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 September 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
(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; 5,129,289 shares were outstanding as of
October 31, 1996.
The total number of pages in this report is 26
Exhibit Index is on page 22
DIME FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
Part I Financial Information Page No.
Item 1. Financial Statements
Consolidated Statements of Condition
September 30, 1996 and 1995 (unaudited)
and December 31, 1995. 3.
Consolidated Statements of Operations
Three months ended September 30, 1996 and 1995 (unaudited)
and nine months ended September 30, 1996 and 1995 (unaudited) 3.
Selected Financial Highlights 3.
Consolidated Statement of Changes in Shareholders' Equity 4.
Consolidated Statements of Cash Flows
Nine months ended September 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 6. Exhibits and Reports on Form 8-K 20.
Signatures 21.
Exhibit Index 22.
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 September
30, 1996 and 1995, filed as Exhibit 19 hereto:
Consolidated Statements of Condition
Consolidated Statements of Operations
Selected Financial Highlights
Dime Financial Corporation and Subisdiary
Consolidated Statement of Changes in Shareholders' Equity
Nine Months Ended September 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 9,068 9,068
Options Exercised 107 1,092 1,199
Dividends Paid (1,109) (1,109)
Change in net unrealized gain
on securities available for sale (1,409) (1,409)
-------------------------------------------------------------------
Balance at September 30, 1996 $5,481 $52,209 $5,793 ($1,168) ($2,898) $59,417
===================================================================
</TABLE>
Item 1 (cont'd) DIME FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine months ended September 30, 1996 and 1995 (unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995
-------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 9,068 $ 3,365
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 1,750 6,700
Depreciation and amortization 755 1,126
Amortization/(Accretion) investments, net (460) 184
Amortization of intangible assets 263 262
Amortization of net deferred loan fees (46) (124)
Gain on investment securities (203) (298)
Deferred income tax benefit -- (2,000)
Gains on sale of other real estate owned (486) (1,247)
Increase in accrued income receivable (744) (747)
Decrease in other assets 1,288 1,668
Increase in other liabilities 46 1,107
-------------------
Net cash provided by operating activities 11,231 9,996
-------------------
Cash flows from investing activities:
Available for sale investment securities:
Proceeds from sale of investment securities 4,076 4,660
Investment securities purchased (19,745) --
Proceeds from principal payments 1,431 --
Proceeds from maturity of investment securities -- 4,000
Held to maturity investment securities:
Investment securities purchased (60,680) (42,849)
Proceeds from maturity of investment securities 22,000 31,599
Available for sale mortgage-backed securities:
Mortgage-backed securities purchased (115,690) (10,120)
Proceeds from principal payments 8,915 326
Proceeds from sale of mortgage-backed securities 62,604 --
Held to maturity mortgage-backed securities:
Mortgage-backed securities purchased -- (46,459)
Proceeds from principal payments -- 2,057
Net decrease in loans 40,905 27,693
Proceeds from sale of loans 1,326 --
Purchase of premises and equipment (349) (176)
Proceeds from sale of bank-owned buildings 245 --
Proceeds from sale of other real estate owned 1,870 3,618
-------------------
Net cash used by investing activities (53,092) (25,651)
-------------------
Cash flows from financing activities:
Net increase in deposits 25,719 (7,154)
Payments of FHLBB advances -- (2,000)
Proceeds from exercise of DFC stock options 1,086 126
Payments of cash dividends (1,115) --
-------------------
Net cash provided (used) by financing activities 25,690 (9,028)
-------------------
Net decrease in cash and cash equivalents (16,171) (24,683)
Cash and cash equivalents at beginning of period 35,489 49,960
-------------------
Cash and cash equivalents at end of period $ 19,318 $25,277
===================
</TABLE>
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 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 Nine Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
--------------------------------------
<S> <C> <C> <C> <C>
Net income $3,169 $2,120 $9,068 $3,365
=================================================================================
Weighted Average
Common Shares Outstanding 5,125 5,011 5,069 5,001
Earnings per share $0.62 $0.42 $1.79 $0.67
=================================================================================
</TABLE>
3. INVESTMENT SECURITIES
The amortized cost, approximate market values, and maturity groupings of
investment securities are as follows:
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
-----------------------------------------
Amortized Market Amortized Market
(Dollars in Thousands) Cost Value Cost Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Asset-backed securities
After 10 years 15,350 15,403 ---- ----
Domestic obligations:
After 5 but within 10 years 3,000 2,997 ---- ----
Equity securities 12 12 12 12
- --------------------------------------------------------------------------------------------
Total Investment Securities Available for Sale $ 18,362 $ 18,412 $ 12 $ 12
============================================================================================
INVESTMENT SECURITIES HELD TO MATURITY:
U.S. treasury securities:
Within 1 year ---- ---- $ 9,076 $ 9,032
After 1 but within 5 years 2,435 2,435 ---- ----
After 5 but within 10 years 1,011 1,043 1,013 1,070
- --------------------------------------------------------------------------------------------
Total U.S. treasury securities 3,446 3,478 10,089 10,102
- --------------------------------------------------------------------------------------------
U.S. government agency obligations and
U.S government-sponsored agency obligations:
Within 1 year ---- ---- 12,994 13,000
After 1 but within 5 years 50,837 50,426 29,876 29,953
After 5 but within 10 years 36,351 35,197 ---- ----
- --------------------------------------------------------------------------------------------
Total U.S. government agency obligations and
U.S.government-sponsored agency oblig. 87,188 85,623 42,870 42,953
- --------------------------------------------------------------------------------------------
Domestic obligations:
Within 1 year ---- ---- 5,861 5,833
- --------------------------------------------------------------------------------------------
Total Investment Securities Held to Maturity $ 90,634 $ 89,101 $58,820 $58,888
============================================================================================
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities:
GNMA $ 44,810 $ 44,350 $ 9,826 $ 9,879
FNMA 2,905 2,881 ---- ----
FHLMC 748 745 ---- ----
REMIC / CMO's 91,155 89,822 ---- ----
- --------------------------------------------------------------------------------------------
Total Mortgage-backed Sec. Available for Sale $139,618 $137,798 $ 9,826 $ 9,879
============================================================================================
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
Mortgage-backed securities:
GNMA ---- ---- $12,507 $12,478
FNMA ---- ---- 1,186 1,208
FHLMC ---- ---- 46 46
REMIC / CMO's ---- ---- 30,800 30,763
- --------------------------------------------------------------------------------------------
Total Mortgage-backed Sec. Held to Maturity ---- ---- $44,539 $44,495
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Sept. 30, 1996 Sept. 30, 1995
------------------------------
<S> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $57 $--
Gross unrealized losses $7 $--
INVESTMENT SECURITIES HELD TO MATURITY:
Gross unrealized gains $55 $145
Gross unrealized losses $1,588 $77
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $10 $56
Gross unrealized losses $1,830 $3
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
Gross unrealized gains $-- $79
Gross unrealized losses $-- $123
</TABLE>
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
---------------------
(In Thousands)
<S> <C> <C>
Balance at January 1, $ 12,779 $ 9,326
Provision for loan losses 1,750 6,700
Charge-offs (2,036) (2,544)
Recoveries 1,268 240
- ---------------------------------------------------------------------------
Balance at September 30, $ 3,761 $ 13,722
===========================================================================
Average loans $433,468 $498,719
Net charge-offs as a percentage of average loans 0.18% 0.46%
Non-performing loans $ 6,052 $ 10,763
Allowance for loan losses as a percentage of
non-performing loans 227.36% 127.49%
Allowance for loan losses as a percentage of
total loans 3.33% 2.86%
</TABLE>
<TABLE>
<CAPTION>
5. NON-PERFORMING ASSETS September 30,
-----------------
1996 1995
-----------------
(In Thousands)
<S> <C> <C>
Mortgage loans on real estate $5,118 $ 9,314
Commercial loans 659 1,151
Consumer loans 275 298
-----------------
Total non-performing loans 6,052 10,763
Other real estate owned, net 825 1,649
-----------------
Total non-performing assets $6,877 $12,412
=================
Non-performing loans as a percentage of total loans 1.47% 2.24%
Non-performing assets as a percentage of total assets 0.99% 1.96%
</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". Non-accrual 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 conditionally guaranteed. Education loans which were 90
days or more past due at September 30, 1996 and in accrual status totalled
$97,000. The Company may choose to place a loan on non-accrual 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 September 30, 1996 impaired loans totalled $4.0 million with a related
allowance of $695,000 compared with impaired loans at September 30, 1995 of
$6.8 million with a related allowance of $913,000. Management believes that
the valuation allowance for impaired loans at September 30, 1996 is
adequate.
7. FHLBB ADVANCES
Federal Home Loan Bank of Boston advances consisted of the following:
<TABLE>
<CAPTION>
September 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") which was organized in 1871.
Consolidated assets as of September 30, 1996 were $691.8 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 six contiguous
communities within New Haven County, Connecticut. Products and services
offered include a variety of savings, time, and checking products as well as
numerous mortgage loans, consumer loans, and commercial loans. Deposits are
insured by the Federal Deposit Insurance Corporation ("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 money ("net interest
income"). The difference between the average interest 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.
For the third quarter of 1996, the Company reported net income of $3.2
million or $0.62 per share compared with net income of $2.1 million or $0.42
per share for the quarter ended September 30, 1995. Net income for the nine
month period ended September 30, 1996 totalled $9.1 million or $1.79 per
share compared with net income of $3.4 million or $0.67 per share for the
nine month period ended September 30, 1995. 1996 results were affected
primarily by a lower provision to the allowance for loan losses and a
reduction in operating expenses, exclusive of OREO operations.
The provision to the allowance for loan losses totalled $450,000 for the
quarter ended September 30, 1996 compared with a provision in the third
quarter of 1995 of $1.4 million. The provision to the allowance for loan
losses for the nine months ended September 30, 1996 totalled $1.8 million
compared with $6.7 million for the year earlier period.
Operating expenses, exclusive of the net cost of the operation of other real
estate owned ("OREO operations"), totalled $3.2 million for the quarter
ended September 30, 1996 compared with $3.6 million in the third quarter of
1995. OREO operations may include gains or losses on the sale of OREO,
writedowns of OREO, and expenses to operate and maintain OREO. OREO
operations equalled a net expense of $67,000 for the quarter ended September
30, 1996 compared with a net gain of $256,000 for the third quarter of 1995.
Operating expenses, exclusive of OREO operations, for the nine month period
ended September 30, 1996 were $10.8 million compared with $13.5 million for
the nine month period ended September 30, 1995, representing a decrease of
$2.7 million or 20%. OREO operations equalled a net gain of $223,000 for the
nine months ended September 30, 1996 compared with a net gain of $432,000
for the nine months ended September 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. In addition, the cost
of FDIC insurance declined substantially due primarily to a general
reduction in the assessment rate charged and an improvement in the risk
rating of Dime.
Salaries and employee benefits decreased $168,000 or 9% and totalled $1.6
million for the quarter ended September 30, 1996 compared with $1.8 million
for the second quarter of 1995. Salaries and employee benefits for the nine
month period ended September 30, 1996 totalled $5.0 million compared with
$6.1 million for the first nine months of 1995 representing a decrease of
over $1 million or 17%. The cost of FDIC insurance decreased to $500 for the
quarter ended September 30, 1996 compared with $52,000 for the third quarter
of 1995. The cost of FDIC insurance for the nine month period ended
September 30, 1996 totalled $79,000 compared with $808,000 for the nine
month period ended September 30, 1996, representing a decrease of $729,000
or 90%.
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. During the first three quarters 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 nine months of 1996.
Net interest income totalled $6.3 million for the quarter ended September
30, 1996 representing a net interest rate spread of 3.20% and a net interest
margin of 3.76% compared with net interest income of $6.3 million for the
quarter ended September 30, 1995 which represented a net interest rate
spread of 3.61% and a net interest margin of 4.11%. Net interest income for
the nine month period ended September 30, 1996 totalled $19.6 million
representing a net interest rate spread of 3.40% and a net interest margin
of 3.94% compared with net interest income of $19.2 million for the nine
months ended September 30, 1995 which represented a net interest rate spread
of 3.73% and a net interest margin of 4.18%. The decrease in the interest
rate spread and margin was due to the combination of a higher cost of
deposits, a lower loan yield, and a greater volume of investment securities
as a percentage of earning assets, which was partially offset by an
increased yield on investment securities.
At September 30, 1996, the Company's allowance for loan losses was $13.8
million or 227.36% of non-performing loans, 200.09% of non-performing
assets, and 3.33% 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 September 30, 1995,
the allowance for loan losses was $13.7 million, or 127.49% of non-
performing loans, 110.56% of non-performing assets, and 2.86% of total
loans.
At September 30, 1996, non-performing loans, totalled $6.1 million, or 1.47%
of total loans, compared with $7.7 million, or 1.68% of total loans at
December 31, 1995, and compared with $10.8 million, or 2.24% of total loans
at September 30, 1995. Other real estate owned totalled $825,000 at
September 30, 1996, compared with $1.4 million at December 31, 1995 and $1.6
million at September 30, 1995. Total non-performing assets, were $6.9
million, or 0.99% of total assets at September 30, 1996, compared with $9.1
million or 1.38% of total assets at December 31, 1995, and compared with
$12.4 million or 1.96% of total assets at September 30, 1995.
Total loans decreased by $43.7 million, or nearly 10%, from $456.4 million
at December 31, 1995 to $412.8 million at September 30, 1996 and decreased
$67.4 million or 14% from $480.2 million at September 30, 1995. The decrease
in total loans was due primarily to limited lending opportunities.
Deposits, including escrow deposits, increased $25.7 million, or nearly 5%,
from $543.3 million at December 31, 1995 to $569.1 million at September 30,
1996 and increased $48.3 million, or 9%, from September 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 third quarter of 1996 the Company added $450,000
to the allowance for loan losses compared with a provision of $1.4 million
in the third quarter of 1995. The provision to the allowance for loan
losses for the nine months ended September 30, 1996 totalled $1.8 million
compared with $6.7 million for the year earlier period. Net charge-offs for
the quarter and nine months ended September 30, 1996 totalled $574,000 and
$768,000, respectively compared with net charge-offs for the quarter and
nine months ended September 30, 1995 of $1.2 million and $2.3 million,
respectively.
Management has classified performing loans totalling $1.6 million at
September 30, 1996 as substandard for internal purposes compared with $12.0
million at September 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.
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 September 30, 1996 the balance in the allowance for loan
losses represented 227.36% of non-performing loans and 3.33% of total loans.
Management believes that the allowance for loan losses at September 30, 1996
is adequate, based on the quality of the loan portfolio at that date.
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 $19.3 million at September 30, 1996, as compared
with $25.3 million at September 30, 1995. Cash and cash equivalents
represented 2.79% of total assets at September 30, 1996 as compared to 4.00%
of total assets at September 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 nine months of 1996, deposits
increased by $25.7 million from $543.3 million at December 31, 1995 to
$569.1 million at September 30, 1996.
Dime is a member of the Federal Home Loan Bank of Boston ("FHLBB") and as a
member may borrow from the FHLBB to secure additional funds. At September
30, 1996, FHLBB borrowings totalled $58.0 million, unchanged from December
31, 1995 and September 30, 1995. No increase in the level of borrowings
outstanding is anticipated. When deposit growth cannot meet increased loan
demand or liquidity requirements, funds may be derived from the FHLBB or
from other alternative funding sources. 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 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 September 30, 1996 the Tier 1
leverage capital ratio of Dime was 8.39%.
On October 16, 1996 the Board of Directors declared a regular quarterly
dividend payment of $0.08 per share payable on November 20, 1996. The
following table presents the Company's risk-based and leverage capital
ratios:
<TABLE>
<CAPTION>
September 30,
---------------
Required 1996 1995
--------------------------
<S> <C> <C> <C>
Tier I risk-based capital 4.0% 17.62% 13.58%
Total risk-based capital 8.0% 18.90% 14.87%
Leverage capital 4.0% 8.41% 7.24%
</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 Nine months ended
September 30, 1996 September 30, 1996
compared with compared with
September 30, 1995 September 30, 1995
----------------------------------------
<S> <C> <C>
Interest income $611 $3,018
Interest expense 606 2,648
----------------------------------------
Net interest income 5 370
Provision for loan losses (950) (4,950)
"Investment securities gains, net (32) (95)
Other operating income 24 (43)
Other operating expenses (90) (2,475)
----------------------------------------
Income before income taxes 1,037 7,657
Income tax expense (12) 1,954
----------------------------------------
Net income $1,049 $5,703
========================================
</TABLE>
Quarter and Nine Months Ended September 30, 1996
Compared to
Quarter and Nine Months Ended September 30, 1995
General. Net income for the quarter ended September 30, 1996, was $3.2
million or $0.62 per share, compared with net income of $2.1 million or
$0.42 per share for the same period in 1995. Net income for the nine months
ended September 30, 1996 totalled $9.1 million or $1.79 per share compared
with net income of $3.4 million or $0.67 per share for the first nine months
of 1995. The change in net income was influenced primarily by a decrease in
the provision for loan losses and a decrease in operating expenses.
Interest Income. Interest income for the quarter ended September 30, 1996
totalled $12.6 million representing an average yield on interest earning
assets of 7.49% and totalled $38.3 million for the nine months ended
September 30, 1996 representing an average yield on interest earning assets
of 7.72%. Interest income for the quarter ended September 30, 1995 totalled
$12.0 million and represented an average yield on interest earning assets of
7.81% and totalled $35.3 million for the nine months ended September 30,
1995 and represented an average yield on interest earning assets of 7.69%.
Interest Expense. Interest expense totalled $6.3 million for the quarter
ended September 30, 1996 representing an average cost of funds of 4.29% and
totalled $18.7 million for the nine months ended September 30, 1996
representing an average cost of funds of 4.32%. Total interest expense for
the quarter ended September 30, 1995 was $5.7 million which represented an
average cost of funds of 4.20% and totalled $16.1 million for the first nine
months of 1995 which represented an average cost of funds of 3.96%.
Net Interest Income. Net interest income totalled $6.3 million for the
quarter ended September 30, 1996 compared with $6.3 million for the quarter
ended September 30, 1995. Net interest income totalled $19.6 million for
the first nine months of 1996 compared with $19.2 million for the first nine
months of 1995. The net interest rate spread for the quarter ended
September 30, 1996 was 3.20% compared with 3.61% for the quarter ended
September 30, 1995. The net interest rate spread for the nine months ended
September 30, 1996 was 3.40% compared with 3.73% for the same period of
1995. The net interest margin was 3.76% for the third quarter of 1996
compared with a net interest margin of 4.11% for the third quarter of 1995.
The net interest margin was 3.94% for the first nine months of 1996 compared
with a net interest margin of 4.18% for the nine months ended September 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 nine months ended
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
9/30/96 9/30/95 9/30/96 9/30/95
-------------------------------------
<S> <C> <C> <C> <C>
Interest Earning Assets:
Loans 8.01% 8.17% 8.37% 8.07%
Investment Securities 6.72% 6.61% 6.57% 6.18%
Federal Funds Sold 5.26% 5.23% 5.23% 5.44%
Yield on Interest Earning Assets 7.49% 7.81% 7.72% 7.69%
Interest Bearing Liabilities:
Deposits 4.03% 3.84% 4.03% 3.57%
Borrowings 6.63% 7.11% 6.83% 7.11%
Cost of Interest Bearing Liabilities 4.29% 4.20% 4.32% 3.96%
Net Interest Rate Spread 3.20% 3.61% 3.40% 3.73%
Net Interest Margin 3.76% 4.11% 3.94% 4.18%
</TABLE>
Provision for Loan Losses. The provision to the allowance for loan losses
for the quarter ended September 30, 1996 totalled $450,000 compared with a
provision of $1.4 million for the third quarter of 1995. The provision to
the allowance for loan losses for the first nine months of 1996 totalled
$1.8 million compared with a provision of $6.7 million for the nine months
ended September 30, 1995.
Investment Securities Gains (Losses), Net. The Company recorded $32,000 of
net realized investment security gains during the quarter ended September
30, 1996 compared with net realized security gains of $64,000 booked during
the year earlier period. During the first nine months of 1996, the Company
recorded net realized security gains of $203,000 compared with net realized
security gains of $298,000 recorded during the first nine months of 1995.
Other Operating Income. Other operating income totalled $552,000 for the
third quarter of 1996 compared with $528,000 in the third quarter of 1995
and totalled $1.5 million for the first nine months of 1996 compared with
$1.6 million for the first nine months of 1995. The following table
comparatively summarizes the categories of other operating income:
OTHER OPERATING INCOME:
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
(Dollars in thousands) 9/30/96 9/30/95 9/30/96 9/30/95
-------------------------------------
<S> <C> <C> <C> <C>
Deposit account fees $421 $404 $1,210 $1,186
Customer service fees 39 39 105 109
Fees from savings bank life
insurance sales 31 33 126 121
Loan and loan servicing fees 11 1 35 36
Other fees 50 51 67 134
-----------------------------------
Total Other Operating Income $552 $528 $1,543 $1,586
===================================
</TABLE>
Other Operating Expenses. Total operating expenses were $3.3 million for
the third quarter of 1996 compared with total operating expenses of $3.3
million for the third quarter of 1995. Total operating expenses for the nine
month period ended September 30, 1996 were $10.6 million compared with $13.0
million for the nine month period ended September 30, 1995. The following
table comparatively illustrates the categories of operating expenses:
OPERATING EXPENSES:
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
(Dollars in thousands) 9/30/96 9/30/95 9/30/96 9/30/95
------------------------------------
<S> <C> <C> <C> <C>
Salaries and Benefits $1,628 $1,796 $ 5,036 $ 6,071
Professional Services 574 513 1,668 1,780
Occupancy and Equipment 534 767 2,147 2,300
FDIC Assessment 1 52 79 808
Net Cost (Gain) of OREO operations 67 (256) (223) (432)
"Restructure Expense, net --- --- 340 947
Other Operating Expenses 455 477 1,504 1,552
------------------------------------
Total Operating Expenses $3,259 $3,349 $10,551 $13,026
====================================
</TABLE>
DIME FINANCIAL CORPORATION AND SUBSIDIARY
PART II OTHER INFORMATION
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 September 30, 1996 and 1995.
(See pages 6-10 for notes to Consolidated Financial Statements.)
19. Report furnished to the Company's shareholders for the quarter
ended September 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
September 30, 1996.
27. Financial Data Schedule
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: November 12, 1996 /s/ Richard H. Dionne
Richard H. Dionne
President & Chief Executive Officer
Date: November 12, 1996 /s/ Albert E. Fiacre, Jr.
Albert E. Fiacre, Jr.
Senior Vice President and Chief Financial Officer
Date: November 12, 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
September 30, 1996 and 1995. (See pages 6-10 for Notes to
Consolidated Financial Statements.)
19. Report furnished to the Company's shareholders for the quarter
ended September 30, 1996.
27. Financial Data Schedule
Dime Financial Corporation - Third Quarter Results
Wallingford, Connecticut: Dime Financial Corporation ("DFC") (NASDAQ:
DIBK) announced net income of $3.2 million or $0.62 per share for the
quarter ended September 30, 1996 compared with net income of $2.1 million or
$0.42 per share for the quarter ended September 30, 1995. Net income for
the nine month period ended September 30, 1996 totalled $9.1 million or
$1.79 per share compared with net income of $3.4 million or $0.67 per share
for the nine month period ended September 30, 1995. In addition, the Board
of Directors announced a regular quarterly dividend payment of $0.08 per
share payable on November 20, 1996 to shareholders of record on November 5,
1996. The improvement in net income during the third quarter of 1996
compared with the third quarter of 1995 resulted primarily from a reduction
in the provision to the allowance for loan losses and a decrease in
operating expenses. The provision to the allowance for loan losses during
the third quarter of 1996 totalled $450,000 compared with $1.4 million
during the third quarter of 1995. The provision to the allowance for loan
losses for the nine months ended September 30, 1996 totalled $1.8 million
compared with $6.7 million for the nine months ended September 30, 1995.
Total operating expenses, exclusive of OREO operations, for the
quarter ended September 30, 1996 were $3.2 million compared with operating
expenses, exclusive of OREO operations, of $3.6 million from the year
earlier quarter ended September 30, 1995 representing a decline of $413,000
or 11%. Total operating expenses, exclusive of OREO operations, for the
nine months ended September 30, 1996 equalled $10.7 million compared with
operating expenses, exclusive of OREO operations, of $13.5 million for the
nine months ended September 30, 1995 representing a decline of $2.7 million
or nearly 20%. 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, along
with a reduction in the cost of FDIC insurance. Salaries and employee
benefits for the quarter ended September 30, 1996 totalled $1.6 million
compared with salaries and employee benefits of $1.8 million for the quarter
ended September 30, 1995, representing a decline of $168,000 or 9%. Salaries
and employee benefits for the nine month period ended September 30, 1996
totalled $5.0 million compared with $6.1 million for the first nine months
of 1995, representing a decrease of $1.0 million or 17%. The cost of FDIC
insurance also declined substantially and totalled only $500 for the quarter
ended September 30, 1996 compared with $52,000 for the quarter ended
September 30, 1995. The cost of FDIC insurance for the nine month period
ended September 30, 1996 totalled $79,000 compared with $808,000 for the
nine month period ended September 30, 1995, representing a decrease of
$729,000 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 ("Dime").
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. During the first three quarters 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 nine months of 1996. The allowance for loan losses at September 30,
1996 equalled $13.8 million and represented 227% of non-performing loans of
$6.1 million and 3.33% 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 September 30, 1995 the allowance for loan losses totalled $13.7 million
or 127% of non-performing loans of $10.8 million and 2.86% of total loans
outstanding. Non-performing loans totalled $6.1 million at September 30,
1996 representing a decrease of $1.6 million or 21% from December 31, 1995
and a decrease of $4.7 million or 44% from September 30, 1995. Other real
estate owned ("OREO") totalled $825,000 at September 30, 1996 compared with
OREO of $1.4 million at December 31, 1995 and $1.6 million at September 30,
1995. Total non-performing assets were $6.9 million at September 30, 1996
compared with $9.1 million at December 31, 1995 and $12.4 million at
September 30, 1995. Non-performing assets equalled 0.99% of total assets at
September 30, 1996 compared with 1.38% of total assets at December 31, 1995
and compared with 1.96% of total assets at September 30, 1995.
Net interest income totalled $6.3 million for the quarter ended
September 30, 1996 representing a net interest rate spread of 3.20% and a
net interest margin of 3.76% compared with net interest income of $6.3
million for the quarter ended September 30, 1995 which represented a net
interest rate spread of 3.61% and a net interest margin of 4.11%. The
decrease in the interest rate spread and margin was due to the combination
of a higher cost of deposits, a lower loan yield, and a greater volume of
investment securities as a percentage of assets, partially offset by an
increased yield on investment securities. Net interest income for the nine
month period ended September 30, 1996 totalled $19.6 million representing a
net interest rate spread of 3.40% and a net interest margin of 3.94%
compared with net interest income of $19.2 million for the nine months ended
September 30, 1995 which represented a net interest rate spread of 3.73% and
a net interest margin of 4.18%. Total assets were $691.8 million at
September 30, 1996 compared with total assets of $632.6 million at September
30, 1995, representing an increase of $59.3 million or 9%. Total deposits
were $569.1 million at September 30, 1996 compared with $520.7 million at
September 30, 1995, representing an increase of $48.3 million or 9%. Total
shareholders' equity was $59.4 million at September 30, 1996 representing an
equity to assets ratio of 8.59% compared with shareholders' equity of $48.7
million at September 30, 1995 which represented an equity to assets ratio of
7.69%. The Tier 1 regulatory capital ratio at September 30, 1996 for Dime
was 8.39% compared with a Tier 1 regulatory capital ratio of 7.20% at
September 30, 1995. The risk-based capital ratio of Dime at September 30,
1996 equalled 18.79% compared with a risk-based capital ratio of 14.74% at
September 30, 1995. These ratios are in excess of the regulatory minimums.
Dime Financial Corporation and Subsidiary
<TABLE>
<CAPTION>
Consolidated Statements of Condition
- ------------------------------------------------------------------------------------------------------------
September 30, December 31, September 30,
(In thousands, except share data) 1996 1995 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and amounts due from banks $ 7,581 $ 11,172 $ 9,505
Interest bearing deposits 24 2,983 3,913
Federal funds sold 11,713 21,334 11,859
Investment securities available for sale (a) 18,412 8,138 12
Investment securities held to maturity (b) 90,634 47,898 58,820
Mortgage-backed securities available for sale (c) 137,798 95,190 9,879
Mortgage-backed securities held to maturity (d) --- --- 44,539
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 304,010 329,597 341,459
Residential real estate - non-owner occupied 23,396 27,699 29,013
Commercial real estate 35,726 43,658 52,190
Builders' and Land 811 1,501 1,928
Commercial loans 3,569 4,529 4,821
Consumer loans 45,246 49,459 50,785
Allowance for loan losses (13,761) (12,779) (13,722)
-----------------------------------
Loans receivable, net 398,997 443,664 466,474
Premises and equipment, net 5,275 5,926 6,816
Accrued income receivable 5,195 4,451 4,745
Other real estate owned, net 825 1,415 1,649
Other assets 5,679 6,242 4,321
Excess of cost over fair value of net assets acquired 2,505 2,768 2,855
-----------------------------------
Total assets $691,830 $658,373 $632,579
===================================
Liabilities and Shareholders' equity
Liabilities:
Deposits $569,063 $543,344 $520,738
Federal Home Loan Bank of Boston advances 58,000 58,000 58,000
Other liabilities 5,350 5,361 5,189
-----------------------------------
Total liabilities 632,413 606,705 583,927
-----------------------------------
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 5,480,896 shares, 5,373,992 and 5,364,902, respectively. 5,481 5,374 5,365
Additional paid-in capital 52,209 51,117 50,992
Retained earnings (deficit) 5,793 (2,166) (4,842)
Net unrealized gain (loss) on available for sale securities (1,168) 241 35
Treasury stock --351,607 shares at cost (2,898) (2,898) (2,898)
-----------------------------------
Total shareholders' equity 59,417 51,668 48,652
-----------------------------------
Total liabilities and shareholders' equity $691,830 $658,373 $632,579
===================================
<Fa> amortized cost: $18,362 at September 30, 1996; $8,155 at December 31, 1995; and $12 at September 30, 1995.
<Fb> market value: $89,101 at September 30, 1996; $48,245 at December 31, 1995; and $58,888 at September 30, 1995.
<Fc> amortized cost: $139,618 at September 30, 1996; $94,809 at December 31, 1995; and $9,826 at September 30, 1995.
<Fd> market value: $44,495 at September 30, 1995.
</TABLE>
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Consolidated Statements of Operations
- -----------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
(In thousands, except share data) 9/30/96 9/30/95 9/30/96 9/30/95
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 8,359 $ 9,943 $27,224 $30,186
Interest-bearing deposits 1 26 22 104
Federal funds sold 148 166 628 909
Interest and dividends on investments:
U.S. treasury securities 56 130 185 563
U.S. government agency obligations 1,429 680 3,599 1,505
REMIC/CMO's 713 493 2,333 708
Non-agency REMIC/CMO's 652 --- 1,141
Mortgage-backed securities 891 379 2,402 520
Asset-backed securities 268 --- 394 ---
Other bonds and notes 7 89 46 420
Equity securities --- --- --- 3
Dividends on Federal Home Loan Bank of Boston Stock 117 124 345 383
--------------------------------------
Total Interest Income 12,641 12,030 38,319 35,301
--------------------------------------
Interest Expense
Interest to depositors 5,364 4,687 15,691 12,926
Interest on Federal Home Loan Bank of Boston advances 983 1,054 3,015 3,132
--------------------------------------
Total Interest Expense 6,347 5,741 18,706 16,058
--------------------------------------
Net Interest Income 6,294 6,289 19,613 19,243
Provision for loan losses 450 1,400 1,750 6,700
--------------------------------------
Net interest income after provision 5,844 4,889 17,863 12,543
Investment securities gains, net 32 64 203 298
Other operating income 552 528 1,543 1,586
--------------------------------------
Income before other operating expenses 6,428 5,481 19,609 14,427
--------------------------------------
Other Operating Expenses:
Salaries and employee benefits 1,628 1,796 5,036 6,071
Professional and other services 574 513 1,668 1,780
Bank occupancy and equipment expense 534 767 2,147 2,300
FDIC Assessment 1 52 79 808
Net (benefit) cost of operation of other real estate 67 (256) (223) (432)
Restructure expense, net --- --- 340 947
Other operating expenses 455 477 1,504 1,552
--------------------------------------
Total Other Operating Expenses 3,259 3,349 10,551 13,026
--------------------------------------
Income before income taxes 3,169 2,132 9,058 1,401
Income tax expense (benefit) 0 12 (10) (1,964)
--------------------------------------
Net income $ 3,169 $2,120 $ 9,068 $ 3,365
======================================
Weighted Average Common Shares (in thousands) 5,125 5,011 5,069 5,001
Earnings per share $0.62 $0.42 $1.79 $0.67
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Highlights
- ------------------------------------------------------------------------------------
For the three months For the nine months
ended September 30, ended September 30,
(Dollars in thousands) 1996 1995 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average yield on interest-earning assets 7.49% 7.81% 7.72% 7.69%
Average cost of funds 4.29% 4.20% 4.32% 3.96%
Net interest rate spread 3.20% 3.61% 3.40% 3.73%
Net yield on interest-earning assets 3.76% 4.11% 3.94% 4.18%
Net income $3,169 $2,120 $9,068 $3,365
Return on average assets 1.84% 1.34% 1.79% 0.71%
Return on average equity 22.11% 17.94% 22.13% 9.69%
Leverage capital ratio 8.41% 7.24% 8.41% 7.24%
Earnings per share $0.62 $0.42 $1.79 $0.67
Book value per share $11.58 $9.71 $11.58 $9.71
</TABLE>
Dime Financial Corporation And Subsidiary
<TABLE>
<CAPTION>
Selected Financial Data
- -------------------------------------------------------------------------------------------
September 30, December 31, September 30,
(in thousands) 1996 1995 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $2,691 $2,729 $ 3,617
Residential Real Estate - non-owner occupied 926 1,235 1,200
Commercial Real Estate 1,501 2,580 4,497
----------------------------------
Total Mortgage Loans 5,118 6,544 9,314
Commercial Loans 659 690 1,151
Consumer Loans 275 448 298
----------------------------------
Total Non-Performing Loans 6,052 7,682 10,763
Other Real Estate Owned 825 1,865 2,160
Less: Reserve for OREO Losses 0 450 511
----------------------------------
Total OREO, net 825 1,415 1,649
Total Non-Performing Assets $6,877 $9,097 $12,412
==================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
September 30, December 31, September 30,
(in thousands) 1996 1995 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Balance Information
For the quarters ended:
Interest earning assets:
Gross loans $417,390 $472,201 $486,867
Investment securities 246,184 136,976 114,708
Federal funds sold / interest bearing deposits 11,280 20,244 14,521
--------------------------------------
Total interest earning assets 674,854 629,421 616,096
Total Assets $688,470 $644,264 $631,303
======================================
Interest bearing liabilities:
Interest bearing deposits $528,520 $494,502 $483,916
Borrowings 58,000 58,000 58,000
--------------------------------------
Total interest bearing liabilities 586,520 552,502 541,916
Total Liabilities 631,119 594,596 584,023
Shareholders' Equity 57,351 49,668 47,280
Total Liabilities & Shareholders' Equity $688,470 $644,264 $631,303
======================================
Average Balance Information
For the nine and twelve months ended:
Interest earning assets:
Gross loans $433,468 $492,028 $498,719
Investment securities 211,933 100,642 88,499
Federal funds sold / interest bearing deposits 16,341 23,727 24,890
--------------------------------------
Total interest earning assets 661,742 616,397 612,108
Total Assets $676,456 $633,938 $630,461
======================================
Interest bearing liabilities:
Interest bearing deposits $519,950 $487,137 $484,655
Borrowings 58,000 58,060 58,080
--------------------------------------
Total interest bearing liabilities 577,950 545,197 542,735
Total Liabilities 621,812 586,808 584,149
Shareholders' Equity 54,644 47,130 46,312
Total Liabilities & Shareholders' Equity $676,456 $633,938 $630,461
======================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,581
<INT-BEARING-DEPOSITS> 24
<FED-FUNDS-SOLD> 11,713
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 156,210
<INVESTMENTS-CARRYING> 90,634
<INVESTMENTS-MARKET> 89,101
<LOANS> 412,758
<ALLOWANCE> 13,761
<TOTAL-ASSETS> 691,830
<DEPOSITS> 569,063
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,350
<LONG-TERM> 58,000
0
0
<COMMON> 5,481
<OTHER-SE> 53,936
<TOTAL-LIABILITIES-AND-EQUITY> 691,830
<INTEREST-LOAN> 27,224
<INTEREST-INVEST> 10,100
<INTEREST-OTHER> 995
<INTEREST-TOTAL> 38,319
<INTEREST-DEPOSIT> 15,691
<INTEREST-EXPENSE> 18,706
<INTEREST-INCOME-NET> 19,613
<LOAN-LOSSES> 1,750
<SECURITIES-GAINS> 203
<EXPENSE-OTHER> 10,551
<INCOME-PRETAX> 9,058
<INCOME-PRE-EXTRAORDINARY> 9,068
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,068
<EPS-PRIMARY> 1.79
<EPS-DILUTED> 1.79
<YIELD-ACTUAL> 3.94
<LOANS-NON> 6,052
<LOANS-PAST> 97
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,779
<CHARGE-OFFS> 2,036
<RECOVERIES> 1,268
<ALLOWANCE-CLOSE> 13,761
<ALLOWANCE-DOMESTIC> 13,761
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
