<PAGE> 1
U.S. 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 March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from _____ to _____.
Commission file number: 0-28648
Ohio State Bancshares, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Ohio 34-1816546
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
111 South Main Street, Marion, Ohio 43302
-----------------------------------------
(Address of principal executive offices)
(740) 387-2265
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common stock, $10.00 par value 137,800 common shares
outstanding at May 12, 1999
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE> 2
OHIO STATE BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets............................................................... 3
Condensed Consolidated Statements of Income......................................................... 4
Condensed Consolidated Statements of Changes in Shareholders' Equity................................ 6
Condensed Consolidated Statements of Cash Flows..................................................... 7
Notes to the Condensed Consolidated Financial Statements............................................ 8
Item 2. Management's Discussion and Analysis................................................................ 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................................................. 21
Item 2. Changes in Securities and Use of Proceeds.......................................................... 21
Item 3. Defaults Upon Senior Securities.................................................................... 21
Item 4. Submission of Matters to a Vote of Security Holders................................................ 21
Item 5. Other Information.................................................................................. 21
Item 6. Exhibits and Reports on Form 8-K................................................................... 21
SIGNATURES.................................................................................................. 22
</TABLE>
<PAGE> 3
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,556,790 $ 2,773,195
Federal funds sold 3,788,000 5,242,000
------------ ------------
Cash and cash equivalents 6,344,790 8,015,195
Securities available for sale 12,242,138 10,559,019
Securities held to maturity (fair value March 31, 1999 -
$3,825,757, December 31, 1998 - $3,328,403) 3,698,213 3,198,042
Loans, net 40,118,549 37,271,773
Premises and equipment, net 915,584 896,769
Other real estate owned and repossessions 15,607 59,682
Accrued interest receivable 438,208 382,488
Other assets 450,160 356,638
------------ ------------
$ 64,223,249 $ 60,739,606
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 6,754,589 $ 6,732,194
Interest-bearing 52,497,963 49,336,879
------------ ------------
Total 59,252,552 56,069,073
Accrued interest payable 269,986 252,157
Other liabilities 205,350 227,167
------------ ------------
Total liabilities 59,727,888 56,548,397
Shareholders' equity
Common stock, $10.00 par value; 500,000 shares authorized; March 31, 1999 -
134,058 shares issued and outstanding,
December 31, 1998 - 126,220 shares issued and outstanding 1,340,580 1,262,200
Additional paid-in capital 2,238,939 2,006,927
Retained earnings 958,848 887,700
Accumulated other comprehensive income (43,006) 34,382
------------ ------------
Total shareholders' equity 4,495,361 4,191,209
------------ ------------
$ 64,223,249 $ 60,739,606
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements.
3.
<PAGE> 4
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 868,614 $ 824,728
Taxable securities 151,526 108,494
Nontaxable securities 41,670 29,141
Other 67,440 12,988
----------- -----------
Total interest income 1,129,250 975,351
INTEREST EXPENSE
Deposits 533,285 430,492
Other borrowings 24 756
----------- -----------
Total interest expense 533,309 431,248
----------- -----------
NET INTEREST INCOME 595,941 544,103
Provision for loan losses 32,000 38,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 563,941 506,103
NONINTEREST INCOME
Fees for customer services 57,095 62,988
Net gains on sales of securities available for sale 12,772 --
Other 6,436 7,502
----------- -----------
Total noninterest income 76,303 70,490
NONINTEREST EXPENSE
Salaries and employee benefits 241,259 190,089
Occupancy 90,831 91,409
Office supplies 20,160 19,519
FDIC and state assessments 4,722 4,123
Professional fees 17,611 13,739
Advertising and public relations 7,088 10,953
Taxes, other than income 15,800 15,380
Loss on other real estate owned and repossessions 19,000 7,000
Credit card processing expense 11,259 11,489
Directors' fees 14,100 10,500
Insurance 6,641 6,585
Other 57,081 43,079
----------- -----------
Total noninterest expense 505,552 423,865
----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING METHOD 134,692 152,728
Income tax expense 39,483 45,613
----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING METHOD 95,209 107,115
Cumulative effect on prior years of a change in
accounting for start-up costs (24,061) --
----------- -----------
NET INCOME $ 71,148 $ 107,115
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
4.
<PAGE> 5
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
BASIC AND DILUTED EARNINGS PER SHARE:
Before cumulative effect of a change in accounting method $ .73 $ .88
Cumulative effect on prior years of a change in
accounting for start-up costs (.18) --
----------- -----------
BASIC AND DILUTED EARNINGS PER SHARE $ .55 $ .88
=========== ===========
Weighted average shares outstanding 129,987 121,200
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements.
5.
<PAGE> 6
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
Balance at beginning of period $ 4,191,209 $ 3,562,815
Proceeds from sale of 7,838 shares of common stock,
net of offering costs 310,392 --
Comprehensive income:
Net income 71,148 107,115
Change in net unrealized gain (loss) on securities
available for sale, net of reclassification and tax effects (77,388) 4,755
-------------- ---------------
Total comprehensive income (loss) (6,240) 111,870
-------------- ---------------
Balance at end of period $ 4,495,361 $ 3,674,685
============== ===============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements.
6.
<PAGE> 7
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 71,148 $ 107,115
Adjustments to reconcile net income to net cash from
operating activities
Net amortization of securities 9,250 9,042
Provision for loan losses 32,000 38,000
Depreciation and amortization 29,597 30,083
Net realized gains on sales of securities (12,772) --
Federal Home Loan Bank stock dividends (3,300) (3,200)
Loss on other real estate owned and repossessions 19,000 7,000
Loss on sale of premises and equipment 785 --
Change in accrued interest receivable (55,720) (10,366)
Change in accrued interest payable 17,829 20,777
Change in other assets and other liabilities (75,472) 75,845
-------------- ---------------
Net cash from operating activities 32,345 274,296
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Purchases (3,435,126) (417,079)
Maturities, prepayments and calls 1,155,465 512,271
Sales 487,188 --
Securities held to maturity:
Purchases (501,250) (227,185)
Net change in interest-earning deposits in other banks -- 99,000
Loan originations and payments, net (2,939,376) (1,107,957)
Proceeds from sale of other real estate owned and repossessions 85,675 98,775
Proceeds from sale of premises and equipment 4,000 --
Purchases of premises and equipment (53,197) (9,761)
-------------- ---------------
Net cash from investing activities (5,196,621) (1,051,936)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 3,183,479 545,563
Net proceeds from sale of stock 310,392 --
-------------- ---------------
Net cash from financing activities 3,493,871 545,563
-------------- ---------------
Net change in cash and cash equivalents (1,670,405) (232,077)
Cash and cash equivalents at beginning of period 8,015,195 3,726,486
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,344,790 $ 3,494,409
============== ===============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 515,480 $ 410,471
Income taxes paid 70,000 30,000
SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers from loans to other real estate owned and repossessions $ 60,600 $ 101,640
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated financial statements.
7.
<PAGE> 8
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements are prepared without audit and reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the consolidated financial position of Ohio State Bancshares, Inc. ("OSB") at
March 31, 1999, and its results of operations and cash flows for the periods
presented. All such adjustments are normal and recurring in nature. The
accompanying consolidated financial statements have been prepared in accordance
with the instructions of Form 10-QSB and, therefore, do not purport to contain
all necessary financial disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances, and should be
read in conjunction with the consolidated financial statements and notes thereto
of OSB for the year ended December 31, 1998, included in its 1998 Annual Report.
Reference is made to the accounting policies of OSB described in the notes to
consolidated financial statements contained in its 1998 Annual Report. OSB has
consistently followed these policies in preparing this Form 10-QSB.
The accompanying consolidated financial statements include the accounts of OSB
and its wholly-owned subsidiary, The Marion Bank ("Bank"), together referred to
as the Corporation. Intercompany transactions and balances have been eliminated.
The Corporation provides financial services through its main and branch office
in Marion, Ohio. Its primary deposit products are checking, savings, and term
certificate accounts, and its primary lending products are residential mortgage,
commercial, and installment loans. Substantially all loans are secured by
specific items of collateral including business assets, consumer assets and real
estate. Commercial loans are expected to be repaid from cash flow from
operations of businesses. Real estate loans are secured by both residential and
commercial real estate. The Corporation is primarily organized to operate in the
banking industry. Substantially all revenues and services are derived from
banking products and services in Marion County and contiguous counties.
To prepare financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions based on available
information. These estimates and assumptions affect amounts reported in the
financial statements and the disclosures provided, and future results could
differ. The allowance for loan losses, fair values of financial instruments and
the status of contingencies are particularly subject to change.
Basic earnings per share is net income divided by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is not
currently applicable since the Corporation has no common stock equivalents.
Income tax expense is based on the effective tax rate expected to be applicable
for the entire year. Income tax expense is the total of the current year income
tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax amounts for the
temporary differences between the carrying amounts and tax basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
- --------------------------------------------------------------------------------
(Continued)
8.
<PAGE> 9
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Corporation adopted Statement of Position ("SOP") 98-5, "Reporting on the
Costs of Start-Up Activities effective January 1, 1999. It requires costs of
start-up activities and organizational costs be expensed as incurred. As a
result, the Corporation expensed, at January 1, 1999, the remaining unamortized
organizational costs associated with the formation of the holding company in
1996. The amount is shown on the Statement of Income as a cumulative effect of a
change in accounting method.
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities". SFAS No. 133 requires companies to record derivatives
on the balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 133 does not allow hedging of a security which is
classified as held to maturity, accordingly, upon adoption of SFAS No. 133,
companies may reclassify any security from held to maturity to available for
sale if they wish to be able to hedge the security in the future. SFAS No. 133
is effective for fiscal years beginning after June 15, 1999 with early adoption
encouraged for any fiscal quarter beginning July 1, 1998 or later, with no
retroactive application. Management does not expect the adoption of SFAS No. 133
to have a significant impact on the Corporation's financial statements.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained After the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise"
changes the way companies involved in mortgage banking account for certain
securities and other interests they retain after securitizing mortgage loans
that were held for sale. SFAS No. 134 allows any retained mortgage-backed
securities after a securitization of mortgage loans held for sale to be
classified based on holding intent in accordance with SFAS No. 115, except in
cases where the retained mortgage-backed security is committed to be sold before
or during the securitization process in which case it must be classified as
trading. Previously, all retained mortgage-backed securities were required to be
classified as trading. SFAS No. 134 was effective as of January 1, 1999, and did
not have a significant impact on the Corporation's financial statements.
- --------------------------------------------------------------------------------
(Continued)
9.
<PAGE> 10
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES
Securities at March 31, 1999 and December 31, 1998 were as follows:
<TABLE>
<CAPTION>
March 31, 1999
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury $ 1,447,741 $ 13,040 $ -- $ 1,460,781
U.S. government and federal agencies 4,292,365 5,524 28,888 4,269,001
Mortgage-backed 6,327,829 3,934 58,947 6,272,816
-------------- ----------- ----------- ---------------
Total debt securities 12,067,935 22,498 87,835 12,002,598
Other securities 239,540 -- -- 239,540
-------------- ----------- ----------- ---------------
Total $ 12,307,475 $ 22,498 $ 87,835 $ 12,242,138
============== =========== =========== ===============
HELD TO MATURITY
State and municipal $ 3,698,213 $ 127,544 $ -- $ 3,825,757
============== =========== =========== ===============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury $ 1,447,568 $ 25,044 $ -- $ 1,472,612
U.S. government and federal agencies 2,505,097 13,053 295 2,517,855
Mortgage-backed 6,318,020 43,127 28,835 6,332,312
-------------- ----------- ----------- ---------------
Total debt securities 10,270,685 81,224 29,130 10,322,779
Other securities 236,240 -- -- 236,240
-------------- ----------- ----------- ---------------
Total $ 10,506,925 $ 81,224 $ 29,130 $ 10,559,019
============== =========== =========== ===============
HELD TO MATURITY
State and municipal $ 3,198,042 $ 130,361 $ -- $ 3,328,403
============== =========== =========== ===============
</TABLE>
Proceeds from sales of securities classified as available for sale were $487,188
during the three ended March 31, 1999. Gross gains of $12,772 were realized on
the sales during the three month period ending March 31, 1999. No securities
classified as available for sale were sold during the three months ended March
31, 1998.
- --------------------------------------------------------------------------------
(Continued)
10.
<PAGE> 11
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES (Continued)
The amortized cost and estimated fair values of securities at March 31, 1999, by
contractual maturity, are shown below. Actual maturities may differ from
contractual maturities because certain borrowers may have the right to call or
repay obligations with or without penalties.
<TABLE>
<CAPTION>
Available-for-Sale Securities Held-to-Maturity Securities
----------------------------- ---------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---- ----- ---- -----
<S> <C> <C> <C> <C>
Due in one year or less $ 550,207 $ 553,217 $ -- $ --
Due in one to five years 3,911,754 3,898,420 -- --
Due in five to ten years 278,145 278,145 959,922 1,015,356
Due after ten years 1,000,000 1,000,000 2,738,291 2,810,401
Mortgage-backed securities 6,327,829 6,272,816 -- --
Other securities 239,540 239,540 -- --
-------------- --------------- --------------- --------------
$ 12,307,475 $ 12,242,138 $ 3,698,213 $ 3,825,757
============== =============== =============== ==============
</TABLE>
Securities with a carrying value of approximately $4,781,000 at March 31,
1999 and $4,835,000 at December 31, 1998 were pledged to secure deposits and
for other purposes.
NOTE 3 - LOANS
Loans at March 31, 1999 and December 31, 1998 were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Commercial $ 14,239,577 $ 14,039,906
Installment 21,099,494 19,042,541
Real estate 4,111,140 3,548,885
Credit card 557,377 597,650
Other 14,399 27,583
---------------- ----------------
40,021,987 37,256,565
Net deferred loan costs 437,973 375,301
Allowance for loan losses (341,411) (360,093)
---------------- ----------------
$ 40,118,549 $ 37,271,773
================ ================
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
11.
<PAGE> 12
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 3 - LOANS (Continued)
Activity in the allowance for loan losses for the three months ended March 31,
1999 and 1998 was as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Balance - January 1 $ 360,093 $ 311,095
Loans charged-off (77,760) (95,074)
Recoveries 27,078 15,997
Provision for loan losses 32,000 38,000
------------ ------------
Balance - March 31 $ 341,411 $ 270,018
============ ============
</TABLE>
Impaired loans at March 31, 1999 and December 31, 1998 were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Period-end loans with no allocated allowance for loan losses $ -- $ --
Period-end loans with allocated allowance for loan losses 457,464 457,464
------------ ------------
Total $ 457,464 $ 457,464
============ ============
Amount of the allowance allocated $ 45,746 $ 45,746
Loans past due over 90 days still on accrual 384,789 72,810
Loans on nonaccrual 644,478 633,094
</TABLE>
All impaired loans are also included in nonaccrual loans.
Impaired loans for the three months ended March 31, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Average of impaired loans during the period $ 457,464 $ 280,000
Total interest income recognized during impairment -- --
Cash-basis interest income recognized -- --
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
12.
<PAGE> 13
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 4 - COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES
Various contingent liabilities are not reflected in the financial statements,
including claims and legal actions arising in the ordinary course of business.
In the opinion of management, after consultation with legal counsel, the
ultimate disposition of these matters is not expected to have a material affect
on the financial condition or results of operations.
Some financial instruments are used in the normal course of business to meet
financing needs of customers and to reduce exposure to interest rate changes.
These financial instruments include commitments to extend credit, standby
letters of credit and financial guarantees. These involve, to varying degrees,
credit and interest rate risk in excess of the amounts reported in the financial
statements.
Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit, standby letters of
credit and financial guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments are expected to expire
without being used, total commitments do not necessarily represent future cash
requirements. Standby letters of credit and financial guarantees written are
commitments to guarantee a customer's performance to a third party.
Commitments to extend credit, primarily in the form of undisbursed portions of
approved lines of credit, consist primarily of variable rate commitments. The
interest rates on these commitments ranged from 7.75% to 10.25% at March 31,
1999 and 7.25% to 10.50% at December 31, 1998. Outstanding commitments for
credit card rates ranged from 12.00% to 17.90% as of March 31, 1999 and December
31, 1998. Of the total outstanding balances on these credit cards at March 31,
1999, 52% were fixed and 48% were variable rate and at December 31, 1998, 55%
were fixed rate and 45% were variable rate.
A summary of the contractual amounts of financial instruments with
off-balance-sheet risk at March 31, 1999 and December 31, 1998 follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Commitments to extend credit $ 4,036,000 $ 2,156,000
Credit card arrangements 1,324,000 1,256,000
Letters of credit 20,000 20,000
</TABLE>
At March 31, 1999 and December 31, 1998, reserves of $532,000 and $425,000 were
required as deposits with the Federal Reserve or as cash on hand. These reserves
do not earn interest.
Included in cash and cash equivalents at March 31, 1999 and December 31, 1998
was approximately $5,527,000 and $6,999,000 on deposit with the Independent
State Bank of Ohio.
- --------------------------------------------------------------------------------
(Continued)
13.
<PAGE> 14
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 4 - COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES (Continued)
At March 31, 1999 and December 31, 1998, the Bank had a line of credit enabling
it to borrow up to $3,916,000 and $3,850,000 with the Federal Home Loan Bank of
Cincinnati. No borrowings were outstanding on this line of credit as of March
31, 1999 or December 31, 1998. Advances under the agreement are collateralized
by a blanket pledge of the Bank's real estate mortgage loan portfolio and
Federal Home Loan Bank stock.
The Bank's branch facility is leased under an operating lease. The lease term is
for twenty years. At the conclusion of the fifth, tenth and fifteenth years, the
rent shall be adjusted by 50% of the cumulative increase in the Consumer Price
Index over the previous five years with a minimum of 5% increase and a maximum
of 10% increase for any one five-year period. Total rental expense was $9,687
the three months ended March 31, 1999 and $13,887 for the three months ended
March 31, 1998.
Rental commitments under these noncancelable operating leases are:
<TABLE>
<CAPTION>
Year ending March 31,
<S> <C>
2000 $ 38,748
2001 38,748
2002 39,368
2003 40,685
2004 40,685
Thereafter 546,919
------------
$ 745,153
============
</TABLE>
NOTE 5 - OTHER COMPREHENSIVE INCOME
Other comprehensive income components and related taxes were as follows for the
three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Unrealized holding gains and losses on available for sale
securities $ (104,659) $ 7,206
Reclassification adjustments for (gains) and losses later
recognized as income (12,772) --
-------------- --------------
Net unrealized gains and losses (117,431) 7,206
Tax effect 40,043 (2,451)
-------------- --------------
Other comprehensive income (loss) $ (77,388) $ 4,755
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
14.
<PAGE> 15
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
INTRODUCTION
The following discussion focuses on the consolidated financial condition of Ohio
State Bancshares, Inc. at March 31, 1999, compared to December 31, 1998, and the
consolidated results of operations for the three months ended March 31, 1999,
compared to the same period in 1998. The purpose of this discussion is to
provide the reader with a more thorough understanding of the consolidated
financial statements than what could be obtained from an examination of the
financial statements alone. This discussion should be read in conjunction with
the interim consolidated financial statements and related footnotes.
When used in this Form 10-QSB or future filings by the Corporation with the
Securities and Exchange Commission, in press releases or other public or
shareholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project,"
"believe," or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Corporation wishes to caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date made,
and to advise readers that various factors, including regional and national
economic conditions, changes in levels of market interest rates, credit risks of
lending activities and competitive and regulatory factors, could affect the
Corporation's financial performance and could cause the Corporation's actual
results for future periods to differ materially from those anticipated or
projected. The Corporation does not undertake, and specifically disclaims, any
obligation to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
See Exhibit 99, which is incorporated herein by reference.
The Corporation is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on the liquidity,
capital resources or operations except as discussed herein. In addition, the
Corporation is not aware of any current recommendations by regulatory
authorities that would have such effect if implemented.
FINANCIAL CONDITION
The Corporation has experienced 5.73% asset growth since December 31, 1998, as
total assets increased $3,483,000 from $60,740,000 at December 31, 1998 to
$64,223,000 at March 31, 1999. Maintaining a moderate growth rate while
increasing the loan to deposit ratio continues to be the Corporation's primary
operating strategy. However, consolidation of financial institutions in the
Corporation's market area continues to bring new customers to the Bank.
Securities available for sale and securities held to maturity increased from
$13,757,000 at December 31, 1998 to $15,940,000 at March 31, 1999, an increase
of $2,183,000 or 15.87%. The increase resulted primarily from using some excess
liquidity which existed at December 31, 1998 and investing of funds received
from the sale of the Corporation's common stock.
- --------------------------------------------------------------------------------
15.
<PAGE> 16
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Net loans increased $2,847,000, or 7.64% during the period from December 31,
1998 to March 31, 1999. This growth was funded primarily by increases in deposit
accounts. Commercial loans increased 1.42% from $14,040,000 on December 31, 1998
to $14,240,000 on March 31, 1999. Installment loans grew from $19,043,000 on
December 31, 1998 to $21,099,000 on March 31, 1999, a 10.80% increase. Real
estate loans increased $562,000, or 15.84% from December 31, 1998. The
commercial loan growth was primarily due to local economic factors and the
hiring of a new senior loan officer in the last quarter of 1998. The installment
loan growth was due to obtaining an increased market share of the indirect
automobile loan business in Marion. The real estate loan growth was primarily
due to the hiring of a new loan officer that focuses on the real estate
portfolio.
The allowance for loan losses decreased to 0.84% of loans as of March 31, 1999
compared to 0.97% at December 31, 1998. The decline occurred due to net
charge-offs exceeding the provision for loan losses for the three months ended
March 31, 1999 and loan growth. All loans charged-off during the three months
ended March 31, 1999 were either installment or credit cards. $19,000 of the
allowance at March 31, 1999 remains unallocated to any specific loan or loan
category. Management is actively monitoring problem loans and has increased
collection efforts to reduce charge-offs in future periods. Should charge-offs
continue, management will increase the provision for loan losses in order to
maintain the allowance for loan losses at a level adequate to absorb probable
losses in the loan portfolio.
Total deposits increased $3,183,000 or 5.68% from December 31, 1998 to March 31,
1999. The increase in deposits was primarily due to the 6.41% increase in
interest-bearing deposits from $49,337,000 on December 31, 1998 to $52,498,000
on March 31, 1999. Noninterest-bearing deposits increased slightly by $22,000,
or 0.33% from December 31, 1998 to March 31, 1999. This increase was due to
cyclical cash needs by customers.
The loan and deposit growth that the Corporation has experienced during 1999 is
a continuation of the events which occurred in the local market in 1998
resulting from financial institution consolidation. The Corporation continues to
obtain several new loan and deposit customers despite spending less money on
advertising and, in certain circumstances, being less interest rate competitive.
Common stock and additional paid-in capital increased $310,000 as the
Corporation completed the pre-emptive rights portion of its $1.1 million stock
offering. The remaining shares from the offering have been fully subscribed and
will be issued in the second quarter of this year.
RESULTS OF OPERATIONS
The operating results of the Corporation are affected by general economic
conditions, the monetary and fiscal policies of federal agencies and the
regulatory policies of agencies that regulate financial institutions. The
Corporation's cost of funds is influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
influenced by consumer and business demand, which, in turn, is affected by the
interest rates at which such loans are made, general economic conditions and the
availability of funds for lending activities.
The Corporation's net income is primarily dependent upon its net interest
income, which is the difference between interest income generated on
interest-earning assets and interest expense incurred on interest-bearing
liabilities. Provisions for loan losses, service charges, gains on the sale of
assets and other income, noninterest expense and income taxes also affect net
income.
- --------------------------------------------------------------------------------
16.
<PAGE> 17
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Net income for the three months ended March 31, 1999 was $71,000, or $36,000
less than the same period in 1998. The reason for the decrease in earnings was
primarily due to increases in noninterest expense and the write-off of the
remaining organization costs associated with the holding company formation to
comply with new accounting guidance partially offset by improved net interest
income.
Net interest income is the largest component of Corporation's income and is
affected by the interest rate environment and the volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
increased by $52,000 for the three months ended March 31, 1999 compared to the
same period in 1998. The increase in net interest income is attributable to the
Corporation's earning assets increasing from $45,771,000 for the three months
ended March 31, 1998 to $58,119,000 for the three months ended March 31, 1999.
Noninterest income increased $5,800, or 8.25% for the three months ended March
31, 1999 over the same period in the prior year. The increase over the prior
period is primarily due to the gain from the sale of securities available for
sale.
Noninterest expense was up $82,000, or 19.27% for the three months ended March
31, 1999 versus the three months ended March 31, 1998. Normal salary increases
and the hiring of additional personnel, particularly in the loan department,
costs associated with Year 2000 testing and increased losses on repossessed
assets were the major reasons for the increase in noninterest expense.
CAPITAL RESOURCES
The Bank is subject to regulatory capital requirements administered by federal
banking agencies. Capital adequacy guidelines and prompt corrective action
regulations involve quantitative measures of assets, liabilities and certain
off-balance-sheet items calculated under regulatory accounting practices.
Capital amounts and classifications are also subject to qualitative judgments by
regulators about components, risk weightings and other factors, and regulators
can lower classifications in certain ceases. Failure to meet various capital
requirements can initiate regulatory action having a direct material affect on
the operations of the Bank.
The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, although these terms are not
used to represent overall financial condition. If adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required. The minimum
requirements are:
<TABLE>
<CAPTION>
Capital to risk-
weighted assets
--------------- Tier 1 capital
Total Tier 1 to average assets
----- ------ -----------------
<S> <C> <C> <C>
Well capitalized 10% 6% 5%
Adequately capitalized 8% 4% 4%
Undercapitalized 6% 3% 3%
</TABLE>
- --------------------------------------------------------------------------------
17.
<PAGE> 18
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
At March 31, 1999 and December 31, 1998, the actual capital ratios for the Bank
were:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Total capital to risk-weighted assets 10.3% 10.7%
Tier 1 capital to risk-weighted assets 9.5 9.8
Tier 1 capital to average assets 6.8 7.1
</TABLE>
At March 31, 1999 and December 31 1998, the Bank was categorized as well
capitalized. A $1.1 million stock offering began in late 1998 and will be
completed in the second quarter of 1999. The proceeds from the stock offering
will be infused into the Bank to maintain the Bank's well capitalized
classification.
LIQUIDITY
Liquidity management focuses on the ability to have funds available to meet the
loan and depository transaction needs of the Bank's customers and the
Corporation's other financial commitments. Cash and cash equivalent assets
(which include deposits this Bank maintains at other banks, federal funds sold
and other short-term investments) totaled $6,345,000 at March 31, 1999 and
$8,015,000 at December 31, 1998. These assets provide the primary source of
funds for loan demand and deposit balance fluctuations. Additional sources of
liquidity are securities classified as available for sale and access to Federal
Home Loan Bank advances, as the Bank is a member of the Federal Home Loan Bank
of Cincinnati.
Taking into account the capital adequacy, profitability and reputation
maintained by the Corporation, available liquidity sources are considered
adequate to meet current and projected needs. See the Condensed Consolidated
Statements of Cash Flows for a more detailed review of the Corporation's sources
and uses of cash.
YEAR 2000
Management began evaluating the potential impact of Year 2000 ("Y2K") in the
fall of 1997. Every technology system utilized by the Bank was inventoried and
graded as either "mission critical" or "nonmission critical." Mission critical
systems are those critical to providing acceptable customer service, critical to
maintaining customer records and those which would have an impact on the Bank's
liquidity should they fail.
The following systems were identified as "mission critical" by management. A
description on the current status of these systems is listed below.
1. IBM a/s 400 mainframe computer
2. Proof and Item capture equipment
3. Jack Henry (JHA) 20/20 software
4. Fedline
5. Equifax Debit-Credit card processing system
6. EDS-MAC ATM processing system
7. Bank security system
- --------------------------------------------------------------------------------
18.
<PAGE> 19
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
IBM a/s 400 MAINFRAME COMPUTER
The Bank upgraded its mainframe computer in September 1998 for capacity reasons.
The upgrade also enables the computer to handle the additional memory
requirements of windows based Y2K compliant JHA operating software that the Bank
installed in April 1999.
PROOF AND ITEM CAPTURE EQUIPMENT
The Bank uses a Lundy MRS 90 reader-sorter which has been upgraded (memory
expansion) to operate in conjunction with JHA 20/20 software. NCR Proof Machines
are used to encode entry information. Y2K date chips have been installed in that
equipment. Identical proof and Capture equipment has been tested and certified
as Y2K compliant by JHA and JHA user groups for use with JHA 20/20 software.
JHA 20/20 SOFTWARE
All JHA software has been vendor certified Y2K compliant since September 1998.
Test results for 20/20 software are being certified by the Bank at this time.
The Bank's decision to change to JHA 20/20 operating software was more to
increase operating efficiency and account capacity rather than a Y2K compliance
issue. JHA has been a leader in the industry and has designed its testing and
certification procedures for all its software products to conform to FDIC and
other industry regulatory standards.
FEDLINE
Fedline is the operating software utilized to process transactions and
communicate with the Federal Reserve Bank. These activities include wire
transfers, ACH transactions and Tax Payments. The Bank concluded Y2K testing
with the Federal Reserve in February 1999, and those results have been certified
as Y2K compliant.
EQUIFAX DEBIT-CREDIT CARD SYSTEM
The Bank uses Equifax Corporation to process debit and credit card transactions
through the Visa network. Equifax is testing the network with Visa and Master
Card to certify Y2K compliance. Direct testing with individual banks was
completed by April 30, 1999.
EDS-MAC ATM CARD PROCESSING
ATM card transactions and point of sale card purchases are performed through the
EDS-MAC network. EDS, like Equifax, is testing its network with Visa, Master
Card and other ATM processors. Individual bank testing is scheduled for the
first half of 1999. The Personal Computer System for ATM card maintenance has
been upgraded to EDS specifications and is scheduled for testing in May, 1999.
BANK SECURITY SYSTEM
All security systems for the Bank have been certified Y2K compliant by the
vendors from which the products have been purchased.
- --------------------------------------------------------------------------------
19.
<PAGE> 20
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
OTHER NONMISSION CRITICAL SYSTEMS
The Bank has utilized the same due diligence which was used on mission critical
systems on all information technology systems used in the Bank. A new windows
based teller system was installed in August 1998 to upgrade that area to Y2K
compliance. All personal computers used by the Bank have been upgraded and
tested to ensure they are Y2K compliant. All software products utilized in the
Bank's daily operations have been certified Y2K compliant or replaced.
CUSTOMER EVALUATION AND NOTIFICATION
The Bank has reviewed all loans with balances of over $50,000 to assess whether
those customers have any significant risk because of Y2K failure that would
impact their ability to repay those loans. Two mailings have been sent to those
customers with follow-up planned in June 1999. At this time, the Bank does not
have any loan customers that they consider high risk for a Y2K related failure.
The Bank has also been sending mailers to all deposit customers informing them
of the Y2K risk and the steps that the Bank is taking to prepare us for Y2K. We
also have detailed information in our lobbies regarding the overall status of
the banking industry.
Y2K COSTS
The Bank incurred direct costs of approximately $80,000 in 1998 relating to Y2K
issues. These were primarily costs associated with upgrading personal computers
and the new teller system. In 1999, the Bank expects additional costs of about
$15,000 relating to Y2K expenses. The Bank has also incurred $125,000 in
indirect expenses upgrading the capacity of the computer mainframe and changing
to JHA 20/20 operating software.
MANAGEMENT'S CURRENT FORECAST AND LIQUIDITY ISSUES
Management is confident that its internal systems will not be significantly
affected by Y2K. Management does anticipate that some problems may occur with
customer's systems and with their suppliers and customers. This could create
slower collection of receivables by the Bank's customers and result in an
increase of demand for line of credit loans or a decrease in checking and
savings account balances for the Bank. The Bank plans to maintain higher than
average levels of liquidity in the second half of 1999 and into the year 2000 to
offset that risk.
- --------------------------------------------------------------------------------
20.
<PAGE> 21
OHIO STATE BANCSHARES, INC.
FORM 10-QSB
Quarter ended March 31, 1999
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Legal Proceedings:
------------------
There are no matters required to be reported under this item.
Item 2 - Changes in Securities and Use of Proceeds:
-----------------------------------------
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
--------------------------------
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
----------------------------------------------------
There are no matters required to be reported under this item.
Item 5 - Other Information:
-----------------
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibit 27 - Financial Data Schedule.
(b) Exhibit 99 - Safe Harbor Under Private Securities
Litigation Reform Act of 1995.
(c) No current reports on Form 8-K were filed by the small
business issuer during the quarter ended March 31, 1999.
- --------------------------------------------------------------------------------
21.
<PAGE> 22
OHIO STATE BANCSHARES, INC.
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.
OHIO STATE BANCSHARES, INC.
------------------------------------
(Registrant)
Date: May 12, 1999 /s/ Gary E. Pendleton
---------------------- ------------------------------------
(Signature)
Gary E. Pendleton
President and Chief Executive
Officer
Date: May 12, 1999 /s/ William H. Harris
---------------------- ------------------------------------
(Signature)
William H. Harris
Executive Vice President and Cashier
- --------------------------------------------------------------------------------
22.
<PAGE> 23
OHIO STATE BANCSHARES, INC.
Index to Exhibits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
- -------------- ----------- -----------
<S> <C> <C>
27 Financial Data Schedule 24
99 Safe Harbor Under the Private Incorporated by reference to
Securities Litigation Reform Act Exhibit 99 to Annual Report
of 1995 on Form 10-KSB for the year ended
December 31, 1998 filed by the Small
Business Issuer on March 26, 1999.
</TABLE>
- --------------------------------------------------------------------------------
23.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,557
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,788
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,242
<INVESTMENTS-CARRYING> 3,698
<INVESTMENTS-MARKET> 3,826
<LOANS> 40,119
<ALLOWANCE> 341
<TOTAL-ASSETS> 64,223
<DEPOSITS> 59,253
<SHORT-TERM> 0
<LIABILITIES-OTHER> 475
<LONG-TERM> 0
0
0
<COMMON> 1,341
<OTHER-SE> 3,155
<TOTAL-LIABILITIES-AND-EQUITY> 64,223
<INTEREST-LOAN> 869
<INTEREST-INVEST> 193
<INTEREST-OTHER> 67
<INTEREST-TOTAL> 1,129
<INTEREST-DEPOSIT> 533
<INTEREST-EXPENSE> 533
<INTEREST-INCOME-NET> 596
<LOAN-LOSSES> 32
<SECURITIES-GAINS> 13
<EXPENSE-OTHER> 506
<INCOME-PRETAX> 135
<INCOME-PRE-EXTRAORDINARY> 95
<EXTRAORDINARY> 0
<CHANGES> 24
<NET-INCOME> 71
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
<YIELD-ACTUAL> 4.16
<LOANS-NON> 644
<LOANS-PAST> 385
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 215
<ALLOWANCE-OPEN> 360
<CHARGE-OFFS> 78
<RECOVERIES> 27
<ALLOWANCE-CLOSE> 341
<ALLOWANCE-DOMESTIC> 341
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 19
</TABLE>
