<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
--------------
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 0-17848
-------
HUDSON CHARTERED BANCORP, INC.
------------------------------
(Exact name of registrant as specified in its charter)
New York 14-1668718
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
PO Box 310, Route 55, Lagrangeville, NY 12540
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(914)471-1711
- -------------
(Registrant`s telephone number, including area code)
- ----------------------------------------------------------------------------
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
4,740,133 shares of Common Stock outstanding, par value $.80 per share, at April
30, 1997.
<PAGE>
HUDSON CHARTERED BANCORP, INC. & SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Reference
--------------
PART I
<S> <C>
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements
of Income & Expense 2
Condensed Consolidated Statements
of Cash Flows 3
Condensed Consolidated Statement
of Changes in Stockholders' Equity 4
Notes to Unaudited Condensed Consolidated
Financial Statements 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II Other Information
Item 4 - Submission of matters to a vote of security holders 25
PART IV Item 6(a) Exhibits 25
Signatures 26
</TABLE>
<PAGE>
Part 1
Item 1: Financial information
HUDSON CHARTERED BANCORP, INC. AND SUBSIDIARIES Form 10-Q
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-----------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 34,358 $ 35,059
Federal funds sold 12,100 11,350
---------- ----------
Total cash and cash equivalents 46,458 46,409
Securities
Available for sale 167,889 162,915
Held to maturity 13,373 13,568
Regulatory securities 2,755 2,755
Loans held for sale 134 168
Loans (see notes)
Gross loans 451,064 451,751
Allowance for loan losses (9,452) (9,302)
---------- ----------
Net loans 441,612 442,449
Premises and equipment, net 16,277 16,249
Accrued income 5,729 5,191
Other assets 8,404 7,171
---------- ----------
TOTAL ASSETS $ 702,631 $ 696,875
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (see notes)
Non-Interest bearing $ 134,848 $ 142,256
Interest bearing 496,407 483,570
---------- ----------
Total deposits 631,255 625,826
Notes payable 1,843 1,854
Other liabilities 4,222 4,030
---------- ----------
TOTAL LIABILITIES 637,320 631,710
STOCKHOLDERS' EQUITY (see notes)
Common stock 3,871 3,854
Common paid-in capital 41,226 40,863
Retained earnings 23,057 21,830
Net unrealized securities (losses) gains (448) 296
Employee stock ownership plan (118) (129)
Treasury stock (2,277) (1,549)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 65,311 65,165
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 702,631 $ 696,875
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
- 1 -
<PAGE>
HUDSON CHARTERED BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE
(dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
3/31/97 3/31/96
------------ ------------
<S> <C> <C>
Interest income:
Loans, including fees $9,951 $9,746
Federal funds sold 180 418
Taxable securities 1,818 2,015
Tax-exempt securities 743 524
------- -------
Total interest income 12,692 12,703
Interest expense 4,965 5,165
------- -------
Net interest income 7,727 7,538
Provision for loan loss 700 600
------- -------
Net interest income
after provision for loan losses 7,027 6,938
------- -------
Noninterest income:
Service charges and fees 1,020 1,010
Trust earnings 163 164
Gains on sales of securities, net 9 73
Gains on sales of loans, net 24 56
Other income 361 242
------- -------
Total noninterest income 1,577 1,545
------- -------
GROSS OPERATING INCOME 8,604 8,483
------- -------
Noninterest expense:
Salaries and employee benefits 3,020 2,987
Net occupancy and equipment expense 1,069 1,008
FDIC insurance 21 7
Stationary & supplies 113 151
Telephone 130 83
Other real estate owned 36 26
Other expenses 1,027 1,127
------- -------
Total noninterest expense 5,416 5,389
------- -------
Income before income taxes 3,188 3,094
Income taxes 1,049 1,081
------- -------
Net income $2,139 $2,013
======= =======
Weighted average common shares outstanding:
Primary 4,892,000 4,386,000
Fully diluted 4,892,000 4,831,000
Per common share data:
Primary earnings $ 0.44 $ 0.44
Fully diluted earnings 0.44 0.42
Cash dividends declared 0.18 0.16
Book value outstanding
at period end $13.80 $12.85
</TABLE>
See notes to condensed consolidated financial statements.
- 2 -
<PAGE>
HUDSON CHARTERED BANCORP, INC. AND SUBSIDIARIES FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three
Months Ended
3/31/97 3/31/96
OPERATING ACTIVITIES -----------------------------------
<S> <C> <C>
Net income $ 2,139 $ 2,013
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 700 600
Depreciation and amortization 365 455
Amortization of security premiums and
accretion of discounts 53 88
Amortization of core deposit intangible 29 33
Realized gains on sales of securities and loans (33) (129)
Deferred income tax benefits (112) (112)
(Increase) decrease in other assets (1,150) 967
Increase in other liabilities 116 260
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,107 4,175
-------- --------
INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale 9,022 3,141
Proceeds from maturities of securities available for sale 3,949 9,846
Proceeds from maturities of securities held to maturity 1,478 1,887
Purchases of securities available for sale (19,240) (16,493)
Purchases of securities held to maturity (1,314) (1,489)
Sales of loans 965 2,826
Net increase in loans (770) (10,576)
Purchases of premises and equipment (393) (90)
Proceeds from sale of OREO 0 155
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (6,303) (10,793)
-------- --------
FINANCING ACTIVITIES
Net increase in deposit accounts 5,429 3,352
Proceeds from issuance of stock 319 214
Repurchase of common stock (728) (94)
Cash dividends- preferred 0 (86)
Cash dividends- common (775) (578)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,245 2,808
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 49 (3,810)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 46,409 67,853
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 46,458 $ 64,043
======== ========
CASH PAID FOR:
Interest $ 5,025 $ 6,025
Taxes 240 58
NON-CASH ITEMS
Transfer from loans to OREO $ 327 $ 56
Net change in unrealized gains (losses) recorded
on securities available for sale (1,282) (1,016)
Change in deferred taxes on net unrealized (gains)
losses recorded on securities available for sale 538 527
Conversion of Preferred Series B stock into common shares 783
</TABLE>
See notes to condensed consolidated financial statements.
- 3 -
<PAGE>
HUDSON CHARTERED BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER EQUITY
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Additional Net Unrealized
Common Paid-in Retained Gains(losses)
Stock Capital Earnings on Securities
<S> <C> <C> <C> <C>
Balance January 1, 1997 $3,854 $40,863 $21,830 $296
Net income 2,139
Cash dividends declared on common stock ($0.18 per share) (851)
Dividend reinvestment and stock purchase plan - 7,017 shares 5 176
Options exercised - 15,532 shares 12 187
Issuance of treasury stock - 22,605 shares (61)
Purchase of treasury stock - 29,408 shares
Payments on ESOP borrowings
Net unrealized loss on securities (744)
--------------------------------------------------------------
Balance March 31, 1997 $3,871 $41,226 $23,057 ($448)
===============================================================
<CAPTION>
Treasury
Stock ESOP Total
<S> <C> <C> <C>
Balance January 1, 1997 ($1,549) ($129) $65,165
Net income 2,139
Cash dividends declared on common stock ($0.18 per share) (851)
Dividend reinvestment and stock purchase plan - 7,017 shares 181
Options exercised - 15,532 shares 199
Issuance of treasury stock - 22,605 shares 61
Purchase of treasury stock - 29,408 shares (789) (789)
Payments on ESOP borrowings 1 11
Net unrealized loss on securities (744)
---------------------------------------------------------------
Balance March 31, 1997 ($2,277) ($118) $65,311
===============================================================
</TABLE>
-4-
<PAGE>
FORM 10-Q
HUDSON CHARTERED BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
- ---------------------
As permitted by the Securities and Exchange Commission, the accompanying
unaudited and condensed consolidated financial statements and notes have been
condensed and, therefore, do not contain all disclosures required by generally
accepted accounting principles. (See the notes to the financial statements for
the year ended December 31, 1996.)
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the consolidated financial
position as of March 31, 1997 and the consolidated results of operations for the
three month period ended March 31, 1997 and 1996 and the consolidated cash flows
for the three month periods ended March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
Material intercompany items and transactions have been eliminated in
consolidation.
Forward-Looking Statements
- --------------------------
The Company has made, and may continue to make, various forward-looking
statements with respect to earnings, credit quality and other financial and
business matters for the remainder of 1997 and, in certain instances, subsequent
periods. The Company cautions that these forward-looking statements are subject
to numerous assumptions, risks and uncertainties, and that statements for
subsequent periods are subject to greater uncertainty because of the increased
likelihood of changes in underlying factors and assumptions. Actual results
could differ materially from forward-looking statements.
In addition to those factors previously disclosed by the Company and those
factors identified elsewhere herein, the following factors could cause actual
results to differ materially from such forward-looking statements; pricing
pressures on loan and deposit products; actions of competitors; changes in
economic conditions; the extent and timing of actions of the Federal Reserve
Board; customer deposit disintermediation; changes in customers' acceptance of
the Company's products and services; other normal business risks such as credit
losses, litigation, etc.; and the extent and timing of legislative and
regulatory actions and reform.
The Company's forward-looking statements speak only as of the date on which such
statements are made. By making any forward-looking statements, the Company
assumes no duty to update them to reflect new, changing or unanticipated events
of circumstances.
5
<PAGE>
Earnings Per Share
- ------------------
On March 3, 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS" No. 128), Earnings per
Share. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. Earlier application
is not permitted. Restatement of all prior-period earnings per share "("EPS")
data presented is required.
SFAS No. 128 establishes standards for computing and presenting "Basic" and
"Diluted" EPS. SFAS No. 128 states that "Basic EPS" excludes dilution and is
computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period; "Diluted
EPS" reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that would then share in the earnings
of the entity. "Basic EPS", replaces the presentation of "Primary EPS", while,
"Diluted EPS" is computed similarly to "Fully Diluted EPS" pursuant to APB
Opinion No. 15 (APB 15).
On a pro forma basis, the effect of this statement will be to report earnings
per share as follows:
Earnings per share as reported (per APB 15):
<TABLE>
<CAPTION>
Three months ended
------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Primary earnings per share $0.44 $0.44
Fully diluted earnings per share 0.44 0.42
Pro forma earnings per share (per SFAS No. 128):
<CAPTION>
Three months ended
------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Basic earnings per share $0.45 $0.45
Diluted earnings per share 0.44 0.42
</TABLE>
Transfers and Servicing of Financial Assets
- -------------------------------------------
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," specifies accounting and reporting standards
for transfers and servicing of financial assets and extinguishments of
liabilities and for distinguishing whether a transfer of financial assets in
exchange for cash or other consideration should be accounted for as a sale or as
a pledge of collateral in a secured borrowing. SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996, except for certain provisions (relating to
the accounting for secured borrowings and collateral and the accounting for
transfers and servicing of repurchase agreements, dollar
6
<PAGE>
rolls, securities lending and similar transactions) which have been deferred
until January 1, 1998 in accordance with SFAS No. 127, "Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125." The adoption of
these standards did not have a material impact on the Bank's consolidated
financial statements.
Loans
- -----
Major classifications of loans (excluding loans held for sale) are summarized
below (in thousands):
<TABLE>
<CAPTION>
At March 31, 1997 At December 31, 1996
----------------- --------------------
<S> <C> <C>
Commercial and industrial $74,209 $71,887
Consumer installment 82,597 80,998
Real estate - construction 12,303 12,227
Real estate - mortgage 275,819 280,425
Other loans 6,270 6,214
-------- --------
Total $451,198 $451,751
======== ========
<CAPTION>
Deposits
- --------
Major classifications of deposits are summarized below (in thousands):
At March 31, 1997 At December 31, 1996
----------------- --------------------
<S> <C> <C>
Demand deposits $134,848 $142,256
NOW accounts 50,316 47,304
Money market deposit account 68,436 63,871
Savings accounts 214,354 210,130
Time deposits under $100,000 125,939 121,762
Time deposits over $100,000 37,362 40,503
------- -------
Total $631,255 $625,826
======== ========
</TABLE>
7
<PAGE>
Securities
- ----------
Securities consist of the following (in thousands):
<TABLE>
<CAPTION>
At March 31, 1997 At December 31, 1996
-------------------------------------- --------------------------------------
Carrying Amortized Fair Carrying Amortized Fair
Amount Cost Value Amount Cost Value
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
US Treasury:
Available for Sale $58,378 $58,802 $58,378 $54,780 $54,716 $54,780
US Gov't Agencies:
Available for Sale 21,466 21,353 21,466 29,032 28,858 29,032
Obligations of States and
Political Subdivisions:
Available for Sale 59,598 60,036 59,598 54,574 54,247 54,574
Held to Maturity 13,298 13,298 13,538 13,543 13,543 13,879
Other Securities:
Available for Sale 28,447 28,480 28,447 24,529 24,594 24,529
Held to Maturity 75 75 75 25 25 25
Regulatory Securities 2,755 2,755 2,755 2,755 2,755 2,755
--------------------------------------------------------------------------------
Total Securities $184,017 $184,799 $184,257 $179,238 $178,738 $179,574
================================================================================
Total Available for Sale $167,889 $168,671 $167,889 $162,915 $162,415 $162,915
Total Held to Maturity 13,373 13,373 13,613 13,568 13,568 13,904
Regulatory Securities 2,755 2,755 2,755 2,755 2,755 2,755
--------------------------------------------------------------------------------
Total Securities $184,017 $184,799 $184,257 $179,238 $178,738 $179,574
================================================================================
</TABLE>
At March 31, 1997 the net unrealized loss on Securities Available for Sale (net
of tax effect of $334,000) that was included as a separate component of
stockholders' equity was $(448,000).
8
<PAGE>
Earnings per common share (1996 Data adjusted for 10% stock dividend)
- -------------------------
Primary earnings per common share is computed as follows (in thousands, except
per share data):
<TABLE>
<CAPTION>
Three months ended
March 31, 1997
----------------------
1997 1996
---- ----
<S> <C> <C>
Weighted average common shares outstanding 4,735 4,308
Net effect of dilutive stock options (at average market price)
157 78
----- -----
Total "primary" shares 4,892 4,386
===== =====
Net income $2,139 $2,013
Less preferred stock dividends declared 0 104
------ ------
Net income applicable to common stock $2,139 $1,942
====== ======
"Primary" earnings per common share $ 0.44 $ 0.44
====== ======
<CAPTION>
Fully diluted earnings per common share is computed as follows (in thousands, except per share data):
Three months ended
March 31, 1997
----------------------
1997 1996
---- ----
Weighted average common shares outstanding 4,735 4,308
Net effect of dilutive stock options (at the
greater of average or period end market price) 157 103
Assumed conversion of Series B, preferred stock
0 419
------ ------
Total "fully diluted" shares 4,892 4,830
====== ======
Net income applicable to common stock $2,139 $2,013
====== ======
"Fully diluted" earnings per common share $0.44 $0.42
====== ======
</TABLE>
9
<PAGE>
Stockholders' Equity
- --------------------
Authorized common stock, $.80 par value, is 20,000,000 shares. Issued and
outstanding shares at March 31, 1997 compared to December 31, 1996, were
4,731,812 and 4,308,029, respectively. The Company paid a 10% stock dividend in
January 1997, which increased common shares outstanding by 430,802 shares.
10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Financial Condition
- -------------------
The Company's financial condition on March 31, 1997 reflected total assets of
$702.1 million or an increase of $5.2 million or .75% over total assets at
December 31, 1996. Net loans decreased some $.7 million or 1.6% to $451.2
million at March 31, 1996. Cash and cash equivalents remained virtually
unchanged at $46.4 million at December 31, 1996 vs. $46.5 million at March 31,
1997. Other assets increased by $.8 million. Aggregate securities investments
were $184.5 million at March 31, 1997, an increase of $5.2 million or 2.9% from
the level at December 31, 1996, funded by the $5.4 million increase in deposits.
During the first quarter of 1997, the Bank wrote new loan originations of $27.7
million. However, normal amortization, prepayments and sales of loans into the
secondary market outpaced this by approximately $700,000 resulting in a slight
decline in loans outstanding at March 31, 1997 compared to December 31, 1996.
The net decline arose solely in real estate mortgage loans which fell $4.5
million (which includes a $3.5 million payoff of a loan to one borrower). Such
real estate loans were $288.1 million at March 31, 1997 vs. $292.6 at December
31, 1996. Commercial loans increased $2.3 million or 3.2% to $74.2 million, and
consumer installment, and other loans increased $1.6 million or 2% to $88.9
million at March 31, 1997.
Period end total deposits increased $5.4 million or .9% in the first three
months of 1997 to $631.3 million. Of this amount, total Public (Municipal) Funds
increased $9.3 million or 19.1% to $58 million and total non-public funds
decreased $3.9 million or .7% to $573.3 million, which movement reflects, in
large measure, seasonal municipal and town tax collection patterns. The decrease
in period end nonpublic funds of $3.9 million is principally attributable to the
usual first quarter decline historically experienced by the Bank in the demand
deposit category.
[In fact, average demand deposits for the three months ended March 31, 1997 were
-------
$134.0 million compared to $128.8 million for the same period in 1996; an
increase of $5.2 million.] Further management believes the decline in NOW
accounts compared to December 31, 1996, represents a continued migration of
these balances to higher interest products (time and savings accounts). These
declines were somewhat offset by an increase in savings accounts (principally
the Bank's Merit product) due to promotions in the first quarter of 1997, and
the new Orange County, N.Y. branches. However, the impact of such deposit
migration on the Company's overall average cost of funds is mitigated by the
relatively high level of the Company's demand deposit base. The following tables
summarize the net changes in public (municipal) fund and non-public fund
deposits from December 31, 1996 to March 31, 1997 (in thousands):
11
<PAGE>
<TABLE>
<CAPTION>
Public Funds
Percent
Change
Balance Balance Net over
12/31/96 3/31/97 Change Y/E`96
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Demand accounts $2,239 $3,068 $829 37.0%
NOW accounts 10,296 14,086 3,790 36.8
Money market accounts 11,136 15,374 4,238 38.1
Savings accounts 3,046 3,271 225 7.4
Time deposits 21,929 22,156 227 1.0
-------------------------------------------------------------------
Total public deposits $48,646 $57,955 $9,309 19.1%
===================================================================
<CAPTION>
Non Public Funds
Percent
Change
Balance Balance Net over
12/31/96 3/31/97 Change Y/E`96
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Demand accounts $140,017 $131,780 $(8,237) (5.9)%
NOW accounts 37,008 36,230 (778) (2.1)
Money market accounts 52,735 53,062 327 .6
Savings accounts 207,084 211,083 3,999 1.9
Time deposits 140,336 141,145 809 .6
------------------------------------------------------------------
Total non public deposits $577,180 $573,300 $(3,880) (.7)%
==================================================================
</TABLE>
12
<PAGE>
Total stockholders' equity showed an increase of $146,000 or .2%. This
increase arises from net income of $2,139,000, for the three months ended
March 31, 1997 and additional common stock of $380,000 issued through the
dividend reinvestment plan and the exercise of stock options, partially
offset by dividends declared of $851,000, purchases of treasury stock of
$728,000, and a decline of $744,000 (after tax) in the unrealized market
value of investment securities held as "available for sale" due to movement
in market rates.
Results of Operations
---------------------
Interest income as reported, for the tree months ended March 31,1997,
compared to the same period in 1996, decreased $11,000 while interest
expense decreased by $200,000. Ghis resulted in an increase in net interest
income of $189,000. Provision for loan losses increased by $100,000. Total
non-interest expenses decreased by $27,000. Net income increased by $126,000
or 6.3%. Fully diluted earnings per share increased $.02 to $.44 for the
three months of 1997 vs. 1996.
13
<PAGE>
Net income and earnings per common share data is presented in the following
table:
<TABLE>
<CAPTION>
Three months ended
3/31/97 3/31/96
------- -------
<S> <C> <C>
Net income (in thousands) $2,139 $2,013
Per common share:
Primary earnings $0.44 $0.42
Fully diluted earnings $0.44 $0.44
</TABLE>
The Company's return on assets, return on equity and return on common equity for
the three months ended March 31, 1997 and 1996, are detailed in the table below:
<TABLE>
<CAPTION>
Three months ended
3/31/97 3/31/96
------- -------
<S> <C> <C>
Return on assets 1.23% 1.17%
Return on total stockholders' equity 13.11 13.35
Return on common equity 13.11 14.10
</TABLE>
Interest income
- ---------------
On a tax equivalent basis, gross interest income increased by $101,000 or .8%
for the three months ended March 31, 1997 compared to the same period in 1996.
Total interest expense decreased by $200,000 or 3.9% for the three months period
ended March 31, 1997 as compared to the three months ended March 31, 1996. For
the first three months of 1997, the Company experienced a net increase in
average earning assets compared to the same period of 1996 of $9.1 million.
Average loans increased by $24.2 million.
Loan growth was principally funded by an decrease in average securities and Fed
funds sold of $15.1 million for the three month period ended 1997 compared to
1996, and the increase in average shareholders' equity.
14
<PAGE>
The table below sets forth the consolidated average balance sheets for the
Company for the periods included. Also set forth is information regarding
weighted average yields on interest-earning assets and weighted average rates
paid on interest-bearing liabilities.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (1) $449,884 $9,951 8.85% $425,707 $9,746 9.16%
Taxable Securities 120,859 1,818 6.02% 133,568 2,015 6.03%
Tax-exempt Securities (2) 60,706 1,117 7.36% 44,899 786 7.00%
Fed Funds Sold 13,615 180 5.29% 31,830 418 5.25%
-------- ------ -------- ---
Total Interest Earning Assets 645,064 13,066 8.10% 636,004 12,965 8.15%
Cash & Due from Banks 32,417 30,866
Premises & Equipment 16,347 16,918
Other Assets 12,524 14,121
Allowance for Loan Losses (9,406) (8,885)
-------- -------
Total Assets $696,946 $689,024
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-Bearing Liabilities:
Savings Deposits $209,436 $2,072 3.96% $206,834 $2,049 3.96%
NOW Accounts 49,676 147 1.18% 49,623 153 1.23%
Money Market Accounts 67,673 576 3.40% 70,006 585 3.34%
Time Deposits 163,238 2,144 5.25% 167,122 2,351 5.63%
Borrowed Funds 1,848 26 5.63% 1,891 27 5.71%
-------- ------ -------- ---
Total Interest-Bearing Liabilities 491,871 4,965 4.04% 495,476 5,165 4.17%
Noninterest-Bearing Liabilities:
Demand Deposits 133,963 128,751
Other 5,873 4,465
-------- --------
Total Noninterest-Bearing Liabilities 139,836 3.14% 133,216 3.29%
Stockholders' Equity 65,239 60,332
-------- --------
Total Liabilities and
Stockholders' Equity $696,946 $689,024
======== ========
Net interest Margin 8,101 5.02% 7,800 4.90%
Ratio of Average
Interest-Earning Assets to
Average Interest-Bearing
Liabilities 131.14% 128.36%
Less Tax Equivalent Adjustments (374) (262)
------ --------
Net Interest Income $7,727 4.79% $7,538 4.74%
====== ====== =====
</TABLE>
(1) Average Balances include non-accrual loans.
(2) Tax Equivalent Yields on tax-exempt securities based on a Federal tax rate
of 34%.
15
<PAGE>
The following table reflects the effects of changes in volumes and interest
rates for each of the same categories on a tax equivalent basis:
Rate/Volume Analysis (in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 vs. 1996
-----------------------------------------------------------------
Increase (Decrease) due to
-----------------------------------------------------------------
Volume Rate Net
------ ---- ---
<S> <C> <C> <C>
Interest Income:
Loans $ 535 $(330) $205
Taxable investment securities (191) (6) (197)
Tax-exempt investment securities 291 40 331
Federal funds sold (241) 3 (238)
------------ ------------- ------------
Total interest income 394 (293) 101
Interest expense:
Savings deposits 26 (3) 23
NOW/accounts (6) (6)
Money market accounts (20) 11 (9)
Time Deposits (51) (156) (207)
Borrowed funds (1) (1)
------------ ------------- ------------
Total interest expense (46) (154) (200)
------------ ------------- ------------
Net interest margin 440 (139) 301
Less tax equivalent affect (98) (14) (112)
------------ ------------- ------------
Net interest income $342 $(153) $189
============ ============= ============
</TABLE>
Average yields on interest earning assets decreased .05 to 8.10% for the three
months ended March 31, 1997 vs. 1996, as a result of lower yields earned on
loans during the quarter, primarily due to a lower average prime rate during the
first quarter of 1997, compared to the first quarter of 1996. The average cost
of interest-bearing liabilities decreased .13 to 4.04% in the same period,
primarily due to $17 million of promotional certificates of deposit which
matured in the second quarter of 1996. Net interest margin on a tax equivalent
basis increased from 4.90% to 5.02% for the three months ended March 31, 1997
compared to the same period in 1996. Overall, variances due to changes in rates
produced a $153,000 decrease in net interest income in the first quarter of 1997
compared to the same period in 1996, while variance due to changes in volume
(principally due to an increase in average earning assets of $9.1 million)
contributed an increase of $342,000 in net interest income.
16
<PAGE>
The net effect was that net interest income before provisions for loan losses
increased to $7.7 million for the three months ended March 31, 1997 compared to
$7.5 million for the comparable period in 1996, or an increase of $.2 million
(2.5%).
Provision for loan losses and credit quality
- --------------------------------------------
The loan loss provision for the three month period ended March 31, 1997 was
$700,000 compared to $600,000 for the comparable period in 1996, a 16.7%
increase. Total net charge-offs for the three months of 1997 were $550,000,
compared to $589,000 for the same period in 1996. The ratio of net chargeoffs to
average loans, on an annualized basis, decreased to .49% in the first three
months of 1997 vs. .53% for the full year of 1996.
Nonperforming assets remained constant at $6.1 million at March 31, 1997
compared to December 31, 1996. While there was turnover in the Company's OREO
portfolio, OREO balances outstanding of $1.0 million showed an increase of
$358,000 at March 31, 1997 from year end 1996, and non-performing loans
decreased by some $392,000, from $5.5 million to $5.1 million. The change in
nonperforming loans is attributable to a $606,000 decrease in nonperforming
construction/land development and real estate loans, and a $108,000 decline in
consumer loans, offset by a $322,000 increase in nonperforming commercial and
industrial loans. The Company's ratio of loan loss allowance to non-performing
loans stood at 187% at March 31, 1997 compared to 169% at year-end 1996, and the
allowance represented 2.09% of loans vs. 2.06% at the end of 1996. The
period-end ratio of non-performing assets to total assets was relatively
unchanged at .86% at March 31, 1997 vs. .88% at December 31, 1996.
These nonperforming assets represent 119 loans or properties of which on1y 17
have balances in excess of $100,000, and no loan has a balance greater than
$350,000. Of the total nonperforming assets, 30.8% is secured by residential
property, 36.2% secured by commercial property, and 33% by other assets or
unsecured.
Provisions for loan losses are based on management's assessment of risk of loss
inherent in the loan portfolio and as such reflect both trends in local economic
conditions and the categorization of the credit quality of individual loans.
Such assessment is ongoing, and may not directly reflect the charge-offs taken
in any accounting period, although the trend in charge-offs is an important
element in the evaluation of the adequacy of the allowance for loan losses.
Provisioning policy during the recent years has resulted in a ratio of allowance
for loan losses to total loans of approximately 2.0%. The ratio of the allowance
for loan losses to total nonperforming loans does not reflect collateral values,
although 67% of all of the Bank's nonperforming assets are collateralized by
real estate.
Management believes that the allowance for loan losses is adequate to cover the
risk of loss inherent in the portfolio but no assurance can be given that the
current apparent economic stabilization of the Company's overall market area
will not be unsettled by future events. Any such developments would be expected
to adversely effect the financial performance of the Company.
17
<PAGE>
The table below summarizes the Company's loan loss experience for the periods
indicated:
<TABLE>
<CAPTION>
For the three months For the year
ended March 31, ended December 31,
1997 1996 1996 1995 1994
------------------------ ----------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $9,302 $8,770 $8,770 $8,326 $7,322
Chargeoffs:
Commercial & industrial 404 208 889 411 350
Consumer installment & other 143 123 554 593 292
Real estate mortgage 68 342 1,289 1,164 1,059
------------------------ ----------------------------------
Total charge-offs 615 673 2,732 2,168 1,701
Recoveries:
Commercial 6 3 89 75 63
Installment 5 54 130 193 153
Real estate 54 27 195 44 20
------------------------ ----------------------------------
Total recoveries 65 84 414 312 236
------------------------ ----------------------------------
Net charge-offs (550) (589) (2,318) (1,856) (1,465)
Provision for Loan Losses 700 600 2,850 2,300 2,400
Transfers, other * 69
------------------------ ----------------------------------
Balance at end of period $9,452 $8,781 $9,302 $8,770 $8,326
======================== ==================================
Ratio of net charge-offs to average
loans outstanding during the period
(annualized) .49% .55% .53% .43% .37%
Allowance for loan losses as a
percent of period-end loans 2.09% 2.05% 2.06% 2.08% 1.93%
Allowance as a percent of
non-performing loans 187% 143% 169% 166% 163%
Nonperforming loans and OREO
to total loans and OREO 1.35% 1.53% 1.36% 1.53% 1.45%
</TABLE>
* An adjustment of $69,000 was transferred to the allowance for loan losses as
a result of the aquisition of loans of the First National Bank of Amenia .
18
<PAGE>
The table below summarizes the Comany's nonperforming assets and restructured
loans at the dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
at March 31, at December 31,
1997 1996 1996 1995 1994
---------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans: (1)
Real estate mortgage $2,720 $4,043 $3,503 $3,246 $3,866
Commercial & Industrial 997 1,043 712 1,013 200
Consumer & other 196 105 313 148 39
---------------------------- ----------------------------------------
Total nonaccrual loans 3,913 5,191 4,528 4,407 4,105
Loans 90 days or more past due and
still accruing:
Real estate mortgage 310 98 216 28 620
Commercial & industrial 264 104 193 476 84
Consumer & other 31 84 22 18 191
---------------------------- ----------------------------------------
Total 90 days past due accruing
605 286 431 522 895
Restructured - real estate 532 235 534 349 119
---------------------------- ----------------------------------------
Total non-performing and restructured
loans 5,050 5,712 5,493 5,278 5,119
Percent of total loans 1.13% 1.28% 1.22% 1.23% 1.18%
Other real estate owned 1,011 1,120 653 1,196 1,150
---------------------------- ----------------------------------------
Total non-performing assets $6,061 $6,832 $6,146 $6,474 $6,269
============================ ========================================
Nonperforming assets as a percent of
total assets .86% .97% .88% .93% .97%
============================ ========================================
</TABLE>
(1) Nonaccrual status denotes loans on which, in the opinion of management, the
collection of interest is unlikely, or loans that meet other nonaccrual criteria
as established by regulatory authorities. Payments received on loans classified
as nonaccrual are either applied to the outstanding principal balance or
recorded as interest income, depending upon management's assessment of the
collectibility of the loan.
19
<PAGE>
Other real estate owned totals $1,011,000 at March 31, 1997 and includes
fourteen properties acquired through foreclosure: two parcels of land,
nine residences, and two non-farm nonresidential properties. Of this
amount, there are contracts currently in place for sales totaling
approximately $347,000. Management believes that the carrying values of
such properties adequately reflect the risk of loss in their orderly
disposal.
At March 31, 1997, the Company had approximately $10.7 million in loans
requiring special attention (substandard), in addition to the
nonperforming loans and other nonperforming assets noted above. Such
loans are being monitored so that if present concerns about the borrowers
ability to comply with repayment terms becomes evident, management will
be able to quickly assess impairment. Approximately 70% of all such loans
are collateralized by real estate. Further deterioration in such
borrowers' financial position may result in classifying them as
nonperforming assets. The following table summarizes impaired loans for
the periods indicated (in thousands):
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Impaired loans with allowance established
($780,000 and $844,000, respectively) $3,631,000 $3,202,000
Impaired loans with a writedown
($1,094,000 and $1,197,000 respectively) 1,419,000 1,750,000
---------- ----------
Total $5,050,000 $4,952,000
========== ==========
Average amount of impaired loans
for the period $5,001,000 $4,682,000
========== ==========
</TABLE>
The following table shows, at the dates indicated, the allocation of the
allowance for loan losses, by category, and the percentage of loans in
each category to total gross loans (dollars in thousands):
<TABLE>
<CAPTION>
March 31, March 31, December 31,
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
Balance at end # of # of # of # of # of
of period Amount total Amount total Amount total Amount total Amount total
applicable to: loans loans loans loans loans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial &
industrial $ 2,571 16.45% $ 2,376 17.28% $ 2,476 15.9% $ 2,355 16.6% $ 2,010 22.10%
Consumer & other 1,993 19.70 1,466 15.51% 1,702 19.9% 1,400 16.1% 1,363 12.20%
Real estate -
construction 2.73 2.10% 2.7% 3.1% 1.50%
Real estate -
mortgage 3,871 61.12 4,151 64.11 3,985 62.1% 4,247 64.2% 4,100 64.20%
Unallocated 1,017 788 1,139 768 853
-----------------------------------------------------------------------------------------------------------------
Total $ 9,452 100.00% $ 8,781 100.00% $ 9,302 100.00% $ 8,770 100.00% $ 8,326 100.00%
=================================================================================================================
</TABLE>
20
<PAGE>
Noninterest Income
- ------------------
Noninterest income increased $32,000 in the first three months of 1997 to
$1,577,000 compared to the same period of 1996. Net gains on sales of loans
declined $32,000, and net gains on sales of available for sale securities
declined by $62,000, and merchant processing income was eliminated due to the
sale of the merchant processing portfolio in the last quarter of 1996. These
declines were offset by an increase in other noninterest income to $119,000
(primarily annuity sales commissions)
Other Expenses
- --------------
In total all other expenses were up slightly by $27,000 or .5% to $5,416,000 for
the first three months of 1997 compared to the same period of 1996.
Salaries and employee benefits increased $33,000 in the first three months of
1997 compared to 1996, mainly due to the personnel costs associated with the
Bank's new Orange County branches ($120,000), and other increases in
compensation related to new hires and normal salary increases ($180,000). Such
increases were substantially offset by a change in the recorded amount of salary
and benefit expenses related to stock appreciation rights' of $150,000. In the
first quarter of 1997, all officers who had stock appreciation rights in tandem
with options, waived such rights, but retained the rights to the related
underlying stock options. As such, the Company recorded a one-time recovery of
$120,000.
Occupancy and equipment expense showed an increase of $61,000 over the same
period in 1996, again mainly due to the Bank's expansion into Orange County.
Telephone expense shows an increase due mainly to a refund of $24,000 received
in 1996. Other real estate owned expense increased $10,000 to $36,000 for the
three months ended March 31, 1997 as a result of additional OREO properties
carried in 1997 vs. 1996. These increases in expenses were partially offset by a
decrease in supply expense of $38,000 to $113,000 for the three months ended
March 31, 1997 vs. 1996. Insurance expense also declined $30,000 for the first
three months of 1997 as compared to 1996 due to the rebidding of the Bank's
insurances in the second half of 1996.
Income tax expense decreased $32,000, or 3%, as a result of the Company's
increased investment in tax exempt securities. The Company's effective tax rate
was 32.9% and 34.9% for the three months ended March 31, 1997 and 1996,
respectively.
Asset/Liability Management
- --------------------------
Management believes the Company's ability to plan for changes in interest rates
is a significant profitability factor. The Company's primary objective in
managing interest rate sensitivity is to maintain a broadly balanced position
between interest sensitive assets and liabilities in order to minimize the
impact of significant interest rate fluctuations. Further, the historical level
of demand deposits (approximately 20% of total deposits) helps to mitigate
increases in interest rates and reduces the average cost of all liabilities to a
level significantly below the average cost of only interest-bearing liabilities.
21
<PAGE>
The following chart (in thousands) provides a quantification of the Company's
interest rate sensitivity gap as of March 31, 1997 based upon the known
repricing dates of certain assets and liabilities and the assumed repricing
dates of others. As shown in the chart below, at March 31, 1997, assuming no
management action, the Company's near-term interest rate risk is to a declining
rate environment over the next three months of 1997. Approximately 3.3% of the
Company's interest rate sensitivity is related to changes in short term interest
rates, particularly the prime rate. Thus, net interest revenue would be expected
to be adversely affected by a decline in interest rates below the rates embedded
in the current yield curve. However, interest rate risk exposure in the one year
time frame is to a rising rate scenario, principally due to a higher level of
fixed-rate liabilities relative to assets that would reprice in that time frame.
This chart displays only a static view of the Company's interest rate
sensitivity gap and does not capture the dynamics of balance sheet, rate and
spread movements nor management actions that may be taken to manage this risk.
22
<PAGE>
<TABLE>
<CAPTION>
Maturity Repricing Greater
Date (1)(2) Total One yr. than
3 months 4 months within to 5 five
or less to one yr. one yr. yrs. yrs. Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities (3) $37,858 $30,568 $68,426 $80,953 $34,638 $184,017
Fed Funds 12,100 12,100 12,100
Commercial loans (3) 76,837 5,319 82,156 13,813 643 96,612
Consumer loans (3) 33,673 19,706 53,379 70,198 2,448 126,025
Mortgage loans (3) 66,420 78,320 144,740 74,271 3,930 222,941
------- ------- ------- ------- ------ --------
Total interest
earning assets (1) 226,888 133,913 360,801 239,235 41,659 641,695
------- ------- ------- ------- ------ --------
Savings (4) 70,209 144,145 214,354 214,354
NOW (5) 50,316 50,316 50,316
MMDA (5) 68,436 68,436 68,436
Time (5) 66,726 54,801 121,527 41,763 11 163,301
--------
Other interest-bearing
liabilities 118 1,725 1,843
Total interest-bearing
liabilities 205,489 249,262 454,633 43,488 11 498,250
------- ------- ------- ------- ------ --------
Interest Sensitivity
gap (6) $21,399 $(115,349) $(93,832) $195,747 $41,648 $143,445
-------------------------------------------------------------------------------
Gap as a percent of earnings
assets 3.3% (18.0)% (14.6)% 30.5% 6.5% 22.3%
===============================================================================
</TABLE>
(1) Interest rate sensitivity gaps are defined as the fixed rate positions
(assets less liabilities) for a given time period. The gaps measure the
time weighted dollar equivalent volume of positions fixed for a
particular period. The gap positions reflect a repricing date at which
date funds are assumed to "mature" and reprice to a current market rate
for the asset or liability. The table does not include loans in
nonaccrual status or net unrealized losses recorded on
"available-for-sale" securities as of March 31, 1997.
(2) Variable rate balances are reported based on their repricing formulas.
Fixed rate balances are reported based on their scheduled contractual
maturity dates, except for certain investment securities and loans
secured by 1-4 family residential properties that are based on
anticipated cash flows.
(3) Prime-priced loans and investments are considered as 1 to 3 month
assets.
(4) Savings accounts: one half of the level of Merit savings accounts,
which reprice against changes in the Federal Reserve Discount rate, are
classified as three months or less maturities. Managements' analysis of
changes in levels indicate that changes in this rate are approximately
half as often as changes in other market rates. The balance of these
accounts and other savings accounts are classified as four months to
one year maturities, reflecting the lagging period that historically
exists in rates paid on passbook and savings accounts.
(5) Other deposits: Time deposits are classified by contractual maturity or
repricing frequency. NOW accounts are classified as four months to one
year maturities. The balance of deposits are considered less than three
month maturities, including all money market deposit accounts. The
interest rate sensitivity assumptions presented for these deposits are
based on historical and current experiences regarding balance retention
and interest rate repricing behavior.
(6) Non-interest bearing deposit liabilities were approximately $135
million at March 31, 1997.
23
<PAGE>
Capital Resources and Liquidity
- -------------------------------
The following summarizes the minimum capital requirements and capital position
at March 31, 1997:
<TABLE>
<CAPTION>
Capital Position at Minimum Capital
March 31, 1997 Requirements
-------------------- ---------------
Bank Only Consolidated
--------- ------------
<S> <C> <C> <C>
Total Capital
to Risk-Weighted Assets 12.50% 14.98% 10%
====== ======
Tier 1 Capital
to Risk-Weighted Assets 11.24 13.72 6
===== =====
Tier 1 Capital to Average
Assets (Leverage Ratio) 7.62 9.29 5(1)
==== ====
</TABLE>
(1) Regulatory authorities require all but the most highly rated banks and bank
holding companies to have a leverage ratio of at least between 4.0% - 5.0%.
The Company believes that its cash and cash equivalents of $46.5 million in
addition to its securities available for sale of $167.9 million at March 31,
1997 are sufficient to meet both the funding needs of its borrowers and the
liquidity requirements of its depositors.
24
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders.
- -------------------------------------------------------------
The Company held its Annual Meeting of Shareholders on May 1, 1997. The
following matters were approved by the Company's shareholders at the meeting:
(1) Election of four directors for three year terms expiring in 2000, and
one director for a two year term expiring in 1999.
The total shares outstanding on the record date of March 31, 1997 were
4,732,057.
Individually votes cast were as follows:
For a three year term expiring 2000:
<TABLE>
<CAPTION>
Votes FOR Votes WITHHELD
--------- --------------
<S> <C> <C>
R. Abel Garraghan 3,502,153 1,738
Warren R. Marcus 3,502,153 1,738
Robert J. Marvin 3,502,112 1,778
Lewis J. Ruge 3,501,984 1,907
For a two year term expiring 1999:
Randolph L. Williams 3,502,153 1,738
Other Directors continuing: Term expires in
---------------
H. Todd Brinckerhoff 1998
Edward vK. Cunningham, Jr. 1998
Tyler Dann 1998
Robert L. Patrick 1998
John Charles VanWormer 1998
Robert M. Bowman 1999
T. Jefferson Cunningham III 1999
Robert R. Fraleigh 1999
</TABLE>
Item 6(a). Exhibits
- --------------------
Exhibit 27 Financial Data Schedule
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed in its behalf by the undersigned
thereunto duly authorized.
Hudson Chartered Bancorp, Inc.
(Registrant)
Date: May 12, 1997 /s/ Paul A. Maisch
------------------
Paul A. Maisch
Duly Authorized Officer and
Principal Financial Officer
26
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
27
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 46,458
<INT-BEARING-DEPOSITS> 496,407
<FED-FUNDS-SOLD> 12,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 167,889
<INVESTMENTS-CARRYING> 16,128
<INVESTMENTS-MARKET> 16,368
<LOANS> 451,198
<ALLOWANCE> 9,452
<TOTAL-ASSETS> 702,631
<DEPOSITS> 631,255
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,222
<LONG-TERM> 1,843
0
0
<COMMON> 3,871
<OTHER-SE> 61,440
<TOTAL-LIABILITIES-AND-EQUITY> 702,631
<INTEREST-LOAN> 9,951
<INTEREST-INVEST> 2,561
<INTEREST-OTHER> 180
<INTEREST-TOTAL> 12,692
<INTEREST-DEPOSIT> 4,939
<INTEREST-EXPENSE> 4,965
<INTEREST-INCOME-NET> 7,727
<LOAN-LOSSES> 700
<SECURITIES-GAINS> 9
<EXPENSE-OTHER> 5,416
<INCOME-PRETAX> 3,188
<INCOME-PRE-EXTRAORDINARY> 3,188
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,139
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 8.10
<LOANS-NON> 3,913
<LOANS-PAST> 605
<LOANS-TROUBLED> 532
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,302
<CHARGE-OFFS> 615
<RECOVERIES> 65
<ALLOWANCE-CLOSE> 9,452
<ALLOWANCE-DOMESTIC> 8,435
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,017
</TABLE>
