UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1999
--------------------------------------------------
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________________ to ________________________
Commission file number 0-21264
--------------------------------------------
VISTA BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
New Jersey 22-2870972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
305 Roseberry Street, P.O. Box 5360, Phillipsburg, New Jersey 08865
(Address of principal executive offices) (Zip Code)
(908) 859-9500
(Issuer's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes X No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of July 28, 1999, there were 4,809,845 shares of $.50 par value Common
Stock outstanding.
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
VISTA BANCORP, INC.
Form 10-Q
For the period ended June 30, 1999
Index
Page
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1999
and December 31, 1998......................................... 3
Consolidated Statements of Income - Three Months and Six Months
Ended June 30, 1999 and 1998...................................4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1999 and 1998...................................5
Notes to Consolidated Financial Statements ......................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................8
Part II Other Information
Item 1. Legal Proceedings.................................................20
Item 2. Changes in Securities ............................................20
Item 3. Defaults Upon Senior Securities ..................................20
Item 4. Submission of Matters to a Vote of Security Holders...............20
Item 5. Other Information.................................................20
Item 6. Exhibits and Reports on Form 8-K..................................21
2
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
Amounts in thousands (except per share and share data) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents:
Cash and due from banks $ 20,137 $ 23,584
Federal funds sold 12,560 7,000
Short-term investments 8,328 2,417
- -----------------------------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 41,025 33,001
- -----------------------------------------------------------------------------------------------------------------------------------
Securities available for sale (Amortized cost: $188,127 and $178,040 in 1999 and 1998, respectively) 184,314 180,163
- -----------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income:
Mortgage 132,013 137,538
Commercial 156,751 136,449
Consumer 98,912 95,539
- -----------------------------------------------------------------------------------------------------------------------------------
Total Loans 387,676 369,526
Allowance for loan losses (4,871) (4,524)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Loans 382,805 365,002
- -----------------------------------------------------------------------------------------------------------------------------------
Premises and equipment 6,873 6,851
Accrued interest receivable 3,327 3,133
Other assets 6,359 4,896
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 624,703 $ 593,046
===================================================================================================================================
Liabilities and Shareholders' Equity
Deposits:
Demand:
Noninterest-bearing $ 66,663 $ 67,477
Interest-bearing 80,224 84,574
Savings 140,875 132,439
Time 259,450 238,252
- -----------------------------------------------------------------------------------------------------------------------------------
Total Deposits 547,212 522,742
- -----------------------------------------------------------------------------------------------------------------------------------
Borrowed funds 24,127 16,963
Long-term debt 5,500 3,000
Accrued interest payable 1,367 1,383
Other liabilities 2,127 2,122
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 580,333 546,210
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock: $.50 par value; shares authorized 10,000,000; shares issued,
4,814,845 and 4,577,888 at June 30, 1999 and December 31, 1998, respectively 2,407 2,289
Paid-in capital 26,650 22,359
Retained earnings 18,102 20,622
Accumulated other comprehensive income (2,789) 1,566
- -----------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 44,370 46,836
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 624,703 $ 593,046
===================================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
Amounts in thousands (except per share and share data) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 7,694 $ 7,096 $ 15,146 $ 13,746
Interest on federal funds sold 150 76 189 180
Interest on short-term investments 39 58 79 122
Interest on securities:
Taxable 2,406 2,496 4,624 5,048
Nontaxable 452 359 872 680
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 10,741 10,085 20,910 19,776
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense:
Interest on deposits 4,652 4,690 9,087 9,237
Interest on borrowed funds 208 154 388 269
Interest on long-term debt 107 46 161 96
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 4,967 4,890 9,636 9,602
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income 5,774 5,195 11,274 10,174
- ------------------------------------------------------------------------------------------------------------------------------------
Provision for Loan Losses 252 195 477 390
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 5,522 5,000 10,797 9,784
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest Income:
Service charges on deposit accounts 475 404 927 810
Other service charges 384 219 727 375
Net gains on sales of securities 17 157 88 207
Net gains on sales of loans 134 15 245 15
Trust income 76 62 161 116
Other income 22 55 94 109
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income 1,108 912 2,242 1,632
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest Expense:
Salaries and benefits 2,281 2,093 4,495 4,074
Occupancy expense 425 340 869 674
Furniture and equipment expense 547 465 1,078 922
Other expense 1,267 1,091 2,341 2,112
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense 4,520 3,989 8,783 7,782
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Provision for Income Taxes 2,110 1,923 4,256 3,634
Provision for Income Taxes 628 587 1,301 1,128
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 1,482 $ 1,336 $ 2,955 $ 2,506
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per Share (Basic and Diluted) $ 0.31 $ 0.28 $ 0.61 $ 0.52
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Common Shares Outstanding 4,809,910 4,833,847 4,808,782 4,822,190
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Amounts in Thousands
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
---------------------------
<S> <C> <C>
Cash Flows From Operating Activites:
Net Income $ 2,955 $ 2,506
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 473 528
Provision for loan losses 477 390
Increase in accrued interest receivable (194) (379)
Increase (decrease) in accrued interest payable (16) 34
Net change in other assets and other liabilities 154 235
Net amortization of premium on securities 269 345
Net gains on sales of securities (88) (207)
Net gains on sales of loans (245) (15)
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 3,785 3,437
- ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Proceeds from maturities of securities available for sale 25,198 31,779
Proceeds from sales of securities available for sale 17,146 34,556
Purchases of securities available for sale (52,611) (65,443)
Net increase in loans (19,715) (26,729)
Proceeds from sale of loans 1,621 999
Net capital expenditures (455) (355)
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (28,816) (25,193)
- ----------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase in demand and savings deposits 3,273 13,303
Net increase in time deposits 21,198 2,656
Net increase in borrowed funds 7,164 5,126
Net increase (decrease) in long-term debt 2,500 (1,222)
Net proceeds from issuance of common stock 539 876
Purchases of treasury stock (389) --
Cash dividends paid (1,222) (960)
Cash in lieu of fractional shares (8) (7)
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 33,055 19,772
- ----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 8,024 (1,984)
Cash and Cash Equivalents, Beginning of Period 33,001 27,850
- ----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period $ 41,025 $ 25,866
- ----------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 9,652 $ 9,568
Income taxes paid 1,554 951
Supplemental Disclosures of Investing and Financing Activities:
Transfers from loans to other real estate owned 0 481
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Basis of Presentation
The accompanying consolidated financial statements of Vista Bancorp, Inc.
and its subsidiaries (Vista) reflect all adjustments and disclosures, which are,
in the opinion of management, necessary for a fair presentation of interim
results. The financial information has been prepared in accordance with Vista's
customary accounting practices and has not been audited.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission (SEC) rules and regulations. The preparation
of financial statements in conformity with general accepted accounting
principles requires management to make certain estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. These interim financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in Vista's Annual Report for the year
ended December 31, 1998.
Results of operations for the six-month period ended June 30, 1999, are not
necessarily indicative of the results to be expected for the full year.
Note 2. Recently Issued Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale" became effective for the first quarter beginning after December
15, 1998. SFAS No. 134 requires that all mortgage-backed securities retained
after a securitization of mortgage loans held for sale be classified as to the
intent to sell or hold those investments. Any retained mortgage-backed
securities that are committed to sell before or during the securitization
process must be classified as trading securities. This statement is not expected
to have a material impact on Vista.
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133 - an amendment of FASB Statement No. 133" was issued
in June 1999. SFAS No. 137 delays the implementation of SFAS No. 133 until
fiscal years beginning after June 15, 2000. This delay was due to the complexity
of implementing this standard along with Year 2000 considerations. Vista is
currently in the process of evaluating the provisions of SFAS No. 137.
Note 3. Earnings per Share
Earnings per share amounts, weighted average shares outstanding and all per
share amounts have been adjusted to reflect the stock dividends declared as of
April 1999 and May 1998.
6
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
On April 16, 1999, Vista declared a 5 percent stock dividend to
shareholders' of record May 3, 1999 and payable May 21, 1999. Following payment
of this dividend, Vista had approximately 4.8 million shares outstanding.
Earnings per share, weighted average shares outstanding and all per share
amounts have been restated in the accompanying financial statements, to reflect
this dividend. Accordingly, an amount equal to the fair market value of the
additional shares issued was charged to retained earnings and credited to common
stock and additional paid in capital based on the quoted market price on
April 16, 1999.
On May 15, 1998, Vista declared a 10 percent stock dividend to
shareholders' of record as of June 1, 1998 and payable June 10, 1998.
Accordingly, an amount equal to the fair market value of the additional shares
issued was charged to retained earnings and credited to common stock and
additional paid in capital based on the quoted market price of the stock on
May 15, 1998.
Note 4. Other Comprehensive Income
Vista held securities classified as available for sale, which experienced
net unrealized pre-tax decreases in value of $5.936 million during the six-month
period, ended June 30, 1999. In compliance with SFAS No. 130, the before-tax and
after-tax amount for this category as well as the tax benefit, is summarized
below.
<TABLE>
<CAPTION>
(Amounts in thousands) Before-Tax Tax Net-of-Tax
Amount (Benefit) Amount
<S> <C> <C> <C>
Unrealized losses on securities:
Unrealized holding losses arising during period $(5,848) $(1,557) $(4,291)
Less: reclassification adjustment for gains realized 88 24 64
in net income -------------------------------------------
Net unrealized loss (5,936) (1,581) (4,355)
Other comprehensive income -------------------------------------------
$(5,936) $(1,581) $(4,355)
===========================================
</TABLE>
7
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Certain statements in this Form 10-Q are forward-looking statements that
involve a number of risks and uncertainties. A discussion of these factors,
among others, which may cause actual results to differ materially from projected
results appears under "Forward Looking Statements" in Vista's Annual Report and
Form 10-K for the year-ended December 31, 1998.
Recent Development
In March 1999, Vista expanded its presence in Pennsylvania, through its
affiliate Twin Rivers Community Bank, with the addition of two branches in
Bethlehem, Pennsylvania. The Westgate office located at 2400 Schoenersville Road
and the Route 191 office located at 3815 Linden Street increased the number of
branch offices in Pennsylvania to six.
These branches were acquired without deposits and consequently they are not
expected to break-even for a period of twelve to eighteen months which is
consistent with Vista's historical experience with similar expansion efforts.
On a consolidated basis, Vista Bancorp now operates fifteen full service
branch locations in Pennsylvania and New Jersey.
Results of Operations for the periods ended June 30, 1999 and June 30, 1998
Earnings Summary
Vista Bancorp, Inc reported an 11 percent increase in net income to $1.482
million or $.31 per diluted share for the quarter ended June 30, 1999, compared
to $1.336 million or $.28 per diluted share for the comparable period in 1998.
For the six months ended June 30, 1999, net income increased 18 percent to
$2.955 million or $.61 per diluted share compared to $2.506 million or $.52 per
share for the comparable period in 1998.
The increase in net income for the quarter continued to be driven by net
interest income, as Vista capitalized on a growing balance sheet, an expanded
net interest margin and strong business loan demand. In addition, other service
charge income, consisting mainly of fee revenue earned from ATM operations and
debit card usage, combined with gains on the sale of loans to offset a higher
provision for loan losses and increased noninterest expenses.
The second quarter of 1999 included the full impact of the two new
full-service branches opened in the Bethlehem, Pennsylvania market. As Vista
continues its focus on expanding its franchise, growing its balance sheet and
expanding its product lines and revenue streams the costs of adding new branches
and the related drag on earnings can be neutralized.
Return on average assets was unchanged at 0.95 percent for the quarter
ended June 30, 1999 and 1998. Return on average equity improved to 12.69 percent
from 12.12 percent due to efficient capital management. For the six months ended
June 30, 1999, return on average assets increased to 0.98 percent from 0.91
percent and average return on equity improved to 12.85 percent from 11.46
percent.
8
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Net Interest Income
Net interest income, on a tax-equivalent basis, increased 11 percent to
$6.0 million for the quarter ended June 30, 1999 compared to $5.4 million for
the quarter ended June 30, 1998. Tax-equivalent net interest income increased 12
percent to $11.7 million for the six months ended June 30, 1999 compared to
$10.5 million for the comparable period in 1998. Growth in net interest income
for both periods was due to higher levels of earning assets and a wider net
interest margin.
For the quarter ended June 30, 1999, interest-earning assets averaged
$591.4 million, an increase of $55.1 million compared to $536.3 million for the
quarter ended June 30, 1998. For the six months ended June 30, 1999,
interest-earning assets averaged $574.7 million compared to $528.1 million for
the comparable period in 1998. The increase in both periods was due to growth in
commercial and consumer lending.
The net interest margin increased to 4.07 percent for the quarter ended
June 30, 1999 from 4.01 percent one year earlier. For the six months ended June
30, 1999, the margin also showed improvement to 4.11 percent from 4.01 percent
in 1998.
Vista has followed a strategy of changing the asset mix of its balance
sheet to one that emphasizes commercial and consumer lending. These products
generally carry higher yields and greater credit risk exposure. Recently, the
favorable interest environment has enabled Vista to re-price a significant
portion of its funding base to lower rates. Collectively, these actions and
conditions have combined to expand the net interest margin.
The average yield on interest-earning assets decreased 23 basis points to
7.44 percent for the quarter ended June 30, 1999 and decreased 18 basis points
to 7.49 percent for the six months ended June 30, 1999, reflecting a lower
interest rate environment. However, an improved mix, emphasizing consumer and
commercial loans, and an increased volume of earning assets produced $1.2
million in additional interest income during the first six months of 1999,
despite a lower rate environment.
The cost of funding this asset growth, as measured by the ratio of interest
expense to interest earning assets, decreased 29 basis points to 3.37 percent
for the quarter ended June 30, 1999 and 28 basis points to 3.39 percent for the
six months ended June 30, 1999. In the first half of 1999, Vista experienced an
increase of $36.5 million in interest-bearing liabilities while reducing the
average rate paid on those liabilities by 30 basis points to 3.94 percent. In
addition, growth in noninterest bearing demand accounts tied to commercial loans
combined with an increase in capital to improve the cost of funding the balance
sheet.
Provision for Loan Loss
The provision for loan losses increased $57 thousand to $252 thousand for
the quarter and increased $87 thousand to $477 thousand for the six months ended
June 30, 1999 compared to a year ago. While the quality of the loan portfolio
remains satisfactory, the increased provision reflects strong loan growth in the
commercial portfolio.
9
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
The table, "Consolidated Average Balances, Net Interest Income and Average
Rates," presents Vista's average assets, liabilities and shareholders' equity.
Vista's net interest income, net interest spreads, and net interest income as a
percentage of interest-earning assets for the periods ended June 30, 1999 and
1998, are also reflected.
The table, "Volume/Rate Analysis of Changes in Net Interest Income,"
analyzes net interest income by segregating the volume and rate components of
the changes in net interest income resulting from changes in the volume of
various interest-earning assets and interest-bearing liabilities and the changes
in the rates earned and paid by Vista.
10
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
Consolidated Average Balances, Net Interest Income and Average Rates
(Tax-equivalent Basis)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
-----------------------------------------------------------
Average Average Average Average
Balances Interest Rates Balances Interest Rates
Amounts in thousands (except percentages) (1) (2) (1) (2)
<S> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold and securities purchased
under agreements to resell $8,024 $189 4.75% $6,490 $180 5.59%
Short-term investments 3,466 79 4.60% 4,731 122 5.20%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Short-term Investments 11,490 268 4.70% 11,221 302 5.43%
- ---------------------------------------------------------------------------------------------------------------------------------
Securities:
U.S. Treasury 10,827 320 5.96% 17,029 520 6.16%
U.S. Government agencies
and corporations 118,522 3,673 6.25% 125,284 4,041 6.50%
States and other political subdivisions (3) 37,206 1,261 6.83% 29,438 976 6.69%
Other 19,479 632 6.54% 15,620 488 6.30%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Securities 186,034 5,886 6.38% 187,371 6,025 6.48%
- ---------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income:(4)
Mortgage 135,022 5,076 7.58% 134,725 5,088 7.62%
Commercial 145,549 6,255 8.67% 107,579 5,124 9.60%
Consumer 96,556 3,856 8.05% 87,189 3,557 8.23%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Loans 377,127 15,187 8.12% 329,493 13,769 8.43%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-earning Assets 574,651 21,341 7.49% 528,085 20,096 7.67%
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 20,077 17,160
Allowance for loan losses (4,724) (4,237)
Other assets 15,692 14,972
- ---------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-earning Assets 31,045 27,895
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets $605,696 $555,980
==================================================================================================================================
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Demand $83,031 $748 1.82% $76,078 $819 2.17%
Savings 137,171 2,033 2.99% 126,604 1,915 3.05%
Time 200,994 5,156 5.17% 194,920 5,271 5.45%
Time deposits $100,000 and over 46,428 1,150 4.99% 44,017 1,232 5.64%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits 467,624 9,087 3.92% 441,619 9,237 4.22%
- ---------------------------------------------------------------------------------------------------------------------------------
Borrowed funds 20,274 388 3.86% 12,142 269 4.47%
Long-term debt 5,409 161 6.00% 3,088 96 6.27%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt 25,683 549 4.31% 15,230 365 4.83%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 493,307 9,636 3.94% 456,849 9,602 4.24%
- ---------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing demand deposits 61,833 51,730
Other liabilities 4,180 3,311
- ---------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-bearing Liabilities 66,013 55,041
- ---------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 46,376 44,090
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $605,696 $555,980
=================================================================================================================================
Interest Income/Earning Assets 21,341 7.49% 20,096 7.67%
- ---------------------------------------------------------------------------------------------------------------------------------
Interest Expense/Earning Assets 9,636 3.38% 9,602 3.66%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Interest Income and Margin (5) $11,705 4.11% $10,494 4.01%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Interest on loans includes fee income.
(2) Rates have been annualized and computed on a tax-equivalent basis using the
federal income tax statutory rate of 34%.
(3) Tax-equivalent adjustments were $431 thousand for 1999 and $320 thousand
for 1998.
(4) Includes nonaccrual loans.
(5) Net interest income as a percent of interest-earning assets on a
tax-equivalent basis.
11
<PAGE>
VISTA BANCORP, INC. AND SUBSIDIARIES
Volume/Rate Analysis of Changes in Net Interest Income (Tax-equivalent Basis)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 vs. 1998
------------------------------------------
Increase (Decrease)
Due to Changes in:
------------------------------------------
Total Average Average
Amounts in thousands Change(1) Volume Rate
- -----------------------------------------------------------------------------------------------------------
Interest Income:
<S> <C> <C> <C>
Federal funds sold $ 9 $ 39 $ (30)
Short-term investments (43) (29) (14)
- ----------------------------------------------------------------------------------------------------------
Total Short-term Investments (34) 10 (44)
- ----------------------------------------------------------------------------------------------------------
Securities:
U.S. Treasury (200) (183) (17)
U.S. Government agencies and corporations (368) (209) (159)
States and other political subdivisions 285 264 21
Other 144 125 16
- ----------------------------------------------------------------------------------------------------------
Total Securities (139) (3) (139)
- ----------------------------------------------------------------------------------------------------------
Loans, net of unearned income:(2)
Mortgage (12) 11 (23)
Commercial 1,131 1,634 (503)
Consumer 299 374 (75)
- ----------------------------------------------------------------------------------------------------------
Total Loans 1,418 2,019 (601)
- ----------------------------------------------------------------------------------------------------------
Total Interest Income 1,245 2,026 (784)
- ----------------------------------------------------------------------------------------------------------
Interest Expense:
Demand (71) 63 (134)
Savings 118 157 (39)
Time (115) 156 (271)
Time deposits $100,000 and over (82) 59 (141)
- ----------------------------------------------------------------------------------------------------------
Total Interest-bearing Deposits (150) 435 (585)
- ----------------------------------------------------------------------------------------------------------
Borrowed funds 119 155 (36)
Long-term debt 65 69 (4)
- ----------------------------------------------------------------------------------------------------------
Total Borrowed Funds and Long-term Debt 184 224 (40)
- ----------------------------------------------------------------------------------------------------------
Total Interest Expense 34 659 (625)
- ----------------------------------------------------------------------------------------------------------
Net Interest Income (tax-equivalent basis) $1,211 $ 1,367 $ (159)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The volume/rate variance is allocated based on the percentage relationship
of changes in volume and changes in rate to the "Total Change."
(2) Includes nonaccrual loans.
12
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Noninterest Income
Noninterest income increased 21 percent to $1.1 million for the quarter
ended June 30, 1999, compared to $912 thousand for the quarter ended June 30,
1998. This increase was due to incremental increases in gains on SBA loan sales,
service charges on deposits, loan-related fee income and ATM user fees offset in
part by reduced levels of security gains. Excluding gains on securities and loan
sales, noninterest income increased 29 percent to $957 thousand.
Net gains on sales of loans increased $119 thousand to $134 thousand for
the quarter ended June 30, 1999, due to gains on the sale of the guaranteed
portion of Small Business Administration (SBA) loans plus $50 thousand from the
sale of a mortgage loan-servicing asset. There can be no assurance that gains
recognized in prior periods will continue in future periods or that there will
not be significant inter-period variations in the results of such activities.
Service charges on deposits increased 18 percent to $475 thousand for the
quarter ended June 30, 1999 due to an increase in service charge pricing and a
higher level of overdraft fees.
Other service charge income increased $165 thousand to $384 thousand for
the quarter ended June 30, 1999 due to loan-related fee income, ATM usage fees,
and debit card transaction income. Loan-related fees consisted of $109 thousand
in third-party mortgage origination fees plus commercial loan fees, application
fees and consumer group life commission income.
Other income sources totaled $98 thousand for the quarter ended June 30,
1999 compared to $117 thousand one year ago. This consisted primarily of Trust
department income, commissions on mutual fund and annuity sales and safe deposit
box rental fees offset partially by losses on the sale of ORE properties.
Net gains on the sale of securities totaled $17 thousand for the quarter
ended June 30, 1999 compared to $157 thousand a year ago. Security gains
recognized in 1998 were due to a strategy of selling high coupon fixed rate and
certain adjustable rate mortgage securities deemed susceptible to expected
higher prepayment levels. The proceeds were reinvested into tax-exempt and
corporate debt securities that offered call protection in lower interest rate
environments.
For the six months ended June 30, 1999, noninterest income increased 38
percent to $2.2 million from $1.6 million. This increase was due to gains on
loan sales, loan-related fee income, ATM fee income and debit card income,
increased service charges on deposits, trust department income and mutual fund
and annuity sales commissions offset in part by lower levels of security gains.
Excluding gains on sales of securities and loans, noninterest income increased
36 percent to $1.9 million for the six months ended June 30, 1999.
Gains on the sale of loans during this period increased $230 thousand to
$245 thousand due primarily to the sale of the guaranteed portion of SBA loans.
Loan-related fees increased $199 thousand to $443 thousand for the six months
ended June 30, 1999, due primarily to a $115 thousand increase in third-party
mortgage origination fees. ATM usage fees and debit card income, increased $125
thousand to $193 thousand for the first half of 1999. Trust department income
increased $45 thousand to $161 thousand for the six months ended June 30, 1999
due to a $15 million increase in assets under management and market
appreciation. Commissions on mutual fund and annuity sales increased $23
thousand to $64 thousand for the first half of 1999.
13
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Gains on the sales of securities totaled $88 thousand for the six months
ended June 30, 1999 compared to $207 thousand a year ago. In 1998, security
gains were due to the sales of high coupon fixed and adjustable rate mortgage
securities which were likely to experience high prepayment levels. The proceeds
were reinvested into corporate debt and tax-exempt municipal securities with
call protection.
Noninterest Expense
Noninterest expenses increased 13 percent to $4.5 million for the quarter
ended June 30, 1999 compared to $4.0 million for the comparable quarter in 1998.
For the six months ended June 30, 1999, noninterest expense increased 13 percent
or $1.0 million to $8.8 million. The higher expenses were due to the branch
network expansion, technology enhancements and incremental expenses related to
loan and deposit growth.
Salaries and benefits expense, the largest portion of noninterest expense,
increased 10 percent to $2.3 million for the quarter ending June 30, 1999
compared to $2.1 million for the quarter ending June 30, 1998. For the six
months ended June 30, 1999 salary and benefits expense increased 10 percent to
$4.5 million from $4.1 million in 1998. Separately, salary expense increased 8
percent to $3.5 million for the six months ending June 30, 1999 due to the
addition of personnel at the two new branches, annual merit increases and
additional positions in marketing, lending and technology related support
functions. Also, pension expense accruals increased $101 thousand compared to
the six months ended June 30, 1998.
Occupancy expense increased 25 percent to $425 thousand for the quarter
ending June 30, 1999. For the six months ended June 30, 1999, occupancy expense
increased 29 percent to $869 thousand. The increase for both periods was
attributed to the added lease expense on the two new branches, and increased
rental charges for a new and larger facility that will house the relocated trust
department and corporate marketing functions.
Furniture and equipment expense increased 18 percent to $547 thousand for
the quarter ending June 30, 1999. For the six months ended June 30, 1999,
furniture and equipment expense increased 17 percent to $1.078 million from $922
thousand in 1998. The increase for both periods was due to increased technology
related equipment lease costs as Vista moves toward leasing equipment rather
than buying plus increased telephone expenses offset in part by reduced
equipment and depreciation expenses.
Other operating expenses increased 16 percent to $1.267 million for the
quarter ended June 30, 1999 compared to $1.019 million for the comparable
quarter in 1998. ORE property expenses, including real-estate taxes and
utilities, increased $56 thousand to $92 thousand for the quarter ended June 30,
1999 compared to $36 thousand for the comparable period in 1998. Fees and
services purchased increased $42 thousand to $103 thousand for the quarter ended
June 30, 1999 due to loan operational consultant fees, professional fees,
outsourcing of the stock transfer function and annual proxy related expenses.
For the six months ended June 30, 1999, other operating expenses increased
10 percent to $2.3 million due to increases in ORE property expenses, electronic
(ATM) banking fees, volume related loan fees, and incremental operating expenses
attributed to branch expansion.
14
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
ORE property expenses increased $68 thousand to $129 thousand for the six
months ended June 30, 1999 compared to $61 thousand for the comparable period in
1998. This included real-estate taxes and utility expenses on ORE properties.
ATM related fees increased $61 thousand to $90 thousand for the first half of
1999. Volume driven loan expenses increased $31 thousand to $252 thousand for
the six months ended June 30, 1999 compared to $221 thousand for the comparable
period in 1998.
The effective tax rate decreased to 29.8 percent for the quarter ended June
30, 1999 compared to 30.6 percent for the comparable quarter 1998. For the six
months ended June 30, 1999, the effective tax rate decreased to 30.6 percent due
to increased investments in tax-exempt municipal securities.
Readiness for Year 2000
As the Year 2000 approaches, Vista Bancorp has undertaken initiatives to
address the Year 2000 problem, as more fully described in the 1998 Annual
Report. As of June 30,1999 Vista has completed testing of all mission critical
systems and continues to perform due diligence with its key vendors and material
customers. Further, Vista has developed a comprehensive business resumption
contingency plan to be implemented in the event of unforeseen minor failures and
has been engaged in an on going customer awareness program.
Vista continues to evaluate the estimated costs associated with attaining
Year 2000 readiness. Incremental costs for 1999, such as testing, software
purchases and marketing publications are not expected to be material. While
additional costs could be incurred, Vista believes, based on available
information, that it will be able to manage its Year 2000 transition without any
adverse effect on its business operations or financial condition.
The preceding Y2K discussion contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to (i) whether or not testing will be
accurate; (ii) the estimated costs associated with becoming Y2K compliant; (iii)
the date by which the Company expects to be fully compliant, and (iv) the
successfulness of any contingency plans. These statements are made using current
estimates and assumptions about future events. There can be no assurance that
these estimates will be achieved and actual results could differ materially from
those anticipated. The factors that might lead to material differences include,
among others, (i) the ability to accurately identify all mission-critical
systems; (ii) accuracy of the testing performed; (iii) whether or not third
party certifications are accurate; (iv) whether or not material customers,
suppliers, governmental agencies and other significant third parties are
successful in their Y2K efforts; (v) the adequacy of contingency plans, and (vi)
the ability to implement contingency plans.
15
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Financial Condition - June 30, 1999 versus December 31, 1998
Total consolidated assets increased $31.7 million to $624.7 million at June
30, 1999, compared to $593.0 million at December 31, 1998. Asset growth was
driven by commercial loans, short-term investments, federal funds sold and
securities available for sale. Funding was provided by time deposits, savings
and money market deposits, borrowed funds and long-term debt.
Total loans increased $18.2 million to $387.7 million at June 30, 1999,
compared to $369.5 million at year-end 1998. This growth was due to commercial
loans and increased home equity loan origination, while mortgage loans declined
by design. For the first half of 1999, mortgage loans were originated on behalf
of third party vendors in exchange for fee income rather than for retention in
the loan portfolio. As of June 30, 1999, the loan portfolio consisted of 40
percent commercial loans, 34 percent mortgage loans and 26 percent consumer
loans. At year-end 1998, the portfolio consisted of 37 percent commercial loans,
37 percent mortgage loans, and 26 percent consumer loans.
Short-term investments and federal funds sold increased $11.5 million to
$20.9 million at June 30, 1999 compared to $9.4 million at year-end 1998. These
balances provide liquid funds for investment as opportunities arise in a rising
rate environment.
Securities available for sale increased $4.1 million to $184.3 million at
June 30, 1999, compared to $180.2 million at December 31, 1998. The increase was
due to $52.6 million in purchases offset in part by $25.2 million in maturities
and principal prepayments, $17.1 million in sales, and $5.9 million of
depreciation in the market value of the portfolio due to rising rates.
At June 30, 1999, total deposits equaled $547.2 million, an increase of
$24.5 million from December 31, 1998. This incremental growth consisted of $21.2
million in time deposits and $8.4 million in savings and money market deposits
offset in part by the $5.1 million decrease in demand deposits. Deposit
concentrations remained virtually unchanged from year-end 1998 with 47 percent
time deposits, 27 percent demand deposits, and 26 percent savings and money
market deposits.
Borrowed funds and long-term debt increased $9.7 million to $29.6 million
at June 30, 1999. This increase was due to a $10 million wholesale borrowing
transaction undertaken to fund security purchases, which was partially offset by
a decline in overnight repurchase account balances.
Non-performing Assets
At June 30, 1999, non-performing assets, consisting of loans on nonaccrual
status plus other real estate acquired through foreclosure (ORE), totaled $2.40
million, a decrease of $600 thousand or 20 percent from December 31, 1998. This
decrease may be attributed to the sale of several ORE properties combined with
write-downs of several ORE properties. The ratio of non-performing assets to
total loans and ORE declined to 0.63 percent at June 30, 1999 from 0.82 percent
at the end of 1998.
16
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Commercial nonaccrual loans increased to 62 percent of total nonaccrual
loans at June 30, 1999 from 55 percent at December 31, 1998, while nonaccrual
residential mortgage loans decreased to 26 percent from 31 percent. Consumer
nonaccrual loans decreased to 12 percent of total nonaccrual loans at June 30,
1999 from 14 percent at December 31, 1998.
<TABLE>
<CAPTION>
Amounts in thousands June 30, 1999 December 31, 1998 June 30, 1998
- ---------------------- ------------- ----------------- -------------
<S> <C> <C> <C>
Non-performing loans $1,877 $1,930 $2,430
Other real estate owned 554 1,112 1,136
------ ------ ------
Total non-performing assets 2,431 3,042 3,566
Loans past due 90 days and on accrual status $ 36 $ 160 $ 110
</TABLE>
Impaired loans are those loans in which management doubts that the
collection of principal and interest, will be in accordance with the original
contract terms. Vista considers impaired loans to include all non-performing
loans in addition to those loans, which are determined to be impaired, based on
individual review of impaired loans above $75 thousand. At June 30, 1999, total
impaired loans equaled $2.7 million, of which $1.9 million are non-performing
loans.
Allowance for Loan Losses
The allowance for loan losses increased to $4.9 million at June 30, 1999,
from $4.3 million at June 30, 1998. The allowance equaled 1.26 percent of total
loans at June 30, 1999 and 1.27 percent at June 30, 1998. The provision for loan
losses equaled $252 thousand for the quarter ended June 30, 1999 compared to
$195 thousand for the quarter ended June 30, 1998, while charge-offs, net of
recoveries, totaled $103 thousand for the quarter ended June 30, 1999 and $33
thousand for the quarter ended June 30, 1998. The allowance for loan losses as a
percentage of non-performing assets equaled 200 percent at June 30, 1999 and 122
percent at June 30, 1998.
For the six months ended June 30, 1999, the provision for loan losses
equaled $477 thousand, an increase of $87 thousand or 22 percent compared to
$390 thousand for the comparable period in 1998. This increase was due to the
growth in commercial loans originated over the past year. Net charge-offs
totaled $130 thousand through June 30, 1999 compared to $205 thousand through
June 30, 1998.
The allowance for loan losses is maintained at a level deemed adequate by
management to provide for potential loan losses. The reserve is comprised of
specific allocations for individual loans while the general allocation is
determined by loss factors associated with each loan type (i.e. commercial,
consumer or mortgage) and allocated accordingly. Commercial loans of $150,000 or
more are reviewed individually. The allocated or required portion of the
allowance for loan losses is calculated quarterly and compared to the total
reserve balance to determine adequacy. The commercial loan reserve requirement
is based on individual loans reviewed, historical loss levels, industry
concentration analyses, delinquency trends, economic cycles, and other pertinent
factors. The consumer and mortgage loan reserve requirements are based on the
historical trend of the last four quarters loss factors. The allowance for loan
losses is reviewed quarterly by management and the Board of Directors for
adequacy.
17
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
<TABLE>
<CAPTION>
For The Six Months Ended
June 30,
Amounts in thousands 1999 1998
- -------------------- -------- -----------
<S> <C> <C>
Average loans outstanding $377,127 $ 329,493
Total loans at end of period 387,676 342,415
Allowance for loan losses:
Balance at beginning of period 4,524 4,148
Charge-offs:
Commercial 74 135
Real estate - mortgage 1 --
Installment 101 122
-------- -----------
Total charge-offs 176 257
Recoveries:
Commercial 12 22
Real estate - mortgage 13 --
Installment 21 30
-------- -----------
Total charge-offs 46 52
-------- -----------
Net charge-offs: 130 205
Provision for loan losses 477 390
-------- -----------
Balance at end of period $ 4,871 $ 4,333
Net charge-offs as a percent of average 0.03% 0.06%
loans outstanding during period
Allowance for loan losses as a percent 1.26% 1.27%
of total loans
</TABLE>
Liquidity
At June 30, 1999, cash and cash equivalents equaled $41.0 million
representing an increase of $8.0 million from the $33.0 million in cash and cash
equivalents at December 31, 1998.
Changes in cash are measured by the three major classifications of cash
flow defined as operating, investing and financing activities. The $8.0 million
increase in cash and cash equivalents was attributed to combined net cash flows
provided by operating and financing activities totaling $36.8 million, offset by
investing activities of $28.8 million.
At June 30, 1999, net cash provided by operating activities equaled $3.8
million, and consisted of net income adjusted for noncash charges and a net
increase in other assets and other liabilities.
Net cash used in investing activities totaled $28.8 million and consisted
of $52.6 million of security purchases and a $19.7 million net increase in loans
funded in part by $44.0 million of proceeds received through maturities and
sales of investment securities and loans.
Net cash provided by financing activities totaled $33.0 million as net
deposit growth of $24.5 million combined with $7.2 million in borrowed funds and
$2.5 million in long-term debt to offset cash dividends paid and share
repurchases.
18
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Capital Resources
At June 30, 1999 total shareholders' equity equaled $44.4 million, a
decrease of $2.4 million from the $46.8 million in shareholders' equity at
December 31, 1998. Changes in shareholders' equity included $3.0 million in net
income, $539 thousand in capital raised primarily through the dividend
reinvestment plan offset by a $4.4 million reduction in the market value
adjustment recorded for the available for sale portfolio, cash dividends paid of
$1.2 million and $389 thousand in share repurchases. Vista's dividend payout
ratio equaled 41.35 percent for the six months ended June 30, 1999 compared to
38.3 percent in 1998.
At June 30, 1999, Vista had a $2.8 million unrealized loss recorded for the
available for sale portfolio compared to a $1.6 million unrealized gain at
December 31, 1998. The $4.4 million depreciation in the market value of the
securities was due to the increase in absolute market interest rates at June 30,
1999 versus December 31, 1998.
During the first quarter 1999, the Board of Directors authorized the
extension of Vista's existing stock repurchase program by an additional 100,000
shares or approximately 2 percent of total shares outstanding. Such purchases
will be conducted pursuant to section 10b-18 from time to time in open market
transactions in the discretion of management over a twelve to eighteen month
time frame. All shares repurchased are expected to be retired. As of July 31,
1999, ten thousand shares had been repurchased under the augmented program. As
of July 31, 1999, a total of 110 thousand shares had been repurchased at a cost
of $2.2 million.
Vista maintained a Tier I risk-based capital ratio of 12.30 percent and a
total risk-based capital ratio of 13.55 percent at June 30, 1999, compared to
12.76 percent and 14.01 percent, respectively, at December 31, 1998. Vista
maintained a leverage capital ratio of 7.55 percent at June 30, 1999 and 7.73
percent at December 31, 1998.
19
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
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
The annual meeting of shareholders was held on Thursday, April 22,
1999
The following Class A directors, whose terms expire in 2002, were
re-elected based on the following votes:
For Against
--------- -------
Barbara Harding 3,391,295 7,495
Mark A. Reda 3,391,295 7,495
J. Marshall Wolff 3,390,195 8,595
The following Class B directors terms continue until 2000:
Harold J. Curry
Dale F. Falcinelli
Barry L. Hajdu
Marc S. Winkler
The following Class C directors terms continue until 2001:
Richard A. Cline
James T. Finegan, Jr.
David L. Hensley
The shareholders approved the ratification of Rudolph, Palitz LLP as
independent auditors for the year 1999 by the following vote:
For Against
--------- -------
3,382,954 13,308
The shareholders also approved the 1999 Employee Stock Purchase Plan
by the following vote:
For Against
--------- -------
3,382,954 13,308
Item 5. Other Information Not Applicable
20
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
Item 6. Exhibits and Reports on form 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit Number Description of Exhibit
-------------- ----------------------
2 Not Applicable
4 Not Applicable
10 Not Applicable
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
22 Not Applicable
23 Not Applicable
24 Not Applicable
27 Financial Data Schedules
99 Not Applicable
(b) Reports on Form 8-K
None.
21
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Vista Bancorp, Inc.
-------------------
(Registrant)
Dated: August 13, 1999
---------------
By /s/ William F. Keefe
------------------------------
William F. Keefe
Executive Vice President and
Chief Financial Officer
(Mr. Keefe is the Principal
Accounting Officer and has
been duly authorized to sign
on behalf of the registrant.)
22
<PAGE>
Vista Bancorp, Inc. and Subsidiaries
INDEX TO EXHIBITS
Item Number Description Page
27 Financial Data Schedules ..........................24
23
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 20,137
<INT-BEARING-DEPOSITS> 8,328
<FED-FUNDS-SOLD> 12,560
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 184,314
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 387,676
<ALLOWANCE> 4,871
<TOTAL-ASSETS> 624,703
<DEPOSITS> 547,212
<SHORT-TERM> 24,127
<LIABILITIES-OTHER> 3,494
<LONG-TERM> 5,500
0
0
<COMMON> 2,407
<OTHER-SE> 41,963
<TOTAL-LIABILITIES-AND-EQUITY> 624,703
<INTEREST-LOAN> 15,146
<INTEREST-INVEST> 5,496
<INTEREST-OTHER> 268
<INTEREST-TOTAL> 20,910
<INTEREST-DEPOSIT> 9,087
<INTEREST-EXPENSE> 9,636
<INTEREST-INCOME-NET> 11,274
<LOAN-LOSSES> 477
<SECURITIES-GAINS> 88
<EXPENSE-OTHER> 8,783
<INCOME-PRETAX> 4,256
<INCOME-PRE-EXTRAORDINARY> 4,256
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,955
<EPS-BASIC> .61
<EPS-DILUTED> .61
<YIELD-ACTUAL> 4.11
<LOANS-NON> 1,877
<LOANS-PAST> 36
<LOANS-TROUBLED> 781
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,524
<CHARGE-OFFS> 176
<RECOVERIES> 46
<ALLOWANCE-CLOSE> 4,871
<ALLOWANCE-DOMESTIC> 4,170
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 701
</TABLE>
