SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-17122
FIRST FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0866076
(State or other (I.R.S. Employer Identification No.)
jurisdiction of incorporation
or organization)
34 Broad Street, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 529-5800
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
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number
of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding Shares at
Common Stock April 30, 1996
$.01 Par Value 6,367,484
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Consolidated Statements of Financial Condition
at March 31, 1996 and September 30, 1995 1
Consolidated Statements of Income for the Three 2
Months Ended March 31, 1996 and 1995
Consolidated Statements of Income for the Six
Months Ended March 31, 1996 and 1995 3
Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 1996 and 1995 4
Notes to Financial Statements 5
Management's Discussion and Analysis of Results
of Operations and Financial Condition 11
PART II - OTHER INFORMATION 28
SIGNATURES 31
SCHEDULES OMITTED
All schedules other than those indicated above are omitted
because of the absence of the conditions under which they are
required or because the information is included in the Financial
Statements and related notes.
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1996 1995
(Amounts in thousands)
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 30,589 $ 24,486
Investments held to maturity (market value of $35,504 and $68,687) 35,547 68,154
Investments available for sale, at fair value 67,776 39,831
Investment in capital stock of Federal Home Loan Bank, at cost 13,513 11,982
Loans receivable, net 1,167,477 1,083,367
Mortgage-backed securities held to maturity (market value of $18,844) 18,361
Mortgage-backed securities available for sale, at fair value 95,888 82,765
Accrued interest receivable 10,014 9,275
Office properties and equipment, net 15,680 15,058
Real estate and other assets acquired in settlement of loans 2,606 3,143
Other assets 10,072 8,926
Total assets $1,449,162 $1,365,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposit accounts $1,064,047 $1,074,313
Advances from Federal Home Loan Bank 205,407 107,853
Securities sold under agreements to repurchase 39,651 44,504
Long-term debt 19,763 19,763
Advances by borrowers for taxes and insurance 4,985 6,872
Other 19,551 20,634
Total liabilities 1,353,404 1,273,939
Stockholders' equity:
Serial preferred stock, authorized 3,000,000 shares--
none issued
Common stock, $.01 par value, authorized 12,000,000 shares,
issued and outstanding 6,956,378 and 6,884,438 shares at
March 31, 1996 and September 30, 1995, respectively 70 69
Additional paid-in capital 24,335 23,776
Retained income, substantially restricted 76,214 72,814
Unrealized net gain (loss) on securities available for sale,
net of income tax 552 (74)
Treasury stock at cost, 590,437 and 578,534 shares at March 31, 1996 and
September 30, 1995, respectively (5,413) (5,176)
Total stockholders' equity 95,758 91,409
Total liabilities and stockholders' equity $ 1,449,162 $ 1,365,348
The accompanying notes are an integral part of the statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
1996 1995
(Amounts in thousands,
except per share amounts)
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest on loans and mortgage-backed securities $25,421 $21,293
Interest and dividends on investments 1,318 1,365
Other 742 572
Total interest income 27,481 23,230
INTEREST EXPENSE
Interest on deposits 12,380 11,602
Interest on borrowed money 3,838 1,923
Total interest expense 16,218 13,525
NET INTEREST INCOME 11,263 9,705
Provision for loan losses 420 26
Net interest income after provision for loan losses 10,843 9,679
OTHER INCOME
Loan servicing fees 294 315
Service charges and fees on deposit accounts 1,126 927
Real estate operations, net 9 (73)
Other 1,045 883
Total other income 2,474 2,052
GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and employee benefits 4,556 4,364
Occupancy costs 798 718
Marketing 286 238
Depreciation, amortization, rental and maintenance
of equipment 624 595
FDIC insurance premiums 644 637
Other 1,827 1,805
Total general and administrative expenses 8,735 8,357
Income before income taxes 4,582 3,374
Income tax expense 1,665 1,243
NET INCOME $ 2,917 $ 2,131
NET INCOME PER COMMON SHARE $ .46 $ 0.34
Cash dividends $ .16 $ 0.14
Weighted average shares outstanding 6,332 6,277
The accompanying notes are an integral part of the statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
March 31,
1996 1995
(Amounts in thousands,
except per share amounts)
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest on loans and mortgage-backed securities $50,014 $41,863
Interest and dividends on investments 2,634 2,678
Other 1,389 1,041
Total interest income 54,037 45,582
INTEREST EXPENSE
Interest on deposits 25,234 22,508
Interest on borrowed money 6,928 3,297
Total interest expense 32,162 25,805
NET INTEREST INCOME 21,875 19,777
Provision for loan losses 725 133
Net interest income after provision for loan losses 21,150 19,644
OTHER INCOME
Loan servicing fees 596 643
Service charges and fees on deposit accounts 2,271 1,901
Real estate operations, net (80) (163)
Other 2,034 1,594
Total other income 4,821 3,975
GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and employee benefits 8,847 8,770
Occupancy costs 1,592 1,473
Marketing 619 544
Depreciation, amortization, rental and maintenance
of equipment 1,229 1,185
FDIC insurance premiums 1,298 1,257
Other 3,876 3,504
Total general and administrative expenses 17,461 16,733
Income before income taxes 8,510 6,886
Income tax expense 3,088 2,558
NET INCOME $ 5,422 $ 4,328
NET INCOME PER COMMON SHARE $ 0.86 $ 0.69
Cash dividends $ 0.32 $ 0.28
Weighted average shares outstanding 6,320 6,274
The accompanying notes are an integral part of the statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
March 31,
1996 1995
(Amounts in thousands)
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,422 $ 4,328
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 908 869
Gain on sale of investments, net (32) (20)
Loss on sale of property and equipment, net 6
Gain on sale of real estate owned, net (78) (80)
Amortization of unearned discounts/premiums on investments 52 (27)
Increase (decrease) in deferred loan fees and discounts 113 (191)
Increase in receivables and prepaid expenses (1,885) (1,386)
Provision for loan losses 725 133
Write downs of real estate acquired in settlement of loans 41 116
Increase (decrease) in accounts payable and accrued expenses (1,464) 594
Net cash provided by operating activities 3,802 4,342
INVESTING ACTIVITIES
Proceeds from maturity of investments held to maturity 15,489 7,000
Principal collected on investments 182 380
Proceeds from sales of investments 6,963 6,418
Purchases of investments (19,087) (16,633)
Increase in loans, net (76,653) (40,556)
Net increase in credit card receivables (580) (554)
Purchase of loans (8,600) (813)
Repayment on mortgage-backed securities 9,846 5,102
Purchases of mortgage-backed securities (4,238) (3,579)
Proceeds from the sales of real estate owned 1,660 1,911
Net purchase of office properties and equipment (1,530) (1,546)
Net cash used in investing activities (76,548) (42,870)
FINANCING ACTIVITIES
Net decrease in deposit accounts (10,266) (6,051)
Proceeds from FHLB advances 128,054 63,300
Repayment of FHLB advances (30,500) (22,000)
Net purchase (repurchase) of securities sold under agreements to
repurchase (4,853) 11,216
Decrease in funds held for others (1,887) (1,940)
Proceeds from sale of common stock 560 298
Dividends paid (2,022) (1,758)
Treasury stock purchased (237) (314)
Net cash provided by financing activities 78,849 42,751
Net increase in cash and cash equivalents 6,103 4,223
Cash and cash equivalents at beginning of period 24,486 23,568
Cash and cash equivalents at end of period $ 30,589 $ 27,791
Supplemental disclosures:
Cash paid during the period for:
Interest $ 34,045 $ 27,103
Income taxes 2,250 2,831
Loans foreclosed 1,142 1,078
Loans securitized into mortgage-backed securities
Unrealized net gain on securities available for
sale, net of income tax 626 544
Transfers of securities held to maturity to available for sale 50,185
The accompanying notes are an integral part of the statements.
</TABLE>
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation
The unaudited consolidated financial statements include the
accounts of First Financial Holdings, Inc. ("the Company") and
its wholly-owned subsidiaries, First Federal Savings and Loan
Association of Charleston and Peoples Federal Savings and Loan
Association of Conway and all of their subsidiaries. All
significant intercompany items related to the consolidated
subsidiaries have been eliminated.
Earnings per Share
Earnings per share are computed by dividing earnings by the
weighted average number of shares outstanding during the period.
The weighted average shares outstanding amounted to 6,331,858 for
the quarter ended March 31, 1996 as compared to 6,277,387 for the
quarter ended March 31, 1995. The weighted average shares
outstanding amounted to 6,319,771 for the six months ended
March 31, 1996 as compared to 6,273,918 for the six months ended
March 31, 1995.
Adoption of SFAS 114 and SFAS 118
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan," ("SFAS 114") which
requires that all creditors value all specifically reviewed loans
for which it is probable that the creditor will be unable to
collect all amounts due according to the terms of the loan
agreement at the present value of expected cash flows, market
price of the loan, if available, or value of the underlying
collateral. Expected cash flows are required to be discounted at
the loan's effective interest rate. SFAS 114 is required for
fiscal years beginning after December 15, 1994.
The FASB also issued Standard No. 118, "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and
Disclosures," ("SFAS 118") that amends SFAS 114 to allow a
creditor to use existing methods for recognizing interest income
on an impaired loan and by requiring additional disclosures about
how a creditor recognizes interest income related to impaired
loans. SFAS 118 is to be implemented concurrently with SFAS 114.
On October 1, 1995, the provisions of SFAS 114 and 118 were
adopted. The adoption required no increase to the allowance for
loan losses and had no impact on net income in the first quarter
of 1996. The Company reclassified amounts of in-substance
foreclosures to non-accrual loans for consistency in treatment.
A loan is also considered impaired if its terms are modified
in a troubled debt restructuring after October 1, 1995. For
these accruing impaired loans, cash receipts are typically
applied to principal and interest receivable in accordance with
the terms of the restructured loan agreement. Interest income is
recognized on these loans using the accrual method of accounting.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks and all
investments payable on demand or with original terms of three
months or less.
Investments in Debt and Equity Securities
The Company's investments in debt securities principally
consist of U.S. Treasury securities and mortgage-backed
securities purchased by the Company or created when the Company
exchanges pools of loans for mortgage-backed securities. The
Company adopted Statement of Financial Accounting Standards
("SFAS") 115 as of September 30, 1993. In accordance with SFAS
115, the Company classifies its investments in debt securities as
held to maturity securities, trading securities and available for
sale securities as applicable.
Securities are designated as held to maturity if the Company
has the positive intent and the ability to hold the securities to
maturity. Held to maturity securities are carried at amortized
cost, adjusted for the amortization of any related premiums or
the accretion of any related discounts into interest income using
a methodology which approximates a level yield of interest over
the estimated remaining period until maturity. Unrealized losses
on held to maturity securities, reflecting a decline in value
judged by the Company to be other than temporary, are charged to
income in the Consolidated Statement of Operations.
Debt and equity securities that are bought and held
principally for the purpose of selling in the near term are
reported as trading securities. Trading securities are carried
at fair value with unrealized holding gains and losses included
in earnings.
The Company classifies securities as available for sale when
at the time of purchase it determines that such securities may be
sold at a future date or if the Company does not have the intent
or ability to hold such securities to maturity.
Securities designated as available for sale are recorded at
market value. Changes in the market value of debt and equity
securities available for sale are included in shareholders'
equity as unrealized gains or losses net of the related tax
effect. Unrealized losses on available for sale securities,
reflecting a decline in value judged to be other than temporary,
are charged to income in the Consolidated Statements of
Operations of the Company. Realized gains or losses on available
for sale securities are computed on the specific identification
basis.
Securities Sold Under Agreements to Repurchase
The Company enters into sales of securities under agreements
to repurchase (reverse repurchase agreements). Fixed coupon
reverse repurchase agreements are treated as financings. The
obligations to repurchase securities sold are reflected as a
liability and securities underlying the agreements continue to be
reflected as assets in the Consolidated Statements of Financial
Condition.
Allowance for Possible Loan Losses
The Company provides for loan losses on the allowance method.
Accordingly, all loan losses are charged to related allowances
and all recoveries are credited to the allowances. Additions to
the allowance for loan losses are provided by charges to
operations based on various factors which, in management's
judgment, deserve current recognition in estimating losses. Such
factors considered by management include the fair value of the
underlying collateral, growth and composition of the loan
portfolios, the relationship of the allowance for loan losses to
outstanding loans, loss experience, delinquency trends, and
economic conditions. Management evaluates the carrying value of
loans periodically and the allowances are adjusted accordingly.
While management uses the best information available to make
evaluations, future adjustments to the allowances may be
necessary if economic conditions differ substantially from the
assumptions used in making the evaluations. Allowances for loan
losses are subject to periodic evaluation by various regulatory
authorities and may be subject to adjustment upon their
examination.
Office Properties and Equipment
Office properties and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation is
provided generally on the straight-line method over the estimated
life of the related asset for financial reporting purposes.
Estimated lives range up to thirty years for buildings and
improvements and up to ten years for furniture, fixtures and
equipment. Maintenance and repairs are charged to expense as
incurred. Improvements which extend the useful lives of the
respective assets are capitalized. Accelerated depreciation is
utilized on certain assets for income tax purposes.
Real Estate
Real estate acquired through foreclosure is initially
recorded at the lower of cost or estimated fair value.
Subsequent to the date of acquisition, it is carried at the lower
of cost or fair value, adjusted for net selling costs. Fair
values of real estate owned are reviewed regularly and writedowns
are recorded when it is determined that the carrying value of
real estate exceeds the fair value less estimated costs to sell.
Costs relating to the development and improvement of such
property are capitalized, whereas those costs relating to holding
the property are charged to expense.
Loans Receivable and Loans Held for Sale
The Company's real estate loan portfolio consists primarily
of long-term loans secured by first mortgages on single-family
residences, other residential property, commercial property and
land. The adjustable-rate mortgage loan is the Company's primary
loan offering for portfolio lending purposes. The Company's
consumer loans include lines of credit, auto loans, marine loans,
mobile home loans and loans on various other types of consumer
products. The Company also makes shorter term commercial
business loans on a secured and unsecured basis.
Fees are charged for originating loans at the time the loan
is granted. Loan origination fees received, if any, are offset
by the deferral of certain direct expenses associated with loans
originated. The net fees or costs are recognized as yield
adjustments by applying the interest method.
Interest on loans is accrued and credited to income based on
the principal amount and contract rate on the loan. The accrual
of interest is discontinued when, in the opinion of management,
there is an indication that the borrower may be unable to meet
future payments as they become due, generally when a loan is
ninety days past due. When interest accrual is discontinued, all
unpaid accrued interest is reversed. While a loan is on non-
accrual status, interest is recognized only as cash is received.
Loans are returned to accrual status only when the loan is
reinstated and ultimate collectibility of future interest is no
longer in doubt.
Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of cost or estimated
market value in the aggregate. Net unrealized losses are
provided for in a valuation allowance by charges to operations.
Income Taxes
Effective October 1, 1992, the Company prospectively adopted
SFAS 109, "Accounting for Income Taxes", which requires an asset
and liability approach to accounting for income taxes. Under
SFAS 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes.
Reclassifications
Certain amounts previously presented in the consolidated
financial statements for prior periods have been reclassified to
conform to current classifications. All such reclassifications
had no effect on the prior period's net income or retained
earnings as previously reported.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
BASIS OF CONSOLIDATIONS AND PRESENTATION
The unaudited consolidated financial statements include the
accounts of First Financial Holdings, Inc., ("First Financial, or
the Company") and its wholly-owned subsidiaries, First Federal
Savings and Loan Association of Charleston ("First Federal") and
Peoples Federal Savings and Loan Association of Conway ("Peoples
Federal") (together, the "Associations"). All significant
intercompany items related to the consolidated subsidiaries have
been eliminated.
GENERAL
Net income for the quarter was $2.9 million, reflecting
growth in earnings of 37% compared to net income of $2.1 million
in the second quarter of 1995. On a per share basis, net income
was $.46, an increase of 35% over second quarter 1995 earnings of
$.34. Net income for the six months ended March 31, 1996 totaled
$5.4 million, or $.86 per share, compared with $4.3 million, or
$.69 per share, earned in the first six months of 1995.
Net interest income in the second quarter totaled $11.3
million compared with $9.7 million in the March 1995 quarter.
Net interest income also increased $2.1 million in the first six
months of 1996 compared with the six months ended March 31, 1995.
Other noninterest income increased approximately 21% in both the
current quarter and in the first six months of fiscal 1996
compared with comparable periods in fiscal 1995. General and
administrative expenses increased by less than 5% in both the
current quarter and in the first six months of 1996 compared with
1995. In the most recent quarter the Company's efficiency ratio
improved to 63.8% compared with 70.8% in the same quarter in
fiscal 1995.
Savings Association Insurance Fund ("SAIF") and Bank
Insurance Fund ("BIF") reforms remain unsettled. Well-
capitalized SAIF-insured institutions, such as First Federal and
Peoples Federal, continue to pay deposit insurance premiums of
$.23 per $100 of deposits on an annual basis while well-
capitalized BIF-insured institutions are subject currently to no
premiums other than a statutory fee of $2,000 per year.
Management continues to expect part of the ultimate solution to
be a one-time special assessment of approximately 80 basis points
on all assessable thrift deposits. Legislation that would have
recapitalized the SAIF was dropped from the final 1996 Budget
Appropriations package passed by Congress in late April.
Available mechanisms for recapitalizing the SAIF have narrowed in
recent weeks.
Based on assessable deposits as of the most recent quarter
ending March 31, 1996, a special assessment of 80 basis points
would result in an after-tax combined charge of approximately
$5.4 million. During the first six months of fiscal 1996, SAIF
premium expenses of $1.3 million were recorded by the
Associations based on current premium rates charged to SAIF-
insured well-capitalized institutions. For further discussion of
these issues, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Recapitalization
Proposal" in the Company's Annual Report on Form 10-K for the
year ended September 30, 1995.
BALANCE SHEET ANALYSIS
Consolidated assets of the Company totaled $1.4 billion at
March 31, 1996. During the current six months assets increased
$83.8 million, or 12.3% on an annualized basis, principally as a
result of net growth of $84.1 million in loans receivable.
Cash, Investment Securities and Mortgage-backed Securities
Cash, deposits in transit and interest-bearing deposits
increased $6.1 million during the six months and totaled $30.6
million at March 31, 1996. Investments held to maturity declined
by $32.6 million while investments available for sale increased
$27.9 million. On November 15, 1995, the Financial Accounting
Standards Board ("FASB") issued a Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities," that permitted an
enterprise to reassess the appropriateness of the classifications
of all securities held upon the initial adoption of the Special
Report provided that such reassessment and any resulting
reclassification be completed no later than December 31, 1995.
Any reclassifications from the held to maturity category
resulting from this one-time reassessment will not call into
question the intent of that enterprise to hold other debt
securities to maturity in the future. The Company evaluated its
investment position with respect to securities classified as held
to maturity in light of this new guidance on implementation.
Investment securities totaling $32.2 million were reclassified
from held to maturity to available for sale during the quarter
ending December 31, 1995.
The Company's investments and other interest-earning deposits
continue to be comprised primarily of U. S. Government and agency
securities, Federal Home Loan Bank ("FHLB") of Atlanta stock and
overnight deposits in the FHLB of Atlanta. During the first six
months of 1996 purchases of investments totaled $19.1 million.
Maturities and sales of investments totaled $22.5 million during
the first half of the year.
Mortgage-backed securities totaled $95.9 million at March 31,
1996. As mentioned above, the Company evaluated its investment
position with respect to mortgage-backed securities held to
maturity as allowed under the provisions of the Special Report of
the FASB and reclassified $18.0 million to available for sale.
All mortgage-backed securities of the Company are currently
classified as available for sale.
Loans Receivable
Loans receivable totaled $1.2 billion at March 31, 1996,
increasing $84.1 million from September 30, 1995. The principal
use of the Company's funds is the origination of mortgage and
other loans. The Company originated $145.5 million (net of
refinances) in mortgage loans, $24.2 million in consumer loans
and $13.1 million in commercial business loans during the six
months ending March 31, 1996. The Company also purchased $8.6
million in loans from correspondent originators.
Due to present market conditions, the Company has limited
growth in loans made on nonresidential properties and placed
greater emphasis on single-family lending. This policy is
expected to over time reduce the Company's exposure to commercial
real estate. The following table summarizes the composition of
the Company's gross loan portfolio (amounts in thousands):
<TABLE>
<CAPTION>
Mar. 31, Sept. 30, Mar. 31,
1996 1995 1995
<S> <C> <C> <C>
Residential (1-4 family) $ 790,956 $ 698,442 $ 624,048
Other residential 55,797 57,269 58,452
Land and lots 29,558 24,294 22,506
Commercial real estate 184,092 187,195 190,294
Home equity lines of credit 44,510 43,852 46,283
Consumer 71,096 70,729 66,599
Commercial business 27,561 27,825 25,119
Total gross loans $1,203,570 $1,109,606 $1,033,301
</TABLE>
As the above table indicates, gross loan balances increased
$94.0 million during the current period principally due to growth
in single-family loans. Outstanding commitments to originate
mortgage loans and to fund the undisbursed portion of
construction loans amounted to $52.7 million at March 31, 1996,
compared to $40.2 million at September 30, 1995. Unused lines of
credit on equity loans, consumer loans, credit cards and
commercial loans totaled $86.4 million as of March 31, 1996
compared to $89.4 million at September 30, 1995.
The Company originates the majority of its loans in its
primary market area located in the coastal region of South
Carolina. Less than 1% of total gross loans are secured by
property or collateral located outside South Carolina. In an
effort to expand mortgage lending operations and improve earning
asset growth the Company began originating mortgage loans in
other markets in 1995. The Company utilizes its existing
mortgage loan products and programs in establishing correspondent
relationships with other lenders.
Asset Quality
The following table summarizes the Company's problem assets
for the periods indicated (amounts in thousands):
<TABLE>
<CAPTION>
Mar. 31, Sept. 30, Mar. 31,
1996 1995 1995
<S> <C> <C> <C>
Non-accrual loans $7,406 $ 7,709 $ 5,877
Loans 90 days or more
past due <F1> 482 816 1,043
Renegotiated loans 9,207 11,103 11,536
Real estate and other
assets acquired in
settlement of loans 2,606 3,144 1,857
Total $19,701 $22,772 $20,313
As a percent of net loans
and real estate owned 1.68% 2.10% 2.02%
As a percent of total assets 1.36% 1.67% 1.57%
<F1> The Company continues to accrue interest on these loans.
</TABLE>
Non-accrual loans and loans contractually delinquent 90 days
or more are comprised of the following types of loans (amounts in
thousands):
<TABLE>
<CAPTION>
Mar. 31, Sept. 30, Mar. 31,
1996 1995 1995
<S> <C> <C> <C>
Residential (1-4 family) $3,123 $2,087 $2,948
Other residential 164 172
Land and lots 1,327 2,375 420
Commercial real estate 1,488 2,292 2,290
Home equity lines of credit 22 22 17
Consumer 150 233 145
Commercial business 1,614 1,516 928
Total $7,888 $8,525 $6,920
</TABLE>
Loans on non-accrual and loans 90 days or more delinquent
totaled $7.9 million at March 31, 1996, declining $637 thousand
during the first six months of fiscal 1996.
Allowance for Loan Losses
The allowance for loan losses represents a reserve for
potential losses existing in the loan portfolio. The adequacy of
the allowance for loan losses is evaluated at least quarterly
based, among other factors, on a continuous review of the
Company's loan portfolio, with particular emphasis on adversely
classified loans.
The following table sets forth the allocation of the
Company's allowance for loan losses (excluding mortgage-backed
securities) at March 31, 1996 and September 30, 1995 (amounts in
thousands). The allocation of the allowance for loan losses set
forth in the table should not be interpreted as an indication
that charge-offs will necessarily occur in these amounts or
proportions or that the allocation indicates future charge-off
trends.
<TABLE>
<CAPTION>
March 31, 1996 September 30, 1995
Gross % of Gross % of
Loan Allowance Loan Allowance
Allowance Balance to Balance Allowance Balance to Balance
<S> <C> <C> <C> <C> <C> <C>
Residential loans:
1-4 family $ 2,426 $ 790,956 .31% $ 2,177 $ 698,442 .31%
Other 2,020 55,797 3.62 1,564 57,269 2.73
Land and lot loans 912 29,558 3.09 1,085 24,294 4.47
Commercial real estate 3,394 184,092 1.84 4,049 187,195 2.16
Commercial business 1,125 27,561 4.08 715 27,825 2.57
Consumer loans 1,106 115,606 .96 1,047 114,581 .91
Total $10,983 $1,203,570 .91 $10,637 $1,109,606 .96
</TABLE>
The following table provides a summary of activity in the
allowance for loan losses for the first six months of fiscal 1996
(amounts in thousands).
<TABLE>
<CAPTION>
Balance Balance
Sept. 30 Charge- Mar. 31
1995 Additions offs Recoveries 1995
<S> <C> <C> <C> <C> <C>
Real estate $ 8,875 $ (51) $ 315 $ 243 $ 8,752
Commercial business 715 402 17 25 1,125
Consumer 1,047 374 352 37 1,106
Total $10,637 $ 725 $ 684 $ 305 $10,983
</TABLE>
At March 31, 1996, impaired loans totaled $5.6 million.
Included in the allowance for loan losses is $611 thousand
related to $2.7 million of impaired loans. The remainder of the
impaired loans are recorded at or below fair value.
Deposits and Borrowings
First Financial's deposit composition at the indicated dates
is as follows (amounts in thousands):
<TABLE>
<CAPTION>
March 31, 1996 September 30, 1995 March 31, 1995
% of % of % of
Balance Total Balance Total Balance Total
<S> <C> <C> <C> <C> <C> <C>
Checking accounts $ 123,596 11.61% $ 117,149 10.90% $ 110,796 10.48%
Passbook, statement and
other accounts 121,502 11.42 125,588 11.69 133,774 12.66
Money market funds 131,397 12.35 131,225 12.22 127,921 12.10
Certificate accounts 687,552 64.62 700,351 65.19 684,444 64.76
Total deposits $1,064,047 100.00% $1,074,313 100.00% $1,056,935 100.00%
</TABLE>
Checking and other transaction account balances have
increased as the Company has emphasized growth in these types of
products. Retail deposits are the primary source of funding for
the Company for lending purposes and as a customer base for
providing additional financial services. The Company's total
deposits declined $10.3 million during the six months ending
March 31, 1996, partially as a result of the maturity of $11.0
million in wholesale certificate of deposits.
Primarily as a result of growth in loans receivable during
the quarter and the utilization of FHLB advances as a primary
source of net new funds, total borrowings increased $92.7 million
to total $264.8 million as of March 31, 1996. Approximately
$204.0 million in FHLB advances mature within one year from March
31, 1996. Securities sold subject to repurchase of $39.7 million
mature within three months of March 31, 1996.
Stockholders' Equity
Stockholders' equity increased $4.3 million during the first
six months of fiscal 1996 to total $95.8 million at March 31,
1996. The Company's capital ratio, total capital to total
assets, was 6.61% at March 31, 1996, compared to 6.69% at
September 30, 1995. During the six months, the Company increased
its cash dividends to $.32 per share compared with $.28 per share
in the six months ending March 31, 1995.
Regulatory Capital
Under current Office of Thrift Supervision ("OTS")
regulations, savings associations must satisfy three minimum
capital requirements: core capital, tangible capital and risk-
based capital. Savings associations must meet all of the
standards in order to comply with the capital requirements. At
March 31, 1996, both subsidiaries were categorized as "well-
capitalized" under the Prompt Corrective Action regulations
adopted by the OTS pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"). To remain in
this status, the Associations must maintain core and risk-based
capital ratios of at least 5.0% and 10.0%, respectively.
The following table summarizes the capital requirements for
First Federal and Peoples Federal as well as their capital
positions at March 31, 1996:
<TABLE>
<CAPTION>
First Federal Peoples Federal
Percent of Percent of
Amount Assets Amount Assets
(Amounts in thousands)
<S> <C> <C> <C> <C>
Tangible capital $73,826 7.15% $27,789 6.90%
Tangible capital
requirement 15,490 1.50 6,042 1.50
Excess $58,336 5.65% $21,747 5.40%
Core capital $73,826 7.15% $27,789 6.90%
Core capital requirement 30,981 3.00 12,084 3.00
Excess $42,845 4.15% $15,705 3.90%
Risk-based capital(a) $80,201 11.39% $27,789 12.69%
Minimum risk-based
capital requirement(a) 56,329 8.00 17,520 8.00
Excess(a) $23,872 3.39% $10,269 4.69%
____________________________
(a) Based on total risk-weighted assets.
</TABLE>
For a complete discussion of capital issues, refer to
"Capital Requirements" and "Dividend Limitations" in the
Company's 10-K for the fiscal year ending September 30, 1995.
LIQUIDITY AND ASSET AND LIABILITY MANAGEMENT
Liquidity
The Associations are subject to federal regulations which
require the maintenance of a daily average balance of liquid
assets equal to 5.00% of net withdrawable savings and borrowings
payable in one year. First Federal had an average liquidity
ratio of 6.54% or the current six months compared to 7.29% for
the comparable period in fiscal 1995. Peoples Federal's average
liquidity ratio was 7.05% during the present six months compared
with 9.21% in the comparable period.
The Associations' primary sources of funds consist of retail
deposits, borrowings from the FHLB, principal repayments on loans
and mortgage-backed securities, securities sold under agreements
to repurchase and the sale of loans. Each of the Association's
sources of liquidity are subject to various uncertainties beyond
the control of the Associations. As a measure of protection, the
Association's have back-up sources of funds available, including
excess FHLB borrowing capacity and excess liquidity in securities
available for sale.
During the current six months the Company experienced a net
cash outflow from investing activities of $76.5 million,
consisting principally of loans originated and purchased for
investment, offset by principal payments on loans and mortgage-
backed securities. The Company experienced cash inflows of $3.8
million from operating activities. Financing activities resulted
in cash inflows of $78.8 million, consisting principally of $97.6
million in net new FHLB advances offset by a $10.3 million
decline in deposit balances.
Parent Company Liquidity
As a holding company, First Financial conducts its business
through its subsidiaries. First Financial issued $20.3 million
in senior notes of the Company in September 1992 principally for
the purpose of acquiring Peoples Federal. Potential sources for
First Financial's payment of principal and interest on the notes
include: (i) dividends from First Federal and Peoples Federal;
(ii) existing cash reserves and sales of marketable investment
securities; and (iii) interest on investment assets.
The Company has agreed to prepay, at a price of 100% of the
principal plus accrued interest to the date of prepayment, up to
$1.0 million of the notes tendered by noteholders for prepayment
during the period of issuance through September 1, 1993, and
thereafter in any twelve month period ending September 1, subject
to certain limitations. As of March 31, 1996, First Financial had
cash reserves and marketable securities of $11.9 million.
First Federal's and Peoples Federal's ability to pay
dividends and make other capital contributions to First Financial
is restricted by regulation and may require regulatory approval.
First Federal's and Peoples Federal's ability to make
distributions may also depend on each institution's ability to
meet minimum regulatory capital requirements in effect during the
period. For a complete discussion of capital distribution
regulations, refer to "Dividend Limitations" in the Company's
10-K for the fiscal year ending September 30, 1995.
Asset/Liability Management
The Company's Asset and Liability Committees establish
policies and monitor results to control interest rate
sensitivity. Although the Company utilizes measures such as
static gap, which is simply the measurement of the difference
between interest-sensitive assets and interest-sensitive
liabilities repricing for a particular time period, just as
important a process is the evaluation of how particular assets
and liabilities are impacted by changes in interest rates or
selected indices as they reprice. Asset/liability modeling is
performed by the Company to assess varying interest rate and
balance mix assumptions. These projections enable the Company to
adjust its strategies to lessen the impact of significant
interest rate fluctuations.
The following table is a summary of First Financial's one
year gap at indicated dates (amounts in thousands):
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1996 1995 1995
<S> <C> <C> <C>
Interest-earning assets
maturing or repricing
within one year $889,694 $874,889 $880,730
Interest-bearing
liabilities maturing
or repricing within
one year 958,331 875,742 777,009
Cumulative gap $(68,637) $ (853) $103,721
Gap as a percent of
total assets (4.74%) (.06%) 8.02%
</TABLE>
The Company's one year gap as a percent of total assets
declined from (.06%) to (4.74%) during the current six months.
One year ago, the Company's one year gap as a percent of total
assets was 8.02%. The change from one year ago is principally
due to the retention of fixed-rate loans originated by the
Company throughout the period. A negative gap indicates that
cumulative interest-sensitive liabilities exceed cumulative
interest-sensitive assets and suggests that net interest income
would decline if market rates increased. A positive gap would
suggest the reverse. This relationship is not always ensured due
to the repricing attributes of both interest sensitive assets and
interest sensitive liabilities. The Company generally considers
plus or minus 10% of assets to be its preferred gap position.
COMPARISON OF OPERATING RESULTS
QUARTERS ENDING March 31, 1996 AND 1995
Net Interest Income
First Financial's net interest income for the quarter ending
March 31, 1996 was $11.3 million compared with $9.7 million for
the comparable quarter in fiscal 1995. The gross interest margin
increased from 2.93% in the prior quarter to 3.01% in the current
quarter.
The following table summarizes rates, yields and average
earning asset and costing liability balances for the respective
quarters (amounts in thousands):
<TABLE>
<CAPTION>
Quarter Ending March 31,
1996 1995
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
<S> <C> <C> <C> <C>
Loans and mortgage-
backed securities $1,256,487 8.14% $1,113,437 7.76%
Other interest-earning
assets 131,150 6.32 129,417 6.07
Total interest-earning
assets $1,387,637 7.97 $1,242,854 7.58
Deposits $1,059,935 4.70 $1,060,445 4.44
Borrowings 256,681 6.01 117,758 6.60
Total interest-bearing
liabilities $1,316,616 4.96 $1,178,203 4.65
Gross interest margin 3.01% 2.93%
Net interest margin 3.25% 3.12%
</TABLE>
The following rate/volume analysis depicts the increase
(decrease) in net interest income attributable to interest rate
and volume fluctuations compared to the prior period (amounts in
thousands):
<TABLE>
<CAPTION>
Quarter Ending March 31,
1996 versus 1995
Volume Rate Total
<S> <C> <C> <C>
Interest income:
Loans and mortgage-backed
securities $2,989 $1,139 $4,128
Investments and other
interest-earning assets 30 93 123
Total interest income 3,019 1,232 4,251
Deposit accounts (5) 783 778
Borrowings 2,101 (186) 1,915
Total interest expense 2,096 597 2,693
Net interest income $ 923 $ 635 $1,558
</TABLE>
Total interest income for the current quarter of $27.5
million represents growth of $4.3 million from the comparative
quarter in fiscal 1995. Average balances of earning assets
increased $144.8 million during the current quarter compared to
the March 1995 quarter. Average yields on loans and mortgage-
backed securities increased by 38 basis points and the average
yield on all other earning assets increased 25 basis points.
Total interest expense increased $2.7 million during the
current quarter, with average interest-bearing liability balances
increasing by $138.4 million. The average cost of deposits
increased 26 basis points while the average cost of borrowings
declined 59 basis points. The Company's overall cost of funds
increased 31 basis points to 4.96% from 4.65% in the prior
period.
Provision for Loan Losses
During the current quarter, First Financial's provision for
loan losses totaled $420 thousand, compared to $26 thousand
during the same period in the previous year. Net charge-offs for
the current quarter totaled $236 thousand compared with $117
thousand in the comparable quarter in fiscal 1995. Total loan
loss reserves as of March 31, 1996 and 1995 were $11.0 million
and $10.6 million, respectively. Loan loss reserves as a
percentage of the total net loan portfolio, excluding mortgage-
backed securities, were .94% and 1.05% at March 31, 1996 and
1995, respectively.
Other Income/General and Administrative Expenses
Loan servicing fee income declined $21 thousand in the
current quarter, primarily as a result of decreases in balances
of loans serviced and respective servicing fees. Fees on deposit
accounts increased $199 thousand during the current quarter,
reflecting increased balances in checking and other transaction
accounts at the Company and changes to service charge pricing
structure since the March 1995 quarter.
General and administrative expenses increased $378 thousand
during the current quarter. General and administrative expenses
as a percentage of average assets declined from 2.61% in the
March 31, 1995 quarter to 2.44% in the current quarter. Salaries
and employee benefits increased $192 thousand, or 4.40% while
other operating expenses increased moderately.
Income Tax Expense
During the current quarter, the Company's effective tax rate
was 36.3% compared to 36.8% in the comparable quarter. The
actual tax provision of $1.7 million resulted in an increase of
$422 thousand from the prior period.
COMPARISON OF OPERATING RESULTS
SIX MONTHS ENDING March 31, 1996 AND 1995
Net Interest Income
First Financial's net interest income for the six months
ending March 31, 1995 was $21.9 million compared with $19.8
million for the comparable six months in fiscal 1995. The gross
interest margin declined from 2.99% in the prior six months to
2.92% in the current six months.
The following table summarizes rates, yields and average
earning asset and costing liability balances for the respective
periods (amounts in thousands):
<TABLE>
<CAPTION>
Six Months Ending March 31,
1996 1995
Average Average Average Average
Balance Yield/Rate Balance Yield/Rate
<S> <C> <C> <C> <C>
Loans and mortgage-backed securities $1,238,730 8.07% $1,101,608 7.62%
Other interest-earning assets 128,674 6.25 126,607 5.89
Total interest-earning assets $1,367,404 7.90 $1,228,215 7.44
Deposits $1,064,872 4.74 $1,059,944 4.26
Borrowings 226,827 6.11 102,430 6.50
Total interest-bearing liabilities $1,291,699 4.98 $1,162,374 4.45
Gross interest margin 2.92% 2.99%
Net interest margin 3.20% 3.22%
</TABLE>
The following rate/volume analysis depicts the increase
(decrease) in net interest income attributable to interest rate
and volume fluctuations compared to the prior period (amounts in
thousands):
<TABLE>
<CAPTION>
Six Months Ending March 31
1996 versus 1995
Volume Rate Total
<S> <C> <C> <C>
Interest income:
Loans and mortgage-backed
securities $5,528 $2,623 $8,151
Investments and other
interest-earning assets 64 240 304
Total interest income 5,592 2,863 8,455
Interest expense:
Deposit accounts 108 2,618 2,726
Borrowings 3,841 (210) 3,631
Total interest expense 3,949 2,408 6,357
Net interest income $1,643 $ 455 $2,098
Provision for Loan Losses
During the current six months, First Financial's provision
for loan losses totaled $725 thousand, compared to $133 thousand
during the same period in the previous year. Net charge-offs for
the current six months totaled $379 thousand compared with $263
thousand in the comparable period in fiscal 1995.
Other Income
Loan servicing fee income declined $47 thousand in the
current six months, primarily as a result of decreases in
balances of loans serviced and respective servicing fees. Fees
on deposit accounts increased $370 thousand during the current
period. Commissions on insurance sales increased $150 thousand
in the current period. During fiscal 1995 Magrath Insurance
Agency, a subsidiary of Peoples Federal, purchased an additional
insurance agency in Lake City, South Carolina. Real estate
operations,net, produced losses of $80 thousand and $163 thousand,
respectively, in the six months ending March 31, 1996 and 1995.
General and Administrative Expenses
General and administrative expenses increased $728 thousand
during the current six months. General and administrative
expenses as a percentage of average assets declined from 2.64% in
the prior period to 2.48% in the current period. Included in the
$3.9 million of other expenses for the current six months was a
non-recurring expense of $348 thousand related to a deposit
account.
Income Tax Expense
During the first six months, the Company's effective tax rate
was 36.3% compared to 37.1% in the comparable period. The actual
tax provision of $3.1 million resulted in an increase of $530
thousand from the prior period.
IMPACT OF REGULATORY AND ACCOUNTING ISSUES
For a comprehensive discussion of regulatory and accounting
issues, refer to "Regulation of the Associations" in the
Company's 10-K for the fiscal year ending September 30, 1995.
The Company adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights," on
October 1, 1995. This rule allows financial institutions to
capitalize servicing-related costs associated with mortgage loans
that are originated for sale, and to create servicing assets for
such loans. Prior to the Company's adoption, originated mortgage
servicing rights would not have been recognized. The Company had
no material amounts of loan sales in the first six months of
fiscal 1996.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
OTHER INFORMATION
Item 1 - Legal Proceedings
Periodically, there are various claims and lawsuits involving
the Associations and their subsidiaries mainly as defendants,
such as claims to enforce liens, condemnation proceedings on
properties in which the Associations hold security interests,
claims involving the making and servicing of real property loans
and other issues incident to the Association's business. In the
opinion of management and the Company's legal counsel, no
material loss is expected from any of such pending claims or
lawsuits.
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
None
Item 5 - Other Information
None
Item 6 - Exhibits and Report on Form 8-K.
Exhibits
(3.1) Certificate of Incorporation, as amended, of Registrant <F1>
(3.2) Bylaws, as amended, of Registrant <F2>
(4) Indenture, dated September 10, 1992, with respect to the
Registrant's 9.375% Senior Notes, due September 1, 2002 <F3>
(10.1) Acquisition Agreement dated as of December 9, 1991 by and
among the Registrant, First Federal Savings and Loan
Association of Charleston and Peoples Federal Savings and
Loan Association of Conway <F3>
(10.2) Employment Agreement with A. L. Hutchinson, Jr., as
amended <F4>
(10.3) Employment Agreement with A. Thomas Hood, as amended <F4>
(10.4) Employment Agreement with Charles F. Baarcke, Jr. <F4>
(10.5) Employment Agreement with John L. Ott, Jr. <F4>
(10.6) 1990 Stock Option and Incentive Plan <F5>
(10.7) 1994 Outside Directors Stock Options-for-Fees Plan <F6>
(10.8) 1994 Employee Stock Purchase Plan <F6>
(22) Subsidiaries of the Registrant <F4>
<F1> Incorporated by reference to Exhibit 3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1993
<F2> Incorporated by reference to Exhibit 3 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1995
<F3> Incorporated by reference to the Registrant's Registration
Statement on Form S-8 File No. 33-55067
<F4> Incorporated by reference to the Registrant's Annual Report
on Form 10-K for the year ended September 30, 1995.
<F5> Incorporated by reference to the Registrant's Registration
Statement on Form S-8 File No. 33-57855
<F6> Incorporated by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders held on
January 25, 1995
Report on Form 8-K
The company filed an 8-K on January 30, 1996, announcing the
retirement of A. L. Hutchinson, Jr. as President and Chief
Executive Officer of First Financial Holdings, Inc., effective
June 30, 1996. Also, effective on July 1, 1996, A. Thomas Hood
will assume the duties of President and Chief Executive Officer
as he continues to serve as President and Chief Executive Officer
of First Federal. The Company also announced that Susan E. Baham
was named Senior Vice President and Chief Financial Officer and
Treasurer effective July 1, 1996.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
First Financial Holdings, Inc.
Date: May 13, 1996 By: /s/ A. Thomas Hood
A. Thomas Hood
Executive Vice President
Treasurer
Principal Financial
Officer
Duly Authorized
Representative
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,940
<INT-BEARING-DEPOSITS> 8,649
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 163,664
<INVESTMENTS-CARRYING> 49,060
<INVESTMENTS-MARKET> 49,017
<LOANS> 1,167,477
<ALLOWANCE> 10,983
<TOTAL-ASSETS> 1,449,162
<DEPOSITS> 1,064,047
<SHORT-TERM> 245,058
<LIABILITIES-OTHER> 0
<LONG-TERM> 19,763
0
0
<COMMON> 70
<OTHER-SE> 95,688
<TOTAL-LIABILITIES-AND-EQUITY> 1,449,162
<INTEREST-LOAN> 50,014
<INTEREST-INVEST> 2,634
<INTEREST-OTHER> 1,389
<INTEREST-TOTAL> 54,037
<INTEREST-DEPOSIT> 25,234
<INTEREST-EXPENSE> 32,162
<INTEREST-INCOME-NET> 21,875
<LOAN-LOSSES> 725
<SECURITIES-GAINS> 32
<EXPENSE-OTHER> 3,876
<INCOME-PRETAX> 8,510
<INCOME-PRE-EXTRAORDINARY> 5,422
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,422
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
<YIELD-ACTUAL> 3.20
<LOANS-NON> 7,406
<LOANS-PAST> 482
<LOANS-TROUBLED> 9,207
<LOANS-PROBLEM> 17,095
<ALLOWANCE-OPEN> 10,637
<CHARGE-OFFS> 684
<RECOVERIES> 305
<ALLOWANCE-CLOSE> 10,983
<ALLOWANCE-DOMESTIC> 10,983
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
