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 June 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 of the Registrant as of July 1,
1995 was 1,150,000.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
INDEX
PAGE
Part I. FINANCIAL INFORMATION
Consolidated Statements of Condition
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . 3
Consolidated Statements of Income
Three Months and Six Months Ended
June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Stockholders' Equity. . . . . . .5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . .7-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . .9-21
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 . . . . . . . . .22
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(Dollars in thousands) Unaudited
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 17,476 $ 19,981
Federal funds sold 10,600 2,000
-------- --------
Total cash and cash equivalents 28,076 21,981
Investment securities held-to-maturity (market
value of $27,474 and $28,528 at June 30,
1995 and December 31, 1994, respectively) 27,513 29,367
Investment securities available-for-sale at
market value 59,132 49,022
Loans 244,007 239,126
Less allowance for possible loan losses (3,712) (3,303)
-------- --------
Net loans 240,295 235,823
Premises and equipment, net 4,705 4,826
Other assets 6,552 7,080
-------- --------
Total assets $366,273 $348,099
======== ========
LIABILITIES
Deposits:
Non-interest bearing $ 52,693 $ 57,827
Interest bearing 265,912 247,638
-------- --------
Total deposits 318,605 305,465
Securities sold under repurchase agreements 13,369 10,499
Other liabilities 4,980 3,836
-------- --------
Total liabilities 336,954 319,800
STOCKHOLDERS' EQUITY
Common stock, par value $1; authorized 5,000,000
shares, outstanding 1,150,000 and 1,200,000
at June 30, 1995 and December 31, 1994,
respectively 1,200 1,200
Additional paid-in capital 3,900 3,900
Retained earnings 26,281 24,998
Net unrealized loss on securities available-for-sale (437) (1,799)
Treasury stock at cost (1,625) 0
-------- --------
Total stockholders' equity 29,319 28,299
-------- --------
Total liabilities & stockholders' equity $366,273 $348,099
======== ========
</TABLE>
The accompanying notes are an integral part of these financial 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
1995 1994 1995 1994
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 5,843 $ 4,602 $ 11,421 $ 9,217
Investment securities 1,197 1,252 2,366 2,446
Federal funds sold 177 29 183 84
--------- --------- --------- ---------
Total interest income 7,217 5,883 13,970 11,747
INTEREST EXPENSE
Deposits 2,780 1,954 5,201 3,950
Securities sold under repurchase agreements 104 65 194 126
Other borrowings 0 0 59 0
--------- --------- --------- ---------
Total interest expense 2,884 2,019 5,454 4,076
--------- --------- --------- ---------
Net interest income 4,333 3,864 8,516 7,671
Provision for loan losses 435 550 784 900
--------- --------- --------- ---------
Net interest income after provision for
possible loan losses 3,898 3,314 7,732 6,771
--------- --------- --------- ---------
NON-INTEREST INCOME
Financial Management Services 459 441 918 882
Service charges on deposit accounts 222 223 453 426
Other 140 166 277 306
--------- --------- --------- ---------
Total non-interest income 821 830 1,648 1,614
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and employee benefits 1,797 1,468 3,525 3,133
Net occupancy and equipment 563 562 1,156 1,104
FDIC deposit insurance 169 163 337 343
Bank shares tax 73 68 148 135
Other 607 699 1,310 1,260
--------- --------- --------- ---------
Total non-interest expense 3,209 2,960 6,476 5,975
--------- --------- --------- ---------
Income before income taxes 1,510 1,184 2,904 2,410
INCOME TAXES 483 355 901 722
--------- --------- --------- ---------
NET INCOME $ 1,027 $ 829 $ 2,003 $ 1,688
========= ========= ========= =========
PER SHARE DATA
Net income $ 0.86 $ 0.69 $ 1.68 $ 1.41
========= ========= ========= =========
Dividends declared $ 0.30 $ 0.27 $ 0.60 $ 0.54
========= ========= ========= =========
Weighted average shares outstanding 1,187,582 1,200,000 1,193,661 1,199,712
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Dollars in thousands)
1995 1994
--------- ---------
<S> <C> <C>
Balance at January 1, $ 28,299 $ 27,767
Change in accounting for investments on January 1, 1994 0 236
Net income to date 2,003 1,688
Cash dividends declared (720) (648)
Net unrealized gain (loss) on securities available-for-sale 1,362 (1,049)
Treasury stock transactions (1,625) 5
--------- ---------
Balance at June 30, $ 29,319 $ 27,999
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST WEST CHESTER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
(Dollars in thousands) June 30,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,003 $ 1,688
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 302 298
Provision for loan losses 784 900
Amortization of investment security premiums
and accretion of discounts 115 224
Amortization of deferred fees on loans 9 48
Provision for deferred income taxes 0 (50)
Increase in other assets (174) (199)
Increase (decrease) in other liabilities 1,168 (2,236)
--------- ---------
Net cash provided by operating activities 4,207 673
--------- ---------
INVESTING ACTIVITIES
Increase in loans (5,265) (5,660)
Proceeds from maturities of investment securities available-for-sale 5,538 8,698
Proceeds from maturities of investment securities held-to-maturity 2,827 5,990
Purchases of invesment securities available-for-sale (13,673) (6,382)
Purchases of invesment securities held-to-maturity (999) (7,663)
Purchase of premises and equipment, net (181) (760)
--------- ---------
Net cash used in investing activities (11,753) (5,777)
--------- ---------
FINANCING ACTIVITIES
Increase (decrease) in deposits 13,140 (7,721)
Increase in securities sold under repurchase agreements 2,870 663
Cash dividends (744) (648)
Treasury stock transactions (1,625) 5
--------- ---------
Net cash provided by (used in) financing activities 13,641 (7,701)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS 6,095 (12,805)
Cash and cash equivalents at beginning of year 21,981 31,264
--------- ---------
Cash and cash equivalents at end of year $ 28,076 $ 18,459
========= =========
</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.
2. The results of operations for the three-month and six-month periods ended
June 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.
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 market
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) 1995
--------------------
(Dollars in thousands) January 1 June 30
--------- --------
Principal amount of impaired loans $ 2,819 $ 536
Less valuation allowance 380 303
-------- -------
$ 2,439 $ 233
======== =======
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
six month periods ended June 30, 1995 is as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
<S> <C> <C>
Valuation allowance at beginning of period $ 380 $ 380
Provision for loan impairment 230 230
Direct charge-offs (349) (349)
Recoveries 42 42
-------- --------
Valuation allowance at end of period $ 303 $ 303
======== ========
</TABLE>
Total cash collected on impaired loans during the three- and six-month
periods ended June 30, 1995 was $22 thousand and $1,415 thousand, of which
$22 thousand and $1,243 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 six-month periods ended June 30, 1995
was $14 thousand and $58 thousand, respectively. Interest income recognized
during the three and six month periods ended June 30, 1995 was $0 and $172
thousand, respectively. During the six months ended June 30, 1995, two
impaired loans totaling $699 thousand were transferred to Other Real Estate
Owned. Also during the six 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>
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 June 30, 1995 was $1,027
thousand, or $0.86 per share, which represents an increase of $198 thousand or
23.9% from $829 thousand, or $0.69 per share, in the three-month period ended
June 30, 1994. Net income for the six-month period ended June 30, 1995 was
$2,003 thousand, or $1.68 per share, which represents an increase of $315
thousand or 18.7% from $1,688 thousand, or $1.41 per share, in the six-month
period ended June 30, 1994. Increases in net income are primarily the result of
improved net interest margins and reductions in non-performing assets, partially
offset by increases in non-interest expenses. The Company's main operating
subsidiary, The First National Bank of West Chester (the "Bank"), opened its
Westtown-Thornbury branch in April 1994 and anticipates a new Exton area branch
opening during the third quarter of 1995. The Company repurchased 50,000 shares
of its common stock under a common stock repurchase program announced on June
30, 1995. See "Common Stock Repurchase" for additional information.
Performance ratios for the three- and six-month periods ended June 30, 1995
were significantly higher than the same ratios for the same periods during 1994
as shown below. Cash dividends declared during the second quarter of 1995
increased to $0.30 per share, an 11.1% increase compared to $0.27 per share in
the second quarter of 1994. On a year-to-date basis, cash dividends increased to
$0.60 per share, an 11.1% increase compared to $0.54 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 Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
PERFORMANCE RATIOS
------------------
Return on Average Assets 1.14% .98% 1.13% .97%
Return on Average Equity 13.72% 12.07% 13.43% 11.82%
Earnings Retained 64.95% 62.80% 64.05% 60.92%
Dividend Payout Ratio 35.05% 37.20% 35.95% 39.08%
Book Value Per Share $25.49 $23.33 $25.49 $23.33
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 six-month periods ended June 30, 1995, on a tax equivalent
basis, was $4,393 thousand and $8,636 thousand, compared to $3,933 thousand and
$7,810 thousand for the same periods in 1994, respectively. Net interest margin,
on a tax equivalent basis was 5.21% and 5.22% for the three- and six-month
periods ended June 30, 1995 compared to 4.94% and 4.88% for the same periods in
1994, respectively. Average interest earning assets increased approximately
$19.0 million to $337.3 million during the second quarter of 1995 compared to
$318.3 million in the same period last year. The increase in average earnings
assets was a direct result of certificate of deposit growth in the second
quarter of 1995. This inflow of funds has been temporarily invested in federal
funds sold and short term investments.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
AVERAGE INTEREST RATES (ON A TAX EQUIVALENT BASIS)
Three-Months Six-Months
Yield On: Ended June 30, Ended June 30,
-------- ------------------ -----------------
1995 1994 1995 1994
------ ------ ------ ------
Interest Earning Assets 8.63% 7.48% 8.52% 7.42%
Interest Bearing Liabilities 4.20% 3.12% 4.05% 3.12%
------ ------ ------ ------
Net Interest Spread 4.43% 4.36% 4.47% 4.30%
Contribution of Interest Free Funds 0.78% 0.58% 0.75% 0.58%
------ ------ ------ ------
Net Yield on Interest Earning Assets 5.21% 4.94% 5.22% 4.88%
====== ====== ====== ======
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 six-month periods
ended June 30, 1995, increased $148 thousand and $99 thousand to $177 thousand
and $183 thousand, respectively, when compared to the same periods in 1994. The
increase in federal funds interest income for the three- and six-month periods
ended June 30, 1995 is due to an $8.7 million and $1.1 million increase in
average balances and a 221 basis point and 262 basis point increase in rates
compared to the same period in 1994, respectively.
INTEREST INCOME ON INVESTMENT SECURITIES
On a tax equivalent basis, interest income on investment securities
decreased $59 thousand and $87 thousand for the three- and six-month periods
ended June 30, 1995 to $1,215 thousand and $2,402 thousand, respectively, when
compared to the same periods in 1994. The decline for the three- and six-month
periods is due to a decrease in average balances of $12.7 million and $13.3
million partially offset by 59 basis point and 67 basis point increases in the
yield earned on securities when compared to the same periods last year,
respectively. Proceeds from investment maturities and paydowns in the second
half of 1994 were used to fund 1994 loan growth.
INTEREST INCOME ON LOANS
Loan interest income, on a tax equivalent basis, generated by the Company's
loan portfolio increased $1,237 thousand and $2,195 thousand to $5,886 thousand
and $11,508 thousand for the three- and six-month periods ended June 30, 1995,
compared to the same periods in 1994, respectively. The increase in interest
income for the three- and six-month period ended June 30,1995 is attributable to
$23.0 million and $22.2 million increases in average loans outstanding and 123
basis point and 103 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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
INTEREST EXPENSE ON DEPOSIT ACCOUNTS
Interest expense on deposit accounts increased $828 thousand and $1,253
thousand for the three- and six-month periods ended June 30, 1995 to $2,782
thousand and $5,203 thousand, compared to the same periods in 1994. The
increases for the three- and six-month periods ended June 30, 1995 are results
of 111 basis point and 92 basis point increases in the rates paid on
interest-bearing deposits and increases in average interest-bearing deposits of
$13.0 million and $4.5 million compared to the same periods in 1994,
respectively. Interest rates offered on deposit accounts dropped throughout the
first half of 1994, rose at the end of 1994 and during the first half of 1995,
and leveled off at the end of the second quarter.
While total average interest-bearing deposits increased 5.2% in the
twelve-month period ended June 30, 1995, the components did not change
proportionately. During the twelve-month period ended June 30, 1995, average
savings, NOW and money market deposits declined $21.3 million or 11.7%, while
average certificates of deposit and other time deposits increased $34.3 million
or 51.3%. The increases in certificates of deposit was offset by loan demand.
A five-year period of declining interest rates ended in the first quarter
of 1994 with a series of interest rate increases. During 1994 and the first part
of 1995, the prime rate increased from 6.0% to 9.00% (8.75% effective July 1995)
in less than thirteen months, and the one-year treasury bill rate increased from
3.51% to 7.25% during the same time period. As a result of these rapid rate
increases, the Company raised certificate of deposit rates faster than savings,
NOW and money market rates. 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% and 4.25% in the first
and second quarters of 1995. Although deposit rates leveled off at the end of
1995's second 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.
INTEREST EXPENSE ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
Interest expense on securities sold under repurchase agreements increased
$49 thousand and $79 thousand to $104 thousand and $195 thousand for the three-
and six-month periods ended June 30, 1995 compared to $55 thousand and $116
thousand for the three- and six-month periods ended June 30, 1994, respectively.
The increases are attributable to $3,705 thousand and $2,497 thousand increases
in average securities sold under repurchase agreements outstanding and 83 basis
point and 81 basis point increases in rates paid on securities sold under
repurchase agreements compared to the three and six month periods ended June
30,1994, respectively.
INTEREST EXPENSE ON OTHER BORROWINGS
Interest expense on other borrowings was $59 thousand for the six-month
period ended June 30, 1995 compared with $10 thousand in the same period in
1994. This increase is attributable to a $1,457 thousand increase in average
other borrowings outstanding during the six month period ended June 30, 1995.
There were no borrowings in the three-month period ended June 30, 1995.
<PAGE>
CONSOLIDATED AVERAGE BALANCE SHEET AND TAXABLE
EQUIVALENT INCOME/ EXPENSE AND RATES
FOR THE THREE MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1995 1994
---------------------------- --------------------------
Dollars in Thousands Daily Daily
Average Average
Balance Interest Rate Balance Interest Rate
--------- -------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- - ------
Federal Funds Sold $ 11,722 $ 177 6.04% $ 3,026 $ 29 3.83%
Investment Securities
Taxable 75,469 1,148 6.08% 87,843 1,194 5.44%
Tax Exempt 3,785 67 7.11% 4,134 80 7.74%
--------- -------- --------- --------
Total Investment Securities 79,254 1,215 6.13% 91,977 1,274 5.54%
--------- -------- --------- --------
Loans
Taxable 239,611 5,727 9.56% 215,907 4,475 8.29%
Tax Exempt 6,675 159 9.55% 7,383 174 9.43%
--------- -------- --------- --------
Total Loans 246,286 5,886 9.56% 223,290 4,649 8.33%
--------- -------- --------- --------
Total Interest Earning Assets 337,262 7,279 8.63% 318,293 5,952 7.48%
Non-interest Earning Assets
Allowance for Possible Loan Losses (3,719) (3,263)
Cash and Due From Banks 15,670 17,467
Other Assets 12,017 9,376
--------- ---------
Total Assets $ 361,230 $ 341,873
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Savings, NOWS & Money Market Deposits $ 160,994 $ 1,352 3.36% $ 182,277 $ 1,214 2.66%
Certificates of Deposits and Other Time 101,010 1,430 5.66% 66,756 740 4.43%
--------- -------- --------- --------
Total Interest Bearing Deposits 262,004 2,782 4.25% 249,033 1,954 3.14%
Securities Sold Under Repurchase Agreements 12,807 104 3.25% 10,009 65 2.60%
Other Borrowings 0 0 0.00% 0 0 0.00%
--------- -------- --------- --------
Total Interest Bearing Liabilities 274,811 2,886 4.20% 259,042 2,019 3.12%
--------- -------- --------- --------
Non-interest Bearing Liabilities
Non-interest Bearing Demand Deposits 51,310 50,791
Other Liabilities 5,166 3,982
--------- ---------
Total Liabilities 331,287 313,815
Stockholders' Equity 29,943 28,058
--------- ---------
Total Liabilities and Stockholders' Equity $ 361,230 $ 341,873
========= =========
Net Interest Income $ 4,393 $ 3,933
======== ========
Net Yield on Interest Earning Assets 5.21% 4.94%
====== ======
<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 (27.2%) for 1995 and 1994.
(2) Non-accruing loans are included in the average balance.
</FN>
</TABLE>
<PAGE>
CONSOLIDATED AVERAGE BALANCE SHEET AND TAXABLE
EQUIVALENT INCOME/ EXPENSE AND RATES
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1995 1994
---------------------------- --------------------------
Dollars in Thousands Daily Daily
Average Average
Balance Interest Rate Balance Interest Rate
--------- -------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- - ------
Federal Funds Sold $ 6,082 $ 183 6.02% $ 4,947 $ 84 3.40%
Investment Securities
Taxable 75,179 2,269 6.04% 87,895 2,332 5.31%
Tax Exempt 3,795 133 7.02% 4,182 157 7.51%
--------- -------- --------- --------
Total Investment Securities 78,974 2,402 6.08% 92,077 2,489 5.41%
--------- -------- --------- --------
Loans
Taxable 238,831 11,188 9.37% 215,985 8,959 8.30%
Tax Exempt 6,750 320 9.48% 7,364 354 9.61%
--------- -------- --------- --------
Total Loans 245,581 11,508 9.37% 223,349 9,313 8.34%
--------- -------- --------- --------
Total Interest Earning Assets 330,637 14,093 8.52% 320,373 11,886 7.42%
Non-interest Earning Assets
Allowance for Possible Loan Losses (3,551) (3,141)
Cash and Due From Banks 15,829 16,988
Other Assets 12,042 9,097
--------- ---------
Total Assets $ 354,957 $ 343,317
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Savings, NOWS & Money Market Deposits $ 162,617 $ 2,709 3.33% $ 195,751 $ 2,447 2.50%
Certificates of Deposits and Other Time 92,857 2,494 5.37% 55,220 1,503 5.44%
--------- -------- --------- --------
Total Interest Bearing Deposits 255,474 5,203 4.07% 250,971 3,950 3.15%
Securities Sold Under Repurchase Agreements 12,039 195 3.24% 9,998 126 2.52%
Other Borrowings 1,913 59 6.17% 0 0 0.00%
--------- -------- --------- --------
Total Interest Bearing Liabilities 269,426 5,457 4.05% 260,969 4,076 3.12%
--------- -------- --------- --------
Non-interest Bearing Liabilities
Non-interest Bearing Demand Deposits 51,472 49,328
Other Liabilities 4,228 5,059
--------- ---------
Total Liabilities 325,126 315,356
Stockholders' Equity 29,831 27,961
--------- ---------
Total Liabilities and Stockholders' Equity $ 354,957 $ 343,317
========= =========
Net Interest Income $ 8,636 $ 7,810
======== ========
Net Yield on Interest Earning Assets 5.22% 4.88%
====== ======
<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 (27.2%) 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
(CONTINUED)
PROVISION FOR POSSIBLE LOAN LOSSES
During the three- and six-month periods ended June 30, 1995, the Company
recorded $435 thousand and $784 thousand as provision for possible loan losses
compared to $550 thousand and $900 thousand for the same periods in 1994. The
allowance for possible loan losses as a percentage of total loans was 1.52% as
of June 30, 1995 compared to 1.28% as of June 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 decreased $9 thousand to $821 thousand for the three-
month period ended June 30, 1995, compared to $830 thousand for the same period
in 1994. Non-interest income increased $34 thousand to $1,648 thousand for the
six-month period ended June 30, 1995, compared to $1,614 thousand for the same
period in 1994.
The primary component of non-interest income is Financial Management
Services revenue, which increased $18 thousand and $36 thousand from $441
thousand and $882 thousand for the three- and six-month periods ended June 30,
1994 to $459 thousand and $918 thousand for the three- and six-month period
ended June 30, 1995. Financial Management Services' assets grew $24.8 million
from $241.5 million at June 30, 1994 to $266.3 million at June 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.
Service charges on deposit accounts decreased $1 thousand to $222 thousand
for the three-month period ended June 30, 1995 from $223 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 $27
thousand to $453 thousand for the six-month period ended June 30, 1995 from $426
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.
Other non-interest income decreased $26 thousand and $29 thousand to $140
thousand and $277 thousand for the three- and six-month periods ended June 30,
1995 compared to $166 thousand and $306 thousand for the same periods in 1994.
These decreases relate to decreases in revenue from the sale of residential
mortgage loans and credit card income, partially offset by increases in rental
income during the second quarter of 1995.
NON-INTEREST EXPENSE
Total non-interest expense for the three- and six-month periods ended June
30, 1995 was $3,209 thousand and $6,476 thousand, increases of $249 thousand and
$501 thousand from $2,960 thousand and $5,975 thousand for the same periods in
1994. The growth in non-interest expense reflects the increased expense incurred
to service the Company's expanding customer base including costs of
non-performing assets. The various components of non-interest expense changes
are discussed below.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
NON-INTEREST EXPENSE
(CONTINUED)
Salaries and employee benefits increased $329 thousand and $392 thousand
for the three- and six-month periods ended June 30, 1995 to $1,797 thousand and
$3,525 compared to $1,468 thousand and $3,133 thousand for the same periods in
1994. Annual employee raises and a staff increase from 166 full-time equivalents
(FTE's) employees in the second quarter of 1994 to 173 FTE's in the second
quarter of 1995 are responsible for the increase. These staffing increases
reflect the Company's need for additional sales and marketing personnel. In
addition to the proportionate increase in benefits, the Company experienced
increased workers' compensation insurance rates.
Net occupancy, equipment, and data processing expense was $563 thousand and
$1,156 thousand for the three- and six-month periods ended June 30, 1995,
increases of $1 thousand and $52 thousand over the same periods last year. The
increase in the first half of 1995 is primarily a result of increased costs
associated with the new Westtown-Thornbury office, increases in MAC system
transaction volume, and personal computer acquisition costs.
The Federal Deposit Insurance Corporation (FDIC) adminsiters the Bank
Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). BIF
insurance expense was $169 thousand and $337 thousand for the three- and six-
month periods ended June 30, 1995, an increase of $6 thousand and a decrease of
$6 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 $100 in deposits for
the best-rated banks. Premiums for the SAIF will remain at current levels. There
is a possibility that the new premuim rates will be applied retroactively for
May 1 or June 1, 1995. It is anticipated that the Bank's BIF insurance expense
for the second half of 1995 will be reduced by 82% or approximately $275
thousand.
Bank shares tax was $73 thousand and $148 thousand for the three- and six-
month periods ended June 30, 1995, increases of $5 thousand and $13 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 decreased $92 thousand, or 13.2%, to $607
thousand for the three-month period ended June 30, 1995 compared to $699
thousand for the same period in 1994. This decrease is primarily the result of
decreases in professional fees, operating supplies and marketing expenses,
partially offset by increases in other real estate owned expenses.
Other non-interest expense increased $50 thousand, or 3.9%, to $1,310
thousand for the six-month period ended June 30, 1995 compared to $1,260
thousand for the same period in 1994. This increase is primarily the result of
the adoption of SFAS No. 116, "Accounting for Contributions Received and
Contributions Made" on January 1, 1995. The adoption of SFAS No. 116 required
the Company to recognize conditional promises to give when the promises became
unconditional. This had an impact of approximately $117 thousand on other
non-interest expenses during the first half of 1995. The remaining increase in
non-interest expenses is due to increases in other real estate owned expenses
and related legal fees and increases in general supplies. These increases were
partially offset by a sales tax refund received from the Commonwealth of
Pennsylvania of approximately $40 thousand in the first half of 1995.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
PURCHASE OF OFFICE BUILDING
On July 24, 1995, the Bank purchased a thirty-three-year-old, 9,000 square
foot, two-story brick building at the corner of High and Market Streets in the
Borough of West Chester. The building was formerly occupied by another financial
institution. 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 six-month periods ended June 30, 1995
was $483 thousand and $901 thousand, compared to $355 thousand and $722 thousand
in the same periods last year. This represents effective tax rates of 31.98% and
31.02% for the three- and six-month periods ended June 30, 1995, compared with
30.0% 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 2.89% and 3.36% at June 30, 1995 and 1994, respectively.
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:
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
DEPOSIT ANALYSIS
<TABLE>
<CAPTION>
(Dollars in thousands) June 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 $ 42,085 2.30% $ 41,985 2.30% $ 100 0.24%
Money Market 29,842 3.18 32,962 2.68 (3,120) (9.47)
Statement Savings 47,021 3.62 51,468 3.06 (4,447) (8.64)
Other Savings 4,763 2.73 5,571 2.60 (808) (14.50)
CD's Less than $100,000 82,314 5.38 64,551 4.57 17,763 27.52
-------- -------- --------
Total Core Deposits 206,025 3.97 196,537 3.31 9,488 4.83
Non-Interest Bearing
Demand Deposit Accounts 51,472 - 50,872 - 600 1.18
-------- -------- --------
Total Core and Non-Interest
Bearing Deposits 257,497 - 247,409 - 10,088 4.08
Tiered Savings 38,906 4.29 45,427 3.33 (6,521) (14.35)
CD's Greater than $100,000 10,543 5.33 8,688 4.66 1,855 21.35
-------- -------- --------
Total Deposits $306,946 - $301,524 - $ 5,422 1.80
======== ======== ========
</TABLE>
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 June 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 $61.3 million or 16.7% of total assets at June 30, 1995, compared with
negative $86.3 million and negative 25.2% at June 30, 1994, respectively.
Management is aware of this negative gap position and is taking steps to
maintain net interest margins at acceptable levels. Over $10 million in
certificates of deposit with a maturity of 30 months were added during the first
six months of 1995.
<PAGE>
INTEREST SENSITIVITY ANALYSIS
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
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 $ 10,600 $ 0 $ 0 $ 0 $ 10,600
Investment securities 48,841 34,639 3,165 0 86,645
Loans & leases 122,536 106,476 14,995 (3,712) 240,295
Cash & cash equivalents 0 0 0 17,476 17,476
Premises & equipment 0 0 0 4,705 4,705
Other assets 0 0 0 6,552 6,552
---------- ---------- ---------- ---------- ----------
Total assets $ 181,977 $ 141,115 $ 18,160 $ 25,021 $ 366,273
========== ========== ========== ========== ==========
LIABLILITIES & CAPITAL:
Noninterest bearing deposits $ 0 $ 0 $ 0 $ 52,693 $ 52,693
Interest bearing deposits 229,259 36,653 0 0 265,912
Borrowed funds 13,369 0 0 0 13,369
Other liabilities 671 0 0 4,309 4,980
Capital $ 0 $ 0 $ 0 29,319 29,319
---------- ---------- ---------- ---------- ----------
Total liabilities & capital $ 243,299 $ 36,653 $ 0 $ 86,321 $ 366,273
========== ========== ========== ========== ==========
Net interest rate sensitivity gap $ (61,322) $ 104,462 $ 18,160 $ (61,300) $ 0
========== ========== ========== ========== ==========
Cummulative interest rate sensitivity gap $ (61,322) $ 43,140 $ 61,300 $ 0 $ 0
========== ========== ========== ========== ==========
Cummulative interest rate sensitivity gap
divided by total assets (16.7%) 11.8% 16.7%
========== ========== ==========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
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
1.28% at June 30, 1994 to 1.52% at June 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 333.5% at June 30, 1995 from 99.5% 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 $2.4 million or 48.1% to
$2.5 million at June 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>
NON-PERFORMING LOANS AND ASSETS
<TABLE>
<CAPTION>
Dollars in thousands June 30,
------------------- Dec. 31,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
Past due over 90 days and still accruing $ 410 $ 1,020 $ 323
Non-accrual loans 703 5,038 2,997
-------- -------- --------
Total non-performing loans 1,113 6,058 3,320
Other real estate owned 1,422 0 1,565
-------- -------- --------
Total non-performing assets $ 2,535 $ 6,058 $4,885
======== ======== ========
Non-performing loans as a percentage
of total loans 0.46% 2.68% 1.39%
Allowance for possible loan losses as a
percentage of non-performing loans 333.51% 47.77% 99.50%
Non-performing assets as a percentage of
total loans and other real estate owned 1.03% 2.68% 2.03%
Allowance for possible loan losses as a
percentage of non-performing assets 146.43% 47.77% 67.60%
</TABLE>
ANALYSIS OF CHANGES IN THE ALLOWANCE
FOR POSSIBLE LOAN LOSSES
AND COMPARISON OF LOANS OUTSTANDING
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Dollars in thousands June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 3,611 $ 3,143 $ 3,303 $ 2,839
Provision charged to operating expense 435 550 784 900
Recoveries of loans previously charged-off 48 2 52 8
Loans charged-off (382) (801) (427) (853)
-------- -------- -------- --------
Net loans charged-off (334) (799) (375) (845)
-------- -------- -------- --------
Balance at end of period $ 3,712 $ 2,894 $ 3,712 $ 2,894
======== ======== ======== ========
Period-end loans outstanding $244,007 $226,200 $244,007 $226,200
Average loans outstanding $246,286 $223,290 $245,581 $223,349
Allowance for possible loan losses as a
percentage of period-end loans outstanding 1.52% 1.28% 1.52% 1.28%
Ratio of net charge-offs to average loans
outstanding 0.14% 0.36% 0.15% 0.38%
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(CONTINUED)
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
June 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>
June 30, "Well
RISK-BASED ----------------- December 31, Capitalized"
CAPITAL RATIOS 1995 1994 1994 Requirements
- - -------------- ------- -------- -------- ------------
<S> <C> <C> <C> <C>
Leverage Ratio 8.17% 8.35% 8.53% 5.00%
Tier I Capital Ratio 11.13% 10.93% 11.09% 6.00%
Total Risk-Based Capital Ratio 12.38% 12.04% 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
On June 2, 1995, the Board of Directors of First West Chester Corporation
authorized the repurchase of up to 60,000 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. During June, 1995, the Company repurchased 50,000 shares
under this plan in two privately negotiated transactions.
On June 30, 1995, the Board of Directors of the Company increased the
number of the Company shares to be repurchased in the manner and for the
purposes originally authorized on June 2, 1995 from 60,000 to 70,000. Repurchase
of the remaining 20,000 shares will commence after July 5, 1995.
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 June 30, 1995.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Various actions and proceedings are presently pending to which
the Company is a party. These actions and proceedings arise out of
routine operations and, in management's opinion, will not, either
individually or in the aggregate, a material adverse effect on the
consolidated financial position of the Company and its subsidiary.
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
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
The following is a list of the 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.
(3) Copy of the Company's Certificate of Amendment to
the Articles of Incorporation filed with the 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.
-----------------------
(1) 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
-------------------
The Company filed one report of Form 8-K during the quarter
ended June 30, 1995. The report dated June 30, 1995 discusses the
announcement of a plan to repurchase up to 70,000 shares of the
Company's Common Stock. The report also indicates that 50,000 of
the 70,000 shares were repurchased prior to June 30, 1995.
<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
Charles E. Swope
/s/ Charles E. Swope
President
DATE: August 11, 1995
J. Duncan Smith
/s/ J. Duncan Smith
Treasurer
(Principal Accounting
and Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This is Exhibit 27 of First West Chester Corporation's Form 10-Q.
</LEGEND>
<CIK> 0000744126
<NAME> FIRST WEST CHESTER CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 17,476
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 59,132
<INVESTMENTS-CARRYING> 27,513
<INVESTMENTS-MARKET> 27,474
<LOANS> 244,007
<ALLOWANCE> 3,712
<TOTAL-ASSETS> 366,273
<DEPOSITS> 318,605
<SHORT-TERM> 13,369
<LIABILITIES-OTHER> 4,980
<LONG-TERM> 0
<COMMON> 1,200
0
0
<OTHER-SE> 28,119
<TOTAL-LIABILITIES-AND-EQUITY> 366,273
<INTEREST-LOAN> 11,421
<INTEREST-INVEST> 2,366
<INTEREST-OTHER> 183
<INTEREST-TOTAL> 13,970
<INTEREST-DEPOSIT> 5,201
<INTEREST-EXPENSE> 5,454
<INTEREST-INCOME-NET> 8,516
<LOAN-LOSSES> 784
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,476
<INCOME-PRETAX> 2,904
<INCOME-PRE-EXTRAORDINARY> 2,003
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,003
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
<YIELD-ACTUAL> 5.22
<LOANS-NON> 703
<LOANS-PAST> 410
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,303
<CHARGE-OFFS> 427
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 3,712
<ALLOWANCE-DOMESTIC> 3,712
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
