<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 0-13585
NATIONAL CITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1632155
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 868, EVANSVILLE, INDIANA 47705-0868
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 464-9677
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 shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 31, 1998
(Common stock) 11,341,256
<PAGE>
NATIONAL CITY BANCSHARES, INC.
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Condensed consolidated statements of financial
position-June 30, 1998, December 31, 1997,
and June 30, 1997 1
Condensed consolidated statements of income-
three months and six months ended
June 30, 1997 and 1996 2
Condensed consolidated statements of cash flows-
six months ended June 30, 1997 and 1996 3
Notes to condensed consolidated financial
statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 19
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 20
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 23
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Unaudited Financial Statements
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Unaudited Condensed Consolidated Statements of Financial Position
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
June December June
30 31 30
1998 1997 1997
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 56,113 $ 39,486 $ 43,720
Time deposits in banks 897 2,485 2,386
Federal funds sold 3,990 11,047 6,942
Securities available for sale 298,441 290,536 300,704
Nonmarketable equity securities 12,600 11,709 9,973
Loans 1,139,367 965,264 913,084
Less: Allowance for loan losses 10,842 8,511 7,830
- ----------------------------------------------------------------------------
Loans-net 1,128,525 956,753 905,254
Premises and equipment, net 38,291 32,449 30,198
Intangible assets 40,451 20,753 11,563
Other assets 24,363 21,028 21,454
- ----------------------------------------------------------------------------
TOTAL ASSETS $1,603,671 $1,386,246 $1,332,194
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
LIABILITIES
Deposits:
Noninterest-bearing demand $ 147,724 $ 138,671 $ 121,307
Interest-bearing savings and time 1,088,673 901,763 900,623
- ----------------------------------------------------------------------------
Total deposits 1,236,397 1,040,434 1,021,930
Short-term borrowings 71,582 76,917 67,585
Other borrowings 81,840 96,201 88,819
Guaranteed preferred beneficial interests
in the Corporation's subordinated debenture 34,500 - -
Dividends payable 2,040 1,931 1,578
Deferred income taxes 4,090 4,517 2,324
Other liabilities 10,505 9,544 10,760
- ----------------------------------------------------------------------------
Total liabilities 1,440,954 1,229,544 1,192,996
- ----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock-1,000,000 shares authorized
None outstanding
Common stock 11,334 11,300 11,062
6/30/98 12/31/97 6/30/97
---------- ---------- ----------
Authorized 29,000,000 20,000,000 20,000,000
Outstanding 11,333,512 11,299,984 11,062,212
Capital surplus 82,206 81,615 51,905
Retained earnings 66,372 60,123 75,008
Accumulated other comprehensive income 2,805 3,664 1,223
- ----------------------------------------------------------------------------
Total shareholders' equity 162,717 156,702 139,198
- ----------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,603,671 $1,386,246 $1,332,194
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Unaudited Condensed Consolidated Statements of Income
(Dollar Amounts Other Than Share Data in Thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30 June 30
- ------------------------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $25,443 $20,382 $48,244 $39,552
Interest and dividends on securities 4,690 4,681 9,079 9,299
Interest on federal funds sold 83 114 199 205
Interest on other investments 29 46 79 94
- ------------------------------------------------------------------------------
Total interest income 30,245 25,223 57,601 49,150
- ------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 11,618 9,533 22,323 18,563
Interest on funds borrowed 2,974 1,888 4,820 3,427
- ------------------------------------------------------------------------------
Total interest expense 14,592 11,421 27,143 21,990
- ------------------------------------------------------------------------------
NET INTEREST INCOME 15,653 13,802 30,458 27,160
Provision for loan losses 1,575 273 1,841 684
- ------------------------------------------------------------------------------
Net interest income after
provision for loan losses 14,078 13,529 28,617 26,476
- ------------------------------------------------------------------------------
NONINTEREST INCOME
Trust income 532 359 1,015 788
Service charges on deposit accounts 1,376 1,047 2,536 2,037
Securities gains 993 154 1,061 624
Other 1,167 899 2,304 1,645
- ------------------------------------------------------------------------------
Total noninterest income 4,068 2,459 6,916 5,094
- ------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 5,797 4,791 10,866 9,627
Premises and equipment 1,596 1,161 2,959 2,337
Other 3,815 2,693 7,006 5,161
- ------------------------------------------------------------------------------
Total noninterest expense 11,208 8,645 20,831 17,125
- ------------------------------------------------------------------------------
Income before income taxes 6,938 7,343 14,702 14,445
Income taxes 2,056 2,199 4,466 4,399
- ------------------------------------------------------------------------------
NET INCOME 4,882 5,144 10,236 10,046
Other comprehensive income, net of
income taxes:
Unrealized gain (loss) arising
in period 258 1,653 (227) 1,563
Reclassification for realized
amount (591) (92) (631) (371)
- ------------------------------------------------------------------------------
Net unrealized gain (loss) recognized
in other comprehensive income (333) 1,561 (858) 1,192
COMPREHENSIVE INCOME $ 4,549 $ 6,705 $ 9,378 $11,238
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Earnings per share:
Basic $0.43 $0.46 $0.90 $0.90
Diluted $0.42 $0.46 $0.89 $0.89
Weighted average shares outstanding:
Basic 11,332,007 11,144,642 11,324,564 11,200,553
Diluted 11,478,212 11,284,299 11,472,290 11,330,151
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
- ---------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 11,358 $ 13,146
- ---------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing time
deposits in banks 1,588 597
Proceeds from matured securities held to maturity - 6,990
Proceeds from matured securities available for sale 50,204 27,367
Proceeds from sales of securities held to maturity - 3,509
Proceeds from sales of securities available for sale 25,928 13,522
Proceeds from sales of nonmarketable equity securities 1,106 803
Purchases of securities held to maturity - (26,321)
Purchases of securities available for sale (46,962) (20,695)
Purchases of nonmarketable equity securities (121) (4,157)
(Increase) decrease in federal funds sold 15,137 (3,324)
(Increase) decrease in loans made to customers (67,176) (28,118)
Capital expenditures (4,270) (5,294)
Proceeds from sale of premises and equipment 51 14
Proceeds from sale of other real estate owned 314 141
Purchase of subsidiary, net of cash and cash
equivalents acquired 36,952 (5,846)
- ---------------------------------------------------------------------------
Net cash flows provided by (used in)
investing activities 12,751 (40,812)
- ---------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ 2,577 $ 5,287
Net increase (decrease) in short-term borrowings (15,845) 221
Proceeds from other borrowings 51,871 84,925
Payments on other borrowings (77,332) (52,343)
Trust preferred securities 34,500 -
Dividends paid (3,878) (3,312)
Repurchase of common stock (905) (8,723)
Sale of common stock 791 851
Proceeds from exercise of stock options 739 515
- ---------------------------------------------------------------------------
Net cash flows provided by (used in)
financing activities (7,482) 27,421
- ---------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 16,627 (245)
Cash and cash equivalents at beginning of period 39,486 43,965
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 56,113 $ 43,720
- ---------------------------------------------------------------------------
</TABLE>
(Continued on next page)
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30
- ---------------------------------------------------------------------------
1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCIAL ACTIVITIES
Change in allowance for unrealized gain
(loss) on securities available for sale $ (1,405) $ 1,948
Increase (decrease) in deferred taxes
attributable to securities available for sale (546) (756)
Other real estate acquired in settlement of loans 99 364
Purchase of subsidiaries and branches:
Purchase price $(32,354) $ 6,797
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Assets acquired:
Cash and cash equivalents 4,598 951
Securities 39,223 3,029
Federal funds sold 8,080 950
Loans 106,536 37,773
Premises and equipment 2,856 698
Other assets 23,700 3,061
Liabilities assumed:
Deposits (193,386) (35,160)
Short-term borrowings (10,510) -
Other borrowings (11,100) (4,027)
Deferred taxes payable (71) (34)
Other liabilities (2,280) (444)
- ---------------------------------------------------------------------------
$(32,354) $ 6,797
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The accompanying unaudited condensed consolidated financial statements
include the accounts of National City Bancshares, Inc. and its
subsidiaries (collectively, the "Corporation"). At June 30, 1998, the
Corporation had as subsidiaries, thirteen commercial banks, one
savings bank, a leasing corporation, a property management company,
and a Delaware statutory business trust. All significant intercompany
transactions are eliminated in consolidation.
The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). While
the financial statements are unaudited, they do reflect all
adjustments which, in the opinion of management, are necessary for a
fair statement of the financial position, the results of operations,
and cash flow for the interim periods. All such adjustments are of a
normal recurring nature. Pursuant to SEC rules, certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted from these financial statements unless
significant changes have taken place since the end of the most recent
fiscal year. The accompanying financial statements and notes thereto
should be read in conjunction with the Corporation's financial
statements and notes for the year ended December 31, 1997 included in
the Corporation's Annual Report on Form 10-K as filed with the SEC.
Because the results from commercial banking operations are so closely
related and responsive to changes in economic conditions, the results
for any interim period are not necessarily indicative of the results
that can be expected for the entire year.
In February, 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits". SFAS No. 132 standardizes the disclosure
requirements for pensions and other postretirement benefits. This
statement is effective for financial statements for periods beginning
after December 15, 1997. The Corporation's management plans to adopt
the appropriate provisions of the statements at January 1, 1998, and
does not currently believe that the future adoption of this statement
will have a material effect on the Corporation's financial position or
operating results.
5
<PAGE>
On June 15, 1998, the FASB issued FAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 established a
new model for accounting for derivatives and hedging activities and
supersedes and amends a number of existing standards. FAS 133 is
effective for fiscal years beginning after June 15, 1999, but earlier
application is permitted as of the beginning of any fiscal quarter
subsequent to June 15, 1998. Upon the statement's initial
application, all derivatives are required to be recognized in the
statement of financial position as either assets or liabilities and
measured at fair value. In addition, all hedging relationships must
be designated, reassessed and documented pursuant to the provisions of
FAS 133. Adoption of FAS 133 is not expected to have a material
financial statement impact on the Corporation's financial position or
operating results.
NOTE 2
The Corporation and its subsidiaries are parties to legal actions
which arise in the normal course of their business activities. In the
opinion of management, the ultimate resolution of these matters is not
expected to have a materially adverse effect on the financial position
or on the results of operations of the Corporation and its
subsidiaries.
In the normal course of business, there are outstanding various other
commitments and contingent liabilities which are not reflected in the
accompanying financial statements. The Corporation uses the same
credit policies in making commitments and conditional obligations as
it does for other instruments.
<TABLE>
<CAPTION>
6/30/98 12/31/97
---------------------------------------------------------------
<S> <C> <C>
Standby letters of credit $ 13,597,000 $ 13,518,000
Commitments to extend credit $229,370,000 $166,927,000
</TABLE>
NOTE 3
A five percent stock dividend was paid December 8, 1997 to
shareholders of record November 24, 1997. All weighted average shares
and per share data presented herein have been restated for the effects
of this stock dividend.
6
<PAGE>
NOTE 4
On March 30, 1998, NCBE Capital Trust I ("the Trust"), a Delaware
statutory business trust created by the Corporation, issued $34.5
million of 8.25% Cumulative Trust Preferred Securities ("Securities")
which will mature on March 31, 2028 subject to extension or earlier
redemption in certain events. The principal asset of the Trust is a
$35.6 million subordinated debenture of the Corporation. The
subordinated debenture bears interest at the rate of 8.25% and matures
on March 31, 2028 subject to extension or earlier redemption in
certain events. The Corporation owns all of the common securities of
the Trust.
The Securities, the assets of the Trust, and the common securities
issued by the Trust are redeemable in whole or in part on or after
March 31, 2003, or at any time in whole, but not in part, from the
date of issuance upon the occurrence of certain events. The
Securities are included in Tier I capital for regulatory capital
adequacy determination purposes, subject to certain limitations.
The obligations of the Corporation with respect to the issuance of the
Securities constitute a full and unconditional guarantee by the
Corporation of the Trust's obligation with respect to the Securities.
Subject to certain exceptions and limitations, the Corporation may,
from time to time, defer subordinated debenture interest payments,
which would result in a deferral of distribution payments on the
related Securities and, with certain exceptions, prevent the
Corporation from declaring or paying cash distributions on the
Corporation's common stock or debt securities that rank pari passu or
junior to the subordinated debenture.
NOTE 5
As of January 1, 1998, the Corporation adopted Statement 130,
Reporting Comprehensive Income. Statement 130 established new rules
for the reporting and display of comprehensive income and its
components; however, the adoption of this Statement had no impact on
the Corporation's net income or shareholders' equity. Statement 130
requires unrealized gains or losses on the Corporation's available-
for-sale securities, which prior to adoption were reported separately
in shareholders' equity, to be included in other comprehensive income.
Prior year financial statements have been reclassified to conform to
the requirements of Statement 130.
7
<PAGE>
NOTE 6
On March 1, 1997, the Corporation acquired First Federal Savings Bank
of Leitchfield, a $43 million savings bank located in Leitchfield,
Kentucky. This acquisition was accounted for as a purchase, and the
results of operations of First Federal Savings Bank of Leitchfield
since the acquisition have been included in the financial statements.
The excess of the acquisition cost over the fair value of net assets
acquired in the amount of $2,807,000 will be amortized over 25 years
using the straight-line method.
On August 1, 1997, the Corporation issued 374,986 shares of common
stock, valued at $15,984,000, in exchange for all of the common stock
of Bridgeport Bancorp, Inc., the parent company of First National Bank
of Bridgeport with total assets of $39,382,000. This acquisition was
accounted for as a purchase. Accordingly, the results of operations
of the acquired entity since the acquisition have been included in the
financial statements. The excess of the acquisition cost over fair
value of net assets acquired in the amount of $9,377,000 will be
amortized over 25 years using the straight-line method.
On December 31, 1997, the Corporation issued 794,994 shares of common
stock for all of the common stock of Fourth First Bancorp, the parent
company of First Bank of Huntingburg, Huntingburg, Indiana, with total
assets of $108,077,000 and total equity of $12,917,000. This
acquisition was accounted for as a pooling of interests. Accordingly,
the Corporation's financial statements have been retroactively
restated to include the accounts and operations of Fourth First
Bancorp for all periods presented. Certain reclassifications have
been made to Fourth First Bancorp's historical financial statements to
conform to the Corporation's presentation.
On January 8, 1998, the Corporation's subsidiary, First Kentucky Bank,
purchased the former Mayfield, Kentucky, Branch Office of Republic
Bank & Trust Company. First Kentucky assumed $65,639,000 in deposit
liabilities in consideration of a deposit premium of $4,521,000, and
acquired assets and assumed other liabilities of $1,264,000. First
Kentucky also purchased the office facility and certain loans of the
Branch.
On March 6, 1998, the Corporation acquired Vernois Bancshares, Inc. in
a cash transaction for $27,500,000. Vernois Bancshares, Inc. was the
parent company of Bank of Illinois in Mt. Vernon, with total assets of
$179,156,000. This acquisition was accounted for as a purchase.
Accordingly, the results of operations of the acquired entity since
the acquisition have been included in the financial statements. The
excess of the acquisition cost over fair value of net assets acquired
in the amount of $16,551,000 will be amortized over 25 years using the
straight-line method.
8
<PAGE>
On May 31, 1998, the Corporation acquired Illinois One Bancorp., Inc.
("IOBI"), the holding company for Illinois One Bank, National
Association ("IOB"), a national banking association with offices in
Shawneetown, Elizabethtown, and Golconda, Illinois. As of March 31,
1998, IOB had total assets of $87.8 million and total shareholders'
equity of $10.9 million. Accordingly, the Corporation's financial
statements have been retroactively restated to include the accounts
and operations of IOBI for all periods presented. Certain
reclassifications have been made to conform to the Corporation's
presentation. The Corporation issued 572,737 shares of its common
stock in the transaction.
NOTE 7
The Corporation is a party to an Agreement and Plan of Merger dated
February 11, 1998, with Trigg Bancorp, Inc. ("TBI"), the holding
company for Trigg County Farmers Bank ("TCBF"), a Kentucky banking
corporation, which has three offices in Cadiz, Kentucky. The
agreement relates to the acquisition of TBI in a merger transaction in
which up to 736,278 shares of the Corporation's common stock would be
issued. As of March 31, 1998, TCFB had total assets of $97 million
and total shareholders equity of $9 million. The acquisition is
expected to qualify for the pooling of interest method of accounting.
The parties expect to close the merger in the third quarter of 1998.
The Corporation is a party to an Agreement and Plan of Merger dated
March 9, 1998, with Community First Financial, Inc. ("CFF"), the
holding company for Community First Bank of Kentucky, a Kentucky
banking corporation, which has two offices in Warsaw and Dry Ridge,
Kentucky, and Community First Bank, National Association, a national
banking association, which has six offices in Maysville, May's Lick
and Mount Olivet, Kentucky and Aberdeen and Ripley, Ohio. The
agreement relates to the acquisition of CFF in a merger transaction in
which up to 1,441,862 shares of the Corporation's common stock would
be issued to shareholders of CFF. As of March 31, 1998, CFF's
subsidiary banks had total assets of $127 million and total
shareholders equity of $13 million. The acquisition is expected to
qualify for the pooling of interests method of accounting. The
parties expect to close the merger in the third quarter of 1998.
The Corporation is a party to an Agreement and Plan of Merger dated
April 21, 1998, with Hoosier Hills Financial Corporation ("HHFC"), the
holding company for The Ripley County Bank ("RCB"), an Indiana banking
corporation, which has offices in Milan, Osgood, and Versailles,
Indiana. The agreement relates to the acquisition of HHFC in a merger
transaction in which up to 775,625 shares of the Corporation's common
stock (subject to increase under certain circumstances, at the
Corporation's election) would be issued. As of March 31, 1998, RCB
had total assets of $110 million and total shareholders' equity of $11
million. The acquisition is subject to shareholder and regulatory
approval. The acquisition is expected to qualify for the pooling of
interests method of accounting. The parties expect to close the
merger in the third quarter of 1998.
9
<PAGE>
The Corporation is a party to an Agreement and Plan of Merger dated
May 21, 1998, with 1st Bancorp Vienna, Inc. ("Bancorp"), the holding
company for First State Bank of Vienna ("FSBV"), an Illinois banking
corporation with a single office in Vienna, Illinois. The agreement
relates to the acquisition of Bancorp in a transaction in which
Bancorp would be merged into the Corporation, FSBV would be merged
into IOB, and approximately 264,000 shares of the Corporation's common
stock would be issued. As of March 31, 1998, FSBV had total assets of
$39.5 million and total shareholders' equity of $5.0 million. The
acquisition is subject to regulatory approval and the approval of
shareholders of Bancorp. The acquisition is expected to qualify for
the pooling of interests method of accounting. The parties expect to
close the merger in the third or fourth quarter of 1998.
The Corporation is a party to an Agreement and Plan of Reorganization
dated May 22, 1998, with Princeton Federal Bank, fsb ("PFB"), a
federal savings bank with a single office in Princeton, Kentucky. The
agreement relates to the acquisition of PFB in a transaction in which
PFB would merge with an interim subsidiary of the Corporation, and
approximately 201,000 shares of the Corporation's common stock would
be issued. As of March 31, 1998, PFB had total assets of $32.3
million and total shareholders' equity of $4.4 million. The
acquisition is subject to regulatory approval and the approval of
shareholders of PFB. The acquisition is expected to qualify for the
pooling of interests method of accounting. The parties expect to
close the merger in the third or fourth quarter of 1998.
The Corporation is a party to an Agreement and Plan of Merger dated
June 30, 1998, with Commonwealth Commercial Corp. ("CCC"), the holding
company for Bank of Crittenden ("BC"), a Kentucky banking corporation
with a single office in Crittenden, Kentucky. The agreement relates
to the acquisition of CCC in a merger transaction in which
approximately 209,000 shares of the Corporation's common stock would
be issued. As of March 31, 1998, BC had total assets of $25.9 million
and total shareholders' equity of $2.6 million. The acquisition is
subject to regulatory approval. The acquisition is expected to
qualify for the pooling of interests method of accounting. The
parties expect to close the merger in the third or fourth quarter of
1998.
The Corporation is a party to an Agreement and Plan of Merger dated
July 9, 1998, with Downstate Banking Co. ("DBC"), the holding company
for Downstate National Bank ("DNB"), which has one office in
Brookport, Illinois. The agreement relates to the acquisition of DBC
in a merger transaction in which approximately 101,250 shares of the
Corporation's common stock would be issued. As of March 31, 1998, DNB
had total assets of $21.9 million and total shareholders' equity of
$2.0 million. The acquisition is subject to regulatory approval. The
acquisition is expected to qualify for the pooling of interests method
of accounting. The parties expect to close the merger in the fourth
quarter of 1998.
10
<PAGE>
The Corporation is a party to an Agreement and Plan of Merger dated
July 14, 1998, with Progressive Bancshares, Inc. ("PBI"), the holding
company for The Progressive Bank, National Association ("TPB"), which
has four offices in Lexington, Lawrenceburg, and Owingsville,
Kentucky. The agreement relates to the acquisition of PBI in a merger
transaction in which approximately 975,700 shares of the Corporation's
common stock would be issued. As of March 31, 1998, TPB had total
assets of $142.9 million and total shareholders' equity of $11.1
million. The acquisition is subject to regulatory approval and the
approval of the shareholders of PBI. The acquisition is expected to
qualify for the pooling of interests method of accounting. The
parties expect to close the merger in fourth quarter of 1998.
NOTE 8
The calculation of net earnings per share as of June 30 is summarized
as follows:
<TABLE>
<CAPTION>
Quarter to Date Year to Date
- ------------------------------------------------------------------------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $4,882,000 $5,144,000 $10,236,000 $10,046,000
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Basic earnings per share
- ------------------------
Weighted average shares
outstanding 11,332,007 11,144,642 11,324,564 11,200,553
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Basic earnings per share $0.43 $0.46 $0.90 $0.90
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Diluted earnings per share
Weighted average shares
outstanding 11,332,007 11,144,642 11,324,564 11,200,553
Common stock equivalents
due to stock options 146,205 139,657 147,726 129,598
- ------------------------------------------------------------------------------
Adjusted shares outstanding 11,478,212 11,284,299 11,472,290 11,330,151
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Diluted earnings per share $0.42 $0.46 $0.89 $0.89
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
INTRODUCTION
"Forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 may be included in this report. A
variety of factors could cause the Corporation's actual results to
differ from those expected at the time of this report including
general and local economic conditions, interest rate changes, risks
associated with acquisitions, credit risks, regulatory risks,
competition, and year 2000 compliance.
The Corporation continues to grow rapidly by acquiring community
banks. The financial results of the acquisition can best be assessed
from the Corporation's financial statements on a quarterly, as-
reported basis. After each acquisition accounted for as a pooling of
interests (other than transactions accounted for as immaterial
poolings), the Corporation's financial statements are restated to
include the results of the acquiree. Since January 1, 1997, the
Corporation acquired assets of $192,904,000 (measured at the time of
each acquisition) in two transactions accounted for as poolings of
interests.
Since the beginning of 1997, the Corporation has also acquired
$326,750,000 (measured at the time of each acquisition) in assets
through transactions accounted for as purchases. Financial statements
are not restated following a transaction accounted for as a purchase;
instead, the Corporation's financial statements include the results of
each acquired entity following acquisition. Transactions accounted
for as purchases typically result in the Corporation's recording
intangible assets, including goodwill, which the Corporation amortizes
on a straight-line basis. The Corporation has recorded $31,743,000
(measured at the time of each acquisition) in intangible assets as the
direct result of purchases consummated between the beginning of 1997
and June 30, 1998. Note 6 to the condensed consolidated financial
statements contains information regarding the acquisitions completed
since January 1, 1997.
Management expects to continue to pursue acquisition opportunities as
they arise. Note 7 to the condensed consolidated financial statement
contains information regarding pending acquisitions. Management
believes other community banks located in the Corporation's general
geographic area (which may extend beyond the tri-state region
currently served) will find the Corporation an attractive merger
partner.
12
<PAGE>
NET INCOME
Net income for the quarter ended June 30, 1998, was $4,882,000, or
$0.43 per share, compared to $5,144,000, or $0.46 per share, for the
second quarter of 1997. This is a decrease of $262,000, or 5.1
percent, in net income. For the first six months of 1998, net income
was $10,236,000, or $0.89 per share on a diluted basis, compared to
$10,046,000, or $0.89 per share on a diluted basis, for the first six
months of 1997, an increase of $190,000, or 1.9 percent, in net
income. The weighted average number of shares outstanding was
11,332,007 and 11,324,564 for the three and six months, respectively,
ended June 30, 1998, compared to 11,144,642 and 11,200,553 during the
same periods last year. The weighted average number of shares
outstanding, assuming dilution, was 11,478,212 and 11,472,290 for the
three and six months, respectively, ended June 30, 1998, compared to
11,284,299 and 11,330,151 during the like periods last year. Shares
were repurchased by the Corporation during 1997 for the dividend
reinvestment program and for the stock repurchase program announced
December 23, 1996.
NET INTEREST INCOME
For the first six months of 1998, net interest income increased
$3,688,000, or 12.6 percent, on a tax equivalent basis, from the same
period last year. Net interest income in the second quarter of 1998
increased $1,994,000, or 13.3 percent, on a tax equivalent basis, from
the year-ago quarter. For the first six months of 1998 and 1997,
average earning assets were $1,391,364,000 and $1,199,874,000,
respectively, representing an increase of $191,490,000 or 16.0
percent. Average earning assets were $1,457,778,000 and
$1,223,050,000, an increase of $234,728,000, or 19.2 percent, during
the second quarters of 1998 and 1997, respectively. Average loans
increased $221,984,000, or 24.8 percent, and average securities
increased $16,040,000, or 5.1 percent, for the quarter. Average
Federal funds sold decreased $2,320,000, or 27.7 percent, and average
time deposits in banks decreased $976,000, or 32.1 percent, for the
quarter.
The growth in net interest income was primarily due to increases and a
changes in the mix of average earning assets. Total interest income
increased $8,841,000, or 17.2 percent, on a tax equivalent basis,
during the first six months of 1998 from the same period of 1997,
compared to a $5,153,000, or 23.4 percent increase in total interest
expense. The increases in both interest income and interest expense
were primarily due to increases in volume.
The net interest margin decreased to 4.67 percent for the second
quarter of 1998, compared to 4.91 percent during the year-ago quarter
and to 4.79 percent for the first six months of 1998 from 4.93 percent
during the same period last year.
13
<PAGE>
UNDERPERFORMING ASSETS
Listed below is a two-year comparison of underperforming assets.
<TABLE>
<CAPTION>
6/30/98 6/30/97
---------------------------------------------------------------
<S> <C> <C>
Nonaccrual loans $5,591,000 $2,396,000
Restructured loans 193,000 147,000
90 days past due loans 1,245,000 2,188,000
---------------------------------------------------------------
Total underperforming loans 7,029,000 4,731,000
Nonaccrual securities:
Agency-issued CMO 37,000 24,000
Other real estate held 185,000 347,000
---------------------------------------------------------------
Total underperforming assets $7,251,000 $5,102,000
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
Past due 90 days or more, nonaccrual, and renegotiated loans were 0.6
percent of total loans at June 30, 1998, and 0.5 percent of total
loans at June 30, 1997. Of the loans in this category, 45.3 and 49.4
percent were secured by real estate at June 30, 1998 and 1997,
respectively. Potential problem loans, other than underperforming
loans, amounted to $39,861,000 at June 30, 1998 and $41,309,000 at
June 30, 1997.
PROVISION FOR LOAN LOSSES
Net charge-offs amounted to $291,000 during the second quarter and
$592,000 during the first six months of 1998, compared to $414,000
during the second quarter and $664,000 during the first six months of
1997.
The provision for loan losses during the first six months of 1998 was
$1,841,000 compared to $684,000 from the comparable year-ago period.
The provision is based on the quarterly review of the allowance for
loan losses. Some of the factors used in this review include current
economic conditions and forecasts, risk by type of loan, previous loan
loss experience, and evaluation of specific borrowers and collateral.
Management realizes the low loan loss environment that the banking
industry has had in the past may not persist, and therefore, has taken
action to increase the allowance for loan losses. Allowance for loan
losses as a percent of total loans increased from 0.86 percent to 0.95
percent over the past year. As of June 30, 1998, management
considered the allowance for loan losses adequate to provide for
potential losses.
14
<PAGE>
NONINTEREST INCOME
Noninterest income for the second quarter of 1998 increased
$1,609,000, or 65.4 percent, and for the first six months of 1998
increased $1,822,000, or 35.8 percent, from the year-ago periods.
Service charges on deposit accounts increased $499,000, or 24.5
percent, and net securities gains increased $437,000, or 70.0 percent,
over the first six months of 1998. Trust income increased $227,000,
or 28.8 percent, for the first six months of 1998, and other
noninterest income increased $659,000, or 40.1 percent, during 1998,
primarily due to gains on the sale of mortgage loans and acquisitions
accounted for under the purchase method of accounting.
NONINTEREST EXPENSE
Noninterest expense increased $2,563,000, or 29.7 percent, and
$3,706,000, or 21.6 percent, in the second quarter and the first six
months of 1998, respectively. Salaries and employee benefits
increased $1,006,000, or 21.0 percent, for the second quarter and
$1,239,000 or 12.9 percent, for the first six months of 1998.
Expenses of premises and equipment increased $435,000, or 37.5
percent, in the second quarter and $622,000, or 26.6 percent, for the
first six months of 1998. Other items in this category increased
$1,122,000, or 41.7 percent for the second quarter and $1,845,000 for
the first six months of 1998. This increase included $387,000 in
legal and accounting expenses associated with acquisitions and
$874,000 of expenses associated with subsidiaries acquired and
accounted for under the purchase method of accounting.
FINANCIAL POSITION ANALYSIS
Cash and cash equivalents increased $12,393,000, or 28.4 percent.
Federal funds sold decreased $2,952,000, or 42.5 percent, and
time deposits in banks decreased $1,489,000, or 62.4 percent, during
the past year.
Securities increased $364,000, or 0.1 percent, during the past year.
The largest increase was in nontaxable municipals which increased
$8,659,000, or 5.3 percent. U. S. Government and agency securities
increased $7,495,000, or 11.4 percent; marketable equity securities
increased $2,616,000, or 182.2 percent; and nonmarketable equity
securities increased $2,627,000, or 26.3 percent, primarily due to
acquisitions accounted for under the purchase method of accounting.
Mortgage-backed securities decreased $17,212,000, or 29.3 percent;
corporate securities decreased $5,808,000, or 90.3 percent; and
taxable municipals decreased $614,000, or 19.1 percent. The market
value adjustment on securities available for sale increased
$2,601,000, or 130.3 percent.
Amortized cost and fair values of securities at June 30, 1998, with
dollar amounts in thousands are on the following page:
15
<PAGE>
Securities available for sale:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government and
agency securities $ 68,379 $ 222 $ 43 $ 68,558
Taxable municipals 2,596 64 - 2,660
Tax-exempt municipals 171,865 4,681 329 176,217
Corporate securities 623 1 - 624
Mortgage-backed securities 46,329 286 187 46,428
Marketable equity
securities 4,052 67 165 3,954
- ----------------------------------------------------------------------
Total available for sale $293,844 $5,321 $724 $298,441
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
At June 30, 1998, the securities portfolio included $1,494,000 in
structured notes, which were comprised of $999,000 in an indexed
amortizing note and $495,000 in a delevered floating note. These
securities have risk characteristics which are well within the
constraints of the non-structured securities held in the securities
portfolio.
The Corporation has increased total loans while maintaining
competitive rates. Loans increased $226,283,000, or 24.8 percent,
during the past year. Of this increase, $123,156,000 relates to
entities acquired and accounted for under the purchase method of
accounting. Loans secured by real estate, increased $99,362,000, or
19.8 percent; commercial loans increased $90,385,000, or 47.4 percent;
consumer loans increased $11,436,000, or 7.6 percent; agricultural
loans increased $2,018,000, or 2.5 percent; and lease financing
increased $28,000, or 0.2 percent. All other loans increased
$23,054,000, or 151.0 percent.
Total deposits have increased $214,467,000, or 21.0 percent, since
June 30, 1997, primarily due to entities acquired and accounted for
under the purchase method of accounting. Noninterest-bearing deposits
increased $26,417,000, or 21.8 percent, and interest-bearing deposits
increased $188,050,000, or 20.9 percent, during this period.
SHAREHOLDERS' EQUITY
The Corporation and each subsidiary bank have capital ratios which
substantially exceed all regulatory requirements. The Corporation's
capital ratios are shown below.
<TABLE>
<CAPTION>
Minimum
Requirements 6/30/98 6/30/97
-------------------------------------------------------------
<S> <C> <C> <C>
Tier I capital to
risk-based assets 4.00% 12.92% 13.97%
Total capital to
risk-based assets 8.00% 14.26% 14.83%
Tangible equity to
tangible assets 3.00% 7.82% 9.66%
</TABLE>
16
<PAGE>
YEAR 2000 COMPLIANCE
The year 2000 poses a unique set of challenges to those industries
reliant on information technology. As a result of methods employed by
early programmers, many software applications and operational programs
may be unable to distinguish the year 2000 from the year 1900. If not
effectively addressed, this problem could result in the production of
inaccurate data, or, in the worst cases, the inability of the systems
to continue to function altogether. Financial institutions are
particularly vulnerable due to the industry's dependence on electronic
data processing systems.
To address the potential adverse year 2000-related consequences, the
banking regulatory authorities, working cooperatively through the
Federal Financial Institutions Examination Council (FFIEC), have
issued a number of specific guidelines designed to guide financial
institutions in their year 2000 compliance efforts. The Corporation
has developed a year 2000 compliance program that it believes is
consistent with these guidelines.
The Corporation and its banking subsidiaries are subject to
examination with respect to their year 2000 compliance by various
state and federal agencies, including the Federal Reserve Board, the
Comptroller of the Currency, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, and state banking agencies. If
a regulatory agency issues a rating of less than "satisfactory" with
respect to an organization's year 2000 compliance efforts, the
organization's ability to obtain regulatory approval of certain
actions, such as proposed acquisitions, may be adversely affected.
The Corporation's acquisition plans are not presently under any such
restriction.
Management believes that the organization has a effective corporate
year 2000 compliance program in place and that additional expenditures
required to bring its systems into compliance will not have a
materially adverse effect on the Corporation's operations, cash flow,
or financial condition. Management expects total additional out-of-
pocket expenditures to be approximately $500,000. This includes fees
to outside consulting firms, costs to upgrade equipment specifically
for the purpose of year 2000 compliance, and certain administrative
expenditures. However, the year 2000 problem is pervasive and complex
and can potentially affect any computer process. Accordingly, no
assurance can be given that year 2000 compliance can be achieved
without additional unanticipated expenditures and uncertainties that
might affect future financial results.
17
<PAGE>
IMPACT OF ACCOUNTING PRONOUNCEMENTS
In February, 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits". SFAS No. 132 standardizes the disclosure
requirements for pensions and other postretirement benefits. This
statement is effective for financial statements for periods beginning
after December 15, 1997. The Corporation's management plans to adopt
the appropriate provisions of the statements at January 1, 1998, and
does not currently believe that the future adoption of this statement
will have a material effect on the Corporation's financial position or
operating results.
On June 15, 1998, the FASB issued FAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 established a
new model for accounting for derivatives and hedging activities and
supersedes and amends a number of existing standards. FAS 133 is
effective for fiscal years beginning after June 15, 1999, but earlier
application is permitted as of the beginning of any fiscal quarter
subsequent to June 15, 1998. Upon the statement's initial
application, all derivatives are required to be recognized in the
statement of financial position as either assets or liabilities and
measured at fair value. In addition, all hedging relationships must
be designated, reassessed and documented pursuant to the provisions of
FAS 133. Adoption of FAS 133 is not expected to have a material
financial statement impact on the Corporation's financial position or
operating results.
18
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in market risk exposures that
affect the quantitative and qualitative disclosures presented in the
Corporation's Annual Report on Form 10-K for the year ended December
31, 1997.
19
<PAGE>
NATIONAL CITY BANCSHARES, INC. and Subsidiaries
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On May 22, 1998, the Corporation filed Restated Articles of
Incorporation (the "Restated Articles") embodying amendments to its
Articles of Incorporation which had been approved by the Corporation's
shareholders at the Annual Meeting of shareholders held May 20, 1998.
A description of the rights of the holders of the Corporation's common
shares, without par value ("NCBE Common") and preferred shares,
without par value ("NCBE Preferred"), and a copy of the Restated
Articles are included in the Form 8-A/A filed June 12, 1998.
Pursuant to the Restated Articles, the rights of holders of NCBE
Common have been materially modified in the following respects: (1)
the number of authorized shares of NCBE Common was increased from
20,000,000 to 29,000,000; (2) 1,000,000 shares of NCBE Preferred have
been authorized and the Board of Directors of the Corporation has been
authorized to establish the rights and preferences of multiple series
of NCBE Preferred, including voting rights (which may be limited or
unlimited), dividend or distribution rights, rights to priority in
relation to NCBE Common or other shares of NCBE Preferred, redemption
or conversion prices, liquidation preferences and sinking fund
provisions, without further shareholder approval; (3) cumulative
voting in elections of directors has been eliminated; (4) directors of
the Corporation may be removed from office for "good cause" only with
the affirmative vote of holders of 66 2/3% of the votes entitled to be
cast in an election of directors; (5) the maximum number of directors
has been fixed at 15; and (6) the number of outstanding shares
required to be held by persons who may demand a special shareholders
meeting was increased from 25% to 80%. Other, less material changes
were also included in the Restated Articles, including; (1) provisions
permitting the Corporation to redeem "control shares" as defined in
the Indiana Business Corporation Law (the "IBCL") were included in the
Restated Articles; (2) the Corporation's statement of purposes was
simplified and clarified; and (3) certain corporate information was
updated, unnecessary and redundant provisions were eliminated and
outdated references to prior Indiana law were replaced by references
to the IBCL.
20
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
DATE OF MEETING
The Annual Meeting of Shareholders was held May 20, 1998.
MATTERS VOTED UPON
(1) Three directors, each to serve a term of three years or until
their successors shall have been duly elected and qualified, were
elected during the Annual Meeting of Shareholders. The results of the
vote were:
Dr. H. Ray Hoops
WITHHELD ABSTENTIONS AND
FOR 8,304,173 AUTHORITY 131,115 BROKER NONVOTES 4,958
John D. Lippert
WITHHELD ABSTENTIONS AND
FOR 8,392,331 AUTHORITY 211,831 BROKER NONVOTES 4,958
Ronald G. Reherman
WITHHELD ABSTENTIONS AND
FOR 8,344,047 AUTHORITY 91,241 BROKER NONVOTES 4,958
(2) The Board of Directors proposed to amend and restate the Articles
of Incorporation. The results of the vote were:
A. Increase the number of the Corporation's authorized common
shares from 20,000,000 to 29,000,000
ABSTENTIONS AND
FOR 7,907,407 AGAINST 470,749 BROKER NONVOTES 119,194
B. Authorize 1,000,000 preferred shares
ABSTENTIONS AND
FOR 5,976,620 AGAINST 1,187,495 BROKER NONVOTES 1,333,235
C. Eliminate cumulative voting in elections of directors
ABSTENTIONS AND
FOR 5,930,833 AGAINST 1,109,853 BROKER NONVOTES 1,456,664
21
<PAGE>
D. Provide for removal of directors only for cause and
only by the vote of shareholders representing 66 2/3%
of votes entitled to be cast
ABSTENTIONS AND
FOR 5,829,260 AGAINST 1,161,862 BROKER NONVOTES 1,506,228
E. Fix the maximum number of directors at 15
ABSTENTIONS AND
FOR 7,832,750 AGAINST 405,043 BROKER NONVOTES 259,557
F. Provide for a shareholders' meeting to be held
upon the demand of holders of shares representing
80% of votes entitled to be cast
ABSTENTIONS AND
FOR 5,958,963 AGAINST 1,015,898 BROKER NONVOTES 1,522,489
G. Adopt the Indiana Business Corporation Law's ("IBCL")
Control Provisions allowing redemption, in certain
cases, of an acquiror's control shares
ABSTENTIONS AND
FOR 6,272,592 AGAINST 807,513 BROKER NONVOTES 1,417,245
H. Clarify that shareholders' voting rights with respect
to certain business combinations extend to sales
transactions and other distributions of the Corporation's
assets
ABSTENTIONS AND
FOR 6,371,115 AGAINST 694,077 BROKER NONVOTES 1,432,158
I. Clarify the Corporation's statement of purpose
ABSTENTIONS AND
FOR 6,841,165 AGAINST 249,883 BROKER NONVOTES 1,406,302
J. Restate the Corporation's Articles in accordance with
the IBCL to update corporate information, eliminate
unnecessary and redundant material, and state certain
default provisions of the IBCL.
ABSTENTIONS AND
FOR 6,819,735 AGAINST 261,783 BROKER NONVOTES 1,415,832
22
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The following exhibits are submitted herewith:
3(i) Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to Form 8-A/A, dated
June 12, 1998
11 Computation of Per Share Earnings (incorporated
by reference to Note 8 to the Corporation's
unaudited interim consolidated financial statements
included herein)
27 Financial Data Schedule (Electronic Filing Only)
REPORTS ON FORM 8-K
A CURRENT REPORT dated April 30, 1998, for the events of April 20,
1998, and April 21, 1998, was filed reporting under Item 5 news
releases announcing earnings and the execution of a definitive
agreement with Hoosier Fills Financial Corporation. The report also
included the two news releases as exhibits under Item 7.
A CURRENT REPORT dated May 27, 1998, for the event of May 20, 1998,
was filed reporting under Item 4 the change in the Corporation's
certifying accountant.
A CURRENT REPORT dated June 9, 1998, for the event of May 22, 1998,
was filed reporting under Item 5 the execution of definitive
agreements with 1st Bancorp Vienna, Inc. and Princeton Federal Bank,
FSB. The report also included the news release as an exhibit under
Item 7.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NATIONAL CITY BANCSHARES, INC.
(Registrant)
By /s/ STEPHEN C. BYELICK, JR.
----------------------------
Stephen C. Byelick, Jr.
Secretary and Treasurer
(On behalf of the registrant
and in his capacity as Chief
Accounting Officer.)
August 14, 1998
23
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- --------------------------------------------------
3(i) Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to Form 8-A/A, dated
June 12, 1998)
11 Computation of Per Share Earnings (incorporated
by reference to Note 8 to the Corporation's
unaudited interim consolidated financial
statements included herein)
27 Financial Data Schedule (Electronic Filing Only)
24
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 56113
<INT-BEARING-DEPOSITS> 897
<FED-FUNDS-SOLD> 3990
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 311041
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1139367
<ALLOWANCE> 10842
<TOTAL-ASSETS> 1603671
<DEPOSITS> 1236397
<SHORT-TERM> 71582
<LIABILITIES-OTHER> 16635
<LONG-TERM> 116340
0
0
<COMMON> 11334
<OTHER-SE> 151383
<TOTAL-LIABILITIES-AND-EQUITY> 1603671
<INTEREST-LOAN> 48244
<INTEREST-INVEST> 9079
<INTEREST-OTHER> 278
<INTEREST-TOTAL> 57601
<INTEREST-DEPOSIT> 22323
<INTEREST-EXPENSE> 4820
<INTEREST-INCOME-NET> 30458
<LOAN-LOSSES> 1841
<SECURITIES-GAINS> 1061
<EXPENSE-OTHER> 20831
<INCOME-PRETAX> 14702
<INCOME-PRE-EXTRAORDINARY> 14702
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10236
<EPS-PRIMARY> .9
<EPS-DILUTED> .89
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 43720
<INT-BEARING-DEPOSITS> 2386
<FED-FUNDS-SOLD> 6942
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 310677
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 913084
<ALLOWANCE> 7830
<TOTAL-ASSETS> 1332194
<DEPOSITS> 1021930
<SHORT-TERM> 67585
<LIABILITIES-OTHER> 14662
<LONG-TERM> 88819
0
0
<COMMON> 11062
<OTHER-SE> 128136
<TOTAL-LIABILITIES-AND-EQUITY> 1332194
<INTEREST-LOAN> 39552
<INTEREST-INVEST> 9299
<INTEREST-OTHER> 299
<INTEREST-TOTAL> 49150
<INTEREST-DEPOSIT> 18563
<INTEREST-EXPENSE> 3427
<INTEREST-INCOME-NET> 27160
<LOAN-LOSSES> 684
<SECURITIES-GAINS> 624
<EXPENSE-OTHER> 17125
<INCOME-PRETAX> 14445
<INCOME-PRE-EXTRAORDINARY> 14445
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10046
<EPS-PRIMARY> .9
<EPS-DILUTED> .89
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
