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 June 30, 2000
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Commission file number 0-133312
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FIRST LIBERTY BANK CORP.
(Exact name of registrant issuer as specified in its charter)
Pennsylvania 23-2275242
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(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
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number 570-876-6500
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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 June 30, 2000
----- ----------------------------
Common stock, $.31 par value 6,429,460
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED JUNE 30, 2000
INDEX
Page
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets - June 30, 2000 and
December 31, 1999 1
Consolidated Statements of Income - Three Months and Six Months
Ended June 30, 2000 and 1999 2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2000 and 1999 3
Notes to Consolidated Financial Statements 4
Six Months Ended June 30, 2000 and 1999
and December 31, 1999
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk 11
PART II - OTHER INFORMATION 12
SIGNATURES 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands of dollars, except per share information)
(unaudited)
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------
June 30, December 31,
Assets 2000 1999
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Cash and due from banks $ 14,187 26,023
Securities available for sale 172,189 185,908
Loans, gross 434,572 417,249
Less: Unearned discount and origination fees (676) (699)
Allowance for loan losses (5,361) (5,107)
---------------------------------------------------------------------------------------------------------------
Loans, net 428,535 411,443
Accrued interest receivable 3,054 3,397
Bank premises, leasehold improvements and furniture and equipment -net 14,336 14,431
Real estate owned other than bank premises 387 558
Other assets 12,270 11,515
---------------------------------------------------------------------------------------------------------------
Total assets $ 644,958 653,275
===============================================================================================================
Liabilities
---------------------------------------------------------------------------------------------------------------
Deposits:
Noninterest-bearing demand $ 52,725 49,502
Interest-bearing 428,704 434,944
--------------------------------------------------------------------------------------------------------------
Total deposits 481,429 484,446
--------------------------------------------------------------------------------------------------------------
Other borrowed money and capitalized lease obligations 50,517 75,567
Federal Funds Purchased 50,900 32,450
Accrued interest payable 2,856 2,040
Other liabilities 670 1,555
--------------------------------------------------------------------------------------------------------------
Total liabilities 586,372 596,058
--------------------------------------------------------------------------------------------------------------
Shareholders' Equity
---------------------------------------------------------------------------------------------------------------
Common stock, $.31 par value, authorized 10,000,000 shares; 2,010 2,009
Issued 6,429,460 and 6,427,804 respectively shares
Surplus 6,120 6,107
Retained earnings 54,970 53,790
Accumulated other comprehensive income (loss) (4,318) (4,493)
Less treasury stock-at cost (60,820 shares) (196) (196)
---------------------------------------------------------------------------------------------------------------
Total shareholders' equity 58,586 57,217
--------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 644,958 653,275
==============================================================================================================
</TABLE>
1
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands of dollars, except per share information)
(unaudited)
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Three months Six months
Ended June 30 Ended June 30
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $ 8,229 7,512 16,458 14,922
Interest on interest bearing deposits 5 167 13 422
Interest and dividends on securities:
Taxable 2,305 2,299 4,661 4,298
Exempt from Federal Taxes 376 576 798 1,201
Interest on federal funds sold -- 63 -- 72
----------------------------------------------------------------------------------------------------------------
Total interest income 10,915 10,617 21,930 20,915
----------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 4,837 4,860 9,538 9,571
Fed Funds Purchased 454 3 811 3
Capitalized lease obligations and borrowed funds 943 702 1,973 1,399
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Total interest expense 6,234 5,565 12,322 10,973
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Net interest income 4,681 5,052 9,608 9,942
Provision for loan losses 180 180 360 360
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Net interest income after
provision for loan losses 4,501 4,872 9,248 9,582
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Noninterest income:
Service charges and fees 165 161 328 344
Gains on sale of securities -- 13 53 87
Trust 174 173 344 337
Other 144 178 277 293
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Total noninterest income 483 525 1,002 1,061
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Noninterest expense:
Salaries and benefits 1,934 1,762 3,911 3,543
Net occupancy and furniture/equipment expenses 643 618 1,293 1,169
Data processing services 25 81 73 196
Foreclosure and other real estate expense 12 3 21 59
Other expenses 812 959 1,646 1,769
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Total noninterest expense 3,426 3,423 6,944 6,736
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Income before federal income tax provision 1,558 1,974 3,306 3,907
Income tax provision 344 435 725 850
----------------------------------------------------------------------------------------------------------------
Net income 1,214 1,539 2,581 3,057
----------------------------------------------------------------------------------------------------------------
Other comprehensive income net of tax
Unrealized gains on securities:
Unrealized holding (loss)/gain
arising during the period 140 (2,622) 210 (3,018)
Reclassification adjustment for gains
included in net income 0 (9) (35) (57)
Comprehensive income (loss) $ 1,354 (1,092) 2,756 (18)
================================================================================================================
Per share information
Net income-basic .19 .24 .41 .48
Net income-diluted .19 .24 .40 .48
</TABLE>
2
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands of dollars)
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Six months ended June 30
2000 1999
---- ----
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Operating activities:
Net income 2,581 3,057
Adjustments to reconcile net income to net cash provided by
Operating activities :
Gains on sales of securities (53) (87)
Provision for loan losses 360 360
Depreciation and amortization of investment securities, bank
premises, leasehold improvements and furniture and equipment 649 483
Increase in interest receivable and other assets (450) (1,661)
(Decrease)/Increase in interest payable and other liabilities (69) (528)
---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,018 1,624
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Investing activities:
Proceeds from maturities of securities 8,641 41,109
Purchases of securities available for sale --- (72,540)
Proceeds from sales of securities available for sale 5,344 13,175
Net increase in loans (17,591) (11,076)
Purchases of bank premises, leasehold improvements and (554) (2,212)
Furniture and equipment-net
Sales of assets acquired through foreclosure, net 310 383
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Net cash used by investing activities (3,850) (31,161)
---------------------------------------------------------------------------------------------------------------------
Financing activities:
Net increase/(decrease) in:
Deposits (3,017) 25,017
Fed Funds Purchased 18,450 (5,000)
Principal payments on capitalized lease obligation (50) (46)
Repay borrowed funds (25,000) --
Proceeds of stock issued thru exercise of options 14 131
Dividends paid (1,401) (1,272)
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Net cash (used) provided by financing activities (11,004) 18,830
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Decrease in cash and cash equivalents (11,836) (10,707)
Cash and cash equivalents at beginning of period 26,023 25,628
---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 14,187 14,921
=====================================================================================================================
Cash paid during the period:
Interest $ 11,556 10,796
Federal Income Taxes 1,042 877
=====================================================================================================================
Noncash transactions:
Net unrealized gain/(loss) on securities available for sale, net of tax $ 175 (3,075)
Transfers of loans to real estate owned other than bank premise 139 431
=====================================================================================================================
</TABLE>
3
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying consolidated financial statements of First Liberty Bank
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, 1999. The results for
the six months ended June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000.
Business
The Company's principal subsidiary, First Liberty Bank & Trust
(the Bank), conducts business from its branch bank system located in
Lackawanna and Luzerne Counties, 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 and state agencies and undergoes periodic examinations
by those regulatory authorities.
Principles of Consolidation
On February 16, 1999, the Company merged its two principal subsidiaries,
The First National Bank of Jermyn and NBO National Bank, under the name
First Liberty Bank & Trust. Concurrent with this merger, the Company
converted the charter of the Bank to a State chartered commercial bank
subject to regulation by the Pennsylvania Department of Banking and the
Federal Reserve Bank.
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.
4
<PAGE>
(2) Earnings Per Share
Basic earnings per share were computed based on the weighted average
number of shares outstanding during each period. Diluted earnings per
share include the dilutive effect of the Company's weighted average
stock options outstanding using the Treasury Stock method.
The following table sets forth the computation of basic and diluted
earnings per share (in thousands)
<TABLE>
<S> <C> <C>
3 months ended June 30 6 months ended June 30
2000 1999 2000 1999
---- ---- ---- ----
Numerator:
Net Income $ 1,214 $ 1,539 $ 2,581 $ 3,057
Denominator:
Denominator for basic
earnings per weighted
average shares 6,367 6,364 6,367 6,356
Effect of dilutive securities:
Employee Stock options 25 48 30 52
_____ ______ _____ ______
Denominator for diluted earnings
per share adjusted weighted
average shares and assumed
exercise of stock options 6,392 6,412 6,397 6,408
Basic earnings per share .19 .24 .41 .48
Diluted earnings per share .19 .24 .40 .48
</TABLE>
5
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
The Company's net income for the six months ended June 30, 2000 was $2.6 million
or $.40 per diluted share compared to $3.1 million and $.48 per diluted share
for the same six-months period in the preceding year. The decrease in net income
was primarily attributable to a decrease in net interest income, combined with
increased noninterest expense.
The Company recorded an annualized return on average assets of .81% for the
six-month period ending June 30, 2000, compared to .99% for the same period in
1999. Return on average equity of 9.05% was recorded for the six-month period
ended June 30, 2000, compared to 10.40% for the same period in 1999.
At June 30, 2000, the Company had total assets of $645 million compared to $653
million at December 31, 1999. The decline in total assets primarily represents
maturities and sales of securities with the proceeds used to fund repayments of
deposits and other borrowings.
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's wholly owned subsidiary, First Liberty Bank & Trust, is one of the
largest independent community banks in Northeastern Pennsylvania. The Company
intends to increase its market penetration through, among other things, the
purchase of additional branches.
Financial Condition
Cash and Due From Banks and Federal Funds Sold
Cash and due from banks decreased approximately $11.8 million to $14.2 million
at June 30, 2000 from $26 million at December 31, 1999 as the company utilized
excess liquidity to pay down other borrowed money.
Securities
Securities available for sale have decreased $13.7 million or 7.4% to $172.2
million from $185.9 million at December 31, 1999. This decrease was primarily
driven by the maturity of, sale of, and paydowns received of $4.7 million,$5.3
million and $3.7 million of securities available for sale, respectively.
Loans Receivable, Net
Aggregate loans receivable totaled $428.5 million at June 30, 2000, an increase
of $17.1 million from $411.4 million at December 31, 1999. This increase is a
result of approximately $5.9 million in commercial and $9.5 million in
commercial real estate loan origination during the six months ended June 30,
2000.
6
<PAGE>
Non-Performing Assets
The Company's total non-performing assets decreased approximately $554,000 to
$1.6 million or .25% of total assets at June 30, 2000 as compared to $2.2
million or .33% of total assets at December 31, 1999. Loans greater than ninety
days delinquent but still accruing decreased from $154,000 at December 31, 1999
to $55,000 at June 30, 2000. Nonaccrual loans decreased approximately $284,000
to $1.2 million.
Real estate owned, decreased from $558,000 as of December 31, 1999 to $387,000
as of June 30, 2000, due to four residential properties sold from the real
estate owned portfolio. There were no significant gains or losses on the sale of
real estate owned during the quarters ended June 30, 2000 and 1999.
<TABLE>
<S> <C> <C>
6/30/00 12/31/99
Nonaccrual $ 1,162,000 $ 1,446,000
Loans 90 day or more delinquent $ 55,000 $ 154,000
Restructured -- --
____________ ____________
Total non-performing $ 1,217,000 $ 1,600,000
Real estate owned other than
Bank premises 387,000 558,000
____________ ____________
Total non-performing assets $ 1,604,000 $ 2,158,000
</TABLE>
At June 30, 2000, the Company's allowance for loan losses amounted to $5.4
million or 1.23% of gross loans receivable. At December 31, 1999, the Company's
allowance for loan losses was $5.1 million or 1.22 % of gross loans receivable.
The allowance for loan losses as of June 30, 2000 has been deemed adequate by
management. The allowance is maintained at a level adequate to cover inherent
losses in the loan portfolio given the present past due, nonperforming and
classified levels.
Deposits
Deposits decreased $3 million or .62% from $484.4 million at December 31, 1999
to $481.4 million at June 30, 2000. The decrease in deposits was primarily due
to maturities of certificates of deposit and a decrease in the level of
interest-bearing demand accounts.
Equity
At June 30, 2000, total equity was $58.6 million or 9.1% or total assets
compared to $57.2 million or 8.8% of total assets as of December 31, 1999. Total
equity increased partially due to the retention of net income during the
intervening period. In addition, there was an increase in accumulated other
comprehensive income due to market changes in the AFS portfolio.
7
<PAGE>
Results of Operations
Net Income
The Company's net income for the three months ended June 30, 2000 decreased to
$1.2 million compared to $1.5 million for the three months ended June 30, 1999
primarily due to an increase of $451,000 and $241,000 in interest expense on Fed
Funds purchased and capitalized lease obligations and borrowed funds,
respectively.
The Company's net income was $2.6 million for the six months ended June 30,
2000, compared to $3.1 million recorded in the comparable prior period. This
$500,000 decrease was due, in part, to an increase in interest expense on Fed
Funds purchased and capitalized lease obligations/borrowed funds. In addition,
the Company's noninterest income decreased slightly to $1 million for the six
months ended June 30, 2000 from $1.1 million for the six months ended June 30,
1999, while noninterest expense increased approximately $208,000 for the six
months ended June 30, 2000, compared to the comparable prior period.
Net Interest Income
Net interest income before provision for loan losses amounted to $4.7 million
and $9.6 million for the three-month and six-month periods ended June 30, 2000
versus $5.1 million and $9.9 million for the comparable prior period ended June
30, 1999.
Total interest income increased to $10.9 million and $21.9 million for the three
and six month periods ended June 30, 2000 from $10.6 million and $20.9 million
during the comparable prior periods. The average interest-earning assets
increased $9.0 million for the six months ended June 30, 2000 compared to the
six months ended June 30, 1999. In addition the yield earned on the average
interest-earning assets increased 16 basis points during the six months ended
June 30, 2000 compared to the 1999 period.
Total interest expense increased to $6.2 million and $12.3 million for the three
and six months ended June 30, 2000 from $5.6 million and $10.9 million for the
comparable prior period. These increases are the result of increases in interest
expense on Fed Funds purchased and capitalized lease obligations and borrowed
funds. The average balance of deposits decreased by $22.2 million during the six
months ended June 30, 2000, compared to the comparable 1999 period. However, the
average rates paid on deposits increased 17 basis points for the six months
ended June 30, 2000 over the comparable 1999 period. The average balance of Fed
Funds purchased and other borrowings increased by $40.8 million during the six
months ended June 30, 2000, compared to the comparable 1999 period. In addition,
the average rates paid on Fed Funds purchased and other borrowings increased 57
basis points for the six months ended June 30, 2000, compared to the comparable
1999 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 market
area generally and other factors related to the collectability of the Company's
loan portfolio. The Company's provision for loan losses remained consistent at
$180,000 for the three months ended June 30, 2000 and June 30, 1999, as well as
for the six months ended June 30, 2000 and June 30, 1999 at $360,000.
8
<PAGE>
Although management utilizes its best judgement in providing for inherent
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 judgements of information which is
available to them at the time of their examination.
Noninterest Income
Noninterest income for the three and six month periods ending June 30, 2000 was
$483,000 and $1 million compared to $525,000 and $1.1 million for the same
periods in the prior year. The decrease for the three month period was the
result of a $13,000 decrease in gains on sale of securities combined with a
$34,000 decrease in other noninterest income. The decrease over the six month
period was due to a $16,000 decrease in service charges and fees on loans and
deposits combined with a $34,000 decrease in gains on sale of securities and a
$16,000 decrease in other noninterest income.
Noninterest Expense
Non interest expenses for the three month period ended June 30, 2000 increased
$3,000 to $3.4 million from the same period in the prior year, while over the
six month period ended June 30, 2000 noninterest expenses increased $208,000 to
$6.9 million from the same period in the prior year. The decrease over the three
month period was the result of a $172,000 increase in salaries and benefits
offset by a $56,000 and $147,000 decrease in data processing services and other
expenses, respectively. The increase over the six month period was the result of
the $368,000 and $124,000 increases in salaries and benefits and net occupancy
and furniture/equipment expenses, respectively, as a result of opening three
additional branches subsequent to June 30, 1999. The increases were offset by a
$123,000 decrease in each data processing services and other expenses. The
decreases in data processing services were primarily the result of the Company
reconfiguring certain vendor contracts to realize efficiencies permitted by the
merger of the two predecessor banks into First Liberty Bank & Trust.
Income Taxes
Income tax expense totaled $344,000 and $725,000 for the three and six-month
periods ended June 30, 2000 compared to $435,000 and $850,000 for the comparable
prior periods. These amounts resulted in effective tax rates calculated at 22.1%
for the three months ended June 30, 2000 and 21.9% for the six months June 30,
2000 compared to 22.0% for the three months ended June 30, 1999 and 21.8% for
the six months ended June 30, 1999. It has been the Company's tax strategy to
increase tax-exempt income as a percentage of total net income through
investments in tax-exempt securities, bank owned life insurance, and low income
housing credits.
9
<PAGE>
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.
Shareholders' equity increased $1.4 million to $58.6 million at June 30, 2000.
It is management's intention to continue paying a reasonable return on
shareholders' investment while retaining adequate earnings to allow for future
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 June 30, 2000, of which 4% must be Tier 1
capital. The Company's total risk-based capital ratio was 16.55 % at June 30,
2000. The Company's Tier 1 risk-based capital ratio was 15.30% at June 30, 2000.
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 9.81% at June 30, 2000.
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 June 30, 2000, the Bank's total risk-based capital, Tier I risk-based capital
and Tier I leverage ratios were 16.55%, 15.30% and 9.81%, respectively.
10
<PAGE>
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.
The results of this rate shock analysis as of June 30, 1999 are as follows:
Change in Rate Net Interest Income Change (After tax, in thousands)
-------------- ----------------------------------------------------
+300 (3472.5)
+200 (2316.7)
+100 (1153.5)
-100 1011.2
-200 1864.0
-300 2411.6
Forward Looking Statements
These financial statements include certain "forward looking statements"
concerning the future operations of the Company. It is management's desire to
take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. This statement is for the express purpose of
availing the Company of the protections of such safe harbor with respect to all
"forward looking statements" contained in our financial statements. "Forward
looking statements" describe the future plans and strategies including
expectations of the Company's future financial results. Management's ability to
predict results or the effect of future plans and strategy is inherently
uncertain. Factors that could affect results include interest rate trends,
competition, the general economic climate in Northeastern Pennsylvania, the
mid-Atlantic region and country as a whole, loan delinquency rates,, and changes
in federal and state regulation. These factors should be considered in
evaluating the "forward looking statements", and undue reliance should not be
placed on such statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information set forth under the caption "Market Risk and Interest Rate Risk"
under Item 2 of Part I is incorporated herein by reference.
11
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
June 30, 2000
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
The Company held its 2000 Annual Meeting of Shareholders (the
"Meeting") on May 15, 2000 for the purpose of electing six class II
members of the Board of Directors to serve for a period of three years
from the date of election .
At the Meeting, all of the nominees of the Company's Board of Directors
were elected as follows:
1. Election of Class II Directors:
-------------------------------
Nominee Votes For Votes Withheld
------- --------- --------------
William M. Davis 4,113,775 30,096
William K Nasser, Jr. 4,107,163 36,708
Peter A. Sabia 4,111,975 31,896
Thomas G. Speicher 4,113,975 30,096
Steven R. Tokach 4,113,855 30,016
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a): Exhibits:
Financial Data Schedule, which is submitted
electronically to the Securities and
Exchange Commission for information only
and not filed.
(b): Reports on Form 8-K:
None
12
<PAGE>
FIRST LIBERTY BANK CORP. AND SUBSIDIARIES
June 30, 2000
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 LIBERTY BANK CORP.
(Registrant)
Date August 10, 2000 By /s/ William M. Davis
--------------- ----------------
William M. Davis
Chairman, President and
Director
Principal Executive Officer)
Date August 10, 2000 By /s/ Donald J. Gibbs
--------------- ---------------
Donald J. Gibbs
(Principal Financial Officer
And Treasurer)
13