UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995
or
( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to __________________
Commission File Number 0-13440
-------------------------------------
B.M.J. FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2474875
- - ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
243 ROUTE 130, BORDENTOWN, NJ 08505
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(609) 298-5500
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ( X ) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: 7,598,501 shares of common
stock, $1.00 par value, outstanding on April 1, 1995.
<PAGE>
INDEX
PART 1. FINANCIAL INFORMATION
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 (Unaudited)
Consolidated Statement of Operations -
Three months ended March 31, 1995 and 1994 (Unaudited)
Consolidated Statement of Cash Flows -
Three months ended March 31, 1995 and 1994 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART 11. OTHER INFORMATION
SIGNATURES
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks ................................. $ 17,099 $ 21,725
Money market investments ................................ 7,757 23,054
--------- ---------
Total cash and cash equivalents .................... 24,856 44,779
--------- ---------
Securities available for sale (amortized cost of $4,710 at
March 31, 1995 and $3,006 at December 31, 1994) ......... 4,658 2,911
Securities held to maturity (market value of $111,726 at
March 31, 1995 and $113,095 at December 31, 1994):
U.S. Treasury securities ................................ 19,285 25,308
U.S. government agencies and corporations ............... 89,820 89,815
States and political subdivisions ....................... 5,120 3,080
Other securities ........................................ 781 781
--------- ---------
Total securities held to maturity .................. 115,006 118,984
--------- ---------
Loans, net of unearned income ................................ 370,258 354,480
Less reserve for loan losses ................................. 12,783 12,485
--------- ---------
Net loans .......................................... 357,475 341,995
--------- ---------
Premises and equipment, net .................................. 5,493 5,598
Other real estate, net ....................................... 4,350 7,214
Other assets ................................................. 16,198 16,951
--------- ---------
Total assets ....................................... $ 528,036 $ 538,432
========= =========
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Balance Sheet
(Continued)
(Unaudited)
(In thousands)
<CAPTION>
March 31, December 31,
1995 1994
--------- ---------
<S> <C> <C>
LIABILITIES
Demand deposits (noninterest-bearing) ........................ $ 73,498 $ 78,446
Savings and interest checking ................................ 253,931 271,209
Certificates of deposit of $100,000 or more .................. 5,947 4,483
Other time deposits .......................................... 112,105 109,436
--------- ---------
Total deposits ..................................... 445,481 463,574
--------- ---------
Securities sold under agreements to repurchase ............... 13,891 8,857
Other liabilities ............................................ 6,524 4,955
Capital notes ................................................ 2,700 2,700
--------- ---------
Total liabilities .................................. 468,596 480,086
--------- ---------
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share.
Authorized 10,000,000 shares;
issued and outstanding 7,598,501 shares at March 31, 1995
and 7,597,513 at December 31, 1994 ...................... 7,598 7,597
Surplus ...................................................... 36,322 36,311
Retained earnings ............................................ 15,555 14,501
Unrealized losses on securities available for sale, net of tax (35) (63)
--------- ---------
Total shareholders' equity ......................... 59,440 58,346
--------- ---------
Total liabilities and shareholders' equity ......... $ 528,036 $ 538,432
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Statement of Operations
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited) Three months ended March 31,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................ $ 7,773 $ 7,537
Interest on money market investments:
Time deposits with other banks ............... 48 43
Interest bearing deposits with other banks ... 8 24
Federal funds sold and repurchase agreements . 54 172
Other short term investments ................. 136 78
Interest on securities available for sale:
U.S. Treasury securities ..................... 33 228
U.S. government agencies and corporations .... -- 75
States and political subdivisions (tax-exempt) 3 5
Other securities ............................. -- 3
Interest on securities held to maturity:
U.S. Treasury securities ..................... 288 270
U.S. government agencies and corporations .... 1,244 1,042
States and political subdivisions (tax-exempt) 60 61
Other securities ............................. 12 12
---------- ----------
Total interest income ................... 9,659 9,550
---------- ----------
INTEREST EXPENSE
Savings and interest checking deposits ............ 1,318 1,495
Certificates of deposit of $100,000 or more ....... 48 59
Other time deposits ............................... 1,132 968
Other debt ........................................ 214 113
---------- ----------
Total interest expense .................. 2,712 2,635
---------- ----------
Net interest income ............................... 6,947 6,915
Provision for loan losses ......................... -- --
---------- ----------
Net interest income after provision
for loan losses ...................... 6,947 6,915
---------- ----------
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Statement of Operations
(Continued)
(In Thousands, Except Per Share Amounts)
<CAPTION>
(Unaudited) Three months ended March 31,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
NONINTEREST INCOME
Service charges, commissions, and fees ............ 977 1,254
Trust income ...................................... 120 75
---------- ----------
Total noninterest income ................ 1,097 1,329
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits .................... 2,508 2,719
Net occupancy ..................................... 731 842
Other real estate expense ......................... 180 406
Other ............................................. 2,377 2,679
---------- ----------
Total noninterest expense ............... 5,796 6,646
---------- ----------
Income before income tax expense .................. 2,248 1,598
Income tax expense ................................ 814 4
---------- ----------
NET INCOME ........................................ $ 1,434 $ 1,594
========== ==========
Net income per share .............................. $ 0.19 $ 0.21
========== ==========
Weighted average shares outstanding ............... 7,900,260 8,095,774
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 1,434 $ 1,594
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation of premises and equipment .............. 213 238
Amortization of intangibles ......................... 28 159
Net accretion of securities available for sale ...... (41) (172)
Net amortization (accretion) of securities held
to maturity ..................................... 18 (74)
Provision for other real estate ..................... -- 238
Net (increase) decrease in other real estate owned .. 67 (25)
Increase (decrease) in equity from unrealized holding
loss on securities available for sale net of tax 28 (28)
Decrease in other assets ............................ 725 392
Increase in other liabilities ....................... 1,569 558
-------- --------
Net cash provided by operating activities ............... 4,041 2,880
-------- --------
Cash flows from investing activities:
Proceeds from maturities of securities available
for sale ........................................ -- 5,853
Purchase of securities available for sale ........... (1,706) (2,749)
Proceeds from maturities of securities held to
maturity ........................................ 6,306 17,535
Purchase of securities held to maturity ............. (2,346) (3,596)
Net (increase) decrease in loans .................... (13,954) (2,930)
Proceeds from other real estate ..................... 1,270 3,203
Property and equipment expenditures ................. (107) (200)
-------- --------
Net cash provided by (used in) investing activities ..... (10,537) 22,976
-------- --------
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
<CAPTION>
Three months ended March 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Net decrease in demand deposits, savings
and interest checking accounts ..................... (22,226) (14,252)
Net increase (decrease) in certificates of deposit .... 4,133 (4,473)
Repayments of capital notes ........................... -- (10)
Net increase in securities sold under
agreements to repurchase ........................... 5,034 1,478
Dividends declared .................................... (380) --
Issuance of stock ..................................... 12 --
-------- --------
Net cash used in financing activities ................... (13,427) (17,257)
-------- --------
Net change in cash and cash equivalents ................. (19,923) 8,599
Cash and cash equivalents at beginning of period ........ 44,779 56,251
Cash and cash equivalents at end of period .............. $ 24,856 $ 64,850
======== ========
Cash paid during the period for:
Interest .............................................. $ 2,709 $ 2,783
======== ========
Income taxes .......................................... -- --
======== ========
Noncash investing activities:
Transfer of loans to other real estate, net ........... $ 1,408 $ 202
======== ========
Transfer of insubstance foreclosures to loans
upon adoption of FASB 114 .......................... $ 2,935 --
======== ========
Transfer of securities available for sale to
securities held to maturity ........................ -- $ 28,237
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
B.M.J. FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis For Financial Statement Presentation
The information in this report is unaudited and is subject to year-end
adjustments and audit. However, in the opinion of management, the information
reflects all adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of the consolidated financial data as of and
for the three-month periods ended March 31, 1995 and 1994. The results of
operations for the three-month period ended March 31, 1995 are not necessarily
indicative of the results to be expected for the entire year ending December 31,
1995.
The accompanying consolidated financial statements include the accounts
of B.M.J. Financial Corp. in addition to those of The Bank of Mid-Jersey
("Mid-Jersey"), a wholly-owned subsidiary of B.M.J. Financial Corp. Unless the
context otherwise indicates, the term "BMJ" as used herein refers to the
consolidated B.M.J. Financial Corp. and The Bank of Mid-Jersey entity. All
significant intercompany accounts and transactions have been eliminated. In
preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the reserve for loan
losses and the valuation of other real estate acquired in connection with
foreclosures or in satisfaction of loans. In connection with the determination
of the reserves for loan losses and other real estate, management periodically
obtains independent appraisals for significant properties.
Management believes that the reserves for losses on loans and other
real estate are adequate in relation to the risks and uncertainties inherent in
those portfolios. While management uses available information to determine the
appropriate recognition of losses on loans and other real estate, future
additions to the reserves may be necessary based on, among other things, changes
in economic conditions, particularly in New Jersey, and the changing
circumstances of the borrowers. In addition, various regulatory agencies, as an
integral part of their examinations, periodically review BMJ's reserves for loan
losses. Such agencies may request BMJ to consider recognizing additions to the
reserves based on the regulators' judgments about information available to them
at the time of their examination.
These statements should be read in conjunction with the notes to the
consolidated financial statements contained in B.M.J. Financial Corp.'s Annual
Report on Form 10-K to the Securities and Exchange Commission for the year ended
December 31, 1994, to which reference is hereby made.
2. Divestitures and Merger
Effective June 24, 1994, having received the required regulatory and
shareholder approvals, BMJ completed the merger of its Mount Holly State Bank
subsidiary into its lead bank subsidiary, The Bank of Mid-Jersey. This merger
was consistent with the corporate-wide restructuring program initiated in 1993,
with the objectives being to increase operating efficiency and enhance the level
of service provided to customers.
On July 29, 1994, BMJ completed the sale of its Southern Ocean State
Bank subsidiary, located in Tuckerton, New Jersey, to another financial
institution for a total consideration of $6.8 million in cash. At June 30, 1994,
Southern Ocean State Bank had total assets of $69.1 million and had net income
of $591 thousand for the six-month period ended June 30, 1994.
On November 18, 1994, BMJ's Mid-Jersey subsidiary sold the furnishings
and equipment of its Willingboro branch office to another financial institution
which also assumed approximately $6.6 million of deposit liabilities and the
remaining term of the facility lease. This transaction resulted in a net
reduction in BMJ's asset base of $6.3 million and a pre-tax gain of
approximately $104 thousand that is included in 1994 results of operations.
3. Securities
On January 1, 1994, BMJ adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("FAS 115"). FAS 115 establishes the accounting and reporting for
investments in equity securities that have readily determinable fair values and
for all investments in debt securities. In accordance with FAS 115, investments
are classified into three categories: (1) held to maturity securities, which are
reported at amortized cost; (2) trading securities, which are reported at fair
value with unrealized gains and losses included in earnings; and (3) available
for sale securities, which are reported at fair value with unrealized gains and
losses reported as a separate component of shareholders' equity and excluded
from earnings. BMJ currently has no securities classified as trading securities.
Securities classified as available for sale may be sold prior to their
contractual maturity in response to changing market and interest rate conditions
or as part of an overall asset/liability strategy. These securities are carried
at their market value with unrealized gains and losses carried, net of tax, as
adjustments to shareholders' equity. Gains and losses on disposition are
included in earnings using the specific identification method.
Securities held to maturity are comprised of securities that BMJ has
the positive intent and ability to hold to maturity. These securities are
carried at cost, adjusted for amortization of premium or accretion of discount.
The premium or discount adjustments are recognized as adjustments to interest
income, on a level yield basis. Unrealized losses due to fluctuations in market
value are recognized as security losses when a decline in value is assessed as
being other than temporary.
4. Provision For Loan Losses
The provision for loan losses charged against operating income is
determined by management based upon, among other things, a continuing review of
the loan portfolio, past experience and conditions which may affect the
borrower's ability to repay. The reserve for loan losses is based on
management's estimates, and actual losses may vary from the current estimates.
These estimates are reviewed periodically and, as adjustments become necessary,
they are reported in the periods in which they become known.
5. Other Real Estate
Other real estate acquired through foreclosure or deed in lieu of
foreclosure is carried at fair value less estimated costs of disposal. When a
property is acquired, the excess of the loan balance over the estimated fair
value is charged to the reserve for loan losses. A reserve for other real estate
has been established to provide for subsequent write-downs that may be required
to the carrying value of the property or losses on the sales of properties. The
reserve is established through charges to other real estate expense. Operating
results of other real estate owned, including rental income and operating
expenses, are recorded in other real estate expense. Gains and losses realized
from the sales of other real estate are included in noninterest income. Specific
dates of disposal cannot realistically be projected without the existence of
firm contracts for sale. At this time, contracts for sale exist on certain
foreclosed assets representing an insignificant portion of the carrying value on
the balance sheet.
6. Income Taxes
BMJ files a consolidated Federal income tax return, and the amount of
income tax expense or benefit is computed and allocated among subsidiaries on a
separate return basis. BMJ utilizes the asset and liability method of accounting
for income taxes as required by Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109"). Under this method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which temporary differences, which are inherent
in the tax filing process, are expected to be recovered or settled. Under FAS
109, the effect on deferred tax assets and liabilities of a change in the tax
rates is recognized in income in the period that includes the enacted date.
BMJ's Federal income tax returns for the calendar years 1990 through
1993 are currently undergoing an examination by the Internal Revenue Service. In
the course of their examination, the IRS has proposed certain adjustments which
management believes will not have a material effect on the consolidated
financial statements.
<PAGE>
B.M.J. Financial Corp. and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis addresses material changes in BMJ's
financial condition between December 31, 1994 and March 31, 1995 and material
changes in its results of operations with respect to the three-month periods
ended March 31, 1995 and 1994.
Results of Operations
Earnings Performance
BMJ reported net income for the first quarter ended March 31, 1995 of
$1.4 million, compared to net income of $1.6 million for the 1994 first quarter.
On a per share basis, earnings for the first quarter of 1995 were
$0.19, compared to earnings of $0.21 for the first quarter of 1994.
Net interest income totaled $6.9 million for both the first quarter
ended March 31, 1995 and the first quarter of 1994. BMJ's taxable equivalent net
interest margin remained strong at 5.76% for the quarter ended March 31, 1995
compared to 4.93% for the first quarter of 1994, primarily as a result of the
continued reduction of nonperforming asset levels and growth in the loan
portfolio.
BMJ continued to pursue its program to reduce the level of total
noninterest expenses while increasing operating efficiency. As a result, total
noninterest expenses for the first quarter of 1995 amounted to $5.8 million, a
reduction of 13% from total noninterest expenses of $6.6 million for the 1994
first quarter. For the three-month period ended March 31, 1995, BMJ's efficiency
ratio improved to 70% compared to 79% for the three-month period ended March 31,
1994.
Operating results for 1994 include those of BMJ's Southern Ocean State
Bank subsidiary and the Willingboro branch of BMJF's The Bank of Mid-Jersey
subsidiary. Southern Ocean State Bank was sold in July 1994 and the Willingboro
branch was sold in November 1994.
Net Interest Income
Net interest income is interest earned on loans and other
interest-earning assets minus interest paid on deposits and other borrowed
funds. Interest rate fluctuations as well as changes in the volume and mix of
interest-earning assets and interest-bearing liabilities combine to affect net
interest income.
BMJ's net interest income was $6.9 million for both the first quarter
ended March 31, 1995 and for the first quarter of 1994. The financial summary in
Table 1 details yields and rates of major interest-earning assets and interest-
bearing liabilities for the three-month periods ended March 31, 1995 and 1994.
Among other things, Table 1 shows that the net interest margin between yields on
average interest-earning assets and costs of average funding sources was 5.76%
for the three-month period ended March 31, 1995 and 4.93% for the comparable
1994 period. The increase in the net interest margin reflects wider interest
spreads resulting from repricing of greater amounts of maturing interest-earning
assets than interest-bearing liabilities in a higher interest rate environment.
The improvement in net interest income in the first quarter of 1995 compared
with the first quarter of 1994 (when considered in light of the $80.4 million
reduction in BMJ's average earning assets at March 31, 1995 versus Mrach 31,
1994) is also attributable to the continuing reduction in BMJ's level of
nonperforming assets whereby the proceeds from sales of properties are invested
in interest-earning assets. Total nonperforming assets at March 31, 1995 totaled
$12.5 million, down from $14.2 million at December 31, 1994.
Noninterest Income
BMJ's revenues include noninterest income, which consists primarily of
service charges on deposit accounts, gains or losses on securities sales and
trust service fees. Noninterest income was $1.1 million for the first quarter of
1995 compared to $1.3 million for the first quarter of 1994.
Service charges, commissions and fees amounted to $977 thousand for the
first quarter of 1995 compared to $1.3 million for the first quarter of 1994.
The decrease for the first quarter of 1995 versus the first quarter of 1994 is
primarily due to the lower level of total deposit accounts during the first
quarter of 1995 subject to service charges and other fees as a result of the
sale of BMJ's Southern Ocean State Bank on July 29, 1994.
There were no gains or losses from securities transactions for the
quarters ended March 31, 1995 and 1994. Management anticipates that BMJ will
continue to transact a significantly lower volume of sales of securities during
the remainder of 1995.
Noninterest Expense
Noninterest expense for the quarter ended March 31, 1995 was $5.8
million, a reduction of 12.8% from total noninterest expense for the 1994 first
quarter as BMJ continued to pursue its program to reduce the level of total
overhead expenses while increasing operating efficiency. Two significant
initiatives completed during 1994 which have had an impact on reducing BMJ's
level of noninterest expenses when comparing 1995 results with 1994 results,
were the merger of BMJ's two principal subsidiaries, The Bank of Mid-Jersey and
Mount Holly State Bank, and the sale of BMJ's Southern Ocean State Bank
subsidiary. As previously discussed, Southern Ocean State Bank's operating
results are included in BMJ's operating results for 1994's first quarter.
Salaries and employee benefits amounted to $2.5 million for the quarter
ended March 31, 1995 compared to $2.7 million for the quarter ended March 31,
1994. BMJ has reduced the number of full-time equivalent employees at March 31,
1995 to 281 employees, a reduction of 20.2% from 352 full-time equivalent
employees at March 31, 1994.
Other real estate expense amounted to $180 thousand for the quarter
ended March 31, 1995, a 55.7% reduction from the $406 thousand reported at March
31, 1994. Other real estate expenses include the costs to maintain repossessed
properties such as real estate taxes, insurance and general maintenance
expenses. During the three-month period ended March 31, 1995, BMJ was able to
reduce the net balance of its other real estate portfolio primarily through
sales of properties to a balance of $4.4 million at March 31, 1995 compared to a
net balance of $11.5 million at March 31, 1994. As a result, BMJ was able to
achieve corresponding reductions in other real estate expenses for the
three-month period ended March 31, 1995 when compared with the three-month
period ended March 31, 1994.
The other (or miscellaneous) noninterest expense category totaled $2.4
million for the quarter ended March 31, 1995 versus $2.7 million for the 1994
first quarter. Included in this decrease in the noninterest expense category are
the current year reductions in the FDIC insurance assessment and legal fees. The
first quarter 1995 decrease of 28.1% to $263 thousand in the FDIC insurance
assessment is a result of the combination of BMJ's strong capital ratios plus a
decrease in the levels of those deposits subject to the insurance assessment.
The first quarter 1995 decrease in BMJ's legal fees of 37.0% to $252 thousand is
a result of a lower level of nonperforming assets, thereby decreasing litigation
costs in pursuing collection of delinquent loans and in obtaining title to
properties through the foreclosure process.
Income Tax Expense
Income tax expense increased to $814 thousand for the three-month
period ended March 31, 1995 compared to $4 thousand for the comparable 1994
period.
During 1994, BMJ realized certain income tax benefits under Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which
was adopted by BMJ on January 1, 1993. During 1994, BMJ had fully recognized all
of its available alternative minimum tax credits and reversed the deferred tax
asset valuation allowance established in 1993 and, as such, the book tax
provision was offset by a reduction of a portion of the deferred tax asset
valuation allowance. As a result, income tax expense for the three-month period
ended March 31, 1995 represents the tax provision associated with the first
quarter 1995 results of operations.
Balance Sheet Analysis
Total assets of BMJ amounted to $528.0 million at March 31, 1995,
decreasing from $538.4 million at December 31, 1994. This decrease is primarily
attributable to a lower level of total deposits at March 31, 1995 versus
December 31, 1994. Total deposits of $445.5 million at March 31, 1995 represents
a 3.9% reduction from the $463.6 of total deposits at December 31, 1994. This
reduction can be attributed to the high level of competition that exists among
financial institutions in BMJ's market for retail deposits. Through renewed
marketing programs and competitively priced deposit products, it is BMJ's
intention to increase its share of the retail deposits market.
During 1995, BMJ continued to improve its capital ratios and its
balance sheet condition. Shareholders' equity increased from $58.3 million at
December 31, 1994 to $59.4 million at March 31, 1995. Consequently, the ratio of
shareholders' equity to total assets at March 31, 1995 increased to 11.3%
compared to 10.8% at December 31, 1994.
In addition, asset quality continued to improve as total nonperforming
assets at March 31, 1995 amounted to $12.5 million compared to $14.2 million at
December 31, 1994.
The following discussion deals with the major components of the balance
sheet.
Securities Available for Sale
Securities which may be sold in response to changing market and
interest rate conditions or as part of BMJ's asset/liability management strategy
have been classified as securities available for sale. The securities available
for sale portfolio amounted to $4.7 million at March 31, 1995 compared to $2.9
million at December 31, 1994. The securities available for sale portfolio is
carried at fair market value at March 31, 1995 and December 31, 1994.
Table 1 details the composition of the securities available for sale
portfolio. In addition, Table 1 provides information concerning average yields
and balances of the securities available for sale portfolio for the three-month
periods ended March 31, 1995 and 1994.
Securities Held to Maturity
Securities held to maturity are comprised of securities that BMJ has
the positive intent and ability to hold to maturity. These securities are
carried at cost, adjusted for amortization of premium or accretion of discount.
The premium or discount adjustments are recognized as adjustments to interest
income, on a level yield basis. Gains or losses on disposition are computed by
the specific identification method and are included in noninterest income.
Unrealized losses due to fluctuations in market value are recognized as security
losses when a decline in value is assessed as being other than temporary.
The securities held to maturity portfolio amounted to $115.0 million at
March 31, 1995 compared to $119.0 million at December 31, 1994. Table 1 provides
information concerning average yields and balances of the securities available
for sale portfolio for the three-month periods ended March 31, 1995 and 1994.
<PAGE>
<TABLE>
Table 1
Financial Summary
Averages Balances, Rates Paid and Yields (yields on a tax-equivalent basis)
<CAPTION>
(in thousands) Three months ended Three months ended
March 31, 1995 March 31, 1994
------------------------------------------------------------------------
Average Yields Interest Average Yields Interest
Balance or Income/ Balance or Income/
Rates Expense Rates Expense
-------- ---- -------- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Money market investments:
Time deposits with other banks ..................... $ 3,318 5.87% $ 48 $ 5,448 3.20% $ 43
Interest bearing deposits with other banks ......... 627 5.17 8 3,159 3.08 24
Federal funds sold and repurchase agreements ....... 3,734 5.87 54 22,332 3.12 172
Other short term investments ....................... 9,167 6.02 136 9,399 3.37 78
-------- ---- -------- -------- ---- --------
Total money market investments ..................... 16,846 5.92 246 40,338 3.19 317
Securities available for sale:
U.S. Treasury securities ........................... 2,929 4.57 33 26,743 3.46 228
U.S. government agencies and corporations .......... -- -- -- 7,425 4.10 75
States and political subdivisions .................. 288 5.63 4 444 7.31 8
Other securities ................................... -- -- -- 232 5.24 3
-------- ---- -------- -------- ---- --------
Total securities available for sale ............ 3,217 4.66 37 34,844 3.65 314
Securities held to maturity:
U.S. Treasury securities ........................... 21,299 5.48 288 25,920 4.22 270
U.S. government agencies and corporations .......... 89,817 5.62 1,244 92,459 4.57 1,042
States and political subdivisions .................. 4,268 8.65 91 4,853 7.69 92
Other securities ................................... 781 6.23 12 857 5.68 12
-------- ---- -------- -------- ---- --------
Total securities held to maturity .............. 116,165 5.71 1,635 124,089 4.63 1,416
Loans, net of unearned income .......................... 361,309 8.82 7,862 378,689 8.15 7,613
-------- ---- -------- -------- ---- --------
Total interest-earning assets .................. $497,537 7.97% $ 9,780 $577,960 6.78% $ 9,660
======== ==== ======== ======== ==== ========
<PAGE>
Table 1 (Continued)
Financial Summary
Averages Balances, Rates Paid and Yields (yields on a tax-equivalent basis)
<CAPTION>
(in thousands) Three months ended Three months ended
March 31, 1995 March 31, 1994
------------------------------------------------------------------------
Average Yields Interest Average Yields Interest
Balance or Income/ Balance or Income/
Rates Expense Rates Expense
-------- ---- -------- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
FUNDING SOURCES
Deposits:
Savings and interest checking ...................... $260,442 2.05% $ 1,318 $350,193 1.73% $ 1,495
Certificates of deposit of $100,000 or more ........ 4,488 4.34 48 6,573 3.64 59
Other time deposits ................................ 110,363 4.16 1,132 120,618 3.25 968
-------- ---- -------- -------- ---- --------
Total interest-bearing deposits ................ 375,293 2.70 2,498 477,384 2.14 2,522
Securities sold under agreements to repurchase ......... 13,567 4.69 157 2,724 1.79 12
Other borrowed funds ................................... 505 4.82 6 -- -- --
Other debt ............................................. 2,700 7.66 51 4,811 8.51 101
-------- ---- -------- -------- ---- --------
Total interest-bearing liabilities ................. 392,065 2.81 2,712 484,919 2.20 2,635
Portion of noninterest-bearing funding sources ......... 105,472 -- -- 93,041 -- --
-------- ---- -------- -------- ---- --------
Total funding sources .............................. $497,537 2.21% $ 2,712 $577,960 1.85% $ 2,635
======== ==== ======== ======== ==== ========
Net interest margin and net interest income ............ 5.76% $ 7,068 4.93% $ 7,025
==== ======== ==== ========
</TABLE>
<PAGE>
Loan Portfolio
BMJ's loan portfolio represented 70.1% of total assets at March 31, 1995,
compared to 65.8% at December 31, 1994. BMJ's loan portfolio amounted to $370.3
million at March 31, 1995 increasing from $354.5 million at December 31, 1994.
The following table provides a comparative analysis of the loan portfolio
composition:
<TABLE>
<CAPTION>
(in thousands) March 31, December 31,
1995 1994
-------- --------
<S> <C> <C>
Commercial, financial and agricultural ........... $ 21,932 $ 22,822
Real estate - mortgage ........................... 280,500 272,878
Real estate - construction ....................... 31,431 28,420
Consumer ......................................... 36,395 30,360
-------- --------
$370,258 $354,480
======== ========
</TABLE>
Substantially all of BMJ's lending activity is to customers, or secured by
property, located within Mercer, Burlington and Ocean counties in New Jersey. Of
the portfolio as a whole, at March 31, 1995, approximately 84.2% of BMJ's loans
are secured by real estate.
Nonperforming Assets
Nonperforming assets, as summarized in the table below, consist of
nonperforming loans plus net other real estate owned.
<TABLE>
<CAPTION>
(in thousands)
March 31, December 31,
1995 1994
--------- ---------
<S> <C> <C>
Nonperforming Loans:
Loans past due 90 days or
more and accruing ....................... $ 168 $ 1,264
Nonaccrual loans ............................. 8,022 5,769
--------- ---------
Total nonperforming loans ................ 8,190 7,033
--------- ---------
Other Real Estate:
Insubstance foreclosure ...................... -- 2,935
Other real estate ............................ 5,079 5,237
Loss reserve ................................. (729) (958)
--------- ---------
Total other real estate, net ............. 4,350 7,214
--------- ---------
Total Nonperforming Assets ................... $ 12,540 $ 14,247
========= =========
</TABLE>
Nonperforming loans include nonaccrual loans and loans 90 days or greater
past due and still accruing. Loans are generally reported as nonaccrual if they
are past due as to maturity or payment of principal or interest for a period of
more than 90 days, unless such loans are well secured and in the process of
collection. If a loan or a portion of a loan is partially charged off, the loan
is classified as nonaccrual. Loans that are on a current payment status or past
due less than 90 days may also be classified as nonaccrual if repayment in full
of principal and/or interest is determined to be in jeopardy. Loans, with the
exception of partially charged off loans or loans with any portion classified as
doubtful, may be placed back on accrual status when they become current as to
both principal and interest and when concern as to future collectibility in full
no longer exists. The remaining recorded balance of a partially charged off
loan, however, may be returned to accrual status if the entire contractual loan
balance, together with all unpaid contractual interest, is determined to be
fully collectible. Nonperforming loans as a percentage of total loans were 2.2%
as of March 31, 1995 and 2.0% as of December 31, 1994.
The following table illustrates the activity in BMJ's nonaccrual loans during
the three-month period ended March 31, 1995.
<TABLE>
<CAPTION>
(in thousands) Three Months Ended
March 31, 1995
------------------
Nonaccrual
Loans
<S> <C>
Balance, January 1, 1995 ........... $ 5,769
New defaults ....................... 3,629
Assets foreclosed upon or designated
as Other Real Estate ............ (735)
Payoffs, cures and sales ........... (595)
Chargeoffs and writedowns .......... (46)
-------
Balance, March 31, 1995 ............ $ 8,022
=======
</TABLE>
Potential problem loans consist of loans which are included in performing
loans at March 31, 1995, but for which potential credit problems of the
borrowers have caused management to have concerns as to the ability of such
borrowers to comply with present repayment terms. At March 31, 1995, such
potential problem loans amounted to approximately $4.1 million. Depending on the
state of the economy and the impact thereof on BMJ's borrowers, as well as other
future events, these loans and others not currently so identified could be
classified as nonperforming loans in the future.
<PAGE>
The following table illustrates the activity in BMJ's other real
estate during the three-month period ended March 31, 1995.
<TABLE>
<CAPTION>
Three Months Ended
(in thousands) March 31, 1995
------------------
<S> <C>
Balance, January 1, 1994 ........................................ $ 8,172
Additions:
Assets foreclosed upon or designated
as Other Real Estate ................................. 1,408
-------
Total additions ........................................ 9,508
-------
Deductions:
Sales and other reductions ................................ (1,267)
Transfer of insubstance foreclosures to loans
upon adoption of FAS 114 .............................. (2,935)
Writedowns to fair value/Chargeoffs ....................... (299)
-------
Total deductions ....................................... (4,501)
Subtotal ..................................................... 5,079
Less loss reserve ............................................ (729)
Balance, March 31, 1995 ......................................... $ 4,350
=======
</TABLE>
Other real estate consists of properties acquired through foreclosure or deed
in lieu of foreclosure. A reserve for other real estate has been established to
maintain the portfolio at the lower of cost or fair value less estimated
disposition costs.
The Financial Accounting Standards Board released Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan"
("FAS 114") in May 1993. FAS 114 establishes standards to determine in what
circumstances a creditor should measure impairment of a loan based on either the
present (discounted) value of expected future cash flows related to the loan,
the market price of the loan or the fair value of the underlying collateral. FAS
114 became effective in 1995. Adoption of FAS 114 has not materially impacted
BMJ's financial position or results of operations.
The following table sets forth information concerning the other real estate
loss reserve activity for the three-month periods ended March 31, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended
(in thousands) March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Balance, beginning of year $ 958 $ 2,614
Add: provision charged to expense ........ - 238
------- ------
958 2,852
Less: writedowns ......................... (229) (824)
------- ------
Balance, at end of period ................... $ 729 $ 2,028
======= =======
</TABLE>
<PAGE>
Reserve for Loan Losses
At March 31, 1995, the reserve for loan losses totaled $12.8 million compared
to $12.5 million at March 31, 1994. The ratio of the reserve for loan losses to
total loans at March 31, 1995 was 3.45% versus 3.52% at December 31, 1994. The
table below provides a summary of the activity in the loan loss reserve plus
additional key ratios for assessing the adequacy of the reserve for loan losses
at March 31, 1995 and December 31, 1994.
<TABLE>
<CAPTION>
Three Months Ended
(in thousands) March 31, 1995 March 31, 1994
--------------- --------------
<S> <C> <C>
Reserve balance, beginning of year .. $ 12,485 $ 14,423
Gross charge-offs ................ (172) (1,370)
Less: recoveries ................. 470 379
---------- ----------
Net (charge-offs) recoveries ........ 298 (991)
Provision charged to operations ..... -- --
---------- ----------
Reserve, at end of period ........... $ 12,783 $ 13,432
========== ==========
Loans, end of period ................ $ 370,258 $ 377,027
Average loans outstanding ........... $ 361,309 $ 378,689
Ratio of net (charge-offs) recoveries
to average loans outstanding ..... .08% (.26%)
Ratio of reserve for loan losses
to nonperforming loans ........... 156.08% 118.96%
Ratio of reserve for loan losses
to loans, end of period .......... 3.45% 3.56%
</TABLE>
Management has adopted a reserve adequacy methodology that requires specific
reserve assessment for all loans including residential real estate mortgages and
consumer loans. This methodology assigns reserves based upon credit risk rating
for specific loans and general reserves for all other loans. The general
reserves are based on historical charge-off experience but are subject to
certain minimums based upon BMJ's assessment of the current economic
environment.
BMJ's gross charge-offs during the first quarter of 1995 totaled $172
thousand compared with $1.4 million for the first quarter of 1994. Subsequent to
the charge-off of a loan, it is BMJ's policy to continue to vigorously pursue
the collection of principal outstanding as well as past due interest. Collection
efforts resulted in recoveries of $470 thousand on previously charged-off loans
during the first quarter of 1995 compared with $379 thousand for the first
quarter of 1994.
The distribution of the reserve for loan losses and the percentage of loans
in each category to total loans at March 31, 1995 is illustrated in the
following table.
<PAGE>
Allocation of the Reserve for Loan Losses
March 31, 1995
<TABLE>
<CAPTION>
(in thousands) % of Loans
Reserve in Each Category
Amount to Total Loans
------- ----------------
<S> <C> <C>
Domestic:
Commercial, financial and agricultural $ 1,183 5.92%
Real estate - mortgage 7,989 75.76
Real estate - construction 2,172 8.49
Consumer 472 9.83
Unallocated 967 --
------- ------
$12,783 100.00%
======= ======
</TABLE>
Note: This distribution is made for analytical purposes only. The total
allowance is available to absorb losses from any segment of the portfolio.
Deposits
BMJ's deposit base is the principal source of funds supporting
interest-earning assets. Maintaining a strong core deposit base is key to the
development of long-term customer relationships which, in turn, present
opportunities for BMJ to cross-sell its services. To meet the requirements of
its diverse customer base, BMJ offers a full range of deposit products,
including interest-bearing and noninterest-bearing demand deposits, savings
deposits, insured retail money market accounts and certificates of deposit.
BMJ's total deposits amounted to $445.5 million at March 31, 1995 compared to
$463.6 million at December 31, 1994.
Table 1 provides information concerning average rates and balances of BMJ's
interest-bearing deposits for the three-month periods ended March 3, 1995 and
1994. Among other things, Table 1 shows that as a result of the increasing
interest rate environment which existed during 1994 and early 1995, the average
rate paid on BMJ's average interest-bearing deposit balances increased to 2.70%
for the three-month period ended March 31, 1995 from 2.14% for the comparable
1994 period.
Capital
BMJ's level of shareholders' equity continued to improve in the first quarter
of 1995; primarily as the result of improved operating results. The following
table provides selected shareholders' equity ratios at March 31, 1995 and
December 31, 1994.
<TABLE>
<CAPTION>
(in thousands) March 31, December 31,
1995 1994
-------- ----------
<S> <C> <C>
Shareholders' equity $59,440 $58,346
Shareholders' equity to assets ratio 11.26% 10.84%
Book value per share $ 7.82 $ 7.68
</TABLE>
The Federal Reserve Board ("FRB") has issued risk-based capital guidelines
applicable to member banks and bank holding companies and the FDIC has issued
comparable guidelines applicable to state nonmember banks. The guidelines, which
establish a risk adjusted ratio relating to the total amount of assets and
off-balance sheet exposures, (as such assets and off-balance sheet items are
weighted to reflect the risk inherent therein,) require a minimum total
risk-based capital ratio of 8.00%, with at least half of the total capital in
the form of Tier 1 capital. The risk-based capital ratios of BMJ and Mid-Jersey
were as follows on the dates shown:
<PAGE>
<TABLE>
<CAPTION>
March 31, 1995 December 31,1994
---------------------------------- -----------------------------------
Total Tier 1 Total Tier 1
Risk-Based Risk-Based Risk-Based Risk-Based
Capital Ratio Capital Ratio Capital Ratio Capital Ratio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
B.M.J.Financial Corp. 16.63% 14.66% 17.03% 15.04%
The Bank of Mid-Jersey 14.75% 13.48% 14.86% 13.58%
</TABLE>
The FRB and FDIC have also adopted leverage capital requirements specifying
the minimum acceptable ratios of Tier 1 capital to total assets. Under these
requirements, the most sound, well-run institutions engaged in the least risky
operations are required to maintain minimum ratios of Tier 1 capital to total
assets of 3%. All other institutions, as well as even extremely sound
institutions experiencing or anticipating significant growth, are expected to
operate well above this minimum level. Most banks generally operate at capital
levels ranging from 100 to 200 basis points above the stated minimum. Higher
capital ratios could be required if they are deemed by regulators to be
warranted by the particular circumstances or risk profile of an individual bank.
The leverage ratios of BMJ and Mid-Jersey were as follows on the dates shown:
<TABLE>
<CAPTION>
Leverage Ratio at Leverage Ratio at
March 31, 1995 December 31,1994
----------------- -----------------
<S> <C> <C>
B.M.J.Financial Corp. 11.00% 10.58%
The Bank of Mid-Jersey 9.97% 9.49%
</TABLE>
Failure to satisfy any minimum capital requirement applicable to BMJ or
Mid-Jersey could subject BMJ or Mid- Jersey, as the case may be, to regulatory
actions by the FRB.
Liquidity and Asset/Liability Management
Liquidity refers to BMJ's ability to maintain a cash flow adequate to fund
operations and meet obligations on a timely and cost effective basis. Asset
liquidity is represented by the ease with which assets can be converted into
cash. BMJ continually evaluates its funding needs and manages its liquidity
position by maintaining adequate levels of liquid assets, such as cash and cash
equivalents and securities available for sale. BMJ's funding needs change as
loans grow, deposits mature and payments on obligations are made. Because the
characteristics of BMJ's assets and liabilities change, liquidity management is
a dynamic process. Among those factors affecting liquidity management are
pricing and maturity of loans, deposits and other assets and liabilities. In
addition, liquidity management is affected by changes in the relationship
between short-term and long-term interest rates.
At March 31, 1995, BMJ had a total of $29.5 million or 5.6% of total assets
in cash and cash equivalents, short-term money market investments, and
securities available for sale, representing its primary sources of liquidity, as
compared to $47.4 million or 8.9% of assets at December 31, 1994. Another source
of asset liquidity is the cash flows provided by maturities and periodic
repayments of principal of both the securities held to maturity portfolio and
the loan portfolio.
Liabilities also provide a source of liquidity for BMJ. Wholesale
certificates of deposit (none of which were brokered deposits) and repurchase
agreements comprised 1.1% of total liabilities at March 31, 1995 and 2.8% of
total liabilities at December 31, 1994. Management believes there is substantial
room to increase these funding sources if necessary to meet its liquidity needs.
In addition, Mid-Jersey currently has a line of $10.8 million available for
discount window borrowing from the Federal Reserve without further pledging
requirements.
As shown in the Consolidated Statement of Cash Flows, cash and cash
equivalents decreased by $19.9 million to $24.9 million at March 31, 1995. This
decrease reflected net cash of $4.0 million provided by operating activities,
offset by $10.5 million of net cash used in investing activities and $13.4
million of net cash used in financing activities. Cash generated by operating
activities reflected BMJ's net income of $1.4 million adjusted for noncash
charges and credits. Cash used in investing activities primarily reflected the
net increases in the loan portfolio and securities held to maturity portfolio
offset in part by the proceeds from maturities of securities available for sale.
Cash used in financing activities primarily reflected the net decrease in demand
deposit, savings and interest checking accounts, partly offset by the net
increase in securities sold under agreements to repurchase.
At March 31, 1995, B.M.J. Financial Corp. (the parent company) had a total of
$8.5 million in cash and cash equivalents, and $1.7 million in short-term
securities for general corporate purposes, which serves as the parent company's
primary source of liquidity. The parent company does not maintain lines of
credit or other borrowing arrangements.
Certain limitations of regulatory agencies exist with respect to the ability
of banking subsidiaries to transfer funds as dividends to the parent holding
company. Nevertheless, on January 1, 1995, $10.7 million of retained earnings of
Mid- Jersey was available for declaration of dividends from Mid-Jersey to BMJ
without prior regulatory approval. Moreover, BMJ has the capacity to borrow
funds from the Federal Reserve discount window to meet liquidity needs that are
not funded through subsidiary dividends or income.
BMJ's principal asset/liability management objectives are to manage the
sensitivity of net interest spreads to potential changes in interest rates and
to enhance profitability in ways that should provide sufficient reward for
understood and controlled risk. Specific asset/liability strategies are chosen
to achieve an appropriate trade-off between average spreads and the variability
of spreads. The BMJ Asset/Liability Management Committee meets weekly to monitor
consolidated risk at the corporate level and to monitor compliance with
established liquidity and interest rate sensitivity policy parameters on a
consolidated and individual bank basis. Funding positions are kept within
established policy limits designed to maintain reasonable risk levels and
adequate liquidity.
In order to measure the effect of interest rate fluctuations on BMJ's net
interest margin, management simulates the potential effects of changing interest
rates through computer modeling. These simulations determine the impact on net
interest income of various interest rate scenarios and balance sheet trends and
strategies. These simulations incorporate the dynamics of the balance sheet as
well as the interrelationships between various categories of short-term interest
rates and the impact the yield-curve level has on asset and liability pricing.
Net interest income sensitivity to balance sheet trends and interest rate
movements is quantified and appropriate strategies are developed and
implemented.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11. Statement Regarding Computation of Per Share
Earnings (Loss)
(b) BMJ filed a current report on Form 8-K with the Securities and
Exchange Commission on April 11, 1995. The report disclosed the
sudden death of Chairman, President and CEO John H. Walther on
April 3, 1995.
The report also disclosed that the Registrant's Board of
Directors postponed the annual meeting of shareholders,
previously scheduled for April 28, 1995. The annual meeting is
now scheduled for Friday, June 2, 1995 at 10:00 AM at Nottingham
Fire Company, Hamilton Square, New Jersey.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date 05/17/95 /s/ Elmer J. Elias
------------------------ -------------------------------------------
Elmer J. Elias, Acting President
Date 05/17/95 /s/ Joseph M. Reardon
------------------------ -------------------------------------------
Joseph M. Reardon, Chief Financial Officer
EXHIBIT 11. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
B.M.J. Financial Corp.
Computation of Earnings per Common Share on Primary
and Fully Diluted Basis
<TABLE>
<CAPTION>
(In thousands except for number Three Months Ended March 31,
of shares and per share amounts) 1995 1994
-------- --------
<S> <C> <C>
Net income for computation of primary
earnings per share .................................... $ 1,434 $ 1,594
======== ========
Weighted average outstanding common shares
for computation of primary earnings per share ......... 7,597,755 7,551,250
Additional common stock equivalents .................... 83,793 19,425
--------- ---------
Adjusted average outstanding shares for
computation of primary earnings per share ............. 7,681,548 7,570,675
========= =========
Primary earnings per share ............................. $ 0.19 $ 0.21
========= ========
Net income ............................................. $ 1,434 $ 1,594
Adjustment to interest expense for reduction of
existing debt, net of tax effect ...................... 33 101
--------- ---------
Net income, as adjusted, for computation of
fully diluted earnings per share ...................... $ 1,467 $ 1,695
======== ========
Weighted average outstanding common shares ............. 7,597,755 7,551,250
Additional shares issued assuming conversion of
convertible capital notes and exercise of stock options 302,505 544,524
--------- ---------
Adjusted average outstanding shares for
computation of fully diluted earnings per share ....... 7,900,260 8,095,774
========= =========
Fully diluted earnings per share ....................... $ 0.19 $ 0.21
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 17,099
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,757
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,658
<INVESTMENTS-CARRYING> 115,006
<INVESTMENTS-MARKET> 111,726
<LOANS> 370,258
<ALLOWANCE> 12,783
<TOTAL-ASSETS> 528,036
<DEPOSITS> 445,481
<SHORT-TERM> 13,891
<LIABILITIES-OTHER> 6,524
<LONG-TERM> 2,700
<COMMON> 7,598
0
0
<OTHER-SE> 51,842
<TOTAL-LIABILITIES-AND-EQUITY> 528,036
<INTEREST-LOAN> 7,773
<INTEREST-INVEST> 1,886
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,659
<INTEREST-DEPOSIT> 2,498
<INTEREST-EXPENSE> 2,712
<INTEREST-INCOME-NET> 6,947
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,796
<INCOME-PRETAX> 2,248
<INCOME-PRE-EXTRAORDINARY> 2,248
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,434
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
<YIELD-ACTUAL> 7.97
<LOANS-NON> 8,022
<LOANS-PAST> 168
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,100
<ALLOWANCE-OPEN> 12,485
<CHARGE-OFFS> 172
<RECOVERIES> 470
<ALLOWANCE-CLOSE> 12,783
<ALLOWANCE-DOMESTIC> 11,816
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 967
</TABLE>
