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 June 30, 2000
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
----------------
Beverly National Corporation
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(Name of small business issuer as specified in its charter)
Massachusetts 04-2832201
----------------------------- -------------------------------
incorporation or organization) (State or other jurisdiction of
Identification No.) (I.R.S. Employer
240 Cabot Street Beverly, Massachusetts 01915
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (978) 922-2100
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
------------ -------------
State the number of shares outstanding of each of the issuer's
classes of common equity, as of August 1, 2000. 1,628,874 shares
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 June 30, 2000 and
December 31, 1999 3-4
Consolidated Statements of Income for the Six and 5-6
Three Months Ended June 30, 2000 and 1999
Consolidated Statements of Cash Flow for the Six
Months Ended June 30, 2000 and 1999 7-9
Notes to Consolidated Financial Statements 10
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security
Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K. 21
Signatures 22
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2000 1999
------------ ------------
ASSETS
Cash and due from banks $ 16,289,832 $ 11,978,530
Federal funds sold 15,500,000 4,400,000
Investments in available-for-sale securities 34,208,419 30,017,299
Investments in held-to-maturity securities 17,769,302 17,078,037
Federal Reserve Bank stock,at cost 97,500 97,500
Federal Home Loan Bank stock, at cost 636,200 636,200
Loans:
Commercial 27,987,963 25,018,277
Real estate-construction and land development 6,855,312 6,278,275
Real estate-residential 60,312,298 56,478,166
Real estate-commercial 49,446,775 48,546,154
Consumer 6,449,703 8,238,379
Municipal 5,937,130 3,476,578
Other 620,157 741,139
Allowence for possible loan losses (2,130,920) (2,132,386)
Deferred loan fees, net 258,825 208,996
------------ ------------
Net loans 155,737,243 146,853,578
Mortgages held for sale 493,963 1,349,314
Premises and equipment, net 5,257,652 5,135,817
Accrued interest receivable 1,626,736 1,268,741
Other assets 2,782,677 2,622,638
------------ ------------
Total assets $250,399,524 $221,437,654
============ ============
<PAGE>
LIABILITES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 54,447,960 $ 44,806,770
Interest bearing
Regular savings 48,753,074 48,681,293
NOW accounts 41,022,385 36,109,984
Money market accounts 25,998,095 19,833,062
Time deposits 56,845,585 49,797,604
------------ ------------
Total deposits 227,067,099 199,228,713
Other liabilities 2,083,931 1,990,662
------------ ------------
Total liabilities 229,151,030 201,219,375
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 1,674,898
shares as of June 30,2000 and 1,622,018 shares
as of December 31, 1999; Outstanding, 1,628,774
shares as of June 30, 2000 and 1,575,894 shares
as of December 31, 1999. 4,187,245 4,055,045
Paid in capital 2,814,077 2,572,740
Retained earnings 15,032,743 14,349,652
Treasury Stock, at cost (46,124 shares) (427,467) (427,467)
Accumulated Other Comprehensive Income (Loss) (358,104) (331,691)
------------ ------------
Total Stockholders' equity 21,248,494 20,218,279
------------ ------------
Total liabilities and stockholders' equity $250,399,524 $221,437,654
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BEVERLY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans $6,550,865 $5,818,429 $3,335,856 $2,909,727
Interest and dividends on
investment securitites:
Taxable 1,472,185 1,359,518 750,407 683,613
Tax-Exempt 15,647 17,138 8,170 8,421
Dividends on marketable equity
securities 0 0 0 0
Other interest 271,650 282,072 205,761 156,057
---------- ---------- ---------- ----------
Total interest and dividend
income 8,310,347 7,477,157 4,300,194 3,757,818
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 2,746,362 2,644,404 1,441,354 1,327,182
Interest on borrowings 2,699 0 0 0
Interest on notes payable 0 12,604 0 0
---------- ---------- ---------- ----------
Total interest expense 2,749,061 2,657,008 1,441,354 1,327,182
---------- ---------- ---------- ----------
Net interest and dividend income 5,561,286 4,820,149 2,858,840 2,430,636
Provision for loan losses 0 0 0 0
---------- ---------- ---------- ----------
Net interest and dividend income
after provision for loan losses 5,561,286 4,820,149 2,858,840 2,430,636
---------- ---------- ---------- ----------
NONINTEREST INCOME:
Income from fiduciary activities 804,269 695,743 429,629 373,396
Service charges on deposit
accounts 193,026 187,508 104,338 96,371
Other deposit fees 111,594 103,981 55,484 56,134
Other income 238,539 208,304 103,649 102,321
Mortgage servicing income(loss) (15,247) 199,913 (3,111) 199,913
---------- ---------- ---------- ----------
Total noninterest income 1,332,181 1,395,449 689,989 828,135
---------- ---------- ---------- ----------
<PAGE>
NONINTEREST EXPENSE:
Salaries and employee benefits 2,822,244 2,587,921 1,409,196 1,255,741
Occupancy expense 507,733 429,891 251,967 211,754
Equipment expense 288,279 219,445 134,703 110,951
Data processing fees 189,874 189,541 88,648 96,202
Professional fees 116,092 173,187 39,228 63,705
Stationery and supplies 124,566 105,973 61,818 48,809
Postage expense 76,521 109,171 36,208 67,082
Other expense 872,562 750,606 437,767 346,736
---------- ---------- ---------- ----------
Total noninterest expense 4,997,871 4,565,735 2,459,535 2,200,980
---------- ---------- ---------- ----------
Income before income taxes 1,895,596 1,649,863 1,089,294 1,057,791
Income taxes 731,400 646,900 418,400 416,400
---------- ---------- ---------- ----------
Net Income $1,164,196 $1,002,963 $ 670,894 $ 641,391
========== ========== ========== ==========
Comprehensive Income $1,137,783 $ 802,313 $ 701,636 $ 519,574
========== ========== ========== ==========
Earnings per share:
Primary shares outstanding 1,601,483 1,555,615 1,623,216 1,555,830
========== ========== ========== ==========
Diluted shares outstanding 1,732,071 1,735,098 1,741,300 1,727,425
========== ========== ========== ==========
Net income per share-Primary $ 0.73 $ 0.64 $ 0.41 $ 0.41
Net income per share-Diluted $ 0.67 $ 0.58 $ 0.39 $ 0.37
Dividends per share $ 0.30 $ 0.28 $ 0.15 $ 0.14
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, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
Cash flows from operating activities:
Interest received $ 7,885,123 $ 7,394,381
Service charges and other income 1,327,951 1,348,424
Interest paid (2,692,203) (2,651,436)
Cash paid to suppliers and employees (4,770,530) (4,444,477)
Income taxes paid (535,937) (646,092)
----------- -----------
Net cash provided by operating activities 1,214,404 1,000,800
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment securities
held-to-maturity 110,000 4,054,000
Proceeds from maturities of investment securities
available-for-sale 1,000,000 9,986,559
Purchases of investment securities held-to-maturity (801,351) (4,980,156)
Purchases of investment securities available-for
-sale (5,197,188) (11,204,657)
Net increase in loans (8,893,121) (5,472,324)
Proceeds from sale of mortgages 859,581 1,380,841
Capital expenditures (448,782) (417,435)
Recoveries of Previously charged off loans 56,601 34,282
(Increase) decrease in other assets (104,484) (570,157)
Increase) decrease in other liabilites (115,176) 57,587
----------- -----------
Net cash provided by (used in) investing activities (13,533,920) (7,431,460)
----------- -----------
<PAGE>
Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW,
money market, and savings accounts 20,790,405 5,174,462
Net increase (decrease) in time deposits 7,047,981 (54,527)
Decrease in borrowings 0 (385,627)
Issued common stock 373,537 34,754
Issued treasury stock 0 0
Dividends paid (481,105) (437,969)
----------- -----------
Net cash used in financing activities 27,730,818 4,331,093
----------- -----------
Net increase(decrease) in cash and cash equivalents 15,411,302 (2,099,567)
Cash and cash equivalents beginning of year 16,378,530 25,471,822
----------- -----------
Cash and cash equivalents at June 30: $31,789,832 $23,372,255
=========== ===========
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, 2000 and 1999
(Unaudited)
(Continued)
Reconciliation of net income to net cash provided by operating activities:
2000 1999
----------- -----------
Net Income $ 1,164,196 $ 1,002,963
----------- -----------
Depreciation expense 326,947 232,167
Amortization expense of investment securities 2,752 11,493
Accretion income of investment securities (23,011) (9,367)
Change in prepaid interest 0 5,572
Provision for loan losses 0 0
Increase (decrease) in taxes payable 195,463 808
(Increase) decrease in interest receivable (357,820) (97,176)
Increase (decrease) in interest payable 56,858 (35,509)
Increase (decrease) in accrued expenses (43,876) (113,369)
Net (gain)loss on sale of mortgages (4.230) (11,516)
Change in deferred loan fees (47,145) 12,274
Change in prepaid expenses (55,730) 2,460
----------- -----------
Total adjustments 50,208 (2,163)
----------- -----------
Net Cash provided by operating activities $ 1,214,404 $ 1,000,800
=========== ===========
Non-cash investing activities:
Loans Transferred from conforming mortgages $ 0 $ 7,273,841
<PAGE>
BEVERLY NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(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,
2000.
2. EARNINGS PER SHARE
Earnings per share calculations are based on the weighted average
number of common shares outstanding during the period.
3. RECLASSIFICATION
Certain amounts in the prior year have been reclassified to be
consistent with the current year's statement presentation.
IMPACT OF NEW ACCOUNTING STANDARD
In June 1998, the FASB issued SFAS no. 133 "Accounting for
Derivative Instruments and Hedging Activities". Statement No.
133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. The Statement is
effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. In management's opinion, SFAS No. 133 when
adopted will not have a material effect on the corporation's
consolidated financial statements.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
------------
The following discussion includes Beverly National Corporation
(the "Corporation") and its subsidiaries, Beverly National Bank
(the "Bank"), and Cabot Street Realty Trust (the "Realty Trust").
The Bank includes its wholly owned subsidiary, Beverly Community
Development Corporation.
Summary
-------
The Corporation's net income for the six months ended June 30,
2000, was $1,164,196 as compared to $1,002,963 for the six month
period ended June 30, 1999. This represents an increase of
$161,233 or 16.1%. Primary earnings per share totaled $.73 for
the six months ended June 30, 2000, as compared to earnings per
share of $.64 for the six months ended June 30, 1999. On a fully
diluted basis, earnings per share for the first six months of
2000 amounted to $.67 as compared with $.58 for the same period
in 1999. As a result of the increase in earnings during the six
months of 2000, the Corporation declared and paid a quarterly
dividend of $.15 per share as compared with $.14 per share during
the same period in 1999.
During the first six months of 2000, the Bank's total assets grew
by $28,961,870 or nearly 13.1% and amounted to $250,399,524 at
June 30, 2000. Growth in assets was represented in increases in
federal funds sold, available for sale securities and the loan
portfolio. Growth for the six months were as follows: federal
funds sold grew $11,100,000 or 252.3%, available for sale
securities grew $4,191,120 and Net loans grew $8,883,665 or 6.5%.
Deposits also grew by $27,838,386 or 14.0% during the first six
months of 2000. As a result, total deposits increased from
$199,228,713 at December 31,1999 to $227,067,099 at June 30,
2000. Both interest bearing deposits and non-interest bearing
deposits grew. Non-interest bearing deposits grew from
$44,806,770 at December 31, 1999 to $54,447,960 at June 30, 2000.
<PAGE>
SIX MONTHS ENDED JUNE 30, 2000
AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Net Interest Income
-------------------
Net interest and dividend income for the six months ended June
30, 2000, totaled $5,561,286 as compared to $4,820,149 for the
time period in 1999. This increase was $741,137 or 15.4%. Total
interest and dividend income equaled $8,310,347 for the six
months ended June 30, 2000 as compared to $7,477,157 for the same
time period in 1999, an increase of $833,190 or 11.1%. Loan
income for the six months ended June 30, 2000 totaled $6,550,865
as compared to $5,818,429 for the same time period in 1999. This
increase of $732,436 or 12.5% represents the increased level of
loan production and a higher rate environment. Interest and
Dividends on Taxable Securities for the six months ended June 30,
2000 totaled $1,472,185 as compared to $1,359,518 for the same
period in 1999. This increase of $112,667 or 8.3% is
attributable to a higher volume of investments and a higher rate
environment. The taxable securities portfolio increased
$1,649,147 during the past twelve months. The interest and
dividends on tax exempt securities decreased slightly for the
first six months of 2000 as compared with the same quarter of
1999. The interest earned from Federal funds sold decreased
$10,422 or 3.7% for the six months ended June 30, 2000 when
compared to the same time period in 1999. This is primarily as a
result of a decrease in the volume of federal funds sold during
the first quarter 2000 as compared to first quarter 1999.
Deposit interest expense equaled $2,746,362 for the six months
ended June 30, 2000, as compared to $2,644,404 for the same
period in 1999. This is an increase of $101,958 or 3.9%
reflecting higher cost of funds of the Bank due to the rate
environment and a higher level of deposits. The Bank generally
pays competitive rates for its deposit base in the local market.
<PAGE>
Short-term borrowings interest expense equaled $2,699 for the six
months ended June 30, 2000 as compared to none for the same
period in 1999. This expense reflects the cost of short-term
borrowings at the Federal Home Loan Bank of Boston. There was no
notes payable interest expense for the six months ended June 30,
2000 in comparison to $12,604 for the corresponding time period
in 1999. The elimination of such expense reflects the
acceleration of loan fees relating to the pay-down of the CSRT
bond in March 1999.
Non-interest Income
-------------------
Non-interest income totaled $1,332,181 for the six months ended
June 30, 2000 as compared to $1,395,449 for six months ended June
30, 1999. This is a decrease of $63,268 or 4.5%. Income from
fiduciary activities totaled $804,269 for the six months ended
June 30, 2000 as compared to $695,743 for the six months ended
June 30, 1999. This $108,526 or 15.6% increase can be primarily
attributed to increased trust business. Service charges on
deposit accounts totaled $193,026 for the six months ended June
30, 2000, as compared to $187,508 for the same time period in
1999.
Other deposit fees increased $7,613 or 7.3% for the six months
ended June 30, 2000 as compared to the same time period in 1999.
Other income for the six month period ended June 30, 2000 totaled
$238,539 as compared to $208,304 for the six month period ended
June 30, 1999, an increase of $30,235 or 14.5%. This increase of
income is the result of higher rents collected.
<PAGE>
Mortgage servicing income totaled $15,247 as an expense to
earnings for the six months ended June 30, 2000 as compared to
$199,913 posted as income for the six months ended June 30, 1999,
when mortgage servicing rights were established. The expense
noted for the first six months in 2000 is the result of
amortization expense exceeding income relating to the
establishment of new mortgage servicing rights during the period.
Non-interest Expense
--------------------
Non-interest expense totaled $4,997,871 for the six months ended
June 30, 2000, as compared to $4,565,735 for the same time period
in 1999. This increase totaled of $432,136 or 9.5%. This
increase is primarily attributed to additional personnel, the
establishment of the Manchester Branch and new product delivery
systems. Salaries and benefits totaled $2,822,244 for the six
months ended June 30, 2000 and $2,587,921 for the same time
period in 1999. This $234,323 or 9.1% increase is primarily due
to increased staffing in lending and retail divisions. Occupancy
expense totaled $507,733 for the six months ended June 30, 2000
as compared to $429,891 for the same period in 1999 which is an
increase of $77,842 or 18.1%. This increase is due to the
establishment of the Manchester branch along with higher expenses
of repairs and maintenance of facilities. The costs of equipment
totaled $288,279 for the six months ended June 30, 2000 as
compared to $219,445 for the same period in 1999. The Manchester
Branch and new data processing equipment created this increase.
Data processing fees totaled $189,874 for the six months ended
June 30, 2000 as compared to $189,541 for the corresponding time
in 1999. Professional fees decreased $57,095 or 33.0% due to
lower legal and benefit consulting expenses. Other expenses
totaled $872,562 for the six months ended June 30, 2000 as
compared to $750,606 for the same period in 1999. This reflects
an increase of $121,956 or 16.3% which can be attributed to an
expense increase in advertising, public relations, communications
and courier services.
<PAGE>
Income Taxes
------------
The income tax provision for the six months ended June 30, 2000
totaled $731,400 in comparison to an income tax provision of
$646,900 for the same time period in 1999. This increase
reflects an increase of taxable income.
Net Income
----------
Net income amounted to $1,164,196 for the six months ended June
30, 2000 as compared to net income of $1,002,963 for the same
period in 1999, which is an increase of $161,233 or 16.1%. The
earnings increase is due to a stronger net interest margin and
higher income from fiduciary activities in 2000 as compared to
1999.
THREE MONTHS ENDED JUNE 30, 2000
AS COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Net Interest Income
-------------------
Net interest and dividend income for the three months ended June
30, 2000, totaled $2,858,840 as compared to $2,430,636 for the
time period in 1999. This increase was $428,204 or 17.6%. Total
interest and dividend income equaled $4,300,194 for the three
months ended June 30, 2000 as compared to $3,757,818 for the same
time period in 1999, an increase of $542,376 or 14.4%. Loan
income for the three months ended June 30, 2000, totaled
$3,335,856 as compared to $2,909,727 for the same time period in
1999. This increase of $426,129 or 14.6% represents the
increased level of loan production and a higher rate environment.
Interest and Dividends on Taxable Securities for the three months
ended June 30, 2000 totaled $750,407 as compared to $683,613 for
the same period in 1999. This increase of $66,794 or 9.8% is
attributable to a higher volume of investments and a higher rate
environment. The taxable securities portfolio increased
$1,649,147 during the past twelve months. The interest and
dividends on tax exempt securities decreased slightly for the
second quarter of 2000 as compared with the same quarter of 1999.
The interest earned from Federal funds sold increased $49,704 or
31.8% for the three months ended June 30, 2000 when compared to
the same time period in 1999.
Deposit interest expense equaled $1,441,354 for the three months
ended
June 30, 2000, as compared to $1,327,182 for the same period in
1999. This increase of $114,172 or 8.6% 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.
<PAGE>
Non-interest Income
-------------------
Non-interest income totaled $689,989 for the three months ended
June 30, 2000 as compared to $828,135 for three months ended June
30, 1999. This is a decrease of $138,146 or 16.7%. Income from
fiduciary activities totaled $429,629 for the three months ended
June 30, 2000 as compared to $373,396 for the three months ended
June 30, 1999. This $56,233 or 15.1% increase can be primarily
attributed to increased trust business. Service charges on
deposit accounts totaled $104,338 for the three months ended June
30, 2000, as compared to $96,371 for the same time period in
1999. This increase is due to the promotion of deposit products
that have service charges.
While other deposit fees were stable for the three months ended
June 30, 2000 as compared to the same time period in 1999. Other
income for the three month period ended June 30, 2000 totaled
$103,649 as compared to $102,321 for the three month period ended
June 30, 1999, an increase of $1,328 or 1.3%. This increase of
income is the result of higher rents collected. Mortgage
servicing income totaled $3,111 as an expense to earnings for the
three months ended June 30, 2000 as compared to $199,913 posted
as income for the three months ended June 30, 1999, when mortgage
servicing rights were established. The expense noted for the
second quarter 2000 is the result of amortization expense
exceeding income relating to the establishment of new mortgage
servicing rights during the period.
<PAGE>
Non-interest Expense
--------------------
Non-interest expense totaled $2,459,534 for the three months
ended June 30, 2000, as compared to $2,200,980 for
the same time period in 1999. This increase totaled $258,554 or
11.7%. This increase is primarily attributed to additional
personnel, the establishment of the Manchester Branch and new
delivery systems. Salaries and benefits totaled $1,409,196 for
the three months ended June 30, 2000 and $1,255,741 for the same
time period in 1999. This $153,455 or 12.2% increase is
primarily due to increased staffing in lending and retail
divisions. Occupancy expense totaled $251,967 for the three
months ended June 30, 2000 as compared to $211,754 for the same
period in 1999 which is an increase of $40,213 or 19.0%. This
increase is due to the establishment of a branch in Manchester
along with higher expenses of repairs and maintenance of
facilities. The costs of equipment totaled $134,703 for the
three months ended June 30, 2000 as compared to $110,951 for the
same period in 1999. The Manchester Branch and new data
processing equipment created this increase. Data processing fees
totaled $88,648 for the three months ended June 30, 2000 as
compared to $96,202 for the corresponding time in 1999. This is a
decrease of $7,554 or 7.9%. Professional fees decreased $24,477
or 38.4% due to lower legal and benefit consulting expenses.
Other expenses totaled $437,766 for the three months ended June
30, 2000 as compared to $346,736 for the same period in 1999.
This reflects an increase of $91,030 or 26.2% which can be
attributed to an expense increase in advertising, public
relations, communications and courier services.
<PAGE>
Income Taxes
------------
The income tax provision for the three months ended June 30, 2000
totaled $418,400 in comparison to an income tax provision of
$416,400 for the same time period in 1999. This increase
reflects an increase of taxable income.
Net Income
----------
Net income amounted to $670,895 for the three months ended June
30, 2000 as compared to net income of $641,391 for the same
period in 1999, which is an increase of $29,504 or 4.6%. The
earnings increase is due to a stronger net interest margin and
higher income from fiduciary activities in 2000 as compared to
1999.
Allowance for Loan Losses
-------------------------
At June 30, 2000, the Corporation's allowance for loan losses was
$2,130,920 representing 1.4% of gross loans as compared to
$2,132,386 and a ratio of 1.4% of gross loans at December 31,
1999. No provisions to the allowance for loan losses were made
during the first six months of 2000 or 1999, respectively.
The Corporation's non-accrual loans were $255,569 at June 30,
2000 as compared to $362,870 at December 31, 1999.
The ratio of non-performing assets to total loans and mortgages
held for sale was 0.17% for June 30, 2000 as compared to 0.24% as
of December 31, 1999. This decrease can be attributed to fewer
loans that were temporarily overdue 90 days or more and a lower
non-accrual balance. The ratio of non-performing assets to
allowance for loan losses equaled 12.0% at June 30, 2000 as
compared to 17.0% at December 31, 1999.
A total of $58,067 loans were charged off by the Corporation
during the six months ended June 30, 2000 as compared to $3,182
charged off during the corresponding period in 1999. These
charged off loans consisted primarily of loans to small
businesses and individuals. A total of $56,601 was recovered of
previously charged off notes by the Corporation during the six
months ended June 30, 2000, as compared to $34,282 recovered
during the corresponding period in 1999.
<PAGE>
Capital Resources
-----------------
As of June 30, 2000, the Corporation had total capital in the
amount of $21,248,494 as compared with $20,218,279 at December
31, 1999, which represents an increase of $1,030,215 or 5.1%.
The Bank is required to maintain a Tier 1 capital at a level
equal to or greater than 4.0% of the Bank's total assets. As of
June 30, 2000, the Bank's Tier 1 capital amounted to 7.80% of
total assets. At June 30, 2000, the Bank's ratio of risk-based
capital to risk weighted assets amounted to 13.58%, which
satisfies the applicable risk based capital requirements. As of
December 31, 1999, the Bank's Tier 1 capital amounted to 8.21% of
total assets and risk based capital amounted to 13.81% of total
risk based assets.
The Corporation is required to maintain a Tier 1 capital at a
level equal to or greater than 4.0% of the Corporation's total
assets. As of June 30, 2000, the Corporation's Tier 1 capital
amounted to 9.71% of total assets. At June 30, 2000, the
Corporation's ratio of risk-based capital to risk weighted assets
amounted to 15.30%, which satisfies the applicable risk based
capital requirements.
The capital ratios of the Corporation and the Bank exceed all
regulatory requirements and both institutions are considered to
be "well capitalized" by their respective federal bank
supervisory agencies.
<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. The Corporation's interest rate sensitivity
management practices seek to provide consistency in the
maintenance of net interest margins and to foster the sustainable
growth of net interest income despite 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 $5,968,831 or 11.3% at
June 30, 2000 of the investment securities portfolio, and
$3,203,783 at December 31, 1999, representing 6.9% 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 goals and general
practices are to be substantially neutral with respect to
interest rate sensitivity and maintain a net cumulative gap at
one year of 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. The
Corporation's current practices are consistent with these
objectives.
Forward Looking Statements
--------------------------
Certain statements contained in this report, including those
contained in Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere, may be forward
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and are thus prospective. Such
forward looking statements are subject to risks, uncertainties
and other factors which could cause actual results to differ
materially from future results expressed or implied by such
statements. Such factors include, but are not limited to changes
in interest rates, regulation, competition and the local and
regional economy. In such statements, the Forward Looking
Statements contained in the Private Securities Litigation Reform
Act of 1995.
<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
27. Financial Data Schedule
b. Reports on Form 8-K
The Corporation did not file any Forms 8-K
during the quarter ended June 30, 2000.
<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: August 10, 2000 By: /s/ Lawrence M. Smith
-----------------------
Lawrence M. Smith
President, Chief
Executive Officer
Date: August 10, 2000 By: /s/ Peter E. Simonsen
-----------------------
Peter E. Simonsen
Treasurer, Principal
Financial Officer
