FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995, OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File No. 0-12870.
FIRST WEST CHESTER CORPORATION
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2288763
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9 North High Street, West Chester, Pennsylvania 19380
(Address of principal executive office) (Zip code)
(610) 692-1423
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares outstanding of Common Stock ($1 par value per share)
of the Registrant as of October 1, 1995 was 1,713,000.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
INDEX
PAGE
Part I. FINANCIAL INFORMATION
Consolidated Statements of Condition
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Income
Three Months and Nine Months Ended
September 30, 1995 and 1994 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-23
Part II. OTHER INFORMATION
Item 1 - Legal Proceedings
Item 2 - Changes in Securities
Item 3 - Defaults upon Senior Securities
Item 4 - Submission of Matters to Vote of Security Holders
Item 5 - Other Information
Item 6 - Exhibits and Reports on Form 8-K 24-25
Signatures 26
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(Dollars in thousands) Unaudited
September 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 14,863 $ 19,981
Federal funds sold 13,950 2,000
------ -----
Total cash and cash equivalents 28,813 21,981
Investment securities held-to-maturity (market value of $25,092
and $28,528 at September 30, 1995 and December 31 25,053 29,367
1994, respectively)
Investment securities available-for-sale at market value 64,731 49,022
Loans 240,579 239,126
Less allowance for possible loan losses (4,055) (3,303)
------ ------
Net loans 236,524 235,823
Premises and equipment 5,345 4,826
Other assets 6,731 7,080
----- -----
TOTAL ASSETS $ 367,197 $ 348,099
=========== ===========
LIABILITIES
Deposits
Noninterest-bearing $ 52,991 $ 57,827
Interest-bearing 268,265 247,638
------- -------
Total deposits 321,256 305,465
Securities sold under repurchase agreements 10,951 10,499
Other liabilities 5,136 3,836
----- -----
Total liabilities 337,343 319,800
------- -------
STOCKHOLDERS' EQUITY
Common stock, par value $1-authorized, 5,000,000 shares;
outstanding 1,713,000 and 1,200,000 at September 30, 1995
and December 31, 1994, respectively; excluding
shares in treasury 87,000 at September 30, 1995
and 0 at December 31, 1994 1,800 1,200
Additional paid-in capital 3,300 3,900
Retained earnings 26,978 24,998
Net unrealized loss on securities available-for-sale (338) (1,799)
Treasury stock, at cost (1,886)
------ ------
Total stockholders' equity 29,854 28,299
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 367,197 $ 348,099
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands - except per share data) Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 5,638 $ 4,924 $ 17,059 $ 14,141
Investment securities 1,367 1,197 3,732 3,643
Federal funds sold 206 43 388 127
--- -- --- ---
Total interest income 7,211 6,164 21,179 17,911
----- ----- ------ ------
INTEREST EXPENSE
Deposits 2,917 2,183 8,120 6,134
Securities sold under repurchase agreements 119 65 313 191
Other borrowings -- 11 59 11
---- ----- ---- ----
Total interest expense 3,036 2,259 8,492 6,336
----- ----- ----- -----
Net interest income 4,175 3,905 12,687 11,575
Provision for loan losses 400 345 1,184 1,245
----- ----- ----- -----
Net interest income after
provision for possible loan losses 3,775 3,560 11,503 10,330
----- ----- ------ ------
NON-INTEREST INCOME
Financial Management Services 459 441 1,377 1,323
Service charges on deposit accounts 225 237 678 664
Other 150 143 427 449
--- --- --- ---
Total non-interest income 834 821 2,482 2,436
--- --- ----- -----
NON-INTEREST EXPENSE
Salaries and employee benefits 1,781 1,680 5,306 4,813
Net occupancy and equipment 585 612 1,741 1,717
FDIC deposit insurance (19) 174 318 517
Bank shares tax 75 68 222 203
Other 604 603 1,911 1,862
--- --- ----- -----
Total non-interest expense 3,026 3,137 9,498 9,112
----- ----- ----- -----
Income before income taxes 1,583 1,244 4,487 3,654
INCOME TAXES 498 371 1,399 1,093
--- --- ----- -----
NET INCOME $ 1,085 $ 873 $ 3,088 $ 2,561
========= ========= ========== ==========
PER SHARE DATA
Net income $ 0.63 $ 0.49 $ 1.75 $ 1.42
========= ========= ========== ==========
Dividends declared $ 0.23 $ 0.19 $ 0.63 $ 0.55
========= ========= =========== ==========
Weighted average shares outstanding 1,716,130 1,800,000 1,765,522 1,799,568
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Balance at January 1, $ 28,299 $ 27,767
Change in accounting for investments on January 1, 1994 -- 236
Net income to date 3,088 2,561
Cash dividends declared (1,108) (996)
Net unrealized gain (loss) on securities available-for-sale 1,461 (1,230)
Treasury stock transactions (1,886) 5
------ ------
Balance at September 30, $ 29,854 $ 28,343
=== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in thousands) Nine Months Ended
September 30,
1995 _ 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $3,088 $2,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 455 461
Provision for loan losses 1,184 1,245
Amortization of investment security premiums
and accretion of discounts 165 328
Amortization of deferred fees on loans 103 46
Provision for deferred income taxes -- (399)
Increase in other assets (404) (1,713)
Increase (decrease) in other liabilities 1,296 (1,654)
----- ------
Net cash provided by operating activities 5,887 875
----- ---
INVESTING ACTIVITIES
Increase in loans (1,988) (12,510)
Proceeds from maturities of investment securities available-for-sale 7,428 10,520
Proceeds from maturities of investment securities held-to-maturity 5,262 9,369
Purchases of investment securities available-for-sale (21,037) (7,380)
Purchases of investment securities held-to-maturity (999) (7,713)
Purchase of premises and equipment, net (974) (807)
---- ----
Net cash used in investing activities (12,308) (8,521)
------- ------
FINANCING ACTIVITIES
Increase (decrease) in deposits 15,791 (6,375)
Increase in securities sold under repurchase agreements 452 2,069
Cash dividends (1,104) (973)
Treasury stock transactions (1,886) 5
------ ------
Net cash provided by (used in) financing activities 13,253 (5,274)
------ ------
NET DECREASE IN CASH AND CASH EQUIVALENTS 6,832 (12,920)
Cash and cash equivalents at beginning of year 21,981 31,264
------ ------
Cash and cash equivalents at end of year $28,813 $18,344
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the financial
position and the results of operations for the interim period presented
have been included. For further information, refer to the consolidated
financial statements and footnotes thereto included in First West Chester
Corporation and Subsidiary's (the "Company") Annual Report on Form 10-K for
the year ended December 31, 1994. The Company's primary operating
subsidiary is the First National Bank of West Chester (the "Bank").
2. The results of operations for the three-month and nine-month periods ended
September 30, 1995 and 1994 are not necessarily indicative of the results
to be expected for the full year.
3. Per share data is based on the weighted average number of shares of common
stock outstanding during the period and includes adjustment for the 3-for-2
stock split discussed in Note 6.
4. On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting for Creditors for Impairment of a
Loan," as amended by SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures." SFAS No. 114 requires loan
impairment to be measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate, its observable
market price, or the fair value of the collateral if the loan is
collateral-dependent. If it is probable that a creditor will foreclose on a
property, the creditor must measure impairment based on the fair value of
the collateral. SFAS No. 118 allows creditors to use existing methods for
recognizing interest income on impaired loans.
The Bank identifies a loan as impaired when it is probable that interest
and principal will not be collected according to the contractual terms of
the loan agreement. The accrual of interest is discontinued on impaired
loans and no income is recognized until all recorded amounts of interest
and principal are recovered in full. Retail loans and residential mortgages
have been excluded from these calculations.
Loan impairment is measured by estimating the expected future cash flows
and discounting them at the respective effective interest rate or by
valuing the underlying collateral. The recorded investment in these loans
and the valuation for credit losses related to loan impairment are as
follows:
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(UNAUDITED)
4. (Continued)
(Dollars in thousands) 1995
January 1 September 30
Principal amount of impaired loans $ 2,819 $ 798
Less valuation allowance 380 333
--- ---
$ 2,439 $ 465
========= ===========
On January 1, 1995 a valuation for credit losses related to impaired loans
was established. The activity in this allowance account for the three- and
nine-month periods ended September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
<S> <C> <C>
Valuation allowance at beginning of period $ 303 $ 380
Provision for loan impairment 50 280
Direct charge-offs (20) (369)
Recoveries -- 42
--
Valuation allowance at end of period $333 $333
==== ====
</TABLE>
Total cash collected on impaired loans during the three- and nine-month
periods ended September 30, 1995 was $17 thousand and $1,432 thousand, of
which $17 thousand and $1,260 thousand was credited to the principal
balance outstanding on such loans and $0 and $172 thousand was recognized
as interest income, respectively. Interest that would have been accrued on
impaired loans during the three- and nine-month periods ended September 30,
1995 was $18 thousand and $76 thousand, respectively. Interest income
recognized during the three- and nine-month periods ended September 30,
1995 was $0 and $172 thousand, respectively. During the nine months ended
September 30, 1995, two impaired loans totaling $699 thousand were
transferred to Other Real Estate Owned. Also during the nine-month period
ended, one impaired loan for $500 thousand was transferred to the Company's
new subsidiary as an equity investment.
5. The Company adopted, effective January 1, 1995, Statement of Financial
Accounting Standards (SFAS) No. 116, "Accounting for Contributions Received
and Contributions Made." SFAS No. 116 specifies that contributions made by
the Company be recognized as expenses in the period made and as decreases
of assets or increases of liabilities depending on the form of the benefits
given.
In accordance with SFAS No. 116, the Company accrued contribution expenses
of $117 thousand relating to long-term commitments to area not-for-profit
organizations during the first quarter of 1995. Financial statements prior
to 1995 were not restated. Prior to 1995, the Company accounted for
contributions made on a cash-basis.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(UNAUDITED)
6. On September 18, 1995, the Board of Directors declared a 3-for-2 stock
split, payable October 16, 1995, in the form of a 50% stock dividend to
stockholders of record on October 3, 1995. Par value remained at $1 per
share. The stock split resulted in the issuance of 600 thousand additional
shares of common stock from authorized but unissued shares. The issuance of
authorized but unissued shares resulted in the transfer of $600 thousand
from additional paid-in capital to common stock, representing the par value
of the shares issued. Accordingly, earnings per share, cash dividends per
share and weighted average shares of common stock outstanding have been
restated to reflect the stock split.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
EARNINGS SUMMARY AND HIGHLIGHTS
Net income for the three month period ended September 30, 1995 was $1,085
thousand, an increase of $212 thousand or 24.3% over the same period in 1994.
Earnings per share for the three month period ending September 30, 1995 were
$0.63, a $0.14 or 28.6% increase over the same period in 1994. Net income for
the nine month period ending September 30, 1995 was $3,088 thousand, an increase
of $527 thousand or 20.6% over the same period in 1994. Earnings per share for
the first nine months of 1995 were $1.75, a $0.33 or 23.2% increase over the
same period in 1994. These increases are a result of improved asset quality,
strong net interest margins, and FDIC premium reductions.
The Company's main operating subsidiary, The First National Bank of West
Chester (the "Bank"), opened a new Exton area branch in August 1995 and
purchased the Commonwealth Savings Bank building at the Southwest corner of High
and Market Streets. The Company repurchased 87,000 shares (on a post-split
basis) of its common stock under a common stock repurchase program announced on
June 30, 1995 and authorized a 3-for-2 stock split in the form of a 50% stock
dividend payable October 16, 1995.
Performance ratios for the three- and nine-month periods ended September
30, 1995 were significantly higher than the same ratios for the same periods
during 1994 as shown below. Cash dividends declared during the third quarter of
1995 increased to $0.23 per share, a 21.1% increase compared to $0.19 per share
in the third quarter of 1994. On a year-to-date basis, cash dividends increased
to $0.63 per share, a 14.6% increase compared to $0.55 per share in the same
period of 1994. The Company has historically maintained a dividend payout ratio
of at least 35.0%.
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
PERFORMANCE RATIOS
Return on Average Assets 1.20% .99% 1.15% 1.01%
Return on Average Equity 14.61% 12.16% 13.79% 12.37%
Earnings Retained 64.24% 61.08% 64.12% 57.75%
Dividend Payout Ratio 35.78% 38.92% 35.88% 42.25%
Book Value Per Share $17.43 $15.75 $17.43 $15.75
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CONSOLIDATED AVERAGE BALANCE SHEET
AND TAXABLE EQUIVALENT INCOME/EXPENSE AND RATES FOR THE
THREE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994
Daily Daily
Average Average
ASSETS Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Federal Funds Sold $13,925 $206 5.92% $3,780 $43 4.55%
Investment Securities
Taxable 85,395 1,323 6.20% 83,574 1,142 5.47%
Tax Exempt 3,484 59 6.78% 4,062 76 7.44%
----- ----- ----- ----
Total Investment Securities 88,879 1,382 6.22% 87,636 1,218 5.56%
------ ----- ------ -----
Loans
Taxable 236,770 5,523 9.33% 222,096 4,802 8.65%
Tax Exempt 6,531 158 9.67% 7,098 168 9.44%
----- --- ----- ---
Total Loans 243,301 5,681 9.34% 229,194 4,970 8.67%
------- ----- ------- -----
Total Interest Earning Assets 346,105 7,269 8.40% 320,610 6,231 7.77%
Non-interest Earning Assets
Allowance for Possible Loan Losses (3,857) (3,018)
Cash and Due From Banks 16,697 19,420
Other Assets 11,998 9,945
------ -----
Total Assets $370,943 $346,957
======== ========
Liabilities And Stockholders' Equity
Savings, NOWS & Money Market Deposits $162,774 $1,364 3.35% $186,973 $1,444 3.09%
Certificates of Deposits and Other Time 107,879 1,553 5.76% 64,724 739 4.57%
------- ----- ------ ---
Total Interest Bearing Deposits 270,653 2,917 4.31% 251,697 2,183 3.47%
Securities Sold under Repurchase Agreements 14,435 119 3.30% 12,300 75 2.44%
Other Borrowings -- -- -- 98 1 4.08%
-- - ----
Total Interest Bearing Liabilities 285,088 3,036 4.26% 264,095 2,259 3.42%
------- ----- ------- -----
Non-interest Bearing Liabilities
Non-interest Bearing Demand Deposits 51,106 51,381
Other Liabilities 5,040 3,311
----- -----
Total Liabilities 341,234 318,787
Stockholders' Equity 29,709 28,170
------ ------
Total Liabilities and Stockholders' Equity $370,943 346,957
======== =======
Net Interest Income $4,233 $3,972
====== ======
Net Yield on Interest Earning Assets 4.89% 4.96%
==== ====
<FN>
(1) The indicated income and annual rate are presented on a taxable equivalent
basis using the Federal marginal rate of 34% adjusted for the 20% interest
expense disallowance for 1995 and 1994.
(2) Non-accruing loans are included in the average balance.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CONSOLIDATED AVERAGE BALANCE SHEET
AND TAXABLE EQUIVALENT INCOME/EXPENSE AND RATES FOR THE
NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
Dollars in Thousands 1995 1994
Daily Daily
Average Average
ASSETS Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Federal Funds Sold $ 8,725 $ 388 5.93% $4,547 $127 3.72%
Investment Securities
Taxable 78,622 3,592 6.09% 86,439 3,474 5.36%
Tax Exempt 3,690 192 6.95% 4,141 232 7.47%
----- --- ----- ---
Total Investment Securities 82,312 3,784 6.13% 90,580 3,706 5.46%
------ ----- ------ -----
Loans
Taxable 238,137 16,711 9.36% 217,950 13,761 8.42%
Tax Exempt 6,676 478 9.55% 7,368 522 9.45%
----- --- ----- ---
Total Loans 244,813 17,189 9.36% 225,318 14,283 8.45%
------- ------ ---- ------- ------ ----
Total Interest Earning Assets 335,850 21,361 8.48% 320,445 18,116 7.54%
Non-interest Earning Assets
Allowance for Possible Loan Losses (3,654) (3,100)
Cash and Due From Banks 16,122 17,809
Other Assets 12,026 9,384
------ -----
Total Assets $360,344 $344,538
======== ========
Liabilities And Stockholders' Equity
Savings, NOWS & Money Market Deposits $162,669 $4,073 3.34% $192,789 $4,119 2.85%
Certificates of Deposits and Other Time 97,920 4,047 5.51% 58,420 2,015 4.60%
------ ----- ------ -----
Total Interest Bearing Deposits 260,589 8,120 4.15% 251,209 6,134 3.26%
Securities Sold under Repurchase Agreements 12,846 313 3.25% 10,472 191 2.43%
Other Borrowings 1,269 59 6.20% 335 11 4.38%
----- -- --- --
Total Interest Bearing Liabilities 274,704 8,492 4.12% 262,016 6,336 3.22%
------- ----- ------- -----
Non-interest Bearing Liabilities
Non-interest Bearing Demand Deposits 51,349 50,025
Other Liabilities 4,440 4,441
----- -----
Total Liabilities 330,493 316,482
Stockholders' Equity 29,851 28,056
------ ------
Total Liabilities and Stockholders' Equity $360,344 $344,538
======== ========
Net Interest Income $12,869 $11,780
======= =======
Net Yield on Interest Earning Assets 5.11% 4.90%
==== ====
<FN>
(1) The indicated income and annual rate are presented on a taxable equivalent
basis using the Federal marginal rate of 34% adjusted for the 20% interest
expense disallowance for 1995 and 1994.
(2) Non-accruing loans are included in the average balance.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income is the difference between interest income on earning
assets and interest expense on interest-bearing liabilities. Net interest income
for the three- and nine-month periods ended September 30, 1995, on a tax
equivalent basis, was $4,233 thousand and $12,869 thousand, compared to $3,972
thousand and $11,780 thousand for the same periods in 1994, respectively. Net
interest margin, on a tax equivalent basis was 4.89% and 5.11% for the three-
and nine-month periods ended September 30, 1995 compared to 4.95% and 4.90% for
the same periods in 1994, respectively. Average interest earning assets
increased approximately $25.5 million to $346.1 million during the third quarter
of 1995 compared to $320.6 million in the same period last year. The increase in
average earnings assets was a direct result of net deposit growth in the second
quarter of 1995. This inflow of funds has been temporarily invested in federal
funds sold and short term investments.
AVERAGE INTEREST RATES (ON A TAX EQUIVALENT BASIS)
<TABLE>
<CAPTION>
Three-Months Nine-Months
Yield On: Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Earning Assets 8.40% 7.77% 8.48% 7.54
Interest Bearing Liabilit 4.26% 3.42% 4.12% 3.22%
---- ---- ---- ----
Net Interest Spread 4.14% 4.35% 4.36% 4.32%
Contribution of Interest Free Funds 0.75% 0.61% 0.75% 0.58%
---- ---- ---- ----
Net Yield on Interest Earning Assets 4.89% 4.96% 5.11% 4.90%
==== ==== ==== ====
</TABLE>
The Company anticipates declines in the net interest margin as competition
for new loan business remains very strong and while maturing certificates of
deposit are renewing at higher rates.
INTEREST INCOME ON FEDERAL FUNDS
Interest income on federal funds sold for the three- and nine-month periods
ended September 30, 1995, increased $163 thousand and $261 thousand to $206
thousand and $388 thousand, respectively, when compared to the same periods in
1994. The increase in federal funds interest income for the three- and
nine-month periods ended September 30, 1995 is due to a $10.1 million and $4.2
million increase in average balances and a 137 basis point and 221 basis point
increase in rates compared to the same periods in 1994, respectively.
<PAGE>
INTEREST INCOME ON INVESTMENT SECURITIES
On a tax equivalent basis, interest income on investment securities
increased $164 thousand and $78 thousand for the three- and nine-month periods
ended September 30, 1995 to $1,382 thousand and $3,784 thousand, respectively,
when compared to the same periods in 1994. The increase for the three- month
period is due to an increase in average balances of $1.2 million and a 66 basis
point increase in the yield earned on securities when compared to the same
period last year. The increase for the nine-month period is due to a 67 basis
point increase in the yield earned on securities, partially offset by a $8.3
million decrease in average balances when compared to the same period last year.
Proceeds from investment maturities and paydowns in 1994 were used to fund loan
growth.
INTEREST INCOME ON LOANS
Loan interest income, on a tax equivalent basis, generated by the Company's
loan portfolio increased $711 thousand and $2,906 thousand to $5,681 thousand
and $17,189 thousand for the three- and nine-month periods ended September 30,
1995, compared to the same periods in 1994, respectively. The increase in
interest income for the three- and nine-month period ended September 30, 1995 is
attributable to a $14.1 million and $19.5 million increases in average loans
outstanding and 67 basis point and 91 basis point increases in rates earned,
respectively. The increase in the loan portfolio yield is a result of increased
new loan demand and several increases in lending rates, partially offset by
increased competition on existing loans. Month end loan portfolio totals peaked
during the second quarter of 1995 at $249 million.
INTEREST EXPENSE ON DEPOSIT ACCOUNTS
Interest expense on deposit accounts increased $734 thousand and $1,986
thousand for the three- and nine-month periods ended September 30, 1995 to
$2,917 thousand and $8,120 thousand, compared to the same periods in 1994. The
increases for the three- and nine-month periods ended September 30, 1995 are
results of 84 basis point and 89 basis point increases in the rates paid on
interest-bearing deposits and increases in average interest-bearing deposits of
$19.0 million and $9.4 million compared to the same periods in 1994,
respectively. Interest rates offered on deposit accounts dropped throughout the
first half of 1994 before rising at the end of 1994.
Total average interest-bearing deposits increased $18.9 million or 7.53% in
the three-month period ended September 30, 1995, compared to the same period in
1994. During that time period, average savings, NOW and money market deposits
declined $24.2 million or 12.9%, while average certificates of deposit and other
time deposits increased $43.2 million or 66.7%. The increases in certificates of
deposit were used to reduce short term borrowings and fund loan growth.
The Company's effective rate on interest-bearing deposits increased from
3.16%, 3.14%, 3.47% and 3.69% in the first, second, third and fourth quarters of
1994, respectively, to 3.89%, 4.25% and 4.31% in the first, second, and third
quarters of 1995. Although offering rates on certificates of deposit leveled off
at the end of 1995's third quarter, the Company anticipates an increase in the
effective rate on deposits due to the rollover of lower yielding certificates of
deposits at today's higher rates.
<PAGE>
INTEREST EXPENSE ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Interest expense on securities sold under repurchase agreements increased
$44 thousand and $122 thousand to $119 thousand and $313 thousand for the three-
and nine-month periods ended September 30, 1995 compared to $75 thousand and
$191 thousand for the three- and nine-month periods ended September 30, 1994,
respectively. The increases are attributable to $2.1 million and $2.4 million
increases in average outstandings and 86 and 82 basis point increases in rates
paid compared to the three- and nine-month periods ended September 30,1994,
respectively.
INTEREST EXPENSE ON OTHER BORROWINGS
Interest expense on other borrowings was $59 thousand for the nine-month
period ended September 30, 1995 compared with $11 thousand in the same period in
1994. This increase is attributable to a $0.9 million increase in average
outstandings and a 182 basis point increase in rates paid during the nine-month
period ended September 30, 1995. There were no borrowings in the three-month
period ended September 30, 1995.
PROVISION FOR POSSIBLE LOAN LOSSES
During the three- and nine-month periods ended September 30, 1995, the
Company recorded $400 thousand and $1,184 thousand as provision for possible
loan losses compared to $345 thousand and $1,245 thousand for the same periods
in 1994. The allowance for possible loan losses as a percentage of total loans
was 1.69% as of September 30, 1995 compared to 1.37% as of September 30, 1994.
The Company continues to deal with non-performing loans by building up the
allowance for possible loan losses and aggressively charging-off loans deemed
uncollectible. See the section titled "Allowance For Possible Loan Losses" for
additional discussion.
NON-INTEREST INCOME
Non-interest income increased $13 thousand and $46 thousand to $834
thousand and $2,482 thousand for the three- and nine- month periods ended
September 30, 1995, compared to $821 thousand and $2,436 thousand for the same
periods in 1994.
The primary component of non-interest income is Financial Management
Services revenue, which increased $18 thousand and $54 thousand from $441
thousand and $1,323 thousand for the three- and nine-month periods ended
September 30, 1994 to $459 thousand and $1,377 thousand for the same periods in
1995. Financial Management Services' assets grew $18.3 million from $257.6
million at September 30, 1994 to $275.9 million at September 30, 1995. The
growth in Financial Management Services, in both assets and revenues, is
primarily the result of business development efforts, particularly in the
investment management, trust, and estate areas and the impact of market
performance.
Service charges on deposit accounts decreased $12 thousand to $225 thousand
for the three-month period ended September 30, 1995 from $237 thousand for the
same period in 1994. This decrease relates to increases in the earnings credits
offered to business customers. Service charges on deposit accounts increased $14
thousand to $678 thousand for the nine-month period ended September 30, 1995
from $664 thousand for the same period in 1994. This growth relates to an
internal review of unprofitable accounts and changes in service charges,
partially offset by increases in the earnings credits offered to business
customers.
<PAGE>
Other non-interest income increased $7 thousand to $150 thousand for the
three-month period ended September 30, 1995 compared to $143 thousand for the
same period in 1994. This increase relates to an increase in revenue from the
sale of residential mortgage loans and increases in rental income during the
third quarter of 1995. Other non-interest income decreased $22 thousand to $427
thousand for the nine-month period ended September 30, 1995 compared to $449 for
the nine-month period ended September 30, 1994. This decrease relates to
decreases in revenue from the sale of residential mortgage loans and credit card
income, partially offset by increases in rental income.
NON-INTEREST EXPENSE
Total non-interest expense for the three-month period ended September 30,
1995 decreased $111 thousand to $3,026 thousand from $3,137 thousand for the
same period in 1994. Total non-interest expense for the nine-month period ended
September 30, 1995 was $9,498 thousand, an increase of $386 thousand from $9,112
thousand for the same period in 1994. The change in non-interest expense reflect
the expense incurred to service the Company's expanding customer base including
costs of non-performing assets, offset by reductions in FDIC insurance premiums.
The various components of non-interest expense changes are discussed below.
Salaries and employee benefits increased $101 thousand and $493 thousand
for the three- and nine-month periods ended September 30, 1995 to $1,781
thousand and $5,306 compared to $1,680 thousand and $4,813 thousand for the same
periods in 1994. Annual employee raises and a staff increase from 173 full-time
equivalents (FTE's) employees in the third quarter of 1994 to 176 FTE's in the
third quarter of 1995 are responsible for the increases.
Net occupancy, equipment, and data processing expense was $585 thousand for
the three- month period ended September 30, 1995, a decrease of $27 thousand
over the same period last year. The decrease is primarily a result of decreased
costs associated with maintenance contracts on Bank equipment and decreases in
computer software purchases, partially offset by increases in MAC system
transaction volume and personal computer acquisition costs. Net occupancy,
equipment and data processing expense was $1,741 thousand for the nine- month
period ended September 30, 1995, an increase of $24 thousand over the same
period last year. The increase is the result of increased costs associated with
the opening of the new Exton branch, increases in MAC system transaction volume
and personal computer acquisition costs, partially offset by decreased costs
associated with maintenance contracts on Bank equipment and decreases in
computer software purchases.
The Federal Deposit Insurance Corporation (FDIC) administers the Bank
Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). BIF
insurance expense was $(19) thousand and $318 thousand for the three- and
nine-month periods ended September 30, 1995, decreases of $193 thousand and $199
thousand over the same periods last year. BIF insurance premiums are calculated
on quarter-end deposits and assessed quarterly. On August 8, 1995 the FDIC
approved a final rule reducing BIF deposit insurance premiums for the second
half of 1995 to 4 cents from 23 cents per year per $1,000 in deposits for the
best-rated banks. Premiums for the SAIF will remain at current levels. The new
premium rate was applied retroactively to June 1, 1995. The Bank received a
refund of $189 thousand during the third quarter of 1995, reducing third quarter
FDIC expense to $(19) thousand.
<PAGE>
Bank shares tax was $75 thousand and $222 thousand for the three- and
nine-month periods ended September 30, 1995, an increase of $7 thousand and $19
thousand over the same periods last year. The Pennsylvania Bank Shares Tax is
calculated on year-end Bank stockholders' equity and paid annually.
Other non-interest expense increased $1 thousand and $49 thousand to $604
thousand and $1,911 thousand for the three- and nine- month periods ended
September 30, 1995 compared to $603 thousand and $1,862 thousand for the same
periods in 1994. The $1 thousand three month change includes decreases in loan
related professional fees offset by increases in operating supplies and business
development expenses. The $49 thousand nine month increase is the result of the
adoption of SFAS No. 116, "Accounting for Contributions Received and
Contributions Made" on January 1, 1995 offset by decreases in loan related
professional fees and loan collection expenses.
PURCHASE OF OFFICE BUILDING
On July 24, 1995, the Bank purchased the building on the southeast corner
of High and Market Streets in the Borough of West Chester. This historic corner
across from the Court House was owned by William Penn in 1702. Definitive plans
for its use have not been finalized.
DISTRIBUTION OF FUNDS FROM QUALIFIED PENSION PLAN
On October 21, 1994, the Board of Directors approved the termination of the
Company's Qualified Defined Benefit Retirement Plan effective December 31, 1994.
Distributions of participants' vested benefits are expected in the fourth
quarter of this year upon receipt of appropriate regulatory approvals.
INCOME TAXES
Income tax expense for the three- and nine-month periods ended September
30, 1995 was $498 thousand and $1,399 thousand, compared to $371 thousand and
$1,093 thousand in the same periods last year. This represents effective tax
rates of 31.5% and 31.2% for the three- and nine-month periods ended September
30, 1995, compared with 29.8% and 29.9% for the same periods in 1994,
respectively. The primary reason for the increase in the effective tax rate is a
decrease in tax-exempt instruments as a percentage of total assets. Average
tax-exempt assets as a percentage of total average assets were 2.9% and 3.3% at
September 30, 1995 and 1994, respectively.
<PAGE>
LIQUIDITY MANAGEMENT AND INTEREST RATE SENSITIVITY
The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all financial commitments and to capitalize on
opportunities for business expansion. Liquidity management addresses the
Company's ability to meet deposit withdrawals either on demand or at contractual
maturity, to repay borrowings as they mature and to make new loans and
investments as opportunities arise. Liquidity is managed on a daily basis
enabling Senior Management to effectively monitor changes in liquidity and to
react accordingly to fluctuations in market conditions.
The primary source of liquidity for the Company is derived from its ability
to generate and maintain NOW, money-market, savings, and smaller denomination
certificates of deposit accounts. The Company considers funds from such sources
to comprise its "core" deposit base because of the historical stability of such
sources of funds. Additional liquidity comes from the Company's non-interest
bearing demand deposit accounts. Other deposit sources include a three-tiered
savings product and certificates of deposit in excess of $100,000. Details of
core deposits, non-interest bearing demand deposit accounts, and other deposit
sources are highlighted in the following table:
<TABLE>
<CAPTION>
DEPOSIT ANALYSIS
(Dollars in thousands) September 30, 1995 December 31, 1994 Average Balance
Average Effective Average Effective Dollar Percentage
Deposit Type Balance Yield Balance Yield Variance Variance
<S> <C> <C> <C> <C> <C> <C>
NOW Accounts $ 42,764 2.30% $ 41,985 2.30% $779 1.86%
Money Market 29,723 3.22 32,962 2.68 (3,239) (9.83)
Statement Savings 46,656 3.64 51,468 3.06 (4,812) (9.35)
Other Savings 4,775 2.68 5,571 2.60 (796) (14.29)
CD's Less than $100,000 86,825 5.58 64,551 4.57 22,274 34.51
-------- ------ ------ ------
Total Core Deposits 210,743 4.09 196,537 3.31 14,206 7.23
Non-Interest Bearing
Demand Deposit Accounts 51,349 - 50,872 - 477 0.94
------ ------ ---
Total Core and Non-Interest
Bearing Deposits 262,092 - 247,409 - 14,68 35.93
Tiered Savings 38,751 4.29 45,427 3.33 (6,676) (14.70)
CD's Greater than $100,000 11,095 4.98 8,688 4.66 2,407 27.70
-------- ------ ----- -----
Total Deposits $311,938 - $301,524 - $10,414 3.45
======== ======== =======
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company also holds marketable securities and other short-term
investments that can be readily converted to cash. The Company's subsidiary, The
First National Bank of West Chester, as a member of the FHLB, maintains a line
of credit secured by the Banks' mortgage related assets. As of September 30,
1995, this line of credit was approximately $34 million. The goal of interest
rate sensitivity management is to avoid fluctuating net interest margins, and to
enhance consistent growth of net interest income through periods of changing
interest rates. Such sensitivity is measured as the difference in the volume of
assets and liabilities in the existing portfolio that are subject to repricing
in a future time period.
The Company's net interest rate sensitivity gap within one year is a
negative $60.9 million or 16.6% of total assets at September 30, 1995.
Management is aware of this negative gap position and is taking steps to
maintain net interest margins at acceptable levels. Over $12.7 million in
certificates of deposit with a maturity of 30 months were added during the first
nine months of 1995.
<TABLE>
<CAPTION>
INTEREST SENSITIVITY ANALYSIS
AS OF SEPTEMBER 30, 1995
(Dollars in thousands)
One Over
Within through five Non-rate
one year five years years sensitive Total
<S> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 13,950 $ -- $ -- $ -- $ 13,950
Investment securities 41,938 30,495 17,351 -- 89,784
Loans and leases 121,718 98,555 20,306 (4,055) 236,524
Cash and cash equivalents -- -- -- 14,863 14,863
Other assets -- -- -- 12,076 12,076
------- ------ ------ ------ -------
Total assets $ 177,606 $ 129,050 $ 37,657 $ 22,884 $ 367,197
============= ============== ============= ============== =============
LIABILITIES AND CAPITAL
Non-interest bearing deposit $ -- $ -- $ -- $ 52,991 $ 52,991
Interest bearing deposits 227,511 38,204 2,550 -- 268,265
Borrowed funds 10,951 -- -- -- 10,951
Other liabilities -- -- -- 5,136 5,1361
Capital -- -- -- 29,854 29,854
------- ------ ------ ------ ------
Total liabilities & capital $ 238,462 $ 38,204 2,550 87,981 $ 367,197
============= ============== ===== ====== =============
Net interest rate
sensitivity rate $ (60,856) $ 90,846 $ 35,107 $ (65,097) $ --
============= ============== ============= ============== ===========
Cumulative interest rate
sensitivity gap $ (60,856) $ 29,990 $ 65,097 $ -- $ --
============= ============== ============= =========== ===========
Cumulative interest rate
sensitivity gap divided
by total assets (16.6%) 8.2% 18.4%
===== === ====
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses is an amount that management
believes will be adequate to absorb possible loan losses on existing loans that
may become uncollectible, based on evaluations of the collectibility of loans.
The evaluations take into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, adequacy of
collateral, review of specific problem loans, and current economic conditions
that may affect the borrower's ability to pay. The allowance for possible loan
losses as a percentage of quarter-end loans outstanding shows an increase from
1.37% at September 30, 1994 to 1.69% at September 30, 1995.
Non-performing loans include loans on non-accrual status and loans past due
90 days or more and still accruing. It is the Company's policy to writedown all
non-performing loans to net realizable value based on updated appraisals. The
Company's non-performing loans are generally collateralized by real estate and
are in the process of collection. The Company is not aware of any loans other
than those included in the following table that would be considered potential
problem loans that would cause management to have doubts as to the ability of
such borrower to comply with the present loan repayment terms. As mentioned in
Note 4 to the Consolidated Financial Statements, the Company adopted SFAS No.
114, as amended by SFAS No. 118, on January 1, 1995.
The allowance for possible loan losses as a percentage of non-performing
loans increased to 360.44% at September 30, 1995 from 99.50% at December 31,
1994. This ratio indicates that the allowance for possible loan losses is
sufficient to cover the principal of all non-performing loans and to cover other
potential losses that might exist in the Company's loan portfolio. In February,
1995, approximately $1.2 million of non-accrual loans were paid off or brought
current resulting in full recovery of principal, approximately $170 thousand in
past-due interest and $18 thousand in legal fees. As a result of the above
mentioned loan recoveries, sales of other real estate owned ("OREO"), and an
intercompany sale, the Company has reduced non-performing assets by $2.5 million
or 50.8% to $2.4 million at September 30, 1995 from $4.9 million at December 31,
1994.
OREO represents residential and commercial real estate that has been
written down to realizable value (net of estimated disposal cost) based on
professional appraisals. Management intends to liquidate OREO in the most
expedient and cost-effective manner. This process could take up to twenty-four
months, although swifter disposition is anticipated.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NON-PERFORMING LOANS AND ASSETS
<TABLE>
<CAPTION>
Dollars in thousands
September 30, Dec 31,
1995 1994 1994
<S> <C> <C> <C>
Past due over 90 days and still accruing $200 $157 $323
Non-accrual loans 925 4,805 2,997
--- ----- -----
Total non-performing loans 1,125 4,962 3,320
Other real estate owned 1,278 860 1,565
----- --- -----
Total non-performing assets $2,403 $5,822 $4,885
====== ====== ======
Non-performing loans as a percentage
of total loans 0.47% 2.13% 1.39%
Allowance for possible loan losses as a
percentage of non-performing loans 360.44% 64.39% 99.50%
Non-performing assets as a percentage of
total loans and other real estate owned 0.99% 2.49% 2.03%
Allowance for possible loan losses as a
percentage of non-performing assets 168.75% 54.88% 67.60%
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ANALYSIS OF CHANGES IN THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
AND COMPARISON OF LOANS OUTSTANDING
<TABLE>
<CAPTION>
Dollars in thousands Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Balance at beginning of period $ 3,712 $ 2,894 $ 3,303 $ 2,839
Provision charged to operating expense 400 345 1,184 1,245
Recoveries of loans previously charged-off 21 3 74 11
Loans charged-off (78) (47) (506) (900)
--- --- ---- ----
Net loans charged-off (57) (44) (432) (889)
--- --- ---- ----
Balance at end of period $ 4,055 $ 3,195 $ 4,055 $ 3,195
========== ======== =========== ==========
Period-end loans outstanding $ 240,579 $233,008 $ 240,579 $ 233,008
Average loans outstanding $ 243,301 $229,194 $ 244,813 $ 225,318
Allowance for possible loan losses as a
percentage of period-end loans outstanding 1.69% 1.37% 1.69% 1.37%
Ratio of net charge-offs to average loans 0.02% 0.02% 0.18% 0.39%
outstanding
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAPITAL ADEQUACY
The Company is subject to Risk-Based Capital Guidelines adopted by the
Federal Reserve Board ("FRB") for bank holding companies. The Bank is also
subject to similar capital requirements adopted by the Office of the Comptroller
of the Currency. Under these requirements, the regulatory agencies have set
minimum thresholds for Tier I Capital, Total Capital, and Leverage ratios. At
September 30, 1995, both the Company's and the Bank's capital exceeded all
minimum regulatory requirements, and were considered "well capitalized" as
defined in the regulations issued pursuant to the FDIC Improvement Act of 1991.
The Company's Risk-Based Capital Ratios, shown below, have been computed in
accordance with regulatory accounting policies, which exclude any SFAS No. 115
adjustments.
<TABLE>
<CAPTION>
RISK-BASED September 30, December 31, "Well Capitalized"
CAPITAL RATIOS 1995 1994 1994 Requirements
<S> <C> <C> <C> <C>
Leverage Ratio 8.31% 8.35% 8.53% 5.00%
Tier I Capital Ratio 11.46% 10.91% 11.09% 6.00%
Total Risk-Based Capital Ratio 12.71% 12.11% 12.32% 10.00%
</TABLE>
The Bank is not under any agreement with the regulatory authorities nor is
it aware of any current recommendations by the regulatory authorities that, if
they were to be implemented, would have a material affect on liquidity, capital
resources or operations of the Company.
COMMON STOCK REPURCHASE
In the second quarter of 1995, the Board of Directors of First West Chester
Corporation authorized the repurchase of up to 105,000 shares of the Company's
outstanding Common Stock through open market or privately negotiated
transactions. The repurchased shares will be used for the Company's employee
benefit plan and other general corporate purposes. Through September 30, 1995,
the Company has repurchased 87,000 shares.
NEW SUBSIDIARY OF THE COMPANY
In the first quarter of 1995, First West Chester Corporation established a
Pennsylvania corporation, 323 East Gay Street Corp ("EGSC"), for the purpose of
holding an interest in WCP Partnership. WCP Partnership is a Pennsylvania
partnership established in 1995 to own and operate a commercial real estate
property. WCP Partnership is owned 61.7% by the Company and 38.3% by an
affiliate of another financial institution. EGSC's interest in this partnership
of approximately $500 thousand is considered an investment under the equity
method and is included in other assets on the Statement of Condition and
excluded from the table of non-performing loans and assets at September 30,
1995.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Various actions and proceedings are presently pending to which the
Company or its subsidiaries are a party. These actions and proceedings
arise out of routine operations and, in management's opinion, will
not, either individually or in the aggregate, have a material adverse
effect on the consolidated financial position of the Company and its
subsidiaries.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
In a press release dated September 18, 1995, the Board of Directors of
the Company announced a "3-for-2" stock split in the form of a 50%
stock dividend payable October 16, 1995 to shareholders of record
October 3, 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following is a list of exhibits incorporated by
reference into this report:
(3)(i) Articles of Incorporation.
(1.) Copy of the Company's Articles of Incorporation,
filed on March 9, 1984 is incorporated by reference to
Exhibit 3 (a)(iii) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1988.
(2.) Copy of the Company's Certificate of Amendment to
the Articles of Incorporation filed with the Secretary
of the Commonwealth of Pennsylvania on April 2, 1986 is
incorporated by reference to Exhibit 3 (a)(i) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1988.
<PAGE>
(3.) Copy of the Company's Certificate of Amendment to
the Articles of Incorporation filed with Secretary of
the Commonwealth of Pennsylvania on March 23, 1984 is
incorporated by reference to Exhibit 3(a)(II) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1988.
(3)(ii) Bylaws of the Company, as amended. Copy of the
Company's Bylaws, as amended, is incorporated by reference
to Exhibit 3 (b) to the Company's Annual Report on Form
10-K for the year ended December 31, 1988.
(b) Reports on Form 8-K
None
<PAGE>
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.
FIRST WEST CHESTER CORPORATION
/s/ Charles E. Swope
President
DATE: November 13, 1995
/s/ J. Duncan Smith
Treasurer
(Principal Accounting
and Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000744126
<NAME> FIRST WEST CHESTER CORP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 14863
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13950
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 64731
<INVESTMENTS-CARRYING> 25053
<INVESTMENTS-MARKET> 25092
<LOANS> 240579
<ALLOWANCE> 4055
<TOTAL-ASSETS> 367197
<DEPOSITS> 321256
<SHORT-TERM> 10951
<LIABILITIES-OTHER> 5136
<LONG-TERM> 0
<COMMON> 1800
0
0
<OTHER-SE> 28054
<TOTAL-LIABILITIES-AND-EQUITY> 367197
<INTEREST-LOAN> 17059
<INTEREST-INVEST> 3732
<INTEREST-OTHER> 388
<INTEREST-TOTAL> 21179
<INTEREST-DEPOSIT> 8120
<INTEREST-EXPENSE> 8492
<INTEREST-INCOME-NET> 12687
<LOAN-LOSSES> 1184
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9498
<INCOME-PRETAX> 4487
<INCOME-PRE-EXTRAORDINARY> 3088
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3088
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
<YIELD-ACTUAL> 5.11
<LOANS-NON> 925
<LOANS-PAST> 200
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3303
<CHARGE-OFFS> 506
<RECOVERIES> 74
<ALLOWANCE-CLOSE> 4055
<ALLOWANCE-DOMESTIC> 4055
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
