FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
Commission file number: 33-66014
FNB Financial Corporation
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 23-2466821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Lincoln Way West, McConnellsburg, PA 17233
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 717/485-3123
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 shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at March 31, 1998
(Common stock, $0.63 par value) 400,000
FNB FINANCIAL CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets -
March 31, 1998 and December 31, 1997 5
Condensed consolidated statements of income -
Three months ended March 31, 1998 and 1997 6
Condensed consolidated statements of comprehensive
income -
Three months ended March 31, 1998 and 1997 7
Condensed consolidated statements of cash flows -
Three months ended March 31, 1998 and 1997 8
Notes to condensed consolidated financial
statements 9-11
Table #1 - Schedule of held to maturity and
available for sale investment activity for the
period January 1, 1998 through March 31, 1998 12
Table #2 - Schedule of gross unrealized gains and
unrealized losses within the held to maturity and
available for sale investment portfolios by
investment type 13
Management's discussion and analysis of financial
condition and results of operations 14-17
PART II - OTHER INFORMATION 18
Signatures 20
PART I - FINANCIAL INFORMATION
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<S> <C> <C>
March 31, December 31,
1998 1997
ASSETS: (unaudited) (audited*)
Cash and Due from banks $ 2,945,207 $ 3,491,312
Interest-bearing deposits with banks 504,767 6,050,546
Marketable Debt Securities
Held-to-maturity (Market value - 1998
$2,473,400 and 1997: $2,988,188) 2,462,147 2,975,841
Available-for-sale 27,710,204 26,204,829
Marketable Equity Securities
Available for Sale 178,580 133,580
Federal Reserve, Atlantic Central Banker's Bank
and Federal Home Loan Bank Stock 389,600 389,600
Federal Funds Sold 4,633,000 2,931,000
Loans, net of unearned discount &
Allowance for loan losses 58,731,962 59,124,012
Bank buildings, equipment, furniture &
fixtures, net 3,291,660 3,295,474
Accrued interest receivable 640,496 610,240
Deferred income tax charges 0 0
Other real estate owned 411,136 428,488
Intangible Assets 190,131 194,222
Other assets 2,258,373 191,091
Total Assets $104,347,263 $106,020,235
========== ==========
LIABILITIES :
Deposits:
Demand deposits $ 9,762,767 $ 9,988,174
Savings deposits 24,301,023 26,713,986
Time certificates 57,268,660 56,293,701
Other time deposits 473,885 263,829
Total deposits $91,806,335 $93,259,690
Accrued interest payable & other liabilities 805,740 738,197
Liability for other borrowed funds 172,138 460,719
Deferred income taxes 51,064 67,880
Accrued dividends payable 68,000 104,000
Total Liabilities $92,903,277 $94,630,486
STOCKHOLDERS' EQUITY:
Capital stock, Common, par value $0.63;
6,000,000 shares authorized; 400,000
outstanding $ 252,000 $ 252,000
Additional paid-in capital 1,789,833 1,789,833
Retained earnings 9,250,793 9,163,913
Net unrealized gain/(loss) on Available-for-sale
securities, net of tax effects 151,360 184,003
Total Stockholders' Equity $11,443,986 $11,389,749
Total Liabilities & Stockholders' Equity$104,347,263 $106,020,235
========== ==========
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed
financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1998 and 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
1998
1997
Interest & Dividend Income
Interest & fees on loans $1,323,777
$1,270,780
Interest on investment securities:
U.S. Treasury Securities 3,494
11,069
Obligations of other U.S.
Government Agencies 326,713
369,951
Obligations of State & Political
Subdivisions 126,656
106,739
Interest on deposits with banks 25,288
3,887
Dividends on Equity Securities 8,139
7,441
Interest on federal funds sold 49,800
18,762
Total Interest & Dividend Income 1,863,867
1,788,629
Interest Expense
Interest on deposits 982,733
927,263
Interest on Other Borrowed Money 2,870
559
Total interest expense 985,603
927,822
Net interest income 878,264
860,807
Provision for loan losses 101,114
9,000
Net interest income after
Provision for loan losses 777,150
851,807
Other income
Service charges on deposit accounts 20,218
14,728
Other service charges, collection &
exchange charges, commissions
and fees 49,886
46,089
Other income 15,085
10,085
Net Securities gains/(losses) 1,573
0
Total other income 86,762
70,902
Other expenses 660,091
655,760
Income before income taxes 203,821
266,949
Applicable income taxes 48,942
48,807
Net income $154,879
$218,142
=======
=======
Earnings per share of Common Stock:
Net income per share $0.39
$0.55
Cash dividend declared per share $0.17
$0.17
Weighted average number of shares outstanding 400,000
400,000
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31, 1998 and 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
1998
1997
Net income $154,879
$218,142
Other Comprehensive income, net of tax
Unrealized holding gains/(losses) for period (32,643)
(105,126)
Comprehensive Income $122,236
$113,016
=======
=======
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1998 and 1997
<TABLE>
<S> <C> <C>
(UNAUDITED)
1998 1997
Cash flows from operating activities:
Net income $ 154,879 $ 218,171
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation & amortization 65,409 68,364
Provision for loan losses 101,114 9,000
Net (gain)/loss on sales of
investments (1,573) 0
(Increase) decrease in accrued
interest receivable (30,256)
(45,561)
Loss on Disposal of Other Real Estate 2,000 0
Increase in Cash Value of Life Insurance (3,983) 0
Increase (decrease) in accrued
interest payable and
other liabilities 67,543 63,758
Other (net) (81,971)
(33,076)
Net cash provided (used)by operating
activities 273,162 280,656
Cash flows from investing activities:
Net (increase) decrease in interest-
bearing deposits with banks 5,545,779
15,124
Purchases of Held-to-maturity
securities 0 0
Purchases of Available-for-sale
securities (4,591,794) 0
Proceeds from sales of Available-for-
sale securities 0 0
Proceeds from maturities of Held-to-
maturity securities 513,694 388,058
Proceeds from maturities of Available-
for-sale securities 3,038,533 1,393,072
Purchases of marketable equity securities (45,000) 0
Net (increase) decrease in loans 290,936
(983,783)
Proceeds from sale of Other real
estate owned 19,025 8,075
Purchases of bank premises &
equipment (net) (57,504)
(25,011)
Purchase of Life Insurance (1,985,000) 0
Purchase of other bank stock 0
(5,900)
Net cash provided (used) by investing
activities 2,728,669
789,635
Cash flows from financing activities:
Net increase (decrease) in deposits (1,453,355)
2,246,399
Net increase (decrease) in Other borrowings (288,581) 0
Cash dividends paid (104,000)
(100,000)
Net cash provided (used) by financing
activities (1,845,936) 2,146,399
Net increase (decrease) in cash & cash
equivalents 1,155,895
3,216,690
Cash & cash equivalents, beginning balance 6,422,312 3,712,315
Cash & cash equivalents, ending balance $7,578,207 $6,929,005
========= =========
Supplemental disclosure of cash flows information
Cash paid during the year for:
Interest $ 898,184 $ 867,978
Income taxes 0 0
Supplemental schedule of noncash investing &
financing activities
Unrealized gain (loss) on Available-for-sale
securities, net of income tax effect (32,643)
(105,126)
Accrued dividends payable 68,000 68,000
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
FNB FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The financial information presented at and for the three
months ended March 31, 1998 and March 31, 1997 is
unaudited. Information presented at December 31, 1997, is
condensed from audited year-end financial statements.
However, this unaudited information reflects all adjustments,
consisting solely of normal recurring adjustments, that are,
in the opinion of management, necessary for a fair
presentation of the financial position, results of operations
and cash flows for the interim period.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
the corporation and its wholly-owned subsidiary, The First
National Bank of McConnellsburg. All significant
intercompany transactions and accounts have been
eliminated.
NOTE 3 - CASH FLOWS
For purposes of the statements of cash flows, the corporation
has defined cash and cash equivalents as those amounts
included in the balance sheet captions "cash and due from
banks" and "federal funds sold". As permitted by Statement
of Financial Accounting Standards No. 104, the corporation
has elected to present the net increase or decrease in
deposits in banks, loans and time deposits in the statement
of cash flows.
NOTE 4 - FEDERAL INCOME TAXES
For financial reporting purposes the provision for loan
losses charged to operating expense is based on management's
judgement, whereas for federal income tax purposes, the
amount allowable under present tax law is deducted.
Additionally, certain expenses are charged to operating
expense in the period the liability is incurred for financial
reporting purposes, whereas for federal income tax purposes,
these expenses are deducted when paid. As a result of these
timing differences, deferred taxes were computed after
reducing pre-tax accounting income for nontaxable municipal
and loan income.
NOTE 5 - INVESTMENTS
The activity within the held to maturity and available for
sale portfolios for the period January 1, 1998, through
March 31, 1998, is summarized in Table #1 on page 12. No
sales were conducted from securities contained within the held
to maturity portfolio.
The amortized cost and estimated market values of investments
by investment type and classification as available for sale or
held to maturity along with each portfolio's gross unrealized
gain or gross unrealized loss are contained in Table #2 on
page 13.
Management has purchased for the portfolio mortgage-backed
securities. The large portion of these securities have a
variable rate coupon and all have scheduled principal
payments. During periods of rising interest rates, payments
from variable rate mortgage-backed securities may accelerate
as prepayments of underlying mortgages occur as home-owners
refinance to a fixed rate while during periods of declining
interest rates, prepayments on high fixed rate mortgage-backed
securities may accelerate as home owners refinance to lower
rate mortgages. These prepayments cause yields on mortgage-
backed securities to fluctuate as larger payments of principal
necessitate the acceleration of premium amortization or
discount accretion. Due to the low dollar amount of mortgage-
backed securities in relation to the total portfolio,
management feels that interest rate risk and prepayment risks
associated with mortgage-backed securities will not have a
material impact on the financial condition of the Bank.
In regard to Collateralized Mortgage Obligations (CMOs), the
Bank presently has none of these types of investments in its
portfolio.
NOTE 6 - ALLOWANCE FOR LOAN LOSSES AND NONACCRUAL LOANS
Activity in the allowance for loan losses is summarized as
follows:
<TABLE>
<S> <C> <C>
1998 1997
Allowance for loan losses beginning of the year $425,813
$405,612
Loans charged-off during the year:
Real estate mortgages 0
253
Installment loans 10,856
1,100
Commercial & all other 88,237
3,313
Total charge-offs 99,093
4,666
Recoveries of loans previously charged-off:
Real estate mortgages 0
0
Installment loans 1,047
2,197
Commercial & all other 330
341
Total recoveries 1,377
2,538
Net loans charged-off (recovered) 97,716
2,128
Provision for loan losses charged to operations 101,114
9,000
Allowance for loan losses, March 31 $429,211
$412,484
======== ========
</TABLE>
The following table shows the principal balance of nonaccrual loans
as of March 31, 1998:
<TABLE>
<S> <C>
Nonaccrual loans $ 224,567.69
==========
Interest income that would have been
accrued at original contract rates $ 5,131.92
Amount recognized as interest income 973.86
Foregone revenue $ 4,158.06
=========
</TABLE>
NOTE 7 - OTHER COMMITMENTS
In the normal course of business, the bank makes various
commitments and incurs certain contingent liabilities which
are not reflected in the accompanying financial statements.
These commitments include various guarantees and commitments
to extend credit. The bank does not anticipate any losses
as a result of these transactions.
TABLE #1
SCHEDULE OF HELD TO MATURITY AND AVAILABLE FOR SALE
DEBT SECURITY PORTFOLIOS
TRANSACTION SUMMARY
FOR THE PERIOD JANUARY 1, 1998 THROUGH MARCH 31, 1998
<TABLE>
<S> <C> <C> <C>
HELD TO AVAILABLE TOTAL
MATURITY FOR SALE INVESTMENT
PORTFOLIO PORTFOLIO PORTFOLIO
BEGINNING BALANCE 1/1/98 $2,975,841 $25,969,217 $28,945,058
PURCHASES 0 4,591,794 4,591,794
NET LOSSES/GAINS 0 (1,573) (1,573)
MATURITIES/CALLS PAYDOWNS/
PREMIUM AMORTIZATION/DISCOUNT
ACCRETION 513,694 3,038,533 3,552,227
ENDING BALANCE 3/31/98 $2,462,147 $27,524,051 $29,986,198
========= ========== ==========
</TABLE>
TABLE #2
SCHEDULE OF UNREALIZED GAINS AND UNREALIZED LOSSES
WITHIN THE HELD TO MATURITY AND AVAILABLE FOR SALE
INVESTMENT PORTFOLIOS BY INVESTMENT TYPE
MARCH 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
HELD TO HELD TO HELD TO HELD TO
AVAILABLE AVAILABLE AVAILABLE AVAILABLE
MATURITY MATURITY MATURITY MATURITY FOR
SALE FOR SALE FOR SALE FOR SALE
BOOK MARKET UNREALIZED UNREALIZED
BOOK MARKET UNREALIZED UNREALIZED
SECURITY PORTFOLIO VALUE VALUE GAIN LOSS
VALUE VALUE GAIN LOSS
U.S. GOVERNMENT TREASURIES 0 0 0 0
199,106 200,156 1,050 0
U.S. GOVERNMENT TREASURIES 0 0 0 0
0 0 0 0
U.S. GOVERNMENT AGENCIES 0 0 0 0
7,694,157 7,760,662 66,505 0
U.S. GOVERNMENT AGENCIES 0 0 0 0
6,392,611 6,350,136 0 (42,475)
SBA GUARANTEED LOAN POOL
CERTIFICATES 856,986 860,625 3,639 0
2,446,288 2,491,141 44,853 0
SBA GUARANTEED LOAN POOL
CERTIFICATES 500,027 495,660 0 (4,367)
107,893 107,198 0 (695)
MORTGAGE-BACKED SECURITIES 0 0 0 0
910,887 933,782 22,895 0
MORTGAGE-BACKED SECURITIES 0 0 0 0
16,454 16,312 0 (142)
SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S. 1,105,133 1,117,115 11,982 0
8,065,504 8,179,260 113,756 0
SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S. 0 0 0 0
1,691,151 1,671,557 0 (19,594)
MARKETABLE EQUITY SECURITIES 0 0 0 0
135,400 178,580 43,180 0
FEDERAL RESERVE BANK STOCK,
ATLANTIC CENTRAL BANKERS BANK
STOCK AND FEDERAL HOME LOAN
BANK STOCK 0 0 0 0
389,600 389,600 0 0
GRAND TOTALS 2,462,146 2,473,400 15,621 (4,367)
28,049,051 28,278,384 292,239 (62,906)
========= ========= ====== ======
========== ========== ======= =======
</TABLE>
CLASSIFICATION OF HELD TO MATURITY AND AVAILABLE FOR SALE
SECURITIES
Due to the implementation of FAS 115, management has segregated
securities as Held to Maturity, Available for Sale or Trading
securities. At the implementation of FAS 115 on January 1, 1994,
management determined that no securities were Trading securities;
that tax-free municipal with maturity dates less than the year 2000
were classified as Held to maturity securities due to management's
intention to hold these securities for tax planning purposes; and
that all other securities were classified as Available for Sale
securities due to management's intention to hold these securities
for liquidity planning purposes. Purchases of tax-free municipals
with maturities of 5 years or less made following implementation of
FAS 115 are classified as Held to Maturity securities with all
other purchase Available for Sale; however, management may decide
on a case-by-case basis that a security may be either classified as
Held to Maturity or Available for Sale depending upon the reasons
for purchase. Held to Maturity classifications are typically used
for securities purchased specifically for interest rate management
or tax-planning purposes while Available for Sale classifications
are typically used for liquidity planning purposes.
FNB FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net income for the first three months of 1998 was $154,879,
compared to $218,142 for the first three months of 1997 and
$228,903 for the same period in 1996. This represents a decrease
of $63,263 or 29% from 1997 and a decrease of $74,024 or 32.3% from
1996. Net income on an adjusted per share basis for the first
three months of 1998 was $0.39 a decrease of $.16 from the $0.55
per share for 1997, and a decrease of $0.18 from the $0.57 per
share for the three months ended March 31, 1996. This decrease
from the prior years is a direct result of an unanticipated
commercial loan charge-off which resulted in the need to increase
the allowance for loan losses.
Total interest and dividend income for the first three months of
1998 was $1,863,867 compared to $1,788,629 for the first three
months of 1997, an increase of $75,238, and compared to $1,684,535
for the three months ended March 31, 1996, representing an increase
of $179,332. This increase is a result of both a general increase
in the balance of earning assets and slightly higher yields on
investments in the Bank's security portfolio and on adjustable rate
loans which have repriced to higher interest rates. Since March
31, 1997, net loans have increased $1,497,250 or 2,62% while the
book value of investment debt securities has decreased $1,530,294
or 4.86% and federal funds sold have increased $1,379,000 or
42.38%. This increase in loans, the Bank's highest yielding
interest-earning asset, and subsequent net increase in the lower
yielding assets of investments and federal funds sold have
increased the Bank's interest income for the first three months of
1998.
During the last quarter of 1997 and the first quarter of 1998,
interest rates on loans and on investments have decreased. During
the first quarter, some investment securities with call features
were called by the issuer resulting in the loss of higher interest
earning assets. At the same time, some residential mortgage
customers refinanced their mortgage loans to lower interest rates
at our institution and at other institution's which resulted in a
general decline in the yield on both investment securities and
loans since the fourth quarter of 1997. Management has decreased
deposit rates but not at the same pace as that of earning assets.
Combined with the aforementioned increase in loans and increase in
investments and federal funds sold, net interest income has
increased, however, the bank's net interest margin during the first
quarter of 1998 has decreased due to the higher cost of time
deposits. Management anticipates the decrease in interest rates on
loans and investments and the decrease of deposit rates to lower
levels will result in the slight decrease of the interest margin
during the next few earning periods.
Interest expense for the three months ended March 31, 1998, was
$985,603, an increase of $57,781 from the $927,822 for the same
period in 1997, and, an increase of $49,627 from the $935,976
incurred for the same period in 1996. This increase is due to an
increase in the cost and balances of time certificates of deposit.
Total deposit volume decreased $1,453,355 or 1,56% since December
31, 1997. Savings accounts decreased $2,412,963 or 9.03% due to
temporary Money Market account deposits at year end which were
anticipated to move during the first quarter of 1998. Time
certificates increased $974,959. The decrease in the lower cost
interest-bearing savings deposits and increase in time deposits
contributed to the increase in interest expense when compared to
1997.
The tax-adjusted net interest margin has decreased 6 basis points
to 4.02% for the first three months of 1998 from that of the first
three months of 1997 which was 4.08%. This decrease occurred due
to a larger increase in the cost of interest-bearing liabilities
than that of earning assets. The tax-equivalent yield on earning
assets for the first three months of 1998 increased .02% to 8.17%
from 8.15% for the same period in 1997 while the cost of
interest-bearing liabilities increased .09% to 4.84% from 4.75%
for the same
period in 1997. Management anticipates to concentrate on the
improvement of net interest margin throughout the year. Recent
decreases in interest rates on adjustable rate loans and securities
will be offset by maturing higher cost time deposits repriced to
lower yielding deposits and a general decrease in the cost of
savings account balances. During the next quarter, securities
which have call features will most likely be called resulting in a
decrease in yield on the investment portfolio. This combined with
continued refinancings by mortgage home owners to lower interest
rates will squeeze the net interest margin and may result in a
decrease in such. Through the decrease of deposit rates,
management anticipates keeping the decrease of the net interest
margin to a minimum.
Total noninterest income for the first three months of 1998
increased $15,860 due to a $5,500 increase in service charges on
deposit accounts, a $5,000 increase in other income as a result of
a $4,420 increase in the cash value of life insurance, and a $3,800
increase in other service charges and fees. Operating expenses for
the period ended March 31, 1998, were $660,091, a $4,331 increase
from the operating expenses incurred for the same period in 1997 of
$655,760.
The company's income tax provision for the first three months of
1998 was $48,942 as compared to $48,807 for the first three months
of 1997. The Company continues to operate with a marginal tax rate
of 34%, during the first quarter of 1998. The effective income tax
rate for the first three months of 1998 was 24.01% a 5.73% increase
compared to 18.28% for the first three months of 1997, and an
increase of 5.34% from the effective tax rate for the first three
months of 1996 of 18.67%.
Total assets as of March 31, 1998, were $104,347,263, a decrease of
$1,672,972 over the period ending December 31, 1997, representing
a decrease of 1.58%. This decrease in total assets was anticipated
as there were large temporary deposits at the Bank on December 31,
1997 in Money Market account balances which were expected to leave
the Bank shortly after the beginning of the 1998 year. This in
fact did occur and total deposits decreased $1,453,355 or 1.56%.
The decrease in deposits was the result of decreased Money Market
account balances which are included under the savings account
caption. Totals savings accounts decreased $2,412,963 to
$24,301,023 from $26,713,986 at December 31, 1997. This decrease
was a direct result of the movement of the temporary deposits as
discussed previously. Time deposits increased $974,959 to
$57,268,660 from $56,293,701 at December 31, 1997, a 1.73%
increase. Net loans as of March 31, 1998, were $58,731,962
compared to $59,124,012 as of December 31, 1997. The allowance for
loan losses at the end of the three months was $429,211 compared to
$425,813 at year end 1997 and is considered adequate, in
management's judgement, to absorb possible losses on existing
loans. The provision for loan losses for the first three months of
1998 was $101,114 compared to $9,000 for the first three months of
1997 and $7,500 for the same period in 1996. This dramatic
increase was a direct result of one large commercial loan
charge-off which necessitated the increase of the allowance for
loan
losses and was the reason for earnings decreasing from the 1997 and
1996 levels. Other assets increased $2,067,282 from December 31,
1997. This increase is due to cash value of life insurance
policies in the amount of $1,985,000 purchased by the Bank on the
lives of key executives and directors on which the Bank is the
primary beneficiary and the executive's/director's designees
secondary beneficiaries, subject to vesting schedules based upon
the director's/executive's years of service to the organization.
The purpose of these policies is to provide the Bank with the
financial ability to recruit new management and directors in the
event of a director's/executive's untimely death and to reward
directors and executives for their commitment to the organization
following retirement.
Total deposits were $91,806,335 as of March 31, 1998, compared to
$93,259,690 on December 31, 1997. This represents a decrease of
$1,453,355 or 1.56% which reflects the activity as discussed
previously.
Total equity as of March 31, 1998, was $11,443,986, 10.97% of total
assets, as compared to $11,389,749, 10.74% of total assets as of
December 31, 1997. This slight increase in equity reflects
earnings for the first quarter of 1997 offset by a decrease in
market value of marketable securities which has resulted in a net
unrealized gain on available for sale securities, net of tax
effects of $151,360, a $32,643 decrease from the December 31, 1997
net unrealized gain on available for sale securities, net of tax
effects of $184,003.
The Corporation has risk-based capital ratios exceeding regulatory
requirements. Risk-based capital guidelines require a minimum
ratio of 8.0%. At March 31, 1998, the risk-based capital ratio of
the Corporation was 18.87% while at December 31, 1997, the
risk-based capital ratio was 18.79%. The following table presents
the
risk-based capital ratios for the Corporation:
<TABLE>
<S> <C> <C>
March 31, Regulatory
1998 Minimum
Leverage Ratio 10.65% 3.00%
Risk-based capital ratios:
Tier I (core capital) 18.17% 4.00%
Total Capital
(Tier I and Tier II Capital) 18.87% 8.00%
</TABLE>
PART II - OTHER INFORMATION
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits - None
b. Reports on Form 8-K - None
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.
/s/John C. Duffey
(John C. Duffey, President
and Director of the Company and
President/CEO of the Bank)
(Duly Authorized Officer)
Date May 12, 1998 /s/Daniel E. Waltz
(Daniel E. Waltz, Treasurer
and Director of the Company and
Senior Vice President/CFO of
the Bank)
(Principal Financial &
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,945
<INT-BEARING-DEPOSITS> 505
<FED-FUNDS-SOLD> 4,633
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 27,710
<INVESTMENTS-CARRYING> 2,462
<INVESTMENTS-MARKET> 2,473
<LOANS> 58,732
<ALLOWANCE> 429
<TOTAL-ASSETS> 104,347
<DEPOSITS> 91,806
<SHORT-TERM> 0
<LIABILITIES-OTHER> 925
<LONG-TERM> 172
<COMMON> 252
0
0
<OTHER-SE> 11,192
<TOTAL-LIABILITIES-AND-EQUITY> 104,347
<INTEREST-LOAN> 1,324
<INTEREST-INVEST> 465
<INTEREST-OTHER> 75
<INTEREST-TOTAL> 1,864
<INTEREST-DEPOSIT> 983
<INTEREST-EXPENSE> 986
<INTEREST-INCOME-NET> 878
<LOAN-LOSSES> 101
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 660
<INCOME-PRETAX> 204
<INCOME-PRE-EXTRAORDINARY> 204
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<YIELD-ACTUAL> 4.02
<LOANS-NON> 225
<LOANS-PAST> 162
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 426
<CHARGE-OFFS> 99
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 429
<ALLOWANCE-DOMESTIC> 429
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
