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, 2000
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
Page 1 of 20
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, 2000
(Common stock, $0.63 par value) 400,000
Page 2 of 20
FNB FINANCIAL CORPORATION
INDEX
Page
INDEPENDENT ACCOUNTANT'S REPORT 5
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets -
March 31, 2000 and December 31, 1999 6
Condensed consolidated statements of income -
Three months ended March 31, 2000 and 1999 7
Condensed consolidated statements of comprehensive
income -
Three months ended March 31, 2000 and 1999 8
Condensed consolidated statements of cash flows -
Three months ended March 31, 2000 and 1999 9
Notes to condensed consolidated financial
statements 10-12
Table #1 - Schedule of held to maturity and
available for sale investment activity for the
period January 1, 2000 through March 31, 2000 13
Table #2 - Schedule of gross unrealized gains and
unrealized losses within the held to maturity and
available for sale investment portfolios by
investment type 14
Management's discussion and analysis of financial
condition and results of operations 15-17
PART II - OTHER INFORMATION 19
Signatures 20
Page 3 of 20
PART I - FINANCIAL INFORMATION
Page 4 of 20
INDEPENDENT ACCOUNTANT'S REPORT
Board of Directors
FNB Financial Corporation
McConnellsburg, Pennsylvania
We have reviewed the accompanying consolidated balance sheet of FNB
Financial
Corporation and Subsidiary as of March 31, 2000 and the related consolidated
statements of income for the three months ended March 31, 2000 and 1999 and
consolidated statements of comprehensive income for the three months ended
March 31,
2000 and 1999 and consolidated statements of cash flows for the three months
ended
March 31, 2000 and 1999. These financial statements are the responsibility of
the
corporation's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial
information consists principally of applying analytical procedures to financial
data
and making inquiries of persons responsible for financial and accounting
matters.
It is substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the expression
of
an opinion regarding the consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them
to be
in conformity with generally accepted accounting principles.
/s/ Smith Elliott Kearns & Company, LLC
SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
May 5, 2000
Page 5 of 20
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<S> <C> <C>
March 31, December 31,
2000 1999
ASSETS: (unaudited) (audited*)
Cash and Due from banks $ 4,110,597 $ 3,565,173
Interest-bearing deposits with banks 734,629 723,094
Marketable Debt Securities
Held-to-maturity (Market value - 2000
$1,431,864 and 1999: $1,556,865) 1,538,209 1,669,712
Available-for-sale 27,287,893 27,886,136
Marketable Equity Securities
Available for Sale 176,499 199,112
Federal Reserve, Atlantic Central Banker's Bank
and Federal Home Loan Bank Stock 833,700 681,200
Federal Funds Sold 0 0
Loans, net of unearned discount &
Allowance for loan losses 79,064,574 76,137,080
Bank buildings, equipment, furniture &
fixtures, net 3,076,253 3,119,101
Accrued interest receivable 723,816 687,259
Deferred income tax charges 696,981 676,502
Other real estate owned 343,654 165,603
Intangible Assets 157,399 161,491
Cash surrender value of life insurance 2,135,775 2,107,104
Other assets 264,544 150,616
Total Assets $121,144,523 $117,929,183
========== ==========
LIABILITIES :
Deposits:
Demand deposits $11,560,196 $10,959,096
Savings deposits 27,209,000 27,567,017
Time certificates 61,453,341 60,509,040
Other time deposits 505,343 294,783
Total deposits $100,727,880 $99,329,936
Accrued interest payable & other liabilities 966,371 861,514
Liability for other borrowed funds 8,015,753 6,364,996
Dividends payable 80,000 172,000
Total Liabilities $109,790,004 $106,728,446
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 10,287,253 10,125,145
Accumulated other comprehensive income (974,567) (966,241)
Total Stockholders' Equity $11,354,519 $11,200,737
Total Liabilities & Stockholders' Equity$121,144,523 $117,929,183
========== ==========
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed
financial statements.
Page 6 of 20
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2000 and 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
Interest & Dividend Income
Interest & fees on loans $1,631,298 $1,318,898
Interest on investment securities:
U.S. Treasury Securities 0 1,585
Obligations of other U.S.
Government Agencies 329,569 354,521
Obligations of State & Political
Subdivisions 111,754 128,776
Interest on deposits with banks 10,041 28,085
Dividends on Equity Securities 14,208 8,163
Interest on federal funds sold 0 42,565
Total Interest & Dividend Income 2,096,870 1,882,593
Interest Expense
Interest on deposits 986,647 1,017,540
Interest on Other Borrowed Money 128,278 2,795
Total interest expense 1,114,925 1,020,335
Net interest income 981,945 862,258
Provision for loan losses 60,000 30,000
Net interest income after
Provision for loan losses 921,945 832,258
Other income
Service charges on deposit accounts 42,208 22,940
Other service charges, collection &
exchange charges, commissions
and fees 63,970 63,275
Gain on Sale of Other Real Estate 19,177 0
Other income 46,883 33,094
Net Securities gains/(losses) 0 (3,691)
Total other income 172,238 115,618
Other expenses 794,681 717,382
Income before income taxes 299,502 230,494
Applicable income taxes 57,394 41,037
Net income $242,108 $189,457
======= =======
Earnings per share of Common Stock:
Net income per share $0.61 $0.47
Cash dividend declared per share $0.20 $0.18
Weighted average number of shares outstanding 400,000 400,000
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
Page 7 of 20
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31, 1999 and 1998
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
Net income $242,108 $189,457
Other Comprehensive income, net of tax
Unrealized holding gains/(losses) for period ( 8,326) (195,274)
Comprehensive Income $233,782 $( 5,817)
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
Page 8 of 20
FNB FINANCIAL CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
<TABLE>
<S> <C> <C>
(UNAUDITED)
2000 1999
Cash flows from operating activities:
Net income $ 242,108 $ 189,457
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation & amortization 68,248 65,933
Provision for loan losses 60,000 30,000
Net (gain)/loss on sales of
investments 0 3,691
(Increase) decrease in accrued
interest receivable (36,557) 14,063
(Gain)/Loss on Disposal of Other Real
Estate (19,177) 2,500
(Gain) on Disposal of Furniture (445) 0
Deferred Income Taxes (16,190) (2,886)
Increase (decrease) in accrued
interest payable and
other liabilities 104,857 55,313
Increase in cash value of insurance (28,671) (20,399)
Other (net) (117,225) (115,409)
Net cash provided (used)by operating activities 256,948 222,263
Cash flows from investing activities:
Net (increase) decrease in interest-
bearing deposits with banks (11,535) (93,525)
Purchases of Held-to-maturity securities 0 0
Purchases of Available-for-sale securities 0 (1,053,706)
Proceeds from sales of Available-for-
sale securities 0 0
Proceeds from maturities of Held-to-
maturity securities 131,503 72,306
Proceeds from maturities of Available-
for-sale securities 608,241 2,215,982
Purchases of marketable equity securities 0 0
Net (increase) decrease in loans (3,217,883) (1,114,322)
Proceeds from sale of Other real
estate owned 74,813 45,750
Purchases of bank premises &
equipment (net) (21,570) (183,471)
Proceeds from Sale of Furniture & Fixtures 706 0
Purchase of other bank stock (152,500) 0
Net cash provided (used) by investing
activities (2,588,225) (110,986)
Cash flows from financing activities:
Net increase (decrease) in deposits 1,397,944 (587,674)
Net increase (decrease) in Other borrowings 1,650,757 (1,163)
Cash dividends paid (172,000) (108,000)
Net cash provided (used) by financing
activities 2,876,701 (696,837)
Net increase (decrease) in cash & cash
equivalents 545,424 (585,560)
Cash & cash equivalents, beginning balance 3,565,173 7,270,802
Cash & cash equivalents, ending balance $4,110,597 $6,685,242
========= =========
Supplemental disclosure of cash flows information
Cash paid during the year for:
Interest $1,026,826 $ 927,927
Income taxes 0 35,926
Supplemental schedule of noncash investing &
financing activities
Unrealized gain (loss) on Available-for-sale
securities, net of income tax effect (8,328) (195,274)
Dividends Payable 80,000 72,000
</TABLE>
The accompanying notes are an integral part of these condensed
financial statements.
Page 9 of 20
FNB FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The financial information presented at and for the three
months ended March 31, 2000, and March 31, 1999 is
unaudited. Information presented at December 31, 1999, 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.
Page 10 of 20
NOTE 5 - INVESTMENTS
The activity within the held to maturity and available for
sale portfolios for the period January 1, 2000, through
March 31, 2000, 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, NONACCRUAL LOANS
Activity in the allowance for loan losses is summarized as
follows:
<TABLE>
<S> <C> <C>
2000 1999
Allowance for loan losses beginning of the year $746,067 $731,641
Loans charged-off during the year:
Real estate mortgages 1,000 0
Installment loans 41,150 12,446
Commercial & all other 4,098 30,000
Total charge-offs 46,249 42,446
Recoveries of loans previously charged-off:
Real estate mortgages 0 0
Installment loans 8,653 8,658
Commercial & all other 375 375
Total recoveries 9,028 9,033
Net loans charged-off (recovered) 37,221 33,413
Provision for loan losses charged to operations 60,000 30,000
Allowance for loan losses, March 31 $768,846 $728,228
======== ========
</TABLE>
Page 11 of 20
The following table shows the principal balance of nonaccrual
loans as of March 31, 2000:
<TABLE>
<S> <C>
Nonaccrual loans $ 227,257.46
==========
Interest income that would have been
accrued at original contract rates $ 6,418.50
Amount recognized as interest income 5,257.50
Foregone revenue $ 1,161.00
=========
</TABLE>
NOTE 7 IMPAIRED LOANS
As the Bank has undertaken a more rigorous review of loans,
their underlying collateral values and ability to repay,
management has determined that based upon this review there
are presently loans on the Bank's books which may not be paid
in full according to contractual terms and may require
additional specific provisions to the allowance for loan
losses. As of March 31, 2000, the dollar amount outstanding
on these impaired loans was $1,225,078; the underlying
collateral values for these loans based upon contractual
lending terms was $1,506,878; and the specific amount
allocated for these loans in the allowance for loan losses
was
$207,633.
NOTE 8 - 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.
Page 12 of 20
TABLE #1
SCHEDULE OF HELD TO MATURITY AND AVAILABLE FOR SALE
DEBT SECURITY PORTFOLIOS
TRANSACTION SUMMARY
FOR THE PERIOD JANUARY 1, 2000 THROUGH MARCH 31, 2000
<TABLE>
<S> <C> <C> <C>
HELD TO AVAILABLE TOTAL
MATURITY FOR SALE INVESTMENT
PORTFOLIO PORTFOLIO PORTFOLIO
BEGINNING BALANCE 1/1/00 $1,669,712 $29,339,102 $31,008,814
PURCHASES 0 0 0
NET LOSSES/GAINS 0 0 0
MATURITIES/CALLS PAYDOWNS/
PREMIUM AMORTIZATION/DISCOUNT
ACCRETION 131,503 608,241 739,744
ENDING BALANCE 3/31/00 $1,538,209 $28,730,861 $30,269,070
========= ========== ==========
</TABLE>
Page 13 of 20
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, 2000
<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
0 0 0 0
U.S. GOVERNMENT TREASURIES 0 0 0 0
0 0 0 0
U.S. GOVERNMENT AGENCIES 0 0 0 0
0 0 0
U.S. GOVERNMENT AGENCIES 498,923 397,107 0 (101,816)
17,544,473 16,548,035 0 (996,438)
SBA GUARANTEED LOAN POOL
CERTIFICATES 209,131 211,093 1,962 0
435,993 438,505 2,512 0
SBA GUARANTEED LOAN POOL
CERTIFICATES 595,115 587,780 0 (7,335)
580,434 576,349 0 (4,085)
MORTGAGE-BACKED SECURITIES 0 0 0 0
427,816 431,925 4,109 0
MORTGAGE-BACKED SECURITIES 0 0 0 0
601,449 566,046 0 (35,403)
SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S. 165,040 166,053 1,013 0
1,039,830 1,043,156 3,326 0
SECURITIES ISSUED BY STATES
& POLITICAL SUBDIVISIONS IN
THE U.S. 70,000 69,831 0 (169)
8,100,866 7,683,876 0 (416,990)
MARKETABLE EQUITY SECURITIES 0 0 0 0
98,250 104,250 6,000 0
MARKETABLE EQUITY SECURITIES 0 0 0 0
111,898 72,249 0 (39,649)
FEDERAL RESERVE BANK STOCK,
ATLANTIC CENTRAL BANKERS BANK
STOCK AND FEDERAL HOME LOAN
BANK STOCK 0 0 0 0
833,700 833,700 0 0
GRAND TOTALS 1,538,209 1,431,864 2,975 (109,320)
29,774,709 28,298,091 15,947 (1,492,565)
========= ========= ====== ======
========== ========== ======= =======
</TABLE>
Page 14 of 20
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 2000 was $242,108,
compared to $189,457 for the first three months of 1999 and
$154,879 for the same period in 1998. This represents an
increase of $52,651 or 28% from 1999 and an increase of $87,229
or 56.32% from 1998. Net income on an adjusted per share basis
for the first three months of 2000 was $0.61 an increase of $.14
from the $0.47 per share for 1999, and an increase of $0.22 from
the $0.39 per share for the three months ended March 31, 1998.
This increase from 1999 is a direct result of an increase in net
interest income which increased $119,687 for the first three
months in 2000 compared to the first three months in 1999.
Total interest and dividend income for the first three months of
2000 was $2,096,870 compared to $1,882,593 for the first three
months of 1999, an increase of $214,277, and compared to
$1,863,867 for the three months ended March 31, 1998,
representing an increase of $233,003. This increase is a result
of an increase in interest income on loans which has increased
$312,400 from 1999. Since March 31, 1999, net loans have
increased $16,079,671. This increase in loans, our highest
yielding interest-earning asset, has increased our interest
income for the first three months of 2000.
Page 15 of 20
During the first quarter of 2000, interest rates on loans have
increased as the Federal Reserve has increased short term
interest rates 50 basis points since December 31, 1999. In order
to retain and attract deposits, we have increased deposit rates
while at the same time borrowing costs of loans at the Federal
Home Loan Bank of Pittsburgh utilized to fund loan demand have
also increased. The combination of the increase in loan balances
and in loan interest rates has resulted in an increase in our net
interest income and an increase in our net interest margin. We
anticipate the increase in interest rates on loans and the
increase of deposit rates will result in the slight improvement
of our net interest margin during the next few earning periods
over the net interest margin in 1999.
Interest expense for the three months ended March 31, 2000, was
$1,114,925, an increase of $94,590 from the $1,020,335 for the
same period in 1999, and an increase of $129,322 from the
$985,603 incurred for the same period in 1998. This increase is
due to an increase in the balances of other borrowed funds.
Total other borrowed funds have increased $7,848,152 since March
31, 1999.
The tax-adjusted net interest margin has increased 16 basis
points to 3.78% for the first three months of 2000 from that of
the first three months of 1999 which was 3.62%. This increase
was the result of an increase in the yield on earning assets
which occurred during the later part of 1999 and continued into
2000. The tax-equivalent yield on earning assets for the first
three months of 2000 increased .24% to 7.82% from 7.58% for the
same period in 1999 while the cost of interest-bearing
liabilities increased .11% to 4.65% from 4.54% for the same
period in 1999. The increased yield on earning assets is due to
adjustable rate loans increasing to higher interest rates and new
loans having higher interest rates. The increased cost of
interest-bearing liabilities is due solely to the our use of
borrowed funds. The cost of deposits remained the same as in
1999 at 4.54%; however, the cost of borrowings during the first
quarter was 5.78% with average borrowings during the quarter of
$8,878,789. We anticipate net interest margin throughout the
year to improve slightly. Recent increases in interest rates on
adjustable rate loans and securities will be offset by maturing
lower cost time deposits repriced to higher yielding deposits.
Through the retention of savings and NOW account deposit interest
rates at their present levels, we will strive to maintain and
improve the net interest margin.
Total noninterest income for the first three months of 2000
increased $56,620 due to a $19,268 increase in service charges on
deposit accounts; a $13,789 increase in other income as a result
of a $8,300 increase in the cash value of life insurance; and a
$19,177 gain on the sale of other real estate. Operating
expenses for the period ended March 31, 2000, were $794,681, a
$77,299 increase from the operating expenses incurred for the
same period in 1999 of $717,382. This increase is the result of
a $43,812 increase in wages and benefits; a $9,147 increase in
advertising expenses; and a $8,344 increase in the costs
associated with the Directors life insurance/retirement program.
Page 16 of 20
Our income tax provision for the first three months of 2000 was
$57,394 as compared to $41,037 for the first three months of
1999. We continue to operate with a marginal tax rate of 34%,
during the first quarter of 2000. The effective income tax rate
for the first three months of 2000 was 19.16% a 1.36% increase
compared to 17.80% for the first three months of 1999 and a
decrease of 4.85% from the effective tax rate for the first three
months of 1998 of 24.01%.
Total assets as of March 31, 1999, were $121,144,523, an increase
of $3,215,340 from the period ending December 31, 1999,
representing an increase of 2.73%. This increase in total assets
was a result of increased lending activity. Net loans as of
March 31, 2000, were $79,064,574 compared to $76,137,080 as of
December 31, 1999, an increase of $2,927,494 or 3.85%, a result
of commercial loan settlements. To fund this increase in assets,
total deposits increased $1,397,944 to $100,727,880 as of March
31, 2000, from $99,329,936 as of December 31, 1999. Additional
funding was provided by increases in borrowed funds of $1,650,757
from $6,364,996 as of December 31, 1999, to $8,015,753 as of
March 31, 2000. The allowance for loan losses at the end of the
three months was $768,846 compared to $746,067 at year end 1999
and is considered adequate, in our opinion, to absorb possible
losses on existing loans. The provision for loan losses for the
first three months of 2000 was $60,000 compared to $30,000 for
the first three months of 1999 and $101,114 for the same period
in 1998. This increase from the 1999 provision is a result of
increased commercial loan activity.
Total equity as of March 31, 2000, was $11,354,519, 9.37% of
total assets, as compared to $11,200,737, 9.50% of total assets
as of December 31, 1999. This ratio decrease is a result of
total asset increase of $3,215,340 or 2.73% while equity accounts
increased $153,782 or 1.37%.
We have risk-based capital ratios exceeding regulatory
requirements. Risk-based capital guidelines require a minimum
ratio of 8.0%. At March 31, 2000, the risk-based capital ratio
of the Corporation was 16.44% while at December 31, 1999, the
risk-based capital ratio was 16.43%. The following table
presents our risk-based capital ratios:
<TABLE>
<S> <C> <C>
March 31,
Regulatory
2000 Minimum
Leverage Ratio 9.24% 4.00%
Risk-based capital ratios:
Tier I (core capital) 15.38% 4.00%
Total Capital
(Tier I and Tier II Capital) 16.44% 8.00%
</TABLE>
Page 17 of 20
PART II - OTHER INFORMATION
Page 18 of 20
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
Page 19 of 20
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 4, 2000 /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)
Page 20 of 20
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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0
0
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