<PAGE>
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 March 31, 1995; 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: 0-15732
Central Bancorporation, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1653291
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 West Rosedale, Fort Worth, Texas 76104
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(817) 347-8102
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Texas Security Bancshares, Inc.
- --------------------------------------------------------------------------------
(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
----- -----
The number of shares of common stock, $2.50 par value, outstanding at
March 31, 1995 was 2,616,723 shares.
<PAGE>
CENTRAL BANCORPORATION, INC.
----------------------------
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
-------
Consolidated Balance Sheets at March 31, 1995
(unaudited) and at December 31, 1994 (audited) 3
Consolidated Statements of Earnings for the Three Months
Ended March 31, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1995 and 1994 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of
------- Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 22
-------
Item 2. Change in Securities 22
-------
Item 3. Defaults Upon Senior Securities 22
-------
Item 4. Submission of Matters to a Vote of
------- Security Holders 22
Item 5. Other Information 23
-------
Item 6. Exhibits and Reports on Form 8-K 23
-------
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 (UNAUDITED) AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
Assets 1995 1994
- ------ ------------ ------------
<S> <C> <C>
Cash and due from banks $ 44,912,083 49,348,407
Interest bearing deposits in other banks 161,514 267,925
Federal funds sold 25,000,000 25,100,000
------------ -----------
Total cash and cash equivalents 70,073,597 74,716,332
------------ -----------
Investment securities 513,713,951 504,687,973
Loans:
Loans, net of unearned discount 284,449,242 272,825,001
Less allowance for loan losses 3,866,489 3,871,653
------------ -----------
Net loans 280,582,753 268,953,348
------------ -----------
Premises and equipment, net 21,444,224 21,090,898
Accrued interest receivable 6,707,022 7,028,363
Other real estate owned, net 89,392 352,211
Excess of cost over net assets acquired,
net of applicable amortization 858,384 907,752
Federal income taxes receivable - 523,524
Deferred income taxes 2,517,452 3,626,813
Other assets 2,348,390 2,980,357
------------ -----------
$898,335,165 884,867,571
============ ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits:
Noninterest-bearing demand $132,752,147 140,459,818
Interest-bearing demand 268,255,535 252,959,937
Savings 63,562,547 67,145,836
Time, $100,000 and over 54,309,591 53,383,374
Other time 222,042,787 212,298,950
------------ -----------
Total deposits 740,922,607 726,247,915
------------ -----------
Short-term borrowings 86,887,745 89,598,888
Note payable 1,000,000 500,000
Dividends payable 261,672 261,672
Accrued interest payable 2,147,976 1,982,687
Federal income taxes payable 134,236 -
Other liabilities 7,679,783 10,950,102
------------ -----------
Total liabilities 839,034,019 829,541,264
------------ -----------
Stockholders' equity:
Common stock, $2.50 par value,
5,000,000 shares authorized and 2,616,723
shares issued 6,541,808 6,541,808
Additional paid-in capital 16,578,010 16,578,010
Retained earnings 37,925,393 36,104,018
Unrealized loss on securities
available-for-sale (1,744,065) (3,897,529)
------------ -----------
Total stockholders' equity 59,301,146 55,326,307
------------ -----------
$898,335,165 884,867,571
============ ===========
</TABLE>
3
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 6,203,620 4,970,644
Interest on investment securities:
Taxable securities 7,148,213 5,162,413
Tax exempt securities 810,494 627,916
Interest on deposits in other banks 1,861 5,623
Interest on federal funds sold 283,660 139,118
----------- ----------
Total interest income 14,447,848 10,905,714
----------- ----------
Interest expense:
Interest on interest-bearing demand deposits 1,919,937 1,077,431
Interest on savings deposits 357,046 391,004
Interest on time deposits 3,155,714 2,145,610
Interest on short-term borrowings 1,230,206 178,552
Interest on note payable 18,396 -
----------- ----------
Total interest expense 6,681,299 3,792,597
----------- ----------
Net interest income 7,766,549 7,113,117
Provision for loan losses 225,000 -
----------- ----------
Net interest income after provision
for loan losses 7,541,549 7,113,117
----------- ----------
Noninterest income:
Service charges and fees 2,199,352 2,019,805
Other income 148,199 81,086
----------- ----------
Total noninterest income 2,347,551 2,100,891
----------- ----------
Noninterest expenses:
Salaries and employee benefits 3,971,831 3,694,852
Net occupancy expense 657,208 657,944
Equipment and data processing expense 761,219 651,969
Communication expense 339,153 340,590
Other real estate owned expense (income), net (46,748) (2,099)
Federal deposit insurance fees 398,100 374,409
Legal and professional 233,263 208,397
Stationery and supplies 217,116 207,395
Marketing expense 208,104 165,350
Other operating expenses 410,807 430,408
----------- ----------
Total noninterest expenses 7,150,053 6,729,215
----------- ----------
Income before Federal income taxes 2,739,047 2,484,793
Provision for Federal income taxes 656,000 625,000
----------- ----------
Net income $ 2,083,047 1,859,793
=========== ==========
Net income per share $ .80 .71
=========== ==========
Weighted average number of shares outstanding 2,616,723 2,616,723
=========== ==========
</TABLE>
4
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,083,047 1,859,793
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for loan losses 225,000 -
Depreciation 648,512 599,886
Amortization of intangibles 49,368 44,701
Premium amortization and discount accretion, net 102,800 699,303
Net gain on sales of other real estate owned (53,507) -
Net gain on sales of premises and equipment (1,948) (6,918)
Changes in operating assets and liabilities:
Decrease in accrued interest receivable 321,341 536,128
Decrease in Federal income taxes receivable 523,524 278,524
Decrease in other assets 631,967 70,293
Increase in accrued interest payable 165,289 55,149
Increase in Federal income taxes payable 134,236 347,836
Decrease in other liabilities (3,270,319) (719,866)
------------ -----------
Net cash provided by
operating activities 1,559,310 3,764,829
------------ -----------
Cash flows from investing activities:
Cash and cash equivalents paid in acquisitions - (1,679,778)
Proceeds from redemption of investment
securities available-for-sale 829,100 -
Proceeds from maturities and principal reductions
of investment securities held-to-maturity 11,158,957 7,158,895
Proceeds from maturities and principal reductions
of investment securities available-for-sale 1,236,211 51,713,251
Purchases of investment securities held-to-maturity (15,153,121) (54,155,278)
Purchases of investment securities available-for-sale (4,049,600) (32,476,209)
Net increase in loans (11,755,532) (6,110,983)
Proceeds from sales of premises and equipment 3,342 18,953
Purchases of premises and equipment (1,003,232) (2,134,300)
Proceeds from sales of other real estate owned 329,953 495
------------ -----------
Net cash used in
investing activities (18,403,922) (37,664,954)
------------ -----------
</TABLE>
(Continued)
5
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand deposits
and savings accounts 4,004,638 4,304,941
Net increase (decrease) in time deposits 10,670,054 (4,237,584)
Proceeds from note payable 500,000 -
Net increase (decrease) in short-term borrowings (2,711,143) 24,046,044
Dividends paid (261,672) (209,338)
----------- ----------
Net cash provided by
financing activities 12,201,877 23,904,063
----------- ----------
Net decrease in cash and cash equivalents (4,642,735) (9,996,062)
Cash and cash equivalents at beginning of period 74,716,332 64,182,656
----------- ----------
Cash and cash equivalents at end of period $70,073,597 54,186,594
=========== ==========
Supplemental Cash Flow Information:
- ----------------------------------
Cash paid for interest $ 6,516,010 3,737,448
Loans transferred to other real estate owned $ 13,627 -
</TABLE>
6
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Principles of Reporting and Consolidation
-----------------------------------------
The accounting and reporting policies of Central Bancorporation, Inc.
(the Corporation), formerly known as Texas Security Bancshares, Inc., and
subsidiaries conform to generally accepted accounting principles and to
general practices in the banking industry. All subsidiaries are included
in the consolidated financial statements, and all significant intercompany
accounts and transactions are eliminated in consolidation.
The consolidated financial information reflects all adjustments,
consisting of only normal recurring accruals, which are, in the opinion of
management, necessary for a fair presentation of the results of the interim
periods.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
ANALYSIS OF EARNINGS
Net income for the first quarter of 1995 was $2,083,047 or $0.80 per
share compared to $1,859,793 or $.71 per share for the first quarter of
1994. Per share amounts are based on average shares outstanding of
2,616,723.
The following is a discussion of the significant changes in the
results of operations and financial condition for the periods indicated.
Net Interest Income
Net interest income on a taxable equivalent basis for the first
quarter of 1995 increased $811,000 or 10.8%, compared to the same period in
1994. The increase in net interest income is primarily attributable to the
higher level of earning assets, as the Corporation's net interest spread
and net interest margin declined 43 basis points and 28 basis points,
respectively, from the first quarter of 1994. The increase in earning
assets was the result of investing funds provided by growth in deposits and
short-term borrowings. Yields on earning assets and rates on interest-
bearing liabilities for the first quarter of 1995 increased from the same
period last year. The net interest spread on a taxable equivalent basis
decreased to 3.61% for the first quarter of 1995 from 4.04% for the
comparable period in 1994 and the net interest margin on taxable equivalent
basis decreased to 4.20% for the first quarter of 1995 from 4.48% for the
same period in 1994.
The following table summarizes the effects of changes in interest
rates and average volume of earning assets on net interest income for the
quarters ended March 31, 1995 and 1994.
ANALYSIS OF CHANGES IN NET INTEREST MARGIN
(Dollars in Thousands - Taxable Equivalent Basis)
<TABLE>
<CAPTION>
1st Qtr. 1995 vs. 1st Qtr. 1994
-------------------------------
Due to Due to Changes
Net Changes Changes in Rates/
Increase In Volume In Rates Volume
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Earning assets $3,699 $2,032 $1,412 255
Interest-bearing
liabilities 2,888 745 1,791 352
------ ------ ------ ---
Net interest margin before
allocation of
rates/volume $ 811 $1,287 $ (379) (97)
------ ------ ------ ---
Allocation of
rates/volume - (138) 41 97
------ ------ ------ ---
Net interest margin $ 811 $1,149 $ (338) -
====== ====== ====== ===
</TABLE>
8
<PAGE>
Noninterest Income
Noninterest income increased $246,660 or 11.8% for the first quarter
of 1995 from the same period last year. Increased levels of noninterest
income are primarily attributable to increases in service charge income
resulting from the increased customer deposit base and increases in rates
charged for certain services. The following table summarizes the major
categories of noninterest income for the three months ended March 31, 1995
and 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Three Months
Ended March 31, $ %
---------------
1995 1994 Change Change
------- ------ ------- -------
<S> <C> <C> <C> <C>
Service charges and fees $1,876 $1,718 $158 9.2%
Investment services income 109 145 (36) (24.8)
Trust Fees 192 151 41 27.2
Mortgage services income 103 45 58 128.9
Other income 68 42 26 61.9
------ ------ ---- -----
Total noninterest income $2,348 $2,101 $247 11.8%
====== ====== ==== =====
</TABLE>
Noninterest Expenses
Noninterest expenses were $7,150,053 for the first quarter of 1995
compared to $6,729,215 for the first quarter of 1994, an increase of
$420,838 or 6.3%. The following table summarizes the major categories of
noninterest expense for the three months ended March 31, 1995 and 1994
(dollars in thousands).
<TABLE>
<CAPTION>
Three Months
Ended March 31, $ %
-----------------
1995 1994 Change Change
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Salaries and employee benefits $3,972 $3,695 $277 7.5%
Net occupancy expense 657 658 (1) 0.2
Equipment and data processing expense 761 652 109 16.7
Communication expense 339 341 (2) (0.6)
Other real estate owned expense (income), net (47) (2) (45) 2250.0
Federal deposit insurances fees 398 374 24 6.4
Legal and professional 233 208 25 12.0
Stationery and supplies 217 207 10 4.8
Marketing expense 208 165 43 26.1
Other operating expenses 412 431 (19) (4.4)
------ ------ ---- ------
Total noninterest expenses $7,150 $6,729 $421 6.3%
====== ====== ==== ======
</TABLE>
Salaries and employee benefits for the first quarter of 1995 increased
$276,979 or 7.5% over the same period in 1994 due to normal compensation
increases and expanded banking operations.
Equipment and data processing fees in the first quarter of 1995
increased $109,250 or 16.7% over the first quarter of 1994. The increase
is primarily attributable to depreciation expense on new equipment and new
furniture for new and remodeled banking centers.
Marketing expense for the three months ended March 31, 1995, which
includes consulting fees with respect to various advertising campaigns and
events, including a deposit promotion, increased $42,754 or 26.1% from the
same period in 1994.
Other real estate owned expense (income), net has a credit balance of
$46,748 through the first three months of 1995 compared to a credit balance
of $2,099 for the same period in 1994. The credit balance in 1995 is due
to gains on sales of other real estate owned.
9
<PAGE>
Provision for Federal Income Taxes
The Corporation files a consolidated tax return under the
consolidation provisions of the Internal Revenue Code. Generally, the
consolidated tax liability is settled between the Corporation and its
subsidiaries as if each had filed a separate return. Payments are made to
the Corporation by its subsidiaries with net tax liabilities on a separate
return basis. Subsidiaries with losses or excess tax credits on a separate
return basis receive payment for these benefits when they are usable in
the consolidated return.
As of March 31, 1995 the Corporation has a deferred tax asset in the
amount of $2,517,452. This deferred tax asset is determined based on net
deductible temporary differences, primarily relating to the allowance for
loan losses, the allowance for losses on other real estate owned, and
unrealized loss on securities available-for-sale, approximating $7,500,000.
Based on the Corporation's historical ability to generate taxable income
exclusive of reversing timing differences, management of the Corporation
believes it is more likely than not that the entire deferred tax asset will
be realized or settled, and accordingly, no valuation allowance has been
recorded as of March 31, 1995 and December 31, 1994.
Provision for Loan Losses, Allowance for Loan Losses and Credit Quality
The Texas economy, in general, continued a recovery which began in
1993. Growth was experienced by small and medium size companies and,
overall, in 1994, Texas was second nationally behind only Florida in job
creation.
In 1994, the real estate market, as a whole, continued to improve.
The most encouraging news came from the areas of residential, retail and
industrial markets. The Dallas/Fort Worth area currently rates as one of
the top residential markets in the U.S. with sales of single-family homes
remaining strong. The apartment market maintained over 90% occupancy in
1994, which resulted in higher rental rates and new development. The
retail market reported approximately 85% occupancy in 1994 with increasing
rent levels. The industrial market has improved to above 90% occupancy.
However, the office market is still having problems due to tenant
downsizing, competition from liquidation properties and declining rental
rates in some areas.
With the improving economy, the Corporation has continued to achieve
moderate loan growth. Most of the growth came from small and medium size
companies and from new or refinanced real estate mortgages. The
Corporation's loan portfolio, although concentrated in real estate, does
not have any industry concentrations and is primarily extended to user
occupied property.
Based upon current information and conditions, management believes the
known risks in the existing loan portfolio have been properly evaluated and
the allowance is at a satisfactory level. Subsequent evaluations, however,
could necessitate changes in the balance of the allowance.
10
<PAGE>
The following table presents the provision for loan losses, loans
charged off, recoveries of loans previously charged-off, and amounts of the
allowance for loan losses, the loans outstanding and certain pertinent
ratios for the periods indicated (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, December 31,
-------------------- -------------
1995 1994 1994
--------- --------- -------------
<S> <C> <C> <C>
Balance at beginning of period $ 3,872 $ 4,072 $ 4,072
-------- -------- --------
Charge-offs:
Commercial and financial loans 93 82 913
Real estate loans 312 29 230
Installment loans 42 79 335
-------- -------- --------
Total 447 190 1,478
-------- -------- --------
Recoveries:
Commercial and financial loans 111 138 419
Real estate loans 74 107 241
Installment loans 31 24 118
-------- -------- --------
Total 216 269 778
-------- -------- --------
Net charge-offs (recoveries):
Commercial and financial loans (18) (56) 494
Real estate loans 238 (78) (11)
Installment loans 11 55 217
-------- -------- --------
Total 231 (79) 700
-------- -------- --------
Provision charged to earnings 225 - 500
-------- -------- --------
Balance at end of period $ 3,866 $ 4,151 $ 3,872
======== ======== ========
Amount of outstanding loans at end of period $284,449 $243,258 $272,825
======== ======== ========
Average amount of loans outstanding:
Commercial and financial loans $ 95,358 $ 74,235 $ 82,714
Real estate loans 166,695 147,697 154,599
Installment loans 16,072 15,889 15,365
-------- -------- --------
Total $278,125 $237,821 $252,678
======== ======== ========
Ratios:
Annualized net charge-offs (recoveries) to average loans:
Commercial and financial loans (0.08)% (0.31)% 0.60%
Real estate loans 0.58 (0.21) (0.01)
Installment loans 0.28 1.40 1.41
-------- -------- --------
Total 0.34% (0.13)% 0.28%
======== ======== ========
Balance in allowance at end of period
to outstanding loans at end of period 1.36% 1.71% 1.42%
======== ======== ========
</TABLE>
At March 31, 1995, the allowance for loan losses was $3.866 million,
or 1.36% of period end loans, compared to $3.872 million and 1.42% at
December 31, 1994 and $4.151 million or 1.71% at March 31, 1994.
11
<PAGE>
The following schedule presents the allowance for loan losses by loan
category at the dates indicated (dollars in thousands).
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Specific reserves by category:
Commercial and financial loans $ 517 $ 427
Real estate loans 905 1,180
Installment loans 111 103
Unallocated reserves 2,333 2,162
------ ------
Total allowance for loan losses $3,866 $3,872
====== ======
</TABLE>
Net charge-offs for the quarter ended March 31, 1995 were $231,000 compared
to net recoveries of $79,000 in the first quarter of 1994.
For the quarter ended March 31, 1995, a provision for loan losses of
$225,000 was charged to earnings. In the first quarter of 1994, no provision
for loan losses was necessary due to reduced levels of nonperforming loans and
due to reduced charge-offs during the period.
Nonperforming assets (loans accounted for on a nonaccrual basis,
restructured loans and foreclosed real estate) at March 31, 1995 totaled $3.310
million, a 15.4% decrease from the $3.911 million reported at December 31, 1994
and an increase of $672,000 or 25.5% compared to March 31, 1994 totals. The
increase in nonperforming assets from March 31, 1994 to March 31, 1995 is
primarily attributable to increases in nonaccrual loans.
The following table summarizes the nonperforming assets and loans 90 days
or more past due that are still accruing interest (dollars in thousands).
<TABLE>
<CAPTION>
March 31, December 31, September 30, June 30, March 31,
1995 1994 1994 1994 1994
--------- ------------ ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $2,986 $3,339 $2,941 $2,234 $2,284
Other real estate
owned 89 352 224 315 335
Restructured loans 235 220 243 19 19
------ ------ ------ ------ ------
Total nonperforming
assets $3,310 $3,911 $3,408 $2,568 $2,638
====== ====== ====== ====== ======
Loans over 90 days
past due but not
on nonaccrual $ - $ 48 $ 88 $ 89 $ 259
====== ====== ====== ====== ======
</TABLE>
The Corporation's problem loan monitoring program examines on a monthly
basis the status and specific action plan for resolution or liquidation of all
major nonperforming assets.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 114 ("Statement No. 114"), "Accounting by Creditors for
Impairment of a Loan" and Statement of Financial Accounting Standards No. 118
("Statement No. 118"), "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures." Both statements are effective for fiscal
years beginning after December 15, 1994 and have been applied on a prospective
basis. Statement No. 114 requires that impaired loans within the scope of the
statement be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. Impairment shall be recognized by creating a valuation allowance
with a corresponding charge to the provision for loan losses. Statement No. 118
amends Statement No. 114 and allows the use of existing methods for recognizing
interest income on impaired loans. The effect of adopting these statements is
not considered material.
12
<PAGE>
BALANCE SHEET ANALYSIS
Loans
The following schedule presents the Corporation's loan balances at the
dates indicated according to loan type.
DISTRIBUTION OF LOANS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
--------------- ------------------
<S> <C> <C>
Commercial and financial $ 98,828 $ 92,992
Real Estate:
Construction 3,391 3,355
Mortgage 165,602 162,130
Installment 18,810 16,395
Overdrafts 125 151
-------- --------
Total loans 286,756 275,023
Less unearned discount (2,307) (2,198)
-------- --------
Total loans, net
of unearned discount $284,449 $272,825
======== ========
</TABLE>
Net loans increased by $11.624 million or 4.3% from December 31, 1994. The
growth is primarily from commercial loans and from new and refinanced real
estate mortgages, and has resulted from an improved economy.
Deposits
The most important source of the Corporation's funds is the deposits
of the subsidiary bank. The types of deposits that were in the subsidiary
bank on a daily average basis are shown in the following table (dollars in
thousands).
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, 1995 December 31, 1994
------------------ -------------------
<S> <C> <C>
Noninterest-bearing demand $132,418 $130,532
Interest-bearing demand 258,849 234,293
Savings 64,633 71,787
Time, $100,000 and over 53,326 49,063
Other time 216,151 208,079
-------- --------
Total deposits $725,377 $693,754
======== ========
</TABLE>
Total average deposits increased $31.623 million or 4.6% from the
average for the year ended December 31, 1994. Time deposits have increased
due to higher interest rates. Money market accounts, included in interest-
bearing demand deposits in the table above, continue to grow as the rates
on these products are competitive with those offered for similar investment
alternatives.
13
<PAGE>
Investment Portfolio
Management of the investment portfolio remains very important as the
loan to deposit ratio remains below 40% and alternative investments are
examined to protect the Corporation's net interest margin. Significant
investments have been made in mortgage-backed securities that provide
attractive yields, minimal credit risk and a balance to the asset and
liability management strategy. The principal mortgage-backed investments
have been Federal Home Loan Mortgage Corporation adjustable rate mortgages
and balloon mortgages, and government-backed collateralized mortgage
obligations.
Effective January 1, 1994, the Corporation adopted the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 115 "Accounting for Certain Investments in Debt and Equity Securities".
Under Statement No. 115, all securities must be classified as held-to-
maturity, trading, or available-for-sale.
Management determines the appropriate classification of securities at
the time of purchase and reevaluates the designation as of each balance
sheet date. Debt securities are classified as held-to-maturity when the
Corporation has the positive intent and ability to hold the securities to
maturity. Held-to-maturity securities are stated at amortized cost.
Trading securities, consisting of debt and marketable equity securities are
held for resale in anticipation of short-term market movements. Trading
securities are stated at fair value and gains and losses, both realized and
unrealized, are included in earnings. Debt securities not classified as
held-to-maturity or trading and marketable equity securities not classified
as trading are classified as available-for-sale. Available-for-sale
securities are stated at fair value, with the unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. The
Corporation does not have any securities classified as trading as of March 31,
1995.
The following schedule presents the amortized cost and fair value of the
available-for-sale and held-to-maturity investment securities as of March 31,
1995 (dollars in thousands).
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Available-for-sale
- ------------------
U. S. Treasury $ 97,161 315 (1,531) 95,945
U. S. Government agencies 26,360 233 (109) 26,484
FHLB stock 2,703 - - 2,703
Mortgage-backed securities 43,273 - (265) 43,008
-------- ----- ------- -------
$169,497 548 (1,905) 168,140
======== ===== ======= =======
Held-to-maturity
- ----------------
U.S. Treasury $ 5,057 - (28) 5,029
U.S. Government agencies 5,510 - (50) 5,460
State and political subdivisions 64,416 1,565 (536) 65,445
Mortgage-backed securities 270,591 291 (13,087) 257,795
-------- ----- ------- -------
$345,574 1,856 (13,701) 333,729
======== ===== ======= =======
</TABLE>
14
<PAGE>
Investment Portfolio, Continued
The following schedule presents the total book value and fair value of
the investment securities as of December 31, 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Available-for-sale
- ------------------
U. S. Treasury $ 97,312 14 (2,827) 94,499
U. S. Government agencies 22,407 37 (554) 21,890
FHLB stock 3,482 - - 3,482
Mortgage-backed securities 44,483 - (1,245) 43,238
-------- --- ------- -------
$167,684 51 (4,626) 163,109
======== === ======= =======
Held-to-maturity
- ----------------
U.S. Treasury $ 5,064 - (108) 4,956
U.S. Government agencies 5,527 - (189) 5,338
State and political subdivisions 53,374 801 (1,196) 52,979
Mortgage-backed securities 277,614 36 (16,784) 260,866
-------- --- ------- -------
$341,579 837 (18,277) 324,139
======== === ======= =======
</TABLE>
Short-term Borrowings
In January 1994, the Corporation initiated a process whereby funds are
borrowed for the purpose of investing in similarly repricing investment
instruments. As of March 31, 1995, the Corporation has $50,000,000 in
securities sold under agreement to repurchase. This borrowing is through
the Federal Home Loan Bank and matures and reprices monthly.
In May 1994, the Corporation began borrowing by offering repurchase
agreements to customers. As of March 31, 1995, through this funding
source, the Corporation has $33,100,794 in securities sold under agreement
to repurchase. These agreements have a maturity of one day and are
repricable on a daily basis. The weighted average interest rate of the
agreements on March 31, 1995 was 5.5%. These agreement were collateralized
by U.S. Government securities with a market value of $47,022,040 as of
March 31, 1995.
15
<PAGE>
Interest Rate Sensitivity
Asset/liability management involves the maintenance of an appropriate
balance between interest sensitive assets and interest sensitive liabilities to
reduce interest rate exposure while also providing liquidity to satisfy the cash
flow requirement of operations to meet customers' fluctuating demands for funds,
either in terms of loan requests or deposit withdrawals.
A volatile rate environment combined with industry deregulation has placed
an increased emphasis on interest rate sensitivity management. Interest
sensitive earning assets and interest-bearing liabilities are those which have
yields or rates which are subject to change within a future time period due to
maturity of the instrument or changes in the rate environment. Gap refers to
the difference between the rate sensitive assets and rate sensitive liabilities.
Interest rate sensitivity management seeks to protect earnings by
maintaining an appropriate balance between interest sensitive earning assets and
interest-bearing liabilities in order to minimize fluctuations in the net
interest margin and net earnings in period of volatile interest rates.
The following table quantifies the interest rate sensitivity of both
earning assets and interest-bearing liabilities as of March 31, 1995.
INTEREST RATE SENSITIVITY ANALYSIS AT MARCH 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Repriced
Due in After One
Due in Due in 91 Days Total Year or
30 Days 31 to 90 to Rate Non-Rate
or Less Days One Year Sensitive Sensitive Total
---------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans $ 69,084 $ 18,215 $ 73,268 $ 160,567 $123,882 $284,449
Interest-bearing deposits
in other banks 162 - - 162 - 162
Federal funds sold 25,000 - - 25,000 - 25,000
Investment securities:
Taxable 74,269 7,416 29,787 111,472 337,826 449,298
Tax-exempt 250 576 2,923 3,749 60,667 64,416
--------- --------- --------- --------- -------- --------
Total investment securities 74,519 7,992 32,710 115,221 398,493 513,714
--------- --------- --------- --------- -------- --------
Total earning assets 168,765 26,207 105,978 300,950 522,375 823,325
--------- --------- --------- --------- -------- --------
Interest-bearing liabilities:
Interest-bearing demand 268,256 - - 268,256 - 268,256
Savings 63,563 - - 63,563 - 63,563
Time deposits (less than) $100,000 30,108 31,819 64,506 126,433 95,610 222,043
Time deposits (greater than) $100,000 7,634 11,393 13,606 32,633 21,677 54,310
Other borrowings 86,888 - - 86,888 1,000 87,888
--------- --------- --------- --------- -------- --------
Total interest-bearing
liabilities 456,449 43,212 78,112 577,773 118,287 696,060
--------- --------- --------- --------- -------- --------
Interest sensitivity gap $(287,684) $ (17,005) $ 27,866 $(276,823) $404,088 $127,265
========= ========= ========= ========= ======== ========
Cumulative gap $(287,684) $(304,689) $(276,823)
========= ========= =========
Relationship of gap to
total earning assets (34.9)% (37.0)% (33.6)%
========= ========= =========
</TABLE>
16
<PAGE>
Capital
The Corporation recognizes the importance of proper capitalization.
The continuing philosophy is to maintain a highly capitalized organization
operating with capital levels well in excess of those required by
regulatory agencies.
The Federal Reserve Board's guidelines to United States banking
organizations provide for the application of a risk-based capital
framework. The guidelines classify capital into two tiers, referred to as
Tier 1 and Tier 2. Tier 1 consists of core capital elements less certain
intangible assets, while Tier 2 includes the allowance for loan losses, but
is limited to 100% of Tier 1 and 1.25% of risk-weighted adjusted assets.
The denominator or asset portion of risk-based capital aggregates generic
classes of balance sheet and off-balance-sheet exposures, each weighted by
one of four factors, ranging from 0% to 100%, based upon the relative risk
of the exposure class. The Federal Reserve Board guidelines require a
minimum capital of 8%, of which at least 4% must be Tier 1.
Amendments to the capital rules for the adoption of Statement No. 115
have not yet been adopted and as such, net unrealized gains on available-
for-sale securities resulting from the accounting change have been excluded
from the computation of Tier 1 (and total) capital.
The Federal Reserve Board has also established guidelines that set
forth the leverage standards to be applied to banking organizations in
conjunction with the risk-based capital framework. The leverage standard
requires a minimum ratio of 3% Tier 1 capital to average total adjusted
assets, as defined. However, regulators are given wide discretion to set a
level appropriate for each bank, with most banks expected to maintain a
leverage capital ratio of 4% to 5%.
The following table presents the Corporation's risk-based and leverage
capital ratios (dollars in thousands).
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Tier 1 (Core Capital)
Stockholders' equity $ 59,301 $ 55,326
Plus: Unrealized loss on securities
available-for-sale 1,744 3,898
Less: Excess cost over
net assets acquired (858) (908)
-------- --------
Total Tier 1 Capital 60,187 58,316
-------- --------
Tier 2 (Supplementary Capital)
Eligible portion of allowance
for loan losses 3,866 3,872
-------- --------
Total risk-based capital $ 64,053 $ 62,188
======== ========
Total risk-weighted assets $383,266 $370,252
======== ========
Tier 1 capital ratio 15.70% 15.75%
Total risk-based capital ratio 16.71% 16.80%
======== ========
Leverage capital ratio 6.86% 7.22%
======== ========
</TABLE>
The above capital ratios, under all regulatory measurements, are in
excess of required minimum levels. The Texas State Banking Department
issued a 6% minimum leverage capital ratio standard for all state banks
during 1991.
17
<PAGE>
Dividends
Central Bank & Trust is subject to various restrictions imposed by the
Texas Banking Code relating to the declaration and payment of dividends to the
Corporation, including continued capital adequacy. The Corporation believes
that the policies and procedures currently in place comply with regulatory
requirements.
Cash dividends are paid to the Corporation's shareholders at the discretion
of the Corporation's Board of Directors and depend upon a number of factors,
including future earnings of the Corporation, the financial condition of the
Corporation, the Corporation's cash needs, general business conditions and the
amount of dividends paid to the Corporation by the Subsidiary Bank.
Liquidity
Liquidity ratios are in excess of regulatory guidelines. The Corporation's
primary internal source of liquidity is its short-term marketable assets,
primarily Federal funds sold and United States Government and Agency securities
maturing within the next twelve months.
18
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED AVERAGE BALANCE SHEETS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Assets 1995 1994
- ------ ---------- ----------
<S> <C> <C>
Earning assets:
Loans $278,125 $237,821
Interest-bearing deposits in banks 258 743
Federal funds sold 19,347 17,947
Investment securities:
Taxable 448,894 381,443
Tax-exempt 53,335 39,819
-------- --------
Total investment securities 502,229 421,262
Total earning assets 799,959 677,773
-------- --------
Cash and due from banks 42,159 41,094
Other real estate 290 317
Other assets 37,004 38,710
Less allowance for possible loan losses (3,886) (4,105)
-------- --------
Total assets $875,526 $753,789
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-bearing liabilities:
Deposits $592,959 $545,914
Other borrowings 88,677 23,806
-------- --------
Total interest-bearing liabilities 681,636 569,720
-------- --------
Noninterest-bearing demand deposits 132,418 125,843
Other liabilities 4,562 3,337
Stockholders' equity 56,910 54,889
-------- --------
Total liabilities and stockholders' equity $875,526 $753,789
======== ========
</TABLE>
19
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED TAXABLE EQUIVALENT STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Interest income:
Interest and fees on loans (1) $ 6,309 $ 5,013
Interest on investment securities:
Taxable securities 7,149 5,163
Tax-exempt (1) 1,227 951
Interest on deposits in other banks 2 6
Interest on federal funds sold 284 139
------- -------
Total interest income 14,971 11,272
Interest expense:
Interest on interest-bearing demand deposits 1,920 1,077
Interest on savings deposits 357 391
Interest on time deposits 3,156 2,146
Interest on other borrowings 1,248 179
------- -------
Total interest expense 6,681 3,793
------- -------
Net interest income 8,290 7,479
Provision for possible loan losses 225 -
------- -------
Net interest income after provision
for possible loan losses 8,065 7,479
------- -------
Other income:
Service charges and fees 2,200 2,020
Other income 148 81
------- -------
Total other income 2,348 2,101
------- -------
Other expenses:
Salaries and employee benefits 3,972 3,695
Net occupancy expense 657 658
Equipment and data processing expense 761 652
Communications expense 339 341
Other real estate owned expense (47) (2)
Federal deposit insurance fees 398 374
Legal and professional 233 208
Stationery and supplies 217 207
Marketing expense 208 165
Other operating expenses 412 431
------- -------
Total other expenses 7,150 6,729
------- -------
Income before Federal income tax 3,263 2,851
------- -------
Tax equivalent adjustment 524 366
------- -------
Income before Federal income taxes 2,739 2,485
------- -------
Provision for Federal income taxes 656 625
------- -------
Net income $ 2,083 $ 1,860
======= =======
</TABLE>
(1) Presented on a taxable equivalent basis using a 34% Federal income tax rate
for 1995 and 1994.
20
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
AVERAGE INTEREST RATES AND SELECTED RATIOS
(TAX EQUIVALENT BASIS)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Yields on earning assets:
Loans (1) 9.20% 8.55%
Interest-bearing deposits
in other banks 3.14 3.28
Federal funds sold 5.95 3.14
Investment securities:
Taxable 6.46 5.49
Tax-exempt (1) 9.33 9.69
----- -----
Total investment securities 6.76 5.89
----- -----
Total earning assets 7.59 6.74
----- -----
Rates on interest-bearing liabilities:
Deposits 3.72 2.68
Other borrowings 5.71 3.05
----- -----
Total interest-bearing liabilities 3.98 2.70
----- -----
Net interest spread 3.61% 4.04%
===== =====
Net interest margin 4.20% 4.48%
===== =====
Selected ratios:
Net income as a percent of:
Average total assets 0.96% 1.00%
===== =====
Average stockholders' equity 14.84% 13.74%
===== =====
</TABLE>
(1) Presented on a taxable equivalent basis using a 34% Federal income
tax rate for 1995 and 1994.
21
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ---------------------------
Not applicable.
Item 2. Change in Securities.
- ------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
- -----------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
The Annual Meeting of the Shareholders of the Corporation was held on April
5, 1995. The shareholders voted (1) to elect eight directors of the
Corporation; (2) to approve an amendment to the Articles of Incorporation
of the Corporation to change the name of the Corporation to Central
Bancorporation, Inc; and (3) to approve the appointment of KPMG Peat
Marwick as the independent public accountants of the Corporation for the
fiscal year ending December 31, 1995.
The results of the voting were as follows:
<TABLE>
<CAPTION>
Election of Directors:
<S> <C> <C>
Name of Director For Against
J. Andy Thompson 2,201,829 344
Richard L. Brown 2,201,829 344
Ervin D. Cruce 2,201,829 344
Stuart W. Murff 2,195,629 6,544
Nancy W. Smith 2,201,829 344
C. Rhea Thompson 2,201,829 344
Kelly R. Thompson 2,201,829 344
F.D. Thompson, Jr. 2,201,829 344
</TABLE>
There were no abstentions or broker non-votes regarding the election of
directors.
22
<PAGE>
The results of the other votes were as follows:
<TABLE>
<CAPTION>
Description For Against Abstain
<S> <C> <C> <C>
Approval of amendment to the Articles of 2,194,156 2,777 5,240
Incorporation of the Corporation to
change the name of the Corporation to
Central Bancorporation, Inc.
Approval of KPMG Peat Marwick as the 2,201,916 172 85
Corporation's independent auditors for the
fiscal year ending December 31, 1995
</TABLE>
There were no broker non-votes on these items.
Item 5. Other Information.
---------------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
------------------------------------------
(a) Exhibits
--------
3(a) Articles of Incorporation of the Corporation, and all amendments thereto
(incorporated herein by reference to Exhibit 3.1 to the Corporation's
Registration Statement on Form 10 filed April 30, 1987)
3(b) Articles of Amendment to the Articles of Incorporation of the Corporation
filed with the Secretary of State of Texas on May 11, 1988 (incorporated
herein by reference to Exhibit 3(b) to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1988 filed April 5, 1989)
3(c) Restated Bylaws of the Corporation (incorporated herein by reference to
Exhibit 3.2 to the Corporation's Registration Statement on Form 10 filed
April 30, 1987); as amended January 19, 1993 (incorporated herein by
reference to Exhibit 3(c) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1992 filed April 15, 1993)
3(d) Articles of Amendment to the Articles of Incorporation of Texas Security
Bancshares, Inc. filed with the Secretary of State of Texas on April 10,
1995*
11 Computation of Earnings Per Common Share*
27 Financial Data Schedule*
- -------------
* Filed herewith.
(b) Reports on Form 8-K
-------------------
On April 19, 1995 the Company filed a Current Report on Form 8-K to
report that on April 10, 1995 the Company filed Articles of Amendment to
its Articles of Incorporation with the Texas Secretary of State to change
its name from Texas Security Bancshares, Inc. to Central Bancorporation,
Inc.
23
<PAGE>
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 hereunto duly authorized.
CENTRAL BANCORPORATION, INC.
---------------------------------
Registrant
/s/ J. Andy Thompson
DATE: May 12, 1995 By: ---------------------------------------
J. Andy Thompson, Chairman of the Board
and Chief Executive Officer
/s/ Michael J. Tyler
DATE: May 12, 1995 By: ---------------------------------------
Michael J. Tyler, Senior Vice President
and Chief Financial Officer
24
<PAGE>
EXHIBIT 3(d)
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
TEXAS SECURITY BANCSHARES, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles
of Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the corporation is Texas Security Bancshares, Inc.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on April 5, 1995.
The amendment alters or changes Article One of the original or amended
Articles of Incorporation and the full text of each provision altered or
changed is as follows:
"ARTICLE ONE: NAME
------------------
The name of the Corporation is Central Bancorporation, Inc."
ARTICLE THREE
The number of shares of the corporation outstanding at the time of such
adoption was 2,616,723; and the number of shares entitled to vote thereon
was 2,616,723.
The designation and number of outstanding shares of each class entitled to
vote thereon as a class were as follows:
CLASS NUMBER OF SHARES
----- ----------------
Common Stock 2,616,723
<PAGE>
ARTICLE FOUR
The number of shares voted for such amendment was 2,194,156; and the number
of shares voted against such amendment was 2,777.
CLASS NUMBER OF SHARES VOTED
----- ----------------------
For Against
Common Stock 2,194,156 2,777
ARTICLE FIVE
The Amendment does not provide for any exhange, reclassification or
cancellation of issued shares.
ARTICLE SIX
The amendment does not effect a change in the amount of stated capital.
DATED April 7, 1995.
TEXAS SECURITY BANCSHARES, INC.
By:/s/ Stuart W. Murff
----------------------
Stuart W. Murff, President
<PAGE>
EXHIBIT (11)
COMPUTATION OF EARNINGS PER COMMON SHARE
The details of the computation of earnings per common share are disclosed in the
Consolidated Statements of Earnings for the Three Months Ended March 31, 1995
and 1994 (unaudited) contained in the Quarterly Report on Form 10-Q of the
Registrant for the quarter ended March 31, 1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS OF CENTRAL BANCORPORATION, INC. AND
SUBSIDIARIES AS OF MARCH 31, 1995 (UNAUDITED) AND DECEMBER 31, 1994,
AND THE RELATED CONSOLIDATED STATEMENTS OF EARNINGS AND CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 44,912,083
<INT-BEARING-DEPOSITS> 161,514
<FED-FUNDS-SOLD> 25,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 168,140,000
<INVESTMENTS-CARRYING> 345,574,000
<INVESTMENTS-MARKET> 333,729,000
<LOANS> 284,449,242
<ALLOWANCE> 3,866,489
<TOTAL-ASSETS> 898,335,165
<DEPOSITS> 740,922,607
<SHORT-TERM> 86,887,745
<LIABILITIES-OTHER> 10,223,667
<LONG-TERM> 1,000,000
<COMMON> 6,541,808
0
0
<OTHER-SE> 52,759,338
<TOTAL-LIABILITIES-AND-EQUITY> 898,335,165
<INTEREST-LOAN> 6,203,620
<INTEREST-INVEST> 7,958,707
<INTEREST-OTHER> 285,521
<INTEREST-TOTAL> 14,447,848
<INTEREST-DEPOSIT> 5,432,697
<INTEREST-EXPENSE> 6,681,299
<INTEREST-INCOME-NET> 7,766,549
<LOAN-LOSSES> 225,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,150,053
<INCOME-PRETAX> 2,739,047
<INCOME-PRE-EXTRAORDINARY> 2,083,047
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,083,047
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
<YIELD-ACTUAL> 4.20
<LOANS-NON> 2,986,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 235,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,872,000
<CHARGE-OFFS> 447,000
<RECOVERIES> 216,000
<ALLOWANCE-CLOSE> 3,866,000
<ALLOWANCE-DOMESTIC> 1,533,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,333,000
</TABLE>
