================================================================================
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 March 31, 1998
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -----------------
Commission File Number 0-17753
-------
REGENT BANCSHARES CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 23-2440805
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Walnut Street, Philadelphia, PA 19102
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(215) 546-6500
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------------------------------------------------------
(Former name and address and former fiscal year, if changed since last report)
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 of the Registrant's Common Stock outstanding at March
31, 1998 was 3,409,822.
================================================================================
<PAGE>
Part I. FINANCIAL INFORMATION
REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,865,778 $ 2,343,163
Overnight investments 4,588,280 3,036,068
------------- -------------
Cash and cash equivalents 7,454,058 5,379,231
Investment securities available for sale 117,833,035 121,013,552
Loans, net of unearned fees 100,279,453 95,051,225
Less: Allowance for loan losses (1,268,381) (1,366,974)
------------- -------------
Net loans 99,011,072 93,684,251
------------- -------------
Accrued interest receivable 1,397,359 1,402,093
Premises and equipment, net 459,176 529,373
Prepaid expenses and other assets 3,457,120 3,609,356
------------- -------------
Total assets $ 229,611,820 $ 225,617,856
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand deposits $ 11,073,116 $ 11,856,620
Interest bearing:
NOW and money market 8,028,332 6,589,991
Savings 25,917,334 33,749,462
Certificates of deposit 100,307,401 99,800,707
------------- -------------
Total deposits 145,326,183 151,996,780
Advances from Federal Home Loan Bank of Pittsburgh 59,190,682 48,193,150
Subordinated debentures 2,750,000 2,750,000
Accrued interest payable 3,884,980 4,382,651
Other liabilities 131,481 152,541
------------- -------------
Total liabilities $ 211,283,326 $ 207,475,122
------------- -------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.10 par value, 5,000,000 shares authorized;
no shares issued and outstanding $ -- $ --
Common stock, $.10 par value, 10,000,000 shares authorized,
3,409,822 shares issued and outstanding 340,982 340,982
Additional paid-in capital 23,698,325 23,698,325
Accumulated deficit (5,222,648) (5,524,397)
Accumulated other comprehensive loss (488,165) (372,176)
------------- -------------
Total shareholders' equity 18,328,494 18,142,734
------------- -------------
Total Liabilities and Shareholders' Equity $ 229,611,820 $ 225,617,856
============= =============
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
Interest income:
Loans, including fees $ 2,285,275 $ 2,142,302
Investment securities, including dividends 2,005,933 1,856,307
----------- -----------
Total interest income 4,291,208 3,998,609
Interest expense:
Deposits 1,884,703 2,347,186
Short-term borrowings 740,433 3,968
Long-term debt 52,551 57,599
----------- -----------
Total interest expense 2,677,687 2,408,753
----------- -----------
Net interest income 1,613,521 1,589,856
Provision for loan losses -- (200,000)
----------- -----------
Net interest income after provision for loan losses 1,613,521 1,789,856
Non-interest income:
Service charges on deposit accounts 40,282 20,493
Other 29,434 12,068
Net gain on sales of assets 22,190 545,113
----------- -----------
Total non-interest income 91,906 577,674
Non-interest expense:
Salaries and employee benefits 635,842 768,632
Professional services 116,053 1,038,012
Occupancy 183,778 121,826
FDIC assessment and other insurance 25,525 131,009
IPF servicing -- 320,312
Data processing 48,372 54,821
Other 209,222 113,339
----------- -----------
Total non-interest expense 1,218,792 2,547,951
----------- -----------
Income (loss) before provision for income taxes 486,635 (180,421)
Income tax expense 184,886 --
----------- -----------
Net income (loss) 301,749 (180,421)
Preferred stock dividends -- 83,145
----------- -----------
Net income (loss) applicable to common stock $ 301,749 $ (263,566)
=========== ===========
Net income (loss) per share basic $ .09 $ (.21)
Net income per share diluted $ .08 --
Weighted average number of shares outstanding 3,409,822 1,237,486
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------- -------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 301,749 $ (180,421)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Provision for loan losses -- (200,000)
Depreciation 72,720 69,789
Net amortization of premiums and accretion of
discounts on investment securities 14,004 96,799
Net gain on sales of assets (22,190) (545,113)
Decrease in unearned fees (38,500) (500,825)
Increase (decrease) in accrued interest receivable 4,734 (159,446)
Decrease in prepaid expenses and other assets 152,236 2,331,484
Decrease in accrued interest payable (497,671) (1,127,765)
(Decrease) increase in other liabilities (21,060) 505,473
------------- -------------
Net cash (used in) provided by operating activities (33,978) 289,975
------------- -------------
Cash flows from investing activities:
Net decrease (increase) in loans (5,365,321) 8,882,317
Sale of investment securities available for sale 100,985,338 --
Purchase of investment securities available for sale (102,530,049) (2,000,000)
Principal collected on investments held to maturity -- 3,290,037
Principal collected on investment securities available for sale 4,694,426 597,928
Purchases of premises and equipment (2,524) --
------------- -------------
Net cash (used in) provided by investing activities (2,218,130) 10,770,282
------------- -------------
Cash flows from financing activities:
Net decrease in demand, NOW, savings and
money market deposits (7,177,291) (4,788,236)
Net increase (decrease) in certificates of deposit 506,694 (3,182,348)
Net increase in advances from Federal Home Loan Bank of
Pittsburgh with original maturities greater than of three months 24,997,532 --
Net decrease in advances from Federal Home Loan Bank of
Pittsburgh with original maturities of three months or less (14,000,000) (1,949)
Proceeds from sale of preferred stock -- 106,366
------------- -------------
Net cash provided by (used in) financing activities 4,326,935 (7,866,167)
------------- -------------
Net increase in cash and cash equivalents 2,074,827 3,194,090
Cash and cash equivalents, beginning of year 5,379,231 9,493,464
------------- -------------
Cash and cash equivalents, end of period $ 7,454,058 $ 12,687,554
============= =============
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
REGENT BANCSHARES CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------------------------
1998 1997
------------------------------ ------------------------------
Comprehensive Comprehensive
Total Income (loss) Total Income (loss)
----------- -------------- ----------- --------------
(unaudited)
<S> <C> <C> <C> <C>
Accumulated deficit
Balance at January 1 $(5,524,397) $(6,049,921)
Net income 301,749 $301,749 (180,421) $(180,421)
---------- -----------
Balance at March 31 $(5,222,648) $(6,230,342)
----------- -----------
Accumulated other comprehensive
income (loss)
Balance at January 1 (372,176) (673,270)
Unrealized losses on securities
net of reclassification adjustment
(1998 is net of tax benefits of
$71,090 and 1997 is net of taxes
with a corresponding tax valuation
allowance) (A) (115,989) (115,989) (96,064) (96,064)
----------- ---------- ----------- ---------
Comprehensive income (loss) $ 185,760 $(276,485)
========== =========
Balance at March 31 (488,165) (769,334)
----------- -----------
Common stock
Balance at January 1 340,982 122,828
Common stock issued --- 1,651
----------- -----------
Balance at March 31 340,982 124,479
----------- -----------
Preferred stock
Balance at January 1 --- 54,705
Preferred stock issued --- 1,636
Preferred stock converted --- (1,649)
----------- -----------
Balance at March 31 --- 54,692
----------- -----------
Additional paid-in capital
Balance at January 1 23,698,325 14,678,375
Preferred stock issued --- 104,728
----------- -----------
Balance at March 31 23,698,325 14,783,103
----------- -----------
Total equity $18,328,494 $ 7,962,598
=========== ===========
</TABLE>
- ----------
(A) Disclosure of reclassification amount:
Three Months Ended March 31,
----------------------------
1998 1997
--------- ---------
Unrealized holding losses during period $ (93,799) $ (96,064)
Less: Reclassification adjustment for
gains included in net income (22,190) --
--------- ---------
Net unrealized losses on securities $(115,989) $ (96,064)
========= =========
See notes to consolidated financial statements.
-5-
<PAGE>
REGENT BANCSHARES CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
1. In the opinion of Regent Bancshares Corp. ("Regent"), the accompanying
unaudited, consolidated financial statements contain all adjustments,
including normal recurring accruals, necessary to present fairly the
financial position of Regent and its wholly owned subsidiary, Regent
National Bank (the "Bank"), as of March 31, 1998, and the results of their
operations and cash flows for the three months ended March 31, 1998 and
1997.
2. Results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
3. Regent adopted FAS No. 128, "Earnings per Share," in 1997. Basic net income
(loss) per common share is computed by dividing net income (loss) less
preferred stock dividends by the weighted average number of common shares
outstanding for the period. Diluted net income per common share reflects
the potential dilution that could occur from the exercise of stock options
and other convertible securities. All prior year income (loss) per share
data has been restated. Diluted earnings per share for the quarter ended
March 31, 1997 is not presented since such amounts are anti-dilutive.
4. Certain 1997 financial information has been reclassified to conform to the
current year's presentation.
5. During the first quarter of 1998, Regent implemented Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS No.
130"). The objective of FAS No. 130 is to report a measure of all changes
in equity of an enterprise that result from transactions and other economic
events of the period other than transactions with owners. Comprehensive
income is the total of net income and all other non-shareholder changes in
equity. Non-shareholder changes in equity include the following:
o Unrealized holding gains/losses on securities classified as available
for sale under Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
o Foreign currency translation adjustments.
o Minimum pension liability adjustments.
The only type of non-owner change in equity that Regent records is
unrealized holding gains/losses on securities classified as available for
sale.
6. In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("FAS No. 131"). This statement is
effective for fiscal years beginning after December 15, 1997. FAS No. 131
requires that a company report financial and descriptive information about
its "reportable operating segments." Management has determined that Regent,
as a community bank, does not have any reportable operating segments.
7. At December 31, 1997, $63.5 million of "held-to-maturity" securities were
reclassified as "available-for-sale." Following this reclassification,
approximately $48 million of premium, mortgage-backed securities ("MBS")
were sold in the first quarter of 1998 to reduce the negative impact on
earnings of significant prepayments. The proceeds were redeployed into
securities that are expected to have better performance characteristics. A
modest gain of $22 thousand was realized as a result of this restructuring.
-6-
<PAGE>
8. On March 18, 1998, Regent and the Bank entered into an Agreement and Plan
of Merger as amended and restated on March 27, 1998 (the "Merger
Agreement") with JeffBanks, Inc. ("JBI"), Jefferson Bank ("Jefferson") and
a wholly owned subsidiary of JBI, JeffBanks Acquisitioncorp. V., Inc. ("JBI
Merger Sub") pursuant to which Regent will merge (the "Merger") with and
into JBI Merger Sub with Regent as the surviving corporation followed by
the merger of Regent with and into JBI and JBI as the surviving corporation
and the Bank will merge (the "Bank Merger") with and into Jefferson with
Jefferson as the surviving bank. The Merger and the Bank Merger are subject
to approval by the shareholders of Regent and JBI as well as various
regulatory approvals, including approval by the Office of the Comptroller
of the Currency (the "OCC"), the Board of Governors of the Federal Reserve
System (the "FRB") and the Pennsylvania Department of Banking.
The Merger Agreement provides that, upon consummation of the Merger, each
outstanding share of Common Stock of Regent will be converted into the
right to receive .303 of a share of Common Stock of JBI, and that each
outstanding and unexercised option to purchase Common Stock of Regent will
be automatically converted into an option to purchase that number of shares
of JBI Common Stock as equals the number of shares of Regent's Common Stock
purchasable pursuant to such option multiplied by .303 at an exercise price
equal to the exercise price of the Regent option divided to .303.
On March 18, 1998, Regent also entered into a Stock Option Agreement as
amended and restated on March 27, 1998 (the "Option Agreement") with JBI
whereby JBI was granted an option under certain circumstances to purchase
up to 678,430 shares of Regent's Common Stock at $14.39 per share.
-7-
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
All statements contained in this Form 10-Q Quarterly Report that are not
historical facts are based on current expectations. Such statements are
forward-looking (as defined in the Private Securities Litigation Reform Act of
1995) in nature and involve a number of risks and uncertainties. Actual results
may vary materially. The factors that could cause actual results to vary
materially include: the ability of the Bank to maintain profitable operations,
the adequacy of the Bank's allowance for possible loan losses, general business
and economic conditions in the Bank's primary lending and deposit-taking areas,
future interest rate fluctuations, competition from various financial and
non-financial businesses, the ability of Regent and the Bank to remain in
compliance with current regulatory provisions and any future changes in such
provisions, the ability of the Bank to continue to generate loan growth and to
improve its net interest margin and other risks that may be described from time
to time in the reports Regent is required to file with the Securities and
Exchange Commission (the "Commission"). Undue reliance should not be placed on
any such forward-looking statements.
Regent reported net income for the first quarter of 1998 of $302 thousand
compared to a net loss of $180 thousand, before dividends on preferred stock,
for the first quarter of 1997. The results for the first quarter of 1998 include
a provision for taxes of $185 thousand, whereas the results for the first
quarter of 1997 included no tax provision. Basic earnings per share were $.09
for the first quarter of 1998, compared to a loss of $.21 for the first quarter
of 1997. Diluted earnings per share were $.08 for the first quarter of 1998,
with none reported for the first quarter of 1997 because the amounts were
antidilutive. The improvement in Regent's performance in the first quarter of
1998 is principally a result of various actions taken a year ago to
substantially reduce the cost of operations. Excluding the merger termination
expense of $722 thousand paid to Carnegie Bank, N.A. in the first quarter of
1997, total noninterest expenses in the first quarter of 1998 declined $607
thousand, or 33%, from the comparable quarter of 1997. In addition, excluding
the gain of $711 thousand on the sale of loans and loan participations to
Carnegie, total noninterest income increased by $225 thousand. Service charges
and other income more than doubled in 1998 and Regent had a gain on sale of
investments in 1998 compared to a loss on sale of problem assets in 1997.
Total assets at March 31, 1998 were $229.6 million, which was 19% greater
than March 31, 1997, while total loans grew by 33% to $100.3 million at March
31, 1998. Total deposits at March 31, 1998 were $145.3 million, a decrease of
18% as a result of management decisions to reduce the Bank's reliance on
expensive, promotion-driven, time deposits and to eliminate the 5.00% APY
guarantee on statement savings accounts. Shareholders' equity was $18.3 million
at March 31, 1998, which was more than two times the level of $8.0 million at
March 31, 1997.
On March 18, 1998, Regent and the Bank entered into the Merger Agreement,
JBI, Jefferson and JBI Merger Sub pursuant to which Regent will merge with and
into JBI Merger Sub with Regent as the surviving corporation followed by the
merger of Regent with and into JBI with JBI as the surviving corporation and the
Bank will merge with and into Jefferson with Jefferson as the surviving bank.
The Merger and the Bank Merger are subject to approval by the shareholders of
Regent and JBI as well as various regulatory approvals, including approval by
the OCC, the FRB and the Pennsylvania Department of Banking.
The Merger Agreement provides that, upon consummation of the Merger,
each outstanding share of Common Stock of Regent will be converted into the
right to receive .303 of a share of Common Stock of JBI, and that each
outstanding and unexercised option to purchase Common Stock of Regent will be
automatically converted into an option to purchase that number of shares of JBI
Common Stock as equals the number of shares of Regent's Common Stock purchasable
pursuant to
-8-
<PAGE>
such option multiplied by .303 at an exercise price equal to the exercise price
of the Regent option divided by .303.
On March 18, 1998, Regent also entered into a Stock Option Agreement as
amended and restated on March 27, 1998 (the "Option Agreement") with JBI whereby
JBI was granted an option under certain circumstances to purchase up to 678,430
shares of Regent's Common Stock at $14.39 per share.
Financial Condition
Capital Adequacy
Capital adequacy is a primary determinant of a financial institution's
ability to grow, make acquisitions and protect against any unforeseen loss or
adverse economic condition. An evaluation of capital adequacy assesses how an
institution's inherent risks impact its ongoing financial net worth and focuses
particularly on asset quality, interest rate sensitivity, earnings and
liquidity. Total shareholders' equity was $18.3 million at March 31, 1998 versus
$18.1 million at December 31, 1997.
Capital adequacy standards adopted by federal banking regulators define
capital as Tier 1 and Tier 2 capital. All banks are required to have Tier 1
capital of at least 4% of risk-weighted assets and total capital of at least 8%
of risk-weighted assets. Tier 1 capital consists of common shareholders' equity,
non-cumulative preferred stock and retained earnings and excludes the effects of
unrealized gains or losses on securities available for sale. Tier 2 or Total
capital includes Tier 1 capital, cumulative preferred stock, qualifying
subordinated debt and the allowance for possible loan losses up to a maximum of
1.25% of total risk-weighted assets.
As an institution whose deposits are insured by the Federal Deposit
Insurance Corporation (the "FDIC"), the Bank is also subject to insurance
assessments imposed by the FDIC. The actual assessment to be paid by any
FDIC-insured institution is based on the institution's assessment risk
classification which is determined on whether the institution is considered
"well capitalized," "adequately capitalized" or "undercapitalized" as those
terms are defined in corrective action provisions of the Federal Deposit
Insurance Corporation Improvement Act, and whether such institution is
considered by its bank supervisory agency to be financially sound or to have
supervisory concerns. At December 31, 1997, the Bank satisfied the OCC criteria
for a "well-capitalized" institution, and, as a result, under current law the
Bank was not required to pay FDIC insurance premiums commencing January 1, 1998.
The following table sets forth the capital ratios of Regent and the Bank as of
March 31, 1998 and December 31, 1997 as well as the required minimum regulatory
capital ratios.
<TABLE>
<CAPTION>
Required
Regulatory
Regent March 31, 1998 December 31, 1997 Minimum
- ------ -------------- ----------------- ----------
<S> <C> <C> <C>
Risk-based capital:
Tier 1 capital.......... 14.78% 14.95% 4.00%
Total capital........... 15.79 16.07 8.00
Tier 1 leverage ratio...... 8.09 8.29 4.00
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Required
Regulatory
The Bank March 31, 1998 December 31, 1997 Minimum
- -------- -------------- ----------------- ----------
<S> <C> <C> <C>
Risk-based capital:
Tier 1 capital.......... 16.90% 17.19% 4.00%
Total capital........... 17.92 18.31 8.00
Tier 1 leverage ratio...... 9.26 9.53 4.00
</TABLE>
Asset and Liability Management
Asset and liability management is the process of maximizing net interest
income within the constraints of maintaining acceptable levels of liquidity,
interest rate risk and capital. To achieve this objective, the Bank has
implemented policies and procedures that utilize a combination of selected
investments and funding sources with various maturity structures.
Liquidity
Liquidity represents the ability to generate funds at reasonable rates to
meet potential cash outflows from deposit customers who need to withdraw funds
or borrowers who need available credit. The primary source of the Bank's
liquidity has been the Bank's ability to generate deposits.
Supplementing the deposit base, liquidity is available from the investment
portfolio, which consists primarily of mortgage-backed securities issued by U.S.
Government agencies and corporations. These securities enhance liquidity not
only by their marketability, but they also provide monthly principal and
interest payments.
The liquidity position is also strengthened by the establishment of credit
facilities with other banks, the Federal Reserve Bank of Philadelphia (the
"FRBP") and the Federal Home Loan Bank of Pittsburgh (the "FHLB"). Investment
securities are required to be pledged as collateral for transactions executed
under these facilities and provide for an availability of funds on an overnight
basis. The FHLB also provides for borrowings on a fixed or floating rate basis
with specified maturities of up to 20 years at costs that may sometimes be less
expensive than the costs of the Bank's deposit generation process.
Investment Portfolio
The investment portfolio, consisting principally of MBS and debt
securities, is coordinated with the liquidity and interest rate sensitivity
position of the Bank. With an emphasis on minimizing credit, capital and market
risk, the investment portfolio is considered an extension of loans with the
objectives of enhancing liquidity and earning a fair return.
Interest Rate Sensitivity
The evaluation of interest rate sensitivity deals with the exposure of net
interest income to fluctuations in interest rates. It is management's objective
to maintain stability in the growth of net interest income by appropriately
mixing interest sensitive assets and liabilities. One tool used by management to
gauge interest rate sensitivity is a gap analysis which categorizes assets and
liabilities on the basis of maturity date, the date of next repricing and the
applicable amortization schedule. This analysis summarizes the matching or
mismatching of rate sensitive assets versus rate sensitive liabilities according
to specified time periods, and provides management with an indication of how
interest income may be impacted by changing rate scenarios. For example, an
institution with more
-10-
<PAGE>
interest sensitive assets than interest sensitive liabilities is said to have a
positive gap. In this example, as interest rates rise, a greater volume of
assets is repriceable than liabilities. The net result may be an increase in the
net interest margin. Conversely, in a declining rate environment, the net
interest margin may decline. In addition to the gap analysis, computer
simulations are used to evaluate more specifically the impact of a change in
interest rates on liquidity, interest rate spreads/margins and operating
results. The simulations are a more effective tool than a gap analysis since the
simulation analyses are more dynamic. The simulation analyses are particularly
beneficial as they can better evaluate the effects of varying prepayment speeds
on the income likely to be generated by the Bank's MBS portfolio. Using the
results of the simulation analyses, the Bank strives to control its interest
rate risk exposure so that its net interest income does not fluctuate beyond a
reasonable range.
The blending of fixed and floating rate loans and investments to match the
repricing and maturity characteristics of the various funding sources is a
continuous process in an attempt to minimize fluctuations in net interest
income. An effective tool used by the Bank in this process has been the
availability and flexibility of the various FHLB advance programs, which enable
the Bank to match effectively fixed rate assets with a fixed rate funding
source.
The distribution as of March 31, 1998 in the following table is based on a
combination of maturities, repricing frequencies and prepayment patterns.
Floating rate assets and liabilities are distributed based on the repricing
frequency of the instrument while fixed rate instruments are based on
maturities. Mortgage-backed securities are distributed in accordance with their
repricing frequency and estimated prepayment speeds, based on recent prepayment
experience, and callable Federal agency securities are distributed based on
their likely call dates. Deposit liabilities are distributed in two ways. First,
certificates of deposits, FHLB advances and subordinated debt are distributed
based on existing maturity dates. Second, non-maturity deposits such as NOWs and
Savings are divided into a core component, which is not considered
interest-sensitive within a year, and a volatile component, which is placed in
the 0-3 month time category. This determination is based on a multi-year history
in varying interest rate environments.
<TABLE>
<CAPTION>
0 to 3 4 to 12 1 to 3 3 to 5 After
Months Months Years Years 5 Years Total
-------- -------- -------- -------- -------- --------
(in thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C>
Investments ....................... $ 19,769 $ 19,355 $ 16,727 $ 10,663 $ 52,106 $118,620
Loans ............................. 36,851 9,457 11,581 18,408 24,341 100,638
Other earning assets .............. 4,588 -- -- -- -- 4,588
-------- -------- -------- -------- -------- --------
Total earning assets .............. $ 61,208 $ 28,812 $ 28,308 $ 29,071 $ 76,447 $223,846
NOW and money market .............. $ 5,028 $ -- $ 3,000 $ -- $ -- $ 8,028
Savings ........................... 10,000 -- 15,917 -- -- 25,917
Certificates of deposit ........... 13,492 48,511 35,056 3,195 53 100,307
FHLB advances ..................... -- -- -- 59,000 191 59,191
Subordinated debt ................. -- 2,750 -- -- -- 2,750
Net non-interest bearing
source of funds ............... -- -- -- -- 27,653 27,653
-------- -------- -------- -------- -------- --------
Total sources of funds ............ $ 28,520 $ 51,261 $ 53,973 $ 62,195 $ 27,897 $223,846
-------- -------- -------- -------- -------- --------
Period Gap ........................ 32,688 (22,449) (25,665) (33,124) 48,550
Cumulative Gap .................... 32,688 10,239 (15,426) (48,550) --
Cumulative Gap as % of
total assets .................... 14.2% 4.5% (6.7%) ( 21.1%)
</TABLE>
-11-
<PAGE>
Investment Portfolio
Following a reclassification of securities at December 31, 1997, the
investment portfolio of Regent includes U.S. agency debt, MBS issued by U.S.
agencies and corporations, collateralized mortgage obligations ("CMOs") and
non-marketable equities, principally issued by the FRBP and the FHLB. These
securities are accounted for and reported based on the guidelines contained in
FAS 115, "Accounting for Certain Investments in Debt and Equity Securities."
Available-for-sale ("AFS") securities may be sold if circumstances warrant and
are accounted for at market value with net unrealized gains or losses reported
as a component of shareholders' equity.
The portfolio is structured to provide a consistent level of interest
income and to generate monthly cash flow to enhance Regent's ability to manage
its liquidity needs. Although the stated maturities of MBS and CMOs may be as
long as 30 years, the average life of these securities is expected to be
considerably shorter due to the effects of normal amortization of principal and
prepayments of the residential mortgages underlying these securities. The
following table summarizes, by major category, the market value and amortized
cost of the AFS portfolio at March 31, 1998.
<TABLE>
<CAPTION>
Amortized Cost Market Value
-------------- ------------
<S> <C> <C>
U.S. Agencies................................ $ 24,293,596 $ 24,203,029
Mortgage-backed securities:
GNMA....................................... 11,815,173 11,694,310
FHLMC...................................... 19,458,182 19,195,802
FNMA....................................... 28,185,824 28,005,208
CMOs......................................... 30,942,683 30,809,747
Non-marketable equity securities............. 3,924,939 3,924,939
------------ ------------
Total..................................... $118,620,397 $117,833,035
============ ============
</TABLE>
The following table sets forth the range of maturities of debt securities
available for sale at March 31, 1998 based on the amortized cost, the weighted
average life of the securities for each classification and the weighted average
yield for each maturity period:
<TABLE>
<CAPTION>
Within 1 After 1 But After 5 But
Year Within 5 Years Within 10 Years Total
------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
U.S. Agencies .............................. $ -- $ -- $ 24,293,596 $ 24,293,596
Mortgage-backed securities ................. 1,893,890 14,197,279 43,368,010 59,459,179
CMOs ....................................... -- 5,751,370 25,191,313 30,942,683
------------ ------------ ------------ ------------
Total ................................... $ 1,893,890 $ 19,948,649 $ 92,852,920 $114,695,458
============ ============ ============ ============
Weighted Average Yield ..................... 7.87% 6.37% 6.90% 6.82%
============ ============ ============ ============
</TABLE>
-12-
<PAGE>
The following table sets forth those CMOs which have a carrying value that
exceeded 10% of Regent's shareholders' equity at March 31, 1998. These
securities have an investment rating of AA or better.
<TABLE>
<CAPTION>
Carrying Value Market Value
-------------- ------------
(in thousands)
<S> <C> <C>
AMAC
Series 1998-1 Class A4............................................... $1,843 $1,843
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 7................................................ 1,965 1,955
Continental Home Equity Loan Trust
Series 1996-3 Class A5............................................... 2,046 2,063
G E Capital Mortgage Services Inc.
Series 1993-17 Class A10............................................. 2,460 2,407
Merrill Lynch Mortgage Investors Inc.
Series 1993-E Class A6............................................... 4,333 4,362
Residential Funding Mortgage Securities Inc.
Series 1997-S19 Class A7............................................. 4,991 5,000
Residential Funding Mortgage Securities Inc.
Series 1996-S9 Class A13............................................. 3,408 3,408
Residential Funding Mortgage Securities Inc.
Series 1997-S15 Class A1............................................. 1,922 1,937
</TABLE>
Gross unrealized gains and losses on the AFS portfolio at March 31, 1998
were $146 thousand and $933 thousand, respectively.
Lending
Total loans amounted to $100.3 million at March 31, 1998 compared to
$95.1 million at December 31, 1997.
The following table sets forth the types of loans outstanding by
category as of March 31, 1998 and December 31, 1997 (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
------------------------------ -----------------------------
Amount % Amount %
--------- --- --------- ----
<S> <C> <C> <C> <C>
Commercial and industrial ...................... $ 41,996 42% $ 41,249 44%
Real estate:
Construction (1) ............................. 3,978 4 11,813 12
Mortgages-residential ........................ 8,662 9 8,259 9
Mortgages-commercial ......................... 44,824 44 32,689 34
Consumer ....................................... 1,178 1 1,361 1
--------- --- --------- ----
Total gross loans ........................... $ 100,638 100% $ 95,371 100%
=== ====
Less:
Net unearned fees ............................ (359) (320)
--------- ---------
Net loans .................................... $ 100,279 $ 95,051
========= =========
</TABLE>
- ---------
(1) On February 27, 1998, $7.1 million of loans previously classified as
construction loans were reclassified as commercial mortgages.
-13-
<PAGE>
To meet its asset/liability objectives and to control its interest rate
sensitivity exposure, the Bank's strategy is to originate loans with floating
rates and with maturities of less than five years. The following table provides
a breakdown of loans as of March 31, 1998 that have either predetermined
interest rates or floating rates:
<TABLE>
<CAPTION>
Within 1 After 1 But After 5 But
Year Within 5 Years Within 10 Years Total
---------- -------------- --------------- -------
(in thousands)
<S> <C> <C> <C> <C>
Predetermined interest rates ....................... $ 6,259 $ 25,784 $ 30,439 $ 62,482
Floating rates ..................................... 33,371 1,602 3,183 38,156
-------- -------- -------- --------
Total .......................................... $ 39,630 $ 27,386 $ 33,622 $100,638
======== ======== ======== ========
</TABLE>
Non-performing Assets
The level of non-performing assets, consisting of non-accrual loans,
accruing loans past due 90 days or more and other real estate owned, amounted to
$528 thousand, or .23%, of total assets at March 31, 1998, compared to $534
thousand, or .24%, of total assets at December 31, 1997. The following table
sets forth the Bank's non-performing assets at March 31, 1998 and December 31,
1997:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
(in thousands, except percentages)
<S> <C> <C>
Non-accrual loans ................................... $498 $496
Accruing loans 90 days or more past due ............. -- 8
---- ----
Total non-performing loans ....................... 498 504
Other real estate owned ............................. 30 30
---- ----
Total non-performing assets ...................... $528 $534
==== ====
Non-performing loans to loans ....................... .50% .52%
Non-performing assets to total assets ............... .23 .24
Non-performing assets to loans and
other real estate owned ........................... .53 .56
</TABLE>
Accrual of interest is discontinued on loans when management believes,
after considering economic and business conditions and collection efforts, that
the borrowers' financial condition is such that collection of interest and
principal is questionable. The non-accrual loans are primarily secured by
various types of real estate. No interest income was included in operating
income attributable to non-accrual loans in the first quarter of 1998.
Other real estate owned represents property acquired by foreclosure or deed
in lieu of foreclosure and repossessed assets. These assets are initially
reported at the lower of the related loan balance or the fair value of the
property. Management continues to evaluate the carrying value in relation to its
fair value less the estimated costs to sell. Included in other assets at March
31, 1998 is a $1 million receivable representing the sale of a portfolio of
previously non-performing truck leases to a servicer who has and will continue
to remit collections to the Bank in accordance with the sales agreement.
At March 31, 1998, the recorded investment in loans that are considered to
be impaired was $498 thousand. The related allowance for possible loan losses
for these impaired loans was $75 thousand. The reserve evaluation was based on
the fair value of the collateral. At December 31, 1997, the recorded investment
in loans that were considered to be impaired was $496 thousand. The related
allowance for possible loan losses for these impaired loans was $74 thousand.
-14-
<PAGE>
As part of the quarterly review of the risk elements of the portfolio, an
evaluation is also made of the adequacy of the allowance for possible loan
losses. In making an assessment of the quality of the loan portfolio and the
adequacy of the allowance for possible loan losses, management takes into
consideration such elements as general economic conditions, industry trends, the
volume of delinquencies, specific credit review, the value of underlying
collateral and other pertinent information. Based on this evaluation, the
allowance for possible loan losses is adjusted by the provision which is charged
against income. The following table summarizes the activity in the allowance for
possible loan losses for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Balance, beginning of period ............................................... $ 1,366,974 $ 3,059,773
Charge-offs:
Commercial and industrial ................................................ 126,470 695,143
Real estate - residential ................................................ -- 197,051
Consumer ................................................................. 3,665 --
----------- -----------
Total charge-offs ..................................................... 130,135 892,194
=========== ===========
Recoveries:
Consumer ................................................................. 31,542 306,932
----------- -----------
Total recoveries ..................................................... 31,542 306,932
----------- -----------
Net (charge-offs) recoveries ............................................... (98,593) (585,262)
----------- -----------
Provision (credited) charged to operations ................................. -- (200,000)
----------- -----------
Balance, end of period ..................................................... $ 1,268,381 $ 2,274,511
=========== ===========
Annualized net charge-offs as a % of average
loans and loans held for sale ............................................ .40% 2.97%
Allowance for loan losses as a % of
period end loans and loans held for sale .................................. 1.26 3.02
</TABLE>
Management believes that those loans identified as non-performing are
adequately secured and the allowance for possible loan losses is sufficient in
relation to the potential risk of loss that has been identified in the loan
portfolio. Management has allocated the allowance based on an assessment of
risks within the loan portfolio and the estimated value of the underlying
collateral. The following table sets forth the allocation of the Bank's
allowance for possible loan losses at March 31, 1998:
<TABLE>
<CAPTION>
% of Loans
Amount to Total Loans
---------- --------------
<S> <C> <C>
Commercial and Industrial ............................. $ 487,499 42%
Real Estate:
Construction ........................................ -- 4
Mortgages - residential ............................. 39,451 9
Mortgages - commercial .............................. -- 44
Consumer .............................................. -- 1
Unallocated ........................................... 741,431 --
---------- --
$1,268,381 100%
========== ===
</TABLE>
-15-
<PAGE>
Deposits
Total deposits at March 31, 1998 aggregated $145.3 million compared to
$151.9 million at December 31, 1997. As shown in the table below, the
composition of deposits at March 31, 1998 has remained relatively consistent
compared to the composition of deposits at December 31, 1997 (dollars in
thousands), except that the aforementioned restructuring of savings accounts led
to a modest shift to certificates of deposit.
<TABLE>
<CAPTION>
March 31, 1998 December 31,1997
----------------------------- -----------------------------
Balance % Balance %
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Demand ...................................... $ 11,073 8% $ 11,857 8%
NOW and money market ........................ 8,028 5 6,590 4
Savings ..................................... 25,917 18 33,749 22
Certificates of deposit ..................... 100,308 69 99,801 66
-------- --- -------- ---
$145,326 100% $151,997 100%
======== === ======== ===
</TABLE>
Certificates of deposit at March 31, 1998 had the following maturities:
<TABLE>
<CAPTION>
$100,000 Under
or more $100,000 Total
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Three months or less .......................................... $ 1,712 $ 11,781 $ 13,493
Three months through twelve months ............................ 6,257 42,254 48,511
One year through three years .................................. 3,043 32,013 35,056
Over three years .............................................. 240 3,008 3,248
-------- -------- --------
$ 11,252 $ 89,056 $100,308
======== ======== ========
</TABLE>
Borrowings
Borrowings are used to supplement the deposit base of the Bank, to support
asset growth, to fund specific loan programs and as a tool in the Bank's
asset/liability management process. During the first quarter of 1998 and 1997,
the Bank utilized its credit facilities with its correspondent banks and with
the FHLB. The borrowings from the FHLB are secured by the Bank's investments in
mortgage-backed securities.
The following table summarizes the Bank's borrowing activity for the three
months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
Average Weighted
Amount Maximum Average
Balance Outstanding Outstanding Interest Average
Outstanding During at any Rate at Rate
3/31 the Period Month-End 3/31 Paid
----------- ----------- ----------- -------- -------
(in thousands, except percentages)
<S> <C> <C> <C> <C> <C>
1998: FHLB borrowings................ $59,191 $56,075 $59,192 5.28% 5.46%
1997: FHLB borrowings................ $ 200 $ 300 $ 1,000 6.70 5.36%
</TABLE>
-16-
<PAGE>
Results of Operations
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Regent reported net income of $302 thousand for the first quarter of 1998
compared to a net loss of $180 thousand, before dividends on preferred stock, in
the same quarter of 1997.
Net Interest Income
Net interest income for the first quarter of 1998 was $1.61 million, 1%
above the level of the same quarter of 1997. The reported net interest margin
for the first quarter of 1998 was 2.88%, with an earning asset yield of 7.76%
and a cost of interest-bearing liabilities of 5.53%. For the comparable period
in 1997, the net interest margin was reported as 3.36%, with an earning asset
yield of 8.55% and a cost of interest-bearing liabilities of 5.71%. The first
quarter of 1997 included approximately $260 thousand of interest and fees on the
remaining portfolio of automobile insurance premium finance receivables ("IPF")
with a de minimis level of outstandings. Without that income, the yield on
earning assets would have been 8.00% and the net interest margin would have been
2.81%.
The decrease in the yield on earning assets, even after adjusting for the
IPF income, is due to the overall decrease in interest rates. As a consequence,
the increasing prepayments on MBS accelerated the write-off of unamortized
premiums and reduced the investment portfolio yield and the lower rates on new
loan bookings, in addition to prepayments and refinancings, also lowered the
yield on loans. The decrease in the cost of funds is attributable to pricing
changes on all interest-bearing deposit accounts.
The following table sets forth a rate/yield analysis for the three months
ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
----------------------------- ---------------------------------
Average Income Rate/ Average Income/ Rate
Balance Expense Yield Balance Expense Yield
-------- -------- ----- -------- -------- -----
(in thousands, except for percentages)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Securities .............................. $124,260 $2,006 6.46% $109,514 $1,857 6.78%
Loans ................................... 98,299 2,285 9.29 78,798 2,142 11.00
-------- ------ ---- -------- ------ -----
Total ............................... $222,559 4,291 7.76 $188,312 $3,999 8.55%
Interest-bearing liabilities:
NOW accounts ............................ $ 4,825 23 1.96 $ 3,861 $ 23 2.44%
Savings ................................. 28,222 264 3.79 45,860 552 4.88
Money market deposits ................... 2,851 24 3.37 3,482 37 4.36
Time deposits ........................... 101,676 1,574 6.28 114,524 1,735 6.14
Short-term borrowings ................... 55,883 737 5.36 300 4 5.36
Long-term advances ...................... 192 3 6.70 201 3 6.70
Subordinated debt ....................... 2,750 53 7.75 2,750 53 7.75
-------- ------ ---- -------- ------ -----
Total .............................. $196,399 $2,678 5.53 $170,978 $2,409 5.71%
Non-interest bearing
sources of funds ........................ $ 26,160 17,334
-------- --------
Net interest income and
net interest spread ..................... $1,613 2.23% $ 1,590 2.84%
====== ==== ======== =====
Net interest rate margin .................... 2.88% 3.36%
==== ====
</TABLE>
-17-
<PAGE>
Non-interest Income
Service charges, which consist primarily of penalty fees on checking
accounts, were 97% higher in the first quarter of 1998 than the comparable
quarter of 1997. The principal reasons for the increase were the more diligent
assessment of fees and closer review of waiver activity. Miscellaneous fees,
which vary significantly, were 144% higher on a quarter-to-quarter basis. Gains
on asset sales, which are volatile based on market circumstances and management
actions, were lower in the first quarter of 1998 compared to the first quarter
of 1997. Net gains on sale of securities resulting from selective restructuring
of the AFS investment portfolio were $22 thousand in the first quarter of 1998
and $0 in the comparable quarter of 1997. Other gains on asset sales in the
first quarter of 1997 consisted of $711 thousand from the sale of commercial
loans and servicing rights on previously sold loan participations to Carnegie
Bank, N.A. and a loss of $143 thousand on the sale of problem assets.
Provision for Possible Loan Losses
The provision for loan losses is determined after management has evaluated
the allowance for possible loan losses. There was no provision expense recorded
in the first quarter of 1998. In the first quarter of 1997, management's
evaluation of the adequacy of the allowance for possible loan losses resulted in
a negative provision expense of $200 thousand to reduce the allowance
accordingly. At March 31, 1998, the allowance represented 1.26% of total loans
and 255% of nonperforming loans.
Non-interest Expense
Total non-interest expense in the first quarter of 1998 was $1.22 million,
33% lower than the comparable quarter of 1997, after excluding the
aforementioned expense of terminating a merger agreement with Carnegie Bank,
N.A. On an annualized basis, these expenses represent approximately 2.13% of
average assets, a level which has been relatively constant for the past three
quarters. The cessation of the IPF business eliminated a considerable expense,
the reduction of 13 positions in the second quarter of 1997 and the adjustment
of employee benefits in the first quarter of 1998 reduced staff expense by 17%,
the sale of problem assets resulted in a 63% decrease in professional fees
(mostly legal), and the improved financial strength of the Bank led to an 80%
cut in insurance costs (mostly FDIC insurance premiums). Occupancy costs rose
due to the end of a rent-free provision pertaining to a portion of the space
occupied by the Bank and other expenses rose only because certain, one-time,
miscellaneous benefits recognized in the first quarter of 1998 had a salutary
effect on reported expenses.
Provision for Income Taxes
In the fourth quarter of 1997, Regent recognized all of the remaining net
deferred tax asset consistent with the principles of FAS 109. The tax benefit of
net operating loss carryforwards and temporary timing differences are expected
to be realized through the generation of future income. As such, results of
operations from the first quarter of 1998 will be reported on a fully taxable
equivalent basis. Thus, a tax expense of $185 thousand was recorded for the
first quarter of 1998, whereas no tax expense was reported for the comparable
quarter of 1997.
-18-
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Item 3 of Registrant's Form 10-K Annual Report for the
year ended December 31, 1997 for a description of certain legal proceedings.
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K.
<S> <C>
(a) Exhibits:
27 -- Financial Data Schedule
(b) Reports on Form 8-K:
Registrant filed the following Current Report on Form 8-K
during the quarter ended March 31, 1998:
1. Registrant filed a Form 8-K Current Report on March 31, 1998 which
under Item 5 reported that on March 18, 1998 (i) Registrant and Regent
National Bank (the "Bank") entered into an Agreement and Plan of
Merger, as amended and restated on March 27, 1998, with JeffBanks,
Inc. ("JBI"), Jefferson Bank ("Jefferson") and JeffBanks Acquisition-
corp. V, Inc. ("JBI Merger Sub") pursuant to which Registrant will
merge with and into JBI Merger Sub with Registrant as the surviving
corporation followed by the merger of Registrant with and into JBI as
the surviving corporation and the Bank will merge with and into
Jefferson with Jefferson as the surviving bank and (ii) Registrant entered
into a Stock Option Agreement, as amended and restated on March 27,
1998, with JBI whereby JBI was granted on option, exercisable under
specified circumstances, to purchase up to 678,430 shares of Registrant's
Common Stock at $14.39 per share.
</TABLE>
-19-
<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.
REGENT BANCSHARES CORP.
By: /s/ Joel E. Hyman
----------------------------------------
Joel E. Hyman, Executive Vice President,
Chief Financial Officer and Treasurer
Dated: May 14, 1998
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 2,866,000
<INT-BEARING-DEPOSITS> 467,800
<FED-FUNDS-SOLD> 4,120,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 117,833,000
<INVESTMENTS-CARRYING> 118,620,000
<INVESTMENTS-MARKET> 117,833,000
<LOANS> 100,279,000
<ALLOWANCE> 1,268,000
<TOTAL-ASSETS> 229,612,000
<DEPOSITS> 145,326,000
<SHORT-TERM> 61,750,000
<LIABILITIES-OTHER> 4,016,463
<LONG-TERM> 191,000
0
0
<COMMON> 341,000
<OTHER-SE> (488,000)
<TOTAL-LIABILITIES-AND-EQUITY> 229,612,000
<INTEREST-LOAN> 2,285,000
<INTEREST-INVEST> 2,006,000
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,291,000
<INTEREST-DEPOSIT> 1,885,000
<INTEREST-EXPENSE> 793,000
<INTEREST-INCOME-NET> 1,614,000
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 22,000
<EXPENSE-OTHER> 1,219,000
<INCOME-PRETAX> 487,000
<INCOME-PRE-EXTRAORDINARY> 487,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 302,000
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0
<YIELD-ACTUAL> 2.88
<LOANS-NON> 498,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,367,000
<CHARGE-OFFS> 130,000
<RECOVERIES> 31,000
<ALLOWANCE-CLOSE> 1,268,000
<ALLOWANCE-DOMESTIC> 1,268,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 741,000
</TABLE>
