<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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
------------------------------
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: 0-15025
-------------------
PROGRESSIVE BANK, INC.
----------------------
(Exact name of registrant as specified in its charter)
New York 14-1682661
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Route 52, Fishkill, New York 12524
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(914) 897-7400
---------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
---------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 8, 1997: 3,809,884 shares.
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . . . .1
Consolidated Statements of Income for the Three
Months Ended March 31, 1997 and March 31, 1996. . . . . . .2
Consolidated Statements of Shareholders' Equity for the Three
Months Ended March 31, 1997 and March 31, 1996. . . . . . .3
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1997 and March 31, 1996. . . . . . .4
Notes to Consolidated Interim Financial Statements. . . . . .5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . 6-16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . 17
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of Security Holders. . 17
Item 5. Other Information. . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit I. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
CONSOLIDATED BALANCE SHEETS
PROGRESSIVE BANK, INC. AND SUBSIDIARY
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------------------------
ASSETS
<S> <C> <C>
Cash and due from banks. . . . . . . . . . . . . . . . . . . . $ 13,432 15,070
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . 25,700 30,500
Securities:
Available for sale, at fair value. . . . . . . . . . . . . . 134,366 137,792
Held to maturity, at amortized cost (fair value of
$84,046 in 1997 and $72,315 in 1996) . . . . . . 85,347 72,614
- -----------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . . . . . . . . . . . . 219,713 210,406
- -----------------------------------------------------------------------------------------
Loans, net:
Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . 517,496 517,077
Other loans. . . . . . . . . . . . . . . . . . . . . . . . . 77,393 75,708
Allowance for loan losses. . . . . . . . . . . . . . . . . . (9,421) (9,231)
- -----------------------------------------------------------------------------------------
Total loans, net . . . . . . . . . . . . . . . . . . . . . 585,468 583,554
- -----------------------------------------------------------------------------------------
Accrued interest receivable. . . . . . . . . . . . . . . . . . 5,676 6,068
Other real estate, net . . . . . . . . . . . . . . . . . . . . 1,318 2,270
Premises and equipment, net . . . . . . . . . . . . . . . . . 9,717 10,323
Deferred income taxes, net . . . . . . . . . . . . . . . . . . 6,667 6,134
Intangible assets . . . . . . . . . . . . . . . . . . . . . . 8,406 8,755
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 1,570 2,100
- -----------------------------------------------------------------------------------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . $877,667 875,180
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Savings and time deposits . . . . . . . . . . . . . . . . . . $738,731 736,579
Demand deposits . . . . . . . . . . . . . . . . . . . . . . . 56,159 57,622
Accrued expenses and other liabilities. . . . . . . . . . . . 9,452 8,437
- -----------------------------------------------------------------------------------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 804,342 802,638
- -----------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock ($1.00 par value; 5,000,000 shares
authorized; none issued) . . . . . . . . . . . . . . . . . . -- --
Common stock ($1.00 par value; 15,000,000 shares
authorized; 4,427,999 shares issued) . . . . . . . . . . . . 4,428 4,428
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 25,879 25,879
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 53,334 51,882
Treasury stock, at cost (603,115 shares in 1997
and 603,315 shares in 1996) . . . . . . . . . . . . . . . . (10,412) (10,416)
Net unrealized gain on securities available for sale, net of
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 769
- -----------------------------------------------------------------------------------------
Total shareholders' equity . . . . . . . . . . . . . . . . . 73,325 72,542
- -----------------------------------------------------------------------------------------
Total liabilities and shareholders' equity . . . . . . . . . $877,667 875,180
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated interim financial statements.
1
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
PROGRESSIVE BANK, INC. AND SUBSIDIARY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
MARCH 31,
1997 1996
--------------------------
<S> <C> <C>
INTEREST AND DIVIDEND INCOME:
Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . $11,320 10,491
Other loans. . . . . . . . . . . . . . . . . . . . . . . . . . 1,818 1,510
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 3,448 2,495
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . 393 188
- -------------------------------------------------------------------------------------------
Total interest and dividend income. . . . . . . . . . . . . . 16,979 14,684
- -------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,567 7,343
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . -- 30
- -------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . . . . . . . . . . . 8,567 7,373
- -------------------------------------------------------------------------------------------
Net interest income . . . . . . . . . . . . . . . . . . . . . 8,412 7,311
Provision for loan losses. . . . . . . . . . . . . . . . . . . . 600 300
- -------------------------------------------------------------------------------------------
Net interest income after provision for loan losses . . . . . 7,812 7,011
- -------------------------------------------------------------------------------------------
OTHER INCOME:
Deposit service fees . . . . . . . . . . . . . . . . . . . . . 577 595
Other service fees . . . . . . . . . . . . . . . . . . . . . . 195 150
Net gain on sales of loans . . . . . . . . . . . . . . . . . . 65 90
Other non-interest income. . . . . . . . . . . . . . . . . . . 83 71
- -------------------------------------------------------------------------------------------
Total other income. . . . . . . . . . . . . . . . . . . . . . 920 906
- -------------------------------------------------------------------------------------------
Net interest and other income . . . . . . . . . . . . . . . . 8,732 7,917
- -------------------------------------------------------------------------------------------
OTHER EXPENSE:
Salaries and employee benefits . . . . . . . . . . . . . . . . 2,846 2,452
Occupancy and equipment. . . . . . . . . . . . . . . . . . . . 689 732
Net cost of other real estate. . . . . . . . . . . . . . . . . (12) 54
Amortization of intangible assets. . . . . . . . . . . . . . . 349 --
Other non-interest expense . . . . . . . . . . . . . . . . . . 1,393 1,400
- -------------------------------------------------------------------------------------------
Total other expense . . . . . . . . . . . . . . . . . . . . . 5,265 4,638
- -------------------------------------------------------------------------------------------
Income before income taxes. . . . . . . . . . . . . . . . . . 3,467 3,279
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . 1,364 1,357
- -------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $2,103 1,922
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Net income per common share(1) . . . . . . . . . . . . . . . . . $ 0.55 0.49
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Weighted average common shares outstanding(1). . . . . . . . . . 3,825 3,945
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
(1) The 1996 amounts were adjusted for the three-for-two stock split
completed in December 1996. See note 2.
See accompanying notes to consolidated interim financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
PROGRESSIVE BANK, INC. AND SUBSIDIARY
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Net
Common Stock Unrealized
--------------------------
Shares Paid-in Retained Treasury Gain on
Outstanding(1) Amount(1) Capital(1) Earnings Stock Securities Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 . 3,824,684 $4,428 25,879 51,882 (10,416) 769 72,542
Net income . . . . . . . . . . -- -- 2,103 -- -- 2,103
Cash dividends declared
($0.17 per share) . . . . . . -- -- (650) -- -- (650)
Stock options exercised. . . . 200 -- -- (1) 4 -- 3
Net change in unrealized gain
on securities available for sale,
net of taxes. . . . . . . . . -- -- -- -- (673) (673)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1997. . . 3,824,884 $4,428 25,879 53,334 (10,412) 96 73,325
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 . 3,942,441 $4,428 25,879 44,880 (7,655) 1,126 68,658
Net income . . . . . . . . . . -- -- 1,922 -- -- 1,922
Cash dividends declared
($0.13 per share)(1). . . . . -- -- (526) -- -- (526)
Stock options exercised. . . . 3,498 -- -- (13) 55 -- 42
Net change in unrealized gain
on securities available for sale,
net of taxes. . . . . . . . . -- -- -- -- (497) (497)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1996. . . 3,945,939 $4,428 25,879 46,263 (7,600) 629 69,599
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 1996 amounts were adjusted for the three-for-two stock split
completed in December 1996. See note 2.
See accompanying notes to consolidated interim financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
PROGRESSIVE BANK, INC. AND SUBSIDIARY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1997 1996
---------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 2,103 1,922
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses . . . . . . . . . . . . . . 600 300
Provision for losses on other real estate . . . . . . -- 75
Depreciation expense. . . . . . . . . . . . . . . . . 209 238
Net gain on sales of loans. . . . . . . . . . . . . . (65) (90)
Amortization of net premiums (discounts) on securities 16 (22)
Amortization of net deferred loan origination fees. . (67) (203)
Net decrease (increase) in accrued interest receivable 392 (81)
Gain on sales of premises and equipment . . . . . . . (186) --
Gain on sales of other real estate. . . . . . . . . . (351) (31)
Amortization of intangible assets . . . . . . . . . . 349 --
Net increase in accrued expenses and other liabilities 1,015 17,920
Other, net. . . . . . . . . . . . . . . . . . . . . . 411 (1,682)
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities. . . . . . 4,426 18,346
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of securities:
Securities available for sale. . . . . . . . . . . . (24,602) (38,665)
Securities held to maturity. . . . . . . . . . . . . (17,517) (33,164)
Proceeds from principal payments, maturities and calls of
securities:
Securities available for sale. . . . . . . . . . . . 26,905 13,861
Securities held to maturity. . . . . . . . . . . . . 4,748 2,126
Disbursements for loan originations, net of principal
collections. . . . . . . . . . . . . . . . . . . . . (6,084) (8,258)
Proceeds from sales of loans. . . . . . . . . . . . . . 3,373 1,377
Purchases of premises and equipment . . . . . . . . . . (67) (88)
Proceeds from sales of premises and equipment . . . . . 680 --
Proceeds from sales of other real estate. . . . . . . . 1,658 64
- --------------------------------------------------------------------------------------------
Net cash used in investing activities . . . . . . . . . (10,906) (62,747)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net decrease in time deposits . . . . . . . . . . . . . (7,047) (14,890)
Net increase in other deposits. . . . . . . . . . . . . 7,736 20,469
Cash dividends paid on common stock . . . . . . . . . . (650) (526)
Net proceeds on exercises of stock options. . . . . . . 3 42
Increase in other borrowings. . . . . . . . . . . . . . -- 17,900
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities. . . . . 42 22,995
- --------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents. . . . . . . . . (6,438) (21,406)
Cash and cash equivalents at beginning of period . . . . . 45,570 37,893
- --------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period . . . . . . . . $39,132 16,487
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Interest paid . . . . . . . . . . . . . . . . . . . . . $ 8,614 7,252
Income taxes paid . . . . . . . . . . . . . . . . . . . 134 390
Loans transferred to other real estate. . . . . . . . . 505 826
Loans originated to finance sales of other real estate. 170 96
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated interim financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Progressive Bank, Inc. and Subsidiary
(Unaudited)
Note 1: Basis of Presentation
The unaudited consolidated financial statements included herein have been
prepared by Progressive Bank, Inc. ("Progressive," or, together with its
subsidiary, the "Company") in conformity with generally accepted accounting
principles for interim financial statements. Progressive, a New York
corporation, is a bank holding company whose sole subsidiary is Pawling
Savings Bank ("Pawling"), a New York state-chartered stock savings bank. In
the opinion of management, the unaudited consolidated financial statements
include all adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the consolidated interim financial position and
results of operations for the periods presented. Certain information and
footnote disclosures normally included in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission.
The unaudited consolidated interim financial statements presented herein
should be read in conjunction with the annual consolidated financial
statements of the Company for the fiscal year ended December 31, 1996.
Note 2: Net Income Per Common Share
Net income per common share is based on net income divided by the weighted
average common shares outstanding during the period. Outstanding common
stock equivalents (stock options) did not have a significant dilutive effect
upon the net income per share computation.
All 1996 share and per share data have been adjusted to give retroactive
effect to the three-for-two stock split completed in December 1996. The split
resulted in the issuance of 1,476,025 additional common shares. The total
par value for these shares was retroactively transferred to common stock from
paid-in-capital.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share,"
which requires presentation of both basic EPS and diluted EPS by all entities
with complex capital structures. Basic EPS, which replaces primary EPS,
excludes dilution and is computed by dividing income available to common
shareholders 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 (such as the Company's
stock options) were exercised or converted into common stock or resulted in
the issuance of common stock that then shared in the earnings of the entity.
As required, the Company will adopt SFAS No. 128 in the fourth quarter of
1997 and will present EPS data for all periods in accordance with the new
statetment.
5
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The financial condition and operating results of the Company are primarily
dependent upon the financial condition and operating results of Pawling. The
Company is engaged principally in the business of attracting retail deposits
from the general public and the business community and investing those funds
in residential and commercial mortgages, consumer loans and securities.
The operating results of the Company depend primarily on its net interest
income after provision for loan losses. Net interest income is the
difference between interest and dividend income on earning assets, primarily
loans and securities, and interest expense on deposits and other borrowings.
Net income of the Company is also affected by other income, which includes
service fees and net gain (loss) on securities and loans; other expense,
which includes salaries and employee benefits and other operating expenses;
and federal and state income taxes.
FINANCIAL CONDITION
Total assets of the Company were $877.7 million at March 31, 1997 as
compared to $875.2 million at December 31, 1996, an increase of $2.5 million
or 0.3%.
Total securities increased by $9.3 million, consisting of a $12.7 million
increase in securities held to maturity and a $3.4 million decrease in
securities available for sale. The increase in securities held to maturity
primarily reflects $17.5 million in purchases of fixed rate five- and
seven-year balloon mortgage-backed securities, partially offset by principal
paydowns of $4.7 million. The decrease in securities available for sale
primarily reflects maturities, calls and principal paydowns of $26.9 million,
partially offset by $24.6 million in purchases of U.S. government agencies
and U.S. Treasury notes.
Net loans totaled $585.5 million at March 31, 1997 compared to $583.6
million at December 31, 1996, an increase of $1.9 million or 0.3%. The
residential mortgage segment of the loan portfolio increased $370,000 (net of
loan sales to the secondary market of $3.3 million) from $429.2 million at
December 31, 1996 to $429.5 million at March 31, 1997. The commercial
mortgage segment of the loan portfolio decreased $320,000 or 0.4%, from $81.1
million at December 31, 1996 to $80.8 million at March 31, 1997. The
construction mortgage segment of the loan portfolio increased $225,000 or
2.5%, from $8.9 million at December 31, 1996 to $9.1 million at March 31,
1997. Other loans increased $1.7 million or 2.3% during the first three
months of 1997 from $72.5 million to $74.2 million, primarily due to
increases in business installment loans and automobile financing.
The $689,000 increase in deposits during the first quarter of 1997 was
primarily attributable to a $16.0 million increase in money market accounts,
partially offset by a decrease in time deposits of $7.0 million, a decline in
savings accounts of $6.8 million and a decline of $1.5 million in demand
deposits.
Shareholders' equity at March 31, 1997 was $73.3 million, an increase of
$783,000 or 1.1% from December 31, 1996. This increase primarily reflects
net income of $2.1 million, partially offset by cash dividends of $650,000.
Shareholders' equity, as a percent of total assets, was 8.35% at March 31,
1997 compared to 8.29% at December 31, 1996. Book value per share increased
to $19.17 at March 31, 1997 from $18.97 at December 31, 1996.
6
<PAGE>
The following table shows the Company's average consolidated balances,
interest income and expense, and average rates (annualized) for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
------------------------------- --------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
--------------------------------------------------------------------
(Dollars in thousands)
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans (1). . . . . . . $521,181 11,320 8.69% $481,895 10,491 8.71%
Other loans (1) . . . . . . . . 73,130 1,818 9.94 59,754 1,510 10.11
Mortgage-backed securities (2). 122,783 2,101 6.84 88,391 1,478 6.69
U.S. Treasury and agencies,
corporate and other securities (2,3) 86,766 1,347 6.21 63,388 1,017 6.42
Federal funds sold. . . . . . . 30,687 393 5.12 14,292 188 5.26
- ----------------------------------------------------------------------------------------------------------------
Total interest-earning assets 834,547 16,979 8.14% 707,720 14,684 8.30%
Non-interest-earning assets. . . . 46,065 44,313
- ----------------------------------------------------------------------------------------------------------------
Total assets . . . . . . . . . $880,612 $752,033
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Time deposits. . . . . . . . . . $370,489 4,906 5.30% $339,697 4,708 5.54%
Other deposits (4) . . . . . . . 366,049 3,661 4.00 268,441 2,635 3.93
Other borrowings . . . . . . . . -- -- -- 2,226 30 5.39
- ----------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 736,538 8,567 4.65% 610,364 7,373 4.83%
Non-interest-bearing liabilities . 71,140 72,540
- ----------------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . 807,678 682,904
Shareholders' equity . . . . . . . 72,934 69,129
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity. . . . . . . . . $880,612 $752,033
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Net earning balance. . . . . . . . $ 98,009 $ 97,356
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Net interest income. . . . . . . . 8,412 7,311
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Interest rate spread (5) . . . . . 3.49% 3.47%
Net yield on interest-earning
assets (margin) (6). . . . . . . 4.03% 4.13%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Interest income on loans does not include interest on non-accrual loans;
however, such loans have been included in the calculation of the average
balances outstanding.
(2) Average balances have been calculated based on amortized cost.
(3) Yields on tax-exempt obligations have not been computed on a
tax-equivalent basis, as the effect thereof is not material.
(4) Includes NOW accounts, passbook and statement savings accounts, and
money market accounts.
(5) Represents average rate on total interest-earning assets less average
rate on total interest-bearing liabilities.
(6) Represents net interest income divided by total average interest-earning
assets.
7
<PAGE>
RESULTS OF OPERATIONS
GENERAL
The Company's net income was $2.1 million or $0.55 per share for the
quarter ended March 31, 1997 as compared to $1.9 million or $0.49 per share
for the same three-month period in 1996. The $181,000 or 9.4% increase in
net income was primarily the result of a $1.1 million increase in net
interest income, partially offset by a $627,000 increase in other expense and
a $300,000 increase in the provision for loan losses.
NET INTEREST INCOME
Net interest income increased $1.1 million, or 15.1%, to $8.4 million for
the three-month period ended March 31, 1997 compared to $7.3 million for the
same period in 1996. The components of net interest income are interest and
dividend income, which increased $2.3 million or 15.6%, and interest on
deposits and other borrowings, which increased $1.2 million or 16.2%. The
Company's interest rate spread widened by 2 basis points from 3.47% for the
three months ended March 31, 1996 to 3.49% for the same period in 1997,
attributable to an 18 basis point decrease in the cost of interest-bearing
liabilities, substantially offset by a 16 basis point decrease in the average
yield on interest-earning assets. The Company's net interest margin narrowed
by 10 basis points from 4.13% for the three months ended March 31, 1996 to
4.03% for the same period in 1997.
Interest on loans increased by $1.1 million, or 9.5%, primarily reflecting
increases in the volume of outstanding loans, partially offset by the
decrease in the average yield. Average mortgage and other loans increased by
$52.7 million for the quarter as compared to the same quarter in the previous
year.
Interest on mortgage-backed securities increased $623,000, or 42.2%, due
to an increase of $34.4 million in the average balance outstanding and an
increase of 15 basis points in the average yield earned on the portfolio. The
higher yield was attributable to recent purchases of securities and upward
adjustments on adjustable rate mortgage-backed securities.
Interest and dividends on U.S. Treasury and agencies, corporate and other
securities increased by $330,000, or 32.4%, primarily reflecting a $23.4
million increase in the average balance outstanding, primarily due to
purchases of U.S. Treasury and agency securities, partially offset by
maturities and calls. The average portfolio yield declined by 21 basis
points, primarily reflecting maturities and calls of higher yielding
securities.
Interest on federal funds sold increased $205,000 primarily reflecting a
$16.4 million increase in the average balance outstanding, partially offset
by a decrease in the average yield.
The $1.2 million increase in interest expense was primarily due to a $128.4
million increase in average interest-bearing deposits primarily due to the
acquisition of the Rockland County branches during the second quarter of
1996, partially offset by the decline in the overall cost of funds.
8
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses is a charge against income which increases
the allowance for loan losses. The adequacy of the allowance for loan losses
is evaluated periodically and is determined based on management's judgment
concerning the amount of risk and potential for loss inherent in the
portfolio. Management's judgment is based upon a number of factors including
a review of non-performing and other classified loans, the value of
collateral for such loans, historical loss experience, changes in the nature
and volume of the loan portfolio, and current economic conditions.
For the three-month period ended March 31, 1997, the provision for loan
losses was $600,000, an increase of $300,000 compared to the provision of
$300,000 for the comparable period in 1996. The higher provision was made to
increase the allowance for loan losses in line with the Company's loan growth
and changes in portfolio mix. The allowance for loan losses represented 1.6%
of total loans at March 31, 1997 compared to 1.5% a year earlier.
Non-performing loans were $5.5 million, or 0.92% of total loans, at March 31,
1997 compared to $6.2 million, or 1.13% of total loans, at March 31, 1996 and
$4.8 million, or 0.81% of total loans, at December 31, 1996.
In determining the allowance for loan losses, management also considers the
level of slow paying loans, or loans where the borrower is contractually past
due 30 to 89 days or more, but has not yet been placed on non-accrual status.
At March 31, 1997, slow paying loans amounted to $4.4 million as compared to
$4.0 million at March 31, 1996 and $6.3 million at December 31, 1996.
Loan loss provisions in future periods will continue to depend on trends in
the credit quality of the Company's loan portfolio, loan mix and the level of
loan charge-offs which, in turn, will depend in part on the economic and real
estate market conditions prevailing within the Company's lending region. If
general economic conditions or real estate values deteriorate, the level of
delinquencies, non-performing loans and charge-offs may increase and higher
provisions for loan losses may be necessary.
9
<PAGE>
Activity in the allowance for loan losses for the periods indicated is
summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
-------------------------
(Dollars in thousands)
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . $9,231 8,033
Provision charged to operations. . . . . . . . . . . . . . . . . 600 300
- -------------------------------------------------------------------------------------------
9,831 8,333
- -------------------------------------------------------------------------------------------
Loans charged-off:
Mortgage loans:
Residential . . . . . . . . . . . . . . . . . . . . . . . . . (277) (214)
Construction and land . . . . . . . . . . . . . . . . . . . . (41) --
Other loans:
Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . (111) (37)
- -------------------------------------------------------------------------------------------
Total charge-offs. . . . . . . . . . . . . . . . . . . . . (429) (251)
- -------------------------------------------------------------------------------------------
Recoveries:
Mortgage loans:
Residential . . . . . . . . . . . . . . . . . . . . . . . . . -- 48
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . -- 31
Construction and land . . . . . . . . . . . . . . . . . . . . -- 101
Other loans:
Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . 16 12
Commercial. . . . . . . . . . . . . . . . . . . . . . . . . . 3 1
- -------------------------------------------------------------------------------------------
Total recoveries . . . . . . . . . . . . . . . . . . . . . 19 193
- -------------------------------------------------------------------------------------------
Net charge-offs. . . . . . . . . . . . . . . . . . . . . . . . . (410) (58)
- -------------------------------------------------------------------------------------------
Balance at end of period . . . . . . . . . . . . . . . . . . . . $9,421 8,275
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Ratio of net charge-offs to average total loans
outstanding (annualized) . . . . . . . . . . . . . . . . . . . 0.28% 0.04%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
The following table sets forth information with respect to non-performing
assets and certain asset quality ratios at or for the dates indicated:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996 1996
-------------------------------------------
(Dollars in thousands)
NON-PERFORMING LOANS:
Mortgage loans:
<S> <C> <C> <C>
Residential properties. . . . . . . . . . . . . . . . . . . . $4,608 2,608 3,769
Commercial properties . . . . . . . . . . . . . . . . . . . . 652 2,357 714
Construction and land . . . . . . . . . . . . . . . . . . . . 138 1,173 215
- ------------------------------------------------------------------------------------------------------
5,398 6,138 4,698
Other loans. . . . . . . . . . . . . . . . . . . . . . . . . . 85 29 101
- ------------------------------------------------------------------------------------------------------
Total non-performing loans (1) . . . . . . . . . . . . . . 5,483 6,167 4,799
OTHER REAL ESTATE, NET . . . . . . . . . . . . . . . . . . . . . 1,318 1,024 2,270
- ------------------------------------------------------------------------------------------------------
Total non-performing assets. . . . . . . . . . . . . . . . $6,801 7,191 7,069
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Ratio of non-performing loans to total loans . . . . . . . . . . 0.92% 1.13% 0.81%
Ratio of non-performing assets to total assets . . . . . . . . . 0.77 0.92 0.81
Ratio of allowance for loan losses to total
non-performing loans . . . . . . . . . . . . . . . . . . . . . 171.82 134.18 192.35
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes loans on non-accrual status of $5.3 million, $6.0 million and
$4.6 million at March 31, 1997, March 31, 1996, and December 31, 1996,
respectively. The remaining balance consists of loans greater than 90
days past due and still accruing. The Company generally stops accruing
interest on loans that are delinquent over 90 days.
The loan portfolio also includes certain restructured loans that are
current in accordance with modified payment terms and, accordingly, are not
included in the preceding table. These restructured loans are loans for
which concessions, including reduction of interest rates to below-market
levels or deferral of payments, have been granted due to the borrowers'
financial condition. Restructured loans totaled $568,000 at March 31, 1997,
compared to $1.3 million at March 31, 1996 and $571,000 at December 31, 1996.
The Company's recorded investment in impaired loans consisted of
non-accrual commercial mortgage and construction loans totaling $790,000 at
March 31, 1997 and $929,000 at December 31, 1996. Total impaired loans at
March 31, 1997 consist of (i) loans of $149,000 for which there was an
allowance for loan impairment of $28,000 determined in accordance with SFAS
No. 114 and (ii) loans of $641,000 for which such an allowance was not
required due to the adequacy of related collateral values and prior
charge-offs. The average recorded investment in impaired loans was $860,000
for the first quarter of 1997 and $3.4 million for the first quarter of 1996.
Interest income on impaired loans is recognized on a cash basis and was not
significant for the quarters ended March 31, 1997 and 1996.
11
<PAGE>
OTHER INCOME
Sources of other income include deposit and other service fees, net gain
(loss) on securities, net gain (loss) on sales of loans, and other
non-interest income. For the three-month period ended March 31, 1997, other
income increased by $14,000 to $920,000 from $906,000 for the same period in
1996.
Deposit service fees, the largest component of other income, decreased by
$18,000, or 3.0%, to $577,000 for the three-month period ended March 31, 1997
from $595,000 for the same period in 1996. Other service fees increased to
$195,000 for the quarter ended March 31, 1997 from $150,000 for the previous
year.
Net gain on sales of loans was $65,000 for the three-month period ended
March 31, 1997 compared to $90,000 during the same period in 1996. Sales of
mortgage loans in both periods reflect the Company's current practice of
selling newly originated fixed rate mortgage loans.
OTHER EXPENSE
Other expense consists of general and administrative expenses incurred in
managing the core business of the Company and the net costs associated with
managing and selling other real estate properties. For the quarter ended
March 31, 1997, other expense increased by $627,000, or 13.5%, to $5.3
million from $4.6 million for 1996, primarily reflecting increases in
salaries and employee benefits expense, as well as amortization of intangible
assets in 1997.
Salaries and employee benefits, the largest component of other expense,
increased by $394,000, or 16.1%, to $2.8 million for the three-month period
ended March 31, 1997 from $2.5 million for the same period in 1996. The
increase primarily reflects additional expense due to the April 1996
acquisition of two branches, as well as the hiring of additional staff and
normal merit and promotional salary increases.
Occupancy and equipment costs decreased $43,000, or 5.9%, to $689,000 for
the three-month period ended March 31, 1997 from the first quarter of 1996,
primarily due to decreases in depreciation and equipment rental and repair
expenses.
The net cost of other real estate decreased $66,000 to ($12,000) for the
quarter ended March 31, 1997 from $54,000 for the prior year quarter,
primarily reflecting a decrease in the provision for losses on other real
estate and increased gains on sales of properties, partially offset by
increased holding costs.
Amortization of intangible assets totaled $349,000 for the first quarter of
1997, primarily reflecting the amortization of the purchase premium as a
result of the acquisition of branches in April 1996.
Other non-interest expense remained virtually unchanged at $1.4 million for
both quarters in 1997 and 1996. Increases in advertising expense, data
processing expense and miscellaneous operating expenses were offset by a
$186,000 gain on sale of the Newburgh Operations building in January 1997.
INCOME TAX EXPENSE
For both three-month periods ended March 31, 1997 and 1996, income tax
expense was $1.4 million (effective tax rates of 39.3% and 41.4%,
respectively).
The Company's net deferred tax assets were $6.7 million at March 31, 1997,
compared to $6.1 million at December 31, 1996. Based on recent historical
and anticipated future pre-tax earnings, management believes it is more
likely than not that the Company will realize its net deferred tax assets.
12
<PAGE>
RATIOS
Results of operations can be measured by various ratios. Two widely
recognized performance indicators are the return on assets and the return on
equity. The following table sets forth these performance ratios for the
Company on an annualized basis:
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1997 1996 1996
------------------------------------------------
Return on assets:
<S> <C> <C> <C>
Net income divided by average
total assets . . . . . . . . . . . 0.96% 1.02% 1.09%
Return on equity:
Net income divided by average equity (1). 11.53% 11.12% 13.11%
</TABLE>
(1) Average equity includes the effect of the net unrealized gain (loss) on
securities available for sale, net of taxes.
LIQUIDITY
Liquidity is defined as the ability to generate sufficient cash flow to meet
all present and future funding commitments. Management monitors the
Company's liquidity position on a daily basis and evaluates its ability to
meet depositor withdrawals and to make new loans and investments as
opportunities arise. The Asset/Liability Management Committee, consisting of
members of senior management, is responsible for setting general guidelines
to ensure maintenance of prudent levels of liquidity. The mix of liquid
assets and various deposit products, at any given time, reflects management's
view of the most efficient use of these sources of funds.
The Company's cash flows are classified according to their source -
operating activities, investing activities, and financing activities.
Further details concerning the Company's cash flows are provided in the
"Consolidated Statements of Cash Flows."
Liquid assets are provided by short-term investments, proceeds from
maturities of securities and principal collections on loans. One measure
used by the Company to assess its liquidity position is the primary liquidity
ratio (defined as the ratio of cash and due from banks, federal funds sold
and securities maturing within one year to total assets). At March 31, 1997,
the Company had a primary liquidity ratio of 6.99% as compared to 7.84% at
December 31, 1996.
An important source of funds is Pawling's core deposit base. Management
believes that a substantial portion of Pawling's deposits of $794.9 million
at March 31, 1997 are core deposits. Core deposits are generally considered
to be a highly stable source of liquidity due to the long-term relationships
with deposit customers. Pawling recognizes the importance of maintaining and
enhancing its reputation in the consumer and commercial markets to enable
effective gathering and retention of core deposits. The Company has not
utilized brokered deposits as a source of funds.
In addition to the funding sources discussed above, the Company has the
ability to borrow funds from several sources. Pawling is a member of the
Federal Home Loan Bank of New York ("FHLBNY") and, at March 31, 1997, had
immediate access to additional liquidity in the form of borrowings from the
FHLBNY of up to $99.3 million. The Company also has access to the discount
window of the Federal Reserve Bank. There were no borrowings from these
sources in 1997 and 1996, other than short term purchases of federal funds
from the
13
<PAGE>
FHLBNY during 1996.
At March 31, 1997, Pawling had outstanding loan commitments and unadvanced
customer lines of credit totaling $90.8 million. These commitments do not
necessarily represent future cash requirements since certain of these
instruments may expire without being funded and others may not be fully drawn
upon. The sources of liquidity discussed above are deemed by management to be
sufficient to fund outstanding loan commitments and to meet the Company's
other obligations.
CAPITAL
Progressive, as a bank holding company, is subject to regulation and
supervision by the Federal Reserve Board ("FRB"). Pawling, as a New York
state-chartered stock savings bank, is subject to regulation and supervision
by the New York State Banking Department as its chartering agency and by the
FDIC as its deposit insurer. Both the FRB and the FDIC have developed and
follow, in substance, similar requirements to maintain minimum levels of
leverage and risk-based capital.
The risk-based capital adequacy guidelines require the Company and Pawling
to maintain capital according to the risk profile of their asset portfolios
and certain off-balance sheet items. The guidelines set forth a system for
calculating risk-weighted assets by assigning assets (and credit-equivalent
amounts for certain off-balance sheet items) to one of four broad risk-weight
categories. The amount of risk-weighted assets is determined by applying a
specific percentage (0%, 20%, 50% or 100%, depending on the level of credit
risk) to the amounts assigned to each category. As a percentage of
risk-weighted assets, a minimum ratio of 4.0% must be maintained for Tier 1
capital and 8.0% for total capital.
At March 31, 1997, Progressive's consolidated capital ratios exceeded the
FRB's minimum regulatory capital guidelines as follows:
<TABLE>
<CAPTION>
Risk-Based Capital
-----------------------------------------
Leverage Capital Tier 1 Total
------------------------------------------------------------------------------
Amount(1) Ratio Amount(1) Ratio Amount(1) Ratio
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actual . . . . . . . . $64,851 7.4% $64,851 13.2% $71,045 14.4%
Minimum requirement. . 35,112 4.0 19,693 4.0 39,386 8.0
- ------------------------------------------------------------------------------------------------------
Excess . . . . . . . . $29,739 3.4% $45,158 9.2% $31,659 6.4%
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) For all capital amounts, actual capital excludes the Company's after-tax
net unrealized gain of $96,000 on securities available for sale (other
than a $4,000 unrealized loss on equity securities) and intangible assets
of $8.4 million.
At March 31, 1997, Pawling's capital ratios exceeded the FDIC's minimum
regulatory capital requirements as follows:
<TABLE>
<CAPTION>
Risk-Based Capital
------------------------------------------
Leverage Capital Tier 1 Total
--------------------------------------------------------------------------
Amount(1) Ratio Amount(1) Ratio Amount(1) Ratio
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actual . . . . . . . . $58,934 6.8% $58,934 12.0% $65,118 13.3%
Minimum requirement. . 34,878 4.0 19,660 4.0 39,320 8.0
- -----------------------------------------------------------------------------------------------------
Excess . . . . . . . . $24,056 2.8% $39,274 8.0% $25,798 5.3%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) For all capital amounts, actual capital excludes Pawling's after-tax net
unrealized gain of $119,000 on securities available for sale and
intangible assets of $8.4 million.
14
<PAGE>
During 1994, the Company announced two plans to repurchase in each case up
to 5% of Progressive's outstanding common stock, to be used for general
corporate purposes. The first repurchase was completed in November 1994 and
consisted of 220,500 shares at a total cost of $3.1 million or $14.14 per
share. The second repurchase plan was completed in September 1995 and
consisted of 210,000 shares at a total cost of $3.3 million or $15.89 per
share. A third repurchase plan, which was announced in October 1995 and
completed in July 1996, consisted of 202,500 shares at a total cost of $3.9
million or $19.19 per share. On October 21, 1996, the Company announced a
fourth plan to repurchase 195,000 shares, or approximately 5% of outstanding
stock, over a six- to nine-month period. At March 31, 1997, 74,250 shares
had been purchased under the fourth plan at a cost of $1.7 million or $22.80
per share. The number of shares and the per share cost of each repurchase
program have been restated to reflect the 1996 three-for-two stock split.
On April 9, 1997, the Company's Board of Directors declared a dividend of 17
cents ($0.17) per common share, payable on May 30, 1997 to shareholders of
record as of April 30, 1997.
ASSET/LIABILITY MANAGEMENT
The Company's asset/liability management goal is to maintain an acceptable
level of interest rate risk to produce relatively stable net interest income
in changing interest rate environments. Management continually monitors the
Company's interest rate risk. Risk management strategies are developed and
implemented by the Asset/Liability Management Committee which uses various
risk measurement tools to evaluate the impact of changes in interest rates on
the Company's asset/liability structure and net interest income.
Earnings are susceptible to interest rate risk to the degree that
interest-bearing liabilities mature or reprice on a different basis than
interest-earning assets. These interest rate repricing "gaps" provide an
indication of the extent that net interest income may be affected by future
changes in interest rates. A one-year period is a common measurement
interval of interest sensitivity known as the one-year gap. The Company's
one-year gap as a percentage of total assets was -4.18% at March 31, 1997. A
negative gap exists when the amount of interest-bearing liabilities exceeds
the amount of interest-earning assets expected to mature or reprice in a
given period. A negative gap may enhance earnings in periods of declining
interest rates in that, during such periods, the interest expense paid on
liabilities may decrease more rapidly than the interest income earned on
assets. Conversely, in a rising interest rate environment, a negative gap
may decrease earnings as the increase in interest expense paid on liabilities
may be greater than the increase in interest income earned on assets. While a
negative gap indicates the amount of interest-bearing liabilities which will
reprice before interest-earning assets, it does not indicate the extent to
which they will reprice. Therefore, at times, a negative gap may not produce
higher margins in a declining rate environment.
15
<PAGE>
Due to limitations inherent in the gap analysis, management augments the
asset/liability management process by using simulation analysis. Simulation
analysis estimates the impact on net interest income of hypothetical changes
in the balance sheet structure and/or interest rate environment. This
analysis serves as an additional tool in meeting the Company's goal of
maintaining relatively stable net interest income in varying rate
environments.
The Company manages its interest rate risk primarily by structuring its
balance sheet to emphasize holding adjustable rate loans and mortgage-backed
securities, and maintaining a large base of core deposits. To date, the
Company has not used synthetic hedging instruments such as interest rate
futures, swaps or options in managing its interest rate risk.
The following table summarizes the Company's interest rate sensitive assets
and liabilities at March 31, 1997 according to the time periods in which they
are expected to reprice, and the resulting gap for each time period.
<TABLE>
<CAPTION>
Within One to Five Over Five
One Year Years Years
-----------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Total interest-earning assets. . . . . . . . . $479,590 296,740 57,376
Total interest-bearing liabilities . . . . . . 516,303 111,175 111,253
- -----------------------------------------------------------------------------------------------------
(Deficiency) excess of interest-earning assets
compared to interest-bearing liabilities . . ($ 36,713) 185,565 (53,877)
- -----------------------------------------------------------------------------------------------------
(Deficiency) excess as a percent of total assets. (4.18%) 21.14% (6.14%)
Cumulative (deficiency) excess as a percent of
total assets. . . . . . . . . . . . . . (4.18%) 16.96% 10.82%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit I, Computation of Net Income Per Common Share.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROGRESSIVE BANK, INC.
----------------------
(Registrant)
Date: May 9, 1997 /s/ Peter Van Kleeck
--------------------------
Peter Van Kleeck
President and Chief Executive
Officer
Principal Executive Officer
Date: May 9, 1997 /s/ Robert Gabrielsen
---------------------------
Robert Gabrielsen, Treasurer
Principal Financial Officer and
Principal Accounting Officer
18
<PAGE>
Exhibit I
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
----------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . $2,103 $1,922
Weighted average common shares (1,2,3) . . . 3,825 3,945
Net income per common share (3). . . . . . . $0.55 $0.49
</TABLE>
(1) Outstanding common stock equivalents (stock options) did not have a
significant dilutive effect on the per share data for either of the
periods presented.
(2) Net of treasury stock.
(3) The 1996 amounts were adjusted for the three-for-two stock split
completed in December 1996. See note 2.
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 13,432
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 25,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 134,366
<INVESTMENTS-CARRYING> 85,347
<INVESTMENTS-MARKET> 84,046
<LOANS> 593,598
<ALLOWANCE> 9,421
<TOTAL-ASSETS> 877,667
<DEPOSITS> 794,890
<SHORT-TERM> 0
<LIABILITIES-OTHER> 9,452
<LONG-TERM> 0
0
0
<COMMON> 4,428
<OTHER-SE> 68,897
<TOTAL-LIABILITIES-AND-EQUITY> 877,667
<INTEREST-LOAN> 13,138
<INTEREST-INVEST> 3,448
<INTEREST-OTHER> 393
<INTEREST-TOTAL> 16,979
<INTEREST-DEPOSIT> 8,567
<INTEREST-EXPENSE> 8,567
<INTEREST-INCOME-NET> 8,412
<LOAN-LOSSES> 600
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,265
<INCOME-PRETAX> 3,467
<INCOME-PRE-EXTRAORDINARY> 3,467
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,103
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
<YIELD-ACTUAL> 4.03
<LOANS-NON> 5,285
<LOANS-PAST> 198
<LOANS-TROUBLED> 568
<LOANS-PROBLEM> 2,161
<ALLOWANCE-OPEN> 9,231
<CHARGE-OFFS> 429
<RECOVERIES> 19
<ALLOWANCE-CLOSE> 9,421
<ALLOWANCE-DOMESTIC> 9,421
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
