<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from to
--------------- ---------------
Commission file number 0-23550
-------
FENTURA BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Michigan 38-2806518
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
ONE FENTON SQ, P.O. BOX 725, FENTON, MICHIGAN 48430
---------------------------------------------------
(Address of Principal Executive Offices)
(810) 629-2263
---------------------------
(Issuer's telephone number)
None
- --------------------------------------------------------------------------------
(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.
X Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: November 10, 1998
Class - Common Stock Shares Outstanding - 1,405,089
<PAGE> 2
Fentura Bancorp, Inc.
Index to Form 10-Q
Page
----
Part I - Financial Information
Item 1 - Consolidated Financial Statements 3
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - Other Information
Item 1 - 6 Miscellaneous Information 19
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
- --------------------------------------------------------------------------------
SEPT 30, DEC 31, SEPT 30,
(000'S omitted Except Per Share Data) 1998 1997 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 10,626 11,047 10,644
Federal funds sold 12,550 5,400 3,800
-----------------------------------
Total Cash & Cash Equivalents 23,176 16,447 14,444
Interest bearing deposits with banks 0 95 95
Investment securities-held to maturity,
at cost (market value of $11,395, and
$9,357 at September 30, 1998 and 1997,
respectively) 11,154 9,590 9,294
Investment securities-available for
sale, at market 52,405 46,460 50,376
-----------------------------------
Total investment securities 63,559 56,050 59,670
Loans:
Commercial 72,545 81,063 77,276
Tax exempt development loans 393 481 562
Real estate loans - mortgage 11,456 14,589 14,346
Real estate loans - construction 13,137 15,007 19,820
Consumer loans 66,500 69,533 68,645
-----------------------------------
Total loans 164,031 180,673 180,649
Less: Reserve for loan losses (2,659) (2,955) (2,979)
-----------------------------------
Net loans 161,372 177,718 177,670
Loans held for sale 10,602 3,525 2,194
Bank premises and equipment 3,581 3,990 4,195
Accrued interest receivable 1,777 1,907 1,813
Other assets 3,743 3,066 2,074
-----------------------------------
Total assets $ 267,810 262,798 262,155
===================================
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C> <C>
Deposits:
Non-interest bearing deposits $ 29,059 31,072 29,241
Interest bearing deposits 204,935 199,462 201,004
----------------------------------
Total deposits 233,994 230,534 230,245
Federal Funds Purchased 0 0 0
Other borrowings 1,599 2,685 2,685
Accrued taxes, interest and
other liabilities 2,657 2,837 2,766
----------------------------------
Total liabilities 238,250 236,056 235,696
----------------------------------
STOCKHOLDERS' EQUITY
Common stock - $5 par value
1,405,089 shares issued (692,343 in 7,026 3,462 3,436
1997 and 687,157 in September, 1997)
Surplus 17,455 16,913 16,670
Retained Earnings 4,597 6,308 6,350
Unrealized loss on securities AFS 482 59 3
----------------------------------
Total stockholder's equity 29,560 26,742 26,459
----------------------------------
Total liabilities and
stockholder's equity $267,810 262,798 262,155
==================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 4,326 4,558 $ 13,309 13,455
Interest and dividends on
investment securities:
Taxable 737 758 2,046 2,143
Tax-exempt 130 101 377 276
Int on deposits with banks 0 2 1 7
Interest on federal funds sold 221 65 381 238
----------------------- -----------------------
Total interest income 5,414 5,484 16,114 16,119
INTEREST EXPENSE
Deposits 2,164 2,272 6,437 6,746
Short-term borrowings 38 43 124 130
----------------------- -----------------------
Total interest expense 2,202 2,315 6,561 6,876
NET INTEREST INCOME 3,212 3,169 9,553 9,243
Provision for loan losses 156 156 568 468
Net interest income after ----------------------- -----------------------
provision for loan losses 3,056 3,013 8,985 8,775
NON-INTEREST INCOME
Service chrgs on dep accts 432 409 1,275 1,167
Fiduciary income 139 140 419 360
Other operating income 382 340 1,239 1,030
Investment gains 0 (12) 5 (12)
----------------------- -----------------------
Total non-interest income 953 877 2,938 2,545
NON-INTEREST EXPENSE
Salaries and benefits 1,264 1,216 3,818 3,731
Occupancy of bank premises 179 165 539 502
Equipment expense 355 361 1,030 1,054
Other operating expenses 867 811 2,713 2,401
----------------------- -----------------------
Total non-interest expense 2,665 2,553 8,100 7,688
NET INCOME BEFORE TAXES 1,344 1,337 3,823 3,632
Applicable income taxes 416 417 1,178 1,136
----------------------- -----------------------
NET INCOME $ 928 920 $ 2,645 2,496
Per share: ======================= =======================
Net income .................. $ 0.66 0.67 $ 1.89 1.83
Dividends ................... $ 0.21 0.19 $ 0.63 0.57
Average number of common
shares outstanding......... 1,403,513 1,371,539 1,397,299 1,365,082
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
- -------------------------------------------------------------------------------
Sept. 30, Sept. 30,
(000's omitted) 1998 1997
- -------------------------------------------------------------------------------
COMMON STOCK
<S> <C> <C>
Balance, beginning of period $ 3,462 $ 3,386
Issuance of shares under
director stock purchase plan,
stock purchase plan, and
dividend reinvestment prog 82 50
Stock dividend 3,482 0
-------- --------
Balance, end of period 7,026 3,436
SURPLUS
Balance, beginning of period 16,913 16,266
Issuance of shares under
director stock purchase plan,
stock purchase plan, and
dividend reinvestment prog 542 404
Stock dividend 0 0
-------- --------
Balance, end of period 17,455 16,670
RETAINED EARNINGS
Balance, beginning of period 6,308 4,632
Net income 2,645 2,496
Stock dividend (3,482)
Cash dividends declared (874) (778)
-------- --------
Balance, end of period 4,597 6,350
UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE
Balance, beginning of period 59 (175)
Change in unrealized gain (loss)
on securities, net of tax 423 178
-------- --------
Balance, end of period 482 3
-------- --------
TOTAL SHAREHOLDERS' EQUITY $ 29,560 $ 26,459
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
- --------------------------------------------------------------------------------
(000's omitted,
Except Per Share Data) 1998 1997
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,645 $ 2,496
Adjustments to reconcile net inc to cash
Provided by Operating Activities:
Depreciation and amortization 670 742
Provision for loan losses 568 468
Amortization (accretion) on securities (47) 69
Loans originated for sale (20,456) (14,665)
Loans sold 13,379 13,478
Gain on investment securities (5) 12
Decrease (increase) in interest receivable 130 22
Decrease (increase) in other assets (896) 837
Increase (decrease) in accrued taxes,
interest, and other liabilities (180) (1,088)
--------------------
Total Adjustments (6,837) (125)
--------------------
Net Cash Provided By (Used In) Operating Activities (4,192) 2,371
--------------------
Cash Flows From Investing Activities:
Net decrease in deposits with other banks 95 0
Proceeds from maturities of inv activities - HTM 3,375 665
Proceeds from maturities of inv activities - AFS 28,616 12,426
Purchases of investment securities - HTM (4,894) (3,437)
Purchases of investment securities - AFS (33,912) (18,252)
Net (increase) in customer loans 15,778 (5,745)
Capital expenditures (261) (143)
--------------------
Net Cash Used in Investing Activities 8,797 (14,486)
Cash Flows From Financing Activities:
Net increase (decrease) in DDA/SAV deposits 1,401 4,334
Net increase (decrease) in Time deposits 2,059 1,862
Net increase (decr) in borrowing's (1,086) 316
Proceeds from stock issuance 624 454
Cash dividends (874) (778)
--------------------
Net Cash Provided By (Used In) Financing Activities 2,124 6,188
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 6,729 ($ 5,927)
CASH AND CASH EQUIVALENTS - BEGINNING $ 16,447 $ 20,371
CASH AND CASH EQUIVALENTS - ENDING $ 23,176 $ 14,444
====================
CASH PAID FOR:
INTEREST $ 6,628 $ 6,695
INCOME TAXES $ 1,232 $ 1,094
</TABLE>
See notes to consolidated financial statements.
<PAGE> 8
Fentura Bancorp, Inc. and Subsidiaries
Statement of Comprehensive Income
<TABLE>
<CAPTION>
Nine Months Ended
(000's Omitted) September 30,
1998 1997
---------------------
<S> <C> <C>
Net Income $2,645 $2,496
Other comprehensive income, net of tax:
Unrealized holding gains arising
during period $ 428 $ 190
Less: reclassification adjustment for
gains included in net income $ 5 $ (12)
---------------------
Other comprehensive income $ 423 $ 178
---------------------
Comprehensive income $3,068 $2,674
=====================
</TABLE>
Fentura Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Basis of presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions
for Form - 10Q and Article 9 of Regulation S-X. Accordingly, they
do not include all of the information and notes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the
nine months ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1998.
Note 2. Reclassifications
Certain prior year amounts have been reclassified to conform to
the current year financial statement presentation.
Note 3. During the first quarter of 1998 the Corporation adopted the
Statement of Financial Accounting Standards (SFAS) No. 130
"Reporting Comprehensive Income". The statement requires that
entities present items of other comprehensive income in a financial
statement with the same prominence as other financial statements.
This statement requires reclassification of financial statements
for earlier periods for comparative purposes.
The adoption for SFAS No. 130 does not effect the net income of
the Corporation.
<PAGE> 9
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis is intended to address significant factors
affecting the Corporation's consolidated financial statements during the three
and nine months ended September 30, 1998 and 1997. It provides a more detailed
and comprehensive review of the operating results and financial position than
could be obtained from the financial statements alone.
Net Interest Income
Net Interest income and average balances and yields on major categories of
interest-earning assets and interest-bearing liabilities for the three and nine
months ended September 30, 1998 and 1997 are summarized in Tables 2 and 3,
respectively. The effects of changes in average interest rates and average
balances are detailed in Table 1 below.
<TABLE>
<CAPTION>
Table 1 CHANGES IN NET INTEREST INCOME
DUE TO CHANGES IN AVERAGE VOLUME
AND INTEREST RATES
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
1998 COMPARED TO 1997 1998 COMPARED TO 1997
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO: DUE TO:
--------------------------------------------------------------
YIELD/ YIELD/
(000'S OMITTED) VOL RATE TOTAL VOL RATE TOTAL
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST BEARING DEPOSITS IN BANKS ($ 2) $ 0 ($ 2) ($ 5) ($ 1) ($ 6)
TAXABLE SECURITIES (11) (10) (21) (76) (21) (97)
TAX-EXEMPT SECURITIES 37 (8) 29 126 (25) 101
FEDERAL FUNDS SOLD 160 (4) 156 132 11 143
TOTAL LOANS (354) (38) (392) (329) (123) (452)
LOANS HELD FOR SALE 172 (12) 160 304 2 306
--------------------------------------------------------------
TOTAL EARNING ASSETS 2 (72) (70) 152 (157) (5)
INTEREST BEARING DEMAND DEPOSITS 19 (7) 12 52 (17) 35
SAVINGS DEPOSITS 19 (63) (44) 52 (166) (114)
TIME CD'S $100,000 AND OVER (1) (12) (13) (116) (10) (126)
OTHER TIME DEPOSITS (22) (41) (63) (27) (77) (104)
OTHER BORROWINGS (4) (1) (5) (9) 3 (6)
--------------------------------------------------------------
TOTAL INTEREST BEARING LIABILITIES 11 (124) (113) (48) (267) (315)
NET INTEREST INCOME ($ 9) $ 52 $ 43 $ 200 $ 110 $ 310
==============================================================
</TABLE>
As indicated in Table 1, during the three and nine months ended September 30
1998, net interest income increased over the same period in 1997 principally due
to the reduction of rates paid on interest bearing liabilities.
Net interest income (displayed without consideration of full tax equivalency),
average balance sheet amounts, and the corresponding yields for the three months
ended September 30, 1998 and 1997 are shown in Table 2. Net interest income for
the three months ended September 30, 1998 was 3,212,000 an increase of $43,000
over the same period in 1997. This represents an increase of
<PAGE> 10
1.4%. The primary factor contributing to the net interest income increase is the
reduction of interest expense due to lower rates paid on savings, interest
bearing DDA, and time deposits. Also indicated in Table 2, for the three months
ended September 30, 1997 net interest income was $3,169,000. This is an increase
of $141,000 or 4.7% over the same period in 1996. The increase in 1997 is
attributable to the increase in income derived from balance increases within
investment securities and loans.
Net interest income (displayed without consideration of full tax equivalency),
average balance sheet amounts, and the corresponding yields for the nine months
ended September 30, 1998 and 1997 are shown in Table 3. Net interest income for
the nine months ended September 30, 1998 was 9,553,000 an increase of $310,000
over the same period in 1997. This represents an increase of 3.4%. The primary
factor contributing to the net interest income increase is a reduction of
interest expense due to lower rates paid on savings, interest bearing DDA, and
other time deposits. Also indicated in Table 3, for the nine months ended
September 30, 1997 net interest income was $9,243,000. This is an increase of
$373,000 or 4.2% over the same period in 1996. The increase in 1997 is
attributable to the increase in income derived from balance increases within
investment securities and loans.
Management continually monitors the Corporation's balance sheet to insulate net
interest income from significant swings caused by interest rate volatility. If
market rates continue to change in 1998, additional corresponding changes in
funding costs will be considered to avoid any potential negative impact on net
interest income. The Corporation's policies in this regard are further discussed
in the section titled "Interest Rate Risk".
<PAGE> 11
<TABLE>
<CAPTION>
TABLE 2 AVERAGE BALANCES AND RATES
THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
ASSETS AVG BAL INC/EXP YIELD AVG BAL INC/EXP YIELD
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST BEARING DEPOSITS IN BANKS $ 0 $ 0 0.00% $ 95 $ 2 8.42%
INVESTMENT SECURITIES:
U.S. TREASURY AND GOVERNMENT AGENCIES 47,601 721 6.06% 48,362 743 6.15%
STATE AND POLITICAL 10,837 130 4.80% 7,948 101 5.08%
OTHER 788 16 8.12% 760 15 7.89%
-------------------------------- ------------------------------
TOTAL INVESTMENT SECURITIES 59,226 867 5.86% 57,070 859 6.02%
FED FUNDS SOLD 15,844 221 5.58% 4,584 65 5.67%
LOANS:
COMMERCIAL 80,413 1,998 9.94% 88,562 2,183 9.86%
TAX FREE 401 5 4.99% 618 9 5.83%
REAL ESTATE-MORTGAGE 16,305 418 10.25% 22,020 598 10.86%
CONSUMER 68,191 1,714 10.05% 68,120 1,737 10.20%
-------------------------------- ------------------------------
TOTAL LOANS 165,310 4,135 10.01% 179,320 4,527 10.10%
ALLOWANCE FOR LOAN LOSS (2,706) (2,949)
NET LOANS 162,604 4,135 10.17% 176,371 4,527 10.27%
-------------------------------- ------------------------------
LOANS HELD FOR SALE 10,870 191 7.03% 1,657 31 7.48%
-------------------------------- ------------------------------
TOTAL EARNING ASSETS $251,250 $5,414 8.62% $242,726 $5,484 9.04%
-----------------------------------------------------------------
CASH DUE FROM BANKS 9,284 9,788
ALL OTHER ASSETS 9,213 9,744
---------- ----------
TOTAL ASSETS $267,041 $259,309
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY:
DEPOSITS:
NON-INTEREST BEARING - DDA $ 27,964 $27,030
INTEREST BEARING - DDA 38,195 217 2.27% 34,936 205 2.35%
SAVINGS DEPOSITS 61,205 442 2.89% 58,959 486 3.30%
TIME CD'S $100,000 AND OVER 26,436 387 5.86% 26,515 400 6.03%
OTHER TIME CD'S 79,304 1,118 5.64% 80,813 1,181 5.85%
-------------------------------- ------------------------------
TOTAL DEPOSITS 233,104 2,164 3.71% 228,253 2,272 3.98%
OTHER BORROWINGS 2,169 38 7.01% 2,420 43 7.11%
-------------------------------- ------------------------------
INTEREST BEARING LIABILITIES $207,309 $2,202 4.25% $203,643 $2,315 4.55%
-----------------------------------------------------------------
ALL OTHER LIABILITIES 2,473 2,572
SHAREHOLDERS EQUITY 29,295 26,064
----------- ----------
TOTAL LIABILITIES and S/H EQUITY $267,041 $259,309
----------- --------- ---------- ---------
Net Interest Rate Spread 4.37% 4.49%
FUNDS ON MARGIN 0.74% 0.73%
--------- ----------
Net Interest Income/Margin $3,212 5.11% $3,169 5.22%
================ =================
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
TABLE 3 AVERAGE BALANCES AND RATES
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
ASSETS AVG BAL INC/EXP YIELD AVG BAL INC/EXP YIELD
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST BEARING DEPOSITS IN BANKS $ 21 $ 1 6.35% $ 95 $ 7 9.82%
INVESTMENT SECURITIES:
U.S. TREASURY AND GOVERNMENT AGENCIES 44,248 1,999 6.02% 45,930 2,099 6.09%
STATE AND POLITICAL 10,466 377 4.80% 7,194 276 5.12%
OTHER 779 47 8.04% 744 44 7.89%
-------------------------------- -------------------------------
TOTAL INVESTMENT SECURITIES 55,493 2,423 5.82% 53,868 2,419 5.99%
FED FUNDS SOLD 9,157 381 5.55% 5,887 238 5.39%
LOANS:
COMMERCIAL 84,266 6,211 9.83% 87,816 6,450 9.79%
TAX FREE 434 18 5.53% 678 29 5.70%
REAL ESTATE-MORTGAGE 19,552 1,485 10.13% 22,977 1,854 10.76%
CONSUMER 69,555 5,223 10.01% 66,723 5,033 10.06%
-------------------------------- -------------------------------
TOTAL LOANS 173,807 12,937 9.92% 178,194 13,366 10.00%
ALLOWANCE FOR LOAN LOSS (2,889) (2,910)
NET LOANS 170,918 12,937 10.09% 175,284 13,366 10.17%
-------------------------------- -------------------------------
LOANS HELD FOR SALE 7,064 372 7.02% 1,601 89 7.41%
-------------------------------- -------------------------------
TOTAL EARNING ASSETS $245,542 $16,114 8.75% $239,645 $16,119 8.97%
------------------------------------------------------------------
CASH DUE FROM BANKS 9,505 9,596
ALL OTHER ASSETS 9,200 9,845
---------- ----------
TOTAL ASSETS $261,358 $256,176
---------- ----------
LIABILITIES & SHAREHOLDERS' EQUITY:
DEPOSITS:
NON-INTEREST BEARING - DDA $26,487 $26,216
INTEREST BEARING - DDA 37,091 628 2.26% 34,086 593 2.32%
SAVINGS DEPOSITS 60,185 1,339 2.97% 58,115 1,453 3.33%
TIME CD'S $100,000 AND OVER 25,405 1,112 5.84% 28,035 1,238 5.89%
OTHER TIME CD'S 79,087 3,358 5.66% 79,703 3,462 5.79%
-------------------------------- -------------------------------
TOTAL DEPOSITS 228,255 6,437 3.76% 226,155 6,746 3.98%
OTHER BORROWINGS 2,304 124 7.18% 2,471 130 7.01%
-------------------------------- -------------------------------
INTEREST BEARING LIABILITIES $204,072 $ 6,561 4.29% $202,410 $ 6,876 4.53%
------------------------------------------------------------------
ALL OTHER LIABILITIES 2,423 2,436
SHAREHOLDERS EQUITY 28,376 25,114
---------- ----------
TOTAL LIABILITIES and S/H EQUITY $261,358 $256,176
---------- -------- ---------- --------
Net Interest Rate Spread 4.46% 4.44%
FUNDS ON MARGIN 0.72% 0.70%
-------- --------
Net Interest Income/Margin $ 9,553 5.19% $ 9,243 5.14%
================ ================
</TABLE>
<PAGE> 13
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses (ALL) reflects management's judgment as to the
level considered appropriate to absorb potential losses inherent in the loan
portfolio. Fentura's subsidiary, The State Bank's, methodology in determining
the adequacy of the ALL includes a review of individual loans and off-balance
sheet arrangements, historical loss experience, current economic conditions,
portfolio trends, and other pertinent factors. Although reserves have been
allocated to various portfolio segments, the ALL is general in nature and is
available for the portfolio in its entirety. At September 30, 1998, the ALL was
$2,659,000, or 1.52% of total loans, including those loans held for sale. This
compares with $2,979,000, or 1.63%, at September 30, 1997. The decline in the
ALL balance and percentage of total loans was a result of a substantial write
down on a nonperforming commercial loan. The loss was a result of isolated
circumstances and management believes that overall asset quality remains strong.
The provision for loan losses was $156,000 and $568,000 for the three and nine
months, respectively, ended September 30, 1998 and $156,000 and $ 468,000 for
the same periods in 1997. The primary reason for increasing the provision in
1998 was the expected impact of the nonperforming commercial loan referenced in
the prior paragraph.
Table 4 ANALYSIS OF THE ALLOWANCE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(000's omitted) September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Balance Beginning of Period $ 2,758 $ 2,930 $ 2,955 $ 2,836
--------------------------------------------
Charge-offs:
Commercial, Financial and (30) (1) (454) (13)
Agricultural
Real Estate-Mortgage (67) 0 (77) 0
Installment Loans to Individuals (215) (115) (446) (359)
Lease Financing 0 0 0 0
--------------------------------------------
Total Charge-offs (312) (116) (977) (372)
--------------------------------------------
Recoveries:
Commercial, Financial and 30 1 45 14
Agricultural
Real Estate-Mortgage 0 0 0 4
Installment Loans to Individuals 27 8 68 29
Lease Financing 0 0 0 0
--------------------------------------------
Total Recoveries 57 9 113 47
--------------------------------------------
Net Charge-offs (255) (107) (864) (325)
--------------------------------------------
Provision 156 156 568 468
--------------------------------------------
Balance at End of Period $ 2,659 $ 2,979 $ 2,659 $ 2,979
============================================
Loans outstanding at period end $174,633 $182,843 $174,633 $182,843
Average loans outstanding during period $176,180 $180,977 $180,871 $179,795
Allowance for loan losses as
percentage of loans outstanding at
period end 1.52% 1.63% 1.52% 1.63%
Ratio of net charge-offs during period
to average loans outstanding (annualized) 0.58% 0.24% 0.64% 0.24%
</TABLE>
<PAGE> 14
NON-INTEREST INCOME
Non-interest income increased in the three and nine month periods ended
September 30, 1998 as compared to the same periods in 1997 due to increases in
other operating income. In addition to other income, the Corporation experienced
increases in service charges on deposit accounts. Overall non-interest income
was $953,000 and $2,938,000 in the three and nine months, respectively, ended
September 30, 1998 compared to $877,000 and $2,545,000 for the same periods in
1997. These figures represents an increase of 8.7% and 15.4% respectively. Table
5 provides a more detailed breakdown of the components of non-interest income
than can be found in the income statement on page 5.
The most significant category of non-interest income is service charges on
deposit accounts. These fees were $432,000 in the three months ended September
30, 1998 and $1,275,000 in the nine months ended September 30, 1998 compared to
$409,000 and $1,167,000, respectively, for the same periods of 1997. These
represent increases of 5.6% and 9.3%, respectively. Growth in deposit totals,
the number of accounts and certain account activities account for the increases
in fees.
Gains on the sale of mortgage loans originated by the bank and sold in the
secondary market were $43,000 in the quarter ended September 30, 1998 and
$43,000 in the same period in 1997. These gains were $190,000 in the nine months
ended September 30, 1998 and $178,000 in the same period of 1997. The increase
occurred because of increases in residential mortgage refinance activity due to
the impact of lower market rates.
Fiduciary income increased $59,000 in the nine months ended September 30, 1998
comparing to the same time period in the prior year. This 16.4%, increase in
fees is attributed to growth in the assets under management within the
Corporation's Investment Trust Department.
Other operating income includes income from the sale of checks, safe deposit box
rent, merchant account income, ATM income, and other miscellaneous income items.
Other operating income was $255,000 for the three months ended September 30,
1998 and $198,000 for the same period in 1997. This is an increase of 28.8%
compared to the same time period in 1997. For the nine months ended September
30, 1998 other income was $784,000 compared to $556,000 to the same period in
1997. This is an increase of 41.0%. These increases occurred due to transaction
fees associated with certain ATM activity.
TABLE 5
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Analysis of Non-Interest Income September 30, September 30,
- ------------------------------------------------------------------------------------------------
(000'S omitted)
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service Charges on Deposit Accounts $432 $409 $1,275 $1,167
Gain on Sale of Mortgages $43 $43 190 178
Gain on Sale of Real Estate Owned $0 $0 0 1
Mortgage Servicing Fees $84 $99 265 295
Fiduciary Income $139 $140 419 360
Other Operating Income $255 $198 784 556
Investment Gains $0 ($12) 5 (12)
------------------------------------------------
Total Non-Interest Income $953 $877 $2,938 $2,545
================================================
</TABLE>
Non-Interest Expense
Total non-interest expense was $2,665,000 in the three months ended September
30, 1998 compared with $2,553,000 in the same period of 1997. This is an
increase of 4.4%. For the nine months ended September 30, 1998 non-interest
expenses were $8,100,000 compared to $7,688,000 in the same time period of 1997,
an increase of 5.4%. These increases occurred due to increases in salaries and
benefits, net occupancy, and other operating expenses.
<PAGE> 15
Salary and benefit costs, Fentura's largest non-interest expense category, were
$1,264,000 in the quarter ended September 30, 1998, compared with $1,216,000, or
an increase of 3.9%, for the same time period in 1997. These costs were
$3,818,000 in the nine months ended September 30, 1998, and $3,731,000, or an
increase of 2.3%, for the same time period in 1997. Increased costs are
primarily a result of the revision of position and salary levels in the second
quarter of 1998 and normal annual salary increases.
During the three months ended September 30, 1998 equipment expenses were
$355,000 compared to $361,000 for the same period in 1997, an decrease of 1.7%.
For the nine months ended September 30, 1998 these expenses were $1,030,000
compared to $1,054,000 for the same time period in 1997, a decrease of 2.3%. The
reduction of expense during these periods is attributable to equipment
depreciation. Depreciation expense decreased because several substantial assets
reached full depreciation in the last quarter of 1997.
Occupancy expenses increased in both the three and nine months ended September
30, 1998 comparing to the same periods in 1997 because of increases in the
accrual for real estate taxes. Tax accruals are up as a result of reviewing tax
liabilities and adjusting accruals accordingly.
During the three and nine months ended September 30, 1998 office supplies
expense increased $10,000 and $41,000, respectively, comparing to the same
periods in 1997. These increases are attributable to cost and volume increases
of regular office supplies and preprinted forms.
Loan and collection expenses, at $96,000, were down $18,000 during the three
months ended September 30, 1998 comparing to the same time period in 1997. These
expenses decreased $18,000 for the nine months ended September 30, 1998
comparing to the same period in 1997 as well. These decreases are primarily
attributable to decreases in home equity loan fees waived to the customer and
paid by the bank and a decrease in dealer service fees paid in connection with
indirect auto lending.
Other operating expenses were $629,000 in the three months ended September 30,
1998 compared to $553,000 in the same time period in 1997, an increase of 13.7%.
The expenses were $1,954,000 in the nine months ended September 30, 1998 and
$1,637,000 in the same time period of 1997, an increase of 19.4%. The increase
for the three month periods is attributable to an increase in consulting fees
paid in connection with outsourcing certain functions formerly performed
internally. The increase for the nine month periods is attributable to a loss in
January 1998 of $75,000 on an improperly endorsed check and increases in legal
and consulting expense associated with efforts to improve employee benefits and
enhance compensation and leveling systems.
TABLE 6
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Analysis of Non-Interest Expense September 30, September 30,
- -----------------------------------------------------------------------------------------------
(000's omitted)
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and Benefits $1,264 $1,216 $3,818 $3,731
Equipment $ 355 $ 361 1,030 1,054
Net Occupancy $ 179 $ 165 539 502
FDIC Assessment $ 7 $ 7 21 20
Office Supplies $ 76 $ 66 235 194
Loan & Collection Expense $ 96 $ 114 294 312
Advertising $ 59 $ 71 209 238
Other Operating Expense $ 629 $ 553 1,954 1,637
-----------------------------------------------
Total Non-Interest Expense $2,665 $2,553 $8,100 $7,688
===============================================
</TABLE>
NONPERFORMING ASSETS
Non-performing assets include loans on which interest accruals have ceased,
loans which have been renegotiated, and real estate acquired through
foreclosure. Past due loans are loans which
<PAGE> 16
were delinquent 90 days or more, but have not been placed on non-accrual status.
table 7 represents the levels of these assets at september 30, 1998 and 1997.
Non-performing loans include several delinquent single-family mortgage loans
which have sufficient equity and no expected loss. Non-accrual loans include a
large commercial loan facility and a residential construction mortgage loan. An
agreement has been executed that requires specific action plans, collateral
pledges, and related performance expectations for the facility creating the
largest exposure for the Corporation. These loans will be closely monitored.
TABLE 7
<TABLE>
<CAPTION>
Non-Performing Assets and Past Due Loans
September 30,
1998 1997
-----------------------------
Non-Performing Loans:
<S> <C> <C>
Loans Past Due 90 Days or More & Still
Accruing $ 181,000 $ 347,000
Non-Accrual Loans 1,307,000 1,773,000
Renegotiated Loans 7,000 0
-----------------------------
Total Non-Performing Loans 1,495,000 2,120,000
-----------------------------
Other Non-Performing Assets:
Other Real Estate 206,000 0
REO in Redemption 122,000 0
Other Non-Performing Assets 67,000 40,000
-----------------------------
Total Other Non-Performing Assets 395,000 40,000
-----------------------------
Total Non-Performing Assets $1,890,000 $2,160,000
=============================
Non-Performing Loans as a % of
Total Loans 0.91% 1.17%
Non-Performing Assets as a % of
Total Loans and Other Real Estate 1.15% 1.20%
Allowance for Loan Losses as a % of
Non-Performing Loans 177.86% 140.52%
Allowance for Loan Losses, Other Real
Estate, and In-Substance Foreclosures
as a % of Non-Performing Assets 158.04% 137.92%
Accruing Loans Past Due 90 Days or
More to Total Loans 0.11% 0.19%
Nonperforming Assets as a % of
Total Assets 0.71% 0.82%
</TABLE>
LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Asset/Liability management procedures are designed to assure liquidity and
reduce interest rate risks. The goal in managing interest rate risk is to
maintain a strong and relatively stable net interest margin. It is the
responsibility of the Asset/Liability Management Committee (ALCO) to set policy
guidelines and to establish short-term and long-term strategies with respect to
interest rate exposure and liquidity. ALCO, which is comprised of key members of
management, meets regularly to review Fentura's financial performance and
soundness, including interest rate risk and liquidity exposure in relation to
present and perspective markets, business conditions, and product lines.
Accordingly, the committee adopts funding and balance sheet management
strategies that are intended to determine that earnings, liquidity, and growth
rates are consistent with policy and prudent business standards.
Liquidity maintenance together with a solid capital base and strong earnings
performance are key objectives of the Corporation. The Bank's liquidity is
derived from a strong deposit base comprised of individual and business
deposits. Deposit accounts of customers in the mature market represent a
substantial portion of deposits of individuals. The Bank's deposit base plus
other funding sources (federal funds purchased, other liabilities and
shareholders' equity) provided primarily all funding needs in the first six
months of 1998 and 1997.
<PAGE> 17
Primary liquidity is provided through short-term investments or borrowings
(including federal funds sold and purchased) and secondary liquidity is provided
by the investment portfolio. As of September 30, 1998 federal funds sold
represented 4.7% of total assets, compared to 1.4% at September 30, 1997. The
Corporation regularly monitors liquidity to ensure adequate cash flows to cover
unanticipated reductions in the availability of funding sources.
Interest rate risk is managed by controlling and limiting the level of earnings
volatility arising from rate movements. The Corporation regularly performs
reviews and analysis of those factors impacting interest rate risk. Factors
include maturity and re-pricing frequency of balance sheet components, impact of
rate changes on interest margin and prepayment speeds, market value impacts of
rate changes, and other issues. Both actual and projected performance are
reviewed, analyzed, and compared to policy and objectives to assure present and
future financial viability.
As indicated in the statement of cash flows, cash flows from financing
activities have increased in 1998 due to the growth of interest bearing demand
and savings deposits. Comparatively, in the first nine months of 1997, cash
flows from financing activities increased because of increases in all deposit
categories. Cash flows from investing activities were $8,797,000 during the
first nine months of 1998 and ($14,486,000) in the same period of 1997. The
primary reason for the decline in investing activities at the end of the third
quarter of 1998 was an increase in maturing investments netting against funds
used for investment purchases comparing to the same period in 1997.
CAPITAL MANAGEMENT
Total shareholders' equity rose 11.7% to $29,560,000 at September 30, 1998
compared with $26,459,000 at September 30, 1997. The Company's equity to asset
ratio was 11.0% at September 30, 1998 and 10.1% at September 30, 1997. The
increase in the amount of capital was obtained through retained earnings and the
proceeds from the issuance of new shares. In the first nine months of 1998, the
Corporation increased its cash dividends by 10.5% to $.63 per share compared
with $.57 in the same time period in 1997.
As indicated on the balance sheet on page 4, at September 30, 1998 the Company
had an unrealized gain on securities available for sale (AFS) of $482,000
compared to an unrealized gain at September 30, 1997 of $3,000. This increase in
gain position is attributable to market interest rates and the interest rate
structures on those securities held in the AFS portfolio.
Regulatory Capital Requirements
Bank holding companies and their bank subsidiaries are required by banking
industry regulators to meet certain levels of capital adequacy. These are
expressed in the form of certain ratios. Capital is separated into two levels,
Tier I capital (essentially total common stockholders' equity less goodwill) and
Tier II capital (essentially the reserve for loan losses limited to 1.25% of
gross risk-weighted assets). These ratios are based on the degree of credit risk
in the Corporation's assets. All assets and off-balance sheet items such as
outstanding loan commitments are assigned risk factors to create an overall risk
weighted asset total. Capital levels are then measured as a percentage of total
risk weighted assets. The regulatory minimum for Tier I capital to risk weighted
assets is 4% and the minimum for Total capital (Tier I plus Tier II) to risk
weighted assets is 8%. The Tier I leverage ratio measures Tier I capital to
average assets and must be a minimum of 4%.
The FDIC has adopted a risk-based insurance premium system based in part on a
corporation's capital adequacy. Under this system a depository institution is
classified as well capitalized, adequately capitalized, or undercapitalized
according to its regulatory capital levels. Subsequently, a financial
institution's premium levels are based on these classifications and its
regulatory supervisory rating (the higher the classification the lower the
premium). It is the Corporation's goal to maintain capital levels sufficient to
receive a designation of "well capitalized".
<PAGE> 18
Table 8
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Capital Ratios Regulatory
Minimum For
"Well September 30, December 31, September 30,
Capitalization" 1998 1997 1997
- --------------------------------------------------------------------------------------
Risk Based Capital:
<S> <C> <C> <C> <C>
Total Capital 10% 14.54% 13.47% 13.44%
Tier 1 6% 13.29% 12.22% 12.19%
Tier 1 Leverage 5% 10.45% 9.99% 9.99%
</TABLE>
INTEREST RATE SENSITIVITY MANAGEMENT
Interest rate sensitivity management seeks to maximize net interest income as a
result of changing interest rates, within prudent ranges of risk. The
Corporation attempts to accomplish this objective by structuring the balance
sheet so that re-pricing opportunities exist for both assets and liabilities in
roughly equivalent amounts at approximately the same time intervals. Imbalances
in these re-pricing opportunities at any point in time constitute a bank's
interest rate sensitivity. As a matter of practice, the Bank doesn't use
derivative transactions in managing interest rate risk.
An indicator of the interest rate sensitivity structure of a financial
institution's balance sheet is the difference between rate sensitive assets and
rate sensitive liabilities, and is referred to as "GAP".
Table 9 sets forth the distribution of re-pricing of the Corporation's earning
assets and interest bearing liabilities as of September 30, 1998, the interest
rate sensitivity GAP, as defined above, the cumulative interest rate sensitivity
GAP, the interest rate sensitivity GAP ratio (i.e. interest rate sensitive
assets divided by interest rate sensitive liabilities) and the cumulative
sensitivity GAP ratio. The table also sets forth the time periods in which
earning assets and liabilities will mature or may re-price in accordance with
their contractual terms. However, the table does not necessarily indicate the
impact of general interest rate movements on the net interest margin since the
re-pricing of various categories of assets and liabilities is subject to the
Corporation's needs, competitive pressures, and the needs of the Corporation's
customers. In addition, various assets and liabilities indicated as re-pricing
within the same period may in fact re-price at different times within such
period and at different rates or indices.
<TABLE>
<CAPTION>
TABLE 9 GAP ANALYSIS SEPTEMBER 30, 1998
(000's Omitted) Within Three One to After
Three Months- Five Five
Months One Year Years Years Total
<S> <C> <C> <C> <C> <C>
Earning Assets:
Interest Bearing Bank Deposits $ 0 $ 0 $ 0 $ 0 0
Federal Funds Sold 12,550 0 0 0 12,550
Investment Securities 7,734 5,495 16,115 34,215 63,559
Loans 52,872 10,734 79,398 21,027 164,031
Loans Held for Sale 88 0 0 10,514 10,602
-----------------------------------------------------------
Total Earning Assets $73,244 $16,229 $95,513 $65,756 $250,742
===========================================================
Interest Bearing Liabilities:
Interest Bearing Demand Deposits $35,622 $ 0 $0 $ 0 $ 35,622
Savings Deposits 17,390 0 0 44,685 62,075
Time Deposits Less than $100,000 23,464 32,423 23,319 234 79,440
Time Deposits Greater than $100,000 11,944 10,498 5,356 0 27,798
Other Borrowings 424 10 40 1,125 1,599
-----------------------------------------------------------
Total Interest Bearing Liabilities $88,844 $42,931 $28,715 $46,044 $206,534
===========================================================
Interest Rate Sensitivity GAP ($15,600) ($26,702) $66,798 $19,712 $ 44,208
Cumulative Interest Rate
Sensitivity GAP ($15,600) ($42,302) $24,496 $44,208
Interest Rate Sensitivity GAP 0.82 0.38 3.33 1.43
Cumulative Interest Rate
Sensitivity GAP Ratio 0.82 0.68 1.15 1.21
</TABLE>
<PAGE> 19
YEAR 2000
The Corporation is aware of current concerns throughout the business community
of reliance upon computer hardware and software programs that do not properly
recognize the year 2000 in date formats. The Corporation began to prepare for
the year 2000 project in 1997 and has a project committee which meets regularly
to plan and discuss test results and status reports. A Comprehensive review to
identify the systems affected by this issue was completed and a testing and
implementation plan was compiled and is currently being executed. The
Corporation anticipates that with current core systems, minor modifications to
auxiliary and vendor supplied systems all year 2000 compliance issues will be
resolved no later than the end of the first quarter of 1999. The Corporation
does not expect YEAR 2000 expenditures to have a material impact on operations,
cash flows, or financial condition of future periods.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The exhibits listed on the "Exhibit Index" on page 15 of this report are
incorporated herein by reference.
b. Report on Form 8-K
No reports on Form 8-K were filed for the quarter ended September 30, 1998.
<PAGE> 20
FENTURA BANCORP, INC.
1998 Quarterly Report on Form 10Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Location
- ------- --------------------------------------------------------------------- ------------
<S> <C> <C>
4.1 Dividend Reinvestment Plan *****
10.1 Equipment Sale Agreement between The State Bank and ITI, Inc.
dated May 31, 1989 *
10.2 Master Equipment Lease Agreement between The State Bank and
Unisys Finance Corporation dated September 6, 1989 *
10.3 Software License Agreement Between the State Bank and ITI, Inc.
dated July 3, 1989 *
10.4 Lease of Site for Automated Teller Machines between The State Bank
and Bryce Felch dated November 6, 1986 *
10.5 Lease of Site for Automated Teller Machines between The State Bank
and VG'S Food Center, Inc. dated January 1, 1992 *
10.6 Lease of Holly Branch Bank Site between The State Bank and Inter Lakes
Associates dated March 26, 1991 *
10.7 Lease of Davison Branch Bank Site between The State Bank and VG'S
Food Center, Inc. dated April 27, 1993 *
10.8 Lease of Clarkston Branch Site between The State Bank and Waldon
Properties, Inc. dated January 24, 199 ***
10.9 Lease of Site for Automated Teller Machines between The State Bank and
Russell and Joy Manser dated December 1, 1994 ***
10.10 Lease of Fenton Silver Parkway Branch site between The State Bank and
VG'S Food Centers dated March 26, 1996 ****
10.11 Lease of Davison (second) BRanch site between The State Bank and
VG'S Food Centers dated November 12, 1996 ******
10.12 Directors Stock Purchase Plan *****
10.13 Non-Employee Director Stock Option Plan *****
10.14 Form of Non-Employee Director Stock Option Agreement *****
10.15 Retainer Stock Plan for Directors *****
10.16 Employee Stock Option Plan *****
10.17 Form of Employee Stock Option Plan Agreement *****
10.18 Executive Stock Bonus Plan *****
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C> <C>
10.19 Stock Purchase Plan between The State Bank and Donald E.
Johnson, Jr., Mary Alice J. Heaton, and Linda J. LeMieux dated
November 27, 1996 ******
10.20 Severance Compensation Agreements between the registrant and Donald
L. Grill and Richard A. Bagnall dated March 20, 1997 *******
27.0 Financial Data Schedule
* Incorporated by reference to form 10-SB registration number 0-23550
** Incorporated by reference to form 8-K filed July 8, 1994
*** Incorporated by reference to form 10K-SB filed March 20, 1995
**** Incorporated by reference to form 10Q-SB filed May 2, 1996
***** Incorporated by reference to form 10K-SB filed March 27, 1996
****** Incorporated by reference to form 10K-SB filed March 20, 1997
******* Incorporated by reference to from 10Q-SB filed May 12, 1997
</TABLE>
<PAGE> 22
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Fentura Bancorp, Inc.
Date November 11, 1998 By /s/ Donald L. Grill
----------------- --------------------
Donald L. Grill
Director
President & CEO
Date November 11, 1998 By /s/ Ronald L. Justice
----------------- ----------------------
Ronald L. Justice
Vice President (Authorized Signer)
Chief Financial Officer
Cashier
<PAGE> 23
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,626
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,405
<INVESTMENTS-CARRYING> 11,154
<INVESTMENTS-MARKET> 11,395
<LOANS> 164,031
<ALLOWANCE> 2,659
<TOTAL-ASSETS> 287,810
<DEPOSITS> 233,994
<SHORT-TERM> 424
<LIABILITIES-OTHER> 2,657
<LONG-TERM> 1,175
0
0
<COMMON> 7,026
<OTHER-SE> 22,534
<TOTAL-LIABILITIES-AND-EQUITY> 267,810
<INTEREST-LOAN> 13,309
<INTEREST-INVEST> 2,424
<INTEREST-OTHER> 381
<INTEREST-TOTAL> 16,114
<INTEREST-DEPOSIT> 6,437
<INTEREST-EXPENSE> 6,561
<INTEREST-INCOME-NET> 9,553
<LOAN-LOSSES> 568
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 8,100
<INCOME-PRETAX> 3,823
<INCOME-PRE-EXTRAORDINARY> 3,823
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,645
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
<YIELD-ACTUAL> 5.19
<LOANS-NON> 1,307
<LOANS-PAST> 181
<LOANS-TROUBLED> 7
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,955
<CHARGE-OFFS> 977
<RECOVERIES> 113
<ALLOWANCE-CLOSE> 2,659
<ALLOWANCE-DOMESTIC> 2,659
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
