<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2000
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------------------------------------------
Commission file number. 0-15752
---------------------------------------------------------
CENTURY BANCORP, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
COMMONWEALTH OF MASSACHUSETTS 04-2498617
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 MYSTIC AVENUE, MEDFORD, MA 02155
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(781)391-4000
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 and 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.
X Yes No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of June 30, 2000:
CLASS A COMMON STOCK, $1.00 PAR VALUE 3,416,000 SHARES
CLASS B COMMON STOCK, $1.00 PAR VALUE 2,144,350 SHARES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: JULY 28, 2000 CENTURY BANCORP, INC.
-------------------------------- --------------------------------
(Registrant)
/s/ Paul V. Cusick, Jr. /s/ Kenneth A. Samuelian
------------------------------------- --------------------------------
PAUL V. CUSICK, JR. KENNETH A. SAMUELIAN
VICE PRESIDENT AND TREASURER VICE PRESIDENT AND CONTROLLER,
(PRINCIPAL FINANCIAL OFFICER) CENTURY BANK & TRUST COMPANY
(CHIEF ACCOUNTING OFFICER)
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Century Bancorp, Inc.
Page
Index Number
----- ------
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets:
June 30, 2000 and December 31, 1999. 3
Consolidated Statements of Income:
Three (3) and Six (6) Months Ended June 30,
2000 and 1999. 4
Consolidated Statements of Changes in Stockholders
Equity: Six (6) Months Ended June 30,
2000 and 1999. 5
Consolidated Statements of Cash Flows:
Six (6) Months Ended June 30,
2000 and 1999. 6
Notes to Consolidated Financial
Statements 7 - 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 9 - 12
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK 12
PART II. OTHER INFORMATION
Item 1 through Item 6 13
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<PAGE> 3
PART I - Item 1
<TABLE>
<CAPTION>
Century Bancorp, Inc. - Consolidated Balance Sheets (unaudited)
---------------------------------------------------------------------------------------------------------------
(000's) June 30, Dec. 31,
ASSETS 2000 1999
-------- --------
<S> <C> <C>
Cash and due from banks $ 45,050 $ 34,512
Federal funds sold and interest-bearing deposits in other banks 24 32,016
--------- ---------
Total cash and cash equivalents 45,074 66,528
--------- ---------
Securities available-for-sale, amortized cost $268,703 and
$263,690, respectively 260,075 254,975
Securities held-to-maturity, market value $167,125 and
$146,603, respectively 172,705 152,599
Loans, net of unearned discount:
Commercial & industrial 91,201 77,166
Construction & land development 22,876 21,682
Commercial real estate 211,114 209,332
Industrial revenue bonds 156 190
Residential real estate 82,560 82,968
Consumer 12,092 11,678
Home equity 19,564 19,227
Overdrafts 3,630 482
--------- ---------
Total loans, net of unearned discount 443,193 422,725
Less: allowance for loan losses 4,754 7,646
--------- ---------
Net loans 438,439 415,079
Bank premises and equipment, net 8,849 9,473
Accrued interest receivable 7,202 6,624
Other assets 17,583 20,255
--------- ---------
Total assets $ 949,927 $ 925,533
========= =========
LIABILITIES
Deposits:
Demand deposits $ 162,484 $ 143,280
Savings and NOW deposits 165,188 152,089
Money market accounts 79,355 77,729
Time deposits 244,380 270,575
--------- ---------
Total deposits 651,407 643,673
Securities sold under agreements to repurchase 63,740 59,480
Federal Home Loan Bank (FHLB) borrowings and other borrowed funds 133,088 117,594
Other liabilities 10,138 15,740
Long term debt 28,750 28,750
--------- ---------
Total liabilities 887,123 865,237
STOCKHOLDERS' EQUITY
Class A common stock, $1.00 par value per share; authorized
10,000,000 shares; issued 3,754,600 and 3,721,850, respectively 3,755 3,722
Class B common stock, $1.00 par value per share; authorized
5,000,000 shares; issued 2,191,900 and 2,196,900, respectively 2,192 2,197
Additional paid-in capital 11,093 11,017
Retained earnings 56,514 52,188
Treasury stock, Class A, 338,600 and 200,600 shares, at cost, respectively (5,101) (3,122)
Treasury stock, Class B, 47,550 shares, each period, at cost, respectively (41) (41)
--------- ---------
68,412 65,961
Accumulated other comprehensive (loss) (5,608) (5,665)
--------- ---------
Total stockholders' equity 62,804 60,296
--------- ---------
Total liabilities and stockholders' equity $ 949,927 $ 925,533
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements 3 of 13
<PAGE> 4
<TABLE>
<CAPTION>
Century Bancorp, Inc. - Consolidated Statements of Income (unaudited)
------------------------------------------------------------------------------------------------------------------------------------
(000's except share data) Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income
Loans $ 9,828 $ 8,836 $ 19,255 $ 17,484
Securities held-to-maturity 2,663 2,368 5,022 4,693
Securities available-for-sale 4,009 3,323 7,923 6,337
Federal funds sold and interest-bearing deposits in other banks 986 56 1,098 219
---------- ---------- ---------- ----------
Total interest income 17,486 14,583 33,298 28,733
Interest expense
Savings and NOW deposits 1,057 1,060 2,037 1,986
Money market accounts 551 539 1,091 1,110
Time deposits 4,194 2,769 7,249 5,696
Securities sold under agreements to repurchase 725 403 1,422 818
FHLB borrowings, other borrowed funds and long term debt 2,113 1,710 4,167 3,083
---------- ---------- ---------- ----------
Total interest expense 8,640 6,481 15,966 12,693
---------- ---------- ---------- ----------
Net interest income 8,846 8,102 17,332 16,040
Provision for loan losses 375 225 675 450
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 8,471 7,877 16,657 15,590
Other operating income
Service charges on deposit accounts 529 455 986 880
Lockbox fees 602 517 1,004 908
Brokerage commissions 415 417 855 767
Other income 514 143 674 275
---------- ---------- ---------- ----------
Total other operating income 2,060 1,532 3,519 2,830
---------- ---------- ---------- ----------
Operating expenses
Salaries and employee benefits 3,986 3,555 7,814 7,070
Occupancy 368 366 777 764
Equipment 413 337 779 672
Other 1,558 1,491 2,942 2,843
---------- ---------- ---------- ----------
Total operating expenses 6,325 5,749 12,312 11,349
---------- ---------- ---------- ----------
Income before income taxes 4,206 3,660 7,864 7,071
Provision for income taxes 1,510 1,375 2,817 2,650
---------- ---------- ---------- ----------
Net income $ 2,696 $ 2,285 $ 5,047 $ 4,421
========== ========== ========== ==========
------------------------------------------------------------------------------------------------------------------------------------
Share data:
Weighted average number of shares outstanding, basic 5,603,086 5,814,533 5,637,678 5,820,000
Weighted average number of shares outstanding, diluted 5,603,086 5,842,324 5,638,674 5,850,962
Net income per share, basic $ 0.48 $ 0.39 $ 0.90 $ 0.76
Net income per share, diluted $ 0.48 $ 0.39 $ 0.90 $ 0.76
Cash dividends declared:
Class A common stock $ 0.0800 $ 0.0800 $ 0.1600 $ 0.1400
Class B common stock $ 0.0370 $ 0.0370 $ 0.0740 $ 0.0540
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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<PAGE> 5
<TABLE>
<CAPTION>
Century Bancorp, Inc. - Consolidated Statement of Changes in Stockholders' Equity (unaudited)
------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Class A Class B Additional Treasury Treasury Other Total
Common Common Paid-In Retained Stock Stock Comprehensive Stockholders'
Three months ended June 30, Stock Stock Capital Earnings Class A Class B Income (Loss) Equity
-------------------------------------------------------------------------------------------
(000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999
Balance at December 31, 1998 $3,673 $2,227 $10,965 $44,451 $ (136) $(41) $ (88) $61,051
Net income -- -- -- 4,421 -- -- -- 4,421
Other comprehensive income, net of tax:
Increase in unrealized loss on
securities available-for-sale -- -- -- -- -- -- (3,157) (3,157)
-------
Comprehensive income 1,264
Conversion of Class B common stock to
Class A common stock, 28,580 shares 29 (29)
Stock options exercised, 16,700 shares 17 -- 44 -- -- -- -- 61
Treasury stock repurchase, 20,000 shares -- -- -- -- (348) -- -- (348)
Cash dividends, Class A common stock,
$.140 per share -- -- -- (511) -- -- -- (511)
Cash dividends, Class B common stock,
$.054 per share -- -- -- (117) -- -- -- (117)
----------------------------------------------------------------------------------------
Balance at June 30, 1999 $3,719 $2,198 $11,009 $48,244 $ (484) $(41) $(3,245) $61,400
========================================================================================
2000
Balance at December 31, 1999 $3,722 $2,197 $11,017 $52,188 $(3,122) $(41) $(5,665) $60,296
Net income -- -- -- 5,047 -- -- -- 5,047
Other comprehensive income, net of tax:
Decrease in unrealized loss on
securities available-for-sale -- -- -- -- -- -- 57 57
-------
Comprehensive income 5,104
Conversion of Class B common stock to
Class A common stock, 5,000 shares 5 (5) -- -- -- -- -- --
Stock options exercised, 27,750 shares 28 -- 76 -- -- -- -- 104
Treasury stock repurchases, 138,000 shares -- -- -- -- (1,979) -- -- (1,979)
Cash dividends, Class A common stock,
$.16 per share -- -- -- (563) -- -- -- (563)
Cash dividends, Class B common stock,
$.074 per share -- -- -- (158) -- -- -- (158)
----------------------------------------------------------------------------------------
Balance at June 30, 2000 $3,755 $2,192 $11,093 $56,514 $(5,101) $(41) $(5,608) $62,804
========================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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<PAGE> 6
<TABLE>
<CAPTION>
Century Bancorp, Inc. - Consolidated Statements of Cash Flows (unaudited) 2000 1999
---------------------------------------------------------------------------------------------------------------
For the six months ended
June 30,
(000's)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,047 $ 4,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 675 450
(Increase) decrease in deferred income taxes 635 (512)
Net depreciation and amortization 1,122 887
(Increase) decrease in accrued interest receivable (578) 221
Decrease (increase) in other assets 1,547 (820)
Proceeds from sales of loans 18 52
Gain on sales of loans -- (1)
Gain on sale of building (386) --
Increase in other liabilities 398 516
-------- --------
Net cash provided by operating activities 8,478 5,214
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities available-for-sale 6,041 52,588
Purchase of securities available-for-sale (11,050) (61,902)
Proceeds from maturities of securities held-to-maturity 6,796 40,399
Purchase of securities held-to-maturity (26,934) (42,739)
Decrease in payable for investments purchased (6,000) (17,992)
Net increase in loans (23,888) (13,112)
Proceeds from sale of building 1,342 --
Capital expenditures (1,131) (400)
-------- --------
Net cash used in investing activities (54,824) (43,158)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in time deposits (26,195) (15,880)
Net increase (decrease) in demand, savings, money market and NOW deposits 33,929 (27,159)
Net proceeds from the issuance of common stock 104 61
Treasury stock repurchases (1,979) (348)
Cash Dividends (721) (628)
Net increase (decrease) in securities sold under agreements to repurchase 4,260 (14,280)
Net increase in FHLB borrowings and other borrowed funds 15,494 77,249
-------- --------
Net cash provided by financing activities 24,892 19,015
-------- --------
Net decrease in cash and cash equivalents (21,454) (18,929)
Cash and cash equivalents at beginning of year 66,528 61,019
-------- --------
Cash and cash equivalents at end of period $ 45,074 $ 42,090
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 15,498 $ 12,711
Income taxes 831 2,214
Change in unrealized losses on securities available-for-sale, net of taxes $ 57 $ (3,157)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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<PAGE> 7
Century Bancorp Inc.
Notes to Consolidated Financial Statements
BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited
interim consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments,
which are necessary to present a fair statement of the
results for the interim period presented of Century
Bancorp, Inc. (the "Company") and its wholly owned
subsidiary, Century Bank and Trust Company (the "Bank").
The results of operations for the interim period ended
June 30, 2000, are not necessarily indicative of results
for the entire year. It is suggested that these
statements be read in conjunction with the consolidated
financial statements and the notes thereto included in
the Company's Annual Report on Form 10K for year ended
December 31, 1999.
The financial statements have been prepared in
conformity with generally accepted accounting principles
and to general practices within the banking industry. In
preparing the financial statements, management is
required to make estimates and assumptions that affect
the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for
the period. Actual results could differ from those
estimates.
Material estimates that are susceptible to change in the
near-term relate to the allowance for losses on loans.
Management believes that the allowance for losses on
loans is adequate based on independent appraisals and
review of other factors associated with the assets.
While management uses available information to recognize
losses on loans, future additions to the allowance for
loans may be necessary based on changes in economic
conditions. In addition, regulatory agencies
periodically review the Company's allowance for losses
on loans. Such agencies may require the Company to
recognize additions to the allowance for loans based on
their judgements about information available to them at
the time of their examination.
.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary,
the Bank. The Company provides a full range of banking
services to consumer, business and municipal customers
in Massachusetts. As a bank holding company, the Company
is subject to the regulation and supervision of the
Federal Reserve Board. The Bank, a state chartered
financial institution, is subject to supervision and
regulation by applicable state and federal banking
agencies, including the Federal Reserve Board, the
Federal Deposit Insurance Corporation (the "FDIC"), and
the Massachusetts Division of Banks.
The Bank is also subject to various requirements and
restrictions under federal and state law, including
requirements to maintain reserves against deposits,
restrictions on the types and amounts of loans that may
be granted and the interest that may be charged thereon,
and limitations on the types of investments that may be
made and the types of services that
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<PAGE> 8
may be offered. Various consumer laws and regulations
also affect the operations of the Bank. In addition to
the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve
Board as it attempts to control the money supply and
credit availability in order to influence the economy.
All aspects of the Company's business are highly
competitive. The Company faces aggressive competition
from other lending institutions and from numerous other
providers of financial services.
=======================================================
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<PAGE> 9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
OVERVIEW For the quarter ended and year-to-date ended June 30, 2000.
Earnings for the second quarter ended June 30, 2000 were $2.7
million, an increase of 18.0% when compared with the second
quarter 1999 earnings of $2.3 million. Diluted earnings per
share for the second quarter 2000 were $0.48 versus $0.39 for
the second quarter of 1999. The increase was attributable to
balance sheet growth and a pretax realized gain of $386,000
associated with the sale of Company owned real estate.
For the six months ending June 30, 2000, earnings were $5.0
million an increase of 14.2% when compared with the same
period last year earnings of $4.4 million. Diluted earnings
per share for the first six months were $0.90 versus $0.76 for
the first six months of 1999. The increase was attributable to
balance sheet growth and a pretax realized gain of $386,000
associated with the sale of Company owned real estate.
Total assets were $949.9 million compared to $925.5 million at
December 31, 1999. The increase was attributable to loan and
investment growth as well as deposit and borrowings growth.
During the fourth quarter of 1999, the Company announced plans
to continue its stock repurchase plan. Under the program, the
Company is authorized to repurchase up to 225,000 shares, or
less than 7%, of Century Bancorp Class A Common Stock. The
program expires on October 21, 2000. Through the end of the
second quarter 2000, the Company has repurchased 216,300
shares.
FINANCIAL CONDITION
LOANS On June 30, 2000 total loans outstanding, net of unearned
discount, were $443.2 million, an increase of 4.8% from the
total on December 31, 1999. At June 30, 2000 commercial real
estate loans accounted for 47.6% and residential real estate
loans accounted for 18.6% of total loans. Construction loans
increased $22.9 million at June 30, 2000 from $21.7 million on
December 31, 1999.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was 1.07% of total loans on June
30, 2000 compared with 1.81% on December 31, 1999. Net
charge-offs for the six month period ended June 30, 2000 were
$3.6 million, compared with $75 thousand for the same period
in 1999. The increase in net charge-offs primarily reflects
the deterioration with one borrower's credit quality whose
total relationship amounted to $4.1 million. Management
reported this credit in the third quarter 10Q, placed it to
nonaccrual loans during the fourth quarter of 1999 and
subsequently charged-off $3.5 million during the first quarter
of 2000.
Management believes that the allowance for loan losses is
adequate. Management uses available information to provide for
losses but recognizes that changes in economic conditions may
result in additional losses and additional loss provisions.
Also, the allowance is reviewed in conjunction with regulatory
examinations. These reviews may require the Company to
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<PAGE> 10
Management's Discussion and Analysis of Financial Condition
and Results of Operation (con't.)
make additional provisions to the allowance based on
judgements made by the regulators.
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
(Dollars In Thousands)
<S> <C> <C>
Nonaccruing loans $ 298 $4,621
Loans past due 90 days
or more $ 76 $ 188
Nonaccruing loans as a
percentage of total loans 0.07% 1.09%
</TABLE>
The decrease in nonaccruing loans was mainly attributable to
the previously mentioned $3.5 million charge-off that occurred
during the first quarter of 2000.
INVESTMENTS Management continually evaluates its investment alternatives
in order to properly manage the overall balance sheet mix. The
timing of purchases, sales and reinvestment, if any, will be
based on various factors including expectation of movements in
market interest rates and loan demand. Notwithstanding these
events, it is the intent of management to grow the earning
asset base through loan originations, loan purchases or
investment acquisitions while funding this growth through a
mix of retail deposits, FHLB advances, and retail repurchase
agreements.
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
(Dollars In Thousands)
<S> <C> <C>
SECURITIES AVAILABLE-FOR-SALE
U.S. Government and
Agencies $215,325 $209,414
Other Bonds 16,913 16,197
Mortgage-backed Securities 27,837 29,364
-------- --------
Total Securities Available-for Sale $260,075 $254,975
======== ========
SECURITIES HELD-TO-MATURITY
U.S. Government and
Agencies $ 83,975 $ 82,824
Other bonds 25 50
Mortgage-backed Securities 88,705 69,725
-------- --------
Total Securities Held-to-Maturity $172,705 $152,599
======== ========
</TABLE>
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<PAGE> 11
Management's Discussion and Analysis of Financial Condition
and Results of Operation (con't.)
SECURITIES HELD-TO-MATURITY
The securities held-to-maturity portfolio totaled $172.7
million on June 30, 2000, an increase of 13.2% from the total
on December 31, 1999. The portfolio is concentrated in United
States Treasury and Agency securities and has an estimated
weighted average maturity of 4.4 years. Total Securities
held-to-maturity increased primarily as a result of growth in
borrowings.
SECURITIES AVAILABLE-FOR-SALE
The securities available-for-sale portfolio totaled $260.1
million at June 30, 2000, an increase of 2.0% from December
31, 1999. The portfolio is concentrated in United States
Treasury and Agency securities and has an estimated weighted
average maturity of 3.5 years.
DEPOSITS AND BORROWED FUNDS
On June 30, 2000 deposits totaled $651.4 million, representing
a 1.2% increase in total deposits from December 31, 1999.
Total deposits increased primarily as a result of core deposit
growth. Borrowed funds totaled $196.8 million compared to
$177.1 million at December 31, 1999. The majority of the
increase was an increase in borrowings from the Federal Home
Loan Bank which were primarily used for leveraged balance
sheet transactions.
RESULTS OF OPERATIONS
NET INTEREST INCOME
For the three month period ended June 30, 2000 net interest
income totaled $8.8 million, an increase of 9.2% from the
comparable period in 1999. For the six month period ended June
30, 2000 net interest income totaled $17.3 million, an
increase of 8.1% from the comparable period in 1999. Interest
income was affected positively by balance sheet growth. The
net yield on average earning assets on a fully taxable
equivalent basis decreased to 4.02% in the first six months of
2000 from 4.11% during the same period in 1999. The decrease
was mainly attributable to leveraged balance sheet
transactions.
PROVISION FOR LOAN LOSSES
For the three month period ended June 30, 2000 the loan loss
provision totaled $375 thousand compared to $225 thousand for
the same period last year. For the six month period ended June
30, 2000 the loan loss provision totaled $675 thousand
compared to $450 thousand for the same period in 1999.
Loan loss provision increased due to growth in the loan
portfolio. The Company's loan loss allowance as a percentage
of total loans outstanding has decreased from 1.58% at June
30, 1999 to 1.07% at June 30, 2000.
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<PAGE> 12
Management's Discussion and Analysis of Financial Condition
and Results of Operation (con't.)
NON-INTEREST INCOME AND EXPENSE
Other operating income for the quarter ended June 30, 2000 was
$2.1 million compared to $1.5 million for the second quarter
of 1999. The Company benefited from a pretax gain of $386
thousand associated with the sale of Company owned real
estate. For the six month period ending June 30, 2000 other
operating income totaled $3.5 million compared to $2.8 million
for the same period in 1999. This was mainly attributable to
the previously mentioned pretax realized gain of $386 thousand
associated with the sale of Company owned real estate.
During the second quarter 2000, operating expenses increased
by $576 thousand to $6.3 million or 10.0% from the same
quarter last year. Most of the increase was in staff levels as
well as merit increases in salaries and employee benefits with
the remainder in all other expenses. For the six month
period ended June 30, 2000 operating expenses totaled $12.3
million compared to $11.3 million for the same period in 1999.
Most of the increase was in salaries and employee benefits
with the remainder in all other expenses.
INCOME TAXES
For the second quarter of 2000, the Company's income taxes
totaled $1.5 million on pretax income of $4.2 million for an
effective tax rate of 35.9%. For last year's corresponding
quarter, the Company's income taxes totaled $1.4 million on
pretax income of $3.7 million for an effective tax rate of
37.6%. For the six month period ended June 30, 2000 income
taxes totaled $2.8 million on a pretax income of $7.9 million
for an effective tax rate of 35.8%. For last year's
corresponding period income taxes totaled $2.7 million on
pretax income of $7.1 million for an effective tax rate of
37.5%. The tax rate is lower in the current period due to
strategic tax savings initiatives.
==========================================================
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The response is incorporated herein by reference from the
discussion under the subcaption "Market Risk and Asset
Liability Management" of the caption "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
on pages 9 and 10 of the Annual Report which is incorporated
herein by reference.
==========================================================
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<PAGE> 13
PART II - OTHER INFORMATION
Item 1 Legal proceedings - The Company is not engaged in any legal
proceedings of a material nature at the present time. From
time to time, the Company is party to routine legal
proceedings within the normal course of business. Such routine
legal proceedings, in the aggregate, are believed by
management to be immaterial to the Company's financial
condition and results of operation.
Item 2 Change in securities - Not applicable
Item 3 Defaults upon senior securities - Not applicable
Item 4 Submission of matters to a vote - Not applicable
Item 5 Other information - Not applicable
Item 6 Exhibits and reports on form 8-K - Not applicable
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