<PAGE>
United States Securities and Exchange Commission Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
COMMISSION FILE NUMBER: 000-22523
UNION NATIONAL BANCORP, INC. (Exact name of registrant as specified in its
charter)
Maryland 52-0514247
(State of incorporation) (I.R.S. identification number)
117 East Main Street, Westminster, MD 21157 (410) 848-7200
(Address of principal executive offices) (Telephone number)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to filing
requirements for the past 90 days.
YES (X) NO ( )
The number of shares of common stock outstanding as of July 14, 2000 is
1,966,228 shares.
<PAGE>
Table Of Contents
Union National Bancorp, Inc.
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Income 3
Consolidated Statements of Comprehensive Income 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis 5-9
</TABLE>
1
<PAGE>
PART 1 FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS
UNION NATIONAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and due from banks $ 13,440,462 $ 7,496,284
Interest bearing deposits with banks 229,113 23,983
Federal funds sold 3,085,610 799,873
Investment securities available for sale-at fair value 68,039,503 70,380,902
Investment securities held to maturity-at amortized cost - fair value of
$30,657,170 (2000) and $31,111,392 (1999) 31,338,014 32,619,087
Loans 174,662,849 179,720,903
Less: allowance for credit losses (1,805,232) (1,792,921)
------------- -------------
Loans - net 172,857,617 177,927,982
Premises and equipment 4,410,888 4,059,081
Accrued interest receivable 2,084,074 2,000,671
Goodwill 2,159,771 2,204,923
Deferred tax 1,606,299 2,536,222
Other assets 3,588,235 2,879,100
------------- -------------
TOTAL ASSETS 302,839,586 302,928,108
============= =============
LIABILITIES
Deposits:
Non-interest bearing deposits $ 28,653,647 $ 28,526,731
Interest bearing deposits $ 201,076,778 203,651,221
------------- -------------
TOTAL DEPOSITS 229,730,425 232,177,952
Short-term borrowings 19,524,416 18,269,157
Federal Home Loan Bank Borrowing 25,000,000 25,000,000
Accrued expenses and other liabilities 1,517,253 1,898,117
------------- -------------
TOTAL LIABILITIES 275,772,094 277,345,226
------------- -------------
STOCKHOLDERS' EQUITY
Common stock - $.01 par; 10,000,000 shares authorized;
1,966,228 shares on June 30, 2000 1,964,128 shares on
December 31, 1999 issued and outstanding 19,660 19,640
Capital surplus 18,407,353 16,831,138
Accumulated other comprehensive income (loss) (1,906,306) (2,020,588)
Retained earnings 10,546,784 10,752,692
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 27,067,491 25,582,882
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 302,839,586 $ 302,928,108
============= =============
</TABLE>
2
<PAGE>
UNION NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 3,757,322 $ 3,620,207 $ 7,523,297 $ 7,119,445
Interest and dividends on investment securities:
Taxable interest on mortgage backed securities 757,696 846,484 1,538,519 1,630,693
Other taxable interest & dividends 622,597 582,315 1,247,436 1,033,062
Nontaxable interest 223,217 224,532 447,421 447,923
Interest on deposits in other banks 797 155 1,568 525
Interest on federal funds sold 48,496 66,931 92,292 205,550
------------ ------------ ------------ ------------
TOTAL INTEREST INCOME 5,410,125 5,340,624 10,850,533 10,437,198
------------ ------------ ------------ ------------
INTEREST EXPENSE:
Interest on deposits:
Time certificates of deposit of $100,000 and more 246,248 221,727 537,911 532,514
Other deposits 1,679,677 1,831,295 3,370,268 3,529,282
------------ ------------ ------------ ------------
Total interest on deposits 1,925,925 2,053,022 3,908,179 4,061,796
Interest on short-term borrowings 254,153 187,090 498,872 313,747
Interest on Federal Home Loan Bank borrowings 333,843 285,822 682,992 568,302
------------ ------------ ------------ ------------
TOTAL INTEREST EXPENSE 2,513,921 2,525,934 5,090,043 4,943,845
------------ ------------ ------------ ------------
Net Interest Income 2,896,204 2,814,690 5,760,490 5,493,353
Provision for Credit Losses 38,000 15,000 95,000 74,000
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 2,858,204 2,799,690 5,665,490 5,419,353
------------ ------------ ------------ ------------
NONINTEREST INCOME:
Service charges on deposit accounts 319,662 292,952 605,711 561,242
Other service charges 81,663 58,818 168,915 146,248
Insurance service activities 417,991 114,417 751,905 114,417
Other income 18,527 19,584 41,719 40,131
------------ ------------ ------------ ------------
TOTAL NONINTEREST INCOME 837,843 485,771 1,568,250 862,038
------------ ------------ ------------ ------------
NONINTEREST EXPENSES:
Salaries and employee benefits 986,454 1,219,009 2,380,280 2,370,497
Occupancy expense 180,546 221,830 398,427 443,279
Equipment expenses 153,220 173,992 344,270 322,376
Other expenses 1,045,359 619,906 1,640,894 1,161,071
------------ ------------ ------------ ------------
TOTAL NONINTEREST EXPENSES 2,365,579 2,234,737 4,763,871 4,297,223
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,330,468 1,050,724 2,469,869 1,984,168
PROVISION FOR INCOME TAXES 373,661 292,905 683,061 543,923
------------ ------------ ------------ ------------
NET INCOME $ 956,807 $ 757,819 $ 1,786,808 $ 1,440,245
============ ============ ============ ============
BASIC AND DILUTED EARNINGS PER COMMON SHARE $ 0.49 $ 0.40 $ 0.91 $ 0.77
============ ============ ============ ============
DIVIDENDS PAID PER COMMON SHARE $ 0.120 $ 0.115 $ 0.24 $ 0.225
============ ============ ============ ============
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Net Income $ 956,807 $ 757,819 $ 1,786,808 $ 1,440,245
OTHER COMPREHENSIVE INCOME/(LOSS), BEFORE TAX:
Unrealized holding gains/(loss) arising during period (1,721,944) (1,895,716) (1,906,306) (2,505,670)
Less: reclassification adjustment for gains
included in net income 0 0 0 0
------------ ------------ ------------ ------------
Other comprehensive income/(Loss), before tax (1,721,944) (1,895,716) (1,906,306) (2,505,670)
Income tax (expense) benefit related to items of other
comprehensive income 576,944 732,126 648,144 967,690
------------ ------------ ------------ ------------
Other comprehensive income/(loss), net of taxes (1,145,000) (1,163,590) (1,258,162) (1,537,980)
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME (LOSS) $ (188,193) $ (405,771) $ (528,646 $ (97,735)
============ ============ ============ ============
</TABLE>
3
<PAGE>
UNION NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ending
June 30,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,786,808 $ 1,440,245
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses 95,000 74,000
Depreciation and amortization 427,136 414,090
Deferred income taxes 76,760 (967,667)
Net increase in accrued interest receivable (83,404) (179,346)
Net increase (decrease) in accrued expenses & other liabilities (380,863) 7,647
Other - net 150,872 1,995,442
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,072,309 2,784,411
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities -- (18,987,610)
Purchases of held to maturity securities -- (10,994,387)
Proceeds from maturities of available for sale securities 2,503,332 15,493,390
Proceeds from maturities of held to maturity securities 1,271,789 1,396,637
Net (increase) decrease in loans 4,975,365 (9,662,375)
Bank premises and equipment acquired (778,943) (277,107)
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 7,971,543 (23,031,452)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits (2,447,527) 10,280,316
Proceeds form dividend reinvestment plan 55,180 112,623
Net increase in short-term borrowings 1,255,259 3,692,949
Cash dividends paid (471,719) (426,187)
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,608,807) 13,659,701
------------ ------------
Net Increase (Decrease) In Cash and Cash Equivalents 8,435,045 (6,587,340)
Cash and Cash Equivalents At Beginning Of Period 8,320,140 14,864,586
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,755,185 $ 8,277,246
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 5,114,852 $ 4,912,632
============ ============
Income taxes paid 683,061 544,000
</TABLE>
4
<PAGE>
Union National Bancorp, Inc.
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - The accompanying unaudited consolidated financial statements for Union
National Bancorp, Inc. ("Company") have been prepared in accordance with the
instructions for Form 10-Q and, therefore do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. The interim financial statements have been prepared
utilizing the interim basis of reporting and, as such, reflect all adjustments
which are normal and recurring in nature and are, in the opinion of management,
necessary for fair presentation of the results for the periods presented. The
results of operations for the interim periods are not necessarily indicative of
the results for the full year.
Note 2 - Recent accounting pronouncements: The FASB has issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging" for the year ending on or after June 15,1999. Union National Bancorp
has reviewed this pronouncement and will adopt this standard when it is
applicable to its operations as required.
Note 3 - On January 20, 2000, the Company entered into an agreement and plan of
affiliation with Mercantile Bancshares Corporation. Under the proposal, the
Company's shareholders will receive 1.15 shares of Mercantile's $2.00 par common
stock for each share of common stock of the Company. Consummation of this
acquisition and merger was completed on July 13, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW
This section of the report contains forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including
statements relating to the Company's beliefs, expectations, anticipations and
plans regarding, among other things, general economic trends. interest rates,
product expansions and other matters. Such statements are subject to numerous
uncertainties, such as federal monetary policy, inflation, employment,
profitability and consumer confidence levels, the health of the real estate and
construction market in the Company's market area, the Company's ability to
develop and market new products and to enter new markets, and other factors, and
as such, there can be no assurance that future events will develop in accordance
with the forward looking statements contained herein.
Union National Bancorp, Inc. (`the Company") began operations as the
parent company of its sole subsidiary, The Union National Bank of Westminster,
("the Bank") in 1994. Union National Bank has conducted the business of banking
since 1816. The Bank is the primary possession of the holding company. Union
National Bank provides a full range of banking and certain non-banking services
to individuals and businesses. The Banks principal market area includes Carroll
County, Maryland and the surrounding regions. The assets and liabilities of the
holding company are mainly its investment in Union National Bank.
Union National Bancorp's principal source of income is from dividends received
from Union National Bank.
Total assets were $302.8 million at June 30, 2000, a decrease of less than
.1% from $302.9 at year-end December 31, 1999. Loan and deposit balances have
decreased slightly since the announcement of the merger agreement in January.
Net income rose $346,563 or 24.1% in the first six months of 2000 to
$1,786,808 from net income of $1,440,245 in the same period of 1999. The
annualized return on average assets for the six month period ended June 30, 2000
and 1999 was 1.18% and 0.97%, respectively. The annualized return on average
equity was 13.78% for the six months ended June 30, 2000 and was 11.96% for the
six months ended June 30, 1999.
SECURITIES PORTFOLIO
Total holdings in the investment portfolio at June 30, 2000 were
$99,377,517 and at year-end 1999 were $102,999,989. In aggregate, investment
securities decreased $3,622,472 or 3.5% in the first six months of 2000. The
investment portfolio is comprised of investment securities available for sale,
and investment securities held to maturity. Available for sale represent those
securities that management may sell as part of its asset/liability management
strategy or that may be sold in response to changing interest rates or liquidity
needs. Held to maturity represent securities that are intended to be held until
they mature. The total portfolio has a duration of 5.09 years on June 30, 2000.
This represents estimates of the actual life on investment instruments.
Union National Bank formed a passive investment company in June of 1998,
Union National Delaware Holding, Inc., (UNDH). First Union is administering
general services for Union National Delaware Holding. Union National Bank has in
aggregate in its portfolio $38,485,441 as of June 30, 2000. Union National
Delaware Holding has in aggregate in its portfolio $60,892,076 as of June 30,
2000. The passive investment company will reduce cost, producing a benefit to
Union National Bank's net income.
5
<PAGE>
The following table presents the securities portfolios mix as June 30, 2000
when compared to year-end 1999:
<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
June 30,2000 December 31,1999 June 30,2000 December 31,1999
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
U.S. government securities and agencies $22,527,355 $22,813,981 $12,493,919 $12,493,956
State & county municipals 529,675 585,698 17,716,719 18,344,666
Government mortgaged-backed 42,495,096 44,468,124 1,127,376 1,780,465
Other securities 2,487,377 2,513,093 -- --
----------- ----------- ----------- -----------
Total Investment Securities $68,039,503 $70,380,902 $31,338,014 $32,619,087
=========== =========== =========== ===========
</TABLE>
LOAN PORTFOLIO
Total loans outstanding on June 30, 2000 were $174,662,849 and on December
31, 1999 were $179,720,903. The loan portfolio decreased $5,058,054 or 2.8% in
the first six months of the year. The loan portfolio represented 57.7% of total
assets on June 30, 2000 and 59.3% of total assets on December 31, 1999.
The table below presents the loan portfolio mix as of June 30, 2000 compared to
year ended 1999:
<TABLE>
<CAPTION>
June 30,2000 December 31,1999
------------ ----------------
<S> <C> <C>
Construction and land development $ 5,483,724 $ 4,400,853
Residential real estate - mortgages 53,002,082 50,735,954
Commercial real estate - mortgages 59,789,649 64,920,155
Commercial 31,322,682 33,422,226
Consumer 25,364,977 26,513,490
------------- -------------
Gross Loans 174,963,114 179,992,678
Net deferred loan fees and cost (300,265) (271,775)
------------- -------------
Total Loans 174,662,849 179,720,903
============= =============
</TABLE>
Union National Bancorp's loan portfolio is comprised of commercial and
residential real estate secured loans, commercial loans, and consumer
installment loans. Most residential mortgages are held for investment purposes
and the majority have a loan to value ratio of less than 80%. For those having a
loan to value ratio greater than 80%, Private Mortgage Insurance is required to
reduce risk. Union National Bancorp is involved in selling mortgages on the
secondary market. Commercial real estate-secured, lines of credit, tax-exempt
loans through local municipalities, and demand notes consist of well-seasoned
credits and new ventures that are well collateralized. The consumer portfolio is
comprised of installment loans for purposes such as vehicle purchases, debt
consolidation, home improvement, and indirect auto loans purchased from
approximately six automobile dealerships and two farm supply equipment dealer.
Union National Bancorp does not engage in foreign lending, and involvement with
speculative real estate and land development is minimal. Union National Bancorp
strives to meet the needs of the community by lending in its market area.
Management continues to review rates, terms, and alternative opportunities to
remain competitive in our market, while continuing to assess credit worthiness
and risk.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses on June 30, 2000 was $1,805,232 and on
December 31, 1999 was $1,792,921. The ratio of allowance to total loans was
1.03% for the first six months of 2000 compared to 1.00% at year-end 1999.
6
<PAGE>
Analysis of the Allowance for Credit Losses
<TABLE>
<CAPTION>
Description Amount
<S> <C> <C>
Balance at beginning of period 1/1/99 $1,792,921
----------
Loans charged off (108,187)
Recoveries 25,500
Provision charged to operating expenses 95,000
=======
Balance at end of period 6/30/99 $1,805,232
==========
Net Charge-offs as a percentage of average total First six months .94%
loans
</TABLE>
The methodology used in determining the allowance is calculated quarterly
and is applied in accordance with Banking Circular 201. Its assesses risk based
on the following categories: (1) levels of and trends in delinquencies and
nonaccruals, (2) trends in volume and terms of loans, (3) effects of any change
in lending policies and procedures, (4) experience, ability, and depth of
lending management and staff, (5) national and local economic trends and
conditions, and (6) concentrations of credit that may effect loss experience. In
addition, historical loss data is also considered. A "reserve range" is
determined from this process. A comparison is then made of the actual allowance
balance to the estimated potential loss in the entire portfolio to determine the
adequacy of the current reserve as well as a current period provision for credit
losses.
DEPOSITS
Union National Bancorp uses deposits as the primary source for funding
asset growth. Union National Bancorp offers individuals, businesses and
non-profit organizations a variety of accounts. These accounts, including
checking, savings, money market, and certificates of deposits, are obtained
primarily from the communities that Union National Bancorp serves.
Total deposits were $229,730,425 on June 30, 2000 and $232,177,952 on
December 31, 1999. This represents a decrease of $2,447,527 or 1.05% in the
first 6 months of 2000. Certificates of deposit, which declined $10 million or
8.0%, represent 49.6% of the total deposit portfolio as of June 30, 2000.
Checking accounts, money market, and regular savings experienced an increase of
$7.6 million or 6.9%.
SHORT-TERM BORROWINGS
Short-term borrowings consist of federal funds purchased, repurchase
agreements, and borrowings from the Federal Home Loan Bank and correspondent
bank lines.
Securities sold under agreement to repurchase have averaged $21,559,638
during the first six months of 2000 compared to $19,051,891 at year-end 1999. At
June 30, 2000 they totaled $19,524,416, and $18,269,157 at year-end 1999.
Union National Bank has borrowed $25,000,000 from the Federal Home Loan
Bank to promote further growth in the loan and security portfolios. Management
believes the spread between the cost of funds on these borrowing, and investment
return in the loan and securities portfolios will continue to increase Union
National Bank's net interest margin.
LIQUIDITY
Traditionally, Union National Bank has maintained a strong liquidity
position due to its concentration of core deposits such as regular savings and
checking accounts. Union National Bank considers a high percentage of its money
market accounts and certificates of deposit as core deposits. Federal funds sold
are Union National Bank's most liquid earning asset. Other sources include
securities classified as available for sale. In addition to these sources, Union
National Bank has lines of credit totaling $50 million available from
correspondent banks as of June 30, 2000, of which 27 million are already in use.
On June 30, 2000 securities available for sale and federal funds sold
totaled $71,125,113 compared with $71,180,775 on December 31, 1999. Liquidity is
also provided by managing the maturities of loans, securities, and certificates
of deposit.
7
<PAGE>
CAPITAL MANAGEMENT
The Company's capital position is presented in the following table:
<TABLE>
<CAPTION>
June 30, December 31 For Capital
2000 1999 Adequacy Purposes
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier 1 capital to risk weighted assets 12.4% 13.0% 4.0%
Total capital to risk weighted assets 13.6% 14.0% 8.0%
Capital leverage ratio 8.4% 8.6% 4.0%
</TABLE>
NET INTEREST INCOME
Net interest income is the major component of Union National Bank's
earnings, and it consists of the excess of interest income from earning assets
less the expense of interest-bearing liabilities. Earning assets are composed
primarily of loans and securities, while deposits and short-term borrowings
represent the major portion of interest-bearing liabilities. Changes in the
volume and mix of these assets and liabilities, as well as changes in the yields
earned and rates paid, are determinants of the changes in net interest income.
The net interest margin is calculated based on tax-equivalent net interest
income (income plus the tax savings from tax-exempt loans and investments)
divided by average earning assets and represents Union National Bank's net yield
on its earning assets.
For the first six months, net interest income before provision for loan
losses was $5,760,490 in 2000 and $5,493,353 for the same period in 1999. This
represents an increase of $267,137 or 4.9% over the same period in 1999.
Managing the net interest margin is one of the primary focuses of the Asset /
Liability Committee. Monthly, the committee examines the "gap" and its
assumptions for their validity, and assesses the margin's movement relative to
these factors. The net interest spread, the difference between the yield on
earning assets and the cost of interest bearing liabilities, improved slightly
to 3.66% in the first six months of 2000 from 3.64% at December 31, 1999.
For the three months ended June 30, 2000, net interest income before
provision for loan losses were $2,896,204 and $2,814,690 for the three months
ended June 30, 1999. This is a $81,514 increase or 2.9% for this period.
<TABLE>
<CAPTION>
AVERAGE CONSOLIDATED BALANCE SHEETS JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 7,146,758 $ 7,114,822
Investments 101,071,079 104,699,615
Federal funds sold 3,060,247 5,925,000
Net loans 176,219,944 169,481,614
Other assets 14,249,765 10,024,197
------------- -------------
TOTAL ASSETS $ 301,747,791 $ 297,245,248
============= =============
LIABILITIES
Deposits 227,225,798 228,594,467
Other borrowings 46,559,638 42,623,837
Other liabilities 2,038,329 1,941,495
------------- -------------
TOTAL LIABILITIES $ 275,823,764 $ 273,159,799
============= =============
Common stock 19,654 19,133
Capital surplus 16,868,766 15,359,566
Retained earnings 11,303,000 9,702,629
Accumulated other comprehensive income (2,267,393) (995,879)
------------- -------------
TOTAL CAPITAL $ 25,924,027 $ 24,085,449
TOTAL LIABILITIES & CAPITAL $ 301,747,791 $ 297,245,248
============= =============
</TABLE>
NONINTEREST INCOME
Total noninterest income for the first six months of 2000 was $1,568,250 up
$706,212 or 81.9% from $862,038 for the first six months in 1999. Total
noninterest income for the three months ended June 30, 2000 and 1999
respectfully was $837,843 and
8
<PAGE>
$485,771, an increase of $352,072 or 72.5%. Noninterest income is divided into
two areas, service charge income and service fee income. In comparison to 1999
figures, service charges on deposit accounts increased $67,136 in the first half
of 2000 and $49,555 for the three months ended June 30,2000. Service fee income
increased $639,076 in the first half of 2000, and $305,217 for the three months
ended June 30, 2000. The increase is primarily due to insurance service
commissions from the Barnes-Bollinger acquisition.
NONINTEREST EXPENSE
Noninterest expense for the first six months of 2000 was $4,763,871 an
increase of $466,648 or 10.9% from $4,297,223 in 1999. Noninterest expense for
the three months ended June 30,2000 was $2,365,579 an increase of $130,842 or
5.9% from $2,234,737 for the same time period of 1999. Three major areas that
make up noninterest expense are salaries and benefits, occupancy and expense,
and other expense. Management has concentrated on reducing noninterest expense
while still providing quality products and customer service.
Salaries and benefits for the first six months of 2000 totaled $2,380,280,
up $9,783 or 0.4% from $2,370,497 in the first six months of 1999. For the three
months ended June 30, 2000, salaries and benefits were $986,454, down $232,555
or 19.1% from $1,219,009 for the three months ended June 30, 1999. Personnel
expense, the largest segment of noninterest expense, represented 50.0% of the
total for the six months ended June 30, 2000
Occupancy and equipment expenses for the first six months totaled $742,697
in 2000, a decrease of $22,958 or 3.0% from $765,655 for the first six months of
1999. For the three months ended June 30, 2000, occupancy and equipment was
$333,766, down $62,056 or 15.7% from $395,822 for the three months ended June
30, 1999. Depreciation expense represents 57.5% of occupancy and equipment
expense. Depreciation expense for the first half of 2000 was $440,339 up $31,891
or 7.8% from $408,448 in the same period in 1999.
Other expense totaled $1,640,895 for the first six months of 2000, an
increase of $479,824 from $1,161,071 for the first six months of 1999. For the
three months ended June 30, 2000, other expense was $1,045,360, up $425,454 or
68.6% from $619,906 for the three months ended June 30,1999. The increase is
primarily due to insurance service commissions from the Barnes-Bollinger
acquisition.
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.
Union National Bancorp, Inc. (Registrant)
July 28, 2000 BY: /s/ STEVEN L.WANTZ
----------------------
Virginia W. Smith
Acting President and Chief Operations Officer
July 28, 2000 BY: /s/ GABRIELLE M. PEREGOY
----------------------------
Gabrielle M. Peregoy
Vice President
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