<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934.
For Quarter ended June 30, 1996 Commission File Number
------------- 0-15261
---------
Bryn Mawr Bank Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2434506
- ------------------------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
801 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZipCode)
Registrant's telephone number, including area code (610) 525-1700
---------------
Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and fiscal year, if changed since last report.
Indicate by check whether the registrant (1) has filed all reports 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 class of
common stock, as of the latest practicable date.
Class Outstanding at August 6, 1996
- -----------------------
Common Stock, par value $1 2,190,380
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED June 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income for Six
Months Ended June 30, 1996 and 1995...................Page 1
Consolidated Statements of Income for Three
Months Ended June 30, 1996 and 1995...................Page 2
Consolidated Balance Sheets as of June 30, 1996,
December 31, 1995 and June 30, 1995...................Page 3
Consolidated Statements of Cash Flows For the Six
Months Ended June 30, 1996 and 1995...................Page 4
Notes to Consolidated Financial Statements.................Page 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS........Page 8
PART II - OTHER INFORMATION....................................Page 19
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Unaudited
<TABLE>
<CAPTION>
Six Months Ended
June 30
1996 1995
--------- ---------
<S> <C> <C>
Interest income:
Interest and fees on loans.................................................. $ 10,413 $ 9,509
Interest on federal funds sold.............................................. 184 366
Interest on interest bearing deposits with banks............................ 2 5
Interest and dividends on investment securities:
U.S. Treasury securities................................................... 818 1,146
U.S. Government Agency securities.......................................... 335 0
Obligations of states and political subdivisions........................... 220 318
Dividend income............................................................ 40 39
-------- --------
Total interest income.......................................................... 12,012 11,383
Interest expense on deposits................................................... 3,271 3,420
-------- --------
Net interest income............................................................ 8,741 7,963
Loan loss provision............................................................ 200 250
-------- --------
Net interest income after loan loss provision.................................. 8,541 7,713
-------- --------
OTHER INCOME:
Fees for Trust services..................................................... 2,975 2,670
Service charges on deposits................................................. 556 514
Other service charges, commissions and fees................................. 516 450
Net gain on sale of loans................................................... 163 144
Net gain on sale of other real estate owned................................. 1,075 132
Other operating income...................................................... 476 509
-------- --------
Total other income............................................................. 5,761 4,419
-------- --------
OTHER EXPENSES:
Salaries and wages.......................................................... 4,269 3,749
Employee benefits........................................................... 1,060 885
Occupancy and bank premises................................................. 787 696
Furniture, fixtures, and equipment.......................................... 537 436
Other operating expenses.................................................... 3,137 3,192
-------- --------
Total other expenses........................................................... 9,790 8,958
-------- --------
Income before income taxes..................................................... 4,512 3,174
Applicable income taxes........................................................ 1,480 940
-------- --------
Net Income..................................................................... $ 3,032 $ 2,234
======== ========
Earnings per average common share:
Net income................................................................. $1.34 $1.02
Cash dividends declared.................................................... $0.62 $0.25
Average number of shares outstanding including common stock equivalents*....... 2,263,532 2,187,380
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
*- 1995 per share data has been restated to reflect the 2-for-1 stock split,
effective December 29, 1995.
Form 10-Q
Page 1
<PAGE>
FINANCIAL STATEMENTS
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Unaudited
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1996 1995
-------- --------
<S> <C> <C>
Interest income:
Interest and fees on loans.................................................. $ 5,364 $ 4,811
Interest on federal funds sold.............................................. 24 281
Interest on interest bearing deposits with banks............................ 1 1
Interest and dividends on investment securities:
U.S. Treasury securities................................................... 376 593
U.S. Government Agency securities.......................................... 167 0
Obligations of states and political subdivisions........................... 98 158
Dividend income............................................................ 23 23
-------- --------
Total interest income.......................................................... 6,053 5,867
Interest expense on deposits................................................... 1,592 1,826
-------- --------
Net interest income............................................................ 4,461 4,041
Loan loss provision............................................................ 75 125
-------- --------
Net interest income after loan loss provision.................................. 4,386 3,916
-------- --------
OTHER INCOME:
Fees for Trust services..................................................... 1,530 1,406
Service charges on deposits................................................. 267 279
Other service charges, commissions and fees................................. 187 180
Net gain on sale of loans................................................... 62 103
Net gain on sale of other real estate owned................................. 1 77
Other operating income...................................................... 275 340
-------- --------
Total other income............................................................. 2,322 2,385
-------- --------
OTHER EXPENSES:
Salaries and wages.......................................................... 2,147 1,920
Employee benefits........................................................... 548 475
Occupancy and bank premises................................................. 372 370
Furniture, fixtures, and equipment.......................................... 315 219
Other operating expenses.................................................... 1,411 1,683
-------- --------
Total other expenses........................................................... 4,793 4,667
-------- --------
Income before income taxes..................................................... 1,915 1,634
Applicable income taxes........................................................ 640 490
-------- --------
Net Income..................................................................... $ 1,275 $ 1,144
======== ========
Earnings per average common share:
Net income................................................................. $0.56 $0.52
Cash dividends declared.................................................... $0.15 $0.125
Average number of shares outstanding including common stock equivalents*....... 2,264,341 2,187,380
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
*- 1995 per share data has been restated to reflect the 2-for-1 stock split,
effective December 29, 1995.
Form 10-Q
Page 2
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30,
1996 1995 1995
(UNAUDITED) (UNAUDITED)
-------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks................................................. $ 21,528 $ 25,128 $ 20,451
Interest bearing deposits with banks.................................... 97 115 79
Federal funds sold...................................................... 0 19,410 25,307
Investment securities available for sale, at market (amortized
cost of $44,396, $58,890 and $61,207 as of June 30, 1996,
December 31, 1995 and June 30, 1995, respectively)................... 44,334 59,211 61,168
Loans :
Consumer............................................................. 75,711 73,189 73,678
Commercial........................................................... 69,213 67,507 53,923
Real Estate.......................................................... 113,956 94,657 95,169
--------- --------- ---------
Total loans........................................................ 258,880 235,353 222,770
Less: Allowance for possible loan losses............................. (4,159) (3,652) (3,954)
--------- --------- ---------
Net loans.......................................................... 254,721 231,701 218,816
--------- --------- ---------
Premises and equipment, net............................................. 11,549 11,820 11,765
Accrued interest receivable............................................. 2,500 2,463 2,036
Other real estate owned................................................. 1,386 3,794 3,390
Other assets............................................................ 2,367 1,314 2,055
--------- --------- ---------
Total assets....................................................... $ 338,482 $ 354,956 $ 345,067
========= ========= =========
LIABILITIES
Deposits:
Demand, noninterest-bearing.......................................... $ 72,226 $ 81,128 $ 77,777
Savings.............................................................. 160,363 161,340 159,303
Time................................................................. 58,159 75,133 71,810
--------- --------- ---------
Total deposits..................................................... 290,748 317,601 308,890
--------- --------- ---------
Borrowed funds.......................................................... 8,700 0 0
Other liabilities....................................................... 5,710 5,452 6,425
--------- --------- ---------
Total liabilities.................................................. 305,158 323,053 315,315
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common stock, par value $1; authorized 5,000,000
shares; issued 2,493,200 shares as of June 30, 1996 and
December 31, 1995 and 1,245,100 shares issued as of
June 30, 1995; shares outstanding of 2,190,380 as of
June 30, 1996 and December 31, 1995 and
1,093,690 shares outstanding as of June 30, 1995..................... 2,493 2,493 1,245
Paid-in capital in excess of par value.................................. 4,363 4,363 5,559
Unrealized investment appreciation
(depreciation) net of deferred income taxes.......................... (41) 212 (26)
Retained earnings....................................................... 28,048 26,374 24,513
--------- --------- ---------
34,863 33,442 31,291
Less: Common stock in treasury at cost -- 151,410 shares................ (1,539) (1,539) (1,539)
--------- --------- ---------
Total shareholders' equity........................................... 33,324 31,903 29,752
--------- --------- ---------
Total liabilities and shareholders' equity........................... $ 338,482 $ 354,956 $ 345,067
========= ========= =========
</TABLE>
The accompanying notes are an integral part of consolidated financial
statements.
*- Reclassified for comparative purposes.
FORM 10-Q
PAGE 3
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
------------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income.......................................... $ 3,032 $ 2,234
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses........................ 200 250
Provision for depreciation and amortization...... 538 490
Gain on sale of other real estate owned.......... (1,074) (126)
Loans originated for resale...................... (35,184) (19,237)
Proceeds from loans sold......................... 21,996 22,606
Gain on sale of loans............................ (163) (144)
Reduction in deferred income taxes............... (40) (203)
Decrease in taxes receivable..................... 0 1,043
Increase in interest receivable.................. (37) (37)
Increase in interest payable..................... 831 1,106
Other............................................ (1,383) (522)
---------- ---------
Net cash provided by operating activities..... (11,284) 7,460
---------- ---------
INVESTING ACTIVITIES:
Purchases of investment securities.................. (4,066) (8,283)
Proceeds from maturity of investment securities..... 12,965 7,015
Proceeds from sales of investment securities
available for sale.................................. 5,499 0
Loan repayments, net of loan originations........... 8,609 14,563
Loans purchased (dealer loans)...................... (18,478) (11,734)
Purchases of premises and equipment................. (213) (815)
Proceeds from disposition of other real
estate owned....................................... 3,482 404
Capitalization of costs of other real estate
owned.............................................. 0 (193)
---------- ---------
Net cash used by investing activities......... 7,798 957
---------- ---------
FINANCING ACTIVITIES:
Net increase in demand and savings deposits......... (9,879) (22,437)
Net increase (decrease) in time deposits............ (16,974) 29,990
Net increase in borrowed funds...................... 8,700 0
Dividends paid...................................... (1,358) (547)
Repayment of mortgage debt.......................... (31) (23)
Proceeds from issuance of common stock.............. 0 0
---------- ---------
Net cash provided (used) by
financing activities......................... (19,542) 6,983
Increase (decrease) in cash and cash equivalents.... (23,028) 15,400
Cash and cash equivalents at beginning of period.... 44,653 30,437
---------- ---------
Cash and cash equivalents at end of period.......... $ 21,625 $ 45,837
========== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid................................ $ 1,740 $ 101
Interest paid.................................... $ 2,440 $ 2,314
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
FORM 10-Q
PAGE 4
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
1. Unaudited Interim Results:
The consolidated balance sheets of Bryn Mawr Bank Corporation (the
"Corporation") as of June 30, 1996 and 1995, the consolidated statements of cash
flows for the six month periods ended June 30, 1996 and 1995 and the related
consolidated statements of income for the six month and three month periods
ended June 30, 1996 and 1995 are unaudited. Management believes that all
adjustments, accruals and elimination entries necessary for the fair
presentation of the consolidated financial position and results of operations
for the interim periods presented have been made. The year-end balance sheet
data was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. The financial
statements should be read in conjunction with the Notes to Consolidated
Financial Statements contained in the Corporation's 1995 Annual Report
Incorporated in the 1995 Form 10-K (Exhibit #13).
2. Earnings Per Common Share:
Reference is made to Note #10, Stock Option Plan (the "Plan"), in the Notes
to Consolidated Financial Statements in the Corporation's 1995 Annual Report
incorporated in the 1995 Form 10-K (Exhibit #13). Shares under option under the
Plan had a dilutive impact on net income per share for the six month and three
month periods ended June 30, 1996 and did not have a material dilutive impact on
net income for the six month and three month periods ended June 30, 1995.
3. Disclosure of Accounting Policy:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, interest bearing deposits with banks and federal funds sold.
4. Adoption of Financial Accounting Standards:
During the first quarter of 1995, the Corporation adopted Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan" ("SFAS No. 114"), as amended by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures". SFAS No. 114 requires measurement of impaired
loans based on the present value of expected future cash flows discounted at the
loan's effective interest rate, or at the loan's observable market price or, as
a practical expedient, the fair value of the collateral, if the loan is
collateral dependent. SFAS No. 114 does not apply to large groups of smaller-
balance homogeneous loans that are collectively evaluated for impairment. The
adoption of SFAS No. 114 did not have a material impact on the financial
position or results of operations of the Corporation.
During the first quarter of 1996, the Corporation adopted Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights" ("SFAS No. 122".) SFAS No. 122 requires the recognition of separate
assets relating to the rights to service mortgage loans for others based on
their fair value, if it is practicable to estimate the value. The adoption of
FORM 10-Q
PAGE 5
<PAGE>
SFAS No. 122 did not have a material impact on the financial position or results
of operations of the Corporation.
Also, during the first quarter of 1996, the Corporation adopted Statement
of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS No. 123"). SFAS No. 123 provides an alternative method of
accounting for stock based compensation arrangements, based on fair value of the
stock based compensation determined by an option pricing model utilizing various
assumptions regarding the underlying attributes of the options and the
Corporation's stock, rather than the existing method of accounting for stock
based compensation which is provided in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). The Financial
Accounting Standards Board encourages entities to adopt the fair value based
method, but does not require the adoption of this method at this time. For those
entities that continue to apply APB No. 25, proforma disclosure of the effect of
SFAS No. 123 on net income and earnings per share is required in the 1996
financial statements. The Corporation will make such year end disclosures at
December 31, 1996. Since the Corporation has determined to continue to apply APB
25, there will be no material impact on the financial position and results of
operations.
5. Loans:
As of June 30, 1996, the recorded investment in loans for which impairment
has been recognized in accordance with SFAS No. 114 totaled $1,172,000. All
impaired loans had a related allowance for loan losses. The total related
allowance for loan losses is $192,000.
Interest on loans, including impaired loans, is accrued only if deemed
collectible. Unpaid interest income is reversed when a loan becomes over 90
days delinquent and on any loans, prior to 90 days delinquency, if management
determines it is warranted. Any principal or interest received on impaired
loans is recorded as a direct reduction of the unpaid principal balance of the
loan. When the unpaid principal balance of the loan has been fully collected,
any additional amounts collected are recognized as interest income.
FORM 10-Q
PAGE 6
<PAGE>
6. Allowance for Possible Loan Losses:
The summary of changes in the allowance is as follows:
<TABLE>
<CAPTION>
six months ended year ended
June 30, December 31,
1996 1995 1995
----------------- -------
<S> <C> <C> <C>
Balance, Beginning of period $3,652 $3,618 $3,618
------- ------- ------
Charge-offs:
Consumer (102) (102) (234)
Commercial and industrial 0 (67) (527)
Real estate 0 (8) (8)
------- ------- -------
Total charge-offs (102) (177) (769)
------- ------- -------
Recoveries:
Consumer 27 25 54
Commercial and industrial 374 228 236
Real estate 8 10 13
------- ------- -------
Total recoveries 409 263 303
------- ------- -------
Net (charge-offs) / recoveries 307 86 (466)
Provision for loan losses 200 250 500
------- ------- -------
Balance, End of period $4,159 $3,954 $3,652
======= ======= =======
</TABLE>
FORM 10-Q
PAGE 7
<PAGE>
ITEM 2.
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Bryn Mawr Bank Corporation (the "Corporation"), the parent company of The
Bryn Mawr Trust Company (the "Bank"), reported net income of $3,032,000 for the
first six months of 1996, a 36% increase over $2,234,000 of net income reported
for the first six months of 1995. The realization of a $1,073,000 pre-tax gain
from the sale of a commercial property in the Bank's other real estate owned
("OREO") during the first quarter of 1996 was primarily responsible for the
large increase in net income in the first half of 1996 compared to the first
half of 1995. Exclusive of this pre-tax gain and certain non-recurring expense
items, net income for the first six months of 1996 was 11% ahead of net income
for the first six months of 1995. For the first six months of 1996, earnings per
common share, including the dilutive effect of common stock equivalents,
amounted to $1.34, a 31% increase over earnings per common share of $1.02
reported for the first six months of 1995. Per share computations were based on
2,263,532 average shares outstanding, including common stock equivalents for the
first six months of 1996 and 2,187,380 average shares outstanding for the first
six months of 1995. Per share amounts and average outstanding shares for 1995
have been restated to reflect the 2-for-1 stock split, effective December 29,
1995.
For the second quarter of 1996, the Corporation reported net income of
$1,275,000 an 11% increase over net income of $1,144,000 reported for the second
quarter of 1995. For the three months ended June 30, 1996, earnings per common
share, including the dilutive effect of common stock equivalents, amounted to
$.56, an 8% increase over earnings per common share of $.52, reported for the
three months ended June 30, 1995. Average shares outstanding, including the
dilutive effect of common stock equivalents were 2,264,341 for the three months
ended June 30, 1996 compared to average shares outstanding of $2,187,380 for the
same period in 1995. Per share amounts and average outstanding shares for 1995
have been restated to reflect the 2-for-1 stock split, effective December 29,
1995.
The increase in earnings for the first six months of 1996 over the same
period in 1995 may be attributed to a number of factors, including an increase
in net interest income, up 10% over the first six months of 1995 as well as
increases in most categories of other income, which, exclusive of the increases
from the gains on the sale of OREO, were up 6% over the same period in 1995.
Other expenses rose 9% for the first six months of 1996 compared to the same
period in 1995.
Higher yielding average outstanding loan balances for 1996 grew 10% from
average daily outstanding loan balances for the first six months of 1995, while
lower yielding average outstanding investment balances decreased by 15%. The
average cost of funds for the respective periods decreased from 2.3% for the
first half of 1995 to 2.2% for the same period in 1996. The result was an
increase in the Bank's annualized net interest margin, to 5.62% for the first
six months of 1996 compared to 5.23% for the same period in 1995.
FORM 10-Q
PAGE 8
<PAGE>
The prime rate decreased by 75 basis points from June 1995 to June 1996.
Since, in the short term, 30 days or less, the Bank is asset rate sensitive, a
declining prime rate usually will cause a related decrease in interest income.
However, a change in the mix of earning assets, increasing higher yielding
average outstanding loan balances while decreasing lower yielding average
outstanding investment balances, caused an increase in the annualized yield on
earning assets for the first six months of 1996 to 7.8% compared to 7.5% for the
same period in 1995. In an effort to further mitigate the effect of a declining
prime rate, Bank management was able to lower the average annualized cost of
funds to 2.2% for the first six months of 1996 compared to 2.3% for the same
period in 1995. While interest rate movements and their effect on future revenue
streams cannot be predicted, management believes that there are presently no
known trends, events or uncertainties that will have or are reasonably likely to
have a material effect on the Corporation's liquidity, capital resources or
results of operations in the future.
NET INTEREST INCOME
- -------------------
For the six months ended June 30, 1996, net interest income rose 10% to
$8,741,000 from $7,963,000 in 1995. Total interest income grew 6% for the first
six months of 1996 to $12,012,000 from $11,383,000 for the first six months of
1995. Interest expense decreased 4% over the same periods. Interest expense for
the six months ended June 30, 1996 and 1995 was $3,271,000 and $3,420,000,
respectively. The yield on earning assets for the first six months of 1996 was
7.8% compared to 7.5% for the first six months of 1995 while the effective rate
paid on interest bearing deposits for the first six of 1996 was 2.9% compared to
3.0% for the same period in 1995.
Interest and fees on loans increased 10% from $9,509,000 for the first six
months of 1995 to $10,413,000 for the first six months of 1996. A combination of
steady loan portfolio yields, at 8.3% for both the first six months of 1996 and
1995 and a 10% increase in average outstanding loan balances from $222,524,000
for the first six months of 1995 to $243,687,000 for the same period in 1996,
are the primary reasons for this increase in loan related interest and fee
income.
Interest income on investments decreased $90,000 or 6%, from $1,503,000 for
the first six months of 1995 to $1,413,000 for the first six months of 1996.
Interest from U.S. Treasury obligations decreased 29% from $1,146,000 for the
first six months of 1995 to $818,000 for the first six months of 1996. The
primary reason for this decrease was a $16,559,000 or 36% decrease in the
average balance of U.S. Treasury securities, from $45,942,000 during the first
six months of 1995 to $29,383,000 for the comparable period in 1996. The
decrease in U.S. Treasury obligations, which was primarily a result of
investment maturities as opposed to sales, was necessary to fund loan growth.
This decrease in interest income from U.S. Treasury obligations is the primary
reason for the 6% decrease in interest income on investments. The Bank also held
U.S. Government Agency securities at June 30, 1996. No such securities were held
by the Bank at June 30, 1995. Interest income on U.S. Government Agency
securities amounted to $335,000 for the six months ended June 30, 1996. There
was no such income reported for the first six months of 1995. Interest income on
obligations of states and political subdivisions decreased by 31%, from $318,000
for the six months ended June 30, 1995 to $220,000 for the same period in 1996.
A decrease of $3,537,000 or 29% in average
FORM 10-Q
PAGE 9
<PAGE>
outstanding balances of obligations of state and political subdivisions, from
$12,334,000 in average outstanding balances for the first six months of 1995
down to $8,797,000 for the same period in 1996 is the primary reason for this
decrease. The overall yield on investment securities increased from 5.1% for the
first six months of 1995 to 5.6% for the first six months of 1996, due primarily
to the maturity of lower yielding investments in the Bank's investment
portfolio.
Interest expense on deposits decreased 4%, to $3,271,000 for the six months
ended June 30, 1996 compared to $3,420,000 for the same period in 1995. The
average cost of interest bearing deposits decreased from 3.0% for the first six
months of 1995 to 2.9% for the same period in 1996. The average interest bearing
deposit balances increased 1% to $224,899,000 at June 30, 1996 compared to
$227,449,000 for the same period in 1995. However, the average deposit mix has
changed for the first six months of 1996 compared to the same period in 1995.
The most significant change in average interest bearing deposit balances, for
the first six months of 1996 compared to the same period in 1995, came in
Savings and Now Accounts. While average Savings account balances decreased
$4,653,000 or 10%, from $47,524,000 for the first six months of 1995 to
$42,871,000 for the same period in 1996, average Now account balances increased
$4,189,000 or 6%, from $65,546,000 at June 30, 1995 to $69,735,000 at June 30,
1996. Declining rates of interest on all categories of interest bearing deposits
for 1996 compared to 1995 rates, are primarily responsible for a decrease in the
average cost of interest bearing deposits, to 2.9% for the first six months of
1996 compared to 3.0% for the first half of 1995.
For the first six months of 1996, the net interest margin increased to
5.62% from 5.23% for same period in 1995. The net interest margin is computed
exclusive of related loan fee income.
For the second quarter of 1996, net interest income increased $420,000 or
10% to $4,461,000 in 1996 from $4,041,000 for the same period in 1995. Total
interest income grew $186,000 or 3%, from $5,867,000 for the second quarter of
1995 to $6,053,000 for the same period in 1996. Interest and fees on loans grew
$553,000 or 11% for the second quarter of 1996 over the same period in 1995.
Growth in average outstanding loans in the second quarter of 1996, compared to
the same quarter in 1995, is primarily responsible for this growth. Interest on
federal funds sold decreased $257,000 or 91% as available funds were used to
fund new loan growth. Interest income on U.S. Treasury securities and
Obligations of states and political subdivisions decreased $217,000 or 37% and
$60,000 or 38%, respectively, during the second quarter of 1996 compared to the
second quarter of 1995. The Bank did not own any U.S. Government agency
securities during the second quarter of 1995, hence there was no interest income
from this category reported for that period. Interest on deposits decreased
$234,000 or 13% from $1,826,000 for the second quarter of 1995 to $1,592,000 for
the same period in 1996. A decline in interest rates paid on all categories of
interest bearing deposits for the second quarter of 1996 compared to the same
quarter in 1995 is responsible for this decrease in interest expense.
FORM 10-Q
PAGE 10
<PAGE>
LOAN LOSS PROVISION
- -------------------
The loan loss provision represents management's determination of the amount
necessary to be charged against the current year's income in order to maintain
an adequate loan loss reserve. The Bank maintains an Officer Loan Review
Committee (the "Committee") and retains the services of an independent loan
review consultant (the "Consultant"). The Consultant performs an independent
review of the Bank's loan portfolio and the loan loss reserve. The Committee
meets monthly to review the adequacy of the loan loss reserve as well as all
nonaccrual loans, any potential problem loans and loans criticized by either the
Bank's regulators or the Consultant.
Based on ratings assigned by the Committee on the quality of the loans
which are reviewed, a specific reserve may be computed for each loan. In
addition to the specific reserve amounts, the balance of loans not reviewed by
the Committee has a reserve computed based on the average of the prior five
years write-offs plus the annualized write-offs for the current year. Including
annualized write-offs for the current year takes into consideration current
trends in both volumes and write-offs, to be included in the computation.
Finally, an amount equal to .5% of all outstanding loans is included in the loan
loss reserve calculation to address possible unforeseen loan loss reserve
requirements. The sum of the specific reserves, the reserve calculated based on
average write-offs and the reserve calculated based on the entire portfolio for
possible unforeseen loan losses is compared to the Bank's current loan loss
reserve balance. Any additions deemed necessary to the loan loss reserve are
then made on a timely basis.
The loan loss reserve amounted to 1.6% of outstanding loans at June 30,
1996 and 1.8% as of June 30, 1995. Nonperforming loans decreased 25% to $703,000
as of June 30, 1996, down from $943,000 as of June 30, 1995. The loan loss
reserve amounted to 592% of nonperforming loans as of June 30, 1996 compared to
419% as of June 30, 1995. Based on the results of both the internal and external
loan review processes and the current level of nonperforming loans, management
believes the loan loss reserve to be adequate as of June 30, 1996. Also, as a
result of the aforementioned reviews, the level of nonperforming loans and the
level of the loan loss reserve when compared to nonperforming loans, it was
determined that the provision for loan losses be reduced during the second
quarter of 1996. The provision for loan losses was $200,000 for the six months
ended June 30, 1996, a 20% reduction from a provision of $250,000 for the first
six months of 1995.
As noted above, during the first quarter of 1995, the Corporation adopted
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan" ("SFAS No. 114"), as amended by Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan-
Income Recognition and Disclosures". SFAS No. 114 requires measurement of
impaired loans based on the present value of expected future cash flows
discounted at the loan's effective interest rate, or at the loan's observable
market price or, as a practical expedient, the fair value of the collateral, if
the loan is collateral dependent. SFAS No. 114 does not apply to large groups of
smaller-balance homogeneous loans that are collectively evaluated for
impairment. The adoption of SFAS No. 114 did not have a material impact on the
financial position or results of operations of the Corporation.
FORM 10-Q
PAGE 11
<PAGE>
OTHER INCOME
- ------------
Other income increased 30% from $4,419,000 for the six months ended June
30, 1995 to $5,761,000 for the same period in 1996. During the first quarter of
1996, the Bank sold a commercial real estate property, included in OREO, and
realized a pre-tax gain of $1,073,000 on the sale. Exclusive of the net gains on
the sale of OREO, reported in each year, other income increased 9% for the first
six months of 1996, compared to the same period in 1995.
Fees for trust services rose 11% from $2,670,000 for the first six months
of 1995 to $2,975,000 for the same period in 1996. The development of new
business lines, including Investment Counsellors of Bryn Mawr ("ICBM"),
established in January of 1996 to provide investment management services to high
net worth individuals and employee benefit plans, along with increased asset
values of assets managed by the Trust division are the primary reasons for the
increase in fees for trust services.
For the six month period ended June 30, 1996, the Bank originated and
sold $21,447,000 of mortgage loans in the secondary mortgage market, a 5%
decrease from $22,606,000 of mortgage loans originated and sold during the first
six, months of 1995. The Bank offers potential borrowers the opportunity to
obtain a mortgage loan at market rates of interest with points attached or to
have a loan with a slightly higher rate of interest and no points attached. Upon
the sale of the loan, the higher rate of interest allows the Bank to recognize a
larger gain on the sale, as opposed to increased deferred loan fees recognized
as income at the time of sale. For the first six months of 1996, as compared
with the same period in 1995, more borrowers chose no point loans with higher
rates of interest. Hence, even with a 5% decline in loan sale volume, net gains
on the sale of residential mortgage loans in the secondary mortgage market
amounted to $152,000 for the first six months of 1996, an 19% increase over
$128,000 in gains on loan sales, reported for the first six months of 1995.
However, deferred loan fee income, earned as a result of these sales declined by
53%, to $97,000 for the first six months of 1996 from $206,000 during the same
period in 1995. The net result is that loan sale activity for the first six
months of 1996 earned 116 basis points on loans sold compared to 148 basis
points for the same period in 1995.
For the six month period ended June 30, 1996, the decrease in interest
rates was also responsible for a $42,000, or 8%, increase in service charges on
deposit accounts, from $514,000 for the six months ended June 30, 1995 to
$556,000 for the same period in 1996, due primarily to decreases in the earnings
credit rate used to offset these service charges.
Other service charges, commissions and fee income rose $66,000 or 15% from
$450,000 for the six months ended June 30, 1995 to $516,000 for the same period
in 1996. The primary reasons for this increase was an increase in loan servicing
and late fees of $20,000, due to an increase in the volume of mortgage loans
serviced by the Bank for others and an increase of $ 52,000 in documentation
preparation fees related to the origination of residential mortgage loans.
Other operating income decreased $33,000 or 6%, from $509,000 for the first
six months of 1995 to $476,000 for the same period in 1996. During the first
quarter of 1996, the Bank sold a parcel of OREO which had produced a
FORM 10-Q
PAGE 12
<PAGE>
revenue stream for the Bank. Subsequent to the disposition of this OREO parcel,
the related revenue stream was eliminated. The revenues from this OREO property
prior to the sale were $74,000 for the first six months of 1996, an $80,000
reduction from $154,000 for the same period in 1995. This reduction on OREO
balances is the primary reason for the 6% decrease in other operating income for
the first six months of 1996, compared to the same period in 1995.
Total other income decreased $63,000 or 3% from $2,385,000 for the second
quarter of 1995 to $2,322,000 for the same quarter in 1996. Trust fees grew
$124,000 or 9% from 1,406,000 for the second quarter of 1995 to $1,530,000 for
the second quarter or 1996. An increase in interest rates offered on residential
mortgage loans during 1996 was primarily responsible for both a decline in the
volume of mortgages originated and sold in the secondary market during the
second quarter of 1996 compared to the same quarter in 1995 as well as the
overall net gains on the sale of these loans. The net gain on loan sales for the
second quarter of 1996, compared to the same quarter in 1995, decreased $41,000
or 40%. Due to the fact that the majority of OREO was disposed of prior to the
second quarter of 1996 and that there remains only one parcel of OREO presently
owned by the Bank, net gains on the sale of OREO decreased by $76,000 or 99% for
the second quarter of 1996 compared to the same quarter in 1995. Other operating
income decreased $65,000 or 19%, from $340,000 for the second quarter of 1995 to
$275,000 for the same quarter in 1996. The primary reason for this decline was
the elimination of OREO related revenues in 1995, associated with a parcel of
OREO sold during the first quarter of 1996. OREO revenues decreased $90,000 for
the second quarter of 1996 compared to the same quarter in 1995.
OTHER EXPENSE
- -------------
Total other expense increased $832,000 or 9% for the first six months of
1996 to $9,790,000 from $8,958,000 for the first six months of 1995. Salaries
and wages grew $520,000 or 14%, from $3,749,000 for the six months ended June
30, 1995 to $4,269,000 for the same period in 1996. Of this increase, $420,000
relates to regular salary expense and, in addition to planned salary increases,
reflects both the addition of new staff associated with the family office
operation, established in May 1995 as well as the staffing additions associated
with the establishment of ICBM in January 1996. Incentive salaries were up
$102,000 or 27%, from $375,000 for the six months ended June 30, 1995 to
$477,000 for the same period in 1996.
Employee benefits expenses grew $175,000 or 20% compared to the first six
months of 1995, primarily a result of a $147,000 increase in the projected
pension expense for the first six months of 1996 compared to the same period in
1995 and a $45,000 increase in Social Security taxes, associated with the
addition of new staff, primarily associated with the establishment of the family
office and ICBM.
Occupancy expense grew $91,000 or 13% for the first six months of 1996 from
$696,000 for the first six months of 1995 to $787,000 for the first six months
of 1996. The largest additional cost contributing to this expense was $30,000
for the removal of snow in 1996, as well as unplanned repairs during the first
six months of 1996. Furniture and equipment expenses grew $101,000
FORM 10-Q
PAGE 13
<PAGE>
or 23% over the first six months of 1995, from $436,000 for the first six months
of 1995 to $537,000 for the same period in 1996. The planned addition of fixed
assets, primarily computer equipment and software related to the conversion of
the Bank's data processing facilities, is primarily responsible for an increase
in the related depreciation expense for the first six months of 1996 compared to
the same period in 1995.
Other operating expenses decreased $55,000 or 2% over the first six months
of 1995, from $3,192,000 for the first six months of 1995 to $3,137,000 for the
first six months of 1996. Included in other operating expenses for the first six
months of 1995 was a $325,000 expense for the cost of Federal Deposit Insurance
Corporation (the "FDIC") deposit insurance premiums. Presently, the Bank, which
is classified as "Well Capitalized" by the FDIC, is benefitting from the
elimination of FDIC insurance premiums for banks included in this
classification. The related expense for the first half of 1996 amounted to
$1,000 compared to $325,000 for the same period in 1995. Exclusive of this
$324,000 net decrease in FDIC deposit insurance premium expense, other operating
expenses increased by $269,000 or 9% over the first six months of 1995. There
are a number of factors primarily responsible for this increase. Included in
this increase was a $53,000 increase in the cost of OREO maintenance. Additional
increases in other operating expenses also included a $70,000 expense to settle
a regulatory dispute, which was less than a non-recurring cost of $135,000,
incurred during the second quarter of 1995, to settle two outstanding disputes
involving the Bank. There was also an increase of $76,000 in additional expenses
primarily associated with the EDP conversion accomplished during the first
quarter of 1996, comprised of stationery and supplies, up $51,000 and telephone
expense, up $25,000. Advertising expense increased $75,000, reflecting the
Bank's continued commitment to broadening its base of customers. Appraisal fees
and the cost of obtaining credit reports, both related to the Bank's origination
and sale of residential loans to the secondary mortgage market, increased
$64,000 over 1995 levels. The balance of the $269,000 increase in other
operating expenses for the first half of 1996 amounted to a 3% increase over
similar expenses for the first six months of 1995.
For the quarter, total other expenses increased 3% to $4,793,000 for the
quarter ended June 30, 1996 compared to $4,667,000 in 1995. Salaries and wages
increased $227,000 or 12% from $1,920,000 for the quarter ended June 30, 1995 to
$2,147,000 for the same period in 1996. The majority of this increase occurred
in regular salary expense, up $175,000 or 10%, reflecting both recurring salary
increases and the addition of ICBM in January of 1996. Other salaries, primarily
incentive related expenses, rose $52,000 or 24% for the second quarter of 1996
compared to the same period in 1995. Trust division incentive expenses, related
to division profitability, were developed during 1995. During the second quarter
of 1996, other salaries included $43,000 in Trust incentive expenses. No such
expenses were incurred in the second quarter of 1995. Employee benefits expenses
grew $73,000 or 15% for the second quarter of 1996, compared to the second
quarter of 1995. An increase in the projected pension expense for 1996 compared
to 1995 is the primary reason for this increase. A $96,000 or 44% increase in
furniture, fixtures and equipment expense is due primarily to a planned increase
in depreciation expense, related to furniture, fixtures and equipment put into
service during the second quarter of 1996, a result of the EDP conversion that
occurred earlier in 1996. Other operating expenses decreased $272,000 or 16% for
the second quarter of 1996, compared to the same quarter in 1995. This decrease
FORM 10-Q
PAGE 14
<PAGE>
was primarily related to two items. The elimination of the Bank's FDIC deposit
insurance premium for 1996 was responsible for a $163,000 decrease in this
expense for the second quarter of 1996, compared to the same quarter in 1995.
During the second quarter of 1995, the Bank incurred an expense of $135,000 so
settle two claims involving the Bank. No such expense was incurred during the
second quarter of 1996. Exclusive of these two items, other operating expenses
grew $26,000 or 2% for the second quarter of 1996, compared to the same quarter
in 1995.
APPLICABLE INCOME TAXES
- -----------------------
The Corporation's effective tax rate for the first six months of 1996 was
33% compared to 30% for 1995. The increase is due to a decrease in the tax-
exempt income from obligations of states and political subdivisions. The
decrease in tax-favored income is related to the decrease in the investment
portfolio necessary to fund the loan growth.
FINANCIAL CONDITION
- -------------------
Total assets decreased 5% from $354,956,000 at December 31, 1995 to
$338,482,000 as of June 30, 1996. Total assets decreased 2% from $345,067,000 as
of June 30, 1995.
Outstanding earning assets decreased 4% to $303,311,000 as of June 30, 1996
from $314,089,000 as of December 31, 1995. The Bank's loan portfolio increased
10%, to $258,880,000 at June 30, 1996 from $235,353,000 as of December 31, 1995.
Outstanding loans increased by 16%, from $222,770,000 as of June 30, 1995.
Outstanding consumer loans of $75,711,000 at June 30, 1996 increased by 3% over
both consumer loan outstanding balances of $73,189,000 as of December 31, 1995
and $73,678,000 as of June 30, 1995. Outstanding commercial loans at June 30,
1996 were $69,213,000, a 3% increase over outstanding commercial loan balances
of $67,507,000 at December 31, 1995 and 28% ahead of $53,923,000 at June 30,
1995. This portfolio's growth is a result of the Bank expanding its commercial
lending staff, including the establishment of the Member Banking Credit
Department in July 1995, adding two experienced lenders to the Bank's lending
staff, to provide loans to high net worth individuals and, also, by aggressively
seeking new commercial loan relationships within its market area. Outstanding
real estate loans were $113,956,000 at June 30, 1996, a 20% increase over both
$94,657,000 in outstanding real estate loans at December 31, 1995 and
$95,169,000 in outstanding real estate loans as of June 30, 1995. The largest
increase in outstanding real estate loans from June 30, 1995 to June 30, 1996
was in the Bank's residential mortgage loan portfolio, which grew by 42% from
$17,237,000 at June 30, 1995 to $24,398,000 at June 30, 1996.
The Bank's investment portfolio, having a market value of $44,334,000 at
June 30, 1996, decreased 25% from a market value of $59,211,000 at December 31,
1995 and decreased 28% from $61,168,000 as of June 30, 1995. The funds obtained
from these decreases in the investment portfolio were primarily used to help
fund the increase in the Bank's loan portfolio over the same period. As of
January 1, 1994, the Corporation adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", ("SFAS No. 115"). SFAS No. 115 requires all entities to
FORM 10-Q
PAGE 15
<PAGE>
allocate their investments among six categories as applicable: (1) trading, (2)
available for sale and (3) held to maturity. The Corporation has chosen to
include all of its investment securities in the available for sale category.
Investments in this category are reported at the current market value with net
unrealized gains or losses, net of the deferred tax effect, being added or
deducted from the Corporation's total equity on the balance sheet. Due primarily
to rising market rates of interest on similar types of investments, there was an
unrealized net loss in the investment portfolio of $62,000 as of June 30, 1996,
compared to a unrealized net gain of $321,000 at December 31, 1995. The
unrealized investment depreciation, net of deferred income taxes, decreased the
Corporation's shareholders' equity on the balance sheet by $41,000 as of June
30, 1996.
There were no federal funds available for sale at June 30, 1996, compared
to federal funds sold balances of $19,410,000 at December 31, 1995 and
$25,307,000 at June 30, 1995. The reduction of federal funds available for sale
at June 30, 1996, compared to December 31, 1995, is primarily a result of a
recurring cyclical increase in year-end deposit balances, the maturity of the
one year Premier CDs, during the first quarter of 1996 and the continued growth
in the loan portfolio. Bank management believed that, in order to maintain a
strong net interest margin, it was prudent to not renew the higher costing
Premier CDs as they matured during the first quarter of 1996. Management
continues to monitor the liquidity requirements of the Bank and believes that it
has the ability to increase its liquidity position through growth of new CDs,
borrowing from the Federal Home Loan Bank and the sale of investments,
classified as available for sale.
Nonperforming assets amounted to $2,089,000 at June 30, 1996, a 53%
decrease from $4,405,000 at December 31, 1995 and a 52% decrease from
nonperforming assets of $4,333,000 at June 30, 1995. Nonperforming loans
increased 15% to $703,000 at June 30, 1996 compared to nonperforming loans of
$611,000 at December 31, 1995 and decreased 25% from $943,000 as of June 30,
1995. The OREO balances decreased 63% from $3,794,000 as of December 31, 1995 to
$1,386,000 at June 30, 1996, which was a 59% decrease from an OREO balance of
$3,390,000 at June 30, 1995. As of June 30, 1996, one property remained as OREO
on the Bank's books.
As of June 30, 1996 and 1995, there were no significant loans classified
for regulatory purposes as loss, doubtful, substandard or special mention that
either (i) represent or result from trends or uncertainties which management
reasonably expects will impact future operating results, liquidity, or capital
resources, or (ii) represent material credits about which management is aware of
any information, causing management to have serious doubts as to the borrower's
ability to comply with the loan repayment terms.
Total deposits decreased 8% to $290,748,000 as of June 30, 1996 from
$317,601,000 as of December 31, 1995. A more meaningful measurement of deposit
change is the change in average outstanding deposit balances. Total average
outstanding deposit balances increased 1% to $297,030,000 for the six month
period ended June 30, 1996 from $295,364,000 for the same period in 1995.
Although the amount of average total deposits remained relatively stable, the
mix of deposits shifted. The Bank raised approximately $15,000,000 in new funds
from a Premier CD promotion during the first quarter of 1995, approximately one-
half of these balances matured during the first
FORM 10-Q
PAGE 16
<PAGE>
quarter of 1996. The net result was a decrease in the average outstanding CD
balances, by $1,072,000 or 2%, from $63,813,000 in average outstanding balances
for the first six months of 1995 to $62,741,000 for the same period in 1996. As
a reaction to a consistently low interest rate environment for interest bearing
deposits, average outstanding Savings and Market Rate Account balances decreased
by 10% and 2%, respectively, from the first six months of 1995 to the first six
months of 1996. Average savings balances decreased $4,653,000 from $47,524,000
for the first six months of 1995 to $42,871,000 for the same period in 1996 and
Market Rate Account balances decreased $1,014,000 from $50,566,000 in average
daily outstanding balances for the six months ended June 30, 1995 to $49,552,000
for the same period in 1996. Average outstanding NOW account balances grew 6% or
$4,189,000, from $65,546,000 for the first six months of 1995 to $69,735,000 for
the same period in 1996. Noninterest bearing demand deposit average outstanding
balances grew 6% or $4,216,000 from $67,915,000 for the six months ended June
30, 1995 to $72,131,000 for the same period in 1996. As of June 30, 1996, the
Bank had borrowed funds of $8,700,000. There were no such borrowing as of
December 31, 1995 or June 30, 1995. Borrowed funds assist Bank management in
managing the daily liquidity requirements of the Bank. A combination of
increased loan demand and a runoff of higher costing matured Premier CDs has
caused the Bank to use its borrowing capabilities, as a lower costing source of
funds than alternative sources of funds, namely the CD market. The six month
average borrowed funds outstanding balance was $1,442,000 as of June 30, 1996,
compared to $179,000 for the six month period ended June 30, 1995.
LIQUIDITY, INTEREST RATE SENSITIVITY
- ------------------------------------
The Bank's liquidity is maintained by managing its core deposits, selling
loans in the secondary market, borrowing from the Federal Home Loan Bank and
managing its position in the federal funds market. The Bank, through its
internal Asset/Liability Committee ("ALCO"), has adopted Risk Management
Policies and Procedures (the "Policy") for monitoring the attaining of goals for
both liquidity and interest rate sensitivity. Periodically, ALCO reviews the
Bank's liquidity ratio, comparing liquid assets, cash, unpledged investments and
federal funds sold against deposits, net of certificates of deposit in excess of
$100,000. It is presently the goal of ALCO to maintain a liquidity ratio of not
less than 20%. Due primarily to the increase in loan balances and the maturity
of Premier CDs, during the first quarter of 1996, this ratio was 18% at June 30,
1996, compared to 28% at December 31, 1995 and 30% at June 30, 1995. ALCO is
presently revising its liquidity policies and procedures to incorporate its
alternative funding sources as a part of the goal for measuring its liquidity
ratio.
In the short term, 30 days or less, the Bank is asset rate sensitive after
adjusting the interest rate sensitivity of savings deposits based on
management's experience and assumptions regarding the impact of product pricing,
interest rate spread relationships and customer behavior. Asset rate sensitivity
will result in a greater portion of assets compared to deposits repricing with
changes in interest rates within specified time periods. The opposite effect
results from being liability rate sensitive. Asset rate sensitivity in the short
term in an increasing rate environment should produce an increase in net
interest income. The Bank uses simulation models to help measure its interest
rate risk and to help manage its interest rate
FORM 10-Q
PAGE 17
<PAGE>
sensitivity. The simulation models consider not only the impact of changes in
interest rates on forecasted net interest income, but also such factors as yield
curve relationships, possible loan prepayments, and deposit withdrawals. As of
June 30, 1996, based on the results from the simulation models, the amount of
the Bank's interest rate risk was within the acceptable range as established by
the Policy.
CAPITAL RESOURCES
- -----------------
Total consolidated shareholders equity of the Corporation was $33,324,000,
or 9.8% of total assets, as of June 30, 1996, compared to total shareholders
equity of $31,903,000, or 9.0% of total assets, as of December 31, 1995. As of
June 30, 1995, shareholders' equity was $29,752,000, or 8.6% of total assets.
The Corporation's risk weighted Tier I capital ratio was 12.06% as of June 30,
1996 compared to 11.96% and 12.14% at December 31, 1995 and June 30, 1995,
respectively. The respective Tier II ratios were 13.31%, 13.21% and 13.40%. In
March 1996, the Corporation declared a one-time special dividend of $.32 per
share, to distribute to shareholders the after-tax proceeds of the gain on the
disposition of a commercial property, held in the Bank's OREO category. In
January and again in April 1996 the Corporation declared its regular dividend of
$.15 per share, a 20% increase over $.125 per share declared in January and
April 1995. The 1995 dividend per share has been restated to reflect the 2-for-1
stock split, effective on December 29, 1995. The cumulative dividends declared
for 1996, including the one-time special dividend, amounted to $.62 per share
compared to $.25 per share for the same period in 1995.
FORM 10-Q
PAGE 18
<PAGE>
PART II. OTHER INFORMATION
--------------------------
JUNE 30, 1996
ITEM 1. LEGAL PROCEEDINGS
- --------
NONE
ITEM 2. CHANGES IN SECURITIES
- --------
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- --------
NONE
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY
- --------
HOLDERS
NONE
ITEM 5. OTHER INFORMATION
- --------
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------
NONE
FORM 10-Q
PAGE 19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 APR-01-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 21,528 0
<INT-BEARING-DEPOSITS> 97 0
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 44,334 0
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 258,880 0
<ALLOWANCE> 4,159 0
<TOTAL-ASSETS> 338,482 0
<DEPOSITS> 290,748 0
<SHORT-TERM> 8,700 0
<LIABILITIES-OTHER> 5,710 0
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 2,493 0
<OTHER-SE> 30,831 0
<TOTAL-LIABILITIES-AND-EQUITY> 338,482 0
<INTEREST-LOAN> 10,413 5,364
<INTEREST-INVEST> 1,413 664
<INTEREST-OTHER> 186 25
<INTEREST-TOTAL> 12,012 6,053
<INTEREST-DEPOSIT> 3,271 1,592
<INTEREST-EXPENSE> 3,271 1,592
<INTEREST-INCOME-NET> 8,741 4,461
<LOAN-LOSSES> 200 75
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 9,790 4,793
<INCOME-PRETAX> 4,512 1,915
<INCOME-PRE-EXTRAORDINARY> 4,512 1,915
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,032 1,275
<EPS-PRIMARY> 1.34 .56
<EPS-DILUTED> 1.34 .56
<YIELD-ACTUAL> 5.62 0
<LOANS-NON> 703 0
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 3,652 0
<CHARGE-OFFS> 102 0
<RECOVERIES> 409 0
<ALLOWANCE-CLOSE> 4,159 0
<ALLOWANCE-DOMESTIC> 4,159 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 978 0
</TABLE>
