SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark One
[ X ] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995 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 0-11986
SUMMIT BANCSHARES, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1694807
------------------------ --------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1300 Summit Avenue, Fort Worth, Texas 76102
-------------------------------------------------
(Address of principal executive offices)
(817) 336-6817
----------------------------------------------------
(Registrant's telephone number, including area code)
No Change
---------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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
---- ----
The number of shares of common stock, $1.25 par value, outstanding at
September 30, 1995 was 1,568,041 shares.
<PAGE>
SUMMIT BANCSHARES, INC.
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1995 and
1994 and at December 31, 1994 4
Consolidated Statements of Income for the Nine Months
Ended September 30, 1995 and 1994 and for the Year
Ended December 31, 1994 5
Consolidated Statements of Income for the Three Months
Ended September 30, 1995 and 1994 6
Consolidated Statements of Changes in Shareholders' Equity
for the Nine Months Ended September 30, 1995 and 1994 and
for the Year Ended December 31, 1994 7
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994 and for the Year Ended
December 31, 1994 8-9
Notes to Consolidated Financial Statements for the Nine
Months Ended September 30, 1995 and 1994 and for the
Year Ended December 31, 1994 10-20
The September 30, 1995 and 1994 and the December 31, 1994 financial
statements included herein are unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management of the registrant,
necessary to a fair statement of the results for the interim periods.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Nine
Months Ended September 30, 1995 and 1994 21-27
-2-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Change in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
-3-
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, (Unaudited)
----------------------------- December 31,
1995 1994 1994
------------ ------------ ------------
ASSETS (In Thousands)
<S> <C> <C> <C>
CASH AND DUE FROM BANKS $ 19,197 $ 15,985 $ 18,420
FEDERAL FUNDS SOLD 23,890 15,890 9,740
TRADING ACCOUNT SECURITIES -0- 963 -0-
INVESTMENT SECURITIES - NOTE 2
(Market Value of $112,540,000
and $109,694,000 at September 30, 1995 and 1994
and $112,498,000 at December 31, 1994) 112,493 111,076 114,722
LOANS - NOTE 3
Loans, Net of Unearned Discount 165,720 134,312 138,966
Allowance for Loan Losses (2,513) (2,513) (2,410)
------- ------- -------
LOANS, NET 163,207 131,799 136,556
PREMISES AND EQUIPMENT, NET - NOTE 4 7,034 6,606 6,602
ACCRUED INCOME RECEIVABLE 2,865 2,515 2,732
OTHER REAL ESTATE - NOTE 5 345 710 649
OTHER ASSETS 1,376 1,868 1,590
------- ------- -------
TOTAL ASSETS $ 330,407 $ 287,412 $ 291,011
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS - NOTE 6
Noninterest-Bearing Demand $ 83,551 $ 68,171 $ 72,992
Interest-Bearing 209,483 189,143 186,547
------- ------- -------
TOTAL DEPOSITS 293,034 257,314 259,539
SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE 6,606 3,635 4,528
NOTE PAYABLE -0- 250 250
ACCRUED INTEREST PAYABLE 591 405 487
OTHER LIABILITIES 1,291 903 873
------- ------- -------
TOTAL LIABILITIES 301,522 262,507 265,677
------- ------- -------
COMMITMENTS AND CONTINGENCIES - NOTE 10
SHAREHOLDERS' EQUITY - NOTES 11, 13 and 17
Common Stock - $1.25 Par Value; 20,000,000 shares
authorized; 1,568,041, 1,563,422 and 1,578,723 shares
issued and outstanding at September 30, 1995 and 1994
and at December 31, 1994, respectively 1,960 1,954 1,973
Capital Surplus 6,052 6,065 6,047
Retained Earnings 20,703 17,293 18,187
Unrealized Gain (Loss) on Investment Securities
Available-for-Sale, Net of Tax 224 (407) (873)
Treasury Stock at Cost (September 30, 1995 - 2,298 shares) (54) -0- -0-
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 28,885 24,905 25,334
------- ------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 330,407 $ 287,412 $ 291,011
======= ======= =======
<FN>
The accompanying Notes should be read with these financial statements.
</FN>
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Nine Months (Unaudited)
Ended September 30, Year Ended
----------------------------------- December 31,
1995 1994 1994
-------------- --------------- -------------------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 11,081 $ 8,343 $ 11,455
Interest and Dividends on Investment Securities:
Taxable 4,757 4,456 6,042
Exempt from Federal Income Taxes 20 24 32
Interest on Federal Funds Sold 654 403 614
------- ------- -------
TOTAL INTEREST INCOME 16,512 13,226 18,143
------- ------- -------
INTEREST EXPENSE
Interest on Deposits 5,705 3,928 5,510
Interest on Securities Sold Under
Agreements to Repurchase 218 54 91
Interest on Note Payable 1 19 24
------- ------- -------
TOTAL INTEREST EXPENSE 5,924 4,001 5,625
------- ------- -------
NET INTEREST INCOME 10,588 9,225 12,518
LESS:PROVISION (CREDIT) FOR LOAN LOSSES - NOTE 3 136 (83) (114)
------- ------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,452 9,308 12,632
------- ------- -------
NON-INTEREST INCOME
Service Charges and Fees on Deposits 1,154 1,166 1,548
Loss on Sale of Investment Securities (10) (84) (152)
Other Income 959 665 972
------- ------- -------
TOTAL NON-INTEREST INCOME 2,103 1,747 2,368
------- ------- -------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 4,301 3,681 5,003
Occupancy Expense - Net 524 491 646
Furniture and Equipment Expense 514 401 547
Other Real Estate Owned Expense - Net (89) (39) (41)
Other Expense - Note 7 2,039 1,972 2,711
------- ------- -------
TOTAL NON-INTEREST EXPENSE 7,289 6,506 8,866
------- ------- -------
INCOME BEFORE INCOME TAXES 5,266 4,549 6,134
APPLICABLE INCOME TAXES - NOTE 8 1,804 1,546 2,094
------- ------- -------
NET INCOME $ 3,462 $ 3,003 $ 4,040
====== ====== ======
NET INCOME PER SHARE - NOTE 13 $ 2.21 $ 1.92 $ 2.58
====== ====== ======
<FN>
The accompanying Notes should be read with these financial statements.
</FN>
</TABLE>
-5-
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
September 30,
----------------------------------
1995 1994
---------- ----------
(In Thousands, Except Per Share Data)
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 3,954 $ 2,948
Interest and Dividends on Investment Securities:
Taxable 1,550 1,522
Exempt from Federal Income Taxes 6 8
Interest on Federal Funds Sold 426 174
------ ------
TOTAL INTEREST INCOME 5,936 4,652
------ ------
INTEREST EXPENSE
Interest on Deposits 2,096 1,432
Interest on Securities Sold Under Agreements
to Repurchase 86 25
Interest on Note Payable -0- 5
------ ------
TOTAL INTEREST EXPENSE 2,182 1,462
------ ------
NET INTEREST INCOME 3,754 3,190
LESS: PROVISION FOR LOAN LOSSES - NOTE 3 50 (113)
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,704 3,303
------ ------
NON-INTEREST INCOME
Service Charges and Fees on Deposits 382 393
Gain (Loss) on Sale of Investment Securities -0- (104)
Other Income 274 233
------ ------
TOTAL NON-INTEREST INCOME 656 522
------ ------
NON-INTEREST EXPENSE
Salaries and Employee Benefits 1,507 1,257
Occupancy Expense - Net 177 161
Furniture and Equipment Expense 193 146
Other Real Estate Owned Expense - Net (3) 23
Other Expense 564 681
------ ------
TOTAL NON-INTEREST EXPENSE 2,438 2,268
------ ------
INCOME BEFORE INCOME TAXES 1,922 1,557
APPLICABLE INCOME TAXES - NOTE 8 665 530
------ ------
NET INCOME $ 1,257 $ 1 ,027
====== ======
NET INCOME PER SHARE - NOTE 13 $ .81 $ .66
====== ======
<FN>
The accompanying Notes should be read with these financial statements.
/<FN>
</TABLE>
-6-
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED September 30, 1995 AND 1994
AND FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
Unrealized
Common Stock Gain (Loss)
------------------- Capital Retained on Investment Treasury
Shares Amount Surplus Earnings Securities-Net Stock Total
--------- -------- --------- --------- -------------- -------- --------
(Dollars in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1994 1,559,324 $ 1,949 $ 5,987 $ 15,042 $ -0- $ -0- $ 22,978
Purchases of Stock Held in
Treasury (353) (353)
Retirement of Stock Held in
Treasury (19,890) (25) (328) 353 -0-
Net Income for the
Nine Months Ended
September 30, 1994 3,003 3,003
Stock Options Exercised 23,988 30 78 108
Cash Dividend $.27
Per Share (424) (424)
Securities Available-for-
Sale Adjustment (407) (407)
BALANCE AT --------- ----- ------ ------- ----- ----- ------
September 30, 1994 1,563,422 1,954 6,065 17,293 (407) -0- 24,905
Net Income for the
Three Months Ended
December 31, 1994 1,037 1,037
Stock Options Exercised 15,301 19 (18) 1
Cash Dividend $.09
Per Share (143) (143)
Securities Available-for-
Sale Adjustment (466) (466)
BALANCE AT --------- ----- ----- ------ ----- ----- ------
DECEMBER 31, 1994 1,578,723 1,973 6,047 18,187 (873) -0- 25,334
Purchase of Stock Held
in Treasury (507) (507)
Retirement of Stock Held
In Treasury (20,482) (25) (428) 453 -0-
Net Income for the
Nine Months Ended
September 30, 1995 3,462 3,462
Stock Options Exercised 9,800 12 5 17
Cash Dividend $.33
Per Share (518) (518)
Securities Available-for-
Sale Adjustment 1,097 1,097
BALANCE AT --------- ----- ----- ------ ----- ----- ------
JUNE 30, 1995 1,568,041 $ 1,960 $ 6,052 $ 20,703 $ 224 $ (54) $ 28,885
========= ===== ===== ====== ===== ===== ======
<FN>
The accompanying Notes should be read with these financial statements.
</FN>
</TABLE>
-7-
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
AND FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
September 30, (Unaudited)
------------------------ December 31,
1995 1994 1994
-------- -------- ------------
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,462 $ 3,003 $ 4,040
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Increase in Trading Account Securities -0- (963) -0-
Depreciation and Amortization 470 404 545
Net Premium Amortization or (Discount
Accretion) on Investment Securities 200 675 831
Provision (Credit) for Loan Losses 136 (83) (114)
Net Decrease in Deferred Income Taxes (93) (139) (248)
Loss on Sale of Investment Securities 10 84 152
Writedown of Other Real Estate 8 -0- -0-
Net Gain From Sale of Other Real Estate (73) (52) (55)
Net Loss on Sale of Fixed Assets -0- -0- 2
Increase in Accrued Income and Other Assets (619) (881) (718)
Increase in Accrued Expenses and Other Liabilities 754 228 500
----- ------ -----
Total Adjustments 793 (727) 895
----- ------ -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,255 2,276 4,935
----- ------ -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (Increase) Decrease in Federal Funds Sold (14,150) 3,860 10,010
Proceeds from Matured and Prepaid Investment Securities
- Held-to-Maturity 13,802 8,810 11,453
- Available-for-Sale 2,457 20,321 17,047
Proceeds from Sales of Investment Securities 2,951 13,944 26,885
Purchase of Investment Securities
- Held-to-Maturity (13,057) (13,216) (19,126)
- Available-for-Sale (2,471) (29,996) (40,972)
Loans Originated or Acquired Less Payments,
Charge-offs and Other Real Estate Acquired (26,968) (7,634) (12,314)
Recoveries of Loans Previously Charged-Off 176 215 243
Proceeds from Sale of Fixed Assets -0- -0- 29
Proceeds from Sale of Other Real Estate 369 535 548
Capital Expenditures (902) (634) (802)
------ ------ ------
NET CASH USED BY INVESTING ACTIVITIES (37,793) (3,796) (6,999)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Demand Deposits, Savings
Accounts and Interest Bearing Transaction Accounts 29,426 5,818 7,564
Increase (Decrease) in Certificates of Deposit 4,069 (2,656) (2,175)
Net Increase in Repurchase Agreements 2,078 1,956 2,849
Principal Payments of Note Payable (250) (250) (250)
Dividends to Shareholders (518) (424) (567)
Purchase of Treasury Stock (507) (353) (353)
Proceeds from Stock Options Exercised 17 108 109
------ ------ ------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 34,315 4,199 7,177
------ ------ ------
NET INCREASE IN CASH AND DUE FROM BANKS 777 2,679 5,113
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 18,420 13,307 13,307
------ ------ ------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 19,197 $ 15,986 $ 18,420
====== ====== ======
<FN>
The accompanying Notes should be read with these financial statements.
</FN>
</TABLE>
-8-
<TABLE>
<CAPTION>
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONT'D
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
AND FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES:
(Unaudited)
September 30, (Unaudited)
------------------------ December 31,
1995 1994 1994
-------- -------- ------------
(In Thousands)
<S> <C> <C> <C>
(1) Interest Paid $ 5,819 $ 3,972 $ 5,516
(2) Income Taxes Paid 1,670 1,387 1,825
(3) Other Real Estate Acquired in Settlement of Loans -0- 577 528
(4) Bank Financed Sales of Other Real Estate -0- 166 234
</TABLE>
-9-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1994 (UNAUDITED)
NOTE 1 - Summary of Significant Accounting Policies
- ------
The accounting and reporting policies of Summit Bancshares, Inc.
(the "Corporation") and Subsidiaries are in accordance with generally
accepted accounting principles. A summary of the more significant
policies follows:
Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The consolidated financial statements of the Corporation include
its accounts and those of its wholly-owned subsidiaries, Summit
National Bank, Alta Mesa National Bank and Camp Bowie National Bank
(the "Subsidiary Banks") and Summit Bancservices, Inc., a wholly-
owned operations subsidiary. All significant intercompany
balances and transactions have been eliminated.
Cash and Due From Banks
-----------------------
The Subsidiary Banks are required to maintain certain balances at
the Federal Reserve Bank based on their levels of deposits. During
the first nine months of 1995 the average cash balance maintained
at the Federal Reserve Bank was $10,307,000. Compensating balances
held at correspondent banks, to minimize service charges, averaged
approximately $908,000 during the same nine month period of 1995.
Investment Securities
---------------------
Effective January 1, 1994, the Corporation adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." This statement
addresses the accounting and reporting for investments in equity
securities that have readily determined fair values and for all
investments in debt securities. Those investments are to be
classified in three categories and accounted for as follows:
- Debt securities that the Corporation has the positive intent
and ability to hold to maturity are classified as HELD-TO-
MATURITY securities and reported at amortized cost.
- Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term
are classified as TRADING securities and reported at fair
value, with unrealized gains and losses included in earnings.
- Debt and equity securities not classified as either held-to-
maturity securities or trading securities are classified as
AVAILABLE-FOR-SALE securities and reported at fair value, with
unrealized gains and losses excluded from earnings and
reported in a separate component of shareholders' equity.
The Corporation has the ability and intent to hold to maturity its
investment securities classified as held-to-maturity; accordingly,
no adjustment has been made for the excess, if any, of amortized
cost over market. In determining the investment category
classifications, management considers its asset/liability strategy,
changes in interest rates and prepayment risk, the need to increase
capital and other factors. Under certain circumstances (including
the deterioration of the issuer's creditworthiness, a change in tax
law, or statutory or regulatory requirements), the Corporation may
change the investment security classification.
All investment securities are adjusted for amortization of premiums
and accretion of discounts. Amortization of premiums and accretion
of discounts are recorded to income over the contractual maturity
or estimated life of the individual investment on the level yield
method. Gain or loss on sale of investments is based upon the
specific identification method and the gain or loss is recorded in
non-interest income. Income earned on the Corporation's
investments in state and political subdivisions is not taxable.
Loans and Allowance for Loan Losses
-----------------------------------
Loans are stated at the principal amount outstanding less unearned
discount and the allowance for loan losses. Unearned discount on
installment loans is recognized as income over the terms of the
loans by a method approximating the interest method. Interest
income on all other loans is recognized based upon the principal
amounts outstanding. The accrual of interest on a loan is
discontinued when, in the opinion of management, there is doubt
about the ability of the borrower to pay interest or principal.
Interest previously earned, but uncollected on such loans, is
written off. When loans are put on non-accrual all payments
received are applied to the principal and no interest income is
recorded until the loan is returned to accrual status or the
principal has been reduced to zero.
-10-
NOTE 1 - Summary of Significant Accounting Policies (cont'd.)
- ------
In January 1995, the Corporation adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan." Under the new standard, the 1995 allowance
for loan losses related to loans that are identified for evaluation
in accordance with Statement No. 114 (impaired loans) is based on
discounted cash flows using the loan's initial effective rate or
the fair value of the collateral for certain collateral dependent
loans. Prior to 1995, the allowance for loan losses related to
these loans was based on undiscounted cash flows or the fair value
of the collateral for collateral dependent loans.
The allowance for loan losses is comprised of amounts charged
against income in the form of a provision for loan losses as
determined by management. Management's evaluation is based on a
number of factors, including the Subsidiary Banks' loss experience
in relation to outstanding loans and the existing level of the
allowance, prevailing and prospective economic conditions, and
management's continuing review of the discounted cash flow values
of impaired loans and its evaluation of the quality of the loan
portfolio. Loans are placed on non-accrual status when management
believes that the borrower's financial condition, after giving
consideration to economic and business conditions and collection
efforts, is such that collection of interest is doubtful. Loans
are charged against the allowance for loan losses when management
believes that the collectibility of the principal is unlikely.
Premises and Equipment
----------------------
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation expense is computed on the straight-
line method based upon the estimated useful lives of the assets
ranging from six to forty years. Maintenance and repairs are
charged to operating expenses. Renewals and betterments are added
to the asset accounts and depreciated over the periods benefitted.
Depreciable assets sold or retired are removed from the asset and
related accumulated depreciation accounts and any gain or loss is
reflected in the income and expense accounts.
Other Real Estate
-----------------
Other real estate is foreclosed property held pending disposition
and is valued at the lower of its fair value or the recorded
investment in the related loan. At foreclosure, if the fair value
of the real estate acquired is less than the bank's recorded
investment in the related loan, a writedown is recognized through a
charge to the allowance for loan losses. Any subsequent reduction
in value is recognized by a charge to income. Operating expenses
of such properties, net of related income, and gains and losses on
their disposition are included in non-interest expense.
Federal Income Taxes
--------------------
The Corporation joins with its Subsidiaries in filing a
consolidated federal income tax return. The Subsidiaries pay to
the parent a charge equivalent to their current federal income tax
based on the separate taxable income of the Subsidiaries.
The Corporation and the Subsidiaries maintain their records for
financial reporting and income tax reporting purposes on the
accrual basis of accounting. Deferred income taxes are provided in
accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes". Deferred income taxes are
provided for accumulated temporary differences due to basic
differences for assets and liabilities for financial reporting and
income tax purposes.
State Income Taxes
------------------
The Corporation and each of the Subsidiaries file separate state
franchise tax returns. As a result of a state franchise tax law
passed by the Texas Legislature in 1991, the Corporation and the
Subsidiaries are subject to a "state income tax." Since the basis
for the state income tax is "federal income tax taxable income",
less interest on U.S. Government Obligations, the Corporation had
no state income tax liability in 1994 or during the first nine
months of 1995.
Fair Values of Financial Instruments
------------------------------------
The following methods and assumptions were used by the Corporation
in estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in
the balance sheet for cash and due from banks and federal
funds sold approximate those assets' fair values.
Investment securities (including mortgage-backed securities):
Fair values for investment securities are based on quoted
market prices, where available. If quoted market prices are
not available, fair values are based on quoted market prices
of comparable instruments.
Loans: For variable-rate loans, fair values are based on
carrying values. The fair values for fixed rate loans such
as mortgage loans (e.g., one-to-four family residential) and
installment loans are estimated using discounted cash flow
analysis. The carrying amount of accrued interest receivable
approximates its fair value.
-11-
NOTE 1 - Summary of Significant Accounting Policies (cont'd.)
- ------
Deposit liabilities: The fair value disclosed for interest
bearing and noninterest-bearing demand deposits, passbook
savings, and certain types of money market accounts are, by
definition, equal to the amount payable on demand at the
reporting date or their carrying amounts. Fair values for
fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of
aggregated expected monthly maturities on time deposits.
Short-term borrowings: The carrying amounts of borrowings
under repurchase agreements approximate their fair values.
Note payable: The fair value of the Corporation's note
payable is based on its carrying amount at the reporting
date.
Cash and Cash Equivalents
-------------------------
For the purpose of presentation in the Statements of Cash Flows,
cash and cash equivalents are defined as those amounts included in
the balance sheet caption "Cash and Due from Banks."
Reclassification
----------------
Certain reclassifications have been made to the 1994 financial
statements to conform to the 1995 presentation.
Audited Financial Statements
----------------------------
The consolidated balance sheet as of December 31, 1994, and the
consolidated statements of income, changes in shareholders' equity
and cash flows for the year ended December 31, 1994 are headed
"unaudited" in these financial statements. These statements were
reported in the Securities Exchange Commission Form 10-K as of
December 31, 1994 as "audited" but are required to be reflected in
these statements as unaudited because of the absence of an
independent auditor's report.
NOTE 2 - Investment Securities
- ------
A summary of amortized cost and estimated fair values of investment
securities is as follows:
<TABLE>
<CAPTION>
September 30, 1995
--------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Investment Securities - Held-to-Maturity
U.S. Treasury Securities $ 38,111 $ 273 $ (265) $ 38,119
U.S. Government Agencies
and Corporations 14,132 45 (13) 14,164
U.S. Government Agency Mortgage
Backed Securities 6,994 28 (23) 6,999
Obligations of States and
Political Subdivisions 321 2 -0- 323
------ ---- ----- ------
Total Held-to-Maturity Securities 59,558 348 (301) 59,605
------ ---- ----- ------
Investment Securities - Available-for-Sale
U.S. Treasury Securities 45,021 347 (110) 45,258
U.S. Government Agencies
and Corporations 3,994 69 (9) 4,054
U.S. Government Agency Mortgage
Backed Securities 3,327 43 (1) 3,369
Federal Reserve Bank Stock 254 -0- -0- 254
------ ---- ----- ------
Total Available-for-Sale Securities 52,596 459 (120) 52,935
------ ---- ----- ------
Total Investment Securities $ 112,154 $ 807 $ (421) $ 112,540
======= ==== ==== =======
<FN>
In the above schedule the AMORTIZED COST of Total Held-to-Maturity Securities of $59,558,000 and the FAIR
VALUE of Total Available-for-Sale Securities of $52,935,000 are reflected in Investment Securities on the
consolidated balance sheet as of September 30, 1995 for a total of $112,493,000. A net unrealized gain of
$339,000 is included in the Available-for-Sale Investment Securities balance. The unrealized gain, net of tax, is
included in Shareholders' Equity.
</FN>
</TABLE>
-12-
NOTE 2 - Investment Securities (cont'd.)
The carrying value of investment securities totaling $21,273,000 at
September 30, 1995, were pledged to secure federal, state and municipal
deposits and for other purposes as required or permitted by law. The
fair value of these pledged securities totaled $21,136,000 at September
30, 1995.
<TABLE>
<CAPTION>
September 30, 1994
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Investment Securities - Held-to-Maturity
U.S. Treasury Securities $ 33,323 $ 1 $ (880) $ 32,444
U.S. Government Agencies
and Corporations 15,881 2 (237) 15,646
U.S. Government Agency Mortgage
Backed Securities 6,736 1 (280) 6,457
Obligations of States and
Political Subdivisions 397 11 -0- 408
------ ---- ------ ------
Total Held-to-Maturity Securities 56,337 15 (1,397) 54,955
------ ---- ------ ------
Investment Securities - Available-for-Sale
U.S. Treasury Securities 47,626 31 (570) 47,087
U.S. Government Agencies
and Corporations 3,544 8 (57) 3,495
U.S. Government Agency Mortgage
Backed Securities 3,931 9 (37) 3,903
Federal Reserve Bank Stock 254 -0- -0- 254
------ ---- ------ ------
Total Available-for-Sale Securities 55,355 48 (664) 54,739
------ ---- ------ ------
Total Investment Securities $ 111,692 $ 63 $ (2,061) $ 109,694
======= ==== ===== =======
</TABLE>
In the above schedule the AMORTIZED COST of Total Held-to-Maturity
Securities of $56,337,000 and the FAIR VALUE of Total Available-for-Sale
Securities of $54,739,000 are reflected in Investment Securities on the
consolidated balance sheet as of September 30, 1994 for a total of
$111,076,000. A net unrealized loss of $616,000 is included in the
Available-for-Sale Investment Securities balance. The unrealized loss,
net of tax benefit, is included in Shareholders' Equity.
Proceeds from sales of investment securities were $2,951,000 and
$13,944,000 during the first nine months of 1995 and 1994, respectively
and $26,885,000 during the year 1994. In the nine months ended
September 30, 1995, a loss from sale of securities of $10,000 was
realized. Gains of $20,000 and losses of $104,000 were realized from
sales during the nine months ended September 30, 1994. Gains of $32,000
and losses of $184,000 were realized for the year ended December 31,
1994.
NOTE 3 - Loans and Allowance for Loan Losses
- ------
The book values and fair values of loans by major type follow (in
thousands):
<TABLE>
<CAPTION>
September 30, 1995 September 30, 1994
----------------------------- -----------------------------
Book Fair Book Fair
Value Value Value Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Commercial $ 76,413 $ 76,466 $ 65,540 $ 65,495
Real Estate Mortgage 60,731 60,714 49,193 49,108
Real Estate Construction 6,912 6,894 3,920 3,899
Loans to Individuals, Less
Unearned Discount 21,664 21,706 15,659 15,706
------- ------- ------- -------
165,720 165,780 134,312 134,208
Allowance for Loan Losses (2,513) (2,513) (2,513) (2,513)
------- ------- ------- -------
Loans - Net $ 163,207 $ 163,267 $ 131,799 $ 131,695
======= ======= ======= =======
</TABLE>
The preceding table indicates that the Corporation had an
unrealized gain of approximately $60,000 in its loan portfolio at
September 30, 1995 and an unrealized loss of approximately $104,000 in
its loan portfolio at September 30, 1994 before the respective
allowances for loan losses were applied. The unrealized gains and
losses are the direct result of the current posted rates for loans being
lower or higher, respectively, than the average yields in the current
loan portfolio.
-13-
NOTE 3 - Loans and Allowance for Loan Losses (cont'd.)
- ------
Transactions in the allowance for loan losses are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended
------------------------------------ December 31,
1995 1994 1994
---------- ---------- ------------
<S> <C> <C> <C>
Balance, Beginning of Period $ 2,410 $ 2,594 $ 2,594
Provisions, Charged (Credited)
to Income 136 (83) (114)
Loans Charged-Off (209) (213) (313)
Recoveries of Loans Previously
Charged-Off 176 215 243
----- ----- -----
Net Loans Charged-Off (33) 2 (70)
----- ----- -----
Balance, End of Period $ 2,513 $ 2,513 $ 2,410
===== ===== =====
</TABLE>
The provisions for loan losses charged to operating expenses during
the nine months ended September 30, 1995 of $136,000 was considered
adequate to maintain the allowance in accordance with the policy
discussed in Note 1. For the nine months ended September 30, 1994 and
the year ended December 31, 1994 credits of $83,000 and $114,000,
respectively, were recorded reducing the Allowance for Loan Losses. This
reduction in the Allowance was warranted as the level of non-performing
loans continued to decline.
At September 30, 1995, the recorded investment in loans that are
considered to be impaired under Statement of Financial Accounting
Standards No. 114 was $345,000 (of which $345,000 were on non-accrual
status). The related allowance for loan losses for these loans was
$163,000. The average recorded investment in impaired loans during the
nine months ended September 30, 1995 was approximately $416,000. For
this period the Corporation recognized no interest income on these
impaired loans.
NOTE 4 - Premises and Equipment
- ------
The investment in premises and equipment stated at cost and net of
accumulated amortization and depreciation is as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
-------------------------- December 31,
1995 1994 1994
-------- -------- ------------
<S> <C> <C> <C>
Land $ 1,264 $ 1,264 $ 1,264
Buildings and Improvements 7,021 6,728 6,742
Furniture & Equipment 4,996 4,370 4,470
------ ------ ------
Total Cost 13,281 12,362 12,476
Less: Accumulated Amortization and Depreciation (6,247) (5,756) (5,874)
------ ------ ------
Net Book Value $ 7,034 $ 6,606 $ 6,602
===== ===== =====
</TABLE>
NOTE 5 - Other Real Estate
- ------
The carrying value of other real estate is as follows (in
thousands):
<TABLE>
<CAPTION>
September 30,
------------------------ December 31,
1995 1994 1994
-------- -------- ------------
<S> <C> <C> <C>
Other Real Estate $ 380 $ 745 $ 684
Valuation Reserve (35) (35) (35)
---- ---- ----
Net Other Real Estate $ 345 $ 710 $ 649
=== === ===
</TABLE>
-14-
NOTE 5 - Other Real Estate (cont'd.)
- ------
Transactions in the valuation reserve are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------- December 31,
1995 1994 1994
-------- -------- ------------
<S> <C> <C> <C>
Balance, Beginning of Period $ 35 $ 279 $ 279
Provisions Charged to Income -0- -0- -0-
Reductions from Sales -0- (244) (244)
---- ---- ----
Balance, End of Period $ 35 $ 35 $ 35
=== ==== ====
</TABLE>
In addition to the above provisions, direct writedowns of other
real estate charged to income were $8,000 for the nine months ended
September 30, 1995. There were no direct writedowns to other real
estate during the first nine months of 1994 or for the year ended
December 31, 1994.
NOTE 6 - Deposits
- ------
The book values and fair values of deposits by major type follow.
For deposits with no defined maturities, Statement of Financial
Accounting Standards No. 107 defines fair values as the amount payable
on demand (in thousands):
<TABLE>
<CAPTION>
September 30, 1995 September 30, 1994
---------------------------- ------------------------------
Book Fair Book Fair
Value Value Value Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Noninterest-Bearing Demand Deposits $ 83,551 $ 83,551 $ 68,171 $ 68,171
------- ------- ------- -------
Interest-Bearing Deposits:
Interest-Bearing Transaction
Accounts 103,628 103,628 103,107 103,107
Savings 33,568 33,568 18,066 18,066
Savings Certificates - Time 48,474 48,716 45,990 45,907
Certificates of Deposits $100,000 or more 23,574 23,635 21,746 21,728
Other 239 238 234 234
------- ------- ------- -------
Total 209,483 209,785 189,143 189,042
------- ------- ------- -------
Total Deposits $ 293,034 $ 293,336 $ 257,314 $ 257,213
======= ======= ======= =======
</TABLE>
The preceding table indicates that the Corporation had an
unrealized gain of approximately $302,000 at September 30, 1995 and an
unrealized loss of approximately $101,000 at September 30, 1994 in its
deposit accounts.
The unrealized gains and losses are the direct result of the
current posted rates for deposits being lower or higher, respectively,
than the average rates in the current deposit portfolio.
NOTE 7 - Other Non-Interest Expense
- ------
The significant components of other non-interest expense are as
follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended
------------------------------- December 31,
1995 1994 1994
-------- -------- ------------
<S> <C> <C> <C>
Business Development $ 303 $ 280 $ 392
Legal and Professional Fees 319 256 357
Printing and Supplies 198 225 303
Regulatory Fees and Assessments 355 499 666
Other 864 712 993
----- ----- -----
Total $ 2,039 $ 1,972 $ 2,711
===== ===== =====
</TABLE>
-15-
NOTE 8 - Income Taxes
- ------
Federal income taxes included in the consolidated balance sheets
were as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
---------------------------- December 31,
1995 1994 1994
------- ------- ------------
<S> <C> <C> <C>
Current Tax Asset (Liability) $ (59) $ 35 $ 29
Deferred Tax Asset 284 767 901
---- ---- ----
Total Included in Other Assets $ 225 $ 802 $ 930
==== ==== ====
</TABLE>
The deferred tax asset at September 30, 1995 of $284,000 included
$115,000 credit related to an unrealized gain on Available-for-Sale
Securities.
The components of income tax expense were as follows (in
thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended
------------------------------- December 31,
1995 1994 1994
-------- -------- -------------
<S> <C> <C> <C>
Federal Income Tax Expense
Current $ 1,785 $ 1,407 $ 1,846
Deferred 19 139 248
----- ----- -----
Total Federal Income Tax Expense $ 1,804 $ 1,546 $ 2,094
===== ===== =====
Effective Tax Rates 34.3% 34.0% 34.1%
===== ===== =====
</TABLE>
The reasons for the difference between income tax expense and the
amount computed by applying the statutory federal income tax rate to
operating earnings are as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended September 30, Year Ended
------------------------------- December 31,
1995 1994 1994
-------- -------- ------------
<S> <C> <C> <C>
Federal Income Taxes at Statutory
Rate of 34% $ 1,790 $ 1,547 $ 2,085
Effect of Tax Exempt Interest Income (17) (18) (23)
Other 31 17 32
----- ----- -----
Income Taxes Per Income Statement $ 1,804 $ 1,546 $ 2,094
===== ===== =====
</TABLE>
NOTE 9 - Related Party Transactions
- ------
The Subsidiary Banks have transactions made in the ordinary course
of business with certain of its officers, directors and their
affiliates. All loans included in such transactions are made on
substantially the same terms, including interest rate and collateral, as
those prevailing at the time for comparable transactions with other
persons. Total loans outstanding to such parties amounted to
approximately $4,156,000 at December 31, 1994.
NOTE 10 - Commitments and Contingent Liabilities
- -------
In the normal course of business, there are various outstanding
commitments and contingent liabilities, such as guarantees and
commitments to extend credit, which are not reflected in the financial
statements. No losses are anticipated as a result of these
transactions. Commitments are most frequently extended for real estate,
commercial and industrial loans.
At September 30, 1995, outstanding documentary and standby letters
of credit totaled $4,615,000 and commitments to extend credit totaled
$61,628,000.
-16-
NOTE 11 - Stock Option Plans
- -------
In September 1982, the Corporation established an Incentive Stock
Option Plan and reserved 30,000 shares of common stock for sale
thereunder. The 30,000 option shares were subsequently amended to
60,000 shares and increased again to 120,000 in April 1993 as a result
of the two-for-one stock split. The plan, which expired in 1992,
provided for the granting to management employees of Summit Bancshares,
Inc. and Subsidiaries incentive stock options, as defined under current
tax laws. The outstanding options are exercisable for periods of five
to ten years from the date of grant.
In April 1993, the Corporation established a similar Incentive
Stock Option Plan and reserved 150,000 shares (after the April 1993 two-
for-one stock split) of common stock for sale thereunder. The 1993 plan
provides for the granting to management employees of Summit Bancshares,
Inc. and Subsidiaries incentive stock options, as defined under the
current tax laws. The options under the 1993 plan will be exercisable
for ten years from the date of the grant.
Options under both plans will be and have been granted at prices
which will not be less than 100-110% of the fair market value of the
underlying common stock at the date of the grant. Since the option
prices are considered to approximate fair market value at date of grant,
no compensation expense has been reported.
The following is a summary of transactions during the periods
presented:
<TABLE>
<CAPTION>
Shares Under Option
---------------------------------------------
Nine Months
Ended Year Ended
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Outstanding, Beginning of Period 151,700 186,200
Additional Options Granted During
the Period 17,000 22,500
Forfeited During the Period -0- (11,100)
Exercised During the Period (10,800) (45,900)
------- -------
Outstanding, End of Period 157,900 151,700
======= =======
</TABLE>
Options outstanding at September 30, 1995 ranged in price from
$3.75 to $24.50 per share with 122,240 shares exercisable.
NOTE 12 - Employee Benefit Plans
- -------
The Corporation has a defined benefit pension plan covering
substantially all of its employees. The benefits are based on years of
service and the employee's compensation history. The employee's
compensation used in the benefit calculation is the highest average for
any five consecutive years of employment within the employee's last ten
years of employment.
Funding for the plan is provided by employer contributions to trust
funds in amounts determined by actuarial assumptions and valuation of
the plan. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned
in the future.
-17-
NOTE 12 - Employee Benefit Plans (cont'd.)
- -------
The table below sets forth the plan's funded status and amounts
recognized in the Corporation's consolidated balance sheets at December
31 (in thousands):
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $1,034,000 in 1994 and $983,000 in 1993 $ (1,072) $ (1,019)
====== ======
Projected benefit obligation for service rendered
to date $ (1,731) $ (1,577)
Plan assets at fair value, primarily listed stock
and U.S. Treasury Securities 1,616 1,414
------ ------
Plan assets net of projected benefit obligation (115) (163)
Unrecognized net gain from past experience
different from that assumed and effect of
changes in assumptions 48 50
Prior service cost not yet recognized in net
periodic pension cost 20 23
------ ------
Unrecognized net obligation at January 1, 1995
and 1994 68 73
------ ------
Net pension cost included in other liabilities $ (47) $ (90)
===== =====
<CAPTION>
Net pension cost included the following components (in thousands): Year Ended December 31,
-------------------------
1994 1993
-------- --------
<S> <C> <C>
Service Cost - benefits earned during the period $ 111 $ 87
Interest cost on projected benefit obligation 130 121
Less: Actual return on plan assets (133) (116)
Net amortization and deferral 5 5
----- -----
Net periodic pension cost $ 113 $ 97
===== =====
</TABLE>
The discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected
benefit obligation were 8.5 percent and 5 percent at December 31, 1994
and 1993. The expected long-term rate of return on plan assets in 1994
was 9 percent.
The market value of plan assets at September 30, 1995 was
$1,715,000. There has been a contribution to the plan during 1995 of
$317,000.
Management Security Plan
- ------------------------
In 1992, the Corporation established a Management Security Plan to
provide key employees with retirement, death or disability benefits in
addition to those provided by the Pension Plan. The expense charged to
operations for such future obligations was $127,000 and $104,000 during
the first nine months of 1995 and 1994, respectively, and $141,000 for
the year 1994.
Other Post Retirement Benefits
- ------------------------------
The Corporation provides certain health care benefits for certain
retired employees who bear all costs of these benefits. These benefits
are covered under the "Consolidated Omnibus Budget Reconciliation Act"
(COBRA).
-18-
NOTE 13 - Earnings per Share
- -------
Earnings per share of common stock are based on the weighed average
number of shares outstanding during the periods as follows:
Shares
----------
Periods of Three Months Ended:
September 30, 1995 1,564,820
September 30, 1994 1,560,571
Period of Nine Months Ended:
September 30, 1995 1,568,799
September 30, 1994 1,565,227
Year Ended December 31, 1994 1,567,885
NOTE 14 - Financial Instruments with Off-Balance Sheet Risk
- -------
The Corporation is a party to financial instruments with off-
balance sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments include
loan commitments, standby letters of credit and documentary letters of
credit. The instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amount recognized in the
financial statements.
The Corporation's exposure to credit loss in the event of non-
performance by the other party of these loan commitments and standby
letters of credit is represented by the contractual amount of those
instruments. The Corporation uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments.
The total contractual amounts of financial instruments with off-
balance sheet risk are as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
-------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Financial Instruments Whose
Contract Amounts Represent
Credit Risk:
Commitments to Extend Credit $ 61,628,000 $ 43,516,000
Documentary and Standby
Letters of Credit 4,615,000 2,530,000
</TABLE>
Since many of the loan commitments may expire without being drawn
upon, the total commitment amount does not necessarily represent future
cash requirements. The Corporation evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained,
if deemed necessary by the Corporation upon extension of credit, is
based on management's credit evaluation of the counterparty. Collateral
held varies but may include accounts receivable, inventory, property,
plant and equipment, owner occupied real estate and income-producing
commercial properties.
The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers.
NOTE 15 - Concentrations of Credit Risk
- -------
The Subsidiary Banks grant commercial, consumer and real estate
loans in their direct market which is defined as Fort Worth and its
surrounding area. Although its Subsidiary Banks have diversified loan
portfolios, a substantial portion of its debtors' abilities to honor
their contracts is dependent upon the strength of the local and state
economy.
NOTE 16 - Litigation
- -------
Certain of the Subsidiary Banks are involved in legal actions
arising in the ordinary course of business. It is the opinion of legal
counsel that the settlement of these matters will not materially affect
the Corporation's financial position.
-19-
NOTE 17 - Stock Repurchase Plan
- -------
On April 18, 1995 the Board of Directors approved a stock
repurchase plan. The plan authorizes management to purchase up to
78,446 shares of the Corporation's common stock over the next twelve
months through the open market or in privately negotiated transactions
in accordance with all applicable state and federal laws and
regulations.
In 1994, 19,890 shares were purchased by the Corporation through
the open market and canceled. In the first nine months of 1995, 22,780
shares were purchased.
NOTE 18 - Subsequent Event
- -------
On October 17, 1995, the Board of Directors of the Corporation
approved a quarterly dividend of $.11 per share to be paid on November
15, 1995 to shareholders of record on November 1, 1995.
On October 17, 1995, the Board of Directors of the Corporation
approved a two for one (2 for 1) stock split to be effected as a 100%
stock dividend. The stock split is to be payable on December 6, 1995 to
holders of record of the Company's common stock as of the close of
business on November 20, 1995.
On July 12, 1995, the Corporation obtained lines of credit from a
bank under which the Corporation may borrow $9,000,000 at prime rate.
The lines of credit are secured by stock of one of the subsidiary banks
and mature on July 12, 1996, whereupon, if balances are outstanding the
lines convert to term notes having five year terms. The Corporation
will not pay a fee for any unused portion of the lines. There have been
no borrowings to date on these lines of credit.
-20-
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summary
- -------
Net income for the third quarter of 1995 was $1,257,000, or $.81
per share, compared with $1,027,000, or $.66 per share, for the third
quarter of 1994. Per share amounts are based on average shares
outstanding of 1,565,774 for the third quarter of 1995 and 1,565,227 for
the comparable period of 1994. On a per share basis, net income
increased 22.7% over the third quarter of the prior year.
Net income for the first nine months of 1995 was $3,462,00, or
$2.21 per share, compared with $3,003,000, or $1.92 per share for the
first nine months of 1994. Per share amounts are based on average
shares outstanding of 1,568,799 for the first nine months of 1995 and
1,565,227 for the first nine months of 1994.
Contributing to the improved earnings for the quarter and the nine
months was a refund by the FDIC of deposit insurance assessments
previously paid. This refund covered the four months ended September
30, 1995 and was approximately $100,000 after tax, or $.06 per share.
Outstanding loans at September 30, 1995 of $165.7 million
represented an increase of $31.4 million, or 23.4%, over September 30,
1994 and an increase of $26.8 million, or 19.2%, from December 31, 1994.
Total deposits at September 30, 1995 of $293.0 million represented
an increase of $35.7 million, or 13.9%, over September 30, 1994 and an
increase of $33.5 million, or 12.9%, from December 31, 1994.
In the third quarter net interest income for the quarter increased
17.7% over the same quarter of the previous year. An increase in non-
interest income of 25.7% also contributed to the earnings increase.
These increases were partially offset by a 7.5% increase in non-interest
expense. Explanations of these increases follows in this Management's
Discussion.
The following table summarizes the Corporation's earnings
performance for the three months and nine months ended September 30,
1995 and 1994, respectively (tax equivalent basis and dollars in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income $ 5,941 $ 4,661 $ 16,524 $ 13,253
Interest Expense 2,182 1,462 5,924 4,001
------ ------ ------ ------
Net Interest Income 3,759 3,199 10,600 9,252
Provision for Loan Loss 50 (113) 136 (83)
------ ------ ------ ------
Net Interest Income After
Provision for Loan Loss 3,709 3,312 10,464 9,335
Non-Interest Income 656 522 2,103 1,747
Non-Interest Expense 2,438 2,268 7,289 6,506
------ ------ ------ ------
Income Before Income Tax 1,927 1,566 5,278 4,576
Income Tax Expense 670 539 1,816 1,573
------ ------ ------ ------
Net Income $ 1,257 $ 1,027 $ 3,462 $ 3,003
====== ====== ====== ======
Net Income per Share $ .81 $ .66 $ 2.21 $ 1.92
Return on Average Assets** 1.55% 1.44% 1.54% 1.43%
Return on Average Stockholders' Equity* ** 17.88% 16.65% 17.07% 16.74%
<FN>
* Before adjustment for unrealized gains and losses on Available-for-Sale securities.
** Annualized.
</FN>
</TABLE>
-21-
Summary of Earning Assets and Interest-Bearing Liabilities
- ----------------------------------------------------------
The following schedules present average balance sheets that
highlight earning assets and interest-bearing liabilities and their
related rates earned and paid for the three months and nine months ended
September 30, 1995 and 1994, respectively (rates on tax equivalent
basis).
<TABLE>
<CAPTION>
Three Months Ended September 30,
------------------------------------------------------------------------
1995 1994
------------------------------- ----------------------------------
Average Average Average Average
Balances Interest Yield/Rate Balances Interest Yield/Rate
-------- -------- ---------- -------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Federal Funds Sold $ 28,932 $ 425 5.80% $ 15,072 $ 174 4.64%
Investment Securities (Taxable) 105,179 1,5551 5.85 112,260 1,522 5.43
Investment Securities (Tax-exempt) 321 10 12.06 399 12 11.76
Loans, Net of Unearned Discount (1) 159,287 3,955 9.85 133,407 2,953 8.88
------- ----- ------- -----
Total Earning Assets 293,719 5,941 8.02 261,138 4,661 7.16
----- -----
Non-interest Earning Assets:
Cash and Due From Banks 18,336 16,674
Other Assets 11,378 10,460
Allowance for Loan Losses (2,494) (2,631)
------- -------
Total Assets $ 320,939 $ 285,641
======= =======
Interest-Bearing Liabilities:
Interest-Bearing Transaction
Accounts $ 104,418 897 3.39 $ 102,713 704 2.75
Savings 29,571 287 3.86 18,580 122 2.63
Savings Certificates 48,344 609 5.00 47,068 408 3.47
Certificates of Deposit
$100,000 or more 23,270 300 5.11 21,527 197 3.65
Other Time 239 3 4.67 232 2 3.63
Other Borrowings 7,006 86 4.87 2,387 24 4.11
Notes Payable -0- -0- -- 268 5 8.26
------ ----- ------- -----
Total Interest-Bearing Liabilities 212,848 2,182 4.07 192,775 1,462 3.04
----- -----
Non-interest Bearing Liabilities:
Demand Deposits 77,959 67,052
Other Liabilities 2,081 1,377
Shareholders' Equity 28,051 24,437
------ ------
Total Liabilities and
Shareholders' Equity $ 320,939 $ 285,641
======= =======
Net Interest Income and Margin
(Tax-equivalent Basis)(2) $ 3,759 5.08 $ 3,199 4.90
===== =====
<FN>
(1) Loan interest income includes fees and loan volumes include loans on non-accrual.
(2) Presented on a tax equivalent basis ("T/E") using a federal income tax rate of 34% in both years.
</FN>
</TABLE>
-22-
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------------------------------
1995 1994
---------------------------------- -----------------------------------
Average Average Average Average
Balances Interest Yield/Rate Balances Interest Yield/Rate
-------- -------- ---------- -------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Federal Funds Sold $ 14,815 $ 641 5.78% $ 13,593 $ 403 3.98%
Investment Securities (Taxable) 108,483 4,756 5.86 111,674 4,455 5.33
Investment Securities (Tax-exempt) 356 31 11.54 427 37 11.55
Loans, Net of Unearned Discount(1) 151,241 11,096 9.81 130,945 8,358 8.53
------- ------ ------- -----
Total Earning Assets 274,895 16,524 8.04 256,639 13,253 6.90
------ -----
Non-interest Earning Assets:
Cash and Due From Banks 16,848 16,139
Other Assets 10,944 10,601
Allowance for Loan Losses (2,428) (2,647)
------- -------
Total Assets $ 300,259 $ 280,732
======= =======
Interest-Bearing Liabilities:
Interest-Bearing Transaction
Accounts $ 101,718 2,594 3.41 $ 101,669 1,900 2.50
Savings 22,654 577 3.40 18,556 348 2.50
Savings Certificates 47,117 1,673 4.74 47,531 1,145 3.22
Certificates of Deposit
$100,000 or more 23,177 853 4.92 21,733 531 3.26
Other Time 237 8 4.60 231 5 3.07
Other Borrowings 5,565 218 5.25 2,101 53 3.44
Notes Payable 15 1 9.56 348 19 7.30
------- ----- ------- -----
Total Interest-Bearing Liabilities 200,483 5,924 3.95 192,169 4,001 2.78
----- -----
Non-interest Bearing Liabilities:
Demand Deposits 70,857 63,044
Other Liabilities 1,997 1,585
Shareholders' Equity 26,922 23,934
------ ------
Total Liabilities and
Shareholders' Equity $ 300,259 $ 280,732
======= =======
Net Interest Income and Margin
(Tax-equivalent Basis)(2) $ 10,600 5.16 $ 9,252 4.82
====== =====
<FN>
(1) Loan interest income includes fees and loan volumes include loans on non-accrual.
(2) Presented on a tax equivalent basis ("T/E") using a federal income tax rate of 34% in both years.
</FN>
</TABLE>
-23-
Net Interest Income
- -------------------
Net interest income (tax equivalent) for the third quarter of 1995
was $3,759,000 which represented an increase of $560,000, or 17.5%, over
the third quarter of 1994. This increase was heavily contributed to by
a 19.4% increase in average loans for the third quarter of 1995 versus
the same quarter last year.
The following table summarizes the effects of changes in interest
rates and average volumes of earning assets and interest bearing
liabilities on tax equivalent net interest income for the three and nine
months ended September 30, 1995 and 1994.
<TABLE>
<CAPTION>
ANALYSIS OF CHANGES IN NET INTEREST INCOME
(Dollars in Thousands)
3rd Qtr. 1995 vs. 3rd Qtr. 1994 Nine Mos. 1995 vs. Nine Mos. 1994
Increase (Decrease) Increase (Decrease)
Due to Changes in: Due to Changes in:
-------------------------------- ---------------------------------
Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Federal Funds Sold $ 197 $ 54 $ 251 $ 39 $ 199 $ 238
Investment Securities (Taxable) (411) 440 29 (197) 498 301
Investment Securities (Tax-exempt) (4) 2 (2) (6) -0- (6)
Loans, Net of Unearned Discount 641 361 1,002 1,391 1,347 2,738
---- ---- ----- ----- ----- -----
Total Interest Income 423 857 1,280 1,227 2,044 3,271
---- ---- ----- ----- ----- -----
Interest-Bearing Liabilities:
Deposits 127 537 664 111 1,665 1,776
Other Borrowings 57 5 62 125 40 165
Notes Payable (3) (3) (6) (25) 7 (18)
---- ---- ---- ---- ----- -----
Total Interest Expense 181 539 720 211 1,712 1,923
---- ---- ---- ---- ----- -----
Net Interest Income $ 242 $ 318 $ 560 $ 1,016 $ 332 $ 1,348
==== ==== ==== ===== ===== =====
</TABLE>
Allowance for Loan Losses and Non-Performing Assets
- ---------------------------------------------------
The Corporation's allowance for loan losses was $2,513,000, or
1.52% of total loans, as of September 30, 1995 compared to $2,513,000,
or 1.87% of total loans, as of September 30, 1994.
Transactions in the allowance for loan losses are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance, Beginning of Period $ 2,464 $ 2,712 $ 2,410 $ 2,594
Provisions, Charged to Income 50 (113) 136 (83)
Loans Charged-Off (43) (178) (209) (213)
Recoveries of Loans Previously
Charged-Off 42 92 176 215
----- ----- ----- -----
Net Loans Charged-Off (1) (86) (33) 2
----- ----- ----- -----
Balance, End of Period $ 2,513 $ 2,513 $ 2,513 $ 2,513
===== ===== ===== =====
</TABLE>
-24-
The following table summarizes the non-performing assets as of
the end of the last five quarters (in thousands).
<TABLE>
<CAPTION>
September 30, June 30, March 31, December 31, September 30,
1995 1995 1995 1994 1994
------------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Non-Accrual Loans $ 1,247 $ 372 $ 368 $ 643 $ 350
Other Real Estate Owned 345 348 391 649 710
Renegotiated Loans -0- -0- -0- -0- -0-
---- ---- ----- ----- -----
Total Non-Performing Assets $ 1,592 $ 720 $ 759 $ 1,292 $ 1,060
===== ==== ===== ===== =====
</TABLE>
Total non-performing assets have continued to decline over the past
several quarters as presented in the previous table.
Non-accrual loans to total loans were .75% at September 30, 1995 and
non-performing assets were .28% of loans and other real estate owned at
the same date.
Non-interest Income
- -------------------
The major component of non-interest income is service charges on
deposits. Other service fees are the majority of other non-interest
income.
The following table reflects the changes in non-interest income
during the periods presented (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1995 1994 % Change 1995 1994 % Change
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Service Charges on Deposit Accounts $ 382 $ 394 (3.0%) $ 1,154 $ 1,166 (1.0)%
Gains (Loss) on Sale of Investment Securities -0- (104) -- (10) (84) --
Non-recurring Income 21 36 -- 217 92 --
Other Non-interest Income 253 196 29.1 742 573 29.5
---- ---- ----- -----
Total Non-interest Income $ 656 $ 522 25.7% $ 2,103 $ 1,747 20.4%
=== === ===== =====
</TABLE>
The increase in Other Non-Interest Income is primarily due to fees
from investment center products which was expanded in late 1994. Also,
increased revenue has been experienced from A.T.M. service fees and letter
of credit fees. Non-recurring income is primarily interest recovered on
loans charged-off in prior years.
Non-interest Expense
- --------------------
Non-interest expenses include all expenses other than interest
expense, loan loss provision and income tax expense.
The following table summarizes the changes in non-interest expense
during the periods presented (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------- --------------------------------
1995 1994 % Change 1995 1994 % Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Salaries & Employee Benefits $ 1,507 $ 1,257 19.9% $ 4,301 $ 3,681 16.8%
Occupancy Expense - Net 177 161 9.9 524 491 6.7
Furniture and Equipment Expense 193 146 32.2 514 401 28.2
Other Real Estate Expense - Net (3) 23 -- (89) (39) --
Other Expenses:
Business Development 105 108 (2.8) 303 280 8.2
Insurance - Other 25 33 (24.2) 73 100 (27.0)
Legal & Professional Fees 111 93 19.4 319 256 24.6
Taxes - Other 25 23 8.7 68 63 7.9
Postage & Courier 65 57 14.0 186 173 7.5
Printing & Supplies 79 81 (2.5) 198 225 (12.0)
Regulatory Fees & Assessments 15 166 -- 355 499 (28.9)
Other Operating Expenses 139 120 15.8 537 376 42.8
----- ----- ----- -----
Total Other Expenses 564 681 (17.2) 2,039 1,972 3.4
----- ----- ----- -----
Total Non-interest Expense $ 2,438 $ 2,268 7.5% $ 7,289 $ 6,506 12.0%
===== ===== ===== =====
</TABLE>
-25-
Salary expense increased for the nine months of 1995 as a result of
salary merit increases, a change in reporting for commissions paid certain
employees and the accrual of projected performance compensation. If the
change in reporting were reflected the same in both periods, the increase
would have been 14.1% for the nine months.
The increase in furniture and equipment expenses was due to increased
depreciation expense related to the refurbishing of leasehold improvements
at two facilities in late 1994 and the addition of a new company-wide
communication system in April 1995.
Business development expenses have increased in 1995 because of
increased expenses for public relations and customer relations. Legal and
Professional fees increased over last year because of legal fees related
to loan collection efforts. Also, as noted earlier a refund of previously
paid FDIC deposit assessments was received in September 1995 in the amount
of approximately $150,000, thereby significantly reducing Regulatory Fees
& Assessment Expense when compared to prior year.
Interest Rate Sensitivity
- -------------------------
Interest rate sensitivity is the relationship between changes in
market interest rates and net interest income due to the repricing
characteristics of assets and liabilities.
The following table, commonly referred to as a "static gap report",
indicates the interest rate sensitivity position at September 30, 1995 and
may not be reflective of positions in subsequent periods (dollars in
thousands):
<TABLE>
<CAPTION>
Total Repriced
Matures or Reprices within: Rate After
-------------------------------------------- Sensitive 1 Year or
30 Days 31-90 91-180 181 to One Year Non-interest
or Less Days Days One Year or Less Sensitive Total
------- ------ ------- --------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans $ 93,364 $ 6,651 $ 9,320 $ 16,432 $ 125,767 $ 39,953 $ 165,720
Investment Securities 8,664 4,400 12,073 24,174 49,311 63,182 112,493
Federal Funds Sold 23,960 -0- -0- -0- 23,960 -0- 23,960
------ ----- ------ ------ ------- ------- -------
Total Earning Assets 125,988 11,051 21,393 40,606 199,038 103,135 302,173
------- ------ ------ ------ ------- ------- -------
Interest Bearing Liabilities:
Interest-Bearing Transaction
Accounts and Savings 137,196 -0- -0- -0- 137,196 -0- 137,196
Certification of Deposits
>$100,000 5,720 4,319 6,408 6,577 23,024 550 23,574
Other Time Deposits 3,437 8,211 14,899 15,372 41,919 6,794 48,713
Repurchase Agreements 6,606 -0- -0- -0- 6,606 -0- 6,606
------- ------ ------ ------ ------- ------ -------
Total Interest Bearing
Liabilities 152,959 12,530 21,307 21,949 208,745 7,344 216,089
------- ------ ------ ------ ------- ----- -------
Interest Sensitivity
Gap $ (26,971) $ (1,479) $ 86 $ 18,657 $ (9,707) $ 95,791 $ 86,084
====== ===== ===== ====== ====== ====== ======
Cumulative Gap $ (26,971) $ (28,450) $ (28,364) $ (9,707)
====== ====== ====== ======
Cumulative Gap to
Total Earning Assets (8.9%) (9.4%) (9.4%) (3.2%)
Cumulative Gap to
Total Assets (8.2%) (8.6%) (8.6%) (2.9%)
</TABLE>
The preceding static gap report reflects a cumulative liability
sensitive position during the one year horizon. An inherent weakness of
this report is that it ignores the relative volatility any one category
may have in relation to other categories or market rates in general. For
instance, the rate paid on NOW accounts typically moves slower than the
nine month T-Bill. Management attempts to capture this relative
volatility by utilizing a simulation model with a "beta factor" adjustment
which estimates the volatility of rate sensitive assets and/or liabilities
in relation to other market rates.
Beta factors are an estimation of the long term, multiple interest
rate environment relation between an individual account and market rates
in general. For instance, NOW, savings and money market accounts, which
are repriceable within 30 days will have considerably lower beta factors
than variable rate loans and most investment categories. Taking this into
consideration, it is quite possible for a bank with a negative cumulative
gap to total asset ratio to have a positive "beta adjusted" gap risk
position.
As a result of applying the beta factors established by management to
the earning assets and interest bearing liabilities in the static gap
report via a simulation model, the negative cumulative gap to total assets
ratio at one year of 2.9% was reversed to a
-26-
positive 18.1% "beta adjusted" gap position.
Management feels that the "beta adjusted" gap risk technique more
accurately reflects the Corporation's gap position.
Capital
- -------
The Federal Reserve Board has guidelines for capital to total assets
(leverage) and capital standards for bank holding companies. The
Comptroller of the Currency also has similar guidelines for national
banks. These new guidelines require a minimum level of Tier I capital to
total assets of 3 percent. A banking organization operating at or near
these levels is expected to have well-diversified risk, excellent asset
quality, high liquidity, good earnings and in general be considered a
strong banking organization. Organizations not meeting these
characteristics are expected to operate well above these minimum capital
standards. Thus, for all but the most highly rated organizations, the
minimum Tier I leverage ratio is to be 3 percent plus minimum additional
cushions of at least 100 to 200 basis points. At the discretion of the
regulatory authorities, additional capital may be required.
At September 30, 1995, total capital, before adjustment for the
unrealized loss on Available-for-Sale Securities, to total assets was
8.69%.
Also, the Federal Reserve Board and Comptroller of the Currency
officially announced risk-adjusted capital adequacy guidelines that became
effective in stages at the end of 1990. Capital under these new
guidelines is defined as Tier I and Tier II. At Summit Bancshares, Inc.
the only components of Tier I and Tier II capital are shareholders' equity
and a portion of the allowance for loan losses, respectively.
The guidelines also stipulate that four categories of risk weights
(0, 20, 50 and 100 percent), primarily based on the relative credit risk
of the counterparty, be applied to the different types of balance sheet
assets. Risk weights for all off-balance sheet exposures are determined
by a two-step process whereby the face value of the off-balance sheet item
is converted to a "credit equivalent amount" and that amount is assigned
to the appropriate risk category.
The regulatory minimum ratio for total qualifying capital is 8.00% of
which 4.00% must be Tier I capital. At September 30, 1995, the
Corporation's Tier I capital represented 15.33% of risk weighted assets
and total qualifying capital (Tier I and Tier II) represented 16.58% of
risk weighted assets. Both ratios are well above current regulatory
guidelines.
-27-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Change in Securities
No applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the period
ending September 30, 1995.
-28-
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.
SUMMIT BANCSHARES, INC.
Registrant
Date: November 1, 1995 By: /s/ Philip E. Norwood
---------------------------------
Philip E. Norwood, President and
Chief Executive Officer
Date: November 1, 1995 By: /s/ Bob G. Scott
----------------------------------
Bob G. Scott, Senior Vice President
and Chief Financial Officer
-29-
<PAGE>
EXHIBIT INDEX
Exhibit Page No.
- ------- --------
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
The details of computation of earnings per common share are disclosed in
the Consolidated Statements of Income and Note 13 of the Notes to
Consolidated Financial Statements for the Periods of Three Months and Nine
Months Ended September 30, 1995 and 1994 (unaudited) and the Year Ended
December 31, 1994 (audited), contained in the Quarterly Report on Form 10-
Q of registrant for the quarter Ended September 30, 1995.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets of Summit Bancshares, Inc., as of September 30,
1995, and the related statements of income, changes in shareholders' equity and
cash flows for the period ending September 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 19,197
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 23,890
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,935
<INVESTMENTS-CARRYING> 112,493
<INVESTMENTS-MARKET> 112,540
<LOANS> 165,720
<ALLOWANCE> 2,513
<TOTAL-ASSETS> 330,407
<DEPOSITS> 293,034
<SHORT-TERM> 0
<LIABILITIES-OTHER> 8,488
<LONG-TERM> 0
<COMMON> 1,960
0
0
<OTHER-SE> 26,925
<TOTAL-LIABILITIES-AND-EQUITY> 330,407
<INTEREST-LOAN> 11,081
<INTEREST-INVEST> 4,777
<INTEREST-OTHER> 654
<INTEREST-TOTAL> 16,512
<INTEREST-DEPOSIT> 5,705
<INTEREST-EXPENSE> 5,924
<INTEREST-INCOME-NET> 10,588
<LOAN-LOSSES> 136
<SECURITIES-GAINS> (10)
<EXPENSE-OTHER> 7,289
<INCOME-PRETAX> 5,266
<INCOME-PRE-EXTRAORDINARY> 3,462
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,462
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 2.21
<YIELD-ACTUAL> 5.14
<LOANS-NON> 1,247
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 7,212
<ALLOWANCE-OPEN> 2,410
<CHARGE-OFFS> 209
<RECOVERIES> 176
<ALLOWANCE-CLOSE> 2,513
<ALLOWANCE-DOMESTIC> 2,513
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
