SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter:
June 30, 1998
Commission File Number 0-13358
CAPITAL CITY BANK GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2273542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
217 North Monroe Street, Tallahassee, Florida 32301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(850) 671-0610
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days.
Yes __X___ No _____
At July 31, 1998, 8,848,627 shares of the Registrant's Common Stock, $.01 par
value, were outstanding
CAPITAL CITY BANK GROUP, INC.
FORM 10-Q INDEX
ITEM PART I. FINANCIAL INFORMATION PAGE NUMBER
1. Financial Statements 3
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
3. Qualitative and Quantitative Disclosure of
Market Risk 17
ITEM PART II. OTHER INFORMATION
1. Legal Proceedings Not Applicable
2. Changes in Securities and Use of Proceeds Not Applicable
3. Defaults Upon Senior Securities Not Applicable
4. Submission of Matters to a Vote of
Security Holders 19
5. Other Information Not Applicable
6. Exhibits and Reports on Form 8-K Not Applicable
Signatures 20
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)(1)
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1998 1997 1998 1997
<S>
INTEREST INCOME <C> <C> <C> <C>
Interest and Fees on Loans $17,247 $15,806 $33,857 $31,204
Investment Securities:
U. S. Treasury 447 543 815 1,097
U. S. Government Agencies/Corp. 677 1,254 1,489 2,544
States and Political Subdivisions 713 816 1,427 1,648
Other Securities 90 89 175 185
Funds Sold & Interest Bearing Deposits 759 357 1,530 616
------- ------- ------- -------
Total Interest Income 19,933 18,865 39,293 37,294
INTEREST EXPENSE
Deposits $ 7,037 $ 6,586 $13,810 $12,948
Short-Term Borrowings 514 476 1,051 886
Long-Term Borrowings 280 298 560 602
------- ------- ------- -------
Total Interest Expense 7,831 7,360 15,421 14,436
------- ------- ------- -------
Net Interest Income 12,102 11,505 23,872 22,858
Provision for Loan Losses 558 446 1,044 902
------- ------- ------- -------
Net Interest Income After Provision
for Loan Losses 11,544 11,059 22,828 21,956
------- ------- ------- -------
NONINTEREST INCOME
Service Charges on Deposit Accounts 2,025 2,041 3,966 4,054
Data Processing 988 937 1,840 1,737
Trust Fees 454 253 781 528
Securities Transactions 15 - 24 (2)
Other 2,162 1,621 4,013 2,985
------- ------- ------- -------
Total Noninterest Income 5,644 4,852 10,624 9,302
------- ------- ------- -------
NONINTEREST EXPENSE
Salaries and Employee Benefits 6,327 5,890 12,687 11,684
Occupancy, Net 795 776 1,580 1,481
Furniture and Equipment 1,225 1,139 2,393 2,424
Other 3,619 3,173 6,869 6,190
------- ------- ------- -------
Total Noninterest Expense 11,966 10,978 23,529 21,779
------- ------- ------- -------
Income Before Income Tax 5,222 4,933 9,923 9,479
Income Tax Expense 1,775 1,657 3,375 3,161
------- ------- ------- -------
NET INCOME $ 3,447 $ 3,276 $ 6,548 $ 6,318
======= ======= ======= =======
Basic Net Income Per Share $ .39 $ .38 $ .74 $ .73
====== ======= ====== =======
Diluted Net Income Per Share $ .39 $ .38 $ .74 $ .73
====== ======= ====== =======
Cash Dividends Per Share $ .11 $ .10 $ .22 $ .20
====== ======= ====== =======
Average Shares Outstanding 8,830,198 8,694,435 8,821,316 8,691,450
========= ========= ========= =========
(1) Prior period share and per share information have been restated to reflect a 3-for-2
stock split effective June 1, 1998.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(Dollars In Thousands, Except Share Data)(1)
<CAPTION>
June 30 December 31
1998 1997
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash and Due From Banks $ 63,963 $ 61,270
Funds Sold 60,589 52,519
Investment Securities, Available-for-Sale 139,412 148,514
Loans, Net of Unearned Interest 746,203 697,726
Allowance for Loan Losses (8,747) (8,322)
---------- ----------
Loans, Net 737,456 689,404
Premises and Equipment, Net 31,134 31,613
Intangibles 10,489 7,703
Other Assets 24,547 18,650
---------- ----------
Total Assets $1,067,590 $1,009,673
========== ==========
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 204,164 $ 191,797
Interest Bearing Deposits 679,378 643,015
---------- ----------
Total Deposits 883,542 834,812
Short-Term Borrowings 48,461 46,114
Long-Term Debt 15,800 15,896
Other Liabilities 12,936 12,401
---------- ----------
Total Liabilities 960,739 909,223
SHAREOWNERS' EQUITY
Preferred Stock, $.01 par value, 3,000,000
shares authorized, no shares outstanding - -
Common Stock, $.01 par value; 90,000,000
shares authorized; 8,848,624 shares outstanding
at June 30,1998 and 8,776,085 outstanding at
December 31, 1997 88 88
Additional Paid-In-Capital 8,328 6,507
Retained Earnings 97,893 93,288
Net Unrealized Gain on
Available-for-Sale Securities 542 567
---------- ----------
Total Shareowners' Equity 106,851 100,450
---------- ----------
Total Liabilities and Shareowners' Equity $1,067,590 $1,009,673
========== ==========
(1) Prior period share and per share data have been restated to reflect a 3-for-2
stock split effective June 1, 1998.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30
(Dollars in Thousands)
<CAPTION>
1998 1997
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 6,548 $ 6,318
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 1,044 902
Depreciation 1,590 1,579
Net Securities Amortization 385 340
Amortization of Intangible Assets 513 505
Gains in Sales on Investment Securities (24) (2)
Non-Cash Compensation 1,677 184
Net (Increase) Decrease in Interest
Receivable (270) 183
Net (Increase) Decrease in Other Assets (5,310) 1,426
Net Increase (Decrease) in Other
Liabilities 550 (343)
-------- --------
Net Cash Provided by Operating Activities 6,703 11,092
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities 34,567 26,055
Purchase of Investment Securities,
Available-for-Sale (25,864) (4,205)
Net Increase in Loans (4,659) (39,222)
Net Cash Received from Acquisition 7,022 -
Purchase of Premises & Equipment (967) (976)
Sales of Premises & Equipment 278 955
-------- --------
Net Cash Provided by (Used in)
Investing Activities 10,377 (17,393)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Decrease in Deposits (6,768) (13,643)
Net Increase in Short-Term Borrowings 2,347 1,317
Borrowing from Long-Term Debt 1,000 -
Repayment of Long-Term Debt (1,096) (1,088)
Dividends Paid (1,943) (1,739)
Issuance of Common Stock 143 1,048
------- -------
Net Cash Used in Financing Activities (6,317) (14,105)
-------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents 10,763 (20,406)
Cash and Cash Equivalents at Beginning of
Period 113,789 88,906
-------- --------
Cash and Cash Equivalents at End of Period $124,552 $ 68,500
======== ========
Supplemental Disclosure:
Interest Paid $ 14,379 $ 13,102
======== ========
Transfer of Loans to ORE $ 483 $ 3,696
======== ========
Income Tax Paid $ 3,252 $ 3,696
======== ========
</TABLE>
CAPITAL CITY BANK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) MANAGEMENT'S OPINION AND ACCOUNTING POLICIES
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of S-X and
S-K of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. Prior year financial
statements have been reformatted and/or amounts reclassified, as necessary,
to conform with the current year presentation, including the restatement of
share and per share data to reflect a 3-for-2 stock split effective
June 1, 1998.
In the opinion of management, the consolidated financial statements contain
all adjustments, which are those of a recurring nature, and disclosures
necessary to present fairly the financial position of the Company as of
June 30, 1998 and December 31, 1997, and the results of operations for the
three and six month periods ended June 30, 1998 and 1997, and cash flows for
the six month periods ended June 30, 1998 and 1997.
The Company and its subsidiaries follow generally accepted accounting
principles and reporting practices applicable to the banking industry.
The principles which materially affect its financial position, results of
operations and cash flows are set forth in Notes to Consolidated Financial
Statements which are included in the Company's 1997 Annual Report and
Form 10-K.
(2) INVESTMENT SECURITIES
The carrying value and related market value of investment securities at
June 30, 1998 and December 31, 1997 were as follows (dollars in thousands):
<TABLE>
June 30, 1998
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<CAPTION>
Available-For-Sale
<S> <C> <C> <C> <C>
U. S. Treasury $ 31,154 $ 50 $15 $ 31,189
U. S. Government Agencies
and Corporations 21,770 40 14 21,796
States and Political
Subdivisions 62,576 548 5 63,119
Mortgage-Backed Securities 17,952 256 11 18,197
Other Securities 5,104 7 - 5,111
-------- ---- --- --------
Total $138,556 $901 $45 $139,412
======== ==== === ========
</TABLE>
<TABLE>
December 31, 1997
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<CAPTION>
Available-For-Sale
<S> <C> <C> <C> <C>
U. S. Treasury $ 24,345 $ 42 $ 4 $ 24,383
U. S. Government Agencies
and Corporations 32,036 55 60 32,031
States and Political
Subdivisions 63,661 593 10 64,244
Mortgage-Backed Securities 22,644 326 48 22,922
Other Securities 4,933 1 - 4,934
-------- ------ ---- --------
Total $147,619 $1,017 $122 $148,514
======== ====== ==== ========
</TABLE>
(3) LOANS
The composition of the Company's loan portfolio at June 30, 1998 and
December 31, 1997 was as follows (dollars in thousands):
June 30, 1998 December 31, 1997
Commercial, Financial
and Agricultural $ 63,710 $ 53,888
Real Estate-Construction 40,846 45,563
Real Estate-Mortgage 495,923 456,499
Consumer 145,724 141,776
-------- --------
Loans, Net of Unearned Interest $746,203 $697,726
======== ========
(4) ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the six month
period ended June 30, 1998 and 1997, is as follows (dollars in thousands):
June 30,
1998 1997
Balance, Beginning of the Period $8,322 $8,179
Provision for Loan Losses 1,044 902
Recoveries on Loans Previously
Charged-Off 418 370
Loans Charged-Off (1,037) (1,003)
------ ------
Balance, End of Period $8,747 $8,448
====== ======
Impaired loans are primarily defined as all nonaccruing loans for the loan
categories which are included within the scope of SFAS 114. Selected
information pertaining to impaired loans is depicted in the table below
(dollars in thousands):
<TABLE>
June 30,
1998 1997
Impaired Loans: Valuation Valuation
Balance Allowance Balance Allowance
<CATION>
<S> <C> <C> <C> <C>
With Related Credit Allowance $2,972 $305 $ 218 $108
Without Related Credit Allowance 1,297 - 881 -
Average Recorded Investment
for the Period 4,680 * 1,650 *
Interest Income:
Recognized $ 48 $ 31
Collected $ 12 $ 28
The Company recognizes income on impaired loans primarily on the cash basis. Any change in the
present value of expected cash flows on impaired loans is recognized through the allowance for loan
losses.
</TABLE>
(5) DEPOSITS
The composition of the Company's interest bearing deposits at June 30, 1998
and December 31, 1997 was as follows (dollars in thousands):
June 30, 1998 December 31, 1997
NOW Accounts $102,881 $113,163
Money Market Accounts 74,612 79,010
Savings Deposits 89,641 80,476
Other Time Deposits 412,244 370,366
-------- --------
Total Interest Bearing Deposits $679,378 $643,015
======== ========
(6) ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statements of Financial
Accounting Standards "SFAS" No. 130, "Reporting Comprehensive Income".
Statement 130 provides new accounting and reporting standards for reporting
and displaying comprehensive income and its components in a full set of
general-purpose financial statements. The adoption of this standard did not
have a material impact on reported results of operations of the Company.
Effective February 1998, the Company adopted SFAS No. 132 "Employers
Disclosure about Pensions and Other Post-Retirement Benefits". Statement 132
standardizes the disclosure requirements for pension and other post-retirement
benefits and requires additional information on changes in the benefit
obligations and fair values of plan assets. The Statement suggests combined
formats for presentation of pension and other post-retirement benefit
disclosures. The adoption of this standard did not have a material impact on
reported results of operations of the Company.
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments of Hedging Activities". The statement establishes accounting and
reporting standards for derivative instruments (including certain derivative
instruments imbedded in other contracts). The statement is effective for
fiscal years beginning after June 15, 1999. The adoption of this standard
is not expected to have a material impact on reported results of operations
of the Company.
(7) COMPREHENSIVE INCOME
Total comprehensive income is defined as net income and all other changes in
equity which, for Capital City Bank Group, consists solely of changes in
unrealized gains (losses) on available-for-sale securities. The Company
reported total comprehensive income, net of tax, for the three month periods
ended June 30, 1998 and 1997, was as follows (dollars in thousands):
<TABLE>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1998 1997 1998 1997
<CAPTION>
<S> <C> <C> <C> <C>
Net Income $3,447 $3,276 $6,548 $6,318
Other Comprehensive Income, Net of Tax
Unrealized Gains (Losses) on Securities:
Unrealized Gains (Losses) on Securities
During the Period 21 620 49 147
Less: Reclassification Adjustments for
Gains (Losses) Included in Net Income 5 0 24 (2)
------ ------ ----- ------
Total Unrealized Gains (Losses)
On Securities 16 620 25 149
Other Comprehensive Income, Net of Tax $3,463 $3,896 $6,573 $6,467
====== ====== ====== ======
These changes reflect a market value decrease for the second quarter ended June 30, 1998, and an increase in investment
securities available-for-sale for the comparable quarter in 1997.
</TABLE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Data)(1)
1998 1997 1996
Second First Fourth Third Second First Fourth Third
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 19,933 $ 19,360 $ 19,008 $ 19,362 $ 18,865 $ 18,429 $ 18,850 $ 19,019
Interest Expense 7,831 7,590 7,302 7,402 7,360 7,076 7,651 7,785
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Net Interest Income 12,102 11,770 11,706 11,960 11,505 11,353 11,199 11,234
Provision for
Loan Loss 558 486 437 449 446 456 606 334
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Net interest Income
After Provision
for Loan Loss 11,544 11,284 11,269 11,511 11,059 10,897 10,593 10,900
Noninterest Income 5,644 4,986 4,895 4,394 4,852 4,450 4,497 4,436
Noninterest Expense 11,966 11,569 12,012 10,974 10,978 10,801 10,740 10,885
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Income Before
Provision for
Income Taxes 5,222 4,701 4,152 4,931 4,933 4,546 4,350 4,451
Provision for
Income Taxes 1,775 1,600 1,299 1,664 1,657 1,504 1,384 1,405
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Net Income $ 3,447 $ 3,101 $ 2,853 $ 3,267 $ 3,276 $ 3,042 $ 2,966 $ 3,046
========== ========== ========== ========== ======== ======== ========== ==========
Net Interest
Income (FTE) $ 12,445 $ 12,131 $ 12,059 $ 12,366 $ 11,929 $ 11,780 $ 11,676 $ 11,638
Per Common Share:
Net Income Basic $ .39 $ .35 $ .33 $ .37 $ .38 $ .35 $ .35 $ .35
Net Income Diluted .39 .35 .32 .37 .38 .35 .35 .35
Dividends Declared .11 .11 .11 .10 .10 .10 .10 .09
Book Value 12.08 11.77 11.45 11.23 10.91 10.55 10.33 10.00
Market Price(2):
High 32.67 32.67 27.33 23.50 21.50 21.33 14.00 14.00
Low 29.75 29.25 23.00 20.83 19.33 14.00 14.00 12.67
Close 31.38 31.67 27.00 23.17 20.83 20.16 14.00 14.00
Selected Average
Balances:
Total Assets $1,046,842 $1,038,806 $1,001,661 $1,003,170 $999,888 $999,837 $1,029,891 $1,026,111
Earning Assets 938,970 933,052 898,383 905,722 902,970 896,130 926,169 923,828
Loans, Net of Unearned 741,914 731,204 700,158 704,222 687,280 678,730 672,672 651,752
Total Deposits 872,087 862,875 828,239 838,732 842,847 839,959 858,301 874,603
Total Shareowners'
Equity 104,580 102,393 98,920 96,448 92,375 90,621 87,580 84,788
Common Equivalent
Shares 8,830 8,812 8,757 8,745 8,694 8,688 8,616 8,613
Ratios:
ROA 1.32% 1.21% 1.13% 1.29% 1.31% 1.23% 1.15% 1.18%
ROE 13.22% 12.28% 11.45% 13.44% 14.22% 13.61% 13.47% 14.20%
Net Interest
Margin (FTE) 5.31% 5.27% 5.33% 5.42% 5.30% 5.32% 5.03% 5.02%
(1) All share and per share data have been adjusted to reflect the three-for-two stock split effective June 1,
1998.
(2) Prior to February 3, 1997, there was not an established trading market for the common stock.
</TABLE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following analysis discusses important factors affecting the financial
condition and results of operations of Capital City Bank Group, Inc., for the
three and six month periods ended June 30, 1998 and 1997. This report contains
forward-looking statements within the meaning of the federal securities laws
such as interest rate sensitivity projections, revenue and expense trends, and
long-term objectives. The forward looking statements in this report are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements.
The following discussion sets forth the major factors that have affected the
Company's financial condition and results of operations and should be read in
conjunction with the accompanying financial statements. All prior period
share and per share data have been adjusted to reflect a three-for-two stock
split effective June 1, 1998. The year-to-date averages used in this report
are based on daily balances for each respective period.
The Financial Review is divided into three subsections entitled Earnings
Analysis, Financial Condition, and Liquidity and Capital Resources.
Information therein should facilitate a better understanding of the major
factors and trends which affect the Company's earnings performance and
financial condition, and how the Company's performance during 1998 compares
with prior years. Throughout this section, Capital City Bank Group, Inc.,
and its subsidiary, collectively, are referred to as "CCBG" or the "Company."
On January 31, 1998, the Company completed its purchase and assumption
transaction with First Federal Savings & Loan Association of Lakeland, Florida
("First Federal-Florida") and acquired five of First Federal-Florida's branch
facilities which included loans and deposits. The Company paid a deposit
premium of $3.3 million, or 6.33%, and assumed $55 million in deposits and
purchased loans equal to $44 million. Four of the five offices were merged
into existing offices of Capital City Bank. The deposit premium is being
amortized over fifteen years.
RESULTS OF OPERATIONS
Net Income
Net income was $3.4 million, or $.39 per basic and diluted share for the
second quarter of 1998, a per share increase of 2.6% over the $3.3 million,
or $.38 per basic and diluted share for the comparable period in 1997. Net
income was $6.5 million, or $.74 per basic and diluted share for the six
months ended June 30, 1998, a per share increase of 1.4% over the $6.3 million,
or $.73 per basic and diluted share for comparable period in 1997. Operating
revenue, which includes net interest income and noninterest income, increased
$2.3 million, or 7.3%, over the first half of 1997, and was the most
significant factor contributing to the increase in earnings.
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<CAPTION>
<S> <C> <C> <C> <C>
Interest and Dividend Income $19,933 $18,865 $39,293 $37,294
Taxable Equivalent Adjustment(1) 343 424 704 851
------- ------- ------- -------
Interest Income (FTE) 20,276 19,289 39,997 38,145
Interest Expense 7,831 7,360 15,421 14,436
------- ------- ------- -------
Net Interest Income (FTE) 12,445 11,929 24,576 23,709
Provision for Loan Losses 558 446 1,044 902
Taxable Equivalent Adjustment 343 424 704 851
------- ------- ------- -------
Net Int. Inc. After Provision 11,544 11,059 22,828 21,956
Noninterest Income 5,638 4,852 10,624 9,302
Noninterest Expense 11,960 10,978 23,529 21,779
------- ------- ------- -------
Income Before Income Taxes 5,222 4,933 9,923 9,479
Income Taxes 1,775 1,657 3,375 3,161
------- ------- ------- -------
Net Income $ 3,447 $ 3,276 $ 6,548 $ 6,318
======= ======= ======= =======
Percent Change 5.22% 17.76% 3.64% 18.12%
Return on Average Assets(2) 1.32% 1.31% 1.27% 1.27%
Return on Average Equity(2) 13.22% 14.22% 12.76% 13.92%
(1) Computed using a statutory tax rate of 35%
(2) Annualized
</TABLE>
Net Interest Income
Second quarter taxable equivalent net interest income increased $516,000, or
4.3%, over the comparable quarter in 1997. Taxable equivalent net interest
income for the first half of 1997 increased $867,000, or 3.7%, over the first
half of 1997. The increase in both periods is attributable to a higher level
of earning assets, reflecting growth in the loan portfolio. Loans purchased
in the First Federal-Florida transaction account for a significant portion of
the total growth in the average loan portfolio. Table I on page 16 provides
a comparative analysis of the Company's average balances and interest rates.
For the three and six month periods ended June 30, 1998, taxable-equivalent
interest income increased $987,000, or 5.1%, and $1.9 million, or 4.9%,
respectively, over the comparable prior year periods. Interest income for
both periods has increased due to growth in the loan portfolio. Additionally,
in the second quarter the Company recognized $400,000 in accrued but
uncollected interest income associated with the resolution of a non-performing
loan. Loans which represent the Company's highest yielding asset, increased
(on average) $53.6 million, or 7.8% and represented 78.7% of total earning
assets for the six months ended June 30, 1998 versus 75.9% for the comparable
period in 1997. This favorable shift in the mix of earning assets led to a
6 basis point increase in the yield on earning assets which rose from 8.55%
during the first six months of 1997 to 8.61% for the comparable period in
1998. The improvement in yield attributable to loan growth was partially
offset by a higher level of liquidity.
Interest expense for the three and six month periods ended June 30, 1998,
increased $471,000, or 6.4%, and $985,000, or 6.8%, respectively, over the
comparable prior year periods. The increase in both periods is primarily due
to the assumption of deposits from First Federal-Florida. Certificates of
deposit, which generally represent a higher cost of funds than other deposit
offerings, increased as a percent of average deposits from 45.7% in the first
half of 1997 to 46.7% in 1998. This shift in deposit mix (attributable to
the mix of acquired deposits) led to a 16 basis point increase in the average
rate paid on interest bearing liabilities, which rose from 4.08% in the first
half of 1997 to 4.24% in 1998.
The Company's interest rate spread (defined as the average federal taxable
equivalent yield on earning assets less the average rate paid on interest
bearing liabilities) declined from 4.47% in the first half of 1997 to 4.37% in
the comparable period for 1998 due to the higher cost of funds. The Company's
net interest margin percentage (defined as taxable-equivalent net interest
income divided by average earning assets) was 5.31% in the first half of 1997,
versus 5.29% in the first half of 1998. The decrease in margin represents the
higher costs of funds.
Provision for Loan Losses
The provision for loan losses was $558,000 and $1.0 million, respectively, for
the three and six month periods ended June 30, 1998, compared to $446,000 and
$902,000 for the comparable periods in 1997. Net charge-offs were up from the
first half of 1997, but remain at low levels relative to the size of the loan
portfolio. Nonperforming loans increased $3.2 million, or 195.8%, during the
first six months of 1998. As compared to year-end, the reserve for loan losses
increased slightly to $8.7 million, and represented 1.17% of total loans versus
1.19%.
For a discussion of the Company's nonperforming loans, see the section entitled
"Financial Condition."
Based on current economic conditions, the low level of nonperforming loans and
net charge-offs, it is management's opinion that the reserve for loan losses as
of June 30, 1998, is sufficient to provide for losses inherent in the portfolio
as of that date.
Charge-off activity for the respective periods is set forth below.
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Net Charge-Offs $331,000 $270,000 $619,000 $633,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .18% .16% .17% .19%
Noninterest Income
Noninterest income increased $792,000, or 16.3%, in the second quarter of 1998
versus the comparable quarter for 1997, and $1.3 million, or 14.2%, for the six
months ended June 30, 1998 versus the comparable period for 1997. All major
categories except service charges reflected an increase.
Service charges on deposit accounts declined $16,000, or 0.8%, and $88,000, or
2.2%, respectively, over the comparable three and six month periods for 1997.
The decline for the first six months of 1998, reflects a reduction in the
number of accounts, higher compensating balances and an increase in charged-off
deposit accounts.
Data processing revenues increased $51,000, or 5.4%, and $103,000, or 5.9%,
respectively, over the comparable three and six month periods in 1997. The
increase reflects higher processing revenues associated with both government
agencies and third party banks.
Revenue from trust activities increased $201,000, or 79.4%, and $253,000, or
47.9%, respectively, over the comparable three and six month periods in 1997.
At June 30, 1998, assets under management totaled $246.3 million compared to
185.7 million at year-end.
Other income increased $544,000, or 33.4%, and $1.0 million, or 34.4%,
respectively, for the three and six month periods ended June 30, 1998 over the
comparable prior year periods. Gains on the sale of residential real estate
loans increased $283,000, reflecting the increased volume of loans sold to the
secondary market due to the higher level of fixed rate loan production during
1998. The Company recorded a $226,000 gain on the sale of other real estate
during the second quarter. ATM fees, interchange commissions, credit life
commissions and VISA cardholder fees account for the remaining favorable
variance.
Noninterest income as a percent of average assets was 2.05% and 1.88%,
respectively, for the first half of 1998 and 1997.
Noninterest Expense
Noninterest expense increased $1.0 million, or 9.0%, and $1.8 million, or 8.0%,
respectively, over the comparable three and six month periods in 1997. The
increase reflects higher costs in all major expense categories.
Compensation expense increased $437,000, or 7.4%, and $1.0 million, or 8.6%,
respectively, over the comparable three and six month periods of 1997,
reflecting annual raises and an increase in full-time equivalent employees of
31. During the first quarter of 1998, the Company added staff to capitalize on
competitive opportunities arising as a result of mergers of other commercial
banks within its market.
Occupancy expense, including premises, furniture, fixtures and equipment
increased $105,000, or 5.5%, and $68,000, or 1.7%, respectively, over the
comparable three and six month periods in 1997. The increase is primarily
attributable increased costs for maintenance and repairs offset partially by a
reduction in other FF&E costs.
Other noninterest expense increased $446,000, or 14.1%, and $679,000, or 11.0%,
respectively, over the comparable three and six month periods in 1997. The
increase was attributable to professional fees of $326,000, advertising of
$167,000, printing and supplies cost of $115,000, and intangible amortization
of $75,000. Professional fees reflect costs associated with completion of an
extensive review of the Bank's operations. The increase in advertising is
attributable to greater product development and market development.
Annualized net noninterest expense (noninterest income minus noninterest
expense, net of intangibles) as a percent of average assets was 2.40% in the
first half of 1998 versus 2.43% for the first half of 1997. The Company's
efficiency ratio (noninterest expense, net of intangibles, expressed as a
percent of the sum of taxable-equivalent net interest income plus noninterest
income) was 65.27% in the first half of 1998 compared to 64.65% for the
comparable period in 1997. The increase in the efficiency ratio reflects
rising costs as noted above.
Income Taxes
The provision for income taxes increased $118,000, or 7.1%, during the second
quarter and $214,000, or 6.8%, during the first six months of 1998, relative to
the comparable prior year periods. The Company's effective tax rate for the
first half of 1998 was 34.0% versus 33.4% for the comparable period in 1997.
The increase in the effective tax rate is attributable to a decrease in tax
exempt income as a percent of taxable income in the first half of 1998 as
compared to the first half of 1997.
FINANCIAL CONDITION
Average balances for the first half of 1998 reflect the acquisition of First
Federal-Florida which was completed on January 31, 1998. Table I on Page 16
presents average balances for the three and six month periods ended June 30,
1998 and 1997.
The Company's average assets increased to $1.04 billion at the end of the
second quarter of 1998 from $999.9 million in the first half of 1997. Average
earning assets were $936.0 million for the six months ended June 30, 1998
versus $899.6 million for the comparable period in 1997. The most significant
shift in the mix of earning assets occurred through growth in the loan
portfolio. The increase in the loan portfolio reflects the First
Federal-Florida acquisition and internal loan growth. Maturities in the
investment portfolio were used to fund loan growth and improve overall
liquidity.
Average loans increased $53.6 million, or 7.8%, over the comparable period in
1997. Loan growth has occurred in all of the portfolios, with the most
significant increase in real estate. Loans as a percent of average earning
assets increased to 78.7% for the second quarter of 1998, compared to 75.9% for
the second quarter of 1997.
The investment portfolio is a significant component of the Company's operations
and, as such, it functions as a key element of liquidity and asset/liability
management. As of June 30, 1998, the average investment portfolio declined
$49.7 million, or 25.7%, from the comparable period in 1997. The decline in
the investment portfolio was used to fund loan growth and provide additional
liquidity. Securities in the available-for-sale portfolio are recorded at fair
value and unrealized gains and losses associated with these securities are
recorded, net of tax, as a separate component of shareowners' equity. At June
30, 1998, shareowners' equity included a net unrealized gain of $542,000
compared to a net gain of $567,000 at December 31, 1997.
At June 30, 1998, the Company's nonperforming loans were $4.6 million versus
$1.6 million at year-end 1997 and $1.9 million at June 30, 1997. The net
increase in 1998 is attributable to two relationships. Specific reserves have
been established for anticipated losses. As a percent of nonperforming loans,
the allowance for loan losses represented 182% at June 30, 1998 versus 512% at
December 31, 1997 and 442% at June 30, 1997. Nonperforming loans include
nonaccruing and restructured loans. Other real estate, which includes property
acquired either through foreclosure or by receiving a deed in lieu of
foreclosure, was $1.8 million at June 30, 1998 versus $1.2 million at December
31, 1997 and $2.0 million at June 30, 1997. The ratio of nonperforming assets
to loans plus other real estate was .88% at June 30, 1998 compared to .41% at
December 31, 1997 and .54% at June 30, 1997.
Average deposits increased 3.1% from the $841.3 million for the first half of
1997, to $867.5 million for the first half of 1998. The growth in deposits is
attributable to the acquisition of First Federal-Florida. During 1998, interest
bearing deposits have continued to decline due to the anticipated run-off from
prior acquisitions and strong competition. For the first half of 1998, average
certificates of deposit represented 46.7% of total deposits compared to 45.7%
for the comparable prior year period. This shift in mix has contributed to a
slight compression in the Company's net interest margin which averaged 5.29% in
the first half of 1998 versus 5.31% in 1997.
The ratio of average noninterest bearing deposits to total deposits was 22.0%
for the first half of 1998 compared to 21.7% for the first half of 1997. For the
same periods, the ratio of average interest bearing liabilities to average
earning assets was 78.4% and 79.3%, respectively. The change in both ratios is
primarily attributable to the increase in noninterst bearing deposits.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity, for a financial institution, is the availability of funds to meet
increased loan demand and/or excessive deposit withdrawals. Management has
implemented a financial structure that provides ready access to sufficient
liquid funds to meet normal transaction requirements, take advantage of
investment opportunities and cover unforeseen liquidity demands. In addition to
core deposits, sources of funds available to meet liquidity demands for the
subsidiary banks include federal funds sold, near-term loan and investment
maturities, including the available-for-sale investment portfolio, and the
ability to purchase federal funds through established lines of credit with
correspondent banks, including the Federal Home Loan Bank.
Additionally, the parent company maintains a $25 million revolving line of
credit. As of June 30, 1998 there was $12.0 million outstanding under this
facility. During the first half of 1998, principal reductions on the line of
credit totaled $1.0 million.
The Company's equity capital was $106.9 million as of June 30, 1998, compared to
$100.5 million as of December 31, 1997. Management continues to monitor its
capital position in relation to its level of assets with the objective of
maintaining a "well capitalized" position. The leverage ratio was 9.0% at June
30, 1998 versus 9.2% at December 31, 1997. Further, the Company's risk-adjusted
capital ratio of 14.65% significantly exceeds the 8.0% minimum requirement under
the risk-based regulatory guidelines.
State and federal regulations as well as the Company's long-term debt agreement
place certain restrictions on the payment of dividends by both the Company and
its Group banks. At June 30, 1998, these regulations and covenants did not
impair the Company's (or its subsidiary's) ability to declare and pay dividends
or to meet other existing obligations.
During the first six months of 1998, shareowners' equity increased $6.4 million,
or 12.9%, on an annualized basis. Growth in equity during the first six months
was positively impacted by net income of $6.5 million and stock issuances of
$1.8 million. Dividends paid during the first six months totaled $1.9 million,
or $.22 per share.
The Company's common stock had a book value of $12.08 per share at June 30, 1998
compared to $11.45 at December 31, 1997. Pursuant to the Company's stock
repurchase program adopted in 1989, the Company has repurchased 790,740 shares
(split adjusted) of its common stock. In the first half of 1998, there were no
shares repurchased.
YEAR 2000 COMPLIANCE
In 1996, Capital City Bank Group initiated the process of preparing its computer
systems and applications for the Year 2000. This process involves modifying or
replacing certain hardware and software maintained by the Company as well as
communicating with external service providers to ensure they are taking the
necessary actions required to remedy their Year 2000 issues. The Company
expects to have substantially all of the system and application changes
completed by the end of 1998 . The Company believes that its level of
preparedness is appropriate and testing will be completed by year-end.
While it is not possible, at present, to give an accurate estimate of the cost
of the work, these costs may be material to the Company's results of operations
in one or more fiscal quarters or years, but are not expected to have a material
adverse impact on the long-term results of operations, liquidity, or
consolidated financial position of the Company.
The expected completion date of the project is based upon the Company's current
best estimates
<TABLE>
TABLE I
AVERAGE BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
FOR THREE MONTHS ENDED JUNE 30
1998 1997
Balance Interest Rate Balance Interest Rate
<CAPTION>
<S>
ASSETS <C> <C> <C> <C> <C> <C>
Loans, Net of Unearned Interest(1) $ 741,914 $17,274 9.34% $687,280 $15,842 9.24%
Taxable Investment Securities 80,032 1,214 6.09% 119,414 1,886 6.34%
Tax-Exempt Investment Securities(2) 62,610 1,029 6.57% 70,168 1,204 6.87%
Funds Sold 54,414 759 5.59% 26,108 357 5.47%
---------- ------- ---- -------- ------- ----
Total Earning Assets 938,970 20,276 8.66% 902,970 19,289 8.57%
Cash & Due From Banks 49,842 44,635
Allowance for Loan Losses (8,617) (8,362)
Other Assets 66,647 60,645
---------- --------
TOTAL ASSETS $1,046,842 $999,888
========== ========
LIABILITIES
NOW Accounts $ 105,358 $ 557 2.12% $100,006 $ 418 1.68%
Money Market Accounts 76,463 541 2.84% 80,732 620 3.08%
Savings Accounts 88,541 472 2.14% 86,976 436 2.01%
Other Time Deposits 411,087 5,467 5.33% 389,801 5,112 5.26%
---------- ------- ---- -------- ------ ----
Total Int. Bearing Deposits 681,449 7,037 4.14% 657,515 6,586 4.02%
Funds Purchased 37,859 498 5.28% 27,976 377 5.40%
Other Borrowed Funds 985 16 6.37% 6,490 99 6.17%
Long-Term Debt 16,315 280 6.88% 17,475 298 6.83%
---------- ------- ---- -------- ------ ----
Total Int. Bearing Liabilities 736,608 7,831 4.26% 709,456 7,360 4.16%
Noninterest Bearing Deposits 190,638 185,332
Other Liabilities 15,016 12,725
---------- --------
TOTAL LIABILITIES 942,262 907,513
SHAREOWNERS' EQUITY
Common Stock 88 87
Surplus 7,867 5,435
Retained Earnings 96,625 86,853
---------- --------
TOTAL SHAREOWNERS' EQUITY 104,580 92,375
---------- --------
TOTAL LIABILITIES & EQUITY $1,046,842 $999,888
========== ========
Interest Rate Spread 4.40% 4.41%
==== ====
Net interest Income $12,445 $11,929
======= =======
Net Interest Margin 5.31% 5.30%
==== ====
</TABLE>
<TABLE>
FOR SIX MONTHS ENDED JUNE 30
1998 1997
Balance Interest Rate Balance Interest Rate
<CAPTION>
<S>
ASSETS <C> <C> <C> <C> <C> <C>
Loans, Net of Unearned Interest(1) $ 736,588 $33,918 9.29% $683,035 $31,279 9.23%
Taxable Investment Securities 80,719 2,479 6.19% 122,020 3,826 6.32%
Tax-Exempt Investment Securities(2) 62,844 2,070 6.59% 71,203 2,424 6.81%
Funds Sold 55,876 1,530 5.52% 23,316 616 5.31%
---------- ------- ---- -------- ------- ----
Total Earning Assets 936,027 39,997 8.61% 899,574 38,145 8.55%
Cash & Due From Banks 49,820 47,392
Allowance for Loan Losses (8,504) (8,318)
Other Assets 65,497 61,210
---------- --------
TOTAL ASSETS $1,042,840 $999,858
========== ========
LIABILITIES
NOW Accounts $ 107,618 $ 1,070 2.01% $105,011 $ 923 1.77%
Money Market Accounts 76,704 1,080 2.84% 80,310 1,199 3.01%
Savings Accounts 87,131 912 2.11% 89,075 887 2.01%
Other Time Deposits 404,997 10,748 5.35% 384,722 9,939 5.21%
---------- ------- ---- -------- ------- ----
Total Int. Bearing Deposits 676,450 13,810 4.12% 659,118 12,948 3.96%
Funds Purchased 40,229 1,023 5.13% 29,866 750 5.06%
Other Borrowed Funds 1,023 28 5.45% 6,386 136 4.30%
Long-Term Debt 16,167 560 6.98% 17,753 602 6.83%
---------- ------- ---- -------- ------- ----
Total Int. Bearing Liabilities 733,869 15,421 4.24% 713,123 14,436 4.08%
Noninterest Bearing Deposits 191,058 182,208
Other Liabilities 14,421 13,029
---------- --------
TOTAL LIABILITIES 939,348 908,360
SHAREOWNERS' EQUITY
Common Stock 88 87
Surplus 7,650 5,353
Retained Earnings 95,754 86,058
---------- --------
TOTAL SHAREOWNERS' EQUITY 103,492 91,498
---------- --------
TOTAL LIABILITIES & EQUITY $1,042,840 $999,858
========== ========
Interest Rate Spread 4.37% 4.47%
==== ====
Net Interest Income $24,576 $23,709
======= =======
Net Interest Margin 5.29% 5.31%
==== ====
(1) Average balances include nonaccrual loans. Interest income includes fees on loans of
approximately $723,000 and $1.5 million, for the three and six months ended June 30, 1998,
versus $480,000 and $1.5 million, for the comparable periods ended June 30, 1997.
(2) Interest income includes the effects of taxable equivalent adjustments using a 35% tax rate.
</TABLE>
Item 3. Quantitative and Qualitative Disclosure for Market Risk
Overview
Market risk management arises from changes in interest rates, exchange rates,
commodity prices and equity prices. The Company has risk management policies to
monitor and limit exposure to market risk. Capital City Bank Group does not
actively participate in exchange rates, commodities or equities. In asset and
liability management activities, policies are in place that are designed to
minimize structural interest rate risk.
Interest Rate Risk Management
The normal course of business activity exposes Capital City Bank Group to
interest rate risk. Fluctuations in interest rates may result in changes in the
fair market value of the Company's financial instruments, cash flows and net
interest income. Capital City Bank Group's asset/liability management process
manages the Company's interest rate risk.
The financial assets and liabilities of the Company are classified as other-
than-trading. An analysis of the other-than-trading financial components,
including the fair values, are presented in Table II on page 18. This table
presents the Company's consolidated interest rate sensitivity position as of
June 30, 1998 based upon certain assumptions as set-forth in the notes to the
Table. The objective of interest rate sensitivity analysis is to measure the
impact on the Company's net interest income due to fluctuations in interest
rates. The asset and liability fair values presented in Table II may not
necessarily be indicative of the Company's interest rate sensitivity over an
extended period of time.
The Company is currently liability sensitive which generally indicates that in a
period of rising interest rates the net interest margin will be adversely
impacted as the velocity and/or volume of liabilities being repriced exceeds
assets. However, as general interest rates rise or fall, other factors such as
current market conditions and competition may impact how the Company responds to
changing rates and thus impact the magnitude of change in net interest income.
Table II
<TABLE>
FINANCIAL ASSETS AND LIABILITIES MARKET RISK ANALYSIS(1)
(Dollars in Thousands)
<CAPTION>
Other Than Trading Portfolio June 30, 1998 Market
Year 1 Year 2 Year 3 Year 4 Year 5 Beyond Total Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Fixed Rate $ 33,243 $ 23,619 $ 40,542 $ 42,643 $ 38,531 $ 80,889 $259,467 $261,617
Average Interest Rate 9.26% 10.26% 9.82% 9.13% 8.89% 8.08% 8.99%
Floating Rate(2) 386,422 46,682 25,340 10,786 11,405 6,101 486,736 480,769
Average Interest Rate 8.94% 7.58% 8.58% 8.07% 8.75% 9.44% 8.78%
Investment Securities(3)
Fixed Rate 65.614 19,338 14,444 8,416 5,467 11,714 124,993 $124,993
Average Interest Rate 6.16% 5.72% 6.47% 6.70% 6.59% 6.45% 6.21%
Floating Rate 0 10,047 3,866 0 0 506 14,419 14,419
Average Interest Rate 0 6.48% 6.34% 0 0 6.29% 6.43%
Other Earning Assets
Fixed Rates 0 0 0 0 0 0 0 0
Average Interest Rates 0 0 0 0 0 0 0
Floating Rates 55,800 0 0 0 0 4,790 60,589 60,589
Average Interest Rates 5.35% 0 0 0 0 4.62% 5.49%
Total Financial Assets $541,079 $99,686 $ 84,192 $ 61,845 $ 55,403 $103,999 $946,204 952,387
Average Interest Rates 8.28% 7.75% 8.71% 8.61% 8.63% 7.81% 8.25%
Deposits(4)
Fixed Rate Deposits $354,870 $ 38,266 $ 14,365 $ 2,852 $ 1,892 $ 0 $412,245 414,170
Average Interest Rates 5.21% 5.68% 5.58% 5.47% 5.74% 0 5.27%
Floating Rate Deposits 267,133 0 0 0 0 0 267,133 267,133
Average Interest Rates 2.18% 0 0 0 0 0 2.18%
Other Interest Bearing
Liabilities
Fixed Rate Debt 235 239 243 247 251 2,585 3,800 3,801
Average Interest Rate 6.14% 6.14% 6.14% 6.14% 6.14% 6.14% 6.14%
Floating Rate Debt 60,461 0 0 0 0 0 60,461 60,461
Average Interest Rate 5.32% 0 0 0 0 0 5.32%
Total Financial Liabilities $682,699 $ 38,504 $ 14,608 $ 3,099 $ 2,143 $ 2,585 $743,639 $745,565
Average interest Rate 4.04% 5.68% 5.59% 5.52% 5.79% 6.14% 4.17%
(1) Based upon expected cash-flows, unless otherwise indicated.
(2) Based upon a combination of expected maturities and repricing opportunities.
(3) Based upon contractual maturity, except for callable and floating rate securities, which are based on expected
maturity and weighted average life, respectively.
(4) Savings, NOW and money market accounts can be repriced at any time, therefore, all such balances are included as
floating rate deposits in 1998. Other time deposit balances are classified according to maturity.
</TABLE>
PART II. OTHER INFORMATION
Items 1-3.
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Capital City Bank Group, Inc. was held on
April 24, 1998. Proxies for the meeting were solicited pursuant to Regulation
14A under the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's solicitations. The following summarizes all matters
voted upon at this meeting.
1. The following directors were elected for terms expiring as noted. These
individuals served on the Board of Directors prior to the Annual Meeting. The
number of votes cast were as follows:
For terms to expire at Against/ Abstentions/
the 2001 annual meeting: For Withheld Broker Non-Votes
Cader B. Cox, III 4,935,743 0 0
William G. Smith, Jr. 4,935,743 0 0
2. The shareowners ratified the selection of Arthur Andersen LLP as the
independent auditors for the Company for 1998. The number of votes cast were as
follows:
Against/ Abstentions/
For Withheld Broker Non-Votes
4,935,248 130 365
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Not applicable
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the period ended June
30, 1998.
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 Chief Financial Officer hereunto duly authorized.
CAPITAL CITY BANK GROUP, INC.
(Registrant)
/s/ J. Kimbrough Davis
J. Kimbrough Davis
Executive Vice President and
Chief Financial Officer
Date: August 13, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000726601
<NAME> CAPITAL CITY BANK GROUP, INC.
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-1-1998
<PERIOD-END> JUN-30-1998
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<CASH> 51977
<INT-BEARING-DEPOSITS> 4100
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<INVESTMENTS-CARRYING> 139885
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<LOANS> 737484
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0
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</TABLE>
