UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Periods Ended: June 30, 1996
Commission File Number: 000-17007
First Republic Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania #23-2486815
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(State or other jurisdiction of IRS Employer Identification
incorporation or organization) Number
1515 Market Street, Philadelphia, Pennsylvania 19102
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(Address of principal executive offices) (Zip code)
215-563-3600
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(Registrant's telephone number, including area code)
ExecuFirst Bancorp, Inc. 1513 Walnut Street, Philadelphia, PA 19102
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(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 filing requirements
for the past 90 days.
YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes
of common stock, as of the latest practicable date.
2,847,969 shares of Issuer's Common Stock, par value
$.01 per share, issued and outstanding as of August 7, 1996
Page 1 of 29
Exhibit index appears on page 19
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
See Annex "A"
2
<PAGE>
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations
- --------------------------------------------------------------------------------
On June 7, 1996 Republic Bancorporation, ("Republic") parent company of Republic
Bank, its sole subsidiary, merged with and into ExecuFirst Bancorp, Inc.
("ExecuFirst") parent company of First Executive Bank, its sole subsidiary. The
merger was accounted for as a "reverse acquisition" whereby Republic is deemed
to have acquired ExecuFirst for financial reporting purposes. Therefore, the
Consolidated Statement of Operations and Consolidated Balance Sheet for the
prior year periods are those of Republic Bancorporation Inc. only, and may not
be comparable to the current year Consolidated Statement of Operations or
Consolidated Balance Sheet. The operations of ExecuFirst have been included in
the Company's Consolidated financial statements since the date of acquisition.
Historical shareholders' equity of Republic Bancorporation prior to the merger
has been retroactively restated (a recapitalization) for the equivalent number
of shares received in the merger after giving effect to any differences in par
value of the issuer's and acquirer's stock.
ExecuFirst, renamed First Republic Bancorp, Inc., (the "Company") remains the
continuing legal entity and registrant for Securities and Exchange Commission
filing purposes. The Company is the parent of First Republic Bank, (the "Bank"),
its sole subsidiary, which is a State chartered commercial bank with four
branches serving Philadelphia and Delaware Counties.
Financial Condition:
For the six months ended June 30, 1996, the Bank's total assets increased
98.9% or $129.6 million to approximately $260.7 million from $131.1 million at
December 31, 1995. This increase was primarily due to the merger with ExecuFirst
which was effective June 7, 1996. ExecuFirst had total assets of $120.9 million
immediately prior to the merger.
As of June 30, 1996, net loans totaled $159.0 million representing an
increase of $73.8 million compared to $85.2 million at December 31, 1995. The
increase was again mainly attributable to the merger with ExecuFirst whose loan
portfolio totalled $73.1 million immediately prior to the merger.
3
<PAGE>
Total deposits increased to $234.0 million during the six months ended June
30, 1996 from $116.4 million at December 31, 1995. Immediately preceding the
merger, ExecuFirst had $111.3 million in deposits. There have been changes in
the deposit mix from December 31, 1995 to June 30, 1996, as the result of the
merger. Higher costing time deposits representing 77.7% of the total deposits at
December 31, 1995 have shifted into other lower costing deposit products, such
as non-interest bearing demand, interest bearing demand, money markets and
savings accounts. Total time deposits represented 70.8% of total deposits at
June 30, 1996.
Deposit Breakdown Table
June 30, 1996
-------------
($000)
June 30, December 31,
1996 1995
% of % of
Type of Account Balance Total Balance Total
- -------------------------------------------------------------------------------
Demand: non-interest bearing $33,462 14.3% $12,570 10.8%
Demand: interest bearing 7,618 3.2% 1,429 1.2%
Money Market 25,353 10.8% 11,362 9.8%
Savings 2,186 0.9% 236 0.2%
Time deposits under $100,000 137,349 58.8% 82,757 71.1%
Time deposits over $100,000 28,023 12.0% 8,070 6.9%
------------------- -------------------
Total deposits $233,991 100% $116,424 100%
Allowance for Loan Losses
Prior to the merger, the Loan Loss Reserve for Republic Bank was $613,000
and for First Executive Bank was $1,527,000. Each Bank has a policy of
increasing its reserve for potential loan losses by 0.60% of net new loans
receivable. Based on numerous factors including, but not limited to, the Bank's
existing loan portfolio, the size of its reserve for potential loan losses,
results of regularly scheduled bank regulatory field examinations, and
Management's internal loan review decisions, the Bank may make additions to the
reserve for possible loan losses other than the percentage additions made in the
ordinary course of business. Additionally, the Board of Directors reviews
reserve adequacy on a quarterly basis. Management believes that the allowance
for loan losses is reasonable and adequate to cover any known losses and any
losses reasonably expected in the portfolio.
The Bank recorded a charge to earnings of $25,000 during the quarter ended
June 30, 1996 compared to a charge of $60,000 in the quarter ended June 30,
1995, as loan growth was higher during the second quarter of 1995 compared to
the second quarter of 1996. As a result of this provision for potential loan
losses, the merger with ExecuFirst and following certain recoveries net of
charge-offs credited to the reserve for potential loan losses as detailed below,
the Bank's aggregate reserve for potential
4
<PAGE>
loan losses increased to $2,140,000 from $680,000 at December 31, 1995. Listed
below is an analysis of the loan loss reserve account:
Allowance for Loan Losses
Rollforward
June 30, 1996
-------------
Balance at December 31, 1995 $ 680,000
Charge-offs (during the six-month
period ended June 30, 1996):
Commercial loans 95,000
Real estate mortgages 0
Installment 0
Total charge-offs (during the six-month
period ended June 30, 1996): 95,000
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Recoveries 3,000
Addition of ExecuFirst's ALLL 1,527,000
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Additions charged to operations 25,000
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Balance at June 30, 1996 $2,140,000
==========
As of June 30, 1996, the Bank had loans outstanding placed in a non-accrual
status totaling approximately $993,000 compared to $832,000 at December 31,
1995. This was mainly due to the addition of ExecuFirst's loan portfolio to the
Bank's as a result of the merger. The current balance of non-performing loans
represents commercial and consumer credits. There was no interest income
recorded on non-accrual loans for the six months ended June 30, 1996. Management
is actively pursuing the collection of all troubled loans. It is uncertain as to
the amount of any potential loss that may be incurred in connection with the
remaining non-accruing loans. The Company has a policy of placing on non-accrual
status any loan for which payment of either principal or interest, on a
contractual basis, is not received or is unlikely to be received for a period of
90 days. Such loans include those classified by either the Bank or its
regulators such that collection of the full amount of principal and interest are
considered doubtful. At June 30, 1996, the Bank held two foreclosed properties
with a combined book value of $295,000. Management is actively pursuing the
liquidation of this collateral.
5
<PAGE>
Listed below is a schedule of gross loans receivable at June 30, 1996. The
loans are categorized based on bank regulatory requirements, which
categorizations are not necessarily indicative of the actual type or purpose of
the loan.
The majority of the loans receivable earn interest at rates that vary
overnight with changes in the Bank's prime rate. Other loans receivable earn
interest at rates that are fixed at a specific spread over the rate being paid
on certificates of deposit either pledged as collateral on the loans or placed
in the Bank for funding purposes. Approximately $62.3 million in loans
receivable are comprised of fixed rate loans that will mature in the next five
years.
Loan Breakdown Table
($000)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
% of % of
Loan Type Balance Total Balance Total
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loans collateralized by Real Estate:
- ------------------------------------
One-to-four family residential $ 51,036 31.7% $26,641 31.0%
Multi-family residential 2,806 1.7% 140 0.2%
Commercial and other 53,121 33.0% 34,353 40.0%
-------- ------ ------- ------
Total loans collateralized by Real Estate $106,963 66.4% $61,134 71.2%
===============================================
Commercial business loans $ 44,342 27.5% $15,183 17.7%
Other loans 9,836 6.1% 9,546 11.1%
-------- ------ ------- ------
Total loans $161,141 100.0% $85,863 100.0%
===============================================
</TABLE>
Since its founding, the Bank's primary focus has been to service the
borrowing and deposit needs of professionals, primarily in the medical and legal
fields, with a secondary focus on small businesses and commercial real estate
investors. Many of the loans made to all of these categories of customers have
been collateralized by real estate, as set forth on the above chart.
6
<PAGE>
Of the approximately $51.0 million at June 30, 1996, in loans
collateralized by "one-to-four residential" properties only $5.5 million
represents traditional residential mortgages. The remainder includes loans made
to investors who own small rental properties or business loans secured by liens
- -- often junior liens -- on the residences of the principals. The risk in
business loans collateralized by liens on residential properties lies more in
the success or failure of the borrower's businesses than the real estate market,
although the value of the collateral is affected by variations in the real
estate market. Generally, housing prices in the Bank's market area fell during
the late 1980's and early 1990's, but more recently have been relatively stable.
"Multi-family residential, Commercial and other" loans primarily represent
loans made to real estate investors and/or developers. This market suffered
dramatic declines in value during the late 1980's and early 1990's, but has
shown signs of stability in recent years. The degree of recovery, however, is
dependent on the type of property and its location. The Bank has strengthened
its ability to analyze and service such loans, and intends to continue its
penetration of this market, which it believes to be under-served, with a
resultant expectation of satisfactory interest rates, fees, and deposits.
Underwriting of such loans will continue to be performed in a conservative
manner.
"Commercial business loans" include loans to professionals and other
businesses not collateralized by real estate. $2.7 million of such loans were
collateralized by liquid collateral as of June 30, 1996. Another $12.3 million
were unsecured, made to borrowers considered to be of sufficient strength to
merit unsecured financing. The remaining amount primarily includes loans
collateralized by business assets, such as accounts receivable, inventory and/or
equipment. The risk in business loans is generally a function of local market
and industry conditions, with any collateral serving as the secondary source of
repayment.
The Bank intends to continue its lending focus on professionals while
expanding its commercial real estate and small business efforts. Additionally,
in a further attempt to diversify its portfolio and increase its market
penetration, the Bank has begun to emphasize consumer lending. All such plans
are highly dependent upon the strength of the economic recovery in the Bank's
market area, as well as the specific industries on which it focuses.
7
<PAGE>
Capital Resources:
During the six months ended June 30, 1996, the Company reported net income
of $1,877,000. After reflecting unrealized gains on securities "available for
sale," in accordance with Financial Accounting Standards Board Statement 115 in
the amount of $1,000, purchase accounting adjustments of $8,246,000 and the
exercise of certain stock options, total Shareholders' Equity increased to
$18,727,000 from $8,622,000 at year-end 1995. Total Shareholders' Equity was
$8,284,000 at June 30, 1995.
The Bank's ratio of Tier I Capital to total Risk-Weighted Assets decreased
to 11.65% as of June 30, 1996 from 12.38% as of December 31, 1995 and increase
from 11.39% as of June 30, 1995. The Company's ratio of Tier I Leverage Capital
to total average quarterly assets was 6.17% compared to 6.58% as of December 31,
1995 and 6.99% as of June 30, 1995.
Regulatory Capital Requirements:
The following table presents the Bank's capital ratios at June 30, 1996:
Tier I Capital $17,842,000
Tier II Capital 2,140,000
---------
Total Capital 19,982,000
Total Average Quarterly Assets 288,949,000
Total Risk-Weighted Assets (1) 171,542,000
Tier I Risk-Based Capital Ratio (2) 10.40%
Required Tier I Risk-Based Capital Rate 4.00%
-----
Excess Tier I Risk-Based Capital Ratio 6.40%
Total Risk-Based Capital Ratio (3) 11.65%
Required Total Risk-Based Capital Ratio 8.00%
-----
Excess Total Risk-Based Capital Ratio 3.65%
Tier I Leverage Ratio (4) 6.17%
Required Tier I Leverage Ratio 4.00%
-----
Excess Tier I Leverage Ratio 2.17%
- ------------------------------------------------------------------------------
(1) Includes off-balance sheet items at credit-equivalent values.
(2) Tier I Risk-Based Capital Ratio is defined as the ratio of Tier I Capital
to Total Risk-Weighted Assets.
(3) Total Risk-Based Capital Ratio is defined as the ratio of Tier I and Tier
II Capital to Total Risk-Weighted Assets.
(4) Tier I Leverage Ratio is defined as the ratio of Tier I Capital to Total
Average Quarterly Assets.
8
<PAGE>
The Bank's ability to maintain the required level of capital is
substantially dependent upon the success of the Bank's capital and business
plans, the impact of future economic events on the Bank's loan customers, the
Bank's ability to manage its interest rate risk and control its growth and other
operating expenses.
In addition to the above minimum capital requirements, effective on
December 19, 1992, the Federal Reserve Bank implemented a statutory requirement
that federal banking regulators take specified "prompt corrective action" when
an insured institution's capital level falls below certain levels. The rule
defines five capital categories based on several of the above capital ratios.
The Bank currently exceeds the levels required for a bank to be classified as
"well capitalized". However, the Federal Reserve Bank may consider other
criteria when determining such classifications that could result in a
downgrading in such classifications.
Liquidity:
The Bank's target and actual liquidity levels are determined and managed
based on Management's comparison of the maturities and marketability of the
Bank's interest-earning assets with its projected future maturities of deposits
and other liabilities. As of June 30, 1996, the Bank maintained $12.1 million in
cash and cash equivalents in the form of cash and due from banks (after reserve
requirements) and overnight federal funds sold. This represented 4.7% of the
total assets at June 30, 1996 as compared to 3.1% and 1.5% at June 30, 1995, and
December 31, 1995, respectively. Of the Bank's investment securities,
approximately $9.5 million are pledged to secure public funds deposits and,
therefore, are not available for liquidity purposes.
Additionally, the Bank has established two collateralized lines of credit
totaling $15.5 million, and three unsecured lines totaling $15.0 million to
assist in managing the Bank's liquidity position. No amounts were outstanding on
any of these facilities as of June 30, 1996.
Both liquidity and interest sensitivity are managed by the Finance
Committee of the Bank's Board of Directors. This Committee's primary objective
is to oversee and assist Management in various financial aspects of the Bank's
activities including asset/liability management.
9
<PAGE>
Investment Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) ("Statement") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Statement requires certain
investments to be classified under one of the following categories: "held-
to-maturity" and accounted for at historical cost, adjusted for accretion of
discounts and amortization of premiums; "available-for-sale" and accounted for
at fair market value, with unrealized gains and losses reported as a separate
component of shareholders' equity; or "trading" and accounted for at fair market
value, with unrealized gains and losses reported as a component of net income.
The Bank does not hold trading securities. As allowable under SFAS No. 115
Business Combination Provisions, concurrent with the merger with ExecuFirst, the
Company reclassified part of ExecuFirst's investment portfolio to Held to
Maturity. This reclassification was done to reposition the investment security
portfolio to be consistent with the Company's Asset/Liability Management policy
and the anticipated future liquidity requirements of the Company.
At June 30, 1996, the Bank has also identified certain investment
securities that will be held for indefinite periods of time, including
securities that will be used as part of the Bank's asset/liability management
strategy and that may be sold in response to changes in interest rates,
prepayments and similar factors. The securities are classified as
"available-for-sale". In order to increase the flexibility of asset/liability
management, the Bank classifies certain investment securities as
"available-for-sale". Available-for-sale securities consist of US Government
Treasury and US Government Agency securities, with book and market values of
$2.5 million, $6.6 million respectively, as of June 30, 1996. The net unrealized
gain on securities available-for-sale, as of this date, was $1,000.
10
<PAGE>
The following table represents the carrying and estimated fair values of
Investment Securities at June 30, 1996.
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Available-for-Sale ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Treasury 2,498 5 (2) 2,501
US Government Agencies 6,621 22 (24) 6,619
- --------------------------------------------------------------------------------
Total Available-for-Sale 9,119 27 (26) 9,120
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Held to Maturity ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Treasury 2,002 2 0 2,004
US Government Agencies 64,168 0 (633) 62,774
Other 2,039 0 0 2,039
- --------------------------------------------------------------------------------
Total Held to Maturity 68,209 2 (633) 66,817
- --------------------------------------------------------------------------------
Interest Rate Sensitivity:
The possible effect upon the Company and the Bank of any future rise in
interest rates is believed by Management to have a negative effect on net
interest income, since the Bank does not have the ability to respond to any such
changes by quickly raising rates on many of its interest-earning assets, which
are comprised chiefly of federal funds sold and prime-rate based commercial
loans. However, a decrease in interest rates generally could have an positive
effect on the Bank, due to a timing difference in repricing the Bank's
liabilities, primarily certificates of deposit, and its interest-earning assets
noted above. As of June 30, 1996, 39% of the Bank's time deposits were to mature
and be repriceable within three months of such date, and an additional 11% were
to be repriceable within three to six months.
11
<PAGE>
The Bank has the ability to reprice 15.0% of its total deposits, reflecting
Money Market, NOW and Savings accounts, on a weekly basis. Accordingly, since a
significant amount of the Bank's present liabilities can be repriced in the
relative short-term, Management believes that the effect resulting from a
decrease in interest rates would be minimal. As of June 30, 1996 and December
31, 1995, 41% and 24% of the Bank's interest-bearing deposits, respectively,
were repriceable within three months. The cumulative 12-month Interest Rate
Sensitivity Gap at June 30, 1996 was a negative 5.2% compared to a negative
15.2% at December 31, 1995, both of which are within management's guidelines of
+/- 20%.
Interest Rate Sensitivity Report at June 30, 1996 ($000)
<TABLE>
<CAPTION>
Rate Maturity Period
-----------------------------------------------------------------
1-90 91-180 181-365 1-5 5 yrs. &
days days days years over Total
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<S> <C> <C> <C> <C> <C> <C>
Interest Sensitive Assets:
Interest Bearing Balances Due 0 990 0 0 0 990
from Banks
Federal Funds Sold 9,154 0 0 0 0 9,154
Investment Securities 5,896 14,445 7,285 4,364 45,338 77,328
Net Loans 6,397 91,930 3,496 44,447 14,871 161,141
------ ------ ------ ------ ----- -------
Totals 21,447 107,365 10,781 48,811 60,209 248,613
Cumulative Totals 21,447 128,812 139,593 188,404 248,613
Interest Sensitive Liabilities:
Demand Interest Bearing 3,809 0 0 1,905 1,904 7,618
Savings 1,093 0 0 0 1,093 2,186
Money Market Accounts 12,640 0 0 6,320 6,393 25,353
Time deposits 64,575 17,945 52,526 30,326 0 165,372
------ ------ ------ ------ ----- -------
Totals 82,117 17,945 52,526 38,551 9,390 200,529
Cumulative Totals 82,117 100,062 152,588 191,139 200,529
GAP (60,670) 89,420 (41,745) 10,261 50,819 48,085
Cumulative GAP (60,670) 28,750 (12,995) (2,735) 48,085
Interest Sensitive Assets/Interest 0.3 1.3 0.9 1.0 1.2
Sensitive Liabilities
Cumulative GAP/Total Earning Assets (24.4%) 11.6% (5.2%) (1.1%) 19.3%
----------------------------------------------------------------
Total Earning Assets 248,613
----------------------------------------------------------------
</TABLE>
Notes to interest sensitivity analysis:
(a) Callable securities are reported at their contractual maturity dates.
(b) Reflects managerial assumptions regarding expected repricing or maturity
behavior of various products.
12
<PAGE>
Results of Operations for the Three Months Ended June 30, 1996 vs 1995:
The Company's net income for the quarter ended June 30, 1996, was $351,000,
or approximately $0.28 per share of common stock, compared to a net income of
$144,000 or approximately $0.09 per share of common stock, during the comparable
quarter of 1995.
Net Interest Income
Net interest income, the difference between interest earned on loans and
other investments and the interest paid on deposits and borrowings, increased to
$2.1 million during the quarter ended June 30, 1996, from $1.5 million in the
quarter ended June 30, 1995. The increase was mainly due to the merger with
ExecuFirst resulting in an additional month of income for June 1996, which was
not in the comparable period in 1995.
Management believes that profitable operations in the future will be
contingent on both external and internal factors. Internal factors include
Management's ability to (i) attract additional deposits to allow further
expansion of the Bank's loan and investment programs; (ii) make accurate credit
analyses upon origination of loans; (iii) deal expeditiously and efficiently
with non-performing assets; and (iv) control or reduce non-interest expenses.
Management has increased its emphasis on business development through the hiring
of additional lending staff and targeting the Bank's niche market segment of
small businesses and professionals. Additionally, media advertising is employed
to obtain deposit funding required to support the increases in loan production.
The utilization of internal loan review and workout activities in conjunction
with the strengthening of credit standards has facilitated the identification
and disposition of problem loans.
External factors, over which the Company has little or no control, include
the interest rate environment and the strength or weakness in the local economy.
Management believes that the general economy in its market area will not
experience a decline to any material extent in the near term. Interest rate
changes are caused, in part, by the actions of the Federal Reserve Bank and
cannot be predicted in advance with any certainty.
Interest and fees on loans was $2.5 million, or 71% of total interest
income, for the quarter ended June 30, 1996 compared with $1.9 million, or 77%
of total interest income reported during the comparable quarter of 1995. This
increase, on an absolute dollar basis, was again due to the merger with
ExecuFirst, effective June 7, 1996. On a percentage basis, this decline is
attributable to the decline in total loans as a percentage of total earning
assets during the period.
13
<PAGE>
Interest on federal funds sold was $318,000, or 8.8% of total interest
income during the quarter ended June 30, 1996, compared to $45,000 or 1.8% of
total interest income reported in the comparable quarter of 1995. This increase
was due to higher average balances of federal funds outstanding during the
period. Interest on investments was $734,000 or 20.3% of total interest income
in the quarter ended June 30, 1996, compared to $509,000, or 20.9% of total
interest income reported during the comparable quarter of 1995. This was due to
lower than expected loan demand which resulted in a shift of excess liquidity
into investment securities.
Non-interest income is comprised of charges on deposit accounts, plus or
minus any gains or losses on sales of securities and the participation of the
Company's subsidiary, First Republic Bank, in a tax refund program with a
national tax preparation service company. As these loans are repaid, the Bank
recognizes a fee per refund, which is paid by the borrower/taxpayer. Fees
recognized on this program were approximately $156,000 for the second quarter of
1996. Total non-interest income increased to $222,000 for the quarter ended June
30, 1996 compared to $42,000 for the quarter ended June 30, 1995. The increase
is primarily due to the non-interest income derived from the tax refund program
which was not in effect during 1995. Additionally, this increase was also due to
a higher level of deposit service fees.
Interest expense for the quarter ended June 30, 1996 was $2.1 million
compared to $1.5 million for the quarter ended June 30, 1995. Such increase is
attributable to the increase in prevailing interest rate levels in 1996 compared
to 1995, in addition to increased deposits as a result of the merger with
ExecuFirst.
The Company's largest non-interest expense, is salaries and employee
benefits, which totaled $636,000, or approximately 53% of total non-interest
expenses, for the quarter ended June 30, 1996, compared to $375,000, or
approximately 51% of total expenses, in the quarter ended June 30, 1995. The
year-to-year increase is due primarily to new staff as a result of the merger
with ExecuFirst.
Occupancy expense consists primarily of rent expense for the lease of the
Company's principal offices. Occupancy expenses were $203,000 for the quarter
ended June 30, 1996, or 17% of total expenses, compared to $142,000, or 19% of
total expenses, for the comparable quarter of 1995. This decrease was
attributable to non-recurring costs associated with a branch opening during the
second quarter of 1995, in Delaware County.
Other operating expenses during the quarter ended June 30, 1996 were
$353,000 or 30% of total expenses, compared to $224,000 or 30% of total
expenses, for the quarter ended June 30, 1995. Major components of this category
include data processing, printing and supplies, advertising, travel and
entertainment, fidelity insurance premiums, and Federal Deposit Insurance
premiums.
14
<PAGE>
Results of Operations for the Six Months Ended June 30, 1996 vs 1995:
The Company's net income for the six months ended June 30, 1996, was
$1,877,000, or approximately $1.84 per share of common stock, compared to a net
income of $284,000 or approximately $0.18 per share of common stock, during the
comparable period of 1995.
Net Interest Income
Net interest income, the difference between interest earned on loans and
other investments and the interest paid on deposits and borrowings, increased to
$2.8 million for the six months ended June 30, 1996, from $1.9 million for the
same period in 1995. The increase was mainly due to higher levels of interest
earning assets, in part due to the recent merger with ExecuFirst. The increase
was also partially offset by a nine (9) basis point reduction in the net
interest margin from the six months ended June 30, 1995 to the same period in
1996.
Interest and fees on loans was $4.6 million, or 66% of total interest
income, for the six months ended June 30, 1996 compared with $3.6 million, or
79% of total interest income reported during the comparable period of 1995. This
increase, on an absolute dollar basis, was due to an increase in average loans
outstanding of $11.7 million, due in part to the merger with ExecuFirst. On a
percentage basis, this decline is attributable to the decline in total loans as
a percentage of total earning assets during the period.
Interest on federal funds sold was $1,129,000 or 16% of total interest
income, during the six months ended June 30, 1996 compared to $101,000 or 2% of
total interest income reported in the comparable period of 1995. This increase
was due to higher average balances of federal funds outstanding during the
period of $35.5 million. Interest on investments was $1,249,000 or 18% of total
interest income in for the six months ended June 30, 1996, compared to $933,000
or 20% of total interest income reported during the comparable quarter of 1995.
This was due to lower than expected loan demand which resulted in a shift of
excess liquidity into investment securities.
Non-interest income is comprised of charges on deposit accounts, plus or
minus any gains or losses on sales of securities and the participation of the
Company's subsidiary, First Republic Bank, in a tax refund program with a
national tax preparation service company. As these loans are repaid, the Bank
recognizes a fee per refund, which is paid by the borrower/taxpayer. Fees
recognized on this program were approximately $2.1 million for the six months
ended June 30, 1996. Total non-interest income increased to $2.2 million for the
six months ended June 30, 1996, compared to $77,000 for the same period in 1995.
The increase is primarily due to the non-interest
15
<PAGE>
income derived from the tax refund program, which was not in effect during 1995.
Additionally, this increase was also due to a higher level of deposit service
fees.
Interest expense for the six months ended June 30, 1996 was $4.2 million
compared to $2.7 million for the same period in 1995. Such increase is
attributable to the increase in prevailing interest rate levels in 1996 compared
to 1995. In addition, average interest bearing deposits increased $28.5 million,
attributable to the merger with ExecuFirst.
Salaries and employee benefits totaled $1,113,000 or approximately 53% of
total non-interest expenses, in the six months ended June 30, 1996, compared to
$773,000 or approximately 51% of total expenses, for the six months ended June
30, 1995. The year-to-year increase is due primarily to new staff as a result of
the merger with ExecuFirst.
Occupancy expense consists primarily of rent expense for the lease of the
Company's principal offices. Occupancy expenses were $358,000 for the six months
ended June 30, 1996 or 17% of total expenses, compared to $229,000 or 15% of
total expenses for the comparable period of 1995.
Other operating expenses during the six months ended June 30, 1996 were
$626,000 or 30% of total expenses, compared to $515,000 or 34% of total expenses
for the same period in 1995. Major components of this category include data
processing, printing and supplies, advertising, travel and entertainment,
fidelity insurance premiums, and Federal Deposit Insurance premiums.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
On May 24, 1995, ExecuFirst and its sole subsidiary, First
Executive Bank ("First Executive") entered into Written Supervisory
Agreements (the "Supervisory Agreements") with each of the Federal
Reserve Bank of Philadelphia (the "Federal Reserve Bank") and the
Pennsylvania Department of Banking ("the Department of Banking"). The
Supervisory Agreements required, in part, the implementation of
policies, procedures and internal controls, related to, but not
limited to, those addressing documentation, review and granting of
loans and the establishment of a Compliance Committee. All plans and
reports required to be submitted to the Federal Reserve Bank or the
Department of Banking were submitted.
Upon consummation of the merger of ExecuFirst with and into First
Republic Bancorp, Inc. on June 7, 1996, the Supervisory Agreements
were terminated.
Management is not aware of any pending or contemplated legal
action which would have a material adverse effect on the Company.
Item 2: Changes in Securities
On November 17, 1995, ExecuFirst and Republic entered into a plan
of merger pursuant to which Republic was merged with and into
ExecuFirst. Upon consummation of the merger, ExecuFirst changed its
corporate name to First Republic Bancorp, Inc. ("the Holding
Company"). Under the terms of the plan of merger, each outstanding
share of ExecuFirst Common Stock was exchanged for one share of the
Holding Company Stock. At the time of merger, a total of 1,243,557
Holding Company shares had been issued to ExecuFirst Shareholders.
Each outstanding share of Republic Common Stock was exchanged for
approximately 2.02 shares of the Holding Company Stock, and an
aggregate total of 1,604,412 shares was issued to Republic
Shareholders, representing 56.6% of the then issued Holding Company
Stock. Immediately following the merger there was 2,847,969 shares
outstanding of Holding Company Stock.
Item 3: Defaults Upon Senior Securities
None
17
<PAGE>
Item 4: Submission of Matters to a Vote of Security Holders
After written notice 28 days prior to a meeting, as provided in
its bylaws, a special meeting of shareholders of Republic
Bancorporation, Inc., parent and sole shareholder of Republic Bank, to
take action upon the proposed merger was held on the 28th day of May,
1996 at 4:00 p.m., at its office located at 1515 Market Street,
Philadelphia, Pennsylvania. As of the record date for said meeting of
shareholders, the number of shares then issued and outstanding was
794,263 shares of common stock, of which 794,263 shares were entitled
to vote on the proposed merger. A total of 463,406 shares were voted
in favor of the proposed merger and 3,700 shares were voted against
the proposed merger. Pursuant to such approval, Republic
Bancorporation, Inc. as sole shareholder of Republic Bank approved the
proposed merger in writing on May 28, 1996.
The annual meeting of shareholders of ExecuFirst Bancorp, Inc.,
parent and sole shareholder of First Executive Bank, to take action
upon the proposed merger was held on the 29th day of May, 1996 at 3:00
p.m., at a meeting held at the Union League, 120 South Broad Street,
Philadelphia, Pennsylvania, after written notice of said meeting,
according to law, was mailed to each shareholder of record entitled to
receive notice of said meeting, 26 days prior thereto. As of the
record date for said meeting of shareholders, the number of shares
then issued and outstanding was 1,243,557 shares of common stock, of
which 1,243,557 shares were entitled to vote on the proposed merger. A
total of 810,845 shares voted in favor of the proposed merger, 1,600
shares voted against the proposed merger and 3,000 shares abstained.
Pursuant to such approval, ExecuFirst Bancorp, Inc. as sole
shareholder of First Executive Bank approved the proposed merger in
writing on May 29, 1996.
Item 5: Other Information
None
18
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
Page Numbering
in Sequential
Numbering System
----------------
2.1 - Agreement and Plan of Merger by and
between ExecuFirst Bancorp, Inc. and
Republic Bancorporation, Inc., dated
November 17, 1995 (incorporated by
reference to Exhibit 2.1 to the
Registrant's Quarterly Report on Form
10-QSB/A for the quarter ended September 30,
1995). --
2.2 - Amendment to the Agreement and Plan
of Merger dated April 29, 1996,
(incorporated by reference to Exhibit 2.2
to Amendment No. 3 to the Registrant's
Registration Statement on Form S-4, File
No. 333-673). --
3.1 - Amended and Restated Articles and
Amended and Restated Bylaws (incorporated
by reference to Exhibit 3 of the
Registrant's Registration Statement on
Form S-1). --
27 - Financial Data Schedule. 23
(b) Form 8-K was filed by the Company on June 10, 1996 to
announce the merger between Republic Bancorporation and
ExecuFirst Bancorp, Inc. which consummated on June 7,
1996.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Issuer has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
First Republic Bancorp, Inc.
/Rolf Stensrud/
---------------
Rolf Stensrud
Chief Operating Officer
/George S. Rapp/
----------------
George S. Rapp
Chief Financial Officer
Dated August 12, 1996
20
<PAGE>
ANNEX "A"
21
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
1996 1995
------------ ------------
ASSETS (unaudited) (audited)
Cash and due from banks $ 5,883,000 $ 2,923,000
Interest-bearing deposits with banks 990,000 0
Federal funds sold 9,154,000 933,000
Securities available for sale, at fair value
(amortized cost of $9,119,000 and
$4,320,000 respectively) 9,120,000 4,348,000
Securities held to maturity, at amortized
cost (fair value of $66,817,000
and $33,846,000 respectively) 68,209,000 34,004,000
Loans, net 159,001,000 85,183,000
Premises and equipment, net 271,000 321,000
Real estate owned 295,000 295,000
Accrued income and other assets 7,787,000 3,056,000
------------ ------------
Total assets $260,710,000 $131,063,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand - non-interest bearing $ 33,462,000 $ 12,570,000
Demand - interest-bearing 7,618,000 1,429,000
Money market and savings 27,539,000 11,598,000
Time deposits 137,349,000 82,757,000
Time deposits over $100,000 28,023,000 8,070,000
------------ ------------
Total deposits 233,991,000 116,424,000
Subordinated Debt 3,400,000 3,400,000
Accrued expenses and other liabilities 4,592,000 2,617,000
------------ ------------
Total liabilities 241,983,000 122,441,000
============ ============
Shareholders' equity:
Preferred stock, par value $.01 per share,
10,000,000 shares authorized; none issued -- --
Common stock, par value $.01 per share;
authorized 10,000,000 shares; issued
and outstanding 2,847,969 and 1,604,412
shares respectively 28,000 16,000
Capital in excess of par 14,180,000 6,647,000
Retained earnings 4,518,000 1,940,000
Unrealized gain on securities available
for sale, net of deferred tax 1,000 19,000
------------ ------------
Total shareholders' equity 18,727,000 8,622,000
------------ ------------
Total liabilities and shareholders'
equity $260,710,000 $131,063,000
============ ============
See notes to consolidated financial statements.
22
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Six Months Ended June 30,
(unaudited)
1996 1995
---------- ----------
Interest Income:
Interest and fees on loans $4,552,000 $3,625,000
Interest on Federal Funds sold 1,129,000 101,000
Interest on investments 1,249,000 933,000
---------- ----------
6,930,000 4,659,000
---------- ----------
Interest expense:
Demand - interest-bearing 32,000 17,000
Money market and savings 258,000 277,000
Time 2,948,000 1,976,000
Time over $100,000 795,000 265,000
Subordinated Debt 140,000 137,000
Repurchase Agreements 0 44,000
---------- ----------
4,173,000 2,716,000
---------- ----------
Net interest income 2,757,000 1,943,000
Provision for possible loan losses 25,000 80,000
---------- ----------
Net interest income after provision for
possible loan losses 2,732,000 1,863,000
Non-interest income:
Service fees 59,000 34,000
Other income 2,148,000 43,000
---------- ----------
2,207,000 77,000
Non-interest expenses:
Salaries and Benefits 1,113,000 773,000
Occupancy/Equipment 358,000 273,000
Printing & Supplies 103,000 24,000
Organization Costs 38,000 0
Insurance 30,000 28,000
Other expenses 455,000 420,000
---------- ----------
2,097,000 1,518,000
---------- ----------
Income before income taxes 2,842,000 422,000
---------- ----------
Provision for income taxes 965,000 138,000
---------- ----------
Net income $1,877,000 $ 284,000
========== ==========
Net income per share $ 1.08 $ 0.18
========== ==========
Average common shares outstanding 1,741,067 1,604,412
========== ==========
See notes to consolidated financial statements
23
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Three Months Ended June 30,
(unaudited)
1996 1995
---------- ----------
Interest Income:
Interest and fees on loans $2,549,000 $1,872,000
Interest on Federal Funds sold 318,000 45,000
Interest on investments 734,000 509,000
---------- ----------
3,601,000 2,426,000
---------- ----------
Interest expense:
Demand - interest-bearing 23,000 8,000
Money market and savings 151,000 129,000
Time 1,571,000 1,131,000
Time over $100,000 261,000 119,000
Subordinated Debt 71,000 69,000
---------- ----------
2,077,000 1,456,000
---------- ----------
Net interest income 1,524,000 970,000
Provision for possible loan losses 25,000 60,000
---------- ----------
Net interest income after provision
for possible loan losses 1,499,000 910,000
Non-interest income:
Service fees 48,000 36,000
Other income 174,000 6,000
---------- ----------
222,000 42,000
Non-interest expenses:
Salaries and Benefits 636,000 375,000
Occupancy/Equipment 203,000 142,000
Printing & Supplies 20,000 25,000
Organization Costs 38,000 0
Insurance 21,000 18,000
Other expenses 274,000 181,000
---------- ----------
1,192,000 741,000
---------- ----------
Income before income taxes 529,000 211,000
---------- ----------
Provision for income taxes 178,000 67,000
---------- ----------
Net income $ 351,000 $ 144,000
========== ==========
Net income per share $ 0.28 $ 0.09
========== ==========
Average common shares outstanding 1,245,626 1,604,412
========== ==========
See notes to consolidated financial statements
24
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Six Months Ended June 30,
1996 1995
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 1,877,000 $ 284,000
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Provision for possible loan losses 25,000 80,000
Depreciation and amortization 123,000 91,000
(Increase) decrease in accrued income
and other assets (846,000) (468,000)
Increase (decrease) in accrued expenses
and other liabilities 77,000 504,000
------------ ------------
Net cash provided by operating activities 1,256,000 491,000
------------ ------------
Cash flows from investing activities:
Purchase of securities:
Investment securities 0 0
Available for sale 0 0
Held to maturity (17,900,000) (7,118,000)
Proceeds from sales and maturities of securities 7,975,000 0
Principal receipts on securities 2,213,000 75,000
Net (increase) decrease in loans (713,000) (6,438,000)
Cash Proceeds from acquisitions 12,155,000 0
Proceeds from the sale of other
real estate owned 0 0
Premises and equipment expenditures (114,000) (22,000)
------------ ------------
Net cash used in investing activities 3,616,000 (13,503,000)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in demand, money
market, and savings deposits 6,215,000 (1,713,000)
Net (decrease) in borrowed funds 0 (5,583,000)
Net increase (decrease) in time deposits 94,000 22,029,000
------------ ------------
Net cash provided (used in) financing activities 6,309,000 14,733,000
============ ============
Increase (decrease) in cash and cash equivalents $ 11,181,000 $ 1,721,000
Cash and cash equivalents, beginning of period 3,856,000 3,968,000
------------ ------------
Cash and cash equivalents, end of period $ 15,037,000 $ 5,689,000
============ ============
Supplemental disclosure:
Interest paid $ 4,266,000 $ 2,191,000
============ ============
Non-cash transactions:
Net transfers to real estate owned from loans $ 295,000 $ 0
============ ============
Changes in unrealized gain (loss) on securities
available for sale $ (18,000) $ 0
============ ============
See notes to consolidated financial statements
25
<PAGE>
FIRST REPUBLIC BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of First Republic Bancorp, Inc., the accompanying unaudited
financial statements contain all adjustments (including normal recurring
accruals) necessary to present fairly the financial position as of June 30,
1996, and the results of operations and cash flows for the three (3) and
six (6) months then ended, June 30, 1996 and 1995. Certain amounts in the
Consolidated Financial Statements have been reclassified for comparative
purposes.
On June 7, 1996 Republic Bancorporation, ("Republic") parent company of
Republic Bank, its sole subsidiary, merged with and into ExecuFirst
Bancorp, Inc., ("ExecuFirst") parent company of First Executive Bank, its
sole subsidiary. Republic exchanged all of its common stock, for
approximately 1,604,411 shares (approximately 56% of the combined total) of
ExecuFirst's common stock. Effective upon the merger, ExecuFirst changed
its name to First Republic Bancorp, Inc. ("the Company"). As a result of
Republic's shareholders owning a majority of the outstanding shares of the
combined company's stock after the merger, the merger transaction was
accounted for as a reverse acquisition of ExecuFirst by Republic.
Therefore, the Consolidated Statement of Operations and Consolidated
Balance Sheet for the prior year periods are those of Republic
Bancorporation Inc. only, and may not be comparable to the current year
Consolidated Statement of operation or Consolidated Balance Sheet of
Condition. The Operations of ExecuFirst have been included in the Company's
financial statements since the date of acquisition. Historical
shareholders' equity of Republic Bancorporation prior to the merger has
been retroactively restated (a recapitalization) for the equivalent number
of shares received in the merger after giving effect to any differences in
par value of the issuer's and acquirer's stock.
A. The June 30, 1996 Consolidated Balance Sheet gives the effect of the
merger on a purchase accounting basis based on the fair market value
of ExecuFirst's common stock at a price of $5.75 per share, the
estimated market value of the stock for a reasonable period before and
after November 17, 1995, the announcement date of the merger. The
merger was accounted for as a reverse acquisition of ExecuFirst by
Republic. Solely for accounting and financial reporting purposes,
Republic is considered the acquiring entity even though, the Holding
Company (as ExecuFirst is referred to with respect to post-merger
actions) is the surviving entity and the entity issuing common stock
because Republic shareholders will acquire the majority of Holding
Company Common Stock as a result of the merger. The purchase price
calculated for accounting purposes amounted to $7,050,000, which is
the result of multiplying the $5.75 per share market value as
determined above, by the outstanding shares of ExecuFirst of 1,226,057
at that date plus acquisition expenses incurred by Republic in the
amount of $933,000. The purchase price has as follows:
26
<PAGE>
Purchase Price............................................$7,983,000
Allocation to Historical Assets of ExecuFirst.............$7,704,000
Adjustments:
Premium on Loans..........................................$ 250,000
Premium on Deposits.......................................$ (228,000)
Deferred Tax Adjustment...................................$1,302,000
Adjusted Net Assets of ExecuFirst.........................$9,028,000
Negative Good Will........................................$1,045,000
B. Reflects the reduction of the valuation allowance on gross deferred
tax asset in the amount of $1,060,000 at the date of acquisition and
the deferred tax effect of the purchase accounting adjustments of
$242,000.
C. Negative Good Will in the amount of $1,045,000 was generated for
purchase accounting purposes and was applied against (i) bank premises
and equipment in the amount of $276,000, (ii) other real estate owned,
in the net amount of $84,000, and (iii) the net deferred tax asset in
the amount of $685,000. No negative good will remains after
application to these non-current assets.
D. Loans and deposits have been increased by $250,000 and $228,000 as of
the date of acquisition, respectively, to reflect the premium
associated with the fair market value of the underlying asset and
liability. The purchase accounting adjustments will be Amoritized over
5 years and 1 year respectively, the average life of the underlying
assets and liabilities.
2. Pennsylvania Shares Tax:
Effective July 1, 1989, Pennsylvania enacted legislation creating the bank
shares tax and a new bank tax credit allowing a one-time tax credit for
banks chartered after January 1, 1979. The maximum amount of the credit
that can be used in any year is limited to 80% of the tax liability. The
tax liability was reduced by aggregate credit of approximately $605,000 for
the years 1989 through 1991.
Subsequent to July 1989, several lawsuits were brought against the
Pennsylvania Department of Revenue requesting the new bank shares tax and
new bank tax credit be
27
<PAGE>
declared invalid. The Bank joined with a group of other banks formed after
January 1, 1979 to protect its interests. This group retained counsel and
actively asserted its position. During 1995, the Commonwealth Court ruled
that the amended bank shares tax was constitutional and the new bank tax
credit was unconstitutional. That ruling has been appealed to the
Pennsylvania Supreme Court.
On April 1995, the Pennsylvania Department of Revenue negotiated a
settlement with the bank group allowing in full the maximum amount of
credits to be applied to the tax liability.
However, the Pennsylvania Department of Revenue indicated that the Bank's
liability, after the credits (primarily for 1989), is approximately
$114,000 representing a difference in treatment for certain aspects of
capital calculations. The Bank disputes the amount and is currently
appealing to the Board of Finance and Revenue. In the opinion of the Bank's
management, the outcome of this litigation will not have a material adverse
effect on the Company's financial position; however, it could have a
material impact on the results of operations of a subsequent quarter or
year.
3. Investment Securities
Effective January 1, 1995, the Bank adopted Statement of Financial
Accounting Standards (SFAS) ("Statement") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Statement requires certain
investments to be classified under one of the following categories: "held-
to-maturity" and accounted for at historical cost, adjusted for accretion
of discounts and amortization of premiums; "available-for-sale" and
accounted for at fair market value, with unrealized gains and losses
reported as a separate component of shareholders' equity; or "trading" and
accounted for at fair market value, with unrealized gains and losses
reported as a component of net income. The Bank does not hold trading
securities. As allowable under SFAS No. 115 Business Combination
Provisions, concurrent with the merger with ExecuFirst, the Company
reclassified part of ExecuFirst's investment portfolio to Held to Maturity.
This reclassification was done to reposition the investment security
portfolio to be consistent with the Company's Asset/Liability Management
policy and the anticipated future liquidity requirements of the Company
At June 30, 1996, the Bank has also identified investment securities
that will be held for indefinite periods of time, including securities that
will be used as part of the Bank's asset/liability management strategy and
that may be sold in response to changes in interest rates, prepayments and
similar factors. The securities are classified as "available-for-sale". In
order to increase the flexibility of asset/liability management, the Bank
classified certain investment securities as "available-for-sale" with a
book and market values of approximately $9.1 million . Available-for-sale
securities consist of US Government Treasury and US Government Agency
Securities. Accordingly, the net unrealized gain on securities
available-for-sale, as of this date, was $1,000.
28
<PAGE>
The following table represents the carrying and estimated fair values of
Investment Securities at June 30, 1996.
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Available-for-Sale ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Treasury 2,498 5 (2) 2,501
US Government Agencies 6,621 22 (24) 6,619
- --------------------------------------------------------------------------------
Total Available-for-Sale 9,119 27 (26) 9,120
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Held to Maturity ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Treasury 2,002 2 0 2,004
US Government Agencies 64,168 0 (633) 62,774
Other 2,039 0 0 2,039
- --------------------------------------------------------------------------------
Total Held to Maturity 68,209 2 (633) 66,817
- --------------------------------------------------------------------------------
29
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,883,000
<INT-BEARING-DEPOSITS> 990,000
<FED-FUNDS-SOLD> 9,154,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 9,120,000
<INVESTMENTS-MARKET> 68,209,000
<LOANS> 161,141,000
<ALLOWANCE> 2,140,000
<TOTAL-ASSETS> 260,710,000
<DEPOSITS> 233,991,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,592,000
<LONG-TERM> 3,400,000
0
0
<COMMON> 28,000
<OTHER-SE> 18,699,000
<TOTAL-LIABILITIES-AND-EQUITY> 260,710,000
<INTEREST-LOAN> 4,552,000
<INTEREST-INVEST> 1,249,000
<INTEREST-OTHER> 1,129,000
<INTEREST-TOTAL> 6,930,000
<INTEREST-DEPOSIT> 4,033,000
<INTEREST-EXPENSE> 140,000
<INTEREST-INCOME-NET> 2,757,000
<LOAN-LOSSES> 25,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,097,000
<INCOME-PRETAX> 2,842,000
<INCOME-PRE-EXTRAORDINARY> 2,842,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,877,000
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
<YIELD-ACTUAL> 3.42
<LOANS-NON> 993,000
<LOANS-PAST> 790,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 944,000
<ALLOWANCE-OPEN> 680,000
<CHARGE-OFFS> 95,000
<RECOVERIES> 3,000
<ALLOWANCE-CLOSE> 2,140,000
<ALLOWANCE-DOMESTIC> 2,140,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
