<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------- ---------
Commission file number 0-19028
CCFNB BANCORP, INC.
(Name of small business Issuer in its charter)
<TABLE>
<S> <C>
PENNSYLVANIA 23-2254643
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
232 East Street, Bloomsburg, PA 17815
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number, including area code: (717) 784-4400
Check whether the issuer (1) 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 issuer was
required to file such reports), and (2) has been subject to such filing
requirings for the past 90 days. Yes X No
--- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. 1,376,726
shares of $1.25 (par) common stock were outstanding as of July 26, 1996.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
JUNE 30, 1996
INDEX 10-QSB
EXHIBIT 27 - FINANCIAL DATA SCHEDULE NO PAGE
#
<TABLE>
<CAPTION>
<S> <C>
PART I - FINANCIAL INFORMATION:
- Consolidated Balance Sheets 1
- Consolidated Statements of Income 2
- Consolidated Statements of Cash Flows 3
- Notes to Consolidated Financial Statements 4 - 6
- Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 13
PART II - OTHER INFORMATION 14
SIGNATURES 15
</TABLE>
<PAGE> 3
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
JUNE DECEMBER
30, 1996 31, 1995
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks........................................ $ 3,895 $ 4,086
Interest-bearing deposits with other banks..................... 2,003 385
Federal funds sold............................................. 1,100 0
Investment securities:
Held-to-maturity securities, approximate fair value of
$1,061 and $1,062.......................................... 1,045 1,045
Available-for-sale securities carried at fair value.......... 38,419 39,339
Loans, net of unearned income.................................. 111,052 111,831
Allowance for loan losses...................................... 881 912
-------- --------
Net loans.................................................... $110,171 $110,919
Premises and equipment......................................... 5,306 5,082
Accrued interest receivable.................................... 960 850
Other assets................................................... 516 360
-------- --------
TOTAL ASSETS.............................................. $163,415 $162,066
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing......................................... $ 11,522 $ 12,051
Interest bearing............................................. 116,514 116,934
-------- --------
Total Deposits............................................ $128,036 $128,985
Short-term borrowings.......................................... 14,343 12,066
Long-term borrowings........................................... 333 364
Accrued interest and other expenses............................ 927 907
Other liabilities.............................................. 27 232
-------- --------
TOTAL LIABILITIES......................................... $143,666 $142,554
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; Authorized 5,000,000
shares; issued 1996 - 1,376,726, 1995 - 1,372,658 shares..... $ 1,721 $ 1,716
Surplus........................................................ 5,758 5,694
Retained earnings.............................................. 12,430 11,817
Allowance for unrealized gain (loss) on available-for-sale
investment securities, net of taxes ......................... (160) 285
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................ $ 19,749 $ 19,512
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $163,415 $162,066
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
-1-
<PAGE> 4
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX FOR THE THREE
MONTHS ENDING MONTHS ENDING
JUNE 30, JUNE 30,
----------------- -----------------
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable........................................ $ 4,505 $ 4,358 $ 2,249 $ 2,208
Tax exempt..................................... 49 78 24 33
Interest and dividends on investment securities:
Taxable interest............................... 903 809 460 409
Tax exempt interest............................ 248 241 130 121
Dividends...................................... 29 25 14 15
Interest on federal funds sold................... 22 27 14 27
Interest on deposits in other banks.............. 78 53 41 44
-------- -------- -------- --------
TOTAL INTEREST INCOME....................... $ 5,834 $ 5,591 $ 2,932 $ 2,857
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits............................. $ 2,415 $ 2,398 $ 1,202 $ 1,260
Interest on short-term borrowings................ 333 284 168 134
Interest on long-term borrowings................. 14 0 5 0
-------- -------- -------- --------
TOTAL INTEREST EXPENSE...................... $ 2,762 $ 2,682 $ 1,375 $ 1,394
-------- -------- -------- --------
Net interest income.............................. $ 3,072 $ 2,909 $ 1,557 $ 1,463
Provision for loan losses........................ 30 32 15 8
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES.................................. $ 3,042 $ 2,877 $ 1,542 $ 1,455
-------- -------- -------- --------
NON-INTEREST INCOME
Service charges and fees......................... $ 270 $ 237 $ 151 $ 124
Trust department income.......................... 34 23 16 11
Other income..................................... 70 27 55 21
Investment securities gain (losses) - net........ 0 0 0 0
-------- -------- -------- --------
TOTAL NON-INTEREST INCOME................... $ 374 $ 287 $ 222 $ 156
-------- -------- -------- --------
NON-INTEREST EXPENSES
Salaries and wages............................... $ 848 $ 738 $ 430 $ 370
Pensions and other employee benefits............. 301 254 152 124
Occupancy expense, net........................... 190 128 95 60
Furniture and equipment expense.................. 189 154 108 76
FDIC insurance................................... 1 144 0 72
Other operating expenses......................... 684 697 336 334
-------- -------- -------- --------
TOTAL NON-INTEREST EXPENSES................. $ 2,213 $ 2,115 $ 1,121 $ 1,036
-------- -------- -------- --------
Income before income taxes....................... $ 1,203 $ 1,049 $ 643 $ 575
Income tax expense............................... 315 264 168 157
-------- -------- -------- --------
NET INCOME................................... $ 888 $ 785 $ 475 $ 418
======== ======== ======== ========
NET INCOME PER SHARE............................. $ .65 $ .57 $ .35 $ .31
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
-2-
<PAGE> 5
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDING JUNE 30,
------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................,,, $ 888 $ 785
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses......................................... 30 32
Provision for depreciation and amortization....................... 187 128
Premium amortization on investment securities..................... 1 5
Discount accretion on investment securities....................... (6) (6)
(Gain) loss on sale of other real estate owned.................... (54) 0
Deferred income taxes (benefit)................................... 22 (3)
(Increase) decrease in accrued interest receivable and other
assets.......................................................... (161) (135)
Increase (decrease) in accrued interest and other expenses
and other liabilities........................................... (83) 169
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES....................... $ 824 $ 975
-------- --------
INVESTING ACTIVITIES
Proceeds from sales of investment securities:
Available-for-sale securities...................................... $ 0 $ 1,000
Proceeds from maturities and redemptions of investment securities
available-for-sale................................................. 9,564 0
Proceeds from maturities and redemptions of held-to-maturity
investment securities.............................................. 0 10,111
Purchase of investment securities:
Held-to-maturity securities........................................ 0 (588)
Available-for-sale securities...................................... (9,313) (8,953)
Net (increase) decrease in loans..................................... 718 (809)
Purchases of premises and equipment.................................. (411) (264)
Proceeds from sale of other real estate owned........................ 54 0
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES............. $ 612 $ 497
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................................. $ (949) $ 4,589
Net increase (decrease) in short-term borrowings..................... 2,277 1,319
Net increase (decrease) in long-term borrowings...................... (31) 0
Proceeds from sale of stock - dividend reinvestment.................. 69 20
Cash dividends paid.................................................. (275) (273)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............. $ 1,091 $ 5,655
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................ $ 2,527 $ 7,127
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR....................... 4,471 4,174
-------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR........................ $ 6,998 $ 11,301
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest........................................................... $ 2,755 $ 2,603
Income taxes....................................................... $ 239 $ 256
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
-3-
<PAGE> 6
CCFNB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
UNAUDITED
BASIS OF PRESENTATION
NOTE 1 - The accounting and reporting policies of CCFNB Bancorp and its
subsidiary conformed to generally accepted accounting principles and
to general practices within the banking industry. These consolidated
interim financial statements included the accounts of CCFNB Bancorp,
Inc. and its wholly owned subsidiary, Columbia County Farmers National
Bank. All significant inter-company balances were eliminated.
NOTE 2 - The accompanying consolidated interim financial statements were not
audited. In management's opinion, the consolidated interim financial
statements reflected a fair presentation of the consolidated financial
position of CCFNB Bancorp, Inc. and Subsidiary, and the results of
their operations and their cash flows for the interim periods
presented. Further, the consolidated interim financial statements
reflected all adjustments, which, in the opinion of management, were
necessary to present fairly the consolidated financial condition and
consolidated results of operations and cash flows for the interim
period presented and that all such adjustments to the consolidated
financial statements were of a normal recurring nature.
NOTE 3 - The results of operations for the six month period ended June 30,
1996 may not necessarily be indicative of the results to be expected
for the full year.
NOTE 4 - Net income per share of common stock for the interim periods was based
on the weighted average number of shares for each period; 1996 -
1,373,498 shares and 1995 - 1,365,622 shares.
NOTE 5 - LOANS
Loans were stated at their outstanding principal balances, net of any
deferred fees or costs, unearned income, and the allowance for loan
losses. Interest on loans was accrued on the principal amount
outstanding, primarily on an actual day basis. Non-refundable loan
fees and certain direct costs were deferred and amortized over the
life of the loans using the interest method. The amortization was
reflected as an interest yield adjustment, and the deferred portion
of the net fees and costs was reflected as a part of the loan balance.
-4-
<PAGE> 7
Non-Accrual Loans - Generally, a loan (including a loan impaired under
Statement of Financial Accounting Standards No. 114) was classified as
non-accrual, and the accrual of interest on such a loan was
discontinued when the contractual payment of principal or interest
became 90 days past due or management had serious doubts about further
collectibility of principal or interest, even though the loan was
performing. A loan may remain on accrual status if it was in the
process of collection and was either guaranteed or well secured. When
a loan was placed on non-accrual status, unpaid interest credited to
income in the current year was reversed, and unpaid interest accrued
in prior years was charged against the allowance for credit losses.
Potential problem loans were identified by management as a part of its
loan review process.
Income recognition was in accordance with Statement of Financial
Accounting Standards No. 118. Certain non-accrual loans may continue
to perform, or payments were still being received. Generally, the
payments were applied to principal. These loans remained under
constant scrutiny and if performance continued, interest income may be
recorded on a cash basis based on management's judgement as to
collectibility of principal.
Allowance for Loan Losses - The allowance for loan losses was
established through provisions for loan losses charged against
income. Loans deemed to be uncollectible were charged against the
allowance for loan losses, and subsequent recoveries, if any, were
credited to the allowance.
The Corporation adhered to the principles provided by Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan", as amended by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure." Under these standards, the
allowance for loan losses related to loans that were identified for
evaluation in accordance with Statement No. 114 and were based on
discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateral dependent
loans. Statement No. 118 allowed the continued use of existing
methods for income recognition on impaired loans and amends disclosure
requirements to require information about the recorded investment in
certain impaired loans and related income recognition on those loans.
The allowance for loan losses was maintained at a level by management
to be adequate to absorb estimated potential loan losses.
Management's periodic evaluation of the adequacy of the allowance for
loan losses was based on the Corporation's past loan loss experience;
known and inherent risks in the portfolio; adverse situations that may
affect the borrower's ability to repay (including the timing of future
payments); the estimated value of any underlying collateral;
composition of the loan portfolio; current economic conditions; and
other relevant factors. This evaluation by management required
estimates by management, including the amounts and timing of future
cash flows expected to be received on impaired loans that may be
susceptible to significant change.
-5-
<PAGE> 8
The following table presents the changes in the allowance for credit
losses:
<TABLE>
<S> <C>
Balance at January 1, 1996............................ $ 912
Provisions charged to operations...................... 30
Loans charged off..................................... (97)
Recoveries............................................ 36
--------
Balance at June 30, 1996.............................. $ 881
========
</TABLE>
At June 30, 1996, the recorded investment in loans that were
considered to be impaired under Statement No. 114 was $12,343, which
were all non-accrual loans. The related allowance for loan losses for
the impaired loans utilizing standards provided in Statement No. 114
was $12,343. No additional charge to operations was required since
the total allowance for loan losses was estimated by management to be
adequate to provide for the loan loss allowance under Statement No.
114 as well as any other potential loan losses.
NOTE 6 - The consolidated interim financial statements were prepared in
accordance with requirements of Form 10-QSB and therefore did not
include all the disclosures normally required by generally accepted
accounting principles, or those normally made in the Corporation's
annual 10-KSB filing. The reader of these consolidated interim
financial statements may wish to refer to the Corporation's annual
report on Form 10-KSB for the period ended December 31, 1995, filed
with the Securities and Exchange Commission.
-6-
<PAGE> 9
CCFNB BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Summary of Operations
(Dollars in Thousands, except for per share data)
<TABLE>
<CAPTION>
AT AND FOR THE SIX MONTHS
ENDED JUNE 30, AT AND FOR THE YEARS ENDED DECEMBER 31,
------------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income and Expense:
Interest income....................... $ 5,834 $ 5,591 $ 11,481 $ 10,459 $ 9,914 $ 9,768 $ 10,016
Interest expense...................... 2,762 2,682 5,557 4,785 4,634 5,053 5,707
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 3,072 2,909 5,924 5,674 5,280 4,715 4,309
Loan loss provision................... 30 32 42 160 105 167 190
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after loan loss
provision........................... 3,042 2,877 5,882 5,514 5,175 4,548 4,119
Non-interest income................... 374 287 678 569 568 547 484
Non-interest expense.................. 2,213 2,115 4,374 3,958 3,763 3,468 3,228
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes............ 1,203 1,049 2,186 2,125 1,980 1,627 1,375
Income taxes.......................... 315 264 561 560 497 414 346
Change in accounting principle........ 0 0 0 0 196 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................ 888 785 1,625 1,565 1,679 1,213 1,029
========== ========== ========== ========== ========== ========== ==========
Per Share: (1)
Net income after change in accounting
principle (2)....................... $ .65 $ .57 $ 1.19 $ 1.35 $ 1.51 $ 1.09 $ .93
Cash dividends paid................... .20 .20 .45 .42 .40 .33 .30
Average shares outstanding............ 1,376,726 1,365,757 1,367,595 1,163,199 1,109,837 1,109,602 1,109,382
Average Balance Sheet:
Loans................................. $ 110,636 $ 110,828 $ 111,980 $ 100,628 $ 88,347 $ 77,354 $ 73,185
Investments........................... 39,854 36,103 37,063 41,410 42,083 38,534 31,459
Other earning assets.................. 3,842 2,693 1,727 2,696 3,659 1,360 2,288
Total assets.......................... 163,179 157,109 157,957 151,752 143,096 129,045 114,488
Deposits.............................. 128,661 127,605 116,495 115,071 117,105 103,500 93,228
Other interest-bearing liabilities.... 13,821 10,709 11,766 11,014 12,332 12,390 9,744
Shareholders' equity.................. 19,430 17,764 18,067 13,736 12,739 11,972 10,873
Balance Sheet Data:
Loans................................. 111,052 110,570 111,831 109,800 96,423 82,055 74,155
Investments........................... 38,419 38,470 40,384 39,323 44,542 39,448 34,489
Other earning assets.................. 3,103 7,250 385 4,174 3,491 9,885 2,534
Total assets.......................... 163,415 164,205 162,066 157,124 152,386 139,273 118,558
Deposits.............................. 128,036 131,453 128,985 126,864 124,023 113,291 95,334
Other interest-bearing liabilities.... 13,676 13,228 12,430 11,910 14,317 13,199 10,197
Shareholders' equity.................. 19,749 18,654 19,512 17,650 13,452 12,208 11,361
Ratios: (3)
Return on average assets.............. 1.09% 1.00% 1.03% 1.03% 1.17% .94% .90%
Return on average equity.............. 9.14% 8.84% 8.99% 11.39% 13.18% 10.13% 9.47%
Dividend payout ratio................. 30.97% 34.78% 34.35% 36.54% 26.44% 30.17% 32.34%
Average equity to average assets ratio 11.91% 11.31% 11.44% 9.05% 8.90% 9.28% 9.50%
</TABLE>
(1) Per share data has been calculated on the weighted average number of
shares outstanding.
(2) Before cumulative effect of change in accounting principle.
(3) The ratios for the six month period ending June 30 are annualized.
-7-
<PAGE> 10
The following discussion and analysis of the financial condition and results
of operations of the Corporation should be read in conjunction with the
consolidated financial statements of the Corporation. The consolidated
financial condition and results of operations of the Corporation are
essentially those of the Bank. Therefore, the discussion and analysis that
follows is directed primarily at the performance of the Bank.
Overview
Total assets increased .83% to $163.4 million at June 30, from $162.1 million
at December 31, 1995. Net income increased 13.12% through June 30, 1996 to
$888,000, or $.65 per share, compared to $785,000, or $.57 per share for the
same six month period ended June 30, 1995. Loans decreased in 1996 by .70% to
$111.1 million at June 30, from $111.8 million at December 31, 1995.
Results of Operations - For the Six Months Ended June 30, 1996 and June 30,
1995.
Net income was affected by five major components: net interest income or the
difference between interest income earned on loans and investments and
interest expense paid on deposits and borrowed funds; the provision for loan
losses, which was the amount charged against net interest income and added to
the allowance for loan losses to provide a reserve for potential future loan
losses; other non-interest income, which was made up of certain fees, gains and
losses from the sale of investment securities, trust department income and
other items; and other non-interest expenses, which consisted primarily of
salaries and benefits, general overhead expenses, other operational expenses
and income taxes.
Net income for the six months ended June 30, 1996 was $888,000, or $.65 per
share, as compared to $785,000, or $.57 per share, for the comparable period
in 1995. The principal factor for the increase was due to a general increase
in net interest income, even though the volume of loans declined.
Return on average assets and return on average equity were 1.09% and 9.14%,
respectively, for the six months ended June 30, 1996, as compared to 1.05% and
8.84%, respectfully, for the comparable period in 1995.
Net Interest Income
For the six months ended June 30, 1996, net interest income was $3.0 million
as compared to $2.9 million for the comparable period of 1995. The net
interest margin reflected a favorable increase to 4.18% for the six months
ended June 30, 1996 from 4.10% for the comparable period in 1995. Average
interest earning assets at June 30, 1996 increased by 3.15% over June 30,
1995.
Average loans outstanding decreased from $110.8 million to $110.6 million or
.17%, for the six months ended June 30, 1996, as compared to the six months
ended June 30, 1995. The outstanding balance of loans at June 30, 1996, also
decreased from $111.8 at December 31, 1995 to $111.1 at June 30, 1996. A
2.66% increase in income on loans from $4.4 million at June 30, 1995 to $4.6
million at June 30, 1996 was attributable to the benefit derived from
adjustable rate mortgage loans and the related indexes used to continually
change interest rates to reflect the "market". In addition and for the
future, senior management implemented, beginning April 1, 1996, a new
variable rate home equity loan program to attract higher yielding interest
attributable to these loans.
-8-
<PAGE> 11
Shown below is a summary of past due and non-accrual loans:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
JUNE DECEMBER
30, 1996 31, 1995
-------- ----------
<S> <C> <C>
Past due and non-accrual:
Days 30 - 89......................................... $ 1,147 $ 1,330
Days 90 plus......................................... 441 397
Non-accrual.......................................... 12 13
-------- --------
$ 1,600 $ 1,740
======== ========
</TABLE>
Any loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that were not disclosed under Industry Guide 3 did not (i)
represent or result from trends or uncertainties which management reasonably
expected will materially impact future operating results, liquidity, or capital
resources, or (ii) represent material credits about which management was aware
of any information which caused management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.
The Corporation adhered to adopt Financial Accounting Standards Board
Statement No. 114, "Accounting by Creditors for Impairment of a Loan" - Refer
to Note 5 above for other details.
The following analysis provides a comparative schedule of loan
maturities/interest rate sensitivities including a schedule of all loans due
after one year by fixed and variable rate categories:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
MATURITY AND REPRICING DATA FOR LOANS AND LEASES JUNE DECEMBER
(EXCLUDING THOSE IN NON-ACCRUAL STATUS) 30, 1996 31, 1995
------------------------------------------------ ---------- --------
<S> <C> <C>
Fixed rate loans & leases with a remaining maturity of:
Three months or less...................................... $ 1,269 $ 1,847
Over three months through 12 months....................... 515 2,997
Over one year through five years.......................... 9,744 14,515
Over five years........................................... 25,039 19,962
---------- ---------
Total Fixed Rate Loans and Leases.................... $ 36,567 $ 39,321
---------- ---------
Floating rate loans & leases with a repricing frequency of:
Quarterly or more frequently.............................. $ 20,916 $ 7,317
Annually or more frequently, but less frequently than
quarterly............................................... 23,091 0
Every five years or more frequently, but less frequently
than annually........................................... 30,929 65,180
---------- ---------
Total Floating Rate Loans and Leases................. $ 74,936 $ 72,497
---------- ---------
Total Loans and Leases............................... $111,503 $111,818
========== =========
</TABLE>
Interest income from investment securities reflected a 9.77% increase comparing
$1,180,000 for the six months ended June 30, 1996, and the $1,075,000 for the
comparable period of 1995. The Corporation increased its yield by investing
in government agencies securities. In addition, during the second quarter an
investment strategy of acquiring mortgage backed securities commenced. The
average balance of investment securities for the six months ended June 30, 1996
increased 10.39% to $39.9 million, compared to the $36.1 million for the same
period of 1995.
Total interest expense increased $80,000 or 2.98% for the first six months of
1996, as compared to the six months of 1995. This increase in interest expense
reflected the shift from lower yielding money market deposits to higher
yielding certificates of deposit as reflected in the average balance sheet as
well as the effect of a small increase in interest bearing deposits. Interest
on short-term borrowings increased by $49,000 from $284,000 in 1995 to $333,000
in 1996.
-9-
<PAGE> 12
The following table sets forth, for the periods indicated, information
regarding: (1) the total dollar amount of interest income from
interest-earning assets and the resultant average yields; (2) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (3) net interest income; (4) net interest margin; (5) tax
equivalent net interest income; and (6) tax equivalent net interest margin.
Information is based on average daily balances during the indicated periods.
Average Balance Sheet and Rate Analysis
(Dollars in Thousands)
<TABLE>
<CAPTION>
------------JUNE 1996--------- -----------JUNE 1995----------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
ASSETS: BALANCE(1) EXPENSE(2) RATE BALANCE(1) EXPENSE(2) RATE
-------- -------- ----- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits with other financial
institutions.................................... $ 2,988 $ 78 5.22% $ 1,783 $ 53 5.95%
Investment securities:
U.S. government securities...................... 27,239 822 6.04% 23,966 701 5.85%
State and municipal obligations (3)............. 9,311 248 8.07% 8,485 241 8.61%
Other securities................................ 3,304 110 6.66% 3,652 133 7.28%
-------- -------- ---- -------- -------- ----
Total Investment Securities....................... $ 39,854 $ 1,180 5.92% $ 36,103 $ 1,075 5.96%
Federal funds sold................................ 854 22 5.15% 910 27 5.93%
Consumer.......................................... 8,307 399 9.61% 11,089 554 9.99%
Mortgage.......................................... 94,465 3,809 8.06% 83,346 3,162 7.59%
Commercial........................................ 6,200 296 9.55% 13,847 640 9.24%
Tax free (3)...................................... 1,664 50 9.10% 2,546 79 9.40%
-------- -------- ---- -------- -------- ----
Total loans....................................... $110,636 $ 4,554 8.23% $110,828 $ 4,435 8.00%
Total interest earning assets..................... 154,332 5,834 7.56% 149,624 5,590 7.47%
-------- -------- ---- -------- -------- ----
Reserve for loan losses........................... $ (918) $ (941)
Cash and due from banks........................... 1,628 1,627
Other assets...................................... 8,137 6,799
-------- --------
Total assets...................................... $163,179 $157,109
======== ========
LIABILITIES AND CAPITAL:
SUPER NOW deposits................................ $ 19,690 $ 214 2.17% $ 19,167 $ 276 2.88%
IRA............................................... 8,390 209 4.98% 8,340 206 4.94%
Money market deposits............................. 14,004 205 2.93% 19,692 328 3.33%
Savings deposits.................................. 24,391 338 2.77% 26,281 445 3.39%
C/D's over $100,000............................... 9,998 291 5.82% 8,116 221 5.45%
Other time deposits............................... 41,315 1,158 5.61% 35,493 924 5.21%
-------- -------- ---- -------- -------- ----
Total interest bearing deposits................... $117,788 $ 2,415 4.10% $117,089 $ 2,400 4.10%
-------- -------- ---- -------- -------- ----
Federal funds purchased........................... $ 0 $ 0 .00% $ 0 $ 0 .00%
Other borrowed funds.............................. 536 13 4.85% 1,229 37 6.02%
Long-term borrowings.............................. 345 14 .00% 0 0 .00%
Repurchase agreements............................. 12,940 320 4.95% 9,480 247 5.21%
-------- -------- ---- -------- -------- ----
Total interest bearing liabilities................ $131,609 $ 2,762 4.20% $127,798 $ 2,684 4.20%
-------- -------- ---- -------- -------- ----
Demand deposits................................... $ 10,873 $ 10,516
Other liabilities................................. 1,267 1,031
Stockholders' equity.............................. 19,430 17,764
-------- --------
Total liabilities and capital..................... $163,179 $157,109
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4)...... $ 3,072 3.98% $ 2,906 3.88%
TAX EQUIVALENT NET INTEREST INCOME/ ======== ==== ======== ====
NET INTEREST MARGIN (5).......................... $ 3,225 4.18% $ 3,070 4.10%
======== ==== ======== ====
</TABLE>
-10-
<PAGE> 13
(1) Average volume information was computed using daily averages.
(2) Interest on loans includes fee income.
(3) Yield on tax-exempt obligations has been computed on a tax-equivalent
basis.
(4) Net interest margin was computed by dividing net interest income by
total interest earning assets.
(5) Interest and yield are presented on a tax equivalent basis using 34% for
1996 and 1995.
Provision for Loan Losses
The provision for loan losses was based on management's evaluation of the
allowance for loan losses in relation to the credit risk inherent in the loan
portfolio. In establishing the amount of the provision required, management
considered a variety of factors, including but not limited to, general economic
conditions, volumes of various types of loans, collateral adequacy and
potential losses from significant borrowers. The Company strengthened its
internal loan review process in 1987 by implementing stringent analytical
standards in the review procedure. On a monthly basis, the Board of Directors
and the Credit Administration Committee reviewed information regarding specific
loans and the total loan portfolio in general in order to determine the amount
to be charged to the provision for loan losses.
For the six month period ending June 30, 1996, the provision for loan losses
was $30,000, compared to $32,000 for the corresponding period in 1995.
Non-Interest Income
The following table sets forth, for the periods indicated, the major
components of non-interest income:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees.................................. $ 270 $ 237
Trust department income................................... 34 23
Investment securities gain (loss) - net................... 0 0
Other..................................................... 70 27
-------- --------
Total................................................ $ 374 $ 287
======== ========
</TABLE>
For the six months ended June 30, 1996, total non-interest income increased
$87,000, to $374,000, compared with $287,000 for the six months ended June 30,
1995. The reason for the improvement was due to a positive increase in trust
income of $11,000; $12,000 in miscellaneous income of a non-recurring nature;
plus a gain in the sale of other real estate of $54,000.
-11-
<PAGE> 14
Non-Interest Expenses
Generally, non-interest expense accounted for the costs of maintaining
facilities, providing salaries and necessary benefits to employees; and general
operating costs such as insurance, supplies, advertising, data processing
services, taxes and other related expenses. Some of the costs and expenses
were variable while others were fixed. To the extent possible, the Company
utilized budgets and related measures to control variable expenses.
The following table sets forth, for the periods indicated, the major components
of non-interest expenses:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages.................................. $ 848 $ 738
Employee benefits................................... 301 254
Net occupancy expense............................... 190 128
Furniture and equipment expense..................... 189 154
FDIC insurance...................................... 1 144
State shares tax.................................... 66 57
Other expense....................................... 618 640
-------- --------
Total.......................................... $ 2,213 $ 2,115
======== ========
</TABLE>
Non-interest expenses totalled $2.2 million for the six months ended June 30,
1996 compared to $2.1 million for the same period in 1995.
Salary and employee benefits expense increased 15.83% due primarily to
addition of staff, internal promotions and normal merit increases. Occupancy
expense increased in 1996 over 1995 by 4.84% or $62,000 principally due to the
harsh winter of 1996 and the related costs of snow removal and utilities
related thereto.
Conversely, the effect of the decreased cost of FDIC insurance occurred in the
first quarter of 1996 and amounted to a decrease in cost of $143,000 or 99.31%
over the same period in 1995. In addition other expenses decreased to $684,000
in 1996 or 1.87% as compared to 1995.
Capital
A major strength of a financial institution is a strong capital position.
This capital is very critical as it must provide growth, payment to
shareholders, and absorption of unforeseen losses. The federal regulators
provide standards that must be met. These standards measure "risk-adjusted"
assets against different categories of capital. The "risk-adjusted" assets
reflect off balance sheet items, such as commitments to make loans, and also
place balance sheet assets on a "risk" basis for collectibility. The adjusted
assets are measured against Tier I Capital and Total Qualifying Capital. Tier
I capital is common stockholders' equity and Tier II Capital includes the
allowance for loan losses. Allowance for loan losses must be lower than or
equal to common stockholders' equity to be eligible for Total Qualifying
Capital.
-12-
<PAGE> 15
The Company exceeded all minimum capital requirements as reflected in the
following table:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
MINIMUM MINIMUM
CALCULATED STANDARD CALCULATED STANDARD
RATIOS RATIOS RATIOS RATIOS
------ ------ ------ ------
<S> <C> <C> <C> <C>
Risk Based Ratios:
Tier I capital to risk-weighted assets.. 18.08% 4.00% 28.21% 4.00%
Total qualifying capital to
risk-weighted assets.................. 18.88% 8.00% 92.46% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
JUNE DECEMBER
30, 1996 31, 1995
-------- ---------
<S> <C> <C>
Tier I capital to total assets.............................. 12.15% 11.86%
Tier II capital to total assets............................. 12.69% 12.39%
</TABLE>
Management believed that the Bank's capital position and liquidity positions
were strong and that its capital position was adequate to support its
operations.
-13-
<PAGE> 16
PART II - Other Information:
Item 1. Legal Proceedings
Management and the Corporation's legal counsel were not aware of any
litigation that would have a material adverse effect on the consolidated
financial position of the Corporation. There were no proceedings pending
other than the ordinary routine litigation incident to the business of the
Corporation and its subsidiary, Columbia County Farmers National Bank. In
addition, no material proceedings were (or are) pending or were (or are)
known to be threatened or contemplated against the Corporation and the Bank
by government authorities.
Item 2. Changes in Securities - Nothing to report.
Item 3. Defaults Upon Senior Securities - Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders of the Company on April 30, 1996
the following votes were taken for three Class I candidates for directors:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Robert W. Brewington, Jr. 910,914 40,225
Willard H. Kile, Sr. 885,003 66,136
Charles E. Long 927,269 23,870
</TABLE>
The following vote was taken:
Proposal to ratify the selection of J.H. Williams & Co. LLP of
Kingston, Pennsylvania, Certified Public Accountants, as the Auditors for the
Corporation for the year ending December 31, 1996.
928,447 For 8,494 Against 14,197 Abstain
Item 5. Other Information - Nothing to report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
2 Not applicable.
3(i) Amended Articles of Incorporation.
3(ii) Bylaws, as amended as of June 10, 1996.
4 Not applicable.
10 Not applicable.
11 Not applicable.
15 Not applicable.
18 Not applicable.
19 Not applicable.
22 Not applicable.
23 Not applicable.
24 Not applicable.
27 Financial Data Schedule.
99 Not applicable.
</TABLE>
(b) Report on Form 8-K.
The Registrant has filed no reports on Form 8-K for the quarterly
period ended June 30, 1996.
-14-
<PAGE> 17
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.
CCFNB BANCORP, INC.
(Registrant)
By /s/ Paul E. Reichart
---------------------------------
Paul E. Reichart
President & CEO
Date: August 8, 1996
By /s/ Virginia D. Kocher
---------------------------------
Virginia D. Kocher
Treasurer
Date: August 8, 1996
-15-
<PAGE> 1
EXHIBIT 3(i)
CCFNB BANCORP, INC.
AMENDED ARTICLES OF INCORPORATION
1. Name of Corporation.
The name of the Corporation is CCFNB Bancorp, Inc.
2. Registered Address.
The address, including street and number, of the corporation's
registered office in the Commonwealth of Pennsylvania and county of
venue is 232 East Street, Bloomsburg, Pennsylvania 17815, Columbia
County.
3. Purposes and Law of Incorporation.
The purpose or purposes of the corporation are to have unlimited power
to engage in and do any lawful act concerning any or all lawful
business for which corporations may be incorporated under the Business
Corporation Law of the Commonwealth of Pennsylvania. The corporation is
incorporated under the provisions of the Business Corporation Law of
1933, as amended.
4. Capitalization.
The aggregate number of shares, classes of shares and par value of
shares which the corporation shall have authority to issue is 5,000,000
shares of common stock, par value $1.25 per share, with a total
authorized capital of $6,250,000.
5. Incorporators.
The name and address of each of the incorporators is: Ezra W. Harris,
R.D. #5, Bloomsburg, Pennsylvania 17815; John I. Mather, R.D. #1, Box
64, Benton, Pennsylvania 17814; and Mac I. Johnson, R.D. #2,
Orangeville, Pennsylvania 17859.
6. Term of Existence.
The term for which the corporation is to exist, is perpetual.
7. Cumulative Voting Rights.
Cumulative voting rights shall not exist with respect to the election
of directors.
8. Opposition of Tender (or other offer).
A. The Board of Directors may, if it deems it advisable, oppose a
tender,or other offer for the corporation's securities, whether the
offer is in cash or in securities of a corporation or otherwise.
When considering whether to oppose an offer, the Board of Directors
may, but it is not legally obligated to, consider any pertinent
<PAGE> 2
issues; by way of illustration, but not of limitation, the Board of
Directors may, but shall not be legally obligated to, consider any
and all of the following:
(1) Whether the offer price is acceptable based on the historical
and present operating results or financial condition of the
corporation;
(2) Whether a more favorable price could be obtained for the
corporation's securities in the future;
(3) The impact which an acquisition of the corporation would have on
its employees, depositors and customers of the corporation and
its subsidiaries in the community which they serve;
(4) The reputation and business practices of the offeror and its
management and affiliates as they would affect the employees,
depositors and customers of the corporation and its subsidiaries
and the future value of the corporation's stock;
(5) The value of the securities, if any, which the offeror is
offering in exchange for the corporation's securities, based on
an analysis of the worth of the corporation as compared to the
corporation or other entity whose securities are being offered;
and
(6) Any antitrust or other legal and regulatory issues that are
raised by the offer.
B. If the Board of Directors determines that an offer should be
rejected, it may take any lawful action to accomplish its purpose
including, but not limited to, any and all of the following:
advising shareholders not to accept the offer; litigation against
the offeror; filing complaints with all governmental and regulatory
authorities; acquiring the authorized but unissued securities or
treasury stock or granting options with respect thereto; acquiring a
company to create an antitrust or other regulatory problem for the
offeror; and obtaining a more favorable offer from another
individual or entity.
9. Classification of Directors.
The Board of Directors of the Corporation shall be divided into three
classes, the respective terms of office of which shall end in
successive years. The number of directors in each class shall be
specified in the Bylaws and shall be nearly as equal as possible.
Unless they are elected to fill vacancies, the directors in each class
shall be elected to hold office until the third successive annual
meeting of shareholders after their election and until their successors
shall have been elected and qualified. At each annual meeting of
shareholders the directors of only one class shall be elected, except
directors who may be elected to fill vacancies.
2
<PAGE> 3
10. Filling of Vacancies in Board of Directors Caused by Increase in Number
of Directors.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by the Board of Directors. The Board of
Directors shall specify the class in which a director so elected shall
serve. Any director elected by the Board of Directors shall hold office
only until the next annual meeting of the shareholders and until his
successor shall have been elected and qualified, notwithstanding that
the term of office of the other directors in the class of which he is a
member does not expire at the time of such meeting. His successor shall
be elected by the shareholders to a term of office which shall expire
at the same time as the term of office of the other directors in the
class to which he is elected.
11. Number of Directors.
The Board of Directors shall consist of not less than five (5) nor more
than twenty-five (25) shareholders, the exact number to be fixed and
determined from time to time by resolution of a majority of the
shareholders at any annual or special meeting thereof.
12. Preemptive Rights.
No holder of shares of any class or of any series of any class shall
have any preemptive right to subscribe for, purchase or receive any
shares of the corporation, whether now or hereafter authorized, or any
obligations or other securities convertible into or carrying options to
purchase any such shares of the corporation, or any options or rights
to purchase any such shares or securities, issued or sold by the
corporation for cash or any other form of consideration, and any such
shares, securities or rights may be issued or disposed of by the Board
of Directors to such persons and on such terms as the Board in its
discretion shall deem advisable.
13. Indebtedness.
The corporation shall have authority to borrow money and the Board of
Directors, without the approval of the shareholders and acting within
their sole discretion, shall have the authority to issue debt
instruments of the corporation upon such terms and conditions and with
such limitation as the Board of Directors deems advisable. The
authority of the Board of Directors shall include, but not be limited
to, the power to issue convertible debentures.
14. Indemnification.
Every person who is or was a director, officer, employee, or agent of
the corporation, or of any Corporation which he served as such at the
request of the Corporation, shall be indemnified by the Corporation to
the fullest extent permitted by law against all expenses and
liabilities reasonably incurred by or imposed upon him, in connection
with any proceeding to which he may be made, or threatened to be made,
a party, or in which he may become involved by reason of his being or
having been a director, officer, employee or agent of the Corporation,
or of such other Corporation, whether or not he is a director,
3
<PAGE> 4
officer, employee or agent of the Corporation or such other Corporation
at the time the expenses or liabilities are incurred.
15. Shareholder Action.
No merger, consolidation, liquidation or dissolution of the Corporation
nor any action that would result in the sale or other disposition of
all or substantially all of the assets of the Corporation shall be
valid unless first approved by the affirmative vote of the holders of
at least sixty-six and two-thirds percent (66 2/3%) of the outstanding
shares of Common Stock. This Article may not be amended unless first
approved by the affirmative vote of the holders of at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding shares of Common
Stock.
16. Control Events.
A. It is the declared intent and policy of this corporation and its
shareholders that control of this corporation is an asset that
belongs to all shareholders of this corporation and that no
shareholder should have, either directly or indirectly, beneficial
ownership of twenty-five percent (25%) or more of the outstanding
shares of this corporation. Therefore, to carry out the
aforementioned intent and policy, this corporation and its
shareholders approve and adopt this Article 16.
B. When any person is determined by the Board of Directors to be the
beneficial owner, either directly or indirectly, of twenty-five
percent (25%) or more of the outstanding shares of this corporation
(the "Substantial Shareholder"), then the Board of Directors may
issue in its sole discretion on a pro rata basis to those
shareholders of the corporation who are not affiliated with the
Substantial Shareholder warrants to purchase additional shares of
the Common Stock of this corporation at a purchase price equivalent
to fifty percent (50%) of the average transaction price of all
purchases and sales of the Common Stock of this corporation that
occurred during the previous twelve-month period and that are known
by the Board of Directors. Such warrants shall be issued without any
consideration, shall not be assignable and shall expire six (6)
months from the date of their issuance. The Board of Directors shall
have the sole discretion in the determination of the number of
shares of Common Stock of this corporation that may be purchased
pursuant to such warrants.
C. The Board of Directors may use, but is not necessarily limited to,
the following indicia to determine "beneficial ownership": the
effect of stock ownership by a person's spouse and minor children;
ownership of shares held by a corporation or foundation of which a
Substantial Shareholder is an officer or affiliate; the extent of a
Substantial Shareholder's ownership of partnership shares; transfers
pursuant to divorce; installment purchases; stock warrants; grants
and options; control over the voting power of any stock; the status
of a Substantial Shareholder as trustee, trust beneficiary or
settlor of a trust of which part or all of the corpus is shares of
the Common Stock of this corporation; and stock dividends.
4
<PAGE> 5
D. "Affiliate" of, or a person "affiliated" with, the Substantial
Shareholder, is a person that directly, indirectly, through one or
more intermediaries, controls, or is controlled by, or is under
common control with, the Substantial Shareholder.
E. "Person" means an individual, corporation, partnership, association,
joint stock company, syndicate, trust where the interest of the
beneficiaries are evidenced by a security, an unincorporated
organization, group of persons acting in consort, or any other
entity. "Person" does not mean the Board of Directors of this
corporation acting collectively in its capacity as the Board of
Directors. "Person" does include an individual who is a member of
the Board of Directors.
F. This Article 16 may not be amended unless first approved by the
affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Common Stock of this Corporation.
17. Opt-Out Provisions
This Corporation specifically opts out and shall not be governed by
Subchapter G, Control-share Acquisitions, and Subchapter H,
Disgorgement by Certain Controlling Shareholders Following Attempts to
Acquire Control, of Chapter 25 of the Business Corporation Law of 1988,
as added and amended by Act 36 of 1990. Subchapter G, Control-share
Acquisitions, and Subchapter H, Disgorgement by Certain Controlling
Shareholders Following Attempts To Acquire Control, of Chapter 25 of
the Business Corporation Law of 1988, as added and amended by Act 36 of
1990, shall not be applicable to the Corporation.
5
<PAGE> 1
EXHIBIT 3(ii)
INDEX
TO BYLAWS OF
CCFNB BANCORP, INC.
(as amended as of June 30, 1996)
ARTICLE I - MEETINGS OF SHAREHOLDERS
Section 101. Place of Meetings
Section 102. Annual Meetings
Section 103. Special Meetings
Section 104. Conduct of Shareholders' Meetings
ARTICLE II - DIRECTORS AND BOARD MEETINGS
Section 201. Management by Board of Directors
Section 202. Nomination for Directors
Section 203. Directors Must be Shareholders
Section 204. Eligibility and Mandatory Retirement
Section 205. Classification of Directors
Section 206. Resignations
Section 207. Compensation of Directors
Section 208. Regular Meetings
Section 209. Special Meetings
Section 210. Chairman of the Board
Section 211. Vice Chairmen of the Board
Section 212. Reports and Records
ARTICLE III - COMMITTEES
Section 301. Committees
Section 302. Executive Committee
Section 303. Audit Committee
Section 304. Organization and Proceedings
ARTICLE IV - OFFICERS
Section 401. Officers
Section 402. President
Section 403. Vice Presidents
Section 404. Secretary
Section 405. Treasurer
Section 406. Compensation
Section 407. General Powers
i
<PAGE> 2
ARTICLE V - SHARES OF CAPITAL STOCK
Section 501. Authority to Sign Share Certificates
Section 502. Lost or Destroyed Certificates
ARTICLE VI - GENERAL
Section 601. Fiscal Year
Section 602. Record Date
Section 603. Absentee Participation in Meetings
Section 604. Emergency Bylaws
Section 605. Severability
ARTICLE VII - INDEMNIFICATION OF OFFICERS AND EMPLOYEES
Section 701.
Section 702.
Section 703.
Section 704.
Section 705.
Section 706.
Section 707.
Section 708.
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS
Section 801.
Section 802.
Section 803.
Section 804.
Section 805.
Section 806.
Section 807.
Section 808.
Section 809.
Section 810.
Section 811.
Section 812.
Section 813.
ARTICLE IX - AMENDMENT OR REPEAL
Section 901. Amendment or Repeal by the Board of Directors
Section 902. Recording Amendments and Repeals
ii
<PAGE> 3
ARTICLE X - APPROVAL OF AMENDED BYLAWS AND RECORD OF
AMENDMENTS AND REPEALS
Section 1001. Approval and Effective Date
Section 1002. Amendments or Repeals
iii
<PAGE> 4
BYLAWS
OF
CCFNB BANCORP, INC.
These Bylaws are supplemental to the Pennsylvania Business
Corporation Law and other applicable provisions of law, as the same
shall from time to time be in effect.
ARTICLE I. MEETINGS OF SHAREHOLDERS.
Section 101. Place of Meetings. All meetings of the shareholders shall
be held at such place or places, within or without the Commonwealth of
Pennsylvania, as shall be determined by the Board of Directors from time to
time.
Section 102. Annual Meetings. The annual meeting of the shareholders
for the election of Directors and the transaction of such other business as may
properly come before the meeting shall be held at such date or hour as may be
fixed by the Board of Directors. Any business which is a proper subject for
shareholder action may be transacted at the annual meeting, irrespective of
whether the notice of said meeting contains any reference thereto, except as
otherwise provided by applicable law.
Section 103. Special Meetings. Special meetings of the shareholders may
be called at any time by the Board of Directors, the Chairman of the Board, or
by the shareholders entitled to cast at least ten percent (10%) of the vote
which all shareholders are entitled to cast at the particular meeting.
Section 104. Conduct of Shareholders' Meetings. The President shall
preside at all shareholders' meetings. In the absence of the President, any
Officer designated by the Board of Directors shall preside. The Officer
presiding over the shareholders' meeting may establish such rules and
regulations for the conduct of the meeting as he/she may deem to be reasonably
necessary or desirable for the orderly and expeditious conduct of the meeting.
Unless the Officer presiding over the shareholders' meeting otherwise requires,
shareholders need not vote by ballot on any questions.
ARTICLE II. DIRECTORS AND BOARD MEETINGS.
Section 201. Management by Board of Directors. The business and affairs
of the Corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute, regulation, the Articles of Incorporation
or these Bylaws directed or required to be exercised or done by the
shareholders.
Section 202. Nomination for Directors. Nominations for directors to be
elected at an annual meeting of shareholders must be submitted to the Secretary
of the Corporation in writing not later than the close of business on the
twentieth (20th) day immediately preceding the date
<PAGE> 5
of the meeting. Such notification shall contain the following information to the
extent known to the notifying shareholder: (a) name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Corporation that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the Corporation
owned by the notifying shareholder. Nominations not made in accordance herewith
may, in his/her discretion, be disregarded by the Presiding Officer of the
meeting, and upon his/her instruction, the vote tellers may disregard all votes
cast for each such nominee. In the event the same person is nominated by more
than one shareholder, the nomination shall be honored, and all shares of capital
stock of the Corporation shall be counted if at least one nomination for that
person complies herewith.
Section 203. Directors Must be Shareholders. Every Director must be a
shareholder of the Corporation and shall own in his/her own right the number of
shares (if any) required by law in order to qualify as such Director. Any
Director shall forthwith cease to be a Director when he/she no longer holds such
shares, which fact shall be reported to the Board of Directors by the Secretary,
whereupon the Board of Directors shall declare the seat of such Directors
vacated.
Section 204. Eligibility and Mandatory Retirement. Commencing with the
annual meeting of the shareholders in 1984, no person shall be eligible to be
newly elected or appointed as a Director as he/she shall have attained the age
of seventy-two (72) years on or prior to the date of his/her election. Any
Director of this Corporation, who attains the age of seventy-two (72) years
shall cease to be a Director (without any action on his/her part) at the close
of business on the day prior to the date of the next shareholders meeting at
which directors are to be elected regardless of whether or not his/her term as a
Director would otherwise expire at such shareholders' meeting.
Section 205. Classification of Directors. The Directors shall be
divided into three (3) classes, as nearly equal in number as possible, known as
Class 1, consisting of not more than eight (8) Directors; Class 2, consisting of
not more than eight (8) Directors; and Class 3, consisting of not more than nine
(9) Directors. The initial Directors of Class 1 shall serve until the third
(3rd) annual meeting of shareholders. At the third (3rd) annual meeting of the
shareholders, the Directors of Class 1 shall be elected for a term of three (3)
years and, after expiration of such term, shall thereafter be elected every
three (3) years for three (3) year terms. The initial Directors of Class 2 shall
serve until the second (2nd) annual meeting of shareholders. At the second (2nd)
annual meeting of the shareholders, the Directors of Class 2 shall be elected
for a term of three (3) years and, after the expiration of such term, shall
thereafter be elected every three (3) years for three (3) year terms. The
initial Directors of Class 3 shall serve until the first (1st) annual meeting of
shareholders. At the first (1st) annual meeting of shareholders, the Directors
of Class 3 shall be elected for a term of three (3) years and, after the
expiration of such term, shall thereafter be elected every three (3) years for
three (3) year terms. Each Director shall serve until his/her successor shall
have been elected and shall qualify, even though his/her term of office as
herein provided has otherwise expired, except in the event of his/her earlier
resignation, removal or disqualification.
Section 206. Resignations. Any Director may resign at any time. Such
resignation shall be in writing, but the acceptance thereof shall not be
necessary to make it effective.
2
<PAGE> 6
Section 207. Compensation of Directors. No Director shall be entitled
to any salary as such; but the Board of Directors may fix, from time to time, a
reasonable annual fee for acting as a Director and a reasonable fee to be paid
each Director for his/her services in attending meetings of the Board and
meetings of committees appointed by the Board. The Corporation may reimburse
Directors for expenses related to their duties as a member of the Board.
Section 208. Regular Meetings. Regular meetings of the Board of
Directors shall be held on such day, at such hour, and at such place, consistent
with applicable law, as the Board shall from time to time designate or as may be
designated in any notice from the Secretary calling the meeting. The Board of
Directors shall meet for reorganization at the first regular meeting following
the annual meeting of shareholders at which the Directors are elected. Notice
need not be given of regular meetings of the Board of Directors which are held
at the time and place designated by the Board of Directors. If a regular meeting
is not to be held at the time and place designated by the Board of Directors,
notice of such meeting, which need not specify the business to be transacted
thereat and which may be either verbal or in writing, shall be given by the
Secretary to each member of the Board at least twenty-four (24) hours before the
time of the meeting.
A majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business. If at the time fixed for the meeting,
including the meeting to organize the new Board following the annual meeting of
shareholders, a quorum is not present, the directors in attendance may adjourn
the meeting from time to time until a quorum is obtained.
Except as otherwise provided herein, a majority of those directors
present and voting at any meeting of the Board of Directors, shall decide each
matter considered. A director cannot vote by proxy, or otherwise act by proxy at
a meeting of the Board of Directors.
Section 209. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President or at the
request of three (3) or more members of the Board of Directors. A special
meeting of the Board of Directors shall be deemed to be any meeting other than
the regular meeting of the Board of Directors. Notice of the time and place of
every special meeting, which need not specify the business to be transacted
thereat and which may be either verbal or in writing, shall be given by the
Secretary to each member of the Board at least twenty-four (24) hours before the
time of such meeting excepting the Organization Meeting following the election
of Directors.
Section 210. Chairman of the Board. The Board of Directors shall elect
a Chairman of the Board at the first regular meeting of the Board following each
annual meeting of shareholders at which Directors are elected. The Chairman of
the Board shall be a member of the Board of Directors and shall perform such
other duties as may be prescribed by the Board of Directors.
Section 211. Vice Chairmen of the Board. The Board of Directors may
elect one (1) or more Vice Chairmen of the Board as the Board of Directors may
from time to time deem advisable. The Vice Chairmen of the Board shall have such
duties as are prescribed by the Board of Directors or the Chairman of the Board.
3
<PAGE> 7
Section 212. Reports and Records. The reports of Officers and
Committees and the records of the proceedings of all Committees shall be filed
with the Secretary of the Corporation and presented to the Board of Directors,
if practicable, at its next regular meeting. The Board of Directors shall keep
complete records of its proceedings in a minute book kept for that purpose. When
a Director shall request it, the vote of each Director upon a particular
question shall be recorded in the minutes.
ARTICLE III. COMMITTEES.
Section 301. Committees. The following two (2) Committees of the Board
of Directors shall be established by the Board of Directors in addition to any
other Committee the Board of Directors may in its discretion establish:
Executive Committee and Audit Committee.
Section 302. Executive Committee. The Executive Committee shall consist
of any three (3) or more Directors. A majority of the members of the Executive
Committee shall constitute a quorum, and actions of a majority of those present
at a meeting at which a quorum is present shall be actions of the Committee.
Meetings of the Committee may be called at any time by the Chairman or Secretary
of the Committee, and shall be called whenever two (2) or more members of the
Committee so request in writing. The Executive Committee shall have and exercise
the authority of the Board of Directors in the management of the business of the
Corporation between the dates of regular meetings of the Board.
Section 303. Audit Committee. The Audit Committee shall consist of at
least three (3) Directors, none of whom shall be Officers of the Corporation.
Meetings of the Committee may be called at any time by the Chairman or Secretary
of the Committee, and shall be called whenever two (2) or more members of the
Committee so request in writing. A majority of the members of the Committee
shall constitute a quorum, and actions of a majority of those present at a
meeting at which a quorum is present shall be actions of the Committee. The
Committee shall supervise the audit of the books of the Corporation and
recommend for approval by the Board the services of a reputable Certified Public
Accounting firm to examine the affairs of the Corporation.
Section 304. Organization and Proceedings. Each Committee of the Board
of Directors shall effect its own organization by the appointment of a Secretary
and such other Officers, except the Chairman and Vice Chairman, as it may deem
necessary. A record of proceedings of all Committees shall be kept by the
Secretary of such Committee and filed and presented as provided in Section 212
of these Bylaws.
ARTICLE IV. OFFICERS.
Section 401. Officers. The Officers of the Corporation shall be a
President, one (1) or more Vice Presidents, a Secretary, a Treasurer, and such
other Officers as the Board of Directors may from time to time deem advisable.
Except for the President, Secretary, and Treasurer, the Board may refrain from
filling any of the said offices at any time and from time to time. The same
individual may hold any two (2) or more offices except both the offices of
President and
4
<PAGE> 8
Treasurer. The following Officers shall be elected by the Board of Directors at
the time, in the manner and for such terms as the Board of Directors from time
to time shall determine: President, Executive Vice President, Senior Vice
President, Secretary and Treasurer. The President may, subject to change by the
Board of Directors, appoint such Officers as he/she may deem advisable provided
such Officers have a title not higher than Vice President, who shall hold office
for such periods as the President shall determine. Any Officer may be removed at
any time with or without cause, and regardless of the term for which such
Officer was elected, but without prejudice to any contract right of such
Officer. Each Officer shall hold his office for the current year for which he
was elected or appointed by the Board unless he/she shall resign, becomes
disqualified, or be removed at the pleasure of the Board of Directors.
Section 402. President. The President shall have general supervision of
all of the departments and business of the Corporation and shall prescribe the
duties of the other Officers and Employees and see to the proper performance
thereof. The President shall be responsible for having all orders and
resolutions of the Board of Directors carried into effect. The President shall
execute on behalf of the Corporation and may affix or cause to be affixed a seal
to all authorized documents and instruments requiring such execution, except to
the extent that signing and execution thereof shall have been delegated to some
other Officer or Agent of the Corporation by the Board of Directors or by the
President. The President shall be a member of the Board of Directors. In the
absence or disability of the Chairman of the Board or his/her refusal to act,
the President shall preside at meetings of the Board. In general, the President
shall perform all the duties and exercise all the powers and authorities
incident to such office or as prescribed by the Board of Directors.
Section 403. Vice Presidents. The Vice Presidents shall perform such
duties, do such acts and be subject to such supervision as may be prescribed by
the Board of Directors or the President. In the event of the absence or
disability of the President or his/her refusal to act, the Vice Presidents, in
the order of their rank, and within the same rank in the order of their
authority, shall perform the duties and have the powers and authorities of the
President, except to the extent inconsistent with applicable law.
Section 404. Secretary. The Secretary shall act under the supervision
of the President or such other Officers as the President may designate. Unless a
designation to the contrary is made at a meeting, the Secretary shall attend all
meetings of the Board of Directors and all meetings of the shareholders and
record all of the proceedings of such meetings in a book to be kept for that
purpose, and shall perform like duties for the standing Committees when required
by these Bylaws or otherwise. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the Board of Directors. The
Secretary shall keep a seal of the Corporation, and, when authorized by the
Board of Directors or the President, cause it to be affixed to any documents and
instruments requiring it. The Secretary shall perform such other duties as may
be prescribed by the Board of Directors, President, or such other Supervising
Officer as the President may designate.
Section 405. Treasurer. The Treasurer shall act under the supervision
of the President or such other Officer as the President may designate. The
Treasurer shall have custody of the Corporation's funds and such other duties as
may be prescribed by the Board of Directors, President or such other Supervising
Officer as the President may designate.
5
<PAGE> 9
Section 406. Compensation. Unless otherwise provided by the Board of
Directors, the salaries and compensation of all Officers and Assistant Officers,
except the President shall be fixed by or in the manner designated by the
President.
Section 407. General Powers. The Officers are authorized to do and
perform such corporate acts as are necessary in the carrying on of the business
of the Corporation, subject always to the direction of the Board of Directors.
ARTICLE V. SHARES OF CAPITAL STOCK.
Section 501. Authority to Sign Share Certificates. Every share
certificate of the Corporation shall be signed by the President and by the
Secretary or one of the Assistant Secretaries. Certificates may be signed by a
facsimile signature of the President and the Secretary or one of the Assistant
Secretaries of the Corporation.
Section 502. Lost or Destroyed Certificates. Any person claiming a
share certificate to be lost, destroyed or wrongfully taken shall receive a
replacement certificate if such person shall have: (a) requested such
replacement certificate before the Corporation has notice that the shares have
been acquired by a bona fide purchaser; (b) provided the Corporation with an
indemnity agreement satisfactory in form and substance to the Board of
Directors, or the President or the Secretary; and (c) satisfied any other
reasonable requirements (including providing an affidavit and a surety bond)
fixed by the Board of Directors, or the President or the Secretary.
ARTICLE VI. GENERAL.
Section 601. Fiscal Year. The fiscal year of the Corporation shall
begin on the first (1st) day of January in each year and end on the thirty-first
(31st) day of December in each year.
Section 602. Record Date. The Board of Directors may fix any time
whatsoever (whether or not the same is more than fifty (50) days) prior to the
date of any meeting of shareholders, or the date for the payment of any dividend
or distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of shares will be made or will go into effect,
as a record date for the determination of the shareholders entitled to notice
of, or to vote at, any such meetings, or entitled to receive payment of any such
dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or exchange of
shares.
Section 603. Absentee Participation in Meetings. One (1) or more
Directors may participate in a meeting of the Board of Directors, or of a
Committee of the Board, by means of a conference telephone or similar
communications equipment, by means of which all persons participating in the
meeting can hear each other.
Section 604. Emergency Bylaws. In the event of any emergency resulting
from a nuclear attack or similar disaster, and during the continuance of such
emergency, the following Bylaw provisions shall be in effect, notwithstanding
any other provisions of the Bylaws:
6
<PAGE> 10
(a) A meeting of the Board of Directors or of any Committee
thereof may be called by any Officer or Director upon one (1) hour's notice to
all persons entitled to notice whom, in the sole judgment of the notifier, it is
feasible to notify;
(b) The Director or Directors in attendance at the meeting of
the Board of Directors or of any Committee thereof shall constitute a quorum;
and
(c) These Bylaws may be amended or repealed, in whole or in
part, by a majority vote of the Directors attending any meeting of the Board of
Directors, provided such amendment or repeal shall only be effective for the
duration of such emergency.
Section 605. Severability. If any provision of these Bylaws is illegal
or unenforceable as such, such illegality or unenforceability shall not affect
any other provision of these Bylaws and such other provisions shall continue in
full force and effect.
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND EMPLOYEES.
Section 701. The Corporation shall indemnify any officer and/or
employee, or any former officer and/or employee, who was or is a party to, or is
threatened to be made a party to, or who is called to be a witness in connection
with, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that such person is or was
an officer and/or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
Section 702. The Corporation shall indemnify any officer and/or
employee, who was or is a party to, or is threatened to be made a party to, or
who is called as a witness in connection with, any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, and/or employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against amounts paid in settlement and
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of, or serving as a witness in, such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation and except
that no indemnification shall be made in respect of any such claim, issue or
matter as to which such
7
<PAGE> 11
person shall have been adjudged to be liable for misconduct in the performance
of his duty to the Corporation.
Section 703. Except as may be otherwise ordered by a court, there shall
be a presumption that any officer and/or employee is entitled to indemnification
as provided in Sections 701 and 702 of this Article unless either a majority of
the directors who are not involved in such proceedings ("disinterested
directors") or, if there are less than three disinterested directors, then the
holders of one-third of the outstanding shares of the Corporation determine that
the person is not entitled to such presumption by certifying such determination
in writing to the Secretary of the Corporation. In such event the disinterested
director(s) or, in the event of certification by shareholders, the Secretary of
the Corporation shall request of independent counsel, who may be the outside
general counsel of the Corporation, a written opinion as to whether or not the
parties involved are entitled to indemnification under Sections 701 and 702 of
this Article.
Section 704. Expenses incurred by an officer and/or employee in
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided under Section 703 of this
Article upon receipt of an undertaking by or on behalf of the officer and/or
employee to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation.
Section 705. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled under any agreement, vote of shareholders of disinterested
directors, or otherwise, both as to action in his official capacity while
serving as an officer and/or employee and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be an
officer and/or employee and shall inure to the benefit of the heirs, executors
and administrators of such a person.
Section 706. The Corporation may create a fund of any nature, which
may, but need not be, under the control of a trustee, or otherwise secure or
insure in any manner its indemnification obligations arising under this Article.
Section 707. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was an officer and/or
employee of the Corporation, or is or was serving at the request of the
Corporation as an officer and/or employee of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
Section 708. Indemnification under this Article shall not be made in
any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
8
<PAGE> 12
ARTICLE VIII. INDEMNIFICATION OF DIRECTORS.
Section 801. A director of this Corporation shall stand in a fiduciary
relation to the Corporation and shall perform his duties as a director,
including his duties as a member of any committee of the board upon which he may
serve, in good faith, in a manner he reasonably believes to be in the best
interests of the Corporation, and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under similar
circumstances. In performing his duties, a director shall be entitled to rely in
good faith on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by any
of the following:
(a) One or more officers or employees of the Corporation whom
the director reasonably believes to be reliable and competent in the matters
presented.
(b) Counsel, public accountants or other persons as to matters
which the director reasonably believes to be within the professional or expert
competence of such person.
(c) A committee of the board upon which he does not serve,
duly designated in accordance with law, as to matters within its designated
authority, which committee the director reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause his reliance to be
unwarranted.
Section 802. In discharging the duties of their respective positions,
the board of directors, committees of the board, and individual directors may,
in considering the best interests of the Corporation, consider the effects of
any action upon employees, upon suppliers and customers of the Corporation and
upon communities in which offices or other establishments of the Corporation are
located, and all other pertinent factors. The consideration of those factors
shall not constitute a violation of Section 801.
Section 803. Absent a breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
Section 804. A director of this Corporation shall not be personally
liable for monetary damages as such for any action taken or for any failure to
take any action, unless:
(a) the director has breached or failed to perform the duties
of his office under the provisions of Sections 801 and 802, and
(b) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
Section 805. The provisions of Section 804 shall not apply to:
9
<PAGE> 13
(a) the responsibility or liability of a director pursuant to
a criminal statute, or
(b) the liability of a director for the payment of taxes
pursuant to local, state or federal law.
Section 806. The Corporation shall indemnify any director, or any
former director who was or is a party to, or is threatened to be made a party
to, or who is called to be a witness in connection with, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
Section 807. The Corporation shall indemnify any director who was or is
a party to, or is threatened to be made a party to, or who is called as a
witness in connection with, any threatened, pending or completed action or suit
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer and/or
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against amounts paid in settlement and expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of, or serving as a witness in, such action or suit if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation and except that no
indemnification shall be made in respect of any such claim, issue or matter as
to which such person shall have been adjudged to be liable for misconduct in the
performance of his duty to the Corporation.
Section 808. Except as may be otherwise ordered by a court, there shall
be a presumption that any director is entitled to indemnification as provided in
Sections 806 and 807 of this Article unless either a majority of the directors
who are not involved in such proceedings ("disinterested directors") or, if
there are less than three disinterested directors, then the holders of one-third
of the outstanding shares of the Corporation determine that the person is not
entitled to such presumption by certifying such determination in writing to the
Secretary of the Corporation. In such event the disinterested director(s) or, in
the event of certification by shareholders, the Secretary of the Corporation
shall request of independent counsel, who may be the outside general counsel of
the Corporation, a written opinion as to whether or not the parties involved are
entitled to indemnification under Sections 806 and 807 of this Article.
10
<PAGE> 14
Section 809. Expenses incurred by a director in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized in the
manner provided under Section 808 of this Article upon receipt of an undertaking
by or on behalf of the director, officer and/or employee to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article.
Section 810. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled under any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity while
serving as a director and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 811. The Corporation may create a fund of any nature, which
may, but need not be, under the control of a trustee, or otherwise secure or
insure in any manner its indemnification obligations arising under this Article.
Section 812. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
Section 813. Indemnification under this Article shall not be made in
any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
ARTICLE IX. AMENDMENT OR REPEAL.
Section 901. Amendment or Repeal by the Board of Directors. These
Bylaws may be amended or repealed, in whole or in part, by a majority vote of
members of the Board of Directors at any regular or special meeting of the Board
duly convened. Notice need not be given of the purpose of the meeting of the
Board of Directors at which the amendment or repeal is to be considered.
Section 902. Recording Amendments and Repeals. The text of all
amendments and repeals to these Bylaws shall be attached to the Bylaws with a
notation of the date and vote of such amendment or repeal.
11
<PAGE> 15
ARTICLE X. APPROVAL OF AMENDED BYLAWS AND RECORD OF AMENDMENTS AND REPEALS.
Section 1001. Approval and Effective Date. These Bylaws have been
approved as the Bylaws of the Corporation this 27th day of June, 1983, and shall
be effected as of said date.
Section 1002. Amendments or Repeals.
Date Amended
Section Involved or Repealed Approved By
Articles VII and VIII April 21, 1987 Shareholders
12
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