As filed with the Securities and Exchange Commission on May 14, 1998
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 March 31, 1998
OR
/ / 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: 0-21386
T R FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3154382
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
EMPLOYER OF INCORPORATION IDENTIFICATION NO.
OR ORGANIZATION)
1122 FRANKLIN AVENUE, GARDEN CITY, NEW YORK 11530
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(516) 742-9300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 for the past 90 days.
Yes X No
--- ---
As of May 8, 1998, there were 17,527,575 shares of the Registrant's
common stock outstanding.
<PAGE>
FORM 10-Q
T R FINANCIAL CORP.
INDEX
Page
PART I -- FINANCIAL INFORMATION Number
- ------------------------------- ------
Item 1. Financial Statements -- Unaudited
Consolidated Statements of Financial Condition at
March 31, 1998 and December 31, 1997 3
Consolidated Statements of Income for the three
months ended March 31, 1998 and 1997 4
Consolidated Statement of Changes in Stockholders' Equity for
the three months ended March 31, 1998 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997 6
Notes to Unaudited Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17-18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
================================================================================
Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by the Company with the Securities and Exchange Commission from
time to time.
================================================================================
2
<PAGE>
PART I -- FINANCIAL INFORMATION
- --------------------------------
ITEM 1. FINANCIAL STATEMENTS -- UNAUDITED
---------------------------------
<TABLE>
<CAPTION>
T R FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
March 31, December 31,
1998 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents....................................................... $21,229 $18,307
Securities available for sale:
Bonds and equities.............................................................. 313,221 308,569
Mortgage-backed securities...................................................... 197,871 168,096
--------- ----------
Total securities available for sale 511,092 476,665
--------- ----------
Securities held to maturity, net (estimated fair value of $1,280,394 and
$1,245,735 at March 31, 1998 and December 31, 1997, respectively):
Bonds.................................................................. 34,513 42,092
Mortgage-backed securities............................................. 1,224,973 1,177,208
---------- ---------
Total securities held to maturity, net................................. 1,259,486 1,219,300
---------- ---------
Loans receivable................................................................ 2,147,507 2,062,896
Allowance for possible loan losses.............................................. (14,904) (14,917)
---------- ---------
Loans receivable, net......................................................... 2,132,603 2,047,979
---------- ----------
Other real estate owned, net.................................................... 1,656 1,040
Banking house and equipment, net................................................ 13,218 13,642
Accrued interest receivable..................................................... 24,293 24,338
Federal Home Loan Bank (FHLB) stock, at cost.................................... 33,954 33,390
Deferred tax asset, net......................................................... 2,009 2,034
Other assets.................................................................... 6,155 6,361
---------- ----------
Total assets.................................................................. $4,005,695 $3,843,056
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Due to depositors............................................................... $2,133,760 $2,202,353
Securities sold under agreements to repurchase.................................. 972,000 807,000
FHLB borrowings................................................................. 553,578 491,578
Mortgagors' escrow deposits..................................................... 31,845 21,784
Accounts payable and accrued expenses........................................... 19,140 19,526
Official checks outstanding..................................................... 15,730 27,989
Accrued taxes payable........................................................... 4,395 15,620
Other liabilities............................................................... 28,952 16,235
----------- ---------
Total liabilities............................................................. 3,759,400 3,602,085
----------- ---------
Commitments and contingencies................................................... -- --
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued..... -- --
Common stock, $.01 par value, 30,000,000 shares authorized; 22,724,000
shares issued; 17,530,381 shares and 17,598,029 shares outstanding at March
31,1998 and December 31, 1997, respectively................................... 227 227
Additional paid-in-capital.................................................... 113,425 110,962
Retained earnings............................................................. 189,901 183,065
Accumulated other comprehensive income:
Net unrealized appreciation in certain securities, net of tax............. 5,090 5,057
Less:
Unallocated common stock held by Employee Stock Ownership Plan (ESOP) (4,358) (4,604)
Unearned common stock held by Bank's Recognition and Retention
Plan and Trust (RRP)...................................................... (78) (103)
Common stock held by Bank's Supplemental Executive Retirement Plan and
Trust (SERP), at cost (106,748 shares and 106,103 shares at March
31, 1998 and December 31, 1997, respectively)............................. (1,246) (1,225)
Treasury stock, at cost (5,193,619 shares and 5,125,971 shares at
March 31, 1998 and December 31, 1997, respectively)....................... (56,666) (52,408)
---------- -----------
Total stockholders' equity........................................... 246,295 240,971
---------- -----------
Total liabilities and stockholders' equity $4,005,695 $3,843,056
========== ==========
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
T R FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
For the
three months ended
March 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Interest income:
Mortgage loans $36,894 $30,466
Mortgage-backed securities 25,089 20,331
Bonds, equities and other investments 5,348 6,538
Other loans 2,041 2,122
----- -----
Total interest income 69,372 59,457
------ ------
Interest expense:
Deposits 24,091 27,884
Borrowed funds 20,217 9,558
------ ------
Total interest expense 44,308 37,442
------ ------
Net interest income 25,064 22,015
Provision for possible loan losses 250 350
--- ---
Net interest income after provision
for possible loan losses 24,814 21,665
------ ------
Non-interest income:
Loan fees and other charges, net 1,459 1,450
Net gain on sales of securities 1,604 966
Gain on sales of whole loans 267 131
Other income 247 433
--- ---
Total non-interest income 3,577 2,980
----- -----
Non-interest expense:
Salaries and employee benefits 8,043 6,766
Occupancy and equipment expense 1,250 1,365
Marketing expense 630 650
Other real estate owned expense 56 77
FDIC assessment 77 74
Other operating expense 2,118 2,496
----- -----
Total non-interest expense 12,174 11,428
------ ------
Income before provision for income
taxes 16,217 13,217
------ ------
Provision for income taxes 6,484 5,453
----- -----
Net income $ 9,733 $ 7,764
======= =======
Basic earnings per share $ 0.59 $ 0.47
======= =======
Diluted earnings per share $ 0.56 $ 0.44
======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
T R FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Common Stock
Held by RRP as
Accumulated Unearned, Held
Common Additional Other by ESOP as Treasury
Stock Paid-in Retained Comprehensive Unallocated and Stock,
(in thousands, except per share amount) Total (Par Value $0.01) Capital Earnings Income Held by SERP at cost
----- ----------------- ------- -------- ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997...............$240,971 $ 227 $110,962 $183,065 $5,057 ($5,932) ($52,408)
Comprehensive income:
Net income............................... 9,733 -- -- 9,733 -- -- --
Other comprehensive income, net
of tax
Net unrealized appreciation
on certain securities, net of
reclassification adjustment............ 33 -- -- -- 33 -- --
--
Comprehensive income(1)..................... 9,766 -- -- -- -- -- --
-----
Cash dividends declared on common stock
($0.17 per share)......................... (2,808) -- -- (2,808) -- -- --
Reissuance of treasury stock................ 538 -- -- (89) -- -- 627
Benefit plan adjustments, including tax
benefits................................... 2,688 -- 2,442 -- -- 246 --
RRP amortization............................ 25 -- -- -- -- 25 --
Common stock acquired at cost............... (4,885) -- 21 -- -- (21) (4,885)
-------- ----- -------- -------- ------- ------- ---------
Balance at March 31, 1998................... $246,295 $ 227 $113,425 $189,901 $ 5,090 ($5,682) ($56,666)
======== ===== ======== ======== ======= ======== =========
</TABLE>
(1) Comprehensive income for three months ended March 31, 1997 was $6,087.
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
T R FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31,
1998 1997
---- ----
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................... $ 9,733 $ 7,764
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Provision for possible loan losses.......................................... 250 350
Depreciation of banking house and equipment................................. 521 504
Net gain on sales of securities available for sale.......................... (1,604) (962)
Gain on sales of whole loans................................................ (267) (131)
Net gain on sale of other real estate owned................................. (19) (277)
Amortization of net deferred loan origination costs......................... 466 92
Amortization of premiums in excess of accretion of discounts................ 1,654 330
Income taxes deferred and tax benefits attributable to stock plans.......... 809 278
Amortization relating to allocation and earned portions of stock plans...... 1,904 1,046
Increase/decrease in:
Accrued interest receivable................................................. 45 22
Accounts payable and accrued expenses....................................... (386) 754
Official checks outstanding................................................. (12,259) (10,355)
Other assets................................................................ 206 3,490
Accrued taxes payable....................................................... (11,225) 1,851
Other liabilities........................................................... 12,717 (3,329)
------ -------
Net cash provided by operating activities................................ 2,545 1,427
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for the purchase of:
Securities held to maturity and FHLB Capital Stock.......................... (144,249) (82,323)
Securities available for sale............................................... (86,199) (82,010)
Banking house and equipment................................................. (97) (1,478)
Proceeds from:
Redemption of FHLB Capital Stock and calls of securities.................... 18,757 4,095
Sales of securities available for sale...................................... 27,399 21,726
Repayments on securities.................................................... 109,123 41,857
Sales of whole loans........................................................ 8,942 7,790
Principal collected on real estate loans.................................... 67,693 54,766
Sales of other real estate owned............................................ 79 1,159
Principal collected on other loans.......................................... 16,468 8,346
Real estate loans originated and purchased.................................... (160,585) (110,275)
Other loans originated and purchased.......................................... (18,267) (13,868)
------- -------
Net cash used in investing activities..................................... (160,936) (150,215)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Interest credited to deposits................................................. 19,028 22,172
Net (withdrawals) deposits in savings accounts, certificate of deposit
accounts, money market accounts and checking accounts....................... (87,621) 37,734
Net proceeds from exercise of stock options................................... 538 326
Net deposits to escrow accounts............................................... 10,061 9,216
Net (repayments of) proceeds from short-term borrowed funds................... 55,000 (7,185)
Repayments of long-term borrowed funds........................................ (33,000) (22,400)
Proceeds from long-term borrowed funds........................................ 205,000 110,478
Purchase of treasury stock.................................................... (4,885) (175)
Cash dividends paid........................................................... (2,808) (1,799)
------ ------
Net cash provided by financing activities.................................. 161,313 148,367
------- -------
Net increase (decrease) in cash and cash equivalents.......................... 2,922 (421)
Cash and cash equivalents at beginning of period.............................. 18,307 18,128
------ ------
Cash and cash equivalents at end of period.................................... $ 21,229 $ 17,707
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes.................................................... $ 2,176 $ 434
========== ==========
Cash paid for interest on deposits and borrowed funds......................... $ 23,172 $ 13,732
========== =========
Non-cash investing activities:
Additions to other real estate owned, net................................... $ 676 $ 508
======= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
T R FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of T R Financial Corp. ("T R Financial"), its direct wholly owned
subsidiary, Roosevelt Savings Bank (the "Bank"), and the subsidiaries of the
Bank (collectively, the "Company").
The unaudited consolidated financial statements included herein reflect
all normal recurring adjustments which are, in the opinion of management,
necessary to present a fair statement of the results for the interim periods
presented. The results of operations for the three months ended March 31, 1998
are not necessarily indicative of the results of operations that may be expected
for the entire year. Certain information and note disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the U.S. Securities and Exchange Commission.
These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Annual Report to Stockholders for the year ended
December 31, 1997.
On April 15, 1997, the Board of Directors announced a stock split in
the form of a 100% stock dividend to stockholders of record at the close of
business on May 1, 1997. As a result, all share and per share amounts contained
in these unaudited consolidated financial statements have been restated to give
effect to the 100% stock dividend. The new shares were distributed on May 14,
1997.
7
<PAGE>
2. DEBT AND EQUITY SECURITIES
The following tables set forth certain information regarding amortized
cost, estimated fair values and gross unrealized gains and losses on debt and
equity securities of the Company at March 31, 1998.
<TABLE>
<CAPTION>
Amortized Estimated Gross Unrealized
Cost Fair Value Gains Losses
---- ---------- ----- ------
(in thousands)
<S> <C> <C> <C> <C>
Available for Sale:
Bonds and equities:
United States Government
obligations........................... $ 209,406 $ 211,097 $ 1,792 $ (101)
Federal agency obligations.............. 66,233 65,938 8 (303)
Industrial, financial corporation
and other bonds....................... 1,023 1,043 20 --
Common and preferred stocks............. 26,710 35,143 8,443 (10)
------- ------- ------ ----
Total bonds and equities............... 303,372 313,221 10,263 (414)
------- ------- ------ ----
Mortgage-backed securities:
FNMA, net.............................. 6,413 6,536 123 --
GNMA, net.............................. 185,992 186,995 1,181 (178)
FHLMC, net............................. 4,346 4,340 6 (12)
------ ------- ------ ----
Total mortgage-backed securities...... 196,751 197,871 1,310 (190)
------- ------- ----- ----
Total available for sale............ $ 500,123 $ 511,092 $ 11,573 $ (604)
======= ======= ====== ====
Held to Maturity, Net:
Bonds:
Federal agency obligations............ $ 1,000 $ 1,000 $ -- $ --
Public utility bonds.................. 801 776 -- (25)
Municipal bonds....................... 5,838 6,025 187 --
Industrial and financial
corporation bonds..................... 26,874 26,799 58 (133)
------ ------ -- ----
Total bonds.......................... 34,513 34,600 245 (158)
------ ------ --- ----
Mortgage-backed securities:
FNMA, net............................. 82,175 82,283 508 (400)
GNMA, net............................. 1,057,186 1,075,033 18,713 (866)
FHLMC, net (1)........................ 82,702 85,437 2,735 --
CMOs, net (1)......................... 2,910 3,041 132 (1)
--------- --------- ------ ------
Total mortgage-backed securities...... 1,224,973 1,245,794 22,088 (1,267)
--------- --------- ------ ------
Total held to maturity, net......... $1,259,486 $1,280,394 $ 22,333 $ (1,425)
========== ========== ====== ======
</TABLE>
(1) Includes securities which were transferred on March 31, 1995 from
available for sale to held to maturity. As of March 31, 1998 the amortized
cost of these securities was reduced by $2,038,000 of gross unrealized
losses existing as of March 31, 1995, adjusted for subsequent accretion.
8
<PAGE>
3. EMPLOYEE STOCK OWNERSHIP PLAN
The Company recognizes compensation expense attributable to its
employee stock ownership plan ("ESOP") ratably over the year based upon the
estimated number of shares of T R Financial common stock to be allocated by the
ESOP to participant accounts each December 31st. The amount of compensation
expense recorded is equal to the estimate of shares to be allocated by the ESOP
multiplied by the average fair value of the underlying shares during the period.
The compensation expense attributable to the ESOP was $1,867,000 and $1,017,000,
respectively, for the three months ended March 31, 1998 and 1997. The average
quoted price of the underlying shares for the three months ended March 31, 1998
and 1997 was $34.18 per share and $17.51 per share, respectively.
4. EARNINGS PER SHARE
Earnings per share is computed in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," which became effective for the Company as of December 31, 1997. As
required by the statement, earnings per share for all prior periods presented
have been restated. Basic earnings per share is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding during the period. Such shares exclude the weighted average number
of unallocated shares of Company common stock held the ESOP. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock, such as stock options, were exercised,
converted into common stock or otherwise resulted in the issuance of common
stock.
The following table is a reconciliation of basic and diluted earnings
per share as required under SFAS No. 128.
<TABLE>
<CAPTION>
Average
Income Shares Per Share Amount
------ ------ ----------------
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 1998:
Net income (all available to common shareholders)................ $9,733,000
==========
Weighted average number of shares of
common stock outstanding (1)................................... 16,553,799
Basic earnings per share......................................... $0.59
=====
Effect of other potentially dilutive securities:
Stock options.................................................. 908,260
-------
Total weighted average of securities:............................ 17,462,059
==========
Diluted earning per share........................................ $0.56
=====
FOR THE THREE MONTHS ENDED MARCH 31, 1997:
Net income (all available to common stockholders)................ $7,764,000
==========
Weighted average number of shares of
common stock outstanding (1)..................................... 16,376,407
Basic earnings per share......................................... $0.47
=====
Effect of other potentially dilutive securities:
Stock options.................................................. 1,193,348
----------
Total weighted average of securities............................. 17,569,755
==========
Diluted earnings per share $0.44
=====
</TABLE>
(1) Excludes 994,122 shares and 1,226,534 shares of unallocated shares of
Company common stock held by the ESOP at March 31, 1998 and 1997,
respectively.
9
<PAGE>
5. CONTINGENCIES
The Company is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business, which in
the aggregate involve amounts that are believed by management to be immaterial
to the financial condition and results of operations of the Company.
6. STOCKHOLDERS' EQUITY
During the three months ended March 31, 1998, a total of 165,000 shares
of T R Financial common stock were repurchased by the Company at an aggregate
cost of $4,885,000. On January 23, 1998, the Board of Directors declared a cash
dividend on the Company's outstanding common stock of $0.17 per share to
stockholders of record on February 12, 1998. This dividend aggregated $2,808,000
and was paid on March 2, 1998.
7. REGULATORY CAPITAL
The following table sets forth the Bank's and the Company's amounts and
ratios for required and actual regulatory capital requirements at March 31,
1998.
<TABLE>
<CAPTION>
Bank Company
--------------------------------- ----------------------------------
Total Tier 1 Tier 1 Total Tier 1 Tier 1
Risk-Based Risk-Based Leverage Risk-Based Risk-Based Leverage
Capital Capital Capital Capital Capital Capital
------- ------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
At March 31, 1998
Actual:
Amount............................. $247,021 $232,117 $232,117 $256,214 $241,310 $241,310
Ratio.............................. 17.92% 16.84% 5.93% 18.64% 17.56% 6.14%
Minimum requirement for
capital adequacy purposes:
Amount............................. $110,290 $ 55,145 $117,431 $109,943 $ 54,971 $118,000
Ratio.............................. 8.00% 4.00% 3.00% 8.00% 4.00% 3.00%
To be "well-capitalized" under prompt
corrective action provisions (1):
Amount............................. $137,863 $ 82,718 $195,718 -- -- --
Ratio.............................. 10.00% 6.00% 5.00% -- -- --
</TABLE>
(1) Such amounts are not applicable to the Company.
8. RECENT DEVELOPMENTS
On April 21, 1998, the Board of Directors declared a cash dividend on
the Company's outstanding common stock of $0.18 per share to stockholders of
record on May 14, 1998. The dividend is payable on June 1, 1998.
10
<PAGE>
9. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" which establishes standards for the way public business
enterprises, including the Company, are to report information about operating
segments in annual reporting and selected information about operating segments
in interim reporting. This statement also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 supersedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise" and amends SFAS No. 94, "Consolidation of All Majority
Owned Subsidiaries" to remove special disclosure requirements for previously
unconsolidated subsidiaries. SFAS No. 131 is effective for the Company for
annual reporting periods beginning after December 15, 1997 and requires interim
periods to be presented in the second year of application. The interim periods,
however, must be presented in comparative form unless it is impracticable to do
so. SFAS No. 131 is limited to additional disclosure and, accordingly, the
adoption of this statement will not have an impact on the Company's financial
condition or results of operations.
10. PROVISION FOR INCOME TAXES
In March 1997, New York City legislative changes were enacted to permit
continued future use of bad debt reserve methods similar to New York State tax
law. The Company reduced its provision for income taxes during the three months
ended March 31, 1997 by $275,000 principally as a result of the change in New
York City bad debt tax legislation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
T R Financial Corp. ("T R Financial") is the bank holding company for
Roosevelt Savings Bank and its subsidiaries (the "Bank"), a New York chartered
stock savings bank. While the following discussion of financial condition and
results of operations includes the collective results of T R Financial and the
Bank (collectively, the "Company"), this discussion reflects principally the
Bank's activities.
FINANCIAL CONDITION
Total assets increased $162.6 million, or 4.2%, to $4.01 billion at
March 31, 1998 from $3.84 billion at December 31, 1997, primarily as a result of
management's continued strategy to leverage its capital position through asset
growth. This growth was funded primarily by increased borrowings from securities
sold under agreements to repurchase ("securities repurchase agreements") and
from Federal Home Loan Bank of New York ("FHLB") borrowings.
Of the increase in total assets, $84.6 million was attributable to an
increase in loans receivable, net, due primarily to the origination and purchase
of residential real estate loans. Securities available for sale increased $34.4
million, or 7.2%, to $511.1 million at March 31, 1998 from $476.7 million at
December 31, 1997, due principally to purchases of such securities totaling
$86.2 million during the three months ended March 31, 1998. Such purchases were
partially offset by sales of securities totaling $25.8 million and repayments of
mortgage-backed securities. Securities held to maturity, net, increased $40.2
million, or 3.3%, to $1.26 billion at March 31, 1998 from $1.22 billion at
December 31, 1997. These changes in securities portfolios reflect the effects of
securities purchases, securities repayments and maturities and,
11
<PAGE>
in the case of the available for sale securities portfolio, also reflects the
effects of securities sales and changes in the estimated fair values of the
portfolio. As of March 31, 1998, the available for sale portfolio had net
unrealized appreciation of $11.0 million as compared to net unrealized
appreciation at December 31, 1997 of $11.1 million.
Total deposits decreased $68.6 million, or 3.1%, to $2.13 billion at
March 31, 1998 from $2.20 billion at December 31, 1997. This decrease was
attributable to the planned net outflow of certain higher cost customer
deposits. Total borrowings, however, from securities repurchase agreements and
from FHLB borrowings, increased $227.0 million, or 17.5%, to $1.53 billion at
March 31, 1998 from $1.30 billion at December 31, 1997. In managing the
Company's overall cost of funds and interest rate sensitivity, management is
using borrowings to leverage asset growth and to supplement its deposit base.
This strategy is intended to mitigate the repricing effect of maturing time
deposit products and to reduce the Company's overall interest rate sensitivity.
Stockholders' equity increased to $246.3 million at March 31, 1998, or
6.1% of total assets, as compared to $241.0 million at December 31, 1997, or
6.3% of total assets. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Investments in Certain Debt and
Equity Securities," stockholders' equity at March 31, 1998 and December 31, 1997
includes net unrealized appreciation in certain securities, net of tax, of $5.1
million at both dates. In addition, during the three months ended March 31,
1998, the Company repurchased 165,000 shares of Company common stock at a total
cost of $4.9 million for the period. See "Liquidity and Capital Resources."
The Bank's leverage capital ratio decreased from 5.98% at December 31,
1997 to 5.93% at March 31, 1998 due to the increase in the Bank's quarterly
average assets, which was partially offset by a $7.3 million increase in the
Bank's Tier 1 leverage capital. The Bank's total risk-based capital ratio of
17.92% at March 31, 1998 represents a 12 basis point increase as compared to
that ratio at December 31, 1997. These capital ratios are well in excess of
Federal Deposit Insurance Corporation ("FDIC") capital requirements applicable
to the Bank. See "Liquidity and Capital Resources -- Regulatory Capital
Position" and Note 7 to Notes to Unaudited Consolidated Financial Statements.
Non-performing assets increased $2.8 million to $17.6 million at March
31, 1998, from $14.8 million at December 31, 1997 and the ratio of these assets
to total assets increased to 0.44% at March 31, 1998 from 0.38% at December 31,
1997. Other real estate owned, net, increased $616 thousand to $1.7 million at
March 31, 1998 from $1.0 million at December 31, 1997. Non-performing loans, the
largest component of non-performing assets, increased to $15.9 million at March
31, 1998 as compared to $13.7 million at December 31, 1997 due primarily to a
$2.2 million increase in FHA government insured residential mortgage loans which
are 90 days or more delinquent. The ratio of non-performing loans to total loans
at March 31, 1998 is 0.74% as compared to 0.67% at December 31, 1997.
ANALYSIS OF NET INTEREST INCOME
Net interest income represents the difference between income on earning
assets and expense on interest-bearing liabilities. Net interest income depends
upon the volume of earning assets and interest-bearing liabilities and the
interest rates earned or paid on them.
The following table sets forth certain information regarding the
Company's average statements of financial condition and its statements of income
for the three months ended March 31, 1998 and 1997, and reflects the average
yield on assets and average cost of liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense, annualized, by the
average balance of assets or liabilities, respectively, for the periods shown.
Average balances are derived from daily balances. Average balances and yields
include non-accrual loans.
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------------------------------------
1998 1997
------------------------------------------- ------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Mortgage Loans, Net $ 1,972,746 $ 36,894 7.48% $ 1,622,825 $ 30,466 7.51%
Other Loans 106,928 2,041 7.64 109,818 2,122 7.73
Mortgage-Backed Securities 1,404,072 25,089 7.15 1,078,998 20,331 7.54
Short-Term Securities 2,004 29 5.79 41 1 5.66
Other Securities 363,316 5,319 5.86 444,895 6,537 5.88
----------- -------- ----------- -------- ----
Total Earning Assets 3,849,066 69,372 7.21 3,256,577 59,457 7.30
-------- --------
Non-Earning Assets 78,351 69,678
----------- ----------
Total Assets $ 3,927,417 $ 3,326,255
=========== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-Bearing Liabilities:
Deposits:
Passbook Accounts 612,873 $ 4,003 2.61% $ 619,470 $ 4,495 2.90%
Now Accounts 10,820 66 2.44 8,640 60 2.78
Money Market Accounts 80,844 518 2.56 75,907 521 2.75
Certificate of Deposit Accounts 1,421,361 19,504 5.49 1,634,767 22,808 5.58
----------- -------- ----------- ------- ----
Total Interest-Bearing Deposits 2,125,898 24,091 4.53 2,338,784 27,884 4.77
Borrowings 1,419,134 20,217 5.70 673,444 9,558 5.68
----------- -------- ----------- -------
Total Interest-Bearing Liabilities 3,545,032 44,308 5.00 3,012,228 37,442 4.97
-------- -------
Other Liabilities 139,750 108,018
----------- -----------
Total Liabilities 3,684,782 3,120,246
Stockholders' Equity 242,635 206,009
----------- -----------
Total Liabilities and Stockholders'
Equity $ 3,927,417 $ 3,326,255
=========== ===========
Net Interest Income/Interest Rate
Spread $ 25,064 2.21% $ 22,015 2.33%
======== ===== ======== ====
Net Earning Assets/Net Interest
Margin $ 304,034 2.60% $ 244,349 2.70%
=========== ===== =========== ====
Ratio of Earning Assets to
Interest-Bearing Liabilities 1.09% 1.08%
===== ====
</TABLE>
13
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
1997
GENERAL. The Company's net income for the three months ended March 31,
1998 increased $2.0 million to $9.7 million from $7.8 million for the same
period in 1997.
INTEREST INCOME. Interest income increased by $9.9 million, or 16.7%,
to $69.4 million for the three months ended March 31, 1998, from $59.5 million
for the same period in 1997, due to a $592.5 million increase in the average
balance of earning assets to $3.85 billion for the three months ended March 31,
1998, from $3.26 billion for the same period in 1997, reflecting the Company's
strategy to leverage its capital position through asset growth. This increase
was primarily attributable to growth in the average balance of mortgage loans of
$349.9 million, net, and growth in the average balance of mortgage-backed
securities of $325.1 million. In addition, the average balance of short-term
securities increased $2.0 million, the average balance of other loans decreased
$2.9 million and the average balance of other securities decreased $81.6
million. The average yield on earning assets decreased to 7.21% for the three
months ended March 31, 1998 from 7.30% for the same period in 1997, due
primarily to the effects that the current interest rate environment has had on
increasing prepayments on higher yielding mortgage loans and mortgage-backed
securities, on lowering the yields of new assets acquired and on the downward
repricing of earning assets.
INTEREST EXPENSE. Interest expense increased by $6.9 million, or 18.3%,
to $44.3 million for the three months ended March 31, 1998, from $37.4 million
for the same period in 1997, due primarily to a $745.7 million increase in
average borrowings, and was partially offset by a $212.9 million decrease in
average interest-bearing deposits and generally lower interest rates associated
with deposits. For the three months ended March 31, 1998 as compared to the same
period in 1997, the average rate paid on interest-bearing deposits decreased 24
basis points while the average rate paid on borrowings increased 2 basis points.
The average rate paid on interest-bearing liabilities increased to 5.00% for the
three months ended March 31, 1998 from 4.97% for the same period in 1997. The
average balance of interest-bearing liabilities increased $532.8 million for the
three months ended March 31, 1998, to $3.55 billion from $3.01 billion for the
same period in 1997.
NET INTEREST INCOME. Net interest income increased $3.0 million, or
13.8%, to $25.1 million for the three months ended March 31, 1998, from $22.0
million for the same period in 1997. This increase is the result, in part, of a
$592.5 million increase in the average balance of earning assets to $3.85
billion, offset by a $532.8 million increase in the average balance of
interest-bearing liabilities to $3.55 billion for the three months ended March
31, 1998 as compared to the comparable prior year period. As a result of these
increases and the yields and costs associated with the earning assets and
interest-bearing liabilities, the net interest rate spread for the three months
ended March 31, 1998 decreased to 2.21% from 2.33% for the same period in 1997.
PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan
losses decreased $100 thousand, or 28.6%, to $250 thousand for the three months
ended March 31, 1998 from $350 thousand for the same period in 1997. The
decrease reflects management's assessment of the loan portfolio, the Bank's
historical charge-off experience, the level of the Bank's allowance for possible
loan losses and management's assessment of the local economy and market
conditions. For the three months ended March 31, 1998, net loan charge-offs were
$263 thousand as compared to $19 thousand for the comparable prior year period.
At March 31, 1998 and December 31, 1997, the allowance for possible loan losses
amounted to $14.9 million and the ratio of such allowance to non-performing
loans was 93.5% at March 31, 1998, as compared to 108.5% at December 31, 1997.
This decline in the ratio of allowance for possible loan losses to
non-performing loans is primarily attributable to a $2.2 million increase in FHA
government insured residential mortgage loans which are 90 days or more
delinquent. Generally the ultimate collection of such loans is achieved through
FHA insurance claims and without substantial charge-offs to the allowance for
possible loan losses. Although management believes its allowance for possible
loan losses is adequate at March 31, 1998, if general economic conditions and
real estate values deteriorate, the level of non-performing loans
14
<PAGE>
and charge-offs may increase and higher provisions for possible loan losses may
be necessary, which would adversely affect future operating results.
NON-INTEREST INCOME. Non-interest income increased $597 thousand to
$3.6 million for the three months ended March 31, 1998 from $3.0 million for the
same period in 1997. This increase was attributable to a $638 thousand increase
in net gain on sales of securities and a $136 thousand increase in gain on sales
of whole loans and was partially offset a $186 thousand decrease in other
income. Other income for the three months ended March 31, 1997 included $277
thousand of gains relating to the disposition of foreclosed property, as
compared to $19 thousand in the three month period ended March 31, 1998. The net
gains on sales of securities totaled $1.6 million in the three months ended
March 31, 1998 as compared to $966 thousand for the same period in 1997. The net
gains for the three months ended March 31, 1998 resulted from sales of available
for sale securities having an amortized cost of $25.8 million as compared to
$20.8 million in the 1997 comparable period. For the three months ended March
31, 1998, the Company sold $22.0 million of bonds (as compared to $13.0 million
in the same period in 1997) and $3.8 million of equities (as compared to $4.8
million in the same period in 1997) from its available for sale portfolio .
These securities were sold during the three months ended March 31, 1998 at net
gains of $41 thousand and $1.6 million, respectively (as compared to $26
thousand and $913 thousand, respectively, for the same period in 1997). In
addition, the 1997 period included sales of mortgage-backed securities having an
amortized cost of $3.9 million which resulted in a gain of $23 thousand.
NON-INTEREST EXPENSE. Non-interest expense increased $746 thousand, or
6.5%, to $12.2 million for the three months ended March 31, 1998, from $11.4
million for the same period in 1997. Of this increase, salary and employee
benefits expense increased $1.3 million, or 18.9%, due primarily to higher costs
associated with certain stock-based compensation plans. Occupancy and equipment
expense decreased $115 thousand to $1.3 million for the three months ended March
31, 1998, due primarily to lower building maintenance costs. Marketing expense
decreased $20 thousand to $630 thousand for the three months ended March 31,
1998 as compared to the same period in 1997. Other real estate owned expense
decreased $21 thousand to $56 thousand for the three months ended March 31, 1998
as compared to the same period in 1997. FDIC assessment expense was $77 thousand
for the three month period ending March 31, 1998 as compared to $74 thousand for
the same period in 1997. Federal Deposit Insurance Corporation ("FDIC") Bank
Insurance Fund ("BIF") assessment rates for both periods were $0.013 per $100 of
insured deposits. Other operating expense decreased $378 thousand, or 15.1%, for
the three months ended March 31, 1998 as compared to the same period during
1997, due in part to lower loan origination costs, lower professional fees and
generally lower levels of other operating expenses.
PROVISION FOR INCOME TAXES. Provision for income taxes increased $1.0
million to $6.5 million for the three months ended March 31, 1998 as compared to
$5.5 million during the same period in 1997. As a percentage of income before
provision for income taxes, the provision for income taxes was 40.0% of pre-tax
earnings for the three months ended March 31, 1998 as compared to 41.3% in the
comparable 1997 period due to lower state and local income taxes. During the
three months ended March 31, 1997, the provision for income taxes was reduced by
$275 thousand as a result of a change in New York City tax legislation relating
to bad debts.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL. Following the completion of the Bank's conversion and T R
Financial's stock offering in June 1993, T R Financial's principal business was
that of its subsidiary, the Bank. T R Financial invested 50% of the net proceeds
from the stock offering in the Bank and initially invested the remaining
proceeds in short-term securities, corporate debt obligations, money market
investments and mortgage-backed securities. The Bank can pay dividends to T R
Financial, to the extent such payments are permitted by law or regulation, which
serves as an additional source of liquidity. T R Financial's liquidity is
available to, among other things, support future expansion of operations or
diversification into other banking related
15
<PAGE>
businesses, to pay dividends to its stockholders or repurchase its common stock.
During the three months ended March 31, 1998, T R Financial repurchased 165,000
shares of its common stock pursuant to its sixth stock repurchase program at a
cost of $4.9 million. The sixth stock repurchase program was authorized by the
Board of Directors on April 16, 1996 and covers the repurchase of up to
1,789,618 shares of common stock. As of March 31, 1998, a total of 782,000
shares had been repurchased pursuant to this program. On April 21, 1998, the
Board of Directors declared a quarterly cash dividend of $0.18 per common share
to stockholders of record on May 14, 1998. This dividend is payable on June 1,
1998.
The Bank's primary sources of funds are deposits, FHLB borrowings,
securities sold under agreements to repurchase and proceeds from principal and
interest payments on loans, mortgage-backed securities and debt securities.
Proceeds from the sales of securities available for sale and, to a lesser
extent, loans are also sources of funding. While maturities and scheduled
amortization of loans and investments are predictable sources of funds, deposit
flows and prepayments of mortgage loans and mortgage-backed securities are
greatly influenced by general interest rates, economic conditions and
competition.
The primary investing activities of the Company are the origination or
purchase of mortgage loans and the purchase of securities, including
mortgage-backed securities. The Company's most liquid assets are cash and cash
equivalents, short-term securities, securities available for sale and securities
held to maturity with expected repayment within one year. The levels of these
assets are dependent on the Company's operating, financing, lending and
investing activities during any given period.
Liquidity management for the Company is both a daily and long-term
component of the Company's management strategy. Excess funds are generally
invested in short-term and intermediate-term securities. In the event that the
Company seeks to raise funds beyond what it generates internally, additional
sources of funds are available through the use of FHLB term advances and through
the use of securities sold under agreements to repurchase. In addition, the Bank
may access funds, if necessary, through a variety of other FHLB products
including a $100 million overnight line of credit and a $100 million one-month
borrowing facility from the FHLB.
REGULATORY CAPITAL POSITION. The Bank is subject to minimum regulatory
requirements imposed by the FDIC which vary according to the institution's
capital level and the composition of its assets. An insured institution is
required to maintain core capital of not less than 3.0% of total assets plus an
additional amount of at least 100 to 200 basis points ("leverage capital
ratio"). An insured institution must also maintain a ratio of total capital to
risk-based assets of 8.0%. Although the minimum leverage capital ratio is 3.0%,
the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
stipulates that an institution with less than a 4.0% leverage capital ratio is
deemed to be an "undercapitalized" institution and results in the imposition of
regulatory restrictions. The Bank's capital ratios qualify it to be deemed "well
capitalized" under FDICIA. In addition, the Company's capital ratios exceed the
minimum regulatory capital requirements imposed by the Federal Reserve Board,
which are substantially similar to the requirements of the FDIC. See Note 7 to
Unaudited Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosure about market risk is presented
at December 31, 1997 in Exhibit 13.1 to the Company's Annual Report on Form
10-K, which was filed with the Securities and Exchange Commission on March 30,
1998. There have been no material changes in the Company's market risk at March
31, 1998 compared to December 31, 1997.
16
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on April 27, 1998,
the following matters were voted upon, with the results of the voting
on such matters indicated:
1. Election of the following persons to serve a three-year term as
directors of the Company:
FOR WITHHELD
A. Gordon Nutt 14,921,573 100,883
Michael P. Galgano 14,921,672 100,784
John C. Mesloh 14,924,672 97,784
Broker Non-Votes: None
2. Ratification of the appointment of the firm of KPMG Peat Marwick LLP
as independent auditors for the Company for the year ending December
31, 1998:
For: 14,933,402
Against: 32,574
Abstain: 56,480
Broker Non-Votes: None
17
<PAGE>
3. Approval of the amendment to the Certificate of Incorporation of the
Company to increase the number of shares of common stock that the
Company is authorized to issue:
For: 14,525,665
Against: 398,707
Abstain: 98,084
Broker Non-Votes: None
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27.1 Financial Data Schedule (submitted only with filing in electronic
format)
27.2 Restated Financial Data Schedule (submitted only with filing in
electronic format)
(b) REPORTS ON FORM 8-K
Not applicable.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
T R FINANCIAL CORP.
(Registrant)
Date: May 14, 1998 By: /s/ John M. Tsimbinos
-------------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
Date: May 14, 1998 By: /s/ Dennis E. Henchy
-----------------------------
Dennis E. Henchy
Executive Vice President
and Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule (submitted only with filing in electronic format)
27.2 Restated Financial Data Schedule (submitted only with filing in electronic
format).
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed statement of financial condition and the consolidated
condensed statement of income and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000898447
<NAME> T R FINANCIAL CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 21,229
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 511,092
<INVESTMENTS-CARRYING> 1,259,486
<INVESTMENTS-MARKET> 1,280,394
<LOANS> 2,147,507
<ALLOWANCE> 14,904
<TOTAL-ASSETS> 4,005,695
<DEPOSITS> 2,133,760
<SHORT-TERM> 167,000
<LIABILITIES-OTHER> 100,062
<LONG-TERM> 1,358,578
0
0
<COMMON> 227
<OTHER-SE> 246,068
<TOTAL-LIABILITIES-AND-EQUITY> 4,005,695
<INTEREST-LOAN> 38,935
<INTEREST-INVEST> 30,437
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 69,372
<INTEREST-DEPOSIT> 24,091
<INTEREST-EXPENSE> 44,308
<INTEREST-INCOME-NET> 25,064
<LOAN-LOSSES> 250
<SECURITIES-GAINS> 1,604
<EXPENSE-OTHER> 12,174
<INCOME-PRETAX> 16,217
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,733
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.56
<YIELD-ACTUAL> 2.60
<LOANS-NON> 13,500
<LOANS-PAST> 2,442
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 14,917
<CHARGE-OFFS> 315
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 14,904
<ALLOWANCE-DOMESTIC> 14,904
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed statement of financial condition and the consolidated
condensed statement of income and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000898447
<NAME> T R FINANCIAL CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 17,707
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 491,412
<INVESTMENTS-CARRYING> 1,053,659
<INVESTMENTS-MARKET> 1,047,803
<LOANS> 1,768,935
<ALLOWANCE> 14,701
<TOTAL-ASSETS> 3,404,326
<DEPOSITS> 2,403,419
<SHORT-TERM> 75,500
<LIABILITIES-OTHER> 72,378
<LONG-TERM> 643,228
0
0
<COMMON> 114
<OTHER-SE> 209,687
<TOTAL-LIABILITIES-AND-EQUITY> 3,404,326
<INTEREST-LOAN> 32,588
<INTEREST-INVEST> 26,869
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 59,457
<INTEREST-DEPOSIT> 27,884
<INTEREST-EXPENSE> 37,442
<INTEREST-INCOME-NET> 22,015
<LOAN-LOSSES> 350
<SECURITIES-GAINS> 966
<EXPENSE-OTHER> 11,428
<INCOME-PRETAX> 13,217
<INCOME-PRE-EXTRAORDINARY> 7,764
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,764
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 2.70
<LOANS-NON> 10,135
<LOANS-PAST> 510
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 14,370
<CHARGE-OFFS> 90
<RECOVERIES> 71
<ALLOWANCE-CLOSE> 14,701
<ALLOWANCE-DOMESTIC> 14,701
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
