<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period From ____________ to ___________
Commission File Number: 1-14659
WILMINGTON TRUST CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 51-0328154
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890
-------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(302) 651-1000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such 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.
[X] Yes [ ] No
<PAGE> 2
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of shares of issuer's common stock ($1.00 par value) outstanding at
June 30, 2000 - 32,330,236 shares
2
<PAGE> 3
Wilmington Trust Corporation and Subsidiaries
Form 10-Q
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1 - Financial Statements
Consolidated Statements of Condition 4
Consolidated Statements of Income 6
Consolidated Statements of Cash Flows 8
Notes to Consolidated Financial Statements 10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk 23
Part II. Other Information
Item 1 - Legal Proceedings 25
Item 2 - Changes in Securities and Use of Proceeds 25
Item 3 - Defaults Upon Senior Securities 25
Item 4 - Submission of Matters to a Vote of Security Holders 25
Item 5 - Other Information 25
Item 6 - Exhibits and Reports on Form 8-K 25
Exhibit 11
Exhibit 27
</TABLE>
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
Wilmington Trust Corporation and Subsidiaries
<TABLE>
<CAPTION>
------------------------------
June 30, December 31,
(in thousands) 2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 247,640 $ 225,145
------------------------------
Interest-bearing time deposits in other banks -- --
------------------------------
Federal funds sold and securities purchased
under agreements to resell 84,813 129,760
------------------------------
Investment securities available for sale:
U.S. Treasury and government agencies 931,978 997,799
Obligations of state and political subdivisions 4,305 4,732
Other securities 601,097 683,736
--------------------------------------------------------------------------------------------------
Total investment securities available for sale 1,537,380 1,686,267
------------------------------
Investment securities held to maturity:
U.S. Treasury and government agencies 11,240 11,960
Obligations of state and political subdivisions 6,790 7,244
Other securities 6,842 12,028
--------------------------------------------------------------------------------------------------
Total investment securities held to maturity (market
values were $24,724 and $31,150, respectively) 24,872 31,232
------------------------------
Loans:
Commercial, financial and agricultural 1,626,247 1,521,336
Real estate-construction 370,317 303,734
Mortgage-commercial 931,316 919,297
Mortgage-residential 979,755 968,259
Consumer 1,192,391 1,108,945
Unearned income (761) (1,492)
--------------------------------------------------------------------------------------------------
Total loans net of unearned income 5,099,265 4,820,079
Reserve for loan losses (75,483) (76,925)
--------------------------------------------------------------------------------------------------
Net loans 5,023,782 4,743,154
------------------------------
Premises and equipment, net 129,622 132,160
Goodwill and other intangible assets, net of accumulated
amortization of $13,205 in 2000 and $9,700 in 1999 163,883 148,005
Accrued interest receivable 47,872 43,672
Other assets 104,440 62,549
--------------------------------------------------------------------------------------------------
Total assets $ 7,364,304 $ 7,201,944
==============================
</TABLE>
4
<PAGE> 5
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Deposits:
Noninterest-bearing demand $ 954,579 $ 994,643
Interest-bearing:
Savings 391,065 393,750
Interest-bearing demand 1,363,449 1,397,574
Certificates under $100,000 972,959 1,067,729
Certificates $100,000 and over 1,766,873 1,515,788
-------------------------------------------------------------------------------------------------
Total deposits 5,448,925 5,369,484
------------------------------
Short-term borrowings:
Federal funds purchased and securities sold
under agreements to repurchase 1,104,035 995,858
U.S. Treasury demand 47,188 95,000
-------------------------------------------------------------------------------------------------
Total short-term borrowings 1,151,223 1,090,858
------------------------------
Accrued interest payable 43,230 56,012
Other liabilities 27,825 19,359
Long-term debt 168,000 168,000
-------------------------------------------------------------------------------------------------
Total liabilities 6,839,203 6,703,713
------------------------------
Stockholders' equity:
Common stock ($1.00 par value) authorized
150,000,000 shares; issued 39,264,173 39,264 39,264
Capital surplus 72,149 70,749
Retained earnings 722,594 689,598
Accumulated other comprehensive income (38,031) (34,796)
-------------------------------------------------------------------------------------------------
Total contributed capital and retained earnings 795,976 764,815
Less: Treasury stock, at cost, 6,933,937 and
6,911,398 shares, respectively (270,875) (266,584)
-------------------------------------------------------------------------------------------------
Total stockholders' equity 525,101 498,231
------------------------------
Total liabilities and stockholders' equity $ 7,364,304 $ 7,201,944
==============================
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Wilmington Trust Corporation and Subsidiaries
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
-----------------------------------------------------------
(in thousands; except per share data) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INTEREST INCOME
Interest and fees on loans $ 106,794 $ 89,636 $ 206,516 $ 176,837
Interest and dividends on investment
securities:
Taxable interest 22,864 20,237 45,850 37,593
Tax-exempt interest 143 190 295 380
Dividends 2,316 2,302 4,824 4,663
Interest on time deposits in other banks -- -- -- --
Interest on federal funds sold and securities
purchased under agreements to resell 465 366 1,115 646
------------------------------------------------------------------------------------------------------------
Total interest income 132,582 112,731 258,600 220,119
------------------------------------------------------------
Interest on deposits 47,899 33,650 92,462 67,483
Interest on short-term borrowings 17,296 14,597 32,300 27,577
Interest on long-term debt 2,762 2,763 5,523 5,519
------------------------------------------------------------------------------------------------------------
Total interest expense 67,957 51,010 130,285 100,579
------------------------------------------------------------
Net interest income 64,625 61,721 128,315 119,540
Provision for loan losses (5,000) (4,500) (10,500) (9,500)
------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 59,625 57,221 117,815 110,040
------------------------------------------------------------
OTHER INCOME
Trust and asset management fees 40,187 36,007 80,517 72,086
Service charges on deposit accounts 6,207 5,948 12,432 11,374
Card fees 2,490 2,280 4,725 4,282
Other operating income 2,153 1,848 4,090 3,920
Securities gains 185 4 1,660 24
------------------------------------------------------------------------------------------------------------
Total other income 51,222 46,087 103,424 91,686
------------------------------------------------------------
Net interest and other income 110,847 103,308 221,239 201,726
------------------------------------------------------------
OTHER EXPENSE
Salaries and employment benefits 38,832 34,221 80,522 68,013
Net occupancy 4,187 3,961 7,804 7,048
Furniture and equipment 5,652 5,675 11,247 10,088
Stationery and supplies 1,539 1,498 3,172 3,059
Servicing and consulting fees 1,792 1,308 3,554 3,085
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Advertising and contributions 2,402 1,953 3,707 3,898
Other operating expense 10,623 9,648 19,584 18,116
------------------------------------------------------------------------------------------------------------
Total other expense 65,027 58,264 129,590 113,307
------------------------------------------------------------
NET INCOME
Income before income taxes 45,820 45,044 91,649 88,419
Applicable income taxes 15,377 15,098 30,605 29,317
------------------------------------------------------------------------------------------------------------
Net income $ 30,443 $ 29,946 $ 61,044 $ 59,102
============================================================
Net income per share:
basic $ 0.94 $ 0.90 $ 1.89 $ 1.78
============================================================
diluted $ 0.94 $ 0.89 $ 1.88 $ 1.76
============================================================
Weighted average shares outstanding:
basic 32,275 33,148 32,251 33,112
diluted 32,566 33,641 32,555 33,672
Cash dividends per share $ 0.45 $ 0.42 $ 0.87 $ 0.81
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Wilmington Trust Corporation and Subsidiaries
<TABLE>
<CAPTION>
--------------------------------------
For the six months ended
June 30,
(in thousands) 2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 61,044 $ 59,102
Adjustments to reconcile net income to net
cash provided by
operating activities:
Provision for loan losses 10,500 9,500
Provision for depreciation 9,189 8,052
Amortization of investment securities available
for sale discounts and premiums 3,217 1,317
Accretion of investment securities held
to maturity discounts and premiums (6) (37)
Deferred income taxes 185 313
Securities gains (1,660) (24)
(Increase)/decrease in other assets (42,771) 7,851
Decrease in other liabilities (2,008) (17,805)
--------------------------------------------------------------------------------------------------
Net cash provided by operating activities 37,690 68,269
--------------------------------------
INVESTING ACTIVITIES
Proceeds from sales of investment securities
available for sale 211,520 521,719
Proceeds from maturities of investment
securities available for sale 148,789 159,726
Proceeds from maturities of investment
securities held to maturity 6,366 36,288
Purchases of investment securities available
for sale (218,034) (1,067,924)
Purchases of investment securities held to maturity -- (500)
Investments in affiliates (19,383) (18,915)
Gross proceeds from sales of loans 27,469 61,981
Purchases of loans (4,628) (5,669)
Net increase in loans (313,969) (317,310)
Net increase in premises and equipment (6,651) (11,137)
--------------------------------------------------------------------------------------------------
Net cash used for investing activities (168,521) (641,741)
-------------------------------------
FINANCING ACTIVITIES
Net (increase)/decrease in demand, savings and
interest-bearing demand deposits (76,874) 27,996
Net increase in certificates of deposit 156,315 196,446
Net increase in federal funds purchased and
securities sold under agreements to repurchase 108,177 292,235
Net (decrease)/increase in U.S. Treasury demand (47,812) 64,858
Cash dividends (28,048) (26,817)
Proceeds from common stock issued under
employment benefit plans 5,255 10,440
Payments for common stock acquired through buybacks (8,634) (33,625)
--------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C>
Net cash provided by financing activities 108,379 531,533
-------------------------------------
Decrease in cash and cash equivalents (22,452) (41,939)
Cash and cash equivalents at beginning of period 354,905 288,079
-------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 332,453 $ 246,140
=====================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 143,067 $ 101,521
Taxes 35,250 22,081
Loans transferred during the year:
To other real estate owned $ 1,675 $ 1,236
From other real estate owned 1,449 1,846
</TABLE>
See Notes to Consolidated Financial Statements
9
<PAGE> 10
Note 1 - Accounting and Reporting Policies
The accounting and reporting policies of Wilmington Trust Corporation (the
"Corporation"), a holding company that owns all of the issued and outstanding
shares of capital stock of Wilmington Trust Company, Wilmington Trust of
Pennsylvania, Wilmington Trust FSB and WT Investments, Inc., conform to
generally accepted accounting principles and practices in the banking industry
for interim financial information. The information for the interim periods is
unaudited and includes all adjustments that are of a normal recurring nature and
that management believes to be necessary for fair presentation. Results of the
interim periods are not necessarily indicative of the results that may be
expected for the full year. This note is presented and should be read in
conjunction with the Notes to the Consolidated Financial Statements included in
the Corporation's Annual Report to Shareholders for 1999.
Note 2 - Comprehensive Income
Total comprehensive income for the Corporation included net income and the
after-tax, unrealized gains and/or losses on the Corporation's investment
securities available-for-sale portfolio. For the three months ended June 30,
2000 and 1999, total comprehensive income, net of taxes, was $29,641,000 and
$10,282,000, respectively. For the six months ended June 30, 2000 and 1999,
total comprehensive income, net of taxes, was $57,809,000 and $36,541,000,
respectively.
Note 3 - Earnings per share
The following table sets forth the computation of basic and diluted net earnings
per share:
<TABLE>
<CAPTION>
For the six months ended
June 30,
------------------------
(in thousands; except per share data) 2000 1999
------------------------------------- ------------------------
<S> <C> <C>
Numerator
Net income $61,044 $59,102
--------------------------------------------------------------------------------
Denominator
Denominator for basic earnings per share -
weighted-average shares 32,251 33,112
--------------------------------------------------------------------------------
Effect of dilutive securities:
Employee stock options 304 560
--------------------------------------------------------------------------------
Denominator for diluted earnings per share -
adjusted weighted-average shares and
assumed conversions 32,555 33,672
--------------------------------------------------------------------------------
Basic earnings per share $ 1.89 $ 1.78
================================================================================
Diluted earnings per share $ 1.88 $ 1.76
================================================================================
</TABLE>
10
<PAGE> 11
Note 4 - Segment Reporting
<TABLE>
<CAPTION>
Financial data by segment for June 30, 2000 vs June 30, 1999 is as follows:
-----------------------------------------------------------------------------------------------------------------------------------
Banking Fee-Based Funds
Year-to-Date June 30, 2000 (in thousands) Business Business Management Totals
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income $ 112,700 $ 12,945 $ 3,705 $ 129,350
Provision for loan losses (10,318) (182) -- (10,500)
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 102,382 12,763 3,705 118,850
Trust and asset management fees:
Personal trust -- 34,597 -- 34,597
Corporate financial services -- 26,547 -- 26,547
Asset management -- 23,094 -- 23,094
Amortization of goodwill -- (3,505) -- (3,505)
Other operating income 20,629 889 734 22,252
Securities gains 1,644 -- 16 1,660
-----------------------------------------------------------------------------------------------------------------------------------
Net interest and other income 124,655 94,385 4,455 223,495
Other expense (66,584) (63,120) (1,002) (130,706)
-----------------------------------------------------------------------------------------------------------------------------------
Segment profit from operations 58,071 31,265 3,453 92,789
Segment loss from infrequent events -- (63) -- (63)
-----------------------------------------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 58,071 $ 31,202 $ 3,453 $ 92,726
===================================================================================================================================
Intersegment revenue $ 12,017 $ 3,886 $ 1,868 $ 17,771
Depreciation and amortization 5,539 3,856 149 9,544
Investment in equity method investees -- 178,069 -- 178,069
Segment average assets 4,411,961 968,132 3,587,797 8,967,890
Year-to-Date June 30, 1999 (in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 100,727 $ 10,878 $ 8,980 $ 120,585
Provision for loan losses (9,441) (56) -- (9,497)
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 91,286 10,822 8,980 111,088
Trust and asset management fees:
Personal trust -- 31,887 -- 31,887
Corporate financial services -- 22,631 -- 22,631
Asset management -- 20,858 -- 20,858
Amortization of goodwill -- (2,921) -- (2,921)
Other operating income 19,198 942 415 20,555
Securities gains -- -- 24 24
-----------------------------------------------------------------------------------------------------------------------------------
Net interest and other income 110,484 84,219 9,419 204,122
Other expense (62,696) (50,324) (1,241) (114,261)
-----------------------------------------------------------------------------------------------------------------------------------
Segment profit from operations 47,788 33,895 8,178 89,861
Segment loss from infrequent events -- (340) -- (340)
-----------------------------------------------------------------------------------------------------------------------------------
Segment profit before income taxes $ 47,788 $ 33,555 $ 8,178 $ 89,521
===================================================================================================================================
</TABLE>
11
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
Intersegment revenue $ 5,093 $ 3,750 $ 1,185 $ 10,028
Depreciation and amortization 5,069 3,353 139 8,561
Investment in equity method investees -- 151,299 -- 151,299
Segment average assets 4,148,200 681,864 3,144,426 7,974,490
</TABLE>
A reconciliation of reportable segment amounts to the Corporation's consolidated
balances is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Year-to-Date June 30 (in thousands) 2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Net interest income $ 129,350 $ 120,585
Other revenues 104,645 93,033
Elimination of intersegment revenues (2,256) (2,396)
--------------------------------------------------------------------------------------
Total consolidated revenues before provision $ 231,739 $ 211,222
==============================
Profit or loss:
Total profit or loss for reportable segments $ 92,726 $ 89,521
Elimination of intersegment profits (1,077) (1,102)
--------------------------------------------------------------------------------------
$ 91,649 $ 88,419
==============================
Assets:
Total assets for reportable segments $ 8,967,890 $ 7,974,490
Other assets 215,342 227,899
Elimination of intersegment assets (2,015,856) (1,740,617)
Other assets not allocated to segments -- --
--------------------------------------------------------------------------------------
Consolidated total average assets $ 7,167,376 $ 6,461,772
==============================
</TABLE>
A description of the Corporation's business lines is contained in Note 18 to its
Consolidated Financial Statements in the Corporation's 1999 Annual Report to
Shareholders.
12
<PAGE> 13
Wilmington Trust Corporation and Subsidiaries
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
SUMMARY
-------
Net income for the second quarter of 2000 was $30.4 million, or $.94 per share,
a 2% increase over the $29.9 million, or $.90 per share, reported for the second
quarter of last year. Diluted net income per share for the second quarter of
2000 was also $.94, compared to $.89 for the second quarter of last year.
Total revenues for the second quarter of 2000 reached $115.8 million, a 7%
increase over the $107.8 million reported for the second quarter of 1999.
Net interest income for the second quarter of 2000 reached $64.6 million, a 5%
increase over the $61.7 million reported for the second quarter of last year.
The quarterly provision for loan losses of $5 million was 11% higher than the
$4.5 million for the second quarter of 1999. The reserve for loan losses at
quarter-end was $75.5 million, $1.4 million, or 2%, below the $76.9 million
reported at December 31, 1999.
Noninterest income for the second quarter of 2000 was $51.2 million, an 11%
increase over the $46.1 million reported for the same quarter of last year.
Operating expenses for the second quarter of 2000 were $65.0 million, a 12%
increase above the $58.3 million reported for the second quarter of last year.
Return on assets for the six months ended June 30, 2000, on an annualized basis,
was 1.71%, down from the 1.84% reported for the corresponding period a year ago.
Return on stockholders' equity, also on an annualized basis, was 24.21%, as
compared with 22.12% for the first six months of 1999.
STATEMENT OF CONDITION
----------------------
Total assets at June 30, 2000 were $7.36 billion, up $162.4 million above the
$7.20 billion reported at December 31, 1999. Total earning assets increased
$79.0 million over the same period of time, to $6.75 billion, as decreases in
investment securities were offset by increases in the loan portfolio.
Total loans at June 30, 2000 were $5.10 billion, an increase of $279.2 million,
or 6%, over the December 31, 1999 level of $4.82 billion. Contributing to this
increase were: commercial loans of $1.63 billion, which rose $104.9 million, or
7%, over their December 31, 1999 level; commercial construction loans of $370.3
million, which rose $66.6 million, or 22%; residential mortgage loans of $979.8
million, which rose $11.5 million, or 1%; and consumer loans of $1.19 billion,
which rose $83.4 million, or 8%. Over half of the loan portfolio growth was from
activity in the southeastern Pennsylvania market.
The investment portfolio at June 30, 2000 was $1.56 billion, a decrease of
$155.2 million, or 9%, from the December 31, 1999 level of $1.72 billion.
Contributing to this decrease were U.S. Treasury and government agency
securities, which decreased $66.5 million, or 7%, to $943.2 million; preferred
stocks, which decreased $38.2 million, or 27%, to $104.3 million; and
asset-backed securities, which decreased $253 million, or 7%, to $336.6 million.
Interest-bearing liabilities at quarter-end were $5.81 billion, $179.9 million,
or 3%, above the year-end level of $5.63 billion. Total deposits during the
first six months of 2000 increased $79.4 million, while short-term borrowings
increased $60.4 million. An increase of $251.1 million in certificates of
deposit
13
<PAGE> 14
$100,000 and over offset decreases in demand, interest-bearing demand and
certificates of deposit $100,000 or less. Complementing this higher level of
national market certificates of deposit were increased levels of short-term
borrowings, primarily Federal funds purchased, which increased $149.5 million
over the prior year-end level to $181.2 million.
Shareholders' equity at June 30, 2000 was $525.1 million, $26.9 million, or 5%,
over the 1999 year-end level. Earnings of $61.0 million and $5.7 million in new
stock issued during that period were offset, in part, by $28.0 million in cash
dividends, the repurchase of $8.6 million of treasury stock and a $3.2 million
valuation reserve adjustment for the investment portfolio.
NET INTEREST INCOME
-------------------
Net interest income for the second quarter of 2000 on a fully tax-equivalent
("FTE") basis was $66.6 million. This was a $2.8 million, or 4%, increase over
the $63.8 million reported for the second quarter of 1999.
Interest income (FTE) for the second quarter of 2000 increased $19.8 million, or
17%, to $134.5 million from $114.8 million for the second quarter of 1999.
Contributing to this improvement was a $584.9 million increase in the average
level of earning assets, which added $12.0 million to interest revenues. This
was complemented by the higher interest rate environment, which added an
additional $7.8 million to interest revenues for the quarter. The average rate
earned on the Corporation's earning assets during the second quarter of 2000
increased 45 basis points, from 7.49% to 7.94%.
Interest expense for the second quarter of 2000 also increased, rising $16.9
million, or 33%, to $68.0 million. Interest-bearing liabilities, on average,
rose $613.3 million over their level of a year ago. This increase in
interest-bearing liabilities contributed an additional $8.8 million to interest
expense, while the higher rate environment added another $8.1 million to
quarterly interest expense. The average rate the Corporation paid for its funds
during the second quarter of 2000 was 4.70%, compared to 3.95% for the second
quarter of 1999.
The Corporation's net interest margin for the second quarter of 2000 was 3.93%,
23 basis points below the 4.16% reported for the second quarter of a year ago.
This decline was driven, in part, by the Corporation's use of the national
certificate of deposit markets and Federal funds purchased to fund its balance
sheet growth. The following two tables present comparative net interest income
data and a rate-volume analysis of changes in net interest income for the second
quarters of 2000 and 1999, respectively.
14
<PAGE> 15
QUARTERLY ANALYSIS OF EARNINGS
<TABLE>
<CAPTION>
2000 Second Quarter 1999 Second Quarter
------------------------------------ -------------------------------------
(in thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Time deposits in other banks $ -- $ -- -- % $ -- $ -- -- %
Federal funds sold and
securities purchased under
agreements to resell 28,903 465 6.36 31,153 366 4.65
---------------------------------------------------------------------------- ---------------------------
Total short-term investments 28,903 465 6.36 31,153 366 4.65
-----------------------------------------------------------------------------------
U.S. Treasury and government
agencies 945,912 14,679 5.98 955,088 13,941 5.83
State and municipal 11,167 215 7.81 15,125 286 7.65
Preferred stock 114,025 2,532 8.15 164,344 2,770 6.81
Asset-backed securities 341,938 5,502 6.19 358,445 5,558 6.18
Other 203,704 3,346 6.52 91,348 1,139 5.01
---------------------------------------------------------------------------- ---------------------------
Total investment securities 1,616,746 26,274 6.27 1,584,350 23,694 5.98
-----------------------------------------------------------------------------------
Commercial, financial and
agricultural 1,603,756 34,803 8.60 1,427,631 28,107 7.80
Real estate-construction 353,187 8,467 9.48 261,784 5,611 8.47
Mortgage-commercial 929,637 20,399 8.68 870,538 19,012 8.64
Mortgage-residential 986,132 17,591 7.13 865,662 15,325 7.08
Consumer 1,169,238 26,531 9.09 1,061,560 22,652 8.53
---------------------------------------------------------------------------- ---------------------------
Total loans 5,041,950 107,791 8.50 4,487,175 90,707 8.04
-----------------------------------------------------------------------------------
Total earning assets $6,687,599 134,530 7.94 $6,102,678 114,767 7.49
===================================================================================
Funds supporting earning assets
Savings $ 395,967 1,489 1.51 $ 421,928 1,837 1.75
Interest-bearing demand 1,345,330 7,337 2.19 1,426,040 7,366 2.07
Certificates under $100,000 978,312 11,744 4.83 1,162,260 14,637 5.05
Certificates $100,000 and over 1,754,268 27,329 6.16 759,609 9,810 5.11
---------------------------------------------------------------------------- ---------------------------
Total interest-bearing
deposits 4,473,877 47,899 4.27 3,769,837 33,650 3.57
-----------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase 1,059,372 16,321 6.14 1,177,167 14,268 4.83
U.S. Treasury demand 64,204 975 6.01 37,192 329 3.50
---------------------------------------------------------------------------- ---------------------------
Total short-term borrowings 1,123,576 17,296 6.13 1,214,359 14,597 4.79
-----------------------------------------------------------------------------------
Long-term debt 168,000 2,762 6.58 168,000 2,763 6.58
---------------------------------------------------------------------------- ---------------------------
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total interest-bearing
liabilities 5,765,453 67,957 4.70 5,152,196 51,010 3.95
----------------------------------------------------------------------------------
Other noninterest funds 922,146 -- -- 950,482 -- --
------------------------------------------------------------------------- --------------------------
Total funds used to support
earning assets $6,687,599 67,957 4.01 $6,102,678 51,010 3.33
===================================== ========================================
Net interest income/yield 66,573 3.93 63,757 4.16
Tax-equivalent adjustment (1,948) (2,036)
-------- --------
Net interest income $ 64,625 $ 61,721
======== ========
</TABLE>
Average rates are calculated using average balances based on historical cost and
do not reflect the market valuation adjustment required by Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective January 1, 1994.
16
<PAGE> 17
YEAR-TO-DATE ANALYSIS OF EARNINGS
<TABLE>
<CAPTION>
Year-to-Date 2000 Year-to-Date 1999
------------------------------------- -------------------------------------
(in thousands; rates on Average Income/ Average Average Income/ Average
tax-equivalent basis) balance expense rate balance expense rate
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Time deposits in other banks $ -- $ -- -- % -- $ -- -- %
Federal funds sold and
securities purchased under
agreements to resell 38,196 1,115 5.77 27,817 646 4.62
------------------------------------------------------------------------- -------------------------
Total short-term investments 38,196 1,115 5.77 27,817 646 4.62
------------------------------------------------------------------------------
U.S. Treasury and government
agencies 951,444 29,390 5.96 895,350 25,900 5.80
State and municipal 11,566 444 7.79 15,184 571 7.63
Preferred stock 123,772 5,315 7.95 166,529 5,583 6.79
Asset-backed securities 347,804 11,182 6.19 324,732 10,161 6.25
Other 199,170 6,525 6.54 91,931 2,338 5.11
------------------------------------------------------------------------- -------------------------
Total investment securities 1,633,756 52,856 6.25 1,493,726 44,553 5.98
------------------------------------------------------------------------------
Commercial, financial and
agricultural 1,558,720 65,865 8.37 1,405,641 54,590 7.74
Real estate-construction 340,161 15,995 9.29 245,936 10,540 8.55
Mortgage-commercial 923,694 40,094 8.58 871,669 38,179 8.73
Mortgage-residential 981,310 34,892 7.11 859,895 31,241 7.24
Consumer 1,146,161 51,594 9.01 1,038,348 44,386 8.60
------------------------------------------------------------------------- -------------------------
Total loans 4,950,046 208,440 8.37 4,421,489 178,936 8.08
------------------------------------------------------------------------------
Total earning assets $6,621,998 262,411 7.82 $5,943,032 224,135 7.54
==============================================================================
Funds supporting earning assets
Savings $ 396,518 3,041 1.54 $ 415,117 3,805 1.85
Interest-bearing demand 1,354,807 14,299 2.12 1,388,077 15,027 2.18
Certificates under $100,000 1,011,487 24,305 4.83 1,168,924 29,581 5.10
Certificates $100,000 and over 1,670,717 50,817 6.02 730,011 19,070 5.20
------------------------------------------------------------------------- -------------------------
Total interest-bearing
deposits 4,433,529 92,462 4.16 3,702,129 67,483 3.66
------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase 1,032,180 30,722 5.93 1,104,382 26,778 4.84
U.S. Treasury demand 54,837 1,578 5.69 32,877 799 4.83
------------------------------------------------------------------------- -------------------------
Total short-term borrowings 1,087,017 32,300 5.92 1,137,259 27,577 4.84
------------------------------------------------------------------------------
Long-term debt 168,000 5,523 6.58 168,000 5,519 6.57
------------------------------------------------------------------------- -------------------------
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total interest-bearing
liabilities 5,688,546 130,285 4.56 5,007,388 100,579 4.03
------------------------------------------------------------------------------
Other noninterest funds 933,452 -- -- 935,644 -- --
-------------------------------------------------------------------- -------------------------
Total funds used to support
earning assets $6,621,998 130,285 3.89 $5,943,032 100,579 3.39
==============================================================================
Net interest income/yield 132,126 3.93 123,556 4.15
Tax-equivalent adjustment (3,811) (4,016)
-------- --------
Net interest income $128,315 $119,540
======== ========
</TABLE>
Average rates are calculated using average balances based on historical cost and
do not reflect the market valuation adjustment required by Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," effective January 1, 1994.
18
<PAGE> 19
RATE-VOLUME ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
------------------------------------- ---------------------------------------
For the three months ended June 30, For the six months ended June 30,
------------------------------------- ---------------------------------------
2000/1999 1999/1998
Increase (Decrease) Increase (Decrease)
due to change in due to change in
------------------------------------- --------------------------------------
(in thousands) Volume(1) Rate(2) Total Volume(1) Rate(2) Total
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Time deposits in other banks $ -- $ -- $ -- $ -- $ -- $ --
Federal funds sold and
securities purchased under
agreements to resell (26) 125 99 242 227 469
----------------------------------------------------------------------------------------------------------------------------
Total short-term
investments (26) 125 99 242 227 469
----------------------------------------------------------------------------------
U.S. Treasury and
government agencies 368 370 738 2,717 773 3,490
State and municipal * (76) 5 (71) (136) 9 (127)
Preferred stock * (661) 423 (238) (1,054) 786 (268)
Asset-backed securities (59) 3 (56) 1,132 (111) 1,021
Other * 1,431 776 2,207 2,761 1,426 4,187
----------------------------------------------------------------------------------------------------------------------------
Total investment
securities 1,003 1,577 2,580 5,420 2,883 8,303
----------------------------------------------------------------------------------
Commercial, financial and
agricultural * 3,416 3,280 6,696 5,892 5,383 11,275
Real estate-construction 1,925 931 2,856 4,006 1,449 5,455
Mortgage-commercial * 1,270 117 1,387 2,258 (343) 1,915
Mortgage-residential 2,121 145 2,266 4,371 (720) 3,651
Consumer 2,284 1,595 3,879 4,611 2,597 7,208
----------------------------------------------------------------------------------------------------------------------------
Total loans 11,016 6,068 17,084 21,138 8,366 29,504
----------------------------------------------------------------------------------------------------------------------------
Total interest income $ 11,993 $ 7,770 $ 19,763 $ 26,800 $ 11,476 $ 38,276
==================================================================================
Interest expense:
Savings $ (113) $ (235) $ (348) $ (171) $ (593) $ (764)
Interest-bearing demand (415) 386 (29) (361) (367) (728)
Certificates under $100,000 (2,310) (583) (2,893) (3,993) (1,283) (5,276)
Certificates $100,000 and over 12,848 4,671 17,519 24,730 7,017 31,747
----------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total interest-bearing
deposits 10,010 4,239 14,249 20,205 4,774 24,979
----------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase (1,422) 3,475 2,053 (1,747) 5,691 3,944
U.S. Treasury demand 239 407 646 536 243 779
----------------------------------------------------------------------------------------------------------------------------
Total short-term
borrowings (1,183) 3,882 2,699 (1,211) 5,934 4,723
----------------------------------------------------------------------------------
Long-term debt (1) -- (1) -- 4 4
----------------------------------------------------------------------------------------------------------------------------
Total interest expense $ 8,826 $ 8,121 $ 16,947 $ 18,994 $ 10,712 $ 29,706
==================================================================================
Changes in net interest income $ 2,816 $ 8,570
======== ========
</TABLE>
* Variances are calculated on a fully tax-equivalent basis, which includes
the effects of any disallowed interest expense.
(1) Changes attributable to volume are defined as change in average balance
multiplied by the prior year's rate.
(2) Changes attributable to rate are defined as a change in rate multiplied by
the average balance in the applicable period of the prior year. A change
in rate/volume (change in rate multiplied by change in volume) has been
allocated to the change in rate.
20
<PAGE> 21
NON-INTEREST REVENUES AND OPERATING EXPENSES
--------------------------------------------
Non-interest revenues for the second quarter of 2000 were $51.2 million, an
increase of $5.1 million, or 11%, over those for the second quarter of a year
ago, due primarily to higher trust and asset management fees.
Wealth management and corporate trust fees for the second quarter of 2000
increased $4.2 million, or 12%, to $40.2 million. This represented 35% of the
Corporation's operating revenues for the second quarter of 2000, compared to 33%
for the second quarter of 1999. Corporate trust fees increased $2.0 million, or
17%, to $13.4 million due in part to double digit fee growth in the
Corporation's employee benefit and investment holding company product lines.
Asset management fees for the quarter rose $1.3 million, or 15%, to $10.1
million due to strong growth in fees from the Corporation's affiliate managers,
whose assets under management have grown 42% over those of the second quarter of
1999 to $16.5 billion. Private client advisory services fees for the quarter
rose $867,000, or 5%, to $16.7 million.
Service charges on deposit accounts for the second quarter were $6.2 million, 4%
above those of a year ago. Increased transaction fees associated with checking
accounts and automated teller machine usage contributed to this increase. Card
fees for the second quarter were $2.5 million, an increase of $210,000, or 9%,
due primarily to increased interchange fees on ATM transactions.
Other operating income for the second quarter was $4.6 million. This was an
increase of $515,000, or 13%, over the $4.1 million reported for the second
quarter of 1999. Loan origination and late charge fees rose $117,000, or 9%, and
other income rose $998,000, or 164%, as a $1.2 million gain was recorded on the
disposition of the Corporation's Maryland retail branches. These increases were
offset in part by increased losses from the disposition of automobiles from the
leasing portfolio. Those losses increased $886,000, or 79%.
Operating expenses for the second quarter of 2000 increased $6.8 million, or
12%, to $65.0 million. Total personnel expenses for the quarter increased $4.6
million, or 14%, to $38.8 million. Contributing to this increase were higher
compensation costs and expansion activity in California, New York, Florida and
Pennsylvania. Salaries and wages increased 14%, reflecting higher compensation
and bonus expense. Employment benefits expense rose 13% due to higher health
insurance costs. Net occupancy expense rose $226,000, or 6%, due to higher costs
associated with the leasing of offices in the Corporation's expansion markets as
well as higher levels of depreciation on leasehold improvements. Servicing and
consulting expenses for the second quarter were $1.8 million, an increase of
$484,000, or 37%, over those for the second quarter of last year. For the first
six months of 2000, those expenses were $3.6 million, $500,000, or 15%, above
the corresponding expenses for the first six months of 1999. Other operating
expense for the second quarter rose $975,000, or 10%, due to increased loan
origination expenses and processing fees.
Income tax expense for the second quarter of 2000 increased $279,000, or 2%, to
$15.4 million. The Corporation's effective tax rate for the second quarter of
2000 was 33.55%, compared to 32.52% for the second three months of 1999.
LIQUIDITY
---------
A financial institution's liquidity represents its ability to meet, in a timely
manner, cash flow requirements that may arise. Liquidity of the asset side of
the balance sheet is provided by the maturity and marketability of loans, money
market assets and investments. Liquidity of the liability side of the balance
sheet is usually provided through deposits.
21
<PAGE> 22
The Corporation's quarter-end liquidity ratio, calculated in accordance with
regulatory requirements of the FDIC, was 22.28%. Management believes that
maturities of the Corporation's investment securities, other readily marketable
assets and external sources of funds offer more than adequate liquidity to meet
any cash flow requirements that may arise. Sources of funds have historically
consisted of deposits, amortization and prepayments of outstanding loans,
maturities of investment securities, borrowings and interest income. Management
monitors the Corporation's existing and projected liquidity requirements on an
ongoing basis, and implements appropriate strategies when deemed necessary.
ASSET QUALITY AND LOAN LOSS PROVISION
-------------------------------------
The Corporation's provision for loan losses for the second quarter of 2000 was
$5.0 million, $500,000, or 11%, higher than the amount provided for the second
quarter of 1999. The reserve for loan losses at June 30, 2000 was $75.5 million,
a decrease of $1.4 million, or 2%, from the $76.9 million reported at December
31, 1999. The reserve as a percentage of total period-end loans outstanding was
1.48%, down from the year-end level of 1.60%. Net chargeoffs for the second
quarter of 2000 were $3.1 million, an increase of $448,000, or 17%, over those
for the corresponding period of 1999.
The following table presents the risk elements in the Corporation's loan
portfolio:
<TABLE>
<CAPTION>
Risk Elements (in thousands) June 30, 2000 December 31, 1999 June 30, 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccruing $49,476 $29,184 $34,764
Past due 90 days or more 11,260 16,520 28,369
--------------------------------------------------------------------------------------------------------
Total $60,736 $45,704 $63,133
=====================================================
Percent of total loans at period-end 1.19% .95% 1.38%
Other real estate owned $ 802 $ 576 $ 922
</TABLE>
Nonaccruing loans at June 30, 2000 were $49.5 million, an increase of $20.3
million, or 70%, over the $29.2 million reported at December 31, 1999. This
includes $13.0 million of credits to a borrower about which the Corporation had
serious doubt at March 31, 2000 that were placed in nonaccrual status in May of
2000. Other real estate owned, which is reported as a component of other assets
in the Consolidated Statements of Condition, consists of assets that have been
acquired through foreclosure. These assets are recorded on the books of the
Corporation at the lower of their cost or the estimated fair value less cost to
sell, adjusted periodically based upon current appraisals. Other real estate
owned at June 30, 2000 was $802,000, an increase of $226,000, or 39%, from the
December 31, 1999 level of $576,000. Nonperforming assets (other real estate
owned plus nonaccrual loans) at June 30, 2000 totaled $50.3 million, or .99% of
period-end loans outstanding. This was an increase of $20.5 million, or 69%,
over the $29.8 million, or .62% of period-end loans outstanding, reported at
December 31, 1999. As a result of the Corporation's ongoing monitoring of its
loan portfolio, at June 30, 2000, approximately $39.3 million of its loans were
identified that are either currently performing in accordance with their terms
or are less than 90 days past due but for which, in management's opinion,
serious doubt exists as to the borrowers' ability to continue to repay their
loans in full on a timely basis.
The reserve for loan losses at quarter-end was 1.53 times the level of
nonaccrual loans. Management believes the reserve is adequate, based upon
currently available information. The Corporation's determination of the adequacy
of its reserve is based upon an evaluation of its classified loans and other
assets, past loss experience, current economic and real estate market conditions
and any regulatory recommendations.
22
<PAGE> 23
CAPITAL RESOURCES
-----------------
A strong capital position provides a margin of safety for both depositors and
stockholders, enables a financial institution to take advantage of profitable
opportunities and provides for future growth. The Corporation's total risk-based
capital ratio at the end of the second quarter of 2000 was 10.52%, and its core
(Tier 1) leveraged capital ratio was 5.50%. The corresponding ratios at year-end
1999 were 10.67% and 5.65%, respectively. Both of these ratios are above the
current regulatory minimums of 8.00% and 4.00%, respectively.
Management monitors the Corporation's capital position and will make adjustments
as needed to insure that the capital base will satisfy existing and impending
regulatory requirements, as well as meet appropriate standards of safety and
provide for future growth.
OTHER INFORMATION
-----------------
Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities: Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133" and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," requires derivative instruments be
carried at fair value on the balance sheet. These statements continue to allow
the hedging of various risks with derivative instruments and set forth specific
criteria to be used to determine when hedge accounting can be used. The
statements provide for changes in fair value of cash flows of both the
derivative and the hedged asset or liability to be recognized in earnings in the
same period. For derivative instruments not accounted for as hedges, changes in
fair value are also required to be recognized in earnings. The Corporation plans
to adopt the provisions of these statements, as amended, for its quarterly and
annual reporting beginning January 1, 2001, the statement's effective date. The
impact of adoption of SFAS No. 133 on the Corporation's financial position,
results of operations and cash flows is not presently determinable and will
depend on the financial position and the nature and purpose of the derivative
instruments in use at that time.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Net interest income is an important determinant of the Corporation's financial
performance. Through interest rate sensitivity management, the Corporation seeks
to maximize the growth of net interest income on a consistent basis by
minimizing the effects of fluctuations associated with changing market interest
rates.
The Corporation employs simulation models to measure the effect of variations in
interest rates on net interest income. The composition of assets, liabilities
and off-balance-sheet instruments and their respective repricing and maturity
characteristics are evaluated in assessing the Corporation's exposure to changes
in interest rates.
Net interest income is projected using multiple interest rate scenarios. The
results are compared to net interest income projected using stable interest
rates. The Corporation's model employs interest rate scenarios in which interest
rates gradually move up or down 250 basis points. The simulation model projects,
as of June 30, 2000, that a gradual 250-basis-point increase in market interest
rates would reduce net interest income by 4.5% over a one-year period. This
figure compares to a projected decrease at
23
<PAGE> 24
December 31, 1999 of 5.5%. If interest rates were to gradually decrease 250
basis points, the simulation model projects, as of June 30, 2000, that net
interest income would increase 1.8% over a one-year period. This figure compares
to a projected decrease at December 31, 1999 of 2.9%. The Corporation's policy
limits the permitted reduction in projected net interest income to 10% over a
one-year period, given a change in interest rates.
The preceding paragraph contains certain forward-looking statements regarding
the anticipated effects on the Corporation's net interest income resulting from
hypothetical changes in market interest rates. The assumptions that the
Corporation uses regarding the effects of changes in interest rates on the
adjustment of retail deposit rates and the balances of residential mortgages,
asset-backed securities and collateralized mortgage obligations (CMOs) play a
significant role in the results the simulation model projects. The adjustment
paths are not assumed to be symmetrical.
The Corporation's model employs assumptions that reflect the historical
adjustment paths of the Corporation's retail deposit rates to changes in the
level of market interest rates. In addition, some of the Corporation's
retail-deposit rates reach historic lows within the 250-basis-point decline
scenario. The Corporation's model freezes the rates for these deposit products
when they equal their historic lows. These model assumptions (asymmetrical
adjustments and rate floors based on new historic lows) limit the extent to
which deposit rates are expected to adjust in a declining rate scenario and
contribute to the projected simulation results.
Changes in residential mortgage loan, CMO and asset-backed security balances are
driven by their contractual obligations and prepayments. While contractual
obligations are not typically influenced by changes in interest rates,
prepayment activity (including refinancing) can shift dramatically with changes
in interest rates. The Corporation's prepayment assumptions are based on
industry estimates for loans with similar coupons and remaining maturities. A
250-basis-point decline in interest rates can lead to a significant increase in
prepayments when available reinvestment opportunities of similar risk carry
lower returns. Conversely, should interest rates rise 250 basis points, the same
balances are not likely to prepay at the same rate, but instead are likely to
lengthen in effective maturity as debtors elect not to prepay and to retain
these now below-market credit terms for as long as possible. Holders of
mortgages, asset-backed securities and CMOs are left with returns below those
prevailing in the current environment. This prepayment-driven effect also
contributes to the projected simulation results.
During the second quarter of 2000, the Corporation sold certain fixed-rate
residential mortgage loans into the secondary market. The primary goal of this
program is to reduce the risk that the average duration of these fixed-rate
residential mortgage loans would extend well beyond the duration that was
anticipated at origination, as frequently occurs during periods of rising
interest rates. Mortgage loans sold during the second quarter of 2000 totaled
$24.2 million.
Management reviews the Corporation's rate sensitivity regularly, and may employ
a variety of strategies as needed to adjust that sensitivity. These include
changing the relative proportions of fixed-rate and floating-rate assets and
liabilities, as well as utilizing off-balance-sheet measures such as interest
rate swaps and interest rate floors.
At June 30, 2000, the Corporation was not committed to any interest rate swaps.
At June 30, 2000, the Corporation was committed to interest rate floors with a
total notional amount of $125 million, down from $225 million at year-end 1999.
The floors have remaining maturities of between .5 and 24 months, with a
weighted average maturity of 14 months. The net interest differential, the
amortization of the initial fees associated with the purchase of the floors and
any gains recorded on sale are reported under the caption "Interest and fees on
loans" and are recognized over the lives of the respective instruments. See "Net
Interest Income."
24
<PAGE> 25
Part II. Other Information
Item 1 - Legal Proceedings
Not Applicable
Item 2 - Change In Securities and Use of Proceeds
Not Applicable
Item 3 - Defaults Upon Senior Securities
Not Applicable
Item 4 - Submission of Matters to a Vote of Security Holders
At the Corporation's Annual Shareholders' Meeting held on May
11, 2000 (the "Annual Meeting"), the nominees for directors of the
Corporation proposed were elected. The votes cast for those nominees
were as follows:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Ted T. Cecala 26,021,579 346,316
Richard R. Collins 25,567,647 800,248
Hugh E. Miller 26,098,707 269,188
David P. Roselle 26,099,389 268,506
Thomas P. Sweeney 26,081,542 286,353
</TABLE>
In addition, at the Annual Meeting, the Corporation's
shareholders approved the Corporation's 2000 Employee Stock Purchase
Plan. That plan, designed to encourage wider ownership of the
Corporation's common stock by its employees, is for a term of four
years and authorizes the issuance of up to 400,000 shares of the
Corporation's common stock. The vote in favor of that plan was as
follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
25,727,266 463,918 176,711
</TABLE>
Item 5 - Other Information
Not Applicable
Item 6 - Exhibits and Reports on Form 8-K
The exhibits listed below are being filed as part of this report. These
exhibits will be made available to any shareholder upon receipt of a
written request therefor, together with payment of $.20 per page for
duplicating costs.
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
11 Statement re computation of per share earnings
27 Financial data schedule
</TABLE>
25
<PAGE> 26
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.
Date: August 11, 2000 /s/ Gerald F. Sopp
----------------------------------------------
Name: Gerald F. Sopp
Title: Vice President and
Controller
(Authorized Officer and
Principal Accounting Officer)
26
