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 the Quarter ended June 30, 1997 Commission File Number: 0-19212
JEFFERSONVILLE BANCORP
(Exact name of Registrant as specified in its charter)
New York 22-2385448
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
P. O. Box 398, Jeffersonville, New York 12748
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 482-4000
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 proceeding 12 months (or for such shorter period that the Registrant was
required to file such report(s) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
Number of Shares Outstanding
Class of Common Stock as of July 14, 1997
--------------------- -------------------
$0.50 par value 1,182,727
INDEX TO FORM 10-Q
Part 1
Item 1 Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
June 30, 1997 and December 31, 1996 ....................... 1
Consolidated Statements of Income for the Six
Months ended June 30, 1997 and 1996 ....................... 2
Consolidated Statements of Income for the Three
Months ended June 30, 1997 and 1996 ....................... 3
Consolidated Statements of Cash Flows for the Six
Months ended June 30, 1997 and 1996 ....................... 4-5
Notes to Consolidated Interim Financial Statements ........ 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 7-8
Part 2
Item 1 Legal Proceedings ......................................... NONE
Item 2 Changes in Securities ..................................... NONE
Item 3 Defaults upon Senior Securities ........................... NONE
Item 4 Submission of Matters to a Vote of Security Holders ....... 9
Item 5 Other Information ......................................... NONE
Item 6 Exhibits and Reports on Form 8-K .......................... NONE
Signatures ........................................................ 9
Jeffersonville Bancorp and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
1997 1996
-------------------- -------------------
(Unaudited)
ASSETS
Cash and due from banks ................................ $ 8,161,000 $ 4,723,000
Federal funds sold ...................................... -- 1,300,000
------------- -------------
CASH AND CASH EQUIVALENTS ....................... 8,161,000 6,023,000
------------- -------------
Securities available for sale, at fair value ............ 69,782,000 64,842,000
Investment securities, estimated fair value of $3,932,000
in 1997 and $3,518,000 in 1996 ................... 3,896,000 3,401,000
Loans, less allowance for loan losses of $1,568,000
in 1997 and $1,711,000 in 1996 ..................... 121,586,000 115,605,000
Accrued interest receivable ............................. 1,236,000 1,168,000
Federal Home Loan Bank stock ............................ 753,000 717,000
Premises and equipment .................................. 2,666,000 2,602,000
Other real estate owned ................................. 466,000 831,000
Other assets ............................................ 1,128,000 924,000
------------- -------------
TOTAL ASSETS .................................. $ 209,674,000 $ 196,113,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand deposits (non-interest bearing) ......... $ 25,644,000 $ 22,044,000
Now and super now deposits ...................... 26,415,000 26,541,000
Savings and insured money market deposits ....... 51,067,000 53,665,000
Time deposits ................................... 74,249,000 70,680,000
------------- -------------
TOTAL DEPOSITS ............................... 177,375,000 172,930,000
------------- -------------
Federal funds purchased and other short-term debt 4,025,000 529,000
Federal Home Loan Bank advances ................. 5,025,000 --
Accrued expenses and other liabilities .......... 1,912,000 1,679,000
------------- -------------
TOTAL LIABILITIES ............................ 188,337,000 175,138,000
------------- -------------
Stockholders' equity:
Series A preferred stock,no par value:
2,000,000 shares authorized, none issued ... -- --
Common stock; $.50 par value; 2,225,000 shares
authorized; 1,234,711 shares issued and
1,182,727 shares outstanding ................ 617,000 617,000
Paid-in capital ................................. 446,000 447,000
Treasury stock, 51,984 shares ................... (206,000) (206,000)
Undivided profits ............................... 20,389,000 19,795,000
Net unrealized gain on securities available for
sale, net of tax ............................ 91,000 322,000
------------- -------------
TOTAL STOCKHOLDERS' EQUITY .................. 21,337,000 20,975,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY ...................................... $ 209,674,000 $ 196,113,000
============= =============
See accompanying notes to consolidated interim financial statements.
-1-
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
For the Six Months
Ended June 30,
1997 1996
---------------- --------------
(Unaudited) (Unaudited)
INTEREST INCOME
Loan interest and fees ....................... $ 5,390,000 $ 5,199,000
Federal funds sold ........................... 39,000 53,000
Investment securities and securities
available for sale
Taxable ................................. 1,393,000 1,360,000
Non-taxable ............................. 808,000 797,000
----------- -----------
7,630,000 7,409,000
----------- -----------
INTEREST EXPENSE
Deposits ..................................... 3,235,000 3,011,000
Federal funds purchased and
other short-term debt ................... 29,000 37,000
Federal Home Loan Bank advances .............. 94,000 45,000
----------- -----------
TOTAL INTEREST EXPENSE ....................... 3,358,000 3,093,000
----------- -----------
NET INTEREST INCOME .......................... 4,272,000 4,316,000
Provision for loan losses .................... (440,000) (60,000)
NET INTEREST INCOME AFTER ----------- -----------
PROVISION FOR LOAN LOSSES ............... 3,832,000 4,256,000
----------- -----------
OPERATING INCOME
Service charges .............................. 359,000 326,000
Gains on sale of securities available
for sale, net .......................... 53,000 --
Other operating income ....................... 262,000 204,000
----------- -----------
674,000 530,000
----------- -----------
OPERATING EXPENSES
Salaries and wages ........................... 1,330,000 1,306,000
Employee benefits ............................ 428,000 417,000
Occupancy and equipment ...................... 585,000 459,000
Other real estate owned, net ................. 102,000 225,000
Other operating expenses ..................... 878,000 848,000
----------- -----------
3,323,000 3,255,000
----------- -----------
Income before income taxes 1,183,000 1,531,000
Income taxes (211,000) (320,000)
----------- -----------
NET INCOME ................................... $ 972,000 $ 1,211,000
=========== ===========
Net income per share ......................... $ 0.82 $ 1.00
=========== ===========
Shares outstanding ........................... 1,182,731 1,211,806
========= =========
See accompanying notes to consolidated interim financial statements.
-2-
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
For the Three Months
Ended June 30,
1997 1996
------------------- ---------------
(Unaudited) (Unaudited)
INTEREST INCOME
Loan interest and fees ....................... $ 2,707,000 $ 2,641,000
Federal funds sold ........................... 11,000 0
Investment securities and securities
available for sale
Taxable ................................. 753,000 702,000
Non-taxable ............................. 410,000 409,000
----------- -----------
TOTAL INTEREST INCOME ........................ 3,881,000 3,752,000
----------- -----------
INTEREST EXPENSE
Deposits ..................................... 1,654,000 1,501,000
Federal funds purchased and
other short-term debt ................... 23,000 34,000
Federal Home Loan Bank advances .............. 71,000 22,000
----------- -----------
TOTAL INTEREST EXPENSE ....................... 1,748,000 1,557,000
----------- -----------
NET INTEREST INCOME .......................... 2,133,000 2,195,000
Provision for loan losses .................... (350,000) (60,000)
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES ............... 1,783,000 2,135,000
----------- -----------
OPERATING INCOME
Service charges .............................. 188,000 163,000
Gains on sales of securities available
for sales, net ......................... 57,000 --
Other operating income ....................... 164,000 147,000
----------- -----------
409,000 310,000
OPERATING EXPENSES
Salaries and wages ........................... 654,000 648,000
Employee benefits ............................ 231,000 227,000
Occupancy and equipment ...................... 294,000 236,000
Other real estate owned , net ................ (1,000) 171,000
Other operating expenses ..................... 453,000 455,000
----------- -----------
1,631,000 1,737,000
----------- -----------
Income before income taxes ................... 561,000 708,000
Income taxes ................................. (90,000) (119,000)
----------- -----------
NET INCOME ................................... $ 471,000 $ 589,000
=========== ===========
Net income per share ......................... $ 0.40 $ 0.49
=========== ===========
Shares outstanding ........................... 1,182,727 1,197,180
========= =========
See accompanying notes to consolidated interim financial statements.
-3-
Jeffersonville Bancorp and Subsidiary
Consolidated Statemments of Cash Flows
Six months ended June 30,
1997 1996
OPERATING ACTIVITIES (Unaudited) (Unaudited)
Net income ....................................... $ 972,000 $ 1,211,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Write down of other real estate owned ...... 79,000 12,000
Provision for loan losses ................... 440,000 60,000
Depreciation and amortization ............... 227,000 163,000
Gain on sales of securities available
for sale , net .......................... (53,000) --
Increase in accrued interest receivable ..... (68,000) (72,000)
Decrease in other assets .................... 23,000 195,000
Increase (decrease) in accrued expenses
and other liabilities .................. 165,000 (21,000)
------------ ------------
TOTAL ADJUSTMENTS ................................ 813,000 337,000
NET CASH PROVIDED BY
OPERATING ACTIVITIES ....................... 1,785,000 1,548,000
------------ ------------
INVESTING ACTIVITIES
Proceeds from maturities and calls of securities
available for sale ........................ 4,630,000 6,666,000
Proceeds from sales of securities
available for sale ......................... 3,654,000 500,000
Purchases of securities available for sale ....... (13,561,000) (17,721,000)
Purchases of Federal Home Loan Bank stock ........ (36,000) --
Proceeds from maturities and calls of investment
securities ................................ 484,000 309,000
Purchases of investment securities ............... (979,000) (640,000)
Net increase in loans ............................ (6,583,000) (3,593,000)
Purchases of premises and equipment .............. (291,000) (356,000)
Cash proceeds from sale of other real estate owned 448,000 310,000
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES ............ (12,234,000) (14,525,000)
------------ ------------
FINANCING ACTIVITIES
Net increase in deposits accounts ................ 4,445,000 6,838,000
Net increase in short-term debt .................. 3,496,000 2,372,000
Dividends paid ................................... (378,000) (382,000)
Purchase and retirement of common stock .......... (1,000) (805,000)
Proceeds from Federal Home Loan Bank advances .... 5,025,000 21,000
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ........................ 12,587,000 8,044,000
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ............................ 2,138,000 (4,933,000)
Cash and cash equivalents at beginning of period . 6,023,000 10,038,000
------------ ------------
Cash and cash equivalents at end of period ....... $ 8,161,000 $ 5,105,000
============ ============
````````````
continued
-4-
Jeffersonville Bancorp and Subsidiary
Consolidated Statemments of Cash Flows
Supplemental information
cash paid for:
Interest ................................... $ 3,383,000 $3,044,000
=========== ==========
Taxes ...................................... $ 145,000 $ 318,000
=========== ==========
Transfers of loans to other real estate owned ........ $ 162,000 $ 434,000
=========== ==========
Change in net unrealized (gain) loss on securities
available for sale,net of tax ..................... $ (231,000) $ 764,000
=========== ==========
Change in deferred tax (benefit) on unrealized
gain (loss) on securities available for sale ...... $ 151,000 $ 310,000
=========== ==========
See accompanying notes to consolidated interim financial statements.
-5-
JEFFERSONVILLE BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
A. Financial Statement Presentation
In the opinion of Management of Jeffersonville Bancorp, the
accompanying unaudited interim Consolidated Financial Statements
contain all adjustments necessary to present fairly, in conformity
with generally accepted accounting principels the financial
position as of June 30, 1997 and December 31, 1996, the Results of
Operations for the six month periods and three month periods ended
June 30, 1997 and 1996, and the Cash Flows for the six month
periods ended June 30, 1997 and 1996. All adjustments are normal
and recurring. The accompanying unaudited consolidated interim
financial statements should be read in conjunction with
Jeffersonville Bancorp's consolidated year-end financial
statements, including notes thereto, which are included in
Jeffersonville Bancorp's 1996 Annual Report.
B. Earnings per share
Earnings per share was calculated for the six month periods ended
June 30, 1997 and 1996 based on weighted average shares
outstanding of 1,182,731 and 1,211,806, respectively, and for the
three month periods ended June 30, 1997 and 1996 based on weighted
average shares outstanding of 1,182,727 and 1,197,180,
respectively.
-6-
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
A. Financial Condition
During the period from December 31, 1996 to June 30, 1997,
total assets increased $13,561,000 or 6.91%. Investment securities
available for sale increased $4,940,000 or 7.62%. This increase
was the result a $5,000,000 deployment of funds borrowed and
invested in U.S. Government Agency Securities. During the period,
$3,526,000 of tax exempt securities were sold and reinvested in
taxable issues in order to improve yields, provide liquidity and
reduce the impact of the alternative minimum tax. Federal funds
sold, a short term investment, was reduced from $1,300,000 to zero
as part of the funds redeployment. Net loans increased from
$115,605,000 at year end 1996 to $121,586,000 at June 30, 1997, an
increase of $5,981,000 or 5.17%. The new Home Equity Loan product
which was successfully launched during the first quarter of 1996
now stands at $5,837,000, an increase of $1,506,000 from December
31,1996
Deposits increased from $172,930,000 at December 31, 1996 to
$177,395,000 at June 30, 1997, an increase of $4,445,000 or 2.57%.
Growth in deposits occurred in Time Deposits as funds flowed from
savings accounts to benefit from higher rates. The 18 month
Escalator, an account that allows one rate modification during its
term, was a popular option. Deposit growth was also favorably
affected by the opening of two new supermarket branches in the
summer of 1996 and one new supermarket branch in February 1997.
Total stockholders' equity of $20,975,000 at December 31, 1996
increased $412,000 or 1.96%. to $21,387,000 at June 30, 1997. This
increase was the result of net current earnings of $972,000, less
a decrease in the net unrealized gain on securities available for
sale, net of tax, of $231,000 and dividendspaid of $378,000. In
January, the board of directors allocated $1,000,000 for the
repurchase and retirement of common stock on the open market. No
shares have been repurchased as of June 30, 1997 from this
allocation.
B. Results of Operations
Net income for the first six months of 1997 was $1,022,000
compared to $1,211,000 for the same period in 1996, a decrease of
20.89%. The Company's annualized return on average assets was .99%
compared to 1.24% in the same period last year. The annualized
return on average stockholders' equity was 9.73% and 11.74% for
the first six months of 1997 and 1996, respectively.
-7-
Net Interest Income
Tax equivalent interest income was increased $188,000 or 1.56%
in the first six months of 1997 compared to the same period in
1996. The yield on investment securities decreased 16 basis points
from 7.22% in 1996 to 7.06% in 1997. The average yield on real
estate mortgages loans, the major portion of the loan portfolio
also declined 33 basis points to 8.45% from 8.78% for the six
month period. Commercial loan and installment loan yields also
declined. The overall yield on interest earning assets was down 27
basis points from 8.46% for the six months ended June 30, 1996 to
8.19% for the same period in 1997. The average balance for earning
assets was $195,936,000 for the six month period ended June 30,
1997 compared to $185,279,000 for the same period in 1996. The
higher average balances more than offset the effect of lower
yields.
The yield on interest bearing liabilities increased 10 basis
points from 4.10% for the first six months of 1996 to 4.20% for
the same period in 1997. The overall net interest margin decreased
36 basis points from 5.12% in 1996 to 4.76% in 1997.
Provision for Loan Losses
The provision for loan losses reflects management's assessment
of the risk inherent in the loan portfolio, the general state of
the economy and past loan experience. The provision for loan
losses was $440,000 for the six months ended June 30, 1997
compared to $60,000 for the same period in 1996. The net loan
charge offs for the 1997 six month period were $583,000 compared
to $59,000 for the same period last year. This increase in the
1997 provision for loan loss was necessary to compensate for two
commercial loans that were charged off in the second quarter.
Management is not presently aware of any other probable loan
losses of this magnitude which could be incurred during the
remaindere of 1997. Based on management's analysis of the loan
portfolio, management believes the current level of the allowance
at $1,568,000 is adequate.
Operating Income and Expense
Operating income for the first six months of 1997 increased $91,000 or
17.17% compared to the same period in 1996. ATM transaction fees instituted
in November 1996 and security gains accounted for the majority of the
increase. Operating expenses were at $3,323,000 for the first six months of
1997 compared to 3,255,000 for the same period in 1996, an increase of
$68,000 or 2.09%. The 1997 amount reflects of increased occupancy expense
at the three new supermarket branch facilities and a new computer main
frame. The cost to maintain and liquidate foreclosed properties was
partially offset by gains realized on property sales, resulting in a lower
net lost in the six months ended June 30, 1997. Other operating expenses
increased 3.54% to reach $878,000 for the six months ended June 30, 1997.
This increase reflects generally higher expenses as the result of growth
and expansion.
-8-
Item 4: Submission of Matters to a Vote of Security Holders
On April 29, 1997, the annual meeting of shareholders was held. The
election of Five Class II directors resulted in the reelection of John W.
Galligan, Solomon Katzoff, Arthur E. Keesler, Raymond L. Walter and Earl A.
Wilde.
The proposal to ratify the firm of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending December 31, 1997 was
approved.
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.
JEFFERSONVILLE BANCORP
Date: August 15, 1997
By: /s/ K. Dwayne Rhodes
--------------------------------------
K. Dwayne Rhodes
Treasurer and Chief Accounting Officer