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: September 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from to
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Commission file no.: 0-12377
BT FINANCIAL CORPORATION
------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 25-1441348
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(State of Incorporation) (I.R.S. Employer Identification Number)
551 Main Street, Johnstown, Pennsylvania 15901
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(Address of Principal Executive Offices) (Zip Code)
(814) 532-3801
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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:
16,683,294 shares common stock
($5.00 par value)
as of October 31, 2000
BT FINANCIAL CORPORATION AND AFFILIATES
FORM 10-Q
September 30, 2000
Part I. Financial Information Page No.
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Item 1.
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Consolidated Balance Sheet - September 30, 2000
and December 31, 1999 3
Consolidated Statement of Income
Three and Nine Months Ended September 30, 2000 and 1999 4
Consolidated Statement of Cash Flows
Nine Months Ended September 30, 2000 and 1999 5
Consolidated Statement of Comprehensive Income
Three and Nine Months Ended September 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2.
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Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3.
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Quantitative and Qualitative Disclosures about Market Risk 22
Part II. Other Information
---------------------------
Item 1.
-------
Legal Proceedings 22
Item 6.
-------
Exhibits and Reports on Form 8-K 22
Signatures 23
2
ITEM 1
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FINANCIAL STATEMENTS
--------------------
BT FINANCIAL CORPORATION AND AFFILIATES
---------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(In thousands, except shares and per share data)
SEPTEMBER 30 December 31
2000 1999
(UNAUDITED)
----------------------------
ASSETS
Cash and cash equivalents $ 65,174 $ 65,812
Interest-bearing deposits with banks 236 136
Federal funds sold --- 49,000
Securities available-for-sale 403,867 359,883
Securities held-to-maturity (market values
of $1,988 at September 30, 2000 and
$1,983 at December 31, 1999) 2,000 1,999
----------------------------
Total securities 405,867 361,882
----------------------------
Loans 1,540,623 1,529,696
Less: Unearned income 9,616 14,872
Reserve for loan losses 16,253 15,654
----------------------------
Net loans 1,514,754 1,499,170
Premises and equipment 27,829 29,265
Accrued interest receivable 14,060 12,660
Other assets 43,094 42,747
----------------------------
Total assets $ 2,071,014 $ 2,060,672
============================
LIABILITIES
Deposits:
Non-interest-bearing $ 244,452 $ 241,293
Interest-bearing 1,401,287 1,353,826
----------------------------
Total deposits 1,645,739 1,595,119
Federal funds purchased and securities sold
under agreements to repurchase 59,090 37,607
Short-term borrowings 3,600 78,750
Accrued interest payable 9,941 7,840
Other liabilities 5,183 6,319
Long-term borrowings 150,900 150,010
----------------------------
Total liabilities $ 1,874,453 $ 1,875,645
----------------------------
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: 16,683,294 at September
30, 2000 and December 31, 1999 83,416 83,416
Surplus 58,950 58,956
Retained earnings 61,162 53,666
Accumulated other comprehensive (loss) income (6,967) (11,011)
------------------------------
Total shareholders' equity 196,561 185,027
------------------------------
Total liabilities and
shareholders' equity $ 2,071,014 $ 2,060,672
==============================
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 Nine months ended
September 30 September 30
2000 1999 2000 1999
------------------------------------------
INTEREST INCOME
Loans, including fees $ 31,095 $ 30,059 $ 91,094 $ 85,514
Investment securities:
Taxable 5,086 4,346 14,099 13,415
Tax-exempt 1,294 1,326 3,872 4,020
Deposits with banks 6 2 11 6
Federal funds sold 295 230 1,440 592
------------------------------------------
TOTAL INTEREST INCOME 37,776 35,963 110,516 103,547
------------------------------------------
INTEREST EXPENSE
Deposits 15,289 12,233 42,337 35,870
Federal funds purchased
and securities sold under
agreements to repurchase 499 394 1,256 1,054
Short-term borrowings 357 896 1,796 1,125
Long-term borrowings 2,051 1,974 6,086 5,117
------------------------------------------
TOTAL INTEREST EXPENSE 18,196 15,497 51,475 43,166
------------------------------------------
NET INTEREST INCOME 19,580 20,466 59,041 60,381
Provision for loan losses 1,685 1,894 3,785 5,064
------------------------------------------
Net interest income
after provision for
loan losses 17,895 18,572 55,256 55,317
------------------------------------------
OTHER INCOME
Trust and investment management
income 1,054 982 3,314 3,000
Fees for other services 2,605 2,791 7,645 7,695
Net security (losses) gains (1) --- 71 90
Other income 332 398 1,056 1,397
------------------------------------------
TOTAL OTHER INCOME 3,990 4,171 12,086 12,182
------------------------------------------
OTHER EXPENSES
Salaries and wages 6,104 6,183 18,017 17,841
Pension and other
employee benefits 1,117 1,257 3,409 3,930
Net occupancy expense 1,230 1,193 3,649 3,679
Equipment expense 1,506 1,522 4,311 4,541
Amortization of intangible
assets 491 524 1,475 1,571
Other taxes 473 447 1,426 1,375
Reorganization expense --- 4,115 --- 4,204
Other operating expense 3,082 3,512 9,764 10,461
------------------------------------------
TOTAL OTHER EXPENSES 14,003 18,753 42,051 47,602
------------------------------------------
INCOME BEFORE INCOME TAXES 7,882 3,990 25,291 19,897
Provision for income taxes 2,322 1,156 7,452 5,744
------------------------------------------
NET INCOME $ 5,560 $ 2,834 $ 17,839 $ 14,153
==========================================
Earnings per common share-Basic
and Diluted $ .33 $ .17 $ 1.07 $ .85
Weighted average common shares
Outstanding-Basic 16,683,294 16,683,294 16,683,294 16,683,294
Weighted average common shares
Outstanding-Diluted 16,683,294 16,683,294 16,683,294 16,683,664
Dividends paid per common
share $ .21 $ .19 $ .62 $ .52
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)
--------------
Nine months ended
September 30
2000 1999
-------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17,839 $ 14,153
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 3,785 5,064
Provision for depreciation and
amortization 3,011 3,478
Amortization of intangible assets 1,475 1,571
Amortization of premium, net of
accretion of discount on loans and
securities (195) (218)
Deferred income taxes (414) (631)
Gain from sale of branches --- (609)
Realized net securities gains (71) (90)
Proceeds from sale of loans 13,389 14,452
Increase in interest receivable (1,400) (353)
Increase in interest payable 2,101 2,257
Equity in loss of limited partnerships 111 185
Other assets and liabilities, net (4,910) 706
------------------
Net cash provided by operating activities 34,721 39,965
------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities 4,771 14,856
Repayments and maturities of securities
available-for-sale 16,086 35,864
Repayments and maturities of securities
held-to-maturity --- 79,193
Purchases of securities available-for-sale (58,525) (75,243)
Purchase of securities held-to-maturity --- (6,726)
Net increase in interest-bearing deposits with banks (100) (32)
Net decrease (increase) in federal funds sold 49,000 (32,300)
Net increase in loans (32,510) (249,786)
Purchases of premises and equipment and other (1,575) (663)
Net increase in investment in limited partnerships --- (37)
--------------------
Net cash used in investing activities (22,853) (234,874)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 50,620 18,427
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase 21,483 (4,915)
Net (decrease) increase in short-term borrowings (75,150) 125,842
Common stock cash dividends paid (10,343) (8,712)
Proceeds from long-term borrowings 900 50,000
Payment on long-term borrowings (10) (16)
Other (6) ---
--------------------
Net cash (used in) provided by
financing activities (12,506) 180,626
--------------------
Decrease in cash and cash equivalents (638) (14,283)
Cash and cash equivalents at beginning
of the year 65,812 67,823
--------------------
Cash and cash equivalents at end of period $ 65,174 $ 53,540
=====================
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 Nine months ended
September 30 September 30
2000 1999 2000 1999
------------------- ------------------
Net income $ 5,560 $ 2,834 $ 17,839 $ 14,153
Other comprehensive income (loss),
net of tax:
Unrealized holding gains (losses)
on securities arising during
period, net of tax of $2,019,
$(609), $2,203, and $(5,474) 3,749 (1,131) 4,090 (10,164)
Less: Reclassification adjustment
for gains (losses) included in
net income, net of tax of $0,
$0, $25, and $31 (1) - 46 59
------------------- ------------------
Other comprehensive income (loss),
net of tax of $2,019, $(609),
$2,178 and $(5,505) 3,750 (1,131) 4,044 (10,223)
------------------- ------------------
Comprehensive income $ 9,310 $ 1,703 $ 21,883 $ 3,930
=================== ==================
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, Bedford Associates of Delaware,
Inc., Flex Financial Consumer Discount Company (Flex), and Laurel Investment
Advisors, Inc. On July 14, 1999, BT completed a merger with First
Philson Financial Corporation (Philson). At the time of the merger,
Philson's assets were approximately $221 million. Philson owned
First Philson Bank, N.A. and Flex, a finance company subsidiary.
The merger was 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
Philson for all periods 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,
1999. The results of operations for the nine month period ended
September 30, 2000 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 $5.5 million
at September 30, 2000, compared to $5.4 million at December 31, 1999
and $3.3 million at September 30, 1999. The corresponding loan loss
valuation allowance was $1.0 million at September 30, 2000, compared
to $1.1 million at December 31, 1999 and $475,000 at September 30,
1999. BT recognized $103,000 and $3,000 of interest revenue on
impaired loans during the nine months ended September 30, 2000 and
1999, respectively. During the quarter ended September 30, 2000,
the interest revenue recorded on impaired loans was $32,000 compared
to $1,000 during the quarter ended September 30, 1999. The interest
revenue during all periods in the current and prior year was
recorded using the cash basis of income recognition.
7
4. Earnings Per Share
------------------
The following table shows the calculation of basic and diluted
earnings per share. Except for the nine months ended September 30,
1999, BT's stock options are antidilutive for the periods presented.
Share and per share data has been adjusted to reflect the five
percent stock dividend distributed on February 1, 2000.
Three months ended Nine months ended
September 30 September 30
2000 1999 2000 1999
------------------ -------------------
Basic Earnings Per Share:
Net income (in thousands) $ 5,560 $ 2,834 $ 17,839 $ 14,153
====== ====== ====== ======
Weighted average number
of common shares
outstanding-Basic 16,683,294 16,683,294 16,683,294 16,683,294
Basic Earnings Per
Share $ .33 $ .17 $ 1.07 $ .85
====== ====== ====== ======
Diluted Earnings Per Share:
Net Income (in thousands) $ 5,560 $ 2,834 $ 17,839 $ 14,153
====== ====== ====== ======
Weighted average number
of common shares
outstanding-Basic 16,683,294 16,683,294 16,683,294 16,683,294
Effect of dilutive
stock options --- --- --- 370
----- ------ ------ ------
Weighted average number
of common shares
outstanding-Diluted 16,683,294 16,683,294 16,683,294 16,683,664
========== ========== ========== ==========
Diluted Earnings
Per Share $ .33 $ .17 $ 1.07 $ .85
====== ====== ====== ======
5. Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board (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
8
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 until
fiscal year 2001. In June of 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an Amendment of SFAS No. 133". This statement amends the
accounting and reporting standards of SFAS No. 133 for certain
derivative instruments and hedging activities. Since BT does not
currently use derivative financial instruments, the standards would not
have any material impact on BT's financial position or results of
operations upon adoption.
In March of 2000, the FASB issued Interpretation No. 44, "Accounting
for Certain Transactions Involving Stock Compensation, an
interpretation of Accounting Principles Board Opinion (APB) No. 25".
The interpretation is intended to provide accounting guidance involving
stock compensation and to clarify certain problems that have arisen in
practice since the issuance of APB No. 25 in October 1972. This
interpretation was effective on July 1, 2000. BT does have a stock-
based compensation plan, however, the interpretation did not have any
impact on BT's financial position or results of operations upon
adoption.
6. Litigation
----------
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 sought to enjoin Laurel from using its name and related logo in
the "Pittsburgh area" and sought 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. On
October 26, 2000, the parties entered into a confidential agreement
to settle this action. While the terms of the agreement are
confidential, the financial portion of the settlement is not
expected to have a material effect on BT's financial position or its
results of operations. The parties agreed to a judgment of
permanent injunction and other relief, whereby Laurel Bank has
agreed to refrain from using the "Laurel" name or related logo on
any bank documents, advertisements, or promotional materials in the
"Pittsburgh area".
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.
9
7. Stock Dividend
--------------
On December 22, 1999, BT's Board of Directors declared a five
percent stock dividend. The dividend was distributed on February 1,
2000, to shareholders of record as of January 4, 2000. All share and
per share data in this report has been adjusted to reflect the stock
dividend.
8. Stock Based Compensation Plan
-----------------------------
On January 5, 2000, under the 1998 Equity Incentive Plan, BT granted
non-qualified stock options to certain employees and directors to
purchase 111,500 shares of BT Common Stock. The exercise price of the
options was $20 per share which equaled the market price of BT's Common
Stock on the date of grant. The stock options became exercisable on
January 6, 2000 and have a maximum term of 10 years.
9. Subsequent Event
----------------
BT purchased 1,729,373 shares of its common stock at $19.50 per
share on November 8, 2000 in connection with a modified Dutch
auction tender offer which expired on October 31, 2000.
Accordingly, 14,953,921 shares of BT's common stock were outstanding
on November 8, 2000. The purchased shares represented 10.4% of BT's
16,683,294 shares of common stock outstanding on October 31, 2000.
10
ITEM 2
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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 September 30, 2000 and December 31,
1999, and the material changes in results of operations comparing the
three and nine month periods ending September 30, 2000 with the
respective results for the comparable periods of 1999 for BT. The
following should be read in conjunction with BT's Annual Report on Form
10-K for the year ended December 31, 1999.
On July 14, 1999, BT completed a merger with First Philson Financial
Corporation (Philson). Philson owned First Philson Bank, N.A. and Flex
Financial Consumer Discount Company, a finance company subsidiary. At
the time of the merger, Philson's assets were approximately $221 million.
The merger was 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 Philson for all periods prior
to the merger. This acquisition strengthened BT's leading market
position in Somerset County, Pennsylvania, where BT currently represents
over one-third of total bank and thrift deposits.
Forward-Looking Statements
--------------------------
Except for historical information contained herein, the matters discussed
in this report or incorporated by reference in this report may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that involve substantial risks and uncertainties. When used in
this report, or in the documents incorporated by reference in this
report, the words "anticipate," "believe," "estimate," "may," "intend,"
"expect" and similar expressions identify certain of such forward-looking
statements. Actual results, performance or achievements could differ
materially from those contemplated, expressed or implied by the forward-
looking statements contained herein. Factors that could cause future
results to vary from current expectations include, but are not limited to
the following: changes in economic conditions (both generally and more
specifically in the markets in which BT operates); changes in interest
rates, deposit flows, loan demand, real estate values and competition;
changes in accounting principles, policies or guidelines and in
government legislation and regulation (which change from time to time and
over which BT has no control); other factors affecting BT's operations,
markets, products and services; and other risks detailed in this report
and in BT's other Securities and Exchange commission filings. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date
hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise
after the date hereof.
11
Strategic Initiatives
---------------------
On September 26, 2000, BT announced a series of strategic initiatives to
enhance future growth, provide increased shareholder value, and to ensure
its ability to operate aggressively in a competitive financial services
market. These initiatives may or may not be successful in increasing
shareholder value. See BT's aforementioned discussion of "Forward
Looking Statements." The following principal initiatives were announced:
- A reorganization of BT's companies to a multi-channel, market-driven
delivery system working from a disciplined customer focus. The
reorganization includes an early retirement program;
- The repurchase of up to ten percent of BT's Common Stock through a
modified Dutch auction tender;
- The adoption of BT's new "Promistar" brand name effective November
15, 2000, permitting the leveraging of BT's advertising resources and
expansion of its markets; and
- The rollout of a new e-commerce strategy featuring comprehensive
Internet banking services.
See BT's Current Report on Form 8-K dated September 26, 2000 for the
press release which details the planned strategic initiatives listed
above. The financial impact of these strategic actions is expected to
result in a nonrecurring pre-tax charge to earnings of approximately $6.6
million in the fourth quarter of this year. Of that amount, $2.7 million
is estimated to represent the cost of the early retirement program which
is expected to result in a reduction of annual expenses of $1.0 million
beginning in 2001.
On November 6, 2000, BT announced the final results of the modified
Dutch auction tender offer which expired on October 31, 2000. The final
number of shares of BT common stock purchased was 1,729,373 shares at a
price of $19.50 per share. The shares purchased represented 10.4% of
BT's 16,683,294 shares of common stock outstanding on October 31, 2000.
As of November 8, 2000, 14,953,921 shares of BT's common stock were
outstanding.
The purchase of the 1,729,373 shares at a purchase price of $19.50 per
share, or $33.7 million in the aggregate, was funded through two
revolving credit facilities and working capital. On November 1, 2000,
BT entered into identical revolving credit facilities with SunTrust Bank
and The Northern Trust Company (each, a "Lender" and together, the
"Lenders"), each in an aggregate principal amount of up to $15.0
million. Each facility has a term of one year and each may be renewed
for additional one year terms at the request of BT, subject to approval
of the Lenders. Each facility bears interest on the principal amount
borrowed at a rate equal to (i) the New York Federal Reserve Effective
Federal Funds Rate plus 0.90%, or (ii) LIBOR plus 1.00%, or (iii) the
prime rate less 1.00%, determined monthly at the option of BT. Interest
is payable monthly in arrears. A facility fee of 0.175% of the total
commitment amount is payable quarterly in arrears to each Lender. The
facilities are unsecured; however, BT has granted the Lenders a negative
pledge on investments held in BT's Delaware investment subsidiary such
12
that BT must maintain investments with a minimum value of $10.0 million
in that subsidiary. On November 8, 2000, BT borrowed the full amount
available under each facility and funded the remaining amounts payable
to purchase the shares tendered in the modified Dutch auction tender
with working capital.
FINANCIAL REVIEW
----------------
Overview
--------
BT's primary financial objectives are to expand the growth and
profitability of the Corporation through: (1) expansion and
diversification of revenue streams in fee income, trust and investment
management areas, (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 product delivery
systems and (4) strategic mergers and acquisitions. Maintaining high
asset quality while managing internal and merger-related growth remains
an essential element in BT's expansion strategies. BT's strategic
business plan targets retail consumers and small to mid-sized businesses
by offering a full menu of banking and financial services.
BT's merger with Philson in July 1999 increased total assets to
approximately $2.0 billion. Philson's banking subsidiary, First Philson
Bank, N.A., operated nine branches in Somerset and Fayette counties and
was merged into Laurel Bank upon consummation of the merger. Philson
also owned Flex Financial Consumer Discount Company (Flex), which
continues to operate as a non-bank subsidiary of BT. Targeted synergies
and efficiencies resulting from the merger have been realized as
evidenced by an improved efficiency ratio of 56.8% in the first nine
months of 2000 compared to 57.2% in the same period of 1999.
Additionally, total other recurring expenses declined $926,000 over the
same period. Cost-saving measures included the elimination of redundant
overhead expenses and some branch closures due to overlapping market
areas. During the fourth quarter of 1999, two branches of the former
Philson Bank, N.A., along with one branch of Laurel, were closed and
consolidated into nearby locations as a result of duplicate service areas
created by the merger. BT is generating additional revenues through the
expansion of Flex's market and by targeting trust and investment services
to the former Philson customer base.
BT reported net income of $17.8 million or $1.07 per share for the nine-
month period ending September 30, 2000. These results represent a 4.9%
increase over core operating earnings of $17.0 million or $1.02 per share
earned in the same period of 1999. Nonrecurring after-tax expenses of
approximately $3.2 million, consisting primarily of reorganization costs
associated with the Philson merger in July 1999, were recorded in the
1999 period. Additionally, a one-time net after-tax gain of $366,000 was
realized on the sale of two branch offices in the second quarter of 1999.
The inclusion of these nonrecurring items reduced net income to $14.2
million or $.85 per share for the nine-month period ending September 30,
1999. The core earnings improvement was driven primarily by increased
non-interest income along with a reduction in operating expenses and a
lower loan loss provision which offset a decreased level of net interest
income due to margin pressure. For the third quarter of 2000, BT
reported net income of $5.6 million or $.33 per share, a 5.8% decline
when compared to core operating earnings of $5.9 million or $.35 per
share earned in the third quarter of 1999. Nonrecurring after-tax
expenses, mainly due to the Philson merger, were $3.1 million in the
13
third quarter of 1999 and reduced net income to $2.8 million or $.17 per
share in that period. The quarterly core earnings decline was due mainly
to a lower level of net interest income attributed to the higher interest
rate environment experienced this year which has resulted in decreased
loan demand and higher rates paid on deposits.
On October 25, 2000, BT's Board of Directors declared a quarterly cash
dividend of $.21 per share to shareholders of record on November 6, 2000,
payable December 1, 2000. On a current year-to-date basis, dividends per
share have increased 19.2% over the same period in 1999. This increase
is in keeping with BT's practice of reflecting the Company's success in
its dividend policy.
CHANGES IN FINANCIAL POSITION
Total assets at September 30, 2000 were $2.071 billion compared to $2.061
billion at December 31, 1999 and $2.106 billion at September 30, 1999.
The 0.5% increase over year-end 1999 resulted from a higher level of
loans and securities offset mostly by a decline in Federal Funds sold in
connection with the retirement of $75 million in short-term borrowings at
the Federal Home Loan Bank this year. The 1.7% decrease in total assets
from September 30, 1999 was primarily due to the retirement of the $75
million in Federal Home Loan Bank short-term borrowings. Average total
assets for the nine months ended September 30, 2000 were $2.039 billion,
representing an increase of $67.2 million or 3.4% over the nine months
ended September 30, 1999. Average total assets for the quarter ended
September 30, 2000 were $2.055 billion, representing a $3.4 million or
0.2% increase over the quarter ended September 30, 1999. The
increase over both periods was primarily due to increased earning asset
levels. Average total assets increased by $30.7 million or 1.5% in the
current quarter compared to the second quarter of 2000 due mainly to
higher loan levels.
Total shareholders' equity was $196.6 million at September 30, 2000
compared to $185.0 million at year-end 1999 and $184.4 million at
September 30, 1999. The increase of $11.5 million over year-end 1999
and $12.2 million over September 30, 1999 was mainly due to BT's net
income. The increases over both comparison periods also reflect an
improvement in accumulated other comprehensive income due to higher
market values on securities available-for-sale. At September 30, 2000,
other comprehensive income improved $4.0 million and $1.2 million
compared to year-end 1999 and September 30, 1999, respectively.
Total loans outstanding at September 30, 2000, net of unearned income,
increased $16.2 million, or 1.1%, compared to year-end 1999 versus a
decrease of $27.4 million, or 1.8% compared to September 30, 1999. Total
average loans, net of unearned income, increased 4.0% to $1.499 billion
in the current nine-month period compared to the same period in 1999.
Most of the $57.5 million average increase was due to a higher level of
consumer and commercial loans which was partially offset by a decline in
residential mortgage loans. Generally, loan growth has been somewhat
below expectations due to the higher interest rates arising from the
monetary tightening actions of the Federal Reserve throughout this year.
BT's decline in residential mortgage lending has been typical of the
activity experienced at most financial institutions in an increasing rate
environment. Consumer and commercial loan levels have improved despite
14
higher rates as lenders continue to target existing and potential
customer relationship opportunities within BT's market area. In the
current quarter, total average loans, net of unearned income, were down
1.6% over the third quarter of 1999 to $1.507 billion due mainly to
decreased residential mortgage lending activity. However, average loans,
net of unearned income, grew by 1.5% in the current quarter compared to
the second quarter of this year. Most of this recent growth has occurred
due to a higher level of consumer automotive lending. BT has no
nationally syndicated or enterprise value technology credits in its
market-centered loan portfolio. In addition, BT has no significant loan
concentrations. BT has operated six local sales-focused banking regions
throughout its market area, designed to incorporate local market
knowledge with the backing of a corporate business plan tailored to offer
customers a complete array of lending and other financial products. In
2000, BT has focused on enhancing its consumer loan function by
centralizing the direct consumer lending area. The key benefits of this
centralization include consistent credit scoring, quicker approval and
turnaround time, enhanced documentation, and improved control over the
entire loan process. Customers will benefit by the time-savings features
inherent in the centralized structure and the resulting improvement in
customer service. Additionally, BT has recently stimulated consumer
lending demand by offering competitive rates on selected products through
various promotional campaigns. In order to profitably expand customer
relationships and meet customer needs, BT has expanded its offering of
loan terms and maturities to its customer base. BT then executes funding
strategies and other balance sheet management techniques to optimize the
related impact on BT's operating results. As an example, BT has
established secondary market relationships which allow the sale of
certain longer-term loans. This enhances BT's capability to manage its
balance sheet more effectively both from a liquidity and risk perspective
while providing the potential for fee gains related to the asset sales.
In 2000, BT has sold some selected residential mortgage and consumer home
equity loans to third parties as part of the aforementioned strategy.
BT's nonperforming assets increased $4.7 million, or 42.3%, and $3.9
million, or 33.6%, compared to year-end 1999 and September 30, 1999,
respectively. The increase over both periods was principally due to the
addition of two secured nonperforming commercial lending relationships
totaling approximately $4.1 million at September 30, 2000. Total
nonperforming assets represented .76% of total assets at September 30,
2000 compared to .53% and .56% at year-end 1999 and September 30, 1999,
respectively. BT's loans are targeted to individuals and businesses
within its marketing region. This strategy enables BT to leverage its
local market expertise to attain its goal of a strong credit culture
without exposure to areas outside of BT's markets.
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. BT's reserve for loan losses
was at a record level of $16.3 million on September 30, 2000,
representing 1.06% of loans, net of unearned income, compared to 1.03% at
year-end 1999 and 1.02% at September 30, 1999. BT has increased the loan
loss reserve and will continue to monitor the effect of the economy and
other trends on credit quality. The following table provides information
with respect to the components of BT's nonperforming assets and related
ratios for the periods indicated.
15
September 30 December 31 September 30
(In thousands) 2000 1999 1999
----------------------------------------
Loans 90 days or more past-due $ 926 $ 582 $ 509
Restructured loans 211 212 213
Nonaccrual loans 13,194 8,936 9,765
----------------------------------------
Total nonperforming loans 14,331 9,730 10,487
Other real estate owned 395 502 471
Repossessed assets 953 784 778
----------------------------------------
Total nonperforming assets $ 15,679 $ 11,016 $ 11,736
========================================
Nonperforming loans as a % of
loans, net of unearned interest .94% .64% .67%
Reserve for loan losses to
nonperforming loans 1.1x 1.6x 1.5x
Reserve for loan losses as a % of
loans, net of unearned interest 1.06% 1.03% 1.02%
Total investment securities have increased $44.0 million, or 12.2%, and
$33.8 million, or 9.1%, compared to year-end 1999 and September 30, 1999,
respectively. Most of the increase over both periods was due to a higher
level of mortgage-backed securities in the current period. BT's
securities are purchased to enhance the overall yield on earning assets
and to contribute to the management of interest rate risk and liquidity.
Loans generally provide higher yields than securities, and sound loan
expansion remains one of BT's key growth strategies.
Period-end total deposits increased by $50.6 million, or 3.2%, and $49.2
million, or 3.1%, compared to year-end 1999 and September 30, 1999,
respectively. The increase over both periods was driven by higher
certificate of deposit balances. BT has recently targeted growth in this
product line by offering more aggressive rates for selected maturities.
Total average deposits have increased 2.1% to $1.604 billion in the
current nine-month period compared to the same period in 1999. For the
current quarter, total average deposits were up 2.1% over the third
quarter of 1999 to $1.628 billion. The nine-month and quarterly average
increases were mainly due to certificate of deposit growth, which offset
declines in savings, interest-checking, and money market accounts.
Average demand deposits rose 1.2% in the current nine-month period over
the same period last year while declining slightly by 0.7% in the current
quarter compared to the third quarter of 1999. BTFC's funding strategy
continues to emphasize growth in its core deposit base which provides
funding at rates lower than current wholesale credit sources.
BT's short-term borrowings (consisting of federal funds purchased,
securities sold under agreements to repurchase and other short-term
borrowings) declined $53.7 million and $97.4 million compared to year-end
1999 and September 30, 1999, respectively, mainly due to the retirement
of $75.0 million in short-term borrowings at the Federal Home Loan Bank
(FHLB) this year. BT had long-term borrowings of $150.0 million at
16
September 30, 2000 provided by the FHLB during 1998 and 1999. The
borrowings, scheduled to mature in years 2008 and 2009, had interest
rates ranging from 4.99% to 5.56% at September 30, 2000. BT's funding
strategy utilizes alternative nondeposit funding sources when deemed
appropriate as a means to supplement internal deposit growth. Loans, net
of unearned income, as a percentage of deposits, were 93.0%, 95.0% and
97.6% at September 30, 2000, December 31, 1999, and September 30, 1999,
respectively. BT strives to maintain the loan to deposit ratio under
100% in order not to become dependent on higher cost funding sources.
Funding strategies are actively managed by BT's Asset/Liability Committee
to ensure adequate liquidity and to control interest rate risk exposure
while maximizing profitability.
RESULTS OF OPERATIONS
A five percent stock dividend was declared on December 22, 1999 to
shareholders of record at January 4, 2000. The stock dividend was
distributed on February 1, 2000. All per share data in the following
discussions reflect the stock dividend.
Third Quarter 2000 vs. Third Quarter 1999
For the third quarter of 2000, BT produced net income of $5.6 million, or
$.33 per share, compared to core operating earnings of $5.9 million, or
$.35 per share earned in the same period of 1999. Nonrecurring after-tax
expenses, mainly due to the Philson merger, were $3.1 million in the
third quarter of 1999 and reduced net income to $2.8 million or $.17 per
share in that period. The third quarter 5.8% decline in core earnings
performance this year was primarily due to a lower level of net interest
income in the current quarter reflecting lower loan demand and higher
rates paid on deposits.
The annualized core return on average assets for the third quarters of
2000 and 1999 was 1.07% and 1.14%, respectively. The annualized core
return on average shareholders' equity was 11.42% in 2000 and 12.70% in
1999. The core return on average tangible shareholders' equity, which
excludes intangible amortization expense from net income and intangibles
from average shareholders' equity was 13.69% and 15.49% for the third
quarters of 2000 and 1999, respectively. The above ratios exclude the
impact of nonrecurring expenses occurring in the third quarter of 1999.
Including the nonrecurring expenses, the ratios for the third quarter of
1999 were 0.55% (return on average assets), 6.10% (return on average
equity), and 8.09% (return on average tangible equity).
Fully taxable equivalent net interest income decreased $1.0 million, or
4.6%, to $20.6 million in the third quarter of 2000 compared to the third
quarter of 1999. The decrease was primarily due to a decline in the net
interest margin of 22 basis points to 4.19% in the current quarter. The
decline in the margin has resulted from a rise in interest rates
initiated by the Federal Reserve over the past year. The rising interest
rate environment has the effect of reducing the net interest margin as
the cost of funds rises faster than the yield on interest earning assets.
Total average earning assets increased $6.7 million or 0.3% to $1.945
billion, while average interest-bearing liabilities declined $8.5 million
or 0.5% to $1.605 billion in the current quarter compared to the third
quarter of 1999. Average earning assets yielded 7.90% compared to 7.58%
while the rate paid on average interest-bearing liabilities increased to
4.50% from 3.81% over the same period, respectively. The increased cost
17
of funds has primarily resulted from both volume and rate increases in
average certificates of deposit balances. For the current quarter, total
average deposits were up 2.1% over the third quarter of 1999 to $1.628
billion. The average increase in certificate of deposit balances offset
declines in savings, interest-checking, and money market accounts. BT has
pursued growth in its core deposit base which provides funding at rates
lower than current wholesale credit sources. BT will continue a
disciplined loan and deposit strategy in the short term with less
dependence on spread-based income over the longer term.
The provision for loan losses decreased $209,000 in the third quarter of
2000, compared to the same period in 1999 due to management's assessment
of the provision necessary to maintain an adequate reserve against
inherent losses based upon the current and quality of the loan portfolio.
Additionally, the provision has decreased due to the recent moderate loan
activity. Net charge-offs for the third quarter were approximately $1.1
million in 2000 compared to $1.4 million in 1999. The decrease was due
to a lower level of credit losses in consumer loans which more than
offset an increase in charged off commercial loans. Net charge-offs
represented .30% of average loans, net of unearned income, on an
annualized basis for the third quarter of 2000 compared to .36% for the
same quarter last year.
In the third quarter of 2000, $4.0 million of non-interest income was
recorded compared to $4.2 million in the third quarter of 1999. The
modest decline was substantially due to lower fees earned in connection
with decreased loan activity this year. Approximately $1.1 million in
trust and investment management income, representing a 7.3% increase over
the third quarter of last year, was realized in the current quarter as
assets under management rose to a record market value of $832.8 million
at September 30, 2000. As a percent of total revenue (net interest
income and total other income), BT's total other income was 16.9% for the
third quarters of 2000 and 1999. BT continues to emphasize growth in fee-
related revenues as it seeks to expand and diversify its revenue streams
and transact business more efficiently through technology that meets the
needs of its customer base.
In the current quarter, total non-interest expenses were $14.0 million,
representing a reduction of $346,000 from the $14.3 million core expense
level in the third quarter of 1999. This improvement directly resulted
from the targeted synergies achieved in the Philson merger in July of
1999. Nonrecurring expenses, primarily related to the Philson merger,
totaled $4.4 million in the third quarter of 1999. The core salaries and
benefits level declined 1.8% despite a $168,000 reduction of the deferral
of loan origination costs as prescribed under Statement of Financial
Accounting Standards No. 91. The cost deferral reduction has resulted
from decreased loan activity this year. Occupancy and equipment expenses
were relatively flat in the current quarter compared to the third quarter
of 1999. Other core operating expenses declined 6.9% reflecting the
elimination of duplicative expense structures at BT and Philson. BT
continuously evaluates the efficiency of its operations to seek improved
processes and delivery channels which will best serve its customers while
reducing operating costs.
BT's effective tax rate was 29.5% for the third quarter of 2000 compared
to 29.0% for the same period of 1999. The change in the effective rate
reflects the change in tax-exempt interest income and the application of
permanent differences during the respective periods.
18
Nine Months Ended September 30, 2000 vs. Nine Months Ended September 30,
1999
Consolidated net income increased 4.9%, to $17.8 million, or $1.07 per
share in the first nine months of 2000 compared to core earnings of $17.0
million, or $1.02 per share earned in the same period of 1999.
Nonrecurring after-tax expenses of approximately $3.2 million, consisting
primarily of reorganization costs associated with the Philson merger were
recorded in the 1999 period. Earnings in the nine month period ended
September 30, 1999 were also impacted by a nonrecurring net after-tax
gain of $366,000 realized in connection with the sale of two branches in
the second quarter of 1999. The inclusion of the nonrecurring items
reduced net income to $14.2 million or $.85 per share for the nine month
period ending September 30, 1999. The improved core profit performance
in net income growth of 4.9%, which excludes nonrecurring items, was
largely a result of targeted cost savings from the July 1999 Philson
merger and continued fee income increases. The rise in interest rates
over the last year has increased the cost of funds and contributed to a
decline in demand for loans, resulting in continued erosion of the net
interest margin. Accordingly, net interest income declined $1.3 million
or 2.2% when comparing the first nine months of 2000 to the same period
of 1999. This decline was offset by a $1.3 million decrease in the
provision for loan losses. BT's efficiency ratio of 56.8% in the first
nine months of 2000 compared favorably to the 57.2% core ratio in the
same period of 1999, reflecting the successful integration of Philson
into BT and management's ongoing efforts to control overhead costs.
For the first nine months of 2000, the annualized core return on average
assets was 1.17% compared to 1.15% in 1999. The annualized core return
on average shareholders' equity for the first nine months of 2000 and
1999 was 12.60% and 12.09%, respectively. The core return on average
tangible shareholders' equity, which excludes intangible amortization
expense from net income and intangibles from average shareholders'
equity, was 15.11% for the first nine months of 2000 compared to 14.81%
in 1999. The above ratios exclude the impact of the 1999 nonrecurring
items mentioned in the preceding paragraph. Including these nonrecurring
items, the returns on average assets, equity, and tangible equity were
.96%, 10.07% and 12.54% for the first nine months of 1999, respectively.
BT's net interest margin, while still above peer levels, declined 32
basis points to 4.27% in the first nine months of 2000 compared to 4.59%
in the same period of 1999. The decline has resulted from the rising
interest rates experienced over the last year which have hampered loan
growth and increased the cost of funds. Consequently, net interest
income has decreased by 2.2% in the nine months ended September 30, 2000,
compared to the same period in 1999. Average total earning assets, of
which the largest component is loans, have increased 4.3% to $1.935
billion in the first nine months of 2000 compared to the same period in
1999. The earning asset growth, although somewhat below expectations due
to higher interest rates, has served to mitigate the compression of the
net interest margin this year. Average interest-bearing liabilities rose
3.8% to $1.596 billion in the first nine months of 2000 compared to the
same period in 1999. Average earning assets yielded 7.81% over the first
nine months of 2000 compared to 7.70% in the same period of 1999 while
the rate paid on average interest-bearing liabilities increased to 4.30%
from 3.76% over the same comparison period. The increased liability cost
was mainly a result of volume and rate increases in certificates of
deposit balances. The growth in average demand deposits of 1.2% in the
first nine months of 2000 compared to the same period of 1999 offset some
of the decline in the net interest margin. BT continues to emphasize
growth in demand deposits which contribute additional funds available for
investment at no interest cost.
19
The provision for loan losses decreased $1.3 million in the first nine
months of 2000, compared to the same period in 1999 due to management's
assessment of the provision necessary to maintain an adequate reserve
against potential future losses based upon the current quality
of the loan portfolio. Additionally, the provision has decreased due to
the recent moderate loan activity. Net charge-offs were approximately
$3.2 million in 2000 compared to $2.9 million in 1999. The increase this
year was substantially due to a higher level of residential mortgage loan
recoveries in 1999. Net charge-offs represented .28% of average loans,
net of unearned income, on an annualized basis for the first nine months
of 2000 compared to .27% for the same period of last year.
Total other income, excluding a $609,000 one-time gain from the sale of
two branches in the second quarter of 1999, increased $513,000 or 4.4% in
the first nine months of 2000 compared to the same period last year. The
gain in other income reflects BT's continuing strategy of emphasis on
growth in fee-related revenues and less reliance on net interest income.
As a percent of total revenue, BT's total other income increased to 17.0%
in the first nine months of 2000 compared to 16.1% for the same period of
1999, excluding the branch sale gain. Trust and investment management
income increased $314,000, or 10.5%, to $3.3 million, reflecting
continued expansion in assets under management. Service fees generated
63.3% of total other income in the first nine months of 2000. The other
income component of total other income grew to $1.1 million, representing
an increase of $268,000, or 34.0%, over 1999 (excluding the branch sale
gains). The higher level was primarily due to an increase in early
redemption certificate of deposit penalties and proceeds received in
connection with a legal settlement. Security gains declined $19,000 in
the first nine months of 2000 compared to the same period last year.
Other expenses declined by 2.2% or $926,000 in the first nine months of
2000 compared to the first nine months of 1999 (excluding nonrecurring
items), primarily due to the successful implementation of targeted cost
savings associated with the Philson acquisition in July of 1999.
Accordingly, BT's efficiency ratio improved to 56.8% for the first nine
months of 2000 compared to 57.2% for the same period of 1999 reflecting
the lower expense levels. Employee expense, excluding nonrecurring
items, declined approximately 0.8% comparing the first nine months of
2000 to the same period in 1999. Net occupancy expense declined 0.8% and
equipment expense declined 5.1% due to branch consolidations, the sale of
two branch locations in May of 1999 and the consolidation of data
processing functions at BT and Philson. Other core operating expenses,
excluding nonrecurring items, declined by 2.7% primarily due to the
elimination of duplicate cost structures at BT and Philson. Nonrecurring
expenses, primarily related to the Philson merger, totaled $4.6 million
in the nine months ended September 30, 1999.
BT's effective tax rate was 29.5% for the first nine months of 2000
compared to 28.9% for the same period of 1999. The change in the
effective rate reflects the change in tax-exempt interest income and the
application of permanent differences during the respective periods.
20
CAPITAL ADEQUACY
At September 30, 2000, BT continued to maintain capital levels
designating BT as "Well Capitalized". BT's capital ratios as of
September 30, 2000 and December 31, 1999, and the required regulatory
ratios representing the level needed to meet "Adequately Capitalized"
status are presented in the table below.
Regulatory
9-30-00 12-31-99 Requirement
------- -------- -----------
Tier I Risk Based Ratio 12.14% 11.79% 4.00%
Total Capital Risk Based Ratio 13.20% 12.83% 8.00%
Tier I Leverage Ratio 9.07% 8.56% 4.00%
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 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
September 30, 2000 were as follows:
(In thousands)
Loan commitments $189,477
Standby letters of credit 11,185
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.
21
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 nine months ended September 30, 2000. For additional
information, refer to pages 50 and 51 in the Annual Report of BT on Form 10-K
as filed on March 29, 2000 for the fiscal year ended December 31, 1999 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 6, Litigation.
ITEM 6
------
Exhibits and Reports on Form 8-K
---------------------------------
(a) Exhibits
--------
Exhibit No. Description Prior Filing or Sequential
Page Number
----------- ----------- -----------
27.1 Financial Data Schedule Filed herewith.
(b) Reports on Form 8-K
-------------------
On September 26, 2000, BT filed a Current Report on Form 8-K under
items 5 and 7 to announce the commencement of its Dutch auction
tender offer on September 29, 2000 and to report BT's press
releases dated September 26, 2000 regarding the commenced Dutch
auction tender offer and BT's major strategic initiatives to
enhance future earnings.
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 November 14, 2000 /s/ John H. Anderson
------------------ ----------------------------
John H. Anderson, Chairman
and Chief Executive Officer
Date November 14, 2000 /s/ Brian H. Lehman
------------------ -------------------------------
Brian H. Lehman,
Senior Vice President and Chief
Financial Officer
23
