SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1996 or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________________ to
____________________.
Commission File Number 0-17494
DIME FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-1237470
- ----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
95 Barnes Road, Wallingford, Connecticut 06492
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(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (203) 269-8881
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $1.00 par value; 5,101,601 shares were outstanding as of June
30, 1996.
The total number of pages in this report is 27
Exhibit Index is on page 23
DIME FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
Part I Financial Information Page No.
Item 1. Financial Statements
Consolidated Statements of Condition
June 30, 1996 and 1995 (unaudited)
and December 31, 1995. 3.
Consolidated Statements of Operations
Three months ended June 30, 1996 and 1995 (unaudited)
and six months ended June 30, 1996 and 1995 (unaudited) 3.
Selected Financial Highlights 3.
Consolidated Statement of Changes in Shareholders' Equity 4.
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995 (unaudited) 5.
Notes to Consolidated Financial Statements (unaudited) 6-10.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-19.
Part II Other Information
Item 4. Submission of Matters to a vote of Security Holders 20.
Item 6. Exhibits and Reports on Form 8-K 21.
Signatures 22.
Exhibit Index 23.
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The registrant incorporates herein by reference the following information
from its Quarterly Report to Shareholders for the quarters ended June 30,
1996 and 1995, filed as Exhibit 20 hereto:
Consolidated Statements of Condition
Consolidated Statements of Operations
Selected Financial Highlights
Dime Financial Corporation and Subisdiary
Consolidated Statement of Changes in Shareholders' Equity
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Net Unrealized
Gain on
Additional Retained Available
Common Paid-in Earnings for Sale Treasury
(dollars in thousands) Stock Capital (Deficit) Securities Stock Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $5,374 $51,117 ($2,166) $ 241 ($2,898) $51,668
Net Income 5,899 5,899
Options Exercised 79 808 887
Dividends Paid (699) (699)
Change in net unrealized gain
on securities available for sale (1,225) (1,225)
-----------------------------------------------------------------
Balance at June 30, 1996 $5,453 $51,925 $3,034 $ (984) ($2,898) $56,530
=================================================================
</TABLE>
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995 (unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,899 $ 1,245
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 1,300 5,300
Depreciation and amortization 509 736
Amortization/Accretion investments, net (228) 183
Amortization of intangible assets 175 175
Amortization of net deferred loan fees (34) (79)
Gain on investment securities (171) (234)
Deferred income tax benefit -- (2,000)
Gains on sale of other real estate owned (475) (742)
Increase in accrued income receivable (388) (291)
Decrease in other assets 1,377 1,273
Increase (decrease) in other liabilities (274) 1,141
------- -------
Net cash provided by operating activities 7,690 6,707
------- -------
Cash flows from investing activities:
Available for sale investment securities:
Proceeds from sale of investment securities 4,076 659
Investment securities purchased (14,577) --
Proceeds from principal payments 597 --
Held to maturity investment securities:
Investment securities purchased (49,281) (28,849)
Proceeds from maturity of investment securities 19,000 28,000
Available for sale mortgage-backed securities:
Mortgage-backed securities purchased (80,346) (5,728)
Proceeds from principal payments 6,020 86
Proceeds from sale of mortgage-backed securities 39,409 --
Held to maturity mortgage-backed securities:
Mortgage-backed securities purchased -- (37,424)
Proceeds from principal payments -- 263
Net decrease in loans 32,377 16,297
Proceeds from sale of loans 733 --
Purchase of premises and equipment (140) (76)
Proceeds from sale of bank -owned buildings 245 --
Proceeds from sale of other real estate owned 1,520 1,918
------- -------
Net cash used by investing activities (40,367) (24,854)
------- -------
Cash flows from financing activities:
Net increase in deposits 26,051 1,223
Payments of FHLBB advances -- (2,000)
Proceeds from exercise of DFC stock options 812 92
Payments of cash dividends (705) --
------- -------
Net cash provided (used) by financing activities 26,158 (685)
------- -------
Net decrease in cash and cash equivalents (6,519) (18,832)
Cash and cash equivalents at beginning of period 35,489 49,960
------- -------
Cash and cash equivalents at end of period $28,970 $31,128
======= =======
</TABLE>
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1996 (unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
Dime Financial Corporation's 1995 Annual Report and Proxy Statement dated
March 8, 1996. In the opinion of management, the accompanying consolidated
financial statements reflect all necessary adjustments, consisting of normal
recurring accruals for a fair presentation of results as of the dates and for
the periods covered by the consolidated financial statements. The results of
operations of the interim period may not be indicative of results for the
entire 1996 fiscal year.
2. EARNINGS PER SHARE
The calculation of earnings per share is based on the weighted average number
of common shares outstanding during the periods presented as follows:
<TABLE>
<CAPTION>
(dollars in thousands, except share data) Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
-----------------------------------
<S> <C> <C> <C> <C>
Net income $3,040 $2,036 $5,899 $1,245
================================================================================
Weighted Average
Common Shares Outstanding 5,059 4,998 5,041 4,996
Earnings per share $0.60 $0.41 $1.17 $0.25
================================================================================
</TABLE>
3. INVESTMENT SECURITIES
The amortized cost, approximate market values, and maturity groupings of
investment securities are as follows:
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
---------------------------------------
Amortized Market Amortized Market
(Dollars in Thousands) Cost Value Cost Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
U.S. government agency obligations:
After 5 but within 10 years ---- ---- 3,997 3,995
Asset-backed securities
After 10 years 13,991 14,041 ---- ----
Domestic obligations:
Within 1 year ---- ---- 4,037 3,996
Equity securities 12 12 12 12
- ------------------------------------------------------------------------------------------
Total Investment Securities Available for Sale $ 14,003 $ 14,053 $ 8,046 $ 8,003
==========================================================================================
INVESTMENT SECURITIES HELD TO MATURITY:
U.S. treasury securities:
Within 1 year ---- ---- $11,604 $11,523
After 1 but within 5 years 2,428 2,425 ---- ----
After 5 but within 10 years 1,011 1,044 1,014 1,073
- ------------------------------------------------------------------------------------------
Total U.S. treasury securities 3,439 3,469 12,618 12,596
- ------------------------------------------------------------------------------------------
U.S. government agency obligations and
U.S government-sponsored agency obligations:
After 1 but within 5 years 39,821 39,557 28,857 28,958
After 5 but within 10 years 38,952 37,793 ---- ----
- ------------------------------------------------------------------------------------------
Total U.S. government agency obligations and
U.S.government-sponsored agency oblig. 78,773 77,350 28,857 28,958
- ------------------------------------------------------------------------------------------
Domestic obligations:
Within 1 year ---- ---- 5,930 5,863
After 5 but within 10 years ---- ---- 998 1,109
- ------------------------------------------------------------------------------------------
Total domestic obligations ---- ---- 6,928 6,972
- ------------------------------------------------------------------------------------------
Total Investment Securities Held to Maturity $ 82,212 $ 80,819 $48,403 $48,526
==========================================================================================
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities:
GNMA $ 50,176 $ 49,755 $ 5,645 $ 5,707
FNMA 3,051 3,020 ---- ----
FHLMC 753 747 ---- ----
REMIC / CMO's 76,168 75,085 ---- ----
- ------------------------------------------------------------------------------------------
Total Mortgage-backed Sec. Available for Sale $130,148 $128,607 $ 5,645 $ 5,707
==========================================================================================
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
Mortgage-backed securities:
GNMA ---- ---- $12,713 $12,703
FNMA ---- ---- 1,253 1,239
FHLMC ---- ---- 48 48
REMIC / CMO's ---- ---- 23,232 23,226
- ------------------------------------------------------------------------------------------
Total Mortgage-backed Sec. Held to Maturity ---- ---- $37,246 $37,216
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $ 79 $ --
Gross unrealized losses $ 29 $ 43
INVESTMENT SECURITIES HELD TO MATURITY:
Gross unrealized gains $ 93 $278
Gross unrealized losses $1,486 $155
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $ 70 $ 62
Gross unrealized losses $1,611 $ --
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
Gross unrealized gains $ -- $ 67
Gross unrealized losses $ -- $ 97
</TABLE>
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
-------------------------
(In Thousands)
<S> <C> <C>
Balance at January 1, $ 12,779 $ 9,326
Provision for loan losses 1,300 5,300
Charge-offs (1,396) (1,330)
Recoveries 1,202 181
- ---------------------------------------------------------------------------
Balance at June 30, $ 13,885 $ 13,477
===========================================================================
Average loans $441,584 $504,961
Net charge-offs as a percentage of average loans 0.04% 0.26%
Non-performing loans $ 5,741 $ 11,323
Allowance for loan losses as a percentage of
non-performing loans 241.85% 119.01%
</TABLE>
5. NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
June 30,
--------
1996 1995
-------------
(In Thousands)
<S> <C> <C>
Mortgage loans on real estate $5,187 $ 9,730
Commercial loans 307 1,040
Consumer loans 247 553
----------------
Total non-performing loans 5,741 11,323
Other real estate owned, net 612 3,455
----------------
Total non-performing assets $6,354 $14,778
================
Non-performing loans as a percentage of total loans 1.36% 2.30%
Non-performing assets as a percentage of total assets 0.92% 2.31%
</TABLE>
6. IMPAIRED LOANS
Impaired loans are commercial, commercial real estate, non-owner occupied
residential mortgage loans, and individually significant owner-occupied
residential mortgage and consumer loans for which it is probable that the
Company will not be able to collect all amounts due according to the
contractual terms of the loan agreement. Owner occupied residential mortgage
and consumer loans which are not individually significant are measured for
impairment collectively.
The definition of "impaired loans" is not the same as the definition of
"non-accrual loans". Nonaccrual loans include impaired loans and are those on
which the accrual of interest is discontinued when collectibility of principal
or interest is uncertain or payments of principal or interest have become
contractually past due 90 days. The Company does not accrue income on loans
that are past due 90 days or more except in the case of education loans which
are guaranteed. Education loans which were 90 days or more past due at June
30, 1996 and in accrual status totalled $69,000. The Company may choose to
place a loan on nonaccrual status while not classifying the loan as impaired if
it is probable that the Company will collect all amounts due in accordance with
the contractual terms of the loan.
Factors considered by management in determining impairment include payment
status and collateral value. Loans that experience insignificant payment delays
and insignificant shortfalls are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of delay, reasons
for delay, the borrower's prior payment record, and the amount of the shortfall
in relation to the total debt owed. The amount of impairment is generally
determined by the difference between the fair value of underlying collateral
securing the loan and the recorded amount of the loan.
Interest payments received from commercial mortgage loans, commercial business
loans, and non-owner occupied residential investment mortgage loans which have
been classified as impaired are generally applied to the carrying value of such
loans. Interest payments received from loans which are classified as impaired,
other than commercial loans, are generally recognized on a cash basis.
At June 30, 1996 impaired loans totalled $4.3 million with a related allowance
of $730,000 compared with impaired loans at June 30, 1995 of $5.3 million with
a related allowance of $1.3 million.
7. FHLBB ADVANCES
Federal Home Loan Bank of Boston advances consisted of the following:
<TABLE>
<CAPTION>
June 30,
1996 1995
--------------
(In Thousands)
<S> <C> <C>
7.07% due 1996 -- 33,000
7.16% due 1997 25,000 25,000
6.05% due 1998 15,000 --
6.29% due 1999 10,000 --
6.51% due 2000 8,000 --
----------------------------------------
Total FHLBB advances $58,000 $58,000
========================================
</TABLE>
Item 2:
DIME FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Dime Financial Corporation of Wallingford, Connecticut (the "Company"),
organized in 1988, is the parent company of one wholly-owned subsidiary, The
Dime Savings Bank of Wallingford ("Dime"). Consolidated assets as of June 30,
1996 were $689.0 million.
The Company provides a full range of banking services to individual and
corporate customers through its subsidiary, The Dime Savings Bank of
Wallingford, which operates eleven retail banking offices in New Haven County,
Connecticut. Products offered include savings and checking products, mortgage
loans, and consumer installment loans. Deposits are insured by the FDIC up to
certain limits under the law.
FINANCIAL CONDITION
The Company's earnings primarily depend upon the difference between the
interest and dividend income earned on loans and investments and the interest
expense paid on deposits and borrowed rate earned on loans and investments and
the average interest rate paid on deposits and borrowings ("net spread") is
affected by economic factors influencing general interest rates, loan demand,
the level of non-performing loans, and savings flows as well as the effects of
competition for loans and deposits. Net income is also affected by gains and
losses on investment securities transactions and other operating income such
as service charges and fees offset by additions to the provision for loan
losses, other operating expenses and income tax expense.
In the second quarter of 1996, the Company reported net income of $3.0
million or $0.60 per share compared with net income of $2.0 million or $0.41
per share for the quarter ended June 30, 1995. Net income for the six month
period ended June 30, 1996 totalled $5.9 million or $1.17 per share compared
with net income of $1.2 million or $0.25 per share for the six month period
ended June 30, 1995. The second quarter and six month results were affected
primarily by a lower provision to the allowance for loan losses, an improvement
in net interest income and a reduction in operating expenses, partially offset
by a reduction in an income tax benefit.
The provision to the allowance for loan losses totalled $600,000 for the
quarter ended June 30, 1996 compared with a provision in the second quarter of
1995 of $1.8 million. The provision to the allowance for loan losses for the
six months ended June 30, 1996 totalled $1.3 million compared with $5.3 million
for the year earlier period.
Net interest income totalled $6.9 million for the quarter ended June 30, 1996
representing a net interest rate spread of 3.61% and a net interest margin of
4.15% compared with net interest income of $6.4 million for the quarter ended
June 30, 1995 which represented a net interest rate spread of 3.67% and a net
interest margin of 4.12%. Net interest income for the six month period ended
June 30, 1996 totalled $13.3 million representing a net interest rate spread
of 3.51% and a net interest margin of 4.05% compared with net interest income
of $13.0 million for the six months ended June 30, 1995 which represented a
net interest rate spread of 3.80% and a net interest margin of 4.22%.
Net interest income for the second quarter of 1996 was favorably affected by
the recovery of $637,000 of interest income from the payoff of a large
commercial mortgage which had been restructured several years ago. These
interest payments had been recorded, in prior years, as reductions of
principal.
Operating expenses totalled $3.8 million for the quarter ended June 30, 1996
compared with $5.0 million in the second quarter of 1995, a reduction of 25%.
Total operating expenses for the six month period ended June 30, 1996 were $7.3
million compared with $9.7 million for the six month period ended June 30,
1995, representing a decrease of $2.4 million or 25%. The decline in operating
expenses was primarily the result of a restructure program, first implemented
during the second quarter of 1995, which has significantly reduced the
Company's workforce. In addition, non-recurring charges of $536,000 were
recorded during the second quarter of 1996 mostly representing losses from the
sale of two bank-owned properties as well as severance charges from staff
reductions.
Salaries and employee benefits decreased $344,000 or 17% and totalled $1.6
million for the quarter ended June 30, 1996 compared with $2.0 million for the
second quarter of 1995. Salaries and employee benefits for the six month period
ended June 30, 1996 totalled $3.4 million compared with $4.3 million for the
first six months of 1995. The cost of FDIC insurance decreased to $40,000 for
the quarter ended June 30, 1996 compared with $378,000 for the second quarter
of 1995, representing a reduction of $338,000 or 89%. The cost of FDIC
insurance for the six month period ended June 30, 1996 totalled $78,000
compared with $756,000 for the six month period ended June 30, 1995,
representing a decrease of $678,000 or 90%. The drop in the cost of FDIC
insurance was caused primarily by a general reduction in the assessment rate
charged and an improvement in the risk rating of DFC's sole subsidiary, The
Dime Savings Bank of Wallingford.
During 1996, the Company provided for only minimal income taxes as the result
of tax loss carry-forwards available to offset regular Federal and State income
taxes. In the second quarter of 1995, the company recognized $2.0 million of a
deferred tax benefit as the result of improved earnings projections. No
deferred tax benefit was recognized during the first months of 1996.
Management remains concerned by the national economy in general and the local
economy, in particular. The local real estate market continues its lackluster
trend. The national economic expansion over the past 5 years has been
relatively weak in terms of the average growth rate of GDP and has generally
by-passed Connecticut, where the recession continued longer and meaningful
recovery has not been experienced. The local economic situation coupled with
continued potential collateral exposure on non-delinquent loans and a higher
than normal, but stable level of delinquency, suggests continued augmentation
of reserves may be necessary.
At June 30, 1996, the Company's allowance for loan losses was $13.9 million
or 241.85% of non-performing loans, 218.54% of non-performing assets, and 3.28%
of total loans. At December 31, 1995, the allowance for loan losses was $12.8
million, or 166.36% of non-performing loans, 140.48% of non-performing assets,
and 2.80% of total loans. At June 30, 1995, the allowance for loan losses was
$13.5 million, or 119.01% of non-performing loans, 91.19% of non-performing
assets, and 2.74% of total loans.
At June 30, 1996, non-performing loans, totalled $5.7 million, or 1.36% of
total loans, compared with $7.7 million, or 1.68% of total loans at December
31, 1995, and compared with $11.3 million, or 2.30% of total loans at June 30,
1995. Other real estate owned totalled $612,000 at June 30, 1996, compared with
$1.4 million at December 31, 1995 and $3.5 million at June 30, 1995. Total
non-performing assets, were $6.4 million, or 0.92% of total assets at June 30,
1996, compared with $9.1 million or 1.38% of total assets at December 31, 1995,
and compared with $14.8 million or 2.31% of total assets at June 30, 1995.
Total loans decreased by $33.5 million, or 7.33% from $456.4 million at
December 31, 1995 to $423.0 million at June 30, 1996 and decreased $69.1
million or 14.04% from $492.1 million at June 30, 1995.
Deposits, including escrow deposits, increased $26.1 million from $543.3
million at December 31, 1995 to $569.4 million at June 30, 1996 and increased
by $40.8 million from June 30, 1995.
ASSET QUALITY
Loan review procedures exist to assess loan quality in addition to providing
the Board and management with analysis to determine that the allowance for
loan losses is sufficient given the risks inherent in the loan portfolio at a
point in time. During the second quarter of 1996 the Company added $600,000 to
the allowance for loan losses compared with a provision of $1.8 million in the
second quarter of 1995. The provision to the allowance for loan losses for the
six months ended June 30, 1996 totalled $1.3 million compared with $5.3 million
for the year earlier period.
Management has classified performing loans totalling $1.2 million at June 30,
1996 as substandard for internal purposes compared with $9.0 million at
June 30, 1995 and compared with $10.5 million at December 31, 1995. These
loans are still performing and management does not have serious doubt as to
their collectibility.
Under FDIC guidelines substandard loans are inadequately protected by the
current sound worth and paying capacity of the obligor or of the collateral
pledged, if any, and must have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. Doubtful loans have all the weaknesses
inherent in those classified as substandard with the added characteristic that
the weaknesses make collection or liquidation in full, on the basis of
currently known facts, conditions, and values, highly questionable and
improbable.
Management continues to closely monitor the loan portfolio and the
foreclosed properties of its subsidiary and to take appropriate action when
necessary. The table entitled "Allowance For Loan Losses," on page 8,
indicates that at June 30, 1996 the balance in the allowance for loan losses
represented 241.85% of non-performing loans and 3.28% of total loans.
Management believes that the allowance for loan losses at June 30, 1996 is
adequate, based on the quality of the loan portfolio at that date.
The net cost of operation of other real estate owned ("OREO") may include:
gains or losses on the sale of OREO, writedowns of OREO, and expenses to
operate and maintain OREO. The net cost of operation of OREO equalled a net
gain of $136,000 for the second quarter of 1996 compared with a net gain of
$260,000 for the second quarter of 1995. For the six months ended June 30, 1996
the net cost of operation of OREO equalled a net gain of $290,000 compared with
a net gain of $176,000 for the same period in 1995. The reduction in costs
during 1996 was primarily due to gains realized on the sales of OREO coupled
with reduced levels of OREO.
LIQUIDITY AND ASSET / LIABILITY MANAGEMENT
The primary objective of asset / liability management is to maximize net
interest income while ensuring adequate liquidity, monitoring proper credit
risk and maintaining an appropriate balance between interest rate sensitive
assets and interest rate sensitive liabilities. Interest rate sensitivity
management seeks to minimize fluctuating net interest margins and to enhance
consistent growth of net interest income through periods of changing interest
rates. Liquidity management involves the ability to meet the cash flow
requirements of the Company's loan and deposit customers.
The Company has an asset / liability committee ("ALCO") which meets weekly
to discuss loan and deposit pricing and trends, current liquidity and interest
rate risk positions, interest rate and economic trends and other relevant
information. To aid in the measurement of interest rate risk, the Company
utilizes an asset / liability model which, given many key assumptions, projects
estimated results within the constraints of those assumptions. The model is
also used to estimate movement within the balance sheet, given certain
scenarios, and to measure the effects of that movement on net interest income.
Cash on hand, deposits at other financial institutions, interest-bearing
deposits with an original maturity of three months or less, and Federal funds
sold are the principal sources of liquidity. Cash and cash equivalents
amounted to $29.0 million at June 30, 1996, as compared to $31.1 million at
June 30, 1995. Cash and cash equivalents represented 4.20% of total assets at
June 30, 1996 as compared to 4.87% of total assets at June 30, 1995. The
Company believes that its liquidity is sufficient to meet currently known
demands and commitments.
Principal sources of funds include cash receipts from deposits, loan
principal and interest payments, earnings on investments, and proceeds from
amortizing and maturing investments. The current principal uses of funds
include disbursements to fund investment purchases, loan originations, payments
of interest on deposits, and payments to meet the operating expenses of the
Company. During the first six months of 1996, deposits increased by $26.1
million from $543.3 million at December 31, 1995 to $569.4 million at June 30,
1996. The Company may rely on borrowings from the Federal Home Loan Bank of
Boston ("FHLBB") if deposits do not keep pace with the demand for quality
loans. During the second quarter of 1996 a single borrowing of $33.0 million
at 7.07% matured and was renewed in three advances with maturities of 2 to 4
years at rates of 6.05% to 6.51%. At June 30, 1996, FHLBB borrowings totalled
$58.0 million, unchanged from December 31, 1995 and June 30, 1995. No increase
in the level of borrowings outstanding is anticipated. Please see page 10 under
the caption "FHLBB ADVANCES" for a schedule of borrowings.
The Company's primary source of funds is in the form of dividends received
from its subsidiary, Dime. Therefore, the liquidity and the capital resources
of the Company are largely dependent upon the liquidity, profitability, and
capital position of its subsidiary, and the ability of the subsidiary to
declare and pay dividends under applicable laws and regulatory authorities.
The Company must comply with the capital ratio requirements set by the Board
of Governors of the Federal Reserve while Dime must comply with the capital
ratio requirements set by the FDIC. At June 30, 1996 the Tier 1 leverage capital
ratio of Dime was 8.02%.
On July 17, 1996. the Board of Directors voted to increase the regular
quarterly dividend payment to $0.08 per share payable on August 23, 1996.
The previous quarterly dividend payment was $0.07 per share.
The following table presents the Company's risk-based and leverage capital
ratios:
<TABLE>
<CAPTION>
June 30,
Required 1996 1995
-------- ---- ----
<S> <C> <C> <C>
Tier I risk-based capital 4.0% 16.94% 12.41%
Total risk-based capital 8.0% 18.22% 13.69%
Leverage capital 4.0% 8.05% 6.86%
</TABLE>
COMPARATIVE ANALYSIS
The following table sets forth the dollar increases (decreases) in the
components of the Company's consolidated statements of operations during the
periods indicated and is followed by management's discussion of the various
changes.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1996 June 30, 1996
compared to compared to
June 30, 1995 June 30, 1995
------------------ ----------------
<S> <C> <C>
Interest income $1,293 $2,407
Interest expense 739 2,042
------ ------
Net interest income 554 365
Provision for loan losses (1,200) (4,000)
Investment securities gains, net 12 (63)
Other operating income (21) (67)
Other operating expenses (1,244) (2,385)
------ ------
Income before income taxes 2,989 6,620
Income tax expense 1,985 1,966
------ ------
Net income $1,004 $4,654
====== ======
</TABLE>
Quarter and Six Months Ended June 30, 1996
Compared to
Quarter and Six Months Ended June 30, 1995
General. Net income for the quarter ended June 30, 1996, was $3.0 million
or $0.60 per share, compared to net income of $2.0 million or $0.41 per share
for the same period in 1995. Net income for the six months ended June 30, 1996
totalled $5.9 million or $1.17 per share compared with net income of $1.2
million or $0.25 per share for the first six months of 1995. The change in net
income was influenced primarily by a decrease in the provision for loan losses,
an increase in net interest income and a decrease in operating expenses.
Interest Income. Interest income for the quarter ended June 30, 1996
totalled $13.1 million representing an average yield on interest earning assets
of 7.89% and totalled $25.7 million for the six months ended June 30, 1996
representing an average yield on interest earning assets of 7.84%. Interest
income for the quarter ended June 30, 1995 totalled $11.8 million and
represented an average yield on interest earning assets of 7.67% and totalled
$23.3 million for the six months ended June 30, 1995 and represented an average
yield on interest earning assets of 7.63%. Interest income for the quarter and
six months ended June 30, 1996 was favorably affected by the recovery of
$637,000 of interest income from the payoff of a large commercial mortgage that
had been restructured. These interest payments had previously been recorded as
reductions of principal.
Interest Expense. Interest expense totalled $6.2 million for the quarter
ended June 30, 1996 representing an average cost of funds of 4.28% and totalled
$12.4 million for the six months ended June 30, 1996 representing an average
cost of funds of 4.33%. Total interest expense for the quarter ended June 30,
1995 was $5.4 million which represented an average cost of funds of 4.00% and
totalled $10.3 million for the first six months of 1995 which represented
an average cost of funds of 3.83%.
Net Interest Income. Net interest income totalled $6.9 million for the
quarter ended June 30, 1996 compared with $6.4 million for the quarter ended
June 30, 1995. Net interest income totalled $13.3 million for the first half of
1996 compared with $13.0 million for the first six months of 1995. The net
interest rate spread for the quarter ended June 30, 1996 was 3.61% down from
the prior year quarter of 3.67%. The net interest rate spread for the six
months ended June 30, 1996 was 3.51% down from the prior year spread 3.80%. The
net interest margin was 4.15% for the second quarter of 1996 compared with a
net interest margin of 4.12% for the second quarter of 1995. The net interest
margin was 4.05% for the first half of 1996 compared with a net interest margin
of 4.22% for the six months ended June 30, 1995. The following table summarizes
the yields for the major components of net interest income for the periods
presented:
Comparative Interest Spread Table
For the quarters and six months ended
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
6/30/96 6/30/95 6/30/96 6/30/95
----------------- -----------------
<S> <C> <C> <C> <C>
Interest Earning Assets:
Loans 8.65% 8.03% 8.54% 8.02%
Investment Securities 6.58% 6.20% 6.49% 5.87%
Federal Funds Sold 5.23% 5.64% 5.24% 5.49%
Yield on Interest Earning Assets 7.89% 7.67% 7.84% 7.63%
Interest Bearing Liabilities:
Deposits 3.99% 3.62% 4.03% 3.43%
Borrowings 6.75% 7.11% 6.93% 7.11%
Cost of Interest Bearing Liabilities 4.28% 4.00% 4.33% 3.83%
Net Interest Rate Spread 3.61% 3.67% 3.51% 3.80%
Net Interest Margin 4.15% 4.12% 4.05% 4.22%
</TABLE>
Provision for Loan Losses. The provision for loan losses for the quarter
ended June 30, 1996 totalled $600,000 compared with a provision of $1.8 million
for the second quarter of 1995. The provision for the first six months of 1996
totalled $1.3 million compared with a provision of $5.3 million for the first
half of 1995.
Investment Securities Gains (Losses), Net. The Company recorded $171,000 of
net realized investment security gains during the first half of 1996 compared
with $234,000 net investment security gains during the first six months of
1995.
Other Operating Income. Other operating income totalled $485,000 for the
second quarter of 1996 compared with $506,000 in the second quarter of 1995
and totalled $991,000 for the first half of 1996 compared with $1.1 million
for the first half of 1995. The following table summarizes the categories of
other operating income:
OTHER OPERATING INCOME:
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
(Dollars in thousands) 6/30/96 6/30/95 6/30/96 6/30/95
----------------- -----------------
<S> <C> <C> <C> <C>
Deposit account fees $396 $390 $789 $ 782
Customer service fees 34 36 66 70
Fees from savings bank life
insurance sales 31 30 95 88
Loan and loan servicing fees 12 17 24 35
Other fees 12 33 17 83
---- ---- ---- ------
Total Other Operating Income $485 $506 $991 $1,058
==== ==== ==== ======
</TABLE>
Other Operating Expenses. Total operating expenses were $3.8 million for
the second quarter of 1996 compared with total operating expenses of $5.0
million for the second quarter of 1995. Total operating expenses for the six
month period ended June 30, 1996 were $7.3 million compared with $9.7 million
for the six month period ended June 30, 1995. The decline in operating expenses
during 1996 was primarily the result of a restructure program, first
implemented during the second quarter of 1995, which significantly reduced
the Company's workforce. The following table comparatively illustrates the
categories of operating expenses:
OPERATING EXPENSES
(Dollars in thousands)
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
6/30/96 6/30/95 6/30/96 6/30/95
----------------- -----------------
<S> <C> <C> <C> <C>
Salaries and Benefits $1,643 $1,986 $3,408 $4,275
Professional Services 578 648 1,094 1,267
Occupancy and Equipment 939 779 1,613 1,533
FDIC Assessment 40 378 78 756
Net Cost (Gain) of OREO operations (136) (260) (290) (176)
Restructure Expense, net 182 947 340 947
Other Operating Expenses 518 530 1,049 1,075
---------------- ----------------
Total Operating Expenses $3,764 $5,008 $7,292 $9,677
================ ================
</TABLE>
DIME FINANCIAL CORPORATION AND SUBSIDIARY
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
a. Wednesday, April 17, 1996 - Annual Meeting
b. Directors elected at this meeting:
Rosalind F. Gallagher
Theodore H. Horwitz
Gary O. Olson
Directors whose term of office as director continued after this
meeting:
M. Joseph Canavan
Richard H. Dionne
William J. Farrell
Ralph D. Lukens
Dr. Robert Nicoletti
Richard D. Stapleton
Fred A. Valenti
c.1. The election of three directors for a three year term who with
the seven directors whose terms of office do not expire at this
meeting, will constitute the full Board of Directors.
<TABLE>
<CAPTION>
Total Votes Total Votes
For Each Director Withheld
----------------- -----------
<S> <C> <C>
Rosalind F. Gallagher 4,441,403 118,755
Theodore H. Horwitz 4,429,507 130,651
Gary O. Olson 4,441,503 118,655
</TABLE>
2. Approval of Non-Qualified Stock Option Agreement.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Total Votes 3,209,700 334,259 41,212
</TABLE>
3. Approval of 1996 Stock Option and Incentive Plan.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Total Votes 2,731,773 719,635 52,095
</TABLE>
4. Approval of 1996 Stock Option Plan for Outside Directors.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Total Votes 3,185,161 347,141 52,869
</TABLE>
5. The ratification of the appointment of KPMG Peat Marwick, LLP
as independent auditors for the fiscal year ending December 31,
1996.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Total Votes 4,506,787 35,256 18,115
</TABLE>
Item 6 Exhibits and Reports on Form 8-K
a. The following exhibits are included in this report:
Exhibit No. Description
11. Statement of Computation of Per Share Earnings
Incorporated by reference to note 2 to Consolidated Financial
Statements for the quarters ended June 30, 1996 and 1995.
(See pages 5-8 for notes to Consolidated Financial Statements.)
20. Report furnished to the Company's shareholders for the quarter
ended June 30, 1996.
b. No report on form 8-K has been filed by the registrant with the
Securities and Exchange Commission during the quarter ended June 30,
1996.
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIME FINANCIAL CORPORATION
Date: August 5, 1996 /s/ Richard H. Dionne
---------------------
Richard H. Dionne
President & Chief Executive Officer
Date: August 2, 1996 /s/ Albert E. Fiacre, Jr.
-------------------------
Albert E. Fiacre, Jr.
Senior Vice President and Chief Financial
Officer
Date: August 2, 1996 /s/ Robert P. Simon
-------------------
Robert P. Simon
Vice President & Comptroller
EXHIBIT INDEX
Exhibit No. Description Page
11. Statement of Computation of Per Share Earnings
Incorporated by reference to note 2 to Consolidated
Financial Statements for the quarters ended
June 30, 1996 and 1995. (See pages 6-9 for Notes to
Consolidated Financial Statements.)
20. Report furnished to the Company's shareholders for the quarter
ended June 30, 1996.
Dime Financial P.O. Box 700
Corporation Wallingford, CT 06492
(203) 269-8881
Dime Financial Corporation - Second Quarter Results
Dime Financial Corporation ("DFC") (NASDAQ: DIBK) announced net income of
$3.0 million or $0.60 per share for the quarter ended June 30, 1996 compared
with net income of $2.0 million or $0.41 per share for the quarter ended
June 30, 1995. Net income for the six month period ended June 30, 1996
totalled $5.9 million or $1.17 per share compared with net income of $1.2
million or $0.25 per share for the six month period ended June 30, 1995. In
addition, the Board of Directors voted to increase the regular quarterly
dividend payment to $0.08 per share payable on August 23, 1996 to
shareholders of record on August 6, 1996. The previous quarterly dividend
payment was $0.07 per share. The improvement in net income from the year
earlier was primarily the result of a reduction in the provision to the
allowance for loan losses, an improvement in net interest income and a
reduction in operating expenses, partially offset by a reduction in an
income tax benefit. The provision to the allowance for loan losses during
the second quarter of 1996 totalled $600,000 compared with $1.8 million
during the second quarter of 1995. The provision to the allowance for loan
losses for the six months ended June 30, 1996 totalled $1.3 million compared
with $5.3 million for the year earlier period.
During 1996, the Company provided for only minimal income taxes as the
result of tax loss carry-forwards available to offset regular Federal and
State income taxes. In the second quarter of 1995, the Company recognized
$2.0 million of a deferred tax benefit as the result of improved earnings
projections. No deferred tax benefit was recognized during the first six
months of 1996. Operating expenses totalled $3.8 million for the quarter
ended June 30, 1996 compared with $5.0 million for the quarter ended June
30, 1995, representing a decrease of $1.2 million or 25%. Total operating
expenses for the six month period ended June 30, 1996 were $7.3 million
compared with $9.7 million for the six month period ended June 30, 1995,
representing a decrease of $2.4 million or 25%. The decline in operating
expenses during 1996 was primarily the result of a restructure program,
first implemented during the second quarter of 1995, which significantly
reduced the Company's workforce.
Salaries and employee benefits for the quarter ended June 30, 1996 totalled
$1.6 million compared with salaries and employee benefits of $2.0 million
for the quarter ended June 30, 1995, representing a decline of $344,000 or
17%. Salaries and employee benefits for the six month period ended June 30,
1996 totalled $3.4 million compared with $4.3 million for the first six
months of 1995, representing a decrease of $868,000 or 20%. The cost of FDIC
insurance also declined and totalled $40,000 for the quarter ended June 30,
1996 compared with $378,000 for the quarter ended June 30, 1995,
representing a reduction of $338,000 or 89%. The cost of FDIC insurance for
the six month period ended June 30, 1996 totalled $78,000 compared with
$756,000 for the six month period ended June 30, 1995, representing a
decrease of $678,000 or 90%. The drop in the cost of FDIC insurance was
caused primarily by a general reduction in the assessment rate charged and
an improvement in the risk rating of DFC's sole subsidiary, The Dime Savings
Bank of Wallingford.
The allowance for loan losses at June 30, 1996 equalled $13.9 million and
represented 242% of non-performing loans of $5.7 million and 3.28% of total
loans outstanding. The allowance for loan losses at December 31, 1995
totalled $12.8 million and represented 166% of non-performing loans of $7.7
million and 2.80% of total loans outstanding. At June 30, 1995 the
allowance for loan losses totalled $13.5 million or 119% of non-performing
loans of $11.3 million and 2.74% of total loans outstanding. Non-performing
loans totalled $5.7 million at June 30, 1996 representing a decrease of $1.9
million or 25% from December 31, 1995 and representing a decrease of $5.6
million or 49% from June 30, 1995. Other real estate owned ("OREO") totalled
$612,000 at June 30, 1996 compared with OREO of $1.4 million at December 31,
1995 and $3.5 million at June 30, 1995. Total non-performing assets were
$6.4 million at June 30, 1996 compared with $9.1 million at December 31,
1995 and $14.8 million at June 30, 1995. Non-performing assets equalled
0.92% of total assets at June 30, 1996 compared with 1.38% of total assets
at December 31, 1995 and compared with 2.31% of total assets at June 30,
1995.
Net interest income totalled $6.9 million for the quarter ended June 30,
1996 representing a net interest rate spread of 3.61% and a net interest
margin of 4.15% compared with net interest income of $6.4 million for the
quarter ended June 30, 1995 which represented a net interest rate spread of
3.67% and a net interest margin of 4.12%. Net interest income for the six
month period ended June 30, 1996 totalled $13.3 million representing a net
interest rate spread of 3.51% and a net interest margin of 4.05% compared
with net interest income of $13.0 million for the six months ended June 30,
1995 which represented a net interest rate spread of 3.80% and a net
interest margin of 4.22%. Net interest income for the second quarter of
1996 was favorably affected by the recovery of $637,000 of interest income
from the payoff of a large commercial mortgage which had been restructured
several years ago. These interest payments had previously been recorded, in
prior years, as reductions of principal. Operating expenses for the
quarter, however, were also affected by approximately the same amount mostly
from the loss on the sale of two bank-owned properties as well as severance
charges from staff reductions.
Total assets were $689.0 million at June 30, 1996 compared with total assets
of $639.3 million at June 30, 1995, representing an increase of $49.7
million or 8%. Total deposits were $569.4 million at June 30, 1996 compared
with $528.6 million at June 30, 1995, representing an increase of $40.8
million or 8%. Total shareholders' equity was $56.5 million at June 30, 1996
representing an equity to assets ratio of 8.20% compared with shareholders'
equity of $46.5 million at June 30, 1995 which represented an equity to
assets ratio of 7.27%. The Tier 1 regulatory capital ratio at June 30, 1996
for The Dime Savings Bank of Wallingford, the Company's subsidiary bank, was
8.02% compared with a Tier 1 regulatory capital ratio of 6.83% at June 30,
1995. This ratio is in excess of the regulatory minimum.
<TABLE>
<CAPTION>
Consolidated Statements of Condition
- --------------------------------------------------------------------------------------------
June 30, December 31, June 30,
(In thousands, except share data) 1996 1995 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and amounts due from banks $ 10,084 $ 11,172 $ 13,817
Interest bearing deposits 209 2,983 3,366
Federal funds sold 18,677 21,334 13,945
Investment securities available for sale (a) 14,053 8,138 8,003
Investment securities held to maturity (b) 82,212 47,898 48,403
Mortgage-backed securities available for sale (c) 128,607 95,190 5,707
Mortgage-backed securities held to maturity (d) --- --- 37,246
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 309,677 329,597 380,803
Residential real estate - non-owner occupied 24,914 27,699 (e)
Commercial real estate 36,968 43,658 52,582
Builders' and Land 1,084 1,501 2,728
Commercial loans 3,954 4,529 5,277
Consumer loans 46,396 49,459 50,701
Allowance for loan losses (13,885) (12,779) (13,477)
- --------------------------------------------------------------------------------------------
Loans receivable, net 409,108 443,664 478,614
Premises and equipment, net 5,312 5,926 7,625
Accrued income receivable 4,839 4,451 4,289
Other real estate owned, net 612 1,415 3,455
Other assets 5,495 6,242 4,729
Excess of cost over fair value of net assets
acquired 2,593 2,768 2,942
- --------------------------------------------------------------------------------------------
Total assets $688,993 $658,373 $639,333
============================================================================================
Liabilities and Shareholders' equity
Liabilities:
Deposits $569,395 $543,344 $528,625
Federal Home Loan Bank of Boston advances 58,000 58,000 58,000
Other liabilities 5,068 5,361 6,243
- --------------------------------------------------------------------------------------------
Total liabilities 632,463 606,705 592,868
- --------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock; no par value; authorized
1,000,000 shares; none issued and outstanding --- --- ---
Common stock; $1.00 par value; authorized
9,000,000 shares; issued 5,453,208 shares,
5,373,992 and 5,359,622, respectively 5,453 5,374 5,360
Additional paid-in capital 51,925 51,117 50,952
Retained earnings (deficit) 3,034 (2,166) (6,962)
Net unrealized gain (loss) on available for sale
securities (984) 241 13
Treasury stock --351,607 shares at cost (2,898) (2,898) (2,898)
- --------------------------------------------------------------------------------------------
Total shareholders' equity 56,530 51,668 46,465
- --------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $688,993 $658,373 $639,333
============================================================================================
<Fa> amortized cost: $14,003 at June 30, 1996; $8,155 at December 31, 1995;
and $8,046 at June 30, 1995.
<Fb> market value: $80,819 at June 30, 1996; $48,245 at December 31, 1995;
and $48,526 at June 30, 1995.
<Fc> amortized cost: $130,148 at June 30, 1996; $94,809 at December 31,
1995; and $5,645 at June 30, 1995.
<Fd> market value: $37,216 at June 30, 1995.
<Fe> information for this period is not available, it is included within
"Residential real estate - owner occupied".
</TABLE>
Dime Financial Corporation and Subsidiary
<TABLE>
<CAPTION>
Consolidated Statements of Operations
- --------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
(In thousands, except share data) 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 9,357 $10,060 $18,865 $20,243
Interest-bearing deposits 9 27 21 78
Federal funds sold 270 359 480 743
Interest and dividends on investments:
U.S. treasury securities 67 192 129 433
U.S. government agency obligations 1,178 535 2,170 825
REMIC/CMO's 787 215 1,620 215
Non-agency REMIC/CMO's 421 --- 489 ---
Mortgage-backed securities 760 141 1,511 141
Asset- backed securities 126 --- 126 ---
Other bonds and notes --- 141 39 331
Equity securities --- --- --- 3
Dividends on Federal Home Loan Bank of
Boston Stock 115 127 228 259
- ----------------------------------------------------------------------------------------------
Total Interest Income 13,090 11,797 25,678 23,271
Interest Expense:
Interest to depositors 5,195 4,404 10,327 8,239
Interest on Federal Home Loan Bank of
Boston advances 990 1,042 2,032 2,078
- ----------------------------------------------------------------------------------------------
Total Interest Expense 6,185 5,446 12,359 10,317
- ----------------------------------------------------------------------------------------------
Net Interest Income 6,905 6,351 13,319 12,954
Provision for loan losses 600 1,800 1,300 5,300
- ----------------------------------------------------------------------------------------------
Net Interest Income after provision 6,305 4,551 12,019 7,654
Investment securities gains
(losses), net 12 --- 171 234
Other operating income 485 506 991 1,058
- ----------------------------------------------------------------------------------------------
Income before other operating expenses 6,802 5,057 13,181 8,946
- ----------------------------------------------------------------------------------------------
Other Operating Expenses:
Salaries and employee benefits 1,643 1,986 3,408 4,275
Professional and other services 578 648 1,094 1,267
Bank occupancy and equipment expense 939 779 1,613 1,533
FDIC Assessment 40 378 78 756
Net cost of operation of other real
estate (136) (260) (290) (176)
Restructure expense, net 182 947 340 947
Other operating expenses 518 530 1,049 1,075
- ----------------------------------------------------------------------------------------------
Total Other Operating Expenses 3,764 5,008 7,292 9,677
- ----------------------------------------------------------------------------------------------
Income (loss) before income taxes 3,038 49 5,889 (731)
Income tax benefit (2) (1,987) (10) (1,976)
- ----------------------------------------------------------------------------------------------
Net income $ 3,040 $ 2,036 $ 5,899 $ 1,245
==============================================================================================
Weighted average common shares 5,059 4,998 5,041 4,996
Earnings per share $ 0.60 $ 0.41 $ 1.17 $ 0.25
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Highlights
- ----------------------------------------------------------------------------------------
For the three months For the six months
ended June 30, ended June 30,
(Dollars in thousands) 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average yield on interest-earning assets 7.89% 7.67% 7.84% 7.63%
Average cost of funds 4.28% 4.00% 4.33% 3.83%
Net interest rate spread 3.61% 3.67% 3.51% 3.80%
Net yield on interest-earning assets 4.15% 4.12% 4.05% 4.22%
Net income $3,040 $2,036 $5,899 $1,245
Return on average assets 1.79% 1.29% 1.76% 0.40%
Return on average equity 22.47% 18.03% 22.14% 5.44%
Leverage capital ratio 8.05% 6.86% 8.05% 6.86%
Earnings per share $ 0.60 $ 0.41 $ 1.17 $ 0.25
Book value per share $11.08 $ 9.28 $11.08 $ 9.28
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Data
- -------------------------------------------------------------------------------------------
June 30, December 31, June 30,
(in thousands) 1996 1995 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $2,000 $2,729 $ 5,513
Residential Real Estate - non-owner occupied 1,358 1,235 4,122
Commercial Real Estate 1,829 2,580 95
- ------------------------------------------------------------------------------------------
Total Mortgage Loans 5,187 6,544 9,730
Commercial Loans 307 690 1,040
Consumer Loans 247 448 553
- ------------------------------------------------------------------------------------------
Total Non-Performing Loans 5,741 7,682 11,323
Other Real Estate Owned 656 1,865 4,055
Less: Reserve for OREO Losses 44 450 600
- ------------------------------------------------------------------------------------------
Total OREO, net 612 1,415 3,455
Total Non-Performing Assets $6,353 $9,097 $14,778
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
June 30, December 31, June 30,
(in thousands) 1996 1995 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Balance Information
For the quarters ended:
Interest earning assets:
Gross loans $432,696 $472,201 $500,800
Investment securities 210,003 136,976 87,240
Federal funds sold / interest bearing
deposits 21,362 20,244 27,475
- -------------------------------------------------------------------------------------------
Total interest earning assets 664,061 629,421 615,515
Total Assets $678,354 $644,264 $632,579
===========================================================================================
Interest bearing liabilities:
Interest bearing deposits $522,188 $494,502 $487,813
Borrowings 58,000 58,000 58,000
- -------------------------------------------------------------------------------------------
Total interest bearing liabilities 580,188 552,502 545,813
Total Liabilities 624,244 594,596 587,419
Shareholders' Equity 54,110 49,668 45,160
Total Liabilities & Shareholders' Equity $678,354 $644,264 $632,579
===========================================================================================
Average Balance Information
For the six and twelve months ended:
Interest earning assets:
Gross loans $441,584 $492,028 $504,961
Investment securities 194,652 100,642 75,187
Federal funds sold / interest bearing
deposits 18,882 23,727 30,170
- -------------------------------------------------------------------------------------------
Total interest earning assets 655,118 616,397 610,318
Total Assets $670,386 $633,938 $630,112
===========================================================================================
Interest bearing liabilities:
Interest bearing deposits $515,619 $487,137 $485,022
Borrowings 58,000 58,060 58,121
- -------------------------------------------------------------------------------------------
Total interest bearing liabilities 573,619 545,197 543,143
Total Liabilities 617,105 586,808 584,358
Shareholders' Equity 53,281 47,130 45,754
Total Liabilities & Shareholders' Equity $670,386 $633,938 $630,112
===========================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,084
<INT-BEARING-DEPOSITS> 209
<FED-FUNDS-SOLD> 18,677
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 142,660
<INVESTMENTS-CARRYING> 82,212
<INVESTMENTS-MARKET> 80,819
<LOANS> 422,993
<ALLOWANCE> 13,885
<TOTAL-ASSETS> 688,993
<DEPOSITS> 569,395
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,068
<LONG-TERM> 58,000
0
0
<COMMON> 5,453
<OTHER-SE> 51,077
<TOTAL-LIABILITIES-AND-EQUITY> 688,993
<INTEREST-LOAN> 18,865
<INTEREST-INVEST> 6,084
<INTEREST-OTHER> 729
<INTEREST-TOTAL> 25,678
<INTEREST-DEPOSIT> 10,327
<INTEREST-EXPENSE> 12,359
<INTEREST-INCOME-NET> 13,319
<LOAN-LOSSES> 1,300
<SECURITIES-GAINS> 171
<EXPENSE-OTHER> 7,292
<INCOME-PRETAX> 5,889
<INCOME-PRE-EXTRAORDINARY> 5,899
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,899
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
<YIELD-ACTUAL> 4.05
<LOANS-NON> 5,741
<LOANS-PAST> 69
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,779
<CHARGE-OFFS> 1,396
<RECOVERIES> 1,202
<ALLOWANCE-CLOSE> 13,885
<ALLOWANCE-DOMESTIC> 13,885
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
