UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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 June 30, 1998 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 000-13091
-----------------------------------
WASHINGTON TRUST BANCORP, INC.
(Exact name of registrant as specified in its charter)
-----------------------------------
RHODE ISLAND 05-0404671
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 BROAD STREET
WESTERLY, RHODE ISLAND 02891
(Address of principal executive offices) (Zip Code)
(401) 348-1200
(Registrant's telephone number, including area code)
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 [ ]
The number of shares of common stock of the registrant outstanding as of August
11, 1998 was 9,962,121.
Page 1
<PAGE>
FORM 10-Q
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY
For The Quarter Ended June 30, 1998
TABLE OF CONTENTS
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997 3
Consolidated Statements of Income
Three Months and Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended June 30, 1998 and 1997 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1998 and 1997 6
Condensed Notes to Consolidated Financial Statements 8
Independent Accountants' Review Report 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II. Other Information 18
Signatures 19
This report contains forward-looking information, including statements regarding
the Corporation's plans, objectives, expectations and intentions. The
Corporation's actual results may differ significantly from the results discussed
in the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, (i) changes in the economy in the geographic
region served by the Corporation; (ii) the effect of changes in laws and
regulations, including federal and state banking laws and regulations, with
which the Corporation must comply; (iii) the effect of changes in accounting
policies and practices; (iv) the effect on the Corporation's competitive
position within its market area of the increasing consolidation within the
banking and financial services industries, including the increased competition
from larger regional and out-of-state banking organizations as well as nonbank
providers of various financial services; and (v) the effect of changes in
interest rates.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and due from banks $22,925 $12,925
Federal funds sold and other short-term investments 11,792 13,203
Mortgage loans held for sale 5,184 3,772
Securities:
Available for sale, at fair value 308,397 237,366
Held to maturity, at cost 55,847 51,807
- -----------------------------------------------------------------------------------------------
Total securities 364,244 289,173
Federal Home Loan Bank stock, at cost 16,444 16,444
Loans 454,070 455,910
Less allowance for loan losses 9,712 8,835
- -----------------------------------------------------------------------------------------------
Net loans 444,358 447,075
Premises and equipment, net 22,944 21,821
Accrued interest receivable 5,697 4,896
Other real estate owned, net 63 497
Other assets 5,560 4,587
- -----------------------------------------------------------------------------------------------
Total assets $899,211 $814,393
- -----------------------------------------------------------------------------------------------
Liabilities:
Deposits:
Demand $89,972 $75,282
Savings 196,858 185,073
Time 264,959 270,571
- -----------------------------------------------------------------------------------------------
Total deposits 551,789 530,926
Dividends payable 1,002 927
Short-term borrowings 26,767 20,337
Federal Home Loan Bank advances 241,331 187,001
Accrued expenses and other liabilities 8,089 7,998
- -----------------------------------------------------------------------------------------------
Total liabilities 828,978 747,189
- -----------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock of $.0625 par value; authorized
30 million shares; issued 9,940,831
shares in 1998 and 6,601,947 shares in 1997 418 413
Paid-in capital 4,054 3,705
Retained earnings 59,265 56,360
Accumulated other comprehensive income 8,272 7,059
Treasury stock, at cost; 55,014 shares in 1998
and 14,205 shares in 1997 (1,776) (333)
- -----------------------------------------------------------------------------------------------
Total shareholders' equity 70,233 67,204
- -----------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $899,211 $814,393
- -----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands,
CONSOLIDATED STATEMENTS OF INCOME except per share data)
(Unaudited)
Three Months Six Months
-------------------------------------------
Periods ended June 30, 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $10,022 $9,712 $20,094 $18,986
Interest on securities 5,132 4,239 9,704 7,977
Dividends on corporate stock and Federal Home Loan Bank stock 535 497 1,043 899
Interest on federal funds sold and other short-term investments 115 70 284 132
- ---------------------------------------------------------------------------------------------------------------------
Total interest income 15,804 14,518 31,125 27,994
- ---------------------------------------------------------------------------------------------------------------------
Interest expense:
Savings deposits 845 860 1,672 1,720
Time deposits 3,926 3,493 7,816 6,769
Federal Home Loan Bank advances 3,331 2,825 6,403 5,171
Other 288 228 520 528
- ---------------------------------------------------------------------------------------------------------------------
Total interest expense 8,390 7,406 16,411 14,188
- ---------------------------------------------------------------------------------------------------------------------
Net interest income 7,414 7,112 14,714 13,806
Provision for loan losses 450 300 900 600
- ---------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 6,964 6,812 13,814 13,206
- ---------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust revenue 1,361 1,223 2,585 2,311
Service charges on deposit accounts 742 623 1,375 1,176
Merchant processing fees 222 165 377 281
Net gains on sales of securities 351 373 392 627
Net gains on loan sales 414 62 743 134
Other income 225 256 507 505
- ---------------------------------------------------------------------------------------------------------------------
Total noninterest income 3,315 2,702 5,979 5,034
- ---------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 3,472 3,203 6,891 6,156
Net occupancy 502 426 961 809
Equipment 622 506 1,188 970
Merchant processing costs 227 169 338 255
Office supplies 178 230 336 386
Advertising and promotion 169 190 281 312
Other 1,620 1,428 2,985 2,755
- ---------------------------------------------------------------------------------------------------------------------
Total noninterest expense 6,790 6,152 12,980 11,643
- ---------------------------------------------------------------------------------------------------------------------
Income before income taxes 3,489 3,362 6,813 6,597
Income tax expense 977 1,101 1,908 2,185
- ---------------------------------------------------------------------------------------------------------------------
Net income $2,512 $2,261 $4,905 $4,412
- ---------------------------------------------------------------------------------------------------------------------
Earnings per share - basic $.25 $.23 $.49 $.45
Earnings per share - diluted $.24 $.22 $.47 $.43
Cash dividends declared per share $.10 $.08 $.20 $.17
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
Accumulated
Other
Common Paid-in Retained Comprehensive Treasury
Six months ended June 30, Stock Capital Earnings Income Stock Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998
Balance at beginning of year $413 $3,705 $56,360 $7,059 $(333) $67,204
Net income 4,905 4,905
Other comprehensive income, net of tax:
Valuation adjustments for securities
available for sale 1,213 1,213
---------
Comprehensive income 6,118
Cash dividends declared (2,000) (2,000)
Shares issued for stock option plan
and dividend reinvestment plan 5 349 1,282 1,636
Shares repurchased (2,725) (2,725)
- -----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998 $418 $4,054 $59,265 $8,272 $(1,776) $70,233
- -----------------------------------------------------------------------------------------------------------------------
1997
Balance at beginning of year $273 $3,764 $50,886 $4,504 $ - $59,427
Net income 4,412 4,412
Other comprehensive income, net of tax:
Valuation adjustments for securities
available for sale 1,019 1,019
---------
Comprehensive income 5,131
Cash dividends declared (1,664) (1,664)
Shares issued for stock option plan
and dividend reinvestment plan 2 278 412 692
Shares repurchased (412) (412)
- -----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1997 $275 $4,042 $53,634 $5,523 $ - $63,474
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six months ended June 30, 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $4,905 $4,412
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 900 600
Depreciation of premises and equipment 1,171 944
Amortization of premium in excess of accretion of discount on
debt securities 604 437
Net gains on sales of securities (392) (627)
Net gains on loan sales (743) (134)
Proceeds from sales of loans 45,469 9,259
Loans originated for sale (46,182) (10,313)
Increase in accrued interest receivable (801) (855)
Increase in other assets (973) (740)
Increase (decrease) in accrued expenses and other liabilities (533) 262
Other, net (124) (158)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,301 3,087
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities: Securities available for sale:
Purchases (122,712) (84,505)
Proceeds from sales 22,544 35,410
Maturities and principal repayments 30,761 13,456
Securities held to maturity:
Purchases (6,388) (21,998)
Maturities and principal repayments 2,349 661
Purchases of Federal Home Loan Bank stock - (4,761)
Loan originations under (over) principal collected on loans 1,923 (20,105)
Purchase of loans - (324)
Proceeds from sales of other real estate owned 504 593
Purchases of premises and equipment (2,301) (2,524)
Purchase of deposits, net of premium paid - 7,014
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (73,320) (77,083)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in deposits 20,862 29,619
Net increase in other short-term borrowings 6,430 1,753
Proceeds from Federal Home Loan Bank advances 313,300 244,100
Repayment of Federal Home Loan Bank advances (258,970) (190,441)
Repurchase of common stock (2,725) (412)
Proceeds from issuance of common stock 1,636 692
Cash dividends paid (1,925) (1,616)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 78,608 83,695
- -------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 8,589 9,699
Cash and cash equivalents at beginning of year 26,128 18,990
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $34,717 $28,689
- -------------------------------------------------------------------------------------------------------------------
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited)
Six months ended June 30, 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Noncash Investing and Financing Activities:
Net transfers from loans to other real estate owned $44 $248
Loans charged off 199 828
Loans made to facilitate the sale of other real estate owned - 270
Increase in net unrealized gain on securities available for sale 1,213 1,019
Supplemental Disclosures:
Interest payments $16,385 $13,694
Income tax payments 1,183 2,002
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WASHINGTON TRUST BANCORP, INC. AND SUBSIDIARY (Dollars in thousands)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accounting and reporting policies of Washington Trust Bancorp, Inc. (the
"Corporation") are in accordance with generally accepted accounting principles
and conform to general practices of the banking industry. In the opinion of
management, the accompanying consolidated financial statements present fairly
the Corporation's financial position as of June 30, 1998 and December 31, 1997
and the results of operations and cash flows for the interim periods presented.
The consolidated financial statements include the accounts of the Corporation
and its wholly-owned subsidiary, The Washington Trust Company. All significant
intercompany balances and transactions have been eliminated.
The unaudited consolidated financial statements of Washington Trust Bancorp,
Inc. presented herein have been prepared pursuant to the rules of the Securities
and Exchange Commission for quarterly reports on Form 10-Q and do not include
all of the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December
31, 1997, included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1997.
All share and per share amounts have been adjusted to reflect a 3-for-2 split of
the Corporation's common stock effected on August 3, 1998.
In June 1997, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
SFAS No. 130 established standards for reporting and displaying comprehensive
income, which is defined as all changes to equity except investments by and
distributions to shareholders. Net income is a component of comprehensive
income, with all other components referred to in the aggregate as other
comprehensive income. The Corporation has adopted SFAS No. 130 effective for the
quarter ended March 31, 1998.
(2) Securities Available for Sale
<TABLE>
<CAPTION>
Securities available for sale are summarized as follows:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 1998
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies $120,633 $1,090 $(116) $121,607
Mortgage-backed securities 144,967 888 (127) 145,728
Corporate bonds 16,088 52 (19) 16,121
Corporate stocks 13,234 11,776 (69) 24,941
- ---------------------------------------------------------------------------------------------------------------------
Total 294,922 13,806 (331) 308,397
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1997
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies 89,632 1,000 (40) 90,592
Mortgage-backed securities 121,728 865 (61) 122,532
Corporate bonds 1,985 15 - 2,000
Corporate stocks 12,319 9,976 (53) 22,242
- ---------------------------------------------------------------------------------------------------------------------
Total $225,664 $11,856 $(154) $237,366
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Securities available for sale with a fair value of $34,277 and $29,127 were
pledged to secure Treasury Tax and Loan deposits, short-term borrowings and
public deposits at June 30, 1998 and December 31, 1997, respectively. For the
six months ended June 30, 1998, proceeds from sales of securities available for
sale amounted to $22,544, while net realized gains on these sales amounted to
$392.
<PAGE>
(3) Securities Held to Maturity
<TABLE>
<CAPTION>
The amortized cost and fair value of securities held to maturity are summarized
as follows:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 1998
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies $22,961 $228 $ - $23,189
Mortgage-backed securities 9,870 339 - 10,209
States and political subdivisions 23,016 162 (14) 23,164
- ---------------------------------------------------------------------------------------------------------------------
Total 55,847 729 (14) 56,562
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1997
U.S. Treasury obligations and obligations
of U.S. government-sponsored agencies 23,932 245 (4) 24,173
Mortgage-backed securities 10,695 377 - 11,072
States and political subdivisions 17,180 161 - 17,341
- ---------------------------------------------------------------------------------------------------------------------
Total $51,807 $783 $(4) $52,586
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
There were no sales or transfers of securities held to maturity during the six
months ended June 30, 1998.
(4) Loan Portfolio The following is a summary of loans:
June 30, December 31,
1998 1997
- --------------------------------------------------------------------------------
Commercial:
Mortgages $68,170 $62,264
Construction and development 423 3,539
Other 126,119 127,956
- --------------------------------------------------------------------------------
Total commercial 194,712 193,759
Residential real estate:
Mortgages 175,602 181,790
Homeowner construction 6,844 6,097
- --------------------------------------------------------------------------------
Total residential real estate 182,446 187,887
Consumer (1) 76,912 74,264
- --------------------------------------------------------------------------------
Total loans $454,070 $455,910
- --------------------------------------------------------------------------------
(1) Includes credit card loans totaling $5.0 million
(5) Allowance For Loan Losses
The following is an analysis of the allowance for loan losses:
Three Months Six Months
---------------------------------------------
Periods ended June 30, 1998 1997 1998 1997
- --------------------------------------------------------------------------------
Balance at beginning of period $9,309 $8,585 $8,835 $8,495
Provision charged to expense 450 300 900 600
Recoveries 97 38 176 144
Loans charged off (144) (512) (199) (828)
- --------------------------------------------------------------------------------
Balance at end of period $9,712 $8,411 $9,712 $8,411
- --------------------------------------------------------------------------------
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Shareholders
Washington Trust Bancorp, Inc.:
We have reviewed the accompanying consolidated balance sheets of Washington
Trust Bancorp, Inc. and subsidiary (the "Corporation") as of June 30, 1998, and
the related consolidated statements of income for the three month and six-month
periods ended June 30, 1998 and 1997, changes in shareholders' equity and cash
flows for six-month periods ended June 30, 1998 and 1997. These consolidated
financial statements are the responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK, LLP
Providence, Rhode Island
July 17, 1998
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Net income for the three months ended June 30, 1998 amounted to $2.5 million, up
11.1% over the $2.3 million of net income recorded in the second quarter of
1997. Diluted earnings per share for the quarter ended June 30, 1998 amounted to
$.24, up from $.22 per share on net income earned in the comparable 1997
quarter. Net income for the six months ended June 30, 1998 amounted to $4.9
million, an increase of 11.2% from the $4.4 million reported for the comparable
1997 period. Diluted earnings per share for the six months ended June 30, 1998
amounted to $.47, up 9.3% from the $.43 per share on net income earned in the
same 1997 period.
Net interest income for the first quarter of 1998 increased by 4.2% over the
prior year quarter, to $7.4 million. Net interest income for the six months
ended June 30, 1998 increased by 6.6% over the prior year period, to $14.7
million. This increase was mainly attributable to net interest income generated
under an investment program, as well as higher interest and fees on loans. (See
additional discussion under the caption "Net Interest Income".)
The provision for loan losses for the three months ended June 30, 1998 amounted
to $450 thousand, up from $300 thousand for the second quarter of 1997. For the
six months ended June 30, 1998 and 1997, the provision for loan losses amounted
to $900 thousand and $600 thousand, respectively. Other noninterest income
(noninterest income excluding net gains on sales of securities) amounted to $3.0
million for the second quarter of 1998, up 27.3% from the corresponding 1997
period. Other noninterest income amounted to $5.6 million for the six months
ended June 30, 1998, up 26.8% from the corresponding 1997 period. This increase
was primarily due to increases in net gains on loan sales, higher revenues for
trust services as well as increases in service charges earned on deposit
accounts. For the three months ended June 30, 1998 and 1997, net gains on sales
of securities amounted to approximately $351 thousand and $373 thousand,
respectively. For the six months ended June 30, 1998 and 1997, net gains on
sales of securities amounted to $392 thousand and $627 thousand, respectively.
Total noninterest expense for the quarter ended June 30, 1998 amounted to $6.8
million, an increase of 10.4% from the comparable 1997 amount. Total noninterest
expense for the six months ended June 30, 1998 amounted to $13.0 million, an
increase of 11.5% over the comparable 1997 amount. Theses increase were
primarily attributable to higher salaries and benefits expense and increases in
other expenses resulting from the Corporation's expansion of its market area.
(See additional discussion of the expansion of the Corporation's market area
under the caption "Expansion"). Equipment and net occupancy costs for the six
months ended June 30, 1998 rose 22.5% and 18.8%, respectively, over the prior
year period due primarily to rental expense and depreciation of premises and
equipment incurred in connection with the Corporation's market area expansion
efforts.
Included in other noninterest expense were contributions to the Corporation's
charitable foundation amounting to $323 thousand and $227 thousand for the three
months ended June 30, 1998 and 1997, respectively. This donation resulted in
realized securities gains of $313 thousand and $208 thousand, respectively, for
the same periods.
Net Interest Income
(The accompanying schedule entitled "Average Balances / Net Interest Margin -
Fully Taxable Equivalent Basis (FTE)" should be read in conjunction with this
discussion.)
FTE net interest income for the six months ended June 30, 1998 amounted to $15.2
million, up 4.6% over the same 1997 period due primarily to the growth in
interest-earning assets. The interest rate spread and the net interest margin
for the six months ended June 30, 1998 amounted to 3.18% and 3.76%,
respectively. Comparable amounts for period ended June 30, 1997 were 3.58% and
4.12%, respectively.
For the six months ended June 30, 1998, average interest-earning assets amounted
to $808.8 million, an increase of $102.9 million, or 14.6%, over the comparable
1997 amount. The growth in average interest-earning assets was due principally
to increases in average taxable debt securities and total average loans. The
$63.3 million increase in average taxable debt securities resulted primarily
from an investment securities purchase program. The objective of the program is
to increase net interest income and improve returns on equity, while incurring
limited interest rate risk. The securities purchased under this program were
funded with Federal Home Loan Bank (FHLB) advances with similar interest rate
repricing characteristics and growth in deposits. The FTE rate of return on
average interest-earning assets was 7.82% for the six months ended June 30,
1998, down from 8.14% for the same 1997 period primarily due to reduction in
yields on taxable debt securities.
The yield on average total loans amounted to 8.87% for the six months ended June
30, 1998, down from 8.94% in the comparable 1997 period due primarily to lower
yields on new loan originations. Average total loans for the six months ended
June 30, 1998 rose 6.6% over the prior year and amounted to $454.4 million. All
categories of loans exhibited increases over prior year amounts, with the
largest increase in consumer loans. The yield on consumer loans declined 20
basis points from the second quarter of 1997 to 9.08%. The yield on commercial
loans amounted to 9.48%, down from the prior year yield of 9.57%, while the
yield on total residential real estate loans amounted to 8.17%, up slightly from
the comparable 1997 period.
The Corporation's total cost of funds on interest-bearing liabilities amounted
to 4.64% for the six months ended June 30, 1998, up from 4.56% for the
comparable 1997 period. This increase was due mainly to higher average FHLB
advances outstanding as well as increases in average balances and rates paid on
time deposits. FHLB advances have the highest overall cost of funds rate of the
bank's interest-bearing liabilities. Average FHLB advances for the six months
ended June 30, 1998 amounted to $219.4 million, up 22.9% from the $178.6 million
average balance for the same 1997 period. The additional advances were used
primarily to purchase securities under the investment program. The average rate
paid on FHLB advances for the six months ended June 30, 1998 was 5.84%, an
increase of 5 basis points from the prior year rate. Average time deposits rose
13.3% from the prior year amount, to $284.2 million due to a certificate of
deposit promotion conducted in early 1998. The rate paid on time deposits
increased to 5.50%, up 10 basis points from the prior year rate. Average savings
deposits for the six months ended June 30, 1998 increased 7.1% from the
comparable 1997 amount to $185.5 million. The rate paid on these deposits was
1.80% for the first six months of 1998, down from 1.99% for the same 1997
period. For the six months ended June 30, 1998, average demand deposits, an
interest-free funding source, were up by $10.6 million, or 16.6%, from the same
prior year period.
The Corporation supplements its interest rate risk management strategies with
off-balance sheet transactions. In March 1998, the Corporation entered into a
five year interest rate floor contract with a notional amount of $20 million.
The purpose of the floor contract is to offset the risk of future reductions in
interest earned on certain floating rate loans. This floor contract entitles the
Corporation to receive payment from a counterparty if the three-month LIBOR rate
falls below 5.50%. The amount of the payment is the difference between the
contractual floor rate and the three-month LIBOR rate multiplied by the notional
principal amount of the contract. If the contractual rate does not fall below
the floor rate, no payment is received. The credit risk associated with this
type of transaction is risk of default by the counterparty. To minimize this
risk, the Corporation enters into interest rate contracts only with creditworthy
counterparties. The notional amount of the agreement does not represent the
amount exchanged by the parties and, therefore, is not a measure of the
Corporation's potential loss exposure.
<PAGE>
Average Balances / Net Interest Margin - Fully Taxable Equivalent Basis
The following table sets forth average balance and interest rate information.
Income is presented on a fully taxable equivalent basis (FTE). For dividends on
corporate stocks, the 70% federal dividends received deduction is also used in
the calculation of tax equivalency. Nonaccrual and renegotiated loans, as well
as interest earned on these loans (to the extent recognized in the Consolidated
Statements of Income), are included in amounts presented for loans.
<TABLE>
<CAPTION>
Six months ended June 30, 1998 1997
- ------------------------------------------ ------------------------------------ ----------------------------------
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
- -------------------------------------- ------------- ------------ ---------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Residential real estate loans $187,998 7,680 8.17% $176,664 7,200 8.15%
Commercial and other loans 192,091 9,108 9.48% 184,773 8,841 9.57%
Consumer loans 74,285 3,371 9.08% 64,972 3,016 9.28%
- -------------------------------------------------------------------------------------------------------------------
Total loans 454,374 20,159 8.87% 426,409 19,057 8.94%
Federal funds sold and other
short-term investments 10,394 284 5.46% 4,842 132 5.44%
Taxable debt securities 294,408 9,285 6.31% 231,061 7,892 6.83%
Nontaxable debt securities 19,411 633 6.52% 15,669 519 6.63%
Corporate stocks and FHLB stock 30,191 1,250 8.28% 27,902 1,115 7.99%
- -------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 808,778 31,611 7.82% 705,883 28,715 8.14%
Non interest-earning assets 50,613 44,449
- -------------------------------------------------------------------------------------------------------------------
Total assets $859,391 $750,332
- -------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Savings deposits $99,018 1,141 2.31% $89,900 1,119 2.49%
NOW account deposits 63,590 288 .91% 58,369 304 1.04%
Money market deposits 22,863 243 2.12% 24,954 297 2.38%
Time deposits 284,222 7,816 5.50% 250,866 6,769 5.40%
FHLB advances 219,364 6,403 5.84% 178,550 5,171 5.79%
Other 18,421 520 5.65% 19,063 528 5.54%
- -------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 707,478 16,411 4.64% 621,702 14,188 4.56%
Demand deposits 74,562 63,964
Non interest-bearing liabilities 7,743 3,278
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 789,783 688,944
Total shareholders' equity 69,608 61,388
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $859,391 $750,332
- -------------------------------------------------------------------------------------------------------------------
Net interest income /
interest rate spread $15,200 3.18% $14,527 3.58%
- -------------------------------------------------------------------------------------------------------------------
Net interest margin 3.76% 4.12%
- -------------------------------------------------------------------------------------------------------------------
<FN>
Interest income amounts presented in the table above include the following
adjustments for taxable equivalency:
(Dollars in thousands)
Six months ended June 30, 1998 1997
- --------------------------------------------------------------------------------
Commercial and other loans $65 $71
Taxable debt securities - 250
Nontaxable debt securities 214 185
Corporate stocks 207 215
</FN>
</TABLE>
<PAGE>
Financial Condition and Liquidity
Total assets amounted to $899.2 million at June 30, 1998, an increase of $84.8
million, or 10.4%, from the December 31, 1997 amount of $814.4 million. Average
assets totaled $859.4 million for the six months ended June 30, 1998, up by
14.5% over the comparable 1997 period.
Securities Available for Sale - The carrying value of securities available for
sale at June 30, 1998 amounted to $308.4 million, an increase of 29.9% over the
December 31, 1997 amount of $237.4 million. This increase is attributable to
purchases of securities under the Corporation's investment program. The net
unrealized gain on securities available for sale amounted to $13.5 million, up
15.2% from the December 31, 1997 balance of $11.7 million. This increase was
attributable to the rise in the equity market that occurred in the first six
months of 1998.
Securities Held to Maturity - The carrying value of securities held to maturity
amounted to $55.8 million at June 30, 1998, up from $51.8 million at December
31, 1997. This increase is due to purchases of securities of states and
political subdivisions. The net unrealized gain on securities held to maturity
amounted to approximately $715 thousand at June 30, 1998, down from $779
thousand at December 31, 1997.
Loans - Total loans amounted to $454.1 million at June 30, 1998, down slightly
from the December 31, 1997 balance of $455.9 million. The balance of residential
real estate loans declined by $5.4 million, primarily due to refinancings of
adjustable-rate mortgages with new loans largely sold into the secondary market.
Consumer loans rose 3.6% during the first six months of 1998 while commercial
loan growth remained flat.
Deposits - Total deposits amounted to $551.8 million at June 30, 1998, up by
3.9% from the December 31, 1997 amount of $530.9 million. Demand and savings
deposits increased by $14.7 million and $11.8 million, respectively, due to
normal seasonal deposit inflow. Time deposits amounted to $265.0 million, a
decline of $5.6 million or 2.1% from the December 31, 1997 balance of $270.6
million.
Borrowings - The Corporation utilizes FHLB advances as a funding source. FHLB
advances amounted to $241.3 million at June 30, 1998, up by $54.3 million from
the December 31, 1997 amount. In addition, short-term borrowings outstanding at
June 30, 1998 amounted to $26.8 million. The additional FHLB advances were used
to purchase securities under the investment program.
For the six months ended June 30, 1998, net cash provided by operations amounted
to $3.3 million, the majority of which was generated by net income. A lower
interest rate environment resulted in increased volume of mortgage loans
originated for sale into the secondary market. Loans originated for sale in the
first six months of 1998 amounted to $46.2 million, significantly higher than
the $10.3 million originated in the corresponding 1997 period. Proceeds from
sales of loans in the six months ended June 30, 1998 amounted to $45.5 million,
up from $9.3 million in the comparable 1997 period. Net cash used in investing
activities amounted to $73.3 million and was primarily used to purchase
securities available for sale. Net cash provided by financing activities of
$78.6 million was generated mainly by a net increase in FHLB advances of $54.3
million, and by an increase in deposits of $20.9 million. (See Consolidated
Statements of Cash Flows for additional information.)
Expansion
During the first quarter of 1998, the Corporation opened a financial services
branch office in New London, Connecticut. Financial services provided at the
office include trust and investment management, commercial lending and
residential mortgage origination. The office does not currently accept deposits
nor perform other retail banking services, but may offer them in the future. The
Corporation has also opened an operations center located in Westerly, Rhode
Island. Operations functions previously performed at the Corporation's
headquarters were relocated to this leased facility during the second quarter of
1998.
<PAGE>
Asset Quality
Nonperforming assets are summarized in the following table:
June 30, December 31,
(Dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
Nonaccrual loans 90 days or more past due $4,440 $4,089
Nonaccrual loans less than 90 days past due 2,887 3,246
- --------------------------------------------------------------------------------
Total nonaccrual loans 7,327 7,335
Other real estate owned 63 497
- --------------------------------------------------------------------------------
Total nonperforming assets $7,390 $7,832
- --------------------------------------------------------------------------------
Nonaccrual loans as a % of total loans 1.61% 1.61%
Nonperforming assets as a % of total assets .82% .96%
Allowance for loan losses to nonaccrual loans 132.55% 120.45%
Not included in the analysis of nonperforming assets at June 30, 1998 and
December 31, 1997 above are approximately $285 thousand and $644 thousand,
respectively, of loans greater than 90 days past due and still accruing. These
loans consist primarily of residential mortgages which are considered
well-collateralized and in the process of collection and therefore are deemed to
have no loss exposure.
The following is an analysis of nonaccrual loans by loan category:
June 30, December 31,
(Dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
Residential mortgages $1,530 $1,290
Commercial:
Mortgages 2,106 1,977
Other (1) 3,132 3,616
Consumer 559 452
- --------------------------------------------------------------------------------
Total nonaccrual loans $7,327 $7,335
- --------------------------------------------------------------------------------
(1) Loans to businesses and individuals, a substantial portion of which is fully
or partially collateralized by real estate.
Impaired loans consist of all nonaccrual commercial loans. At June 30, 1998, the
recorded investment in impaired loans was $5.3 million, including $4.7 million
which had a related allowance amounting to $903 thousand. The balance of
impaired loans which did not require an allowance at June 30, 1998 was $591
thousand. During the six months ended June 30, 1998, the average recorded
investment in impaired loans was $6.0 million. Also during this period, interest
income recognized on impaired loans amounted to approximately $184 thousand.
Interest income on impaired loans is recognized on a cash basis only.
Capital Resources
Total equity capital amounted to $70.2 million, or 7.8% of total assets at June
30, 1998. This compares to $67.2 million, or 8.3% at December 31, 1997. The
reduction in this ratio is due primarily to the growth in assets resulting from
the investment program. Total equity increased by approximately $3.0 million
from December 31, 1997. This increase was principally attributable to a $2.5
million increase in earnings retention. (See the Consolidated Statements of
Changes in Shareholders' Equity for additional information.)
At June 30, 1998, the Corporation's Tier 1 capital ratio was 12.84%, the total
risk-adjusted capital ratio was 14.10% and the leverage ratio was 7.03%. These
ratios were all above the ratios required to be categorized as well-capitalized.
Dividends payable at June 30, 1998 amounted to approximately $1.0 million,
representing $.10 per share payable on July 15, 1998, an increase of 11.1% over
the $.09 per share declared in the fourth quarter of 1997. The source of funds
for dividends paid by the Corporation is dividends received from its subsidiary
bank. The subsidiary bank is a regulated enterprise, and as such its ability to
pay dividends to the parent is subject to regulatory review and restriction.
On June 18, 1998, the Corporation's board of directors voted to approve a
3-for-2 stock split of the Corporation's common stock. The stock split, in the
form of a stock dividend, was paid on August 3, 1998 to shareholders of record
as of July 17, 1998. Cash payments were made in lieu of issuing fractional
shares. The cash payment for fractional shares was based on the closing price of
the common stock as reported by Nasdaq on the record date.
Year 2000
The Corporation has developed a Year 2000 Project Plan (the "Plan") which
includes an assessment of its computer hardware and software systems, as well as
vendor supplied systems. Substantially all of the software used by the
Corporation is provided by outside vendors, including both internal systems as
well as certain applications provided by outside service bureaus. The Plan calls
for validation and testing with respect to all internal mission critical systems
to be completed by December 31, 1998. Validation and testing of outsourced
mission critical systems of vendor supplied systems is expected to be completed
by March 31, 1999. Management believes that its state of readiness is
appropriate. The Plan calls for contingency strategies addressing action plans
for mission critical items including the evaluation of potential alternative
solutions.
Costs associated with Year 2000 preparation include internal staffing,
consulting, system testing and modification. The Corporation has estimated that
costs associated with the project will amount to approximately $500,000 and will
largely be incurred beginning in the third quarter of 1998 through year-end
1999. Most of these costs will be expensed, while others will be incurred for
certain capital improvements.
An additional concern for the Corporation is the risk of a customer's failure to
prepare for Year 2000 compliance and the impact this could have on their ability
to repay their loans in accordance with their terms. The Corporation is in the
process of gathering the necessary information from its commercial customers and
assessing the impact that this issue will have on the adequacy of the level of
the allowance for loan losses.
Target dates associated with the Plan's completion, as well as applicable costs
are estimates. The risk of not completing the Plan as outlined could affect the
Corporation's results of operations.
Recent Accounting Developments
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", is effective for financial statements of public business
enterprises for periods beginning after December 15, 1997. This Statement
provides reporting standards for financial and descriptive information on
reportable operating segments. An operating segment is defined as a component of
an enterprise for which separate financial information is available and reviewed
regularly by the chief operating decision maker in order to make decisions about
resources to be allocated to the segment and also to evaluate the segment's
performance. SFAS No. 131 requires a corporation to disclose certain balance
sheet and income statement information by operating segment, as well as provide
a reconciliation of operating segment information to the corporation's
consolidated balances.
Effective January 1, 1998, the Corporation will adopt SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits, an amendment of
SFAS Nos. 87, 88 and 106". SFAS No. 132 standardizes the disclosure requirements
for pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis, and eliminates
certain disclosures required by SFAS Nos. 87, 88 and 106. The adoption of this
pronouncement also requires restatement of disclosures for earlier periods.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This Statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
No. 133 requires a corporation to recognize all derivatives as either assets or
liabilities in the balance sheet and to measure those instruments at fair value.
This Statement defines conditions and criteria to be used in designating a
derivative as a specific type of hedging instrument. SFAS No. 133 also explains
the accounting for changes in the fair value of a derivative which depends on
the intended use and the resulting designation. Under this Statement, a
corporation is required to establish at the inception of the hedge the method to
be used for assessing the effectiveness of the hedging derivative and the
measurement approach for determining the ineffective aspect of the hedge. Those
methods must be consistent with the corporation's approach to managing risk.
SFAS No. 133 applies to all entities. This Statement amends SFAS No. 52,
"Foreign Currency Translation" and No. 107, "Disclosures about Fair Value of
Financial Instruments". The Statement also supersedes SFAS No. 80, "Accounting
for Futures Contracts", No. 105, "Disclosures of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk", and No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments". SFAS No. 133 is
effective for all fiscal quarters beginning after June 15, 1999 and is not to be
applied retroactively to financial statements of prior periods. The Corporation
has not yet determined what the effect of the adoption of this pronouncement
will have on the financial position and earnings of the Corporation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Sensitivity and Liquidity
Interest rate risk is one of the major market risks faced by the Corporation.
The Corporation's objective is to manage assets and funding sources to produce
results which are consistent with its liquidity, capital adequacy, growth, risk
and profitability goals.
The Corporation manages interest rate risk using income simulation to measure
interest rate risk inherent in its on-balance sheet and off-balance sheet
financial instruments at a given point in time by showing the effect of interest
rate shifts on net interest income over a 24 month period. The simulation
results are reviewed to determine whether the negative exposure of net interest
income to changes in interest rates remains within established tolerance levels
over a 24-month horizon, and to develop appropriate strategies to manage this
exposure. As of June 30, 1998, the Corporation's estimated exposure as a
percentage of net interest income for the next 12 and 24 months, respectively,
is as follows:
200 basis point increase in rates: - 0.4% / - 0.5%
200 basis point decrease in rates: - 1.3% / - 4.6%
Since this simulation assumes the Corporation's balance sheet will remain static
over the 24-month simulation horizon, the results do not reflect adjustments in
strategy that the Corporation could implement in response to rate shifts, and
should therefore not be relied upon as a projection of net interest income.
For a complete discussion of interest rate sensitivity and liquidity, including
simulation assumptions, see the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1997.
The Corporation also monitors the potential change in market value of its
available for sale debt securities in parallel rate shifts of up to 200 basis
points. The purpose is to determine market value exposure which may not be
captured by income simulation, but which might result in changes to the
Corporation's capital position. Results are calculated using industry-standard
modeling analytics and securities data. The Corporation uses the results to
manage the effect of market value changes on the Corporation's capital position.
As of June 30, 1998, an immediate 200 basis point rise in rates would result in
a 5.0% decline in the value of the Corporation's available for sale debt
securities. Conversely, a 200 basis point fall in rates would result in a 2.3%
increase in the value of the Corporation's available for sale debt securities.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material changes since the filing of the Registrant's Form
10-Q for the quarter ended March 31, 1998.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual
Meeting of Shareholders was held on April 28, 1998.
(c) The results of matters voted upon are presented below. These
amounts have not been adjusted for the three-for-two stock split paid
on August 3, 1998.
i. A proposal to elect Alcino G. Almeida, Katherine W. Hoxsie,
Brendan P. O'Donnell, Anthony J. Rose, Jr. and John C. Warren
as directors of the Corporation for three year terms expiring
at the 2001 Annual Meeting of Shareholders passed as follows:
Abstentions
Votes Votes and Broker
In Favor Withheld Non-votes
--------------------- ----------------------------------------
Alcino G. Almeida 5,705,233.83 36,813.60 0
Katherine W. Hoxsie 5,685,963.83 56,082.60 0
Brendan P. O'Donnell 5,671,635.14 70,411.29 0
Anthony J. Rose, Jr. 5,692,593.83 49,452.60 0
John C. Warren 5,706,296.59 35,749.84 0
ii. A proposal for the ratification of KPMG Peat Marwick LLP to
serve as independent auditors of the Corporation for the current
fiscal year ending December 31, 1998 was passed by a vote of
5,716,220.59 shares in favor; 7,018.15 shares against; with no
abstentions or broker non-votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit index
Exhibit No.
11 Statement re Computation of Per Share Earnings
(b) On June 19, 1998, a Form 8-K was filed which reported that the
Corporation's Board of Directors voted to approve a 3-for-2 stock
split of the Registrant's common stock. The stock split, in the
form of a stock dividend, was paid on August 3, 1998 to
shareholders of record as of July 17, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WASHINGTON TRUST BANCORP, INC.
(Registrant)
August 14, 1998 By: John C. Warren
---------------------------------------
John C. Warren
President and Chief Executive Officer
(principal executive officer)
August 14, 1998 By: David V. Devault
-----------------------------------------------------
David V. Devault
Vice President, Treasurer and Chief Financial Officer
(principal financial and accounting officer)
<TABLE>
<CAPTION>
EXHIBIT 11
Washington Trust Bancorp, Inc.
Computation of Per Share Earnings
For the Periods Ended June 30, 1998 and 1997
Three months ended June 30, 1998 1997
- ----------------------------------------------- --------------------------- --------------------------
(In thousands, except per share amounts) Basic Diluted Basic Diluted
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net income $2,512 $2,512 $2,261 $2,261
Share amounts: (1)
Average outstanding 9,959.9 9,959.9 9,869.9 9,869.9
Common stock equivalents - 384.1 - 344.9
- ----------------------------------------------- ------------- ------------- ------------- ------------
Weighted average outstanding 9,959.9 10,344.0 9,869.9 10,214.8
- ----------------------------------------------- ------------- ------------- ------------- ------------
Earnings per share $.25 $.24 $.23 $.22
- ----------------------------------------------- ------------- ------------- ------------- ------------
<CAPTION>
Six months ended June 30, 1998 1997
- ----------------------------------------------- --------------------------- --------------------------
(In thousands, except per share amounts) Basic Diluted Basic Diluted
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net income $4,905 $4,905 $4,412 $4,412
Share amounts: (1)
Average outstanding 9,966.9 9,966.9 9,847.1 9,847.1
Common stock equivalents - 397.8 - 370.7
- ----------------------------------------------- ------------- ------------- ------------- ------------
Weighted average outstanding 9,966.9 10,364.7 9,847.1 10,217.8
- ----------------------------------------------- ------------- ------------- ------------- ------------
Earnings per share $.49 $.47 $.45 $.43
- ----------------------------------------------- ------------- ------------- ------------- ------------
<FN>
(1) Share amounts have been adjusted to reflect the three-for-two stock split
paid August 3, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO OF WASHINGTON TRUST BANCORP, INC. AS
OF JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 22,925
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,792
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 308,397
<INVESTMENTS-CARRYING> 55,847
<INVESTMENTS-MARKET> 56,562
<LOANS> 454,070
<ALLOWANCE> 9,712
<TOTAL-ASSETS> 899,211
<DEPOSITS> 551,789
<SHORT-TERM> 26,767
<LIABILITIES-OTHER> 250,422
<LONG-TERM> 0
0
0
<COMMON> 418
<OTHER-SE> 69,815
<TOTAL-LIABILITIES-AND-EQUITY> 899,211
<INTEREST-LOAN> 20,094
<INTEREST-INVEST> 10,747
<INTEREST-OTHER> 284
<INTEREST-TOTAL> 31,125
<INTEREST-DEPOSIT> 9,488
<INTEREST-EXPENSE> 16,411
<INTEREST-INCOME-NET> 14,714
<LOAN-LOSSES> 900
<SECURITIES-GAINS> 392
<EXPENSE-OTHER> 12,980
<INCOME-PRETAX> 6,813
<INCOME-PRE-EXTRAORDINARY> 6,813
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,905
<EPS-PRIMARY> .49
<EPS-DILUTED> .47
<YIELD-ACTUAL> 3.76
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,835
<CHARGE-OFFS> 199
<RECOVERIES> 176
<ALLOWANCE-CLOSE> 9,712
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
