<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1996
OR
/ / 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 0-25756
ISB Financial Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 72-1280718
- ------------------------------------------------- ----------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
1101 East Admiral Doyle Drive
New Iberia, Louisiana 70560
- ------------------------------------------------- ----------------------
(Address of principal executive office) (Zip Code)
(318) 365-2361
--------------------------------------------------------
(Registrant's telephone number, including area code)
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 for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-- -- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of August 9, 1996, 7,051,260 shares of the Registrant's common stock
were issued and outstanding. Of that total, 590,423 shares are held by
the Registrant's Employee Stock Ownership Plan, of which 497,216 shares
were not committed to be released.
<PAGE> 2
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition 3
(As of June 30, 1996 and December 31, 1995)
Consolidated Statements of Income (For the three months 4
and six months ended June 30, 1996 and 1995)
Consolidated Statements of Stockholders' Equity (For the 5
six months ended June 30, 1996 and 1995)
Consolidated Statements of Cash Flows (For the six 6
months ended June 30, 1996 and 1995)
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
</TABLE>
2
<PAGE> 3
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Dollars in Thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Cash and Cash Equivalents:
Cash on Hand and Due from Banks $7,884 $5,313
Interest Bearing Deposits 59,237 46,429
Investment Securities:
Held to Maturity (market value of $2,220 and $784, 2,215 784
respectively)
Available for Sale, at market value 64,537 86,058
Trading Account Securities, at market value 2,681 389
Mortgage-Backed Securities Held to Maturity (market 51,688 51,646
value of $51,512 and $51,872, respectively)
Loans Receivable, Net 470,320 399,542
Real Estate Owned 1,054 561
Premises and Equipment, Net 12,376 9,440
Federal Home Loan Bank Stock, at Cost 4,056 3,739
Accrued Interest Receivable, Net 4,278 4,153
Other Assets 6,223 776
---------- ------------
TOTAL ASSETS $686,549 $608,830
========== ============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
LIABILITIES:
Deposits $515,309 $444,600
Federal Home Loan Bank Advances 48,236 40,490
Accrued Interest Payable on Deposits 688 315
Advance Payments by Borrowers for Taxes and Insurance 1,189 1,239
Other Liabilities 3,582 2,509
---------- ------------
TOTAL LIABILITIES 569,004 489,153
---------- ------------
STOCKHOLDERS' EQUITY:
Preferred Stock of $1 par value; 5,000,000 shares authorized 0 0
-0- shares issued or outstanding
Common Stock of $1.00 par value, authorized 25,000,000 7,381 7,381
shares, issued and outstanding 7,380,671 shares
Paid in Capital 65,504 65,293
Retained Earnings 54,122 51,584
Unearned Common Stock Held by ESOP (4,972) (5,339)
Unearned Common Stock Held by MRP Trust (4,656) 0
Net Unrealized Gain on Securities 166 758
---------- ------------
TOTAL STOCKHOLDERS' EQUITY 117,545 119,677
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $686,549 $608,830
========== ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
----------------------- -------------------------
1996 1995 1996 1995
---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $9,651 $8,108 $18,193 $16,101
Investment Securities Available for Sale 964 1,221 2,177 1,930
Investment Securities Held to Maturity 23 15 35 29
Mortgage-Backed Securities Held to Maturity 772 815 1,609 1,363
Interest-Bearing Deposits 939 457 1,740 607
---------- ----------- ---------- --------
Total Interest Income 12,349 10,616 23,754 20,030
---------- ----------- ---------- --------
INTEREST EXPENSE:
Deposits 5,481 5,132 10,640 9,926
Federal Home Loan Bank Advances 787 41 1,540 80
---------- ----------- ---------- --------
Total Interest Expense 6,268 5,173 12,180 10,006
---------- ----------- ---------- --------
Net Interest Income 6,081 5,443 11,574 10,024
Provision for Loan Losses 9 133 17 206
---------- ----------- ---------- --------
Net Interest Income After Provision for Loan Losses 6,072 5,310 11,557 9,818
---------- ----------- ---------- --------
NONINTEREST INCOME:
Service Charges on Deposit Accounts 445 440 831 800
Late Charges and Other Fees on Loans 223 134 393 279
Dividends on FHLB Stock 59 60 114 114
Other Income 217 159 449 223
---------- ----------- ---------- --------
Total Noninterest Income 944 793 1,787 1,416
---------- ----------- ---------- --------
NONINTEREST EXPENSE:
Salaries and Employee Benefits 2,041 1,571 3,757 2,919
SAIF Deposit Insurance Premium 257 249 508 498
Depreciation Expense 242 221 446 438
Occupancy Expense 279 230 489 432
Computer Expense 142 136 282 255
Net Costs (Income) of Other Real Estate 6 4 25 (8)
Louisiana Shares and Franchise Tax 223 0 447 0
Other 918 751 1,706 1,470
---------- ----------- ---------- --------
Total Noninterest Expense 4,108 3,162 7,660 6,004
---------- ----------- ---------- --------
Income Before Income Taxes 2,908 2,941 5,684 5,230
Income Taxes 1,054 1,073 2,051 1,828
---------- ----------- ---------- --------
NET INCOME $1,854 $1,868 $3,633 $3,402
========== =========== ========== ========
NET INCOME PER COMMON SHARE $0.27 $0.27 $0.53 N/A
========== =========== ========== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 6,751,046 6,799,542 6,803,502 N/A
========== =========== ========== ========
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Unearned
Common
Stock
Common Paid In Retained Acquired
Stock Capital Earnings By ESOP
------- ------- ---------- ---------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $46,105
Net Income 3,402
Cash Dividends Declared (509)
Common Stock Issued in Conversion $7,381 $65,006 ($5,904)
Common Stock Releasaed by 71 185
ESOP Trust
Change in Unrealized Gain (Loss) on
Securities Available for Sale
------- --------- ---------- ---------
BALANCE, JUNE 30, 1995 $7,381 $65,077 $48,998 ($5,719)
======= ========= ========== =========
BALANCE, DECEMBER 31, 1995 $7,381 $65,293 $51,584 ($5,339)
Net Income 3,633
Cash Dividends Declared (1,095)
Common Stock Released by 211 367
ESOP Trust
Common Stock Acquired by
Management Recognition Plan Trust
Common Stock Earned by Participants
of Management Recognition Plan
Change in Unrealized Gain (Loss) on
Securities Available for Sale
------- --------- ---------- ---------
BALANCE, JUNE 30, 1996 $7,381 $65,504 $54,122 ($4,972)
======= ========= ========== =========
</TABLE>
<TABLE>
<CAPTION>
Unearned Common
Stock Acquired By Net
Management Unrealized Total
Recognition and Gain (Loss) Stockholders'
Retention Plan On Securities Equity
----------------- ------------- -------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 ($1,265) $44,840
Net Income 3,402
Cash Dividends Declared (509)
Common Stock Issued in Conversion 66,483
Common Stock Releasaed by 256
ESOP Trust
Change in Unrealized Gain (Loss) on 1,616 1,616
Securities Available for Sale
--------------- ------------ -------------
BALANCE, JUNE 30, 1995 $351 $116,088
=============== ============ =============
BALANCE, DECEMBER 31, 1995 $758 $119,677
Net Income 3,633
Cash Dividends Declared (1,095)
Common Stock Released by 578
ESOP Trust
Common Stock Acquired by ($4,687) (4,687)
Management Recognition Plan Trust
Common Stock Earned by Participants 31 31
of Management Recognition Plan
Change in Unrealized Gain (Loss) on (592) (592)
Securities Available for Sale
--------------- ------------ -------------
BALANCE, JUNE 30, 1996 ($4,656) $166 $117,545
=============== ============ =============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
June 30, June 30,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,633 $ 3,402
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 551 487
Provision for Loan Losses 17 206
Compensation Earned on Shares Granted 31 0
Gain on Sale of Premises and Equipment (57) 0
(Gain) Loss on Sale of Real Estate Owned 16 (13)
Amortization of Premium/Discount on Investments 242 186
FHLB Stock Dividends (114) (114)
Loans Originated for Resale 0 0
Proceeds From Loans Sold to Others 0 0
Income Reinvested on Marketable Equity Security (151) (142)
ESOP Contribution 574 256
Net Change in Securities Classified as Trading (2,291) 0
Changes in Assets and Liabilities:
Decrease (Increase) in Accrued Interest Receivable 250 (1,058)
Decrease (Increase) in Other Assets and Other Liabilities 76 (457)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,777 2,753
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Maturities of Held to Maturity Securities 2,142 145
Proceeds from Maturities of Available for Sale Securities 23,625 0
Purchases of Held to Maturity Securities (1,576) 0
Purchases of Available for Sale Securities (2,995) (37,820)
Increase in Loans Receivable, Net (26,770) (9,680)
Proceeds from Sale of Premises and Equipment 128 2
Purchases of Premises and Equipment (1,035) (294)
Proceeds from Disposition of Real Estate Owned 53 119
Purchases of Mortgage-Backed Securities 0 (9,109)
Principal Collections on Mortgage-Backed Securities 4,219 1,746
Cash Received in Excess of Purchase Price of Bank Subsidiary 5,614 0
Other Investing Activities (75) 0
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 3,330 (54,891)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Change in Demand, NOW, Money Market and Savings Deposit 6,118 (13,092)
Net Change in Time Deposits 1,165 9,379
Increase (Decrease) in Escrow Funds and Miscellaneous Deposits, Net (14) 167
Proceeds From FHLB Advances 8,195 45,846
Principal Repayments of FHLB Advances (449) (41,755)
Proceeds from Issuance of Common Stock 0 67,903
Dividends Paid to Shareholders (1,056) 0
Acquisition of Common Stock by Management Recognition Plan (4,687) 0
Stock Conversion Costs Incurred 0 (1,116)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,272 67,332
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 15,379 15,194
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 51,742 9,686
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 67,121 $ 24,880
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Acquisition of Real Estate in Settlement of Loans $ 108 $ 94
SUPPLEMENTAL DISCLOSURES:
Cash Paid For:
Interest on Deposits and Borrowings $ 11,807 $ 9,908
Income Taxes $ 1,663 $ 1,597
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL
PART OF THESE FINANCIAL STATEMENTS.
6
<PAGE> 7
ISB FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements were prepared in
accordance with instructions to Form 10-Q, and therefore, do not include
information or footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity
with generally accepted accounting principles. All normal, recurring
adjustments which, in the opinion of management, are necessary for a fair
presentation of the financial statements, have been included. These
interim financial statements should be read in conjunction with the
audited financial statements and note disclosures for ISB Financial
Corporation (the "Company") previously filed with the Securities and
Exchange Commission in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
BUSINESS
The Company's principal business is conducted through it's wholly owned
subsidiary, Iberia Savings Bank, which conducts business from its main
office located in New Iberia, Louisiana and 17 full-service branch offices
located in the cities of New Iberia, Lafayette, St. Martinville, Crowley,
Rayne, Kaplan, Jeanerette, Franklin, Morgan City and Abbeville. During
the quarter the Bank opened two branch offices in supermarkets in
Lafayette, Louisiana. The Bank's deposits are insured by the Savings
Association Insurance Fund ("SAIF") to the maximum extent permitted by
law. The Bank is subject to examination and regulation by the Office of
Financial Institutions of the State of Louisiana, which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the Federal Deposit Insurance Corporation ("FDIC"), as the
administrator of the SAIF, and to certain reserve requirements established
by the Federal Reserve Board ("FRB"). The Bank is a member of the Federal
Home Loan Bank of Dallas ("FHLB").
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
the Bank and the Bank's wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in
consolidation.
7
<PAGE> 8
(2) LOANS RECEIVABLE
Loans receivable (in thousands) at June 30, 1996 and December 31, 1995
consisted of the following:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
---------- ----------
<S> <C> <C>
Mortgage Loans:
Single-family Residential $331,324 $318,705
Multifamily 1,497 1,506
Commercial Real Estate 19,134 14,486
Construction 17,098 15,617
---------- ----------
Total Mortgage Loans 369,053 350,314
---------- ----------
Commercial Business Loans 24,706 11,055
---------- ----------
Consumer Loans:
Home Equity $22,931 $15,364
Automobile 40,550 6,492
Mobile Home Loans 5,087 6,077
Educational Loans 9,331 9,262
Credit Card Loans 3,467 3,836
Loans on Savings 7,522 7,481
Other 3,942 4,960
---------- ----------
Total Consumer Loans 92,830 53,472
---------- ----------
Total Loans Receivable 486,589 414,841
---------- ----------
Less:
Allowance for Loan Losses (4,102) (3,746)
Loans-in-Process (9,328) (8,399)
Unearned Discount (1) (1)
Deferred Loan Fees (1,147) (1,191)
Discount on Loans Purchased (1,691) (1,962)
---------- ----------
Loans Receivable, Net $470,320 $399,542
========== ==========
</TABLE>
(3) EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the conversion from mutual to stock form, the Company
established an Employee Stock Ownership Plan ("ESOP") for the benefit of
employees of the Company and the Bank. The ESOP purchased 590,423 shares,
or 8% of the total stock sold in the conversion, for $5,904,230, financed
by a loan from the Company. The leveraged ESOP is accounted for in
accordance with AICPA SOP 93-6, "Employers' Accounting for Employee Stock
Ownership Plans".
Compensation cost of the ESOP for the six months ended June 30, 1996 was
$574,000 based on the release of 36,738 shares. At June 30, 1996, there
were 56,469 allocated shares, 36,738 shares had been committed to be
released, and 497,216 shares were held in suspense by the ESOP. The fair
value of the unearned ESOP shares was approximately $7,334,000.
8
<PAGE> 9
(4) EARNINGS PER SHARE
Earnings per share were based on 6,751,046 weighted average shares
outstanding during the three month period ended June 30, 1996. The
weighted average number of common shares outstanding excludes the weighted
average unreleased shares owned by the ESOP of 506,344 for the three month
period ended June 30, 1996. The weighted average number of common shares
outstanding excludes the weighted average shares owned by the Management
Recognition Plan and Trust of 123,281 for the three months ending June 30,
1996. Earnings per share for periods preceding the three months ended
June 30, 1995 are not applicable, as the Bank's conversion from
mutual-to-stock form and reorganization into a holding company format was
not completed until April 6, 1995.
(5) ROYAL BANKGROUP OF ACADIANA, INC. ACQUISITION
After the close of business on May 3, 1996, the Company acquired, through
a multi-step cash merger transaction, Royal Bankgroup of Acadiana, Inc.
("RBA") and its wholly owned subsidiary, Bank of Lafayette ("BOL"), a
Louisiana chartered commercial bank with two offices in Lafayette,
Louisiana. BOL has been merged with and into Iberia Savings Bank and RBA
has been merged with and into the Company. The Company paid an aggregate
of $9.1 million in merger consideration for the previously outstanding
shares of common stock and options to acquire all of the outstanding
common stock of RBA. As of May 3, 1996, RBA had $76.3 million in total
assets, $63.5 million in total deposits and $44.1 million in loans
outstanding. The two BOL offices continue to be operated as branch
offices of Iberia Savings Bank. The transaction is accounted for as a
purchase under generally accepted accounting principles and it resulted in
$3.3 million of goodwill, which is to be amortized over 15 years, using
the straight-line method. The revenues and expenses of RBA are included
in these consolidated financial statements only from the date of the
acquisition forward.
(6) MANAGEMENT RECOGNITION AND RETENTION PLAN AND TRUST AND STOCK OPTION PLAN
On May 24, 1996, the shareholders of the Company approved the Management
Recognition and Retention Plan. The plan enables the Company to provide
officers, key employees and directors with a proprietary interest in the
Company as an incentive to contribute to its success. Pursuant to this
plan, the Company acquired 295,226 shares, or 4%, of its outstanding
common stock in an open market transaction. These shares are accounted
for as unearned deferred compensation and will be vested over the next
seven years.
The shareholders also approved the Stock Option Plan on May 24, 1996. The
plan is designed to attract and retain qualified personnel in key
positions, provide officers and key employees with a proprietary interest
in the Company as an incentive to contribute to the success of the Company
and reward key employees for outstanding performance The plan is also
designed to retain qualified directors for the Company. Pursuant to this
plan, the Company has reserved 738,067 shares for issuance.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CHANGES IN FINANCIAL CONDITION
At June 30, 1996, the consolidated assets of the Company totalled $686.5
million, an increase of $77.7 million or 12.8% from December 31, 1995.
Loans receivable, net, increased by $70.8 million, or 17.7%, to $470.3
million at June 30, 1996, compared to $399.5 million at December 31, 1995.
The increase was primarily the result of $15.8 million of commercial
business and real estate loans, $22.8 million of automobile loans, and
$5.5 million of various other consumer loans acquired in the purchase of
RBA and it's subsidiary, BOL. This acquisition together with loan
originations during the period resulted in a $12.6 million, or 4.0%,
increase in single-family residential loans, a $4.6 million, or 32.1%,
increase in commercial real estate loans, a $1.5 million, or 9.5%,
increase in construction loans, a $13.7 million, or 123.5%, increase in
commercial business loans, a $7.6 million, or 49.3%, increase in home
equity loans and a $34.1 million, or 524.6%, increase in automobile loans.
Such increases were partially offset by a $990,000, or 16.3%, decrease in
mobile home loans and a $1.0, or 20.5%, decrease in other consumer loans.
The increase in loans receivable was funded primarily by the deposits
acquired from BOL and by fixed-rate advances from the Federal Home Loan
Bank ("FHLB") of Dallas.
Interest bearing deposits at other institutions increased $12.8 million,
or 27.6%, to $59.2 million at June 30, 1996, compared to $46.4 million at
December 31, 1995. The increased level of interest bearing deposits will
be used as part of the consideration for the Company's proposed cash
acquisition of Jefferson Bancorp, Inc., the parent holding company of
Jefferson Federal Savings Bank, Gretna, Louisiana, which acquisition is
expected to be consumated in the fourth quarter of 1996. This increase
was funded primarily by maturities of investment securities.
The Company's investment securities available for sale decreased $21.5
million, or 25.0%, to $64.5 million at June 30, 1996, compared to $86.1
million at December 31, 1995. Such decrease was due primarily to the
maturity or redemption of $25.6 million of investment securities together
with a $897,000 decrease in the market value of such securities which was
partially offset by the purchase of $3.0 million of investment securities
and $2.0 million of investment securities acquired from BOL.
Mortgage-backed securities increased $42,000 from December 31, 1995 to
June 30, 1996. Such increase was the result of $4.4 million of
mortgage-backed securities acquired from the Bank of Lafayette partially
offset by $4.3 million of principal repayments on such mortgage-backed
securities.
Deposits increased $70.7 million, or 15.9%, to $515,309 million at June
30, 1996, compared to $444.6 million at December 31, 1995. Such increase
was due to $63.5 million of deposits acquired from BOL and $7.8 million of
interest credited, which was partially offset by $603,000 in net deposit
withdrawals.
10
<PAGE> 11
Advances from the FHLB of Dallas increased $7.7 million, or 19.1%, to
$48.2 million at June 30, 1996, compared to $40.5 million at December 31,
1995. The advances are fixed-rate and long term and are used to fund
additional originations of fixed-rate, long term single-family residential
loans.
Total stockholders' equity decreased $2.1 million, or 1.8%, to $117.5
million at June 30, 1996, compared to $119.7 at December 31, 1995. The
decrease was the result of the declaration of cash dividends on common
stock of $1.1 million, a $592,000, after deferred taxes, decrease in net
unrealized gains on securities available for sale and $4.7 million of
common stock acquired by the Management Recognition and Retention Plan and
Trust, which was partially offset by the Company's net income of $3.6
million and $578,000 of common stock released by the ESOP.
RESULTS OF OPERATIONS
The Company reported net income of $1.9 million for the three months ended
June 30, 1996, virtually unchanged from the the $1.9 million earned during
the three month period ended June 30, 1995. The Company's net interest
income increased by $638,000 and total noninterest income increased by
$151,000 during the three months ended June 30, 1996 compared to the
second quarter of 1995. Such increases were offset by a $946,000 increase
in noninterest expense in the three months ended June 30, 1996 compared to
the same period in 1995, primarily as a result of increases in salaries
and benefits and Louisiana shares and franchise tax, which is imposed only
for periods subsequent to the Bank's mutual-to-stock conversion.
For the six months ended June 30, 1996 the Company earned $3.6 million
compared to $3.4 million for the same period of 1995. The $231,000, or
6.8%, increase in net income was the result primarily of a $1.6 million,
or 15.5%, increase in net interest income, a $371,000, or 26.2%, increase
in noninterest income and a $189,000, or 91.7%, decrease in provision for
loan losses which was partially offset by a $1.7 million, or 27.6%,
increase in noninterest expenses and a $223,000, or 12.2%, increase in
income tax expense.
11
<PAGE> 12
Average Balances, Net Interest Income and Yields Earned and Rates Paid
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of the Bank from
interest-earning assets and the resultant average yields (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rate; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin. Information is based on average daily balances during the
indicated periods.
<TABLE>
<CAPTION>
T h r e e M o n t h s E n d e d J u n e 3 0,
-----------------------------------------------------------------------
1996 1995
------------------------------- ------------------------------------
Yield/Cost Average Average
at June 30, Average Yield/ Average Yield/
1996 Balance Interest Cost(1) Balance Interest Cost(1)
---------- --------- ---------- --------- --------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Mortgage loans 7.86 % $348,870 $7,200 8.26 % $316,250 $6,622 8.38 %
Commercial business loans 9.30 22,194 511 9.21 7,772 182 9.37
Consumer and other loans 9.47 74,000 1,940 10.49 51,830 1,304 10.06
------ ----- ------ -----
Total Loans 8.07 445,064 9,651 8.67 375,852 8,108 8.63
Mortgage-backed securities 6.14 51,908 772 5.95 46,190 815 7.06
Investment securities 6.05 67,090 987 5.88 80,385 1,236 6.15
Other earning assets 5.34 71,232 939 5.27 21,979 457 8.32
------ --- ------ ---
Total interest-earning assets 7.46 635,294 12,349 7.78 524,406 10,616 8.10
------ ------
Non-interest-earning assets 33,925 27,057
------ ------
Total assets $669,219 $551,463
======== ========
Interest-bearing liabilities:
Deposits:
Demand deposits 1.96 $98,403 491 2.00 $69,414 430 2.48
Passbook savings deposits 2.67 58,403 402 2.75 52,062 457 3.51
Certificates of deposits 5.48 334,927 4,588 5.48 311,477 4,245 5.45
------- ----- ------- -----
Total deposits 4.39 491,733 5,481 4.46 432,953 5,132 4.74
Borrowings 6.54 48,392 787 6.51 2,400 41 6.83
------ --- ----- --
Total interest-bearing liabilities 4.58 540,125 6,268 4.64 435,353 5,173 4.75
----- -----
Non-interest bearing liabilities 6,441 6,429
----- -----
Total liabilities 546,566 441,782
Stockholders' Equity 122,653 109,681
------- -------
Total liabilities and
stockholders' equity $669,219 $551,463
======== ========
Net interest-earning assets $95,169 $89,053
======= =======
Net interest income/interest rate
spread 2.88% $6,081 3.13 % $5,443 3.34 %
===== ====== ==== ====== ====
Net interest margin 3.83 % 4.15 %
==== ====
Ratio of average interest-
earning assets to average
interest-bearing liabilities 117.62% 120.46%
======= =======
</TABLE>
<TABLE>
<CAPTION>
S i x M o n t h s E n d e d J u n e 3 0,
-----------------------------------------------------------------------
1996 1995
------------------------------------- --------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost(1) Balance Interest Cost(1)
------- -------- ------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Mortgage loans $344,465 $14,133 8.21 % $315,459 $13,161 8.34 %
Commercial business loans 16,847 825 9.79 6,903 326 9.45
Consumer and other loans 63,124 3,235 10.25 51,700 2,614 10.11
------ ----- ------ -----
Total Loans 424,436 18,193 8.57 374,062 16,101 8.61
Mortgage-backed securities 51,291 1,609 6.27 42,859 1,363 6.36
Investment securities 72,262 2,212 6.12 64,509 1,959 6.07
Other earning assets 65,591 1,740 5.31 15,028 607 8.08
------ ----- ------ ---
Total interest-earning assets 613,580 23,754 7.74 496,458 20,030 8.07
------ ------
Non-interest-earning assets 30,348 26,930
------ ------
Total assets $643,928 $523,388
======== ========
Interest-bearing liabilities:
Deposits:
Demand deposits $86,767 908 2.09 $70,928 881 2.48
Passbook savings deposits 54,500 749 2.75 57,243 827 2.89
Certificates of deposits 327,871 8,983 5.48 309,192 8,218 5.32
------- ----- ------- -----
Total deposits 469,138 10,640 4.54 437,363 9,926 4.54
Borrowings 47,185 1,540 6.53 2,573 80 6.22
------ ----- ----- --
Total interest-bearing liabilities 516,323 12,180 4.72 439,936 10,006 4.55
------ ------
Non-interest bearing liabilities 5,970 5,445
----- -----
Total liabilities 522,293 445,381
Stockholders' Equity 121,635 78,007
------- ------
Total liabilities and
stockholders' equity $643,928 $523,388
======== ========
Net interest-earning assets $97,257 $56,522
======= =======
Net interest income/interest rate
spread $11,574 3.02 % $10,024 3.52 %
======= ==== ======= ====
Net interest margin 3.77 % 4.04 %
==== ====
Ratio of average interest-
earning assets to average
interest-bearing liabilities 118.84% 112.85%
======= =======
</TABLE>
- ------------------------------
(1) Annualized.
12
<PAGE> 13
NET INTEREST INCOME
Net interest income increased $638,000, or 11.7%, to $6.1 million in the
three months ended June 30, 1996, compared to $5.4 million in the three
months ended June 30, 1995. The increase was due to a $1.7 million, or
16.3%, increase in interest income, which was partially offset by a $1.1
million, or 21.2%, increase in interest expense. The increase in interest
income was the result of a $110.9 million, or 21.1%, increase in the
average balance of interest-earning assets, due in part to $63.2 million
in aggregate interest-earning assets acquired from RBA, which was
partially offset by a 32 basis point (100 basis points being equal to 1%)
decrease in the yield thereon. The increase in interest expense was the
result of a $104.8 million, or 24.1%, increase in the average balance of
interest-bearing liabilities which was partially offset by a 11 basis
point decrease in the cost thereon. The Company's interest rate spread
(the difference between the weighted average yield on interest- earning
assets and the weighted average cost of interest-bearing liabilities) and
net interest margin (net interest income as a percentage of average
interest-earning assets) amounted to 3.13% and 3.83%, respectively, during
the three months ended June 30, 1996, compared to 3.34% and 4.15%,
respectively, for the comparable period in 1995.
For the six month period ending June 30, 1996, net interest income
increased $1.6 million, or 15.5%, to $11.6 million compared to $10.0
million for the same period in 1995. The increase was due to a $3.7
million, or 18.6%, increase in interest income, which was partially offset
by a $2.2 million, or 21.7%, increase in interest expense. The increase
in interest income was the result of a $117.1 million, or 23.6%, increase
in the average balace of interest-earning assets which was partially
offset by a 33 basis point decrease in the yield thereon. The increase in
interest expense was the result of a $76.4 million, or 17.4%, increase in
the average balance of interest-bearing liabilities together with a 17
basis point increase in the cost thereon. The Company's interest rate
spread and net interest margin amounted to 3.02% and 3.77%, respectively,
during the six months ended June 30, 1996, compared to 3.52% and 4.04%,
respectively, for the comparable period in 1995.
INTEREST INCOME
The Company's total interest income was $12.3 million for the three months
ended June 30, 1996, compared to $10.6 million for the three months ended
June 30, 1995. The reasons for the $1.7 million, or 16.3%, increase in
interest income were a $1.5 million, or 19.0%, increase in interest income
from loans and a $482,000, or 105.5%, increase in interest income from
other earning assets, primarily interest-earning deposits held at other
institutions, which was partially offset by a $43,000, or 5.3%, decrease
in interest income from mortgage-backed securities and a $249,000, or
20.1%, decrease in interest income from investment securities. The
increase in interest income from loans was the result of a $69.2 million,
or 18.4%, increase in the average balance of loans, together with a 4
basis point increase in the average yield earned thereon. The increase in
interest income from other earning assets was the result of a $49.3
million, or 224.1%, increase in the average balance of other earning
assets which was partially offset by a 305 basis point decrease in the
yield thereon. The decrease in interest income on mortgage-backed
securities was the result of a 111 basis point
13
<PAGE> 14
decrease in the yield earned thereon, which was partially offset by a $5.7
million, or 12.4%, increase in the average balance of mortgage-backed
securities. The decrease in interest income from investment securities
was the result of a $13.3 million, or 16.5%, decrease in the average
balance of investment securities together with a 27 basis point decrease
in the yield thereon.
For the six months ended June 30, 1996, total interest income was $23.8
million compared to $20.0 million for the same period in 1995. The
reasons for the $3.7 million, or 18.6%, increase in interest income were a
$2.1 million, or 13.0%, increase in interest income from loans, a
$246,000, or 18.0%, increase in interest income from mortgage-backed
securities, a $253,000, or 12.9%, increase in interest income from
investment securities and a $1.1 million, or 186.7%, increase in interest
income from other earning assets. The increase in interest income from
loans was the result of a $50.4 million, or 13.5%, increase in the average
balance of loans, which was partially offset by a 4 basis point decrease
in the yield thereon. The increase in interest income from
mortgage-backed securities was the result of $8.4 million, or 19.7%,
increase in the average balance of mortgage-backed securities, which was
partially offset by a 9 basis point decrease in the yield earned thereon.
The increase in interest income from investment securities was the result
of a $7.8 million, or 12.0%, increase in the average balance of investment
securities together with a 5 basis point increase in the yield thereon.
The increase in interest income from other earning assets was the result
of a $50.6 million, or 336.5%, increase in the average balance of other
earning assets, which was partially offset by a 277 basis point decrease
in the yield earned thereon.
INTEREST EXPENSE
The Company's total interest expense was $6.3 million during the three
months ended June 30, 1996, compared to $5.2 million for the three months
ended June 30, 1995. The primary reasons for the $1.1 million, or 21.2%,
increase in interest expense was a $349,000, or 6.8%, increase in interest
expense on deposits due to a $58.8 million, or 13.6%, increase in the
average balance of deposits, which was partially offset by a 28 basis
point decrease in the average cost thereof and a $746,000, or 1,819.5%,
increase in interest expense paid on advances from the FHLB due to a $46.0
million, or 1,916.3%, increase in the average balance of advances from the
FHLB which was partially offset by a 11 basis point decrease in the cost
thereof. The decrease in the average cost of deposits reflects primarily
the effects of the lower cost deposits acquired from the Bank of
Lafayette. The borrowings from the FHLB are used to fund fixed-rate, long
term single-family residential loans.
For the six months ended June 30, 1996, the company's total interest
expense was $12.2 million, compared to $10.0 million for the same period
in 1995. The primary reasons for the $2.2 million, or 21.7%, increase in
interest expense was a $714,000, or 7.2%, increase in interest expense on
deposits due to a $31.8 million, or 7.3%, increase in the average balance
of deposits, while the cost thereof remained unchanged, and a $1.5
million, or 1,825.0%, increase in interest expense on borrowings due to a
$44.6 million, or 1,733.9%, increase in the average balance of borrowings
together with a 31 basis point increase in the cost thereof.
14
<PAGE> 15
PROVISION FOR LOAN LOSSES
The provision for loan losses was $9,000 in the three months ended June
30, 1996 as compared to $133,000 for the same period in 1995. The
decrease was primarily due to management's assessment of the amount of
provisions necessary to maintain a sufficient level of loan loss reserves.
Loan loss reserve adjustments required pre-closing of BOL by the Company
resulted in $542,000 of additional loan loss reserves being added to the
Company's loan loss reserves. As of June 30, 1996, the ratio of the
Company's allowance for loan losses to non-performing loans was 219.1% and
the ratio of the allowance for loan losses to net loans was .87%.
NONINTEREST INCOME
Noninterest income increased $151,000, or 19.0%, in the three months ended
June 30, 1996 to $944,000, compared to $793,000 for the three months ended
June 30, 1995. Such increase was due primarily to a $89,000, or 66.4%,
increase in late charges and other fees on loans and a $58,000, or 36.5%,
increase in other income due primarily to gains on the sale of certain
assets owned by the Bank's subsidiary company.
For the six months ended June 30, 1996, noninterest income increased
$371,000, or 26.2%, to $1.8 million, compared to $1.4 million for the same
period in 1995. Such increase was due primarily to a $114,000, or 40.9%,
increase in late charges and other fees on loans and a $226,000, or
101.3%, increase in other income.
NONINTEREST EXPENSE
Noninterest expense increased $946,000, or 29.9%, in the three months
ended June 30, 1996 to $4.1 million, compared to $3.2 million in the three
months ended June 30, 1995. Such increase was due primarily to a $470,000,
or 29.9%, increase in salaries and employee benefits due primarily to
shares released to employees from the ESOP and salaries and benefits
associated with the additional personnel needed to staff the two branch
offices acquired from the Bank of Lafayette and the two new branches
opened in supermarkets during the quarter and a $223,000 increase in
Louisiana Shares Tax, which is assessed only on stock-form institutions
beginning in the year following the issuance of stock, and Louisiana
Franchise Tax, which was nominal in 1995 because the parent company's
assets at the beginning of 1995 were zero. Other noninterest expense
increased $167,000, or 22.2%, primarily due to increases associated with
the two branch offices acquired from BOL and the two new branch offices
opened in supermarkets.
For the six months ended June 30, 1996, noninterest expense increased $1.7
million, or 27.6%, to $7.7 million compared to $6.0 million for the same
period in 1995. Such increase was primarily due to a $838,000, or 28.7%,
increase in salaries and employee benefits, a $447,000 increase in
Louisiana Shares Tax and Louisiana Franchise Tax and a $236,000, or 16.1%,
increase in other noninterest expense.
15
<PAGE> 16
INCOME TAX EXPENSE
Income tax expense decreased $19,000, or 1.8%, in the three months ended
June 30, 1996 to $1.1 million, compared to $1.1 million for the three
months ended June 30, 1995. The decrease in income tax expense reflects a
decrease in income before income taxes.
For the six months ended June 30, 1996, income tax expense increased
$223,000, or 12.2%, to $2.1 million compared to $1.8 million for the same
period in 1995. The increase in income tax expense reflects an increase
in income before income taxes and an increase in the effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The
Company's primary sources of funds are deposits, borrowings, amortization,
prepayments and maturities of outstanding loans and mortgage-backed
securities, maturities of investment securities and other short-term
investments and funds provided from operations. While scheduled payments
from the amortization of loans and mortgage-backed securities and maturing
investment securities and short-term investments are relatively
predictable sources of funds, deposit flows and loan and mortgage-backed
security prepayments are greatly influenced by general interest rates,
economic conditions and competition. In addition, the Company invests
excess funds in overnight deposits and other short-term interest-earning
assets which provide liquidity to meet lending requirements. The Bank has
been able to generate sufficient cash through its deposits as well as
borrowings. At June 30, 1996, the Company had $48.2 million in
outstanding advances from the Federal Home Loan Bank of Dallas.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term
investments such as over-night deposits. On a longer-term basis, the
Company maintains a strategy of investing in various lending products.
The Company uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing savings certificates and savings withdrawals,
fund loan commitments and maintain a portfolio of mortgage-backed and
investment securities. At June 30, 1996, the total approved loan
commitments outstanding amounted to $22.0 million. At the same time,
commitments under unused lines of credit, including credit card lines,
amounted to $30.4 million. Certificates of deposit scheduled to mature in
six months or less at June 30, 1996 totalled $141.5 million. Based on
past experience, management believes that a significant portion of
maturing deposits will remain with the Bank. The Company has signed a
definitive agreement to acquire Jefferson Bancorp, Inc. for $51.2 million
in cash, which acquisition is expected to be consumated in the fourth
quarter of 1996. The Company anticipates it will continue to have
sufficient funds to meet its liquidity requirements.
At June 30, 1996, the Company and the Bank had regulatory capital which
was well in
16
<PAGE> 17
excess of regulatory limits. The current requirements and the Bank's
actual levels as of June 30, 1996 are detailed below (dollars in
thousands):
<TABLE>
<CAPTION>
Required Capital Actual Capital Excess Capital
-------------------- ---------------------- ----------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Tier 1 Leverage $19,643 3.00% $80,326 12.27% $60,683 9.27%
Tier 1 Risk- Based $13,940 4.00% $80,326 23.05% $66,386 19.05%
Total Risk-Based $27,880 8.00% $84,428 24.23% $56,548 16.23%
</TABLE>
PROPOSED DEPOSIT INSURANCE PREMIUMS
The deposits of the Bank are currently insured by the SAIF. Both the SAIF
and the Bank Insurance Fund ("BIF"), the federal deposit insurance fund
that covers commercial bank deposits, are required by law to attain and
thereafter maintain a reserve ratio of 1.25% of insured deposits. The BIF
has achieved a fully funded status in contrast to the SAIF and, therefore,
the FDIC in 1995 substantially reduced the average deposit insurance
premium paid by commercial banks to a level approximately 75% below the
average premium paid by savings institutions.
The underfunded status of the SAIF has resulted in the introduction in
the U.S. Congress of various bills intended to, among other things,
recapitalize the SAIF and address the resulting premium disparity. The
Congress had been actively considering legislation which would require
savings institutions like the Bank to pay a one-time charge of $0.85 to
$0.95 for ever $100 of insured deposits to recapitalize the depleted SAIF.
Based on total insured deposits of $440.5 million at March 31, 1995, which
is the anticipated measurement date for deposits, the Bank would incur a
one-time charge of between $3.7 million and $4.2 million on a pre-tax
basis ($2.5 million to $2.8 million after tax). Management does not believe
that this one-time charge to the Bank, if incurred, will have a material
impact on the Bank's overall financial condition.
The proposed legislation also contemplated the merger of the BIF and the
SAIF following the recapitalization of the SAIF. Thereafter, federal
deposit insurance premiums would be assessed similarly for all FDIC
insured institutions. The above described legislation had been, for some
time, included as part of a fiscal 1996 budget bill, but was eliminated
prior to the bill being enacted on April 26, 1996. The Bank cannot
presently predict with any degree of certainty what form the legislation
will ultimately take, nor when or whether it may be enacted.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," establishing financial accounting and reporting standards
for stock-based employee compensation plans. This statement encourages
all entities
17
<PAGE> 18
to adopt a new method of accounting to measure compensation cost of all
employee stock compensation plans based on the estimated fair value of the
award at the date it is granted. Companies are, however, allowed to
continue to measure compensation cost for those plans using the intrinsic
value based method of accounting, which generally does not result in
compensation expense recognition for most plans. Companies that elect to
remain with the existing accounting are required to disclose in a footnote
to the financial statements pro forma net income and, if presented,
earnings per share, as if this Statement had been adopted. The accounting
requirements of this Statement are effective for transactions entered into
in fiscal years that begin after December 15, 1995.
18
<PAGE> 19
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
Not applicable.
Item 5. Other Information
After the close of business on May 3, 1996, the Company acquired,
through a multi-step cash merger transaction, Royal Bankgroup of
Acadiana, Inc. ("RBA") and its wholly owned subsidiary, Bank of
Lafayette ("BOL"), a Louisiana chartered commercial bank with two
offices in Lafayette, Louisiana. BOL has been merged with and
into Iberia Savings Bank and RBA has been merged with and into
the Company.
Item 6. Exhibits and Reports on Form 8-K
a) Not applicable.
b) On April 12, 1996 a current report on Form 8-K was filed
with repsect to the Letter of Intent which the registrant entered
into with respect to its proposed acquisition of Jefferson
Bancorp, Inc.
19
<PAGE> 20
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.
ISB FINANCIAL CORPORATION
Date: August 9, 1996 By: /s/ LARREY G. MOUTON
------------------------------------
Larrey G. Mouton, President and
Chief Executive Officer
Date: August 9, 1996 By: /s/ WILLIAM M. LAHASKY
------------------------------------
William M. Lahasky, Vice President
and Chief Financial Officer
20
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION AT JUNE 30, 1996 AND DECEMBER 31, 1995;
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q SIX
MONTHS ENDED JUNE 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,884
<INT-BEARING-DEPOSITS> 59,237
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 2,681
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 51,688
<INVESTMENTS-MARKET> 64,537
<LOANS> 474,422
<ALLOWANCE> (4,102)
<TOTAL-ASSETS> 686,549
<DEPOSITS> 515,309
<SHORT-TERM> 48,236
<LIABILITIES-OTHER> 5,459
<LONG-TERM> 0
0
0
<COMMON> 7,381
<OTHER-SE> 110,164
<TOTAL-LIABILITIES-AND-EQUITY> 686,549
<INTEREST-LOAN> 18,193
<INTEREST-INVEST> 3,821
<INTEREST-OTHER> 1,740
<INTEREST-TOTAL> 23,754
<INTEREST-DEPOSIT> 10,640
<INTEREST-EXPENSE> 12,180
<INTEREST-INCOME-NET> 11,574
<LOAN-LOSSES> 17
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,660
<INCOME-PRETAX> 6,131
<INCOME-PRE-EXTRAORDINARY> 6,131
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,663
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
<YIELD-ACTUAL> 3.77
<LOANS-NON> 1,789
<LOANS-PAST> 83
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,851
<ALLOWANCE-OPEN> 3,729
<CHARGE-OFFS> 244
<RECOVERIES> 75
<ALLOWANCE-CLOSE> 4,102
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,102
</TABLE>
