<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 000-21267
SUMMIT BANK CORPORATION
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1722476
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4360 Chamblee-Dunwoody Road
Atlanta, Georgia 30341
(Address of principal executive offices, including Zip Code)
(770) 454-0400
(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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of capital stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at August 1, 1998
----- -----------------------------
<S> <C>
Common Stock. $.0l par value 1,815,363
</TABLE>
The Exhibit Index Appears on Page 15
Page 1 of 19
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 14,272 $ 8,091
Federal funds sold 15,725 1,200
Interest-bearing deposits in other banks 394 69
Investment securities available for sale, at fair value 79,004 61,396
Other investments 1,314 1,566
Loans, net of unearned income 119,812 95,473
Loans held for sale 2,531 3,419
Less: allowance for loan losses (2,796) (1,468)
- --------------------------------------------------------------------------------------
Net loans 119,547 97,424
- --------------------------------------------------------------------------------------
Premises and equipment, net 4,493 4,461
Customers' acceptance liability 1,826 1,397
Deferred income taxes 208 134
Goodwill 3,261 --
Other assets 4,088 4,558
- --------------------------------------------------------------------------------------
Total assets $ 244,132 $ 180,296
======================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest-bearing demand $ 41,840 $ 35,193
Interest-bearing:
Demand 39,805 34,348
Savings 8,665 6,681
Time, $100,000 and over 34,455 23,595
Other time 76,629 44,978
- --------------------------------------------------------------------------------------
Total deposits 201,394 144,795
- --------------------------------------------------------------------------------------
Obligation under capital lease 60 81
Federal Home Loan Bank advance 10,000 10,000
Other borrowed funds 5,009 2,756
Acceptances outstanding 1,826 1,397
Other liabilities 2,012 1,489
- --------------------------------------------------------------------------------------
Total liabilities 220,301 160,518
- --------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 18 15
Additional paid-in capital 16,178 12,933
Retained earnings 7,569 6,658
Accumulated other comprehensive income 66 172
- --------------------------------------------------------------------------------------
Total stockholders' equity 23,831 19,778
- --------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 244,132 $ 180,296
======================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 2 of 19
<PAGE> 3
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(Dollars in thousands, except share
and per share amounts) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 2,678 $ 2,387 $ 5,267 $ 4,727
Interest-bearing deposits in other banks 4 1 6 2
Federal funds sold 85 23 167 152
Investment securities-taxable 401 345 810 571
Mortgage-backed securities 634 556 1,238 1,060
- ---------------------------------------------------------------------------------------------------------------
Total interest income 3,802 3,312 7,488 6,512
- ---------------------------------------------------------------------------------------------------------------
Interest expense
Time deposits, $100,000 and over 385 361 758 657
Other deposits 1,023 875 1,983 1,773
Federal Home Loan Bank advance 124 61 250 66
Short-term borrowings and obligation
under capital lease 44 36 78 52
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 1,576 1,333 3,069 2,548
- ---------------------------------------------------------------------------------------------------------------
Net interest income 2,226 1,979 4,419 3,964
Provision for loan losses 195 135 355 260
- ---------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 2,031 1,844 4,064 3,704
- ---------------------------------------------------------------------------------------------------------------
Non-interest income
Fees for international banking services 292 321 576 568
SBA loan servicing fees 61 111 137 222
Service charge income 74 68 147 126
Overdraft and NSF charges 159 100 290 210
Gains on sales of loans 216 208 373 208
Net gains on sales of investment securities 31 19 48 19
Other 108 95 221 174
- ---------------------------------------------------------------------------------------------------------------
Total non-interest income 941 922 1,792 1,527
- ---------------------------------------------------------------------------------------------------------------
Non-interest expenses
Salaries and employee benefits 985 896 1,969 1,812
Equipment 195 153 342 307
Net occupancy 139 128 278 250
Other operating expenses 693 617 1,340 1,242
- ---------------------------------------------------------------------------------------------------------------
Total non-interest expenses 2,012 1,794 3,929 3,611
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 960 972 1,927 1,620
- ---------------------------------------------------------------------------------------------------------------
Income tax expense 341 314 683 551
- ---------------------------------------------------------------------------------------------------------------
Net income $ 619 $ 658 $ 1,244 $ 1,069
- ---------------------------------------------------------------------------------------------------------------
Basic net income per common share $ .34 $ .47 $ .72 $ .76
Diluted net income per common share and
common share equivalents $ .34 $ .40 $ .69 $ .65
- ---------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding - basic 1,815,363 1,408,126 1,735,086 1,407,908
Weighted-average shares outstanding - diluted 1,821,161 1,633,243 1,802,091 1,639,677
- ---------------------------------------------------------------------------------------------------------------
Dividends declared per common share $ .10 $ .09 $ .19 $ .17
===============================================================================================================
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 3 of 19
<PAGE> 4
SUMMIT BANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months
ended June 30,
(In thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,244 $ 1,069
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of premises and equipment 214 159
Net amortization of premiums/discounts on
investment securities 49 41
Amortization of negative goodwill (55) (55)
Provision for loan losses 355 260
Gains on sales of loans (373) (208)
Net gains on sales of investment securities (48) (19)
Changes in other assets and liabilities:
Decrease (increase) in other assets 1,054 (648)
Increase in other liabilities 246 80
- ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,686 679
- ------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from maturities of investment securities available for sale 11,260 1,000
Principal collections on investment securities available for sale 4,616 2,543
Proceeds from sales of investment securities available for sale 2,855 13,966
Purchases of investment securities available for sale (22,311) (32,010)
Loans made to customers, net of principal collected on loans (2,973) (7,411)
Purchases of premises and equipment (172) (34)
Purchase of California Security Bank, net of cash and cash equivalents acquired (320) --
- ------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,045) (21,946)
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in demand and savings deposits 1,598 (5,368)
Net increase in time deposits 18,645 3,951
Principal payments for obligation under capital lease (21) (18)
Dividends paid (333) (239)
Issuance of common stock upon exercise of warrants and options 3,248 --
Net increase in borrowed funds 2,253 8,071
- ------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 25,390 6,432
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 21,031 (14,835)
Cash and cash equivalents at beginning of period 9,360 23,417
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 30,391 $ 8,582
- ------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash paid during the period:
Interest $ 2,908 $ 2,245
Income taxes $ 831 $ 357
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
Page 4 of 19
<PAGE> 5
SUMMIT BANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared by
Summit Bank Corporation and Subsidiaries (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in consolidated financial statements prepared in accordance with generally
accepted accounting principles have been omitted, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of management, the information
furnished in the condensed consolidated financial statements reflects all
adjustments necessary to present fairly the Company's financial position,
results of operations and cash flows for such interim periods. Management
believes that all interim period adjustments are of a normal recurring
nature. These consolidated financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto as of December 31, 1997, included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, The Summit National Bank (the "Bank")
and The Summit Merchant Banking Corporation (inactive.) All intercompany
accounts and transactions have been eliminated in consolidation.
2. ACCOUNTING POLICIES
Reference is made to the accounting policies of the Company described in
the notes to consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the year ended December 31 1997.
3. ACQUISITION
On June 30, 1998, the Company acquired all of the issued and outstanding
common stock of California Security Bank, a single-branch California state
chartered bank located in San Jose, California, for a cash price of
$6,193,000, including acquisition costs. The acquisition was recorded by
the Company under the purchase method of accounting. Goodwill of $3,261,000
was recorded in connection with the purchase and is being amortized over 20
years. The fair value of assets acquired and liabilities assumed were as
follows:
<TABLE>
<S> <C>
In thousands
------------
Cash and due from banks $ 1,845
Federal funds sold 3,835
Investment securities available for sale 13,948
Loans, net 19,132
Premises and equipment 74
Other assets 786
Deposits (36,356)
Other liabilities (332)
--------
Fair value of net assets acquired 2,932
--------
Cash paid to shareholders 6,000
Acquisition costs 193
--------
Total purchase price 6,193
--------
Cost over fair value of net assets acquired $ 3,261
========
</TABLE>
The net cash paid was $320,000.
Page 5 of 19
<PAGE> 6
The following is proforma information for the six months ended June 30,
1998 and 1997 as if the acquisition had been consummated on January 1, 1998
and 1997, respectively. The proforma information is not necessarily
indicative of the combined financial position or results of operations
which would have been realized had the acquisition been consummated during
the period or as of the dates for which the proforma financial information
is presented:
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------
June 30, 1998 June 30, 1997
------------- -------------
(in thousands, except for per share data) Historical Proforma Historical Proforma
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net interest income $4,419 $5,348 $3,964 $4,798
Provision for loan losses 355 355 260 260
Non-interest income 1,793 1,933 1,527 1,653
Non-interest expense 3,929 4,890 3,611 4,614
Provision for income taxes 684 684 551 560
Net income 1,244 1,352 1,069 1,017
Basic net income per share .72 .78 .76 .72
Diluted net income per share .69 .75 .65 .62
</TABLE>
4. ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). This statement establishes standards
for reporting and displaying of comprehensive income and its components in
a full set of general purpose financial statements. SFAS 130 requires all
items that are required to be recognized under accounting standards as
components of comprehensive income be reported in an annual financial
statement that is displayed in equal prominence with the other annual
financial statements. For interim period financial statements, enterprises
are required to disclose a total for comprehensive income in those
financial statements. The term "comprehensive income" is used in SFAS 130
to describe the total of all components of comprehensive income including
net income. "Other comprehensive income" refers to revenues, expenses,
gains, and losses that are included in comprehensive income but excluded
from earnings under current accounting standards. Currently, "other
comprehensive income" for the Company consists solely of items previously
recorded as a component of stockholders' equity under SFAS 115, "Accounting
for Certain Investments in Debt and Equity Securities". The Company has
adopted the interim-period disclosure requirements of SFAS 130 effective
January 1, 1998 and will adopt the annual financial statement reporting and
disclosure requirements of SFAS 130 effective December 31 1998.
Total comprehensive income for the three months and six months ended June
30, 1998 was $516,000 and $1,138,000 compared to $826,000 and $1,041,000
for the three months and six months ended June 30, 1997.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 is effective for financial statements
for years beginning after December 15, 1997. The Company does not have any
separate segments that are considered material.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 is effective for financial statements for fiscal
quarters beginning after June 15, 1999. The Company has not made an
assessment on the expected impact that SFAS 133 will have on its financial
statements.
5. RECLASSIFICATIONS
Certain 1997 amounts have been reclassified for comparative purposes in
order to conform the prior period to the 1998 presentation.
Page 6 of 19
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Performance Overview
Summit Bank Corporation and Subsidiaries (collectively, the "Company") reported
net income of $619,000 for the second quarter of 1998 compared to earnings for
the same period last year of $658,000. The earnings decrease is attributable to
slightly higher non-interest expenses in second quarter 1998 as well as an
increased effective tax rate. Net earnings per share for second quarter 1998
were $.34 (diluted) as compared to $.40 (diluted) for second quarter 1997. Basic
earnings per share for the respective second quarters of 1998 and 1997 were $.34
and $.47. Current year to date net income through June 30 was $1,244,000, a 16%
increase over 1997 year to date earnings of $1,069,000. Diluted earnings per
share for the six-month periods of 1998 and 1997 were $.69 and $.65,
respectively while basic earnings per share for the same periods were $.72 and
$.76, respectively. The annualized return on average stockholders' equity for
the 1998 six-month period was 11.1% versus 12.4% for the 1997 six-month period,
while the returns on average assets for the comparable periods were 1.31% and
1.35%. Book value per share was $13.13 at June 30, 1998 compared to $13.28 at
December 30, 1997 and $12.59 at June 30, 1997. The decline in earnings per share
and return on average shareholders' equity in 1998 year to date compared to the
same period in 1997 was mainly due to the issuance of an additional 408,000
shares of common stock resulting from the exercise of organizers' warrants
issued in 1988 and stock options issued during the Company's first ten years of
operations. In second quarter 1998, the Company paid a dividend of $.10 per
share to its shareholders.
On June 30, 1998, the Company acquired a financial institution, California
Security Bank, in San Jose, California for a cash price of $6 million by merging
California Security Bank into The Summit National Bank. The acquisition was
accounted for using the purchase method of accounting. The acquired bank had one
office location and total assets of $40 million, which included investment
securities of $14 million and loans of $19 million at June 30. Primarily due to
this addition, total assets for the Company at June 30, 1998 increased to $244
million, an increase of 51% during the last twelve months and 35% since year-end
1997. Total loans were $122 million at June 30 compared to $99 million at
year-end 1997, an increase of 24%. Total deposits have grown $70 million, or
53%, during the last twelve months and $57 million, or 39%, since December 31,
1997. The acquisition contributed $36 million of deposits to the Company's
deposit base, $6 million of which were non-interest-bearing deposits. The
Company's subsidiary Bank experienced a strong growth in time deposits due to a
special 10- and 20-month Certificate of Deposit promotion held in second quarter
1998. During second quarter, the influx of time deposits added $15 million of
funds for investment in loans and securities, in addition to providing cash for
the acquisition.
Net interest income increased 12% to $2.2 million during second quarter 1998
compared to the same period in 1997, primarily due to a higher volume of
interest earning assets. For the six-month periods of 1998 and 1997, net
interest income increased 11% to $4.4 million. The Company's net interest margin
through June 30, 1998 declined to 5.13% from 5.57% for the comparable period in
1997 due primarily to a higher cost of funds. In addition, yields on
interest-earning assets have declined slightly from 9.0% for the six months
ended June 30, 1997 to 8.7% for the same period in 1998 due to lower yields on
investment securities purchased to replace called agency securities and slightly
lower rates on loans as a result of increased competition.
The provision for loan losses increased to $195,000 from $135,000 for the
respective second quarters of 1998 and 1997 due to loan volume growth in 1998.
Gross charged off loans for the quarter ended June 30, 1998 were $17,000 while
recoveries for the period were $169,000, resulting in an annualized net recovery
rate of .20% of total loans for the current year to date compared to an
annualized net charge-off rate for the year to date 1997 of .96% The recoveries
recorded in second quarter included $47,000 of guaranteed portions of SBA loans
previously charged-off. Net loan charge-offs were 1.08% of total loans for the
year ended December 31, 1997.
Non-interest income was relatively flat from second quarter 1998 to second
quarter 1997. Gains on sales of SBA loans for second quarter 1998 and 1997 were
$216,000 and $208,000, respectively. Increases in service charge income and
overdraft fees of $65,000 comparing second quarter 1998 to the same period in
1997 were partially offset by a decline in SBA loan servicing fees of $50,000.
The increase in service charge fees were a result of higher demand deposit
volumes and an increase in service charge rates effected in May, 1997. The
decline in SBA loan servicing fees was due in part to the decrease in servicing
rates received on sold loans as a result of heightened competition over the past
year, in addition to the increase in the offsetting amortization expense of the
related servicing asset. Year to date non-interest income was $1.8 million, a
17% increase over 1997 to date non-interest
Page 7 of 19
<PAGE> 8
income. This increase was primarily due to the sale of SBA loans in first
quarter 1998 while no SBA loans were sold in first quarter 1997.
Non-interest expenses increased $218,000, or 12%, in the second quarter of 1998
as compared to the same period last year. A portion of the increase was due to
the costs allocated to ensure that the Bank is ready for Year 2000 within the
time frame set by the Office of the Comptroller of the Currency. In second
quarter, $45,000 was earmarked for this cause, and the Bank completed the task
of assessment and replacement of computer hardware to Year 2000 compliant
equipment. Personnel costs of $985,000 also increased from second quarter 1997
by $89,000 primarily due to salary increases, higher temporary employee expenses
and SBA loan commission expenses. Other operating expenses increased $76,000, or
12%, to $693,000 for second quarter 1998 compared to the same quarter last year.
General Bank growth and stronger marketing efforts have increased expenses for
data and item processing by $28,000 and marketing costs by $19,000 comparing
second quarter 1998 to the same period in 1997. In addition, miscellaneous
expenses, which include employee relations and incentives and bank security,
increased in second quarter by $23,000 as compared to second quarter last year.
The Company's efficiency ratio for the three-month period of 1998 was 64%,
somewhat higher than the ratio for the same period last year of 62%, primarily
due to the increase in non-interest expenses. Year to date non-interest expenses
increased 9% from 1997 to the current year total of $3.9 million. The increase
was primarily due to higher personnel costs and other operating expenses such as
non-capitalizable equipment (for Year 2000 costs), data processing, marketing
and legal fees.
The financial institution in San Jose that was purchased at June 30, 1998 is
located in leased space in an area of San Jose whose population is predominately
Vietnamese and Chinese. Because of its location, the Company will be able to
capitalize on its major Atlanta strengths in the small business banking arena,
as well as servicing ethnic groups familiar to Summit and providing
international trade finance services to the San Jose market. The San Jose
financial institution, prior to acquisition, was making a small monthly profit.
The Company plans to consolidate most of the back-room operations of the office
with the head office in Atlanta, thus allowing for significant cost savings, and
to operate the San Jose office as a branch of the Bank. With these cost savings
and the addition of several new products and services currently offered to its
Atlanta market, such as cash management services, a voice response system and
international trade finance services, the Company expects this branch office to
make a positive impact on late 1998 earnings.
Asset Quality
Non-performing assets increased to $2,696,000 at June 30, 1998 compared to
$1,777,000 at year-end 1997. Non-performing assets represented 2.20% of total
loans as of June 30, 1998 compared to 1.80% at December 31, 1997. The
acquisition of California Security Bank resulted in the addition of $999,000 of
non-performing loans which consist of two commercial loans, one of which has
been restructured, both collateralized with first mortgages on real estate.
Other non-performing loans at June 30, 1998 represents four fully guaranteed SBA
credits, one real estate credit of $722,000 for which the Bank believes it is
well secured, and one commercial credit also collateralized with first and
second mortgages on real property. One of the SBA credits included in
non-accrual loans at December 31, 1997 was reclassified in January 1998 as a
restructured loan because of interest rate, term, and collateral modifications.
Management believes the restructuring of the loan has enhanced its
collectibility even though the loan will remain non-performing. Additionally,
the loan is fully guaranteed by the SBA.
Page 8 of 19
<PAGE> 9
NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
(Dollars in thousands) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
Loans on non-accrual
SBA guaranteed $ 361 $1,018
Non-SBA guaranteed 1,438 759
Other real estate -- --
Restructured loans -
SBA guaranteed 413 --
Non-SBA guaranteed 484 --
- --------------------------------------------------------------------------------
Total non-performing assets $2,696 $1,777
- --------------------------------------------------------------------------------
Loans 90 days past due and still accruing interest $ -- --
Total non-performing assets as a
percentage of total loans and ORE 2.20% 1.80%
Loans ninety days past due and still accruing
interest as a percentage of total loans --% --%
</TABLE>
The allowance for loan losses increased to $2,796,000 at June 30, 1998 from
$1,468,000 at year-end 1997, an increase of 90%. The acquisition of California
Security Bank contributed to the addition of $814,000 to the Company's loan
loss allowance. Loan losses have also declined this year to date with gross
charge-offs of $202,000 offset by recoveries of $361,000, resulting in a net
annualized charge-off rate of -.20% of average total loans compared to 1.08%
for the entire year of 1997. The allowance for loan losses represented 2.29%
and 1.48%, respectively, of total loans outstanding at June 30, 1998 and
December 31, 1997.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES AT JUNE 30, 1998
<TABLE>
<CAPTION>
(In thousands)
-----------------------------------------------------------------
<S> <C>
Allowance for loan losses at December 31, 1997 $1,468
-----------------------------------------------------------------
Charge-offs:
Commercial, financial, and agricultural 125
SBA 38
Real estate --
Installment loans to individuals 39
-----------------------------------------------------------------
Total 202
-----------------------------------------------------------------
Recoveries:
Commercial, financial, and agricultural 115
SBA 230
Real estate --
Installment loans to individuals 16
-----------------------------------------------------------------
Total 361
-----------------------------------------------------------------
Net recoveries (159)
-----------------------------------------------------------------
Provision for loan losses charged to income 355
Adjustment due to acquisition of California Security Bank 814
-----------------------------------------------------------------
Allowance for loan losses at June 30, 1998 $2,796
-----------------------------------------------------------------
</TABLE>
Page 9 of 19
<PAGE> 10
The loan portfolio is periodically reviewed to evaluate the outstanding loans
and to measure both the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses and internal credit ratings. Based on this analysis,
management considers the allowance for loan losses at June 30, 1998 to be
adequate to cover loan losses in the portfolio as of that date. However, because
of the inherent uncertainty of assumptions made during the evaluation process,
there can be no assurance that loan losses in future periods will not exceed the
allowance for loan losses or that additional allocations to the allowance will
not be required.
Liquidity and Capital Adequacy
Liquidity has increased in second quarter primarily due to the California
acquisition as compared to December 31, 1997. At June 30, 1998, the Company's
average net loan to deposit ratio was 59%, down from 67% at year end. Management
also analyzes the level of off-balance sheet assets such as unfunded loan
commitments and outstanding letters of credit as they relate to the levels of
cash, cash equivalents, liquid investments, and available federal funds lines to
ensure that no potential shortfall exists. Additionally, the Bank has $16
million of borrowing capacity under a secured line of credit available from the
Federal Home Loan Bank of Atlanta, of which $10 million was being utilized at
June 30, 1998. Based on this analysis, management believes that the Company has
adequate liquidity to meet short-term operational requirements.
Stockholders' equity of the Company increased $4 million to $23.8 million at
June 30, 1998, an increase of 20% from December 31, 1997, and 34% from June 30,
1997. In addition to normal earnings retention, stockholders' equity increased
$3.2 million since December 31, 1997 due to the issuance of common stock from
the exercise of warrants and options. The capital level of the subsidiary Bank
exceeds all prescribed regulatory capital guidelines for adequate
capitalization. Regulations require that the most highly rated banks maintain a
minimum Tier 1 leverage ratio of 3%, and require other banks to maintain a
minimum Tier 1 leverage ratio of 3% plus an additional cushion of at least 1 to
2 percentage points. Tier 1 capital consists of stockholders' equity less
certain intangible assets. The Bank's Tier 1 leverage ratio declined to 7.4% at
June 30, 1998 compared to 9.6% at year end 1997 due to the acquisition. Since it
was a cash transaction, stockholders' equity was not affected while $40 million
in assets were consolidated into the Bank's total assets. Regulations require
that the Bank maintain a minimum total risk weighted capital ratio of 8% with
50%, or 4%, of this amount made up of Tier 1 capital. Risk-weighted assets
consist of balance sheet assets adjusted by risk category and off-balance sheet
asset equivalents similarly adjusted. At June 30, 1998, the Bank had a
risk-weighted total capital ratio of 11.17% and a Tier 1 risk-weighted capital
ratio of 9.91% compared to year-end 1997 ratios of 15.6% and 14.3%,
respectively.
Year 2000
The Company has made significant progress on its Year 2000 compliance project in
1998 in an effort to ensure that failures will not materially adversely affect
its operations. The first major milestone was reached by June 30, 1998 with the
completion of the hardware testing and necessary replacement. The Company
engaged a company to assist in the testing and replacement of any computer
hardware which was not Year 2000 compliant. Actual costs accrued or incurred to
date for this portion of the Year 2000 project are $45,000. A testing plan for
mission critical systems, systems which are necessary to the ongoing operation
of the Bank, is being written, and testing of these systems will begin in
September, 1998. The Company outsources its data processing and item processing
services to third party vendors. The completion of the Company's Year 2000
project and its ability to adequately service its customers in 2000 is largely
dependent on the compliance of these third party vendors. The Company has
monitored the progress of these vendors in their efforts to become Year 2000
compliant over the past year, and will address contingency plans for these
systems in early 1999, if testing has proven unsatisfactory. Another critical
system is utilized in the Bank's international department to process customer
letters of credit and other trade finance products. This system has been
certified as Year 2000 compliant by the third party vendor. The Company also
recognizes the importance of ensuring that borrowers are addressing the problem
in a timely manner to avoid deterioration of the loan portfolio solely due to
Year 2000. The Company has identified all material relationships, mailed
relevent questionnaires to assess the risk, and plans to work with each of these
customers on a one-to-one basis as appropriate to assist them with compliance.
Deposit customer awareness is being addressed through mailings and statement
stuffers.
Accordingly, the Company believes that its internal systems and software and the
network connections it maintains will be adequately programmed to address the
Year 2000 issue. Based on information currently available, management does not
believe that the Company will incur significant additional costs in connection
with the Year 2000 issue. Nevertheless, there can be no assurances that all
hardware and software that the Company will use will be Year 2000 compliant, and
the Company cannot predict with any certainty the costs the Company will incur
to
Page 10 of 19
<PAGE> 11
respond to any Year 2000 issues. Further, since the business of the Company's
customers and vendors may be negatively affected by the Year 2000 issue, any
financial difficulties incurred by the Company's customers and vendors in
solving Year 2000 issues could negatively affect their ability to perform their
agreements with the Company. Therefore, even if the Company does not incur
significant direct costs in connection with responding to the Year 2000 issue,
there can be no assurance that the failure or delay of the Company's customers,
vendors or other third parties in addressing the Year 2000 issue or the costs
involved in such process will not have a material adverse effect on the
Company's business, financial condition and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has not provided quantitative and qualitative disclosures about
market risk as required by Item 305 of Regulation S-K because it met the
requirements of a small business issuer. The Company will be required to provide
this disclosure for the year ended December 31, 1999.
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings - Not Applicable
ITEM 2. Changes in Securities - Not Applicable
ITEM 3. Defaults Upon Senior Securities - Not Applicable
ITEM 4. Submission of Matters to a Vote of Security Holders - Not Applicable
The 1998 Annual Meeting of the Shareholders (the "Meeting") of the
Company was held on April 25, 1998. Proxies were solicited prior to
the meeting from shareholders of record at the close of business on
March 13, 1997, for the primary purposes of electing six members to
the Board of Directors and approving the Company's 1998 Stock
Incentive Plan.
Article Fourteen of the Company's Amended and Restated Articles of
Incorporation provides that the Board of Directors shall be divided
into three classes with each class to be as nearly equal in number as
possible. Article Fourteen also provides that the three classes of
directors are to have staggered terms, so that the terms of only
approximately one-third of the Board will expire at each annual
meeting of shareholders and each director serves a three-year term.
Six Class III Directors were nominated at the meeting to serve until
the Annual Shareholders Meeting in 2001: Gerald L. Allison, Jose
Gonzalez, James S. Lai, Nack Paek, Carl L. Patrick, Jr., and David Yu.
All six nominees were elected.
Proxies for 78%, or 1,423,564 of the 1,815,363 outstanding common
shares, were received prior to the meeting. A quorum was present by
proxy. Votes were cast as follows:
<TABLE>
<CAPTION>
Votes Votes
Director For Against
-------- --- -------
<S> <C> <C>
Gerald L. Allison 1,412,589 10,975
Jose Gonzalez 1,416,791 6,773
James S. Lai 1,422,389 1,175
Nack Paek 1,422,589 975
Carl L. Patrick, Jr. 1,422,589 975
David Yu 1,412,589 10,975
</TABLE>
The following Class I and Class II directors, whose terms did not
expire at the Annual Shareholders Meeting, continued to serve as
directors following the meeting: Peter M. Cohen, Donald R. Harkleroad,
Daniel T. Huang, Shafik H. Ladha, Paul C. Y. Chu, Cecil M. Phillips,
Howard H. L. Tai, P. Carl Unger, Aaron I. Alembik, Jack N. Halpern,
Sion Nyen (Francis) Lai, Shih Chien (Raymond) Lo, W. Clayton Sparrow,
Jr., and Pin Pin Chau.
Page 11 of 19
<PAGE> 12
The Company's 1998 Stock Incentive Plan was approved with 1,076,239
votes for, 9,552 votes against, and 4,125 votes abstaining.
Pursuant to Rule 14a-4(c)(1) promulgated under the Securities Exchange
Act of 1934, as amended, shareholders desiring to present a proposal
for consideration at the Company's 1999 Annual Meeting of Shareholders
must notify the Company in writing at its principal office at 4360
Chamblee Dunwoody Road, Atlanta, Georgia, 30341 of the contents of
such proposal no later than February 15, 1999. Failure to timely
submit such a proposal will enable the proxies appointed by management
to exercise their discretionary voting authority when the proposal is
raised at the Annual Meeting of Shareholders without any discussion of
the matter in the proxy statement.
ITEM 5. Other Information - None
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
<S> <C>
2.1 Agreement and plan of merger by and between the Summit National
Bank and California Security Bank, dated March 27, 1998
(incorporated by reference to Exhibit 2.1 to the Company's
current report on Form 8-K dated April7, 1998.)
3.1 Amended and Restated Articles of Incorporation of Summit Bank
Corporation (incorporated by reference to Exhibit 3.2 of Summit
Bank Corporation's Registration Statement on Form S-1, Amendment
No.3 (Registration Number 33-16366.)
3.2 Bylaws of Summit Bank Corporation, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987.)
4.1 The rights of security holders are defined in (i) Articles Five,
Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen of the
Amended and Restated Articles of Incorporation of Summit Bank
Corporation and (ii) Articles Two, Three, Eight, Ten, and Eleven
of the amended Bylaws of Summit Bank Corporation, (incorporated
by reference to Exhibits 3.1 and 3.2 respectively, to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.1 Summit Bank Corporation 1987 Key Employee Incentive Stock Option
Plan, as amended and restated as of February 28, 1989
(incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991.)
10.2 Form of Summit Bank Corporation Organizer's Warrant Agreement
(incorporated by reference to Exhibit 10.4 of Summit Bank
Corporation's Registration Statement on Form S-1 (Registration
Number 33-16366.)
10.3 Lease Agreement dated December 3, 1993, between Baker Dennard
Co., Lessor, and Summit National Bank, Lessee (incorporated by
reference to Exhibit 10.4 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993.)
10.4 Lease agreement dated June 16, 1995, between ZML-Paces Limited
Partnership, Lessor and Summit National Bank, Lessee
(incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995.)
</TABLE>
Page 12 of 19
<PAGE> 13
<TABLE>
<S> <C>
10.5 Change in Control Agreement dated August 25, 1995 by and between
Pin Pin Chau, President of the Summit National Bank, and the
Summit National Bank (incorporated by reference to Exhibit 10.7 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.)
10.6 Change in Control Agreement dated August 25, 1995 by and between
David Yu, Chairman of the Summit National Bank, and the Summit
National Bank (incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.)
10.7 Change in Control Agreement dated August 25, 1995 by and between
Alec Dudley, Executive Vice President of the Summit National Bank,
and the Summit National Bank (incorporated by reference to Exhibit
10.9 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
10.8 Change in Control Agreement dated August 25, 1995 by and between
Gary K. McClung, Executive Vice President of the Summit National
Bank, and the Summit National Bank (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)
10.9 Agreement to purchase real estate dated December 18, 1995 between
SBC Properties, L.L.C. (as agent for the Summit National Bank) and
SunTrust Bank, Atlanta (incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.)
10.10 Agreement to purchase real estate dated June 20, 1996 between The
Summit National Bank and Nationsbank, NA. (incorporated by
reference to Exhibit 10.11 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule (for SEC use only)
</TABLE>
b) Reports on Form 8-K
On April 7, 1998, the Company filed a Current Report on Form 8-K to
report execution of the agreement to acquire California Security Bank.
The item reported was "Item 5 - Other Events".
On July 14, 1998, the Company filed a Current Report on Form 8-K to
report consummation of its acquisition of California Security Bank. The
items reported were "Item 2 - Acquisition or Disposition of Assets" and
"Item 7 - Financial Statements, Pro-Forma Financial Information and
Exhibits" (to be filed by amendment).
Page 13 of 19
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed by the undersigned,
thereunto duly authorized.
SUMMIT BANK CORPORATION
BY: /s/ David Yu
-------------------------------------
David Yu
President and Chief Executive Officer
BY: /s/ Gary K. McClung
-------------------------------------
Gary K. McClung
Executive Vice President
(Principal Financial Officer
and Principal Accounting Officer)
DATE: August 13, 1998
------------------------------------
Page 14 of 19
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<S> <C>
2.1 Agreement and plan of merger by and between the
Summit National Bank and California Security Bank,
dated March 27, 1998 (incorporated by reference to
Exhibit 2.1 to the Company's current report on Form 8-K
dated April7, 1998.)
3.1 Amended and Restated Articles of Incorporation
of Summit Bank Corporation (incorporated by reference
to Exhibit 3.2 of Summit Bank Corporation's
Registration Statement on Form S-1, Amendment No.3
(Registration Number 33-16366.)
3.2 Bylaws of Summit Bank Corporation, as amended
(incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.)
4.1 The rights of security holders are defined in
(i) Articles Five, Six, Nine, Ten, Eleven, Thirteen,
Fourteen, and Sixteen of the Amended and Restated
Articles of Incorporation of Summit Bank Corporation
and (ii) Articles Two, Three, Eight, Ten, and Eleven of
the amended Bylaws of Summit Bank Corporation,
(incorporated by reference to Exhibits 3.1 and 3.2
respectively, to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.)
10.1 Summit Bank Corporation 1987 Key Employee
Incentive Stock Option Plan, as amended and restated as
of February 28, 1989 (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991.)
10.2 Form of Summit Bank Corporation Organizer's
Warrant Agreement (incorporated by reference to Exhibit
10.4 of Summit Bank Corporation's Registration
Statement on Form S-1 (Registration Number 33-16366.)
10.3 Lease Agreement dated December 3, 1993, between
Baker Dennard Co., Lessor, and Summit National Bank,
Lessee (incorporated by reference to Exhibit 10.4 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10.4 Lease agreement dated June 16, 1995, between
ZML-Paces Limited Partnership, Lessor and Summit
National Bank, Lessee (incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.)
10.5 Change in Control Agreement dated August 25,
1995 by and between Pin Pin Chau, President of the
Summit National Bank, and the Summit National Bank
(incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
10.6 Change in Control Agreement dated August 25,
1995 by and between David Yu, Chairman of the Summit
National Bank, and the Summit National Bank
(incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
10.7 Change in Control Agreement dated August 25,
1995 by and between Alec Dudley, Executive Vice
President of the Summit National Bank, and the Summit
National Bank (incorporated by reference to Exhibit
10.9 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.)
</TABLE>
Page 15 of 19
<PAGE> 16
<TABLE>
<S> <C> <C>
10.8 Change in Control Agreement dated August 25,
1995 by and between Gary K. McClung, Executive Vice
President of the Summit National Bank, and the Summit
National Bank (incorporated by reference to Exhibit
10.9 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995.)
10.9 Agreement to purchase real estate dated December
18, 1995 between SBC Properties, L.L.C. (as agent for
the Summit National Bank) and SunTrust Bank, Atlanta
(incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.)
10.10 Agreement to purchase real estate dated June
20, 1996 between The Summit National Bank and
Nationsbank, NA. (incorporated by reference to Exhibit
10.11 to the Company's Annula Report on Form 10-K for
the fiscal year ended December 31, 1996.)
11.1 Statement Regarding Computation of Per Share Earnings. 17
27.1 Financial Data Schedule (for SEC use only) 18
27.2 Restated Financial Data Schedule (for SEC use only) 19
</TABLE>
Page 16 of 19
<PAGE> 1
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION
OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Statement Regarding Computation of Three months Six months
Per Share Earnings ended June 30, ended June 30,
-----------------------------------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share:
Weighted-average shares outstanding 1,815,363 1,408,126 1,735,086 1,407,908
Net income per share $ .34 $ .47 $ .72 $ .76
Diluted earnings per share:
Weighted average shares outstanding 1,815,363 1,408,126 1,735,086 1,407,908
Dilutive warrants -- 462,797 103,863 463,015
Dilutive stock options 20,000 41,225 26,377 41,225
Assumed repurchased under treasury
stock method (14,202) (278,905) (63,235) (272,471)
----------- ----------- ----------- -----------
Weighted-average common shares
outstanding and common share
equivalents 1,821,161 1,633,243 1,802,091 1,639,677
----------- ----------- ----------- -----------
Net income $ 619,000 $ 658,000 $ 1,244,000 $ 1,069,000
=========== =========== =========== ===========
Diluted net income per share $ .34 $ .40 $ .69 $ .65
=========== =========== =========== ===========
</TABLE>
Page 17 of 19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1998 10-Q FINANCIAL STATEMENTS OF SUMMIT BANK CORPORATION FOR THE SIX MONTHS
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 14,272
<INT-BEARING-DEPOSITS> 394
<FED-FUNDS-SOLD> 15,725
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 79,004
<INVESTMENTS-CARRYING> 1,314
<INVESTMENTS-MARKET> 1,314
<LOANS> 122,343
<ALLOWANCE> 2,796
<TOTAL-ASSETS> 244,132
<DEPOSITS> 201,394
<SHORT-TERM> 15,009
<LIABILITIES-OTHER> 3,838
<LONG-TERM> 0
0
0
<COMMON> 18
<OTHER-SE> 23,831
<TOTAL-LIABILITIES-AND-EQUITY> 244,132
<INTEREST-LOAN> 5,267
<INTEREST-INVEST> 2,048
<INTEREST-OTHER> 173
<INTEREST-TOTAL> 7,488
<INTEREST-DEPOSIT> 2,741
<INTEREST-EXPENSE> 3,069
<INTEREST-INCOME-NET> 4,419
<LOAN-LOSSES> 355
<SECURITIES-GAINS> 48
<EXPENSE-OTHER> 3,929
<INCOME-PRETAX> 1,927
<INCOME-PRE-EXTRAORDINARY> 1,927
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,244
<EPS-PRIMARY> .72
<EPS-DILUTED> .69
<YIELD-ACTUAL> 5.13
<LOANS-NON> 2,696
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,468
<CHARGE-OFFS> 202
<RECOVERIES> 361
<ALLOWANCE-CLOSE> 2,796
<ALLOWANCE-DOMESTIC> 2,796
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1997 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS, EXCEPT FOR LINE 9-04(21) WHICH HAS BEEN RESTATED TO
CONFORM WITH THE ADOPTION OF FINANCIAL ACCOUNTING STANDARDS NO. 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,510
<INT-BEARING-DEPOSITS> 72
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,085
<INVESTMENTS-CARRYING> 934
<INVESTMENTS-MARKET> 934
<LOANS> 90,999
<ALLOWANCE> 1,760
<TOTAL-ASSETS> 161,967
<DEPOSITS> 131,482
<SHORT-TERM> 9,728
<LIABILITIES-OTHER> 2,984
<LONG-TERM> 0
0
0
<COMMON> 14
<OTHER-SE> 17,759
<TOTAL-LIABILITIES-AND-EQUITY> 161,967
<INTEREST-LOAN> 4,727
<INTEREST-INVEST> 1,631
<INTEREST-OTHER> 154
<INTEREST-TOTAL> 6,512
<INTEREST-DEPOSIT> 2,430
<INTEREST-EXPENSE> 2,548
<INTEREST-INCOME-NET> 3,964
<LOAN-LOSSES> 260
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 3,611
<INCOME-PRETAX> 1,620
<INCOME-PRE-EXTRAORDINARY> 1,620
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,069
<EPS-PRIMARY> .76
<EPS-DILUTED> .65
<YIELD-ACTUAL> 5.57
<LOANS-NON> 1,777
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,931
<CHARGE-OFFS> 546
<RECOVERIES> 115
<ALLOWANCE-CLOSE> 1,760
<ALLOWANCE-DOMESTIC> 1,760
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
