FIRST NATIONAL CORPORATION
Financial Statements
(Form 10-Q)
June 30, 1996
<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1996 Commission File Number 0-13663
FIRST NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0799315
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
950 JOHN C. CALHOUN DRIVE, SE, ORANGEBURG, SC 29115
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 534-2175
NOT APPLICABLE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period) and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of issuer's class of
securities.
CLASS OUTSTANDING as of June 30, 1996
(Common Stock, $5 par value) 2,253,089
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FIRST NATIONAL CORPORATION
INDEX
Part I: Financial Information
Consolidated Balance Sheet -
June 30, 1996 and December 31, 1995
Consolidated Statement of Income -
Three and Six Months Ended
June 30, 1996 and 1995
Consolidated Statement of Cash Flows -
Six Months Ended
June 30, 1996 and 1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II: Other Information
Item 1 - Legal Proceedings
Item 6 - Exhibits and Reports of Form 8-K
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PART I - FINANCIAL INFORMATION
Item l. Financial Statements
FIRST NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS 6-30-96 12-31-95
(In Thousands) (In Thousands)
Cash and due from banks $24,546 $24,144
Federal funds sold 7,550 0
Investment securities - Note 2
Securities held-to-maturity (fair value
of $76,152 in 1996 and $96,594 in 1995) 76,447 95,660
Securities available-for-sale, at fair
value 71,027 55,836
Total investment securities 147,474 151,496
Loans - Note 3 264,231 250,423
Less: Unearned income 2,692 2,540
Allowance for loan losses-Note 4 4,295 3,703
Loans, net 257,244 244,180
Premises and equipment 9,361 8,250
Intangible assets 3,282 3,489
Other real estate - Note 6 44 151
Other assets 4,962 4,612
TOTAL ASSETS $454,463 $436,322
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Consolidated Balance Sheet - Continued.......
LIABILITIES & STOCKHOLDERS' EQUITY 6-30-96 12-31-95
(In Thousands) (In Thousands)
Liabilities:
Deposits in domestic offices:
Noninterest bearing $60,156 $56,735
Interest-bearing - Note 7 315,944 311,580
TOTAL DEPOSITS 376,100 368,315
Federal funds purchased & securities
sold under agreement to repurchase 32,694 25,833
Other liabilities 4,370 2,397
TOTAL LIABILITIES 413,164 396,545
Commitments & Contingent liabilities - Note 8
Shareholders' equity:
Common stock - $5 par value; authorized
5,000,000 shares; issued and outstanding
2,255,361 shares in 1996 and 2,244,339
shares in 1995 - Note 9 11,277 11,222
Additional paid-in capital 16,456 16,260
Retained earnings 14,226 12,241
Unrealized gain (loss) on securities
available-for-sale, net of applicable
deferred income taxes (660) 54
TOTAL SHAREHOLDERS' EQUITY 41,299 39,777
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY $454,463 $436,322
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FIRST NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
3 Months Ended 6 Months Ended
06-30-96 06-30-95 06-30-96 06-30-95
(In Thousands) (In Thousands)
Interest income:
Interest and fees on loans $6,149 $5,271 $12,065 $10,336
Interest & dividends on investment sec.:
Taxable income 1,691 1,412 3,267 2,736
Non-taxable income 394 376 854 760
Dividends on stock 7 6 13 12
Interest on federal funds sold 132 291 328 424
Total Interest income 8,373 7,356 16,527 14,268
Interest expense:
Interest on deposits 3,016 2,685 6,084 5,134
Interest on federal funds purchased &
securities sold under agreement to
repurchase 340 378 692 635
Total interest expense 3,356 3,063 6,776 5,769
Net Interest Income 5,017 4,293 9,751 8,499
Provisions for loan losses - Note 4 300 120 520 240
Net interest income after provisions
for loan losses 4,717 4,173 9,231 8,259
Noninterest income:
Service charges on deposit accounts 1,012 731 1,998 1,449
Other service charges commissions, fees 272 202 591 464
Gains (losses) on investment securities 2 0 2 2
Other operating income 8 9 16 20
Total noninterest income 1,294 942 2,607 1,935
Noninterest expense:
Salaries & employee benefits 2,168 1,910 4,212 3,800
Occupancy expense of bank premises -
net 244 207 518 425
Furniture & equipment expense - net 316 260 610 515
Amortization expense-Intangible assets 158 77 313 153
FDIC insurance premium 0 181 0 359
Other expense 1,063 823 2,175 1,687
Total noninterest expense 3,949 3,458 7,828 6,939
Income before income taxes 2,062 1,657 4,010 3,255
Applicable income taxes 663 484 1,214 942
Net Income $1,399 $1,173 $2,796 $2,313
Net income per common share - Note 10 $0.62 $0.52 $1.24 $1.03
Cash dividends per common share $0.18 $0.165 $0.36 $0.33
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FIRST NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
6 Months Ended 6 Months Ended
06-30-96 06-30-95
(In Thousands) (In Thousands)
Cash flows from operating activities:
Net income $ 2,796 $ 2,313
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 737 558
Provision for loan losses 520 240
Provision for deferred taxes 0 92
Increase (decrease) in reserve
for income taxes-current (266) (52)
(Gain) loss on sale of premises
and equipment 0 (3)
(Increase) decrease in interest
receivables (111) (266)
Increase (decrease) in accumulated
premium amortization and discount
accretion - net 107 (189)
Increase (decrease) in interest
payable (86) 380
(Increase) decrease in miscellaneous
assets (116) (3,427)
(Increase) decrease in prepaid
assets 314 0
Increase (decrease) in other
liabilities 326 30
Total adjustments 1,425 (2,637)
Net cash provided by operating
activities $ 4,221 $ (324)
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Consolidated Statement of Cash Flows - Continued.......
6 Months Ended 6 Months Ended
06-30-96 06-30-95
(In Thousands) (In Thousands)
Cash flows from investing activities:
Proceeds from maturities of investment
securities held-to-maturity $39,218 $19,724
Purchase of investment securities
held-to-maturity (4,180) (13,245)
Proceeds from maturities of investment
securities available-for-sale 9,312 999
Purchase of investment securities
available-for-sale (41,588) (25,997)
Net (increase) decrease in customer
loans (13,860) (24,930)
Additions to premises and equipment (1,535) (1,365)
Proceeds from sale of premises and
equipment 0 3
Recoveries from loans previously charged
off 277 192
(Increase) decrease in funds sold (7,550) 0
Net cash used in investing
activities (19,906) (44,619)
Cash flows from financing activities:
Net increase in demand deposits, NOW
accounts, savings accounts and
certificates of deposit 7,785 36,230
Purchase of treasury stock (61) (36)
Sale of common stock 312 0
Net increase (decrease) in federal funds
purchased and securities sold under
agreement to repurchase 6,861 9,872
Proceeds Issuance of Debt 2,000 0
Dividends paid (811) (672)
Net cash provided by financing
activities 16,086 45,394
Net increase (decrease) in cash and
cash equivalents 401 451
Cash and cash equivalents at beginning
of year 24,144 23,046
Cash and cash equivalents at end of
reporting period $24,545 $23,497
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FIRST NATIONAL CORPORATION
Note 1 - Basis of Presentation:
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year
ended December 31, 1995.
Note 2 - Investment Securities:
The following is the amortized cost and fair value of investment
securities held-to-maturity at June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
06-30-96 12-31-95
Gross Gross Gross Gross
Amort Unreal Unreal Fair Amort Unreal Unreal Fair
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U S Treasury
securities 26,244 17 (71) 26,190 34,323 203 (65) 34,461
Obligations of
U S government
agencies & corps 18,836 63 (416) 18,483 23,875 212 (86) 24,001
Obligations of state
and political
subdivisions 31,367 406 (294) 31,479 37,462 714 (44) 38,132
Other securities 0 0 0 0 0 0 0 0
Total 76,447 486 (781) 76,152 95,660 1,129 (195) 96,594
</TABLE>
<PAGE>
Note 2 - Continued...
The following is the amortized cost and fair value of securities
available-for-sale at June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
06-30-96 12-31-95
Gross Gross Gross Gross
Amort Unreal Unreal Fair Amort Unreal Unreal Fair
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U S Treasury
securities 19,164 1 (323) 18,842 15,448 188 0 15,636
Obligations of
U S government
agencies & corps 52,454 21 (765) 51,710 39,826 188 (289) 39,725
Other securities 475 0 0 475 475 0 0 475
Total 72,093 22 (1,088) 71,027 55,749 376 (289) 55,836
</TABLE>
Investment securities with an aggregate amortized cost of $64,397
on June 30, 1996, and $55,126 on December 31, 1995, were pledged to
secure public deposits and for other purposes as required and
permitted by law.
Note 3 - Loans:
The following is a summary of loans at: 6-30-96 12-31-95
Commercial, financial & agricultural 42,117 42,000
Real Estate - construction 6,930 5,792
Real estate - mortgage 158,601 148,853
Consumer 55,166 52,670
All other 1,417 1,108
Total loans, gross 264,231 250,423
As of June 30, 1996 and December 31, 1995 the aggregate dollar
amount of loans to related parties; principally, directors and
executive officers, their immediate families and their business
interests, was $5,669 and $7,342 respectively. The following is an
analysis of the activity with respect to loans to related parties
for the six months ended June 30, 1996:
Balance, beginning of period 7,342
Add:
New loans 9,972
Deduct:
Payments 11,645
Other changes 0
Balance, end of period 5,669
<PAGE>
Note 4 - Allowance for Loan Losses:
Amount
06-30-96 12-31-95
Balance, beginning of period (year) 3,703 3,194
Add:
Recoveries 277 356
Provisions for loan losses charged
to income 520 844
Total 4,500 4,394
Deduct:
Loans charged off 205 691
Balance, end of period (year) 4,295 3,703
The allowance for loan losses is maintained at a level which, in
management's judgement is adequate to absorb credit losses inherent
in the loan portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan
portfolio, including the nature of the portfolio, credit
concentrations, trends in historical loss experience, specific
impaired loans, and economic conditions. Allowances for impaired
loans are generally determined based on collateral values or the
present value of estimated cash flows. The allowance is increased
by a provision for loan losses, which is charged to expense, and
reduced by charge-offs, net of recoveries.
For impairment recognized in accordance with Statement of Financial
Accounting Standards No. 114 (SFAS 114), ACCOUNTING BY CREDITORS
fOR IMPAIRMENT OF A LOAN, the entire change in present value of
expected cash flows is reported as bad debt expense in the same
manner in which impairment initially was recognized or as a
reduction in the amount of bad debt expense that otherwise would be
reported.
Note 5 - Adoption of Statement of Financial Accounting Standards No. 114
and No. 118:
Effective January 1, 1995, the Company adopted Statement of
Financial Accounting Standards No. 114 (SFAS 114), ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN, and Statement of Financial
Accounting Standards No. 118 (SFAS 118), ACCOUNTING BY CREDITORS
FOR IMPAIRMENT OF A LOAN - INCOME RECOGNITION AND DISCLOSURES.
These statements require creditors to account for impaired loans,
except for those loans that are accounted for at fair value or at
the lower of cost or fair value, at the present value of the
expected future cash flows discounted to the loan's effective
interest rate.
<PAGE>
Note 5 - continued...
The Company determines when loans become impaired through its
normal loan administration and review functions. Those loans
identified as substandard or doubtful as a result of the loan
review process are potentially impaired loans. A loan is impaired
when, based on current information and events, it is probable that
a creditor will be unable to collect all principal and interest
amounts due according to the contractual terms of the loan
agreement. A loan is not impaired during a period of delay in
payment of the Company expects to collect all amounts due,
including interest accrued at the contractual interest rate, for
the period of delay.
In accordance with these standards, the Company does not apply SFAS
114 and SFAS 118 to large groups of smaller balance homogeneous
loans that are collectively evaluated for impairment. These groups
include the Company's credit card, residential mortgage, overdraft
protection, home equity lines, accounts receivable financing, and
consumer installment loans.
The Company's adoption of these accounting standards did not have
a material effect on the financial condition and results of
operations of the Company.
In accordance with SFAS 114, historical information has not been
restated to reflect the application of this standard.
Note 6 - Other Real Estate:
Real estate acquired in satisfaction of a loan and in-substance
foreclosures are reported in other assets. In-substance
foreclosures are properties in which the borrower has little or no
equity in the collateral. Properties acquired by foreclosure or
deed in lieu of foreclosure and in-substance foreclosures are
transferred to Other Real Estate Owned ("OREO") and recorded at the
lower of the outstanding loan balance at the time of acquisition or
the estimated market value. Market value is determined on the
basis of the properties being disposed of in the normal course of
business and not on a liquidation or distress basis. Loan losses
arising from the acquisition of such properties are charged against
the allowance for losses. Gains or losses arising from the sale of
OREO are reflected in current operations.
<PAGE>
Note 7 - Interest Bearing Deposits:
Certificates of deposit in excess of $100,000 totaled $30,954 and
$31,203 at June 30, 1996 and December 31, 1995 respectively.
Note 8 - Commitments and Contingent Liabilities:
In the normal course of business, the Company makes various
commitments and incurs certain contingent liabilities, which are
not reflected in the accompanying financial statements. The
commitments and contingent liabilities include guarantees,
commitments to extend credit and standby letters of credit. At
June 30, 1996, commitments to extend credit and standby letters of
credit aggregated $49,257. The Company does not anticipate any
material losses as a result of these transactions.
Note 9 - Common Stock:
As of December 31, 1995, the common stock outstanding was
2,244,339. During the first two quarters, the Company granted
options to purchase an aggregate of 3,525 shares under the
incentive stock option plan and also issued 9,324 shares to the
dividend reinvestment plan. During the second quarter, the Company
granted and issued 5,185 shares under a restricted stock agreement
dated March 28, 1996. The Company purchased and retired 7,012
shares during the first two quarters of 1996. As of June 30, 1996,
the common stock outstanding was 2,255,361.
Note 10 - Earnings Per Share:
Earnings per share are calculated on the weighted-average of number
of shares of common stock outstanding, giving retroactive effect to
stock dividends and stock splits. The number of weighted-average
shares outstanding at June 30, 1996 was 2,250,549 and 2,240,081 at
December 31, 1995.
Dividends per share are calculated using the current equivalent of
number of common shares outstanding at the time of the dividend
based on the Company's shares outstanding.
<PAGE>
FIRST NATIONAL CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion relates to financial statements contained in
this report. For further information refer to the Management's Discussion
and Analysis of Financial Condition and Results of Operations appearing in
the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
For the second quarter of 1996, First National Corporation ("the
Corporation") had consolidated net income of $1,399,000, an increase of 19.3
percent over the $1,173,000 earned in the second quarter of 1995. Earnings
per share amounted to $0.62 for the three months ended June 30, 1996, a 19.2
percent increase over the $0.52 per share earned in the second quarter of
1995. Net income for the first six months of 1996 was $2,796,000, an
increase of 20.9 percent over the $2,313,000 earned for the same period in
1995. Earnings per share amounted to $1.24 for the six months ended June 30,
1996, a 20.4 percent increase over the $1.03 per share earned in the first
six months of 1995.
NET INTEREST INCOME
For the second quarter of 1996, net interest income was $5,017,000
compared to $4,293,000 for the same period in 1995. This is an increase of
$724,000 or 16.9 percent. Net interest income for the first six months of
1996 was $9,751,000 compared to $8,499,000 for the same period in 1995. This
represents an increase of $1,252,000 or 14.7 percent. This increase resulted
from a 12.1 percent increase in loan outstandings, net of unearned income,
when compared to the first six months of 1995.
The yield on a major portion of the Company's earning assets adjusts
simultaneously with changes in the general level of interest rates. In the
first six months of 1995, the year to date taxable equivalent yield on
earning assets was 7.97 percent. During the same period of 1996, the yield
decreased to 7.93 percent, or a decrease of 4 basis points. The cost of the
liabilities used to support these earning assets increased 1 basis point from
3.88 percent in 1995 to 3.89 percent in 1996. Interest rates paid on
interest-bearing liabilities increased more rapidly than yields on earning
assets due to the Company's negative asset/liability position.
For the first six months net interest margins decreased form 4.75
percent in 1995 to 4.66 percent in 1996. The impact of interest-free funds
for the same period decreased from .66 percent to .62 percent or a decrease
of 4 basis points.
<PAGE>
Management's Discussion Continued...
The largest category of earning assets is loans. At the end of the
second quarter 1996, loans outstanding, less unearned income, were
$261,539,000 compared to $247,883,000 at December 31, 1995. This represents
an increase of $13,656,000 or 5.5 percent. For the second quarter ended June
30, 1996, interest and fees on loans were $6,149,000 compared to $5,271,000
for the comparable period in 1995, an increase of $878,000 or 16.7 percent.
For the six months ended June 30, 1996, interest and fees on loans were
$12,065,000 compared with $10,336,000 for the same period in 1995. This
represents an increase of $1,729,000 or 16.7 percent.
The major volume increase in the loan portfolio was in real estate-
mortgage loans. For the first six month period ended June 30, 1996, mortgage
loans increased $9,748,000 or 6.5 percent when compared to December 31, 1995.
Of this increase $4,578,000 was secured by nonfarm nonresidential properties
and $3,236,000 was secured by 1-4 family residential properties when compared
to December 31, 1995. This increase in the loan portfolio was brought about
due to a renewed confidence in overall economic trends as well as favorable
mortgage interest rates. The Company has no foreign loans nor loans for
highly leveraged transactions.
For the six months ended June 30, 1996, loans averaged $254,313,000 and
yielded 9.17 percent on a taxable equivalent basis compared to $227,556,000
with a taxable equivalent yield of 9.36 percent or a decrease of 19 basis
points for the year ended December 31, 1995.
Investment securities are the second largest category of earning assets.
Investment securities are utilized by the Company as a vehicle for the
employment of excess funds, to provide liquidity, to fund loan demand or
deposit liquidation, and to pledge as collateral for certain deposit and
purchased funds.
At June 30, 1996, investment securities were $147,474,000 compared to
$151,496,000 at December 31, 1995. This is a decrease of $4,022,000 or 2.7
percent. Funds generated in the reduction of the investment portfolio were
used to fund the Company's loan growth.
For the second quarter ended June 30, 1996, investment income was
$2,092,000 compared with $1,794,000 for the comparable period in 1995, a net
increase of $289,000 or 16.6 percent. For the six month period ended June
30, 1996, investment income was $4,134,000 compared with $3,508,000 for the
same period in 1995, a net increase of $626,000 or 17.8 percent. Management
attributes this increase in income to higher yields on investment securities.
At the end of the second quarter 1996, securities averaged $149,397,000
and yielded 5.94 percent on a taxable equivalent basis, compared to
$142,614,000 with a yield of 5.85 percent for the year ended December 31,
1995, resulting in a 9 basis point increase in yield.
<PAGE>
Management's Discussion Continued...
As of June 30, 1996, the Company had unrealized gains in the U.S.
Treasury and agency portfolio of $102,000 and in the municipal portfolio
$406,000. Also at June 30, 1996, the Company had an unrealized loss of
$1,575,000 in the U. S. Treasury and agency portfolio and a $294,000
unrealized loss in the municipal portfolio.
At year end 1993, the Company adopted Statement of Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debit and Equity
Securities" for the investment portfolio, and showed a net unrealized loss at
June 30, 1996 of approximately $1,066,000 on the $70,552,000 of securities
denoted as available-for-sale.
For the first six months ended June 30, 1996, the Company had a $2,000
realized gain due to called municipal bonds.
Although securities classified as available-for-sale may be sold from
time to time to meet liquidity or other needs, it is not the normal activity
of the Company to trade the investment portfolio. Management has the intent
and the ability to hold securities on a long-term basis or until maturity.
During the first six months of 1996, interest-bearing liabilities
averaged $350,025,000 and carried an average rate of 3.89 percent. This
compares to an average level of $316,629,000 with a rate of 3.96 percent at
December 31, 1995 or a decrease of 7 basis points. Approximately half of
these interest-bearing liabilities have fixed rates. They are expected to be
renewed at prevailing market rates as they mature.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three month period ended June 30,
1996 was $300,000 compared to $120,000 for the same period in 1995 which
represents a 150.0 percent increase. For the six month period ended June 30,
1996, the provision for loan loss was $520,000 compared to $240,000 for the
same period in 1995 which represents a 116.7 percent increase. The increase
in the provision for loan losses was due to several factors. These factors
include continued strong loan growth. The allowance for loan losses was
$4,295,000 or 1.64 percent of outstanding loans at June 30, 1996 compared to
1.49 percent of outstanding loans at year-end 1995.
To determine the adequacy of the allowance for loan losses, management
performs an internal loan analysis which indicated the estimated loan losses.
Management feels that the allowance for loan losses is adequately funded.
Other real estate owned includes certain real estate acquired as a
result of foreclosure as well as amounts reclassified as in-substance
foreclosures. For the period ended June 30, 1996, other real estate owned
was $44,000 compared to $151,000 at December 31, 1995. This increase
resulted from the sale of several real estate properties.
<PAGE>
Management's Discussion Continued...
Management anticipates that the level of charge-offs for 1996 will be
near or below the levels of 1995. The loan loss allowance is considered
adequate by management. However, changes in economic conditions in the
Company's market area could affect these levels.
NONINTEREST INCOME AND EXPENSE
Noninterest income for the second quarter of 1996 was $1,294,000
compared to $942,000 for the same period in 1995, representing an increase of
$352,000 or 37.4 percent. For the first six months of 1996 noninterest
income was $2,607,000 compared to $1,935,000 for the same period in 1995,
representing an increase of $672,000 or 34.7 percent. During the first six
months of 1996, service charges and fee income increased $549,000 or 37.9
percent. This was primarily due to the increase in service fees on deposit
accounts implemented during the fourth quarter of 1995. Other service
charges, commissions and fees for the first six months of 1996 increased
$127,000 or 27.4 percent compared to the same period in 1995. This increase
can be primarily attributed to the increase in the real estate mortgage loan
origination fee income.
Noninterest expense for the second quarter of 1996 was $3,949,000
compared to $3,458,000 for the same period in 1995, representing an increase
of $491,000 or 14.2 percent. For the six months ended June 30, 1996,
noninterest expense was $7,828,000 compared to $6,939,000, an increase of
$889,000 or 12.8 percent. Salaries and employee benefits for the second
quarter ended June 30, 1996 increased $258,000 or 13.5 percent compared to
the same period in 1995. For the first six months of 1996 salaries and
employee benefits increased $412,000 or 10.8 percent compared to the same
period in 1995. Amortization expense on intangible assets increased $81,000
or 105.2 percent compared to the same period in 1995. For the six months
ended June 30, 1996, amortization expense on intangible assets increased
$160,000 or 104.5 percent compared to the same period in 1995. This is the
direct result of acquiring two branches from NationsBank in June 1995. Other
expenses increased $240,000 or 29.2 percent for the second quarter of 1996
compared to the same period in 1995. For the six months ended June 30, 1996,
other expenses increased $488,000 or 28.9 percent compared to the same period
in 1995. This increase in other expenses is distributed among the following
expense categories: advertising, insurance, office and printing supplies,
postage, telephone and line charges, and other expenses.
NET INCOME
Net income was up 19.3 percent for the second quarter of 1996 when
compared to the same period in 1995. For the six months ended June 30, 1996,
net income was up 20.9 percent compared to the same period in 1995. The
$1,252,000 or 14.7 percent increase in net interest income and the $672,000
or 34.7 percent increase in noninterest income for the six months ended June
30, 1996 as compared to the same period in 1995 were the primary factors in
the growth in net income.
<PAGE>
Management's Discussion Continued...
CAPITAL RESOURCES AND LIQUIDITY
To date, the capital needs of the Company have been met through the
retention of earnings less cash dividends. At the end of the second quarter,
1996, stockholder's equity was $41,299,000 compared to $39,777,000 at
December 31, 1995.
In connection with its sponsorship of the organization of the National
Bank of York County, the Company borrowed $2,000,000 from a third party
financial institution and $2,500,000 provided by First National Corporation
from available funds. The Company is offering for sale up to 170,000 shares
of $5.00 par value common stock at a price of $27.00 per share. Proceeds
from this offering will by used first to reimburse First National Corporation
for expenses of this offering, second to repay as much as possible of the
borrowed funds, third to reimburse First National Corporation as much as
possible of its $2,500,000 of contributed funds, and finally, for general
corporate purposes of First National Corporation.
The Company and subsidiary are subject to certain risk-based capital
guidelines. These ratios measure the relationship of capital to a
combination of balance sheet and off balance sheet risks. The values of both
balance sheet and off balance sheet items will be adjusted to reflect credit
risk. Under the guidelines of the Board of Governors of the Federal Reserve
System, which are substantially similar to the Office of the Comptroller of
the Currency guidelines, as of December 31, 1995, Tier 1 capital must be at
least 4 percent of risk-weighted assets, while total capital must be 8
percent of risk-weighted assets. The Tier 1 capital ratio at June 30, 1996
was 15.1 percent compared to 15.3 percent at December 31, 1995. The total
capital ratio was 16.4 percent at June 30, 1996 compared to 16.6 percent at
December 31, 1995.
In conjunction with the risk-based capital ratio, applicable regulatory
agencies have also prescribed a leverage capital ratio in evaluating capital
strength and adequacy. The minimum leverage ratio required for banks is
between 3 percent and 5 percent, depending on the institution's composite
rating as determined by its regulators. At June 30, 1996, First National
Corporation's leverage ratio was 9.2 percent, compared to 9.1 percent at
December 31, 1995. First National Corporation's ratio exceeds the minimum
standards by substantial margins.
Liquidity is the ability of the Company to meet its cash flow
requirements which arise primarily from withdrawal of deposits, extension of
credit and payment of operating expenses. Asset liquidity is maintained by
the maturity structure of loans, investment securities and other short-term
investments. Management has policies and procedures governing the length of
time to maturity on loans and investments. Normally changes in the earning
asset mix are of a longer term nature and are not utilized for day-to-day
Corporation liquidity needs.
<PAGE>
Management's Discussion Continued...
The Company's liabilities provide liquidity on a day-to-day basis.
Daily liquidity needs are met from deposit levels or from the Company's use
of federal funds purchased and securities sold under agreement to repurchase.
Additional liquidity can be secured from lines of credit extended to the
Company from its correspondent banks. Management feels that its liquidity
position is adequate.
<PAGE>
PART II - OTHER INFORMATION
Item l. Legal Proceedings:
Neither First National Corporation nor its subsidiary, First National
Bank, is a party to nor is any of their property the subject of any
material or other pending legal proceedings, other than ordinary routine
proceedings incidental to their business.
Item 2. Changes in Securities:
Not Applicable
Item 3. Defaults Upon Senior Securities:
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders:
Not Applicable
Item 5. Other Information:
Not Applicable
Item 6. Exhibits and Reports of Form 8-K:
(a) Exhibit 3 - Articles of Incorporation
(b) Exhibit 27 - Financial Data Schedule
(c) Reports on Form 8-K: None
<PAGE>
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.
FIRST NATIONAL CORPORATION
Date: AUGUST 14, 1996 C. JOHN HIPP, III
President & Chief Executive Officer
Date: AUGUST 14, 1996 W. LOUIS GRIFFITH
Principal Accounting Officer and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
3 Articles of Incorporation Attached
27 Financial Data Schedule Attached
<PAGE>
ARTICLES OF INCORPORATION
OF
FIRST NATIONAL CORPORATION
I, undersigned person, having capacity to contract and acting as the
incorporator of a corporation under the South Carolina Business Corporation Act,
adopt the following Articles of Incorporation for such corporation:
FIRST: The name of the corporation is First National
Corporation.
SECOND: The duration of the corporation is perpetual.
THIRD: The street and post office address of its initial
registered office in the State of South Carolina
shall be 345 John C. Calhoun Drive S.E., P O Box
1287, Orangeburg, South Carolina, 29116-1287,
County of Orangeburg, and the name of its initial
registered agent at such address is J. Donald
Collier.
FOURTH: The specific purpose of purposes for which the
corporation is organized, stated in general terms
are: to exercise all powers of a banking holding
company which is registered with the Board of
Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and
to engage in any and all banking and non-banking
activities allowed for such a bank holding company
under state and federal law, and to engage in any
lawful act or activity for which corporations may
be organized under the Business Corporation Act of
South Carolina.
FIFTH: The aggregate number of shares which the
corporation shall have the authority to issue is
One Million Five Hundred Thousand (1,500,000)
shares of one class of Common Stock each of which
shall have a par value of Five Dollars ($5.00).
<PAGE>
SIXTH: The capital stock of the corporation may be issued
for valid corporate purposes upon authorization by
the Board of Directors of the corporation without
prior stockholder approval. Such authorization by
the Board of Directors may be made by a majority or
other vote of the Board as may be provided in the
Bylaws of the corporation. The provisions of this
Article Sixth may only be amended or repealed by
the affirmative vote of the holders of not less
than eighty percent (80%) of the outstanding voting
stock of the corporation.
SEVENTH: The corporation shall have the right to purchase
its own shares to the extent of unreserved and
unrestricted earned surplus available therefor and
to the extent of unreserved and unrestricted
capital surplus available therefor.
EIGHTH: The affirmative vote of the holders of not less
than eighty percent (80%) of the outstanding voting
stock of the corporation is required in the event
that the Board of Directors of the corporation does
not recommend to the stockholders of the
corporation a vote in favor of (1) a merger,
exchange of consolidation of the corporation with,
or (2) a sale, exchange or lease of all or
substantially all of the assets of the corporation
to, any person or entity. For purposes of this
provision, substantially all of the assets shall
mean assets having a fair market value or book
value, whichever is greater, of 25 percent or more
of the total assets as reflected on a balance sheet
of the corporation as of a date no earlier than 45
days prior to any acquisition of such assets. The
affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding voting
stock of the corporation is required to amend or
repeal the provisions of this Article Eighth.
<PAGE>
NINTH: The affirmative vote of the holders of not less
than 80% of the outstanding shares of all voting
stock of the corporation and the affirmative vote
of the holders of not less than 67% of the
outstanding shares of voting stock held by
stockholders other than the Controlling Party shall
be required for the approval or authorization of
any merger, consolidation, or sale, exchange or
lease of all or substantially all the assets of the
corporation (as defined in Article Eighth of this
Articles of Incorporation) shall be required to
approve or authorize any such transaction involving
any shareholder owning or controlling 20% or more
of the corporation's voting stock at the time of
the proposed transaction ("Controlling party");
provided, however, that these voting requirements
shall not be applicable in such transactions (a) in
which the cash or fair market value of the
property, securities or other consideration to be
received (which includes common stock of this
corporation retained by its existing shareholders
in such a transaction in which the corporation is
the surviving entity) per share by holders of
common stock of the corporation in such transaction
is not less than the highest per share price (with
appropriate adjustments for recapitalization and
for stock splits, stock dividends, and
distributions), paid by the Controlling Party in
the acquisition of any of its holdings of the
corporation's common stock in the three years
preceding the announcement of the proposed
transaction; or (b) recommended by a majority of
the entire Board of Directors. The affirmative
vote of not less than eighty percent (80%) of the
outstanding voting stock of the corporation is
required to amend or repeal the provisions of this
Article Ninth. The requirements of this Article
Ninth are in addition to and separate from any
consent or approval that may be required by those
Articles of Incorporation to authorize any merger,
consolidation, or sale, exchange or lease of all or
substantially all the assets of the Corporation (as
defined in Article Eighth).
<PAGE>
TENTH: A director of the corporation may be removed by the
affirmative vote of a majority of the entire Board
of Directors with or without cause. Shareholders
can remove directors with or without cause only by
the affirmative vote of the holders of eighty (80%)
of the Corporation's shares. Cause shall mean
fraudulent or dishonest acts or gross abuse of
authority in the discharge of duties to the
Corporation and shall be established after written
notice of specific charges and the opportunity to
meet and refute such charges.
ELEVENTH: The Board of Directors of the corporation shall
consist of a maximum of twenty (20) persons.
Directors may increase membership on the Board up
to this maximum, but may not do so once the maximum
membership is reached. The terms of the members of
the Board of Directors elected at the first annual
shareholders meeting shall be set so as to
implement staggered terms, i.e. the terms of one-
third (or as near one-third as possible) of the
Directors shall be one year, the terms of one-third
shall be two years and the terms of one-third shall
be three years. Thereafter, one-third of the
Directors shall be elected by a majority of the
votes cast at each annual meeting of the
shareholders or by similar vote at any special
meeting called for the purpose, to serve three-year
terms. Each Director shall hold office until the
expiration of the term for which he is elected,
except as otherwise stated in the Bylaws, and
thereafter until his successor has been elected and
qualified. The affirmative vote of the holders of
not less than eighty percent (80%) of the
outstanding voting stock of the corporation is
required to amend or repeal the provisions of this
Article Eleventh.
<PAGE>
TWELFTH: The number of directors constituting the initial
Board of Directors is seventeen (17). The names
and addresses of the persons who shall serve as
directors until the first annual meeting of
shareholders or until their successors are elected
and qualified are:
J. Gavin Appleby
345 John C. Calhoun Dr., S.E.
Orangeburg, SC 29115
J. Donald Collier
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
W. B. Cox
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Austin Cunningham
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
C. Parker Dempsey
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Clarence F. Evans
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
John L. Gramling, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Charlton B. Horger
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
F. O. Hutto, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
R. H. Jennings, III
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Edward V. Mirmow, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
<PAGE>
J. C. McAlhany
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
R. Park Newton, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
J. A. Richardson, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Jesse D. Shirer
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Henry Tecklenburg, Jr.
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
Howard E. Thomas
345 John C. Calhoun Dr., S.E.
Orangeburg SC 29115
THIRTEENTH: Shareholders shall not have cumulative voting
rights.
FOURTEENTH: The holders of the shares of the corporation shall
have no preemptive rights to acquire any shares in
the corporation.
FIFTEENTH: Any and all vacancies on the Board of Directors,
including those by increase in the number of
directors or by removal of directors with or
without cause, shall be filled by the Board of
Directors for the full unexpired term of a director
of that class.
SIXTEENTH: A majority of the entire Board of Directors shall
have the power to alter, amend or repeal the Bylaws
of the corporation. Shareholders may alter, amend,
or repeal the bylaws only by the affirmative vote
of the holders of eighty percent (80%) of
outstanding stock of the corporation
SEVENTEENTH: The holders of fifty percent (50%) or more of the
outstanding stock of the corporation shall be
required to call a special meeting of shareholders.
<PAGE>
EIGHTEENTH: A special meeting of shareholders, called by
shareholders, the Board of Directors or any members
thereof, or any officer of the corporation, to
consider a vote in favor of a merger or
consolidation of the corporation with or a sale,
exchange or lease of substantially all of the
assets of the corporation to any person or entity,
as defined under Articles Eighth and Ninth of these
Articles of Incorporation, which is not recommended
by the Board of Directors of the corporation, shall
require attendance in person or by proxy of eighty
percent (80%) of the shareholders of the
corporation in order for a quorum for the conduct
of business to exist. Such a meeting may not be
adjourned absent notice if a quorum is not present.
Such eighty percent (80%) quorum requirement will
apply at any annual meeting called to consider such
a non-Board recommended transaction.
Dated: FEBRUARY 21, 1985
ANN WATSON
Ann Watson,
Sole Incorporator
67 Madison Avenue, Third Flr.
Memphis, Tennessee 38103
<PAGE>
VERIFICATION CERTIFICATE
STATE OF TENNESSEE
COUNTY OF SHELBY
I, Ann Watson, do hereby certify that I have read and understood
the meaning and purport of statements contained in these Articles of
Incorporation; that the statements therein contained and the same are
true to the best of my knowledge and belief; and that I signed these
Articles of Incorporation as the sole Incorporator of First National
Corporation and am authorized to execute this Verification.
ANN WATSON
Ann Watson, Sole
Incorporator
CERTIFICATE OF ATTORNEY
I, CHARLTON B. HORGER, an attorney licensed to practice in the
State of South Carolina, certify that the corporation, to whose Articles
if Incorporation this certificate is attached, has complied with the
requirements of the South Carolina Business Corporation Act relating to
the organization of corporations and that, in my opinion, the
corporation is organized for a lawful purpose.
Date: FEBRUARY 21, 1985
CHARLTON B. HORGER
Charlton B. Horger
Address: P O Drawer 329
Orangeburg SC 29115
<PAGE>
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant Section 3-10-106 of the 1976 South Carolina Code, as amended,
the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
1. The name of the corporation is FIRST NATIONAL CORPORATION.
2. On APRIL 24, 1990, the corporation adopted the following Amendment(s)
of its Articles of Incorporation:
RESOLVED, that a new Article Nineteen (19) be added to the Articles of
Incorporation to be set forth as follows:
NINETEEN: No director of the corporation shall be personally liable to
the corporation or its shareholders for monetary damages for
breach of his fiduciary duty as a director occurring after
the effective date hereof; provided, however, the foregoing
shall not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the
corporation or its shareholders; (ii) for acts or omissions
not in good faith or which involve gross negligence,
intentional misconduct, or a knowing violation of law; (iii)
imposed for unlawful distributions as set forth in Section
33-8-330 of the South Carolina Business Corporation Act of
1988, as amended from time to time (the "Act"), or (iv) for
any transaction from which the director derived an improper
personal benefit. This provision shall eliminate or limit
the liability of a director only to the maximum extent
permitted from time to time by the Act or any successor law
or laws. Any repeal or modification of the foregoing
protection by the shareholders of the corporation shall not
adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or
modification.
3. The manner, if not set forth in the amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
Amendment shall be effected, is as follows: (if not applicable, insert
"not applicable" or "NA").
N/A
<PAGE>
4. Complete either a or b, whichever is applicable.
a. Amendment(s) adopted by shareholder action.
At the date of adoption of the amendment, the number of outstanding
shares of each voting group entitled to vote separately on the
Amendment, and the vote of such shares was:
Voting Group Common Stock
Number of Outstanding Shares 685,007
Number of Votes Entitled to be Cast 685,007
Number of Votes Represented at the meeting 488,377
Number of Undisputed* Shares Voted For 469,184
Number of Undisputed* Shares Voted Against 8,684
*NOTE: Pursuant to Section 33-10-106(6)(i), the corporation can
alternatively state the total number of undisputed shares cast
for the amendment by each voting group together with a statement
that the number of cast for the amendment by each voting group
was sufficient for approval by that voting group.
b. The Amendment(s) was duly adopted by the incorporators or board
of directors without shareholder approval pursuant to Section
33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South Carolina
Code as amended, and shareholder action was not required.
5. Unless a delayed date is specified, the effective date of these Articles
of Amendment shall be the date of acceptance for filing by the Secretary
of State (See Section 33-1-230(b)):ACCEPTED May 3, 1990
DATE: MAY 1, 1990 FIRST NATIONAL CORPORATION
By: JAMES C. HUNTER, JR.
James C. Hunter, Jr., Secretary
<PAGE>
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant Section 3-10-106 of the 1976 South Carolina Code, as amended,
the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
1. The name of the corporation is FIRST NATIONAL CORPORATION.
2. On APRIL 28, 1992, the corporation adopted the following Amendment(s)
of its Articles of Incorporation:
RESOLVED that Article Fifth of the Corporation's Articles of Incorporation be
amended to read as follows:
FIFTH: The aggregate number of shares which the corporation shall have
authority to issue is five million (5,000,000) shares of one
class of common stock each of which shall have a par value of
five dollars ($5.00).
3. The manner, if not set forth in the amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
Amendment shall be effected, is as follows:(if not applicable, insert
"not Applicable" or "NA").
N/A
4. Complete either a or b, whichever is applicable.
a. Amendment(s) adopted by shareholder action.
At the date of adoption of the amendment, the number of outstanding
shares of each voting group entitled to vote separately on the
Amendment, and the vote of such shares was:
Voting Group Common Stock
Number of Outstanding Shares 1,370,014
Number of Votes Entitled to be Cast 1,370,014
Number of Votes Represented at the meeting 1,011,297
Number of Undisputed* Shares Voted For 987,826
Number of Undisputed* Shares Voted Against 23,471
*NOTE: Pursuant to Section 33-10-106(6)(i), the corporation can
alternatively state the total number of undisputed shares cast
for the amendment by each voting group together with a statement
that the number of cast for the amendment by each voting group
was sufficient for approval by that voting group.
<PAGE>
b. The Amendment(s) was duly adopted by the incorporators or board
of directors without shareholder approval pursuant to Section
33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South Carolina
Code as amended, and shareholder action was not required.
5. Unless a delayed date is specified, the effective date of these Articles
of Amendment shall be the date of acceptance for filing by the Secretary
of State (See Section 33-1-230(b)):ACCEPTED MAY 6, 1992
DATE: MAY 4, 1992 FIRST NATIONAL CORPORATION
By: JAMES C. HUNTER, JR.
James C. Hunter, Jr., Secretary
<PAGE>
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant Section 3-10-106 of the 1976 South Carolina Code, as amended,
the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
1. The name of the corporation is FIRST NATIONAL CORPORATION.
2. On APRIL 23, 1996, the corporation adopted the following Amendment(s)
of its Articles of Incorporation:
A. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
(1) Amendment to Article Tenth.
Shareholders can remove directors with or without cause only
by the affirmative vote of the holders of 80% of the
Corporation's shares. Cause shall mean fraudulent or
dishonest acts of gross abuse of authority in the discharge
of duties to the Corporation and shall be established after
written notice as specific charges and the opportunity to
meet and refute such charges.
(2) Amendment to delete Article Fifteenth.
(3) Amendment to delate Article Seventeenth.
B. PROPOSAL TO ADD NEW ARTICLE
(1) Amendment to Add New Article.
When evaluating any proposed plan of merger, consolidation,
exchange or sale of all, or substantially all, of the assets
of the Corporation, the Board of Directors shall consider
the interests of the employees of the Corporation and its
subsidiaries, if any, do business in addition to the
interest of the Corporation's shareholders.
3. The manner, if not set forth in the amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the
Amendment shall be effected, is as follows: (if not applicable, insert
"not applicable" or "NA").
N/A
<PAGE>
4. Complete either a or b, whichever is applicable.
a. Amendment(s) adopted by shareholder action.
At the date of adoption of the amendment, the number of outstanding
shares of each voting group entitled to vote separately on the
Amendment, and the vote of such shares was:
A. Voting Group Common Stock
Number of Outstanding Shares 2,252,446
Number of Votes Entitled to be Cast 2,252,446
Number of Votes Represented at the meeting 1,613,680
Number of Undisputed* Shares Voted For 1,601,158
Number of Undisputed* Shares Voted Against 1,573
B. Voting Group Common Stock
Number of Outstanding Shares 2,252,446
Number of Votes Entitled to be Cast 2,252,446
Number of Votes Represented at the meeting 1,613,680
Number of Undisputed* Shares Voted For 1,592,283
Number of Undisputed* Shares Voted Against 12,876
*NOTE: Pursuant to Section 33-10-106(6)(i), the corporation can
alternatively state the total number of undisputed shares cast
for the amendment by each voting group together with a statement
that the number of cast for the amendment by each voting group
was sufficient for approval by that voting group.
b. The Amendment(s) was duly adopted by the incorporators or board
of directors without shareholder approval pursuant to Section
33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South Carolina
Code as amended, and shareholder action was not required.
5. Unless a delayed date is specified, the effective date of these Articles
of Amendment shall be the date of acceptance for filing by the Secretary
of State (See Section 33-1-230(b)):
DATE: MAY 8, 1996 FIRST NATIONAL CORPORATION
By: JAMES C. HUNTER, JR.
James C. Hunter, Jr., Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at June 30, 1996 (Unaudited) and
the Consolidated Statement of Income (Unaudited) for the six months ended June
30, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 24,546
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 71,027
<INVESTMENTS-CARRYING> 76,447
<INVESTMENTS-MARKET> 76,152
<LOANS> 261,539
<ALLOWANCE> 4,295
<TOTAL-ASSETS> 454,463
<DEPOSITS> 376,100
<SHORT-TERM> 32,694
<LIABILITIES-OTHER> 4,370
<LONG-TERM> 0
0
0
<COMMON> 11,277
<OTHER-SE> 30,022
<TOTAL-LIABILITIES-AND-EQUITY> 454,463
<INTEREST-LOAN> 12,065
<INTEREST-INVEST> 4,134
<INTEREST-OTHER> 328
<INTEREST-TOTAL> 16,527
<INTEREST-DEPOSIT> 6,084
<INTEREST-EXPENSE> 6,776
<INTEREST-INCOME-NET> 9,749
<LOAN-LOSSES> 520
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 7,828
<INCOME-PRETAX> 4,010
<INCOME-PRE-EXTRAORDINARY> 2,796
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,796
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.93
<LOANS-NON> 677
<LOANS-PAST> 280
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,590
<ALLOWANCE-OPEN> 3,703
<CHARGE-OFFS> 205
<RECOVERIES> 277
<ALLOWANCE-CLOSE> 4,295
<ALLOWANCE-DOMESTIC> 4,295
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
