U. S. SECURITIES AND EXCHANGE COMMISSION
FORM 10-QSB
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1996
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to_______________
Commission file number 33-22224-B
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Beverly National Corporation
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(Name of small business issuer as specified in its charter)
Massachusetts 04-2832201
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
240 Cabot Street Beverly, Massachusetts 01915
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(Address of principal executive offices) (Zip Code)
Issuers telephone number, including area code (508) 922-2100
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Check whether the issuer (l) filed all reports required to be
filed by Section l3 or l5 (d) of the Securities Exchange Act
during the past l2 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
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State the number of shares outstanding of each of the issuer's
classes of common equity, as of November 1, 1996. 754,382 shares
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Transitional small business disclosure format
Yes No X
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<PAGE>
BEVERLY NATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 1996 and December 31, 1995 . . . . . . . . . . 3
Consolidated Statements of Income for the Three Months and
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . 5
Consolidated Statements of Cash Flow for the
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . 7
Notes to Consolidated Financial Statements. . . . . . . . . . 9
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . 19
Item 2. Changes in Securities . . . . . . . . . . . . . . . . 19
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . 19
Item 4. Submission of Matters to a Vote of Security Holders . 19
Item 5. Other Information. . . . . . . . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 19
Signatures . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, December 31,
1996 1995
------------- ------------
ASSETS
Cash and due from banks $ 11,180,089 $ 9,294,959
Federal funds sold 13,200,000 5,800,000
Investments in available-for-sale securities 13,062,441 11,153,903
Investments in held-to-maturity securities 24,650,317 33,183,718
Federal Reserve Bank stock, at cost 97,500 97,500
Loans:
Commercial 16,444,351 16,485,532
Real estate-construction and land development 5,628,055 4,648,818
Real estate-residential 38,513,851 34,092,682
Real estate-commercial 44,361,810 42,587,993
Consumer 6,854,759 5,593,914
Municipal 452,000 465,000
Other 641,419 787,342
Allowance for possible loan losses (2,266,778) (2,072,523)
Deferred loan fees, net (121,943) (96,940)
Unearned income 0 (4)
------------- -------------
Net loans 110,507,524 102,491,814
Mortgages held for sale 1,218,711 123,663
Premises and equipment, net 4,309,736 4,377,035
Accrued interest receivable 1,136,600 1,204,582
Other assets 1,256,467 1,393,520
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$180,619,385 $169,120,694
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 31,041,568 $ 34,500,825
Interest bearing
Regular savings 37,689,276 34,300,913
NOW accounts 31,739,472 30,316,353
Money market accounts 18,262,871 19,271,207
Time deposits 45,069,463 35,108,927
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Total deposits 163,802,650 153,498,225
Notes payable 685,627 685,627
Employee Stock Ownership Plan loan 360,000 394,354
Other liabilities 1,074,194 1,071,736
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Total liabilities 165,922,471 155,649,942
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The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(CONTINUED)
September 30, December 31,
1996 1995
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Stockholders' equity:
Preferred stock, $2.50 par value per share; 300,000
shares authorized; issued and outstanding none
Common stock, $2.50 par value per share;
2,500,000 shares authorized; issued 791,349;
outstanding, 754,382 shares 1,978,373 1,978,373
Paid-in Capital 4,380,219 4,380,219
Retained earnings 9,524,009 8,304,831
Treasury stock, at cost (36,967 shares) (706,420) (744,619)
Net unrealized holding loss on
available-for-sale securities (119,267) (53,698)
Unearned compensation -
Employee Stock Ownership Plan (360,000) (394,354)
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Total stockholders' equity 14,696,914 13,470,752
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$180,619,385 $169,120,694
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
INTEREST INCOME:
Interest and fees on loans $7,548,255 $6,275,557 $2,736,674 $2,240,074
Interest and dividends on
investment securities:
Taxable 1,697,795 2,129,402 546,052 704,305
Tax-exempt 20,304 33,573 6,663 11,470
Federal Funds Sold 288,022 232,520 122,311 77,126
Other interest 119,876 0 21,149 0
---------- ---------- ---------- ----------
Total interest and
dividend income 9,674,252 8,671,052 3,432,849 3,032,975
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Interest on Deposits 3,224,622 2,994,160 1,099,117 1,076,657
Interest on Notes payable 44,654 78,064 14,960 26,434
---------- ---------- ---------- ----------
Total interest expense 3,269,276 3,072,224 1,114,077 1,103,091
---------- ---------- ---------- ----------
Net interest and dividend income 6,404,976 5,598,828 2,318,772 1,929,884
---------- ---------- ---------- ----------
Provision for loan losses 0 60,000 0 0
---------- ---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 6,404,976 5,538,828 2,318,772 1,929,884
--------- ---------- ---------- ----------
NONINTEREST INCOME:
Income from fiduciary activities 644,557 669,467 213,036 217,155
Service charges on deposit
accounts 316,342 306,068 103,880 93,485
Other deposit fees 173,977 181,994 56,752 65,142
Other income 264,965 242,977 94,664 73,252
---------- ---------- ---------- ----------
Total noninterest income 1,399,841 1,400,506 468,332 449,034
---------- ---------- ---------- ----------
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(CONTINUED)
Nine Months Ended Three Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
NONINTEREST EXPENSE:
Salaries and employee benefits 3,018,517 3,017,887 1,072,069 1,005,275
Occupancy expense 461,120 457,671 154,141 155,762
Equipment expense 307,548 265,198 99,848 103,234
Investment security
(gain)loss, net 0 6,813 0 316
Loss(Gain) on sale of
other real estate owned, net 0 17,456 0 17,456
Data processing fees 164,011 251,014 55,563 73,308
F.D.I.C. insurance premium 1,500 179,567 500 (9,333)
Stationary and supplies 119,502 104,061 47,157 42,236
Other expense 1,169,764 1,018,360 461,717 288,911
---------- ---------- ---------- ----------
Total noninterest expense 5,241,962 5,318,027 1,890,995 1,677,165
---------- ---------- ---------- ----------
Income before income taxes 2,562,855 1,621,307 896,109 701,753
---------- ---------- ---------- ----------
Income taxes 1,072,100 662,500 373,600 286,000
---------- ---------- ---------- ----------
Net Income $1,490,755 $ 958,807 $ 522,509 $ 415,753
========== ========== ========== ==========
Earnings per share:
Weighted average
shares outstanding 753,994 751,172 753,994 751,172
========== ========== ========== =========
Net income per share $ 1.98 $ 1.28 $ 0.69 $ 0.55
Dividends per share $ 0.24 $ 0.20 $ 0.12 $ 0.12
Special dividend per share $ 0.12 $ 0.00 $ 0.00 $ 0.00
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Interest received $ 9,594,611 $ 8,691,382
Service charges and other income 1,399,841 1,277,793
Interest paid (3,229,363) (3,075,174)
Cash paid to suppliers and employees (4,858,515) (5,129,248)
Income taxes paid (1,070,989) (699,162)
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Net cash provided by operating activities 1,835,585 1,065,591
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Cash flows from investing activities:
Proceeds from maturities of investment securities
held-to-maturity 13,520,665 13,161,962
Proceeds from maturities of investment securities
available-for-sale 4,135,938 3,973,570
Purchases of investment securities held-to-maturity (4,956,495) (5,052,274)
Purchases of investment securities
available-for-sale (6,104,155) (3,332,980)
Net increase in loans (9,834,403) (10,705,946)
Proceeds from sale of mortgages 0 2,755
Capital expenditures (227,006) (352,346)
Proceeds from sale of fixed assets 0 40
Recoveries of previously charged off loans 698,645 71,352
Decrease in other assets 182,845 151,275
Proceeds from sale of OREO 0 113,808
Increase (decrease) in other liabilities (37,536) 246,249
Increase in federal funds sold (7,400,000) (2,000,000)
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Net cash used in investing activities (10,021,502) (3,722,535)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
NOW, money market & savings accounts 343,889 (4,575,965)
Net increase in time deposits 9,960,536 7,316,306
Net increase in borrowings 0 0
(Purchases) sale of treasury stock 38,199 (49,500)
Dividends paid (271,577) (241,215)
------------ ------------
Net cash provided by financing activities 10,071,047 2,449,626
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Net decrease in cash and cash equivalents 1,885,130 (207,318)
Cash & cash equivalents beginning of year 9,294,959 10,031,837
------------ ------------
Cash & cash equivalents at September 30: $11,180,089 $ 9,824,519
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(UNAUDITED)
(CONTINUED)
Reconciliation of net income to net cash provided by operating activities:
1996 1995
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Net income $ 1,490,755 $ 958,807
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Depreciation expense 294,305 291,681
Amortization expense of investment securities 27,679 85,365
Accretion income of investment securities (64,338) (79,856)
Change in prepaid interest (2,950) (2,950)
Provision for loan losses 0 60,000
Increase (decrease) in taxes payable 1,111 (36,662)
Decrease in interest receivable (67,982) (23,328)
Increase (decrease) in interest payable 42,863 (119,958)
Increase (decrease) in accrued expenses (36,380) 114,657
Net gain on sale of mortgages 0 (2,755)
Change in deferred loan fees 25,004 38,573
Change in prepaid expenses 125,522 (217,559)
Change in unearned income (4) (424)
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Total adjustments 344,830 106,784
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Net cash provided by operating activities $ 1,835,585 $ 1,065,591
============ ============
Non-cash investing activities:
Loans transferred to other real estate owned $ 0 $ 136,000
Loans originated for the sale of other real estate $ 0 $ 560,000
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
1. BASIS OF PRESENTATION
The interim consolidated financial statements contained
herein are unaudited but, in the opinion of management,
include all adjustments which are necessary, to make the
financial statements not misleading. All such adjustments
are of a normal recurring nature. The results of operations
for any interim period are not necessarily indicative of
results that may be expected for the year ended December 31, 1996.
2. EARNINGS PER SHARE
Earnings per share calculations are based on the weighted
average number of common shares outstanding during the period.
3. LEVERAGED E.S.O.P.
The prepared financial statements include adjusting entries
to properly reflect the leveraged portion of the Employee
Stock Ownership Plan.
4. RECLASSIFICATION
Certain amounts in the prior year have been reclassified to
be consistent with the current year's statement presentation.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
- - ------------
The following discussion and related consolidated financial
statements include Beverly National Corporation (the
"Corporation") and its subsidiaries, Beverly National Bank (the
"Bank"), Cabot Street Realty Trust, and 86 Bay Road Realty Trust.
Summary
- - -------
The Corporation's net income for the nine months ended September
30, 1996, was $1,490,755 as compared to $958,807 for the time
period ended September 30, 1995. This represents an increase of
$531,948 or 55.5%. Earnings per share totaled $1.98 for the
nine months ended September 30, 1996, as compared to earnings
per share of $1.28 for the nine months ended September 30, 1995.
The improved earnings per share reflect both the improvement in
core earnings and non-recurring income.
NINE MONTHS ENDED SEPTEMBER 30, 1996
AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1995
Net Interest Income
- - -------------------
Net interest and dividend income for the nine months ended
September 30, 1996, totaled $6,404,976 as compared to $5,598,828
for the same time period in 1995. This is an increase of
$806,148 or 14.4%. Total interest and dividend income equaled
$9,674,252 for the nine months ended September 30, 1996 as
compared to $8,671,052 for the same time period in 1995, an
increase of $1,003,200 or 11.6%. Loan income for the nine
months ended September 30, 1996, totaled $7,548,255 as compared
to $6,275,557 for the same time period in 1995. This increase
of $1,272,698 or 20.3% reflects the continued increased loan
production and the reduction of non-performing loans. Interest
and Dividends on Taxable Investment Securities for the nine
months ended September 30, 1996 totaled $1,697,795 as compared
to $2,129,402 for the same period in 1995. This is a decrease of
$431,607 or 20.3%. As taxable investment securities matured
funds were redeployed to fund loan growth. In this regard, the
investment portfolio was reduced by $6,624,863 during the first
nine months while net loans increased $8,015,710. The interest
earned from federal funds sold increased $55,502 or 23.9% for
the nine months ended September 30, 1996 as compared to 1995,
reflecting an increase in volume.
<PAGE>
Other interest was recorded in the amount of $119,876 for the
nine months ended September 30, 1996 as compared to $-0- for the
corresponding time period in 1995. This interest is
non-recurring and relative to a refund associated with taxation
of municipal amortization of investment premiums.
Deposit interest expense equaled $3,224,622 for the nine months
ended September 30, 1996, as compared to $2,994,160 for the same
period in 1995. This increase of $230,462 or 7.7% reflects the
current strategy of managing the cost of funds of the Bank.
Average deposit rates have increased slightly during 1996 in
comparison to 1995.
Notes payable interest expense for the nine months ended
September 30, 1996 decreased $33,410 in comparison to 1995 due
to the reduction of corporate borrowings.
Loan Loss Provision
- - -------------------
The provision for the possible loan losses for the nine months
ended September 30, 1996 was $-0- as compared to $60,000 for the
same period in 1995. At September 30, 1996, the Corporation's
allowance for possible loan losses was $2,266,778 representing
2.0% of gross loans at September 30, 1996 as compared to
$2,072,523 or 2.0% of total loans at December 31, 1995. Factors
that enabled the Bank to reduce provisions included management's
evaluation of improving economic conditions including a stable
local economy and the reduction of non-performing loan balances.
The Corporation's non-accrual loans were $1,792,654 at September
30, 1996 as compared to $2,374,226 at December 31, 1995. The
decrease in non-accrual loans can be attributed primarily to the
additional resources devoted to addressing the loans that are in
non-accrual status.
The ratio of non-performing assets to total loans and mortgages
held for sale was 1.57% for September 30, 1996 as compared to
2.97% as of December 31, 1995. This decrease can be attributed
to the reduction of non-performing assets of $581,572. The
ratio of allowance for loan losses to non-performing assets
equaled 132.4% at September 30, 1996 as compared to 66.6% at
December 31, 1995.
A total of $504,390 loans were charged off by the Corporation
during the first nine months of 1996 as compared to $60,215
charged off during the corresponding period in 1995. These
charge-offs consisted primarily of loans to small businesses and
individuals. A total of $698,645 was recovered of previously
charged off notes by the Corporation during the nine month
period ended September 30, 1996, as compared to $71,352
recovered of previously charged off notes during the
corresponding period in 1995.
<PAGE>
Noninterest Income
- - ------------------
Noninterest income totaled $1,399,841 for the nine months ended
September 30, 1996 as compared to $1,400,506 for nine months
ended September 30, 1995. This is a decrease of $665 or .1%.
Income from fiduciary activities totaled $644,557 for the nine
months ended September 30, 1996 as compared to $669,467 for nine
months ended September 30, 1995 a decrease of $24,910 or 3.7%
due to a reduction of non-recurring trust services. Service
charges on deposit accounts increased slightly as income totaled
$316,342 for the nine months ended September 30, 1996, as
compared to $306,068 for the same time period in 1995.
Other deposit fees declined slightly with a decrease of $8,017
or 4.4% for the nine months ended September 30, 1996 as compared
to the same time period in 1995. Other income for the nine
month period ended September 30, 1996 totaled $264,965 as
compared to $242,977 September 30, 1995, an increase of $21,988
or 9.1%.
Noninterest Expense
- - -------------------
Noninterest expense totaled $5,241,962 for the nine months ended
September 30, 1996, as compared to $5,318,027 for the same time
period in 1995. This is an expense reduction of $76,065 or
1.4%. Salaries and benefits totaled $3,018,517 for the nine
months ended September 30, 1996 as compared $3,017,887 for the
same time period in 1995. This increase of $630 can be
attributed to reduction of some benefit costs and limited salary
increases. Occupancy expense totaled $461,120 for the nine
months ended September 30, 1996 as compared to $457,671 for the
same period in 1995. This increase is due to increased rental
expense and repair and maintenance costs. The costs of
equipment totaled $307,548 for the nine months ending September
30, 1996 as compared to $265,198 for the same period in 1995.
An additional $217,000 of equipment purchases was made in the
third quarter 1995 in relation to the scheduled data processing
upgrades. Data processing fees totaled $164,011 for the nine
months ended September 30, 1996 as compared to $251,014 for the
corresponding time period in 1995. The decrease of $87,003 or
34.7% is related to the data processing upgrades and related
1995 expenses. The FDIC Insurance Premium totaled $1,500 for
the nine months ended September 30, 1996 as compared to $179,567
for the corresponding period in 1995. This is a decrease of
$178,067 or 99.2% of premium expense. This decrease is based on
the reduction of FDIC Insurance premiums. Stationary and
supplies totaled $119,502 at nine months ended September 30,
1996 as compared to $104,061 for the corresponding period in
1995. Legal and miscellaneous expenses were reduced by $96,500
due to a recovery of non-recurring trust expenses.
<PAGE>
Income Taxes
- - ------------
The income tax provision for the nine months ended September 30,
1996 totaled $1,072,100 in comparison to an income tax provision
of $662,500 for the same time period in 1995. This increase of
$409,600 or 61.8% reflects the increase in taxable income.
Net Income
- - ----------
Net income amounted to $1,490,755 for the nine months ended
September 30, 1996 as compared to net income of $958,807 for the
same period in 1995, which is an increase of $531,948 or 55.5%.
The increase in net income for nine months can be attributed to:
increased loan production; collection of non-recurring interest;
reduced loan loss provisions to the Allowance for Loan Losses;
recovery of non-recurring trust expenses; and reduction of the
FDIC insurance premium and data processing costs.
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1996
AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1995
Net Interest Income
- - -------------------
Net interest and dividend income for the three months ended
September 30, 1996, totaled $2,318,772 as compared to $1,929,884
for the same time period in 1995. This increase was $388,888 or
20.2%. Total interest and dividend income equaled $3,432,849
for the three months ended September 30, 1996 as compared to
$3,032,975 for the same time period in 1995, an increase of
$399,874 or 13.2%. Loan income for the three months ended
September 30, 1996, totaled $2,736,674 as compared to $2,240,074
for the same time period in 1995. This increase of $496,600 or
22.2% represents increased loan production, recovery of
non-accrual income and the reduction of non-performing assets.
Interest and Dividends on Taxable Investment Securities for the
three months ended September 30, 1996 totaled $546,052 as
compared to $704,305 for the same period in 1995. This is a
decrease of $158,253 or 22.5%. Investment securities that
matured funded the loan growth, during the quarter. The
investment portfolio decreased $3,495,693 during the third
quarter. The interest earned from federal funds sold increased
$45,185 or 58.6% for the three months ended September 30, 1996
when compared to the same time period in 1995, due to increased
volume. This reflects increased liquidity due to strong deposit
growth.
Other interest was recorded in the amount of $21,149 for the
three months ended September 30, 1996 as compared to $-0- for
the corresponding time period in 1995. This interest is
non-recurring and relative to taxation of municipal amortization
of investment premiums.
Deposit interest expense equaled $1,099,117 for the three months
ended September 30, 1996, as compared to $1,076,657 for the same
period in 1995. This increase of $22,460 or 2.1% reflects the
current strategy of managing the cost of funds of the Bank. The
Bank generally pays competitive rates for its deposit base in
the local market.
Notes payable interest expense for the three months ended
September 30, 1996 decreased $11,474 in comparison to the corresponding
time period in 1995 due to the reduced level of corporate borrowings.
<PAGE>
Loan Loss Provision
- - -------------------
No provisions to the allowance for possible loan losses were
made during the third calendar quarters of 1996 or 1995,
respectively. At September 30, 1996, the Corporation's
allowance for possible loan losses was $2,266,778 representing
2.0% of gross loans as compared to the ratio of 2.0% of total
loans at December 31, 1995.
The Corporation's non-accrual loans were $1,792,654 at September
30, 1996 as compared to $2,374,226 at December 31, 1995. The
decrease in non-accrual loans can be attributed primarily to the
additional resources devoted to collecting the loans that are in
non-accrual status.
The ratio of non-performing assets to total loans and mortgages
held for sale was 1.57% for September 30, 1996 as compared to
2.97% as of December 31, 1995. This decrease can be attributed
to the reduction of non-performing assets of $581,572. The
ratio of allowance for loan losses to non-performing assets
equaled 132.4% at September 30, 1996 as compared to 66.6% at
December 31, 1995.
A total of $46,719 loans were charged off by the Corporation
during the third quarter of 1996 as compared to $1,975 charged
off during the corresponding period in 1995. These charge-offs
consisted primarily of loans to small businesses and
individuals. A total of $92,310 was recovered of previously
charged off notes by the Corporation during the three month
period ended September 30, 1996, as compared to $4,190 recovered
during the corresponding period in 1995.
Noninterest Income
- - ------------------
Noninterest income totaled $468,332 for the three months ended
September 30, 1996 as compared to $449,034 for three months
ended September 30, 1995. This is an increase of $19,298 or
4.3%. Income from fiduciary activities totaled $213,036 for the
three months ended September 30, 1996 as compared to $217,155
for the three months ended September 30, 1995. Service charges
on deposit accounts totaled $103,880 for the three months ended
September 30, 1996, as compared to $93,485 for the same time
period in 1995. Other deposit fees decreased $8,390 or 12.9%
for the three months ended September 30, 1996 as compared to the
same time period in 1995. There were no net security gains
posted for the three month periods ended September 30, 1996 and
September 30, 1995. Other income for the three month period
ended September 30, 1996 totaled $94,664 as compared to $73,252
for the three month period ended September 30, 1995, an increase
of $21,412 or 29.2%.
<PAGE>
Noninterest Expense
- - -------------------
Noninterest expense totaled $1,890,995 for the three months
ended September 30, 1996, as compared to $1,677,165 for the same
time period in 1995. This increase totaled $213,830 or 12.7%.
This increase is attributed to increased advertising, marketing,
additional personnel, and repo collection costs. Salaries and
benefits totaled $1,072,069 for the three months ended September
30, 1996 and $1,005,275 for the same time period in 1995. This
increase is due to increased staffing during the third quarter.
Occupancy expense totaled $154,141 for the three months ended
September 30, 1996 as compared to $155,762 for the same period
in 1995. The costs of equipment totaled $99,848 for the three
months ended September 30, 1996 as compared to $103,234 for the
same period in 1995. The increased equipment expense in 1995
can be attributed to the purchase of additional equipment in
connection with the implementation of the data processing
system. An additional $217,000 of equipment was purchased
during the third quarter 1995 relative to a data processing
upgrade. Data processing fees totaled $55,563 for the three
months ended September 30, 1996 as compared to $73,308 for the
corresponding time in 1995. This decrease of $17,745 or 24.2%
relates to the additional data processing costs in 1995. The
FDIC Insurance Premium was $500 for the three months ended
September 30, 1996 as compared to ($9,333) for the corresponding
period in 1995. Other expenses totaled $461,717 at three months
ended September 30, 1996 as compared to $288,911 for the same
period in 1995. This reflects the increases in marketing costs
of $137,250 and repo collections costs of $94,525.
Income Taxes
- - ------------
The income tax provision for the three months ended September
30, 1996 totaled $373,600 in comparison to an income tax
provision of $286,000 for the same time period in 1995. This
increase reflects an increase of taxable income.
Net Income
- - ----------
Net income amounted to $522,509 for the three months ended
September 30, 1996 as compared to net income of $415,753 for the
same period in 1995, which is an increase of $106,756 or 25.7%.
The increase in net income for the quarter can be attributed to:
increased loan production, recovery of non-accrual interest and
no loan loss provision.
<PAGE>
Capital Resources
- - -----------------
As of September 30, 1996, the Corporation had total capital in
the amount of $14,696,914, as compared with $13,470,752 at
December 31, 1995, which represents an increase of $1,226,162 or 9.1%.
The Bank is required to maintain a Tier 1 capital at a level
equal to or greater than 4.0% of the Bank's adjusted total
assets. As of September 30, 1996, the Bank's Tier 1 capital
amounted to 7.73% of total assets. In addition, banks and
holding companies must maintain minimum levels of risk-based
capital equal to risk weighted assets of 8.00%. At September
30, 1996, the Bank's ratio of risk-based capital to risk
weighted assets amounted to 13.00%, which satisfies the
applicable risk based capital requirements. As of December 31,
1995, the Corporation's Tier 1 capital amounted to 7.35% of
total assets and risk based capital amounted to 12.57% of total
risk based assets. The capital ratios of the Corporation and
the Bank exceed regulatory requirements.
Liquidity
- - ---------
The primary function of asset/liability management is to assure
adequate liquidity and maintain an appropriate balance between
interest-sensitive earning assets and interest-bearing
liabilities. Liquidity management involves the ability to meet
the cash flow requirements of customers who may be either
depositors wanting to withdraw funds or borrowers needing
assurance that sufficient funds will be available to meet their
credit needs. Interest rate sensitivity management seeks to
avoid fluctuating net interest margins and to enhance consistent
growth of net interest income through periods of changing
interest rates.
Certain marketable investment securities, particularly those of
shorter maturities, are the principal source of asset liquidity.
The Corporation maintains such securities in an available for
sale account as a liquidity resource. Securities maturing in
one year or less amounted to approximately $7,675,804 or 20.3%
at September 30, 1996 of the investment securities portfolio,
and $16,843,430 at December 31, 1995, representing 38.0% of the
investment securities portfolio. Assets such as federal funds
sold, mortgages held for sale, as well as maturing loans are
also sources of liquidity. The Corporation's goal and general
practice is to be interest rate sensitive neutral, and maintain
a net cumulative gap at one year or less than 10% of Total
Earning Assets, so that changes in interest rates should not
dramatically impact income as assets and liabilities mature and
reprice concurrently.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEVERLY NATIONAL CORPORATION
(Registrant)
Date: November 12, 1996 By: /s/ Lawrence M. Smith
----------------------
Lawrence M. Smith
President, Chief Executive Officer
Date: November 12, 1996 By: /s/ Peter E. Simonsen
----------------------
Peter E. Simonsen
Treasurer, Principal Financial Officer
<PAGE>
PART II - Other Information
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit Number
27. Financial Data Schedule
b. The Corporation did not file any reports on Form
8-K during the quarter ended September 30, 1996.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,180,089
<INT-BEARING-DEPOSITS> 132,761,082
<FED-FUNDS-SOLD> 13,200,000
<TRADING-ASSETS> 1,218,711
<INVESTMENTS-HELD-FOR-SALE> 11,153,903
<INVESTMENTS-CARRYING> 24,650,317
<INVESTMENTS-MARKET> 24,453,803
<LOANS> 112,774,302
<ALLOWANCE> 2,266,778
<TOTAL-ASSETS> 180,619,385
<DEPOSITS> 163,802,650
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,074,194
<LONG-TERM> 685,627
0
0
<COMMON> 1,978,373
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<INTEREST-DEPOSIT> 3,224,622
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<INTEREST-INCOME-NET> 6,404,976
<LOAN-LOSSES> 0
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<EXPENSE-OTHER> 5,241,962
<INCOME-PRETAX> 2,562,855
<INCOME-PRE-EXTRAORDINARY> 2,562,855
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,490,755
<EPS-PRIMARY> 1.98
<EPS-DILUTED> 1.92
<YIELD-ACTUAL> 7.76
<LOANS-NON> 1,792,654
<LOANS-PAST> 0
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