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
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIE EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
___________________
For Quarter Ended March 31, 1998 Commission file number: 2-96350
CNB Corporation
(Exact name of registrant as specified in its charter)
South Carolina 57-0792402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 320, Conway, South Carolina 29526
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (843) 248-5721
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 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 .
The number of shares outstanding of the issuer's $10.00 par value common
stock as of March 31, 1998 was 597,900.
<PAGE>
CNB Corporation
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1998, 1
December 31, 1997 and March 31, 1997
Consolidated Statement of Income for the Three Months 2
Ended March 31, 1998 and 1997
Consolidated Statement of Changes in Stockholders' 3
Equity for the Three Months Ended March 31, 1998
and 1997
Consolidated Statement of Cash Flows for the Three Months 4
Ended March 31, 1998 and 1997
Notes to Consolidated Financial Statements 5-12
Item 2. Management's Discussion and Analysis of Financial 13-20
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURE 22
<PAGE>
CNB Corporation and Subsidiary
Consolidated Balance Sheets
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
ASSETS:
<S> <C> <C> <C>
Cash and due from banks $ 15,683 $ 14,371 $ 15,118
Interest bearing deposits with banks 0 0 0
Investment Securities 63,195 70,239 72,784
(Fair values of $63,983 at
March 31, 1998, $70,893 at
December 31, 1997, and $72,411
at March 31, 1997)
Securities Available for Sale 59,300 53,184 60,557
(Amortized cost of $58,874 at
March 31, 1998, $52,855 at
December 31, 1997, and $60,885
at March 31, 1997)
Federal Funds sold and securities
purchased under agreement
to resell 34,575 11,375 12,150
Loans:
Gross Loans 227,140 222,826 197,704
Less unearned income (1,089) (1,105) (1,022)
Loans, net of unearned income 226,051 221,721 196,682
Less reserve for possible
loan losses (3,014) (2,879) (2,534)
Net loans 223,037 218,842 194,148
Bank premises and equipment 6,780 6,798 6,702
Other assets 6,654 6,335 6,211
Total assets 409,224 381,144 367,670
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing 61,743 55,422 55,240
Interest-bearing 266,447 245,905 239,787
Total deposits 328,190 301,327 295,027
Federal funds purchased and
securities sold under agreement
to repurchase 37,098 32,366 32,312
Other short-term borrowings 1,672 5,000 2,573
Obligations under mortgages and
capital leases 0 0 4
Other liabilities 3,247 4,707 2,271
Minority interest in subsidiary 28 27 25
Total liabilities 370,235 343,427 332,212
Stockholders' equity:
Common stock, par value $10 per
share: Authorized 1,500,000 in
1998 and 500,000 in 1997;
issued 598,687 in 1998 and
479,093 in 1997 5,987 5,987 4,791
Surplus 24,551 24,552 15,699
Undivided Profits 8,266 7,030 15,194
Net Unrealized Holding 255 197 (196)
Gains (Losses) on
Available-For-Sale Securities
Less: Treasury stock (70) (49) (30)
Total stockholders' equity 38,989 37,717 35,458
Total liabilities
and stockholders' equity 409,224 381,144 367,670
</TABLE>
1
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statement of Income
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
Interest Income:
<S> <C> <C>
Interest and fees on loans $ 5,093 $ 4,509
Interest on investment securities:
Taxable investment securities 1,687 1,757
Tax-exempt investment securities 179 180
Other securities 0 0
Interest on federal funds sold and securities
purchased under agreement to resell 228 129
Total interest income 7,187 6,575
Interest Expense:
Interest on deposits 2,742 2,366
Interest on federal funds purchased and securities
sold under agreement to repurchase 398 415
Interest on other short-term borrowings 26 17
Total interest expense 3,166 2,798
Net interest income 4,021 3,777
Provision for possible loan losses 190 240
Net interest income after provision for possible
loan losses 3,831 3,537
Other income:
Service charges on deposit accounts 590 534
Gains/(Losses) on securities 0 0
Other operating income 226 186
Total other income 816 720
Other expenses:
Minority interest in income of subsidiary 1 1
Salaries and employee benefits 1,661 1,513
Occupancy expense 423 420
Other operating expenses 669 607
Total operating expenses 2,754 2,541
Income before income taxes 1,893 1,716
Income tax provision 657 603
Net Income 1,236 1,113
Per share data (1):
Net income per weighted average shares outstanding $ 2.07 $ 1.86
Cash dividend paid per share $ 0 $ 0
Book value per actual number of shares outstanding $ 65.21 $ 59.25
Weighted average number of shares outstanding 598,098 598,197
Actual number of shares outstanding 597,900 598,466
</TABLE>
(1) Adjusted for the effect of a 25% stock dividend issued during the
third quarter of 1997.
2
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(All Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Common Stock:
($10 par value; 500,000 shares authorized)
Balance, January 1 5,987 4,791
Issuance of Common Stock None None
Balance at end of period 5,987 4,791
Surplus:
Balance, January 1 24,552 15,697
Issuance of Common Stock None None
Gain on sale of treasury stock 0 2
Balance at end of period 24,551 15,699
Undivided profits:
Balance, January 1 7,030 14,082
Net Income 1,236 1,113
Cash dividends declared None None
Balance at end of period 8,266 15,194
Net unrealized holding gains/(losses) on
available-for-sale securities:
Balance, January 1 197 27
Change in net unrealized gains/(Losses) 58 (223)
Balance at end of period 255 (196)
Treasury stock:
Balance, January 1 (49) (101)
Purchase of treasury stock (127) (7)
Reissue of treasury stock 106 79
Balance at end of period (70) (30)
Total stockholders' equity 38,989 35,458
</TABLE>
Note: Columns may not add due to rounding.
3
<PAGE>
CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three-month period ended March 31,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,236 $ 1,113
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 172 167
Provision for loan losses 190 240
Provision for deferred income taxes 49 (60)
Loss (gain) on sale of investment
securities 0 0
(Increase) decrease in accrued interest
receivable (240) (407)
(Increase) decrease in other assets (79) 6
(Decrease) increase in other liabilities 266 (4)
Increase in minority interest in
subsidiary 1 0
Net cash provided by operating
activities 1,595 1,055
INVESTING ACTIVITIES
Proceeds from sale of investment securities
available for sale 0 0
Proceeds from maturities of investment
securities held to maturity 10,440 5,570
Proceeds from maturities of investment
securities available for sale 3,884 3,500
Purchase of investment securities held to
Maturity (3,000) (6,124)
Purchase of investment securities
available for sale (10,000) (4,000)
Decrease (increase) in interest-bearing
deposits in banks 0 0
(Increase) decrease in federal funds sold (23,200) (12,150)
(Increase) decrease in loans (4,330) (11,807)
Premises and equipment expenditures (154) (3)
Net cash provided by (used for)
investing activities (26,756) (25,014)
FINANCING ACTIVITIES
Dividends paid (1,794) (1,433)
Increase (Decrease) in deposits 26,863 26,614
(Decrease) increase in securities sold
under repurchase agreement 4,732 (706)
(Decrease) increase in other
short-term borrowings (3,328) 254
Increase (decrease)in obligation under
mortgages and capital leases 0 (2)
Net cash provided by (used for)
financing activities 26,473 24,727
Net increase (decrease) in cash
and due from banks 1,312 768
CASH AND DUE FROM BANKS, BEGINNING OF YEAR 14,371 14,350
CASH AND DUE FROM BANKS, MARCH 31, 1998 AND 1997 $15,683 $ 15,118
CASH PAID (RECEIVED) FOR:
Interest $ 3,200 $ 2,601
Income taxes $ 131 $ 551
</TABLE> 4
<PAGE>
CNB CORPORATION AND SUBSIDIARY (The "Corporation")
CNB CORPORATION (The "Parent")
THE CONWAY NATIONAL BANK (The "Bank")
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Dollar Amounts in Thousands)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net income per share - Net income per share is computed on the basis of the
weighted average number of common shares outstanding adjusted for the effect
of a 25% stock dividend paid during the third quarter of 1997, 598,098 for
the three-month period ended March 31, 1998 and 598,197 for the three-month
period ended March 31, 1997.
NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances either at the Bank
or on deposit with the Federal Reserve Bank. The average amount of these
reserve balances for the three-month period ended March 31, 1998 and for the
years ended December 31, 1997 and 1996 were approximately $6,072, $5,909, and
$5,112, respectively.
5
<PAGE>
NOTE 3 - INVESTMENT SECURITIES
Investment securities with a par value of approximately $71,595 at March 31,
1998 and $69,965 at December 31, 1997 were pledged to secure public deposits
and for other purposes required by law.
The following summaries reflect the book value, unrealized gains and losses,
approximate market value, and tax-equivalent yields of investment securities
at March 31, 1998 and at December 31, 1997.
<TABLE>
<CAPTION>
March 31, 1998
Book Unrealized Holding Fair
Value Gains Losses Value Yield(1)
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
United States Treasury
Within one year $ 9,276 $ 61 $ 4 $ 9,333 6.73%
One to five years 10,974 124 0 11,098 6.09
20,250 185 4 20,431 6.38
Federal agencies
Within one year 6,157 6 5 6,158 5.31
One to five years 30,651 237 35 30,853 6.13
Six to ten years 1,375 32 0 1,407 6.90
38,183 275 40 38,418 6.02
State, county and
municipal
One to five years 325 10 0 335 7.85
325 10 0 335 7.85
Other Securities(Equity) 116 0 0 116 -
Total available for sale $58,874 $ 470 $ 44 $59,300 6.14%
HELD TO MATURITY
United States Treasury
Within one year 13,679 35 20 13,694 5.43
One to five years 8,002 111 0 8,113 6.35
21,681 146 20 21,807 5.77
Federal agencies
One to five years 28,312 308 15 28,605 6.25
28,312 308 15 28,605 6.25
State, county and
municipal
Within one year 1,304 21 0 1,325 9.59%
One to five years 6,503 204 1 6,706 8.39
Six to ten years 5,240 143 0 5,383 7.44
After ten years 155 2 0 157 7.44
13,202 370 1 13,571 8.12
Total held to maturity $63,195 $ 824 $ 36 $63,983 6.47%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended March 31, 1998, the Bank did not hold any securities
of an issuer that exceeded 10% of stockholders' equity. The net unrealized
holding gains/(losses) on available-for-sale securities component of capital
is $255 as of March 31, 1998.
6
<PAGE>
NOTE 3 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
December 31, 1997
Book Unrealized Fair
Value Gains Losses Value Yield(1)
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
United States Treasury
Within one year $10,252 $ 52 $ 8 $10,296 6.53%
One to five years 11,987 125 - 12,112 6.30%
22,239 177 8 22,408 6.41%
Federal agencies
Within one year 4,995 1 12 4,984 5.11%
One to five years 23,805 158 18 23,945 6.26%
After ten years 1,375 21 - 1,396 6.90%
30,175 180 30 30,325 6.10%
State, county and
municipal
One to five years 325 10 - 335 7.85%
Other - restricted
Federal Reserve
Bank Stock 116 - - 116 6.03%
Total available for sale $52,855 $ 367 $ 38 $53,184 6.24%
HELD TO MATURITY
United States Treasury
Within one year 17,703 11 49 17,665 5.14%
One to five years 9,977 131 - 10,108 6.46%
27,680 142 49 27,773 5.62%
Federal agencies
One to five years 28,235 216 45 28,406 6.34%
State, county and
municipal
Within one year 1,540 9 - 1,549 8.88%
One to five years 6,436 214 1 6,649 8.71%
Six to ten years 5,746 157 - 5,903 7.39%
After ten years 602 11 - 613 7.39%
14,324 391 1 14,714 8.14%
Total held to maturity $70,239 $ 749 $ 95 $70,893 6.42%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended December 31, 1997, the Bank did not hold any
securities of an issuer that exceeded 10% of stockholders' equity. The net
unrealized holding gains/(losses) on available-for-sale securities component
of capital is $197 as of December 31, 1997.
7
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans at March 31, 1998 and December 31,
1997 by major classification:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Real estate loans - mortgage $ 137,362 $ 136,441
- construction 18,228 19,653
Commercial and industrial loans 38,101 34,606
Loans to individuals for household,
family and other consumer expenditures 31,451 30,772
Agriculture 1,810 1,214
All other loans, including overdrafts 188 140
Gross loans 227,140 222,826
Less unearned income (1,089) (1,105)
Less reserve for loan losses (3,014) (2,879)
Net loans 223,037 218,842
</TABLE>
8
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued
Changes in the reserve for loan losses for the quarter ended March 31,
1998 and 1997 and the year ended December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31, December 31,
1998 1997 1997
<S> <C> <C> <C>
Balance, beginning of period $ 2,879 $ 2,370 $ 2,370
Charge-offs:
Commercial, financial, and agricultural 46 28 238
Real Estate - construction and mortgage 1 0 5
Loans to individuals 116 81 399
Total charge-offs $ 163 $ 109 $ 642
Recoveries:
Commercial, financial, and agricultural $ 30 $ 5 $ 100
Real Estate - construction and mortgage 1 0 106
Loans to individuals 77 28 145
Total recoveries $ 108 $ 33 $ 351
Net charge-offs/(recoveries) $ 55 $ 76 $ 291
Additions charge to operations $ 190 $ 240 $ 800
Balance, end of period $ 3,014 $ 2,534 $ 2,879
Ratio of net charge-offs during the period
to average loans outstanding during the
period .02% .04% .14%
</TABLE>
The entire balance is available to absorb future loan losses.
At March 31, 1998 and December 31, 1997 loans on which no interest was being
accrued totalled approximately $165 and $24, respectively; foreclosed real
estate totalled $0 and $16, respectively; and loans 90 days past due and
still accruing totalled $221 and $135, respectively.
OTHER INTEREST-BEARING ASSETS
The Bank maintained an investment in an executive life insurance program
through Confederation Life Insurance and Annuity Company, Inc. During 1994
the Michigan Insurance Commission seized control of this United States
Corporation due to a similar action by the Canadian regulatory authorities
over the company's parent corporation, Confederation Life Insurance Company.
Regulatory oversight began as concerns regarding investment losses of the
parent corporation developed during 1993 and 1994. Management determined
that any impairment of the approximate $2,100,000 cash surrender value of the
policies was remote due to the financial stability of the U.S. subsidiary.
Subsequently, on October 23, 1996, a plan of Rehabilitation for Confederation
Life Insurance Company (U.S.) was confirmed by the State of Michigan in the
Circuit Court for the County of Ingham. The plan provided for the assumption
of company owned life insurance policies (COLI), such as the Bank's, to be
assumed by Pacific Mutual Life Insurance Company. Under the agreement,
holders of COLI policies had the option to have a policy reinsured by Pacific
Mutual which was expected to have the same account value and substantially
the same contract terms as the original policy or to receive the liquidation
or "opt-out" value of the policy.
The Bank's independent external auditors revisited the facts and circumstances
regarding the investment in the COLI program and read the related guidance in
SFAS No. 5 and SAB Topic 5(Y). There continues to be no significant
uncertainties requiring the recognition of a loss contingency.
The Bank's COLI policies were reinsured by Pacific Mutual during the third
quarter of 1997. Management received permission from the Office of the
Comptroller of the Currency to return this asset to accrual status and to
adjust the carrying value during the first quarter of 1998 with the total
cash surrender values totalling approximately $85,000 above the carrying
value on the bank's books.
As of March 31, 1998, the Company does not have any interest-bearing assets
that would be required to be disclosed under Item III.C.1. or 2. if such
assets were loans.
9
<PAGE>
NOTE 5 - PREMISES AND EQUIPMENT
Property at March 31, 1998 and December 31, 1997 is summarized as follows:
March 31, December 31,
1998 1997
Land and buildings $ 8,852 $ 8,853
Furniture, fixtures and equipment 5,292 5,313
Construction in progress 14 2
$ 14,158 $ 14,168
Less accumulated depreciation and
amortization 7,378 7,370
$ 6,780 $ 6,798
Depreciation and amortization of bank premises and equipment charged to
operating expense was $172 for the quarter ended March 31, 1998 and $700 for
the year ended December 31, 1997.
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
At March 31, 1998 and December 31, 1997, certificates of deposit of
$100,000 or more included in time deposits totalled approximately $66,316 and
$56,305 respectively. Interest expense on these deposits was approximately
$874 for the quarter ended March 31, 1998 and $2,815 for the year ended
December 31, 1997.
NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
At March 31, 1998 and December 31, 1997, securities sold under repurchase
agreements totalled approximately $37,098 and $32,366. U.S. Government
securities with a book value of $38,939 ($39,355 market value) and $38,984
($39,242 market value), respectively, are used as collateral for the agreements.
The weighted-average interest rate of these agreements was 4.59 percent and
4.61 percent at March 31, 1998 and December 31, 1997.
NOTE 8 - LINES OF CREDIT
At March 31, 1998, the Bank had unused short-term lines of credit to
purchase Federal Funds from unrelated banks totalling $19,000. These lines of
credit are available on a one to seven day basis for general corporate purposes
of the Bank. All of the lenders have reserved the right to withdraw these lines
at their option.
The Bank has a demand note through the U.S. Treasury, Tax and Loan system
with the Federal Reserve Bank of Richmond. The Bank may borrow up to $7,000
under the arrangement at a variable interest rate. The note is secured by U.S.
Treasury Notes with a market value of $6,078 at March 31, 1998. The amount
outstanding under the note totalled $1,672 and $5,000 at March 31, 1998 and
December 31, 1997, respectively.
NOTE 9 - INCOME TAXES
Income tax expense for the quarter ended March 31, 1998 and March 31,
1997 on pretax income of $1,893 and $1,716 totalled $657 and $603, respectively.
The provision for federal income taxes is calculated by applying the 34%
statutory federal income tax rate and increasing or reducing this amount due
to any tax-exempt interest, state bank tax (net of federal benefit), business
credits, surtax exemption, tax preferences, alternative minimum tax
calculations, or other factor. A summary of income tax components and a
reconciliation of income taxes to the federal statutory rate is included in
fiscal year-end reports.
Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes". SFAS 109 replaces SFAS 96 beginning in 1993, with early implementation
permitted. The impact of the adoption of SFAS 109 is not considered to be
material.
10
<PAGE>
NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
From time to time the bank subsidiary is a party to various litigation,
both as plaintiff and as defendant, arising from its normal operations. No
material losses are anticipated in connection with any of these matters at March
31, 1998.
Also, in the normal course of business, the bank subsidiary has
outstanding commitments to extend credit and other contingent liabilities, which
are not reflected in the accompanying financial statements. At March 31, 1998,
commitments to extend credit totalled $21,352; financial standby letters of
credit totalled $117; and performance standby letters of credit totalled $1,510.
In the opinion of management, no material losses or liabilities are expected as
a result of these transactions.
NOTE 11 - EMPLOYEE BENEFIT PLAN
The Bank has a defined contribution pension plan covering all employees
who have attained age twenty-one and have a minimum of one year of service.
Upon ongoing approval of the Board of Directors, the Bank matches one-hundred
percent of employee contributions up to one percent of employee salary deferred
and fifty percent of employee contributions in excess of one percent and up to
six percent of salary deferred. The Board of Directors may also make
discretionary contributions to the Plan. For the quarter ended March 31, 1998
and years ended December 31, 1997, 1996 and 1995, $93, $361, $336, and $266,
respectively, was charged to operations under the plan.
NOTE 12 - REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory -and possibly additional
discretionary - actions by regulators that, if undertaken, could have a direct
material effect on the financial statements. The regulations require the Bank
to meet specific capital adequacy guidelines that involve quantitative measures
of assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The capital classification is also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the maintenance of minimum amounts and ratios (set forth in the table
below) of Tier I capital to adjusted total assets (Leverage Capital ratio) and
minimum ratios of Tier I and total capital to risk-weighted assets. To be
considered adequately capitalized under the regulatory framework for prompt
corrective action, the Bank must maintain minimum Tier I leverage, Tier I
risk-based and total risked-based ratios as set forth in the table. The Bank's
actual capital ratios are also presented in the table below as of March 31,
1998:
To be
well capitalized
For under prompt
capital adequacy corrective action
purposes provisions
Actual Minimum Minimum
Amount Ratio Amount Ratio Amount Ratio
Total Capital (to risk $39,705 16.73% $18,984 8.0% $23,730 10.0%
weighted assets)
Tier I Capital (to risk 36,739 15.48 9,492 4.0 14,238 6.0
weighted assets)
Tier I Capital (to avg. 36,739 9.33 15,747 4.0 19,683 5.0
assets)
11
<PAGE>
NOTE 13 - CONDENSED FINANCIAL INFORMATION
Following is condensed financial information of CNB Corporation (parent
company only):
CONDENSED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
ASSETS
Cash $ 1,637
Investment in subsidiary 36,967
Fixed assets 348
Other assets 37
$ 38,989
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liability $ 0
Stockholders' equity 38,989
$ 38,989
CONDENSED STATEMENT OF INCOME
For the three-month period ended March 31, 1998
(Unaudited)
EQUITY IN NET INCOME OF SUBSIDIARY $ 1,263
OTHER INCOME 0
OTHER EXPENSES (27)
Net Income $ 1,236
DISCUSSION OF FORWARD-LOOKING STATEMENTS
Information in the enclosed report, other than historical information, may
contain forward-looking statements that involve risks and uncertainties,
including, but not limited to, timing of certain business initiatives of the
Company, the Company's interest rate risk condition, and future regulatory
actions of the Comptroller of the Currency and Federal Reserve System. It is
important to note that the Company's actual results may differ materially and
adversely from those discussed in forward-looking statements.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's Discussion and Analysis is provided to afford a clearer
understanding of the major elements of the corporation's results of operations,
financial condition, liquidity, and capital resources. The following discussion
should be read in conjunction with the corporation's financial statements and
notes thereto and other detailed information appearing elsewhere in this
report. In addition, the results of operations for the interim periods shown
in this report are not necessarily indicative of results to be expected for
the fiscal year. In the opinion of management, the information contained
herein reflects all adjustments necessary to make the results of operations for
the interim periods a fair statement of such operations. All such adjustments
are of a normal and recurring nature.
DISTRIBUTION OF ASSETS AND LIABILITIES
The Company maintains a conservative approach in determining the distribution of
assets and liabilities. Loans, net of unearned income, have increased 14.9%
from $196,682 at March 31, 1997 to $226,051 at March 31, 1998 and have increased
as a percentage of total assets from 53.5% to 55.2% over the same period as loan
demand has remained strong in our market. Securities and federal funds sold
have decreased as a percentage of total assets from 39.6% at March 31, 1997 to
38.4% at March 31, 1998 as we have utilized funds from the investments area
to meet the credit needs of the community. This level of investments and federal
funds sold provides for a more than adequate supply of secondary liquidity.
Management has sought to build the deposit base with stable, relatively
non-interest-sensitive deposits by offering the small to medium deposit
account holders a wide array of deposit instruments at competitive rates.
Non-interest-bearing demand deposits increased slightly as a percentage of
total assets from 15.0% at March 31, 1997 to 15.1% at March 31, 1998.
However, as more customers, both business and personal, are attracted to
interest-bearing deposit accounts, we expect the percentage of demand deposits
to decline over the long-term. Interest-bearing deposits have decreased
slightly from 65.2% of total assets at March 31, 1997 to 65.1% at March 31,
1998 while securities sold under agreement to repurchase have increased from
8.8% to 9.1% over the same period.
The following table sets forth the percentage relationship to total assets of
significant component's of the corporation's balance sheet as of March 31, 1998
and 1997:
<TABLE>
<CAPTION>
March 31,
<S> <C> <C>
Assets: 1998 1997
Earning assets:
Loans, net of unearned income 55.2% 53.5%
Investment securities 15.4 9.8
Securities Available for Sale 14.5 16.5
Federal funds sold and securities purchased
under agreement to resell 8.5 3.3
Other earning assets - -
Total earning assets 93.6 93.1
Other assets 6.4 6.9
Total assets 100.0% 100.0%
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits 65.1% 65.2%
Federal funds purchased and securities sold
under agreement to repurchase 9.1 8.8
Other short-term borrowings .4 .7
Total interest-bearing liabilities 74.6 74.7
Noninterest-bearing deposits 15.1 15.0
Other liabilities .8 .7
Stockholders' equity 9.5 9.6
Total liabilities and stockholders' equity 100.0% 100.0%
</TABLE>
13
<PAGE>
RESULTS OF OPERATION
CNB Corporation experienced earnings for the three-month period ended March
31, 1998 and 1997 of $1,236 and $1,113, respectively, resulting in a return
on average assets of 1.25% and 1.24% and a return on average stockholders'
equity of 12.88% and 13.16%.
The earnings were primarily attributable to net interest margins in each
period (see Net Income-Net Interest Income). Other factors include management's
ongoing effort to maintain other income at adequate levels (see Net Income -
Other Income) and to control other expenses (see Net Income - Other Expenses).
This level of earnings, coupled with a conservative dividend policy, have
supplied the necessary capital funds to support the growth in total assets.
Total assets have increased $41,554 or 11.3% from $367,670 at March 31, 1997
to $409,224 at March 31, 1998. The following table sets forth the financial
highlights for the three-month periods ending March 31, 1998 and March 31,
1997:
CNB Corporation
CNB Corporation and Subsidiary
FINANCIAL HIGHLIGHTS
(All Dollar Amounts, Except Per Share Data, in Thousands)
Three-Month Period Ended March 31,
<TABLE>
<CAPTION>
Percent
Increase
1998 1997 (Decrease)
<S>
Net interest income after provision for <C> <C> <C>
loan losses 3,831 3,537 8.3%
Income before income taxes 1,893 1,716 10.3
Net Income 1,236 1,113 11.1
Per Share (1) 2.07 1.86 11.3
Cash dividends declared 0 0 0
Per Share (1) 0 0 0
Total assets 409,224 367,670 11.3%
Total deposits 328,190 295,027 11.2
Loans, net of unearned income 226,051 196,682 14.9
Investment securities 122,495 133,341 (8.1)
Stockholders' equity 38,989 35,458 10.0
Book value per share (1) 65.21 59.25 10.1
Ratios (2):
Annualized return on average total assets 1.25% 1.24% .8%
Annualized return on average stockholders'
equity 12.88% 13.16% (2.1)%
</TABLE>
(1) Adjusted for the effect of a 25% stock dividend issued during the third
quarter of 1997.
(2) For the three-month period ended March 31, 1998 and March 31, 1997, average
total assets amounted to $394,051 and $358,598 with average stockholders'
equity totaling $38,384 and $33,817, respectively.
14
<PAGE>
NET INCOME
Net Interest Income - Earnings are dependent to a large degree on net interest
income, defined as the difference between gross interest and fees earned on
earning assets, primarily loans and securities, and interest paid on deposits
and borrowed funds. Net interest income is effected by the interest rates
earned or paid and by volume changes in loans, securities, deposits, and
borrowed funds.
Interest rates paid on deposits and borrowed funds and earned on loans and
investments have generally followed the fluctuations in market interest rates
in 1998 and 1997. However, fluctuations in market interest rates do not
necessarily have a significant impact on net interest income, depending on the
bank's rate sensitivity position. A rate sensitive asset (RSA) is any loan or
investment that can be repriced either up or down in interest rate within a
certain time interval. A rate sensitive liability (RSL) is an interest paying
deposit or other liability that can be repriced either up or down in interest
rate within a certain time interval. When a proper balance between RSA and
RSL exists, market interest rate fluctuations should not have a significant
impact on earnings. The larger the imbalance, the greater the interest rate
risk assumed by the bank and the greater the positive or negative impact of
interest rate fluctuations on earnings. The bank seeks to manage its assets
and liabilities in a manner that will limit interest rate risk and thus
stabilize longrun earning power. Management believes that a rise or fall in
interest rates will not materially effect earnings.
The Bank has maintained adequate net interest margins for the three-month
period ended March 31, 1998 and 1997 by earning satisfactory yields on loans
and investments and funding these assets with a favorable deposit mix
containing a significant level of noninterest-bearing demand deposits.
Fully-tax-equivalent net interest income showed a 6.3% increase from $3,870
for the three-month period ended March 31, 1997 to $4,113 for the three-month
period ended March 31, 1998. During the same period, total fully-tax-equivalent
interest income increased by 9.2% from $6,668 to $7,279 and total interest
expense increased by 13.2% from $2,798 to $3,166. Fully-tax-equivalent net
interest income as a percentage of total earning assets has shown a
decrease of .16% from 4.62% for the three-month period ended March 31, 1997
to 4.46% for the three-month period ended March 31, 1998.
The tables on the following two pages present selected financial data and an
analysis of net interest income.
15
<PAGE>
CNB Corporation and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
Three Months Ended 3/31/98 Three Months Ended 3/31/97
Avg. Interest Avg. Ann. Avg. Interest Avg.Ann.
Balance Income/ Yield or Balance Income/ Yield or
Expense(1) Rate Expense(1) Rate
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning assets:
Loans, net of unearned income $223,932 $ 5,093 9.10% $190,868 $ 4,509 9.45%
Securities:
Taxable 111,894 1,687 6.03 119,212 1,757 5.90
Tax-exempt 13,843 271 7.83 13,952 273 7.83
Federal funds sold and
securities purchased under
agreement to resell 19,474 228 4.68 10,800 129 4.78
Other earning assets 0 0 - 0 0 -
Total earning assets 369,143 7,279 7.89 334,832 6,668 7.97
Other assets 24,908 23,766
Total assets $394,051 $358,598
Liabilities and stockholder equity
Interest-bearing liabilities:
Interest-bearing deposits $257,784 2,742 4.25 $233,672 $ 2,366 4.05
Federal funds purchased and
securities sold under
agreement to repurchase 35,263 398 4.51 35,945 415 4.62
Other short-term borrowings 1,471 26 7.07 1,237 17 5.50
Obligations under mortgages
and capitalized leases 0 0 - 4 0 8.00
Total interest-bearing
liabilities $294,518 $ 3,166 4.30 $270,858 $ 2,798 4.13
Noninterest-bearing deposits 57,807 50,346
Other liabilities 3,342 3,577
Stockholders' equity 38,384 33,817
Total liabilities and
stockholders' equity $394,051 $358,598
Net interest income as a percent
of total earning assets $369,143 $ 4,113 4.46 $334,832 $ 3,870 4.62
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 92 $ 93
Ratios:
Annualized return on average total
assets 1.25 1.24
Annualized return on average
stockholders' equity 12.88 13.16
Cash dividends declared as a
percent of net income 0 0
Average stockholders' equity as a
percent of:
Average total assets 9.74 9.43
Average total deposits 12.16 11.91
Average loans, net of unearned
income 17.14 17.72
Average earning assets as a
percent of average total assets 93.68 93.37
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Three Months Ended March 31, 1998 and 1997
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change
Average Average Interest Interest Change Change Due To
Volume Volume Yield/Rate Yield/Rate Earned/Paid Earned/Paid Due to Due To Rate X
1998 1997 1998 (1) 1997 (1) 1998 (1) 1997 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 223,932 190,868 9.10% 9.45% 5,093 4,509 584 (167) 781 (30)
Investment securities:
Taxable 111,894 119,212 6.03% 5.90% 1,687 1,757 (70) 39 (108) (1)
Tax-exempt 13,843 13,952 7.83% 7.83% 271 273 (2) - (2) 0
Federal funds sold and
securities purchased under
agreement to resell 19,474 10,800 4.68% 4.78% 228 129 99 (3) 104 (2)
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 369,143 334,832 7.89% 7.97% 7,279 6,668 611 (131) 775 (33)
Interest-bearing Liabilities:
Interest-bearing deposits 257,784 233,672 4.25% 4.05% 2,742 2,366 376 117 244 15
Federal funds purchased and
securities sold under
agreement to repurchase 35,263 35,945 4.51% 4.62% 398 415 (17) (10) (7) -
Other short-term borrowings 1,471 1,237 7.07% 5.50% 26 17 9 5 3 1
Mortgage indebtedness and
obligations under capital-
ized leases 0 4 - 8.00% 0 0 0 - - -
Total Interest-bearing
Liabilities 294,518 270,858 4.30% 4.13% 3,166 2,798 368 112 240 16
Interest-free Funds
Supporting Earning Assets 74,625 63,974
Total Funds Supporting
Earning Assets 369,143 334,832 3.43% 3.35% 3,166 2,798 368 112 240 16
Interest Rate Spread 3.59% 3.84%
Impact of Non-interest-
bearing Funds on Net Yield
on Earning Assets .87% .78%
Net Yield on Earning Assets 4.46% 4.62% 4,113 3,870
</TABLE>
(1) Tax-equivalent adjustment based on a 34% tax rate.
(2) Includes non-accruing loans which does not have a material effect on the
Net Yield on Earning Assets.
17
<PAGE>
NET INCOME (continued)
Provision for Possible Loan Losses - It is the policy of the bank to maintain
the reserve for possible loan losses at the greater of 1.20% of net loans or
the percentage based on the actual loan loss experience over the previous five
years. In addition, management may increase the reserve to a level above these
guidelines to cover potential losses identified in the portfolio.
The provision for possible loan losses was $190 for the three-month period
ended March 31, 1998 and $240 for the three-month period ended March 31, 1997.
Net loan charge-offs totalled $55 for the three-month period ended March 31,
1998 and $76 for the same period in 1997.
The reserve for possible loan losses as a percentage of net loans was 1.35% at
March 31, 1998 and 1.31% at March 31, 1997. The provision for possible loan
losses decreased from $240 during the first quarter of 1997 to $190 during the
first quarter of 1998 due to slight decreases in net loan charge-offs and the
rate of loan growth.
Securities Transactions - The bank had no security sales during the first
quarter of 1998 or 1997. At March 31, 1998, December 31, 1997, and March 31,
1997 market value appreciation/(depreciation) in the investment portfolio
totalled $1,214, $983, and $(701), respectively. As indicated, market value
increased in 1997 and 1998 due to falling market interest rates.
Other Income - Other income, net of any gains/losses on security transactions,
increased by 13.3% from $720 for the three-month period ended March 31, 1997
to $816 for the three-month period ended March 31, 1998 primarily due to an
increase in deposit account volumes, higher merchant discount income, and a
June 1, 1997 increase in overall service charge rates.
Other Expenses - Other expenses increased by 8.4% from $2,541 for the
three-month period ended March 31, 1997 to $2,754 for the three-month period
ended March 31, 1998. The major components of other expenses are salaries and
employee benefits which increased 9.8% from $1,513 to $1,661; occupancy expense
which increased .7% from $420 to $423; and other operating expenses which
increased by 10.2% from $607 to $669. Occupancy expense has remained flat as
depreciation expense has only increased 3.0% from $167 during the first quarter
of 1997 to $172 for the same period in 1998. Salaries and employee benefits
expense has increased due to an increase of full-time-equivalent employees from
179 at March 31, 1997 to 190 at March 31, 1998 as the bank prepares to open
the new "501 North Office" in the late fall of 1998.
Income Taxes - Provisions for income taxes increased 9.0% from $603 for the
three-month period ended March 31, 1997 to $657 for the three-month period
ended March 31, 1998. Income before income taxes less interest of tax-exempt
investment securities increased by 11.6% from $1,536 for the three-month period
ended March 31, 1997 to $1,714 for the same period in 1998. State tax
liability increased as income before income taxes increased 10.3% from $1,716
to $1,893 during the same period.
LIQUIDITY
The bank's liquidity position is primarily dependent on short-term demands for
funds caused by customer credit needs and deposit withdrawals and upon the
liquidity of bank assets to meet these needs. The bank's liquidity sources
include cash and due from banks, federal funds sold, and short-term investments.
In addition, the bank has established federal funds lines of credit from
correspondent banks and has the ability, on a short-term basis, to borrow
funds from the Federal Reserve System. Management feels that liquidity sources
are more than adequate to meet funding needs.
18
<PAGE>
CAPITAL RESOURCES
Total stockholders' equity was $38,989, $37,717, $34,496, and $32,195 at
March 31, 1998, December 31, 1997, December 31, 1996, and December 31, 1995,
representing 9.53%, 9.90%, 10.09%, and 9.92% of total assets, respectively.
At March 31, 1998, the Bank exceeds quantitative measures established by
regulation to ensure capital adequacy (see NOTE 12 - REGULATORY MATTERS).
Capital is considered sufficient by management to meet current and prospective
capital requirements and to support anticipated growth in bank operations.
The Company paid an approximate 25% stock dividend on September 12, 1997.
The Board continued to pay a $3.00 per share annual cash dividend at year-end
1997 on the increased number of outstanding shares which has the effect of
increasing the cash dividend payout ratio and cash dividend yield.
EFFECTS OF REGULATORY ACTION
The management of the Company and the Bank is not aware of any current
recommendations by the regulatory authorities which, if they were to be
implemented, would have a material effect on liquidity, capital resources, or
operations.
ACCOUNTING ISSUES
In an effort to simplify the current standards in the United States for
computing earnings per share ("EPS") and make them more compatible with
international standards, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share" in February 1997. SFAS 128
applies to entities with publicly traded common stock or potential common
stock and is effective for financial statements for periods ending after
December 15, 1997, including interim periods. SFAS 128 simplifies the standards
for computing EPS previously found in APB Opinion 15, "Earnings per Share."
It replaces the presentation of primary EPS with a presentation of basic EPS.
It also requires dual presentation of basic and diluted EPS on the face of
the income statement for all companies with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
The Company does not have any dilutive common stock or equivalents and
accordingly the adoption of SFAS had no effect on earnings per share
computations.
The FASB also issued SFAS No. 129, "Disclosure of Information about Capital
Structure" in February 1997. The purpose of SFAS 129 is to consolidate
existing disclosure requirements for ease of retrieval. SFAS 129 contains no
change in disclosure requirements for companies that were subject to the
previously existing requirements. It applies to all entities and is effective
for Financial Statements for periods ending after December 15, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS 130 establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains, and losses) in a full set of
general purpose financial statements. SFAS 130 requires that all items that
are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. SFAS 130 requires
that companies (i) classify items of other comprehensive income by their
nature in a financial statement and (ii) display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of the statement of financial condition.
SFAS 130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comprehensive purposes is required.
In June, 1997, the FASB also issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 establishes standards
for the way public enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
19<PAGE>
ACCOUNTING ISSUES (continued)
disclosures about products and services, geographic areas, and major customers.
SFAS 131 supersedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise." SFAS 131 becomes effective for financial statements
for periods beginning after December 15, 1997, and requires that comparative
information from earlier years be restated to conform to its requirements.
The adoption of the provisions of SFAS 131 is not expected to have a material
impact on the Company.
In June of 1996 the FASB issued an exposure draft of a proposed statement,
"Accounting for Derivatives and Similar Financial Instruments and for Hedging
Activities." In August 1997 the FASB distributed a draft of the standards
section of the final statement, together with related implementation guidance
and examples to members of the Financial Instruments Task Force and other
identified parties for comment on the draft's clarity and operationality.
Under the proposed standard, all derivatives would be measured at fair value
and recognized in the statement of financial position as assets or liabilities.
Although the final standard has not been issued, the FASB has expressed publicly
that a final statement would be effective for fiscal years beginning after
December 15, 1998. Because the Company has limited use of derivative
transactions at this time, management does not expect that this standard, if
adopted in its present proposed form, would have a significant effect on the
Company.
YEAR 2000
The Year 2000 poses a significant challenge for financial institutions because
of the way date fields have been historically handled. Older versions of
software used a two digit year date field and assumed the first two digits of
the year date to be "19". All software applications using this dating method
must be replaced or modified to avoid computer systems reverting to the year
date of 1900 in the year 2000.
The Board of Directors early in 1997 assigned Year 2000 Project implementation
responsibility to the Electronic Data Processing (EDP) Steering Committee.
The EDP Steering Committee is comprised of the following members: President,
Executive Vice President, Vice President and Cashier, Vice President-Systems,
Vice President-Data Processing, and Assistant Vice President-Systems. The
committee meets at least quarterly with the meetings being reviewed by the
Board Audit Committee and progress reports made to the full Board. The CPA
firm of Tourville, Simpson, & Henderson has been engaged to assist in Year
2000 Plan development, implementation, and examination.
All systems used by the bank have been identified and prioritized with a time
line established for projected dates of upgrades, replacement, certification,
and testing. Testing of all systems to ensure Year 2000 compliance is expected
to be completed by December 31, 1998. Anticipated Year 2000 costs are
projected to be approximately $200,000.
20
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K
See Exhibit Index appearing below.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter covered by this report.
EXHIBIT INDEX
Exhibit
Number
27 Financial Data Schedule - Article 9 Financial Data Schedule for
10-Q for electronic filers (pages 23 and 24).
All other exhibits, the filing of which are required with this Form, are not
applicable.
21
<PAGE>
CNB Corporation
SIGNATURE
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.
CNB Corporation
(Registrant)
Paul R. Dusenbury
_________________________________________
Paul R. Dusenbury
Treasurer
(Chief Financial and Accounting Officer)
Date: May 13, 1998
22
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MORE
DETAILED FINANCIAL STATEMENTS OF THE COMPANY AND SUBSIDIARY AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIALS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,683
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 34,575
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 59,300
<INVESTMENTS-CARRYING> 63,195
<INVESTMENTS-MARKET> 63,983
<LOANS> 226,051
<ALLOWANCE> 3,014
<TOTAL-ASSETS> 409,224
<DEPOSITS> 328,190
<SHORT-TERM> 38,770
<LIABILITIES-OTHER> 3,275
<LONG-TERM> 0
0
0
<COMMON> 5,987
<OTHER-SE> 33,002
<TOTAL-LIABILITIES-AND-EQUITY> 409,224
<INTEREST-LOAN> 5,093
<INTEREST-INVEST> 1,866
<INTEREST-OTHER> 228
<INTEREST-TOTAL> 7,187
<INTEREST-DEPOSIT> 2,742
<INTEREST-EXPENSE> 3,166
<INTEREST-INCOME-NET> 4,021
<LOAN-LOSSES> 190
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,754
<INCOME-PRETAX> 1,893
<INCOME-PRE-EXTRAORDINARY> 1,236
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,236
<EPS-PRIMARY> 2.07<F1>
<EPS-DILUTED> 2.07<F1>
<YIELD-ACTUAL> 4.46<F1>
<LOANS-NON> 165
<LOANS-PAST> 221
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 165
<ALLOWANCE-OPEN> 2,879
<CHARGE-OFFS> 163
<RECOVERIES> 108
<ALLOWANCE-CLOSE> 3,014
<ALLOWANCE-DOMESTIC> 3,014
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>MULTIPLIER IS NOT APPLICABLE TO EPS AND YIELD DATA.
</FN>
</TABLE>
