<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
[ ] Transition report under Section 13 or 15(d) of the
Exchange Act
For the transition period ______________ to ____________
Commission file number 0-15777
FIRST INDEPENDENCE CORPORATION
------------------------------
(Exact Name of Small Business Issuer in Its Charter)
Michigan 38-2583843
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
44 Michigan, Detroit, Michigan 48226
------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(313) 256-8400
--------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12 (b) of the Exchange Act:
NONE
Securities registered under Section 12 (g) of the Exchange Act:
Common stock, par value $1.00 per share
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $1 Par Value-336,760 shares as of November 12, 1997
<PAGE> 2
FIRST INDEPENDENCE CORPORATION
INDEX
PAGE
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet September 30, 1997 3
Consolidated Statement of Income
Quarter ended and YTD ended September 30, 1997 and 1996 4
Consolidated Statement of Cash Flows
YTD ended September 1997 and 1996 5
Notes to Consolidated Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8 - 12
Part II. OTHER INFORMATION 13
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Exhibits and Reports on Form 8-K 13
Signatures 14
2
<PAGE> 3
PART I.
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
September 30
ASSETS 1997
---------------
<S> <C>
Cash and due from banks $ 3,113,106
Federal funds sold 11,854,000
-------------
Total cash and cash equivalents 14,967,106
Securities available for sale 14,918,703
Securities held to maturity (fair value of $18,566,990) 18,530,874
-------------
Total securities 33,449,577
Loans
Commercial 10,656,258
Commercial real estate 11,205,227
Real estate mortgages 12,925,928
Consumer 6,693,620
-------------
41,481,033
Allowance for loan losses (953,780)
-------------
40,527,253
Premises and equipment, net 3,368,814
Accrued interest receivable and other assets 1,116,768
-------------
Total assets $ 93,429,518
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing $ 36,713,213
Interest-bearing 45,544,139
------------
82,257,352
Securities sold under retail repurchase agreements 4,581,723
Accrued expenses and other liabilities 956,444
Long-term debt 900,000
------------
Total liabilities 88,695,519
Shareholders' equity
Preferred stock 2,749,508
Common stock, $1 par value: 500,000 shares authorized;
336,760 shares issued and outstanding 336,760
Capital surplus 2,369,782
Accumulated deficit (749,327)
Unrealized loss on securities available for sale 36,033
Unrealized holding loss on securities transferred (8,757)
------------
Total shareholders' equity 4,733,999
------------
Total liabilities and shareholders' equity $ 93,429,518
=============
</TABLE>
3
<PAGE> 4
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
Quarter and YTD ended September 30 1997 and 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
----------------------- -----------------------
September 1997 September 1996 September 1997 September 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Interest income
loans, including fees $1,015,209 $1,146,988 $3,093,674 $3,395,163
Taxable securities 485,061 473,684 1,372,736 1,399,914
Federal funds sold 173,387 119,823 548,779 379,126
---------- ---------- ---------- ----------
Total interest income 1,673,657 1,740,495 5,015,189 5,174,203
Interest expense
Deposits 465,793 425,954 1,390,095 1.276,015
Other borrowed funds 71,292 76,847 211,257 259,060
---------- ---------- ---------- ----------
Total interest expense 537,085 502,801 1,601,352 1,535,075
---------- ---------- ---------- ----------
NET INTEREST INCOME 1,136,572 1,237,694 3,413,837 3,639,128
Provision for loan losses 125,000 255,000 (400,879) 662,750
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,011,572 982,694 3,814,716 2,976,378
Noninterest income
Service charges on deposit accounts 191,023 218,241 628,551 625,731
Securities gains, net 0 40,626 0 40,742
Net gains on sales of residential real estate loans 37,088 120,679 158,809 426,014
Other 61,015 53,754 119,118 172,127
---------- ---------- ---------- ----------
Total noninterest income 289,126 433,300 906,478 1,264,614
Noninterest expenses
Salaries and employee benefits 694,341 692,793 2,010,393 2,064,591
Occupancy 119,335 130,196 339,374 372,457
Professional services 30,000 85,000 173,000 219,000
Insurance expense 25,729 30,237 86,818 78,214
Other noninterest expenses 472,558 480,650 1,556,131 1,346,291
---------- ---------- ---------- ----------
Total noninterest expenses 1,341,963 1,418,876 4,165,716 4,080,553
INCOME (LOSS) BEFORE FEDERAL INCOME TAXES (41,265) (2,882) 555,478 160,439
Federal income tax expense 0 0 0 0
---------- ---------- ---------- ----------
Net income (loss) (41,265) (2,882) 555,478 160,439
Preferred stock dividend requirements 8,550 8,550 25,650 25,650
---------- ---------- ---------- ----------
Income (loss) attributable to common stock $ (49,815) $ (11,432) $ 529,828 $ 134,789
========== ========== ========== ==========
Income (loss) per common and common equivalent share $ (0.15) $ (0.03) $ 1.57 $ 0.40
========== ========== ========== ==========
</TABLE>
4
<PAGE> 5
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 555,478 $ 160,439
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 355,018 368,100
Amortization of premiums and accretion of discounts 56,439 37,655
Provision for loan losses (400,879) 662,750
Net realized gains on securities available for sale - (40,742)
Origination of loans intended for sale (1,491,300) (10,690,125)
Proceeds from loans originated for sale 2,033,003 10,133,701
Net gains on sale of residential real estate loans (158,809) (426,014)
Net loss on sale/writedown of other assets 72,631 -
Changes in:
Accrued interest receivable and other assets 464,817 (124,464)
Accrued expenses and other liabilities (28,837) 85,230
------------ -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,457,561 166,530
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities available for sale - 3,692,616
Proceeds from maturities of investment securities available for sale 3,055,939 3,135,194
Proceeds from maturities of investment securities held to maturity 5,500,000 5,700,000
Purchases of investment securities available for sale (7,283,999) (8,119,470)
Purchases of investment securities held to maturity (5,526,450) (4,665,092)
Net change in loans 4,725,541 (3,035,334)
Purchases of premises and equipment (167,067) (320,160)
------------ -------------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES 303,964 (3,612,246)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in:
Deposits (1,272,342) (232,626)
Securities sold under repurchase agreements 297,035 227,450
Payment of interest on Senior Notes (81,250) -
Payment of dividends Class A and Class B Preferred Stock (59,850) -
Proceeds from issuance of preferred stock - 47,700
------------ -------------
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES (1,116,407) 42,524
------------ -------------
Net increase (decrease) in cash and cash equivalents 645,118 (3,403,192)
Cash and cash equivalents, beginning of year 14,321,988 17,059,650
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,967,106 $ 13,656,458
============ =============
</TABLE>
5
<PAGE> 6
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
1. The consolidated balance sheet as of September 30, 1997, the related
consolidated statements of income for the quarter and nine months ended
September 30, 1997 and 1996, and the statement of cash flows for the nine
month period ended September 30, 1997 and 1996 are unaudited.
2. In the opinion of management, all normal recurring adjustments
necessary for a fair presentation of such financial statements have been
included. Interim results are not necessarily indicative of results for a full
year.
3. The consolidated statements include the accounts of First Independence
Corporation (the "Corporation") and its wholly owned subsidiary, First
Independence National Bank of Detroit (the "Bank"). All significant
intercompany balances and transactions have been eliminated in consolidation.
4. Securities are classified as held to maturity and carried at amortized
cost when management has the positive intent and ability to hold them to
maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported seperately in shareholders'
equity.
Gains and losses on sales of securities are determined using amortized
cost of the specific security sold. Interest income includes amortization of
purchased premiums and discounts.
5. Loans are reported at the principal balance outstanding, net of
deferred loan fees and costs, and the allowance for loan losses. Interest
income is reported on the interest method and includes amortization of net
deferred loan fees and costs over the loan term.
6. The allowance for possible losses on loans is maintained at a level
believed adequate by management to absorb potential losses from specific assets
identified as having greater than a normal risk of loss as well as losses from
the remainder of the portfolio. Management's determination of the level of the
allowance is based upon an evaluation of the portfolio, past experience,
current economic conditions, size and composition of the portfolio, collateral
location and values, cash flow positions, industry concentrations,
delinquencies and other relevant factors.
Loan impairment is reported when full paymant under the loan terms is
not expected. Impairment is evaluated in total for smaller-balance loans of
similiar nature such as residential mortgage, consumer, and credit card loans,
and on an individual basis for other loans. If a loan is impaired, a portion
of the allowance is allocated so that the loan is reported, net, at the present
value of estimated future cash flows using the loan's existing rate or at the
fair value of the colateral if the loan is collateral dependant. When credit
analysis of a borrower's operating results and financial condition indicates
that the underlying cash flows of the borrower's business are not adequate to
meet its debt service requirements, including the Bank's loans to the borrower,
the loan is evaluated for impairment. Often this is associated when payments
are delayed, typically 90 days or more, or when the internal grading system
indicates a substandard or doubtful classification.
6
<PAGE> 7
The following table details information concerning nonperforming loans as of
September 30, 1997.
(in thousands)
Non-accrual Loans 1,322
Impaired loans 1,535
Loans past due 90
days or more 818
------
Total 3,675
======
Interest that would have been accrued on the non-accrual loans at September 30,
1997, had they been on accrual status would have been approximately $39,000.
7. In 1991, a former senior officer of the Bank filed a complaint in the
Circuit Court for the County of Wayne, Michigan, against the Bank, a
non-operating subsidiary of the Bank, and the Corporation and certain directors
and another former officer thereof alleging wrongful termination. In May 1993,
a jury verdict was entered against the Corporation, a non-operating subsidiary
of the Bank, certain directors and another former officer thereof, in the
amount of $320,000 by a Wayne County Circuit Court. A judgment was entered on
the verdict in October 1994. An accrual for the judgment was recorded in 1994
and is reflected in the consolidated financial statements. Attorney fees and
other litigation costs have been expensed as they were incurred. The
Corporation appealed the judgment to the Michigan Court of Appeals and on March
14, 1997, the judgment was reversed by the Court of Appeals holding that there
was no liability by the Corporation, the Bank's subsidiary, or any of the
individual defendants. The plaintiff has sought leave of the Michigan Supreme
Court to appeal the reversal by the Michigan Court of Appeals. Counsel for the
Corporation is of the opinion that the appeal is without merit.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Summary of Operations
Net loss for the third quarter of 1997 was $41,265 or $.15 per share, compared
to a net loss of $2,882 or $.03 per share for the third quarter of 1996. The
decrease in net income for the third quarter of 1997, as compared to 1996,
resulted from a decrease in net interest income, a decrease on gains on sales
of residential real estate loans which were offset by a decrease in the
provision for loan losses, and decrease in noninterest expense.
For the first nine months of 1997, net income was $555,478, or $1.57 per share,
an increase of $395,039 over the net income of $160,439 for the first nine
months of 1996. The increase in net income resulted from the February 21,
1997, insurance settlement of $1,441,721 from its fidelity insurance
underwriters in settlement of the Bank's claims related to the fictitious
"loans" made in late 1995 and January 1996. The Bank recorded a recovery of
$1,137,000 to the allowance for loan losses for amounts previously charged off
related to the fictitious "loans." The balance of $308,000 was received by the
Bank in exchange for $308,000 in performing loans written by a consumer loan
officer with no lending authority. Subsequently, the allowance was reduced
through a negative provision of $874,572, in the first quarter of 1997.
Net Interest Income
Net interest income in the third quarter of 1997 was $1,136,572, a decrease of
$101,122 from third quarter 1996 net interest income of $1,237,694. The
decrease was attributable to lower yielding earning assets and higher rates on
deposits. As a result of lower yields on earning assets and higher rates on
deposits, net interest margin decreased 50 basis points from 5.69 percent in
the third quarter of 1996 to 5.19 percent in the third quarter of 1997.
Provision for Loan Losses
The provision for loan losses in the third quarter of 1997 amounted to
$125,000, a decrease of $130,000 from the third quarter 1996 provision for
loan losses of $255,000. A detailed analysis of the related allowance for
possible loan losses, charge-offs, recoveries, and ratios is presented on page
11.
Noninterest Income
Noninterest income for the third quarter of 1997 amounted to $289,126, a
decrease of $144,174, or 33 percent, from third quarter 1996 noninterest income
of $433,300. The decrease was largely attributable to a decrease in gains on
sales of residential real estate loans of approximately $84,000, due to lower
residential mortgage originations.
Noninterest Expenses
Noninterest expenses for the third quarter of 1997 amounted to $1,341,963, a
decrease of $76,913, or 5 percent, from third quarter 1996 noninterest expense
of $1,418,876. Professional services decreased $55,000 and occupancy expense
decreased $11,000.
8
<PAGE> 9
BALANCE SHEET ANALYSIS
LIQUIDITY
Deposits at September 30, 1997 totaled $82,257,352 while federal funds sold
were $11,854,000 (14% of total deposits). Total securities available-for-sale
at September 30, 1997 were $14,918,703 (18% of total deposits). In addition,
approximately $5,381,000 (7% of total deposits) of the Bank's $33 million of
securities will mature within one year. Thus, the bank has a liquidity
position such that management believes it is capable of funding loan demand or
deposit withdrawals.
INVESTMENTS
The Bank had $33,449,577 of investment securities at September 30, 1997,
compared to $29,175,658 of such securities at December 31, 1996. The
following is a summary of the maturities and weighted average yields from the
investment portfolio at September 30, 1997. Yields are not calculated on a tax
equivalent basis.
<TABLE>
<CAPTION>
After One After Five
Within But Within But Within After
(in thousands) One Year Five Years Ten Years Ten Years Total
Available-for-sale -------- ---------- ---------- --------- -----
<S> <C> <C> <C> <C> <C>
Treasury and agency - $13,686 - $ 1,066 $14,752
State and Political - - - - -
Other - - - 167 167
------ ------- ------ --------- -------
Total $ - $13,686 - $ 1,233 $14,919
====== ======= ====== ========= =======
Weighted Ave Yield - 6.02% - 6.79% 6.08%
Held-to-maturity
Treasury and agency $5,381 $13,150 - - $18,531
State and Political - - - - -
Other - - - - -
------ ------- ------ -------- -------
Total $5,381 $13,150 - - $18,531
====== ======= ====== ======== =======
Weighted Ave Yield 5.48% 6.19% - - 5.98%
</TABLE>
LOANS
The following table sets forth the composition of the Bank's loan portfolio at
September 30, 1997.
<TABLE>
<S> <C> <C>
Commercial $ 10,656 25.69%
Commercial Real Estate 11,205 27.01
Residential Real Estate 12,926 31.16
Consumer 6,694 16.14
-------- ------
$ 41,481 100.00%
======== ======
</TABLE>
9
<PAGE> 10
At September 30, 1997, the Bank had $3,675,000 of loans that were
nonperforming. Nonperforming loans include non-accrual loans, loans with
principal or interest past due 90 days or more, and loans that have matured and
are being extended or rewritten after their stated maturity date.
Non-accrual loans are those nonperforming and/or impaired loans on which the
Bank does not accrue interest income. Loans are placed on non-accrual status
when principal or interest is in default for a period of 90 days or more unless
the loan is in the process of collection and is well secured so that delinquent
principal and interest would be expected to be satisfied from the collateral.
Nonperforming loans and non-accrual loans are all considered "impaired loans"
under SFAS 114, "Accounting by Creditors for Impairment of a Loan", and SFAS
118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosure." At September 30, 1997, total nonperforming and impaired loans
amounted to 8.86% of the aggregate loans at September 30, 1997, compared to
7.12% at the end of 1997.
The table included on page 7 details information concerning nonperforming
loans, as of September 30, 1997. The amount of interest income that would have
been accrued on the loans on non-accrual status at September 30, 1997, had
those loans remained current, was approximately $39,000.
At September 30, 1997, there were no significant loans other than those
included in the table on page 7, for which information was known that caused
management to have serious doubts as to the ability of borrowers to comply with
loan repayment terms.
The allowance for loan losses totaled $953,780 at September 30, 1997, compared
to the 1996 year end balance of $765,561. The allowance for loan losses
represented 2.30% of loans compared with 1.66% at December 31, 1996. The
allowance for loan losses was 26% of the nonperforming loans at September 30,
1997. At December 31, 1996, the allowance was 23% of such loans. The total
amount of the allowance for loan losses is based on management's evaluation of
the portfolio, past experience, economic conditions, composition of the
portfolio, collateral location and values, cash flow positions of the
borrowers, delinquencies and other factors deemed relevant. The allowance for
loan losses, in management's opinion, is adequate taking all such
considerations into account.
The loan review system and charge-off policy assist management in identifying
problem loans and credit deterioration earlier than in the past, and continuing
implementation of the loan review system will improve this process further.
Loans charged off in the third quarter of 1997 aggregated $73,146. The charge
offs were part of the Bank's continuing effort to address problem loans in the
loan portfolio and improve the quality of the loan assets. Collection efforts
in the third quarter of 1997 resulted in recoveries of $9,604 on loans
previously charged off.
10
<PAGE> 11
The table below presents management's allocation of the allowance for loan
losses at September 30, 1997.
<TABLE>
<CAPTION>
(in thousands) Allowance Percent*
--------- --------
<S> <C> <C>
Commercial 808 53%
Real estate mortgage 33 31
Consumer 110 16
Unallocated 2 -
---- ---
953 100%
==== ===
</TABLE>
*Represents percent of loans in each category as a percent of total loans
The following table summarizes activity in the allowance for loan losses during
the third quarter of 1997.
<TABLE>
<CAPTION>
Quarter Ended
September 1997
----------------
<S> <C>
Average loans outstanding
during the period $41,799,749
===========
Allowance for loan losses:
Beginning balance 892,322
Provision for credit losses 125,000
Charge-Offs (73,146)
Recoveries 9,604
-----------
Balance at End-of-Period 953,780
===========
Charge-Offs by Category
Commercial (5,627)
Consumer (45,572)
Real-Estate Mortgages (21,947)
-----------
Total charge-offs (73,146)
===========
Recoveries by Category
Commercial (2,391)
Consumer 8,941
Real-Estate Mortgages 3,054
-----------
Total recoveries 9,604
===========
Net Loans Charged Off (63,542)
===========
Provision for loan losses as a percent of
average loans 0.30%
Net loans charged off as a percent of
average loans 0.15%
Total loans charged off as a percent of
average loans 0.17%
</TABLE>
11
<PAGE> 12
DEPOSITS
The following is a summary of the average balances and average rates paid on
deposits for the period ending September 30, 1997.
<TABLE>
<CAPTION>
Average Average
Balance Rate
------- -------
(in thousands)
<S> <C> <C>
Non-interest bearing demand deposits $29,228
U.S. Treasury, tax, and loan deposits * 148
Interest bearing demand deposits 6,249 2.23%
Savings deposits 14,856 2.35%
Time deposits
$100,000 or more ** 18,115 3.49%
Other time deposits 14,916 4.92%
-------
Total $83,512
=======
</TABLE>
* Represents non-retail deposits held overnight and remitted to the federal
government the following business day.
** Includes approximately $6,000,000 of a non-interest bearing time deposit
from the U.S. Treasury.
CAPITAL RESOURCES
At September 30, 1997, the ratio of equity capital to average assets of the
Bank was 6.44% and in compliance with the Comptroller of Currency requirement
of 5.50%. The risk-based Tier 1 capital ratio at September 30, 1997 was 12.29%
and the Bank's total capital ratio at September 30, 1997, was 14.05%.
As a result of 1997 net income, the Bank is now legally able to pay dividends
to the Corporation, subject to prior approval of the Comptroller of the
Currency. The Bank is prohibited from paying any cash dividends to the
Corporation without prior written consent of the Comptroller of the Currency
until the Comptroller Agreement described in the 10-KSB is terminated. The
Bank has requested and received permission from the Comptroller of the Currency
to pay dividends to the Corporation so that the Corporation can pay the Senior
Note holders and Class A and Class B Preferred Stock holders interest and
dividends due them.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings. The judgment for wrongful termination,
entered against the Corporation in October 1994, in the amount of
$320,000 was reversed in March 1997 by the Michigan Court of Appeals
holding that there was no liability by the Corporation, the Bank's
subsidiary, or any of the individual defendants. The plaintiff has
sought leave of the Michigan Supreme Court to appeal the reversal by
the Michigan Court of Appeals. The Corporation is awaiting final
disposition.
ITEM 2. Changes in Securities - none.
ITEM 3 Defaults upon senior securities - none.
ITEM 4 Submission of matters to vote of security holders - none.
ITEM 5. Exhibits and reports on Form 8-K.
Exhibits:
(a)Exhibit 27-Financial Data Schedule
Reports on Form 8-K: None
13
<PAGE> 14
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the registrant has duly caused this to report on Form 10-QSB to be signed on
behalf of the undersigned thereunto duly authorized.
FIRST INDEPENDENCE CORPORATION AND SUBSIDIARY
Registrant
November 14, 1997 /s/ Don Davis
------------------------------
Don Davis
Chief Executive Officer
November 14, 1997 /s/ Rose Ann Lacy
------------------------------
Rose Ann Lacy
Chief Financial Officer
Chief Accounting Officer
14
<PAGE> 15
Exhibit Index
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,113,106
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,854,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,918,703
<INVESTMENTS-CARRYING> 18,530,874
<INVESTMENTS-MARKET> 18,566,990
<LOANS> 41,481,033
<ALLOWANCE> 953,780
<TOTAL-ASSETS> 93,429,518
<DEPOSITS> 82,257,352
<SHORT-TERM> 4,581,723
<LIABILITIES-OTHER> 956,444
<LONG-TERM> 900,000
0
2,749,508
<COMMON> 336,760
<OTHER-SE> 1,647,731
<TOTAL-LIABILITIES-AND-EQUITY> 93,429,518
<INTEREST-LOAN> 1,015,209
<INTEREST-INVEST> 485,061
<INTEREST-OTHER> 173,387
<INTEREST-TOTAL> 1,673,657
<INTEREST-DEPOSIT> 465,793
<INTEREST-EXPENSE> 537,085
<INTEREST-INCOME-NET> 1,136,572
<LOAN-LOSSES> 125,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,312,448
<INCOME-PRETAX> (41,265)
<INCOME-PRE-EXTRAORDINARY> (41,265)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,265)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
<YIELD-ACTUAL> 0
<LOANS-NON> 1,322,000
<LOANS-PAST> 818,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,535,000
<ALLOWANCE-OPEN> 892,322
<CHARGE-OFFS> 73,146
<RECOVERIES> 9,604
<ALLOWANCE-CLOSE> 953,780
<ALLOWANCE-DOMESTIC> 953,780
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
