SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
X Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange
- ---
Act of 1934
For the quarter ended December 31, 1995
----------------------
or
____ Transition report persuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from_________________________ to __________________
Commission File Number 0 - 16123
-----------------
Bethel Bancorp
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maine 01 - 0425066
- ----------------------------------- -------------------------------------
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
489 Congress Street, Portland, Maine 04101
- ---------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(207) 772 - 8587
- ------------------------------------------------------------------------------
Registrant's telephone number, including area code
Not Applicable
- ------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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 periods that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---------- -------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares outstanding as of January, 31, 1996: 1,203,486 of common stock, $1.00
par value per share.
BETHEL BANCORP AND SUBSIDIARIES
Table of Contents
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
December 31, 1995 and June 30, 1995
Consolidated Statements of Income
Three Months ended December 31, 1995 and 1994
Consolidated Statements of Income
Six Months ended December 31, 1995 and 1994
Consolidated Statements of Changes in Shareholders' Equity
Six Months ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows
Six Months ended December 31, 1995 and 1994
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation
Part II. Other Information
Items 1 - 6.
Signature Page
Index to Exhibits
BETHEL BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
--------------- ---------------
<S> <C> <C>
Assets
Cash and due from banks $ 3,962,657 $ 3,855,648
Interest bearing deposits in other banks 347,813 367,423
Federal Home Loan Bank overnight deposits 18,080,682 10,517,000
Trading account securities at market -- 1,375
Available for sale securities 12,510,182 10,148,251
Federal Home Loan Bank stock 2,300,000 2,150,000
Loans held for sale 770,540 528,839
Due from broker -- 941,407
Loans 170,372,431 170,442,082
Less deferred loan origination fees 333,323 302,178
Less allowance for loan losses 2,394,000 2,396,000
--------------- ---------------
Net loans 167,645,108 167,743,904
Bank premises and equipment, net 3,791,142 3,873,278
Real estate held for investment 479,750 452,479
Other real estate owned 727,028 1,068,454
Goodwill (net of accumulated amortization
of $779,816 at 12/31/95
and $631,146 at 6/30/95) 2,718,156 2,866,826
Other assets 2,865,915 2,994,253
--------------- ---------------
Total Assets 216,198,973 207,509,137
=============== ===============
Liabilities and Shareholders' Equity
Liabilities
Deposits $ 149,335,274 $ 147,119,870
Repurchase Agreements 3,764,672 2,585,387
Advances from Federal Home Loan Bank 41,100,000 35,700,000
Notes payable 1,754,648 2,010,091
Due to broker -- 989,062
Other Liabilities 1,460,829 1,829,449
--------------- ---------------
Total Liabilities 197,415,423 190,233,859
Shareholders' Equity
Preferred stock, Series A,
45,454 shares issued and outstanding 999,988 999,988
Preferred stock, Series B,
71,428 shares issued and outstanding 999,992 999,992
Common stock, par value $ 1, issued
and outstanding, 1,203,486 shares at
12/31/95 and 547,502 at 6/30/95 1,203,486 547,502
Additional paid in capital 5,330,058 4,643,059
Retained earnings 10,285,945 10,180,244
--------------- ---------------
18,819,469 17,370,785
Net unrealized loss on available
for sale securities (35,919) (95,507)
--------------- ---------------
Total Shareholders' Equity 18,783,550 17,275,278
Total Liabilities and Shareholders'
Equity $ 216,198,973 $ 207,509,137
=============== ===============
</TABLE>
BETHEL BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1995 1994
-------------- --------------
<S> <C> <C>
Interest and Dividend Income
Interest on FHLB overnight deposits $ 174,511 $ 114,826
Interest on loans & loans held for sale 4,078,736 3,695,313
Interest on investment securities &
available for sale securities 222,578 293,151
Dividends on Federal Home Loan Bank stock 36,887 53,513
Other Interest Income 11,978 5,756
-------------- --------------
Total Interest Income 4,524,690 4,162,559
Interest Expense
Deposits 1,652,178 1,301,404
Repurchase agreements 48,880 21,442
Other borrowings 592,950 597,446
-------------- --------------
Total Interest Expense 2,294,008 1,920,292
-------------- --------------
Net Interest Income 2,230,682 2,242,267
Provision for loan losses 147,708 168,496
-------------- --------------
Net Interest Income after
Provision for Loan Losses 2,082,974 2,073,771
Other Income
Service charges 235,211 230,593
Available for sale securities gains (losses) 85,791 4,183
Gain (Loss) on trading account 7,006 210,676
Other 222,470 209,940
-------------- --------------
Total Other Income 550,478 655,392
Other Expenses
Salaries and employee benefits 952,595 941,010
Net occupancy expense 126,373 129,772
Equipment expense 175,814 176,272
Goodwill amortization 74,335 58,566
Other 606,554 778,666
-------------- --------------
Total Other Expenses 1,935,671 2,084,286
-------------- --------------
Income Before Income Taxes 697,781 644,877
Income tax expense 254,345 237,763
-------------- --------------
Net Income $ 443,436 $ 407,114
============== ==============
Earnings Per Share
Primary $ 0.32 $ 0.30
Fully Diluted $ 0.29 $ 0.28
</TABLE>
<TABLE>
<CAPTION>
BETHEL BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
Six Months Ended
December 31,
1995 1994
-------------- --------------
<S> <C> <C>
Interest and Dividend Income
Interest on FHLB overnight deposits $ 356,076 $ 207,112
Interest on loans & loans held for sale 8,176,899 7,273,296
Interest on investment securities &
available for sale securities 383,158 465,777
Dividends on Federal Home Loan Bank stock 73,737 102,916
Other Interest Income 17,476 12,659
-------------- --------------
Total Interest Income 9,007,346 8,061,760
Interest Expense
Deposits 3,287,660 2,454,043
Repurchase agreements 82,793 21,442
Other borrowings 1,192,909 1,233,081
-------------- --------------
Total Interest Expense 4,563,362 3,708,566
-------------- --------------
Net Interest Income 4,443,984 4,353,194
Provision for loan losses 295,563 348,814
-------------- --------------
Net Interest Income after
Provision for Loan Losses 4,148,421 4,004,380
Other Income
Service charges 516,820 450,285
Available for sale securities gains (losses) 206,383 8,129
Gain (Loss) on trading account 7,006 223,823
Other 434,563 369,760
-------------- --------------
Total Other Income 1,164,772 1,051,997
Other Expenses
Salaries and employee benefits 1,995,844 1,869,651
Net occupancy expense 248,269 233,176
Equipment expense 344,102 317,405
Goodwill amortization 148,669 89,830
Other 1,214,711 1,266,482
-------------- --------------
Total Other Expenses 3,951,595 3,776,544
-------------- --------------
Income Before Income Taxes 1,361,598 1,279,833
Income tax expense 496,525 467,007
-------------- --------------
Net Income $ 865,073 $ 812,826
============== ==============
Earnings Per Share
Primary $ 0.64 $ 0.60
Fully Diluted $ 0.58 $ 0.56
</TABLE>
<TABLE>
<CAPTION>
BETHEL BANCORP AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended December 31, 1995 and 1994
Net
Unrealized
Gains(Losses)
Additional on Available
Common Preferred Paid - In Retained for Sale
Stock Stock Capital Earnings Securities Totals
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 $ 547,400 $ 1,999,980 $ 4,640,968 $ 9,006,038 $ (438,023) $ 15,756,363
Net income for six months
ended December 31,1994 -- -- -- 812,826 -- 812,826
Dividends paid on common
stock -- -- -- (87,584) -- (87,584)
Dividends paid on preferred
stock -- -- -- (70,000) -- (70,000)
Net change in unrealized losses
on securities available for sale -- -- -- -- (51,307) (51,307)
------------- ------------- ------------- ------------- ------------- -------------
Balance December 31, 1994 $ 547,400 $ 1,999,980 $ 4,640,968 $ 9,661,280 $ (489,330) $ 16,360,298
============= ============= ============= ============= ============= =============
Balance at June 30, 1995 $ 547,502 $ 1,999,980 $ 4,643,059 $ 10,180,244 $ (95,507) $ 17,275,278
Net income for six months
ended December 31, 1995 -- -- -- 865,073 -- 865,073
Dividends paid on common stock -- -- -- (91,629) -- (91,629)
Dividends paid on preferred stock -- -- -- (70,000) -- (70,000)
Issuance of common stock 241 -- 4,999 -- -- 5,240
Common stock warrants exercised 50,000 -- 650,000 -- -- 700,000
Stock split effected in the form
of a dividend 597,743 -- -- (597,743) -- 0
Stock options exercised 8,000 -- 32,000 -- -- 40,000
Net change in unrealized losses
on securities available for sale -- -- -- -- 59,588 59,588
------------- ------------- ------------- ------------- ------------- -------------
Balance December 31, 1995 $ 1,203,486 $ 1,999,980 $ 5,330,058 $ 10,285,945 $ (35,919) $ 18,783,550
============= ============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
BETHEL BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flow
Six Months Ended
December 31,
1995 1994
--------------- ---------------
<S> <C> <C>
Cash provided by operating activities $ 759,572 $ 1,046,404
Cash flows from investing activities:
FHLB stock purchased (150,000) (205,000)
Held to maturity securities purchased -- (11,526,263)
Held to maturity securities matured -- 207,018
Available for sale securities purchased (19,088,597) (135,239)
Available for sale securities principal
reductions 400,237 47,083
Available for sale securities sold 16,628,443 140,644
New loans, net of repayments & charge offs (280,874) (6,193,058)
Net capital expenditures (195,644) (1,123,017)
Real estate owned sold 471,184 421,103
Real estate held for investment purchased (56,096) (21,905)
Real estate held for investment sold 40,000 41,100
Premium paid for Key Bank acquisition -- (1,590,228)
--------------- ---------------
Net cash provided by (used in)
investing activities (2,231,347) (19,937,762)
Cash flows from financing activities:
Net change in deposits 2,215,404 24,109,386
Net change in repurchase agreements 1,179,285 2,010,236
Dividends paid (161,629) (157,584)
Proceeds from stock issuance 745,240 --
Net (decrease) increase in advances
from Federal Home Loan Bank of Boston 5,400,000 (7,645,000)
Net change in notes payable (255,443) (379,966)
--------------- ---------------
Net cash provided by financing
activities 9,122,857 17,937,072
--------------- ---------------
Net (decrease) increase in cash
and cash equivalents 7,651,082 (954,286)
Cash and cash equivalents,
beginning of period 14,740,070 11,336,505
--------------- ---------------
Cash and cash equivalents,
end of period $ 22,391,152 $ 10,382,219
=============== ===============
Cash and cash equivalents include cash
on hand, amounts due from banks, interest
bearing deposits and federal funds sold
Supplemental schedule of noncash
investing activities:
Net increase (decrease) in valuation
for unrealized market value adjustments
on available for sale securities 59,585 (51,307)
Net transfer (to) from Loans to
Other Real Estate Owned (158,173) 233,870
Supplemental disclosure of cash paid during
the period for:
Income taxes paid, net of refunds 433,700 689,000
Interest paid 4,566,224 3,720,580
</TABLE>
BETHEL BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995
1. Basis of Presentation
---------------------
The accompanying unaudited condensed and consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly,they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
month period ended December 31, 1995 are not necessarily indicative of the
results that may be expected for the year ending June 30, 1996. For further
information, refer to the audited consolidated financial statements and
footnotes thereto for the fiscal year ended June 30, 1995 included in the
Company's annual report on Form 10-K.
2. Securities
----------
Securities available for sale at the carrying and approximate market values are
summarized below.
<TABLE>
<CAPTION>
December 31, 1995 June 30, 1995
-------------------------- --------------------------
Cost Market Cost Market
Value Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Debt securities issued
by the U.S. Treasury
and other U.S.
Government corporations
and agencies $ 250,000 $ 245,950 $ 250,000 $ 239,225
Corporate bonds 149,623 147,830 149,599 141,436
Mortgage-backed
securities 11,608,003 11,672,488 9,315,419 9,297,505
Equity securities 556,978 443,914 577,939 470,085
------------ ------------ ------------ ------------
$ 12,564,604 $ 12,510,182 $ 10,292,957 $ 10,148,251
============ ============ ============ ============
December 31, 1995 June 30, 1995
-------------------------- --------------------------
Cost Market Cost Market
Value Value
------------ ------------ ------------ ------------
Due in one year
or less -- -- -- --
Due after one year
through five years 250,000 245,950 -- --
Due after five years
through ten years 149,623 147,830 399,599 380,661
Due after ten years -- -- -- --
Mortgage-backed
securities
(including
securities with
interest rates
ranging from
5.15% to 8.5%
maturing
December 2007 to
November 2024) 11,608,003 11,672,488 9,315,419 9,297,505
Equity securities 556,978 443,914 577,939 470,085
------------ ------------ ------------ ------------
$ 12,564,604 $ 12,510,182 $ 10,292,957 $ 10,148,251
============ ============ ============ ============
</TABLE>
3. Allowance for Loan Losses
--------------------------
The following is an analysis of transactions in the allowance for loan losses:
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------------------------------
1995 1994
---------------- ----------------
<S> <C> <C>
Balance at beginning of year $ 2,396,000 $ 2,463,000
Add provision charged to operations 295,563 348,814
Recoveries on loans previously
charged off 20,776 29,161
---------------- ----------------
2,712,339 2,840,975
Less loans charged off 318,339 413,275
---------------- ----------------
Balance at end of period $ 2,394,000 $ 2,427,700
================ ================
</TABLE>
4. Advances from Federal Home Loan Bank
------------------------------------
A summary of borrowings from the Federal Home Loan Bank is as follows:
<TABLE>
<CAPTION>
December 31, 1995
----------------------------------------------------
Principal Interest Maturity
Amounts Rates Dates
<C> <C> <C>
--------------- -------------------- --------------
$ 19,400,000 5.15% - 8.30% 1996
5,000,000 5.17% - 6.88% 1997
15,700,000 4.97% - 6.35% 1998
1,000,000 5.75% 1999
--------------- -------------------- ---------------
$ 41,100,000
===============
June 30, 1995
-----------------------------------------------------
Principal Interest Maturity
Amounts Rates Dates
<C> <C> <C>
--------------- -------------------- ---------------
$ 25,400,000 4.41% - 7.65% 1996
5,300,000 5.17% - 8.30% 1997
4,000,000 4.97% - 6.35% 1998
1,000,000 5.75% 1999
-------------- --------------------- ---------------
$ 35,700,000
===============
</TABLE>
5. Stock Dividend
--------------
The Company paid a 100% stock dividend to all shareholders on December 15,
1995. Based on this dividend, the current common stock outstanding was
1,203,486 shares at December 31, 1995. The Company anticipates continuing the
annual dividend of $.32 per share, resulting in an increase in yield to
shareholders.
6. Reserve for Credit Losses
-------------------------
Effective July 1, 1995, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 114,"Accounting by Creditors for Impairment of
a Loan"(SFAS No. 114) as amended by SFAS No. 118,"Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures"(SFAS No. 118).
SFAS 114 and 118, taken together, require the Company to identify impaired
loans and generally value them at the lower of (i) the present value of
expected cash flows discounted at the loan's effective interest rate or
(ii) the loan's observable market price or (iii) fair value of the loan's
collateral, if the loan is collateral dependent. The two statements, in
connection with recent regulatory guidance, require the Company to reclassify
its in-substance foreclosures to loans and disclose them as impaired loans.
Commercial and commercial real estate loans, with balances to one borrower
greater than $25,000, are considered impaired when it is probable that the
Company will not collect all amounts due in accordance with the contractual
terms of the loan. Except for certain restructured loans, impaired loans are
loans on non-accrual status. Residential mortgage loans and consumer
installment loans are considered homogenous loans that will be reserved for
under the Company's general reserve analysis. The Company's policy for
charging off loans to the reserve is 120 days delinquent for consumer
installment loans and for all other loans when a loss has been determined. The
Company policy for an insignificant delay in payments is when the contractual
payment is up to 60 days delinquent and considers an immaterial shortfall in
payments to be 10% or less of the contractual payment amount due. Upon
adoption of SFAS 114 and 118, the Company did not change its method of
recognizing interest income on impaired loans. When a loan is placed on
non-accrual status, all interest previously accrued, but not collected, is
reversed against interest income. Subsequent cash receipts are amortized and
applied to principal and interest based on the contractual terms of the
non-accrual loan. Impaired loans are returned to accrual status and are no
longer considered impaired when they become current, as to principal and
interest, and demonstrate a period of performance under the contractual
terms, and, in management's opinion, are fully collectable. Residential and
consumer installment loans are returned to accrual status when the contractual
payments are less than 90 days delinquent and in management's opinion are
fully collectable.
Loans which were restructured prior to the adoption of SFAS No. 114, and which
are performing in accordance with the renegotiated terms are not required
to be reported as impaired. Loans restructured subsequent to the adoption of
SFAS No. 114 are required to be reported as impaired in the year of
restructuring. Thereafter, such loans can be removed from the impaired loan
disclosure if the loans were paying a market rate of interest at the time
of restructuring and are performing in accordance with their renegotiated
terms.
In accordance with SFAS No. 114, a loan is classified as an in-substance
foreclosure when the Company has taken possession of the collateral regardless
of whether formal foreclosure proceedings have taken place. Loans classified
as in-substance foreclosures prior to adoption of SFAS No. 114, but for
which the Company had not taken possession of the collateral was $304,232
at June 30, 1995. This balance was reclassified from real state owned to loans
for the comparable periods on the consolidated balance sheets and did not have
a significant effect on the financial position, liquidity or results of
operations of the Company.
At December 31, 1995, the recorded investment in impaired loans was $820,906
of commercial loans and $1,265,090 of commercial real estate loans, for a
total of $2,085,996, all of which were on non-accrual status. Included in
this amount is $1,650,771 of impaired loans for which the related impairment
reserve is $643,586, and $435,225 of impaired loans which do not require an
impairment reserve. The average recorded investment in impaired loans was
$2,311,932 and $1,858,167 for the quarter and six months ended December 31,
1995, respectively. The amount of interest income recognized on impaired
loans for the quarter was $16,945 and six months ended December 31, 1995 was
$45,936. The allowance for loan losses contains $1,750,000 for homogenous
loans as deemed necessary to maintain reserves at levels considered adequate
by management.
7. Subsequent Events
-----------------
On Monday, January 8, 1996, the President of Bethel Bancorp (the "Company"),
James D. Delamater, announced that the Company, subject to the receipt of
necessary regulatory approvals, intends to merge the Company's two wholly-owned
banking subsidiaries, Bethel Savings Bank F.S.B. and Brunswick Federal Savings
Bank, F.A. (the "Bank Subsidiaries"). The proposed merger was approved by the
Boards of Directors of the two Bank Subsidiaries on January 3, 1996. The
resulting bank will be known as Northeast Bank, F.S.B. The Bank Subsidiaries
have applied to the Office of Thrift Supervision for approval of the proposed
merger.
On the same day, Mr. Delamater announced that the Company intends to change
its name to Northeast Bancorp upon the merger of its two Bank Subsidiaries
and at the same time to change the symbol under which its stock trades on
The NASDAQ Stock Market to NEBC.
BETHEL BANCORP AND SUBSIDIARIES
Part I.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operation
------------
Financial Condition
- -------------------
Total consolidated assets were $216,198,973, which represents an increase of
$8,689,836 for the six months ended December 31, 1995, when compared to
June 30, 1995. Total loans decreased by $69,651, while loans held for sale
increased by $241,701. Federal Home Loan Bank (FHLB) overnight deposits
increased by $7,563,682, while securities available for sale and FHLB Stock
increased by $2,361,931 and $150,000, respectively during the same period.
Total deposits increased by $2,215,404, total repurchase agreements increased
by $1,179,285, and total borrowings from the FHLB increased by $5,400,000 from
June 30, 1995 to December 31, 1995.
FHLB overnight deposits increased by $7,563,682 due to the cash provided by
increased deposits and repurchase agreements as well as the increase in FHLB
advances. The Company restructured its investment portfolio, during the
quarter ended December 31, 1995, to improve the yield on the securities
portfolio. This was accomplished by selling mortgage-backed securities with
lower coupon rates and purchasing additional mortgage-backed securities with
better yields, resulting in an increase in securities available for sale of
$2,361,931. FHLB stock increased by $150,000 due the increased levels of FHLB
advances. The FHLB requires institutions to hold a certain level of FHLB stock
based on advances outstanding.
Total loans decreased by $69,651 for the six months ended December 31, 1995,
which was a $2,179,000 improvement from September 31, 1995. The total
principal decrease was primarily due to regular principal payments on the loan
portfolio as well as a principal reductions from portfolio loan pay-offs. The
Company's local market as well as the secondary market has become and continues
to be very competitive for loan volume. The local competitive environment and
customer's response to favorable secondary market rates has effected the
Company's ability to increase the loan portfolio. In the effort to increase
loan volume, the Company's offering rates for its loan products has been
reduced to compete in the various markets. The decrease in loan rates will
result in some margin compression to the Company. Loans held for sale
increased by $241,701 due to the increased volume of mortgage loans sold and
still pending closure to Freddie Mac and Fannie Mae. The increased volume was
due to favorable secondary market rates during the Company's December 31, 1995
quarter.
The loan portfolio contains elements of credit and interest rate risk. The
Company primarily lends within its local market areas, which management
believes helps them to better evaluate credit risk. The Company also
maintains a well collateralized position in real estate mortgages. Residential
real estate mortgages make up 69% of the total loan portfolio, in which 48%
of the residential loans are variable rate products. It is management's intent
to increase the volume in variable rate residential loans, by selling fixed
rate loans to the secondary market and marketing portfolio variable rate loans,
to reduce the interest rate risk in this area. Fourteen percent of the
Company's total loan portfolio balance is commercial real estate mortgages.
Similar to the residential mortgages, the Company tries to mitigate credit risk
by lending in its local market area as well as maintaining a well
collateralized position in the real estate. The commercial real estate loans
have minimal interest rate risk as 86% of the portfolio consists of variable
rate products. Commercial loans make up 8% of the total loan portfolio, in
which 92% of its balance are variable rate instruments. The credit loss
exposure on commercial loans is highly dependent on the cash flow of the
customer's business. The Banks attempt to mitigate losses in commercial loans
through lending in accordance to the Company's credit policies. Consumer and
other loans make up 9% of the loan portfolio. Since these loans are primarily
fixed rate products, they have interest rate risk when market rates increase.
These loans also have credit risk with, at times, minimal collateral security.
Management attempts to mitigate these risks by keeping the products offered
short-term, receiving a rate of return equal to the measured risks, and
lending to individuals in the Company's known market areas.
Other real estate owned decreased by $341,426 from June 30, 1995 to
December 31,1995 due to sales of these properties. On July 1, 1995 the Company
adopted FASB Statement of Financial Accounting Standards Nos. 114 and 118. The
adoption resulted in the reclassification of in-substance foreclosure loans to
impaired loans. SFAS 114 and 118, taken together, require the Company to
identify impaired loans and generally value them at the lower of (i) the
presentvalue of expected future cash flows discounted at the loan's original
effective interest rate or (ii) the loan's observable market price or (iii)
fair value of the loan's collateral, if the loan is collateral dependent. The
two statements, in connection with recent regulatory guidance, require the
Company to reclassify its in-substance foreclosures to loans and disclose them
as impaired loans. The effect of SFAS 114 and 118 did not have a significant
effect on the financial position, liquidity or results of operations of the
Company and is more fully discussed in footnote 6 to the financial statements.
Both of the Company's subsidiary Banks continue to attract new deposit
relationships. Total deposits were $149,335,274 and securities sold under
repurchase agreements were $3,764,672 as of December 31, 1995. These amounts
represent increases of $2,215,404 and $1,179,285, respectively, compared to
June 30, 1995. Brokered deposits represented $7,516,585 of the total deposits
for the quarter ended December 31, 1995 and decreased by $1,271,116 when
compared to June 30, 1995's $8,787,701 balance. The Company utilizes, as
alternative sources of funds, brokered CD's when the national brokered CD
interest rates are less than the interest rates on local market deposits.
Brokered deposits are similar to local deposits, in that both are interest rate
sensitive with the respect to the Company's ability to retain the funds. Based
on the growth of local deposits and attractive FHLB advance rates, management
has chosen to reduce its level of brokered deposits. Management will be
reviewing an additional $3,000,000 of brokered deposits maturing in the next
two quarters. Total advances from the FHLB were $41,100,000 as of December 31,
1995, an increase of $5,400,000 when compared to June 30, 1995. The cash
received from FHLB advances as well as the increase in deposits and repurchase
agreements was utilized for the increased loan demand, during the quarter
ended December 31, 1995, and securities purchases as well as providing
availablefunds for loan commitments that will close in the near future. The
Company's current advance availability, subject to the satisfaction of certain
conditions, is approximately $56,300,000 over and above the December 31, 1995
advances reported. Mortgages, free of liens, pledges and encumbrances are
required to be pledged to secure FHLB advances. The Company utilizes FHLB
advances, as alternative sources of funds, when the interest rates of the
advances are less than market deposit interest rates and to fund short-term
liquidity demands for loan volume. With the borrowing capacity at the Federal
Home Loan Bank and the continued growth in bank deposits and repurchase
agreements, management believes that the Company's available liquidity
resources are sufficient to support future loan growth.
Notes payable decreased by $255,443, for the six months ended December 31,
1995,due to regular principal payments.
Total equity of the Company was $18,783,550 as of December 31, 1995 versus
$17,275,278 at June 30, 1995. On September 8, 1995 Square Lake Holding
Corporation exercised 50,000 warrants at an aggregate price of $700,000. These
proceeds will be utilized as general working capital. The exercise of these
warrants contributed to the growth of the Company's total equity. Warrants
outstanding were 133,764 as of December 31, 1995. The Company paid a 100%
stock dividend to all shareholders on December 15, 1995. Based on this
dividend, the current common stock outstanding was 1,203,486 shares at
December 31, 1995. The Company anticipates continuing the annual dividend of
$.32 per share, resulting in an increase in yield to shareholders. Due to the
ability of the Company to pay dividends from the subsidiaries to the holding
company, the effect of increasing the dividend payout to common stock
shareholders will not have a significant effect on the financial position,
liquidity, or results of operations of the Company. Book value per common
share was $13.95 as of December 31, 1995 and $13.95 at June 30, 1995, when
restated for the 100% stock dividend. Total equity to total assets of the
Company as of December 31, 1995 was 8.69%.
At December 31, 1995, the Banks' regulatory capital was in compliance with
regulatory capital requirements as follows:
<TABLE>
<CAPTION>
Brunswick
Bethel Savings Federal Savings,
Bank, F.S.B. F.A.
------------------ ------------------
<S> <C> <C>
Capital Requirements:
Tangible capital $1,643,000 $1,543,000
Percent of tangible assets 1.50% 1.50%
Core capital $3,286,000 $3,087,000
Percent of adjusted tangible assets 3.00% 3.00%
Leverage capital $4,382,000 $4,116,000
Percent of adjusted leverage assets 4.00% 4.00%
Risk-based capital $5,879,000 $4,656,000
Percent of risk-weighted assets 8.00% 8.00%
Actual:
Tangible capital $8,286,000 $7,866,000
Percent of adjusted total assets 7.56% 7.64%
Excess of requirement $6,643,000 $6,323,000
Core capital $8,286,000 $7,866,000
Percent of adjusted tangible assets 7.56% 7.64%
Excess of requirement $5,000,000 $4,779,000
Leverage capital $8,286,000 $7,866,000
Percent of adjusted leverage assets 7.56% 7.64%
Excess of requirement $3,904,000 $3,750,000
Risk-based capital $8,770,000 $8,594,000
Percent of risk-weighted assets 11.93% 14.77%
Excess of requirement $2,891,000 $3,938,000
</TABLE>
The carrying value of securities available for sale of the Company was
$12,510,182, which is $54,422 less than the cost of the underlying securities,
at December 31, 1995. The reduction in carrying value from the cost was
primarily attributable to the decline in market value of equity securities.
The difference between cost and carrying value of the securities was primarily
due to the change in current market prices from the price at the time of
purchase. The Company has primarily invested in mortgage-backed securities.
Substantially all of the mortgage-backed securities are high grade government
backed securities. Management believes that the yields currently received on
this portfolio are satisfactory. As in any long term earning asset with a
fixed earning rate, the market value of mortgage-backed securities will decline
when market interest rates increase. Since these mortgage-backed securities
are backed by the U.S. government, there is little or no risk in loss of
principal. Therefore, management believes that during adverse market
fluctuations it would be advantageous to hold these securities until the market
values recover.
The Company's allowance for loan losses was $2,394,000 as of December 31, 1995
versus $2,396,000 as of June 30, 1995, representing 1.41% of total loans, as
of each time periods. The Company had non-performing loans totaling $3,624,000
at December 31, 1995 as compared to $2,266,000 at June 30, 1995. Non-
performing loans represented 1.68% and 1.09% of total assets at December 31 and
June 30, 1995, respectively. The Company's allowance for loan losses was
equal to 66% and 106% of the total non-performing loans at December 31, 1995
and June 30, 1995, respectively. At December 31, 1995, the Company had
approximately $4,175,000 of loans classified substandard, exclusive of the
non-performing loans stated above, that could potentially become non-performing
due to delinquencies or marginal cash flows. Along with non-performing and
delinquent loans, management takes an aggressive posture in reviewing its loan
portfolio to classify loans substandard. The following table represents the
Company's non-performing loans as of December 31 and June 30, 1995,
respectively:
<TABLE>
<CAPTION>
Description December 31, June 30,
1995 1995
------------------- ----------------- -----------------
<S> <C> <C>
1-4 Family Mortgages $1,322,000 637,000
Commercial Mortgages 1,614,000 1,223,000
Commercial Installment 644,000 375,000
Consumer Installment 44,000 31,000
----------------- -----------------
Total non-performing $3,624,000 2,266,000
================= =================
</TABLE>
The following table reflects the quarterly trend of total delinquencies 30 days
or more past due, including non-performing loans, for the Company as a
percentage of total loans:
<TABLE>
<C> <C> <C> <C>
3-31-95 6-30-95 9-30-95 12-31-95
2.27% 2.46% 2.15% 3.51%
</TABLE>
The majority of the non-performing loans are seasoned loans located in the
Oxford county area. This geographic area continues to have a depressed economy
resulting in high unemployment and a soft real estate market. Management has
allocated substantial resources to the collection area in an effort to
control the growth in non-performing, delinquent and substandard loans in this
area. In addition, the Company has historically experienced a seasonal
increase in delinquent loans during the winter months, which increased total
delinquencies during the second quarter, followed by an improvement in the
spring and summer months.
The increase in non-performing, delinquent and classified loans this quarter
was also due, in part, to the timing of the Company being funded by the
guaranteed portion of an SBA loan, in the amount of $370,000. The Company has
now been funded its guaranteed portion of the SBA loan. The Company has also
received commitment letters for loan payoffs on loans that are in
non-performing, delinquent or classified status. The loan payoffs are expected
to improve the Company's level of non-performing, delinquent and classified
loans in future quarters.
Classified assets are also considered in management's analysis in the adequacy
of allowance for loan losses. Based on reviewing the credit risk and collateral
of delinquent loans, classified loans and non-performing loans, management
has considered the risks of the loan portfolio and believes the allowance for
loan losses is adequate. Management at each of the subsidiary Banks primarily
lends within their local market areas, which management believes helps it to
better evaluate credit risk. The Company also maintains a well collateralized
position in real estate mortgage loans. On a regular and ongoing basis,
Company management evaluates the adequacy of the allowance for loan losses.
The process to evaluate the allowance involves a high degree of management
judgement. The methods employed to evaluate the allowance for loan losses are
quantitative in nature and consider such factors as the loan mix, the level
of non-performing loans, delinquency trends, past charge-off history, loan
reviews and classifications, collateral, and the current economic climate.
Management believes that the allowance for loan losses is adequate considering
the level of risk in the loan portfolio. While management uses its best
judgement in recognizing loan losses in light of available information, there
can be no assurance that the Company will not have to increase its provision
for loan losses in the future as a result of changing economic conditions,
adverse markets for real estate or other factors. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses. Such agencies
may require the Company to recognize additions to the allowance for loan
losses based on their judgements about information available to them at
the time of their examination. The Company's most recent examination by the
OTS was on May 15, 1995. At the time of the exam the regulators proposed no
additions to the allowance for loan losses.
The state of Maine's economy appears to be stable with moderate or flat growth.
However, the weakness in the Oxford county economy, which has resulted in high
unemployment and a soft real estate market, must be considered a risk to the
overall credit quality of the loan portfolio of Bethel Savings Bank. Bethel
Savings Bank has expanded its market beyond the Oxford county with the
acquisition of the Key Bank branches. The Company will continue to monitor
loans within these portfolios and increase the levels of allowance for loan
losses when necessary.
Results of Operations
- ---------------------
Net income for the quarter ended December 31, 1995 was $443,436. Primary
earnings per share was $.32 and the fully diluted earnings per share was $.29
for the quarter ended December 31, 1995. This compares to earnings of $407,114
or a primary earnings per share of $.30 per share and a fully diluted earnings
per share of $.28, for the quarter ended December 31, 1994. Net income for
the six months ended December 31, 1995 was $865,073 versus $812,826 for the
period ended December 31, 1994. Primary earnings per share was $.64 and
fully diluted earnings per share was $.58 for the six month period ended
December 31, 1995 versus primary earnings per share of $.60 and fully diluted
earnings per share of $.56 for the period ended December 31, 1994. The 1994
earnings per share has been restated to give consideration to the 100% stock
dividend.
The Company's net interest income was $2,230,682 for the quarter ended
December 31, 1995 versus $2,242,267 for the quarter ended December 31, 1994,
for a decrease of $11,585. This decrease was due to an increase of $362,131
in total interest income offset by an increase in total interest expense of
$373,716.
The Company's net interest income was $4,443,984 for the six months ended
December 31, 1995, versus $4,353,194 for the six months ended December 31,
1994,an increase of $90,790. Total interest income increased $945,586 during
the six months ended December 31, 1995 compared to the six months ended
December 31, 1994, resulting from the following items. Interest income on
loans and loans held for sale increased by $903,603 for the six months ended
December 31, 1995 resulting from a $368,487 increase due to an increase in the
volume of loans as well as an increase of $535,116 due to increased rates on
loans. Interest income on investment securities decreased by $106,324
resulting from a $102,454 decrease due to a decrease in volume as well as a
decrease of $3,870 due to decreased rates on investments. Interest income on
short term liquid funds increased by $148,307 resulting from a $105,318
increase due to an increase in volume as well as an increase of $42,989 due
to increased rates on FHLB overnight deposits. The increase in total interest
expense of $854,796 for the six months ended December 31, 1995 resulted from
the followingitems. Interest expense on deposits increased by $833,617 for
the six months ended December 31, 1995 resulting from a $311,548 increase due
to an increase in the volume of deposits as well as an increase of $522,069 due
to increasing deposit rates. Interest expense on repurchase agreements
increased by $61,351 due to an increase of $59,663 in the volume of repurchase
agreements as well asan increase of $1,688 due to increased repurchase
agreement rates. Interest expense on borrowings decreased by $40,172 for
the six months ended December 31, 1995 resulting from a decrease of $284,230
due to a decrease in the volume of borrowings offset by an increase of
$244,058 due to a change in the mix of interest rates on borrowings. The
changes in net interest income, as explained above, are also presented in the
schedule below.
<TABLE>
<CAPTION>
Bethel Bancorp
Rate/Volume Analysis for the six months ended
December 31, 1995 versus December 31, 1994
Difference Due to
Volume Rate Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Investments $ (102,454) $ (3,870) $ (106,324)
Loans 368,487 535,116 903,603
FHLB & Other Deposits 105,318 42,989 148,307
--------------- --------------- ---------------
Total 371,351 574,235 945,586
Deposits 311,548 522,069 833,617
Repurchase Agreements 59,663 1,688 61,351
Borrowings (284,230) 244,058 (40,172)
--------------- --------------- ---------------
Total 86,981 767,815 854,796
--------------- --------------- ---------------
Net Interest Income $ 284,370 $ (193,580) $ 90,790
=============== ================ ===============
</TABLE>
Rate/Volume amounts spread proportionately between volume and rate.
From October 1993 to late 1995, actions by the Federal Reserve Board resulted
in increases in prime lending rates. In December 1995, actions by the Federal
Reserve Board resulted in a decrease in prime lending rates. Approximately
20% of the Company's loan portfolio is comprised of floating rate loans based
on a prime rate index. Interest income on these existing loans will fluctuate
in the same direction as the prime rate, as well as on approximately 21% of
other loans in the Company's portfolio that are based on short-term rate
indices such as the one-year treasury bill. A fluctuation in short-term
interest rates will also effect deposit and FHLB advance rates, in the same
manner. The Company is experiencing and anticipates additional net interest
margin compression due to fluctuating rates. The impact on net interest
income will depend on, among other things, actual rates charged on the
Company's loan portfolio, deposit and advance rates paid by the Company and
loan volume.
Total non-interest income was $550,478 and $1,164,772 for the three and six
months ended December 31, 1995 versus $655,392 and 1,051,997 for the three
and six months ended December 31, 1994. Service fee income was $235,211
and $516,820 for the three and six months ended December 31, 1995 versus
$230,593 and $450,285 for the three and six months ended December 31, 1994.
The December 31, 1995 six month increase of $66,535 in service fee income
was primarily due to the deposit fee income generated from the acquisition
of the Key Bank branches. Income from available for sale securities gains
was $85,791 and $206,383 for the three and six months ended December 31,
1995 versus $4,183 and $8,129 for the three and six months ended December 31,
1994. Gains from the sale of securities have increased due to the Company
selling some of its available for sale securities, taking advantage of the
fluctuation in market prices in the mortgage-backed security portfolio.
Income from trading account securities was $7,006 for each of the three and
six month periods ended December 31, 1995 versus $210,676 and $223,823 for
the three and six months ended December 31, 1994. The gain on trading
account, in the December 31, 1994 quarter, was due to the sale and appreciation
in the market values of the securities classified as trading. Currently,
all of the trading account portfolio has been liquidated.
Other income was $222,470 and $434,563 for the three and six months ended
December 31, 1995, which was an increase of $12,530 and an increase of $64,803
from other income for the three and six months ended December 31, 1994, which
was $209,940 and $369,760, respectively. Gains on the sale of loans held for
sale amounted to $40,342 and $123,158 for the three and six months ended
December 31, 1995 versus $56,858 and $116,760 for the three and six months
ended December 31, 1994. Gains from the sale of loans have increased as a
result of increased originations due to secondary market loan demand from the
Company's customers due to current low rates. Gross income for First New
England Benefits was $76,179 and $154,502 for the three and six months ended
December 31, 1995 versus $103,675 and $169,689 for the three and six months
ended December 31, 1994. The amounts discussed in this paragraph are reflected
in other income.
Total operating expense, or non-interest expense, for the Company was
$1,935,671 and $3,951,595 for the three and six months ended December 31,
1995 versus $2,084,286 and $3,776,544 for the three and six months ended
December 31, 1994.
Compensation expense increased by $11,585 and $126,193 for the three and six
months ended December 31, 1995 as a result of the addition of the four new
branches, annual salary increases and the increase in the number of individual
employees qualifying for the Company's profit sharing and 401(k) program. Net
occupancy expenses decreased by $3,399 and increased by $15,093 for the three
and six months ended December 31, 1995. The six month increase in occupancy
expense was primarily due to the four new branches acquired from Key Bank.
Equipment expense increased by $26,697 for the six months ended December 31,
1995 due to the expenses associated with the new acquisitions as well as the
general needs at the subsidiaries. Goodwill expense increased by $15,769 and
$58,839 for the three and six months ended December 31, 1995 due to the premium
paid for the four Key Bank branches. Other expenses have decreased by $172,112
and $51,771 for the three and six months ended December 31, 1995 versus the
three and six months ended December 31, 1994. Other expenses decreased during
the three and six months ended December 31, 1995 primarily due to the Company
decreasing its computer services, provision for real estate owned, telephone,
supplies and deposit insurance expenses . In September 1995, the Company
received a rebate from the FDIC for its BIF insured deposits. This rebate
reduced other expenses by approximately $56,000.
The FDIC has proposed a one time assessment on all SAIF insured deposits in a
range of $.85 to $.90 per $100 of domestic deposits held as of March 31, 1995.
This one time assessment is intended to recapitalize the SAIF to the required
level of 1.25% of insured deposits and could be payable in early 1996. If the
assessment is made at the proposed rates, the effect on the Company would be
an after tax charge of approximately $320,000 (assuming an income tax rate of
36%). The one time charge assumes a .85% charge on Brunswick Federal Savings,
F.A. deposits of approximately $60,000,000 at March 31, 1995, which does not
include the BIF insured deposits of the newly acquired Key Bank branches.
Subsequent to the proposed payment of the one time assessment, the ongoing risk
based assessment schedule for the newly capitalized SAIF would be similar to
the schedule of BIF (the current FDIC board proposal has rates ranging from 4
to 31 basis points). The Company anticipates that it would be assessed at the
lowest BIF rate as it currently is assessed at the lowest SAIF rate due to its
regulatory standing. If the Company's premium is reduced to 4 basis points,
the Company would have future after tax annual savings of approximately
$180,000 (assuming an income tax rate of 36%). The annual savings assumes a
.04% insurance premium charge compared to the current .23% insurance premium
paid on the Company's total deposit base of $149,000,000.
The Company announced, subject to the receipt of necessary regulatory
approval, its intention to merge the Company's two wholly-owned banking
subsidiaries, Bethel Savings Bank, F.S.B. and Brunswick Federal Savings, F.A..
The merged banking subsidiaries would operate under the new name Northeast
Bank, F.S.B.. The Company also intends to relocate its corporate headquarters
and open a new retail banking facility in the Lewiston/Auburn area. Subject
to regulatory approval, it is expected that these events will be completed by
July 1, 1996. Due to the corporate plans mentioned above, the Company will
incur additional expenses that will have a negative impact on earnings in the
following quarters. The additional expenses are one time in nature and have
not been projected at this time. The Company anticipates, over the long term,
these moves will lead to an increase in efficiency and performance.
Impact of Inflation
- -------------------
The consolidated financial statements and related notes herein have been
presented in terms of historic dollars without considering changes in the
relative purchasing power of money over time due to inflation. Unlike many
industrial companies, substantially all of the assets and virtually all of the
liabilities of the Company are monetary in nature. As a result, interest rates
have a more significant impact on the Company's performance than the general
level of inflation. Over short periods of time, interest rates may not
necessarily move in the same direction or in the same magnitude as inflation.
BETHEL BANCORP AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
-----------------
Not Applicable.
Item 2. Changes in Securities
---------------------
Not Applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable.
Item 5. Other Information
-----------------
Not Applicable.
Item 6. Exhibits and Reports on Form 8 - K
----------------------------------
(a) Exhibits
--------
11 Statement regarding computation of per share earnings
27 Financial data schedule
(b) Reports on Form 8 - K
---------------------
No reports on Form 8 - K have been filed during the quarter ended
December 31, 1995.
BETHEL BANCORP AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
BETHEL BANCORP
----------------
(Registrant)
/s/ James D. Delamater
-------------------------
James D. Delamater
President and CEO
/s/ Richard Wyman
-----------------------
Richard Wyman
Chief Financial Officer
Date: February 13, 1996
BETHEL BANCORP AND SUBSIDIARIES
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION
11 Statement regarding computation of per share earnings
27 Finanacial Data Schedule
<TABLE>
<CAPTION>
BETHEL BANCORP AND SUBSIDIARIES
Exhibit 11. Statement Regarding Computation of Per Share Earnings
Three Months Ended Three Months Ended
December 31,1995 December 31, 1994*
------------------- --------------------
<S> <C> <C>
EQUIVALENT SHARES:
Average Shares Outstanding 1,195,685 1,094,800
Total Equivalent Shares 1,195,685 1,094,800
Total Primary Shares 1,293,424 1,226,670
Total Fully Diluted Shares 1,529,798 1,460,434
Net Income $ 443,436 $ 407,114
Less Preferred Stock Dividend 35,000 35,000
------------------- --------------------
Net Income after Preferred
Dividend $ 408,436 $ 372,114
=================== ====================
Primary Earnings Per Share $ 0.32 $ 0.30
Fully Diluted Earnings Per
Share $ 0.29 $ 0.28
Six Months Ended Six Months Ended
December 31, 1995 December 31, 1994*
------------------- --------------------
EQUIVALENT SHARES:
Average Shares Outstanding 1,157,967 1,094,800
Total Equivalent Shares 1,157,967 1,094,800
Total Primary Shares 1,252,857 1,231,236
Total Fully Diluted Shares 1,492,080 1,465,000
Net Income $ 865,073 $ 812,826
Less Preferred Stock Dividend 69,999 69,999
------------------- --------------------
Net Income after Preferred
Dividend $ 795,074 $ 742,827
=================== ====================
Primary Earnings Per Share $ 0.64 $ 0.60
Fully Diluted Earnings Per
Share $ 0.58 $ 0.56
</TABLE>
*The 1994 earnings per share was restated due to the 100% common stock
dividend.
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000811831
<NAME> BETHEL BANCORP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,962,657
<INT-BEARING-DEPOSITS> 18,428,495
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,510,182
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 170,039,108
<ALLOWANCE> 2,394,000
<TOTAL-ASSETS> 216,198,973
<DEPOSITS> 149,335,274
<SHORT-TERM> 19,904,648
<LIABILITIES-OTHER> 1,460,829
<LONG-TERM> 22,950,000
<COMMON> 1,203,486
0
1,999,980
<OTHER-SE> 15,616,003
<TOTAL-LIABILITIES-AND-EQUITY> 216,198,973
<INTEREST-LOAN> 8,176,899
<INTEREST-INVEST> 456,895
<INTEREST-OTHER> 373,552
<INTEREST-TOTAL> 9,007,346
<INTEREST-DEPOSIT> 3,287,660
<INTEREST-EXPENSE> 4,563,362
<INTEREST-INCOME-NET> 4,443,984
<LOAN-LOSSES> 295,563
<SECURITIES-GAINS> 206,383
<EXPENSE-OTHER> 3,951,595
<INCOME-PRETAX> 1,361,598
<INCOME-PRE-EXTRAORDINARY> 1,361,598
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 865,073
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.58
<YIELD-ACTUAL> 4.356
<LOANS-NON> 3,624,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 410,706
<LOANS-PROBLEM> 4,175,000
<ALLOWANCE-OPEN> 2,396,000
<CHARGE-OFFS> 318,339
<RECOVERIES> 20,775
<ALLOWANCE-CLOSE> 2,394,000
<ALLOWANCE-DOMESTIC> 643,586
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,750,414
</TABLE>
