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 30,1999 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 31,1999
(Common Stock, no par value) 2,064,309
ORRSTOWN FINANCIAL SERVICES, INC.
INDEX
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial statements ( unaudited )
Condensed consolidated balance sheets - September 30,1999
and December 31, 1998 3
Condensed consolidated statements of income - Three months
ended September 30,1999 and 1998 4
Condensed consolidated statements of income - Nine months
ended September 30,1999 and 1998 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 30,1999 and 1998 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
Other Information 15
Signatures 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,
1999
1998*
(Unaudited)
ASSETS
(000
Omitted)
Cash and due from banks 9,659
7,028
Interest - bearing deposits with banks 162
27
Federal funds sold 9,171
8,072
Securities available for sale 61,554
49,852
Federal Home Loan Bank, Federal Reserve and
Atlantic Central Bankers Bank Stock, at cost
which approximates market value 1,285
1,285
Loans 176,776
158,632
Allowance for loan losses (2,137)
(1,971)
-----------
- -----------
Net Loans 174,639
156,661
Bank premises and equipment, net 6,528
5,224
Accrued Interest receivable 1,331
1,235
Other assets 7,388
6,438
-----------
- -----------
Total assets 271,717
$ 235,822
===========
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing $ 30,050
$ 22,020
Interest bearing 180,627
161,744
-----------
- -----------
Total deposits 210,677
183,764
Federal funds purchased and other short term borrowed funds 16,085
6,234
Long term borrowed funds 20,822
20,828
Accrued interest payable 389
2,129
Other liabilities 1,992
1,787
-----------
- -----------
Total liabilities 249,965
214,742
-----------
- -----------
STOCKHOLDERS' EQUITY
Common stock, no par value - $ .1041 stated
value per share at September 30, 1999 and
December 31, 1998, 10,000,000 shares authorized
with 2,062,053 shares issued at September 30, 1999 and
2,055,315 issued at December 31, 1998 215
214
Additional paid - in capital 12,694
12,476
Retained earnings 8,852
6,863
Unrealized holding gain, net of tax
$(5) and $786 at September 30, 1999 and
December 31, 1998, respectively (9)
1,527
-----------
- -----------
Total stockholders' equity 21,752
21,080
-----------
- -----------
Total liabilities and stockholders'
equity $ 271,717
$ 235,822
===========
===========
* 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, 1999 and 1998
(UNAUDITED)
1999
1998
(Unaudited)
(Unaudited)
(000 Omitted)
Interest Income
Interest and fees on loans $ 3,735 $
3,372
Interest on federal funds sold 85
23
Interest and dividends on investment securities 845
741
Interest income on deposits with banks 7
2
----------- -----
- -------
Total interest income 4,672
4,138
Interest Expense
Interest on deposits 1,635
1,648
Interest on borrowed money 398
209
----------- -----
- -------
Total interest expense 2,033
1,857
----------- -----
- -------
Net interest income 2,639
2,281
Provision for loan losses 90
75
----------- -----
- -------
Net interest income after provision for loan
losses 2,549
2,206
----------- -----
- -------
Other Income
Service charges on deposits 288
220
Other service charges 130
122
Trust department income 212
160
Brokerage income 90
34
Other income 81
14
Net gains on available for sale securities 271
11
----------- -----
- -------
Total other income 1,072
561
----------- -----
- -------
Other Expenses
Salaries and employee benefits 1,164
864
Net occupancy and equipment expenses 297
212
Other operating expenses 841
491
----------- -----
- -------
Total other expense 2,302
1,567
----------- -----
- -------
Income before income taxes 1,319
1200
Income tax expenses 345
335
----------- -----
- -------
Net income $ 974 $
865
===========
============
Weighted average number of shares outstanding 2,061,542
2,052,172
Net income per share $ 0.47 $
0.42
Cash dividends declared per share $ 0.14 $
0.12
The accompanying notes are an integral part of these condensed financial
statements.
All per share amounts have been adjusted to give retroactive recognition to a 2
for 1 stock split effective
November 21,1998
ORRSTOWN FINANCIAL SERVICES, INC.
AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 1999 and 1998
(UNAUDITED)
1999 1998
(Unaudited)
(Unaudited)
(000 Omitted)
Interest Income
Interest and fees on loans $ 10,750 $
9,367
Interest on federal funds sold 244
198
Interest and dividends on investment securities 2,408
2,262
Interest income on deposits with banks 12
5
--------- --------
- ---
Total interest income 13,414
11,832
Interest Expense
Interest on deposits 4,806
4,838
Interest on borrowed money 1,090
526
--------- --------
- ---
Total interest expense 5,896
5,364
--------- --------
- ---
Net interest income 7,518
6,468
Provision for loan losses 270
225
--------- --------
- ---
Net interest income after provision for loan
losses 7,248
6,243
--------- --------
- ---
Other Income
Service charges on deposits 793
614
Other service charges 412
346
Trust department income 627
480
Brokerage income 292
91
Other income 252
45
Net gains on available for sale securities 256
(1)
--------- --------
- ---
Total other income 2,632
1,575
--------- --------
- ---
Other Expenses
Salaries and employee benefits 3,217
2,502
Net occupancy and equipment expenses 741
621
Other operating expenses 2,093
1,527
--------- --------
- ---
Total other expense 6,051
4,650
--------- --------
- ---
Income before income taxes 3,829
3,168
Income tax expenses 1,017
876
--------- --------
- ---
Net income $ 2,812 $
2,292
=========
===========
Weighted average number of shares outstanding *********
2,050,856
Net income per share $ 1.36 $
1.12
Cash dividends declared per share $ 0.40 $
0.35
The accompanying notes are an integral part of these condensed financial
statements.
All per share amounts have been adjusted to give retroactive recognition to a 2
for 1 stock split effective
November 21,1998
ORRSTOWN FINANCIAL SERVICES, INC.
AND ITS WHOLLY - OWNED SUBSIDIARY, ORRSTOWN BANK
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended September 30, 1999 and 1998
(UNAUDITED)
1999
1998
(000 Omitted)
Net Income $ 974 $
865
Other comprehensive income, net of tax
Unrealized gain (loss) on investment securities
available for sale (660)
362
Comprehensive Income $ 314 $
1,227
===========
============
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 Sept 30,1999 and 1998
(UNAUDITED)
1999
1998
(000 Omitted)
Net Income $ 2,812 $
2,292
Other comprehensive income, net of tax
Unrealized gain (loss) on investment securities
available for sale (1,536)
356
Comprehensive Income $ 1,276 $
2,648
===========
============
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, 1999
and 1998
(UNAUDITED)
1999
1998
(Unaudited)
(Unaudited)
(000 Omitted)
Cash flows from operating activities:
Net income $ 2,812
$ 2,292
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 332
314
Provision for loan losses 270
225
Other, net (1,826)
(37)
----------
- ---------
Net cash provided by operating activities 1,588
2,794
Cash flows from investing activities:
Net (increase) decrease in interest bearing
deposits with banks (135)
2
Purchase of available for sale securities (19,601)
(8,267)
Maturities of available for sale securities 5,562
9,003
Net (increase) in loans (18,248)
(27,857)
Purchases of bank premises and equipment (1,636)
(384)
(Increase) in other assets (159)
(4,969)
(Increase) in other liabilitie 205
598
----------
- ---------
Net cash (used) by investing activities (34,012)
(31,874)
----------
- ---------
Cash flows from financing activities:
Net increase in deposits 26,913
15,467
Cash dividends paid (823)
(718)
Dividend reinvestment plan purchases 219
59
Net increase in purchased funds 9,851
5,024
Payments on debt (6)
(6)
----------
- ---------
Net cash provided by financing activities 36,154
19,826
----------
- ---------
Net increase (decrease) in cash and cash equivalents 3,730
(1,758)
Cash and cash equivalents at beginning of period 15,100
8,821
----------
- ---------
Cash and cash equivalents at end of period $ 18,830
$ 7,063
==========
=========
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest $ 7,636
$ 4,839
Income Taxes 1,005
602
Supplemental schedule of noncash investing and financing activities:
Unrealized gain (loss) on investments available for
sale (net of deferred taxes of $(791) and $183 at
September 30, 1999 and 1998, respectively (1,536)
356
The accompanying notes are an integral part of these condensed financial
statements.
ORRSTOWN FINANCIAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(UNAUDITED)
NOTE 1. Basis of Presentation
The financial information presented at and for the three months ended
and nine
months ended September 30, 1999 and 1998 is unaudited. Information
presented
at December 31, 1998 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 / Subsequent Event
In October, 1998 the Board of Directors of Orrstown Financial
Services,
Inc. approved
a two for one stock split effective November 21, 1998 for shareholders
of record on
November 2, 1998. Earnings per share, dividends per share and
weighted
average
shares outstanding references have been restated to reflect the two
for
one stock split
for all periods presented.
In October, 1999 the Board of Directors of Orrstown Financial
Services,
Inc. approved a
7 1/2 % stock dividend payable November 19, 1999 to shareholders of
record November 1, 1999.
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, 1999 amortized cost exceeded fair value by $14,000. This resulted
in a decrease in
stockholders' equity of $9,000 after recognizing the tax effects of
the
unrealized losses.
At December 31, 1998, fair market value exceeded amortized cost by $
2,313,000 resulting
in an increase in stockholders' equity of $1,527,000 after recognizing
the tax effects of
the unrealized gains.
Note 8. Year 2000 (Y2K) Data Processing Position
The Corporation's last mission critical function, check processing,
was
converted to a Y2K
compliant system effective May 6, 1999. Renovation of other systems
has been completed
and a Phase II regulatory examination was satisfactorily completed
during February, 1999.
Core commercial bank data processing was converted from a Y2K
compliant
third party
processive system to a Y2K compliant in-house system during the third
quarter of 1999.
Nonrecurring costs of approximately $301,000 were recorded. The
Corporation considered
itself "Y2K ready" as of September 30, 1999. Thus, the Corporation
does not expect Y2K
expenses recorded in 1999 to have a material effect on its liquidity,
capital position or
results of operations.
Note 9. Nonrecurring Income and Expense Items
During the third quarter of 1999 the Corporation realized $271,000 of
gains from the sale
of investment securities and recognized $301,000 of operating expenses
related to the
conversion of commercial bank core data processing systems from a
third
party processing
solution to an in-house solution.
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 $ 974,000 for the third quarter of
1999 compared to $ 865,000 for the same period in
1998, representing an increase of
$ 109,000 or 12.6 %. Net income per share was $ .47
during 1999's third quarter up $ .05
from the $ .42 earned during 1998's third quarter.
Net income for the first nine months of 1999 was $
2,812,000 compared to $ 2,292,000 for
the same period in 1998, representing an increase of
$520,000 or 22.7%. Net income
per share for the first nine months of 1999 was
$ 1.36
up $.24 from the $ 1.12 per share
realized during the nine months ended September 30,
1998.
The following statistics compare 1999's year to date
performance to that of 1998:
Third Quarter Nine Months Year to Date
1999 1998 1999 1998
Return on average assets
1.52% 1.60% 1.53 % 1.49 %
Return on average equity
17.38% 17.42% 17.10 % 16.05 %
Average equity / Average assets
8.73% 9.19% 8.95% 9.27%
A more detailed discussion of the elements having the
greatest impact on net income follows.
Net Interest Income
Third Quarter 1999 vs. Third Quarter 1998
Net interest income for the third quarter of
1999 was $ 2,639,000 representing a
growth of $ 358,000, or 15.7 % , over the $ 2,281,000
realized during 1998's third quarter.
The growth in net interest income is driven by volume
factors since spreads have tightened
slightly. Earning asset growth of 16.7 % has
generated 15.7 % net interest income growth
despite an 8 basis point tightening of net interest
margin.
Nine Months 1999 vs. Nine Months 1998
Net interest income for the first nine months
of 1999 was $ 7,518,000 representing
an increase of $ 1,050,000 or 16.2 %, over the $
6,468,000 generated during the first nine
months of 1998. Volume factors have driven the net
interest income growth since net interest
margin has tightened by 6 basis points. Earning asset
growth of 17.2 % has increased net
interest income 16.2 % year to date.
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
1999
1998 1999
1998
(in thousands) Avg. Balances Rates Avg.
Balances
Rates Avg. Balances Rates Avg. Balances
Rates
Interest earning assets $ 235,129 8.18% $ 201,492
8.48% $ 227,470 8.15% $ 194,096
8.44%
Interest bearing liabilities 202,480 3.98% 169,611
4.39% 195,524 4.03% 164,089
4.37%
--------- --------- ----------
- --------- ---------- -------- --------- ----
- -----
Free Funds $ 32,649 $ 31,881
$ 31,946 $ 30,007
========= ==========
========== =========
Net interest income $ 2,639 $ 2,281
$ 7,518 $ 6,468
========= ==========
========== =========
Net interest spread (F.T.E.) 4.20%
4.14% 4.12%
4.07%
=========
========= ========
=========
Free funds ratio 13.89% 15.82%
14.04% 15.46%
========= ==========
========== =========
Net interest margin ( F.T.E ) 4.75%
4.83% 4.69%
4.75%
=========
========= ========
=========
Other Income and Other Expenses
Third Quarter 1999 vs. Third Quarter 1998
Other income increased $ 511,000, or 91.1%, from $ 561,000 during the third
quarter of 1998 to $ 1,072,000
during the third quarter of 1999. Increases in service charges on deposit
accounts accounted for
$ 68,000 of the increase due to growth of the deposit base and the adoption
of a
new service charges
effective May, 1999. Trust and brokerage incomes have contributed to an
increase of $ 108,000,
or 55.7%, over third quarter 1998 results and represent our fastest growing
area. Nonrecurring securities
gain of $ 271,000 contributed $ 260,000 of the $ 561,000 increase. Other
income
has risen $ 67,000 arising
from benefits related single premium life insurance policies contributing most
of the gains.
Other expense rose $ 735,000, or 46.9 %, from $ 1,567,000 for third quarter
1998
to $ 2,302,000
for 1999's third quarter. Nonrecurring expenses of $ 301,000 arose related
to a
conversion of core
commercial bank data processing systems. All expense categories grew due
simply
to overall bank growth.
Nine Months 1999 vs. Nine Months 1998
Other income increased $ 1,057,000, or 67.1%, to $ 2,632,000 from $ 1,575,000 a
year ago. A $ 348,000,
or 60.9%, increase in trust and brokerage income, plus a $179,000 increase in
service charges were
primary contributors. In addition, nonrecurring securities gain increased
$257,000 and other income rose
$ 207,000 primarily related to the aforementioned single premium life insurance
policy cash buildup.
Other expenses rose $ 1,401,000, or 30.1 % from $ 4,650,000 during the first
nine months of 1998 to
$ 6,051,000 for the same period of 1999. All categories of noninterest expense
rose due to the
aforementioned growth plus a material change in backroom operations including a
change in check
processing and a change in commercial bank data processing from a third party
processor to an in-house
system that was completed during July, 1999. In addition, our eighth full
service office was opened in
September, 1999. This office was acquired from Soverign Bank and is our second
Chambersburg,
Pennsylvania branch. Deposits of approximately $ 5,000,000 and loans of
approximately $ 500,000 were
added along with additional staff and leased premises.
Preliminary work has begun on the proposed expansion of our operations area,
which will include increased
retail space in Shippensburg, Pennsylvania and the opening of a ninth full
service branch in Mechanicsburg,
Pennsylvania. Both projects are expected to be completed in early 2000.
Income Tax Expense
Income tax expense increased $ 10,000 or 3%, during 1999's third quarter versus
third quarter
1998. Income tax expense rose $ 141,000, or 16.1 % for the first nine months
of
1999 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
1999 1998 1999
1998
Effective income tax rate 26.2% 26.0% 26.6%
27.4%
The marginal 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
1999 1998 1999
1998
Balance, beginning of
period $ 2,049 $ 1,905 $ 1,971
$ 1,767
Recoveries 2 2 4
16
Provision for loan loss
charged to income 90 75 270
225
--------- -------- --------
- ---------
Total 2,141 1,982 2,245
2,008
Losses 4 11 108
37
--------- -------- --------
- ---------
Balance, end of pe $ 2,137 $ 1,971 $ 2,137
$ 1,971
========= ======== ========
=========
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, 1999.
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
1999 1998 1999
1998
Real estate mortgage $ 164 $ 241 $ 0
$ 0
Installment loans 67 81 25
24
Commercial loans 184 0 45
596
Credit card 5 1 0
0
--------- -------- --------
- ---------
Total $ 420 $ 323 $ 70
$ 620
========= ======== ========
=========
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, 1999 is as follows:
Orrstown Financia
Regulatory Minimum
Services
Requirements
Leverage ratio 8.35%
4 %
Risk based capital ratios:
Tier I (core capital) 12.65%
4 %
Combined tier I and tier II
(core capital plus allowance
for loan losses) 13.90%
8 %
The growth experienced during 1999 has been supported by capital growth in the
form of retained
earnings. Equity represented 8.01% of assets at September 30, 1999 which is
down from 8.94 %
at December 31, 1998. Available-for-sale investment securities markdowns have
reduced equity
by $1,536,000 since December 31, 1999 accounting for approximately 60 % of the
decline in the
equity to asset ratio.
All balance sheet fluctuations exceeding 5 % have been created by either the
growth that has
been experienced during 1999 or single day fluctuations.
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
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)
(Duly Authorized
Officer)
/s/
------------------ --------------------------
- ----------
(Bradley S. Everly,
Senior Vice President)
(Chief Financial
Officer)
/s/
--------------------------
- ----------
(Robert B. Russell,
Controller)
(Chief Accounting
Officer)
DATA TABLE
FOR 10-Q AT September 30, 1999