<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
_________________________________________________________________
FORM 10-QSB
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE EXCHANGE ACT
For the transition period from _____ to _____.
Commission File Number: 0-24926
-------
CECIL BANCORP, INC.
-------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1883546
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
127 North Street
Elkton, Maryland 21921
---------------- -----
(Address of principal (Zip Code)
executive office)
(410) 398-1650
--------------
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or 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
------- -------
Number of shares outstanding of common stock
as of September 30, 1998
$0.01 par value common stock 598,337 shares
- ---------------------------- --------------
Class Outstanding
1<PAGE>
<PAGE>
CECIL BANCORP, INC., AND SUBSIDIARIES
CONTENTS
PART I. FINANCIAL INFORMATION PAGE
----
ITEM 1. Financial Statements (Unaudited)
Consolidated Condensed Statements of
Financial Condition - September 30, 1998
and December 31, 1997 3-4
Consolidated Condensed Statements of
Operations for the Nine Months Ended
and Three Months Ended September 30, 1998
and September 30, 1997 5-7
Consolidated Condensed Statement of
Cash Flows for the Nine Months Ended
September 30, 1998 and September 30, 1997 8-9
Notes to Consolidated Condensed
Financial Statements 10
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11-22
PART II. OTHER INFORMATION 23
2<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
ASSETS
------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997 (1)
------------ ------------
(Unaudited)
<S> <C> <C>
Cash $ 1,982,904 $ 1,438,218
Cash - interest bearing 2,849,933 2,519,230
Federal funds sold 700,000 571,703
Investment securities
Securities held-to-maturity 5,003,500 5,842,776
Securities available-for-sale at
estimated market value 3,828,395 2,913,708
Mortgage-backed securities
Securities held-to-maturity 2,249,125 2,759,534
Securities available-for-sale at
estimated market value 945,535 1,405,483
Loans receivable, net 74,601,445 72,016,049
Loans held for sale 2,906,291 1,362,969
Real estate owned 356,480 455,568
Office properties, equipment and leasehold
improvements at cost, less accumulated
depreciation and amortization 1,044,777 1,005,974
Stock in Federal Home Loan Bank of
Atlanta - at cost 672,300 652,700
Accrued interest receivable 675,275 662,992
Mortgage servicing rights 110,341 103,605
Prepaid expenses 64,883 37,455
Deferred taxes 99,816 52,869
Other assets 22,806 65,535
----------- -----------
TOTAL ASSETS $98,113,806 $93,866,368
=========== ===========
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
3<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997 (1)
------------ ------------
(Unaudited)
<S> <C> <C>
LIABILITIES
Savings deposits $85,128,710 $80,595,893
Advance payments by borrowers for
property taxes and insurance 528,017 842,358
Employee stock ownership debt 269,556 269,556
Other liabilities 602,288 896,226
Advances from Federal Home Loan
Bank of Atlanta 1,750,000 1,750,000
----------- ------------
TOTAL LIABILITIES 88,278,571 84,354,033
----------- ------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $.01 par value
Authorized: 4,000,000 shares
Issued and outstanding: 598,337
shares at September 30, 1998
and 592,869 at December 31, 1997 5,983 5,929
Additional paid in capital 4,633,395 4,561,520
Employee stock ownership debt (269,556) (269,556)
Deferred compensation - Management
Recognition Plan (80,676) (118,361)
Retained earnings, substantially
restricted 5,514,011 5,292,341
Accumulated other comprehensive income 32,078 40,462
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 9,835,235 9,512,335
----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $98,113,806 $ 93,866,368
=========== ============
<FN>
(1) Restated due to pooling of interest transaction completed in the quarter
ended September 30, 1998.
</FN>
</TABLE>
4<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 (1) 1998 1997 (1)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable $1,639,886 $1,583,499 $4,863,567 $4,609,495
Mortgage-backed securities 52,957 73,885 178,840 234,743
Investment securities 147,143 139,572 425,247 395,144
Other interest-earning assets 71,136 60,307 225,944 204,679
---------- ---------- ---------- ----------
Total interest income 1,911,122 1,857,263 5,693,598 5,444,061
INTEREST EXPENSE
Interest expense on deposits 1,018,419 977,144 2,990,675 2,835,206
Borrowings 22,587 24,932 87,115 124,684
---------- ---------- ---------- ----------
Total interest expense 1,041,006 1,002,076 3,077,790 2,959,890
---------- ---------- ---------- ----------
Net interest income 870,116 855,187 2,615,808 2,484,171
Provision for loan losses 22,500 30,500 67,500 66,500
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 847,616 824,687 2,548,308 2,417,671
NONINTEREST INCOME (LOSS)
Loan service charges 31,283 7,766 49,234 25,160
Dividends on FHLB stock 12,571 7,919 36,333 23,225
Gain on sale of loans 18,728 33,526 41,320
Gain on sale of office properties
and equipment 44,769 44,769
Other 21,585 65,145 78,041 140,119
Checking account fees 45,784 30,809 115,588 89,062
Commission income 19,486 58,999
---------- ---------- ---------- ----------
Total noninterest income 130,709 175,136 371,721 363,655
NONINTEREST EXPENSE
Compensation and benefits 269,833 299,794 954,014 930,567
Occupancy expense 42,209 35,183 109,120 106,037
Equipment and data processing
expense 65,105 56,708 187,668 162,679
SAIF deposit insurance premium 21,045 26,954 62,719 60,338
Merger expense 201,038 252,174
Other 211,522 158,885 557,954 504,244
---------- ---------- ---------- ----------
Total noninterest expense 810,752 577,524 2,123,649 1,763,865
---------- ---------- ---------- ----------
Income before income taxes 167,573 422,299 796,380 1,017,461
INCOME TAXES
Current 206,350 175,645 455,020 401,048
Deferred (32,425) (138) (51,019) 3,511
---------- ---------- ---------- ----------
Total income taxes 173,925 175,507 404,001 404,559
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (6,352) $ 246,792 $ 392,379 $ 612,902
========== ========== ========== ==========
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
5<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 (1) 1998 1997 (1)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Earnings per common share and
common share equivalent $ (.01) $ .44 $ .66 $ 1.10
=========== =========== =========== ===========
Earnings per common share -
assuming full dilution $ (.01) $ .55 $ .64 $ 1.37
=========== =========== =========== ===========
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
6<PAGE>
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CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 (1) 1998 1997 (1)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $ (6,352) $ 246,792 $ 392,379 $ 612,902
OTHER COMPREHENSIVE GAIN (LOSS)
Unrealized gains (losses) on
investment securities, net
of deferred taxes 2,639 21,713 (8,384) 19,705
--------- ---------- --------- ---------
COMPREHENSIVE INCOME $ ( 3,713) $ 268,505 $ 383,995 $ 632,607
========= ========== ========= =========
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
7<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1997 (1)
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest and fees received on loans
and investments $ 5,978,965 $ 5,620,247
Cash paid to suppliers and employees (2,189,781) (1,669,842)
Proceeds from sale of loans 1,249,567 2,456,236
Origination of loans held for sale (2,959,600) (2,115,800)
Interest paid (3,077,790) (2,959,890)
Income taxes paid (541,567) (171,186)
------------ ------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (1,540,206) 1,159,765
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investment
securities 6,645,000 5,500,000
Proceeds from sale of securities available-
for-sale 588,322
Proceeds from maturities of mortgage-backed
securities 967,066 885,894
Purchases of investment securities held-to-
maturity (5,798,863) (4,995,156)
Purchases of investment securities available-
for-sale (886,939) (518,488)
Loans originated (24,888,679) (17,749,146)
Principal collected on loans 22,436,020 12,950,830
Purchases of office properties, equipment
and leasehold improvements (106,924) (201,031)
Proceeds from sale of office properties, equipment
and leasehold improvements 129,295
Purchase of real estate owned (146,071) (173,097)
Proceeds from sale of real estate owned 245,159 227,604
Purchase of stock in Federal Home Loan
Bank of Atlanta (19,600) (15,200)
------------ ------------
NET CASH USED BY
INVESTING ACTIVITIES (1,553,831) (3,370,173)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts,
and savings accounts 40,361,688 20,860,966
Proceeds from sales of certificates 5,569,556 6,870,100
Payments of maturing certificates of deposits (41,398,427) (23,501,577)
Decrease in advance payments by borrowers for
property taxes and insurance (314,341) (264,169)
Repayments to Federal Home Loan
Bank of Atlanta (1,500,000)
Dividends paid (131,553) (162,382)
Proceeds from issuance of common stock 10,800 14,626
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,097,723 2,317,564
------------ ------------
NET INCREASE IN CASH 1,003,686 107,156
CASH
BEGINNING OF PERIOD 4,529,151 3,785,459
------------ ------------
END OF PERIOD $ 5,532,837 $ 3,892,615
============ ============
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
7<PAGE>
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CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Continued)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
1998 1997
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income $ 392,379 $ 612,902
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Gain on sale of office properties, equipment
and leasehold improvements (44,769)
Depreciation 68,121 54,933
Provision for loan losses 67,500 66,500
Amortization of investment security
premiums (discounts) (6,985) (7,432)
Stock dividends (26,824) (22,912)
Increase in accrued interest receivable (12,283) (71,036)
(Increase) decrease in deferred tax asset (52,840) 59,379
(Increase) decrease in prepaid expenses (27,428) 33,380
Increase in mortgage servicing rights (6,736)
(Increase) decrease in other assets 42,729 (5,897)
Increase (decrease) in other liabilities (293,938) 61,439
(Increase) decrease in loans held for sale (1,743,559) 299,116
Distribution from MRP Trust 61,076 44,184
Increase in deferred tax liability 79,978
Cash paid in lieu of fractional shares (1,418)
----------- -----------
(1,932,585) 546,863
----------- -----------
($1,540,206) $1,159,765
=========== ===========
<FN>
(1) Restated due to pooling of interest transaction
completed in the quarter ended September 30, 1998.
</FN>
</TABLE>
9<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
SEPTEMBER 30, 1998
------------------
(1) BASIS OF PRESENTATION
---------------------
(1) Summary of Significant Accounting Policies
------------------------------------------
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the
accounting policies in effect at December 31, 1997, as set
forth in the annual consolidated financial statements of
Cecil Bancorp, Inc. and Subsidiaries (the "Bank"). In the
opinion of Management, all adjustments necessary for a
fair presentation of the consolidated financial statements
are of a normal recurring nature and have been included.
The results of operation for the nine month periods ended
September 30, 1998 and 1997, are not necessarily
indicative of the results to be expected for the full
year.
(2) Earnings per Share
------------------
Earnings per common share is computed by dividing net
income by the weighted average number of shares of common
stock outstanding. The weighted average number of shares
of common stock and common stock equivalents was 597,964
for the nine months ended September 30, 1998. The
weighted average number of shares of common stock and
common stock equivalents for computation of earnings per
common shares - fully diluted was 609,811 for the nine
months ended September 30, 1998.
(3) Other Financial Information
---------------------------
Simon, Master & Sidlow, P.A., Cecil Bancorp's independent
public accountants, performed a limited review of the
financial data presented on pages 1 through 5 inclusive.
The review was performed in accordance with standards for
such reviews established by the American Institute of
Certified Public Accountants. The review did not
constitute an audit; accordingly, Simon, Master & Sidlow,
P.A. did not express an opinion on the aforementioned
data. The financial data includes any material
adjustments or disclosures proposed by Simon, Master &
Sidlow, P.A. as a result of their review.
(4) Restatement
-----------
Effective September 30, 1998, Cecil Bancorp, Inc. issued
shares of its common stock to acquire Columbian Bank, A
Federal Savings Bank ("Columbian") through a transaction
accounted for as a pooling of interests. As a result of
the pooling, the accompanying financial statements have
been restated for all periods to include the statements of
financial position, income and cash flows of Columbian.
10<PAGE>
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CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Cecil Bancorp, Inc. ("the Company") was incorporated under the
laws of the State of Maryland in July 1994. On November 10,
1994, Cecil Federal Savings Bank ("Cecil Federal") converted from
mutual to stock form and reorganized into the holding company
form of ownership as a wholly owned subsidiary of the Company.
As a result of the conversion and reorganization, the Company
issued and sold 481,361 shares of its common stock at a price of
$10.00 per share to its depositors, borrowers, stock benefit
plans and the public, thereby recognizing net proceeds of
$4,315,057. The Company's common stock is registered with the
Securities and Exchange Commission ("SEC") under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"). The
Company is classified as a unitary savings institution holding
company subject to regulation by the Office of Thrift
Supervision ("OTS") of the Department of the Treasury.
On May 29, 1998, the Company entered into a merger agreement to
acquire Columbian Bank, FSB., a $30.0 million savings bank
located in Havre de Grace, Maryland.
The merger agreement provides for the acquisition of Columbian
Bank, A Federal Savings Bank ("Columbian") by the Company.
Columbian will exist as a wholly-owned subsidiary of Cecil
Bancorp, and each outstanding share of Columbian's common stock
will be automatically converted into the right to receive shares
of Company Common Stock (and cash in lieu of fractional shares),
based upon an exchange ratio of 1.7021. Together these
transactions are referred herein as the "Merger". Consummation
of the merger occurred on September 30, 1998.
The Company is primarily engaged in the business of directing,
planning and coordinating the business activities of Cecil
Federal and Columbian ("the Banks"). Accordingly, the
information set forth in this report, including financial
statements and related data, relates primarily to the Banks' and
their subsidiaries. In the future, the Company may become an
operating company or acquire or organize other operating
subsidiaries, including additional financial institutions.
Currently, the Company does not maintain offices separate from
those of Cecil Federal and employs one person other than its
officers who are not separately compensated for such service.
The Banks' are principally engaged in the business of
attracting savings deposits from the general public and
investing those funds in loans for the purchase and construction
of one-to-four family residential real estate, primarily
located in Cecil and Harford County, Maryland, and in
originating to a lessor extent, land loans, commercial real
estate loans, equity loans, consumer loans and student loans.
Also, during periods of reduced loan demand, the Bank invests
excess funds in mortgage-backed securities and other investment
securities, such as U.S. Treasury obligations and overnight
funds in the Federal Home Loan Bank of Atlanta.
The Banks' profitability is primarily dependent upon its net
interest income, which is the difference between interest earned
on its loan and investment portfolios and the cost of funds or
interest paid on deposits. Net interest income is directly
11<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
affected by the relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or
paid on these balances.
To a lesser extent, the Banks' profitability is also affected
by the level of noninterest income and expense. Noninterest
income consists primarily of service fees and gains on sales of
investments. Noninterest expenses include salaries and
benefits, occupancy expenses, equipment and data processing
expenses, deposits insurance expenses and other operating
expenses.
The most significant outside factors influencing the operations
of Cecil Federal, Columbian and other banks include general
economic conditions, competition in the local marketplace and
related monetary and fiscal policies of agencies that regulate
financial institutions. More specifically, lending activities
are influenced by the demand for real estate financing and other
types of loans, which in turn are affected by the interest rates
at which such loans may be offered and other factors affecting
loan demand and funds availability, while the costs of funds
(deposits) are influenced by interest rates on competing
deposits and general market rates of interest.
FINANCIAL SERVICES
- ------------------
On September 1, 1997, Cecil Financial Services, a service
corporation of Cecil Federal Savings Bank, began offering a full
range of brokerage and investment services in all our branches,
through a partnership with UVEST Investment Services.
With this expansion, Cecil Federal will now offer maximum
convenience in servicing customer needs. Mr. Roger L. Owens,
CLU, has been hired as investment representative. He will seek
to provide comprehensive investment products tailored to meet
current and future individual financial needs.
Cecil Financial, Inc. has partnered in this venture with UVEST
Investment Services, a registered broker-dealer and member of
both the National Association of Securities Dealers (NASD) and
the Securities Investment Protection Corporation (SIPC).
Headquartered in Charlotte, NC, UVEST has been providing bank-
based investment services throughout the Southeast since 1982.
Year 2000 Issues
- ----------------
As the Year 2000 approaches, there is growing concern that many
computers and computer systems could malfunction. Banks, as
with many other industries, could be faced with errors in their
account processing, payment systems, ATM systems, security
systems, or virtually any system controlled by a computer.
The cause is rooted in the programming of the date field within
computer systems and software. For many years, computer systems
were designed to record only the last two digits of the year in
the date field in order to save costly data storage space. This
programming concept works well while we are still in the 1900's.
This concept does not work well for the Year 2000, as that year
could be read by a computer to mean 1900.
Bank regulators and computer system experts are emphasizing
systems and software products be implemented and tested for Year
2000 readiness. This task is a monumental undertaking for all
parties involved from vendor service providers, computer systems
12<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
manufacturers, software providers, and finally the Bank. Cecil
Federal and Columbian are preparing for the millennium.
The Banks' have prepared an action plan to begin evaluating our
systems and software products. The Bank's plan consists of the
following:
Problem Awareness: The Banks' are aware of the problems that
could potentially arise with the year 2000 problem. The Banks'
have analyzed what systems and software need to be reviewed.
Assessment Phase: The Banks' have made contacts with all its
third party vendors to assess exposure to problems. These
include those that provide Account & Item Processing; System
Hardware Setup and ATM Software; General Ledger Software; ATM
Transaction Processing; the ATM Service Provider; ATM Software;
Financial Reporting Software; Fed-Line Software; On-Line Bank
Service Software; Loan Sales Software; Loan Documentation
Software; HMDA/Geocoding Software; Payroll Processing; Computer
Hardware; Spreadsheet Software; and Word Processing Software.
Vendors have been proactive to the Year 2000 problem. The
Banks' vendors have in place or will have in place procedures to
minimize risk to the Year 2000 problem by December 31, 1998.
Renovation Phase: Initial steps have been completed to assure
compliance with the Year 2000 problem. New front-end
processing system has been installed in the third quarter of
1998 at Cecil Federal, and is to be installed at Columbian prior
to January 31, 1999. This system is already Year 2000
compliant. This system replaces the Banks' previous teller
system which was not compliant.
Validation Phase: The Banks' will validate any decision making
by thoroughly assessing the systems compatibility with the Year
2000 issues. Validations will be recorded and presented to the
Board of Directors. The target date for the validation phase is
December 31, 1998. Software and system testing will be done on
an ongoing basis through the end of 1998.
Implementation Phase: The Banks' will monitor the implementation
of the Year 2000 assessment and report results to the Board of
Directors. The Banks' will continue to stress with its vendors
the importance of this project. The Banks' will keep in
continual contact with its vendors until a final solution and
implementation has been completed. All plans are to be
completed as outlined above. The implementation phase is to be
completed by December 31, 1998.
Contingency Plan: The Banks' have prepared a contingency plan
that allows for the manual processing of transactions and
reporting. The plan designates the training and implementation
of the manual operation in a worst case scenario.
The Contingency Plan is being updated in conjunction with our
Disaster Recovery Plan. We plan on updating both plans by
October 1998.
13<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Customer Awareness: The Banks' has also undertaken an effort to
reach all our business customers via mail to explain how the
Year 2000 issue affects their business. All businesses need to
be aware of the Year 2000 issue and make attempts to correct any
possible problems.
The employees were also made aware of the process and have been
notified on who is responsible for Year 2000 compliance. A memo
was sent to all employees to assist them with their Year 2000
efforts.
ASSET /LIABILITY MANAGEMENT
- ---------------------------
The ability to maximize net interest income is largely
dependent upon the achievement of a positive interest rate
spread (the difference between the weighted average interest
yields earned on interest-earning assets and the weighted
average interest rates paid on interest-bearing liabilities)
that can be sustained during fluctuations in prevailing interest
rates. Cecil Federal and Columbian's asset/liability management
policies are designed to reduce the impact of changes in
interest rates on its net interest income by achieving a more
favorable match between the maturities and repricing dates of
its interest-earning assets and interest-bearing liabilities.
The Banks' have implemented these policies by generally
emphasizing the origination of one-year, three-year and five-
year adjustable rate mortgage loans and short-term consumer
lending. Prior to June 1994, most fixed-rate mortgages offered
by Cecil Federal were originated for sale in the secondary
market. Since July 1, 1995, Cecil Federal has originated fixed
rate mortgages for sale in the secondary market. Columbian
originates fixed rate mortgages that are held to maturity.
Management intends to continue to concentrate on maintaining
its interest rate spread in a manner consistent with its lending
policies, which is principally the origination of adjustable-
rate mortgages, with an appropriate blend of fixed rate mortgage
loans in its primary market areas.
FINANCIAL CONDITION
- -------------------
Comparison of financial condition at September 30, 1998 and
December 31, 1997.
The Company's total assets at September 30, 1998 increased
$4,247,438, or 4.5%, to $98,113,806 from $93,866,368 at December
31, 1997. The increase was primarily the result of an increase
in loans receivable, cash, federal funds sold, and loans-held-
for-sale. Total liabilities increased $3,924,538, or 4.7%, to
$88,278,571 at September 30, 1998 from $84,354,033 at December
31, 1997. This increase was the result of an increase in
savings deposits. Stockholder's equity increased $322,900 or
3.4%.
Cash increased $544,686, or 37.9%, to $1,982,904 at September
30, 1998 from $1,438,218 at December 31, 1997. Interest-bearing
cash increased $330,703, or 13.1%, to $2,849,933 at September
30, 1998 from $2,519,230 at December 31, 1997. The increases
were primarily due to an increase in deposits and repayments of
loans.
Loans receivable increased $2,585,396, or 3.6%, to $74,601,445
at September 30, 1998 from $72,016,049 at December 31, 1997.
The increase in loans receivable was a
14<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
result of increased loan originations. The loans-held-for sale
portfolio increased $1,543,322, or 113.2%, to $2,906,291 at September
30, 1998 from $1,362,969 at December 31, 1997. The increase was a
result of increased fixed rate originations. Loans held-for-sale will
continue to be sold to fund portfolio needs. No loans-held-for
sale were sold during the quarter. Real estate owned decreased
$99,088, or 21.8%, to $356,480 at September 30, 1998 from
$455,568 at December 31, 1998. The company purchased one and
sold two single-family properties that were the result of
foreclosure.
Total savings deposits increased $4,532,817, or 5.6%, to
$85,128,710 at September 30, 1998 from $80,595,893 at December
31, 1997. Increases are attributable to increased marketing and
cross selling plans. Escrows held for the payments of taxes and
insurances decreased $314,341, or 37.3%, to $528,017 at
September 30, 1998 from $842,358 at December 31, 1997. Advances
from the Federal Home Loan Bank of Atlanta remained at the same
level of $1,750,000 at September 30, 1998 from the same period
at December 31, 1997.
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended September 30, 1998 Net income for the three
month period ended September 30, 1998 decreased $253,144, or
102.9%, to $(6,352) as compared to net income for the same
period in 1997 of $246,792. The annualized return on average
assets and annualized return on average equity were (0.03%) and
(0.26)% respectively, for the three-month period ended September
30, 1998. This compares to an annualized return on average
assets and annualized return on average equity of 1.04% and
10.60% respectively, for the same period in 1997.
Net interest income, the Bank's primary source of income,
increased 1.7%, or $14,929, for the three months ended September
30, 1998, over the same period in 1997. The weighted average
yield on interest earning assets decreased from 8.26% for the
three months ended September 30, 1997 to 8.23% for the three
months ended September 30, 1998. The weighted average rate paid
on interest bearing liabilities decreased from 4.76% for the
three months ended September 30, 1997 to 4.72% for the three
months ended September 30, 1998.
Interest on loans receivable increased by $56,387, or 3.6%, from
$1,583,499 for the three months ended September 30, 1997 to
$1,639,886 for the three months ended September 30, 1998. The
increase is attributable to an increase in the average balance
outstanding of $4,975,362. The weighted average yield decreased
from 8.77% for the three months ended September 30, 1997 to
8.50% for the three months ended September 30, 1998.
Interest on mortgage backed securities decreased $20,928, or
28.3%, from $73,885 for the three months ended September 30,
1997 to $52,957 for the three months ended September 30, 1998.
The decrease was the result of an decrease in the average
outstanding balance.
Interest on investment securities increased $7,571, or 5.4%,
from $139,572 for the three months ended September 30, 1997 to
$147,143 for the three months ended September 30, 1998. The
average outstanding balance increased $128,880 for the three
months ended September 30, 1998 over the three months ended
15<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
September 30, 1997. The weighted average yield increased from
9.92% for the three months ended September 30, 1997 to 10.23%
for the three months ended September 30, 1998.
Interest on other investments increased $10,829, or 18.0%, from
$60,307 for the three months ended September 30, 1997 to $71,136
for the three months ended September 30, 1998. The average
outstanding balance decreased 833,880, or 11.3%, while the
weighted average yield increased from 3.26% for the three months
ended September 30, 1997 to 4.33% for the three months ended
September 30, 1998.
Interest on savings deposits increased $41,275, or 4.2%, from
$977,144 for the three months ended September 30, 1997 to
$1,018,419 for the three months ended September 30, 1998. The
average balance outstanding increased $3,667,583 for the period
noted above. The weighted average rate paid on deposits
decreased from 4.78% for the three months ended September 30,
1997 to 4.77% for the three months ended September 30, 1998.
Interest expense paid on borrowings decreased $2,345, or 9.4%,
from $24,932 for the three months ended September 30, 1997 to
$22,587 for the three months ended September 30, 1998.
Noninterest income decreased 25.4%, down $44,427, for the three
months ended September 30, 1998, over the same period in 1997.
Loan servicing fees increased 302.8%, up $23,517, for the three
months ended September 30, 1998 over the same period in 1997.
FHLB dividends increased $4,652, or 58.7%, from $7,912 for the
three months ended September 30, 1997 to $12,571 for the three
months ended September 30, 1998. There were no gains on the
sale of loans within the quarter ended September 30, 1998.
Checking account fees increased $14,975, or 48.9%. Increases in
this area can be primarily attributable to increased service
charges, as a result of steady growth of demand deposits, and
the activity of three ATM machines, which are primarily used by
non-customers. Commission income from the sale of investment
instruments and insurance was $19,486 for the quarter ended
September 30, 1998. Other fee income has decreased $43,560, or
66.9%, from $65,145 for the three months ended September 30,
1997 to $21,585 for the three months ended September 30, 1998.
Noninterest expense increased 40.4%, up $233,228, for the three
months ended September 30, 1998, over the same period in 1997.
Compensation and benefits decreased 10.0% for the three months
ended September 30, 1998 over the same period in 1997. Equipment
and data processing expenses increased 14.8% for the three
months ended September 30, 1998 over the same period in 1997 as
a result of the Company's year 2000 compliance plan. The SAIF
deposit premium decreased 21.9% for the three months ended
September 30, 1998 over the same period in 1997. Other expenses
increased by 33.1% for the three months ended September 30, 1998
over the same period in 1997, as a result of increased legal
expenses, accounting and audit expenses, meeting expenses, and
charitable contributions. Merger expenses in the amount of
$201,038 for the three months ended September 30, 1998,
associated with the merger of Columbian Bank, FSB into Cecil
Bancorp, Inc., accounted for the majority of the noninterest
expense increase for the quarter.
Income tax expense for the three-month period ended September
30, 1998 and 1997 was $173,925 and $175,507, respectively, which
equates to effective rates of 103.8% and 41.6% respectively.
The effective tax rate of 103.8% was high due to factoring in
the non-tax deductible merger expenses of $201,038 for the three
months ended September 30, 1998.
16<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 1998 Net income for the nine-
month period ended September 30, 1998 decreased $220,523, or
36.0%, to $392,379, compared to net income of $612,902 for the
same period in 1997. The annualized return on average assets
and annualized return on average equity were 0.54% and 5.36%
respectively, for the nine-month period ended September 30,
1998. This compares to an annualized return on average assets
and annualized return on average equity of 0.88% and 8.90%
respectively, for the same period in 1997.
Net interest income, the Bank's primary source of income,
increased 5.3%, up $131,637, for the nine months ended September
30, 1998, over the same period in 1997. The weighted average
yield on interest earning assets increased from 8.21% for the
nine months ended September 30, 1997 to 8.23% for the nine
months ended September 30, 1998. The weighted average rate paid
on interest bearing liabilities decreased from 4.75% for the
nine months ended September 30, 1997 to 4.71% for the nine
months ended September 30, 1998.
Interest on loans receivable increased by $254,071, or 5.5%,
from $4,609,496 for the nine months ended September 30, 1997 to
$4,863,567 for the nine months ended September 30, 1998. The
average balance outstanding increased $4,536,061. The weighted
average yield decreased from 8.63% for the nine months ended
September 30, 1997 to 8.56% for the nine months ended September
30, 1998.
Interest on mortgage backed securities decreased $55,903, or
23.8%, from $234,743 for the nine months ended September 30,
1997 to $178,840 for the nine months ended September 30, 1998.
The average outstanding balance decreased $1,580,578 for the
nine months ended September 30, 1998 from the same period ended
1997, with the weighted average yield increased from 5.99% for
the nine months ended September 30, 1997 to 6.54% for the nine
months ended September 30, 1998.
Interest on investment securities increased $30,103, or 7.6%,
from $395,144 for the nine months ended September 30, 1997 to
$425,247 for the same period in 1998. The weighted average yield
decreased from 10.28% for the nine months ended September 30,
1997 to 9.47% for the nine months ended September 30, 1998. The
average outstanding balance increased $863,722 from $5,125,775
for the nine months ended September 30, 1997 to $5,989,497 for
the nine months ended September 30, 1998.
Interest on other investments increased $21,265, or 10.4%, from
$204,679 for the nine months ended September 30, 1997 to
$225,944 for the nine months ended September 30, 1997. The
average balance outstanding decreased slightly. The weighted
average yield increased from 4.00% for the nine months ended
September 30, 1997 to 4.44% to the nine months ended September
30, 1998.
Interest on savings deposits increased $155,469, or 5.5%, from
$2,835,206 for the nine months ended September 30, 1997 to
$2,990,675 for the nine months ended September 30, 1998. The
average balance outstanding increased $4,484,467 for the period
noted above. The weighted average rate paid on deposits
decreased from 4.75% for the nine months ended September 30,
1997 to 4.74% for the nine months ended September 30, 1998.
17<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Interest expense paid on borrowings decreased $37,569, or 30.1%,
from $124,684 for the nine months ended September 30, 1997 to
$87,115 for the nine months ended September 30, 1998. Decreases
are attributable to decreases in the average balance outstanding
and the weighted average cost of funds.
Noninterest income increased $8,066, or 2.2%, to $371,721 for
the nine months ended September 30, 1998 from $363,655 for the
same period in 1997. Gain on sale of loans was down $7,794, or
18.9%, for the nine months ended September 30, 1998 over the
same period in 1997, as a result of the decreased sales of fixed
rate loans in the secondary market. Other fees decreased 44.3%,
down $62,078, for the nine months ended September 30, 1998 over
the same period in 1997. Decreases in other fee income were
offset by increases in fees associated with checking accounts of
$26,526 relating mainly to the fees associated with the Bank's
three ATM machines and commission income of $58,999 generated
from the sale of investment instruments and insurance.
Noninterest expense increased $359,784, or 20.4%, to $2,123,649
for the nine-month period ended September 30, 1998 from
$1,763,865 for the nine months ended September 30, 1997. The
SAIF deposit premium stable for the nine months ended September
30, 1998 compared with the same period in 1997. Equipment and
data processing expenses increases $24,989, or 15.4%, for the
nine months ended September 30, 1998 over the same period in
1997. The increase was due to equipment purchases to bring the
Bank's equipment into year 2000 compliance. Other expenses
increased 10.7%, up $53,710, for the nine-month period ended
September 30, 1998, over the same period in 1997. The increase
was attributable to an increase in legal fees, audit and
accounting fees, meeting expenses, and charitable contributions.
Merger expenses in the amount of $252,174 for the nine months
ended September 30, 1998, associated with the merger of
Columbian Bank, FSB into Cecil Bancorp, Inc. accounted for the
majority of the noninterest expense increase for the year.
Income tax expense for the nine month period ended September 30,
1998 and 1997 was $404,001 and $404,559 which equates to
effective rates of 50.7% and 39.8% respectively. The effective
tax rate of 50.7% was high due to factoring in the non-tax
deductible merger expenses of $252,174 for the nine months ended
September 30, 1998.
18<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nonperforming Assets and Problem Loans
- --------------------------------------
Management of the Banks' review and identify all loans and
investments that require designation as nonperforming assets.
These assets include: (I) loans accounted for on a nonaccrual
basis, consisting of all loans 90 or more days past due; (ii)
troubled debt restructuring; and (iii) assets acquired in
settlement of loans. The following table sets forth certain
information with respect to nonperforming assets at September
30, 1998:
1998 1997
-------- --------
Nonperforming loans:
Residential mortgage $573,913 $1,308,380
Consumer and other 6,871 80,039
Assets acquired in settlement of loans:
Real estate held for development and sale
Real estate held for investment and sale
Repossessed assets $356,399 $ 425,680
-------- ----------
Total nonperforming assets $937,183 $1,814,099
======== ==========
Residential mortgages classified consisted of 13 loans with
balances ranging from $1,000 to $172,000. Classified consumer
loans consisted of 2 loan as of September 30, 1998.
The provision for losses on loans is determined based on
management's review of the loan portfolio and analysis of
borrower's ability to repay, past collection experience, and
risk characteristics.
19<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAPITAL ADEQUACY
- ----------------
The Company Capital adequacy refers to the level of capital
required to sustain asset growth and to absorb losses. There
are currently no regulatory capital guidelines or requirements
for the Company.
The Banks' The Office of Thrift Supervision ("OTS"), which is
the banks' principle regulator, has established requirements for
tangible, core and risk based measures of capital. As a result,
the three capital measures mentioned above were as follows at
September 30, 1998:
<TABLE>
<CAPTION>
CECIL FEDERAL SAVINGS BANK
Tangible Core Risk Based
- --------------------------------------------------------------------
<S> <C> <C> <C>
Available capital $7,711 $7,711 $7,930
Required capital 1,033 2,756 3,461
------ ------ ------
Excess $6,678 $4,955 $4,469
====== ====== ======
Available capital 11.19% 11.19% 18.33%
Required capital 1.50% 4.00% 8.00%
------ ------ ------
Excess 9.69% 7.19% 10.33%
====== ====== ======
COLUMBIAN BANK, F.S.B.
Tangible Core Risk Based
- --------------------------------------------------------------------
Available capital $2,064 $2,064 $2,167
Required capital 438 1,167 1,154
------ ------ ------
Excess $1,626 $ 897 $1,013
====== ====== ======
Available capital 7.07% 7.07% 15.02%
Required capital 1.50% 4.00% 8.00%
------ ------ ------
Excess 5.57% 3.07% 7.02%
====== ====== ======
</TABLE>
20<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Federal Deposit Improvement Act of 1991 ("FDICIA")
established five capital categories which are used to determine
the rate of deposit insurance premiums paid by insured
institutions, thus introducing the concept of risk adjusted
premiums. This act has the effect of requiring weaker banks to
pay higher insurance premiums while allowing healthier , well
capitalized banks to pay lower premiums. The following table
summarizes the five capital categories and the minimum capital
requirements for each of the three capital requirements:
<TABLE>
<CAPTION>
Tangible Core Risk-Based
______________________________________________________________________
<S> <C> <C> <C>
Well capitalized 5+% 6+% 10+%
Adequately capitalized 4%-4.99% 4%-5.99% 8%-9.99%
Undercapitalized 3%-3.99% 3%-3.99% 6%-7.99%
Significantly undercapitalized 2%-2.99% 2%-2.99% 0%-5.99%
Critically undercapitalized 0%-1.99% - -
______________________________________________________________________
</TABLE>
On September 30, 1998, the Banks' capital levels were sufficient
to qualify it as a well capitalized institution, the most
favorable category, allowing the Banks' to pay lower deposit
insurance premiums.
21<PAGE>
<PAGE>
CECIL BANCORP, INC. AND SUBSIDIARIES
PART II. Other Information:
Item 1. Legal Proceedings -
Not Applicable
Item 2. Changes in Securities -
Not Applicable
Item 3. Defaults Upon Senior Securities -
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information -
Not Applicable
Item 6. Exhibits and Reports on Form 8-K -
Cecil Bancorp filed a Form 8-K on September 30, 1998
announcing the closure of its acquisition of Columbian Bank, A
Federal Savings Bank in a transaction which will be accounted for
as a pooling of interests.
22<PAGE>
<PAGE>
CECIL BANCORP INC. AND SUBSIDIARIES
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.
CECIL BANCORP, INC.
Date: November 13, 1998 By: /s/ Mary Beyer Halsey
----------------------------
Mary Beyer Halsey
President
Chief Executive Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 1,982,904
<INT-BEARING-DEPOSITS> 2,849,933
<FED-FUNDS-SOLD> 700,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,773,930
<INVESTMENTS-CARRYING> 7,252,625
<INVESTMENTS-MARKET> 7,252,625
<LOANS> 74,601,445
<ALLOWANCE> 398,675
<TOTAL-ASSETS> 98,113,806
<DEPOSITS> 85,128,710
<SHORT-TERM> 1,750,000
<LIABILITIES-OTHER> 602,288
<LONG-TERM> 0
<COMMON> 5,983
0
0
<OTHER-SE> 9,829,252
<TOTAL-LIABILITIES-AND-EQUITY> 98,113,806
<INTEREST-LOAN> 1,639,886
<INTEREST-INVEST> 200,100
<INTEREST-OTHER> 71,136
<INTEREST-TOTAL> 1,911,122
<INTEREST-DEPOSIT> 1,018,419
<INTEREST-EXPENSE> 1,041,006
<INTEREST-INCOME-NET> 870,116
<LOAN-LOSSES> 22,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 211,522
<INCOME-PRETAX> 167,573
<INCOME-PRE-EXTRAORDINARY> 167,573
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,352)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<YIELD-ACTUAL> 3.52
<LOANS-NON> 458,000
<LOANS-PAST> 258,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 375,182
<CHARGE-OFFS> 18,217
<RECOVERIES> 19,209
<ALLOWANCE-CLOSE> 398,675
<ALLOWANCE-DOMESTIC> 398,675
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 1,332,521
<INT-BEARING-DEPOSITS> 894,485
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,030,730
<INVESTMENTS-CARRYING> 3,443,266
<INVESTMENTS-MARKET> 3,443,266
<LOANS> 53,537,887
<ALLOWANCE> 165,309
<TOTAL-ASSETS> 64,312,981
<DEPOSITS> 52,676,645
<SHORT-TERM> 3,000,000
<LIABILITIES-OTHER> 1,195,941
<LONG-TERM> 0
<COMMON> 4,702
0
0
<OTHER-SE> 7,440,395
<TOTAL-LIABILITIES-AND-EQUITY> 64,312,981
<INTEREST-LOAN> 1,154,840
<INTEREST-INVEST> 73,323
<INTEREST-OTHER> 32,562
<INTEREST-TOTAL> 1,260,725
<INTEREST-DEPOSIT> 592,384
<INTEREST-EXPENSE> 617,316
<INTEREST-INCOME-NET> 643,409
<LOAN-LOSSES> 30,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 104,407
<INCOME-PRETAX> 301,544
<INCOME-PRE-EXTRAORDINARY> 301,544
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 168,085
<EPS-PRIMARY> .44 <F1>
<EPS-DILUTED> .55 <F1>
<YIELD-ACTUAL> 4.27
<LOANS-NON> 699,000
<LOANS-PAST> 144,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 147,645
<CHARGE-OFFS> 19,535
<RECOVERIES> 6,738
<ALLOWANCE-CLOSE> 165,309
<ALLOWANCE-DOMESTIC> 165,309
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> Restated for adoption of SFAS No. 128.
</TABLE>
