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 March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____________to ______________
Commission File Number 0-11460
KEYSTONE FINANCIAL, INC.
Pennsylvania 23-2289209
(State of Incorporation) (IRS Employer I.D. No.)
ONE KEYSTONE PLAZA
FRONT & MARKET STREETS
P.O. BOX 3660
HARRISBURG, PA 17105-3660
(Address of principal executive offices)
(717) 231-1555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X or No_______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock ($2 par value): 37,220,000 as of April 30, 1997.
1
<PAGE>
KEYSTONE FINANCIAL, INC.
INDEX PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Condition -
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Income - Three months ended
March 31, 1997 and 1996
4
Consolidated Statements of Cash Flows - Three months ended
March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Items 1,2,3,4 and 5 have been omitted since they are not applicable to the
registrant.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits 14
(b) Reports on Form 8-K
Signatures 15
2
<PAGE>
CONSOLIDATED STATEMENTS OF CONDITION
March 31, December 31,
1997 1996
- --------------------------------------------------------------------------------
ASSETS (in thousands)
(UNAUDITED) (NOTE)
- --------------------------------------------------------------------------------
Cash and due from banks $139,843 $167,403
Federal funds sold and other 101,230 78,354
Investment securities available
for sale 655,986 856,380
Investment securities held to
maturity(market values
1997-$373,829; 1996-$383,526) 374,655 379,958
Loans held for resale 281,165 51,225
Loans and leases 3,494,457 3,553,662
Allowance for credit losses (45,882) (45,016)
- --------------------------------------------------------------------------------
Net Loans 3,448,575 3,508,646
Premises and equipment 75,735 74,407
Other assets 112,508 114,895
- --------------------------------------------------------------------------------
TOTAL ASSETS $5,189,697 $5,231,268
================================================================================
LIABILITIES
- --------------------------------------------------------------------------------
Noninterest-bearing deposits $501,670 $511,931
Interest-bearing deposits 3,578,410 3,585,180
- --------------------------------------------------------------------------------
Total Deposits 4,080,080 4,097,111
Fed Funds purchased and security
repurchase agreements 246,781 299,895
Other short-term borrowings 26,029 26,175
- --------------------------------------------------------------------------------
Total Short-Term Borrowings 272,810 326,070
FHLB borrowings 239,261 205,929
Long-term debt 1,928 2,154
Other liabilities 104,370 92,697
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 4,698,449 4,723,961
- --------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Preferred stock; $1.00 par value,
authorized 8,000,000 shares;
none issued or outstanding --- ---
Common stock: $2.00 par value,
authorized 75,000,000; issued
38,357,448 - 1997 and
38,228,160 - 1996 76,715 76,456
Surplus 74,993 73,201
Retained earnings 375,610 368,172
Deferred KSOP benefit expense (1,125) (1,249)
Treasury stock: 1,139,271 - 1997
and 320,000 - 1996 shares at cost (30,309) (8,186)
Net unrealized securities losses,
net of tax (4,636) (1,087)
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 491,248 507,307
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $5,189,697 $5,231,268
================================================================================
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
1997 1996
(unaudited)
- --------------------------------------------------------------------------------
INTEREST INCOME
- --------------------------------------------------------------------------------
Loans and fees on loans $77,705 $75,417
Investments - taxable 15,832 16,207
Investments - tax exempt 1,894 1,820
Federal funds sold & other 800 1,528
Loans held for resale 1,616 443
- --------------------------------------------------------------------------------
97,847 95,415
- --------------------------------------------------------------------------------
INTEREST EXPENSE
- --------------------------------------------------------------------------------
Deposits 38,507 37,223
Short-term borrowings 3,137 2,863
FHLB borrowings 3,183 2,642
Long-term debt 8 96
- --------------------------------------------------------------------------------
44,835 42,824
- --------------------------------------------------------------------------------
NET INTEREST INCOME 53,012 52,591
Provision for credit losses 3,674 1,988
- --------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 49,338 50,603
- --------------------------------------------------------------------------------
NONINTEREST INCOME
- --------------------------------------------------------------------------------
Trust and investment advisory fees 4,136 3,681
Service charges on deposit accounts 3,508 3,462
Fee income 4,086 3,309
Mortgage banking income 1,518 1,698
Other secondary market income 513 459
Reinsurance income 884 586
Other income 4,202 2,231
Net gains-equity securities --- 104
Net gains-debt securities 19 348
- --------------------------------------------------------------------------------
18,866 15,878
NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
Salaries 18,426 16,971
Employee benefits 3,997 3,830
Occupancy expense (net) 3,489 3,488
Furniture and equipment expense 4,060 3,355
Other expense 13,748 13,853
- --------------------------------------------------------------------------------
43,720 41,497
- --------------------------------------------------------------------------------
Income before income taxes 24,484 24,984
Income tax expense 7,355 8,127
- --------------------------------------------------------------------------------
NET INCOME $17,129 $16,857
- --------------------------------------------------------------------------------
PER SHARE DATA
- --------------------------------------------------------------------------------
Net income $0.46 $0.44
Dividends $0.26 $0.24
Average number of shares outstanding 37,552,848 37,950,453
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)
Three Months Ended
March 31,
1997 1996
(in thousands)
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net Income $17,129 $16,857
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for credit losses 3,674 1,988
Provision for depreciation & amortization 3,586 3,198
Deferred income taxes 7,355 8,127
Sale of loans held for resale 16,463 45,018
Origination of loans held for resale (82,293) (61,933)
Decrease in interest receivable 3,319 2,202
Increase (decrease)in interest payable 990 (115)
Other 4,199 (1,812)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES (25,578) 13,530
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Net (increase)decrease in interest-earning deposits 15,714 (3,180)
Available for sale securities:
Sales 61,669 15,926
Maturities 237,534 373,586
Purchases (104,685) (343,305)
Held to maturity securities:
Maturities 6,845 63,415
Purchases (1,606) (47,986)
Net (increase) decrease in loans (112,482) 7,940
Proceeds from sales of loans 4,837 23,177
Purchases of premises and equipment (4,975) (2,689)
Other 580 (403)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 103,431 86,481
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net decrease in deposits (17,031) (71,509)
Net decrease in short-term borrowings (53,260) (46,496)
Proceeds from FHLB borrowings 137,952 26,069
Repayments of FHLB borrowings (104,620) ( 19,621)
Net decrease in long-term debt (226) (448)
Acquisition of treasury stock (22,123) ---
Cash dividends (9,691) (10,685)
Other 2,176 1,653
- --------------------------------------------------------------------------------
NET CASH USED BY FINANCING ACTIVITIES (66,823) (121,037)
- --------------------------------------------------------------------------------
INCREASE (DECREASE)IN CASH AND
CASH EQUIVALENTS 11,030 (21,026)
Cash and cash equivalents at beginning of
period 209,203 258,659
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $220,233 $237,633
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
Notes To Consolidated
Financial Statements
BASIS OF PRESENTATION
- ---------------------
The accompanying unaudited consolidated financial statements for the interim
periods do not include all of the information and footnotes required by
generally accepted accounting principles. However, in the opinion of management,
all adjustments necessary for a fair presentation have been included, and such
adjustments were of a normal recurring nature.
Operating results for the three-month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for 1997.
For further information, refer to the audited consolidated financial statements,
footnotes thereto, and the Financial Review for the year ended December 31,
1996, as contained in the Annual Report to Shareholders.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
Various provisions of Statement No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" became effective for
transactions occurring in 1997. Adoption of the provisions of this statement,
which provides new accounting and reporting standards for sales, securiti-
zations, and servicing of receivables and other financial assets, for certain
secured borrowing and collateral transactions, and for extinguishments of
liabilities, did not have a significant impact on Keystone's financial condition
or results of operations.
During the first quarter of 1997, the Financial Accounting Standards Board
(FASB) issued Statement No. 128, "Earnings per Share", which will be effective
for reporting periods ending after December 15, 1997. This statement will
require disclosure of both basic and diluted earnings per share. The statement
will require restatement of all prior period earnings per share data pre-
sented. This standard, if implemented, would not have significantly impacted
reported earnings per share amounts for the first quarter of 1997 and is not
expected to have a significant impact on Keystone's historical or future
earnings per share amounts.
RECENTLY APPROVED ACQUISITIONS
- ------------------------------
On May 8, 1997 the shareholders of First Financial Corporation of Western
Maryland (FFWM) approved Keystone's acquisition of FFWM. Keystone's acquisition
of Financial Trust Corp. (FTC) was approved by FTC shareholders on May 7, 1997,
and by Keystone shareholders on May 8, 1997. Both transactions are expected to
be completed in the second quarter of 1997.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
The purpose of this review is to provide additional information necessary to
fully understand the consolidated financial condition and results of operations
of Keystone Financial, Inc. (Keystone). Throughout this review, net interest
income and the yield on earning assets are stated on a fully taxable-equivalent
basis. In addition, balances represent daily average balances, unless otherwise
indicated.
SUMMARY
- -------
Keystone recorded improved financial performance in the first quarter of 1997,
as net income reached $17,129,000 and earnings per share grew to $0.46. This
performance reflected increases from first quarter 1996 net income of
$16,857,000 and earnings per share of $0.44. Growth in earnings per share was
4.5% in the first quarter as return on average assets (ROA) and return on
average equity (ROE) in 1997 were 1.34% and 13.91%, respectively, virtually
constant with first quarter 1996 measures.
Performance in 1997 has been affected by stable net interest income, continued
improvement in noninterest income, and controlled growth in overhead expenses.
Interest income grew nearly 3% and was bolstered by loan growth of approximately
6.4%, including increases in commercial real estate and consumer credit. The
improvement in interest income performance was attributable to higher loan
volumes but was partially offset by higher funding costs, including the higher
costs of deposit products with interest rates comparable to alternative
investment offerings with similar risk characteristics.
Noninterest revenues continued to be influenced by the strength of the improving
level of trust and investment management fees which grew 12% from the first
quarter of 1996. Performance was also aided by higher levels of ATM fees and a
$2,500,000 gain from the sale of community offices pursuant to Keystone's office
reconfiguration strategy.
Overhead expenses grew 5.4% due to the impact of a slight increase in full-time
equivalent employees and Keystone's efforts to provide market competitive
compensation.
Keystone was also able to improve the allowance to loans ratio to 1.31% from
1.27% at the end of 1996. The loan loss provision, which grew to $3,674,000 in
1997 from $1,988,000 in the first quarter of 1996, was responsive to increased
loan growth and higher charge-off levels.
Keystone continued to manage its capital base through acquisition of treasury
shares as authorized by its Board of Directors. Shares totaling approximately
1.1 million have been acquired through March 31, 1997, pursuant to this
authorization.
7
<PAGE>
AVERAGE STATEMENT OF CONDITION
- -------------------------------
The average balance sheets for the three-months ended March 31, 1997 and 1996
were as follows (in thousands):
Change
1997 1996 Volume %
- -------------------------------------------------------------------------------
Cash and due from banks $146,113 $143,239 $2,874 2%
Federal funds sold and other 57,771 114,703 (56,932) (50)
Investments 1,153,485 1,193,590 (40,105) ( 3)
Loans held for resale 73,186 21,052 52,134 248
Loans 3,608,887 3,392,181 216,706 6
Allowance for credit losses (45,429) (45,101) (328) 1
- -------------------------------------------------------------------------------
Net loans 3,563,458 3,347,080 216,378 6
Other assets 179,987 163,939 16,048 10
- -------------------------------------------------------------------------------
TOTAL ASSETS $5,174,000 $4,983,603 $190,397 4%
- -------------------------------------------------------------------------------
Noninterest-bearing deposits $485,216 $486,975 ($1,759) -%
Interest-bearing deposits 3,579,027 3,502,319 76,708 2
Short-term borrowings 290,358 261,202 29,156 11
FHLB borrowings 215,862 167,145 48,717 29
Other liabilities 104,260 83,730 20,530 25
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 4,674,723 4,501,371 173,352 4
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 499,277 482,232 17,045 4
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $5,174,000 $4,983,603 $190,397 4%
- -------------------------------------------------------------------------------
Substantive loan growth occurred during the quarter in consumer leases,
commercial loans, and dealer floor plan financings. The growth was funded by a
combination of maturing investments, deposit growth, and increased borrowings.
The growth that occurred in deposits was offset, to some degree, by branch sales
occurring during the quarter.
8
<PAGE>
NET INTEREST INCOME
- -------------------
The following table summarizes, on a fully taxable equivalent basis, changes in
net interest income and net interest margin for the quarter ended March 31, 1997
and 1996 (in thousands):
<TABLE>
<CAPTION>
Increase/
1997 1996 (Decrease)
YIELD/ YIELD/ YIELD/
AMOUNT RATE AMOUNT RATE AMOUNT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $99,119 8.18% $96,614 8.21% $2,505 (0.03)
Interest expense 44,835 4.45% 42,824 4.38% 2,011 0.07
- -----------------------------------------------------------------------------------------
Net interest income $54,284 $53,790 $494
Interest spread 3.73% 3.83% (0.10)
Impact of noninterest funds 0.73% 0.73% --
- -----------------------------------------------------------------------------------------
Net interest margin 4.46% 4.56% (0.10)
- -----------------------------------------------------------------------------------------
*The change in net interest income consisted primarily of favorable volume
variances.
</TABLE>
Keystone's primary source of revenue is net interest income, which represents
the difference between interest income on earning assets and interest expense on
deposits and other borrowed funds. Competitive pricing pressures both reduced
earning asset yields and increased funding costs from 1996.
Interest income grew 2.6% during the first quarter of 1997 compared to the same
quarter in 1996, while the yield on earning assets, influenced by competitive
pressures, declined three basis points. Loan growth was primarily responsible
for the increase in interest income and occurred primarily in consumer leases,
commercial loans and dealer floor plan financings.
Interest expense increased 4.7% during the first quarter of 1997 compared to
1996, due primarily to a seven basis point increase in the cost of funds.
Customers continued to move deposits from transaction accounts to higher cost
time deposits such as the variable rate CD. Funding trends during the quarter
included increases in higher cost short-term and FHLB borrowings.
The decline in earning asset yields and higher funding costs narrowed the spread
ten basis points from 3.83% for the first quarter of 1996 to 3.73% for the same
quarter of 1997. The net interest margin declined a similar amount, from 4.56%
to 4.46%, as the impact of noninterest funds remained stable.
PROVISION FOR CREDIT LOSSES
- ---------------------------
The provision for credit losses increased $1,686,000 or 84.8% in the first
quarter of 1997 compared to 1996, and was influenced by both a 6.4% increase in
average loans and a 35.1% increase in net charge-offs from the first quarter of
1996 to the same quarter in 1997.
Consistent with the trend occurring throughout much of the industry, Keystone
experienced higher consumer loan charge-offs towards the end of 1996 and during
the first quarter of 1997.
9
<PAGE>
NONINTEREST INCOME
- --------------------
Total noninterest income increased $2,988,000 or 18.8% from the first quarter of
1996 to the same quarter of 1997. Growth of 12.4% occurred in trust and
investment advisory fees, as assets under management increased 7%. Fee income,
which was benefitted by the ATM machines added through the contract with Sheetz
convenience stores, increased $777,000 or 23.5%.
Pursuant to Keystone's office reconfiguration strategy, community offices were
sold in the first quarter of 1997 which contributed approximately $2,500,000 to
other income. First quarter 1996 results had benefitted from a $2,000,000 gain
recognized on the sale of the credit card portfolio. Excluding these gains in
both 1997 and 1996, other income increased approximately $1,500,000 primarily
from increased sales of annuity products through Key Investor Services.
NONINTEREST EXPENSES
- --------------------
Growth in noninterest expenses totaled $2,223,000 or 5.4% from the first quarter
of 1996 to the same period in 1997. Over half of the increase occurred in salary
expense, which increased 8.6%, and was impacted by merit increases, the
implementation of an integrated performance-based compensation program, and a 2%
increase in employees added for the KeyCall phone center and Key Investor
Services.
Furniture and equipment expense, which increased 21% in the first quarter of
1997, was impacted by equipment maintenance and rent on the ATM machines added
through the contract with Sheetz. In addition, continued technological
investments in fixed assets, including purchases to start up KeyCall, resulted
in higher levels of depreciation expense in the first quarter of 1997 compared
to the same quarter in 1996.
Although other expense for the first quarter of 1997 remained comparable to
1996, prior year amounts included various nonrecurring expense accruals. Absent
these accruals, other expense grew approximately 11%. Increases were
attributable to expenses directly associated with revenue expansion
opportunities including marketing, telephone, reinsurance and merchant card
expenses.
ASSET QUALITY
- -------------
Keystone's allowance for credit losses totaled $45,882,000 at March 31, 1997
compared to an allowance of $45,016,000 at the end of 1996. The increase in the
provision for credit losses in the first quarter of 1997 resulted in a ratio of
the allowance for credit losses to loans of 1.31%, slightly improved from the
year-end 1996 ratio. The ratio of annualized net charge offs to loans of 0.32%
for the first quarter of 1997, while higher than the ratio of 0.25% for the
first quarter of 1996, reflected slight improvement from the final quarter of
1997. Refer to the Provision for Credit Losses section for additional
information.
10
<PAGE>
The following table provides a comparative summary of the activity in the
allowance for credit losses for the three-month periods ended March 31, 1997 and
1996.
1997 1996
- ------------------------------------------------------------------------
Allowance for Credit Losses:
Balance at beginning of period $45,016 $44,377
Loans charged-off:
Commercial (318) (218)
Real estate secured (555) (563)
Consumer (2,101) (1,706)
Lease Financing (429) (269)
- ------------------------------------------------------------------------
Total loans charged-off (3,403) (2,756)
- ------------------------------------------------------------------------
Recoveries:
Commercial 82 271
Real estate secured 231 105
Consumer 248 252
Lease financing 34 50
- -------------------------------------------------------------------------
Total recoveries 595 678
- -------------------------------------------------------------------------
Net loans charged-off (2,808) (2,078)
Provision for credit losses 3,674 1,988
- -------------------------------------------------------------------------
Balance at end of period $45,882 $44,287
- -------------------------------------------------------------------------
Net loans charged-off to average loans* 0.32% 0.25%
- -------------------------------------------------------------------------
Provision for credit losses to average loans* 0.41% 0.24%
- -------------------------------------------------------------------------
Allowance for credit losses to loans 1.31% 1.32%
- -------------------------------------------------------------------------
*Annualized
Total risk elements increased slightly during the first quarter of 1997. As a
result, the ratio of total risk elements to loans increased slightly from 1.25%
at December 31, 1996 to 1.30% at March 31, 1997. Consumer loan delinquencies,
which have increased throughout much of the industry, drove Keystone's slight
increase in risk elements and are being monitored closely.
11
<PAGE>
The following table has been provided to compare nonperforming assets and total
risk elements at March 31, 1997 to the balances at the end of 1996, in both
absolute dollars and as a percentage of loans. This presentation is supplemented
by a comparison of various coverage ratios.
March 31, December 31,
(dollars in thousands) 1997 1996
- -------------------------------------------------------------------------
Nonaccrual Loans $19,859 $18,913
Restructurings 371 393
- -------------------------------------------------------------------------
Nonperforming loans 20,230 19,306
Other real estate 6,658 7,414
- -------------------------------------------------------------------------
Nonperforming assets 26,888 26,720
Loans past due 90 days or more 18,457 17,649
- -------------------------------------------------------------------------
Total risk elements $45,345 $44,369
- -------------------------------------------------------------------------
Ratio to period-end loans:*
Nonperforming assets .77% .75%
90-days past due .53 .50
- -------------------------------------------------------------------------
Total risk elements 1.30% 1.25%
- -------------------------------------------------------------------------
Coverage Ratios:
Ending allowance to nonperforming loans 227% 233%
Ending allowance to risk elements** 119% 122%
Ending allowance to annualized
net charge-offs 4.0X 4.9X
- --------------------------------------------------------------------------
* The denominator consists of period-end loans and ORE.
**Excludes ORE.
Based upon the evaluation of loan quality, management believes that the
allowance for credit losses is adequate to absorb credit risk in the portfolio.
12
<PAGE>
CAPITAL MANAGEMENT
- ------------------
In accordance with a board authorized share repurchase program, Keystone held
1,139,000 shares in treasury at March 31, 1997, at a total cost of $30,309,000.
These shares were purchased over the course of 1996 and the first quarter of
1997. The program, as amended in January, 1997, allows for up to 1,200,000
shares to be repurchased. In a separate action, the Board of Directors also
authorized the repurchase of up to 1,500,000 additional shares to be issued in
the previously announced purchase acquisition of First Financial Corporation of
Western Maryland (FFWM).
Due to share repurchases, shareholders' equity at March 31, 1997 declined to
$491,248,000 from $507,307,000 at the end of 1996. Correspondingly, the ratio of
equity to assets decreased from 9.70% at December 31, 1996 to 9.47% at March 31,
1997.
Keystone's regulatory capital measures, which include the leverage ratio, "Tier
1" capital, and "Total" capital ratios, continued to be well in excess of both
regulatory minimums and the thresholds established for "well capitalized"
institutions. The following comparative presentation of these ratios and
associated regulatory standards is provided:
Regulatory Standards
---------------------
March 31, December 31, Well Minimum
1997 1996 Capitalized Requirement
- ---------------------------------------------------------------------------
Leverage ratio 9.34% 9.64% 5.00% 4.00%
Tier 1 12.40% 13.54% 6.00% 4.00%
Total capital ratio 13.58% 14.77% 10.00% 8.00%
On April 18, 1997, Keystone filed a Form S-3 with the Securities and Exchange
Commission providing information of its intent to offer up to $400,000,000 of
medium term notes for sale to the general public through its subsidiary,
Keystone Financial Mid-Atlantic Funding Corp. In May 1997, Keystone intends to
sell $100,000,000 of the securities, the proceeds of which will be used for
general corporate purposes including to finance the acquisition of FFWM.
13
<PAGE>
Item 6(a) Exhibits:
Exhibit # Description Page #
- ---------- -------------- -------
27 Financial Data Schedule 16
ITEM 6(b) Reports on Form 8-K:
During the quarter ended March 31, 1997, the registrant filed the following
reports on Form 8-K:
Date of Report Item Description
- --------------- ----- ---------------------------------------
December 31, 1996 5 Earnings release for the fourth quarter
and year ended December 31, 1996
January 23, 1997 5 Press release announcing the share
repurchase program
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: May 14 1997
- -----------------------
/s/ Carl L. Campbell
- -----------------------
Carl L. Campbell,
President and Chief Executive Officer
DATE: May 14, 1997
- -----------------------
/s/ Mark L. Pulaski
- -----------------------
Mark L. Pulaski,
Senior Executive Vice President,
Chief Administrative Officer,
and Chief Financial Officer
DATE: May 14, 1997
- -----------------------
/s/ Donald F. Holt
- -----------------------
Donald F. Holt,
Senior Vice President,
Controller and Principal
Accounting Officer
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the first
quarter 10-Q and is qualified in its entirety by reference to such 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 139,843
<INT-BEARING-DEPOSITS> 20,840
<FED-FUNDS-SOLD> 80,390
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 655,986
<INVESTMENTS-CARRYING> 374,655
<INVESTMENTS-MARKET> 373,829
<LOANS> 3,494,457
<ALLOWANCE> 45,882
<TOTAL-ASSETS> 5,189,697
<DEPOSITS> 4,080,080
<SHORT-TERM> 272,810
<LIABILITIES-OTHER> 104,370
<LONG-TERM> 241,189
0
0
<COMMON> 76,715
<OTHER-SE> 414,533
<TOTAL-LIABILITIES-AND-EQUITY> 5,189,697
<INTEREST-LOAN> 77,705
<INTEREST-INVEST> 17,726
<INTEREST-OTHER> 2,416
<INTEREST-TOTAL> 97,847
<INTEREST-DEPOSIT> 38,507
<INTEREST-EXPENSE> 44,835
<INTEREST-INCOME-NET> 53,012
<LOAN-LOSSES> 3,674
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 43,720
<INCOME-PRETAX> 24,484
<INCOME-PRE-EXTRAORDINARY> 24,484
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,129
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 3.73
<LOANS-NON> 19,859
<LOANS-PAST> 18,457
<LOANS-TROUBLED> 371
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 45,016
<CHARGE-OFFS> 3,403
<RECOVERIES> 595
<ALLOWANCE-CLOSE> 45,882
<ALLOWANCE-DOMESTIC> 45,882
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
