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 SEPTEMBER 30, 1996
COMMISSION FILE NO: 0-17411
PARKVALE FINANCIAL CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1556590
----------------------- ----------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
4220 William Penn Highway, Monroeville, Pennsylvania 15146
----------------------------------------------------------
(Address of principal executive offices; zip code)
Registrant's telephone number, including area code: (412) 373-7200
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1.00 par value)
--------------------------------
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The closing sales price of the Registrant's Common Stock on October 28,
1996 was $24.50 per share.
Number of shares of Common Stock outstanding as of October 28, 1996 was
4,041,607.
<PAGE>
PARKVALE FINANCIAL CORPORATION
INDEX
Part I. Financial Information Page
--------------------------------- -----
Consolidated Statements of Financial Condition as
of September 30, 1996 and June 30, 1996 3
Consolidated Statements of Operations (Unaudited)
for the Three Months ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows (Unaudited)
for the Three Months ended September 30, 1996 and 1995 5-6
Consolidated Statements of Shareholders' Equity as
of September 30, 1996 6
Notes to Unaudited Interim Consolidated Financial
Statements 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
Part II - Other Information 14
Signatures 14
2<PAGE>
PARKVALE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar Amounts in Thousands, except share data)
September 30, June 30,
ASSETS 1996 1996
---------- --------
Cash and noninterest-earning deposits $7,400 $10,905
Federal funds sold 103,130 66,557
Interest-earning deposits in other banks 382 173
Investment securities available for sale
(cost of $6,804 at September 30 and June 30) 11,102 10,493
Investment securities held to maturity
(fair value of $169,732 at September 30
and $194,061 at June 30) 169,670 194,393
Loans, net of allowance of $14,158 at
September 30 and $13,990 at June 30 620,710 625,452
Foreclosed real estate, net of allowance
of $14 at September 30 and $19 at June 30 166 240
Office properties and equipment, net 1,925 2,005
Intangible assets and deferred charges 237 276
Prepaid expenses and other assets 9,643 8,748
-------- --------
Total Assets $924,365 $919,242
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Savings deposits $819,657 $807,087
Advances from Federal Home Loan Bank 15,691 20,693
Escrow for taxes and insurance 5,604 10,828
Other liabilities 9,774 4,651
Other debt 5,079 6,218
-------- --------
Total Liabilities 855,805 849,477
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock ($1.00 par value; 5,000,000
shares authorized; 0 shares issued) - -
Common Stock ($1.00 par value; 10,000,000
shares authorized; September-4,310,679*
shares issued, June - 3,448,736 shares issued) 4,311 3,449
Additional Paid in Capital 8,175 9,138
Treasury Stock at cost (269,072* shares in
September and 266,366* shares in June) (3,206) (3,028)
Employee Stock Ownership Plan debt (96) (104)
Unrealized gains on securities available for
sale 2,729 2,342
Retained earnings 56,647 57,968
-------- -------
Total Shareholders' Equity 68,560 69,765
-------- -------
Total Liabilities and Shareholders' Equity $924,365 $919,242
======== ========
* Reflect the effect of the 5 for 4 stock split on October 14,
1996.
3<PAGE>
PARKVALE FINANCIAL CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar Amounts in Thousands, except per share data)
Three months ended
September 30,
1996 1995
----- -----
Interest Income:
Loans $12,520 $11,090
Mortgage-backed securities 1,553 1,752
Investments 1,424 1,944
Federal funds sold 1,169 1,775
------- -------
Total interest income 16,666 16,561
------- -------
Interest Expense:
Savings deposits 9,414 9,680
Borrowings 323 393
------- -------
Total interest expense 9,737 10,073
------- -------
Net interest income 6,929 6,488
Provision for loan losses 135 185
------- -------
Net interest income after
provision for losses 6,794 6,303
------- -------
Noninterest Income:
Service charges on deposit accounts 291 262
Other fees and service charges 149 132
Gain on sale of assets -- --
Miscellaneous 79 116
------- -------
Total other income 519 510
------- -------
Noninterest Expenses:
Compensation and employee benefits 1,756 1,733
Office occupancy 512 498
Marketing 80 60
FDIC and other insurance 498 490
FDIC special assessment 5,035 --
Office supplies, telephone, and postage 201 190
Miscellaneous 483 550
------- -------
Total other expenses 8,565 3,521
------- -------
Income (loss) before income taxes (1,252) 3,292
Income tax expense (benefit) (464) 1,149
------- -------
Net income (loss) ($788) $2,143
======= =======
Net income (loss) per share ($0.19) $0.51
Dividends per share $0.13 $0.104
All share amounts reflect the effect of the 5 for 4 stock split on
October 14, 1996.
4<PAGE>
Parkvale Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Three Months Ended September 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Dollar Amounts in Thousands)
1996 1995
Cash flows from operating activities: -------- --------
Interest received $17,727 $16,836
Loan fees received 36 70
Other fees and commissions received 489 480
Interest paid (9,739) (10,045)
Cash paid to suppliers and others (3,600) (3,065)
Income taxes paid (1,499) (1,113)
-------- --------
Net cash provided by operating activities 3,414 3,163
Cash flows from investing activities:
Proceeds from sales of investment
securities available for sale -- --
Proceeds from maturities of investments 21,500 27,700
Purchase of investment securities available
for sale -- (69)
Purchase of investment securities (4,955) (18,895)
(Purchase) maturity of deposits in other banks (209) 27
Purchase of mortgage-backed securities -- (13,100)
Purchase of loans (131) (15,296)
Proceeds from sales of loans 1,255 896
Principal collected on mortgage-backed
securities 8,139 5,173
Principal collected on loans 34,069 32,164
Loans made to customers, net of loans in
process (30,518) (35,391)
Other -- (49)
-------- --------
Net cash (used in) investing activities 29,150 (16,840)
Cash flows from financing activities:
Net decrease in checking and
savings accounts (4,044) (200)
Net increase in certificates of deposit 16,613 5,685
Repayment of FHLB advances (5,003) (2)
Net (decrease) increase in other borrowings (1,138) 688
Decrease in borrowers' advances for tax &
insurance (5,224) (5,430)
Cash dividends paid (421) (333)
Allocation of treasury stock to retirement plans 41 11
Acquisition of treasury stock (320) --
-------- --------
Net cash provided by financing activities 504 419
-------- --------
Net increase (decrease) in cash and cash
equivalents 33,068 (13,258)
Cash and equivalents at beginning of period 77,462 126,584
-------- --------
Cash and equivalents at end of period $110,530 $113,326
======== ========
5<PAGE>
Reconciliation of net income to net cash
provided by operating activities: Three months ended
September 30,
1996 1995
------- -------
Net income ($788) $2,143
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 119 139
Accretion and amortization of loan fees
and discounts 8 (23)
Loan fees collected and deferred 36 70
Provision for loan losses 135 185
Decrease in accrued interest receivable 967 218
Increase in other assets (58) (115)
(Decrease) increase in accrued interest payable (2) 28
Increase in other liabilities 2,997 518
------ ------
Total adjustments 4,202 1,020
------ ------
Net cash provided by operating activities $3,414 $3,163
====== ======
For purposes of reporting cash flows, cash and cash equivalents include
cash and noninterest-earning deposits, and federal funds sold.
Generally, federal funds are purchased and sold for one-day periods.
Loans transferred to foreclosed assets aggregated $3,000 and $46,000 in
the three months ended September 30, 1996 and 1995, respectively.
<TABLE>
PARKVALE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
<CAPTION> Employee
Stock Unrealized Total
Common Paid-in Treasury Ownership Security Retained Shareholders'
Stock Capital Stock Plan Debt Gains Earnings Equity
--------- -------- -------- --------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 $3,449 $9,138 ($3,028) ($104) $2,342 $57,968 $69,765
Net income (loss), three months
ended September 30, 1996 (788) (788)
Dividends on common stock at
$.13 per share (533) (533)
Principal payments on employee
stock ownership plan debt 8 8
Transfer to reflect 5 for 4 split 862 (862) 0
Treasury stock purchased (320) (320)
Unrealized security gains 387 387
Exercise of stock options (101) 142 41
------- ------- --------- ------- ------- ------- --------
Balance, September 30, 1996 $4,311 $8,175 ($3,206) ($96) $2,729 $56,647 $68,560
======= ======= ========= ======= ======= ======= ========
</TABLE>
6<PAGE>
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------
1. STATEMENTS OF OPERATIONS
The statements of operations for the three months ended September 30,
1996 and 1995 are unaudited, but in the opinion of management, reflect
all adjustments (consisting of only normal recurring accruals) necessary
for a fair presentation of the results of operations for those periods.
The results of operations for the three months ended September 30, 1996
are not necessarily indicative of the results which may be expected for
fiscal 1997. The Annual Report on Form 10-K for the year ended June 30,
1996 contains additional information and should be read in conjunction
with this report.
2. STOCK SPLIT
On September 17, 1996 the Board of Directors declared a 5-for-4 stock
split of Parkvale's common stock. The additional shares were paid on
October 14, 1996 to stockholders of record at the close of business on
September 30, 1996. This increased the outstanding shares by 808,129.
No fractional shares were issued. All share amounts in this report have
been restated to reflect this stock split.
3. EARNINGS PER SHARE
Primary earnings per share are based upon the weighted average number
of issued and outstanding common shares including shares subject to
stock options, which are deemed common stock equivalents. For the three
months ended September 30, 1996, earnings (loss) per share were ($0.19)
based upon 4,206,799 average shares outstanding, respectively assuming
all 283,993 option shares outstanding were exercised. For the three
months ended September 30, 1995, the restated earnings per share was
$0.51 per share based upon 4,195,508 average shares outstanding,
respectively assuming all 321,047 option shares then outstanding were
exercised.
4. CHANGE IN METHOD OF ACCOUNTING
In October 1995, the FASB issued FAS 123, "Accounting for Stock-Based
Compensation." FAS 123 defines a fair value-based method of accounting
for stock-based employee compensation plans. Under the fair value-based
method, compensation cost is measured at the grant date based upon the
value of the award and is recognized over the service period. The
standard encourages all entities to adopt this method of accounting for
all employee stock compensation plans. However, it also allows an
entity to continue to measure compensation costs for its plans as
prescribed in APB Opinion No. 25, "Accounting for Stock Issued to
Employees." If an entity elects to continue to use the accounting in
Opinion 25, pro forma disclosures of net income and earnings per share
must be made as if the fair value method of accounting, as defined by
FAS 123 had been applied. Management has evaluated the adoption of FAS
123 for fiscal 1997 and determined that Parkvale will continue its
accounting in accordance with APB Opinion 25. If Parkvale were to
present pro forma disclosures as if FAS 123 were adopted, there would be
minimal impact to the results of operations for the three months ended
September 30, 1996 and 1995 for those awards granted on or after July 1,
1995.
In June 1996, the FASB issued FAS 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities."
Under the FASB's "financial components" approach, both the transferor
and transferee would recognize the asset and liabilities (or components
thereof) that it controls in a physical sense and "derecognize" the
assets and liabilities that were surrendered or extinguished in the<PAGE>
transfer. Prior rules emphasize the economic risks or rewards of
ownership of the assets. This Statement is effective for transactions
occurring after December 31, 1996. Parkvale does not anticipate any
impact on results of operations and financial condition from the
adoption of this Statement.
7
5. FDIC SPECIAL ASSESSMENT
On September 30, 1996, the Deposit Insurance Funds Act of 1996 was
enacted to recapitalize the Savings Association Insurance Fund (SAIF).
As part of the legislation, a one-time assessment of $0.657 per $100 of
insured deposits ($5,035,012 before tax) is mandated to restore SAIF to
its required statutory level of $1.25 per $100 of insured deposits. The
one-time assessment, required to be expensed in the September 1996
quarter, is tax deductible and payable on November 27, 1996. As such,
Parkvale reported a net loss for the quarter ended September 30, 1996 of
$788,000 or $0.19 per share as a direct result of this $5.0 million
($3.2 million, net of tax) assessment. Earnings (loss) per share impact
of this one-time assessment is ($0.75).
Without the FDIC special assessment, net income for the September 30,
1996 quarter would have been $2.4 million or $0.57 per share, up 11.1%
from net income (10.8% on a per share basis) of $2.1 million or $0.51
per share for the quarter ended September 30, 1995.
Despite the magnitude of the assessment, management believes the
legislation will have positive ramifications for Parkvale as it will
significantly reduce deposit insurance premiums and the competitive
disadvantage that SAIF-insured institutions have suffered relative to
Bank Insurance Fund (BIF)-insured institutions. Sharing in the
Financing Corporation (FICO) obligation begins January 1, 1997 when the
FICO premium to SAIF-insured institutions will be 6.4 basis points.
FICO bonds were originally issued to finance part of the savings and
loan crisis of the 1980s. Total premiums will then be the sum of the
FICO premium and any regular insurance assessment, currently nothing for
the lowest risk category institutions. Since Parkvale is considered to
be in the lowest risk category, the total premium beginning January 1,
1997 will only be for the FICO premium of 6.4 basis points. Parkvale's
insurance cost will be reduced by 16.6 basis points or $1.3 million
annually. Net earnings are expected to increase $0.05 per share per
quarter for the remaining quarters in the 1997 fiscal year.
Beginning January 1, 2000 the deposit insurance premium will be
further reduced so that there is full pro-rata FICO sharing with other
institutions. This amount has not been determined at this point in time.
8<PAGE>
6. LOANS:
Loans are summarized as follows:
September 30, June 30,
1996 1996
----------- ---------
(Dollar Amounts in Thousands)
First mortgage loans:
Residential:
1-4 Family $509,886 $517,082
Multi-family 17,156 17,375
Commercial 19,173 19,516
Other 2,413 2,387
-------- --------
548,628 556,360
Consumer loans 79,746 76,224
Commercial business loans 8,858 8,925
Loans on savings accounts 3,233 3,285
-------- --------
640,465 644,794
Less: Loans in process 4,642 4,386
Allowance for loan losses 14,158 13,990
Unamortized discount and deferred loan fees 955 966
-------- --------
Loans, net $620,710 $625,452
======== ========
Nonaccrual loans $2,208 $1,008
as a percent of total assets 0.34% 0.16%
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due or when the loan becomes more than 90 days past due.
The amount of additional interest income that had not been recognized in
interest income was $188 at September 30, 1996 and $137 at June 30,
1996. The following summary sets forth the activity in the allowance
for loan losses for the three months ended September 30:
1996 1995
------- --------
Beginning balance $13,990 $13,136
Provision for losses - mortgage loans 26 195
Provision for losses - consumer loans 109 (10)
Provision for losses - commercial loans -- --
Loans recovered 60 81
Loans charged off (27) (44)
------- -------
Ending balance $14,158 $13,358
======= =======
Non-accrual, substandard and doubtful commercial and other real estate
loans are evaluated for impairment under the provisions of FAS 114 and
118. At September 30, 1996, management has determined that $1.0 million
of loans were considered to be impaired in conformity with these
Statements. The average recorded investment in impaired loans during
the September 1996 quarter was $800. The total allowance for loan
losses related to these loans was $154.
9<PAGE>
PARKVALE FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollar Amounts in Thousands, except per share data)
Balance Sheet Data: September 30,
1996 1995
------ ------
Total assets $924,365 $899,575
Loans, net 620,710 541,913
Interest-earning deposits and federal
funds sold 103,512 103,699
Total investments 180,772 232,692
Savings deposits 819,657 799,930
FHLB Advances 15,691 20,605
Other borrowings 5,079 4,686
Shareholders' Equity 68,560 62,852
Book value per share $16.96 $15.69
Statistical Profile:
Three Months Ended
September 30, (1)
1996 1995
------ ------
Average yield earned on all
interest-earning assets 7.41% 7.52%
Average rate paid on all
interest-bearing liabilities 4.66% 4.89%
Average interest rate spread 2.75% 2.63%
Net yield on average
interest-earning assets 3.08% 2.94%
Other expenses to average assets 3.71% 1.57%
Other expenses to average assets without
special assessment 1.53% 1.57%
Taxes to pre-tax income 37.06% 34.90%
Return on average assets -0.34% 0.95%
Return on average assets without
special assessment 1.03% 0.95%
Return on average equity -4.66% 14.16%
Return on average equity without
special assessment 13.89% 14.16%
Average equity to average total assets 7.33% 6.72%
At September 30,
1996 1995
----- -----
One year gap to total assets 0.39% 6.69%
Intangibles to total equity 0.35% 0.63%
Capital to assets ratio 7.42% 6.99%
Ratio of nonperforming assets to total assets 0.26% 0.25%
Number of full-service offices 28 28
(1) The applicable income and expense figures have been annualized in
calculating the percentages.
10<PAGE>
Results of Operations - Comparison of Three Months Ended September 30,
1996 and 1995
------------------------------------------------------------------------
For the three months ended September 30, 1996, Parkvale reported a net
loss of $788,000 or ($0.19) per share as a direct result of the $5.0
million ($3.2 million, net of tax) FDIC special assessment as discussed
a b o ve under "Notes to Unaudited Interim Consolidated Financial
Statements" under Note 5. "FDIC Special Assessment". This one-time
assessment was required to be recorded upon enactment of the legislation
in the September 1996 quarter. Without such special assessment, net
income for the quarter would have been $2.4 million or $0.57 per share,
up 11.1% from net income (10.8% on a per share basis) of $2.1 million or
$0.51 per share for the quarter ended September 30, 1995. The $238,000
increase in net income excluding the assessment primarily reflects
increased net interest income of $441,000. Net interest income for the
quarter ended September 30, 1996 increased to $6.9 million from $6.5
million for the quarter ended September 30, 1995.
INTEREST INCOME:
----------------
Parkvale had interest income of $16.7 million during the three months
ended September 30, 1996 versus $16.6 million during the comparable
period in 1995. This slight increase of $105,000 is the result of an
$18.4 million or 2.1% increase in the average balance of interest-
earning assets, offset by an 11 basis point decrease in the average
yield from 7.52% in 1995 to 7.41% in 1996. Interest income from loans
increased $1.4 million or 12.9% resulting from an increase in the
average outstanding loan balances of $89.8 million or 16.9%, offset by
a 28 basis point decrease in the average yield from 8.32% in 1995 to
8.04% in 1996. Interest income on mortgage-backed securities decreased
$199,000 from the 1995 quarter due to a decrease of $9.6 million or 9.3%
in the average balance, compounded by a 16 basis point decrease in the
average yield from 6.78% in 1995 to 6.62% in 1996. Investment
securities interest income decreased by $520,000 or 26.8% from the 1995
quarter due to a decrease of $29.0 million or 23.2% in the average
balance, compounded by a 29 basis point decrease in the average yield
from 6.22% in 1995 to 5.93% in 1996. Interest income earned on federal
funds sold decreased $606,000 or 34.1% from the 1995 quarter due to a
decrease in the average balance of $32.8 million or 27.4%, compounded by
a 56 basis point decrease in the average yield from 5.93% to 5.37%. At
September 30, 1996, the weighted average yield on all interest earning
assets was 7.45% compared to 7.52% at September 30, 1995.
INTEREST EXPENSE:
-----------------
Interest expense slightly decreased $336,000 or 3.3% from the 1995 to
the 1996 quarter. The decrease was due to a 23 basis point decrease in
the average rate paid on deposits and borrowings from 4.89% in 1995 to
4.66% in 1996, offset by an increase in the average deposits and
borrowings of $12.3 million. At September 30, 1996, the average rate
payable on liabilities was 4.60% for deposits, 6.01% for borrowings and
4.64% for combined deposits and borrowings.
PROVISION FOR LOAN LOSSES:
-------------------------
Parkvale's provision for loan losses decreased by $50,000 or 27.0% from
the 1995 to the 1996 quarter. Total reserves were 2.21% and 2.17% of
gross loans at September 30, 1996 and June 30, 1996, respectively.<PAGE>
Non-performing loans and real estate owned were $2.4 million, $1.2
million and $2.2 million at September 30, 1996, June 30, 1996 and
September 30, 1995, representing 0.26%, 0.14% and 0.25% of total assets
at the respective balance sheet dates. Total loan loss reserves at
September 30, 1996
11<PAGE>
were $14.2 million, which represents 2.21% of the gross loan portfolio.
The increase of $1.1 million in non-performing assets from June 30, 1996
is due to a reclassification of a $359,000 shopping center from accrual
to non-accrual status and a $758,000 increase in non-accruing single-
family dwellings.
Loans are placed on non-accrual status when in the judgement of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. All loans which are 90 or more
days delinquent are treated as non-accrual loans.
OTHER INCOME:
-------------
Total other income decreased slightly by $20,000 in 1996 primarily from
a decrease of $37,000 in income from the tax deferred annuity and mutual
fund products.
OTHER EXPENSE:
--------------
Total other expense increased by $5.0 million from 1995 as a direct
result of the FDIC special assessment discussed above. Without this
nonrecurring charge, other expenses would have increased only slightly
by $9,000 from 1995. The largest component of other expense,
compensation and employee benefits, increased slightly by $23,000 or
1.3%. Annualized operating expenses as a percentage of average assets
without the special assessment would have been lower at 1.53% for the
quarter ended September 30, 1996 versus 1.57% during the comparable 1995
quarter.
INCOME TAXES:
-------------
The provision for income taxes consists of the following for the three
months ended September 30, 1996: Current tax benefit - Federal
$335,000; State $79,000 and Deferred Federal Tax Benefit $50,000 with
the total aggregating $464,000. The prepaid and deferred tax asset
increased by $1.8 million from June 30, 1996 to September 30, 1996 which
reflects a $1.6 million overpayment of estimated federal taxes remitted
prior to the enactment of the Deposit Insurance Funds Act of 1996 signed
into law September 30, 1996. On September 15, 1996, additional taxes of
$396,000 were paid due to the elimination of the special bad debt
deduction under the reserve method which allowed Parkvale to deduct 8%
from taxable income before the deduction. The $396,000 was accrued as a
deferred tax liability for activity in the first half of the calendar
year prior to the enactment of the Small Business Job Protection Act of
1996 which contained this provision to eliminate the special bad debt
deduction granted solely to thrifts. The effective tax rate for the
three months ended September 30, 1996 was 37.1%, which is anticipated to
be the effective tax rate for the 1997 fiscal year.
LIQUIDITY AND CAPITAL RESOURCES:
--------------------------------
Federal funds sold increased $36.6 million from June 30, 1996 to
September 30, 1996 resulting from the combination of funds available
from investment securities maturing and an increase in deposit balances
of $12.6 million. Investment securities held to maturity decreased
$24.7 million from June 30, 1996 to September 30, 1996.
Escrow for taxes and insurance decreased by $5.2 million or 48.3% as a
result of the payment of property taxes to the various taxing districts
during the quarter.<PAGE>
Stockholders' equity was $68.6 million or 7.42% of total assets at
September 30, 1996. The Bank is required to maintain Tier I (Core)
capital equal to at least 4% of the institution's adjusted total assets,
12<PAGE>
and Tier II (Supplementary) risk-based capital equal to at least 8% of
the risk-weighted assets. At September 30, 1996, Parkvale was in
compliance with all applicable regulatory requirements, with Tier I and
Tier II ratios of 6.97% and 14.78%, respectively.
The following table sets forth certain information concerning the Bank's
regulatory capital at September 30, 1996:
Tier I Tier I Tier II
Core Risk-Based Risk-Based
Capital Capital Capital
------- ------- ------
Equity Capital (1) $67,991 $67,991 $67,991
Less non-allowable intangible assets (237) (237) (237)
Less unrealized securities gains (2,589) (2,589) (2,589)
Plus general valuation allowances (2) -- -- 6,125
------- ------- -------
Total regulatory capital 65,165 65,165 71,290
Minimum required capital 37,385 19,600 38,580
------- ------- -------
Excess regulatory capital $27,780 $45,564 $32,710
Adjusted total assets $934,615 $490,007 $482,249
Regulatory capital as a percentage (3) 6.97% 13.30% 14.78%
Minimum capital required as a
percentage 4.00% 4.00% 8.00%
Excess regulatory capital as a ------ ------ ------
percentage 2.97% 9.30% 6.78%
====== ====== ======
Well capitalized requirement 5.00% 6.00% 10.00%
====== ====== ======
(1) Represents equity capital of the consolidated Bank as reported to
the Pennsylvania Department of Banking and FDIC on Form 032 for the
quarter ended September 30, 1996.
(2) Limited to 1.25% of risk adjusted total assets.
Management is not aware of any trends, events, uncertainties or current
r e commendations by any regulatory authority that will have (if
implemented), or that are reasonably likely to have, material effects on
Parkvale's liquidity, capital resources or operations.
IMPACT OF INFLATION AND CHANGING PRICES:
----------------------------------------
The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating
results in terms of historical dollars without considering changes in
the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, substantially all of the assets and
liabilities of a financial institution are monetary in nature. As a
result, interest rates have a more significant impact on a financial
institution's performance than the effects of general levels of
inflation. Interest rates do not necessarily move in the same direction
or in the same magnitude as the prices of goods and services as measured
by the consumer price index.
13<PAGE>
PART II - OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings None
Item 2. Changes in Securities
Refer to above Part I, "Notes to Unaudited Interim Consolidated
Financial Statements," under Note 2, "Stock Split".
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security
Holders None
(a) The 1996 Annual Meeting of Shareholders of Parkvale Financial
Corporation was held on October 24, 1996. Of 3,243,243 shares eligible
to vote, 90.5% or 2,936,248 were voted by proxy.
(b) The shareholders voted to approve the re-election of the two
nominees for directors, as described in the Proxy Statement for the
Annual Meeting. The results for the re-election of Fred P. Burger as a
director were 2,911,832 shares in favor and 24,416 withheld. The
results for the re-election of Warren R. Wenner as director were
2,909,308 shares in favor and 26,940 shares withheld.
(c) The recommendation by the Board of Directors to ratify the
appointment of Ernst & Young LLP as the Corporation's independent
auditors, as described in the Proxy Statement for the Annual Meeting,
was approved with 2,906,247 shares in favor, 2,210 against and 27,791
abstaining.
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.
Parkvale Financial Corporation
DATE: October 29, 1996 By: Robert J. McCarthy, Jr.
-----------------------
Robert J. McCarthy, Jr.
President and
Chief Executive Officer
DATE: October 29, 1996 By: Timothy G. Rubritz
-----------------------
Timothy G. Rubritz
Vice President, Treasurer and
Chief Financial Officer
14<PAGE>
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<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
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<INT-BEARING-DEPOSITS> 382
<FED-FUNDS-SOLD> 103,130
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,102
<INVESTMENTS-CARRYING> 169,670
<INVESTMENTS-MARKET> 169,732
<LOANS> 634,868
<ALLOWANCE> 14,158
<TOTAL-ASSETS> 924,365
<DEPOSITS> 819,657
<SHORT-TERM> 5,079
<LIABILITIES-OTHER> 15,378
<LONG-TERM> 15,691
0
0
<COMMON> 4,311
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<INTEREST-INVEST> 4,146
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<INTEREST-TOTAL> 16,666
<INTEREST-DEPOSIT> 9,414
<INTEREST-EXPENSE> 9,737
<INTEREST-INCOME-NET> 6,929
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<EXPENSE-OTHER> 8,565
<INCOME-PRETAX> (1,252)
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