SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File Number 0-14550
NEW ENGLAND COMMUNITY BANCORP, INC.
DELAWARE 06-1116165
OLD WINDSOR MALL
P.O. BOX 130
WINDSOR, CONNECTICUT 06095
Telephone: (860) 610-3600
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--------
The number of shares of common stock of the registrant outstanding as of July
31, 1999 was 7,036,494.
The total number of pages in this report is xx.
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NEW ENGLAND COMMUNITY BANCORP, INC.
TABLE OF CONTENTS
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Part I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets--June 30, 1999 (unaudited) and
December 31, 1998 3
Consolidated Statements of Income--three and six months ended June30, 1999
and 1998 (unaudited) 4
Consolidated Statements of Cash Flows--six months ended June 30, 1999
and 1998 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Part II. OTHER INFORMATION 19
Item 6. Exhibits, Financial Statement Schedules and Reports on Form 8-K 16
SIGNATURES 17
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Part I--FINANCIAL INFORMATION
Item 1. Financial Statements
NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
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(Thousands of dollars; except share data)
June 30, December 31,
1999 1998
(Unaudited)
====================================================================================================================================
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ASSETS:
Cash and due from banks $ 33,040 $ 39,279
Short-term investments 3,270 12,080
Federal funds sold 7,208 1,485
----------- -----------
Cash and cash equivalents 43,518 52,844
Interest bearing deposits with banks 595 694
Securities held-to-maturity 4,122 5,675
Securities available-for-sale 204,512 191,867
Federal Home Loan Bank stock, at cost 4,881 4,881
Loans outstanding 518,459 515,980
Less: allowance for possible loan losses (10,282) (10,092)
----------- -----------
Net loans 508,177 505,888
Loans held-for-sale 6,730 7,721
Premises and equipment 13,454 13,932
Other real estate owned 1,641 1,636
Goodwill 4,651 4,847
Other assets 16,117 13,902
----------- -----------
Total Assets $ 808,398 $ 803,887
=========== ===========
LIABILITIES:
Deposits:
Noninterest bearing $ 146,856 $ 160,876
Interest bearing 496,928 503,202
----------- -----------
Total deposits 643,784 664,078
Short-term borrowings 56,788 34,848
Long-term debt 35,252 27,279
Other liabilities 2,982 4,332
----------- -----------
Total Liabilities 738,806 730,537
SHAREHOLDERS' EQUITY:
Common stock, $0.10 par value, authorized 20,000,000 shares:
June 30, 1999, 7,036,000 outstanding;
December 31, 1998, 7,031,000 outstanding 704 703
Additional paid-in capital 61,921 61,811
Retained earnings 11,869 9,452
Treasury Stock -June 30, 1999, 136,000 shares (2,681)
Net unrealized gain (loss) on securities available-for-sale (2,221) 1,384
----------- -----------
Total Shareholders' Equity 69,592 73,350
----------- -----------
Total Liabilities & Shareholders' Equity $ 808,398 $ 803,887
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
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NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
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Six Months Ended Three Months Ended
June 30, June 30,
(thousands of dollars; except per share data) 1999 1998 1999 1998
====================================================================================================================================
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INTEREST INCOME:
Loans, including fees $ 22,150 $ 24,198 $ 11,083 $11,994
Securities:
Taxable interest 5,037 5,080 2,720 2,600
Interest exempt from federal income taxes 366 408 185 274
Dividends 561 207 226 45
Federal funds sold and other interest 303 228 86 107
--------- --------- -------- -------
Total interest income 28,417 30,121 14,300 15,020
INTEREST EXPENSE:
Deposits 8,175 10,291 3,947 5,086
Borrowed funds 1,790 1,229 1,000 650
--------- --------- -------- -------
Total interest expense 9,965 11,520 4,947 5,736
Net interest income 18,452 18,601 9,353 9,284
Provision for possible loan losses 333 805 168 366
--------- --------- -------- -------
Net interest income after provision for possible loan losses 18,119 17,796 9,185 8,918
NONINTEREST INCOME:
Service charges, fees and commissions 2,206 2,034 1,129 1,088
Investment securities gains, net 499 1,417 324 175
Mortgage banking revenues 1,659 1,367 902 826
Other 125 165 55 87
--------- --------- -------- -------
Total noninterest income 4,489 4,983 2,410 2,176
NONINTEREST EXPENSE:
Salaries and employee benefits 7,838 7,807 3,974 4,012
Occupancy 1,479 1,411 712 664
Furniture and equipment 1,027 987 557 561
Outside services 780 998 482 570
Postage and supplies 648 612 352 315
Losses, writedowns, expenses - other real estate owned 146 (114) 112 (36)
Amortization of goodwill 235 195 137 97
Loss on sale of portfolio loans 715
Mergers & restructuring provivions 1,353 190 525 190
Other 2,329 2,142 1,406 997
--------- --------- -------- -------
Total noninterest expense 15,835 14,943 8,257 7,370
--------- --------- -------- -------
Income before taxes 6,773 7,836 3,338 3,724
Income taxes 2,428 3,211 1,175 1,595
--------- --------- -------- -------
Net Income $ 4,345 $ 4,625 $ 2,163 $ 2,129
========= ========= ======== =======
Net income per share--Basic $ 0.62 $ 0.66 $ 0.31 $ 0.30
Net income per share--Diluted $ 0.61 $ 0.64 $ 0.31 $ 0.29
Weighted average shares of
Common Stock outstanding--Basic 6,953 7,050 6,901 7,057
Weighted average shares of
Common Stock outstanding--Diluted 7,105 7,254 7,068 7,244
The accompanying notes are an integral part of these consolidated financial statements.
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NEW ENGLAND COMMUNITY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of dollars) Six Months Ended
June 30,
1999 1998
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OPERATING ACTIVITIES:
Net income $4,345 $4,625
Adjustment for noncash charges (credits):
Provision for depreciation and amortization 714 698
Losses from sale or disposal and provisions to reduce the carrying value
of other real estate owned, net 58 (253)
Securities losses (gains), net (499) (1,417)
Accretion of discounts and amortization of premiums on bonds, net (22) 54
Amortization of goodwill and other intangibles 235 195
Provision for possible loan losses 333 805
Loss on sale of portfolio loans, net 715
(Increase) decrease in other assets, net 3,313 (2,200)
Decrease (increase) in loans held-for-sale 991 (4,755)
(Decrease) increase in other liabilities, net (1,325) 273
---------- --------
Net cash provided by (used for) operating activities 8,143 (1,260)
--------- ---------
FINANCING ACTIVITIES:
Net decrease in noninterest-bearing accounts (14,020) (6,140)
Net decrease in interest-bearing accounts (6,274) (14,855)
Net increase in short-term borrowings 21,940 7,734
Net increase in long-term borrowings 7,973 7,289
Proceeds from issuance of common stock (139) 413
Cash dividends paid (1,537) (1,037)
--------- ---------
Net cash used for financing activities 5,262 (6,596)
--------- ---------
INVESTING ACTIVITIES:
Loans originated, net of principal collections (3,684) (1,614)
Decrease in interest-bearing time deposits 99 87
Proceeds from sale of portfolio loans 10,157
Purchases of securities available-for-sale (67,375) (53,122)
Proceeds from sales of securities available-for-sale 2,042 18,884
Proceeds from maturities of securities available-for-sale 45,797 28,289
Proceeds from maturities of securities held-to-maturity 1,553 2,039
Proceeds from sales of other real estate owned 586 2,774
Purchases of premises and equipment, net (1,755) (803)
Sales of premises and equipment 6 49
Capitalization of expenditures on other real estate owned (342)
--------- --------
Net cash provided by (used for) investing activities (22,731) 6,398
---------- --------
Decrease in cash and cash equivalents (9,326) (1,458)
Cash and cash equivalents, beginning of period 52,844 61,030
--------- --------
Cash and cash equivalents, end of period $ 43,518 $ 59,572
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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NEW ENGLAND COMMUNITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed interim financial statements are unaudited and
include the accounts of New England Community Bancorp, Inc. (the "Company" or
"NECB") and its subsidiaries, New England Bank and Trust Company ("New England
Bank"), The Equity Bank ("Equity Bank"), Community Bank ("Community Bank"), and
Olde Port Bank (together the "Subsidiaries"). The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to SEC
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
These financial statements reflect, in the opinion of Management, all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of the Company's financial position and the results of its
operations and its cash flows for the periods presented. These financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's 1998 Annual Report on Form 10-K.
NOTE 2 - MERGERS AND ACQUISITIONS
During the third quarter of 1998, NECB completed two acquisitions.
On, July 10, 1998, Olde Port Bank & Trust Company ("Olde Port"), a New
Hampshire state-chartered bank and trust company, became NECB's fourth
wholly-owned banking subsidiary. NECB acquired Olde Port by issuing 585,986
shares of the Company's common stock for all of the outstanding common shares of
Olde Port and all fully vested and exercisable stock options.
On August 14, 1998, NECB acquired Bank of South Windsor ("South Windsor"),
of South Windsor, Connecticut, by issuing 1,270,720 shares of the Company's
common stock for all of the outstanding common shares of South Windsor. In
conjunction with the transaction, shares of South Windsor common stock
beneficially owned by NECB were cancelled and retired.
The acquisitions of Olde Port and South Windsor were accounted for as
poolings of interests and, as such, all prior period results have been restated
as though the companies had been combined as of the earliest period presented.
NOTE 3 - DISCLOSURE FOR STATEMENTS OF CASH FLOWS
Schedule of noncash investing and financing activities:
Loans charged off, net of recoveries $143 $2,718
Real estate acquired through foreclosure 649 952
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Part I--FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
OVERVIEW
The Company's earnings are largely dependent upon net interest income and
noninterest income from its community banking operations--with net interest
income providing the majority of the Company's revenues. Net interest income is
the difference between interest earned on the loan and investment portfolios and
interest paid on deposits and other sources of funds. Noninterest revenue is
primarily derived from service charges, fees and commissions related to deposit
accounts and the Company's service loan portfolio. As discussed in Note 2 above,
the acquisitions of South Windsor and Olde Port were accounted for as pooling of
interests. As such, all prior results have been restated as though the companies
had been combined as of the earliest period presented.
NECB reported net income for the second quarter of 1999 of $2,163,000, or
$0.31 per diluted share, compared to net income of $2,129,000, or $0.29 per
diluted share, reported in 1998. This represented an increase of $34,000 or 1.6%
compared to net income reported in the previous year. On an earnings per share
basis, second quarter 1999 net income increased 7% from the second quarter of
1998. Returns on assets ("ROA") and equity ("ROE") improved from 1998 and were
1.38% and 14.97%, respectively, for 1999 compared to 1.18% and 13.18%,
respectively, for the comparative period in 1998.
Net interest income on a fully taxable-equivalent ("FTE") basis increased
$59,000 and totaled $9,493,000 for the quarter ended June 30, 1999 compared to
$9,434,000 for the same period in 1998. The increase in net interest income
resulted from volume related increases of $242,000 partially offset by rate
related decreases of $183,000. While overall, interest rates were generally
lower, the net interest margin rose slightly from 5.16% in 1998 to 5.17% in the
quarter just ended. The average rate earned on earning assets decreased 44 basis
points while the average rate paid for the use of interest bearing liabilities
decreased 56 basis points.
The provisions for possible loan losses were $168,000 compared to $366,000
in the comparable period in 1998. The $198,000 decrease occurred as loan quality
remained strong and total loans outstanding rose a modest $2 million.
Noninterest income, excluding security gains, increased $85,000 the second
quarter including a $76,000 increase in mortgage banking revenues. Securities
gains, meanwhile, increased $149,000. Income from service charges rose $41,000
while all other income decreased $32,000.
Noninterest expense totaled $8,257,000 in the second quarter of 1999
compared to $7,370,000 in 1998. Both periods included unusual events which do
not recur on a regular basis. In 1999 a $525,000 charge was taken related to the
announced acquisition of NECB by Webster Financial Corporation, while a $190,000
expense was recorded in the second quarter of 1998 related to NECB's acquisition
of Olde Port. When these actions are excluded, other noninterest expenses
amounted to $7,732,000 in the second quarter of 1999 compared to $7,180,000 a
year earlier. NECB's efficiency ratio, which measures how much a dollar of
revenue costs to produce, equaled 63.62% for the second quarter of 1999 compared
to 62.12% for the same period in 1998. This increase resulted primarily from
costs related to preparation for Y2k readiness and the expanded operating basis
that includes our mortgage banking subsidiary and a new full service banking
branch by Olde Port Bank.
Loans outstanding at June 30, 1999 amounted to $518,459,000 compared to
$515,980,000 at December 31, 1998. Total deposits amounted to $643,784,000 at
June 30, 1999 compared to $664,078,000 at December 31, 1998. NECB's deposit base
typically reaches its highest levels at year-end with net ouflows during the
first quarter and a return to net growth throughout the balance of the year.
NECB increased its use of alternative funding sources by increasing its
short-term borrowings since the start of 1999 to $56,788,000 at June 30, 1999
compared to $34,848,000 at year-end 1998.
At June 30, 1999, shareholders' equity was $69,592,000 and represented
8.61% of total assets. In February 1999 NECB announced a program to repurchase
up to 5%, or approximately 350,000 shares, of the Company's outstanding shares
of common stock. A total of 135,500 shares have been acquired at an average
price of $19.79 per share. Unrealized gain on securities available for sale
decreased $3,605,000 during the first half of 1999 and ended with a loss
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of $2,221,000, as a moderate rise in interest rates reduced the market value of
debt instruments. When goodwill resulting from several previous acquisitions is
excluded, tangible equity capital is reduced to $64,941,000 or 8.03% of total
assets. The resulting tangible book value per share amounted to $9.41 at June
30, 1999 compared to $9.74 at December 31, 1998.
RESULTS OF OPERATIONS--THREE MONTHS ENDED JUNE 30, 1999 AND 1998
For the three months ended June 30, 1999, the Company reported net income
of $2,163,000, or $0.31 per diluted share, compared to $2,129,000, or $0.29 per
diluted share, for the same period of 1998. The quarter included a net charge of
$525,000 arising from expenses incurred in conjunction with the sale of the
Company. During the quarter ended June 30, 1998 a charge of $190,000 was
recognized by Olde Port related to its acquisition by NECB. When these
transactions are excluded, core operating income amounted to $2,688,000 or $0.38
per diluted share in 1999 and $2,319,000 or $0.32 per diluted share in 1998.
This represents a 16% increase in net operating income and a 19% increase in
operating earnings per diluted share.
NET INTEREST INCOME
The principal earning asset of the Company is its loan portfolio--which is
comprised of loans to finance operations of businesses located primarily within
its market area, mortgage loans to finance the purchase or improvement of
properties used by businesses and mortgage and personal loans to individuals.
Representing approximately a quarter of the Company's earning assets, NECB's
investment portfolio also plays an important part in the management of the
Company's balance sheet. While providing a source of revenue, these funds are
used to provide reserves and meet the liquidity needs of the Company. These
reserves are available to meet the borrowing needs of the communities NECB
serves. For the following discussion, interest income is presented on a fully
taxable-equivalent ("FTE") basis. FTE interest income restates reported interest
income on tax exempt loans and securities as if such interest were taxed at the
statutory Federal income tax rate of 34% for all periods presented.
(Amounts in thousands)
THREE MONTHS ENDED JUNE 30, 1999 1998 % CHANGE
- -------------------------------------------------------------------------------
Interest income (financial statements) $14,300 $15,020 (4.8)%
Tax equivalent adjustment 140 150 (6.7)%
--------- --------
Total interest income (on an FTE basis) 14,440 15,170 (4.8)%
Interest expense (4,947) (5,086) (2.7)%
--------- --------
Net interest income (on an FTE basis) $ 9,493 $ 9,434 0.6 %
========= ========
For the second quarter of 1999 net interest income on an FTE basis rose
$59,000, or 0.6% when compared to the same period in 1998. A key factor in this
increase in 1999 was management's ability to offset the effect of lower rates on
new and renewed loans and the effect of early payoffs of fixed rate loans with
higher than current market rates. This was accomplished by reducing interest
expense for funds used to support these assets and the investment portfolio.
Modest reductions in rates paid to selected deposit accounts and reduced
dependence upon higher cost time deposits were the chief ingredients.
The net interest margin measures the difference in yield on, and the mix
of, interest-earning assets and interest-bearing liabilities. As shown in the
table below, the margin for the quarter ended June 30, 1999 increased to 5.17%
from 5.16% in 1998. The yield on earning assets was reduced by 44 basis points
and equaled 7.86% compared to 8.30%, while the average rate paid for
interest-bearing liabilities decreased 56 basis points to 3.47% for the quarter
ended June 30, 1999 compared to 4.03% a year earlier.
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AVERAGE BALANCES/INTEREST EARNED OR PAID/RATES
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Three Months Ended June 30, 1999 June 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
(Amounts in Thousands) Balance Interest Rate Balance Interest Rate
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ASSETS:
Short-term investments 9,527 $ 117 4.93% 12,415 $ 106 3.42%
Investment securities:
Securities held-to-maturity 4,056 49 4.85% 13,166 162 4.94%
Securities available-for-sale 202,681 3,191 6.31% 174,474 2,872 6.60%
Mortgages held for sale 4,481 73 6.53% 11,658 197 6.78%
Loans (A) 515,997 11,010 8.56% 521,006 11,833 9.11%
---------- ------- --------- -------
Total interest-earning assets 736,742 14,440 7.86% 732,719 15,170 8.30%
Allowance for loan losses (10,200) (11,871)
Cash and due from banks 24,023 35,522
Other assets 33,567 29,642
---------- ---------
Total Assets $784,132 $786,012
======== ========
LIABILITIES:
Regular savings deposits $ 157,270 $ 655 1.67% $149,676 $ 810 2.17%
NOW account deposits 83,886 270 1.29% 73,595 257 1.40%
Money market deposits 1,819 10 2.20% 5,307 22 1.66%
---------- ------- --------- -------
Total savings deposits 242,976 935 1.54% 228,578 1,089 1.91%
Time deposits 245,245 3,012 4.93% 289,436 4,051 5.61%
Short-term borrowings 54,772 542 3.97% 26,944 197 2.93%
Long-term borrowings 29,193 458 6.29% 25,704 399 6.23%
---------- ------- --------- -------
Total interest-bearing liabilities 572,186 4,947 3.47% 570,661 5,736 4.03%
Demand deposits 136,014 141,686
Other liabilities 3,911 3,073
---------- ---------
Total Liabilities 712,112 715,421
Equity 72,021 70,591
---------- ---------
Total Liabilities & Equity $784,132 $786,012
======== ========
Net interest income--FTE basis $ 9,493 $ 9,434
Less adjustment for
Tax-exempt income (140) (150)
------- -------
Net interest income $ 9,353 $ 9,284
======= =======
Net interest margin 5.17% 5.16%
Net interest spread 4.39% 4.27%
(A) AVERAGE LOANS INCLUDE NONACCRUING LOANS.
</TABLE>
RATE/VOLUME ANALYSIS
Changes in net interest income are divided into two components--the changes
resulting from the changes in average balances of earning assets and
interest-bearing liabilities (or "volume") and the changes in the rates earned
or paid on those balances. The changes in interest income and interest expense
attributable to changes in both volume and rate, which cannot be segregated,
have been allocated proportionately to the absolute values of the changes due to
volume and rate. The following table is presented on an FTE basis.
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Change due to
Total CHANGE IN:
Increase --------------------
(AMOUNTS IN THOUSANDS) (DECREASE) RATE VOLUME
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INTEREST EARNED ON:
Short-term investments $ 11 $ 46 $ (35)
Securities held to maturity (113) (3) (110)
Securities available for sale 319 (125) 444
Mortgages held for sale (124) (7) (117)
Loans (823) (716) (107)
----- --------- -----
Total interest-earning assets $ (730) $ (805) $ 75
-------- -------- ------
INTEREST PAID ON:
Regular savings deposits $ (155) $ (187) $ 32
NOW account deposits 13 (20) 33
Money market deposits (12) 7 (19)
--------- -------- -------
Total savings deposits (154) (200) 46
Time deposits (1,039) (496) (543)
Short-term borrowings 345 70 275
Long-term borrowings 59 4 55
-------- -------- -------
Total interest-bearing liabilities (789) (622) (167)
--------- --------- --------
Net interest income change $ 59 $ (183) $ 242
======== ======== =======
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NONINTEREST INCOME
For the quarter ended June 30, 1999, noninterest income amounted to
$2,410,000, compared to $2,176,000 reported for the second quarter in 1998. NECB
reported realized gains from the sale of securities during the second quarter of
1999 of $324,000 compared to $175,000 in the second quarter of 1998. Mortgage
banking revenues increased a modest $76,000 as when compared to the second
quarter of 1998. Rising interest rates dampened sales during the quarter causing
New England community Mortgage Corp, NECB's production unit to fall short of its
targeted production.
Service charges, fees and commissions increased $41,000 in the second
quarter of 1999 primarily from increases in selected priced services. The
popularity of our relationship account ("New England Gold") tended to soften the
increase in revenue as customers opting for this service can avoid certain fees
by grouping their accounts within this program.
NONINTEREST EXPENSE
Noninterest expenses amounted to $8,257,000 for the second quarter of 1999
compared to $7,370,000 in the same quarter last year. Included in this year's
total expense was a $525,000 charge related to the announced acquisition of NECB
by Webster Financial Corp. The second quarter of 1998 included a nonrecurring
expense of $190,000 by Olde Port Bank related to its acquisition by NECB. When
these nonrecurring transactions and the expenses related to management and
liquidation of foreclosed properties and the amortization of goodwill are
excluded, the core operating expenses are $7,483,000 in 1999 compared to
$7,119,000 a year earlier. This represents an increase of $364,000 or 5.1%.
NECB's efficiency ratio, which measures how much a dollar of net revenue costs
to produce, equaled 63.6% for the second quarter of 1999 compared to 62.1% for
the same period in 1998.
RESULTS OF OPERATIONS--SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Through the first six months of 1999, NECB reported net income of
$4,345,000 or $0.61 per diluted share, a decrease of $280,000 compared to
$4,625,000 or $0.64 per diluted share for the same period last year. Net
interest income decreased $149,000 and noninterest income, excluding securities
gains, increased $424,000. Securities gains decreased $918,000. Noninterest
expenses increased $892,000 including non-operating expenses of $748,000.
Returns on average assets and average equity for the six months ended June 30,
1999 were 1.31% and 13.95%, compared to 1.20% and 11.87% for the same period a
year earlier.
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Net interest Income
During the first six months of 1999, net interest income on a fully
taxable-equivalent basis decreased $115,000 from the same period in 1998 and
totaled $18,780,000. The net interest margin decreased slightly from 5.21% in
1998 to 5.19% this year. Total average earning assets were virtually unchanged
in 1999 when compared to last year. Of significance was a decrease in average
loans outstanding and a corresponding increase in investment assets. The average
rate earned in earning assets decreased 45 basis points in 1999. This was
matched by a 46 basis point decrease in average rates paid for interest-bearing
liabilities. The table below provides details of the changes in average
balances, interst and rates for the first six months of 1999 compared to 1998.
AVERAGE BALANCES/INTEREST EARNED OR PAID/RATES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average
(AMOUNTS IN THOUSANDS) BALANCE INTEREST RATE BALANCE INTEREST RATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments 15,338 $398 5.23% 10,686 $228 4.30%
Investment securities:
Securities held-to-maturity 5,073 144 5.72% 12,342 329 5.38%
Securities available-for-sale 190,433 6,053 5.41% 170,443 5,660 6.70%
Mortgages held for sale 4,867 162 6.71% 7,825 268 6.91%
Loans (A) 514,633 21,988 8.62% 529,905 23,930 9.11%
---------- ------- ----- --------- ------- -----
Total interest-earning assets 730,344 28,745 7.94% 731,201 30,415 8.39%
Allowance for loan losses (10,194) (10,984)
Cash and due from banks 30,367 35,069
Other assets 33,546 33,799
---------- ---------
Total Assets $784,063 $789,085
======== ========
LIABILITIES:
Regular savings deposits $156,835 $ 1,528 1.96% $148,264 $ 1,600 2.18%
NOW account deposits 84,818 580 1.38% 79,435 582 1.48%
Money market deposits 1,851 26 2.83% 7,104 104 2.95%
---------- ------- --------- -------
Total savings deposits 243,504 2,134 1.77% 234,803 2,286 1.96%
Time deposits 248,854 6,041 4.90% 294,637 8,005 5.48%
Short-term borrowings 44,551 883 4.00% 22,404 434 3.91%
Long-term borrowings 29,991 907 6.10% 25,900 795 6.19%
---------- ------- --------- -------
Total interest-bearing liabilities 566,900 9,965 3.54% 577,744 11,520 4.02%
Demand deposits 140,149 135,309
Other liabilities 3,942 5,418
---------- ---------
Total Liabilities 710,991 718,471
Equity 73,072 70,614
---------- ---------
Total Liabilities & Equity $784,063 $789,085
======== ========
Net interest income--FTE basis $18,780 $18,895
Less adjustment for
Tax-exempt income (328) (294)
------- -------
Net interest income $18,452 $18,601
======= =======
Net interest margin 5.19% 5.21%
Net interest spread 4.39% 4.37%
(A) AVERAGE LOANS INCLUDE NONACCRUING LOANS.
</TABLE>
Page -11-
<PAGE>
RATE/VOLUME ANALYSIS
Changes in net interest income are divided into two components--the changes
resulting from the changes in average balances of earning assets and
interest-bearing liabilities (or "volume") and the changes in the rates earned
or paid on those balances. The changes in interest income and interest expense
attributable to changes in both volume and rate, which cannot be segregated,
have been allocated proportionately to the absolute values of the changes due to
volume and rate. The following table is presented on an FTE basis.
Page -12-
<PAGE>
<TABLE>
<CAPTION>
Change due to
Total CHANGE IN:
Increase ----------
(AMOUNTS IN THOUSANDS) (DECREASE) RATE VOLUME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST EARNED ON:
Short-term investments $ 170 $ 49 $ 121
Securities held to maturity (185) 21 (206)
Securities available for sale 393 (242) 635
Mortgages held for sale (106) (8) (98)
Loans (1,942) (1,289) (653)
------- --------- -----
Total interest-earning assets $ (1,670) $ (1,469) $ (201)
-------- -------- -------
INTEREST PAID ON:
Regular savings deposits $ (72) $ (156) $ 84
NOW account deposits (2) (39) 37
Money market deposits (78) (4) (74)
--------- --------- -------
Total savings deposits (152) (199) 47
Time deposits (1,964) (853) (1,111)
Short-term borrowings 449 10 439
Long-term borrowings 112 (12) 124
-------- --------- -------
Total interest-bearing liabilities (1,555) (1,053) (502)
--------- --------- --------
Net interest income change $ (115) $ (416) $ 301
========= ======== =======
</TABLE>
NONINTEREST INCOME
Through the first six months of 1999, noninterest income totaled
$4,489,000, compared to $4,983,000 reported for the same period in 1998. The
major change was a $918,000 decrease in gains from the sale of investment
securities. In 1998 the parent company recorded a gain of $898,000 from the sale
of its own investment securities. Service charges, fees and commissions
increased $172,000 or 8.5% to $2,206,000 in the first half of this year. The
increase resulted from selected price increases and increased volume of services
provided to our growing base of customers. Mortgage Banking revenues increased
$292,000 or 21.4% and amounted to $1,659,000 for the six months ended June 30,
1999.
NONINTEREST EXPENSE
Noninterest expenses amounted to $15,835,000 during the first half of 1999
compared to $14,943,000 for the same period in 1998. Included in these results
were nonrecurring charges related to mergers and organizational restructurings.
In 1999 charges included $525,000 related to the acquisition of NECB by Webster
Financial Corp. and $828,000 related to the formation of a Passive investment
corporation by NECB. Under current Connecticut state tax guidelines this
structure provides NECB with significant tax benefits on an ongoing basis. In
1998 Olde Port incurred nonrecurring expenses of $190,000 related to its
acquisition by NECB. When these expenses and those related to management and
disposal of foreclosed properties and the amortization of goodwill are excluded
core operating expenses are $14,101,000 in 1999 compared to $13,997,000 in 1998.
The table below indicates the effect upon operating expenses, caused by
nonrecurring expenses
(amounts in thousands)
SIX MONTHS ENDED JUNE 30, 1999 1998 CHANGE
- ---------------------------------------------------------------------------
Noninterest expenses $15,835 $14,943 $892
Less:
Merger related expenses 525 190 335
Restructuring 828 0 828
Sale of portfolio loans 0 715 (715)
Foreclosed property expense 146 (114) 260
Amortization of good will 235 195 40
--- --- --
Subtotal 1,734 986 748
----- --- ---
Operating expense $14,101 $13,957 $144
======= ======= ====
Page -13-
<PAGE>
Using operating expenses, NECB's efficiency ratio for the six months ended June
30, 1999 is 61.5% compared to 59.4% for the six months ended June 30, 1998. This
increase reflected the increased investment for a new banking center to serve
the community of Hampton, New Hampshire and the operating costs of New England
Community Mortgage Corp. which was formed in June, 1998.
Page -14-
<PAGE>
FINANCIAL CONDITION
Total assets at June 30, 1999 were $808.4 million, an increase of $4.5
million from December 31, 1998. During the first half of 1999 loans outstanding
increased $2.5 million to $518.5 million while other earning assets, principally
the investment portfolio increased $6.9 million and non-earning assets decreased
$4.9 million. The table below shows a comparison of loans outstanding at the
start of this year and June 30, 1999. Our core business of serving the small
business clients in our market area continues to expand. Commercial and
financial loans rose $5.2 million while commercial real estate loans increased
$13.6 million. Earlier this year NECB completed the sale of a credit card
portfolio to the Texas Independent Bank. The $1.2 million portfolio, had
belonged to South Windsor prior to its acquisition last year.
(Amounts in thousands)
June 30, December 31,
1999 1998
- --------------------------------------------------------------------
Commercial and financial $ 152,140 $ 146,962
Real estate:
Construction 20,043 23,862
Residential 116,512 123,446
Commercial 189,758 176,139
Consumer 40,006 45,571
----------- -----------
Loans outstanding $ 518,459 $ 515,980
Securities available for sale amounted to $204.5 million at June 30, 1999,
an increase of $12.6 million since the start of the year. Securities
held-to-maturity decreased $1.6 million from December 31, 1998 and ended the
second quarter of 1999 at $4.1 million.
At June 30, 1999 other real estate owned amounted to $1.6 million or 0.2% of
total assets, virtually unchanged from the end of 1998. During the first half of
the year, the Company acquired properties with a value of $649,000 through
foreclosure and disposed of properties with a market value of $586,000.
Total deposits, which constitute the principal funding source of the
Company's assets, decreased $20.3 million from December 31, 1998 and amounted to
$643.8 million at June 30, 1999. Seasonal deposit outflows typically reach
maximum near the end of the first quarter and then increase moderately to
mid-year. This year follows that pattern with Deposits declining to $635.0
million at March 31st. Short-term borrowings, primarily customer repurchase
agreements, increased $21.9 million since the year began and stood at $56.9
million at June 30, 1999. NECB increased its long term borrowings $8.0 million
during the first half of 1999 to $35.3 million at June 30, 1999.
At mid-year total shareholders' equity stood at $69.6 million, a decrease of
$3.8 million since the start of the year. Net income of $4.3 million, less the
payment of the increased quarterly dividends of $0.24, per share added $2.7
million while $2.7 million was paid out to repurchase 135,500 shares of the
Company's Common Stock under the buyback program announced in February. Finally,
the change in the market value of investments available for sale resulted in a
reduction in capital of $3.6 million.
SECURITIES HELD-TO-MATURITY
Securities held-to-maturity are shown in the Company's balance sheets on an
amortized cost basis. Amortized cost is the original cost adjusted for the
effect of accumulated amortization of premiums and accretion of discounts. As
summarized in the table below, investments in securities held-to-maturity
decreased from $5.7 million at December 31, 1998 to $4.1 million at June 30,
1999.
Page -15-
<PAGE>
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Amortized Amortized
Cost Fair Cost Fair
(AMOUNTS IN THOUSANDS) BASIS VALUE BASIS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt securities issued by the U.S. Treasury
and other U.S. government agencies $ 500 $ 501 $1,899 $1,914
Debt securities issued by states and
political subdivisions of the states 2,838 2,890 2,813 2,969
Mortgage-backed securities 519 513 672 678
Other debt securities 265 267 265 270
--------- --------- --------- ---------
$ 4,122 $4,171 $5,675 $5,831
========= ====== ====== ======
</TABLE>
SECURITIES AVAILABLE-FOR-SALE
Securities available-for-sale are shown in the Company's balance sheets at
fair value. The unrealized gain or loss resulting from such valuation, reduced
by the effect of income taxes, is reflected as a separately disclosed component
of shareholders' equity.
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Amortized Amortized
Cost Fair Cost Fair
(AMOUNTS IN THOUSANDS) BASIS VALUE BASIS VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marketable equity securities $ 16,993 $ 17,348 $ 29,826 $ 30,369
Debt securities issued by the U.S. Treasury
and other U.S. government agencies 98,438 96,163 102,029 102,937
Debt securities issued by states and
political subdivisions of states 13,067 12,833 13,186 13,417
Corporation debt securities 18,432 18,013 10,610 10,727
Asset-based securities 986 1,019
Mortgage-backed securities 61,272 60,155 32,950 33,398
-------- -------- -------- --------
$208,202 $204,512 $189,587 $191,867
======== ======== ======== ========
</TABLE>
NONPERFORMING ASSETS
Nonperforming assets ("NPAs") are assets on which income recognition, in
the form of principal and/or interest, has either ceased or is limited, thereby
reducing the Company's earnings. Maintaining a low level of NPAs is important to
the ongoing success of NECB. The Company's comprehensive credit review and
approval process is critical to the ability to minimize NPAs on a long-term
basis. In addition to the negative impact on net interest income and credit
losses, NPAs also increase operating expenses due to the costs associated with
collection efforts.
NPAs include nonaccrual loans and other real estate owned ("OREO").
Generally, loans are placed in nonaccrual status when they are past due greater
than ninety days or the repayment of interest or principal is considered to be
in doubt. OREO consists of properties acquired through foreclosure proceedings.
These properties are recorded at the lower of the carrying value of the related
loans or the estimated fair market value less estimated selling costs. Charges
to the allowance for loan losses are made to reduce the carrying amount of loans
to the fair market value of the properties less estimated selling expenses upon
reclassification as OREO. Subsequent reductions, if needed, are charged to
operating income. In addition to NPAs, the asset quality of the Company can be
measured by the amount of the provision, charge-offs and several credit quality
ratios presented in the discussion concerning "Provision and Allowance for Loan
Losses."
Page -16-
<PAGE>
<TABLE>
<CAPTION>
(Amounts in thousands)
JUNE 30, 1999 DECEMBER 31,1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $ 6,524 $ 5,340
OREO 1,641 1,636
--------- ---------
Total nonperforming assets $ 8,165 $ 6,976
========= =========
Loans past due in excess of ninety days and accruing interest $ 209 $ 977
Activity in Nonperforming Assets
(Amounts in thousands)
SIX MONTHS ENDING JUNE 30, 1999 1998(A)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 and 1997 $7,241 13,034
Additions 4,528 1,671
Reductions:
Payments (2,438) (821)
Charge-offs and writedowns (345) (3,602)
Loans returned to accruing status (235) (323)
Sales (586) (2,774)
--------- ---------
Ending Balance, June 30, 1999 and 1998 $ 8,165 $ 7,185
========= =========
</TABLE>
(a) The unusually large decrease in nonperforming assets was primarily to the
bulk sale in March 1998.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
NECB's allowance for loan losses represents amounts available for
future credit losses. Management continually assesses the adequacy of the
allowance for loan losses in response to current and anticipated economic
conditions, specific problem loans, historical net charge-offs and the overall
risk profile of the loan portfolio. Management allocates specific allowances to
individual problem loans based upon its analysis of the potential for loss
perceived to exist related to such loans. In addition to the specific allowances
for individual loans, a portion of the allowance is maintained as a general
allowance. The amount of the general allowance is determined through
management's analysis of the potential for loss inherent in those loans not
considered problem loans. Among the factors considered by management in this
analysis are the number and type of loans, nature and amount of collateral
pledged to secure such loans and current economic conditions. The allowance for
loan losses is not a precise amount but is derived from judgments based on the
above factors.
The following table summarizes the activity in the allowance for possible
loan losses for the quarters ended June 30, 1999 and 1998. The allowance is
maintained at a level consistent with identified loss potential and the
perceived risk in the portfolio.
Page -17-
<PAGE>
(In thousands)
SIX MONTHS ENDED JUNE 30, 1999 1998
- ----------------------------------------------------------------------------
Balance beginning of period $10,092 $12,081
Provisions charged to operations 333 805
Recoveries on loans previously charged-off 369 430
Charge-offs taken in conjunction with bulk
loan sale (i.e., specific allocated reserves) (1,392)
Loans charged-off (512) (1,756)
------- -------
Balance end of period $10,282 $10,168
======= =======
CAPITAL
The Company endeavors to maintain an optimal amount of capital upon which an
attractive return to shareholders will be realized over the short and long run
while meeting all regulatory requirements for minimum levels of capital.
As of June 30, 1999, the Company exceeded all regulatory capital ratios and
each of the banking subsidiaries were categorized as "well capitalized." The
various capital ratios of the Company for June 30, 1999 and 1998 were:
MINIMUM LEVEL 1999 1998
------------- ---- ----
Total Risk-Based............... 8% 13.2% 14.5%
Tier 1 Risk-Based.............. 4% 11.9% 13.2%
Leverage....................... 4% 8.6% 9.1%
LIQUIDITY
It is Management's objective to ensure the continuous ability to meet cash
needs as they arise. Such needs may occur from time to time as a result of
seasonal declines in deposit levels, response to changes in interest rates paid
on deposits and interest rates charged for loans and fluctuations in the demand
for the Banks' various loan products. Accordingly, the Company maintains
liquidity that provides the flexibility to meet its cash needs. The liquidity
objective is achieved through the maintenance of readily marketable assets as
well as a balanced flow of asset maturities and prudent pricing on loan and
deposit agreements. The Company has alternative sources of liquidity, including
repurchase agreements and lines of credits provided by the FHLBB to the
Subsidiaries, which together provide the Company with flexibility in managing
its liquidity position. The maturities of investment securities and cash flows
from the repayments of outstanding loans are expected to provide the Company
with adequate liquidity over the coming months.
YEAR 2000 READINESS
In preparation for December 31, 1999, the Company has developed a Year 2000
Plan (the "Plan") which has been approved by Senior management and the Boards of
Directors of NECB and each of its subsidiaries. The Plan was developed using the
guidelines outlined in a report by the Federal Financial Institutions
Examination Council (FFIEC), The Effect of Year 2000 on Computer Systems. The
Company assigned responsibility for the Plan to the Year 2000 Coordinator who
reports to the Board of Directors. The Coordinator chairs a committee of key
managers providing constant oversight to the process of Year 2000 readiness. The
committee reviews all actions related to the implementation of the Plan. The
Plan recognizes that the Company's operating, processing and accounting
operations are computer reliant and could be affected by the Year 2000.
The Company is reliant on both in-house and third party vendors for its
computer output and processing, as well as other significant functions and
services (e.g., securities safekeeping services, securities pricing information,
etc.). The Coordinator completed an inventory and assessment of all of the
Company's mission critical systems and completed both the renovation and testing
phases of the project. In terms of the third party vendors, the Year 2000
Coordinator is continuing to work with those to assess and test their Year 2000
readiness. Management presently believes that these vendors are taking
appropriate steps to modify existing software and hardware to ensure that
critical systems will function properly. The most significant hurdle the Company
has encountered in verifying and testing all mission critical
Page -18-
<PAGE>
third parties is the limited ability the Company has to independently test the
preparedness of its telephone system and electric power providers. The Company
has identified 67 mission critical (without which the Company cannot operate)
and necessary (applications that the Company can use for a moderate amount of
time without requiring Year 2000 compliance) applications operated by third
party vendors. The list is reviewed regularly to include new applications or
remove unnecessary applications. Of such mission critical and critical
applications, the Company has been informed that substantially all are Year 2000
compliant. While the Company has received assurances from these third party
vendors as to compliance, their assurances are not guarantees and may not be
enforceable. Many of the Company's existing older contracts with the vendors do
not include Year 2000 certifications or warranties. Thus, in the event such
vendor's products and/or services are not actually Year 2000 compliant, the
Company's recourse may be limited.
If any required modifications and conversions are not properly made, or are
not completed on a timely basis, there can be no assurance that potential system
interruptions or unanticipated additional expense incurred to obtain Year 2000
compliance would not have a material adverse effect on the Company's business,
financial condition, results of operations and business prospects. Nevertheless,
the Company does not believe that the costs or the consequences of incomplete or
untimely resolution of its Year 2000 problems represent a known material event
or uncertainty that is reasonably likely to affect its future financial results,
or cause its reported financial information not to be indicative of future
operating results or future financial condition.
The Year 2000 readiness also affects a certain limited number of the
Company's customers, particularly in the areas of access to funds and additional
expense incurred to achieve compliance. The Company has adopted a plan for
evaluating and assessing the level of Year 2000 preparedness of its large or
commercial credit customers. While no assurance can be given that the Company's
customers will be Year 2000 compliant, management has taken steps to verify that
they are adequately addressing or that they are not faced with material Year
2000 Problems. The Company's credit risk related to the Year 2000 Problem is
mitigated by the fact that only a few of such borrowers use networked computer
systems or data centers to conduct their operations. In addition, in
substantially all cases the credit extended to such borrowers is collateralized
by real estate which inherently minimizes the Company's exposure in the event
that some borrowers do experience problems or delays in becoming Year 2000
compliant. The Company has already begun to assess and make accommodations for
addressing the liquidity concerns that our regulators have raised. These plans
may include the off-site retention of extra cash, lines of credit, and
additional liquid investment vehicles to provide the ability to maintain smooth
operations in the event of abnormal withdrawals of funds by consumers concerned
with the effect of the Year 2000. In addition, the Company has embarked on an
extensive consumer education and awareness program regarding the Company's state
of preparedness. The program includes multiple correspondence and communication
pieces, in-branch materials and the like. The Company has its own company-wide
Year 2000 contingency plan. The Company has had a comprehensive business
interruption and disaster recovery contingency plan for many years. The plan is
continually updated. The Company has developed even more specific contingency
plans which address operational policies and procedures in the event of data
processing, electric power supply and/or telephone service failures associated
with the Year 2000. Such contingency plans are designed to provide documented
actions to allow the Company to maintain and/or resume normal operations in the
event of any failure in mission critical or critical applications. Such plans
identify participants, processes and equipment that will be necessary to permit
the Company to continue operations. Such plans may include providing off-line
system processing, back-up electrical and telephone systems, and other methods
to ensure the Company's ability to continue to operate.
The direct costs of modifications to the existing software and hardware,
staffing, customer awareness and other issues for completing the Year 2000
project have been and will continue to be expensed as incurred.
FORWARD LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q,
including those contained in this Item 1, are forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 and are thus
prospective. Such forward looking statements are subject to risks, uncertainties
and other factors which could cause actual results to differ materially from
future results expressed or implied by such statements. Such factors include,
but are not limited to: changes in interest rates, regulation, competition and
the local and regional economy.
Page -19-
<PAGE>
Part II: Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Exhibits
Exhibit Number Exhibit
27 Financial Data Schedule
Page -20-
<PAGE>
NEW ENGLAND COMMUNITY BANCORP, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW ENGLAND COMMUNITY BANCORP, INC.
-----------------------------------
Date: August 14, 1999 By:
--------------------------------------------
Anson C. Hall
Vice President and Treasurer
Page -21-
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000752324
<NAME> New England Community Bancorp, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 33,040
<INT-BEARING-DEPOSITS> 595
<FED-FUNDS-SOLD> 7,208
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 204,512
<INVESTMENTS-CARRYING> 4,122
<INVESTMENTS-MARKET> 4,171
<LOANS> 518,459
<ALLOWANCE> 10,282
<TOTAL-ASSETS> 808,398
<DEPOSITS> 643,784
<SHORT-TERM> 56,788
<LIABILITIES-OTHER> 2,982
<LONG-TERM> 35,252
0
0
<COMMON> 704
<OTHER-SE> 68,888
<TOTAL-LIABILITIES-AND-EQUITY> 808,398
<INTEREST-LOAN> 22,150
<INTEREST-INVEST> 5,964
<INTEREST-OTHER> 303
<INTEREST-TOTAL> 28,417
<INTEREST-DEPOSIT> 8,175
<INTEREST-EXPENSE> 9,965
<INTEREST-INCOME-NET> 18,452
<LOAN-LOSSES> 333
<SECURITIES-GAINS> 499
<EXPENSE-OTHER> 15,835
<INCOME-PRETAX> 6,773
<INCOME-PRE-EXTRAORDINARY> 6,773
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,345
<EPS-BASIC> 0.62
<EPS-DILUTED> 0.61
<YIELD-ACTUAL> 5.19
<LOANS-NON> 6,524
<LOANS-PAST> 209
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 18,231
<ALLOWANCE-OPEN> 10,092
<CHARGE-OFFS> 345
<RECOVERIES> 153
<ALLOWANCE-CLOSE> 10,282
<ALLOWANCE-DOMESTIC> 10,282
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
