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 Period Ended: September 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
1608 Walnut Street, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip code)
215-735-4422
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(Registrant's telephone number, including area code)
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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 ____
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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 November 1, 1996
Page 1 of 21
Exhibit index appears on page 13
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
See Annex "A"
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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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 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 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:
As of September 30, 1996, the Bank's total assets increased 97%
or $127.1 million to approximately $258.2 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 September 30, 1996, net loans totaled $158.8 million representing
an increase of $73.6 million compared to $85.2 million at December 31, 1995. The
increase was again mainly attributable to the merger with ExecuFirst whose loan
portfolio totaled $73.1 million immediately prior to the merger.
Total deposits increased to $231.9 million at September 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 September 30, 1996, as the result of the
merger. Higher costing time deposits representing 78.0% 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 75.1% of total deposits at
September 30, 1996.
Deposit Breakdown Table
($000)
September 30, December 31,
1996 1995
% of % of
Type of Account Balance Total Balance Total
- -------------------------------------------------------------------------------
Demand: non-interest bearing $ 20,070 8.7% $ 12,570 10.8%
Demand: interest bearing 10,088 4.3% 1,429 1.2%
Money Market and Savings 27,657 11.9% 11,598 10.0%
Time deposits under $100,000 140,874 60.8% 82,757 71.1%
Time deposits over $100,000 33,227 14.3% 8,070 6.9%
-------------------- --------------------
Total deposits $231,916 100% $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. 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 provision for loan loss of $30,000 during the
quarter ended September 30, 1996 compared to a charge of $92,000 in the quarter
ended September 30, 1995, as loan growth was higher during the third quarter of
1995 compared to the third 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 loan losses
increased to $2,025,000 from $680,000 at December 31, 1995. Listed below is an
analysis of the loan loss reserve account:
Allowance for Loan Losses
Rollforward
September 30, 1996
Balance at December 31, 1995 $680,000
Charge-offs (during the nine-month period ended 9/30/96):
Commercial loans 238,000
Installment 33,000
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Total charge-offs (during the nine-month period ended 9/30/96): 271,000
--------
Recoveries (during the nine-month period ended 9/30/96):
Installment 14,000
Commercial 20,000
------
Total recoveries 34,000
------
Addition of First Executive's ALL 1,527,000
---------
Additions charged to operations 55,000
------
Balance at September 30, 1996 $2,025,000
==========
As of September 30, 1996, the Bank had loans outstanding placed in a
non-accrual status totaling approximately $1,971,000 compared to $832,000 at
December 31, 1995. This was mainly due to the addition of a large loan during
the third quarter and the addition of ExecuFirst's loan portfolio to the Bank's
as a result of the merger. There was no interest income recorded on non-accrual
loans for the nine months ended September 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 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 September 30, 1996, the Bank held three foreclosed properties with a combined
book value of $364,000. Management is actively pursuing the liquidation of this
collateral.
Listed below is a schedule of gross loans receivable at September 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 $63.9 million in loans
receivable are comprised of fixed rate loans that will mature in the next five
years.
Loan Breakdown Table
($000)
September 30, December 31,
1996 1995
% of % of
Loan Type Balance Total Balance Total
- -------------------------------------------------------------------------------
Loans collateralized by
Real Estate:
One-to-four family residential $ 52,278 32.5% $ 26,641 31.0%
Multi-family residential 2,326 1.4% 140 0.2%
Commercial and other 59,169 36.8% 34,353 40.0%
-------- ----- -------- -----
Total loans collateralized by
Real Estate $113,773 70.7% $ 61,134 71.2%
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Commercial business loans $ 42,458 26.4% $ 15,183 17.7%
Other loans 4,569 2.9% 9,546 11.1%
-------- ----- -------- -----
Total loans $160,800 100.0% $ 85,863 100.0%
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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 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.
Of the approximately $52.3 million at September 30, 1996, in loans
collateralized by "one-to-four residential" properties only $4.5 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 all 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. $12.3 million of such loans were
collateralized by liquid collateral as of September 30, 1996. Another $8.2
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 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.
Capital Resources:
During the nine months ended September 30, 1996, the Company reported
net income of $2,377,000. After reflecting unrealized losses on securities
"available for sale," in accordance with Financial Accounting Standards Board
Statement 115 in the amount of $7,000, purchase accounting adjustments of
$6,968,000 resulting from the merger and the exercise of certain stock options,
total Shareholders' Equity increased to $18,025,000 from $8,622,000 at year-end
1995. Total Shareholders' Equity was $8,284,000 at September 30, 1995.
The Bank's ratio of Tier I Capital to total Risk-Weighted Assets
decreased to 10.15% as of September 30, 1996 from 12.38% as of December 31,
1995. The Company's ratio of Tier I Leverage Capital to total average quarterly
assets was 6.68% compared to 6.58% as of December 31, 1995.
Regulatory Capital Requirements:
The following table presents the Bank's capital ratios at September 30, 1996:
Tier I Capital $17,149,000
Tier II Capital 4,745,000
---------
Total Capital 21,894,000
Total Average Quarterly Assets 256,823,000
Total Risk-Weighted Assets (1) 168,909,000
Tier I Risk-Based Capital Ratio (2) 10.15%
Required Tier I Risk-Based Capital Ratio 4.00%
-----
Excess Tier I Risk-Based Capital Ratio 6.15%
Total Risk-Based Capital Ratio (3) 12.96%
Required Total Risk-Based Capital Ratio 8.00%
-----
Excess Total Risk-Based Capital Ratio 4.96%
Tier I Leverage Ratio (4) 6.68%
Required Tier I Leverage Ratio 4.00%
-----
Excess Tier I Leverage Ratio 2.68%
- ----------------------------------------------------------------
(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.
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 September 30, 1996, the Bank maintained
$9.6 million in cash, cash equivalents in the form of cash and due from banks
(after reserve requirements) and overnight federal funds sold. This represented
3.7% of the total assets at September 30, 1996 as compared to 1.5% at December
31, 1995. Of the Bank's investment securities, approximately $6.3 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 $17.0 million
to assist in managing the Bank's liquidity position. No amounts were outstanding
on any of these facilities as of September 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.
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 permitted under SFAS No. 115,
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 Bank.
At September 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. These securities are classified as
"available-for-sale" and have a book and market value of $7,634,000 and
$7,627,000 respectively, as of September 30, 1996. The net unrealized loss on
securities available-for-sale, as of this date, was $7,000, and is included in
Shareholders' Equity.
The following table represents the carrying and estimated fair values of
Investment Securities at September 30, 1996.
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Available-for-Sale ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Treasury 1,499 1 0 1,500
US Government Agencies 6,135 10 (18) 6,127
- --------------------------------------------------------------------------------
Total Available-for-Sale 7,634 11 (18) 7,627
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Held to Maturity ($000) Cost Gain Loss Fair Value
- --------------------------------------------------------------------------------
US Government Agencies 68,401 96 (325) 68,172
Other 2,034 0 0 2,034
- --------------------------------------------------------------------------------
Total Held to Maturity 70,435 96 (325) 70,206
- --------------------------------------------------------------------------------
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 September 30, 1996, 22% of the Bank's time deposits were to
mature and be repriceable within three months of such date, and an additional
25%, up from 11% from June 30, 1996, were to be repriceable within three to six
months.
The Bank has the ability to reprice 16.2% 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 September
30, 1996 and December 31, 1995, 27% and 24% of the Bank's interest-bearing
deposits, respectively, were repriceable within three months. The cumulative
12-month Interest Rate Sensitivity Gap at September 30, 1996 was a negative 8.6%
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 September 30, 1996 ($000)
<TABLE>
<CAPTION>
Rate Maturity Period
-----------------------------------------------------------------
1-90 91-180 181-365 1-5 5 yrs.&
days days days years over Total
-----------------------------------------------------------------
Interest Sensitive Assets:
Interest Bearing Balances Due
<S> <C> <C> <C> <C> <C> <C>
from Banks 164 495 0 0 0 659
Federal Funds Sold 6,384 --- --- --- --- 6,384
Investment Securities 4,358 15,961 7,200 18,791 31,752 78,062
Loans 92,066 5,573 12,547 35,760 14,854 160,800
------ ----- ------ ------ ------ -------
Totals 102,972 22,029 19,747 54,551 46,606 245,905
Cumulative Totals 102,972 125,001 144,748 199,299 245,905
Interest Sensitive Liabilities:
Demand Interest Bearing 5,044 --- --- 2,522 2,522 10,088
Savings 1,319 --- --- --- 1,319 2,638
Money Market Accounts 12,509 --- --- 6,255 6,255 25,019
Time deposits 37,945 43,805 65,377 26,975 --- 174,102
------ ------ ------ ------ ------ -------
Totals 56,816 43,805 65,377 35,752 10,096 211,846
Cumulative Totals 56,816 100,621 165,998 201,750 211,847
GAP 46,156 (21,776) (45,630) 18,800 36,509 34,059
Cumulative GAP 46,156 24,380 (21,250) (2,451) 34,059 ---
Interest Sensitive Assets/Interest
Sensitive Liabilities 1.8 1.2 0.9 1.0 1.2
Cumulative GAP/Total Earning Assets
18.8% 9.9% (8.6%) (1.0%) 13.9%
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Total Earning Assets 245,905
-----------------------------------------------------------------
</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.
Results of Operations for the Three Months Ended September 30, 1996 vs 1995:
The Company's net income for the quarter ended September 30, 1996, was
$500,000, or approximately $0.17 per share of common stock, compared to a net
income of $163,000 or approximately $0.10 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 $2.3 million during the quarter ended September 30, 1996, from
$986,000 in the quarter ended September 30, 1995. The increase was mainly due to
the merger with ExecuFirst, as well as growth in interest earning assets in the
third quarter.
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 of 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 $3.7 million, or 74% of total interest
income, for the quarter ended September 30, 1996 compared with $2.0 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.
Interest on federal funds sold was $66,000, or 1.3% of total interest
income during the quarter ended September 30, 1996, compared to $51,000 or 2.6%
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 $1,213,000 or 24.4% of total interest
income in the quarter ended September 30, 1996, compared to $525,000, or 20.6%
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. Total non-interest income
increased to $166,000 for the quarter ended September 30, 1996 compared to
$40,000 for the quarter ended September 30, 1995. The increase is primarily due
to increased service charges as a result of combining ExecuFirst's deposit base
effective June 7, 1996.
Interest expense for the quarter ended September 30, 1996 was $2.7
million compared to $1.6 million for the quarter ended September 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 $845,000, or approximately 50% of total non-interest
expenses, for the quarter ended September 30, 1996, compared to $392,000, or
approximately 57% of total expenses, in the quarter ended September 30, 1995.
The year-to-year increase is due primarily to increases in 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 and branch facilities. Occupancy expenses were
$281,000 for the quarter ended September 30, 1996, or 17% of total expenses,
compared to $139,000, or 20% of total expenses, for the comparable quarter of
1995. This increase was again attributable to costs associated with the addition
of ExecuFirst's two-branch system, as a result of the merger.
Other operating expenses during the quarter ended September 30, 1996
were $571,000 or 34% of total expenses, compared to $159,000 or 23% of total
expenses, for the quarter ended September 30, 1995. Major components of this
category include data processing, printing and supplies, advertising, travel and
entertainment, and fidelity insurance premiums.
Results of Operations for the nine months ended September 30, 1996 vs 1995:
The Company's net income for the nine months ended September 30, 1996,
was $2,377,000, or approximately $1.05 per share of common stock, compared to a
net income of $447,000 or approximately $0.28 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 $5.0 million for the nine months ended September 30, 1996, from
$2.9 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.
Interest and fees on loans was $8.2 million, or 69% of total interest
income, for the nine months ended September 30, 1996 compared with $5.6 million,
or 78% 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 $81.4 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 $1,195,000 or 10% of total interest
income, during the nine months ended September 30, 1996 compared to $152,000 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. Interest on investments was $2,462,000 or 21% of total interest
income for the nine months ended September 30, 1996, compared to $1,458,000 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. 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 nine months ended September 30, 1996. Total
non-interest income increased to $2.3 million for the nine months ended
September 30, 1996, compared to $117,000 for the same period in 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 nine months ended September 30, 1996 was $6.9
million compared to $4.3 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 $90.5 million,
as a result of the merger with ExecuFirst.
Salaries and employee benefits totaled $1,958,000 or approximately 52%
of total non-interest expenses, in the nine months ended September 30, 1996,
compared to $1,165,000 or approximately 53% of total expenses, for the nine
months ended September 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 and the Bank's branch offices. Occupancy
expenses were $639,000 for the nine months ended September 30, 1996 or 17% of
total expenses, compared to $415,000 or 19% of total expenses for the comparable
period of 1995. The year-to-year increase is due primarily to the addition of
two branches as a result of the merger with ExecuFirst.
Other operating expenses during the nine months ended September 30,
1996 were $1,138,000 or 30% of total expenses, compared to $628,000 or 28% 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
Corporation premiums.
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
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, was held on
the 29th day of May, 1996 at 3:00 p.m., at the Union League, 120 South
Broad Street, Philadelphia, Pennsylvania at which meeting the
shareholders considered the Proposed Merger. 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
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). --
2.3 - Amended 10QSB/A for the period ended
June 30, 1996 filed 10/4/96 --
2.4 - Registrants Quarterly Report on Form 10-QSB
filed August 14, 1996 --
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. 21
(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.
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.
/s/ Rolf Stensrud
---------------
Rolf Stensrud
Chief Operating Officer
/s/ George S. Rapp
----------------
George S. Rapp
Chief Financial Officer
Dated November 11, 1996
ANNEX "A"
First Republic Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
ASSETS (unaudited) (audited)
<S> <C> <C>
Cash and due from banks $ 6,601,000 $ 2,923,000
Interest-bearing deposits with banks 1,154,000 0
Federal funds sold 6,384,000 933,000
Securities available for sale, at fair
value (amortized cost of $7,634,000 and
$4,320,000 respectively) 7,627,000 4,348,000
Securities held to maturity, at amortized
cost (fair value of $ 70,206,000 and
$33,846,000 respectively) 70,435,000 34,004,000
Loans, net 158,775,000 85,183,000
Premises and equipment, net 545,000 321,000
Real estate owned
364,000 295,000
Accrued income and other assets 6,278,000 3,056,000
------------ ------------
Total assets $258,163,000 $131,063,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand - non-interest bearing $ 20,070,000 $ 12,570,000
Demand - interest-bearing 10,088,000 1,429,000
Money market and savings 27,657,000 11,598,000
Time deposits 140,874,000 82,757,000
Time deposits over $100,000 33,227,000 8,070,000
------------ ------------
Total deposits 231,916,000 116,424,000
Subordinated Debt 3,400,000 3,400,000
Accrued expenses and other liabilities 4,822,000 2,617,000
------------ ------------
Total liabilities 240,138,000 122,441,000
============ ============
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 13,687,000 6,647,000
Retained earnings 4,317,000 1,940,000
Unrealized gain/(loss) on securities
available for sale, net of
deferred tax (7,000) 19,000
------------ ------------
Total shareholders' equity 18,025,000 8,622,000
------------ ------------
Total liabilities and shareholders' equity $258,163,000 $131,063,000
============ ============
</TABLE>
See notes to consolidated financial statements.
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Nine Months Ended September 30
(unaudited)
1996 1995
----------- -----------
Interest Income:
Interest and fees on loans $ 8,245,000 $ 5,595,000
Interest on Federal Funds sold 1,195,000 152,000
Interest on investments 2,462,000 1,458,000
----------- -----------
11,902,000 7,205,000
----------- -----------
Interest expense:
Demand - interest-bearing 82,000 25,000
Money market and savings 467,000 395,000
Time 4,908,000 3,215,000
Time over $100,000 1,193,000 397,000
Subordinated Debt 210,000 206,000
Repurchase Agreements 0 38,000
----------- -----------
6,860,000 4,276,000
----------- -----------
Net interest income 5,042,000 2,929,000
Provision for possible loan losses 55,000 172,000
----------- -----------
Net interest income after provision for possible
loan losses 4,987,000 2,757,000
Non-interest income:
Service fees 174,000 117,000
Other income 2,140,000 0
----------- -----------
2,314,000 117,000
Non-interest expenses:
Salaries and Benefits 1,958,000 1,165,000
Occupancy/Equipment 639,000 415,000
Printing & Supplies 102,000 44,000
Organization Costs 38,000 0
Insurance 45,000 37,000
Other expenses 953,000 547,000
----------- -----------
3,735,000 2,208,000
----------- -----------
Income before income taxes 3,566,000 666,000
----------- -----------
Provision for income taxes 1,189,000 219,000
----------- -----------
Net income $ 2,377,000 $ 447,000
Earnings per share:
Primary $ 1.05 $ 0.28
Fully diluted $ 1.02 $ 0.28
Weighted Average Shares Outstanding:
Primary 2,255,319 1,604,412
Fully diluted 2,330,752 1,604,412
=========== ===========
See notes to consolidated financial statements.
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations
Three Months Ended Sepetmber 30,
(unaudited)
1996 1995
---------- ----------
Interest Income:
Interest and fees on loans $3,693,000 $1,970,000
Interest on Federal Funds sold 66,000 51,000
Interest on investments 1,213,000 525,000
---------- ----------
4,972,000 2,546,000
---------- ----------
Interest expense:
Demand - interest-bearing 50,000 8,000
Money market and savings 209,000 119,000
Time 1,960,000 1,232,000
Time over $100,000 398,000 132,000
Subordinated Debt 70,000 69,000
---------- ----------
2,687,000 1,560,000
---------- ----------
Net interest income 2,285,000 986,000
Provision for possible loan losses 30,000 92,000
---------- ----------
Net interest income after provision for possible
loan losses 2,255,000 894,000
Non-interest income:
Service fees 115,000 40,000
Other income 51,000 --
---------- ----------
166,000 40,000
Non-interest expenses:
Salaries and Benefits 845,000 392,000
Occupancy/Equipment 281,000 139,000
Printing & Supplies 64,000 20,000
Insurance 15,000 9,000
Other expenses 492,000 130,000
---------- ----------
1,697,000 690,000
---------- ----------
Income before income taxes 724,000 244,000
---------- ----------
Provision for income taxes 224,000 81,000
---------- ----------
Net income $ 500,000 $ 163,000
Earnings per Share:
Primary $ 0.17 $ 0.10
Fully diluted $ 0.16 $ 0.10
Weighted Average Shares Outstanding:
Primary 3,018,241 1,604,412
Fully diluted 3,068,687 1,604,412
========== ==========
See notes to consolidated financial statements.
<PAGE>
First Republic Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,377,000 $ 447,000
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Provision for possible loan losses 55,000 172,000
Depreciation and amortization 183,000 137,000
(Increase) decrease in accrued income
and other assets 663,000 (458,000)
Increase(decrease) in accrued expenses
and other liabilities (153,000) 904,000
------------ ------------
Net cash provided by operating activities 3,125,000 1,202,000
------------ ------------
Cash flows from investing activities:
Purchase of securities:
Investment securities 0 0
Available for sale 0 0
Held to maturity (26,901,000) (8,748,000)
Proceeds from sales and maturities of
securities 10,975,000 0
Principal receipts on securities 6,709,000 139,000
Net (increase) decrease in loans (372,000) (10,098,000)
Cash Proceeds from acquisitions 12,155,000 0
Proceeds from the sale of other real estate
owned 0 0
Premises and equipment expenditures (137,000) (35,000)
------------ ------------
Net cash used in investing activities 2,429,000 (18,742,000)
------------ ------------
Cash flows from financing activities:
Net increase (decrease) in demand, money
market, and savings deposits (4,589,000) 767,000
Net (decrease) in borrowed funds 0 (5,583,000)
Net increase (decrease) in time deposits 8,823,000 24,134,000
============ ============
Net cash provided (used in) financing
activities 4,234,000 19,318,000
============ ============
Increase (decrease) in cash and cash equivalents $ 9,788,000 $ 1,778,000
Cash and cash equivalents, beginning of period $ 3,856,000 $ 3,968,000
============ ============
Cash and cash equivalents, end of period $ 13,644,000 $ 5,746,000
============ ============
Supplemental disclosure:
Interest paid $ 6,327,000 $ 4,428,000
============ ============
Non-cash transactions:
Net transfers to real estate owned from loans $ 0 $ 0
============ ============
Changes in unrealized gain (loss) on securities
available for sale $ (26,000) $ 19,000
============ ============
</TABLE>
See notes to consolidated financial statements.
FIRST REPUBLIC BANCORP, INC. AND SUBSIDIARY
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 September 30,
1996, and the results of operations and cash flows for the three (3) and nine
(9) months then ended, September 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"). Upon completion of the merger, Republic's
shareholders owned a majority of the outstanding shares of the consolidated
company's stock. As a result transaction was accounted for as a
reverse acquisition of ExecuFirst by Republic solely for accounting and
financial reporting purposes. Therefore, the Consolidated Statement of
Operations and Consolidated Balance Sheet for the prior year periods are those
of Republic 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 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 September 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 of ExecuFirst, by
the outstanding shares of ExecuFirst of 1,226,057 at the announcement date
of the merger, plus acquisition expenses incurred by Republic as a result of
the merger in the amount of $1,193,000. The purchase price has been
allocated as follows:
Purchase Price............................................$8,243,000
Allocation to Historical Assets of ExecuFirst.............$7,704,000
Adjustments:
Premium on Loans..........................................$ 250,000
Premium on Deposits.......................................$ (228,000)
Other Adjustments ........................................$ 260,000
Deferred Tax Adjustment...................................$1,302,000
Adjusted Net Assets of ExecuFirst.........................$9,288,000
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 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 permitted under SFAS No. 115 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 September 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. These securities are classified as "available-for-sale" and have a book
and market value of approximately $7.6 million. Available-for-sale securities
consist of US Government Treasury and US Government Agency Securities.
Accordingly, the net unrealized loss on securities available-for-sale, as of
this date is $7,000.
The following table represents the carrying and estimated fair values of
Investment Securities at September 30, 1996.
- ---------------------------- ---------- ------------ ------------ ------------
Gross Gross
Amortized Unrealized Unrealized
Available-for-Sale ($000) Cost Gain Loss Fair Value
- ---------------------------- ---------- ------------ ------------ ------------
US Treasury 1,499 1 0 1,500
US Government Agencies 6,135 10 (18) 6,127
- ---------------------------- ---------- ------------ ------------ ------------
Total Available-for-Sale 7,634 11 (18) 7,627
- ---------------------------- ---------- ------------ ------------ ------------
- ---------------------------- ---------- ------------ ------------ ------------
- ---------------------------- ---------- ------------ ------------ ------------
Gross Gross
Amortized Unrealized Unrealized
Held to Maturity ($000) Cost Gain Loss Fair Value
- ---------------------------- ---------- ------------ ------------ ------------
US Treasury 0 0 0 0
US Government Agencies 68,401 96 (325) 68,172
Other 2,034 0 0 2,034
- ---------------------------- ---------- ------------ ------------ ------------
Total Held to Maturity 70,435 96 (325) 70,206
- ---------------------------- ---------- ------------ ------------ ------------
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6601
<INT-BEARING-DEPOSITS> 659
<FED-FUNDS-SOLD> 6384
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 70435
<INVESTMENTS-MARKET> 7627
<LOANS> 160800
<ALLOWANCE> 2025
<TOTAL-ASSETS> 258163
<DEPOSITS> 231916
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4822
<LONG-TERM> 3400
0
0
<COMMON> 28
<OTHER-SE> 17997
<TOTAL-LIABILITIES-AND-EQUITY> 258163
<INTEREST-LOAN> 8245
<INTEREST-INVEST> 2462
<INTEREST-OTHER> 1195
<INTEREST-TOTAL> 11902
<INTEREST-DEPOSIT> 6620
<INTEREST-EXPENSE> 6860
<INTEREST-INCOME-NET> 5042
<LOAN-LOSSES> 55
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3735
<INCOME-PRETAX> 3566
<INCOME-PRE-EXTRAORDINARY> 3566
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2377
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.02
<YIELD-ACTUAL> 3.78
<LOANS-NON> 1971
<LOANS-PAST> 1642
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1358
<ALLOWANCE-OPEN> 680
<CHARGE-OFFS> 271
<RECOVERIES> 34
<ALLOWANCE-CLOSE> 2025
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
