SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for
the Quarterly Period Ended June 30, 1999,
or
Transition report pursuant to Section 13 or
15(d) of the Exchange Act for the
Transition Period from _________________
to _________________.
Commission file number 0-14555
FIRST LEESPORT BANCORP, INC.
(Exact name of Registrant as specified in its charter)
PENNSYLVANIA
(State or other jurisdiction of
incorporation or organization)
23-2354007
(I.R.S. Employer Identification No.)
133 North Centre Avenue
Leesport, Pennsylvania 19533
(Address of principal executive offices) (Zip Code)
(610) 926-2161
(Registrant's telephone number, including area code)
Check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at August 1, 1999
Common Stock ($5.00 par 1,264,655 Shares
value)
<PAGE>
<TABLE>
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED, CONDENSED BALANCE SHEETS
(Amounts in thousands)
<CAPTION> June 30 Dec 31
Assets 1999 1998
<S> <C> <C>
Cash and Due from Banks 6,605 4,403
Interest-bearing Deposits in Other 248 272
Banks
Total Cash and Balances Due from 6,853 4,675
Banks
Securities Available for Sale 48,321 50,753
Loans, Net of Unearned Income 201,054 162,533
Less: Allowance for Loan Losses -1,993 -1,756
Net Loans 199,061 160,777
Bank Premises and Equipment 6,182 5,606
Other Real Estate Owned 175 360
Accrued Interest Receivable and 10,752 9,404
Other Assets
Total Assets 271,344 231,575
Liabilities
Deposits:
Non-interest Bearing 30,369 21,889
Interest Bearing 184,052 161,384
Total Deposits 214,421 183,273
Federal Funds Purchased and
Securites Sold 7,600 5,509
Under Agreements to Repurchase
Short-term Debt 10,000 5,700
Long-term Debt 15,500 12,500
Accrued Interest Payable 1,015 980
Other Liabilities 2,935 3,024
Total Liabilities 251,471 210,986
Stockholders' Equity
Common Stock, $5.00 Par Value per
Share;
Authorized 2,000,000 Shares at
December 31, 1998 and 10,000,000 6,366 6,366
shares at June 30, 1999, Issued
1,273,284 Shares
Surplus 4,417 4,417
Retained Earnings 9,846 9,245
Accumulated Other Comprehensive -638 679
Income (Loss)
Treasury Stock; 8,629 Shares at -118 -118
Cost
Total Stockholders' Equity 19,873 20,589
Total Liabilities and 271,344 231,575
Stockholders' Equity
<FN>
The accompanying notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED, CONDENSED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
<CAPTION> Three Months Six Months
Ended June 30 Ended June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest & Fees on Loans 3,757 2,887 7,100 5,547
Interest on Securities:
Taxable 652 586 1,301 998
Tax-Exempt 125 139 255 276
Interest on Federal 2 15 4 37
Funds Sold
TOTAL INTEREST INCOME 4,536 3,627 8,660 6,858
INTEREST EXPENSE
Interest on Deposits 2,039 1,674 3,932 3,213
Interest on Borrowed 445 209 830 314
Funds
TOTAL INTEREST EXPENSE 2,484 1,883 4,762 3,527
NET INTEREST INCOME 2,052 1,744 3,898 3,331
Provision for Loan 248 155 483 245
Losses
Net Interest Income
after the Provision for 1,804 1,589 3,415 3,086
Loan Losses
OTHER INCOME
Customer Service Fees 97 44 183 118
Mortgage Banking 43 118 85 186
Activites
Commissions on Insurance 871 0 1,696 0
Sales
Other Income 138 146 264 245
Realized Gain on Sale of 39 0 40 32
Securities
TOTAL OTHER INCOME 1,188 308 2,268 581
OTHER EXPENSES
Salaries and Benefits 1,155 710 2,235 1,480
Occupancy Expense 145 130 288 247
Furniture and Equipment 152 104 289 199
Expense
Computer Services 156 182 277 358
Other Operating Expenses 739 514 1,360 894
TOTAL OTHER EXPENSES 2,347 1,640 4,449 3,178
Income Before Income 645 257 1,234 489
Taxes
Federal Income Taxes 197 48 349 81
NET INCOME 448 209 885 408
EARNINGS PER SHARE DATA
Based on Averages Shares
Outstanding 1273284 1191204 1273284 1191227
Basic Earnings Per Share 0.35 0.17 0.70 0.34
Dividends 0.145 0.13 0.275 0.260
<FN>
The accompanying notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
<CAPTION> Six Months
Ended June 30
1999 1998
<S> <C> <C>
Net Income 885 408
Other Comprehensive Income
(Loss), net of tax:
Unrealized gains (losses) on
Securities arising during the
period, net of tax expense
(benefit) -1,291 -94
1999 - $665; 1998 - $59
Less: Reclassification adjustments
For gains included in net
income, 26 21
Net of tax expense (benefit)
1999 - $14; 1998 - $14
Other Comprehensive Income -1,317 -115
Comprehensive Income (Loss) -418 293
<FN>
The accompanying notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Amounts in thousands, except per share data)
<CAPTION> Six Months
Ended June 30
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income 885 408
Provision for loan losses 483 245
Provision for depreciation and 250 194
amortization
Net amortization (accretion) of -5 -10
securities premiums and discounts
Realized gain on sale of -40 -32
securities
Loans originated for sale 0 -11,146
Proceeds from sales of loans 0 11,332
(Gain) on sales of loans 0 -186
(Increase) Decrease in accrued
interest receivable and other -1,163 -405
assets
Increase (Decrease) in accrued
interest payable and other 89 -443
liabilities
NET CASH PROVIDED BY OPERATING 499 -43
ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES:
Available for sale securities:
Proceeds from principal
repayments and maturities of 2,959 3,601
securities
Proceeds from sales of securities 6,840 1,008
Purchase of securities -8964 -14,710
Loans made to customers, net of -38,521 -10,746
repayments
Purchases of bank premises and -826 -1,382
equipment
NET CASH USED IN INVESTING -38,512 -22,229
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net increase in deposits 31,148 15,597
Net increase (decrease) in
federal funds purchased and 2,091 -1,226
repurchase agreements
Net borrowings (repayments) of
short-term borrowings 4,300 -3,000
Proceeds from long-term debt 3,000 10,000
Dividends paid -348 -310
Issuance of Treasury Stock 0 6
NET CASH PROVIDED BY FINANCING 40,191 21,067
ACTIVITIES
Increase (decrease) in cash and 2,178 -1,205
cash equivalents
Cash and cash equivalents: 4,675 5,556
Beginning
6,853 4,351
Ending
SUPPLEMENTAL DISCLOSURES OF CASH
FLOWS:
Interest paid 4,727 3,531
Income taxes paid 100 180
<FN>
The accompanying notes are an integral part of these condensed
financial
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The financial information included herein is unaudited,
however, such information reflects all adjustments (consisting
solely of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair statement of the results for
the interim periods. All significant intercompany accounts and
transactions have been eliminated.
2. The results of operations for the six-month period ended June
30, 1999 are not necessarily indicative of the results to be
expected for the full year.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In addition to historical information, this report contains
forward-looking statements. The forward-looking statements
contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those
projected in the forward-looking statements. Important factors
that might cause such a difference include, but are not limited
to, changing economic conditions in the Company's market area and
increasing interest rates. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date of this report. The
Company undertakes no obligation to publicly revise or update
these forward-looking statements to reflect events or
circumstances that arise after the date of this report.
Financial Condition
The Company's total assets increased by $39,769,000 or 17.2%
between December 31, 1998 and June 30, 1999, growing from
$231,575,000 to $271,344,000. The Company's emphasis on
accelerated growth and improved financial performance resulted in
this increase.
Net loans increased by $38,284,000 or 23.8% between the two dates
growing from $160,777,000 at December 31, 1998 to $199,061,000 at
June 30, 1999 and provided a substantial portion of the overall
growth in total resources. Commercial loans were targeted for
growth and actually provided the majority of growth within the
portfolio. This segment of the portfolio provides higher yields
than mortgage loans and allows the Bank to generate better
returns for its stockholders. Commercial loans increased to
42.5% of the total loan portfolio at June 30, 1999 up from 37.7%
at December 31, 1998.
Mortgage products have, over the years, pretty much become
commodity type products and do not automatically generate
additional account relationships. As the Bank continues to build
its customer base and promote cross selling efforts, the products
that provide the best results include consumer loan products. To
take advantage of the opportunities provided by these products,
the Bank heavily promoted consumer-type loans including home
equity loans during the first half of 1999. These loans
increased to $34,607,000 at June 30, 1999 and now represent 17.2%
of the loan portfolio compared with only $22,945,000 at December
31, 1998 when it represented 14.3% of the portfolio.
As part of the loan growth noted above, the Bank has increased
its provision for loan losses and recognizes that on an on-going
basis the level of the allowance will have to be evaluated on a
continual basis. At June 30, 1999, the allowance for loans as a
percentage of total loans outstanding amounted to 1.0%, down from
1.08% at December 31, 1998. Management anticipates providing at
least $1,000,000 from current earnings into the allowance for
loan losses during 1999.
Cash and balances due from banks increased to $6,853,000 at June
30, 1999 from $4,675,000 at December 31, 1998. During this time
period, the Bank's seventh full-service office in Bern Township,
Berks County was opened and required additional cash levels.
Management intends to closely monitor the levels of cash within
the retail branch system and, in conjunction with consumer
attitudes towards Year 2000 reports, will manage cash levels
aggressively throughout the remainder of 1999.
Investment securities decreased between December 31, 1998 and
June 30, 1999 falling from $50,753,000 to $48,321,000, a decrease
of $2,432,000 or 4.8%. A significant part of this decrease
resulted from changes in the market values of the Company's
securities portfolio as the overall rise in interest rates
resulted in lower values of the available-for-sale securities
maintained by the Company.
The difference between the market value of the Company's
securities and the book values for those securities amounted to
($1,031,000) at June 30, 1999. For comparative purposes, this
difference was $1,004,000 at December 31, 1998, representing
that the market value exceeded the book values of the available
for sale securities at December 31, 1998.
During the first half of 1999, some transactions within the
investment portfolio helped to generate gains on sales of
securities. These transactions, involving selling some callable
and pre-refunding securities and replacing them with longer-term
agency securities and municipal securities generated
approximately $40,000 in gains during April and May.
Bank premises and equipment increased to $6,182,000 at June 30,
1999 as the Bank opened its Bern Township Office in February. In
addition some of the Bank's support functions and lending staff
were relocated during April and May and generated some building
enhancements and furniture replacements. The level of premises
and equipment at December 31, 1998 was $5,606,000. The resulting
growth of $576,000 or 10.3% is after depreciation expense during
the period.
The Bank's total deposits increased to $214,421,000 at June 30,
1999 from $183,273,000 at December 31, 1998, an increase of
$31,148,000 or 17.0%.
The mix of interest bearing versus non-interest bearing deposits
changed dramatically between December 31, 1998 and June 30, 1999
as management continues to focus on improving the Company's
overall financial performance. Part of this strategy included
increasing the level of non-interest bearing deposits, through
free checking promotional efforts, and reducing higher-cost
deposits. The Bank's analysis of its net interest margin and
overall cost of funds resulted in an effort to drive down the
cost of funds. As part of this strategy, the level of demand
deposits as a percentage of total deposits increased from 12.4%
at December 31, 1998 to 14.2% at June 30, 1999, a significant
improvement given the very competitive nature of demand deposits.
Other borrowed funds, both short-term and long-term increased by
$7,300,000 or 40.1% between December 31, 1998 and June 30, 1999
growing from $18,200,000 to $25,500,000. The Company uses these
funds to supplement deposit growth and provide funding for its
lending and investment activities.
The Company's net stockholders equity decreased to $19,873,000 at
June 30, 1999 from $20,589,000 at December 31, 1998 after
accounting for the change in market value of its available for
sale securities noted above. Total equity, before this
adjustment, actually increased by 3.0% or $601,000 growing from
$19,910,000 at December 31, 1998 to $20,511,000 at June 30, 1999
due to retained net income.
The aggressive asset growth rates, and modest equity growth rates
generated a leverage ratio of 6.28% at June 30, 1999, down from
7.04% at December 31, 1998. The Company remains in compliance
with its capital requirements, in spite of this decrease, as the
minimum regulatory leverage ratio is only 3.00%. The Company's
Tier I Capital to risk-adjusted assets ratio is 8.35% at June 30,
1999, well in excess of the regulatory minimum of 4.00%. As the
Company continues to improve its financial performance, and
accelerate its capital growth, these capital measurements will
continue to improve.
Results of Operations
Three-Month Periods Ended June 30, 1999 and 1998
Total interest income for the three months ended June 30, 1999
amounted to $4,536,000 compared with $3,627,000 for the three
months ended June 30, 1998, an increase of $909,000 or 25.1%.
Within this total, interest and fees on loans increased to
$3,757,000 from $2,887,000, an increase of $870,000 or 30.1%. The
Bank's focus on increased lending activity resulted in this
increase.
Total interest expense, including interest on borrowed funds
increased by $601,000 or 31.9% between the second quarter of 1998
and the second quarter of 1999 growing from $1,883,000 to
$2,484,000. Efforts to reduce the overall cost of funds resulted
in a reduced level of deposit growth during the quarter, and to
supplement the Bank's funding needs additional borrowings from
the Federal Home Loan Bank were required.
Net interest income increased by $308,000 or 17.7% as a result of
the above changes, growing from $1,744,000 for the three months
ended June 30, 1998 to $2,052,000 for the same period in 1999.
The provision for loan losses increased by $93,000 or 60.0%
between the second quarter of 1998 and the second quarter of
1999, growing from $155,000 to $248,000 between the periods. The
resulting net interest income after the provision for loan losses
increased to $1,804,000 from $1,589,000 between the two periods.
Total other income, impacted significantly by income from the
sales of insurance, increased by $880,000 or 285.7% growing from
$308,000 for the second quarter of 1998 to $1,188,000 for the
second quarter of 1999. Customer service fees increased by
$53,000 from $44,000 for the second quarter of 1998 to $97,000
for the same period in 1999, an increase of 120.4% as the Bank
continues to focus on improving its overall financial
performance. Gains on sales of securities during the period
amounted to $39,000 for the second quarter of 1999. There were no
loans sold during the second quarter of 1999.
Total other expenses, including costs associated with the
Company's insurance agency, increased by $707,000 or 43.1%
between the three month period ended June 30, 1998 and the three
month period ended June 30, 1999, growing from $1,609,000 to
$2,347,000 respectively. Salaries and benefits provided the bulk
of this increase, $445,000 and resulted in an increase to
$1,155,000 from $710,000 between the two periods. Other operating
expenses, including expenses associated with the sale of
foreclosed real estate, increased to $739,000 from $514,000, an
increase of 43.8%.
Income before income taxes increased to $645,000 from $257,000
between the second quarter of 1998 and the second quarter of
1999, an increase of $388,000 or 151.0%, and resulted in
increased federal income taxes during the period. Federal income
tax expense increased to $197,000 from $48,000 between the
quarter ended June 30, 1998 and 1999.
Net income during the second quarter of 1999 amounted to $448,000
representing an increase of $239,000 or 114.4% from the second
quarter of 1998. Basic earnings per share improved to $0.35 per
share for the second quarter of 1999 compared with only $0.17 per
share for the second quarter of 1998.
Six-Month Periods Ended June 30, 1999 and 1998
Total interest income for the six months ended June 30, 1999
increased to $8,660,000 from $6,858,000 for the same period in
1998, an increase of $1,802,000 or 26.3%. Contributing
significantly to this improvement was the extraordinary growth in
the loan portfolio noted above. Interest and fees on loans
increased by $1,553,000 or 28.0% growing from $5,547,000 for the
six months ended June 30, 1998 to $7,100,000 for the same period
in 1999.
Taxable interest on investment securities also increased, growing
to $1,301,000 for the period in 1999 from $998,000 for the period
in 1998. During the six months ended June 30, 1999, approximately
$4,000,000 of investment securities were sold and replaced. This
transaction was designed to remove prepayment risk from the
portfolio, as many of the securities that were sold were callable
agency securities and pre-refunded municipal securities.
Interest expense, including interest on borrowed funds, increased
to $4,762,000 for the first six months of 1999 from $3,527,000
for the same period in 1998, an increase of $1,235,000 or 35.0%.
Net interest income, a key component of the Bank's net income,
increased by $567,000 or 17.0% for the first six months of 1999
compared with the first six months of 1998, growing from
$3,331,000 to $3,898,000. The Bank's focus on growing the loan
portfolio while controlling interest costs, resulted in this
dramatic improvement.
The accelerated loan growth, however, did not come without a
price. The provision for loan losses for the first six months of
1999 was increased by $238,000 or 97.1% from the first six months
of 1998. Management is funding the allowance for loan losses at a
significantly higher rate than in 1998 and anticipates providing
about $1,000,000 during 1999. In addition, the Bank continues to
focus on loan quality and credit reviews.
Net interest income after the provision for loan losses increased
by $329,000 or 10.7% growing from $3,086,000 to $3,415,000
between the six month periods ended June 30, 1998 and 1999.
Total other income increased dramatically, due to the addition of
commissions on insurance sales generated by the company's
insurance agency subsidiary, Essick & Barr. These commissions
generated $1,696,000 in income during the first six months of
1999. Absent this income, total other income remained stable,
falling slightly from $581,000 for the first six months of 1998
to $572,000 in 1999. Increases in customer service fees and other
income offset a decrease in fees from mortgage banking
activities. The Bank continues to review its position relative to
customer service fees and is keenly aware of the need to generate
additional fee income to supplement its net interest margin.
Total other expenses increased to $4,449,000 for the first six
months of 1999 from $3,178,000 for the first six months of 1998,
an increase of $1,271,000 or 40.0%. Contributing to this increase
are the costs associated with Essick & Barr, including salaries
and benefits. For the first six months of 1998, salaries and
benefits amounted to $1,480,000 and for the first six months of
1999, salaries and benefits amounted to $2,235,000, an increase
of $755,000 representing 51.0%.
Other operating expenses increased significantly with the
acquisition of Essick & Barr Insurance, Inc. growing from
$894,000 for the first six months of 1998 to $1,360,000 for the
first six months of 1999, an increase of $466,000 or 52.1%.
Within this increase, expenses associated with the sale of
foreclosed real estate amounted to $148,000 during 1999. The cost
of computer services decreased between the two periods, falling
from $358,000 to $277,000 as the effects of a renegotiated
computer services contract were realized.
Income before taxes increased to $1,234,000 from $489,000 between
the first six months of 1998 and 1999, an increase of $745,000 or
152.4%. The associated increase in federal income taxes resulted
in tax expenses of $349,000 for the first six months of 1999
compared with $81,000 for the first six months of 1998. The
effective tax rates between the two periods were 28.3% for the
first six months of 1999 compared with 19.9% for the same period
in 1998 due to the decrease in tax-exempt income as a percentage
of total income between the two periods.
Net income improved by $477,000 or 116.9% between the two periods
growing from $408,000 for the first six months of 1998 to
$885,000 for the first six months of 1999. Net income on a per
share basis improved to $0.70 per share for the six months ended
June 30, 1999 compared with only $0.34 per share for the six
months ended June 30, 1998, an increase of $0.36 per share or
105.9%. Dividends paid per share increased to $0.275 per share
from $0.26 per share.
Year 2000
The Bank and the Insurance Agency have completed their
identification and testing processes associated with preparing
for the Year 2000. This testing involved establishing test
accounts and duplicate processing environments.
The Bank's Year 2000 Committee, which was established in 1996,
was charged with assessing the impact of the Year 2000 problem,
identifying affected equipment, systems, and processes,
identifying and resolving any of the identified problems, and
testing the solutions. During the process, the Bank worked very
closely with its data processing provider, Bisys, of Cherry Hill,
New Jersey, to identify and resolve potential problems associated
with the date change. The Insurance Agency also completed its
testing during the period.
Communications with customers and the general public have been on-
going, and training, planning, and monitoring responses and
inquiries will continue throughout the remainder of 1999. For the
entire year of 1999, the Company anticipates spending
approximately $20,000 in conjunction with these Year 2000
preparations. An additional investment of $15,000 in equipment
replacement will also be included throughout 1999.
Merchants Bank
On July 1, 1999 the Company completed the acquisition of
Merchants Bancorp of Shenandoah, a single-bank holding company
for Merchants Bank, a state-chartered institution of $61,000,000
in total assets. This acquisition will be treated as a pooling
for financial accounting purposes. On a pro-forma basis, the
Company's total assets will be $332,000,000 and its total capital
will be $25,000,000 .
Liquidity and Interest Rate Sensitivity
The banking industry has been required to adapt to an environment
in which interest rates have been volatile and deposit
deregulation has provided customers with the opportunity to
invest in liquid, interest rate-sensitive deposits. The banking
industry has adapted to this environment by using a process known
as asset/liability management.
Adequate liquidity means the ability to obtain sufficient cash to
meet all current and projected needs promptly and at a reasonable
cost. These needs include deposit withdrawal, liability runoff,
and increased loan demand. The principal sources of liquidity are
cash and due from banks, money market investments, and all
unpledged investment securities maturing within one year.
Maturing loans and loan payments are another source of liquidity.
The Bank can also package and sell residential mortgage loans
into the secondary market. Other sources of liquidity are the
federal funds market, term borrowings from the Federal Home Loan
Banking System, and the discount window of the Federal Reserve
Banking System. In view of all factors involved, the Bank's
management believes that liquidity is being maintained at an
adequate level.
Asset/liability management is intended to provide for adequate
liquidity and interest rate sensitivity by matching interest rate-
sensitive assets and liabilities and coordinating maturities on
assets and liabilities. Approximately 25% of the commercial loan
portfolio is sensitive to interest rate changes. Other loans are
written for relatively short terms and, except for the majority
of residential mortgage loans, provide for a readjustment of the
interst rate at specified times during the term of the loan. In
addition, interest rates offered for all types of deposit
instruments are reviewed weekly and are established on a basis
consistent with funding needs and maintaining a desirable spread
between coast and return. The Bank does not use reverse
repurchase agreements, interest rate swaps, or other derivative
products in its asset/liability management practices at this
time.
<PAGE>
<TABLE>
The following table shows the repricing periods of interest
earning assets and interest bearing liabilities as of June 30,
1999:
INTEREST RATE SENSITIVITY
(Amounts in thousands)
<CAPTION> Repricing Period
One
Within Year to Over
One Five Five
Year Years Years Total
<S> <C> <C> <C> <C>
Interest Earning
Assets:
Interest-bearing 248 0 0 248
balances
Federal funds sold 0 0 0 0
Securities 6,141 6,001 36,179 48,321
Net loans 82,754 22,566 93,741 199,061
Total Interest Earning 89,143 28,567 129,920 247,630
Assets
Interest Earning
Liabilities:
Total interest-bearing 114,609 69,443 0 184,052
deposits
Other borrowed funds 12,600 8,000 12,500 33,100
Total Interest Earning 127,209 77,443 12,500 217,152
Liabilities
Rate Sensitivity Gap -38,006 -48,876 117,420 30,478
<FN>
</TABLE>
<TABLE>
Capital Adequacy
The following table provides information about the capital of the
Bank as it relates to regulatory minimums as of selected Balance
Sheet dates:
<CAPTION> Actual Actual
Regulatory June 30 Dec 31
Minimum 1999 1998
<S> <C> <C> <C>
Tier I Capital to Risk- 4.00% 8.35% 10.27%
Adjusted Assets
Total Capital to Risk- 8.00% 9.42% 11.46%
Adjusted Assets
Leverage Ratio 3.00% 6.28% 7.04%
</TABLE>
<PAGE>
Item 3 - Quantitative and Qualitative Disclosures about Market
Risk
There have been no material changes in the Company's assessment
of its sensitivity to market risk since its presentation in the
1998 annual report on Form 10-KSB filed with the SEC.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
At a special meeting of shareholders of First Leesport
Bancorp, Inc. (the "Company") held on June 24, 1999, the merger
of Merchants Bancorp of Shenandoah with and into the Company was
approved by the Company's shareholders. The shareholders cast
1,078,316 votes for the merger and 91,954 votes against the
merger, and there were 24,598 abstentions. The effective
date of the merger was July 1, 1999.
At the annual meeting of shareholders of the Company held on
April 27, 1999, the shareholders approved the 1998 Employee Stock
Incentive Plan and the 1998 Independent Directors Stock Option
Plan and approved an amendment to the Company's Articles of
Incorporation increasing the number of authorized shares from
2,000,000 to 10,000,000 shares. The shareholders also elected
Raymond H. Melcher, Jr., William J. Keller, and Charles J.
Hopkins to three-year terms and Edward C. Barrett to a two-year
term on the Company's Board of Directors. The votes cast in such
matters were as follows:
For Against Abstain
Stock Incentive Plan 762,140 53,246 41,319
Stock Option Plan 731,125 79,608 52,320
Amendment to Articles of
Incorporation 802,048 82,935 26,723
Election of Directors
Raymond H. Melcher, Jr. 891,902 26,159
William J. Keller 892,028 26,033
Charles J. Hopkins 891,536 26,525
Edward C. Barrett 892,028 26,033
A proposed amendment to the Company's Articles of
Incorporation to reduce the percentage of shares necessary to
approve a merger or consolidation in which the Company is the
surviving entity was not approved by the Company's shareholders.
John T. Connelly, Karen A. Rightmire, Richard L. Henry,
Alfred J. Weber, Harry J. O'Neill, III, and Daniel W. Weist
continue as directors of the Company after the annual meeting of
shareholders.
Item 5. Other Information
The Board of Directors of First Leesport Bancorp, Inc. at
its June 24 , 1999 meeting declared a $0.145 per share
cash dividend to be paid July 15, 1999 to holders of record
on July 1, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K.
ARTICLES OF INCORPORATION
OF
FIRST LEESPORT BANCORP, INC.,
AS AMENDED
1. The Name of the Corporation is: First Leesport Bancorp,
Inc.
2. The Address of its Registered Office in Pennsylvania is:
133 North Centre Avenue, Leesport, Pennsylvania 19533.
3. The Purpose or Purposes of the Corporation: To have
unlimited power to engage in and do any lawful act
concerning any or all lawful business for which corporations
may be incorporated under the provisions of the Business
Corporation Law of the Commonwealth of Pennsylvania. The
Corporation is incorporated under the provisions of the
Business Corporation Law of the Commonwealth of Pennsylvania
(Act of May 5, 1933, P.L. 364 as amended).
4. The Term of Existence is: Perpetual.
5. The total number of Common Shares that the Corporation shall
have the authority to issue is 10,000,000 shares of the par
value of $5.00 per share.
6. The Name and Address of Each Incorporator, and the Number
and Class of Shares Subscribed to by Each Incorporator:
John T. Connelly 1203 Independence Drive 1 share common
Reading, PA 19609 stock
Paul E. Keim R.D. #1, Box 145 1 share common
Leesport, PA 19533 stock
Sherwood C. Rieser R.D. #1, Box 145 1 share common
Leesport, PA 19533 stock
7. Cumulative Voting Rights. Cumulative voting rights shall
not exist with respect to the election of directors.
8. Opposition of Tender (or other offer). The Board of
Directors may, if it deems it advisable, oppose a tender, or
other offer for the corporation's securities, whether the
offer is in cash or in securities of a corporation or
otherwise. When considering whether to oppose an offer, the
Board of Directors may, but it is not legally obligated to,
consider any pertinent issues; by way of illustration, but
not of limitation, the Board of Directors may, but shall not
be legally obligated to, consider any and all of the
following:
8.1 Whether the offer price is acceptable based on the
historical and present operating results or financial
condition of the corporation.
8.2 Whether a more favorable price could be obtained
for the corporation's securities in the future.
8.3 The impact which an acquisition of the corporation
would have on its employees, depositors and customers
of the corporation and its subsidiaries in the
community which they service.
8.4 The reputation and business practices of the
offeror and its management and affiliates as they would
affect the employees, depositors and customers of the
corporation and its subsidiaries and the future value
of the corporation's stock.
8.5 The value of the securities, if any, which the
offeror is offering in exchange for the corporation's
securities, based on an analysis of the worth of the
corporation as compared to the corporation or other
entity whose securities are being offered.
8.6 Any antitrust or other legal and regulatory issues
that are raised by the offer.
If the Board of Directors determines that an offer should be
rejected, it may take any lawful action to accomplish its
purpose including, but not limited to, any and all of the
following: advising shareholders not to accept the offer;
litigation against the offeror; filing complaints with all
governmental and regulatory authorities; acquiring the
authorized but unissued securities or treasury stock or
granting options with respect thereto; acquiring a company
to create an antitrust or other regulatory problem for the
offeror; and obtaining a more favorable offer from another
individual or entity.
9. Classification of Directors. The Board of Directors of the
Corporation shall be divided into three classes, the
respective terms of office of which shall end in successive
years. The number of directors in each class shall be
specified in the Bylaws and shall be nearly as equal as
possible. Unless they are elected to fill vacancies, the
directors in each class shall be elected to hold office
until the third successive annual meeting of shareholders
after their election and until their successors shall have
been elected and qualified. At each annual meeting of
shareholders the directors of only one class shall be
elected, except directors who may be elected to fill
vacancies.
10. Preemptive Rights. No holder of shares of any class or of
any series of any class shall have any preemptive right to
subscribe for, purchase or receive any shares of the
corporation, whether now or hereafter authorized, or any
obligations or other securities convertible into or carrying
options to purchase any such shares of the corporation, or
any options or rights to purchase any such shares or
securities, issued or sold by the corporation for cash or
any other form of consideration, and any such shares,
securities or rights may be issued or disposed of by the
Board of Directors to such persons and on such terms as the
Board in its discretion shall deem advisable.
11. Indebtedness. The corporation shall have authority to
borrow money and the Board of Directors, without the
approval of the shareholders and acting within their sole
discretion, shall have the authority to issue debt
instruments of the corporation upon such terms and
conditions and with such limitation as the Board of
Directors deems advisable. The authority of the Board of
Directors shall include, but not be limited to, the power to
issue convertible debentures.
12. Shareholder Action. No merger, consolidation, liquidation
or dissolution of the Corporation nor any action that would
result in the sale or other disposition of all or
substantially all of the assets of the Corporation shall be
valid unless first approved by the affirmative vote of the
holders of at least seventy percent (70%) of the outstanding
shares of Common Stock. This Article may not be amended
unless first approved by the affirmative vote of the holders
of at least seventy percent (70%) of the outstanding shares
of Common Stock.
13. If any corporation, person, entity, or group becomes the
beneficial owner, directly or indirectly, of shares of
capital stock of the Corporation having the right to cast in
the aggregate 30% or more of all votes entitled to be cast
by all issued and outstanding shares of capital stock of the
Corporation entitled to vote, such corporation, person,
entity or group shall within 30 days thereafter offer to
purchase all shares of capital stock of the Corporation
issued, outstanding and entitled to vote. Such offer to
purchase shall be at a price per share equal to the highest
price paid for shares of the respective class or series of
capital stock of the Corporation purchased by such
corporation, person, entity or group within the preceding
twelve months. If such corporation, person, entity or group
did not purchase any shares of capital stock of the
Corporation within the preceding twelve months, such offer
to purchase shall be at a price per share equal to the fair
market value of such capital stock on the date on which such
corporation, person, entity or group becomes the beneficial
owner, directly or indirectly, of shares of capital stock of
the Corporation having the right to cast in the aggregate
30% or more of all votes entitled to be cast by all issued
and outstanding capital stock of the Corporation. Such
offer shall provide that the purchase price for such shares
shall be payable in cash. The provisions of this ARTICLE
THIRTEENTH shall not apply if 80% or more of the members of
the Board of Directors of the Corporation approve in advance
the acquisition of beneficial ownership by such corporation,
person, entity or group of shares of capital stock of the
Corporation having the right to cast in the aggregate 30% or
more of all votes entitled to be cast by all issued and
outstanding shares of capital stock of the Corporation. The
provisions of this ARTICLE THIRTEENTH shall be in addition
to and not in lieu of any rights granted under Section 910
of the Pennsylvania Business Corporation Law and any
amendment or restatement of such section ("Section 910");
provided, however, that if the provisions of this ARTICLE
THIRTEENTH and Section 910 are both applicable in any given
instance, the price per share to be paid for shares of
capital stock of the Corporation issued, outstanding and
entitled to vote shall be the higher of the price per share
determined in accordance with this ARTICLE THIRTEENTH or the
price per share determined in accordance with the provisions
of Section 910."
AMENDED AND RESTATED
BYLAWS
OF
FIRST LEESPORT BANCORP, INC.
ARTICLE I. MEETINGS OF SHAREHOLDERS.
Section 101. Place of Meetings. All meetings of the
shareholders shall be held at such place or places, within or
without the Commonwealth of Pennsylvania, as shall be
determined by the Board of Directors from time to tine.
Section 102. Annual Meetings. The annual meeting of
the shareholders for the election of Directors or the
transaction of such other business as may properly come
before the meeting shall be held at such date or hour as may
be fixed by the Board of Directors. Any business which is a
proper subject for shareholder action may be transacted at
the annual meeting, irrespective of whether the notice of
said meeting contains any reference thereto, except as
otherwise provided by these Bylaws or by applicable law.
Section 103. Special Meetings. Except as expressly
required by law, special meetings of the shareholders may be
called at any time only by the Board of Directors.
Section 104. Conduct of Shareholders' Meetings. The
Chairman of the Board shall preside at all shareholders'
meetings. In the absence of the Chairman of the Board, the
Vice Chairmen in order of seniority shall preside or, in the
absence of any of them, the Chief Executive Officer shall
preside. The officer presiding over the shareholders'
meeting may establish such rules and regulations for the
conduct of the meeting as he/she may deem to be reasonably
necessary or desirable for the orderly and expeditious
conduct of the meeting, including the ability to impose
reasonable limits on the amount of time at the meeting taken
up in remarks by any one shareholder or group of
shareholders. Unless the officer presiding over the
shareholders' meeting otherwise requires, shareholders need
not vote by ballot on any question.
Section 105. Business at Meetings of Shareholders.
(a) Except as otherwise provided by law or in
these Bylaws, or except as permitted by the presiding officer
of the meeting in the exercise of such officer's sole
discretion in any specific instance, the business which shall
be voted upon or discussed at any annual or special meeting
of the shareholders shall (i) have been specified in the
written notice of the meeting (or any supplement thereto)
given by the Corporation, (ii) be brought before the meeting
at the direction of the Board of Directors, or (iii) in the
case of an annual meeting of shareholders have been specified
in a written notice given to the Corporation by or on behalf
of any shareholder who shall have been a shareholder of
record on the record date for such meeting and who shall
continue to be entitled to vote thereat (the "Shareholder
Notice"), in accordance with all of the requirements set
forth below.
(b) Each Shareholder Notice must be delivered to,
or mailed and received at, the principal executive offices of
the Corporation addressed to the attention of the President
(i) in the case of an annual meeting that is called for a
date that is within 30 days before or after the anniversary
date of the immediately preceding annual meeting of
shareholders, not less than 60 days nor more than 90 days
prior to such anniversary date, provided, that a proposal
submitted by shareholder for inclusion in the Corporation's
proxy statement for an annual meeting which is appropriate
for inclusion therein and otherwise complies with Securities
Exchange Act of 1934 Rule 14a-8 (including timeliness), or
any successor rule, shall be deemed to have also been
submitted timely pursuant to these Bylaws and (ii) in the
case of an annual meeting that is called for a date that is
not within 30 days before or after the anniversary date of
the immediately preceding annual meeting, not later than the
close of business on the fifth day following the earlier of
the day on which notice of the date of the meeting was mailed
or public disclosure of the meeting date (which shall include
disclosure of the meeting date given to a national securities
exchange or the National Association of Securities Dealers)
was made. Each such Shareholder Notice must set forth
(A) the name and address of the shareholder who intends to
bring the business before the annual meeting ("Proposing
Shareholder"); (B) the name and address of the beneficial
owner, if different than the Proposing Shareholder, of any of
the shares owned of record by the Proposing Shareholder
("Beneficial Owner"); (C) the number of shares of each class
and series of shares of the Corporation which are owned of
record and beneficially by the Proposing Shareholder and the
number which are owned beneficially by any Beneficial Owner;
(D) any interest (other than an interest solely as a
shareholder) which the Proposing Shareholder or a Beneficial
Owner has in the business being proposed by the Proposing
Shareholder; (E) a description of all arrangements and
understandings between the Proposing Shareholder and any
Beneficial Owner and any other person or persons (naming such
person or persons) pursuant to which the proposal in the
Shareholder Notice is being made; (F) a description of the
business which the Proposing Shareholder seeks to bring
before the annual meeting, the reason for doing so and, if a
specific action is to be proposed, the text of the resolution
or resolutions which the Proposing Shareholder proposes that
the Corporation adopt; and (G) a representation that the
Proposing Shareholder is at the time of giving the
Shareholder Notice, was or will be on the record date for the
meeting, and will be on the meeting date a holder of record
of shares of the Corporation entitled to vote at such
meeting, and intends to appear in person or by proxy at the
meeting to bring the business specified in the Shareholder
Notice before the meeting. The presiding officer of the
meeting may, in such officer's sole discretion, refuse to
acknowledge any business proposed by a shareholder which the
presiding officer determines is not made in compliance with
the foregoing procedure.
ARTICLE II. DIRECTORS AND BOARD MEETINGS.
Section 201. Management by Board of Directors. The
business and affairs of the Corporation shall be managed by
its Board of Directors. The Board of Directors may exercise
all such powers of the Corporation and do all such lawful
acts and things as are not by statute, regulation, the
Articles of Incorporation or these Bylaws directed or
required to be exercised or done by the shareholders.
Section 202. Nomination for Directors.
Notwithstanding the provisions of Section 105 of these Bylaws
(dealing with business at meetings of shareholders),
nominations for the election of Directors may be made by the
Board of Directors, by a committee appointed by the Board of
Directors with authority to do so or by any shareholder of
record entitled to vote in the election of Directors who is a
shareholder at the record date of the meeting and also on the
date of the meeting at which Directors are to be elected;
provided, however, that with respect to a nomination made by
a shareholder, such shareholder must provide timely written
notice to the President of the Corporation in accordance with
the following requirements:
(a) To be timely, a shareholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Corporation
addressed to the attention of the President (i) in the case of an annual
meeting that is called for a a date that is within 30 days before or
after the anniversary date of the immediately preceding annual meeting of
shareholders, not less than 60 days nor more than 90 days before or after
the anniversary date of the immediately preceding annual meeting, or in the
case of a special meeting of shareholders called for the
purpose of electing Directors, not later than the close of
business on the fifth day following the earlier of the day on
which notice of the date of the meeting was mailed or public
disclosure of the meeting date (which shall include
disclosure of the meeting date given to a national securities
exchange or the National Association of Securities dealers)
was made; and
(b) Each such written notice must set forth:
(i) the name and address of the shareholder who intends to
make the nomination("Nominating Shareholder"); (ii) the name
and address of the beneficial owner, if different than the
Nominating Shareholder, of any of the shares owned of record
by the Nominating Shareholder ("Beneficial Holder");
(iii) the number of shares of each class and series of shares
of the Corporation which are owned of record and beneficially
by the Nominating Shareholder and the number which are owned
beneficially by any Beneficial Holder; (iv) a description of
all arrangements and understandings between the Nominating
Shareholder and any Beneficial Holder and any other person or
persons (naming such person or persons) pursuant to which the
nomination is being made; (v) the name and address of the
person or persons to be nominated; (vi) a representation that
the Nominating Shareholder is at the time of giving of the
notice, was or will be on the record date for the meeting,
and will be on the meeting date a holder of record of shares
of the Corporation entitled to vote at such meeting, and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(vii) such other information regarding each nominee proposed
by the Nominating Shareholder as would have been required to
be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the
Board of Directors; and (viii) the written consent of each
nominee to serve as a Director of the Corporation is so
elected. The presiding officer of the meeting may, in such
officer's sole discretion, refuse to acknowledge the
nomination of any person which the presiding officer
determines is not made in compliance with the foregoing
procedure.
Section 203. Certain Director Qualifications. Every
Director must be a shareholder of the Corporation and shall
own in his/her own right the number of shares (if any)
required by law in order to qualify as such Director. Any
Director shall forthwith cease to be a Director when he/she
no longer holds such shares, which fact shall be reported to
the Board of Directors by the Secretary, whereupon the Board
of Directors shall declare the seat of such Director vacated.
Section 204. Eligibility and Mandatory Retirement. No
person shall be eligible for nomination or for election to
the Board of Directors of the Corporation if such person
would attain the age of seventy (70) years at any time during
such person's term as a Director, if elected; provided,
however, that the preceding provisions of this sentence shall
not apply to persons elected as Directors of the Corporation
pursuant to the terms of a definitive agreement of
acquisition or merger approved by the Board of Directors of
the Company to the extent, but only to the extent,
specifically provided in such agreement. The Board of
Directors may designate one or more persons who have retired
from the Board as honorary members of the Board of Directors.
Such honorary members of the Board of Directors may attend
meetings of the Board of Directors, but shall have no
authority to vote or receive compensation.
Section 205. Number of Directors. The Board of
Directors shall consist of not less than five (5) nor more
than twenty-five (25) shareholders, the exact number to be
fixed and determined from time to time by resolution of a
majority of the full Board of Directors or by resolution of
the shareholders at any annual or special meeting thereof.
Section 206. Classification of Directors. The
Directors shall be divided into three (3) classes, as nearly
equal in number as possible, known as Class 1, consisting of
not more than eight (8) Directors; Class 2, consisting of not
more than eight (8) Directors; and Class 3, consisting of not
more than nine (9) Directors. The initial Directors of Class
I shall serve until the third (3rd) annual meeting of
shareholders. At the third (3rd) annual meeting of the
shareholders, the Directors of Class I shall be elected for a
term of three (3) years and, after expiration of such term,
shall thereafter be elected every three (3) years for three
(3) year terms. The initial Directors of Class 2 shall serve
until the second (2nd) annual meeting of shareholders. At
the second (2nd) annual meeting of shareholders, the
Directors of Class 2 shall be elected for a term of three (3)
years and, after the expiration of such term, shall
thereafter be elected every three (3) years for three (3)
year terms. The initial Directors of Class 3 shall serve
until the first (1st) annual meeting of shareholders. At the
first (1st) annual meeting of shareholders, the Directors of
Class 3 shall be elected for a term of three (3) years and,
after the expiration of such term, shall thereafter be
elected every three (3) years for three (3) year terms. Each
Director shall serve until his/her successor shall have been
elected and shall qualify, even though his/her term of office
as herein provided has otherwise expired, except in the event
of his/her earlier resignation, removal or disqualification.
Section 207. Vacancies. Vacancies in the Board of
Directors, including vacancies resulting from an increase in
the number of Directors, may be filled by the remaining
members of the Board even though less than a quorum. Any
Director elected to fill a vacancy in the Board of Directors
shall become a member of the same Class of Directors in which
the vacancy existed; but if the vacancy is due to an increase
in the number of Directors a majority of the members of the
Board of Directors shall designate such directorship as
belonging to Class 1, Class 2 or Class 3 so as to maintain
the three (3) classes of Directors as nearly equal in number
as possible. Each Director so elected shall be a Director
until his/her successor is elected by the shareholders, who
may make such election at the next annual meeting of the
shareholders or at any special meeting duly called for that
purpose and held prior thereto.
Section 208. Compensation of Directors. No Director
shall be entitled to any salary as such, but the Board of
Directors may fix, from time to time, a reasonable annual fee
for acting as a Director and a reasonable fee to be paid each
Director for his/her services in attending meetings of the
Board and meetings of committees appointed by the Board. The
Corporation may reimburse Directors for expenses related to
their duties as a member of the Board.
Section 209. Regular Meetings. Regular meetings of
the Board of Directors shall be held on such day, at such
hour, and at such place, consistent with applicable law, as
the Board shall from time to time designate or as may be
designated in any notice from the Secretary calling the
meeting. The Board of Directors shall meet for
reorganization at the first regular meeting following the
annual meeting of shareholders at which the Directors are
elected. Notice need not be given of regular meetings of the
Board of Directors which are held at the time and place
designated by the Board of Directors. If a regular meeting
is not to be held at the time and place designated by the
Board of Directors, notice of such meeting, which need not
specify the business to be transacted thereat and which may
be either verbal in writing, shall be given by the Secretary
to each member of the Board at least twenty-four (24) hours
before the time of the meeting.
Directors shall attend a minimum of fifty percent (50%)
of the regular meetings held in any calendar year unless such
absences shall be excused by the Board of Directors in a
manner prescribed by them from time to time. Failure to
attend a minimum of fifty percent (50%) of the regular
meetings of the Directors in any calendar year, without
sufficient excuse, shall subject the Director to removal from
the Board of Directors in such manner as the Board of
Directors shall prescribe from time to time.
A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business.
If at the time fixed for the meeting, including the meeting
to organize the new Board following the annual meeting of
shareholders, a quorum is not present, the directors in
attendance may adjourn the meeting from time to time until a
quorum is obtained.
Except as otherwise provided herein, a majority of those
directors present and voting at any meeting of the Board of
Directors, shall decide each matter considered. A director
cannot vote by proxy, or otherwise act by proxy at a meeting
of the Board of Directors.
Section 210. Special Meetings. Special meetings of
the Board of Directors may be called by the President or at
the request of three (3) or more members of the Board of
Directors. A special meeting of the Board of Directors shall
be deemed to be any meeting other than the regular meeting of
the Board of Directors. Notice of the time and place of
every special meeting, which need not specify the business to
be transacted thereat and which may be either verbal or in
writing, shall be given by the Secretary to each member of
the Board at least twenty-four (24) hours before the time of
such meeting excepting the Organization meeting following the
election of the Directors.
Section 211. Reports and Records. The reports of
officers and Committees and the records of the proceedings of
all Committees shall be filed with the Secretary of the
Corporation and presented to the Board of Directors, if
practicable, at its next regular meeting. The Board of
Directors shall keep complete records of its proceedings in a
minute book kept for that purpose. When a Director shall
request it, the vote of each Director upon a particular
question shall be recorded in the minutes.
Section 212. Liability of Directors; Indemnification.
Section 212.1 To the fullest extent permitted by the
Directors' Liability Act (42 Pa. C.S. ?8361 et seq.) and the
Business Corporation Law of the Commonwealth of Pennsylvania,
a director of the corporation shall not be personally liable
to the corporation, its stockholders or others for monetary
damages for any action taken or any failure to take any
action unless the director has breached or failed to perform
the duties of his or her office as set forth in the
Directors' Liability Act and such breach or failure
constitutes self-dealing, willful misconduct, or
recklessness. The provisions of this Section 212 shall not
apply with respect to the responsibility or liability of a
director under any criminal statute or the liability of a
director for the payment of taxes pursuant to local, state or
federal law.
Section 212.2 (a) The corporation shall indemnify any
person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that such person is or
was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), amounts paid in settlement, judgments, and fines
actually and reasonably incurred by such person in connection
with such action, suit, or proceeding; provided, however,
that no indemnification shall be made (i) in any case where
the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted
willful misconduct or recklessness, (ii) with respect to
proceedings, claims or actions initiated or brought
voluntarily by such person and not by way of defense, or
(iii) for any amounts paid in settlement of an action
indemnified against by the Corporation, unless pursuant to
the prior written consent of the Corporation.
(b) Expenses (including attorneys' fees) incurred
in defending a civil or criminal action, suit, or proceeding
shall be paid by the corporation in advance of the final
disposition of such action, suit, or proceeding upon receipt
of an undertaking by or on behalf of the director, officer,
employee, or agent to repay such amount if it shall be
ultimately determined that he is not entitled to be
indemnified by the corporation as authorized in this
Section 212.
(c) The indemnification and advancement of
expenses provided by this Section 212 shall not be deemed
exclusive of any other right to which persons seeking
indemnification and advancement of expenses may be entitled
under any agreement, vote of shareholders or disinterested
directors, or otherwise, both as to actions in such persons'
official capacity and as to their actions in another capacity
while holding office, and shall continue as to a person who
has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and
administrators of such person.
(d) The corporation may purchase and maintain
insurance on behalf of any person, may enter into contracts
of indemnification with any person, may create a fund of any
nature (which may, but need not be, under the control of a
trustee) for the benefit of any person, and may otherwise
secure in any manner its obligations with respect to
indemnification and advancement of expenses, whether arising
under this Section 212 or otherwise, to or for the benefit of
any person, whether or not the corporation would have the
power to indemnify such person against such liability under
the provisions of this Section 212.
Section 212.4 Notwithstanding anything herein contained
to the contrary, this Section 212 may not be amended or
repealed except by the affirmative vote of 75% of the members
of the entire Board of Directors or by the affirmative vote
of shareholders of the corporation entitled to cast at least
75% of all votes which shareholders of the corporation are
then entitled to cast, except that, if the Business
Corporation Law or the Directors' Liability Act is amended or
any other statute is enacted so as to decrease the exposure
of directors to liability or to increase the indemnification
rights available to directors, officers, or others, then this
Section 212 and any other provision of these By-Laws
inconsistent with such decreased exposure or increased
indemnification rights shall be amended, automatically and
without any further action on the part of shareholders or
directors, to reflect such decreased exposure or to include
such increased indemnification rights, unless such
legislation expressly requires otherwise. Any repeal or
modification of this Section 212 by the stockholders of the
corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of
a director of the corporation or any right to indemnification
from the corporation for any action taken or any failure to
take any action occurring prior to the time of such repeal or
modification.
Section 212.5 If, for any reason, any provision of this
Section 212 shall be held invalid, such invalidity shall not
affect any other provision not held so invalid, and each such
other provision shall, to the full extent consistent with
law, continue in full force and effect. If any provision of
this Section 212 shall be held invalid in part, such
invalidity shall in no way affect the remainder of such
provision, and the remainder of such provision, together with
all other provisions of this Section 212 shall, to the full
extent consistent with law, continue in full force and
effect.
ARTICLE III. COMMITTEES.
Section 301. Committees. The following Committees of
the Board of Directors shall be established by the Board of
Directors in addition to any other Committee the Board of
Directors may in its discretion establish.
Section 302. Executive Committee. The Executive
Committee shall consist of any three (3) or more Directors.
A majority of the members of the Executive Committee shall
constitute a quorum, and actions of a majority of those
present at a meeting at which a quorum is present shall be
actions of the Committee. Meetings of the Committee may be
called at any time by the Chairman or Secretary of the
Committee, and shall be called whenever two (2) or more
members of the Committee so request in writing. The
Executive Committee shall have and exercise the authority of
the Board of Directors in the management of the business of
the Corporation between the dates of regular meetings of the
Board.
Section 303. Appointment of Committee Members. The
Board of Directors shall elect the members of the Committees
and the Chairman and Vice Chairman of each such Committee to
serve until the next annual meeting of shareholders. The
President shall appoint or shall establish a method of
appointing, subject to the approval of the Board of
Directors, the members of any other Committees established by
the Board of Directors, and the Chairman and Vice Chairman of
such Committee, to serve until the next annual meeting of
shareholders. The Board of Directors may appoint, from time
to time, other committees, for such purposes and with such
powers as the Board may determine.
Section 304. Organization and Proceedings. Each
Committee of the Board of Directors shall effect its own
organization by the appointment of a Secretary and such other
Officers, except the Chairman and Vice Chairman, as it may
deem necessary. A record of proceedings all of committees
shall be kept by the Secretary of such Committee and filed
and presented as provided in Section 211 of these Bylaws.
ARTICLE IV. OFFICERS.
Section 401. Officers. The Officers of the
Corporation shall be a President, who shall be a member of
the Board of Directors, one or more Vice Presidents, a
Secretary, a Treasurer and such other Officers and Assistant
Officers as the Board of Directors may from time to time deem
advisable. The Board may also elect a Chairman of the Board
and so many Vice Chairman as deemed advisable. All officers
of the corporation shall be elected by the Board of Directors
for such terms as the Board of Directors shall determine from
time to time. Any Officer may be removed at any time with or
without cause, and regardless of the term for which such
Officer was elected, but without prejudice to any contract
right of such Officer. Each Officer shall hold his or her
office for the current year for which he or she was elected
or appointed by the Board unless such Officer shall resign,
become disqualified or be removed at the pleasure of the
Board of Directors.
Section 402. Chairman of the Board. The Board of
Directors may elect one of its members to be Chairman of the
Board at the first regular meeting of the Board following
each annual meeting of shareholders at which Directors are
elected. The Chairman of the Board shall be an ex-officio
member of all committees, shall preside at the meetings of
the Board and the shareholders, and shall perform such other
duties as may be prescribed by the Board of Directors.
Section 403. Vice Chairman of the Board. In the
absence of the Chairman, a Vice Chairman, if elected, shall
preside at meetings of shareholders and of the directors and
shall perform such other duties as may from time to time be
prescribed by the Board, by law, or these Bylaws.
Section 404. President. The President shall be the
Chief Executive Officer of the Bank and oversee all facets of
its operation and shall report directly to the Board of
Directors, be responsible to it and carry out those duties as
directed by the Board. In the absence of a Chairman of the
Board, the President shall serve as chairman of the Board.
The President shall be an ex-officio member of all Committees
of the Board of Directors, except the Audit Committee.
Section 405. Vice Presidents. The Vice Presidents
shall perform such duties, do such acts and be subject to
such supervision as may be prescribed by the Board of
Directors or the President. In the event of the absence or
disability of the President and his/her refusal to act, the
Vice Presidents, in the order of their rank, and within the
same rank and in the order of their authority, shall perform
the duties and have the powers and authorities of the
President, except to the extent inconsistent with applicable
law.
Section 406. Secretary. The Secretary shall keep
accurate minutes of the proceedings of all meetings of the
shareholders and the directors in a book provided for that
purpose. He/she shall keep a record of the attendance at all
meetings of shareholders and directors and shall perform such
other duties as may from time to time be prescribed by the
Board, by law, or these Bylaws.
Section 407. Treasurer. The Treasurer shall act under
the supervision of the President or such other officer as the
President may designate. The Treasurer shall have custody of
the Corporation's funds and such other duties as may be
prescribed by the Board of Directors, President or such other
Supervising Officer as the President may designate.
Section 408. Assistant Officers. Unless otherwise
provided by the Board of Directors, each Assistant Officer
shall perform such duties as shall be prescribed by the Board
of Directors, the President or the officer to whom he/she is
an Assistant. In the event of the absence or disability of
an Officer or his/her refusal to act, his/her Assistant
Officer shall, in the order of their rank, and within the
same rank in the order of their seniority, have the powers
and authorities of such officer.
Section 409. Compensation. Unless otherwise provided
by the Board of Directors, the salaries and compensation of
all Officers and Assistant Officers, except the President
shall be fixed by or in the manner designated by the
President.
Section 410. General Powers. The Officers are
authorized to do and perform such corporate acts as are
necessary in the carrying on of the business of the
Corporation, subject always to the direction of the Board of
Directors.
ARTICLE V. SHARES OF CAPITAL STOCK.
Section 501. Authority to Sign Share Certificates.
Every share certificate of the Corporation shall be signed by
the President and by the Secretary or one of the Assistant
Secretaries. Certificates may be signed by a facsimile
signature of the President and the Secretary or one of the
Assistant Secretaries of the Corporation.
Section 502. Lost or Destroyed Certificates. Any
person claiming a share certificate to be lost, destroyed or
wrongfully taken shall receive a replacement certificate if
such person shall have: (a) requested such replacement
certificate before the Corporation has notice that the shares
have been acquired by a bona fide purchaser; (b) provided the
Corporation with an indemnity agreement satisfactory in form
and substance to the Board of Directors, or the President or
the Secretary; and (c) satisfied any other reasonable
requirements (including providing an affidavit and a surety
bond) fixed by the Board of Directors, or the President or
the Secretary.
ARTICLE VI. GENERAL.
Section 601. Fiscal Year. The fiscal year of the
Corporation shall begin on the first (1st) day of January in
each year and end on the thirty-first (31st) day of
December in each year.
Section 602. Record Date. The Board of Directors may
fix any time whatsoever (but not more than ninety (90) days)
prior to the date of any meeting of shareholders, or the date
for the payment of any dividend or distribution, or the date
for the allotment of rights, or the date when any change or
conversion or exchange of shares will be made or will go into
effect, as a record date for the determination of the
shareholders entitled to notice of, or to vote at, any such
meetings, or entitled to receive payment of any such dividend
or distribution, or to receive any such allotment of rights,
or to exercise the rights in respect to any such change,
conversion or exchange of shares.
Section 603. Absentee Participation in Meeting. One
(1) or more Directors may participate in a meeting of the
Board of Directors, or of a Committee of the Board, by means
of a conference telephone or similar communications
equipment, by means of which all persons participating in the
meeting can hear each other.
Section 604. Emergency Bylaws. In the event any
emergency resulting from a nuclear attack or similar
disaster, and during the continuance of such emergency, the
following Bylaw provisions shall be in effect,
notwithstanding any other provisions of the Bylaws:
(a) A meeting of the Board of Directors or of any
Committee thereof may be called by any Officer or Director
upon one (1) hour's notice to all persons entitled to notice
whom, in the sole judgement of the notifier, it is feasible
to notify;
(b) The Director or Directors in attendance at the
meeting of the Board of Directors or of any Committee thereof
shall constitute a quorum; and
(c) These Bylaws may be amended or repealed, in
whole or in part, by a majority vote of the Directors
attending any meeting of the Board of Directors, provided
such amendment or repeal shall only be effective for the
duration of such emergency.
Section 605. Severability. If any provision of these
Bylaws is illegal or unenforceable as such, such illegality
or unenforceability shall not affect any other provision of
these Bylaws and such other provisions shall continue in full
force and effect.
ARTICLE VII. AMENDMENT OR REPEAL.
Section 701. Amendment or Repeal by the Board of
Directors. These Bylaws may be amended or repealed, in whole
or in part, by a majority vote of members of the Board of
Directors at any regular or special meeting of the Board duly
convened. Notice need not be given of the purpose of the
meeting of the Board of Directors at which the amendment or
repeal is to be considered.
Section 702. Recording Amendments and Repeals. The
text of all amendments and repeals to these Bylaws shall be
attached to the Bylaws with a notation of the date and vote
of such amendment or repeal.
ARTICLE VIII. APPROVALS OF AMENDED BYLAWS AND RECORD OF
AMENDMENTS AND REPEALS.
Section 801. Approval and Effective Date. These
Amended and Restated Bylaws have been approved as the Bylaws
of the Corporation this 24 day of June, 1999 and shall be
effective as of said date.
_______________________________
Secretary
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
FIRST LEESPORT BANCORP, INC.
(Registrant)
Dated: August 16, 1999 By Raymond H.Melcher, Jr.
President and Chief Executive Officer
Dated: August 16,1999 By Frederick P.Henrich
Treasurer and Chief Accounting Officer
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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