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 ending SEPTEMBER 30, 1999
[ ] 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 0-26314
JAMES RIVER BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1740210
(State of Incorporation) (I.R.S. Employer Identification No.)
1514 HOLLAND ROAD, SUFFOLK, VIRGINIA 23434
(Address of principal executive offices)(Zip Code)
(757) 934-8100
(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. At October 31, 1999,
the issuer had 4,576,661 outstanding shares of its $5.00 par value common stock.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
(unaudited)
September December 31,
---------------------------------------- ------------
1999 1998 1998
<S> <C>
ASSETS
Cash and due from banks $ 13,962 $ 17,532 $ 16,969
Interest bearing deposits with banks 229 9,706 12,031
Federal funds sold 300 4,703 15,149
Securities available-for-sale, at fair value (amortized cost
of $109,625 on September 30, 1999, $91,496 on September
30, 1998, and $93,593 on December 31, 1998) 107,373 92,967 94,691
Securities held-to-maturity, at amortized cost (fair value
of $14,254 on September 30, 1999, $18,259 on September
30, 1998, and $16,523 on December 31, 1998) 14,312 17,713 16,096
Loans, net of allowance for loan losses 330,991 305,208 308,409
Loans held for sale, net 282 3,322 3,599
Premises and equipment, net 11,143 11,012 11,468
Accrued interest receivable 3,904 3,981 3,373
Intangible assets, net 2,154 2,409 2,342
Other assets 5,839 4,551 4,746
--------- --------- ---------
Total Assets $ 490,489 $ 473,104 $ 488,873
========= ========= =========
LIABILITIES
Non-interest bearing deposits $ 58,180 $ 50,353 56,362
Interest bearing deposits 361,038 365,150 377,537
--------- --------- ---------
Total deposits 419,218 415,503 433,899
Accrued interest payable 993 962 982
Federal funds purchased and other short-term borrowings 7,153 2,253 742
Long-term borrowings 11,000 - -
Accounts payable and other liabilities 2,008 3,248 2,071
--------- --------- ---------
Total Liabilities 440,372 421,966 437,694
--------- --------- ---------
SHAREHOLDERS' EQUITY
Preferred stock, $5 par, 2,000,000 shares authorized,
none issued - - -
Common stock, $5 par, 10,000,000 shares authorized,
4,576,344 issued and outstanding at September 30, 1999,
4,564,052 at September 30, 1998, and 4,565,326 at
December 31, 1998 22,881 22,820 22,827
Additional paid-in capital 3,957 4,085 4,096
Retained earnings 24,765 23,263 23,531
Accumulated other comprehensive income (loss) (1,486) 970 725
---------- --------- ---------
Total Shareholders' Equity 50,117 51,138 51,179
---------- --------- ---------
Total Liabilities and Shareholders' Equity $ 490,489 $ 473,104 $ 488,873
========== ========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------------------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
------------- ------------- ------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C>
INTEREST INCOME
Loans $ 7,206 $ 6,997 $ 21,112 $ 20,698
Investment securities:
Taxable 1,527 1,299 4,221 3,829
Exempt from federal income taxes 332 329 990 956
Federal funds sold and other 79 309 585 961
---------- --------- --------- ---------
Total Interest Income 9,144 8,934 26,908 26,444
---------- --------- --------- ---------
INTEREST EXPENSE
Deposits 3,766 4,206 11,672 12,415
Federal funds purchased and other borrowings 69 17 99 35
Long-term borrowings 92 - 142 -
---------- --------- --------- ---------
Total Interest Expense 3,927 4,223 11,913 12,450
---------- --------- --------- ---------
Net Interest Income 5,217 4,711 14,995 13,994
Provision for Loan Losses 197 148 533 390
---------- --------- --------- ---------
Net Interest Income after Provision for Loan Losses 5,020 4,563 14,462 13,604
---------- --------- --------- ---------
NON-INTEREST INCOME
Service charges on deposit accounts 585 445 1,589 1,238
Other fees and commissions 116 145 387 430
Net realized gains on disposition of securities 7 17 13 455
Other income 88 53 292 354
---------- --------- --------- ---------
Total Non-Interest Income 796 660 2,281 2,477
---------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and employee benefits 2,399 1,989 7,266 5,890
Occupancy 315 264 973 738
Equipment 309 276 935 824
Directors' fees 66 99 239 303
Deposit insurance premiums 30 29 91 90
Other 1,225 965 3,458 2,894
---------- --------- --------- ---------
Total Non-Interest Expense 4,344 3,622 12,962 10,739
---------- --------- --------- ---------
Income Before Income Taxes 1,472 1,601 3,781 5,342
Provision for Income Taxes 433 424 984 1,460
---------- --------- --------- ---------
Net Income $ 1,039 $ 1,177 $ 2,797 $ 3,882
========== ========= ========= =========
Net Income per Common Share
Basic $ 0.23 $ 0.26 $ 0.61 $ 0.85
========== ========= ========= =========
Diluted $ 0.23 $ 0.25 $ 0.61 $ 0.84
========== ========= ========= =========
Cash Dividends Paid per Common Share $ 0.12 $ 0.10 $ 0.36 $ 0.30
========== ========= ========= =========
Weighted Average Number of Shares Outstanding
Basic 4,582,783 4,561,756 4,579,099 4,541,522
========== ========= ========= =========
Diluted 4,605,043 4,655,371 4,601,360 4,635,137
========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ACCUMULATED
SHARES OF ADDITIONAL OTHER
COMMON COMMON PAID-IN RETAINED COMPREHEN-
STOCK STOCK CAPITAL EARNINGS SIVE INCOME TOTAL
--------- ------ ------- -------- ----------- -----
<S> <C>
Balance - December 31, 1998 4,565,326 $ 22,827 $ 4,096 $ 23,531 $ 725 $ 51,179
Comprehensive income
Net income - - - 2,797 - 2,797
Other comprehensive income (loss) - - - - (2,211) (2,211)
Common stock issued 1,755 9 20 - - 29
Stock options exercised 19,926 99 (52) - - 47
Common stock repurchased (10,500) (53) (105) - - (158)
Cash paid in lieu of fractional shares (163) (1) (2) - - (3)
Cash dividends declared
($0.36 per share) - - - (1,563) - (1,563)
--------- -------- -------- -------- -------- --------
Balance - September 30, 1999 4,576,344 $ 22,881 $ 3,957 $ 24,765 $(1,486) $ 50,117
========= ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ACCUMULATED
SHARES OF ADDITIONAL OTHER
COMMON COMMON PAID-IN RETAINED COMPREHEN-
STOCK STOCK CAPITAL EARNINGS SIVE INCOME TOTAL
--------- ------ ---------- -------- ----------- -----
<S> <C>
Balance - December 31, 1997 4,516,535 $ 22,583 $ 3,789 $ 20,667 $ 704 $ 47,743
Comprehensive income:
Net income - - - 3,882 - 3,882
Other comprehensive income - - - - 266 266
Common stock issued 1,157 6 19 - - 25
Stock options exercised 46,360 231 277 - - 508
Cash dividends declared
($0.30 per share) - - - (1,286) - (1,286)
---------- --------- -------- --------- ------ --------
Balance - September 30, 1998 4,564,052 $ 22,820 $ 4,085 $ 23,263 $ 970 $ 51,138
========== ========= ======== ========= ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
JAMES RIVER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
---- ----
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,797 $ 3,882
Adjustments to reconcile to net cash provided
by operating activities:
Provision for loan and other real estate losses 533 390
Depreciation and amortization 1,126 1,007
Amortization of bond (discounts) and premiums 25 16
Gain on disposition of securities (13) (455)
Gain on sale of loans (215) (33)
Gain on sale of assets (7) (93)
Changes in:
Loans held for sale 3,532 (2,500)
Interest receivable (531) (597)
Other assets 147 (103)
Interest payable 11 46
Other liabilities (63) 1,418
------- -------
Net cash provided by operating activities 7,342 2,978
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities, calls, and sales of securities -
available-for-sale 20,724 28,432
Proceeds from maturities of securities - held-to-maturity 2,386 2,751
Purchase of securities - available-for-sale (36,754) (33,445)
Purchase of securities - held-to-maturity (617) (1,677)
Purchases of premises and equipment (532) (2,926)
Proceeds from sale of premises and equipment 29 192
Net increase in loans (23,318) (12,928)
------- --------
Net cash used in investing activities (38,082) (19,601)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest bearing deposits 1,818 (4,514)
Net increase (decrease) in interest bearing deposits (16,499) 15,740
Issuance of stock 76 533
Common stock repurchase (158) -
Cash paid in lieu of fractional shares (3) -
Cash dividends paid (1,563) (1,286)
Proceeds from short-term borrowings 6,411 2,162
Proceeds from long-term borrowings 11,000 -
------- -
Net cash provided by financing activities 1,082 12,635
------- -------
Net decrease in cash and cash equivalents $(29,658) $(3,988)
CASH AND CASH EQUIVALENTS
Beginning 44,149 35,930
-------- -------
Ending $14,491 $31,942
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest paid $11,902 $12,413
======== =======
Income taxes $ 937 $ 1,593
======== =======
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Real estate acquired in settlement of loans $ 203 $ 128
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
PART 1 - FINANCIAL INFORMATION
JAMES RIVER BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all of the disclosures and notes required by generally accepted
accounting principles. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The results of operations for the nine month periods ended
September 30, 1999 and 1998 are not necessarily indicative of results that may
be expected for the entire year or any interim period. The interim financial
statements should be read in conjunction with the December 31, 1998 Annual
Report to Shareholders on Form 10-K, including the 1998 consolidated financial
statements of James River Bankshares, Inc. ("James River" or the "Company").
NOTE 2. MERGERS AND ACQUISITIONS
On August 15, 1999, James River completed its merger with State Bank of
Remington, Inc. ("State Bank"). Under the terms of the Merger Agreement , State
Bank became a wholly owned banking subsidiary of James River and is conducting
operations as a free standing banking subsidiary. The Merger Agreement provided
that shareholders of State Bank receive 2.9 shares of James River common stock
for each outstanding share of State Bank common stock. State Bank had
approximately 291,000 shares of common stock outstanding, which converted to
843,815 whole shares of James River's common stock. The merger was accounted for
as a pooling of interests. All historical information presented in this Form
10-Q has been restated to reflect this transaction.
NOTE 3. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and displaying
comprehensive income and its components. All of James River's other
comprehensive income relates to net unrealized gains (losses) on
available-for-sale securities.
Comprehensive income consists of the following for the nine months
ended September 30:
1999 1998
------------ ----------------
Net income $ 2,797,000 $3,882,000
Other comprehensive income (2,211,000) 266,000
------------ -----------------
Total comprehensive income (loss) $ 586,000 $4,148,000
============ =================
<PAGE>
The components of other comprehensive income and related tax effects
for the nine months ended September 30 are shown in the following table.
<TABLE>
<CAPTION>
1999 1998
---------------- ------------
<S> <C>
Unrealized gain/(loss) on available-for-sale securities $ (3,338,000) $ 863,000
Reclassification adjustment for gains realized in income 13,000 455,000
---------------- ------------
Net unrealized gain/(loss) $ (3,351,000) $ 408,000
Tax effect (1,140,000) 142,000
---------------- ------------
Net of tax amount $ (2,211,000) $ 266,000
================ ============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Information contained in this Form 10-Q may contain forward looking
statements with respect to James River Bankshares, Inc.'s ("James River" or the
"Company") financial condition and results of operations, including the
anticipated effect of rising interest rates on net interest income and James
River's Year 2000 readiness. These forward looking statements may involve
certain risks and uncertainties that may cause actual results to differ
materially from those contemplated by such forward looking statements. Risks and
uncertainties that may affect the financial condition and results of operations
of James River include, but are not limited to, general economic and business
conditions, interest rate fluctuations, competition from banks and other
financial service providers, new financial products and services, risks inherent
in making loans including repayment risks and changing collateral values,
changing trends in customer profiles, technological changes, changes in laws and
regulations applicable to James River and its subsidiaries, and risk related to
Year 2000 issues, including the risks associated with vendors and their
suppliers and risks from customers. Although James River believes that its
expectations with respect to any forward looking statements are based upon
reasonable assumptions within the limits of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from any future results that may be expressed or implied by forward
looking statements.
FINANCIAL CONDITION
- -------------------
ASSETS
- ------
Total assets of James River at September 30, 1999 were $490.5 million
compared to $488.9 million at December 31, 1998, an increase of $1.6 million or
0.3%. Net loans increased $19.3 million during the first nine months of 1999.
Real estate loans increased $6.4 million to $185.9 million at September 30,
1999, and business loans increased $12.0 million while loans held for sale
decreased $3.3 million for the same period. Investment securities increased
$10.9 million, from $110.8 million at December 31, 1998 to $121.7 million at
September 30, 1999. Federal funds sold decreased $14.8 million to $300 thousand
at September 30, 1999, while interest bearing deposits decreased $11.8 million
during the first nine months of 1999. Short-term investments, including Federal
Funds sold and interest bearing deposits were reduced and invested in higher
yielding investment securities and loans during the period. Total earning assets
increased $3.5 million, or 0.8%, during the same period.
At September 30, 1999, James River's total assets were $490.5 million,
3.7%, or $17.4 million, more than on the comparable date in 1998. Net loans were
$331.3 million at September 30, 1999, an increase of $22.7 million over
September 30, 1998. Real estate loans increased 3.6% or $6.5 million and
business loans increased 16.7% or $12.8 million while loans held for sale
decreased 91.5% to $282 thousand for the same period. Investment securities were
$121.7 million at September 30, 1999, up $11.0 million from September 30, 1998.
Interest bearing deposits and federal funds sold decreased $9.5 million and $4.4
million, respectively at September 30,1999 over September 30, 1998.
<PAGE>
Average total assets for the nine months ended September 30, 1999
increased $23.4 million to $490.5 million from $467.1 million for the nine
months ended September 30, 1998. Average investment securities increased 10.2%
from $107.1 million for the nine months ended September 30, 1998 to $118.0
million for the same period in 1999. Average total loans increased $19.7 million
to $325.4 million during the same period. Average interest bearing deposits
decreased 31.8% to $6.2 million while Federal funds sold decreased 29.8% to $9.3
million in the first nine months of 1999 over the same period of 1998.
Average total assets increased 3.8% to $491.9 million for the quarter
ended September 30, 1999 from $474.2 million for the same period in 1998.
Average investment securities increased from $109.9 million for the quarter
ended September 30, 1998 to $124.6 million for the quarter ended September 30,
1999. Average total loans increased 6.8% to $331.5 million during the same
period. Average interest bearing deposits decreased $9.4 million and Federal
funds sold decreased $6.6 million, respectively in the third quarter of 1999
over the same period of 1998.
LIABILITIES
- -----------
Total liabilities at September 30, 1999 were $440.4 million compared to
$437.7 million at December 31, 1998, a 0.6%, or $2.7 million increase. Deposits
at September 30, 1999 were $419.2 million compared to $433.9 million at December
31, 1998, a decrease of 3.4% or $14.7 million. During the first nine months of
1999, non-interest bearing deposits increased $1.8 million to $58.2 million,
while interest bearing deposits decreased $16.5 million to $361.0 million.
At September 30, 1999, total liabilities were $18.4 million more than
total liabilities at September 30, 1998. Deposits at September 30, 1999 were
$3.7 million more than the $415.5 million at September 30, 1998. Non-interest
bearing deposits increased $7.8 million while interest bearing deposits
decreased $4.1 million for the same period. Long term borrowings increased $11.0
million over the comparable period in 1998. The debt was incurred by the
Company's subsidiary banks through the Federal Home Loan Bank.
Average total liabilities for the nine months ended September 30, 1999
increased 5.2% to $439.4 million compared to $417.7 million for the same period
in 1998. Average interest bearing deposits increased 3.2% to $374 million for
the same period, while average non-interest bearing deposits increased 10.6% to
$55.6 million. Average Federal funds purchased increased $859 thousand for the
same period.
Average total liabilities for the quarter ended September 30, 1999 were
$441.5 million compared to $423.7 million for the quarter ended September 30,
1998, an increase of $17.8 million. Average interest bearing deposits increased
$4.1 million for the same period, while average non-interest bearing deposits
increased $3.7 million. Average Federal funds purchased increased $2.5 million
for the same period.
NON-PERFORMING ASSETS
- ---------------------
Non-performing assets of James River consist of non-accrual loans and
property acquired through foreclosure or repossession. Non-performing assets
totaled $2.7 million on September 30, 1999, compared to $2.0 million on December
31, 1998. On September 30, 1999, non-accrual loans totaled $968 thousand, of
which $829 thousand was secured by real estate. Non-accrual loans totaled $390
thousand on December 31, 1998, of which $278 thousand was secured by real
estate. Foreclosed real estate accounted for $1.7 million of non-performing
assets at September 30, 1999 compared to $1.6 million at December 31, 1998.
<PAGE>
Loans past due 90 days or more and still accruing were $968 thousand
and $521 thousand on September 30, 1999 and December 31, 1998, respectively. Of
these loans, loans secured by real estate totaled $738 thousand on September 30,
1999 and $332 thousand on December 31, 1998.
The recorded investment in impaired loans requiring an allowance for
loan losses as determined in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan,"
as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures," was $2.0 million and $1.4 million at
September 30, 1999, and December 31, 1998, respectively. The portion of the
allowance for loan losses allocated to the impaired loan balance was $241
thousand and $162 thousand at September 30, 1999, and December 31, 1998,
respectively.
The allowance for loan losses is maintained by James River at what
management considers to be a realistic level consistent with the level and type
of loans, and taking into consideration the non-accrual and past due loans
detailed above.
James River's allowance for loan losses of $4.5 million was 1.3% of
total loans on September 30, 1999 compared with $4.2 million or 1.3% of total
loans on September 30, 1998. On December 31, 1998, the allowance for loan losses
of $4.3 million was 1.4% of total loans.
RESULTS OF OPERATIONS
- ---------------------
NET OPERATING RESULTS
- ---------------------
For the quarter ended September 30, 1999, James River's net income was
$1.0 million compared to $1.2 million for the same period of 1998, a 11.7%
decrease. Diluted earnings per share in the third quarter decreased 8.0% to $.23
in 1999 from $.25 in 1998. The annualized return on average assets and return on
average equity were 0.85% and 8.24%, respectively, in the third quarter of 1999
compared to 0.99% and 9.33% in the comparable period in 1998. The decrease in
net income is primarily attributable to non-recurring expenses totaling $244
thousand after taxes related to the merger of State Bank of Remington and to the
downsizing of the Company's mortgage subsidiary. Exclusive of non-recurring
expense in the third quarter of 1999, the annualized return on average assets
was 1.04% and the return on average equity was 10.17%.
For the nine months ended September 30, 1999, net income was $2.8
million compared to $3.9 million for the same period in 1998, a 28.0% decrease.
Diluted earnings per share in the first nine months of 1999 decreased 27.4% to
$0.61 from $0.84 in the comparable 1998 period. The net income comparison for
the nine month periods in 1999 and 1998 was affected by non-recurring merger
expenses totaling $248 thousand and mortgage subsidiary restructuring charges of
approximately $73 thousand after taxes. Also, in the first nine months of 1998,
the Company had non-recurring income resulting from gains on the sale of
securities and from mortgage servicing rights totaling $567 thousand before
taxes. After tax, these non-recurring items added approximately $352 thousand,
or $.09 per fully diluted share, to net income in the first nine months of 1998.
The annualized return on average assets and return on average equity for the
first nine months of 1999 were 0.76% and 7.30% respectively, compared to 1.11%
and 10.48% in the comparable period of 1998. On the basis of recurring net
income for the nine months, the annualized return on average assets was .85% in
1999 compared with 1.01% in 1998, and the return on average equity was 8.14% in
1999 compared with 9.53% in 1998.
<PAGE>
NET INTEREST INCOME
- -------------------
Net interest income during the quarter ended September 30, 1999
increased $506 thousand to $5.2 million, up 10.7% from the $4.7 million for the
quarter ended September 30, 1998. During the third quarter of 1999, income on
investment securities increased $231 thousand, or 14.2%, to $1.9 million,
compared to the third quarter of 1998. Interest expense on deposits decreased
10.5% in the third quarter from $4.2 million in 1998 to $3.8 million for the
same period in 1999. The net interest margin increased in the third quarter of
1999 to 4.69% from 4.43% in same period in 1998.
At the end of the second quarter of 1999, the Federal Reserve raised
its benchmark for short-term interest rates 25 basis points. That change was
reflected in the market with a comparable change in the prime lending rate. As
evidenced by higher third quarter net interest income, higher short-term rates
are expected to have a beneficial effect on interest income and a lesser, or
delayed, effect on interest expense, depending upon competitive factors.
Long-term interest rates, particularly mortgage loan rates, have been trending
upward throughout 1999. This trend has reduced the volume of mortgage loan
originations and refinances throughout the year.
Net interest income during the nine months ended September 30, 1999
increased $1.0 million to $15.0 million, up 7.2% from $14.0 million in the same
period of 1998. Interest and fee income on loans increased $414 thousand or 2.0%
to $21.1 million in the first nine months of 1999 over the $20.7 million in the
comparable period in 1998. During the first nine months of 1999, income on
investment securities increased $426 thousand or 8.9% to $5.2 million compared
to the first nine months of 1998. Interest expense on deposits decreased 6.0%
from $12.4 million in the first nine months of 1998 to $11.7 million in 1999.
The net interest margin was 4.51% in the first nine months of 1999 compared to
4.44% in the same period in 1998.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses during the quarter ended September 30,
1999 was $197 thousand, up $49 thousand, or 33.1%, from the respective period in
1998.
The provision for loan losses during the first nine months of 1999 was
$533 thousand, up $143 thousand or 36.7% from the respective period in 1998.
This increase was due in part to an increase in total loans for the first nine
months of 1999 of $23.1 million, or 7.4%, to $335.8 million compared to $312.7
million during the first nine months of 1998. The increase also reflected higher
loan losses in the 1999 period, an increase in non-performing assets, the
deterioration of certain impaired loans, and a rising interest rate environment
that may adversely affect borrowers' ability to repay loans.
NON-INTEREST INCOME
- -------------------
For the three months ending September 30, 1999, non-interest income was
$796 thousand, up $136 thousand, or 20.6%, compared to the respective period in
1998. This increase was partially attributable to $77 thousand from gain on sale
of loans originated in the new mortgage subsidiary. This increase also reflects
a 31.5% increase in service charges on deposit accounts.
For the nine months ended September 30, 1999, non-interest income was
$2.3 million, down 7.9% compared the same period of 1998. The decrease was
predominately attributable to non-recurring income in the first nine months of
1998 from gains on the sale of securities and mortgage servicing rights totaling
$607 thousand. Excluding the non-recurring items in 1998, non-interest income
increased 22.0% in the first nine months of 1999.
<PAGE>
NON-INTEREST EXPENSE
- --------------------
Non-interest expense during the third quarter of 1999 increased $722
thousand, or 19.9%, to $4.3 million compared with $3.6 million in the comparable
1998 quarter. This increase reflects non-recurring expenses of $244 thousand
related to the merger of State Bank of Remington and to the downsizing of the
Company's mortgage subsidiary.
Non-interest expense during the first nine months of 1999 increased
$2.2 million, or 20.7%, to $13.0 million compared with the same period of 1998.
The increase was primarily attributable to the non-recurring factors that
affected third quarter non-interest expense discussed above. Expenses related to
the opening of four new branch offices and the mortgage subsidiary in the fourth
quarter of 1998 also affected the comparison.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
LIQUIDITY AND INTEREST SENSITIVITY
- ----------------------------------
Liquidity represents an institution's ability to meet present and
future financial obligations through either the sale or maturity of existing
assets or the acquisition of additional funds through liability management.
Liquid assets include cash, interest bearing deposits with banks, federal funds
sold, investments, and loans maturing within one year. As a result of James
River's management of liquid assets and the ability to generate liquidity
through liability funding, management believes that James River maintains
overall liquidity sufficient to satisfy its depositors' requirements and meet
its customers' credit needs.
At September 30, 1999, James River had $54.3 million in undisbursed
loan commitments and expects to have sufficient funds available to meet current
loan origination commitments. Funding is expected to be in the normal course of
business primarily through loan repayments, prepayments, and deposit growth. As
additional funding, James River holds $121.7 million in investment securities.
Of this amount, only $14.3 million is classified as held-to-maturity and is not
readily available for sale. $9.0 million of the investment securities portfolio
will mature in less than one year, with an additional $51.0 million maturing
between 1 and 5 years.
James River has $11.0 million in long-term debt. Almost the entire
deposit base is made up of core deposits, with only 9.1% of total deposits
composed of certificates of deposit of $100,000 and over.
CAPITAL RESOURCES
- -----------------
Total shareholders' equity amounted to $50.1 million at September 30,
1999 compared to $51.2 million at December 31, 1998. Reference is made to the
Consolidated Statements of Changes in Shareholders' Equity, included elsewhere
in this 10-Q. The decrease in shareholders' equity is attributable primarily to
a decrease in the valuation of securities held for sale and secondarily to
normal cash dividends paid to shareholders. In August of 1999, James River
<PAGE>
implemented a stock repurchase plan authorizing the total buyback of 50,000
shares. As of September 30, 1999, James River had repurchased 10,500 shares at a
cost of $158 thousand. James River's leverage ratio was 10.06%, with a tier 1
risk-based capital ratio of 15.35% and a total risk-based capital ratio of
16.60%. Each of these ratios is above the level required to be classified for
regulatory purposes as "well capitalized".
RECENT ACCOUNTING CHANGES
- -------------------------
Financial Accounting Standards Board (FASB) Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", was issued in
June 1998. This Statement establishes accounting and reporting standards for
derivative instruments, including certain derivative information embedded in
other contracts, (collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This Statement is effective for all fiscal quarters
or fiscal years beginning after June 15, 2000. James River does not expect this
Statement to materially affect its financial condition or results of operations.
YEAR 2000 PROJECT
- -----------------
State of Readiness
In 1997 James River's board of directors established a Year 2000 Plan
to assess internal and external risks posed by the date change issue and to
develop corrective actions and contingency plans as may be determined prudent by
the assessment. The plan covers internal information technology systems,
environmental systems, and other non-information technology products and date
sensitive issues. In addition James River has communicated with suppliers and
significant customers to determine their state of readiness. The Company's
management, its board of directors, and the management and boards of the
Company's subsidiary banks receive updates at least quarterly, and more
frequently as needed, regarding progress and activities related to the Year 2000
Plan. The five phases of the plan and the progress towards completion of each
phase are described below.
Awareness Phase - Completed third quarter 1997;
Assessment Phase - Completed first quarter 1998;
Renovation Phase - No significant renovation to existing systems (principal
hardware and software systems were compliant when purchased);
Validation Phase - Completed first quarter 1999; and
Implementation Phase - Completed secondquarter 1999 for mission critical
systems.
Testing has been completed on the hardware and software for "mission
critical" systems and for all other software applications and hardware as well.
In addition, testing has been performed on all environmental systems, including
security systems, heating and air conditioning units, and vault timers, among
others. Testing has been completed on all personal computers and software
applications that are not deemed critical. Such software testing included
software for processing new deposit accounts and loans, as well as merchant
credit card terminals. The testing did not result in any determinable Year 2000
difficulties. A review of vault mechanisms has been completed. The review
determined that vault timers do not have embedded chips and are not dependent on
electrical or other sources of power. Consequently, the Company's management
does not expect to experience difficulty with the vaults. Reviews of security
systems reveal that such systems have battery back-up capabilities in the event
of power failure. Battery testing will be undertaken near year-end. In addition,
ATM hardware has been evaluated for Year 2000 readiness. Because of the age of
some of the equipment, vendors have been contacted to determine readiness.
<PAGE>
The Federal Reserve Bank of Richmond provides several significant
outside systems that James River is dependent upon. Testing of these systems,
which was completed in the first quarter of 1999, revealed no difficulties with
processing in Year 2000.
In addition, James River relies upon outside sources for investment
securities accounting and custodial services, stock transfer services, and
disaster recovery services. In each case, James River has been provided with
information indicating that all vendors have completed Year 2000 testing and
upgraded all non-compliant equipment.
In 1998, James River's subsidiary banks completed an assessment of
large commercial loan customers for compliance with Year 2000 issues and are
preparing another written communication to all customers regarding the status of
the Company's Year 2000 efforts. In addition, the Company initiated a
communications program directed at employees and customers that will provide
written information regarding Year 2000 issues and Company contact information
at each of the Company's locations.
James River's efforts to address Year 2000 issues are subject to
guidelines established by the Federal Financial Institutions Examination Council
("FFIEC"). Consequently, the Company's plan and its progress in implementing
that plan are subject to periodic examination by the Federal Reserve Bank of
Richmond.
The Costs to Address the Company's Year 2000 Issues
At this stage, James River has incurred costs of approximately $25,000
related to Year 2000. This figure represents the software upgrade to two (2)
Proof Department Reader/Sorter machines; statement stuffers on Year 2000 scams
for all accounts; the re-ordering of ATM cards due to expiration dates of
December 31, 1999; and associated advertising costs for "Mrs. Y2K Day" in each
bank main office as well as for postage and printing for the CEO letters mailed
to deposit customers in this quarter. The Company has completed its
investigation into the advisability of hiring security guards for its branch
banking offices during a period of time around the millennium date change, and
determined that each branch will have security guards or new locking devices on
the front doors, or a combination of both, depending on the location. The
projections for expenses related to Year 2000 range from $50,000 to $100,000,
which is an increase from Company's previous estimate due primarily to the
decision to hire security guards. In addition, a non-cash charge of
approximately $61,000 will be incurred in 1999 to maintain back-up computer
capabilities.
The Risks of the Company's Year 2000 Issues
James River is subject to a variety of Year 2000 risks for which there
are no means to measure, test, or control. One such risk is that suppliers or
vendors upon whom James River depends will not be Year 2000 ready. James River
also is subject to difficulties experienced by local governments and businesses
and those on a state or national level that could have ramifications upon the
Company and/or that of significant customers or suppliers.
Another significant risk to the Company for Year 2000 is the failure of
one or more business entities that have considerable loan volume with one or
more of the Company's subsidiary banks. To assess that risk, James River
recently completed a survey of large commercial loan customers to determine
their ability to operate successfully past the century date change. Preliminary
results of this process showed no significant risks. James River will continue
to analyze those customers and their efforts to comply with the requirements of
Year 2000 for their business systems. Loan agreements allow the Company to
monitor these businesses and their financial performance to ensure their
on-going preparedness for Year 2000.
<PAGE>
In addition, the Company has risk that its internal assessment of Year
2000 issues did not identify or adequately prepare the Company for all Year 2000
issues.
The Company's Contingency Plans
James River continues to evaluate contingency plans with respect to the
Year 2000. The Company has outlined its needs for a short-term emergency and are
working on a more detailed plan for a longer-term business disruption, should
that be necessary. The manual processing of teller work as well as other
transactions such as loan payments, general ledger entries, etc. is the focus of
the Company's contingency plan. The utilization of back-office personnel to meet
customer requests for year-end statements is also a vital part of that plan.
During the third quarter of 1999, the Company evaluated the need for training to
implement these aspects of the contingency plan and will provide this training
during the early months of the fourth quarter. In addition, the disaster
recovery plans of each subsidiary have been reviewed during the second quarter
of 1999 with respect to Year 2000 issues. Also, in conjunction with its decision
to enter into a data processing agreement with SBS Data Services, Inc., James
River decided to retain its mainframe computer as part of its contingency
back-up plan. Upgrades to the operating system, Unix, and any other ancillary
equipment pertaining to the mainframe have been ordered and loaded. Testing has
been performed on several of the ancillary functions during this quarter, such
as the proof machines, with no problems encountered. Testing on the remainder of
the ancillary functions as well as the mainframe itself will be completed during
the fourth quarter. The mainframe would be activated only if SBS Data Services,
Inc.'s disaster recovery plan failed.
Another issue that the subsidiary banks have addressed is the adequacy
of liquidity and related security concerns. Through various media, the public
has been cautioned to maintain above normal levels of cash. To meet expected
cash requirements and other liquidity needs, the subsidiary banks and their
Boards of Directors have established borrowing privileges at the Federal
Reserve. Analysis of cash flow over the past year for each bank and branch has
been performed in an effort to establish cash needs during the last quarter of
1999.
In conjunction with the above normal cash needs, the Company and its
subsidiaries have reviewed insurance coverage needs and security measures that
may be necessary. An analysis of the use of security guards has been performed
as well as an inventory taken of dual-control facilities for cash storage.
The Company expects on-going reviews of all contingency plans and is
committed to updating the overall plan as necessary to ensure continued
operation in the new century.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
James River's primary market risk is exposure to interest rate risk.
Fluctuations in interest rates will impact both the level of interest income and
interest expense and the market value of James River's interest-earning assets
and interest-bearing liabilities. There were no material changes in James
River's market risk management strategy during the third quarter of 1999. James
River is monitoring its interest rate risk in view of increases in both short
and long-term interest rates. Based on current assessments and the level of
changes in interest rates, the effects are not expected to be material.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings to which James River or its
subsidiaries are involved in other than nonmaterial legal proceedings
occurring in the ordinary course of business.
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Securities Holders
James River held its 1999 Annnual Meeting of Shareholders on July 22,
1999. At the Annual Meeting, the following matters were acted upon by
shareholders.
1. Approval of merger with State Bank of Remington.
FOR AGAINST ABSTAIN
2,468,597 117,339 54,355
2. Election of Directors. The following persons were elected as
directors of James River to serve a one year term, with the votes For
and Withheld as indicated below.
DIRECTOR FOR WITHHELD
Harold U. Blythe 2,966,742 27,255
G. P. Jackson 2,983,345 10,652
James E. Butler, Jr. 2,982,961 11,036
Ben P. Kanak 2,980,645 13,352
Bruce B. Gray 2,962,857 31,140
John A. Ramsey, Jr. 2,981,920 12,077
Elmon T. Gray 2,962,782 31,215
Robert E. Spencer, Jr. 2,983,420 10,577
Horace R. Higgins, Jr. 2,984,332 9,665
3. Ratification of Yount, Hyde & Barbour, P.C. as independent auditors
for 1999.
FOR AGAINST ABSTAIN
2,934,559 40,112 19,326
Item 5. Other Information - None
<PAGE>
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - Financial Data Schedule, Exhibit 27
Amended and Restated Stock/Cash Plan for
Payment of Directors Fees, Exhibit 10.8
(b) Reports on Form 8-K - None
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.
JAMES RIVER BANKSHARES, INC.
Date: November 10, 1999 /s/ Donald W. Fulton, Jr.
------------------ --------------------------------------
Donald W. Fulton, Jr., Sr. Vice President
and Chief Financial Officer
JAMES RIVER BANKSHARES, INC.
AMENDED AND RESTATED STOCK/CASH PLAN FOR PAYMENT OF DIRECTORS' FEES
SECTION 1. PURPOSE.
The purpose of the Plan is to promote the interest of the Company and
its shareholders by (i) attracting, retaining, and motivating experienced and
knowledgeable directors of the Company and its subsidiaries; and (ii) enabling
directors of the Company and its subsidiaries to invest in the Company and to
participate in the long-term success of the Company by electing to receive all
or a portion of their fees for service as a director in the form of JRB Stock.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall have the meanings
set forth below:
(a) "BOARD" means the Board of Directors of the Company.
(b) "CODE" means the Internal Revenue Code of 1986, as
amended, or any successor thereto.
(c) "COMMITTEE" means the Compensation Committee of the Board.
If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
(d) "COMPANY" means James River Bankshares, Inc., a
corporation organized under the laws of the Commonwealth of Virginia.
(e) "ELECTION" means the election made by an Eligible Director
to receive all or a portion of his/her director's fees in JRB Stock under the
Plan.
(f) "ELIGIBLE DIRECTOR" means a member of the Board or a
member of a Subsidiary's Board eligible to elect to receive all or a portion of
his/her director's fees in JRB Stock under the Plan.
(g) "EFFECTIVE DATE" means the date of shareholder approval of
the Plan.
(h) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
<PAGE>
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, or any successor thereto.
(j) "FAIR MARKET VALUE" means as of any given date, the
average last reported sale price of the JRB Stock on the NASDAQ National Market
(consolidated trading) for the ten (10) trading days ending on the Friday
preceding the meeting for which the Participant is to be paid. (For example, if
the meeting is on Wednesday, March 20, then the Fair Market Value will be
calculated using the last reported sale price for the JRB Stock for the ten (10)
days the NASDAQ National Market was open for trading prior to and ending on
Friday, March 15.)
(k) "JRB STOCK" means the Common Stock, $5.00 par value per
share, of the Company.
(l) "PARTICIPANT" means an Eligible Director who has elected
to receive all or a portion of his/her director's fees in JRB Stock.
(m) "PLAN" means the James River Bankshares, Inc. Stock/Cash
Plan for Payment of Directors' Fees, as set forth herein and as it may be
amended from time to time.
(n) "SEC" means the Securities and Exchange Commission.
(o) "SUBSIDIARY" means a corporation or other business entity
of which the Company owns a majority of the voting shares or interests, and any
subsidiary of a Subsidiary, as long as the parent's subsidiary owns voting
control of the shares or interests of such subsidiary.
(p) "SUBSIDIARY'S BOARD" means the Board of Directors of a
Subsidiary.
SECTION 3. ADMINISTRATION.
The Committee will administer the Plan, subject to approval of the
Board. The Committee is authorized to interpret the provisions of the Plan and
to resolve all disputes arising under the Plan. Any determination of the
Committee shall be final and binding upon all persons having or claiming any
interest under the Plan.
SECTION 4. SHARES OF STOCK SUBJECT TO THE PLAN.
The stock to be subject to the Plan shall be authorized and unissued
shares of JRB Stock. The maximum number of shares of JRB Stock that may be
issued under the Plan may not exceed in the aggregate 3% of the issued and
outstanding JRB Stock at any time.
<PAGE>
SECTION 5. CAPITAL ADJUSTMENTS.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the JRB Stock, such substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan, as may be
determined to be appropriate by the Committee in its sole discretion.
SECTION 6. ELIGIBILITY.
Only elected directors of the Company or elected directors of a
Subsidiary are eligible to be a Participant under the Plan.
SECTION 7. RIGHTS UNDER THE PLAN.
An Eligible Director may elect to receive all or a portion of his/her
earned fees for attendance at a meeting of the board or committee of the board
on which the Eligible Director serves in the form of JRB Stock, rather than in
cash. The number of shares of JRB Stock to which a Participant shall be entitled
shall be determined by dividing the amount owed to the Participant for
attendance at the board or committee meeting by the Fair Market Value of the JRB
Stock.
SECTION 8. ELECTION TO PARTICIPATE.
Within three weeks of election, each Eligible Director shall complete a
Fee Authorization Form in the form attached hereto as Exhibit A, on which form
the Eligible Director shall designate how his/her fees are to be paid during the
Eligible Director's term. The Eligible Director may revise his/her election
annually by completing a new Fee Authorization Form within three weeks of
his/her re-election to serve as a director.
<PAGE>
Payment may be in cash, in stock, or in a combination of cash and
stock, as indicated by percentage. The Fee Authorization Form shall be given to
the Corporate Secretary of the Company, as the case may be, for processing. In
the event an Eligible Director fails to complete the Fee Authorization Form,
such failure shall constitute an election to receive his/her fees in cash.
After each meeting of the Board or a Subsidiary Board, the Company's
Corporate Secretary shall notify the Company's Registrar, in writing, indicating
the number of whole shares to be issued to each Participant. The number of whole
shares will be determined by dividing the fee to be paid to the Participant in
stock by the Fair Market Value of JRB Stock. Any remaining amount will be paid
by check, not by the issuance of fractional shares.
SECTION 9. TAX TREATMENT.
Participants shall be advised that the issuance of JRB Stock as payment
for their directors' fees shall constitute receipt of compensation for purposes
of federal and state income tax.
SECTION 10. AMENDMENT AND TERMINATION.
The Board may terminate or amend this Plan at any time and from time to
time; provided, however, that the Board may not, without approval of the
shareholders of the Company, increase the maximum number of shares of JRB Stock
reserved for issuance under the Plan (other than for adjustments pursuant to
Section 5), materially increase the benefits accorded to Participants under the
Plan or change the description of the individuals eligible to participate in the
Plan. No termination of or amendment to the Plan may adversely affect the rights
of a Participant with respect to any Election made by a Participant as of the
date of such termination or amendment without such Participant's consent.
SECTION 11. GENERAL PROVISIONS.
(a) The Committee may require each Participant to represent to
and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer. All certificates for shares of JRB Stock delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Exchange Act, any stock exchange or automated
quotation system upon which the JRB Stock is then listed, and any applicable
federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.
<PAGE>
(b) The adoption of the Plan and/or the Election by an
Eligible Director shall not confer upon any director of the Company or of a
Subsidiary any right to continue as a member of the Board or the Subsidiary's
Board.
(c) The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any issuable
JRB Stock or amounts payable in the event of the Participant's death are to be
paid.
(d) This Plan and all actions taken hereunder shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia, except to the extent federal law and the rules and regulations
promulgated thereunder by the SEC apply.
(e) It is the intent of the Company that transactions
involving equity securities under the Plan be exempt under Rule 16b-3 under the
Exchange Act. Accordingly, if any provision of the Plan does not comply with the
requirements of Rule 16b-3 as then applicable to such a transaction, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements with respect to such transaction.
<PAGE>
EXHIBIT A
BOARD OF DIRECTORS
FEE AUTHORIZATION
In accordance with the James River Bankshares, Inc. Stock/Cash Plan for Payment
of Directors' Fees Plan approved by the shareholders on May 23, 1996,
authorizing payment of Directors' fees either in dollars or the equivalent value
of shares of James River Bankshares, Inc. common stock, or a combination
thereof, I elect to receive my fee for the regular meetings of the board of
directors and all committee meetings during the period commencing
___________________ and terminating _______________________, as follows:
______ cash only
______ stock only
______ combination (in percentages) ______ stock ______ cash
Please send check and/or stock certificates to the following address:
----------------------------------
(EXACT NAME FOR STOCK CERTIFICATE)
----------------------------------
----------------------------------
----------------------------------
I understand that receipt of the stock in lieu of cash will be
considered a taxable event as though I had received the actual cash.
---------------------------
Director
- --------------------
Date
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 13,962
<INT-BEARING-DEPOSITS> 229
<FED-FUNDS-SOLD> 300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 107,373
<INVESTMENTS-CARRYING> 14,312
<INVESTMENTS-MARKET> 14,254
<LOANS> 335,806
<ALLOWANCE> 4,533
<TOTAL-ASSETS> 490,489
<DEPOSITS> 419,218
<SHORT-TERM> 7,153
<LIABILITIES-OTHER> 3,001
<LONG-TERM> 11,000
0
0
<COMMON> 22,881
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<TOTAL-LIABILITIES-AND-EQUITY> 490,489
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<EPS-BASIC> 0.61
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<LOANS-NON> 829
<LOANS-PAST> 3,615
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