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) January 18, 2000
KEYSTONE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-11460 23-2289209
(State or 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>
Item 5. Other Events
The following documents are filed as an exhibit to this Form 8-K:
I. Press Release of Keystone Financial, Inc. dated January 18, 2000.
II. Fiscal Insight
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.
Keystone Financial, Inc.
--------------------------
(Registrant)
Date: January 18, 2000 Donald F. Holt
----------------
Executive Vice President &
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Keystone Financial, Inc. dated January 18,
2000.
99.2 Fiscal Insight
For further information, contact:
Donald F. Holt
Executive Vice President &
Chief Financial Officer
(717)231-5704
Harrisburg, PA - January 18, 2000 Keystone Financial, Inc. (NASDAQ:KSTN), today
reported fourth quarter and annual results for the periods ended December 31,
1999.
For the fourth quarter, Keystone reported a loss of $17.9 million or 37 cents
per diluted share, which served to reduce year-to-date results to net income of
$37.1 million, or 75 cents per diluted share.
Fourth quarter results were affected by the settlement of all lawsuits
associated with the previously announced Devon litigation. A total of $43.7
million (pre-tax) was charged to fourth quarter results for this matter, and
includes the benefit of estimated insurance recoveries.
Keystone Chairman and CEO, Carl L. Campbell noted, "During 1999, we took
significant steps to put Keystone in the best position to compete in this
consolidating and changing financial services industry, that included unifying
our seven banks, enhancing our branding strategy, and resolving outstanding
litigation." Acknowledging that 1999 was a very difficult year, Campbell further
explained that the Devon settlement, coupled with the significant costs related
to Keystone's internal restructuring, and the disruption associated with those
events and Y2K preparations, all heavily impacted 1999 performance.
During the fourth quarter, the company recorded final expenses associated with
its internal restructuring of $4.9 million, bringing the total for the year to
$26.9 million. The company also recorded securities losses of $1.5 million in
order to restructure the bond portfolio to respond better to rising interest
rates, and recognized higher loan charge-offs primarily related to a single,
nonperforming commercial credit.
Campbell noted, "Our good customer base; staff of qualified and dedicated
associates; improved cost structure; strong and high quality balance sheet; and
market approach geared to add value for our customers, all set the stage for an
improved year ahead. I am confident that in 2000, we will reap the benefits of
the difficult actions taken in 1999," Campbell closed.
Keystone Financial, Inc., the fourth largest financial institution headquartered
in Pennsylvania, is the holding company for Keystone Financial Bank, NA, which
has 175 branches throughout Pennsylvania, Maryland, and West Virginia and a
Mobile Bank which operates throughout the tri-state area. Keystone also operates
Martindale Andres & Co., an investment management services provider; Keystone
Financial Mortgage Co.; MMC&P, a retirement benefit services firm; Keystone
Brokerage, Inc., offering full service investment planning and discount
brokerage; and a 24-hours-a-day, seven days a week Telephone Banking Center.
<PAGE>
Financial Highlights
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended December 31, 1999 Year-To-Date
Earnings 1999 1998 Change 1999 1998 Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Interest Income (1) $65,047 $70,258 (7)% $266,030 $285,534 (7)%
Provision for Credit Losses 13,473 3,633 271 23,376 17,150 36
Noninterest Income 24,170 26,830 (10) 104,683 97,795 7
Net Securities Gains (1,512) 661 (329) (338) 11,018 (103)
Noninterest Expense:
As reported 102,192 55,484 84 289,674 223,189 30
Excluding special charges (3) 53,630 55,484 (3) 219,099 223,189 (2)
Net Income:
As reported (17,915) 24,749 (172) 37,076 99,747 (63)
Excluding special charges (3) 13,983 24,749 (44) 83,632 99,747 (16)
Earnings Per Share:
Basic:
As reported ($0.36) $0.48 (175)% $0.76 $1.94 (61)%
Excluding special charges (3) 0.29 0.48 (40) 1.71 1.94 (12)
Diluted:
As reported (0.37) 0.48 (177) 0.75 1.92 (61)
Excluding special charges (3) 0.29 0.48 (40) 1.70 1.92 (11)
Dividends Per Share 0.29 0.29 -- 1.16 1.13 3
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended December 31, Year-To-Date
1999 1998 1999 1998
--------------------------------------- --------------------------------------
Excluding Excluding
Performance Indicators As Reported Special Charges(3) As Reported Special Charges(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Return on Average Assets (1.03)% 0.81% 1.42% 0.55% 1.23% 1.45%
Return on Average Equity (12.12) 9.21 14.36 6.33 13.72 14.63
Net Interest Margin 4.08 4.08 4.33 4.21 4.21 4.42
Provision for Credit Losses/Average Loans (2) 1.21 1.21 0.32 0.53 0.53 0.37
Noninterest Expense/Revenues 114.54 60.11 57.15 78.14 59.10 58.22
</TABLE>
December 31
At Period End 1999 1998 Change
- --------------------------------------------------------------------------------
Investments $1,661,539 $1,789,289 (7)%
Loans 4,459,546 4,459,783 --
Total Assets 6,887,508 6,968,227 (1)
Deposits 4,960,334 5,231,718 (5)
Shareholders' Equity 550,025 661,665 (17)
Book Value per Share $11.29 $13.12
Equity to Assets Ratio 7.99% 9.50%
Risk Adjusted Capital/Assets Ratio 11.78 13.84
Asset Quality
Nonperforming Assets to Loans 0.70% 0.65%
Loans 90 Days Past Due 0.50 0.64
- --------------------------------------------------------------------------------
Total Risk Elements to Loans 1.20% 1.29%
- --------------------------------------------------------------------------------
Allowance for Credit Losses to Loans 1.35% 1.35%
Allowance to Nonperforming Loans 214 242
Net Charge-Offs to Average Loans (2) 1.13 0.39
- --------------------------------------------------------------------------------
(1) Fully taxable-equivalent
(2) Annualized
(3) Special charges incurred in 1999 are primarily associated with litigation
resolution and the unification of Keystone's seven banks under a single
charter.
FINANCIAL HIGHLIGHTS
Keystone reported a loss of $17.9 million for the fourth quarter, which served
to reduce income for the year to $37.1 million or $0.75 per diluted share.
Results for the fourth quarter were impacted by the previously announced
settlement of all lawsuits associated with the Devon litigation. A total of
$43.7 million (pre-tax) was charged to fourth quarter results for this matter,
and includes the benefit of estimated insurance recoveries. Additionally,
Keystone recorded $4.9 million in final expenses associated with its internal
restructuring during the quarter, which brought the total for the year to $26.9
million. Excluding special charges associated with the litigation resolution and
internal restructuring, Keystone achieved an ROA of 1.23% and ROE of 13.72% for
1999.
Fourth quarter 1999 results were also impacted by higher loan charge-offs,
primarily related to a single, nonperforming, commercial credit, as well as by
losses on investment securities totaling $1.5 million. The securities were sold
at a loss in order to restructure the bond portfolio to take advantage of rising
interest rates. The losses are expected to be recovered in less than two years,
as proceeds were reinvested at higher current yields.
Credit quality ratios reflected notable improvement at December 31, 1999. Risk
elements expressed as a percentage of total loans declined from 1.26% at
September 30, 1999 to 1.20%. The allowance for credit losses expressed as a
percentage of nonperforming loans increased to 214% at December 31, 1999, from
182% at the previous quarter end.
Keystone's risk-based regulatory capital ratios at December 31, 1999 remained in
excess of well-capitalized levels.
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Annual Quarter Quarter Quarter Quarter Annual Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings per share - basic $ 0.76* $ (0.36)* $ 0.46* $ 0.49* $ 0.17* $ 1.94 $ 0.48
Earnings per share - diluted $ 0.75* $ (0.37)* $ 0.46* $ 0.49* $ 0.17* $ 1.92 $ 0.48
Return on average assets 0.55%* -1.03%* 1.31%* 1.45%* 0.50%* 1.45% 1.42%
Return on average equity 6.33%* -12.12%* 15.37%* 17.19%* 5.50%* 14.63% 14.36%
Net interest margin 4.21% 4.08% 4.26% 4.31% 4.22% 4.42% 4.33%
Noninterest income/revenues 28.24% 27.09% 28.01% 29.98% 27.78% 25.51% 27.63%
Provision for credit
losses/average loans 0.53% 1.21% 0.30% 0.36% 0.24% 0.37% 0.32%
Noninterest expense/revenues 78.14%* 114.54%* 60.50%* 56.55%* 83.19%* 58.22% 57.15%
Nonperforming assets to loans -- 0.70% 0.82% 0.73% 0.78% -- 0.65%
90 day past due loans to loans -- 0.50% 0.44% 0.56% 0.57% -- 0.64%
Total risk elements to loans -- 1.20% 1.26% 1.29% 1.35% -- 1.29%
Allowance for credit losses to loans -- 1.35% 1.35% 1.35% 1.36% -- 1.35%
Allowance for credit losses to
nonperforming loans -- 214% 182% 206% 195% -- 242%
Net charge-offs/average loans 0.54% 1.13% 0.37% 0.35% 0.28% 0.46% 0.39%
Equity to assets -- 7.99% 8.52% 8.54% 8.54% -- 9.50%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Excluding special charges associated with litigation resolution and the
unification of Keystone's seven banks under a single charter, various
performance ratios for 1999 were as follows:
<TABLE>
<CAPTION>
Fourth Third Second First
Annual Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Earnings per share - basic $ 1.71 $ 0.29 $ 0.49 $ 0.50 $ 0.43
Earnings per share - diluted $ 1.70 $ 0.29 $ 0.49 $ 0.50 $ 0.42
Return on average assets 1.23% 0.81% 1.40% 1.48% 1.26%
Return on average equity 13.72% 9.21% 16.33% 17.49% 13.81%
Noninterest expense/revenues 59.10% 60.11% 58.13% 55.87% 62.46%
</TABLE>
<PAGE>
PER SHARE STATISTICS
<TABLE>
<CAPTION>
Diluted Earnings per Share
- -------------------------------------------------------------------------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 $ (0.37) $ 0.46 $ 0.49 $ 0.17 $ 0.75
1998 $ 0.48 $ 0.50 $ 0.48 $ 0.46 $ 1.92
1997 $ 0.49 $ 0.47 $ 0.29 $ 0.43 $ 1.68
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Diluted Shares Outstanding
- -------------------------------------------------------------------------------------------------------
Fourth Third Second First Average
Quarter Quarter Quarter Quarter For Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 48,847,000 48,836,000 48,927,000 50,115,000 49,186,000
1998 51,624,000 51,875,000 52,095,000 52,557,000 52,042,000
1997 52,611,000 52,463,000 51,943,000 52,256,000 52,320,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
Book Value per Share
- --------------------------------------------------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
1999 $11.29 $12.04 $11.89 $11.99
1998 $13.12 $13.39 $13.05 $13.13
1997 $13.18 $13.06 $12.77 $12.59
- --------------------------------------------------------------------------------
QUARTER-END INFORMATION
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans $ 4,459,546 $ 4,388,555 $ 4,432,600 $ 4,413,283 $ 4,459,783
Earning assets 6,232,166 6,372,096 6,263,529 6,349,615 6,473,174
Intangible assets 54,147 56,172 57,247 58,324 60,371
Total assets 6,887,508 6,877,563 6,748,497 6,829,509 6,968,227
Deposits 4,960,334 4,913,753 5,026,958 5,109,821 5,231,718
Long-term debt (excluding FHLB) 129,920 129,938 129,955 130,096 130,239
Total shareholders' equity 550,025 585,844 576,151 583,350 661,665
Unrealized securities gains(losses), net (16,287) (10,619) (6,666) 1,468 6,284
- ------------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding 48,731,057 48,647,898 48,456,882 48,673,031 50,434,735
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
QUARTER-END CAPITAL RATIOS
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity to assets 7.99% 8.52% 8.54% 8.54% 9.50%
Tier one capital/Risk adjusted assets 10.54% 11.33% 11.38% 11.13% 12.59%
Total capital/Risk adjusted assets 11.78% 12.57% 12.63% 12.37% 13.84%
Leverage ratio 7.48% 8.04% 7.93% 7.78% 8.66%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
CONDENSED CONSOLIDATED QUARTERLY AVERAGE
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earning Assets:
Loans and leases $4,421,098 $4,395,983 $4,418,446 $4,444,509 $4,493,990
Loans held for resale 112,389 97,311 92,352 81,314 87,263
Federal funds sold and other 120,546 116,712 50,215 103,007 83,559
Taxable investment securities 1,441,442 1,449,896 1,442,224 1,544,018 1,596,077
Nontaxable investment securities 253,077 241,912 223,986 205,976 205,849
- -----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 6,348,552 6,301,814 6,227,223 6,378,824 6,466,738
Cash and due from banks 218,574 204,265 205,248 182,718 178,087
Allowance for credit losses (59,481) (60,300) (60,087) (60,978) (62,043)
Intangible assets 55,623 56,692 57,765 59,853 60,898
Other assets 315,911 284,622 264,280 226,585 283,774
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $6,879,179 $6,787,093 $6,694,429 $6,787,002 $6,927,454
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Deposits less than $100,000:
Now/Savings accounts $763,136 $790,241 $812,437 $808,068 $803,592
Money market accounts 793,144 795,353 783,236 774,232 762,234
Time deposits 2,357,464 2,495,748 2,545,283 2,602,634 2,630,606
Deposits greater than $100,000 378,696 250,330 269,040 283,292 316,273
Short-term borrowings 337,642 361,677 357,295 353,721 363,110
FHLB Borrowings 696,945 534,614 405,461 421,325 426,774
Long-term debt, other 129,930 129,948 130,030 130,190 130,606
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 5,456,957 5,357,911 5,302,782 5,373,462 5,433,195
- -----------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing deposits 676,687 691,552 682,793 661,527 663,716
Other liabilities 159,177 157,477 144,222 138,410 146,612
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 6,292,821 6,206,940 6,129,797 6,173,399 6,243,523
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 586,358 580,153 564,632 613,603 683,931
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $6,879,179 $6,787,093 $6,694,429 $6,787,002 $6,927,454
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CHANGE IN AVERAGE BALANCES (1)
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Loans -1.6% -3.5% -4.9% -4.8% -4.9%
Total assets -0.7% -1.7% -2.6% -0.2% 2.2%
Deposits -4.0% -3.0% -2.0% -1.6% -0.9%
Shareholders' equity -14.3% -14.3% -16.9% -10.7% -0.1%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Compares current quarter to the comparable quarter of the prior year.
-3-
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Annual Quarter Quarter Quarter Quarter Annual Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 486,031 $ 124,087 $ 121,957 $ 119,410 $ 120,577 $ 518,331 $ 127,639
Tax equivalent adjustment 8,657 2,279 2,128 2,180 2,070 8,569 2,049
- ------------------------------------------------------------------------------------------------------------------------------------
494,688 126,366 124,085 121,590 122,647 526,900 129,688
Interest expense 228,658 61,319 56,726 54,666 55,947 241,366 59,430
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income 266,030 65,047 67,359 66,924 66,700 285,534 70,258
Provision for credit losses 23,376 13,473 3,290 3,950 2,663 17,150 3,633
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 242,654 51,574 64,069 62,974 64,037 268,384 66,625
Noninterest income 104,683 24,170 26,202 28,655 25,656 97,795 26,830
Security transactions (338) (1,512) 729 20 425 11,018 661
Noninterest expense 289,674 102,192 56,602 54,046 76,834 223,189 55,484
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 57,325 (27,960) 34,398 37,603 13,284 154,008 38,632
Income taxes 11,592 (12,324) 9,798 11,219 2,899 45,692 11,834
Tax equivalent adjustment 8,657 2,279 2,128 2,180 2,070 8,569 2,049
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 37,076 $ (17,915) $ 22,472 $ 24,204 $ 8,315 $ 99,747 $ 24,749
====================================================================================================================================
Tax effect of security transactions $ (118) $ (529) $ 255 $ 7 $ 149 $ 3,856 $ 231
====================================================================================================================================
</TABLE>
ANALYSIS OF NONINTEREST INCOME
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Annual Quarter Quarter Quarter Quarter Annual Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust and investment advisory fees $ 27,766 $ 6,982 $ 6,784 $ 7,326 $ 6,674 $ 25,906 $ 6,281
Service charges on deposit accounts 19,173 5,556 4,822 4,458 4,337 18,443 4,794
Fee income 26,989 6,202 7,668 6,860 6,259 24,548 6,516
Mortgage banking income 11,461 2,026 2,374 3,479 3,582 12,412 3,003
Reinsurance income 3,113 365 856 1,045 847 3,167 1,021
Other income 16,181 3,039 3,698 5,487 3,957 13,319 5,215
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest income $104,683 $ 24,170 $ 26,202 $ 28,655 $ 25,656 $ 97,795 $ 26,830
===================================================================================================================================
Noninterest income to average assets(1) 1.54% 1.39% 1.53% 1.72% 1.53% 1.42% 1.54%
===================================================================================================================================
</TABLE>
(1) Annualized
ANALYSIS OF NONINTEREST EXPENSE
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Annual Quarter Quarter Quarter Quarter Annual Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries expense $ 89,149 $ 20,983 $ 22,383 $ 21,952 $ 23,831 $ 97,443 $ 23,965
Employee benefits 17,701 4,287 3,812 3,979 5,623 17,535 3,538
Occupancy expense 18,169 4,558 4,378 4,494 4,739 17,302 4,206
Furniture and equipment expense 21,103 5,423 5,152 5,158 5,370 20,567 5,153
Litigation resolution expense 43,658 43,658 -- -- -- -- --
Restructuring-related charges 26,917 4,904 2,215 650 19,148 -- --
Other expense 72,978 18,379 18,662 17,813 18,123 70,342 18,622
- -----------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $289,674 $102,192 $ 56,602 $ 54,046 $ 76,834 $223,189 $ 55,484
===================================================================================================================================
Noninterest expense to average assets(1)(2) 3.23% 3.09% 3.18% 3.20% 3.45% 3.25% 3.18%
===================================================================================================================================
Noninterest expense to revenues (2) 59.10% 60.11% 58.13% 55.87% 62.46% 58.22% 57.15%
===================================================================================================================================
E.O.P. full-time equivalent employees 2,553 2,517 2,598 2,707 2,965
===================================================================================================================================
</TABLE>
(1) Annualized
(2) Excluding special charges
-4-
<PAGE>
NET INTEREST INCOME ANALYSIS
<TABLE>
<CAPTION>
Fourth Quarter
- ----------------------------------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Amount Rate Amount Rate Change
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income:*
Loans - Commercial $17,918 8.49 % $17,779 8.36 % $139
Commercial - Real Estate 35,012 8.53 33,445 8.77 1,567
Consumer - Mortgage 13,897 7.60 14,648 7.72 (751)
Consumer 27,749 9.03 31,994 9.18 (4,245)
Loans held for resale 2,449 8.72 1,770 8.12 679
Investments 27,723 6.54 29,089 6.45 (1,366)
Federal funds sold and other 1,617 5.32 963 4.57 654
- ----------------------------------------------------------------------------------------------------------------------------
126,366 7.91 129,688 7.97 (3,322)
- ----------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits - NOW/Savings 2,461 1.28 3,104 1.53 (643)
Money Market 6,274 3.14 5,172 2.69 1,102
Time 35,403 5.13 38,257 5.15 (2,854)
Short-term borrowings 4,165 4.89 3,740 4.09 425
FHLB borrowings 10,236 5.83 6,139 5.71 4,097
Long-term debt, other 2,780 8.49 3,018 7.54 (238)
- ----------------------------------------------------------------------------------------------------------------------------
61,319 4.46 59,430 4.34 1,889
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income $65,047 $70,258 $(5,211)
- ----------------------------------------------------------------------------------------------------------------------------
Spread 3.45 3.63
============================================================================================================================
Net interest margin 4.08 % 4.33 %
============================================================================================================================
</TABLE>
* Fully taxable equivalent
<TABLE>
<CAPTION>
Year-to-Date
- ----------------------------------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) Amount Rate Amount Rate Change
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income:*
Loans - Commercial $69,703 8.21 % $72,585 8.69 % $(2,882)
Commercial - Real Estate 135,966 8.52 135,197 9.03 769
Consumer - Mortgage 55,005 7.73 61,317 7.92 (6,312)
Consumer 113,609 9.08 135,934 9.16 (22,325)
Loans held for resale 8,011 8.35 5,559 8.07 2,452
Investments 107,362 6.31 111,488 6.53 (4,126)
Federal funds sold and other 5,031 5.15 4,820 5.40 211
- ----------------------------------------------------------------------------------------------------------------------------
494,688 7.83 526,900 8.16 $(32,212)
- ----------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits - NOW/Savings 11,318 1.43 12,737 1.55 (1,419)
Money Market 22,974 2.92 20,649 2.79 2,325
Time 139,650 5.00 159,702 5.34 (20,052)
Short-term borrowings 15,844 4.49 17,486 4.66 (1,642)
FHLB borrowings 29,547 5.73 21,507 5.78 8,040
Long-term debt, other 9,325 7.17 9,285 7.78 40
- ----------------------------------------------------------------------------------------------------------------------------
228,658 4.26 241,366 4.45 (12,708)
- ----------------------------------------------------------------------------------------------------------------------------
Net interest income $266,030 $285,534 $(19,504)
- ----------------------------------------------------------------------------------------------------------------------------
Spread 3.58 3.71
============================================================================================================================
Net interest margin 4.21 % 4.42 %
============================================================================================================================
</TABLE>
* Fully taxable equivalent
-5-
<PAGE>
PERIOD-END LOAN PORTFOLIO ANALYSIS
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial:
Commercial and industrial $609,708 $625,162 $648,804 $625,183 $615,925
Floor plan financing 183,357 156,965 180,601 189,538 167,762
Obligations of political subdivisions 62,173 62,212 62,722 62,993 63,487
- ------------------------------------------------------------------------------------------------------------------------------------
855,238 844,339 892,127 877,714 847,174
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial real estate:
Commercial and industrial 1,379,520 1,366,960 1,346,405 1,320,740 1,299,052
Multi-family residential 83,725 79,864 79,903 72,576 76,752
Obligations of political subdivisions 46,037 46,855 54,748 51,025 47,493
Construction and land development 116,139 107,765 108,098 101,946 95,279
Agricultural 14,880 13,931 13,421 12,217 11,873
- ------------------------------------------------------------------------------------------------------------------------------------
1,640,301 1,615,375 1,602,575 1,558,504 1,530,449
- ------------------------------------------------------------------------------------------------------------------------------------
Consumer:
Real estate 739,198 703,083 694,684 710,836 754,280
Installment 403,580 420,343 458,420 503,265 543,513
Home equity 580,195 570,106 538,398 503,087 508,729
Personal lines of credit 42,005 40,177 39,411 39,218 39,754
Lease financing 199,029 195,132 206,985 220,659 235,884
- ------------------------------------------------------------------------------------------------------------------------------------
1,964,007 1,928,841 1,937,898 1,977,065 2,082,160
- ------------------------------------------------------------------------------------------------------------------------------------
Total Loans $4,459,546 $4,388,555 $4,432,600 $4,413,283 $4,459,783
====================================================================================================================================
</TABLE>
RISK ELEMENTS ANALYSIS
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans $27,183 $31,659 $28,177 $30,307 $24,675
Troubled debt restructurings 841 854 952 431 264
Other real estate 3,170 3,488 3,339 3,677 3,982
- -----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets 31,194 36,001 32,468 34,415 28,921
Loans 90 days or more past due 22,508 19,290 24,757 25,435 28,549
- -----------------------------------------------------------------------------------------------------------------------------------
Total risk elements $53,702 $55,291 $57,225 $59,850 $57,470
- -----------------------------------------------------------------------------------------------------------------------------------
Delinquent loans to period-end loans* 1.73% 1.71% 1.75% 1.80% 1.99%
===================================================================================================================================
Nonperforming assets to period-end loans 0.70% 0.82% 0.73% 0.78% 0.65%
===================================================================================================================================
Total risk elements to period-end loans 1.20% 1.26% 1.29% 1.35% 1.29%
===================================================================================================================================
</TABLE>
* The numerator consists of loans 30 days or more past due.
-6-
<PAGE>
COMPONENTS OF NONPERFORMING ASSETS
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 7,641 $13,944 $ 9,259 $10,418 $10,066
Commercial real estate 15,208 14,097 14,943 15,100 10,581
Consumer 5,175 4,472 4,927 5,220 4,292
- ------------------------------------------------------------------------------------------------------------------------------------
Nonaccrual and restructured loans 28,024 32,513 29,129 30,738 24,939
Other real estate 3,170 3,488 3,339 3,677 3,982
- ------------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $31,194 $36,001 $32,468 $34,415 $28,921
====================================================================================================================================
</TABLE>
ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
(dollars in thousands) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 59,110 $ 59,971 $ 59,857 $ 60,274 $ 61,933
Loans charged-off:
Commercial (6,218) (697) (426) (773) (536)
Real estate secured (3,411) (822) (577) (900) (1,379)
Consumer (2,792) (2,671) (2,952) (1,888) (2,926)
Lease financing (823) (410) (480) (146) (14)
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans charged-off (13,244) (4,600) (4,435) (3,707) (4,855)
- -----------------------------------------------------------------------------------------------------------------------------------
Recoveries:
Commercial 147 38 34 112 73
Real estate secured 190 62 276 306 57
Consumer 240 317 249 171 248
Lease financing 59 32 40 38 62
- -----------------------------------------------------------------------------------------------------------------------------------
Total recoveries 636 449 599 627 440
- -----------------------------------------------------------------------------------------------------------------------------------
Net loans charged-off (12,608) (4,151) (3,836) (3,080) (4,415)
Provision for credit losses 13,473 3,290 3,950 2,663 3,633
Other -- -- -- -- (877)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at end of period $ 59,975 $ 59,110 $ 59,971 $ 59,857 $ 60,274
===================================================================================================================================
Net loans charged-off to average loans* 1.13% 0.37% 0.35% 0.28% 0.39%
===================================================================================================================================
Provision for credit losses to average loans* 1.21% 0.30% 0.36% 0.24% 0.32%
===================================================================================================================================
Allowance for credit losses to loans 1.35% 1.35% 1.35% 1.36% 1.35%
===================================================================================================================================
</TABLE>
*Annualized
<PAGE>
OTHER RATIOS
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment portfolio - market to amortized cost 97.8% 98.7% 99.2% 100.5% 101.1%
Dividend payout ratio (excluding special charges) 101.0% 59.2% 58.0% 67.4% 60.4%
Loans to deposits ratio, average 89.0% 87.5% 86.8% 86.6% 86.8%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FEE GENERATION ACTIVITY
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mortgage loans originated $144,266 $138,235 $148,657 $117,875 $146,726
Mortgage loans sold 53,847 76,447 84,079 76,485 104,984
End of period mortgages serviced for others 998,863 996,855 982,885 977,742 956,613
End of period indirect loans securitized & serviced 16,628 24,341 29,252 37,543 46,985
=================================================================================================================================
</TABLE>
MARKET PRICE AND DIVIDENDS DECLARED
<TABLE>
<CAPTION>
Closing Bid Price Range
- ---------------------------------------------------------------------------------------------------------------------
Dividends
Quarter High Low Declared
- ---------------------------------------------------------------------------------------------------------------------
1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I $ 37.19 $ 32.25 $ 0.29
II 33.06 29.50 0.29
III 29.56 23.75 0.29
IV 25.34 20.00 0.29
- ---------------------------------------------------------------------------------------------------------------------
$ 1.16
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
1998
- ---------------------------------------------------------------------------------------------------------------------
I $ 42.00 $ 36.00 $ 0.28
II 41.53 34.00 0.28
III 37.13 27.88 0.28
IV 37.00 25.72 0.29
- ---------------------------------------------------------------------------------------------------------------------
$ 1.13
=====================================================================================================================
1997
- ---------------------------------------------------------------------------------------------------------------------
I $ 28.00 $ 24.88 $ 0.26
II 33.25 24.50 0.26
III 38.88 30.56 0.26
IV 41.00 34.00 0.28
- ---------------------------------------------------------------------------------------------------------------------
$ 1.06
=====================================================================================================================
</TABLE>
