<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended June 30, 1996
-------------
Commission File Number 0-17859
-------
NEW HAMPSHIRE THRIFT
BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
State of Delaware 02-0430695
(State of Incorporation) (IRS Employer I.D. Number)
New London, New Hampshire 03257
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 603-526-2116
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of each of the issuer's classes of common
stock, $.01 par value per share, as of July 11, 1996 was 1,691,803.
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1 Financial Statements:
Consolidated Statements of Financial Condition - 1
June 30, 1996 and December 31, 1995
Consolidated Statements of Income - 2
For the Three Months Ended June 30, 1996 and 1995
and the Six Months Ended June 30, 1996 and 1995
Consolidated Statements of Changes In Shareholders' Equity - 3
For the Three Months Ended June 30, 1996 and 1995
and the Six Months Ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows - 4
For the Six Months Ended June 30, 1996 and 1995
Notes To Consolidated Financial Statements - 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations - 13
PART II. OTHER INFORMATION 18
Item 1 Legal Proceedings 18
Item 2 Changes in Securities 18
Item 3 Defaults Upon Senior Securities 18
Item 4 Submission of Matters to a Vote of Common Shareholders 18
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part I. Item I. NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1996 and December 31, 1995
(Unaudited)
June 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,660,216 $ 7,544,297
Federal funds sold - 3,449,000
Securities held to maturity 368,054 393,054
Securities available for sale 25,234,393 25,718,260
Other investments 2,307,557 2,303,285
Loans held for sale 1,000,855 3,095,971
Loans receivable, net 211,438,852 205,073,080
Accrued interest receivable 1,550,660 1,433,882
Bank premises and equipment, net 5,794,351 5,955,394
Real estate owned and property acquired in settlement of loans 819,679 984,185
Non-earning assets 1,444,239 297,172
Other assets 907,269 1,968,497
----------- -----------
Total assets $ 258,526,125 $ 258,216,077
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits $ 200,303,248 $ 199,970,921
Repurchase agreements 4,201,001 9,552,825
Federal funds purchased 1,143,000 -
Advances from Federal Home Loan Bank 31,270,344 26,936,168
Accrued expense and other liabilities 2,133,405 2,212,158
----------- -----------
Total liabilities 239,050,998 238,672,072
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value - -
Common stock, $.01 par value, 1,691,803 shares outstanding as
of June 30, 1996 and 1,689,503 as of December 31, 1995 21,473 21,473
Paid-in capital 13,167,570 13,160,382
Retained earnings 9,079,266 8,673,504
Unrealized gain (loss) on securities available for sale (394,297) 97,594
----------- -----------
21,874,012 21,952,953
Treasury stock, at cost, 455,479 shares as of June 30, 1996
and 457,779 as of December 31, 1995 (2,398,885) (2,408,948)
----------- -----------
Total shareholders' equity 19,475,127 19,544,005
----------- -----------
Total liabilities and shareholders' equity $ 258,526,125 $ 258,216,077
=========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements.
1
</TABLE>
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended June 30, 1996 and 1995
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest income
Interest on loans $ 4,176,389 $ 3,899,303 $ 8,243,982 $ 7,587,163
Interest and dividends on investments 463,931 405,773 953,543 763,011
------------ ------------ ------------ ------------
Total interest income 4,640,320 4,305,076 9,197,525 8,350,174
------------ ------------ ------------ ------------
Interest expense
Interest paid to depositors 2,066,025 1,990,734 4,198,985 3,853,261
Interest on advances and other borrowed money 455,074 415,781 855,820 698,806
------------ ------------ ------------ ------------
Total interest expense 2,521,099 2,406,515 5,054,805 4,552,067
------------ ------------ ------------ ------------
Net interest income 2,119,221 1,898,561 4,142,720 3,798,107
Provision for loan losses, net 522,554 280,000 744,191 580,000
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 1,596,667 1,618,561 3,398,529 3,218,107
------------ ------------ ------------ ------------
Non-interest income
Customer service fees 327,429 210,118 563,762 471,493
Loan origination fees 23,623 15,914 42,062 32,066
Net gain on sale of securities and bank property 262,427 15,087 259,873 21,577
Rental income 55,393 55,049 111,392 110,854
Brokerage service income 40,924 32,548 107,638 59,477
Other income 671 595 1,966 16,235
------------ ------------ ------------ ------------
Total other operating income 710,467 329,311 1,086,693 711,702
------------ ------------ ------------ ------------
Other operating expenses
Salaries and employee benefits 734,965 696,344 1,558,905 1,525,916
Occupancy expenses 327,313 293,518 655,002 603,466
Advertising and promotion 50,648 41,519 64,745 99,916
Depositors insurance 114,747 109,883 227,775 219,765
Outside services 92,759 80,380 182,381 161,442
Other expenses 271,621 343,052 560,184 652,203
------------ ------------ ------------ ------------
Total other operating expenses 1,592,053 1,564,696 3,248,992 3,262,708
------------ ------------ ------------ ------------
Income before provision for income taxes 715,081 383,176 1,236,230 667,101
Provision for income taxes 235,700 126,000 408,000 220,000
------------ ------------ ------------ ------------
Net income $ 479,381 $ 257,176 $ 828,230 $ 447,101
------------ ------------ ------------ ------------
Earnings per common share $ .28 $ .15 $ .49 $ .26
------------ ------------ ------------ ------------
Dividends declared per common share $ .125 $ .125 $ .25 $ .25
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
2
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months Ended June 30, 1996 and 1995
and the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
COMMON STOCK
Balance, beginning and end of period $ 21,473 $ 21,473 $ 21,473 $ 21,473
============= ============= ============= =============
PAID-IN CAPITAL
Balance, beginning of period $ 13,160,382 $ 13,103,404 $ 13,160,382 $ 13,103,404
Change during the period 7,188 1,900 7,188 1,900
------------- ------------- ------------- ------------
Balance, end of period $ 13,167,570 $ 13,105,304 $ 13,167,570 $ 13,105,304
============= ============= ============= =============
RETAINED EARNINGS
Balance, beginning of period $ 8,811,165 $ 8,249,145 $ 8,673,504 $ 8,268,094
Net income 479,381 257,176 828,230 447,101
Cash dividends paid (211,280) (208,949) (422,468) (417,823)
------------- ------------- ------------- ------------
Balance, end of period $ 9,079,266 $ 8,297,372 $ 9,079,266 $ 8,297,372
============= ============= ============= =============
UNREALIZED GAIN (LOSS) ON SECURITIES
AVAILABLE FOR SALE
Balance, beginning of period $ (167,398) $ (437,252) $ 97,594 $ (728,667)
Adjustment to fair value (343,899) 144,461 (745,891) 192,876
Effect of change in deferred taxes 117,000 151,000 254,000 394,000
------------- ------------- ------------- ------------
Balance, end of period $ (394,297) $ (141,791) $ (394,297) $ (141,791)
============= ============= ============= =============
TREASURY STOCK
Balance, beginning of period $ (2,408,948) $ (2,411,430) $ (2,408,948) $ (2,411,430)
Exercise of stock options (2,300 shares at June
30, 1996 and 608 shares at June 30, 1995) 10,063 2,660 10,063 2,660
------------- ------------- ------------- ------------
Balance, end of period $ (2,398,885) $ (2,408,770) $ (2,398,885) $ (2,408,770)
============= ============= ============= =============
</TABLE>
The accompanying note to consolidated financial statements are an integral
part of these statements.
3
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 828,230 $ 447,101
------------- -------------
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 235,558 216,418
Loans originated for sale (6,301,226) (4,931,893)
Proceeds from sale of loans 6,309,540 4,936,030
Gain from sale of loans (8,314) (4,137)
Loss from sale of debt securities available for sale 731 4,199
Gain from sale of equity securities available for sale - (21,639)
Gain from sale of bank premises and equipment (253,497) -
Provision for loan losses 744,191 580,000
Provision for deferred taxes - (64,200)
(Increase) decrease in accrued interest and other assets 970,411 (395,420)
Decrease in deferred loan fees (42,005) (74,163)
Increase in accrued expenses and other liabilities 184,324 1,668,991
------------- -------------
Net cash provided by operating activities 2,667,943 2,361,287
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (151,018) (269,028)
Proceeds from sale of bank premises and equipment 330,000 -
Proceeds from sale of debt securities available for sale 951,471 1,384,091
Proceeds from sale of equity securities available for sale 200,000 448,414
Principal reductions on securities held to maturity 25,000 25,000
Purchase of securities available for sale (3,842,459) (3,934,770)
Purchase of Federal Home Loan Bank Stock - (247,000)
Maturities of securities available for sale 2,398,000 100,000
Net increase in loans to customers (4,972,842) (10,242,845)
(Increase) decrease in non-earning assets (1,147,067) 520,154
Decrease in real estate owned 164,506 223,331
------------- -------------
Net cash used in investing activities (6,044,409) (11,992,653)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits and repurchase agreements (5,019,497) 3,188,726
Increase in advances from Federal Home Loan Bank 5,477,176 7,763,778
Net change in other borrowed money (9,077) (5,658)
Dividends paid (422,468) (417,822)
Exercise of stock options 17,251 4,560
------------- -------------
Net cash provided by financing activities 43,385 10,533,584
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,333,081) 902,218
CASH AND CASH EQUIVALENTS, beginning of period 10,993,297 8,253,588
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 7,660,216 $ 9,155,806
============= =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposit accounts $ 4,215,158 $ 3,818,906
Interest on advances and other borrowed money 853,362 631,555
============= =============
Total interest paid $ 5,068,520 $ 4,450,461
============= =============
Income taxes, net $ 190,619 $ 139,252
============= =============
Supplemental disclosure of noncash investing and financing activities:
Transfers from loans to real estate acquired through foreclosure $ - $ 40,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and December 31, 1995
1. Summary of significant accounting policies:
Principles of consolidation - The consolidated financial statements
include the accounts of New Hampshire Thrift Bancshares, Inc. (NHTB or
Company, a unitary holding company), Lake Sunapee Bank, fsb (LSB), Lake
Sunapee Group, Inc. (LSGI), and Lake Sunapee Financial Services Corp.
(LSFSC). LSB is owned by the holding company and the other entities are
wholly-owned subsidiaries of LSB. All significant intercompany accounts
and transactions have been eliminated. The financial statements include
all adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the results of operations for the three months and
the six months ended June 30, 1996 and 1995.
Earnings per share - Earnings per share are calculated using the weighted
average number of shares outstanding at the end of the period plus common
stock equivalents, as appropriate, resulting from the granting of
incentive stock options. Common stock equivalents are determined using the
treasury method. Common stock equivalents are included in the computation
of earnings per share if they have a dilutive effect. As of June 30, 1996
and 1995, there was a dilutive effect from stock options. The number of
shares used in computing earnings per share was 1,695,931 and 1,694,095
for the periods ended June 30, 1996 and 1995, respectively.
Cash and cash equivalents - For purposes of reporting cash flows, the Bank
considers federal funds sold and due from banks to be cash equivalents.
Treasury stock - Treasury Stock is accounted for at cost when purchased.
Sales of Treasury Stock are on a first in first out basis at cost. Any
gain on the sale of Treasury Stock is recorded to Paid-in Capital.
Mortgage servicing rights - Effective January 1, 1996, Lake Sunapee Bank,
fsb recorded as a separate asset the rights to service mortgage loans for
others according to FAS No. 122 "Accounting for Mortgage Servicing
Rights." The accounting standard is effective for loans sold after
December 31, 1995. The mortgage servicing rights (MSR's) are valued at the
lower of cost or market on an aggregate basis. The MSR's are amortized on
a straight-line basis over the anticipated life of the related loans.
5
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and December 31, 1995
2. Securities
The amortized cost and appropriate market value of securities are
summarized as follows:
<TABLE>
<CAPTION>
June 30, 1996
------------------------------------------------------
Gross Gross
Fair Unrealized Unrealized Amortized
Value Gain Loss Cost
------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity:
Bonds and notes -
Municipal bonds $ 368,054 $ - $ - $ 368,054
------------------------------------------------------
Total held to maturity 368,054 - - 368,054
------------------------------------------------------
Available for Sale:
Bonds and notes -
U. S. Treasury Notes 12,746,404 3,990 209,440 12,951,854
U. S. Government, including agencies 2,484,811 7,040 82,824 2,560,595
Other bonds and debentures 8,658,928 18,617 199,080 8,839,392
------------------------------------------------------
23,890,143 29,648 491,344 24,351,840
Equity securities 1,344,250 18,575 154,175 1,479,850
------------------------------------------------------
Total available for sale 25,234,393 48,223 645,519 25,831,690
------------------------------------------------------
Investments at cost:
Federal Home Loan Bank Stock 1,861,000 - - 1,861,000
Other securities 446,557 - - 446,557
------------------------------------------------------
Total investments at cost 2,307,557 2,307,557
------------------------------------------------------
Total securities $ 27,910,004 $ 48,223 $ 645,519 $ 28,507,301
======================================================
<CAPTION>
December 31, 1995
------------------------------------------------------
Gross Gross
Fair Unrealized Unrealized Amortized
Value Gain Loss Cost
------------------------------------------------------
<S> <C> <C> <C> <C>
Held to Maturity:
Bonds and notes -
Municipal bonds $ 393,054 $ - $ - $ 393,054
------------------------------------------------------
Total held to maturity 393,054 - - 393,054
------------------------------------------------------
Available for Sale:
Bonds and notes -
U. S. Treasury Notes 12,139,529 147,900 3,166 11,994,795
U. S. Government, including agencies 2,724,130 33,249 40 2,690,921
Other bonds and debentures 9,352,476 104,119 38,416 9,286,773
------------------------------------------------------
24,216,135 285,268 41,622 23,972,489
Equity securities 1,502,125 11,750 106,800 1,597,175
------------------------------------------------------
Total available for sale 25,718,260 297,018 148,422 25,569,664
------------------------------------------------------
Investments at cost:
Federal Home Loan Bank Stock 1,861,000 - - 1,861,000
Other securities 442,285 - - 442,285
------------------------------------------------------
Total investments at cost 2,303,285 2,303,285
------------------------------------------------------
Total securities $ 28,414,599 $ 297,018 $ 148,422 $ 28,266,003
======================================================
</TABLE>
6
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
3. Loans
<TABLE>
<CAPTION>
Loans consisted of the following as of: June 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Real estate loans -
Conventional $ 180,898,716 $ 175,130,966
Construction 693,630 2,456,763
-------------- --------------
181,592,346 177,587,729
Less: Unadvanced portion 321,596 1,434,258
-------------- --------------
Total real estate loans 181,270,750 176,153,471
Collateral loans 21,620,233 19,524,706
Consumer loans 4,753,166 5,025,818
Commercial and municipal loans 7,998,711 9,301,028
Other loans 88,536 671,302
-------------- --------------
Total loans 215,731,396 210,676,325
Less: Reserve for loan losses 1,507,413 1,828,060
Deferred loan origination fees 340,037 382,042
Non-earning assets 1,444,239 297,172
-------------- --------------
Net loans $ 212,439,707 $ 208,169,051
============== ==============
<CAPTION>
A summary of activity in the reserve for loan loss account consisted of the following as of:
June 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
BALANCE, beginning of period $ 1,828,060 $ 2,752,885
-------------- --------------
Loans charged-off:
Real estate loans -
Conventional 329,300 141,541
Construction 649,274 1,014,670
Collateral and consumer loans 15,199 25,568
Commercial and municipal loans 75,424 913,441
-------------- --------------
Total charged-off loans 1,069,197 2,095,220
-------------- --------------
Recoveries:
Real estate loans -
Conventional 3,963 3,300
Collateral and consumer loans 396 2,099
Commercial and municipal loans - 1,286
-------------- --------------
Total recoveries 4,359 6,685
-------------- --------------
Charged-off loans, net of recoveries 1,064,838 2,088,535
-------------- --------------
Provision for loan losses charged to income 744,191 1,163,710
-------------- --------------
BALANCE, end of period $ 1,507,413 $ 1,828,060
============== ==============
Ratio of net charged-off loans during the period
to average loans outstanding during the period 0.50% 1.02%
============== ==============
</TABLE>
7
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
3. Loans (continued):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
Non-earning assets $ 1,444,239 $ 297,172
Amount of interest income which would have been earned 61,426 55,864
Amount of interest income that was included in net income 23,001 13,553
Troubled debt restructured 524,338 445,417
In addition to non-earning assets, non-accrual
loans included the following amount of delinquent loans 856,135 1,144,293
EFFECT OF FASB NO. 66:
Loans reclassified to real estate owned $ 366,316 $ 370,672
Interest income reduced by 12,734 23,063
IMPAIRED LOANS:
Average recorded investment in impaired loans $ 810,596 $ 934,829
Investment in impaired loans, end of period 493,645 1,452,049
Portion of valuation allowance allocated to impaired loans 52,412 654,663
Net balance of impaired loans 441,232 797,386
Interest income recognized on impaired loans 17,345 102,449
Interest income on impaired loans on cash basis 14,454 97,401
</TABLE>
There are no impaired loans which do not have a valuation allowance assigned to
them.
Interest income on impaired loans is recognized using the accrual basis
accounting method when the impaired loan is less than 90 days past due and has
not been reclassified to non-accrual status. Interest income on impaired loans
over 90 days past due and on loans placed on non-accrual status is recognized on
the cash basis method. Cash receipts on impaired loans are recorded as both
interest income and a reduction in the impaired loan balance consistent with the
terms of the underlying contractual agreement. The net balance of impaired loans
represents the aggregate fair value or present value of expected cash flows on
individual loans identified as impaired. A loan becomes impaired when it is
probable all amounts due on the loan will not be received. A loan is placed on
non-accrual status when it is likely interest income will not be received. Non-
accrual loans are reviewed for possible impairment. Impaired loans are written-
down or charged-off when it has been determined the asset has such little value
that it no longer warrants remaining on the books. The decision to charge-off is
made on a case-by-case basis.
The Bank had no extensions of credit to affiliated parties in excess of 5% of
shareholders' equity at any time during the six months ended June 30, 1996.
MORTGAGE SERVICING RIGHTS - As of June 30, 1996, the fair value of MSR's was
$48,963. The significant assumptions used to estimate fair value included a
prepayment risk based on current market pricing information, a discount rate of
1% above the U. S. Treasury bond rate, and industry averages for other
significant assumptions. MSR's capitalized were reduced by $2,448 of
amortization during the quarter. For purposes of evaluating and measuring
impairment of MSR's, the Company stratifies the underlying loans by maturity and
by interest rate. As of June 30, 1996, the Company stratified its loans by
maturity into 15 and 30 year loans and stratified loans in each of the maturity
categories by every one-half percent change in interest rates. There is no
impairment to the value of the MSR's recorded during the quarter ended June 30,
1996.
8
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
4. Deposits:
Deposit accounts consisted of the following as of :
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Checking Accounts (non-interest bearing) $ 9,403,790 $ 10,934,512
NOW Accounts 25,951,723 26,014,007
Ever-Ready Money Market 12,241,216 13,971,617
Regular Savings Accounts 10,252,895 11,363,366
Treasury Savings Accounts 45,878,940 44,388,408
Club Deposits 327,829 87,779
Time Deposits:
$100,000 and over 12,302,412 11,924,585
Other Time Deposits 83,944,443 81,286,647
---------------- ----------------
$ 200,303,248 $ 199,970,921
---------------- ----------------
</TABLE>
REPURCHASE AGREEMENTS - As of June 30, 1996, fifteen repurchase agreements were
outstanding. Repurchase agreements are secured by U. S. Treasury Notes held by a
third party in safekeeping with a fair value of $12,746,404. The maturities of
the repurchase agreements are from July 13, 1996 to June 30, 1997 on the
anniversary date of the repurchase agreement.
5. Advances from Federal Home Loan Bank:
Advances from the Federal Home Loan Bank consisted of loans, at various
interest rates ranging from 4.87% to 7.32%, maturing as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------------- ----------------
<S> <C> <C>
1996 (4.87% - 6.78%) $ 11,096,320 $ 6,762,143
1997 (4.87% - 7.32%) 7,927,707 7,927,707
1998 (4.87% - 5.82%) 7,166,033 7,166,033
1999 (5.78%) 56,084 56,085
2000 and after (5.74% - 5.82%) 5,024,200 5,024,200
---------------- ----------------
$ 31,270,344 $ 26,936,168
---------------- ----------------
</TABLE>
These advances are secured by Federal Home Loan Bank Stock (Note 2) and
unspecified first mortgage loans. The Bank is able to borrow up to an additional
$46,000,000 of Federal Home Loan Bank advances.
In addition to the above advances, the Bank has credit available up to
$5,167,000 under a revolving loan agreement with the Federal Home Loan Bank. As
of June 30, 1996, $1,143,000 had been borrowed against this line of credit.
Interest is payable monthly as funds are borrowed.
9
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
6. Shareholders' Equity:
On May 22, 1986, Lake Sunapee Bank fsb received approval from the Federal
Home Loan Bank Board and converted from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank. Net proceeds of
the conversion (after deducting applicable costs of conversion) were
$11,889,397.
At the time of conversion, the Bank established a liquidation account in an
amount of $4,292,510 (equal to the Bank's net worth as of the date of the
latest financial statement included in the final offering circular used in
connection with the conversion). The liquidation account will be
maintained for the benefit of eligible account holders who maintain their
deposit accounts in the Bank after conversion. In the event of a complete
liquidation of the Bank subsequent to conversion (and only in such event),
each eligible account holder will be entitled to receive a liquidation
distribution from the liquidation account before any liquidation
distribution may be made with respect to capital stock. The amount of the
liquidation account is reduced to the extent that the balance of eligible
deposit accounts are reduced on any year-end closing date subsequent to the
conversion.
The Bank may not declare or pay a cash dividend on or purchase any of its
stock if the effect would be to reduce the net worth of the Bank below
either the amount of the liquidation account or the net worth requirements
of the Office of Thrift Supervision.
DIVIDENDS - The Board of Directors, at their July meeting, declared a cash
dividend of $0.125 per share payable July 29, 1996.
7. Stock Options:
On January 3, 1995, 30,000 options were granted from previously forfeited
shares of the 1986 plan at an exercise price of $9.00 per share, the fair
market value on that date. As of June 30, 1996, 57,880 of previously
forfeited shares remained available for grant and options to purchase
30,000 shares were available for exercise under the 1986 plan. At the
Annual Meeting held on April 15, 1987, the shareholders approved the
adoption of the "1987 Stock Option Plan." As of June 30, 1996, 27,666 of
previously forfeited shares remained available for grant and options to
purchase 30,290 shares were available for exercise under the 1987 plan. On
January 2, 1996, 49,900 options were granted and made available from
previously ungranted and forfeited shares of the 1987 plan at an exercise
price of $10.125 per share, the fair market value on that date. As of June
30, 1996, none of these options had been exercised. At the Annual meeting
held on April 10, 1996, the shareholders approved the adoption of the "1996
Stock Option Plan." Under this plan, an amount equal to 10% of the issued
and outstanding common stock of the Company has been reserved for future
issuance. No options were granted in the three month period ended June 30,
1996 and 1995.
10
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
7. Stock Options (continued): A summary of the Company's stock option plans as
of June 30, 1996 and 1995 and changes during the six months ended is presented
below:
<TABLE>
<CAPTION>
1996 1995
---------------------- --------------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Options Price Options Price
-------- ----------- -------- ---------
<S> <C> <C> <C> <C>
Outstanding, beginning of 62,590 $ 8.22 32,590 $ 7.50
year
Granted 49,900 10.125 30,000 9.00
Exercised 0 0 0 0
Forfeited 0 0 0 0
Expired 0 0 0 0
---------- ----------- -------- ----------
Outstanding, end of period 112,490 $ 9.06 62,590 $ 8.22
========== =========== ======== ==========
Exercisable, end of period 112,490 62,590
========== ========
</TABLE>
The exercise price of each option equals the market price of the Company's stock
on the date of grant, and an option's maximum term is 10 years. The range of
exercise prices is $7.50 to $10.125 and $7.50 to $9.00 as of June 30, 1996 and
1995, respectively.
The weighted-average fair value of the options granted during the six months
ended June 30, 1996 and 1995 was $2.93 and $2.56, respectively.
The Company applies APB Opinion 25 and related Interpretations in accounting for
its stock option plans. Accordingly, no compensation cost has been recognized
for its stock options. Had compensation cost for the Company plans been
determined based on the fair value at the grant dates consistent with the method
of FASB Statement 123, the Company's net income and earnings per share would
have been reduced to the proforma amounts indicated below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
1996 1995 1996 1995
----------------------------------------------
<S> <C> <C> <C> <C>
Net income: As reported $ 479,381 $ 257,176 $ 828,230 $ 447,101
Pro forma $ 479,381 $ 257,176 $ 738,907 $ 400,301
Primary earnings per share: As reported $ 0.28 $ 0.15 $ 0.49 $ 0.27
Pro forma $ 0.28 $ 0.15 $ 0.44 $ 0.24
Fully diluted earnings per share: As reported $ 0.28 $ 0.15 $ 0.49 $ 0.26
Pro forma $ 0.28 $ 0.15 $ 0.44 $ 0.24
</TABLE>
The fair value of each option is estimated on the date of grant using the Black-
Scholes option pricing model using the following weighted-average assumptions:
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------- --------------
<S> <C> <C>
Weighted risk-free interest rate 6.71% 6.67%
Weighted expected life 9.25 years 8.75 years
Weighted expected volatility 17.33% 17.33%
Weighted expected dividend yield 5.0% per year 5.0% per year
</TABLE>
No modifications have been made to the terms of the option agreements.
11
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
June 30, 1996 and December 31, 1995
8. Commitments and Contingencies:
In the normal course of business, LSB has outstanding various commitments
and contingent liabilities, such as legal claims, which are not reflected
in the financial statements. Management does not anticipate any material
loss as a result of these transactions.
As of June 30, 1996, LSB has entered into commitments to fund loans
totaling approximately $5 million. The majority of these loans will have
adjustable rates.
9. Treasury Stock:
On April 3, 1990, NHTB announced a Stock Repurchase Program to buy back, on
the open market, up to a total of 5% of its outstanding common stock or
107,364 shares. On July 11, 1990, NHTB completed its Stock Repurchase
Program whereby 107,364 shares were repurchased at an average price of
$4.37 per share. On August 9, 1990, NHTB announced a second buy back
program to buy back, on the open market, up to 10%, or 203,992 shares of
its total outstanding common stock. On June 11, 1991, a third buy back was
announced to cover an additional 10% of the then outstanding stock or
183,592 shares. On July 15, 1993, NHTB announced another buy back program
whereby the company intends to repurchase, on the open market, 10%, or
165,233 shares of its outstanding common stock. As of June 30, 1996, NHTB
had repurchased a total of 539,148 shares at an average price of $4.98 for
all programs while 121,033 shares remained to be purchased from the 1993
buy back program.
10. Authorized Shares of Stock:
The authorized, issued and outstanding stock was as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Preferred stock:
Authorized shares 2,500,000 2,500,000
Issued shares - -
Outstanding shares - -
Common stock:
Authorized shares 5,000,000 5,000,000
Issued shares 2,147,282 2,147,282
Outstanding shares 1,691,803 1,689,503
</TABLE>
12
<PAGE>
Part I. Item II. Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
New Hampshire Thrift Bancshares, Inc. (The Company), a Delaware
holding company organized on July 5, 1989, is the parent company of Lake Sunapee
Bank, fsb (The Bank), a federally chartered savings bank. The Bank was
originally chartered by the State of New Hampshire in 1868 as the Newport
Savings Bank. On December 1, 1980, the Bank became the first bank in the
United States to convert from a state chartered mutual savings bank to a
federally-chartered mutual savings bank. In 1981, the Bank changed its name to
Lake Sunapee Savings Bank, fsb, and in 1994, changed its name to Lake Sunapee
Bank, fsb. The Bank is a member of the Federal Deposit Insurance Corporation
(FDIC) and its deposits are insured through the Savings Association Insurance
Fund (SAIF). The Bank is regulated by the Office of Thrift Supervision (OTS).
The Company's profitability is derived from its only subsidiary, Lake
Sunapee Bank, fsb. The Bank's earnings in turn are generated from the net
income from the yield on its loan and investment portfolios less the cost of its
deposit accounts and borrowings. These core revenues are supplemented by loan
origination fees, retail banking service fees, gains on the sale of investment
securities, and brokerage fees. The Bank passes its earnings to the Company to
the extent allowed by OTS regulations. Current regulations enable the Bank to
pay to the Company the higher of an amount equal to seventy-five per cent of the
Bank's prior four quarter earnings or up to fifty per cent of excess capital
plus total current year earnings. As of June 30, 1996, the Company had capital
of $1,674,446 which the Company plans to use to continue its annual dividend
payout of $0.50 per share. The Bank's core capital position of $17,800,681
results in core capital of 6.89%.
The United States Congress continues to debate various methods for the
recapitalization of the Savings Association Insurance Fund (SAIF), to which the
Bank pays deposit insurance assessments. As currently proposed, this
legislation will require the Bank to incur a one-time, after-tax expense in the
range of $800,000 to $1,100,000 in order to cover its portion of a one-time
contribution to the SAIF fund. This will be offset by expected, annual, after-
tax expense savings in deposit insurance of approximately $200,000.
Proposed legislation also provided for the merger of the BIF and SAIF
on January 1, 1998, with such merger being conditioned upon the prior
elimination of the thrift charter. Congressional leaders had also agreed that
Congress should consider and act upon separate legislation to eliminate the
thrift charter as early as possible in 1996. If adopted, such legislation would
require that the Bank, as a federal savings association, convert to a bank
charter. Such a requirement to convert to a bank charter could cause the Bank
to lose the favorable tax treatment for its bad debt reserves that it currently
enjoys under section 593 of the Internal Revenue Code and to have all or part of
its existing bad debt reserves recaptured into income.
On July 29, 1996, the Company announced that the Bank had entered into
a definitive agreement to acquire Landmark Bank, located in Lebanon, NH. This
agreement provides that Landmark Bank shareholders may elect to receive $12.00
in cash per share, or to exchange their shares for New Hampshire Thrift
Bancshares, Inc. shares, with a total consideration of sixty per cent in stock
and forty per cent in cash. The total transaction value is $5,676,000.
The combined banking operation as of June 30, 1996, reflected total
assets of $316 million, deposits of $254 million, capital of $22.5 million, and
a total of 12 branches located in Sullivan, Merrimack, Grafton, and Hillsborough
counties. This transaction is expected to be accretive to earnings in 1997.
13
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (continued)
This acquisition is subject to shareholder approval by both New
Hampshire Thrift Bancshares and Landmark Bank. Approval of applicable
regulatory authorities and the satisfaction of certain other customary
conditions will be required.
Financial Condition
During the first six months of 1996, total assets increased slightly
by $310,048 or .12% to $258.5 million. The decrease in federal funds sold and
loans held for sale was offset by an increase in loans held in portfolio. In
addition, the decrease in the Bank's deposits held under repurchase agreements
was offset by an increase in advances from the Federal Home Loan Bank.
Total investments (at fair value) increased by $241,297, or .85% as
sales and maturities of approximately $3.6 million were offset by purchases of
approximately $3.8 million.
Real estate loans held in portfolio increased 2.90% from year-end.
Proceeds from the sales of loans increased $1,829,369 from March 31, 1996 to
approximately $46 million at June 30, 1996. The Bank from time-to-time sells
fixed-rate loans into the secondary market and retains the servicing on these
loans in order to build fee income. The selling of fixed-rate loans reduces
interest rate risk and creates liquidity.
Real estate owned totaled $819,679 and accounted for 26.28% of non-
performing assets at June 30, 1996 compared to $984,185, or 40.58% at year-end
1995. Continuing to be included in the real estate owned amount is a real
estate development loan, Blye Hill Landing in Newbury, NH, with a book value of
$615,902 at June 30, 1996. At June 30, 1996, the Bank had recorded no
properties as in-substance foreclosures.
Non-performing assets amounted to $3,120,133, or 1.21% of assets at
June 30, 1996, compared to $2,425,647, or .94% at year-end 1995. The Bank
includes all loans 90 days past due, all real estate owned, and non-earning
assets as non-performing assets. The increase in non-performing assets resulted
from the transfer of a loan from classified or impaired to a non-performing
status. Impaired loans totaled $440,539 and $807,867 at June 30, 1996 and
December 31, 1995, respectively. As of June 30, 1996, the Bank charged-off
$1,069,197 of loans which had been previously reserved for.
Deposits increased $332,327 for the first six months of 1996, after a
decline of $1.5 million in the first quarter, as customers shifted deposits into
longer-term instruments. Certificates of deposits increased as the Bank priced
its one-year certificates comparable to the one-year Treasury. In addition to
deposits, the Bank funded the growth in loans with advances from the Federal
Home Loan Bank of Boston (FHLBB). As stated above, advances increased
$4,334,176 million to $31,270,344 during the six months ended June 30, 1996
Liquidity and Capital Resources
The Bank is required to maintain a 5.00% ratio of long-term liquid
assets to net withdrawable funds. At June 30, 1996, the Bank's percentage of
10.49% exceeded regulatory requirements.
The Bank's sources of funds come from net deposit inflows, loan
amortizations, and advances from the FHLBB. At June 30, 1996, the Bank had
approximately $46 million in additional borrowing capacity available from the
FHLBB. The Bank expects to be able to fund loan commitments of approximately $5
million by utilizing the FHLBB advance program, in the event deposit inflows are
not sufficient to cover funding needs.
14
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (continued)
As of June 30, 1996, net cash inflows from operating activities
amounted to $2,667,943 compared to $2,361,287 for the same period in 1995. Net
cash inflows from financing activities were $43,385 compared to $10,533,584 for
1995. This change was primarily due to the $8,208,223 decrease in deposits and
repurchase agreements. The net cash inflows from operating activities, when
added to the net cash inflows from financing activities were not sufficient, by
$3,333,081, to cover the investing cash outflow needs of $6,044,409. The Bank
utilized its beginning cash position to cover the balance of its investing
activity needs. Cash and cash equivalents, therefore, declined to $7,660,216 as
of June 30, 1996. Investing activity needs included the purchase of $3,842,459
of securities available for sale and a net increase in loans to customers of
$4,972,842.
At June 30, 1996, the Company's capital amounted to $19,475,127, or
7.53% of total assets, compared to $19,544,005, or 7.57% of total assets at
year-end 1995. The change of $68,878 is attributed to retaining income of
$405,762, a change in the unrealized loss on securities available for sale of
$491,891, and a change of $17,251 in paid-in capital and treasury stock due to
the exercise of stock options. An increase in interest rates during the first
six months of 1996 resulted in a drop in bond values. This increased the
unrealized loss on securities available for sale.
As part of the Financial Institution Reform, Recovery, and Enforcement
Act of 1989 (FIRREA), banks are required to maintain core, leverage, and risk-
based capital of 3.00%, 3.00%, and 8.00%, respectively. As of June 30, 1996,
the Bank's core, leverage and risk-based capital ratios were 6.98%, 6.98%, and
12.57%, respectively, well in excess of the regulators' requirements.
The Company's book value per share was $11.51 at June 30, 1996, versus
$11.57 at December 31, 1995. The decrease was attributable to the change in the
unrealized loss on securities available for sale.
Interest Rate Sensitivity
The Bank's one-year interest sensitive gap at June 30, 1996, was
approximately negative eight percent, compared to the December 31, 1995, gap
position of approximately negative seven percent. The Bank continues to offer
adjustable rate mortgages which reprice at one, three, and five year intervals.
In addition, from time-to-time, the Bank sells fixed rate mortgages into the
secondary market in order to minimize interest rate risk. As of June 30, 1996,
adjustable rate mortgages amounted to approximately 83% of total loans.
The strategy of matching rate-sensitive assets with similar
liabilities stabilizes profitability during periods of interest rate
fluctuations. The Bank's gap, of approximately negative eight percent at June
30, 1996, means earnings would increase if interest rates trended downward. The
opposite would occur if interest rates were to rise. Management feels that
maintaining the gap within ten points of the parity line provides adequate
protection against severe interest rate swings. In an effort to maintain the
gap within ten points of parity, the Bank utilizes the Federal Home Loan Bank
advance program to control the repricing of liabilities.
NET INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1996
As compared to the three months ended June 30, 1995
Net income for the second quarter in 1996 was $479,381, or $0.28 per
share as compared to $257,176, or $0.15 per share for the same period in 1995,
an increase of $222,205, or 86%. Net interest income increased by $220,660, or
32.79% due to an increase in loan volume and upward adjustments to the Bank's
variable rate loans.
Total non-interest income increased $381,156, or 115.74%. Two factors
accounted for this increase. As mentioned in the March 31, 1996, 10-QSB, the
Bank expected to realize an after-tax gain of
15
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (continued)
approximately $200,000 from the sale of a piece of land adjacent to the Bank's
New London branch. The sale occurred in June. Fees from customer and brokerage
services increased $125,687 during the three months ended June 30, 1996.
Operating expenses remained flat, increasing slightly by $27,357, or
1.75%. The Bank expects future operating expenses to increase at approximately
the rate of inflation.
NET INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996
As compared to the six months ended June 30, 1995
Net income for the six months ended June 30, 1996 increased $381,129
to $828,230, or $0.49 per share compared to $447,101, or $0.26 per share at June
30, 1995. The reasons for the increase are explained above.
Reserve for Loan Losses
The Bank considers many factors in determining the level of loan loss
reserves. These factors include the risk and size characteristics of loans,
prior years' loss experience, the levels of delinquencies, the prevailing
economic conditions, the number of foreclosures, unemployment rates, interest
rates, and the value of collateral securing loans. Additionally, the Bank's
commercial loan officers review the financial condition of commercial loan
facilities and inventories. The Bank also has an internal audit and compliance
program whereby all loans are reviewed and classified to determine appropriate
loan loss reserve levels. Results of the audit and compliance programs are
reported directly to the Audit Committee of the Company's Board of Directors.
The reserve for loan losses at June 30, 1996, was $1,507,413 including
$7,411 in specific reserves for loans classified as loss, compared to
$1,828,060, including $628,060 in specific reserves, at year-end 1995. The
reserve for loan loss allowance represented 0.70% of total loans at June 30,
1996, compared to 0.87% at December 31, 1995. The allowance for loan losses as a
percentage of non-performing assets was 48.31% at June 30, 1996, compared to
75.36% at December 31, 1995.
Loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention do not result from trends or uncertainties which
the Bank expects will materially impact future operating results, liquidity, or
capital resources.
Total classified loans, excluding special mention, as of
June 30, 1996, were $6,739,969 compared to $6,049,066 at December 31, 1995.
Of these amounts, $3,120,133 and $2,425,647, respectively, are included in
non-performing assets.
16
<PAGE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations (continued)
The Financial Accounting Standards Board has issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan." The Statement became
effective for the Bank as of January 1, 1995. Note 3, pp. 8, to the Financial
Reports presents a discussion relative to impaired loans.
The following table shows the Bank's breakdown of non-performing loans (dollars
in thousands):
<TABLE>
<CAPTION>
6-30-96 12-31-95
-------------- --------------
<S> <C> <C> <C> <C>
90 days delinquent/(1)/ $ 856 0.33% $ 1,144 0.54%
Non-earning assets/(2)/ 1,444 0.56% 297 0.14%
Real estate owned 820 0.32% 984 0.47%
------ ----- ------ ----
Total non-performing assets $ 3,120 1.21% $ 2,425 1.15%
------ ----- ------ ----
Impaired loans $ 441 0.17% $ 808 0.38%
------ ----- ------ -----
</TABLE>
/(1)/All loans 90 days or more delinquent are placed on a non-accruing status
/(2)/Loans considered to be uncollectible, pending foreclosure, or in bankruptcy
proceeding are placed on a non-earning status
The following table sets forth the allocation of the loan loss valuation
allowance and the percentage of loans in each category to total loans:
<TABLE>
<CAPTION>
6-30-96 12-31-95
----------------- -----------------
<S> <C> <C> <C> <C>
Real estate loans -
Conventional $ 1,166,925 83% $ 687,547 83%
Construction 111,909 .5% 201,257 n/m
Collateral and Consumer 3,550 12% 8,067 12%
Commercial and Municipal 172,617 4% 276,526 4%
Impaired Loans 52,412 .5% 654,663 1%
---------- ---- --------- ----
Valuation allowance $ 1,507,413 100% $ 1,828,060 100%
---------- ---- --------- ----
Valuation allowance as a
percentage of total loans 0.70% 0.87%
---------- ----------
</TABLE>
As of June 30, 1996, there were no other loans not included in the
table or discussed above where known information about the possible credit
problems of borrowers caused management to have doubts as to the ability of the
borrowers to comply with present loan repayment terms and which may result in
disclosure of such loans in the future.
<PAGE>
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There is no material litigation pending in which the Company or its
subsidiaries is a party or which the property of the Company or its
subsidiaries is subject.
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Common Shareholders
------------------------------------------------------
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A.) Exhibits:
None
B.) Reports on Form 8-K:
(i) Form 8-K regarding change of independent auditors dated
July 10, 1996
(ii) Form 8-K reporting announcement of agreement to acquire
Landmark Bank dated July 26, 1996
18
<PAGE>
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.
NEW HAMPSHIRE THRIFT BANCSHARES, INC.
-------------------------------------
(Registrant)
Date: August 14, 1996 /s/ Stephen W. Ensign
---------------------- ---------------------------------------
Stephen W. Ensign
President and Chief Executive Officer
Date: August 14, 1996 /s/ Stephen R. Theroux
---------------------- ---------------------------------------
Stephen R. Theroux
Executive Vice President and
Chief Financial Officer
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,660,216
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,234,393
<INVESTMENTS-CARRYING> 368,054
<INVESTMENTS-MARKET> 368,054
<LOANS> 215,731,396
<ALLOWANCE> 1,507,413
<TOTAL-ASSETS> 258,526,125
<DEPOSITS> 200,303,248
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,133,405
<LONG-TERM> 0
0
0
<COMMON> 21,473
<OTHER-SE> 19,453,654
<TOTAL-LIABILITIES-AND-EQUITY> 19,475,127
<INTEREST-LOAN> 8,243,982
<INTEREST-INVEST> 953,543
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,197,525
<INTEREST-DEPOSIT> 4,198,985
<INTEREST-EXPENSE> 5,054,805
<INTEREST-INCOME-NET> 4,142,720
<LOAN-LOSSES> 744,191
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,248,992
<INCOME-PRETAX> 1,236,230
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 828,230
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
<YIELD-ACTUAL> 0
<LOANS-NON> 1,444,239
<LOANS-PAST> 0
<LOANS-TROUBLED> 524,338
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,828,060
<CHARGE-OFFS> 1,069,197
<RECOVERIES> 4,359
<ALLOWANCE-CLOSE> 1,507,413
<ALLOWANCE-DOMESTIC> 1,507,413
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
