<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
FOR THE SIX MONTH PERIOD ENDED: JUNE 30, 1996
COMMISSION FILE NUMBER: 0-16084
CITIZENS AND NORTHERN CORPORATION
STATE OF INCORPORATION: PENNSYLVANIA
I.R.S. EMPLOYER IDENTIFICATION NUMBER: 23-2451943
REGISTRANT'S TELEPHONE NUMBER (INCLUDING AREA CODE) : 717-724-3411
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE: THOMPSON STREET
RALSTON, PA 17763
MAILING ADDRESS OF EXECUTIVE OFFICE: 90-92 MAIN STREET
WELLSBORO, PA 16901
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 report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
As of July 1, 1996 5,117,182 COMMON SHARES WERE OUTSTANDING
1
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
June 30, December 31,
(In Thousands) 1996 1995
(Unaudited) (Audited)
ASSETS
Cash & Due From Banks 14,479 12,945
Interest-Bearing Deposits 645 645
Total Cash and Cash Equivalents 15,124 13,590
Available-for-Sale Securities 312,851 299,591
Held-to-Maturity Securities 1,625 1,507
Loans, Net 264,895 259,603
Bank Premises and Equipment 6,584 6,791
Foreclosed Assets Held for Sale 612 455
Accrued Interest on Bonds and Loans 4,492 4,058
Other Assets 1,661 392
TOTAL ASSETS 607,844 585,987
LIABILITIES
Deposits:
Noninterest Bearing 46,457 41,167
Interest - Bearing 383,498 388,385
Total Deposits 429,955 429,552
Dividends Payable 852 843
Borrowed Funds 106,650 85,000
Accrued Interest and Other Liabilities 5,085 3,615
TOTAL LIABILITIES 542,542 519,010
STOCKHOLDERS' EQUITY
Common Stock, Par Value $ 1.00 per Share 5,117 5,067
Authorized 10,000,000; Issued 5,117,182
and 5,066,516 in 1996 and 1995, respectively
Stock Dividend Distributable 1,013
Paid in Capital 12,538 11,575
Retained Earnings 46,332 43,370
Total 63,987 61,025
Unrealized Holding Loss on Available-for-Sale
Securities 2,315 6,952
Less: Treasury Stock at Cost
105,100 shares at June 30, 1996 (1,000)
104,060 shares at December 31, 1995 (1,000)
TOTAL STOCKHOLDERS' EQUITY 65,302 66,977
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 607,844 585,987
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
CITIZENS & NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. - Financial Statements (continued)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands except Per Share Data)
Three Months Ended Fiscal Year To Date
June 30, 6 Months Ended June 30,
1996 1995 1996 1995
(Current) (Prior Year) (Current) (Prior Year)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans 6,807 6,460 13,530 12,599
Interest on Balances with Depository Institutions 10 15 17 23
Interest on Loans to Political Subdivisions 106 107 212 208
Interest on Federal Funds Sold 23 58 63
Income from Available-for-Sale and
Held-to-Maturity Securities:
Taxable 4,065 3,690 8,059 7,320
Tax Exempt 761 672 1,441 1,299
Dividends 227 172 407 354
Total Interest and Dividend Income 11,999 11,116 23,724 21,866
INTEREST EXPENSE
Interest on Deposits 4,371 4,807 8,769 9,414
Interest on Other Borrowings 1,415 1,328 2,803 2,816
Total Interest Expense 5,786 6,135 11,572 12,230
Interest Margin 6,213 4,981 12,152 9,636
Provision for Possible Loan Losses 175 184 350 368
Interest Margin After Provision for Possible Loan Losses 6,038 4,797 11,802 9,268
OTHER INCOME
Service Charges on Deposit Accounts 288 282 558 556
Service Charges and Fees 67 68 130 131
Trust Department Income 183 195 388 384
Insurance Commissions, Fees and Premiums 149 156 268 313
Other Operating Income 9 10 27 29
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 171 77 268 851
Total Other Income 867 788 1,639 2,264
OTHER EXPENSES
Salaries and Wages 1,473 1,364 2,922 2,728
Pensions and Other Employee Benefits 420 418 885 878
Occupancy Expense, Net 189 176 367 356
Furniture and Equipment Expense 177 158 365 310
Other Operating Expense 1,347 1,546 2,672 3,037
Total Other Expenses 3,606 3,662 7,211 7,309
Income Before Income Tax Provision 3,299 1,923 6,230 4,223
Income Tax Provision 812 256 1,564 831
NET INCOME 2,487 1,667 4,666 3,392
PER SHARE DATA:
NET INCOME 0.50 0.33 0.93 0.68
NUMBER SHARES USED IN COMPUTATION 5,012,081 5,012,081 5,012,081 5,012,081
NUMBER SHARES ISSUED 5,117,182 5,066,516 5,117,182 5,066,516
NUMBER SHARES AUTHORIZED 10,000,000 10,000,000 10,000,000 10,000,000
DIVIDEND PER SHARE 0.17 0.16 0.34 0.32
</TABLE>
3
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information (Continued)
Item 1. Financial Statements (Continued)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
Periods Ended June 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 4,666 3,392
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Provision for Possible Loan Losses 350 368
Realized (Gain), on Available-for-Sale and
Held-to-Maturity Securities, Net (268) (851)
Provision for Depreciation 381 368
Accretion and Amortization 429 161
Deferred Income Tax (20) (26)
Increase in Accrued Interest
Receivable and Other Assets (1,682) (181)
Increase in Accrued Interest Payable and
Other Liabilities 3,869 2,700
Net Cash Provided by Operating Activities 7,725 5,931
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the Maturity of Held-to-Maturity Securities 82 64
Purchase of Held-to-Maturity Securities (200) (198)
Proceeds from Sales of Available-for-Sale Securities 11,071 3,295
Proceeds from Maturities of Available-for-Sale Securities 20,418 16,191
Purchase of Available-for-Sale Securities (51,937) (34,381)
Net Increase in Loans (5,643) (2,232)
Purchase of Premises and Equipment (174) (119)
Sale of Foreclosed Assets 174 228
Purchase of Other Real Estate (331) (167)
Net Cash Used in Investing Activities (26,540) (17,319)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Deposits 403 13,703
Increase in Short Term Borrowings 7,650 21,000
Proceeds from (Repayment of) Long Term Borrowings 14,000 (20,000)
Dividends Declared (1,704) (1,588)
Net Cash Provided by Financing Activities 20,349 13,115
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,534 1,727
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 13,590 12,407
CASH AND CASH EQUIVALENTS, END OF YEAR 15,124 14,134
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid 9,052 9,629
Income Taxes Paid 1,876 779
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information (continued )
Item 1. Financial Statements ( continued )
Notes to Consolidated Financial Statements
1. The financial information included herein, with the exception of the
Consolidated Balance Sheet dated December 31, 1995 is unaudited; however, such
information reflects all adjustments ( consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations, and changes in
financial position for the interim periods.
During the first quarter of 1995, the Corporation implemented SFAS No. 114
"Accounting by Creditors for Impairment of a Loan" . The pronouncement
requires that impaired loans that are within the scope of this Statement be
measured 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
the fair value of collateral if the loan is collateral dependent. The
implementation of this standard did not have a material impact on the
Corporation's balance sheet.
This document has not been reviewed or confirmed for accuracy or relevance
by the Federal Deposit Insurance Corporation.
5
<PAGE>
CITIZENS AND NORTHERN - FORM 10 - Q
Part I - Financial Information (continued )
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
EARNINGS OVERVIEW
The Corporation reported net income for the six months ended June 30, 1996
of $ 4,266,000, or $ .93 per common share. This compares to $ 3,392,000, or
$.68 per share, for the six month period ended June 30, 1995.
Income for the six months ended June 30, 1996 increased 38 percent when
compared to the same six month period in 1995. The increase can be attributed
to an increase in the net interest margin.
The directors and management of the Corporation expect that profits for the
balance of 1996 should be in the range of those recorded for the first months
provided interest rates remain at the current levels.
NET INTEREST MARGIN
Quarters Ended June 30, 1996/1995
The net spread between the rate of return on earning assets and the cost
of interest-bearing liabilities increased from 2.83 percent for the six month
period ended June 30, 1995 to 3.55 percent for the six month period ended June
30, 1996. The net spread for the year ended December 31, 1995 was 2.99 percent.
The gross rate of return on earning assets for the six months ended June 30,
1996, year ended December 31, 1995 and six months ended June 30, 1995 was 8.31
percent, 8.22 percent and 8.18 percent, respectively. The average costs of
interest-bearing liabilities for the six month period ended June 30, 1996, year
ended December 31, 1995 and six months ended June 30, 1995 was 4.76 percent,
5.23 percent and 5.35 percent, respectively. The 72 basis point increase in the
net interest margin between the comparable six month periods caused net interest
income to increase $2,106,000; an additional $410,000 can be attributed to
volume increases.
The average rate of return on the portfolio of Available-for-Sale
investments remained relatively unchanged during the periods being compared.
However, the average balance for the six months ended June 30, 1996 amounted to
$306,609,000, increasing $29,457,000 between the two periods; this increase
generated $941,000 in additional investment income. The average investment in
Available-for-Sale investments for the year ended December 31, 1995 amounted to
$287,069,000 and has increased just over $19,540,000 during the first six months
of 1996. The average rate of return for 1995 was 6.41 percent.
Average gross loans for the periods ended June 30, 1996, December 31, 1995
and June 30, 1995 totaled $264,895,000, $259,143,000 and $257,367,000,
respectively. The average rate of return on the loan portfolio posted a slight
increase of 9 basis points since year-end 1995 and 13 basis points since June
30, 1995, increasing interest income $936,000. Loan growth has been relatively
flat during the past year. Average total loans have increased $7,528,000, an
increase of just 2.9 percent since June 30, 1995. The loan categories that did
increase slightly were mortgage and commercial loans. The biggest single factor
inhibiting loan growth is rate competition from other banks and non bank
competitors. The competition will probably keep the average rate of return on
the portfolio at its current level for 1996.
On the liability side of the balance sheet, average total interest-bearing
deposits increased 5.6 percent or $20,503,000 when comparing average balances
for the periods ended June 30, 1996 and June 30, 1995. Average total interest-
bearing deposits increased 3.6 percent or $13,355,000 between December 31, 1995
and June 30, 1996. All of the deposit growth has been in interest-bearing
deposit categories as demand deposit liabilities have remained flat.
Average balances in all deposit categories have posted growth since June
30, 1995 with the exception of interest checking, passbook and statement
savings accounts. The average balances in these deposit categories have shown a
slight decline due to the lower rates paid. Average interest checking account
balances have declined $1,071,000 between June 30, 1995 and June 30, 1996. The
reason for the decrease was a change in the rate schedule applied to these
accounts. The rate paid on balances in these accounts prior to November 1, 1995
was 79% of the 91 day Treasury bill auction rate. After November 1, 1995 the
rate was lowered to 50 percent of the auction rate; account balances of less
than $2,500 will be paid 25 percent of the 91-day Treasury Bill auction rate.
The former rate was 39.5 percent of auction rate. Balances in passbook and
statement savings have declined slightly since October 1, 1994 when the rate was
lowered to 2.5 percent. They seem to have leveled off at about $47,000,000 and
are considered core deposits.
Money market account average balances for the periods ended June 30, 1996,
December 31, 1995 and June 30, 1995 amounted to $99,006,000, $91,773,000 and
$89,046,000, respectively. The average rates paid on these balances for the
respective periods were 4.52 percent, 4.93 percent and 5.11 percent. The rate
paid on Money Market accounts is 90 percent of the 91-day Treasury bill auction
rate. The average balances carried in certificates of deposit increased
significantly between the comparable periods. The respective average balance for
the periods ended June 30, 1996, December 31, 1995 and June 30, 1995 amounted to
$118,745,000, $112,493,000 and $107,149,000. The average rate paid on the
certificates dropped 27 basis points between June 30, 1995 and June 30, 1996.
Individual retirement accounts also posted a modest increase in average balances
due to the posting of interest on December 31, 1995. The average balances at
June 30, 1996, December 31, 1995 and June 30, 1995 were $81,067,000, $78,534,000
and $78,221,000, respectively.
6
<PAGE>
Average borrowed funds increased $12,292,000 between the periods ended
June 30, 1966 and June 30, 1995 and the average rate paid on those borrowed
funds decreased 47 basis points. Borrowed funds are invested in mortgage backed
securities issued primarily by Fannie Mae. The primary source of borrowing is
the Federal Home Loan Bank of Pittsburgh.
Management is expecting interest rates to remain stable for the balance of
1996 and the net spread to remain in the 3.55 to 3.75 percent range.
Tables I and II are provided to reflect average balances and rates paid for
the six month periods ended June 30, 1996, December 31, 1995 and June 30, 1995,
respectively.
7
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
TABLE I - Analysis of the Effect of Volume and Rate Changes in
Interest Income and Interest Expense
<TABLE>
<CAPTION>
Periods Ended June 30, 1996/1995
Change in Change in Total
(In Thousands) Volume Rate Change
<S> <C> <C> <C>
EARNING ASSETS
Available-for-Sale Securities:
U S Treasury Securities
Securities of Other US Government Agencies and Corporations 470 41 511
Mortgage Backed Securities 92 (133) (41)
Obligations of States and Political Subdivisions 154 (13) 141
Stock 84 (29) 55
Other Securities 141 126 267
Total Available-for-Sale Securities 941 (8) 933
Held-to-Maturity Securities:
U S Treasury Securities 12 12
Securities of Other US Government Agencies and Corporations
Mortgage Backed Securities (6) (5) (11)
Obligations of States and Political Subdivisions
Stock
Other Securities
Total Held-to-Maturity Securities 6 (5) 1
Interest-Bearing Due from Banks (13) 6 (7)
Federal Funds Sold 3 (8) (5)
Loans:
Real Estate Loans 303 411 714
Consumer (112) 256 144
Agricultural (21) (3) (24)
Commercial/Industrial 114 (20) 94
Other 1 1 2
Political Subdivisions 8 (3) 5
Leases 1 1
Total Loans 294 642 936
Total Interest Income 1,231 627 1,858
INTEREST-BEARING LIABILITIES
Interest Checking (24) (404) (428)
Money Market 224 (262) (38)
Savings (33) 2 (31)
Certificates of Deposit 314 151 465
Individual Retirement Accounts 101 (700) (599)
Other Time Deposits (2) (11) (13)
Federal Funds Purchased (100) (11) (111)
Other Borrowed Funds 341 (244) 97
Total Interest Expense 821 (1,479) (658)
NET INTEREST INCOME 410 2,106 2,516
</TABLE>
The change in interest due to both volume and rates has been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar amount
of the change in each.
8
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Table II - Analysis of Average Daily Balances and Rates
<TABLE>
<CAPTION>
Rate of Rate of Rate of
Return/ Return/ Return/
Cost of Cost of Cost of
(In Thousands) Funds Funds Funds
EARNING ASSETS 6/30/96 % 12/31/95 % 6/30/95 %
<S> <C> <C> <C> <C> <C> <C>
Available-for-Sale Securities:
U S Treasury Securities 2,507 5.15 2,510 5.10 2,510 5.14
Securities of Other US Government Agencies and Corporations 24,693 6.90 10,639 6.49 10,838 6.22
Mortgage Backed Securities 206,841 6.55 208,469 6.55 204,000 6.68
Obligations of States and Political Subdivisions 46,201 6.29 41,756 6.39 41,262 6.35
Stock 16,805 4.90 13,547 5.09 13,381 5.34
Other Securities 9,562 8.10 10,148 5.60 5,161 4.55
Total Available-for-Sale Securities 306,609 6.48 287,069 6.41 277,152 6.49
Held-to-Maturity Securities:
U S Treasury Securities 698 6.07 324 6.79 299 6.31
Securities of Other U S Government Agencies and Corporations 16 6.50
Mortgage Backed Securities 866 6.75 1,004 7.67 1,057 7.65
Obligations of States and Political Subdivisions
Stock
Other Securities
Total Held-to-Maturity Securities 1,580 6.51 1,328 7.45 1,356 7.35
Interest -Bearing Due from Banks 575 5.96 996 5.52 1,107 4.31
Federal Funds Sold 2,176 5.38 1,301 6.07 2,071 6.01
Loans:
Real Estate Loans 203,930 9.41 198,936 9.15 197,268 8.93
Consumer 35,192 17.70 36,230 17.01 36,575 16.12
Agricultural 2,676 10.17 3,051 10.32 3,082 10.29
Commercial/Industrial 16,014 9.76 13,998 10.03 13,650 9.99
Other 229 7.93 238 7.98 192 7.63
Political Subdivisions 6,680 6.40 6,524 6.45 6,446 6.45
Leases 174 8.11 166 4.00 154 8.37
Total Loans 264,895 10.46 259,143 10.24 257,367 10.03
Net Loans & Leases 264,895 10.46 259,143 10.24 257,367 10.03
Total Earning Assets 575,835 8.31 549,837 8.22 539,053 8.18
Cash 12,549 11,834 11,831
Securities Valuation Reserve 6,936 (2,668) (8,578)
Allowance for Possible Loan Losses (4,581) (4,484) (4,393)
Other Assets 5,597 4,737 8,069
Bank Premises & Equipment 6,946 6,774 6,832
Total Assets 603,282 566,030 552,814
INTEREST-BEARING LIABILITIES
Interest Checking 40,735 2.45 42,118 4.02 41,806 4.45
Money Market 99,006 4.52 91,773 4.93 89,046 5.11
Savings 47,186 2.50 48,261 2.48 49,877 2.48
Certificates of Deposit 118,745 5.55 112,493 5.50 107,149 5.28
Individual Retirement Accounts 81,067 5.41 78,534 6.58 78,221 7.15
Other Time Deposits 2,260 2.41 2,465 2.60 2,397 2.45
Federal Funds Purchased 1,829 5.95 4,774 6.37 5,220 6.39
Other Borrowed Funds 99,162 5.59 87,728 6.09 86,870 6.06
Total Interest-Bearing Liabilities 489,990 4.76 468,146 5.23 460,586 5.35
Demand Deposits 41,871 39,313 38,664
Other Liabilities 5,278 4,844 2,494
Total Liabilities 537,139 512,303 501,744
Stockholders' Equity 60,555 55,961 50,633
Securities Valuation Reserve 5,588 (2,234) 437
Total Liabilities and Stockholders' Equity 603,282 566,030 552,814
Interest Rate Spread 3.55 2.99 2.83
</TABLE>
9
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Allowance for Possible Loan Losses is a reserve established by
management, which it believes will be adequate to absorb future loan losses
based on management's assessment of the quality of the total loan portfolio. The
assessment is performed on an ongoing basis and reviewed by the Board of
Directors quarterly.
The assessment looks at portfolio quality and a review of historical
charge-offs using a six year average. Portfolio quality is determined by
regulatory and independent loan reviews. The Corporation employs an independent
loan review specialist who reviews loans based on criteria set by the Board of
Directors. The review includes, but is not limited to, documentation, financial
statements, tax returns and a cash flow analysis of each loan.
Probably the most important tool used by management to determine portfolio
quality is the "Watch List". The "Watch List" is a collection of loans that are
now or have been substandard for a variety of reasons. The list is distributed
to Branch Managers monthly for their review and updated before going to the
Board of Directors. The list also contains all nonperforming loans that for
purposes of SFAS No. 114 are segregated for reserve purposes and valued at
their observable collateral value.
The most recent loan review by the Corporation's independent loan appraiser
was conducted at the close of business May 31, 1996. The review was submitted on
July 26, 1996 and listed $10,145,000 in criticized loans an, increase of
$1,102,000 over the review completed June 16, 1995. Loans classified as
substandard, doubtful and loss were $6,873,000, $276,000 and $82,000,
respectively. Using regulatory standards of 15% of substandard loans, 50% of
doubtful and 100% of loss credits, management and the Board of Directors has
determined that the Reserve for Possible Loan Losses is adequate.
Other factors used to evaluate the reserve level are loan growth, economic
conditions of the market area and peer group comparisons.
Tables IV and V present a five year history of the Allowance for Possible
Loan Losses and projection for the current year. Table V projects estimated
losses using the last five years as a base. Years having abnormally large or low
charge-offs are eliminated to present a realistic estimation. Table III provides
reserve activity for the year-to-date, the most probable at year end and a worst
case scenario which uses an historical average including years which had larger
than normal losses.
TABLE III - Reconciliation of the Reserve for Possible Loan Losses
<TABLE>
<CAPTION>
(In Thousands) Worst Case Probable Actual Actual
Dec 31, 1996 Dec 31, 1996 June 30, 1996 Dec 31, 1995
<S> <C> <C> <C> <C>
Beginning Balance January 1, 4,579,210 4,579,210 4,579,210 4,228,741
Provision Charged to Earnings 721,000 721,000 350,250 736,500
Year-to-Date Recoveries 140,000 140,000 94,441 187,473
Year-to-Date Charge-offs (882,000) (600,000) (320,016) (573,504)
Ending Balance 4,558,210 4,840,210 4,703,885 4,579,210
</TABLE>
<TABLE>
<CAPTION>
TABLE IV--Loan Loss History
(In Thousands) 1996 Est 1995 1994 1993 1992 1991 AVERAGE
<S> <C> <C> <C> <C> <C> <C> <C>
Net Loans * 290,000 264,182 258,472 238,755 225,475 199,072 210,851
Net Charge-offs 460 387 326 247 518 3,142 726
Allowance for Possible Loan Losses Balance 4,840 4,579 4,229 3,817 3,356 2,548 3,338
Provision for Loan Losses Charged to Earnings 721 737 737 708 1,326 3,151 1,054
Earnings 7,203 7,866 7,494 8,127 7,290 5,643 6,232
Earnings Coverage of Net Charge-offs 15.7x 20.3x 23.0x 32.9x 14.1x 1.8x 8.6x
Allowance Coverage of Net Charge-offs 10.5x 11.8x 13.0x 15.5x 6.5x 0.8x 4.6x
Loans Ninety Days or More Past Due and
Still Accruing 2,500 2,915 2,743 2,899 2,532 3,810 2,486
Net Charge-offs as a Percent of the Provision 63.8% 52.5% 44.2% 34.9% 39.1% 99.7% 68.8%
Year-End Nonperforming Loans 250 279 624 843 1,351 417 538
Allowance as a Percentage of Gross Loans: *
Bank (1) 1.74% 1.73% 1.64% 1.60% 1.49% 1.28% 1.36%
Peer Group (2) 1.58% 1.61% 1.65% 1.82% 1.42% 1.44% 1.38%
* Gross Loans less Unearned Discount
(1) At March 31, 1996
(2) At December 31, 1995
</TABLE>
10
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
<TABLE>
<CAPTION>
Table V - Allocation of the Reserve for Possible Loan Losses
(In Thousands)
LOAN CLASSIFICATION 1996 Est 1995 1994 1993 1992 1991 Average
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, Financial
& Agricultural 35,000 31,522 22,649 26,376 22,712 23,541 26,967 0.01955 X 35,000 = 684
Real Estate - Construction 1,500 1,284 2,593 2,224 993 982 1,596 0.00000 X 1,500 =
Real Estate - Mortgage 210,000 192,350 193,095 170,532 162,434 136,716 177,521 0.00017 X 210,000 = 36
Credit Card &
Related Plans 10,000 9,934 9,896 9,212 9,991 6,694 9,288 0.01303 X 10,000 = 130
All Other Loans
to Individuals 33,340 28,955 30,094 30,282 29,182 31,762 30,603 0.00551 X 33,340 = 184
Lease Financing 160 163 145 154 162 129 152 X 160 = 0
Total Loans 290,000 264,208 258,472 238,780 225,474 199,824 246,126
FASB 114 Allocation 240 228 N/A N/A N/A N/A 181 1.00000 X 240 = 240
Letter of Credit
Commitments 2,750 2,633 4,415 5,046 4,670 N/A 4,191 0.00000 X 2,750 = 0
All Other Commitments
Consumer 25,000 24,811 24,202 23,323 22,174 N/A 23,628 0.00551 X 25,000 = 138
Mortgage 7,500 7,276 9,566 9,466 9,117 N/A 8,856 0.00017 X 7,500 = 1
Commercial 10,500 10,201 9,901 9,790 5,670 N/A 8,891 0.01955 X 10,500 = 205
Reserve Allocation 1,618
Unallocated Portion 3,222
Reserve Balance 4,840
</TABLE>
11
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ( continued )
<TABLE>
<CAPTION>
Table VI - Major Categories of Noninterest Income
Periods Ended
June 30,
(In Thousands) $ %
1996 1995 Change Change
<S> <C> <C> <C> <C>
Service Charges on Deposit Accounts 558 556 2 0.36
Service Charges and Fees 130 131 (1) (0.76)
Trust Department Income 388 384 4 1.04
Insurance Commissions, Fees and Premiums 268 313 (45) (14.38)
Other Operating Income 27 29 (2) (6.90)
Realized Gains (Losses) on Securities, Net 268 851 (583) (68.51)
Total Other Income 1,639 2,264 (625) (27.61)
</TABLE>
Only two items of other income reflect significant change: insurance
premiums generated by the Corporation's captive life and accident and health
insurance subsidiary which provides insurance for the consumer loan portfolio
and realized gains from the sale of available-for-sale securities. The decline
in insurance premiums is the general lack of loan demand during the comparable
periods as evidenced by the small increase in average outstanding loan balances.
Realized gains from the sale of available-for-sale securities are the
result of the sale of stock. The Bank and Corporation both have substantial
holdings of Pennsylvania banks and Pennsylvania bank holding companies. The
stocks are evaluated continuously and frequently and when the holdings become
too large or overvalued due to mergers or other reasons, all or portions of the
holdings are sold. Some of the issues sold during the two comparable six month
periods were mandated by an FDIC ruling that banks may not hold stock that is
traded over-the-counter and not listed on a recognized stock exchange.
12
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ( continued )
The following table compares the various categories of other expense for the
periods ended June 30, 1996 and June 30, 1995.
<TABLE>
<CAPTION>
Table VII - Major Categories of Noninterest Expense
Periods Ended
June 30,
(In Thousands) $ %
1996 1995 Change Change
<S> <C> <C> <C> <C>
Salaries and Wages 2,922 2,728 194 7.11
Pensions and Other Employee Benefits 885 878 7 0.80
Occupancy Expense, Net 367 356 11 3.09
Furniture and Equipment Expense 365 310 55 17.74
Other Operating Expense 2,672 3,037 (365) (12.02)
Total Other Expense 7,211 7,309 (98) (1.34)
</TABLE>
Salaries and wages increased 7.11 percent. The increase can be attributed
to an increase in the number of full time equivalent employees and merit raises.
The number of full time equivalent employees at June 30, 1996 was 204, compared
to 198 at June 30, 1995. Merit raises effective January 1, 1996 were in the 5
to 6 percent range.
Furniture and equipment expense increased $55,000 or nearly 18 percent. The
change is due to the increase in equipment maintenance costs on the new check
imaging equipment. The new equipment was maintenance free for the first year of
operation. Depreciation expense also increased $10,000 over the same six month
period last year.
Other operating expense decreased $365,000 over the same period in 1995.
The largest single factor contributing to the decrease was FDIC insurance. FDIC
premiums dropped from $447,000 for the period ended June 30, 1995 to $1,500 for
the period ended June 30, 1996. Several other expense items varied only
slightly, however credit card processing costs increased $135,000 over the same
period last year. It should also be noted that interest and fees associated with
the credit card function included in interest and fees on loans increased
$147,000 during the six months ended June 30, 1996 when compared to the same
period last year.
13
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM - 10Q
Part I - Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ( continued )
STATEMENT OF CONDITION
Average total assets of the Corporation for the six month period ended June
30, 1996 increased $50,648,000 or 9.1 percent when compared to the average
balance at June 30, 1995. Average total assets increased $37,252,000 or 6.6
percent when compared to year-end 1995. The increase in average assets between
June 30, 1995 and June 30, 1996 can be attributed to an increase in average
deposits totaling $23,710,000 and an increase in average borrowed funds totaling
$8,900,000. The deposit increase was primarily money market accounts and
certificates of deposit. Average demand deposit balances increased $3,207,000
between June 30, 1995 and June 30, 1996: other deposit categories exhibited only
modest growth or in some cases a slight decline.
Borrowed funds increased only slightly between June 30, 1995 and December
31, 1995, and $8,500,000 between December 31, 1995 and June 30, 1996. Maturities
of the borrowed funds range from six months to two years.
The increases in average deposits and borrowed funds were used primarily to
fund an increase in Available-for-Sale securities as average total loans
increased only 2.9 percent or $7,528,000 between June 30, 1995 and June 30, 1996
and 2.2 percent or $5,752,000 between the periods ending December 31, 1995 and
June 30, 1996. Average Available-for-Sale securities increased 10.6 percent or
$29,457,000 between June 30, 1995 and June 30, 1996; average balances increased
6.8 percent or $19,540,000 during the six month period ending June 30, 1996.
Interest rate fluctuations have caused wide variations in the required
market value adjustment due to the large holdings of Available-for-Sale
securities. The net after tax adjustment at June 30, 1996, December 31, 1995 and
June 30, 1995 were $2,315,000, $6,952,000, and $1,569,000, respectively.
The capital base of the Corporation remains strong. The ratio of capital to
deposits excluding the market value adjustment for Available-for-Sale securities
at June 30, 1996, December 31, 1995 and June 30, 1995 was 14.9 percent, 14.2
percent and 14.1 percent, respectively. The risk based capital ratio for the
same periods, respectively, was 19.74 percent, 18.72 percent and 18.59 percent.
The dividend as a percentage of net income for the six months ended June
30, 1996, and June 30, 1995 was 36.5 percent and 46.8 percent, respectively. The
dividend for the year ended December 31, 1995 was 41.2 percent.
The Corporation does not expect that there will be any significant change
in the mix of assets and liabilities for the remainder of 1996. This expectation
is based on the assumption that interest rates will remain stable through the
balance of the year.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation's ability to absorb short term deposit fluctuations or
unusually heavy loan demand, should they occur, are met by using a Flexline of
credit and the Open RepoPlus program available through the Federal Home Loan
Bank of Pittsburgh. The Flexline of credit provides the Corporation with a
credit line of approximately $28,000,000. The Open RepoPlus line is $50,000,000.
The maturities of the repurchase agreements generally range from 30 days to 2
years. The Corporation also has credit lines with correspondent banks totaling
approximately $15,000,000.
At June 30, 1996 total corporate borrowing amounted to $106,650,000,
consisting of repurchase agreements amounting to $47,650,000 and long term
borrowings totaling $59,000,000. This relatively short term borrowing created a
large negative gap which had a detrimental effect on earnings during the first
half of 1995, however interest rates have declined and the net interest margin
has shown steady improvement through the last half of 1995 and through the first
six months of 1996.
The Corporation uses a computer model to measure the theoretical effect of
interest rate swings on the market value and the net interest margin using a
rate shock. The model shocks interest 400 basis points upward and downward. The
Asset and Liability Policy set by the Board of Directors imposes limits on the
change in net interest income and market value of portfolio equity at a 200
basis point increase in interest rates. Net interest income may not decline
more than 20 percent and the change in market value of portfolio equity may not
decline more than 25 percent. The Board of Directors feels that the parameters
are reasonable based on the capital strength of the Corporation. The interest
rate sensitivity table presented on page 15 uses static gap methodology to
measure the difference between rate sensitive assets and liabilities at June 30,
1996. The analysis shows that the Corporation has a negative gap; i.e.
liabilities reprice faster than assets. The Corporation has the ability to
increase or decrease the gap by selling assets and repaying borrowed funds. It
should be noted that the Corporation relies more heavily on its computer model
to monitor interest rate risk than the static gap. The reader should refer to
pages 16 and 17 for a fuller understanding of the effect of interest rate
movements.
14
<PAGE>
CITIZENS AND NORTHERN CORPORATION FORM 10 - Q
Part I Financial Information ( continued )
Item 2. Management's Discussion and Analysis of Condition
and Results of Operations ( continued )
<TABLE>
<CAPTION>
Table VIII - Rate Sensitive Assets and Rate Sensitive Liabilities
< 1 Year > 1 - 5 Years > 5 - 10 Years > 10 Years Total
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-Bearing Deposits 645 645
Available-for-Sale Securities:
US Treasury Securities 2,456 2,456
Securities of Other Government
Agencies 8,902 16,915 10,183 36,000
Mortgage-Backed Securities 31,401 125,603 38,644 195,648
Municipals 1,665 4,466 3,970 41,311 51,412
Other Bonds 600 2,400 1,000 1,266 5,266
Stocks 22,069 22,069
Total Available-for-Sale Securities 33,666 143,827 60,529 74,829 312,851
Held-to-Maturity Securities:
US Treasury Securities 699 699
Securities of Other Government
Agencies 100 100
Mortgage-Backed Securities 826 826
Total Held-to-Maturity Securities 0 799 0 826 1,625
Loans and Lease Financing:
Real Estate-Construction 66,455 66,455
Real Estate-Mortgage 20,978 48,365 45,928 26,442 141,713
Consumer 11,128 14,153 1,574 7,980 34,835
Agricultural 1,320 1,341 168 22 2,851
Commercial 12,421 3,449 522 179 16,571
Other 231 26 257
Political Subdivisions 1,508 2,484 1,455 1,274 6,721
Leases 48 147 1 196
Total Loans 114,089 69,965 49,648 35,897 269,599
Allowance for Possible
Loan Losses (4,704) (4,704)
Net Loans and Leases 114,089 69,965 49,648 31,193 264,895
Federal Funds Sold 0
Cash and Due From Banks 14,479 14,479
Other Assets 13,349 13,349
TOTAL ASSETS 148,400 214,591 110,177 134,676 607,844
LIABILITIES AND EQUITY
Interest-Bearing Deposits: 0
Money Market 99,879 99,879
NOW and SNOW 39,822 39,822
Christmas/Fund Clubs 1,775 1,775
CDs 72,440 41,093 30 113,563
Reg/Key Savings 48,081 48,081
GPS 882 882
IRAs 79,496 79,496
Total Interest-Bearing Deposits 293,412 41,093 30 48,963 383,498
Demand Deposits 46,457 46,457
Repurchase Agreements 47,650 47,650
Borrowed Funds: 0
Variable 0
Fixed 39,000 20,000 59,000
Total Borrowed Funds 39,000 20,000 59,000
Other Liabilities 5,937 5,937
Stockholders' Equity 65,302 65,302
TOTAL LIABILITIES AND EQUITY 380,062 61,093 30 166,659 607,844
INTEREST RATE SENSITIVITY GAP (231,662) 153,498 110,147 (31,983)
</TABLE>
15
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Table IX - Rate Shock Analysis and the Resulting Hypothetical Effect on Income
for the Year ended June 30, 1997
<TABLE>
<CAPTION>
(In Thousands)
(4.00) (3.00) (2.00) (1.00) FLAT 1.00 2.00 3.00 4.00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
Interest Income
Loans 24,827 25,670 26,481 27,285 27,659 28,386 29,090 29,767 30,385
Investments 19,743 20,077 20,411 20,745 20,284 19,558 19,655 19,751 19,847
Total Interest Income 44,570 45,747 46,892 48,030 47,943 47,944 48,745 49,518 50,232
Interest Expense
Deposits 7,995 10,715 13,435 15,900 18,184 20,727 23,215 25,753 28,317
Borrowings 3,734 4,119 4,855 4,503 4,508 4,524 4,535 4,546 4,557
Fed Fds Purchased 364 672 1,000 1,326 1,045 531 657 798 953
Total Interest Expense 12,093 15,506 19,290 21,729 23,737 25,782 28,407 31,097 33,827
Other Adjustments 32,476 30,241 27,602 26,302 24,206 22,162 20,338 18,421 16,406
Net Interest Income 32,476 30,241 27,602 26,302 24,206 22,162 20,338 18,421 16,406
Memo:
Net Interest Income
Taxable Equivalent 34,205 31,958 29,303 28,001 25,898 23,849 22,019 20,095 18,074
Loan Loss Provision 701 701 701 701 701 701 701 701 701
Net Int Inc After Prov 31,775 29,540 26,901 25,601 23,505 21,461 19,637 17,720 15,705
Other Operating Income 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Other Operating Expense 14,170 14,170 14,170 14,170 14,170 14,170 14,170 14,170 14,170
Income Before Inc Tax 19,605 17,370 14,731 13,431 11,335 9,291 7,467 5,550 3,535
Income Tax Provision 5,525 4,773 3,886 3,445 2,737 2,045 1,429 782 101
Net Income 14,080 12,597 10,845 9,986 8,598 7,246 6,038 4,768 3,434
Dividends 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400
</TABLE>
16
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Table X - Rate Shock Analysis and the Theoretical Effect on Equity Market
Values for the Period Ended June 30, 1996
<TABLE>
<CAPTION>
(In Thousands)
(4.00) (3.00) (2.00) (1.00) FLAT 1.00 2.00 3.00 4.00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Book Value 598,822 598,822 598,822 598,822 598,822 598,822 598,822 598,822 598,822
Market Value 717,068 686,061 658,257 633,351 611,787 592,885 576,121 561,218 548,939
Change 118,246 87,239 59,435 34,529 12,965 (5,937) (22,701) (37,604) (49,883)
LIABILITIES
Book Value 540,822 540,822 540,822 540,822 540,822 540,822 540,822 540,822 540,822
Market Value 574,941 564,762 555,162 547,884 540,972 533,860 527,449 521,068 514,869
Change (34,119) (23,940) (14,340) (7,062) (150) 6,962 13,373 19,754 25,953
EQUITY
Beginning Balance 58,002 58,002 58,002 58,002 58,002 58,002 58,002 58,002 58,002
Asset Change 118,246 87,239 59,435 34,529 12,965 (5,937) (22,701) (37,604) (49,883)
Liability Change (34,119) (23,940) (14,340) (7,062) (150) 6,962 13,373 19,754 25,953
Market Value 142,129 121,301 103,097 85,469 70,817 59,027 48,674 40,152 34,072
DURATION
Assets 5.406 5.138 4.889 4.660 454.000 4.269 4.103 3.954 3.828
Liabilities 2.859 2.789 2.722 2.673 2.627 2.576 2.531 2.485 2.439
Equity 15.710 16.074 16.557 17.396 18.408 19.584 21.142 23.021 24.805
</TABLE>
Table XI - Current Exposure to Hypothetical Change in Interest Rates for the
Period Ended June 30, 1997
Net Interest Income MV of Portfolio Equity
Change in Rates Projected Projected
Basis Points Change (%) Change (%)
400 (30.2) (51.9)
300 (22.4) (43.3)
200 (15.0) (31.3)
100 (7.9) (16.6)
0 0.0 0.0
(100) 8.1 20.7
(200) 13.1 45.6
(300) 23.4 71.3
(400) 32.1 100.7
Memo:
Net interest income projected under constant interest rates: $25,898.3
Market value of portfolio equity under current interest rates: $70,816.3
17
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part II - Other Information
Item 1. Legal Proceedings
Citizens and Northern Corporation is not a litigant in any pending
material lawsuits.
It is the opinion of the counsel of Citizens and Northern Corporation that
minor lawsuits which are pending will not have a significant or materially
detrimental effect on the capital of the Corporation or in any way effect the
results of operations.
Item 4. A submission of matters to a Vote by Security Holders
The Annual Meeting of Shareholders of Citizens & Northern Corporation was
held on Tuesday, April 16, 1996. The Board of Directors fixed the close of
business on March 1, 1996 as the record date for the determination of
stockholders entitled to notice of and to vote at the annual Meeting and at any
adjournment thereof. On this record date, there were outstanding and entitled to
vote 5,012,082 shares of Common Stock.
The total number of votes cast was 3,763,557. All were voted by proxy for
the following purposes and with the following results.
1. The election of the following as Class III Directors to serve for
a term of three years:
J. Robert Bower Craig G. Litchfield
William K. Francis Lawrence F. Mase
Karl W. Kroeck
The total votes in favor of any one of the above-listed Directors were
not less than 3,699,695.
2. The ratification of the action of the Board of Directors in the
appointment of the firm of Parente, Randolph, Orlando, Carey & Associates as
independent auditors of the Corporation:
Total Votes in Favor 3,737,010
Total Votes Against 6,672
Total Votes Abstained 18,875
Item 5. Other Events
a. Exhibit 2 -- Appointment of New President of Citizens and
Northern Corporation
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits filed as part of this report - None
b. No reports on Form 8-K were filed during the period ended
June 30, 1996
18
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
SIGNATURE PAGE
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.
Date August 6, 1996 WILLIAM K FRANCIS /S/
William K. Francis
Chairman of the Board and Chief Executive
Officer
Date August 6, 1996 JAMES W SEIPLER /S/
James W. Seipler
Treasurer
(Chief Financial Officer)
19
<PAGE>
CITIZENS AND NORTHERN - FORM 10 - Q
Item 5. Other Events
Exhibit - 2.
At the Annual Meeting held on Tuesday, April 16, in Wellsboro W. K. Francis
resigned as President and Craig Litchfield was appointed by the Board of
Directors to fill the position. Mr. Francis, who is 64 years old, joined the
Bank in 1958 and will continue as Chairman of the Board and Chief Executive
Officer for the balance of 1996: after that time he will remain Chairman of the
Board.
Mr. Litchfield, at 48 years old has been employed by the Bank since 1972 and has
held several positions including vice-president and more recently Senior vice-
president.
20
<PAGE>
DEFERRED TAXES FASB91
gl#00-22428
CALCULATION OF BOOK DEFERRED FEES FOR 1996
<TABLE>
<CAPTION>
(Dr) Cr
Estimated December 31, 1995 Pre 94 Loans 94 Loans 95 Loans Total Deferred Tax
<S> <C> <C> <C> <C> <C>
FASB 91 BAL
DECEMBER 31, 1994 1,831,846.00 200,164 2,032,010 (690,883)
Est Gross Other Fees
thru 12/31/95 114,307 114,307
Est Gross Fees Points
thru 12/31/95 Est 476,174 476,174
Est Gross Costs thru
12/31/95 Est (181,172) (181,172)
Est Amortization of
Net Fees thru 12/31/95 (367,452) (367,452)
Estimated Balance
12/31/95 Est 1,831,846 200,164 41,857 2,073,867 (705,115)
Balance December 31 1995 1,959,192 (666,125)
Deferred Balance Dec 30 1995 668,958
</TABLE>
FASB Monthly Report
<TABLE>
<CAPTION>
Beginning Fasb 91 Earnings New Closed Remaining
Balance Salaries Fees,Net Loans NUCF
<S> <C> <C> <C> <C> <C> <C>
January 1, 1995 2,026,938 (12,935) (28,183) 31,165 2,016,984
February 2,016,984 (13,051) (21,040) 26,723 2,009,616
March 2,009,616 (17,365) (24,882) 40,298 2,007,547
April 2,007,547 (15,974) (24,487) 30,229 1,995,823
May 1,995,823 (16,466) (33,640) 39,382 1,986,326
June 1,986,326 (15,832) (31,726) 39,503 1,987,272
July 1,987,272 (15,155) (31,316) 58,944 1,990,743
August 1,990,743 (15,631) (34,309) 34,651 1,975,339
September 1,975,339 (15,965) (45,477) 48,189 1,963,578
October 1,963,578 (14,767) (29,712) 34,356 1,953,456
November 1,953,456 (14.031) (30,085) 47,316 1,956,656
December 1,956,656 (14,028) (30,003) 42,526 1,955,138
(181,200) (364,860) 473,282
Salaries Earnings New Fees Ytd closed Inserted Calculated
January 1, 1996 1,959,192 (13,275) (30,735) 16,823 1,945,280 1,932,005
February 1,945,280 (13,450) (23,983) 19,677 (11,361) 1,929,613 1,916,163
March 1,929,613 (15,799) (24,044) 23,318 (17,750) 1,911,137 1,895,338
April 1,911,137 (18,999) (37,546) 47,932 (20,885) 1,900,638 1,881,639
May 1,900,638 (18,539) (7,253) 59,781 (39,887) 1,913,279 1,894,740
June 1,913,279 (17,418) (13,822) 49,552 (27,365) 1,921,644 1,904,226
July 1,921,644 (18,923) (20,474) 45,523 (21,562) 1,925,131 1,906,208
August 1,925,131 1,925,131
September 0 0 0
October 0 0 0
November 0
December 0
Totals (116,403) (157,857) 262,607 (138,810)
</TABLE>
<TABLE>
<CAPTION>
General Ledger
Beginning Fasb 91 NUCF New Fees Closed Fasb 91 Difference
Balance Salaries Amort Fees Loans Balance NUCF & GL
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1995 2,032,010
January 2,032,010 (13,275) (30,735) 34,057 2,022,057 (5,073)
February 2,022,057 (13,051) (21,040) 26,723 2,014,689 (5,073)
March 2,014,689 (17,365) (24,882) 40,298 2,012,740 (5,193)
April 2,012,740 (15,974) (24,487) 30,229 2,002,508 (6,685)
May 2,002,508 (16,466) (33,640) 39,382 1,991,784 (5,458)
June 1,991,784 (15,832) (31,726) 39,503 1,983,729 3,543
July 1,983,729 (15,155) (31,316) 58,944 1,996,202 (5,459)
August 1,996,202 (15,631) (34,309) 34,651 1,980,913 (5,574)
September 1,980,913 (15,965) (45,477) 48,189 1,967,660 (4,082)
October 1,967,660 (14,767) (29,712) 34,356 1,957,537 (4,081)
November 1,957,537 (14,031) (30,085) 47,316 1,960,737 (4,081)
December 1,960,737 (14,028) (30,043) 42,526 1,959,192 (4,054)
Ending Balances 1,959,192 (181,540) (367,452) 476,174 0
Year end (242,053) (489,936) 634,898 0
Salaries Amort Fees New Fees
January 1996 1,959,192 (13,275) (30,735) 36,728 1,951,910 (22,297)
February 1,951,910 (13,450) (35,343) 44,487 (11,361) 1,936,243 (6,630)
March 1,936,243 (15,799) (41,794) 54,264 (17,750) 1,915,164 (4,027)
April 1,915,164 (18,999) (58,430) 87,814 (20,885) 1,904,664 (4,026)
May 1,904,664 (18,539) (47,140) 118,208 (39,887) 1,917,306 (4,027)
June 1,917,306 (17,418) (41,187) 94,550 (27,365) 1,925,886 (4,242)
July 1,925,886 (18,923) (42,036) 87,742 (21,562) 1,931,107 (5,976)
0
(Dr) dr
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 15,124
<SECURITIES> 314,476
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 607,844
<CURRENT-LIABILITIES> 542,542
<BONDS> 0
0
0
<COMMON> 5,117
<OTHER-SE> 60,185
<TOTAL-LIABILITY-AND-EQUITY> 607,844
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,230
<INCOME-TAX> 1,564
<INCOME-CONTINUING> 4,666
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,666
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
