<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
FOR THE QUARTER ENDED: MARCH 31, 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 April 1, 1996 5,117,182 COMMON SHARES WERE OUTSTANDING
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
--------------------------
March 31, December 31,
(In Thousands) 1996 1995
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash & Due From Banks 12,776 12,945
Interest-Bearing Deposits 661 645
---------- ----------
Total Cash and Cash Equivalents 13,437 13,590
Available-for-Sale Securities 316,146 299,591
Held-to-Maturity Securities 1,572 1,507
Federal Funds Sold 4,700
Loans, Net 259,646 259,603
Bank Premises and Equipment 6,634 6,791
Foreclosed Assets Held for Sale 786 455
Accrued Interest on Bonds and Loans 4,155 4,058
Other Assets 658 392
---------- ----------
TOTAL ASSETS 607,734 585,987
---------- ----------
---------- ----------
LIABILITIES
Deposits:
Noninterest-Bearing 41,398 41,167
Interest - Bearing 391,793 388,385
---------- ----------
Total Deposits 433,191 429,552
Dividends Payable 852 843
Borrowed Funds 103,800 85,000
Accrued Interest and Other Liabilities 4,301 3,615
---------- ----------
TOTAL LIABILITIES 542,144 519,010
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 44,696 43,370
---------- ----------
Total 62,351 61,025
Unrealized Holding Loss on Available-for-Sale Securities 4,239 6,952
Less: Treasury Stock at Cost
105,101 shares at March 31, 1996 (1,000)
104,060 shares at December 31, 1995 (1,000)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 65,590 66,977
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 607,734 585,987
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
Three Months Ended Fiscal Year To Date
March 31, 3 Months Ended March 31,
1996 1995 1996 1995
(Current) (Prior Year) (Current) (Prior Year)
---------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 6,723 $ 6,123 $ 6,723 $ 6,123
Interest on Balances with Depository Institutions 7 8 7 8
Interest on Loans to Political Subdivisions 106 101 106 101
Interest on Federal Funds Sold 35 63 35 63
Income from Available-for-Sale and
Held-to-Maturity Securities:
Taxable 3,994 3,630 3,994 3,630
Tax Exempt 680 627 680 627
Dividends 180 182 180 182
------------ ------------ ------------ ------------
Total Interest and Dividend Income 11,725 10,734 11,725 10,734
INTEREST EXPENSE
Interest on Deposits 4,398 4,607 4,398 4,607
Interest on Other Borrowings 1,388 1,488 1,388 1,488
------------ ------------ ------------ ------------
Total Interest Expense 5,786 6,095 5,786 6,095
------------ ------------ ------------ ------------
Interest Margin 5,939 4,639 5,939 4,639
Provision for Possible Loan Losses 175 184 175 184
------------ ------------ ------------ ------------
Interest Margin After Provision for Possible Loan Losses 5,764 4,455 5,764 4,455
OTHER INCOME
Service Charges on Deposit Accounts 270 274 270 274
Service Charges and Fees 63 63 63 63
Trust Department Income 205 189 205 189
Insurance Commissions, Fees and Premiums 119 157 119 157
Other Operating Income 18 35 18 35
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 97 774 97 774
------------ ------------ ------------ ------------
Total Other Income 772 1,492 772 1,492
OTHER EXPENSES
Salaries and Wages 1,449 1,364 1,449 1,364
Pensions and Other Employee Benefits 465 460 465 460
Occupancy Expense, Net 178 180 178 180
Furniture and Equipment Expense 188 152 188 152
Other Operating Expense 1,325 1,491 1,325 1,491
------------ ------------ ------------ ------------
Total Other Expenses 3,605 3,647 3,605 3,647
------------ ------------ ------------ ------------
Income Before Income Tax Provision 2,931 2,300 2,931 2,300
Income Tax Provision 752 575 752 575
------------ ------------ ------------ ------------
NET INCOME $ 2,179 $ 1,725 $ 2,179 $ 1,725
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
PER SHARE DATA:
NET INCOME $ 0.43 $ 0.34 $ 0.43 $ 0.34
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 $ 0.17 $ 0.16
</TABLE>
3
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part I - Financial Information (Continued)
Item 1. Financial Statements (Continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Periods Ended
March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 2,179 1,725
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Provision for Possible Loan Losses 175 184
Realized (Gain), Loss on Available-for-Sale and
Held-to-Maturity Securities, Net (97) (774)
Provision for Depreciation 191 184
Accretion and Amortization 243 78
Deferred Income Tax (18)
(Increase) in Accrued Interest
Receivable and Other Assets (363) (397)
Increase in Accrued Interest Payable and
Other Liabilities 2,112 1,917
- -------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 4,422 2,917
- -------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the Maturity of Held-to-Maturity Securities 34 28
Purchase of Held-to-Maturity Securities (100) (198)
Proceeds from Sales of Available-for-Sale Securities 144 1,435
Proceeds from Maturities of Available-for-Sale Securities 10,494 5,016
Purchase of Available-for-Sale Securities (31,451) (11,434)
Net Increase in Loans (218) 1,050
Purchase of Premises and Equipment (34) (99)
Sale of Foreclosed Assets (110)
Purchase of Other Real Estate (331) 162
- -------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (21,462) (4,150)
- -------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Deposits 3,639 6,609
(Decrease) in Short Term Borrowings (15,200) (14,000)
Proceeds from Long Term Borrowings 34,000 10,000
Dividends Declared (852) (794)
- -------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 21,587 1,815
- -------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,547 582
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 13,590 12,407
- -------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR 18,137 12,989
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid 4,324 4,700
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Income Taxes Paid 1,063 810
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</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 quarter ended March 31, 1996 of
$ 2,179,000, or $ .43 per common share. This compares to $ 1,725,000, or $ .34
per share, for the quarter ended March 31, 1995.
Income for the three months ended March 31, 1996 increased 26 percent when
compared to the same three months 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 1996 will be a
profitable year if interest rates remain at the current levels.
NET INTEREST MARGIN
Quarters ended March 31, 1996/1995
The net spread between the rate of return on earning assets and the cost
of interest-bearing liabilities increased from 2.75 percent for the quarter
ended March 31, 1995 to 3.53 percent for the quarter ended March 31, 1996. The
net spread for the quarter ended December 31, 1995 was 2.90 percent. The gross
rate of return on earning assets for the quarters ending March 31, 1996,
December 31, 1995 and March 31, 1995 were 8.33 percent, 8.22 percent and 8.10
percent, respectively. The average costs of interest bearing liabilities for the
quarters ended March 31, 1996, December 31, 1995 and March 31, 1995 were 4.80
percent, 5.23 percent and 5.35 percent, respectively. The 78 basis point
increase in the net interest margin between the comparable periods caused net
interest income to increase $1,300,000.
The average rate of return on the portfolio of available-for-sale
investments remained unchanged during the periods being compared. However, the
average balance for the quarter ended March 31, 1995 amounted to $274,493,000
and has increased nearly $27,000,000 between the two periods; this increase
generated $411,000 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 $14,000,000 during the first quarter of
1996. The average rate of return for 1995 was 6.41 percent.
Average gross loans for the periods ended March 31, 1996, December 31, 1995
and March 31, 1995 totaled $263,960,000, $259,143,000 and $256,600,000,
respectively. The average rate of return on the loan portfolio posted a slight
increase of 5 basis points since year-end 1995. However, it has increased 65
basis points since March 31, 1995, thus increasing interest income $605,000.
Loan growth has been relatively flat during the past year. Average total loans
have increased $7,262,000, an increase of just 2.8 percent since March 31, 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 deposits increased
6.7 percent or $25,345,000 when comparing average balances for the periods ended
March 31, 1996 and March 31, 1995. Average total deposits increased 3 percent or
$12,666,000 between December 31, 1995 and March 31, 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 March
31, 1995 with the exception of interest checking, passbook and statement
savings accounts. The average balance in these deposit categories has shown a
slight decline due to the lower rates paid. Average interest checking account
balances have declined $1,188,000 between March 31, 1995 and March 31, 1996. The
reason for the decrease was a change in the rate schedule applied to these
accounts. The rate paid balances in these accounts prior to November 1, 1995
was 79% of the 91-treasury bill auction. After November 1, 1995 the rate was
dropped to 50 percent of the auction rate; lesser rates are paid on account
balances less than $2,500.
6
<PAGE>
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 $46,000,000 and are considered core deposits.
Money market account average balances for the periods ended March 31, 1996,
December 31, 1995 and March 31, 1995 amounted to $97,145,000, $91,773,000 and
$87,178,000, respectively. The average rates paid on these balances for the
respective periods were 4.48 percent, 4.93 percent and 5.18 percent. The average
balances of certificates of deposit increased significantly between the
comparable periods. The respective average balance carried at March 31, 1996,
December 31, 1995 and March 31, 1996 amounted to $119,814,000, $112,493,000 and
$105,166,000. The average rate paid on the certificates dropped 61 basis points
between March 31, 1995 and March 31, 1996. Individual retirement accounts also
posted a modest increase in average balances due to the payment of interest. The
average balances at March 31, 1996, December 31, 1995 and March 31, 1995 were
$81,901,000, $78,534,000 and $77,525,000, respectively.
Average borrowed funds increased $2,651,000 since March 31, 1995 and the
average rate paid on those borrowed funds has decreased 57 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 3.53 to 3.75 percent range.
Tables I and II are provided to reflect average balances and rates paid for
the quarters ended March 31, 1996, December 31, 1995 and March 31, 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
Table I - Analysis of Average Daily Balances and Rates
<TABLE>
<CAPTION>
Periods Ended
(In Thousands)
EARNING ASSETS 3/31/96 % 12/31/95 % 3/31/95 %
<S> <C> <C> <C> <C> <C> <C>
Available-for-Sale Securities:
U. S. Treasury Securities $ 2,508 5.17 $ 2,510 5.10 $ 2,511 5.17
Securities of Other U.S. Government Agencies and Corporations 16,599 6.87 10,639 6.49 13,096 6.38
Mortgage Backed Securities 208,718 6.61 208,469 6.55 200,931 6.67
Obligations of States and Political Subdivisions 43,900 6.28 41,756 6.39 40,501 6.28
Stock 16,689 4.37 13,547 5.09 13,467 5.48
Other Securities 12,945 7.93 10,148 5.60 3,987 6.51
- -----------------------------------------------------------------------------------------------------------------------------------
Total Available-for-Sale Securities 301,359 6.50 287,069 6.41 274,493 6.52
- -----------------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity Securities:
U. S. Treasury Securities 667 6.08 324 6.79
Securities of Other U. S. Government Agencies and Corporations
Mortgage Backed Securities 1,072 6.43 1,004 7.67 1,074 7.17
Obligations of States and Political Subdivisions
Stock
Other Securities
- -----------------------------------------------------------------------------------------------------------------------------------
Total Held-to-Maturity Securities 1,739 6.30 1,328 7.45 1,074 7.17
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing Due from Banks 881 3.22 996 5.52 1,105 2.94
Federal Funds Sold 2,740 5.18 1,301 6.07 4,166 6.13
Loans:
Real Estate Loans 203,401 9.48 198,936 9.15 196,770 8.89
Consumer 35,368 17.36 36,230 17.01 36,665 15.39
Agricultural 2,654 10.24 3,051 10.32 3,045 10.26
Commercial/Industrial 15,505 9.89 13,998 10.03 13,502 10.00
Other 215 7.55 238 7.98 203 7.99
Political Subdivisions 6,660 6.45 6,524 6.45 6,276 6.53
Leases 157 10.33 166 4.00 139 8.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total Loans 263,960 10.49 259,143 10.24 256,600 9.84
- -----------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets 570,679 8.33 549,837 8.22 537,438 8.10
Cash 12,454 11,834 12,082
Securities Valuation Reserve 9,092 (2,668) (12,413)
Allowance for Possible Loan Losses (4,681) (4,484) (4,301)
Other Assets 3,809 4,737 9,221
Bank Premises & Equipment 7,241 6,774 6,883
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 598,594 566,030 548,910
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
Interest Checking 40,729 2.44 42,118 4.02 41,917 4.46
Money Market 97,145 4.48 91,773 4.93 87,178 5.18
Savings 46,479 2.50 48,261 2.48 49,646 2.55
Certificates of Deposit 119,814 5.66 112,493 5.50 105,166 5.05
Individual Retirement Accounts 81,901 5.50 78,534 6.58 77,525 7.23
Other Time Deposits 2,113 2.30 2,465 2.60 2,285 2.66
Federal Funds Purchased 1,403 6.07 4,774 6.37 1,578 5.91
Other Borrowed Funds 98,818 5.61 87,728 6.09 96,167 6.18
- -----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities 488,402 4.80 468,146 5.23 461,462 5.35
Demand Deposits 39,378 39,313 38,561
Other Liabilities 3,291 4,844 2,083
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 531,071 512,303 502,106
Stockholders' Equity 60,532 55,961 54,997
- -----------------------------------------------------------------------------------------------------------------------------------
Securities Valuation Reserve 6,991 (2,234) (8,193)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 598,594 $ 566,030 $ 548,910
Interest Rate Spread 3.53 2.99 2.75
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 the Effect of Volume and Rate Changes in Interest Income
and Interest Expense
<TABLE>
<CAPTION>
Quarters Ended March 31, 1995/1996
(In Thousands)
Change Change Total
in in
Volume Rate Change
<S> <C> <C> <C>
EARNING ASSETS
Available-for-Sale Securities:
U. S. Treasury Securities $ $ 1 $ 1
Securities of Other U.S. Government Agencies and Corporations 58 16 74
Mortgage Backed Securities 127 (31) 96
Obligations of States and Political Subdivisions 53 53
Stock (13) 11 (2)
Other Securities 172 17 189
- -----------------------------------------------------------------------------------------------------
Total Available-for-Sale Securities 398 13 411
- -----------------------------------------------------------------------------------------------------
Held-to-Maturity Securities
U. S. Treasury Securities
Securities of Other U.S. Government Agencies and Corporations 10 10
Mortgage Backed Securities (6) (6)
Obligations of States and Political Subdivisions
Stock
Other Securities
- -----------------------------------------------------------------------------------------------------
Total Held-to-Maturity Securities 4 4
- -----------------------------------------------------------------------------------------------------
Interest-Bearing Due from Banks (1) (1)
Federal Funds Sold (19) (9) (28)
Loans:
Real Estate Loans 148 293 441
Consumer (46) 169 123
Agricultural (10) (10)
Commercial/Industrial 49 (5) 44
Other
Political Subdivisions 6 (1) 5
Leases 2 2
- -----------------------------------------------------------------------------------------------------
Total Loans 146 459 605
- -----------------------------------------------------------------------------------------------------
Total Interest Income 524 467 991
- -----------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
Interest Checking (13) (203) (216)
Money Market 213 (255) (42)
Savings (20) (5) (25)
Certificates of Deposit 194 168 362
Individual Retirement Accounts 84 (356) (272)
Other Time Deposits (2) (14) (16)
Federal Funds Purchased (3) 1 (2)
Other Borrowed Funds 41 (139) (98)
- -----------------------------------------------------------------------------------------------------
Total Interest Expense 495 (804) (309)
- -----------------------------------------------------------------------------------------------------
NET INTEREST INCOME $ 29 $ 1,271 $ 1,300
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</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.
9
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10 - Q
Part 1 - 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 update 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.
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 Actual
Dec. 31, 1996 Dec. 31, 1996 Mar. 31, 1996 Dec. 31, 1995 Dec 31, 1994
<S> <C> <C> <C> <C> <C>
Beginning Balance January 1, 4,579,210 4,579,210 4,579,210 4,228,741 3,816,982
Provision Charged to Earnings 721,000 721,000 175,125 736,500 737,496
Year-to-Date Recoveries 140,000 140,000 79,415 187,473 194,312
Year-to-Date Charge-offs (882,000) (600,000) (183,265) (573,504) (520,049)
- -------------------------------------------------------------------------------------------------------
Ending Balance 4,558,210 4,840,210 4,650,485 4,579,210 4,228,741
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
TABLE IV--Loan Loss History
<TABLE>
<CAPTION>
(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 15.7 x 20.3 x 23.0 x 32.9 x 14.1 x 1.8 x 8.6 x
Allowance Coverage of Net Charge-offs 10.5 x 11.8 x 13.0 x 15.5 x 6.5 x 0.8 x 4.6 x
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) 1.76 % 1.73 % 1.64 % 1.60 % 1.49 % 1.28 % 1.36 %
Peer Group (2) 1.73 % 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 V - Allocation of the Reserve for Possible Loan Losses
<TABLE>
<CAPTION>
(In Thousands)
- -------------------------------------------------------------------------------------------------
LOAN CLASSIFICATION 1996 1995 1994 1993 1992 1991 AVG
Est.
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, Financial & 35,000 31,522 22,649 26,376 22,712 23,541 26,967 0.01955 X 35,000 = 684
Agricultural
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 VI - Major Categories of Noninterest Income
Periods Ended
(In Thousands) March 31,
$ %
1996 1995 Change Change
Service Charges on Deposit Accounts 270 274 (4) (1.46)
Service Charges and Fees 63 63 0 0.00
Trust Department Income 205 189 16 8.47
Insurance Commissions, Fees and Premiums 119 157 (38) (24.20)
Other Operating Income 18 35 (17) (48.57)
Realized Gains (Losses) on Securities, Net 97 774 (677) (87.47)
- -------------------------------------------------------------------------------
Total Other Income 772 1,492 (720) (48.26)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total other income decreased 48 percent when comparing the quarter ended
March 31, 1996 to the same quarter in 1995. The primary reason for the decrease
was realized gains on available-for-sale securities. The realized gains for both
periods resulted from the sales of stock of Pennsylvania banks or Pennsylvania
bank holding companies. During the first quarter of 1995, the Corporation sold
one issue of stock which management felt had become over-priced. The Bank sold
three issues of stock, two of which were not listed on a recognized exchange and
had to be sold to comply with FDIC regulations. The other was sold because
management felt it would be prudent to lock in the increase in market value.
During the first quarter of 1996, the Corporation sold one issue of bank stock
which management also felt had become over priced.
Service charges on deposit accounts and other service charges and fees
remained nearly unchanged when comparing the two periods.
Trust department income increased just over 8 percent during the first
quarter of 1996 when compared to the same period in 1995. The increase can be
attributed to the increase in the market value of trust assets.
Insurance commissions, fees and premiums generated by Bucktail Life
Insurance Company decreased $38,000 due to the lack of consumer loan activity.
The insurance company writes life and accident and health insurance on the
bank's consumer loan portfolio.
Other operating income increased 48 percent or $17,000; however, $16,000 in
loan late charges had been improperly classified as other income . Had this
amount been excluded from the March 31, 1995 total the change would have been
minimal.
12
<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 )
The following table compares the various categories of other expense for the
periods ended March 31, 1996 and March 31, 1995
Table VII - Major Categories of Noninterest Expense
Periods Ended
March 31,
(In Thousands)
% $ %
1996 1995 Change Change
Salaries and Wages 1,449 1,364 85 6.23
Pensions and Other Employee Benefits 465 460 5 1.09
Occupancy Expense, Net 178 180 (2) (1.11)
Furniture and Equipment Expense 188 152 36 23.68
Other Operating Expense 1,325 1,491 (166) (11.13)
- -------------------------------------------------------------------------------
Total Other Expense 3,605 3,647 (42) (1.15)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Salaries and wages increased 6.23 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 March 31, 1996 was 198, compared
to 196 at March 31, 1995. Merit raises effective January 1, 1996 were in the 5
to 6 percent range.
Other categories of other expense reflecting large variances over last year
were furniture and fixtures and other expense. The primary cause for the
increase in furniture and fixtures expense was the purchase of a check imaging
system. The cost of the system was approximately $900,000, which caused an
increase in depreciation expense.
Other expense decreased $166,000 over the same period in 1995. The largest
single factor contributing to the decrease was FDIC insurance. FDIC premiums
dropped from $224,000 for the period ended March 31, 1995 to $1,000 for the
period ended March 31, 1996.
There were no other material expense category increases except credit card
processing costs, which increased $105,000. The increase was caused by increased
interchange transaction fees.
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 quarter ended March 31,
1996 increased $49,684,000 or 9.1 percent when compared to the quarter ended
March 31, 1995. Average total assets increased $32,564,000 or 5.8 percent when
compared to year-end 1995. The increase in average assets between March 31, 1995
and March 31, 1996 can be attributed to an increase in average deposits totaling
$24,464,000. The deposit increase was primarily money market accounts and
certificates of deposits. Demand deposits remained relatively flat during the
year.
The cash flow generated by the deposit increase was invested primarily in
available-for-sale securities as average gross loans grew only $7,360,000
between March 31, 1995 and March 31, 1996. The small loan growth that was
experienced was in real estate secured loans and some commercial loan growth;
all other loan categories showed very little change.
Average borrowed funds, primarily term loans with the Federal Home Loan
Bank of Pittsburgh, increased $2,651,000 when comparing average outstanding
balances for the quarters ended March 31, 1996 and March 31, 1995. When
comparing the average borrowing for the quarter ended March 31, 1996 with the
year ended December 31, 1995, average borrowing increased $11,090,000. The
increase was due to slightly lower, stable interest rates during the first
quarter of 1996.
Interest rate swings have caused wide fluctuations in the market value of
the Available-for-Sale securities, causing large adjustments to the capital
account. The net adjustments to capital for March 31, 1996, December 31, 1995
and March 31, 1995 were $6,991,000, ($2,234,000) and ($8,193,000),
respectively. Interest rates have declined slightly and stabilized since
March 31, 1995, which has further improved the market value.
The Corporation's capital remains strong at 14.1 percent of total deposits
and 10.1 percent of total assets on March 31, 1996. Including the net market
value adjustment for the Available-for-Sale securities, the ratios would be
15.14 percent and 10.8 percent, respectively. The ratios of capital to deposits
and total assets at March 31, 1995 were 13.9 and 10.1 percent respectively. All
capital ratios are well above regulatory requirements.
The reader should refer to Table II and Table VIII on pages 8 and 16.
Table II reflects average balances for the periods ended March 31, 1996,
December 31, 1995 and March 31, 1995. Table VIII reflects the estimated market
values of assets and liabilities at March 31, 1996 using rate shock analysis.
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 available through the Federal Home Loan Bank of Pittsburgh or repurchase
agreements. The flexline of credit provides the Corporation with a credit line
which approximates 10 percent of the Corporation's borrowing capacity, or about
$28.5 million dollars. Repurchase agreements are secured with mortgage-backed
instruments. 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 March 31, 1996 total corporate borrowing amounted to $103,800,000,
consisting of repurchase agreements amounting to $24,800,000 and long term
borrowings totaling $79,000,000. 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 into the first
quarter 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 felt that the parameters
were reasonable based on the capital strength of the Corporation. 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 VIII - Rate Sensitive Assets and Rate Sensitive Liabilities
<TABLE>
<CAPTION>
(In Thousands) Under One to Five Five to Ten Over Ten Non-
ASSETS One Year Years Years Years Interest Total
<S> <C> <C> <C> <C> <C> <C>
Interest-Bearing Deposits $ 661 $ 661
Available-for-Sale Securities:
U.S.Treasury Securities 2,467 2,467
U.S.Agency Securities 12,034 10,125 22,159
Mortgage-Backed Securities 31,296 41,728 52,161 83,457 208,642
Municipals 1,515 4,110 5,108 35,998 46,731
Other Bonds 2,544 10,865 619 14,028
Stocks 22,119 22,119
Total Available-for-Sale Securities 35,355 59,170 69,922 151,699 316,146
Held-to-Maturity Securities:
U.S.Treasury Securities 698 698
Mortgage-Backed Securities 874 874
Total Held-to-Maturity Securities 1,572 1,572
Loans and Lease Financing:
Real Estate-Construction 1,327 1,327
Real Estate-Mortgage 90,101 47,130 43,688 19,099 200,018
Consumer 11,664 13,107 1,199 9,297 35,267
Agricultural 1,230 1,179 107 51 2,567
Commercial 11,737 3,104 233 388 15,462
Other 2,726 14 21 2,761
Political Subdivisions 1,569 2,476 1,426 1,298 6,769
Leases 26 99 125
Total Loans 120,380 67,109 46,653 30,154 264,296
Allowance for Loan Losses (4,650) (4,650)
- -----------------------------------------------------------------------------------------------------------------------------
Net Loans and Leases 120,380 67,109 46,653 30,154 (4,650) 259,646
- -----------------------------------------------------------------------------------------------------------------------------
Federal Funds Sold 4,700 4,700
- -----------------------------------------------------------------------------------------------------------------------------
Cash and Due From Banks 12,776 12,776
- -----------------------------------------------------------------------------------------------------------------------------
Other Assets 12,233 12,233
- -----------------------------------------------------------------------------------------------------------------------------
Total Assets $ 162,668 126,279 116,575 181,853 20,359 $ 607,734
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Interest-Bearing Deposits:
Money Market 99,471 99,471
NOW and SNOW 40,881 40,881
Christmas/Fund Clubs 1,547 1,547
CD's 78,419 40,774 41 954 120,188
Reg/Key Savings 47,541 47,541
GPS 909 909
IRA's 81,256 81,256
Total Interest-Bearing Deposits 302,483 40,774 41 48,495 391,793
Demand Deposits 41,398 41,398
Repurchase Agreements 24,800 24,800
Borrowed Funds:
Variable 10,000 10,000
Fixed 49,000 20,000 69,000
- -----------------------------------------------------------------------------------------------------------------------------
Total Borrowed Funds 59,000 20,000 79,000
- -----------------------------------------------------------------------------------------------------------------------------
Other Liabilities 852 4,301 5,153
- -----------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity 65,590 65,590
- -----------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Equity $ 362,335 85,574 41 - 111,289 $ 607,734
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Interest Rate Sensitivity Gap $ (199,667) 40,705 116,534 181,853 (90,930) $
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</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 March 31, 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 23,411 24,365 25,319 26,273 27,226 27,997 28,694 29,337 30,015
INVESTMENTS 19,556 19,749 19,943 20,137 20,331 20,524 20,718 20,912 21,106
FED FUNDS SOLD 2 4 6 8 10 12 14 16 18
TOTAL INT INC 42,969 44,118 45,268 46,418 47,567 48,533 49,426 50,265 51,139
INTEREST EXPENSE
DEPOSITS 10,805 12,434 14,059 15,764 18,838 21,427 23,961 26,546 29,155
BORROWINGS 3,462 3,689 3,916 4,143 4,369 4,356 4,352 4,347 4,342
F F PURCHASED 143 263 389 522 685 851 1,030 1,222 1,427
TOTAL INT EXP 14,410 16,386 18,364 20,429 23,892 26,634 29,343 32,115 34,924
NET INT INC BEFORE
RATE
SWAPS/FIXTURES/
OTHER ADJUST 28,559 27,732 26,904 25,989 23,675 21,899 20,083 18,150 16,215
NET INT INC 28,559 27,732 26,904 25,989 23,675 21,899 20,083 18,150 16,215
MEMO:
NET INT INC
TAX EQUIV 30,053 29,229 28,405 27,493 25,169 23,389 21,570 19,633 17,693
LN LOSS PROV 701 701 701 701 701 701 701 701 701
NET AFTER PROV 27,858 27,031 26,203 25,288 22,974 21,198 19,382 17,449 15,514
OTHER OPER INC 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
OTHER OPER EXP 13,968 13,968 13,968 13,968 13,968 13,968 13,968 13,968 13,968
INC BEFORE TAXES 15,890 15,063 14,235 13,320 11,006 9,230 7,414 5,481 3,546
TAXES 4,417 4,133 3,849 3,537 2,757 2,155 1,540 885 230
NET INCOME 11,473 10,930 10,386 9,783 8,249 7,075 5,874 4,596 3,316
DIVIDENDS 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300
</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 March 31, 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 602,022 602,022 602,022 602,022 602,022 602,022 602,022 602,022 602,022
MARKET VALUE 720,255 689,633 661,886 636,655 613,632 596,607 582,026 569,652 557,080
CHANGE 118,233 87,611 59,864 34,633 11,610 (5,415) (19,996) (32,370) (44,942)
LIABILITIES
BOOK VALUE 541,609 541,609 541,609 541,609 541,609 541,609 541,609 541,609 541,609
MARKET VALUE 559,556 557,409 555,341 552,521 540,913 533,756 527,253 520,774 514,479
CHANGE (17,947) (15,800) (13,732) (10,912) 696 7,853 14,356 20,835 27,130
EQUITY
BEG BALANCE 62,976 62,976 62,976 62,976 62,976 62,976 62,976 62,976 62,976
ASSET CHANGE 118,233 87,611 59,864 34,633 11,610 (5,415) (19,996) (32,370) (44,942)
LIAB CHANGE (17,947) (15,800) (13,732) (10,912) 696 7,853 14,356 20,835 27,130
MARKET VALUE 163,262 134,787 109,108 86,697 75,282 65,414 57,336 51,441 45,164
DURATION
ASSETS 4.956 4.733 4.528 4.339 4.166 4.030 3.911 3.811 3.713
LIABILITIES 2.719 2.722 2.725 2.721 2.639 2.588 2.544 2.499 2.454
EQUITY 12.746 13.212 13.923 14.968 15.529 16.268 17.067 17.785 18.909
</TABLE>
Table XI - Current Exposure to Hypothetical Change in Interest Rates for the
Period Ended March 31, 1997
Net Interest Income MV of Portfolio Equity
Change in Rates Projected Projected
Basis Points Change Change
400 -29.7 -40.0
300 -22.0 -31.7
200 -14.3 -23.8
100 -7.1 -13.1
0 0.0 0.0
-100 9.2 15.2
-200 12.9 44.9
-300 16.1 79.0
-400 19.4 116.9
Memo:
Net interest income projected under constant interest rates: $22,962.7
Market value of portfolio equity under current interest rates: $62,198.7
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 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 March 31, 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 May 6, 1996 WILLIAM K FRANCIS /S/
----------- -----------------------
William K. Francis
President and Chief Executive Officer
Date May 6, 1996 JAMES W SEIPLER /S/
----------- -----------------------
James W. Seipler
Treasurer
(Chief financial Officer)
19
<PAGE>
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 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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000810958
<NAME> CITIZENS & NORTHERN CORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,776
<SECURITIES> 317,718
<RECEIVABLES> 0
<ALLOWANCES> 4,650
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6,634
<DEPRECIATION> 0
<TOTAL-ASSETS> 607,734
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 5,117
<OTHER-SE> 57,734
<TOTAL-LIABILITY-AND-EQUITY> 607,734
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,650
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,931
<INCOME-TAX> 752
<INCOME-CONTINUING> 2,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,179
<EPS-PRIMARY> .435
<EPS-DILUTED> .435
</TABLE>
