FORM 10-Q
Securities and Exchange Commission
Washington, D.C. 20549
[ X ] Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1999
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 no.: 0-12377
BT FINANCIAL CORPORATION
------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 25-1441348
------------ ----------
(State of Incorporation) (I.R.S. Employer Identification Number)
551 Main Street, Johnstown, Pennsylvania 15901
-----------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(814) 532-3801
--------------
Registrant's Telephone Number
Indicate by checkmark 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:
15,888,852 shares common stock
($5.00 par value)
as of August 2, 1999
BT FINANCIAL CORPORATION AND AFFILIATES
FORM 10-Q
June 30, 1999
Part I. Financial Information Page No.
------------------------------ --------
Item 1.
-------
Consolidated Balance Sheet - June 30, 1999
and December 31, 1998 3
Consolidated Statement of Income
Three and Six Months Ended June 30, 1999 and 1998 4
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1999 and 1998 5
Consolidated Statement of Comprehensive Income
Three and Six Months Ended June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2.
-------
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3.
-------
Quantitative and Qualitative Disclosures about Market Risk 21
Part II. Other Information
---------------------------
Item 1.
-------
Legal Proceedings 21
Item 2.
-------
Changes in Securities and Use of Proceeds 21
Item 3.
-------
Defaults Under Senior Securities 21
Item 4.
-------
Submission of Matters to a Vote of Security Holders 21
Item 5.
-------
Other Information 21
Item 6.
-------
Exhibits and Reports on Form 8-K 22
Signatures 23
2
ITEM 1
------
FINANCIAL STATEMENTS
--------------------
BT FINANCIAL CORPORATION AND AFFILIATES
---------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(In thousands, except shares and per share data)
JUNE 30 December 31
1999 1998
(UNAUDITED)
-------------------------
ASSETS
Cash and cash equivalents $45,226 57,522
Interest-bearing deposits with banks 85 57
Federal funds sold --- 17,000
-------------------------
Securities available-for-sale 294,441 274,291
Securities held-to-maturity (market values
of $1,998 at June 30, 1999 and
$72,691 at December 31, 1998) 1,999 72,307
-------------------------
Total securities 296,440 346,598
-------------------------
Loans: 1,394,917 1,247,867
Less: Unearned interest 20,622 29,681
Reserve for loan losses 12,316 10,971
-------------------------
Net loans 1,361,979 1,207,215
Premises and equipment 26,920 28,665
Accrued interest receivable 11,404 11,288
Other assets 39,158 33,983
-------------------------
Total assets $1,781,212 $1,702,328
=========================
LIABILITIES
Deposits:
Non-interest-bearing 211,650 210,127
Interest-bearing 1,167,233 1,182,893
-------------------------
Total deposits 1,378,883 1,393,020
Federal funds purchased and securities sold
under agreements to repurchase 49,809 35,073
Short-term borrowings 33,750 2,185
Accrued interest payable 5,787 5,747
Other liabilities 2,875 2,689
Long-term borrowings 150,022 100,031
--------------------------
Total liabilities $1,621,126 $1,538,745
--------------------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value
2,000,000 shares authorized,
None outstanding --- ---
Common stock, par value $5 per share,
25,000,000 shares authorized,
shares issued: 12,985,272 at June 30, 1999
and December 31, 1998 64,926 64,926
Surplus 43,993 43,993
Retained earnings 57,936 53,057
Accumulated other comprehensive (loss) income (6,769) 1,607
---------------------------
Total shareholders' equity 160,086 163,583
---------------------------
Total liabilities and
shareholders' equity $1,781,212 $1,702,328
===========================
The accompanying notes are an integral part of the consolidated financial
statements.
3
BT FINANCIAL CORPORATION AND AFFILIATES
---------------------------------------
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(Unaudited)
(In thousands, except shares and per share data)
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
-------------------------------------------
INTEREST INCOME
Loans, including fees $26,033 $24,128 $50,819 $47,449
Investment securities:
Taxable 3,301 7,023 6,868 13,309
Tax-exempt 1,175 707 2,322 968
Deposits with banks 2 1 4 5
Federal funds sold 100 107 175 146
--------------------------------------------
TOTAL INTEREST INCOME 30,611 31,966 60,188 61,877
--------------------------------------------
INTEREST EXPENSE
Deposits 10,227 11,941 20,871 23,851
Federal funds purchased
and securities sold under
agreements to repurchase 326 447 626 964
Short-term borrowings 195 608 217 872
Long-term borrowings 1,853 1,255 3,143 1,620
--------------------------------------------
TOTAL INTEREST EXPENSE 12,601 14,251 24,857 27,307
--------------------------------------------
NET INTEREST INCOME 18,010 17,715 35,331 34,570
Provision for loan losses 1,675 1,650 3,142 2,895
--------------------------------------------
Net interest income
after provision for
loan losses 16,335 16,065 32,189 31,675
--------------------------------------------
OTHER INCOME
Trust income 1,045 885 2,018 1,741
Fees for other services 2,387 2,106 4,416 4,007
Net security gains 14 43 90 64
Other income 757 223 904 399
--------------------------------------------
TOTAL OTHER INCOME 4,203 3,257 7,428 6,211
--------------------------------------------
OTHER EXPENSES
Salaries and wages 4,981 5,246 10,338 10,740
Pension and other
employee benefits 1,102 1,057 2,248 2,147
Net occupancy expense 1,132 1,085 2,302 2,225
Equipment expense 1,353 1,295 2,698 2,532
F.D.I.C. insurance 64 71 131 142
Amortization of intangible
assets 524 523 1,047 1,047
Other operating expense 3,475 3,320 6,807 6,862
--------------------------------------------
TOTAL OTHER EXPENSE 12,631 12,597 25,571 25,695
--------------------------------------------
INCOME BEFORE INCOME TAXES 7,907 6,725 14,046 12,191
Provision for income taxes 2,351 2,019 4,103 3,757
--------------------------------------------
NET INCOME $ 5,556 $ 4,706 $ 9,943 $ 8,434
============================================
Earnings per common share-Basic
and Diluted $ .43 $ .36 $ .77 $ .65
Weighted average common shares
Outstanding-Basic 12,985,272 12,985,272 12,985,272 12,985,272
Weighted average common shares
Outstanding-Diluted 12,985,272 12,986,444 12,986,455 12,985,272
Dividends paid per common
share $ .20 $ .18 $ .39 $ .35
The accompanying notes are an integral part of the consolidated financial
statements.
4
BT FINANCIAL CORPORATION AND AFFILIATES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
Six months ended
June 30
1999 1998
------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,943 $ 8,434
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 3,142 2,895
Provision for depreciation and
amortization 2,143 2,175
Amortization of intangible assets 1,047 1,047
Amortization of premium, net of
accretion of discount on loans and
securities (143) 458
Deferred income taxes (421) (480)
Realized net securities gains (90) (64)
Increase in interest receivable (116) (4,424)
Increase in interest payable 40 723
Equity in loss of limited partnerships 123 31
Other assets and liabilities, net (1,247) (2,487)
-------------------
Net cash provided by operating activities 14,421 8,308
-------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities -- 16,581
Repayments and maturities of securities
available-for-sale 29,520 27,648
Repayments and maturities of securities
held-to-maturity 70,310 44,133
Purchases of securities available-for-sale (62,485) (150,223)
Purchase of securities held-to-maturity --- (2,060)
Net (increase) decrease in interest-bearing deposits
with banks (28) 397
Net decrease (increase) in federal funds sold 17,000 (5,300)
Proceeds from sales of loans 1,253 3,120
Net increase in loans (158,942) (83,777)
Purchases of premises and equipment and other (399) (1,692)
Net increase in investment in limited partnerships (37) (1,044)
--------------------
Net cash used in investing activities (103,808) (152,217)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits (14,137) 10,968
Net increase in Federal Funds purchased
and securities sold under agreements to repurchase 14,736 9,034
Net increase in short-term borrowings 31,565 25,479
Common stock cash dividends paid (5,064) (4,535)
Proceeds from long-term borrowings 50,000 100,000
Payment on long-term borrowings (9) (1,437)
--------------------
Net cash provided by financing activities (77,091) 139,509
--------------------
Decrease in cash and cash equivalents (12,296) (4,400)
Cash and cash equivalents at beginning
of the year 57,522 53,215
--------------------
Cash and cash equivalents at end of
Period $45,226 $48,815
====================
The accompanying notes are an integral part of the consolidated financial
statements.
5
BT FINANCIAL CORPORATION AND AFFILIATES
---------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
----------------------------------------------
(Unaudited)
------------
(In thousands)
----------------
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
---------------- ----------------
Net income $ 5,556 $ 4,706 $ 9,943 $ 8,434
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on
securities arising during period,
net of tax of $(3,615), $235,
$(4,478), and $(92) (6,714) 437 (8,317) (170)
Less: Reclassification adjustment for
gains included in net income,
net of tax of $5, $15, $31, and $22 9 28 59 42
------------------ ---------------
Other comprehensive income (loss),
net of tax of $(3,620), $220,
$(4,509) and $(114) (6,723) 409 (8,376) (212)
------------------ ---------------
Comprehensive income (loss) $(1,167) $ 5,115 $ 1,567 $ 8,222
================== ===============
The accompanying notes are an integral part of the consolidated
financial statements.
6
BT FINANCIAL CORPORATION AND AFFILIATES
---------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
1. In the opinion of the management of
BT Financial Corporation (BT or the Corporation), the
accompanying consolidated financial statements include
all normal recurring adjustments necessary for a fair
presentation of the financial position and results of
operations of BT for the periods presented. All
significant intercompany transactions have been
eliminated in consolidation. The consolidated
financial statements of BT include the accounts of BT
and its wholly owned affiliates, Laurel Bank (Laurel),
Laurel Trust Company (the Trust Company), Bedford
Associates, Inc., Laurel Community Development
Corporation, and Bedford Associates of Delaware, Inc.
On October 23, 1998, BT completed a merger with The
Peoples National Bank of Rural Valley (Peoples). At
the time of the merger, Peoples' assets were
approximately $37 million. The merger was accounted
for as a pooling-of-interests, and accordingly, BT's
accompanying consolidated financial statements have
been restated retroactively to include the accounts and
operations of Peoples for all periods presented prior
to the merger. These statements should be read in
conjunction with the financial statements and the notes
thereto included in BT's annual report to the
Securities and Exchange Commission on Form 10-K for the
year ended December 31, 1998. The results of
operations for the six month period ended June 30, 1999
are not necessarily indicative of the results which may
be expected for the full year.
2. Tax provisions for interim financial
statements are based on the estimated effective tax
rates for the full fiscal year. The estimated
effective tax rates may differ from the statutory tax
rate due primarily to tax-exempt interest income.
3. Reserve for loan losses -- The recorded
investment in loans for which impairment has been
recognized in accordance with Statement of Financial
Accounting Standards (SFAS) No. 114 totaled $856,000 at June
30, 1999, compared to $674,000 at December 31, 1998 and
$2.0 million at June 30, 1998. The corresponding loan
loss valuation allowance was $199,000, $148,000, and $1.4
million for the same periods, respectively.
The interest revenue recognized on impaired loans during
the six months ended June 30, 1999 and 1998 was insignificant.
7
4. Earnings Per Share
------------------
The following table shows the calculation of basic
and diluted earnings per share. Share and per share
data has been adjusted to reflect the 2-for-1 stock
split effected in the form of a stock dividend
distributed on May 1, 1998.
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
--------------------- ---------------------
Basic Earnings Per Share:
Net income (in thousands) $5,556 $4,706 $9,943 $8,434
===================== =====================
Weighted average number
of common shares
outstanding-Basic 12,985,272 12,985,272 12,985,272 12,985,272
Basic Earnings Per Share $ .43 $ .36 $ .77 $ .65
============================================
Diluted Earnings Per Share:
Net Income (in thousands) $5,556 $4,706 $9,943 $8,434
============================================
Weighted average number
of common shares
outstanding-Basic 12,985,272 12,985,272 12,985,272 12,985,272
Effect of dilutive
stock options --- 1,172 1,183 ---
--------------------------------------------
Weighted average number
of common shares
outstanding-Diluted 12,985,272 12,986,444 12,986,455 12,985,272
=============================================
Diluted Earnings
Per Share $ .43 $ .36 $ .77 $ .65
=============================================
5. Recent Accounting Pronouncements
--------------------------------
In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging
Activities." The statement establishes accounting and
reporting standards for derivative instruments,
including certain derivative instruments embedded in
other contracts, and for hedging activities. It
requires, among other things, that an entity recognizes
all derivatives as either assets or liabilities in the
statement of financial condition and measures those
instruments at fair value. In June of 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of SFAS
No. 133," which postponed the adoption date of SFAS No. 133.
As such, the Corporation is not required to adopt SFAS No. 133
8
until fiscal year 2001. Since BT does not currently use
derivative financial instruments, the standard will not
have any material impact on BT's financial position or
results of operations upon adoption.
6. Recent Acquisition
------------------
On July 14, 1999, BT completed a merger with First
Philson Financial Corporation (Philson) whereby Philson was
merged directly into BT. In connection with the merger, each
share of Philson Common Stock was converted into 1.667 shares
of BT Common Stock, resulting in the issuance of 2,904,580 BT
Common Stock shares. The value of the transaction was approximately
$71 million based on BT's closing market price of $24.50 on
July 14, 1999. Philson's assets totaled approximately $221
million on the merger date. Post-merger, BT's assets totaled
approximately $2.0 billion. This merger enhances BT's current
lead position in market share for Somerset County,
Pennsylvania where BT will now represent over one-third of the
total bank and thrift deposits. The merger has been accounted for
as a pooling-of-interests. Philson's banking subsidiary, First
Philson Bank, N.A., was merged into Laurel Bank upon consummation of
the merger of the corporations. At the time of the merger, First
Philson Bank, N.A., operated 9 branches in Somerset and Fayette
counties. Philson also owned Flex Financial Consumer Discount
Company (Flex), a finance company subsidiary. Flex has one office
in Somerset County and will continue to operate as a non-bank
subsidiary of BT.
The following unaudited pro forma financial data
summarizes the combined operating results of BT and Philson as
if the merger occurred at the beginning of the periods
presented.
PRO FORMA RESULTS
(in thousands, except per share data
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
------------------- ------------------
NET INTEREST INCOME BEFORE THE
PROVISION FOR LOAN LOSS . . . . $20,328 $20,017 $39,915 $39,086
NET INCOME. . . . . . . . . . 6,258 5,438 11,319 9,851
EARNINGS PER SHARE:*
Basic and Diluted. . . . . . .39 .34 .71 .62
*The pro forma earnings per share amounts are based
on the sum of the weighted average shares outstanding, as
reported by BT, and the weighted average shares outstanding
for Philson converted to BT shares at the exchange ratio of
1.667.
7. Litigation
----------
A purported class action was instituted in the Court of
Common Pleas of Cambria County, Pennsylvania against the former
Johnstown Bank & Trust Company (Bank and Trust), now Laurel
Bank, and Security of America Life Insurance Company (Security)
in November, 1996 alleging various calculation irregularities
in connection with a residential mortgage loan to the plaintiff
9
in the principal amount of approximately thirteen thousand
dollars resulting in, among other things, overcharges on credit
life and disability insurance coverage and other items. The
plaintiff purports to represent a class of persons who made a
mortgage payment to the former Bank and Trust or any of its
subsidiaries within six years before November 21, 1996 and/or
had credit life or disability insurance coverage with Security
within six years before November 21, 1996. The complaint seeks
unspecified damages. The Corporation has filed an answer
denying that its actions breached its agreements with
plaintiffs. The class potentially includes the borrowers on
approximately 2,800 accounts, the number of residential
mortgages held by the former Bank and Trust during the relevant
period. The class discovery phase of the litigation was
completed in February 1999. A class certification hearing has
not been scheduled yet. If the court certifies the case as a class
action, Laurel Bank intends to pursue its affirmative defenses
and vigorously defend the lawsuit. The impact of this
litigation on BT cannot be fully assessed at this stage of the
proceedings.
On November 19, 1997, Laurel Capital Group, Inc, and its
wholly-owned subsidiary, Laurel Savings Bank, filed a suit in
the United States District Court in the Western District of
Pennsylvania claiming that Laurel Bank infringed on its common
law trademark and servicemark rights by using the name "Laurel"
and a related logo in an undefined market area referred to as
the "Pittsburgh area." The suit seeks to enjoin Laurel from
using its name and related logo in the "Pittsburgh area" and
seeks unspecified damages. Laurel Savings Bank is a thrift
institution with five branch locations in the North Hills of
Pittsburgh and one branch in Butler County. Pending a hearing
on plaintiffs' motion for preliminary injunction, Laurel agreed
to refrain from using the "Laurel" name or any related logo on
any bank documents, advertisements, or promotional materials in
the "Pittsburgh area". In April 1999, the Court granted
plaintiff's partial motion for summary judgment, concluding that
plaintiff has the exclusive right to use the word "Laurel" in its
name within a geographic area around its offices in the Pittsburgh
area, but the court did not define the area of exclusive use.
While the plaintiff contends that the zone of exclusive use
encompasses the metropolitan "Pittsburgh area", Laurel Bank
contends that this zone is substantially smaller. The issue of
the scope of the "Pittsburgh area" remains to be decided. The
impact of this litigation on BT cannot be fully assessed at this
stage of the proceedings.
Due to the nature of their activities, BT and its
subsidiaries are at all times engaged in other various legal
proceedings which arise in the normal course of their
businesses. While it is difficult to predict the outcome of
these proceedings, management believes the ultimate liability,
if any, will not materially affect BT's consolidated financial
position or results of operations.
8. Stock Dividend
--------------
On March 25, 1998, BT's Board of Directors
declared a 2-for-1 stock split effected in the form of a
stock dividend. The dividend was distributed on May 1, 1998,
to shareholders of record as of April 8, 1998. All share and
per share data in this report has been adjusted to reflect
the stock dividend.
10
9. Stock Based Compensation Plan
-----------------------------
On January 4, 1999, under the 1998 Equity
Incentive Plan, BT granted non-qualified stock options
to certain employees and directors to purchase 105,000
shares of BT Common Stock. The exercise price of the
options was $26.375 per share which equaled the market
price of BT's Common Stock on the date of grant. The
stock options became exercisable on January 5, 1999 and
have a maximum term of 10 years.
11
ITEM 2
------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
----------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The following is Management's Discussion and Analysis of the material
changes in financial position between June 30, 1999 and December 31, 1998,
and the material changes in results of operations comparing the three and
six month periods ending June 30, 1999 with the respective results for the
comparable periods of 1998 for BT. The following should be read in
conjunction with BT's Annual Report on Form 10-K for the year ended
December 31, 1998.
Certain statements contained in this report constitute "forward-looking"
statements with respect to BT and its subsidiaries. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the financial condition and results of operations of BT and
its subsidiaries to be materially different from any future financial
condition or results of operations suggested or implied by such forward-
looking statements. BT undertakes no obligation to update any forward-
looking statements made herein. The factors that may cause actual results
to differ materially from the forward-looking statements include: interest
rates, market and monetary fluctuations, monetary and fiscal policies,
changes in laws and regulations, inflation, general economic conditions,
competition and economic conditions in the geographic region and industries
in which the Corporation conducts its operations, introduction and
acceptance of new products and enhancements, mergers and acquisitions and
their integration into BT, and management's ability to manage these and
other risks.
On October 23, 1998, BT completed a merger with the Peoples National Bank
of Rural Valley, Rural Valley, Pennsylvania, whereby Peoples merged into
Laurel Bank. At the time of the merger, Peoples operated one branch with
unaudited assets totaling approximately $37 million. The merger has been
accounted for as a pooling-of-interests, and accordingly, BT's consolidated
financial statements have been restated retroactively to include the
accounts and operations of Peoples for all periods presented prior to the
merger. This acquisition increased BT's market share in Armstrong County,
located north of Pittsburgh, Pennsylvania.
FINANCIAL REVIEW
- ----------------
Overview
- --------
BT's primary financial objectives are to expand the growth and profitability of
the Corporation through: (1) strategic mergers and acquisitions, (2) increases
in market share growth by way of expanded sales-focused initiatives, (3)
implementation of various efficiency strategies including the continuous
refinement of BT's branch delivery system and (4) expansion of revenue streams
in fee income and trust revenue areas. Maintaining high asset quality while
managing internal and merger-related growth remains an essential element in
BT's expansion strategies.
BT's recent merger with First Philson Financial Corporation (Philson) in July
of 1999 increased total assets to approximately $2.0 billion and solidified
BT's current lead market position in Somerset County, Pennsylvania, where BT
will now represent over one-third of the total bank and thrift deposits.
Philson's assets totaled approximately $221 million on the July 14, 1999
merger date. Philson's banking subsidiary, First Philson Bank, N.A., was
merged into Laurel Bank upon consummation of the merger. Philson also owned
Flex Financial Consumer Discount Company (Flex), which will continue to operate
as a non-bank subsidiary of BT. Targeted synergies and efficiencies resulting
from the merger will include the elimination of redundant back-office functions
and some branch closures due to overlapping market areas. The impact of the
cost-saving measures will begin in 1999 with the full effect expected to be
12
realized in the year 2000. BT plans to generate additional revenues in the
future through the expansion of Flex's market and by targeting Laurel Trust
Company's services to Philson's customer base.
BT's consolidated net income increased 18.1%, to $5.6 million, or $.43 per
diluted share, in the second quarter of 1999 compared to $4.7 million, or
$.36 per diluted share, in the same period of 1998. The increased earnings
performance was primarily due to higher levels of net interest income and
fee-based revenue. In order to achieve a more efficient branch delivery
system, BT sold its two Indiana, Pennsylvania branches of Laurel Bank in the
current quarter. Accordingly, net income in the second quarter of 1999 was
impacted by a gain of $366,000 ($.03 per diluted share) on an after-tax
basis related to this sale. Excluding this gain, net income would have
increased 10.3% in the second quarter of 1999 over the same period of 1998.
Loans, net of unearned interest, increased to a record $1.37 billion at
June 30, 1999 compared to $1.22 billion at year-end 1998 and $1.16 billion
at June 30, 1998. The higher level in the current period reflects strong
ongoing loan demand and increased market penetration resulting from an
increased focus on sales and customer service inherent in the formation of
Laurel Bank's five local regions late in 1997. Demand deposits, also
benefiting from enhanced sales and service initiatives, rose to a record
$211.7 million in the current period versus $210.1 million at year-end 1998
and $191.6 million at June 30, 1998.
Excluding the gain from the aforementioned sale of two branches, BT's non-
interest income increased 10.3% in the second quarter of 1999 compared to
the corresponding period of 1998 due primarily to increases in trust income
and service fees. The market value of trust assets under management
increased $111.1 million, or 17.0%, over 1998 to $766.2 million in 1999.
CHANGES IN FINANCIAL POSITION
Total assets at June 30, 1999 were $1.78 billion, representing increases of
$78.9 million, or 4.6%, and $43.2 million, or 2.5%, compared to year-end
1998 and June 30, 1998, respectively. The increases were primarily due to
higher loan levels which were somewhat offset by decreased investment
securities. Average total assets for the six months ended June 30, 1999
were $1.71 billion, representing an increase of $30.5 million or 1.8% over
the six months ended June 30, 1998. The increase was substantially due to
higher loan levels in the current year.
Total shareholders' equity decreased $3.5 million, or 2.1%, compared to
year-end 1998 primarily resulting from a reduction in accumulated other
comprehensive income (loss) of $8.4 million due to a change in unrealized
market values on securities available-for-sale. Total shareholder's equity
increased $2.6 million, or 1.7%, compared to June 30, 1998 principally due
to BT's net income.
Period-end total loans outstanding, net of unearned interest, increased
$156.1 million, or 12.8%, and $215.1 million, or 18.6%, compared to year-
end 1998 and June 30, 1998, respectively. The loan increases were largely
due to internal growth in commercial, consumer and residential mortgage
loans attributable to increased market demand and various loan sales
coupled with aggressive sales efforts focusing on loan production. Laurel
Bank formed five local banking regions late in 1997. This regionalized
marketing approach has contributed to loan growth by placing managers
closer to their customers enabling them to focus on customer needs more
effectively. Loan growth was also impacted in the second quarter of 1999
by Laurel Bank's purchase of approximately $21 million in residential
mortgage loans from another financial institution. While recent loan growth
has been substantial, BT adheres to strict underwriting and credit guidelines
13
in its loan review processes to preserve a quality loan portfolio.
BT's nonperforming assets increased $2.2 million, or 25.5%, and $373,000,
or 3.5%, compared to year-end 1998 and June 30, 1998, respectively. The
increases were essentially due to a higher level of loans 90 days or more
past due resulting mainly from a past due commercial mortgage loan. This
loan is fully collateralized and management is presently anticipating the
loan will return to a current status during the last half of 1999.
Management's policy is to maintain an adequate loan loss reserve to cover
inherent losses in the loan portfolio. The evaluation process to determine
potential losses includes loan reviews, collateral adequacy assessments, an
analysis of specific conditions of the borrower and an assessment of
general economic conditions. The BT Credit and Collection functions
continuously monitor and assess credit quality to minimize exposure to
potential future credit losses. The coverage ratio, defined as the reserve
for loan losses to nonperforming loans, was 1.3x at June 30, 1999 compared
to 1.5x at year-end 1998 and 1.2x at June 30, 1998. The following table
provides information with respect to the components of BT's nonperforming
assets and related ratios for the periods indicated.
June 30 December 31 June 30
(In thousands) 1999 1998 1998
-------------------------------
Loans 90 days or more past-due $ 3,999 $ 644 $ 504
Restructured loans 213 264 265
Nonaccrual loans 5,463 6,544 8,235
-------------------------------
Total nonperforming loans 9,675 7,452 9,004
Other real estate owned 633 614 685
Repossessed assets 573 601 819
-------------------------------
Total nonperforming assets $ 10,881 $ 8,667 $ 10,508
===============================
Nonperforming loans as a % of
loans, net of unearned interest .70% .61% .78%
Reserve for loan losses to
nonperforming loans 1.3x 1.5x 1.2x
Reserve for loan losses as a % of
loans, net of unearned interest .90% .90% .90%
Total investment securities have declined $50.2 million, or 14.5%, and
$153.5 million, or 34.1%, compared to year-end 1998 and June 30, 1998,
respectively. Most of the decline has been due to decreases in government
agency securities offset partially by increases in municipal securities.
BT's recent funding strategies have generally involved utilizing the
proceeds from maturing and called securities to support recent loan growth.
Loans generally provide higher yields than securities and sound loan
expansion remains one of BT's key growth strategies. Two government agency
securities totalling $50 million were purchased during the second quarter
of 1999 in a balance sheet leveraging strategy designed to enhance net
interest income by utilizing favorably priced wholesale funding.
Period-end total deposits decreased $14.1 million, or 1.0% and $7.4
million, or 0.5%, compared to year-end 1998 and June 30, 1998,
respectively. Deposit totals at June 30, 1999 reflect a reduction of
approximately $6.8 million due to deposits sold in connection with the sale
14
of Laurel Bank's two Indiana, PA branches in the current quarter. Excluding
the impact of the sold deposits, period-end total deposits decreased $7.3
million and $553,000 compared to year-end 1998 and June 30, 1998,
respectively. The declines are due to a lower level of interest-bearing
deposits in the current period. Non-interest-bearing demand deposits,
excluding the impact of sold deposits, increased $2.8 million, or 1.3%, and
$21.3 million, or 11.1%, compared to year-end 1998 and June 30, 1998,
respectively. The increase in non-interest-bearing deposits is attributed to
attracting new accounts through BT's sales focus and cross-selling into its
existing customer base. BT's primary deposit gathering strategy emphasizes
growth in non-interest-bearing demand deposits and other low cost deposits.
Additionally, BT has recently targeted growth in longer-term certificates
of deposit by offering more aggressive rates for selected extended maturities.
Jumbo certificates of deposit, particularly public funds, have also been
marketed at competitive rates which recently have been lower than comparable
wholesale funding costs.
BT's short-term borrowings increased $46.3 million, or 124.3%, and $10.9
million, or 14.9%, compared to year-end 1998 and June 30, 1998,
respectively. These borrowings are comprised of federal funds purchased,
securities sold under agreements to repurchase and other short-term
borrowings. Federal Home Loan Bank (FHLB) short-term borrowings totalled
$30.2 million at June 30, 1999. The increase in short-term borrowings
resulted primarily from funding requirements associated with BT's recent
loan growth. At June 30, 1999, long-term borrowings with the FHLB amounted
to $150.0 million. During the current quarter, BT borrowed $50 million in
long-term borrowings from the FHLB to match-fund selected government agency
securities purchases as part of a balance sheet leveraging strategy. The
remaining $100 million in long-term borrowings were incurred during 1998 to
support loan growth and securities purchases. The borrowings are secured
primarily by Laurel Bank's residential mortgage loans. The borrowings,
scheduled to mature in the year 2008 or 2009, have interest rates ranging
from 4.99% to 5.29% at June 30, 1999.
RESULTS OF OPERATIONS
A 2-for-1 stock split effected in the form of a stock dividend was declared
on March 25, 1998 to shareholders of record at April 8, 1998. The stock
dividend was distributed on May 1, 1998. All per share data in the
following discussions reflects the stock dividend.
Second Quarter 1999 vs. Second Quarter 1998
For the second quarter of 1999, BT produced record net income of $5.6
million, or $.43 per diluted share, compared to $4.7 million, or $.36 per
diluted share earned in the same period of 1998. Second quarter 1999 earnings
were impacted by the sale of two Indiana, PA branches of Laurel Bank which
produced an after-tax gain of $366,000 ($.03 per diluted share). Excluding
the gain, net income would have increased $484,000 or 10.3% in the current
quarter compared to the quarter ended June 30, 1998.
The annualized return on average assets for the second quarters of 1999 and
1998 was 1.28% and 1.09%, respectively. The annualized return on average
shareholders' equity was 13.58% in 1999 and 12.15% in 1998. The return on
average tangible shareholders' equity, which excludes intangible
amortization expense from net income and intangibles from average
shareholders' equity was 16.95% and 15.76% for the second quarters of 1999
and 1998, respectively. The above ratios include the impact of the gain
from the sale of the two Indiana, PA branches in the second quarter of 1999.
Fully taxable equivalent net interest income increased $664,000, or 3.6%,
to $19.0 million in the second quarter of 1999 compared to 1998. The
increase was primarily due to an improved net interest margin and a $15.3
million, or 0.9%, rise in average earning assets in 1999. The earning
15
asset increase was mainly due to a higher level of loans in 1999 offset
partially by a decline in investment securities. Average loans, net of
unearned interest, increased $175.5 million, or 15.3%, to $1.32 billion in
the second quarter of 1999 compared to 1998. Average securities declined
$160.9 million, or 34.5% to $305.9 million in the current period. The net
interest margin improved 13 basis points in 1999 to 4.67% due primarily to
increased loan volume and lower rates paid on interest-bearing liabilities.
BT's net interest margin in 1999 and 1998 has been impacted by balance
sheet leveraging through the utilization of wholesale funding from the FHLB
used to support higher earning asset levels. The leveraging position
enables BT to enhance net interest income while sacrificing some net
interest spread differential. While the current period net interest margin
has been higher than peer levels, BT is anticipating some net interest
margin compression during the remainder of 1999 due to the expected repricing
characteristics of its asset/liability mix.
The provision for loan losses increased $25,000 in the second quarter of
1999 compared to the same period of 1998 due to management's assessment of
the provision necessary to maintain an adequate reserve based upon the
current size and quality of the loan portfolio. Net charge-offs were
$892,000 in the second quarter of 1999 compared to $1.3 million in the same
period of 1998. The decline was mainly due to a lower level of commercial
real estate credit losses.
Total other income increased $946,000, or 29.0%, in the second quarter of
1999 compared to 1998. Most of the increase was due to the aforementioned
sale of two branches which resulted in a gross other income gain of
$609,000 in the current quarter. Excluding the gain, total other income
increased $337,000, or 10.3%, in the current quarter compared to the second
quarter of 1998. Trust income increased $160,000, or 18.1%, commensurate
with a greater volume of assets under management. Service fees grew
$281,000 or 13.3%, primarily resulting from higher levels of deposit
account fees, increased ATM/debit card revenue, and a rise in loan
insurance commissions. Securities transactions income declined $29,000
while other income, reflecting the gain from the sale of the two branches,
rose $534,000 in the second quarter of 1999 compared to 1998. Excluding
the gain, other income declined $75,000 in the current quarter due
primarily to a lower level of gains on sold loans in 1999.
Total other expenses rose slightly by $34,000, or 0.3%, in the second
quarter of 1999 compared to 1998. The increase mainly resulted from one-
time expense charges of $46,000 resulting from costs associated with the
sale of the two Indiana, PA branches. BT's efficiency ratio, exclusive of
nonrecurring items, improved to 56% in the second quarter of 1999 compared
to 58% in the same period of 1998. The efficiency ratio measures the
ability to generate revenue in relation to expenditures. The lower ratio
in 1999 indicates improvement in BT's strategic goal of improving
efficiency by utilizing its resources more effectively to produce revenue.
Salaries and benefits decreased 3.5% indicative of a decline in full-time
equivalent employees to 766 in 1999 from 781 in 1998. The decrease
reflects increased utilization of BT's part-time work force due to a branch
staffing model developed in 1998. Occupancy expense rose 4.3% due to
various increases in building costs. Equipment expense increased 4.5%
reflecting higher levels of ongoing technology-based expenditures. Other
operating expense increased 4.7% primarily due to higher expense levels
associated with increased activity at Laurel Community Development
Corporation and the one-time charges resulting from the branch sales.
BT's effective tax rate was 29.7% for the second quarter of 1999 compared
to 30.0% for the same period of 1998. The lower rate in 1999 reflects a
higher level of tax-exempt securities interest income.
16
Six Months Ended June 30, 1999 vs. Six Months Ended June 30, 1998
Consolidated net income increased 17.9%, to $9.9 million, or $.77 per
diluted share in the first six months of 1999 compared to $8.4 million, or
$.65 per diluted share earned in the same period of 1998. In the first
quarter of 1998, earnings were impacted by special charges associated with the
retirement of several senior officers of BT and certain costs incurred in
connection with two legal settlements along with other legal fees related
to various lawsuits. The total charges approximated $445,000 on an after-
tax basis and reduced earnings per diluted share by approximately $.03 in
1998. Earnings in the second quarter of 1999 reflect an after-tax gain of
$366,000 ($.03 per diluted share) realized in connection with the sale of
two branches. Excluding the branch sale gain in the current quarter and
the special charges incurred in the first quarter of 1998, net income
increased $698,000, or 7.9%, and diluted earnings per share increased $.06,
or 8.8%, in the first half of 1999 compared to the same period of 1998.
The core earnings improvement in 1999 was driven principally by a higher
level of net interest income and an increase in fee income.
For the first six months of 1999, the annualized return on average assets
was 1.17% compared to 1.01% in 1998. The annualized return on average
shareholders' equity for the first six months of 1999 and 1998 was 12.22%
and 10.97%, respectively. The return on average tangible shareholders'
equity, which excludes intangible amortization expense from net income and
intangibles from average shareholders' equity, was 15.44% for the first
half of 1999 compared to 14.44% in 1998. The above ratios include the impact
of the special charges incurred in the first quarter of 1998 and the gain from
the sale of the two Indiana, PA branches in the second quarter of 1999.
Fully taxable equivalent net interest income increased $1.7 million, or
4.8%, to $37.3 million in the first six months of 1999 compared to $35.6
million in 1998. The increase was primarily due to a $40.8 million, or
2.6%, rise in average earning assets in 1999 and an improved net interest
margin. The year-over-year increase in average loans was $162.8 million,
or 14.5%, while average securities declined $124.2 million, or 28.5%. The
net interest margin improved 10 basis points in 1999 to 4.68% due to
increased loan volumes and lower rates paid on interest-bearing
liabilities.
The provision for loan losses increased $247,000 in the first six months of
1999, compared to the same period of 1998 due to management's assessment of
the provision necessary to maintain an adequate reserve based upon the current
size and quality of the loan portfolio. Net charge-offs were approximately
$1.8 million in 1999 compared to $2.4 million in 1998. The lower level in
the current year reflects a decrease in commercial loan and commercial real
estate charge-offs.
Total other income increased $1.2 million, or 19.6%, in the first half of
1999 compared to 1998. Approximately $609,000 of the increase was due to
the gain from the sale of the two branches. Trust income gained $277,000,
or 15.9%, commensurate with a greater volume of assets under management.
Service fees grew $409,000 or 10.2%, primarily resulting from increased
ATM/debit card service revenue, a rise in loan insurance commissions, and a
higher level of deposit account fees. Securities transactions income rose
$26,000 while other income, excluding the gain from the sale of the two
branches, declined $104,000 in the first half of 1999 compared to 1998.
The decline in other income in the current year reflects decreases in gains
from the sale of loans and other real estate.
Total other expenses declined $124,000, or 0.5%, in the first half of 1999
compared to the same period of 1998. The decline was mainly due to the
aforementioned special charges incurred in the first quarter of 1998.
Salaries and benefits declined 2.3% reflecting the impact of first quarter
1998 special charges of approximately $322,000 paid in 1998 associated with
17
the retirement of several senior officers of BT. Average assets per
employee have risen 3.7% compared to 1998 to over $2.2 million in 1999.
Occupancy expense was up 3.5% due to various increases in building costs.
Equipment expense increased 6.6% reflecting higher levels of ongoing
technology-based expenditures. Other operating expense decreased 0.8%
largely due to $363,000 in special charges mentioned earlier in this
discussion related to litigation and legal settlement costs paid in 1998.
Excluding the special charges, other expenses increased 4.7% in 1999 due
mainly to increased advertising expenses and approximately $46,000 in one-
time expense charges paid in the current quarter resulting from costs
associated with the sale of the two branches. Excluding nonrecurring
items, BT's efficiency ratio improved to 58% in the first six months of
1999 compared to 60% in 1998.
BT's effective tax rate was 29.2% for the first half of 1999 compared to
30.8% for the same period in 1998. The lower rate in 1999 reflects a
higher level of tax-exempt securities interest income.
CAPITAL ADEQUACY
At June 30, 1999, BT continued to maintain capital levels well above the
minimum regulatory levels. BT's capital ratios as of June 30, 1999 and
December 31, 1998 are presented in the following table. The required
regulatory ratios, representing the level needed to meet "Adequately
Capitalized" status are also presented.
Regulatory
6-30-99 12-31-98 Requirement
------- -------- -----------
Tier I Risk Based Ratio 10.95% 11.25% 4.00%
Total Capital Risk Based Ratio 11.87% 12.13% 8.00%
Tier I Leverage Ratio 8.52% 8.41% 4.00%
COMMITMENTS AND CONTINGENCIES:
YEAR 2000 READINESS DISCLOSURE
In 1996, BT created a special task force to analyze any Year 2000 issues
pertaining to BT's business and operations. Year 2000 issues refer to
uncertainties regarding the ability of various software systems to
interpret dates correctly after the beginning of the Year 2000. BT
utilizes and is dependent upon data processing systems and software in its
normal course of business. BT has completed or is in the process of: (1)
ongoing analysis of its information systems and vendor supplied application
systems to address any Year 2000 issues, (2) correcting or replacing all
non-compliant critical applications, (3) testing or certifying its mission
critical systems, (4) evaluating the potential effects of Year 2000 issues
on both the customers and vendors of Laurel Bank and the Trust Company, and
(5) developing Year 2000 contingency and business resumption plans.
The ongoing process of analyzing BT's information systems involves internal
testing of computer hardware and software and the modification and/or
replacement of such systems if necessary. BT is also assessing its
noncomputer (non-IT) systems for Year 2000 compliance. These non-IT
systems such as ATM machines and security systems typically utilize
embedded technology, such as microcontrollers, which could contain a date
element. BT met its goal of completing renovations of all mission critical
systems and applications by the end of 1998. While BT is taking all
appropriate steps to assure Year 2000 compliance, it is dependent on its
information systems vendor's compliance to a large extent. BT is requiring
systems and software vendors to represent that the services and products
provided are, or will be, Year 2000 compliant and are tested for such
compliance. Currently, 98% of the mission critical systems that BT and its
18
affiliates utilize have been certified by the respective vendor or service
provider as being Year 2000 compliant, and additionally, 2% that are not
yet certified have a renovation plan in place to become compliant.
Successful internal unit testing or other internal certification has been
performed on 98% of these systems. The internal testing relative to these
mission critical systems is 100% complete and the testing proved to
successfully process data on the various computer applications. BT's
mainframe system, as well as BT's core business application software
packages, have been certified by the respective vendors and tested internally
for Year 2000 compliance.
Contingency planning efforts, specific to critical systems and
applications, are substantially completed in the event that primary
systems, although certified, are deemed inadequate for processing after the
beginning of the Year 2000. In the event of any mission critical system
failure, the contingency plans provide for detailed interim procedures to
be followed until resumption of all affected processes is completed. BT
has developed a liquidity plan which addresses any funding needs related to
Year 2000 issues including the adequacy of cash reserves in branch offices
and ATM's. BT has contacted and assessed its utility service suppliers and
does not anticipate any interruption in services due to Year 2000 issues.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the
Corporation's results of operations, liquidity and capital resources.
Although BT believes that it will be adequately prepared for potential Year
2000 risks, the Corporation is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the
Corporation's results of operations, liquidity or capital resources, due to
the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third-party
suppliers and customers.
BT estimates that the total cumulative cost of this process will
approximate $756,000, which includes costs associated with modifying the
systems as well as the cost of purchasing or leasing certain hardware and
software. Purchased hardware and software will be capitalized in
accordance with normal policy. Personnel and all other costs related to
this process are being expensed as incurred. Currently, approximately
$652,000 of the estimated total cumulative cost has been expended. The
total cost of this process is based on management's best estimates and is
believed to be reasonably accurate. The expenditure is not expected to be
material to the Corporation's business, operations or financial condition
and should have no material impact on the Corporation's results of
operations, liquidity or capital resources.
BT's process of evaluating potential effects of Year 2000 issues on
customers of Laurel Bank is 100% complete, and at this time BT has not
identified any potentially adverse effects of Year 2000 problems on Laurel
Bank's loan customers. Reassessments on medium and high risk loan
customers have been or are currently being performed. The failure of a
commercial bank customer to prepare adequately for Year 2000 compatibility
could have a significant adverse effect on such customer's operations and
profitability, in turn inhibiting its ability to repay loans in accordance
with their terms to Laurel Bank. Information will continue to be accumulated
from customers of Laurel Bank to enable BT to assess the degree to which
customers' operations are susceptible to potential problems.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Corporation is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments consist of loan commitments and
19
standby letters of credit. The Corporation's exposure to loss in the event
of nonperformance by the other party to the financial instrument for loan
commitments and standby letters of credit is represented by the contractual
amount of these instruments. The Corporation uses the same credit policies
in making commitments and conditional obligations as it does for on-balance-
sheet instruments.
The face amounts of financial instruments with off-balance-sheet risk at
June 30, 1999 were as follows:
(In thousands)
Loan commitments $206,738
Standby letters of credit 10,459
Since many of the loan commitments may expire without being drawn upon, the
total commitment amount does not necessarily represent future cash
requirements or loss exposures. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Corporation upon extension of credit,
is based on management's credit evaluation of the customer. Standby
letters of credit are unconditional commitments issued by the Corporation
to support the financial obligations of a customer to a third party. These
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans. The collateral
varies but may include accounts receivable, inventory and property, plant
and equipment for those commitments for which collateral is deemed
necessary.
20
ITEM 3
------
Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
There have been no material changes in the Corporation's market risk during
the three or six months ended June 30, 1999. For additional information,
refer to pages 45 and 46 in the Annual Report of BT on Form 10-K as filed
on March 31, 1999 for the fiscal year ended December 31, 1998 which is
incorporated by reference.
PART II
-------
OTHER INFORMATION
-----------------
ITEM 1
------
Legal Proceedings
-----------------
The information regarding legal proceedings can be found in this current
filing of Form 10-Q under BT and Affiliates Notes to Consolidated Financial
Statements in Footnote 7, Litigation.
ITEM 2
------
Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable.
ITEM 3
------
Defaults Under Senior Securities
--------------------------------
Not applicable.
ITEM 4
------
Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of BT was held on Tuesday, May 11, 1999, at the
Holiday Inn-Downtown Johnstown, 250 Market Street, Johnstown, Pennsylvania.
The following directors were elected:
Name Votes For Votes Withheld Term Expires
- ---- --------- -------------- ------------
Louis G. Galliker 9,186,857 1,021,363 2003
Gerald W. Swatsworth 9,189,573 1,018,647 2003
Rowland H. Tibbott, Jr. 9,194,921 1,013,299 2003
Thomas A. Young 9,175,812 1,032,408 2003
ITEM 5
------
Other Information
-----------------
The information contained in Footnote 6 under BT and Affiliates Notes to
Consolidated Financial Statements included in Part I in this current filing
on Form 10-Q is incorporated by reference in response to this item.
21
ITEM 6
------
Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
Exhibit No. Description Prior Filing or Sequential
- ---------- ----------- Page Number
-----------
2.1 Agreement and Plan of Reorganization Incorporated by reference to
by and between BT and Philson dated Amendment No. 1 of
February 23, 1999 Registration Statement on
Form S-4 (No. 333-76295)
filed on June 2, 1999.
3.1 Articles of Incorporation of BT Incorporated by reference to
as amended to August 16, 1991 Registration Statement on
Form S-4 (No.33-69112)
filed on October 15, 1993.
3.2 Amendment to Articles of Incorporation Incorporated by referenceto
of BT dated June 4, 1997 Registration statement on
Form S-4 (No.333-61683)
filed on September 3, 1998.
3.3 By-laws of BT as amended to Incorporated byreference to
September 23, 1992 Registration Statement on
Form S-4 (No.33-69112)
filed on October 15, 1993.
27.1 Financial Data Schedule Filed herewith.
(b) Reports on Form 8-K
-------------------
The Registrant did not file any Current Reports on Form
8-K during the second quarter of 1999.
22
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.
BT FINANCIAL CORPORATION
(Registrant)
Date August 13, 1999 /s/ John H. Anderson
------------------ ----------------------------
John H. Anderson, Chairman
and Chief Executive Officer
Date August 13, 1999 /s/ Mark L. Sollenberger
------------------ -------------------------------
Mark L. Sollenberger,
Executive Vice President
and Chief Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 45,226
<INT-BEARING-DEPOSITS> 85
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 294,441
<INVESTMENTS-CARRYING> 1,999
<INVESTMENTS-MARKET> 1,998
<LOANS> 1,394,917
<ALLOWANCE> 12,316
<TOTAL-ASSETS> 1,781,212
<DEPOSITS> 1,378,883
<SHORT-TERM> 83,559
<LIABILITIES-OTHER> 8,662
<LONG-TERM> 150,022
0
0
<COMMON> 64,926
<OTHER-SE> 95,160
<TOTAL-LIABILITIES-AND-EQUITY> 1,781,212
<INTEREST-LOAN> 50,819
<INTEREST-INVEST> 9,190
<INTEREST-OTHER> 179
<INTEREST-TOTAL> 60,188
<INTEREST-DEPOSIT> 20,871
<INTEREST-EXPENSE> 24,857
<INTEREST-INCOME-NET> 35,331
<LOAN-LOSSES> 3,142
<SECURITIES-GAINS> 90
<EXPENSE-OTHER> 25,571
<INCOME-PRETAX> 14,046
<INCOME-PRE-EXTRAORDINARY> 14,046
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,943
<EPS-BASIC> .77
<EPS-DILUTED> .77
<YIELD-ACTUAL> 4.68
<LOANS-NON> 5,463
<LOANS-PAST> 3,999
<LOANS-TROUBLED> 213
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,971
<CHARGE-OFFS> 2,048
<RECOVERIES> 251
<ALLOWANCE-CLOSE> 12,316
<ALLOWANCE-DOMESTIC> 12,316
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
