<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 30, 1996
KEYSTONE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-11460 23-2289209
State of other jurisdiction (Commission File Number) (IRS Employer ID No.)
of incorporation)
One Keystone Plaza, P.O.Box 3660,Harrisburg, Pennsylvania 17105-3660
(Address of principal executive offices) (ZIP CODE)
Registrant's telephone number including area code: (717) 233-1555
<PAGE>
<PAGE>
Item 5 Other Events
The following documents are filed as exhibits to this Form 8-K:
I. Earnings Release of Keystone Financial, Inc. for the quarter
ended June 30, 1996.
II. Fiscal Insight
III. Cautionary Statement
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 hereunto duly authorized.
<TABLE>
<CAPTION>
Keystone Financial, Inc.
(Registrant)
<S> <C>
Date: July 19, 1996
Donald F. Holt
Senior Vice President, Controller
and Chief Accounting Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description
- ----------- ------------
<C> <S>
99.1 Earnings Release of Keystone Financial, Inc. for the quarter
ended June 30, 1996, filed herewith.
99.2 Fiscal Insight
99.3 Cautionary Statement
</TABLE>
July 18, 1996 Mark L.
Pulaski
(717)231-5702
KEYSTONE FINANCIAL REPORTS SECOND QUARTER/SIX MONTH GAINS
HARRISBURG, PA, July 18 -- Keystone Financial, Inc. (NASDAQ,
NM:KSTN), Pennsylvania's fifth largest bank holding company, today
reported gains in earnings for the second quarter and six months
ended June 30, 1996.
Second quarter net income increased to $17,733,000, or 70 cents
per share compared to $15,021,000, or 64 cents per share for the
comparable period last year. Net income for the six month period
rose to $34,590,000, or $1.37 per share from $29,677,000 or $1.27 per
share, a gain in earnings per share of eight percent. For the first
half of the year, return on average assets was 1.39 percent and
return on average equity was 14.31 percent.
Assets at mid-year reached $5,020,979,000, a six percent gain
from the $4,733,638,000, at the same date last year. Deposits grew to
$4,058,766,000, from $3,855,377,000 at June 30, 1995, and loans
increased to $3,397,203,000, from $3,283,331,000 during the same
period.
"We are pleased with our second quarter performance. These
results reaffirm our strategies to be more aggressive in expanding
revenues and building market position," Carl L. Campbell, president
and chief executive officer, said.
"Keystone knows its future will be based on the extent and
quality of the relationships we have with our customers. We are
committed to developing our products and services to meet customers'
financial needs," Campbell continued. "Changing customer demands
and intense competition have also placed pressure on us to evolve the
ways that we deliver service. As a result, we are focused on
redesigning our delivery system to provide our customers with more
options to conduct their banking," Campbell concluded.
Keystone Financial has five member banks -- Pennsylvania National
Bank, Pottsville; Northern Central Bank, Williamsport; Mid-State Bank,
Altoona; Frankford Bank, Horsham; and American Trust Bank N.A.,Cumberland,
MD; which together operate 154 offices in Pennsylvania, Maryland and West
Virginia. Keystone also operates several non-banking companies providing
specialized services including Keystone Financial Mortgage Company,
Lancaster, PA; Martindale Andres & Co., (asset management firm), West
Conshohocken,PA ; and Keystone Financial Dealer Center, Williamsport, PA.
####
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
<S> <C>
Keystone's second quarter results continue to reflect the beneficial impact of performance-enhancing strategic initiatives.
Second quarter net income and earnings per share grew to $17,733,000 and $0.70, respectively. Growth in quarterly
earnings per share from the second quarter of 1995 reached 9.4% while year-to-date earnings per share improved 7.9%.
This performance resulted in return on average assets of 1.43% and return on average equity of 14.60% at June 30, 1996.
Ongoing strategic initiatives designed to focus on expanding the fee-based revenue stream and controlling the level of
expenses are more significantly influencing performance results. The overall revenue stream continues to improve as
a result of efforts to both expand fee-based services and prudently manage net interest income. Additionally, the
relative levels of noninterest expenses have begun to contract, adding further strength to core performance.
Net interest income for the quarter remained stable due to sustained net interest margin performance and growth in
relationship-focused products and services. Earning asset growth was moderated somewhat due to lower levels of
deposit growth and the influence of fee-based activities such as mortgage banking and indirect securitization.
Noninterest income grew 23% from the second quarter of 1995. Revenues reflected growth in investment advisory fees,
service charges on deposits, mortgage banking revenues, and servicing fees from indirect securitization.
Relative levels of expenses have declined as the ratio of noninterest expense to revenues declined from 60.02% in the second
quarter of 1995 to 57.73% in the current quarter. Expense levels continue to be affected by late 1995 acquisitions.
</TABLE>
<TABLE>
<CAPTION>
1996 1995
------------------- ----------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter Annual
<S> <C> <C> <C> <C> <C> <C>
Earnings per share $0.70 $0.67 $0.67 $0.65 $0.64 $2.59
Return on average assets 1.43% 1.36% 1.32% 1.28% 1.28% 1.29%
Return on average equity 14.60% 14.02% 13.99% 13.91% 14.02% 14.06%
Net interest margin 4.56% 4.57% 4.45% 4.37% 4.51% 4.49%
Noninterest income/revenues 21.60% 22.29% 19.37% 20.83% 19.30% 19.45%
Prov. for credit losses/Average loans 0.24% 0.24% 0.16% 0.26% 0.28% 0.24%
Noninterest expense/revenues 57.73% 59.95% 58.92% 58.46% 60.02% 59.78%
Nonperforming assets to loans 0.75% 0.74% 0.78% 0.77% 0.70% -
90 day past due loans to loans 0.57% 0.45% 0.44% 0.42% 0.39% -
Total risk elements to loans 1.32% 1.19% 1.22% 1.19% 1.09% -
Allowance for credit losses to loans 1.30% 1.32% 1.32% 1.34% 1.33% -
Allowance for credit losses to
nonperforming loans 247% 261% 257% 274% 277% -
Net charge-offs/Average loans 0.24% 0.25% 0.24% 0.20% 0.22% 0.21%
Equity to assets 9.79% 9.74% 9.47% 9.30% 9.22% -
Total risk adjusted capital ratio 15.02% 14.92% 14.83% 14.70% 14.65% -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PER SHARE STATISTICS
Earnings per Share
<C> <C> <C> <C> <C> <C>
Fourth Third Second First
Quarter Quarter Quarter Quarter Total
1996 $0.70 $0.67 $1.37
1995 $0.67 $0.65 $0.64 $0.63 $2.59
1994 $0.60 $0.40 $0.60 $0.60 $2.20
Average Shares Outstanding
Fourth Third Second First Average
Quarter Quarter Quarter Quarter For Year
1996 25,348,613 25,300,302 25,324,457
1995 24,095,035 23,568,450 23,465,047 23,431,267 23,641,572
1994 23,396,673 23,287,086 23,374,726 23,423,767 23,395,425
Book Value per Share
Fourth Third Second First
Quarter Quarter Quarter Quarter
1996 $19.38 $19.13
1995 $19.03 $18.96 $18.60 $18.06
1994 $17.46 $17.45 $17.49 $17.58
</TABLE>
<TABLE>
<CAPTION>
QUARTER-END INFORMATION
(dollars in thousands) 1996 1995
--------------------- -----------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter (1) Quarter Quarter
<S> <C> <C> <C> <C> <C>
Loans $3,397,203 $3,355,552 $3,365,716 $3,243,618 $3,283,331
Earning assets 4,720,625 4,672,069 4,755,763 4,525,818 4,450,945
Total assets 5,020,979 4,966,610 5,074,785 4,807,854 4,733,638
Deposits 4,058,766 3,990,379 4,061,888 3,848,290 3,855,377
Total shareholders' equity 491,317 483,890 480,694 447,214 436,448
Unrealized securities gains (losses), net (5,609) (3,438) 1,198 (2,352) (2,691)
Number of shares outstanding 25,356,662 25,326,537 25,256,369 23,584,637 23,467,981
</TABLE>
(1) During the fourth quarter of 1995, Keystone consummated pre-announced
mergers with Shawnee Financial Services Corporation and National American
Bancorp, Inc. Although these transactions were accounted for under the
pooling-of-interests method of accounting, prior period results were not
restated due to the immaterial impact the mergers had on Keystone's consol-
dated financial condition and results of operations. In total, the
two mergers increased year-end loans, total assets, and equity by
approximately $116 million, $225 million, and $22 million, respectively.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED QUARTERLY AVERAGE
STATEMENTS OF CONDITION
<S> <C> <C> <C> <C> <C>
(in thousands)
1996 1995
------------------- ----------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
ASSETS
Earning Assets:
Loans and leases $3,367,113 $3,392,181 $3,304,982 $3,264,259 $3,267,857
Assets held for resale 81,505 21,052 21,459 40,191 12,809
Federal funds sold and other 102,138 114,703 162,889 198,657 121,464
Taxable investment securities 1,032,165 1,069,390 993,056 889,968 919,297
Nontaxable investment securities 124,377 124,200 126,801 129,000 132,372
Total earning assets 4,707,298 4,721,526 4,609,187 4,522,075 4,453,799
Cash and due from banks 147,538 143,239 145,080 153,508 151,309
Allowance for credit losses (45,071) (45,101) (44,043) (44,345) (44,033)
Intangible assets 14,921 15,368 14,112 10,960 11,270
Other assets 152,268 148,571 142,500 137,620 126,361
TOTAL ASSETS $4,976,954 $4,983,603 $4,866,836 $4,779,818 $4,698,706
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Deposits less than $100,000:
Now accounts $433,775 $429,358 $425,851 $429,176 $433,623
Money market accounts 400,426 415,689 415,954 406,037 420,612
Savings 401,689 406,246 392,686 409,969 428,649
Time deposits 2,049,346 2,016,052 1,947,640 1,912,743 1,867,691
Deposits greater than $100,000 237,623 234,974 245,810 217,516 214,240
Short-term borrowings 241,506 261,202 232,644 212,559 180,788
FHLB Borrowing 136,162 167,145 166,130 188,369 179,027
Long-term debt, other 3,385 3,893 4,338 4,767 5,321
Total interest-bearing liabilities 3,903,912 3,934,559 3,831,053 3,781,136 3,729,951
Noninterest-bearing deposits 494,991 486,975 490,802 478,125 466,554
Other liabilities 90,946 79,837 85,440 80,371 72,441
TOTAL LIABILITIES 4,489,849 4,501,371 4,407,295 4,339,632 4,268,946
Shareholders' equity 487,105 482,232 459,541 440,186 429,760
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,976,954 $4,983,603 $4,866,836 $4,779,818 $4,698,706
</TABLE>
<TABLE>
<CAPTION>
GROWTH IN AVERAGE BALANCES (1)
1996 1995
<S> <C> <C> <C> <C> <C>
------------------ ------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
Loans 3.0% 5.1% 6.0% 11.1% 15.1%
Total assets 5.9% 5.9% 5.2% 7.6% 7.4%
Deposits 4.9% 4.6% 3.7% 5.3% 6.4%
Shareholders' equity 13.3% 16.2% 12.6% 7.8% 4.9%
(1) Compares current quarter to the comparable quarter of the prior year.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------- -----------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter Annual
Interest income $ 94,596 $ 95,415 $ 93,646 $ 91,426 $ 90,101 $ 363,931
Tax equivalent adjustment 1,234 1,199 1,312 1,348 1,489 5,618
FTE interest income 95,830 96,614 94,958 92,774 91,590 369,549
Interest expense 42,161 42,824 43,239 42,930 41,378 166,579
Net interest income 53,669 53,790 51,719 49,844 50,212 202,970
Provision for credit losses 2,036 1,988 1,357 2,160 2,258 7,859
Net interest income after provision 51,633 51,802 50,362 47,684 47,954 195,111
Noninterest income 14,782 15,426 12,427 13,112 12,011 49,004
Security transactions 101 452 925 6 354 1,317
Noninterest expense 39,519 41,497 38,338 36,806 37,557 150,634
Income before income taxes 26,997 26,183 25,376 23,996 22,762 94,798
Income taxes 8,030 8,127 7,860 7,215 6,252 27,866
Tax equivalent adjustment 1,234 1,199 1,312 1,348 1,489 5,618
NET INCOME $ 17,733 $ 16,857 $ 16,204 $ 15,433 $ 15,021 $ 61,314
Tax effect of security transactions $ 35 $ 158 $ 324 $ 2 $ 124 $ 461
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NONINTEREST INCOME
(dollars in thousands) 1996 1995
------------------- -------------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter Annual
<S> <C> <C> <C> <C> <C> <C>
Trust and investment advisory fees $ 3,726 $ 3,681 $ 3,371 $ 2,831 $ 3,156 $ 12,557
Service charges - deposits 3,689 3,462 $ 3,486 3,269 3,284 13,205
Mortgage banking income 1,986 1,698 $ 1,283 1,802 1,787 6,111
Fee income 3,492 3,309 $ 3,076 3,329 2,883 12,135
Reinsurance income 538 586 $ 505 460 559 2,047
Other 1,351 2,690 $ 706 1,421 342 2,949
Total noninterest income $ 14,782 $ 15,426 $ 12,427 13,112 12,011 49,004
Noninterest income to average assets* 1.19% 1.24% 1.01% 1.09% 1.03% 1.03%
*Annualized
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF NONINTEREST EXPENSE
(dollars in thousands) 1996 1995
-------------------- -----------------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter Annual
<S> <C> <C> <C> <C> <C> <C>
Salaries expense $ 16,819 $ 16,971 $ 16,864 $ 15,260 $ 15,039 $ 62,115
Employee benefits 3,064 3,830 2,520 2,618 2,349 10,898
Occupancy expense 3,329 3,488 3,073 3,209 3,119 12,650
Furniture and equipment expense 3,405 3,355 3,365 3,065 2,981 12,435
Deposit insurance 171 215 520 142 2,149 4,957
Other expense 12,731 13,638 11,996 12,512 11,920 47,579
Total noninterest expense $ 39,519 $ 41,497 $ 38,338 $ 36,806 $ 37,557 $ 150,634
Noninterest expense to average assets* 3.18% 3.34% 3.13% 3.06% 3.21% 3.16%
Noninterest expense to revenues 57.73% 59.95% 58.92% 58.46% 60.02% 59.47%
Avg. full-time equivalent employees 2,449 2,432 2,334 2,308 2,297 2,315
*Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NET INTEREST INCOME ANALYSIS
Second Quarter
1996 1995
----------------- ----------------
(dollars in thousands) Amount Rate Amount Rate Change
<S> <C> <C> <C> <C> <C>
Interest income:*
Loans - Commercial $ 13,588 8.79% $ 13,246 9.24% $ 342
Commercial - Real Estate 21,013 9.42 20,531 9.52 482
Consumer - Mortgage 15,853 8.27 15,889 8.02 (36)
Consumer 24,324 8.96 22,684 8.75 1,640
Assets held for resale 1,321 6.52 225 7.05 1,096
Investments 18,392 6.40 17,100 6.52 1,292
Federal funds sold and other 1,339 5.27 1,915 6.32 (576)
Total interest income 95,830 8.16 91,590 8.24 4,240
Interest expense:
Deposits - NOW 1,438 1.33 1,975 1.83 (537)
Savings 1,985 1.99 2,197 2.07 (212)
Money Market 2,303 2.31 2,688 2.56 (385)
Time 31,631 5.56 29,428 5.67 2,203
Short-term borrowings 2,489 4.15 2,251 4.99 238
FHLB borrowings 2,229 5.58 2,737 6.13 (508)
Long-term debt, other 86 8.56 102 7.69 (16)
Total interest expense 42,161 4.34 41,378 4.45 783
Net interest income $ 53,669 $ 50,212 $ 3,457
Spread 3.82 3.79
Net interest margin 4.56% 4.51%
*Fully taxable equivalent
</TABLE>
<TABLE>
<CAPTION>
Year-to-Date
1996 1995
----------------- ------------------
(dollars in thousands) Amount Rate Amount Rate Change
<S> <C> <C> <C> <C> <C>
Interest income:*
Loans - Commercial $ 27,213 8.90% $ 26,648 9.28% $ 565
Commercial - Real Estate 41,808 9.43 40,812 9.61 996
Consumer - Mortgage 32,491 8.33 31,612 7.95 879
Consumer 49,024 8.94 44,024 8.69 5,000
Assets held for resale 1,764 6.92 420 7.19 1,344
Investments 37,277 6.38 35,243 6.49 2,034
Federal funds sold and other 2,867 5.32 3,058 6.17 (191)
Total interest income 192,444 8.18 181,817 8.21 10,627
Interest expense:
Deposits - NOW 2,930 1.37 3,937 1.82 (1,007)
Savings 4,016 2.00 4,506 2.07 (490)
Money Market 4,696 2.31 5,478 2.54 (782)
Time 62,937 5.58 56,251 5.54 6,686
Short-term borrowings 5,352 4.28 4,866 4.97 486
FHLB borrowings 4,871 6.46 5,154 5.90 (283)
Long-term debt, other 182 8.79 218 7.90 (36)
Total interest expense 84,984 4.36 80,410 4.34 4,574
Net interest income $ 107,460 $ 101,407 $ 6,053
Spread 3.82 3.87
Net interest margin 4.56% 4.57 %
*Fully taxable equivalent
</TABLE>
<TABLE>
<CAPTION>
PERIOD-END LOAN PORTFOLIO ANALYSIS
(in thousands) 1996 1995
--------------------- -------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Commercial:
Commercial and industrial loans $ 481,481 $ 463,126 $ 448,639 $ 414,973 $ 401,956
Floor plan financing 148,670 148,109 163,431 144,888 152,394
Obligations of political subdivisions 26,783 28,169 31,159 31,534 30,618
Total Commercial 656,934 639,404 643,229 591,395 584,968
Commercial real estate:
Commercial and industrial 673,567 671,153 680,161 680,678 689,016
Multi-family residential 76,014 76,077 73,079 68,733 67,290
Obligations of political subdivisions 29,335 30,365 33,010 30,007 33,866
Agricultural 8,401 8,832 8,853 4,812 4,802
Construction and land development 75,807 71,281 73,211 70,630 66,033
Total Commercial Real Estate 863,124 857,708 868,314 854,860 861,007
Consumer:
Real estate 789,384 804,573 828,059 795,058 805,723
Installment 557,476 570,255 562,592 566,431 614,339
Home equity 260,004 239,455 239,915 229,413 229,911
Personal lines of credit 36,519 37,094 39,053 37,263 37,018
Lease financing 233,762 207,063 184,554 169,198 150,365
Total Consumer 1,877,145 1,858,440 1,854,173 1,797,363 1,837,356
Total loans $ 3,397,203 $ 3,355,552 $ 3,365,716 $ 3,243,618 $ 3,283,331
</TABLE>
<TABLE>
<CAPTION> RISK ELEMENTS ANALYSIS
(in thousands) 1996 1995
--------------------- --------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans $ 16,999 $ 16,335 $ 16,740 $ 15,695 $ 15,651
Troubled debt restructurings 954 632 503 102 108
Other real estate 7,678 7,761 8,984 9,288 7,281
Total nonperforming assets 25,631 24,728 26,227 25,085 23,040
Loans 90 days or more past due 19,475 15,200 14,995 13,579 12,965
Total risk elements $ 45,106 $ 39,928 $ 41,222 $ 38,664 $ 36,005
Delinquent loans to period-end loans* 2.40% 2.13% 2.18% 1.74% 1.68%
Nonperforming assets to period-end loans 0.75% 0.74% 0.78% 0.77% 0.70%
Total risk elements to period-end loans 1.32% 1.19% 1.22% 1.19% 1.09%
*The numerator consists of loans 30 days or more past due.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Components of Nonperforming Asssets
(in thousands) 1996 1995
-------------------- -------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Commercial $ 4,650 $ 4,362 $ 4,213 $ 3,735 $ 3,512
Commercial real estate:
Construction and development 1,113 1,388 1,260 1,183 1,200
Permanent 10,795 9,842 10,389 9,400 8,729
Residential real estate 419 712 612 638 1,568
Consumer 976 663 769 841 750
Total nonaccrual and restructured loans 17,953 16,967 17,243 15,797 15,759
Other real estate 7,678 7,761 8,984 9,288 7,281
Total nonperforming assets $ 25,631 $ 24,728 $ 26,227 $ 25,085 $ 23,040
</TABLE>
<TABLE>
<CAPTION>
ALLOWANCES FOR CREDIT LOSSES
(in thousands) 1996 1995
------------------ -------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 44,287 $ 44,377 $ 43,303 * 43,589 * 43,109
Allowance obtained through mergers - - 1,750 - -
Allowance transferred out - - - (815) -
Loans charged-off:
Commercial (616) (218) (373) (13) (54)
Real estate secured (672) (563) (556) (171) (651)
Consumer (1,033) (1,706) (1,407) (1,555) (1,428)
Lease financing (143) (269) (291) (184) (159)
Total loans charged-off (2,464) (2,756) (2,627) (1,923) (2,292)
Recoveries:
Commercial 76 271 74 17 124
Real estate secured 99 105 282 21 117
Consumer 208 252 204 231 245
Lease financing 29 50 34 23 28
Total recoveries 412 678 594 292 514
Net loans charged-off (2,052) (2,078) (2,033) (1,631) (1,778)
Provision for credit losses 2,036 1,988 1,357 2,160 2,258
Balance at end of period $ 44,271 $ 44,287 44,377 43,303 43,589
Net loans charged-off to ave. loans 0.24% 0.25% 0.24% 0.20% 0.22%
Prov. for credit losses to ave. loans 0.24% 0.24% 0.16% 0.26% 0.28%
Allowance for credit losses to loans 1.30% 1.32% 1.32% 1.34% 1.33%
*Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OTHER RATIOS
1996 1995
------------------ ---------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Investment portfolio - market to amortized cost 99.1% 99.7% 100.7% 99.9% 99.8%
Dividend payout ratio 51.4% 53.7% 53.7% 52.3% 53.1%
Loans to deposits ratio, average 83.8% 85.0% 84.3% 84.7% 85.3%
</TABLE>
<TABLE>
<CAPTION>
FEE GENERATION ACTIVITY
(in thousands) 1996 1995
--------------------- --------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Mortgage loans originated $ 61,103 $ 50,808 $ 41,607 $ 48,010 $ 39,310
Mortgage loans sold $ 38,015 $ 33,387 $ 29,729 $ 30,503 $ 23,298
End of period mortgages serviced for others $540,088 $551,055 $520,809 $509,631 $349,264
End of period indirect loans securitized & serviced $120,824 $ 53,375 $ 59,899 $ 67,960 $ -
</TABLE>
<TABLE>
<CAPTION>
Market Price and Dividends Declared
Closing Bid Price Range
Quarter High Low Dividends
<S> <C> <C> <C> <C>
1996
I $34.25 $29.75 $0.36
II 34.13 31.13 0.36
Total $0.72
1995
I $30.25 $26.25 $0.34
II 29.00 27.00 0.34
III 32.25 27.75 0.34
IV 34.00 29.50 0.36
Total $1.38
1994
I $32.25 $27.50 $0.32
II 32.00 27.75 0.32
III 32.00 27.75 0.32
IV 30.25 27.25 0.34
Total $1.30
</TABLE>
Cautionary Statement
From time to time, Keystone may disseminate materials or make statements which
may include "forward-looking" information as that term is defined by the
Private Securities Litigation Reform Act of 1995 (the "Act"). The cautionary
statements which follow are being made pursuant to the provisions of the Act
and with the intention of obtaining the benefits of the "safe harbor"
provisions of the Act.
Keystone cautions investors that "forward-looking" information disseminated
through financial presentations or discussions with the investor community
should not be construed as guarantees of future performance. Furthermore,
actual results may differ from expectations contained in such "forward-looking"
information as a result of factors which are not predictable. Financial
institution performance can be affected by any number of factors, many of which
are outside of management's direct control. Examples of factors which may
influence performance and cause actual results to differ from expectations
include, but are not limited to, the following: (i) the effect of prevailing
economic conditions, particularly those in Keystone's local trade area;
(ii) the overall direction of government policies, particularly changes
in laws and regulations directly affecting financial institutions; (iii)
unforseen changes in the general interest rate environment; (iv) the actions
and policy directives of the Federal Reserve Board, including those that
affect the availability of funds for lending and investing activities; (v)
competitive factors in the marketplace, including the impact of increasing
consolidation in the financial services industry and the influence of both
bank and nonbank competitors;(vi) business risk associated with the management
of the credit extension function and fiduciary activities. Each of these
factors could affect estimates, assumptions, uncertainties, and risks
considered in the development of "forward-looking" information, and could
cause actual results to differ materially from management's expectations
regarding future performance.
