stock through
shareholder and employee plans was $0.7 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
payable June 13, 1995 was declared 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 June 30, 1995, approximately $16.6
million, compared to $16.8 million at June 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'
June 30, 1995 and December 31, 1994, total capital and leverage ratios are shown
in Table 5.
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 Jun 30, Dec 31, Jun 30, Dec 31,
Risk-Based Capital 1995 1994 1995 1994
_______________________________________________________________________________
Company 14.06% 14.31% 8.98% 8.82%
Peoples First National
Bank 13.26 13.59 8.99 9.00
Liberty Bank & Trust 16.32 15.77 9.23 9.27
First Kentucky FSB 19.51 20.05 8.17 7.89
Regulatory minimum 8.00 8.00 4.00 4.00
RESULTS OF OPERATIONS
For the first six months of 1995, the Company reported net income of $6.4
million, compared to net income of $6.2 million for the first six months of
1994. Earnings per share for the first six months of 1995, increased 2.9% to
$0.72, from $0.70 for the same 1994 period. Nonrecurring acquisition costs of
$0.04 per share were included in the first six months of 1994. For the second
quarter of 1995, the Company reported net income of $3.4 million, compared to
net income of $3.3 million for the second quarters of 1994. Earnings per share
for the second quarter of both 1995 and 1994 was $0.38.
Return on average stockholders' equity for the first six months of 1995 and 1994
was 11.36% and 11.63%, respectively. Return on average assets for the first six
months of 1995 and 1994 was 1.06% and 1.07%, respectively. Return on average
stockholders' equity for the three months ended June 30, 1995 and 1994 was
11.73% and 12.47%, respectively. Return on average assets for the three months
ended June 30, 1995 and 1994 was 1.10% and 1.14%, respectively.
16
Table 7
Net Interest Income Analysis Average Average
Six months ended June 30, 1995 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $838,325 $37,428 9.00%
Securities 320,952 11,174 7.02
Other interest earning assets 2,079 58 5.63
--------- ------
1,161,356 48,660 8.45
Time deposits 596,971 16,593 5.61
All other interest bearing deposits 331,769 5,437 3.30
Other interest bearing liabilities 89,697 2,621 5.89
--------- ------
$1,018,437 24,651 4.88
------ ----
Net interest income (TE) spread $24,009 3.57%
====== ====
Net interest income (TE) as a percent 4.17%
of average interest-earning assets ====
Table 8
Net Interest Income Analysis Average Average
Six months ended June 30, 1994 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $729,273 $29,661 8.20%
Securities 363,543 11,989 6.65
Other interest earning assets 7,157 133 3.75
--------- ------
1,099,973 41,783 7.66
Time deposits 562,923 12,179 4.36
All other interest bearing deposits 344,308 4,779 2.80
Other interest bearing liabilities 57,463 1,260 4.42
--------- ------
$964,694 18,218 3.81
------ ----
Net interest income (TE) spread $23,565 3.85%
====== ====
Net interest income (TE) as a percent 4.32%
of average interest-earning assets ====
17
Table 9
Net Interest Income Analysis Average Average
Three months ended June 30, 1995 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $856,454 $19,491 9.13%
Securities 317,740 5,507 6.95
Other interest earning assets 2,868 41 5.73
--------- ------
1,177,062 25,039 8.53
Time deposits 607,546 8,737 5.77
All other interest bearing deposits 328,210 2,754 3.37
Other interest bearing liabilities 95,794 1,427 5.97
--------- ------
$1,031,550 12,918 5.02
------ ----
Net interest income (TE) spread $12,121 3.51%
====== ====
Net interest income (TE) as a percent 4.13%
of average interest-earning assets ====
Table 10
Net Interest Income Analysis Average Average
Three months ended June 30, 1994 volume Interest rate
_______________________________________________________________________________
(dollars in thousands)
Loans $747,082 $15,280 8.20%
Securities 358,522 5,988 6.70
Other interest earning assets 2,335 38 6.53
--------- ------
1,107,939 21,306 7.71
Time deposits 564,951 6,183 4.39
All other interest bearing deposits 344,871 2,440 2.84
Other interest bearing liabilities 60,115 675 4.50
--------- ------
$969,937 9,298 3.84
------ ----
Net interest income (TE) spread $12,008 3.87%
====== ====
Net interest income (TE) as a percent 4.35%
of average interest-earning assets ====
18
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 six months ended June 30, 1995, net interest income (TE) increased 1.9%, or
$0.4 million to $24.0 million as compared to $23.6 million for the six months
ended June 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.
Although the subsidiary banks generally maintain a relatively balanced position
between volumes of rate-repricing assets and liabilities to guard against
adverse effects to net interest income from possible fluctuations in interest
rates, net interest income to date was unfavorably affected in 1995 to a greater
extent than 1994 by interest rate caps on a significant portion of residential
mortgage loans originated with low rates that have repriced less quickly than
the average liability funding rate during the recent rapidly increasing
interest-rate environment. 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 4.17% and 4.32% for the six months ended June 30, 1995 and 1994,
respectively. Management has significantly increased the amount of loans
outstanding while decreasing lower yielding debt securities during the last two
years. For the six months ended June 30, 1995, interest earned on loans was
4.12% greater than the average funding cost, down from 4.39% for the six months
ended June 30, 1994. Expansion of residential real estate lending and aggres-
sive pricing of loans during the past year has stimulated demand and retarded
margins. 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.
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 future earnings will be less
susceptible to changing economic cycles. The provision for loan losses amounted
to $0.9 million for the six months ended June 30, 1995, a slight decrease when
compared to $1.0 million for the six months ended June 30, 1994. The annualized
provision for loan losses as a percentage of average loans was 0.21% for the six
months ended June 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
historically low loss experience.
19
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Table 11 June 30, June 30,
Allowance for Loan Losses 1995 1994 1995 1994
____________________________________________________________________________________________
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance at beginning of period $12,452 $11,218 $12,188 $10,715
Provision charged to expense 448 480 891 999
Loans charged off (432) (89) (711) (237)
Recoveries of chargeoffs 50 75 150 207
------ ------ ------ ------
Net loans charged off (382) (14) (561) (30)
------ ----- ------ -----
Balance at end of period $12,518 $11,684 $12,518 $11,684
====== ====== ====== ======
Annualized Ratios:
Provision for loan losses
to average loans 0.21% 0.26% 0.21% 0.28%
Net chargeoffs to
average loans 0.18 0.01 0.13 0.01
Allowance for loan losses
to period end loans 1.44 1.54 1.44 1.54
</TABLE>
Net chargeoffs as a percentage of average loans were 0.13% and 0.01% for the six
months ended June 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 June 30, 1995, which approximates the average
during the last five years. The June 30, 1995 allowance is 282% 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.
NONINTEREST INCOME
Noninterest income amounted to $3.5 million for the six months ended June 30,
1995, compared to $3.3 million for the six months ended June 30, 1994. Service
charges on deposit accounts, the largest component of noninterest income,
remained approximately the same for the first six months of 1995 and 1994. The
66.0% increase in insurance commissions for the first two 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 12.7% of total net interest
income plus noninterest income for both the six months ended June 30, 1995 and
1994.
20
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Table 12 June 30, June 30,
Noninterest Income 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C>
Deposit service charges $967 $967 $1,829 $1,842
Net securities gains 172 46 172 50
Trust service fees 254 302 531 606
Insurance commissions 165 109 332 200
Other income 347 284 646 623
----- ----- ----- -----
$1,905 $1,708 $3,510 $3,321
===== ===== ===== =====
Annualized Ratio:
Noninterest income
to average assets 0.62% 0.59% 0.58% 0.57%
</TABLE>
NONINTEREST EXPENSE
During the first six months of 1995, it required more noninterest expense
(overhead) to produce total net interest income plus noninterest income
(revenue). The ratio of overhead to revenue was 62.54% for the six months ended
June 30, 1995, compared to 62.14% for the six months ended June 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.
The annualized ratio of personnel expense has increased as a percentage of
average total assets and was 1.32% for the six months ended June 30, 1995,
compared to 1.28% for the six months ended June 30, 1994. Full-time-equivalent
employees at June 30, 1995 were 508, compared to 507 at June 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. 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 third 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.
21
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Table 13 June 30, June 30,
Noninterest Expense 1995 1994 1995 1994
____________________________________________________________________________________________
(in thousands)
<S> <C> <C> <C> <C>
Salaries $3,311 $3,100 $6,724 $6,095
Employee benefits 641 655 1,291 1,292
Occupancy expense 444 418 854 836
Equipment expense 449 376 889 756
FDIC insurance expense 569 559 1,138 1,110
Data processing expense 532 499 1,064 989
Bank share taxes 342 345 685 686
Goodwill amortization 207 207 415 415
Other expense 1,777 1,852 3,526 3,844
------ ------ ------ ------
$8,272 $8,011 $16,586 $16,023
====== ====== ====== ======
Annualized Ratios:
Overhead ratio 61.10% 60.79% 62.54% 62.14%
Noninterest expense
to average assets 2.68 2.74 2.74 2.77
</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 2.5% increase in assessments for deposit insurance
for the six months ended June 30, 1995 from the same 1994 period, is attribu-
table to increased deposit levels. Beginning in 1993, the assessments were
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 deposit assessment rate from the FDIC. As a result of recent
governmental discussions about the industry's stability and level of insurance
fund reserves, future FDIC assessment rates could be significantly lower than
the Company's current rate which is equal to 0.23% of applicable deposits.
Additional data processing expense was incurred in connection with the consoli-
dation of five subsidiary banks into one bank during the last quarter of 1994
and the first two quarters of 1995. Also contributing to the 7.6% increase in
data processing expense for the six months ended June 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 six months ended June 30, 1994 was
approximately $383,000 of professional fees relating to the mergers which were
22
completed in the first and fourth quarters of 1994. Several components 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 six months ended June 30, 1995 from
the comparable 1994 period, is attributable to higher operating earnings. The
effective tax rate decreased, and was 28.9% for the six months ended June 30,
1995, compared to 29.8% for the six months ended June 30, 1994. Nondeductible
organizational costs were incurred in 1994 which caused the higher effective
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
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.
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
23
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 third 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 June 30, 1995, approximately $108.9 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.
<TABLE>
<CAPTION>
Table 14
Interest Rate Sensitivity 1-91 92-183 184 days Total at 1 year to
Analysis 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 $3,001 $6,052 $14,197 $23,250 $54,170 $77,420
Mortgaged-backed 16,452 13,979 31,633 62,064 99,843 161,907
Municipal bonds 1,270 1,572 1,200 4,042 61,203 65,245
Other 9,815 0 0 9,815 4,800 14,615
------- ------- ------- ------- ------- ---------
30,538 21,603 47,030 99,171 220,016 319,187
Loans 268,331 117,535 196,215 582,081 289,142 871,223
------- ------- ------- ------- ------- ---------
298,869 139,138 243,245 681,252 509,158 1,190,410
Rate Sensitive Liabilities
Deposits
Transaction and savings 88,802 416 535 89,753 245,998 335,751
Time 169,618 98,229 121,169 389,016 216,533 605,549
Federal funds purchased 19,950 0 0 19,950 0 19,950
Short-term borrowings 18,828 3,555 51,249 73,632 0 73,632
Long-term borrowings 0 0 0 0 7,974 7,974
------- ------- ------- ------- ------- ---------
297,198 102,200 172,953 572,351 470,505 1,042,856
------- ------- ------- ------- ------- ---------
Period Gap $1,671 $36,938 $70,292 $108,901 $38,653 $147,554
======= ======= ======= ======= ======= =========
Cumulative Gap at 06/30/95 $1,671 $38,609 $108,901 $108,901 $147,554 $147,554
Cumulative Gap at 12/31/94 ($49,560) $5,222 $125,934 $125,934 $141,779 $141,779
</TABLE>
24
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 filed a current report on Form
8-K on April 28, 1995, reporting the April 27, 1995 press
release announcement of the declaration of a 5% stock
dividend payable June 13, 1995.
25
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
08/11/95 /s/ Aubrey W. Lippert
Aubrey W. Lippert
President and Chairman
of the Board
08/11/95 /s/ Allan B. Kleet
Allan B. Kleet
Principal Financial Officer
26
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 36,079
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 138,050
<INVESTMENTS-CARRYING> 180,630
<INVESTMENTS-MARKET> 183,432
<LOANS> 871,223
<ALLOWANCE> (12,518)
<TOTAL-ASSETS> 1,254,535
<DEPOSITS> 1,023,277
<SHORT-TERM> 93,582
<LIABILITIES-OTHER> 9,972
<LONG-TERM> 7,974
<COMMON> 6,777
0
0
<OTHER-SE> 112,953
<TOTAL-LIABILITIES-AND-EQUITY> 1,254,535
<INTEREST-LOAN> 37,385
<INTEREST-INVEST> 10,218
<INTEREST-OTHER> 58
<INTEREST-TOTAL> 47,661
<INTEREST-DEPOSIT> 22,026
<INTEREST-EXPENSE> 24,651
<INTEREST-INCOME-NET> 23,010
<LOAN-LOSSES> 891
<SECURITIES-GAINS> 172
<EXPENSE-OTHER> 16,586
<INCOME-PRETAX> 9,043
<INCOME-PRE-EXTRAORDINARY> 9,043
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,427
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.72
<YIELD-ACTUAL> 4.17
<LOANS-NON> 827
<LOANS-PAST> 2,074
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 14,600
<ALLOWANCE-OPEN> 12,188
<CHARGE-OFFS> 711
<RECOVERIES> 150
<ALLOWANCE-CLOSE> 12,518
<ALLOWANCE-DOMESTIC> 12,518
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
