UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1999.
or
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________.
Commission File #333-78445
PENNSYLVANIA COMMERCE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1834776
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 Senate Avenue, P.O. Box 8599, Camp Hill, Pennsylvania 17011-8599
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(Address of principal executive offices)
Registrant's telephone number including area code: (717) 975-5630
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Securities registered under Section 12 (b) of the Exchange Act:
None
Securities registered under Section 12 (g) of the Exchange Act:
Common Stock, $1.00 par value
-----------------------------
(Title of Class)
NASDAQ Small Cap Market
(Name of Each Exchange on Which Registered)
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
during the preceding 12 months (or for such 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.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
1
The aggregate market value of voting stock held by non-affiliates of
the registrant is $23,438,200. (1)
The number of shares of the Issuer's common stock, par value $1.00 per
share, outstanding as of March 17, 2000 was 1,648,744.
DOCUMENTS INCORPORATED BY REFERENCE:
Part II incorporates certain information by reference from the
registrant's Annual Report to Shareholders for the fiscal year ended December
31, 1999 (the "Annual Report"). Part III incorporates certain information by
reference from the registrant's Proxy Statement for the Annual Meeting of
Shareholders.
______________________
(1) The aggregate dollar amount of the voting stock set forth equals
the number of shares of the registrant's Common Stock outstanding, reduced by
the amount of Common Stock held by executive officers, directors, and
shareholders owning in excess of 10% of the registrant's Common Stock,
multiplied by the last sale price for the registrant's Common Stock on March 17,
2000. The information provided shall in no way be construed as an admission that
the officer, director, or 10% shareholder in the registrant may be deemed an
affiliate of the registrant or that such person is the beneficial owner of the
shares reported as being held by him, and any such inference is hereby
disclaimed. The information provided herein is included solely for the record
keeping purpose of the Securities and Exchange Commission.
2
PENNSYLVANIA COMMERCE BANCORP, INC.
FORM 10-K CROSS-REFERENCE INDEX
Page
Part I.
Item 1. Business..............................................................................5
Item 2. Properties...........................................................................11
Item 3. Legal Proceedings....................................................................14
Item 4. Submission of Matters to a Vote of Security Holders (This item is
omitted since no matters were submitted to a vote of security
holders during the fourth quarter of 1999.)
Part II.
Item 5. Market Price for the Registrant's Common Equity and
Related Shareholder Matters......................................................15
Item 6. Selected Financial Data
(The information required by this item is set forth on the
inside cover page of the Company's 1999 Annual Report.)
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(The information required by this item is incorporated by
reference from the Company's 1999 Annual Report.)
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
(The information required by this item is incorporated by
reference from the Company's 1999 Annual Report.)
Item 8. Financial Statements and Supplementary Data
(The information required by this item is incorporated by
reference from the Company's 1999 Annual Report.)
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure (This item is omitted since it is not applicable.)
Part III.
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
The information required by the items in this Part III has been
omitted since it will be contained in the Company's definitive
proxy statement to be filed pursuant to Regulation 14A.
3
Part IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements: Balance Sheets, Statements of Income,
Statements of Stockholders' Equity, and Statements of Cash Flows
(a)(2) Financial Statement Schedules (This item is omitted since
information required is either not applicable or is included in
the footnotes to the Annual Financial Statements.)
(a)(3) Exhibits:
2. Agreement and Plan of Reorganization of Commerce Bank/Harrisburg,
National Association, dated April 23, 1999 (A)
3. i. Articles of Incorporation, as amended (A)
3.ii. By - Laws, as amended (B)
10. i. The Company's 1990 Directors Stock Option Plan (C)
10.ii. The Company's 1996 Employee Stock Option Plan (D)
10 iii. Warrant Agreement and Warrant No. 1 of Commerce Bank/Harrisburg
dated October 7, 1988
10 iv. Amendment No. 1 to the Stock and Warrant Purchase Agreement
11. Calculation of EPS
(The information required by this item appears in Note 12 of the
Consolidated Financial Statements of the Company's 1999 Annual
Report.)
13. Pennsylvania Commerce Bancorp, Inc. 1999 Annual Report to
Shareholders
21. Subsidiaries of the Company (incorporated by reference from
PART I, Item 1. "BUSINESS" of this Report on Form 10-K.)
23. Consent of Beard & Company Inc.
27. The Registrants Financial Data Schedule.
(b) There were no reports on Form 8-K filed in the fourth quarter of 1999
________________________
(A) Incorporated by reference from Appendix "A" and Appendix "B",
respectively, of the Prospectus of the Company's Registration
Statement on Form S-4 filed with the SEC on May 14, 1999.
(B) Incorporated by reference from Exhibit 3(b) of the Company's
Registration Statement on Form S-4 filed with the SEC on May 14,
1999.
(C) Incorporated by reference from Exhibit 4 of the Company's
Registration Statement on Form S-4 filed with the SEC on July 1,
1999.
(D) Incorporated by reference from Exhibit 4 of the Company's
Registration Statement on Form S-4 filed with the SEC on July 1,
1999.
Item 15. Signatures.......................................................................................16
4
Part I.
Item 1. Business
General
Pennsylvania Commerce Bancorp, Inc. (the "Company") is a Pennsylvania
business corporation, which is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "Holding Company Act"). The
Company was incorporated on April 23, 1999 and became an active bank holding
company on July 1, 1999 through the acquisition of 100% of the outstanding
shares of Commerce Bank/Harrisburg, N.A. Currently, the Company's only activity
is its ownership of the Bank. Except as otherwise indicated, all references
herein to the Company include Commerce Bank/Harrisburg, N.A. (also referred to
as "Commerce" or the "Bank").
The Company is a member of the Commerce Bancorp, Inc. Network (the
"Network") and has the exclusive right to use the "Commerce Bank" name and the
"Yes Bank" logo within its primary service area. The Network provides certain
marketing and support services to the Bank.
As of December 31, 1999, the Company had approximately $379 million in
assets, $349 million in deposits, $221 million in total loans, and $20 million
in stockholders' equity. The Bank is a member of the Federal Reserve System
(FRB) and substantially all of the Bank's deposits are insured up to applicable
limits by the Bank Insurance Fund (BIF) of the Federal Deposit Insurance
Corporation (FDIC) to the fullest extent permitted by law.
As of December 31, 1999, the Company had 276 employees, of which 200
were full-time employees. Management believes the Company's relationship with
its employees is good.
Commerce Bank/Harrisburg
On July 13, 1984, Commerce Bank/Harrisburg (Commerce) filed an
application to establish a state-chartered banking institution with the
Pennsylvania Department of Banking. On September 7, 1984, Commerce was granted
preliminary approval of its application, and on September 11, 1984, was
incorporated as a Pennsylvania state-chartered banking institution under the
laws of the Commonwealth of Pennsylvania. The Bank opened for business on June
1, 1985.
On October 7, 1994, Commerce was converted from a Pennsylvania
state-chartered banking institution to a national banking association under the
laws of the United States of America and changed its name to "Commerce
Bank/Harrisburg, National Association." The Bank's conversion was consummated
pursuant to preliminary and conditional approval of the conversion granted by
the Office of the Comptroller of the Currency (OCC) on July 5, 1994 in response
to a letter of intent to convert to a national bank filed by the Bank with the
OCC on April 6, 1994.
Commerce provides a full range of retail and commercial banking
services for consumers and small and mid-sized companies. The Bank's lending and
investment activities are funded principally by retail deposits gathered through
its retail branch office network.
Service Area
The Bank offers its lending and depository services from its Main
Office in Camp Hill, Pennsylvania, and its ten full-service branch offices
located in Mechanicsburg, Colonial Park, Lower Paxton Township, Hummelstown,
York, and Carlisle, Pennsylvania. The Bank currently considers its primary
service area to include the central Pennsylvania area, including portions of
Dauphin, Cumberland, and York Counties, Pennsylvania.
5
Retail and Commercial Banking Activities
The Bank provides a broad range of retail banking services and products
including free personal checking accounts and business checking accounts
(subject to a minimum balance), regular saving accounts, money market accounts,
interest checking accounts, fixed rate certificates of deposit, individual
retirement accounts, club accounts, and safe deposit facilities. Its services
also include a full range of lending activities including commercial
construction and real estate loans, land development and business loans,
business lines of credit, consumer loan programs (including installment loans
for home improvement and the purchase of consumer goods and automobiles), home
equity and Visa Gold card revolving lines of credit, overdraft checking
protection, student loans and automated teller facilities. The Bank also offers
construction loans and permanent mortgages for homes. Commerce is a participant
in the Small Business Administration Loan Program and is an approved lender for
qualified applicants.
The Bank directs its commercial lending principally toward businesses
that require funds within the Bank's legal lending limit, as determined from
time to time, and that otherwise do business and/or are depositors with
Commerce. The Bank also participates in inter-bank credit arrangements in order
to take part in loans for amounts that are in excess of its lending limit. In
consumer lending, the Bank offers various types of loans, including revolving
credit lines, automobile loans, and home improvement loans.
The Company has focused its strategy for growth primarily on the
further development of its community-based retail-banking network. The objective
of this corporate strategy is to build earnings growth potential for the future
as the retail branch office network matures. The Company's branch concept uses a
prototype or standardized branch office building, convenient locations and
active marketing, all designed to attract retail deposits. Using this prototype
branch concept, the Company plans to open two new branch offices in each of the
next five years. It has been the Company's experience that each newly opened
branch office incurs operating losses during the first 18 to 20 months of
operations and becomes profitable thereafter. The Company's retail approach to
banking emphasizes a combination of long-term customer relationships, quick
responses to customer needs, active marketing, convenient locations, free
checking for customers maintaining certain minimum balances and extended hours
of operation.
The Company is not dependent on any one or more major customers.
Competitive Business Conditions / Competitive Position
The Company's current primary service area, the central Pennsylvania
area, including portions of Dauphin, Cumberland, and York Counties, is
characterized by intense competition for banking business. The Bank competes
with local commercial banks as well as numerous regionally based commercial
banks, most of which have assets, capital, and lending limits larger than that
of Commerce. The Bank competes with respect to its lending activities as well as
in attracting demand, savings, and time deposits with other commercial banks,
savings banks, insurance companies, regulated small loan companies, credit
unions, and with issuers of commercial paper and other securities such as shares
in money market funds.
Other institutions may have the ability to finance wide-ranging
advertising campaigns, and to allocate investment assets to regions of highest
yield and demand. Many institutions offer services such as trust services and
international banking which Commerce does not directly offer (but which the Bank
may offer indirectly through other institutions). Many institutions, by virtue
of their greater
6
total capital, can have substantially higher lending limits than Commerce.
In commercial transactions, the Bank's legal lending limit to a single
borrower (approximately $3,930,000 as of December 31, 1999) enables it to
compete effectively for the business of smaller companies. However, this legal
lending limit is considerably lower than that of various competing institutions
and thus may act as a constraint on the Bank's effectiveness in competing for
financing in excess of these limits.
In consumer transactions, the Bank believes it is able to compete on a
substantially equal basis with larger financial institutions because it offers
longer hours of operation, personalized service and competitive interest rates
on savings and time accounts with low minimum deposit requirements.
In order to compete with other financial institutions both within and
beyond its primary service area, the Bank uses, to the fullest extent possible,
the flexibility which independent status permits. This includes an emphasis on
specialized services for the small businessperson and professional contacts by
the Bank's officers, directors and employees, and the greatest possible efforts
to understand fully the financial situation of relatively small borrowers. The
size of such borrowers, in management's opinion, often inhibits close attention
to their needs by larger institutions. The Bank may seek to arrange for loans in
excess of its lending limit on a participation basis with other financial
institutions in order more fully to service customers whose loan demands exceed
the Bank's lending limit.
The Bank endeavors to be competitive with all competing financial
institutions in its primary service area with respect to interest rates paid on
time and saving deposits, its overdraft charges on deposit accounts, and
interest rates charged on loans.
Supervision and Regulation
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to bank holding companies and their
subsidiaries and provides certain specific information relevant to the Company.
The regulatory framework is intended primarily for the protection of depositors,
other customers and the Federal Deposit Insurance Funds and not for the
protection of security holders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. A change in
applicable statutes, regulations or regulatory policy may have a material effect
on the business of the company.
The Company
The Company is subject to the jurisdiction of the Securities and
Exchange Commission ("SEC") and of state securities commissions for matters
relating to the offering and sale of its securities and is subject to the SEC's
rules and regulations relating to periodic reporting, reporting to shareholders,
proxy solicitation and insider trading.
The Company is subject to the provisions of the Bank Holding Company
Act of 1956, as amended. The Company is subject to supervision and examination
by the Federal Reserve Board ("FRB"). Under the Bank Holding Company Act, the
Company must secure the prior approval of the FRB before it may own or control,
directly or indirectly, more than 5% of the voting shares or substantially all
of the assets of any institution, including another bank (unless it already owns
a majority of the voting stock of the bank).
7
Satisfactory financial condition, particularly with regard to capital
adequacy, and satisfactory Community Reinvestment Act ratings are generally
prerequisites to obtaining federal regulatory approval to make acquisitions.
Commerce is currently rated "satisfactory" under the Community Reinvestment Act.
The Company is required to file an annual report with the Federal
Reserve Board and any additional information that the Federal Reserve Board may
require pursuant to the Bank Holding Company Act. The Federal Reserve Board may
also make examinations of the Company and any or all of its subsidiaries.
Further, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with the extension of
credit or provision for any property or service. Thus, an affiliate of the
Company, such as Commerce may not condition the extension of credit, the lease
or sale of property or furnishing of any services on (i) the customer's
obtaining or providing some additional credit, property or services from or to
the Company or other subsidiaries of the Company, or (ii) the customer's
refraining from doing business with a competitor of Commerce, the Company or of
its subsidiaries. The Company or Commerce may impose conditions to the extent
necessary to reasonably assure the soundness of credit extended.
Subsidiary banks of a bank holding company are subject to certain
restrictions imposed by the Federal Reserve Act on (i) any extension of credit
to the bank holding company or any of its subsidiaries, (ii) investments in the
stock or other securities of the bank holding company, and (iii) taking the
stock or securities of the bank holding company as collateral for loans to any
borrower.
The Bank
As a nationally chartered commercial banking association, the Bank is
subject to regulation, supervision and regular examination by the Office of the
Comptroller of the Currency (OCC) and is required to furnish quarterly reports
to the OCC. The Bank is a member of the Federal Reserve System. The Bank's
deposits are insured by the FDIC up to applicable legal limits. Some of the
aspects of the lending and deposit business of the Bank that are regulated by
these agencies include personal lending, mortgage lending and reserve
requirements. The Bank is also subject to numerous federal, state and local laws
and regulations which set forth specific restrictions and procedural
requirements with respect to the extension of credit, credit practices, the
disclosure of credit terms and discrimination in credit transactions.
8
The approval of the OCC is required for the establishment of additional
branch offices. Since March 4, 1990, the Bank is able to establish branches
within any county in Pennsylvania.
Under the Change in Banking Control Act of 1978, subject to certain
exceptions, no person may acquire control of the Bank without giving at least
sixty days prior written notice to the OCC. Under the Change in Banking Control
Act of 1978 and the regulations promulgated thereunder, control of the Bank is
generally presumed to be the power to vote ten percent (10%) or more of the
Common Stock. The OCC is empowered to disapprove any such acquisition of
control.
Under the Pennsylvania Banking Code of 1965, subject to certain
exceptions, no person may acquire control of more than 10 percent (10%) of the
outstanding voting shares of the Bank without the prior written approval of the
Pennsylvania Department of Banking.
The amount of funds that Commerce may lend to a single borrower is
limited generally under the National Bank Act to 15% of the aggregate of its
capital, surplus and undivided profits and capital securities (all as defined by
statute and regulation).
The OCC has authority under the Financial Institutions Supervisory Act
to prohibit national banks from engaging in any activity which, in the OCC's
opinion, constitutes an unsafe or unsound practice in conducting their
businesses. The Federal Reserve Board has similar authority with respect to the
Company.
As a consequence of the extensive regulation of commercial banking
activities in the United States, the Bank's business is particularly susceptible
to being affected by federal and state legislation and regulations which may
affect the cost of doing business.
Recent Legislation
On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act (better known as the Financial Services Modernization Act
of 1999) which will, effective March 11, 2000, permit bank holding companies to
become financial holding companies and thereby affiliate with securities firms
and insurance companies and engage in other activities that are financial in
nature. A bank holding company may become a financial holding company if each of
its subsidiary banks is well capitalized, is well managed and has at least a
satisfactory rating under the Community Reinvestment Act, by filing a
declaration that the bank holding company wishes to become a financial holding
company. Also effective March 11, 2000, no regulatory approval will be required
for a financial holding company to acquire a company, other than a bank or
savings association, engaged in activities that are financial in nature or
incidental to activities that are financial in nature, as determined by the
Federal Reserve Board. The Financial Services Modernization Act defines
"financial in nature" to include: securities underwriting, dealing and market
making; sponsoring mutual funds and investment companies; insurance underwriting
and agency; merchant banking activities; and activities that the Federal Reserve
Board has determined to be closely related to banking. A national bank also may
engage, subject to limitations on investment, in activities that are financial
in nature, other than insurance underwriting, insurance company portfolio
investment, real estate development and real estate investment, through a
financial subsidiary of the bank, if the bank is well capitalized, well managed
and has at least a satisfactory Community Reinvestment Act rating. The specific
effects of the enactment of the Financial Services Modernization Act on the
banking industry in general and on the Company in particular has yet to be
determined due to the fact that the Financial Services Modernization Act was
only recently adopted.
9
National Monetary Policy
In addition to being affected by general economic conditions, the
earnings and growth of the Company are affected by the policies of regulatory
authorities, including the OCC, the FRB and the FDIC. An important function of
the FRB is to regulate the money supply and credit conditions. Among the
instruments used to implement these objectives are open market operations in
U.S. Government securities, setting the discount rate, and changes in reserve
requirements against bank deposits. These instruments are used in varying
combinations to influence overall growth and distribution of credit, bank loans,
investments and deposits, and their use may also affect interest rates charged
on loans or paid on deposits.
The monetary policies and regulations of the FRB have had a significant
effect on the operating results of commercial banks in the past and are expected
to continue to do so in the future. The effects of such policies upon the future
business, earnings, and growth of the Company cannot be predicted.
The costs and effects of compliance with environmental laws, federal,
state and local, on the Company are minimal.
10
Item 2. Properties
Main Office
The main office of Commerce is located on the east side of the ground
floor of the Senate Plaza, Erford Road and Senate Avenue, East Pennsboro
Township, Camp Hill, Pennsylvania. The Bank leases and occupies 10,792 square
feet on the ground floor, containing a banking floor, lobby, administrative
offices, and executive offices. The Bank has constructed its own leasehold
improvements in the main office.
This lease commenced January 1, 1985 and had an initial term of 5 years
with three 5-year options to renew. The Bank renegotiated the lease to provide
for a ten-year term. The Bank currently pays an annual rent of $209,365. The
lease contains a provision for incremental rental increases.
Under the lease, the Bank is required to pay its pro rata share of the
increase in operating expenses and property taxes of the building over and above
the building's operational expenses and property taxes for the calendar year
ending December 31, 1983. The Bank's pro rata share of the total building is
4.79%. At the present time, the Bank's monthly pro rata share of these expenses
is $1,311. Leasehold improvements and interior furnishings are the
responsibility of the Bank.
The Bank has also leased an additional area on the Senate Plaza site
for a drive-in kiosk at an annual rent of $6,992. The drive-in kiosk is an
independent facility built and maintained at Commerce's sole cost and expense.
Operations Facilities
Operations Center
The operations center is located on the northwest side of the second
floor of 3 Crossgates Drive, Hampden Township, Mechanicsburg, Pennsylvania. The
Bank leases and occupies 8,535 square feet of office space on the second floor.
The original lease for 5,235 square feet of office space commenced March 1, 1994
and had an initial term of 5 years with three 3-year renewal options. The Bank
exercised its option to renew the lease for the first 3-year renewal period in
1999. The Bank has constructed leasehold improvements in the office space at the
lessor's expense.
In February 1996, the Bank signed a lease for an additional 3,300
square feet of office space. The initial term of this lease is three years with
three 3-year renewal options. The Bank exercised its option to renew the lease
for the first 3-year renewal period in 1999. The Bank has constructed leasehold
improvements in this space at it own expense. The Bank currently pays a combined
annual rent for this location of $90,300. The leases contain provisions for
incremental rent increases.
Loan Production Offices
(1) The Bank leases an office at 4 Lemoyne Drive, Suite 100, Lemoyne
Borough, Lemoyne, Pennsylvania, as a loan production office. The lease for 1,885
square feet of office space commenced October 1, 1998, and has an initial term
of 2 years with a year-to-year renewal option. The Bank has constructed
leasehold improvements in the office space at its own expense. The Bank
currently pays annual rent of $28,020. The lease contains provisions for
incremental rent increases.
(2) The Bank leases an office at 205-2 St. Charles Way, York
Township,York, Pennsylvania, as a loan production office. The lease for 1,496
square feet of office space commenced December 1, 1998, and had an initial term
of 1 year with three 1-year renewal options. The Bank exercised its first 1-year
renewal option in December 1999. The Bank has constructed leasehold improvements
in the office space at its own expense. The Bank currently pays annual rent of
$19,062.
11
The lease contains provisions for incremental rent increases.
Branch Facilities
4700 Jonestown Road, Lower Paxton Township, Harrisburg, PA 17109-6216
The Bank entered into a land lease for the premises located at 4700
Jonestown Road, Harrisburg, Pennsylvania, consisting of a 36,007 square foot
lot. The Bank has constructed a full service branch on this land.
The land lease commenced on July 1, 1987, and has an initial term of 20
years. In addition, The Bank has an option to renew the land lease for three
additional 5-year terms. The Bank currently pays an annual rent of $40,000. Rent
is subject to increase on the terms set forth in the lease agreement.
4860 Carlisle Pike, Hampden Township, Mechanicsburg, PA 17055-3026
The Bank entered into a land lease for the premises located at 4860
Carlisle Pike, Mechanicsburg, Pennsylvania. The Bank constructed a full service
branch on this land.
The land lease commenced on October 1, 1988, and has an initial term of
20 years. In addition, the Bank has an option to renew the land lease for four
additional 5-year terms. The Bank currently pays an annual rent of $36,000. Rent
is subject to increase on the terms set forth in the lease agreement.
6071 Allentown Boulevard, Lower Paxton Township, Harrisburg, PA 17112-2673
The Bank entered into a land lease for the premises located at 6071
Allentown Boulevard, Harrisburg, Pennsylvania. The Bank constructed a full
service branch on this land.
The land lease commenced on January 1, 1992 and has an initial term of
20 years. In addition, the Bank has an option to renew the land lease for six
additional 5-year terms. The Bank currently pays an annual rent of $47,000. Rent
is subject to increase on the terms set forth in the lease agreement.
600 Walton Avenue, Derry Township, Hummelstown, PA 17036
The Bank purchased the parcel of land located at 600 Walton Avenue,
Hummelstown, Pennsylvania. The Bank constructed a full service branch office on
this land.
2160 South Queen Street, York, York County, Pennsylvania
The Bank purchased the parcel of land located at 2160 South Queen
Street, York, Pennsylvania. The Bank constructed a full service branch office on
this land.
2100 York Crossing Drive, West Manchester Township, York, York County,
Pennsylvania
The Bank entered into a land lease for the premises located at 2100
York Crossing Drive, York, Pennsylvania. The Bank constructed a full service
branch on this land.
The land lease commenced on April 23, 1996 and has an initial term of
20 years. In addition, the Bank has an option to renew the land lease for four
additional 5-year terms. The Bank currently pays an annual rent of $50,000. Rent
is subject to increase on the terms set forth in the lease agreement.
12
1098 Haines Road, Springettsbury Township, York, York County, Pennsylvania
The Bank entered into a land lease for the premises located at 1098
Haines Road, York, Pennsylvania. The Bank constructed a full service branch on
this land.
The land lease commenced on April 1, 1997 and has an initial term of 20
years. In addition, the Bank has an option to renew the land lease for one
additional 5-year term and a term of four years, eleven months thereafter. The
Bank currently pays annual rent of $51,000. Rent is subject to increase on the
terms set forth in the lease agreement.
5032 Simpson Ferry Road, Lower Allen Twp., Mechanicsburg, Cumberland County,
Pennsylvania
The Bank purchased the parcel of land at 5032 Simpson Ferry Road,
Mechanicsburg, Pennsylvania. The Bank constructed a full service branch office
on this land.
55 Arsenal Road, Manchester Township, York, York County, Pennsylvania
The Bank purchased the parcel of land located at 55 Arsenal Road in
Manchester Township, York, Pennsylvania. The Bank constructed a full service
branch office on this land.
65 Ashland Avenue, Borough of Carlisle, Carlisle, Cumberland County,
Pennsylvania
The Bank purchased the parcel of land located at 65 Ashland Avenue in
the Borough of Carlisle, Carlisle, Pennsylvania. The Bank constructed a full
service branch office on this land.
1120 Carlisle Road, Lower Allen Township, Camp Hill, Cumberland County,
Pennsylvania
The Bank has purchased the parcel of land located at 1120 Carlisle Road
in Lower Allen Township, Camp Hill, Pennsylvania. The Bank intends to construct
a full service branch office on this land by June 2000.
Palmyra Shopping Center, Borough of Palmyra, Palmyra, Lebanon County,
Pennsylvania
The Bank has entered into a land lease for the premises located on lot
#2, in the Palmyra Shopping Center, on Route #422 in Palmyra, Pennsylvania. The
Bank intends to construct a full service branch office on this land in the year
2000.
The land lease commenced on September 13, 1999 and has an initial term
of 20 years. In addition, the Bank has an option to renew the land lease for
four additional 5-year terms. Initial annual rent payments equal $60,000 and
will commence on the opening of the branch for business. Rent is subject to
increase on the terms set forth in the lease agreement.
In the opinion of management, the interest of the Company is adequately
covered by insurance in each of the above properties.
13
Item 3. Legal Proceedings
In prior years the Bank had reported on a multi-count lender liability
complaint against the Bank seeking unspecified damages. The Bank believed that
the complaint was without merit. The complaint was resolved with the Bank
borrower in the second quarter of 1999, with nominal costs to the Bank. In July
1999, the borrower withdrew the complaint.
In addition, the Company is also subject to certain other legal
proceedings and claims arising in the ordinary course of business. It is
management's opinion that the ultimate resolution of these claims will not have
a material adverse effect on the Company's financial position and results of
operations.
14
Part II.
Item 5. Market Price For the Registrant's Common Equity
and Related Shareholder Matters
Since August 25, 1994, the Company's common stock has traded on the
NASDAQ Small Cap Market tier of The NASDAQ Stock Market under the symbol COBH.
Prior to that time, there was no established market for the Company's common
stock. The preferred stock is not traded on any market.
The following table sets forth the prices for which common stock has
traded during the last two (2) fiscal years on the NASDAQ Small Cap Market. The
prices per share have been adjusted to reflect common stock dividends of 5% with
record dates of February 4, 2000 and January 29, 1999. As of December 31, 1999,
there were approximately 400 holders of record of the Company's common stock.
Sales Price
Quarter Ended: High Low
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March 31, 1999 $ 28.81 $ 25.62
June 30, 1999 27.38 25.24
September 30, 1999 25.60 21.43
December 31, 1999 23.81 20.00
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March 31, 1998 $ 27.21 $ 23.76
June 30, 1998 31.29 26.08
September 30, 1998 34.47 27.21
December 31, 1998 28.12 25.40
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Dividends and Dividend History
Neither the Company nor the Bank has declared or paid cash dividends on
its common stock since the Bank began operations in June 1985.
The holders of Common Stock of the Company are entitled to receive
dividends as may be declared by the Board of Directors with respect to the
Common Stock out of funds of the Company. While the Company is not subject to
certain restrictions on dividends and stock redemptions applicable to a bank,
the ability of the Company to pay dividends to the holders of its Common Stock
will depend to a large extent upon the amount of dividends paid by the Bank to
the Company.
The ability of the Company to pay dividends on its Common Stock in the
future will depend on the earnings and the financial condition of the Bank and
the Company. The Company's ability to pay dividends will be subject to the prior
payment by the Company of principal and interest on any debt obligations it may
incur in the future as well as other factors that may exist at the time.
Regulatory authorities restrict the amount of cash dividends the Bank
can declare without prior regulatory approval. Presently, the Bank cannot
declare a dividend in excess of its accumulated retained earnings.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Pennsylvania Commerce Bancorp, Inc,
Date: March 17, 2000 By /s/ James T Gibson
----------------------------
James T. Gibson
President and Chief Executive
Officer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Gary L. Nalbandian Chairman of the Board March 17, 2000
Gary L. Nalbandian
/s/ James T. Gibson President, Chief Executive Officer March 17, 2000
James T. Gibson and Director (Principal Executive
Officer)
/s/ Alan R. Hassman Director March 17, 2000
Alan R. Hassman
/s/ Michael A. Serluco Director March 17, 2000
Michael A. Serluco
/s/ Samir J. Srouji, M.D. Director March 17, 2000
Samir J. Srouji, M.D.
/s/ Mark A. Zody Executive Vice President (Chief March 17, 2000
Mark A. Zody Financial Officer and Principal
Accounting Officer)
16