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 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: O-19065
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Sandy Spring Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 52-1532952
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(State of incorporation) (I.R.S. Employer Identification Number)
17801 Georgia Avenue, Olney, Maryland 20832 301-774-6400
- ------------------------------------- ----- --------------
(Address of principal office) (Zip Code) (Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
YES X NO
-----
The number of shares of common stock outstanding as of April 22, 1998 is
9,675,138 shares.
SANDY SPRING BANCORP
INDEX
Page
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at
March 31, 1998 and December 31, 1997............................... 1
Consolidated Statements of Income and Comprehensive
Income for the Three Month Periods Ended March 31, 1998 and 1997... 2
Consolidated Statements of Cash Flows for
the Three Month Periods Ended March 31, 1998 and 1997.............. 3
Notes to Consolidated Financial Statements......................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................... 6
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................. 10
SIGNATURES................................................................ 11
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Sandy Spring Bancorp and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
March 31, December 31,
1998 1997
- -------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $33,172 $37,644
Federal funds sold 13,057 11,036
Interest-bearing deposits with banks 577 387
Residential mortgage loans held for sale 15,723 6,670
Investments available-for-sale (at fair value) 343,255 344,258
Investments held-to-maturity -- fair value of
$101,418 (1998) and $110,437 (1997) 99,881 108,991
Other equity securities 12,728 11,485
Total Loans (net of unearned income) 573,626 558,893
Less: Allowance for credit losses (7,230) (7,016)
--------------- ---------------
Net loans 566,396 551,877
Premises and equipment, net 28,496 28,468
Accrued interest receivable 10,661 9,908
Other real estate owned 542 296
Other assets 13,956 10,313
--------------- ---------------
TOTAL ASSETS $ 1,138,444 1,121,333
=============== ===============
LIABILITIES
Noninterest-bearing deposits $ 157,951 150,957
Interest-bearing deposits 709,378 702,054
--------------- ---------------
Total deposits 867,329 853,011
Short-term borrowings 134,066 144,426
Long-term borrowings 25,486 14,592
Accrued interest and other liabilities 5,046 4,629
--------------- ---------------
TOTAL LIABILITIES 1,031,927 1,016,658
STOCKHOLDERS' EQUITY
Common stock -- par value $1.00; shares authorized
15,000,000; shares issued and outstanding
9,676,196 (1998) and 4,862,574 (1997) 9,676 4,862
Surplus 25,617 31,695
Retained earnings 68,866 66,261
Accumulated other comprehensive income 2,358 1,857
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 106,517 104,675
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,138,444 1,121,333
=============== ===============
See Notes to Consolidated Financial Statements.
1
Sandy Spring Bancorp and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
------------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $ 12,851 $ 11,935
Interest on loans held for sale 134 54
Interest on deposits with banks 19 27
Interest and dividends on securities:
Taxable 5,706 4,466
Nontaxable 1,072 784
Interest on federal funds sold 229 326
------------------------------------------
TOTAL INTEREST INCOME 20,011 17,592
Interest expense:
Interest on deposits 7,001 6,986
Interest on short-term borrowings 1,760 807
Interest on long-term borrowings 346 80
------------------------------------------
TOTAL INTEREST EXPENSE 9,107 7,873
------------------------------------------
NET INTEREST INCOME 10,904 9,719
Provision for Credit Losses 267 100
------------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 10,637 9,619
Noninterest Income:
Securities gains 248 20
Service charges on deposit accounts 934 789
Gains on mortgage sales 601 269
Trust income 355 259
Other income 730 492
------------------------------------------
TOTAL NONINTEREST INCOME 2,868 1,829
Noninterest Expenses:
Salaries and employee benefits 4,547 3,740
Occupancy expense of premises 680 517
Equipment expenses 655 519
Marketing 251 334
FDIC insurance expense 25 25
Outside data services 357 297
Other expenses 1,380 1,199
------------------------------------------
TOTAL NONINTEREST EXPENSES 7,895 6,631
------------------------------------------
Income Before Income Taxes 5,610 4,817
Income Tax Expense 1,750 1,614
------------------------------------------
NET INCOME 3,860 3,203
Other Comprehensive Income, net of tax:
Net unrealized gain on investments available-
for-sale, net of taxes 501 (511)
------------------------------------------
COMPREHENSIVE INCOME $ 4,361 $ 2,692
==========================================
Basic Net Income Per Share* $ 0.40 $ 0.33
Diluted Net Income Per Share* 0.40 0.33
Dividends Declared Per Share* 0.13 0.11
*Per share data have been adjusted to give retroactive effect to a 2-for-1
stock split declared on January 28, 1998.
See Notes to Consolidated Financial Statements.
2
Sandy Spring Bancorp and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
March 31,
-------------------------
1998 1997
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net Income $ 3,860 $ 3,203
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 620 503
Provision for credit losses 267 100
Deferred income taxes (205) 60
Origination of loans held for sale (52,875) (12,393)
Proceeds from sales of loans held for sale 44,423 16,854
Gains on sales of loans held for sale (601) (269)
Securities gains (248) (20)
Net change in:
Accrued interest receivable (753) 109
Accrued income taxes 1,480 527
Other accrued expenses (1,063) (345)
Other -- net (3,741) 580
-------------------------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (8,836) 8,909
Cash Flows from Investing Activities:
Net increase in interest-bearing deposits with banks (190) (443)
Purchases of investments held-to-maturity (2,705) (2,998)
Purchases of other equity securities (1,242) 0
Purchases of investments available-for-sale (132,796) (46,686)
Proceeds from sales of investments available-for-sale 4,918 15,803
Proceeds from maturities, calls and principal
payments of investments held-to-maturity 11,860 3,773
Proceeds from maturities, calls and principal
payments of investments available-for-sale 129,914 31,085
Net increase in loans receivable (14,979) (14,378)
Expenditures for premises and equipment (728) (3,240)
-------------------------
NET CASH USED BY INVESTING ACTIVITIES (5,948) (17,084)
Cash Flows from Financing Activities:
Net increase in demand and savings accounts 4,926 1,401
Net increase in time and other deposits 9,392 4,391
Net increase (decrease) in short-term borrowings (10,460) 2,642
Proceeds from long-term borrowings 11,000 0
Retirement of long-term borrowings (6) (8)
Common stock purchased and retired (1,949) 0
Proceeds from issuance of common stock 685 614
Dividends paid (1,255) (1,031)
-------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,333 8,009
-------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,451 (166)
Cash and Cash Equivalents at Beginning of Quarter 48,680 56,177
-------------------------
CASH AND CASH EQUIVALENTS AT END OF QUARTER* $ 46,229 $ 56,011
=========================
3
Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Disclosures:
Interest payments $8,939 $6,974
Income tax payments 628 905
Noncash Investing Activities:
Transfers from loans to other real estate owned 246 300
Reclassification of borrowings from
long-term to short-term 100 100
*Cash and cash equivalents include amounts of "Cash and due from banks" and
"Federal funds sold" on the Consolidated Balance Sheets.
See Notes to Consolidated Financial Statements.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The foregoing financial statements are unaudited; however, in the opinion of
Management, all adjustments (comprising only normal recurring accruals)
necessary for a fair presentation of the results of the interim periods have
been included. These statements should be read in conjunction with the financial
statements and accompanying notes included in Sandy Spring Bancorp's 1997 Annual
Report to Shareholders. The results shown in this interim report are not
necessarily indicative of results to be expected for the full year 1998.
The accounting and reporting policies of Sandy Spring Bancorp (the
"Company") conform to generally accepted accounting principles and to general
practice within the banking industry. Certain reclassifications have been made
to amounts previously reported to conform with current classifications.
Consolidation has resulted in the elimination of all significant
intercompany accounts and transactions.
NOTE 2 - NEW ACCOUNTING STANDARD
In June 1997, Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (FASB 130) was issued and establishes standards for
reporting and displaying comprehensive income and its components. FASB 130
requires comprehensive income and its components, as recognized under the
accounting standards, to be displayed in the Statement of Income. The Company
adopted this disclosure standard, as required, in the first quarter of 1998,
including reclassification of the prior period.
NOTE 3 - PER SHARE DATA
Statement of Financial Accounting Standards No. 128, Earnings per Share" (FASB
128), became effective for the Company at the end of 1997. Under FASB 128,
primary and fully diluted earnings per share were replaced with basic and
diluted earnings per share. For purposes of comparability, prior period earnings
per share have been restated to reflect application of the provisions of this
Statement.
The calculations of net income per common share for the periods ended March
31 were as follows. Data in the table has been adjusted to give retroactive
effect to a 2 for 1 stock split declared on January 28, 1998.
1998 1997
---- ----
Basic:
Net income (available to common stockholders) $3,860 $3,203
Average common shares outstanding 9,668 9,813
Basic net income per share $0.40 $0.33
==========================
Diluted:
Net income (available to common stockholders) $3,860 $3,203
Average common shares outstanding 9,668 9,813
Stock option adjustment 48 17
Warrant stock adjustment 0 4
--------------------------
Average common shares outstanding - diluted 9,716 9,834
Diluted net income per share $0.40 $0.33
==========================
5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Consolidated basis, dollars in thousands except per share data)
This Management's Discussion and Analysis contains forward-looking
statements, including statements of goals, intentions and expectations,
regarding or based upon general economic conditions, interest rates,
developments in national and local markets, and other matters, and which, by
their nature, are subject to significant uncertainties. Because of these
uncertainties and the assumptions on which statements in this report are based,
the actual future results may differ materially from those indicated in this
report.
In the following discussion, per share amounts have been adjusted to
reflect a 2 for 1 stock split declared on January 28, 1998 (see Note 3).
THE COMPANY
The Company is the registered bank holding company for Sandy Spring
National Bank of Maryland (the "Bank"), headquartered in Olney, Maryland. The
Bank operates twenty-one community offices in Montgomery, Howard, Prince
George's and Anne Arundel Counties in Maryland, together with a mortgage banking
company. The Company has established a strategy of independence, and intends to
establish or acquire additional offices or banking organizations as appropriate
opportunities may arise.
A. FINANCIAL CONDITION
The Company's total assets were $1,138,444 at March 31, 1998, compared
to $1,121,333 at December 31, 1997, increasing $17,111 or 1.5% during the first
quarter of 1998. Earning assets increased $17,127 or 1.6% to $1,058,847 at March
31, 1998, from $1,041,720 at December 31, 1997.
Total loans rose 2.6% or $14,733 during the first quarter of 1998 to
$573,626. Of the major loan categories, construction loans increased 8.5% due to
growth in commercial construction loans, commercial loans increased 8.4%,
consumer loans increased 6.4% due primarily to growth in student loans, and
mortgage loans increased 0.4% including a 3.9% increase in commercial mortgages.
Also, residential mortgage loans held for sale increased by $9,053 from December
31, 1997 to $15,723 at March 31, 1998.
The investment portfolio, consisting of available-for-sale, held-to-
maturity and other equity securities, decreased $8,870 or 1.9% from December 31,
1997 to March 31, 1998. During this period, the increases in total loans and
residential mortgage loans held for sale required funding in excess of that
achieved by growth in total deposits and borrowings.
Total deposits were $867,329 at March 31, 1998, increasing $14,318 or
1.7% from $853,011 at December 31, 1997. Growth was achieved for
noninterest-bearing demand deposits, up $6,994 or 4.6%, attributable primarily
to increases in commercial and small business checking balances, and for
interest-bearing deposits, up $7,324 or 1.0%, due primarily to higher time
deposits under $100. Borrowings were essentially unchanged overall, with
declines in short-term borrowings offset by an increase in long-term Federal
Home Loan Bank of Atlanta borrowing.
Market Risk Management
By employing simulation analysis through use of a computer model, the Bank
intends to effectively manage the potential adverse impacts that changing
interest rates can have on the institution's short-term earnings, long term
value, and liquidity. The simulation model captures optionality factors such as
call features and interest rate caps and floors imbedded in investment and loan
portfolio contracts. As of March 31, 1998, the Bank had the following estimated
sensitivity profile for net interest income over a twelve month horizon and for
the fair value of equity:
Immediate Change in Rates
---------------------------------------
+200 basis points -200 basis points Policy Limit
- --------------------------------------------------------------------------------------------------
% Change in Net Interest Earnings (6.08)% (1.33)% +/-15%
% Change in Fair Value of Equity 2.14% (16.81)% +/-25%
6
Liquidity
The Bank's liquidity position is measured monthly, looking forward
ninety days. Liquid assets, defined to include cash on hand, federal funds sold,
interest-bearing deposits with banks, loans held for sale, investments held-to-
maturity maturing within ninety days and investments available-for-sale maturing
within one year, net of projected loan growth over the following ninety days,
totalled $159,002 or 14.0% of total assets at March 31, 1998. This represents a
liquidity position, net of estimated potential cash outflows for deposits and
borrowings, of $75,328 or 6.6% of total assets, which exceeded the minimum level
established by management.
Capital Management
The Company recorded a total risk-based capital ratio of 16.71% at
March 31, 1998, compared to 17.07% at December 31, 1997; a tier 1 risk-based
capital ratio of 15.62%, compared to 15.97%; and a capital leverage ratio of
9.26%, compared to 9.46%. Capital adequacy, as measured by these ratios, was
well above regulatory requirements.
Stockholders' equity totaled $106,517 (including accumulated other
comprehensive income of $2,358) at March 31, 1998, up 1.8% from $104,675
(including accumulated other comprehensive income of $1,857) at December 31,
1997. Internal capital generation (net income less dividends) provided $2,605 in
additional equity during the first quarter of 1998, representing an annualized
rate (when considered as a percentage of average total stockholders' equity) of
10.1% versus 8.6% for the year ended December 31, 1997.
External capital formation from stock issuances under the dividend
reinvestment plan, newly expanded in 1997 to include optional cash purchases,
and to a lesser degree, through the exercise of warrants arising from the merger
with Annapolis Bancshares, Inc. in 1996, totaled $685 during the first quarter
of 1998. However, share repurchases amounted to $1,949 through March 31, 1998,
for a net decrease in stockholders' equity from external sources of $1,264.
First quarter dividends were $0.13 per share in 1998, compared to $0.11
per share in 1997, for dividend payout ratios of dividends declared per share to
diluted net income per share of 32.50% and 33.33%, respectively.
B. RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Net income for the first three months of the year rose $657 or 20.5% in
1998, to $3,860, from $3,203. Diluted earnings per share for the first quarter
were $0.40 in 1998 and $0.33 in 1997. The annualized return on average assets
for the first three months of the year was 1.40% in 1998 compared to 1.34% in
1997. The annualized returns on average equity for the same three month periods
were 14.98% and 13.45% in 1998 and 1997, respectively.
Net Interest Income
Net interest income for the first three months of the year was $10,904
in 1998, an increase of 12.2% over $9,719 in 1997, reflecting a higher volume of
average earning assets.
For the first three months, tax-equivalent interest income increased
$1,299 or 13.0% in 1998, compared to 1997. Average earning assets rose 14.2%
over the prior year period while the average yield earned on those assets
decreased slightly to 7.96% from 7.97%. Comparing the first three months of 1998
versus 1997, average loans grew 7.50% to $570,983 (55.0% of average earning
assets), while the average yield on loans increased to 9.19% from 9.12%.
Virtually all major categories increased, with residential mortgages (including
those held for sale) and residential construction loans accounting for a
majority of the overall increase. Average total securities increased 27.6% to
$449,173 (43.2% of average earning assets) and recorded an 8 basis point
increase in average yield to 6.50% from 6.42%.
Interest expense for the first three months increased $1,234 or 15.7%,
due to the combined effects of 13.9% higher average interest-bearing liabilities
and a 6 basis point rise in the average rate paid on those funds to 4.24% from
4.18%. Most of the increase in interest-bearing liabilities was generated by
growth in average short-term borrowings, which primarily resulted from Federal
Home Loan Bank of Atlanta advances used to invest in securities.
7
Credit Risk Management
During the first three months of the year, the provision for credit
losses was $267 in 1998, compared to $100 in 1997. Net charge-offs of $53 were
recorded for the three month period ended March 31, 1998 while there were net
charge-offs of $104 for the same period a year earlier.
The Company regularly analyzes the sufficiency of its allowance for
credit losses based upon a number of factors, including lending risks associated
with growth and entry into new markets, loss allocations for specific problem
credits, the level of the allowance to nonperforming loans, historical loss
experience, economic conditions, portfolio trends and credit concentrations, and
changes in the size and character of the loan portfolio. Management establishes
the allowance for credit losses in an amount that it determines, based upon
these factors, is sufficient to provide for losses inherent in the loan
portfolio. The allowance for credit losses was 1.26% of total loans at March 31,
1998 and at December 31, 1997. Management believes the allowance for credit
losses at March 31, 1998 was adequate.
Nonperforming loans decreased by $146 to $2,526 and total nonperforming
assets decreased by $100 to $3,068 from December 31, 1997 to March 31, 1998.
Expressed as a percentage of total assets, nonperforming assets were 0.27% at
March 31, 1998 and 0.26% at December 31, 1997. The allowance for credit losses
represented 286% of nonperforming loans at March 31, 1998, compared to coverage
of 263% at December 31, 1997. Significant variation in the coverage ratio may
occur from period to period because the amount of nonperforming loans depends
largely on the condition of a small number of individual loans and borrowers
relative to the total loan portfolio. Other real estate owned totaled $542 at
March 31, 1998, compared to $296 at December 31, 1997. The balance of impaired
loans was $446 at March 31, 1998, and $890 at December 31, 1997, and there were
no reserves for those loans at either period end.
Noninterest Income and Expenses
Noninterest income increased 56.8% or $1,039 during the three months
ended March 31, 1998 versus 1997, primarily from increases in securities gains,
fees from trust services, mortgage banking revenues, and transaction based
service fees. Substantial growth was achieved from the Bank's asset and trust
management business due to higher levels of assets under management. The Bank's
mortgage banking subsidiary, Sandy Spring Mortgage Corporation, now in its
second year of operation, continued to achieve strong mortgage loan origination
volumes and related gains on sales of loans, due in part to high levels of
mortgage refinancing. The rise in service fees primarily reflected higher return
check charges, debit card fees and ATM access fees.
For the three months ended March 31, 1998, noninterest expenses increased
19.1%, or $1,264, to $7,895, from $6,631 in 1997. The Company incurs additional
costs in order to enter new markets, provide new services, and support the
growth of the Company. Management manages its operating expenses, however, with
the goal of maximizing profitability over time. The growth in noninterest
expenses was due primarily to a 21.6%, or $807, increase in salaries and
employee benefits, mainly related to growth in staff, an expanded branch network
and higher incentive compensation and pension plan costs. Average full-time
equivalent employees reached 419 during the first quarter of 1998 compared to
365 during the first quarter of 1997. Despite the increase in staff, the ratio
of net income per average full-time-equivalent employee increased to $9.2 from
$8.8. Occupancy expenses increased 31.5% or $163 to $680 for the three month
period ended March 31, 1998 from $517 for the same period in 1997 due in large
part to rental expenses related to new branches. Over the same period, equipment
expenses also increased significantly, by 26.2% or $136, due primarily to higher
depreciation expenses. While marketing expense declined, other noninterest
expense categories increased, as the Company grew.
Income Taxes
The effective tax rate for the first quarter of the year was 31.2% in
1998, compared to 33.5% in 1997, reflecting an increase in the percentage of
nontaxable income to income before taxes.
8
ANALYSIS OF CREDIT RISK
(Dollars in thousands)
Activity in the allowance for credit losses is shown below:
3 Months Ended 12 Months Ended
March 31, 1998 December 31, 1997
- ---------------------------------------------------------------------------
Balance, January 1 $7,016 $6,391
Provision for credit losses 267 986
Loan charge-offs:
Real estate-mortgage (20) (60)
Real estate-construction 0 (79)
Consumer (40) (167)
Commercial (4) (235)
---------------- ---------------
Total charge-offs (64) (541)
Loan recoveries:
Real estate-mortgage 0 0
Real estate-construction 0 0
Consumer 6 39
Commercial 5 141
---------------- ---------------
Total recoveries 11 180
---------------- ---------------
Net charge-offs (53) (361)
---------------- ---------------
BALANCE, PERIOD END $ 7,230 $ 7,016
================ ===============
Net charge-offs to average loans
(annual basis) 0.04% 0.07%
Allowance to total loans 1.26% 1.26%
Balance sheet risk inherent in the lending function is presented as follows at
the dates indicated:
March 31, December 31,
1998 1997
- ---------------------------------------------------------------------------
Non-accrual loans $ 446 $ 890
Loans 90 days past due 2,064 1,764
Restructured loans 16 18
---------------- ---------------
Total Nonperforming Loans* 2,526 2,672
Other real estate owned 542 296
---------------- ---------------
TOTAL NONPERFORMING ASSETS $3,068 $2,968
================ ===============
Nonperforming assets to total
assets 0.27% 0.26%
- -------------------------------------------------------------------------
* Those performing loans considered potential problem loans, as defined and
identified by management, amounted to approximately $7,639 at March 31, 1998,
compared to $7,890 at December 31, 1997. Although these are loans where known
information about the borrowers' possible credit problems causes management to
have doubts as to their ability to comply with the present loan repayment terms,
most are well collateralized and are not believed to present significant risk of
loss.
9
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following is a list of Exhibits filed as part of this
Quarterly Report on Form 10-Q:
No. Exhibit
----- -------
27 Financial Data Schedule and Restated Financial Data Schedules
(b) Reports on Form 8-K. None.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SANDY SPRING BANCORP, INC.
(Registrant)
By: /s/ HUNTER R. HOLLAR
---------------------
Hunter R. Hollar
President and Chief Executive Officer
Date: May 7, 1998
By: /s/ JAMES H. LANGMEAD
----------------------
James H. Langmead
Vice President and Treasurer
Date: May 7, 1998