<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
SEPTEMBER 30, 1996 0-25938
MERIT HOLDING CORPORATION
-----------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-1934011
- ---------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 LAVISTA ROAD, P. O. BOX 49, TUCKER, GEORGIA 30085-0049
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 770-491-8808
Not Applicable
------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
------ --
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $2.50 Par Value 3,704,102
- ----------------------------- ----------------------------------
Class Outstanding as of November 7, 1996
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ----
<PAGE> 2
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------------- ---------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 10,948,782 $ 15,214,844
Federal funds sold and other short-term investments 24,064,931 11,538,083
Interest bearing deposits with other
financial institutions 100,000 203,750
Investment securities, at cost (market
value of $1,723,049 and $1,753,150 respectively) 1,838,003 1,838,216
Mortgage-backed securities available for sale 7,502,957 8,982,079
Securities available for sale (Note 4) 36,596,919 28,007,845
Federal Reserve Bank stock 299,850 299,850
Federal Home Loan Bank stock 868,800 695,300
Loans, less allowance for loan losses
of $2,932,261 and $2,543,408 (Notes 2 and 3) 144,531,475 130,674,294
Real estate owned 248,667 718,673
Premises and equipment, net 5,521,885 4,650,485
Accrued interest receivable and other assets 3,097,675 2,426,786
--------------- ---------------
Total assets $ 235,619,944 $ 205,250,205
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 49,618,496 $ 51,959,459
Checking with interest 31,217,777 26,984,809
Money-market accounts 37,188,448 28,435,375
Savings 3,884,342 3,809,717
Time, $100,000 and over 22,720,378 18,567,497
Other time 51,086,799 43,306,680
--------------- ---------------
195,716,240 173,063,537
Short-term borrowings 9,033,109 4,497,555
Long-term debt 3,130,267 2,483,716
Accrued interest payable and other liabilities 1,995,340 1,893,880
--------------- ---------------
Total liabilities 209,874,956 181,938,688
--------------- ---------------
Stockholders' equity
Common stock, $2.50 par value; 10,000,000 shares
authorized; 3,704,102 and 3,807,815 shares issued and
3,704,102 and 3,665,055 outstanding, respectively 9,260,255 9,519,537
Paid-in capital 8,061,623 8,302,438
Retained earnings 8,542,448 5,958,990
Unrealized (losses) gains on securities available for sale, net of tax (119,338) 271,032
Treasury stock, at cost: 0 and 142,760 shares respectively 0 (740,480)
--------------- ---------------
Total stockholders' equity 25,744,988 23,311,517
--------------- ---------------
Total liabilities and stockholders'
equity $ 235,619,944 $ 205,250,205
=============== ===============
</TABLE>
(See notes to consolidated financial statements)
<PAGE> 3
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three month period ended For the nine month period ended
September 30, September 30,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 3,555,406 $ 3,264,225 $ 10,335,136 $ 9,687,676
Interest on securities 687,737 515,189 1,924,073 1,489,651
Interest on federal funds sold
and other short-term investments 313,982 286,713 538,455 612,861
Interest on time deposits with other
financial institutions 2,398 5,457 8,372 25,793
Dividends on Federal Reserve Bank stock 4,498 4,498 13,493 13,493
Dividends on Federal Home Loan Bank stock 15,498 12,919 41,517 37,581
-------------- --------------- -------------- --------------
Total interest and dividend income 4,579,519 4,089,001 12,861,046 11,867,055
Interest expense on deposits 1,520,333 1,427,720 4,234,743 3,874,815
Interest expense on FHLB advances 52,785 43,563 136,284 130,720
Interest expense on short-term borrowings 76,549 18,307 166,658 69,018
-------------- --------------- -------------- --------------
Total interest expense 1,649,667 1,489,590 4,537,685 4,074,553
-------------- --------------- -------------- --------------
Net interest income 2,929,852 2,599,411 8,323,361 7,792,502
Provision for loan losses 165,000 210,000 495,000 570,000
-------------- --------------- -------------- --------------
Net interest income after
provision for loan losses 2,764,852 2,389,411 7,828,361 7,222,502
-------------- --------------- -------------- --------------
Non-interest income:
Service charges and fees on deposits 200,143 193,651 577,845 522,849
Gain on sale of SBA loans 852 45,038 2,557 205,813
Losses on sales of securities (59,788)
Mutual fund sales fees 11,442 13,955 51,099 56,955
Other income 80,538 78,225 306,533 553,890
-------------- --------------- -------------- --------------
Total non-interest income 292,975 330,869 938,034 1,279,719
-------------- --------------- -------------- --------------
Non-interest expense:
Salaries and other personnel 852,665 765,678 2,497,318 2,233,892
Occupancy and equipment 243,976 196,400 698,032 590,171
Advertising and marketing 27,226 26,586 71,912 76,352
Legal 75,000 37,000 171,000 290,750
Data processing 36,670 32,874 101,591 106,910
FDIC fees 4,596 (5,030) 14,297 164,184
Other operating 419,683 402,037 1,185,032 1,239,606
-------------- --------------- -------------- --------------
Total non-interest expense 1,659,816 1,455,545 4,739,182 4,701,865
-------------- --------------- -------------- --------------
Income before income taxes 1,398,011 1,264,735 4,027,213 3,800,356
Provision for income taxes 502,406 486,566 1,443,755 1,469,178
-------------- --------------- -------------- --------------
Net income $ 895,605 $ 778,169 $ 2,583,458 $ 2,331,178
=============== =============== =============== ===============
Net income per share $ .21 $ .19 $ .60 $ .57
=============== =============== =============== ===============
</TABLE>
(See notes to consolidated financial statements)
- 2 -
<PAGE> 4
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
<TABLE>
<CAPTION>
For the nine month period ended
September 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,583,458 $ 2,331,178
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 336,226 291,471
Net amortization of premiums on securities 47,285 5,077
Write down of other real estate 16,601 65,642
Provision for loan losses 495,000 570,000
Gain on sale of SBA loans (2,557) (205,813)
Loss on sale of investment securities 59,788
Gain on sale of other real estate (19,517) (14,782)
Increase in interest receivable (61,993) (168,471)
Decrease in interest payable 100,375 452,723
Increase (decrease) in accrued expenses and other liabilities 209,442 (50,524)
Increase in prepaid expenses and other assets (644,651) (244,703)
--------------- ---------------
Net cash provided by operating activities 3,059,669 3,091,586
--------------- ---------------
Cash flows from investing activities:
Purchases of "held to maturity" investment securities (200,000)
Purchases of "available for sale" investment securities (12,706,762) (18,024,866)
Proceeds from sales of "available for sale" investment securities 6,590,253
Proceeds from maturities of "held to maturity" investment securities 1,040,511
Proceeds from maturities of "available for sale" investment securities 4,946,605 4,650,611
Purchases of Federal Home Loan Bank stock (173,500) (110,900)
Proceeds from maturities of time deposits with other financial institutions 103,750 0
Proceeds from sale of other real estate 568,562 275,881
Proceeds from sale of SBA loans 1,899,271
Capital improvements on other real estate (94,386) (73,937)
Loans made to customers, net (14,349,622) (13,050,683)
Capital expenditures (1,168,721) (201,156)
--------------- ---------------
Net cash used in investing activities (22,874,074) (17,205,015)
--------------- ---------------
Cash flows from financing activities:
Repayment of short-term borrowing (430,000)
Net increase (decrease) in Federal Home Loan Bank advances 646,551 (97,329)
Net increase in deposits 22,652,703 14,208,571
Net increase in securities sold under
agreements to repurchase 4,535,554 812,174
Exercise of stock warrants 240,383 330,594
Purchase of fractional & dissenting shares (366)
--------------- ---------------
Net cash provided by financing activities 28,075,191 14,823,644
--------------- ---------------
Net increase in cash and cash equivalents 8,260,786 710,215
Cash and cash equivalents at beginning of period 26,752,927 27,700,547
--------------- ---------------
Cash and cash equivalents at end of period $ 35,013,713 $ 28,410,762
=============== ===============
Supplemental data:
Interest paid $ 4,437,311 $ 3,621,830
=============== ===============
Income taxes paid $ 2,150,000 $ 2,092,450
=============== ===============
Loans transferred to other real estate owned $ $ 1,283,141
=============== ===============
</TABLE>
(See notes to consolidated financial statements)
- 3 -
<PAGE> 5
MERIT HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Merit Holding
Corporation (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statement presentation. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
to present a fair presentation have been included. Operating results for the
nine months ended September 30, 1996 are not necessarily indicative of trends
or results to be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
NOTE 2 - LOANS
Loans are stated at unpaid principal balances, net of unearned income and
deferred loan fees. Interest is accrued only if deemed collectible. Generally
the Company's policy is not to accrue interest on loans delinquent over ninety
days unless the loan is well secured and in the process of collection.
<TABLE>
<CAPTION>
Loans consist of :
(in thousands)
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C> <C> <C>
Commercial $ 84,569 58% $ 74,885 56%
Real estate - construction
and land development 32,840 22% 25,898 20%
Real estate - mortgages 18,985 13% 21,198 16%
Installment and other
Consumer 10,817 7% 10,828 8%
Other 252 0% 408 0%
-------- --- -------- ---
147,463 100% 133,217 100%
Less allowance for loan losses (2,932) (2,543)
-------- --------
$144,531 $130,674
======== ========
</TABLE>
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<PAGE> 6
NOTE 3 - ALLOWANCE FOR LOAN LOSSES
A provision for loan losses is charged to operations based on management's
evaluation of potential losses in the loan portfolio. Such evaluation includes
a review of all loans on which full collectibility may not be reasonably
assured and considers, among other matters, management's estimate of the fair
value of the underlying collateral on specific loans, inherent losses in the
loan portfolio, and prevailing and anticipated economic conditions.
Activity in the allowance for loan losses for the nine months ended September
30, 1996 and September 30, 1995 follows:
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Balance, January 1 $2,543,408 $1,688,805
Provision charged to expense 495,000 570,000
Net charge-offs (106,147) (141,580)
---------- ----------
Balance, September 30 $2,932,261 $2,117,225
========== ==========
</TABLE>
NOTE 4 - SECURITIES AVAILABLE FOR SALE
Securities available for sale are reported at fair value, with unrealized gains
and losses, net of related income taxes, reported as a separate component of
stockholders' equity.
NOTE 5 - NET INCOME PER SHARE
The Company is required to calculate net income per share based on the
"modified treasury stock" method. Under this method, net income and weighted
average shares are adjusted for the effects of assumed exercise of common stock
equivalents. The number of shares used to compute primary and fully diluted
earnings per share for the three months and nine months ended September 30,
1996 was 4,318,769 and 4,365,566, respectively. The number of shares used to
compute primary and fully diluted earnings per share for the three months and
nine months ended September 30, 1995 was 4,186,717.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of" ("SFAS 121") requires that
an impairment of long-lived assets be recognized if the future cash flows
expected from the use of the asset and its eventual disposition is less than
the carrying amount of the asset. The Company adopted SFAS 121 in 1996 with no
material impact on the Company.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-based Compensation" ("SFAS 123") was issued by the Financial Accounting
Standards Board during 1995 and is effective for the Company in 1996. SFAS 123
requires the Company to disclose fair value information about stock-based
employee compensation plans for periods beginning after January 1, 1995.
-5-
<PAGE> 7
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion addresses the factors that have affected the financial
condition and results of operations of Merit Holding Corporation (the
"Company") as reflected in the unaudited consolidated financial statements for
the three and nine months ended September 30, 1996 and 1995. The Company's
operating subsidiaries are Mountain National Bank ("Mountain") and Charter Bank
& Trust Co. ("Charter").
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's net income for the third quarter of 1996 was $895,605, a 15.1%
increase compared to net income of $778,169 for the same period in 1995.
Earnings per share was $.21 in the third quarter of 1996 compared to $.19 for
the same period in 1995. Net income for the nine months ended September 30,
1996 was $2,583,458 compared to $2,331,178 for the same period of 1995, a 10.8%
increase. The increase in net income in the third quarter of 1996 compared to
the same period in 1995 was primarily the result of an increase in net interest
income of $330,441, or 12.7%, and a $45,000 reduction in the provision for
loan losses compared to the third quarter of 1995. These changes were offset by
a decrease of $37,894, or 11.5%, in non-interest income, and an increase of
$204,271, or 14.0%, in non-interest expense. The growth in net income for the
nine month period ended September 30, 1996 over the corresponding period in
1995 resulted primarily from an increase of $530,859, or 6.8%, in net interest
income, and a decrease of $75,000, or 13.2%, in the provision for loan losses,
offset by a decrease of $341,685, or 26.7%, in non-interest income and an
increase of $37,317, or 0.8%, in non-interest expenses.
Return on average equity for the three months and nine months ended September
30, 1996 was 14.10% and 14.01% on average equity of $25,409,000 and
$24,581,737, respectively, as compared to 14.14% and 14.79% on average equity
of $22,016,843 and $21,011,620, respectively, for the same periods in 1995.
Return on average assets for the three months and nine months ended September
30, 1996 was 1.56% and 1.63% on average assets of $229,215,612 and $211,459,249
respectively as compared to 1.58% and 1.66% on average assets of $197,188,100
and $187,552,497 for the same periods in 1995.
Total assets at September 30, 1996 were $235,619,944, a 14.8% increase from
$205,250,205 at December 31, 1995. Total average assets for the first nine
months of 1996 were $211,459,000, up $23,906,503, or 12.7% from the same
period in 1995. Average loans for the first nine months of 1996 were
$136,438,000, up $13,834,000, or 11.3% over the same period in 1995. The loan
growth was funded by increased average deposits, up $17,021,000, or 10.7%.
-6-
<PAGE> 8
Net interest income for the third quarter of 1996 increased $330,441 or 12.7%
over the third quarter of 1995. Net interest income for the nine months ended
September 30, 1996 increased $530,859 or 6.8% over the same period in 1995. The
net interest margin for the three months and nine months ended September 30,
1996 was 5.84% and 5.80% respectively on average total earning assets of
$229,216,000 and $211,459,000, respectively. For the same periods in 1995, the
net interest margin was 5.80% and 6.07% respectively on average earning assets
of $179,187,534 and $171,110,136. The increase in net interest income reflects
growth in earning assets in 1996 over 1995, partly offset by lower yields on
earning assets.
The provision for loan losses for the third quarter of 1996 was $165,000
compared to $210,000 in the third quarter of 1995. The provision for
loan losses for the first nine months of 1996 was $495,000 compared to $570,000
for the same period in 1995. The allowance for loan losses at September 30,
1996 was $2,932,261 compared to $2,543,408 at December 31, 1995. At September
30, 1996 and December 31, 1995, the allowance for loan losses was 1.99% and
1.91% of loans outstanding, respectively. The provision for loan losses and
the adequacy of the allowance for loan losses are based upon management's
continuing evaluation of the collectibility of the loan portfolio under current
economic conditions and includes analysis of underlying collateral value and
other factors which could affect that collectibility. Management considers the
allowance for loan losses to be adequate based upon evaluations of specific
loans, internal loan rating systems, guidelines provided by the banking
regulatory authorities governing Mountain and Charter, and an annual
independent loan review performed by a consultant.
Through the nine months ended September 30, 1996, charged-off loans totaled
$106,147, net of recoveries, or 0.07% of total loans outstanding. This
compares to $141,580 or 0.11% through the nine months ended September 30, 1995.
The ratio of non-performing loans (including loans 90 days or more past due)
to total outstanding loans was 1.12% at September 30, 1996 compared to .97% at
December 31, 1995 and .91% at September 30, 1995. Included in non-performing
assets are four loan participations purchased by Mountain. As is customary in
evaluating participation loan agreements, Mountain had underwritten the
creditworthiness of the underlying debtor. The original participating lender
defaulted on its obligation to a large regional Southeastern bank which has now
stated it does not consider Mountain a participant. While Mountain disputes
this assertion, two of the underlying debtors repaid their loans in 1995 and a
third repaid in February 1996 without any proceeds being paid to Mountain. The
remaining debtor is in negotiations with the lender for the liquidation of its
debt. Mountain has filed suit against the lender (original and successor) for
payment of its portion of these payoffs.
At September 30, 1996, the Company owned three foreclosed residential
properties carried in other real estate owned totaling $248,667. As of December
31, 1995, the company owned seven such properties carried at $718,673. Since
that date, four properties were sold at a net gain of $9,714, and no real
estate has been foreclosed. The Company does not anticipate any material loss
on the sale of the remaining properties.
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<PAGE> 9
At September 30, 1996, the Company had $9,033,109 in short-term borrowings
compared to $4,497,555 at year ended December 31, 1995. Short-term borrowings
consist mainly of repurchase agreements with customers. Long-term debt at
September 30, 1996 was $3,130,267 compared to $2,483,716 at year end December
31, 1995. Long-term debt consists of advances from the Federal Home Loan Bank
of Atlanta for the purpose of match funding loans. Charter entered into one new
advance in July, 1996 in the amount of $792,000, maturing in 1999.
Non-interest income decreased $37,894 or 11.5% during the third quarter of 1996
compared to the same period in 1995, and decreased $341,685, or 26.7%, for the
first nine months of 1996 compared to the same period in 1995. Management
decided in late 1995 to discontinue selling SBA loans originated by the Company
and instead to hold the loans in the loan portfolio. This change resulted in a
decrease of $44,186, or 98.1%, in gains on sale of SBA loans in the third
quarter of 1996, compared to the comparable period in 1995, and a decrease of
$203,256, or 98.8%, for the first nine months of 1996 over 1995. Other income
decreased $247,357 for the first nine months of 1996, compared to the same
period in 1995, because the Company realized a one-time gain of $347,522 on
the sale of publicly traded stock in the second quarter of 1995. These declines
were offset by higher service charges on deposits, up $6,492, or 3.3%, in the
third quarter of 1996 compared to 1995, and up $54,996, or 10.5%, for the first
nine months of 1996 compared to 1995. The Company sold investment securities
available for sale in the second quarter of 1995, incurring a loss of $59,788.
No securities were sold in the first nine months of 1996.
Non-interest expense increased $204,271, or 14.0%, for the quarter ended
September 30, 1996 as compared to the same period in 1995. Occupancy and
equipment expense increased $47,576, or 24.2%, in the third quarter of 1996
compared to the same period in 1995 partly resulting from Mountain opening a
new combined branch bank/operations center in April, 1996. Legal expense
increased $38,000, or 102.7%, for the third quarter of 1996 compared to the
same period in 1995, the result of Mountain's lawsuit discussed above involving
its nonperforming participation loans. Salaries and other personnel expenses
increased $86,987, or 11.4%, and other operating expenses increased $17,646, or
4.4%, in the third quarter of 1996 compared to 1995, reflecting continued
growth.
Non-interest expense for the nine months ended September 30, 1996 increased
$37,317, or 0.8%, over the same period in 1995. Salaries and other personnel
expenses increased $263,426, or 11.8%, as a result of continued growth.
Occupancy and equipment expense increased $107,861, or 18.3%, in the first nine
months of 1996 compared to the same period in 1995, for the reason explained in
the preceding paragraph. Legal expense decreased $119,750, or 41.2%, for the
first nine months of 1996 compared to the same period in 1995 due to expenses
incurred in 1995 related to settlement costs of three lawsuits. This decrease
was partly offset by expenses of the 1996 lawsuit discussed above FDIC
assessment fees paid in the nine months ended September 30, 1996 were $149,887
less than the same period in 1995, as the result of the FDIC eliminating the
deposit based assessment fee upon the full funding of the Bank Insurance Fund
in 1995. Other operating expenses decreased $54,574, or 4.4%, in the third
quarter of 1996 compared to 1995, as management continues to control operating
expenses.
-8-
<PAGE> 10
CAPITAL ADEQUACY
Federal banking regulators have established certain capital adequacy standards
required to be maintained by banks and bank holding companies. These
regulations establish minimum requirements for risk-based capital of 4% for
core capital (tier I), 8% for total risk-based capital and 3% for the leverage
ratio. At September 30, 1996 the Company's tier I risk-based capital ratio was
15.22% and total risk-based capital ratio was 16.55%, compared to 14.53% and
16.08% at year-ended December 31, 1995, respectively. At September 30, 1996,
the Company's leverage ratio was 12.93% compared to 11.79% at December 31,
1995.
LIQUIDITY
The goal of liquidity management is to ensure the availability of an adequate
level of funds to meet the loan demand and deposit withdrawal needs of the
Company's customers. The Company does not anticipate any events which would
require liquidity beyond that which is available through deposit growth,
federal funds balances, or investment portfolio maturities. The Company
actively manages the levels, types and maturities of earning assets in relation
to the sources available to fund current and future needs to ensure that
adequate funding will be available at all times. There are no known trends or
any known commitments or uncertainties that will result in the Company's
liquidity increasing or decreasing in any material way.
-9-
<PAGE> 11
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule (SEC use only)
(b) No reports on Form 8-K were filed during the quarter ended September
30, 1996.
-10-
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MERIT HOLDING CORPORATION
Date: November 8, 1996 J. Randall Carroll
---------------- --------------------------------------------
J. Randall Carroll
Chairman and Chief Executive Officer
Date: November 8, 1996 Ronald H. Francis
----------------- --------------------------------------------
Ronald H. Francis
President and Chief Financial Officer
(principal financial and accounting officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MERIT HOLDING CORPORATION FOR THE PERIOD ENDED SEPTEMBER
30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 10,948,782
<INT-BEARING-DEPOSITS> 100,000
<FED-FUNDS-SOLD> 24,064,931
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,268,526
<INVESTMENTS-CARRYING> 1,838,003
<INVESTMENTS-MARKET> 1,723,049
<LOANS> 147,463,736
<ALLOWANCE> 2,932,261
<TOTAL-ASSETS> 235,619,944
<DEPOSITS> 195,716,240
<SHORT-TERM> 9,033,109
<LIABILITIES-OTHER> 1,995,340
<LONG-TERM> 3,130,267
0
0
<COMMON> 9,260,255
<OTHER-SE> 16,484,733
<TOTAL-LIABILITIES-AND-EQUITY> 235,619,944
<INTEREST-LOAN> 10,335,136
<INTEREST-INVEST> 1,924,073
<INTEREST-OTHER> 601,837
<INTEREST-TOTAL> 12,861,046
<INTEREST-DEPOSIT> 4,234,743
<INTEREST-EXPENSE> 4,537,685
<INTEREST-INCOME-NET> 8,323,361
<LOAN-LOSSES> 495,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,739,182
<INCOME-PRETAX> 4,027,213
<INCOME-PRE-EXTRAORDINARY> 2,583,458
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,583,458
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
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<ALLOWANCE-CLOSE> 2,932,261
<ALLOWANCE-DOMESTIC> 2,932,261
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</TABLE>
