UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30,1998
Commission File Number 0-12635
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
(Exact Name of Registrant as specified in Charter)
Delaware 22-2983654
(State of Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
53 South Laurel Street
Bridgeton, New Jersey 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 and Exchange Act of 1934 during the period it
has been subject to such filing requirements.
[X] YES [ ] NO
Common Stock Outstanding as of June 30, 1998 1,095,475
<PAGE>
<TABLE>
PART I - Financial Information
This is the consolidated balance sheet for Southern Jersey Bancorp.
All dollar amounts are in thousands.
6/30/98 6/30/97 12/31/97
<S> <C> <C> <C>
ASSET
Cash and due from banks 19,642 16,557 18,565
Interest Bearing Deposits 4,000 0 4,000
Investment Securities Held to Maturity
59,362 55,428 55,415
Investment Securities Available for Sale
40,393 39,203 37,278
Fair Value: Securities Held-to-Maturity
6/30/98 59,870
3/31/97 55,434
12/31/97 55,956
Loan: Net of Unearned Income 289,582 296,021 305,556
Less: Allowance for loan losses 7,054 3,654 5,236
------ ------- -----
Net Loans 282,528 292,367 300,320
------ ------- -----
Federal Funds Sold 46,100 18,900 40,950
Bank Premises and Equipment - Net
6,450 6,064 6,353
Other Assets 23,860 18,407 20,473
----- ------ -----
Total Assets 482,335 446,926 483,354
======= ======= ======
LIABILITIES 6/30/98 6/30/97 12/31/97
Deposits - Interest Bearing 377,500 340,824 377,364
Non-Interest Bearing Deposits 61,456 58,203 61,100
------- ------- ------
Total Deposits 438,956 399,027 438,464
Funds Purchased - - -
Other Liabilities 5,059 6,206 5,331
------ ------- ------
Total Liabilities 444,015 405,233 443,795
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 2,260 2,260
Undivided Profits 37,588 41,241 38,767
------ ------- ------
41,977 45,630 43,156
Less: Treasury Stock at cost
179,525 Common Shares 6-30-98
188,769 Common Shares 6-30-97
183,927 Common Shares 12-31-97
3,806 3,847 3,756
----- ------- ------
38,171 41,783 39,400
Allowance for unrealized gain/losses
on Available for Sale Securities 149 (90) 159
----- ------- ------
Total Shareholder's Equity 38,320 41,693 39,559
----- ------- -----
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
482,335 446,926 483,354
======= ======= =======
</TABLE>
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<TABLE>
This is the consolidated balance sheet for Southern
Jersey Bancorp of Delaware, Inc. All dollar amounts
are shown in thousands except for the per share data.
<CAPTION>
Six Months Second Quarter
<S> <C> <C> <C> <C>
INTEREST INCOME
Int. on Securities:
Taxable int. income 2,111 2,242 1,022 1,154
Tax-Exempt int. inc. 710 725 358 363
Interest and Fees on Loans 13,126 12,762 6,697 6,548
Interest on Interest Bearing Deposits
114 - 114 -
Federal Funds Sold 1,184 550 657 270
Lease Income 0 0 0 0
---- ---- ---- -----
Total Int. Income 17,245 16,279 8,848 8,335
INTEREST EXPENSE
Interest on Deposit Savings 2,757 2,748 1,379 1,561
Certificates of Deposit $100,000 and over
2,163 1,747 1,106 876
Federal Funds Purchased - - - -
Other Time Deposits 4,235 3,406 2,117 1,569
----- ----- ---- -----
Total Int. Expense 9,155 7,901 4,602 4,006
NET INTEREST INCOME 8,090 8,378 4,246 4,329
Provision for Loan Losses 2,900 660 1,700 315
----- ----- ---- ---
Net Interest Income After Provision for Loan Loss
5,190 7,718 2,546 4,014
OTHER OPERATING INCOME
Service charges on deposit accounts
834 827 423 419
Trust Department Income 399 359 209 178
Comm., collection
Charges and fees 524 192 270 98
Investment Security gains/(losses)
0 0 0 0
Other Non-Interest Income 0 2 0 2
----- ----- ---- ----
Total Other Operating Income 1,757 1,380 902 697
OTHER OPERATING EXPENSES
Salaries and Wages 2,457 2,499 1,363 1,318
Pension and other benefits 697 580 369 279
Occupancy and Equipment 969 890 519 507
FDIC Assessment 94 67 54 34
Postage, stationary and supplies
265 242 114 103
Professional Fees 737 215 395 103
Other Oper. Expen. 2,580 808 1,518 423
----- ----- ----- -----
Total Other Oper. Expenses 7,799 5,301 4,332 2,767
Income Before Income Taxes (852) 3,797 (884) 1,944
Applicable Income Taxes 0 1,140 (10) 540
---- ----- ---- -----
NET INCOME (852) 2,657 (874) 1,404
=== ===== ==== =====
Earnings Per Common Share (0.70) 2.45 (0.72) 1.30
</TABLE>
<PAGE>
<TABLE>
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands)
Six Months Ended
June 30
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (852) 2,657
Adjustments to reconcile net income to
net cash provided by oper. activities
Amortization of Organization Expenses 0 0
Depreciation of Premises and Equip. 264 232
Net Loan Charge-Offs (1,082) (196)
Provision for Loan Losses 2,900 660
Premium Amortization net of discount accretion
0 78
Gain or (Loss) on Sale of Securities 0 0
Gain on Other Real Estate (3) 2
Gain on Sale of Bank Premises & Equipment 0 0
(Increase)/decrease in Other Assets (3,405) (9,920)
Increase/(decrease) in Other Liabilities (272) 1,017
Increase/(decrease) in Borrowed Funds 0 0
------ -----
Net Cash Provided by Operating Activities (2,450) (5,470)
Cash Flows from Investing Activities
Interest Bearing deposits 114 0
Purchase of Investment Securities (32,390) (11,823)
Proceeds from Sale of Invest. Secur. 6,463
Proceeds from Maturities of Invest. Securities
24,971 6,662
(Increase)/Decease in Loans 15,974 (5,136)
Bank Premises and Equipment (361) 82
Proceeds from Sale of Bank Premises and Equipment
0 80
Proceeds from Sale of Other Real Estate 155 312
----- ----
Net Cash Used for Investing Activities 8,463 (3,360)
Cash Flows from Financing Activities
(Decrease)/Increase in Total Deposits 492 13,643
Cash Dividends (329) (652)
Purchase of Treasury Stock (174) (90)
Sale of Treasury Stock 225 139
----- ----
Net Cash Provided by Financing Activities 214 13,040
Net Increase/(Decrease) in Cash and Cash Equivalents
6,227 4,210
Cash and Equivalents at the Beginning of the Year
63,515 31,247
------ -----
Cash and Equivalents at End of the Quarter 69,742 35,457
===== =====
Supplementary Schedule of Non-Cash Investing and
Financing Activities
Loans, Net of Charge-Offs transferred to
Other Real Estate Owned: 399 0
</TABLE>
<PAGE>
SOUTHERN JERSEY BANCORP OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1998
1. Principals 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 accounting policies of
the Registrant the date the most recent annual report to security holders,
nor have there occurred events which have 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 period presented.
4. In accordance with Rule 10-01(b)(8), the unaudited interim financial
statements filed under cover of Form 10-Q for June 30, 1998, 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.
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 J. Ritter, III
Treasurer
Clarence D. McCormick
Chairman/CEO
DATE: August 14, 1998
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
RESULTS IN OPERATIONS
Six Months Ended June 30, 1998
The net operating loss of ($852,000) for the first six months of 1998
is $3,509,000 less than the net operating income of $2,657,000 for the same
period for the prior year. Net income after taxes for 1998 is projected to be
approximately $200,000 or approximately 76.10% less than the $837,000 net
income after taxes in 1997.
The decrease in net income through the first six months of 1998
is primarily due to the increase in the loan loss provision expense to
$2,900,000 in the first half of 1998 as compared to $660,000 for the first
half of 1997. This large increase of 394% in the loan loss provision expense
is attributable to the substantial amount of marine installment loans required
to be charged off in the first half of 1998 which required the company to
increase its allowance for loan losses to comply with regulatory requirements.
This reserve expense increased the Company's loan loss reserve account to
$7,054,000 at June 30, 1998 from $5,236,000 at December 31, 1997. The Company
had a total of approximately $2,456,000 of repossessed marine collateral
at the end of the first half of 1998. The establishment of a reserve for
repossessed marine collateral apart from th $7.054 million in the loan
loss reserve account was necessitated to cover liquidation expenses. A
provision for other marine assets of $1,437,000 was expensed in the first
half of 1998 as compared to no such expense in the first half of 1997.
There has been the following significant changes in charge offs,
recoveries, non-accruing or non-performing loans in the first
half of 1998:
An increase from the first quarter to the second quarter of 1998 of
approximately $225,000 (6.83%)in loans secured by real estate in a non
accrual status, an increase of approximately $2,744,000 (58.51%) in
commercial and industrial loans past due 30 through 89 days and still
accruing, and an increase of approximately $472,000 (10.71%) in commercial
and industrial loans in a non accrual status. A portion of these
delinquent loans are secured by real estate and other collateral.
Total charge offs for the first six months of 1998 totaled $2,214,000
while total recoveries during the same period were $1,132,000. These
charge-offs included a total of $2,040,000 in charge offs of loans to
individuals for household, family and other personal expenditures which
includes installment marine retail loans.
The Company has delinquent retail installment marine loans as follows:
$2,666,000 30-59 days delinquent, $684,000 60-89 days delinquent all of
which are still accruing interest, $230,000 90 days to 119 days delinquent.
There are approximately $25,172,000 of retail installment marine loans that
are current and performing per their terms.
The foregoing discussion contains forward-looking statements that
involve risks and uncertainities. The Company's actual results could
differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the performance of
the Company's marine loan portfolio and the banking industry performance
in general.
<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
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<S> <C>
<CASH> 19,642
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 46,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,393
<INVESTMENTS-CARRYING> 59,362
<INVESTMENTS-MARKET> 59,870
<LOANS> 289,582
<ALLOWANCE> 7,054
<TOTAL-ASSETS> 482,335
<DEPOSITS> 438,956
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,059
<LONG-TERM> 0
<COMMON> 2,129
0
0
<OTHER-SE> 38,320
<TOTAL-LIABILITIES-AND-EQUITY> 482,335
<INTEREST-LOAN> 13,126
<INTEREST-INVEST> 2,821
<INTEREST-OTHER> 1,298
<INTEREST-TOTAL> 17,245
<INTEREST-DEPOSIT> 9,155
<INTEREST-EXPENSE> 9,155
<INTEREST-INCOME-NET> 8,090
<LOAN-LOSSES> 2,900
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,799
<INCOME-PRETAX> (852)
<INCOME-PRE-EXTRAORDINARY> (852)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (852)
<EPS-PRIMARY> (0.70)
<EPS-DILUTED> (0.70)
<YIELD-ACTUAL> 3.79
<LOANS-NON> 8,706
<LOANS-PAST> 2,016
<LOANS-TROUBLED> 2,782
<LOANS-PROBLEM> 12,670
<ALLOWANCE-OPEN> 5,236
<CHARGE-OFFS> 2,214
<RECOVERIES> 1,132
<ALLOWANCE-CLOSE> 7,054
<ALLOWANCE-DOMESTIC> 7,054
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
