<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1996
-----------------
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: O-17177
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BSB Bancorp, Inc.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1327860
------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer Number)
incorporation or organization)
58-68 Exchange Street, Binghamton, New York 13902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 779-2492
--------------
n/a
---------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes: [X] No: [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of June 30, 1996: 5,959,439
shares of common stock, $0.01 par value.
<PAGE>
INDEX
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PART I. FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<TABLE>
<CAPTION>
Item 1: Financial Statements
- -------
<S> <C>
Consolidated Statements of Condition
June 30, 1996 and December 31, 1995 1
Consolidated Statements of Income Three Months
and Six Months Ended June 30,
1996 and June 30, 1995 2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996
and June 30, 1995 3
Consolidated Statements of Changes in
Shareholders' Equity Six Months Ended
June 30, 1996 and June 30, 1995 4
Notes to Consolidated Financial Statements 5
Item 2: Management's Discussion and Analysis of
- -------
Financial Condition and Results of
Operations 6-15
PART II. OTHER INFORMATION
- ---------------------------
Item 1-6 16-17
Signature Page 18
</TABLE>
<PAGE>
Item 1
- -------------------------------------------------------------------------------
BSB BANCORP, INC. (Dollars in Thousands)
CONSOLIDATED STATEMENTS OF CONDITION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 33,308 $ 43,826
Federal funds sold 0 0
- -------------------------------------------------------------------------------
Total cash and cash equivalents 33,308 43,826
Investment securities (market value $109,257
and $103,611) 108,619 103,114
Mortgage-backed securities (market value
$137,214 and $144,272) 136,998 143,978
Mortgages held for sale 4,526 1,280
Loans:
Commercial 503,124 455,444
Consumer 208,826 200,546
Real estate 263,037 271,026
- -------------------------------------------------------------------------------
Total loans 974,987 927,016
Less: Unearned discounts 674 605
Allowance for possible credit losses 17,520 16,560
- -------------------------------------------------------------------------------
Net loans 956,793 909,851
Bank premises and equipment 8,209 7,288
Accrued interest receivable 8,860 8,486
Other real estate 1,479 2,468
Intangible assets 2,335 2,483
Other assets 17,813 13,767
- -------------------------------------------------------------------------------
$1,278,940 $1,236,541
===============================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
Due to depositors $1,049,939 $1,006,465
Borrowings 106,889 98,949
Other liabilities 10,524 14,353
Commitments
Shareholders' Equity:
Preferred Stock, par value $0.01 per share;
authorized 2,500,000 shares; none issued 0 0
Common Stock, par value $0.01 per share;
authorized 30,000,000 shares; 7,328,667
shares and 7,270,925 shares issued 73 73
Additional paid-in capital 27,441 26,861
Undivided profits 106,122 101,519
Unrealized appreciation (depreciation)
in securities available for sale, net (1,553) 169
Treasury stock, at cost: 1,369,228 and
1,027,528 shares (20,495) (11,848)
- -------------------------------------------------------------------------------
Total Shareholders' Equity 111,588 116,774
- -------------------------------------------------------------------------------
$1,278,940 $1,236,541
===============================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 21,786 $ 20,561 $ 42,750 $ 40,548
Interest on mortgage-backed securities 2,289 2,386 4,861 4,889
Interest on mortgages held for sale 79 52 130 72
Interest on federal funds sold and
interest-bearing deposits 0 0 0 30
Interest and dividends on investment securities:
U.S. Government obligations 1,040 821 1,961 1,473
State and municipal obligations 233 104 388 212
Other debt obligations 259 408 457 791
Corporate stocks 368 178 775 348
- --------------------------------------------------------------------------------------------------------------------------------
Total interest income 26,054 24,510 51,322 48,363
- --------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest on savings deposits 1,025 1,110 2,036 2,246
Interest on time accounts 7,883 7,030 15,625 13,795
Interest on money market deposit accounts 2,592 2,597 5,037 5,147
Interest on NOW accounts 201 192 395 376
Interest on borrowed funds 1,045 1,686 2,336 3,139
- --------------------------------------------------------------------------------------------------------------------------------
Total interest expense 12,746 12,615 25,429 24,703
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income 13,308 11,895 25,893 23,660
Provision for credit losses 2,605 1,305 4,678 2,665
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 10,703 10,590 21,215 20,995
Gains (losses) on sale of securities 314 (175) 348 (192)
Gains (losses) on sale of loans (231) 25 (75) 61
Non-interest income:
Service charges on deposit accounts 481 380 900 745
Credit card fees 987 522 1,787 963
Mortgage servicing fees 237 226 508 462
Fees and commissions-brokerage services 242 69 360 157
Trust fees 149 122 290 248
Other charges, commissions, and fees 164 137 349 341
- --------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 2,260 1,456 4,194 2,916
Non-interest expense:
Salaries, pensions and other employee benefits 3,176 3,052 6,390 6,123
Building occupancy 575 559 1,169 1,176
Computer service fees 211 222 431 411
Services 678 436 1,249 1,036
FDIC insurance 21 538 39 1,076
Goodwill 74 74 148 148
Interchange fees 710 403 1,150 654
Other real estate 7 196 144 260
Other expenses 1,756 1,444 3,189 2,939
- --------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 7,208 6,924 13,909 13,823
- --------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,838 4,972 11,773 9,957
Provision for income taxes 2,229 2,008 4,591 4,010
- --------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 3,609 $ 2,964 $ 7,182 $ 5,947
================================================================================================================================
Earnings per share: $ 0.59 $ 0.46 $ 1.17 $ 0.92
================================================================================================================================
Average shares outstanding 6,071,973 6,430,934 6,143,995 6,437,313
</TABLE>
2
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (Dollars in Thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30,
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities: 1996 1995
---------------------------------
Net income $ 7,182 $ 5,947
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses 4,678 2,865
Realized losses (gains) on available for sale investment securities (78) 36
Realized gains on available for sale mortgage-backed securities (270) (44)
Gains (losses) on sale of loans 75 (61)
Gain on sales and disposition of premises and equipment 0 (3)
Depreciation and amortization 665 687
Net amortization (accretion) of premiums and discounts on investment securities (41) 2
Net amortization of premiums and discounts on mortgage-backed securities 59 107
Net accretion of premiums and discounts on loans 69 (490)
Sales of loans originated for sale 11,092 11,940
Net increase in loans originated for sale (14,469) (12,620)
Decrease in other assets and liabilities (4,085) (2,587)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,877 5,779
- ------------------------------------------------------------------------------------------------------------------------------
Investing activities:
Proceeds from calls of held to maturity investment securities 7,199 450
Principal collected on held to maturity investment securities 902 79
Purchases of held to maturity investment securities (18,044) (115)
Proceeds from calls of held to maturity mortgage-backed securities 0 50
Principal collected on held to maturity mortgage-backed securities 1,725 1,116
Purchases of held to maturity mortgage-backed securities 0 0
Proceeds from sales of available for sale investment securities 47,163 22,278
Purchases of available for sale investment securities (49,633) (28,649)
Principal collected on available for sale investment securities 5,153 6
Proceeds from sales of available for sale mortgage-backed securities 22,357 16,878
Purchases of available for sale mortgage-backed securities (18,779) (7,426)
Principal collected on available for sale mortgage-backed securities 11,619 9,281
Net increase in longer-term loans (85,664) (70,768)
Proceeds from sales of loans 23,218 4,084
Other (1,438) (391)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (54,222) (53,127)
- ------------------------------------------------------------------------------------------------------------------------------
Financing activities:
Net increase (decrease) in demand deposits, NOW accounts, savings
accounts, and money market deposit accounts (net of deposits acquired) 17,268 (10,662)
Net increase in time deposits (net of deposits acquired) 24,265 2,892
Net increase in short-term borrowings 8,240 48,700
Repayment of long-term borrowings (300) (130)
Proceeds from exercise of stock options 580 250
Purchases of treasury stock (8,647) (2,422)
Dividends paid (2,579) (1,888)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 38,827 36,740
- ------------------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (10,518) (10,608)
Cash and cash equivalents at beginning of year 43,826 38,699
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 33,308 $ 28,091
==============================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest credited on deposits and paid on other borrowings $ 25,477 $ 25,059
- ------------------------------------------------------------------------------------------------------------------------------
Income taxes $ 5,370 $ 2,706
- ------------------------------------------------------------------------------------------------------------------------------
Non-cash investing activity:
Securitization of mortgage loans and transfers to/or sales of other real estate $ 9,824 $ (482)
- ------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) in securities $ (2,956) $ 7,836
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------
Unrealized
Depreciation
Six Months Ended Additional In Marketable
June 30, Common Paid-In Undivided Treasury Equity
1995 Stock Capital Profits Stock Securities Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 48 $ 26,436 $ 92,986 $ (7,054) $ (5,546) $ 106,870
Decrease in unrealized
appreciation in available
for sale securities 4,566 4,566
Net income 5,947 5,947
Stock options exercised 250 250
Cash dividend paid on common
stock ($0.30 per share) (1,888) (1,888)
Treasury stock purchased (2,422) (2,422)
- --------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1995 $ 48 $ 26,686 $ 97,045 $ (9,476) $ (980) $ 113,323
==========================================================================================================================
1996
Balance at December 31, 1995 $ 73 $ 26,861 $ 101,519 $ (11,848) $ 169 $ 116,774
Increase in unrealized
depreciation in available
for sale securities (1,722) (1,722)
Net income 7,182 7,182
Stock options exercised 580 580
Cash dividend paid on common
stock ($0.42 per share) (2,579) (2,579)
Treasury stock purchased (8,647) (8,647)
- --------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1996 $ 73 $ 27,441 $ 106,122 $ (20,495) $ (1,553) $ 111,588
==========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Item 1 - continued
BSB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(1) In the opinion of management, the interim financial statements reflect all
adjustments which are of a normal recurring nature necessary to a fair
statement of the results for the interim periods presented. The December
31, 1995 data in the Consolidated Statements of Condition is derived from
the consolidated financial statements included in the Company's 1995 Annual
Report to Shareholders. The accompanying unaudited interim consolidated
financial statements and related notes should be read in conjunction with
the consolidated financial statements and related notes included in the
Company's 1995 Annual Report to Shareholders.
(2) Outstanding stock options were excluded from the weighted average number of
shares because their dilutive effect is not material. Fully diluted
earnings per common share have not been presented because it is not
significantly different from primary earnings per share.
(3) The Company adopted FAS 122, "Accounting for Mortgage Servicing Rights" on
January 1, 1996. The impact for the first six months of 1996 was not
material.
(4) Certain data for prior years has been reclassified to conform to the
current year's presentation. These reclassifications had no effect on net
income.
5
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
BSB Bancorp, Inc. (the "Company"), the bank holding company for BSB Bank &
Trust Company (the "Bank"), earned net income of $3,609,000, or $0.59 per share,
for the quarter ended June 30, 1996, as compared to net income of $2,964,000, or
$0.46 per share, for the quarter ended June 30, 1995. All references to the
Company herein are intended to include the activities of the Bank, the Company's
wholly-owned subsidiary. Net income for the first six months of 1996 totalled
$7,182,000, or $1.17 per share, compared to net income of $5,947,000, or $0.92
per share for the first six months of 1995. The Board of Directors has declared
a quarterly cash dividend of $0.22 per share. The dividend is payable on
September 10, 1996 to shareholders of record at the close of business on August
23, 1996.
Financial Condition
- -------------------
During the first six months of 1996, the Bank originated $73.8 million
commercial loans, which contributed to a net increase in the commercial loan
portfolio from $455.4 million at December 31, 1995 to $503.1 million at June 30,
1996. The interest rates on these loans are generally tied to the Company's
Prime Rate. Consumer loans increased from $200.5 million to $208.8 million, and
during this period, the Bank originated $69.3 million in consumer loans and sold
$10.1 million in student loans. Real estate loans decreased from $271.0 million
at December 31, 1995 to $263.0 million at June 30, 1996. During this period,
the Bank originated $45.3 million of real estate loans and securitized or sold
$35.1 million. Total assets increased from $1,236.5 million at December 31,
1995 to $1,278.9 million at June 30, 1996.
Total deposits increased from $1,006.5 million at December 31, 1995 to
$1,049.9 million at June 30, 1996. The Company's borrowings increased from $98.9
million at December 31, 1995 to $106.9 million at June 30, 1996, while cash and
cash equivalents decreased from $43.8 million to $33.3 million at June 30, 1996.
Shareholders' equity decreased from $116.8 million to $111.6 million during
the first six months of 1996. This decrease is a result of an increase of and
repurchases of outstanding Company stock totalling $8.6 million, a $1.7 million
increase in unrealized depreciation in securities available for sale, as
required under SFAS No. 115, "Accounting For Certain Investments in Debt and
Equity Securities", and cash dividends paid to shareholders of $2.6 million.
This was offset by Company earnings of $7.2 million and $0.6 million of stock
options exercised during the period.
Results of Operations
- ---------------------
The operating results of the Company depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets, primarily loans and investments, and interest expense on interest-
bearing liabilities, primarily deposits and borrowings. The Company's operating
results also are affected by credit loss requirements, operating expenses, the
level of other income, including gains or losses on sale of loans and
securities, and other fees.
The following tables set forth, for and at the periods indicated,
information regarding (i) the Company's average balance sheet, (ii) the total
dollar amount of interest income from interest-earning assets and the resulting
average yields, (iii) the total dollar amount of interest expense on interest-
bearing liabilities and the resultant average cost, (iv) net interest income,
(v) interest rate margin and interest rate spread, (vi) net interest-earning
assets, (vii) net yield on interest-earning assets, and (viii) ratio of
interest-earning assets to interest-bearing liabilities. Average balances are
based on daily or month-end balances. No tax equivalent adjustments were made.
6
<PAGE>
Item 2 - continued
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Commercial loans $ 473,790 $11,660 9.84% $ 401,236 $10,059 10.03%
Consumer loans 200,396 4,729 9.44 199,968 4,514 9.03
Real estate loans 264,698 5,398 8.16 287,481 5,988 8.33
Investment securities 117,211 1,899 6.48 94,061 1,511 6.43
Mortgage-backed securities 128,686 2,289 7.11 138,577 2,386 6.89
Mortgages held for sale 3,406 79 9.28 1,489 52 13.97
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 1,188,187 $26,054 8.77% 1,122,812 $24,510 8.73%
- ---------------------------------------------------------------------------------------------------------------------------------
Non-interest-earning assets 69,272 59,427
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $1,257,459 $1,182,239
==================================================================================================================================
Interest-bearing liabilities:
Deposits and mortgage escrow funds $1,048,603 $11,701 4.46% $ 947,389 $10,929 4.61%
Borrowings 75,342 1,045 5.55 108,242 1,686 6.23
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 1,123,945 12,746 4.54 1,055,631 12,615 4.78
- ---------------------------------------------------------------------------------------------------------------------------------
Non-interest-bearing liabilities 17,774 11,275
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,141,719 1,066,906
- ---------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 115,740 115,333
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $1,257,459 $1,182,239
==================================================================================================================================
Net interest income/net interest rate spread $13,308 4.23% $11,895 3.95%
==================================================================================================================================
Net earnings assets/net interest rate margin $64,242 4.48% $67,181 4.24%
==================================================================================================================================
Ratio of interest-earning assets to
==================================================================================================================================
interest-bearing liabilities 1.06X 1.06X
==================================================================================================================================
</TABLE>
7
<PAGE>
Item 2 - continued
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Commercial loans $ 461,578 $22,427 9.72% $ 392,099 $ 19,703 10.05%
Consumer loans 199,487 9,400 9.42 200,224 8,943 8.93
Real estate loans 265,171 10,923 8.24 283,128 11,902 8.41
Investment securities 115,618 3,581 6.19 91,358 2,824 6.18
Mortgage-backed securities 131,425 4,861 7.40 143,126 4,889 6.83
Mortgages held for sale 2,295 130 11.33 1,360 72 10.59
Other interest-earning assets 0 0 0.00 884 30 6.79
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 1,175,574 $51,322 8.73% 1,112,179 $48,363 8.70%
- --------------------------------------------------------------------------------------------------------------------------------
Non-interest-earning assets 71,009 58,257
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $1,246,583 $1,170,436
================================================================================================================================
Interest-bearing liabilities:
Deposits and mortgage escrow funds $1,030,738 $23,093 4.48% $ 943,380 $21,564 4.57%
Borrowings 83,343 2,336 5.61 101,101 3,139 6.21
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 1,114,081 25,429 4.57 1,044,481 24,703 4.73
- --------------------------------------------------------------------------------------------------------------------------------
Non-interest-bearing liabilities 15,982 11,464
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,130,063 1,055,945
- --------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 116,520 114,491
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,246,583 $1,170,436
- --------------------------------------------------------------------------------------------------------------------------------
Net interest income/net interest rate spread $25,893 4.16% $23,660 3.97%
- --------------------------------------------------------------------------------------------------------------------------------
Net earnings assets/net interest rate margin $61,493 4.41% $67,698 4.25%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of interest-earning assets to
interest-bearing liabilities 1.06X 1.06X
=================================================================================================================================
</TABLE>
The following table presents changes in interest income and interest expense
attributable to (i) changes in volume (change in volume multiplied by old rate),
and (ii) changes in rate (change in rate multiplied by old volume). The net
change attributable to the combined impact of volume and rate has been allocated
proportionately to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 Compared to 1995 1996 Compared to 1995
Increase (Decrease) (Increase (Decrease)
Volume Rate Net Volume Rate Net
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income on interest-earning assets:
Commercial loans $ 1,329 $ 272 $ 1,601 $ 2,981 $ (257) $ 2,724
Consumer loans 10 205 215 (95) 552 457
Real estate loans (469) (121) (590) (742) (237) (979)
Investment securities 376 12 388 752 5 757
Mortgage-backed securities (488) 391 (97) (821) 793 (28)
Other interest-earning assets 132 (105) 27 38 (10) 28
- ---------------------------------------------------------------------------------------------------------------------------------
Total $ 890 $ 654 $ 1,544 $ 2,113 $ 846 $ 2,959
=================================================================================================================================
Interest expense on interest-bearing liabilities:
Deposits $ 2,770 $(1,998) $ 772 $ 2,661 $(1,132) $ 1,529
Borrowings (472) (169) (641) (518) (285) (803)
- ---------------------------------------------------------------------------------------------------------------------------------
2,298 (2,167) 131 2,143 (1,417) 726
- ---------------------------------------------------------------------------------------------------------------------------------
Total $(1,408) $ 2,821 $ 1,413 $ (30) $ 2,263 $ 2,233
=================================================================================================================================
</TABLE>
8
<PAGE>
Item 2 - Continued
Interest Income
- ---------------
The Company's interest income on earning assets increased from $24.5 million
for the three months ended June 30, 1995 to $26.1 million for the three months
ended June 30, 1996, and from $48.4 million to $51.3 million for the six months
ended June 30, 1995 and 1996, respectively. This increase in interest income was
the result of an increase in the average balance of earning assets from $1,122.8
million to $1,188.2 for the three months ended June 30, 1995 and 1996,
respectively, and from $1,112.2 million to $1,175.6 million for the six months
ended June 30, 1995 and June 30, 1996, respectively. The increase in the yield
on earning assets from 8.73% to 8.77% for the quarter ended June 30, 1995 to the
quarter ended June 30, 1996, and from 8.70% for the six months ended June 30,
1995 to 8.73% for the six months ended June 30, 1996, also contributed to this
increase in interest income for those periods. The yield on commercial loans
declined from 10.03% for the second quarter of 1995 to 9.84% for the second
quarter of 1996 and from 10.05% for the first six months of 1995 to 9.72% for
the first six months of 1996. These yield decreases were due to decreases in the
Bank's Prime Rate from 8.50% at December 31, 1995 to 8.25% at June 30, 1996.
Offsetting the decrease in Prime Rate, the commercial loan average balance
increased $72.6 million from the second quarter of 1995 to $473.8 million for
the second quarter of 1996, and from an average balance of $392.1 million for
the first six months of 1995 to $461.6 million for the first six months of 1996,
an increase of $69.5 million. These rate and volume changes for the commercial
loan portfolio were the largest contributors to the increase in interest income.
Despite high levels of competition in the local lending market for indirect auto
and mobile homes, the Company continues to emphasize origination of these loans,
which add to the Company's market base for potential business. However, such
competition, coupled with the continued softness in the local economy has
contributed to the average balance of consumer loans remaining stable for the
three-month and six-month periods ending June 30, 1995 and 1996. Consumer loans
had increases in yields which contributed to increases in interest income of
$0.2 million for the three months ended June 30, 1996 compared to the three
months ended June 30, 1995, and $0.5 million for the six months ended June 30,
1996 and June 30, 1995. Average balances of real estate loans decreased $22.8
million to $264.7 million for the quarter ended June 30, 1996 compared to
quarter ended June 30, 1995. This is another example of the effect the local
economy has had on the real estate lending portfolio. This period also reflected
a decrease in yield from 8.33% to 8.16%. The six-month period also showed
similar changes with an average balance decrease from $283.1 million to $265.2
million and a yield decrease from 8.41% to 8.24%. Due to prepayments and sales,
the average balance of mortgage-backed securities decreased from $138.6 million
to $128.7 million from the three months ended June 30, 1995 to the three months
ended June 30, 1996, and from $143.1 million to $131.4 million for the six
months ended June 30, 1995 to the six months ended June 30, 1996. This decrease
in average balance was offset by an increase in yield from 6.89% for the quarter
ended June 30, 1995 to 7.11% for the quarter ended June 30, 1996. The six-month
period showed similar changes with the yield increasing from 6.83% to 7.40%.
Interest income from mortgage-backed securities varied minimally with the affect
of these offsetting changes. The average balance of investment securities
increased from $94.1 million to $117.2 million, and the yield increased from
6.43% to 6.48% from the three months ended June 30, 1995 to the three months
ended June 30, 1996, and increased from $91.4 million to $115.6 million, and the
yield increased from 6.18% to 6.19% from the six months ended June 30, 1995 to
the six months ended June 30, 1996. The amortization of mortgage-backed
securities during these periods were mainly used to purchase bonds. Another
factor in these increases was the Bank changing its' charter to a commercial
bank in the third quarter of 1995. This change required the Bank to increase its
holding of Federal Home Loan Bank of New York stock by approximately $7.8
million.
Interest Expense
- ----------------
Total interest expense increased by $0.1 million for the quarter ended June
30, 1996 as compared to the same period in 1995. The average balance of all
interest-bearing liabilities increased from $1,055.6 million for the quarter
ended June 30, 1995 to $1,123.9 million for the quarter ended June 30, 1996.
This increase accompanies a decrease in the average rate paid on all interest-
bearing liabilities from 4.78% to 4.54% during the respective period. One
component of the change in interest-bearing liabilities is
9
<PAGE>
Item 2 - continued
the average balance of borrowings decreasing from $108.2 million for the three
months ended June 30, 1995 to $75.3 million for the three months ended June 30,
1996. The borrowing balance augments deposits to fund the loan growth
principally in the commercial loan area when needed. This decrease was coupled
with a decrease in the rate paid on borrowings from 6.23% to 5.55% during this
period to reflect lower borrowing costs from $1.7 million for the three months
ended June 30, 1995 to $1.0 million for the same period in 1996. A similar
decrease in average balances and rates paid on borrowings lowered borrowing
expense by $0.8 million for the six-month period ending June 30, 1995 to June
30, 1996. The average balance of deposits increased from $947.4 million during
the three months ended June 30, 1995 to $1,048.6 million during the same period
in 1996. The increase in the average balance of deposits, despite the 15 basis
point decrease in the average rate paid on such funds, resulted in an increase
in interest paid on deposits from $10.9 million for the second quarter of 1995
to $11.7 million for the second quarter of 1996. Total interest expense
increased from $24.7 million to $25.4 million for the six-month periods ended
June 30, 1995 and 1996, respectively. This increase was due primarily to the
elevation in the Bank's average balance in deposits; the average increased from
$943.4 million to $1,030.7 million. The average cost of deposits decreased from
4.57% to 4.48%.
Provision for Credit Losses
- ---------------------------
The provision for credit losses increased from $1.3 million to $2.6 million
for the quarters ended June 30, 1995 and June 30, 1996, respectively. The
allowance for possible credit losses increased to $17.5 million as of June 30,
1996, compared to $16.6 million as of December 31, 1995. See "Non-performing
Loans and Other Real Estate Owned". Management considers this level of reserves
adequate to cover potential credit losses.
Non-interest Income
- -------------------
Non-interest income increased from $1.5 million for the three months ended
June 30, 1995 to $2.3 million for the three months ended June 30, 1996, an
increase of 55.2%. This increase resulted primarily from growth in the credit
card merchant and consumer base resulting in increased fee income. Mortgage
servicing fees increased slightly and service charges on deposit accounts
increased 26.6% from the quarter ended June 30, 1995 to the quarter ended June
30, 1996. Also contributing to the increase in non-interest income was a
favorable financial market environment for security and annuity sales which
prompted increased brokerage fee income in the second quarter of 1996. The total
non-interest income increased from $2.9 million for the six months ended June
30, 1995 to $4.2 million for the same period in 1996.
Gain On Sale of Loans
- ---------------------
The practice of the Bank has been to sell or securitize long-term, fixed-
rate residential mortgage loans. As a result of this practice, the Bank
securitized or sold $35.1 million of mortgage loans for the first six months of
1996 as compared to having securitized or sold $13.6 million for the first six
months of 1995. Of the $38.2 million of residential mortgage loans originated in
the first six months of 1996, only $5.0 million were adjustable-rate loans. This
led to increased sales of fixed-rate loans in 1996 as compared to 1995. For the
first six months of 1995, $27.1 million of the total residential mortgage loans
of $43.6 million that were originated were adjustable-rate loans. A more stable
rate environment in the first six months of 1995 resulted in a gain on sale of
mortgages of $25,000 for the quarter ended June 30, 1995 and $61,000 for the
first six months of 1995. The rise in interest rates during 1996 resulted in
losses on sale of loans of $231,000 for the quarter ended June 30, 1996, which
is primarily made up of losses on sale of mortgages of $173,000 and adjustments
of $70,000 on mortgages available for sale that were marked to market. Losses of
$75,000 were incurred for the first six months of 1996. They were comprised
mainly of losses on sale of mortgages of $183,000 and adjustments of $144,000 of
lowering mortgages available for sale by marking to market. Offsetting these
losses for the six-month period ending June 30, 1996, were gains of $210,00
taken in the first quarter on a sale of student loans of $9.6 million.
10
<PAGE>
Item 2 - continued
Non-interest Expense
- --------------------
Non-interest expense increased from $6.9 million to $7.2 million for the
quarters ended June 30, 1995 and 1996, respectively, and from $13.8 million to
$13.9 million for the six months ended June 30, 1995 and 1996, respectively. The
major changes in components of non-interest expense included growth in the
credit card merchant transaction base which resulted in additional fee income,
but also additional non-interest expense associated with servicing the increased
transactions and accounts. These interchange fee expenses increased from $0.4
million for the second quarter of 1995 to $0.7 million for the same quarter of
1996. The first six months of 1996 showed $1.2 million of expense compared to
$0.7 million for the same period of 1995. Adding to these expenses, are
increased expenses paid to service the consumer-based transactions. Offsetting
the increase in credit card expenses was a decline in FDIC insurance expense
because of the full capitalization of the FDIC Bank Insurance Fund. This
expense declined from $538,000 for the second quarter of 1995 to $21,000 for the
same period in 1996. For comparable six-month periods, the decline was from
$1.1 million in 1995 to $39,000 in 1996.
Income Taxes
- ------------
The income tax expense was $2.0 million and $2.2 million for the quarters
ended June 30, 1995 and June 30, 1996, respectively. These taxes increased from
$4.0 million to $4.6 million for the six-month periods ending June 30, 1995 and
June 30, 1996, respectively.
Non-Performing Loans and Other Real Estate Owned ("ORE")
- --------------------------------------------------------
When a borrower fails to make a scheduled payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made within five business days after the expiration of
the payment grace period, set forth in the loan contract. In most cases,
deficiencies are cured promptly. If a delinquency extends beyond 60 days, the
loan and payment histories are reviewed and legal proceedings may be instituted
to remedy the default. While the Company generally prefers to work with
borrowers to resolve such problems, the Company does initiate foreclosure
proceedings or pursues other legal collection procedures, as necessary, to
minimize any potential loss. Once the Company takes legal title to the
property, it is classified as other real estate owned ("ORE") on the Statement
of Condition.
Loans are placed on a non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. Such loans include potential problem
loans where known information about possible credit problems of borrowers has
caused management to have serious doubts as to the ability of such borrowers to
comply with the loan repayment terms. When a loan is placed on non-accrual
status, previously accrued but unpaid interest is deducted from interest income.
The Company does not accrue interest on loans greater than 90 days or more past
due for the payment of interest unless the value of the collateral and active
collection efforts ensure full recovery.
The following table sets forth information regarding non-performing loans
which are 90 days or more overdue and other real estate owned held by the
Company at the dates indicated.
11
<PAGE>
Item 2 - continued
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
- -------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C>
Commercial loans:
Non-accrual loans $ 5,348 $ 8,032
Consumer loans:
Accruing loans 90 days overdue 160 96
Residential real estate loans:
Non-accrual loans 1,938 1,920
Commercial real estate loans:
Non-accrual loans 2,783 2,764
- -------------------------------------------------------------------------------------------------------------
Total non-performing loans and accruing loans 90 days overdue $10,229 $12,812
Total non-performing loans to total gross loans 1.05% 1.38%
Total real estate acquired in settlement of
loans at net realizable value $ 1,479 $ 2,468
Total non-performing loans and real estate acquired in settlement
of loans at net realizable value to total assets 0.92% 1.24%
</TABLE>
Total non-performing loans and other real estate owned decreased to $11.7
million, or 0.92% of total assets at June 30, 1996, compared to $15.3 million,
or 1.24% of total assets at December 31, 1995.
At December 31, 1995, 49 non-performing residential real estate loans
totalled $1.9 million. At June 30, 1996, non-performing residential real estate
loans totalled $1.9 million and included 39 loans.
At December 31, 1995, non-performing commercial real estate loans totalled
$2.8 million, and included 6 loans ranging in size from $62,000 to $1.6 million.
At June 30, 1996, non-performing commercial real estate loans remained stable at
$2.8 million and consisted of 6 loans ranging in size from $63,000 to $1.6
million.
Non-performing commercial loans at December 31, 1995 totalled $8.0 million
and included 35 individual loans ranging in size from $5,500 to $2.2 million. At
June 30, 1996, non-performing commercial loans decreased to $5.3 million and
consisted of 34 individual loans ranging in size from $2,000 to $1.7 million.
The Company's policy is to charge-off all consumer loans before they become
non-accrual. At December 31, 1995, the Company had $96,000 of loans greater than
90 days past due on which it was accruing interest, as compared to $161,000 at
June 30, 1996. As of each date, the only such loans were consumer loans.
At June 30, 1996, the recorded investment in loans for which impairment has
been recognized in accordance with SFAS No. 114 totalled $9,309,598 of which
$3,341,000 related to loans with no valuation allowance because the loans have
been partially written down through charge-offs, and $5,968,598 related to loans
with a corresponding valuation allowance of $2,288,762. For the twelve months
ended June 30, 1996, the average recorded investment in impaired loans was
approximately $9,250,675. The Bank recognized on a cash basis, $80,494 of
interest on impaired loans for the quarter ended June 30, 1996.
At December 31, 1995, ORE, which is defined to include property acquired by
foreclosure or by deed in lieu of foreclosure, totalled $2.5 million, which
consisted of 7 single-family residential properties with a book value totalling
$400,000 and 12 local commercial real estate properties with a book value of
$2.1 million. At June 30, 1996, ORE totalled $1.5 million, which consisted of 5
single-family residential properties totalling $0.2 million and 12 local
commercial real estate properties with a book value of $1.3 million. See
"- Provision for Credit Losses".
Management reviews the adequacy of the allowance for possible credit losses
at least quarterly, applying projected loss ratios to the risk-ratings of loans
both individually and by category. The projected loss ratios incorporate such
factors as recent loss experience, current economic conditions and trends,
trends in past due and non-accrual amounts, the risk of characteristics of
various categories and concentrations of loans, transfer risks and other
pertinent factors.
12
<PAGE>
Item 2 - continued
The following table summarizes activity in the Company's allowance for possible
credit losses during the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Average gross loans outstanding $ 956,928 $ 905,245 $ 944,019 $ 892,436
========================================================================================================
Allowance at beginning of period $ 17,207 $ 15,551 $ 16,560 $ 15,847
========================================================================================================
Charge-offs:
Commercial loans 1,846 594 3,088 1,711
Consumer loans 363 276 711 522
Residential real estate loans 0 26 30 57
Commercial real estate loans 274 533 450 1,026
- --------------------------------------------------------------------------------------------------------
Total loan charge-offs 2,483 1,429 4,279 3,316
Recoveries:
Commercial loans 56 49 193 205
Consumer loans 122 96 233 150
Residential real estate loans 0 0 0 16
Commercial real estate loans 13 4 135 9
- --------------------------------------------------------------------------------------------------------
Total recoveries 191 149 561 380
- --------------------------------------------------------------------------------------------------------
Net charge-offs 2,292 1,280 3,718 2,936
- --------------------------------------------------------------------------------------------------------
Provision for credit losses
charged to operating expenses 2,605 1,305 4,678 2,665
- --------------------------------------------------------------------------------------------------------
Allowance at end of period $ 17,520 $ 15,576 $ 17,520 $ 15,576
========================================================================================================
Ratio of net charge-offs to:
Average gross loans
outstanding (annualized) 0.96% 0.57% 0.79% 0.66%
Ratio of allowance to:
Non-performing loans 171.28% 123.01% 171.28% 123.01%
Period-end loans outstanding 1.80% 1.68% 1.80% 1.68%
</TABLE>
During the second quarter of 1996, the Bank charged-off $2.5 million of
loans compared to $1.4 million for the second quarter of 1995. Charge-offs on
commercial loans increased from $0.6 million for the quarter ended June 30, 1995
to $1.8 million for the three months ended June 30, 1996. Of this, $0.7 million
of an office building loan was charged off, which brought to $0.9 million the
total charge-offs for this loan for the first six months of 1996. Also
contributing to the increase in the charge-offs from 1995 to 1996 was the
charge-off of $0.5 million of a loan to a local manufacturer. This same
manufacturer had $0.2 million of another loan charged off in this quarter. These
charge-offs contributed to the lower amount of non-performing loans for the
second quarter of 1996 also. The above loans were a factor in the increase of
charge-offs for the first six months of 1996 of $4.3 million compared to $3.3
million for 1995. With these charge-offs, the Bank was still able to increase
the ratio of allowance to period-end loans outstanding from 1.68% at June 30,
1995 to 1.80% at June 30, 1996. For the same periods, the ratio of allowance to
non-performing loans increased from 123.01% to 171.28%. This allowance increase
from $15.6 million at June 30, 1995 to $17.5 million at June 30, 1996 is
consistent with the growth in the loan portfolio and management's discerning
review of and action toward non-performing loans. Management considers the
current level of loan loss reserves to be adequate to cover potential credit
losses.
13
<PAGE>
Item 2 - continued
Sources of Funds
- ----------------
Funding for the Company's assets is derived primarily from demand and time
deposits and long and short-term borrowings. The average balance of all
interest-bearing liabilities increased from $1,044.5 million for the six-month
period ended June 30, 1995 to $1,114.1 million for the same period ended June
30, 1996, an increase of $69.6 million. In order to provide the Company with
alternative funding sources, the Board of Directors authorized the Company to
use up to $50.0 million of brokered deposits. The Company continued utilizing
this authorization in the six months of 1996 and held brokered deposits of $40.0
million compared to $20.0 million at June 30, 1995.
Liquidity and Capital Resources
- -------------------------------
A fundamental objective of the Company is to effectively manage its
liquidity. Prudent liquidity management insures that the Company can meet all of
its contractual obligations, meet its customers' loan demands, fund all of its
operations and minimize the effects of interest rate fluctuation on earnings.
The Company's primary sources of funds have consisted of deposits,
amortization and prepayments of outstanding loans, bond maturities, and such
other sources as long and short-term borrowings including institutional
repurchase agreements, sales of investment securities, loans, and mortgage-
backed securities. At June 30, 1996, the total of approved loan commitments
amounted to $74.7 million. Scheduled maturities of borrowings during the next
twelve months are $106.9 million. Savings certificates, which are scheduled to
mature during the next twelve months, totalled $375.9 million. Management
expects that a substantial portion of these maturing certificates will remain on
deposit with the Company. At June 30, 1996, the Company had no long-term
borrowings.
At June 30, 1996, the Company's Tier I leverage ratio, as defined in
guidelines, was 8.74%, which exceeds the current requirements for the Company.
On June 30, 1996, the Company's total capital-to-risk-weighted assets ratio,
calculated under the Federal Reserve Board's risk-based capital requirements,
was 12.02%.
The Company's book value per common share increased from $18.70 at December
31, 1995 to $18.72 at June 30, 1996.
Impact of Inflation and Changing Prices
- ---------------------------------------
The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the price
of goods and services.
Market Prices and Related Shareholder Matters
- ---------------------------------------------
The stock of the Company is listed on The Nasdaq Stock Market National
Market System under the symbol "BSBN". As of June 30, 1996, the Company had
1,568 shareholders of record and 5,959,439 shares of outstanding common stock.
The number of shareholders does not reflect persons or entities who hold their
stock in nominee or "street" name through various brokerage firms.
14
<PAGE>
Item 2 - continued
The following table sets forth the market price information as reported by
The Nasdaq Stock Market for the common stock.
<TABLE>
<CAPTION>
Cash
Price Range Dividends
1995 High Low Per Share
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter $19.83 $18.00 $0.15
Second Quarter 20.67 18.00 0.15
Third Quarter 21.33 20.00 0.15
Fourth Quarter 26.00 20.67 0.20
1996
- ------------------------------------------------------------------------------------------------------------------------
First Quarter $26.50 $21.75 $0.20
Second Quarter 26.75 25.25 0.22
</TABLE>
15
<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
---------------------------------------------------
(a) On April 22, 1996, the Company held an Annual Meeting of
Shareholders (the "Annual Meeting") to elect four directors
for a term of three years and ratify the appointment of the
Company's independent auditors for the fiscal year ending
December 31, 1995.
(b) At the Annual Meeting, Messrs. Robert W. Allen, Thomas F.
Kelly, Ph.D., and John V. Sponyoe were elected as directors.
Each of the following individual's term of office continued
after the Annual Meeting:
Ferris G. Akel David A. Niermeyer
William C. Craine Mark T. O'Neil, Jr.
Helen A. Gamble William H. Rincker
Herbert R. Levine Thomas L. Thorn
Following the Annual Meeting, John J. Consey resigned from
the Board, reducing the number of Board members from 12 to
11.
(c) Set forth below is a description of each matter voted upon
at the Annual Meeting and the number of votes cast for,
against or withheld, as well as the number of abstentions
and broker non-votes as to each such matter.
1. Three directors were elected for a term of three years,
or until their successors have been elected and
qualified. A list of such directors, including the votes
for, withheld and abstentions, and broker non-votes, is
set forth below:
<TABLE>
<CAPTION>
Votes Broker
For Withheld Abstentions Non-votes
<S> <C> <C> <C> <C>
Robert W. Allen 4,567,721 626,912 0 0
Thomas F. Kelly, PhD. 4,842,211 352,422 0 0
John V. Sponyoe 4,567,308 626,325 0 0
</TABLE>
2. The appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the fiscal year
ending December 31, 1995 was ratified. There were
5,170,769 votes cast for the proposal, and 12,976 votes
against the proposal, and 10,886 votes abstained. There
were 0 broker non-votes.
16
<PAGE>
3. The Company's Certificate of Incorporation was amended
to increase the number of authorized shares of common
stock from 10,000,000 to 30,000,000. There were
3,424,244 votes cast for the proposal, 1,726,963 votes
against the proposal and 42,297 votes abstained. There
were 0 broker non-votes.
4. The Company's Long-Term Incentive and Capital
Accumulation Plan was adopted. There were 3,858,643
votes cast for the proposal, 1,261,976 votes against the
proposal and 10,886 votes abstained. There were 0 broker
non-votes.
(d) Not applicable.
Item 5 - Other Information
-----------------
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27 Financial Data Schedule
17
<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 thereunto duly authorized.
BSB Bancorp, Inc.
Date: August 14, 1996 By:/s/ William H. Rincker
-------------------- ----------------------------------------
WILLIAM H. RINCKER
Chairman of the Board and Chief Executive Officer
Date: August 14, 1996 By:/s/ Edward R. Andrejko
-------------------- ----------------------------------------
EDWARD R. ANDREJKO
Senior Vice President and
Chief Financial Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 33,308
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 218,660
<INVESTMENTS-CARRYING> 26,957
<INVESTMENTS-MARKET> 27,812
<LOANS> 979,513
<ALLOWANCE> 17,520
<TOTAL-ASSETS> 1,278,940
<DEPOSITS> 1,049,939
<SHORT-TERM> 106,889
<LIABILITIES-OTHER> 10,524
<LONG-TERM> 0
0
0
<COMMON> 73
<OTHER-SE> 111,515
<TOTAL-LIABILITIES-AND-EQUITY> 1,278,940
<INTEREST-LOAN> 42,880
<INTEREST-INVEST> 8,442
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 51,322
<INTEREST-DEPOSIT> 23,093
<INTEREST-EXPENSE> 25,429
<INTEREST-INCOME-NET> 25,893
<LOAN-LOSSES> 4,678
<SECURITIES-GAINS> 348
<EXPENSE-OTHER> 13,909
<INCOME-PRETAX> 11,773
<INCOME-PRE-EXTRAORDINARY> 11,773
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,182
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
<YIELD-ACTUAL> 8.73
<LOANS-NON> 10,069
<LOANS-PAST> 160
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 16,560
<CHARGE-OFFS> 4,279
<RECOVERIES> 561
<ALLOWANCE-CLOSE> 17,520
<ALLOWANCE-DOMESTIC> 17,520
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
