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 September 30, 1999
__________________
or
___ Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number 1 - 14588
_________
Northeast Bancorp
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maine 01 - 0425066
___________________________________ _______________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
232 Center Street, Auburn, Maine 04210
___________________________________ _______________________________________
(Address of principal executive (Zip Code)
offices)
(207) 777 - 6411
_______________________________________________________________________________
Registrant's telephone number, including area code
<PAGE> 2
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 period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Shares outstanding as of
November 10, 1999: 2,770,815 of common stock, $1.00 par value per share.
_______________________________________________________________________________
NORTHEAST BANCORP
Table of Contents
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
September 30, 1999 and June 30, 1999
Consolidated Statements of Income
Three Months ended September 30, 1999 and 1998
Consolidated Statements of Changes in Shareholders' Equity
Three Months ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows
Three Months ended September 30, 1999 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
<PAGE> 3
Item 1. Financial Statements
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
_______________ _______________
<S> <C> <C>
Assets
Cash and due from banks $ 5,375,209 $ 4,963,985
Interest bearing deposits 1,328,193 345,585
Federal Home Loan Bank overnight deposits 2,257,000 6,784,000
Available for sale securities 18,737,183 18,054,317
Federal Home Loan Bank stock 6,019,400 5,680,500
Loans held for sale 430,200 311,600
Loans 341,991,194 318,986,247
Less allowance for loan losses 3,046,000 2,924,000
_______________ _______________
Net loans 338,945,194 316,062,247
Bank premises and equipment, net 4,926,388 5,037,026
Assets acquired through foreclosure 15,790 193,850
Goodwill (net of accumulated amortization
of $1,731,153 at 9/30/99 and $1,662,588
at 6/30/99) 1,393,781 1,462,346
Other assets 5,640,273 5,487,449
_______________ _______________
Total Assets 385,068,611 364,382,905
=============== ===============
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 225,272,883 $ 219,364,035
Securities Sold Under Repurchase Agreements 13,051,036 11,867,839
Advances from Federal Home Loan Bank 115,387,173 103,881,716
Note Payable 611,111 687,500
Other Liabilities 3,526,085 1,898,700
_______________ _______________
Total Liabilities 357,848,288 337,699,790
Shareholders' Equity:
Common stock, par value $1, 2,770,446 and
2,768,624 shares issued and outstanding
at 9/30/99 and 6/30/99, respectively 2,770,446 2,768,624
Additional paid in capital 10,222,068 10,208,299
Retained earnings 14,800,607 14,145,720
_______________ _______________
27,793,121 27,122,643
Accumulated other comprehensive income (loss) (572,798) (439,528)
_______________ _______________
Total Shareholders' Equity 27,220,323 26,683,115
<PAGE> 4
_______________ _______________
Total Liabilities and Shareholders' Equity $ 385,068,611 $ 364,382,905
=============== ===============
</TABLE>
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
_______________ _______________
<S> <C> <C>
Interest and Dividend Income
Interest on FHLB overnight deposits $ 64,791 $ 116,234
Interest on loans & loans held for sale 7,010,975 6,309,260
Interest on available for sale securities 293,123 194,387
Dividends on Federal Home Loan Bank stock 94,269 90,203
Other Interest Income 5,612 5,072
_______________ _______________
Total Interest Income 7,468,770 6,715,156
Interest Expense
Deposits 2,335,723 2,129,744
Repurchase agreements 126,207 52,744
Other borrowings 1,516,348 1,437,078
_______________ _______________
Total Interest Expense 3,978,278 3,619,566
_______________ _______________
Net Interest Income 3,490,492 3,095,590
Provision for loan losses 295,229 204,931
_______________ _______________
Net Interest Income after Provision for
Loan Losses 3,195,263 2,890,659
Other Income
Service charges 265,183 253,385
Net securities gains 5,165 10,791
Net gain on trading securities -- 5,612
Other 356,976 236,733
_______________ _______________
Total Other Income 627,324 506,521
Other Expenses
Salaries and employee benefits 1,303,792 1,196,731
Net occupancy expense 227,449 219,761
Equipment expense 233,177 182,003
Goodwill amortization 68,565 74,094
Other 754,562 730,068
_______________ _______________
Total Other Expenses 2,587,545 2,402,657
<PAGE> 5
_______________ _______________
Income Before Income Taxes 1,235,042 994,523
Income tax expense 433,320 358,486
_______________ _______________
Net Income $ 801,722 $ 636,037
=============== ===============
Earnings Per Share
Basic $ 0.29 $ 0.24
Diluted $ 0.29 $ 0.23
</TABLE>
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Additional Comprehensive
Preferred Stock at Paid in Retained Income
Stock $1.00 Par Capital Earnings (Loss) Total
_____________ ___________ ____________ _____________ _____________ _____________
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1998 999,988 2,614,285 9,258,107 12,331,595 (64,448) 25,139,527
Net income for three months
ended September 30, 1998 -- -- -- 636,037 -- 636,037
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for securities
available for sale -- -- -- -- 53,227 53,227
_____________
Comprehensive income -- -- -- -- -- 689,264
Cash dividends declared on
common stock -- -- -- (138,573) -- (138,573)
Cash dividends declared on
preferred stock -- -- -- (17,500) -- (17,500)
Common stock issued in
<PAGE> 6
connection with employee
benefit and stock option
plans -- 4,099 32,085 -- -- 36,184
_____________ ___________ ____________ _____________ _____________ _____________
Balance September 30, 1998 $ 999,988 $2,618,384 $ 9,290,192 $ 12,811,559 $ (11,221) $ 25,708,902
============= =========== ============ ============= ============= =============
Balance at June 30, 1999 -- 2,768,624 10,208,299 14,145,720 (439,528) 26,683,115
Net income for three months
ended September 30, 1999 -- -- -- 801,722 -- 801,722
Other comprehensive income,
net of tax:
Adjustment of valuation
reserve for securities
available for sale -- -- -- -- (133,270) (133,270)
_____________
Comprehensive income -- -- -- -- -- 668,452
Cash dividends declared on
common stock -- -- -- (146,835) -- (146,835)
Common stock issued in
connection with employee
benefit and stock option
plans -- 1,822 13,769 -- -- 15,591
_____________ ___________ ____________ _____________ _____________ _____________
Balance September 30, 1999 $ 0 $ 2,770,446 $10,222,068 $ 14,800,607 $ (572,798) $ 27,220,323
============= =========== ============ ============= ============= =============
</TABLE>
NORTHEAST BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
_______________ _______________
<S> <C> <C>
Cash provided by (used in) operating
activities $ 992,653 $ (210,989)
<PAGE> 7
Cash flows from investing activities:
FHLB stock purchased (338,900) --
Available for sale securities purchased (675,157) (532,917)
Available for sale securities matured 758,002 1,641,994
Available for sale securities sold 48,461 49,669
New loans, net of repayments & charge offs (22,452,960) (7,867,188)
Net capital expenditures (92,857) (376,651)
Assets acquired through foreclosure sold 222,724 262,219
Real estate held for investment sold 14,997 50,000
_______________ _______________
Net cash used in investing activities (22,515,690) (6,772,874)
Cash flows from financing activities:
Net change in deposits 5,908,848 11,370,876
Net change in repurchase agreements 1,183,197 326,655
Dividends paid (146,835) (156,073)
Proceeds from stock issuance 15,591 36,184
Net increase (decrease) in advances from
Federal Home Loan Bank of Boston 11,505,457 (5,436,040)
Net change in notes payable (76,389) (76,389)
_______________ _______________
Net cash provided by financing activities 18,389,869 6,065,213
_______________ _______________
Net decrease in cash and cash equivalents (3,133,168) (918,650)
Cash and cash equivalents, beginning of
period 12,093,570 12,151,966
_______________ _______________
Cash and cash equivalents, end of period $ 8,960,402 $ 11,233,316
=============== ===============
Cash and cash equivalents include cash on
hand, amounts due from banks, interest
bearing deposits and FHLB deposits
Supplemental schedule of noncash investing
activities:
Net (decrease) increase in valuation for
unrealized market value adjustments on
available for sale securities (133,270) 53,227
Supplemental disclosure of cash paid during
the period for:
Income taxes paid, net of refund -- 206,000
Interest paid 3,892,105 3,615,158
</TABLE>
NORTHEAST BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 1999
1. Basis of Presentation
<PAGE> 8
_____________________
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 three month
period ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the fiscal year ending June 30, 2000. For further
information, refer to the audited consolidated financial statements and
footnotes thereto for the fiscal year ended June 30, 1999 included in the
Company's Annual Report on Form 10-K.
2. Securities
__________
Securities available for sale at cost and approximate market values are
summarized below.
<TABLE>
<CAPTION>
September 30, 1999 June 30, 1999
_________________________ _________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Debt securities issued by
the U.S. Treasury and
other U.S. Government
corporations and agencies $ 596,064 $ 595,626 $ 596,626 $ 598,445
Corporate bonds 201,654 197,590 201,916 199,527
Mortgage-backed securities 17,401,924 16,652,644 16,653,302 16,027,028
Equity securities 1,405,417 1,291,323 1,268,424 1,229,317
____________ ____________ ____________ ____________
$19,605,059 $18,737,183 $18,720,268 $18,054,317
============ ============ ============ ============
September 30, 1999 June 30, 1999
____________________________________________________
Market Market
Cost Value Cost Value
____________ ____________ ____________ ____________
Due in one year or less $ 496,064 $ 496,064 $ 496,626 $ 497,820
Due after one year through
five years 201,654 197,590 301,916 300,152
Due after five years
through ten years 100,000 99,562 -- --
Mortgage-backed securities
(including securities with
interest rates ranging
from 5.15% to 9.0%
maturing September 2003
to October 2029) 17,401,924 16,652,644 16,653,302 16,027,028
Equity securities 1,405,417 1,291,323 1,268,424 1,229,317
____________ ____________ ____________ ____________
$19,605,059 $18,737,183 $18,720,268 $18,054,317
<PAGE> 9
============ ============ ============ ============
</TABLE>
3. Allowance for Loan Losses
_________________________
The following is an analysis of transactions in the allowance for loan losses:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
____________ ____________
<S> <C> <C>
Balance at beginning of year $ 2,924,000 $ 2,978,000
Add provision charged to operations 295,229 204,931
Recoveries on loans previously charged off 58,355 25,523
____________ ____________
3,277,584 3,208,454
Less loans charged off 231,584 338,454
____________ ____________
Balance at end of period $ 3,046,000 $ 2,870,000
============ ============
</TABLE>
4. Advances from Federal Home Loan Bank
____________________________________
A summary of borrowings from the Federal Home Loan Bank is as follows:
<TABLE>
<CAPTION>
September 30, 1999
_____________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ ____________
<C> <C> <C>
$ 48,000,000 4.64% - 6.27% 2000
3,131,545 4.98% - 6.40% 2001
2,731,893 5.38% - 6.49% 2002
15,282,272 5.69% - 6.64% 2003
3,241,463 5.55% - 6.67% 2004
9,000,000 5.25% - 6.65% 2005
34,000,000 4.89% - 5.68% 2008
______________
$ 115,387,173
==============
June 30, 1999
_____________________________________________
Principal Interest Maturity
Amounts Rates Dates
______________ _______________ ____________
$ 42,000,000 4.64% - 6.27% 2000
3,148,288 4.98% - 6.40% 2001
2,815,780 5.38% - 6.49% 2002
9,515,546 5.69% - 6.64% 2003
3,402,102 5.55% - 6.67% 2004
<PAGE> 10
9,000,000 5.25% - 6.65% 2005
34,000,000 4.89% - 5.68% 2008
______________
$ 103,881,716
==============
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
_______________________________________________________________
Results of Operation
____________________
Description of Operations
_________________________
Northeast Bancorp (the "Company"), is a unitary savings and loan holding
company registered with the Office of Thrift Supervision ("OTS") its primary
regulator. The Company has one wholly-owned banking subsidiary, Northeast
Bank, FSB (the "Bank"), which has branches located in Auburn, Augusta, Bethel,
Harrison, South Paris, Buckfield, Mechanic Falls, Brunswick, Richmond,
Lewiston, and Lisbon Falls, Maine. The Bank also maintains a facility on Fundy
Road in Falmouth, Maine, from which loan applications are accepted and
investment, insurance and financial planning products services are offered.
Although the Bank's deposits are primarily insured through BIF, deposits at the
Brunswick branch, which represent approximately 23% of the Bank's total
deposits at September 30, 1999 are SAIF-insured.
Northeast Bancorp through its subsidiary, Northeast Bank and the Bank's
subsidiary Northeast Financial Services, Inc., provide a broad range of
financial services to individuals and companies in western, midcoast and south-
central Maine. Substantially all income and services are derived from banking
products and services in Maine. Accordingly, the Company's subsidiary is
considered by management to be aggregated in one reportable operating segment.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations presents a review of the material changes in the financial condition
of the Company from June 30, 1999 to September 30, 1999, and the results of
operations for the quarters ended September 30, 1999 and 1998. This discussion
and analysis is intended to assist in understanding the financial condition and
results of operations of the Company. Accordingly, this section should be read
in conjunction with the consolidated financial statements and the related notes
and other statistical information contained herein.
Certain statements contained herein are not based on historical facts and are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, such as statements relating to financial
condition and future prospects, loan loss reserve adequacy, year 2000
readiness, simulation of changes in interest rates, prospective results of
operations, capital spending and financing sources, and revenue sources. These
statements relate to expectations concerning matters that are not historical
facts. Forward-looking statements, which are based on various assumptions
(some of which are beyond the Company's control), may be identified by
reference to a future period or periods, or by the use of forward-looking
terminology such as "believe", "expect", "estimate", "anticipate", "continue",
"plan", "approximately", "intend", or other similar terms or variations on
those terms, or future or conditional verbs such as "will", "may", "should",
"could", and "would". Such forward-looking statements reflect the current view
of management and are based on information currently available to them, and
<PAGE> 11
upon current expectations, estimates, and projections regarding the Company and
its industry, management's belief with respect there to, and certain
assumptions made by management. These forward-looking statements are not
guarantees of future performance and are subject to risks, uncertainties, and
other factors. Accordingly, actual results could differ materially from those
set forth in forward-looking statements due to a variety of factors, including,
but not limited to, those related to the economic environment, particularly in
the market areas in which the Company operates, competitive products and
pricing, fiscal and monetary policies of the U.S. Government, changes in
government regulations affecting financial institutions, including regulatory
fees and capital requirements, changes in prevailing interest rates,
acquisitions and the integration of acquired businesses, credit risk
management, asset/liability management, changes in technology, changes in the
securities markets, and the availability of and the costs associated with
sources of liquidity. For a more complete discussion of such risks, please
refer to the Company's Form 10-K for the year ended June 30, 1999 under the
section entitled "Business-Forward-Looking Statements".
Financial Condition
___________________
Total consolidated assets were $385,068,611 on September 30, 1999, which
represents an increase of $20,685,706 from June 30, 1999. The increase in
assets is primarily due to loan growth. Loan volume during the quarter has
been enhanced due to increased generation of consumer loans through the Bank's
participation in indirect automobile loans and mobile home loans as well as
increased generation of commercial loans. The increase in loans has been
funded with increased deposits, excess funds from cash equivalents, and Federal
Home Loan Bank ("FHLB") borrowings. In this regard, total net loans and
securities increased by $22,882,947 and $682,866, respectively, from June 30,
1999 to September 30, 1999, while cash equivalents decreased by $3,133,168
during the same period. Total deposits and repurchase agreements increased by
$7,092,045 from June 30, 1999 to September 30, 1999. FHLB borrowings also
increased by $11,505,457 during the same period.
At September 30, 1999, the carrying value of securities available for sale by
the Company was $18,737,183, which is $867,876 less than the cost of the
underlying securities. The difference between the carrying value and the cost
of the securities was primarily attributable to the decline in the market value
of mortgage-backed securities due to rising interest rates. The net unrealized
loss on mortgage-backed securities was $749,280 at September 30, 1999.
Substantially all of the mortgage-backed securities are high grade government
backed securities. As in any long term earning asset in which the earning rate
is fixed, the market value of mortgage-backed securities will fluctuate based
on changes in market interest rates from the time of purchase. Since these
mortgage-backed securities are backed by the U.S. Government, there is
virtually no risk of loss of principal. Management believes that the yields
currently received on this portfolio are satisfactory and intends to hold these
securities for the foreseeable future. Management attributes the reduction of
$114,094 in the market value of equity securities to the decline on the market
value of the Company's investments in small cap technology stocks. Management
reviews the portfolio of investments on an ongoing basis to determine if there
has been an other-than-temporary decline in value. Some of the considerations
management makes in the determination are market valuations of particular
securities and economic analysis of the securities' sustainable market values
based on the underlying companies' profitability.
FHLB stock increased by $338,900 from June 30, 1999 to September 30, 1999, due
<PAGE> 12
to the increase in FHLB borrowings. The FHLB requires institutions to hold a
certain level of FHLB stock based on advances outstanding.
Total loans increased by $23,004,947 for the three months ended September 30,
1999. From June 30, 1999 to September 30, 1999, the loan portfolio increased
by $4,486,712 in real estate mortgage loans, $17,427,483 in consumer and other
loans, and by $1,090,752 in commercial loans. The increase in consumer loans
was primarily due to the increased volume in indirect automobile loans and
mobile home loans. The loan portfolio contains elements of credit and interest
rate risk. The Bank primarily lends within its local market areas, which
management believes helps them to better evaluate credit risk. The Bank's
local market, as well as the secondary market, continues to be very competitive
for loan origination volume. The local competitive environment and customer
response to favorable secondary market rates have affected the Bank's ability
to increase the loan portfolio. The Bank has supplemented its loan portfolio
by purchasing mortgage loans locally and from other states. As the Bank
expands its purchase of loans in other states, management researches the
strength of the economy in the respective state and underwrites every loan
before purchase. These steps are taken to better evaluate and minimize the
credit risk of out-of-state purchases. Also, in an effort to increase loan
volume, the Bank's offering rates for its loan products have been reduced to
compete in the various markets. The Bank has experienced margin compression
due to decreased loan rates and anticipates that the margin compression will
continue for the foreseeable future until loan volume increases in the current
rising interest rate environment.
At September 30, 1999, residential real estate mortgages consisting of owner-
occupied residential loans made up 55% of the total loan portfolio, of which
39% of the residential loans are variable rate products, as compared to 60% and
51%, respectively, at September 30, 1998. Although the Bank has purchased
fixed rate loans, it is management's intent, where market opportunities arise,
to increase the volume in variable rate residential loans to reduce the
interest rate risk in this area.
At September 30, 1999, 17% of the Bank's total loan portfolio balance is
commercial real estate mortgages. Commercial real estate loans have minimal
interest rate risk as 87% of the portfolio consists of variable rate products.
At September 30, 1998, commercial real estate mortgages also made up 17% of the
total loan portfolio, of which 88% of the commercial real estate loans were
variable rate products. The Bank tries to mitigate credit risk by lending in
its local market area as well as maintaining a well collateralized position in
real estate.
Commercial loans made up 10% of the total loan portfolio, of which 44% are
variable rate instruments at September 30, 1999. At September 30, 1998
commercial loans also made up 10% of the total loan portfolio, of which 57%
were variable rate instruments. The repayment ability of commercial loans is
highly dependent on the cash flow of the customer's business. The Bank
mitigates losses by strictly adhering to the Company's underwriting and credit
policies.
Consumer and other loans made up 18% of the loan portfolio as of September 30,
1999 which compares to 13% at September 30, 1998. Since these loans are
primarily fixed rate products, they have interest rate risk when market rates
increase. These loans also have credit risk with minimal security. The
increase in consumer loans was primarily due to increased volume in indirect
automobile loans and mobile home loans, which together comprise approximately
<PAGE> 13
83% of the total consumer loans. The consumer loan department underwrites all
the indirect automobile loans and mobile home loans to mitigate credit risk.
The Bank primarily pays a nominal one time origination fee on the loans. The
fees are deferred and amortized over the life of the loans as a yield
adjustment. Management attempts to mitigate credit and interest rate risk by
keeping the products offered short-term, receiving a rate of return
commensurate with the risk, and lending to individuals in the Bank's known
market areas.
The Bank's allowance for loan losses was $3,046,000 as of September 30, 1999 as
compared to $2,924,00 as of June 30, 1999, representing 0.89% and 0.92% of
total loans, respectively. The Bank had non-performing loans totaling
$1,039,000 and $1,144,000 at September 30, 1999 and June 30, 1999,
respectively, which was 0.30% and 0.36% of total loans, respectively. The
Bank's allowance for loan losses was equal to 293% and 256% of the total non-
performing loans at September 30, 1999 and June 30, 1999, respectively. At
September 30, 1999, the Bank had approximately $689,000 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.
These substandard loans decreased by $52,000 when compared to the $741,000 at
June 30, 1999.
The following table represents the Bank's non-performing loans as of September
30, 1999 and June 30, 1999, respectively:
<TABLE>
<CAPTION>
September 30, June 30,
Description 1999 1999
_________________________ _______________ _______________
<C> <C> <C>
1-4 Family Mortgages $ 586,000 $ 293,000
Commercial Mortgages 316,000 654,000
Commercial Loans 0 0
Consumer Installment 137,000 197,000
_______________ _______________
Total non-performing $ 1,039,000 $ 1,144,000
=============== ===============
</TABLE>
The following table reflects the quarterly trend of total delinquencies 30 days
or more past due, including non-performing loans, for the Bank as a percentage
of total loans:
<TABLE>
<CAPTION>
09-30-99 06-30-99 03-31-99 12-31-98
__________ __________ __________ __________
<C> <C> <C> <C>
0.72% 0.76% 1.09% 1.27%
</TABLE>
At September 30, 1999, loans classified as non-performing of $1,039,000
included approximately $149,000 of loan balances that are current and paying as
<PAGE> 14
agreed, but which the Bank maintains as non-performing until the borrower has
demonstrated a sustainable period of performance.
The level of the allowance for loan losses as a percentage of total loans has
decreased due to the increase of loan volume, while the level of allowance for
loan losses as a percentage of non-performing loans increased at September 30,
1999, when compared to June 30,1999. The Company has experienced good growth
in the commercial and consumer loan portfolio during the September 30, 1999
quarter, however these type of loans have additional credit risk as compared to
real estate mortgage loans. Although these types of loans have increased, the
decrease in the allowance for loan losses as a percentage of total loans was
supported by management's ongoing analysis of the adequacy of the allowance for
loan losses and the continued historical trend of lower delinquency and non-
performing loans. Classified loans are also considered in management's
analysis of the adequacy of the allowance for loan losses. Based on reviewing
the credit risk and collateral of classified loans, management has considered
the risks of the classified portfolio and believes the allowance for loan
losses is adequate.
On a regular and ongoing basis, 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 Bank's allowance for loan losses. Such agencies may
require the Bank 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 Bank's most recent examination by the OTS was on November 30,
1998. At the time of the exam the regulators proposed no additions to the
allowance for loan losses.
At September 30, 1999, the Bank had a total of $15,790 in assets acquired
through foreclosure as compared to $193,850 as of June 30, 1999. The reduction
in assets acquired through foreclosure was due to a sale of real estate
property that was acquired through foreclosure.
Other assets increased by $152,824 from June 30, 1999 to September 30, 1999.
The increase was due to the increase in capitalized loan servicing rights and
the purchase of non-marketable investments.
Other liabilities increased by $1,627,385 compared to June 30, 1999, due
primarily to increases in accrued expenses, escrow accounts and a due to broker
resulting from the settlement of a security purchase.
Capital Resources and Liquidity
_______________________________
The Bank continues to attract new local deposit relationships. The Bank
<PAGE> 15
utilizes, as alternative sources of funds, brokered certificate of deposits
("C.D.s") when national deposit interest rates are less than the interest rates
on local market deposits. Brokered C.D.s are also used to supplement the growth
in earning assets. Brokered C.D.s carry the same risk as local deposit C.D.s,
in that both are interest rate sensitive with respect to the Bank's ability to
retain the funds. The Bank also utilizes FHLB advances, as alternative sources
of funds, when the interest rates of the advances are less than market deposit
interest rates. FHLB advances are also used to fund short-term liquidity
demands.
Total deposits were $225,272,883 and securities sold under repurchase
agreements were $13,051,036 as of September 30, 1999. These amounts represent
an increase of $5,908,848 and $1,183,197, respectively, compared to June 30,
1999. The increase in deposits was primarily due to the increase in time
deposits. The increase in time deposits was attributable to various special
offerings as well as normal growth from the branch market areas. The Bank has
devoted additional staffing to increase its balances in repurchase agreements.
Repurchase agreements enhances the Bank's ability to attain additional
municipal and commercial deposits, improving its overall liquidity position in
a cost effective manner. Brokered deposits represented $13,623,168 of the
total deposits at September 30, 1999, which increased by $164,911 compared to
the $13,458,257 balance as of June 30, 1999. Cross selling strategies are
employed by the Bank to enhance deposit growth. Even though deposit interest
rates have remained competitive, the rates of return are potentially higher
with other financial instruments such as mutual funds and annuities. Like
other companies in the banking industry, the Bank will be challenged to
maintain and or increase its core deposits.
Total advances from the FHLB were $115,387,173 as of September 30, 1999, an
increase of $11,505,457 compared to June 30, 1999. The cash received from the
increase in FHLB advances were utilized to fund the Bank's loan growth. The
Bank has unused borrowing capacity from the FHLB through its advances program.
The Bank's current advance availability, subject to the satisfaction of certain
conditions, is approximately $11,400,000 over and above the September 30, 1999
advances. Mortgages, free of liens, pledges and encumbrances are required to
be pledged to secure FHLB advances. The Bank's ability to access principal
sources of funds is immediate and with the borrowing capacity at the Federal
Home Loan Bank, the normal growth in bank deposits and repurchase agreements
and the immediate availability of the Bank's cash equivalents as well as
securities available for sale, management believes that the Company's available
liquidity resources are sufficient to support the Company's needs.
Total equity of the Company was $27,220,323 as of September 30, 1999 as
compared to $26,683,115 at June 30, 1999. Book value per common share was
$9.83 as of September 30, 1999 as compared to $9.64 at June 30, 1999. The
total equity to total assets ratio of the Company was 7.07% as of September 30,
1999 and 7.32% at June 30, 1999.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
contains various provisions intended to capitalize the Bank Insurance Fund
("BIF") and also affects a number of regulatory reforms that impact all insured
depository institutions, regardless of the insurance fund in which they
participate. Among other things, FDICIA grants the OTS broader regulatory
authority to take prompt corrective action against insured institutions that do
not meet capital requirements, including placing undercapitalized institutions
into conservatorship or receivership. FDICIA also grants the OTS broader
regulatory authority to take corrective action against insured institutions
<PAGE> 16
that are otherwise operating in an unsafe and unsound manner.
FDICIA defines specific capital categories based on an institution's capital
ratios. Although no capital requirements are imposed on the Company, the Bank
is subject to such requirements established by the OTS. The OTS has issued
regulations requiring a savings institution to maintain a minimum regulatory
tangible capital equal to 1.5% of adjusted total assets, core capital of 3.0%,
leverage capital of 4.0% and a risk-based capital standard of 8.0%. The prompt
corrective action regulations define specific capital categories based on an
institution's capital ratios. The capital categories, in declining order, are
"well capitalized", "adequately capitalized", "undercapitalized",
"significantly undercapitalized", and "critically undercapitalized". As of
September 30, 1999, the Bank met the definition of a well capitalized
institution. There are no conditions or events since that notification that
management believes has changed the institution's category.
At September 30, 1999, the Bank's regulatory capital was in compliance with
regulatory capital requirements as follows:
<TABLE>
<CAPTION>
To Be"Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
________ _______ _________ _______ __________ _______
<S> <C> <C> <C> <C> <C> <C>
(Dollars in Thousands)
As of September 30,
1999:
Tier 1 (Core) capital
(to risk weighted
assets) $ 26,297 9.53% $ 11,041 4.00% $ 16,562 6.00%
Tier 1 (Core) capital
(to total assets) $ 26,297 6.85% $ 15,367 4.00% $ 19,208 5.00%
Total Capital (to risk
weighted assets) $ 28,002 10.14% $ 22,083 8.00% $ 27,603 10.00%
</TABLE>
Management believes that there are adequate funding sources to meet its future
liquidity needs for the foreseeable future. Primary among these funding
sources are the repayment of principal and interest on loans, the renewal of
time deposits, and the growth in the deposit base. Management does not believe
that the terms and conditions that will be present at the renewal of these
funding sources will significantly impact the Company's operations, due to its
management of the maturities of its assets and liabilities. However, in order
to finance the continued growth of the Bank at current levels, additional funds
may be necessary in order to provide sufficient capital to fund loan growth.
In this regard, the Company has filed a registration statement with the SEC
pursuant to which a wholly-owned trust subsidiary intends to issue preferred
securities to investors, the net proceeds of which will be invested in junior
subordinated debentures of the Company. The junior subordinated debentures
will pay an interest rate equal to the dividend rate payable to the holders of
the trust's preferred securities. There can be no assurance that the Company
<PAGE> 17
will be able to issue the trust's preferred securities or obtain any other
additional financing, if needed, or, if available, that it can be obtained on
terms favorable to the Company.
Results of Operations
_____________________
Net income for the quarter ended September 30, 1999 was $801,722 or basic and
diluted earnings per share of $0.29, respectively. This compares to earnings
of $636,037 or basic earnings per share of $0.24 and diluted earnings per share
of $0.23 for the quarter ended September 30, 1998. The Company's net interest
income was $3,490,492 for the three months ended September 30, 1999, as
compared to $3,095,590 for the three months ended September 30, 1998, an
increase of $394,902. Total interest income increased $753,614 during the
three months ended September 30, 1999 compared to the three months ended
September 30, 1998. The increase in interest income was due primarily from an
increase in the volume of loans offset in part by a decrease in rates. The
increase in total interest expense of $358,712 for the three months ended
September 30, 1999 was due primarily from the increased volume of deposits and
borrowings offset in part by the decrease in rates.
The changes in net interest income are presented in the schedule below.
Northeast Bancorp
Rate/Volume Analysis for the three months ended
September 30, 1999 versus September 30, 1998
<TABLE>
<CAPTION>
Difference Due to
Volume Rate Total
_______________ _______________ _______________
<S> <C> <C> <C>
Investments $ 103,655 $ (1,339) $ 102,316
Loans 986,869 (285,154) 701,715
FHLB & Other Deposits (40,764) (9,653) (50,417)
_________________________________________________
Total 1,049,760 (296,146) 753,614
Deposits 398,975 (192,996) 205,979
Repurchase Agreements 74,628 (1,165) 73,463
Borrowings 118,686 (39,416) 79,270
_________________________________________________
Total 592,289 (233,577) 358,712
_________________________________________________
Net Interest Income $ 457,471 $ (62,569) $ 394,902
=================================================
</TABLE>
Rate/Volume amounts spread proportionately between volume and rate.
The Company's business primarily consists of the savings and loan activities of
the Bank. Accordingly, the success of the Company is largely dependent on its
ability to manage interest rate risk. This is the risk that changes in
interest rates may adversely affect net interest income. Generally, interest
rate risk results from differences in repricing intervals or maturities between
<PAGE> 18
interest-earning assets and interest-bearing liabilities, the components of
which comprise the interest rate spread. When such differences exist, a change
in the level of interest rates will most likely result in an increase or
decrease in net interest income. Management believes that the Bank is slightly
asset sensitive based on its own internal analysis which categorizes its core
deposits as long term liabilities which are then matched to long term assets.
As a result, the Bank will generally experience a contraction in its net
interest margins during a period of falling rates. Management believes that
the maintenance of a slight asset sensitive position is appropriate since
historically interest rates tend to rise faster than they decline.
Approximately 20% of the Bank's loan portfolio is comprised of floating rate
loans based on a prime rate index. Interest income on these existing loans
will increase as the prime rate increases, as well as on approximately 21% of
other loans in the Bank's portfolio that are based on short-term rate indices
such as the one-year treasury bill. An increase in short-term interest rates
will also increase deposit and FHLB advance rates, increasing the Company's
interest expense. Although the Company has experienced some net interest
margin compression, the impact on net interest income will depend on, among
other things, actual rates charged on the Bank's loan portfolio, deposit and
advance rates paid by the Bank and loan volume.
The provision for loan losses for the three months ended September 30, 1999
increased by $90,298 when compared to September 30, 1998. Management believes
the increase in the provision for loan losses was prudent to mitigate potential
credit risk, based on the growth in the loan portfolio.
Total non-interest income was $627,324 for the three months ended September 30,
1999 as compared to $506,521 for the three months ended September 30, 1998.
Service fee income was $265,183 for the three months ended September 30, 1999
as compared to $253,385 for the three months ended September 30, 1998. The
$11,798 service fee increase for the three months ended September 30, 1999 was
primarily due to an increase in deposit fee income due to increased deposit
accounts. Net gains from securities decreased by $11,238 for the three months
ended September 30, 1999 as compared to the three ended September 30, 1998.
The Company sold a larger volume of its securities during the three month
period ended September 30, 1998, taking advantage of the fluctuation in market
prices.
Other income was $356,976 for the three month period ended September 30, 1999,
which was an increase of $120,243 when compared to other income of $236,733 for
the three months ended September 30, 1998. The increase in other income in the
three months ended September 30,1999, was primarily due to increased fee income
from trust and investment services.
Total non-interest expense, for the Company was $2,587,545 for the three months
ended September 30, 1999 as compared to $2,402,657 for the three months ended
September 30, 1998. The increase in non-interest expense of $184,888 for the
three months ended September 30, 1999 as compared to the three months ended
September 30, 1998 was due, in part, to the following items: (I) compensation
expense increased by $107,061 primarily due to the additional staffing for the
new branch opened in Lewiston, Maine, the increased commission paid to brokers
in the investment sales division due to growth in sales revenue and increased
costs associated with the Company's health insurance and benefit plans, (II)
occupancy expense increased by $7,688 due to the additional lease expense in
opening the new Lewiston branch, (III) equipment expense increased by $51,174
due to the expenses associated with opening the new Lewiston branch as well as
<PAGE> 19
the conversion of the mainframe hardware and software and tele-communication
system.
Other expenses increased by $24,494 for the three months ended September 30,
1999 compared to the three months ended September 30, 1998. The increase was
primarily due to the following: an increase in professional fees of $50,000 due
to increased legal and audit services, courier services and data operations
services; an increase of $24,000 due to the Company's growth in tele-
communication lines; and an increase $24,000 in loan expenses due to the costs
associated with the increased loan volume other general expenses. These
increases were offset by the reduction of the Company's other general expenses.
The Company's income tax expense increased by $74,834 for the three months
ended September 30, 1999, when compared to the three months ended September 30,
1998. The increase in income tax expense is due to increased earnings before
tax.
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
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.
Year 2000
_________
The Company has addressed the Year 2000 issue. Many existing computer programs
and hardware configurations use only two digits to identify a year in the date
field. Since these programs did not take into consideration the upcoming
change in the century, many computer applications could create erroneous
results by the year 2000 if not corrected. The Year 2000 issue will affect
this Company and it will affect virtually all companies and organizations,
including the Company's borrowers. The Company has organized a Year 2000
committee to research, develop and implement a plan that will correct this
issue before the year 2000. The OTS, which primarily regulates thrifts, savings
and loan associations, and savings and loan holding companies, has issued a
formal regulation and comprehensive plan concerning the Year 2000 issue for
such financial institutions. The Company has adopted the regulatory
comprehensive plan which has the following phases:
Awareness Phase
_______________
This phase consisted of defining the Year 2000 problem; developing the
resources necessary to perform compliance work, establishing a Year 2000
program committee and developing an overall strategy that encompasses in-house
systems, service bureaus for systems that are outsourced, vendors, auditors,
customers, and suppliers (including correspondents). This phase has been
completed by the Company's committee.
Assessment Phase
________________
This phase involved an assessment of the size and complexity of the problem and
determination of the magnitude of the effort necessary to address the Year 2000
<PAGE> 20
issue. As part of this valuation, the Company evaluated all hardware,
software, networks, automated teller machines, other various processing
platforms, and customer and vendor interdependencies affected by the Year 2000
date change. The assessment was not limited to a review of information
systems, it also encompassed environmental systems that are dependent on
embedded microchips, such as security systems, elevators and vaults.
Management also evaluated the Year 2000 effect on other strategic business
initiatives, including the potential effect that mergers and acquisitions,
major system development, corporate alliances, and system interdependencies
will have on existing systems and/or the potential Year 2000 issues that may
arise from acquired systems. The financial institution or vendor should also
identify resource needs and established time frames for their Year 2000
efforts. The resource needs responding to this issue include appropriately
skilled personnel, contractors, vendor support, budget allocations, and
hardware capacity. Finally, contingency plans have been developed to cover
unforeseen obstacles during the renovation and validation phases and include
plans to deal with lesser priority systems that would be fixed later in the
renovation phase.
The assessment phase has been completed, but is considered an ongoing phase for
the Company. The Company has developed its contingency plan and will continue
to test the plan in the upcoming quarter. The Company has instituted a
comprehensive plan to communicate with all its borrowers that the Company
considers to be at risk concerning the Year 2000 issue. The Company considers
this plan necessary to mitigate the risk associated with borrowers not having
the ability to make loan payments due to a Year 2000 issue. The Company has
currently estimated the following costs associated with the Year 2000 issue,
(1) computer hardware replacement $40,000, (2) software replacement $42,000,
(3) testing and administrative costs $94,000, and (4) potential contingency
costs $15,000. As of September 30, 1999, the Company has incurred
approximately $37,333 of capitalized purchases and $98,500 of cumulative Year
2000 expenses. These costs are under continuous review and will be revised as
needed. There can be no assurance that actual costs will not exceed the
Company's estimates. During fiscal 1999, the Company has replaced its computer
mainframe, software and data communication systems, as planned, to accommodate
the growth of the Company through merger and acquisitions. The previous
mainframe and software had been fully depreciated through the normal course of
its depreciable life and the costs associated with the replacement of these
items was in the Company's general business plan for fiscal 1999. The
anticipated Year 2000 hardware and software costs indicated above are in
addition to the Company's costs associated with the replacement of the
mainframe, software and data communication system.
Renovation Phase
________________
This phase includes code enhancements, hardware and software upgrades, system
replacements, vendor certification, and other associated changes. Work will be
prioritized based on information gathered during the assessment phase. Each of
the Company's service providers and vendors have been contacted and has or will
provide information to the Company concerning their efforts to comply with the
Year 2000 issue. The Company has completed this phase. However, there can be
no assurance that these service providers or vendors will become Year 2000
compliant in a timely manner.
Validation Phase
________________
Testing is a multifaceted process that is critical to the Year 2000 project and
<PAGE> 21
inherent in each phase of the project management plan. This process includes
the testing of incremental changes to hardware and software components. In
addition to testing upgraded components, connections with other systems must be
verified, and all changes should be accepted by internal and external users.
Management will establish controls to assure the effective and timely
completion of all hardware and software testing prior to final implementation.
As with the renovation phase, the Company will be in ongoing discussions with
their vendors on the success of their validation efforts. The Company has
completed the testing of its critical systems and has completed this phase.
Implementation Phase
____________________
In this phase, systems should be validated as Year 2000 compliant and be
accepted by the business users. For any system failing certification, the
business effect must be assessed clearly and the organization's Year 2000
contingency plans should be implemented. Any potentially noncompliant mission-
critical system should be brought to the attention of executive management
immediately for resolution. In addition, this phase must ensure that any new
systems or subsequent changes to verified systems are compliant with Year 2000
requirements. The Company has completed the validation of its systems and has
completed this phase.
Risks Associated with Year 2000 and Contingency Plan
____________________________________________________
The Company recognizes the Year 2000 as a global issue with potentially
catastrophic results if not addressed. The Company has and will continue to
undertake all the necessary steps to protect itself and its customers
concerning the Year 2000 issue. Management is confident that all the
instituted phases will be completed and in place prior to the year 2000.
However, the inability of third party vendors to complete their year 2000
remediation process in a timely fashion could result in delays in processing
daily transactions and could result in a material and adverse effect on the
Company's results of operations and financial condition. The Company has
developed a contingency plan to address potential failures in these systems.
However, there can be no assurance that these plans will adequately protect the
Bank from adverse consequences of such failures.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
_________________________________________________________
There have been no material changes in the Company's market risk from June 30,
1999. For information regarding the Company's market risk, refer to the
Company's Annual Report on Form 10-K dated as of June 30, 1999.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
_________________
None.
Item 2. Changes in Securities
_____________________
None.
Item 3. Defaults Upon Senior Securities
_______________________________
None.
<PAGE> 22
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
None.
Item 5. Other Information
_________________
None.
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
September 30, 1999.
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.
Date: November 10, 1999 NORTHEAST BANCORP
By: /s/ James D. Delamater
__________________________________
James D. Delamater
President and CEO
By : /s/ Richard Wyman
_________________________________
Richard Wyman
Chief Financial Officer
NORTHEAST BANCORP
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION
11 Statement regarding computation of per share earnings
27 Financial data schedule
NORTHEAST BANCORP
Exhibit 11. Statement Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1999 September 30, 1998
____________________ ____________________
<S> <C> <C>
EQUIVALENT SHARES:
Weighted Average Shares Outstanding 2,770,439 2,615,515
Total Diluted Shares 2,787,785 2,791,569
Net Income $ 801,722 $ 636,037
Less Preferred Stock Dividend -- 17,500
____________________ ____________________
Income Available to Common
Stockholders $ 801,722 $ 618,537
==================== ====================
Basic Earnings Per Share
$ 0.29 $ 0.24
Diluted Earnings Per Share $ 0.29 $ 0.23
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 5,375,209
<INT-BEARING-DEPOSITS> 3,585,193
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,737,183
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 341,991,194
<ALLOWANCE> 3,046,000
<TOTAL-ASSETS> 385,068,611
<DEPOSITS> 225,272,883
<SHORT-TERM> 61,356,592
<LIABILITIES-OTHER> 3,526,085
<LONG-TERM> 67,692,728
0
0
<COMMON> 2,770,446
<OTHER-SE> 24,449,877
<TOTAL-LIABILITIES-AND-EQUITY> 385,068,611
<INTEREST-LOAN> 7,010,975
<INTEREST-INVEST> 293,123
<INTEREST-OTHER> 164,672
<INTEREST-TOTAL> 7,468,770
<INTEREST-DEPOSIT> 2,335,723
<INTEREST-EXPENSE> 3,978,278
<INTEREST-INCOME-NET> 3,490,492
<LOAN-LOSSES> 295,229
<SECURITIES-GAINS> 5,165
<EXPENSE-OTHER> 2,587,545
<INCOME-PRETAX> 1,235,042
<INCOME-PRE-EXTRAORDINARY> 1,235,042
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 801,722
<EPS-BASIC> 0.29
<EPS-DILUTED> 0.29
<YIELD-ACTUAL> 3.766
<LOANS-NON> 1,039,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 181,352
<LOANS-PROBLEM> 689,000
<ALLOWANCE-OPEN> 2,924,000
<CHARGE-OFFS> 231,584
<RECOVERIES> 58,355
<ALLOWANCE-CLOSE> 3,046,000
<ALLOWANCE-DOMESTIC> 77,200
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,968,800
</TABLE>
