U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly period ended September 30, 1997
--------------------------
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
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (978) 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, 1997. 754,482 shares
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Transitional small business disclosure format
Yes
------
No X
------
<PAGE>
BEVERLY NATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Income for the Three Months and
Nine Months Ended September 30, 1997 and 1996 5
Consolidated Statements of Cash Flow for the
Nine Months Ended September 30, 1997 and 1996 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 18
Item 2.
Changes in Securities and Use of Proceeds 18
Item 3.
Defaults Upon Senior Securities 18
Item 4.
Submission of Matters to a Vote of Security Holders 18
Item 5.
Other Information 18
Item 6.
Exhibits and Reports on Form 8-K 18
Signatures 17
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, December 31,
1997 1996
------------- ------------
ASSETS
Cash and due from banks $ 9,585,132 $ 11,263,278
Federal funds sold 14,800,000 14,100,000
Investments in available-for-sale securities 18,465,370 17,608,128
Investments in held-to-maturity securities 18,686,484 22,934,468
Federal Reserve Bank stock, at cost 97,500 97,500
Loans:
Commercial 19,823,371 16,946,508
Real estate - construction and land development 6,775,915 5,847,491
Real estate residential 46,578,420 40,019,022
Real estate - commercial 46,401,511 46,150,365
Consumer 7,206,411 6,538,122
Municipal 450,000 450,000
Other 636,114 585,066
Allowance for possible loan losses (2,174,458) (2,197,694)
Deferred loan fees, net (6,781) (85,990)
------------ ------------
Net loans 125,690,503 114,252,890
Mortgages held for sale 200,000 964,377
Premises and equipment, net 4,915,092 4,433,529
Accrued interest receivable 1,304,419 1,081,467
Other assets 1,333,933 1,281,374
------------ ------------
Total assets $195,078,433 $188,017,011
============ ============
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 35,940,254 $ 34,897,850
Interest bearing
Regular savings 38,377,199 35,622,750
NOW accounts 31,724,038 34,006,197
Money market accounts 20,372,955 18,748,989
Time deposits 50,302,072 47,462,442
------------ ------------
Total deposits 176,716,518 170,738,228
Notes payable 385,627 385,627
Employee Stock Ownership Plan loan 300,000 360,000
Other liabilities 1,312,987 1,390,595
------------ ------------
Total liabilities 178,715,132 172,874,450
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, 754,482 shares 1,978,373 1,978,373
Paid-in Capital 4,358,872 4,358,926
Retained earnings 10,988,967 9,886,901
Treasury stock, at cost (36,867 shares) (683,273) (685,127)
Net unrealized holding loss on available-for-
sale securities 20,362 (36,512)
Unearned compensation -Employee Stock Ownership
Plan (300,000) (360,000)
------------ ------------
Total stockholders' equity 16,363,301 15,142,561
------------ ------------
Total liabilities and stockholders' equity $195,078,433 $188,017,011
============ ============
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,
1997 1996 1997 1996
----------- ----------- ----------- -----------
INTEREST INCOME:
Interest and fees on loans $ 8,382,606 $ 7,548,255 $ 2,910,395 $ 2,736,674
Interest and dividends on
investment securities:
Taxable 1,813,020 1,697,795 581,763 546,052
Tax-exempt 9,491 20,304 2,058 6,663
Federal Funds Sold 373,534 288,022 169,275 122,311
Other interest 0 119,876 0 21,149
----------- ----------- ----------- -----------
Total interest and
dividend income 10,578,651 9,674,252 3,663,491 3,432,849
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Interest on Deposits 3,701,776 3,224,622 1,284,024 1,099,117
Interest on Notes payable 26,132 44,654 8,867 14,960
----------- ----------- ----------- -----------
Total interest expense 3,727,908 3,269,276 1,292,891 1,114,077
----------- ----------- ----------- -----------
Net interest and dividend
income 6,850,743 6,404,976 2,370,600 2,318,772
Provision for loan losses 0 0 0 0
----------- ----------- ----------- -----------
Net interest and dividend
income after provision
for loan losses 6,850,743 6,404,976 2,370,600 2,318,772
----------- ----------- ----------- -----------
NONINTEREST INCOME:
Income from fiduciary
activities 796,509 644,557 262,271 213,036
Service charges on deposit
accounts 332,307 316,342 114,307 103,880
Other deposit fees 166,002 173,977 60,294 56,752
Other income 264,249 264,965 97,335 94,664
----------- ----------- ----------- -----------
Total noninterest income 1,559,067 1,399,841 534,207 468,332
----------- ----------- ----------- -----------
<PAGE>
NONINTEREST EXPENSE:
Salaries and employee
benefits 3,497,291 3,018,517 1,177,893 1,072,069
Occupancy expense 549,793 461,120 175,311 154,141
Equipment expense 312,956 307,548 99,173 99,848
Data processing fees 195,643 164,011 63,367 55,563
F.D.I.C. insurance premium 14,986 1,500 5,055 500
Stationary and supplies 137,633 119,502 43,751 47,157
Other expense 1,186,988 1,169,764 375,698 461,717
----------- ----------- ----------- -----------
Total noninterest expense 5,895,290 5,241,962 1,940,248 1,890,995
----------- ----------- ----------- -----------
Income before income taxes 2,514,520 2,562,855 964,559 896,109
Income taxes 1,050,306 1,072,100 400,906 373,600
----------- ----------- ----------- -----------
Net Income $ 1,464,214 $ 1,490,755 $ 563,653 $ 522,509
=========== =========== =========== ===========
Earnings per share:
Weighted average shares
outstanding 754,439 753,994 754,439 753,994
=========== =========== =========== ===========
Net income per share $ 1.94 $ 1.98 $ 0.75 $ 0.69
Dividends per share $ 0.48 $ 0.36 $ 0.16 $ 0.12
Special dividend per share $ 0.06 $ 0.12 $ 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, 1997 and 1996
(Unaudited)
1997 1996
----------- ----------
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Interest received $10,262,239 $9,594,611
Service charges and other income $1,549,365 1,399,841
Interest paid ($3,697,617) (3,229,363)
Cash paid to suppliers and employees ($5,753,791) (4,858,515)
Income taxes paid ($1,013,966) (1,070,989)
----------- ----------
Net cash provided by operating activities 1,346,230 1,835,585
----------- ----------
Cash flows from investing activities:
Proceeds from maturities of investment securities
held to maturity 7,492,554 13,520,665
Proceeds from maturities of investment securities
available for sale 13,444,498 4,135,938
Purchases of investment securities held-to-maturity (8,342,090) (4,956,495)
Purchases of investment securities available-for-
sale (9,134,255) (6,104,155)
Net increase in loans (11,465,638) (9,834,403)
Proceeds from sale of mortgages 774,079 0
Proceeds from sale of other real estate owned 74,658 0
Capital expenditures (481,563) (227,006)
Recoveries of previously charged off loans 19,750 698,645
(Increase) decrease in other assets (333,031) 182,845
Increase (decrease) in other liabilities 8,721 (37,536)
Increase in federal funds sold (700,000) (7,400,000)
----------- -----------
Net cash provided by (used in) investing activities (8,642,317) (10,021,502)
----------- -----------
Cash flows from financing activities:
Net decrease in demand deposits, NOW,
money market & savings accounts 3,105,151 343,889
Net increase (decrease) in time deposits 2,873,139 9,960,536
Issued treasury stock 1,771 38,199
Dividends paid (362,120) (271,577)
----------- -----------
Net cash provided by (used in) financing activities 5,617,941 10,071,047
----------- -----------
Net decrease in cash and cash equivalents (1,678,146) 1,885,130
Cash & cash equivalents beginning of year 11,263,278 9,294,959
----------- -----------
Cash & cash equivalents at Sept 30: $ 9,585,132 $11,180,089
=========== ===========
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, 1997 and 1996
(Unaudited)
(Continued)
Reconciliation of net income to net cash provided by operating activities:
1997 1996
----------- -----------
Net income $ 1,464,214 $ 1,490,755
----------- -----------
Depreciation expense 326,317 294,305
Amortization expense of investment securities 19,014 27,679
Accretion income of investment securities (32,105) (64,338)
Change in prepaid interest (2,950) (2,950)
Provision for loan losses 0 0
Increase (decrease) in taxes payable 36,340 1,111
Increase in interest receivable (222,952) (67,982)
Increase (decrease) in interest payable 30,291 42,863
Increase (decrease) in accrued expenses (150,009) (36,380)
Net (gain) loss on sale of mortgages (9,702) 0
Net (gain) loss on sale of other real estate owned 8,275 0
Change in deferred loan fees (80,369) 25,004
Change in prepaid expenses (40,134) 125,522
Change in unearned income 0 (4)
----------- -----------
Total adjustments (117,984) 344,830
----------- -----------
Net cash provided by operatingactivities $ 1,346,230 $ 1,835,585
=========== ===========
Non-cash investing activities:
Loans transferred to other real estate owned $ 82,933 $ 0
Loans originated from the sales of other
real estate owned $ 0 $ 0
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, 1997
(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, 1997.
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"), and Cabot Street Realty Trust.
Summary
- -----------
The Corporation's net income for the nine months ended September 30, 1997, was
$1,464,214 as compared to $1,490,755 for the time period ended September 30,
1996. This represents a decrease of $26,541 or 1.8%. Earnings per share
totaled $1.94 for the nine months ended September 30, 1997, as compared to
earnings per share of $1.98 for the nine months ended September 30, 1996.
While the earnings per share reflects both the improvement in core earnings,
the improvement in core earnings was offset by a reduction in the
non-recurring income posted in 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997
AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996
Net Interest Income
- --------------------
Net interest and dividend income for the nine months ended September 30, 1997,
totaled $6,850,743 as compared to $6,404,976 for the same time period in 1996.
This is an increase of $445,767 or 7.0%. Total interest and dividend income
equaled $10,578,651 for the nine months ended September 30, 1997 as compared to
$9,674,252 for the same time period in 1996, an increase of $904,399 or 9.3%.
Loan income for the nine months ended September 30, 1997, totaled $8,382,606 as
compared to $7,548,255 for the same time period in 1996. This increase of
$834,351 or 11.1% reflects continued increased loan production. Interest and
Dividends on Taxable Investment Securities for the nine months ended September
30, 1997 totaled $1,813,020 as compared to $1,697,795 for the same period in
1996. This is an increase of $115,225 or 6.8%, is due to investing in a higher
rate environment. Some taxable investment securities that matured funded loan
growth. In this regard, the taxable investment portfolio was reduced by
$3,348,742 during the first nine months while net loans increased $11,437,613.
The interest earned from federal funds sold increased $85,512 or 29.7% for the
nine months ended September 30, 1997 as compared to 1996, reflecting an
increase in volume and a slightly higher rate environment.
There was no other interest recorded for the nine months ended September 30,
1997 as compared to $119,876 for the corresponding time period in 1996. This
interest was non-recurring and relative to a refund associated with taxation of
municipal amortization of investment premiums.
<PAGE>
Deposit interest expense equaled $3,701,776 for the nine months ended September
30, 1997, as compared to $3,224,622 for the same period in 1996. This increase
of $477,154 or 14.8% reflects increased deposits and the current strategy of
managing the cost of funds of the Bank. Average deposit rates have increased
slightly during 1997 in comparison to 1996.
Notes payable interest expense for the nine months ended September 30, 1997
decreased $18,522 in comparison to 1996 due to the reduction of corporate
borrowings.
Loan Loss Provision
- -------------------
The was no provision for the possible loan losses for the nine months ended
September 30, 1997 and 1996. At September 30, 1997, the Corporation's
allowance for possible loan losses was $2,174,458 representing 1.7% of gross
loans as compared to $2,197,694 or 1.9% of total loans at December 31, 1996.
Factors that enabled the Bank to reduce provisions included management's
evaluation of economic conditions including a stable local economy and the
reduction of non-performing loan balances.
The ratio of non-performing assets to total loans and mortgages held for sale
was .36% for September 30, 1997 as compared to .29% as of December 31, 1996.
The ratio of allowance for loan losses to non-performing assets equaled 494.3%
at September 30, 1997 as compared to 635.6% at December 31, 1996.
A total of $42,987 in loans were charged off by the Corporation during the
first nine months of 1997 as compared to $504,390 charged off during the
corresponding period in 1996. These charge-offs consisted primarily of loans
to small businesses and individuals. A total of $19,750 was recovered of
previously charged off notes by the Corporation during the nine month period
ended September 30, 1997, as compared to $698,645 recovered of previously
charged off notes during the corresponding period in 1996.
Noninterest Income
- -------------------
Noninterest income totaled $1,559,067 for the nine months ended September 30,
1997 as compared to $1,399,841 for nine months ended September 30, 1996. This
is an increase of $159,226 or 11.4%. Income from fiduciary activities totaled
$796,509 for the nine months ended September 30, 1997 as compared to $644,557
for nine months ended September 30, 1996 an increase of $151,952 or 23.6% due
to growth of recurring trust services. Service charges on deposit accounts
increased slightly as income totaled $332,307 for the nine months ended
September 30, 1997, as compared to $316,342 for the same time period in 1996.
Other deposit fees declined slightly with a decrease of $7,975 or 4.6% for the
nine months ended September 30, 1997 as compared to the same time period in
1996. Other income for the nine month period ended September 30, 1997 totaled
$264,269 as compared to $264,965 September 30, 1996, indicating a slight
decrease.
<PAGE>
Noninterest Expense
- --------------------
Noninterest expense totaled $5,895,290 for the nine months ended September 30,
1997, as compared to $5,241,962 for the same time period in 1996. This is an
expense increase of $653,328 or 12.5%. Salaries and benefits totaled
$3,497,291 for the nine months ended September 30, 1997 as compared $3,018,517
for the same time period in 1996. This increase of $478,774 or 15.9% can be
attributed to increased staff in the commercial loan and retail services.
Occupancy expense totaled $549,793 for the nine months ended September 30, 1997
as compared to $461,120 for the same period in 1996. This increase of $88,673
or 19.2% is due to increased rental expense and leasehold improvements relating
to the Cummings Center Branch, Beverly High School Branch, Hamilton Wenham
Regional High School Branch and two stand alone ATM sites. The costs of
equipment totaled $312,956 for the nine months ending September 30, 1997 as
compared to $307,548 for the same period in 1996. Data processing fees
totaled $195,643 for the nine months ended September 30, 1997 as compared to
$164,011 for the corresponding time period in 1996. The increase of $31,632 or
19.3% is related to the higher processing volumes, data processing upgrades and
new products and services. The FDIC Insurance Premium totaled $14,986 for the
nine months ended September 30, 1997 as compared to $1,500 for the
corresponding period in 1996. This is an increase of $13,486 or 899.1% of
premium expense. This increase is based on the Bank's portion of the FICO
assessment from FDIC. Other expenses for the nine months ending 1996 of legal
and miscellaneous were reduced by $96,500 due to a recovery of non-recurring
trust expenses.
Income Taxes
- -------------
The income tax provision for the nine months ended September 30, 1997 totaled
$1,050,306 in comparison to an income tax provision of $1,072,100 for the same
time period in 1996. This decrease of $21,794 or 2.0% reflects lower taxable
income.
Net Income
- -----------
Net income amounted to $1,464,214 for the nine months ended September 30, 1997
as compared to net income of $1,490,755 for the same period in 1996, which is a
decrease of $26,541 or 1.8%. While the Bank's loan production increased, the
decrease in net income can be attributed to the high level of non-recurring
interest in 1996; recovery of non-recurring trust expenses in 1996; and costs
associated with the development of the Cummings Center Branch, two high school
branches and two stand alone ATM sites in 1997.
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1997
AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996
Net Interest Income
- --------------------
Net interest and dividend income for the three months ended September 30, 1997,
totaled $2,370,600 as compared to $2,318,772 for the same time period in 1996.
This increase was $51,828 or 2.2%. Total interest and dividend income equaled
$3,663,491 for the three months ended September 30, 1997 as compared to
$3,432,849 for the same time period in 1996, an increase of $230,642 or 6.7%.
Loan income for the three months ended September 30, 1997, totaled $2,910,395
as compared to $2,736,674 for the same time period in 1996. This increase of
$173,721 or 6.3% represents increased loan production income. Interest and
Dividends on Taxable Investment Securities for the three months ended September
30, 1997 totaled $581,763 as compared to $546,052 for the same period in 1996.
This is an increase of $35,711 or 6.5%. Investment securities that matured
helped fund the loan growth, during the quarter. The investment portfolio
decreased $2,882,317 during the third quarter. The interest earned from
federal funds sold increased $46,964 or 38.4% for the three months ended
September 30, 1997 when compared to the same time period in 1996, due to
increased volume. This reflects increased liquidity due to strong deposit
growth.
There was no other interest was recorded for the three months ended September
30, 1997 as compared to $21,149 for the corresponding time period in 1996.
This interest was a 1996 non-recurring item and relative to taxation of
municipal amortization of investment premiums.
Deposit interest expense equaled $1,284,024 for the three months ended
September 30, 1997, as compared to $1,099,117 for the same period in 1996. This
increase of $184,907 or 16.8% reflects the increased deposit volume and 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, 1997
decreased $6,093 in comparison to the corresponding time period in 1996 due to
the reduced level of corporate borrowings.
Loan Loss Provision
- --------------------
No provisions to the allowance for possible loan losses were made during the
third calendar quarters of 1997 or 1996, respectively. At September 30, 1997,
the Corporation's allowance for possible loan losses was $2,174,458
representing 1.7% of gross loans as compared to the ratio of 1.9% of total
loans at December 31, 1996.
The ratio of non-performing assets to total loans and mortgages held for sale
was .36% for September 30, 1997 as compared to .29% as of December 31, 1996.
The ratio of allowance for loan losses to non-performing assets equaled 494.3%
at September 30, 1997 as compared to 635.6% at December 31, 1996.
<PAGE>
A total of $863 loans were charged off by the Corporation during the third
quarter of 1997 as compared to $46,719 charged off during the corresponding
period in 1996. These charge-offs consisted primarily of loans to small
businesses and individuals. A total of $2,396 was recovered of previously
charged off notes by the Corporation during the three month period ended
September 30, 1997, as compared to $92,310 recovered during the corresponding
period in 1996.
Noninterest Income
- -------------------
Noninterest income totaled $534,207 for the three months ended September 30,
1997 as compared to $468,332 for three months ended September 30, 1996. This
is an increase of $65,875 or 14.1%. Income from fiduciary activities totaled
$262,271 for the three months ended September 30, 1997 as compared to $213,036
for the three months ended September 30, 1996. Service charges on deposit
accounts totaled $114,307 for the three months ended September 30, 1997, as
compared to $103,880 for the same time period in 1996. Other deposit fees
increased $3,542 or 6.2% for the three months ended September 30, 1997 as
compared to the same time period in 1996. Other income for the three month
period ended September 30, 1997 totaled $97,335 as compared to $94,664 for the
three month period ended September 30, 1996, an increase of $2,671 or 2.8%.
Noninterest Expense
- --------------------
Noninterest expense totaled $1,940,248 for the three months ended September 30,
1997, as compared to $1,890,995 for the same time period in 1996. This
increase totaled $49,253 or 2.6%. Salaries and benefits totaled $1,177,893 for
the three months ended September 30, 1997 and $1,072,069 for the same time
period in 1996. This increase is due to the increased staff in commercial
loans and retail services. Occupancy expense increased $21,170 or 13.7% and
totaled $175,311 for the three months ended September 30, 1997 as compared to
$154,141 for the same period in 1996 due to the increase in the branch system.
The costs of equipment totaled $99,173 for the three months ended September 30,
1997 as compared to $99,848 for the same period in 1996. Data processing fees
totaled $63,367 for the three months ended September 30, 1997 as compared to
$55,563 for the corresponding time in 1996. This increase of $7,804 or 14.1%
relates to higher volumes, data processing upgrades and new products and
services. The FDIC Insurance Premium was $5,055 for the three months ended
September 30, 1997 as compared to $500 for the corresponding period in 1996.
The increase is due to the FICO assessment by the FDIC placed upon the Bank.
Other expenses totaled $375,699 at three months ended September 30, 1997 as
compared to $461,717 for the same period in 1996. A decrease of $86,018 or
18.6%. This reflects the higher repo collections costs of $94,525 in 1996.
Income Taxes
- -------------
The income tax provision for the three months ended September 30, 1997 totaled
$400,906 in comparison to an income tax provision of $373,600 for the same time
period in 1996. This increase reflects an increase of taxable income for the
quarter.
<PAGE>
Net Income
- -----------
Net income amounted to $563,653 for the three months ended September 30, 1997
as compared to net income of $522,509 for the same period in 1996, which is an
increase of $41,144 or 7.9%. The increase in net income for the quarter can be
attributed to increased loan production of high quality loans and increased
revenues from fiduciary activities.
Capital Resources
- ------------------
As of September 30, 1997, the Corporation had total capital in the amount of
$16,363,301, as compared with $15,142,561 at December 31, 1996, which
represents an increase of $1,220,740 or 8.1%.
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,
1997, the Bank's Tier 1 capital amounted to 7.59% 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,
1997, the Bank's ratio of risk-based capital to risk weighted assets amounted
to 13.04%, which satisfies the applicable risk based capital requirements. As
of December 31, 1996, the Bank's Tier 1 capital amounted to 7.34% of total
assets and risk based capital amounted to 12.71% of total risk based assets.
The capital ratios of the Bank exceed regulatory requirements.
The Corporation is required to maintain a Tier 1 capital at a level equal to or
greater than 4.0% of the Corporation's adjusted total assets. As of September
30, 1997, the Corporation's Tier 1 capital amounted to 8.38% 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,
1997, the Corporation's ratio of risk-based capital to risk weighted assets
amounted to 14.14%, which satisfies the applicable risk based capital
requirements. As of December 31, 1996, the Corporation's Tier 1 capital
amounted to 8.26% of total assets and risk based capital amounted to 12.58% of
total risk based assets. The capital ratios of the Corporation and the Bank
exceed regulatory requirements.
<PAGE>
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 $9,289,313 or 24.9% at September 30, 1997 of the investment
securities portfolio, and $7,534,983 at December 31, 1996, representing 18.6%
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
In accordance with 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: November 10, 1997 By: /s/ Lawrence M. Smith
--------------------------
Lawrence M. Smith
President, Chief Executive
Officer
Date: November 10, 1997 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 and Use of proceeds 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, 1997.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,585,132
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,800,000
<TRADING-ASSETS> 200,000
<INVESTMENTS-HELD-FOR-SALE> 18,465,370
<INVESTMENTS-CARRYING> 18,686,484
<INVESTMENTS-MARKET> 18,609,061
<LOANS> 127,864,961
<ALLOWANCE> 2,174,458
<TOTAL-ASSETS> 195,078,433
<DEPOSITS> 170,738,228
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,390,595
<LONG-TERM> 385,627
0
0
<COMMON> 1,978,373
<OTHER-SE> 14,384,928
<TOTAL-LIABILITIES-AND-EQUITY> 195,078,433
<INTEREST-LOAN> 8,382,606
<INTEREST-INVEST> 1,822,511
<INTEREST-OTHER> 373,534
<INTEREST-TOTAL> 10,578,651
<INTEREST-DEPOSIT> 3,701,776
<INTEREST-EXPENSE> 26,132
<INTEREST-INCOME-NET> 6,850,743
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,895,290
<INCOME-PRETAX> 2,514,520
<INCOME-PRE-EXTRAORDINARY> 2,514,520
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,464,214
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.78
<YIELD-ACTUAL> 7.89
<LOANS-NON> 439,895
<LOANS-PAST> 22,412
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,197,694
<CHARGE-OFFS> 42,896
<RECOVERIES> 19,750
<ALLOWANCE-CLOSE> 2,174,458
<ALLOWANCE-DOMESTIC> 1,557,398
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 617,060
</TABLE>
