<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 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 0-18911
GLACIER BANCORP, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 81-0468393
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P.O. Box 27; 49 Commons Loop, Kalispell, Montana 59903-0027
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (406) 756-4200
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former 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 Registrant's common stock outstanding on November 9,
1998, was 8,366,555. No preferred shares are issued or outstanding.
1
<PAGE> 2
GLACIER BANCORP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page #
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Condensed Statements of Financial Condition -
September 30, 1998, December 31, and September 30, 1997 (unaudited) ............3
Consolidated Condensed Statements of Operations -
Three and nine months ended September 30, 1998 and 1997 (unaudited) ...........4
Consolidated Condensed Statements of Cash Flows -
Nine months ended September 30, 1998 and 1997 (unaudited) .....................5
Notes to Consolidated Condensed Financial Statements ...........................6
Item 2 - Management's Discussion and Analysis
Of Financial Condition and Results of Operations ............................12
Item 3 - Quantitative and Qualitative Disclosure about Market Risk ...................17
PART II. OTHER INFORMATION .............................................................19
Signatures ...................................................................................19
</TABLE>
2
<PAGE> 3
GLACIER BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(Unaudited - dollars in thousands except per share data) September 30, December 31, September 30,
- ------------------------------------------------------------------------------ 1998 1997 1997
----------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Cash on hand and in banks .................................................... $ 27,487 29,724 30,426
Federal funds sold ........................................................... 0 3,860 325
Interest bearing cash deposits ............................................... 19,188 595 8,063
----------- ----------- -----------
Cash and cash equivalents ............................................... 46,675 34,179 38,814
----------- ----------- -----------
Investments:
Investment securities, held-to-maturity ................................. 8,309 12,951 18,471
Investment securities, available-for-sale ............................... 47,284 45,466 43,257
Mortgage backed securities, held-to-maturity ............................ 0 3,100 3,191
Mortgage backed securities, available-for-sale .......................... 38,606 54,008 49,794
----------- ----------- -----------
Total Investments .................................................... 94,199 115,525 114,713
----------- ----------- -----------
Net loans receivable:
Real estate loans ....................................................... 197,403 213,186 214,249
Commercial Loans ........................................................ 181,395 142,633 133,890
Installment and other loans ............................................. 112,756 115,125 114,963
Allowance for losses .................................................... (4,356) (4,027) (4,060)
----------- ----------- -----------
Total Loans, net ..................................................... 487,198 466,917 459,042
----------- ----------- -----------
Premises and equipment, net .................................................. 15,530 13,604 13,375
Real estate and other assets owned ........................................... 271 121 158
Federal Home Loan Bank of Seattle stock, at cost ............................. 11,582 10,956 10,731
Federal Reserve stock, at cost ............................................... 1,067 340 340
Accrued interest receivable .................................................. 4,090 4,234 4,180
Goodwill, net ................................................................ 2,658 1,371 1,403
Other assets ................................................................. 1,193 1,420 1,267
----------- ----------- -----------
$ 664,463 648,667 644,023
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits - interest bearing .................................................. $ 348,362 319,362 323,283
Deposits - non-interest bearing .............................................. 91,177 84,987 82,968
Advances from Federal Home Loan Bank of Seattle .............................. 125,978 141,860 129,606
Securities sold under agreements to repurchase ............................... 13,356 21,673 21,177
Other borrowed funds ......................................................... 3,256 7,937 12,017
Accrued interest payable ..................................................... 2,784 1,816 2,318
Current income taxes ......................................................... 43 484 343
Deferred income taxes ........................................................ 2,113 1,870 1,919
Other liabilities ............................................................ 3,723 2,623 6,802
Minority Interest ............................................................ 312 1,280 1,249
----------- ----------- -----------
Total liabilities .................................................... 591,104 583,892 581,682
----------- ----------- -----------
Common stock, $.01 par value per share (1) ................................... 76 74 74
Paid-in capital .............................................................. 39,126 35,837 35,170
Retained earnings - substantially restricted ................................. 33,733 28,743 27,250
Treasury stock at cost (2) ................................................... (1,066) (1,066) (1,066)
Accumulated other comprehensive earnings ..................................... 1,490 1,187 913
----------- ----------- -----------
Total stockholders' equity ........................................... 73,359 64,775 62,341
=========== =========== ===========
$ 664,463 648,667 644,023
=========== =========== ===========
Book value per share ................................................. $ 8.82 7.98 7.71
=========== =========== ===========
(1) Number of shares outstanding adjusted for 10% stock dividend in 1998
(1) Total shares outstanding at end of period ................................ 8,319,940 8,122,003 8,087,442
(2) Treasury shares .......................................................... 85,890 85,890 85,890
</TABLE>
3
<PAGE> 4
GLACIER BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
(unaudited - $ in thousands except per share data) September 30, September 30,
- --------------------------------------------------- -------------------------- --------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Real estate loans ............................ $ 4,162 4,358 12,775 12,811
Commercial loans ............................. 4,149 3,263 11,550 9,263
Consumer and other loans ..................... 2,744 2,801 8,285 8,054
Mortgage backed securities ................... 733 917 2,256 2,681
Investment securities ........................ 1,126 1,279 3,522 3,873
---------- ---------- ---------- ----------
Total interest income ..................... 12,914 12,618 38,388 36,682
---------- ---------- ---------- ----------
INTEREST EXPENSE:
Deposits ..................................... 3,587 3,331 10,332 9,673
Advances ..................................... 1,790 1,938 5,825 5,873
Repurchase agreements ........................ 99 290 512 771
Other borrowed funds ......................... 107 89 226 206
---------- ---------- ---------- ----------
Total interest expense .................... 5,583 5,648 16,895 16,523
---------- ---------- ---------- ----------
Net interest income ............................... 7,331 6,970 21,493 20,159
Provision for loan losses .................... 305 204 1,055 601
---------- ---------- ---------- ----------
Net Interest Income after provision for loan losses 7,026 6,766 20,438 19,558
---------- ---------- ---------- ----------
NON-INTEREST INCOME:
Loan fees and service charges ................ 2,567 2,321 7,092 6,411
Gains (Losses) on sale of investments ........ 1 19 2 20
Other income ................................. 202 160 1,442 546
---------- ---------- ---------- ----------
Total fees and other income ............... 2,770 2,500 8,536 6,977
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE:
Compensation, employee benefits
and related expenses ...................... 2,832 2,751 8,320 7,909
Occupancy expense ............................ 644 582 1,830 1,684
Data processing expense ...................... 171 248 760 742
Other expenses ............................... 1,822 1,550 5,195 4,495
Minority interest ............................ 33 59 132 158
---------- ---------- ---------- ----------
Total non-interest expense ................ 5,502 5,190 16,237 14,988
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES ...................... 4,294 4,076 12,737 11,547
Federal and state income tax expense .............. 1,638 1,527 4,782 4,288
---------- ---------- ---------- ----------
NET EARNINGS ...................................... $ 2,656 2,549 7,955 7,258
========== ========== ========== ==========
Basic earnings per share (1) ...................... $ 0.32 0.32 0.97 0.90
Diluted earnings per share (1) .................... 0.32 0.31 0.95 0.89
Dividends declared per share (1) .................. 0.13 0.13 0.36 0.32
Return on average assets (annualized) ............. 1.59% 1.57% 1.60% 1.52%
Return on beginning equity (annualized) ........... 15.37% 16.96% 16.37% 17.14%
Basic weighted average shares outstanding (1) ..... 8,228,730 8,083,450 8,186,197 8,073,843
</TABLE>
(1) Adjusted for 10% stock dividend in 1998.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------
(dollars in thousands) 1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES :
Net earnings .......................................................... $ 7,955 7,258
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Mortgage loans held for sale originated or acquired ................. (106,249) (49,989)
Proceeds from sales of mortgage loans held for sale ................. 88,685 50,686
Provision for loan losses ........................................... 1,055 601
Depreciation of premises and equipment .............................. 1,015 763
Amortization of goodwill ............................................ 121 123
Loss (gain) on sale of investments .................................. 0 20
Amortization of investment securities premiums and discounts, net ... (228) 169
Net increase (decrease) in deferred income taxes .................... 22 (76)
Net (increase) decrease in accrued interest receivable .............. 144 (238)
Net increase in accrued interest payable ............................ 968 1,105
Net increase (decrease) in current income taxes ..................... (441) 119
Net (increase) decrease in other assets ............................. 227 173
Net increase (decrease) in other liabilities and minority interest .. 1,206 (3,738)
FHLB stock dividends ................................................ (626) (553)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES .............. (6,146) 6,423
--------- ---------
INVESTING ACTIVITIES:
Proceeds from maturities and prepayments of investment
securities available-for-sale ....................................... 20,763 29,433
Purchases of investment securities available-for-sale ................. (6,369) (28,988)
Proceeds from maturities and prepayments of investment ................ 0
securities held-to-maturity ......................................... 7,944 4,214
Purchases of investment securities held-to-maturity ................... (260) (325)
Principal collected on installment and commercial loans ............... 97,837 77,188
Installment and commercial loans originated or acquired ............... (143,717) (103,509)
Proceeds from sales of commercial loans ............................... 8,761 1,794
Principal collections on mortgage loans ............................... 66,834 37,591
Mortgage loans originated or acquired ................................. (33,487) (44,039)
Net proceeds from sales (acquisition) of real estate owned ............ (150) 348
Net purchase of FHLB and FRB stock .................................... (727) (1,056)
Net addition of premises and equipment ................................ (2,941) (1,114)
Acquisition of minority interest ...................................... (283) (3)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .............. 14,205 (28,466)
--------- ---------
FINANCING ACTIVITIES:
Net increase in deposits .............................................. 35,190 33,692
Net decrease in FHLB advances and other borrowed funds ................ (20,563) (10,871)
Net increase (decrease) in securities sold under repurchase agreements. (8,317) 8,858
Cash dividends paid to stockholders ................................... (2,965) (2,521)
Proceeds from exercise of stock options ............................... 1,092 239
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........................ 4,437 29,397
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ........................ 12,496 7,354
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ...................... 34,179 31,459
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................ $ 46,675 38,814
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for: Interest ............................. $ 15,927 15,170
Income taxes ...................... 5,223 4,169
</TABLE>
5
<PAGE> 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Basis of Presentation:
In the opinion of Management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation of
Glacier Bancorp Inc.'s (the "Company") financial condition as of
September 30, 1998, December 31, and September 30, 1997 and the results
of operations for the three and nine months ended September 30, 1998 and
1997 and cash flows for the nine months ended September 30, 1998 and
1997.
The accompanying consolidated condensed financial statements do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. These
consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. Operating results for the three and nine months ended
September 30, 1998 are not necessarily indicative of the results
anticipated for the year ending December 31, 1998.
2) Organizational Structure:
The Company is the parent company for six subsidiaries: Glacier Bank
("Glacier"); Glacier Bank of Whitefish ("Whitefish"); Glacier Bank of
Eureka ("Eureka"); First Security Bank of Missoula ("Missoula"); Valley
Bank of Helena ("Helena") and Community First, Inc. ("CFI"). On February
1, 1998, Glacier was converted from a Federal Savings Bank charter to a
State of Montana commercial bank charter. On August 31, 1998, the
acquisition of HUB Financial Corporation and Valley Bank of Helena was
completed. At September 30, 1998, the Company owned 100%, 94%, 98%,
100%, 100% and 100% of Glacier, Whitefish, Eureka, Missoula, Helena and
CFI, respectively. CFI provides full service brokerage services through
Robert Thomas Securities.
The Valley Bank of Helena was acquired through an exchange of stock with
HUB Financial Corporation ("HUB") shareholders, formerly the parent
company of Helena, and a share exchange with the minority shareholders
of Helena. The pooling-of-interests accounting method is being used for
the HUB acquisition. Under this method, financial information for each
of the periods presented includes the combined companies as though the
merger had occurred prior to the earliest date presented. The share
exchange with the minority shareholders of Helena is being accounted for
as a purchase transaction. In a purchase none of the prior period
amounts are restated. The following abbreviated organizational chart
illustrates the various relationships:
<TABLE>
<S> <C> <C>
Glacier Bancorp, Inc.
(Parent Holding Company)
First Security Bank Glacier Bank Glacier Bank
Glacier Bank of Missoula of Whitefish of Eureka
(Commercial Bank) (Commercial bank) (Commercial bank) (Commercial bank)
Valley Bank Community First
of Helena Inc,
(Commercial bank) (Brokerage services)
</TABLE>
6
<PAGE> 7
3) Stock Split:
On August 27, 1998 a 10% stock dividend was approved by the Board of
Directors. As a result, all per share amounts from time periods
proceeding this date have been restated to illustrate the effect of the
stock dividend. Any fractional shares were paid in cash.
4) Ratios:
Return on Average Assets was calculated based on the average of the
total assets for the period. Return on Beginning Equity was calculated
based on the stockholders' equity at the beginning of each period
presented.
5) Cash Dividend Declared:
On September 30, 1998, the Board of Directors declared a $.13 per share
quarterly cash dividend to stockholders of record on October 13, 1998,
payable on October 23, 1998.
6) Computation of Earnings Per Share:
Basic earnings per common share is computed by dividing net income by
the weighted average number of shares of common stock outstanding during
the period presented. Diluted earnings per share is computed by
including the net increase in shares if dilutive outstanding stock
options were exercised, using the treasury stock method. Previous period
amounts are restated for the effect of the stock dividend. The following
schedule contains the data used in the calculation of basic and diluted
earnings per share.
7
<PAGE> 8
<TABLE>
<CAPTION>
Average Per-share
THREE MONTHS ENDED SEPTEMBER 30, 1998 Income Shares Amount
- ------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Income available to common shareholders ..................... $2,656,000 8,228,730 0.32
EFFECT OF DILUTIVE SECURITIES:
Net increase in shares from assumed exercise of stock options 142,282
DILUTED EARNINGS PER SHARE:
---------- ---------- ----------
Income available to common shareholders plus assumed options 2,656,000 8,371,012 0.32
========== ========== ==========
<CAPTION>
Average Per-share
Three months ended September 30, 1997 Income Shares Amount
- ------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Income available to common shareholders ..................... $2,549,000 8,083,450 0.32
EFFECT OF DILUTIVE SECURITIES:
Net increase in shares from assumed exercise of stock options 152,049
DILUTED EARNINGS PER SHARE:
---------- ---------- ----------
Income available to common shareholders plus assumed options 2,549,000 8,235,499 0.31
========== ========== ==========
<CAPTION>
Average Per-share
Nine months ended September 30, 1998 Income Shares Amount
- ------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Income available to common shareholders ..................... $7,955,000 8,186,197 0.97
EFFECT OF DILUTIVE SECURITIES:
Net increase in shares from assumed exercise of stock options -- 170,490 --
DILUTED EARNINGS PER SHARE:
---------- ---------- ----------
Income available to common shareholders plus assumed options 7,955,000 8,356,687 0.95
========== ========== ==========
<CAPTION>
Average Per-share
Nine months ended September 30, 1997 Income Shares Amount
- ------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Income available to common shareholders ..................... $7,258,000 8,073,843 0.90
EFFECT OF DILUTIVE SECURITIES:
Net increase in shares from assumed exercise of stock options -- 124,710 --
DILUTED EARNINGS PER SHARE:
---------- ---------- ----------
Income available to common shareholders plus assumed options 7,258,000 8,198,554 0.89
========== ========== ==========
</TABLE>
8
<PAGE> 9
7) Investments:
A comparison of the amortized cost and estimated fair value of the
Company's investment securities is as follows:
INVESTMENT SECURITIES AS OF SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Gross Unrealized
- --------------------------------------------- Amortized ----------------------- Estimated
(dollars in thousands) Cost Gains Losses Fair Value
- --------------------------------------------- --------- ------- ------- ----------
<S> <C> <C> <C> <C>
HELD TO MATURITY:
U.S. Government and Federal Agencies $ 5,026 175 0 5,201
State and Local Government and other issues 3,283 122 (1) 3,404
------- ------- ------- -------
Total Held to Maturity Securities $ 8,309 297 (1) 8,605
======= ======= ======= =======
AVAILABLE FOR SALE:
U.S. Government and Federal Agencies $13,608 111 (7) 13,712
State and Local Government and other issues 27,271 1,748 (40) 28,979
Mortgage-backed securities 17,768 620 (29) 18,359
Real Estate Mortgage Investment Conduit 24,765 271 (196) 24,840
------- ------- ------- -------
Total Available for Sale securities $83,412 2,750 (272) 85,890
======= ======= ======= =======
</TABLE>
INVESTMENT SECURITIES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Gross Unrealized
- --------------------------------------------- Amortized ----------------------- Estimated
(dollars in thousands) Cost Gains Losses Fair Value
- --------------------------------------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C>
HELD TO MATURITY:
U.S. Government and Federal Agencies $ 9,342 169 (6) 9,505
State and Local Government and other issues 3,609 118 (1) 3,726
Mortgage-backed securities 3,100 27 0 3,127
------- ------- ------- -------
Total Held to Maturity Securities $16,051 314 (7) 16,358
======= ======= ======= =======
AVAILABLE FOR SALE:
U.S. Government and Federal Agencies $18,773 70 (55) 18,788
State and Local Government and other issues 25,541 1,145 (8) 26,678
Mortgage-backed securities 20,877 678 (20) 21,535
Real Estate Mortgage Investment Conduit 32,318 259 (104) 32,473
------- ------- ------- -------
Total Available for Sale securities $97,509 2,152 (187) 99,474
======= ======= ======= =======
</TABLE>
9
<PAGE> 10
8) Stockholders Equity:
The Federal Reserve Board has adopted capital adequacy guidelines
pursuant to which it assesses the adequacy of capital in supervising a
bank holding company. The following table illustrates the Federal
Reserve Boards capital adequacy guidelines and the Company's compliance
with those guidelines as of September 30, 1998.
<TABLE>
<CAPTION>
Tier I (Core) Capital Tier II (Total) Capital Leverage Capital
- ------------------------------------------ ------------------------ ------------------------ ------------------------
(dollars in thousands) $ % $ % $ %
- ------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
GAAP Capital ............................. $ 73,359 $ 73,359 73,359
Goodwill ................................. (2,658) (2,658) (2,658)
Net unrealized gains on securities
available-for-sale .................. (1,490) (1,490) (1,490)
Allowance for loan losses ................ -- 4,356 --
--------- --------- ---------
Regulatory capital computed .............. $ 69,211 $ 73,567 69,211
========= ========= =========
Risk weighted assets ..................... $ 456,480 $ 456,480
========= =========
Total average assets ..................... 668,176
=========
Capital as % of defined assets ......................... 15.16% 16.11% 10.36%
Regulatory "well capitalized" requirement .............. 6.00% 10.00% 5.00%
--------- --------- ---------
Excess over "well capitalized" requirement ............. 9.16% 6.11% 5.36%
========= ========= =========
</TABLE>
9) Comprehensive Income:
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, `Reporting Comprehensive Income," which establishes
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. This
statement requires that all items required to be recognized under
accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other financial statements. The Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 130 as of
January 1, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
OTHER COMPREHENSIVE INCOME: SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
--------------------------------- ---------------------------------
BEFORE TAX AFTER BEFORE TAX AFTER
(DOLLARS IN THOUSANDS) TAX EXPENSE TAX TAX EXPENSE TAX
- ------------------------------------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains arising during the period .... $ 2,405 914 1,491 1,492 567 925
Less reclassification adjustment for amounts
included in net income ............................ (1) 0 (1) (19) (7) (12)
------- ------- ------- ------- ------- -------
Other comprehensive income ............................ $ 2,404 914 1,490 1,473 560 913
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED Nine months ended
SEPTEMBER 30, 1998 September 30, 1997
--------------------------------- ---------------------------------
BEFORE TAX AFTER BEFORE TAX AFTER
TAX EXPENSE TAX TAX EXPENSE TAX
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains arising during the period .... $ 2,405 914 1,491 1,492 567 925
Less reclassification adjustment for amounts
included in net income ............................ (2) (1) (1) (20) (8) (12)
------- ------- ------- ------- ------- -------
Other comprehensive income ............................ $ 2,403 913 1,490 1,472 559 913
======= ======= ======= ======= ======= =======
</TABLE>
10
<PAGE> 11
10) Forward Looking Statements
This document contains certain forward-looking statements, all of which
are based on current expectations. Actual results may differ materially,
and therefore readers are cautioned not to place undue reliance on these
forward-looking statements.
In addition to the discussion of the Company's Year 2000 issues set
forth in Item 2, this document contains certain "forward looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. The Company's ability to predict the results of
future plans is inherently uncertain, and is subject to factors that may
cause actual results to differ materially from those predicted. Among
such factors are unanticipated costs and expenses associated with the
Company's operations, including the acquisition transaction described in
"Subsequent Events' below, the effects of intense market competition
locally and in the banking industry generally, and the effects of the
economy on the Company's results of operations generally.
11) Subsequent Events
On October 20, 1998 the Company entered into a definitive share exchange
agreement to acquire Big Sky Western Bank ("Big Sky"). Big Sky has
approximately $40 million in total assets and brings a presence in
Bozeman, Montana to the Company. The transaction, which is subject to
approval by Big Sky shareholders and regulatory authorities, is expected
to close by early 1999.
As of November 1, 1998 the Company relocated its corporate headquarters
and a drive-up office of Glacier Bank to 49 Commons Loop, which is on
the northern edge of Kalispell, Montana.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS -
Financial Condition - This section discusses the changes in Statement of
Financial Condition items from December 31, 1997 to September 30, 1998.
At September 30, 1998, total consolidated assets increased by $15.8 million or
2.4%, over the December 31, 1997 level. This increase was primarily in loan
growth of $20.3 million, and interest bearing cash deposits with other financial
institutions, $18.6 million. Total investments have declined $21.3 million.
Real estate loans decreased $15.8 million during the period, while commercial
loans increased $38.8 million, offsetting the decline in real estate loans.
Approximately $8.5 million of the commercial loan increase resulted from
repurchasing loan participations from non-affiliated banks.
Loans sold to the secondary market amounted to $97.4 million and $52.5 million
during the first nine months of 1998 and 1997, respectively.
The amount of loans serviced for others on September 30, 1998 was $128.2
million.
Total deposits increased $35.2 million, with $29.0 million of the increase
occurring in interest bearing deposits and $6.2 million from non-interest
bearing deposits. Advances from the Federal Home Loan Bank ("FHLB") decreased
$15.9 million while securities sold under repurchase agreements and other
borrowed funds decreased $13.0 million.
All five institutions are members of the FHLB. Accordingly, management of the
Company has a wide range of versatility in managing the liquidity and
asset/liability mix for each individual institution as well as the Company as a
whole. The following table demonstrates the available FHLB lines of credit and
the extent of utilization as of September 30, 1998:
<TABLE>
<CAPTION>
Available line Amount Used Available
---------------- ------------- -----------
<S> <C> <C> <C>
Glacier Bank 151,100,000 92,386,000 58,714,000
Whitefish 8,078,000 3,000,000 5,078,000
Eureka 7,396,000 2,494,000 4,902,000
Missoula 24,636,000 10,000,000 14,636,000
Helena 10,449,000 2,398,000 8,051,000
</TABLE>
Classified Assets and Reserves
Non-performing assets, consisting of non-accrual loans, accruing loans 90 days
or more overdue, and real estate and other assets acquired by foreclosure or
deed-in-lieu thereof, net of related reserves, amounted to $2.7 million or .41%
of total assets at September 30, 1998, as compared to $1.5 million, or .23% of
total assets, as December 31, 1997. Although the level of non-performing assets
has increased, the level remains below the Federal Reserve Bank peer group ratio
of .60% of total assets as of June 30, 1998, the latest available information.
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- -----------
<S> <C> <C>
Total Reserves for Loan and Real Estate Owned Losses: $4.4 million $4.0 million
Reserves as a percentage of Total Loans: .89% .86%
Reserves as a percentage of Non-performing Assets: 159% 275%
</TABLE>
12
<PAGE> 13
Impaired Loans
As of September 30, 1998, there were no loans considered impaired. Interest
income on impaired loans and interest recoveries on loans that have been charged
off, is recognized on a cash basis after principal has been fully paid, or at
the time a loan becomes fully performing per the terms of the loan.
Minority Interest
The minority interest on the consolidated statement of financial condition
represents the minority stockholders' share in the retained earnings of the
Company. These are shares of Eureka and Whitefish that are still outstanding. As
of September 30, 1998, the Company owns 47,280 shares of Whitefish and 49,084
shares of Eureka. The Company's ownership of Whitefish and Eureka is 94% and
98%, respectively.
Results of Operations - The three months ended 9/30/98 compared to the three
months ended 9/30/97.
Glacier Bancorp, Inc. reported net income of $2.656 million; or basic earnings
per share of $.32, for the third quarter of 1998, compared with $2.549 million,
or basic earnings per share of $.32, for the same quarter of 1997. Return on
average assets and return on beginning equity in the third quarter of 1998 were
1.59 percent and 15.37 percent, respectively, compared to returns of 1.57
percent and 16.96 percent for the same quarter of 1997.
Net income was $2.928 million, excluding merger related expenses; or basic
earnings per share of $.36 for the quarter. Return on average assets and return
on beginning equity in the third quarter of 1998 were 1.76 percent and 16.94
percent, respectively.
From September 30, 1997 total assets have grown $20.440 million, or 3.2 percent,
to $664.463 million, and stockholders' equity increased $11.018 million, or 17.7
percent, to $73.359 million. The capital level remains very strong at 11.0
percent of assets.
Net Interest Income
Net interest income for the quarter was $7.331 million, an increase of $361,000
or 5.2 percent over the same period in 1997. Growth in net earning assets, and
the changing mix of assets from real estate loans and investments to commercial
loans were the reasons for this increase. Loan balances have increased $28.2
million from September 30, 1997, an increase of 6.1 percent. Commercial loans
increased $47.5 million, or 35.5 percent, consumer loans are down $2.2 million,
or 1.9 percent, the result of selling the credit card portfolio of approximately
$3.8 million. Real estate loans have decreased $16.8 million reflecting the
successful execution of the strategy of selling the long-term fixed rate loan
production. Total investments including mortgage backed securities, decreased
$20.5 million, or 17.9 percent. The flat yield curve has provided little
opportunity to achieve reasonable spreads, therefore prepayments and maturities
have not been reinvested in securities. Total deposits increased $33.3 million,
or 8.2 percent, with $8.2 million of the increase in non-interest bearing
deposits. Borrowed funds, which include Federal Home Loan Bank advances,
repurchase agreements, and other borrowed funds, decreased $20.2 million,
reducing the reliance on borrowed funds for asset growth.
The Company's net interest income is determined by its interest rate spread
(i.e. the difference between the yields earned on its earning assets, and the
rates paid on its interest-bearing liabilities) and the relative amounts of
earning assets and interest-bearing liabilities. The following table sets forth
information concerning the Company's interest rate spread at September 30, 1998
and 1997:
13
<PAGE> 14
INTEREST RATE SPREAD
One way to protect against interest rate volatility is to maintain a comfortable
interest spread between yields on assets and the rates paid on interest bearing
liabilities. As shown below the net interest spread decreased in 1998 from 3.80%
to 3.78%, from lower rates on interest earning assets, and slightly lower rates
on liabilities. The net interest margin increased in 1998 from 4.63% to 4.70%
the result of increased asset levels, and the increase in non-interest bearing
deposits.
<TABLE>
<CAPTION>
September 30, [1]
----------------------
For the nine months ended: 1998 1997
------- -------
<S> <C> <C>
Combined weighted average yield on loans and investments [2] .............. 8.40% 8.51%
Combined weighted average rate paid on savings deposits and borrowings .... 4.62% 4.71%
Net interest spread ....................................................... 3.78% 3.80%
Net interest margin [3] ................................................... 4.70% 4.63%
</TABLE>
[1] Weighted averages are computed without the effect of compounding daily
interest.
[2] Includes dividends received on capital stock of the Federal Home Loan Bank.
[3] The net interest margin (net yield on average interest earning assets) is
interest income from loans and investments less interest expense from
deposits, FHLB advances, and other borrowings, divided by the total amount
of earning assets. Interest income from tax exempt investments is on a tax
equivalent basis.
Non-Interest Income
Non-interest income increased $270,000, or 10.8 percent from the third quarter
of 1997. Loan fees and service charges on deposit accounts were up $246,000
while other income increased by $42,000.
Loan Loss Provision and Non-Performing Assets
The third quarter provision for loan losses was $305 thousand, up from $204
thousand during the same quarter in 1997 reflecting the growth in loans and the
changing mix from residential real estate to more commercial and consumer loans.
The reserve for loan losses was 159 percent of non-performing assets as of
September 30, 1998.
Non-Interest Expense
Non-interest expense increased by $312 thousand, or 6.0 percent, over the third
quarter of 1997. Compensation and employee benefits increased $81 thousand, or
2.9 percent, resulting from additional staffing with our in-house data
processing, commissions on loan production, and other increases. Occupancy
expense was up $62 thousand, or 10.6 percent. Data processing expenses decreased
$77 thousand, or 31.0 percent, resulting from the change to in-house data
processing. Other expenses, which include non-recurring merger expenses of $284
thousand and costs related to the curative reorganization of $3 thousand, were
up $272 thousand, or 17.6 percent.
Results of Operations - Nine months ended September 30, 1998
Net income of $7.955 million was an increase of $697 thousand, or 9.6 percent,
over the nine months of 1997. Basic earnings per share were $.97 for 1998 and
$.90 in 1997, with diluted earnings per share of $.95 and $.89, respectively.
Return on average assets was 1.60 and 1.52, and return on beginning equity was
16.37 and 17.14 percent, for the first nine months in 1998 and 1997,
respectively. The relatively high capital level results in a lower return on
equity even with increased earnings.
14
<PAGE> 15
Excluding merger related expenses net income was $8.465 million which is an
increase of $1.207 million, or 16.63 percent, over 1997. Basic earnings per
share were $1.03, and fully diluted earnings of $1.01 per share. Return on
average assets and return on average equity were 1.71 percent and 17.42 percent
respectively.
Net-Interest Income
Net interest income for the first nine months was $21.493 million, an increase
of $1.334 million, or 6.6 percent over the same period in 1997. The year-to-date
net interest income as a percentage of earning assets increased from 4.63
percent to 4.70 percent. This increase in margin, more net earning assets, and
the changing mix of loans to more commercial and consumer, are the reasons for
the increased net interest income.
Loan Loss Provision
The provision for loan losses was $1.055 million, up from $601 thousand in 1997.
As discussed above the increase in loans and the change in the mix of loans was
the primary reason for the increase.
Non-Interest Income
Total non-interest income increased by 1.559 million, or 22.3 percent over the
same period last year. Fees and service charges increased $681 thousand, or 10.6
percent. Other income increased $896 thousand, primarily from increased activity
in real estate loan origination and sales, $102 thousand from the sale of the
trust department, and $457 thousand from the sale of the credit card portfolio
Non-Interest Expense
Non-interest expense increased $1.249 million, or 8.3 percent, over 1997.
Compensation and employee benefits were up $411 thousand, or 5.2 percent,
primarily from the two new branches in 1997, the data processing conversion, and
commissions from real estate loan originations. Occupancy expense also increased
$146 thousand, primarily from the new branches. Data processing expense
increased $18 thousand. Other expenses increased $700 thousand of which $381
thousand was merger related, and $201 thousand to the curative reorganization
and the additional authorized shares, which are non-recurring.
Year 2000 Issues
The century date change for the Year 2000 is a serious issue that may impact
virtually every organization including the Company. Many software programs are
not able to recognize the Year 2000, since most programs and systems were
designed to store calendar years in the 1900s by assuming and "19" and storing
only the last two digits of the year. The problem is especially important to
financial institutions since many transactions, such as interest accruals and
payments, are date sensitive, and because the Company and its subsidiary banks
interact with numerous customers, vendors and third party service providers who
must also address the Year 2000 issue. The problem is not limited to computer
systems. Year 2000 issues will also potentially affect every system that has an
embedded microchip, such as automated teller machines, elevators and vaults.
State of Readiness
The Company and its subsidiary banks are committed to addressing these Year 2000
issues in a prompt and responsible manner, and they have dedicated the resources
to do so. Management has completed an assessment of its automated systems and
has implemented a program consistent with applicable regulatory guidelines, to
complete all steps necessary to resolve identified issues. The Company's
compliance program has several phases, including (1) project management; (2)
assessment; (3) testing; and (4) remediation and implementation.
15
<PAGE> 16
Project Management. The Company has formed a Year 2000 compliance committee
consisting of senior management and departmental representatives. The committee
has met regularly since October 1997. A Year 2000 compliance plan was developed
and regular meetings have been held to discuss the process, assign tasks,
determine priorities and monitor progress. The committee regularly reports to
the Company's Board.
Assessment. All of the Company's and its subsidiary banks' computer equipment
and mission-critical software programs have been identified. This phase is
essentially complete. Primary software vendors were also assessed during this
phase, and vendors who provide mission-critical software have been contacted.
The Year 2000 committee is in the process of obtaining written certification
from providers of material services that such providers are, or will be, Year
2000 compliant. Based upon its ongoing assessment of the readiness of its
vendors, suppliers and service providers, the committee intends to develop
contingency plans addressing the most reasonably likely worst case scenarios.
The committee will continue to monitor and work with these vendors. The
committee and other bank officers have also identified and began working with,
the subsidiary banks' significant borrowers and funds providers to assess the
extent to which they may be affected by Year 2000 issues.
Testing. Updating and testing of the Company's and its subsidiary banks'
automated systems is currently underway and it is anticipated that all testing
will be complete by January 31, 1999. Upon completion, the committee will be
able to identify any internal computer systems that remain non-compliant.
Remediation and Implementation. This phase involves obtaining and implementing
renovated software applications provided by vendors. As these applications are
received and implemented, the committee will test them for Year 2000 compliance.
This phase also involves upgrading and replacing automated systems where
appropriate, and will continue throughout 1998 and the first quarter of 1999.
Estimated Costs to Address Year 2000 Issues
The total financial effect that Year 2000 issues will have on the Company cannot
be predicted with any certainty at this time. In fact, in spite of all efforts
being made to rectify these problems, the success of the Company's efforts will
not be known until the Year 2000 actually arrives. However, based on its
assessment to date, the Company does not believe that expenses related to
meeting Year 2000 challenges will have a material effect on its operations or
consolidated financial condition. Year 2000 challenges facing vendors of
mission-critical software and systems, and facing the Company's customers, could
have a material effect on the operations or consolidated financial condition of
the Company, to the extent such parties are materially affected by such
challenges.
Risks Related to Year 2000 Issues
The year 2000 poses certain risks to the Company and its subsidiary banks and
their operations. Some of these risks are present because the Company purchases
technology and information systems applications from other parties who face Year
2000 challenges. Other risks are inherent in the business of banking or are
risks faced by many companies. Although it is impossible to identify all
possible risks that the Company may face moving into the millennium, management
has identified the following significant potential risks:
Commercial banks may experience a contraction in their deposit base, if a
significant amount of deposited funds are withdrawn by customers prior to the
Year 2000, and interest rates may increase as the millennium approaches. This
potential deposit contraction could make it necessary for the Company to change
its sources of funding and could impact future earnings. The Company established
a contingency plan for addressing this situation, should it arise, into its
asset and liability management policies. The plan includes maintaining the
16
<PAGE> 17
ability to borrow funds from the Federal Home Loan Bank of Seattle. Significant
demand for funds from other banks could reduce the amount of funds available to
borrow. If insufficient funds are available from these sources, the Company may
also sell investment securities or other liquid assets to meet liquidity needs.
The Company lends significant amounts to businesses in its marketing area. If
these businesses are adversely affected by Year 2000 problems, their ability to
repay loans could be impaired. This increased credit risk could adversely affect
the Company's financial performance. During the assessment phase of the
Company's Year 2000 program, each of the Company's subsidiary banks' substantial
borrowers were identified, and the Company is working with such borrowers to
ascertain their levels of exposure to Year 2000 problems. To the extent that the
Company is unable to assure itself of the Year 2000 readiness of such borrowers,
it intends to apply additional risk assessment criteria to the indebtedness of
such borrowers and make any necessary related adjustments to the Company's
provision for loan losses.
The Company and its subsidiary banks, like those of many other companies, can be
adversely affected by the Year 2000 triggered failures of other companies upon
who the Company depends for the functioning of their automated systems.
Accordingly, the Company's operations could be materially affected, if the
operations of mission-critical third party service providers are adversely
affected. As described above, the Company has identified its mission-critical
vendors and is monitoring their Year 2000 compliance programs.
Contingency Plans
The Company is in the process of developing specific contingency plans related
to year 2000 issues, other than those described above. As the Company and its
subsidiary banks continue the testing phase, and based on future ongoing
assessment of the readiness of vendors, service providers and substantial
borrowers, appropriate contingency plans will be developed that address the most
reasonably likely "worst case" scenarios. Certain circumstances, as described
above in "Risk," may occur for which there are no completely satisfactory
contingency plans.
FORWARD LOOKING STATEMENTS
The discussion above regarding to the century date change for the Year 2000
includes certain "forward looking statements" concerning the future operations
of the Company. The Company desires to take advantage of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 as they apply
to forward looking statements. This statement is for the express purpose of
availing the Company of the protections of such safe harbor with respect to all
"forward looking statements." Management's ability to predict results of the
effect of future plans is inherently uncertain, and is subject to factors that
may cause actual results to differ materially from those projected. Factors that
could affect the actual results include the Company's success is identifying
systems and programs that are not Year 2000 compliant; the possibility that
systems modifications will not operate as intended; unexpected costs associated
with remediation, including labor and consulting costs; the nature and amount of
programming required to upgrade or replace the affected systems; the uncertainty
associated with the impact of the century change on the Company's customers,
vendors and third-party service providers; and the economy generally.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk is the risk of loss in a financial instrument arising from
adverse changes in market rates/prices such as interest rates, foreign
currency exchange rates, commodity prices, and equity prices. The
Company's primary market risk exposure is interest rate risk. The
ongoing monitoring and management of this risk is an important component
of the Company's asset/liability management
17
<PAGE> 18
process which is governed by policies established by its Board of
Directors that are reviewed and approved annually. The Board of
Directors delegates responsibility for carrying out the asset/liability
management policies to the Asset/Liability committee (ALCO). In this
capacity ALCO develops guidelines and strategies impacting the Company's
asset/liability management related activities based upon estimated
market risk sensitivity, policy limits and overall market interest rate
levels/trends.
Interest Rate Risk:
Interest rate risk represents the sensitivity of earnings to changes in
market interest rates. As interest rates change the interest income and
expense streams associated with the Company's financial instruments also
change thereby impacting net interest income (NII), the primary
component of the Company's earnings. ALCO utilizes the results of a
detailed and dynamic simulation model to quantify the estimated exposure
of NII to sustained interest rate changes. While ALCO routinely monitors
simulated NII sensitivity over a rolling two-year horizon, it also
utilizes additional tools to monitor potential longer-term interest rate
risk.
The simulation model captures the impact of changing interest rates on
the interest income received and interest expense paid on all assets and
liabilities reflected on the Company's balance sheet. This sensitivity
analysis is compared to ALCO policy limits which specify a maximum
tolerance level for NII exposure over a one year horizon, assuming no
balance sheet growth, given a 200 basis point (bp) upward and downward
shift in interest rates. A parallel and pro rata shift in rates over a
12 month period is assumed. The following reflects the Company's NII
sensitivity analysis as of July 31, 1998, the most recent information
available, as compared to the 10% Board approved policy limit.
<TABLE>
<CAPTION>
Estimated
Rate Change NII Sensitivity
----------- ---------------
<S> <C>
+200 bp 0.30%
-200 bp -2.03%
</TABLE>
The preceding sensitivity analysis does not represent a Company forecast
and should not be relied upon as being indicative of expected operating
results. These hypothetical estimates are based upon numerous
assumptions including: the nature and timing of interest rate levels
including yield curve shape, prepayments on loans and securities,
deposit decay rates, pricing decisions on loans and deposits,
reinvestment/replacement of assets and liability cashflows, and others.
While assumptions are developed based upon current economic and local
market conditions, the Company cannot make any assurances as to the
predictive nature of these assumptions including how customer
preferences or competitor influences might change.
Also, as market conditions vary from those assumed in the sensitivity
analysis, actual results will also differ due to: prepayment/refinancing
levels likely deviating from those assumed, the varying impact of
interest rate change caps or floors on adjustable rate assets, the
potential effect of changing debt service levels on customers with
adjustable rate loans, depositor early withdrawals and product
preference changes, and other internal/external variables. Furthermore,
the sensitivity analysis does not reflect actions that ALCO might take
in responding to or anticipating changes in interest rates.
18
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the registrant
or its subsidiaries are a party.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibit 27 - Financial data schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLACIER BANCORP, INC.
November 13, 1998 By /s/ Michael J. Blodnick
----------------------------
Michael J. Blodnick
President/CEO
November 13, 1998 By /s/ James H. Strosahl
----------------------------
James H. Strosahl
Executive Vice President/CFO
19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 1998 AND THE
CONSOLIDATED STATEMENTS OF OPERATIONS AS OF SEPTEMBER 30, 1998 INCLUDED IN THE
COMPANY'S QUARTERLY REPORT FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 27,487
<INT-BEARING-DEPOSITS> 19,188
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 85,890
<INVESTMENTS-CARRYING> 8,309
<INVESTMENTS-MARKET> 0
<LOANS> 491,554
<ALLOWANCE> 4,356
<TOTAL-ASSETS> 664,463
<DEPOSITS> 439,539
<SHORT-TERM> 71,226
<LIABILITIES-OTHER> 8,975
<LONG-TERM> 71,364
0
0
<COMMON> 76
<OTHER-SE> 73,283
<TOTAL-LIABILITIES-AND-EQUITY> 664,463
<INTEREST-LOAN> 32,610
<INTEREST-INVEST> 5,778
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 38,388
<INTEREST-DEPOSIT> 10,332
<INTEREST-EXPENSE> 16,895
<INTEREST-INCOME-NET> 21,493
<LOAN-LOSSES> 1,055
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 16,237
<INCOME-PRETAX> 12,737
<INCOME-PRE-EXTRAORDINARY> 7,955
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,995
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.95
<YIELD-ACTUAL> 4.70
<LOANS-NON> 1,121
<LOANS-PAST> 1,951
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,499
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 4,356
<ALLOWANCE-DOMESTIC> 4,356
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
