<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number: 0-18533
--------
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 16-1168175
-----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer incorporation or
organization) Identification No.)
50 North Main Street Box 129 Castile NY 14427
================================================================
(Address of principal executive offices) (Zip Code)
(716) 493-2576
--------------
Registrant's telephone number, including area code)
____________________________________________________________
(Former name, address, fiscal year, if changed)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(b) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Y Yes No
-------- ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 8, 1999
====================================================================
Common Stock, $1.00 per share 3,473,624 shares
Transitional Small Business Disclosure Format (Check One):
Yes__ No X
-
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
INDEX
Page
PART I Financial Information
Item 1. Financial Statements
Consolidated Statement of Condition (Unaudited)
September 30, 1999 and December 31, 1998, 3
respectively
Consolidated Statement of Income (Unaudited)
Three and Nine Months Ended September 30, 1999
and 1998, respectively 4
Consolidated Statement of Comprehensive Income
(Unaudited)Three and Nine Months Ended
September 30, 1999 and 1998, respectively 5
Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30,1999 and 1998, 6
respectively
Notes to Consolidated Financial Information 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
PART II Other Information
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 24
Exhibit 11 25
2
<PAGE>
Part I - Financial Information
- ------------------------------
Item 1 - Financial Statements
- -----------------------------
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
---------------------------------------------
CONSOLIDATED STATEMENT OF CONDITION
-----------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-------------------------- --------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 19,033,820 $ 10,647,917
Federal funds sold 17,100,000 9,250,000
Investment securities:
Available for sale 105,961,239 65,255,014
Held to maturity 1,497,910 -
Other securities 2,769,759 2,083,501
Loans, net of allowance for loan losses of
$4,126,763 and $2,377,300, respectively 299,281,005 184,459,034
Accrued interest receivable 3,018,231 1,731,499
Premises and equipment, net 13,675,648 6,344,049
Other Assets 9,787,998 1,891,872
-------------------------- --------------------------
Total Assets $472,125,610 $281,662,886
-------------------------- --------------------------
LIABILITIES AND SHAREHOLDERS EQUITY:
Deposits:
Noninterest bearing $ 81,376,413 $ 36,432,791
Interest bearing 334,958,898 204,419,241
-------------------------- --------------------------
Total Deposits 416,335,311 240,852,032
Securities sold under agreement to repurchase 1,292,938 1,198,294
Accrued interest payable 1,320,335 1,158,630
Accrued taxes and other liabilities 1,997,294 856,636
Advances from Federal Home Loan Bank 11,602,560 3,968,283
-------------------------- --------------------------
Total Liabilities 432,548,438 248,033,875
-------------------------- --------------------------
Minority Interest in Subsidiary 4,783,665 -
Shareholders' equity
Common stock, $1.00 par value, 5,000,000
shares authorized, 3,472,924 and 3,390,650
shares issued, respectively 3,472,924 3,390,650
Capital surplus 12,688,215 12,347,915
Retained earnings 20,935,665 18,673,888
Unearned employee stock ownership plan shares (441,988) (490,654)
Accumulated other comprehensive income (91,160) 1,261,145
Treasury stock at cost, 100,847 and 86,847
shares, respectively (1,770,149) (1,553,933)
-------------------------- --------------------------
Total Shareholders' Equity 34,793,507 33,629,011
-------------------------- --------------------------
Total Liabilities and Shareholders Equity $472,125,610 $281,662,886
-------------------------- --------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Month Ended
September 30, September 30,
1999 1998 1999 1998
Interest Income:
<S> <C> <C> <C> <C> <C>
Interest and fees on loans $6,599,654 $4,232,393 $15,709,137 $12,152,986
Interest on investment securities
Taxable 854,211 599,791 1,894,412 2,101,898
Tax-exempt 512,878 363,037 1,357,107 1,142,085
Interest on federal funds sold 216,972 105,158 638,597 205,636
---------------- -------------- ------------- ---------------
Total interest income 8,183,715 5,300,379 19,599,253 15,602,605
Interest expense on deposits and advances 2,781,250 2,206,578 7,012,235 6,574,577
---------------- -------------- ------------- ---------------
Net interest income 5,402,465 3,093,801 12,587,018 9,028,028
Provision for loan losses 99,011 121,831 380,977 378,251
---------------- -------------- ------------- ---------------
Net interest income after
provision for loan losses 5,303,454 2,971,970 12,206,041 8,649,777
---------------- -------------- ------------- ---------------
Other operating income:
Service charges on deposit accounts 399,616 256,526 981,600 798,236
Other charges and fees 94,926 44,940 209,965 101,890
Net gain on sales of loans
and investment securities 2,299 44,734 6,848 65,639
Other operating income 212,987 119,134 400,038 230,784
---------------- -------------- ------------- ---------------
Total other operating income 709,828 465,334 1,598,451 1,196,549
---------------- -------------- ------------- ---------------
Other operating expenses:
Salaries and employee benefits 2,035,490 1,209,074 4,848,452 3,406,964
Equipment expense 331,373 213,197 811,421 680,786
Occupancy expense 68,061 125,998 315,994 390,486
Printing and supplies 170,145 72,238 308,261 212,791
FDIC assessment 20,290 9,693 42,061 29,445
Minority interest in Subsidiary net income 190,406 - 232,898 -
Other operating expenses 1,294,849 532,667 2,671,781 1,619,858
---------------- -------------- ------------- ---------------
Total other operating expense 4,110,614 2,162,867 9,230,868 6,340,330
Income before income taxes 1,902,668 1,274,437 4,573,624 3,505,996
Provision for income taxes 625,438 409,200 1,408,337 1,066,600
---------------- -------------- ------------- ---------------
Net Income $1,277,230 $ 865,237 $ 3,165,287 $ 2,439,396
================ ============== ============= ===============
Basic earnings per share $0.39 $0.27 $0.97 $0.75
Diluted earnings per share $0.38 $0.26 $0.96 $0.73
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net Income $1,277,230 $ 865,237 $ 3,165,287 $2,439,396
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period (248,262) 1,112,317 (1,350,731) 1,088,856
Less: reclassification adjustments
for gains included
in net income (2,296) (30,611) (1,574) (41,267)
----------------------- -------------- -------------------- -----------
Other comprehensive income (loss),
net of tax (251,258) 1,081,706 (1,352,305) 1,047,589
----------------------- -------------- -------------------- -----------
Comprehensive income $1,025,972 $1,946,943 $ 1,812,982 $3,486,985
==========================================================================
</TABLE>
The accompanying notes are an integral part of these financial statement
5
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
---------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,165,287 $ 2,439,396
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation and amortization 1,134,001 644,087
Provision for possible loan losses 380,977 378,251
Minority interest income 232,898 -
ESOP compensation expense 48,666 118,216
Gain on sale of investments (2,623) (60,697)
Gain on sale of loans (4,225) (4,942)
Increase in interest receivable (348,075) (270,175)
Increase in other assets (1,148,013) (228,695)
(Decrease) increase in interest payable (123,389) 209,175
Increase in accrued taxes and other liabilities 988,501 304,446
----------------------- -----------------------
Net cash provided by operating activities $ 4,324,005 $ 3,529,062
----------------------- -----------------------
Cash flows from investing activities:
Proceeds from sales of securities-available
for sale $ 7,340,737 $ 5,275,596
Proceeds from calls and maturities of securities:
Held to Maturity 1,242,000 -
Available for sale 10,520,242 18,561,794
Purchases of securities:
Available for sale (24,765,278) (10,705,131)
Cash acquired, net of acquisition cost 4,211,398 -
Proceeds from sale of loans 1,172,011 789,112
Net increase in loans (27,413,676) (21,649,410)
Expenditures for capital assets (992,744) (578,337)
----------------------- -----------------------
Net cash used in investing activities $(28,685,310) $ (8,306,376)
----------------------- -----------------------
Cash flows from financing activities:
Net increase in demand deposits, NOW
accounts and money market accounts $ 35,458,593 $ 3,039,950
Net increase in time deposits (1,865,892) 17,908,986
Net increase in securities sold under
agreements to repurchase 94,644 354,073
Proceeds from FHLB borrowings 8,000,000 -
Repayment FHLB borrowings (365,723) (273,483)
Exercise of options and warrants 422,574 78,670
Purchase of treasury stock (216,216) (1,379,351)
Dividends paid (930,772) (802,309)
----------------------- -----------------------
Net cash provided by financing activities $ 40,597,208 $ 18,926,536
----------------------- -----------------------
Net increase in cash and cash equivalents $ 16,235,903 $ 14,149,222
Cash and cash equivalents, beginning of year 19,897,917 12,413,023
----------------------- -----------------------
Cash and cash equivalents, end of quarter $ 36,133,820 $ 26,562,245
----------------------- -----------------------
Interest paid $ 7,173,940 $ 2,415,753
Income taxes paid $ 1,849,000 $ 850,000
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
---------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
-------------------------------------------
September 30, 1999
------------------
Note 1 Basis of Presentation
- ----------------------------
The unaudited interim financial information includes the accounts of Letchworth
Independent Bancshares Corporation ("Letchworth", "the Company" or "Registrant")
and its subsidiaries, The Bank of Castile and The Mahopac National Bank
("Mahopac"). The financial information has been prepared in accordance with the
Summary of Significant Accounting Policies as outlined in Letchworth's Form 10-K
for the year ended December 31, 1998 and, in the opinion of management contains
all adjustments necessary to present fairly Letchworth's financial position as
of September 30, 1999 and December 31, 1998, the results of its operations for
the three and nine month periods ended September 30, 1999 and 1998,
respectively, and its cash flows for the nine month periods ended September 30,
1999 and 1998, respectively.
The accounting policies of Letchworth conform with generally accepted accounting
principles and prevailing practices within the banking industry. The
preparation of financial information in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial information and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
These notes should be read in conjunction with the notes to the consolidated
financial statements included in the Letchworth 1998 Annual Report on Form 10-
K.
Note 2 Merger Agreement with Tompkins TrustCo, Inc.
- ---------------------------------------------------
On July 30, 1999, the Registrant entered into an Agreement and Plan of
Reorganization (the "Agreement") with Tompkins TrustCo, Inc. ("Tompkins"),
pursuant to which, subject to regulatory and shareholder approval, the
Registrant will be merged with and into Tompkins. Pursuant to the terms and
conditions of the Agreement, each shareholder of the Registrant will receive
.685 shares of common stock of Tompkins for each share of common stock of the
Registrant owned by the shareholder. In connection with the Agreement, the
Registrant granted Tompkins an option, exercisable under certain circumstances,
to purchase an aggregate of 689,737 newly issued shares of common stock, par
value $1.00 per share, of the Registrant. The transaction is expected to be
accounted for as a pooling of interest.
The merger is subject to approval by the shareholders of both companies and
various regulatory authorities. Both companies have scheduled special meetings
for their respective shareholders, to be held on December 20, 1999, at which the
shareholders will be asked to consider and vote on the merger. A Joint Proxy
7
<PAGE>
Statement/Prospectus is being mailed during the week of November 15, 1999, to
shareholders of record of each company as of October 31,1999. The merger is
expected to be consummated in the fourth quarter of 1999, and will result in the
issuance of approximately 2.4 million shares of Tompkins common stock.
Note 3 Acquisition of The Mahopac National Bank
- -----------------------------------------------
On June 4, 1999, Letchworth consummated the acquisition of a controlling
interest in Mahopac, a national banking organization with its principal office
located in Mahopac, New York. As a result, Letchworth now owns 1,491 shares, or
70.165%, of the issued and outstanding shares of capital stock of Mahopac. The
total cost of the transaction was $14,634,524.
Acquired assets, loans and deposits of Mahopac on June 4, 1999 totaled
approximately $158.4 million, $90.5 million and $141.8 million, respectively.
The transaction has been accounted for as a purchase and, accordingly operations
acquired from Mahopac have been included in Letchworth's financial results since
the acquisition date. In connection with the acquisition, Letchworth recorded
approximately $2.5 million of goodwill and $3.5 million of core deposit
intangible. The goodwill is being amortized on a straight-line basis over twenty
years and the core deposit intangible is being amortized on an accelerated basis
over ten years.
Presented below is certain pro forma information as if Mahopac had been acquired
on January 1, 1998. These results combine the historical results of Mahopac into
Letchworth's Consolidated Statement of Income and, while certain adjustments
were made for the estimated impact of purchase accounting adjustments and other
acquisition-related activity, they are not necessarily indicative of what would
have occurred had the acquisition taken place at that time.
Pro forma
Nine Months Ended September 30,
1999 1998
(in thousands, except per share)
Interest Income $23,401 $22,783
Other Income 2,172 2,059
Net income 3,316 2,687
Basic earnings per share $ 1.01 $ .82
Diluted earnings per share $ 1.00 $ .80
8
<PAGE>
Note 4 Investment Securities
- ----------------------------
The amortized cost and approximate market value of investment securities are as
follows:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
Amortized Cost Market Value Amortized Cost Market Value
--------------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Available for Sale
- ------------------
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies 24,098,323 24,011,995 $13,742,386 $14,087,865
State and political subdivision
obligations 49,175,176 49,257,666 32,486,465 33,876,508
Mortgage-Backed Securities 31,351,710 31,210,557 17,173,404 17,290,641
Corporate Securities 1,508,832 1,481,021 - -
----------- ----------- ----------- -----------
106,134,041 105,961,239 $63,402,255 $65,255,014
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
Amortized Cost Market Value Amortized Cost Market Value
--------------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Held to Maturity
- ----------------
State and political subdivision
obligations 1,497,910 1,498,862 - -
--------- --------- -------------- ------------
1,497,910 1,498,862 - -
--------- --------- -------------- ------------
</TABLE>
Note 5 Loans
- ------------
<TABLE>
<CAPTION>
Loans consist of the following:
September 30, December 31,
1999 1998
--------------------- ---------------------
<S> <C> <C>
Residential real estate $116,960,983 $ 53,638,439
Commercial real estate 69,623,898 39,948,496
Commercial and industrial loans 51,496,254 38,201,766
Agricultural loans 32,048,139 35,707,279
Consumer loans 33,278,494 19,340,354
------------ ------------
$303,407,768 $186,836,334
------------ ------------
</TABLE>
9
<PAGE>
An analysis of changes in the
allowance for loan losses is as follows:
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
---------------------- -----------------------
<S> <C> <C>
Balance, beginning of year $2,377,300 $2,028,600
Allowance acquired from Mahopac 1,510,938 -
Provision Expense 380,977 378,251
Chargeoffs (208,853) (142,004)
Recoveries 66,401 28,465
---------- ----------
Balance, end of period $4,126,763 $2,293,312
</TABLE>
The following table summarized the Company's non-performing loans at the dates
indicated.
<TABLE>
<CAPTION>
September 30,
1999 1998
------------------ -----------------
<S> <C> <C>
Non-accruing loans 963,711 642,551
Accruing loans past due 90 days or more 167,411 327,243
Renegotiated loans 0 0
</TABLE>
The average balance of impaired loans during the first nine months of 1999 was
approximately $163,586, as compared to $613,438 for the first nine months of
1998. At September 30, 1999, the balance of impaired loans and related reserve
against that balance was $181,324 and $26,976, respectively. At September 30,
1998, the balance of impaired loans and related reserve against the balance was
$593,011 and $170,256, respectively. Interest income recognized on impaired
loans and interest income recognized on a cash basis was not significant
Note 6 Earnings Per Share
- -------------------------
The calculations of basic and diluted earnings per share are as follows:
<TABLE>
<CAPTION>
Quarter ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Income available to common shareholders $1,277,230 $ 865,237 $3,165,287 $2,439,396
Basic earnings per share
Weighted average shares outstanding 3,308,932 3,250,168 3,278,652 3,269,064
Basic earnings per share $ 0.39 $ 0.27 $ 0.97 $ 0.75
-------------------- --------------------- -------------------- --------------------
Diluted earnings per share
Weighted average shares outstanding 3,308,932 3,250,168 3,278,652 3,269,064
Dilitive effect of:
Stock options 36,196 84,146 26,332 94,367
Adjusted weighted average shares
outstanding 3,345,128 3,334,314 3,304,984 3,363,431
Diluted earnings per share $ 0.38 $ 0.26 $ 0.96 $ 0.73
-------------------- --------------------- -------------------- --------------------
</TABLE>
10
<PAGE>
Note 7 Comprehensive Income
- ---------------------------
Letchworth has chosen to disclose comprehensive income in a separate statement,
in which the components of comprehensive income are displayed net of income
taxes. The following table sets forth the related tax effects allocated to each
element of comprehensive income for the three and nine months ended September
30, 1999 and 1998, respectively:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999 Nine Months Ended September 30, 1999
Tax Tax
Before-tax (Expense) Net-of-Tax Before-tax (Expense) Net-of-Tax
Amount or Benefit Amount Amount or Benefit Amount
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains on securities:
Unrealized holding losses
arising during period (259,188) 10,226 (248,962) (2,022,938) 672,207 (1,350,731)
Less: reclassification
adjustment for gains
realized in net income (3,345) 1,049 (2,296) (2,623) 1,049 (1,574)
--------- ---------- ---------- ------------ ---------- ------------
Other comprehensive income (262,533) 11,275 (251,258) (2,025,561) 673,256 (1,352,305)
--------- ---------- ---------- ------------ ---------- ------------
<CAPTION>
Three Months Ended September 30, 1998 Nine Months Ended September 30, 1998
Tax Tax
Before-tax (Expense) Net-of-Tax Before-tax (Expense) Net-of-Tax
Amount or Benefit Amount Amount or Benefit Amount
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains on securities:
Unrealized holding gains
arising during period 1,639,694 (527,377) 1,112,317 1,601,531 (512,675) 1,088,856
Less:
reclassification adjustment for
gains realized in net income (43,363) 12,752 (30,611) (60,697) 19,430 (41,267)
----------- ---------- ----------- ----------- ---------- -----------
Other comprehensive income 1,596,331 (514,625) 1,081,706 1,540,834 (493,245) 1,047,589
----------- ---------- ----------- ----------- ---------- -----------
</TABLE>
The following table sets forth the components of accumulated other comprehensive
income for the nine months ended September 30, 1999 and 1998, respectively:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
----------- ----------
<S> <C> <C>
Beginning balance $1,261,145 $ 309,072
Unrealized losses on securities, net of tax (1,352,305) 1,047,589
---------- ----------
Ending balance $ (91,160) $1,356,661
---------- ----------
</TABLE>
11
<PAGE>
Note 8 "Disclosure about segments of an enterprise and related information"
- ---------------------------------------------------------------------------
With the Mahopac acquisition on June 4, 1999, Letchworth now has two reportable
segments as prescribed by Statement of Financial Accounting Standards ("SFAS")
No.131, "Disclosures About Segments of an Enterprise and Related Information".
In accordance with the provision of SFAS No.131, reportable segments have been
determined based upon Letchworth's two operating subsidiaries, The Bank of
Castile and Mahopac.
Up until June 4, 1999, substantially all the Company's revenue and net income
was derived from The Bank of Castile. Since the Company's acquisition of a
70.165% interest in Mahopac, this new segment has contributed $4,121,526 in
total revenue and $416,215 in net income. At September 30, 1999, total assets of
The Bank of Castile and Mahopac were $288.3 million and $177.6 million,
respectively. The Bank of Castile had $276.6 million in assets at September 30,
1998.
12
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
ITEM 2
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
September 30, 1999
Merger with Tompkins Trustco, Inc.
On July 30, 1999, Letchworth Independent Bancshares Corporation "Letchworth"
entered into an Agreement and Plan of Reorganization with Tompkins Trustco,
Inc., which provides for Letchworth to be merged with and into Tompkins Trustco,
Inc. Under the terms of the agreement, which was unanimously approved by both
boards of directors, Letchworth shareholders will receive 0.685 shares of
Tompkins common stock for each share of Letchworth common stock. The merger is
expected to be accounted for as a pooling of interests, and has been structured
to qualify as a tax-free-for-stock exchange for Letchworth shareholders.
The merger is subject to approval by the shareholders of both companies and
various regulatory authorities. Both companies have scheduled special meetings
for their respective shareholders, to be held on December 20, 1999, at which the
shareholders will be asked to consider and vote on the merger. A Joint Proxy
Statement/Prospectus is being mailed during the week of November 15, 1999, to
shareholders of record of each company as of October 31, 1999. The merger is
expected to be consummated in the fourth quarter of 1999, and will result in the
issuance of approximately 2.4 million shares of Tompkins common stock.
Mahopac Transaction
On June 4, 1999, the Company consummated the acquisition of a controlling
interest in The Mahopac National Bank ("Mahopac"), a national banking
organization headquartered in Putnam County, New York. Mahopac currently
operates three offices and is scheduled to open a fourth in Brewster, New York.
As a result of the transaction, Letchworth now owns 1,491 shares, or 70.165% of
the issued and outstanding shares of capital stock of Mahopac. The total
purchase price paid by Letchworth in connection with the acquisition was an
amount equal to $14,462,700 based upon a sales price of $9,700 for each share of
common stock purchased.
Prior to the transaction, Mahopac was owned primarily by the members of two
families, the Costello/Ryder family and the Spain family. The Company entered
into a written agreement (the "Shareholder Agreement") with the members of the
Spain family to unify the ownership structure of
13
<PAGE>
Mahopac within two years. To unify the ownership structure, the Shareholder
Agreement allows for the Spain family to purchase all the shares of Mahopac
owned by the Company(the "Spain Option")or in the event that the Spain family
fails to exercise the Spain Option, for the Company to purchase all of the
shares of Mahopac owned by the Spain family. In either case the exercise price
for each share of common stock is equal to 90 percent of the "fair marker value"
of each share of common stock of Mahopac, as determined in accordance with the
Shareholder Agreement. The intent of the Company, and also the stated intent of
the Spain family, is for the Company to acquire all of the shares of common
stock owned by the Spain Family within two (2) years. If, for whatever reason,
neither party is able or willing to buy out the other, the terms of the
Shareholder Agreement require that Mahopac be sold in its entirety to a third
party.
Management believes that the Mahopac transaction gives the Company greater
opportunity for future growth than if Letchworth remained exclusively in Western
New York. Putnam County is the fastest growing county in New York and has the
highest median income in the state.
Upon completion of the merger of the Company with and into Tompkins, all of the
rights of the Company in Mahopac including its ownership of the 1,491 shares of
common stock and any and all of its rights and obligations under the Shareholder
Agreement, shall be assumed by Tompkins.(See Item 5 of this Quarterly Report on
Form 10-Q).
Financial Condition
As result of the acquisition of Mahopac, Letchworth's total assets were $472.1
million as of September 30, 1999, an increase of $190.5 million, or 67.62%,
above total assets at December 31, 1998.
The overall investment portfolio increased $42.9 million, or 63.69%, from
December 31, 1998, levels to $110.2 million. The additional $43.4 million of
Mahopac investments negated the $549 thousand decline in The Bank of Castile
portfolio. The Bank of Castile's portfolio declined due to cumulative maturities
and sales since year end to maintain adequate liquidity to fund the purchase of
the controlling interest in Mahopac. The change in other securities was
negligible.
Net loans outstanding as of September 30, 1999 were $299.3 million, which
represented an increase of $114.8 million, or 62.25%, over net loans at December
31, 1998. Net loans outstanding is net of loans sold and the allowance for loan
losses. The primary reason for higher loan balances was the $104.1 million of
loans obtained in the Mahopac acquisition, including approximately $55.8 million
of residential mortgage loans, $26.0 million of commercial real estate loans,
$10.7 million of commercial loans, $6.1 million of construction loans and $5.5
million of consumer loans.
14
<PAGE>
Nonaccrual loans totaled $963,711 as of September 30, 1999, compared to $642,551
as of September 30, 1998. Approximately $607 thousand of this increase was
attributable to Mahopac. While this represents an increase, the Company is
aggressive in identifying and dealing with problem loan situations. Further,
management believes that the loan loss allowance is adequate to cover any
expected losses. "Potential problem loans" consist of loans which are generally
secured and not currently considered nonperforming, but where information about
possible credit problems has caused management to have doubts as to the ability
of such borrowers to comply with present payment terms. As of September 30,
1999, the Company considers $3,179,878 to be "potentially problem loans", which
represents an increase of $886,566 when compared to the $2,293,312 figure on
September 30, 1998. Most of this increase, $734.0 thousand, is due to the
Mahopac acquisition.
Net premises and equipment for the nine month period ended September 30, 1999,
increased to $13.7 million. Virtually all of the $7.3 million increase was due
to the addition of Mahopac. The purchase had a similar impact on the other
assets; $7.3 million of the $7.9 million increase for the nine month period was
attributable to Mahopac, including unamoritized goodwill and core deposit
intangible of $2.4 million and $3.3 million, respectively.
Total deposits as of September 30, 1999 were $416.3 million, which represented
an increase of $175.5 million, or 72.86%, from total deposits as of December 31,
1998. Of this amount, $160.9 million was attributable to Mahopac. Interest
bearing deposits increased by $130.5 million since the end of 1998, to $335.0
million at September 30, 1999. Approximately $119.0 million of this increase was
attributable to Mahopac. In addition, noninterest bearing deposits increased to
$81.4 million at September 30, 1999, a $44.9 million increase from the amount at
December 31, 1998. Virtually all of this increase for noninterest bearing
deposit balances came as a result of the addition of Mahopac earnings.
At September 30,1999, Letchworth had advances, secured by residential mortgage
loans, from the Federal Home Loan Bank of New York ("FHLB") equal to
$11,602,560. This represents a $7.6 increase in advances since December 1998. Of
this amount, $3.5 million was attributed to replacement of FHLB advances (which
had matured in December 1998),as well as an additional $4.1 million in advances
used to increase the investment portfolio's income and reduce interest rate
risk.
The Company's shareholders' equity increased to $34.8 million, an increase of
3.46%, or $1.2 million, from December 31, 1998. The increase in shareholders
equity is primarily attributed to the year to date earnings less dividends paid
to shareholders, as well as, a reduction in the unrealized gains on securities.
15
<PAGE>
Federal regulators generally require banking institutions to maintain "core
capital", that is, "Tier 1" and "total capital" ratios, of at least 4% and 8%,
respectively, of risk adjusted total assets. In addition to the risk-based
measures, federal bank regulators have also implemented a minimum "leverage"
ratio guideline of 4% of the quarterly average of total assets. Under regulatory
guidelines, unrealized gains or losses on investment securities classified as
available for sale are not recognized in determining regulatory capital. The
Company has historically maintained capital ratios in excess of minimum
regulatory guidelines largely through a high rate of internal capital
generation.
The capital ratios for the company as of 9/30/99 are set forth below:
Sept 30, 1999 Sept 30, 1998 Minimum
Tier 1 Capital Ratio 12.47% 17.96% 4.00%
Total Capital Ratio 13.72% 19.21% 8.00%
Tier 1 Leverage Ratio 10.04% 11.65% 4.00%
Results of Operations - Three Months Ended September 30, 1999 Compared
to Three Months Ended September 30, 1998
Net income of $1,277,230 for the three months ended September 30, 1999
represents an increase of $411,993, or 47.62%, over the $865,237 earned during
the same period ended September 30, 1998. Diluted earnings per share was $.38
for the three months ended September 30, 1999. (See Exhibit 11 of this Quarterly
Report on Form 10-Q). This represents an increase from the $.26 per share for
the same period in 1998.
Net interest income was $5.4 million for the three months ended September 30,
1999, up 74.62% from the $3.1 million earned during the three months ended
September 30, 1998. The addition of Mahopac contributed approximately $2.1
million of the increase in net interest income during the third quarter of 1999.
Most of the remaining increase was attributable to reduced interest expense on
deposits at The Bank of Castile.
The provision for loan losses, the charge to earnings for potential credit
losses associated with lending activities, was $99,011 for the three months
ended September 30, 1999, down 18.73% from the $121,831 provision recorded
during the three months ended September 30, 1998. The decrease in the provision
for loan losses in 1999 is reflective of the stronger credit quality of the
loans. Gross charge-offs were $62,696 in the third quarter of 1999, compared to
$32,533 for the same period last year. The inclusion of Mahopac's gross
chargeoffs accounts for $19,749 of the third quarter 1999 increase. Management
conducts a periodic
16
<PAGE>
evaluation which assigns risk weights for individual loans and different classes
of loan groups in determining the adequacy of the reserve. Regulatory
examination, historical gross loans, an assessment of economic conditions and
other relevant factors are used in this analysis. Management of the Company
believes this analysis indicates that the level of the loan loss reserve is
adequate to absorb any potential losses inherent in the loan portfolio at
September 30, 1999. The allowance for possible loan losses of the Company at
September 30, 1999 was $4,126,763 or 1.36% of total loans, and is up 73.59%, or
$1,749,463, from the allowance at December 31, 1998. The increase is due
primarily to the $1.5 million allowance acquired in connection with the Mahopac
transaction.
Other operating income for the three month period ended September 30, 1999 was
$709,828, compared to $465,334 for the same period in 1998. This increase is
partially attributed to revisions made in deposit fees and service charges, as
well as $226 thousand in other income from Mahopac.
Other operating expense for the three month period ended September 30, 1999 was
$4,110,614, an increase of $1,947,747, or 90.05%,over the $2,162,867 recorded
for the same period in the prior year. Mahopac's other operating expense
accounted for $1.3 million, or 66.7%, of the increase. Goodwill and core deposit
amortization, as well as minority interest, in Mahopac, further increased other
operating expenses by approximately $382 thousand. Several new staff positions
at The Bank of Castile , as well as an increase in the Employee Stock Ownership
Plan and pension expenses, also contributed to the increase.
The provision for income taxes increased from $409,200 to $625,438 for the three
months ended September 30, 1998 and 1999, respectively. Letchworth's effective
tax rate increased slightly from 32.1% to 32.9% due mainly to the impact of the
Mahopac transaction.
Results of Operations - Nine Months Ended September 30, 1999 Compared to
Nine Months Ended September 30, 1998
Net income of $3,165,287 for the nine months ended September 30, 1999 represents
an increase of $725,891, or 29.76%, over the $2,439,396 earned during the same
period ended September 30, 1998. Diluted earnings per share was $.96 for the
nine months ended September 30, 1999. (See Exhibit 11 of this Quarterly Report
on Form 10-Q). This represents an increase from the $.73 per share figure for
the same period in 1998.
Net interest income was $12.6 million for the nine months ended September 30,
1999, up 39.42% from the $9.0 million earned during the nine months ended
September 30, 1998. Mahopac contributed $2.8 million of this increase. Most of
the remaining increase was attributable to
17
<PAGE>
increased income on loans and reduced interest expense on deposits at The Bank
of Castile.
The provision for loan losses, the charge to earnings for potential credit
losses associated with lending activities, was $380,977 for the nine months
ended September 30, 1999, up .72% from the $378,251 provision recorded during
the nine months ended September 30, 1998. Despite improved credit quality the
slight increase in the provision for loan losses in 1999 is reflective of the
increased loan volume. Gross charge-offs were $208,853 in the first nine month
period of 1999, as compared to $142,004 for the same period last year. The
inclusion of Mahopac's gross charge-offs accounts for $33,794 of the nine month
period increase.
Other operating income for the nine month period ended September 30,1999 was
$1,598,451 compared to $1,196,549 for the same period in 1998. Of the $401.9
thousand increase, Mahopac contributed $323.3 thousand. Increases in ATM
surcharges and other interchange income fees contributed most of the growth to
this area.
Other operating expense for the nine month period ended September 30, 1999, was
$9,230,868, which represented an increase of $2.9 million, or 45.59%, over the
$6,340,330 recorded for the same period in the prior year. Mahopac's other
operating expense accounted for $1.9 million of this increase. Goodwill and core
deposit amortization, as well as minority interest, in Mahopac, further
increased other operating expenses by approximately $488 thousand. The Bank of
Castile accounted for the other $512 thousand increase. Additional new staffing,
normal annual salary adjustments and bonus accruals accounted for approximately
$249 thousand of this increase. Increased pension, health insurance and other
benefits costs contributed another $22 thousand, and approximately $217 thousand
of additional expense was concentrated in audits & exams, telephone, debit card
expenses, NYCE charges, consulting fees and incentive fees for the new indirect
loan program.
The provision for income taxes was $1,408,337 for the nine months ended
September 30, 1999, up 32.04% from the $1,066,600 for the nine months ended
September 30, 1998. Letchworth's effective tax rate increased slightly from
30.4% for the nine months ended September 30, 1998, to 30.8% for the nine months
ended September 30, 1999.
18
<PAGE>
Interest Rate Sensitivity
The Company realizes income principally from the differential or spread between
the interest earned on loans, investments and other interest-earning assets and
the interest paid on deposits and borrowings. Loan volumes and yields, as well
as the volume of and rates on investments, deposits and borrowings, are affected
by market interest rates. Additionally, because of the terms and conditions of
many of our loan documents and deposit accounts, a change in interest rates
could also affect the duration of the loan portfolio and/or the deposit base,
which could alter our sensitivity to future changes in interest rates. As a
result, significant shifts up or down in interest rates could affect the
accuracy of previous made forward-looking statements. Based on model
simulations, a rising interest rate environment results in higher net income for
the Company. Conversely, decreasing rates result in declined earnings.
Impact Of The Year 2000
The Year 2000 issue concerns the potential impact of historic computer software
code that only utilizes two digits to represent the calendar year (e.g. "99" for
"1999"). The Company, similar to most financial services providers, is
significantly subject to the potential impact of the Year 2000 issue due to the
nature of financial information.
In May 1997, the Federal Financial Institutions Examination Council ("FFIEC")
issued an interagency statement to the chief executive officers of all federally
supervised financial institutions regarding Year 2000 project management
awareness. The FFIEC statement provided guidance to financial institutions,
providers of data services, and all examining personnel of the federal banking
agencies regarding the Year 2000 issue.
The Board of Directors of The Bank of Castile assigned responsibility for the
Year 2000 project to the standing Risk Committee with the Vice President,
Manager of Information Services as coordinator. At Mahopac, project
responsibility was assigned to a year 2000 Committee which is made up of the
Chief Financial Officer, Vice President of Deposit Operations and the MIS
Technology Department Manager. Furthermore, the five-step approach recommended
by the FFIEC was adopted as the project guideline: 1. Awareness; 2. Assessment;
3. Renovation; 4. Validation; and 5. Implementation.
Because the Company does not have any "in house" programming, but instead uses
the services of outside software packages, most of the process involved insuring
that these systems were compliant. The core processing system and item
processing systems were successfully tested for all test dates. Validations for
the non-critical processes were also completed. In the view of management, all
identified mission critical processes are currently Year 2000 ready at both The
Bank of Castile and Mahopac.
The Company, The Bank of Castile and Mahopac also initiated formal
communications with all of its significant suppliers, utility providers, and
customers to determine the extent to which the Company, The Bank of Castile or
Mahopac are vulnerable to those third parties' failure to remediate their own
Year 2000 issues to ascertain their readiness. However, the response of certain
third parties is beyond the control of the Company.
The Company developed a business continuation contingency plan to address
anticipated worst case scenarios which are beyond our control that may disrupt
normal operations. The Company is prepared to curtail credit availability to
customers identified as having material exposure to the Year 2000 issue.
19
<PAGE>
The Company is also carefully monitoring its liquidity position as part of its
contingency plan and believes it is adequately prepared to cover its anticipated
cash requirements.
Since all systems have been successfully tested for compliance, the Company
presently believes that the Year 2000 issue will not pose significant
operational problems or have significant impact on its financial condition,
results of operations or cash flows for either Letchworth, The Bank of Castile,
or Mahopac.
The Company has assumed a proactive approach to increase Year 2000 awareness and
compliance. In addition to multiple statements forwarded to all customers, the
Company has also have trained its loan officers to discuss Year 2000 issues with
its borrowers. Ongoing customer awareness programs are planned throughout the
balance of 1999 at both The Bank of Castile and Mahopac.
Year 2000 compliance costs incurred during the first half of 1999 totaled
approximately $220 thousand, the majority of which was related to equipment and
software. This figure does not include the implicit costs associated with the
reallocation of internal staff hours to Year 2000 project-related efforts. At
this time, management estimates no additional Year 2000 cash compliance costs.
Despite the Company's activities in regard to the Year 2000 issue at all its
operating units, there can be no assurance that partial or total systems
interruptions or the costs necessary to update hardware and software would not
have a material adverse effect upon the Company's business, financial condition,
results of operations, and business prospects.
20
<PAGE>
OTHER INFORMATION
Item 5. Other Information
On July 12, 1999, Castile Funding Corporation, a wholly-owned subsidiary of The
Bank of Castile, was incorporated in New York State under Section 402 of the
Business Corporation Law. Castile Funding Corporation ("CFC") was formed to
qualify as a real estate investment trust as defined in Section 856 of the
Internal Revenue Service Code of 1986, as amended from time to time (the
"Code"), that is "domestically controlled" for purposes of Section 897(h) of the
Code (a "REIT"). In connection therewith, The Bank of Castile capitalized CFC
with selected assets held in its loan portfolio, including $44.3 million of one
to four family fixed rate and adjustable rate mortgage loans, and $10.1 million
of commercial loans.
On July 12, 1999, Mahopac Funding Corporation, a wholly-owned subsidiary of The
Mahopac National Bank, was incorporated in New York State under Section 402 of
the Business Corporation Law. Mahopac Funding Corporation ("MFC") was formed to
qualify as a real estate investment trust as defined in Section 856 of the
Internal Revenue Service Code of 1986, as amended from time to time (the
"Code"), that is "domestically controlled" for purposes of Section 897(h) of the
Code (a "REIT"). In connection therewith, The Mahopac National Bank capitalized
MFC with selected assets held in its loan portfolio, including $44.3 million of
one to four family fixed rate and adjustable rate mortgage loans.
21
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits
3(a) Certificate of Incorporation of Registrant filed by the New York
Department of State on July 17, 1981, incorporated by reference to the
Registrant's Registration Statement on Form S-18 (Reg. No. 33-31149-NY), filed
with the commission on September 2, 1989 and wherein such Exhibit is designed
Exhibit 3(a).
3(b) Certificate of Amendment of Certificate of Incorporation of Registrant
filed by the New York Department of State on July 26, 1989, incorporated by
reference to the Registrant's Registration Statement on Form S-18 (Reg. No. 33-
31149-NY), filed with the Commission on September 2, 1989, and wherein such
Exhibit is designated Exhibit 3(b).
3(c) Certificate of Amendment of Certificate of Incorporation of Registrant
filed by the New York Department of State on May 2, 1990, incorporated by
reference to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1990 and filed with the Commission on August 9, 1990, and wherein
such Exhibit is designed Exhibit (4)b.
3(d) Certificate of Amendment of Certificate of Incorporation of Registrant
filed by the New York Department of State on May 15,1998, incorporated by
reference to the Registrant's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1998, and filed with the commission on August 13, 1998, and
wherein such exhibit is designated Exhibit 3(d).
3(e) Bylaws of Registrant, as amended by the stockholders of the Registrant at
a special meeting of stockholders on July 11, 1989, incorporated by reference to
the Registrant's Registration Statement on From S-18 (Reg. No. 33-31149-NY),
filed with the Commission on September 2, 1989 and wherein such Exhibit is
designated Exhibit 3(c).
4(a) Form of Common Stock Certificate of Registrant, incorporated by reference
to the Registrant's Amendment No. 1 to Form s-18 Registration Statement (Reg.
No. 33-31149-NY), filed with the Commission on October 31, 1989, and wherein
such Exhibit is designated Exhibit 4.
4(b) Letchworth Independent Bancshares Corporation Stock Option Plan of 1990
and form of Stock Option Agreement, incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990
and filed with the Commission on August 9, 1990, and wherein such Exhibit is
designated Exhibit 4.
22
<PAGE>
4(c) Letchworth Independent Bancshares Corporation Stock Option Plan of 1998,
and form of Stock Option Agreement, incorporated by reference to the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998 and filed with the Commission on November 11, 1998, and wherein such
Exhibit is designated Exhibit 4(c).
10(a) Agreement and Plan of Reorganization, dated as of July 30,1999, by and
between Registrant and Tompkins TrustCo, Inc., incorporated by reference to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
and filed with the Securities Exchange Commission on August 16, 1999, and
wherein such Exhibit is designated Exhibit 10(a).
10(b) Agreement and Plan of Merger of Registrant with and into Tompkins
TrustCo, Inc., dated as of July 30, 1999, by and between Registrant and Tompkins
TrustCo, Inc., incorporated by reference to the Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, and filed with the Securities
Exchange Commission on August 16, 1999, and wherein such Exhibit is designated
Exhibit 10(b).
10(c) Stock Option Agreement, dated as of July 30, 1999, by and between
Registrant and Tompkins TrustCo, Inc., incorporated by reference to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
and filed with the Securities Exchange Commission on August 16, 1999, and
wherein such Exhibit is designated Exhibit 10(c).
11 Computation of Basic and Diluted Earnings Per Share for the quarter and
nine months ended September 30, 1999 is presented on Exhibit 11 of this Report
on Form 10-Q.
(b). The Registrant filed a Current Report on Form 8-K on June 17, 1999, in
connection with its acquisition of a controlling interest in The Mahopac
National Bank. The requisite financial statements and pro forma financial
information required on the Form 8-K was filed on August 13, 1999, by an
amendment to the Form 8-K.
27 Financial Data Schedule
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
Date 11/12/99 /s/ James W. Fulmer
--------- ---------------------------------------------
James W. Fulmer
President & Chief Executive Officer
Date 11/12/99 /s/ Thomas J. Sykes
--------- ---------------------------------------------
Thomas J. Sykes
Treasurer & Chief Financial Officer
24
<PAGE>
LETCHWORTH INDEPENDENT BANCSHARES CORPORATION
---------------------------------------------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
September 30, 1999
------------------
Exhibit 11:
<TABLE>
<CAPTION>
Three Months Ended Nine Month Ended
September 30, 1999 Sept 30, 1999
----------------------------- -----------------------------
<S> <C> <C>
Income available to common shareholders $1,277,230 $3,165,287
Basic earnings per share
Weighted average shares outstanding 3,308,932 3,278,652
Basic earnings per share $ 0.39 $ 0.97
----------------------------- -----------------------------
Diluted earnings per share
Weighted average shares outstanding 3,308,932 3,278,652
Dilitive effect of:
Stock options 36,196 26,332
Adjusted weighted average shares
outstanding 3,345,128 3,304,984
Diluted earnings per share $ 0.38 $ 0.96
----------------------------- -----------------------------
</TABLE>
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,034
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 17,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 105,961
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 303,408
<ALLOWANCE> 4,127
<TOTAL-ASSETS> 472,126
<DEPOSITS> 416,335
<SHORT-TERM> 1,320
<LIABILITIES-OTHER> 3,290
<LONG-TERM> 11,603
0
0
<COMMON> 3,473
<OTHER-SE> 12,688
<TOTAL-LIABILITIES-AND-EQUITY> 472,126
<INTEREST-LOAN> 15,709
<INTEREST-INVEST> 3,252
<INTEREST-OTHER> 639
<INTEREST-TOTAL> 19,599
<INTEREST-DEPOSIT> 7,012
<INTEREST-EXPENSE> 7,012
<INTEREST-INCOME-NET> 12,587
<LOAN-LOSSES> 381
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 8,998
<INCOME-PRETAX> 4,574
<INCOME-PRE-EXTRAORDINARY> 4,574
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,165
<EPS-BASIC> 0.97
<EPS-DILUTED> 0.96
<YIELD-ACTUAL> 0
<LOANS-NON> 964
<LOANS-PAST> 2,698
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,126
<ALLOWANCE-OPEN> 3,888
<CHARGE-OFFS> 209
<RECOVERIES> 66
<ALLOWANCE-CLOSE> 4,127
<ALLOWANCE-DOMESTIC> 4,127
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
