Exhibit 99.1
PRIOR YEAR 2000 READINESS DISCLOSURES
Each of the following statements previously made by the Corporation is
being designated as "Year 2000 Readiness Disclosure" under the Year 2000
Information and Readiness Disclosure Act. These prior Year 2000 Readiness
Disclosures were based in part upon and repeated information provided by
the Corporation's customers, suppliers and other third parties without
independent verification by the Corporation. These prior Year 2000
Readiness Disclosures are superseded by the Year 2000 Readiness Disclosure
in the Quarterly Report on Form 10-Q for the period ended September 30,
1998.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1998
The Corporation is currently in the process of addressing a potential
problem that is facing all users of automated information systems. The
problem is that many computer systems that process transactions based on
two digits representing the year of transaction may recognize a date using
"00" as the year 1900 rather than the year 2000. The problem could affect
a wide variety of automated information systems, such as mainframe
applications, personal computers, and communication systems, in the form of
software failure, errors, or miscalculations. By nature, the banking and
financial services industries are highly dependent upon computer systems
because of significant transaction volumes and a date dependency for
interest measurements on financial instruments such as loans and deposits.
The Corporation developed a plan to prepare for the year 2000 in 1997.
This plan began with the performance of an inventory of software
applications, communicating with third party vendors and suppliers, and
obtaining certification of compliance with third party providers. The
Corporation has a comprehensive, written plan, which is regularly updated
and monitored by technical personnel. Plan status is regularly reviewed by
management of the Corporation. As of June 30, 1998, it is estimated that
this plan is approximately 55% complete.
The Corporation will continue to assess the impact of the Year 2000 issue
on the remainder of its computer based systems and applications throughout
1998. The Corporation's goal is to perform tests of its systems and
applications during 1998, and to have all systems and applications
compliant with the century change by early 1999, allowing the rest of 1999
to be used for full validation and testing.
The Corporation estimates it will spend approximately $160,000 during 1998
and 1999 to remediate its Year 2000 issues. These costs will primarily
consist of personnel expense and for staff dedicated to the effort and
professional fees paid to third party providers of remedial services. It
is the Corporation's policy to expense such costs as incurred. The
Corporation may also invest in new or upgraded technology which has
definable value lasting beyond 2000. In these instances, where Year 2000
compliance is merely ancillary, the Corporation may capitalize and
depreciate such an asset over its estimated useful life.
In addition to reviewing its own computer operating systems and
applications, the Corporation has initiated formal communications with its
significant suppliers and large customers to determine the extent to which
the Corporation's interface systems are vulnerable to those third parties'
failure to resolve their own Year 2000 issues. There is no assurance that
the systems of other companies on which the Corporation's systems rely will
be timely converted. If such modifications and conversions are not made,
or are not completed timely, the Year 2000 issue could have an adverse
impact on the operations of the Corporation.
Based on currently available information, management does not presently
anticipate that the costs to address the Year 2000 issues will have an
adverse impact on the Corporation's financial conditions, results of
operations, or liquidity.
The costs of the project and the date on which the Corporation believes it
will complete the Year 2000 modifications are based on management's best
estimates. There can be no guarantee that these estimates will be achieved
and actual results could differ from those anticipated. Specific factors
that might cause differences include, but are not limited to, the ability
of other companies on which the Corporation's systems rely to modify or
convert their systems to be Year 2000 compliant, the ability to locate and
correct all relevant computer codes, and similar uncertainties.
1997 ANNUAL REPORT, INCORPORATED BY REFERENCE IN
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997
YEAR 2000
The Corporation is currently in the process of addressing a potential
problem that is facing all users of automated information systems. The
problem is that many computer systems that process transactions based on
two digits representing the year of transaction may recognize a date using
"00" as the year 1900 rather than the year 2000. The problem could affect
a wide variety of automated information systems, such as mainframe
applications, personal computers, and communication systems, in the form of
software failure, errors, or miscalculations. By nature, the banking and
financial services industries are highly dependent upon computer systems,
because of significant transaction volumes and a date dependency for
interest measurements on financial instruments such as loans and deposits.
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The Corporation developed a plan to prepare for the year 2000 in 1997.
This plan began with the performance of an inventory of software
applications, communicating with third party vendors and suppliers, and
obtaining certification of compliance with third party providers. The
Corporation has a comprehensive, written plan, which is regularly updated
and monitored by technical personnel. Plan status is regularly reviewed by
management of the Corporation. As of December 31, 1997, it is estimated
that this plan is approximately 30% complete.
The Corporation will continue to assess the impact of the Year 2000 issue
on the remainder of its computer based systems and applications throughout
1998. The Corporation's goal is to perform tests of its systems and
applications during 1998, and to have all systems and applications
compliant with the century change by early 1999, allowing the rest of 1999
to be used for full validation and testing.
At December 31, 1997, the Corporation estimated it may spend approximately
$160,000 over the next two years to remediate its Year 2000 issues. These
costs will primarily consist of personnel expense for staff dedicated to
the effort and professional fees paid to third party providers of remedial
services. It is the Corporation's policy to expense such costs as
incurred. The Corporation may also invest in new or upgraded technology
which has definable value lasting beyond 2000. In these instances, where
Year 2000 compliance is merely ancillary, the Corporation may capitalize
and depreciate such an asset over its estimated useful life.
In addition to reviewing its own computer operating systems and
applications, the Corporation has initiated formal communications with its
significant suppliers and large customers to determine the extent to which
the Corporation's interface systems are vulnerable to those third parties'
failure to resolve their own Year 2000 issues. There is no assurance that
the systems of other companies on which the Corporation's systems rely will
be timely converted. If such modifications and conversions are not made,
or are not completed timely, the Year 2000 issue could have an adverse
impact on the operations of the Corporation.
Based on currently available information, management does not presently
anticipate that the costs to address the Year 2000 issues will have an
adverse impact on the Corporation's financial conditions, results of
operations, or liquidity.
The costs of the project and the date on which the Corporation believes it
will complete the Year 2000 modifications are based on management's best
estimates. There can be no guarantee that these estimates will be achieved
and actual results could differ from those anticipated. Specific factors
that might cause differences include, but are not limited to, the ability
of other companies on which the Corporation's systems rely to modify or
convert their systems to be Year 2000 compliant, the ability to locate and
correct all relevant computer codes, and similar uncertainties.
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