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
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: 0-22066
FCB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1760287
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
420 South Koeller Street, Oshkosh, WI 54902
(Address of principal executive office) (Zip Code)
(920) 303-4900
(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
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Common Stock, $.01 Par Value
Number of shares outstanding as of September 30, 1998: 3,834,180
<PAGE>
FCB FINANCIAL CORP.
INDEX -- FORM 10-Q
Part I--Financial Information Page No.
Item 1--Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
as of September 30, 1998 and March 31, 1998 1
Consolidated Statements of Income for the Three
Months Ended September 30, 1998 and 1997 3
Consolidated Statements of Income for the Six
Months Ended September 30, 1998 and 1997 4
Consolidated Statements of Shareholders'
Equity for the Six Months Ended September
30, 1998 and 1997 5
Consolidated Statements of Cash Flows for the
Six Months Ended September 30, 1998 and 1997 6
Notes to Consolidated Financial Statements 8
Item 2 --Management's Discussion and Analysis
Results of Operations 11
Changes in Financial Condition 12
Asset Quality 13
Liquidity & Capital Resources 15
Impact of Year 2000 16
Special Note Regarding Forward-Looking
Statements 17
Item 3--Quantitative and Qualitative Disclosures
About Market Risk 17
Part II--Other Information
Item 4 --Submission of Matters to a Vote of
Security Holders 17
Item 6 --Exhibits and Reports on Form 8-K 18
<PAGE>
Part 1 - Financial Information
Item 1 - Financial Statements
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONS
September 30, 1998 and March 31, 1998
(Unaudited)
ASSETS
September 30 March 31
1998 1998
------------ --------
(In thousands)
Cash and cash equivalents $ 55,185 $ 28,359
Investment securities available
for sale, at fair value 4,903 2,894
Investment securities held to
maturity (estimated fair value of
$37,162 and $20,719 at September
30, 1998 and March 31, 1998,
respectively) 36,767 20,424
Mortgage-related securities
available for sale, at fair value 31,639 33,870
Mortgage-related securities held
to maturity (estimated fair value
of $17,901 and $26,124 at September
30, 1998 and March 31, 1998,
respectively) 17,633 25,754
Investment in Federal Home Loan Bank
stock, at cost 5,918 6,028
Loans held for sale 9,136 16,692
Loans receivable - Net 360,410 370,934
Office properties and equipment 6,902 6,610
Other assets 6,435 6,207
--------- --------
TOTAL ASSETS $ 534,928 $ 517,772
=========== ===========
See accompanying notes to the unaudited consolidated financial statements.
1
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 1998 and March 31, 1998
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 March 31
1998 1998
------------ --------
(In thousands)
Liabilities:
Deposit accounts $ 322,652 $ 318,508
Borrowed funds 118,350 109,350
Advance payments by borrowers
for taxes and insurance 9,171 4,644
Other liabilities 8,919 10,354
--------- ---------
Total liabilities 459,092 442,856
--------- ---------
Commitments and contingencies
Shareholders' Equity:
Common stock - $.01 par value 45 45
Additional paid-in capital 60,127 59,638
Retained earnings -
Substantially restricted 30,786 29,211
Accumulated other comprehensive
income, unrealized gain on
securities available for sale
- Net of tax 418 502
Unearned compensation - ESOP (868) (1,036)
Treasury common stock, at cost (14,672) (13,444)
---------- ----------
Total shareholders' equity 75,836 74,916
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 534,928 $ 517,772
========= =========
See accompanying notes to the unaudited consolidated financial statements.
2
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 1998 and 1997
(Unaudited)
Three Months Ended
September 30
---------------------------
1998 1997
(In thousands, except per share numbers)
Interest and dividend income:
Mortgage loans $ 5,263 $ 6,303
Other loans 2,173 1,844
Investment securities 707 513
Mortgage-related securities 911 1,074
Dividends on stock in
Federal Home Loan Bank 96 102
Interest-bearing deposits 541 34
--------- ---------
Total interest and
dividend income 9,691 9,870
--------- ---------
Interest expense:
Deposit accounts 3,865 4,045
Borrowed funds 1,572 1,641
--------- ---------
Total interest expense 5,437 5,686
--------- ---------
Net interest income 4,254 4,184
Provision for loan losses 84 150
--------- ---------
Net interest income after provision
for loan losses 4,170 4,034
--------- ---------
Noninterest income:
Loan fees - Net 182 169
Gain on sale of loans - Net 268 195
Deposit fees 235 185
Other income 173 169
--------- ---------
Total noninterest income 858 718
--------- ---------
Operating expenses:
Compensation, payroll taxes
and other employee benefits 1,365 1,341
Marketing 91 88
Occupancy 324 295
Data processing 122 200
Federal insurance premiums 50 52
Other 422 359
--------- ---------
Total operating expenses 2,374 2,335
--------- ---------
Income before provision for income taxes 2,654 2,417
Provision for income taxes 989 727
--------- ---------
NET INCOME $ 1,665 $ 1,690
========= =========
BASIC EARNINGS PER SHARE $ 0.45 $ 0.45
========= =========
DILUTED EARNINGS PER SHARE $ 0.44 $ 0.44
========= =========
DIVIDENDS DECLARED PER SHARE $ 0.22 $ 0.20
========= =========
See accompanying notes to the unaudited consolidated financial statements.
3
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended September 30, 1998 and 1997
(Unaudited)
Six Months Ended
September 30
-----------------------------------------
1998 1997
(In thousands, except per share numbers)
Interest and dividend income:
Mortgage loans $ 10,944 $ 11,840
Other loans 4,215 3,300
Investment securities 1,138 905
Mortgage-related securities 1,885 1,961
Dividends on stock in Federal
Home Loan Bank 189 189
Interest-bearing deposits 968 51
-------- ---------
Total interest and dividend
income 19,339 18,246
-------- ---------
Interest expense:
Deposit accounts 7,710 7,318
Borrowed funds 3,054 3,064
-------- ---------
Total interest expense 10,764 10,382
-------- ---------
Net interest income 8,575 7,864
Provision for loan losses 234 650
-------- ---------
Net interest income after provision
for loan losses 8,341 7,214
-------- ---------
Noninterest income:
Loan fees - Net 363 329
Gain on sale of loans - Net 769 335
Gain on sale of mortgage-related
securities available for sale 0 99
Deposit fees 470 322
Other income 337 266
-------- ---------
Total noninterest income 1,939 1,351
-------- ---------
Operating expenses:
Compensation, payroll taxes and
other employee benefits 2,788 2,424
Marketing 179 180
Occupancy 627 581
Data processing 244 355
Federal insurance premiums 100 96
Merger-related charges 0 827
Other 884 661
-------- ---------
Total operating expenses 4,822 5,124
-------- ---------
Income before provision for income taxes 5,458 3,441
Provision for income taxes 2,054 1,061
-------- ---------
NET INCOME $ 3,404 $ 2,380
======== =========
BASIC EARNINGS PER SHARE - See note 5 $ 0.91 $ 0.66
======== =========
DILUTED EARNINGS PER SHARE - See note 5 $ 0.89 $ 0.64
======== =========
DIVIDENDS DECLARED PER SHARE $ 0.44 $ 0.38
======== =========
See accompanying notes to the unaudited consolidated financial statements.
4
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<TABLE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six Months Ended September 30, 1998 and 1997
(Unaudited-in thousands)
<CAPTION>
Accumulated
Additional Other Unearned Treasury
Common Paid-in Retained Comprensive Compensation- Common
Stock Capital Earnings Income ESOP Stock Total
------ ------- -------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1997 $ 29 $28,911 $26,630 $(72) $(869) $ (7,197) $47,432
--------
Net income 2,380 2,380
Other comprehensive income, change
in unrealized gain on securities
available for sale - Net of tax 431 431
--------
Comprehensive Income 2,811
Cash dividends declared ($.38 per
share) (1,453) (1,453)
Amortization of unearned compensation
- ESOP 228 158 386
Exercise of stock options -
41,426 treasury common shares (192) 680 488
Purchase of treasury common stock -
244,656 shares (6,467) (6,467)
Acquisition of OSB Financial Corp. 16 29,907 (487) 29,436
--- ------- ------- ------ ------ -------- --------
Balance at September 30, 1997 45 59,046 27,365 359 (1,198) (12,984) 72,633
--------
Net income 3,464 3,464
Other comprehensive income, change
in unrealized gain on securities
available for sale - Net of tax 143 143
--------
Comprehensive Income 3,607
Cash dividends declared ($.40 per share) (1,493) (1,493)
Amortization of unearned compensation
- ESOP 302 162 464
Exercise of stock options -
12,789 treasury common shares 290 (125) 258 423
Purchase of treasury common stock -
25,150 shares (718) (718)
--- ------- --------- ------- ------- ------- --------
Balance at March 31, 1998 45 59,638 29,211 502 (1,036) (13,444) 74,916
--------
Net income 3,404 3,404
Other comprehensive income, change in
unrealized gain (loss) on securities
available for sale - Net of tax (84) (84)
--------
Comprehensive Income 3,320
Cash dividends declared ($.44 per
share) (1,642) (1,642)
Amortization of unearned compensation
- ESOP 325 168 493
Exercise of stock options -
19,308 treasury common shares 164 (187) 396 373
Purchase of treasury common stock -
52,208 shares (1,624) (1,624)
--- ------- --------- ------- ------- --------- --------
Balance at September 30, 1998 $ 45 $60,127 $30,786 $418 $(868) $(14,672) $75,836
=== ======= ========= ======= ======= ========= ========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended September 30, 1998 and 1997
(Unaudited)
Six Months Ended
September 30
---------------------------
1998 1997
(In thousands)
Operating activities:
Net income $ 3,404 $2,380
---------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and net amortization
accretion 45 129
Provision for loan losses 234 650
Gain on sale of assets (805) (434)
Loans originated for sale (46,830) (19,682)
Proceeds from loan sales 55,155 17,921
Changes in operating assets and
liabilities (1,580) 1,332
Unearned compensation - ESOP 493 386
---------- ----------
Total adjustments 6,712 302
---------- ----------
Net cash provided by operating activities 10,116 2,682
---------- ----------
Cash flows from investing activities:
Purchases of investment securities
held to maturity (24,287) (2,968)
Maturities of investment securities
held to maturity 8,000 7,425
Purchases of investment securities
available for sale (1,997) 0
Principal repayments on mortgage-
related securities available for sale 2,136 694
Sale of mortgage-related securities
available for sale 0 3,426
Principal repayments on mortgage-
related securities held to maturity 8,181 1,074
Redemption of Federal Home Loan Bank
stock 560 175
Purchase of Federal Home Loan Bank
stock (450) (40)
Proceeds from sale of foreclosed
property 207 0
Net (increase) decrease in loans 10,193 (408)
Capital expenditures (515) (16)
Net cash received in acquisition 0 3,104
---------- ----------
Net cash provided by investing activities 2,028 12,466
---------- ----------
Cash flows from financing activities:
Net increase in deposit accounts 4,144 1,108
Net increase (decrease) in borrowed
funds 9,000 (8,750)
Net increase in advance payments by
borrowers for taxes and insurance 4,527 6,480
Proceeds from exercise of stock options 209 488
Purchase of treasury common stock (1,624) (6,467)
Dividends paid (1,574) (1,134)
---------- ----------
Net cash provided by (used in) financing
activities 14,682 (8,275)
---------- ----------
Net increase in cash and cash equivalents 26,826 6,873
Cash and cash equivalents at beginning of
period 28,359 4,628
---------- ----------
Cash and cash equivalents at end of period $ 55,185 $ 11,501
========== ==========
6
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six Months Ended September 30, 1998 and 1997
(Unaudited)
Six Months Ended
September 30
---------------------
1998 1997
(In thousands)
Supplemental cash flow information:
Cash paid during the period for:
Interest on deposit accounts $7,879 $7,292
Interest on borrowed funds 3,051 3,087
Income taxes 2,374 703
Supplemental schedule of non-cash
investing activities:
Loans transferred to foreclosed
property $ 97 $ 112
See accompanying notes to the unaudited consolidated financial statements.
7
<PAGE>
FCB FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1-PRINCIPLES OF CONSOLIDATION
FCB Financial Corp. (the "Corporation") is the holding company for Fox Cities
Bank (the "Bank"). The accompanying unaudited consolidated financial statements
include the accounts of the Corporation, the Bank and the Bank's wholly-owned
subsidiaries, Fox Cities Financial Services, Inc. ("FCFS") and Fox Cities
Investments, Inc. ("FCI"), after elimination of significant intercompany
accounts and transactions. FCFS sells tax-deferred annuities and investment
securities. In addition, FCFS has a 50% ownership in a low/moderate income
apartment building partnership. The partnership qualifies for federal low income
housing tax credits. FCI, a Nevada corporation, owns and manages a portfolio of
investment securities, all of which are permissible investments of the Bank
itself.
NOTE 2-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate to
prevent the information presented from being misleading. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation of the consolidated financial statements have been
included. The results of operations and other data for the three and six months
ended September 30, 1998 are not necessarily indicative of results that may be
expected for the fiscal year ending March 31, 1999. The unaudited consolidated
financial statements presented herein should be read in conjunction with the
audited consolidated financial statements and related notes thereto for the
fiscal year ended March 31, 1998 included in the Corporation's Annual Report on
Form 10-K (Commission File Number 0-22066) as filed with the Securities and
Exchange Commission.
NOTE 3-BUSINESS COMBINATION
Effective May 1, 1997, OSB Financial Corp. ("OSB"), a Wisconsin corporation, was
merged (the "Merger") with and into the Corporation. The Corporation was the
surviving corporation in the Merger. The Merger was consummated in accordance
with the terms of an Agreement and Plan of Merger, dated November 13, 1996,
between the Corporation and OSB.
The Merger was accounted for as a purchase. Accordingly, the related accounts
and results of operations of OSB are included in Corporation's consolidated
financial statements from the date of acquisition. There was no goodwill
recorded as a result of the transaction.
NOTE 4-ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
investments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. The Statement requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial condition, and measure those instruments at fair value. If certain
conditions are met, a derivative may be specifically designated as (a) a hedge
of the exposure to changes in the fair value of a recognized asset or liability
or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash
flows of
8
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a forecasted transaction, or a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
Generally, for a derivative designated as a hedge, the gain or loss resulting
from the ineffective portion of the hedge is reported in earnings in the period
in which the change in value has occurred. The effective portion of the hedge
either offsets the change in value of the item being hedged on the statement of
financial condition or is reported as a component of other comprehensive income.
For a derivative not designated as a hedging instrument, the gain or loss is
recognized in earnings in the period of the change in value. The Statement
amends SFAS No. 52, "Foreign Currency Translation" and SFAS No. 107,
ADisclosures about Fair Value of Financial Instruments." It supersedes SFAS No.
80, "Accounting for Futures Contracts," SFAS No. 105, "Disclosure of Information
about Financial Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk," and SFAS No. 119, "Disclosure
about Derivative Financial Instruments and Fair Value of Financial Instruments."
The Statement also nullifies or modifies the consensuses reached on a number of
issues addressed by the Emerging Issues Task Force. The Statement is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999. Early
adoption is encouraged and retroactive application is prohibited. Management
anticipates that adoption of this Statement will not have a material effect on
the financial statements of the Corporation.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This Statement establishes standards for reporting and displaying comprehensive
income in a full set of general-purpose financial statements. This Statement
provides that all items that are 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. This Statement also requires that an enterprise display an amount
representing total comprehensive income for the period in a financial statement,
but does not require a specific format for that financial statement. This
Statement also requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the statement
of financial position. The Corporation adopted this Statement on April 1, 1998.
As required by the Statement, the Corporation has reclassified its financial
statements for earlier periods which are provided for comparative purposes.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This Statement establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. This Statement supersedes SFAS No. 14,
Financial Reporting for Segments of a Business Enterprise," but retains the
requirement to report information about major customers. It also amends SFAS No.
94, "Consolidation of All Majority-Owned Subsidiaries," to remove the special
disclosure requirements for previously unconsolidated subsidiaries. The
Statement is effective for financial statements for periods beginning after
December 15, 1997. In the initial year of application, comparative information
for earlier years is to be restated. This Statement need not be applied to
interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second year
of application. The Statement is not expected to have an effect on the financial
position or operating results of the Corporation, but may require additional
disclosures in the financial statements at March 31, 1999.
9
<PAGE>
NOTE 5-EARNINGS PER SHARE
The following table reflects a reconciliation for the six months ended September
30, 1998 and 1997 of basic earnings per share and diluted earnings per share:
Six Months Ended September 30,
1998 1997
(In thousands, except share and
per-share amounts)
Basic EPS:
Income available to common shareholders $ 3,404 $ 2,380
Average common shares outstanding 3,736,543 3,634,628
Earnings per share - basic $ 0.91 $ 0.66
---------- ----------
Diluted EPS:
Income available to common shareholders $ 3,404 $ 2,380
Average common shares outstanding 3,736,543 3,634,628
Effect of options - net 80,636 72,642
Average common shares outstanding - diluted 3,817,179 3,707,270
Earnings per share - diluted $ 0.89 $ 0.64
---------- ----------
NOTE 6-STOCK REPURCHASE PROGRAMS
On September 23, 1997, the Corporation announced an additional stock repurchase
program. Under this program, the Corporation is authorized to purchase an
additional 5% of its outstanding common stock, or 193,000 shares. At September
30, 1998, 45,600 shares had been repurchased. This is the sixth 5% stock
repurchase program adopted by the Corporation since it became a public company
in September 1993.
10
<PAGE>
Item 2--
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
FCB FINANCIAL CORP.
Results of Operations
The Corporation's results of operations are dependent primarily on the Bank's
net interest income, which is the difference between the interest income earned
on loans, mortgage-related securities and investments and the cost of funds,
consisting of interest paid on deposits and borrowings. Operating results are
also affected to a lesser extent by loan servicing fees, commissions on
insurance sales, service charges for customer services and gains or losses on
the sale of investment securities and loans. Operating expenses principally
consist of employee compensation and benefits, occupancy expenses, federal
deposit insurance premiums and other general and administrative expenses.
Results of operations are significantly affected by general economic and
competitive conditions, particularly changes in interest rates, government
policies and actions of regulatory authorities.
Comparison of Operating Results for the Three Months and Six Months Ended
September 30, 1998 and 1997
Net income for each of the three-month periods ended September 30, 1998 and 1997
was $1.7 million. For the six months ended on the same dates, net income
increased $1.0 million from $2.4 million in 1997 to $3.4 million in 1998. Income
before provision for income taxes increased 9.8% to $2.7 million for the
three-month period ended September 30, 1998 from $2.4 million for the same
period ended September 30, 1997. Income before provision for income taxes also
increased to $5.5 million from $3.4 million for the six month periods ended
September 30, 1998 and 1997, respectively. The increase in the provision for
income taxes from 1997 to 1998 related to an increase in the Corporation=s
effective tax rate as a result of favorable tax treatment on several
Merger-related issues during the quarter ended September 30, 1997. The increase
in net income for the six-month period ended September 30, 1998 from the same
period in the prior fiscal year was due to higher net interest income combined
with a lower provision for loan losses, as well as an increase in non-interest
income and a decrease in noninterest expense. Contributing to the increase in
net interest income was growth in average earning assets from $470.8 million for
the six months ended September 30, 1997 to $509.3 million for the same period
ended September 30, 1998. As explained in Note 3, the Merger was accounted for
as a purchase and the related accounts of OSB were not included in the
Corporation's financial statements until May 1, 1997. Net interest margin was
essentially flat when comparing the three- and six- month periods ended
September 30, 1998 to the same periods ended September 30, 1997.
The provision for loan losses decreased from $150,000 for the quarter ended
September 30, 1997 to $84,000 for the same quarter of 1998. The provision for
the six-month periods also decreased from $650,000 for the period ended
September 30, 1997 to $234,000 for the same period ended September 30, 1998. The
decrease between the six-month periods was primarily a result of a provision of
$350,000 made to equalize the loan loss allowance percentages historically
maintained by the Bank and the former Oshkosh Savings Bank, F.S.B. in 1997. The
remaining increase was due to a change in the mix of loans after completing the
Merger. For more information on the allowance for loan losses, see the "Asset
Quality" section below.
Noninterest income increased from $718,000 for the quarter ended September 30,
1997 to $858,000 for the quarter ended September 30, 1998. Noninterest income
also increased from $1.4 million for the six months ended September 30, 1997 to
$1.9 million for the six months ended September 30, 1998. These increases were
primarily the result of increases in gain on sales of loans from $195,000 and
$335,000 for the three and six months ended September 30, 1997, respectively to
$268,000 and $769,000 for the three and six months ended September 30, 1998,
respectively. The increase in the gain on sales of loans is due to an increase
in the volume of fixed-rate loans due to demand created by the falling interest
rate environment experienced during the fiscal year to date. The gains, however,
were partially offset by a decrease of $99,000 in gain on
11
<PAGE>
sale of a mortgage-related security available for sale during the six months
ended September 30, 1997. There were no such sales in the six months ended
September 30, 1998.
Operating expenses decreased from $5.1 million for the six months ended
September 30, 1997 to $4.8 million for the six months ended September 30, 1998.
Operating expenses of $2.4 million for the quarter ended September 30, 1998
increased only slightly from $2.3 million for the same quarter ended September
30, 1997. Included in the six-month period for 1997 was a charge of $827,000 for
costs associated with the Merger. There were no such charges in the six-month
period ended September 30, 1998. Without the effect of the Merger-related
charge, noninterest expense would have increased from $4.3 million to $4.8
million for the six-month periods ended September 30, 1997 and 1998,
respectively. The largest component of the increase was compensation expense,
which grew to $2.8 million for the six-month period ended September 30, 1998
from $2.4 million for the same period ended September 30, 1997. The increase in
compensation expense was a combination of general salary increases, as well as
staff additions primarily in the lending area.
Changes in Financial Condition
Total Assets. Total assets increased $17.1 million to $534.9 million at
September 30, 1998 from $517.8 million at March 31, 1998. The increase in total
assets was driven by increases in cash and cash equivalents and investment
securities, and offset by decreases in mortgage-related securities, loans held
for sale, and loans receivable.
Cash and Cash Equivalents. Cash and cash equivalents increased from $28.4
million at March 31, 1998 to $55.2 million at September 30, 1998. The increase
was due to receipt of funds from principal repayment on mortgage-related
securities and loans, maturities of investment securities, sale of mortgage
loans, and increases in deposit accounts, funds held for escrow, and borrowed
funds.
Investment and Mortgage-related Securities. For the six months ended September
30, 1998, the Corporation purchased $26.3 million in investment securities.
During the same period, $8.0 million of investment securities matured, resulting
in a net increase in investment securities of $18.3 million from March 31, 1998.
The increase was the result of the investment of excess funds. Mortgage-related
securities decreased from $59.6 million at March 31, 1998 to $49.3 million at
September 30, 1998. The decrease was primarily the result of accelerated
principal repayments as loans underlying the mortgage-related securities were
prepaid or paid-off as a result of the low interest rate environment.
Loans Held for Sale. Loans held for sale decreased to $9.1 million at September
30, 1998 from $16.7 million at March 31, 1998. The decrease was primarily the
result of the variable timing of loan demand and related loan sales, as well as
management's decision to hold some fixed-rate loans in the Bank's portfolio.
Net Loans Receivable. Net loans receivable decreased $10.5 million to $360.4
million at September 30, 1998 from $370.9 million at March 31, 1998. This
decrease resulted primarily from portfolio loan principal repayments and payoffs
and conversions of loans from adjustable to fixed-rate products. The Bank sold
the majority of its fixed-rate mortgage loan production until September 1, 1998.
Following that date, the majority of its 15 year and 20 year mortgage loan
originations were retained in its held for investment portfolio.
Borrowed Funds. Borrowed funds increased $9.0 million to $118.4 million at
September 30, 1998 from $109.4 million at March 31, 1998. During the period, the
Bank borrowed $27.0 million, while $18.0 million matured. The Bank anticipated
paying off an additional $10.0 million advance due October 5. 1998.
Advance Payments by Borrowers for Taxes and Insurance. Advance payments by
borrowers for taxes and insurance increased $4.6 million from $4.6 million at
March 31, 1998 to $9.2 million at September 30, 1998. The increase was expected
during the calendar year as funds held for borrowers' property tax and insurance
payments accumulate until disbursement near calendar year-end.
12
<PAGE>
Asset Quality
Loans are placed on nonaccrual status when either principal or interest is more
than 90 days past due. Interest accrued and unpaid at the time a loan is placed
on nonaccrual status is charged against interest income. Subsequent payments are
either applied to the outstanding principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.
The following table sets forth the amounts and categories of nonperforming
assets in the Bank's loan portfolio at the dates indicated. For all dates
presented, the Bank had no troubled debt restructurings (which involve forgiving
a portion of interest or principal on any loans or making loans at terms
materially more favorable than those which would be provided to other borrowers)
or accruing loans more than 90 days delinquent. Foreclosed properties include
assets acquired in settlement of loans.
At September 30 At March 31,
--------------- -------------------------
1998 1998 1997 1996
------- ------ ------ -----
(In thousands)
Non-accruing loans:
One- to four-family $1,080 $ 941 $ 379 $ 212
Five or more family -- -- -- --
Commercial real estate -- -- -- --
Consumer and other 168 188 25 --
Commercial 19 96 -- --
------ ------ ------ -----
Total 1,267 1,225 404 212
------ ------ ------ -----
Foreclosed assets:
One- to four-family -- 113 -- --
Five or more family -- -- -- --
Commercial real estate -- -- -- --
Repossessed assets 26 -- -- 22
------ ------ ------ -----
Total 26 113 0 22
------ ------ ------ -----
Total non-performing assets $1,293 $1,338 $ 404 $ 234
====== ====== ====== =====
Total non-performing assets as a
percentage of total assets 0.24% 0.26% 0.15% 0.09%
====== ====== ====== ======
Allowance for loan losses to loans
and foreclosed properties 1.05% 0.96% 0.63% 0.51%
====== ====== ====== ======
The allowance for loan losses includes specific allowances related to commercial
loans which have been judged to be impaired. The Corporation generally considers
credit card, residential mortgage, and consumer installment loans to be large
groups of smaller-balance homogeneous loans. These loans are collectively
evaluated in the analysis of the adequacy of the allowance for loan losses.
A loan is impaired when, based on current information, it is probable the
Corporation will not collect all amounts due in accordance with the contractual
terms of the loan agreement. Management considers, on a loan by loan basis, the
conditions which may constitute a minimum delay or shortfall in payment, as well
as the factors which may influence its decision in determining when a loan is
impaired. These specific allowances are based on discounted cash flows of
expected future payments using the loan's initial effective interest rate or the
fair value of the collateral if the loan is collateral dependent. Subsequent
changes in the estimated value of impaired loans are accounted for as bad debt
expense.
The Corporation continues to maintain a general allowance for loans and
foreclosed properties not considered impaired. The allowance for loan and
foreclosed property losses is maintained at a level which management believes is
adequate to provide for possible losses. Management periodically evaluates the
adequacy of the allowance using the Corporation's past loss experience, known
and inherent risks in the portfolio, composition of the portfolio, current
economic conditions, and other relevant factors. This evaluation is inherently
13
<PAGE>
subjective since it requires material estimates that may be susceptible to
significant change.
Real estate properties acquired through or in lieu of loan foreclosure are
initially recorded at fair value at the date of foreclosure. Subsequently, the
foreclosed properties are carried at the lower of the newly established cost or
fair value less estimated selling costs. Costs related to the development and
improvement of property are capitalized, whereas costs relating to the holding
of property are expensed.
Federal regulations require that each savings institution classify its own
assets on a regular basis. On the basis of management's review of its assets, at
September 30, 1998, on a net basis, the Bank classified $714,000 of its assets
as special mention and $771,000 as substandard. There were no loans classified
as doubtful or loss at September 30, 1998. As of September 30, 1998, management
believes that these asset classifications were consistent with those of the
Office of Thrift Supervision (the "OTS").
Based on management's evaluation at September 30, 1998, $84,000 in general loan
loss provisions were deemed appropriate for the quarter ended September 30, 1998
and the aggregate allowance for loan losses of $3.8 million as of such date was
determined to be adequate.
The following table sets forth an analysis of the Bank's allowance for loan
losses for the periods indicated.
Three Months Six Months
Ended September 30 Ended September 30
------------------ --------------------
1998 1997 1998 1997
(In thousands)
Allowance at beginning of period $3,693 $3,322 $3,567 $1,405
Provision for loan losses 84 150 234 650
Charge-offs:
Residential real estate - - (15) -
Commercial real estate - - - -
Other commercial - - - -
Consumer and other (8) (21) (20) (23)
-------- -------- ------- -------
Total Charge-offs (8) (21) (35) (23)
-------- -------- ------- -------
Recoveries:
Residential real estate - - 2 -
Commercial real estate - - - -
Other commercial 1 - 2 -
Consumer and other - 1 - 1
-------- -------- ------- -------
Total recoveries 1 1 4 1
-------- -------- ------- -------
Net charge-offs (7) (20) (31) (22)
-------- -------- ------- -------
Allowance acquired through
acquisition - - - 1,419
-------- -------- ------- -------
Allowance at end of period $3,770 $3,452 $3,770 $3,452
======== ======== ======= =======
While management believes that the allowances are adequate and that it uses the
best information available to determine the allowance for losses on loans,
unforeseen market conditions could result in adjustments and net earnings could
be significantly affected if circumstances differ substantially from the
assumptions used in making the final determination.
14
<PAGE>
Liquidity & Capital Resources
The Bank is required to maintain minimum levels of liquid assets as defined by
OTS regulations. These requirements, which may be varied at the direction of the
OTS depending upon economic conditions and deposit flows, are based upon a
percentage of the average daily balance of an institution's net withdrawable
deposit accounts and short-term borrowings. The required ratio is currently
4.0%. On September 30, 1998, the Bank's liquidity ratio, calculated in
accordance with OTS requirements, was 42.8%.
At September 30, 1998, the Bank had outstanding commitments to originate loans
of $22.5 million, with varying interest rates. At September 30, 1998, the Bank
had outstanding commitments to sell mortgage loans of $9.3 million. In addition,
the Bank had commitments to fund unused lines of credit of $8.3 million at
September 30, 1998. Management does not believe the Bank will suffer any adverse
consequences as a result of fulfilling these commitments.
The following table summarizes the Bank's capital ratios and the ratios required
by Federal laws and regulations at September 30, 1998:
Total
Risk-
Tangible Leverage Based
Equity Capital Capital
----------- ----------- ----------
(Dollars in thousands)
Bank's regulatory percentage 11.35% 11.35% 20.82%
Required regulatory percentage 2.00 4.00 8.00
---------- ---------- -----------
Excess regulatory percentage 9.35% 7.35% 12.82%
========== ========== ===========
Bank's regulatory capital $60,003 $60,003 $63,773
Required regulatory capital 10,573 21,146 24,509
---------- ---------- ----------
Excess regulatory capital $49,430 $38,857 $39,264
========== ========== ==========
15
<PAGE>
Impact of Year 2000
Historically, computer programs generally abbreviated dates by eliminating the
century digits of the year. Many resources, such as software, hardware,
telephones, alarms, heating, ventilating and air conditioning ("Systems") were
affected. These Systems were designed to assume a century value of "19" to save
memory and disk space within their programs. In addition, many Systems used a
value of "99" in a year or "99/99/99" in a date to indicate "no date" or "any
date" or even a default expiration date.
As the year 2000 approaches, this abbreviated date mechanism with Systems
threatens to disrupt the function of computer software, hardware, building
controls and embedded systems at nearly every business, including the Bank,
which relies heavily on computer systems for account and other recordkeeping
functions. If the millennium issue is ignored, system failures or
miscalculations could occur, causing disruption of operations, including among
other things, a temporary inability to process transactions or engage in similar
normal business activities.
The Bank's State of Readiness. The Bank outsources a majority of its computer
functions to Fiserv, Inc. ("Fiserv") of Milwaukee, Wisconsin. Because year 2000
problems could affect Fiserv, and hence the Bank through its relationship with
Fiserv, the Bank has discussed potential year 2000 problems with Fiserv. These
discussions have kept the Bank abreast of Fiserv's progress in anticipating and
avoiding year 2000 problems that could affect the Bank's operations. In
conjunction with Fiserv, extensive testing of the Fiserv functions was completed
early in October 1998. This testing showed no major problems, though the Bank
will continue to analyze data produced and work with other financial
institutions to determine if serious weaknesses were found in their testing of
the Fiserv functions. In addition, further extensive testing of these functions
will occur early in the spring of 1999.
The Bank has completed more than 97% of the Systems awareness and assessment
phases of its Year 2000 project as of September 30, 1998. Pursuant to these
phases, the Bank has identified the business impact of the Year 2000 on its
operation; briefed senior management; established a working group and steering
committee; contacted external businesses (such as vendors and service
providers); distributed literature on the Year 2000 throughout the Bank;
established hardware, software and application interface inventories,
utilization and space capacities; defined the requirements for adequate Year
2000 compliance; obtained statements of compliance to Year 2000 requirements
from outside service relationships; and estimated costs to correct critical
applications. In addition, 90% of the renovation phase, 71% of the validation
phase and 27% of the implementation phase have also been completed as of
September 30, 1998. Pursuant to these phases, the Bank has identified critical
applications and the sequence of conversion of critical applications; determined
the technical approach and selected the tools to correct critical applications;
developed detailed plans for correcting, testing and reimplementing critical
applications; defined compliance criteria and developed testing procedures for
each critical application; converted or will convert critical applications;
performed or will perform compliance testing for critical applications;
developed or will develop plans for implementation of critical applications; and
developed or will develop a contingency plan to address alternative options. All
phases are expected to be completed by the end of the fourth quarter of calendar
1998. The Bank expects to use internal resources to reprogram, upgrade or
replace and test the majority of its Systems.
Costs to Address Year 2000 Compliance Issues. Based on recent assessments, the
Bank has determined that it will be required to modify or replace certain
portions of its Systems. The Bank currently anticipates that the cost of these
modifications will not exceed $250,000. As of September 30, 1998, the Bank has
expended less than $100,000 on compliance matters. The Bank presently believes
that, with these modifications, the year 2000 will not pose significant
operational problems for its Systems assuming that unanticipated third party
compliance problems do not materially adversely affect the Bank's Systems.
However, if such modifications and conversions are not made, or are not
completed in a timely manner, or if third party noncompliance is a significant
issue, the year 2000 could have an adverse impact on the operations of the Bank.
In addition, the costs of the year 2000 project and the date on which the Bank
believes it will complete the year 2000
16
<PAGE>
modifications are based on management's best estimates, which were derived using
numerous assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ from those anticipated.
Risks of Non-Compliance and Contingency Plans. Failure of the Bank or third
parties to correct year 2000 issues could cause disruption of operations
resulting in increased operating costs and other adverse effects. In addition,
to the extent customers' financial positions are weakened as a result of year
2000 issues, credit quality could be affected. It is not possible to predict
with certainty all of the adverse effects that may result from a failure of the
Bank or third parties to become fully year 2000 compliant or whether such
effects could have a material impact on the Bank. For that reason, the Bank is
developing contingency plans to address alternatives in the event that System
failures relating to year 2000 occur. This contingency planning is scheduled to
be completed in the fourth calendar quarter of 1998.
Special Note Regarding Forward-Looking Statements
The statements which are not historical facts contained in this Quarterly Report
on Form 10-Q are forward-looking statements intended to qualify for the safe
harbors from liability established by the Private Securities Litigation Reform
Act of 1995. Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those currently
anticipated. These factors include, without limitation, interest rate trends,
the general economic climate in the Corporation's market area, loan delinquency
rates, regulatory treatment and unanticipated issues associated with achieving
year 2000 compliance. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements. The forward-looking statements included herein are made as of the
date hereof and the Corporation undertakes no obligation to update publicly such
statements to reflect subsequent events or circumstances.
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk
The Corporation has not experienced any material changes to its market risk
position from that disclosed in the Corporation's Annual Report on Form 10-K for
the year ended March 31, 1998.
Part II - Other Information
Item 4--Submission of Matters to a Vote of Security Holders
At the Corporation's annual meeting of shareholders held on July 27,
1998, William A. Raaths and David L. Geurden were elected as directors
of the Corporation for two-year terms expiring in 2000. Additionally,
David L. Erdmann, David L. Omachinski and Donald D. Parker were elected
as directors of the Corporation for three-year terms expiring in 2001.
The following table sets forth certain information with respect to the
election of directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
David L. Erdmann 3,138,346 110,972
David L. Geurden 3,185,537 63,781
David L. Omachinski 3,186,770 62,548
17
<PAGE>
Donald D. Parker 3,187,316 62,002
William A. Raaths 3,098,856 150,462
The following table sets forth the other directors of the Corporation whose
terms of office continued after the 1998 annual meeting:
Year in Which
Name of Director Term Expires
---------------- -------------
Richard A. Bergstrom 1999
Thomas C. Butterbrodt 1999
Edwin L. Downing 1999
James J. Rothenbach 1999
William J. Schmidt 1999
Walter H. Drew 2000
Ronald L. Tenpas 2000
In addition, at the annual meeting, shareholders approved the FCB Financial
Corp. 1998 Incentive Stock Plan. With respect to such mater, the number of
shares voted for and against were 2,323,709 and 200,544, respectively. The
number of shares abstaining and the number of shares subject to broker non-votes
were 81,808 and 623,257, respectively.
Item 6--Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 FCB Financial Corp. 1998 Incentive Stock Plan
(incorporated by reference to Exhibit 10.1 to the
Corporation's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998.)
27.1 Financial Data Schedule at and for the six-month
period ended September 30, 1998 (EDGAR version
only)
27.2 Restated Financial Data Schedule at and for the
six-month period ended September 30, 1997 (EDGAR
version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1998.
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.
FCB FINANCIAL CORP.
Date: November 11, 1998 By:/s/ James J. Rothenbach
James J. Rothenbach
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 11, 1998 By:/s/ Phillip J. Schoofs
Phillip J. Schoofs
Vice President, Treasurer and Chief
Financial Officer (Principal Financial
and Accounting Officer)
19
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ---------- -------
10.1 FCB Financial Corp. 1998 Incentive Stock Plan (incorporated
by reference to Exhibit 10.1 to the Corporation's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.)
27.1 Financial Data Schedule at and for the six-month period
ended September 30, 1998 (EDGAR version only)
27.2 Restated Financial Data Schedule at and for the six-month
period ended September 30, 1997 (EDGAR version only)
20
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF FCB FINANCIAL CORP.
AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2474
<INT-BEARING-DEPOSITS> 52712
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 36542
<INVESTMENTS-CARRYING> 54400
<INVESTMENTS-MARKET> 55063
<LOANS> 360410
<ALLOWANCE> 3770
<TOTAL-ASSETS> 534928
<DEPOSITS> 322652
<SHORT-TERM> 27250
<LIABILITIES-OTHER> 18090
<LONG-TERM> 91100
0
0
<COMMON> 45
<OTHER-SE> 75791
<TOTAL-LIABILITIES-AND-EQUITY> 534928
<INTEREST-LOAN> 15159
<INTEREST-INVEST> 3212
<INTEREST-OTHER> 968
<INTEREST-TOTAL> 19339
<INTEREST-DEPOSIT> 7710
<INTEREST-EXPENSE> 10764
<INTEREST-INCOME-NET> 8575
<LOAN-LOSSES> 234
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4822
<INCOME-PRETAX> 5458
<INCOME-PRE-EXTRAORDINARY> 5458
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3404
<EPS-PRIMARY> 0.91
<EPS-DILUTED> 0.89
<YIELD-ACTUAL> 3.36
<LOANS-NON> 1267
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3567
<CHARGE-OFFS> 35
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 3770
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3770
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF FCB FINANCIAL CORP.
AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 11501
<INT-BEARING-DEPOSITS> 6870
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34889
<INVESTMENTS-CARRYING> 55913
<INVESTMENTS-MARKET> 56571
<LOANS> 396906
<ALLOWANCE> 3452
<TOTAL-ASSETS> 522991
<DEPOSITS> 316547
<SHORT-TERM> 59160
<LIABILITIES-OTHER> 19301
<LONG-TERM> 55350
0
0
<COMMON> 45
<OTHER-SE> 72588
<TOTAL-LIABILITIES-AND-EQUITY> 522991
<INTEREST-LOAN> 15140
<INTEREST-INVEST> 3055
<INTEREST-OTHER> 51
<INTEREST-TOTAL> 18246
<INTEREST-DEPOSIT> 7318
<INTEREST-EXPENSE> 10382
<INTEREST-INCOME-NET> 7864
<LOAN-LOSSES> 650
<SECURITIES-GAINS> 99
<EXPENSE-OTHER> 5124
<INCOME-PRETAX> 3441
<INCOME-PRE-EXTRAORDINARY> 3441
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2380
<EPS-PRIMARY> .66
<EPS-DILUTED> .64
<YIELD-ACTUAL> 3.37
<LOANS-NON> 1081
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1405
<CHARGE-OFFS> 23
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 3452
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3452
</TABLE>
