<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 0-15040
------------------ --------
PennRock Financial Services Corp.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2400021
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1060 Main St.
Blue Ball, Pennsylvania 17506
--------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(717) 354-4541
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at November 8, 1995
------------------------------ --------------------------------
Common Stock ($2.50 par value) 6,062,412 Shares
<PAGE> 2
INDEX
REGISTRANT COMPANY AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Condensed consolidated balance sheets - September 30, 1995,
December 31, 1994 and September 30, 1994.
Condensed consolidated statements of income - Nine months ended
September 30, 1995 and 1994.
Condensed consolidated statements of cash flows - Nine months
ended September 30, 1995 and 1994.
Notes to condensed consolidated financial statements - September 30,
1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
<PAGE> 3
Part I. FINANCIAL INFORMATION
PENNROCK FINANCIAL SERVICES CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31, September 30,
(Amounts in thousands) 1995 1994 1994
------------ ----------- -------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 15,759 $ 14,400 $ 15,326
Money market investments 294 75 267
Mortgages held for sale 3,764 1,242 266
Investment securities:
Available for sale, at fair value 174,144 191,887 187,104
Held to maturity 19,191 16,096 17,117
Loans:
Loans, net of unearned income 290,247 239,928 225,856
Allowance for loan losses (3,708) (3,482) (3,554)
--------- --------- ---------
Net loans 286,539 236,446 222,302
Bank premises and equipment 8,794 6,811 5,431
Accrued interest receivable 3,301 2,926 3,187
Other assets 9,813 10,209 10,526
--------- --------- ---------
Total assets $521,599 $480,092 $461,525
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 52,099 $ 50,405 $ 47,877
Interest bearing 361,090 292,028 297,924
--------- --------- ---------
Total deposits 413,189 342,433 345,801
Short-term borrowings 43,054 82,077 48,733
Long-term debt 9,000 10,500 19,000
Accrued interest payable 2,393 1,817 1,396
Other liabilities 5,145 3,362 5,520
--------- --------- ---------
Total liabilities 472,781 440,189 420,450
Stockholders' Equity:
Common stock, par value $2.50 per share;
authorized - 10,000,000 shares; issued
and outstanding - 6,062,991,
6,006,040, and 3,969,623 15,157 15,015 9,964
Surplus 10,905 9,774 14,261
Unrealized gains (losses)
on securities available for sale,
net of deferred taxes (1,144) (6,038) (3,716)
Retained earnings 23,900 21,152 20,566
--------- --------- ---------
Total stockholders' equity 48,818 39,903 41,075
--------- --------- ---------
Total liabilities and
stockholders' equity $521,599 $480,092 $461,525
========= ========= =========
</TABLE>
<PAGE> 4
PENNROCK FINANCIAL SERVICES CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Amounts in thousands) September 30, September 30,
-------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $6,668 $4,937 $18,883 $13,835
Investment securities:
Available for sale 2,576 2,418 8,249 7,008
Held to maturity 505 261 1,207 893
Mortgages held for sale 74 82 172 248
Other 2 2 20 6
------- ------- ------- -------
Total interest income 9,825 7,700 28,531 21,990
Interest expense:
Deposits 4,238 2,613 11,725 7,461
Short-term borrowings 644 436 2,400 920
Long-term debt 144 193 481 440
------- ------- ------- -------
Total interest expense 5,026 3,242 14,606 8,821
------- ------- ------- -------
Net interest income 4,799 4,458 13,925 13,169
Provision for loan losses 110 60 289 293
------- ------- ------- -------
4,689 4,398 13,636 12,876
Other income:
Trust commissions and fees 143 134 436 404
Service charges and fees 253 254 764 741
Investment security gains 159 (18) 432 999
Gain (loss) on sale
of mortgage loans 34 (83) 30 (280)
Other 233 199 623 595
------- ------- ------- -------
Total other income 822 486 2,285 2,459
------- ------- ------- -------
Net interest and other income 5,511 4,884 15,921 15,335
------- ------- ------- -------
Other expenses:
Salaries and benefits 1,861 1,750 5,484 5,199
Occupancy, net 261 223 734 667
Equipment depreciation
and service 310 175 783 542
Other 946 902 3,040 2,855
------- ------- ------- -------
Total other expense 3,378 3,050 10,041 9,263
------- ------- ------- -------
Income before income taxes 2,133 1,834 5,880 6,072
Income taxes 479 449 1,318 1,431
------- ------- ------- -------
Net income $1,654 $1,385 $ 4,562 $ 4,641
======= ======= ======= =======
Earnings per share $.27 $.23 $.75 $.78
======= ======= ======= =======
</TABLE>
<PAGE> 5
PENNROCK FINANCIAL SERVICES CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
(Amounts in thousands) -----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash from operations $ 2,595 $ 13,689
Investing activities:
Proceeds from sales of investment securities 51,802 25,534
Purchases of investment securities (40,257) (82,909)
Maturities and paydowns of
investment securities 10,778 28,112
Net increase in loans (50,382) (17,674)
Purchases of premises and equipment (2,650) (1,226)
--------- ---------
Net cash used by investing activities (30,709) (48,163)
Financing activities:
Net increase (decrease) in demand, NOW,
money market and savings deposits 4,966 (3,622)
Net increase in time deposits 65,789 7,792
Increase (decrease) in short-term borrowings (39,024) 20,001
Increase (decrease) in long-term debt (1,500) 12,500
Issuance of stock 1,273 1,336
Cash dividends (1,813) (1,707)
--------- ---------
Net cash provided by financing
activities 29,691 36,300
--------- ---------
Increase in cash and cash equivalents 1,577 1,826
Cash and cash equivalents, beginning
of year 14,476 13,767
--------- ---------
Cash and cash equivalents, end of period $16,053 $15,593
========= =========
</TABLE>
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1995
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of PennRock Financial
Services Corp. and subsidiary have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The information contained in the financial statements is unaudited. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results of
interim periods have been made. Operating results for the nine months ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto included
in PennRock's annual report on Form 10-K for the year ended December 31,
1994.
NOTE 2. ACCOUNTING POLICIES
The accounting policies of PennRock Financial Services Corp. and Subsidiary,
as applied in the consolidated interim financial statements presented, are
substantially the same as those followed on an annual basis as presented in
the 1994 Annual Report to shareholders except that, as of January 1, 1995,
PennRock adopted the Financial Accounting Standards Board's Statement No.
114, "Accounting by Creditors for Impairment of a Loan" and Statement No. 118
which amends SFAS 114. SFAS 114 requires impaired loans that are within the
scope of the Statement to be measured on the present value of expected future
cash flows discounted at the loan's effective interest rate, or at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. SFAS 118 amends SFAS 114 to allow a creditor to use
existing methods for recognizing interest income on an impaired loan and to
required additional disclosure on interest income recognition related to
impaired loans. A loan is impaired when it is probable the creditor will be
unable to collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement. Prior to 1995, the credit
losses related to impaired loans were estimated based on undiscounted cash
flows or the fair value of the underlying collateral. The effect on the
financial statements of adopting SFAS 114 and 118 has been immaterial.
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES
The financial statements do not reflect various commitments and contingent
liabilities, such as commitments to extend credit, letters of credit,
guarantees, and liability for assets held in Trust, which arise in the normal
course of business. Commitments under outstanding letters of credit amounted
to $9.0 million at September 30, 1995. Management does not anticipate any
significant loss as a result of these transactions.
<PAGE> 7
NOTE 4. ADOPTION OF SFAS NO. 122
Effective January 1, 1996, PennRock plans to adopt Statement of Financial
Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights, an
amendment of FASB Statement No. 65" (SFAS 122). SFAS 122 amended Statement
65 to require an institution to recognize as separate assets the rights to
service mortgage loans for others when a mortgage loan is sold or securitized
and servicing rights retained. When capitalizing originated mortgage
servicing rights ("OMSR's"), an institution allocates the total cost of the
mortgage loans (the recorded investment in the mortgage loans including net
deferred fees or costs and any purchase premium or discount) to the OMSR's
and the loans (without the OMSR's) based on their relative fair values.
OMSR's are amortized in proportion to, and over the period of, estimated net
servicing income.
SFAS 122 also requires that all capitalized mortgage servicing rights be
evaluated for impairment based on the difference between the carrying amount
of the servicing rights and their current fair value. Impairment of OMSR's
is recognized through a valuation allowance. The amount of impairment
recognized is the amount by which the capitalized OMSR's exceed their fair
value. Subsequent to the initial measurement of impairment, the valuation
allowance is adjusted to reflect changes in the measurement of impairment.
Fair value in excess of the amount capitalized as OMSR's (net of
amortization) is not recognized.
Management is currently evaluating the potential impact of the adoption of
SFAS 122 on the financial statements. Factors such as volume of mortgage
loans which will be originated in 1996 will have a material effect on the
amount of OMSR's realized and consequently on the respective financial
statements and cannot be determined at this time. PennRock has no purchased
mortgage servicing rights.
NOTE 5. ACQUISITION OF BRANCHES
On January 27, 1995, the Bank purchased three branches from PNC Bank, N.A.
As part of the transaction, the Bank also acquired approximately $40 million
in deposits and $6 million in consumer loans.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This section presents management's discussion and analysis of the financial
condition and results of operations of PennRock Financial Services Corp. and
subsidiary. This discussion should be read in conjunction with the financial
statements which appear elsewhere in this report.
Total assets of PennRock increased by $41.5 million or 8.7% for the first
half of the year and increased by $60.1 million or 13.0% over September 30,
1994. The increases in assets were primarily reflected in increases in loans
outstanding as loans increased $50.3 million or 21.0% for the year-to-date
and by $64.4 million or 28.5% since last year. Total investment securities
(measured on an amortized cost basis) declined approximately $22.3 million or
10.3% since year-end and by $14.9 million or 7.6% from September 30 last
year.
Net income for the current quarter was $1,654,098 or $.27 per share compared
with $1,385,325 or $.23 per share for the third quarter of 1994, an increase
of $268,773 or 19.4%. Net interest income increased $340,848 from the third
quarter of 1994 due to volume increases and slightly wider spreads, while
other income excluding security and mortgage gains and losses increased
$43,188 and other expenses increased $327,059.
Net income for the year-to-date was $4,561,846 or $.75 per share compared
with $4,640,700 or $.78 per share for the first three quarters of 1994. Net
interest income increased $755,858 from the same period in 1994, while other
income excluding security and mortgage gains and losses increased $82,044 and
other expenses increased $778,343. Investment security gains totaled
$999,159 for the first three quarters of 1994 and $432,462 for the first
three quarters of 1995, a decline of $566,697.
Dividends declared for the quarter totaled $606,429 or $.10 per share. This
represented 39.8% of net income. Dividends declared during the second
quarter were $604,441 or $.10 per share and $598,182 or $.093 per share for
the third quarter of last year. For the year-to-date, dividends paid totaled
$1,813,311 compared to $1,707,268 for the first nine months of 1994, an
increase of 6.2%. All per share data have been adjusted for a 3-for-2 stock
split paid in the fourth quarter of 1994.
NET INTEREST INCOME
Net interest income is the product of the volume of average earning assets
and the average rates earned on them, less the volume of average interest
bearing liabilities and the average rates paid on them. The amount of net
interest income is affected by changes in interest rates, volumes and the mix
of earning assets and paying liabilities. For analytical purposes, net
interest income is adjusted to a taxable equivalent basis. This adjustment
allows for a more accurate comparison among taxable and tax-exempt assets by
increasing tax-exempt income by an amount equivalent to the federal income
tax which would have been paid if this income were taxable at the statutory
rate of 34%.
<PAGE> 9
Table 1 presents the net interest income on a fully taxable equivalent basis
for the third quarter and first nine months of 1995 and 1994. Net interest
income on a fully taxable equivalent basis totaled $5.0 million for the third
quarter of 1995, an increase of $.5 million or 11.3% from $4.5 million earned
for the same period of 1994. For the first nine months of 1995, net interest
income amounted to $14.4 million, an increase of $.9 million or 6.9% from
$13.5 million for 1994.
TABLE 1 - NET INTEREST INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Amounts in thousands) September 30, September 30,
-------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Total interest income $9,825 $7,700 $28,531 $21,990
Total interest expense 5,026 3,242 14,606 8,821
------- ------- ------- -------
Net interest income 4,799 4,458 13,925 13,169
Tax equivalent adjustment 224 55 537 364
------- ------- ------- -------
Net interest income
(fully taxable equivalent) $5,023 $4,513 $14,462 $13,533
======= ======= ======= =======
</TABLE>
Table 2 presents the average balances, taxable equivalent interest income and
expense and rates for PennRock's assets and liabilities for the three and
nine months ended September 30, 1995 and 1994. Both the interest rate spread
and net interest margin are lower in 1995 than in 1994 because rates on
interest bearing liabilities grew faster than rates on interest earning
assets. For the third quarter of 1995 compared with the third quarter of
1994, earning asset yields were 71 basis points higher but rates on paying
liabilities increased 116 basis points for the same period. For the first
nine months, earning asset yields were 75 basis points higher while rates on
paying liabilities were 118 basis points higher.
<PAGE> 10
TABLE 2 - AVERAGE BALANCES, RATES, AND INTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
Three Months Ended September 30,
(Amounts in thousands) --------------------------------------------------------
1995 1994
-------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Money market investments $ 453 $ 8 7.01% $ $
Mortgages held for sale 3,095 61 7.82% 619 16 10.25%
Securities available
for sale 166,171 2,490 5.94% 168,544 2,343 5.52%
Securities held to maturity 16,667 390 9.28% 8,749 220 9.52%
Loans:
Mortgage 158,218 3,616 9.07% 123,674 2,675 8.58%
Commercial 75,294 1,858 9.79% 66,370 1,528 9.13%
Consumer 50,529 1,214 9.53% 33,659 738 8.70%
-------- ------ -------- ------
Total loans 284,041 6,688 9.34% 223,703 4,941 8.76%
-------- ------ -------- ------
Total earning assets 490,002 10,049 8.14% 413,953 7,755 7.43%
Other assets 30,791 28,327
-------- --------
$520,793 $442,280
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing deposits:
Demand $ 65,888 $ 497 2.99% $ 60,452 $ 345 2.26%
Savings 62,624 401 2.54% 69,837 486 2.76%
Time 233,944 3,340 5.66% 169,331 1,782 4.18%
-------- ------ -------- ------
Total interest bearing
deposits 362,456 4,238 4.64% 299,360 2,613 3.46%
Short-term borrowings 43,052 644 5.93% 37,120 436 4.66%
Long-term debt 9,000 144 6.35% 15,500 193 4.94%
-------- ------ -------- ------
414,508 5,026 4.81% 352,240 3,242 3.65%
Non-interest bearing deposits 52,336 ------ 46,255 ------
Other liabilities 7,556 6,227
Stockholders' equity 46,393 37,558
-------- -------
Total liabilities and
stockholders' equity $520,793 $442,280
======== ========
Net interest income $5,023 $4,513
====== ======
Interest rate spread 3.33% 3.78%
====== ======
Net interest margin 4.07% 4.33%
====== ======
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
Nine Months Ended September 30,
(Amounts in thousands) ---------------------------------------------------------
1995 1994
----------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Money market investments $ 869 $ 38 5.85% $ 28 $ 1 4.77%
Mortgages held for sale 2,420 139 7.68% 2,145 157 9.79%
Securities available
for sale 186,761 8,839 6.33% 182,316 7,885 5.78%
Securities held to maturity 16,717 1,111 8.88% 5,054 360 9.52%
Loans:
Mortgage 149,346 10,157 9.09% 119,135 7,861 8.82%
Commercial 73,582 5,427 9.86% 65,088 4,079 8.38%
Consumer 47,721 3,357 9.41% 30,869 2,012 8.71%
------- ------ ------- ------
Total loans 270,649 18,940 9.36% 215,092 13,951 8.67%
-------- ------ -------- ------
Total earning assets 477,416 29,068 8.14% 404,635 22,354 7.39%
Other assets 31,322 24,891
-------- --------
$508,738 $429,526
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing deposits:
Demand $ 63,633 $ 1,391 2.92% $ 49,743 $ 1,004 2.70%
Savings 63,501 1,277 2.69% 68,676 1,422 2.77%
Time 220,194 9,057 5.50% 167,074 5,035 4.03%
-------- ------ -------- ------
Total interest bearing
deposits 347,328 11,725 4.51% 285,493 7,461 3.49%
Short-term borrowings 52,254 2,400 6.14% 29,932 920 4.11%
Long-term debt 9,319 481 6.90% 11,790 440 4.99%
-------- ------ -------- ------
408,901 14,606 4.78% 327,215 8,821 3.60%
Non-interest bearing deposits 52,336 ------ 46,255 ------
Other liabilities 6,586 5,599
Stockholders' equity 42,371 39,664
-------- -------
Total liabilities and
stockholders' equity $508,738 $429,526
======== ========
Net interest income $14,462 $13,533
======= =======
Interest rate spread 3.38% 3.78%
====== ======
Net interest margin 4.05% 4.47%
====== ======
</TABLE>
<PAGE> 12
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses charged to earnings was $110,270 for the third
quarter of 1995 compared with $59,340 for the third quarter of last year.
The provision for the first nine months of 1995 was $288,555 compared with
$292,830 in 1994. The provision is based on management's estimate of the
amount needed to maintain an adequate allowance for loan losses. The
adequacy of the allowance will continue to be examined in light of past loan
loss experience, current economic conditions, volume of non-performing and
delinquent loans and other relevant factors. The allowance is established at
a level considered by management to be adequate to absorb potential future
losses contained in the portfolio and is monitored on a continuous basis with
independent formal reviews conducted semiannually. The allowance is
increased by provisions charged to expense and decreased by net charge-offs.
Table 3 reflects an analysis of the allowance for loan losses for the third
quarter and for the first nine months of 1995 and 1994.
TABLE 3 - ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Amounts in thousands) September 30, September 30,
-------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Balance, beginning of period $3,602 $3,691 $3,482 $3,461
Provision charged to
operating expense 110 59 289 293
Total loans charged off (11) (202) (104) (314)
Total recoveries 7 6 41 114
------- ------- ------- -------
Net charge-offs (4) (196) (63) (200)
------- ------- ------- -------
Balance, end of period $3,708 $3,554 $3,708 $3,554
======= ======= ======= =======
Total loans:
Average $284,041 $223,703 $270,649 $215,092
Period-end $290,247 $225,856 $290,247 $225,856
Ratios:
Net charge-offs to
average loans (annualized) 0.00% 0.35% 0.09% 0.37%
Allowance for loan losses to
period-end loans 1.28% 1.57% 1.28% 1.57%
</TABLE>
<PAGE> 13
TABLE 4 - NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30 December 31, September 30,
(Amounts in thousands) 1995 1994 1994
------------ ----------- -------------
<S> <C> <C> <C>
Non-accrual loans $ 870 $ 624 $ 965
Other real estate owned 279 1,048 1,735
--------- --------- ---------
Total non-performing assets $1,149 $1,672 $2,700
========= ========= =========
Ratios:
Non-accrual loans to total loans 0.30% 0.26% 0.43%
Non-accrual loans to total loans and
other real estate owned 0.30% 0.26% 0.42%
Allowance for loan losses to
non-accrual loans 426.21% 558.01% 368.29%
Loans accruing but 90 days past due
as to principal or interest $244 $434 $372
</TABLE>
LIQUIDITY
The purpose of liquidity management is to ensure that there are sufficient
cash flows available to meet a variety of needs. These include financial
commitments such as satisfying the credit needs of our borrowers and
withdrawals by our depositors, the ability to capitalize in investment and
business opportunities as they occur, and the funding of PennRock's own
operations. Liquidity is provided by maturities and sales of investment
securities, loan payments and maturities, liquidating money market
investments such as federal funds sold, and PennRock's dividend reinvestment
plan. Liquidity is also provided by short-term lines of credit with various
correspondents and fixed and variable rate advances from the Federal Home
Loan Bank of Pittsburgh and other correspondent banks. However, PennRock's
primary source of liquidity lies in PennRock's ability to renew, replace and
expand its base of core deposits (consisting of demand, NOW, money market,
savings, and time deposits of less than $100,000).
Total deposits increased $70.8 million or 20.7% since year end and $67.4
million or 19.5% from last year. This deposit growth was enhanced by the
purchase of $40 million in deposits in connection with the acquisition of
three branches of PNC Bank in January 1995. Total borrowings declined $40.5
million or 43.8% since year end and by $15.7 million or 23.1% from last year.
Table 5 reflects the changes in the major classifications of deposits and
borrowings by comparing the balances at the end of the third quarter of 1995
with year-end and the third quarter of 1994.
<PAGE> 14
TABLE 5 - DEPOSITS AND BORROWINGS BY MAJOR CLASSIFICATION
(Amounts in thousands)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
------------- ------------ -------------
<S> <C> <C> <C>
Non-interest bearing $ 52,099 $ 50,405 $ 47,877
NOW accounts 35,746 39,038 37,290
Money market deposit accounts 31,611 20,152 21,224
Savings accounts 61,351 66,246 68,841
Time deposits under $100,000 212,353 149,785 152,988
--------- --------- ---------
Total core deposits 393,160 325,626 328,220
Time deposits of $100,000 or more 20,029 16,807 17,581
--------- --------- ---------
Total deposits 413,189 342,433 345,801
Short-term borrowings 43,054 82,077 48,733
Long-term debt 9,000 10,500 19,000
--------- --------- ---------
Total deposits and borrowings $468,243 $435,010 $413,534
========= ========= =========
</TABLE>
CAPITAL RESOURCES:
In June of 1995, PennRock announced that the Board of Directors had
authorized the repurchase of up to 200,000 shares of outstanding common
stock. These shares may be used for general corporate purposes including the
dividend reinvestment plan. In October 1995, PennRock purchased 20,000
shares for $374,379.
Total stockholders' equity increased $7.7 million or 18.9% from September 30,
1994 and increased $8.9 million or 22.3% since year-end 1994. The increase
in stockholders' equity since year-end and from last year was enhanced by a
decrease in the unrealized loss, net of deferred tax effect, of PennRock's
available for sale investment portfolio.
Table 6 shows PennRock's and the Bank's capital resources at September 30,
1995 and at December 31 and September 30, 1994. PennRock and the Bank exceed
all minimum capital guidelines.
<PAGE> 15
TABLE 6 - CAPITAL RESOURCES
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1995 1994 1994
------------- ------------ -------------
<S> <C> <C> <C>
PennRock Financial Services Corp.:
Leverage ratio:
Total capital to total assets 10.07% 9.04% 9.67%
Tier 1 capital to total assets 9.36% 8.31% 8.90%
Risk-based capital ratios:
Tier 1 capital to risk weighted
assets 15.73% 16.22% 16.56%
Total capital to risk weighted
assets 16.92% 17.45% 17.84%
Blue Ball National Bank:
Leverage ratio:
Total capital to total assets 9.72% 8.70% 9.31%
Tier 1 capital to total assets 9.01% 7.97% 8.53%
Risk-based capital ratios:
Tier 1 capital to risk weighted
assets 15.20% 15.66% 15.98%
Total capital to risk weighted
assets 16.40% 16.90% 17.23%
</TABLE>
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule regarding unaudited interim financial
information of PennRock for the quarter ended September 30, 1995.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
September 30, 1995.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PennRock Financial Services Corp.
---------------------------------
(Registrant)
Date: November ~~, 1995 By: /s/Melvin Pankuch
- ----------------------- -----------------------------------------------
Melvin Pankuch
Executive Vice President and
Chief Executive Officer
Date: November ~~, 1995 By: /s/George B. Crisp
- ------------------------ -----------------------------------------------
George B. Crisp
Vice President and Treasurer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at September 30, 1995 (unaudited) and the
Consolidated Income Statements for the Nine Months Ended September 30, 1995
(unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 15,759
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 294
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 174,144
<INVESTMENTS-CARRYING> 19,191
<INVESTMENTS-MARKET> 19,492
<LOANS> 293,911
<ALLOWANCE> 3,708
<TOTAL-ASSETS> 521,599
<DEPOSITS> 413,189
<SHORT-TERM> 43,054
<LIABILITIES-OTHER> 7,538
<LONG-TERM> 9,000
<COMMON> 15,157
0
0
<OTHER-SE> 34,691
<TOTAL-LIABILITIES-AND-EQUITY> 521,599
<INTEREST-LOAN> 18,883
<INTEREST-INVEST> 9,456
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<INTEREST-TOTAL> 28,531
<INTEREST-DEPOSIT> 11,725
<INTEREST-EXPENSE> 2,881
<INTEREST-INCOME-NET> 14,606
<LOAN-LOSSES> 289
<SECURITIES-GAINS> 432
<EXPENSE-OTHER> 10,041
<INCOME-PRETAX> 5,880
<INCOME-PRE-EXTRAORDINARY> 4,562
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,562
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
<YIELD-ACTUAL> 8.14
<LOANS-NON> 870
<LOANS-PAST> 244
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 6,800
<ALLOWANCE-OPEN> 3,602
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<RECOVERIES> 7
<ALLOWANCE-CLOSE> 3,708
<ALLOWANCE-DOMESTIC> 3,708
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
