UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
Quarterly Report Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
Commission File Number: 2-88927
FIRST KEYSTONE CORPORATION
(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2249083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
111 West Front Street, Berwick, PA 18603
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(717) 752-3671
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Stock, $2 Par Value, 808,429 shares as of March 31, 1995.
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PART I. - FINANCIAL INFORMATION
FIRST KEYSTONE CORPORATION
BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
March December
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 4,388 $ 4,812
Interest bearing deposits with banks 24 484
Available-for-sale securities carried at
estimated fair value 57,282 52,153
Investment securities, held to maturity
securities, estimated fair value of
$28,035 and $26,909 28,530 27,793
Loans, net of unearned income 119,954 118,184
Allowance for loan losses (1,815) (1,801)
Net loans $118,139 $116,383
Bank premises and equipment 2,977 3,029
Other real estate 115 235
Interest receivable 1,493 1,273
Other assets 689 702
Total Assets $213,637 $206,864
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Non-interest bearing $ 15,408 $ 16,682
Interest bearing 162,424 155,598
Total deposits $177,832 $172,280
Securities sold under agreements to
repurchase $ 4,050 $ 4,826
Other short-term borrowings 474 659
Long-term borrowings 8,000 7,500
Accrued expenses and other liabilities 1,278 811
Total Liabilities $191,634 $186,076
STOCKHOLDERS' EQUITY
Common stock, par value $2 per share $ 1,617 $ 1,617
Surplus 3,829 3,829
Retained earnings 15,839 15,357
Allowance for unrealized gains (loss) on
available for sale on debt and equity
investment securities 718 (15)
Total Stockholders' Equity $ 22,003 $ 20,788
Total Liabilities and Stockholders' Equity $213,637 $206,864
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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<TABLE>
FIRST KEYSTONE CORPORATION
Statements of Income
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
(Amounts in thousands except per share data)
<CAPTION>
1995 1994
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,579 $2,230
Interest and dividend income on securities 1,251 1,113
Interest on deposits in banks 9 3
Total Interest Income $3,839 $3,346
INTEREST EXPENSE
Interest on deposits $1,669 $1,359
Interest on short-term borrowings 60 71
Interest on long-term borrowings 132 86
Total Interest Expense $1,861 $1,516
Net interest income $1,978 $1,830
Provision for loan losses 12 2
Net Interest Income After Provision
for Loan Losses $1,966 $1,828
OTHER INCOME
Service charges on deposit accounts $ 113 $ 96
Other non-interest income 91 82
Investment securities gains (losses) net (32) 46
Total Other Income $ 172 $ 224
OTHER EXPENSES
Salaries and employee benefits $ 574 $ 540
Net occupancy and fixed asset expense 182 182
Other non-interest expense 473 365
Total Other Expenses $1,229 $1,087
Income before income taxes $ 909 $ 965
Applicable income tax (benefit) 192 202
Net Income $ 717 $ 763
Net Income Per Weighted Share Outstanding $ .89 $ .94
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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<TABLE>
FIRST KEYSTONE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
(Amounts in thousands)
<CAPTION>
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 717 $ 763
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision or loan losses 12 2
Provision for depreciation 75 76
Premium amortization on investment
securities 63 95
Discount accretion on investment
securities (46) (10)
(Gain) loss on sales of investment
securities 32 (46)
Deferred income tax (benefit) 11 (5)
(Gain) loss on sales of other real
estate owned 13 0
(Increase) decrease in interest
receivable and other assets (508) (332)
Increase (decrease) in interest payable,
accrued expenses and other liabilities 379 8
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 748 $ 551
INVESTING ACTIVITIES
Purchases of investment securities available
for sale $(6,120) $(11,195)
Proceeds from sales of investment securities
available for sale 985 10,204
Proceeds from maturities and redemptions
of investment securities available for sale 1,114 0
Purchase of investment securities held to
maturity (3,508) (1,012)
Proceeds from maturities and redemption of
investment securities held to maturity 2,725 3,453
Proceeds from sale of other real estate owned 108 0
Net (increase) decrease in loans (1,768) (293)
Purchase of premises and equipment (25) (84)
NET CASH USED BY INVESTING ACTIVITIES $(6,489) $ 1,073
FINANCING ACTIVITIES
Net increase (decrease) in deposits $ 5,552 $ (444)
Net increase (decrease) in short-term
borrowings (961) 207
Net increase (decrease)in long-term borrowings 500 0
Cash dividends (234) (218)
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 4,857 $ (455)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENT $ (884) $ 1,169
CASH AND CASH EQUIVALENTS, BEGINNING 5,296 3,951
CASH AND CASH EQUIVALENTS, ENDING $ 4,412 $ 5,120
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during period for
Interest $ 1,653 $ 1,504
Income Taxes 51 1
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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FIRST KEYSTONE CORPORATION
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
Note 1.
The accounting and reporting policies of First Keystone Corporation and
Subsidiaries conform to generally accepted accounting principles and to
general practices within the banking industry. These consolidated interim
financial statements include the accounts of First Keystone Corporation and
its wholly owned subsidiaries, The First National Bank of Berwick and FKC
Realty Corporation. All significant inter-company balances have been
eliminated.
Note 2.
The accompanying consolidated interim financial statements are
unaudited. In management's opinion, the consolidated interim financial
statements reflect a fair presentation of the consolidated financial position
of First Keystone Corporation and Subsidiaries, and the results of their
operations and their cash flows for the interim periods presented. Further,
the consolidated interim financial statements reflect all adjustments, which
are in the opinion of management, 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 are of a normal recurring nature.
Note 3.
The results of operations for the three-month period ended March 31,
1995, are not necessarily indicative of the results to be expected for the
full year.
Note 4.
Net income per share of common stock for the interim periods is based on
the weighted average number of shares for each period; 1995 - 808,429 shares
and 1994 - 808,429 shares.
Note 5.
Management considers the allowance for possible loan losses to be
adequate at the present time.
Note 6.
The consolidated interim financial statements have been prepared in
accordance with requirements of From 10-QSB and therefore does 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 or Form 10-KSB for the period ended
December 31, 1994, filed with the Securities and Exchange Commission.
<PAGE>
FIRST KEYSTONE CORPORATION
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
March 31, 1995
FINANCIAL CONDITION
Total assets of the Corporation increased by $6,773,000 from
December 31, 1994, to March 31, 1995, to a level of $213,637,000. The
increase in total assets was largely a result of total deposits increasing to
$177,832,000, up $5,552,000 from December 31, 1994.
Other significant balance sheet changes for the three-month period ended
March 31, 1995, were: net loans increased by $1,756,000, available for sale
securities carried at fair value increased $5,129,000 and total stockholders'
equity increased $1,215,000.
LIQUIDITY
The liquidity position of the Corporation remains adequate to meet
customer loan demand and deposit fluctuation. Managing liquidity remains an
important segment of asset liability management. Our overall liquidity
position is maintained by an active asset liability management committee.
Liquidity is achieved through steady increases in core deposits, our
investment portfolio, and access to borrowed funds.
RESULTS OF OPERATIONS
Net interest income, our primary source of net income, increased
$148,000, or 8.1% as of March 31, 1995 over the same period in 1994. Other
income decreased $52,000 in the first quarter of 1995 over 1994; however,
other income before investment security gains and losses was actually $26,000
higher than the first quarter of 1994. Other expense increased $142,000, or
13.1%. The majority of the increase relates to the opening of our
Mifflinville Office, which was not in operation in the first quarter
of 1994.
Our newest branch office continues to grow and is not expected to
adversely effect net income for the year of 1995. Income before income taxes
and security gains or losses amounted to $941,000 as of March 31, 1995,
compared to $919,000 in 1994. While net income is actually $46,000 less than
a year ago, the fundamental strengths of improved net interest income,
projected continuation of strong loan activity and our control of other
expenses should enable us to continue to produce excellent net income
results.
<PAGE>
PART II - OTHER INFORMATION
A. Reports on Form 8-K
The Registrant has filed no reports on From 8-K for this quarter.
<PAGE>
FIRST KEYSTONE CORPORATION
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST KEYSTONE CORPORATION
Registrant
May 5, 1995 /s/ J GERALD BAZEWICZ
J. Gerald Bazewicz
President and
Chief Executive Officer
May 5, 1995 /s/ DAVID R SARACINO
David R. Saracino
Treasurer/Assistant Secretary
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,388
<INT-BEARING-DEPOSITS> 24
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,282
<INVESTMENTS-CARRYING> 28,530
<INVESTMENTS-MARKET> 0
<LOANS> 119,954
<ALLOWANCE> (1,815)
<TOTAL-ASSETS> 213,637
<DEPOSITS> 177,832
<SHORT-TERM> 4,524
<LIABILITIES-OTHER> 1,278
<LONG-TERM> 8,000
<COMMON> 1,617
0
0
<OTHER-SE> 20,386
<TOTAL-LIABILITIES-AND-EQUITY> 213,637
<INTEREST-LOAN> 2,579
<INTEREST-INVEST> 1,251
<INTEREST-OTHER> 9
<INTEREST-TOTAL> 3,839
<INTEREST-DEPOSIT> 1,669
<INTEREST-EXPENSE> 192
<INTEREST-INCOME-NET> 1,978
<LOAN-LOSSES> 12
<SECURITIES-GAINS> (32)
<EXPENSE-OTHER> 1,229
<INCOME-PRETAX> 909
<INCOME-PRE-EXTRAORDINARY> 909
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 717
<EPS-PRIMARY> .89
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.31
<LOANS-NON> 630
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,649
<ALLOWANCE-OPEN> 1,813
<CHARGE-OFFS> 10
<RECOVERIES> 12
<ALLOWANCE-CLOSE> 1,815
<ALLOWANCE-DOMESTIC> 1,815
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 515
</TABLE>
