UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission File Number 0-12635
SOUTH JERSEY BANCORP OF DELAWARE, INC.
(Exact name of Registrant as Specified in Charter)
Delaware 22-2983654
(State of Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Organization) Number>
53 South Laurel Street
Bridgeton, NJ 08302
(Address of Principal Executive Offices)
(609) 453-3000
(Registrant's Area Code and Telephone Number)
Registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the period it has been subject
to such filing requirements.
[X] YES [ ] NO
Common Stock Outstanding as of September 30, 1997 1,089,877
<PAGE>
<TABLE>
PART I-Financial Information
This is the consolidated balance sheet for Southern Jersey Bancorp.
All dollar amounts are in thousands.
<CAPTION>
9/30/97 9/30/96 12/31/96
<S> <C> <C> <C>
ASSET
Cash and due from banks 19,112 17,599 18,347
Interest bearing deposits 0 0 0
Investment securities held to maturity 53,092 67,898 61,765
Investment securities available for sale 35,387 35,655 34,904
Market Value of held to maturity
9-30-97 53,454
9-30-96 67,755
12-31-96 61,901
Loan net of unearned income 308,346 280,168 290,885
Less: Allowance for loan losses 3,711 3,310 3,190
------- ------- -------
Net Loans 304,635 276,858 287,695
------- ------- -------
Federal funds sold 43,950 10,000 12,900
Bank premises and equipment - net 6,041 6,326 6,214
Other assets 18,740 9,599 8,499
------- ------- -------
Total Assets 480,957 423,935 430,324
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES 9/30/97 9/30/96 12/31/96
<S> <C> <C> <C>
Deposits-interest bearing 378,342 326,814 330,041
Non-interest bearing deposits 55,154 53,550 55,343
------ ------ ------
Total Deposits 433,496 380,364 385,384
Federal Funds Purchased 0 0 0
Other Liabilities 5,322 4,473 5,189
----- ----- -----
Total Liabilities 438,818 384,837 390,573
Shareholder's Equity
Common stock par value $1.67 per share
Authorized 5,000,000 shares;
Issued 1,275,000 shares 2,129 2,129 2,129
Surplus 2,260 2,223 2,260
Undivided profits 41,391 38,766 39,236
------ ------ ------
45,780 43,118 43,625
Less: Treasury stock at cost
185,123 Common Shares 9-30-97
190,093 Common Shares 9-30-96
190,196 Common Shares 12-31-96 3,764 3,793 3,896
----- ----- -----
42,016 39,325 39,729
Allowance for unrealized gain/losses
on Available for Sale Securities 123 (227) 22
------ ------ ------
Total Shareholders' Equity 42,139 39,098 39,751
------ ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 480,957 423,935 430,324
======= ======= =======
</TABLE>
<PAGE>
<TABLE>
This is the consolidated statement of earnings sheet for
Southern Jersey Bancorp. All dollar amounts are in thousands except for per
share data
<CAPTION>
Nine Months Third Qtr.
Ended Ended
September 30 September 30
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on securities:
Taxable interest income 3,235 3,972 993 1,193
Tax-exempt interest income 1,073 1,272 348 506
Interest and fees on loans 19,488 16,143 6,726 5,822
Interest on interest bearing deposits 0 0 0 0
Federal funds sold 1,190 752 640 169
Lease income 0 214 0 (11)
---- ---- ---- ---
Total interest income 24,986 22,353 8,707 7,679
INTEREST EXPENSE
Interest on deposits
Savings 4,247 4,377 1,499 1,483
Certificates of deposit $100,000
and over 2,685 1,976 938 688
Fed Funds Purchased 0 0 0 0
Other time deposits 5,555 4,466 2,149 1,540
----- ----- ----- -----
Total interest expense 12,487 10,819 4,586 3,711
NET INTEREST INCOME 12,499 11,534 4,121 3,968
Provision for loan losses 2,408 960 1,748 345
Net Interest Income After --- --- --- ---
Provision for Loan Losses 10,091 10,574 2,373 3,623
OTHER OPERATING INCOME
Service charges on deposit accounts 1,245 1,219 418 435
Trust Department Income 550 515 191 174
Commissions, collection
Charges and fees 486 370 294 154
Investment security gains (losses) 0 358 0 316
Other Non-Interest Income 2 0 0 0
--- --- --- ---
Total Other Operating Income 2,283 2,462 903 1,079
OTHER OPERATING EXPENSES
Salaries and wages 3,584 3,214 1,085 996
Pension and other benefits 865 794 285 221
Occupancy and equipment 1,375 1,238 485 439
FDIC Assessments 105 73 38 25
Postage, stationery and supplies 362 295 120 178
Professional Fees 363 423 148 183
Other operating expenses 1,413 1,118 605 398
--- --- --- ---
Total Other Operating Expenses 8,067 7,155 2,766 2,440
Income Before Income Taxes 4,307 5,881 510 2,262
Applicable Income Taxes 1,500 1,620 360 570
----- ----- ---- -----
NET INCOME 2,807 4,261 150 1,692
===== ===== ===== =====
Earnings per Common Share 2.58 3.93 0.14 1.57
</TABLE>
<PAGE>
<TABLE>
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
<CAPTION>
Nine Months Ended
September 30
1997 1996
---- ----
<S> <C> <C>
Cash flow from operating activities
Net Income 2,807 4,261
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of organization expenses 0 0
Depreciation of premises and equipment 319 292
Net Loan charge offs (1,887) (63)
Provision of loan losses 2,408 960
Premium Amortization net of discount accretion 102 46
Gain or (Loss) on sale of securities (2) 358
Gain on other real estate 0 0
Gain on sale of bank premises and equipment 0 (42)
Increase in other assets (10,258) (2,090)
Increase/(decrease) in other liabilities 133 309
Increase/(decrease) in borrowed funds 0 0
----- ----
Net cash provided by operating activities (6,378) 4,031
Cash flows from investing activities
Interest bearing deposits 0 0
Purchase of investment securities (13,897) (15,542)
Proceeds from sales of investment securities 8,373 8,000
Proceeds from maturities of investment securities 12,779 15,402
Increase in loans (17,461) (48,055)
Bank premises and equipment 146 (702)
Proceeds from sale of bank premises and equipment 0 42
Proceeds from sale of other real estate 661 1,361
--- ---
Net cash used for investing activities (9,399) (39,494)
Cash flows from financing activities
(Decrease)/Increase in total deposits 48,112 16,931
Cash dividends (652) (598)
Purchase of Treasury stock (107) (235)
Sale of Treasury stock 239 183
---- ----
Net Cash provided by financing activities 47,592 16,281
Net increase/(decrease) in cash and cash equivalents 31,815 (19,182)
Cash and equivalents at beginning of year 31,247 46,781
------ ------
Cash and Cash equivalent at end of quarter 63,062 27,599
====== ======
Supplementary Schedule of NonCash Investing
and Financing Activities 101 2,079
Loans, Net of Charge-offs transferred to Other Real Estate Owned:
434 0
</TABLE>
<PAGE>
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 30, 1997
1) Principles of Consolidation: The consolidated financial statements
reflect the account of Southern Jersey Bancorp of Delaware, Inc. and
its subsidiary, The Farmers and Merchants National Bank of Bridgeton,
after the elimination of all intercompany balances and transactions.
2) There have been no significant changes in the account policies of
the registrant since December 31, 1996, the date of the most recent
annual report to security holders, nor have there occurred events
which have had a material impact on the disclosures herein.
3) The interim financial statements contained herein reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented.
4) In accordance with Rule 10-01(b)(8), the unaudited interim financial
statements filed under cover of Form 10-Q for September 30, 1997,
reflect adjustments that are of a normal recurring nature which are,
in the opinion of Management, necessary to a fair statement of the
results for the interim periods presented.
<PAGE>
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
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.
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
(Registrant)
Paul Ritter
Treasurer
Clarence D. McCormick
Chairman/CEO
DATE: September 14, 1997
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
RESULTS IN OPERATIONS
Nine Months Ended September 30, 1997
The net operating income of $2,807,000 for the first nine months
of 1997 is 34.12% or $1,454,000 below the same period in the prior
year. Net income after taxes for 1997 is projected to be $3,200,000
or approximately 39.94% or $2,128,000 less than 1996.
This decrease in net income through the first nine months of 1997 is
primarily due to the increase in the loan loss provision expense to
$2,408,000 or 251% greater as compared to $960,000 for the first
three quarters of 1996.
The increase in the loan loss provision expense was necessitated
by the substantial amount of marine installment loans required to be
charged off in the third quarter of 1997 which required the company to
increase its allowance for loan losses to comply with regulatory
requirements.
There has been the following significant changes in charge offs,
recoveries, non-accruing or non-performing loans in the third
quarter of 1997:
An increase from the second quarter to the third quarter of
1997 of approximately $1,152,000 in loans secured by real
estate past due 30 through 89 days and still accruing,
an increase of $422,000 in commercial and industrial
loans past due 30 through 89 days and still accruing,
and an increase of $677,000 in commercial and industrial
loans in non-accrual. These loans are secured by real
estate and other collateral and minimal loss is expected
at this time.
The increase in the loans secured by real estate past due
30 through 89 days and still accruing and the increase in
commercial and industrial loans past due 30 through 89 days
and still accruing from the second quarter to third quarter
of 1997 is primarily a result of a substantial marine dealership
filing Chapter 11 bankruptcy in the third quarter of 1997.
Total charge offs for the first nine months of 1997 totaled
$1,934,000 while total recoveries during the same period were
$47,000. In the third quarter of 1997, there was a total of
$1,706,000 in charge offs of loans to industrial, household
and other personal expenditures.
The Company had approximately $2,454,000 in installment
marine retail loans from the above described marine dealership
that were 120 days or more delinquent. There were approximately
$1,472,000 of these 120 days or more delinquent loans charged off
in the third quarter of 1997 and the balance of $982,000 was
repossessed in the form of marine collateral. To the extent
that the Bank realizes more or less than the $982,000 from
the sale of the marine collateral it will increase or decrease
the Company's loss.
In addition to the $2,454,000 discussed above, the
Company has as additional amount of delinquent retail
installment marine loans generated from the above
described marine dealership as follows: $805,000
30 - 59 days delinquent, $752,000 60-89 days delinquent,
$227,000 90 days to 119 days delinquent. There are
approximately $18,651,000 of retail installment marine
loans that are current and performing that were generated
from the above described marine dealership.
<PAGE>
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
No reports have been filed on form 8-K during this quarter.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 19,112
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 43,950
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,387
<INVESTMENTS-CARRYING> 53,092
<INVESTMENTS-MARKET> 54,151
<LOANS> 308,346
<ALLOWANCE> 3,711
<TOTAL-ASSETS> 480,957
<DEPOSITS> 433,496
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,322
<LONG-TERM> 0
<COMMON> 2,129
0
0
<OTHER-SE> 40,010
<TOTAL-LIABILITIES-AND-EQUITY> 480,957
<INTEREST-LOAN> 19,488
<INTEREST-INVEST> 4,308
<INTEREST-OTHER> 1,190
<INTEREST-TOTAL> 24,986
<INTEREST-DEPOSIT> 12,487
<INTEREST-EXPENSE> 12,487
<INTEREST-INCOME-NET> 12,499
<LOAN-LOSSES> 2,408
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 8,067
<INCOME-PRETAX> 4,307
<INCOME-PRE-EXTRAORDINARY> 4,307
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,807
<EPS-PRIMARY> 2.58
<EPS-DILUTED> 2.58
<YIELD-ACTUAL> 4.08
<LOANS-NON> 3,139
<LOANS-PAST> 2,476
<LOANS-TROUBLED> 945
<LOANS-PROBLEM> 2,169
<ALLOWANCE-OPEN> 3,440
<CHARGE-OFFS> 1,934
<RECOVERIES> 47
<ALLOWANCE-CLOSE> 3,711
<ALLOWANCE-DOMESTIC> 3,711
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
