<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 March 31, 1997 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 April 21, 1997
- ---------------------------------
Common Stock, par value $1 2,205,665
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED March 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Consolidated Statements of Income for the three
Months Ended March 31, 1997 and 1996..............Page 1
Consolidated Balance Sheets as of March 31, 1997,
December 31, 1996 and March 31, 1996..............Page 2
Consolidated Statements of Cash Flows for the three
Months Ended March 31, 1997 and 1996..............Page 3
Notes to Consolidated Financial Statements............Page 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...Page 9
PART II - OTHER INFORMATION................................Page 18
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
-------- --------
<S> <C> <C>
Interest income:
Interest and fees on loans....................................... $ 5,367 $ 5,049
Interest on federal funds sold................................... 231 160
Interest on interest bearing deposits with banks................. 2 1
Interest and dividends on investment securities:
U.S. Treasury securities.................................... 219 442
U. S. Government Agency securities.......................... 204 168
Obligations of states and political subdivisions............ 83 122
Dividend income............................................. 19 17
--------- ---------
Total interest and dividend income....................................... 6,125 5,959
Interest expense on deposits............................................. 1,682 1,679
--------- ---------
Net interest income...................................................... 4,443 4,280
Loan loss provision...................................................... 50 125
--------- ---------
Net interest income after loan loss provision............................ 4,393 4,155
--------- ---------
Other income:
Fees for Trust services.......................................... 1,913 1,445
Service charges on deposits...................................... 270 289
Other service charges, commissions and fees...................... 312 329
Net gain on sale of loans........................................ 67 101
Net gain on sale of other real estate owned...................... 1 1,074
Other operating income........................................... 128 201
--------- ---------
Total other income....................................................... 2,691 3,439
--------- ---------
Other expenses:
Salaries and wages............................................... 2,425 2,122
Employee benefits................................................ 478 512
Occupancy and bank premises...................................... 348 415
Furniture, fixtures, and equipment............................... 375 222
Other operating expenses......................................... 1,280 1,726
--------- ---------
Total other expenses..................................................... 4,906 4,997
--------- ---------
Income before income taxes............................................... 2,178 2,597
Applicable income taxes.................................................. 720 840
========= =========
Net Income............................................................... $ 1,458 $ 1,757
========= =========
Earnings per average common share:
Net income ...................................................... $0.63 $0.77
Cash dividends declared ......................................... $0.18 $0.47
Average number of shares outstanding including common stock equivalents . 2,297,780 2,269,086
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Form 10-Q
1
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
March 31, Decmber 31, March 31,
1997 1996 1996
(Unaudited) (Unaudited)
----------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks............................................... $ 20,701 $ 26,717 $ 22,269
Interest bearing deposits with banks.................................. 166 121 107
Federal funds sold.................................................... 14,300 11,616 0
Investment securities available for sale, at market (amortized cost
of $39,704, $34,748 and $51,258 as of March 31, 1997,
December 31, 1996 and March 31, 1996, respectively)........... 39,491 34,747 51,354
Loans:
Consumer...................................................... 81,597 81,512 72,967
Commercial.................................................... 70,410 74,688 69,208
Real Estate................................................... 109,267 103,227 103,461
------------- ------------- ----------
Total loans........................................... 261,274 259,427 245,636
Less: Allowance for loan losses............................... (4,240) (4,182) (3,927)
------------- ------------- ----------
Net loans............................................. 257,034 255,245 241,709
------------- ------------- ----------
Premises and equipment, net........................................... 11,221 11,334 12,353
Accrued interest receivable........................................... 2,268 2,164 2,540
Other real estate owned............................................... 1,515 1,523 1,386
Other assets.......................................................... 2,365 2,280 1,500
============= ============= ==========
Total assets.......................................... $ 349,061 $ 345,747 $ 333,218
============= ============= ==========
Liabilities
Deposits:
Demand, noninterest-bearing................................... $ 70,316 $ 81,865 $ 70,676
Savings....................................................... 158,498 162,440 162,238
Time.......................................................... 77,038 58,878 61,173
------------- ------------- ----------
Total deposits........................................ 305,852 303,183 294,087
Other liabilities..................................................... 6,407 6,756 6,649
------------- ------------- ----------
Total liabilities..................................... 312,259 309,939 300,736
------------- ------------- ----------
Shareholders' equity
Common stock, par value $1; authorized 5,000,000 shares; issued
2,508,485, 2,503,885 and 2,493,200 shares as of March 31, 1997,
December 31, 1996 and March 31, 1996, respectively and
outstanding 2,205,665, 2,201,065 and 2,190,380 shares as of
March 31, 1997, December 31, 1996 and March 31, 1996,
respectively.................................................. 2,508 2,504 2,493
Paid-in capital in excess of par value................................ 4,513 4,445 4,363
Unrealized investment appreciation
(depreciation) net of deferred income taxes................... (141) (1) 63
Retained earnings..................................................... 31,461 30,399 27,102
------------- ------------- ----------
38,341 37,347 34,021
Less: Common stock in treasury at cost -- 302,820 shares as of
March 31, 1997, December 31, 1996 and March 31, 1996.......... (1,539) (1,539) (1,539)
------------- ------------- ----------
Total shareholders' equity.................................... 36,802 35,808 32,482
============= ============= ==========
Total liabilities and shareholders' equity.................... $ 349,061 $ 345,747 $ 333,218
============= ============= ==========
</TABLE>
The accompanying notes are an integral part of consolidated financial
statements.
Form 10-Q
2
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------------------------
1997 1996
--------------- -------------
<S> <C> <C>
Operating activities:
Net Income..................................................................... $ 1,458 $ 1,757
Adjustments to reconcile net income to net cash (used) provided by
operating activities:
Provision for loan losses................................................... 50 125
Provision for depreciation and amortization................................. 319 243
Gain on sale of other real estate owned..................................... (1) (1,074)
Loans originated for resale................................................. (7,761) (17,862)
Proceeds from loans sold.................................................... 8,209 10,248
Gain on sale of loans....................................................... (67) (101)
Increase (reduction) in deferred income taxes............................... 45 (40)
Increase in interest receivable............................................. (104) (77)
(Decrease) increase in interest payable..................................... (356) 453
Other....................................................................... (28) 729
----------- -----------
Net cash (used) provided by operating activities......................... 1,764 (5,599)
----------- -----------
Investing activities:
Purchases of investment securities............................................. (12,984) (4,066)
Proceeds from maturity of fixed income securities.............................. 8,027 11,629
Loan repayments, net of loan originations...................................... 6,804 5,017
Loans purchased (dealer loans)................................................. (9,024) (7,435)
Purchases of premises and equipment............................................ (205) (749)
Proceeds from disposition of other real estate owned........................... 0 3,482
----------- -----------
Net cash (used) provided by investing activities......................... (7,382) 7,878
----------- -----------
Financing activities:
Net decrease in demand and savings deposits.................................... (15,491) (9,554)
Net increase (decrease) in time deposits....................................... 18,160 (13,960)
Dividends paid................................................................. (396) (1,029)
Proceeds from issuance of common stock......................................... 72 0
Repayment of mortgage debt..................................................... (14) (13)
----------- -----------
Net cash (used) provided by financing activities......................... 2,331 (24,556)
----------- -----------
Decrease in cash and cash equivalents......................................... (3,287) (22,277)
Cash and cash equivalents at beginning of period............................... 38,454 44,653
----------- -----------
Cash and cash equivalents at end of period..................................... 35,167 22,376
=========== ===========
Supplemental cash flow information:
Income taxes paid........................................................... $ 51 $ 276
Interest paid............................................................... $ 2,038 $ 1,226
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Form 10-Q
3
<PAGE>
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(Unaudited)
1. Unaudited Interim Results:
The consolidated balance sheets of Bryn Mawr Bank Corporation (the
"Corporation") as of March 31, 1997 and 1996, the consolidated statements of
cash flows for the three month periods ended March 31, 1997 and 1996 and the
related consolidated statements of income for the three month periods ended
March 31, 1997 and 1996 are unaudited.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of related revenue and expense during the
reporting period. Actual results could differ from those estimates. 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. All such
adjustments were of a normal recurring nature. 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 1996 Annual Report
incorporated in the 1996 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 1996 Annual Report
incorporated in the 1996 Form 10-K (Exhibit #13). Shares under option under the
Plan had a dilutive impact on net income per share for the three month periods
ended March 31, 1997 and 1996.
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 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
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
Form 10-Q
4
<PAGE>
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, if adopted, on net income and earnings per share was
required in the 1996 financial statements. Reference is made to Note 10, Stock
Option Plan, in the notes to the consolidated Financial Statements in the
Corporation's Annual Report for the disclosure of the effect of SFAS No. 123 on
the Corporation's earnings per share. The Corporation has determined to
continue to apply APB 25 and, therefore, there will be no material impact on the
financial position and results of operations.
In January 1997, the Corporation adopted Statement of Financial Accounting
Standard No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities", ("SFAS No. 125"). SFAS No. 125, which was
adopted prospectively, provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of liabilities based on
the concept of control. The adoption of SFAS No. 125 did not have a material
impact on the financial position or results of operation of the Corporation.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earning per Share", ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation and disclosure requirements
for earnings per share for entities with publicly held common stock or potential
common stock. SFAS No. 128 requires the presentation of both basic earnings per
share and, when not antidilutive, diluted earnings per share. Basic earnings
per share is computed by dividing net income by the weighted-average number of
common shares outstanding during the period. Dilutive earnings per share is
computed in a manner similar to basic earnings per share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the dilutive common shares had been issued.
SFAS No. 128 supersedes Accounting Principals Board Opinion No. 15-Earnings
per share and is effective for financial statements for both interim and annual
periods ending after December 15, 1997. Early application is not permitted.
Had SFAS No. 128 been in effect at March 31, 1997, the earnings per share
computation would have been as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Earnings per common share $ .66 $ .80
Earnings per common share- assuming dilution $ .63 $ .77
</TABLE>
5. Loans:
Interest income on loans performing satisfactorily is recognized on the
accrual method of accounting. Nonperforming loans are loans on which scheduled
principal and/or interest is past due 90 days or more or loans less than 90 days
past due which are deemed to be problem loans by management. All nonperforming
loans, except consumer loans, are placed on nonaccrual status, and any
outstanding interest receivable at the time the loan is deemed
Form 10-Q
5
<PAGE>
nonperforming is deducted from interest income. The charge-off policy for all
loans, including nonperforming and impaired loans, consider such factors as the
type and size of the loan, the quality of the collateral, and historical
creditworthiness of the borrower in management's assessment of the
collectability of such loans.
In May 1993, Statement of Financial Accounting Standards NO. 114, "Accounting by
Creditors for Impairment of a Loan" ("SFAS No. 114"), was issued. Under the
requirements of SFAS No. 114, a loan is considered to be impaired when it is
probable that all amounts will not be collected in accordance with the terms of
the loan agreement. SFAS No. 114 was subsequently amended by Statement of
Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment
of a Loan- Income Recognition and Disclosure" ("SFAS No. 118"), to allow a
creditor to use existing methods for recognizing interest income on an impaired
loan. The adoption of SFAS No. 114 and No. 118 was required in the first
quarter of 1995.
As a part of its internal loan review process, management, when considering
making a loan an impaired loan, considers a number of factors, such as a
borrower's financial strength, the value of related collateral and the ability
to continue to meet the original contractual terms of a loan. Major risk
classifications, used to aggregate loans for application of SFAS No. 114 include
both credit and the risk of failure to repay a loan and concentration risk. A
loan is not considered impaired if there is merely an insignificant delay or
shortfall in the amounts of payments. An insignificant delay or shortfall is a
temporary delay in the payment process of a loan. However, under these
circumstances, the Bank expects to collect all amounts due, including interest
accrued at the contractual interest rate for the period of the delay.
When a borrower is deemed to be unable to meet the original terms of a loan, the
loan is considered impaired. While all impaired loans are not necessarily
considered non-performing loans, if a loan is delinquent for 90 days or more, it
is considered both a nonperforming and impaired loan. All of the Corporation's
impaired loans, which amounted to $1,486,000, $2,069,000 and $1,145,000 at March
31, 1997, December 31, 1996 and March 31, 1996, respectively, were put on a
nonaccrual status and any outstanding accrued interest receivable on such loans
at the time they were put on nonaccrual status, was reversed from income.
Under SFAS No. 114, impaired loans subject to the statement are required to be
measured based upon the present value of expected future cash flows, discounted
at the loan's initial effective interest rate or at the loan's market price or
fair value of the collateral, if the loan is collateral dependent. As of March
31, 1997, December 31, 1996 and March 31, 1996, impaired loans measured using
the present value of future cash flows amounted to $159,000, $162,000, and
$210,000, respectively. Impaired loans measured by the value of the loan's
collateral amounted to $1,327,000, $1,904,000, and $926,000, respectively.
If the loan valuation is less than the recorded value of the loan, an impairment
reserve must be established for the difference. The impairment reserve is
established by either an allocation of the reserve for loan losses or by a
provision for loan losses, depending on the adequacy of the reserve for loan
losses. All impairment reserves established in either 1997 or 1996 were
allocated from the existing reserve for loan losses. As of March 31, 1997,
December 31, 1996 and March 31, 1996, there were $916,000, $1,381,000 and
$720,000, respectively of impaired loans for which there is a related allowance
for loan losses. The total related allowance for loan loss at March 31, 1997,
December 31, 1996 and March 31, 1996 was $187,000, $191,000 and
Form 10-Q
6
<PAGE>
$149,000, respectively. Impaired loans for which no loan loss allowance was
allocated amounted to $570,000, $688,000 and $425,000 at March 31, 1997,
December 31, 1996 and March 31, 1996, respectively. Average impaired loans
during the first three months of 1997 and 1996, respectively, amounted to
$1,588,000 and $1,151,000, compared to $2,237,000 for the twelve months ended
December 31, 1996.
While SFAS No. 118 permits existing income recognition practices to continue,
when a loan is classified as impaired, it is put on a nonaccrual status and any
income subsequently collected is credited to the outstanding principal balance.
Therefore, no interest income was reported on outstanding loans while considered
impaired during either quarter ended March 31, 1997 or 1996. No loans
considered impaired since the adoption of SFAS No. 114 and SFAS No. 118 have
been removed from the impaired loan status. Loans may be removed from impaired
status and returned to accrual status when all principal and interest amounts
contractually due are reasonably assured of repayment within an acceptable
period of time and there is a sustained period of repayment performance by the
borrower, with a minimum repayment of at least six months, in accordance with
the contractual terms of interest and principal. Subsequent income recognition
would be recorded under the existing terms of the loan.
Smaller balance, homogeneous loans, exclusively consumer loans, when included in
nonperforming loans, for practical consideration, are not put on a nonaccrual
status nor is the current accrued interest receivable reversed from income. The
adoption of SFAS No. 114 and SFAS No. 118 did not have a material impact on the
financial position or results of operations of the Corporation nor do they
materially impact the comparability of the credit risk tables under Industry
Guide 3.
Form 10-Q
7
<PAGE>
6. Allowance for Possible Loan Losses:
The summary of changes in the allowance is as follows:
<TABLE>
<CAPTION>
three months ended year ended
March 31, December 31,
1997 1996 1996
--------------------- ----------
<S> <C> <C> <C>
Balance, Beginning of period $4,182 $3,652 $3,652
------- ------- -------
Charge-offs:
Consumer (43) (56) (180)
Commercial and industrial 0 0 (84)
Real estate (5) 0 (4)
------- ------- -------
Total charge-offs (48) (56) (268)
------- ------- -------
Recoveries:
Consumer 7 11 36
Commercial and industrial 45 187 404
Real estate 4 8 8
------- ------- -------
Total recoveries 56 206 448
------- ------- -------
Net (charge-offs) / recoveries 8 150 180
Provision for loan losses 50 125 350
------- ------- -------
Balance, End of period $4,240 $3,927 $4,182
======= ======= =======
</TABLE>
Form 10-Q
8
<PAGE>
Item 2.
BRYN MAWR BANK CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
The realization of a $1,073,000 pre-tax gain from the sale of a commercial
property (the "Nonrecurring Gain") in The Bryn Mawr Trust Company's (the
"Bank's") other real estate owned ("OREO"), was primarily responsible for the
large increase in net income in the first quarter of 1996 compared to the first
quarter of 1997. Exclusive of this pre-tax Nonrecurring Gain and certain non-
recurring expense items (the "Nonrecurring Expenses"), adding $545,000 to net
income for the first quarter of 1996, net income for the three months ended
March 31, 1997 was 20% ahead of first quarter 1996 net income.
Including the after tax effect of the Nonrecurring Gain and Nonrecurring
Expenses in net income for the first three months of 1996, Bryn Mawr Bank
Corporation (the "Corporation"), the parent company of the Bank, reported net
income of $1,458,000 for the first three months of 1997, a 17% decrease from
$1,757,000 of net income reported for the first three months of 1996. For the
first three months of 1997, earnings per common share amounted to $.63, an 18%
decrease from earnings per common share of $.77 reported for the first three
months of 1996. Exclusive of the $.24 earnings per share, the result of the
Nonrecurring Gain and Nonrecurring Expenses, earnings per share increased 19%
for the first quarter of 1996, from $.53 per share for the three months ended
March 31, 1996 to $.63 per share for the same period in 1997. Per share
computations were based on 2,297,780 average shares outstanding for the first
three months of 1997 and 2,269,0860 average shares outstanding for the first
three months of 1996, including common stock equivalents for both periods.
Exclusive of the after tax effect of the Nonrecurring Gain and
Nonrecurring Expenses during the first quarter of 1996, the increase in
earnings, for the first three months of 1997 over the same period in 1996 may be
attributed to a number of factors, including an increase in net interest income,
up 4% over the first three months of 1996, a decrease in the provision for loan
losses, down 60% and an increase of 14% in other income, primarily due to a 32%
increase in fees for trust services. Other expenses, exclusive of the
Nonrecurring Expenses, rose 3% for the first three months of 1997 compared to
the same period in 1996.
Higher yielding average outstanding loan balances for the first three
months of 1997 grew 9% from average daily outstanding loan balances for the
first three months of 1996. The increase in average loan balances was
partially funded by proceeds from the maturity of certain securities in the
Bank's investment portfolio, resulting in a 33% decrease in lower yielding
average outstanding investment balances. The average cost of funds for the
respective periods remained unchanged at 2.2%. The result was an increase in
the Bank's annualized net interest margin, to 5.65% for the first three months
of 1997 compared to 5.49% for the same period in 1996.
The prime rate increased by 25 basis points from March 1996 to March 1997.
Since, in the short term, 30 days or less, the Bank is asset rate
Form 10-Q
9
<PAGE>
sensitive, a rising prime rate usually will cause a related increase in interest
income. This increase in the Bank's prime rate along with a change in the mix
of earning assets, increasing higher yielding average outstanding loan balances
while decreasing lower yielding average outstanding investment balances, caused
a 10 basis point increase in the yield on earning assets for the first three
months of 1997, to 7.8% compared to 7.7% for the same period in 1996. 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 three months ended March 31, 1997, net interest income rose 4% to
$4,443,000 from $4,280,000 in 1996. Total interest income grew 3% for the first
three months of 1997, to $6,125,000 from $5,959,000 for the first three months
of 1996. Interest expense remained practically level over the same periods.
Interest expense for the three months ended March 31, 1997 and 1996 was
$1,682,000 and $1,679,000, respectively. The yield on earning assets for the
first three months of 1997 was 7.8% compared to 7.7% for the first three months
of 1996 while the effective rate paid on interest bearing deposits for the first
three months of 1997 and 1996 was 2.9% for each respective period.
Interest and fees on loans increased 6% from $5,049,000 for the first three
months of 1996 to $5,367,000 for the first three months of 1997. A level loan
portfolio yield, at 8.3% for the first three months of 1997 and 1996, combined
with a 9% increase in average outstanding loan balances from $236,174,000 for
the first three months of 1996 to $257,823,000 for the same period in 1997, are
the primary reasons for this increase in loan related interest and fee income.
Interest income on investments decreased $224,000 or 30%, from $749,000 for
the first three months of 1996 to $525,000 for the first three months of 1997.
Interest from U.S. Treasury obligations decreased 50% from $442,000 for the
first three months of 1996 to $219,000 for the first three months of 1997. The
primary reason for this decrease was a $17,485,000 or 54% decrease in the
average balance of U.S. Treasury securities, from $32,383,000 during the first
three months of 1996 to $14,898,000 for the comparable period in 1997. 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.
Interest income on U.S. Government Agency securities increased 21% from $168,000
for the three months ended March 31, 1996 to $204,000 at March 31, 1997. A 22%
increase in the average balance of U.S. Government Agency securities, from
$11,100,000 for the three months ended March 31, 1996 to $13,493,000 for the
same period in 1997, is primarily responsible for the related 21% increase in
interest income. Interest income on obligations of states and political
subdivisions decreased by 32%, from $122,000 for the three months ended March
31, 1996 to $83,000 for the same period in 1997. A decrease of $2,917,000 or
30% in average outstanding balances of obligations of state and political
subdivisions, from $9,734,000 in average outstanding balances for the first
three months of 1996 down to $6,817,000 for the same period in 1997 is the
primary reason for this decrease. The overall yield on investment securities
increased from 5.5% for the first three months of 1996
Form 10-Q
10
<PAGE>
to 5.8% for the first three months of 1997, due primarily to the maturity of
lower yielding investments in the Bank's investment portfolio.
Interest expense on deposits remained practically level at $1,682,000 for
the three months ended March 31, 1997 compared to $1,679,000 for the same period
in 1996. The average cost of interest bearing deposits remained at 2.9% for
each respective period. The average interest bearing deposit balances increased
1% to $231,086,000 at March 31, 1997 compared to $228,297,000 for the same
period in 1996. However, the average deposit mix has changed for the first
three months of 1997 compared to the same period in 1996. Average non-
transaction savings and Market Rate Accounts decreased 8% and 7%, respectively,
while the Bank's average transaction based NOW account and non-interest bearing
demand deposit account balances increased 8% and 4% respectively. During the
first quarter of 1995, the Bank offered a new one and two year Premier CD, at
highly competitive rates of interest. The one year Premier CDs matured during
the first quarter of 1996 and were not renewed. The two year Premier CDs
matured during the first quarter of 1997 and a CD promotion, offering a 50 basis
point premium over the then current market rate of interest for a nine month CD
was offered. As a result of this promotion, the average daily outstanding
balances of time deposits increased 6% for the first three months of 1997
compared to 1996. The annualized cost of CDs remained level at 5.3% for both
periods. With the exception of the average cost of NOW accounts declining 10
basis points, from 1.4% in 1996 to 1.3% for the first three months of 1997, the
average cost of each interest bearing deposit product remained level with the
respective cost for the same period in 1996. The result was a level average
cost of interest bearing deposits of 2.9% for each respective period. The
average cost of deposits, including non-interest bearing demand deposits
remained at 2.2% for each respective period.
For the first three months of 1997, the net interest margin increased to
5.65% from 5.49% for same period in 1996. The net interest margin is computed
exclusive of related loan fee income.
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
Form 10-Q
11
<PAGE>
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.
Based on the results of the aforementioned reviews, the low level of loan
delinquencies, less than 1% of total loans at March 31, 1997 and the size of the
loan loss reserve, 1.62% of total loans at March 31, 1997, the loan loss
provision was reduced to $50,000 for the three months ended March 31, 1997,
compared to $125,000 for the same period in 1996. The loan loss reserve
amounted to 1.60% of outstanding loans at March 31, 1996. Nonperforming loans
have decreased 7% to $846,000 as of March 31, 1997, down from $907,000 as of
December 31, 1996 and increased 21% from $698,000 in nonperforming loans as of
March 31, 1996. The loan loss reserve amounted to 501% of nonperforming loans
as of March 31, 1997 compared to 563% as of March 31, 1996. 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 March 31, 1997.
During the first quarter of 1996, 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.
OTHER INCOME
- ------------
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. This Nonrecurring Gain is the primary reason for a 22% decrease in other
income, to $2,691,000 for the three months ended March 31, 1997 from $3,439,000
for the same period in 1996. Exclusive of the Nonrecurring Gain on the sale of
OREO, reported in 1996, other income increased 14% for the first three months of
1997, compared to the same period in 1996.
Fees for trust services rose 32% from $1,445,000 for the first three months
of 1996 to $1,913,000 for the same period in 1997. The establishment of
additional lines of business, including Investment Counsellors of Bryn Mawr
("ICBM"), in January of 1996, to provide investment management services to high
net worth individuals and employee benefit plans, increased asset values and an
increase in the schedule of trust fees charged are the primary reasons for the
increase in fees for trust services.
For the three month period ended March 31, 1997, the Bank originated and
sold $8,125,000 of mortgage loans in the secondary mortgage market, an 18%
Form 10-Q
12
<PAGE>
decrease from $9,850,000 of mortgage loans originated and sold during the first
three months of 1996. In a rising interest rate environment, the sale of
residential mortgage loans in the secondary mortgage market becomes less
profitable as investors look for higher yields by paying lower prices for the
loans being sold. This was the case for the loans sold in 1997, compared to
loan sales for the same period in 1996. The Bank offers potential borrowers the
opportunity to obtain a mortgage loan at market rates of interest with points
attached or to have no points with a slightly higher rate of interest. 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. Deferred loan fees earned as income resulting
from the sale of residential mortgage loans in the secondary mortgage market
amounted to $26,000 or 32 basis points earned on the sale of $8,125,000 of
residential mortgage loans in the secondary mortgage market, practically level
with $36,000 or 37 basis points earned on the sale of $9,850,000 of residential
mortgage loans in the secondary mortgage market during the first quarter of
1996. However, related gains on the same respective sales of loans in the
secondary mortgage market decreased to $59,000 or 72 basis points for the first
quarter of 1997 compared to $97,000 or 98 basis points for the same period in
1996. The result was a decline in the total basis points earned on the sale of
loans in the secondary mortgage market, from 133 basis points earned on the sale
of $9,850,000 in residential mortgages loans for the first quarter of 1996 to
104 basis points on the sale of $8,125,000 in residential mortgage loans for the
first quarter of 1997.
For the three month period ended March 31, 1997, the increase in interest
rates caused a $19,000, or 7%, decrease in service charges on deposit accounts,
from $289,000 for the three months ended March 31, 1996 to $270,000 for the same
period in 1997, due primarily to increases in the earnings credit rate used to
offset these service charges.
Prior to its disposal, the commercial property included in the Bank's OREO
and sold in March 1996 produced a revenue stream, included in other operating
income. This revenue stream was eliminated with the sale of the OREO property.
Other operating income decreased by $73 thousand or 36%, from $201,000 for the
first three months of 1996 to $128,000 for the same period in 1997. The OREO
revenue stream, included in other operating income for the first quarter of 1996
amounted to $73,000 compared to no such revenue in 1997. This accounts for the
total decrease in other operating income from period to period.
OTHER EXPENSE
- -------------
Total other expense decreased 2% for the first three months of 1997 to
$4,906,000 from $4,997,000 for the first three months of 1996. Exclusive of the
Nonrecurring Expenses, incurred during the first quarter of 1996, other expenses
rose 3% for the first quarter of 1997 compared to the same quarter in 1996.
Salaries and wages grew $303,000 or 14%, from $2,122,000 for the three months
ended March 31, 1996 to $2,425,000 for the same period in 1997. Of this
increase, $146,000 relates to regular salary expense, representing an 8%
increase in regular, part time and overtime salaries during the first quarter of
1997, compared to 1996. Incentive salaries were up $157,000 or 70%, from
$225,000 for the three months ended March 31, 1996 to $382,000 for the same
period in 1997. Incentive salaries are primarily related to the profitability
Form 10-Q
13
<PAGE>
of both the Bank and its related business segments. The 70% increase in
incentive salaries is primarily due to the 20% increase in net income, exclusive
of the Nonrecurring Gain and Nonrecurring Expenses. The Bank's full time
equivalent staff increased to 210 as of March 31, 1997, compared to 198.5 as of
March 31, 1996.
Employee benefits expenses decreased $34,000 or 7% compared to the first
three months of 1996, primarily a result of a $116,000 decrease in the projected
pension expense for the first three months of 1997 compared to the same period
in 1996, offset by a $66,000 rebate by the Bank's medical insurance carrier in
1996. During 1996, the Bank projected a larger than incurred pension expense.
Due to strong performance of the Bank's pension plan assets, the actual pension
expense for 1996 was lower than planned and was adjusted in the fourth quarter
of 1996. The actuarial projections for 1997 project a negative pension expense.
This is the primary reason for the $116,000 reduction in pension expense from
the first quarter of 1996 compared to the same period in 1997.
Occupancy expense decreased $67,000 or 16% for the first three months of
1997 from $415,000 for the first three months of 1996 to $348,000 for the first
three months of 1997. The largest additional cost in 1996, primarily
responsible for the decrease in 1997, was $30,000 for the removal of snow during
the "Blizzard of 1996". Furniture and equipment expenses grew $153,000 or 69%
over the first three months of 1996, from $222,000 for the first three months of
1996 to $375,000 for the same period in 1997. Planned depreciation and
amortization expenses associated with the conversion to an in-house EDP system
account for $131,000 of this $153,000 increase in 1997.
Other operating expenses decreased $446,000 or 26% over the first three
months of 1996, from $1,726,000 for the first three months of 1996 to $1,280,000
for the first three months of 1997. The largest decrease in other operating
expense occurred in computer processing fees, down by $150,000 for the first
three months of 1997 compared to the same period in 1996. This decrease was
primarily due to the conversion to an in-house EDP system during the first
quarter of 1996, eliminating this related expense later in 1996. This cost more
than offsets the additional related increased cost of depreciation and
amortization, included in furniture and equipment expense. Miscellaneous
expense decreased by $93,000 as the Bank incurred a $70,000 expense in 1996 to
settle a regulatory dispute. The cost of maintenance of OREO decreased by
$84,000 for the first quarter of 1997, as the Bank increased its OREO reserve
during the first quarter of 1996 to provide additional reserves for its last
large commercial OREO property. No such increase was deemed necessary during
the first quarter of 1997. Advertising was down by $38,000 in the first quarter
of 1997, a timing difference in the Bank's advertising campaign for 1997. Legal
expenses were down by $34,000. The balance of the $446,000 decrease in other
operating expenses for the first quarter of 1997 amounted to a 3% decrease from
similar expenses for the first quarter of 1996.
APPLICABLE INCOME TAXES
- -----------------------
The Corporation's effective tax rate for the first three months of 1997 was
33% compared to 32% for 1996. The increase was due to a decrease in the tax-
favored income from obligations of states and political subdivisions. The
decrease in tax-favored income is related to the decrease in the investment
Form 10-Q
14
<PAGE>
portfolio necessary to fund the loan growth.
FINANCIAL CONDITION
- -------------------
Total assets increased 1% from $345,747,000 at December 31, 1996 to
$349,061,000 as of March 31, 1997. Total assets grew 5% from $333,218,000 as of
March 31, 1996.
Outstanding earning assets increased 3% to $315,231,000 as of March 31,
1997 from $305,911,000 as of December 31, 1996. The Bank's loan portfolio
increased 1%, to $261,274,000 at March 31, 1997 from $259,427,000 as of December
31, 1996. Outstanding loans increased by 6%, from $245,636,000 as of March 31,
1996. Outstanding consumer loans of $81,597,000 at March 31, 1997 were level
with consumer loan outstanding balances of $81,512,000 as of December 31, 1996
and up 12% from $72,967,000 as of March 31, 1996. Growth in both the Bank's
indirect automobile paper and fixed rate home equity loans are primarily
responsible for this growth from March 31, 1996. Outstanding commercial loans
at March 31, 1997 were $70,410,000, a 6% decrease from outstanding commercial
loan balances of $74,688,000 at December 31, 1996 and 2% ahead of $69,208,000 at
March 31, 1996. Payoffs of larger balance commercial loans, during the first
quarter of 1997, are primarily responsible for the decrease in balances from
December 31, 1996. Outstanding real estate loans were $109,267,000 at March 31,
1997, a 6% increase over $103,227,000 in outstanding real estate loans at
December 31, 1996 and a 6% increase over $103,461,000 in outstanding real estate
loans as of March 31, 1996.
The Bank's investment portfolio, having a market value of $39,491,000 at
March 31, 1997, increased 14% from a market value of $34,747,000 at December 31,
1996 and decreased 23% from $51,354,000 as of March 31, 1996. During the first
quarter of 1997, the Bank offered a nine month Cd bearing an interest rate of 50
basis points over the then current interest rate for such CDs. Some of the
proceeds from the CDs were used to purchase securities for the Bank's investment
portfolio and sold as federal funds. The funds obtained from the maturity of
securities in the investment portfolio from March 31, 1996 to March 31, 1997
were primarily used to 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
allocate their investments among three 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 interest rates, maturities and the shortening of the
average term of the investment portfolio, the unrealized gain in the investment
portfolio of $1,000 at December 31, 1996 decreased to an unrealized loss of
$213,000 as of March 31, 1997. The unrealized investment depreciation, net of
deferred income taxes, decreased the Corporation's shareholders' equity on the
balance sheet by $141,000 as of March 31, 1997.
Form 10-Q
15
<PAGE>
Federal funds sold amounted to $14,300,000 as of March 31, 1997, a 23%
increase over $11,616,000 as of December 31, 1996. There were no federal funds
available for sale at March 31, 1996. The increase in federal funds available
for sale at March 31, 1997 is primarily a result of retaining the majority of
maturing two year CDs during the first quarter of 1997. 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 of Pittsburgh (the "FHLB") and the sale of
investments, classified as available for sale.
Nonperforming assets amounted to $2,361,000 at March 31, 1997, a 3%
decrease from $2,430,000 at December 31, 1996 and a 13% increase from
nonperforming assets of $2,084,000 at March 31, 1996. Nonperforming loans
decreased 7% to $846,000 at March 31, 1997 compared to nonperforming loans of
$907,000 at December 31, 1996 and increased 21% from $698,000 as of March 31,
1996. The OREO balances decreased 1% from $1,523,000 as of December 31, 1996 to
$1,515,000 at March 31, 1997, which was a 9% increase from an OREO balance of
$1,386,000 at March 31, 1996. As of March 31, 1997, one large commercial
property and two smaller properties remained as OREO on the Bank's books.
As of March 31, 1997 and 1996, 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 increased 1% to $305,852,000 as of March 31, 1997 from
$303,183,000 as of December 31, 1996. A more meaningful measurement of deposit
change is the change in average outstanding deposit balances. Total average
outstanding deposit balances increased 2% to $306,541,000 for the three month
period ended March 31, 1997 from $300,678,000 for the same period in 1996.
Although the amount of average total deposits remained relatively stable, the
mix of deposits shifted. As a reaction to a consistently low interest rate
environment for interest bearing deposits, average outstanding savings and
Market Rate Account balances decreased by 8% and 7%, respectively, from the
first three months of 1996 to the first three months of 1997. Average savings
balances decreased $3,461,000 from $42,960,000 for the first three months of
1996 to $39,499,000 for the same period in 1997 and Market Rate Account balances
decreased $3,301,000 from $49,643,000 in average daily outstanding balances for
the three months ended March 31, 1996 to $46,342,000 for the same period in
1997. Average outstanding NOW account balances grew 8% or $5,362,000, from
$69,303,000 for the first three months of 1996 to $74,665,000 for the same
period in 1997. The two year Premier CDs, offered during the first quarter of
1995 matured during the first quarter of 1997. In an effort to retain some of
these deposits, the Bank offered a nine month CD with a 50 basis point premium
over the then current rate of interest for a nine month CD. The net result was
an increase in the average outstanding CD balances, by $4,188,000 or 6%, from
$66,392,000 in average outstanding balances for the first three months of 1996
to $70,580,000 for the same period in 1997. Noninterest bearing demand deposit
average outstanding balances grew 4% or $3,075,000 from $72,380,000 for the
three months ended March 31, 1996 to
Form 10-Q
16
<PAGE>
$75,455,000 for the same period in 1997.
LIQUIDITY, INTEREST RATE SENSITIVITY
- ------------------------------------
The Bank's liquidity is maintained by managing its core deposits,
purchasing federal funds, selling loans in the secondary market, and borrowing
from the FHLB. The Bank's liquid assets include cash and cash equivalents as
well as certain unpledged investment securities. Bank management is presently
developing a revised liquidity measure, incorporating its ability to borrow from
the FHLB to meet liquidity needs and goals. Periodically, the Asset / Liability
Committee of the Bank reviews the Bank's liquidity needs and reports its
findings to the Risk Management Committee of the Bank's Board of Directors.
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 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 March
31, 1997, 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 $36,802,000,
or 10.5% of total assets, as of March 31, 1997, compared to total shareholders
equity of $35,808,000, or 10.4% of total assets, as of December 31, 1996. As of
March 31, 1996, shareholders' equity was $32,482,000, or 9.7% of total assets.
The Corporation's risk weighted Tier I capital ratio was 13.16% as of March 31,
1997 compared to 12.75% and 12.23% at December 31, 1996 and March 31, 1996,
respectively. The respective Tier II ratios were 14.41%, 14.01% and 13.48%,
respectively. In March 1997, 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 April 1997, the Corporation declared its regular dividend of $.18
per share, a 20% increase over $.15 per share declared in April 1996. As of
March 31, 1997, the cumulative dividends declared amounted to $.18 per share,
compared to $.47 per share for the first quarter of 1996, which included the
one-time special dividend of $.32 per share.
Form 10-Q
17
<PAGE>
PART II. OTHER INFORMATION
--------------------------
March 31, 1997
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
--------
On March 26, 1997, the Corporation filed a Report on
Form 8-K reporting that the Corporation established a stock
repurchase program to repurchase up to 5% of the
outstanding shares of the Corporation's stock, with a limit
of no more than $4,000,000 to be paid for the stock. The
stock repurchase program was instituted to help offset the
dilutive effect of the Corporation's employee and outside
directors' stock option plans.
Form 10-Q
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bryn Mawr Bank Corporation
Date: April 25, 1997 By:/s/ Robert L. Stevens
------------------ ------------------------
Robert L. Stevens
Chairman,
President & Chief
Executive Officer
Date: April 25, 1997 By:/s/ Joseph W. Rebl
------------------ ------------------
Joseph W. Rebl
Treasurer and
Assistant Secretary
Form 10-Q
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 20,701
<INT-BEARING-DEPOSITS> 166
<FED-FUNDS-SOLD> 14,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 39,491
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 261,274
<ALLOWANCE> 4,240
<TOTAL-ASSETS> 349,061
<DEPOSITS> 305,852
<SHORT-TERM> 0
<LIABILITIES-OTHER> 6,407
<LONG-TERM> 0
0
0
<COMMON> 2,508
<OTHER-SE> 34,294
<TOTAL-LIABILITIES-AND-EQUITY> 349,061
<INTEREST-LOAN> 5,367
<INTEREST-INVEST> 525
<INTEREST-OTHER> 233
<INTEREST-TOTAL> 6,125
<INTEREST-DEPOSIT> 1,682
<INTEREST-EXPENSE> 1,682
<INTEREST-INCOME-NET> 4,443
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,906
<INCOME-PRETAX> 2,178
<INCOME-PRE-EXTRAORDINARY> 2,178
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,458
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
<YIELD-ACTUAL> 5.65
<LOANS-NON> 846
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,182
<CHARGE-OFFS> 54
<RECOVERIES> 62
<ALLOWANCE-CLOSE> 4,240
<ALLOWANCE-DOMESTIC> 2,562
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,678
</TABLE>
