SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
June 30, 1997 0-11733
CITY HOLDING COMPANY
(Exact name of registrant as specified in its charter)
West Virginia 55-0619957
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3601 MacCorkle Avenue, Southeast
Charleston, West Virginia 25304
(Address of principal offices)
Registrant's telephone number, including area code: (304) 925-6611
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes xx No
------ ------
The number of shares outstanding of the issuer's common stock as of August 11,
1997:
Common Stock, $2.50 Par Value -- 6,071,327 shares
THIS REPORT CONTAINS 34 PAGES.
EXHIBIT INDEX IS LOCATED ON PAGE 32 .
<PAGE>
Index
City Holding Company and Subsidiaries
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -- June 30, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Income (unaudited) -- Six
months ended June 30, 1997 and 1996 and the three
months ended June 30, 1997 and 1996
Consolidated Statements of Changes in Stockholders'
Equity (unaudited) -- Six months ended June 30, 1997
and 1996
Consolidated Statements of Cash Flows (unaudited)
-- Six months ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements (unaudited) --
June 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PAGE 2 OF 34
<PAGE>
PART I. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Item I. JUNE 30 DECEMBER 31
1997 1996
------------ ------------
ASSETS (unaudited)
<S> <C>
Cash and due from banks $ 45,011,000 $ 47,351,000
Federal funds sold 532,000 413,000
Securities available for sale, at fair value 182,393,000 122,944,000
Investment securities (approximate market values:
December 31, 1996 -- $41,826,000) 0 40,978,000
Loans:
Gross loans 768,553,000 704,775,000
Unearned income (8,150,000) (6,793,000)
Allowance for possible loan losses (7,864,000) (7,281,000)
---------- -----------
NET LOANS 752,539,000 690,701,000
Loans held for sale 110,342,000 92,472,000
Bank premises and equipment 30,848,000 30,025,000
Accrued interest receivable 8,317,000 7,510,000
Other assets 17,702,000 16,416,000
------------ -----------
TOTAL ASSETS $ 1,147,684,000 $ 1,048,810,000
============= =============
LIABILITIES
Deposits:
Noninterest-bearing $ 138,037,000 $ 118,976,000
Interest-bearing 763,050,000 709,694,000
----------- -----------
TOTAL DEPOSITS 901,087,000 828,670,000
Short-term borrowings 101,832,000 90,298,000
Long-term debt 39,400,000 34,250,000
Other liabilities 17,882,000 16,219,000
------------- -----------
TOTAL LIABILITIES 1,060,201,000 969,437,000
STOCKHOLDERS' EQUITY
Preferred stock, par value $25 a share:
Authorized-500,000 shares; none issued
Common stock, par value $2.50 a share: authorized
20,000,000 shares; issued
6,082,456 and 5,598,912 shares as of June 30, 1997 and December 31, 1996,
respectively, including 11,130 and 11,341 shares in treasury at June 30, 1997
and December 31, 1996, respectively. 15,207,000 13,998,000
Capital surplus 35,795,000 35,426,000
Retained earnings 36,214,000 30,246,000
Cost of common stock in treasury (310,000) (300,000)
Net unrealized gain on securities available for sale,
net of deferred income taxes 577,000 3,000
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 87,483,000 79,373,000
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,147,684,000 $ 1,048,810,000
============== ==============
</TABLE>
See notes to consolidated financial statements
PAGE 3 OF 34
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
June 30
1997 1996
---------- ----------
<S> <C>
INTEREST INCOME
Interest and fees on loans $ 40,563,000 $ 37,318,000
Interest and dividends on securities:
Taxable 4,456,000 4,227,000
Tax-exempt 974,000 1,032,000
Other interest income 59,000 19,000
--------------- -----------
TOTAL INTEREST INCOME 46,052,000 42,596,000
INTEREST EXPENSE
Interest on deposits 15,851,000 14,587,000
Interest on short-term borrowings 3,479,000 3,749,000
Interest on long-term debt 1,252,000 782,000
------------ ------------
TOTAL INTEREST EXPENSE 20,582,000 19,118,000
NET INTEREST INCOME 25,470,000 23,478,000
PROVISION FOR POSSIBLE LOAN LOSSES 938,000 561,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 24,532,000 22,917,000
OTHER INCOME
Net securities gains 11,000 63,000
Service charges 2,086,000 1,784,000
Mortgage loan servicing fees 5,352,000 520,000
Other 2,560,000 1,654,000
------------- ------------
TOTAL OTHER INCOME 10,009,000 4,021,000
OTHER EXPENSES
Salaries and employee benefits 13,991,000 10,456,000
Net occupancy expense 4,006,000 2,876,000
Other 7,195,000 6,053,000
---------- ----------
TOTAL OTHER EXPENSES 25,192,000 19,385,000
INCOME BEFORE INCOME TAXES 9,349,000 7,553,000
INCOME TAXES 3,345,000 2,526,000
---------- ----------
NET INCOME $ 6,004,000 $ 5,027,000
========== ==========
Net income per common share $ .99 $ .90
========== ==========
Average common shares outstanding 6,069,192 5,586,170
========== ==========
</TABLE>
See notes to consolidated financial statements
PAGE 4 OF 34
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED
June 30
1997 1996
---------- ----------
<S> <C>
INTEREST INCOME
Interest and fees on loans $ 21,907,000 $ 19,015,000
Interest and dividends on securities:
Taxable 2,289,000 1,974,000
Tax-exempt 488,000 500,000
Other interest income 3,000 14,000
--------------- -----------
TOTAL INTEREST INCOME 24,687,000 21,503,000
INTEREST EXPENSE
Interest on deposits 8,147,000 7,354,000
Interest on short-term borrowings 2,217,000 1,670,000
Interest on long-term debt 660,000 411,000
------------ ------------
TOTAL INTEREST EXPENSE 11,024,000 9,435,000
NET INTEREST INCOME 13,663,000 12,068,000
PROVISION FOR POSSIBLE LOAN LOSSES 550,000 290,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 13,113,000 11,778,000
OTHER INCOME
Net securities (losses) gains (17,000) 2,000
Service charges 1,138,000 945,000
Mortgage loan servicing fees 2,570,000 293,000
Other 1,161,000 868,000
------------- ------------
TOTAL OTHER INCOME 4,852,000 2,108,000
OTHER EXPENSES
Salaries and employee benefits 7,324,000 5,202,000
Net occupancy expense 2,038,000 1,506,000
Other 3,717,000 3,164,000
---------- ----------
TOTAL OTHER EXPENSES 13,079,000 9,872,000
INCOME BEFORE INCOME TAXES 4,886,000 4,014,000
INCOME TAXES 1,711,000 1,448,000
----------- ----------
NET INCOME $ 3,175,000 $ 2,566,000
========== ==========
Net income per common share $ .52 $ .46
========== ==========
Average common shares outstanding 6,069,161 5,586,093
========== ==========
</TABLE>
See notes to consolidated financial statements
PAGE 5 OF 34
<PAGE>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
CITY HOLDING COMPANY AND SUBSIDIARIES
Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
UNREALIZED
GAIN/(LOSS)
SECURITIES TOTAL
COMMON CAPITAL RETAINED AVAILABLE TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE STOCK EQUITY
----- ------- -------- -------- ----- -----
<S> <C>
Balances
at December 31, 1996 $ 13,998,000 $ 35,426,000 $ 30,246,000 $ 3,000 ($ 300,000) $ 79,373,000
Net income 6,004,000 6,004,000
Cash dividends
declared ($.36/share) (2,186,000) (2,186,000)
Change in unrealized gain/(loss),
net of income taxes of $370,000 555,000 555,000
Exercise of 2,627 stock options 7,000 58,000 65,000
Sale of 2,511 shares of treasury stock 13,000 67,000 80,000
Purchase of 2,300 shares of treasury
stock (77,000) (77,000)
Acquisition of subsidiary 1,202,000 298,000 2,150,000 19,000 3,669,000
------------ ------------ ------------ ------------ ------------ ------------
Balances
at June 30, 1997 $ 15,207,000 $ 35,795,000 $ 36,214,000 $ 577,000 ($ 310,000) $ 87,483,000
============ ============ ============ ============ ============ ============
</TABLE>
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
UNREALIZED
GAIN/(LOSS)
SECURITIES TOTAL
COMMON CAPITAL RETAINED AVAILABLE TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE STOCK EQUITY
----- ------- -------- -------- ----- ------
<S> <C>
Balances
at December 31, 1995 $ 12,730,000 $ 25,942,000 $ 34,432,000 $ 395,000 ($ 360,000) $ 73,139,000
Net income 5,027,000 5,027,000
Cash dividends
declared ($.31/share) (1,727,000) (1,727,000)
Changes in unrealized
gain/(loss), net of income
taxes of $755,000 (1,132,000) (1,132,000)
------------ ------------ ------------ ------------ ------------ ------------
Balances
at June 30, 1996 $ 12,730,000 $ 25,942,000 $ 37,732,000 ($ 737,000) ($ 360,000) $ 75,307,000
============ ============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements
PAGE 6 OF 34
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
CITY HOLDING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
JUNE 30
1997 1996
---- ----
<S> <C>
OPERATING ACTIVITIES
Net Income $6,004,000 $5,027,000
Adjustments to reconcile net income to net cash
used in operating activities:
Net amortization 493,000 430,000
Provision for depreciation 2,261,000 1,613,000
Provision for loan losses 938,000 561,000
Realized securities gains (11,000) (63,000)
Loans originated for sale (58,357,000) (59,563,000)
Purchases of loans held for sale (301,971,000) (541,519,000)
Proceeds from loans sold 343,004,000 560,532,000
Realized gains on loans sold (546,000) (478,000)
Increase in accrued interest receivable (517,000) (428,000)
Increase in other assets (2,011,000) (681,000)
Increase in other liabilities 1,424,000 1,199,000
--------- -------------
NET CASH USED IN OPERATING ACTIVITIES (9,289,000) (33,370,000)
INVESTING ACTIVITIES
Proceeds from sales of securities available for sale 17,134,000 33,825,000
Proceeds from maturities of securities available for sale 20,095,000 24,236,000
Purchases of securities available for sale (44,425,000) (32,554,000)
Proceeds from maturities of securities 1,863,000 130,352,000
Purchases of securities 0 (122,979,000)
Net increase in loans (36,702,000) (10,292,000)
Net cash acquired in acquisitions 9,126,000 0
Purchases of premises and equipment (1,940,000) (7,235,000)
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (34,849,000) 15,353,000
FINANCING ACTIVITIES
Net increase (decrease) in noninterest bearing deposits 4,349,000 (1,475,000)
Net increase in interest-bearing deposits 23,443,000 20,571,000
Net increase in short-term borrowings 11,093,000 7,090,000
Proceeds from long-term-debt 5,150,000 4,200,000
Exercise of stock options 65,000 0
Purchases of treasury stock (77,000) 0
Proceeds from sales of treasury stock 80,000 0
Cash dividends paid (2,186,000) (1,727,000)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 41,917,000 28,659,000
------------ -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,221,000) 10,642,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 47,764,000 28,460,000
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 45,543,000 $ 39,102,000
============= ============
</TABLE>
See notes to consolidated financial statements
PAGE 7 OF 34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements, which are
unaudited, include all the accounts of City Holding Company (the Parent Company)
and its wholly owned subsidiaries (collectively, the Company). All material
intercompany transactions have been eliminated. The consolidated financial
statements include all adjustments which, in the opinion of management, are
necessary for a fair presentation of the results of operations and financial
condition for each of the periods presented. Such adjustments are of a normal
recurring nature. The results of operations for the six months ended June 30,
1997, are not necessarily indicative of the results of operations that can be
expected for the year ending December 31, 1997. The Company's accounting and
reporting policies conform with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Such policies require management to make estimates and
develop assumptions that affect the amounts reported in the consolidated
financial statements and related footnotes. Actual results could differ from
management's estimates. Certain amounts in the unaudited consolidated financial
statements have been reclassified. Such reclassifications had no effect on
operating results in any period presented. For further information, refer to the
consolidated financial statements and footnotes thereto included in the City
Holding Company annual report on Form 10- K for the year ended December 31,
1996.
PAGE 8 OF 34
<PAGE>
NOTE B - ACQUISITIONS
On January 24, 1997, the Company consummated its acquisition of
the Old National Bank of Huntington in Huntington, West Virginia (Old National).
The merger involved the exchange of 480,917 shares of the Company's common stock
for all of the outstanding shares of Old National. This transaction was
accounted for under the pooling of interests method of accounting. However, due
to the immateriality of the impact of this transaction to the Company's
consolidated financial statements, prior period financial statements have not
been restated.
NOTE C - PENDING ACQUISITION
On January 8, 1997, City National Bank, a wholly-owned
subsidiary, signed a Letter of Intent to acquire RMI, Ltd., an insurance agency
designed to market insurance products and services to select corporate and
individual clients. It is anticipated that the transaction will be accounted for
under the purchase method of accounting in the third quarter of 1997. The
acquisition, subject to the negotiation of a definitive acquisition agreement,
would have less than a 1% impact on total assets and net income reported in the
Company's second quarter 1997 financial statements. As a result, proforma
information has not been included for the information provided herein. A
director of one of the Company's subsidiaries is the President and current owner
of RMI, Ltd.
NOTE D - INCOME TAXES
The consolidated provision for income taxes is based upon
financial statement earnings. The effective tax rate for the six months ended
June 30, 1997, of 35.78% varied from the statutory federal income tax rate
primarily due to state income taxes and the tax effects of nontaxable interest
income and the amortization of goodwill.
PAGE 9 OF 34
<PAGE>
NOTE E - INVESTMENT RECLASSIFICATION
In June 1997, the Company reclassified its entire
held-to-maturity securities portfolio to the available-for-sale classification.
The securities transferred consisted of investment securities with approximate
amortized cost and market value of $46,520,000 and $46,781,000, respectively.
This action was taken by the Company to provide management more flexibility in
managing the Company's liquidity and interest rate risk.
NOTE F - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are various
commitments and contingent liabilities, such as commitments to extend credit and
standby letters of credit, that are not included in the consolidated financial
statements. These commitments approximated $91,850,000 at June 30, 1997. These
arrangements, consisting principally of unused lines of credit issued in the
normal course of business, have credit risks essentially the same as that
involved in extending loans to customers and are subject to the Company's
standard credit policies. Standby letters of credit, which total $2,755,000,
have historically expired unfunded.
NOTE G - NEW ACCOUNTING PRONOUNCEMENTS
On January 1, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities", which requires that
entities recognize the financial and servicing assets it controls and the
liabilities it has incurred and derecognize financial assets when control has
been surrendered in accordance with the criteria provided in the Statement. The
adoption of SFAS No. 125 did not have a material impact on the Company's
financial position or results of operations during 1997. The company is further
evaluating the impact it will have in 1998.
PAGE 10 OF 34
<PAGE>
The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share," (SFAS No. 128)
which establishes new standards for computing and presenting earnings per share.
SFAS No. 128 is effective for all financial statements issued subsequent to
December 15, 1997. The basic and diluted earnings per share computed under SFAS
No. 128 are not anticipated to be materially different from earnings per common
share presented herein.
NOTE H - LONG-TERM BORROWINGS
Long-term debt consists of a $35,000,000 revolving line of
credit of the Parent Company with a variable rate based on the lesser of the
adjusted LIBOR rate plus 1.875% per annum or the lender's base rate less .25%
per annum (7.5625% at June 30, 1997) due on December 31, 1997. As of June 30,
1997, the outstanding balance was equal to $29,400,000. Interest on this
obligation is payable quarterly, and the Parent Company has pledged the common
stock of each of its wholly-owned banking subsidiaries as collateral for the
revolving credit loan. Management intends to refinance this loan according to
the provisions provided in the agreement.
Additionally, two banking subsidiaries maintain long-term
financing from the Federal Home Loan Bank (FHLB) in the form of Long-Term LIBOR
Floaters as follows:
Amount Amount Interest Maturity
Available Outstanding Rate Date
- ---------------------------------------------------------------
$5,000,000 $5,000,000 5.29% December 2002
5,000,000 5,000,000 5.29 December 2002
PAGE 11 OF 34
<PAGE>
NOTE I - SUBSEQUENT EVENT
On July 3, 1997, the Company consolidated its Pennsylvania
mortgage operations into a central West Virginia location and sold substantially
all of the assets of City Mortgage Corporation to a third party.
PAGE 12 OF 34
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This form 10-Q may include forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are identified by phrases such
as the Company "expects" or "anticipates" and words of similar effect. The
Company's actual results may differ materially from those projected. Factors
that could cause such a difference include, among others: changes in interest
rates and economic and other market conditions generally and in the Company's
principal markets; competition for origination and servicing of mortgage loans,
particularly the types of loans purchased by the Company through its whole loan
purchasing program; disruption of the Company's participation in its whole loan
purchasing program; and changes in regulations and government policies affecting
banks and their subsidiaries, including changes in monetary policies.
HIGHLIGHTS
FINANCIAL POSITION
Total assets increased $98.9 million or approximately 9.4%
during the first six months of 1997. Net loans increased $61.8 million or 9.0%.
Loans held for sale, consisting primarily of loans received through the
Company's participation in a whole loan purchasing program, increased $17.9
million or 19.3%. As of June 30, 1997, program loans owned by the Company had an
outstanding principal balance of approximately $67.5 million. See LOAN PORTFOLIO
for further discussion. The Company earned interest income of approximately
$6,209,000 on program loans during the six months ended June 30, 1997. See NET
INTEREST
PAGE 13 OF 34
<PAGE>
INCOME for further discussion. The increase in loans held for sale was funded
primarily by an increase in deposits and short-term borrowings of $72.4 million
and $11.5 million, respectively. Total stockholders' equity increased $8.1
million during the first six months of 1997 primarily due to the Company's $3.7
million acquisition of Old National and retained net profits.
QUARTER ENDED JUNE 30, 1997, COMPARED TO QUARTER ENDED JUNE 30, 1996.
The Company reported net income of $3,175,000 for the three
months ended June 30, 1997 compared to net income of $2,566,000 for the quarter
ended June 30, 1996. This increase of $609,000, or 23.73%, was primarily due to
an increase of $2,763,000 in the Company's total other income (excluding
securities transactions) during the second quarter of 1997 as compared to the
same period of 1996. This increase is attributable to an additional $2.3 million
in mortgage loan servicing fees generated by the Company's mortgage servicing
division, City Mortgage Services.
Non-interest expenses increased $3,207,000 or 32.49% during
the second quarter of 1997 as compared to the same period of 1996, primarily due
to the Company's expansion of its mortgage servicing division. City Mortgage
Services incurred $2.2 million in expenses, which includes $1.3 million in
personnel costs. In addition, 1997 non-interest expenses include $474,000 in
expenses incurred by Old National. Because prior periods were not restated for
this acquisition, no expenses for this new subsidiary are included in the 1996
results.
Net income for the second quarter also benefited from an
increase of $1,595,000 in the Company's net interest income during the second
quarter of 1997 as compared to the same period of 1996. See NET INTEREST INCOME
for further discussion. Earnings per share were $.52 and $.46 for the second
quarter of 1997 and 1996, respectively.
PAGE 14 OF 34
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997, COMPARED TO SIX MONTHS ENDED JUNE
30, 1996.
The Company reported net income of $6,004,000 for the six
months ended June 30, 1997 compared to net income of $5,027,000 for the six
months ended June 30, 1996. This increase of $977,000 or 19.44%, was primarily
due to an increase of $6,040,000 in the Company's total other income (excluding
securities transactions) during the first six months of 1997 as compared to the
same period of 1996. This increase is attributable to an additional $4.8 million
in mortgage loan servicing fees and $557,000 of originated mortgage servicing
rights. Non-interest expenses increased $5,807,000 or 30.0% during the first six
months of 1997 as compared to the same period of 1996, primarily due to the
Company's expansion of its mortgage servicing division. City Mortgage Services
incurred $4.2 million in expenses, which includes $2.5 million in personnel
costs and $239,000 in expenses related to equipment. In addition, non-interest
expenses include $802,000 in expenses incurred by Old National with no expenses
for this new subsidiary included in the 1996 results.
Net income for the first six months also benefitted from an
increase of $1,992,000 in the Company's net interest income during the first six
months of 1997 as compared to the same period of 1996. Earnings per share were
$.99 and $.90 for the six months ended June 30, 1997 and 1996, respectively.
SELECTED RATIOS
The return on average assets (ROA) for the second quarter of
1997 was 1.07% compared to .96% in the second quarter of 1996. The return on
average shareholder's equity (ROE) for the second quarter of 1997 was 14.79%
compared to 13.61% ROE for the second
PAGE 15 OF 34
<PAGE>
quarter of 1996. For the six months of 1997, ROA was 1.05% compared to .95% for
the six months ended 1996. ROE was 14.10% and 13.44% for the first six months of
1997 and 1996, respectively.
The dividend payout ratio of 34.62% for the quarter ended June
30, 1997 represents an increase of 2.73% from the dividend payout ratio of
33.70% for the quarter ended June 30, 1996. The dividend payout ratio was 36.36%
and 34.44% for the six months ended June 30, 1997 and 1996, respectively. Since
1988, the Company has paid dividends on a quarterly basis, and expects to
continue to do so in the future.
LOAN PORTFOLIO
The composition of the Company's loan portfolio is presented
in the following table:
LOAN PORTFOLIO BY TYPE
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
---- ----
<S> <C>
Commercial, financial and
agricultural $ 238,255 $ 224,267
Real Estate-Mortgage 344,390 312,421
Real Estate-Construction 28,927 25,964
Installment and other 156,981 142,123
Unearned Income (8,150) (6,793)
--------- ---------
TOTAL $ 760,403 $ 697,982
========= =========
Loans Held for Sale
Program Loans $ 67,502 $ 37,043
Loans Originated for Sale 42,840 55,429
--------- ---------
TOTAL $ 110,342 $ 92,472
========= =========
</TABLE>
The Company grants loans to customers generally within the
market areas of its subsidiaries. There have been no significant changes in the
Company's loan policy or credit standards. The Company continues to shift its
marketing efforts more towards direct loan
PAGE 16 OF 34
<PAGE>
business. There are no significant concentrations of credit and speculative or
highly leveraged transactions are insignificant. Also, in order to increase the
repricing frequency of the loan portfolio, the Company has significantly
increased its portfolio of variable rate commercial and residential mortgage
loans.
In November 1996, the Company restructured its whole loan
purchasing program and began purchasing the loans directly from loan
originators. As a result of this restructuring, the Company currently earns the
stated note rate of the loans (a weighted average of 13.59% at June 30, 1997)
during the 30 to 90 days that the loans typically are held by the Company. Prior
to restructuring, the Company received interest income on the loans pursuant to
established loan purchasing agreements with rate sharing provisions.
ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES
The following table summarizes the Company's risk elements for
the periods ending June 30, 1997 and December 31, 1996. The Company's coverage
ratio of nonperforming assets and potential problem loans continues to be strong
at 108% as of June 30, 1997.
With the increased return on investment earned under the
restructured whole loan purchasing program, there is also an increase in the
risk of loss due to delinquencies and uncollectibility. As a result, management
has increased its 1997 provision for possible loan losses to provide for
potentially uncollectible loans inherent in the pools of loans acquired in this
program.
Management is of the opinion that the allowance for loan
losses is adequate to provide for probable future losses inherent in the
portfolio.
PAGE 17 OF 34
<PAGE>
RISK ELEMENTS
(in thousands)
Six Months
Ended Year Ended
June 30 December 31
1997 1996
---- ----
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period $ 7,281 $ 6,566
Charge-offs (809) (1,375)
Recoveries 244 412
------- -------
Net charge-offs (565) (963)
Provision for loan possible losses 938 1,678
Balance of acquired subsidiary 210 0
------- -------
Balance at end of period $ 7,864 $ 7,281
======= =======
AS A PERCENT OF AVERAGE TOTAL LOANS
Net charge-offs 0.08% 0.14%
Provision for possible loan losses 0.13% 0.25%
Allowance for loan losses 1.06% 1.09%
June 30 December 31
1997 1996
---- ----
NON -PERFORMING ASSETS
Other real estate owned $ 1,080 $ 1,054
Non-accrual loans 2,537 1,734
Accruing loans past due 90 days
or more 3,046 2,674
Restructured loans 368 235
------ ------
Total Non-performing Assets $ 7,031 $ 5,697
POTENTIAL PROBLEM LOANS $ 221 $ 235
AS A PERCENT OF NON-PERFORMING ASSETS
AND POTENTIAL PROBLEM LOANS
Allowance for loan losses 108.44% 122.74%
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
AS A PERCENT OF AVERAGE TOTAL LOANS 0.41% 0.40%
PAGE 18 OF 34
<PAGE>
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Company's cash and cash equivalents, represented by cash
and due from banks and overnight federal funds sold, is a product of its
operating, investing and financing activities. These activities are set forth in
the City Holding Company Consolidated Statements of Cash Flows included
elsewhere herein. Cash was used in operating activities in each period
presented, primarily for loans originated for sale and purchases of loans held
for sale. Net cash was used in investing activities during the second quarter of
1997 due to funding the Company's loan growth. Net cash was provided by
investing activities during the second quarter of 1996 due primarily to maturing
investment securities. The net cash provided by financing activities in the
respective periods is a result of an increase in interest-bearing deposits. In
the second quarter of 1997, financing activities also provided cash due to the
increase in short-term borrowings to fund the loan growth.
The Company seeks to maintain a strong liquidity position to
reduce interest rate risk, which is the susceptibility of assets and liabilities
to decline in value as a result of changes in general market interest rates. The
Company minimizes this risk through asset and liability management, where the
goal is to optimize earnings while managing interest rate risk. The Company
measures this interest rate risk through interest sensitivity gap analysis as
illustrated in the following table. At June 30, 1997, the one year period shows
a negative gap (liability sensitive) of $317 million. This analysis is a "static
gap" presentation and movements in deposit rates offered by the Company's
subsidiary banks lag behind movements in market rates. Such time lags affect the
repricing frequency of many items on the Company's balance sheet. Accordingly,
the sensitivity of deposits to changes in market rates may differ significantly
from the related
PAGE 19 OF 34
<PAGE>
contractual terms. The table is first presented without adjustment for expected
repricing behavior. Then, as presented in the "management adjustment" line,
these balances have been notionally distributed over the first three periods to
reflect those portions of such accounts that are expected to reprice fully with
market rates over the respective periods. The distribution of the balances over
the repricing periods represents an aggregation of such allocations by each of
the affiliate banks, and is based upon historical experience with their
individual markets and customers. Management expects to continue the same
pricing methodology in response to market rate changes; however, management
adjustments may change as customer preferences, competitive market conditions,
liquidity, and loan growth change. Also presented in the management adjustment
line are loan prepayment assumptions which may differ from the related
contractual term of the loans. These balances have been distributed over the
four periods to reflect those loans that are expected to be repaid in full prior
to their maturity date. After management adjustments, the table shows a negative
gap in the one year period of $98 million. A negative gap position is
advantageous when interest rates are falling because interest-bearing
liabilities are being repriced at lower rates and in greater volume, which has a
positive effect on net interest income. Consequently, the Company has
experienced a decline in its net interest margin during the past year and is
somewhat vulnerable to a rapid rise in interest rates during 1997. These
declines in net interest margin did not translate into declines in net interest
income because of increases in the volume of interest-earning assets.
The Company's net interest margin is effected by a number of
factors, including economic conditions generally, the level of the Company's
participation in its whole loan purchasing program, Federal Reserve Board
economic policies, demand for loans and deposits,
PAGE 20 OF 34
<PAGE>
and competition with other financial institutions. Changes in any of these
factors could reduce the Company's net interest margin.
There are no known trends, demands, commitments or
uncertainties that have resulted or are reasonably likely to result in material
changes in liquidity.
INTEREST RATE SENSITIVITY GAPS
(in thousands)
<TABLE>
<CAPTION>
1 to 3 3 to 12 1 to 5 Over 5
Months Months Years Years Total
------ ------ ----- ----- -----
<S> <C>
ASSETS
Gross loans $ 176,407 $ 112,990 $ 381,376 $ 95,243 $ 766,016
Loans held for sale 110,342 0 0 0 110,342
Securities 21,899 31,764 99,285 29,445 182,393
Federal funds sold 532 0 0 0 532
---------- ---------- ---------- ---------- ----------
Total interest earning assets $ 309,180 $ 144,754 $ 480,661 $ 124,688 $1,059,283
---------- ---------- ---------- ---------- ----------
LIABILITIES
Savings and NOW Accounts 349,217 0 0 0 349,217
All other interest bearing deposits 100,406 180,547 132,319 561 413,833
Short term and other borrowings 101,832 0 0 0 101,832
Long term borrowings 39,400 0 0 0 39,400
---------- ---------- ---------- ---------- ----------
Total interest bearing liabilities $ 590,855 $ 180,547 $ 132,319 $ 561 $ 904,282
---------- ---------- ---------- ---------- ----------
Interest sensitivity gap ($ 281,675) ($ 35,793) $ 348,342 $ 124,127 $ 155,001
---------- ---------- ---------- ---------- ----------
Cumulative sensitivity gap ($ 281,675) ($ 317,468) $ 30,874 $ 155,001
========== ========== ========== ==========
Management adjustments $ 304,163 ($ 85,091) ($ 207,681) ($ 11,391)
========== ========== ========== ==========
Cumulative management adjusted gap $ 22,488 ($ 98,396) $ 42,265 $ 155,001
========== ========== ========== ==========
</TABLE>
The table above includes various assumptions and estimates by management as to
maturity and repricing patterns. Future interest margins will be impacted by
balances and rates which are subject to change periodically throughout the year.
PAGE 21 OF 34
<PAGE>
CAPITAL RESOURCES
As a bank holding company, City Holding Company is subject to
regulation by the Federal Reserve Board under the Bank Holding Company Act of
1956. In January 1989, the Federal Reserve published risk-based capital
guidelines in final form which are applicable to bank holding companies. Such
guidelines define items in the calculation of risk-weighted assets. At June 30,
1997, the regulatory minimum ratio of qualified total capital to risk-weighted
assets (including certain off-balance-sheet items, such as standby letters of
credit) is 8 percent. At least half of the total capital is to be comprised of
"Tier 1 capital", or the Company's common stockholders' equity, and minority
interest in consolidated subsidiary, net of intangibles. The remainder ("Tier 2
capital") may consist of certain other prescribed instruments and a limited
amount of loan loss reserves.
In addition, the Federal Reserve Board has established minimum
leverage ratio (Tier 1 capital to quarterly average tangible assets) guidelines
for bank holding companies. These guidelines provide for a minimum ratio of 3
percent for bank holding companies that meet certain specified criteria,
including that they have the highest regulatory rating. All other bank holding
companies will be required to maintain a leverage ratio of 3 percent plus an
additional cushion of a least 100 to 200 basis points. The guidelines also
provide that banking organizations experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant reliance on intangible
assets.
The following table presents comparative capital ratios and
related dollar amounts of capital for the Company:
PAGE 22 OF 34
<PAGE>
Dollars in Thousands
June 30 December 31
1997 1996
---- ----
Capital Components
Tier 1 risk-based capital $79,683 $72,157
Total risk-based capital 87,547 79,439
Capital Ratios
Tier 1 risk-based 10.17% 10.20%
Total risk-based 11.17% 11.23%
Leverage 6.75% 6.58%
Regulatory Minimum
Tier 1 risk-based (dollar/ratio) $31,351/4.00% $28,290/4.00%
Total risk-based (dollar/ratio) 62,703/8.00% 56,579/8.00%
Leverage (dollar/ratio) 47,291/4.00% 43,872/4.00%
The strong capital position of the Company is indicative of
management's emphasis on asset quality and a history of retained net income. The
ratios enable the Company to continually pursue acquisitions and other growth
opportunities. Improvements in operating results and a consistent dividend
program, coupled with an effective management of credit risk, have been, and
will be, the key elements in maintaining the Company's present capital position.
The Company does not anticipate any material capital
expenditures in 1997. The continued expansion of the Company's Operations Center
and mortgage loan servicing division will be funded by the Company's long-term
debt. See NOTE H for further discussion. Earnings from subsidiary bank
operations are expected to remain adequate to fund payment of stockholders'
dividends and internal growth. In management's opinion, subsidiary banks have
the capability to upstream sufficient dividends to meet the normal cash
requirements of the Company.
PAGE 23 OF 34
<PAGE>
NET INTEREST INCOME
Net interest income, on a fully federal tax-equivalent basis,
improved from the second quarter of 1996 to the second quarter of 1997 by
approximately $1,589,000 due to an increase in net earning assets. Net yield on
earning assets increased between the respective periods from 4.98% to 5.00%.
Earning asset yields increased 18 basis points (100 basis points equal one
percent) to 8.96%, and the cost of interest-bearing liabilities increased 25
basis points to 4.61%. The $523,000 decrease in net interest income due to a
change in the rate, as shown in the following table, was coupled with a
$2,112,000 increase in net interest income due to a change in the volume. The
major component of this favorable volume change was increased average loans.
Net interest income, on a fully federal tax-equivalent basis,
improved from the six months ended June 30, 1996 to the six months ended June
30, 1997 by approximately $1,962,000 due to an increase in net earning assets.
Net yield on earning assets increased between periods from 4.84% to 4.85%, as
earning asset yields remained the same at 8.70%, and the cost of interest
bearing liabilities increased 3 basis points to 4.45%. The $285,000 increase in
net interest income due to a change in the rate, as shown in the following
table, was coupled with a $1,677,000 increase in net interest income due to a
change in the volume. The major component of this favorable volume change was
increased average loans.
PAGE 24 OF 34
<PAGE>
EARNING ASSETS AND INTEREST-BEARING LIABILITIES
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended
June 30
1997 1996
---- ----
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
--------------------------------------------------------------------
<S> <C>
EARNING ASSETS:
Loans (1)
Commercial and industrial $ 235,324 $ 5,337 9.07% 210,465 4,793 9.11%
Real estate 365,717 7,833 8.57 308,576 6,727 8.72
Consumer obligations 147,059 3,663 9.96 133,966 3,308 9.88
--------------------------------------------------------------------
Total loans 748,100 16,833 9.00 653,007 14,828 9.08
Loans held for sale 183,026 5,074 11.09 173,821 4,187 9.64
Securities
Taxable 146,622 2,289 6.24 127,543 1,974 6.19
Tax-exempt (2) 35,022 740 8.45 35,617 758 8.51
--------------------------------------------------------------------
Total securities 181,644 3,029 6.67 163,160 2,732 6.70
Federal funds sold 189 3 6.35 971 14 5.77
--------------------------------------------------------------------
Total earning assets 1,112,959 24,939 8.96 990,959 21,761 8.78
Cash and due from banks 33,461 29,992
Bank premises and equipment 31,304 26,979
Other assets 19,087 22,551
Less: allowance for possible
loan losses (7,665) (6,685)
--------------------------------------------------------------------
Total assets $ 1,189,146 $1,063,796
====================================================================
INTEREST BEARING LIABILITIES
Demand deposits $ 123,982 $ 820 2.65% $ 108,365 $ 783 2.89%
Savings deposits 221,982 1,851 3.34 226,770 1,802 3.18
Time deposits 410,218 5,476 5.34 365,531 4,769 5.22
Short-term borrowings 163,039 2,217 5.44 142,560 1,670 4.69
Long-term debt 36,927 660 7.15 23,011 411 7.14
--------------------------------------------------------------------
Total interest-bearing liabilities 956,148 11,024 4.61 866,237 9,435 4.36
Demand deposits 135,484 111,648
Other liabilities 11,631 10,501
Stockholders' equity 85,883 75,410
--------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 1,189,146 $1,063,796
====================================================================
Net interest income $13,915 $ 12,326
====================================================================
Net yield on earning assets 5.00% 4.98%
====================================================================
</TABLE>
(1) For purposes of this table, nonaccruing loans have been included in average
balances and loan fees, which are immaterial, have been included in interest
income.
(2) Computed on a fully federal tax-equivalent basis assuming a tax rate of 34%
in all years.
PAGE 25 OF 34
<PAGE>
RATE VOLUME ANALYSIS OF
CHANGES IN INTEREST INCOME AND EXPENSE
(in thousands)
Quarter Ended
June 30
1997 VS. 1996
Increase (Decrease)
Due to Change In:
INTEREST INCOME FROM: Volume Rate Net
-----------------------------
Loans
Commercial and industrial $ 679 $ (135) $ 544
Real estate 1,872 (766) 1,106
Consumer obligation 326 29 355
-----------------------------
Total loans 2,877 (872) 2,005
Loans held for sale 230 657 887
Investment Securities
Taxable 298 17 315
Tax-exempt (1) (13) (5) (18)
-----------------------------
Total Investment Securities 285 12 297
Federal funds sold (20) 9 (11)
-----------------------------
Total interest-earning assets $ 3,372 $ (194) $ 3,178
INTEREST EXPENSE ON:
Demand deposits 357 (320) 37
Savings deposits (198) 247 49
Time deposits 594 113 707
Short-term borrowings 258 289 547
Long-term debt 249 0 249
-----------------------------
Total interest-bearing liabilities $ 1,260 $ 329 $ 1,589
-----------------------------
NET INTEREST INCOME $ 2,112 $ (523) $ 1,589
=============================
(1) Fully federal taxable equivalent using a tax rate of 34% in all years.
PAGE 26 OF 34
<PAGE>
EARNING ASSETS AND INTEREST-BEARING LIABILITIES
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1997 1996
---- ----
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------------------------------------------------------------------------------
<S> <C>
EARNING ASSETS:
Loans (1)
Commercial and industrial $ 233,078 $ 10,454 8.97% $ 210,181 $ 9,646 9.18%
Real estate 360,274 15,165 8.42 306,561 13,250 8.64
Consumer obligations 146,010 7,199 9.86 134,429 6,612 9.84
---------------------------------------------------------------------------------
Total loans 739,362 32,818 8.88 651,171 29,508 9.06
Loans held for sale 148,707 7,745 10.42 167,581 7,810 9.32
Securities
Taxable 143,922 4,456 6.19 135,421 4,227 6.24
Tax-exempt (2) 35,525 1,476 8.31 36,816 1,564 8.50
---------------------------------------------------------------------------------
Total securities 179,447 5,932 6.61 172,237 5,791 6.72
Federal funds sold 2,969 59 3.97 708 19 5.37
---------------------------------------------------------------------------------
Total earning assets 1,070,485 46,554 8.70 991,697 43,128 8.70
Cash and due from banks 35,699 29,192
Bank premises and equipment 30,880 25,401
Other assets 18,267 22,662
Less: allowance for possible
loan losses (7,619) (6,646)
---------------------------------------------------------------------------------
Total assets $ 1,147,712 $ 1,062,306
=================================================================================
INTEREST BEARING LIABILITIES
Demand deposits $ 120,983 $ 1,717 2.84% $ 102,775 $ 1,543 3.00%
Savings deposits 221,749 3,478 3.14 224,286 3,499 3.12
Time deposits 407,715 10,656 5.23 364,181 9,545 5.24
Short-term borrowings 137,448 3,479 5.06 151,045 3,749 4.96
Long-term debt 37,504 1,252 6.68 22,042 782 7.10
---------------------------------------------------------------------------------
Total interest-bearing liabilities 925,399 20,582 4.45 864,329 19,118 4.42
Demand deposits 126,440 114,802
Other liabilities 10,701 8,349
Stockholders' equity 85,172 74,826
---------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 1,147,712 $ 1,062,306
=================================================================================
Net interest income $ 25,972 $ 24,010
=================================================================================
Net yield on earning assets 4.85% 4.84%
=================================================================================
</TABLE>
(1) For purposes of this table, nonaccruing loans have been included in average
balances and loan fees, which are immaterial, have been included in interest
income.
(2) Computed on a fully federal tax-equivalent basis assuming a tax rate of 34%
in all years.
PAGE 27 OF 34
<PAGE>
RATE VOLUME ANALYSIS OF
CHANGES IN INTEREST INCOME AND EXPENSE
(in thousands)
Six Months Ended
June 30
1997 VS. 1996
Increase (Decrease)
Due to Change In:
INTEREST INCOME FROM: Volume Rate Net
------ ---- ---
Loans
Commercial and industrial $ 1,394 $ (586) $ 808
Real estate 2,871 (956) 1,915
Consumer obligations 571 16 587
------- ------- -------
Total loans 4,836 (1,526) 3,310
Loans held for sale (1,829) 1,764 (65)
Investment Securities
Taxable 324 (95) 229
Tax-exempt (1) (54) (34) (88)
------- ------- -------
Total Investment Securities 270 (129) 141
Federal funds sold 55 (15) 40
------- ------- -------
Total interest-earning assets $ 3,332 $ 94 $ 3,426
INTEREST EXPENSE ON:
Demand deposits 391 (217) 174
Savings deposits (65) 44 (21)
Time deposits 1,190 (79) 1,111
Short-term borrowings (465) 195 (270)
Long-term debt 604 (134) 470
------- ------- -------
Total interest-bearing liabilities $ 1,655 $ (191) $ 1,464
------- ------- -------
NET INTEREST INCOME $ 1,677 $ 285 $ 1,962
======= ======= =======
(1) Fully federal taxable equivalent using a tax rate of 34% in all years.
PAGE 28 OF 34
<PAGE>
Item 3. Quantitative and Qualitative - Not Applicable
Disclosures about Market Risk
PART II OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Seller Securities - None
Item 4. Submission of Matters to a Vote
of Security Holders -
On May 13, 1997, the Company held its Annual Meeting of Shareholders. Two
matters were submitted to the shareholders for consideration:
1. Election of six Class II directors; and
2. Ratification of the Board of Directors'appointment of Ernst & Young LLP as
auditors for the Company for 1997.
The vote tabulation for each matter was as follows:
1. Election of six Class II directors:
Authority
Directors For Withheld Abstain
Carlin K. Harmon 4,149,803 19,874 0
Dale Nibert 4,150,434 19,243 0
Mark Schaul 4,150,570 19,107 0
Van R. Thorn 4,150,570 19,107 0
C. Scott Briers 4,150,184 19,493 0
Hugh R. Clonch 4,150,189 19,488 0
Continuing directors whose terms did not expire at the annual meeting were:
D. K. Cales, J. Goldman, C. Dallas Kayser, Robert D. Fisher, George F. Davis,
William F. Frazier, Samuel M. Bowling, Steven J. Day, Jack E. Fruth, Otis
L. O'Connor, Bob F. Richmond, and Leon K. Oxley.
2. Ratification of Appointment of Ernst & Young LLP:
For Against Abstain
4,156,257 10,881 2,539
PAGE 29 OF 34
<PAGE>
Item 5. Other Information - None
Item 6. Exhibits and Reports on 8-K - None
PAGE 30 OF 34
<PAGE>
S I G N A T U R E
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.
CITY HOLDING COMPANY
August 11, 1997 By /s/ Dawn Woolsey
-----------------------------
Dawn Woolsey,
Chief Accounting Officer
(Principal Accounting Officer)
PAGE 31 OF 34
<PAGE>
EXHIBIT INDEX
Exhibit Page Number
Index
27 Financial Data Schedule for the six months
ending June 30, 1997 33 - 34
PAGE 32 OF 34
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 45,011
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 532
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 182,393
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 760,403
<ALLOWANCE> 7,864
<TOTAL-ASSETS> 1,147,684
<DEPOSITS> 901,087
<SHORT-TERM> 101,832
<LIABILITIES-OTHER> 17,882
<LONG-TERM> 39,400
0
0
<COMMON> 15,207
<OTHER-SE> 72,276
<TOTAL-LIABILITIES-AND-EQUITY> 1,147,684
<INTEREST-LOAN> 40,563
<INTEREST-INVEST> 5,430
<INTEREST-OTHER> 59
<INTEREST-TOTAL> 46,052
<INTEREST-DEPOSIT> 15,851
<INTEREST-EXPENSE> 20,582
<INTEREST-INCOME-NET> 25,470
<LOAN-LOSSES> 938
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 25,192
<INCOME-PRETAX> 9,349
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,004
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
<YIELD-ACTUAL> 4.85
<LOANS-NON> 2,537
<LOANS-PAST> 3,046
<LOANS-TROUBLED> 368
<LOANS-PROBLEM> 221
<ALLOWANCE-OPEN> 7,281
<CHARGE-OFFS> (809)
<RECOVERIES> 244
<ALLOWANCE-CLOSE> 7,864
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
