<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, 1998
---------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period __________ to __________
Commission file number 0-26486
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Auburn National Bancorporation, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 63-0885779
(State or Other Jurisdiction of (I.R.S.Employer
Incorporation or 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
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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 30, 1998: 3,924,573 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 SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION PAGE
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Item 1 Financial Information
Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997 3
Consolidated Statements of Earnings for
the Three Months and Six Months Ended
June 30, 1998 and 1997 4
Consolidated Statements of Changes in
Stockholders' Equity for the Six Months
Ended June 30, 1998 and the Year Ended
December 31, 1997 5
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998
and 1997 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
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Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Events 16
Item 6 Exhibits 17
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARY
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 6/30/98 12/31/97
--------------------------------------- ------------- -------------
<S> <C> <C>
Cash and due from banks $ 9,721,569 $ 12,268,412
Federal funds sold and securities purchased under agreements to resell 5,490,000 2,615,000
------------- -------------
Cash and cash equivalents 15,211,569 14,883,412
Interest bearing deposits with other banks 2,206,685 1,722,982
Investment securities held to maturity (fair value of $12,730,356 and
$14,401,723 at June 30, 1998 and December 31, 1997,
respectively):
Taxable 11,370,014 12,885,396
Tax-exempt 1,204,639 1,478,866
------------- -------------
Total Investment Securities Held to Maturity 12,574,653 14,364,262
Investment securities available for sale
Taxable 51,351,138 39,965,856
Tax-exempt 480,000 480,000
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Total Investment Securities Available for Sale 51,831,138 40,445,856
Loans:
Loans, less unearned income of $24,582 at June 30, 1998
and $36,706 at December 31, 1997 203,488,224 185,493,178
Less allowance for loan losses (2,580,777) (2,125,104)
------------- -------------
Loans, net 200,907,447 183,368,074
Premises and equipment, net 3,410,913 3,520,542
Rental property, net 1,806,284 1,807,359
Other assets 5,048,143 4,621,187
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Total assets $ 292,996,832 $ 264,733,674
============= =============
<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
-------------------------------------------------
Deposits:
<S> <C> <C>
Noninterest bearing $ 33,156,818 $ 32,638,352
Interest bearing 195,687,291 191,339,635
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Total Deposits 228,844,109 223,977,987
Securities sold under agreements to repurchase 4,059,301 1,273,507
Other borrowed funds 31,070,596 11,138,850
Accrued expenses and other liabilities 1,792,464 2,238,989
Employee Stock Ownership Plan debt 56,934 56,934
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Total liabilities 265,823,404 238,686,267
Stockholders' equity:
Preferred stock of $.01 par value; authorized 200,000 shares;
issued shares-none -- --
Common stock of $.01 par value; authorized 8,500,000 shares;
issued 3,957,135 at June 30, 1998 and December 31, 1997,
respectively 39,571 39,571
Surplus 3,707,472 3,707,472
Retained earnings 23,536,992 22,396,461
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27,284,035 26,143,504
Accumulated other comprehensive income 160,926 175,436
Treasury stock, 32,562 shares at June 30, 1998 and
December 31, 1997, at cost (214,599) (214,599)
Employee Stock Ownership Plan debt (56,934) (56,934)
------------- -------------
Total stockholders' equity 27,173,428 26,047,407
Total liabilities and stockholders' equity $ 292,996,832 $ 264,733,674
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARY
Consolidated Statements of Earnings
For The Three Months and Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------
1998 1997
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<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,349,755 $ 3,778,258
Interest and dividends on investment securities held to maturity:
Taxable 143,368 283,237
Tax-exempt 18,694 24,625
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Total interest and dividends on investment securities-HTM 162,062 307,862
Interest and dividends on investment securities available for sale:
Taxable 761,904 771,583
Tax-exempt 5,947 5,947
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Total interest and dividends on investment securities-AFS 767,851 777,530
Interest on federal funds sold 72,066 68,787
Interest on interest-bearing deposits with other banks 33,819 29,481
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Total interest income 5,385,553 4,961,918
Interest expense:
Interest on deposits 2,392,717 2,323,150
Interest on securities sold under agreements to repurchase 42,756 64,417
Interest on other borrowings 311,120 165,716
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Total interest expense 2,746,593 2,553,283
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Net interest income 2,638,960 2,408,635
Provision for loan losses 390,000 55,358
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Net interest income after provision for loan losses 2,248,960 2,353,277
Noninterest income:
Service charges on deposit accounts 238,864 215,547
Investment securities gains/(losses), net (308) 0
Other 355,752 274,754
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Total noninterest income 594,308 490,301
Noninterest expense:
Salaries and benefits 755,231 767,151
Net occupancy expense 248,014 258,808
Other 670,892 571,738
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Total noninterest expense 1,674,137 1,597,697
Earnings before income tax expense 1,169,131 1,245,881
Income tax expense 515,851 440,468
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Net earnings $ 653,280 $ 805,413
=========== ===========
Basic earnings per share $ 0.17 $ 0.21
=========== ===========
Weighted average shares outstanding 3,924,573 3,912,537
=========== ===========
Dividends per share $ 0.05 $ 0.04
=========== ===========
<CAPTION>
Six Months Ended June 30,
-------------------------------
1998 1997
----------- -----------
Interest income:
Interest and fees on loans $ 8,473,755 $ 7,361,602
Interest and dividends on investment securities held to maturity:
Taxable 413,191 548,410
Tax-exempt 40,262 50,465
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Total interest and dividends on investment securities-HTM 453,453 598,875
Interest and dividends on investment securities available for sale:
Taxable 1,390,124 1,474,983
Tax-exempt 11,895 11,895
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Total interest and dividends on investment securities-AFS 1,402,019 1,486,878
Interest on federal funds sold 148,178 195,119
Interest on interest-bearing deposits with other banks 61,754 38,269
----------- -----------
Total interest income 10,539,159 9,680,743
Interest expense:
Interest on deposits 4,768,149 4,661,833
Interest on securities sold under agreements to repurchase 74,756 102,615
Interest on other borrowings 529,636 332,469
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Total interest expense 5,372,541 5,096,917
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Net interest income 5,166,618 4,583,826
Provision for loan losses 476,030 113,939
----------- -----------
Net interest income after provision for loan losses 4,690,588 4,469,887
Noninterest income:
Service charges on deposit accounts 445,350 421,173
Investment securities gains/(losses), net 6,860 (40,060)
Other 703,057 583,675
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Total noninterest income 1,155,267 964,788
Noninterest expense:
Salaries and benefits 1,475,471 1,550,715
Net occupancy expense 502,132 482,833
Other 1,313,491 1,130,124
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Total noninterest expense 3,291,094 3,163,672
Earnings before income tax expense 2,554,761 2,271,003
Income tax expense 1,047,936 815,790
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Net earnings $ 1,506,825 $ 1,455,213
=========== ===========
Basic earnings per share $ 0.38 $ 0.37
=========== ===========
Weighted average shares outstanding 3,924,573 3,911,112
=========== ===========
Dividends per share $ 0.09 $ 0.08
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</TABLE>
See accompanying notes to consolidated financial
statements.
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Accumulated
Other
Retained Comprehensive
Common Stock Surplus Earnings Income
------------ --------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 13,190 3,691,099 19,942,980 (146,528)
Net earnings -- -- 3,080,043 --
Cash dividends paid ($0.16 per share) -- -- (626,562) --
Change in accumulated other comprehensive income -- -- -- 321,964
Payment of Employee Stock Ownership Plan Debt -- -- -- --
Sale of treasury stock (5,488 shares) 42,754
Purchase of treasury stock (368 shares) -- -- -- --
Three for one stock split effected in form of dividend,
subsequent to December 31, 1997 (note 4) 26,381 (26,381) -- --
----------- ----------- ----------- -----------
Balance at December 31, 1997 $ 39,571 3,707,472 22,396,461 175,436
Through June 30, 1998 (Unaudited):
Net earnings -- -- 1,506,825 --
Cash dividends paid ($0.09 per share) -- -- (366,294) --
Change in accumulated other comprehensive income -- -- -- (14,510)
----------- ----------- ----------- -----------
Balance at June 30, 1998 (Unaudited) $ 39,571 3,707,472 23,536,992 160,926
=========== =========== =========== ===========
<CAPTION>
Employee Stock
Ownership Treasury
Plan debt Stock Total
-------------- -------- ---------
<S> <C> <C> <C>
Balance at December 31, 1996 (113,940) (304,009) 23,082,792
Net earnings -- -- 3,080,043
Cash dividends paid ($0.16 per share) -- -- (626,562)
Change in accumulated other comprehensive income -- -- 321,964
Payment of Employee Stock Ownership Plan Debt 57,006 -- 57,006
Sale of treasury stock (5,488 shares) 98,058 140,812
Purchase of treasury stock (368 shares) -- (8,648) (8,648)
Three for one stock split effected in form of dividend,
subsequent to December 31, 1997 (note 4) -- -- --
----------- ----------- -----------
Balance at December 31, 1997 (56,934) (214,599) 26,047,407
Through June 30, 1998 (Unaudited):
Net earnings -- -- 1,506,825
Cash dividends paid ($0.09 per share) -- -- (366,294)
Change in accumulated other comprehensive income -- -- (14,510)
----------- ----------- -----------
Balance at June 30, 1998 (Unaudited) (56,934) (214,599) 27,173,428
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARY
Consolidated Statements of Cash Flows
For The Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,506,825 $ 1,455,213
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and Amortization 343,313 318,122
Accretion of investment discounts & loan fees (176,079) (44,153)
Provision for loan losses 476,030 113,939
Loss on sale of premises & equipment -- 6,126
Loss on sale of other real estate -- 3,687
Increase in interest receivable (175,543) (242,044)
Increase in other assets (285,811) (19,764)
Increase/(decrease) in interest payable 111,644 (37,859)
(Decrease)/increase in other liabilities (548,496) 255,433
------------ ------------
Net cash provided by operating activities 1,251,883 1,808,700
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities/calls/paydowns of investment
securities held to maturity 2,331,492 2,872,557
Purchases of investment securities held to maturity (425,000) (244,400)
Proceeds from maturities/calls/paydowns of investment
securities available for sale 4,979,929 5,293,087
Proceeds from sale of investment securities available for sale 4,970,457 10,870,613
Purchases of investment securities available for sale (21,355,538) (18,076,850)
Net increase in loans (18,015,403) (12,190,745)
Purchases of premises and equipment (99,114) (454,179)
Purchases of rental property (44,214) (1,670)
Net increase in interest-bearing deposits with
other banks (483,703) (301,655)
------------ ------------
Net cash used in investing activities (28,141,094) (12,233,242)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease)/increase in non-interest bearing deposits,
NOW accounts and savings accounts (1,003,835) 7,050,285
Net increase/(decrease) in certificates of deposit 5,869,957 (3,831,028)
Net increase/(decrease) in securities sold under agreements
to repurchase 2,785,794 (3,513,503)
Net increase in borrowings from FHLB 19,940,876 310,419
Net decrease in other short-term borrowings -- (1,203,130)
Net decrease in other long-term debt (9,130) (9,725)
Proceeds from sale of Treasury Stock -- 19,638
Purchase of treasury stock -- (8,648)
Dividends paid (366,294) (299,877)
------------ ------------
Net cash provided/(used) by financing activities 27,217,368 (1,485,569)
------------ ------------
Net increase/(decrease) in cash and cash equivalents 328,157 (11,910,111)
Cash and cash equivalents at beginning of period 14,883,412 27,172,715
------------ ------------
Cash and cash equivalents at end of period $ 15,211,569 $ 15,262,604
============ ============
Supplemental information on cash payments:
Interest paid $ 5,260,897 $ 5,134,776
============ ============
Income taxes paid $ 1,212,147 $ 680,055
============ ============
</TABLE>
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARY
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, 1997.
Note 2 - Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (Statement 130). Statement 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set of general
purpose statements. The Company adopted Statement 130 effective January 1, 1998.
The primary component of the differences between net income and comprehensive
income for the Company is unrealized gains/losses on securities. Total
comprehensive income for the six months ended June 30, 1998 was $1,492,000
compared to $1,744,000 for the six months ended June 30, 1997. Total
comprehensive income for the three months ended June 30, 1998 was $655,322
compared to $1,195,879 for the three months ended June 30, 1997.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (Statement 133). Statement 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities. This statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. The Company has not yet determined the impact of
Statement 133 on the Company's financial statements upon adoption.
Note 3 - Derivatives Disclosure
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.
Note 4 - Stockholders' Equity
On May 14, 1998, the Company's Board of Directors approved a three for one stock
split effected in the form of a dividend payable on June 25, 1998 to
shareholders of record on June 10, 1998. All share and per share information in
the accompanying financial statements has been restated to reflect the effect of
the additional shares outstanding resulting from the stock split. Common stock
and surplus have been restated also to reflect the stock split retroactively.
<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 three and six months ended June 30, 1998 and 1997.
Summary
Net income of $653,000 for the quarter ended June 30, 1998 represented a
decrease of $152,000 (18.9%) from the Company's net income of $805,000 for the
same period of 1997. Basic income per share decreased $0.04 (19.0%) to $0.17
during the second quarter of 1998 from $0.21 for the second quarter of 1997. Net
income increased $52,000 (3.6%) to $1,507,000 for the six month period ended
June 30, 1998 compared to $1,455,000 for the same period of 1997. During the
six month period ended June 30, 1998 compared to the same period of 1997, the
Company experienced increases in net interest income, noninterest income and
provision for loan losses offset by an increase in noninterest expense due to
continued growth of the Company. The net yield on total interest earning assets
was 8.28% for the six months ended June 30, 1998 compared to 8.23% for the six
months ended June 30, 1997. The increase in the net yield on interest earning
assets is due to an increase in the yield of loans and interest bearing deposits
with other banks offset by a decrease in the yield of investment securities. The
decrease in the Company's net income during the second quarter of 1998 compared
to the same period of 1997 is primarily due to the increase in the provision for
loan losses. See the "Consolidated Average Balances, Interest Income/Expense
and Yields/Rates" table.
Total assets of $292,997,000 at June 30, 1998 reflected an increase of
$28,263,000 (10.7%) over total assets of $264,734,000, at December 31, 1997.
This increase resulted primarily from increases in total loans, net of unearned
income, federal funds sold and securities purchased under agreement to resell
and investment securities available for sale. This was offset by a decrease in
cash and due from banks and investment securities held to maturity.
Financial Condition
Investment Securities
Investment securities held to maturity were $12,575,000 and $14,364,000 at
June 30, 1998 and December 31, 1997, respectively. This decrease of $1,789,000
(12.5%) resulted from scheduled paydowns and calls of principal. The increase
of $11,385,000 (28.2%) in investment securities available for sale to
$51,831,000 at June 30, 1998 from $40,446,000 at December 31, 1997, reflects the
purchase of U.S. government agency securities. The shift into investment
securities available for sale is a deliberate move by management to maintain
flexibility in its liquidity planning.
Federal funds sold increased $2,875,000 (109.9%) to $5,490,000 at June 30,
1998 from $2,615,000 at December 31, 1997. This increase is a result of a
temporary investment. These fluctuations reflect normal activity in the Bank's
funds management efforts.
Loans
Total loans, net of unearned income, of $203,488,000 at June 30, 1998
reflected an increase of $17,995,000 (9.7%) compared to the total loans of
$185,493,000, net of unearned income, at December 31, 1997. This growth
continues to occur in the commercial and consumer real estate mortgage
portfolios due to strong customer demand and a stable local real estate market.
In addition, the Bank experienced growth in its commercial, financial and
agricultural loans during the first six months of 1998. Commercial real estate,
consumer real estate and commercial, financial and agricultural loans
represented the majority of the loan portfolio with approximately 30.7%, 28.1%
and 27.6% of the Bank's total loans, net of unearned income at June 30, 1998,
respectively. The net yield on loans was 8.90% for the six months ended June
30, 1998 compared to 8.86% for the six months ended June 30, 1997. See the
"Consolidated Average Balances, Interest Income/Expense and Yields/Rates" table.
<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 inherent 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 was $2,581,000 at June 30, 1998. Management
believes that this level of reserves (1.27% 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 1998, the Bank made $476,000 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, 1998, the Bank had charge-offs
of $75,000 and recoveries of $55,000; however, management's assessment of the
credit quality of the loan portfolio indicated deterioration of a large
individual credit such that management's estimate of the necessary level of the
allowance increased. This credit in the amount of $4,099,000 is included in
potential problem loans and the relationship continues to be monitored as part
of the Bank's overall credit administration procedures
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, 1998, 92 loans totaling $6,556,000, or 3.22% of total loans
outstanding, net of unearned income, were considered potential problem loans
compared to 73 loans totaling $2,681,000, or 1.45% of total loans outstanding,
net of unearned income, at December 31, 1997. At June 30, 1998, the amount of
impaired loans were $353,000 compared to $578,000 at December 31, 1997.
Nonperforming assets, comprised of nonaccrual loans, renegotiated loans and
other real estate owned, and accruing loans 90 days or more past due were
$978,000 at June 30, 1998 compared to $276,000 at December 31, 1997. This
change resulted primarily from an increase of $466,000 in nonaccrual loans due
primarily to one relationship.
Deposits
Total deposits increased $4,866,000 (2.2%) to $228,844,000 at June 30,
1998, as compared to $223,978,000 at December 31, 1997. Noninterest-bearing
deposits increased $519,000 (1.6%) during the first six months of 1998 while
total interest-bearing deposits also increased $4,347,000 (2.3%) to $195,687,000
at June 30, 1998 from $191,340,000 at December 31, 1997. 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 5.00%
for the six months ended June 30, 1998 compared to 5.06% for the same period of
1997. During the first six months of 1998, the Bank experienced an increase in
certificates of deposits over $100,000 of $5,411,000 (14.7%). This increase was
offset by a slight decrease in NOW accounts of $1,465,000 (6.5%) during the
first six months of 1998. The Company considers the shifts in the deposit mix
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 $27,173,000 at June 30,
1998, compared to $26,047,000 at December 31, 1997. This represents an increase
of $1,126,000 (4.3%) during the first six months of 1998. Net earnings for the
first six months of 1998 continues to exceed net earnings for the same period of
1997. In addition, the Company experienced a change in accumulated other
comprehensive income to $161,000 at June 30, 1998 from $175,000 at December 31,
1997. During the first six months of 1998, cash dividends of $366,000, or $0.09
per share, were declared on Common Stock, compared to $313,000, or $0.08 per
share for the first six months
<PAGE>
of 1997. On May 14, 1998 the Company declared a three for one stock split
effected in the form of a 200 percent stock dividend for all shareholders of
record on June 10, 1998 (see note 4).
The Company's Tier 1 leverage ratio was 9.22%, Tier I risk-based capital
ratio was 13.46% and Total risk-based capital ratio was 14.71% at June 30, 1998.
These ratios exceed the minimum regulatory capital percentages of 3.0% to 5.0%
for Tier 1 leverage ratio, 4.0% for Tier I risk-based capital ratio and 8.0% for
Total risk-based capital ratio. 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 1998 is
through investment securities sold under agreements to repurchase, additional
advances from the Federal Home Loan Bank of Atlanta ("FHLB-Atlanta") and deposit
growth. 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 $30,817,000, leaving credit available, net of advances drawn down,
of approximately $9,183,000 at June 30, 1998.
Net cash provided by operating activities of $1,252,000 for the six months
ended June 30, 1998, consisted primarily of net earnings. Net cash used in
investing activities of $28,141,000 funded investment securities available for
sale purchases and loan growth of $21,356,000 and $18,015,000, respectively,
offset by proceeds from investment sales, maturities, calls and paydowns of
$12,281,000. The $27,217,000 in net cash provided by financing activities
resulted primarily from a net increase in deposits of $4,866,000, increases of
$2,786,000 in securities sold under agreements to repurchase and $19,941,000 in
increases in FHLB-Atlanta advances.
Interest Rate Sensitivity Management
At June 30, 1998, interest sensitive assets that repriced or matured within
the next 12 months were $165,157,000, compared to interest sensitive liabilities
that reprice or mature within the same time frame totaling $156,823,000. The
cumulative GAP position (the difference between interest sensitive assets and
interest sensitive liabilities) of a positive $8,334,000, resulted in a GAP
ratio (calculated as interest sensitive assets divided by interest sensitive
liabilities) of 105.3%. This compares to a twelve month cumulative GAP position
at December 31, 1997, of a positive $4,373,000 and a GAP ratio of 104.0%. 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. A positive GAP position indicates that the
Company has more interest-earning assets than interest-bearing liabilities that
reprice within the GAP period. The Bank's Asset/Liability Management Committee
("ALCO") is charged with the responsibility of managing, to the degree prudently
possible, its exposure to "interest rate risk," while attempting to provide
earnings enhancement opportunities. Based on ALCO's alternative interest rate
scenarios used by the Company in modeling for asset/liability planning purposes
and the GAP position at June 30, 1998, 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 decreased $152,000 (18.9%) to $653,000 for the three month
period ended June 30, 1998 compared to $805,000 for the same period of 1997.
Basic income per share was $0.17 and $0.21 for the second quarter of 1998 and
1997, respectively, a decrease of 19.0%. Net income increased $52,000 (3.6%) to
$1,507,000 for the six month period ending June 30, 1998, compared to $1,455,000
for the same period of 1997. During the six month period ended June 30, 1998
compared to the same period of 1997, the Company experienced increases in net
interest income, noninterest income and provision for loan losses offset by an
increase in noninterest expense due to continued growth of the Company.
Net Interest Income
Net interest income was $2,639,000 for the second quarter of 1998. The
increase of $230,000 (9.5%) over $2,409,000 for the same period of 1997,
resulted primarily from the increase in interest and fees on loans. Net
<PAGE>
interest income increased $583,000 (12.7%) to $5,167,000 for the six months
ended June 30, 1998, compared to $4,584,000 for the six months ended June 30,
1997. The net taxable yield on the Company's interest earning assets increased 5
basis points during the first six months of 1998, compared to the same period of
1997. During the second quarter of 1998, the Company's GAP position became more
asset sensitive to changes in interest rates as compared to December 31, 1997.
The 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 $5,386,000 and $4,962,000 for the
three months ended June 30, 1998 and 1997, respectively. This represents an
increase of $424,000 (8.5%) for the second quarter of 1998. For the six months
ended June 30, 1998 interest income was $10,539,000, an increase of $858,000
(8.9%) compared to $9,681,000 for the same period of 1997. This change for the
first six months of 1998 resulted as the average volume of interest earning
assets outstanding increased $19,150,000 (8.0%) over the same period of 1997.
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 $4,350,000 and $3,778,000 for the second quarter of 1998 and
1997, respectively. This reflects an increase of $572,000 (15.1%) during the
three months ended June 30, 1998 over the same period of 1997. For the six month
period ended June 30, 1998, interest and fees on loans increased $1,112,000
(15.1%) to $8,474,000 from $7,362,000 for the same period of 1997. The average
volume of loans increased $24,549,000 (14.7%) as of June 30, 1998 compared to
the same period of 1997, while the Company's yield on loans increased 4 basis
points comparing these same periods.
Interest income on investment securities held to maturity for the three
month period ended June 30, 1998, decreased $146,000 (47.4%) to $162,000 from
$308,000 for the same period of 1997. Interest income on investment securities
held to maturity for the six month period ended June 30, 1998, decreased
$146,000 (24.4%) to $453,000 from $599,000 for the same period of 1997. There
was a 21.1% decline in the average volume outstanding for the first six months
of 1998 compared to the same period of 1997, and the net yield on these average
balances also decreased 30 basis points. For the three month period ended June
30, 1998, interest income on investment securities available for sale decreased
$10,000 (1.3%) to $768,000 from $778,000 for the same period of 1997. For the
six months ended June 30, 1998, interest income on investment securities
available for sale decreased $85,000 (5.7%) to $1,402,000 from $1,487,000 for
the same period of 1997. The Company's average volume of investment securities
available for sale decreased by $443,000 (1.0%) for the first six months of
1998, compared to the same period of 1997, while the net yield on these average
balances also decreased 31 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 $194,000 (7.6%) to $2,747,000 for the
second quarter of 1998 compared to $2,553,000 for the same period of 1997. Total
interest expense increased $276,000 (5.4%) to $5,373,000 from $5,097,000 for the
six months ended June 30, 1998 and 1997, respectively. These changes resulted
as the Company's average interest-bearing liabilities outstanding increased 6.5%
while the rates paid on these liabilities decreased 5 basis points during the
first six months of 1998 compared to the same period of 1997. See the
"Consolidated Average Balances, Interest Income/Expense and Yields/Rates" table.
Interest on deposits, the primary component of total interest expense,
increased $70,000 (3.0%) to $2,393,000 for the second quarter of 1998 compared
to $2,323,000 for the same period of 1997. Interest on deposits were $4,768,000
and $4,662,000 for the six months ended June 30, 1998 and 1997, respectively.
Interest expense on borrowed funds, including both short term borrowing and
other borrowed funds, was $311,000 and $166,000 for the second quarter of 1998
and 1997, respectively. This represents an increase of $145,000 or 87.3%. For
the six months ended June 30, 1998, interest expense on borrowed funds increased
<PAGE>
$198,000 (59.3%) to $530,000 from $332,000 for the same period of 1997. These
increases for the three month and six month periods ended June 30, 1998 are due
to a 66.3% increase in the average volume offset by a 5 basis point decrease in
the rate paid on other borrowed funds. The increase is primarily from the
increase in FHLB-Atlanta advances and securities sold under agreements to
repurchase.
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 $476,000 for the six
months ended June 30,1998 compared to $114,000 for the six months ended June 30,
1997. The increase in the provision for loan losses during the first six months
of 1998 reflects an additional provision for possible loan losses of $300,000 in
the second quarter to reflect significant growth in the loan portfolio and the
recent identification of potential problem loans to a commercial customer.
See "---Allowance for Loan Losses and Risk Elements."
Noninterest Income
Noninterest income increased $104,000 (21.2%) to $594,000 for the second
quarter of 1998 from $490,000 for the same period of 1997. Noninterest income
was $1,155,000 and $965,000 for the six months ended June 30, 1998 and 1997,
respectively. These changes are the result of gain on investment securities of
$7,000, increases in services charges on deposit accounts and changes in other
noninterest income.
Service charges on deposit accounts for the second quarter of 1998
increased $23,000 (10.6%) to $239,000 from $216,000 for the second quarter of
1997. Service charges on deposit accounts was $445,000 and $421,000 for the six
months ended June 30, 1998 and 1997, respectively. This increase is primarily
due to increases in nonsufficient funds and overdraft charges.
Other noninterest income increased $81,000 (29.5%) to $356,000 for the
second quarter of 1998 from $275,000 for the same period of 1997. Other
noninterest income was $703,000 and $584,000 for the six months ended June 30,
1998 and 1997, respectively. These increases for the three month period ended
June 30, 1998 resulted from an increase in noninterest loan income and fees due
to increases in loan growth and stock dividends from other companies.
Noninterest Expense
Total noninterest expense was $1,674,000 and $1,598,000 for the second
quarter of 1998 and 1997, respectively, representing a increase of $76,000 or
4.8%. For the six months ended June 30, 1998, total noninterest expense
increased $127,000 (4.0%) to $3,291,000 from $3,164,000 for the same period of
1997. These increases for the six month period ended June 30, 1998 were due to
increases in net occupancy expense and other noninterest expense offset by
decreases in salaries and benefits expense.
Salaries and benefits expense was $755,000 and $767,000 for the three
months ended June 30, 1998 and 1997, respectively. This represents a decrease
of $12,000 (1.6%) in the second quarter of 1998 compared to the second quarter
of 1997. For the six months ended June 30, 1998, total salaries and benefits
expense decreased $76,000 (4.9%) to $1,475,000 from $1,551,000 for the same
period of 1997. Overall employee levels remain consistent with a slight
decrease due to additional costs allocated to loan origination activity.
Net occupancy expense was $248,000 for the second quarter of 1998, which
represented a decrease of $11,000 (4.2%) over the level of $259,000 for the same
period of 1997. For the six month period ended June 30, 1998, net occupancy
expense increased $19,000 (3.9%) to $502,000 from $483,000 for the same period
of 1997. The six month period increase is due to increases in expenses
associated with furniture and equipment purchases due to the purchase of
computer equipment. The three month period corresponding decrease is due to
lease payments on furniture and equipment.
For the second quarter of 1998, other noninterest expense increased $99,000
(17.3%) to $671,000 from $572,000 for the second quarter of 1997. Other
noninterest expense was $1,313,000 and $1,130,000 for the six months ended June
30, 1998 and 1997, respectively. This increase is due to the expenses
associated with the
<PAGE>
introduction of the VISA checkcard that was launched in 1998 and expenses
associated with establishing the Company's technology plan.
Income Taxes
Income tax expense was $516,000 and $440,000 for the second quarter of 1998
and 1997, respectively. This represents an increase of $76,000 or 17.3%. For
the six months ended June 30, 1998, income tax expense increased $232,000
(28.4%) to $1,048,000 from $816,000 for the six months ended June 30, 1997.
These levels represent an effective tax rate on pre-tax earnings of 41.0% for
the six months ended June 30, 1998 and 35.9% for the same period of 1997.
Year 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium ("Year 2000") approaches. The
Company has conducted a comprehensive review of its computer systems to identify
the systems that could be affected by the Year 2000 issue and has developed a
plan to resolve the mission critical modifications necessary in order be
prepared for the new millennium. Modifications are expected to be completed by
December 31, 1998. The Company has received certification of Year 2000
compliance from their critical vendors used in the major operations of the
Company. The Company has followed the Federal Reserve guidelines for preparing
for Year 2000. The Company also reports quarterly to the Board the progress of
the Year 2000 project. Accordingly, the Company does not expect the Year 2000
issue to pose any significant operational problems and has not discovered any
Year 2000 problems with significant counter-parties that it believes will have
material effect on the financial position or results of operations of the
Company. However, the Company has not fully evaluated the effect of any Year
2000 problems on its loan and deposit customers, and no assurance can be given
that potential Year 2000 problems of those with whom the Company does business
will not occur, and if they occur, that the consequences to the Company will not
be material. The total cost of the project is estimated not to exceed $250,000,
a portion of which will be capitalized, and is estimated to be funded through
operating cash flows.
Impact of Inflation and Changing Prices
Virtually all of the assets and liabilities of the Company are monetary in
nature. As a result, interest rates have a more significant impact on the
Company's performance than the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or with the same magnitude
as the price of goods and services since such prices are affected by inflation.
In the current interest rate environment, liquidity and the maturity structure
of the Company's assets and liabilities are critical to the maintenance of
desired performance levels. However, relatively low levels of inflation in
recent years have resulted in a rather insignificant effect on the Company's
operations.
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC. & SUBSIDIARY
Consolidated Average Balances, Interest Income/Expense and Yields/Rates
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------------------
1998
-------------------------------------------------
Average Yield/
ASSETS Balance Interest Rate
--------------------------- ------- -------- ----
(Dollars in thousands)
<S> <C> <C> <C>
Interest Earning Assets:
Loans, net of unearned income (1) $ 192,092 8,474 8.90%
Investment securities held to maturity:
Taxable 12,022 413 6.93%
Tax-exempt (2) 1,293 61 9.45%
-----------------------------
Total investment securities held to maturity 13,315 474 7.17%
Investment securities available for sale:
Taxable 44,055 1,390 6.36%
Tax-exempt (2) 480 18 7.64%
-----------------------------
Total investment securities available for sale 44,535 1,408 6.38%
Federal funds sold 5,324 148 5.61%
Interest bearing deposits with other banks 1,913 62 6.54%
-----------------------------
Total interest earning assets 257,179 10,566 8.28%
Allowance for loan losses (2,214)
Cash and due from banks 7,661
Premises and equipment 3,482
Rental property, net 1,795
Other assets 4,349
----------
Total Assets $ 272,252
==========
LIABILITIES & STOCKHOLDERS' EQUITY
------------------------------------
Interest bearing liabilities:
Deposits:
Demand $ 20,912 222 2.14%
Savings and Money Market 60,837 1,358 4.50%
Certificates of deposits less than $100,000 71,593 2,190 6.17%
Certificates of deposits and other time deposits of $100,000 or more 39,021 998 5.16%
-----------------------------
Total interest bearing deposits 192,363 4,768 5.00%
Federal funds purchased and securities sold under agreements to
repurchase 2,990 75 5.06%
Other short term borrowings 0 0 0.00%
Other borrowed funds 18,538 528 5.74%
Employee stock ownership plan debt 56 2 7.20%
-----------------------------
Total interest bearing liabilities 213,947 5,373 5.06%
Noninterest bearing demand deposits 29,341
Accrued expenses and other liabilities 1,141
Stockholder's equity 27,823
----------
Total Liabilities and shareholder's equity $ 272,252
==========
Net Interest Income $ 5,193
=========
Net Yield on Total Interest Earning Assets 4.07%
=======
<CAPTION>
----------------------------------------------------
1997
----------------------------------------------------
Average Yield/
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 15,328 548 7.21%
Tax-exempt (2) 1,558 77 10.00%
-----------------------------
Total investment securities held to maturity 16,886 625 7.47%
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 238,029 9,713 8.23%
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 4,370
---------
Total Assets 253,349
=========
LIABILITIES & STOCKHOLDERS' EQUITY
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 deposits 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
Stockholder's equity 23,567
---------
Total Liabilities and shareholder's equity 253,349
=========
Net Interest Income 4,616
Net Yield on Total Interest Earning Assets ========
3.91%
=======
</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%.
<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 13, 1998 By: /s/ E. L. Spencer, Jr.
---------------------------- ------------------------------
E. L. Spencer, Jr.
President, CEO and Director
Date: August 13, 1998 By: /s/ Linda D. Fucci
---------------------------- ------------------------------
Linda D. Fucci
Chief Financial Officer and
Principal Accounting Officer
<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 12, 1998, 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 1999 Annual Meeting of Shareholders and until their successors have
been elected and qualified, to approve the increase in the number of authorized
shares of the Company's common stock to 8,500,000 and to ratify the appointment
of KPMG Peat Marwick LLP as the independent auditors for the Company.
As to the election of five directors, Messers E.L Spencer, Jr., Emil
F. Wright, Jr., J.E. Evans, Terry Andrus and Anne M. May were all elected to the
Board of Directors with 1,143,419 votes cast FOR all nominees, except for Terry
Andrus who received 1,142,601 votes FOR his election and 818 votes cast AGAINST
and J.E. Evans who received 1,140,745 votes FOR his election and 2,674 votes
cast AGAINST.
As to the approval to increase the number of authorized shares of the
Company's common stock, the matter was approved with 1,091,408 votes cast FOR,
40,978 votes cast AGAINST and 11,033 votes ABSTAIN.
As to the ratification of the appointment of KPMG Peat Marwick LLP as
the independent auditors for the Company, the ratification was approved. There
were 1,142,219 votes cast FOR, 200 votes cast against and 1,000 votes ABSTAIN.
ITEM 5. OTHER EVENTS
The proxy statement solicited by the Company's Board of Directors with
respect to the Company's 1999 Annual Meeting of Shareholders will confer
discretionary authority to vote on any proposals of shareholders intended to be
presented for consideration at such Annual Meeting that are submitted to the
Company after February 27, 1999.
<PAGE>
AUBURN NATIONAL BANCORPORATION, INC.
Item 6(a)
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- ------ ----------- -------------
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-term Incentive Plan. * ---
10.B Lease and Equipment Purchase Agreement, Dated
September 15, 1987. * ---
27 Financial Data Schedule 18
- -------------------------
* Incorporated by reference from Registrant's Registration
Statement on Form SB-2.
(b) Reports filed on Form 8-K for the quarter ended June 30, 1998:
Form 8-K dated May 12, 1998
Filed under Item 5 - Other Events and relates to the Certificate
of Amendment of Certificate of Incorporation and the press release
of second quarter earnings.
Form 8-K dated May 14, 1998
Filed under Item 5 - Other Events and relates to $0.14 cash
dividend and 200% stock dividend press release and press release
regarding the plans of opening of a new branch in Phenix City,
Alabama.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB
FOR JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 9,722
<INT-BEARING-DEPOSITS> 2,207
<FED-FUNDS-SOLD> 5,490
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 51,831
<INVESTMENTS-CARRYING> 12,575
<INVESTMENTS-MARKET> 12,730
<LOANS> 203,488
<ALLOWANCE> 2,581
<TOTAL-ASSETS> 292,997
<DEPOSITS> 228,844
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,849
<LONG-TERM> 31,071
0
0
<COMMON> 40
<OTHER-SE> 27,133
<TOTAL-LIABILITIES-AND-EQUITY> 292,997
<INTEREST-LOAN> 8,474
<INTEREST-INVEST> 1,855
<INTEREST-OTHER> 210
<INTEREST-TOTAL> 10,539
<INTEREST-DEPOSIT> 4,768
<INTEREST-EXPENSE> 5,373
<INTEREST-INCOME-NET> 5,166
<LOAN-LOSSES> 476
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 3,291
<INCOME-PRETAX> 2,555
<INCOME-PRE-EXTRAORDINARY> 2,555
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,507
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
<YIELD-ACTUAL> 4.07
<LOANS-NON> 466
<LOANS-PAST> 512
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6,556
<ALLOWANCE-OPEN> 2,125
<CHARGE-OFFS> 75
<RECOVERIES> 55
<ALLOWANCE-CLOSE> 2,581
<ALLOWANCE-DOMESTIC> 2,581
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
