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, 1998
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.)
1845 Walnut Street
Philadelphia, PA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 215-861-7000
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, 1998: 5,057,796
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Balance Sheet
UNAUDITED
March 31, December 31,
1998 1997
(in thousands)
<S> <C> <C>
Assets:
Cash and cash equivalents:
Cash and due from banks ....................................... $ 67,002 $ 49,623
Federal funds sold ............................................ 32,400 92,200
---------- ----------
99,402 141,823
Investment securities available for sale .......................... 254,844 243,487
Investment securities held to maturity ............................ 681 682
Mortgages held for sale ........................................... 8,699 2,959
Loans, net ........................................................ 897,851 893,997
Premises and equipment, net ....................................... 19,983 18,420
Accrued interest receivable ....................................... 7,902 7,518
Other real estate owned ........................................... 2,933 2,235
Goodwill .......................................................... 4,341 4,435
Other assets ...................................................... 13,660 13,068
---------- ----------
Total assets .................................................. $1,310,296 $1,328,624
========== ==========
Liabilities and shareholders' equity:
Deposits:
Demand (non-interest bearing) ................................. $ 139,903 $ 144,310
Savings, money market and interest checking ................... 387,620 380,982
Time deposits ................................................. 287,032 309,712
Time deposits, $100,000 and over .............................. 103,537 98,626
---------- ----------
918,092 933,630
Securities sold under repurchase agreements ....................... 66,300 70,911
FHLB advances ..................................................... 150,000 150,000
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 25,300
Accrued interest payable .......................................... 8,636 11,352
Other liabilities ................................................. 4,308 2,576
---------- ----------
Total liabilities ............................................. 1,204,636 1,225,769
---------- ----------
Shareholders' equity:
Common Stock - authorized, 10,000,000 shares of $1 par value;
issued and outstanding 5,057,796 and 5,001,430 shares,
respectively ................................................ 5,058 5,001
Additional paid-in capital .................................... 71,786 71,101
Retained earnings ............................................. 27,492 25,127
Net unrealized gain on securities available for sale .......... 1,324 1,626
---------- ----------
Total shareholders' equity .................................... 105,660 102,855
---------- ----------
Total liabilities and shareholders' equity .................... $1,310,296 $1,328,624
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
JeffBanks, Inc.
Consolidated Statements of Income
UNAUDITED
Three Months Ended March 31,
1998 1997
(in thousands, except per share data)
Interest income:
Loans including fees ...................... $20,732 $18,755
Investment securities ..................... 3,900 2,729
Federal funds sold ........................ 560 717
------- -------
25,192 22,201
------- -------
Interest expense:
Time deposits, $100,000 and over .......... 1,438 1,189
Other deposits ............................ 7,224 5,780
FHLB advances ............................. 1,553 1,587
Subordinated notes and debentures ......... 717 717
Trust preferred securities ................ 585 364
Securities sold under repurchase agreements 712 776
------- -------
12,229 10,413
------- -------
Net interest income .................... 12,963 11,788
Provision for credit losses .................... 966 825
------- -------
Net interest income after provision
for credit losses ..................... 11,997 10,963
------- -------
Non-interest income:
Service fees on deposit accounts .......... 838 802
Gain on sales of residential mortgages and
capitalized mortgage servicing rights ... 333 152
Gain on sales of investment securities .... 243
Mortgage servicing fees ................... 181 185
Merchant credit card deposit fees ......... 487 482
Credit card fee income .................... 157 98
Other ..................................... 428 265
------- -------
2,667 1,984
------- -------
Non-interest expense:
Salaries and employee benefits ............ 4,491 3,959
Occupancy expense ......................... 995 937
Depreciation .............................. 493 433
FDIC expense .............................. 28 22
Data processing expense ................... 237 269
Legal ..................................... 207 312
Stationery, printing and supplies ......... 277 285
Shares tax ................................ 183 197
Advertising ............................... 337 287
Other real estate owned maintenance expense 11 73
Loss on sale and write-downs of other
real estate owned ........................ 31 72
Amortization of intangibles ............... 241 323
Credit card origination expense ........... 201 111
Credit card processing expense ............ 197 128
Merchant card expense ..................... 390 353
Other ..................................... 1,501 1,144
------- -------
9,820 8,905
------- -------
Income before income taxes ..................... 4,844 4,042
Income taxes ................................... 1,526 1,358
------- -------
Net income ............................. $ 3,318 $ 2,684
======= =======
Per share data:
Average number of common shares (basic) ........ 5,024 4,881
Average number of common shares (diluted) ...... 5,482 5,210
Net income per common share (basic) ............ $ 0.66 $ 0.55
Net income per common share (diluted) .......... $ 0.61 $ 0.52
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statement of Changes in Shareholders' Equity
UNAUDITED
Accumulated
comprehensive
income:
net unrealized
gain (loss)
Additional on securities
Common paid-in- Retained available Comprehensive
Stock capital earnings for sale income Total
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 .................... $ 5,001 $ 71,101 $ 25,127 $ 1,626 $ 102,855
Net income ...................................... -- -- 3,318 -- $ 3,318 3,318
Issuance of common stock for
dividend reinvestment plan ..................... 2 77 -- -- -- 79
Warrants exercised .............................. 55 608 -- -- -- 663
Cash dividends on common stock .................. -- -- (953) -- -- (953)
Other comprehensive income, net of tax
Unrealized losses on securities, net
of reclassification adjustment (see disclosure) -- -- -- (302) (166) (302)
----
Other comprehensive income ..................... -- -- -- -- (166)
---------
Comprehensive income ............................ -- -- -- -- $ 3,152
=========
--------- --------- --------- --------- ---------
Balance at March 31, 1998 ....................... $ 5,058 $ 71,786 $ 27,492 $ 1,324 $ 105,660
========= ========= ========= ========= =========
</TABLE>
Disclosure of reclassification amount:
Unrealized holding losses arising during period .................. $(166)
Less: reclassification adjustment for gains included in net income (136)
-----
Net unrealized losses on securities .............................. $(302)
=====
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
JeffBanks, Inc.
Consolidated Statement of Changes in Shareholders' Equity
UNAUDITED
Accumulated
comprehensive
income:
net unrealized
gain (loss)
Additional on securities
Common paid-in- Retained available Comprehensive
Stock capital earnings for sale income Total
(in thousands)
<S> <C> <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 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) -- -- --
Other comprehensive income, net of tax
Unrealized losses on securities ..... -- -- -- (997) (997) (997)
---------
Other comprehensive income .......... -- -- -- -- (997)
---------
Comprehensive income ................. -- -- -- -- $ 1,687 --
=========
--------- --------- ---------- ---------- ---------
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 Statements of Cash Flows
UNAUDITED
Three Months Ended March 31,
----------------------------
1998 1997
(in thousands)
<S> <C> <C>
Operating activities:
Net income ......................................................... $ 3,318 $ 2,684
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization ...................................... 934 1,050
Provision for credit losses ........................................ 966 825
Gain on sales of investment securities ............................. (243) --
Mortgage loans originated for sale ................................. (23,495) (7,574)
Mortgage loan sales ................................................ 17,755 6,050
Increase in interest receivable .................................... (384) (781)
(Decrease) increase in interest payable ............................ (2,716) 1,412
Increase in other assets ........................................... (603) (2,147)
Increase in other liabilities ...................................... 1,732 1,642
--------- ---------
Net cash provided by operating activities ....................... (2,736) 3,161
--------- ---------
Investing activities:
Proceeds from sales of investment securities available for sale .... 16,520 --
Proceeds from maturities of investment securities available for sale 10,062 17,316
Purchase of investment securities available for sale ............... (38,333) (39,805)
Proceeds from sales of other real estate owned ..................... 90 240
Net increase in loans .............................................. (5,608) (12,641)
Purchase of premises and equipment ................................. (2,056) (1,336)
--------- ---------
Net cash used in investing activities ........................... (19,325) (36,226)
--------- ---------
Financing activities:
Net (decrease) increase in deposits ................................ (15,538) 13,527
Net (decrease) increase in repurchase agreements ................... (4,611) 5,423
Net proceeds from issuance of common stock ......................... 742 339
Net increase (decrease) in FHLB advances ........................... -- (12,750)
Proceeds from issuance of trust preferred securities ............... -- 25,300
Dividends paid on common stock ..................................... (953) (714)
--------- ---------
Net cash (used in) provided by financing activities ............. (20,360) 31,125
--------- ---------
Net decrease in cash and cash equivalents .............................. (42,421) (1,940)
Cash and cash equivalents at beginning of year ......................... 141,823 87,293
--------- ---------
Cash and cash equivalents at end of period ............................. $ 99,402 $ 85,353
========= =========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
Note 1 - Allowance for Credit Losses:
Three months ended March 31,
1998 1997
(in thousands)
Balance, beginning of period .. $ 12,769 $ 13,734
Provision charged to operations 966 825
Loans charged off ............. (1,490) (1,269)
Recoveries .................... 129 102
-------- --------
Balance, end of period ........ $ 12,374 $ 13,392
======== ========
The balances of impaired loans were $10,789,000 and $11,093,000
respectively, at March 31, 1998 and 1997. The allowance for credit losses
associated with impaired loans was $2,132,000 and $3,280,000 respectively, at
those dates. Total cash collected on impaired loans during the first three
months of 1998 and 1997, respectively, was $109,000 and $124,000, 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
$232,000 and $273,000. 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, 1998, were as follows:
Gross Gross
Amortized unrealized unrealized Approximate
cost gains losses fair value
(in thousands)
Available for Sale:
U.S. treasury securities ...... $ 41,405 $ 100 $ 1 $ 41,504
Federal agency obligations .... 17,014 96 -- 17,110
Mortgage backed securities .... 121,581 392 195 121,778
State and municipal obligations 50,847 1,606 10 52,443
Other securities .............. 21,991 19 1 22,009
--------- --------- --------- ---------
Total ......................... $ 252,838 $ 2,213 $ 207 $ 254,844
========= ========= ========= =========
Held to Maturity:
State and municipal obligations 681 15 -- 696
--------- --------- --------- ---------
Total ......................... $ 681 $ 15 $ -- $ 696
========= ========= ========= =========
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:
The Company adopted the provisions of Statement of Financial Accounting
Standard ("SFAS") No. 128, Earnings Per Share ("EPS"), which 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.
Note 5:
Certain captions in the financial statements presented for prior periods
have been reclassified to conform with the current period presentation.
Note 6:
The American Institute of Certified Public Accountants ("AICPA") has issued
Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which provides accounting
guidance on capitalization of costs associated with software specifically
developed or obtained for internal use. This statement is effective for
Financial Statements issued after December 15, 1998. The effect of adoption is
not expected to be material.
Note 7:
On March 19, 1998, the Company announced that it had entered into a merger
agreement with Regent Bancshares Corp.(Regent), pursuant to which it would
acquire that institution. Comsummation of the merger is conditional upon
required regulatory and shareholder approvals. Under the terms of the pending
merger, each share of Regent common stock would be converted into .303 of a
share of the Comapny's common stock, resulting in the issuance of 1,033,176
shares of the Company's common stock. Each option to acquire Regent common stock
would be converted into an option to acquire .303 of a share of the Company's
common stock, resulting in the issuance of up to 110,898 shares of the Company's
common stock if all outstanding Regent options are converted.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The matters discussed in this Form 10Q that are forward looking statements
relate to future events or the future financial performance of JeffBanks, Inc.
(the "Company") and are based on current management expectations that involve
risks and uncertainties. Such statements are only predictions and actual events
or performance may differ materially from the events or performance expressed in
any such forward looking statements.
Results of Operations
Net income. Net income for the Company amounted to $3.3 million for the three
months ended March 31, 1998 as compared to $2.7 million for the three months
ended March 31, 1997, an increase of approximately 24%.
Net Interest Income and Average Balances. Net interest income was $13.0 million
for the first three months of 1998, compared to $11.8 million for the first
three months of 1997, an increase of $1.2 million or 10%. Yields on interest
earning assets increased to 8.43% for the first three months of 1998 from 8.39%
in the prior year period, a difference of .04 %. The cost of interest bearing
liabilities increased to 4.75% for the first three months of 1998 from 4.65% in
the prior year period, a difference of .10%. Accordingly, the net interest
margin on JBI's interest earning assets decreased to 4.40% in 1998 as compared
to 4.50% in the comparable prior year period, a difference of .10%. The increase
in the cost of interest bearing liabilities and the decrease in the net interest
margin reflected the full period effect in 1998 of 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
$144.5 million in 1998 compared to $134.3 million in 1997, an increase of $10.2
million or 8%. Average balances for savings, money market and interest checking
increased to $378.8 million in 1998 compared to $307.2 million in the comparable
1997 period, an increase of $71.6 million or 23%.
In the first three months of 1998, average interest earning assets totaled
$1.215 billion, an increase of $145.6 million or 14% over the 1997 comparable
period. Reflected in that net increase was a $77.9 million or 9% increase in
average loans to $911.7 million.
Savings and money market deposits at March 31, 1998 reflect $12 million in
short term money market deposits from an entity at which a director of the
Company is an officer. Interest on the deposits is paid at money market rates.
Non-Interest Income. Total non-interest income for the first three months of
1998 was $2.7 million compared to $2.0 million for the first three months of
1997, an increase of $683,000 or 34%. Gain on sales of residential mortgages and
capitalized mortgage servicing rights increased to $333,000 in 1998, an increase
of $181,000 or 119% over 1997. The increase in 1998 reflected an increase in
residential mortgage loan originations. Gain on sales of securities increased to
$243,000 for the first three months of 1998, an increase of $243,000 over 1997.
The sales were made for asset liability management purposes, as a result of the
disproportionately large securities portfolio to be acquired in the pending
Regent merger. Other income increased to $428,000 for the first three months of
1998, an increase of $163,000 or 62% from the comparable 1997 period. The
increase reflected $130,000 in service charges for non customer usage of ATM's.
The service charges were instituted in the third quarter of 1997.
Non-Interest Expense. Total non-interest expense for the first three months of
1998, was $9.8 million, compared to $8.9 million for the comparable prior year
period, an increase of $915,000 or 10%. Salaries and employee benefits amounted
to $4.5 million in the first three months of 1998 compared to $4.0 million for
the first three months of 1997, an increase of $532,000 or 13%. The increase
reflected $112,000 resulting from new branches and $111,000 resulting from
expansion in consumer related loan departments.
Legal expense decreased to $207,000 for the first three months of 1998, a
decrease of $105,000 or 34% from the comparable 1997 period. The 1997 period
reflected $55,000 in legal fees resulting from the United Valley Bank merger
that did not recur in the first quarter of 1998.
Amortization of intangibles decreased to $241,000 for the first three
months of 1998, a decrease of $82,000 or 25% from the prior year. The decrease
resulted primarily from the year end 1997 reduction in the valuation allowance
for deferred tax assets acquired as a result of the merger of Constitution Bank.
That reduction increased related realizable deferred tax assets and decreased
goodwill, and corresponding goodwill amortization.
Credit card origination expense increased to $201,000 for the first three
months of 1998, an increase of $90,000, or 81% over 1997. The increase reflected
origination costs incurred in connection with the Company's efforts to expand
its retail credit card portfolio.
Credit card processing expense increased to $197,000 for the first three
months of 1998, an increase of $69,000, or 54% over 1997. The increase reflected
significant increases in the outstanding number of credit card accounts, and
related increases in transaction volume.
<PAGE>
Liquidity and Capital Resources. The major sources of funding for the Company'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 as an alternative
funding source, 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 of $5.6 million for the first three months of 1998
compared to $12.6 million for the 1997 period. Cash outflows required for
mortgage loans originated for sale amounted to $23.5 million for the first three
months of 1998 compared to $7.6 million for the first three months of 1997. At
March 31, 1998 the Company's subsidiaries exceeded "well capitalized" ratios as
determined by the appropriate regulatory authorities. The following table sets
forth the regulatory capital ratios of the Company and its wholly-owned banking
subsidiaries, Jefferson Bank (Jefferson PA) and Jefferson Bank of New Jersey
(Jefferson NJ) at that date.
<TABLE>
<CAPTION>
Tier 1 Capital to Tier 1 Capital to Total Capital to
Average Risk-Weighted Risk-Weighted
Assets Ratio Assets Ratio Assets Ratio
March 31, December 31, March 31, December 31, March 31, December 31,
1998 1997 1998 1997 1998 1997
Entity:
<S> <C> <C> <C> <C> <C> <C>
Company ...................... 9.58% 9.31% 13.35% 12.27% 18.08% 16.93%
Jefferson PA ................. 7.47% 7.14% 10.20% 9.61% 14.84% 14.33%
Jefferson NJ ................. 7.00% 7.04% 9.56% 9.23% 13.85% 13.57%
"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, 1998 and the difference or
"gap" between them on an actual and cumulative basis for the periods indicated.
<TABLE>
<CAPTION>
Within Four to
Three Twelve One to Two Two to Five Over Five
Months Months Years Years Years
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Interest earning assets:
Investment securities:
Federal funds sold ................ $ 32,400
Available for sale:
Taxable investment securities ... 44,963 $ 22,420 $ 16,746 $ 6,380 $ 111,892
Non-taxable investment securities 80 1,138 365 181 50,679
Held to maturity:
Non-taxable investment securities -- -- 261 195 225
Mortgages held for sale ............ 8,699 -- -- -- --
Loans net of unearned discount ..... 377,855 157,246 113,810 185,205 76,109
--------- --------- --------- --------- ---------
Total interest earning assets ......... 463,997 180,804 131,182 191,961 238,905
--------- --------- --------- --------- ---------
Interest bearing liabilities:
Savings and money market deposits .. 11,404 49,002 75,359 251,855 --
Time deposits ...................... 117,244 231,037 33,858 7,780 650
Securities sold under repurchase
agreements ....................... 66,300 -- -- -- --
FHLB advances ...................... 150,000 -- -- -- --
Subordinated notes and debentures .. -- -- -- -- 32,000
Preferred securities ............... -- -- -- -- 25,300
--------- --------- --------- --------- ---------
Total interest bearing liabilities .... 344,948 280,039 109,217 259,635 57,950
--------- --------- --------- --------- ---------
Gap ................................... $ 119,049 $ (99,235) $ 21,965 $ (67,674) $ 180,955
========= ========= ========= ========= =========
Cumulative gap ........................ $ 119,049 $ 19,814 $ 41,779 $ (25,895) $ 155,060
========= ========= ========= ========= =========
Gap to assets ratio ................... 9% -8% 2% -5% 14%
Cumulative gap to assets ratio ........ 9% 2% 3% -2% 12%
</TABLE>
<PAGE>
Loan Portfolio. The following table summarizes the loan portfolio of the Company
by loan category and amount at March 31, 1998 and corresponds to appropriate
regulatory definitions. Loans with a principal amount in excess of 2% of the
Company's equity capital are generally considered to be large loans. By this
standard, large loans were those exceeding $2.1 million at March 31, 1998. Large
loans as a percentage of total loans at that date were 7%.
Book Value
(dollars in
thousands)
Loans secured by real estate:
Construction and land development ....................... $ 80,979
Secured by 1-4 family residential properties ............ 205,081
Secured by multifamily (5 or more) residential properties 26,220
Secured by non-farm non-residential properties .......... 236,113
Commercial and industrial loans:
To U.S. addresses (domicile) ............................ 110,871
Loans to individuals for household, family and other personal
expenditures (consumer):
Credit cards and related plans .......................... 24,559
Other ................................................... 208,923
Tax exempt industrial development obligations ................ 4,609
All other loans .............................................. 1,641
Lease financing receivables, net of unearned income .......... 19,928
--------
Total ................................................... $918,924
========
<PAGE>
Non-Performing Loans. The following table presents the principal amounts of non
accrual and renegotiated loans (1) at March 31, 1998 in addition to a schedule
presenting loans contractually past due 90 days or more as to interest or
principal still accruing interest. At March 31, 1998 the ratio of the allowance
for credit losses to total loans amounted to 1.35%. On an annualized basis, the
ratio of net charge-offs to average loans was .60% for the three month period
ended March 31, 1998.
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997 1997 1996 1995 1994 1993
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis ....... $10,789 $11,093 $ 9,361 $11,269 $13,127 $10,240 $ 6,832
Loans renegotiated to provide a reduction or
deferral of interest or principal ........... -- -- -- -- -- 1,367 1,493
------- ------- ------- ------- ------- ------- -------
Total non-performing loans (1) ................... 10,789 11,093 9,361 11,269 13,127 11,607 8,325
------- ------- ------- ------- ------- ------- -------
Other real estate owned .......................... 2,933 3,049 2,235 3,537 4,260 6,093 5,937
------- ------- ------- ------- ------- ------- -------
Total non-performing assets (1) .................. $13,722 $14,142 $11,596 $14,806 $17,387 $17,700 $14,262
======= ======= ======= ======= ======= ======= =======
Non-performing loans/total loans (1) ............. 1.17% 1.32% 1.03% 1.36% 1.69% 1.83% 1.56%
Non-performing assets/total loans and
non-performing assets (1) ................... 1.49% 1.67% 1.27% 1.78% 2.23% 2.76% 2.64%
Loans past due 90 days or more as to interest
or principal payments still accruing interest
and not included in non-accrual loans ....... $ 5,343 $ 7,385 $ 5,452 $ 4,478 $ 6,898 $ 6,190 $ 4,564
======= ======= ======= ======= ======= ======= =======
</TABLE>
Non-accrual loans(1) increased to $10.8 million at March 31, 1998 compared to
$9.4 million at December 31, 1997. The increase reflected approximately $2.1
million of additions, $535,000 of charge-offs and $109,000 of payments.
Other real estate owned amounted to $2.9 million at March 31, 1998 compared
to $2.2 million at December 31, 1997. Activity in the three months ended March
31, 1998 reflected $811,000 of additions with sales and other receipts of
$90,000, and charge-offs and other write downs of $24,000.
Interest on Non-Accrual Loans(1). If interest on non-accrual loans had been
accrued, such income would have been $232,000 and $273,000, respectively for the
first three months of 1998 and 1997.
Provision for Credit Losses. The provision for credit losses for the first
three months of 1998 was $966,000 compared to $825,000 in the first three months
of 1997.
- -----------------------------------------
(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,
1998 1997 1997 1996 1995 1994 1993
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance in the allowance for credit losses at
beginning of period .................... $12,769 $13,734 $13,734 $14,991 $ 8,986 $ 6,867 $ 6,468
------- ------- ------- ------- ------- ------- -------
Loans charged-off:
Commercial ............................. 272 483 957 1,914 2,816 1,198 736
Construction ........................... -- -- -- 473 -- 167 --
Real estate mortgage ................... 486 589 3,140 4,272 1,588 1,768 1,274
Credit card ............................ 428 70 835 160 16 -- --
Installment and lease financing ........ 304 127 900 522 435 236 243
------- ------- ------- ------- ------- ------- -------
Total ............................... 1,490 1,269 5,832 7,341 4,855 3,369 2,253
------- ------- ------- ------- ------- ------- -------
Recoveries:
Commercial ............................. 24 29 216 109 265 309 73
Construction ........................... -- -- -- -- -- -- 1
Real estate mortgage ................... 44 44 956 901 437 196 31
Credit card ............................ 14 8 9 -- -- -- --
Installment and lease financing ........ 47 21 86 51 51 28 28
------- ------- ------- ------- ------- ------- -------
Total ............................... 129 102 1,267 1,061 753 533 133
------- ------- ------- ------- ------- ------- -------
Net charge-offs ............................. 1,361 1,167 4,565 6,280 4,102 2,836 2,120
Acquisitions ................................ -- -- -- -- 6,121 3,098 --
Provision charged to operations ............. 966 825 3,600 5,023 3,986 1,857 2,519
------- ------- ------- ------- ------- ------- -------
Balance in allowance for credit losses at end
of period .............................. $12,374 $13,392 $12,769 $13,734 $14,991 $ 8,986 $ 6,867
======= ======= ======= ======= ======= ======= =======
Net charge-offs/average loans ............... 0.60% 0.56% 0.53% 0.79% 0.58% 0.50% 0.42%
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK
Refer to 10-K.
<PAGE>
Part II. Other Information
Item 6. Reports on Form 8-K
1. Form 8-K filed March 31, 1998
Item (5) Other material events: the proposed acquisition of Regent
Bancshares Corp.
<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: April 22, 1998 By /s/ Paul Frenkiel
------------------------------------------
Paul Frenkiel
Chief Financial Officer
Dated: April 22, 1998 By /s/ Martin F. Egan
------------------------------------------
Martin F. Egan
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 67002
<INT-BEARING-DEPOSITS> 799
<FED-FUNDS-SOLD> 32400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 254844
<INVESTMENTS-CARRYING> 681
<INVESTMENTS-MARKET> 696
<LOANS> 918924
<ALLOWANCE> 12374
<TOTAL-ASSETS> 1310296
<DEPOSITS> 918092
<SHORT-TERM> 216300
<LIABILITIES-OTHER> 12944
<LONG-TERM> 57300
0
0
<COMMON> 5058
<OTHER-SE> 100602
<TOTAL-LIABILITIES-AND-EQUITY> 1310296
<INTEREST-LOAN> 20732
<INTEREST-INVEST> 3900
<INTEREST-OTHER> 560
<INTEREST-TOTAL> 25192
<INTEREST-DEPOSIT> 8662
<INTEREST-EXPENSE> 12229
<INTEREST-INCOME-NET> 12963
<LOAN-LOSSES> 966
<SECURITIES-GAINS> 243
<EXPENSE-OTHER> 9820
<INCOME-PRETAX> 4844
<INCOME-PRE-EXTRAORDINARY> 3318
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3318
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.61
<YIELD-ACTUAL> 4.40
<LOANS-NON> 10789
<LOANS-PAST> 5343
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12769
<CHARGE-OFFS> 1490
<RECOVERIES> 129
<ALLOWANCE-CLOSE> 12374
<ALLOWANCE-DOMESTIC> 12374
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
