SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly Report under Section 13 or 15(d) of the Securities Exchange
- ------- Act of 1934 for the quarterly period ended September 30, 1999.
Or
_____Transition Report under Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period
from __________________ to __________________.
Commission File No. 33-69326
CNB HOLDINGS, INC.
(Exact name of the registrant as specified in its charter)
Virginia 54-1663340
(State of Incorporation) (I.R.S. Employer Identification No.)
P.O. Box 1060, 900 Memorial Drive, Pulaski, Virginia 24301
(Address of principal executive offices)
(540) 994-0831
(Issuer's telephone number, including area code)
-----------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since
last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
926,399 shares of common stock, $5.00 par value per share (the "Common Stock"),
issued and outstanding as of October 8, 1999.
Transitional Small Business Disclosure Format (check one): Yes No X
There are no Exhibits
<PAGE>
CNB Holdings, Inc.
Form 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
The financial statements of CNB Holdings, Inc. (the "Company") are set forth in
the following pages.
<TABLE>
<S> <C>
Consolidated Balance Sheets as of September 30, 1999 and
December 31,1998 ......................................................................................3
Consolidated Statements of Operations for the Nine Months
Ended September 30, 1999 and 1998.....................................................................4
Consolidated Statements of Operations for the Three Months
Ended September 30, 1999 and 1998.....................................................................5
Consolidated Statements of Stockholders' Equity for the
Nine Months Ended September 30, 1999 and the Year
Ended December 31, 1998................................................................................6
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998.....................................................................7
Consolidated Statements of Cash Flows for the Three Months
Ended September 30, 1999 and 1998.....................................................................8
Notes to Consolidated Financial Statements...............................................................9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS........................................................................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................11
Item 2. Changes in Securities...........................................................................11
Item 3. Defaults Upon Senior Securities.................................................................11
Item 4. Submission of Matters to a Vote of Security Holders............................................ 11
Item 5. Other Information...............................................................................12
Item 6. Exhibits and Reports on Form 8-K............................................................... 12
SIGNATURES..............................................................................................12
</TABLE>
All schedules have been omitted because they are inapplicable or the required
information is provided in the financial statements, including the notes
thereto.
<PAGE>
- --------------------------------------------------------------------------------
CNB Holdings, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------- ----------------
<S> <C>
Assets
Cash and due from banks $ 3,664,167 $ 2,925,106
Federal funds sold 1,506,000 495,000
Investment securities available for sale 11,439,437 16,427,685
Loans, net of allowance for loan losses
of $346,378 in 1999 and $372,574 in 1998 31,730,786 31,108,102
Property and equipment, net 1,994,129 1,952,346
Accrued income 329,067 425,640
Other assets 136,536 94,836
--------------- ----------------
Total assets $ 50,800,122 $ 53,428,715
=============== ================
Liabilities
Demand deposits $ 3,429,538 $ 3,595,984
Interest-bearing demand deposits 12,708,496 14,235,369
Savings deposits 7,718,142 6,629,166
Large denomination time deposits 4,031,431 4,456,768
Other time deposits 16,791,486 17,200,180
--------------- ----------------
Total deposits 44,679,093 46,117,467
Federal funds purchased - 851,000
Other borrowed funds 128,107 132,590
Accrued interest payable 93,924 72,786
Other liabilities 39,708 15,140
--------------- ----------------
Total liabilities 44,940,832 47,188,983
--------------- ----------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value; 1,000,000 shares
authorized; none outstanding - -
Common stock, $5 par value; 10,000,000 shares
authorized; 926,399 shares outstanding
in 1999 and 1998 4,631,995 4,631,995
Surplus 2,803,782 2,803,782
Retained deficit (1,204,760) (1,185,804)
Unrealized depreciation on investment
securities available for sale (371,727) (10,241)
--------------- ----------------
Total stockholders' equity 5,859,290 6,239,732
--------------- ----------------
Total liabilities and stockholders' equity $ 50,800,122 $ 53,428,715
=============== ================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
CNB Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
Nine months ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
1999 1998
--------------- ----------------
<S> <C>
Interest income:
Loans and fees on loans $ 2,116,199 $ 1,690,417
Federal funds sold 46,995 160,018
Taxable investment securities 576,937 582,316
------------ ----------------
Total interest income 2,740,131 2,432,751
------------ ----------------
Interest expense:
Deposits 1,379,072 1,321,953
Federal funds purchased 5,624 130
Other borrowed funds 5,554 -
------------ ----------------
Total interest expense 1,390,250 1,322,083
------------ ----------------
Net interest income 1,349,881 1,110,668
Provision for loan losses 166,638 94,011
------------ ----------------
Net interest income after provision for loan losses 1,183,243 1,016,657
------------ ----------------
Noninterest income:
Service charges on deposit accounts 121,462 122,420
Net realized gains on sales of securities - -
Other income 76,713 62,337
------------ ----------------
Total noninterest income 198,175 184,757
------------ ----------------
Noninterest expense:
Salaries and employee benefits 598,610 557,949
Occupancy expense 109,825 89,771
Equipment expense 82,555 99,627
Other expense 609,384 417,797
------------ ----------------
Total noninterest expense 1,400,374 1,165,144
------------ ----------------
Net income (loss) $ (18,956) $ 36,270
============ ================
Basic earnings per share $ (.02) $ .04
============ ================
Weighted average shares outstanding 926,399 926,399
============ ================
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
CNB Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
Three months ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
--------------- ----------------
<S> <C>
Interest income:
Loans and fees on loans $ 711,640 $ 600,050
Federal funds sold 7,621 68,794
Taxable investment securities 196,162 228,186
--------------- ----------------
Total interest income 915,423 897,030
--------------- ----------------
Interest expense:
Deposits 444,961 497,562
Federal funds purchased 2,493 -
Other borrowed funds 1,830 -
--------------- ----------------
Total interest expense 449,284 497,562
--------------- ----------------
Net interest income 466,139 399,468
Provision for loan losses 141,149 47,134
--------------- ----------------
Net interest income after provision for loan losses 324,990 352,334
--------------- ----------------
Noninterest income:
Service charges on deposit accounts 39,186 40,912
Net realized gains on sales of securities - -
Other income 13,870 21,091
--------------- ----------------
Total noninterest income 53,056 62,003
--------------- ----------------
Noninterest expense:
Salaries and employee benefits 166,947 212,624
Occupancy expense 38,559 31,773
Equipment expense 25,580 30,988
Other expense 229,036 132,427
--------------- ----------------
Total noninterest expense 460,122 407,812
--------------- ----------------
Net income (loss) $ (82,076) $ 6,525
=============== ================
Basic earnings per share $ (.09) $ .01
=============== ================
Weighted average shares outstanding 926,399 926,399
=============== ================
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
- --------------------------------------------------------------------------------
CNB Holdings, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
Year ended December 31, 1998 and the nine months ended September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
Common Stock Retained Other
------------ Earnings Comprehensive
Shares Amount Surplus (Deficit) Income (Loss) Total
------ ------ ------- --------- ------------- -----
<S> <C>
December 31, 1997 546,399 $ 2,731,995 $ 1,609,748 $ (1,209,973) $ (21,151) $ 3,110,619
------------ ----------- ------------ ------------- ---------- -------------
Comprehensive income
Net income - - - 24,169 - 24,169
Net change in unrealized
depreciation on investment
securities available for sale - - - - 10,910 10,910
-------------
Total comprehensive income 35,079
Proceeds from sale of
common stock 380,000 1,900,000 1,520,000 - - 3,420,000
Costs related to sale of
common stock - - (325,966) - - (325,966)
------------- ------------ ------------- ------------- ----------- -------------
December 31, 1998 926,399 $ 4,631,995 $ 2,803,782 $ (1,185,804) $ (10,241) $ 6,239,732
Comprehensive income
Net loss - - - (18,956) - (18,956)
Net change in unrealized
depreciation on investment
securities available for sale - - - - (361,486) (361,486)
-------------
Total comprehensive income (380,442)
------------- ------------ ------------- ------------- ------------ -------------
September 30, 1999 926,399 $ 4,631,995 $ 2,803,782 $ (1,204,760) $ (371,727) $ 5,859,290
============= ============ ============= ============= ============ =============
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE>
CNB Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Nine months ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------------
1999 1998
--------------- ----------------
<S> <C>
Cash flows from operating activities:
Net income $ (18,956) $ 36,270
Adjustments to reconcile net income
to net cash used by operations:
Depreciation and amortization 100,728 83,217
Provision for loan losses 166,638 94,011
Accretion of discount on securities, net 50,700 (5,996)
Changes in assets and liabilities:
Accrued income 96,573 (45,729)
Other assets (54,119) (55,557)
Accrued interest payable 21,138 43,215
Other liabilities 24,568 44,665
--------------- ----------------
Net cash flows from operating activities 387,270 194,096
--------------- ----------------
Cash flows from investing activities:
Net (increase) decrease in federal funds sold (1,011,000) (2,985,000)
Purchases of investment securities (7,005,397) (19,921,882)
Sales of available for sale securities 3,499,463 -
Maturities of investment securities 8,081,996 15,402,680
Net increase in loans (789,322) (4,815,546)
Purchases of property and equipment (130,092) (204,797)
--------------- ----------------
Net cash provided (used) by investing activities 2,645,648 (12,524,545)
--------------- -----------------
Cash flows from financing activities:
Net increase (decrease) in demand, NOW, and savings deposits (604,343) 5,990,824
Net increase (decrease) in time deposits (834,031) 2,656,273
Net decrease in federal funds purchased (851,000) -
Repayment of borrowed funds (4,483) 135,000
Issuance of common stock - 3,235,754
--------------- ----------------
Net cash provided (used) by financing activities (2,293,857) 12,017,851
---------------- ----------------
Net increase in cash and cash equivalents 739,061 (312,598)
Cash and cash equivalents, beginning 2,925,106 2,290,840
---------------- ----------------
Cash and cash equivalents, ending $ 3,664,167 $ 1,978,242
================ ================
Supplemental disclosure of cash flow information:
Interest paid $ 1,369,112 $ 1,278,868
=============== ================
Income taxes paid $ - $ -
=============== ================
Supplemental disclosure of noncash investing activities:
Other real estate acquired in settlement of loans $ - $ -
=============== ================
</TABLE>
7
See Notes to Consolidated Financial Statements
<PAGE>
CNB Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Three months ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------------
1999 1998
--------------- ----------------
<S> <C>
Cash flows from operating activities:
Net income (loss) $ (82,076) $ 6,525
Adjustments to reconcile net income (loss)
to net cash used by operations:
Depreciation and amortization 34,684 27,575
Provision for loan losses 141,149 47,134
Accretion of discount on securities, net 15,755 (1,999)
Changes in assets and liabilities:
Accrued income 32,518 (9,882)
Other assets (28,438) (7,532)
Accrued interest payable 10,488 19,293
Other liabilities 26,113 41,031
---------------- ----------------
Net cash flows from operating activities 150,193 122,145
---------------- ----------------
Cash flows from investing activities:
Net (increase) decrease in federal funds sold (695,000) (858,000)
Purchases of investment securities (100,000) (12,185,355)
Sales of available for sale securities 1,000,747 -
Maturities of investment securities 3,493,566 8,860,392
Net (increase) decrease in loans 402,189 (1,879,388)
Purchases of property and equipment (111,299) (40,734)
---------------- ----------------
Net cash provided by investing activities 3,990,203 (6,103,085)
--------------- ----------------
Cash flows from financing activities:
Net (increase) decrease in demand, NOW, and savings deposits (713,146) 3,259,380
Net (increase) decrease in time deposits (2,146,992) 1,009,973
Net increase in federal funds purchased - -
Repayment of borrowed funds (1,516) 135,000
--------------- ----------------
Net cash used by financing activities (2,861,654) 4,404,353
---------------- ----------------
Net increase in cash and cash equivalents 1,278,742 (1,576,587)
Cash and cash equivalents, beginning 2,385,425 3,554,829
--------------- ----------------
Cash and cash equivalents, ending $ 3,664,167 $ 1,978,242
=============== ================
Supplemental disclosure of cash flow information:
Interest paid $ 428,146 $ 476,269
=============== ================
Income taxes paid $ - $ -
=============== ================
Supplemental disclosure of noncash investing activities:
Other real estate acquired in settlement of loans $ - $ -
=============== ================
</TABLE>
See Notes to Consolidated Financial Statements
8
<PAGE>
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1. Organization and Summary of Significant Accounting Policies
Organization
CNB Holdings, Inc. (the Company) is a bank holding company incorporated under
the laws of Virginia on April 29, 1993. On August 29, 1994, the Company's wholly
owned subsidiary, Community National Bank (the Bank), was chartered as an FDIC
insured National Banking Association under the laws of the United States and the
Bank opened for business in Pulaski, Virginia. As an FDIC insured National
Banking Association, the Bank operates two banking offices and is subject to
regulation by the Comptroller of the Currency. The Company is regulated by the
Federal Reserve.
Basis of Presentation
The consolidated financial statements as of September 30, 1999 and for the
periods ended September 30, 1999 and 1998 included herein, have been prepared by
CNB holdings, Inc., without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished in the interim consolidated financial statements reflects
all adjustments necessary to present fairly the Company's consolidated financial
position, results of operations, changes in stockholders' equity and cash flows
for such interim periods. Management believes that all interim period
adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the Company's audited financial
statements and the notes thereto as of December 31, 1998, included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998.
The accounting and reporting policies of the Company and the Bank follow
generally accepted accounting principles and general practices within the
financial services industry.
Note 2. Commitments and Contingencies
Financial Instruments with Off-Balance-Sheet Risk
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending other loan facilities to customers. Collateral held
varies as specified above and is required in instances which the Bank deems
necessary.
Note 3. Sale of Common Stock
After receiving approval in 1997 from the Securities and Exchange Commission to
sell an additional 380,000 shares of common stock, the Company began offering
this stock for sale in December, 1997. The entire issue was fully subscribed by
the offering cut-off date in February, 1998. Net proceeds from this offering of
approximately $3.2 million will be used for general purposes and to fund future
growth.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANACIAL CONDITION AND
RESULTS OF OPERATIONS.
Discussion of Operations
The Company had a net loss of $18,956 (or $.02 per share, based on 926,399
weighted average shares of Common Stock outstanding during the period) for the
nine months ended September 30, 1999, compared with an income of $36,270 (or
$.04 per share, based on 926,399 weighted average shares of Common Stock
outstanding during the period) for the nine months ended September 30, 1998.
Net losses for the three months ended September 30, 1999, were $82,076 as
compared to net income of $6,525 for the three months ended September 30, 1998.
This decrease in earnings is due primarily to an increase in the provision for
loan losses to $141,149 in the third quarter of 1999 from $47,134 in the third
quarter of 1998. This increase in loan loss provision is due to higher than
anticipated loan charge-offs in the third quarter of 1999.
At September 30, 1999, the Company had total assets of approximately $50.8
million compared to $53.4 million at December 31, 1998. Total assets had a
decrease of $2.6 million, or 4.9% since year end 1998. At September 30, 1999,
assets were comprised principally of loans and investment securities. Loans
increased $622,000, or 2.0%, to $31.7 million at September 30, 1999, as the Bank
experienced loan growth in most categories. Investment securities decreased $5.0
million or 30.4%. Investment securities declined significantly as maturing
investments were used to fund seasonal declines in large municipal deposits. As
loan demand continues to develop, the bank will be in a position to invest more
of its excess funds into higher yielding loans instead of investment securities.
The Company's liabilities at September 30, 1999 were $44.9 million compared to
$47.2 million at December 31, 1998. These liabilities consisted almost entirely
of deposits for both periods. Demand and savings deposits decreased by $604,000,
or 2.5% to $23.9 million, and time deposits decreased $834,000, or 4.0%, to
$20.8 million. At September 30, 1999, $3.4 million, or 7.7%, of total deposits
were non interest-bearing compared to $3.6 million, or 7.7%, at December 31,
1998. The Bank offers competitive interest rates in its local market and has
been successful at attracting depositors.
At September 30, 1999 and December 31, 1998, the Company had stockholders'
equity of approximately $5.7 million and $6.2 million, respectively.
Stock-holders' equity was affected by the Company's first nine months of 1999
loss of $18,956, and an $361,000 decrease in the market value of investment
securities available for sale as a result of raising interest rates.
Management of the Company believes that the Bank has sufficient capital to fund
its operations until the Bank begins to generate significant profits on an
operating basis, but there can be no assurance that this will be the case.
During the first quarter the Bank became a member of the Federal Home Loan Bank
system which would provide the Bank with borrowing capacity to meet liquidity or
loan needs, however, management has not identified other sources of capital for
the Company or the Bank should they be needed.
At September 30, 1999, the Bank was in compliance with all regulatory capital
requirements. Management believes that the Bank has sufficient liquidity on a
short-term basis to meet any funding needs it may have, and expects that its
long-term liquidity needs can be achieved through deposit growth, however there
can be no assurance that such growth will develop.
10
<PAGE>
Year 2000 Compliance
Like most financial service providers, the Company and the operations of the
Bank may be significantly affected by the Y2K issue due to its dependence on
technology and date sensitive data. Computer software, hardware and other
equipment, both within and outside the Bank's direct control, and third parties
with whom the Bank electronically or operationally interfaces (including without
limitation its customers and third party vendors) are likely to be affected. If
computer systems are not modified in order to be able to identify the year 2000,
many computer applications could fail or could adversely affect the viability of
the Bank's suppliers and creditors and the creditworthiness of its borrowers.
Thus, if not adequately addressed, the Y2K issue could result in a significant
adverse impact of the Bank's operations and, in turn, the financial condition
and results of operations of the Company.
Management has formulated a Y2K Team, a significant part of the team's efforts
has been to monitor the Bank's data processor's Y2K project closely. The data
processor had substantially completed renovating and testing of its
mission-critical mainframe and PC-based applications by year-end 1998 as
planned. The Bank actively participated in testing the significant loan and
deposit systems. Integration testing was completed in the second quarter of
1999.
Management expects to be ready for the year 2000, but there are certain factors
beyond the Bank's control that could cause disruption, including the failure of
vendors of mission critical systems. As the Bank uses a single data processor to
process customer banking transactions, the Company cannot assure that there will
be no disruption to operations as a result of the year 2000. However, the
Company has developed a Year 2000 Business Resumption Contingency Plan designed
to resume operations in the event of a Year 2000 related disruption to mission
critical systems and continues to refine its Contingency Plan.
Y2K related expenses were $28,000 in the first nine months of 1999. Because the
Bank used a third party data processor, management believes that future Y2K
expenses will not be material to operations and have budgeted $50,000 towards
these expenses in 1999.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
There are no matters pending legal proceedings to which the Company or any of
its subsidiaries is a party or of which any of their property is subject.
Item 2. Changes in Securites
(a) Not applicable.
(b) Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None.
11
<PAGE>
Item 5. Other Information
Wayne Carpenter, the President and CEO of Community National Bank since
inception, announced that effective August 31, 1999 he will resign to pursue
interests outside the banking industry. Mr. Carpenter will continue to serve as
a member of the Board of Directors of CNB Holdings, Inc. and Community National
Bank. Philip Baker, a current member of Community Nations Bank's management team
will assume the duties of interim president and CEO.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on 8-K
None.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CNB HOLDINGS, INC.
Date: October 10, 1999 By: /s/ Hiawatha Nicely, Jr.
------------------------------
President & Chief Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CNB HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AT SEPTEMBER
30, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,664,167
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,506,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,439,437
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 31,730,786
<ALLOWANCE> (346,378)
<TOTAL-ASSETS> 50,800,122
<DEPOSITS> 44,679,093
<SHORT-TERM> 0
<LIABILITIES-OTHER> 261,739
<LONG-TERM> 0
0
0
<COMMON> 4,631,995
<OTHER-SE> 1,227,295
<TOTAL-LIABILITIES-AND-EQUITY> 50,800,122
<INTEREST-LOAN> 2,116,199
<INTEREST-INVEST> 576,937
<INTEREST-OTHER> 46,995
<INTEREST-TOTAL> 2,740,131
<INTEREST-DEPOSIT> 1,379,072
<INTEREST-EXPENSE> 1,390,250
<INTEREST-INCOME-NET> 1,349,881
<LOAN-LOSSES> 166,638
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,400,374
<INCOME-PRETAX> (18,956)
<INCOME-PRE-EXTRAORDINARY> (18,956)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,956)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
<YIELD-ACTUAL> 3.81
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 372,574
<CHARGE-OFFS> 192,834
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 346,378
<ALLOWANCE-DOMESTIC> 346,378
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
