<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 1997
---------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period __________ to __________
Commission file number 0-26486
---------------------------
Auburn National Bancorporation, Inc.
(Exact Name of Small Business Issuers as Specified in Its Charter)
Delaware 63-0885779
(State of Other Jurisdiction of (I.R.S.Employer
Incorporation of Organization) Identification No.)
165 East Magnolia Avenue, Suite 203, Auburn, Alabama 36830
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(Address of Principal Executive Offices)
(334) 821-9200
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of July 31, 1997: 1,306,101 shares of common stock, $.01 par
-------------------------------------------
value per share
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Transitional Small Business Disclosure Format (check one):
Yes No X
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<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
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<S> <C>
Item 1 Financial Information
Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Income for
the Three Months and Six Months Ended
June 30, 1997 and 1996 4
Consolidated Statements of Changes in
Stockholders' Equity for June 30, 1997
and December 31, 1996 5
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1997
and 1996 6
Notes to Consolidated Financial Statements 7
Item 2 Managements Discussion and Analysis of Financial Condition
and Results of Operations 8
<CAPTION>
PART II. OTHER INFORMATION
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<S> <C>
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 6 Exhibits 17
</TABLE>
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<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
ASSETS 6/30/97 12/31/96
------------------------------------ -------------------- -------------------
(UNAUDITED)
<S> <C> <C>
Cash and due from banks 9,092,604 15,427,715
Federal funds sold and securities purchased under agreements to resell 6,170,000 11,745,000
-------------------- -------------------
Cash and cash equivalents 15,262,604 27,172,715
Interest bearing deposits with other banks 308,009 6,354
Investment securities held to maturity (fair value of $15,236,612 and
$19,091,036 at June 30, 1997 and December 31, 1996, respectively):
Taxable 14,871,691 17,581,189
Tax-exempt 1,524,202 1,469,847
-------------------- -------------------
Total Investment Securities Held to Maturity 16,395,893 19,051,036
Investment securities available for sale, net (unrealized holding gains of
$242,374 and unrealized holding losses of $215,031 at June 30, 1997 and
December 31, 1996, respectively)
Taxable 45,947,702 43,546,979
Tax-exempt 480,000 480,000
-------------------- -------------------
Total Investment Securities Available for Sale 46,427,702 44,026,979
Loans:
Loans, less unearned income of $64,996 at June 30, 1997
and $91,167 at December 31, 1996 173,869,080 161,718,475
Less allowance for loan losses (including valuation reserve
for impaired loans) (2,171,168) (2,093,682)
-------------------- -------------------
Loans, net 171,697,912 159,624,793
Premises and equipment, net 3,693,996 3,447,099
Rental property, net 1,854,636 1,899,354
Other assets 2,881,731 2,827,027
-------------------- -------------------
Total assets $258,522,483 $258,055,357
==================== ===================
LIABILITIES & STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
Noninterest bearing 30,835,802 28,406,946
Interest bearing 189,110,629 188,320,228
-------------------- -------------------
Total Deposits 219,946,431 216,727,174
Securities sold under agreements to repurchase 1,139,331 4,652,834
Other short term borrowings --- 1,203,130
Other borrowed funds 11,209,032 10,908,338
Accrued expenses and other liabilities 1,571,121 1,367,149
Employee Stock Ownership Plan debt 113,940 113,940
-------------------- -------------------
Total liabilities 233,979,855 234,972,565
Stockholders' equity:
Preferred stock of $.01 par value; authorized 200,000 shares;
issued shares-none --- ---
Common stock of $.01 par value; authorized 2,500,000 shares;
issued 1,319,045 at June 30, 1997 and December 31, 1996,
respectively 13,190 13,190
Surplus 3,704,070 3,691,099
Retained earnings 21,089,879 19,942,980
-------------------- -------------------
24,807,139 23,647,269
Less: Unrealized gain/(loss) on mutual funds and investment securities
available for sale, net of taxes 142,448 (146,528)
Treasury stock, 15,050 shares and 15,974 shares at
June 30, 1997 and December 31, 1996, respectively, at cost (293,019) (304,009)
Employee Stock Ownership Plan debt (113,940) (113,940)
-------------------- -------------------
Net stockholders' equity 24,542,628 23,082,792
Commitments --- ---
-------------------- -------------------
Total liabilities and stockholders' equity $258,522,483 $258,055,357
==================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARIES
Consolidated Statements of Earnings
For The Three Months and Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $3,778,258 $3,157,880 $7,361,602 $6,244,678
Interest and dividends on investment securities held to maturity:
Taxable 263,148 369,653 548,410 773,987
Tax-exempt 24,625 26,235 50,465 52,819
------------- ------------- ------------- -------------
Total interest and dividends on investment securities-HTM 287,773 395,888 598,875 826,806
Interest and dividends on investment securities available for sale:
Taxable 771,583 711,690 1,474,983 1,259,703
Tax-exempt 5,947 3,569 11,895 3,569
------------- ------------- ------------- -------------
Total interest and dividends on investment securities-AFS 777,530 715,259 1,486,878 1,263,272
Interest on federal funds sold 68,787 18,022 195,119 122,938
Interest on interest-bearing deposits with other banks 29,481 349 38,269 813
------------- ------------- ------------- -------------
Total interest income 4,941,829 4,287,398 9,680,743 8,458,507
Interest expense:
Interest on deposits 2,323,150 2,049,029 4,661,833 4,116,914
Interest on securities sold under agreements to repurchase 64,417 128,907 102,615 240,336
Interest on other borrowings 165,716 123,377 332,469 220,963
------------- ------------- ------------- -------------
Total interest expense 2,553,283 2,301,313 5,096,917 4,578,213
------------- ------------- ------------- -------------
Net interest income 2,388,546 1,986,085 4,583,826 3,880,294
Provision for loan losses 55,358 (1,300) 113,939 (4,697)
------------- ------------- ------------- -------------
Net interest income after provision for loan losses 2,333,188 1,987,385 4,469,887 3,884,991
Noninterest income:
Service charges on deposit accounts 215,547 204,512 421,173 389,090
Investment securities gains/(losses), net 0 5,639 (40,060) 9,639
Other 345,019 372,447 603,254 674,373
------------- ------------- ------------- -------------
Total noninterest income 560,566 582,598 984,367 1,073,102
Noninterest expense:
Salaries and benefits 777,113 703,784 1,570,293 1,438,789
Net occupancy expense 266,348 199,306 482,833 401,892
Other 604,412 605,630 1,130,125 1,116,026
------------- ------------- ------------- -------------
Total noninterest expense 1,647,873 1,508,720 3,183,251 2,956,707
Earnings before income tax expense 1,245,881 1,061,263 2,271,003 2,001,386
Income tax expense 440,468 348,540 815,790 647,991
------------- ------------- ------------- -------------
Net earnings $805,413 $712,723 $1,455,213 $1,353,395
============= ============= ============= =============
Net earnings per share $0.62 $0.55 $1.12 $1.04
============= ============= ============= =============
Weighted average shares outstanding 1,304,179 1,302,943 1,303,704 1,306,021
============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
AUBURN NATIONAL BANCORPORATION & SUBSIDIARIES
CHANGES IN STOKCHOLDERS EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 1996 AND JUNE 30, 1997
<TABLE>
<CAPTION>
Unrealized
Gain/(Loss) on
Mutual Funds
and Securities
Retained Available for
Common Stock Surplus Earnings Sale
------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ 13,190 3,685,488 17,749,910 90,775
Net earnings --- --- 2,753,354 ---
Cash dividends paid ($0.43 per share) --- --- (560,284) ---
Change in net unrealized gain (loss) on mutual funds and
investment securities available for sale of bank subsidiary --- --- --- (237,303)
Payment of Employee Stock Ownership Plan Debt --- --- --- ---
Sale of treasury stock (1,111 shares) 5,611
Purchase of treasury stock (11,265 shares) --- --- --- ---
-------------- ----------- -------------- ----------------
Balance at December 31, 1996 $ 13,190 3,691,099 19,942,980 (146,528)
Through June 30, 1997 (Unaudited):
Net earnings --- --- 1,455,213 ---
Cash dividends paid ($0.24 per share) --- --- (312,848) ---
Change in net unrealized gain (loss) on mutual funds and
investment securities available for sale of bank subsidiary --- --- 4,534 288,976
Sale of treasury stock (1,292 shares) --- 12,971 --- ---
Purchase of treasury stock (368 shares) --- --- --- ---
-------------- ----------- -------------- ----------------
Balance at June 30, 1997 (Unaudited) $ 13,190 3,704,070 21,089,879 142,448
============== =========== ============== ================
</TABLE>
<TABLE>
<CAPTION>
Employee Stock
Ownership Treasury
Plan debt Stock Total
---------------- ------------------- -------------
<S> <C> <C> <C>
Balance at December 31, 1995 (170,946) (99,755) 21,268,662
Net earnings --- --- 2,753,354
Cash dividends paid ($0.43 per share) --- --- (560,284)
Change in net unrealized gain (loss) on mutual funds and
investment securities available for sale of bank subsidiary --- --- (237,303)
Payment of Employee Stock Ownership Plan Debt 57,006 --- 57,006
Sale of treasury stock (1,111 shares) 16,887 22,498
Purchase of treasury stock (11,265 shares) --- (221,141) (221,141)
---------------- ------------------- -------------
Balance at December 31, 1996 (113,940) (304,009) 23,082,792
Through June 30, 1997 (Unaudited):
Net earnings --- --- 1,455,213
Cash dividends paid ($0.24 per share) --- --- (312,848)
Change in net unrealized gain (loss) on mutual funds and
investment securities available for sale of bank subsidiary --- --- 293,510
Sale of treasury stock (1,292 shares) --- 19,638 32,609
Purchase of treasury stock (368 shares) --- (8,648) (8,648)
---------------- ------------------- -------------
Balance at June 30, 1997 (Unaudited) (113,940) (293,019) 24,542,628
================ =================== =============
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARIES
Consolidated Statements of Cash Flow
For The Six Months Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $1,455,213 $1,353,395
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and Amortization 318,122 433,127
Accretion of discount & loan fees (44,153) (66,438)
Provision for loan losses and adjustment for impaired loans 113,939 (4,697)
Loss on sale of premises & equipment 6,126 186
Loss on sale of other real estate 3,687 ---
Increase in Interest receivable (242,044) (169,789)
Decrease/(Increase) in other assets (19,764) 129,630
Decrease in interest payable (37,859) (63,414)
Increase in other liabilities 255,433 60,809
-------------------- --------------------
Net cash provided by operating activities 1,808,700 1,672,809
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities/calls/paydowns of investment
securities held to maturity 2,872,557 4,407,167
Purchases of Investment securities held to maturity (244,400) (17,700)
Proceeds from maturities/calls/paydowns of investment
securities available for sale 5,293,087 7,826,657
Proceeds from sale of investment securities available for sale 10,870,613 2,535,079
Purchases of investment securities available for sale (18,076,850) (23,413,803)
Net increase in loans (12,190,745) (10,163,735)
Purchases of premises and equipment (454,179) (67,030)
Purchases of rental property (1,670) (1,310)
Net increase in interest-bearing deposits with
other banks (301,655) (4,194)
-------------------- --------------------
Net cash used in investing activities (12,233,242) (18,898,869)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Interest bearing deposits,
NOW accounts and savings accounts 7,050,285 5,955,509
Net decrease in certificates of deposit (3,831,028) (3,287,714)
Net decrease in securities sold under agreements
to repurchase (3,513,503) (908,051)
Increase in borrowings from FHLB 310,419 4,950,000
Net increase/(decrease) in other short-term borrowings (1,203,130) 944,941
Net decrease in other long-term debt (9,725) (10,255)
Proceeds from sale of Treasury Stock 19,638 ---
Purchase of treasury stock (8,648) (221,141)
Dividends paid (299,877) (273,607)
-------------------- --------------------
Net cash provided by financing activities (1,485,569) 7,149,682
-------------------- --------------------
Net decrease in cash and cash equivalents (11,910,111) (10,076,378)
Cash and cash equivalents at beginning of year 27,172,715 18,750,545
-------------------- --------------------
Cash and cash equivalents at end of period $15,262,604 $8,674,167
==================== ====================
Supplemental information on cash payments:
Interest paid $5,192,556 $4,641,627
==================== ====================
Income taxes paid $680,055 $606,592
==================== ====================
Supplemental information on noncash transactions:
Change in unrealized gain (loss) on investment securities
available for sale, net of change in deferred tax $288,976 ($370,610)
==================== ====================
</TABLE>
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<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
Note 1- General
The consolidated financial statements in this report have not been audited.
In the opinion of management, all adjustments necessary to present fairly the
financial position and the results of operations for the interim periods have
been made. All such adjustments are of a normal recurring nature. The results of
operations are not necessarily indicative of the results of operations which the
Company may achieve for the entire year. For further information, refer to the
consolidated financial statements and footnotes included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1996.
Note 2- Accounting Pronouncements
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (Statement 128). Statement 128
supersedes Accounting Principles Board Opinion No. 15 "Earnings Per Share" and
specifies the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common stock or
potential common stock. Statement 128 replaces the presentation of primary EPS
with a presentation of basic EPS and fully diluted EPS with diluted EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Statement 128 is
effective for financial statements for both interim and annual periods ending
after December 15, 1997. The expected impact on the Company's financial
statements of the provisions of Statement 128 is not expected to be material.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129, "Disclosures of Information about Capital Structure"
(Statement 129). Statement 129 is effective for financial statements for periods
ending after December 15, 1997. The Company does not expect that Statement 129
will require significant revision of prior disclosures since the statement lists
required disclosures that have been included in a number of previously existing
separate statements or opinions.
Note 3- Derivatives Disclosure
In January 1997, the Securities and Exchange Commission approved rule
amendments (the Release) regarding disclosures about derivative financial
instruments, other financial instruments and derivative commodity instruments.
The Release requires inclusion in the footnotes to the financial statements of
extensive detail about the accounting for derivative financial instruments and
derivative commodity instruments. The accounting policy requirements become
effective for all registrants for filings that include financial statements for
periods ending after June 15, 1997.
As part of its overall interest rate risk management activities, the
Company utilizes off-balance sheet derivatives to modify the repricing
characteristics of on-balance sheet assets and liabilities. The primary
instruments utilized by the Company are interest rate swaps and interest rate
floor and cap arrangements. The fair value of these off-balance sheet derivative
financial instruments are based on dealer quotes and third party financial
models.
Interest rate swaps, floors and caps are accounted for on an accrual basis,
and the net interest differential, including premiums paid, if any, is
recognized as an adjustment to interest income or expense of the related
designated asset or liability. The impact of such derivatives has been
determined by Management to be immaterial to its financial statements.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis is designed to provide a better
understanding of various factors related to the Company's results of operations
and financial condition. This discussion is intended to supplement and
highlight information contained in the accompanying unaudited consolidated
financial statements for the six month periods ended June 30, 1997 and 1996.
Summary
Net income of $805,000 for the quarter ended June 30, 1997 represented an
increase of $92,000 (12.9%) from the Company's net income of $713,000 for the
same period of 1996. Earnings per average Share of Common Stock outstanding
increased $0.07 (12.9%) to $0.62 during the second quarter of 1997 from $0.55
for the second quarter of 1996 due primarily to the increase in net income. Net
income increased $102,000 (7.5%) to $1,455,000 for the six month period ended
June 30, 1997 compared to $1,353,000 for the same period of 1996. During the
three month and six month periods ended June 30, 1997 compared to the same
periods of 1996, the Company experienced an increase in net interest income,
while noninterest income decreased and noninterest expense increased. The net
yield on total interest earning assets was 3.89% for the six months ended June
30, 1997 compared to 3.74% for the six months ended June 30, 1996. While the
Prime interest rate was at a slightly higher level during the first six months
of 1997, compared to the first six months of 1996, this increase in the net
yield on interest earning assets is due primarily to an increase in total
loans, net of unearned income of 10 basis points and the repricing of the one
and two year special offering certificates of deposit to current market rates.
See the "Consolidated Average Balances, Interest Income/Expense and
Yields/Rates" table.
Total assets of $258,522,000 at June 30, 1997 reflected an increase of
$467,000 (0.2%) over total assets of $258,055,000, at December 31, 1996. This
increase resulted primarily from increases in total loans, net of unearned
income, offset by decreases in cash and due from banks and federal funds sold
and securities purchased under agreement to resell.
Financial Condition
Investment Securities
Investment securities held to maturity were $16,396,000 and $19,051,000 at
June 30, 1997 and December 31, 1996, respectively. This decline of $2,655,000
(13.9%) resulted entirely from scheduled paydowns and calls of principal. The
increase of $2,401,000 (5.4%) in investment securities available for sale to
$46,428,000 at June 30, 1997 from $44,027,000 at December 31, 1996, reflects the
reinvestment from investment securities held to maturity. The shift into
investment securities available for sale is a deliberate move by management to
maintain flexibility in its liquidity planning.
Federal funds sold decreased $5,575,000 (47.5%) to $6,170,000 at June 30,
1997 from $11,745,000 at December 31, 1996. This decrease is a result of the
expected outflow of public funds. These fluctuations reflect normal activity in
the Bank's funds management efforts.
Loans
Total loans, net of unearned income, of $171,698,000 at June 30, 1997
reflected an increase of $9,980,000 (6.2%) compared to the total loans of
$161,718,000, net of unearned income, at December 31, 1996. This growth
continues to occur primarily in the commercial and consumer real estate mortgage
portfolios due to strong customer demand and a stable local real estate market.
Commercial and consumer real estate mortgage loans represented approximately
29.2% and 36.6% of the Bank's total loan portfolio at June 30, 1997,
respectively. In addition, the Bank experienced some growth in its commercial
installment loans during the first six months of 1997. The net
yield on loans was 8.86% for the six months ended June 30, 1997 compared to
8.76% for the six months ended June 30, 1996. See the "CONSOLIDATED AVERAGE
BALANCES, INTEREST INCOME/EXPENSE AND YIELDS/RATES" table.
-8-
<PAGE>
Allowance for Loan Losses and Risk Elements
The allowance for loan losses represents management's assessment of the
risk associated with extending credit and its evaluation of the quality of the
loan portfolio. Management analyzes the loan portfolio to determine the
adequacy of the allowance and the appropriate provision required to maintain a
level considered adequate to absorb anticipated loan losses. In assessing the
adequacy of the allowance, management reviews the size, quality and risk of
loans in the portfolio. Management also considers such factors as the Bank's
loan loss experience, the amount of past due and nonperforming loans, specific
known risk, the status and amount of nonperforming assets, underlying collateral
values securing loans, current and anticipated economic conditions and other
factors which affect the allowance for potential credit losses.
The allowance for loan losses, including the valuation reserve for impaired
loans, was $2,171,000 at June 30, 1997. Management believes that this level of
reserves (1.26% of total outstanding loans, net of unearned income) is adequate
to absorb known risks in the portfolio. No assurance can be given, however,
that adverse economic circumstances will not result in increased losses in the
Bank's loan portfolio.
During the first six months of 1997, the Bank made $114,000 in provisions
to the allowance for loan losses based on management's assessment of the credit
quality of the loan portfolio, coupled with the relatively low level of net
charge-offs. For the six months ended June 30, 1997, the Bank had charge-offs
of $73,000 and recoveries of $36,000.
Potential problem loans consist of those loans where management has serious
doubts as to the borrower's ability to comply with the present loan repayment
terms. At June 30, 1997, 62 loans totaling $1,328,000, or 0.77% of total loans
outstanding, net of unearned income, were considered potential problem loans
compared to 69 loans totaling 2,269,000, or 1.4% of total loans outstanding, net
of unearned income, at December 31, 1996.
Nonperforming assets, comprised of nonaccrual loans, renegotiated loans and
other real estate owned, were $111,000 at June 30, 1997 compared to $107,000 at
December 31, 1996. This change resulted primarily from an increase of $49,000
in nonaccrual loans.
Deposits
Total deposits increased $3,219,000 (1.5%) to $219,946,000 at June 30,
1997, as compared to $216,727,000 at December 31, 1996. Noninterest-bearing
deposits increased $2,429,000 (8.5%) during the first six months of 1997 while
total interest-bearing deposits increased $791,000 (0.4%) to $189,111,000 at
June 30, 1997 from $188,320,000 at December 31, 1996. The growth in
noninterest-bearing deposits is due primarily to an increase in regular demand
deposit accounts. The average rate paid on interest-bearing deposits was 5.06%
for the six months ended June 30 31, 1997 compared to 5.22% for the same period
of 1996. During the first six months of 1997, the Bank experienced an increase
of approximately $12,396,000 (6.7%) in its Money Market Deposit accounts and an
increase of approximately $9,891,000 (5.9%) in its certificate of deposits and
other time deposits of $100,000 or more. In addition, certificates of deposits
under $100,000 decreased approximately $2,866,000 (1.7%) during the first six
months of 1997. The Company considers the shifts in the deposit mix and the
deposit runoff to be within the normal course of business and in line with the
management of the Bank's overall cost of funds. See the "CONSOLIDATED AVERAGE
BALANCES, INTEREST INCOME/EXPENSE AND YIELDS/RATES" table.
Capital Resources and Liquidity
The Company's consolidated stockholders' equity was $24,543,000 at June 30,
1997, compared to $23,083,000 at December 31, 1996. This represents an increase
of $1,460,000 (6.3%) during the first six months of 1997. Net earnings for the
first six months of 1997 continues to exceed net earnings for the same period of
1996. However, the Company experienced a change to an unrealized gain, net of
taxes, at June 30, 1997 from an unrealized loss, net of taxes, at December 31,
1996 on its investment securities available for sale. In addition, during the
six month period ended June 30, 1997, the Company purchased 368 shares of
Treasury Stock and reissued 1,292 shares of Treasury Stock in conjunction with
the Dividend Reinvestment Plan. During the first six months of 1997, cash
dividends of $313,000, or $0.24 per Share, were declared on Common Stock.
-9-
<PAGE>
The Company's Leverage capital ratio was 9.54%, Tier I capital ratio was
14.33% and Total Capital ratio was 15.58% at June 30, 1997. These ratios exceed
the minimum regulatory capital percentages of 3.0% to 5.0% leverage capital,
4.0% Tier I capital and 8.0% Total Capital. Based on current regulatory
standards, the Company believes it is a "well capitalized" bank.
The primary source of liquidity during the first six months of 1997
continues to be through maturities, calls and paydowns of investment
securities, investment securities sold under agreements to repurchase, coupled
with an additional advance from the Federal Home Loan Bank of Atlanta ("FHLB-
Atlanta"). The Company used these funds primarily to purchase investment
securities available for sale and to fund new loan growth. Under the advance
program with FHLB-Atlanta, the Bank had outstanding advances totaling
approximately $10,926,000, leaving credit available, net of advances drawn down,
of approximately $14,074,000 at June 30, 1997.
Net cash provided by operating activities of $1,809,000 for the six months
ended June 30, 1997, consisted primarily of net earnings. Net cash used in
investing activities of $12,233,000 funded investment securities available for
sale purchases and loan growth of $18,077,000 and $12,191,000, respectively,
offset by proceeds from investment sales, maturities, calls and paydowns of
$10,871,000. The $1,486,000 in net cash used by financing activities resulted
from decreases of $3,514,000 in securities sold under agreements to repurchase
and $1,203,000 in decreases in other short-term borrowings.
Interest Rate Sensitivity Management
At June 30, 1997, interest sensitive assets that repriced or matured within
the next 12 months were $126,157,000, compared to interest sensitive liabilities
that reprice or mature within the same time frame totaling $161,779,000. The
cumulative GAP position of a negative $35,622,000, resulted in a GAP ratio of
78.0%. This compares to a cumulative GAP position at December 31, 1996, of a
negative $19,636,000 and a GAP ratio of 87.3%. A negative GAP position indicates
that the Company has more interest-bearing liabilities than interest-earning
assets that reprice within the GAP period, and that net interest income may be
adversely affected in a rising rate environment as rates earned on interest-
earning assets rise more slowly than rates paid on interest-bearing liabilities.
The Company entered into a $10,000,000 notional value interest rate swap during
the second quarter of 1997 to reduce the cost of funds on its 2 year 6.25%
certificates of deposit and to better match funding of variable rate assets.
Based on the Asset and Liability Committee's ("ALCO's") alternative interest
rate scenarios used by the Company in modeling for asset/liability planning
purposes and the GAP position at June 30, 1997, the Company's asset/liability
model indicated that the changes in the Company's net interest income would be
less than 5.0% over 12 months.
Results of Operations
Net Income
Net income increased $92,000 (12.9%) to $805,000 for the three month period
ending June 30, 1997 compared to $713,000 for the same period of 1996. Earnings
per average Share of Common Stock outstanding was $0.62 and $0.55 for the
second quarter of 1997 and 1996, respectively, an increase of 12.7%. Net income
increased $102,000 (7.5%) to $1,455,000 for the six month period ended June 30,
1997, compared to $1,353,000 for the same period of 1996. The increases for the
three and six month periods ending June 30, 1997, compared to the same period of
1996, resulted primarily from increases in net interest income and increases in
service charges on deposit accounts, offset by losses on investment securities
and increases in salaries and benefits, net occupancy expense and income tax
expense.
Net Interest Income
Net interest income was $2,389,000 for the second quarter of 1997. The
increase of $403,000 (20.3%) over $1,986,000 for the same period of 1996,
resulted as interest income increased and interest expense increased only
moderately. Net interest income increased $704,000 (18.1%) to $4,584,000 for the
six months ended June 30, 1997, compared to $3,880,000 for June 30, 1996. The
net taxable equivalent yield on the Company's interest earning assets increased
eight basis points during the first six months of 1997, compared to the same
period of 1996. Also, the net yield on earning assets increased 20 basis points
from year-end 1996. The prime rate for the first six months of 1997 was
slightly higher than its level for the first six months of 1996. During the
second quarter of 1997, the Company's GAP position became more asset sensitive
to changes in interest rates as compared to December 31, 1996. The
-10-
<PAGE>
Company continues to regularly review and manage its asset/liability position in
an effort to reduce the negative effects of changing rates. See "Financial
Condition - Interest Rate Sensitivity Management" and the "CONSOLIDATED AVERAGE
BALANCES, INTEREST INCOME/EXPENSE AND YIELDS/RATES" table.
Interest Income
Interest income is a function of the volume of interest earning assets and
their related yields. Interest income was $4,942,000 and $4,287,000 for the
three months ended June 30, 1997 and 1996, respectively. This represents an
increase of $655,000 (15.3%) for the second quarter of 1997. For the six months
ended June 30, 1997, interest income was $9,681,000, an increase of $1,222,000
(14.4%) compared to $8,459,000 for the same period of 1996. This change for the
first six months of 1997 resulted as the average volume of interest earning
assets outstanding increased $28,315,000 (13.4%) over the same period of 1996
while the fully taxable equivalent yields on these assets increased eight basis
points. See the "CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND
YIELDS/RATES" table.
Loans are the main component of the Bank's earning assets. Interest and
fees on loans were $3,778,000 and $3,158,000 for the second quarter of 1997 and
1996, respectively. This reflects an increase of $620,000 (19.6%) during the
three months ended June 30, 1997 over the same period of 1996. For the six month
period ended June 30, 1997, interest and fees on loans increased $1,117,000
(17.9%) to $7,362,000 from $6,245,000 for the same period of 1996. The average
volume of loans increased $23,900,000 (16.6%) during the first six months of
1997 compared to the same period of 1996, while the Company's yield on loans
increased 10 basis points comparing these same periods.
Interest income on investment securities held to maturity decreased
$108,000 (27.3%) to $288,000 for the three month period ended June 30, 1997,
compared to $396,000 for the same period of 1996. Interest income on investment
securities held to maturity decreased $228,000 (27.6%) to $599,000 from $827,000
for the same period of 1996. These declines were attributed almost entirely to
the 26.0% decline in the average volume outstanding. The fully taxable
equivalent yield on these average balances declined six basis points. For the
three month period ended June 30, 1997, interest income on investment securities
available for sale increased $63,000 (8.8%) to $778,000 from 715,000 for the
same period of 1996. For the six months ended June 30, 1997, interest income on
investment securities available for sale increased $224,000 (17.7%) to
$1,487,000 from $1,263,000 for the same period of 1996. The Company's average
volume of investment securities available for sale was $6,361,000 (16.5%)
greater for the first six months of 1997, compared to the same period of 1996,
while the fully taxable equivalent yield on these average balances increased 10
basis points. Management continues to reinvest runoff from the investment
securities held to maturity portfolio and to invest new funds into investment
securities available for sale to maintain flexibility in its liquidity planning.
See the "CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND
YIELDS/RATES" table.
Interest Expense
Total interest expense increased $252,000 (11.0%) to $2,553,000 for the
second quarter of 1997 compared to $2,301,000 for the same period of 1996. Total
interest expense increased $519,000 (11.3%) to $5,097,000 from $4,578,000 for
the six months ended June 30, 1997 and 1996, respectively. These changes
resulted as the Company's average interest-bearing liabilities outstanding
increased 14.7% and the rates paid on these liabilities decreased 15 basis
points during the first six months of 1997 compared to the same period of 1996.
See the "CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND
YIELDS/RATES" table.
Interest on deposits, the primary component of total interest expense,
increased $274,000 (13.4%) to $2,323,000 for the second quarter of 1997 compared
to $2,049,000 for the same period of 1996. Interest on deposits was $4,662,000
and $4,117,000 for the six months ended June 30, 1997 and 1996, respectively.
This represents an increase of $545,000 or 13.2%. While the Bank has allowed the
one and two year, special rate certificates of deposit to adjust downward to its
current market interest rates, the Company is still experiencing some of the
effects of offering above market rates on its two year certificates of deposit
during the first quarter of 1995. This campaign, to develop a larger local core
deposit base and market share, is a factor on the Bank's overall increased cost
of funds. Other factors include a shift into higher yielding money market
deposit accounts, as well as increases in time deposits open accounts ("TDOA")
accounts.
-11-
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARIES
Consolidated Average Balances, Interest Income/Expense and Yields/Rates
Taxable Equivalent Basis
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1997
---------------------------------
Average Yield/
ASSETS Balance Interest Rate
===================================== ======= ======== ====
<S> <C> <C> <C>
Interest Earning Assets:
Loans, net of unearned income (1) $ 167,543 7,362 8.86%
Investment securities held to maturity:
Taxable 16,502 548 6.70%
Tax-exempt (2) 1,558 77 10.03%
---------------------
Total investment securities held to maturity 18,060 625 6.98%
Investment securities available for sale:
Taxable 44,477 1,475 6.69%
Tax-exempt (2) 501 18 7.32%
---------------------
Total investment securities available for sale 44,978 1,493 6.69%
Federal funds sold 7,030 195 5.59%
Interest bearing deposits with other banks 1,592 38 4.81%
---------------------
Total interest earning assets 239,203 9,713 8.19%
Allowance for loan losses (2,124)
Cash and due from banks 7,635
Premises and equipment 3,559
Rental property, net 1,880
Other assets 3,196
----------
Total Assets $ 253,349
==========
<CAPTION>
LIABILITIES & SHAREHOLDERS' EQUITY
=====================================
<S> <C> <C> <C>
Interest bearing liabilities:
Deposits:
Demand $ 19,826 201 2.04%
Savings and Money Market 54,615 1,191 4.40%
Certificates of deposits less than $100,000 72,273 2,252 6.28%
Certificates of deposit and other time deposits of $100,000 or more 38,863 1,017 5.28%
---------------------
Total interest bearing deposits 185,577 4,661 5.06%
Federal funds purchased and securities sold under agreements to
repurchase 3,948 103 5.26%
Other short term borrowings 190 9 9.55%
Other borrowed funds 11,145 320 5.79%
Employee stock ownership plan debt 114 4 7.08%
---------------------
Total interest bearing liabilities 200,974 5,097 5.11%
Noninterest bearing demand deposits 26,936
Accrued expenses and other liabilities 1,872
Shareholder's equity 23,567
----------
Total Liabilities and shareholder's equity $ 253,349
==========
Net Interest Income $4,616
==========
Net Yield on Total Interest Earning Assets 3.89%
=========
<CAPTION>
Six Months Ended June 30,
---------------------------------
1996
---------------------------------
Average Yield/
ASSETS Balance Interest Rate
===================================== ======= ======== ====
<S> <C> <C> <C>
Interest Earning Assets:
Loans, net of unearned income (1) 143,643 6,258 8.76%
Investment securities held to maturity:
Taxable 22,845 774 6.81%
Tax-exempt (2) 1,560 80 10.31%
---------------------
Total investment securities held to maturity 24,405 854 7.04%
Investment securities available for sale:
Taxable 38,475 1,260 6.59%
Tax-exempt (2) 142 5 7.08%
---------------------
Total investment securities available for sale 38,617 1,265 6.59%
Federal funds sold 4,207 123 5.88%
Interest bearing deposits with other banks 16 1 12.57%
---------------------
Total interest earning assets 210,888 8,501 8.11%
Allowance for loan losses (2,040)
Cash and due from banks 6,887
Premises and equipment 3,572
Rental property, net 1,991
Other assets 2,725
---------
Total Assets 224,023
=========
<CAPTION>
LIABILITIES & SHAREHOLDERS' EQUITY
=====================================
<S> <C> <C> <C>
Interest bearing liabilities:
Deposits:
Demand 20,652 213 2.07%
Savings and Money Market 37,729 709 3.78%
Certificates of deposits less than $100,000 75,870 2,403 6.37%
Certificates of deposit and other time deposits of $100,000 or more 24,337 792 6.54%
---------------------
Total interest bearing deposits 158,588 4,117 5.22%
Federal funds purchased and securities sold under agreements to
repurchase 8,851 240 5.45%
Other short term borrowings 519 14 5.42%
Other borrowed funds 7,044 201 5.74%
Employee stock ownership plan debt 171 6 7.06%
---------------------
Total interest bearing liabilities 175,173 4,578 5.26%
Noninterest bearing demand deposits 25,441
Accrued expenses and other liabilities 1,896
Shareholder's equity 21,513
---------
Total Liabilities and shareholder's equity 224,023
=========
Net Interest Income 3,923
========
Net Yield on Total Interest Earning Assets 3.74%
===========
</TABLE>
- -------------------
(1) Loans on nonaccrual status have been included in the computation of average
balances.
(2) Yields on tax-exempt securities have been computed on a tax-equivalent
basis using an income tax rate of 34%.
-12-
<PAGE>
Interest expense on borrowed funds, including both short term borrowing and
other borrowed funds, was $230,000 and $252,000 for the second quarter of 1997
and 1996, respectively. This represents a decrease of $22,000 or 8.7%. For the
six months ended June 30, 1997, interest expense on borrowed funds decreased
$26,000 (5.6%) to $435,000 from $461,000 for the same period of 1996. These
decreases for both the three month and six month periods ended June 30, 1997 are
due primarily to decreases in expense on investment securities sold under
agreements to repurchase, offset by increases in interest on other borrowings.
Provision for Loan Losses
The provision for loan losses is based on management's assessment of the
risk in the loan portfolio, the growth of the loan portfolio and the amount of
recent loan losses. The provision for loan losses was $114,000 for the six
months ended June 30, 1997 compared to a credit of $5,000 for the six months
ended June 30, 1996. The increase in the provision for loan losses during the
first six months of 1997, is entirely due to the significant increases in the
loan portfolio. See "---ALLOWANCE FOR LOAN LOSSES AND RISK ELEMENTS."
Noninterest Income
Noninterest income decreased $22,000 (3.8%) to $561,000 for the second
quarter of 1997 from $583,000 for the same period of 1996. Noninterest income
was $984,000 and $1,073,000 for the six months ended June 30, 1997 and 1996,
respectively. This represents a decrease of $89,000 or 8.3%. These decreases are
primarily the result of losses on investment securities of $40,000 and decreases
in noninterest loan income and fees, offset by increases in service charges on
deposit accounts and rental income.
Service charges on deposits accounts increased $11,000 (5.4%) to $216,000
for the second quarter of 1997 from $205,000 for the second quarter of 1996.
Service charges on deposit accounts was $421,000 and $389,000 for the six months
ended June 30, 1997 and 1996, respectively. This represents an increase of
$32,000 or 8.2%. These increases are due primarily to an increase in income on
nonsufficient funds and overdraft charges coupled with a slight general increase
in regular monthly services charges on deposit accounts.
Other noninterest income decreased $27,000 (7.3%) to $345,000 for the
second quarter of 1997 from $372,000 for the same period of 1996. Other
noninterest income was $603,000 and $674,000 for the six months ended June 30,
1997 and 1996, respectively. This represents a decrease of $71,000 or 10.5%.
These decreases for both the three month and six month periods ended June 30,
1997 resulted primarily from reductions in noninterest loan income and fees.
Noninterest Expense
Total noninterest expense was $1,648,000 and $1,509,000 for the second
quarter of 1997 and 1996, respectively, representing an increase of $139,000 or
9.2%. For the six months ended June 30, 1997, total noninterest expense
increased $226,000 (7.6%) to $3,183,000 from $2,957,000 for the same period of
1996. These increases were due primarily to increases in salaries and benefits
expense, marketing expenses, FDIC deposit insurance premium expense and
professional fees expense.
Salaries and benefits expense was $777,000 and $704,000 for the three
months ended June 30, 1997 and 1996, respectively. This represents an increase
of $73,000 (10.4%) in the second quarter of 1997 compared to the second quarter
of 1996. During the six month period ended June 30, 1997, salaries and benefits
expense increased $131,000 (9.1%0 to $1,570,000 from $1,439,000 for the same
period of 1996. These increases are due to merit and cost-of-living raises and
the cost of benefits associated with such increases.
Net occupancy expense was $266,000 for the second quarter of 1997, which
represented an increase of $67,000 (33.7%) over the level of $199,000 for the
same period of 1996. For the six month period ended June 30, 1997, net occupancy
expense increased $81,000 (20.0%) to $483,000 from $402,000 for the same period
of 1996. These increases continue to result from increases in depreciation
expense associated with the renovation of the Bank's main office, Kroger branch,
and addition of the Winn-Dixie branch and service contracts on furniture and
equipment due to the purchase of computer equipment, coupled with a slight
decrease during the first six months of 1997 in general furniture and equipment
repair and maintenance expense.
-13-
<PAGE>
For the second quarter of 1997, other noninterest expense decreased $2,000
(0.3%) to $604,000 from $606,000 for the second quarter of 1996. Other
noninterest expense was $1,130,000 and $1,116,000 for the six months ended June
30, 1997 and 1996, respectively. This represents an increase of $14,000 or 1.3%.
These increases were due primarily to increases in the Bank's FDIC deposit
insurance premium expense of $14,000, Professional fees expense of $18,000 and
marketing expense of $29,000. The increase in the FDIC deposit insurance premium
expense was the result of the FDIC Board's action to increase the Bank Insurance
Fund ("BIF") premiums and to assess annual FICO charges of 1.30 basis points on
average deposits.
Income taxes
Income tax expense was $440,000 and $349,000 for the second quarter of 1997
and 1996, respectively. This represents an increase 91,000 or 26.0%. For the six
months ended June 30, 1997, income tax expense increased $168,000 (25.9%) to
$816,000 from $648,000 for the six months ended June 30, 1996. These levels
represent an effective tax rate on pre-tax earnings of 35.9% for the six months
ended June 30, 1997 and 32.4% for the same period of 1996.
-14-
<PAGE>
SIGNATURES
In accordance with 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.
AUBURN NATIONAL BANCORPORATION, INC.
(Registrant)
Date: August 11, 1997 By: /s/ E. L. Spencer, Jr.
--------------------------------- ------------------------------
E. L. Spencer, Jr.
President, CEO and
Director
Date: August 11, 1997 By: /s/ Linda D. Fucci
--------------------------------- ------------------------------
Linda D. Fucci
Chief Financial Officer and
Principal Accounting Officer
-15-
<PAGE>
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held at the
AuburnBank Center in Auburn, Alabama, on Tuesday May 13, 1997, at 3:00 in the
afternoon. This meeting was held for the purpose of considering the election of
five directors to the Board of Directors to serve one year terms expiring at the
Company's 1998 Annual Meeting of Shareholders and until their successors have
been elected and quantified.
As to the election of five directors, Messrs E.L. Spencer, Jr., Emil F.
Wright, Jr., J.E. Evans and Ms. Winifred H. Boyd and Ms. Anne M. May were all
elected to the Board of Directors with 1,100,744 votes cast FOR all nominees,
except for Ms. May who received 1,091,114 votes FOR her election and 9,630 votes
cast to WITHHOLD AUTHORITY and Mr. Evans who received 1,090,609 votes FOR his
election and 10,134 votes cast to WITHHOLD AUTHORITY.
-16-
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
<S> <C> <C>
4.A Certificate of Incorporation of Auburn National
Bancorporation, Inc. * ---
4.B Bylaws of Auburn National Bancorporation, Inc. * ---
10.A Auburn National Bancorporation, Inc. 1994 long
Long-term Incentive Plan. * ---
10.B Lease and Equipment Purchase Agreement, Dated
September 15, 1987. * ---
11 Statement Regarding Computation of Per Share
Earnings 18
27 Financial Data Schedule 19
</TABLE>
- -------------------------
* Incorporated by reference from Registrant's Registration
Statement on Form SB-2.
-17-
<PAGE>
AUBURN NATIONAL BANCORPORATION INC. AND SUBSIDIARIES
Exhibit 11 - Statement Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Primary:
Average shares outstanding 1,303,704 1,306,021
Dilutive Stock Options-based on the
treasury stock method using the
average market price for the period --- ---
---------- ----------
Total 1,303,704 1,306,021
========== ==========
Net Income $1,455,213 $1,353,395
=========== ===========
Earning per share amounts:
Disclosed (1) $ 1.12 $ 1.04
Computed $ 1.12 $ 1.04
Fully-Diluted:
Average shares outstanding 1,303,704 1,306,021
Dilutive Stock Options-based on the
treasury stock method using the
average market price for the period --- ---
---------- ----------
Total 1,303,704 1,306,021
========== ==========
Net Income $1,455,213 $1,353,395
=========== ===========
Earning per share amounts:
Disclosed (1) $ 1.12 $ 1.04
Computed $ 1.12 $ 1.04
</TABLE>
(1) The Company reserved 75,000 shares of Common Stock in May of 1994 for
issuance under stock option plans. The exercise price of such options is to
be determined at the time an option is granted. Since no options have been
granted as of the date of this filing and, therefore, no exercise price
established, no incremental shares have been included in the computation of
earnings per share in the statement of earnings under the provisions of
Accounting Principles Board Opinion Number 15. That opinion provides that
any reduction of less than 3% need not be considered as dilutive.
-18-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB
FOR JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,093
<INT-BEARING-DEPOSITS> 308
<FED-FUNDS-SOLD> 6,170
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 46,428
<INVESTMENTS-CARRYING> 16,396
<INVESTMENTS-MARKET> 15,237
<LOANS> 171,698
<ALLOWANCE> 2,171
<TOTAL-ASSETS> 258,522
<DEPOSITS> 219,946
<SHORT-TERM> 1,139
<LIABILITIES-OTHER> 1,571
<LONG-TERM> 11,209
0
0
<COMMON> 13
<OTHER-SE> 24,530
<TOTAL-LIABILITIES-AND-EQUITY> 258,522
<INTEREST-LOAN> 7,362
<INTEREST-INVEST> 2,086
<INTEREST-OTHER> 233
<INTEREST-TOTAL> 9,681
<INTEREST-DEPOSIT> 4,662
<INTEREST-EXPENSE> 5,097
<INTEREST-INCOME-NET> 4,584
<LOAN-LOSSES> 114
<SECURITIES-GAINS> (40)
<EXPENSE-OTHER> 3,183
<INCOME-PRETAX> 2,271
<INCOME-PRE-EXTRAORDINARY> 2,271
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,455
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
<YIELD-ACTUAL> 3.89
<LOANS-NON> 111
<LOANS-PAST> 115
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,328
<ALLOWANCE-OPEN> 2,094
<CHARGE-OFFS> 73
<RECOVERIES> 36
<ALLOWANCE-CLOSE> 2,171
<ALLOWANCE-DOMESTIC> 2,171
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
