<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
---------------------------------------
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 0-26876
---------------
OAK HILL FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1010517
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14621 State Route 93
Jackson, Ohio 45640
- --------------------- ----------
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (740) 286-3283
Check whether the issuer (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
--- ---
As of May 6, 1998, the latest practicable date, 3,521,790 shares of the
registrant's common stock, $.50 stated value, were issued and outstanding.
Transitional Small Business Disclosure Format:
Yes No X
--- ---
Page 1 of 17 pages
<PAGE> 2
Oak Hill Financial, Inc.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II - OTHER INFORMATION 14
SIGNATURES 15
2
<PAGE> 3
<TABLE>
OAK HILL FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
(Restated)
<S> <C> <C>
Cash and due from banks $ 8,197 $ 9,840
Federal funds sold 12,153 3,773
Investment securities designated as available for sale - at market 52,133 51,989
Loans receivable - net 291,168 285,249
Loans held for sale - at lower of cost or market 568 --
Office premises and equipment - net 4,555 4,608
Federal Home Loan Bank stock - at cost 2,706 2,659
Accrued interest receivable 2,155 2,346
Prepaid expenses and other assets 433 180
Cash surrender value of life insurance 608 591
Deferred federal income tax asset 752 682
-------- --------
Total assets $375,428 $361,917
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $321,166 $301,965
Securities sold under agreements to repurchase 929 258
Advances from the Federal Home Loan Bank 16,524 24,705
Accrued interest payable and other liabilities 1,755 1,530
Federal income taxes payable 627 110
-------- --------
Total liabilities 341,001 328,568
Stockholders' equity
Common stock - $.50 stated value; authorized 5,000,000 shares,
3,530,390 and 3,529,390 shares issued at March 31, 1998, and
December 31, 1997 1,765 1,765
Additional paid-in capital 4,022 4,012
Retained earnings 28,434 27,410
Treasury stock (11,200 shares at cost) (28) (28)
Unrealized gains on securities designated as available
for sale, net of related tax effects 234 190
-------- --------
Total stockholders' equity 34,427 33,349
-------- --------
Total liabilities and stockholders' equity $375,428 $361,917
======== ========
</TABLE>
3
<PAGE> 4
OAK HILL FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31,
(In thousands, except share data)
1998 1997
(Restated)
Interest income
Loans $6,672 $5,534
Investment securities 802 917
Interest-bearing deposits and other 160 111
------ ------
Total interest income 7,634 6,562
Interest expense 3,343 2,912
Borrowings 311 337
------ ------
Total interest expense 3,654 3,249
------ ------
Net interest income 3,980 3,313
Provision for losses on loans 277 106
------ ------
Net interest income after
provision for losses on loans 3,703 3,207
Other income
Gain on sale of loans 144 14
Gain on investment securities transactions 14 --
Service fees, charges and other operating 358 338
------ ------
Total other income 516 352
General, administrative and other expense
Employee compensation and benefits 1,288 1,009
Occupancy and equipment 309 340
Federal deposit insurance premiums 15 17
Franchise taxes 127 114
Other operating 559 434
------ ------
Total general, administrative
and other expense 2,298 1,914
------ ------
Earnings before income taxes 1,921 1,645
Federal income taxes
Current 521 474
Deferred 94 74
------ ------
Total federal income taxes 615 548
------ ------
NET EARNINGS $1,306 $1,097
====== ======
EARNINGS PER SHARE
Basic $ .30 $ .25
====== ======
Diluted $ .29 $ .25
====== ======
4
<PAGE> 5
OAK HILL FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended March 31,
(In thousands)
1998 1997
Net earnings $1,306 $1,097
Other comprehensive income, net of tax:
Unrealized gains on securities
designated as available for sale 68 (244)
------ ------
Comprehensive income $1,374 $ 853
====== ======
5
<PAGE> 6
<TABLE>
OAK HILL FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31,
(In thousands)
<CAPTION>
1998 1997
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 1,306 $ 1,097
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 136 136
Amortization (accretion) of premiums and discounts
on investment securities - net 17 (3)
Amortization of deferred loan origination costs 101 54
Federal Home Loan Bank stock dividends (47) (35)
Loans originated for sale in secondary market (9,520) (1,589)
Proceeds from sale of loans in the secondary market 9,048 1,673
Gain on sale of loans (96) (14)
Provision for losses on loans 277 106
Gain on investment securities transactions (14) --
Gain on sale of office equipment (4) --
Increase (decrease) in cash due to changes in:
Accrued interest receivable 191 (120)
Prepaid expenses and other assets (270) (165)
Accrued expenses and other liabilities 742 313
Federal income taxes
Current (188) --
Deferred 94 74
-------- --------
Net cash provided by operating activities 1,773 1,527
Cash flows provided by (used in) investing activities:
Loan principal repayments 38,386 33,459
Loan disbursements (44,683) (40,558)
Principal repayments on mortgage-backed securities 306 499
Proceeds from maturity and redemption of investment securities 6,000 3,706
Purchase of office premises and equipment (83) (82)
Proceeds from sale of office equipment 4 --
Purchase of investment securities
designated as available for sale (6,385) (13,161)
(Increase) decrease in federal funds sold - net (8,380) 215
-------- --------
Net cash used in investing activities (14,835) (15,922)
-------- --------
Net cash used in operating and investing
activities (balance carried forward) (13,062) (14,395)
-------- --------
</TABLE>
6
<PAGE> 7
<TABLE>
OAK HILL FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the three months ended March 31,
(In thousands)
<CAPTION>
1998 1997
(Restated)
<S> <C> <C>
Net cash used in operating and investing
activities (balance brought forward) $(13,062) $(14,395)
Cash flows provided by (used in) financing activities:
Proceeds from securities sold under agreement to repurchase 671 95
Net increase in deposit accounts 19,201 16,724
Proceeds from Federal Home Loan Bank advances 975 5,755
Repayment of Federal Home Loan Bank advances (9,156) (7,553)
Proceeds from issuance of shares under stock option plan 10 --
Dividends paid on common shares (282) (172)
-------- --------
Net cash provided by financing activities 11,419 14,849
-------- --------
Net increase (decrease) in cash and cash equivalents (1,643) 454
Cash and cash equivalents at beginning of period 9,840 8,635
-------- --------
Cash and cash equivalents at end of period $ 8,197 $ 9,089
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ -- $ 24
======== ========
Interest on deposits and borrowed money $ 3,662 $ 3,227
======== ========
Supplemental disclosure of noncash investing activities:
Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects $ 68 $ (244)
======== ========
Recognition of mortgage servicing rights in
accordance with SFAS No. 125 $ 48 $ --
======== ========
</TABLE>
7
<PAGE> 8
OAK HILL FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
On October 1, 1997, Oak Hill Financial, Inc. (the "Company") merged
Unity Savings Bank with and into its subsidiary Oak Hill Banks (the
"Bank"), in a transaction that was accounted for as a
pooling-of-interests. Accordingly, the consolidated financial
statements as of December 31, 1997 and for the three month period ended
March 31, 1997, have been restated to reflect the effects of the
business combination as of January 1, 1997.
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB 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.
Accordingly, these financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of the
Company included in the Annual Report on Form 10-KSB for the year ended
December 31, 1997. However, all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three month periods
ended March 31, 1998 and 1997, are not necessarily indicative of the
results which may be expected for the entire year.
2. Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries the Bank and Action Finance
Company ("Action"). Action was incorporated during 1997 for the purpose
of conducting finance lending operations. Action began such operations
during 1998 using two separate office locations. All significant
intercompany balances and transactions have been eliminated.
3. Earnings Per Share
------------------
Basic earnings per share is computed based upon the weighted-average
shares outstanding during the period, adjusted for the issuance of
804,613 shares in the Unity merger and a 5 for 4 stock dividend which
was declared on April 28, 1998, for shareholders of record on May 1,
1998 and which is payable on June 1, 1998. Weighted-average common
shares outstanding totaled 4,398,418 and 4,396,487 for the three month
periods ended March 31, 1998 and 1997, respectively. Diluted earnings
per share is computed taking into consideration common shares
outstanding and dilutive potential common shares to be issued under the
Company's stock option plan. Weighted-average common shares deemed
outstanding for purposes of computing diluted earnings per share
totaled 4,497,990 and 4,417,790 for the three month periods ended March
31, 1998 and 1997, respectively.
4. Effects of Recent Accounting Pronouncements
-------------------------------------------
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
that provides accounting guidance on transfers of financial assets,
servicing of financial assets, and extinguishment of liabilities. SFAS
No. 125 introduces an approach to accounting for transfers of financial
assets that provides a means of dealing with more complex transactions
in which the seller disposes of only a partial interest in the assets,
retains rights or obligations, makes use of special purpose entities in
the transaction or otherwise has continuing involvement with the
transferred assets. The new accounting method, referred to as the
financial components approach,
8
<PAGE> 9
provides that the carrying amount of the financial assets transferred
be allocated to
9
<PAGE> 10
OAK HILL FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Effects of Recent Accounting Pronouncements (continued)
-------------------------------------------------------
components of the transaction based on their relative fair values. SFAS
No. 125 provides criteria for determining whether control of assets has
been relinquished and whether a sale has occurred. If the transfer does
not qualify as a sale, it is accounted for as a secured borrowing.
Transactions subject to the provisions of SFAS No. 125 include among
others, transfers involving repurchase agreements, securitizations of
financial assets, loan participations, factoring arrangements and
transfers of receivables with recourse.
An entity that undertakes an obligation to service financial assets
recognizes either a servicing asset or liability for the servicing
contract (unless related to a securitizations of assets, and all the
securitized assets are retained and classified as held to maturity). A
servicing asset or liability that is purchased or assumed is initially
recognized at its fair value. Servicing assets and liabilities are
amortized in proportion to and over the period of estimated net
servicing income or net servicing loss and are subject to subsequent
assessments for impairment based on fair value.
SFAS No. 125 provides that a liability is removed from the balance
sheet only if the debtor either pays the creditor and is relieved of
its obligation for the liability or is legally released from being the
primary obligor.
SFAS No. 125 is effective for transfers and servicing of financial
assets and extinguishment of liabilities occurring after December 31,
1997, and is to be applied prospectively. Earlier or retroactive
application is not permitted. Management adopted SFAS No. 125 on
January 1, 1998 as required, without material effect on the Company's
consolidated financial position or results of operations.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and display
of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general-purpose financial statements. SFAS
No. 130 requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements. It does not require a
specific format for the financial statement but requires that an
enterprise display an amount representing total comprehensive income
for the period in that financial statement.
SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in-capital in the
equity section of a statement of financial position. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods for
comparative purposes is required. Management adopted SFAS No. 130
effective January 1, 1998, as required without material impact on the
Company's financial statements.
10
<PAGE> 11
OAK HILL FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. Effects of Recent Accounting Pronouncements (continued)
-------------------------------------------------------
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 significantly
changes the way that public business enterprises report information
about operating segments in annual financial statements and requires
that those enterprises report select information about reportable
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and
services, geographic areas and major customers. SFAS No. 131 uses a
"management approach" to disclose financial and descriptive information
about the way that management organizes the segments within the
enterprise for making operating decisions and assessing performance.
For many enterprises, the management approach will likely result in
more segments being reported. In addition, SFAS No. 131 requires
significantly more information to be disclosed for each reportable
segment than is presently being reported in annual financial statements
and also requires that selected financial information be reported in
interim financial statements. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. SFAS No. 131 is not expected
to have a material impact on the Company's financial statements.
5. Other Matters
-------------
As with all providers of financial services, the Company's operations
are heavily dependent on information technology systems. The Bank and
Action are addressing the potential problems associated with the
possibility that the computers that control or operate the Bank's and
Action's information technology system and infrastructure may not be
programmed to read four-digit date codes and, upon arrival of the year
2000, may recognize the two-digit code "00" as the year 1900, causing
systems to fail to function or to generate erroneous data. The Bank and
Action are working with the companies that supply or service its
information technology systems to identify and remedy any year 2000
related problems.
As of March 31, 1998, neither the Bank nor Action has identified any
specific expenses that are reasonably likely to be incurred by the Bank
or Action in connection with this issue and do not expect to incur
significant expenses to implement the necessary corrective measures. No
assurance can be given, however, that significant expense will not be
incurred in future periods. In the event that the Bank and/or Action is
ultimately required to purchase replacement computer systems, programs,
and/or equipment, or incur substantial expense to make the Bank's
and/or Action's systems, programs, and/or equipment year 2000
compliant, the Bank's and/or Action's net earnings and financial
condition could be adversely affected.
In addition to possible expense related to its own systems, the Bank
and/or Action could incur losses if loan payments are delayed due to
year 2000 problems affecting any major borrowers in the Bank's or
Action's primary market area. Because the Bank's and Action's loan
portfolios are highly diversified with regard to individual borrowers
and types of businesses, and the Bank's and Action's primary market
areas are not significantly dependent upon any one employer or
industry, the Bank and Action do not expect any significant or
prolonged difficulties that will affect net earnings or cash flow.
11
<PAGE> 12
OAK HILL FINANCIAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Discussion of Financial Condition Changes from December 31, 1997 to March 31,
- -----------------------------------------------------------------------------
1998
- ----
At March 31, 1998, the Company had total assets of $375.4 million, an
increase of approximately $13.5 million, or 3.7%, over December 31, 1997 levels.
The increase in total assets was funded primarily by growth in the deposit
portfolio of $19.2 million and undistributed net earnings of $1.0 million, which
were partially offset by a decrease in Federal Home Loan Bank advances of $8.2
million.
Cash, federal funds sold and investment securities totaled $72.5
million at March 31, 1998, an increase of $6.9 million, or 10.5%, over December
31, 1997 levels. During the three months ended March 31, 1998, management
purchased $6.4 million of investment securities, while $6.3 million of
securities matured. Securities purchased consisted primarily of U.S. treasury
notes and U.S. government agency securities. The increase reflects management's
efforts to maintain adequate levels of liquidity while maximizing yield on
short-term investments.
Loans receivable and loans held for sale totaled $291.7 million at
March 31, 1998, an increase of $6.5 million, or 2.3%, over the total at December
31, 1997. Loan disbursements totaled approximately $54.2 million during the 1998
three month period, while principal repayments and sales amounted to $38.4
million and $9.0 million, respectively. Loan disbursements increased by $12.1
million, or 28.6%, during the 1998 period, as compared to the comparable period
in 1997. Loans originated in 1998 were primarily comprised of commercial loans
and 1-4 family residential loans.
The Company's allowance for loan losses amounted to $3.8 million at
March 31, 1998, an increase of $97,000 or 2.6% over the total at December 31,
1997. The allowance for loan losses represented 1.30% of the total loan
portfolio at March 31, 1998 and December 31, 1997. The Company's allowance
represented 392.1% and 360.4% of non-performing loans, which totaled $980,000
and $1.0 million at March 31, 1998 and December 31, 1997, respectively.
The deposit portfolio totaled $321.2 million at March 31, 1998, an
increase of $19.2 million, or 6.4%, over December 31, 1997 levels. Proceeds from
deposit growth were utilized to fund loan originations and to repay advances
from the Federal Home Loan Bank. The increase resulted primarily from
management's marketing efforts and continued growth at newer branch facilities.
The Bank is required to maintain minimum regulatory capital pursuant to
federal regulations. At March 31, 1998, the Bank's regulatory capital
substantially exceeded all regulatory capital requirements.
12
<PAGE> 13
OAK HILL FINANCIAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three month periods ended March 31, 1998 and 1997
Comparison of Results of Operations for the Three Month Periods Ended March 31,
- -------------------------------------------------------------------------------
1998 and 1997
- -------------
General
- -------
Net earnings for the three months ended March 31, 1998 totaled $1.3
million, an increase of $209,000, or 19.1%, over the $1.1 million in net
earnings reported in the comparable 1997 period. The increase in earnings in the
1998 period was primarily attributable to a $496,000 increase in net interest
income after provision for losses on loans and a $164,000 increase in other
income, which were partially offset by a $384,000 increase in general,
administrative and other expenses and an increase in the federal income tax
provision of $67,000.
Net Interest Income
- -------------------
Total interest income for the three months ended March 31, 1998
increased by $1.1 million, or 16.3%, generally reflecting the effects of growth
in average interest-earning assets from $306.9 million to $353.0 million for the
three month periods ending March 31, 1997 and 1998, respectively, coupled with
an increase in the weighted-average yield year-to-year from 8.67% to 8.77%.
Similarly, total interest expense increased for the three months ended March 31,
1998 by $405,000, or 12.5%, also reflecting the growth in average
interest-bearing liabilities from $264.7 million to $306.9 million, as well as
an increase in the weighted-average cost of funds from 4.98% to 4.94%, during
the respective three month periods.
As a result of the foregoing changes in interest income and interest
expense, net interest income increased by $667,000, or 20.1%, for the three
months ended March 31, 1998, as compared to the comparable quarter in 1997. The
interest rate spread amounted to 3.83% and 3.69% for the three months ended
March 31, 1998 and 1997, while the net interest margin totaled 4.57% and 4.38%
for the three months ended March 31, 1998 and 1997, respectively.
Provision for Losses on Loans
- -----------------------------
The provision for losses on loans totaled $277,000 for the three months
ended March 31, 1998, an increase of $171,000 over the comparable 1997 period.
The increase in the provision was primarily attributable to growth in the
portfolio year-to-year.
Although management believes that it uses the best information
available in providing for possible loan losses and believes that the allowance
was adequate at March 31, 1998, future adjustments to the allowance could be
necessary and net earnings could be affected if circumstances and/or economic
conditions differ substantially from the assumptions used in making the initial
determinations.
13
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For the three month periods ended March 31, 1998 and 1997
Comparison of Results of Operations for the Three Month Periods Ended March 31,
- -------------------------------------------------------------------------------
1998 and 1997 (continued)
- -------------------------
Other Income
- ------------
Other income for the three months ended March 31, 1998, totaled
$516,000, an increase of $164,000, or 46.6%, over the $352,000 reported in the
comparable 1997 period. The increase resulted from a $20,000, or 5.9% increase
in service fees, charges and other operating income, an increase of $130,000, or
928.6% in gain on sale of loans, and a $14,000 gain on sale of investments. The
increase in gain on sale of loans was primarily attributable to an increase in
the number of loans sold from the comparable 1997 period.
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense increased for the three
months ended March 31, 1998 by $384,000, or 20.1%. The increase was due
primarily to a $279,000, or 27.7%, increase in employee compensation and
benefits, and an increase in franchise taxes of $13,000, which were partially
offset by a $31,000, or 9.1% decrease in occupancy and equipment expense, and a
$2,000, or 11.8% decrease in federal deposit insurance premiums. Other operating
expenses also increased year-to-year by $125,000, or 28.8%.
The increase in employee compensation and benefits is due primarily to
additional staffing levels, primarily related to the start-up of the Action
subsidiary, coupled with normal merit increases, which were partially offset by
an increase in deferred costs related to greater lending volume year-to-year.
The increase in franchise taxes resulted from greater levels of stockholders'
equity in 1998. The decrease in occupancy and equipment expense resulted
primarily from expenses related to the addition of new branch facilities during
the first quarter of 1997. The increase in other operating expenses is primarily
attributable to costs incurred in connection with the inception of the Action
subsidiary, coupled with the Company's overall growth year to year.
Federal Income Taxes
- --------------------
The provision for federal income taxes increased by $67,000, or 12.2%,
during the three months ended March 31, 1998, as compared to the same period in
1997. The effective tax rates for the three month periods ended March 31, 1998
and 1997 were 32.0% and 33.3%, respectively.
14
<PAGE> 15
OAK HILL FINANCIAL, INC.
PART II
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
---------------------------------------------------
(a) The Company held its 1998 Annual Meeting of Shareholders April
28, 1998. Holders of 3,272,701 Common Shares of the Company
were present were present representing 93.0% of the Company's
3,519,190 Common Shares outstanding.
(b) and (c) The following persons were elected as Class II members of
the Company's Board of Directors to serve until the 2000
Annual Meeting or until their successors are duly elected
and qualified. Each person received the number of votes for
or the number of votes with authority withheld indicated
below.
Name Votes For Votes Withheld
---- --------- --------------
Barry M. Dorsey, Ph.D. 3,270,058 2,643
Rick A. McNelly 3,270,058 2,643
Donald R. Seigneur 3,270,058 2,643
H. Grant Stephenson 3,270,058 2,643
The continuing Class I directors, whose terms expire at the 1999 Annual
Meeting are: Evan E. Davis, John D. Kidd, C. Clayton Johnson, Richard
P. LeGrand, and D. Bruce Knox.
The proposal for the ratification of the appointment of Grant Thornton
LLP as independent auditors for the Company for the fiscal year ending
December 31, 1998, was approved with 3,270,003 votes FOR, 1,742 votes
AGAINST, and 956 votes ABSTAIN.
ITEM 5. Other Information
-----------------
None
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
None
15
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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.
Date: May 6, 1998 By: /s/ John D. Kidd
------------------- -----------------------------
John D. Kidd
President
Date: May 6, 1998 By: /s/ H. Tim Bichsel
------------------- -----------------------------
H. Tim Bichsel
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,132
<INT-BEARING-DEPOSITS> 65
<FED-FUNDS-SOLD> 12,153
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,133
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 291,736
<ALLOWANCE> 3,842
<TOTAL-ASSETS> 375,428
<DEPOSITS> 321,166
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,311
<LONG-TERM> 16,524
0
0
<COMMON> 1,765
<OTHER-SE> 32,662
<TOTAL-LIABILITIES-AND-EQUITY> 375,428
<INTEREST-LOAN> 6,672
<INTEREST-INVEST> 802
<INTEREST-OTHER> 160
<INTEREST-TOTAL> 7,634
<INTEREST-DEPOSIT> 3,343
<INTEREST-EXPENSE> 3,654
<INTEREST-INCOME-NET> 3,980
<LOAN-LOSSES> 277
<SECURITIES-GAINS> 14
<EXPENSE-OTHER> 2,298
<INCOME-PRETAX> 1,921
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</TABLE>
