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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file number 0-133312
THE FIRST JERMYN CORP.
----------------------
(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2275242
- ------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
645 Washington Avenue; P.O. Box 39; Jermyn Pennsylvania 18433-0039
- ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 717-876-6500
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding at May 6, 1998
----- --------------------------
Common stock, $1.25 par value 884,680
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THE FIRST JERMYN CORP. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
<S> <C>
PAGE
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets - March 31, 1998 and
December 31, 1997 1
Consolidated Statements of Income - Three Months
Ended March 31, 1998 and 1997 2
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 3
Notes to Consolidated Financial Statements-
Three Months Ended March 31, 1998 and 1997 and
December 31, 1997 4
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk 12
PART II - OTHER INFORMATION 13
SIGNATURES 14
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
THE FIRST JERMYN CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands of dollars, except per share information)
<TABLE>
<CAPTION>
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March 31, December 31,
ASSETS 1998 1997
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<S> <C> <C>
Cash and due from banks $ 20,298 8,102
Federal Funds sold 4,030 5,110
Securities available for sale 5,276 6,284
Mortgage backed securities available for sale 53,202 50,152
Investment securities 43,982 45,033
Loans, gross 202,327 204,464
Less: Unearned discount and origination fees (820) (854)
Allowance for loan losses (2,744) (2,696)
- ---------------------------------------------------------------------------------------------------------------
Loans, net 198,763 200,914
Accrued interest receivable 2,158 2,105
Bank premises, leasehold improvements and furniture and equipment -net 4,722 4,824
Real estate owned other than bank premises 0 188
Other assets 2,895 3,025
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Total assets $335,326 325,737
==============================================================================================================
LIABILITIES
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Deposits:
Noninterest-bearing demand $ 28,168 29,281
Interest-bearing 272,629 262,829
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Total deposits 300,797 292,110
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Capitalized lease obligation 723 744
Accrued interest payable 1,448 1,352
Other liabilities 208 254
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Total liabilities 303,176 294,460
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SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Common stock, $1.25 par value, authorized 2,500,000 shares;
Outstanding 899,885 shares 1,125 1,125
Surplus 3,876 3,876
Retained earnings 27,463 26,587
Unrealized loss on securities available for sale, net of tax (118) (115)
Less treasury stock-at cost (15,205) (196) (196)
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Total shareholders equity 32,150 31,277
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Total liabilities and shareholders' equity $335,326 325,737
==============================================================================================================
</TABLE>
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THE FIRST JERMYN CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands of dollars, except per share information)
<TABLE>
<CAPTION>
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Three months ended March 31,
1998 1997
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<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,145 3,953
Interest of balances with Banks 99 0
Interest and dividends on securities:
U.S. Treasury 471 913
Collateralized mortgage obligations of U.S. government
agencies and corporations 747 388
State and political subdivisions 238 244
Other taxable debt -- 1
Taxable equity 26 2
Interest on federal funds sold 63 66
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Total interest income 5,789 5,567
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Interest expense:
Deposits 2,935 2,783
Capitalized lease obligation 18 20
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Total interest expense 2,953 2,803
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Net interest income 2,836 2,764
Provision for loan losses 45 45
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Net interest income after provision for loan losses 2,791 2,719
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Noninterest income:
Service charges and fees 123 112
Other 49 30
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Total Noninterest income 172 142
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Noninterest expense:
Salaries and benefits 870 839
Net occupancy and furniture/equipment expenses 322 321
Data processing services 111 115
Other expenses 444 481
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Total noninterest expense 1,747 1,756
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Income before federal income tax provision 1,216 1,105
Federal income tax provision 340 292
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Net income 876 813
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Other comprehensive income net of tax
Unrealized gains on securities
Unrealized holding (loss)/gain arising during the period (3) 35
Less reclassification adjustment for gains included in net income --- (7)
Comprehensive income 873 841
==============================================================================================================
Per share information:
Net income $ .99 .92
Weighted average shares outstanding 884,680 884,680
==============================================================================================================
</TABLE>
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THE FIRST JERMYN CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands of dollars)
<TABLE>
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Three months ended March 31,
1998 1997
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<S> <C> <C>
Operating activities:
Net income $ 876 813
Adjustments to reconcile net income to net cash provided by
Operating activities:
Provision for loan losses 45 45
Depreciation and amortization of investment securities, bank
premises, leasehold improvements and furniture and equipment 107 107
Increase in interest receivable and other assets 79 157
Increase in interest payable and other liabilities 50 (399)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,157 723
- ------------------------------------------------------------------------------------------------------------
Investing activities:
Proceeds from maturities of securities 6,845 10,198
Purchases of securities available for sale (7,841) (3,976)
Net (increase) decrease in loans 2,106 551
Purchase of bank premises, leasehold improvements and
furniture and equipment-net (5) (116)
Sales of assets acquired through foreclosure, net 188 0
- ------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 1,293 6,657
- ------------------------------------------------------------------------------------------------------------
Financing activities:
Net increase (decrease) in noninterest-bearing demand deposits
and interest-bearing deposits 8,687 (4,796)
Principal payments on capitalized lease obligation (21) (19)
- ------------------------------------------------------------------------------------------------------------
Net cash used provided by financing activities 8,666 (4,815)
- ------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 11,116 2,565
Cash and cash equivalents at beginning of year 13,212 10,003
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $24,328 12,568
============================================================================================================
Cash paid during the year:
Interest $ 2,857 2,750
Federal Income Taxes 354 228
============================================================================================================
Noncash transactions
Net unrealized (loss) gain on securities available for sale, net of tax $ (3) 35
Transfers of loans to real estate owned other than bank premise 0 140
============================================================================================================
</TABLE>
3
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FIRST JERMYN CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements of First Jermyn
Corp. and subsidiaries (the Company) were prepared in accordance with
instructions to Form 10-Q, and therefore, do not include information or
footnotes necessary for a complete presentation of financial position,
results of operations and cash flows in conformity with generally
accepted accounting principles. However, all normal, recurring
adjustments which, in the opinion of management, are necessary for a
fair presentation of the financial statements, have been included.
These financial statements should be read in conjunction with the
audited financial statements and the notes thereto included in the
Company's Annual Report for the period ended December 31, 1997. The
results for the three months ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1998.
BUSINESS
The Company's principal subsidiary, The First National Bank of Jermyn
(the Bank), conducts business from its branch bank system located in
Lackawanna County, Pennsylvania. The Bank is subject to competition
from other financial institutions and other companies which provide
financial services. The Bank is subject to the regulations of certain
federal agencies and undergoes periodic examinations by those
regulatory authorities.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all of
the Company's wholly-owned subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. Additionally,
certain reclassifications have been made in order to conform with the
current year's presentation. The accompanying consolidated financial
statements have been prepared on an accrual basis.
(2) EARNINGS PER SHARE
Earnings per share were $.99 and $.92 for the three-month periods ended
March 31, 1998 and 1997 and was computed based on the weighted average
number of shares outstanding during each period. The Company has no
common stock equivalents.
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(3) RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the FASB issued SFAS No. 128, Earning Per Share. This
statement establishes standards for computing and presenting earnings per share
(EPS) and applies to entities with publicly held common stock or potential
common stock. This Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings per Share, and makes them
comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation. This Statement is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods; earlier application is not permitted. All EPS information in this Form
10-Q has been presented in accordance with SFAS No. 128.
In September 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 130, Reporting Comprehensive Income.
This statement establishes standards for the reporting and display of
comprehensive income and is components in a full set of general-purpose
financial statements. SFAS No. 130 requires that all items that are required to
be recognized as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The statement does not require a specific format for that financial
statement but requires that an enterprise display an amount representing total
comprehensive income for the period in that financial statement SFAS No. 130 is
effective for fiscal year beginning after December 15, 1997. The Company has
included this new reporting information in its form 10-Q.
In September 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 131, Disclosures About Segments of an
Enterprise and Related Information. SFAS No. 131 established for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. SFAS No. 131 is
effective for annual financial statements for periods beginning after December
15, 1997 and in interim financial statements there after. The Company has not
yet determined what impact, if any, the adaption of this statement will have on
disclosures in future financial statements of The Company.
In February 1998, the FASB issued SFAS No. 132, Employer's Disclosures about
Pensions and other Postretirement Benefits. This statement revises employer's
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. It standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures that are no longer as useful as
they were when FASB Statements No.87, Employer's Accounting for Pensions, No.88,
Employer's Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits, and No. 106, Employer's Accounting
for Postretirement Benefits Other Than Pensions, were issued.
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This statement requires changes in disclosures and would not effect the results
of operations, financial condition, or shareholders' equity of the Corporation.
This statement is effective for fiscal years beginning after December 15, 1997.
(4) PENDING ACQUISITION
On October 15, 1997, the Company entered into a definitive agreement to acquire
Upper Valley Bancorp, Inc. (UVB) the holding company of NBO National Bank (NBO).
NBO is a $259 million national-chartered bank with three branches in Olyphant,
Scranton, and Pittston, Pennsylvania. Under the terms of the agreement, UVB
shareholders will receive .689 share of the First Jermyn Corp. Common stock for
each UVB share owned. The transaction will be accounted for as a
pooling-of-interests and is subject to approval by the shareholders of First
Jermyn and UVB. The total value of the transaction is approximately $42.7
million subject to change based upon First Jermyn Corp.'s stock price prior to
finalization of the acquisition. When consummated, the transaction is expected
to create a company with approximately $600 million in assets and $56 million in
total shareholder's equity.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company's net income for the three months ended March 31, 1998 was $876,000
or $.99 per share compared to $813,000 and $.92 in the same three-month period
in the preceding year. The increase in net income was primarily attributable to
increases in net interest income and noninterest income, partially offset by an
increase in the federal income tax provision.
The Company recorded an annualized return on average assets of 1.08% for the
three-month period ending March 31, 1998, compared to 1.03% for the same period
in 1997. Return on average equity of 11.32% was recorded for the three-month
period ended March 31, 1998, compared to 11.37% for the same period in 1997.
At March 31, 1998, the Company had total assets of $335 million compared to $326
million at December 31, 1997. The increase in total assets was driven by a $12.2
million increase in cash and due from banks, which was primarily funded by a
$9.8 million increase in interest-bearing deposits.
The Company is susceptible to a continued increasing interest rate environment
that may erode the net interest margin. Strategies to enhance earnings and
improve the interest rate exposure of the Company will be considered, such as
the sale of existing mortgage-backed securities available for sale and
purchasing higher yielding, rate sensitive assets with the proceeds.
The Company will be increasing its market penetration through the proposed
acquisition of Upper Valley Bancorp, Inc. and its wholly owned subsidiary NBO
National Bank. Upper Valley Bancorp, Inc. had total assets of $270.1 million and
total deposits of $193.3 million at March 31, 1998. After completion of the
acquisition, The Company's wholly owned subsidiary, The First National Bank of
Jermyn, will be one of the largest community banks in Northeastern Pennsylvania
with total assets of approximately $600 million.
FINANCIAL CONDITION
CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD
Cash and due from banks increased approximately $12.2 million to $20.2 million
at March 31, 1998 from $8.1 million at December 31, 1997 as the company invested
excess liquidity with the Federal Home Loan Bank of Pittsburgh in anticipation
of funding two commercial loans for a total of $8 million in the second quarter
of 1998. Federal funds sold decreased to $4.0 million at March 31, 1998 from
$5.1 million at December 31, 1997 due to normal fluctuations resulting from the
conduct of customer business.
SECURITIES
Securities including securities available for sale, mortgage backed securities
available for sale, as well as investment securities, have increased $1.0
million or 1% to $102.5 million from $101.5 million
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at December 31, 1997. This increase was primarily driven by investment in
mortgage backed securities available for sale offset by the maturity of U.S.
Treasury securities with maturities generally less than two years.
LOANS RECEIVABLE, NET
Aggregate loans receivable totaled $198.8 million at March 31, 1998, a decrease
of $2.1 million or 1% from $200.9 million at December 31, 1997. The mix of loans
is substantially unchanged at those dates.
NON-PERFORMING ASSETS
The Company's total non-performing assets was relatively constant at
approximately $1.6 million or 0.5% of total assets at December 31, 1997. Loans
greater than ninety days delinquent but still accruing decreased from $242,000
at December 31, 1997 to $156,000 at March 31, 1998. However, nonaccrual loans
increased approximately $324,000 to $1,516,000.
Real estate owned, decreased from $188,000 as of December 31, 1997 to $0 as of
March 31, 1998, due to the sale of all three foreclosed properties owned by the
Company. There were no significant gains or losses on the sale of real estate
owned during the quarters ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
3/31/98 12/31/97
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<S> <C> <C>
Nonaccrual 1,516,000 1,192,000
Loans 90 days or more delinquent 156,000 242,000
Restructured -- --
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Total non-performing loans $1,672,000 $1,434,000
Other real estate owned other than
Bank premises 0 188,000
---------- ----------
Total non-performing assets $1,672,000 $1,622,000
</TABLE>
At March 31, 1998, the Company's allowance for loan losses amounted to $2.74
million or 1.36% of gross loans receivable. At December 31, 1997, the Company's
allowance for loan losses was $2.70 million or l.32% of gross loans receivable.
DEPOSITS
Deposits increased $8.7 million or 3.0% from $292.1 million at December 31, 1997
to $300.8 million at March 31, 1998. The increase in deposits was primarily due
to an increase in
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Certificate of Deposits from the local market. The Company believes this
increase is due to the Bank's competitive rates.
EQUITY
At March 31, 1998, total equity was $32.2 million or 9.6% of total assets
compared to $31.3 million or 9.6% of total assets as of December 31, 1997. Total
equity increased primarily due to the retention of net income during the
intervening period.
RESULTS OF OPERATIONS
NET INCOME
The Company's net income was $876,000 for the three months ended March 31, 1998,
compared to $813,000 recorded in the comparable prior period. In a competitive
rate environment, the Company was able to increase its level of core earnings as
net interest income after provision for loan losses approximated $2.8 million
for the three months ended March 31, 1998 compared to $2.7 million for the three
months ended March 31, 1997. Non interest expense remained relatively constant
at approximately $1.8 million, while the Federal income tax provision increased.
NET INTEREST INCOME
Net interest income before provision for loan losses amounted to $2.8 million
for the three-month periods ended March 31, 1998 and 1997. Interest income in
1997 increased primarily due to the interest and fees on loans.
Total interest income increased by $222,000 or 4.0% to $5,789,000 for the three
month period ended March 31, 1998 from $5,567,000 during the comparable prior
period. The increase was primarily the result of an increase in average
interest-earning assets of $10,559,000 for the three months ended March 31, 1998
compared to the three months ended March 31, 1997. However, this was partially
offset by a 1 basis point decline in the yield earned on average
interest-earning assets during the three months ended March 31, 1998 compared to
the 1997 period.
Total interest expense increased by $150,000 or 5.4% to $2,953,000 for the three
months ended March 31, 1998 from $2,803,000 for the comparable prior period. The
increase was due to an increase in interest expense associated with deposits,
where the average balance increased by $8,700,000 during the three months ended
March 31, 1998, compared to the comparable 1997 period. The increase in interest
expense on deposits was also caused by a 12 basis point increase in the average
rates paid for the three months ended March 31, 1998 over the comparable 1997
period.
PROVISION FOR LOAN LOSSES
The Company establishes a provision for loan losses, which is charged to
operations, in order to maintain the allowance for loan losses at a level which
is deemed to be appropriate based upon an assessment of prior loss experience,
the volume and type of lending presently being conducted by the Company,
industry standards, past due loans, economic conditions in the Company's
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market area generally and other factors related to the collectability of the
Company's loan portfolio. For the three-month period ended March 31, 1998, the
provision for loan losses amounted to $45,000 consistent with the amount
recorded in the comparable prior period.
Although management utilizes its best judgment in providing for potential
losses, there can be no assurance that the Company will not have to increase its
provisions for loan losses in the future as a result of the future increases in
non-performing loans or for other reasons which could adversely affect the
Company's results of operations. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the allowance
for loan losses. Such agencies may require the Company to recognize additions to
the allowance for loan losses based on their judgments of information which is
available to them at the time of their examination.
NONINTEREST INCOME
Noninterest income for the period ending March 31, 1998 increased approximately
$30,000 to $172,000 from the comparable prior period, primarily due to the
addition of ATM surcharge fees.
NONINTEREST EXPENSES
Noninterest expenses for the period ending March 31, 1998 decreased
approximately 0.5% from the comparable prior period. Salary and benefits
increased as a result of employee raises. Other expenses have decreased due to
managements efforts to control costs.
INCOME TAXES
Income tax expense totaled $340,000 for the three-month period ended March 31,
1998 compared to $292,000 for the comparable prior period. These amounts
resulted in effective tax rates calculated at 27.8% and 26.4%, respectively. The
increase in tax expense during the period ending March 31, 1998 was due to an
increase in income before the federal income tax provision. The 1998 effective
tax rate increase primarily due to a decrease in tax-exempt income as a
percentage of total net income.
LIQUIDITY & CAPITAL ADEQUACY
The Company's primary source of funds on long term and short term basis are
deposits, principal and interest payments on loans, mortgage backed securities,
and FHLB advances. The Company uses the funds generated to support its lending
and investment activities as well as any other demands for liquidity such as
deposit out flows.
The Company has continued to maintain the required levels of liquid assets as
defined by Federal regulations.
A strong capital position is important to the continued profitability of the
Company and promotes depositor and investor confidence. The Company's capital
consists of shareholders' equity, which provides a basis for future growth and
expansion and also provides a buffer against unexpected losses.
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Shareholders' equity increased $873,000 to $32,150,000 at March 31, 1998. It is
management's intention to continue paying a reasonable return on shareholders'
investment while retaining adequate earnings to allow for continued growth.
The Federal Reserve Board measures capital adequacy for bank holding companies
by using a risk-based capital frame-work and by monitoring compliance with
minimum leverage ratio guidelines. The minimum ratio of total risk-based capital
to risk-adjusted assets is 8% at March 31, 1998, of which 4% must be Tier 1
capital. The Company's total risk-based capital ratio was 18.20% at March 31,
1998. The Company's Tier 1 risk-based capital ratio was 16.95% at March 31,
1998.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
leverage ratio of 3% for bank holding companies that meet certain criteria,
including that they maintain the highest regulatory rating. All other bank
holding companies are required to maintain a leverage ratio of 3% plus an
additional cushion of at least 100 to 200 basis points. The Federal Reserve
Board has not advised the Company of any specific minimum leverage ratio
applicable to it. The Company's leverage ratio was 9.58% at March 31, 1998.
The Federal Deposit Insurance Corporation Improvement Act (FDICIA) establishes
minimum capital requirements for all depository institutions and established
five capital tiers: "well capitalized", "adequately capitalized,"
"under-capitalized:, "significantly under-capitalized," and "critically
under-capitalized," FDICIA imposes significant restrictions on the operations of
a bank which is not at least adequately capitalized. A depository institutions'
capital tier will depend upon where its capital levels are in relation to
various other capital measures which include a risk-based capital measure, a
leverage ratio capital measure and other factors. Under regulations adopted, for
an institution to be well capitalized it must have a total risk-based capital
ratio of at least 10%, a Tier I risk-based capital ratio of at least 6%, and a
Tier I leverage ratio of at least 5%, and not be subject to any specific capital
order or directive.
At March 31, 1998, the Bank's total risk-based capital, Tier I risk-based
capital and Tier I leverage ratios were 18.20%, 16.95% and 9.58%, respectively.
MARKET RISK AND INTEREST RATE RISK
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest rate risk inherent in
its lending, investment, and deposit taking activities. To that end, management
actively monitors and manages its interest rate risk exposure.
The Company uses simulation analysis to help monitor and manage interest rate
risk. In this analysis the Company examines the result of 100, 200 and 300 basis
point change in market interest rates and the effect on net interest income. It
is assumed that the change is instantaneous and that all rates move in a
parallel manner. In addition, it is assumed that rates on core deposit products
such as NOWs, savings accounts, and the MMDA accounts will be adjusted by 50% of
the assumed rate change. Assumptions are also made concerning prepayment speeds
on mortgage loans and mortgage securities. The results of this rate shock are a
useful tool to assist the Company in assessing interest rate risk inherent in
their balance sheet.
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The results of this rate shock analysis as of March 31, 1998 are as follows:
Change in Rate Net Interest Income Change (After tax, in thousands)
-------------- ----------------------------------------------------
+300 (594)
+200 (394)
+100 (190)
-100 138
-200 183
-300 192
OTHER MATTERS
The Company is currently working to resolve the potential impact of the year
2000 on the processing of data-sensitive information by the Corporation's
computerized information systems. The year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. Based on
preliminary information, costs of addressing potential problems are not
currently expected to have a material adverse impact on the Company's financial
position, results of the operations or cash flows in future periods. However, if
the Company, its customers, or vendors are unable to resolve such processing
issues in a timely manner, it could result in a material financial risk.
Accordingly, the Company plans to devote the necessary resources to resolve all
significant year 2000 issues in a timely manner.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth was under the caption "Market Risk and Interest Rate
Risk" under Item 2 of Part I is incorporated herein by reference.
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FIRST JERMYN CORP. AND SUBSIDIARIES
March 31, 1998
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a): Exhibits:
None
(b): Reports on Form 8-K:
None
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FIRST JERMYN CORP. AND SUBSIDIARIES
March 31, 1998
SIGNATURES
In accordance with requirement of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE FIRST JERMYN CORP.
----------------------
(Registrant)
Date May 13, 1998 By /s/ WILLIAM M. DAVIS
------------ ---------------------
William M. Davis
Chairman, President and
Director
(Principal Executive Officer)
Date May 13,1998 By /s/ MARTHA MYSHAK
------------ ---------------------
Martha Myshak
(Principal Financial Officer and
Treasurer)
Date May 13, 1998 By /s/ DONALD J. GIBBS
------------ ---------------------
Donald J. Gibbs
(Principal Accounting Officer
and Vice President, Finance /
Control Division Manager)
14
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000741562
<NAME> FIRST JERMYN CORP.
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