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 December 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: 0-22066
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 December 31, 1998: 3,840,680
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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
December 31, 1998 and March 31, 1998 1
Consolidated Statements of Income for the Three Months
Ended December 31, 1998 and 1997 3
Consolidated Statements of Income for the Nine Months Ended
December 31, 1998 and 1997 4
Consolidated Statements of Shareholders' Equity for the Nine
Months Ended December 31, 1998 and 1997 5
Consolidated Statements of Cash Flows for the Nine Months
Ended December 31, 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 14
Liquidity & Capital Resources 16
Impact of Year 2000 17
Proposed Merger 18
Special Note Regarding Forward-Looking Statements 18
Item 3--Quantitative and Qualitative Disclosures About Market Risk 19
Part II--Other Information
Item 6 --Exhibits and Reports on Form 8-K 19
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<TABLE>
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Part I - Financial Information
Item 1--Financial Statements
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1998 and March 31, 1998
(Unaudited)
ASSETS
December 31 March 31
1998 1998
------------- ------------
(In thousands)
<S> <C> <C>
Cash and cash equivalents $ 23,916 $ 28,359
Investment securities available for sale, at fair value 4,900 2,894
Investment securities held to maturity (estimated fair
value of $44,519 and $20,719 at December 31, 1998
and March 31, 1998, respectively) 44,297 20,424
Mortgage-related securities available for sale, at fair value 25,527 33,870
Mortgage-related securities held to maturity
(estimated fair value of $14,808 and $26,124
at December 31, 1998 and March 31, 1998, respectively) 14,381 25,754
Investment in Federal Home Loan Bank stock, at cost 5,493 6,028
Loans held for sale 20,189 16,692
Loans receivable - Net 373,884 370,934
Office properties and equipment 6,758 6,610
Other assets 6,605 6,207
------------- -------------
TOTAL ASSETS $ 525,950 $ 517,772
============= =============
See accompanying notes to the unaudited consolidated financial statements.
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<TABLE>
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1998 and March 31, 1998
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31 March 31
1998 1998
------------- -------------
(In thousands)
Liabilities:
<S> <C> <C>
Deposit accounts $ 329,290 $ 318,508
Borrowed funds 105,850 109,350
Advance payments by borrowers for taxes and insurance 1,223 4,644
Other liabilities 12,732 10,354
------------- -------------
Total liabilities 449,095 442,856
------------- -------------
Commitments and contingencies
Shareholders' Equity:
Common stock - $.01 par value 45 45
Additional paid-in capital 60,310 59,638
Retained earnings - Substantially restricted 31,601 29,211
Accumulated other comprehensive income, unrealized gain on
securities available for sale - Net of tax 218 502
Unearned compensation - ESOP (784) (1,036)
Treasury common stock, at cost (14,535) (13,444)
------------- -------------
Total shareholders' equity 76,855 74,916
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 525,950 $ 517,772
============= =============
See accompanying notes to the unaudited consolidated financial statements.
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<TABLE>
<CAPTION>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended December 31, 1998 and 1997
(Unaudited)
Three Months Ended
December 31
--------------------------
1998 1997
------ ------
(In thousands, except per share numbers)
Interest and dividend income:
<S> <C> <C>
Mortgage loans $ 5,424 $ 6,300
Other loans 2,137 1,927
Investment securities 719 420
Mortgage-related securities 921 1,042
Dividends on stock in Federal Home Loan Bank 97 107
Interest-bearing deposits 438 87
--------- ---------
Total interest and dividend income 9,736 9,883
--------- ---------
Interest expense:
Deposit accounts 3,774 3,908
Borrowed funds 1,477 1,567
--------- ---------
Total interest expense 5,251 5,475
--------- ---------
Net interest income 4,485 4,408
Provision for loan losses 84 150
--------- ---------
Net interest income after provision for loan losses 4,401 4,258
--------- ---------
Noninterest income:
Loan fees - Net 170 168
Gain on sale of loans - Net 201 188
Deposit fees 222 222
Other income 203 124
--------- ---------
Total noninterest income 796 702
--------- ---------
Operating expenses:
Compensation, payroll taxes and other employee benefits 1,342 1,385
Marketing 89 93
Occupancy 309 276
Data processing 131 119
Federal insurance premiums 48 51
Other 554 383
--------- ---------
Total operating expenses 2,473 2,307
--------- ---------
Income before provision for income taxes 2,724 2,653
Provision for income taxes 1,017 935
--------- ---------
NET INCOME $ 1,707 $ 1,718
========= =========
BASIC EARNINGS PER SHARE - See Note 5 $ 0.46 $ 0.46
========= =========
DILUTED EARNINGS PER SHARE - See Note 5 $ 0.45 $ 0.45
========= =========
DIVIDENDS DECLARED PER SHARE $ 0.22 $ 0.20
========= =========
See accompanying notes to the unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended December 31, 1998 and 1997
(Unaudited)
Nine Months Ended
December 31
---------------------------
1998 1997
------ ------
(In thousands, except per share numbers)
Interest and dividend income:
<S> <C> <C>
Mortgage loans $ 16,368 $ 18,140
Other loans 6,352 5,227
Investment securities 1,857 1,325
Mortgage-related securities 2,806 3,003
Dividends on stock in Federal Home Loan Bank 286 296
Interest-bearing deposits 1,406 138
--------- ---------
Total interest and dividend income 29,075 28,129
--------- ---------
Interest expense:
Deposit accounts 11,484 11,226
Borrowed funds 4,531 4,631
--------- ---------
Total interest expense 16,015 15,857
--------- ---------
Net interest income 13,060 12,272
Provision for loan losses 318 800
--------- ---------
Net interest income after provision for loan losses 12,742 11,472
--------- ---------
Noninterest income:
Loan fees - Net 533 497
Gain on sale of loans - Net 970 523
Gain on sale of mortgage-related securities available for sale 0 99
Deposit fees 692 544
Other income 540 390
--------- ---------
Total noninterest income 2,735 2,053
--------- ---------
Operating expenses:
Compensation, payroll taxes and other employee benefits 4,130 3,809
Marketing 268 273
Occupancy 936 857
Data processing 375 474
Federal insurance premiums 148 147
Merger-related charges 0 827
Other 1,438 1,044
--------- ---------
Total operating expenses 7,295 7,431
--------- ---------
Income before provision for income taxes 8,182 6,094
Provision for income taxes 3,071 1,996
--------- ---------
NET INCOME $ 5,111 $ 4,098
========= =========
BASIC EARNINGS PER SHARE - See Note 5 $ 1.37 $ 1.12
========= =========
DILUTED EARNINGS PER SHARE - See Note 5 $ 1.34 $ 1.09
========= =========
DIVIDENDS DECLARED PER SHARE $ 0.66 $ 0.58
========= =========
See accompanying notes to the unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Nine Months Ended December 31, 1998 and 1997
(Unaudited-in thousands)
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 4,098 4,098
Other comprehensive income,
change in unrealized
gain on securities available for
sale - Net of tax 387 387
--------
Comprehensive Income 4,485
Cash dividends declared ($.58 per
share) (2,196) (2,196)
Amortization of unearned compensation
- ESOP 367 239 606
Exercise of stock options -
43,516 treasury common shares (215) 722 507
Purchase of treasury common stock -
263,656 shares (6,986) (6,986)
Acquisition of OSB Financial Corp. 16 29,907 (487) 29,436
------- ---------- ---------- ----------- ----------- ---------- --------
Balance at December 31, 1997 45 59,185 28,317 315 (1,117) (13,461) 73,284
--------
Net income 1,746 1,746
Other comprehensive income, change in
unrealized gain on securities available
for sale - Net of tax 187 187
--------
Comprehensive Income 1,933
Cash dividends declared ($.20 per share) (750) (750)
Amortization of unearned compensation
- ESOP 163 81 244
Exercise of stock options -
10,699 treasury common shares 290 (102) 216 404
Purchase of treasury common stock -
6,150 shares (199) (199)
------- ---------- ---------- ----------- ----------- -------- --------
Balance at March 31, 1998 45 59,638 29,211 502 (1,036) (13,444) 74,916
--------
Net income 5,111 5,111
Other comprehensive income, change in
unrealized gain (loss) on securities
available for sale - Net of tax (284) (284)
--------
Comprehensive Income 4,827
Cash dividends declared ($.66 per share) (2,462) (2,462)
Amortization of unearned compensation
- ESOP 463 252 715
Exercise of stock options -
25,808 treasury common shares 209 (259) 533 483
Purchase of treasury common stock -
52,208 shares 1,624) (1,624)
------- ---------- ---------- ----------- ----------- -------- --------
Balance at December 31, 1998 $ 45 $ 60,310 $ 31,601 $ 218 $ (784) $(14,535) $ 76,855
======= ========== ========== =========== =========== ========= ========
See accompanying notes to the unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended December 31, 1998 and 1997
(Unaudited)
Nine Months Ended
December 31
---------------------------
1998 1997
--------- ---------
(In thousands)
Operating activities:
<S> <C> <C>
Net income $ 5,111 $ 4,098
---------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and net amortization/accretion 94 176
Provision for loan losses 318 800
Gain on sale of assets (1,093) (622)
Loans originated for sale (75,566) (36,302)
Proceeds from loan sales 71,043 30,517
Changes in operating assets and liabilities 2,161 5,089
Unearned compensation - ESOP 715 606
---------- ---------
Total adjustments (2,328) 264
---------- ---------
Net cash provided by operating activities 2,783 4,362
---------- ---------
Cash flows from investing activities:
Purchases of investment securities held to maturity (44,245) (2,968)
Maturities of investment securities held to maturity 20,500 11,425
Purchases of investment securities available for sale (1,997) 0
Principal repayments on mortgage-related securities
available for sale 8,031 899
Sale of mortgage-related securities available for sale 0 3,426
Principal repayments on mortgage-related securities held
to maturity 11,460 1,688
Redemption of Federal Home Loan Bank stock 1,060 175
Purchase of Federal Home Loan Bank stock (525) (40)
Proceeds from sale of foreclosed property 222 0
Net (increase) decrease in loans (1,454) 8,175
Proceeds from sale of office properties and equipment 649 0
Capital expenditures (1,046) (98)
Net cash received in acquisition 0 3,104
---------- ---------
Net cash provided by (used in) investing activities (7,345) 25,786
---------- ---------
Cash flows from financing activities:
Net increase in deposit accounts 10,782 539
Net decrease in borrowed funds (3,500) (6,660)
Net decrease in advance payments by borrowers
for taxes and insurance (3,421) (2,363)
Proceeds from exercise of stock options 274 507
Purchase of treasury common stock (1,624) (6,986)
Dividends paid (2,392) (1,880)
---------- ---------
Net cash provided by (used in) financing activities 119 (16,843)
---------- ---------
Net increase (decrease) in cash and cash equivalents (4,443) 13,305
Cash and cash equivalents at beginning of period 28,359 4,628
---------- ---------
Cash and cash equivalents at end of period $ 23,916 $ 17,933
========== =========
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FCB FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Nine Months Ended December 30, 1998 and 1997
(Unaudited)
Nine Months Ended
December 31
-----------------------
1998 1997
------ ------
(In thousands)
Supplemental cash flow information:
Cash paid during the period for:
<S> <C> <C>
Interest on deposit accounts $ 11,710 $ 11,189
Interest on borrowed funds 4,584 4,669
Income taxes 3,236 1,693
Supplemental schedule of non-cash investing activities:
Loans transferred to foreclosed property $ 187 $ 112
Loans transferred from held for sale to held for investment 2,006 1,073
See accompanying notes to the unaudited consolidated financial statements.
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7
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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 nine months
ended December 31, 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 "OSB Merger") with and into the Corporation. The Corporation was the
surviving corporation in the OSB Merger. The OSB 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 OSB 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
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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,
"Disclosures 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 display of comprehensive
income in a full set of general-purpose financial statements. This Statement
requires 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 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.
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NOTE 5-EARNINGS PER SHARE
The following table reflects a reconciliation for the three and nine months
ended December 31, 1998 and 1997 of basic earnings per share and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
-------- --------- --------- --------
(In thousands, except share and per-share amounts)
Basic EPS:
<S> <C> <C> <C> <C>
Income available to common shareholders $ 1,707 $ 1,718 $ 5,111 $ 4,098
Average common shares outstanding 3,719,397 3,724,704 3,731,222 3,664,763
Earnings per share - basic $ 0.46 $ 0.46 $ 1.37 $ 1.12
========= ========= ========== ========
Diluted EPS:
Income available to common shareholders $ 1,707 $ 1,718 $ 5,111 $ 4,098
Average common shares outstanding 3,719,397 3,724,704 3,731,222 3,664,763
Effect of options - net 59,963 90,303 72,984 79,492
Average common shares outstanding - diluted 3,779,360 3,815,007 3,804,206 3,744,255
Earnings per share - diluted $ 0.45 $ 0.45 $ 1.34 $ 1.09
========= ========= ========== ========
</TABLE>
NOTE 6-STOCK REPURCHASE PROGRAM
On September 23, 1997, the Corporation announced an additional stock repurchase
program. Under this program, the Corporation was authorized to purchase an
additional 5% of its outstanding common stock, or 193,000 shares, over the
twelve-month period beginning with the date of the announcement. At December 31,
1998, 45,600 shares had been repurchased. The stock repurchase program was
rescinded in conjunction with the developments related to the proposed merger
referred to in Note 7 - Subsequent Events.
NOTE 7-SUBSEQUENT EVENTS
On January 5, 1999, the Corporation entered into a definitive agreement (the
"Merger Agreement") providing for the merger of Corporation with and into Anchor
BanCorp Wisconsin Inc. ("Anchor"), with Anchor continuing as the surviving
corporation (the "Merger"). Anchor, headquartered in Madison, Wisconsin, is the
parent holding company for AnchorBank, S.S.B., a $2.1 billion financial
institution with 35 full service offices and two lending-only facilities in
Wisconsin. The Merger Agreement provides that each outstanding share of common
stock, $.01 par value, of the Corporation will be converted (other than certain
shares that will be canceled as specified in the Merger Agreement) into the
right to receive 1.83 shares of common stock, $.10 par value, of Anchor.
Outstanding stock options to purchase shares of Corporation common stock held by
employees and directors of the Corporation will be converted into options to
purchase Anchor common stock upon consummation of the Merger. Consummation of
the Merger is subject to applicable regulatory approvals, and the approval of
the shareholders of both companies. The Merger is structured as a
pooling-of-interests for financial accounting purposes and as a tax-free
reorganization for shareholders of the Corporation. The Merger is currently
expected to be completed during the second calendar quarter of 1999.
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The Corporation filed with the Securities and Exchange Commission a Current
Report on Form 8-K, dated January 5, 1999, with respect to the Merger. Reference
is made to this filing for further details regarding the Merger.
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 Nine Months Ended
December 31, 1998 and 1997
Net income for each of the three-month periods ended December 31, 1998 and 1997
was $1.7 million. For the nine month periods ended December 31, 1998 and 1997,
net income increased $1.0 million from $4.1 million in the 1997 period to $5.1
million in the 1998 period. The increase in net income for the nine-month period
ended December 31, 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 non-interest
expense. This was partially offset by an increase in provision for income taxes.
Contributing to the increase in net interest income was growth in average
earning assets to $512.2 million for the nine-month period ended December 31,
1998 from $482.7 million for the same nine months ended December 31, 1997. Net
interest margin decreased from 3.47% to 3.43% for the quarter ended December 31,
1997 to December 31, 1998, respectively, and from 3.42% to 3.38% for the
nine-month periods ended with the same dates, respectively. As explained in Note
3, the OSB 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.
The provision for loan losses decreased from $150,000 for the quarter ended
December 31, 1997 to $84,000 for the same quarter of 1998. The provision for the
nine-month periods also decreased from $800,000 for the period ended December
31, 1997 to $318,000 for the same period ended December 31, 1998. The decrease
between the nine-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. For more
information on the allowance for loan losses, see the " Asset Quality" section
below.
Noninterest income increased to $796,000 for the quarter ended December 31, 1998
from $702,000 for the quarter ended December 31, 1997. Noninterest income also
increased to $2.7 million for the nine months ended December 31, 1998 from $2.1
million for the nine months ended December 31, 1997. These increases were
primarily the result of increases in gain on sales of loans to $201,000 and
$970,000 for the three and nine months ended December 31, 1998, respectively,
from $188,000 and $523,000 for the same periods ended December 31, 1997,
respectively. The increase in the gain on sales of loans was due to an increase
in the volume of fixed-rate loans originated due to demand created by the
falling interest rate environment experienced during the current fiscal year to
date. Also contributing to the increase in fiscal 1999 was a gain
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on sale of office properties of $83,000, which was included in other income.
These increases, however, were partially offset by a decrease of $99,000 in gain
on sale of mortgage-related securities available for sale from the nine months
ended December 31, 1997. There were no sales of mortgage-related securities
during the nine months ended December 31, 1998.
Operating expenses increased only slightly from $2.3 million for the quarter
ended December 31,1997 to $2.5 million for the quarter ended December 31, 1998.
Operating expenses decreased from $7.4 million for the nine months ended
December 31, 1997 to $7.3 million for the nine months ended December 31, 1998.
Included in the nine-month period for 1997 was a charge of $827,000 for costs
associated with the OSB Merger. There were no such charges in the three- or
nine-month periods ended December 31, 1998. Without the effect of the OSB
Merger-related charge, non-interest expense increased from $6.6 million to $7.3
million for the nine-month periods ended December 31, 1997 and 1998,
respectively. The most significant component of the increase was compensation
expense, which grew from $3.8 million for the nine-month period ended December
31, 1997 to $4.1 million for the same period ended December 31, 1998. The
increase in compensation expense was a combination of general salary increases,
as well as staff additions primarily in the lending area. Other expenses
increased from $383,000 to $554,000 for the quarters ended December 31, 1997 and
1998, respectively, and from $1.0 million to $1.4 million for the nine-month
periods ended with the same dates, respectively. The largest component of the
increase was a charge of $123,000 in the quarter ended December 31, 1998, to
establish a valuation allowance for the impairment of mortgage servicing rights.
Provision for income taxes increased from $935,000 to $1.0 million for the
three-month periods ended December 31, 1997 and 1998, respectively. Provision
for income taxes increased from $6.1 million for the nine months ended December
31, 1997 to $8.2 million for the same period ended December 31, 1998. The
increases in the provision for income taxes from 1997 to 1998 primarily related
to an increase in the Corporation's effective tax rate as a result of favorable
tax treatment on several OSB Merger-related issues during the nine months ended
December 31, 1997.
Changes in Financial Condition
Total Assets. Total assets increased $8.2 million from $517.8 million at March
31, 1998 to $526.0 million at December 31, 1998. The increase in total assets
was driven by increases in investment securities, loans held for sale and loans
receivable and was partially offset by decreases in mortgage-related securities
and cash and cash equivalents.
Cash and Cash Equivalents. Cash and cash equivalents decreased from $28.4
million at March 31, 1998 to $23.9 million at December 31, 1998. The decrease
resulted from the use of cash to fund the growth in investments, loans and loans
held for sale.
Investment and Mortgage-related Securities. The Corporation purchased $46.2
million in investment securities during the nine months ended December 31, 1998.
Investment securities totaling $20.5 million matured during the same period,
resulting in a net increase in investment securities of $25.7 million from March
31, 1998. The increase was a result of the investment of excess funds.
Mortgage-related securities decreased to $39.9 million at December 31, 1998 from
$59.6 million at March 31, 1998. The decrease was primarily a 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 increased to $20.2 million at December
31, 1998 from $16.7 million at March 31, 1998. The increase was primarily a
result of the variable timing of loan demand and related loan sales.
12
<PAGE>
Net Loans Receivable. Net loans receivable increased $3.0 million from $370.9
million at March 31, 1998 to $373.9 million at December 31, 1998. Until
September 1, 1998, the Bank sold the majority of its fixed-rate mortgage loan
production. Following that date, a portion of its 15 and 20 year mortgage loan
originations were retained in its held for investment portfolio.
Deposit Accounts. Deposit accounts increased $10.8 million from $318.5 million
at March 31, 1998 to $329.3 million at December 31, 1998. A large portion of
this increase was due to payment of real estate tax escrow funds to customers in
December. Customers typically transfer these funds to deposit accounts until
they make property tax payments near the calendar year end or in the first
calendar quarter.
Borrowed Funds. Borrowed funds decreased $3.5 million to $105.9 million at
December 31, 1998 from $109.4 million at March 31, 1998. The decrease was a
result of scheduled maturities of borrowings.
Advance payments by borrowers for taxes and insurance. Advance payments by
borrowers for taxes and insurance decreased $3.4 million to $1.2 million at
December 31, 1998 from $4.6 million at March 31, 1998. The decrease was expected
as funds held for borrowers' real estate tax payments accumulate until being
disbursed annually in December.
13
<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 non-accrual 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 non-performing
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.
<TABLE>
<CAPTION>
At December 31 At March 31,
--------------- -------------------------------------------------
1998 1998 1997 1996
-------------- -------------- ------------- -------------
(In thousands)
Non-accruing loans:
<S> <C> <C> <C> <C>
One- to four-family $865 $941 $379 $212
Five or more family - - - -
Commercial real estate - - - -
Consumer and other 104 188 25 -
Commercial 17 96 - -
-------------- -------------- ------------- -------------
Total 986 1,225 404 212
-------------- -------------- ------------- -------------
Foreclosed assets:
One- to four-family 80 113 - -
Five or more family - - - -
Commercial real estate - - - -
Repossessed assets 26 - - 22
-------------- -------------- ------------- -------------
Total 106 113 0 22
-------------- -------------- ------------- -------------
Total non-performing assets $1,092 $1,338 $404 $234
============== ============== ============= =============
Total non-performing assets as a
percentage of total assets 0.21% 0.26% 0.15% 0.09%
============== ============== ============= =============
Allowance for loan losses to loans
and foreclosed properties 0.98% 0.96% 0.63% 0.51%
============== ============== ============= =============
</TABLE>
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
14
<PAGE>
subjective since it requires material estimates that may be susceptible to
significant change. There have been no material changes in the distribution of
the allowance for loan and foreclosed property losses since March 31, 1998.
Additional information on the distribution of the Corporation's allowance for
loan losses is included in the Corporation's March 31, 1998 Annual Report on
Form 10-K.
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
December 31, 1998, on a net basis, the Bank classified $630,000 of its assets as
special mention, $667,000 as substandard, and $4,000 as doubtful. There were no
loans classified as loss at December 31, 1998. As of December 31, 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 December 31, 1998, $84,000 in general loan
loss provisions were deemed appropriate for the quarter ended December 31, 1998
and the aggregate allowance for loan losses of $3,839,000 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.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended December 31 Ended December 31
-------------------------------- --------------------------------
1998 1997 1998 1997
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Allowance at beginning of period $3,770 $3,452 $3,567 $1,405
Provision for loan losses 84 150 318 800
Charge-offs:
Residential real estate - - (15) -
Commercial real estate - (5) - (5)
Other commercial - - - -
Consumer and other (17) (6) (37) (29)
-------------- -------------- -------------- --------------
Total Charge-offs (17) (11) (52) (34)
-------------- -------------- -------------- --------------
Recoveries:
Residential real estate - 1 2 1
Commercial real estate - 1 - 1
Other commercial 2 - 4 -
Consumer and other - 1 - 2
-------------- -------------- -------------- --------------
Total recoveries 2 3 6 4
-------------- -------------- -------------- --------------
Net charge-offs (15) (8) (46) (30)
-------------- -------------- -------------- --------------
Allowance acquired through acquisition - - - 1,419
-------------- -------------- -------------- --------------
Allowance at end of period $3,839 $3,594 $3,839 $3,594
============== ============== ============== ==============
</TABLE>
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.
15
<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 December 31, 1998, the Bank's liquidity ratio, calculated in accordance
with OTS requirements, was 27.6%.
At December 31, 1998, the Bank had outstanding commitments to originate loans of
$34.8 million, with varying interest rates. At December 31, 1998, the Bank had
outstanding commitments to sell mortgage loans of $2.5 million, and commitments
to purchase loans of $2.2 million. In addition, the Bank had commitments to fund
unused lines of credit of $14.4 million at December 31, 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 December 31, 1998:
<TABLE>
<CAPTION>
Total
Risk-
Tangible Leverage Based
Equity Capital Capital
-------------- -------------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
Bank's regulatory percentage 11.70 % 11.70 % 20.49 %
Required regulatory percentage 2.00 4.00 8.00
-------------- -------------- -------------
Excess regulatory percentage 9.70 % 7.70 % 12.49 %
============== ============== =============
Bank's regulatory capital $60,870 $60,870 $64,709
Required regulatory capital 10,406 20,812 25,267
-------------- -------------- -------------
Excess regulatory capital $50,464 $40,058 $39,442
============== ============== =============
</TABLE>
16
<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 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 disruptions 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 99% of the Systems awareness and assessment
phases of its Year 2000 project as of December 31, 1998. As part of these
phases, the Bank has identified the business impact of the Year 2000 on its
operations; briefed senior management; established a working group and steering
committee; contacted external businesses (such as vendors and service providers)
in an effort to assess their Year 2000 readiness and its potential impact on the
Bank's operations; 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 providers; and estimated costs to correct critical
applications. In addition, 98% of the renovation phase, 93% of the validation
phase and 70% of the implementation phase have also been completed as of
December 31, 1998. As part of 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 ensure compliance of 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. Substantially all phases are expected to be completed by
the end of the first quarter of calendar 1999. 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 December 31, 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
17
<PAGE>
the Year 2000 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 first calendar quarter of 1999.
Proposed Merger
On January 5, 1999, the Corporation entered into the Merger Agreement with
Anchor. Reference is made to Note 7 of Notes to Consolidated Financial
Statements for additional information on the Merger.
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.
18
<PAGE>
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 6--Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger, dated as of January 5, 1999, by
and between FCB Financial Corp. and Anchor BanCorp Wisconsin
Inc. (Incorporated by reference to Exhibit 2.1 to FCB Financial
Corp.'s Current Report on Form 8-K, dated January 5, 1999.)
2.2 Stock Option Agreement, dated as of January 5, 1999, between FCB
Financial Corp. and Anchor BanCorp Wisconsin Inc. (Incorporated
by reference to Exhibit 2.2 to FCB Financial Corp.'s Current
Report on Form 8-K, dated January 5, 1999.)
27 Financial Data Schedule at and for the nine-month period ended
December 31, 1998 (EDGAR version only)
(b) Reports on Form 8-K
On January 11, 1999, the Corporation filed a Current Report on Form
8-K (under Item 5) to report that it had entered into an Agreement
and Plan of Merger, dated as of January 5, 1999, with Anchor BanCorp
Wisconsin Inc.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FCB FINANCIAL CORP.
Date: February 11, 1999 By:/s/ James J. Rothenbach
-------------------------------------------
James J. Rothenbach
President and Chief Executive Officer
(Principal Executive Officer)
Date: February 11, 1999 By:/s/ Phillip J. Schoofs
-------------------------------------------
Phillip J. Schoofs
Vice President, Treasurer and Chief
Financial Officer (Principal Financial
and Accounting Officer)
20
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
2.1 Agreement and Plan of Merger, dated as of January 5, 1999,
by and between FCB Financial Corp. and Anchor BanCorp
Wisconsin Inc. (Incorporated by reference to Exhibit 2.1 to
FCB Financial Corp.'s Current Report on Form 8-K, dated
January 5, 1999.)
2.2 Stock Option Agreement, dated as of January 5, 1999,
between FCB Financial Corp. and Anchor BanCorp Wisconsin
Inc. (Incorporated by reference to Exhibit 2.2 to FCB
Financial Corp.'s Current Report on Form 8-K, dated January
5, 1999.)
27 Financial Data Schedule at and for the nine-month period
ended December 31, 1998 (EDGAR version only)
21
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF FCB FINANCIAL CORPORATION AS OF AND FOR THE
PERIOD ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 3010
<INT-BEARING-DEPOSITS> 20906
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30427
<INVESTMENTS-CARRYING> 58678
<INVESTMENTS-MARKET> 59327
<LOANS> 373884
<ALLOWANCE> 3839
<TOTAL-ASSETS> 525950
<DEPOSITS> 329290
<SHORT-TERM> 12250
<LIABILITIES-OTHER> 13955
<LONG-TERM> 93600
0
0
<COMMON> 45
<OTHER-SE> 76810
<TOTAL-LIABILITIES-AND-EQUITY> 525950
<INTEREST-LOAN> 22720
<INTEREST-INVEST> 4949
<INTEREST-OTHER> 1406
<INTEREST-TOTAL> 29075
<INTEREST-DEPOSIT> 11484
<INTEREST-EXPENSE> 16015
<INTEREST-INCOME-NET> 13060
<LOAN-LOSSES> 318
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7295
<INCOME-PRETAX> 8182
<INCOME-PRE-EXTRAORDINARY> 8182
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5111
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.34
<YIELD-ACTUAL> 3.38
<LOANS-NON> 1092
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3567
<CHARGE-OFFS> 52
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 3839
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3839
</TABLE>
