<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999
--------------
Commission File Number: 0-16187
----------
GRANDBANC, INC.
-------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
MARYLAND 52-1332050
- ------------------------------- ------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1800 ROCKVILLE PIKE, ROCKVILLE, MARYLAND 20852
----------------------------------------------
(Address of principal executive offices)
(301) 770-1300
---------------------------
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO ___________
----------
At April 30, 1999, there were 4,049,665 shares of Common Stock, par value $.10
per share outstanding.
Transitional Small Business Disclosure Format
YES __________ NO X
------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<S> <C>
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets....................... 1
Consolidated Statements of Income................. 2
Consolidated Statements of Shareholders' Equity... 3
Consolidated Statements of Changes in Cash Flows.. 4
Notes to Consolidated Financial Statements........ 5-10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS............. 11
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K................... 23
6(a) The following exhibits required to be filed herewith:
(11) "Computation of Earnings per Common Share" is presented as Note 7
on page 10
(27) Financial Data Schedule
6(b). Reports on Form 8-K
SIGNATURES 24
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GRANDBANC, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
MARCH, 31 DECEMBER 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and Due from $ 2,344 $ 3,225
Federal funds sold 2,979 5,132
----------------------------------------------
Total cash and cash equivalents 5,323 8,357
Securities available-for-sale 45,855 34,080
Securities held-to-maturity - -
Loans, net of unearned discount and loan fees 57,983 61,300
Less: Allowance for loan losses (915) (927)
----------------------------------------------
Loans, net 57,068 60,373
Bank premises and equipment, net 4,019 1,825
Accrued income receivable 777 669
Prepaid expenses and other assets 789 892
Deferred income taxes 2,144 1,924
Intangible assets 1,139 1,179
Other real estate owned 374 374
----------------------------------------------
TOTAL ASSETS $ 117,488 $109,673
==============================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand $ 10,664 $ 10,069
Interest checking 9,745 9,970
Savings 15,827 14,547
Time 68,069 62,139
----------------------------------------------
Total Deposits 104,305 96,725
Securities sold under agreement to repurchase
and other borrowed funds 5,577 4,764
Other liabilities 268 496
----------------------------------------------
TOTAL LIABILITIES 110,150 101,985
----------------------------------------------
SHAREHOLDERS' EQUITY
Common stock 405 405
Surplus 10,963 10,963
Retained earnings (3,709) (3,648)
Accumulated comprehensive income:
Unrealized holding loss on securities available-for-sale (321) (32)
----------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,338 7,688
----------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 117,488 $ 109,673
==============================================
BOOK VALUE PER SHARE $ 1.81 $ 1.90
==============================================
ACTUAL SHARES OUTSTANDING 4,050 4,050
==============================================
</TABLE>
See notes to condensed consolidated financial statements.
Page 1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
-----------------------------
1999 1998
-----------------------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 1,504 $ 1,810
Interest on federal funds sold and repurchase agreement 49 69
Interest on Securities 610 192
-----------------------------
TOTAL INTEREST INCOME 2,163 2,071
-----------------------------
INTEREST EXPENSE:
Interest on deposits 1,019 938
Interest on securities sold under agreements to repurchase and other borrowed
funds 70 92
-----------------------------
TOTAL INTEREST EXPENSE 1,089 1,030
-----------------------------
NET INTEREST INCOME 1,074 1,041
PROVISION FOR LOAN LOSSES 122 10
-----------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 952 1,031
-----------------------------
NONINTEREST INCOME:
Service charges 85 79
Other 52 49
-----------------------------
TOTAL NONINTEREST INCOME 137 128
-----------------------------
NONINTEREST EXPENSES:
Salaries and employee benefits 507 462
Occupancy 166 192
Equipment 73 60
Other operating expenses 443 403
-----------------------------
TOTAL NONINTEREST EXPENSES 1,189 1,117
-----------------------------
INCOME BEFORE APPLICABLE INCOME TAXES (100) 42
INCOME TAXES (38) 18
-----------------------------
NET INCOME $ (62) $ 24
-----------------------------
PER COMMON SHARE DATA
BASIC EARNINGS $ (0.02) $ 0.01
DILUTED EARNINGS $ (0.01) $ 0.01
AVERAGE COMMON SHARES
BASIC 4,050 4,047
DILUTED 4,211 4,169
</TABLE>
See notes to condensed consolidated financial statements.
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
COMMON ACCUMULATED
STOCK OTHER
SHARES COMMON RETAINED COMPREHENSIVE
OUTSTANDING STOCK SURPLUS EARNINGS INCOME, NET TOTAL
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 4,041 $404 $10,928 $(3,747) $(100) $7,485
Net income for the three months
ended March 31, 1998 - - - 24 - 24
Common stock issuance 9 1 34 - - 35
Change in unrealized holding gain
(loss) on securities available for sale - - - - 80 80
-------------------------------------------------------------------
BALANCE AT MARCH 31, 1998 4,050 $405 $10,962 $(3,723) $ (20) $7,624
-------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 4,050 $405 $10,963 $(3,648) $ (32) $7,688
Net income for the trhee months
ended March 31, 1999 - - - (62) - (62)
Common stock issuance - - - - - -
Change in unrealized holding gain
(loss) on securities available for sale - - - - (289) (289)
-------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 4,050 $405 $10,963 $(3,710) $(321) $7,337
-------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
Page 3
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
-------------------------------
1999 1998
-------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (62) $ 24
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 69 60
Net amortization of securities 33 17
Amortization of intangibles 36 40
Provision for loan losses 122 10
Other real estate owned - writedowns - 10
Net realized gain on sale of securities (1) -
(Benefit) provision for deferred income taxes (38) 18
Change in assets and liabilities:
Accrued income receivable, other assets and other real estate (185) (238)
Accrued expenses and other liabilities (228) 63
------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (254) 4
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease (increase) in federal funds sold 2,153 (3,845)
Proceeds from sales and maturities of
available for sale securities 1,758 536
Proceeds from sales and maturities of
held to maturity securities - 3,641
Purchases of available for sale securities (14,031) (3,065)
Net decrease in loans 3,163 3,563
Purchase of loans - (111)
Purchases of bank premises and equipment (2,263) -
Proceeds from sale of foreclosed real estate and other assets - 376
------------------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (9,220) 1,095
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 7,580 2,554
Net increase (decrease) in federal funds purchased and
other short-term borrowings 1,013 (2,029)
Net decrease in long term debt - (1,300)
------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 8,593 (775)
------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (881) 324
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,225 2,460
------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,344 $ 2,784
------------------------------
INTEREST PAID $ 1,038 $ 995
------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
NOTE 1 - ORGANIZATION
GrandBanc, Inc. (the "Corporation"), is a Maryland bank holding company. The
Corporation's operations primarily consist of managing the operations of
GrandBank, its wholly owned subsidiary. GrandBank (the "Bank") is a community
oriented commercial bank. It provides a full range of banking services to
small-to-medium sized businesses, professionals, and individuals in its primary
market that encompasses the metropolitan Washington D.C. area including suburban
Maryland and northern Virginia. The Bank, in addition to its headquarters in
Rockville, has branch offices in Bethesda and Germantown, Maryland and
Alexandria, Virginia. The Corporation's other wholly owned subsidiary, Facility
Holdings, Inc., a Virginia corporation, was established in the first quarter of
1998 and owns the real property of the Corporation located in Alexandria,
Virginia. The Corporation and Bank are subject to the regulations of certain
Federal and State agencies and undergo periodic examinations by those regulatory
agencies.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. 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 three-month period ended March 31, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1998.
NOTE 3 - RECENTLY ADOPTED ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and displaying comprehensive income
and its components (revenues, expenses, gains and losses) in financial
statements. In addition, SFAS No. 130 requires the Company to classify items of
other comprehensive income by their nature in a separate financial statement or
as a component of the statement of operations or the statement of shareholders'
equity and display the accumulated balance of other comprehensive income
separately in the shareholders' equity section of the statement of financial
condition. The Corporation adopted SFAS No. 130 on January 1, 1998, as
required.
Page 5
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. SECURITIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1999
- ----------------------------------------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Agencies and Corporations $ 24,523 $ 6 $ (388) $ 24,141
Mortgage-Backed Securities 21,435 48 (247) 21,236
Other Securities 420 58 - 478
----------------------------------------------------------------
TOTAL $ 46,378 $ 112 $ (635) $ 45,855
----------------------------------------------------------------
SECURITIES HELD-TO-MATURITY
U.S. Government Agencies and Corporations $ - $ - $ - $ -
Mortgage-Backed Securities - - - -
----------------------------------------------------------------
TOTAL $ - $ - $ - $ -
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
- -------------------------------------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
U.S. Government Agencies and Corporations $ 17,601 $ 28 $ (111) $ 17,518
Mortgage-Backed Securities 16,133 52 (80) 16,105
Other Securities 399 58 - 457
----------------------------------------------------------------
TOTAL $ 34,133 $ 138 $ (191) $ 34,080
----------------------------------------------------------------
SECURITIES HELD-TO-MATURITY
U.S. Government Agencies and Corporations $ - $ - $ - $ -
Mortgage-Backed Securities - - - -
----------------------------------------------------------------
TOTAL $ - $ - $ - $ -
----------------------------------------------------------------
</TABLE>
Page 6
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. LOANS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
FOR THE PERIODS ENDED 1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
Commercial $ 16,255 $ 17,477
Real Estate-Construction 211 211
Real Estate-Mortgage 36,154 37,845
Consumer 2,608 2,890
Credit Card Receivable 2,815 3,065
---------------------------------
GROSS LOANS 58,043 61,488
---------------------------------
Less: Deferred loan fees and
unearned discount (60) (188)
---------------------------------
LOANS, NET OF UNEARNED DISCOUNT AND
DEFERRED LOAN FEES 57,983 61,300
---------------------------------
Allowance for loan losses (915) (927)
---------------------------------
LOANS, NET $ 57,068 $ 60,373
---------------------------------
</TABLE>
Page 7
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. ALLOWANCE FOR LOAN LOSSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------
FOR THE PERIODS ENDED 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 927 $ 1,702
Provision charged to expense 122 10
Charge-offs:
Commercial and other - 105
Consumer 139 -
Real Estate - 291
-----------------------
Total Charge-offs 139 396
Recoveries:
Commercial and other - 7
Consumer 5 -
Real Estate - 1
-----------------------
Total Recoveries 5 8
Net Charge-Offs (Recoveries) 134 388
-----------------------
BALANCE AT END OF PERIOD $ 915 $ 1,324
-----------------------
AVERAGE TOTAL LOANS (1) $59,598 $75,608
TOTAL LOANS AT PERIOD END (1) $57,983 $73,598
RATIO OF NET CHARGE-OFFS (RECOVERIES)
TO AVERAGE TOTAL LOANS 0.22% 0.51%
RATIO OF ALLOWANCE FOR
LOAN LOSSES TO TOTAL
LOANS AT PERIOD END 1.58% 1.80%
</TABLE>
(1) Total Loans are reported net of unearned income.
Page 8
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6A
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
LOANS IN EACH LOANS IN EACH
CATEGORY TO CATEGORY TO
MARCH 31, TOTAL DECEMBER 31, TOTAL
1999 LOANS 1998 LOANS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $ 126 28.0% $ 114 28.4%
Real Estate-Construction 1 0.4% 1 0.3%
Real Estate-Mortgage 387 62.3% 450 61.5%
Consumer 380 9.3% 281 9.7%
Unallocated 21 N/A 81 N/A
----------------------------------------------------------------------------------
TOTAL $ 915 100.0% $ 927 100.0%
==================================================================================
</TABLE>
Page 9
<PAGE>
GRANDBANC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------------
1999 1998
- ----------------------------------------------------------------------------
<S> <C> <C>
BASIC EARNINGS PER SHARE:
Net income $ (62) $ 24
Stock and stock equivalents (average shares):
Common shares outstanding 4,050 4,047
Stock options - -
-----------------------
Total stock and stock equivalents 4,050 4,047
-----------------------
BASIC NET INCOME PER COMMON SHARE $ (0.02) $ 0.01
-----------------------
DILUTED EARNINGS PER SHARE:
Net income $ (62) $ 24
Stock and stock equivalents (average shares):
Common shares outstanding 4,050 4,047
Stock options 161 122
-----------------------
Total stock and stock equivalents 4,211 4,169
-----------------------
DILUTED NET INCOME PER COMMON SHARE $ (0.01) $ 0.01
-----------------------
</TABLE>
Page 10
<PAGE>
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis contains forward-looking statements,
including statements of goals, intentions and expectations, regarding or based
on assumptions about the future, including future economic conditions, interest
rates, and statements by suppliers of data processing equipment and services,
government agencies, and other third parties as to Year 2000 compliance and
compliance costs. Because of these uncertainties and the assumptions on which
statements in this report are based, the actual future results may differ
materially from those indicated in this report.
FINANCIAL SUMMARY
Net income for the three months ended March 31, 1999 decreased by $86 thousand
from the same period in 1998. The company reported a loss of $62 thousand or
$0.02 per share for the quarter ended March 31, 1999 compared to net income of
$24 thousand or $0.01 per share. Returns on average assets and average equity
for the first quarter of 1999 (0.22%) and (3.28%), respectively, compared to
0.09% and 1.05% for the same period in 1998.
Contributing to the decrease in earnings for the first quarter of 1999 were a
higher than anticipated charge to the provision for loan losses to cover credit
card receivable losses and increases in noninterest expenses. The provision for
loan losses totaled $122 thousand for the quarter ended March 31, 1999 compared
to $10 thousand for the same quarter in 1998. Noninterest expenses increased by
$72 thousand or 6.45%, to $1,189 thousand as of March 31, 1999 compared to
$1,117 thousand for the same period in 1998.
The Company continued to experience significant growth as total assets
increased to $117.5 million at March 31, 1999 compared to $109.7 million at
December 31, 1999 representing an increase of $7.8 million or 7.1%. Loans, net
of unearned discount and fees, decreased by $1.3 million or 2.1% to $58 million
at March 31, 1999 from $61.3 million at December 31, 1998. The decrease in
loans reflects the ongoing effort to increase the quality of the loan portfolio.
The securities portfolio increased by $11.8 million to $45.9 million at March
31, 1999 from $34.1 million at December 31, 1998 representing an increase of
34.6%. Total deposits were $104.3 million at the end of the quarter compared to
$96.7 million at December 31, 1998, representing an increase of 7.9%
Shareholders' equity at March 31, 1999 totaled $7.3 million compared to $7.6
million at December 31, 1998. Book value per share of common stock on March 31,
1999 was $1.81 compared to $1.90 per share at December 31, 1998. The decrease
in book value per share was primarily attributable to a decline in the fair
market value of the securities available-for-sale portfolio.
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income is the Company's primary source of earnings and represents
the difference between interest and fees earned on earning assets and the
interest expense paid on deposits and other interest bearing liabilities. Net
interest income totaled $1,074 thousand for the first quarter of 1999 compared
to $1,041 thousand for the same period in 1998, representing an increase of
3.2%. The improvements in net interest income were attributable to a higher
volume of earning assets which was
Page 11
<PAGE>
partially offset by a tightening of the spread between interest earned on loans,
securities, federal funds, and other investments, and the rates paid on deposits
and borrowed funds. TABLE 2 presents the Company's analysis of changes in
interest income and interest expense relating to volume and rate for the periods
indicated.
The Company's net interest margin for the quarter ended March 31, 1999
decreased to 4.16% from 4.46% for the first quarter of 1998. The declined in
net interest margin for the first quarter was the result of a decline in the
yield of earning assets of 53 basis points. This decrease resulted primarily
from a 21.0% decrease in average loans from $75.7 million at March 31, 1998 to
$59.8 million at March 31, 1999. This shift in loan volume was partially offset
by a decrease in the cost of interest bearing liabilities of 40 basis points
from 4.97% at March 31, 1998 to 4.57% at March 31, 1999.
In the first three months of 1999, average earning assets increased by $10.5
million or 11.1% to $104.9 million compared to $94.4 for the first three months
of 1998. Average total loans, the largest component of earning assets,
decreased to $59.8 million for the first three months of 1999 compared to $75.7
million for the first three months of 1998. Average securities and federal
funds sold increased by $26.4 million to $45.1 million for the first three
months of 1999, compared to $18.7 million for the first three months of 1998.
The growth in earning assets was primarily funded by an increase in certificates
of deposit, interest checking accounts, and customer repurchase agreements as
average interest bearing deposits increase to $96.7 million for the first three
months of 1999 from $84.5 million for the same period in 1998, representing an
increase of 14.3%. Average demand deposits declined slightly to $9.8 million
for the first three months of 1999 compared to $9.9 million for the same period
in 1998. TABLE 1 presents an analysis of average earning assets, interest
bearing liabilities and demand deposits with the related components of net
interest income.
Page 12
<PAGE>
AVERAGE BALANCES AND INTEREST RATES
(DOLLARS IN THOUSANDS)
TABLE 1 (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1999
------------------ ------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------------------------------ ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Interest Checking Deposits $ 9,906 $ 50 2.05% $ 9,194 $ 49 2.16%
Money Market Deposits 11,059 88 3.23% 11,191 89 3.23%
Savings Deposits 4,439 27 2.47% 4,207 27 2.60%
Certificates of Deposit
$100,000 and over 19,034 242 5.16% 15,734 222 5.72%
Certificates of Deposit 46,989 612 5.28% 40,300 555 5.59%
-------------------------------------- ---------------------------------
Total Interest-Bearing Deposits 91,427 1,019 4.52% 80,626 942 4.74%
Purchased Funds 5,212 70 5.45% 3,829 92 9.74%
-------------------------------------- ---------------------------------
Total Interest-Bearing Liabilities 96,639 1,089 4.57% 84,455 1,034 4.97%
Noninterest-Bearing Liabilities:
Total Demand Deposits 9,809 9,896
Other Liabilities 485 517
--------- ---------
Total Noninterest-Bearing
Liabilities 10,294 10,413
--------- ---------
Total Liabilities 106,933 94,868
Shareholders' Equity 7,568 9,161
--------- ---------
Total Liabilities and Shareholders'
Equity $ 114,501 $ 104,029
========= =========
Interest Spread 3.81% 3.93%
--------------------------------- ---------------------------------
Net Interest Margin $ 1,074 4.16% $ 1,037 4.46%
================================= =================================
Cost to fund earning assets 4.21% 4.44%
==== ====
</TABLE>
Note: Average balances are calculated on a daily average basis. Allowance for
loan losses is excluded from calculation of average balances and average rates,
as appropriate. Nonaccruing loans are included in the average loan balance.
Page 13
<PAGE>
GRANDBANC, INC.
AVERAGE BALANCES AND INTEREST RATES
(DOLLARS IN THOUSANDS)
TABLE 1
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1999
------------------ ------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------------------------------ ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-Earning Assets:
Securities:
Federal Agency and
Mortgage-Backed Securities 40,553 604 6.04% 13,021 184 5.73%
Other Investments 420 6 5.79% 399 8 8.13%
-------------------------------------------------------------------------------
Total Securities 40,973 610 6.04% 13,420 192 5.80%
Loans: (1)
Commercial 16,551 386 9.46% 21,145 506 9.70%
Real Estate-Construction 211 4 7.69% 321 14 17.69%
Real Estate-Mortgage 37,364 944 10.25% 46,337 1,050 9.19%
Consumer 5,626 170 12.25% 7,939 240 12.26%
---------------------------------------- ------------------------------
Total Loans 59,752 1,504 10.21% 75,742 1,810 9.69%
Federal Funds Sold 4,141 49 4.80% 5,230 69 5.35%
--------------------------------------- ------------------------------
TOTAL INTEREST-EARNING ASSETS 104,866 2,163 8.37% 94,392 2,071 8.90%
Noninterest-Earning Assets:
Cash and Due from Banks 2,650 2,171
Other Assets 8,028 9,147
Allowance for Loan Losses (889) (1,548)
Deferred Loan Fees (154) (133)
---------- -------
Total Noninterest-Earning Assets 9,635 9,637
---------- -------
Total Assets $ 114,501 104,029
========== =======
</TABLE>
(1) For the purpose of these computations, nonaccruing loans are included in
the daily average loan amounts outstanding.
Page 14
<PAGE>
GRANDBANC, INC.
RATE AND VOLUME ANALYSIS
- ----------------------------
<TABLE>
<CAPTION>
FROM THE THREE MONTHS ENDED
MARCH 31, 1999 TO THE
(DOLLARS IN THOUSANDS) THREE MONTHS ENDED
TABLE 2 MARCH 31, 1998
CHANGE DUE TO:
-----------------------------
TOTAL
INCREASE
(DECREASE) RATE VOLUME
------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income:
Securities:
Federal Agency and
Mortgage-Backed 420 $ 31 $ 389
Securities
Other Investments (2) ($2) $ 0
-------------------
Total Securities 418 $ 24 $ 394
Loans: (1)
Commercial (120) ($10) ($110)
Real Estate-Construction (10) ($5) ($5)
Real Estate-Mortgage (106) $ 97 ($203)
Consumer (70) ($0) ($70)
-------------------
Total Loans (306) $ 76 ($382)
Federal Funds Sold (20) ($6) ($14)
-------------------
TOTAL INTEREST INCOME 92 ($138) $ 230
-------------------
Interest expense:
Interest-Bearing Deposits:
Interest Checking Deposits 1 ($3) $ 4
Money Market Deposits (1) $ 0 ($1)
Savings Deposits 0 ($1) $ 1
Certificates of Deposit
$100,000 and over 20 ($26) $ 47
Certificates of Deposit 57 ($36) $ 92
-------------------
Total Interest-Bearing 77 ($50) $ 126
Deposits
TOTAL INTEREST EXPENSE 55 ($95) $ 149
-------------------
NET INTEREST INCOME $ 37 ($78) $ 115
===================
</TABLE>
(1) For the purpose of these computations, nonaccruing loans are included in the
daily average loan amounts outstanding.
* Variances are computed on a line-by-line basis and are non-additive The
increase or decrease due to a change in average volume has been determined by
multiplying the change in average volume by the average rate during the
preceding period, and the increase or decrease due to a change in average
rate has been determined by multiplying the current average volume by the
change in average rate.
Page 15
<PAGE>
PROVISION FOR LOAN LOSSES
A provision for loan losses of $122 thousand was required for the three months
ended March 31, 1999, compared to a provision of $10 thousand for the same
period in 1998. A more detailed discussion of nonperforming assets and the
allowance for loan losses appears in the "Asset Quality" section.
NONINTEREST INCOME
Non-interest income for the three-month period ended March 31, 1999 was $137
thousand, compared to $128 thousand for the three-month period ended March 31,
1998, representing an increase of $9 thousand or 7.0%.
NONINTEREST EXPENSE
In support of the Company's strategic growth, total noninterest expenses
consisting of employee related costs, occupancy expenses, and other overhead
totaled $1,189 thousand for the first three months of 1999 compared to $1,117
thousand for the same period in 1998, representing an increase of $72 thousand
or 6.4%.
The single largest increase in year-to-date noninterest expenses was
attributable to employee salaries and benefits. Salaries and employee benefits
expense totaled $507 thousand for the quarter ended March 31, 1999 compared to
$462 thousand for the same period in 1998, representing an increase of $45
thousand. Occupancy expense totaled $166 thousand for the quarter ended March
31, 1999 compared to $192 thousand in 1998. The decrease in occupancy costs is
attributable to the savings gained from the purchase of the building housing the
Bethesda/Metro branch located at 7535 Old Georgetown Road, Bethesda, Maryland.
Other operating expenses increased by $10 thousand or 9.9 % for the first
quarter of 1999 compared to the same period in 1998.
CAPITAL RESOURCES
Shareholders' equity on March 31, 1999 was $7.3 million compared to $7.6
million at December 31, 1998. Book value per share of common stock on March 31,
1999 was $1.81 compared to $1.90 per share at December 31, 1998. Factors
contributing to the decrease in shareholders' equity were the reported net loss
and the decline in the fair market value of the securities available-for-sale
portfolio.
At March 31, 1999 the Company's Tier 1 and total risk-based capital ratios
were 7.91% and 9.20%, respectively, compared to 7.95% and 9.24% at December 31,
1998. The Company's leverage ratio was 5.15% at March 31, 1999 compared to
5.60% at December 31, 1998. TABLE 3 details the various components of
shareholders' equity.
Tier 1 and total risk-based capital ratios for GrandBank, the Company's
banking affiliate were 10.24% and 11.53% respectively at March 31, 1999 compared
to 10.70% and 12.00% at December 31, 1998. The Bank's leverage ratio was 6.68%
at March 31, 1999 compared to 7.60% at December 31, 1998.
The Bank continues to maintain capitalthatexceeds the minimum regulatory
guidelines for "well capitalized" institutions. The Company plans to maintain a
capital base sufficient to take advantage of business opportunities while
ensuring that it has the resources to protect against the risks inherent in its
business.
Page 16
<PAGE>
GRANDBANC, INC.
SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
TABLE 3
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-------------------------------------------
<S> <C> <C>
TIER 1 CAPITAL:
Common Stock 405 $ 405
Surplus 10,963 10,963
Retained Earnings (3,709) (3,648)
Unrealized holding (loss) gain on securities available-for-sale (321) (32)
-------------------------------------------
Total Shareholders' Equity 7,338 7,688
Less: Unrealized holding loss (gain) on securities available for 321 32
sale
Less: Dissallowed intangibles (1,862) (1,864)
-------------------------------------------
TOTAL TIER 1 CAPITAL 5,797 5,856
TIER 2 CAPITAL:
Qualifying allowance for loan losses 941 953
-------------------------------------------
TOTAL TIER 2 CAPITAL 941 953
-------------------------------------------
TOTAL RISK-BASED CAPITAL 6,738 6,809
===========================================
Risk Weighted Assets 73,240 73,676
===========================================
RATIOS:
Tier 1 Capital to risk weighted assets 7.92% 7.95%
Tier 2 Capital to risk weighted assets 1.28% 1.29%
-------------------------------------------
Total risk-based capital ratio 9.20% 9.24%
===========================================
Leverage Ratio-Tier 1 Capital to quarterly
average assets less intangibles 5.16% 5.60%
===========================================
</TABLE>
Page 17
<PAGE>
ASSET QUALITY
The Company employs extensive written policies and procedures to enhance
management of credit risk. The loan portfolio is managed under a specifically
defined credit process. This process includes formulation of portfolio
management strategy, guidelines for underwriting standards and risk assessment,
procedures for on-going identification and management of credit deterioration,
and regular portfolio reviews to estimate loss exposure and to ascertain
compliance with the Company's policies. The Bank's loan approval policies
provide for various levels of officer lending authority. Loans which in the
aggregate exceed the level of officer lending authority must be presented to the
Executive Committee for approval. This Committee is comprised of the Bank's
Chairman of the Board, the President and CEO and the other three members of the
Board of Directors.
A major element of credit risk management is the diversification of risk. The
Bank's objective is to maintain a diverse loan portfolio to minimize the impact
of any single event or set of circumstances. Concentration parameters are based
upon individual risk factors, policy constraints, economic conditions,
collateral and products. The Bank generally does not make loans outside its
market area unless the borrower has an established relationship with the Bank.
Consequently, the Bank and its borrowers are directly affected by the economic
conditions prevailing in its market area.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents management's view as to the amount
necessary to absorb potential losses in the loan portfolio. The amount of the
provision charged to expense each period is dependent upon an assessment of the
loan quality, current economic trends and conditions, evaluation of specific
client compositions, past loan experience, and the level of net charge-offs
during the period.
The ratio of allowance for loan losses to total loans at March 31, 1999 was
1.58% compared to 1.51% at December 31, 1998. The coverage multiple of
allowance for loan losses to nonperforming loans was 1.83 at March 31, 1999
compared to 1.73 at December 31, 1998. Management believes that the allowance
for loan losses at March 31, 1999 is adequate to cover losses inherent in the
loan portfolio. Loans classified as loss, doubtful, substandard, or special
mention are adequately reserved for and are not expected to have a material
impact beyond what has been reserved.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets, consisting of nonaccrual loans, restructured loans and
other real estate decreased by $45 thousand to $874 thousand at March 31, 1999
from $909 thousand at December 31, 1998. Non performing assets to total assets
at March 31, 1999 were 0.74% compared to 0.83% at December 31, 1998.
Nonaccrual loans, the single largest category of nonperforming assets, are
those loans on which the accrual of interest has been discontinued. Commercial
loans are generally placed on nonaccrual status when either principal or
interest is past due 90 days or more, or when management believes the collection
of principal or interest is in doubt. Nonaccrual loans decreased to $500
thousand at March 31, 1999 from $535 thousand at December 31, 1998.
Past due loans are defined as those loans which are 90 days or more past due
as to principal and interest but are still accruing interest because they are
well secured and are in the process of collection. The Company had past due
loans of $634 thousand at March 31, 1999 compared to $127 thousand at December
31, 1998.
TABLE 4 details nonperforming assets, past due loans and asset quality ratios.
Page 18
<PAGE>
GRANDBANC, INC.
CREDIT QUALITY
(DOLLARS IN THOUSANDS)
TABLE 4
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
-----------------------------
<S> <C> <C>
Nonaccrual Loans $ 500 $ 535
Restructured Loans 0 0
-----------------------------
TOTAL NONPERFORMING LOANS 500 535
Other Real Estate 374 374
-----------------------------
TOTAL NONPERFORMING ASSETS 874 909
Loans past due 90 days or
more and accruing interest 634 127
-----------------------------
TOTAL NONPERFORMING ASSETS AND
LOANS PAST DUE 90 DAYS OR MORE $ 1,508 $ 1,036
=============================
Total Loans at Period End (1) 57,983 61,300
Allowance for Loan Losses 915 927
Total Assets 117,488 109,673
ASSET QUALITY RATIOS:
Allowance for Loan Losses to
Period end Loans 1.58% 1.51%
Allowance for Loan losses to
Nonperforming Loans (Multiple) 1.83 X 1.73 X
Total Nonperforming Loans
to Total Loans 0.86% 0.87%
Total Nonperforming Assets to
Total Assets 0.74% 0.83%
Nonperforming Assets to Total
Loans plus Other Real Estate 1.50% 1.47%
Nonperforming Assets and Loans Past
Due 90 days or more to Total Loans
and Other Real Estate 2.58% 1.68%
</TABLE>
(1) Total loans are reported net of unearned income.
Page 19
<PAGE>
ASSET LIABILITY MANAGEMENT
LIQUIDITY AND INTEREST RATE SENSITIVITY ANALYSIS
The primary functions of asset/liability management are to maintain
adequate levels of liquidity while minimizing fluctuations in net interest
margin as a percentage of total assets.
At March 31, 1999, cash equivalents and securities available-for-sale
totaled $51.2 million compared to $42.4 million at December 31, 1998. The cash
flows from the securities and loan portfolios are relatively predictable and
satisfy the Company's need for liquidity. To further satisfy liquidity needs,
the Bank maintains lines of credit with the Federal Home Loan Bank of Atlanta
and federal funds facilities with its correspondent banks. In addition, the
Company's strong capital position, a large core deposit base, the quality of
assets and future earnings power will ensure the Company's long term liquidity
needs are met.
An important element of asset/liability management is the monitoring of the
Company's sensitivity to interest rate movements. In order to measure the
effect of interest rates on the Company's net interest income, management takes
into consideration the expected cash flows from the securities and loan
portfolios as well as the expected magnitude of the repricing of specific asset
and liability categories by assigning earnings changes ratios to individual
balance sheet items. The Company evaluates interest sensitivity risk and then
formulates guidelines to manage risk based upon its outlook regarding the
economy, forecasted interest rate movements and other business factors.
Management uses the securities portfolio, which consists predominantly of fixed
rate securities, to hedge against changes in the loan portfolio, as well as
changes in deposit rates, which are both variable and fixed. The securities
portfolio, which has an average life of less than five years, provides a steady
stream of cash flows which are reinvested at current market rates, which in turn
helps to manage long term exposure to interest rate changes. Management's goal
is to maximize and stabilize the net interest margin by limiting its exposure to
interest rate changes.
The data in TABLE 5 reflects repricing or expected maturities of various
assets and liabilities at March 31, 1999. This gap represents the difference
between interest-sensitive assets and liabilities in a specific time interval.
Interest sensitivity gap analysis presents a position that existed at one
particular point in time, does not take into consideration potential cash flows
and assumes that assets and liabilities with similar repricing characteristics
will reprice to the same degree. Therefore, the Company's static gap position
is not indicative of the impact of changes in interest rates on net interest
income. Therefore, in addition to the traditional "static gap presentation"
TABLE 5 also presents interest sensitivity on a adjusted basis using Beta
adjustments. Essentially, the Beta adjustments recognize that assets and
liabilities do not reprice to the same degree. The Beta adjustments reflect the
tendency for movements in deposit rates to lag movements in open market rates.
On a cumulative one year basis at March 31, 1999, the Company had a positive
adjusted gap of $5.7 million excess interest sensitive assets over interest
sensitive liabilities. Management believes that its current gap position
effectively insulates the Bank from significant interest rate risk.
Page 20
<PAGE>
INTEREST RATE GAP ANALYSIS
(DOLLARS IN THOUSANDS)
TABLE 5
<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------------------------------------------
1-90 91-180 181-365 1-5 Over 5
INTEREST-SENSITIVE ASSETS: Days Days Days Years Years
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federal Funds Sold $ 2,979 $ 0 $ 0 $ 0 $ 0
Securities 1,654 2,097 3,713 18,348 20,566
Loans Maturing 1,035 0 348 9,878 3,593
Loans Repricing 26,051 0 8,216 5,588 459
Credit Card Receivables 2,815 0 0 0 0
-----------------------------------------------------------
Total $34,534 $ 2,097 $ 12,277 $ 33,814 $ 24,618
-----------------------------------------------------------
Cumulative Totals $34,534 $ 36,631 $ 48,908 $ 82,722 $107,340
-----------------------------------------------------------
INTEREST-SENSITIVE LIABILITIES:
- ---------------------------------------------------
Certificate of Deposits & CD IRA's 10,034 9,099 11,525 37,024 0
Savings Accounts & Savings IRA's 4,618 0 0 0 0
Interest Checking Accounts 9,745 0 0 0 0
Money Market Deposit Accounts 11,487 0 0 0 0
Repurchase Agreements 0 0 0 0 0
Sweep Accounts 3,502 0 0 0 0
FHLB - Advances 0 0 0 0 0
Other 25 25 50 1975 0
-----------------------------------------------------------
Totals $39,411 $ 9,124 $ 11,575 $ 38,999 $ 0
-----------------------------------------------------------
Cumulative Totals $39,411 $ 48,535 $ 60,110 $ 99,109 $ 99,109
-----------------------------------------------------------
Gap (4,877) (7,027) 702 (5,185) 24,618
===========================================================
Cumulative Gap ($4,877) ($11,904) ($11,202) ($16,387) $ 8,231
===========================================================
Adjustments:
Beta Adjustments
Interest Checking (beta factor .30) 6,822
Savings accounts (beta factor .30) 3,233
Money Market Accounts (beta factor .40) 6,892
-----------------------------------------------------------
Cumulative Adjusted Gap $12,069 $ 5,042 $ 5,744 $ 559 $ 25,177
===========================================================
As Reported Information:
Interest-Sensitive Assets/Interest-
Sensitive Liabilities (Cumulative): 87.63% 75.47% 81.36% 83.47% 108.30%
Cumulative Gap/Total Assets -4.15% -10.13% -9.53% -13.95% 7.01%
Beta Adjusted Information:
Interest-Sensitive Assets/Interest-
Sensitive Liabilities (Cumulative): 153.73% 115.96% 113.31% 100.68% 130.64%
Cumulative Gap/Total Assets 10.27% 4.29% 4.89% 0.48% 21.43%
</TABLE>
Page 21
<PAGE>
YEAR 2000
Many computer programs now in use have not been designed to properly recognize
years after 1999. If not corrected, these programs could fail or create
erroneous results. The year 2000 ("Y2K") issue affects the entire banking
industry because of its reliance on computers and other equipment that use
computer chips, and may have significant adverse effects on banking customers,
bank regulators, and the general economy.
The Corporation initiated the process of preparing its computer systems and
applications for the Year 2000 in 1997. The process involves modifying or
replacing certain hardware and software maintained by the Corporation as well as
communicating with external service providers to ensure that they are taking the
appropriate action to remedy their Y2K issues. Specific goals of the Y2K Plan
include identifying risks, testing data processing and other systems and
equipment used by the Company, informing customers of Y2K issues and risks,
establishing a contingency plan for operating if Y2K issues cause important
systems or equipment failure, implementing changes necessary to achieve Y2K
compliance, and verifying that these changes are effective. The Company's Board
of Directors reviews progress under the plan on a monthly basis.
Management designed the Y2K Plan to comply with the requirements for Y2K efforts
established by the Federal Deposit Insurance Corporation, the primary federal
regulator of the Bank.
As of March 31, 1999, the Corporation had met its Y2K goals and will continue to
meet the goals of the overall Y2K Plan. By March 31, 1999, the Corporation had
performed risk assessments, had assessed the Y2K preparedness of suppliers of
data processing services to the Corporation, had implemented its customer
awareness program, had developed its Y2K contingency Plan, and had tested and
implemented necessary changes in hardware and software. Elements of the Y2K
Plan, such as risk assessments, customer communications, and the continuing
testing and evaluation of systems and equipment, are processes that will
continue into the year 2000. The Y2K contingency plan calls for the company to
manually process bank transactions and to use other data processing methods, in
the event that Y2K efforts of the Corporation and its data services providers
are not successful.
The Corporation's primary supplier of data processing services also has adopted
a Y2K plan and time table to make changes necessary for it to provide services
in the year 2000, and has provided written assurances to the Corporation of its
progress. The suppliers and the Corporation have successfully tested the
software changes that have been made to date. The Corporation is also
monitoring the progress of its other suppliers of data processing services.
Purchases of hardware and software have been and, if applicable, will continue
to be capitalized in accordance with normal policy. Internal personnel and all
other costs related to the project are being expensed and will continue to be
expensed as incurred. Because of the high level of dependency on outside data
service providers, the cost of resolving Y2K issues has not been significant to
the Corporation. Management believes that any additional cost related to Y2K
issues both internal and external will not be material to the Corporation's
business, operations, liquidity, capital resources, or financial condition,
based on the information developed to date and communications from data
processing suppliers. The Corporation is funding its Y2K expenditures through
continuing operations as part of the overall data processing budget. The 1999
budget for this category is $475,000.
Page 22
<PAGE>
GRANDBANC, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1999
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
(11) "Computation of Earnings per Common Share" is presented as Note 7
on Page 9.
(27) Financial Data Schedule: Filed herewith.
B. Reports on Form 8-K
None
Page 23
<PAGE>
GRANDBANC, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1999
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GRANDBANC, INC.
(Registrant)
Date: May 10, 1999 /s/ Steven K. Colliatie
------------ -----------------------------------------------
Steven K. Colliatie
President and Chief Executive Officer
Date: May 10, 1999 /s/ Domingo Rodriguez
------------ -----------------------------------------------
Domingo Rodriguez
Executive Vice President and
Chief Financial Officer
Page 24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB for the period ended March 31, 1999, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000719488
<NAME> GRANDBANC, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,344
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,979
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,855
<INVESTMENTS-CARRYING> 46,378
<INVESTMENTS-MARKET> 45,855<F1>
<LOANS> 57,983
<ALLOWANCE> 915
<TOTAL-ASSETS> 117,488
<DEPOSITS> 104,305
<SHORT-TERM> 5,377
<LIABILITIES-OTHER> 268
<LONG-TERM> 200
0
0
<COMMON> 405
<OTHER-SE> 6,993
<TOTAL-LIABILITIES-AND-EQUITY> 117,488
<INTEREST-LOAN> 1,504
<INTEREST-INVEST> 610
<INTEREST-OTHER> 49
<INTEREST-TOTAL> 2,163
<INTEREST-DEPOSIT> 1,019
<INTEREST-EXPENSE> 1,089
<INTEREST-INCOME-NET> 1,074
<LOAN-LOSSES> 122
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,189
<INCOME-PRETAX> (100)
<INCOME-PRE-EXTRAORDINARY> (100)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.01)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 927
<CHARGE-OFFS> 139
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 915
<ALLOWANCE-DOMESTIC> 915
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>NOT BROKEN OUT IN KSB
</FN>
</TABLE>
