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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission file number
September 30, 1995 0-15645
FCNB Corp
(Exact name of registrant as specified in its charter)
MARYLAND 52-1479635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 North Market Street, Frederick, Maryland 21701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(301) 662-2191
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No[ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date: Common Stock, $1 par value per
share, 4,069,879 shares outstanding as of October 31, 1995.
1
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PART I FINANCIAL INFORMATION Item 1. Financial Statements
FCNB Corp and Subsidiaries
Consolidated Balance Sheets (Unaudited) (Note 2)
(Dollars in thousands, except per share amounts) September 30, 1995 December 31, 1994
- - ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 24,464 $ 14,194
Interest-bearing deposits in other banks 331 426
Federal funds sold 7,304 18,733
- - ------------------------------------------------------------------------------------------
Cash and cash equivalents 32,099 33,353
- - ------------------------------------------------------------------------------------------
Loans held for sale 2,983 1,023
- - ------------------------------------------------------------------------------------------
Investment securities held to maturity -
fair value of $73,251 in 1995 and
$79,917 in 1994 73,080 82,058
- - ------------------------------------------------------------------------------------------
Investment securities available for sale -
at fair value 61,632 77,234
- - ------------------------------------------------------------------------------------------
Loans 350,944 306,160
Less: Allowance for credit losses (3,737) (3,561)
Unearned income (1,359) (2,163)
- - ------------------------------------------------------------------------------------------
Net loans 345,848 300,436
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Bank premises and equipment 17,575 12,150
- - ------------------------------------------------------------------------------------------
Other assets 11,355 11,267
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Total assets $544,572 $517,521
==========================================================================================
Liabilities and Stockholders' Equity
LIABILITIES
Deposits:
Noninterest-bearing deposits $ 62,701 $ 65,667
Interest-bearing deposits 387,932 362,130
- - ------------------------------------------------------------------------------------------
Total deposits 450,633 427,797
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Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 15,256 25,103
Other short-term borrowings 25,221 19,089
Long-term debt 2,235 --
Accrued interest and other liabilities 4,326 3,844
- - ------------------------------------------------------------------------------------------
Total liabilities 497,671 475,833
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STOCKHOLDERS' EQUITY
Preferred stock, per share par value $1.00;
1,000,000 shares authorized; none outstanding -- --
Common stock, per share par value $1.00;
5,000,000 shares authorized; 4,070,321
shares issued and outstanding in 1995
and 2,713,547 in 1994 4,070 2,714
Surplus 22,536 22,535
Retained earnings 20,278 18,589
Net unrealized gain (loss) on securities
available for sale 17 (2,150)
- - ------------------------------------------------------------------------------------------
Total stockholders' equity 46,901 41,688
- - ------------------------------------------------------------------------------------------
Total liabilities and stockholders'
equity $544,572 $517,521
==========================================================================================
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FCNB Corp and Subsidiaries
Consolidated Statements of Income (Unaudited) (Note 2)
For the Three and Nine Months Ended September 30, 1995 and 1994
(Dollars in thousands, except per share amounts)
- - ----------------------------------------------------------------------------------------------------------------------------
For Three Months For Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 8,339 $6,057 $23,294 $17,171
Interest and dividends on investments:
Taxable 1,928 2,286 6,505 6,807
Tax exempt 288 430 996 1,394
Dividends 113 66 249 151
Interest on federal funds 136 114 306 330
Other interest income 11 2 20 6
- - ----------------------------------------------------------------------------------------------------------------------------
Total interest income 10,815 8,955 31,370 25,859
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Interest expense:
Interest on deposits 3,954 2,920 11,461 8,613
Interest on federal funds purchased and
securities sold under agreements to
repurchase 385 429 933 975
Interest on other short-term borrowings 230 75 1,304 238
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Total interest expense(1) 4,569 3,424 13,698 9,826
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Net interest income 6,246 5,531 17,672 16,033
Provision for credit losses 23 202 278 285
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Net interest income after provision
for credit losses 6,223 5,329 17,394 15,748
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Noninterest income:
Service fees 548 500 1,535 1,386
Net securities gains 8 2 64 454
Gain (loss) on sale of loans 107 16 167 (258)
Other operating income 225 288 783 554
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Total noninterest income 888 806 2,549 2,136
- - ----------------------------------------------------------------------------------------------------------------------------
Noninterest expenses:
Salaries and employee benefits 2,547 2,181 7,336 6,263
Occupancy expenses 360 371 1,101 1,150
Equipment expenses 332 242 962 903
Other operating expenses 1,056 1,210 3,830 3,679
- - ----------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses 4,295 4,004 13,229 11,995
- - ----------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 2,816 2,131 6,714 5,889
Provision for income taxes 1,026 610 2,261 1,707
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Net income $1,790 $1,521 $ 4,453 $ 4,182
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Net income per share $0.44 $0.38* $1.09 $1.03*
============================================================================================================================
Dividends declared per share $0.11 $0.11* $0.34 $0.33*
============================================================================================================================
Weighted average number
of shares outstanding 4,070,321 4,070,655* 4,070,321 4,068,968*
============================================================================================================================
(1) The total interest expense amounts have been reduced by $43,000 and
$120,000 for the quarter and nine months ended September 30, 1995 while no
adjustment was made in 1994. This interest reduction is due to the
capitalization of interest on the new corporate headquarters.
* The amounts shown have been adjusted retroactively for a three for two
stock split, effected in the form of a 50% stock dividend declared in April
1995.
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FCNB Corp and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (Note 2)
For the Nine Months Ended September 30, 1995 and 1994
(Dollars in thousands)
- - -------------------------------------------------------------------------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,453 $4,182
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 705 712
Provision for credit losses 278 285
Provision for foreclosed properties 62 148
Provision for deferred income taxes (benefits) (66) 105
Net premium amortization (discount accretion)
on investment securities (82) 140
Federal Home Loan Bank stock dividend -- (26)
Accretion of net loan origination fees (279) (216)
Net securities gains (64) (454)
Net (gain) loss on disposition of bank
premises and equipment (30) 19
Net gain on sale of foreclosed properties -- (7)
Decrease (increase) in other assets (197) 33
Decrease (increase) in loans held for sale(1) (1,960) 14,278
Increase in accrued interest and
other liabilities 482 627
- - --------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,302 19,826
- - --------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of investment securities -
available for sale 20,269 5,005
Proceeds from maturities of investment securities -
available for sale 5,881 16,407
Proceeds from maturities of investment securities -
held to maturity 13,368 17,861
Purchases of investment securities - available for sale (7,224) (23,041)
Purchases of investment securities - held to maturity (4,252) (9,637)
Net increase in loans (46,448) (41,026)
Purchases of bank premises and equipment (6,220) (1,382)
Proceeds from dispositions of bank premises and equipment 120 --
Proceeds from dispositions of foreclosed properties -- 169
Investment in foreclosed property joint venture -- (20)
- - --------------------------------------------------------------------------------------------
Net cash (used in) investing activities (24,506) (35,664)
- - --------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in noninterest-bearing
deposits, NOW accounts, money market accounts, and
savings accounts (5,276) 2,664
Net increase in time deposits 28,112 1,457
Net increase (decrease) in short-term borrowings (3,715) 8,070
Proceeds from long-term debt 2,235 --
Proceeds from sale of stock -- 95
Dividend reinvestment plan (8) (9)
Dividends paid (1,398) (1,319)
- - --------------------------------------------------------------------------------------------
Net cash provided by financing activities 19,950 10,958
- - --------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (1,254) (4,880)
Cash and cash equivalents:
Beginning of period 33,353 31,099
- - --------------------------------------------------------------------------------------------
End of period $32,099 $26,219
============================================================================================
(continued)
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FCNB Corp and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (Note 2)
For the Nine Months Ended September 30, 1995 and 1994
(Dollars in thousands)
- - ---------------------------------------------------------------------------------------------
1995 1994
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<S> <C> <C>
Supplemental disclosures:
Interest paid $13,624 $9,796
=============================================================================================
Income taxes paid $1,963 $659
=============================================================================================
Supplemental schedule of noncash investing and financing activities:
Foreclosed properties acquired in settlement of loans $1,037 $360
=============================================================================================
Seller financed disposition of property $-- $--
=============================================================================================
Reduction in surplus from stock options terminated $-- $(18)
=============================================================================================
Fair value adjustment for securities available for sale,
net of $1,150 in 1995 in deferred income taxes payable
and $(1,958) in 1994 in deferred income tax benefits $2,166 $(3,526)
=============================================================================================
(1) Loans held for sale are generally held for periods of ninety days or less.
</TABLE>
5
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FCNB Corp and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and, therefore, do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. The interim financial
statements have been prepared utilizing the interim basis of reporting and, as
such, reflect all adjustments which are normal and recurring in nature and are,
in the opinion of management, necessary for a fair presentation of the results
for the periods presented. The results of operations for the interim periods are
not necessarily indicative of the results for the full year.
Note 2 - Merger and Acquisitions: On March 24, 1995, FCNB Corp (the "Company")
consummated its merger of ENB Financial Corporation ("ENB"), the holding company
for Elkridge Bank, Elkridge, Maryland, with and into the Company. As a result of
the merger, each share of the outstanding common stock, $5.00 par value of ENB,
was converted into 1.3173 shares of the common stock, $1.00 par value, of the
Company, resulting in the issuance of approximately 526,539 shares of the
Company's common stock, as adjusted for the stock distribution in April 1995.
The merger transaction with ENB has been accounted for as a
pooling-of-interests. Therefore, the consolidated balance sheet as of December
31, 1994 and the consolidated statements of income for the three and nine month
periods ended September 30, 1994 have been restated to reflect this business
combination.
The combined and separate results of operations for ENB and the Company
preceding the merger are as follows:
(Dollars in thousands)
For the Three Months Ended March 31, 1995 ENB FCNB Combined
----------------------------------------- ------ ------- --------
Total income $1,600 $ 9,083 $10,683
Net income 182 1,130 1,312
Net income per share .32 .32
For the Three Months Ended September 30, 1994 ENB FCNB Combined
--------------------------------------------- ------ ------- --------
Total income $1,470 $ 8,291 $9,761
Net income 125 1,396 1,521
Net income per share .39 .38
For the Nine Months Ended September 30, 1994 ENB FCNB Combined
-------------------------------------------- ------ ------- --------
Total income $4,205 $23,790 $27,995
Net income 271 3,911 4,182
Net income per share 1.10 1.03
Note 3 - Investments: Using the criteria specified in Statement 115, the Company
classifies its investments in debt and equity securities at September 30, 1995
and December 31, 1994 into two categories: held-to-maturity and available-for-
sale.
Securities classified as held-to-maturity are those debt securities the Company
has both the intent and ability to hold to maturity regardless of changes in
market conditions, liquidity needs or changes in general economic conditions.
These securities are carried at cost adjusted for amortization of premium and
accretion of discount, computed using the interest method over their contractual
lives.
Securities classified as available-for-sale are equity securities with readily
determinable fair values and those debt securities that the Company intends to
hold for an indefinite period of time but not necessarily to maturity. Any
decision to sell a security classified as available-for-sale would be based on
various factors, including significant movements in interest rates, changes in
the maturity mix of the Company's assets and liabilities, liquidity needs,
regulatory capital considerations, and other similar factors. These securities
are carried at fair value, with any unrealized gains or losses reported in
stockholders' equity, net of the related deferred tax effect.
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As of September 30, 1995, the gross unrealized losses in the Company's
investment portfolio were $1.13 million in the held-to-maturity investment
portfolio and $585,000 in the available-for-sale investment portfolio compared
to $3.36 million and $3.67 million, respectively, as of December 31, 1994. The
decrease in the gross unrealized losses in the total investment portfolio is
principally the result of a decrease in market interest rates during 1995. Since
the Company's held-to-maturity investment portfolio includes fixed rate
investment securities that have below current market interest rates, the future
operating results of the Company would be negatively impacted in an increasing
rate environment. This reduction in net interest income would result when the
cost of funding the Company's operations increases, while the income earned on
the held-to-maturity portfolio remains constant.
The amortized cost and estimated fair value of securities classified as
held-to-maturity at September 30, 1995 are as follows:
<TABLE>
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Held-to-maturity portfolio
- - ------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1995 Cost Gains Losses Value
- - ------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury and other U.S.
government agencies and corporations $10,920 $ 25 $ 32 $10,913
State and political subdivisions 12,622 803 -- 13,425
Mortgage-backed debt securities 49,538 468 1,093 48,913
- - ------------------------------------------------------------------------------------------------
$73,080 $1,296 $1,125 $73,251
================================================================================================
The amortized cost and estimated fair value of securities classified as
available-for-sale at September 30, 1995 are as follows:
Available-for-sale portfolio
- - -------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1995 Cost Gains Losses Value
- - -------------------------------------------------------------------------------------------------
(dollars in thousands)
U.S. Treasury and other U.S.
government agencies and corporations $12,452 $ 36 $ 50 $12,438
State and political subdivisions 700 8 -- 708
Mortgage-backed debt securities 41,055 276 535 40,796
Equity securities 7,382 308 -- 7,690
- - -------------------------------------------------------------------------------------------------
$61,589 $628 $585 $61,632
=================================================================================================
</TABLE>
Securities classified as available-for-sale at September 30, 1995 are carried in
the accompanying 1995 consolidated balance sheet at fair value, which was more
than the amortized cost of those securities by $43,000. This increase, net of
applicable deferred income taxes of $26,000, is included as a separate component
of stockholder's equity in the accompanying 1995 consolidated balance sheet.
The gross realized gains on securities sold from the available-for-sale
portfolio for the first nine months of 1995 and 1994 are $155,000 and $466,000,
respectively. The gross realized losses on securities sold from the
available-for-sale portfolio for the same periods are $91,000 and $12,000,
respectively.
The amortized cost and estimated fair value of securities classified as
held-to-maturity and available-for-sale at September 30, 1995 summarized by
contractual maturity, are as follows:
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Held-to-maturity Available-for-sale
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Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
- - ------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Due in one year or less $11,322 $11,441 $ 2,203 $ 2,218
Due after one through five years 9,520 9,792 9,949 9,977
Due after five through ten years 2,347 2,751 1,000 950
Due after ten years 353 353 -- --
Mortgage-backed debt securities 49,538 48,914 41,055 40,797
Equity securities -- -- 7,382 7,690
- - ------------------------------------------------------------------------------------------------------------
$73,080 $73,251 $61,589 $61,632
============================================================================================================
The amortized cost and estimated fair value of securities classified as
held-to-maturity at December 31, 1994 are as follows:
Held-to-maturity portfolio
- - ------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1994 Cost Gains Losses Value
- - ------------------------------------------------------------------------------------------------------------
(dollars in thousands)
U.S. Treasury and other U.S.
government agencies and corporations $10,509 $ -- $ 481 $10,028
State and political subdivisions 16,854 959 29 17,784
Mortgage-backed debt securities 54,695 260 2,850 52,105
- - ------------------------------------------------------------------------------------------------------------
$82,058 $1,219 $3,360 $79,917
============================================================================================================
The amortized cost and estimated fair value of securities classified as
available-for-sale at December 31, 1994 are as follows:
Available-for-sale portfolio
- - ------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1994 Cost Gains Losses Value
- - ------------------------------------------------------------------------------------------------------------
(dollars in thousands)
U.S. Treasury and other U.S.
government agencies and corporations $12,251 $ 7 $ 343 $11,915
State and political subdivisions 1,101 10 5 1,106
Mortgage-backed debt securities 62,194 26 3,320 58,900
Equity securities 4,961 352 -- 5,313
- - ------------------------------------------------------------------------------------------------------------
$80,507 $395 $3,668 $77,234
============================================================================================================
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The amortized cost and estimated fair value of securities classified as
held-to-maturity and available-for-sale at December 31, 1994 summarized by
contractual maturity, are as follows:
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<CAPTION>
Held-to-maturity Available-for-sale
- - ----------------------------------------------------------------------------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
- - ----------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 9,793 $ 9,983 $ 1,303 $ 1,303
Due after one through five years 14,589 14,638 11,049 10,755
Due after five through ten years 2,981 3,191 1,000 963
Mortgage-backed debt securities 54,695 52,105 62,194 58,900
Equity securities -- -- 4,961 5,313
- - ----------------------------------------------------------------------------------------------
$82,058 $79,917 $80,507 $77,234
==============================================================================================
</TABLE>
Actual maturities may differ from the contractual maturities reflected in the
preceding tables because borrowers may have the right to call or prepay
obligations with or without prepayment penalties. Mortgage-backed securities
have no stated maturity and primarily reflect investments in various
Pass-through and Participation Certificates issued by the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation,
respectively. Repayment of mortgage-backed securities is dependent on the
contractual repayment terms of the underlying mortgages collateralizing these
obligations and the current level of interest rates.
Note 4 - Long-Term Debt: On May 31, 1995, the Company entered into a secured
lending arrangement, with a regional national bank, to finance the cost of its
new corporate headquarters facility in Frederick, Maryland (the "Facility").
Pursuant to the terms of this arrangement, the Company will borrow $6.55
million. The Loan is secured by a first lien security interest in the Facility's
land, improvements and fixtures and equipment. The principal amount of the loan
will be amortized with monthly payments over a 15 year term commencing on the
earlier of the first day of the first month following the completion of the
Facility, or November 1, 1996. Any remaining unpaid balance on May 1, 2002 is
due in full. The loan bears interest at a fluctuating rate equal to the daily
London Interbank Offering Rate for one-month U.S. Dollar deposits (LIBOR), plus
1.35 percent, subject to a limited upward adjustment if certain performance
ratios are not maintained. On June 28, 1995, the Company obtained the first
construction draw in the amount of $2.24 million.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
- - --------
On March 24, 1995, FCNB Corp (the "Company") consummated its merger of ENB
Financial Corporation ("ENB"), the holding company for Elkridge Bank, Elkridge,
Maryland, with and into the Company. As a result of the merger, each share of
the outstanding common stock, $5.00 par value of ENB, was converted into 1.3173
shares of the common stock, $1.00 par value, of the Company, resulting in the
issuance of approximately 526,539 shares of the Company's common stock, as
adjusted for a three for two stock split effected in the form of a 50% stock
dividend declared in April 1995. Pursuant to the terms of the Agreement and Plan
of Merger between ENB and the Company, ENB was merged with and into the Company
and Elkridge Bank became a separate subsidiary of the Company.
The following discussion and related financial data for the Company has been
restated to recognize the March 24, 1995 acquisition of ENB which was accounted
for as a pooling-of-interests. This discussion provides an overview of the
financial condition and results of operations of the Company and its
wholly-owned subsidiaries, which is presented on a consolidated basis. The
principal subsidiaries of the Company are FCNB Bank and Elkridge Bank. Since the
merger transaction with ENB has been accounted for as a pooling-of-interests,
the financial information has been combined for the two companies. Net income
for the first nine months of 1995 was $4.45 million compared to $4.18 million
for the first nine months of 1994. The net income for the third quarter of 1995
was $1.79 million compared to $1.52 million for the same period in 1994.
Throughout the discussion on the financial performance of the Company for
the periods ended September 30, 1995 and 1994, the yield on interest-earning
assets, the net interest spread, the net interest margin, the risk-based capital
ratios, and the leverage ratio, exclude the effects of the adoption of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." However, the return on average assets and the
return on average equity include the effects of this pronouncement.
Return on average assets and return on average equity are key measures of
earnings performance. Return on average assets measures the ability of a bank to
utilize its assets in generating income. Return on average assets was 1.13%
(annualized) for the nine months ended September 30, 1995 compared to 1.15%
(annualized) for the nine months ended September 30, 1994. Return on average
stockholders' equity, which measures the income earned on the capital invested,
was 13.45% (annualized) and 13.73% (annualized) for the nine months ended
September 30, 1995 and 1994, respectively. Return on average assets was 1.35%
(annualized) for the three months ended September 30, 1995 compared to 1.24%
(annualized) for the three months ended September 30, 1994. Return on average
stockholders' equity was 15.63% (annualized) and 14.99.% (annualized) for the
third quarter of 1995 and 1994, respectively.
On May 25, 1995, the Company signed an Agreement and Plan of Merger to
acquire Laurel Bancorp, Inc. ("Laurel"). Laurel is the holding company for
Laurel Federal Savings Bank, a $110 million financial institution headquartered
in Laurel, Maryland, with an additional branch in Monrovia, Maryland. Upon
consummation, Laurel will be merged with and into the Company and all
outstanding shares of Laurel common stock will be converted into and exchanged
for the number of shares of the common stock, $1.00 par value, of the Company
determined by dividing $15.78 by the value of a share of the Company's common
stock, as determined in accordance with the terms of the Agreement and subject
to adjustment and limitations as set forth in the Agreement.
In the ordinary course of its business, the Company routinely explores
opportunities for additional growth and expansion of its core banking business
and related activities, by acquisition of existing branches, by merger with
other institutions, and by de novo branching, both within the Company's existing
market, and in new markets. There can be no assurance that any growth or
expansion will have a positive impact on the Company's earnings, dividends, book
value or market value.
Net Interest Income
- - -------------------
Net interest income represents the Company's gross profit from lending and
investment activities, and is the most significant component of the Company's
earnings. Net interest income is the difference between interest and related fee
income on earning assets (primarily loans and investment securities) and the
cost of funds (primarily deposits and short-term borrowings) supporting them. To
facilitate analysis, net interest income is presented on a taxable equivalent
basis to adjust for the tax-exempt status of certain loans and investment
securities. This adjustment, based on the statutory federal income tax rate of
34%, increases the tax-exempt income to an amount representing an estimate of
what would have been earned if that income were fully taxable.
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Taxable equivalent net interest income for the first nine months of 1995
totaled $18.19 million, increasing 8.5% from the $16.76 million recorded for the
same period in 1994. The Company's average interest-earning assets increased
8.2% to $490.71 million from September 30, 1994. This increase was primarily
funded with an 8.6% increase in the Company's average interest-bearing
liabilities, and a 6.9% increase in its average noninterest-bearing deposits for
the same period. Comparing the third quarter of 1995 to the same period in 1994,
taxable equivalent net interest income totaled $6.40 million, increasing 11.1%
from the $5.76 million recorded for the same period in 1994. The Company's
average interest-earning assets increased 7.1% to $493.20 million. This increase
was primarily funded with an 8.7% increase in the Company's average
interest-bearing liabilities, and a 5.6% increase in its average
noninterest-bearing deposits for the same period.
The Company's net interest margin (taxable equivalent net interest income as
a percent of average interest-earning assets) was 4.94% and 4.93% in the first
nine months of 1995 and 1994, respectively. The net interest margin is impacted
by the change in the spread between yields on earning assets and rates paid on
interest-bearing liabilities. This spread decreased by 12 basis points when
compared to the same period in the prior year. This was caused principally by a
greater increase in rates paid on interest-bearing liabilities compared to the
increase in yields earned on the Company's investment and loan portfolios. The
yield on earning assets increased 85 basis points to 8.66%, while the rates paid
on interest-bearing liabilities increased by 97 basis points to 4.37%.
For the third quarter of 1995, the net interest margin was 5.18% compared to
5.01% for the same period in 1994. The net interest spread increased by 10 basis
points during this period. This was caused principally by an increase in loan
fees and the receipt of interest on a large nonaccrual credit. The yield on
earning assets increased 91 basis points to 8.88%, while the rates paid on
interest-bearing liabilities increased by 81 basis points to 4.33%.
The rate of interest earned on interest-earning assets and the rate paid on
interest-bearing liabilities, while significantly affected by the actions taken
by the Federal Reserve to control economic growth, are influenced by competitive
factors within the Company's market. Competitive pressures during 1995 for both
loans and the funding sources needed to satisfy loan demand within the Company's
market area caused its net interest spread to narrow. This trend of declining
net interest spreads is expected to continue throughout 1995, as an increase in
the cost of funds needed to fund interest-earning assets outpaces the increase
in yields anticipated on interest-earning assets.
Management of the Company employs extensive computer simulations to model
the impact of rising and falling interest rates. These simulations are based on
numerous assumptions management determines from their strategic planning
process.
Noninterest Income
- - ------------------
Noninterest income increased $413,000 (19.3%) for the nine months ended
September 30, 1995, when compared to the same period in 1994. This increase was
primarily attributable to the gains on sales of loans into the secondary
mortgage market in 1995 in the amount of $167,000 compared to the losses of
$258,000 recognized during this period in 1994. However, this increase was
partially offset by the impact of the reduction in net security gains realized
of $64,000 in 1995 compared to $454,000 in 1994. Service fee income also
increased by $149,000 due to an increase in the volume of deposit accounts
maintained. The other operating income increased by $229,000, principally due to
increases in servicing fees recognized on loans sold into the secondary mortgage
market, on which the Company retains the servicing function.
For the third quarter of 1995, noninterest income increased $82,000 (10.2%)
when compared to the same period in 1994. This increase was primarily
attributable to the gains on sales of loans into the secondary mortgage market
in 1995 in the amount of $107,000 compared to $16,000 recognized during this
period in 1994, and security gains realized of $8,000 in 1995 compared to $2,000
in 1994. Service fee income increased by $48,000 while other operating income
decreased by $63,000.
The Company is constantly adding products and services to enhance its level
of noninterest income in an effort to mitigate the effect of its decreasing net
interest spread. Some of these products are fee-base and, accordingly, are less
sensitive to fluctuations in the level of interest rates. The arrangement
entered into in 1994 with Wall Street Investor Services, Inc. will enable the
Company in future years to earn commissions on the sale of mutual funds and
annuities. Additionally, revenue from service charges on deposit accounts will
continue to increase as the volume of accounts maintained expands.
11
<PAGE>
Noninterest income from gains realized on the sale of mortgage loans is
directly affected by the volume of mortgage loans settled, which is
significantly influenced by increases and decreases in the level of interest
rates. In periods of rising interest rates mortgage loan production typically
declines, whereas in periods of declining interest rates mortgage loan
production increases. As a result, this source of noninterest income is highly
influenced by the level and direction of future interest rate changes. Servicing
income on mortgage loans originated and sold however, is expected to make a
smaller contribution to noninterest income since the Company is currently not
retaining servicing rights on mortgages sold.
The Company's management is committed to developing and offering innovative,
market-driven products and services that will generate additional sources of
noninterest income.
Noninterest Expenses
- - --------------------
Noninterest expenses increased $1.23 million (10.3%) for the first nine
months of 1995, when compared to the first nine months of 1994. Included in this
increase are merger related expenses of $213,000 in 1995 compared to $5,000 in
1994.
A portion of this increase is attributable to the additional overhead costs
associated with operating the new Damascus branch acquired in December 1994 and
the opening of the new Brunswick branch in April 1995. Total salaries and
employee benefits increased $1.07 million (17.1%) over the first nine months of
1994, which was primarily attributable to an increase in salary expenses of
$948,000, payroll taxes and pension costs. This change reflects the increase in
the current year's average number of full-time equivalent employees. During the
first nine months of 1995, the Company employed 294 average full-time equivalent
employees, an increase of 29 people over the same period in 1994.
For the third quarter of 1995, noninterest expenses increased $291,000
(7.3%) when compared to the same period in 1994. A portion of this increase is
related to the additional costs of maintaining the new branches discussed above.
Total salaries and employee benefits increased $366,000 (16.8%) over the third
quarter of 1994, which was primarily attributable to an increase in salary
expenses of $329,000, payroll taxes and pension costs. This change reflects an
increase in the current quarter's average number of full-time equivalent
employees of 33.
Occupancy expenses decreased $49,000 (4.3%) while equipment expenses
increased $59,000 (6.5%) over the first nine months of 1994. The decrease in
occupancy expenses is primarily associated with a reduction in repair and
maintenance costs and a reprieve from the harsh winter weather which occurred
during early 1994. The increase in equipment expenses is primarily related to an
increase in computer repairs and maintenance costs and an increase in automated
teller machine costs.
For the third quarter of 1995, occupancy expenses decreased $11,000 (3.0%)
while equipment expenses increased $90,000 (37.2%) when compared with the same
period in 1994. The decrease in occupancy expenses is principally caused by a
decrease in building repair and maintenance costs. The increase in equipment
expenses is primarily related to an increase in computer repairs and maintenance
costs and by an increase in automated teller machine costs.
Other operating expenses increased $151,000 (4.1%) over the first nine
months of 1994, primarily in the areas of legal and professional fees (related
to the acquisition of ENB Financial Corporation), printing, postage and general
supplies which was due to the increased costs of maintaining the branch network
with the addition of the Damascus and Brunswick branch offices added in December
1994 and April 1995. The Company received a refund of its FDIC charges in the
amount of $237,000 during the third quarter of 1995.
For the third quarter of 1995, other operating expenses decreased $154,000
(12.7%), primarily related to the refund of its FDIC charges as discussed above.
This reduction was partially offset by increases in the areas of legal and
professional fees (related to the acquisition of ENB Financial Corporation and
the pending acquisition of Laurel Bancorp, Inc.), printing, postage and general
supplies which was due to the increased costs of maintaining the branch network
with the addition of the Damascus and Brunswick branch offices added in December
1994 and April 1995.
Income Taxes
The Company's effective tax rates for the first nine months of 1995 and 1994
were 33.7% and 29.0%, respectively. For the third quarter of 1995 and 1994, the
effective tax rates were 36.4% and 28.6%, respectively. The Company's income tax
expense differs from the amount computed at
12
<PAGE>
statutory rates primarily due to tax-exempt interest from certain loans and
investment securities.
Allowance for Credit Losses and Problem Assets
On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114 (SFAS 114), "Accounting by Creditors for Impairment of a Loan"
as amended by Statement No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures." It requires that impaired loans within
its scope be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, except that as a practical
expedient, a creditor may measure impairment based on a loan's observable market
price, or the fair value of the collateral if the loan is collateral dependent.
Since the Company's allowance for credit losses was considered adequate when
this Statement was adopted, the impact to the financial condition and results of
operations was not material.
SFAS 114 excludes smaller balance and homogeneous loans from impairment
reporting. Therefore, the Company has designated consumer, credit card and
residential mortgage loans to be excluded for this purpose. From the remaining
loan portfolio, loans rated as doubtful, or worse, classified as nonaccrual, and
troubled debt restructurings are considered to be impaired. Loans are placed on
nonaccrual when a loan is specifically determined to be impaired or when
principal or interest is delinquent for 90 days or more. Any unpaid interest
previously accrued on those loans is reserved from income. Interest income
generally is not recognized on specific impaired loans unless the likelihood of
further loss is remote. Interest payments received on such loans are applied as
a reduction of the loan principal balance. Interest income on other nonaccrual
loans is recognized only to the extent of interest payments received. Up to this
point, slow payment on a loan is considered, by the Company, to only be a
minimum delay. The Company has identified commercial real estate and commercial
and industrial type loans as the major risk classifications to be used to
aggregate loans for the application of SFAS 114.
As of September 30, 1995, the Company had loans amounting to approximately
$424,000 that were specifically classified as impaired. The average balance of
these loans amounted to approximately $1.26 million for the nine months ended.
The allowance for credit losses related to impaired loans amounted to
approximately $53,000. Cash receipts applied to reduce the principal balance and
cash receipts recognized as interest income were $92,000 and $115,000,
respectively. The primary difference between the average balance for the nine
month period then ended and the balance as of September 30, 1995 is due to $1.17
million of properties acquired through foreclosure. In addition, at September
30, 1995, the Company had other nonaccrual loans of approximately $345,000 for
which impairment had not been recognized. If interest on these loans had been
recognized at the original interest rates, interest income would have increased
approximately $15,000.
The Company maintains its allowance for credit losses at a level deemed
sufficient to provide for estimated potential losses in the credit extension
process. Management reviews the adequacy of the allowance each quarter,
considering factors such as current and future economic conditions and their
anticipated impact on specific borrowers and industry groups, the growth and
composition of the loan portfolio, the level of classified and problem assets,
historical loss experience, and the collectibility of specific loans. Allowances
for impaired loans is generally determined based on collateral values or the
present value of estimated cash flows.
The provision for credit losses is charged to income in an amount necessary
to maintain the allowance at the level management believes is appropriate.
The allowance for credit losses was $3.74 million, or 1.07% of total loans,
net of unearned income, at September 30, 1995, compared to $3.41 million, or
1.17% as of September 30, 1994, and $3.56 million, or 1.17% as of December 31,
1994. The allowance for credit losses to nonperforming loans was 474.2%, 124.4%
and 253.3% as of September 30, 1995, September 30, 1994 and December 31, 1994,
respectively.
Total nonperforming assets as of September 30, 1995 were $2.65 million, a
$1.22 million decrease from the level of nonperforming assets as of September
30, 1994, and a $381,000 increase from the level as of December 31, 1994. Total
nonperforming assets as of September 30, 1995, including properties acquired
through foreclosure, represent .49% of total assets, compared to .77% and .44%
as of September 30, 1994 and December 31, 1994, respectively.
Nonperforming assets at September 30, 1995 included $769,000 of nonaccrual
loans. The remaining $1.87 million in nonperforming assets reflected the fair
value of foreclosed commercial properties held.
13
<PAGE>
<TABLE>
<CAPTION>
Allowance for Credit Losses
- - ----------------------------------------------------------------------------------------------
Nine months
ended Year ended
(Dollars in thousands) September 30, 1995 December 31, 1994
- - ----------------------------------------------------------------------------------------------
<S> <C> <C>
Average total loans outstanding during period $332,698 $274,948
==============================================================================================
Allowance at beginning of year $3,561 $3,160
- - ----------------------------------------------------------------------------------------------
Charge-offs:
Real estate - construction -- --
Real estate - mortgage 22 28
Commercial and agricultural 19 --
Consumer 102 129
- - ----------------------------------------------------------------------------------------------
Total charge-offs 143 157
- - ----------------------------------------------------------------------------------------------
Recoveries:
Real estate - construction -- --
Real estate - mortgage -- --
Commercial and agricultural -- 38
Consumer 41 70
- - ----------------------------------------------------------------------------------------------
Total recoveries 41 108
- - ----------------------------------------------------------------------------------------------
Net charge-offs 102 49
- - ----------------------------------------------------------------------------------------------
Additions to Allowance charged to operating expenses 278 450
- - ----------------------------------------------------------------------------------------------
Allowance at end of period $3,737 $3,561
==============================================================================================
Ratio of net charge-offs to average total loans 0.03% 0.02%
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Allocation of Allowance for Credit Losses
- - --------------------------------------------------------------------------------
(Dollars in thousands) September 30, 1995 December 31, 1994
(1) (1)
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate - construction $ 217 8% $ 143 5%
Real estate - mortgage 1,687 64 1,894 65
Commercial and agricultural 977 13 736 14
Consumer 372 15 304 16
Unallocated 484 -- 484 --
- - --------------------------------------------------------------------------------
Total Allowance $3,737 100% $3,561 100%
================================================================================
(1) Percent of loans in each category to total loans, net of unearned income.
</TABLE>
The Company makes real estate-construction, real estate-mortgage, commercial
and agricultural, and consumer loans. The real estate-construction loans are
generally secured by the construction project and have a term of one year or
less. The real estate-mortgage loans are generally secured by the property with
a maximum loan to value ratio of 75% and a term of one to five years. The
commercial and agricultural loans consist of secured and unsecured loans. The
unsecured commercial loans are made based on the financial strength of the
borrower and usually require personal guarantees from the principals of the
business. The collateral for the secured commercial loans may be equipment,
accounts receivable, marketable securities or deposits in the subsidiary banks
of the Company. These loans have a maximum loan to value ratio of 75% and a term
of one to five years. The consumer loan category consists of secured and
unsecured loans. The unsecured consumer loans are made on the financial strength
of the individual borrower. The collateral for the secured consumer loans may be
marketable securities, automobile, recreational vehicles or deposits in the
subsidiary banks of the Company. The usual term for these loans is three to five
years.
As of September 30, 1995 and December 31, 1994, the Company had loans
totaling $11.20 million and $13.50 million, respectively, that were current but
as to which there are concerns as to the
14
<PAGE>
ability of the borrowers to comply with present loan repayment terms. While
management of the Company does not anticipate any loss not previously provided
for on these loans, changes in the financial condition of these borrowers may
necessitate future modifications in their loan repayment terms.
At September 30, 1995, the Company had no concentrations of loans in any one
industry exceeding 10% of its total loan portfolio. An industry for this purpose
is defined as a group of counterparties that are engaged in similar activities
and have similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or other
conditions.
There were no other interest-bearing assets at September 30, 1995,
classifiable as nonaccrual, past due, restructured or problem assets.
15
<PAGE>
Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differentials
The following table shows average balances of asset and liability
categories, interest income and expense, and average yields and rates for the
periods indicated:
<TABLE>
<CAPTION>
Nine months ended
September 30,
1995 1994
Average Interest Average Average Interest Average
daily income1/ yield/ daily income1/ yield/
balance expense rate balance expense rate
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Interest-bearing deposits $ 352 $ 20 7.59% $ 153 $ 6 5.23%
- - --------------------------------------------------------------------------------------
Federal funds sold 6,643 306 6.14 11,659 330 3.77
- - --------------------------------------------------------------------------------------
Loans held for sale 574 27 6.27 4,144 226 7.27
- - --------------------------------------------------------------------------------------
Investment securities:
Taxable 134,617 6,754 6.69 147,493 6,958 6.29
Tax exempt 15,829 1,509 12.71 22,237 2,112 12.66
- - --------------------------------------------------------------------------------------
150,446 8,263 7.32 169,730 9,070 7.13
- - --------------------------------------------------------------------------------------
Loans 2 332,698 23,271 9.33 267,988 16,956 8.44
- - --------------------------------------------------------------------------------------
Total interest-earning assets 490,713 31,887 8.66 453,674 26,588 7.81
Noninterest-earning assets 35,129 30,405
Net effect of SFAS 115 (755) (503)
- - ---------------------------------------------------------------------------------------
Total assets $525,087 $483,576
=======================================================================================
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $368,536 $11,461 4.15% $343,914 $ 8,613 3.34%
Short-term borrowings 48,794 2,237 6.11 40,917 1,213 3.95
Long-term debt 3 745 -- -- -- -- --
- - --------------------------------------------------------------------------------------
Total interest-bearing
liabilities 4 418,075 13,698 4.37 384,831 9,826 3.40
- - ---------------------------------------------------------------------------------------
Noninterest-bearing deposits 58,119 54,379
Noninterest-bearing liabilities 4,744 3,753
- - ---------------------------------------------------------------------------------------
Total liabilities 480,938 442,963
- - --------------------------------------------------------------------------------------
Stockholders' equity 44,904 41,116
Net effect of unrealized
gain (loss) on securities
available for sale (755) (503)
- - ---------------------------------------------------------------------------------------
Total Stockholders' equity 44,149 40,613
- - --------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $525,087 $483,576
=======================================================================================
Net interest income $18,189 $16,762
=======================================================================================
Net interest spread 4.29% 4.41%
=======================================================================================
Net interest margin 4.94% 4.93%
=======================================================================================
1 Taxable equivalent adjustments of $517,000 for 1995 and $729,000 for 1994 are
included in the interest income for total interest-earning assets.
16
<PAGE>
2 Nonaccruing loans are included in the average balances. Net loan fees
included in interest income totaled $556,000 in 1995 and $341,000 in 1994.
3 The long-term debt is for the construction of a new headquarters. Interest
in the amount of $43,000 on this debt has been capitalized in 1995 during
the construction period.
4 The interest expense amount for 1995 has been reduced by $120,000 while no
adjustment was made for 1994. This interest reduction is due to the
capitalization of interest on the new corporate headquarters.
Capital Resources
- - -----------------
The following table shows the risk-based capital and the leverage ratios
for the Company as of September 30, 1995:
Risk-based capital ratios
Tier 1 Total capital Leverage ratio
--------- ------------- ---------------
Actual 12.02% 13.00% 8.49%
Minimum 4.00 8.00 3.00
- - -----------------------------------------------------------------------
Excess 8.02% 5.00% 5.49%
========================================================================
Recent developments
- - -------------------
There are currently being discussed certain proposals relating to the
reform or restructuring of the deposit insurance fund system. Currently, there
are two deposit insurance funds maintained by the FDIC, the Bank Insurance Fund
("BIF") and the Savings Association Insurance Fund ("SAIF"). Deposits of SAIF
insured institutions assumed by BIF insured banks (plus the deemed growth in
such deposits) continue to be treated as SAIF insured deposits, unless "entrance
and exit fees" amounting to approximately 1.79% of the assumed deposits are
paid. The designation of deposits as "BIF insured" or "SAIF insured" determines
the level of the deposit insurance premiums paid by an institution, and the
allocation of such premiums between BIF and SAIF. As of September 30, 1995, the
Company had approximately $40.00 million in deposits designated as SAIF insured,
out of $450.63 million in total deposits. Deposit premium assessments for the
Company's BIF insured deposits have been reduced to .04%, down from .23%. SAIF
deposit insurance premiums will remain at .23% until SAIF meets the mandated
level of 1.25% of insured deposits. Among the proposals to recapitalize SAIF and
allow the equalization at the lower BIF premium levels is one which would impose
a one-time assessment of .85% to .90% of SAIF insured deposits on all
institutions holding SAIF insured deposits. If a one-time assessment of .85% of
SAIF insured deposits were imposed on the Company as of September 30, 1995, and
the assessment were imposed utilizing the same formula for calculating the level
of the SAIF insured deposit base as that currently utilized for allocating
premiums between BIF and SAIF, then the Company would be required to pay
approximately $340,000 in connection with the assessment without reduction for
the effect of income taxes. There can be no assurance as to the enactment of any
of the current proposals, the form of any such proposals, the amount, tax
treatment or timing of any one-time assessment, or the means used to calculate
the deposit base subject to any such assessment.
17
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
No. 11 Statement Regarding Computation of Per Share Earnings
No. 27 Financial Data Schedule
(b) There were no Reports on Form 8-K filed for the quarter ended
September 30, 1995.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FCNB CORP
(Registrant)
November 9, 1995 BY:/s/ A. Patrick Linton
------------------------------------
A. Patrick Linton, President,
Chief Executive Officer and
Director
November 9, 1995 BY:/s/ Mark A. Severson
-----------------------------------
Mark A. Severson, Vice President
and Treasurer
19
<PAGE>
Exhibit No. 11
Statement Regarding the Computation of Per Share Earnings
1995 1994(1)
--------- -----------
Earnings per Common Share:
Primary $1.09 $1.03
Average shares outstanding 4,070,321 4,068,968
Fully diluted $1.08 $1.02
Average shares outstanding 4,122,845 4,113,781
(1) The amounts shown for 1994 have been retroactively restated to reflect
the acquisition of ENB Financial Corporation consummated on March 24,
1995, accounted for as a pooling-of-interests, and for the effects of a
three-for-two stock split, effected in the form of a 50% stock
dividend, declared in April 1995.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000803644
<NAME> FCNB CORP
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 24,464
<INT-BEARING-DEPOSITS> 331
<FED-FUNDS-SOLD> 7,304
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 61,632
<INVESTMENTS-CARRYING> 73,080
<INVESTMENTS-MARKET> 73,251
<LOANS> 349,585
<ALLOWANCE> 3,737
<TOTAL-ASSETS> 544,572
<DEPOSITS> 450,633
<SHORT-TERM> 40,477
<LIABILITIES-OTHER> 4,326
<LONG-TERM> 2,235
<COMMON> 4,070
0
0
<OTHER-SE> 42,831
<TOTAL-LIABILITIES-AND-EQUITY> 544,572
<INTEREST-LOAN> 23,294
<INTEREST-INVEST> 7,750
<INTEREST-OTHER> 326
<INTEREST-TOTAL> 31,370
<INTEREST-DEPOSIT> 11,461
<INTEREST-EXPENSE> 13,698
<INTEREST-INCOME-NET> 17,672
<LOAN-LOSSES> 278
<SECURITIES-GAINS> 64
<EXPENSE-OTHER> 13,229
<INCOME-PRETAX> 6,714
<INCOME-PRE-EXTRAORDINARY> 6,714
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,453
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.08
<YIELD-ACTUAL> 8.66
<LOANS-NON> 769
<LOANS-PAST> 19
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 11,200
<ALLOWANCE-OPEN> 3,561
<CHARGE-OFFS> 143
<RECOVERIES> 41
<ALLOWANCE-CLOSE> 3,737
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 484
</TABLE>
