<PAGE>
FORM 10Q
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
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from ____________ to _____________
Commission file number: 2-98960A
COMMERCE NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
FLORIDA
(State or Other Jurisdiction of Incorporation or Organization)
59-2497676
(I.R.S. Employer Identification No.)
1201 South Orlando Avenue
Winter Park, Florida 32789
(Address of principal executive offices)
(Zip Code)
(407) 741-8900
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period 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 _______
-------
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
On November 1, 1999, Commerce National Corporation (the "Company") had
721,019 shares of common stock, par value $0.10 per share, issued and
outstanding.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements begin on the following page.
3
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Financial Statements
September 30, 1999 and December 31, 1998
(Unaudited - See accompanying review
report of KPMG LLP)
4
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Table of Contents
Accountants' Review Report
Condensed consolidated balance sheets (unaudited)--September 30, 1999
and December 31, 1998
Condensed consolidated statements of operations (unaudited)--Three months
ended September 30, 1999 and 1998; Nine months ended September 30, 1999
and 1998
Condensed consolidated statements of cash flows (unaudited)--Nine months
ended September 30, 1999 and 1998
Selected notes to condensed consolidated financial statements (unaudited)--
September 30, 1999
5
<PAGE>
KPMG
111 North Orange Avenue, Suite 1600
P.O. Box 3031
Orlando, FL 32802
The Board of Directors
Commerce National Corporation and Subsidiary:
We have reviewed the condensed consolidated balance sheet of Commerce National
Corporation and subsidiary as of September 30, 1999 and the related condensed
consolidated statements of operations for the three month and nine month periods
ended September 30, 1999 and 1998 and condensed consolidated statements of cash
flows for the nine month periods ended September 30, 1999 and 1998. These
condensed consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Commerce National Corporation and
subsidiary as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended not
presented herein; and in our report dated February 4, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1998, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG LLP
Orlando, Florida
October 14, 1999
6
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
Assets September 30, December 31,
1999 1998
---------------- ------------
<S> <C> <C>
Cash and due from banks $ 8,314,417 5,221,144
Federal funds sold 7,200,000 8,100,000
Investment securities available for sale (note 2) 18,804,531 13,492,660
Loans, net (note 3) 137,103,259 122,929,105
Accrued interest receivable 951,695 813,736
Premises and equipment, net 3,590,833 3,698,955
Other real estate owned 210,826 --
Deferred tax asset, net 751,897 458,990
Federal Reserve Bank stock, at cost 199,500 178,500
Federal Home Loan Bank stock, at cost 468,100 378,600
Prepaid expenses and other assets 329,398 168,470
Executive supplemental income plan - cash
surrender value life insurance policies 1,519,942 1,467,332
---------------- ------------
Total assets $ 179,444,398 156,907,492
================ ============
</TABLE>
See accompanying review report of KPMG LLP and accompanying selected notes to
condensed consolidated financial statements (unaudited).
7
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
Liabilities 1999 1998
------------------- --------------
<S> <C> <C>
Deposits (note 4):
Noninterest bearing $ 24,584,640 21,301,512
Interest bearing 130,567,608 115,798,941
------------------- --------------
Total deposits 155,152,248 137,100,453
Federal Home Loan Bank advances 7,116,334 4,125,534
Other borrowed funds 2,527,016 2,189,251
Accrued interest payable 221,045 191,744
Accounts payable and other liabilities 616,319 333,781
------------------- --------------
Total liabilities 165,632,962 143,940,763
------------------- --------------
Stockholders' Equity
Common stock, par value $.10 per share
(1,000,000 shares authorized; 742,819 shares issued and
and 721,019 shares outstanding at September 30, 1999
and December 31, 1998) 74,282 74,282
Additional paid-in capital 7,927,804 7,927,804
Retained earnings 6,242,088 5,182,057
Treasury stock, at cost (21,800 shares at
September 30, 1999 and December 31, 1998) (208,640) (208,640)
Accumulated other comprehensive income (224,098) (8,774)
------------------- --------------
Total stockholders' equity 13,811,436 12,966,729
Commitments and contingencies (note 5)
------------------- --------------
Total liabilities and stockholders' equity $ 179,444,398 156,907,492
=================== ==============
</TABLE>
8
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------------ --------------------------------
1999 1998 1999 1998
---------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 3,021,930 2,579,546 8,658,768 7,227,036
Investment securities 265,224 201,560 719,451 679,441
Federal funds sold 102,123 103,160 156,395 285,847
Federal Reserve Bank stock 3,368 2,565 8,498 7,639
Federal Home Loan Bank stock 8,849 7,393 24,769 20,397
Due from banks 2,573 1,959 4,255 7,993
---------------- ------------- ------------ -------------
Total interest income 3,404,067 2,896,183 9,572,136 8,228,353
Interest expense 1,587,688 1,268,971 4,333,518 3,625,655
---------------- ------------- ------------ -------------
Net interest income 1,816,379 1,627,212 5,238,618 4,602,698
Provision for loan losses 188,881 97,253 387,643 221,759
---------------- ------------- ------------ -------------
Net interest income after
provision for loan losses 1,627,498 1,529,959 4,850,975 4,380,939
---------------- ------------- ------------ -------------
Other operating income:
Customer service fees 220,298 259,524 684,733 702,685
Other operating expenses:
Salaries and benefits 599,223 584,175 1,764,189 1,659,515
Occupancy expense 256,736 229,936 707,282 681,024
Legal and professional fees 99,638 (36,473) 300,475 97,305
Other expenses 299,107 378,070 956,848 993,820
Loss on sale and write down of
other real estate owned -- -- -- 32,075
---------------- ------------- ------------ -------------
1,254,704 1,155,708 3,728,794 3,463,739
Net income before taxes 593,092 633,775 1,806,914 1,619,885
Income tax expense 218,746 200,036 659,983 576,790
---------------- ------------- ------------ -------------
Net income $ 374,346 433,739 1,146,931 1,043,095
================ ============= ============ =============
Basic and diluted earnings per
share (note 6) $ 0.52 .60 1.59 1.48
================ ============= ============ =============
</TABLE>
See accompanying review report of KPMG LLP and accompanying selected notes to
condensed consolidated financial statements (unaudited).
9
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------------------------
1999 1998
------------- --------------
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 1,146,931 1,043,095
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of premises and equipment 246,279 232,354
Net amortization of premiums and accretion of
discounts on investment securities held to maturity
and investment securities available for sale 36,955 (42,188)
Provision for loan losses 387,643 221,759
Deferred loan origination fees (10,835) 76,123
Deferred income taxes (163,116) (14,085)
Loss on sale of other real estate owned -- 32,075
Provision for other real estate owned 3,802 --
Executive supplemental income plan - additional cash
surrender value (52,610) (48,172)
Cash provided by (used in) changes in:
Accrued interest receivable (137,959) (77,721)
Prepaid expenses and other assets (160,928) (77,540)
Accrued interest payable 29,301 29,303
Accounts payable and other liabilities 282,538 297,652
------------- --------------
Net cash provided by operating activities 1,608,001 1,672,655
------------- --------------
Cash flows provided by (used in) investing activities:
Net loans made to customers (14,779,249) (17,563,941)
Decrease (increase) in federal funds sold 900,000 (2,950,000)
Purchases of investment securities available for sale (11,693,941) (7,500,000)
Proceeds from maturity of investment securities available
for sale 5,000,000 5,500,000
Proceeds from calls of investment securities available for sale 1,000,000 5,000,000
Proceeds from maturities of investment securities
held to maturity -- 190,000
Purchase of premises and equipment (138,157) (38,048)
Proceeds from sale of other real estate owned 13,659 263,043
Purchase of Federal Home Loan Bank stock (89,500) (37,300)
Purchase of Federal Reserve Bank stock (21,000) --
------------- -------------
Net cash used in investing activities (19,808,188) (17,136,246)
------------- -------------
</TABLE>
10 (Continued)
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------------------
1999 1998
------------- ------------
<S> <C> <C>
Cash flows provided by financing activities:
Net increase in demand deposits, NOW accounts and
passbook savings accounts 7,325,049 5,023,631
Net increase in certificates of deposit 10,726,746 10,115,254
Principal repayment on mortgage note payable (22,622) (20,872)
Increase (decrease) in repurchase agreements 360,387 (1,069,100)
Proceeds (repayments) on Federal Home Loan
Bank borrowings 2,990,800 (8,400)
Shareholder dividends paid (86,900) (65,586)
Proceeds from employee stock options exercised -- 1,215,000
Proceeds from sale of common stock -- 4,153
------------- ------------
Net cash provided by financing activities 21,293,460 15,194,080
------------- ------------
Net increase (decrease) in cash and cash equivalents 3,093,273 (269,511)
Cash and cash equivalents at the beginning of the period $ 5,221,144 6,095,762
------------- ------------
Cash and cash equivalents at the end of the period 8,314,417 5,826,251
============= ============
Cash paid during the period for:
Interest $ 4,304,217 3,596,352
============= ============
Income taxes $ 617,877 463,350
============= ============
Supplemental disclosures for noncash transactions:
Market value adjustment - investments available for sale:
Investments $ (359,131) 89,567
Deferred income tax liability 135,033 33,677
------------- ------------
Unrealized gain on investments available for sale $ 224,098 55,890
============= ============
Financing of other real estate owned $ -- 43,496
============= ============
Transfer of loans to other real estate owned $ 228,287 --
============= ============
</TABLE>
See accompanying review report of KPMG LLP and accompanying selected notes to
condensed consolidated financial statements (unaudited).
11
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
(1) Basis of Presentation
(a) Interim Financial Information
The accompanying unaudited condensed consolidated financial statements
of Commerce National Corporation and Subsidiary (the Company) have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial information. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September
30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1998.
(b) Derivative Financial Instruments
The Company has interest rate risk exposure relating to its
investments in interest sensitive assets and funding through interest
sensitive liabilities. Management continually monitors the Company's
interest rate risk level by determining the effect of various interest
rate movements on the level of exposure. Management considers the
level of exposure in determining the appropriate duration mix of
interest sensitive assets in relation to interest sensitive
liabilities, and the pricing of such assets and liabilities. The
Company does not have any investment in derivative financial
instruments.
(c) Total Comprehensive Income
Total comprehensive income for the three and nine months periods ended
September 30, 1999 and 1998 were $379,676, $931,607, $434,127 and
$1,029,207, respectively.
(Continued)
12
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
(2) Investment Securities Available for Sale
The amortized cost and estimated market value of investments available for
sale at September 30, 1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
-------------------------------------- --------------------------------------
Estimated Estimated
Amortized market Amortized market
cost value cost value
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
U.S. Treasury
securities $ 19,163,662 18,804,531 13,506,676 13,492,660
================ ================= ================ =================
</TABLE>
As of September 30, 1999, the Company had securities sold under agreement
to repurchase of $2,279,194. All agreements were one day transactions, thus
the carrying value, market value, and borrowings were equal at quarter end.
The Company enters into sales of securities under agreements to repurchase
("Agreements"). Fixed-coupon Agreements are treated as financing, and the
obligations to repurchase securities sold are reflected as a liability in
the condensed consolidated balance sheet. The dollar amount of securities
underlying the Agreements remains in the asset accounts. At September 30,
1999, all of the Agreements were to repurchase identical securities. The
assets underlying the Agreements were held in safekeeping by a third party.
During the quarter ended September 30, 1999, Agreements outstanding
averaged approximately $2,116,458 and the maximum amount outstanding during
the quarter was $3,917,900. Total interest expense paid on repurchase
Agreements was $29,511 and $38,687 for the quarter ended September 30, 1999
and September 30, 1998, respectively, and $83,913 and $137,066 for the nine
months ended September 30, 1999 and September 30, 1998, respectively.
(Continued)
13
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
(3) Loans
Major categories of loans included in the loan portfolio at September 30,
1999 and December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
<S> <C> <C>
Commercial-secured $ 10,624,689 12,471,553
Commercial-unsecured 2,478,429 2,886,847
Real estate - primarily commercial 124,124,838 105,820,828
Other (installment and overdrafts) 3,013,343 3,559,619
-------------------- --------------------
139,241,299 124,738,847
Allowance for loan losses (1,662,276) (1,323,143)
Deferred loan origination fees (475,764) (486,599)
-------------------- --------------------
$ 137,103,259 122,929,105
==================== ====================
</TABLE>
The recorded investment in loans for which an impairment has been
recognized and the related allowance for loan losses at September 30, 1999
and December 31, 1998 were $3,122,676 and $291,322 and $1,207,759 and
$110,380, respectively. The average recorded investment in impaired loans
during the third quarter was $2,165,218. No interest income was recognized
during the quarter ended September 30, 1999 on impaired loans.
(Continued)
14
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
The activity in the allowance for loan losses for the three months ended
September 30, 1999 and 1998 and the nine months ended September 30, 1999
and 1998 is as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------- ------------------------------
1999 1998 1999 1998
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at the beginning of the period $ 1,476,751 1,130,371 1,323,143 1,013,081
Charge offs (3,776) (9,675) (51,489) (75,735)
Recoveries 420 4,154 2,979 62,998
Provision for loan losses 188,881 97,253 387,643 221,759
-------------- ------------- ------------ -------------
Balance at the end of the period $ 1,662,276 1,222,103 1,662,276 1,222,103
============== ============= ============ =============
</TABLE>
At September 30, 1999 and December 31, 1998, certain stockholders,
directors and employees were indebted to the Bank in the aggregate amounts
of $7,319,445 and $9,733,678, respectively. All such loans were made in the
ordinary course of business.
(4) Deposits
Included in interest bearing deposits are certificates of deposit issued in
amounts of $100,000 or more. These certificates and their remaining
maturities at September 30, 1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Three months or less $ 27,248,243 32,151,951
Three through twelve months 9,404,599 7,647,112
Over one year 11,982,750 907,267
---------------- ----------------
$ 48,635,592 40,706,330
================ ================
</TABLE>
(Continued)
15
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
(5) Commitments
In the normal course of business, the Bank has various commitments to
extend credit and standby letters of credit which are not reflected in the
financial statements. At September 30, 1999 and December 31, 1998, the Bank
had commitments to customers of approximately $968,421 and $714,583 for
standby letters of credit, $32,473,770 and $29,135,729 for unfunded firm
loan commitments and $77,612,695 and $68,306,642 for approved lines of
credit, respectively.
(6) Basic and Diluted Earnings Per Share
Basic and diluted earnings per share are calculated as follows:
<TABLE>
<CAPTION>
Income Share Per share
(numerator) (denominator) amount
---------------- ------------------- ----------------
<S> <C> <C> <C>
For the three months ended September 30, 1999:
Basic and diluted earnings per share:
Net income $ 374,346 721,019 $ .52
================ =================== ================
For the three months ended September 30, 1998:
Basic and diluted earnings per share:
Net income $ 433,739 721,019 $ .60
================ =================== ================
For the nine months ended September 30, 1999:
Basic and diluted earnings per share:
Net income $ 1,146,931 721,019 $ 1.59
================ =================== ================
For the nine months ended September 30, 1998:
Basic and diluted earnings per share:
Net income $ 1,043,095 706,849 $ 1.48
================ =================== ================
</TABLE>
16 (Continued)
<PAGE>
COMMERCE NATIONAL CORPORATION AND SUBSIDIARY
Selected Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
(Unaudited - See accompanying review report of KPMG LLP)
(7) Stock Option Plan
The 1998 Commerce National Corporation Employees' Stock Option Plan (the
"Plan") was adopted by the Company's shareholders on April 19, 1999. The
Plan permits the Company to grant employees options to purchase the common
stock of the Company at its fair market value per share, but in no case
shall the purchase price be less than $15.00 per share, which was the fair
market value at the date of adoption. Pursuant to the Plan, immediately
exercisable options have been granted to purchase 10,000 shares and shall
not exceed a total of 100,000 shares.
(8) New Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedge Activities" (FASB
133). This standard requires all derivatives to be measured at fair value
and be recognized as assets and liabilities in the statement of financial
position. FASB 133 sets forth the accounting for changes in fair value of a
derivative depending on the intended use and designation of the derivative.
In June 1999, the FASB issued FASB 137, "Accounting for Derivative
Instruments and Hedge Activities deferral of the effective date of FASB
133, an Amendment of FASB 133." FASB 133, as amended, is now effective for
all fiscal years beginning after Jun15, 2000. Implementation of FASB 133 is
not expected to have a significant impact on the financial position or
results of operations of the Company.
In October 1998, the FASB issued Financial Accounting Standards No. 134
"Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise." This Statement requires that after the securitization of a
mortgage loan held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed security as a trading
security. The Statement is effective for the first fiscal quarter beginning
after December 15, 1998. The Company does not expect the adoption of this
Statement to have any impact on its consolidated financial statements.
17 (Continued)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Except for historical information contained herein, the matters discussed
in this report contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that involve substantial risks and uncertainties. When used in this
report, or in the documents incorporated by reference herein, the words
"anticipate", "believe", "estimate", "may", "intend", "expect" and similar
expressions identify certain of such forward-looking statements. Actual
results, performance or achievements could differ materially from those
contemplated, expressed or implied by the forward-looking statements contained
herein. These forward-looking statements are based largely on the expectations
of the Company and are subject to a number of risks and uncertainties,
including, but not limited to, economic, competitive and other factors affecting
the Company's operations, markets, products and services, as well as expansion
strategies and other factors discussed elsewhere in this report filed by the
Company with the Securities and Exchange Commission. Many of these factors are
beyond the Company's control.
The accompanying condensed consolidated financial statements of the Company
are primarily affected by the operation of the NATIONAL BANK OF COMMERCE (the
"Bank"), its wholly owned subsidiary.
The following discussion and analysis presents a review of the Company's
Condensed Consolidated Financial Condition and Results of Operation. This
review should be read in conjunction with the condensed consolidated financial
statements and other financial data presented herein.
Summary:
- -------
During the third quarter and the first nine months of 1999, the Company had
net income of $374,346 and $1,146,931, respectively. This compares with net
income of $433,739 for the third quarter of 1998, and $1,040,095 for the first
nine months of 1998. During 1999, loans have continued to increase quarter-by-
quarter to all-time highs. At the end of the third quarter of 1999, loans stood
at $137,103,259 compared to the year-end 1998 figure of $122,929,105. This
resulted in total interest income of $9,572,136 at the end of the third quarter
of 1999 compared to $8,228,353 for the same period in 1998. Interest expense
for the third quarter ending September 30, 1999 was $1,587,688 compared to
$1,268,971 for the same period in 1998, while interest expense totaled
$4,333,518 for the first nine months of 1999 compared to $3,625,655 for the same
period in 1998. While interest-bearing deposits increased to $130,567,608 as of
September 30, 1999, compared to the year-end 1998 figure of $115,798,941, the
rates paid on these deposits have fluctuated less than one percent (1%) since
the second quarter of 1997.
Two indicators which measure profitability are net income as a percentage
of average assets (ROAA) and net income as a percentage of average shareholder
equity (ROAE). A comparison of these ratios for the first nine months of the
last two years is as follows:
18
<PAGE>
----------------------------------------
For the Nine Months Ending
----------------------------------------
9/30/99 9/30/98
-----------------------------------------------------------------------
ROAA .92% 1.02%
-----------------------------------------------------------------------
ROAE 11.42% 11.60%
-----------------------------------------------------------------------
NET INCOME $ 1,146,931 $ 1,043,095
-----------------------------------------------------------------------
AVERAGE ASSETS $167,486,867 $136,915,826
-----------------------------------------------------------------------
AVERAGE CAPITAL $ 13,408,233 $ 11,991,234
-----------------------------------------------------------------------
Financial Position
- ------------------
Total assets and total liabilities have increased $22,536,906 and
$21,692,199, respectively, between December 31, 1998 and September 30, 1999.
This is primarily due to an increase in loans of $14,174,154, investment
securities available for sale of $5,311,871 and an increase in deposits of
$18,051,795.
Net Interest Income
- -------------------
Net interest income, the difference between interest earned on interest-
earning assets and interest expense incurred on interest-bearing liabilities, is
the most significant component of the Company's earnings. Net interest income is
affected by changes in the volumes and rates of interest-earning assets and
interest-bearing liabilities and the volume of interest-earning assets funded
with interest-bearing deposits, non-interest-bearing deposits, and shareholders'
equity. Net interest income for the first nine months of the last two years is
as follows:
---------------------------------------
For the Nine Months Ending
---------------------------------------
9/30/99 9/30/98
-----------------------------------------------------------------------
INTEREST INCOME $9,572,136 $8,228,353
-----------------------------------------------------------------------
INTEREST EXPENSE $4,333,518 $3,625,655
-----------------------------------------------------------------------
NET INTEREST INCOME $5,238,618 $4,602,698
-----------------------------------------------------------------------
Net interest income increased 11.6% in the third quarter and 16.3% in the
first nine months of 1999 compared to the same periods in 1998.
On an annualized basis, the Company's net interest margin was 4.27% through
the third quarter of 1999 compared to 4.69% through the third quarter of 1998.
19
<PAGE>
Changes in net interest income from period to period result from increases
or decreases in the average balances of interest-earning assets and interest-
bearing liabilities, increases or decreases in the average rates earned and paid
on such assets and liabilities, the banks' ability to manage their earning asset
portfolios and the availability of particular sources of funds.
Provision and Allowance for Loan Losses
- ---------------------------------------
The provision for loan losses is charged to operations to bring the total
allowance for loan losses to a level considered appropriate by management. The
provision for loan losses was $188,881 and $97,253 for the three month periods
ending September, 1999 and September 30, 1998, respectively. The provision for
loan losses was $387,643 and $221,759 for the nine month periods ending
September 30, 1999 and September 30, 1998, respectively.
The Company segregates the loan portfolio for loan loss purposes into the
following broad segments such as: commercial real estate; residential real
estate; commercial business; and consumer loan. The Company provides for a
general allowance for losses inherent in the portfolio by the above categories,
which consists of two components. General loss percentages are calculated based
upon historical analyses. A supplemental portion of the allowance is calculated
for inherent losses which probably exist as of the evaluation date even though
they might not have been identified by the more objective processes used for the
portion of the allowance described above. This is due to the risk of error
and/or inherent imprecision in the process. This portion of the allowance is
particularly subjective and requires judgments based on qualitative factors
which do not lend themselves to exact mathematical calculations such as: trends
in delinquencies and nonaccruals; migration trends in the portfolio; trends in
volume, terms, and portfolio mix; new credit products and/or changes in the
geographic distribution of those products; changes in lending policies and
procedures; loan review reports on the efficacy of the risk identification
process; changes in the outlook for local, regional and national economic
conditions; concentrations of credit; and peer group comparisons.
Specific allowances are provided in the event that the specific collateral
analysis on each classified loan indicates that the probable loss upon
liquidation of collateral would be in excess of the general percentage
allocation. The provision for loan loss is debited or credited in order to state
the allowance for loan losses to the required level as determined above.
Regulatory examiners may require the Company to recognize additions to the
allowance based upon their judgments about the information available to them at
the time of their examination.
The Company's allowance for loan losses at September 30, 1999, was
$1,662,276, or a 1.20% reserve on total loans outstanding. This compares to an
allowance of $1,205,020, a 1.05% reserve of total loans outstanding, at
September 30, 1998.
There were nine non-accruing loans totaling $2,121,998 as of September 30,
1999. This compares with non-accruing loans of $1,569,969 as of September 30,
1998.
20
<PAGE>
There are three loans to one customer totaling $758,252 secured by business
assets, which have 75-80% guarantees from the Small Business Administration.
These three loans are also secured by a cross-collateralization of mortgages on
a personal residence of the principals. At the same time, there is a fourth
loan to the same principals in the amount of $136,125 secured by common stock,
which is traded on NASDAQ. There is a fifth loan in the amount of $112,850
secured by a second mortgage on a second personal residence to the principals of
the same corporation. During the third quarter of 1999, the above five loans
were brought current.
One non-accrual loan in the amount of $51,005 is secured by a second
mortgage on the principal's residence. Also, a UCC filing has been placed on
the principal's business assets. At the present, a foreclosure suit has been
filed against the principals. It is anticipated that there will be a small loss
to the Bank during the fourth quarter of 1999.
There is one non-accrual loan in the amount of $128,187 secured by a
commercial helicopter and additional engine components. The loan is on non-
accrual because there is a dispute on an insurance claim for engine work on the
helicopter. It is felt at this time that this loan will eventually be worked
out. A lawsuit has been filed against all parties involved.
One non-accrual loan in the amount of $63,889 is secured by a second
mortgage on the principal's residence, and a third mortgage on commercial
property. It is anticipated that this loan will be paid in full during the
fourth quarter of this year.
One non-accrual loan in the amount of $871,690 is secured by a first
mortgage on a 61-lot subdivision. This subdivision is currently under contract
with a national homebuilder subject to completion of the second phase of the
subdivision. It is anticipated that this loan will be paid in full during the
fourth quarter of 1999.
Non-Interest Income
- -------------------
Non-interest income for the third quarter of 1999 decreased 1.5% to
$220,298 compared to $259,524 for the same period in 1998, while non-interest
income for the first nine months of 1999 decreased 2.5% to $684,733 compared to
$702,685 for the same period in 1998.
Non-Interest Expense
- --------------------
Operating expenses in the third quarter of 1999 increased 8.6% to
$1,254,704 compared to $1,155,708 in the same period in 1998, while non-interest
expense for the first nine months of 1999 increased 7.7% to $3,728,794 compared
to $3,463,739 for the same time period in 1998. Personnel expense, consisting
of salaries, other compensation and employment benefits, increased $15,048 and
$104,674 over the aforementioned periods. This is a result of additional
hirings during the first nine months of 1999, which increased salary expense and
group insurance costs.
21
<PAGE>
Occupancy expense in the third quarter of 1999 increased 11.6% to $256,736
compared to $229,936 for the same period in 1998, while occupancy expense for
the first nine months of 1999 increased 3.9% to $707,282, compared to $681,024
during the same time period in 1998. Also, equipment expense, which is included
under occupancy expense, increased $26,153 during the third quarter of 1999
compared to the same time period in 1998. This is a result of increased
depreciation expense on both software and hardware on new computer systems, plus
the maintenance and repair expense to maintain the computer systems. The
investment in equipment will continue to grow due to the Company's commitment to
maintain high quality capabilities and computer software information as it heads
toward the year 2000. Conversion activities and testing of the computer systems
for the year 2000 were completed in the second quarter of 1999. Expenditures in
1999 for the year 2000 project have amounted so far to $35,000.
Also, data processing expense increased $22,945 in the first three quarters
of 1999 as the Bank's customer base continued to grow.
Liquidity
- ---------
The liquidity of a banking institution reflects its ability to provide
funds to meet loan requests, to accommodate possible outflows in deposits and to
take advantage of interest rate market opportunities. Funding of loan requests,
providing for liability outflows, and management of interest rate fluctuations
require continuous analysis in order to match the maturities of specific
categories of specific short-term loans and investments with specific types of
deposits and borrowings. The objective of liquidity management is to maintain a
balance between sources and uses of funds such that the cash flow needs of the
Company are met in the most economical manner. On the asset side, the Company's
liquidity is provided by Federal funds sold, loan principal repayments, and by
investment securities of which 100% have maturities of five years or less.
Closely related to the concept of liquidity is the management of interest-
earning assets and interest-bearing liabilities, which focuses on maintaining
stability in the net interest spread, an important factor in earnings' growth
and stability. The interest rate volatility of recent years and rate
deregulation have significantly affected the way in which banks manage their
business and have highlighted the importance of asset and liability management.
For the Company, the most important objectives in assets and liability
management include: (1) controlling interest rate exposure, (2) ensuring
adequate liquidity, and (3) maintaining strong capital position.
Capital Resources
- -----------------
On January 27, 1989, the Office of the Comptroller of the Currency ("OCC")
issued an amendment to 12 CFR Part 3 adopting final risk based capital
guidelines for national banks. Developed in conjunction with the Federal
Deposit Insurance Corporation and the Board of Governors of the Federal Reserve
System, these guidelines provide an additional measure of a bank's capital
adequacy and are intended to reflect the relative degree of credit risk
associated with various assets by setting different capital requirements for
assets having less credit risk than others. Banks are required to
systematically hold capital against such off-balance sheet activities as loans
sold with recourse, loan commitments, guarantees and standby letters of credit.
The guidelines strengthen the
22
<PAGE>
quality of capital by increasing the emphasis on common equity and restricting
the amount of loss reserves and other forms of equity, such as preferred stock,
that can be counted as capital.
Under the terms of the guidelines, banks must meet minimum capital adequacy
based upon both total assets and risk adjusted assets. To the extent that an
institution has a favorable risk based capital ratio, it would more likely be
permitted to operate at or near minimum primary capital levels. On December 31,
1992, the guidelines took effect in their final form whereupon all banks are
required to maintain a risk based capital ratio of 8.0%. At September 30, 1999,
the Bank had a total risk based capital ratio of 10.45% (10.64% for the Company
on a consolidated basis). The Bank and the Company are well capitalized.
The Company stands ready to infuse additional capital into the Bank should
it be warranted.
Impact of Inflation
- -------------------
The condensed consolidated financial statements and related financial data
and notes presented herein have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP"), which require the measurement of
financial position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation. Unlike most industrial companies, virtually all of the assets and
liabilities of the Company and the Bank are monetary in nature. As a result,
interest rates have a more significant impact on the performance of the Company
and the Bank than the effects of general price levels. Although interest rates
generally move in the same direction as inflation, the magnitude of such changes
varies.
Competition
- -----------
All areas of the Company's business are highly competitive. The Company
faces heavy competition, both from local and national financial institutions and
from various other providers of financial services. By industry standards, the
Company relies heavily on large deposit customers. In the opinion of
management, this factor is a result of its customer base and local demographics.
Year 2000 (Y2K)
- ---------------
The Bank is aware of the potential risks involved in its technology-guided
equipment that has been identified by the coming of the year 2000 ("Y2K"). The
Board of Directors has been pro-active in appointing a committee and
coordinator, approving a budget and contingency plan for the Y2K. The Board of
Directors monitors the Bank's Y2K progress on a monthly basis.
The Bank does not write its own software or perform programming. Instead,
it uses the services of M&I Data Services, Inc. ("M&I") for customer item
processing, CORE application, ATM services, voice response unit, and other
related Bank services. The other direct software link is with Independent
Bankers' Bank of Florida, a correspondence bank for customer wire transfers and
federal funds transfers. Both of these entities have provided the Bank with
adequate responses to the Bank's inquiries as to the status of their Y2K plans.
Ongoing monitoring will continue until all pieces are in place.
23
<PAGE>
The Bank's Y2K Action Plan consists of five phases: awareness, assessment,
renovation, validation and implementation.
The awareness phase defines the Y2K problem and commits the necessary
resources to perform the required compliance responsibilities. The Bank
has successfully concluded the awareness phase.
The assessment phase requires the Bank to determine the size and complexity
of potential problems. This phase has been completed.
The renovation phase includes software, hardware enhancements, upgrades or
replacements as deemed necessary for Y2K readiness. The Bank has replaced
all computer hardware that was evaluated as impossible to enhance or
upgrade to become Y2K compliant. Computer software has been enhanced or
replaced as necessary.
The validation phase involves testing the renovated or replaced hardware
and software components for Y2K readiness. The Bank is in this validation
stage and will continue until all components are deemed compliant.
The final stage of implementation is the certification of the validation of
Y2K compliancy and the use of the validated resources. As the Bank
completes various stages of the validation stage, the implementation stage
will be completed.
Through the various phases mentioned above, the Bank has identified that
power, telephone, and CORE application are the components that are "mission
critical" to the operation of the Bank and the standards it has set. The Board
of Directors has approved a contingency plan for each mission critical
component. These contingency plans are in line with the Bank's established
disaster contingency plan, and management is confident of their performance.
The Board of Directors has approved a Y2K budget as prepared by the Y2K
committee in the approximate amount of $70,000. Any substantive increases the
committee deems necessary will be submitted to the Board of Directors for
approval.
The Bank's regulatory agency, the OCC, has frequently visited or telephoned
the Bank's committee coordinator for continual oversight of the Bank's progress
in the Y2K compliancy. The FRB and the Office of Thrift Supervision review the
progress of M&I for assurance that M&I is progressing satisfactorily with M&I's
Y2K action plan.
Accounting Pronouncements
- -------------------------
SFAS No. 133 and SFAS No. 137
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedge Activities" (FASB
133). This standard requires all derivatives be measured at fair value and be
recognized as assets and liabilities in the statement of financial position.
FASB 133 sets forth the accounting for changes in fair value of a derivative
24
<PAGE>
depending on the intended use and designation of the derivative. In June 1999,
the FASB issued FASB 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB No. 133, an Amendment of
FASB 133." FASB 133, as amended, is now effective for all fiscal quarters and
fiscal years beginning after June 15, 2000. Implementation of FASB 133 is not
expected to have a significant impact on the financial position or results of
operations of the Company.
SFAS No. 134
In October 1998, the FASB issued Financial Accounting Standards No. 134,
"Accounting for Mortgage-Backed Securities Retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprise." This statement
requires that, after the securitization of a mortgage loan held for sale, an
entity engaged in mortgage banking activities classify the resulting mortgage
backed security as a trading security. The statement is effective for the first
fiscal quarter beginning after December 15, 1998. Adoption of this standard did
not have any impact on the Company's consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The business of the Company and the composition of its consolidated balance
sheet consists of investments in interest-earning assets (primarily loans and
investment securities) which are primarily funded by interest-bearing
liabilities (deposits). Such financial instruments have varying levels of
sensitivity to changes in market interest rates resulting in market risk.
Interest Rate Risk Measurement
Interest rate risk results when the maturity or repricing intervals and
interest rate indices of the interest-earning assets and interest-bearing
liabilities are different. In an attempt to manage its exposure to changes in
interest rates, management monitors the Company's interest rate risk.
Management's asset/liability committee meets monthly to review the Company's
interest rate risk position and profitability, and recommend adjustments for
consideration by the Board of Directors. Management also reviews the Bank's
securities portfolio, formulates investment strategies, and oversees the timing
and implementation of transactions to assure attainment of the Board's
objectives in the most effective manner. Notwithstanding the Company's interest
rate risk management activities, the potential for changing interest rates is an
uncertainty that can have an adverse effect on net income.
In adjusting the Company's asset/liability position, the Board of Directors
and management attempt to manage the Company's interest rate risk while
enhancing net interest margins. The rates, terms and interest rate indices of
the Company's interest-earning assets result primarily from the Company's
strategy of investing in loans and securities which permit the Company to limit
its exposure to interest rate risk, together with credit risk, while at the same
time achieving a positive interest rate spread from the difference between the
income earned on interest-earning assets and the cost of interest-bearing
liabilities.
25
<PAGE>
One method of measuring interest rate risk is to determine the earnings-at-
risk for a given change in interest rates which is done on a quarterly basis.
The impact on value (earnings) is significant because reduced earnings will
affect capital. The change in interest rates does not necessarily represent an
immediate or parallel shift.
Economic Value of Equity
The interest rate risk ("IRR") component is a dollar amount that is
deducted from total capital for the purpose of calculating an institution's
risk-based capital requirement and is measured in terms of the sensitivity of
its economic value of equity ("EVE") to changes in interest rates. An
institution's EVE is calculated as the net discounted cash flows from assets,
liabilities, and off-balance sheet contracts. An institution's IRR component is
measured as the change in the ratio of EVE to the net present value of total
assets as a result of a hypothetical 200 basis point change in market interest
rates. A resulting decline in this ratio of more than 2% of the estimated
present value of an institution's total assets prior to the hypothetical 200
basis point change will require the institution to deduct from its regulatory
capital 50% of that excess decline. Based on quarterly calculations, the Bank
experienced no such decline.
Although certain assets and liabilities may have similar maturities or
periods to repricing, they may react in different degrees to changes in market
interest rates. Also, the interest rates on certain types of assets and
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates.
Additionally, certain assets, such as adjustable-rate mortgage loans, have
features that restrict changes in interest rates on a short-term basis and over
the life of the loan. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels could deviate significantly. Finally,
the ability of many borrowers to service their debt may decrease in the event of
a significant interest rate increase.
The repricing of certain categories of assets and liabilities are subject
to competitive and other pressures beyond the Company's control. As a result,
certain assets and liabilities indicated as maturing or otherwise repricing
within a stated period may in fact mature or reprice at different times and at
different volumes. There were no substantial changes in the Company's
asset/liability position in the quarter ended September 30, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Company nor the Bank is involved at this time in any claims or
lawsuits other than routine matters arising out of the normal day-to-day banking
business.
Item 2. Changes in Securities
None.
26
<PAGE>
Item 3. Defaults Under Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
EXHIBIT DESCRIPTION LOCATION
-----------------------------------------------------------------------------------------------
<S> <C> <C>
3.2 First Amended and Restated Bylaws of Incorporated by reference from
Commerce National Corporation Exhibit 3.2 to the Company's Report
effective January 14, 1988 on Form 10-K for the fiscal year
ended December 31, 1992
-----------------------------------------------------------------------------------------------
3.3 First Amendment to First Amended and Incorporated by reference from
Restated Bylaws of Commerce National Exhibit 3.3 to the Company's Report
Corporation dated effective May 26, on Form 10-Q for the fiscal quarter
1998 ended June 30, 1998
-----------------------------------------------------------------------------------------------
3.4 Articles of Restatement of the Incorporated by reference from
Articles of Incorporation of Exhibit 3.4 to the Company's Report
Commerce National Corporation, and on Form 10-Q for the fiscal quarter
Amended and Restated Articles of ended June 30, 1998
Incorporation, filed June 22, 1998
-----------------------------------------------------------------------------------------------
4.1 Specimen copy of common stock Incorporated by reference from
certificate for Common Stock of Exhibit 4.1 to the Company's Report
Commerce National Corporation on Form 10-K for the fiscal year
ended December 31, 1992
-----------------------------------------------------------------------------------------------
4.2 Article IV of Articles of Incorporated by reference from
Incorporation of Commerce National Exhibit 3.1 to Registration No.
Corporation included in the Articles 2-98960-A
of Incorporation of Commerce
National Corporation
-----------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
EXHIBIT DESCRIPTION LOCATION
-----------------------------------------------------------------------------------------------
<S> <C> <C>
4.3 Stock Redemption/Repurchase Incorporated by reference fromExhibit
Policy 4.3 to the Company's Report
on Form 10-Q for the fiscal quarter
ended June 30, 1993
-----------------------------------------------------------------------------------------------
10.1 First Amendment to Amended and Incorporated by reference from
Restated 1985 Commerce National Exhibit 10.1 to the Company's Report
Corporation Directors' Stock Plan on Form 10-K for the fiscal year
dated October 20, 1997 ended December 31, 1997
-----------------------------------------------------------------------------------------------
10.2 1998 Commerce National Corporation Incorporated by reference from
Employees' Stock Option Plan Exhibit 10.2 to the Company's Report
on Form 10-Q for the fiscal quarter
ended June 30, 1999
-----------------------------------------------------------------------------------------------
10.3 1998 Commerce National Corporation Incorporated by reference from
Employees' Stock Option Agreement Exhibit 10.2 to the Company's Report
on Form 10-Q for the fiscal quarter
ended June 30, 1999
-------------------------------------------------------------------------------------------------
27 Article 9 Financial Data Schedule Attached
(for SEC use only).
-------------------------------------------------------------------------------------------------
</TABLE>
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company for the fiscal quarter
ended September 30, 1999.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
28
<PAGE>
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.
COMMERCE NATIONAL CORPORATION
Dated: November 12, 1999
By:/s/ Guy D. Colado
-----------------------------
GUY D. COLADO, President and
Chief Executive Officer
Dated: November 12, 1999 By:/s/ Alan M. Scarboro
-----------------------------
ALAN M. SCARBORO
Secretary/Treasurer
29
<PAGE>
INDEX OF EXHIBITS FILED WITH THIS REPORT
----------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT DESCRIPTION
- --------------------------------------------------------------------------------
27 Article 9 Financial Data Schedule (for SEC use only).
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR COMMERCE NATIONAL CORPORATION
AND SUBSIDIARY DATED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 8,314,417
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,804,531
<INVESTMENTS-CARRYING> 18,804,531
<INVESTMENTS-MARKET> 18,804,531
<LOANS> 137,103,259
<ALLOWANCE> 1,662,276
<TOTAL-ASSETS> 179,444,398
<DEPOSITS> 155,152,248
<SHORT-TERM> 7,116,334
<LIABILITIES-OTHER> 837,364
<LONG-TERM> 2,527,016
0
0
<COMMON> 74,282
<OTHER-SE> 13,737,154
<TOTAL-LIABILITIES-AND-EQUITY> 179,444,398
<INTEREST-LOAN> 8,658,768
<INTEREST-INVEST> 719,451
<INTEREST-OTHER> 193,917
<INTEREST-TOTAL> 9,572,136
<INTEREST-DEPOSIT> 4,014,157
<INTEREST-EXPENSE> 4,333,518
<INTEREST-INCOME-NET> 5,238,618
<LOAN-LOSSES> 387,643
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,728,794
<INCOME-PRETAX> 1,806,914
<INCOME-PRE-EXTRAORDINARY> 1,806,914
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,146,931
<EPS-BASIC> 1.59
<EPS-DILUTED> 1.59
<YIELD-ACTUAL> 0.043
<LOANS-NON> 1,982,198
<LOANS-PAST> 0
<LOANS-TROUBLED> 28,379
<LOANS-PROBLEM> 2,030,609
<ALLOWANCE-OPEN> 1,323,143
<CHARGE-OFFS> 51,489
<RECOVERIES> 2,979
<ALLOWANCE-CLOSE> 1,662,276
<ALLOWANCE-DOMESTIC> 1,662,276
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 414,562
</TABLE>
