<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission file number 33-29708
-----------------------------------------------------------------
SUMMIT BANCORP
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Ohio 34-1599501
----------------------------- -----------------------
(State or other jurisdiction) (IRS Employer I.D. No.)
2680 West Market Street, Akron, Ohio 44333
------------------------------------------
(Address of principal executive office)
(330) 864-8080
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) 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, and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
As of May 9, 1997 there were outstanding 234,891 shares, without par
value, of the Company's common stock.
Transitional Small Business Disclosure Format (Check One)
Yes No X
--- ---
Page 1 of 14
<PAGE> 2
SUMMIT BANCORP AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
Page Number
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets 3
Consolidated Statements
of Income 4
Consolidated Statements
of Cash Flows 5
Notes to Consolidated
Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEMS 1. through 6. 13
SIGNATURES 14
</TABLE>
Page 2 of 14
<PAGE> 3
SUMMIT BANCORP
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 2,242,207 $ 2,111,588
Securities available-for-sale
at fair market value 18,664,172 18,073,130
Mortgage loans originated and held for sale 2,399,900 3,527,817
Loans:
Commercial 37,175,786 35,336,334
Residential mortgages 11,897,724 12,575,904
Installment 1,488,418 1,472,007
Lines of credit 6,454,300 5,949,950
Credit card receivables 630,615 681,103
------------------------------------------
Total loans 57,646,843 56,015,298
Allowance for loan losses (906,524) (837,805)
------------------------------------------
Net loans 56,740,319 55,177,493
Premises and equipment
Equipment and furniture 869,448 869,448
Leasehold improvements 565,639 565,639
Accumulated depreciation (596,370) (551,689)
-------------------------------------------
Premises and equipment, net 838,717 883,398
Accrued interest and other assets 1,661,481 1,472,019
------------------------------------------
TOTAL ASSETS $ 82,546,796 $ 81,245,445
==========================================
LIABILITIES:
Deposits:
Noninterest bearing demand $ 8,226,013 $ 8,012,995
Interest bearing demand 5,742,657 5,528,169
Savings 18,378,375 18,729,271
Time 34,713,755 35,491,490
------------------------------------------
Total deposits 67,060,800 67,761,925
Borrowings 7,600,000 5,300,000
Accrued interest payable and other liabilities 805,118 975,137
------------------------------------------
TOTAL LIABILITIES 75,465,918 74,037,062
SHAREHOLDERS' EQUITY:
Common Stock, no par value,
3,000,000 shares authorized,
252,590 shares issued 6,138,895 6,138,895
Retained earnings 1,749,246 1,807,517
Treasury Stock, at cost, 17,699 shares
held at March 31, 1997 and 17,674 at
December 31, 1996 (576,349) (574,724)
Unearned restricted stock awards (100,800) (100,800)
Securities equity valuation account (130,114) (62,505)
------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,080,878 7,208,383
------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 82,546,796 $ 81,245,445
==========================================
</TABLE>
See notes to consolidated financial statements.
Page 3 of 14
<PAGE> 4
SUMMIT BANCORP
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1997 1996
--------------- -------------
<S> <C> <C>
INTEREST INCOME:
Loans $ 1,352,454 $ 1,187,347
Taxable securities 280,617 283,553
Tax exempt securities 12,604 -
Deposits with banks 2,844 3,990
------------------------------------
TOTAL INTEREST INCOME 1,648,519 1,474,890
------------------------------------
INTEREST EXPENSE:
Deposits 709,499 623,545
Other borrowings 86,561 84,712
------------------------------------
TOTAL INTEREST EXPENSE 796,060 708,257
------------------------------------
NET INTEREST INCOME 852,459 766,633
Provision for loan losses 75,000 30,000
------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 777,459 736,633
NONINTEREST INCOME:
Origination fees on loans sold 136,964 253,682
Customer service fees 40,477 36,964
Commissions 41,476 19,532
Net gain/(loss) on sales of securities (860) 32,313
Other income 16,022 15,797
------------------------------------
TOTAL NONINTEREST INCOME 234,079 358,288
------------------------------------
NONINTEREST EXPENSE:
Salaries and employee benefits 425,315 426,901
Net occupancy expense 55,594 46,719
Depreciation and amortization 46,406 49,016
Professional services 39,743 43,692
EDP and communications 87,297 85,512
Ohio franchise tax 23,629 23,769
FDIC insurance 1,693 500
Other insurance 9,431 8,302
Merger related expenses 280,794 -
Other operating costs 98,919 78,619
------------------------------------
TOTAL NONINTEREST EXPENSE 1,068,821 763,030
------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (57,283) 331,891
Federal income taxes 1,000 120,000
------------------------------------
NET INCOME (LOSS) $ (58,283) $ 211,891
=====================================
Earnings per common share
Primary (Note A) $ (0.24) $ 0.90
=====================================
Fully diluted (Note A) $ (0.24) $ 0.90
=====================================
</TABLE>
See notes to consolidated financial statements.
Page 4 of 14
<PAGE> 5
SUMMIT BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1997 1996
------------------------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ (58,283) $ 211,891
Adjustments to reconcile net income
to net cash from operating activities:
Provision for loan losses 75,000 30,000
Depreciation and amortization 46,406 49,016
Amortization of securities available for sale premiums, net 51,549 40,954
Securities net loss/(gain) 860 (32,313)
FHLB stock dividends received (18,000) (20,900)
Deferred income taxes (51,872) (2,280)
Mortgage loans originated for sale (5,353,595) (11,619,199)
Proceeds from the sale of loan originations 6,481,512 12,310,867
Changes in:
Accrued interest receivable and other assets (92,932) (386,659)
Accrued interest payable and other liabilities (170,019) 325,728
-----------------------------------------
NET CASH FROM OPERATING ACTIVITIES 910,626 907,105
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (3,659,369) (7,210,412)
Proceeds from the sales of securities available for sale 1,877,780 6,228,121
Proceeds from maturities of securities available for sale 1,042,158 1,121,892
Net increase in loans (1,637,826) (2,569,868)
Purchase of premises and equipment - (188,463)
-----------------------------------------
NET CASH FROM INVESTING ACTIVITIES (2,377,257) (2,618,730)
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in deposits (701,125) (550,857)
Purchase of treasury stock (29,315) (107,032)
Proceeds from the sale of treasury stock 27,690 -
Long-term advances from FHLB 2,000,000 1,000,000
Repayment of long-term advances from FHLB (500,000) -
Changes in short-term borrowings 800,000 400,000
-----------------------------------------
NET CASH FROM FINANCING ACTIVITIES 1,597,250 742,111
-----------------------------------------
Net change in cash and cash equivalents 130,619 (969,514)
Cash and cash equivalents at the beginning of the period 2,111,588 3,432,431
-----------------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 2,242,207 $ 2,462,917
=========================================
</TABLE>
See notes to consolidated financial statements.
Page 5 of 14
<PAGE> 6
SUMMIT BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The unaudited consolidated financial statements include the accounts of Summit
Bancorp and its wholly owned subsidiaries, Summit Bank and Summit Banc
Investments Corporation. All significant intercompany transactions have been
eliminated.
These accompanying unaudited interim consolidated financial statements have been
prepared in accordance with the instructions of Form 10-QSB and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. All adjustments which are in the
opinion of management necessary for a fair statement of the financial statements
for the periods covered by this report have been included. All such adjustments
are of a normal recurring nature.
The consolidated financial statements included herein should be read in
conjunction with the consolidated financial statements and notes thereto, and
the Report of Independent Auditors included in Summit Bancorp's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996. Reference is made to
the accounting policies of Summit Bancorp described in the notes to financial
statements contained in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996. Summit Bancorp has consistently followed
those policies in preparing this report. Certain items from 1996 have been
reclassified to conform to the 1997 presentation.
The provision for income taxes is based upon the effective tax rate expected to
be applicable for the entire year.
Earnings per share: Primary earnings per share is based on the weighted average
number of shares outstanding year-to-date and the assumed exercise of dilutive
stock options less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of Summit Bancorp's common stock.
Fully diluted earnings per share reflects the additional dilution related to
the stock options due to the use of the stock's market price at March 31, 1997.
The primary and fully diluted weighted average shares outstanding for the
quarter ended March 31, 1997 were 242,972 and 243,754, and for the quarter
ended March 31, 1996 were 236,608 and 236,650.
The Company, through its subsidiary bank, grants residential, commercial, and
consumer loans to customers located in Northern Ohio. Residential mortgage,
commercial and all other loans comprise 21%, 64%, and 15% of total loans at
March 31, 1997.
The Company in its normal course of business, makes commitments to extend credit
which are not reflected in the financial statements. At March 31, 1997, unused
credit lines amounted to approximately $11.4 million. Since many commitments to
make loans expire without being used, the amount does not necessarily represent
future cash commitments.
Collateral obtained related to the commitments is determined using management's
credit evaluation of the borrower and may include real estate, vehicles,
business assets, deposits, and other items.
Page 6 of 14
<PAGE> 7
In management's opinion these commitments represent normal banking transactions,
and no material losses are expected to result therefrom.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities," was issued by the FASB in 1996. It revises the
accounting for transfers of financial assets, such as loans and securities, and
for distinguishing between sales and secured borrowings. It was originally
effective for some transactions in 1997 and others in 1998. SFAS No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125"
was issued in December 1996. SFAS No. 127 defers for one year the effective date
of provisions related to securities lending, repurchase agreements and other
similar transactions. The remaining portions of SFAS No. 125 will continue to be
effective January 1, 1997. SFAS No. 125 did not have a material impact on Summit
Bancorp's financial statements.
In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share" which is
effective for financial statements for periods ending after December 15, 1997,
including interim periods. SFAS No. 128 simplifies the calculation of earnings
per share by replacing the primary EPS with basic EPS. It also requires dual
presentation of basic EPS and diluted EPS for entities with complex capital
structures. Basic EPS includes no dilution and is computed by dividing income
available to common shareholders by the weighted-average common shares
outstanding for the period. Diluted EPS reflects the potential dilution of
securities that could share in earnings such as stock options, warrants or other
common stock equivalents. All prior period EPS data will be restated to conform
with the new presentation.
NOTE B - SECURITIES
The amortized cost and estimated fair values of securities are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
--------------------------------------------------------
<S> <C> <C> <C> <C>
MARCH 31, 1997
SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities $14,339,708 $ 3,284 $169,277 $14,173,715
Municipal securities 1,320,936 -- 25,490 1,295,446
Other debt security 32,032 -- 6,406 25,625
U.S. Treasuries obligations 1,997,223 6,214 -- 2,003,437
--------------------------------------------------------
Total debt securities available for sale 17,689,898 9,498 201,173 17,498,223
Other securities 1,168,393 -- 2,444 1,165,949
--------------------------------------------------------
Total securities available for sale $18,858,291 $ 9,498 $203,617 $18,664,172
========================================================
DECEMBER 31, 1996
SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities $14,961,116 $ 4,233 $113,377 $14,851,972
Other debt security 44,105 -- 8,821 35,284
U.S. Treasuries obligations 1,996,974 21,463 -- 2,018,437
--------------------------------------------------------
Total debt securities available for sale 17,002,195 25,696 122,198 16,905,693
Other securities 1,167,437 -- -- 1,167,437
--------------------------------------------------------
Total securities available for sale $18,169,632 $25,696 $122,198 $18,073,130
========================================================
</TABLE>
During the first quarter of 1997, the Company sold two available for sale
securities totaling $1,877,780. Gains on securities sold totaled $447 and losses
totaled $1,307. Proceeds from these sales were reinvested in available for sale
securities, consisting of mortgage backed securities and municipal securities.
First quarter purchases totaled $3,659,369.
Page 7 of 14
<PAGE> 8
The amortized cost and estimated fair value of debt securities at March 31, 1997
by contractual maturity, are shown below. Actual maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations.
<TABLE>
<CAPTION>
Amortized Estimated
Cost Fair Value
------------------------------------
<S> <C> <C>
SECURITIES AVAILABLE FOR SALE:
Due within 1 year $ 281,960 $ 274,912
Due after 1 year through 5 years 4,412,654 4,407,807
Due after 5 years through 10 years 3,671,629 3,631,246
Due after 10 years 9,323,655 9,184,258
Other securities 1,168,393 1,165,949
------------------------------------
TOTAL SECURITIES AVAILABLE FOR SALE $ 18,858,291 $ 18,664,172
====================================
</TABLE>
NOTE C - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the three month periods ending
March 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-----------------------------------
<S> <C> <C>
Balance at beginning of period $ 837,805 $ 739,062
Charge-offs (8,360) (24,492)
Recoveries 2,079 23,960
Provision for loan losses 75,000 30,000
-----------------------------------
Balance at end of period $ 906,524 $ 768,530
===================================
</TABLE>
NOTE D - PROPOSED AFFILIATION
The Company entered into an Agreement of Affiliation and Plan of Merger with
FirstFederal Financial Services Corp of Wooster, Ohio (FirstFederal) on December
30, 1996. Under the terms of the agreement, FirstFederal will exchange 1.87
shares of its common stock for each share of the Company's stock. Based on the
average of FirstFederal's closing bid and ask price of $39.375 on December 30,
1996, the transaction would be valued at approximately $17.3 million. The
merger, which will be accounted for as a pooling of interests, is expected to be
consummated during the third quarter of 1997, pending Summit Bancorp shareholder
approval, regulatory approval and other customary conditions of closing. The
transaction is expected to be a tax-free reorganization for federal income tax
purposes.
McDonald and Company Securities, Inc. is serving as the Company's financial
advisor in connection with this transaction.
Under the Merger Agreement, Summit has agreed to pay FirstFederal a fee of
$750,000 in the event the merger is not consummated and certain events occur.
Page 8 of 14
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
INTRODUCTION
The purpose of this discussion is to focus on information about
Summit Bancorp ("Company"), its financial condition and results of operations
which is not otherwise apparent from the consolidated financial statements. This
discussion should be read in conjunction with the interim consolidated financial
statements and footnotes included in this Form 10-QSB. The Company is not aware
of any market or institutional trends, events or uncertainties that will have or
are reasonably likely to have a material effect on liquidity, capital resources
or operations except as discussed herein. The Company is not aware of any
current recommendations by regulatory authorities which would have such effect
if implemented.
SOURCES AND USES OF FUNDS
The Company functions as a financial intermediary, and as such, its
financial condition should be examined in terms of trends in its sources and
uses of funds. The Company uses its funds primarily to support its lending
activities. Year to date in 1997, total loans have increased $1.6 million to
$57.6 million and represent 73% of earning assets. Commercial loans grew $1.8
million (a 5% increase), residential mortgages decreased $.7 million (5%) and
other loans increased $.5 million (6%) when compared to December 31, 1996
balances.
Securities, a major use of funds, increased $.6 million during the
first quarter of 1997. Security purchases of $3.7 million were funded primarily
by sales and maturities. The security portfolio of $18.7 million represents 24%
of earning assets at March 31, 1997. The balance of mortgage loans originated
and held for sale decreased $1.1 million from December 31, 1996. These loans are
normally held less than 30 days before they are sold to private investors and
FNMA. Loans originated for sale were $5.4 million during the first three months
of 1997.
As the primary source of funds, deposits have decreased $.7 million
when compared to the December 31, 1996 balances. Demand deposits have grown $.2
million (3%) year to date when compared to December 31, 1996. Interest bearing
deposits have decreased $.9 million (2%) year to date. The cost to acquire
retail deposits compared to market indices, such as US Treasury rates, has
increased over the past 12 months due to competitive pressures; consequently,
the Company has chosen to increase its use of wholesale funds in 1997 to control
the cost to fund earning assets. Wholesale funds represent 9.6% of the total
funding at March 31, 1997 compared to 6.8% at December 31, 1996. The Company's
cost to fund earning assets averaged 4.11% during the first three months of 1997
which is comparable to 4.01% for the same period for 1996.
Page 9 of 14
<PAGE> 10
LIQUIDITY
The primary functions of asset/liability management are to assure
adequate liquidity and maintain an appropriate balance between
interest-sensitive earning assets and interest-bearing liabilities. Liquidity
management involves the ability to meet the cash flow requirements of customers
who may be either depositors wanting to withdraw funds or borrowers needing
assurance that sufficient funds will be available to meet their credit needs.
Interest rate sensitivity management seeks to avoid fluctuating net interest
margins and to enhance consistent growth of net interest income through periods
of changing interest rates.
Securities available for sale are a primary source of liquidity.
Projected cash flow from the securities portfolio between April 1, 1997 and
March 31, 1998 is $4.7 million. Other types of assets, such as mortgages held
for sale and maturing loans are sources of liquidity. Liquidity is further
enhanced because of the significant aggregate amount of core deposits.
Additionally, the Company has available lines of credit aggregating $11.2
million which enhance liquidity. Advances on these lines total $2.0 million at
March 31, 1997.
CAPITAL RESOURCES
The Company maintains a strong capital base to take advantage of
business opportunities while ensuring that it has resources to absorb the risks
inherent in the business. The Federal Reserve Board has set standards for
measuring capital adequacy for U.S. banking organizations. In general, the
standards require banks and bank holding companies to maintain capital based on
"risk-adjusted" assets so that categories of assets with potentially higher
credit risk will require more capital backing than assets with lower risk. In
addition, banks and bank holding companies are required to maintain capital to
support, on a risk-adjusted basis, certain off-balance-sheet activities such as
loan commitments and interest rate swaps.
The Federal Reserve Board standards classify capital into two tiers,
referred to as Tier 1 and Tier 2. Tier 1 capital consists of common
shareholders' equity, noncumulative and cumulative (bank holding companies only)
perpetual preferred stock, and minority interests less goodwill. Tier 2 capital
consists of allowance for loan and lease losses, perpetual preferred stock (not
included in Tier 1), hybrid capital instruments, term subordinated debt, and
intermediate-term preferred stock. Banks are required to meet a minimum ratio of
8% of qualifying total capital to risk-adjusted total assets with at least 4%
Tier 1 capital. Capital that qualifies as Tier 2 capital is limited to 100% of
Tier 1 capital.
Page 10 of 14
<PAGE> 11
Federal Reserve Board regulations have also established a minimum
leverage capital ratio of 3%. The leverage capital ratio is defined as Tier 1
capital to total average assets. The FDIC defines a well capitalized bank as
exceeding Tier 1 capital of 6%, total risk-based capital of 10% and a leverage
ratio of 5%. The table below illustrates the Company's subsidiary bank's
regulatory capital ratios:
<TABLE>
<CAPTION>
March 31, 1997
(Thousands of dollars) --------------
<S> <C>
Tier 1 Capital $ 5,794
Tier 2 Capital 1,874
---------
Total Qualifying Capital $ 7,668
=========
Risk Adjusted Total Assets
(including off-balance sheet exposures) $ 59,779
=========
Tier 1 Risk-Based Capital Ratio 10%
Total Risk-Based Capital Ratio 13%
Leverage Ratio 7%
</TABLE>
The ability of the Company to pay dividends is dependent upon the
Bank paying dividends to the Company. These payments by the Bank are restricted
by the regulatory agencies. For the three months ended March 31, 1997, the Bank
has not paid dividends to the Company. The Bank has accumulated earnings of $1.8
million available for distribution to the Company. To date the Company has
decided to reinvest earnings rather than pay a dividend to shareholders.
REGULATORY MATTERS
Examination procedures require examiners to make judgements about a
borrower's ability to repay loans, sufficiency of collateral values and the
effects of changing economic circumstances. These judgements are similar to
those employed by the Company in determining the adequacy of the allowance for
loan losses and in classifying loans. Judgements made by regulatory examiners
may differ from those made by management.
Management and the boards of directors of the Company and Bank
evaluate existing practices and procedures on an ongoing basis. In addition,
regulators often make recommendations during the course of their examinations
that relate to the operations of the Company and its subsidiary. As a matter of
practice, management and the boards of directors of the Company and its
subsidiaries consider such recommendations promptly.
During September 1996, the Federal Reserve Bank of Cleveland
conducted an examination of the Company and its subsidiaries, which included an
evaluation of the Bank's asset quality. The Bank's level and classification of
identified potential problem loans was not revised as a result of this
regulatory examination.
Page 11 of 14
<PAGE> 12
RESULTS OF OPERATIONS
The Company's net interest margin year to date 1997 is 4.24% compared
to 4.14% for the same period in 1996. The net interest margin is calculated by
dividing net interest income before the provision for loan losses by average
earning assets. As with net interest income, the net interest margin is affected
by the level and mix of earning assets, the proportion of earning assets funded
by noninterest bearing liabilities and the interest rate spread.
Year to date net interest income before the provision for loan losses
has increased $86,000 over the same period in the prior year. Net interest
income increased $82,000 due to volume changes and increased $4,000 due to rate
changes. For the first three months of 1997 in comparison with the same period
in 1996, average earning assets increased $6.8 million. Average total loans grew
$7.4 million while average total securities declined $.4 million. Growth in
earning assets was funded primarily by an increase of $6.5 million in average
deposits. The yield on earning assets was 8.54% and 8.34% during the first three
months of 1997 and 1996. Deposits and borrowings had an average rate of 4.41% in
the first three months of 1997 compared to 4.27% during the same period in 1996.
Noninterest income decreased $124,000 year to date 1997 in comparison
to 1996. The decrease resulted primarily from the decline in mortgage loan
originations and gains from the sale of SBA guaranteed loans. During the first
three months of 1997, originations totaled $5.4 million compared to $11.6
million in 1996.
1997 year to date total noninterest expenses have increased $306,000
in comparison to the same period in 1996. The increase is primarily the result
of merger related expenses, which totaled $280,794. For further explanation, see
the footnote D "Proposed Affiliation".
Page 12 of 14
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - Not applicable.
ITEM 2. CHANGES IN SECURITIES - Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
Not applicable
ITEM 5. OTHER INFORMATION - Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibit #27. Financial Data Schedule.
B) On January 8, 1997 Form 8-K was filed by Summit
Bancorp. Filing stated: On December 31, 1996,
Summit Bancorp issued a press release announcing
the signing of a definitive agreement for the
acquisition of the stock of Summit Bancorp by
FirstFederal Financial Services Corp. The
acquisition is expected to close in July 1997 and
is subject to the approval of Summit Bancorp's
shareholders and regulatory approval.
Page 13 of 14
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SUMMIT BANCORP
/s/ DAVID C. VERNON
Dated: May 13, 1997 By: __________________________________
David C. Vernon
Chairman of the Board, President and
Chief Executive Officer
/S/ CHARLES P. MURPHY
By: __________________________________
Charles P. Murphy
Comptroller
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 46,068
<INT-BEARING-DEPOSITS> 161,381
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,664,172
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 57,646,843
<ALLOWANCE> 906,524
<TOTAL-ASSETS> 82,546,796
<DEPOSITS> 67,060,800
<SHORT-TERM> 3,100,000
<LIABILITIES-OTHER> 805,118
<LONG-TERM> 4,500,000
<COMMON> 6,138,895
0
0
<OTHER-SE> 941,983
<TOTAL-LIABILITIES-AND-EQUITY> 82,546,796
<INTEREST-LOAN> 1,352,454
<INTEREST-INVEST> 293,221
<INTEREST-OTHER> 2,844
<INTEREST-TOTAL> 1,648,519
<INTEREST-DEPOSIT> 709,499
<INTEREST-EXPENSE> 796,060
<INTEREST-INCOME-NET> 852,459
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> (860)
<EXPENSE-OTHER> 1,068,821
<INCOME-PRETAX> (57,283)
<INCOME-PRE-EXTRAORDINARY> (57,283)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,283)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
<YIELD-ACTUAL> 4.43
<LOANS-NON> 285,000
<LOANS-PAST> 142,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,365,983
<ALLOWANCE-OPEN> 837,805
<CHARGE-OFFS> 8,360
<RECOVERIES> 2,079
<ALLOWANCE-CLOSE> 906,524
<ALLOWANCE-DOMESTIC> 906,524
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 181,000
</TABLE>
