<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
SEPTEMBER 30, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks ....................................................... $ 24,685 $ 24,322
-------- --------
Investment securities at amortized cost (approximate
market value of $56,716 and $63,619 ) .................................. 56,344 63,376
-------- --------
Securities available for sale at estimated market value
(amortized cost of $57,852 and $54,871 ) ................................ 59,353 55,252
-------- --------
Loans ......................................................................... 378,445 351,793
Less: Allowance for loan losses .............................................. 4,672 3,653
-------- --------
Net loans ..................................................................... 373,773 348,140
-------- --------
Premises and equipment, net ................................................... 7,650 5,151
Foreclosed real estate ........................................................ -- 610
Accrued interest receivable and other assets .................................. 6,813 7,838
-------- --------
TOTAL ASSETS .................................................................. $528,618 $504,689
======== ========
LIABILITIES
Deposits
Noninterest bearing ..................................................... $ 86,977 $ 76,340
Interest bearing ........................................................ 367,036 353,673
-------- --------
Total deposits ................................................................ 454,013 430,013
Securities sold under agreements to repurchase ................................ 12,638 11,050
Short-term borrowings ......................................................... -- 5,200
Accrued interest payable and other liabilities ................................ 3,792 4,082
Long-term borrowings .......................................................... 9,906 9,983
-------- --------
TOTAL LIABILITIES ............................................................. 480,349 460,328
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock .................................................................. 4,794 4,733
Capital surplus ............................................................... 15,739 14,931
Retained earnings ............................................................. 28,491 24,429
Unrealized gain - securities available for sale, net of taxes ................. 951 268
-------- --------
49,975 44,361
Less: Treasury Stock (89,350 common shares) ................................. 1,706 --
-------- --------
Total stockholders' equity .............................................. 48,269 44,361
-------- --------
TOTAL liabilities and stockholders' equity .................................... $528,618 $504,689
======== ========
- ----------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
<CAPTION>
THREE MONTHS ENDED Nine Months Ended
SEPTEMBER 30, September 30,
------------------------ ----------------------
1997 1996 1997 1996
---------- ---------- -------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ........................................ $ 8,335 $ 7,295 $ 24,130 $ 21,468
Interest on federal funds sold .................................... 73 5 268 375
Interest and dividends on securities
Taxable interest income ....................................... 1,704 1,874 5,081 5,664
Interest income exempt from federal income taxes .............. 36 49 60 79
Dividends ..................................................... 47 39 148 115
-------- -------- -------- --------
TOTAL INTEREST INCOME ............................................. 10,195 9,262 29,687 27,701
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits .............................................. 3,660 3,488 10,483 10,626
Interest on short-term borrowings ................................. 180 89 545 344
Interest on long-term borrowings .................................. 149 -- 447 --
-------- -------- -------- --------
TOTAL INTEREST EXPENSE ............................................ 3,989 3,577 11,475 10,970
-------- -------- -------- --------
NET INTEREST INCOME ............................................... 6,206 5,685 18,212 16,731
Provision for loan losses ......................................... 210 150 1,330 550
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES .................................................. 5,996 5,535 16,882 16,181
-------- -------- -------- --------
NONINTEREST INCOME
Service fees on deposit accounts .................................. 525 397 1,418 1,161
Net gain on sale of loans ......................................... -- -- 1,067 --
Net gain on sale of securities available for sale ................. -- -- -- 235
Accretion of discount in connection with acquisition .............. -- 131 -- 511
Other ............................................................. 304 197 1,619 969
-------- -------- -------- --------
TOTAL NONINTEREST INCOME .......................................... 829 725 4,104 2,876
-------- -------- -------- --------
NONINTEREST EXPENSES
Salaries and benefits ............................................. 2,010 1,919 6,057 5,722
Net occupancy ..................................................... 468 539 1,431 1,637
Furniture and equipment ........................................... 216 171 580 534
Advertising and promotion ......................................... 184 213 545 561
Federal Deposit Insurance Corporation assessment .................. 15 129 34 154
Foreclosed real estate expense, net ............................... (5) 116 -- 214
Other ............................................................. 1,161 1,191 3,448 3,499
-------- -------- -------- --------
TOTAL NONINTEREST EXPENSES ........................................ 4,049 4,278 12,095 12,321
-------- -------- -------- --------
Income before income taxes ....................................... 2,776 1,982 8,891 6,736
Income taxes ...................................................... 972 694 3,112 2,358
-------- -------- -------- --------
NET INCOME ........................................................ $ 1,804 $ 1,288 $ 5,779 $ 4,378
======== ======== ======== ========
PER COMMON SHARE .................................................. $ 0.43 $ 0.30 $ 1.35 $ 1.03
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
<CAPTION>
Unrealized
Gain/(Loss) on
Securities
Common Capital Retained Available Treasury
Stock Surplus Earnings for Sale Stock Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 ................................... $ 4,495 $ 12,110 $ 22,990 $ 646 $ -- $ 40,241
Net income ................................................... 4,378 4,378
Dividends on common stock at $0.36 per share (1) ............. (1,551) (1,551)
5% common stock dividend ..................................... 225 2,678 (2,903) --
Fractional shares of 5% common stock dividend ................ (5) (5)
Issued 7,498 shares of common stock in connection
with incentive plan ...................................... 13 148 161
Decrease in market valuation-securities available for
sale, net of taxes ....................................... (580) (580)
------ ----- ------ ------ ----- ----
Balance at September 30, 1996 ................................ 4,733 14,931 22,914 66 -- 42,644
Net Income ................................................... 2,041 2,041
Dividends on common stock at $0.127 per share (1) ............ (526) (526)
Increase in market valuation-securities available for
sale, net of taxes ....................................... 202 202
-------- -------- -------- -------- -------- --------
Balance at December 31, 1996 ................................. 4,733 14,931 24,429 268 -- 44,361
Net income ................................................... 5,779 5,779
Dividends on common stock at $0.405 per share (1) ............ (1,717) (1,717)
Fractional shares on 3 for 2 stock split ..................... (3) (3)
Issued 8,549 shares of common stock in connection
with incentive plans (1) ................................. 9 159 168
Exercise of 18,293 option shares (1) ......................... 20 143 163
Purchase of 8,133 shares in exchange for option shares (1) ... (163) (163)
Purchase 81,217 shares of common stock at $19 per share ...... (1,543) (1,543)
Issuance of 153,041 shares of common stock in merger
with Washington Interchange Corporation .................. 170 2,765 2,935
Retirement of 124,855 shares of common stock held by
Washington Interchange Corporation at time of merger .... (138) (2,256) (2,394)
Increase in market valuation - securities available
for sale, net of taxes ................................... 683 683
-------- -------- -------- -------- -------- --------
Balance at September 30, 1997 ................................ $ 4,794 $ 15,739 $ 28,491 $ 951 $ (1,706) $ 48,269
======== ======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Adjusted for the effects of the 3 for 2 stock split issued on April 17, 1997
to shareholders of record on March 20, 1997
</FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
For the nine months ended
September 30,
---------------------------
1997 1996
---------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...................................................................... $ 5,779 $ 4,378
Non-cash items included in earnings
Depreciation and amortization of fixed assets ................................ 775 755
Amortization of securities premiums .......................................... 579 801
Accretion of securities discounts ............................................ (81) (48)
Amortization of premiums in connection with acquisition ...................... 333 333
Accretion of discount in connection with acquisition ......................... -- (511)
Provision for loan losses .................................................... 1,330 550
Net gain on sale of securities available for sale ............................ -- (235)
Net gain on sale of loans ................................................... (1,067) --
Net (gain) loss on sale of foreclosed real estate ............................ (5) 87
(Increase) decrease in carrying value of loans available for sale ............ (7) 30
Decrease (increase) in operating assets
Net repayment (origination) of loans available for sale ...................... 19 (108)
Accrued interest receivable .................................................. 352 616
Deferred income taxes ........................................................ -- (84)
Other ........................................................................ (39) 1,014
Increase (decrease) in operating liabilities
Accrued interest payable ..................................................... 39 93
Other ........................................................................ (330) (326)
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES ........................................... 7,677 7,345
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
(Payments for) proceeds from
Net originations of loans .................................................... (30,350) (20,482)
Purchase of loans ............................................................ (1,502) (2,116)
Sale of loans ................................................................ 5,944 --
Purchase of securities available for sale .................................... (3,990) (21,528)
Maturities of securities available for sale .................................. 834 618
Sale of securities available for sale ........................................ -- 38,349
Sale of foreclosed real estate ............................................... 616 644
Purchase of investment securities ............................................ (21,086) (19,266)
Maturities of investment securities .......................................... 27,787 20,270
Net payments on foreclosed real estate ....................................... -- 8
Washington Interchange merger ................................................ 37 --
Purchase of fixed assets ..................................................... (2,833) (582)
Sale of fixed assets ......................................................... 13 --
-------- --------
CASH USED FOR INVESTING ACTIVITIES .............................................. (24,530) (4,085)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (payments for)
Deposits more (less) than withdrawals ........................................ 24,000 (802)
Securities sold under agreements to repurchase ............................... 14,388 15,828
Retirement of other borrowings ............................................... (5,277) (7,950)
Retirement of securities sold under agreement to repurchase .................. (12,800) (7,382)
Dividends .................................................................... (1,717) (1,551)
Common stock issued .......................................................... 165 156
Treasury stock ............................................................... (1,543) --
-------- --------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES ................................ 17,216 (1,701)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS ........................................... 363 1,559
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .................................... 24,322 25,151
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................................ $ 24,685 $ 26,710
======== ========
- ----------
Supplemental disclosure of cash flow information:
Cash paid for:
Interest ................................................................... $11,436 $ 10,876
Income taxes ............................................................... 3,822 2,960
Supplemental disclosure of non-cash investing activities:
Loans transferred to foreclosed real estate ................................ $ -- $ 179
(Increase) decrease - market valuation of securities available
for sale .............................................................. (1,119) 876
See notes to consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
1. FINANCIAL STATEMENTS
The consolidated financial statements should be read in conjunction
with the financial statements and schedules as presented in the Annual Report on
Form 10-K of Interchange Financial Services Corporation (the "Company") for the
year ended December 31, 1996.
Consolidated financial data for the three months and nine months ended
September 30, 1997 and 1996, are unaudited but reflect all adjustments
consisting of only normal recurring adjustments which are, in the opinion of
management, considered necessary for a fair presentation of the financial
condition and results of operations for the interim periods. Results for interim
periods are not necessarily indicative of results to be expected for any other
period or the full year.
2. LEGAL PROCEEDINGS
The Company is a party to routine litigation involving various aspects
of its business, none of which, in the opinion of management and its legal
counsel, is expected to have a material adverse impact on the consolidated
financial condition, results of operations or liquidity of the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is an analysis of the consolidated financial
condition and results of operations of the Company for the three months and nine
months ended September 30, 1997 and 1996, and should be read in conjunction with
the consolidated financial statements and notes thereto included in Item 1
hereof.
RESULTS OF OPERATIONS
EARNINGS SUMMARY -- THREE MONTHS
For the third quarter of 1997, the Company reported net income of $1.8
million or $0.43 per share, as compared with $1.3 million or $0.30 per share for
the comparable 1996 period, an increase of $516 thousand or $0.13 per share. The
growth in earnings was a product of improved net interest income, increased
noninterest income and a decline in noninterest expenses.
Net interest income increased $521 thousand or 9.2% largely because of
a $37.6 million or 8.3% increase in average interest earning assets and an
improved net interest margin. The greatest growth in interest earning assets
continues to occur in loans; specifically commercial loans which generally carry
higher yields. For the third quarter of 1997, loans on average increased $43.6
million or 13.2% as compared to the same period a year ago. Such assets were
funded mostly with demand and savings deposits which typically carry lower
yields, thereby having a positive effect on the net interest margin. The net
interest margin for the third quarter 1997 was 5.05% as compared to 5.01% for
the prior comparable period.
Noninterest income increased $104 thousand for the third quarter of
1997, as compared to the same period in 1996. The change was principally due to
an increase in service charge income.
Noninterest expenses for the 1997 period decreased $229 thousand or
5.4% as compared to the 1996 period despite the Company's growth and continued
investment in technology. The decrease is attributable in the first instance to
a decrease in foreclosed real estate expense of $121 thousand resulting from the
workout and sale of the Company's foreclosed real estate. In addition, the
decrease is attributable to a one time Federal Deposit Insurance Corporation
("FDIC") assessment of $114 thousand in the third quarter of 1996 to
recapitalize the Savings Association Insurance Fund.
EARNINGS SUMMARY -- NINE MONTHS
Net Income for the nine months ended September 30, 1997, was $5.8
million or $1.35 per share, as compared to $4.4 million or $1.03 per share for
the same period a year ago. The growth in earnings was generated by improved net
interest income, increased noninterest income and a decline in noninterest
expenses.
Earnings for the nine month period improved as a result of a $1.5
million or 8.9% growth in net interest income from the same period a year ago.
Contributing to the growth in net interest income was an increase of $26.3
million in average interest earning assets for the 1997 period over the
comparable 1996 period. The growth occurred mostly in loans which had an average
balance of $362.6 million for the nine months ended September 30, 1997, an
increase of $42.8 million or 13.4% over the comparable 1996 period. The earnings
benefit derived from the growth in earning assets was augmented by an increase
in the net interest margin to 5.06% for the 1997 period, as compared to 4.92%
for the same period in 1996. The improved net interest margin was a product of
the Company's effort to improve the composition of its deposit liabilities by
moving from higher costing single transaction certificates of deposit to lower
costing demand and savings deposits. In addition, a portion of the higher
costing single transaction certificates of deposit were replaced with less
expensive alternative funding sources, such as repurchase agreements. The change
in the composition of deposit liabilities combined with the growth in earning
assets was principally responsible for the improvement in net interest income.
Earnings for the 1997 period also benefited from a $1.2 million
increase in noninterest income. The increase resulted from the following: a gain
of $775 thousand resulting from the early payoff of a commercial loan that was
purchased at a discount; and, a gain of $1.1 million from the sale of two
commercial mortgage loans in the first quarter of 1997. However, the benefit
derived from the gains was partly offset by approximately $1.1 million in gains
and discount accretion that was realized in the first nine months of 1996 and
did not reoccur in 1997.
Earnings for the nine month period ended September 30, 1997, were
unfavorably affected by a $780 thousand increase in the provision for loan
losses as compared to the same period in 1996. The increase is described in the
section titled "Provision for Loan Losses and Loan Loss Experience."
Noninterest expenses for the 1997 period decreased $226 thousand or
1.8% as compared to the 1996 period despite the Company's growth and continued
investment in technology. During 1997, the Company increased investment in
technology to include a wide area network, improved deposit and loan software,
ACH origination, automated bill payment system and a larger mainframe. The
enhancements in technology will allow the Company to deliver faster and more
efficient services to its customers. The decrease in noninterest expenses is
principally attributable to the following: a decrease in foreclosed real estate
expense of $214 thousand resulting from the workout and sale of the Company's
remaining foreclosed real estate; a decline in the Federal Deposit Insurance
Corporation ("FDIC") assessment of $120 thousand due to a third quarter 1996
special assessment of $114 thousand to recapitalize the Savings Association
Insurance Fund; and, a decline in net occupancy of $206 thousand. An increase of
$335 thousand in salaries and benefits due primarily to annual salary increases
and promotions partially offset the benefits described above.
NONPERFORMING ASSETS
Nonperforming assets are comprised of nonaccrual loans, restructured
loans and foreclosed real estate. At September 30, 1997, nonperforming assets
amounted to $2.1 million, a decrease of $1.3 million from $3.4 million at
December 31, 1996. The decline was mostly influenced by the sale of $610
thousand of real estate owned during the nine month period. The ratio of
nonperforming assets to total loans and foreclosed real estate decreased from
1.0% at December 31, 1996, to .6% at September 30, 1997.
PROVISION FOR LOAN LOSSES AND LOAN LOSS EXPERIENCE
The provision for loan losses represents management's determination of
the amount necessary to bring the allowance for loan losses to a level that
management considers adequate to reflect the risk of future losses inherent in
the Company's loan portfolio. In its evaluation of the adequacy of the allowance
for loan losses, management considers past loan loss experience, changes in the
composition of performing and nonperforming loans, the condition of borrowers
facing financial pressure, the relationship of the current level of the
allowance to the credit portfolio and to nonperforming loans and existing
economic conditions. However, the process of determining the adequacy of the
allowance is necessarily judgmental and subject to changes in external
conditions. Accordingly, there can be no assurance that existing levels of the
allowance will ultimately prove adequate to cover actual loan losses.
The allowance for loan losses was $4.7 million at September 30, 1997,
and $3.7 million at December 31, 1996, representing 217.7% and 130.0% of
nonperforming loans at those dates, respectively. In the third quarter of 1997,
the Company's provision for loan losses was $210 thousand, an increase of $60
thousand from the same period a year ago. For the nine month period, the
Company's provision for loan losses was $1.3 million, an increase of $780
thousand from the same period a year ago. The Company's lending focus and growth
continue to be largely in its commercial loan portfolio. Such growth can change
the characteristics and potentially increase the inherent credit risk of the
Company's loan portfolio. Accordingly, the Company has revised the risk
allocation percentages applied to commercial loans used in computing the
allowance for loan losses to capture such risk. This resulted in the increase in
the provision for loan losses.
<PAGE>
<TABLE>
SECURITIES
Investment securities and securities available for sale consist of the following: (in thousands)
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C>
INVESTMENT SECURITIES
OBLIGATIONS OF U.S. TREASURY ................................. $ 28,208 $ 155 -- $ 28,363
OBLIGATIONS OF U.S. AGENCIES ................................. 19,689 249 $ 11 19,927
OBLIGATIONS OF STATES & POLITICAL SUBDIVISIONS ............... 4,158 -- 9 4,149
OTHER DEBT SECURITIES ........................................ 4,289 -- 12 4,277
-------- -------- -------- --------
56,344 404 32 56,716
-------- -------- -------- --------
SECURITIES AVAILABLE FOR SALE
OBLIGATIONS OF U.S. TREASURY ................................. 35,497 589 102 35,984
OBLIGATIONS OF U.S. AGENCIES ................................. 16,751 178 5 16,924
OTHER DEBT SECURITIES ........................................ 1,692 33 -- 1,725
EQUITY SECURITIES ............................................ 3,912 808 -- 4,720
-------- -------- -------- --------
57,852 1,608 107 59,353
-------- -------- -------- --------
TOTAL SECURITIES ........................................... $114,196 $ 2,012 $ 139 $116,069
======== ======== ======== ========
December 31, 1996
-------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
Investment securities
Obligations of U.S. Treasury ................................... $ 43,517 $ 248 -- $ 43,765
Obligations of U.S. Agencies ................................... 11,077 74 $ 22 11,129
Obligations of states & political subdivisions ................. 3,581 1 9 3,573
Other debt securities .......................................... 5,201 -- 49 5,152
-------- -------- -------- --------
63,376 323 80 63,619
-------- -------- -------- --------
Securities available for sale
Obligations of U.S. Treasury ................................... 31,640 453 246 31,847
Obligations of U.S. Agencies ................................... 17,321 124 12 17,433
Other debt securities .......................................... 1,998 11 -- 2,009
Equity securities .............................................. 3,912 51 -- 3,963
-------- -------- -------- --------
54,871 639 258 55,252
-------- -------- -------- --------
Total securities ............................................. $118,247 $ 962 $ 338 $118,871
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
At September 30, 1997, the contractual maturities of investment securities and securities available
for sale are as follows: (in thousands)
<CAPTION>
SECURITIES
INVESTMENT SECURITIES AVAILABLE FOR SALE
------------------------------- ----------------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
WITHIN 1 YEAR .................... $20,191 $20,242 $ 2,000 $ 2,006
AFTER 1 BUT WITHIN 5 YEARS ....... 19,140 19,294 37,447 37,981
AFTER 5 BUT WITHIN 10 YEARS ...... 6,887 6,996 8,705 8,821
AFTER 10 YEARS ................... 10,126 10,184 5,788 5,825
EQUITY SECURITIES ................ -- -- 3,912 4,720
------- ------- ------- -------
TOTAL .... $56,344 $56,716 $57,852 $59,353
======= ======= ======= =======
</TABLE>
<TABLE>
CAPITAL ADEQUACY
The Company's and the Bank's capital amounts and ratios are as follows: (dollars in thousands)
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------------ ------------------------ ---------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ----------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
AS OF SEPTEMBER 30, 1997:
TOTAL CAPITAL (TO RISK WEIGHTED ASSETS):
THE COMPANY .................................... $50,835 14.58% $27,891 8.00% N/A N/A
THE BANK ....................................... 48,982 14.12 27,745 8.00 $34,681 10.00%
TIER 1 CAPITAL (TO RISK WEIGHTED ASSETS):
THE COMPANY .................................... 46,477 13.33 13,946 4.00 N/A N/A
THE BANK ....................................... 44,647 12.87 13,872 4.00 20,809 6.00
TIER 1 CAPITAL (TO AVERAGE ASSETS):
THE COMPANY .................................... 46,477 8.81 15,823 3.00 N/A N/A
THE BANK ....................................... 44,647 8.50 15,756 3.00 26,259 5.00
As of December 31, 1996:
Total Capital (to Risk Weighted Assets):
The Company .................................... $46,720 14.42% $25,918 8.00% N/A N/A
The Bank ....................................... 45,391 14.07 25,813 8.00 $32,266 10.00%
Tier 1 Capital (to Risk Weighted Assets):
The Company .................................... 43,067 13.29 12,959 4.00 N/A N/A
The Bank ....................................... 41,738 12.94 12,906 4.00 19,359 6.00
Tier 1 Capital (to Average Assets):
The Company .................................... 43,067 8.66 14,925 3.00 N/A N/A
The Bank ....................................... 41,738 8.39 14,925 3.00 24,875 5.00
</TABLE>
<PAGE>
LIQUIDITY
Liquidity is the ability to provide sufficient resources to meet all
financial obligations and finance prospective business opportunities. Liquidity
levels over any given period of time are a product of the Company's operating,
financing and investing activities. The extent of such activities is often
shaped by such external factors as competition for deposits and demand for
loans.
Financing for the Company's loans and investments is derived primarily
from deposits, along with interest and principal payments on loans and
investments. At September 30, 1997, total deposits amounted to $454.0 million,
an increase of $24.0 million or 5.6% from December 31, 1996. The Company
continues to supplement the more traditional funding sources with borrowings
from the Federal Home Loan Bank of New York ("FHLB") and with securities sold
under agreements to repurchase ("REPOS"). At September 30, 1997, advances from
the FHLB and REPOS amounted to $9.9 million and $12.6 million, respectively, as
compared to $15.2 million and $11.1 million, respectively, at December 31, 1996.
In the third quarter of 1997, loan production continued to be the
Company's principal investing activity. Net loans at September 30, 1997,
amounted to $373.8 million, compared to $348.1 million at the end of 1996, an
increase of $25.7 million or 7.4%.
The Company's most liquid assets are cash and due from banks and
federal funds sold. At September 30, 1997, the total of such assets amounted to
$24.7 million or 4.7% of total assets, compared to $24.3 million or 4.8% of
total assets at December 31, 1996.
Another significant liquidity source is the Company's
available-for-sale ("AFS") securities. At September 30, 1997, AFS securities
amounted to $59.4 million or 51.3% of total securities, compared to $55.3
million or 46.6% of total securities at December 31, 1996.
In addition to the aforementioned sources of liquidity, the Company has
available various other sources of liquidity, including federal funds purchased
from other banks and the Federal Reserve discount window. The Company also has a
$50.9 million line of credit available through its membership in the Federal
Home Loan Bank of New York.
Management believes that the Company's sources of funds are sufficient
to meet its funding requirements.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Form 10-K filed for the year ended December 31, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are furnished herewith:
EXHIBIT NO.
10 Change in Control Agreement dated August 4, 1997 for Patricia
Arnold
11 Statement Re: Computation of Per Share Earnings
(b) No reports filed on Form 8-K for the three months ended September 30,
1997
(c) Executive Compensation Plans and Arrangements
(1) Stock Option Plan of 1989 now retitled Stock Option & Incentive
Stock Plan of 1997, filed as part of Amendment No. 1 to Form S-8
filed with the SEC on September 30, 1997, is incorporated herein
by reference to Registration Statement No. 33-82530
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERCHANGE FINANCIAL SERVICES CORPORATION
by: _______________________________
Anthony Labozzetta
Executive Vice President & Chief Financial Officer
August 4, 1997
Ms. Patricia Arnold
35 Manor Road
Wyckoff, NJ
Dear Ms. Arnold:
Interchange Financial Services Corporation, a New Jersey Bank Holding Company
(the "Company"), considers the maintenance of a sound and vital executive team
to be essential to protecting and enhancing the best interests of the Company
and its stockholders. In this connection, the Company recognizes that the
possibility of a change in control presently exists and may exist in the future,
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of executives to
the detriment of the Company and its stockholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's executive team.
This letter agreement sets forth the severance benefits which the Company agrees
will be provided to you in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below.
1. COMPANY'S RIGHT TO TERMINATE
During the term of this Agreement, you agree that you will not
voluntarily leave the employ of the Company except as may be permitted
hereunder, and will continue to perform your regular duties as Senior
Vice President of the Company. Notwithstanding the foregoing, the
Company may terminate your employment at any time, subject to
providing the benefits hereinafter specified in accordance with the
terms hereof.
2. CHANGE IN CONTROL
No benefits shall be payable hereunder unless there shall have been a
change in control of the Company, as set forth below, and your
employment by the Company shall thereafter have been terminated in
accordance with Section 3 below. For purposes of this Agreement, a
"change in control of the Company" shall mean, unless the Board
otherwise directs resolution approved by unanimous vote of the entire
membership thereof adopted prior thereto, a change in control of a
nature that would be required to be reported in response to Item 5(f)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing more than 25% control of the
combined voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
3. TERMINATION FOLLOWING CHANGE IN CONTROL
If any of the events described in Section 2 hereof constituting a
change in control of the Company shall have occurred, you shall be
entitled to the benefits provided in Section 4 hereof upon your
subsequent termination, so long as such termination occurs within two
(2) years after a change in control of the Company, unless such
termination is (A) because of your death or Retirement, (B) by the
Company for Cause or Disability or (c) by you other than for Good
Reason.
(i) Disability; Retirement
(A) Termination by the Company of your employment based on
"Disability" shall mean termination because of your absence
from your duties with the Company on a full-time basis for
130 consecutive business days, as a result of your
incapacity due to physical or mental illness, unless within
thirty (30) days after Notice of Termination (as hereinafter
defined) is given following such absence, you shall have
returned to the full time performance of your duties; or
(B) Termination by the Company or you of your employment based
on "Retirement" shall mean your voluntary termination in
accordance with the Company's retirement policy, including
early retirement, generally applicable to its salaried
employees.
(ii) Cause
Termination by the Company of your employment for Cause shall
mean your termination on account of:
(A) Your willful commission of an act that causes or is
reasonably likely to cause substantial damage to the
Company;
(B) Your commission of an act of fraud in the performance
of your duties on behalf of the Company;
(C) Your conviction for commission of a felony or other
crime punishable by confinement for a period in excess
of one (1) year in connection with the performance of
your duties on behalf of the Company; or
(D) The order of a federal or state bank regulatory agency
or a court of competent jurisdiction requiring the
termination of your employment.
(iii) Good Reason
Termination by you of your employment for "Good Reason" shall
mean termination based on:
(A) Subsequent to a change in control of the Company, and
without your express written consent, the assignment to
you of any duties inconsistent with your positions,
duties, responsibilities and status with the Company
immediately prior to a change in control, or a change
in your reporting responsibilities, titles or offices
as in effect immediately prior to a change in control,
or any removal of you from or any failure to re-elect
you to any of such positions, except in connection with
the termination of your employment for Cause,
Disability or Retirement or as a result of your death
or by you other than for Good Reason;
(B) Subsequent to a change in control of the Company, a
reduction by the Company in your base salary as in
effect on the date hereof or as the same may be
increased from time to time;
(C) Subsequent to a change in control of the Company, a
failure by the Company to continue any bonus plans in
which you are presently entitled to participate (the
"Bonus Plans") as the same may be modified from time to
time but substantially in the forms currently in
effect, or a failure by the Company to continue you as
a participant in the Bonus Plans on at least the same
basis as you presently participate in accordance with
the Bonus Plans;
(D) Subsequent to a change in control of the Company and
without your express written consent, the Company's
requiring you to be based anywhere other than within
thirty (30) miles of your present office location,
except for required travel on the Company's business to
an extent substantially consistent with your present
business travel obligations;
(E) Subsequent to change in control of the Company, the
failure by the Company to continue in effect any
benefit or compensation plan, stock ownership plan,
stock purchase plan, stock option plan, life insurance
plan, health-and-accident plan or disability plan in
which you are participating at the time of a change in
control of the Company (or plans providing you with
substantially similar benefits), the taking of any
action by the Company which would adversely affect your
participation in or materially reduce your benefits
under any of such plans or deprive you of any material
fringe benefit enjoyed by you at the time of the change
in control, or the failure by the Company to provide
you with the number of paid vacation days to which you
are then entitled in accordance with the company's
normal vacation policy in effect on the date hereof;
(F) Subsequent to a change in control of the Company, the
failure by the Company to obtain the assumption of the
agreement to perform this Agreement by any successor as
contemplated in Section 6 hereof; or
(G) Subsequent to a change in control of the Company, any
purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (iv) below (and, if
applicable, paragraph (ii) above); and for purposes of
this Agreement, no such purported termination shall be
effective.
(iv) Notice of Termination
Any purported termination by the Company pursuant to paragraph
(i) or (ii) above or by you pursuant to subparagraph (B) of
paragraph (i) or paragraph (iii) above shall be communicated by
written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination
"Date of Termination" shall mean (A) if your employment is
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have
returned to the performance of your duties on a full-time
basis during such thirty (30) day period), (B) if your
employment is terminated pursuant to paragraph (ii) above, the
date specified in the Notice of Termination, and (C) if your
employment is terminated for any other reason, the date on
which a Notice of Termination is given; provided that if
within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction entered upon such arbitration
award (the time of appeal therefrom having expired and no
appeal having been perfected).
4. Certain Benefits Upon Termination
If, after a change in control of the Company shall have occurred, as
defined in Section 2 above, your employment by the Company shall be
terminated (A) by the Company other than for Cause, Disability or
Retirement or (B) by you for Good Reason, then you shall be entitled
to the benefits provided below:
(i) The Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given plus credit for any vacation earned but not
taken and the amount, if any, of any bonus for a past fiscal year
and the portion of the current fiscal year ending on the Date of
Termination which has not yet been awarded or paid to you under
the Bonus Plans;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you on the fifth day following the Date of
Termination a lump sum amount equal to two (2) times your annual
base salary at the highest rate in effect during the twelve (12)
months immediately preceding the Date of Termination;
(iii)The Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement);
(iv) The Company shall maintain in full force and effect, for your
continued benefit until the earlier of (A) two (2) years after
the Date of Termination or (B) your commencement of full time
employment with a new employer, all life insurance, medical,
health and accident, and disability plans, programs or
arrangements in which you were entitled to participate
immediately prior to the Date of Termination, provided that your
continued participation is possible under the general terms and
provisions of such plans and programs. In the event that your
participation in any such plan or program is barred, the Company
shall arrange to provide you with benefits substantially similar
to those which you are entitled to receive under such plans and
programs. In addition, the Company shall pay you a lump sum
amount of equivalent actuarial value to the additional pension
benefit you would have earned under the Company's Pension Plan as
in effect on the date the change of control occurs, but
disregarding any Internal Revenue Code limitations pertaining to
qualified plans, if you were granted at the time of your
termination of employment two (2) additional years of Credited
Service and deemed 2 years older under the Plan. In determining
the equivalent actuarial value of the additional pension granted
under this Section 4, an interest rate of 5% and the mortality
table under the Company's Pension Plan shall be used to determine
the lump sum amount.
You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer after the Date of Termination or
otherwise.
5. CERTAIN FURTHER PAYMENTS BY THE CORPORATION
In the event that any amount or benefit paid or distributed to you
pursuant to this Agreement, taken with any amounts or benefits
otherwise paid or distributed to you by the Company or any affiliated
company (collectively the "Covered Payments"), are or become subject
to the tax (the "Excise Tax") imposed under Section 4999 of the Code
or any similar tax that may hereafter be imposed, the Company shall
pay to you at the time specified below an additional amount (the "Tax
Reimbursement Payment") such that the net amount retained by you with
respect to such Covered Payments, after deduction of any Excise Tax on
the Covered Payments and any Federal, state and local income tax and
Excise Tax on the Tax Reimbursement Payment provided for by this
Section 5, but before deduction for any Federal, state or local income
or employment tax withholding on such Covered Payments, shall be equal
to the amount of the Covered Payments.
(i) For purposes of determining whether any of the Covered Payments will
be subject to the Excise Tax and the amount of such Excise Tax,
(A) Such Covered Payments will be treated as "parachute
payments" within the meaning of Section 280G of the Code,
and all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be
treated as subject to the Excise Tax, unless, and except to
the extent that, in the opinion of the Company's independent
certified public accountants appointed prior to the date the
Change of Control occurs or tax counsel selected by such
accountants (the "Accountants"), such Covered Payments (in
whole or in part) either do not constitute parachute
payments or represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4)
of the Code) in excess of the "base amount", or such
parachute payments are otherwise not subject to such Excise
Tax, and
(B) The value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Accountants in
accordance with the principles of Section 280G of the Code.
(ii) For purposes of determining the amount of the Tax Reimbursement
Payment, you shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate
of Federal income taxation for the calendar year in which
the Tax Reimbursement Payment is to be made,
and
(B) Any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year
in which the Tax Reimbursement Payment is to be made, net of
the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if
paid in such year.
(iii)In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder in calculating
the Tax Reimbursement Payment made, you shall repay to the
Company, at the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of such prior Tax
Reimbursement Payment that would not have been paid if such
Excise Tax had been applied in initially calculating such Tax
Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.
In the event that the Excise Tax is later determined to exceed
the amount taken into account hereunder at the time the Tax
Reimbursement Payment is made (including, but not limited to, by
reason of any payment the existence or amount of which cannot be
determined at the time of the Tax Reimbursement Payment), the
Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payment with
respect to such excess) at the time that the amount of such
excess is finally determined.
(iv) The Tax Reimbursement Payment (or portion thereof) provided for
in this Section 5 shall be paid to you not later than ten (10)
business days following the payment of the Covered Payments;
provided, however, that if the amount of such Tax Reimbursement
Payment (or portion thereof) cannot be finally determined on or
before the date on which payment is due, the Company shall pay to
you by such date an amount estimated in good faith by the
Accountants to be the minimum amount of such Tax Reimbursement
Payment and shall pay the remainder of such Tax Reimbursement
Payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the
amount of the estimated Tax Reimbursement Payment exceeds the
amount subsequently determined to have been due, such excess
shall constitute a loan by the Corporation to you, payable on the
fifth business day after written demand by the Company for
payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
6. TERM OF AGREEMENT
This Agreement shall continue in effect so long as you are employed by
the Company provided that, if a change of control of the Company, as
defined in Section 2 hereof, shall have occurred during the term of
this Agreement, this Agreement shall continue in effect for a period of
thirty-six (36) months beyond the month in which such change in control
occurred.
7. SUCCESSOR; BINDING AGREEMENT
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to you,
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company
in the same amount and on the same terms as you would be entitled
hereunder if you terminated your employment for Good Reason,
except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed
the Date of Termination. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 7 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there be no such designee, to
your estate.
8. NOTICE
For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed
to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed
to the attention of the President of the Company with a copy to the
Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
9. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by you and such officer as may be specifically designated by
the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement; provided, however, that this Agreement shall not supersede
or in any way limit the rights, duties or obligations you may have
under any other written agreement with the Company. The validity,
interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New Jersey.
10. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
11. TAX WITHHOLDING
The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
THE COMPANY
By /S/ ANTHONY D. ANDORA
------------------------
Name: Anthony D. Andora
Title: Chairman of the Board
Agreed to this 4TH day
of AUGUST , 1997.
/S/PATRICIA ARNOLD
- ------------------
Patricia Arnold
Senior Vice President
Attest by: /S/ BENJAMIN ROSENZWEIG
- ------------------------------------
Benjamin Rosenzweig
<TABLE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------------- ----------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income ..................................................... $1,804 $1,288 $5,779 $4,378
Weighted average common shares outstanding ..................... 4,225 4,259 4,268 4,257
NET INCOME PER COMMON SHARE .................................... $0.43 $0.30 $1.35 $ 1.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 24,685
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 59,353
<INVESTMENTS-CARRYING> 56,344
<INVESTMENTS-MARKET> 56,716
<LOANS> 378,445
<ALLOWANCE> 4,672
<TOTAL-ASSETS> 528,618
<DEPOSITS> 454,013
<SHORT-TERM> 12,638
<LIABILITIES-OTHER> 3,792
<LONG-TERM> 9,906
<COMMON> 4,794
0
0
<OTHER-SE> 43,475
<TOTAL-LIABILITIES-AND-EQUITY> 528,618
<INTEREST-LOAN> 24,130
<INTEREST-INVEST> 5,289
<INTEREST-OTHER> 268
<INTEREST-TOTAL> 29,687
<INTEREST-DEPOSIT> 10,483
<INTEREST-EXPENSE> 992
<INTEREST-INCOME-NET> 18,212
<LOAN-LOSSES> 1,330
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 12,095
<INCOME-PRETAX> 8,891
<INCOME-PRE-EXTRAORDINARY> 8,891
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,779
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
<YIELD-ACTUAL> 4.91
<LOANS-NON> 1,573
<LOANS-PAST> 79
<LOANS-TROUBLED> 573
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,653
<CHARGE-OFFS> 465
<RECOVERIES> 154
<ALLOWANCE-CLOSE> 4,672
<ALLOWANCE-DOMESTIC> 4,672
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,836
</TABLE>
