FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
Commission file number: 33-850626
FULTON BANCSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 25-1598464
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Lincoln Way East
McConnellsburg, Pennsylvania 17233
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (717) 485-3144
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 July 31, 2000
(Common stock, .625 par value) 495,000
Page 1 of 18 pages
FULTON BANCSHARES CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets - June 30, 2000
and December 31, 1999 3
Condensed consolidated statements of income - three months
ended June 30, 2000 and 1999 4
Condensed consolidated statements of comprehensive income -
three months ended June 30, 2000 and 1999 5
Condensed consolidated statements of income - six months
ended June 30, 2000 and 1999 6
Condensed consolidated statements of comprehensive income -
six months ended June 30, 2000 and 1999 7
Condensed consolidated statements of cash flows - six
months ended June 30, 2000 and 1999 8
Notes to condensed consolidated financial statements 9 and 10
Management's discussion and analysis of financial
condition and results of operations 11 - 16
PART II - OTHER INFORMATION 17
Signatures 18
Exhibits
Page 2 of 18 page
PART I - FINANCIAL INFORMATION
FULTON BANCSHARES CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2000 1999 *
ASSETS (Unaudited)
(000 Omitted)
Cash and due from banks $ 3,625 $ 4,582
Available-for-sale securities 23,644 23,567
Federal Reserve, Atlantic Central Bankers Bank,
Federal Home Loan Bank, at cost which
approximates market 870 870
Loans, net of allowance for loan losses 97,797 90,995
Bank building, equipment, furniture &
fixtures, net 3,615 3,710
Other real estate owned 228 230
Accrued interest/dividends receivable 830 731
Cash surrender value of life insurance 3,096 3,028
Other assets 837 765
Total assets $ 134,542 $ 128,478
LIABILITIES
Deposits:
Noninterest-bearing deposits $ 13,650 $ 12,354
Interest-bearing deposits:
Savings deposits 28,766 29,913
Time deposits 62,739 61,044
Total deposits 105,155 103,311
Accrued interest payable 376 421
Other borrowed money 15,225 11,475
Other liabilities 541 518
Total liabilities 121,297 115,725
STOCKHOLDERS' EQUITY
Capital stock, common, par value - $ 0.625;
4,000,000 shares authorized; 495,000
shares issued and outstanding, at June 30,
2000 and December 31, 1999 309 309
Surplus 2,051 2,051
Retained earnings 11,625 11,076
Net unrealized gains/(losses) available-
for-sale securities ( 740) ( 683)
Total stockholders' equity 13,245 12,753
Total liabilities and
stockholders' equity $ 134,542 $ 128,478
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed
financial statements.
Page 3 of 18 pages
FULTON BANCSHARES CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
(000 Omitted)
Interest & Dividend Income
Interest & fees on loans $ 2,090 $ 1,804
Interest & dividends on investment
securities:
U.S. Government securities 233 203
Obligations of state & political
subdivisions 51 75
Interest on federal funds sold 2 1
Other interest & dividend income 93 88
Total interest & dividend income 2,469 2,171
Interest Expense
Interest on deposits 1,047 912
Interest on federal funds purchased 6 0
Interest on other borrowed money 187 147
Total interest expense 1,240 1,059
Net interest income before
provision for loan losses 1,229 1,112
Provision for loan losses 15 15
Net interest income after provision
for loan losses 1,214 1,097
Other Income
Service charges on deposit accounts 38 37
Other fee income 36 25
Other noninterest income 45 40
Securities gains 5 0
Total other income 124 102
Other Expense
Salaries and employee benefits 346 300
Fixed asset expenses (including
depreciation) 172 142
FDIC insurance premiums 5 3
Other noninterest expenses 280 261
Total other expenses 803 706
Net income before income taxes 535 493
Applicable income taxes 140 125
Net income $ 395 $ 368
Weighted average number of shares
outstanding 495,000 495,000
Net income per share $ .80 $ .74
Cash dividends declared per share $ .18 .17
The accompanying notes are an integral part of these condensed
financial statements.
Page 4 of 18 pages
FULTON BANCSHARES CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
(000 Omitted)
Net income $ 395 $ 368
Other comprehensive income, net of tax
Unrealized gain (loss) on investments
available for sale ( 91) ( 183)
Reclassification adjustment for gains
(losses) included in net income 5 0
Comprehensive income $ 309 $ 185
The accompanying notes are an integral part of these condensed
financial statements.
Page 5 of 18 pages
FULTON BANCSHARES CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
(000 Omitted)
Interest & Dividend Income
Interest & fees on loans $ 4,069 $ 3,556
Interest & dividends on investment
securities:
U.S. Government securities 465 430
Obligations of state & political
subdivisions 102 150
Interest on federal funds sold 4 1
Other interest & dividend income 184 171
Total interest & dividend income 4,824 4,308
Interest Expense
Interest on deposits 2,065 1,843
Interest on federal funds purchased 6 3
Interest on other borrowed money 334 260
Total interest expense 2,405 2,106
Net interest income before
provision for loan losses 2,419 2,202
Provision for loan losses 30 100
Net interest income after provision
for loan losses 2,389 2,102
Other Income
Service charges on deposit accounts 75 73
Other fee income 62 60
Other noninterest income 89 172
Securities gains 5 2
Total other income 231 307
Other Expense
Salaries and employee benefits 745 637
Fixed asset expenses (including
depreciation) 353 292
FDIC insurance premiums 10 6
Other noninterest expenses 545 528
Total other expenses 1,653 1,463
Net income before income taxes 967 946
Applicable income taxes 240 206
Net income $ 727 $ 740
Weighted average number of shares
outstanding 495,000 495,000
Net income per share $ 1.47 $ 1.49
Cash dividends declared per share $ .36 .34
The accompanying notes are an integral part of these condensed
financial statements.
Page 6 of 18 pages
FULTON BANCSHARES CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
2000 1999
(000 Omitted)
Net income $ 727 $ 740
Other comprehensive income, net of tax
Unrealized gain (loss) on investments
available for sale ( 62) ( 259)
Reclassification adjustment for gains
(losses) included in net income 5 2
Comprehensive income $ 670 $ 483
The accompanying notes are an integral part of these condensed
financial statements.
Page 7 of 18 pages
FULTON BANCSHARES, CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2000 and 1999
(UNAUDITED)
2000 1999
(000 Omitted)
Cash flows from operating activities:
Net income $ 727 $ 740
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 187 142
Provision for loan losses 30 100
Gain on sale - Securities ( 5) 0
Other - Net ( 233) ( 96)
Net cash provided by operating activities 706 886
Cash flows from investing activities:
Purchase of investment securities -
Available-for-sale ( 940) ( 690)
Purchase of Federal Home Loan Bank Stock 0 ( 267)
Sales of available-for-sale securities 430 1,843
Maturities of available-for-sale securities 353 2,469
Net (increase) in loans ( 6,832) ( 8,400)
Proceeds of director's life insurance 0 360
Deposits/improvements on OREO property 0 ( 5)
Purchases of & deposits on bank premises
and equipment - net ( 90) ( 677)
Net cash (used) by investing activities ( 7,079) ( 5,367)
Cash flows from financing activities:
Net increase (decrease) in deposits 1,844 ( 2,782)
Dividends paid ( 178) ( 168)
Net increase (decrease)in federal funds
Borrowed 0 ( 2,100)
Net increase (decrease) in other
borrowed money 3,750 8,975
Net cash provided by financing activities 5,416 3,925
Net increase(decrease) in cash and cash
equivalents ( 957) ( 556)
Cash and cash equivalents, beginning balance 4,582 3,301
Cash and cash equivalents, ending balance $ 3,625 $ 2,745
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest $ 2,110 $ 2,181
Income taxes 233 221
Supplemental schedule of noncash investing
and financing activities:
Change in net unrealized gain on investments
available for sale (net of deferred taxes) ( 57) ( 257)
The accompanying notes are an integral part of these condensed
financial statements.
Page 8 of 18 pages
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
Review of Interim Financial Statements
The condensed consolidated financial statements as of and for
the three months ended June 30, 2000 and 1999 have been
reviewed by independent certified public accountants. Their
report on the review is attached as Exhibit 99 to the 10-Q
filing.
Note 1. Basis of Presentation
The financial information presented at and for the three
months ended June 30, 2000 and 1999 is unaudited.
Information presented at December 31, 1999 is condensed from
audited year-end financial statements. However, 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 subsidiaries, Fulton
County National Bank & Trust Company and the Fulton County
Community Development Corporation. 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 statements
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
judgment, 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 income taxes are provided in the
financial statements. Federal income taxes were computed
after reducing pretax accounting income for nontaxable
municipal and loan income.
Page 9 of 18 pages
Note 5. 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 and the bank does not anticipate any losses
as a result of these transactions.
Note 6. Earnings Per Share of Common Stock
Earnings per share of common stock were computed based on an
average of 495,000 shares for the quarters ended June 30,
2000 and 1999.
Note 7. Investment Securities
The carrying amounts of investment securities and their
approximate fair values at June 30, 2000 were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
Debt securities available for sale:
FNMA/FHLMC non-
cumulative
preferred
stocks $ 5,239,344 $ 0 ($ 543,673) $ 4,695,671
State & municipal
securities 4,119,675 12,392 ( 171,555) 3,960,512
U.S. Government
agencies 10,250,865 0 ( 280,615) 9,970,250
Mortgage-backed
securities 4,523,573 4,715 ( 142,485) 4,385,803
Corporate bonds 499,260 0 0 499,260
Equity
securities 132,000 0 0 132,000
$ 24,764,717 $ 17,107 ($ 1,138,328) $ 23,643,496
There were no securities categorized "Held-to-maturity" or
"Trading" at June 30, 2000.
Note 8. Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting of Comprehensive Income", became effective for
fiscal years and interim reporting periods beginning after
December 15, 1997.
Comprehensive income is defined as the change in equity from
transactions and other events from nonowner sources. It
includes all changes in equity except those resulting from
investments by owners and distributions to owners. The only
element of "other comprehensive income" that the Bank has is
the unrealized gain or loss on available for sale securities.
Consequently, a "Statement of Comprehensive Income" has been
included in this filing.
Page 10 of 18 pages
FULTON BANCSHARES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Net after tax income for the first six months of 2000 was
$ 727,000 compared to $ 740,000 for the same period in 1999,
representing a decrease of $ 13,000, or 1.8%. Net income on an
adjusted per share basis for the first six months of 2000 was
$ 1.47, a decrease of $ .02 from the $ 1.49 per share realized
during the six months ended June 30, 1999.
RESULTS OF OPERATIONS
Second Quarter 2000 vs. Second Quarter 1999
Interest income for the second quarter of 2000 was $ 2,469,000
compared with $ 2,171,000 earned during the same period in 1999,
for an increase of $ 298,000, or 13.7%. The increase was due
primarily to a higher average balance of loans, which typically
produce higher yields than investments, in 2000 compared with the
same period in 1999. Management expects average rates earned for
the rest of 2000 to be higher than the previous year since interest
rates have increased.
Interest expense for the second quarter of 2000 was
$ 1,240,000, an increase of $ 181,000, or 17.1% over the
$ 1,059,000 incurred for the same period in 1999. The increase was
due primarily to higher average balances of time deposits and
additional borrowings, which were used to fund loan growth.
Management expects interest expense to be higher for the rest of
2000 because borrowed monies or more costly time deposits most
likely will be used to fund the loan growth.
Net interest income for the second quarter of 2000 totaled
$ 1,229,000, up $ 117,000, or 10.5%, from the second quarter of
1999.
Six Months 2000 vs. Six Months 1999
Interest income for the first six months of 2000 was
$ 4,824,000 compared with $ 4,308,000 as of June 30, 1999, for an
increase of $ 516,000, or 12.0%. The increase was due primarily to
a higher average balance of loans, which typically produce higher
yields than investments, in 2000 compared with the same period in
1999. Management expects average rates earned for the rest of 2000
to be higher than the previous year since interest rates have
increased.
Interest expense for the first six months of 2000 was
$ 2,405,000, an increase of $ 299,000, or 14.2% over the
$ 2,106,000 incurred for the same period in 1999. The increase was
due primarily to higher average balances of time deposits and
additional borrowings, which were used to fund loan growth.
Management expects interest expense to be higher for the rest of
2000 because borrowed monies or more costly time deposits most
likely will be used to fund the loan growth.
Page 11 of 18 pages
Net interest income for the first six months of 2000 totaled
$ 2,419,000, up $ 217,000, or 9.9%, from June 30, 1999. Liquidity
and interest rate risk are continuously monitored through Asset-
Liability Committee reports. Management plans to protect its net
interest margin by competitively pricing loans and deposits and by
structuring interest-earning assets and liabilities in such a way
that they can be repriced in response to changes in market interest
rates.
NONINTEREST INCOME
Second Quarter 2000 vs. Second Quarter 1999
Second quarter 2000 noninterest income increased $ 102,000 to
$ 124,000, or 21.6%, primarily due to an $ 11,000 increase in other
fee income. Service charges on deposit accounts increased $ 1,000,
other noninterest income increased $ 5,000, and $ 5,000 in
securities gains was reported.
Six Months 2000 vs. Six Months 1999
Noninterest income for the first six months of 2000 and the
same period in 1999 was $ 231,000 and $ 307,000, respectively.
Service charges on deposit accounts and other fee income increased
$ 2,000 each. Other noninterest income decreased $ 83,000
primarily due to director life insurance benefit income of $ 91,000
reported during the first quarter of 1999. Securities gains of
$ 5,000 were reported for the first six months of 2000 compared
with $ 2,000 for the same period in 1999.
NET INTEREST MARGIN
The net interest margin for the first six months of 2000 was
4.08% compared to 3.84% for the first six months of 1999.
Management plans to protect its net interest margin by
competitively pricing its loans and deposits and by structuring
interest-earning assets and liabilities so they can be repriced in
response to changes in market interest rates.
NONINTEREST EXPENSES
Second Quarter 2000 vs. Second Quarter 1999
Noninterest expenses for the second quarter of 2000 totaled
$ 803,000, an increase of $ 97,000, or 13.7%, over the $ 706,000
for the second quarter of 1999. Salaries and employee-related
expenses were up $ 46,000, or 15.3%, primarily due to the addition
of two branch offices in July and November, 1999, and merit pay
increases. Fixed asset expenses increased $ 30,000, or 21.1%,
primarily due to increased equipment and building maintenance costs
and depreciation for the additional branch offices. Other
noninterest expenses increased $ 19,000, or 7.3%, due to increases
in advertising and promotion costs, telephone and other operating
expenses.
Page 12 of 18 pages
Six Months 2000 vs. Six Months 1999
Noninterest expenses for the first six months of 2000 and the
same period in 1999 were $ 1,653,000 and $ 1,463,000, respectively.
Salaries and employee-related expenses were up $ 108,000, or 17.0%,
primarily due to the addition of two branch offices in July and
November, 1999, and merit pay increases. Fixed asset expenses
increased $ 61,000, or 20.9%, primarily due to increased equipment
and building maintenance costs and depreciation for the additional
branch offices. Other noninterest expenses increased $ 17,000, or
3.2%, primarily due to increases in advertising and promotion
costs, telephone and other operating expenses.
INCOME TAXES
The income tax provision for the second quarter of 2000 was
$ 140,000 compared with $ 125,000 for the second quarter of 1999.
The effective income tax rate for the first six months of 2000 was
24.8% compared with 21.8% for the same period in 1999. The
increase was primarily due to a 32% decrease in tax-exempt interest
on obligations of state and political subdivisions, and the 1999
receipt of nontaxable director life insurance benefits.
PROVISION FOR LOAN LOSSES
A $ 30,000 provision for loan losses was made for the first
six months of 2000 compared with $ 100,000 for the first six months
of 1999. The provisions were made based on management's evaluation
of the reserve for possible loan losses at June 30, 2000 and 1999.
A summary of the allowance for loan losses is as follows:
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(In 000's)
June 30, 2000 June 30, 1999
Allowance for loan losses
Beginning of period $ 800 $ 580
Loans charged-off during the period:
Real estate loans 0 0
Installment loans 22 14
Commercial and all other loans 2 14
Total charge-offs 24 28
Recoveries of loans previously
charged-off:
Real estate loans 0 0
Installment loans 2 4
Commercial and all other
loans 1 15
Total recoveries 3 19
Net loans (charged-off) received ( 21) ( 9)
Provision for loan losses charged to
operations 30 100
Allowance for loan losses - end of
period $ 809 $ 671
Page 13 of 18 pages
Loans 90 days or more past due (still accruing interest) and
those on nonaccrual status were as follows at June 30:
NONPERFORMING LOANS
(In 000's)
90 Days or More
Past Due Nonaccrual Status
2000 1999 2000 1999
Real estate loans $ 448 $ 620 $ 0 $ 0
Installment loans 7 0 0 0
Demand and time loans 0 34 0 0
Total loans $ 455 $ 654 $ 0 $ 0
There were no restructured loans for any of the time periods
set forth above.
FINANCIAL CONDITION
Assets
Total assets on June 30, 2000 were $ 134,542,000, compared
with $ 128,478,000, on December 31, 1999 for an increase of 4.7%.
Management intends to contain growth and concentrate on maintaining
adequate profit margins. Net loans on June 30, 2000 stood at
$ 97,797,000, an increase of 7.5% from $ 90,995,000 on December 31,
1999. The loan loss reserve at June 30, 2000 was $ 809,000
compared with $ 800,000 at year-end 1999 and is considered
adequate, in management's judgment, to absorb possible loan losses
on existing loans.
Liabilities
Total deposits increased 1.8% to $ 105,155,000 as of June 30,
2000 compared with $ 103,311,000 at December 31, 1999.
Noninterest-bearing demand deposits and time deposits increased
10.5% and 2.8%, respectively, while interest-bearing savings
deposits decreased 4.0%.
Capital
Total equity as of June 30, 2000 was $ 13,245,000 representing
9.8% of total assets, an increase of $ 492,000 from the
$ 12,753,000 reported on December 31, 1999. Accumulated earnings
for the first six months of 2000 were partially offset by a
$ 57,000 increase in net unrealized holding losses (net of deferred
tax) and dividends declared and paid of $ 178,200. It is the
intention of management and the Board of Directors to continue to
pay a fair return on the stockholders' investment while retaining
adequate earnings to allow for continued growth.
Page 14 of 18 Pages
REGULATORY CAPITAL
The company maintains capital ratios that are well above the
minimum total capital levels required by federal regulatory
authorities, including risk-based capital guidelines. A comparison
of Fulton Bancshares Corporation's capital ratios to regulatory
minimum requirements at June 30, 2000 is as follows:
Fulton Bancshares Regulatory Minimum
Corporation Requirements
Leverage ratio 10.3% 4.0%
Risk based capital ratios:
Tier I (core capital) 14.2% 4.0%
Combined tier I and tier
II (core capital plus
allowance for loan losses) 15.0% 8.0%
BALANCE SHEET ANALYSIS
The following table highlights the changes in the balance
sheet. Since quarter-end balances can be distorted by one-day
fluctuations, an analysis of changes in the quarterly averages is
provided to give a better indication of balance sheet trends.
AVERAGE BALANCE SHEETS
(In 000's)
Second Quarter
2000 1999
ASSETS
Federal funds sold $ 161 $ 73
Securities available for sale 23,129 24,973
Other investments 860 779
Loans 96,736 87,369
Total interest-earning assets 120,886 113,194
Cash and due from banks 3,579 2,971
Bank premises and equipment 3,658 2,954
All other assets 4,451 4,201
Allowance for loan losses ( 809) ( 662)
Total assets $ 131,765 $ 122,658
LIABILITIES
Interest-bearing deposits in domestic
offices $ 92,787 $ 85,859
Federal funds purchased 254 8
Other short-term borrowings 12,899 11,674
Total interest-bearing
liabilities 105,940 97,541
Noninterest-bearing deposits 12,353 11,653
All other liabilities 522 780
Total liabilities 118,815 109,974
Page 15 of 18 Pages
Second Quarter
2000 1999
STOCKHOLDERS' EQUITY
Common stockholders' equity $ 13,691 $ 12,707
Net unrealized holding gains (losses),
net of tax ( 741) ( 23)
Total stockholders' equity 12,950 12,684
Total liabilities and stockholders'
equity $ 131,765 $ 122,658
Page 16 of 18 pages
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
Page 17 of 18 pages
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/
Clyde H. Bookheimer,
President and Chief
Executive Officer
Date /s/
Doriann Hoffman, Vice
President (Principal
Financial Officer)
Page 18 of 18 pages
6-MOS
DEC-31-2000
JUN-30-2000
3,625
0
0
0
0
23,644
23,644
98,606
809
134,542
105,155
15,225
917
0
0
0
309
12,936
134,542
4,069
567
188
4,824
2,065
2,405
2,419
30
5
1,653
967
727
0
0
727
1.47
1.47
4.08
0
0
0
0
800
24
3
809
809
0
0
EXHIBIT 99
INDEPENDENT ACCOUNTANT'S REPORT
Board of Directors
Fulton Bancshares Corporation and Subsidiaries
McConnellsburg, Pennsylvania
We have reviewed the accompanying consolidated balance sheet
of Fulton Bancshares Corporation and Subsidiaries as of June 30, 2000
and the related consolidated statements of income, comprehensive
income, and cash flows for the interim periods ended June 30, 2000 and
1999. These consolidated 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
August 8, 2000
