<PAGE> 1
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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
Commission file number 0 - 12784
WESTBANK CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS
(State or other jurisdiction of 04-2830731
incorporation or organization) (I.R.S. Employer I.D. No.)
225 PARK AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0149
(Address of principal executive offices) (Zip Code)
(413) 747-1400
(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
Common stock, par value $2 per share: 4,283,353 shares outstanding as of October
31, 1999
<PAGE> 2
WESTBANK CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Comprehensive Income 5
Condensed Consolidated Statements of Stockholders' Equity 6
Condensed Consolidated Statements of Cash Flows 7
Notes to Condensed Consolidated Financial Statements 8-10
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-19
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 20
ITEM 2. Changes in Rights of Securities Holders 20
ITEM 3. Defaults by Company on its Senior Securities 20
ITEM 4. Results of Votes on Matters Submitted
to a Vote of Security Holders 20
ITEM 5. Other Events 20-21
ITEM 6. Exhibits and Reports on Form 8-K 21-22
Signatures 23
2
<PAGE> 3
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
(Dollar amounts in thousands) September 30, 1999 December 31, 1998
- - ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Cash and due from banks:
Non-interest bearing $ 13,087 $ 11,291
Interest bearing 1,419 1,880
Federal funds sold 18,579 1,069
- - ---------------------------------------------------------------------------------------------
Total cash and cash equivalents 33,085 14,240
- - ---------------------------------------------------------------------------------------------
Investment securities available for sale 57,641 53,712
Investment securities held to maturity
(fair value of $11,652 in 1999 and $30,817 in 1998) 11,904 30,616
- - ---------------------------------------------------------------------------------------------
Total securities 69,545 84,328
- - ---------------------------------------------------------------------------------------------
Loans 352,716 293,432
Mortgage loans held-for-sale 2,475 2,346
Allowance for loan losses (2,662) (2,665)
- - ---------------------------------------------------------------------------------------------
Net loans 352,529 293,113
Bank premises and equipment 6,721 6,851
Accrued interest receivable 2,645 2,457
Other assets 2,719 1,634
- - ---------------------------------------------------------------------------------------------
TOTAL ASSETS $ 467,244 $ 402,623
=============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 53,998 $ 51,395
Interest bearing 326,631 290,872
- - ---------------------------------------------------------------------------------------------
Total Deposits 380,629 342,267
Borrowed funds 29,377 20,807
Federal Home Loan borrowing 7,000 7,000
Accrued interest payable 526 429
Other liabilities 1,193 1,630
- - ---------------------------------------------------------------------------------------------
Total Liabilities 418,725 372,133
- - ---------------------------------------------------------------------------------------------
Mandatory redeemable preferred stock 17,000
- - ---------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock - $2 par value
Authorized - 9,000,000 shares
Issued - 4,268,504 shares in 1999 and
4,198,838 shares in 1998 8,537 8,397
Additional paid in capital 11,514 11,076
Retained earnings 12,803 10,803
Accumulated other comprehensive income (loss) (1,335) 214
- - ---------------------------------------------------------------------------------------------
Total Stockholders' Equity 31,519 30,490
- - ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 467,244 $ 402,623
=============================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
09-30-99 09-30-98 09-30-99 09-30-98
- - ---------------------------------------------------------------------------------------------------------------------------
Income:
<S> <C> <C> <C> <C>
Interest and fees on loans $6,749 $6,144 $19,282 $17,781
Interest on federal funds sold 28 138 101 321
Interest on securities 1,177 1,167 3,567 3,225
- - ---------------------------------------------------------------------------------------------------------------------------
7,954 7,449 22,950 21,327
Interest expense 3,697 3,570 10,503 9,951
- - ---------------------------------------------------------------------------------------------------------------------------
Net interest income 4,257 3,879 12,447 11,376
Provision for loan losses 0 0 77 40
- - ---------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 4,257 3,879 12,370 11,336
- - ---------------------------------------------------------------------------------------------------------------------------
Investment security gains 0 2 92 141
Other non-interest income 602 585 1,620 1,703
- - ---------------------------------------------------------------------------------------------------------------------------
Total non-interest income 602 587 1,712 1,844
- - ---------------------------------------------------------------------------------------------------------------------------
Operating expense:
Salaries and benefits 1,581 1,440 4,548 4,278
Other operating expenses 1,114 1,114 3,387 3,471
Occupancy - net 294 286 908 784
- - ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,989 2,840 8,843 8,533
- - ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,870 1,626 5,239 4,647
Income taxes 735 620 2,012 1,802
- - ---------------------------------------------------------------------------------------------------------------------------
Net Income $1,135 $1,006 $ 3,227 $ 2,845
===========================================================================================================================
Earnings per share
- Basic $0.27 $0.24 $0.76 $0.69
- Diluted $0.26 $0.23 $0.75 $0.66
Weighted average shares outstanding
- Basic 4,260,321 4,159,956 4,232,378 4,128,198
- Dilutive option shares 95,546 171,153 98,593 196,386
- Diluted 4,355,867 4,331,109 4,330,971 4,324,584
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
09-30-99 09-30-98 09-30-99 09-30-98
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income $1,135 $1,006 $3,227 $2,845
- - ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income:
Unrealized gain/(loss) on securities
available for sale, net of income taxes
(benefits) of $(254) and $128 for the
quarter and $(996) and $87 for the
nine-month periods ended September 30,
1999 and 1998, respectively. (410) 210 (1,606) 143
Reclassification adjustment for
gains included in net income,
net of income taxes of $35 for
the nine-month period ended
September 30, 1999 and
$54 for the nine-month period ended
September 30, 1998 1 57 87
- - ---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) (410) 211 (1,549) 230
- - ---------------------------------------------------------------------------------------------------------------------------
Comprehensive Income $ 725 $1,217 $1,678 $3,075
===========================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998 AND NINE MONTHS ENDED SEPTEMBER 30, 1999
(1999 unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL COMPREHENSIVE
NUMBER PAR PAID IN RETAINED INCOME/
OF SHARES VALUE CAPITAL EARNINGS (LOSS) TOTAL
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1997 3,932,535 $7,865 $9,711 $9,282 $ 60 $26,918
Net income 3,377 3,377
Cash dividend declared
($.30 per share) (1,503) (1,503)
Stock dividend
(1% on Cargill Bancorp shares) 17,389 35 93 (129) (1)
Shares issued:
Stock Option Plan 199,799 399 742 1,141
Dividend Reinvestment
and Stock Purchase Plan 49,115 98 530 628
Cargill interim loss for the
quarter ended December 31, 1998 (224) (224)
Changes in unrealized gain on
securities available for sale 154 154
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 1998 4,198,838 8,397 11,076 10,803 214 30,490
Net income 3,227 3,227
Cash dividend declared
($.20 per share) (1,227) (1,227)
Shares issued:
Stock Option Plan 30,255 61 79 140
Dividend Reinvestment
and Stock Purchase Plan 39,411 79 359 438
Changes in unrealized gain on
securities available for sale (1,549) (1,549)
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE - SEPTEMBER 30, 1999 4,268,504 $8,537 $11,514 $12,803 $(1,335) $31,519
====================================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
(Unaudited)
NOTE A - GENERAL INFORMATION
Westbank Corporation (hereinafter sometimes referred to as "Westbank" or the
"Corporation") is a registered Bank Holding Company organized to facilitate the
expansion and diversification of the business of Park West Bank and Trust
Company and Cargill Bank (hereinafter sometimes referred to as "Park West" and
"Cargill") into additional financial services related to banking. Substantially
all operating income and net income of the Corporation are presently accounted
for by Park West and Cargill.
NOTE B - ACQUISITION OF CARGILL BANCORP, INC.
The Corporation completed the acquisition of Cargill Bancorp, Inc. ("Cargill")
on January 29, 1999. Cargill served as the holding company for Cargill Bank,
which will continue to operate its three banking offices in Northeastern
Connecticut and will retain its name and Connecticut charter as a separate
subsidiary of the Corporation. Under the terms of the merger agreement, each
share of Cargill was exchanged for 1.3655 shares of the Corporation. Westbank
issued a total of 400,164 shares. The transaction was accounted for using the
pooling-of-interests method and, accordingly, all historical financial data has
been restated to include both entities for all periods presented. Direct costs
of the merger accounted for by the pooling-of-interests method are expensed as
incurred. Merger-related costs expensed for the year ended December 31, 1998,
aggregate $595,000. These merger expenses included legal, accounting, regulatory
and severance costs, as well as integration costs.
Westbank's fiscal year ends December 31 and Cargill's fiscal year ends September
30. The financial statements combine the financial information of Westbank at
and for the quarters ended September 30, 1998 and 1999, and the year ended
December 31, 1998, with financial information of Cargill for the quarters ended
September 30, 1999 and June 30, 1998, and the year ended September 30, 1998. The
Cargill loss of $224,000 for the quarter ended December 31, 1998, has been
included directly in stockholders' equity in order to conform Cargill's
reporting periods to the Corporation's as of December 31, 1998. For the quarter
ended December 31, 1998, Cargill had net interest income of $456,000 and a net
loss of $224,000. Included in operating expenses were $346,000 of merger and
related costs that were primarily the cause of their loss.
The following table sets forth the unaudited results of operations of the
combined entities for the periods prior to this acquisition:
(In thousands, except per-share data)
<TABLE>
<CAPTION>
Westbank Cargill Combined
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Month ended January 31, 1999
Net interest income $1,192 $138 $1,330
Net income 355 21 376
Quarter ended September 30, 1998
Net interest income $3,400 $473 $3,879
Net income 910 96 1,006
Nine months ended September 30, 1998
Net interest income $9,948 $1,428 $11,376
Net income 2,634 211 2,845
</TABLE>
8
<PAGE> 8
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
(Unaudited)
NOTE C - CURRENT OPERATING ENVIRONMENT
Park West operates thirteen banking offices located in Hampden County,
Massachusetts, and also operates a Trust Department providing services normally
associated with holding property in a fiduciary or agency capacity. A full range
of retail banking services is furnished to individuals, businesses and
non-profit organizations. Cargill Bank operates three offices in Windham County,
Connecticut. A full range of retail banking services is furnished to
individuals, businesses and non-profit organizations. The primary source of
revenue for Park West and Cargill is derived from providing loans to customers
who are predominantly located in Park West's and Cargill's service areas.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
imposes significant regulatory restrictions and requirements on banking
institutions insured by the FDIC and their holding companies. FDICIA established
capital categories into which financial institutions are placed based on capital
level. Each capital category establishes different degrees of regulatory
restrictions that can apply to a financial institution. As of September 30,
1999, Park West and Cargill's capital was at a level that placed the Banks in
the "well capitalized" category as defined by FDICIA.
FDICIA imposes a variety of other restrictions and requirements on insured
banks. These include significant regulatory reporting requirements such as
insuring that a system of risk-based deposit insurance premiums and civil money
penalties for inaccurate deposit assessment reports exists. In addition, FDICIA
imposes a system of regulatory standards for bank and bank holding company
operations, detailed truth in savings disclosure requirements, and restrictions
on activities authorized by state law but not authorized for national banks.
NOTE D - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements for the
quarter and nine months ended September 30, 1999 and 1998 have been prepared in
accordance with generally accepted accounting principles for interim information
and with instructions for Form 10-Q. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting or normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the quarter and
nine-month period ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.
For further information, please refer to the Consolidated Financial Statements
and footnotes thereto included in the Westbank Corporation's Annual Report on
Form 10-K-A for the year ended December 31, 1998.
NOTE E - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding commitments and
contingent liabilities, such as standby letters of credit and commitments to
extend credit. As of September 30, 1999, standby letters of credit amounted to
$664,000 and loan commitments were $33,737,000 and unused balances available on
home equity lines of credit were $7,754,000.
Trust Assets - Property with a book value of $113,447,000 at September 30, 1999
held for customers in a fiduciary or agency capacity is not included in the
accompanying balance sheet since such items are not assets of the Bank.
9
<PAGE> 9
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
(Unaudited)
NOTE F - STOCKHOLDERS' EQUITY
The FDIC imposes leverage capital ratio requirements for state non-member banks.
In addition, the FDIC has established risk-based capital requirements for
insured institutions for Tier 1 risk-based capital of 4.00% and total risk-based
capital of 8.0%.
The capital ratios of Park West and Cargill as of September 30, 1999 were as
follows:
<TABLE>
<CAPTION>
Park West Bank
and Trust Company Cargill Bank
----------------- ------------
<S> <C> <C>
Leverage Capital Ratio 6.78% 6.77%
Tier 1 Risk-Based Capital 10.49% 13.38%
Total Risk-Based Capital 11.37% 14.52%
</TABLE>
As of September 30, 1999, both Park West and Cargill met the criteria which
classified them as well capitalized financial institutions.
NOTE G - MANDATORY REDEEMABLE PREFERRED STOCK
On September 30, 1999, the Corporation completed its offering of 1,700,000
shares, 9.6% trust preferred stock, each with a liquidation amount of $10. The
$17 million trust preferred debentures are due September 30, 2029. Quarterly
cash distributions are paid beginning December 31, 1999. Of the $17 million in
proceeds, the Corporation contributed $15.5 million of the net proceeds to
Cargill Bank as equity capital to support the acquisition of two (2) Connecticut
branches of New London Trust, F.S.B. (see Note H).
NOTE H - BRANCH ACQUISITION
On October 29, 1999, the Corporation completed its acquisition of the
Connecticut division of New London Trust, F.S.B. The two (2) New London Trust
offices will become part of Cargill Bank, increasing its number of offices to
five (5). The acquisition resulted in $105 million of assets (loans of $86
million) and $105 million of liabilities being acquired as of October 29, 1999.
The Corporation will account for this acquisition on the purchase accounting
method.
10
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Changes in Financial Condition
Total consolidated assets amounted to $467,244,000 on September 30, 1999,
compared to $402,623,000 on December 31, 1998. As of September 30, 1999 and
September 30, 1998, earning assets amounted to, respectively, $444,734,000 or
95% of total assets and $383,305,000 or 95% of total assets. Earning assets
increased during the first nine months of 1999 as a result of an increase in
loans. Deposits originated throughout the Corporation's branch system and
short-term borrowings with the Federal Home Loan Banks.
Changes in Results of Operations
For the quarter ended September 30, 1999, net income totaled $1,135,000,
compared to $1,006,000 for the quarter ended September 30, 1998. For the nine
months ended September 30, 1999, net income was $3,227,000, compared to
$2,845,000 for the same period during 1998. Included in the results for the nine
months ended September 30, 1999 is a gain on the sale of securities available
for sale totaling $92,000 compared to $141,000 in 1998.
An overall increase in interest income and interest expense reflects an increase
in volume and decrease in interest rates on earning assets and an increase in
volume and decrease in rates on interest-bearing deposits. Further analysis is
provided in sections on net interest revenue and supporting schedules.
Allowance for Loan Losses and Non-Performing Assets
The Corporation did not provide any provision for loan losses in the current
quarter or the 1998 quarter. Loans written off against the allowance for loan
losses after recoveries amounted to $80,000 for the nine months ended September
30, 1999.
After giving effect to the actions described above, the allowance for loan
losses at September 30, 1999, totaled $2,662,000 or 0.75% of total loans, as
compared to $2,665,000 or 0.90% at December 31, 1998.
Non-performing past due loans at September 30, 1999, aggregated $1,015,000 or
0.29% of total loans, compared to $1,100,000 or 0.37% at December 31, 1998. The
percentage of non-performing and past due loans compared to total assets on
those same dates, respectively, amounted to 0.22% and 0.27%.
Other real estate owned at September 30, 1999, totaled $84,000 and stands at
0.02% of total assets at the end of the current quarter.
Management has made every effort to recognize all circumstances known at this
time that could affect the collectibility of loans and has reflected these in
the provision for loan losses, the write-down of other real estate owned and
impaired loans to fair value and other loans (watch list) monitored by
management, the charge-off of loans and the balance in the allowance for loan
losses. Management deems that the provision for the quarter and the balance in
the allowance for loan losses are adequate, based on results provided by the
loan grading system and circumstances known at this time.
11
<PAGE> 11
Year 2000
The Corporation has taken steps to ensure that all of its computer systems (the
"systems") are ready to operate accurately on and beyond January 1, 2000. In the
event that the Corporation's systems are not Year 2000 compliant as of January
1, 2000, the Corporation would face significant operational difficulties. The
Corporation fully understands the need to prevent disruption of computer and
technical systems, and the Corporation is committed to providing its customers
with high quality services without interruption.
While the Corporation has determined that many of the Systems are Year 2000
compliant, the Corporation has prepared an action plan (the "Year 2000 Project")
to ensure the continued integrity of its systems. The Year 2000 Project includes
five phases: (1) the awareness phase; (2) the assessment phase; (3) the
renovation phase; (4) the validation phase; and (5) the implementation phase.
The Corporation is currently in the implementation phase.
The Corporation relies on outside providers for the core banking software and
data processing portions of the Systems. The Year 2000 Project applies to such
vendors with whom the Corporation has had continuous contact and updates as to
their Year 2000 readiness.
The Year 2000 Project also includes a contingency plan to be implemented in the
event the Year 2000 Project reveals that any of the systems are not Year 2000
compliant. In addition, in the event that, despite the Year 2000 Project, the
Corporation experiences disruption due to Year 2000 problems, the Corporation
has developed a business resumption plan that would be implemented in this
event.
As of September 30, 1999, the Corporation has incurred approximately $232,000 in
Year 2000-related expenses and has estimated that capital expenditures related
to the Year 2000 issue will total approximately $510,000.
As of September 30, 1999, the Corporation has completed testing of all critical
systems and believes that these systems are ready to operate without disruption
of service on January 1, 2000 and thereafter.
The Corporation has designed the Year 2000 Project based on guidance from the
Federal Financial Institutions Examining Council. In addition, the FDIC monitors
the Corporation's preparation for the Year 2000 on a periodic basis.
The information set forth above is designed to be a "Year 2000 Readiness
Disclosure" as that term is defined in the Year 2000 Information Readiness and
Disclosure Act. This information is forward-looking information and, as such, it
is subject to risks and uncertainties that would cause actual results to differ
materially from the projected results discussed in this report.
12
<PAGE> 12
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
NET INTEREST INCOME
The Corporation's earning assets include a diverse portfolio of earning
instruments, ranging from the Corporation's core business of loan extensions to
interest-bearing securities issued by federal, state and municipal authorities.
These earning assets are financed through a combination of interest-bearing and
interest-free sources.
Net interest income, the most significant component of earnings, is the amount
by which the interest generated by assets exceeds the interest expense on
liabilities.
The Corporation analyzes its performance by utilizing the concepts of interest
rate spread and net yield on earning assets. The interest rate spread represents
the difference between the yield on earning assets and interest paid on
interest-bearing liabilities. The net yield on earning assets is the difference
between the rate of interest on earning assets and the effective rate paid on
all funds - interest-bearing liabilities as well as interest-free sources
(primarily demand deposits and shareholders' equity).
The balances and rates derived for the analysis of net interest income presented
on the following pages reflect the consolidated assets and liabilities of the
Corporation's principal earning subsidiaries, Park West Bank and Trust Company
and Cargill Bank.
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
09-30-99 09-30-98 09-30-99 09-30-98
<S> <C> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------
Interest and dividend income $7,954 $7,449 $22,950 $21,327
Interest expense 3,697 3,570 10,503 9,951
- - -------------------------------------------------------------------------------------------------------
Net interest income $4,257 $3,879 $12,447 $11,376
=======================================================================================================
</TABLE>
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
- - -----------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
Balance Rate Balance Rate Balance Rate Balance Rate
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning Assets $419,637 7.58% $375,455 7.93% $403,205 7.59% $357,330 7.95%
- - -----------------------------------------------------------------------------------------------------------------------------
Interest-bearing
liabilities 354,474 4.17 316,321 4.51 339,252 4.13 298,774 4.44
- - -----------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.41 3.42 3.46 3.51
- - -----------------------------------------------------------------------------------------------------------------------------
Interest-free resources
used to fund
earning assets 65,163 59,134 63,953 58,556
=============================================================================================================================
Total Sources of Funds $419,637 $375,455 $403,205 $357,330
=============================================================================================================================
Net Yield on Earning Assets 4.06% 4.13% 4.12% 4.24%
=============================================================================================================================
</TABLE>
13
<PAGE> 13
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
CHANGES IN NET INTEREST INCOME
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED 09-30-99 NINE MONTHS ENDED 09-30-99
OVER OVER
QUARTER ENDED 09-30-98 NINE MONTHS ENDED 09-30-98
- - ---------------------------------------------------------------------------------------------------------------
CHANGE DUE TO CHANGE DUE TO
VOLUME RATE TOTAL VOLUME RATE TOTAL
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans $1,099 $(494) $605 $2,767 $(1,266) $1,501
Securities (48) 58 10 217 125 342
Federal funds (109) (1) (110) (184) (36) (220)
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Earned 942 (437) 505 2,800 (1,177) 1,623
- - ---------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest-bearing deposits 225 (274) (49) 866 (731) 135
Other borrowed funds 194 (18) 176 412 5 417
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Expense 419 (292) 127 1,278 (726) 552
- - ---------------------------------------------------------------------------------------------------------------
Net Interest Income $ 523 $(145) $378 $1,522 $ (451) $1,071
- - ---------------------------------------------------------------------------------------------------------------
</TABLE>
Net interest earned increased by $378,000 during the third quarter of 1999
compared to the third quarter of 1998. For the nine-month period ended September
30, 1999, net interest income increased by $1,071,000 versus the same period of
1998.
Average earning assets increased by $45,875,000 during the first nine months of
1999. The average earning base was $403,205,000 compared to $357,330,000 in the
same period last year.
OPERATING EXPENSES
The components of total operating expenses for the periods and their percentage
of gross income are as follows:
(Dollars amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
09-30-99 09-30-98 09-30-99 09-30-98
- - ----------------------------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and benefits $1,581 18.48% $1,440 17.92% $4,548 18.44% $4,278 18.46%
Other non-interest expense 1,114 13.02 1,114 13.86 3,387 13.73 3,471 14.98
Occupancy - net 294 3.43 286 3.56 908 3.69 784 3.39
- - ----------------------------------------------------------------------------------------------------------------
Total Operating Expenses $2,989 34.93% $2,840 35.34% $8,843 35.86% $8,533 36.83%
================================================================================================================
</TABLE>
For the nine-month period ended September 30, 1999, operating expenses increased
by approximately $310,000 over the 1998 period. The increase was a result of
increases in salary and benefits totaling $270,000, occupancy expense totaling
$124,000 and a decrease in other non-interest expense of $84,000. The increases
are primarily the result of overall growth of the Corporation.
14
<PAGE> 14
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
CAPITAL RATIOS
<TABLE>
<CAPTION>
09-30-99 09-30-98
-------- --------
<S> <C> <C>
Ratio of "Tier 1" leverage capital
to total assets at end of period 9.70% 7.41%
</TABLE>
Regulatory risk-based capital requirements take into account the different risk
categories of banking organizations by assigning risk weight to assets and the
credit equivalent amounts of off-balance sheet exposures.
In addition, capital is divided into two tiers. For this Corporation, Tier 1
includes the common stockholders' equity. Tier 2, or supplementary capital,
includes not only the equity but, also, a portion of the allowance for loan
losses. Net unrealized gain/(losses) on securities available for sale are not
permitted to be included for regulatory capital purposes.
The following are the Corporation's risk-based capital ratios at September 30,
1999:
Tier 1 Capital (minimum required 4.00%) 15.89%
Tier 2 Capital (minimum required 8.00%) 16.82%
INTEREST RATE SENSITIVITY
The following table sets forth the distribution of the repricing of the
Corporation's earning assets and interest-bearing liabilities as of September
30, 1999.
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Three Over Three Over One
Months Months to Year to Over
or Less One Year Five Years Five Years Total
==========================================================================================================
<S> <C> <C> <C> <C> <C>
Earning Assets $76,312 $ 45,377 $120,053 $202,992 $444,734
Interest-Bearing
Liabilities 115,736 121,425 123,485 2,362 363,008
- - ----------------------------------------------------------------------------------------------------------
Interest Rate
Sensitivity Gap $(39,424) $(76,048) $ (3,432) $200,630 $ 81,726
==========================================================================================================
Cumulative Interest
Rate
Sensitivity Gap $(39,424) $(115,472) $(118,904) $81,726
Interest Rate
Sensitivity
Gap Ratio (8.86)% (17.10)% (0.77)% 45.11% 18.38%
Cumulative Interest
Rate Sensitivity
Gap Ratio (8.86)% (25.96)% (26.73)% 18.38%
</TABLE>
15
<PAGE> 15
WESTBANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
LIQUIDITY
Liquidity management requires close scrutiny of the mix and maturity of deposits
and borrowings and short-term investments. Cash and due from banks, federal
funds sold, investment securities and mortgage-backed securities, as compared to
deposits, are used by Westbank to compute its liquidity on a daily basis as
adjusted for regulatory purposes. In addition, Westbank is subject to Regulation
D of the Federal Reserve Bank (FRB), which requires depository institutions to
maintain reserve balances on deposit with the FRB based on certain average
depositor balances. Westbank is in compliance with Regulation D. Management of
Westbank believes that its current liquidity is sufficient to meet current and
anticipated funding needs.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
09-30-99 09-30-98 09-30-99 09-30-98
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $2,721 $2,742 $2,665 $3,057
Provision charged to expense 77 40
- - -----------------------------------------------------------------------------------------------------
2,721 2,742 2,742 3,097
- - -----------------------------------------------------------------------------------------------------
Charge-offs:
Loans secured by real estate 41 128 340
Commercial and industrial loans 2 49
Consumer loans 25 9 65 35
- - -----------------------------------------------------------------------------------------------------
66 11 193 424
- - -----------------------------------------------------------------------------------------------------
Recoveries:
Loans secured by real estate 4 5 90 38
Commercial and industrial loans 15 15 30
Consumer loans 3 8 10
- - -----------------------------------------------------------------------------------------------------
7 20 113 78
- - -----------------------------------------------------------------------------------------------------
Net charge-offs (recoveries) 59 (9) 80 346
- - -----------------------------------------------------------------------------------------------------
Balance at end of period $2,662 2,751 $2,662 2,751
=====================================================================================================
Net charge-offs (recoveries) to:
Average loans 0.02% (0.003)% 0.02% 1.22%
Loans at end of period 0.02% (0.003)% 0.02% 1.20%
Allowance for loan losses 2.21% (0.33)% 3.01% 12.58%
Allowance for loan losses as a percentage of:
Average loans 0.77% 0.94% 0.81% 0.97%
Loans at end of period 0.75% 0.95% 0.75% 0.95%
</TABLE>
The approach the Corporation uses in determining the adequacy of the allowance
for loan losses is the combination of a target reserve and a general reserve
allocation. Quarterly, based on an internal review of the loan portfolio, the
Corporation identifies required reserve allocations targeted to recognized
problem loans that, in the opinion of management, have potential loss exposure
or questions relative to the depth of the collateral on these same loans. In
addition, the Corporation allocates a general reserve against the remainder of
the loan portfolio.
16
<PAGE> 16
WESTBANK CORPORATION AND SUBSIDIARIES
NON-ACCRUAL, PAST DUE AND RESTRUCTURED LOANS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
09-30-99 06-30-99 03-31-99 12-31-98 09-30-98
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-Accrual Loans $658 $595 $ 952 $ 869 $ 817
- - --------------------------------------------------------------------------------------------------------
Loans contracturally past
due 90 days or more
and still accruing 357 245 147 231 218
- - --------------------------------------------------------------------------------------------------------
Total non-accrual, past due
and restructured loans $1,015 $840 $1,099 $1,100 $1,035
- - --------------------------------------------------------------------------------------------------------
Non-accrual, past due and
restructured loans as a
percentage of total loans .29% .25% .34% .37% .36%
- - --------------------------------------------------------------------------------------------------------
Allowance for loan losses as a
percentage of non-accrual,
past due and restructured loans 262.27% 323.93% 264.52% 242.27% 265.80%
- - --------------------------------------------------------------------------------------------------------
Other real estate owned - net $ 84 $ 85 $ 347 $ 466 $ 304
- - ---------------------------------------------------------------------------------------------------------
Total non-performing assets $1,099 $925 $1,446 $1,566 $1,339
- - --------------------------------------------------------------------------------------------------------
Non-performing assets as a
percentage of total assets .24% .21% .35% .39% .33%
- - --------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 17
WESTBANK CORPORATION AND SUBSIDIARIES
QUARTER-TO-DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------
FOR THE QUARTER ENDED FOR THE QUARTER ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
Balance Interest Rate Balance Interest Rate
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold and
temporary investments $ 2,167 $ 28 5.17% $ 10,379 $ 138 5.32%
Securities 69,797 1,177 6.74 72,745 1,167 6.41
Loans 347,673 6,749 7.76 292,331 6,144 8.40
- - -----------------------------------------------------------------------------------------------------------------
Total earning assets 419,637 $7,954 7.58% 375,455 $7,449 7.93%
- - -----------------------------------------------------------------------------------------------------------------
Loan loss allowance (2,717) (2,746)
All other assets 23,189 22,246
- - -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $440,109 $394,955
=================================================================================================================
LIABILITIES AND EQUITY
Interest-bearing deposits $319,023 $3,303 4.14% $298,298 $3,352 4.49%
Borrowed funds 35,451 394 4.45 18,023 218 4.84
- - -------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 354,474 $3,697 4.17 $316,321 $3,570 4.51
- - -------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.41% 3.42%
Demand deposits 52,457 47,141
Other liabilities 2,063 1,787
Shareholders' equity 31,115 29,706
- - -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES
AND EQUITY $440,109 $394,955
===================================================================================================================
NET INTEREST INCOME $4,257 $3,879
===================================================================================================================
Interest Earned/Earning Assets 7.58% 7.93%
Interest Expense/Earning Assets 3.52 3.80
- - -------------------------------------------------------------------------------------------------------------------
===================================================================================================================
Net Yield on Earning Assets 4.06% 4.13%
</TABLE>
18
<PAGE> 18
WESTBANK CORPORATION AND SUBSIDIARIES
YEAR-TO-DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
Balance Interest Rate Balance Interest Rate
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold and
temporary investments $ 2,971 $ 101 4.53% $ 7,644 $ 321 5.60%
Securities 71,479 3,567 6.65 67,164 3,225 6.40
Loans 328,755 19,282 7.82 282,523 17,781 8.39
- - -------------------------------------------------------------------------------------------------------------------
Total earning assets 403,205 $22,950 7.59% 357,331 $21,327 7.95%
- - -------------------------------------------------------------------------------------------------------------------
Loan loss allowance (2,715) (2,983)
All other assets 22,909 21,829
- - -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $423,399 $376,177
===================================================================================================================
LIABILITIES AND EQUITY
Interest-bearing deposits $310,806 $9,613 4.12% $283,665 $9,478 4.43%
Borrowed funds 28,446 890 4.17 15,110 473 4.17
- - -------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 339,252 $10,503 4.13 298,775 $9,951 4.44
- - -------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.46% 3.51%
Demand deposits 51,237 47,047
Other liabilities 1,873 1,536
Shareholders' equity 31,037 28,819
- - -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES
AND EQUITY $423,399 $376,177
===================================================================================================================
NET INTEREST INCOME $12,447 $11,376
===================================================================================================================
Interest Earned/Earning Assets 7.59% 7.95%
Interest Expense/Earning Assets 3.47 3.71
- - -------------------------------------------------------------------------------------------------------------------
Net Yield on Earning Assets 4.12% 4.24%
===================================================================================================================
</TABLE>
19
<PAGE> 19
WESTBANK CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - NONE
ITEM 2. Changes in Rights of Securities Holders - NONE
ITEM 3. Defaults by Company on its Senior Securities - NONE
ITEM 4. Results of Votes on Matters Submitted to a Vote of Security Holders
- NONE
ITEM 5. Other Events
a. Acquisition of New London Trust, F.S.B., Branches
As of the close of business on October 29, 1999, Cargill Bank
("Cargill"), a wholly owned subsidiary of Westbank Corporation
("Westbank"), completed its purchase of certain assets and
assumption of certain liabilities of New London Trust, F.S.B.,
including two (2) branches in Connecticut, pursuant to an
agreement entered with PM Holdings, Inc., ("PM Holdings"), a
wholly owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("Phoenix"), and PM Trust Holding Company, a wholly
owned subsidiary of PM Holdings. The acquisition occurred
immediately after PM Trust's acquisition of all the outstanding
capital stock of New London Trust from Sun Life Assurance
Company of Canada (U.S.). The agreements among the parties
relating to this transaction were filed as exhibits to the Form
10-Q for the quarter ended March 31, 1999.
In connection with the acquisition, Westbank indirectly acquired
two (2) branches of New London Trust in Danielson and Putnam,
Connecticut, with assets totaling $106 million to add to its
recently acquired Cargill Bank subsidiary. The New London Trust
offices in Danielson and Putnam, Connecticut, are branch offices
of Cargill Bank, which will operate five (5) banking offices
with a total of $170 million in assets. The combined assets of
Westbank upon consummation of the acquisition of the two (2)
Connecticut branch offices are in excess of $570 million. The
acquisition was consummated after satisfaction of certain
conditions, including the receipt of all requisite regulatory
approvals and will be accounted for as a purchase under
generally accepted accounting principles. Cargill paid
$8,690,000 of a deposit premium. The source of the funds for the
acquisition consisted of Cargill's accumulation of its cash flow
from the maturity of short-term investments, principal and
interest on loans, other cash receipts, net of operating
expenses and other projected disbursements.
As of the date of this filing, it is impracticable to provide
financial statements and pro forma financial information for the
Connecticut branches of New London Trust as the businesses
acquired. The required financial statements will be filed as
soon as possible and in no event later than January 14, 2000,
under cover of a Current Report on Form 8-K.
b. Information Concerning Forward-Looking Statements
Westbank has made, and may make in the future, forward-looking
statements concerning future performance, including, but not
limited to, future earnings and events or conditions that may
affect such future performance. These forward-looking statements
are based upon management's expectations and belief concerning
possible future developments and the potential effect of such
future developments on Westbank. There is no assurance that such
future developments will be in accordance with management's
expectations and belief or that the effect of any future
developments on Westbank will be those anticipated by Westbank
management.
20
<PAGE> 20
All assumptions that form the basis of any forward-looking
statements regarding future performance, as well as events or
conditions that may affect such future performance, are based on
factors that are beyond Westbank's ability to control or predict
with precision, including future market conditions and the
behavior of other market participants. Among the factors that
could cause actual results to differ materially from such
forward-looking statements are the following:
1. The status of the economy in general, as well as in
Westbank's prime market areas of Western Massachusetts and
Northeastern Connecticut;
2. The real estate market in Western Massachusetts and Northeastern
Connecticut;
3. Competition in Westbank's prime market area from other
banks, especially in light of continued consolidation in
the New England banking industry;
4. Any changes in federal and state bank regulatory requirements;
5. Changes in interest rates; and
6. The cost and other effects of unanticipated legal and
administrative cases and proceedings, settlements and
investigations.
While Westbank periodically reassesses material trends and
uncertainties affecting the Corporation's performance in
connection with its preparation of Management's Discussion and
Analysis of Results of Operations and Financial Condition
contained in its quarterly and annual reports, Westbank does not
intend to review or revise any particular forward-looking
statements.
c. Registration on Form S-3
None.
d. Registration of Form S-8
None
ITEM 6. Exhibits and Reports on Form 8
a. Exhibits
21
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
3. Articles of Organization, as amended **
(a) Articles of Organization, as amended *
(b) By-Laws, as amended *
</TABLE>
10. Material Contracts
(a) Stock Purchase Agreement dated April 12, 1999, among SunLife
Assurance Company of Canada (U.S.), New London Trust, F.S.B.,
and PM Holdings, Inc., PM Trust Holding Company, Lake Sunapee
Bank, F.S.B., Mascoma Savings Bank and Cargill Bank.
(b) Purchase and Assumption Agreement dated April 12, 1999, among PM
Holdings, Inc., PM Trust Holding Company, Cargill Bank, Lake
Sunapee Bank, F.S.B., and Mascoma Savings Bank.
(c) Asset and Liability Allocation Agreement dated April 12, 1999,
among Lake Sunapee Bank, F.S.B., Mascoma Savings Bank and
Cargill Bank.
27. Financial Data Schedule To be included
* Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.
** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987.
22
<PAGE> 22
WESTBANK CORPORATION AND SUBSIDIARIES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned thereunto duly authorized.
WESTBANK CORPORATION
/s/ Donald R. Chase
Date: November 12, 1999 -------------------------------------
Donald R. Chase
President and Chief Executive Officer
/s/ John M. Lilly
Date: November 12, 1999 -------------------------------------
John M. Lilly
Treasurer and Chief Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 13,087
<INT-BEARING-DEPOSITS> 1,419
<FED-FUNDS-SOLD> 18,579
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,641
<INVESTMENTS-CARRYING> 11,904
<INVESTMENTS-MARKET> 11,652
<LOANS> 355,191
<ALLOWANCE> 2,662
<TOTAL-ASSETS> 467,244
<DEPOSITS> 360,629
<SHORT-TERM> 29,377
<LIABILITIES-OTHER> 1,719
<LONG-TERM> 7,000
17,000
0
<COMMON> 31,519
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 467,244
<INTEREST-LOAN> 19,282
<INTEREST-INVEST> 3,567
<INTEREST-OTHER> 101
<INTEREST-TOTAL> 22,950
<INTEREST-DEPOSIT> 9,613
<INTEREST-EXPENSE> 10,503
<INTEREST-INCOME-NET> 12,447
<LOAN-LOSSES> 77
<SECURITIES-GAINS> 92
<EXPENSE-OTHER> 8,643
<INCOME-PRETAX> 5,239
<INCOME-PRE-EXTRAORDINARY> 5,239
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,227
<EPS-BASIC> .76
<EPS-DILUTED> .75
<YIELD-ACTUAL> 4.12
<LOANS-NON> 658
<LOANS-PAST> 357
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,015
<ALLOWANCE-OPEN> 2,665
<CHARGE-OFFS> 193
<RECOVERIES> 113
<ALLOWANCE-CLOSE> 2,662
<ALLOWANCE-DOMESTIC> 2,662
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 12,478
<INT-BEARING-DEPOSITS> 2,030
<FED-FUNDS-SOLD> 16,165
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,405
<INVESTMENTS-CARRYING> 33,637
<INVESTMENTS-MARKET> 34,026
<LOANS> 289,068
<ALLOWANCE> 2,751
<TOTAL-ASSETS> 404,908
<DEPOSITS> 352,605
<SHORT-TERM> 12,222
<LIABILITIES-OTHER> 2,773
<LONG-TERM> 7,000
0
0
<COMMON> 30,307
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 404,908
<INTEREST-LOAN> 17,781
<INTEREST-INVEST> 3,225
<INTEREST-OTHER> 321
<INTEREST-TOTAL> 21,327
<INTEREST-DEPOSIT> 9,478
<INTEREST-EXPENSE> 9,951
<INTEREST-INCOME-NET> 11,376
<LOAN-LOSSES> 40
<SECURITIES-GAINS> 141
<EXPENSE-OTHER> 8,533
<INCOME-PRETAX> 4,647
<INCOME-PRE-EXTRAORDINARY> 4,647
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,845
<EPS-BASIC> .69
<EPS-DILUTED> .66
<YIELD-ACTUAL> 4.21
<LOANS-NON> 817
<LOANS-PAST> 218
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,035
<ALLOWANCE-OPEN> 3,057
<CHARGE-OFFS> 424
<RECOVERIES> 78
<ALLOWANCE-CLOSE> 2,751
<ALLOWANCE-DOMESTIC> 2,751
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
