UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
--------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ -----------
Commission file number 000-20163
----------------------------------
FIRST PHILSON FINANCIAL CORPORATION
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 25-1511866
---------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
534 Main Street, Berlin, PA 15530
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
(814) 267-4666
---------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
---------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the registrant (1) 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.
(1) Yes X No (2) Yes X No
----- ----- ----- -----
As of August 2, 1996, there were 435,600 shares outstanding of
the issuer's common stock.
1
<PAGE>
First Philson Financial Corporation
INDEX TO QUARTERLY REPORT ON FORM 10-Q
Page
-------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited)
as of June 30, 1996 and December 31,
1995 3
Consolidated Statement of Income
(Unaudited) for the Three Months and
Six Months Ended June 30, 1996 and 1995 4
Consolidated Statement of Cash Flows
(Unaudited) for the Six Months Ended
June 30, 1996 and 1995 5
Notes to Consolidated Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7 - 13
Part II - Other Information 14
Item 1. Legal Proceedings
2. Changes in Securities
3. Defaults Upon Senior Securities
4. Submission of Matters to a Vote of Security
Holders
5. Other Information
6. Exhibits and Reports on Form 8-K
Signatures 15
2
<PAGE>
<TABLE>
First Philson Financial Corporation
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
June 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 8,803,366 $ 6,587,061
Federal funds sold 7,900,000 8,800,000
Securities available for sale 452,050 -
Investment securities held to
maturity (approximate market
values of $83,846,889 and
$88,771,879) 84,468,038 88,142,581
Total loans 95,748,881 92,631,963
Less allowance for loan losses 2,942,620 2,882,015
-------------- --------------
Net loans 92,806,261 89,749,948
Premises and equipment, net 2,357,670 2,452,330
Accrued interest receivable 1,826,753 1,921,088
Other assets 1,293,529 1,265,660
-------------- --------------
TOTAL ASSETS $199,907,667 $198,918,668
============== ==============
LIABILITIES
Deposits:
Noninterest-bearing demand $ 21,184,693 $ 20,181,499
Interest-bearing demand 26,892,913 23,657,013
Savings 36,953,555 35,902,742
Money market 11,963,062 12,758,546
Time 79,544,807 78,358,459
-------------- --------------
Total Deposits 176,539,030 170,858,259
Securities sold under
agreements to repurchase 776,219 7,361,419
U. S. Treasury demand notes 1,342,460 283,319
Accrued interest payable 543,560 590,306
Other liabilities 485,426 491,188
-------------- --------------
TOTAL LIABILITIES 179,686,695 179,584,491
-------------- --------------
STOCKHOLDERS' EQUITY
Common stock ($10 par value,
500,000 shares authorized,
435,600 shares issued and
outstanding) 4,356,000 4,356,000
Capital surplus 2,354,000 2,354,000
Retained earnings 13,510,179 12,624,177
Net unrealized gain on
securities 793 -
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 20,220,972 19,334,177
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $199,907,667 $198,918,668
============== ==============
See accompanying notes to the consolidated financial
statements.
</TABLE>
3
<PAGE>
<TABLE>
First Philson Financial Corporation
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
Three Months Ended June 30,
1996 1995
-------------- --------------
<S> <C> <C>
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $2,099,521 $2,044,575
Interest-bearing deposits in
other banks - 2,006
Interest on federal funds sold 83,135 229,074
Investment securities:
Taxable interest 1,129,675 940,166
Tax exempt interest 159,271 173,895
-------------- --------------
Total interest income 3,471,602 3,389,716
-------------- --------------
INTEREST EXPENSE
Interest on deposits 1,452,487 1,507,849
Interest on borrowed funds 39,926 60,385
-------------- --------------
Total interest expense 1,492,413 1,568,234
-------------- --------------
NET INTEREST INCOME 1,979,189 1,821,482
Provision for loan losses - -
-------------- --------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,979,189 1,821,482
-------------- --------------
OTHER INCOME
Service charges on deposit
accounts 132,848 132,313
Other income 116,593 67,753
-------------- --------------
Total other income 249,441 200,066
-------------- --------------
OTHER EXPENSE
Salaries and employee benefits 771,585 775,596
Premises and equipment expense 181,944 209,062
Deposit insurance premiums 500 106,125
Other expense 437,530 327,534
-------------- --------------
Total other expense 1,391,559 1,418,317
-------------- --------------
Income before income taxes 837,071 603,231
Income tax expense 223,000 119,200
-------------- --------------
NET INCOME $ 614,071 $ 484,031
============== ==============
EARNINGS PER SHARE $ 1.41 $ 1.11
CASH DIVIDENDS PER SHARE $ .30 $ .20
WEIGHTED AVERAGE SHARES
OUTSTANDING 435,600 435,600
Six Months Ended June 30,
1996 1995
-------------- --------------
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $4,258,322 $4,018,876
Interest-bearing deposits in
other banks - 4,090
Interest on federal funds sold 172,890 367,932
Investment securities:
Taxable interest 2,233,748 1,856,925
Tax exempt interest 320,508 350,935
-------------- --------------
Total interest income 6,985,468 6,598,758
-------------- --------------
INTEREST EXPENSE
Interest on deposits 2,925,464 2,921,918
Interest on borrowed funds 100,504 126,275
-------------- --------------
Total interest expense 3,025,968 3,048,193
-------------- --------------
NET INTEREST INCOME 3,959,500 3,550,565
Provision for loan losses - -
-------------- --------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,959,500 3,550,565
-------------- --------------
OTHER INCOME
Service charges on deposit
accounts 247,804 250,588
Other income 186,169 193,682
-------------- --------------
Total other income 433,973 444,270
-------------- --------------
OTHER EXPENSE
Salaries and employee benefits 1,528,127 1,531,028
Premises and equipment expense 460,396 438,624
Deposit insurance premiums 1,000 212,271
Other expense 849,588 823,618
-------------- --------------
Total other expense 2,839,111 3,005,541
-------------- --------------
Income before income taxes 1,554,362 989,294
Income tax expense 407,000 190,100
-------------- --------------
NET INCOME $1,147,362 $ 799,194
============== ==============
EARNINGS PER SHARE $ 2.63 $ 1.83
CASH DIVIDENDS PER SHARE $ .60 $ .40
WEIGHTED AVERAGE SHARES
OUTSTANDING 435,600 435,600
See accompanying notes to the consolidated financial
statements.
</TABLE>
4
<PAGE>
<TABLE>
First Philson Financial Corporation
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended June 30,
1996 1995
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $1,147,362 $ 799,194
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, amortization
and accretion, net 184,279 304,095
Decrease in accrued interest
receivable 94,335 69,672
Increase (decrease) in
accrued interest payable (46,746) 82,460
Other, net (96,386) (300,498)
-------------- --------------
Net cash provided by
operating activities 1,282,844 954,923
-------------- --------------
INVESTING ACTIVITIES
Net decrease in interest-bearing
deposits in other banks - 42,436
Proceeds from maturity of
investment securities held
to maturity 18,456,802 14,034,191
Purchase of securities
available for sale (450,849) -
Purchase of investment securities
held to maturity (14,805,485) (9,960,241)
Net increase in loans (3,054,040) (38,668)
Purchase of premises and
equipment, net (68,667) (39,445)
Other, net 62,348 7,326
-------------- --------------
Net cash provided by
investing activities 140,109 4,045,599
-------------- --------------
FINANCING ACTIVITIES
Net increase in deposits 5,680,771 3,300,421
Decrease in securities sold
under agreements to repurchase (6,585,200) (114,052)
Increase in U.S. Treasury
demand notes 1,059,141 549,031
Cash dividends paid (261,360) (174,240)
-------------- --------------
Net cash provided by
(used for) financing
activities (106,648) 3,561,160
-------------- --------------
Increase in cash and
cash equivalents 1,316,305 8,561,682
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 15,387,061 12,661,149
-------------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $16,703,366 $21,222,831
============== ==============
See accompanying notes to the consolidated financial
statements.
</TABLE>
5
<PAGE>
First Philson Financial Corporation
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts
of First Philson Financial Corporation (the "Company") and
its wholly-owned subsidiary First Philson Bank, National
Association (the "Bank"). All significant intercompany
balances and transactions have been eliminated in the
consolidation.
Laurel Highland Life Insurance Company ("Laurel") was a
former subsidiary of the Company. On March 1, 1995, Laurel
executed a life and disability Retrocession Agreement with
USLIFE Credit Life Insurance Company ("USLIFE"). Under the
agreement, USLIFE and Laurel terminated their Reinsurance
Agreement dated April 3, 1986. USLIFE assumed all business
of Laurel as of March 1, 1995 including all past liabilities.
Consideration was paid to USLIFE by Laurel for reassumption
of the liability associated with the business. As the result
of the execution Laurel's monthly income and expense was
terminated. The required adjustments were made on Laurel's
financial statements in the second quarter of 1995 to reflect
the effects of the Retrocession Agreement. On September 29,
1995, Laurel was dissolved according to the Articles of
Dissolution filed with the Arizona Corporation Commission.
Laurel was not a significant segment of the Company's
business.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to
Form 10-Q and therefore, do not necessarily include all
information that would be included in audited financial
statements. The information furnished reflects all
adjustments which are, in the opinion of Management,
necessary for a fair statement of the results of operations.
All such adjustments are of a normal recurring nature. The
results of operations for the interim periods are not
necessarily indicative of the results to be expected for
the full year.
Reclassification of Comparative Amounts
- ---------------------------------------
Certain comparative amounts for the previous period have been
reclassified to conform to the current period classifications.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Total assets at June 30, 1996 increased by $988,999 from that
reported at December 31,1995. The increase resulted
primarily from increases in cash and due from banks of
$2,216,305 and net loans of $3,056,313, which were offset by
decreases in federal funds sold of $900,000 and investment
securities of $3,222,493.
The increase in cash and due from banks was funded by the
decrease in federal funds sold and an increase in
stockholder's equity of $886,795.
The decrease in investment securities primarily funded the
increase in net loans. U.S. Government agencies and
Corporate notes declined by $2,436,413 and $3,266,323,
respectively, due to maturities and calls, while U.S.
Treasury notes increased by $1,895,312. The Company also
purchased several equity securities which have been
classified as available for sale.
The increase in net loans was primarily due to an increase
in mortgage loans of $3,524,204, essentially in home equity
and commercial real estate loans. As in 1995, Management is
continuing its concentration on consumer and small business
lending. This has permitted the Company to meet the needs
of the communities for which it serves. The allowance for
loan losses increased by 2.10% or $60,605 as fewer charge
offs and continuing recoveries of loan losses resulted in a
net recovery position for the second quarter of 1996. As of
June 30, 1996, the allowance for loan losses represents
3.07% of the outstanding loan balances as compared to 3.11%
for December 31, 1995.
The increase in total deposits of $5,680,771 and U.S.
Treasury demand notes of $1,059,141 was offset by a decrease
in securities sold under agreements to repurchase of
$6,585,200. Money market deposits decreased while all other
deposit categories experienced increases. The decrease in
securities sold under agreements to repurchase is primarily
due to the loss of a repurchase customer.
The increase in equity capital was attributed to net earnings
of $1,147,362 and unrealized gains on available for sale
securities of $793, less dividend payments totalling
$261,360.
Management monitors risk-based capital and leverage capital
ratios in order to assess compliance with regulatory
guidelines. At June 30, 1996, the Company had total risk-
based capital of 19.41%, exceeding the 8.00% minimum risk-
based capital requirement. Core equity capital, which must
be at least 50% of the total risk-based capital, was 93.47%
of this requirement at June 30, 1996. Additionally, the
Company must maintain an adequate minimum leverage capital
ratio. The minimum leverage capital ratio for the highest-
rated institutions is 3.00%, with all other institutions
expected to maintain higher ratios. As of June 30, 1996
the Company's leverage capital ratio was 10.18%.
7
<PAGE>
Results of Operations
Comparison of Six Months Ended June 30, 1996 and 1995.
The Company's net income increased by $348,168 from 1995
when comparing the first six months of 1995 to 1996.
Effecting net income positively was an increase in interest
income of $386,710 and decreases in interest expense of
$22,225 and other expense of $166,430. Negative effects to
net income were primarily due to an increase in income taxes
of $216,900.
Net interest income for 1996 increased $408,935 from 1995
due to an increase in interest income and a decrease in
interest expense. The increase in interest income resulted
from increases in interest and fees on loans of $239,446
and interest on investment securities of $346,396, offset by
a decrease in interest on federal funds sold of $195,042.
The increase in interest and fees on loans and interest on
investment securities were attributable to increases in both
the average outstanding balance and net yields. The decrease
in interest on federal funds sold is due to decreases in both
the average outstanding balance and net yield. The decrease
in interest expense resulted primarily from a decrease in the
cost of interest-bearing liabilities which was offset by an
increase in the average outstanding balance.
Because of Management's efforts, the Bank experienced lower
non-performing loans and charge offs, while increasing the
loan growth. Fewer charge offs and continuing recoveries of
loan losses resulted in a net recovery position for 1996
and 1995. Because of improved loan quality and loan
monitoring, Management did not feel a loan loss provision
was necessary in either period.
Other expenses decreased from 1995 to 1996, primarily due to
a decrease in deposit insurance premiums of $211,271.
Deposit insurance premiums decreased from 1995 as the result
of the Bank having the highest classification for deposit
premium purposes resulting in the statutory $500 minimum per
quarter being assessed in 1996.
The increase in income taxes was due to an increase in
pretax income of $565,068 and an alternative minimum tax
credit which lowered taxes in 1995. The effective tax rates
were 19.22% for 1995 and 26.18% for 1996.
8
<PAGE>
Results of Operations
Comparison of Three Months Ended June 30, 1996 and 1995.
The Company's net income increased by $130,040 for the second
quarter of 1996, as compared to net income for the second
quarter of 1995. Effecting net income positively were
increases in interest income of $81,886 and other income of
$49,375 and decreases in interest expense of $75,821 and
other expense of $26,758. Negative effects to net income
consisted of an increase in income taxes of $103,800.
Net interest income for the second quarter of 1996 increased
$157,707 as compared to the second quarter of 1995 from an
increase in interest income and a decrease in interest
expense. The increase in interest income resulted primarily
from increases in interest and fees on loans of $54,946 and
interest on investment securities of $174,885, offset by a
decrease in interest on federal funds sold of $145,939. The
increase in interest and fees on loans and interest on
investment securities from the second quarter of 1995 to the
second quarter of 1996 represents increases in the average
outstanding balances. The increase in interest on
investments was also due to investing in higher yielding
securities. The decrease in interest on federal funds sold
is due to decreases in both the average outstanding balance
and net yield. The decrease in interest expense resulted
primarily from a decrease in the cost of interest-bearing
liabilities which was offset by an increase in the average
outstanding balance.
Other income increased for the second quarter of 1996 as
compared to that of 1995. The increase was primarily due to
$32,348 in gains on the sale of two properties held as other
real estate.
Other expenses decreased for the second quarter of 1996 as
compared to that of 1995. The decrease was primarily due
to decreases in deposit insurance premiums of $105,625 and
premises and equipment expense of $27,118, which were offset
by an increase in other expense of $109,996. Deposit
insurance premiums decreased from 1995 as the result of the
Bank having the highest classification for deposit premium
purposes resulting in the statutory $500 minimum per quarter
being assessed in 1996. The decrease in premises and
equipment was primarily due to an insurance reimbursement
of $30,872 for repairs due to minor flood damage at the
Confluence office which were expensed in the first quarter
of 1996. The increase in other expense resulted from credits
of $68,000 recorded to other expense in 1995 due to Laurel's
dissolution. See Notes to Consolidated Financial Statements
for more discussion on Laurel.
The increase in income taxes for the second quarter of 1996
as compared to the second quarter of 1995 was due to an
increase in pretax income of $233,840 and an alternative
minimum tax credit which lowered taxes in 1995. The
effective tax rates were 19.76% for 1995 and 26.64% for 1996.
9
<PAGE>
Liquidity
To ensure that the Bank can satisfy customer credit needs for
current and future commitments and depository withdrawal
requirements, the Bank manages the liquidity position by
ensuring that there are adequate short-term funding sources
available for those needs. Liquid assets consist of cash
and due from banks, federal funds sold and investment
securities maturing in one year or less. The following
table shows these liquidity sources, minus short-term
borrowings as of June 30, 1996 and December 31, 1995,
(dollars in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
Liquidity Source 1996 1995
================ -------------- --------------
<S> <C> <C>
Cash and due from banks $ 8,803 $ 6,587
Federal funds sold 7,900 8,800
Investment securities maturing
in one year or less 16,898 22,027
-------------- --------------
Total 33,601 37,414
Less short-term borrowings 2,119 7,645
-------------- --------------
Net liquidity position $ 31,482 $ 29,769
============== ==============
As a percent of total assets 15.75% 14.97%
============== ==============
</TABLE>
Management feels that the liquidity position is strong and
adequate to cover any potential customer withdrawals and
credit needs.
Capital Resources
Capital management is an ongoing process that consists of
providing equity for both current and future financial
positioning. The Company manages its capital to execute its
strategic business plans and support its growth and
investments. During the first six months of 1996, the
Company increased its capital base by $886,795 or 4.59%,
primarily through retained earnings. For the first six
months of 1995, capital increased by $549,954 or 3.09%.
Bank regulatory agencies have capital adequacy and risk-based
capital adequacy guidelines by which they monitor the capital
adequacy of financial institutions and holding companies.
The Company has complied with the regulatory requirements
and expects to remain in compliance in the future.
The first measure is risk-based capital which measures the
relationship between capital, segregated between Tier 1 and
Tier 2 capital, and risk-weighted assets, as defined.
Tier 1 capital generally consists of stockholders' equity,
non-cumulative perpetual preferred stock and minority interest
in consolidated subsidiaries. Tier 2 capital includes the
allowance for loan losses up
10
<PAGE>
to 1.25% of risk-weighted assets, cumulative preferred stock,
term subordinated debt and other hybrid capital instruments.
Total capital is reduced by such items as goodwill and other
certain intangible assets. Additionally, Tier 2 capital
cannot exceed 50% of the minimum capital requirements, which
is 8% for 1996. Risk-weighted assets are derived by applying
certain predetermined percentages, ranging from 0 to 100% to
on-balance sheet assets and off-balance sheet items based
upon their defined measure of credit risk.
The secured measure is the leverage capital ratio which
evaluates capital adequacy based upon Tier 1 capital in
relation to quarterly average assets, adjusted for the
allowance for loan losses, goodwill and certain other
intangible assets. The minimum leverage capital ratio for
the highest-rated institutions is 3%, with all other
institutions expected to maintain higher ratios.
Furthermore, pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA), the Federal
Banking Regulators have set minimum risk-based capital ratios
for a well capitalized banking institution at 6% Tier 1
capital, 10% total capital and 5% leverage capital ratio.
The Company has exceeded all these capital ratios and expects
to exceed these ratios in the future to continue to be
classified as a well capitalized bank.
Management has calculated and monitored the following risk-
based and leverage capital ratios in order to assess
compliance with these regulatory guidelines for the Company
at June 30, 1996 and December 31, 1995, (dollars in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
CONSOLIDATED 1996 1995
============ -------------- --------------
<S> <C> <C>
Tier 1 Capital $ 20,221 $ 19,334
Tier 2 Capital 1,412 1,417
-------------- --------------
Total Risk-Based Capital $ 21,633 $ 20,751
============== ==============
Risk-Based Capital Ratio 19.41% 18.55%
(Risk-based capital to risk-weighted assets)
Leverage Capital Ratio 10.18% 9.65%
(Tier 1 capital to quarterly average assets)
</TABLE>
11
<PAGE>
Management is not aware of any current recommendations by
regulatory authorities which, if implemented, would have a
material effect on the Company's liquidity, capital resources
or operations other than what has been disclosed.
<TABLE>
<CAPTION>
June 30, December 31,
SIGNIFICANT RATIOS 1996 1995
================== -------------- --------------
<S> <C> <C>
Return on Average Assets
(Annualized) 1.16% 0.99%
Return on Average Equity
(Annualized) 11.64% 10.44%
Dividend Payout Ratio 22.78% 20.17%
</TABLE>
NON-PERFORMING ASSETS AND RISK ELEMENTS
Reviews of the loan portfolio are conducted by an internal
committee quarterly and annually by an outside consultant.
The results of the outside consultant are then compared to
the internal reviews with detailed explanations of
differences, if any. Commercial loans and residential
mortgages are placed on a non-accrual status when principal
and interest become 90 days past due. Delinquent loans are
reviewed monthly by senior management and the Loan Committee
of the Board. Generally, all consumer loans and commercial
loans less than $100,000 and not secured by real estate, will
be charged off at 90 days past due, while all loans secured
by real estate and in the process of foreclosure will be
charged off at 180 days past due. All commercial loans
greater than $100,000 and not secured by real estate, will be
subject to the conditions of the action plan between the Bank
and the customer to correct the default.
A loan remains on a non-accrual status until principal and
interest become current and a consistent track record of
payments is established, or it is determined to be
uncollectible and is charged off against the allowance for
loan losses. A loan would be classified as restructured when
the terms have been modified, because of deterioration in
the financial position of the borrowers, to provide for a
reduction of either interest or principal. It is Management's
opinion that the Bank did not have any loans that met the
definition of a restructured loan as of June 30, 1996 and
December 31, 1995.
In 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by Statement No. 118. It
is Management's opinion that the Bank did not have any
loans that met the definition of an impaired loan as of
June 30, 1996 and December 31, 1995.
The table below presents information concerning non-
performing loans and assets.
12
<PAGE>
<TABLE>
NON-PERFORMING LOANS AND OTHER NON-PERFORMING ASSETS
(Dollars in thousands)
<CAPTION>
June 30, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
Loans on non-accrual status $ 69 $ 102
Restructured loans - -
Impaired loans - -
Loans past due 90 days or more 262 52
-------------- --------------
Total non-performing loans 331 154
Other real estate 1 31
Repossessed assets - -
-------------- --------------
Total non-performing assets $ 332 $ 185
============== ==============
Non-performing loans as a
percent of total loans 0.35% 0.17%
Non-performing assets as a
percent of total loans 0.35% 0.20%
Non-performing assets as a
percent of total assets 0.17% 0.09%
</TABLE>
13
<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 a Vote of Security Holders
(a) Annual Meeting April 16, 1996
(b) The following directors were elected at the
annual meeting to serve for a three year term
or until mandatory retirement age is reached:
Tommy R. Croner George W. Hay George R. Shafer
The following directors were elected at the annual
meeting to serve for a two year term or until
mandatory retirement age is reached:
Richard P. Bulow H. Dean White
The following directors' terms continued after the
annual meeting:
Lewis W. Berkley James E. Croner Gary W. Sterner
Gregory A. Croner Theodore Deskevich Earl K. Wahl, Jr.
The results of the votes from the annual meeting were as
follows:
FOR AGAINST WITHHELD
------- ------- --------
Tommy R. Croner 308,442 6,746 120,412
George W. Hay 307,967 7,221 120,412
George R. Shafer 308,819 6,369 120,412
Richard P. Bulow 308,927 6,261 120,412
H. Dean White 308,927 6,261 120,412
Item 5 - Other Information
NONE
Item 6 - Exhibits and Reports on Form 8-K
No reports have been filed for 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
FIRST PHILSON FINANCIAL CORPORATION
-----------------------------------
(Registrant)
Date August 5, 1996 By /s/ George W. Hay
------------------------ ------------------------
George W. Hay
President and Chief
Executive Officer
By /s/ Theodore Deskevich
------------------------
Theodore Deskevich
Executive Vice President
and Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,803
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 452
<INVESTMENTS-CARRYING> 84,468
<INVESTMENTS-MARKET> 83,847
<LOANS> 95,749
<ALLOWANCE> 2,943
<TOTAL-ASSETS> 199,908
<DEPOSITS> 176,539
<SHORT-TERM> 2,119
<LIABILITIES-OTHER> 1,029
<LONG-TERM> 0
0
0
<COMMON> 4,356
<OTHER-SE> 15,865
<TOTAL-LIABILITIES-AND-EQUITY> 199,908
<INTEREST-LOAN> 4,258
<INTEREST-INVEST> 2,554
<INTEREST-OTHER> 173
<INTEREST-TOTAL> 6,985
<INTEREST-DEPOSIT> 2,925
<INTEREST-EXPENSE> 3,026
<INTEREST-INCOME-NET> 3,959
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,839
<INCOME-PRETAX> 1,554
<INCOME-PRE-EXTRAORDINARY> 1,554
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,147
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 69
<LOANS-PAST> 262
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,882
<CHARGE-OFFS> 69
<RECOVERIES> 130
<ALLOWANCE-CLOSE> 2,943
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
