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 June 30, 1996
-----------------------
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
------------------------------ -------------------
(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 August 1, 1996. 754,382 shares
----------------
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
June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . 3
Consolidated Statements of Income for the Three Months
and Six Months Ended June 30, 1996 and 1995 . . . . . . . . . 5
Consolidated Statements of Cash Flow for the
Six Months Ended June 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)
June 30, December 31,
1996 1995
------------ ------------
ASSETS
Cash and due from banks $ 7,736,480 $ 9,294,959
Federal funds sold 5,300,000 5,800,000
Investments in available-for-sale securities 12,076,511 11,153,903
Investments in held-to-maturity securities 29,131,940 33,183,718
Federal Reserve Bank stock, at cost 97,500 97,500
Loans:
Commercial 16,504,950 16,485,532
Real estate - construction and
land development 6,106,127 4,648,818
Real estate - residential 36,590,071 34,092,682
Real estate - commercial 45,011,425 42,587,993
Consumer 6,513,133 5,593,914
Municipal 452,000 465,000
Other 807,372 787,342
Allowance for possible loan losses (2,221,186) (2,072,523)
Deferred loan fees,net (102,843) (96,940)
Unearned income 0 (4)
------------- -------------
Net loans 109,661,049 102,491,814
Mortgages held for sale 1,244,373 123,663
Premises and equipment, net 4,302,585 4,377,035
Accrued interest receivable 1,327,398 1,204,582
Other assets 1,321,081 1,393,520
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$172,198,917 $169,120,694
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 34,113,358 $ 34,500,825
Interest bearing
Regular savings 36,335,935 34,300,913
NOW accounts 29,793,154 30,316,353
Money market accounts 19,301,756 19,271,207
Time deposits 36,393,033 35,108,927
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Total deposits 155,937,236 153,498,225
Notes payable 685,627 685,627
Employee Stock Ownership Plan loan 360,000 394,354
Other liabilities 952,219 1,071,736
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Total liabilities 157,935,082 155,649,942
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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 9,092,025 8,304,831
Treasury stock, at cost (36,967 shares) (706,420) (744,619)
Net unrealized holding loss on
available-for-sale securities (120,362) (53,698)
Unearned compensation-Employee
Stock Ownership Plan (360,000) (394,354)
------------- -------------
Total stockholders' equity 14,263,835 13,470,752
------------- -------------
$172,198,917 $169,120,694
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- -------
INTEREST INCOME:
Interest and fees on loans $4,811,581 $4,035,483 $2,471,483 $2,022,798
Interest and dividends on
investment securities:
Taxable 1,151,743 1,425,097 567,973 680,236
Tax-exempt 13,641 22,103 6,766 11,784
Federal Funds Sold 165,711 155,394 100,137 126,692
Other interest 98,727 0 98,727 0
---------- ---------- ---------- ----------
Total interest and
dividend income 6,241,403 5,638,077 3,245,086 2,841,510
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Interest on Deposits 2,125,505 1,917,503 1,071,362 1,030,465
Interest on Notes payable 29,694 51,630 14,808 27,241
---------- ---------- ---------- ----------
Total interest expense 2,155,199 1,969,133 1,086,170 1,057,706
---------- ---------- ---------- ----------
Net interest and
dividend income 4,086,204 3,668,944 2,158,916 1,783,804
---------- ---------- ---------- ----------
Provision for loan losses 0 60,000 0 0
---------- ---------- ---------- ----------
Net interest and dividend
income after provision
for loan losses 4,086,204 3,608,944 2,158,916 1,783,804
---------- ---------- ---------- ----------
NONINTEREST INCOME:
Income from fiduciary
activities 431,521 452,312 232,457 213,602
Service charges on
deposit accounts 212,462 212,583 106,380 111,273
Other deposit fees 117,225 116,852 59,678 58,122
Other income 170,301 169,725 78,931 82,867
---------- ---------- ---------- ----------
Total noninterest income 931,509 951,472 477,446 465,864
---------- ---------- ---------- ----------
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(CONTINUED)
NONINTEREST EXPENSE:
Salaries and employee benefits 1,946,448 2,012,612 1,007,392 1,004,693
Occupancy expense 306,979 301,909 143,381 141,359
Equipment expense 207,700 161,964 103,673 80,034
Investment security loss, net 0 6,497 0 0
Data processing fees 108,448 177,706 55,623 95,393
F.D.I.C. insurance premium 1,000 188,900 500 94,200
Stationary and supplies 72,345 61,825 36,584 27,295
Other expense 708,047 729,449 443,756 360,771
---------- ---------- ---------- ----------
Total noninterest expense 3,350,967 3,640,862 1,790,909 1,803,745
---------- ---------- ---------- ----------
Income before income taxes 1,666,746 919,554 845,453 445,923
Income taxes 698,500 376,500 353,000 154,757
---------- ---------- ---------- ----------
Net Income $ 968,246 $ 543,054 $ 492,453 $ 291,166
========== ========== ========== ==========
Earnings per share:
Weighted average shares
outstanding 753,994 753,172
========== ==========
Net income per share $ 1.28 $ 0.72
Dividends per share $ 0.24 $ 0.20
Special dividend per share $ 0.12 $ 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
Six Months Ended June 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 $6,106,338 $5,794,077
Service charges and other income 931,509 949,118
Interest paid (2,155,076) (2,043,421)
Cash paid to suppliers and employees (3,232,960) (3,485,452)
Income taxes paid (635,858) (489,795)
----------- -----------
Net cash provided by operating activities 1,013,953 724,527
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Cash flows from investing activities:
Proceeds from maturities of investment
securities held-to-maturity 3,053,391 9,037,897
Proceeds from maturities of investment
securities available-for-sale 7,105,933 2,933,940
Purchase of investment securities
held-to-maturity (3,961,183) (5,008,438)
Purchase of investment securities
available-for-sale (3,117,750) (1,208,125)
Net increase in loans (8,902,187) (8,006,438)
Proceeds from sale of mortgages 0 279,354
Capital expenditures (128,664) (117,599)
Proceeds from sale of fixed assets 0 75
Recoveries of previously charged off loans 606,334 67,161
(Increase) decrease in other assets (10,248) 402,466
Proceeds from sale of OREO 0 0
Decrease in other liabilities (14,216) (12,932)
(Increase) decrease in federal funds sold 500,000 (6,600,000)
----------- -----------
Net cash used in investing activities (4,868,590) (8,235,639)
----------- -----------
Cash flow from financing activities:
Net increase in demand deposits, NOW
money market & savings accounts 1,154,905 1,368,703
Net increase in time deposits 1,284,106 5,021,286
Net increase in borrowings 0 0
(Purchase) sale treasury stock 38,199 (16,500)
Dividends paid (181,052) (150,834)
----------- -----------
Net cash provided by financing activities 2,296,158 6,222,655
----------- -----------
Net decrease in cash and cash equivalents (1,558,479) (1,288,457)
Cash & cash equivalents beginning of year 9,294,959 10,031,837
----------- -----------
Cash & cash equivalents at June 30: $7,736,480 $8,743,380
----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
(Continued)
Reconciliation of net income to net cash provided by operating activities:
1996 1995
---------- ----------
Net income $ 968,246 $ 543,054
---------- ----------
Depreciation expense 203,114 186,342
Amortization expense of investment securities 18,844 59,231
Accretion income of investment securities (36,729) (56,051)
Change in prepaid interest 1,967 1,967
Provision for loan losses 0 60,000
Increase (decrease) in taxes payable 62,642 (113,295)
(Increase) decrease in interest receivable (123,088) 136,877
Decrease in interest payable (1,843) (76,255)
Decrease in accrued expenses (172,564) (30,425)
Net gain on sale of mortgages 0 (2,354)
Change in deferred loan fees 5,903 15,488
Change in prepaid expenses 87,457 (507)
Change in unearned income 4 455
----------- -----------
Total adjustments 45,707 181,473
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Net cash provided by operating activities $1,013,953 $ 724,527
=========== ===========
Non-cash investing activities:
Loans transferred to other real estate owned $ 0 $ 480,810
Loans originated for the sale of other real
estate owned $ 0 $ 400,000
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BEVERLY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX AND THREE MONTHS ENDED JUNE 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 six months ended June 30, 1996,
was $968,246 as compared to $543,054 for the time period ended
June 30, 1995. This represents an increase of $425,192 or 78.3%.
Earnings per share totaled $1.28 for the six months ended June 30,
1996, as compared to earnings per share of $.72 for the six months ended
June 30, 1995. The improved earnings per share reflect both the
improvement in core earnings and non-recurring income.
SIX MONTHS ENDED JUNE 30, 1996
AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Net Interest Income
- - ------------------
Net interest and dividend income for the six months ended
June 30, 1996, totaled $4,086,204 as compared to $3,668,944
for the same time period in 1995. This is an increase of
$417,260 or 11.4%. Total interest income equaled $6,241,403
for the six months ended June 30, 1996 as compared to
$5,638,077 for the same time period in 1995, an increase of
$603,326 or 10.7%. Loan income for the six months ended June
30, 1996, totaled $4,811,581 as compared to $4,035,483 for the
same time period in 1995. This increase of $776,098 or 19.2%
reflects the continued increased loan production and the
reduction of non-performing loans. Interest and Dividends on
taxable Investment Securities for the six months ended June 30,
1996 totaled $1,151,743 as compared to $1,425,097 for the same
period in 1995. This is a decrease of $273,354 or 19.2%. As
taxable investment securities matured funds were redeployed to
fund loan growth. In this regard, the investment portfolio was
reduced by $3,129,170 during the first six months while net
loans increased $7,169,235. The interest earned from federal
funds sold increased $10,317 or 6.6% for the six months ended
June 30, 1996 as compared to 1995.
Other interest was recorded in the amount of $98,727 for the
six months ending June 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.
<PAGE>
Deposit interest expense equaled $2,125,505 for the six months
ended June 30, 1996, as compared to $1,917,503 for the same
period in 1995. This increase of $208,002 or 10.9% 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 six months ended June 30, 1996
decreased $21,936 in comparison to 1995 due to the reduction of
corporate borrowings.
Loan Loss Provision
- - -------------------
The provision for the possible loan losses for the
six months ended June 30, 1996 was $-0- as compared to $60,000
for the same period in 1995. At June 30, 1996, the
Corporation's allowance for possible loan losses was $2,221,186
representing 2.0% of gross loans at June 30, 1996 as compared to
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 $1,957,531 at June 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 1.73% for June 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 $416,695. The ratio of
allowance for loan losses to non-performing assets equaled
113.5% at June 30, 1996 as compared to 66.6% at December 31, 1995.
A total of $457,671 loans were charged off by the
Corporation during the first six months of 1996 as compared to
$58,239 charged off during the corresponding period in 1995.
These charge-offs consisted primarily of loans to small
businesses and individuals. A total of $606,334 was recovered
of previously charged off notes by the Corporation during the
six month period ended June 30, 1996, as compared to $67,161
recovered of previously charged off notes during the
corresponding period in 1995.
<PAGE>
Noninterest Income
- - ------------------
Noninterest income totaled $931,509 for the six months ended
June 30, 1996 as compared to $951,472 for six months ended
June 30, 1995. This is a decrease of $19,963 or 2.1%. Income
from fiduciary activities totaled $431,521 for the six months
ended June 30, 1996 as compared to $452,312 for six months
ended June 30, 1995 a decrease of $20,791 or 4.6% due to
a reduction of non-recurring trust services. Service charges on
deposit accounts remained stable as income totaled $212,462 for
the six months ended June 30, 1996, as compared to $212,583 for
the same time period in 1995.
Other deposit fees also remained stable with an increase of $373
or .3% for the six months ended June 30, 1996 as compared to the
same time period in 1995. There were no net security gains
posted for the six month periods ended June 30, 1996 and June 30,
1995. Other income for the six month period ended June 30, 1996
totaled $170,301 as compared to $169,725 June 30, 1995, an increase
of $576 or .3%. The Bank sold $-0- in mortgages to the secondary
market during the six months ended June 30, 1996.
Noninterest Expense
- - -------------------
Noninterest expense totaled $3,350,967 for the six months
ended June 30, 1996, as compared to $3,640,862 for the same
time period in 1995. This is an expense reduction of
$289,895 or 8.0%. Salaries and benefits totaled $1,946,448
for the six months ended June 30, 1996 and $2,012,612 for
the same time period in 1995. This decrease of $66,164 or
3.3% can be attributed to reduction of some benefit costs,
decreased staff and limited salary increases. Occupancy
expense totaled $306,979 for the six months ended June 30,
1996 as compared to $301,909 for the same period in 1995.
This increase is due to increased rental expense and repair
and maintenance costs. The costs of equipment totaled
$207,700 for the six months ending June 30, 1996 as
compared to $161,964 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 $108,448 for the six
months ended June 30, 1996 as compared to $177,706 for the
corresponding time period in 1995. The decrease of $69,258 or
39.0% is related to the data processing upgrades and related
1995 expenses. The FDIC Insurance Premium totaled $1,000 for
the six months ended June 30, 1996 as compared to $188,900 for
the corresponding period in 1995. This is a decrease of
$187,900 or 99.5% of premium expense. This decrease is based on
the reduction of FDIC Insurance premiums. Stationary and
supplies totaled $72,345 at six months ended June 30, 1996 as
compared to $61,825 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 six months ended
June 30, 1996 totaled $698,500 in comparison to an income tax
provision of $376,500 for the same time period in 1995. This
increase reflects the increase in taxable income.
Net Income
- - ----------
Net income amounted to $968,246 for the six months ended
June 30, 1996 as compared to net income of $543,054
for the same period in 1995, which is an increase of $425,192 or
78.3%. The increase in net income for six months can be
attributed to: increased loan production; collection of
non-recurring interest; reduced loan loss provisions to the
Allowance for Loan Losses; recovery non-recurring trust
expenses; and reduction of the FDIC insurance premium.
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996
AS COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Net Interest Income
- - -------------------
Net interest and dividend income for the three months
ended June 30, 1996, totaled $2,158,916 as compared to
$1,783,804 for the same time period in 1995. This
increase was $375,112 or 21.0%. Total interest and dividend
income equaled $3,146,359 for the three months ended June 30,
1996 as compared to $2,841,510 for the same time period in 1995,
an increase of $304,849 or 10.7%. Loan income for the three
months ended June 30, 1996, totaled $2,471,483 as compared to
$2,022,798 for the same time period in 1995. This increase of
$448,685 or 22.2% represents increased loan production, recovery
of non-accrual income and the reduction of non-performing
assets. Interest and Dividends on Investment Securities for the
three months ended June 30, 1996 totaled $574,739 as compared to
$692,020 for the same period in 1995. This is a decrease of
$117,281 or 16.9%. Investment securities that matured funded
the loan growth, during the quarter. The investment portfolio
decreased $929,468 during the second quarter. The interest
earned from federal funds sold decreased $26,555 or 21.0% for
the three months ended June 30, 1996 when compared to the same
time period in 1995.
Other interest was recorded in the amount of $98,727 for the
three months ending June 30, 1996 as compared to $-0- for the
corresponding time in 1995. This interest is non-recurring and
relative to taxation of municipal amortization of investment
premiums.
Deposit interest expense equaled $1,071,362 for the three months
ended June 30, 1996, as compared to $1,030,465 for the same period
in 1995. This increase of $40,897 or 4.0% 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 June
30, 1996 decreased $12,433 in comparison to the corresponding
time period in 1995 due to corporate borrowings and a lower
interest rate environment.
Loan Loss Provision
- - -------------------
No provisions to the allowance for possible loan losses were
made during the second calendar quarters of 1996 or 1995,
respectively. At June 30, 1996, the Corporation's allowance
for possible loan losses was $2,221,186 representing
2.0% of gross loans as compared to the ratio of 2.0% of total
loans at December 31, 1995.
<PAGE>
The Corporation's non-accrual loans were $1,957,531 at June 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 1.73% for June 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 $416,695. The ratio of
allowance for loan losses to non-performing assets equaled
113.5% at June 30, 1996 as compared to 66.6% at December 31,
1995.
A total of $423,452 loans were charged off by the
Corporation during the second quarter of 1996 as compared to
$3,395 charged off during the corresponding period in 1995.
These charge-offs consisted primarily of loans to small
businesses and individuals. A total of $351,029 was recovered
of previously charged off notes by the Corporation during the
three month period ended June 30, 1996, as compared to $56,142
recovered during the corresponding period in 1995.
Noninterest Income
- - ------------------
Noninterest income totaled $477,446 for the three months
ended June 30, 1996 as compared to $465,864 for three
months ended June 30, 1995. This is an increase of $11,582
or 2.5%. Income from fiduciary activities totaled $232,457
for the three months ended June 30, 1996 as compared to
$213,602 for the three months ended June 30, 1995. Service
charges on deposit accounts totaled $106,380 for the three
months ended June 30, 1996, as compared to $111,273 for the
same time period in 1995. Reduced deposit volume created
this situation. Other deposit fees increased $1,556 or
2.7% for the three months ended June 30, 1996 as compared to the
same time period in 1995. There were no net security gains
posted for the three month periods ended June 30, 1996 and June
30, 1995. Other income for the three month period ended June
30, 1996 totaled $78,931 as compared to $82,867 for the three
month period ended June 30, 1995, a decrease of $3,936 or 4.8%.
Noninterest Expense
- - -------------------
Noninterest expense totaled $1,790,909 for the three months
ended June 30, 1996, as compared to $1,803,745 for the same
time period in 1995. This decrease totaled $12,836 or .7%.
Salaries and benefits totaled $1,007,392 for the three months
ended June 30, 1996 and $1,004,693 for the same time period
in 1995. Occupancy expense totaled $143,381 for the three
<PAGE>
months ended June 30, 1996 as compared to $141,359 for the
same period in 1995. The costs of equipment totaled $103,673
for the three months ended June 30, 1996 as compared to $80,034
for the same period in 1995. The increased equipment expense
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 $55,623 for the three months ended
June 30, 1996 as compared to $95,393 for the corresponding time
in 1995. This decrease of $39,770 or 41.7% relates to the
additional data processing costs in 1995. The FDIC Insurance
Premium was $500 for the three months ended June 30, 1996 as
compared to $94,200 for the corresponding period in 1995.
This is a decrease of $93,700 or 99.5% of premium expense.
This decrease is based on the reduction of FDIC Insurance.
Other expenses totaled $443,756 at three months ended June 30,
1996 as compared to $360,771 for the same period in 1995.
This reflects the increases in marketing costs.
Income Taxes
- - ------------
The income tax provision for the three months ended June 30,
1996 totaled $353,000 in comparison to an income tax provision of
$154,757 for the same time period in 1995. This increase
reflects an increase of taxable income.
Net Income
- - ----------
Net income amounted to $492,453 for the three months
ended June 30, 1996 as compared to net income of $291,166 for
the same period in 1995, which is an increase of $201,287 or
69.1%. The increase in net income for the quarter can be
attributed to: recovery of interest, increased loan production,
recovery of non-accrual interest, no loan loss provision,
stabilized salary and benefits costs, along with the reduction
of the FDIC insurance premium.
Capital Resources
- - -----------------
As of June 30, 1996, the Corporation had total
capital in the amount of $14,263,835, as compared with
$13,470,752 at December 31, 1995, which represents an increase
of $793,083 or 5.9%.
<PAGE>
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 June 30, 1996, the Bank's Tier 1
capital amounted to 7.49% 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 June 30,
1996, the Bank's ratio of risk-based capital to risk weighted
assets amounted to 12.77%, 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 $11,840,261 or 28.7% at
June 30, 1996 of the investment securities portfolio, and
$16,843,430 at December 31, 1995, representing 37.9% 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 Securities 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: August 9, 1996 By: /s/ Lawrence M. Smith
--------------------------
Lawrence M. Smith
President, Chief Executive Officer
Date: August 9, 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
27. Financial Date Schedule
b. The Corporation did not file any reports on Form 8-K
during the quarter ending June 30, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,736,480
<INT-BEARING-DEPOSITS> 121,823,878
<FED-FUNDS-SOLD> 5,300,000
<TRADING-ASSETS> 1,244,373
<INVESTMENTS-HELD-FOR-SALE> 12,076,511
<INVESTMENTS-CARRYING> 29,131,940
<INVESTMENTS-MARKET> 29,002,744
<LOANS> 111,882,234
<ALLOWANCE> 2,221,186
<TOTAL-ASSETS> 172,198,917
<DEPOSITS> 155,937,236
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,045,627
<LONG-TERM> 685,627
0
0
<COMMON> 1,978,373
<OTHER-SE> 12,285,462
<TOTAL-LIABILITIES-AND-EQUITY> 172,198,917
<INTEREST-LOAN> 4,811,581
<INTEREST-INVEST> 1,165,384
<INTEREST-OTHER> 264,438
<INTEREST-TOTAL> 6,241,403
<INTEREST-DEPOSIT> 2,125,505
<INTEREST-EXPENSE> 29,694
<INTEREST-INCOME-NET> 4,086,204
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,350,967
<INCOME-PRETAX> 1,666,746
<INCOME-PRE-EXTRAORDINARY> 1,666,746
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 968,246
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.24
<YIELD-ACTUAL> 7.97
<LOANS-NON> 1,803,177
<LOANS-PAST> 0
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