FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended Commission file number 0-22850
March 31, 1997
JeffBanks, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2189480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1609 Walnut Street
Philadelphia, PA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 215-564-5040
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 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.
Yes X No
Number of Shares of Common Stock Outstanding at March 31, 1997: 4,976,429
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Balance Sheet
UNAUDITED
March 31, December 31,
1997 1996
(in thousands)
<S> <C> <C>
Assets:
Cash and cash equivalents:
Cash and due from banks $ 39,378 $ 45,343
Federal funds sold 45,975 41,950
---------------- ----------------
85,353 87,293
Investment securities available for sale 195,243 174,551
Investment securities held to maturity 686 687
Mortgages held for sale 2,249 725
Loans, net 827,637 815,128
Premises and equipment, net 15,892 14,989
Accrued interest receivable 8,080 7,299
Other real estate owned 3,049 3,982
Goodwill 8,610 8,776
Other assets 16,241 13,744
---------------- ----------------
Total assets $ 1,163,040 $ 1,127,174
================ ================
Liabilities and shareholders' equity:
Deposits:
Demand (non-interest bearing) $ 129,742 $ 137,361
Savings and money market 309,164 315,939
Time deposits 273,608 249,787
Time deposits, $100,000 and over 88,152 84,052
---------------- ----------------
800,666 787,139
Securities sold under repurchase agreements 79,187 73,764
FHLB advances 115,000 127,750
Subordinated notes and debentures 32,000 32,000
Company-obligated mandatorily redeemable preferred securities of the
Company's subsidiary trust, holding solely $25.3 million aggregate
principal amount of 9.25% junior subordinated deferrable interest
debentures due 2027 of the Company 25,300
Accrued interest payable 9,494 8,082
Other liabilities 8,800 7,158
---------------- ----------------
Total liabilities 1,070,447 1,035,893
---------------- ----------------
Shareholders' equity:
Common Stock - authorized, 10,000,000 shares of $1 par value;
issued and outstanding 4,976,429 and 4,952,039 shares,
respectively 4,976 4,716
Additional paid-in capital 70,448 64,030
Retained earnings 17,986 22,355
Net unrealized gain (loss) on investment securities available for sale (817) 180
---------------- ----------------
Total shareholders' equity 92,593 91,281
---------------- ----------------
Total liabilities and shareholders' equity $ 1,163,040 $ 1,127,174
================ ================
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statements of Income
UNAUDITED
Three Months Ended March 31,
1997 1996
(in thousands, except per share data)
<S> <C> <C>
Interest income:
Loans including fees $ 18,755 $ 17,770
Investment securities 2,729 2,424
Federal funds sold 717 570
--------------- ---------------
22,201 20,764
--------------- ---------------
Interest expense:
Time deposits, $100,000 and over 1,189 1,276
Other deposits 5,780 6,516
FHLB advances 1,587 840
Subordinated notes and debentures 717 247
Preferred securities 364
Securities sold under repurchase agreements 776 417
--------------- ---------------
10,413 9,296
--------------- ---------------
Net interest income 11,788 11,468
Provision for credit losses 825 759
--------------- ---------------
Net interest income after provision
for credit losses 10,963 10,709
--------------- ---------------
Non-interest income:
Service fees on deposit accounts 802 758
Mortgage servicing fees 185 211
Gain on sales of residential mortgages and
capitalized mortgage servicing rights 152 120
Merchant card fees 482 321
Other 363 225
--------------- ---------------
1,984 1,635
--------------- ---------------
Non-interest expense:
Salaries and employee benefits 3,959 3,962
Occupancy expense 937 939
Depreciation 433 408
FDIC expense 22 7
Data processing expense 269 340
Legal and auditing 312 264
Stationery, printing and supplies 263 194
Shares tax 197 191
Advertising 287 358
Other real estate owned maintenance expense 73 52
Loss on sale and write-downs of other
real estate owned 72 32
Amortization of intangibles 323 310
Merchant card expense 353 285
Merger related expenses 178
Other expense 1,227 1,093
--------------- ---------------
8,905 8,435
--------------- ---------------
Income before income taxes 4,042 3,909
Income taxes 1,358 1,389
--------------- ---------------
Net income $ 2,684 $ 2,520
=============== ===============
Per share data:
Net income applicable to common stock $ 2,684 $ 2,520
Average number of common shares and equivalents 5,210 5,120
Net income per common share - primary $ 0.52 $ 0.49
Net income per common share - fully diluted $ 0.52 $ 0.49
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statement of Changes in Shareholders' Equity
UNAUDITED
Net unrealized
gain (loss)
Additional on securities
Common paid-in- Retained available
Stock capital earnings for sale Total
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ... $ 4,716 $ 64,030 $ 22,355 $ 180 $ 91,281
Net income ..................... -- -- 2,684 -- 2,684
Issuance of common stock for
401(K) plan ................... 5 115 -- -- 120
Warrants exercised ............. 18 201 219
Cash dividends on common stock . -- -- (714) -- (714)
5% stock dividend .............. 237 6,102 (6,339) -- --
Change in net unrealized loss on
securities available for sale . -- -- -- (997) (997)
-------- -------- -------- -------- --------
Balance at March 31, 1997 ...... $ 4,976 $ 70,448 $ 17,986 $ (817) $ 92,593
======== ======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statement of Changes in Shareholders' Equity
UNAUDITED
Net unrealized
gain (loss)
Additional on securities
Common paid-in- Retained available
Stock capital earnings for sale Total
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 ... $ 4,649 $ 63,102 $ 16,802 $ 485 $ 85,038
Net income ..................... -- -- 2,520 -- 2,520
Issuance of common stock for ... --
401(K) plan ................... 7 189 -- -- 196
Costs to establish a dividend .. --
reinvestment plan ............. -- (26) -- -- (26)
Warrants exercised ............. 20 214 234
Cash dividends on common stock . -- -- (572) -- (572)
Change in net unrealized loss on --
securities available for sale . -- -- -- (648) (648)
-------- -------- -------- -------- --------
Balance at March 31, 1996 ...... $ 4,676 $ 63,479 $ 18,750 $ (163) $ 86,742
======== ======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statements of Cash Flows
UNAUDITED
Three Months Ended March 31,
1997 1996
(in thousands)
<S> <C> <C>
Operating activities:
Net income ......................................................... $ 2,684 $ 2,520
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization ...................................... 1,050 865
Provision for credit losses ........................................ 825 759
Mortgage loans originated for sale ................................. (7,574) (5,325)
Mortgage loan sales ................................................ 6,050 5,261
Increase in interest receivable .................................... (781) (196)
Increase in interest payable ....................................... 1,412 1,333
Increase in other assets ........................................... (2,147) (1,528)
Increase in other liabilities ...................................... 1,642 578
--------- ---------
Net cash provided by operating activities ...................... 3,161 4,267
--------- ---------
Investing activities:
Proceeds from maturities of investment securities available for sale 17,316 4,243
Proceeds from sales of other real estate owned ..................... 240 1,143
Purchase of investment securities available for sale ............... (39,805) (18,649)
Net increase in loans .............................................. (12,641) (12,973)
Purchase of premises and equipment ................................. (1,336) (309)
--------- ---------
Net cash used in investing activities .......................... (36,226) (26,545)
--------- ---------
Financing activities:
Net decrease in deposits ........................................... 13,527 9,602
Net increase in repurchase agreements .............................. 5,423 10,450
Net proceeds from issuance and redemption of common stock .......... 339 404
Net decrease in FHLB advances ...................................... (12,750) (15,000)
Proceeds from issuance of subordinated notes ....................... -- 23,000
Proceeds from issuance of preferred securities ..................... 25,300 --
Dividends paid on common stock ..................................... (714) (572)
--------- ---------
Net cash provided by (used in) financing activities ............ 31,125 27,884
--------- ---------
Net (decrease) increase in cash and cash equivalents ................... (1,940) 5,606
Cash and cash equivalents at beginning of year ......................... 87,293 101,741
--------- ---------
Cash and cash equivalents at end of period ............................. $ 85,353 $ 107,347
========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
Note 1 - Allowance for Credit Losses:
Changes in the allowance for credit losses are as follows:
Three months ended March 31,
1997 1996
(in thousands)
Balance, beginning of period .. $ 13,734 $ 14,991
Provision charged to operations 825 759
Loans charged off ............. (1,269) (1,013)
Recoveries .................... 102 83
-------- --------
Balance, end of period ........ $ 13,392 $ 14,820
======== ========
The balances of impaired loans were $11,093,000 and $14,077,000
respectively, at March 31, 1997 and 1996. The allowance for credit losses
associated with impaired loans was $3,280,000 and $4,226,000, respectively, at
those dates. Total cash collected on impaired loans during the first three
months of 1997 and 1996, respectively, was $124,000 and $303,000, all of which
was credited to the principal balance outstanding on such loans. Interest which
would have been accrued on impaired loans during those respective periods was
$273,000 and $341,000. No related interest income was recognized during the
period.
Note 2 - Investment Securities:
The carrying value and approximate market value of investment securities
at March 31, 1997, are as follows:
<TABLE>
<CAPTION>
Gross Gross Approximate
Amortized unrealized unrealized market Carrying
cost gains losses value value
(in thousands)
<S> <C> <C> <C> <C> <C>
Available for Sale:
U.S. treasury securities ...... $ 66,428 $ 2 $ 182 $ 66,248 $ 66,248
Federal agency obligations .... 80,567 125 651 80,041 80,041
State and municipal obligations 34,848 95 596 34,347 34,347
Other securities .............. 14,620 6 19 14,607 14,607
-------- -------- -------- -------- --------
Total ......................... $196,463 $ 228 $ 1,448 $195,243 $195,243
======== ======== ======== ======== ========
Held to Maturity:
State and municipal obligations 686 6 -- 692 686
-------- -------- -------- -------- --------
Total ......................... $ 686 $ 6 $ -- $ 692 $ 686
======== ======== ======== ======== ========
</TABLE>
<PAGE>
Note 3:
The unaudited interim financial statements furnished reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All such adjustments
are of a normal recurring nature, except as discussed in these notes.
Note 4:
Primary earnings per common share are calculated by dividing net income
applicable to common stock by the weighted average number of common shares and
common share equivalents outstanding during the period, after giving retroactive
effect to stock dividends.
The Financial Accounting Standard Board ("FASB") has issued Statement of
Financial Accounting Standard ("SFAS") No. 128, Earnings Per Share ("EPS"),
which is effective for financial statements issued after December 31, 1997. Once
effective, the new standard eliminates primary and fully diluted EPS and instead
requires presentation of basic and diluted EPS in conjunction with the
disclosure of the methodology used in computing such EPS. Basic EPS excludes
dilution and is computed by dividing income available to common shareholders by
the weighted-average common shares outstanding during the period. Diluted EPS
takes into consideration the potential dilution that could occur if securities
or other contracts to issue common stock were exercised and converted into
common stock.
The adoption of this new standard is not expected to have a material impact
on the disclosure of EPS. The effect of adopting this new standard has not been
determined.
Note 5:
On January 21, 1997, the Company, through Jefferson PA, completed a merger
with United Valley Bank ("UVB") pursuant to which it acquired that institution.
Under the terms of the merger, each share of UVB common stock was converted into
.339 of a share of the Company's common stock, resulting in the issuance of
749,278 shares of the Company's common stock. In addition, outstanding warrants
to purchase the acquired institution's common stock were converted into warrants
to purchase 255,381 shares of the Company's common stock, with an exercise price
of $11.80 per share. UVB was a Pennsylvania chartered banking institution
engaged in commercial and retail banking with one principal office in
Philadelphia. UVB had total assets of $121.1 million at the time of acquisition.
The acquisition was accounted for under the pooling of interests method of
accounting. Accordingly, all prior period information has been restated to
reflect UVB historical performance. The income statement for the three months
ended March 31, 1997 reflected a total of $178,000 of merger related expenses,
primarily legal, accounting and filing fees.
Note 6:
On February 5, 1997, the Company issued $25.3 million of 9.25% of junior
subordinated deferrable interest debentures (the "debentures") to JBI Capital
Trust I (the "Trust"), a Delaware business trust, in which the Company owns all
of the common equity. The debentures are the sole asset of the Trust. The Trust
issued $25 million of preferred securities to investors. The Company's
obligations under the debentures and related documents, taken together,
constitute a full and unconditional guarantee by the Company of the Trust's
obligations under the preferred securities. Although the debentures will be
treated as debt of the Company, they currently qualify for tier 1 capital
treatment. The preferred securities are redeemable by the Company on or after
March 31, 2002, or earlier in the event the deduction of related interest for
federal income taxes is prohibited, treatment as tier 1 capital is no longer
permitted or certain other contingencies arise. The preferred securities must be
redeemed upon maturity of the debentures in 2027. See "Liquidity and Capital
Resources" below.
Note 7:
On April 1, 1997, the Company declared a 5% common stock dividend, payable
May 13, 1997. That dividend is reflected in the financial statements and
earnings per share computations for all periods.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net income. Net income for JeffBanks, Inc. (JBI) amounted to $2.7 million for
the three months ended March 31, 1997 as compared to $2.5 million for the three
months ended March 31, 1996.
Net Interest Income and Average Balances. Net interest income was $11.8 million
for the first three months of 1997, compared to $11.5 million for the first
three months of 1996, an increase of $320,000 or 3%. Yields on interest earning
assets decreased to 8.39% for the first three months of 1997 from 8.49% in the
prior year period, a difference of .10 %. The cost of interest bearing
liabilities increased to 4.65% for the first three months of 1997 from 4.55% in
the prior year period, a difference of .10%. Accordingly, the net interest
margin on JBI's interest earning assets decreased to 4.50% in 1997 as compared
to 4.68% in the comparable prior year period, a difference of .18%. The increase
in the cost of interest bearing liablities and the decrease in the net interest
margin reflected the full period effect in 1997 of the isssuance of $23 million
of 8.75% subordinated notes on March 25, 1996 and the issuance of $25.3 million
of 9.25% preferred securities on February 5, 1997.
Average balances for non-interest bearing demand deposits increased to
$134.3 million in 1997 compared to $121.6 million in the comparable 1996 period,
an increase of $12.7 million or 10%. Average balances for savings and money
market deposits increased to $307.2 million for the first three months of 1997,
compared to $301.0 million for the comparable year period, an increase of $6.2
million or 2%.
In the first three months of 1997, average interest earning assets totaled
$1.1 billion, an increase of $88.2 million or 9% over the 1996 comparable
period. Reflected in that net increase was a $62.2 million or 8% increase in
average loans to $833.8 million.
Non-Interest Income. Total non-interest income for the first three months of
1997 was $2 million compared to $1.6 million for the first three months of 1996,
an increase of $349,000 or 21%. Gain on sales of residential mortgages and
capitalized mortgage servicing rights increased to $152,000 in 1997, an increase
of $32,000 or 27% over 1996. The increase in 1997 reflected an increase in
residential mortage loan originations. Merchant card fees increased to $482,000
in 1997, an increase of $161,000 or 50%. The increase was substantially offset
by increases in merchant card expense and reflected higher volume.
Non-Interest Expense. Total non-interest expense for the first three months of
1997 was $8.9 million, compared to $8.4 million for the comparable prior year
period, an increase of $470,000 or 6%. Salaries and employee benefits amounted
to $4.0 million in first quarter of each of 1997 and 1996.
Data processing expense decreased to $269,000 for the first three months
of 1997, a decrease of $71,000 or 21% from the comparable 1996 period. The
decrease reflected reductions in data processing fees resulting from a new
outsourcing contract.
Legal and auditing expense increased to $312,000 for the first three
months of 1997, an increase of $48,000, or 18% over 1996. The increase reflected
legal fees on several unrelated matters and $23,000 of audit fees resulting from
the outsorcing of the internal audit function.
Stationary, printing and supplies increased to $263,000 for the first
three months of 1997, an increase of $69,000 or 36% over 1996. The increase
reflected the impact of the UVB acquisition, three new branches and a $17,000
increase in credit card supplies.
Advertising decreased to $287,000 for the first three months of 1997, a
decrease of $71,000 or 20% over the comparable 1996 period. The decrease
reflected the 1996 one time advertising campaign for personal transaction
accounts.
Merger related expenses resulting from the acquisiton of United Valley
Bank amounted to $178,000 in 1997. The merger expenses reflected $55,000 in
legal fees, $20,000 in external accounting fees, $22,000 in printing costs,
$23,000 in regulatory filing fees and $58,000 from the write-off of leasehold
improvements on vacated locations.
Liquidity and Capital Resources. The major sources of funding for JBI's
investing activities have historically been cash inflows resulting from
increases in deposits. Such increases have been utilized primarily to fund net
increases in loans. FHLB advances have also been utilized when relative interest
costs were less than those for deposits. Funds not needed for operations are
invested primarily in daily federal funds sold and securities.
Net increases in loans amounted to $12.6 million for the first three
months of 1997 and $13 million for the 1996 period. Cash outflows required for
mortgage loans originated for sale amounted to $7.6 million for the first three
months of 1997 compared to $5.3 million for the first three months of 1996. As
described in note 6 to the financial statements, tier 1 capital and cash inflows
were increased by a $25.3 million debt offering on February 5, 1997.
At March 31, 1997 JeffBanks and its subsidiaries exceeded "well
capitalized" ratios as determined by the appropriate regulatory authorities. The
following table sets forth the regulatory capital ratios of JBI, Jefferson Bank
(Jefferson PA) and Jefferson Bank of New Jersey (Jefferson NJ) at that date.
<TABLE>
<CAPTION>
Tier 1 Capital to Total Capital to
Leverage Risk-Weighted Risk-Weighted
Ratio (1) Assets Ratio Assets Ratio
March 31, December 31, March 31, December 31, March 31, December 31,
1997 1996 1997 1996 1997 1996
Entity:
<S> <C> <C> <C> <C> <C> <C>
JBI .......................... 9.37% 7.28% 12.89% 9.92% 18.00% 15.13%
Jefferson PA ................. 7.06% 7.14% 9.67% 9.59% 14.66% 14.67%
Jefferson NJ ................. 8.51% 8.10% 10.96% 11.16% 16.22% 16.88%
"Well capitalized" institution
(under FDIC Regulations) . 5.00% 5.00% 6.00% 6.00% 10.00% 10.00%
</TABLE>
<PAGE>
Asset and Liability Management
The following table summarizes repricing intervals for interest earning assets
and interest bearing liabilities as of March 31, 1997 and the difference or
"gap" between them on an actual and cumulative basis for the periods indicated.
<TABLE>
<CAPTION>
One to 90 91 to 180 181 to 364 One to Two Three to Five Over Five
Days Days Days Years Years Years
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Federal funds sold ................... $ 45,975
Investment securities:
Available for sale:
Taxable investment securities ... 22,357 $ 14,030 $ 20,001 $ 43,446 $ 50,051 $ 11,011
Non-taxable investment securities -- 455 615 1,214 362 31,701
Held to maturity:
Taxable investment securities ... --
Non-taxable investment securities -- -- -- -- 266 420
Mortgages held for sale .............. 2,249 -- -- -- -- --
Loans net of unearned discount ....... 367,235 59,190 79,121 119,121 168,225 48,137
--------- --------- --------- --------- --------- ---------
Total interest earning assets ........... 437,816 73,675 99,737 163,781 218,904 91,269
--------- --------- --------- --------- --------- ---------
Interest bearing liabilities:
Savings and money market accounts .... 309,164 -- -- -- -- --
Time deposits ........................ 110,512 92,175 120,272 16,764 21,380 657
Securities sold under repurchase
agreements ....................... 79,187 -- -- -- -- --
FHLB advances ........................ 115,000 -- -- -- -- --
Subordinated notes and debentures .... -- -- -- -- -- 32,000
Preferred securities ................. -- -- -- -- -- 25,300
--------- --------- --------- --------- --------- ---------
Total interest bearing liabilities ...... 613,863 92,175 120,272 16,764 21,380 57,957
--------- --------- --------- --------- --------- ---------
Gap ..................................... $(176,047) $ (18,500) $ (20,535) $ 147,017 $ 197,524 $ 33,312
========= ========= ========= ========= ========= =========
Cumulative gap .......................... $(176,047) $(194,547) $(215,082) $ (68,065) $ 129,459 $ 162,771
========= ========= ========= ========= ========= =========
Gap to assets ratio ..................... -15% -2% -2% 13% 17% 3%
Cumulative gap to assets ratio .......... -15% -17% -18% -6% 11% 14%
</TABLE>
<PAGE>
Loan Portfolio. The following table summarizes the loan portfolio of JBI by loan
category and amount at March 31, 1997 and corresponds to appropriate regulatory
definitions. Loans with a principal amount in excess of 2% of JBI's equity
capital are generally considered to be large loans. By this standard, large
loans were those exceeding $1.9 million at March 31, 1997. Large loans as a
percentage of total loans at that date were 10%.
Book Value
Loans secured by real estate:
Construction and land development ....................... $ 70,035
Secured by 1-4 family residential properties ............ 214,034
Secured by multifamily (5 or more) residential properties 20,420
Secured by non-farm non-residential properties .......... 222,681
Commercial and industrial loans:
To U.S. addresses (domicile) ............................ 149,838
Loans to individuals for household, family and other personal
expenditures (consumer):
Credit cards and related plans .......................... 9,744
Other ................................................... 134,976
Tax exempt industrial development obligations ................ 3,379
All other loans .............................................. 2,255
Lease financing receivables, net of unearned income .......... 15,916
--------
Total ................................................... $843,278
========
<PAGE>
Non-Performing Loans. The following table presents the principal amounts of non
accrual and renegotiated loans (1) at March 31, 1997 in addition to a schedule
presenting loans contractually past due 90 days or more as to interest or
principal still accruing interest.
<TABLE>
<CAPTION>
March 31, December 31,
------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis ...... $11,093 $14,077 $11,269 $13,127 $10,240 $ 6,832 $ 7,344
Loans renegotiated to provide a reduction or
deferral of interest or principal ........... -- -- -- -- 1,367 1,493 1,746
------- ------- ------- ------- ------- ------- -------
Total non-performing loans (1) .................. 11,093 14,077 11,269 13,127 11,607 8,325 9,090
------- ------- ------- ------- ------- ------- -------
Other real estate owned ......................... 3,049 4,756 3,537 4,260 6,093 5,937 5,710
------- ------- ------- ------- ------- ------- -------
Total non-performing assets (1) ................. $14,142 $18,833 $14,806 $17,387 $17,700 $14,262 $14,800
======= ======= ======= ======= ======= ======= =======
Non-performing loans/total loans (1) ............ 1.32% 1.79% 1.36% 1.69% 1.83% 1.56% 1.81%
Non-performing assets/total loans and
non-performing assets (1) ................... 1.67% 2.38% 1.78% 2.23% 2.76% 2.64% 2.91%
Loans past due 90 days or more as to interest
or principal payments still accruing interest
and not included in non-accrual loans ....... $ 7,385 $ 5,785 $ 4,478 $ 6,898 $ 6,190 $ 4,564 $ 3,656
======= ======= ======= ======= ======= ======= =======
</TABLE>
At March 31, 1997 the ratio of the allowance for credit losses to total
loans amounted to 1.59%. On an annualized basis, the ratio of net charge-offs to
average loans was .56% for the three month period ended March 31, 1997.
Non-accrual loans(1) decreased to $11.1 million at March 31, 1997 compared to
$11.3 million at December 31, 1996. The decrease reflects approximately $872,000
of charge-offs, $838,000 of additions and $124,000 of payments.
Other real estate owned amounted to $3.0 million at March 31, 1997 compared to
$3.5 million at December 31, 1996. Activity in the three months ended March 31,
1997 reflects sales and other receipts of $240,000, and charge-offs and other
write downs of $239,000.
Interest on Non-Accrual Loans(1). If interest on non-accrual loans(1) had been
accrued, such income would have been $273,000 and $341,000, respectively for the
first three months of 1997 and 1996.
Provision for Credit Losses. The provision for credit losses for the first three
months of 1997 was $825,000 compared to $759,000 in the three three months of
1996, reflecting increased loan volume.
- --------------------------------------------------------------------------------
(1) Excluding loans past due 90 days or more still accruing interest.
<PAGE>
Summary of Credit Loss Experience. The following table summarizes the credit
loss experience of JBI for the periods shown:
<TABLE>
<CAPTION>
March 31, December 31,
---------------------- ---------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance in the allowance for credit losses at
beginning of period ..................... $13,734 $14,991 $14,991 $ 8,986 $ 6,867 $ 6,468 $ 5,228
------- ------- ------- ------- ------- ------- -------
Loans charged-off:
Commercial .............................. 483 475 1,914 2,816 1,198 736 1,051
Construction ............................ -- 59 473 -- 167 -- 134
Real estate mortgage .................... 589 321 4,272 1,588 1,768 1,274 1,209
Credit card ............................. 70 21 160 16 -- -- --
Installment and lease financing ......... 127 137 522 435 236 243 157
------- ------- ------- ------- ------- ------- -------
Total ................................ 1,269 1,013 7,341 4,855 3,369 2,253 2,551
------- ------- ------- ------- ------- ------- -------
Recoveries:
Commercial .............................. 29 30 109 265 309 73 43
Construction ............................ -- -- -- -- -- 1 --
Real estate mortgage .................... 44 43 901 437 196 31 41
Credit card ............................. 8 -- -- -- -- -- --
Installment and lease financing ......... 21 10 51 51 28 28 21
------- ------- ------- ------- ------- ------- -------
Total ................................ 102 83 1,061 753 533 133 105
------- ------- ------- ------- ------- ------- -------
Net charge-offs ............................. 1,167 930 6,280 4,102 2,836 2,120 2,446
Acquisitions ................................ -- -- -- 6,121 3,098 -- --
Provision charged to operations ............. 825 759 5,023 3,986 1,857 2,519 3,686
------- ------- ------- ------- ------- ------- -------
Balance in allowance for credit losses at end
of period ............................... $13,392 $14,820 $13,734 $14,991 $ 8,986 $ 6,867 $ 6,468
======= ======= ======= ======= ======= ======= =======
Net charge-offs/average loans ............... 0.56% 0.48% 0.79% 0.58% 0.50% 0.42% 0.50%
</TABLE>
<PAGE>
Part II. Other Information
Item 6. Reports on Form 8-K
1. Form 8-K filed January 24, 1997
Item (5) Other material events: the completed acquisition of United
Valley Bancorp, Inc.
<PAGE>
SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JEFFBANKS, INC.
(Registrant)
Dated: May 9, 1997 By /s/ Paul Frenkiel
------------------------------------------
Paul Frenkiel
Chief Financial Officer
Dated: May 9, 1997 By /s/ Patricia DiPietro
------------------------------------------
Patricia DiPietro
Assistant Secretary
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<PERIOD-END> Mar-31-1997
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<FED-FUNDS-SOLD> 45975
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