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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1996 Commission File No.: 0-18011
ONBANCorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 16-1345830
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 South Salina Street, Syracuse, New York 13202
----------------------------------------------------
(Address of principal executive office and Zip Code)
(315) 424-4400
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
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, par value $1.00 per share 12,786,256
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(Title of Class) (Shares Outstanding)
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This report contains 20 pages
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2
ONBANCorp, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1996, December 31, 1995, and June 30, 1995 ............... 3
Condensed Consolidated Statements of Income
for the Three Months and Six Months ended June 30, 1996 and 1995 .. 4
Condensed Consolidated Statements of Changes in Shareholders'
Equity for the Six Months ended June 30, 1996 and 1995 ............ 5
Condensed Consolidated Statements of Cash Flows
for the Six Months ended June 30, 1996 and 1995 .................... 6
Notes to Condensed Consolidated Financial Statements ................. 7-10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 11-18
PART II. OTHER INFORMATION............................................................. 19
Signatures.............................................................................. 20
</TABLE>
<PAGE>
3
ONBANCorp, Inc.
Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
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June 30, December 31, June 30,
1996 1995 1995
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<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 135,497 150,621 125,862
Federal funds sold and other 27,402 134,623 44,720
Securities:
Trading 1,708 1,790 12,098
Available for sale 857,101 978,361 564,340
Held to maturity, fair value of $1,711,183 at June 30, 1996,
$1,797,286 at December 31, 1995 and $3,318,076 at June 30, 1995 1,706,181 1,761,692 3,337,235
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Total securities 2,564,990 2,741,843 3,913,673
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Loans:
Portfolio, net of premium and discount 2,370,515 2,288,990 2,148,302
Allowance for loan losses (37,553) (34,583) (33,961)
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Net loans 2,332,962 2,254,407 2,114,341
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Loans available for sale 34,124 40,137 22,904
Premises and equipment, net 62,846 66,549 63,137
Due from brokers 16,118 65,205 54,222
Other assets 116,091 113,674 133,153
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TOTAL ASSETS $ 5,290,030 5,567,059 6,472,012
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing 321,347 320,140 306,005
Interest bearing:
Savings, NOW and money market 1,262,200 1,291,952 1,362,059
Time deposits less than $100,000 1,558,975 1,671,027 1,484,705
Time deposits $100,000 and greater 469,895 525,154 562,186
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Total deposits 3,612,417 3,808,273 3,714,955
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Repurchase agreements 292,787 361,617 905,023
Other borrowings 898,724 903,370 1,392,632
Due to brokers 58,992 43,951 9,855
Other liabilities 55,898 61,082 68,467
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Total liabilities $ 4,918,818 5,178,293 6,090,932
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Shareholders' equity:
Preferred stock, par value $1.00 per share; 10,000,000 shares authorized;
Series B 6.75% Cummulative Convertible; par value $1.00 per share;
10,000,000 shares authorized; issued at outstanding: 2,515,700 at
June 30, 1996 and December 31, 1995; 2,769,100 at June 30, 1995:
aggregate liquidation value $62,893 at June 30, 1996 2,516 2,516 2,769
Common stock, par value $1.00 per share; 56,000,000 shares authorized;
shares issued: June 30, 1996 - 14,116,356; December 31, 1995 - 14,116 14,095 14,077
14,095,499; June 30, 1995 - 14,076,677
Additional paid-in capital 156,083 155,748 162,146
Retained earnings 266,785 253,727 239,182
Net unrealized holding loss on securities, net of deferred taxes (25,500) (18,952) (36,644)
Treasury Stock, at cost, 1,330,100 shares at June 30, 1996,
577,900 at December 31, 1995 (42,488) (18,068) --
Guarantee of ESOP indebtedness (300) (300) (450)
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Total shareholders' equity 371,212 388,766 381,080
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,290,030 5,567,059 6,472,012
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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4
ONBANCorp, Inc.
Condensed Consolidated Statements of Income
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
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For the Three Months Ended For the Six Months Ended
Ended June 30, Ended June 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Interest income:
Loans $49,131 45,278 97,609 87,713
Securities 41,243 61,453 86,613 120,637
Federal funds sold and other 657 506 1,636 1,271
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Total interest income 91,031 107,237 185,858 209,621
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Interest expense:
Deposits 36,895 39,398 75,857 75,847
Borrowings:
Repurchase agreements 4,956 13,218 10,499 26,342
Other 11,858 17,058 24,298 32,470
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Total interest expense 53,709 69,674 110,654 134,659
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Net interest income 37,322 37,563 75,204 74,962
Provision for loan losses 1,950 1,690 3,900 3,380
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Net interest income after provision for loan losses 35,372 35,873 71,304 71,582
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Other operating income:
Mortgage banking 1,023 517 1,816 1,194
Service charges 4,515 4,025 8,843 7,704
Net gain on securities 744 1,643 2,637 2,770
Other 2,710 1,002 4,210 2,254
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Total other operating income 8,992 7,187 17,506 13,922
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Other operating expenses:
Salaries and employee benefits 10,686 10,101 21,198 20,205
Building, occupancy and equipment 4,508 4,553 9,243 9,115
Deposit insurance premiums 679 2,226 1,384 4,342
Contracted data processing 2,700 2,440 5,325 4,773
Legal and financial services 951 728 1,902 1,773
Other 6,666 6,272 13,351 12,278
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Total other operating expenses 26,190 26,320 52,403 52,486
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Income before income taxes 18,174 16,740 36,407 33,018
Income taxes 6,513 6,604 13,180 12,957
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Net income $11,661 10,136 23,227 20,061
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Income per common share:
Primary $ 0.80 0.63 1.56 1.24
Fully diluted 0.76 0.62 1.50 1.22
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
5
ONBANCorp, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Net
Unrealized
Additional Holding Guarantee of
Preferred Common Paid-in Retained Loss on Treasury ESOP
Stock Stock Capital Earnings Securities Stock Indebtedness Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $2,818 14,050 162,960 229,374 (45,816) -- (450) 362,936
Net income -- -- -- 20,061 -- -- -- 20,061
Stock issued under:
Stock Option Plans -- 15 137 -- -- -- -- 152
Employee Stock Purchase Plan -- 12 244 -- -- -- -- 256
Cash dividends declared:
Preferred ($.84 per share) -- -- -- (2,366) -- -- -- (2,366)
Common ($.56 per share) -- -- -- (7,887) -- -- -- (7,887)
Preferred stock repurchase (49) -- (1,195) -- -- -- -- (1,244)
Changes in net unrealized holding loss
on securities, net of income tax effect
of $6,116 -- -- -- -- 9,172 -- -- 9,172
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Balance at June 30, 1995 $2,769 14,077 162,146 239,182 (36,644) -- (450) 381,080
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Balance at December 31, 1995 $2,516 14,095 155,748 253,727 (18,952) (18,068) (300) 388,766
Net income -- -- -- 23,227 -- -- -- 23,227
Stock issued under:
Stock Option Plans -- 11 75 -- -- -- -- 86
Employee Stock Purchase Plan -- 10 260 -- -- -- -- 270
Cash dividends declared:
Preferred ($.84 per share) -- -- -- (2,121) -- -- -- (2,121)
Common ($.60 per share) -- -- -- (8,048) -- -- -- (8,048)
Treasury stock purchase -- -- -- -- -- (24,420) -- (24,420)
Changes in net unrealized holding loss
on securities, net of income tax effect
of ($4,406) -- -- -- -- (6,548) -- -- (6,548)
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Balance at June 30, 1996 $2,516 14,116 156,083 266,785 (25,500) (42,488) (300) 371,212
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
6
ONBANCorp, Inc.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
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For the Six Months Ended
1996 1995
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<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 27,322 49,522
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INVESTING ACTIVITIES
Proceeds from sales of securities available for sale 415,561 765,856
Proceeds from maturities of and principal collected on securities available for sale 112,252 51,685
Proceeds from maturities of and principal collected on securities held to maturity 375,337 307,041
Purchases of securities available for sale (325,630) (298,117)
Purchases of securities held to maturity (342,728) (622,387)
Net change in loans (97,584) (172,150)
Net payment made for sale of branches (19,820) --
Purchases of premises and equipment (1,579) (4,892)
Proceeds from sale of building 250 --
Other 2,933 33,079
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NET CASH PROVIDED IN INVESTING ACTIVITIES 118,992 60,115
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FINANCING ACTIVITIES
Net decrease in deposit accounts excluding time deposits (15,985) (83,855)
Net increase (decrease) in time deposits (146,188) 5,467
Net decrease in repurchase agreements (68,830) (257,406)
Net increase in other borrowings 84,875 4,023
Advances from Federal Home Loan Bank 156,717 770,757
Repayment of advances from Federal Home Loan Bank (245,059) (540,000)
Repayments of collateralized mortgage obligations (1,179) (920)
Net proceeds from issuance of common stock 356 408
Purchase of treasury stock (23,104) --
Repurchase of preferred stock -- (1,244)
Cash dividends paid on common stock (8,140) (7,872)
Cash dividends paid on preferred stock (2,122) (2,377)
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NET CASH USED BY FINANCING ACTIVITIES (268,659) (113,019)
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Net decrease in cash and cash equivalents (122,345) (3,382)
Cash and cash equivalents at beginning of period 285,244 173,964
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Cash and cash equivalents at end of period $ 162,899 170,582
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Supplemental schedule of cash flow information: Cash paid during the period for:
Interest 113,814 135,135
Income taxes 11,768 10,749
Non-cash investing and financing activities:
Securitization of mortgage loans 34,788 --
Mortgage loans transferred to other real estate owned 2,903 2,025
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
7
ONBANCorp, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying condensed consolidated financial statements and
related notes should be read in conjunction with the consolidated financial
statements and related notes thereto included in the Company's Form 10-K for the
year ended December 31, 1995.
The condensed consolidated financial statements included herein reflect
all adjustments of a normal recurring nature which are, in the opinion of
management, necessary for a fair presentation of the Company's financial
position at June 30, 1996 and 1995 and the results of operations for the three
and six months ended June 30, 1996 and 1995.
Certain reclassifications have been made to prior period amounts for
consistency in reporting.
(2) Loans
The Financial Accounting Standards Board issued Statement 114
Accounting by Creditors for Impairment of a Loan as amended by Statement 118,
Accounting by Creditors for Impairment of a Loan - Income and Disclosure. These
statements prescribe recognition criteria for loan impairment, generally related
to commercial type loans, and measurement methods for certain impaired loans and
all loans whose terms are modified in troubled debt restructuring subsequent to
the adoption of these statements. A loan is considered impaired when it is
probable that the borrower will be unable to repay the loan according to the
original contractual terms of the loan agreement.
As of January 1, 1995, the Company has adopted the provisions of SFAS
No. 114 and SFAS No. 118 and has provided the required disclosures. The effect
of adoption was not material to the consolidated financial statements. As of
January 1, 1995, all of the Company's in substance foreclosed assets were
reclassified into impaired loan status as required by SFAS No. 114. For all
prior periods presented, all amounts related to in substance foreclosures have
also been reclassified. These reclassifications did not impact the Company's
consolidated financial condition or results of operations.
As a result of the adoption of SFAS No. 114, the allowance for possible
loan losses related to impaired loans that are identified for evaluation in
accordance with SFAS No. 114 is based on the present value of expected cash
flows discounted at the loan's initial effective interest rate, except that as a
practical expedient, impairment may be measured at the loan's observable market
price, or the fair value of the collateral for certain loans where repayment of
the loan is expected to be provided solely by the underlying collateral
(collateral dependent loans). The Company's impaired loans are generally
collateral dependent. The Company considers estimated costs to sell, on a
discounted basis, when determining the fair value of collateral in the
measurement of impairment of those costs are expected to reduce the cash flows
available to repay or otherwise satisfy the loans. Prior to the adoption of SFAS
No. 114 and 118, the allowance for possible loan losses related to these loans
was based on estimated undiscounted cash flows or the fair value of the
collateral, less estimated costs to sell for collateral dependent loans.
Other real estate owned included both formally foreclosed and
in-substance foreclosed real properties. In accordance with SFAS No. 114, a loan
is classified as an in-substance foreclosure when the Company has taken
possession of the collateral regardless of whether formal foreclosure
proceedings have taken place. Prior to the adoption of SFAS No. 114 and SFAS No.
118, in-substance foreclosed properties included those properties where the
borrower had little or no remaining equity in the property considering its fair
value of remaining equity; where repayment was only expected to come from the
operation or sale of the property; and where the borrower had effectively
abandoned control of the property or it was doubtful that the borrower would be
able to rebuild equity in the property.
<PAGE>
8
At June 30, 1996, the recorded investment in loans that are considered
to be impaired under SFAS No. 114 totaled $8.4 million. Included in this amount
is $7.1 million of impaired loans for which the related allowance for credit
losses is $3.9 million. In addition, included in the total impaired loans at
June 30, 1996 is $1.3 million of impaired loans that as a result of the adequacy
of collateral values do not have an allowance for credit losses determined in
accordance with SFAS No. 114. The average recorded investments in impaired loans
during the six months ended June 30, 1996 was approximately $9.8 million.
Impaired loans generally are included in non-performing loans, as
non-accrual loans. Commercial type loans past due greater than 90 days and still
accruing are generally not considered to be impaired as the Company expects to
collect all amounts due, including interest accrued at the contractual interest
rate for the delinquent period.
For the six months ended June 30, 1996 the Company recognized interest
income on those impaired loans of $222 thousand using the cash basis method of
income recognition.
Potential problem loans at June 30, 1996 amounted to $21.3 million.
"Potential problem loans" are defined as loans which are not included with past
due and non-accrual loans discussed above, but about which management, through
normal internal credit review procedures, has information about possible credit
problems which may result in the borrowers inability to comply with the present
loan repayment terms. Of the $21.3 million in potential problem loans, $3.5
million are considered impaired under SFAS No. 114. There have been no loans
classified for regulatory purposes as loss, doubtful, or substandard that are
not included above or which caused management to have serious doubts as to the
ability of the borrower to comply with repayment terms. In addition, there were
no material commitments to lend additional funds to borrowers whose loans were
classified as non-performing.
(3) Securities
The following table sets forth securities available for sale as of June
30, 1996.
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Amortized Gross Unrealized Fair
(In Thousands) Cost Gains Losses Value
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Debt securities:
U.S. Government obligations $ 4,537 4 91 4,450
U.S. Government agencies 64,993 -- 2,441 62,552
Mortgage-backed securities 731,585 4,536 2,603 733,518
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Total debt securities 801,115 4,540 5,135 800,520
Equity securities:
Common 13 -- -- 13
Federal Home Loan Bank 56,568 -- -- 56,568
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Total equity securities 56,581 -- -- 56,581
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$857,696 4,540 5,135 857,101
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<PAGE>
9
The following table sets forth securities held to maturity as of June 30, 1996.
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Amortized Gross Unrealized Fair
(In Thousands) Cost Gains Losses Value
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Debt securities:
U.S. Government obligations $ 29,850 83 107 29,826
U.S. Government agencies 159,499 -- 11,085 148,414
State and municipal 64,149 1,057 166 65,040
Corporate and other 438 7 -- 445
Mortgage-backed securities 1,494,190 3,413 30,145 1,467,458
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Total debt securities 1,748,126 4,560 41,503 1,711,183
Unamortized holding loss on
securities transferred (41,945)
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$1,706,181
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The difference between the amortized cost and the fair value of
both the available for sale and the held to maturity categories of securities
represents the change in value related to interest rate fluctuations occurring
following the purchase of these securities. These differences will disappear as
the assets prepay or mature and are considered to be temporary in nature. There
is minimal credit risk associated with the portfolio given it's secured nature.
Approximately one-third of the total portfolio is available for sale, and
therefore, a relatively instantaneous source of liquidity. The held to maturity
portfolio also provides ongoing liquidity given the amortizing nature of the
securities. The major uncertainty relative to this portfolio which is
predominantly mortgage-backed securities, is prepayment risk. Accelerating or
decelerating prepayments affect the cash flows and hence the yield on these
securities. These factors are taken into consideration when the assets are
acquired and are periodically monitored.
(4) Shareholders' Equity
In 1995 the Company repurchased and retired 301,800 shares of Series
"B" Cumulative Convertible Preferred Stock at a cost of $8.360 million and
repurchased 577,900 shares of Common Stock at a cost of $18.068 million. During
the second quarter of 1996, the Company repurchased 752,200 shares of Common
Stock at a cost of $24.420 million. In addition, the Company intends to continue
to acquire up to an additional 797,800 fully diluted shares, both common and
preferred, as market conditions permit.
Primary earnings per share are based upon the weighted average number
of common shares and common share equivalents outstanding, after provision for
dividends on preferred shares. The average number of shares used to compute
primary earnings per share was 13,328,531 and 14,224,092 for the three months
ended June 30, 1996 and 1995, respectively; and 13,514,796 and 14,206,062 for
the six months ended June 30, 1996 and 1995, respectively.
Fully diluted earnings per share are based upon the weighted average
number of common shares and common share equivalents outstanding and the assumed
conversion of the preferred shares. The average number of shares used to compute
fully diluted earnings per share was 15,288,626 and 16,422,523 for the three
months ended June 30, 1996 and 1995, respectively; and 15,475,217 and 16,418,756
for the six months ended June 30, 1996 and 1995, respectively.
(5) Other Accounting Issues
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing Rights" on a
prospective basis. SFAS 122 requires the Company to recognize as separate assets
rights to service mortgage loans for others, however those servicing rights are
acquired, and also requires the Company to assess its capitalized mortgage
servicing rights for impairment based on the fair value of
<PAGE>
10
those rights. The adoption of SFAS 122 did not have a material impact on the
Company's financial condition or results of operations.
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation" which encourages, but does not require, companies to
use a fair value based method of determining compensation cost for grants of
stock options under stock-based employee compensation plans. As permitted by
SFAS No. 123, the Company elected to continue accounting for stock-based
compensation in accordance with Accounting Principles Board Opinion No. 25 ("APB
25"). Under APB 25, no compensation cost is recorded as options are granted by
the Company at a purchase price not less than the fair market value of the
common stock on the date of the grant. Companies electing to continue accounting
under the provisions of APB 25 are required to present pro forma disclosures of
net income and net income per for each period in which a complete set of
financial statements are presented.
On June 28, 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities". The statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on a consistant application of a financial-components approach that
focuses on control. It distinguishes transfers of financial assets that are
sales from transfers that are secured borrowings. The Company will prospectively
adopt Statement 125 effective January 1, 1997, and the expected impact on the
Company's consolidated financial statements is not material.
<PAGE>
11
ONBANCorp, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
ONBANCorp, Inc.'s ("ONBANCorp" or "the Company") results of operations
are dependent upon the results of operations of its wholly owned subsidiary
banks: OnBank & Trust Co., Franklin First Savings Bank and OnBank ("the Banks").
Second quarter net income was $11.7 million compared to $10.1 million
for the 1995 second quarter and first six months net income was $23.2 million
compared to $20.1 million for the prior year period. Fully diluted net income
per common share was $.76 compared to $.62 for the 1995 second quarter and 1996
first six months fully diluted net income per common share was $1.50 compared to
$1.22 for the prior year period. Book value per common share was $24.11 at June
30, 1996 and December 31, 1995, and $22.15 at June 30, 1995. A regular dividend
of $.30 per common share was declared for the second quarter of 1996 and paid on
July 1, 1996. Regular dividends of $.60 per common share have been declared
during the first six months of 1996. Return on average equity (ROE) was 12.3%
and 12.1% for the three and six month periods ended June 30, 1996 compared to
10.7% and 10.8% for the respective prior year periods. Return on Average Assets
(ROA) was .89% and .87% for the three and six month periods ended June 30, 1996
compared to .64% for the respective prior year periods.
Net Interest Income
Increasing core business activity has been a significant influence in
year over year performance improvements. During the one year period ended June
30, 1996, commercial loans have increased by $124 million or 25% to $609 million
and consumer loans increased by $87 million or 16% to $646 million. During the
last year residential mortgage loans have increased slightly by $16 million to
$1,116 million despite the fact that $243 million new loans were originated. To
manage overall interest rate risk in a relatively low yield market rate
environment $109 million of these originations were securitized or sold,
thereby, moderating loan portfolio growth. Total assets declined by $ 1.2
billion or 18% to $5.3 billion as a result of selling securities and paying down
borrowings during the last quarter of 1995 and first half of 1996. This
decreased "wholesale" activity coupled with the increased "core banking"
business have been primary factors affecting the increased net interest margin.
During the second quarter of 1996 other non operating income was affected by a
$2.9 million gain related to the sale of three small branches and a $1.3 millon
loss on the sale of a building, both of which were non-recurring in nature.
Net interest income was $37.3 million and $75.2 million for the three
and six month periods ended June 30, 1996, compared to the $37.6 million and
$75.0 million recorded in the respective prior year periods. Average loans of
$2.315 billion for the first six months of 1996 were $274 million or 13%
improved over the first six months of 1995 as a result of the Company's
continuing focus on expanding loan generation. The yield on these average loans
declined by .19% to 8.48% for the first six months of 1996 compared to the 8.67%
for the prior year period. The volume of average securities for the first six
months of 1996 declined to $2.704 billion or by $1.187 billion compared to the
prior year period. The yield on these securities increased by .19% to 6.44% as a
combined result of the reinvestment of part of the proceeds from the sale of
securities during the fourth quarter 1995 repositioning and the scheduled
repricing of certain adjustable-rate securities. Average securities decreased by
more than the increase in average loans, therefore, average interest earning
assets of $5.081 billion were $888 million less for the first six months of 1996
than for the first six months of 1995. The yield on total earning assets
increased by .28% to 7.36% for the six months of 1996 compared to the first six
months of 1995. The Company intends to continue its efforts to increase its core
lending business as a percentage of overall earning assets.
The average balance of savings deposits decreased by $67 million to
$757 million for the first six months of 1996 compared to the prior year period.
The cost of these deposits also decreased by .20% to 2.64% for the first six
months of 1996 compared to the prior year period. Average time deposits
increased $29 million to $2.164 billion for the first six months of 1996
compared to the first six months of 1995. The costs of these deposits also
increased by .14% to 5.57% for the first six months ended June 30, 1996. The
increase in time deposits was the
<PAGE>
12
result of increases in retail and municipal certificates of deposit being
greater than the decrease in retail brokered certificates of deposit. Average
interest bearing transaction accounts (Money market, NOW and escrow deposits)
decreased $41 million to $529 million and the cost decreased .12% to 2.27% when
comparing the first six months of 1996 to the first six months of 1995. The
decrease in these accounts is mainly attributable to consumer preference for
higher yielding certificates of deposit, as well as, alternative investments
such as stocks and bonds. Average total interest bearing deposits decreased by
$79 million to $3.450 billion for the first six months of 1996 compared to the
first six months of 1995.
Total average borrowings (including repurchase agreements) of $1.156
billion for the first six months of 1996 are $882 million or 43% less than the
$2.038 billion for the first six months of 1995 reflecting the Company's
strategy to reduce borrowings. The selective lengthening in maturities of
borrowings during 1995 affected the costs of the borrowings with repurchase
agreements increasing by .37% to 6.26% and other borrowings increasing .20% to
5.97% when comparing the first six months of 1996 to the first six months of
1995. The essentially flat slope of the yield curve in 1995 provided the
opportunity for extending liabilities and thereby helping to protect against
rising interest rates, however, the offset is that the Company's net interest
income will not benefit as much from declining interest rates. As a result of
the decreased volume of higher cost borrowings, the cost of total interest
bearing liabilities decreased by .05% to 4.83% for the first six months of 1996
compared to the first six months of 1995.
The effect of the increase in yield on earning assets of .28% and the
decrease in cost of interest bearing liabilities of .05% resulted in the net
interest spread increasing from 2.20% to 2.53% for the first six months of 1996
compared to the first six months of 1995. The effects of average interest
bearing liabilities decreasing by more than interest earning assets resulted in
the net interest margin, which is affected by the relative average balances of
interest earning assets and interest bearing liabilities, increasing by .45% to
2.98% for the first six months of 1996 compared to the first six months of 1995.
<PAGE>
13
This table sets forth for the three months ended June 30, the average
daily balances of the Company's major asset and liability items and the interest
earned or paid thereon expressed in dollars and weighted average rates.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
1996 1995
Average Yield\ Average Yield\
(Dollars in Thousands) Balance Interest Rate Balance Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets(1)
Loans $2,315,235 97,609 8.48% 2,041,282 87,713 8.67%
Securities 2,703,789 86,613 6.44% 3,891,014 120,637 6.25%
Federal funds sold and other 62,425 1,636 5.27% 36,664 1,271 6.99%
- ----------------------------------------------------------------------------------------------------------------------------
Total interest earning assets 5,081,449 185,858 7.36% 5,968,960 209,621 7.08%
Non-interest earning assets 278,967 328,106
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $5,360,416 6,297,066
- ----------------------------------------------------------------------------------------------------------------------------
Interest bearing liabilities
Savings deposits 756,507 9,924 2.64% 823,754 11,585 2.84%
Time deposits 2,164,363 59,955 5.57% 2,135,455 57,504 5.43%
Money market accounts, NOW accounts,
and escrow deposits 528,645 5,978 2.27% 569,705 6,758 2.39%
- ----------------------------------------------------------------------------------------------------------------------------
Total Deposits 3,449,515 75,857 4.42% 3,528,914 75,847 4.33%
Repurchase agreements 337,200 10,499 6.26% 902,171 26,342 5.89%
Other borrowings 818,988 24,298 5.97% 1,135,816 32,470 5.77%
- ----------------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities 4,605,703 110,654 4.83% 5,566,901 134,659 4.88%
Non-interest bearing deposits 308,207 290,159
Non-interest bearing liabilities 61,049 65,223
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,974,959 5,922,283
Shareholders' equity 385,457 374,783
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $5,360,416 6,297,066
Net interest income $ 75,204 74,962
- ----------------------------------------------------------------------------------------------------------------------------
Interest rate spread 2.53% 2.20%
Net interest margin(2) 2.98% 2.53%
Total interest earning assets to total interest
bearing liabilities 1.10X 1.07X
Average equity to average assets 7.19% 5.95%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Nonaccruing loans, which are immaterial, have been included in interest
earning assets.
(2) Computed by dividing net interest income by total interest earning
assets.
<PAGE>
14
The following table presents changes in interest income and interest
expense attributable to: changes in volume (changes in average balance or volume
multiplied by prior year rate), changes in rate (change in rate multiplied by
prior year volume), and the net change in net interest income. The net change
attributable to the combined impact of volume and rate has been allocated
proportionately to the absolute dollar amount of the change in each.
- --------------------------------------------------------------------------------
1996 Compared to 1995
Increase (Decrease)
(Dollars in Thousands) Volume Rate Net
- --------------------------------------------------------------------------------
Interest earning assets
Loans $ 11,823 (1,927) 9,896
Securities (37,627) 3,603 (34,024)
Federal funds sold and other 735 (370) 365
- --------------------------------------------------------------------------------
Total change in income from interest
earning assets (25,069) 1,306 (23,763)
- --------------------------------------------------------------------------------
Interest bearing liabilities
Savings deposits (892) (769) (1,661)
Time deposits 844 1,607 2,451
Money market accounts, NOW accounts,
and escrow deposits (460) (320) (780)
- --------------------------------------------------------------------------------
Total change in interest expense on deposits (508) 518 10
Repurchase agreements (17,416) 1,573 (15,843)
Other borrowings (9,279) 1,107 (8,172)
- --------------------------------------------------------------------------------
Total change in expense from interest
bearing liabilities (27,203) 3,198 (24,005)
- --------------------------------------------------------------------------------
Net interest income $ 2,134 (1,892) 242
- --------------------------------------------------------------------------------
Allowance for Loan Losses. Management's evaluation of the adequacy of
the allowance takes into consideration the Company's past loan loss experience,
known and inherent risks in the portfolio, adverse situations which may affect
the borrower's ability to repay, overall portfolio quality, and current and
prospective economic conditions.
Non-performing loans plus other real estate owned represented .60% of
total assets at June 30, 1996. The Company's provision for loan losses of $2.0
million and $3.9 million for the three and six month periods ended June 30, 1996
increased from the $1.7 million and $3.4 million recorded in the respective
prior year periods. These provisions reflect the increase in overall loan
portfolio. The coverage ratio of allowance for loan losses to nonperforming
loans increased from 119% at year-end 1995 to 140% at June 30, 1996. The
allowance as a percent of gross loans was 1.6% at June 30, 1996. The ratio of
delinquent loans as a percentage of gross loans was 1.1% at June 30, 1996. Loan
quality remains strong at ONBANCorp.
<PAGE>
15
The following table sets forth the activity in the allowance for loan
losses for the periods indicated:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
June 30, /-----------------December 31,-------------------/
(Dollars in Thousands) 1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance $34,583 33,775 32,717 31,722 13,064 10,937
Charge-offs
Mortgage loans 861 3,749 3,706 748 1,623 1,687
Commercial loans 147 1,437 1,746 7,303 8 6
Other loans 1,184 2,405 2,686 3,684 639 726
- ---------------------------------------------------------------------------------------------------------------------------
Total charge-offs 2,192 7,591 8,138 11,735 2,270 2,419
- ---------------------------------------------------------------------------------------------------------------------------
Recoveries
Mortgage loans 857 630 236 1 30 --
Commercial loans 173 352 598 1,341 9 --
Other loans 232 627 724 1,091 93 86
- ---------------------------------------------------------------------------------------------------------------------------
Total recoveries 1,262 1,609 1,558 2,433 132 86
- ---------------------------------------------------------------------------------------------------------------------------
Net charge-offs 930 5,982 6,580 9,302 2,138 2,333
- ---------------------------------------------------------------------------------------------------------------------------
Provision for loan losses 3,900 6,790 7,638 10,297 5,900 4,460
Allowance of combined banks -- -- -- -- 14,896 --
- ---------------------------------------------------------------------------------------------------------------------------
Ending balance $37,553 34,583 33,775 32,717 31,722 13,064
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average loans
outstanding 0.04% 0.28% 0.35% 0.47% 0.14% 0.15%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the allocation of the allowance for loan
losses:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
June 30, /-----------------December 31,-------------------/
(Dollars in Thousands) 1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans $16,843 15,629 17,374 17,313 15,237 9,122
Mortgage loans to total loans 56.87% 59.36% 59.74% 60.89% 61.32% 72.22%
Construction loans $ 1,101 1,060 340 340 150 --
Construction loans to total loans 1.66% 2.30% 1.58% 1.64% 1.64% 1.21%
Commercial loans $12,304 11,801 10,676 10,856 10,774 1,067
Commercial loans to total loans 13.58% 11.68% 11.32% 9.53% 9.54% 1.72%
Other loans $ 7,305 6,093 5,385 4,208 5,561 2,875
Other loans to total loans 27.88% 26.66% 27.36% 27.94% 27.50% 24.85%
- ---------------------------------------------------------------------------------------------------------------------------
Total allowance for loan losses $37,553 34,583 33,775 32,717 31,722 13,064
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The loan loss allowance allocation provided does not necessarily
represent the total amount which may or may not be available for actual future
losses in any one or more of the categories.
<PAGE>
16
The following table sets forth information with respect to loans
delinquent for 90 days or more, restructured loans and other nonperforming
assets:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
June 30, /-----------------December 31,-------------------/
(Dollars in Thousands) 1996 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Delinquent mortgage loans:
Conventional $11,913 12,340 12,691 11,436 13,275 10,940
FHA and VA 581 705 612 905 1,155 1,055
Multi family and commercial 7,517 9,063 8,591 7,546 7,864 3,735
- ---------------------------------------------------------------------------------------------------------------------------
Total delinquent mortgage loans $20,011 22,108 21,894 19,887 22,294 15,730
- ---------------------------------------------------------------------------------------------------------------------------
As a percentage of gross mortgage loans 1.4% 1.5% 1.8% 1.7% 1.7% 1.4%
- ---------------------------------------------------------------------------------------------------------------------------
Delinquent commercial loans: $ 4,541 4,387 5,593 6,655 9,782 357
- ---------------------------------------------------------------------------------------------------------------------------
As a percentage of gross commercial loans 1.4% 1.6% 2.5% 3.6% 4.9% 1.4%
- ---------------------------------------------------------------------------------------------------------------------------
Delinquent other loans:
Home equity $ 807 738 720 414 528 389
Guaranteed student 155 183 157 97 902 5,829
Loans to individuals 1,266 1,542 1,396 1,651 1,815 1,033
- ---------------------------------------------------------------------------------------------------------------------------
Total delinquent other loans $ 2,228 2,463 2,273 2,162 3,245 7,251
- ---------------------------------------------------------------------------------------------------------------------------
As a percentage of gross other loans 0.3% 0.4% 0.4% 0.4% 0.6% 1.9%
- ---------------------------------------------------------------------------------------------------------------------------
Delinquent loans as a percentage of gross loans 1.1% 1.2% 1.5% 1.5% 1.7% 1.5%
- ---------------------------------------------------------------------------------------------------------------------------
Nonperforming loans:
Non-accrual loans $21,602 23,580 22,525 25,381 30,236 14,999
Accruing loans delinquent 90 days or more 2,315 2,586 2,386 3,323 5,085 8,339
Restructured loans 2,863 2,792 4,849 5,559 4,053 7,991
- ---------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 26,780 28,958 29,760 34,263 39,374 31,329
Other nonperforming assets:
Other real estate owned 4,123 4,019 5,431 10,719 17,332 6,893
Repossessed assets 754 441 335 666 327 210
- ---------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $31,657 33,418 35,526 45,648 57,033 38,432
- ---------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses as a percentage of non-
performing loans 140.23% 119.42% 113.49% 95.49% 80.57% 41.70%
Nonperforming assets as a percentage of total
assets 0.60% 0.60% 0.53% 0.79% 1.21% 1.13%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
17
Other Operating Income
Other operating income, which is generated by mortgage banking
activities, service charges, security transactions and miscellaneous other
sources, increased by $1.8 million and $3.6 million for the three and six month
periods ended June 30, 1996 compared to the respective prior year periods.
Mortgage banking income increased by $.5 million and $.6 million for
the three and six month periods ended June 30, 1996 compared to the respective
prior year periods. Adoption of Statement of Financial Accounting Standards No.
122, "Accounting for Mortgage Servicing Rights" in 1996 increased mortgage
banking income by $.5 million year to date. The volume of loans serviced for
others decreased from $1.167 billion at June 30, 1995 to $1.104 billion at June
30, 1996.
Service charges increased $.5 million or 12% and $1.1 million or 15%
for the three and six month periods ended June 30, 1996 compared to the
respective prior year periods. Increasing volumes of commercial banking business
and the associated fees are primarily responsible for these increases. The
Company intends to continue to emphasize the growth of "core" commercial banking
in the form of deposit growth and electronic fee generated business. For
example, OnBank & Trust Co. became the sole provider of ATM's at twenty-six New
York State Thruway Service Areas during the second half of 1995.
Gains on the sale of securities decreased by $.9 million and $.1
million in the three and six month periods ended June 30, 1996 compared to the
respective prior year periods. These gains generally reflect the sale of
selected available-for-sale securities associated with the securities downsizing
strategy.
Other income of $2.7 million for the three months ended June 30, 1996
includes non-recurring items of a $2.9 million gain on sale of three small
branches and a $1.3 million loss on sale of a building. Continuing to increase
other operating income in the future is a strategic goal of the Company. The
primary sources of the increases are targeted in the retail and commercial
banking areas along with electronic banking.
Other Operating Expenses
Second quarter and six month operating expenses are $.1 million less
than the prior year periods. A decrease of FDIC insurance premiums of $3.0
million for the six month period of 1996 compared to the prior year period was
offset by $.5 million of one-time borrowing prepayment penalties and $2.4
million increase in overall operating expenses associated with increased volume
of banking activity. When compared to almost any peer group the Company's
expenses to average assets ratio of 1.97% for the first six months of 1996 is
favorable. Other operating expenses are expected to decrease slightly during the
third quarter of 1996 reflecting the decrease in operating expenses related to
the second quarter sale of branches and building.
Contingencies
Congress currently has proposed legislation to recapitalize the Savings
Association Insurance Fund. If enacted in its current form, the Banks' one-time
FDIC assessment would be approximately $7.0 million. Proposed legislation would
also repeal the bad debt methods currently available to thrift institutions,
requiring the Company to recapture a portion of their existing bad debt
reserves. The aggregate potential Federal and state tax expense resulting from
recapture would be approximately $5.6 million. There is no assurance that this
pending legislation will be enacted into law, therefore, the FASB has stated
that the charge to earnings must be recorded in the period enacted. Accordingly,
the Company has made no accrual for these potential obligations, however, it is
expected that the bad debt recapture will be enacted in the third quarter of
1996 and that this one-time government mandated charge will be incurred in this
period.
Dividends
Payments of dividends by ONBANCorp on its common and preferred stock is
subject to various regulatory and tax restrictions. During the three and six
month periods ended June 30, 1996 the Company declared dividends of $.30 and
$.60 respectively, per common share amounting to $3.9 million and $8.0 million
respectively. For the same periods the Company declared dividends of $.42 and
$.84 respectively, per preferred share amounting to $1.1
<PAGE>
18
million and $2.1 million respectively. These dividends were paid in April and
July of 1996 to appropriate shareholders of record.
Liquidity
ONBANCorp's liquidity should be sufficient to meet normal transaction
requirements and flexible enough to take advantage of market opportunities and
to react to other liquidity needs. Net cash provided by operating activities
decreased to $27 million for the first six months of 1996 from $50 million for
the prior year period. Investing activities provided $119 million with proceeds
from sales, maturities and principal collected on securities exceeding purchases
of securities by $235 million, partially offset by the funding of loans and
branch sale. The major use of financing activity funds was to reduce advances
from Federal Home Loan Bank and fund the decrease in time deposits, with total
uses of cash from financing activities totaling $269 million. Cash and cash
equivalents of $163 million at June 30, 1996 were $8 million less than at June
30, 1995.
Shareholders' Equity and Capital Adequacy
The capital to asset ratio was 7.0% on June 30, 1996 as measured by
shareholders' equity of $371 million and assets of $5.290 billion. ONBANCorp's
capital ratios exceed all regulatory requirements including the total risk
adjust capital ratio of 15.1% which is almost double the regulatory requirements
of 8.0%. The current share repurchase program is expected to continue during the
third quarter and will result in fewer shares of common stock outstanding at
September 30, 1996 than at June 30, 1996. It is currently expected that the
current share repurchase program will be completed prior to year-end 1996.
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 4: Submission of Matters to Vote of Security Holders.
On April 23, 1996 the Company held its 1996 Annual Meeting
of Shareholders (the "Meeting"). The results of voting at the Meeting by the
shareholders in connection with certain matters, including the election of a
class of directors and six shareholder proposals, were described in the
Company's Current Report on Form 8-K, filed with the Securities and Exchange
Commission on May 3, 1996 and incorporated by reference herein.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed as part of
this quarterly report on Form 10Q.
No. Exhibit
--- -------
11 Computation of Per Share Earnings
27 Selected Financial Data
(b) Reports on Form 8-K
During the quarter ended June 30, 1996, the Registrant filed one
Form 8-K, date of report April 23, 1996, announcing the results of voting at the
Annual Meeting of Shareholders in connection with (i) the election of a class of
directors, (ii) the ratification of the appointment of KPMG Peat Marwick, LLP as
the Company's independent auditors for the fiscal year ending December 31, 1996,
and (iii) six shareholder proposals, which were described in the Company's
Current Report on Form 8-K, filed with the Securities and Exchange Commission on
May 3, 1996 and incorporated by reference herein.
<PAGE>
20
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.
ONBANCorp, INC.
/s/ Robert J. Bennett
--------------------------------
DATE: August 12, 1996 Robert J. Bennett
Chairman, President
and Chief Executive Officer
/s/ Robert J. Berger
--------------------------------
DATE: August 12, 1996 Robert J. Berger
Senior Vice President, Treasurer
and Chief Financial Officer
<PAGE>
21
EXHIBIT 11
Earnings Per Share Computations
(thousands of dollars, except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
Ended June 30, Ended June 30,
1996 1995 1996 1995
------------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Primary Earnings Per Share
Earnings available for common shares and common stock
equivalent shares deemed to have a dilutive effect:
Earnings from operations .................................... $ 11,661 10,136 23,227 20,061
Provision for cash dividends on preferred
stock (Series B) ......................................... (1,061) (1,189) (2,121) (2,377)
----------- ---------- ---------- ----------
Net earnings available for common shares
and common stock equivalent shares deemed
to have a dilutive effect ................................... $ 10,600 8,947 21,106 17,684
----------- ---------- ---------- ----------
Primary earnings per share ..................................... $ 0.80 0.63 1.56 1.24
----------- ---------- ---------- ----------
Shares Used in Computation
Weighted average common shares outstanding
(net of treasury shares) .................................... 13,147,457 14,072,789 13,332,060 14,065,411
Common stock equivalents ....................................... 181,074 151,303 182,736 140,651
----------- ---------- ---------- ----------
Total common shares and common stock
equivalent shares deemed to have a dilutive
effect ...................................................... 13,328,531 14,224,092 13,514,796 14,206,062
----------- ---------- ---------- ----------
Fully Diluted Earnings Per Share
Net earnings available for common shares
and common stock equivalent shares deemed
to have a dilutive effect ................................... 11,661 10,136 23,227 20,061
----------- ---------- ---------- ----------
Fully diluted earnings per share ............................... $ 0.76 0.62 1.50 1.22
----------- ---------- ---------- ----------
Shares Used in Computation
Total common shares and common stock
equivalent shares deemed to have a dilutive
effect ...................................................... 13,328,531 14,224,092 13,514,796 14,206,062
Additional potentially dilutive securities
(equivalent in common stock):
Convertible preferred stock (Series B) ................... 1,959,268 2,188,646 1,959,268 2,191,465
Stock options ............................................ 827 9,785 1,153 21,229
----------- ---------- ---------- ----------
Total ................................................ 15,288,626 16,422,523 15,475,217 16,418,756
----------- ---------- ---------- ----------
Summary of Cash Dividends Declared Per Share
Preferred-Series B ............................................. .42 .42 .84 .84
Common ......................................................... .30 .28 . 60 .56
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<LEGEND>
THIS SHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FINANCIAL STATEMENTS FOR THE PERIOD
ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 135,497
<INT-BEARING-DEPOSITS> 27,402
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,708
<INVESTMENTS-HELD-FOR-SALE> 857,101
<INVESTMENTS-CARRYING> 1,706,181
<INVESTMENTS-MARKET> 1,711,183
<LOANS> 2,370,515
<ALLOWANCE> (37,553)
<TOTAL-ASSETS> 5,290,030
<DEPOSITS> 3,612,417
<SHORT-TERM> 804,211
<LIABILITIES-OTHER> 114,890
<LONG-TERM> 387,300
0
2,516
<COMMON> 14,116
<OTHER-SE> 354,580
<TOTAL-LIABILITIES-AND-EQUITY> 5,290,030
<INTEREST-LOAN> 97,609
<INTEREST-INVEST> 86,613
<INTEREST-OTHER> 1,636
<INTEREST-TOTAL> 185,858
<INTEREST-DEPOSIT> 75,857
<INTEREST-EXPENSE> 110,654
<INTEREST-INCOME-NET> 75,204
<LOAN-LOSSES> 3,900
<SECURITIES-GAINS> 2,637
<EXPENSE-OTHER> 52,403
<INCOME-PRETAX> 36,407
<INCOME-PRE-EXTRAORDINARY> 23,227
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,227
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 7.36
<LOANS-NON> 21,602
<LOANS-PAST> 2,315
<LOANS-TROUBLED> 2,863
<LOANS-PROBLEM> 21,327
<ALLOWANCE-OPEN> 34,583
<CHARGE-OFFS> 2,192
<RECOVERIES> 1,262
<ALLOWANCE-CLOSE> 37,553
<ALLOWANCE-DOMESTIC> 37,553
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
