<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
JUNE 30, 1996 0-25938
MERIT HOLDING CORPORATION
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(Exact name of small business issuer as specified in its charter)
GEORGIA 58-1934011
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5100 LAVISTA ROAD, P.O. BOX 49, TUCKER, GEORGIA 30085-0049
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 770-491-8808
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
------ --
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $2.50 Par Value 3,702,492
- ----------------------------- --------------------------------
Class Outstanding as of August 8, 1996
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ----
<PAGE> 2
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------- ---------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 14,959,502 $ 15,214,844
Federal funds sold and other short-term investments 11,901,174 11,538,083
Interest bearing deposits with other
financial institutions 203,750 203,750
Investment securities, at cost (market
value of $1,706,276 and $1,753,150 respectively) 1,839,397 1,838,216
Mortgage-backed securities available for sale 7,987,700 8,982,079
Securities available for sale (Note 4) 28,902,098 28,007,845
Federal Reserve Bank stock 299,850 299,850
Federal Home Loan Bank stock 742,200 695,300
Loans, less allowance for loan losses
of $2,847,010 and $2,543,408 (Notes 2 and 3) 141,095,721 130,674,294
Real estate owned 444,389 718,673
Premises and equipment, net 4,771,382 4,650,485
Accrued interest receivable and other assets 3,356,891 2,426,786
--------------- ---------------
Total assets $ 216,504,054 $ 205,250,205
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 48,651,439 $ 51,959,459
Checking with interest 25,035,388 26,984,809
Money-market accounts 31,713,803 28,435,375
Savings 3,706,074 3,809,717
Time, $100,000 and over 22,144,432 18,567,497
Other time 50,564,022 43,306,680
--------------- ---------------
181,815,158 173,063,537
Short-term borrowings 5,938,764 4,497,555
Long-term debt 2,418,830 2,483,716
Accrued interest payable and other liabilities 1,678,551 1,893,880
--------------- ---------------
Total liabilities 191,851,303 181,938,688
--------------- ---------------
Stockholders' equity
Common stock, $2.50 par value; 10,000,000 shares
authorized; 3,697,492 and 3,807,815 shares issued and
3,697,492 and 3,665,055 outstanding, respectively 9,243,730 9,519,537
Paid-in capital 8,045,646 8,302,438
Retained earnings 7,646,842 5,958,990
Unrealized (losses) gains on securities available for sale, net of tax (283,467) 271,032
Treasury stock, at cost: 0 and 142,760 shares respectively 0 (740,480)
--------------- ---------------
Total stockholders' equity 24,652,751 23,311,517
--------------- ---------------
Total liabilities and stockholders'
equity $ 216,504,054 $ 205,250,205
=============== ===============
</TABLE>
(See notes to consolidated financial statements)
<PAGE> 3
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three month period ended For the six month period ended
June 30, June 30,
1996 1995 1996 1995
------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 3,445,348 $ 3,305,574 $ 6,779,730 $ 6,423,451
Interest on securities 619,976 483,085 1,236,336 974,462
Interest on federal funds sold
and other short-term investments 142,867 218,799 224,473 326,148
Interest on time deposits with other
financial institutions 2,987 11,131 5,974 20,336
Dividends on Federal Reserve Bank stock 4,497 4,497 8,995 8,995
Dividends on Federal Home Loan Bank stock 13,471 13,226 26,019 24,662
------------- --------------- --------------- ---------------
Total interest and dividend income 4,229,146 4,036,312 8,281,527 7,778,054
Interest expense on deposits 1,390,343 1,317,937 2,714,410 2,447,095
Interest expense on FHLB advances 41,709 43,709 83,499 87,157
Interest expense on short-term borrowings 54,222 23,155 90,109 50,711
------------- --------------- --------------- ---------------
Total interest expense 1,486,274 1,384,801 2,888,018 2,584,963
------------- --------------- --------------- ---------------
Net interest income 2,742,872 2,651,511 5,393,509 5,193,091
Provision for loan losses 165,000 210,000 330,000 360,000
------------- --------------- --------------- ---------------
Net interest income after
provision for loan losses 2,577,872 2,441,511 5,063,509 4,833,091
------------- --------------- --------------- ---------------
Non-interest income:
Service charges and fees on deposits 176,427 172,286 377,702 329,198
Gain on sale of SBA loans 853 77,947 1,705 160,775
Losses on sales of securities (59,788) (59,788)
Mutual fund sales fees 34,209 30,815 39,657 43,000
Other income 150,989 410,760 225,995 475,665
------------- --------------- --------------- ---------------
Total non-interest income 362,478 632,020 645,059 948,850
------------- --------------- --------------- ---------------
Non-interest expense:
Salaries and other personnel 853,451 787,747 1,722,403 1,545,964
Occupancy and equipment 239,686 201,296 454,056 393,771
Advertising and marketing 24,418 29,790 44,686 49,766
Legal 66,000 49,000 96,000 253,750
Data processing 33,536 36,428 64,921 74,036
FDIC fees 5,315 84,608 9,701 169,214
Other operating 369,469 375,264 687,599 759,819
------------- --------------- --------------- ---------------
Total non-interest expense 1,591,875 1,564,133 3,079,366 3,246,320
------------- --------------- --------------- ---------------
Income before income taxes 1,348,475 1,509,398 2,629,202 2,535,621
Provision for income taxes 485,325 581,223 941,349 982,612
------------- --------------- --------------- ---------------
Net income $ 863,150 $ 928,175 $ 1,687,853 $ 1,553,009
============= =============== =============== ===============
Net income per share $ .20 $ .22 $ .39 $ .38
============= =============== =============== ===============
</TABLE>
(See notes to consolidated financial statements)
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<PAGE> 4
MERIT HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
<TABLE>
<CAPTION>
For the six month period ended
June 30,
1996 1995
------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,687,853 $ 1,553,009
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 222,025 193,398
Net amortization of premiums on securities 32,859 (4,917)
Write down of other real estate 65,642
Provision for loan losses 330,000 360,000
Gain on sale of SBA loans (1,705) (160,775)
Loss on sale of investment securities 59,788
Gain on sale of other real estate (8,642)
Increase in interest receivable (124,083) (68,195)
Decrease (increase) in interest payable (99,741) 132,252
Increase (decrease) in accrued expenses and other liabilities 140,975 (36,540)
Decrease (increase) in prepaid expenses and other assets (776,701) 37,647
------------- ---------------
Net cash provided by operating activities 1,402,840 2,131,309
------------- ---------------
Cash flows from investing activities:
Purchases of "held to maturity" investment securities (200,000)
Purchases of "available for sale" investment securities (3,755,200) (5,496,664)
Proceeds from sales of "available for sale" investment securities 6,590,253
Proceeds from maturities of "held to maturity" investment securities 712,239
Proceeds from maturities of "available for sale" investment securities 2,953,427 3,618,947
Purchases of Federal Home Loan Bank stock (46,900) (116,300)
Purchases of time deposits with other financial institutions (497,000)
Proceeds from sale of other real estate 344,274
Proceeds from sale of SBA loans 1,353,233
Capital improvements on other real estate (61,348)
Loans made to customers, net (10,749,722) (12,043,470)
Capital expenditures (315,447) (153,528)
------------- ---------------
Net cash used in investing activities (11,630,916) (6,232,290)
------------- ---------------
Cash flows from financing activities:
Repayment of short-term borrowing (430,000)
Net decrease in Federal Home Loan Bank advances (64,886) (64,886)
Net increase in deposits 8,751,621 12,042,358
Net increase in securities sold under
agreements to repurchase 1,441,209 1,159,661
Exercise of stock warrants 207,881 299,248
Purchase of fractional & dissenting shares (288)
------------- ---------------
Net cash provided by financing activities 10,335,825 13,006,093
------------- ---------------
Net increase in cash and cash equivalents 107,749 8,905,112
Cash and cash equivalents at beginning of period 26,752,927 27,700,547
------------- ---------------
Cash and cash equivalents at end of period $ 26,860,676 $ 36,605,659
============= ===============
Supplemental data:
Interest paid $ 2,987,757 $ 2,258,135
============= ===============
Income taxes paid $ 1,650,000 $ 1,552,450
============= ===============
</TABLE>
(See notes to consolidated financial statements)
-3-
<PAGE> 5
MERIT HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Merit Holding
Corporation (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statement presentation. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
to present a fair presentation have been included. Operating results for the
six months ended June 30, 1996 are not necessarily indicative of trends or
results to be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
NOTE 2 - LOANS
Loans are stated at unpaid principal balances, net of unearned income and
deferred loan fees. Interest is accrued only if deemed collectible. Generally
the Company's policy is not to accrue interest on loans delinquent over ninety
days unless the loan is well secured and in the process of collection.
<TABLE>
<CAPTION>
Loans consist of :
(in thousands)
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Commercial $81,704 56% $74,885 56%
Real estate - construction
and land development 31,022 22% 25,898 20%
Real estate - mortgages 20,115 14% 21,198 16%
Installment and other
Consumer 10,786 8% 10,828 8%
Other 316 0% 408 0%
------- --- ------- ---
143,943 100% 133,217 100%
Less allowance for loan losses (2,847) (2,543)
-------- --------
$141,096 $130,674
======== ========
</TABLE>
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<PAGE> 6
NOTE 3 - ALLOWANCE FOR LOAN LOSSES
A provision for loan losses is charged to operations based on management's
evaluation of potential losses in the loan portfolio. Such evaluation includes
a review of all loans on which full collectibility may not be reasonably
assured and considers, among other matters, management's estimate of the fair
value of the underlying collateral on specific loans, inherent losses in the
loan portfolio, and prevailing and anticipated economic conditions.
<TABLE>
<CAPTION>
Activity in the allowance for loan losses for the six months ended June 30, 1996 and June
30, 1995 follows:
June 30, 1996 June 30,1995
------------- ------------
<S> <C> <C>
Balance, January 1 $2,543,408 $1,688,805
Provision charged to expense 330,000 360,000
Net charge-offs (26,398) (140,018)
---------- ----------
Balance, June 30 $2,847,010 $1,908,787
========== ==========
</TABLE>
NOTE 4 - SECURITIES AVAILABLE FOR SALE
Securities available for sale are reported at fair value, with unrealized gains
and losses, net of related income taxes, reported as a separate component of
stockholders' equity.
NOTE 5 - NET INCOME PER SHARE
The Company is required to calculate net income per share based on the
"modified treasury stock" method. Under this method, net income and weighted
average shares are adjusted for the effects of assumed exercise of common stock
equivalents. The number of shares used to compute primary and fully diluted
earnings per share for the three months and six months ended June 30, 1996 was
4,312,808 and for the three months and six months ended June 30, 1995 was
4,176,116.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of" ("SFAS 121") requires that
an impairment of long-lived assets be recognized if the future cash flows
expected from the use of the asset and its eventual disposition is less than
the carrying amount of the asset. The Company adopted SFAS 121 in 1996. No
material impact on the Company is expected.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-based Compensation" ("SFAS 123") was issued by the Financial Accounting
Standards Board during 1995 and is effective for the Company in 1996. SFAS 123
will require the Company to disclose fair value information about stock-based
employee compensation plans for periods beginning after January 1, 1995. The
Company has not evaluated the impact of this Statement on its financial
statements.
-5-
<PAGE> 7
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion addresses the factors that have affected the financial
condition and results of operations of Merit Holding Corporation (the
"Company") as reflected in the unaudited consolidated financial statements for
the three and six months ended June 30, 1996 and 1995. The Company's
operating subsidiaries are Mountain National Bank ("Mountain") and Charter Bank
& Trust Co. ("Charter").
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's net income for the second quarter of 1996 was $863,150, a 7.0%
decrease compared to net income of $928,175 for the same period in 1995.
Earnings per share was $.20 in the second quarter of 1996 compared to $.22 for
the same period in 1995. Net income for the six months ended June 30, 1996 was
$1,687,853 compared to $1,553,009 for the same period of 1995, an 8.7%
increase. The decrease in net income in the second quarter of 1996 compared to
the same period in 1995 was the result of an increase in net interest income of
$91,361, or 3.4%, and a $45,000 reduction in the provision for loan losses
compared to the second quarter of 1995. These changes were offset by a decrease
of $269,542, or 42.6%, in non-interest income, and an increase of $27,742, or
1.8%, in non-interest expense. The growth in net income for the six month
period ended June 30,1996 over the corresponding period in 1995 resulted
primarily from an increase of $200,418, or 3.9%, in net interest income, and a
decrease of $166,954, or 5.1%, in non-interest expense, offset by a decrease of
$303,791, or 32.0%, in non-interest income.
Return on average equity for the three months and six months ended June 30,
1996 was 14.11% and 13.95% on average equity of $24,467,000 and $24,195,000,
respectively, as compared to 17.52% and 15.07% on average equity of
$21,195,116 and $20,614,364, respectively, for the same periods in 1995.
Return on average assets for the three months and six months ended June 30,
1996 was 1.66% and 1.67% on average assets of $208,212,000 and $202,510,000
respectively as compared to 1.97% and 1.70% on average assets of $188,861,061
and $182,654,912 for the same periods in 1995.
Total assets at June 30, 1996 were $216,504,054, a 5.5% increase from
$205,250,205 at December 31, 1995. Total average assets for the first six
months of 1996 were $202,510,000, up $19,855,000, or 10.9% from the same
period in 1995. Average loans for the first six months of 1996 were
$134,286,000, up $11,006,000, or 8.9% over the same period in 1995. The loan
growth was funded by increased average deposits, up $14,133,000, or 9.1%.
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<PAGE> 8
Net interest income for the second quarter of 1996 increased $91,361 or 3.4%
over the second quarter of 1995. Net interest income for the six months ended
June 30, 1996 increased $200,418 or 3.9% over the same period in 1995. The net
interest margin for the three months and six months ended June 30, 1996 was
5.81% and 5.90% respectively on average total earning assets of $188,906,000
and $182,876,000, respectively. For the same periods in 1995, the net interest
margin was 6.14% and 6.22% respectively on average earning assets of
$172,642,350 and $167,002,984. The increase in net interest income reflects
growth in earning assets in 1996 over 1995, partly offset by lower yields on
earning assets.
The provision for loan losses for the second quarter of 1996 was $165,000
compared to $210,000 in the second quarter of 1995. The provision for loan
losses for the first six months of 1996 was $330,000 compared to $360,000 for
the same period in 1995. The allowance for loan losses at June 30, 1996 was
$2,847,010 compared to $2,543,408 at December 31, 1995. At June 30, 1996 and
December 31, 1995, the allowance for loan losses represented 1.98% and 1.91%
of loans outstanding, respectively. The provision for loan losses and the
adequacy of the allowance for loan losses is based upon management's continuing
evaluation of the collectibility of the loan portfolio under current economic
conditions and includes analysis of underlying collateral value and other
factors which could affect that collectibility. Management considers the
allowance for loan losses to be adequate based upon evaluations of specific
loans, internal loan rating systems, guidelines provided by the banking
regulatory authorities governing Mountain and Charter, and an annual
independent loan review performed by a consultant.
Through the six months ended June 30, 1996, charged-off loans totaled $26,398,
net of recoveries, or 0.02% of total loans outstanding. This compares to
$140,018 or 0.11% through the six months ended June 30, 1995. The ratio of
non-performing loans (including loans 90 days or more past due) to total
outstanding loans was 0.88% at June 30, 1996 compared to .97% at December 31,
1995 and 1.01% at June 30, 1995. Included in non-performing assets are four
loan participations purchased by Mountain. As is customary in evaluating
participation loan agreements, Mountain had underwritten the credit worthiness
of the underlying debtor. The original participating lender defaulted on its
obligation to a large regional Southeastern bank which has now stated it does
not consider Mountain a participant. While Mountain disputes this, two of the
underlying debtors paid off their loans in 1995 and a third paid off in
February 1996 without benefit being passed to Mountain. The remaining debtor is
in negotiations with the lender for the liquidation of its debt. Mountain has
made demand on the lender (original and successor) for payment of its portion
of these payoffs.
At June 30, 1996, the Company owned five foreclosed residential properties
carried in other real estate owned totaling $444,389. The Company does not
anticipate any material loss on the sale of these properties.
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<PAGE> 9
At June 30, 1996, the Company had $5,938,764 in short-term borrowings compared
to $4,497,555 at year ended December 31, 1995. Short-term borrowings consist
of repurchase agreements with customers. Long-term debt at June 30, 1996 was
$2,418,830 compared to $2,483,716 at year end December 31, 1995. Long-term
debt consists of advances from the Federal Home Loan Bank of Atlanta for the
purpose of match funding loans.
Non-interest income decreased $269,542 or 42.6% during the second quarter of
1996 compared to the same period in 1995, and decreased $303,791, or 32.0%, for
the first six months of 1996 compared to the same period in 1995. Management
decided in late 1995 to discontinue selling SBA loans originated by the Company
and instead hold the loans in the loan portfolio. This change resulted in a
decrease of $77,094, or 98.9%, in gains on sale of SBA loans in the second
quarter of 1996, compared to the comparable period in 1995, and to a decrease
of $159,070, or 98.9%, for the first six months of 1996 over 1995. Other income
decreased $259,771 and $249,670, for the second quarter and first six months
of 1996, compared to the same periods in 1995, because the company realized a
one-time gain of $347, 522 on the sale of publicly traded stock in the second
quarter of 1995. These declines were offset by higher service charges on
deposits, up $4,141, or 2.4%, in the second quarter of 1996 compared to 1995,
and up $48,504, or 14.7%, for the first six months of 1996 compared to 1995.
The company sold investment securities in the second quarter of 1995, incurring
a loss of $59,788. No securities were sold during the first six months of 1996.
Non-interest expense increased $27,742, or 1.8%, for the quarter ended June
30, 1996 as compared to the same period in 1995. Occupancy and equipment
expense increased $38,390, or 19.1%, in the second quarter of 1996 compared to
the same period in 1995 partly resulting from Mountain opening a new combined
branch/operations center in April, 1996. Legal expense increased $17,000, or
34.7%, for the second quarter of 1996 compared to the same period in 1995.
FDIC insurance assessment fees paid in the quarter ended June 30, 1996 were
$79,293 less than the same period in 1995, as the result of the FDIC cutting
the assessment fee after the full funding of the Bank Insurance Fund in 1995.
Salaries and other personnel expenses increased $65,704, or 8.3%, to manage
continued growth. Other operating expenses decreased $5,795, or 1.5%, in the
second quarter of 1996 compared to 1995.
Non-interest expense for the six months ended June 30, 1996 decreased $166,954,
or 5.1%, over the same period in 1995. Salaries and other personnel expenses
increased $176,439, or 11.4%, to manage continued growth. Occupancy and
equipment expense increased $60,285, or 15.3%, in the first six months of 1996
compared to the same period in 1995, for the reason explained in the preceding
paragraph. Legal expense decreased $157,750, or 62.2%, for the first half of
1996 compared to the same period in 1995 due to expenses incurred in 1995
related to settlement costs of three lawsuits. FDIC insurance
-8-
<PAGE> 10
assessment fees paid in the six months ended June 30, 1996 were $159,513 less
than the same period in 1995, for the same reason cited in the preceding
paragraph. Other operating expenses decreased $72,220, or 9.5%, in the second
quarter of 1996 compared to 1995, as management continues to closely monitor
operating expenses.
CAPITAL ADEQUACY
Federal banking regulators have established certain capital adequacy standards
required to be maintained by banks and bank holding companies. These
regulations establish minimum requirements for risk-based capital of 4% for
core capital (tier I), 8% for total risk-based capital and 3% for the leverage
ratio. At June 30, 1996 the Company's tier I risk-based capital was 14.20% and
total risk-based capital was 15.62%, compared to 14.53% and 16.08% at
year-ended December 31, 1995, respectively. At June 30, 1996 the Company's
leverage ratio was 12.31% compared to 11.79% at December 31, 1995.
LIQUIDITY
The goal of liquidity management is to ensure the availability of an adequate
level of funds to meet the loan demand and deposit withdrawal needs of the
Company's customers. The Company does not anticipate any events which would
require liquidity beyond that which is available through deposit growth,
federal funds balances, or investment portfolio maturities. The Company
actively manages the levels, types and maturities of earning assets in relation
to the sources available to fund current and future needs to ensure that
adequate funding will be available at all times. There are no known trends or
any known commitments or uncertainties that will result in the Company's
liquidity increasing or decreasing in any material way.
-9-
<PAGE> 11
Part II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS FOR VOTE OF SECURITY HOLDERS.
On May 9, 1996, the Company held its 1996 Annual Meeting of
Shareholders. At the meeting, the following persons were elected to
serve on the Company's Board of Directors for a term of one year and
until their successors are elected and have qualified: J. Randall
Carroll, Michael J. Coles, Ronald H. Francis, Patrick H. Hickok and
Walter J. McCloud, II. The number of votes cast for and against the
election of each nominee for director was as follows:
<TABLE>
<CAPTION>
Director For Withhold
--------------------- --- --------
<S> <C> <C>
J. Randall Carroll 2,315,268 201
Michael J. Coles 2,312,945 2,524
Ronald H. Francis 2,309,231 6,238
Patrick H. Hickok 2,315,268 201
Walter J. McCloud, II 2,315,268 201
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule (SEC use only)
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1996.
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MERIT HOLDING CORPORATION
Date: August 8, 1996 J. Randall Carroll
-------------- -------------------------------------------
J. Randall Carroll
Chairman and Chief Executive Officer
Date: August 8, 1996 Ronald H. Francis
-------------- -------------------------------------------
Ronald H. Francis
President and Chief Financial Officer
(principal financial and accounting officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 14,959,502
<INT-BEARING-DEPOSITS> 203,750
<FED-FUNDS-SOLD> 11,901,174
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,931,848
<INVESTMENTS-CARRYING> 1,839,397
<INVESTMENTS-MARKET> 1,706,276
<LOANS> 143,942,731
<ALLOWANCE> 2,847,010
<TOTAL-ASSETS> 216,504,054
<DEPOSITS> 181,815,158
<SHORT-TERM> 5,938,764
<LIABILITIES-OTHER> 1,678,551
<LONG-TERM> 2,418,830
0
0
<COMMON> 9,243,730
<OTHER-SE> 15,409,021
<TOTAL-LIABILITIES-AND-EQUITY> 216,504,054
<INTEREST-LOAN> 6,779,730
<INTEREST-INVEST> 1,236,336
<INTEREST-OTHER> 265,461
<INTEREST-TOTAL> 8,281,527
<INTEREST-DEPOSIT> 2,714,410
<INTEREST-EXPENSE> 2,888,018
<INTEREST-INCOME-NET> 5,393,509
<LOAN-LOSSES> 330,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,079,366
<INCOME-PRETAX> 2,629,202
<INCOME-PRE-EXTRAORDINARY> 1,687,853
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,687,853
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 5.90
<LOANS-NON> 1,271,074
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<ALLOWANCE-OPEN> 2,543,408
<CHARGE-OFFS> 43,854
<RECOVERIES> 17,456
<ALLOWANCE-CLOSE> 2,847,010
<ALLOWANCE-DOMESTIC> 2,847,010
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
