<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996
------------------
COMMISSION FILE NUMBER 0-14620
-------
COMMUNITY BANKSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW HAMPSHIRE 02-0394439
------------- ----------
(STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
43 NORTH MAIN STREET
CONCORD, NEW HAMPSHIRE 03301
----------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(603) 224-1100
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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
---- ----
2,438,873 shares of Community Bankshares, Inc.'s Common Stock ($1.00 Par Value)
were outstanding as of September 30, 1996. Community Bankshares, Inc. has no
other classes of common stock.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
--------------------
CONSOLIDATED STATEMENTS OF INCOME
COMMUNITY BANKSHARES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Interest and dividend income:
Loans................................. $ 8,425 $7,594 $24,153 $21,860
Securities available for sale......... 1,411 1,071 3,839 3,057
Securities held to maturity........... 630 994 1,975 2,804
Federal Home Loan Bank stock.......... 75 69 219 178
Fed funds sold and deposits in other 30 124 255 215
banks................................ ------- ------ ------- -------
Total interest and dividend income.. 10,571 9,852 30,441 28,114
------- ------ ------- -------
Interest expense:
Deposits.............................. 3,745 3,800 11,170 10,680
Borrowed funds........................ 1,299 1,233 3,553 3,276
------- ------ ------- -------
Total interest expense.............. 5,044 5,033 14,723 13,956
------- ------ ------- -------
Net interest and dividend income........ 5,527 4,819 15,718 14,158
Provision for possible loan losses...... 300 250 875 675
------- ------ ------- -------
Net interest and dividend income
after provision for possible loan
losses............................. 5,227 4,569 14,843 13,483
------- ------ ------- -------
Non-interest income:
Deposit account fees.................. 213 167 595 476
Gains on sales of investment 122 - 471 118
securities, net......................
Gains on sales of loans, net.......... 202 244 622 480
Loan servicing income................. 184 199 592 470
Other................................. 135 105 361 344
------- ------ ------- -------
Total non-interest income........... 856 715 2,641 1,888
------- ------ ------- -------
Non-interest expense:
Salaries and employee benefits........ 2,080 1,813 6,086 5,248
Occupancy and equipment............... 696 545 1,966 1,556
Foreclosed property................... 39 48 97 99
FDIC deposit insurance premiums....... 1 (25) 3 389
Marketing............................. 136 93 395 287
Other................................. 1,157 1,069 3,231 2,841
------- ------ ------- -------
Total non-interest expense.......... 4,109 3,543 11,778 10,420
------- ------ ------- -------
Income before income taxes.............. 1,974 1,741 5,706 4,951
Income tax expense...................... 713 603 2,041 1,651
------- ------ ------- -------
Net income............................ $ 1,261 $1,138 $ 3,665 $ 3,300
======= ====== ======= =======
Earnings per common and common
equivalent share....................... $ 0.51 $ 0.46 $ 1.48 $ 1.35
Average number of common and common
equivalent shares outstanding.......... 2,494 2,453 2,481 2,441
Dividends paid per share................ $0.15 $0.14 $0.45 $0.40
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
COMMUNITY BANKSHARES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------------- -------------------
<S> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT
SHARE DATA)
(UNAUDITED)
ASSETS
Cash and due from banks................... $ 20,125 $ 19,226
Interest-bearing deposits in other banks.. 18,254 11,767
Fed funds sold............................ -- 200
-------- --------
Total cash and cash equivalents....... 38,379 31,193
-------- --------
Securities available for sale--amortized
cost $82,320 at September 30, 1996 and
$66,467 at December 31, 1995............ 82,000 67,411
Securities held to maturity--fair value
$40,996 at September 30, 1996 and
$47,760 at December 31, 1995............. 41,311 47,525
Federal Home Loan Bank stock.............. 4,571 4,411
Mortgage loans held for sale.............. 3,880 2,940
Loans..................................... 361,407 327,014
Allowance for possible loan losses........ (3,725) (3,667)
-------- --------
Net loans............................. 357,682 323,347
-------- --------
Premises and equipment.................... 10,450 8,938
Real estate acquired by foreclosure....... 536 566
Due from broker for security sale......... -- 1,710
Accrued interest receivable............... 3,718 3,724
Other assets.............................. 6,197 6,238
-------- --------
Total assets.......................... $548,724 $498,003
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing demand............ $ 57,815 $ 39,969
Savings................................ 144,472 137,835
Time certificates...................... 205,061 207,633
-------- --------
Total deposits........................ 407,348 385,437
Securities sold under
agreements to repurchase.............. 36,189 14,581
Other borrowed funds.................... 60,855 56,355
Liability relating to ESOP.............. -- 118
Accrued interest payable................ 1,431 1,517
Other liabilities....................... 3,600 3,227
-------- --------
Total liabilities..................... 509,423 461,235
-------- --------
Stockholders' equity:
Preferred stock, $1.00 par value per
share; 1,000,000 shares authorized,
none issued............................ -- --
Common stock, $1.00 par value per
share; 4,500,000 shares authorized;
issued and outstanding 2,438,873 at
September 30, 1996 and 2,382,849 at
December 31, 1995...................... 2,439 2,383
Additional paid-in capital.............. 22,267 21,784
Retained earnings ...................... 14,977 12,299
-------- --------
39,683 36,466
Unrealized net gains (losses) on (224) 578
securities available for sale, net.....
Unearned compensation expense--ESOP..... -- (118)
Treasury stock (at cost) --9,655
shares at September 30, 1996 and
December 31, 1995...................... (158) (158)
-------- --------
Total stockholders' equity............ 39,301 36,768
-------- --------
Total liabilities and stockholders'
equity.............................. $548,724 $498,003
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
COMMUNITY BANKSHARES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1996 1995
--------- ----------
<S> <C> <C>
(In Thousands)
(Unaudited)
Cash flows from operating activities:
Net income....................................... $ 3,665 $ 3,300
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for possible loan losses.............. 875 675
Depreciation and amortization................... 1,168 1,412
Gains on sales of investment securities, net.... (471) (118)
Gains on sales of premises and equipment........ (5) --
Net (gains) losses on sales and loss provisions
on real estate acquired by foreclosure......... (2) (92)
Mortgage loans originated for sale.............. (43,614) (30,288)
Mortgage loans sold............................. 42,674 29,559
(Increase) decrease in other assets............. 2,357 (2,822)
Increase (decrease) in other liabilities........ 287 (713)
-------- ---------
Net cash provided by (used in) operating
activities..................................... 6,934 913
-------- ---------
Cash flows from investing activities:
Proceeds from sales of securities available
for sale........................................ 39,539 17,963
Proceeds from sales of securities held
to maturity..................................... 1,005 --
Proceeds from maturities and principal payments
to securities held to maturity.................. 19,906 6,008
Proceeds from maturities and principal payments
of securities available for sale................ 30,791 10,169
Purchase of securities held to maturity.......... (8,877) (17,162)
Purchase of securities available for sale........ (81,413) (23,679)
Purchase of FHLB stock........................... (160) (1,623)
Net increase in loans............................ (50,173) (52,228)
Proceeds from sales of automobile loans.......... 4,069 18,933
Proceeds from disposition of real estate
acquired by foreclosure......................... 540 1,059
Proceeds from sales of premises and equipment.... 16 --
Additions to premises and equipment.............. (2,444) (1,090)
Cash paid for mortgage servicing rights.......... -- (2,208)
-------- ---------
Net cash used in investing activities.......... (47,201) (43,858)
-------- ---------
Cash flows from financing activities:
Net increase (decrease) in time certificates
of deposit...................................... (2,572) 23,989
Net increase (decrease) in demand, NOW, savings
and money market deposit accounts............... 24,483 (339)
Proceeds from borrowings......................... 112,429 177,797
Repayments of borrowings......................... (86,321) (144,472)
Repayments of liability relating to ESOP......... (118) (118)
Proceeds from issuance of common stock........... 539 114
Purchase of treasury stock....................... -- (395)
Dividends paid on common stock................... (987) (741)
-------- ---------
Net cash provided by financing activities...... 47,453 55,835
-------- ---------
Net increase (decrease) in cash and
cash equivalents............................... 7,186 12,890
Cash and cash equivalents at beginning of period.. 31,193 15,410
-------- ---------
Cash and cash equivalents at end of period........ $ 38,379 $ 28,300
======== =========
Supplemental cash flow information:
Cash paid for:
Income taxes, net.............................. $ 1,117 $ 991
Interest....................................... 14,809 13,631
Supplemental schedule of non-cash activities:
Securities transferred from available for sale
to held to maturity............................ $ 5,730 $ --
Mortgage loans securitized during the period.... 10,698 5,551
Loans transferred to real estate acquired by
foreclosure.................................... 508 602
Change in net unrealized gains (losses) on
securities available for sale, net............. (802) 1,685
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
COMMUNITY BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1996 and 1995
1. Basis of Presentation
---------------------
The unaudited consolidated financial statements of Community Bankshares, Inc.
and its wholly owned subsidiaries ("the Company"), Concord Savings Bank
("Concord"), Concord's wholly owned subsidiary, Bancredit Corporation
("Bancredit"), and Centerpoint Bank ("Centerpoint"), presented herein should be
read in conjunction with the supplemental consolidated financial statements of
Community Bankshares, Inc. and subsidiaries as of and for the year ended
December 31, 1995. In the opinion of management, the unaudited financial
statements reflect all normal recurring adjustments which are necessary for a
fair presentation. Interim results are not necessarily indicative of results to
be expected for the entire year.
2. Earnings Per Share
------------------
Earnings per share for the periods presented are based on the weighted average
number of common and common equivalent shares outstanding during each period.
3. Acquisition Consummation
-------------------------
On March 20, 1996, the Company completed its acquisition of Centerpoint Bank
through the issuance of 657,587 shares of common stock. The acquisition was
accounted for as a pooling-of-interests and, accordingly, the accounts and
results of operations of Centerpoint have been combined with that of the Company
for all periods presented. The separate results of operations of the Company
and Centerpoint for the periods ended September 30, 1995 are presented below:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, 1995 Ended September 30, 1995
------------------------------------------------------------------------
Community Community
Bankshares, Centerpoint Bankshares, Centerpoint
Inc. Bank Combined Inc. Bank Combined
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands Except Per Share Data, Unaudited)
Interest income $8,055 $1,797 $9,852 $23,292 $4,822 $28,114
Net income 846 292 1,138 2,588 712 3,300
Earnings per common
and common equivalent share $ 0.47 $ 0.48 $ 0.46 $ 1.44 $ 1.19 $ 1.35
</TABLE>
4. Accounting Change
-----------------
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) FAS No. 123, "Accounting for Stock-Based Compensation." This
statement establishes a fair-value-based method of accounting for stock-based
compensation plans under which compensation cost is measured at the grant date
based on the value of the award and is recognized over the service period.
However, the statement allows a company to continue to measure compensation cost
for such plans under Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees." Under APB Opinion No. 25, no
compensation cost is recorded if, at the grant date, the exercise price of
options granted is equal to the fair market value of the Company's stock. The
Company has elected to continue to follow the accounting method under APB
Opinion No. 25. SFAS No. 123 requires companies that elect to continue to follow
the accounting in APB Opinion No. 25 to disclose in the notes to their financial
statements pro forma net income and earnings per share as if the fair-value-
based method of accounting had been applied. Based on activity for the three and
nine months ended September 30, 1996, net income and earnings per share would
not have been materially affected had the accounting method under SFAS No. 123
been applied.
5. Recent Accounting Developments
------------------------------
In June 1996, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard No. 125 (FAS No. 125), "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities."
This Statement provides guidance for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. FAS 125
supersedes FAS 76, 77, and 122, while amending both FAS 65 and 115. The
Statement is effective January 1, 1997 and is to be applied prospectively.
Earlier implementation is not permitted.
5
<PAGE>
A transfer of financial assets in which control is surrendered over those assets
is accounted for as a sale to the extent that consideration other than
beneficial interests in the transferred assets is received in the exchange.
Liabilities and derivatives incurred or obtained by the transfer of financial
assets are required to be measured at fair value, if practicable. Also, any
servicing assets and other retained interests in the transferred assets must be
measured by allocating the previous carrying value between the asset sold and
the interest retained, if any, based on their relative fair values at the date
of transfer. For each servicing contract in existence before January 1, 1997,
previously recognized servicing rights and excess servicing receivables that do
not exceed contractually specified servicing are required to be combined, net of
any previously recognized servicing obligations under that contract, as a
servicing asset or liability. Previously recognized servicing receivables that
exceed contractually specified servicing fees are required to be reclassified as
interest-only strips receivable.
The Statement also requires an assessment of interest-only strips, loans, other
receivables or retained interests in securitizations. If these assets can be
contractually prepaid or otherwise settled such that the holder would not
recover substantially all of its recorded investment, the asset will be measured
like available for sale securities or trading securities, under FAS 115. This
assessment is required for financial assets held on or acquired after January
1, 1997.
In accordance with the above, the Company will apply the requirements of this
Statement beginning January 1, 1997. The Company has not completed the complex
analysis required to determine the future impact on its financial statements
relating to existing financial assets and servicing contracts.
6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
- -------------
FINANCIAL CONDITION
- -------------------
On March 20, 1996, the Company completed its acquisition of Centerpoint Bank
through the issuance of 657,587 shares of common stock. The acquisition was
accounted for as a pooling-of-interests and, accordingly, the accounts and
results of operations for Centerpoint have been combined with that of the
Company for all periods presented.
At September 30, 1996, total assets amounted to $548,724,000, an increase of
$50,721,000, or 10.2%, from $498,003,000 at December 31, 1995. This growth in
assets was primarily in loans, investment securities and interest bearing
deposits in other banks and was funded primarily with an increase in deposits,
securities sold under agreements to repurchase and other borrowed funds.
Total loans increased by $34,393,000, or 10.5%, from $327,014,000 at December
31, 1995 to $361,407,000 at September 30, 1996. Since December 31, 1995, the
Company has experienced growth in commercial, residential mortgage and consumer
loans by approximately $14 million, $2 million and $19 million, respectively.
The commercial loan growth was primarily to small businesses in the
manufacturing, retail, service industries and to professional associations. The
growth in residential mortgage loans was primarily in 15-year fixed rate
mortgages which resulted from a limited, special promotion offered by the
Company during the first quarter of 1996 which were originated for the Company's
portfolio. Additionally, the Company has experienced growth in its adjustable
rate mortgage loan product. During the third quarter of 1996, $10,698,000 of
residential mortgage loans were securitized and transferred from loans to
securities available for sale. The growth in consumer loans was primarily in
indirect automobile loans which resulted from competitive pricing to dealers
located throughout the State of New Hampshire.
Total investment securities amounted to $123,311,000, or 22.5% of total assets,
at September 30, 1996 compared to $114,936,000, or 23.1% of total assets, at
December 31, 1995. At September 30, 1996, securities available for sale
amounted to $82,000,000, or 66.5% of total investment securities. Securities
held to maturity amounted to $41,311,000 and represented 33.5% of total
investment securities. During the third quarter of 1996, $10,698,000 of
residential mortgage loans were securitized and transferred from loans to
securities available for sale. Of this amount, $5,500,000 was sold realizing a
loss on sale of $10,000. In June 1996, the Company transferred $5,730,000 of
securities classified as available for sale to held to maturity. At the time of
reclassification, there was $252,000 in unrealized losses relating to the
securities transferred. The investment portfolio consists primarily of U.S.
Treasury and Agency securities, mortgage-backed securities guaranteed by the
Federal Home Loan Mortgage Corporation (FHLMC) and the Federal National Mortgage
Association (FNMA), and to a lesser extent other mortgage-backed securities,
corporate bonds, municipal investments and marketable equity securities.
Total deposits increased by $21,911,000 since December 31, 1995 to $407,348,000
at September 30, 1996. Since December 31, 1995, deposit growth was primarily in
non-interest bearing deposits and savings deposits which increased by
$17,846,000 and $6,637,000, respectively. Growth in these two categories more
than offset the decline in time deposits which decreased by $2,572,000 during
the same period. On September 30, 1996, approximately $7,000,000 of overnight
funds were deposited at Centerpoint inflating the non-interest bearing balances.
The remaining increase in non-interest bearing deposits resulted from the
Company's continued growth in small commercial business relationships.
Funding loan growth was the primary reason for the increase in borrowed funds of
$26,108,000 since December 31, 1995. The Company's borrowed funds consist
primarily of Federal Home Loan Bank (FHLB) advances and, to a lesser extent,
repurchase agreements.
At September 30, 1996, the Company's stockholders' equity totaled $39,301,000,
resulting in an equity-to-assets ratio of 7.16%, a Tier 1 leverage ratio of
7.28% and a total risk-based capital ratio of 11.91%. The Company's capital
ratios exceed all published regulatory minimums. For further information on the
capital ratios of the Company and of Concord and Centerpoint, see the "Liquidity
and Capital Resources" section below.
7
<PAGE>
Due to market conditions the Company's unrealized net gains (losses) on
securities available for sale, recorded net of applicable taxes as a component
of stockholders' equity, declined from an unrealized net gain of $578,000 at
December 31, 1995 to an unrealized net loss of $224,000 at September 30, 1996.
Changes in the market values of securities available for sale are reflected in
the Company's balance sheet as increases or decreases in stockholders' equity.
RISK ELEMENTS
- -------------
At September 30, 1996, total non-performing assets amounted to $2,047,000, or
0.37% of total assets compared to $2,523,000, or 0.51%, at December 31, 1995.
The decrease of $476,000 since December 31, 1995 was due to sales and
resolutions of non-performing assets exceeding new non-performing loans.
Non-performing assets consist of non-performing loans, non-accrual loans
(including impaired loans), restructured loans, and property or other assets
which have been acquired by foreclosure or repossession. Non-performing loans
decreased to $1,283,000 or by 21% at September 30, 1996 from $1,624,000 at
December 31, 1995. Foreclosed property and repossessed autos and mobile homes
decreased to $764,000 at September 30, 1996 from $899,000 at December 31, 1995.
At September 30, 1996, impaired loans, which are included in nonaccrual loans
in the table below, amounted to $483,000 as compared to $819,000 at December 31,
1995.
The following table summarizes non-performing assets and loans delinquent 90
days or more and still accruing at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
-------------- ------------- --------------
1996 1995 1995
-------------- ------------- --------------
<S> <C> <C> <C>
(In Thousands)
Non-accrual loans....................... $1,283 $1,624 $2,049
Restructured loans...................... -- -- --
------ ------ ------
Total non-performing loans............ 1,283 1,624 2,049
------ ------ ------
Real estate acquired by foreclosure..... 536 566 893
Other assets acquired................... 228 333 441
------ ------ ------
Total assets acquired toward
satisfaction of debt................ 764 899 1,334
------ ------ ------
Total non-performing assets............. 2,047 2,523 3,383
Loans delinquent 90 days or more and
still accruing......................... 35 69 375
------ ------ ------
Total non-performing assets and loans
delinquent 90 days or more and still
accruing............................. $2,082 $2,592 $3,758
====== ====== ======
Total non-performing assets as a
percentage of total loans and assets
acquired toward satisfaction of debt. 0.57% 0.77% 1.04%
</TABLE>
The Company's provision for possible loan losses amounted to $300,000 and
$875,000, respectively, for the quarter and nine months ended September 30,
1996, bringing the allowance to $3,725,000 after net charge-offs of $179,000 and
$817,000, respectively for the quarter and nine months ended September 30, 1996.
At September 30, 1996, the allowance for possible loan losses represented 1.03%
of total loans in comparison to 1.12% of total loans at December 31, 1995. At
September 30, 1996, the allowance for possible loan losses represented 290.3% of
non-performing loans of $1,283,000 versus 225.8% of non-performing loans of
$1,624,000 at December 31, 1995.
The allowance for possible loan losses is maintained at a level believed by
management to adequately meet reasonably foreseeable loan losses on the basis of
many factors including risk characteristics of the portfolio, underlying
collateral, current and anticipated economic conditions that may affect the
borrower's ability to pay, specific problem loans, trends in loan delinquencies,
loan charge-offs and loan growth. While management uses the best information
available to establish the allowance for possible loan losses, future additions
to the allowance may be necessary if economic conditions differ substantially
from the assumptions used in making the evaluation. In
8
<PAGE>
addition, various regulatory agencies, as an integral part of their examination
process, periodically review Concord's and Centerpoint's allowance for possible
loan losses. Such agencies may require Concord and Centerpoint to recognize
additions to the allowance based on judgments different from those of
management.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
---------------------------------------------------------
SEPTEMBER 30, 1996 AND 1995
---------------------------
RESULTS OF OPERATIONS
- ---------------------
The Company earned net income of $1,261,000, or $0.51 per share, for the quarter
ended September 30, 1996, and $3,665,000, or $1.48 per share, for the nine
months then ended. Comparable amounts for the quarter and nine months ended
September 30, 1995 equaled $1,138,000, or $0.46 per share, and $3,300,000, or
$1.35 per share. On March 20, 1996, the Company completed its acquisition of
Centerpoint Bank through the issuance of 657,587 shares of common stock. The
acquisition was accounted for as a pooling-of-interests and, accordingly, the
accounts and results of operations for Centerpoint have been combined with that
of the Company for all periods presented.
AVERAGE BALANCE SHEETS AND NET INTEREST AND DIVIDEND INCOME
- -----------------------------------------------------------
The following table sets forth certain information relating to the Company's
summarized average balance sheets, including interest-earning assets, interest-
bearing liabilities and net interest income on a fully tax-equivalent basis for
the three month periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------------------------ ------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE (5) BALANCE INTEREST RATE (5)
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Assets:
Interest-earning assets:
Loans(1)............................... $365,671 $ 8,425 9.22% $330,341 $7,594 9.20%
Investments(2)......................... 141,772 2,170 6.12 143,152 2,272 6.35
-------- ------- -------- ------
Total interest-earning assets.. 507,443 10,595 8.35 473,493 9,866 8.33
------- ------
Non interest-earning assets............. 36,188 31,358
Allowance for possible loan losses...... (3,674) (3,518)
-------- --------
Total assets................... $539,957 $501,333
======== ========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits............................ 350,299 3,745 4.28 343,280 3,800 4.43
Borrowed funds...................... 97,691 1,299 5.32 83,463 1,233 5.91
-------- ------- -------- ------
Total interest-bearing liabilities..... 447,990 5,044 4.50 426,743 5,033 4.72
------- -------
Non interest-bearing demand deposits.... 47,172 34,697
Other liabilities....................... 6,282 4,474
-------- --------
Total liabilities...................... 501,444 465,914
Stockholders' equity.................... 38,513 35,419
-------- --------
Total liabilities and stockholders'
equity.............................. $539,957 -------- $501,333 --------
======== ========
Net interest income/interest rate
spread(3).............................. $5,551 3.85% $4,833 3.61%
======= ==== ====== ====
Net interest margin(4).................. 4.38% 4.08%
==== ====
</TABLE>
(1) Includes nonaccrual loans.
(2) Investments (includes interest bearing deposits in other banks and fed
funds sold) are shown at average amortized cost.
(3) Interest rate spread is the average yield earned on total earning assets
less the average cost paid for interest-bearing liabilities.
(4) The net interest margin during the period equals net interest income
divided by average interest-earning assets for the period.
(5) Calculated on an annualized basis.
9
<PAGE>
The following table sets forth certain information relating to the Company's
summarized average balance sheets, including interest-earning assets, interest-
bearing liabilities and net interest income on a fully tax-equivalent basis for
the nine month periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------------------------ ------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE (5) BALANCE INTEREST RATE (5)
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Assets:
Interest-earning assets:
Loans(1)........................... $351,169 $24,153 9.17% $322,657 $21,860 9.03%
Investments (2).................... 137,135 6,343 6.17 132,583 6,288 6.32
-------- ------- -------- -------
Total interest-earning assets.... 488,304 30,496 8.33 455,240 28,148 8.24
------- -------
Non interest-earning assets......... 35,350 28,261
Allowance for possible loan losses.. (3,676) (3,554)
-------- --------
Total assets..................... $519,978 $479,947
======== ========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits............................... 346,545 11,170 4.30 337,921 10,680 4.21
Borrowed funds......................... 87,260 3,553 5.43 73,087 3,276 5.98
-------- ------- -------- -------
Total interest-bearing liabilities... 433,805 14,723 4.53 411,008 13,956 4.53
------- -------
Non interest-bearing demand deposits ... 42,586 31,101
Other liabilities....................... 5,610 3,718
-------- --------
Total liabilities.................... 482,001 445,827
Stockholders' equity.................... 37,977 34,120
-------- --------
Total liabilities and stockholders'
equity.............................. $519,978 $479,947
======== ========
Net interest income/interest rate
spread(3)............................ $15,773 3.80% $14,192 3.71%
======= ==== ======= ====
Net interest margin(4)................. 4.31% 4.16%
==== ====
</TABLE>
(1) Includes nonaccrual loans.
(2) Investments (includes interest bearing deposits in other banks and fed
funds sold) are shown at average amortized cost.
(3) Interest rate spread is the average yield earned on total earning assets
less the average cost paid for interest-bearing liabilities.
(4) The net interest margin during the period equals net interest income
divided by average interest-earning assets for the period.
(5) Calculated on an annualized basis.
10
<PAGE>
RATE/VOLUME ANALYSIS
- --------------------
The following table presents changes in interest and dividend income, interest
expense and net interest and dividend income, on a fully tax-equivalent basis,
which are attributable to changes in the average amounts of interest-earning
assets and interest-bearing liabilities outstanding and/or to changes in rates
earned or paid thereon. The net changes attributable to both volume and rate
have been allocated proportionately.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 VS. 1995 SEPTEMBER 30, 1996 VS. 1995
------------------------------ ----------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
------------------------------ ----------------------------
DUE TO DUE TO DUE TO DUE TO
VOLUME RATE TOTAL VOLUME RATE TOTAL
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Interest and dividend income:
Loans............................. $814 $ 17 $ 831 $1,957 $ 336 $2,293
Investments....................... (22) (80) (102) 213 (158) 55
---- ----- ----- ------ ----- ------
Total interest and dividend income.. 792 (63) 729 2,170 178 2,348
---- ----- ----- ------ ----- ------
Interest expense:
Deposits.......................... 77 (132) (55) 276 214 490
Borrowed funds.................... 197 (131) 66 596 (319) 277
---- ----- ----- ------ ----- ------
Total interest expense.............. 274 (263) 11 872 (105) 767
---- ----- ----- ------ ----- ------
Net interest and dividend income.... $518 $ 200 $ 718 $1,298 $ 283 $1,581
==== ===== ===== ====== ===== ======
</TABLE>
INTEREST INCOME
- ---------------
Total interest and dividend income, on a fully tax-equivalent basis, increased
by $729,000 and $2,348,000, respectively, for the quarter and nine months ended
September 30, 1996 over amounts earned for the same periods of the prior year.
These increases were primarily due to an increase in average loans outstanding
and, to a lesser extent, to an increase in yield. The average balance of loans
outstanding for the quarter and nine months ended September 30, 1996 increased
by $35,330,000 and $28,512,000, respectively from the same periods of the
previous year, resulting in an increase of interest and fee income on loans due
to volume of $814,000 and $1,957,000 respectively.
INTEREST EXPENSE
- ----------------
Interest expense on deposits for the quarter ended September 30, 1996 as
compared with the same period of the prior year decreased by $55,000. This
decline resulted primarily from a decline in interest rates paid on time
certificates of deposit. The average yield on interest bearing deposits for the
quarter ended September 30, 1996 was 4.28% compared to 4.43% for the quarter
ended September 30, 1995 resulting in a decline in interest expense due to rate
of $132,000. Partially offsetting this decline is an increase in average
volumes of $7,019,000 resulting in an increase in interest expense of $77,000.
Interest expense on deposits for the nine months ended September 30, 1996
increased $490,000 over amounts paid for the same period of the prior year due
to the combination of growth in the average balance of interest bearing deposits
of $8,624,000 and an increase in rates paid on such deposits.
The Company used borrowed funds as a funding alternative for loan growth which
resulted in increased average outstanding borrowings of $14,228,000 and
$14,173,000, respectively, for the quarter and nine months ended September 30,
1996. This utilization of borrowed funds resulted in an increase in interest
expense of $66,000 and $277,000 for the quarter and nine months ended September
30, 1996 over the comparable periods of the prior year. For the three
months ended September 30, 1996, the average interest rate was 5.32% as compared
with 5.91% at September 30, 1995 resulting in a reduction in interest expense on
borrowings due to rates of $131,000. For the nine months ended September 30,
1996, the average interest rate paid was 5.43% compared to 5.98% at September
30, 1995 resulting in a reduction in interest expense on borrowings due to rates
of $319,000.
11
<PAGE>
PROVISION FOR POSSIBLE LOAN LOSSES
- ----------------------------------
The Company made a provision of $300,000 and $875,000, respectively, for the
three and nine months ended September 30, 1996 into the allowance for possible
loan losses compared to $250,000 and $675,000, respectively, for the comparable
periods of the prior year. Net loan charge-offs for the current quarter and
nine month period equaled $179,000 and $817,000, respectively, as compared to
$158,000 and $576,000, respectively, for the same periods of the prior year.
The current year's loan charge-offs were previously provided for in the
allowance for possible loan losses. The increase in the provision for loan
losses was primarily due to loan growth.
NON-INTEREST INCOME
- -------------------
Non-interest income for the quarter and nine months ended September 30, 1996
increased by $141,000 and $753,000, respectively, from the same periods of last
year.
Increased transaction activity and numbers of accounts were the primary reasons
for the growth of $46,000 and $119,000, respectively, in deposit account fees
for the quarter and nine months ended September 30, 1996 when compared to the
same periods of the prior year. The Company also revised its deposit account
fee schedule during December 1995.
Favorable market conditions during the quarter and nine months ended September
30, 1996 allowed the Company to record $122,000 and $471,000, respectively, in
security gains as compared to $0 and $118,000, respectively, during the same
periods of the prior year.
Gains on the sale of loans decreased by $42,000 for the quarter ended September
30, 1996 as compared with the quarter ended September 30, 1995. This decline
resulted primarily from SBA and consumer loan sales that occurred in the third
quarter of 1995. No such sales occurred in the third quarter of 1996. For the
nine months ended September 30, 1996, the Company recorded $622,000 in loan
sale gains as compared to $480,000 for the nine months ended September 30, 1995.
This increase resulted primarily from an increase in mortgage loans originated
for sale into the secondary market.
Loan servicing income decreased by $15,000 for the quarter ended September 30,
1996 as compared with the quarter ended September 30, 1995. This decrease
resulted primarily from accelerated amortization of mortgage servicing rights.
For the nine months ended September 30, 1996, the Company recorded loan
servicing income of $592,000 as compared to $470,000 for the comparable period
in 1995. This increase was primarily due to income related to the Company's
purchase of mortgage servicing rights which were transferred to the Company
during August, 1995.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense for the quarter and nine months ended September 30, 1996
increased by $566,000 and $1,358,000, respectively, over the same periods of the
prior year. The increase in non-interest expense was primarily due to continued
investments made by the Company to expand its business lines and product
distribution system, increased marketing, and normal increases related to
salaries and benefits and other operating expenses. Within the past year the
Company has opened offices in Tilton and Portsmouth, New Hampshire, opened new
remote automated cash dispensing machines at 16 of the Walmart and Sam's Club
stores in New Hampshire and expanded its commercial and indirect consumer
lending capacity. The Company is planning to open another office in Hooksett,
New Hampshire before the end of the year. Also included in non-interest expense
for the nine months ended September 30, 1996 was some necessary duplicate costs
resulting from the Centerpoint acquisition. These costs are expected to be
eliminated in future periods.
Offsetting a portion of the increase in non-interest expense was a reduction in
FDIC deposit insurance premiums of $386,000 for the nine months ended September
30, 1996 versus the same period of the prior year. This reduction was due to
substantially lower premiums that the FDIC charges banks to insure deposits
which became effective June 1, 1995. The premiums were lowered after the Bank
Insurance Fund (BIF) met its Congressionally mandated
12
<PAGE>
level during the month of May 1995. The Company's subsidiary banks are currently
subject to the minimum premium level.
INCOME TAXES
- ------------
Income tax expense for the quarters ended September 30, 1996 and 1995 amounted
to $713,000 and $603,000, respectively. Income tax expense for the nine months
ended September 30, 1996 and 1995 amounted to $2,041,000 and $1,651,000,
respectively. The effective tax rate for 1996 was 36% compared to 33% in 1995.
The lower effective tax rate for the prior year was primarily the result of the
Company reducing its valuation reserve on its deferred tax asset.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is a measure of the Company's ability to meet its cash needs at a
reasonable cost. Cash needs arise primarily as a result of funding lending
opportunities, the maturity of liabilities such as borrowings and the withdrawal
of deposits. Asset liquidity is achieved through the management of earning
asset maturities, loan amortization, deposit growth, securities available for
sale and access to borrowed funds. As members, Concord and Centerpoint may
borrow from the Federal Home Loan Bank of Boston on a secured basis. Borrowing
usually requires the pledging of a bank's FHLB stock as well as certain
residential mortgage loans and investment securities. At September 30, 1996,
the Company's sources of liquidity included $82 million of investment
securities classified as "available for sale" and unused available borrowing
capacity of approximately $66 million at the Federal Home Loan Bank of Boston.
The Company's primary sources of liquidity are dividends from its subsidiary
banks and its cash balances. Dividends paid from the banks to the Company are
limited to the extent necessary for the banks to comply with regulatory capital
guidelines.
The deposits of Concord and Centerpoint are insured by the Federal Deposit
Insurance Corporation which issues and enforces regulations designed to protect
the safety and soundness of insured institutions. At September 30, 1996, the
Company had equity capital of $39,301,000, resulting in an equity-to-assets
ratio of 7.16% and a Tier 1 leverage ratio of 7.28%. Stockholders' equity was
reduced by $224,000 of net tax-effected unrealized security losses relative to
investment securities classified as available for sale.
13
<PAGE>
The following table summarizes the Company's regulatory capital ratios as of
September 30, 1996.
<TABLE>
<CAPTION>
REQUIRED ACTUAL
REGULATORY REGULATORY
RATIO RATIO
----------- -----------
<S> <C> <C>
Leverage............ 4.00%-5.00% 7.28%
Risk-based:
Tier 1............ 4.00 10.88
Total risk-based.. 8.00 11.91
</TABLE>
The following table summarizes Concord's regulatory capital ratios as of
September 30, 1996.
<TABLE>
<CAPTION>
REQUIRED ACTUAL
REGULATORY REGULATORY
RATIO RATIO
----------- -----------
<S> <C> <C>
Leverage............ 4.00%-5.00% 6.93%
Risk-based:
Tier 1............ 4.00 10.29
Total risk-based.. 8.00 11.28
</TABLE>
The following table summarizes Centerpoint's regulatory capital ratios as of
September 30, 1996.
<TABLE>
<CAPTION>
REQUIRED ACTUAL
REGULATORY REGULATORY
RATIO RATIO
----------- -----------
<S> <C> <C>
Leverage............ 4.00%-5.00% 6.80%
Risk-based:
Tier 1............ 4.00 9.32
Total risk-based.. 8.00 10.36
</TABLE>
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
-----------------
The Company is not a party to any material pending legal proceedings other than
ordinary routine litigation incidental to its business. Management believes
that the resolution of these matters will not materially affect the business or
the consolidated financial condition or results of operations of the Company and
its subsidiaries.
ITEM 2 - CHANGES IN SECURITIES
---------------------
Not applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable
ITEM 5 - OTHER INFORMATION
-----------------
Not applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Method of Filing
- ------- ---------------------------------- --------------------------------------------
<S> <C> <C>
3.1 Restated Articles of Incorporation Incorporated by reference to Exhibit 3.1B to
of Community Bankshares, Inc. Amendment No. 1 to Registration Statement on
Form S-1 (File No. 33-00125) the
"Registration Statement")
3.1(a) Statement of Resolution establishing Incorporated by reference to Exhibit 3.1(a) to
series of shares of Community Annual Report on Form 10-K for the year ended
Bankshares, Inc. dated October 27, 1989 June 30, 1991
3.1(b) Articles of Amendment to the Restated Incorporated by reference to Exhibit 3.1 (b) to
Articles of Incorporation of Quarterly Report on Form 10-Q for the quarter
Community Bankshares, Inc. ended March 31, 1996
3.2 By-laws of Community Bankshares, Inc. Incorporated by reference to Quarterly Report on
as currently in effect Form 10-Q for the quarter ended September 30, 1995
4.1 Loan Agreement dated September 22, 1986, Incorporated by reference to Exhibit 4 to Annual
between the Savers Bank and the Trustee Report on Form 10-K for the year ended June 30, 1986
of the Concord Savings Bank Employees
Stock Ownership Plan, with related Note
and Pledge Agreement
4.2 Amendment to Loan Agreement between Incorporated by reference to Exhibit 4.2 to
the Savers Bank and the Trustee of the Quarterly report on Form 10-Q for quarter ended
Concord Savings Bank Employee Stock March 31, 1988
Ownership Plan, dated January 25, 1988
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
Exhibit
Number Description of Exhibit Method of Filing
- ------- ---------------------------------- --------------------------------------------
4.3 Rights Agreement between Community Incorporated by reference to Form 8-A filed
Bankshares, Inc. and the First June 30, 1989
National Bank of Boston
4.4 Community Bankshares, Inc. Dividend Incorporated by reference to Form S-3
Reinvestment and Stock Dividend Plan, (File No. 33-87956)
dated December 28, 1994
10.2(a) Concord Savings Bank 1985 Stock Option Incorporated by reference to Exhibit 10.2 to
Plan, as amended * Amendment No. 3 to Registration Statement
10.2(b) Amendment to said Stock Option Plan Incorporated by reference to Exhibit 10.2(b) to
adopted August 18, 1987 * Annual Report on Form 10-K for year ended
June 30, 1987
10.3 Concord Savings Bank 1988 Stock Option Incorporated by reference to Exhibit A to Proxy
Plan * Statement for Annual Meeting of Stockholders
held on October 20, 1988
10.4 Executive Supplemental Retirement Incorporated by reference to Exhibit 10.8 to the
Agreement with Douglas Crichfield * Quarterly Report on Form 10-Q for quarter ended
September 30, 1988
10.5 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.9 to Annual
with Douglas Crichfield dated Report on Form 10-K for year ended June 30, 1989
August 1, 1988 *
10.5 (a) Amendment of Form of Severance Incorporated by reference to Exhibit 10.9(a) to
Benefits Agreement with Douglas Annual Report on Form 10-K for year ended
Crichfield dated April 19, 1989 * June 30, 1989
10.6 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.10 to Annual
with Donna L. Bean * Report on Form 10-K for year ended June 30, 1989
10.7 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.11 to Annual
with Gerald R. Emery * Report on Form 10-K for year ended June 30, 1989
10.7(a) Amendment of Form of Severance Benefits Incorporated by reference to Exhibit 10.7(a) to
Agreement with Gerald R. Emery dated Annual Report on Form 10-K for year ended
December 30, 1992 * June 30, 1993
10.8 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.12 to Annual
with David E. Fuller * Report on Form 10-K for year ended June 30, 1989
10.9 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.13 to Annual
with Robert F. Howe* Report on Form 10-K for year ended June 30, 1989
10.10 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.11 to Annual
with Paul M. Ferguson * Report on Form 10-K for year ended June 30, 1991
10.10(a) Amendment of Form of Severance Agreement Incorporated by reference to Exhibit 10.11(a) to
with Paul M. Ferguson dated December Annual Report on Form 10-K for year ended
30, 1992 * June 30, 1993
</TABLE>
16
<PAGE>
<TABLE>
<S> <C> <C>
Exhibit
Number Description of Exhibit Method of Filing
- ------- ------------------------------------ ---------------------------------------------------
10.11 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.12 to
with Charles E. Gorhan * Annual Report on Form 10-K for year ended
June 30, 1991
10.12 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.13 to Annual
with Irving S. Felladore * Report on Form 10-K for year ended June 30, 1991
10.13 Form of Severance Benefits Agreement Incorporated by reference to Exhibit 10.14 to Annual
with Margaret A. Flint * Report on Form 10-K for year ended June 30, 1991
10.14 Community Bankshares, Inc. 1992 Stock Incorporated by reference to Exhibit A to Proxy
Option Plan * Statement for Annual Meeting of Stockholders
held on October 15, 1992
10.15 Agreement and Plan of Merger by and Incorporated by reference to Annex A of the
between the Company and Centerpoint Proxy Statement-Prospectus included in Registration
Bank, dated as of August 28, 1995 Statement on Form S-4 (File No. 33-63443) (the "S-4
Registration Statement")
10.16 Employment Agreement between Centerpoint Incorporated by reference to the S-4 Registration
Bank and Philip Stone, dated August 29, Statement
1995. *
10.17 Employment Agreement between Centerpoint Incorporated by reference to the S-4 Registration
Bank and Lucy T. Gobin, dated August 29, Statement
1995 *
10.18 Employment Agreement between Centerpoint Incorporated by reference to the S-4 Registration
Bank and Joseph B. Reilly, dated Statement
August 29, 1995 *
10.19 Centerpoint Bank 1989 Stock Option Plan * Incorporated by reference to Exhibit 10.20 to
Transition Report on Form 10-K for the six months
ended December 31, 1995
11 Statement re computation of Income per Filed herewith
share
27 Financial Data Schedule Filed herewith
* indicates management contract or compensatory plan
(b) Reports on Form 8-K
</TABLE>
The Company has not filed any reports on Form 8-K during the quarter ended
September 30, 1996.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<CAPTION>
COMMUNITY BANKSHARES, INC.
<S> <C> <C>
Name Title Date
- ----------------------------------------------------------------------------------------
/s/ Douglas Crichfield President and Chief Executive Officer November 13, 1996
- -----------------------
Douglas Crichfield
/s/ Gerald R. Emery Treasurer and Chief Financial Officer November 13, 1996
- --------------------
Gerald R. Emery (Principal Financial and Chief
Accounting Officer)
</TABLE>
18
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
(In thousands except per share data)
Net income $1,261 $1,138 $3,665 $3,300
Primary average common and common equivalent shares 2,494 2,453 2,481 2,441
Primary earnings per common and common equivalent share $ 0.51 $ 0.46 $ 1.48 $ 1.35
Fully diluted average common and common equivalent shares 2,496 2,453 2,484 2,441
Fully diluted earnings per common and common equivalent share $ 0.51 $ 0.46 $ 1.48 $ 1.35
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 20,125
<INT-BEARING-DEPOSITS> 18,254
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 86,571
<INVESTMENTS-CARRYING> 41,311
<INVESTMENTS-MARKET> 40,996
<LOANS> 365,287
<ALLOWANCE> (3,725)
<TOTAL-ASSETS> 548,724
<DEPOSITS> 407,348
<SHORT-TERM> 97,044
<LIABILITIES-OTHER> 5,031
<LONG-TERM> 0
0
0
<COMMON> 2,439
<OTHER-SE> 36,862
<TOTAL-LIABILITIES-AND-EQUITY> 548,724
<INTEREST-LOAN> 24,153
<INTEREST-INVEST> 6,033
<INTEREST-OTHER> 255
<INTEREST-TOTAL> 30,441
<INTEREST-DEPOSIT> 11,170
<INTEREST-EXPENSE> 14,723
<INTEREST-INCOME-NET> 15,718
<LOAN-LOSSES> 875
<SECURITIES-GAINS> 471
<EXPENSE-OTHER> 11,778
<INCOME-PRETAX> 5,706
<INCOME-PRE-EXTRAORDINARY> 5,706
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,665
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
<YIELD-ACTUAL> 4.31
<LOANS-NON> 1,283
<LOANS-PAST> 35
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,667
<CHARGE-OFFS> 1,050
<RECOVERIES> 233
<ALLOWANCE-CLOSE> 3,725
<ALLOWANCE-DOMESTIC> 3,725
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
