<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.
[_] 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 33-27312
----------
Lakeland Bancorp, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-2953275
------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
250 Oak Ridge Road, Oak Ridge, New Jersey 07438-8906
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(973) 697-2000
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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
-----
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 30, 1999, 12,661,462 common shares, no par value, were
outstanding.
<PAGE>
LAKELAND BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION 1
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CONDITION AS OF
DECEMBER 31, 1998 AND SEPTEMBER 30, 1999 (UNAUDITED) 2
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(UNAUDITED) 3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1999 (UNAUDITED) 4
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(UNAUDITED) 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 20
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
SIGNATURES 23
</TABLE>
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. Lakeland Bancorp, Inc. (the registrant or
the Company) believes that the disclosures presented are adequate to assure that
the information presented is not misleading in any material respect. It is
suggested that the following consolidated financial statements be read in
conjunction with the year-end consolidated financial statements, and notes
thereto, included in the registrant's Annual Report on Form 10-K for the year
ended December 31, 1998, as amended and in Form 8-K filed with the Securities
----------------------------------------------------
and Exchange Commission on October 12, 1999.
- --------------------------------------------
The results of operations for the three and nine month periods ended September
30, 1999, are not necessarily indicative of the results to be expected for the
entire fiscal year.
1
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 35,105,000 $ 41,531,000
Federal funds sold 28,700,000 10,100,000
------------ ------------
Cash and cash equivalents 63,805,000 51,631,000
Certificates of deposit 204,000 215,000
Securities available for sale, at estimated fair value 165,282,000 160,143,000
Securities held to maturity; estimated fair value of $91,846,000
in 1998 and $123,861,000 in 1999 90,657,000 125,131,000
Loans 442,067,000 460,994,000
Premises and equipment 22,620,000 23,937,000
Accrued interest receivable 5,704,000 5,994,000
Other assets 12,685,000 11,903,000
------------ ------------
Total assets $803,024,000 $839,948,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing demand $153,111,000 $160,177,000
Savings and interest-bearing demand 329,185,000 358,121,000
Time 190,146,000 185,024,000
Time of $100,000 and over 39,369,000 38,568,000
------------ ------------
Total deposits 711,811,000 741,890,000
------------ ------------
Securities sold under agreement to repurchase 8,110,000 15,602,000
Long-term debt 5,000,000 5,000,000
Other liabilities 4,340,000 4,330,000
------------ ------------
Total liabilities 729,261,000 766,822,000
Commitments
Stockholders' equity
Common stock, no par value authorized shares 40,000,000; issued
shares 12,672,262 in 1998 with a par value $2.50 and 12,672,262 in
1999; outstanding shares 12,663,662 in 1998 with a par value of $2.50
and 12,661,462 in 1999 31,681,000 71,394,000
Surplus 50,836,000
Undivided profits (accumulated deficit) (9,297,000) 3,591,000
Accumulated other comprehensive income, net 841,000 (1,530,000)
Loans for options exercised (169,000) (160,000)
Treasury stock, at cost (8,600 and 10,800 shares in 1998 and 1999,
respectively) (129,000) (169,000)
------------ ------------
Total stockholders' equity 73,763,000 73,126,000
------------ ------------
Total liabilities and stockholders' equity $803,024,000 $839,948,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
LAKELAND BANCORP, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine Months Ended
September 30, September 30,
------------------------ --------------------------
1998 1999 1998 1999
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and fees $ 9,191,000 $ 9,579,000 $27,331,000 $28,064,000
Federal funds sold 512,000 333,000 1,310,000 1,086,000
Securities
U.S. Treasury 1,147,000 986,000 3,617,000 3,146,000
U.S. Government agencies 1,402,000 1,907,000 4,367,000 5,201,000
States and political subdivisions 435,000 606,000 1,207,000 1,687,000
Other 322,000 494,000 804,000 1,399,000
----------- ----------- ----------- -----------
Total interest income 13,009,000 13,905,000 38,636,000 40,583,000
----------- ----------- ----------- -----------
INTEREST EXPENSE
Deposits 4,788,000 4,798,000 14,114,000 14,638,000
Borrowed money 213,000 243,000 648,000 597,000
----------- ----------- ----------- -----------
Total interest expense 5,001,000 5,041,000 14,762,000 15,235,000
----------- ----------- ----------- -----------
Net interest income 8,008,000 8,864,000 23,874,000 25,348,000
----------- ----------- ----------- -----------
PROVISION FOR LOAN LOSSES 62,000 140,000 164,000 405,000
Net interest income after provision for loan losses 7,946,000 8,724,000 23,710,000 24,943,000
----------- ----------- ----------- -----------
OTHER INCOME
Service charges on deposit accounts 1,010,000 1,095,000 2,961,000 3,167,000
Commission and fees 111,000 153,000 455,000 392,000
Gain on sale of investment securities 14,000 - 81,000 30,000
Other income 231,000 146,000 734,000 714,000
----------- ----------- ----------- -----------
Total other income 1,366,000 1,394,000 4,231,000 4,303,000
----------- ----------- ----------- -----------
OTHER EXPENSES
Salaries and benefits 3,298,000 4,658,000 10,012,000 11,957,000
Occupancy expense, net 565,000 548,000 1,797,000 1,663,000
Furniture and equipment 582,000 626,000 1,737,000 1,901,000
Other 1,492,000 3,240,000 5,037,000 6,604,000
----------- ----------- ----------- -----------
Total other expenses 5,937,000 9,072,000 18,583,000 22,125,000
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 3,375,000 1,046,000 9,358,000 7,121,000
INCOME TAXES 1,177,000 671,000 3,313,000 2,628,000
----------- ----------- ----------- -----------
NET INCOME $ 2,198,000 $ 375,000 $ 6,045,000 $ 4,493,000
=========== =========== =========== ===========
Net income per common share
Basic 0.17 0.03 0.48 0.35
Diluted 0.17 0.03 0.48 0.35
Weighted average number of shares outstanding
Basic 12,649,414 12,661,462 12,631,685 12,661,712
Diluted 12,760,722 12,710,735 12,722,051 12,718,602
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine Months Ended
September 30, September 30,
---------------------- ---------------------------
1998 1999 1998 1999
----------- --------- ----------- --------------
<S> <C> <C> <C> <C>
Net income $2,198,000 $375,000 $6,045,000 $ 4,493,000
---------- -------- ---------- -----------
Other comprehensive income, net of income taxes
Unrecognized holding gains (losses) on securities
available for sale, net of income taxes (benefit) 176,000 67,000 993,000 (2,352,000)
Less gains on dispositions of securities available
for sale, net of income taxes 9,000 - 52,000 19,000
---------- -------- ---------- -----------
Total other comprehensive income (loss) 167,000 67,000 941,000 (2,371,000)
---------- -------- ---------- -----------
Comprehensive income $2,365,000 $442,000 $6,986,000 $ 2,122,000
========== ======== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
---------------------------------
1998 1999
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 6,045,000 $ 4,493,000
Adjustments to reconcile net income to net cash provided by operating activities
Net amortization and accretion 845,000 40,000
Depreciation and amortization of premises and equipment 1,289,000 1,492,000
Provision for loan losses 164,000 405,000
Loss (gain) on disposition of premises and equipment (60,000) 1,000
Gain on sales of investment securities (81,000) (30,000)
Decrease in accrued interest receivable (55,000) (290,000)
Increase (decrease) in other assets (61,000) 33,000
Decrease in other liabilities - (10,000)
------------ ------------
Net cash provided by operating activities 8,086,000 6,134,000
Cash flows from investing activities
Net change in certificates of deposit (2,000) (11,000)
Proceeds from maturities of and repayments on securities available for sale 39,647,000 26,751,000
Proceeds from sales of securities available for sale 21,452,000 5,087,000
Proceeds from calls of securities available for sale 3,000,000 1,300,000
Purchases of securities available for sale (61,027,000) (57,270,000)
Proceeds from maturities of and repayments on securities held to maturity 22,438,000 19,954,000
Purchases of securities held to maturity (20,520,000) (27,250,000)
Net increase in loans receivable (24,815,000) (19,561,000)
Sale of loan and participation interest in loans 1,084,000 -
Net decrease in other real estate owned 538,000 619,000
Additions to premises and equipment (5,030,000) (2,810,000)
------------ ------------
Net cash (used in) investing activities (23,235,000) (53,191,000)
Cash flows from financing activities
Net increase in deposits 22,035,000 30,079,000
Net increase (decrease) in short-term borrowings (485,000) 7,492,000
Proceeds from sale of common stock 230,000 -
Cash dividends paid on common stock (1,880,000) (2,378,000)
Proceeds from loan for options exercised - 9,000
Purchase of treasury stock (168,000) (499,000)
Exercise of stock options 189,000 180,000
------------ ------------
Net cash provided by financing activities 19,921,000 34,883,000
Net (decrease) increase in cash and cash equivalents 4,772,000 (12,174,000)
Cash and cash equivalents - beginning 62,157,000 63,805,000
------------ ------------
Cash and cash equivalents - ending $ 66,929,000 $ 51,631,000
============ ============
Supplemental disclosures of cash flow information
Cash paid during the three month period for
Income taxes $ $ 2,995,000
Interest $ 15,203,000 $ 14,659,000
Supplemental schedule of noncash investing and financing activities
Transfer of investment securities transferred from available
for sale to held to maturity $ - $ 25,396,000
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles. Certain
information and footnote disclosures normally included in financial statements
under generally accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission rules and regulations. These
financial statements should be read in conjunction with the annual financial
statements and notes thereto included in Form 10-K for the fiscal year ended
December 31,1998, as amended and in Form 8-K filed with the Securities and
Exchange Commission on October 12, 1999. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the consolidated financial statements have been included.
The results of operations for the nine months ended September 30, 1999, are not
necessarily indicative of the results which may be expected for the entire
fiscal year.
Amounts previously reported by the Corporation in its consolidated statement of
income for the three and nine months ended September 30, 1998, have been
retroactively restated to include the accounts of High Point Financial
Corporation and its subsidiary, The National Bank of Sussex County (NBSC).
---
On July 16, 1999, the Corporation completed its merger with High Point
Financial Corp. (High Point). Under the terms of the merger, each share of High
Point common stock was converted into 1.2 shares of the Corporation's common
stock, resulting in an issuance of 4,160,674 shares of the Corporation's common
stock. The Corporation owned 344,252 shares of High Point common stock prior to
the merger and at the consummation of the merger, these shares were canceled
and retired. In addition, outstanding stock options to purchase High Point
common stock were converted into stock options to purchase 99,600 shares of the
Corporation's common stock with exercise prices of $5.63 and $10.52 per share.
The transaction will be accounted for under the pooling of interest method of
accounting.
NOTE 2 - NET INCOME PER COMMON SHARE
Basic net income per common share is calculated by dividing net income by the
weighted average number of shares of common stock outstanding. Diluted net
income per share is calculated by adjusting the weighted average number of
shares of common stock outstanding to include the effect of stock options, if
dilutive, using the treasury stock method.
On August 26, 1998, the Corporation's Board of Directors authorized a 2 for 1
stock split in the form of a 100% stock dividend, which was distributed on
October 1, 1998. Per share amounts have been retroactively restated to give
effect to this stock dividend.
NOTE 3 - STOCKHOLDERS' EQUITY
On July 19, 1999, the Corporation amended its Certificate of Incorporation to
increase the number of authorized common shares from 14,806,718 shares with a
par value of $2.50 to 40,000,000 shares with no par value. The surplus account
has been combined with the common stock account as presented in the
consolidated balance sheet.
The deficit in undivided profits contained in the December 31, 1998
consolidated financial statements is primarily the result of a bookkeeping
entry charging undivided profits $10,620,000 in connection with Corporation's
accounting for its 2 for 1 stock split effected in the form of a 100% stock
dividend distributed October 1, 1998. In accordance with New Jersey corporate
law, the Corporation's Board of Directors on March 10, 1999, approved the
reversing of this accounting treatment of the stock dividend, thereby moving
the $10,620,000 from the capital stock account to the undivided profits account
to more accurately reflect the Corporation's financial condition. This
reclassification was made in the Corporation's unaudited consolidated statement
of financial condition as of March 31, 1999.
6
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 4 - SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
September 30, 1999
-------------------------------------------------------
Amortized Gross unrealized Fair market
-----------------
cost Gains Losses value
--------- ----------------- ------------ -----------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury $ 30,939 $ 165 $ (88) $ 31,016
U.S. Government agencies 56,694 54 (1,102) 55,646
Mortgage-backed securities 12,191 81 (271) 12,000
States and political subdivisions 43,150 29 (1,044) 42,136
Other debt securities 11,183 18 (301) 10,900
Equity securities 8,445 - - 8,445
-------- -------- -------- --------
$162,602 $ 347 $ (2,806) $160,143
======== ======== ======== ========
December 31, 1998
-------------------------------------------------------
Amortized Gross unrealized Fair market
----------------
cost Gains Losses value
--------- ---------------- ----------- -----------
(in thousands)
U.S. Treasury $ 39,097 $ 784 $ (20) $ 39,861
U.S. Government agencies 41,991 308 (117) 42,182
Mortgage-backed securities 18,022 140 (48) 18,114
States and political subdivisions 44,221 443 (81) 44,583
Other debt securities 14,163 25 (100) 14,088
Equity securities 6,442 12 - 6,454
-------- -------- -------- --------
$163,936 $ 1,712 $ (366) $165,282
======== ======== ======== ========
</TABLE>
The following is a summary of securities available for sale by maturity:
<TABLE>
<CAPTION>
1999 1998
-------- --------
Amortized Fair market Amortized Fair market
cost value cost value
--------- ---------------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 34,079 $ 34,027 $ 29,490 $ 29,643
Due after one year through five years 84,354 83,091 80,637 81,552
Due after five years through ten years 19,153 18,425 19,638 19,824
Due after ten years 4,380 4,155 9,707 9,695
Mortgage-backed securities 12,191 12,000 18,022 18,114
Other securities 8,445 8,445 6,442 6,454
-------- -------- -------- --------
$162,602 $160,143 $163,936 $165,282
======== ======== ======== ========
</TABLE>
7
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 5 - INVESTMENT SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
September 30, 1999
-------------------------------------------------------
Amortized Gross unrealized Fair market
-----------------
cost Gains Losses value
--------- ----------------- ------------ -----------
(in thousands)
<S> <C> <C> <C> <C>
U.S. Treasury $ 32,400 $ 161 $ (117) $ 32,444
U.S. Government agencies 38,478 38 (481) 38,035
Mortgage-backed securities 27,248 60 (443) 26,865
States and political subdivisions 15,786 30 (154) 15,662
Other debt securities 11,219 - (364) 10,855
-------- -------- ------- --------
$125,131 $ 289 $(1,559) $123,861
======== ======== ======= ========
December 31, 1998
-------------------------------------------------------
Amortized Gross unrealized Fair market
----------------
cost Gains Losses value
--------- ---------------- ----------- -----------
(in thousands)
U.S. Treasury $ 32,576 $ 630 $ - $ 33,206
U.S. Government agencies 24,407 352 (27) 24,732
Mortgage-backed securities 23,023 213 (10) 23,226
States and political subdivisions 4,513 78 - 4,591
Other debt securities 6,138 6 (53) 6,091
-------- -------- ------- --------
$ 90,657 $ 1,279 $ (90) $ 91,846
======== ======== ======= ========
</TABLE>
The following is a summary of securities held to maturity by maturity:
<TABLE>
<CAPTION>
1999 1998
--------------------------- -------------------------
Amortized Fair market Amortized Fair market
cost value cost value
--------- ---------------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 23,873 $ 23,944 $14,916 $ 15,007
Due after one year through five years 71,606 70,687 49,753 50,607
Due after five years through ten years 2,204 2,165 2,665 2,697
Due after ten years 200 200 300 309
Mortgage-backed securities 27,248 26,865 23,023 23,226
-------- -------- ------- --------
$125,131 $123,861 $90,657 $ 91,846
======== ======== ======= ========
</TABLE>
8
<PAGE>
LAKELAND BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE 6 - LOANS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
--------------- --------------
(in thousands)
<S> <C> <C>
Loans $450,056 $468,937
Less
Unearned (income) expense (5) 156
Allowance for loan losses (7,984) (8,099)
-------- --------
$442,067 $460,994
======== ========
</TABLE>
A summary of the activity in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------------
1998 1999
-------------- -----------
(in thousands)
<S> <C> <C>
Balance - beginning $ 8,262 $ 7,984
Provisions charged to operations 164 405
Loans charged off (1,316) (528)
Recoveries of loans previously charged off 493 238
-------- --------
Balance of allowance at end of period $ 7,603 $ 8,099
======== ========
</TABLE>
Impaired loans and related amounts recorded in the allowance for loan losses are
summarized as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
----------- ------------
(in thousands)
<S> <C> <C>
Recorded investment in impaired loans:
With recorded allowances $ 3,133 $ 2,826
Without recorded allowances 1,119 -
-------- --------
Total impaired loans 4,252 2,826
-------- --------
Related allowance for loan losses 638 992
-------- --------
Net impaired loans $ 3,614 $ 1,834
======== ========
Nine months ended
September 30,
---------------------------
1998 1999
----------- ------------
(in thousands)
Interest income recognized $ 238 $ 70
</TABLE>
9
<PAGE>
PART I -- ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW
--------
During the first quarter of 1998, Lakeland Bancorp, Inc. (the "Company")
consummated its acquisition of Metropolitan State Bank ("MSB"). During the third
quarter of 1999, the Company completed its acquisition of High Point Financial
Corporation ("High Point") by merging High Point into Lakeland. Both
transactions were accounted for as a pooling of interests. As a result, the
Company's financial statements have been retroactively adjusted to combine the
Company's accounts, Metropolitan State Bank's accounts, and High Point's
accounts for all prior periods. See Notes to Consolidated Financial Statements.
Three Month Summary
The third quarter of 1999 resulted in decreased earnings for Lakeland
Bancorp, Inc. (the "Company"), when compared to the same period in 1998. Net
income decreased $1,821,893 or 82.93%, to $374,987 for the third three months of
1999 from $2,196,880 for the same period in 1998. Net income per share
decreased to $.03. An increase of $3,135,663 in other expenses due primarily to
the expensing of $2,335,894 in expenses relating to the High Point acquisition,
and an increase of $77,606 in the provision for loan losses more than offset
increases of $857,224 in net interest income, $28,605 in other income, and a
decrease of $505,547 in income tax expense.
The Company's annualized return on average assets and average stockholders'
equity for the third three months of 1999 were .18% and 2.22%, respectively,
compared to 1.14% and 11.81%, respectively, for the same period in 1998.
Results of Operations
Total interest income increased $897,168, or 6.90% to $13,904,877 for the
three months ended September 30, 1999, when compared to $13,007,709 for the same
period in 1998. The overall increase in this category was a result of an
increase of $387,609 or 4.22% in interest earned on the loan portfolio and
$688,627 or 20.84%, in interest earned on the securities portfolio which was
partially offset by a decrease of $179,088 or 34.97% in interest earned on
federal funds sold.
10
<PAGE>
The increase in interest income on loans was primarily attributable to an
increase in average balances of $26.9 million, which was partially offset by a
16 basis point decrease in yield. The increase in interest income on investment
securities was attributable to an increase in average balances of $50.6 million,
which more than offset a 4 basis point decrease in yield. The decrease in
interest income on federal funds sold was attributable to a $9.0 million
decrease in average balances along with a 79 basis point decrease in yield.
Interest expense on deposits increased $10,053 or .21% to $4,797,639 for
the third quarter of 1999 compared to $4,787,586 for the same period in 1998.
This increase was primarily attributable to an increase of $61.1 million in
average balances of interest bearing deposits (which partially funded the
increases in loans and investment securities), which was partially offset by a
37 basis point decrease in yield. Total interest expense increased $39,944 or
.80%, reflecting the aforementioned deposit factors along with a $29,891
increase in interest expense on borrowed money.
Net interest income increased $857,224 or 10.71% to $8,864,440 for the
third three months of 1999 from $8,007,216 for the same period in 1998,
primarily as the result of increased average balances of net interest-earning
assets. The annualized net interest margin (the average yield on interest
earning assets, less the average cost of interest-bearing liabilities)
increased from 3.77% to 3.91%. While the average yield on earning assets
decreased 20 basis points from 7.41% to 7.21%, the average rate paid on
interest-bearing liabilities decreased 34 basis points from 3.64% to 3.30%.
The provision for loan losses increased $77,606 or 124.38% to $140,000 for
the three months ended September 30, 1999, as compared with $62,394 for the same
prior year period. During the third quarter of 1999, the Company charged off
loans of $166,561 and recovered $43,872 in previously charged off loans compared
to $369,344 and $68,632, respectively, during the same period in 1998. The
$166,561 in charged-off loans in 1999 is primarily the result of the charging
off of nine home equity loans and one mortgage loan. The allowance for loan
losses at September 30, 1999, was 1.73% of total loans, compared to 1.77% at
December 31, 1998, and 1.72% at September 30, 1998. The Company believes, based
on management's ongoing review of loan quality, economic conditions, loss
experience, and loan growth, that the allowance for loan losses is adequate.
This statement represents a forward-looking statement. Actual results could
differ materially from this statement based upon a number of conditions,
including the financial viability of the Company's loan customers, the value of
the Company's collateral, and general economic conditions.
11
<PAGE>
The following table sets forth for the nine months ended September 30, 1999
and 1998, and for each of the years in the five years ended December 31, 1998,
the historical relationships among the allowance for loan losses, the provision
for loan losses, the amount of loans charged-off and the amount of loan
recoveries:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------ ------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------------------- -------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance of allowance at beginning
of period........................... $7,984 $8,262 $8,262 $7,558 $8,079 $8,781 $8,874
------ ------ ------ ------ ------ ------ ------
Charge-offs:
Commercial.......................... 130 811 1,134 561 1,384 1,272 2,016
Installment......................... 121 139 476 202 402 380 385
Construction........................ - - - - - 86 254
Mortgage............................ 277 366 57 15 161 360 212
------ ------ ------ ------ ------ ------ ------
Total charge-offs................ 528 1,316 1,667 778 1,947 2,098 2,867
------ ------ ------ ------ ------ ------ ------
Recoveries:
Commercial.......................... 162 410 581 262 353 688 705
Installment......................... 68 67 95 157 150 114 129
Construction - - - - 13 9 16
Mortgage............................ 8 16 15 37 2 3 27
------ ------ ------ ------ ------ ------ ------
Total recoveries................. 238 493 691 456 518 814 877
------ ------ ------ ------ ------ ------ ------
Net charge-offs........................ 290 823 976 322 1,429 1,284 1,990
------ ------ ------ ------ ------ ------ ------
Provision for loan losses.............. 405 164 698 1,026 908 582 1,897
------ ------ ------ ------ ------ ------ ------
Balance of allowance at end of period.. $8,099 $7,603 $7,984 $8,262 $7,558 $8,079 $8,781
====== ====== ====== ====== ====== ====== ======
Ratio of net charge-offs to average
loans outstanding (annualized)...... .08% .25% .23% .08% .40% .39% .63%
Balance of allowance at end of period
as a percent of total loans......... 1.73% 1.72% 1.77% 1.98% 1.97% 2.40% 2.70%
</TABLE>
The Company has established criteria to identify loans which may be
impaired. Large groups of smaller-balance homogeneous loans are collectively
evaluated for impairment, while other larger-balance loans are independently
evaluated.
A loan evaluated for impairment is deemed impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. An insignificant delay, which is defined as up to 90 days by the
Company, will not cause a loan to be classified as impaired. Loan impairment is
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate or, if the loan is collateral dependent, the
fair value of the related collateral. Loan allowances, based upon impaired loan
evaluations, are included in the allowance for loan loss.
The Company's policy concerning non-accrual loans states that loans,
without consideration as to loan balance, are placed on a non-accrual status
when payments are 90 days delinquent or more, unless the asset is both well
secured and in the process of collection. Due to the difference in measurement
criteria, the populations of non-accrual and impaired loans, while having many
common elements, will be different in the aggregate.
12
<PAGE>
Loans, or portions thereof, are charged-off when it is determined that a
loss has occurred. Until such time, an allowance for loan loss is maintained
for estimated losses. With regard to interest income recognition for payments
received on impaired loans, as well as all non-accrual loans, the Company
applies any payments to principal as long as there is doubt as to the
collectibility of the loan balance.
13
<PAGE>
As of September 30, 1999, based on the above criteria, the Company
classified eight loans, totaling $2,825,758 as impaired. The impairment of
these loans is based on the fair value of the underlying collateral for
these loans. Based upon such evaluation of these impaired loans, $992,086
has been allocated to the allowance for loan losses.
The following schedule sets forth certain information regarding the
Company's non-accrual, past due and renegotiated loans and other real
estate owned (as such terms are defined in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998) as of
September 30, 1999 and 1998, and as of December 31 of each of the last five
years:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---- ---------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------- ------- ------- ------- ------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Non-accrual loans............. $3,352 $ 5,535 $ 3,281 $4,850 $ 5,695 $ 8,110 $11,093
Past due loans................ 2,324 3,367 4,265 1,404 2,200 835 1,328
Renegotiated loans............ 1748 1,300 1,867 1,942 3,072 3,209 5,904
------ ------- ------- ------ ------- ------- -------
Total non-accrual, past due
and renegotiated loans...... 7,424 10,202 9,413 8,196 10,967 12,154 18,325
Other real estate owned....... 704 1,064 1,989 1,758 1,313 3,692 5,908
------ ------- ------- ------ ------- ------- -------
Total........................ $8,128 $11,266 $11,402 $9,954 $12,280 $15,846 $24,233
====== ======= ======= ====== ======= ======= =======
</TABLE>
Included in the above schedule at September 30, 1999, are five non-
accrual loans, totaling $1,515,798, and three loans past due over 90 days,
totaling $1,309,960, which represents all loans categorized as impaired.
At September 30, 1999, non-accrual loans totaled $3,352,000, a
decrease of $234,000 compared to June 30, 1999. This net change is
primarily the result of the transferring of one commercial loan, totaling
$122,000, to other real estate. This property was subsequently disposed of.
Of the total non-accrual loans at September 30, 1999, all are either in
foreclosure, in various stages of litigation, or on a repayment schedule.
At September 30, 1999, loans past due 90 days or more and still accruing
totaled $2,324,000, an increase of $608,000 compared to June 30, 1999. This
net change is primarily the result of two commercial loans, totaling
$510,000, being added to this category. At September 30, 1999, renegotiated
loans totaled $1,748,000, a reduction of $14,000 compared to June 30, 1999.
Other income increased $28,605 or 2.09% to $1,394,381 for the third
three months of 1999 from $1,365,776 for the same period in 1998. An
increase in service charges on deposits of $84,298, and an increase of
$42,000 in commissions and fees, both of which reflect larger account
volume and stricter enforcement in the collection of fees, was partially
offset by a decrease in other income of $83,928. This decrease was due to a
change in method of recording commission income of the full service
brokerage operation in The National Bank of Sussex County. Previously both
income and expenses were recorded. In the new method, income was recorded
net of expenses.
14
<PAGE>
Other expenses increased by $3,135,663 or 52.82% to $9,072,519 for the
third three months of 1999 from $5,936,856 for the same period in 1998. Salaries
and benefits increased by $1,360,714 or 41.26%. $965,226 of this increase
relates to expenses incurred pursuant to change of control and salary
continuation agreements for two senior officers of High Point Financial Corp.
Exclusive of this expense, salaries and benefits increased $395,488 or 11.99%.
This was due to increased staffing levels, along with normal salary increases.
Occupancy expense decreased $17,459 or 3.09%. This was due to a reduction in
rent expense from the third quarter of 1998 to the third quarter of 1999. In
July 1998, The National Bank of Sussex County repurchased the eight branch
locations that it was leasing. The expense in 1998 represents a rent payment in
July made prior to the purchase. Furniture and equipment expense increased
$43,667 or 7.50%. This increase was due to expansions in the Company's branch
network. Other expenses increased in the aggregate $1,748,741 or 117.22%.
$1,370,668 of this increase relates to expenses incurred in the Company's
acquisition of High Point Financial Corp. Exclusive of this merger expense,
other expenses increased $378,073 or 25.34%. Of this increase $80,895 represents
expense incurred for a computer conversion for MSB, which was discontinued.
$196,464 represents expense incurred on a write-down of a property in other real
estate. The remaining increase of $100,714 is due to the increased size of the
branch network and the Company's banking business.
Income tax expense decreased $505,547 or 42.96% to $671,315 for the
third three months of 1999 from $1,176,862 for the same period in 1998. The
decrease in income tax expense was due primarily to a decrease in pre-tax income
and an increase in tax-exempt income. The effective tax rate for the three
months ended September 30, 1999, was 64% as compared to 34% for the prior year
period. This was due to the fact that the merger related expense of $1,370,668
was a non-deductible expense for tax purposes.
15
<PAGE>
Nine Month Summary
The first nine months of 1999 resulted in decreased earnings for the
Company, when compared to the same period in 1998. Net income decreased
$1,551,893 or 25.67%, to $4,492,987 for the first nine months of 1999 from
$6,044,880 for the same period in 1998. Net income per share decreased 27.1% to
$.35. Increases of $3,542,663 in other expenses and an increase of $240,606 in
the provision for loan losses more than offset increases of $1,474,224 in net
interest income, $72,605 in other income, and a decrease of $684,547 in income
tax expense.
The Company's annualized return on average assets and average stockholders'
equity for the first nine months of 1999 were .74% and 8.67%, respectively,
compared to 1.07% and 10.94%, respectively, for the same period in 1998.
Results of Operations
Total interest income increased $1,947,168 or 5.04% to $40,582,877 for the
nine months ended September 30, 1999, when compared to $38,635,709 for the same
period in 1998. The overall increase in this category was a result of increases
of $732,609 or 2.68% in interest earned on the loan portfolio and $1,438,647 or
14.39% in interest earned on the securities portfolio, which offset a decrease
of $224,088 or 17.10% in interest earned on federal funds sold.
The increase in interest income on loans was attributable to an increase in
average balances of $26.6 million, which was partially offset by a 29 basis
point decrease in yield. The decrease in interest income on federal funds sold
was attributable to a decrease in average balances of $1.9 million, along with a
68 basis point decrease in yield. The increase in interest income on securities
was attributable to a $45.9 million increase in average balances which more than
offset a 26 basis points decrease in yield.
Interest expense on deposits increased $524,053 or 3.71% to $14,637,639 for
the first nine months of 1999 compared to $14,113,586 for the same period in
1998. This increase is attributable to a $59.8 million increase in average
balances of interest-bearing deposits offset partially by a 26 basis point
decrease in yield. Total interest expense increased $472,944 or 3.20%,
reflecting the aforementioned deposit factors along with a $51,109 decrease in
interest expense incurred in the first nine months of 1999 on borrowed money.
16
<PAGE>
Net interest income increased $1,474,224 or 6.17% to $25,348,440 for the
first nine months of 1999 from $23,874,216 for the same period in 1998,
primarily as the result of increased average balances of net interest-earning
assets, which more than offset a 5 basis point decrease in net interest margin.
The annualized net interest margin decreased from 3.78% to 3.73%. While the
average yield on earning assets decreased 36 basis points from 7.47% to 7.11%,
the average rate paid on interest-bearing liabilities decreased 31 basis points
from 3.69% to 3.38%.
Other income increased $72,605 or 1.72% to $4,303,381 for the first nine
months of 1999 from $4,230,776 for the same period in 1998. This was primarily
the result of an increase in service charges on deposits of $205,298, which was
partially offset by a $63,000 decrease in commissions and fees and a $50,765
decrease in gain on disposition of securities.
Other expenses increased by $3,542,663 or 19.06% to $22,125,519 for the
first nine months of 1999 from $18,582,856 for the same period in 1998. Salaries
and benefits increased by $1,945,714 or 19.43%. Of this increase, $965,226
relates to the aforementioned expense incurred pursuant to the change of control
and salary continuation agreements for former officers of High Point. Exclusive
of this expense, salaries and benefits increased $980,488 or 9.79%. This was due
to increased staffing levels along with normal salary increases. Occupancy
expense decreased $133,459 or 7.43%. This was due primarily to a reduction in
rent expense due to the aforementioned repurchasing by The National Bank of
Sussex County of the eight branch locations which were previously leased.
Furniture and equipment expense increased $163,667 or 9.42%. This increase is
primarily the result of increased depreciation expense on the buildings which
were repurchased, along with expansion in the Company's branch network. Other
expenses increased in the aggregate $1,566,741 or 31.11%. In 1998, $343,000 was
expensed, which represented acquisition expenses incurred by the Company with
regard to the acquisition of Metropolitan State Bank. In 1999, $1,370,668 was
expensed, which represented acquisition expenses incurred by the Company with
regard to the acquisition of High Point Financial Corp. Exclusive of these
merger-related expenses, other expenses increased $539,073 or 11.48%. Of this
increase, $80,895 represents computer conversion expense and $196,464 represents
other real estate owned expense. The remaining increase of $261,714 is due to
the increased size of the branch network and the Company's banking business.
Income tax expense decreased $684,547 or 20.66% to $2,628,315 for the first
nine months of 1999 from $3,312,862 for the same period in 1998. The decrease in
income tax expense was due primarily to a decrease in pre-tax income and an
increase in tax-exempt income.
17
<PAGE>
Financial Condition
The Company's total assets increased $36.9 million or 4.60% from
$803.0 million at December 31, 1998, to $839.9 million at September 30, 1999.
This increase is due to a $29.3 million increase in the Company's securities
portfolio, an $18.9 million increase in loans, a $1.3 million increase in
premises and equipment, which was partially offset by a $12.2 million decrease
in cash and cash equivalents, and a $492,000 decrease in other assets.
At September 30, 1999, the Company's securities portfolio of $285.3 million
is segregated into classifications of "available for sale" and "held to
maturity". As required, available for sale securities are carried at fair value.
Unrealized gains and losses of $347,000 and $2,806,000 respectively, contained
in the available for sale portfolio, have been recorded, net of deferred taxes,
as a separate component of stockholders' equity. The effect of such adjustment
at September 30, 1999, is to decrease stockholders' equity by $1,530,000.
Securities held to maturity continue to be carried at historical cost and, at
September 30, 1999, contain unrealized gains and losses of $289,000 and
$1,559,000, respectively. For the entire securities portfolio, net unrealized
losses were $3,729,000 at September 30, 1999, as compared with a $6,145,000 net
unrealized gain at December 31, 1998.
See notes 3 and 4 of the Notes to Consolidated Financial Statements.
Total deposits increased $30.1 million or 4.23% from December 31, 1998, to
September 30, 1999. A $28.9 million increase in savings and interest-bearing
demand deposits and a $7.1 million increase in non-interest-bearing demand
deposits were partially offset by a $5.9 million decrease in time deposits. Time
deposits at September 30, 1999, represented 30.14% of total deposits as compared
to 32.24% at December 31, 1998.
Stockholders' equity decreased $637,000 as net income of $4.5 million, was
offset by a $2.4 million decrease in the equity component related to available
for sale securities, $2.4 million in dividends paid to stockholders and $499,000
in the repurchase of treasury stock.
Cash and cash equivalents decreased by $12.2 million during the nine months
ended September 30, 1999. Operating activities, principally the result of the
Company's net income, provided $6.1 million in net cash. Investing activities
used $53.2 million in net cash, primarily reflecting use of funds for the
purchase of securities of $31.4 million and use of funds for loans of $19.6
million. Financing activities, on the other hand, provided $34.9 million in net
cash, reflecting an increase in deposits and short-term borrowings of $37.6
million, offset partially by a payment of cash dividends of $2.4 million.
18
<PAGE>
CAPITAL RESOURCES
In March 1989, the FDIC adopted a risk-based capital policy statement,
which imposed a minimum capital standard on insured banks. The minimum ratio of
risk-based capital to risk-weighted assets (including certain off-balance sheet
items, such as standby letters of credit) is 8%. At least half of the total
capital is to be comprised of common stock equity and qualifying perpetual
preferred stock, less goodwill ("Tier I capital"). The remainder ("Tier II
capital") may consist of mandatory convertible debt securities, qualifying
subordinated debt, other preferred stock and a portion of the allowance for loan
losses. The Federal Reserve Board adopted a similar risk-based capital guideline
for the Company, which is computed on a consolidated basis.
In addition, the Federal Reserve Board has established leverage ratio
guidelines (Tier I capital to average quarterly assets, less goodwill) for bank
holding companies. These guidelines provide for a minimum leverage ratio of 3%
for bank holding companies that meet certain specified criteria, including that
they have the highest regulatory rating. All other holding companies will be
required to maintain a leverage ratio of 3% plus an additional cushion of at
least 100 to 200 basis points.
The following table reflects the Company's capital ratios as of September
30, 1999.
<TABLE>
<CAPTION>
Amount Ratio
(In Thousands)
<S> <C> <C>
Risk-Based Capital Ratios:
Actual Tier I Capital $74,656 15.84%
Tier I Capital minimum amount 18,856 4.00%
------- -----
Excess $55,800 11.84%
======= =====
Actual Combined Tier I and Tier II Capital $80,575 17,09%
Combined Tier I and Tier II Capital minimum
requirement 37,712 8.00%
------- -----
Excess $42,863 9.09%
======= =====
Leverage Ratio:
Actual Tier I Capital to average third quarter
assets $74,656 8.87%
Minimum leverage target* * *
------- -----
Excess $ * *%
======= =====
</TABLE>
* No formal minimum leverage target (other than the three percent floor
described above) has been established for the Company as of September 30, 1999.
19
<PAGE>
ITEM 3 Quantitative and Qualitative Disclosures about Market Risk not
applicable - no significant change from Annual Report on Form 10-K.
20
<PAGE>
PART II OTHER INFORMATION
Item 1 Legal Proceedings Not Applicable
Item 2 Change in Securities Not Applicable
Item 3 Defaults Upon Senior Securities Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Stockholders was held on July 14, 1999, in
Oak Ridge, New Jersey. At the meeting, a merger agreement was approved pursuant
to which High Point Financial Corp. was merged into the Company. The vote on the
merger agreement was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
5,903,995 128,933 20,779 561,563
A class of four directors was elected at the meeting to serve for terms of
three years. The Directors were elected by a plurality of the votes. The table
below discloses the vote which was recorded for each nominee for office:
In Favor Abstain Withheld
--------- ------- --------
Mark J. Fredericks 6,518,401 78,867 --
Robert B. Nicholson 6,517,942 79,326 --
Arthur L. Zande 6,518,401 78,867 --
Roger Bosma 6,516,128 81,140 --
Also at the meeting, the stockholders approved an amendment to the
Company's certificate of incorporation to increase the number of shares of the
Company's common stock which the Company is authorized to issue to 40,000,000
shares and to eliminate the stock's par value. The vote on the amendment to the
certificate of incorporation was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
6,450,903 123,913 22,452 --
Item 5 Other Information Not Applicable
21
<PAGE>
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
Exhibit 27.1 Financial Data Schedule
(b) Current Reports on form 8-K filed during the quarter ended September
30, 1999.
On July 20, 1999, the Company filed a Current Report on Form 8-K
reporting, under Item 2, the acquisition of High Point Financial Corp., which
was consummated on July 15, 1999.
On September 23, 1999, the Company filed a Current Report on Form 8-K
which contained, under Items 5 and 7, a consolidated statement of income for the
two months ended August 31, 1999.
22
<PAGE>
SIGNATURE
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.
Lakeland Bancorp, Inc.
----------------------------------
(Registrant)
/s/ Roger Bosma
----------------------------------
Roger Bosma
President and Chief Executive Officer
/s/ Arthur L. Zande
----------------------------------
Arthur L. Zande
Vice President and Treasurer
(Chief Financial Officer)
November 12, 1999
- -----------------
DATE
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 36,440
<INT-BEARING-DEPOSITS> 123
<FED-FUNDS-SOLD> 14,964
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 145,584
<INVESTMENTS-CARRYING> 77,236
<INVESTMENTS-MARKET> 77,523
<LOANS> 383,299
<ALLOWANCE> 7,558
<TOTAL-ASSETS> 688,200
<DEPOSITS> 613,441
<SHORT-TERM> 8,590
<LIABILITIES-OTHER> 3,874
<LONG-TERM> 973
0
0
<COMMON> 14,809
<OTHER-SE> 46,513
<TOTAL-LIABILITIES-AND-EQUITY> 688,200
<INTEREST-LOAN> 30,792
<INTEREST-INVEST> 13,012
<INTEREST-OTHER> 1,356
<INTEREST-TOTAL> 45,160
<INTEREST-DEPOSIT> 17,073
<INTEREST-EXPENSE> 17,545
<INTEREST-INCOME-NET> 27,615
<LOAN-LOSSES> 908
<SECURITIES-GAINS> (4)
<EXPENSE-OTHER> 21,789
<INCOME-PRETAX> 10,141
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,296
<EPS-BASIC> .51
<EPS-DILUTED> .50
<YIELD-ACTUAL> 7.59
<LOANS-NON> 5,695
<LOANS-PAST> 2,200
<LOANS-TROUBLED> 3,072
<LOANS-PROBLEM> 12,065
<ALLOWANCE-OPEN> 8,079
<CHARGE-OFFS> 1,947
<RECOVERIES> 518
<ALLOWANCE-CLOSE> 7,558
<ALLOWANCE-DOMESTIC> 7,558
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 38,232
<INT-BEARING-DEPOSITS> 102
<FED-FUNDS-SOLD> 23,925
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 151,186
<INVESTMENTS-CARRYING> 81,775
<INVESTMENTS-MARKET> 82,295
<LOANS> 418,134
<ALLOWANCE> 8,262
<TOTAL-ASSETS> 741,175
<DEPOSITS> 651,901
<SHORT-TERM> 11,737
<LIABILITIES-OTHER> 4,410
<LONG-TERM> 5,000
0
0
<COMMON> 15,763
<OTHER-SE> 50,657
<TOTAL-LIABILITIES-AND-EQUITY> 741,175
<INTEREST-LOAN> 34,533
<INTEREST-INVEST> 14,000
<INTEREST-OTHER> 1,391
<INTEREST-TOTAL> 49,924
<INTEREST-DEPOSIT> 18,566
<INTEREST-EXPENSE> 19,250
<INTEREST-INCOME-NET> 30,674
<LOAN-LOSSES> 1,026
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 23,749
<INCOME-PRETAX> 11,860
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,626
<EPS-BASIC> .61
<EPS-DILUTED> .60
<YIELD-ACTUAL> 7.67
<LOANS-NON> 4,850
<LOANS-PAST> 1,404
<LOANS-TROUBLED> 1,942
<LOANS-PROBLEM> 8,959
<ALLOWANCE-OPEN> 7,558
<CHARGE-OFFS> 778
<RECOVERIES> 456
<ALLOWANCE-CLOSE> 8,262
<ALLOWANCE-DOMESTIC> 8,262
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 34,896
<INT-BEARING-DEPOSITS> 103
<FED-FUNDS-SOLD> 38,675
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 140,144
<INVESTMENTS-CARRYING> 78,297
<INVESTMENTS-MARKET> 78,726
<LOANS> 419,896
<ALLOWANCE> 8,130
<TOTAL-ASSETS> 742,057
<DEPOSITS> 653,157
<SHORT-TERM> 10,629
<LIABILITIES-OTHER> 3,642
<LONG-TERM> 5,000
0
0
<COMMON> 15,763
<OTHER-SE> 53,866
<TOTAL-LIABILITIES-AND-EQUITY> 742,057
<INTEREST-LOAN> 9,045
<INTEREST-INVEST> 3,403
<INTEREST-OTHER> 365
<INTEREST-TOTAL> 12,813
<INTEREST-DEPOSIT> 4,696
<INTEREST-EXPENSE> 4,915
<INTEREST-INCOME-NET> 7,898
<LOAN-LOSSES> 49
<SECURITIES-GAINS> 89
<EXPENSE-OTHER> 6,406
<INCOME-PRETAX> 2,911
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,879
<EPS-BASIC> .15
<EPS-DILUTED> .15
<YIELD-ACTUAL> 7.59
<LOANS-NON> 5,795
<LOANS-PAST> 2,148
<LOANS-TROUBLED> 1,324
<LOANS-PROBLEM> 8,196
<ALLOWANCE-OPEN> 8,262
<CHARGE-OFFS> 529
<RECOVERIES> 348
<ALLOWANCE-CLOSE> 8130
<ALLOWANCE-DOMESTIC> 8130
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 43,632
<INT-BEARING-DEPOSITS> 104
<FED-FUNDS-SOLD> 31,080
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 150,946
<INVESTMENTS-CARRYING> 78,947
<INVESTMENTS-MARKET> 79,441
<LOANS> 428,867
<ALLOWANCE> 7,842
<TOTAL-ASSETS> 761,176
<DEPOSITS> 664,469
<SHORT-TERM> 18,020
<LIABILITIES-OTHER> 2,417
<LONG-TERM> 5,000
0
0
<COMMON> 15,763
<OTHER-SE> 55,507
<TOTAL-LIABILITIES-AND-EQUITY> 761,176
<INTEREST-LOAN> 18,140
<INTEREST-INVEST> 6,689
<INTEREST-OTHER> 798
<INTEREST-TOTAL> 25,627
<INTEREST-DEPOSIT> 9,326
<INTEREST-EXPENSE> 9,761
<INTEREST-INCOME-NET> 15,866
<LOAN-LOSSES> 102
<SECURITIES-GAINS> 67
<EXPENSE-OTHER> 12,646
<INCOME-PRETAX> 5,983
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,847
<EPS-BASIC> .31
<EPS-DILUTED> .31
<YIELD-ACTUAL> 7.40
<LOANS-NON> 5,586
<LOANS-PAST> 1,776
<LOANS-TROUBLED> 1,894
<LOANS-PROBLEM> 7,740
<ALLOWANCE-OPEN> 8,298
<CHARGE-OFFS> 865
<RECOVERIES> 307
<ALLOWANCE-CLOSE> 7,842
<ALLOWANCE-DOMESTIC> 7,842
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 36,804
<INT-BEARING-DEPOSITS> 104
<FED-FUNDS-SOLD> 30,125
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 138,956
<INVESTMENTS-CARRYING> 89,656
<INVESTMENTS-MARKET> 91,433
<LOANS> 448,429
<ALLOWANCE> 7,603
<TOTAL-ASSETS> 767,023
<DEPOSITS> 673,935
<SHORT-TERM> 11,252
<LIABILITIES-OTHER> 3,521
<LONG-TERM> 5,000
0
0
<COMMON> 31,642
<OTHER-SE> 41,673
<TOTAL-LIABILITIES-AND-EQUITY> 767,023
<INTEREST-LOAN> 27,331
<INTEREST-INVEST> 9,995
<INTEREST-OTHER> 1,310
<INTEREST-TOTAL> 38,636
<INTEREST-DEPOSIT> 14,114
<INTEREST-EXPENSE> 14,762
<INTEREST-INCOME-NET> 23,874
<LOAN-LOSSES> 164
<SECURITIES-GAINS> 81
<EXPENSE-OTHER> 18,583
<INCOME-PRETAX> 9,358
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,045
<EPS-BASIC> .48
<EPS-DILUTED> .48
<YIELD-ACTUAL> 7.47
<LOANS-NON> 5,535
<LOANS-PAST> 3,367
<LOANS-TROUBLED> 1,300
<LOANS-PROBLEM> 7,201
<ALLOWANCE-OPEN> 8,262
<CHARGE-OFFS> 1,316
<RECOVERIES> 493
<ALLOWANCE-CLOSE> 7,603
<ALLOWANCE-DOMESTIC> 7,603
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 35,105
<INT-BEARING-DEPOSITS> 204
<FED-FUNDS-SOLD> 28,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 165,282
<INVESTMENTS-CARRYING> 90,657
<INVESTMENTS-MARKET> 91,846
<LOANS> 450,056
<ALLOWANCE> 7,984
<TOTAL-ASSETS> 803,024
<DEPOSITS> 711,811
<SHORT-TERM> 8,110
<LIABILITIES-OTHER> 4,340
<LONG-TERM> 5,000
0
0
<COMMON> 31,681
<OTHER-SE> 42,082
<TOTAL-LIABILITIES-AND-EQUITY> 803,024
<INTEREST-LOAN> 36,970
<INTEREST-INVEST> 13,411
<INTEREST-OTHER> 1,834
<INTEREST-TOTAL> 52,215
<INTEREST-DEPOSIT> 19,043
<INTEREST-EXPENSE> 19,876
<INTEREST-INCOME-NET> 32,339
<LOAN-LOSSES> 698
<SECURITIES-GAINS> 119
<EXPENSE-OTHER> 25,033
<INCOME-PRETAX> 12,381
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,957
<EPS-BASIC> .63
<EPS-DILUTED> .63
<YIELD-ACTUAL> 7.50
<LOANS-NON> 3,281
<LOANS-PAST> 4,265
<LOANS-TROUBLED> 1,867
<LOANS-PROBLEM> 6,192
<ALLOWANCE-OPEN> 8,262
<CHARGE-OFFS> 1,667
<RECOVERIES> 691
<ALLOWANCE-CLOSE> 7,984
<ALLOWANCE-DOMESTIC> 7,984
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 30,457
<INT-BEARING-DEPOSITS> 214
<FED-FUNDS-SOLD> 30,330
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 163,848
<INVESTMENTS-CARRYING> 108,832
<INVESTMENTS-MARKET> 109,515
<LOANS> 453,832
<ALLOWANCE> 8,014
<TOTAL-ASSETS> 819,511
<DEPOSITS> 725,654
<SHORT-TERM> 11,149
<LIABILITIES-OTHER> 2,922
<LONG-TERM> 5,000
<COMMON> 31,681
0
0
<OTHER-SE> 43,105
<TOTAL-LIABILITIES-AND-EQUITY> 819,511
<INTEREST-LOAN> 9,149
<INTEREST-INVEST> 3,604
<INTEREST-OTHER> 393
<INTEREST-TOTAL> 13,146
<INTEREST-DEPOSIT> 4,935
<INTEREST-EXPENSE> 5,092
<INTEREST-INCOME-NET> 8,054
<LOAN-LOSSES> 105
<SECURITIES-GAINS> 25
<EXPENSE-OTHER> 6,625
<INCOME-PRETAX> 2,725
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,858
<EPS-BASIC> .15
<EPS-DILUTED> .15
<YIELD-ACTUAL> 7.06
<LOANS-NON> 3,097
<LOANS-PAST> 2,726
<LOANS-TROUBLED> 2,286
<LOANS-PROBLEM> 5,847
<ALLOWANCE-OPEN> 7,984
<CHARGE-OFFS> 178
<RECOVERIES> 103
<ALLOWANCE-CLOSE> 8,041
<ALLOWANCE-DOMESTIC> 8,041
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 37,369
<INT-BEARING-DEPOSITS> 214
<FED-FUNDS-SOLD> 27,021
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 159,172
<INVESTMENTS-CARRYING> 122,049
<INVESTMENTS-MARKET> 120,767
<LOANS> 467,158
<ALLOWANCE> 8,076
<TOTAL-ASSETS> 847,477
<DEPOSITS> 747,986
<SHORT-TERM> 16,029
<LIABILITIES-OTHER> 4,756
<LONG-TERM> 5,000
0
0
<COMMON> 31,681
<OTHER-SE> 73,706
<TOTAL-LIABILITIES-AND-EQUITY> 847,477
<INTEREST-LOAN> 18,485
<INTEREST-INVEST> 7,440
<INTEREST-OTHER> 753
<INTEREST-TOTAL> 26,678
<INTEREST-DEPOSIT> 9,840
<INTEREST-EXPENSE> 10,194
<INTEREST-INCOME-NET> 16,484
<LOAN-LOSSES> 265
<SECURITIES-GAINS> 30
<EXPENSE-OTHER> 13,053
<INCOME-PRETAX> 6,075
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,118
<EPS-BASIC> .17
<EPS-DILUTED> .17
<YIELD-ACTUAL> 6.99
<LOANS-NON> 3,586
<LOANS-PAST> 1,716
<LOANS-TROUBLED> 1,762
<LOANS-PROBLEM> 5,249
<ALLOWANCE-OPEN> 7,984
<CHARGE-OFFS> 360
<RECOVERIES> 187
<ALLOWANCE-CLOSE> 8,076
<ALLOWANCE-DOMESTIC> 8,076
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 41,531
<INT-BEARING-DEPOSITS> 215
<FED-FUNDS-SOLD> 10,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 160,143
<INVESTMENTS-CARRYING> 125,131
<INVESTMENTS-MARKET> 123,861
<LOANS> 469,093
<ALLOWANCE> 8,099
<TOTAL-ASSETS> 839,948
<DEPOSITS> 741,890
<SHORT-TERM> 15,602
<LIABILITIES-OTHER> 4,330
<LONG-TERM> 5,000
0
0
<COMMON> 71,394
<OTHER-SE> 1,732
<TOTAL-LIABILITIES-AND-EQUITY> 73,126
<INTEREST-LOAN> 28,064
<INTEREST-INVEST> 11,433
<INTEREST-OTHER> 1,086
<INTEREST-TOTAL> 40,583
<INTEREST-DEPOSIT> 14,638
<INTEREST-EXPENSE> 15,235
<INTEREST-INCOME-NET> 25,348
<LOAN-LOSSES> 405
<SECURITIES-GAINS> 30
<EXPENSE-OTHER> 22,125
<INCOME-PRETAX> 7,121
<INCOME-PRE-EXTRAORDINARY> 4,493
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,493
<EPS-BASIC> .35
<EPS-DILUTED> .35
<YIELD-ACTUAL> 7.11
<LOANS-NON> 3,352
<LOANS-PAST> 2,324
<LOANS-TROUBLED> 1,748
<LOANS-PROBLEM> 4,993
<ALLOWANCE-OPEN> 7,984
<CHARGE-OFFS> 528
<RECOVERIES> 238
<ALLOWANCE-CLOSE> 8,099
<ALLOWANCE-DOMESTIC> 8,099
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
