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, 2005 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 identification No.)
incorporation or organization)
P. O. Box 398, Jeffersonville, New York 12748
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (845) 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 by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
Number of Shares Outstanding
Class of Common Stock as of August 12, 2005
--------------------- ----------------------------
$0.50 par value 4,434,321
INDEX TO FORM 10-Q
Page
Part 1 FINANCIAL INFORMATION
Item 1 Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
June 30, 2005 and December 31, 2004 1
Consolidated Statements of Income for the Three
Months Ended June 30, 2005 and 2004 2
Consolidated Statements of Income for the Six
Months Ended June 30, 2005 and 2004 3
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2005 and 2004 4
Notes to Unaudited Consolidated Interim Financial Statements 5-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-17
Item 3 Quantitative and Qualitative Disclosures about Market Risk 17
Item 4 Controls & Procedures 17
Part 2 OTHER INFORMATION
Item 1 Legal Proceedings 18
Item 2 Changes in Securities, Use of Proceeds and Issuer
Purchases of Equity Securities 18
Item 3 Defaults upon Senior Securities 18
Item 4 Submission of Matters to a Vote of Security Holders 18
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 19
Jeffersonville Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2005 2004
ASSETS
Cash and cash equivalents $ 13,887,000 $ 14,040,000
Securities available for sale, at fair value 93,733,000 100,705,000
Securities held to maturity, estimated fair value of $7,303,000
at June 30, 2005 and $5,998,000 at December 31, 2004 7,292,000 5,957,000
Loans, net of allowance for loan losses of $3,708,000 at
June 30, 2005 and $3,645,000 at December 31, 2004 237,454,000 220,591,000
Accrued interest receivable 1,976,000 2,085,000
Premises and equipment, net 3,005,000 2,869,000
Federal Home Loan Bank stock 2,825,000 2,175,000
Cash surrender value of bank-owned life insurance 12,993,000 12,747,000
Other assets 3,004,000 2,698,000
------------ ------------
TOTAL ASSETS $376,169,000 $363,867,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand deposits $ 67,086,000 $ 65,208,000
NOW and super NOW accounts 36,077,000 36,594,000
Savings and insured money market deposits 88,277,000 87,115,000
Time deposits 100,080,000 104,177,000
------------ ------------
TOTAL DEPOSITS 291,520,000 293,094,000
Federal Home Loan Bank borrowings 28,500,000 18,500,000
Short-term debt 8,422,000 8,424,000
Accrued expenses and other liabilities 5,918,000 4,203,000
------------ ------------
TOTAL LIABILITIES 334,360,000 324,221,000
------------ ------------
Stockholders' equity:
Series A preferred stock, no par value;
2,000,000 shares authorized, none issued -- --
Common stock, $0.50 par value; 11,250,000 shares
authorized, 4,767,786 shares issued at June 30, 2005
and at December 31, 2004 2,384,000 2,384,000
Paid-in capital 6,483,000 6,483,000
Treasury stock, at cost; 333,465 shares at June 30, 2005
and at December 31, 2004 (1,108,000) (1,108,000)
Retained earnings 34,210,000 32,342,000
Accumulated other comprehensive loss (160,000) (455,000)
TOTAL STOCKHOLDERS' EQUITY 41,809,000 39,646,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 376,169,000 $ 363,867,000
See accompanying notes to unaudited consolidated interim financial
statements.
1
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Three Months
Ended June 30,
2005 2004
Unaudited Unaudited
INTEREST AND DIVIDEND INCOME
Loan interest and fees $ 4,250,000 $ 3,738,000
Securities:
Taxable 657,000 863,000
Non-taxable 476,000 503,000
Federal funds sold 8,000 5,000
----------- -----------
TOTAL INTEREST AND DIVIDEND INCOME 5,391,000 5,109,000
----------- -----------
INTEREST EXPENSE
Deposits 919,000 691,000
Federal Home Loan Bank borrowings 307,000 281,000
Other interest expense 26,000 3,000
----------- -----------
TOTAL INTEREST EXPENSE 1,252,000 975,000
----------- -----------
NET INTEREST INCOME 4,139,000 4,134,000
Provision for loan losses 60,000 90,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,079,000 4,044,000
----------- -----------
NON-INTEREST INCOME
Service charges 480,000 571,000
Increase in cash surrender value
of bank-owned life insurance 123,000 139,000
Net security gains 1,000 6,000
Other real estate owned income, net 18,000 11,000
Other non-interest income 342,000 323,000
----------- -----------
TOTAL NON-INTEREST INCOME 964,000 1,050,000
----------- -----------
NON-INTEREST EXPENSES
Salaries and employee benefits 1,809,000 1,825,000
Occupancy and equipment expenses 497,000 443,000
Other non-interest expenses 843,000 807,000
----------- -----------
TOTAL NON-INTEREST EXPENSES 3,149,000 3,075,000
----------- -----------
Income before income tax expense 1,894,000 2,019,000
Income tax expense 498,000 525,000
----------- -----------
NET INCOME $ 1,396,000 $ 1,494,000
=========== ===========
Basic earnings per common share $ 0.31 $ 0.34
=========== ===========
Average common shares outstanding 4,434,000 4,434,000
=========== ===========
See accompanying notes to unaudited consolidated interim financial
statements.
2
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Six Months
Ended June 30,
2005 2004
Unaudited Unaudited
INTEREST AND DIVIDEND INCOME
Loan interest and fees $ 8,346,000 $ 7,418,000
Securities:
Taxable 1,333,000 1,809,000
Non-taxable 955,000 1,012,000
Federal funds sold 19,000 7,000
----------- -----------
TOTAL INTEREST AND DIVIDEND INCOME 10,653,000 10,246,000
----------- -----------
INTEREST EXPENSE
Deposits 1,760,000 1,380,000
Federal Home Loan Bank borrowings 540,000 577,000
Other interest expense 40,000 8,000
----------- -----------
TOTAL INTEREST EXPENSE 2,340,000 1,965,000
----------- -----------
NET INTEREST INCOME 8,313,000 8,281,000
Provision for loan losses 120,000 180,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 8,193,000 8,101,000
----------- -----------
NON-INTEREST INCOME
Service charges 948,000 1,112,000
Increase in cash surrender value
of bank-owned life insurance 246,000 258,000
Net security gains 6,000 6,000
Other real estate owned income, net 125,000 20,000
Other non-interest income 588,000 523,000
----------- -----------
TOTAL NON-INTEREST INCOME 1,913,000 1,919,000
----------- -----------
NON-INTEREST EXPENSES
Salaries and employee benefits 3,853,000 3,470,000
Occupancy and equipment expenses 978,000 893,000
Other non-interest expenses 1,567,000 1,505,000
----------- -----------
TOTAL NON-INTEREST EXPENSES 6,398,000 5,868,000
----------- -----------
Income before income tax expense 3,708,000 4,152,000
Income tax expense 952,000 1,098,000
----------- -----------
NET INCOME $ 2,756,000 $ 3,054,000
=========== ===========
Basic earnings per common share $ 0.62 $ 0.69
=========== ===========
Average common shares outstanding 4,434,000 4,434,000
=========== ===========
See accompanying notes to unaudited consolidated interim financial
statements.
3
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months
Ended June 30,
2005 2004
OPERATING ACTIVITIES
Net income $ 2,756,000 $ 3,054,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120,000 180,000
Gain on sales of other real estate owned (124,000) (67,000)
Depreciation and amortization 286,000 305,000
Net increase in cash surrender value
of bank-owned life insurance (246,000) (258,000)
Net security gains (6,000) (6,000)
Decrease in accrued interest receivable 109,000 149,000
Increase in other assets (554,000) (29,000)
Increase in accrued expenses and other liabilities 1,716,000 617,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITES 4,057,000 3,945,000
------------ ------------
INVESTING ACTIVITIES
Proceeds from maturities and calls:
Securities available for sale 4,786,000 11,344,000
Securities held to maturity 420,000 405,000
Proceeds from sales of securities available for sale 4,782,000 --
Purchases:
Securities available for sale (2,049,000) (6,075,000)
Securities held to maturity (1,755,000) (313,000)
Disbursements for loan originations, net of
principal collections (16,983,000) (16,460,000)
Purchase of Federal Home Loan Bank stock (2,231,000) (425,000)
Redemption of Federal Home Loan Bank stock 1,581,000 675,000
Net purchases of premises and equipment (422,000) (304,000)
Proceeds from sales of other real estate owned 124,000 67,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITES (11,747,000) (11,086,000)
------------ ------------
FINANCING ACTIVITES
Net (decrease) increase in deposits (1,574,000) 12,886,000
Proceeds from Federal Home Loan Bank borrowings 10,000,000 --
Net decrease in short-term debt (2,000) (5,105,000)
Cash dividends paid (887,000) (800,000)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,537,000 6,981,000
------------ ------------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (153,000) (160,000)
Cash and cash equivalents at beginning of period 14,040,000 15,992,000
------------ ------------
Cash and cash equivalents at end of period $ 13,887,000 $ 15,832,000
============ ============
Supplemental information:
Cash paid for:
Interest $ 2,257,000 $ 1,972,000
Income taxes 1,198,080 821,000
See accompanying notes to unaudited consolidated interim financial
statements.
4
JEFFERSONVILLE BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2005
(Unaudited)
A. Financial Statement Presentation
The accompanying unaudited interim consolidated financial statements
include the accounts of Jeffersonville Bancorp and its wholly owned
subsidiary, The First National Bank of Jeffersonville (collectively,
Jeffersonville Bancorp and its subsidiary are referred to herein as the
"Company"). In the opinion of Management of the Company, the
accompanying unaudited consolidated interim financial statements contain
all adjustments necessary to present the financial position as of June
30, 2005 and December 31, 2004, the results of operations for the three
month and six month periods ended June 30, 2005 and 2004, and the cash
flows for the six month periods ended June 30, 2005 and 2004.
Reclassifications are made whenever necessary to conform prior periods'
financial statements to current periods' presentation. All adjustments
are normal and recurring. Second quarter results are not indicative of
full year results. The accompanying unaudited consolidated interim
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X and should be read in conjunction with the
Company's consolidated year-end financial statements, including notes
thereto, which are included in the 2004 Annual Report on Form 10-K.
B. Earnings per Share
Basic earnings per share amounts were calculated for the three and six
month periods ended June 30, 2005 and 2004 based on weighted average
common shares outstanding of 4,434,321. There were no dilutive
securities during any of the periods. Earnings per share were $0.31 for
the quarter ended June 30, 2005, as compared to $0.34 per share for the
same period in 2004. Earnings per share were $0.62 for the six months
ended June 30, 2005, as compared to $0.69 for the same period in 2004.
C. Comprehensive Income
Comprehensive income (loss) for the three-month periods ended June 30,
2005 and 2004 was $2,536,000 and $(894,000), respectively.
Six Months Ended June 30, 2005
Net Income $ 2,756,000
Net unrealized holding gains arising during the period,
net of tax (pre-tax amount of $498,000) 299,000
Reclassification adjustment for net gains realized in net income
income during the period, net of tax (pre-tax amount of $6,000) (4,000)
-----------
Other comprehensive income 295,000
-----------
Total comprehensive income $ 3,051,000
===========
Six Months Ended June 30, 2004
Net Income $ 3,054,000
Net unrealized holding losses arising during the period,
net of tax (pre-tax amount of $2,871,000) (1,698,000)
Reclassification adjustment for net gains realized in net
income during the period, net of tax (pre-tax amount of $6,000) (4,000)
-----------
Other comprehensive loss (1,702,000)
-----------
Total comprehensive income $ 1,352,000
===========
5
D. New Accounting Pronouncements
In December 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act) became law in the United States. The
Act introduced a prescription drug benefit under Medicare as well as a
federal subsidy to sponsors of retiree health care benefit plans that
provide a benefit that is at least actuarially equivalent to Medicare
Part D under the Act. In accordance with FASB Staff Position FAS 106-2,
"Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003," the
Company has elected to defer recognition of the effects of the Act in
any measures of the benefit obligation or cost. The Company is still
analyzing the specific authoritative guidance on the accounting for the
federal subsidy, which was issued in January 2005, but the Company
anticipates that, in order to make the plan actuarially equivalent, it
may make minor changes to its non-pension postretirement plan.
Accordingly, the measures of the accumulated non-pension postretirement
benefit obligation and net periodic non-pension postretirement benefit
cost do not reflect any amount associated with the subsidy.
E. Pension and Other Postretirement Benefits
The Company has a noncontributory defined benefit pension plan covering
substantially all of its employees. The Company also sponsors a
postretirement medical and life insurance benefit plan for retirees in
the pension plan. The components of the net periodic benefit cost for
these plans were as follows for the six and three month periods ended
June 30:
For the six months ended June 30, 2005:
Pension benefits Postretirement benefits
2005 2004 2005 2004
Service cost $ 149,000 $ 134,000 $ 83,000 $122,000
Interest cost 204,000 188,000 88,000 104,000
Expected return on plan assets (183,000) (160,000) -- --
Amortization of prior service cost 12,000 12,000 (22,000) --
Amortization of transition (asset) obligation (2,000) (2,000) -- 8,000
Recognized net actuarial loss 67,000 66,000 26,000 30,000
--------- --------- -------- --------
Net periodic benefit cost $ 247,000 $ 238,000 $175,000 $264,000
========= ========= ======== ========
For the three months ended June 30, 2005:
Pension benefits Postretirement benefits
2005 2004 2005 2004
Service cost $ 75,000 $ 67,000 $ 42,000 $ 61,000
Interest cost 102,000 94,000 44,000 52,000
Expected return on plan assets (91,000) (80,000) -- --
Amortization of prior service cost 5,000 6,000 (11,000) --
Amortization of transition (asset) obligation (1,000) (1,000) -- 4,000
Recognized net actuarial loss 33,000 33,000 12,000 15,000
-------- -------- -------- --------
Net periodic benefit cost $123,000 $119,000 $ 87,000 $132,000
======== ======== ======== ========
The Company previously disclosed in its consolidated financial
statements for the year ended December 31, 2004, that it expected to
contribute $341,000 to its pension plan and $73,000 to its other
postretirement benefits plan in 2005. As of June 30, 2005, contributions
of $170,000 have been made to the pension plan and $24,000 of
contributions have been made to the other postretirement benefits plan.
6
F. Guarantees
FASB Interpretation No. 45 (FIN No. 45), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others; an interpretation of FASB Statements No. 5, 57,
and 107 and rescission of FASB Interpretation No. 34" requires certain
disclosures and liability recognition for the fair value at issuance of
guarantees that fall within its scope. Under FIN No. 45, the Company
does not issue any guarantees that would require liability recognition
or disclosure, other than its standby letters of credit. Standby letters
of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party. Standby letters of
credit generally arise in connection with lending relationships. The
credit risk involved in issuing these instruments is essentially the
same as that involved in extending loans to customers. Contingent
obligations under standby letters of credit totaled approximately
$1,176,000 at June 30, 2005 and $808,000 at December 31, 2004 and
represent the maximum potential future payments the Company could be
required to make. Typically, these instruments have terms of twelve
months or less and expire unused; therefore, the total amounts do not
necessarily represent future cash requirements. Each customer is
evaluated individually for creditworthiness under the same underwriting
standards used for commitments to extend credit and on-balance sheet
instruments. Company policies governing loan collateral apply to standby
letters of credit at the time of credit extension. Loan-to-value ratios
are generally consistent with loan-to-value requirements for other
commercial loans secured by similar types of collateral. The fair value
of the Company's standby letters of credit at June 30, 2005 and December
31, 2004 was insignificant.
7
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Statements
In addition to historical information, this report includes certain
forward-looking statements with respect to the financial condition,
results of operations and business of the Company based on current
management's expectations. The Company's ability to predict results or
the effect of future plans and strategies is inherently uncertain and
actual results, performance or achievements could differ materially from
those management expectations. Factors that could cause future results
to vary from current management expectations include, but are not
limited to, general economic conditions, legislative and regulatory
changes, monetary and fiscal policies of the federal government, changes
in tax policies, rates and regulations, changes in interest rates,
deposit flows, the cost of funds, demand for loan products, demand for
financial services, competition, changes in the quality or composition
of the Company's loan and securities portfolios, changes in accounting
principles, and other economic, competitive, governmental, and
technological factors affecting the Company's operations, markets,
products, services and prices.
A. Overview - Financial Condition
During the period from December 31, 2004 to June 30, 2005, total assets
increased $12,302,000 or 3.4%. Decreases in securities available for
sale, cash and cash equivalents and accrued interest receivable were
offset by increases in held to maturity securities, net loans, Federal
Home Loan Bank stock and the cash surrender value of bank-owned life
insurance. Securities available for sale decreased from $100,705,000 at
year end 2004 to $93,733,000 at June 30, 2005, a decrease of $6,972,000
or 6.9%. Securities held to maturity increased from $5,957,000 at year
end 2004 to $7,292,000 at June 30, 2005, an increase of $1,335,000 or
22.4%. Net loans increased from $220,591,000 at year end 2004 to
$237,454,000 at June 30, 2005, an increase of $16,863,000 or 7.6%.
Deposits decreased from $293,094,000 at December 31, 2004 to
$291,520,000 at June 30, 2005, a decrease of $1,574,000 or 0.5%. Demand
deposits increased from $65,208,000 at December 31, 2004 to $67,086,000
at June 30, 2005, an increase of $1,878,000 or 2.9%. These lower cost
deposits are an important offset to the cost of higher priced funds.
Time deposits decreased $4,097,000 or 3.9% to $100,080,000 at June 30,
2005 from December 31, 2004. NOW and super NOW accounts decreased from
$36,594,000 at December 31, 2004 by $517,000 or 1.4%, to $36,077,000 at
June 30, 2005. Savings deposits increased from $87,115,000 at December
31, 2004 to $88,277,000 at June 30, 2005, an increase of $1,162,000 or
1.3%. Non deposit liabilities increased from $31,127,000 at December 31,
2004 to $42,840,000 at June 30, 2005, an increase of $11,713,000 or
37.6%, largely due to a $10,000,000 or 54% increase in Federal Home Loan
Bank borrowings at June 30, 2005.
8
Total stockholders' equity increased $2,163,000 or 5.5% from $39,646,000
at December 31, 2004 to $41,809,000 at June 30, 2005. This increase was
the result of net income of $2,756,000 less cash dividends of $887,000
and a $295,000 reduction in accumulated other comprehensive loss.
Loan Portfolio Composition:
June 30, 2005 December 31, 2004
Amount Percent Amount Percent
REAL ESTATE LOANS
Residential $ 86,805,000 35.9% $ 83,340,000 37.0%
Commercial 81,006,000 33.5% 75,357,000 33.4%
Home Equity 21,825,000 9.0% 21,127,000 9.4%
Farm Land 3,778,000 1.6% 3,727,000 1.7%
Construction 6,618,000 2.7% 4,524,000 2.0%
------------ ----- ------------ -----
200,032,000 82.7% 188,075,000 83.5%
------------ ----- ------------ -----
OTHER LOANS
Commercial Loans 27,063,000 11.1% 21,317,000 9.5%
Consumer Installment Loans 12,968,000 5.4% 14,116,000 6.3%
Other Consumer Loans 1,418,000 0.6% 1,345,000 0.6%
Agriculture Loans 462,000 0.2% 338,000 0.1%
------------ ----- ------------ -----
41,911,000 17.3% 37,116,000 16.5%
------------ ----- ------------ -----
Total Loans 241,943,000 100.0% 225,191,000 100.0%
------------ ----- ------------ -----
Unearned Income (781,000) (955,000)
Allowance for Loan Losses (3,708,000) (3,645,000)
============ ============
TOTAL LOANS, NET $237,454,000 $220,591,000
============ ============
B. Allowance for Loan Losses
The allowance for loan losses reflects management's assessment of the
risk inherent in the loan portfolio, which includes factors such as the
general state of the economy and past loan experience. The provision for
loan losses was $120,000 for the six months ended June 30, 2005 compared
to $180,000 for the six months ended June 30, 2004. Total charge-offs
for the six month period ended June 30, 2005 were $181,000 compared to
$254,000 for the same period in the prior year, while recoveries
increased from $83,000 for the 2004 period to $124,000 for the 2005
period. The amounts represent net charge-offs of $57,000 in the first
six months of 2005 versus net charge-offs of $171,000 for the same
period in the prior year. Based on management's analysis of the loan
portfolio, management believes the current level of the allowance for
loan losses is adequate.
Changes in the allowance for loan losses are summarized as follows for
the six month periods ended June 30:
2005 2004
Balance at beginning of period $3,645,000 $3,569,000
Provision for loan losses 120,000 180,000
Loans charged-off (181,000) (254,000)
Recoveries 124,000 83,000
---------- ----------
Balance at end of period $3,708,000 $3,578,000
========== ==========
Annualized net charge-offs as a
percentage of average outstanding loans 0.05% 0.17%
Allowance for loan losses to:
Total loans 1.54% 1.68%
Total nonperforming loans 116.6% 274.0%
9
C. Nonaccrual and Past Due Loans
The Company places a loan on nonaccrual status when collectability of
principal or interest is doubtful, or when either principal or interest
is 90 days or more past due and the loan is not well secured and in the
process of collection. Interest payments received on nonaccrual loans
are applied as a reduction of the principal balance when concern exists
as to the ultimate collection of principal.
Nonperforming loans are summarized as follows at June 30:
Nonaccrual loans $3,015,000 $1,076,000
Loans past due 90 days or more
and still accruing interest 166,000 230,000
---------- ----------
Total nonperforming loans 3,181,000 1,306,000
---------- ----------
Nonperforming loans as a
percentage of total loans 1.32% 0.61%
---------- ----------
As of June 30, 2005 and 2004, the recorded investment in loans
considered to be impaired under Statement of Financial Accounting
Standards ("SFAS") No.114 totaled $1,690,000 and $708,000, respectively.
There was no allowance for loan impairment under SFAS No.114 at either
date, primarily due to prior charge-offs and the adequacy of collateral
values on these loans.
D. Capital
Under the Federal Reserve Bank's risk-based capital rules, the Company's
Tier I risk-based capital was 16.9% and total risk-based capital was
18.1% of risk-weighted assets at June 30, 2005. These risk-based capital
ratios are well above the minimum regulatory requirements of 4.0% for
Tier I capital and 8.0% for total capital. The Company's leverage ratio
(Tier I capital to average assets) of 11.3% at June 30, 2005 is well
above the 4.0% minimum regulatory requirement.
The following table shows the Company's actual capital measurements
compared to the minimum regulatory requirements at June 30, 2005.
TIER I CAPITAL
Stockholders' equity, excluding accumulated
other comprehensive loss $ 41,705
TIER II CAPITAL
Allowance for loan losses(1) 3,083
---------
Total risk-based capital $ 44,788
---------
Risk-weighted assets(2) $ 247,155
---------
Average assets $ 368,623
---------
RATIOS
Tier I risk-based capital (minimum 4.0%) 11.3%
Total risk-based capital (minimum 8.0%) 16.9%
Leverage (minimum 4.0%) 18.1%
(1) The allowance for loan losses is limited to 1.25% of
risk-weighted assets for the purpose of this calculation.
(2) Risk-weighted assets have been reduced for excess allowance
for loan losses excluded from total risk-based capital
10
Consolidated Average Balance Sheet for the six months ended June 30, 2005
(Fully Taxable Equivalent)
%
AVERAGE OF INTEREST AVERAGE
BALANCE ASSETS EARNED/PAID YIELD/RATE
ASSETS
Investment securities (1)
Taxable securities $ 55,630,000 15.09% $ 1,333,000 4.79%
Tax exempt securities 47,702,000 12.94% 1,447,000 6.07%
------------ ------- ----------- -----
TOTAL SECURITIES 103,332,000 28.03% 2,780,000 5.38%
------------ ------- ----------- -----
Short-term investments 1,509,000 0.41% 19,000 2.52%
Loans, net of unearned income
Real estate mortgages 165,583,000 44.92% 5,769,000 6.97%
Home equity loans 21,105,000 5.73% 625,000 5.92%
Time and demand loans 25,366,000 6.88% 946,000 7.46%
Installment loans 17,060,000 4.63% 856,000 10.04%
Other loans 2,685,000 0.73% 150,000 11.17%
------------ ------- ----------- -----
TOTAL LOANS (2) 231,799,000 62.89% 8,346,000 7.20%
------------ ------- ----------- -----
TOTAL INTEREST EARNING ASSETS 336,640,000 91.33% 11,145,000 6.62%
------------ ------- ----------- -----
Allowance for loan losses (3,651,000) -0.99%
Unrealized gains and losses on portfolio, net 308,000 0.08%
Cash and due from banks 13,128,000 3.56%
Premise and equipment, net 2,918,000 0.79%
Cash surrender value of bank-owned life insurance 12,005,000 3.26%
Other assets 7,275,000 1.97%
------------ ------
TOTAL ASSETS $368,623,000 100.00%
============ ======
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW and Super NOW accounts $ 38,312,000 10.39% 49,000 0.26%
Savings and insured money market deposits 87,552,000 23.75% 380,000 0.87%
Time deposits 105,095,000 28.51% 1,331,000 2.53%
------------ ------- ----------- -----
TOTAL INTEREST BEARING DEPOSITS 230,959,000 62.65% 1,760,000 1.52%
Federal funds purchased and other short-term debt 2,738,000 0.74% 40,000 2.92%
Long-term debt 21,925,000 5.96% 540,000 4.93%
------------ ------- ----------- -----
TOTAL INTEREST BEARING LIABILITIES 255,622,000 69.35% 2,340,000 1.83%
------------ ------- ----------- -----
Demand deposits 65,358,000 17.73%
Other liabilities 6,861,000 1.86%
------------ -------
TOTAL LIABILITIES 327,841,000 88.94%
STOCKHOLDERS' EQUITY 40,782,000 11.06%
------------ -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $368,623,000 100.00%
============ =======
NET INTEREST INCOME $ 8,805,000
===========
NET INTEREST SPREAD 4.79%
=====
NET INTEREST MARGIN (3) 5.23%
=====
(1) Yields on securities available for sale are based on amortized costs.
(2) For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income
statement. However, the nonaccrual loan balances are included in the
average amount outstanding.
(3) Computed by dividing net interest income by average interest earning
assets
11
Consolidated Average Balance Sheet for the six months ended June 30, 2004
(Fully Taxable Equivalent)
%
AVERAGE OF INTEREST AVERAGE
BALANCE ASSETS EARNED/PAID YIELD/RATE
ASSETS
Investment securities (1)
Taxable securities $ 69,214,000 19.52% $ 1,809,000 5.23%
Tax exempt securities 49,883,000 14.07% 1,533,000 6.15%
------------ -----------
TOTAL SECURITIES 119,097,000 33.59% 3,342,000 5.61%
Short-term investments 1,764,000 0.50% 7,000 0.79%
Loans, net of unearned income
Real estate mortgages 147,939,000 41.72% 5,276,000 7.13%
Home equity loans 18,890,000 5.33% 585,000 6.19%
Time and demand loans 17,090,000 4.82% 531,000 6.21%
Installment loans 17,208,000 4.85% 874,000 10.16%
Other loans 3,178,000 0.90% 152,000 9.57%
------------ ------- ----------- ------
TOTAL LOANS (2) 204,305,000 57.62% 7,418,000 7.26%
------------ ------- ----------- ------
TOTAL INTEREST EARNING ASSETS 325,166,000 91.71% 10,767,000 6.62%
------------ ------- ----------- ------
Allowance for loan losses (3,512,000) -0.99%
Unrealized gains and losses on portfolio, net 679,000 0.19%
Cash and due from banks 12,643,000 3.57%
Premise and equipment, net 3,080,000 0.87%
Cash surrender value of bank-owned life insurance 12,379,000 3.49%
Other assets 4,120,000 1.16%
------------ -------
TOTAL ASSETS $354,555,000 100.00%
============ =======
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW and Super NOW accounts $ 40,046,000 11.29% 55,000 0.27%
Savings and insured money market deposits 82,559,000 23.29% 239,000 0.58%
Time deposits 103,327,000 29.14% 1,086,000 2.10%
------------ ------- ----------- ------
TOTAL INTEREST BEARING DEPOSITS 225,932,000 63.72% 1,380,000 1.22%
Federal funds purchased and other short-term debt 1,364,000 0.38% 8,000 1.17%
Long-term debt 27,000,000 7.62% 577,000 4.27%
------------ ------- ----------- ------
TOTAL INTEREST BEARING LIABILITIES 254,296,000 71.72% 1,965,000 1.55%
------------ ------- ----------- ------
Demand deposits 59,772,000 16.86%
Other liabilities 4,513,000 1.27%
------------ -------
TOTAL LIABILITIES 318,581,000 89.85%
STOCKHOLDERS' EQUITY 35,974,000 10.15%
------------ -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $354,555,000 100.00%
============ =======
NET INTEREST INCOME $8,802,000
==========
NET INTEREST SPREAD 5.07%
=====
NET INTEREST MARGIN (3) 5.41%
=====
(1) Yields on securities available for sale are based on amortized costs.
(2) For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income
statement. However, the nonaccrual loan balances are included in the
average amount outstanding.
(3) Computed by dividing net interest income by average interest earning
assets.
12
Consolidated Average Balance Sheet for the three months ended June 30, 2005
(Fully Taxable Equivalent)
Percentage
of Total Interest
Average Average Earned/ Average
Balance Assets Paid Yield/Rate
ASSETS
Investment securities (1)
Taxable securities $ 54,937,000 14.64% $ 657,000 4.78%
Tax exempt securities 47,911,000 12.77% 721,000 6.02%
------------ ----------
Total securities 102,848,000 27.41% 1,378,000 5.36%
Short-term investments 1,275,000 0.34% 8,000 2.51%
Loans, net of unearned income
Real estate mortgages 169,422,000 45.16% 2,923,000 6.90%
Home equity loans 21,615,000 5.76% 315,000 5.83%
Time and demand loans 27,210,000 7.25% 518,000 7.61%
Installment loans 17,209,000 4.59% 420,000 9.76%
Other loans 2,859,000 0.76% 74,000 10.35%
------------ ------ ---------- ------
Total loans (2) 238,315,000 63.52% 4,250,000 7.13%
------------ ------ ---------- ------
Total interest earning assets 342,436,000 91.27% 5,636,000 6.58%
------------ ------ ---------- ------
Allowance for loan losses (3,712,000) -0.99%
Unrealized gains and losses on portfolio, net 97,000 0.03%
Cash and due from banks 13,202,000 3.51%
Premise and equipment, net 2,992,000 0.80%
Cash surrender value of bank-owned life insurance 11,351,000 3.03%
Other assets 8,812,000 2.35%
Total assets $375,180,000 100.00%
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW and Super NOW deposits $ 36,540,000 9.74% 24,000 0.26%
Savings and insured money market deposits 90,647,000 24.16% 209,000 0.92%
Time deposits 103,506,000 27.59% 686,000 2.65%
------------ ----------
Total interest bearing deposits 230,693,000 61.49% 919,000 1.59%
Federal funds purchased and other short-term debt 3,425,000 0.91% 26,000 3.04%
Long-term debt 25,594,000 6.82% 307,000 4.80%
------------ ----------
Total interest bearing liabilities 259,712,000 69.22% 1,252,000 1.93%
------------ ----------
Demand deposits 66,071,000 17.61%
Other liabilities 7,576,000 2.02%
------------
Total liabilities 333,359,000 88.85%
Stockholders' equity 41,821,000 11.15%
------------
Total liabilities and stockholders' equity $375,180,000 100.00%
============
Net interest income $4,384,000
==========
Net interest spread 4.66%
=====
Net interest margin (3) 5.12%
=====
(1) Yields on securities available for sale are based on amortized costs.
(2) For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income
statement. However, the nonaccrual loan balances are included in the
average amount outstanding.
(3) Computed by dividing net interest income by average interest earning
assets
13
Consolidated Average Balance Sheet for the three months ended June 30, 2004
(Fully Taxable Equivalent)
Percentage
of Total Interest
Average Average Earned/ Average
Balance Assets Paid Yield/Rate
ASSETS
Investment securities (1)
Taxable securities $ 68,362,000 18.91% $ 863,000 5.05%
Tax exempt securities 50,181,000 13.88% 762,000 6.07%
------------ ----------
Total securities 118,543,000 32.79% 1,625,000 5.48%
Short-term investments 2,876,000 0.80% 5,000 0.70%
Loans, net of unearned income
Real estate mortgages 152,354,000 42.13% 2,657,000 6.98%
Home equity loans 19,605,000 5.42% 300,000 6.12%
Time and demand loans 17,307,000 4.79% 264,000 6.10%
Installment loans 17,621,000 4.87% 443,000 10.06%
Other loans 3,442,000 0.95% 74,000 8.60%
------------ ----------
Total loans (2) 210,329,000 58.16% 3,738,000 7.11%
------------ ----------
Total interest earning assets 331,748,000 91.75% 5,368,000 6.47%
------------ ----------
Allowance for loan losses (3,577,000) -0.99%
Unrealized gains and losses on portfolio, net (136,000) -0.04%
Cash and due from banks 12,570,000 3.48%
Premise and equipment, net 3,130,000 0.87%
Cash surrender value of bank-owned life insurance 12,579,000 3.48%
Other assets 5,257,000 1.45%
------------
Total assets $361,571,000 100.00%
============
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW and Super NOW deposits $ 38,095,000 10.54% 23,000 0.24%
Savings and insured money market deposits 86,198,000 23.84% 119,000 0.55%
Time deposits 105,480,000 29.17% 549,000 2.08%
------------ ----------
Total interest bearing deposits 229,773,000 63.55% 691,000 1.20%
Federal funds purchased and other short-term debt 702,000 0.19% 3,000 1.71%
Long-term debt 27,000,000 7.55% 281,000 4.16%
------------ ----------
Total interest bearing liabilities 257,475,000 71.29% 975,000 1.51%
------------ ----------
Demand deposits 62,492,000 17.20%
Other liabilities 5,987,000 1.66%
------------
Total liabilities 325,954,000 90.15%
Stockholders' equity 35,617,000 9.85%
------------
Total liabilities and stockholders' equity $361,571,000 100.00%
============
Net interest income $ 4,393,000
===========
Net interest spread 4.96%
=====
Net interest margin (3) 5.30%
=====
(1) Yields on securities available for sale are based on amortized costs.
(2) For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income
statement. However, the nonaccrual loan balances are included in the
average amount outstanding.
(3) Computed by dividing net interest income by average interest earning
assets
14
Liquidity
The objective of maintaining adequate liquidity is to assure the ability
of the Company and its subsidiary to meet their financial obligations.
These obligations include the payment of interest on deposits
borrowings, withdrawal of deposits on demand or at their contractual
maturity and repayment of borrowings as they mature, the ability to fund
new and existing loan commitments and the ability to take advantage of
new business opportunities. The Company and its subsidiary achieve
liquidity by maintaining a strong base of core customer funds, maturing
short-term assets, the ability to sell securities, the availability of
lines of credit and access to capital markets.
Liquidity at the subsidiary bank level is managed through the monitoring
of anticipated changes in loans, the investment portfolio, core deposits
and wholesale funds. The strength of the subsidiary banks' liquidity
position is a result of its base of core customer deposits. These core
deposits are supplemented by wholesale funding sources, including credit
lines with the other banking institutions, and the Federal Home Loan
Bank.
The primary sources of liquidity for the parent company are dividends
and lease payments from the bank.
In 2005, cash generated from operating activities amounted to $4.1
million and cash provided by financing activities amounted to $7.5
million. These amounts were offset by amounts used in investing
activities of $11.7 million, resulting in a net decrease in cash and
cash equivalents of $153,000. See the Consolidated Statements of Cash
Flows for additional information.
Maturity Schedule of Time Deposits of $100,000 or More at June 30, 2005:
Deposits
Due three months or less $ 8,068,000
Over three months through six months 3,412,000
Over six months though twelve months 3,861,000
Over twelve months 10,061,000
-----------
$25,402,000
===========
E. Result of Operations
Net income for the quarter ended June 30, 2005 decreased by $98,000 to
$1,396,000 compared to $1,494,000 for the corresponding period in 2004.
The Company's annualized return on average assets was 1.5% and 1.7% for
the quarters ended June 30, 2005 and 2004, respectively. The annualized
return on average stockholders' equity was 13.4% and 16.8% for the
second quarter of 2005 and 2004, respectively.
Total interest income for the second quarter of 2005 increased $282,000
or 5.5% from the corresponding period in 2004 and total interest expense
increased $277,000 or 28.4% from the corresponding period in 2004. Net
interest income increased $5,000 or 0.1% from the prior year period.
Non-interest income for the second quarter of 2005 decreased $86,000 or
8.2% from the corresponding period in 2004, while total non-interest
expenses increased $74,000 or 2.4% from the second quarter of 2004.
Total interest income increased as did the overall yield on average
interest earning assets. Total average interest earning assets were
$342,436,000 for the three month period ended June 30, 2005 compared to
$331,748,000 for the corresponding period in 2004, an increase of
$10,688,000 or 3.2%. There was an increase of $27,986,000 or 13.3% on
loan average interest earning assets, for the period ended June 30, 2005
as compared to June 30, 2004. Total securities decreased by $15,695,000
or 15.3% from June 30, 2004 to June 30, 2005. The yield on total loans
increased 2 basis points from 7.11% June 30, 2004 to 7.13% for the
respective period in 2005. The yield on total average interest earning
assets increased from 6.47% for the period ended June 30, 2004 to 6.58%
for the period ended June 30, 2005 or 11 basis points.
Total interest expense increased primarily as a result of an increase
in the overall rate paid on interest bearing liabilities. The total
average balance for interest bearing liabilities was $259,711,000 for
the three month period ended June 30, 2005 compared to $257,475,000 for
the corresponding period in 2004, an increase of $2,236,000 or 0.9%. The
rate paid on interest bearing liabilities increased by 42 basis points
from 1.51% for the three month period ended June 30, 2004 to 1.93% for
the three month period ended June 30, 2005.
The provision for loan losses was $60,000 for the three months ended
June 30, 2005, a decrease of $30,000 compared to $90,000 for the three
months ended June 30, 2004. This decrease was primarily due to reduced
net charge offs and low delinquency rates, offset to some degree by an
increase in nonperforming loans and overall loan growth.
Non-interest income was $964,000 for the three month period ended June
30, 2005 compared to $1,050,000 for the corresponding period in 2004, a
decrease of $86,000 or 8.2%. This increase was primarily due to a
decrease in deposit account service charges.
15
Non-interest expenses were $3,149,000 for the three month period ended
June 30, 2005 compared to $3,075,000 for the corresponding period in
2004, an increase of $74,000 or 2.4%. Occupancy and equipment expense
increased $54,000 from last year. There was an increase of $36,000 or
4.5% in other non-interest expenses primarily due to increases in legal
fees and advertising expenditures.
Income tax expense was $498,000 for the three month period ended June
30, 2005 compared to $525,000 for the corresponding period in 2004, a
decrease of $27,000 or 5.1%. This decrease was primarily due to a
decrease in taxable income. The Company's effective tax rates were 26.3%
and 26.0% for the three month periods ended June 30, 2005 and 2004,
respectively. This increase was primarily due to an increase in the
percentage of taxable income total income during the three month period
ended June 30, 2005 compared to the corresponding period in 2004.
Comparison of the six month periods June 30, 2004 and 2005
Net income for the first six months of 2005 decreased by $298,000 to
$2,756,000 compared to $3,054,000 for the same period in 2004. This
overall decrease was primarily due to an increase of $530,000 in
non-interest expenses which was partially offset by a $32,000 increase
in net interest income, a decrease of $60,000 in provision for loan
losses and reduction of income tax expense of $146,000. The Company's
annualized return on average assets was 1.5% for the six months ended
June 30, 2005 compared to 1.7% in the same period last year. The
annualized return on average stockholders' equity was 13.5% and 17.0%
for the first six months of 2005 and 2004, respectively.
Tax equivalent interest income increased $378,000 or 3.5% in the first
six months of 2005 compared to the same period in 2004, primarily due to
an increase in average earning assets. The yield on investment
securities decreased 23 basis points from 5.61% in 2004 to 5.38% in 2005
as the result of the sale and call of higher yielding securities. The
yield on the total loan portfolio decreased by 6 basis points in the
period ended June 30, 2005 compared to the first six months of 2004.
Several loan categories average rates decreased. The average yield on
real estate mortgage loans, the major portion of the loan portfolio,
decreased 16 basis points for the six month period primarily due to the
origination of fixed rate loans at lower interest rates. The overall
yield on interest earning assets remained unchanged from 2004 at 6.62%.
The total average balance for earning assets was $336,640,000 for the
six month period ended June 30, 2005 compared to $325,166,000 for the
same six month period in 2004, an increase of $11,474,000 or 3.5%. An
increase in average loans of $27,494,000, which was partially offset by
a decrease in average securities of $15,765,000 accounted for the
increase in average balance for earning assets.
The increasing interest rate environment caused the Company to re-price
its deposits which resulted in a 28 basis point increase in the rate
paid on interest bearing deposits for the six month period ended June
30, 2005 as compared to the same period in 2004. The overall net
interest margin decreased 18 basis points from 5.41% in the first six
months of 2004 to 5.23% in the first six months of 2005 due to the
increase in rates paid on interest bearing liabilities.
The provision for loan losses was $120,000 for the six months ended June
30, 2005, a decrease of $60,000 compared to $180,000 for the six months
ended June 30, 2004. This decrease was principally due to a decrease in
net charge-offs in 2005 as compared to 2004 offset by increases in
nonperforming loans.
Non-interest income was $1,913,000 for the first six months of 2005
compared to $1,919,000 for the same period in 2004, a decrease of $6,000
or 0.3%. This decrease was primarily due to reduced service charge
income of $164,000 resulting from a decrease in fees for insufficient
funds and returned checks. Gains on the sale of other real estate owned,
which increased $105,000 over 2004, were the result of the last
remaining condominium units at Grandview Palace being sold. Other
non-interest income increased $65,000 due to an increase in ATM fees.
Non-interest expenses were $6,398,000 for the first six months of 2005
compared to $5,868,000 for the same period in 2004, an increase of
$530,000 or 9.0%. This increase reflects a $383,000 increase in salaries
and employee benefits costs due to normal salary increases, increased
costs for Supplemental Employee Retirement Program (SERP) and health
care benefits. Occupancy cost increased 9.5%, or $85,000 to $978,000
for the six months primarily as a result of increases in software
maintenance expense. Other non-interest expense increased by $62,000.
Income tax expense was $952,000 for the six month period ended June 30,
2005 compared to $1,098,000 for the corresponding period in 2004, a
decrease of $146,000 or 13.3%. The Company's effective tax rates were
25.7% and 26.4% for the six month periods ended June 30, 2005 and 2004,
respectively. This decrease was primarily due to a larger percentage of
income before taxes being generated by tax exempt securities.
16
F. Critical Accounting Policies
Management of the Company considers the accounting policy relating to
the allowance for loan losses to be a critical accounting policy given
the inherent uncertainty in evaluating the levels of the allowance
required to cover credit losses in the portfolio and the material effect
that such judgments can have on the results of operations. The allowance
for loan losses is maintained at a level deemed adequate by management
based on an evaluation of such factors as economic conditions in the
Company's market area, past loan loss experience, the financial
condition of individual borrowers, and underlying collateral values
based on independent appraisals. While management uses available
information to recognize losses on loans, future additions to the
allowance for loan losses may be necessary based on changes in economic
conditions and values of real estate particularly in Sullivan County.
Collateral underlying certain real estate loans could lose value which
could lead to future additions to the allowance for loan losses. In
addition, Federal regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for
loan losses and may require the Company to recognize additions to the
allowance based on their judgments about information available to them
at the time of their examination, which may not be currently available
to management.
Item 3: Quantitative and Qualitative Disclosures about Market Risk
The Company's most significant form of market risk is interest rate
risk, as the majority of the assets and liabilities are sensitive to
changes in interest rates. There have been no material changes in the
Company's interest rate risk position since December 31, 2004. Other
types of market risk, such as foreign exchange rate risk and commodity
price risk, do not arise in the normal course of the Company's business
activities.
Item 4. Controls & Procedures
The Company's management, including the Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended) (the "Exchange Act") as of the end of the
period covered by this report. Based upon that evaluation, the Company's
management, including the Chief Executive Officer and Chief Financial
Officer, concluded that, the Company's disclosure controls and
procedures are effective in timely alerting them to any material
information relating to the Company and its subsidiaries required to be
included in the Company's Exchange Act filings.
There were no significant changes made in the Company's internal
controls over financial reporting that occurred during the Company's
most recent fiscal quarters that has materially affected, or is
reasonably likely to materially affect, the Company's internal control
over financial reporting.
17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company or any
of its subsidiaries is a party or which their property is subject.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on April 26, 2005.
(b) The Following individuals were elected as directors at the
annual meeting for three year terms:
John K. Gempler
Gibson E. McKean
Edward T. Sykes
The other continuing directors are: John W. Galligan, Douglas
A. Heinle, Arthur E. Keelser; Kenneth Klein, James F. Roche,
Raymond Walter and Earle A. Wilde.
(c) The following matters were voted upon and approved by the
Registrant's shareholders at the 2005 Annual Meeting of
Shareholders on April 26, 2005.
(i) the election of three directors to serve for three-year
terms (Proposal 1)
(ii) the ratification of the appointment of KPMG LLP as
independent auditors of the Company for the Fiscal Year
ending December 31, 2005 (Proposal 2).
The votes for the above-listed proposals were as follows:
Proposal 1
John K. Gempler received 3,467,235.51 votes for election
and 1,193.64 votes were withheld; Gibson E. McKean
received 3,467,657.46 votes for election and 2,731.67
votes were withheld; Edward T. Sykes received
3,465,456.47 votes for election and 2,972.67 votes were
withheld.
Proposal 2
Shareholders cast 3,464,281.69 votes for, 1,403 votes
against and 2,744.44 abstentions.
(d) Not applicable
(e) Not applicable
Item 5. Other Information
None
Item 6. Exhibits
31.1 Certification of Chief Executive Officer pursuant to Section
302 of Sarbanes-Oxley of 2002
31.2 Certification of Chief Financial Officer pursuant to Section
302 of Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to Section
906 of Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to Section
906 of Sarbanes-Oxley Act of 2002
18
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
----------------------
(Registrant)
/s/ Raymond Walter
------------------
Raymond Walter
President and Chief Executive Officer
/s/ Charles E. Burnett
----------------------
Charles E. Burnett
Chief Financial Officer and Treasurer
August 12, 2005
19