SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition
period from _________ to __________
Commission File Number 0-13899
DELAWARE NATIONAL BANKSHARES CORP.
(Exact name of registrant as specified in its charter)
Delaware 51-0281753
(state of incorporation (IRS Employer
or organization) Identification No.)
Rt. 113 & Edwards St., P.O. Box 520, Georgetown, DE 19947
(address of principal executive offices) (Zip Code)
(302) 855-2400
(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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 31, 1995
(Common Stock, $5 par value) 763,351
INDEX
PART 1 - FINANCIAL INFORMATION
PAGE NO.
Condensed Consolidated Balance Sheet -
March 31, 1995, and December 31, 1994
4
Condensed Consolidated Statement of Income -
Three Months Ended March 31, 1995 & 1994
6
Condensed Consolidated Statement of Changes in Stockholders Equity -
Three Months Ended March 31, 1995 & 1994
8
Statement of Cash Flows -
Three Months Ended March 31, 1995 & 1994
9
Notes to Consolidated Condensed Financial Statements -
11
Management's' Discussion and Analysis of Financial Condition
and Results of Operations -
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submissions of Matters to a vote of Security Holders
N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8K N/A
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994
March 31, December 31,
1995 1994
___________ ___________
ASSETS:
Cash and due from banks $3,650,049 $3,492,676
Interest-bearing deposits in banks 2,200,000 200,000
Investment securities:
Available for sale 1,495,391 3,229,936
Held to maturity (Market values at
3/31/95 - $10,570,048 & 12/31/94 -
$10,150,751) 11,127,388 10,340,373
Federal funds sold 4,475,000 6,075,000
Loans, net - domestic 69,955,427 68,197,369
Property on operating leases, net 0 4,920
Premises and equipment, net 2,867,087 2,913,981
Other real estate owned 361,919 453,630
Other assets 1,079,708 1,158,765
__________ __________
TOTAL ASSETS $97,211,969 $96,066,650
see accompanying notes
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994
March 31, December 31,
1995 1994
__________ ___________
LIABILITIES
Deposits - Domestic:
Noninterest-bearing $13,422,283 $14,774,359
Interest-bearing 75,564,475 73,540,562
__________ __________
TOTAL DEPOSITS 88,986,758 88,314,921
Other liabilities 799,832 597,464
__________ __________
TOTAL LIABILITIES 89,786,590 88,912,385
STOCKHOLDERS' EQUITY
Common Stock
Par value $5 per share;
Authorized: 1,250,000 shares:
Issued 766,913 shares at 3/31/95
and 734,540 shares at 12/31/94 3,834,565 3,672,700
Paid in surplus 1,627,545 1,480,449
Undivided profits 2,048,585 2,096,776
Net gains (losses) on securities
available for sale (4,491) (14,835)
Treasury stock:
(151 shares at $27.00)
(3411 shares at $22.50) (80,825) (80,825)
__________ __________
TOTAL STOCKHOLDERS' EQUITY 7,425,379 7,154,265
__________ __________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $97,211,969 $96,066,650
see accompanying notes
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
3 Months Ended 3 Months Ended
March 31, 1995 March 31, 1994
______________ ______________
INTEREST INCOME
Loans including fees $1,592,829 $1,376,290
Investment securities:
Taxable 163,943 130,274
Exempt from federal taxes 13,154 16,310
Deposits in banks 20,207 1,568
Federal funds sold 89,544 6,473
__________ __________
TOTAL INTEREST INCOME 1,879,677 1,530,915
__________ __________
INTEREST EXPENSE
Deposits 792,874 534,931
Short-term borrowing and
federal funds purchased 0 715
__________ __________
TOTAL INTEREST EXPENSE 792,874 535,646
__________ __________
NET INTEREST INCOME 1,086,803 995,269
PROVISION FOR LOAN LOSSES 0 30,000
__________ __________
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,086,803 965,269
__________ __________
OTHER INCOME
Dividends on stock 1,025 1,025
Service charges and fees 102,554 91,606
Other operating income 5,872 6,203
__________ __________
TOTAL OTHER INCOME 109,451 98,834
__________ __________
see accompanying notes
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
3 Months Ended 3 Months Ended
March 31, 1995 March 31, 1994
______________ ______________
OTHER EXPENSES
Salaries, employee benefits,
and director fees $452,579 $417,346
Net occupancy and equipment expense 181,199 138,043
Other operating expenses 333,771 237,105
__________ __________
TOTAL OTHER EXPENSES 967,549 792,494
__________ __________
INCOME BEFORE INCOME TAXES 228,705 271,609
PROVISION FOR INCOME TAXES 86,058 86,307
__________ __________
NET INCOME $142,647 $185,302
EARNINGS PER COMMON SHARE AND
COMMON STOCK EQUIVALENTS
Primary $0.19 $0.25
Fully diluted $0.19 $0.25
Primary Shares:
Weighted average number of
shares actually outstanding 750,500 723,879
Stock options 14,206 21,080
_______ _______
764,706 744,959
Fully diluted shares:
Weighted average number of
shares actually outstanding 750,500 723,879
Stock options 14,206 21,080
_______ _______
764,706 744,959
See accompanying notes.
<TABLE>
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION>
Gain(Loss)
Avail. for
Capital Undivided
Sale Treasury
Total Stock Surplus Profits
Securities Stock
<S> <C> <C> <C> <C>
<C> <C>
Balance December 31, 1993 $6,897,505 $3,575,690 $1,395,486 $2,007,154
$0 ($80,825)
Net Income - Three Months
Ended March 31, 1994 $185,302 185,302
Proceeds from Stock Options
Exercised (9,538 shares) $84,428 47,690 36,738
Net Gain(Loss) on Investment
Securities Available
for Sale $10,897
10,897
Dividends Paid
($.25 per share) ($181,169) (181,169)
_________ _________ _________ _________
_______ ________
Balance, March 31, 1994 $6,996,963 $3,623,380 $1,432,224 $2,011,287
$10,897 ($80,825)
Balance December 31, 1994 $7,154,265 $3,672,700 $1,480,449 $2,096,776
($14,835) ($80,825)
Net Income - Three Months
Ended March 31, 1995 $142,647 142,647
Proceeds from Stock Options
Exercised (32,373 shares) $308,961 161,865 147,096
Net Gain(Loss) on Investment
Securities Available
for Sale $10,344
10,344
Dividends Paid
($.25 per share) ($190,838) (190,838)
_________ _________ _________ _________
_________ _________
Balance, March 31, 1995 $7,425,379 $3,834,565 $1,627,545 $2,048,585
($4,491) ($80,825)
</TABLE>
See accompanying notes.
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
March 31, 1995 March 31, 1994
______________ ______________
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received from earning assets $1,840,562 $1,565,721
Fees and commissions received 102,554 91,606
Interest paid (646,804) (548,207)
Cash paid to suppliers and employees (824,443) (900,237)
Income taxes paid 0 (13,586)
Other Income 6,541 4,251
Rent from operating leases 356 2,977
_________ _________
NET CASH PROVIDED BY OPERATING ACTIVITIES 478,766 202,525
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities (995,859) 0
Proceeds from maturities of
investment securities 1,965,314 872,793
Purchase of certificates of deposit (2,000,000) 0
Net loans made to customers (1,751,361) (931,971)
Capital expenditures (86,438) (114,417)
Federal funds sold, net 1,600,000 3,900,000
Proceeds from sale of property 156,991 0
_________ _________
NET CASH USED IN INVESTING ACTIVITIES (1,111,353) 3,726,405
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposit accounts 671,837 (3,977,796)
Short-term unsecured borrowing, net 0 400,000
Dividends paid (190,838) (181,169)
Proceeds from stock options exercised 308,961 84,428
_________ _________
NET CASH PROVIDED BY FINANCING ACTIVITIES 789,960 (3,674,537)
_________ _________
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 157,373 254,393
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 3,492,676 2,851,342
_________ _________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $3,650,049 $3,105,735
See accompanying notes.
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS - CONTINUED
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES: March 31, 1995 March 31, 1994
______________ ______________
Net income $142,647 $185,302
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 68,052 52,947
Provision for loan losses 0 30,000
(Increase) decrease in interest receivable (34,042) 34,067
(Increase) decrease in other assets 104,814 (95,354)
Increase (decrease) in interest payable 146,070 (12,561)
Increase (decrease) in other liabilities (29,760) (65,336)
Amortization of investment premium
(discount), net (5,073) 739
Provision for deferred taxes 86,058 72,721
________ ________
NET CASH PROVIDED BY OPERATING ACTIVITIES $478,766 $202,525
See accompanying notes.
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1995, the consolidated
statements of income for the three months ended March 31, 1995 and 1994, and
the consolidated statements of changes in stockholders' equity, and cash
flows for the three months ended March 31, 1995 and 1994, have been prepared
by the Company, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1995
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's December 31, 1993 annual report
to shareholders and December 31, 1994 form 10-K. The results of operations
for the periods ended March 31, 1995 and 1994 are not necessarily indicative
of the operating results for the full year.
NOTE 2 - ADOPTION OF SFAS 114 - ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OPTION OF SFAS 114 - ACCOUNTING BY CREDITORS FOR IMPAIRMENT
OF A LOAN
On January 1, 1995, the Company adopted the provisions of SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures," an amendment to SFAS No. 114. The new standards require that
impaired loans, within the scope of the Statement, be measured based on the
present value of expected future cash flows, discounted at the loan's
effective interest rate, or the fair value of the collateral if the loan is
collateral dependent. Implementation of these new standards did not have a
material impact on the Company's results of operations or financial position.
NOTE 3 - PROPOSED AFFILIATION
In early 1995, the board of directors of the Company entered into an
agreement and plan of affiliation and share exchange with Fulton Financial
Corporation. The transaction is subject to approval of stockholders and
regulatory authorities.
DELAWARE NATIONAL BANK
CAPITAL ADEQUACY AND REQUIREMENTS
March 31, 1995 March 31, 1994
______________ ______________
TIER 1 CAPITAL 6,228,138 6,037,366
TIER 2 CAPITAL 709,929 620,104
_________ _________
TOTAL CAPITAL 6,938,067 6,657,470
RISK-WEIGHTED ASSETS 56,794,297 49,608,317
RISK-BASED CAPITAL RATIOS AND REQUIREMENTS:
3/31/95 3/31/94
ACTUAL ACTUAL REQUIRED
_______ _______ ________
TIER 1 CAPITAL / RISK-WEIGHTED ASSETS 10.966% 12.170% 4.000%
TOTAL CAPITAL / RISK-WEIGHTED ASSETS 12.216% 13.420% 8.000%
DELAWARE NATIONAL BANKSHARES CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed financial
statements.
DELAWARE NATIONAL BANKSHARES CORP.
ASSETS
The assets of the Corporation have increased from $96,066,650 at year end
1994 to $97,211,969 on March 31, 1995. The 1.2% increase is attributable to
changes on the balance sheet of the Corporation's only active subsidiary,
Delaware National Bank. Loans increased 2.6% from $68,197,369 at year end
1994 to $69,955,427 on March 31, 1995. Investment securities decreased
nearly 7.1% from the December 1994 total of $13,570,309 to $12,622,779 as of
March 31, 1995.
CAPITAL
Capital on March 31, 1995 was $7,425,379, a 3.8% increase over year end
figures of $7,154,265. This is a result of retained earnings for the first
quarter of 1995 and proceeds from stock options exercised during the quarter,
less the payment of a $.25 per share dividend.
Earnings for the first quarter of 1995 were $142,647, compared to $185,302
the first quarter of 1994. The reduction in earnings is primarily due to
legal fees pertaining to the proposed merger with Fulton Financial
Corporation and additional occupancy expense related to the establishment of
an operations / administration facility.
Management is aware of the sale price in some, but not all, of the sales of
stock of the Corporation. The most recent price of which it is aware is
$19.50 per share. This price was provided by Ferris Baker Watts, Inc. and
may not reflect all sales of the Corporation's stock for the quarter.
As of year end 1994, the corporation listed its stock with four independent
market makers. Listed below are the names of those who list Delaware
National Bankshares Corp. stock:
Ferris Baker Watts, Inc. Wheat First Securities,
Inc.
1-800-753-3321
1-800-777-8714
F.J. Morrissey, Inc. A.G. Edwards &
Sons, Inc.
1-800-842-8928
1-800-568-5408
DELAWARE NATIONAL BANK
There have been no material changes in financial condition not directly
related or attributable to the growth of or change in the Corporation's
only active subsidiary, Delaware National Bank, or the market or economic
conditions affecting it. There have been no significant changes of income
or losses from continuing operations which are not representative of the
ongoing business.
GROWTH
Deposits of the Bank on March 31, 1995 were $88,986,758, compared to
$88,314,921 on December 31, 1994. This is an increase of less than 1%.
The Bank maintains its policy of not soliciting brokered certificates of
deposit. As of March 31, 1995, the Bank held $99,000 in brokered deposits.
These will not be renewed upon their maturity.
CAPITAL
Under the risk based capital guidelines, the minimum capital requirements
are set at 8% of total risk weighted assets. Risk based capital ratio for
the Bank at March 31, 1995, was 12.22%, at December 31, 1994 it was 12.20%
and at March 31, 1994 it was 13.42%. Total tier 1 capital to total assets
must exceed 4%. Tier 1 capital at March 31, 1995 was 10.97%, compared to
10.95% at December 31, 1994, and 12.17% at March 31, 1994.
LIQUIDITY
The Bank's liquidity is measured at 22.73% on March 31, 1995, compared to the
average for the year 1994 of 19.51%. Liquidity is reviewed by the Board's
ALCO committee. An important function of the ALCO committee is the analysis
of the adequacy of its sources of liquidity. Measuring liquidity involves
analysis of deposit and other liability maturities, new loan generation
forecasts, maturities of the loan portfolio, market conditions, economic
forecasts and the institution's investment and funding sources. These analyses
must balance the critical factors of time and cost.
Cash flows from operating activities increased by $276,241 from the
comparable quarter in 1994, primarily from income received from earning
assets. Cash flows from investing activities decreased significantly due to
the purchase of certificates of deposit and loans made to customers. Cash
flows from financing activities increased due to increases in deposit accounts.
ASSET QUALITY
Loans appearing on the Bank's "watch sheet" are monitored to determine
possibility of charge off. The amount of potential charge off loans at
March 31, 1995 is $19,123. The delinquency ratio at March 31, 1995, was
1.25%, compared to 0.94% at March 31, 1994. The average delinquency ratio
for 1994 was 0.91%. Other than these targeted loans, the quality of the
bank's loan and investment portfolio remains high with no adverse trends or
deterioration in quality.
INFLATION
The monetary nature of the majority of the Bank's assets and liabilities
differs from that of other business entities. Because of this, inflation
does not have a determinable effect on the assets, liabilities, capital or
earnings of the Bank.
There have been no other significant changes in financial statements or
operation in the first quarter of 1995 or in the twelve months preceding,
other than those disclosed within this document or otherwise stipulated in
notes to financial statements filed with the report and incorporated herein
by reference.
PART II - OTHER INFORMATION
NO APPLICABLE ITEMS TO REPORT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on its behalf by the undersigned thereunto
duly authorized.
Date: May 12, 1995
DELAWARE NATIONAL BANKSHARES CORP.
______________________________________
(Lynda A. Messick, Treasurer)
(Duly Authorized Officer)
___________________________________
(Linda C. Betts, Assistant Treasurer)
