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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended December 31, 1998
Commission file number 0-12508
S&T BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1434426
(State or other jurisdiction of
incorporation of organization) (I.R.S. Employer Identification No.)
800 Philadelphia Street, Indiana, PA 15701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (724) 349-1800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $2.50 per share
(Title of class)
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 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 (229.405 of this chapter) 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. { }
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of February 26, 1999:
Common Stock, $2.50 par value - $660,439,670
The number of shares outstanding of the issuer's classes of common
stock as of February 26, 1999:
Common Stock, $2.50 par value - 27,325,493 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended
December 31, 1998 are incorporated by reference into Part II.
Portions of the proxy statement for the annual shareholders
meeting to be held April 19, 1999 are incorporated by reference
into Part III.
PAGE 1
PART I
Item 1. BUSINESS
General
S&T Bancorp, Inc. ("S&T") was incorporated on March 17, 1983
under the laws of the Commonwealth of Pennsylvania as a bank holding
company and has two wholly owned subsidiaries, S&T Bank and S&T
Investment Company, Inc. S&T is registered as a bank holding company
with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act, as amended.
As of December 31, 1998, S&T had $2.1 billion in total assets,
$260 million in total shareholders' equity and $1.4 billion in
total deposits. Deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC") to the full extent provided by law.
Total trust assets were approximately $649 million at December
31, 1998. Trust services include services as executor and trustee
under wills and deeds, and as guardian and custodian of employee
benefit trusts.
S&T Bank is a full service bank with its Main Office at 800
Philadelphia Street, Indiana, Pennsylvania, providing service to
its customers through a branch network of 38 offices located in
Armstrong, Allegheny, Indiana, Jefferson, Clarion, Clearfield and
Westmoreland counties.
S&T Bank's services include accepting time and demand deposit
accounts, making secured and unsecured commercial and consumer
loans, providing letters of credit, and offering discount brokerage
services, personal financial planning and credit card services.
S&T Bank has a relatively stable deposit base and no material amount
of deposits is obtained from a single depositor or group of depositors
(including federal, state and local governments). S&T Bank does not
experience significant fluctuations in deposits.
Employees
As of December 31, 1998, S&T Bank had a total of 665 full-time
equivalent employees. S&T provides a variety of employment benefits
and considers its relationship with its employees to be good.
Supervision and Regulation
General
S&T and S&T Bank are each extensively regulated under both
federal and state law. The following information describes
certain aspects of that regulation applicable to S&T and S&T
Bank and does not purport to be complete. To the extent
statutory or regulatory provisions or proposals are described,
the description is qualified in its entirety by reference to the
particular statutory or regulatory provisions or proposals.
S&T
As a bank holding company, S&T is subject to regulation under
the Bank Holding Company Act of 1956 ("BHCA") and the examination
and reporting requirements of the Federal Reserve Board. Under the
BHCA, a bank holding company may not directly or indirectly acquire
ownership or control of more than five percent of the voting shares
or substantially all of the assets of any additional bank, or merge
or consolidate with another bank holding company, without the prior
approval of the Federal Reserve Board.
PAGE 2
Item 1. BUSINESS -- Continued
The BHCA also generally limits the activities of a bank holding
company to that of banking, managing or controlling banks, or any
other activity which is determined to be so closely related to banking
or to managing or controlling banks as to be a proper incident thereto.
S&T is presently engaged in two nonbanking activities: S&T Investment
Company, Inc., which is an investment holding company, and Commonwealth
Trust Credit Life Insurance Company ("CTCLIC"). S&T Investment Company,
Inc. was formed in June 1988 to hold and manage a group of investments
previously owned by S&T Bank and to give S&T additional latitude to pur-
chase other investments. CTCLIC, which is a joint venture with another
financial institution, acts as a reinsurer of credit life, accident and
health insurance policies sold by S&T Bank and the other institution.
There are a number of obligations and restrictions imposed on
bank holding companies and their depository institution subsidiaries
by federal law and regulatory policy that are designed to reduce
potential loss exposure to the depositors of such depository
institutions and to the FDIC insurance funds in the event the depository
institution becomes in danger of default or in default. For example,
under a policy of the Federal Reserve Board with respect to bank holding
company operations, a bank holding company is required to serve as a
source of financial strength to its subsidiary depository institutions
and to commit resources to support such institutions in circumstances
where it might not do so otherwise.
S&T Bank
As a state-chartered commercial bank, the deposits of which
are insured by the Bank Insurance Fund ("BIF") of the FDIC, S&T
Bank is subject to the supervision and regulation of the
Pennsylvania Department of Banking ("PADB") and the FDIC. S&T
Bank also is subject to various requirements and restrictions under
federal and state law, including requirements to maintain reserves
against deposits, restrictions on the types, amount and terms and
conditions of loans that may be granted, and limits on the type of
other activities in which S&T Bank may engage and the investments
it may make. Various consumer and compliance laws and regulations
also affect S&T Bank's operations.
S&T Bank also is subject to federal laws that limit the amount
of transactions between itself and S&T or S&T's nonbank subsidiaries.
Under these provisions, transactions by a bank subsidiary to its
parent company or any nonbank affiliate generally are limited to 10%
of the bank subsidiary's capital and surplus, or 20% in the aggregate.
Further, loans and extensions of credit generally are required to be
secured by eligible collateral in specified amounts. A bank, such as
S&T Bank, is prohibited from purchasing any "low quality" asset from
an affiliate. S&T Bank is in compliance with these provisions.
As an FDIC-insured bank, S&T Bank also is subject to FDIC
insurance assessments. Currently, the amount of FDIC assessments
paid by individual insured depository institutions ranges from zero
to $.27 per $100 of insured deposits, based on their relative risk
to the deposit insurance funds, as measured by the institutions'
regulatory capital position and other supervisory factors. S&T
Bank currently pays the lowest premium rate based upon this risk
assessment. However, because legislation enacted in 1996 requires
that all insured deposits pay a pro rata portion of the interest
due on the obligations issued by the Financing Corporation, the
FDIC is assessing BIF-insured deposits an additional $.013 per $100
of deposits to cover those obligations.
PAGE 3
Item 1. BUSINESS -- Continued
Capital
The Federal Reserve Board and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to
banking organizations they supervise. Under the risk-based capital
requirements, S&T and S&T Bank each generally is required to maintain
a minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of
credit), of eight percent. At least half of the total capital is to
be composed of common equity, retained earnings and qualifying
perpetual preferred stock, less certain intangibles ("Tier 1 capital").
The remainder may consist of certain subordinated debt, certain hybrid
capital instruments and other qualifying preferred stock, and a limited
amount of the loan loss allowance ("Tier 2 capital") and, together with
Tier 1 capital, ("Total capital"). At December 31, 1998, S&T's Tier 1
and Total capital ratios were 14.18 percent and 17.09 percent, respectively,
and the ratios of Tier 1 capital and Total capital to total risk-adjusted
assets for S&T Bank were 10.42 percent and 11.68 percent, respectively.
In addition, each of the federal bank regulatory agencies has
established minimum leverage capital ratio requirements for banking
organizations. These requirements provide for a minimum leverage
ratio of Tier 1 capital to adjusted average quarterly assets equal
to three percent for bank and bank holding companies that meet certain
specified criteria, including that they have the highest regulatory
rating and are not experiencing significant growth or expansion.
All other banks and bank holding companies will generally be required
to maintain a leverage ratio of at least 100 to 200 basis points above
the stated minimum. S&T's leverage ratio at December 31, 1998 was
10.68 percent, and S&T Bank's leverage ratio was 7.48 percent.
Both the Federal Reserve Board's and the FDIC's risk-based
capital standards explicitly identify concentrations of credit risk
and the risk arising from non-traditional activities, as well as an
institution's ability to manage these risks, as important factors to
be taken into account by the agency in assessing an institution's
overall capital adequacy. The capital guidelines also provide that
an institution's exposure to a decline in the economic value of its
capital due to changes in interest rates be considered by the agency
as a factor in evaluating a bank's capital adequacy. The Federal
Reserve Board also has recently issued additional capital guidelines
for certain bank holding companies that engage in trading activities.
S&T does not believe that consideration of these additional factors
will affect the regulators' assessment of S&T's or S&T Bank's capital
position.
Payment of Dividends
S&T is a legal entity separate and distinct from its banking
and other subsidiaries. A major portion of the revenues of S&T
result from amounts paid as dividends to S&T by S&T Bank. S&T Bank,
in turn, is subject to state laws and regulations that limit the
amount of dividends it can pay to S&T. In addition, both S&T and
S&T Bank are subject to various general regulatory policies relating
to the payment of dividends, including requirements to maintain
adequate capital above regulatory minimums. The Federal Reserve
Board has indicated that banking organizations should generally pay
dividends only if (1) the organization's net income available to
common shareholders over the past year has been sufficient to fund
fully the dividends and (2) the prospective rate of earnings retention
appears consistent with the organization's capital needs, asset quality
and overall financial condition. S&T does not expect that any of these
laws, regulations or policies will materially impact its ability or the
ability of S&T Bank to pay dividends. During the year ended December
31, 1998, S&T Bank paid $17.5 million in cash dividends to S&T.
PAG3 4
Item 1. BUSINESS -- Continued
Other Safety and Soundness Regulations
The federal banking agencies possess broad powers under
current federal law to take prompt corrective action to resolve
problems of insured depository institutions. The extent of
these powers depends upon whether the institution in question
is "well capitalized," "adequately capitalized," "undercapital-
ized," "significantly undercapitalized," or "critically under-
capitalized," as defined by the law. As of December 31, 1998,
S&T Bank was classified as "well capitalized." The classific-
ation of depository institutions is primarily for the purpose of
applying the federal banking agencies' prompt corrective action
provisions and is not intended to be, and should not be interpreted
as, a representation of overall financial condition or prospects
of any financial institution.
The agencies' prompt corrective action powers can include,
among other things, requiring an insured depository institution
to adopt a capital restoration plan which cannot be approved
unless guaranteed by the institution's parent company; placing
limits on asset growth and restrictions on activities, including
restrictions on transactions with affiliates; restricting the
interest rates the institution may pay on deposits; prohibiting
the payment of principal or interest on subordinated debt;
prohibiting the holding company from making capital distributions
without prior regulatory approval and, ultimately, appointing a
receiver for the institution. Among other things, only a "well
capitalized" depository institution may accept brokered deposits
without prior regulatory approval.
The PADB also has broad enforcement powers over S&T Bank,
including the power to impose fines and other civil and criminal
penalties, and to appoint a conservator or receiver.
Interstate Banking and Branching
The BHCA currently permits bank holding companies from any
state to acquire banks and bank holding companies located in any
other state, subject to certain conditions, including certain
nation-wide and state-imposed concentration limits. Effective
June 1, 1997, S&T Bank has the ability, subject to certain
restrictions, including state opt-out provisions, to acquire
by acquisition or merger, branches of banks located outside of
Pennsylvania, its home state. States may affirmatively opt-in
to permit these transactions earlier, which Pennsylvania, among
other states, has done. The establishment of de novo interstate
branches also will be possible in those states that expressly
permit it. Once a bank has established branches in a state through
an interstate merger transaction, the bank may establish and acquire
additional branches at any location in the state where a bank
headquartered in that state could have established or acquired
branches under applicable federal or state law.
Competition
All phases of S&T Bank's business are highly competitive.
S&T Bank's market area is western Pennsylvania, with a represent-
ation in Indiana, Armstrong, Allegheny, Jefferson, Clarion,
Clearfield and Westmoreland counties. S&T Bank competes with
those local commercial banks which have branches and customer
calling programs in its market area. S&T Bank considers its
major competitors to be First Commonwealth Bank headquartered in
Indiana, PA; People's Bank headquartered in Ford City, PA; Indiana
First Savings Bank headquartered in Indiana, PA; Clearfield Bank
and Trust Company, headquartered in Clearfield, PA and Marion Center
National Bank, headquartered in Marion Center, PA. The proximity of
Indiana to metropolitan Pittsburgh results in a significant impact
on the S&T market because of media influence and penetration by
larger financial institutions, such as Mellon Bank, National City
Bank and PNC Bank.
PAGE 5
Item 1. BUSINESS -- Continued
Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential.
The following discussion and analysis is presented so that
shareholders may review in further detail the financial condition
and results of operations of S&T. This discussion and analysis
should be read in conjunction with the consolidated financial
statements, selected financial data and management's discussion
and analysis incorporated by reference. References to assets and
liabilities and changes thereto represent daily average balances
for the periods discussed, unless otherwise noted.
Net interest income represents the difference between the
interest and fees earned on interest-earning assets and the interest
paid on interest-bearing liabilities. Net interest income is
affected by changes in the volume of interest-earning assets and
interest-bearing liabilities and changes in interest yields and
rates. Interest on loans to and obligations of state, municipal-
ities and other public entities is not subject to federal income tax.
As such, the stated (pre-tax) yield on these assets is lower than the
yields on taxable assets of similar risk and maturity. In order to
make the pre-tax income and resultant yields comparable to taxable
loans and investments, a taxable equivalent adjustment was added to
interest income in the tables below. This adjustment has been
calculated using the U.S. federal statutory income tax rate of 35%
for 1998, 1997 and 1996. The following table demonstrates the amount
that has been added to interest income per the summary of operations.
[CAPTION]
Year Ended December 31
1998 1997 1996
(In thousands of dollars)
Interest income per consolidated
statements of income $151,438 $141,101 $132,442
Adjustment to fully taxable
equivalent basis 3,048 3,335 3,469
Interest income adjusted to fully
taxable equivalent basis 154,486 144,436 135,911
Interest expense 69,156 62,284 58,589
Net interest income adjusted to fully
taxable equivalent basis $85,330 $82,152 $77,322
PAGE 6
Item 1. BUSINESS -- Continued
Average Balance Sheet and Net Interest Income Analysis
[CAPTION]
December 31
1998 1997 1996
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
(IN THOUSANDS OF DOLLARS)
ASSETS
>C>
Interest-earning
assets:
Loans (1)(2) $1,314,984 $115,993 8.82% $1,234,733 $109,781 8.89% $1,131,186 $100,373 8.87%
Taxable investment
securities 502,889 35,784 7.12% 405,840 30,663 7.56% 411,560 30,871 7.50%
Tax-exempt investment
securities (2) 28,459 2,395 8.42% 41,850 3,461 8.27% 52,026 4,332 8.33%
Interest-earning
deposits with banks 83 6 7.23% 111 8 7.21% 73 5 6.85%
Federal funds sold 5,812 308 5.30% 9,528 523 5.49% 6,097 330 5.41%
Total interest-earning
assets (3) 1,852,227 154,486 8.34% 1,692,062 144,436 8.54% 1,600,942 135,911 8.49%
Noninterest-earning
assets:
Cash and due from
banks 39,395 36,185 38,741
Premises and equip-
ment, net 20,905 19,752 19,419
Market value appreci-
ation of securities
available for sale 60,811 46,626 33,524
Other assets 44,755 38,971 36,972
Less allowance for loan
losses (23,562) (19,802) (17,630)
$1,994,531 $1,813,794 $1,711,968
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing
liabilities:
NOW/Money market
accounts $327,851 $10,146 3.09% $294,356 $8,772 2.98% $242,838 $7,628 3.14%
Savings deposits 172,525 3,914 2.27% 187,394 4,340 2.32% 206,287 5,049 2.45%
Time deposits 642,681 35,510 5.53% 626,192 34,854 5.57% 605,693 33,448 5.52%
Federal funds
purchased 7,007 383 5.47% 8,369 472 5.64% 5,812 319 5.49%
Securities sold
under agreements
to repurchase 170,961 8,968 5.25% 126,481 6,602 5.22% 135,199 7,006 5.18%
Long-term borrowing 185,959 10,226 5.50% 123,722 7,227 5.84% 88,613 5,071 5.72%
Other borrowed funds 130 9 6.92% 230 17 7.39% 641 68 10.61%
Total interest-bearing
liabilities (3) 1,507,114 69,156 4.59% 1,366,744 62,284 4.56% 1,285,083 58,589 4.56%
Noninterest-bearing
liabilities:
Demand deposits 183,435 161,339 151,863
Other 47,423 42,048 34,235
Shareholders' equity 256,559 243,663 217,138
$1,994,531 $1,813,794 $1,688,319
Net interest income $85,330 $82,152 $77,322
Net yield on interest-
earning assets 4.61% 4.85% 4.83%
(1) For the purpose of these computations, nonaccruing loans are
included in the daily average loan amounts outstanding.
(2) Tax-exempt income is on an FTE basis, including the dividend
received deduction for equity securities, using the statutory
federal income tax rate of 35% for 1998, 1997 and 1996.
(3) Yields are calculated using historical cost basis.
PAGE 7
Item 1. BUSINESS -- Continued
The following tables set forth for the periods indicated a
summary of the changes in interest earned and interest paid
resulting from changes in volume and changes in rates:
[CAPTION]
1998 Compared to 1997 1997 Compared to 1996
Increase (Decrease) Due to (1) Increase (Decrease) Due to (1)
Volume Rate Net Volume Rate Net
(In thousands of dollars)
Interest earned on:
Loans (2) $7,135 ($923) $6,212 $9,188 $220 $9,408
Taxable investment
securities 7,332 (2,211) 5,121 (429) 221 (208)
Tax-exempt investment
securities (2) (1,107) 41 (1,066) (847) (24) (871)
Interest-earning
deposits (2) 0 (2) 3 0 3
Federal funds sold (204) (11) (215) 186 7 193
Total interest-earning
assets $13,154 ($3,104) $10,050 $8,101 $424 $8,525
Interest paid on:
NOW/Money market
accounts $3,597 ($2,223) $1,374 $1,141 $3 $1,144
Savings deposits (344) (82) (426) (462) (247) (709)
Time deposits 918 (262) 656 1,132 274 1,406
Securities sold under
agreements to
repurchase 2,322 44 2,366 (452) 48 (404)
Federal funds purchased (77) (12) (89) 140 13 153
Long-term borrowings 3,635 (636) 2,999 2,009 147 2,156
Other borrowed funds (7) (1) (8) (44) (7) (51)
Total interest-bearing
liabilities $10,044 ($3,172) $6,872 $3,464 $231 $3,695
Change in net interest
income $3,178 $4,830
(1) The change in interest due to both volume and rate has been
allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of the change
in each.
(2) Tax-exempt income is on an FTE basis using the statutory
federal income tax rate of 35% for 1998, 1997 and 1996.
PAGE 8
Item 1. BUSINESS -- Continued
INFLATION AND CHANGING INTEREST RATES
The majority of assets and liabilities of a financial
institution are monetary in nature and therefore differ
greatly from most commercial and industrial companies that
have significant investments in fixed assets or inventory.
Fluctuations in interest rates and the efforts of the Federal
Reserve Board to regulate money and credit conditions have a
greater effect on a financial institution's profitability than
do the effects of higher costs for goods and services. Through
its asset/liability management committee ("ALCO"), S&T is
positioned to cope with changing interest rates and inflationary
trends. ALCO monitors and manages interest rate sensitivity
through gap, simulation and duration analysis.
The schedule below presents S&T's interest rate sensitivity
at December 31, 1998 using gap analysis. The gap and cumulative
gap represents the net position of assets and liabilities subject
to repricing in specified time periods, as measured by a ratio of
rate sensitive assets to rate sensitive liabilities. ALCO policy
guidelines for cumulative gap in the six and twelve month time
frames, annually approved by the S&T Board of Directors, is
currently a .85 to 1.15 range. Management believes this range
provides an acceptable and manageable level of interest rate
risk for S&T. Significant to gap analysis is the expected rate
of asset prepayment, calls on securities and the behavior of
depositors during periods of changing interest rates. For
example, in periods of declining interest rates, borrowers can
be expected to accelerate loan prepayments and refinancings;
depositors will tend to hold those certificates of deposits with
rates currently higher than the market. Conversely, in a rising
interest rate scenario, borrower refinancings and prepayments
typically decrease, while deposit shifting and early withdrawals
tend to accelerate as depositors position funds to earn higher
yields.
ALCO continually monitors these historical behavior patterns
through periods of changing interest rates, and uses this
information to develop loan prepayments and decay rates for
Core Deposits (demand, NOW, savings). The gap analysis below
incorporates a flat rate scenario, and the following significant
assumptions:
Monthly loan prepayments above contractual requirements
5 year ARM - Commercial Real Estate 1.50 %
Fixed Rate - Commercial Real Estate 1.25
Residential Real Estate 1.75
New Indirect Auto Loans 2.00
Other Installment Loans 2.75
Deposit behavioral patterns/decay rate assumptions
NOW and Savings - Year #1 25.00 %
NOW and Savings - Year #2 25.00
NOW and Savings - beyond Year #2 50.00
Money market pricing is indexed and
tiered to market interest rates. NA
S&T has not historically experienced
fluctuations in demand deposit balances
during periods of interest rate fluctuations. NA
Swaps
Reflects that portion of borrowings whose interest
rate risk is reduced due to the effects of interest
rate swaps.
PAGE 9
Item 1. BUSINESS -- Continued
[CAPTION]
Interest Rate Sensitivity
December 1998
(thousands of dollars)
GAP 1-6 Months 7-12 Months 13-24 Months >2 Years
Repricing Assets:
Cash/Due From Banks $0 $0 $0 $48,789
Federal Funds 19,300 0 0 0
Securities 112,486 87,599 211,319 180,084
Net Loans 537,401 153,269 211,043 437,520
Other Assets 0 0 0 70,804
Total $669,187 $240,868 $422,362 $737,197
Repricing Liabilities:
Demand $0 $0 $0 $215,666
NOW 15,424 15,424 30,846 61,694
Money Market 239,341 0 0 0
Savings/Clubs 21,060 21,060 42,122 84,243
Certificates 244,034 142,927 143,355 102,868
Repos & Short-term
Borrowings 128,262 564 0 0
Long-term Borrowings 19,600 0 0 220,468
Swaps 0 0 10,000 0
Other Liabilities/Equity 0 0 0 310,656
Total $667,721 $179,975 $226,323 $995,595
GAP $1,466 $60,893 $196,039 ($258,398)
Cumulative GAP $1,466 $62,359 $258,398 $0
Immediate
Rate Sensitive Assets/Rate Current Policy Core Deposits
Sensitive Liabilities Month Guideline Repricing
Cumulative 6 months 1.00 .85-1.15 0.72
Cumulative 12 months 1.07 .85-1.15 0.85
S&T's six month and one year gap position at December 31,
1998 is asset sensitive. Asset sensitive means that more assets
than liabilities of S&T will reprice during the measured time
frames. The implications of an asset sensitive position will
differ depending upon the current trend of market interest rates.
For example, an asset sensitive position in a declining
interest rate environment, the yields on repricing assets can
theoretically be expected to decline more quickly than the cost
of S&T repricing liabilities. This situation would cause a
decrease to S&T's interest rate spreads, net interest income
and to operating income. Liquidity impacts in this scenario,
other than decreased yields, would not be material unless
serious ongoing declines in operating results caused depositors,
lenders and investors to lose confidence.
Conversely, an asset sensitive gap position in a rising
interest rate scenario would theoretically have a positive impact
to interest rate spreads, net income and to operating income.
Liquidity impacts would not be material in the short-term; in the
long-term, improved operating income is always beneficial to
liquidity issues.
Gap analysis usefulness as a measurement of interest rate
risk is limited because the time period measured is static.
Simulation provides a more dynamic modeling tool for interest
rate risk since this technique can incorporate future assumptions
about interest rates, volume fluctuations and customer behaviors.
ALCO uses simulation to measure changes in net interest income
during a 2%, plus or minus, change in current market interest rates
(Rate Shock Analysis). Current ALCO policy guidelines require that
declines in forecasted net interest income do not exceed 3% as a
result of Rate Shock Analysis.
Duration techniques are a relatively new addition to S&T's
interest rate risk monitoring tools. Duration modeling is
primarily used to assist in match fundings for large commercial
loans, security purchases and segments of the installment loan
portfolios.
PAGE 10
Item 1. BUSINESS -- Continued
Securities
S&T invests in various securities in order to provide
a source of liquidity, increase net interest income and as
an ALCO tool to quickly reposition the balance sheet for
interest rate risk purposes. Securities are subject to
similar interest rate and credit risks as loans. In addition,
by their nature, securities classified as available for sale
are also subject to market value risks that could negatively
affect the level of liquidity available to S&T, as well as
equity.
Risks associated with various securities portfolios are
managed and monitored by investment policies annually approved
by the S&T Board of Directors, and administered through ALCO
and the Chief Investment Officer. As of December 31, 1998,
management is not aware of any risk associated with securities
that would be expected to have a significant, negative effect
to S&T's statement of condition or statement of operations.
The following table sets forth the carrying amount of
securities at the dates indicated:
[CAPTION]
December 31
1998 1997 1996
(In thousands of dollars)
Available for Sale
Marketable equity securities $115,532 $101,639 $75,805
Obligations of U.S. government corporations
and agencies 357,417 341,288 235,924
Collateralized mortgage obligations of
U.S. government corporations and agencies 0 0 4,182
Mortgage-backed securities 8,715 14,542 47,462
U.S. Treasury securities 27,952 39,473 58,742
Corporate securities 36,353 11,064 14,550
Other securities 19,172 13,111 13,136
TOTAL $565,141 $521,117 $449,801
Held to Maturity
Obligations of states and political
subdivisions $21,009 $37,497 $46,334
Corporate securities 1,999 1,998 1,998
Other securities 3,337 7,608 1,928
TOTAL $26,345 $47,103 $50,260
PAGE 11
Item 1. BUSINESS -- Continued
The following table sets forth the maturities of securities
at December 31, 1998, and the weighted average yields of such
securities (calculated on the basis of the cost and effective
yields weighted for the scheduled maturity of each security).
Tax-equivalent adjustments (using a 35% federal income tax rate)
for 1998 have been made in calculating yields on obligations of
state and political subdivisions.
Maturing
Within After One But After Five But After No Fixed
One Year Within Five Years Within Ten Years Ten Years Maturity
Amount Yield Amount Yield Amount Yield Amount Yield Amount
(in thousands of dollars)
Available for Sale
Marketable equity securities $115,532
Obligations of U.S. government
corporations and agencies $10,170 7.47% $242,703 6.25% $104,545 7.39%
Mortgage-backed securities 194 6.49% 4,632 7.64% $3,889 7.51%
U.S. Treasury securities 12,712 7.27% 8,571 7.20% 6,669 7.81%
Corporate securities 615 8.70% 26,177 6.59% 9,560 6.19%
Other securities 19,172
TOTAL $23,691 $277,451 $125,406 $3,889 $134,704
Weighted Average Rate 7.39% 6.31% 7.33% 7.51%
Held to Maturity
Obligations of states and
political subdivisions $4,934 7.46% $12,436 8.50% $3,639 8.87%
Corporate securities 1,999 7.15%
Other securities $3,337
TOTAL $4,934 $14,435 $3,639 $0 $3,337
Weighted Average Rate 7.46% 8.31% 8.87% 0.00%
PAGE 12
Item 1. BUSINESS -- Continued
Loan Portfolio
The following table shows S&T's loan distribution at the end
of each of the last five years:
[CAPTION]
December 31
1998 1997 1996 1995 1994
(In thousands of dollars)
Domestic Loans:
Commercial, mortgage
and industrial $672,742 $582,401 $496,863 $450,932 $416,036
Real estate-construction 87,246 47,967 35,508 30,191 35,660
Real estate-mortgage 492,570 512,417 513,424 461,822 413,533
Installment 113,351 130,968 154,341 160,437 161,105
TOTAL LOANS $1,365,909 $1,273,753 $1,200,136 $1,103,382 $1,026,334
The following table shows the maturity of loans (excluding
residential mortgages of 1-4 family residences and installment
loans) outstanding as of December 31, 1998. Also provided are
the amounts due after one year classified according to the
sensitivity to changes in interest rates.
[CAPTION]
Maturing
After One
Within But Within After
One Year Five Years Five Years Total
Commercial, mortgage
and industrial $259,634 $204,121 $208,987 $672,742
Real estate-construction 18,199 33,849 35,198 87,246
TOTAL $277,833 $237,970 $244,185 $759,988
Fixed interest rates $92,797 $62,036
Variable interest rates 145,173 182,149
TOTAL $237,970 $244,185
PAGE 13
Item 1. BUSINESS -- Continued
Nonaccrual, Past Due and Restructured Loans
The following table summarizes S&T's nonaccrual, past due
and restructured loans:
[CAPTION]
December 31
1998 1997 1996 1995 1994
(IN THOUSANDS OF DOLLARS)
Nonaccrual loans $2,933 $3,602 $10,268 $4,748 $3,894
Accruing loans past
due 90 days or more $0 $0 $0 $0 $0
At December 31, 1998, $2,933,000 of nonaccrual loans were secured.
Interest income that would have been recorded under original terms
totaled $337,000. No interest income was recorded on these loans.
It is S&T's policy to place loans on nonaccrual status when collection
of interest or principal is doubtful, or generally when interest or
principal are 90 days or more past due. The accrual of interest on
impaired loans is discontinued when, in management's opinion, the
borrower may be unable to meet payments as they become due. At
December 31, 1998, there were no impaired loans that were on
nonaccrual. There are no foreign loan amounts required to be included
in this table. There were no restructured loans in the periods presented.
Summary of Loan Loss Experience
Management evaluates the degree of loss exposure for loans on
a continuous basis through a formal loan policy as administered by
the Loan Administration Department and various management and director
committees. Problem loans are identified and continually monitored
through detailed reviews of specific large dollar loans, and the
analysis of delinquency and charge-off levels of consumer loan
portfolios. Charged-off and recovered loan amounts are applied to
the allowance for loan losses. Quarterly updates are presented to
the S&T Board of Directors as to the status of loan quality.
Additional amounts are added through a charge to current earnings
through the provision for loan losses, based upon management's assess-
ment about the adequacy of the allowance for loan losses for probable
loan losses. A quantitative analysis is utilized to support the
adequacy of the allowance for loan losses. This analysis includes
review of the high and low historical charge-off rates for loan
categories, fluctuations and trends in the amount of classified loans
and economic factors. Economic factors consider the level of S&T's
historical charge-offs that have occurrence within the credits economic
life cycle. Management also assesses other subjective factors such as
economic conditions and business trends, concentrations, growth and
composition of the loan portfolio and effectiveness of the Loan
Administration Department.
Significant to this analysis and assessment is the shift in
loan portfolio composition to an increased mix of commercial loans.
These loans are generally larger in size and due to our continuing
growth, many are not well seasoned and could be more vulnerable to
an economic slowdown. Management relies on its risk rating process
to monitor trends which may be occurring relative to commercial
loans to assess potential weaknesses within specific credits.
Current economic factors and trends in risk ratings are considered
in the determination of the allowance for loan losses.
This analysis and assessment results in an allowance for
loan losses consisting of two components, allocated and unallocated.
The allocated component of the allowance for loan losses reflects
expected losses resulting from the analysis of individual loans
developed through specific ratings and allocations, and historical
loss experience for categories of loans. The specific allocations
are based upon regular analysis of loans and commitments over a fixed
dollar amount and the internal credit rating for the loan or commit-
ment. Categories of smaller individual loans are allocated based upon
historical losses and current delinquency levels.
PAGE 14
Item 1. BUSINESS -- Continued
The unallocated component is primarily subjective based
upon management's assessment of nonquantifiable factors that
make historical trend analyses difficult:
Economic factors
Loan concentration in western Pennsylvania.
Significant commercial loan volume increases in
the last three years in new markets with new customers.
The introduction of several new consumer products.
Increased commercial real estate lending.
Recent increases in charged-off and impaired loans.
Peer analysis.
The allowance for loan losses in each of the years presented
below considered management's assessment of the factors noted above,
along with the growth in the loan portfolio. The additions to the
allowance charged to operating expense has maintained the allowance
as a percent of loans at the following levels at the end of each
year presented.
Year Ended December 31
1998 1997 1996 1995 1994
1.95% 1.60% 1.56% 1.55% 1.48%
S&T has considered impaired loans in its determination of
the allowance for loan losses. The allowance for loan losses for
all impaired loans totaled $133,000 and $914,000 at December 31,
1998 and 1997, respectively, and is included in the allowance
allocated specifically to commercial loans.
Asset quality is a major corporate objective at S&T.
Based on the evaluation of loan quality and assessment of risk
characteristics, management believes that the allowance for
loan losses is adequate to absorb probable loan losses.
This table summarizes S&T's loan loss experience for each of
the five years ended December 31:
[CAPTION]
Year Ended December 31
1998 1997 1996 1995 1994
(In thousands of dollars)
Balance at January 1: $20,427 $18,729 $17,065 $15,169 $14,242
Charge-offs:
Commercial, mortgage
and industrial 2,905 1,654 2,986 1,313 2,333
Real estate-mortgage 1,497 1,056 405 148 196
Installment 1,597 1,771 2,145 1,578 1,258
5,999 4,481 5,536 3,039 3,787
Recoveries:
Commercial, mortgage
and industrial 713 517 1,591 294 505
Real estate-mortgage 389 221 105 107 188
Installment 597 441 329 314 421
1,699 1,179 2,025 715 1,114
Net charge-offs 4,300 3,302 3,511 2,324 2,673
Provision for loan losses 10,550 5,000 5,175 4,220 3,600
Balance at December 31: $26,677 $20,427 $18,729 $17,065 $15,169
Ratio of net charge-offs
to average loans outstanding 0.33% 0.27% 0.31% 0.22% 0.28%
PAGE 15
Item 1. BUSINESS -- Continued
[CAPTION]
This table shows allocation of the allowance for loan losses as of the end of each of the last five years:
December 31, 1998 December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1994
Percent of Percent of Percent of Percent of Percent of
Loans in Loans in Loans in Loans in Loans in
Each Each Each Each Each
Category to Category to Category to Category to Category to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans
(In thousands of dollars)
Commercial, mortgage
and industrial $16,850 49% $13,556 46% $9,605 41% $8,579 41% $9,578 41%
Real estate-construc-
tion 0 7% 0 4% 0 3% 0 3% 0 3%
Real estate-mortgage 1,096 36% 763 40% 1,680 43% 1,321 42% 1,215 40%
Installment 2,635 8% 1,865 10% 1,859 13% 1,803 14% 1,510 16%
Unallocated 6,096 0% 4,243 0% 5,585 0% 5,362 0% 2,866 0%
TOTAL $26,677 100% $20,427 100% $18,729 100% $17,065 100% $15,169 100%
Deposits
The daily average amount of deposits and rates paid on such
deposits is summarized for the periods indicated in the following table:
[CAPTION] Year Ended December 31
1998 1997 1996
Amount Rate Amount Rate Amount Rate
(In thousands of dollars)
Noninterest-bearing
demand deposits $183,435 $161,339 $151,863
NOW/ Money market
accounts 327,851 3.09% 294,356 2.98% 242,838 3.14%
Savings deposits 172,525 2.27% 187,394 2.32% 206,287 2.45%
Time deposits 642,681 5.53% 626,192 5.57% 605,693 5.52%
TOTAL $1,326,492 $1,269,281 $1,206,681
Maturities of time certificates of deposit of $100,000 or more
outstanding at December 31, 1998, are summarized as follows:
(In thousands of dollars)
[CAPTION]
3 Months or less $39,268
Over 3 through 6 months 9,887
Over 6 through 12 months 16,301
Over 12 months 25,716
TOTAL $91,172
Return on Equity and Assets
The table below shows consolidated operating and capital ratios
of S&T for each of the last three years:
[CAPTION]
Year Ended December 31
1998 1997 1996
Return on average assets 1.90% 1.84% 1.65%
Return on average equity 14.80% 13.71% 13.01%
Dividend payout ratio 46.14% 42.54% 37.77%
Equity to asset ratio 12.55% 13.55% 12.65%
PAGE 16
Item 1. BUSINESS -- Continued
Short-Term Borrowings
The following table shows the distribution of S&T's short-term
borrowings and the weighted average interest rates thereon at the
end of each of the last three years. Also provided are the maximum
amount of borrowings and the average amounts of borrowings as well
as weighted average interest rates for the last three years.
Federal Funds
Purchased and
Securities
Sold Under
Agreements
to Repurchase
(In thousands of dollars)
Balance at December 31:
1998 $138,825
1997 179,449
1996 114,980
Weighted average interest rate at year end:
1998 4.63%
1997 5.82%
1996 5.68%
Maximum amount outstanding at any month's end:
1998 $251,030
1997 195,024
1996 180,776
Average amount outstanding during the year:
1998 $177,968
1997 134,851
1996 141,012
Weighted average interest rate during the year:
1998 5.29%
1997 5.31%
1996 5.24%
S&T defines repurchase agreements with its retail customers
as retail REPOs; wholesale REPOs are those transacted with other
banks and brokerage firms with terms normally ranging from 1 to
14 days.
PAGE 17
Item 2. PROPERTIES
S&T operates 38 banking offices in Indiana, Armstrong,
Allegheny, Jefferson, Clearfield, Clarion, Westmoreland
and surrounding counties in Pennsylvania. S&T owns land
and banking offices at the following locations: 800
Philadelphia Street, 2175 Route 286 South in Indiana;
Route 119 South & Lucerne Road and 34 North Main Street
in Homer City; 232 North Hampton Avenue in Punxsutawney;
133 Philadelphia Street in Armagh; Route 119 in Black
Lick; 256 Main Street and Route 36 & I-80 in Brookville;
456 Main Street in Brockway; Route 28 & Carrier Street
in Summerville; 602 Salt Street in Saltsburg; 35 West
Scribner Avenue, Treasure Lake; and 614 Liberty Boulevard
in DuBois; 418 Main Street in Reynoldsville; 205 East
Market Street in Blairsville; 85 Greensburg Street in
Delmont; 100 South Chestnut Street in Derry; 109 Grant
Avenue in Vandergrift; 100 South Fourth Street in
Youngwood; 701 East Pittsburgh Street in Greensburg;
2190 Hulton Road in East Oakmont; 4385 Old William Penn
Highway in Monroeville; 7660 Saltsburg Road in Plum;
12262 Frankstown Road in Penn Hills; 410 Main Street in
Clarion; and 301 Unity Center Road in Unity. Land is
leased where S&T owns the banking offices at 1107 Wayne
Avenue and remote ATM buildings at 435 South Seventh Street
and 1176 Grant Street, all in Indiana; 8th and Merle Street
and Gemmel Student Center in Clarion; 730 East Pittsburgh
Street in Greensburg; and 523 Franklin Avenue in Vandergrift.
In addition, S&T leases land and banking offices at the
following locations: Chestnut Ridge Plaza in Blairsville;
324 North Fourth Street and 2850 Route 286 South and Hospital
Road in Indiana; the Mall Office in DuBois; 229 Westmoreland
Mall; 2388 Route 286 in Holiday Park; Route 268 Hilltop Plaza
in Kittanning and a remote ATM location at the Main Street
Mall in DuBois.
Item 3. LEGAL PROCEEDINGS
The nature of S&T's business generates a certain
amount of litigation involving matters arising in the
ordinary course of business. However, in the opinion
of management, there are no proceedings pending to
which S&T is a party or to which its property is subject,
which, if determined adverse, would be material in
relation to its shareholders' equity or financial condition.
In addition, no material proceedings are pending nor are
known to be threatened or contemplated against S&T by
governmental authorities or other parties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters during the fourth quarter of
the fiscal year covered by this report that were
submitted to a vote of the security holders through
solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
Stock Prices and Dividend Information on page 54 and
Dividend and Loan Restrictions on page 44 of the Annual
Report for the year ended December 31, 1998, incorporated
herein by reference.
Item 6. SELECTED FINANCIAL DATA
Selected Financial Data on pages 54 and 55 of the
Annual Report for the year ended December 31, 1998,
incorporated herein by reference.
PAGE 18
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial
Condition and Results of Operations on pages 21 through
30 of the Annual Report for the year ended December 31,
1998, incorporated herein by reference.
Item 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures about Market
Risk on pages 27 and 28 of the Annual Report for the year
ended December 31, 1998, incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, Report of
Independent Auditors and Quarterly Selected Financial
Data on pages 31 through 53 and page 55 of the Annual
Report for the year ended December 31, 1998, incorpor-
ated herein by reference.
Item 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
There have been no changes in accountants or disagree-
ments with accountants on accounting and financial disclosures.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Election of Directors on pages 4 through 5 of the
proxy statement for the April 19, 1999, annual meeting
of shareholders, incorporated herein by reference.
Executive Officers
Number of
Shares
For the Officer Beneficially
Name Corporation Since Owned (1) Age
Robert D. Duggan Chairman 1983 180,927 66
and Director
James C. Miller President, Chief 1983 154,516 53
Executive Officer
and Director
James G. Barone Executive Vice 1992 50,682 51
President,
Secretary and
Treasurer
Robert E. Rout Executive Vice 1993 39,014 46
President and
Chief Financial
Officer
Bruce W. Salome Executive Vice 1991 76,773 52
President
Edward C. Hauck Executive Vice 1991 47,090 46
President
PAGE 19
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -- Continued
Executive Officers (continued)
Number of
Shares
For the Officer Beneficially
Name Corporation Since Owned (1) Age
David L. Krieger Executive Vice 1984 22,680 55
President
J. Jeffrey Smead Executive Vice 1992 53,731 47
President
William H. Klumpp Senior Vice 1994 14,971 55
President
Edward A. Onderick Senior Vice 1989 56,774 54
President
David P. Ruddock Senior Vice 1998 6,038 37
President
(1) May include shares held by spouse, other family members,
as trustee or through a corporation, and nonstatutory
stock options vesting within 60 days of the date of this
10-K Report. The reporting person may disclaim beneficial
ownership of such shares.
PAGE 20
Item 11. EXECUTIVE COMPENSATION
Remuneration of Executive Officers on pages 7 and 8 of
the proxy statement for the April 19, 1999, annual meeting
of shareholders, incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Principal Beneficial Owners of Common Stock on page 3
of the proxy statement for the April 19, 1999, annual
meeting of shareholders, incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others on pages 10 and
11 of the proxy statement for April 19, 1999, annual
meeting with shareholders, incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) List of financial statements and financial statement schedules
(1) The following Consolidated Financial Statements and
Report of Independent Auditors of S&T Bancorp, Inc. and
subsidiaries included in the annual report of the registrant
to its shareholders for the year ended December 31, 1998,
are incorporated by reference in Part II, Item 8:
Page
Reference
Report of Ernst & Young LLP, Independent Auditors 53
Consolidated Balance Sheets
December 31, 1998 and 1997 31
Consolidated Statements of Income
Year ended December 31, 1998, 1997, and 1996 32
Consolidated Statements of Changes in Shareholders' Equity
Year ended December 31, 1998, 1997, and 1996 33
Consolidated Statements of Cash Flows
Year ended December 31, 1998, 1997, and 1996 34
Notes to Consolidated Financial Statements
December 31, 1998 35-52
Quarterly Selected Financial Data 55
PAGE 21
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
(2) Schedules to the consolidated financial statements
required by Article 9 of Regulation S-X are not required
under the related instructions or are inapplicable, and
therefore have been omitted.
(3) Listings of Exhibits - See Item 14 (c) below
(b) Reports on Form 8-K
Form 8-K dated September 21, 1998 was filed by S&T
Bancorp, Inc. announcing a two-for-one stock split
which was effected in the form of a 100% stock
dividend.
(c) Exhibits
(3.1) Articles of Incorporation of S&T Bancorp, Inc.
filed as Exhibit B to Registration Statement (No. 2-83565)
on Form S-4 of S&T Bancorp, Inc. dated May 5, 1983,
incorporated herein by reference.
(3.2) Amendment to Articles of Incorporation of S&T Bancorp,
Inc. filed as Exhibit 3.2 to Form S-4 Registration Statement
(No. 33-02600) dated January 15, 1986, incorporated herein
by reference.
(3.3) Amendment to Articles of Incorporation of S&T Bancorp, Inc.
effective May 8, 1989 - filed herewith.
(3.4) Amendment to Articles of Incorporation of S&T Bancorp, Inc.
effective July 21, 1995 - filed herewith.
(3.5) Amendment to Articles of Incorporation of S&T Bancorp, Inc.
effective June 18, 1998 - filed herewith.
(3.6) By-Laws of S&T Bancorp, Inc., as amended, - filed herewith.
(13) Annual Report for the year ended December 31, 1998,
pages 21-55 filed herewith.
(21) Subsidiaries of the Registrant - filed herewith.
(23.1) Consent of Ernst & Young LLP, Independent Auditors -
filed herewith.
(23.2) Consent of S.R. Snodgrass, A.C., Independent Auditors -
filed herewith.
(99) Report of S.R. Snodgrass, A.C., Independent Auditors -
filed herewith.
PAGE 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
S&T BANCORP, INC.
(Registrant)
/s/ James C. Miller 03/15/99
James C. Miller, Date
President and Chief
Executive Officer
(Principal Executive Officer)
/s/ Robert E. Rout 03/15/99
Robert E. Rout, Date
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
PAGE 23
SIGNATURES
Pursuant to the requirements of the Securities 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.
/s/ Thomas A. Brice 03/15/99 /s/ Joseph A. Kirk 03/15/99
Thomas A. Brice, Director Date Joseph A. Kirk, Director Date
/s/ James L. Carino 03/15/99 /s/ Frank W. Jones 03/15/99
James L. Carino, Director Date Frank W. Jones, Director Date
/s/ John J. Delaney 03/15/99 /s/ James C. Miller 03/15/99
John J. Delaney, Director Date James C. Miller, President, Date
Chief Executive Officer and
Director
/s/ Robert D. Duggan 03/15/99 /s/ Alan Papernick 03/15/99
Robert D. Duggan, Chairman Date Alan Papernick, Director Date
/s/ William J. Gatti 03/15/99 /s/ W. Parker Ruddock 03/15/99
William J. Gatti, Director Date W. Parker Ruddock, Director Date
/s/ Ruth M. Grant 03/15/99 /s/ Myles D. Sampson 03/15/99
Ruth M. Grant, Director Date Myles D. Sampson, Director Date
/s/ Jeffrey D. Grube 03/15/99 /s/ Charles A. Spadafora 03/15/99
Jeffrey D. Grube, Director Date Charles A. Spadafora, Date
Director
/s/ Herbert L. Hanna 03/15/99 /s/ Christine J. Toretti 03/15/99
Herbert L. Hanna, Director Date Christine J. Toretti, Date
Director
PAGE 24