-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, X9caIABIrmegaJ+1FQgywucF8aHYWdumlqxS5UDJQvJc4IVNpQorfXA8+2yE+uIO PdIleD6ILy9Z9hoRucc6ug== 0000950109-94-000878.txt : 19940525 0000950109-94-000878.hdr.sgml : 19940525 ACCESSION NUMBER: 0000950109-94-000878 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940519 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORESTATES FINANCIAL CORP CENTRAL INDEX KEY: 0000069952 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 231899716 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11285 FILM NUMBER: 94529459 BUSINESS ADDRESS: STREET 1: CENTRE SQ W STREET 2: 1500 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19101 BUSINESS PHONE: 2159733806 MAIL ADDRESS: STREET 1: 1500 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19101 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL CENTRAL FINANCIAL CORP DATE OF NAME CHANGE: 19830517 8-K 1 CORESTATES/GERMANTOWN 8K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 8-K ---------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 19, 1994 CORESTATES FINANCIAL CORP (EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER) PENNSYLVANIA 0-6879 23-1899716 (STATE OR OTHER (COMMISSION (IRS EMPLOYEE JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) INCORPORATION) CENTRE SQUARE WEST, 1500 MARKET STREET PHILADELPHIA, PENNSYLVANIA 19101 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (215) 973-3806 (FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ================================================================================ ITEM 5. OTHER EVENTS As previously announced, CoreStates Financial Corp ("CoreStates") and Germantown Savings Bank ("GSB") have entered into a definitive agreement, dated March 7, 1994, providing for CoreStates to acquire GSB for a combination of cash and stock. Under the terms of the agreement, each of GSB's 4,194,647 shares of common stock, par value $0.10 per share, will be exchanged for cash and Core- States common shares or a combination of cash and CoreStates common shares valued at $62.00. The transaction, which will be accounted for as a purchase, is subject to receipt of regulatory and GSB's shareholder approval. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements Page (i) Consolidated Statements of Income For the Three Months Ended March 31, 1994 and 1993 3 (ii) Consolidated Balance Sheet as of March 31, 1994 4 (iii) Consolidated Statements of Changes in Shareholders' Equity For the Three Months Ended March 31, 1994 and 1993 5 (iv) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1994 and 1993 6 (v) Notes to Interim Consolidated Financial Statements 7-10 CoreStates Financial Corp (Registrant) By: /s/ David T. Walker ------------------------- David T. Walker Deputy Chief Counsel Dated: May 19, 1994 -2- GERMANTOWN SAVINGS BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands except Per Share Amounts)
(Unaudited) Three Months Ended March 31, ----------------------- 1994 1993 ----------------------- Interest income: Loan interest and fees $19,601 $21,421 Interest and dividends on investment securities 6,629 7,143 Interest on money market instruments 235 197 ------- ------- Total interest income 26,465 28,761 ------- ------- Interest expense: Interest on deposits 10,178 13,085 Other 28 27 ------- ------- Total interest expense 10,206 13,112 ------- ------- Net interest income 16,259 15,649 Provision for possible loan losses 100 850 ------- ------- Net interest income after provision for possible loan losses 16,159 14,799 ------- ------- Noninterest income: Net security gains 4 317 Service fees and other 1,123 1,137 ------- ------- Total noninterest income 1,127 1,454 ------- ------- Noninterest expenses: Salaries and employee benefits 5,121 4,952 Occupancy expense 1,094 1,038 FDIC insurance 837 791 Depreciation and amortization 270 239 Amortization of value ascribed to acquired intangibles 117 227 Other 1,909 2,350 ------- ------- Total noninterest expenses 9,348 9,597 ------- ------- Income before income taxes 7,938 6,656 Applicable income taxes 2,691 2,254 ------- ------- Net income $ 5,247 $ 4,402 ======= ======= Earnings per common share: Net income $ 1.18 $ 1.01 ======= ======= Weighted-average common shares outstanding 4,434 4,349 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. -3- GERMANTOWN SAVINGS BANK AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in Thousands)
(Unaudited) March 31, 1994 -------------- ASSETS Cash and due from banks $ 20,637 Money market instruments 38,326 ---------- Total cash and cash equivalents 58,963 ---------- Securities held-to-maturity (Market value: $512,723) 514,494 Securities available-for-sale at market value (Net amortized cost: $22,717) 24,167 ---------- Total securities 538,661 ---------- Loans: Mortgage 652,283 Consumer 367,046 Commercial 2,225 ---------- Total 1,021,554 Less: Unearned income (7,430) Allowance for possible loan losses (23,507) ---------- Net loans 990,617 ---------- Accrued interest receivable 8,069 Premises and equipment, net 7,308 Deferred tax asset 9,318 Other 9,465 ---------- Total assets $1,622,401 ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Noninterest-bearing deposits $ 45,080 Interest-bearing checking accounts 121,558 Money market and super NOWs 234,198 Passbooks, clubs and other savings 306,534 Savings certificates of $100,000 and over 33,496 Other savings certificates 712,742 ---------- Total deposits 1,453,608 Other 22,049 ---------- Total liabilities 1,475,657 ---------- Shareholders' Equity: Preferred stock (par value $0.10) 15,000,000 shares authorized, none issued or outstanding -- Common stock (par value $0.10) 35,000,000 shares authorized, 4,194,647 outstanding 419 Additional paid-in capital 38,627 Retained earnings 106,755 Net unrealized holding gains on available-for-sale securities 943 ---------- Total shareholders' equity 146,744 ---------- Total liabilities and shareholders' equity $1,622,401 ==========
The accompanying notes are an integral part of the consolidated financial statements. -4- GERMANTOWN SAVINGS BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Dollars in Thousands) (Unaudited)
Net Additional Unrealized Preferred Common Paid-in Retained Holding Stock* Stock Capital Earnings Gains Total ------------------------------------------------------------ Balance at December 31, 1992 -- $411 $36,798 $ 83,085 -- $120,294 11,313 stock options exercised 1 145 146 Net income 4,402 4,402 Cash dividend paid ($0.10 per share) (411) -- (411) --------------------------------------------------------- Balance at March 31, 1993 -- $412 $36,943 $ 87,076 -- $124,431 ========================================================= Balance at December 31, 1993 -- $419 $38,480 $101,928 $1,164 $141,991 5,313 stock options exercised 147 147 Net income 5,247 5,247 Cash dividend paid ($0.10 per share) (420) (420) Change in net unreal- ized holding gains -- (221) (221) --------------------------------------------------------- Balance at March 31, 1994 -- $419 $38,627 $106,755 $ 943 $146,744 =========================================================
* The Bank's Articles of Incorporation authorize the issuance of 15,000,000 shares of preferred stock, par value $0.10 per share. The preferred stock may be issued at any time upon terms as determined by the Board of Directors. The accompanying notes are an integral part of the consolidated financial statements. -5- GERMANTOWN SAVINGS BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
(Unaudited) Three Months Ended March 31, ------------------ 1994 1993 ------------------ Cash flows from operating activities: Net income $ 5,247 $ 4,402 Reconciliation of net income to cash provided by operating activities: Depreciation and amortization 270 239 Amortization of value ascribed to acquired intangibles 117 227 Deferred taxes (157) (120) Provision for possible loan losses 100 850 Gain on sales and calls of securities (4) (317) (Gain) loss on sale of premises and equipment 13 (2) (Increase) decrease in interest receivable (343) 118 Increase in interest payable 330 526 Increase in accrued expenses 1,573 1,359 -------- -------- Net cash provided by operating activities 7,146 7,282 -------- -------- Cash flows from investing activities: Proceeds from amortization, prepayments and maturities of securities 379,561 158,522 Proceeds from sales of securities -- 501 Purchases of securities (395,909) (173,490) Principal collected on loans 89,597 66,298 Loans funded (63,976) (82,253) Capital expenditures (184) (263) Proceeds from sale of premises and equipment 57 27 Net decrease in other assets 133 374 -------- -------- Net cash provided by (used in) investing activities 9,279 (30,284) -------- -------- Cash flows from financing activities: Net increase (decrease) in demand deposits, NOW accounts, money market and savings accounts (4,572) 8,876 Proceeds from sale of savings certificates 36,872 52,307 Payments for maturing savings certificates (54,331) (60,349) Net increase (decrease) in other liabilities (937) 77 Dividends paid (420) (411) Proceeds from issuance of common stock 73 146 -------- -------- Net cash provided by (used in) financing activities (23,315) 646 -------- -------- Net decrease in cash and cash equivalents (6,890) (22,356) Cash and cash equivalents at beginning of period 65,853 65,609 -------- -------- Cash and cash equivalents at end of period $ 58,963 $ 43,253 ======== ======== Supplemental disclosures: Interest paid on deposits $9,876 $12,586 Income taxes paid 178 217 Transferred from loans to other real estate owned 151 490
The accompanying notes are an integral part of the consolidated financial statements. -6- GERMANTOWN SAVINGS BANK AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands) (Unaudited) 1. Basis of Presentation: The consolidated financial statements include the accounts of Germantown Savings Bank (Bank) and its wholly owned subsidiaries, Morris Holdings, Inc. and GSB Investment, Inc. All significant intercompany accounts and transactions have been eliminated. These unaudited consolidated financial statements are prepared in conformity with generally accepted accounting principles and include all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. 2. Securities Held-To-Maturity: At March 31, 1994, the amortized cost, gross unrealized gains and losses, and the approximate market values of held-to-maturity securities are as follows:
Net Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value ---------------------------------------------- U.S. Government and agencies $259,525 $ 3 $1,079 $258,449 GNMA, FNMA and FHLMC mortgage-backed securities 254,969 3,173 3,868 254,274 ---------------------------------------------- $514,494 $ 3,176 $4,947 $512,723 ==============================================
At March 31, 1994, the maturity distribution of the amortized cost and the approximate market values of held-to-maturity securities by contractual maturity are shown below. Since borrowers may have the right to call or prepay obligations with or without prepayment penalties, expected maturities will differ from contractual maturities.
March 31, 1994 --------------------- Net Amortized Market Cost Value --------------------- Due 1 year or less $179,275 $179,220 After 1 year to 5 years 80,250 79,229 After 5 years to 10 years -- -- More than 10 years -- -- --------------------- 259,525 258,449 GNMA, FNMA and FHLMC mortgage-backed securities 254,969 254,274 --------------------- $514,494 $512,723 =====================
3. Securities Available-For-Sale: At March 31, 1994, the maturity distribution of the net amortized cost and the carrying amount (approximate market value) of available-for-sale securities by contractual maturity are shown below. Since borrowers may have the right to call or prepay obligations with or without prepayment penalties, expected matu- rities will differ from contractual maturities.
March 31, 1994 -------------------- Net Amortized Carrying Cost Value -------------------- Due 1 year or less $ -- $ -- After 1 year to 5 years 710 715 After 5 years to 10 years 6,074 7,202 More than 10 years 15,933 16,250 -------------------- $22,717 $24,167 ====================
During the first quarter of 1994, available-for-sale securities with a carrying value (market value) of $2,684 were called. The Bank received proceeds including scheduled payments of $2,609 and recognized net profits of $75 on these transactions. Also during the quarter, held-to-maturity securities with a -7- cost of $15,346 were called. The Bank received proceeds including amortization and prepayments of $15,275 and recognized net losses of $71 on these transactions. The Bank did not sell any available-for-sale securities or held- to-maturity securities during the first quarter of 1994. During the first quarter of 1993, corporate and municipal securities with a carrying value of $18,750 were called. The Bank received proceeds of $19,063 and recognized net profits of $313 on these calls and scheduled payments. In addition, the Bank sold its holding of preferred stock. The carrying value of this stock was $497; the proceeds received were $501; and the profit was $4 on this sale. 4. Loans: The Bank's construction, direct residential, consumer and commercial lending activity is generally limited to southeastern Pennsylvania, south and central New Jersey, Delaware and northeastern Maryland. The Bank's indirect residential mortgage lending activity includes regions that Management believes are not experiencing unusual economic problems. These lending activities could be affected by regional economic problems or a downturn in real estate values. Included in other assets on the consolidated balance sheet at March 31, 1994 is other real estate owned of $1,186. 5. Premises and Equipment: At March 31, 1994, premises and equipment are as follows:
March 31, 1994 --------- Land $ 396 Buildings and improvements 10,296 Equipment 11,693 ------- 22,385 Less: Accumulated depreciation and amortization 15,077 ------- $ 7,308 =======
6. Allowance for Possible Loan Losses: Changes in the allowance for possible loan losses are as follows:
Three Months Ended March_31, ----------------------- 1994 1993 ------ ------ Balance at beginning of period $23,043 $18,855 Provision charged to income 100 850 Charge-offs (142) (286) Recoveries 506 356 ------- ------- Balance at end of period $23,507 $19,775 ======= =======
7. Income Taxes: The components of applicable income taxes are as follows:
Three Months Ended March_31, --------------------- 1994 1993 ------ ------ Federal: Currently payable $2,848 $2,374 Deferred tax (benefit) (157) (120) ------ ------ 2,691 2,254 State: Currently payable -- -- ------ ------ $2,691 $2,254 ====== ======
The Bank established a subsidiary in Delaware to hold a portion of the Bank's securities in 1989. As a result, there is no applicable state tax in either quarter of 1994 or 1993. -8- At March 31, 1994, items that give rise to significant portions of the Bank's deferred tax asset, calculated at a 35% tax rate, are as follows:
March 31, 1994 --------- Allowance for possible loan losses $8,227 Postretirement benefits other than pensions 1,485 Other, net (394) ------ $9,318 ======
8. Earnings per Common Share: Earnings per common share is based on income divided by the weighted-average number of shares and equivalent shares outstanding for each of the periods presented. When the closing price at the end of a period or the average market price of the common stock for the period, whichever is greater, exceeds the exercise price of options, the number of shares of common stock is increased by the number of shares issuable on the exercise of options based on the assumption that common stock could be purchased with the proceeds from the exercise of options. At March 31, 1994 and 1993, the weighted-average number of common and common share equivalents outstanding amounts to 4,434,183 and 4,348,595, respectively. 9. Stock Option Plan and Program: During the first quarter of 1994 and 1993, transactions in the Bank's Stock Option Plan and Program are as follows:
Plan Program ----------------------- ---------------------- Per Share Per Share Shares Price Shares Price ------- -------------- ------ -------------- Exercisable 12/31/92 318,649 9.75 to 21.875 55,443 9.75 to 21.875 Exercised (6,000) 9.75 to 21.875 (5,313) 9.75 ------- ------ Exercisable 3/31/93 312,649 9.75 to 21.875 50,130 9.75 to 21.875 ======= ====== Exercisable 12/31/93 269,107 9.75 to 29.00 43,504 9.75 to 29.00 Exercised -- (5,313) 13.75 ------- ------ Exercisable 3/31/94 269,107 9.75 to 29.00 38,191 9.75 to 29.00 ======= ======
10. Financial Instruments with Off-Balance Sheet Risk: The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to originate and/or purchase residential, consumer and construction loans and standby letters of credit to guarantee performance of a customer to a third party. Such instruments generally have fixed expiration dates or termination clauses and may require payment of fees to the Bank. The Bank uses the same credit policies in making commitments and issuing standby letters of credit as it does for on-balance sheet instru- ments. However, these instruments are properly not recorded on the Bank's financial statements. Management believes its diversified loan portfolio is not dependent upon any particular economic sector. Since some commitments and letters of credit are expected to expire without being drawn down, the amounts summarized below at March 31, 1994 and 1993 do not necessarily represent future cash requirements:
March 31, 1994 1993 -------- -------- Commitments to extend credit $74,384 $132,875 Standby letters of credit 211 211
11. Conversion: In April 1987, the Bank completed its conversion from a state-chartered mutual savings bank to a state-chartered stock savings bank through amendments to its charter and sale of 4,025,000 shares of $0.10 par value common stock. The net proceeds of the sale were $36,356. -9- At the time of conversion, the Bank established a liquidation account in the amount of $23,778 equal to the Bank's total net worth as of December 31, 1986. The liquidation account has been established for a period of 10 years for the benefit of eligible depositors who continue to maintain their deposit accounts in the Bank after conversion, subject to downward adjustment. Eligible depositors would be entitled, in the unlikely event of complete liquidation of the Bank, to receive liquidating distributions of any assets remaining after payment of all creditors' claims (including the claims of all depositors at the time of liquidation), but before any distributions made to the Bank's shareholders, equal to their proportionate interest at that time in the liquidation account. Except for the repurchase of stock by the Bank, the existence of the liquidation account will not restrict the use or application of such capital. 12. Agreement between GSB and CoreStates Financial Corp: On March 7, 1994, GSB and CoreStates Financial Corp entered into an agreement for CoreStates to acquire GSB for a combination of cash and stock. Assuming approval by regulators and by GSB shareholders, the transaction is expected to close in the third quarter of 1994, and will be accounted for as a purchase. The accompanying financial statements do not include any adjustments in contemplation of this proposed acquisition. 13. Other Matters: The Bank is required to maintain certain levels of regulatory capital. At March 31, 1994, the Bank's leverage capital ratio is 8.87%, and the Bank's total risk-based capital ratio is 18.44%. -10- -----END PRIVACY-ENHANCED MESSAGE-----