FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-16272
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HOMETOWN BANCORPORATION, INC.
-----------------------------
(Exact name of Registrant as specified its charter)
DELAWARE 06-1199559
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
20 WEST AVENUE, P.O. BOX 1265, DARIEN, CT 06820
------------------------------------------------
(Address of principal executive offices)
(203) 656-2265
--------------
(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
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:
CLASS OUTSTANDING AT JULY 31, 1996
----- ----------------------------
Common Stock (Voting), $1 par
value 1,709,146
---------
<PAGE>
HOMETOWN BANCORPORATION, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. - Financial Statements
Consolidated Balance Sheet -
June 30, 1996 and December 31, 1995 3
Consolidated Statement of Income -
Three Months Ended June 30, 1996 and 1995 4
Consolidated Statement of Income -
Six Months Ended June 30, 1996 and 1995 5
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
ITEM 2. - Management's Discussion and Analysis
of Financial Condition and Results of Operations 7-11
PART II - OTHER INFORMATION
ITEM 6. - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
<PAGE>
Part I
ITEM 1. - FINANCIAL STATEMENTS
HOMETOWN BANCORPORATION, INC.
CONSOLIDATED BALANCE SHEET
(000'S OF DOLLARS EXCEPT PAR VALUE AND SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
1996 1995
---- ----
(unaudited)
ASSETS
Cash and due from banks $12,464 $9,891
Federal funds sold 1,690 ---
Investments available for sale, at fair value 70,037 93,696
Investments held to maturity (fair value:
$13,161 in 1996 and $14,763 in 1995) 13,526 15,100
Loans, less allowance for loan losses of
$2,569 in 1996 and $2,883 in 1995 99,402 103,407
Equipment and leasehold improvements, net of
accumulated depreciation of $2,072 in 1996
and $1,897 in 1995 1,510 1,456
Other real estate owned 735 603
Other assets 5,385 5,067
------- -------
Total Assets $204,749 $229,220
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $25,044 $26,064
NOW and money market accounts 73,088 69,200
Savings deposits 13,031 12,858
Certificates of deposit of $100 and over 10,178 10,954
Other time deposits 53,050 58,924
------- -------
174,391 178,000
Short-term borrowings 11,500 32,116
Accrued interest and other liabilities 1,614 2,286
------- -------
Total Liabilities 187,505 212,402
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock, par value $1; 2,000,000 shares
authorized, none issued and outstanding
Common Stock, par value $1; 10,000,000 shares
authorized, 1,833,381 issued and outstanding
in 1996 and 1995, respectively 1,833 1,833
Surplus 14,123 14,123
Retained earnings 2,411 1,784
Treasury stock - 124,235 and 126,935 shares
in 1996 and 1995, respectively, at cost (720) (735)
Unrealized (loss) on investments available
for sale, net (403) (187)
------- -------
Total Stockholders' Equity 17,244 16,818
------- -------
Total Liabilities and Stockholders' Equity $204,749 $229,220
======= =======
3
<PAGE>
HOMETOWN BANCORPORATION, INC.
CONSOLIDATED STATEMENT OF INCOME
(000'S OF DOLLARS EXCEPT PAR VALUE AND SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED
JUNE 30,
1996 1995
---- ----
Interest and dividend income: (unaudited) (unaudited)
Interest and fees on loans $2,139 $1,848
Interest on investment securities:
Obligations of U.S. Agencies 891 1,407
Other 432 539
Interest on federal funds sold 7 --
Dividends 27 36
--------- ---------
Total interest and dividend income 3,496 3,830
Interest expense:
Deposits 1,372 1,473
Short-term borrowings 258 500
Total interest expense 1,630 1,973
Net interest income 1,866 1,857
Provision for loan losses 25 --
Provision for OREO losses -- 20
--------- ---------
Net interest income after provision for
loan and OREO losses 1,841 1,837
Other operating revenue:
Deposit and other service charges 163 190
Mortgage origination fees 133 139
Securities gains -- 26
Other 50 13
--------- ---------
Net interest income and operating revenue 2,187 2,205
Other operating expenses:
Salaries and benefits 776 770
Occupancy expense 138 142
FDIC insurance premiums -- 101
Depreciation 91 92
Merger expense 137 --
Advertising and marketing 42 68
Foreclosure expense and cost of other
real estate owned 57 30
Other operating expenses 460 381
--------- ---------
Total other operating expenses 1,701 1,584
Income before taxes 486 621
Provision for federal and state income taxes 206 145
--------- ---------
Net income $280 $476
========= =========
Earnings per share:
Primary earnings per share $.16 $.27
========= =========
Average number of shares outstanding 1,790,366 1,764,957
========= =========
Fully diluted earnings per share $.16 $.27
========= =========
Average number of shares outstanding 1,792,390 1,771,249
========= =========
4
<PAGE>
HOMETOWN BANCORPORATION, INC.
CONSOLIDATED STATEMENT OF INCOME
(000'S OF DOLLARS EXCEPT PAR VALUE AND SHARE AMOUNTS)
FOR THE SIX MONTHS ENDED
JUNE 30,
1996 1995
---- ----
(unaudited) (unaudited)
Interest and dividend income:
Interest and fees on loans $4,442 $3,617
Interest on investment securities:
Obligations of U.S. Agencies 1,885 2,810
Other 891 1,044
Interest on federal funds sold 8 --
Dividends 55 69
--------- ---------
Total interest and dividend income 7,281 7,540
Interest expense:
Deposits 2,820 3,027
Short-term borrowings 624 812
--------- ---------
Total interest expense 3,444 3,839
Net interest income 3,837 3,701
Provision for loan losses 50 25
Provision for OREO losses -- 20
--------- ---------
Net interest income after provision for
loan and OREO losses 3,787 3,656
Other operating revenue:
Deposit and other service charges 325 363
Mortgage origination fees 212 195
Securities (losses) gains (2) 26
Other 108 46
--------- ---------
Net interest income and operating revenue 4,430 4,286
Other operating expenses:
Salaries and benefits 1,629 1,524
Occupancy expense 274 287
FDIC insurance premiums 1 203
Depreciation 175 183
Merger expense 137 --
Advertising and marketing 109 123
Foreclosure expense and cost of other
real estate owned 98 60
Other operating expenses 938 713
--------- ---------
Total other operating expenses 3,361 3,093
Income before taxes 1,069 1,193
Provision for federal and state income taxes 450 347
--------- ---------
Net income $619 $846
========= =========
Earnings per share:
Primary earnings per share $.35 $.48
========= =========
Average number of shares outstanding 1,785,547 1,763,665
========= =========
Fully diluted earnings per share $.35 $.48
========= =========
Average number of shares outstanding 1,789,227 1,770,302
========= =========
5
<PAGE>
HOMETOWN BANCORPORATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
FOR THE SIX MONTHS ENDED
JUNE 30,
1996 1995
---- ----
(unaudited) (unaudited)
Cash Flows from Operating Activities:
Net income $619 $846
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net 278 183
Provision for loan losses and OREO losses 50 45
Securities losses (gains) 2 (26)
(Increase) in other assets (268) (2,485)
(Decrease) in other liabilities (672) (800)
------- -------
Net cash provided (used) by operating activities 9 (2,237)
------- -------
Cash Flows from Investing Activities:
Proceeds from the maturity of investments held
to maturity 1,574 2,155
Proceeds from the maturity of investments
available for sale 14,546 5,498
Purchase of investment securities available
for sale (3,075) (22,600)
Proceeds from the sale of investments available
for sale 11,817 20,618
Net decrease (increase) in loans 3,955 (7,961)
(Increase) decrease in foreclosed assets (132) 58
(Purchase) of capital assets (229) (117)
------- -------
Net cash provided (used) by investing activities 28,456 (2,349)
------- -------
Cash Flows from Financing Activities:
Net increase in demand deposits, NOW
accounts, money market accounts and
savings accounts 3,041 3,849
Net (decrease) in certificates of deposit
and other time deposits (6,650) (1,924)
(Decrease) increase in short-term borrowings (20,616) 9,266
Exercise of stock options 23 75
------- -------
Net cash (used) provided by financing activities (24,202) 11,266
------- -------
Net increase in cash and cash equivalents 4,263 6,680
Cash and cash equivalents at the beginning of
the period 9,891 8,549
------- -------
Cash and cash equivalents at the end of
the period $14,154 $15,229
======= =======
6
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Hometown Bancorporation, Inc. (the "Company") was formed to become a
holding company for The Bank of Darien (the "Bank"), to raise additional
capital and to provide a vehicle for other permitted holding company
activities. On July 21, 1987, each share of the Bank's outstanding common
stock was exchanged for one share of Common Stock, par value $1.00, of the
Company. This transaction was recorded in a manner analogous to a pooling
of interests.
The Bank is the sole subsidiary of the Company. The business of the
Company consists of ownership of the capital stock of the Bank.
The Bank, which currently has offices in Darien and Westport,
Connecticut, is a full service commercial institution with a market area
within Southern Fairfield County. Its commitment to service excellence is
supported by a flexible approach to banking, immediate problem resolution
and local decision making with fast turnaround. The staff's commitment to
excellence is evidenced by courteous and efficient service.
The Bank, a member of the FDIC, offers a complete line of financial
services to the retail and commercial market segments. Deposit products
range from checking, NOW and money market accounts, savings accounts,
certificates of deposit, individual retirement accounts and Keoghs. Loan
products include personal and commercial loans, mortgages, home equity
lines of credit, secured and unsecured loans, MasterCard, VISA and Gold
MasterCard credit cards.
RESULTS OF OPERATIONS
The Company earned consolidated net income of $280,000 or $.16 per
share and $476,000 or $.27 per share for the three months ended June 30,
1996 and 1995, respectively. The Company earned consolidated net income
of $619,000 or $.35 per share and $846,000 or $.48 per share for the six
months ended June 30, 1996 and 1995, respectively. The decrease in net
income for the three and six month periods ended June 30, 1996 as compared
with 1995 was primarily the result of increases in other operating
expense, including direct merger-related expenses totaling $137,000
associated with the proposed merger of the Company with a wholly-owned
subsidiary of HUBCO, Inc., decrease in FDIC insurance and increased
provisions for federal and state income taxes.
NET INTEREST INCOME
Net interest income increased $9,000 and $136,000 for the three and
six months ended June 30, 1996, as compared to the three and six months
ended June 30, 1995, respectively. The increases in net interest income
were due primarily to a shift in asset allocation. During the fourth
quarter of 1995 and first quarter of 1996, the Company increased its loans
outstanding. Higher yielding loans improved the overall yield on
interest-earning assets, while maturing investments provided liquidity to
fund new lending. Additional liquidity for funding new lending was
achieved by a liquidation of securities from the Available-for-Sale
Investment portfolio during the first quarter of 1996. Below is the yield
analysis for the six months ended June 30, 1996 and for the year ended
December 31, 1995.
7
<PAGE>
HOMETOWN BANCORPORATION, INC.
YIELD ANALYSIS
(000'S OF DOLLARS)
<TABLE>
<CAPTION>
For the Six Months Ended For the Year Ended
June 30, 1996 December 31, 1995
Average Average
BALANCE INTEREST YIELD BALANCE INTEREST YIELD
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans $105,561 $4,441 8.44% $ 81,948 $7,625 9.30%
Investment securities 92,845 2,829 6.09% 124,325 7,403 5.95%
Federal funds sold 293 8 5.36% 990 52 5.25%
---------------------------------------------------------------
Total interest earning assets 198,699 7,278 7.34% 207,263 15,080 7.28%
---------------------------------------------------------------
Non interest earning assets:
Cash and due from banks 8,098 7,288
Allowance for loan losses (2,930) (2,990)
Other assets 6,553 7,130
-------- -------
Total assets $210,420 $218,691
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Savings deposits $12,568 125 2.00% $13,304 292 2.20%
NOW accounts 26,580 165 1.24% 25,448 364 1.43%
Money market deposits 43,082 727 3.38% 50,100 1,896 3.78%
Time deposits 66,566 1,725 5.20% 66,830 3,463 5.18%
Other interest bearing liabilities 21,867 701 6.41% 24,444 1,653 6.76%
---------------------------------------------------------------
Total interest bearing liabilities 170,663 3,443 4.04% 180,126 7,668 4.26%
---------------------------------------------------------------
Non interest bearing liabilities:
Demand deposits 22,034 22,209
Other liabilities 616 947
Stockholders' equity 17,107 15,409
-------- -------
Total liabilities and
stockholders' equity $210,420 $218,691
======== =======
----- -----
Net interest income $3,835 $7,412
===== =====
Net yield on interest earning assets 3.87% 3.58%
====== ========
</TABLE>
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The Company maintains an allowance for loan losses which is recorded
through a provision for loan losses. The provision for loan losses is
charged to operations based on management's assessment of such loan related
factors as loan risk, including collateral and liquidation value of that
collateral, loan type, current economic conditions and other pertinent
factors.
The Company, in its assessment of the allowance for loan losses, utilizes
a risk rating system. This system involves an ongoing review of the loan
portfolio that culminates in loans being assigned a risk factor based upon
various credit criteria. If the review indicates a
8
<PAGE>
possibility that some portion of the loan may result in a loss, a specific
allowance is established for the amount of the estimated loss. If the review
indicates that it is probable that some portion of the loan will result in a
loss, that portion of the loan is charged-off as a reduction of the loan and
allowance for loan losses balance. In determining the allowance for loan
losses for the balance of the portfolio, loans are classified as to industry
and collateral type with risk assessments made for each category of loans.
Reserve requirements are then established for each category and provided for
in the allowance for loan losses.
For the three months ended June 30, 1996 and 1995 the Company provided
$25,000 and $0, respectively, to the allowance for loan losses. For the six
months ended June 30, 1996 and 1995, the Company recorded a provision to
the allowance for loan losses of $50,000 and $25,000, respectively. The
following table illustrates nonperforming assets and allowance for loan loss
coverage ratios for the Company at June 30, 1996 and December 31, 1995.
June 30, December 31,
1996 1995
---- ----
(thousands of dollars)
Nonaccruing loans $861 $1,475
Other real estate owned, net 735 603
----- -----
Total nonperforming assets $1,596 $2,078
===== =====
Restructured and performing loans $518 $544
===== =====
Nonaccruing loans to gross loans 0.84% 1.39%
Nonperforming assets to total assets 0.78% 0.91%
Allowance for loan losses $2,569 $2,883
Coverage Ratios:
Allowance for loan losses to gross loans 2.52% 2.71%
Allowance for loan losses to
nonperforming assets 160.96% 138.74%
Had the nonaccruing loans in the table above been current, gross interest
income on these loans for the six months ended June 30, 1996 would have been
approximately $66,000. Interest income recorded on these loans during 1996
was $4,000.
OTHER OPERATING REVENUE
For the three and six months ended June 30, 1996, total other operating
revenue decreased $22,000 or 6% and increased $13,000 or 2%, as compared to
the three and six months ended June 30, 1994, respectively. The decline
in second quarter revenues for 1996 reflects the absence of investment
securities gains for the current period and a decline in fees due to
transaction volume on deposit accounts. The increase for the six months
ended June 30, 1996 as compared to the six months ended June 30, 1995
reflects an improvement in mortgage origination fees as compared to 1995.
The increase in mortgage origination fees during 1996 was the result of
improved primary and new market coverage during the first quarter of 1996.
Other operating income other, also improved $62,000 for the six month period
ended June 30, 1996 reflecting increased revenues related to OREO rental
income, increased fees on merchant credit card processing and other
retail-based services.
9
<PAGE>
OTHER OPERATING EXPENSES
For the three months ended June 30, 1996 total other operating expenses
increased $117,000 or 7% as compared to the three months ended June 30, 1995.
The increase for this period relates primarily to direct and indirect
expenses associated with the proposed merger. For the six months ended
June 30, 1996, other operating expenses increased $268,000 or 9% as compared
to the six months ended June 30, 1995. The increase in other operating
expenses for this six month period ended June 30, 1996 primarily reflects
direct and indirect charges relating to the pending merger and increased
salary and benefit costs.
For the three and six months ended June 30, 1996 salaries and benefits
expense increased $6,000 or 1% and $105,000 or 7%, respectively, versus the
three and six months ended June 30, 1995. The increase reflects increases
in the cost of comprehensive benefits, primarily medical and dental insurance
offered to employees, combined with unemployment and FICA taxes, and an
increase in full-time equivalent employees to support operations.
Occupancy expense remained stable for the three months ended June 30,
1996 as compared to the three months ended June 30, 1995 For the six months
ended June 30, 1996, occupancy expense declined $13,000 or 5% as compared to
the six months ended June 30, 1995. The decline reflects renegotiated term
on a lease contract on the Darien headquarters.
For the three and six months ended June 30, 1996, FDIC
insurance premiums improved $101,000 and $202,000 as compared to the three
and six months ended June 30, 1995. FDIC insurance premiums were reduced
for all members effective June 1, 1995 due to the successful recapitalization
of the Bank Insurance Fund. The current period results reflect the effect of
the new rate.
For the three and six months ended June 30, 1996, depreciation decreased
$1,000 and $8,000 as compared to the three and six months ended June 30, 1995.
For the six months ended June 30, 1996, advertising and marketing
decreased $14,000 or 11% as compared to the six months ended June 30, 1995.
The decline for both three and six month periods ended June 30, 1996 relate
to a reduction in advertising and special promotions which were run during
1995 in advance of the Bank's 10-year anniversary.
Foreclosure expense and cost of other real estate owned for the three and
six months ended June 30, 1996 increased $27,000 and $38,000 as compared with
1995, respectively. This increase in expense relates to an increase in
activity of taking possession and arranging for the disposal of properties
acquired in foreclosure.
LIQUIDITY AND CAPITAL RESOURCES
Total deposits of the Bank decreased $3,609,000 or 2% to $174,391,000 at
June 30, 1996 from December 31, 1995 when total deposits were $178,000,000.
Deposit balances decreased particularly for certificates of deposit reflecting
a marketwide trend of financial disintermediation of funds into the mutual
fund market.
In addition to deposits (the Bank's primary funding and liquidity source)
liquidity is managed through continuous maturity of earning assets, federal
funds lines of credit and Federal Home Loan Bank Advances.
The Company's total capital increased $426,000 from December 31, 1995 to
June 30, 1996, due to proceeds from the exercise of stock options, net income
of $619,000 for the six months ended June 30, 1996 offset, somewhat, by the
increase in the valuation reserve for investments available-for-sale in the
amount of $216,000. Illustrated below are the Company's capital to asset
ratios and the corresponding regulatory minimums.
10
<PAGE>
Hometown Bancorporation, Inc.
Capital Ratios
June 30, Regulatory
1996 Minimum
---- -------
Tier one leverage capital ratio 8.30% 4.00%
Risk-based capital ratio 18.13% 8.00%
The following summarizes the Company's investment portfolio by type of
security at June 30, 1996:
Carrying Approximate
Amount Fair Value
------ ----------
(thousands of dollars)
Investments held to maturity:
Other mortgage-backed securities $6,135 $5,854
U. S. Agency Mortgage-Backed Securities 4,437 4,420
Other U. S. Agency Obligations 2,954 2,887
------ ------
$13,526 $13,161
====== ======
Investments available for sale:
U. S. Agency Mortgage-Backed Securities $48,995 $48,462
Other mortgage-backed securities 15,931 15,815
U. S. Treasury Securities 3,068 3,013
Other U. S. Agency Obligations 1,015 1,030
Federal Home Loan Bank Stock 1,717 1,717
------ ------
$70,726 $70,037
====== ======
11
<PAGE>
Part II - Other Information
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NO. DESCRIPTION
4 Amendment No. 1, dated as of April 26, 1996, to Common Shares Rights
Agreement between Hometown Bancorporation, Inc. and Mellon Bank, N.A.
27 Financial Data Schedule
(b) Reports on Form 8-K
During the period ended June 30, 1996, the Company filed a Current
Report on Form 8-K dated April 28, 1996 reporting under Item 5 that
the Company had entered into a Merger Agreement pursuant to which
the Company would be acquired by HUBCO, Inc.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hometown Bancorporation, Inc.
Date: August 13, 1996 By: /s/ Kevin E. Gage
--------------------------------
Kevin E. Gage
President and
Chief Executive Officer
Date: August 13, 1996 By: /s/ Albert T. Jaronczyk
--------------------------------
Albert T. Jaronczyk
Senior Vice President and
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION
4 Amendment No. 1, dated as of April 26, 1996, to Common Shares Rights
Agreement between Hometown Bancorporation, Inc. and Mellon Bank, N.A.
27 Financial Data Schedule
<PAGE>
AMENDMENT NO. 1
TO
COMMON SHARES RIGHTS AGREEMENT
BETWEEN
HOMETOWN BANCORPORATION, INC.
AND
MELLON BANK, N.A.
AMENDMENT NO. 1, dated as of April 26, 1996 (this "AMENDMENT
NO. 1") to the Common Shares Rights Agreement, dated as of September 20,
1990 (the "RIGHTS AGREEMENT"), between HOMETOWN BANCORPORATION, INC., a
Delaware corporation (the "COMPANY"), and MELLON BANK, N.A., a national
banking association (the "RIGHTS AGENT").
WHEREAS, , Hometown and the Rights Agent reserved the right in
Section 27 of the Rights Agreement to supplement or amend the Rights
Agreement prior to the occurrence of a Distribution Date (as defined in
the Rights Agreement); and
WHEREAS, as of the date of this Amendment No. 1 a Distribution
Date has not occurred; and
WHEREAS, the Company and the Rights Agent wish to amend the
Rights Agreement to modify the definition of "Shares Acquisition Date"
as used in the Rights Agreement;
NOW, THEREFORE, the Company and the Rights Agent hereby agree
as follows:
DEFINED TERMS. Capitalized terms which are used in this
Amendment No. 1 and not otherwise defined herein are used as defined in
the Rights Agreement.
DEFINITION OF "SHARES ACQUISITION DATE." Section 1(jj) of
the Rights Agreement is hereby amended to read in its entirety as
follows:
(jj) "Shares Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such;
PROVIDED, HOWEVER, that if the transaction pursuant to which a
Person or an Affiliate or Associate of such Person would become
an Acquiring Person is approved prior to the consummation
thereof by action of a majority of the Continuing Directors,
<PAGE>
2
the consummation of such transaction and the public announcement
thereof shall not constitute a Shares Acquisition Date.
CONFIRMATION OF RIGHTS AGREEMENT. Except as amended by
this Amendment No. 1, the provisions of the Rights Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company and the Rights Agent have
caused this Amendment No. 1 to be duly executed as of the day and year
first above written.
HOMETOWN BANCORPORATION, INC.
By: /S/ KEVIN E. GAGE
-------------------------------------
Kevin E. Gage
President and Chief Executive Officer
MELLON BANK, N.A.,
as Rights Agent
By: /S/ TRACIE L. VICKI
-------------------------------------
Name: Tracie L. Vicki
Title: Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COMPANY AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,464
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,690
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 70,037
<INVESTMENTS-CARRYING> 13,526
<INVESTMENTS-MARKET> 13,161
<LOANS> 101,971
<ALLOWANCE> 2,569
<TOTAL-ASSETS> 204,749
<DEPOSITS> 174,391
<SHORT-TERM> 11,500
<LIABILITIES-OTHER> 1,614
<LONG-TERM> 0
0
0
<COMMON> 1,833
<OTHER-SE> 15,411
<TOTAL-LIABILITIES-AND-EQUITY> 204,749
<INTEREST-LOAN> 4,442
<INTEREST-INVEST> 2,831
<INTEREST-OTHER> 8
<INTEREST-TOTAL> 7,281
<INTEREST-DEPOSIT> 2,820
<INTEREST-EXPENSE> 3,444
<INTEREST-INCOME-NET> 3,837
<LOAN-LOSSES> 50
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 3,361
<INCOME-PRETAX> 1,069
<INCOME-PRE-EXTRAORDINARY> 619
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 619
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
<YIELD-ACTUAL> 7.34
<LOANS-NON> 861
<LOANS-PAST> 0
<LOANS-TROUBLED> 518
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<CHARGE-OFFS> 449
<RECOVERIES> 85
<ALLOWANCE-CLOSE> 2,569
<ALLOWANCE-DOMESTIC> 2,569
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>