-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AfJr59NSOb1L3kC41m0TNM4xhlFIIb5D9LGd0RSl50msQWWYx5MyqG7XLdVpI5NP hSXqjx8/u4isvULk1VWakQ== 0000826154-98-000004.txt : 19981116 0000826154-98-000004.hdr.sgml : 19981116 ACCESSION NUMBER: 0000826154-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORRSTOWN FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000826154 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232530374 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-18888 FILM NUMBER: 98748385 BUSINESS ADDRESS: STREET 1: 77 E KING STREET STREET 2: P O BOX 250 CITY: SHIPPENSBURG STATE: PA ZIP: 17257 BUSINESS PHONE: 7175326114 MAIL ADDRESS: ZIP: 00000 10-Q 1 FORM 10 - Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended September 30,1998 Commission file number: 33-18888 ORRSTOWN FINANCIAL SERVICES, INC. (Exact name of registrant as specified in its charter) Commonwealth of Pennsylvania 23-2530374 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 77 East King Street 17257 P.O. Box 250, Shippensburg, Pennsylvania (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (717) 532-6114 Indicate by check mark whether the registrant (1) has filed all reports required to be filled by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 --------------- N---- - ---------- Class Outstanding at October 31,1998 (Common Stock, no par value) 1,027,658 ORRSTOWN FINANCIAL SERVICES, INC. INDEX Page Part I - FINANCIAL INFORMATION Item 1. Financial statements ( unaudited ) Condensed consolidated balance sheets - September 30,1998 and December 31, 1997 3 Condensed consolidated statements of income - Three months ended September 30,1998 and 1997 4 Condensed consolidated statements of income - Nine months ended September 30,1998 and 1997 5 Condensed consolidated statements of comprehensive income - Three months & Nine months ended September 30,199 6 Condensed consolidated statements of cash flows - Nine months ended September 30,1998 and 1997 7 Notes to condensed consolidated financial statements 8-9 Item 2. Management's discussion and analysis of financial condition and results of operations 10-13 PART II - OTHER INFORMATION 14 Signatures 15 Data Table 16 PART I - FINANCIAL INFORMATION PART I - FINANCIAL INFORMATION Item 1. Financial Statements ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, December 31, 1998 1997* (Unaudited) ASSETS (000 Omitted) Cash and due from banks 5,947 5,963 Interest - bearing deposits with banks 18 16 Federal funds sold 1,116 2,858 Securities available for sale 45,875 46,208 Federal Home Loan Bank, Federal Reserve and Atlantic Central Bankers Bank Stock, at cost which approximates market value 1,119 983 Loans 156,209 128,331 Allowance for loan losses (1,971) (1,767) ----------- - ----------- Net Loans 154,238 126,564 Bank premises and equipment, net 5,232 5,130 Other assets 7,457 2,520 ----------- - ----------- Total assets 221,002 $ 190,242 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest bearing $ 20,997 $ 17,649 Interest bearing 155,050 142,931 ----------- - ----------- Total deposits 176,047 160,580 Federal funds purchased and other borrowed money 21,093 8,569 Other liabilities 3,609 2,828 ----------- - ----------- Total liabilities 200,749 171,977 ----------- - ----------- STOCKHOLDERS' EQUITY Common stock, no par value - $ .2083 stated value per share at September 30, 1998 and December 31, 1997, 2, 000, 000 shares authorized with 1, 026,417 shares issued at September 30, 1998 and 1,025,094 issued at December 31, 1997 214 214 Additional paid - in capital 12,410 12,352 Retained earnings 6,305 4,730 Unrealized holding gain, net of tax $682 and $499 at September 30, 1998 and December 31, 1997, respectively 1,324 969 ----------- - ----------- Total stockholders' equity 20,253 18,265 ----------- - ----------- Total liabilities and stockholders' equity $ 221,002 $ 190,242 =========== =========== * Condensed from audited financial statements The accompanying notes are an integral part of these condensed financial statements. ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 1998 and 1997 (UNAUDITED) 1998 1997 (Unaudited) (Unaudited) (000 Omitted) Interest Income Interest and fees on loans $ 3,372 $ 2,764 Interest on federal funds sold 23 44 Interest and dividends on investment securities 741 666 Interest income on deposits with banks 2 0 --------- ------- - -- Total interest income 4,138 3,474 Interest Expense Interest on deposits 1,648 1,421 Interest on borrowed money 209 83 --------- ------- - -- Total interest expense 1,857 1,504 --------- ------- - -- Net interest income 2,281 1,970 Provision for loan losses 75 45 --------- ------- - -- Net interest income after provision for loan losses 2,206 1,925 --------- ------- - -- Other Income Service charges on deposits 220 155 Other service charges 122 81 Trust department income 194 115 Other income 14 0 Net gains on available for sale securities 11 5 --------- ------- - -- Total other income 561 356 --------- ------- - -- Other Expenses Salaries and employee benefits 864 707 Net occupancy and equipment expenses 212 170 Other operating expenses 491 420 --------- ------- - -- Total other expense 1,567 1,297 --------- ------- - -- Income before income taxes 1,200 984 Income tax expenses 335 256 --------- ------- - -- Net income $ 865 $ 728 ========= ========= Weighted average number of shares outstanding ********* ********* Net income per share $ 0.85 $ 0.71 Cash dividends declared per share $ 0.24 $ 0.20 The accompanying notes are an integral part of these condensed financial statements. ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended September 30, 1998 and 1997 (UNAUDITED) 1998 1997 (Unaudited) (Unaudited) (000 Omitted) Interest Income Interest and fees on loans $ 9,367 $ 7,901 Interest on federal funds sold 198 164 Interest and dividends on investment securities 2,262 1,845 Interest income on deposits with banks 5 4 --------- -------- - - Total interest income 11,832 9,914 Interest Expense Interest on deposits 4,838 4,011 Interest on borrowed money 526 211 --------- -------- - - Total interest expense 5,364 4,222 --------- -------- - - Net interest income 6,468 5,692 Provision for loan losses 225 135 --------- -------- - - Net interest income after provision for loan losses 6,243 5,557 --------- -------- - - Other Income Service charges on deposits 614 449 Other service charges 346 225 Trust department income 571 402 Other income 45 41 Net gains(losses) on available for sale securitie (1) 5 --------- -------- - - Total other income 1,575 1,122 --------- -------- - - Other Expenses Salaries and employee benefits 2,502 2,103 Net occupancy and equipment expenses 621 539 Other operating expenses 1,527 1,273 --------- -------- - - Total other expense 4,650 3,915 --------- -------- - - Income before income taxes 3,168 2,764 Income tax expenses 876 758 --------- -------- - - Net income $ 2,292 $ 2,006 ========= ========= Weighted average number of shares outstanding ********* ********* Net income per share $ 2.24 $ 1.96 Cash dividends declared per share $ 0.70 $ 0.57 The accompanying notes are an integral part of these condensed financial statements. ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended September 30, 1998 and 1997 (UNAUDITED) 1998 1997 (000 Omitted) Net Income $ 865 $ 728 Other comprehensive income, net of tax Unrealized gain (loss) on investment securities available for sale 362 348 Comprehensive Income $ 1,227 $ 1,076 =========== ============ The accompanying notes are integral part of these condensed financial statements. ******************************************************************************** ********* ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Nine Months Ended September 30,1998 and 1997 (UNAUDITED) 1998 1997 (000 Omitted) Net Income $ 2,292 $ 2,006 Other comprehensive income, net of tax Unrealized gain (loss) on investment securities available for sale 356 426 Comprehensive Income $ 2,648 $ 2,432 =========== ============ The accompanying notes are integral part of these condensed financial statements. ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1998 and 1997 (UNAUDITED) 1998 1997 (Unaudited) (Unaudited) (000 Omitted) Cash flows from operating activities: Net income $ 2,292 $ 2,006 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 314 252 Provision for loan losses 225 135 Other, net (37) (14) ---------- - --------- Net cash provided by operating activities 2,794 2,379 Cash flows from investing activities: Net (increase) decrease in interest bearing deposits with banks (2) 1,532 Purchase of available for sale securities (8,267) (11,818) Sales and Maturities of available for sale securities 9,003 2,595 Net (increase) in loans (27,857) (13,920) Purchases of bank premises and equipment (384) (1,026) Increase in other assets (4,969) 0 Increase in other liabilities 598 0 ---------- - --------- Net cash (used) by investing activities (31,878) (22,637) ---------- - --------- Cash flows from financing activities: Net increase in deposits 15,467 14,578 Cash dividends paid (718) (585) Cash paid in lieu of fractional shares 0 (22) Dividend reinvestment plan purchases 59 0 Net increase in purchased funds 5,024 0 Proceeds from long - term debt 7,500 3,000 Payments on debt (6) (5) ---------- - --------- Net cash provided by financing activities 27,326 16,966 ---------- - --------- Net increase (decrease) in cash and cash equivalents (1,758) (3,292) Cash and cash equivalents at beginning of period 8,821 8,172 ---------- - --------- Cash and cash equivalents at end of period $ 7,063 $ 4,880 ========== ========= Supplemental disclosure of cash flows information: Cash paid during the period for: Interest $ 4,839 $ 3,860 Income Taxes 902 724 Supplemental schedule of noncash investing and financing activities: Unrealized gain (loss) on investments available for sale (net of deferred taxes of $183 and $219 at September 30, 1998 and 1997, respectively 356 425 5% Stock dividend issued May, 1997 0 1,736 The accompanying notes are an integral part of these condensed financial statements. ORRSTOWN FINANCIAL SERVICES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1998 (UNAUDITED) NOTE 1. Basis of Presentation The financial information presented at and for the three months ended and nine months ended September 30, 1998 and 1997 is unaudited. Information presented at December 31, 1997 is condensed from audited year-end financial statements. However, unaudited information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period. NOTE 2. Principles of Consolidation The consolidated financial statements include the accounts of the corporation and its wholly-owned subsidiary, Orrstown Bank. All significant intercompany transactions and accounts have been eliminated. NOTE 3. Cash Flows For purposes of the statements of cash flows, the corporation has defined cash and cash equivalents as those amounts included in the balance sheet captions " cash and due from banks " and " federal funds sold ". As permitted by Statement of Financial Accounting Standards No. 104, the corporation has elected to present the net increase or decrease in deposits in banks, loans and time deposits in the statement of cash flows. NOTE 4. Federal Income Taxes For financial reporting purposes the provision for loan losses charged to operating expense is based on management's judgment, whereas for federal income tax purposes, the amount allowable under present tax law is deducted. Additionally, certain expenses are charged to operating expense in the period the liability is incurred for financial reporting purposes, whereas for federal income tax purposes, these expenses are deducted when paid. As a result of these timing differences, deferred income taxes are provided in the financial statements. Income tax expense is less than the amount calculated using the statutory tax rate primarily as a result of tax exempt income earned from state and political subdivision obligations. NOTE 5. Other Commitments In the normal course of business, the bank makes various commitments and incurs certain contingent liabilities which are not reflected in the accompanying financial statements. These commitments include various guarantees and commitments to extend credit and the bank does not anticipate any losses as a result of these transactions. Note 6. Changes in Common Stock On March 20, 1997 the Board of Directors of Orrstown Financial Services, Inc. declared a 5 % stock dividend payable May 15, 1997 to shareholders of record May 1, 1997. Earnings per share, dividends per share and weighted average shares outstanding references have been restated to reflect the 5 % stock dividend for all periods presented. In 1998, a dividend reinvestment plan was approved and installed. The dividend paid during the third quarter of 1998 was the first where shareholders were able to elect reinvestment. In October 1998, the Board of Directors approved a two for one stock split, effective November 21, 1998 for shareholders of record on November 2, 1998. Note 7. Investment Securities Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the corporation has the ability at the time of purchase to hold securities until maturity or on a long - term basis, they are classified as securities held to maturity and carried at amortized historical cost. Securities to be held for indefinite periods of time and not intended to be held to maturity or on a long - term basis are classified as available for sale and carried at fair value. Securities held for indefinite periods of time include securities that management intends to use as part of its asset and liability management strategy and that may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate and resultant prepayment risk changes. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold, using the specific indentification method. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security. These gains and losses are credited or charged to shareholders' equity, whereas realized gains and losses flow through the corporation's operations. Management has classified all investments securities as "available for sale". At September 30 1998 fair value exceeded amortized cost by $2,006,000. This resulted in an increase in stockholders' equity of $1,324,000 after recognizing the tax effects of the unrealized gains. At December 31, 1997, fair market value exceeded amortized cost by $ 1,468,000 resulting in an increase in stockholders' equity of $969,000 after recognizing the tax effects of the unrealized gains. Note 8. Year 2000 (Y2K) Data Processing Position The Corporation is in the renovation and testing stage of its Y2K preparedness. The original Y2K budget called for $100,000 of expenditures. The $100,000 estimate still appears to be appropriate of which approximately $70,000 has been expensed to date. Note 9. New Pronouncements The adoption of Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income has resulted in the addition of the statement of comprehensive income. ORRSTOWN FINANCIAL SERVICES, INC. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Summary Orrstown Financial Services, Inc. recorded net income of $ 865,000 for the third quarter of 1998 compared to $ 728,000 for the same period in 1997, representing an increase of $ 137,000 or 18.8 %. Net income per share was $ .85 during 1998's third quarter up $ .14 from the $ .71 earned during 1997's third quarter. Net income for the first nine months of 1998 was $ 2,292,000 compared to $ 2,006,000 for the same period in 1997, representing an increase of $ 286,000 or 14.3 %. Net income per share for the first nine months of 1998 was $ 2.24 up $ .28 from the 1.96 per share realized during the nine months ended September 30, 1997. Robust balance sheet growth has fueled 1998's earnings gains. Despite tightening net interest rate margins versus those of 1997, net income has grown significantly due to volume factors. In addition, noninterest income has grown at a rate of 40.4%, more than double that of noninterest expenses increases of 18.8%. Mergers of competitors within our geographical markets have provided opportunities for growth and 1998 net interest margins have improved as we have advanced through the year with loan demand providing outlets for the funds growth realized in early 1998. Consequently, 1998 results have improved each quarter. Net income of $ 865,000 represents an increase of 10.2 % over the $785,000 earned during the second quarter of 1998. The following statistics compare 1998's year to date performance to that of 1997: Third Quarter Nine Months Year to Date 1998 1997 1998 1997 Return on average assets 1.60 % 1.65 % 1.49 % 1.59 % Return on average equity 17.42 % 16.89 % 16.05 % 16.20 % Average equity / Average assets 9.19 % 9.73 % 9.27 % 9.83 % A more detailed discussion of the elements having the greatest impact on net income follows. Net Interest Income Third Quarter 1998 vs. Third Quarter 1997 Net interest income for the third quarter of 1998 was $ 2,281,000 representing a growth of $ 311,000, or 15.8 % , over the $ 1,970,000 realized during 1997's third quarter. The growth in net interest income is driven by volume factors since spreads have tightened Earning asset growth of 21.2 % has generated 15.8 % net interest income growth despite a 21 basis point tightening of net interest margin. Net interest margin has widened by 9 basis points over 1998's second quarter however, as loan demand has increased. Nine Months 1998 vs. Nine Months 1997 Net interest income for the first nine months of 1998 was $ 6,468,000 representing an increase of $ 776,000, or 13.6 %, over the $ 5,692,000 generated during the first nine months of 1997. Volume factors have generated the increase despite tightened spreads from 1997. Spreads have improved as we have progressed through 1998, however. The table that follows states rates on a fully taxable equivalent basis, ( F.T.E. ) and demonstrates the aforementioned effects: THIRD QUARTER NINE MONTHS YEAR TO DATE 1998 1997 1998 1997 (in thousands) Avg. Balances Rates Avg. Balances Rates Avg. Balances Rates Avg. Balances Rates Interest earning assets $ 201,492 8.48% $ 166,275 8.63% $ 194,096 8.44% $ 158,754 8.64% Interest bearing liabilities 169,611 4.34% 138,969 4.29% 164,089 4.37% 132,493 4.26% --------- --------- ---------- - -------- ---------- -------- --------- ----- - ---- Free Funds $ 31,881 $ 27,306 $ 30,007 $ 26,261 ========= ========== ========== ========= Net interest income $ 2,281 $ 1,970 $ 6,468 $ 5,692 ========= ========== ========== ========= Net interest sprted (F.T.E.) 4.14% 4.33% 4.07% 4.38% ========= ======== ======== ========= Free funds ratio 15.82% 16.42% 15.46% 16.54% ========= ========== ========== ========= Net interest margin ( F.T.E ) 4.83% 5.04% 4.75% 5.09% ========= ======== ======== ========= Other Income and Other Expenses Third Quarter 1998 vs. Third Quarter 1997 Other income increased $ 205,000, or 57.6 %, from $ 356,000 during the third quarter of 1997 to $ 561,000 during the third quarter of 1998. Increases in service charges on deposit accounts accounted for $ 65,000 of the increase and trust department income increased $ 79,000 as all areas of the bank have experienced robust growth. Other expense rose $ 270,000, or 20.8 %, from $ 1,297,000 for third quarter 1997 to $ 1,567,000 for 1998's third quarter. Salary and benefit increases contributed $ 157,000 of the growth. All expense categories grew due to general growth of the bank plus the opening of a seventh branch office during November 1997 in Chambersburg, Pennsylvania. Nine Months 1998 vs. Nine Months 1997 Other income increased $ 453,000, or 40.4 %, to $ 1,575,000 from $ 1,122,000 a year ago. A $ 169,000, or 42.0 %, increase in trust department income, plus a $165,000 increase in service charges were the primary contributors. Other expenses rose $ 735,000, or 18.8 % from $ 3,915,000 during the first nine months of 1997 to $ 4,650,000 for the same period of 1998. All categories of noninterest expense rose due to the aforementioned growth plus the addition of a new branch office in late 1997. Staff increases contributed to growth in salaries and benefits of $399,000, the largest single component of increase. Income Tax Expense Income tax expense increased $ 79,000, or 30.9 %, during 1998's third quarter versus third quarter 1997. Income tax expense rose $ 118,000, or 15.6 % for the first nine months of 1998 versus the same period a year ago. The growth in income tax expense is the byproduct of similar increases in pretax income since effective federal income tax rates has remained relatively stable, as shown below: Third Quarter Nine Months Year to Date 1998 1997 1998 1997 Effective income tax rate 27.9% 26.0% 27.7% 27.4% The margined federal income tax bracket is 34 % for all periods presented. PROVISION AND ALLOWANCE FOR LOAN LOSSES The provision for loan losses and the other changes in the allowance for loan losses are shown below (in thousands) : Quarter Ended Nine Months Ended September 30 September 30 1998 1997 1998 1997 Balance, beginning of period $ 1,905 $ 1,684 $ 1,767 $ 1,620 Recoveries 2 0 16 1 Provision for loan loss charged to income 75 45 225 135 --------- -------- -------- - --------- Total 1,982 1,729 2,008 1,756 Losses 11 38 37 65 --------- -------- -------- - --------- Balance, end of pe $ 1,971 $ 1,691 $ 1,971 $ 1,691 ========= ======== ======== ========= In the opinion of management, the allowance, when taken as a whole, is adequate to absorb reasonably estimated loan losses inherent in the Bank's loan portfolio. The unallocated portion of the allowance for loan losses exceeds 50% at September 30, 1998. Loans 90 days or more past due (still accruing interest) and those on nonaccrual status were as follows at September 30 (in thousands) : 90 Days or More Past Due Nonaccrual Status 1998 1997 1998 1997 Real estate mortgage $ 241 $ 463 $ 0 $ 405 Installment loans 81 42 24 15 Commercial loans 0 12 596 0 Credit card 1 5 0 0 --------- -------- -------- - --------- Total $ 323 $ 522 $ 620 $ 420 ========= ======== ======== ========= There were no restructured loans for any of the time periods set forth above. Any loans classified for regulatory purposes as loss, doubtful, substandard or special mention that have not been disclosed under Item III of Industry Guide 3 do not represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity or capital resources. CAPITAL RESOURCES AND BALANCE SHEET FLUCTUATIONS A comparison of Orrstown Financial Services' capital ratios to regulatory minimum requirements at September 30, 1998 is as follows: Orrstown Financia Regulatory Minimum Services Requirements Leverage ratio 8.61 % 4 % Risk based capital ratios: Tier I (core capital) 10.71 % 4 % Combined tier I and tier II (core capital plus allowance for loan losses) 11.85 % 8 % The robust growth experienced during 1998 has been supported by capital growth in the form of retained earnings. Equity represented 9.16 % of assets at September 30, 1998 which is down slightly from 9.60 % at December 31, 1997. All balance sheet fluctuations exceeding 5 % have been created by either the robust growth that has been experienced during 1998 or single day fluctuations, except the $4,937,000, or 196%, increase in other assets. This was caused by the investment of approximately $4,700,000 in single premium life insurance policy cash values supporting supplemental employee retirement plan benefits provided to the director and executive management groups. In addition, the $12,524,000, or 146%, increase in federal funds purchased and other borrowed money was caused by the borrowing of $5,000,000 from the Federal Home Loan Bank to support an in-house fixed rate residential mortgage program and the popularity of the short-term repurchase aggreement program. Management is not aware of any current recommendations by regulatory authorities which, if implemented, would have a material effect on the corporation's liquidity, capital resources or operations. PART II - OTHER INFORMATION PART II - OTHER INFORMATION Item 1 - Legal Proceedings None Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities Not applicable Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8 - K (a) Exhibits - None (b) Reports on Form 8 - K - None 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. /s/ -------------------------- - ---------- (Kenneth R. Shoemaker, President and CEO) (Chief Executive Officer) /s/ November 10, 1998 -------------------------- - ---------- (Bradley S. Everly, Senior Vice President and CFO) (Chief Financial Officer) /s/ -------------------------- - ---------- (Robert B. Russell, Vice President) (Chief Accounting Officer) DATA TABLE FOR 10-Q AT SEPTEMBER 30, 1998 EX-27 2 ARTICLE 9 FDS FOR 10-Q
9 1,000 9-MOS DEC-31-1998 SEP-30-1998 5,947 18 1,116 0 45,875 45,875 45,875 156,209 1,971 221,002 176,047 5,593 3,609 15,500 214 0 0 20,253 221,002 9,367 2,262 203 11,832 4,838 5,364 6,468 225 (1) 4,650 3,168 2,292 0 0 2,292 2.24 2.24 4.75 620 323 0 0 1,767 42 21 1,971 1,971 0 0
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