UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001, OR
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File No. 0-12870
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FIRST CHESTER COUNTY CORPORATION
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2288763
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 North High Street, West Chester, Pennsylvania 19380
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(Address of principal executive offices)
Registrant's telephone number, including area code (484) 881-4000
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 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 is not contained herein, and will not be contained, to the
best of the 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 ]
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates as of March 1, 2002, was approximately $46,278,614.
The number of shares outstanding of Common Stock of the Registrant as of March
1, 2001, was 4,424,833.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 2001, are incorporated by reference into Parts I and II hereof.
Portions of the Registrant's definitive Proxy Statement for its 2001 Annual
Meeting of Shareholders are incorporated by reference into Part III hereof.
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I: Item 1 - Business 3
Item 2 - Properties 16
Item 3 - Legal Proceedings 17
Item 4 - Submission of Matters to a Vote of Security Holders 17
PART II: Item 5 - Market for the Corporation's Common Equity and
Related Stockholder Matters 17
Item 6 - Selected Financial Data 18
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operation 18
Item 7A - Quantitative and Qualitative Disclosures About
Market Risk
Item 8 - Financial Statements and Supplementary Data 18
Item 9 - Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure 18
PART III: Item 10 - Directors and Executive Officers of the Corporation 18
Item 11 - Executive Compensation 18
Item 12 - Security Ownership of Certain Beneficial Owners
and Management 18
Item 13 - Certain Relationships and Related Transactions 18
PART IV: Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K 19
SIGNATURES 21
PART I
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Item 1. Business.
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FORWARD-LOOKING STATEMENTS
First Chester County Corporation (the "Corporation") may from time to time
make written or oral "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements contained
in the Corporation's filings with the Securities and Exchange Commission
(including this Report on Form 10-K), its reports to shareholders and in other
communications by the Corporation. These statements can often be identified by
the use of forward-looking terminology such as "believes", "expects", "intends",
"may", "will", "should" or "anticipates" or similar terminology. These
statements involve risks and uncertainties and are based on various assumptions.
Investors and prospective investors are cautioned that such statements are only
projections. The risks and uncertainties noted below, among others, could cause
the Corporation's actual future results to differ materially from those
described in forward looking statements made in this report or presented
elsewhere by Management from time to time.
These risks and uncertainties include, but are not limited to, the
following: (a) loan growth and/or loan margins may be less than expected due to
competitive pressures in the banking industry and/or changes in the interest
rate environment; (b) the strength of the United States economy in general and
the strength of the economic conditions in the Corporation's market area may be
less favorable than expected resulting in, among other things, a deterioration
in credit quality causing increased loan losses; (c) costs and timing of the
Corporation's planned training initiatives, product development, branch
expansion, new technology and operating systems may exceed expectations; (d)
volatility in the Corporation's market area due to mergers of competing
financial institutions which may have unanticipated consequences, such as
customer turnover; (e) changes in the regulatory environment, securities
markets, general business conditions and inflation may be adverse, including the
effects of trade, monetary and fiscal policies of the government and interest
rate policies of the Federal Reserve System; (f) impact of changes in interest
rates on customer behavior; (g) estimated changes in net interest income; (h)
continued competitive pressure on net yields; (i) ability to acquire suitable
branch locations at reasonable cost; and (j) technological changes. These risks
and uncertainties are all difficult to predict and most are beyond the control
of the Corporation's Management.
Although the Corporation believes that its expectations are based on
reasonable assumptions, readers are cautioned that such statements are only
projections. The Corporation undertakes no obligation to publicly release any
revisions to the forward-looking statements to reflect events or circumstances
after the date of this report.
GENERAL
The Corporation is a Pennsylvania business corporation and a bank holding
company registered under the Federal Bank Holding Company Act of 1956, as
amended (the "BHC Act"). As a bank holding company, the Corporation's operations
are confined to the ownership and operation of banks and activities deemed by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") to be so closely related to banking to be a proper incident thereto. The
Corporation was incorporated on March 9, 1984, for the purpose of becoming a
registered bank holding company pursuant to the BHC Act and acquiring First
National Bank of Chester County, formerly known as The First National Bank of
West Chester (the "Bank"), thereby enabling the Bank to operate within a bank
holding company structure. On September 13, 1984, the Corporation acquired all
of the issued and outstanding shares of common stock of the Bank. The principal
activities of the Corporation are the owning and supervising of the Bank, which
engages in a general banking business in Chester County, Pennsylvania. The
Corporation directs the policies and coordinates the financial resources of the
Bank. In addition, the Corporation is the sole shareholder of Turks Head
Properties, Inc., a Pennsylvania corporation, which was formed in 1994 for the
purpose of holding the Bank's interest's in and operating foreclosed real
property until liquidation of such properties. The Bank has two wholly-owned
subsidiaries, FNB Insurance Services, LLC, trading as, First National Wealth
Advisory Services, and FNB Properties, LLC. First National Wealth Advisory
Services offers insurance, full service brokerage, financial planning and mutual
fund services through this subsidiary. FNB Properties, LLC acts as property
manager for the properties where the Bank's Lionville and New Garden branches
are located. On August 5, 2000, First Chester County Corporation became a
financial holding company pursuant to the Grahm-Leach-Bliley Act of 1999.
BUSINESS OF THE BANK
The Bank is engaged in the business of commercial and retail banking and
was organized under the banking laws of the United States in December 1863. The
Bank currently conducts its business through fifteen banking offices located in
Chester and Delaware Counties, Pennsylvania, including its main office. In
addition, the Bank operates twenty-one limited service ATM facilities. The Bank
is a member of the Federal Reserve System. At December 31, 2001, the Bank had
total assets of approximately $584 million, total loans of approximately $448
million, total deposits of approximately $499 million and employed 279 persons,
of which 221 were full-time and 58 were part-time.
The Bank is a full service commercial bank offering a broad range of retail
banking, commercial banking, internet banking, trust and financial management
services to individuals and businesses. Retail services include checking
accounts, savings programs, money-market accounts, certificates of deposit, safe
deposit facilities, consumer loan programs, residential mortgages, overdraft
checking, automated tellers and extended banking hours. Commercial services
include revolving lines of credit, commercial mortgages, equipment leasing and
letter of credit services.
These retail and commercial banking activities are provided primarily to
consumers and small to mid-sized companies within the Bank's market area.
Lending services are focused on commercial, consumer and real estate lending to
local borrowers. The Bank attempts to establish a total borrowing relationship
with its customers which may typically include a commercial real estate loan, a
business line of credit for working capital needs, a mortgage loan for a
borrower's residence, a consumer loan or a revolving personal credit line.
The Bank's Financial Management Services Department provides a broad range
of personal trust services. It administers and provides investment management
services for estates, trusts, agency accounts and employee benefit plans. At
December 31, 2001, the Bank's Financial Management Services Department
administered or provided investment management services to accounts that held
assets with an aggregate market value of approximately $497 million. For the
year ended December 31, 2001, gross income from the Bank's Financial Management
Services Department and related activities amounted to approximately $2.9
million.
COMPETITION
The Bank's service area consists primarily of greater Chester County,
including West Chester and Kennett Square, as well as the western fringe of
Delaware County, Pennsylvania. The core of the Bank's service area is located
within a fifteen-mile radius of the Bank's main office in West Chester,
Pennsylvania. The Bank encounters vigorous competition for market share in the
communities it serves from community banks, thrift institutions and other
non-bank financial organizations. The Bank also competes with banking and
financial institutions, some from out-of-state that have opened branches in our
market, which are substantially larger and have greater financial resources than
the Bank. There are branches of many commercial banks, savings banks and credit
unions, including the Bank, in the general market area serviced by the Bank. The
largest of these institutions had assets of over $100 billion and the smallest
had assets of less than $30 million. The Bank had total assets of approximately
$584 million as of December 31, 2001.
The Bank competes for deposits with various other commercial banks, savings
banks, Internet banks, credit unions, brokerage firms and stock, bond and money
market funds. The Bank also faces competition from major retail-oriented firms
that offer financial services similar to services traditionally available only
through commercial banks without being subject to the same degree of regulation.
Mortgage banking firms, finance companies, insurance companies and leasing
companies also compete with the Bank for traditional lending services.
Management believes that the Bank is able to effectively compete with its
competitors because of its ability to provide responsive personalized services
and competitive rates. This ability is a direct result of management's knowledge
of the Bank's market area and customer base. Management believes the needs of
the small to mid-sized commercial business and retail customers are not
adequately met by larger financial institutions, therefore creating a marketing
opportunity for the Bank.
BUSINESS OF TURKS HEAD PROPERTIES INC.
Turks Head Properties, Inc. was formed in 1994 to hold the Bank's interest
in a Partnership which was formed to facilitate the acquisition, necessary
repairs, required environmental remediation and other actions necessary to sell
real property acquired by the bank through foreclosure. As of December 31, 2001,
one property was held in Turks Head Properties as a result of 2001 activity.
Turks Head Properties, Inc. may be used in the future to hold and administer the
Bank's interests in foreclosed real properties.
SUPERVISION AND REGULATION
General
The Corporation is a bank holding company subject to supervision and
regulation by the Federal Reserve Board. In addition, the Bank is subject to
supervision, regulation and examination by the Office of the Comptroller of the
Currency (the "OCC") and secondary regulation by the Federal Deposit Insurance
Corporation (the "FDIC"). Federal and state laws impose a number of requirements
and restrictions on the operations of the Bank, including requirements to
maintain reserves against deposits, restrictions on the types and amounts of
loans that may be made and the types of services which may be offered, and
restrictions on the ability to acquire deposits under certain circumstances. The
Bank must also comply with various consumer laws and regulations, and approval
of the OCC is required before establishing new branches and for bank mergers if
the continuing bank would be a national bank. Certain aspects of the Bank's
operation are also subject to state laws. The following sections discuss more
fully some of the principal elements of the regulatory framework applicable to
the Corporation and the Bank. This discussion is not intended to be an
exhaustive description of the statutes and regulations applicable to the
Corporation and the Bank and is subject to and qualified by reference to the
statutory and regulatory provisions. A change in these statutes, regulations or
regulatory policies, or the adoption of new statutes, regulations or regulatory
policies, may have a material effect on our business.
Bank Holding Company Act
The Corporation is required to file with the Federal Reserve Board an
annual report and such additional information as the Federal Reserve Board may
require pursuant to the BHC Act. Annual and other periodic reports also are
required to be filed with the Federal Reserve Board. The Federal Reserve Board
also makes examinations of bank holding companies and their subsidiaries. The
BHC Act requires each bank holding company to obtain the prior approval of the
Federal Reserve Board before it may acquire substantially all of the assets of
any bank, or if it would acquire or control more than 5% of the voting shares of
such a bank. The Federal Reserve Board considers numerous factors, including its
capital adequacy guidelines, before approving such acquisitions. For a
description of certain applicable guidelines, see this Item "Capital," Part II,
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Capital Adequacy," and Part II, Item 8, "Note I -- Regulatory
Matters" in the consolidated financial statements.
The Community Reinvestment Act
The Community Reinvestment Act of 1977, as amended (the "CRA"), and the
regulations promulgated to implement the CRA are designed to create a system for
bank regulatory agencies to evaluate a depository institution's record in
meeting the credit needs of its community. The CRA regulations were completely
revised in 1995 to establish performance-based standards for use in examining a
depository institution's compliance with the CRA (the "revised CRA
regulations"). The revised CRA regulations establish new tests for evaluating
both small and large depository institutions' investment in the community. For
the purposes of the revised CRA regulations, the Bank is deemed to be a large
retail institution, based upon financial information as of December 31, 2001.
The Bank has opted to be examined under a three-part test evaluating the Bank's
lending service and investment performance. The Bank is currently waiting for
its rating from its 2001 exam.
Dividend Restrictions
The Corporation is a legal entity separate and distinct from the Bank.
Virtually all of the revenue of the Corporation available for payment of
dividends on its Common Stock will result from amounts paid to the Corporation
from dividends received from the Bank. All such dividends are subject to
limitations imposed by federal and state laws and by regulations and policies
adopted by federal and state regulatory agencies.
The Bank as a national bank is required by federal law to obtain the
approval of the OCC for the payment of dividends if the total of all dividends
declared by the Board of Directors of the Bank in any calendar year will exceed
the total of the Bank's net income for that year and the retained net income for
the preceding two years, less any required transfers to surplus or a fund for
the retirement of any preferred stock. Under this formula, in 2002, the Bank,
without affirmative governmental approvals, could declare aggregate dividends of
approximately $14.7 million, plus an amount approximately equal to the net
income, if any, earned by the Bank for the period from January 1, 2001, through
the date of declaration of such dividend less dividends previously paid, subject
to the further limitations that a national bank can pay dividends only to the
extent that retained net profits (including the portion transferred to surplus)
exceed bad debts and provided that the Bank would not become "undercapitalized"
(as these terms are defined under federal law). Dividends declared in 2001 were
$2.2 million
If, in the opinion of the applicable regulatory authority, a bank or bank
holding company under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
bank or bank holding company, could include the payment of dividends), such
regulatory authority may require such bank or bank holding company to cease and
desist from such practice, or to limit dividends in the future. Finally, the
several regulatory authorities described herein, may from time to time,
establish guidelines, issue policy statements and adopt regulations with respect
to the maintenance of appropriate levels of capital by a bank or bank holding
company under their jurisdiction. Compliance with the standards set forth in
such policy statements, guidelines and regulations could limit the amount of
dividends which the Corporation and the Bank may pay.
Capital
The Corporation and the Bank are both subject to minimum capital
requirements and guidelines. The Federal Reserve Board measures capital adequacy
for bank holding companies on the basis of a risk-based capital framework and a
leverage ratio. The Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These guidelines currently provide for a
minimum leverage ratio of Tier I capital to adjusted total assets of 3% for bank
holding companies that meet certain criteria, including that they maintain the
highest regulatory rating. All other bank holding companies are required to
maintain a leverage ratio of 3% plus an additional cushion of at least 100 to
200 basis points. The Federal Reserve Board has not advised the Corporation of
any specific minimum leverage ratio under these guidelines which would be
applicable to the Corporation. Failure to satisfy regulators that a bank holding
company will comply fully with capital adequacy guidelines upon consummation of
an acquisition may impede the ability of a bank holding company to consummate
such acquisition, particularly if the acquisition involves payment of
consideration other than common stock. In many cases, the regulatory agencies
will not approve acquisitions by bank holding companies and banks unless their
capital ratios are well above regulatory minimums.
The Bank is subject to capital requirements which generally are similar to
those affecting the Corporation. The minimum ratio of total risk-based capital
to risk-adjusted assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%. Capital may consist of equity and qualifying
perpetual preferred stock, less goodwill ("Tier I capital"), and certain
convertible debt securities, qualifying subordinated debt, other preferred stock
and a portion of the reserve for possible credit losses ("Tier II capital").
A depository institution's capital classification depends upon its capital
levels in relation to various relevant capital measures, which include a
risk-based capital measure and a leverage ratio capital measure. A depository
institution is considered well capitalized if it significantly exceeds the
minimum level required by regulation for each relevant capital measure,
adequately capitalized if it meets each such measure, undercapitalized if it
fails to meet any such measure, significantly undercapitalized if it is
significantly below any such measure and critically undercapitalized if it fails
to meet any critical capital level set forth in the regulations. An institution
may be placed in a lower capitalization category if it receives an
unsatisfactory examination rating, is deemed to be in an unsafe or unsound
condition, or engages in unsafe or unsound practices. Under applicable
regulations, for an institution to be well capitalized it must have a total
risk-based capital ratio of at least 10%, a Tier I risk-based capital ratio of
at least 6% and a Tier I leverage ratio of at least 5% and not be subject to any
specific capital order or directive. As of December 31, 2001, 2000 and 1999, the
Corporation and the Bank had capital in excess of all regulatory minimums and
the Bank was "well capitalized."
Deposit Insurance Assessments
The Bank is subject to deposit insurance assessments by the FDIC's Bank
Insurance Fund ("BIF"). The FDIC has developed a risk-based assessment system,
under which the assessment rate for an insured depository institution varies
according to its level of risk. An institution's risk category is based upon
whether the institution is well capitalized, adequately capitalized or
undercapitalized and the institution's "supervisory subgroups": Subgroup A, B or
C. Subgroup A institutions are financially sound institutions with a few minor
weaknesses; Subgroup B institutions are institutions that demonstrate weaknesses
which, if not corrected, could result in significant deterioration; and Subgroup
C institutions are institutions for which there is a substantial probability
that the FDIC will suffer a loss in connection with the institution unless
effective action is taken to correct the areas of weakness. Based on its capital
and supervisory subgroups, each BIF member institution is assigned an annual
FDIC assessment rate per $100 of insured deposits varying between 0.00% per
annum (for well capitalized Subgroup A institutions) and 0.27% per annum (for
undercapitalized Subgroup C institutions). As of January 1, 2000, well
capitalized Subgroup A institutions paid 0.00%.
In accordance with the Deposit Insurance Act of 1997 an additional
assessment by the Financing Corporation ("FICO") became applicable to all
insured institutions as of January 1, 1998. This assessment is not tied to the
FDIC risk classification. The BIF FICO assessment ranged from 1.760 and 1.820
basis points per $100 in deposits for 2001. For 2001, the Bank's assessment for
BIF FICO was $86 thousand.
Financial Services Modernization Act of 1999
On November 12, 1999, the President signed into law the Gramm-Leach-Bliley
Act (the "Act") which became effective on March 11, 2000. Among the Act's
various provisions are some changes governing the operations of companies doing
business in the financial services industry. The Act eliminates many of the
restrictions previously placed on the activities of banks and bank holding
companies, and through the creation of two new designations, financial holding
companies and financial subsidiaries, bank holding companies and national banks
may participate in a wider array of financial services and products (referred to
as "financial activities" in the Act), including services and products that had
been reserved only for insurance companies and securities firms. In addition, a
bank holding company can now affiliate with an insurance company and a
securities firm.
A "financial activity" is an activity that does not pose a safety and
soundness risk and is financial in nature, incidental to an activity that is
financial in nature, or complementary to a financial activity. Some examples of
"financial activities" which are permitted under the Act are:
o Lending, investing or safeguarding money or securities;
o Underwriting insurance or annuities, or acting as an insurance or annuity
principal, agent or broker;
o Providing financial or investment advice;
o Underwriting, dealing in or making markets in securities; and
o Insurance company portfolio investments.
The Corporation meets the qualifications set forth under the Act to elect
to become a financial holding company, and the Bank, as a national bank, is
authorized by the Act to use "financial subsidiaries" to engage in financial
activities, subject to the limitations imposed by the Act. On August 5, 2001,
the Bank became a financial holding company pursuant to the Act. During 2000,
First National Wealth Advisory Services was formed as a wholly-owned subsidiary
of the Bank for the purpose of offering insurance, full service brokerage,
financial planning and mutual fund services. First National Wealth Advisory
Services has elected to become a financial subsidiary under the Act.
Control Acquisitions
The Change in Bank Control Act prohibits a person or group of persons from
acquiring "control" of a bank holding company, unless the Federal Reserve Board
has been notified and has not objected to the transaction. Under a rebuttable
presumption established by the Federal Reserve Board, the acquisition of ten
percent or more of a class of voting stock of a bank holding company with a
class of securities registered under Section 12 of the Exchange Act, such as the
Corporation, would, under the circumstances set forth in the presumption,
constitute acquisition of control of the bank holding company.
In addition, as described above, under the Bank Holding Company Act, the
Federal Reserve Board must give its prior approval of any transaction pursuant
to which any person or persons may acquire 25 percent (five percent in the case
of an acquirer that is a bank holding company) or more of any class of
outstanding common stock of a bank holding company, such as the Corporation, or
otherwise obtaining control or a "controlling influence" over that bank holding
company. See this Item, " Bank Holding Company Act".
Other Matters
Federal and state law also contains a variety of other provisions that
affect the operations of the Corporation and the Bank including certain
reporting requirements, regulatory standards and guidelines for real estate
lending, "truth in savings" provisions, the requirement that a depository
institution give 90 days prior notice to customers and regulatory authorities
before closing any branch, certain restrictions on investments and activities of
nationally-chartered insured banks and their subsidiaries, limitations on credit
exposure between banks, restrictions on loans to a bank's insiders, guidelines
governing regulatory examinations, and a prohibition on the acceptance or
renewal of brokered deposits by depository institutions that are not well
capitalized or are adequately capitalized and have not received a waiver from
the FDIC.
EFFECT OF GOVERNMENTAL POLICIES
The earnings of the Bank and, therefore, of the Corporation are affected
not only by domestic and foreign economic conditions, but also by the monetary
and fiscal policies of the United States and its agencies (particularly the
Federal Reserve Board), foreign governments and other official agencies. The
Federal Reserve Board can and does implement national monetary policy, such as
the curbing of inflation and combating of recession, by its open market
operations in United States government securities, control of the discount rate
applicable to borrowings from the Federal Reserve and the establishment of
reserve requirements against deposits and certain liabilities of depository
institutions. The actions of the Federal Reserve Board influence the level of
loans, investments and deposits and also affect interest rates charged on loans
or paid on deposits. The nature and impact of future changes in monetary and
fiscal policies are not predictable.
From time to time, various proposals are made in the United States Congress
and the Pennsylvania legislature and before various regulatory authorities which
would alter the powers of different types of banking organizations, remove
restrictions on such organizations and change the existing regulatory framework
for banks, bank holding companies and other financial institutions. It is
impossible to predict whether any of such proposals will be adopted and the
impact, if any, of such adoption on the business of the Corporation.
ACCOUNTING PRONOUNCEMENTS
Please refer to the Corporation's 2001 annual report pages 43-45.
STATISTICAL DISCLOSURES
The following tables set forth certain statistical disclosures concerning
the Corporation and the Bank. These tables should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Corporation's 2001 Annual Report to Shareholders,
incorporated herein by reference.
ANALYSIS FOR LOAN LOSS UPDATE
In its 2001 annual report the Corporation reported total loan write-downs
and charge offs of $3.4 million and total non-performing loans of $7.8 million.
As of the date of this report $205 thousand of the 2001 charge-offs have been
recovered and a significant loan relationship, which accounts for a material
portion of the non-performing loans, has been restructured. Management is
currently evaluating the details of this restructuring agreement in conjunction
with the regulatory environment to determine when this loan can be restored to
performing status.
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
RATE VOLUME ANALYSIS (1)
Increase (decrease) in net interest income due to:
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Volume (2) Rate (2) Total Volume (2) Rate (2) Total
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(Dollars in thousands) 2001 Compared to 2000 2000 Compared to 1999
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INTEREST INCOME
Federal funds sold $ 396 $ (185) $ 211 $ (76) $ (7) $ (69)
Interest bearing deposits in banks 1 - 1 - 1 1
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Total Interest Income 397 (185) 212 (76) (8) (68)
Investment securities
Taxable (1,340) (554) (1,894) (575) 347 (228)
Tax-exempt(3) (29) 3 (26) 4 (4) -
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Total investment securities (1,369) (551) (1,920) (571) 343 (228)
Loans
Taxable 3,905 (2,886) 1,019 3,865 1,110 4,975
Tax-exempt(3) (296) 25 (271) 14 (36) (22)
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Total loans(4) 3,609 (2,861) 748 3,879 1,074 4,953
------- ------- ------- ------- ------- -------
Total interest income 2,637 (3,597) (960) 3,232 1,425 4,657
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INTEREST EXPENSE
Savings, NOW and money market
deposits 308 (1,759) (1,451) 744 555 1,299
Certificates of deposits and other time 415 (86) 329 (394) 524 130
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Total interest bearing deposits 723 (1,845) (1,122) 350 1,079 1,429
Securities sold under repurchase
Agreements 14 (55) (41) (2) 29 27
Other borrowings 22 (256) (234) 880 104 984
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Total Interest expense 759 (2,156) $(1,397) 1,228 1,213 $ 2,440
------- ------- ------- ------- ------- -------
Net Interest income $ 1,878 $ (1,441) $ 437 $ 2,004 $ 215 $ 2,217
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NOTES:
(1) The related average balance sheets can be found on page 29 of the
Corporation's 2001 Annual Report to Shareholders.
(2) The changes in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(3) The indicated changes are presented on a tax equivalent basis.
(4) Non-accruing loans have been used in the daily average balances to
determine changes in interest due to volume. Loan fees included in the
interest income computation are not material.
FIRST CHESTER COUNTY CORPORATION
LOAN PORTFOLIO BY TYPE AT DECEMBER
(Dollars in thousands) 2001 2000 1999 1998 1997
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Amount % Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ - ------ -
Commercial loans $118,420 26% $105,125 26% $95,820 27% $85,110 27% $93,914 30%
Real estate - construction 40,065 9% 30,134 7% 15,266 4% 13,439 4% 17,256 5%
Real estate - other 199,398 45% 181,129 45% 152,174 43% 133,191 42% 117,953 37%
Consumer loans (1) 48,323 11% 54,692 13% 55,520 16% 62,481 19% 66,753 21%
Lease financing receivables 41,904 9% 35,809 9% 35,558 10% 26,174 8% 23,023 7%
-------- -------- -------- -------- --------
Total gross loans $448,110 100% $406,889 100% $354,338 100% $320,395 100% $318,899 100%
Allowance for possible loan
losses(2) $ (6,344) $ (6,609) $ (6,261) $ (5,877) $ (5,900)
-------- -------- ------- ------- -------
Total net loans (3) $ 441,766 $400,280 $348,077 $314,518 $312,999
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NOTES:
(1) Consumer loans include open-end home equity lines of credit and credit card
receivables.
(2) See pages 32-36 of the Corporation's 2001 Annual Report to Shareholders for
additional information.
(3) At December 31, 2001 there were no concentrations of loans exceeding 10% of
total loans which is not otherwise disclosed as a category of loans in the
above table.
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
MATURITIES AND RATE SENSITIVITY OF LOANS DUE TO CHANGES IN
INTEREST RATES AT DECEMBER 31, 2001 (1) (2)
Maturing
Maturing After 1 Year Maturing
Within And Within After
(Dollars in thousands) 1 Year (3) 5 Years 5 Years Total
-------- ----------- -------- ----------
Commercial loans $ 73,741 $ 39,571 $ 5,108 $118,420
Real Estate - construction 40,065 -- -- 40,065
------- ------- --------- --------
Total $113,806 $ 39,571 $ 5,108 $158,485
======= ======= ====== =======
Loans maturing after 1 year with:
- --------------------------------
Fixed interest rates $ 39,571 $ 5,108
Variable interest rates -- --
---------- ---------
Total $ 39,571 $ 5,108
======= ======
NOTES:
(1) Determination of maturities included in the loan maturity table are based
upon contract terms. In situations where a "rollover" is appropriate, the
Corporation's policy in this regard is to evaluate the credit for
collectability consistent with the normal loan evaluation process. This
policy is used primarily in evaluating ongoing customer's use of their
lines of credit with the Bank that are at floating interest rates.
(2) This data excludes real estate-other loans, consumer loans and lease
financing receivables.
(3) Demand loans and overdrafts are reported maturing "Within 1 Year".
Construction real estate loans are reported maturing "Within 1 Year"
because of their short term maturity or index to the Bank's prime rate. An
immaterial amount of loans has no stated schedule of repayments.
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
INVESTMENT SECURITIES YIELD BY MATURITY AT DECEMBER 31, 2001
Due over Due over
Due 1 year 5 years Due
Within Through Through Over
(Dollars in thousands) 1 year 5 years 10 years 10 years Total
------ ------- -------- -------- -----
Held-to-Maturity
- ----------------
U.S. Treasury -- -- -- -- --
U.S. Government agency -- -- -- -- --
Mortgage-backed securities (1) 8 -- 19 -- 27
State and municipal (2) 484 -- 20 -- 504
Corporate securities -- -- -- -- --
Asset-backed (1) -- -- -- -- --
------- ------- ------- ------- -------
492 -- 39 -- 531
------- ------- ------- ------- -------
Available-for-Sale
- ------------------
U.S. Treasury 2,009 2,002 -- -- 4,011
U.S. Government agency -- -- -- -- --
Mortgage-backed securities (1) -- 2,025 2,006 59,143 63,174
State and municipal (2) 100 655 524 -- 1,279
Corporate securities -- 1,002 3,001 2,615 6,618
Asset-backed (1) -- -- -- 38 38
Mutual Funds -- -- -- 863 863
Other equity securities (3) -- -- -- 4,100 4,100
------- ------- ------- ------- -------
2,109 5,684 5,531 66,759 80,083
------- ------- ------- ------- -------
Total Investment securities $2,601 $5,684 $5,570 $66,759 $ 80,614
====== ====== ====== ======= =======
Percent of portfolio 3.23% 7.05% 6.91% 82.81% 100.00%
====== ====== ====== ======= =======
Weighted average yield 5.23% 5.17% 3.21% 4.99% 4.88%
====== ====== ====== ======= =======
NOTES:
(1) Mortgage-backed and Asset-backed securities are included in the above table
based on their contractual maturity.
(2) The yield on tax-exempt obligations has been computed on a tax equivalent
basis using the Federal marginal rate of 34% adjusted for the 20% interest
expense disallowance.
(3) Other equity securities having no stated maturity have been included in
"Due over 10 years".
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
INVESTMENT SECURITIES AT DECEMBER 31,
2001 2000 1999
------------------------ ------------------------ -----------------------
(Dollars in thousands) Book Market Book Market Book Market
Value Value Value Value Value Value
----- ----- ----- ----- ----- -----
Held-to-Maturity
U.S. Treasury $ -- $ -- $ -- $ -- $ -- $ --
U.S. Government agency -- -- -- -- -- --
Mortgage-backed securities 27 29 116 118 241 859
State and municipal 504 518 1,067 1,152 1,067 1,067
Corporate securities -- -- -- -- 2,104 2,104
Asset-backed -- -- -- -- -- --
Mutual funds -- -- -- -- -- --
Other equity securities -- -- -- -- -- --
---------- ---------- ---------- -------- -------- ---------
$ 531 $ 547 $ 1,183 $ 1,270 $ 4,402 $ 4,535
======= ======== ======= ======= ======== =========
Available-for-Sale
U.S. Treasury $ 4,069 $4,069 $ 3,987 $ 3,987 $ 3,969 $ 3,969
U.S. Government agency -- -- 1,971 1,971 1,827 1,827
Mortgage-backed securities 63,331 63,331 63,062 63,062 74,090 74,090
State and municipal 1,315 1,315 1,277 1,277 1,230 1,230
Corporate securities 2,803 2,803 9,555 9,555 10,669 10,669
Corporate CMO's 3,693 3,693 4,738 4,738 4,726 4,726
Asset-backed 37 37 2,827 2,827 6,874 6,874
Mutual Funds 825 825 1,034 1,034 1,015 1,015
Other equity securities 4,137 4,137 4,561 4,561 4,238 4,238
-------- -------- ----- -------- --------- ---------
$80,210 $80,210 $93,012 $93,012 $108,638 $108,638
====== ====== ====== ====== ======= =======
MATURITIES OF CERTIFICATES OF DEPOSIT AND OTHER TIME DEPOSITS,
$100,000 OR MORE, AT DECEMBER 31, 2001
Due Within Over 3 Months Over 6 Months Due Over
(Dollars in thousands) 3 Months Through 6 Months Through 12 Months 12 Months Total
----------- ---------------- ----------------- --------- -----
Certificates of Deposit
$100,000 or more $ 7,805 $ 3,132 $ 3,945 $ 12,014 $ 26,896
FIRST CHESTER COUNTY CORPORATION AND SUBSIDIARIES
EFFECT OF NONACCRUING LOANS ON INTEREST FOR
YEARS ENDED DECEMBER 31,
(Dollars in thousands) 2001 2000 1999 1998 1997
-------- -------- -------- ---------- ----------
Interest income which would
have been recorded (1) $ 308 $ 76 $ 89 $ 129 $ 64
Interest income that was
received from customer -- 17 -- 25 37
------ ----- ------ ----- -----
Total contractual interest
for nonaccruing loans
not collected $ 308 $ 59 $ 89 $ 104 $ 27
==== ===== ==== ==== =====
NOTES:
(1) Generally the Bank places a loan in nonaccrual status when principal or
interest has been in default for a period of 90 days or more unless the
loan is both well secured and in the process of collection.
Item 2. Properties.
- ------- ----------
The Bank owns eight properties which are not subject to any mortgages. The
Corporation owns one property which is not subject to any mortgage, and which is
located at 124 West Cypress Street, Kennett Square, Pennsylvania. In addition,
the Corporation leases the Westtown-Thornbury, Exton, Frazer, Kenndal,
Crosslands, Lima, Granite Farms, Offices. Management of the Corporation believes
the Corporation's and the Bank's facilities are suitable and adequate for their
respective present needs. Set forth below is a listing of each banking office
presently operated by the Bank, and other properties owned or leased by the Bank
and the Corporation which may serve as future sites for branch offices.
Current Date
Banking Acquired
Offices / Use Address or Opened
- ------------- --------- ---------------
Main Office / Branch 9 North High Street December 1863
and Corporate West Chester, Pennsylvania
Headquarters
Walk-In Facility / Branch 17 East Market Street February 1978
West Chester, Pennsylvania
Westtown-Thornbury / Route 202 and Route 926 May 1994
Branch Westtown, Pennsylvania
Goshen / Branch 311 North Five Points Road September 1956
West Goshen, Pennsylvania
Kennett Square / Branch 126 West Cypress Street February 1987
Kennett Square, Pennsylvania
Exton / Branch Route 100 and Boot Road August 1995
West Chester, Pennsylvania
Frazer / Branch 309 Lancaster Avenue August 1999
Frazer, Pennsylvania
Former Commonwealth High & Market Streets July 1995
Building / Mortgage Center West Chester, Pennsylvania
Kendal at Longwood / Branch 1109 E. Baltimore Pike December 1999
Kennett Square, Pennsylvania
Crosslands / Branch 1660 E. Street Road December 1999
Kennett Square, Pennsylvania
Lima Estates / Branch 411 North Middletown Road December 1999
Media, Pennsylvania
Granite Farms Estates / Branch 1343 West Baltimore Pike December 1999
Wawa, Pennsylvania
Lionville / Branch Route 114 & Sheree Boulevard December 2000
Uwchlan Township, Pennsylvania
New Garden / Branch 741 West Cypress Street August 2001
Kennett Square, Pennsylvania
Hershey's Mill / Branch 1371 Boot RoadDecember 2001
West Chester, Pennsylvania
Other Date Acquired
Properties / Use Address or Opened
- ---------------- --------- -------------
Operations 202 Carter Drive July 1988
Center / Operations West Chester, Pennsylvania
Matlack Street / 887 South Matlack Street September 1999
Operations West Chester, Pennsylvania
Paoli Pike / Parking 1104 Paoli Pike July 1963
West Chester, Pennsylvania
Item 3. Legal Proceedings.
- ------ -----------------
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Corporation, the
Bank or Turks Head Properties, Inc., is a party or of which any of their
respective property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------ ----------------------------------------------------
None.
PART II
Item 5. Market for the Corporation's Common Equity and Related Stockholder
- ------ Matters.
-----------------------------------------------------------------------
The Corporation's Common Stock is publicly traded over the counter. Trading
is sporadic. Information regarding high and low bid quotations is incorporated
herein by reference from the Corporation's 2001 Annual Report to Shareholders,
attached as an exhibit hereto. As of March 1, 2001, there were approximately 980
shareholders of record of the Corporation's Common Stock.
The Corporation declared cash dividends per share on its Common Stock
during each quarter of the fiscal years ended December 31, 2001 and 2000, as set
forth in the following table:
Dividends
Amount Per Share
2001 2000
---- ----
First Quarter............................................. $ 0.130 $ 0.125
Second Quarter............................................ 0.130 0.125
Third Quarter............................................. 0.130 0.130
Fourth Quarter............................................ 0.130 0.130
------ ------
Total................................................... $ 0.520 $ 0.490
====== ======
The holders of the Corporation's Common Stock are entitled to receive such
dividends as may be legally declared by the Corporation's Board of Directors.
The amount, time, and payment of future dividends, however, will depend on the
earnings and financial condition of the Corporation, government policies, and
other factors.
Item 6. Selected Financial Data.
- ------ ------------------------
Selected financial data concerning the Corporation and the Bank is
incorporated herein by reference from the Corporation's 2001 Annual Report to
Shareholders, attached as an exhibit hereto.
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 is incorporated herein by reference from the Corporation's 2001
Annual Report to Shareholders, attached as an exhibit hereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- ------- ----------------------------------------------------------
Quantitative and Qualitative Disclosures About Market Risk are incorporated
herein by reference from the Corporation's 2001 Annual Report to Shareholders,
attached as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data.
- ------ ---------------------------------------------
Consolidated financial statements of the Corporation and the Report of
Independent Certified Public Accountants thereon are incorporated herein by
reference from the Corporation's 2001 Annual Report to Shareholders, attached as
an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------ Financial Disclosure.
-------------------------------------------------------------------
None.
PART III
----------
Item 10. Directors and Executive Officers of the Corporation.
- ------- ----------------------------------------------------
The information called for by this item is incorporated herein by reference
to the Corporation's Proxy Statement dated February 15, 2002, for its 2002
Annual Meeting of Shareholders.
Item 11. Executive Compensation.
- ------- -----------------------
The information called for by this item is incorporated herein by reference
to the Corporation's Proxy Statement dated February 15, 2002, for its 2002
Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------- ---------------------------------------------------------------
The information called for by this item is incorporated herein by reference
to the Corporation's Proxy Statement dated February 15, 2002, for its 2002
Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
The information called for by this item is incorporated herein by reference
to the Corporation's Proxy Statement dated February 15 2002, for its 2002 Annual
Meeting of Shareholders.
PART IV
---------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- ------- ----------------------------------------------------------------
(a.) 1. Index to Consolidated Financial Statements
Page of Annual
Report to Shareholders
------------------------
Consolidated Balance Sheets Page 39
at December 31, 2001 and
2000
Consolidated Statements of Page 40
Income for the years ended
December 31, 2001, 2000
and 1999
Consolidated Statement of Changes Page 41
in Stockholders' Equity for the years
Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Page 42
Cash Flows for the years ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Pages 43 to 64
Financial Statements
Report of Independent Certified 65 Public Accountants
The Consolidated Financial Statements listed in the above index, together
with the report thereon of Grant Thornton LLP dated January16, 2002, which are
included in the Corporation's Annual Report to Shareholders for the year ended
December 31, 2001, are hereby incorporated herein by reference.
2. Financial Statement Schedules
-----------------------------
Financial Statement Schedules are not required under the related
instructions of the Securities and Exchange Commission, are inapplicable or are
included in the Consolidated Financial Statements or notes thereto.
3. Exhibits
--------
The following is a list of the exhibits filed with, or
incorporated by reference into, this Report (those exhibits marked with an
asterisk are filed herewith):
3(i).Articles of Incorporation. Copy of the Articles of Incorporation of
----------------------------
the Corporation, as amended, filed as Exhibit 3 (i) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999 is incorporated by
reference.
3(ii).By-Laws of the Corporation. By-Laws of the Corporation, filed as
----------------------------
Exhibit 3 (ii) to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1997 is incorporated by reference.
10. Material contracts.
------------------
(a) Copy of Employment Agreement among the Corporation, the Bank and
Charles E. Swope dated January 1, 1998, filed as Exhibit 10 (a) to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997 is
incorporated by reference.
(b) Copy of the Corporation's Dividend Reinvestment and Stock Purchase
Plan, filed as an exhibit to the Corporation's registration statement on Form
S-3 filed August 8, 1997 (File no. 333-33175) is incorporated herein by
reference.
(c) Copy of the Corporation's Amended and Restated Stock Bonus Plan, filed
as an exhibit to the Corporation's registration statement on Form S-8 filed
August 12, 1997 (File no. 333-33411) is incorporated herein by reference.
(d) Copy of the Bank's Amended and Restated Supplemental Benefit Retirement
Plan, effective date January 1, 1995, is incorporated herein by reference to
Exhibit 10(g) to the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1994, SEC File number 95084672.
(e) Copy of the Corporation's and the Bank's Directors Deferred
Compensation Plan, effective December 30, 1995, is incorporated herein by
reference to Exhibit 10(h) to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1995, SEC File number 96539681.
(f) Copy of the Corporation's Amended and Restated 1995 Stock Option Plan,
filed as an appendix to the Corporation's Proxy statement for the 2001 Annual
Meeting of Shareholders as filed with the SEC via EDGAR is incorporated herein
by reference.
(g) Copy of Employment Agreement between the Bank and James Duncan Smith
(EVP), dated December 1, 1999 is incorporated by reference to Exhibit 10 (g) to
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1999. Kevin C. Quinn, EVP, and Peter J. D'Angelo, EVP, are also parties to
employment agreements with the Bank which are substantially identical to Mr.
Smith's.
* 13. Annual Report to Security Holders, Form 10-Q or Quarterly Report to
Security Holders. The Corporation's Annual Report to Shareholders for the year
ended December 31, 2000. With the exception of pages 17-61 and the items
referred to in Items 1, 5, 6, 7, 7A, 8 and 16 hereof, the Corporation's 2001
Annual Report to Shareholders is not deemed to be filed as part of this report.
* 21. Subsidiaries of the Corporation. First National Bank of Chester County,
formerly known as The First National Bank of West Chester, is a banking
institution organized under the banking laws of the United States in December
1863. Turks Head Properties, Inc., formerly known as 323 East Gay Street
Corporation, incorporated in 1996 in the State of Pennsylvania. FNB Insurance
Services, LLC, t/a First National Wealth Advisory Services, a wholly-owned
subsidiary of the Bank, is a limited liability company formed in 2000 under the
laws of Pennsylvania. FNB Properties, LLC, is a wholly owned subsidiary of the
Bank, is a limited liability company formed in 2000 under the laws of
Pennsylvania.
* 23. Consents. Consent of Grant Thornton LLP, dated March 29, 2002.
--------
* 27. Financial Data Schedules. A Financial Data Schedule is being submitted
with the Corporation's 2001 Annual Report on Form 10-K in the electronic format
prescribed by the EDGAR Filer Manual and sets forth the financial information
specified by Article 9 of Regulation S-X and Securities Act Industry Guide 3
information and Exchange Act Industry Guide 3 listed in Appendix C to Item 601
of Regulation S-K.
(b) A form 8-K was filed by the Corporation on October 31, 2001, that
reported the Corporation's 2001 earnings for the three- and nine- month periods
ended September 30, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FIRST CHESTER COUNTY CORPORATION
By: /s/ Charles E. Swope
--------------------
Charles E. Swope,
President
Date: March 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Corporation and in the capacities indicated on March 29, 2002.
Signature Title
--------- ----------
/s/ Charles E. Swope President, Chief Executive
Officer and Chairman of the
- ------------------------------- Board of Directors
Charles E. Swope
/s/ J. Duncan Smith Treasurer (Principal
______________________________ Accounting and Financial Officer)
J. Duncan Smith
(Signatures continued on following page)
(Signatures continued from previous page)
Signature Title
/s/ John J. Ciccarone Director
- --------------------------------
John J. Ciccarone
/s/ M. Robert Clarke Director
- ---------------------------------
M. Robert Clarke
/s/ Clifford E. DeBaptiste Director
- ---------------------------------
Clifford E. DeBaptiste
/s/ John A. Featherman, III Director
- ---------------------------------
John A. Featherman, III
/s/ John S. Halsted Director
- ---------------------------------
John S. Halsted
/s/ J. Carol Hanson Director
- ---------------------------------
J. Carol Hanson
/s/ David L. Peirce Director
- ---------------------------------
David L. Peirce
/s/ John B. Waldron Director
- ---------------------------------
John B. Waldron
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FIRST CHESTER COUNTY CORPORATION
By:
----------------------------------
Charles E. Swope,
President
Date: March 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Corporation and in the capacities indicated on March 29, 2002.
Signature Title
----------- ----------
President, Chief Executive
Officer and Chairman of the
- --------------------------------- Board of Directors
Charles E. Swope
Treasurer (Principal
______________________________ Accounting and Financial Officer)
J. Duncan Smith
(Signatures continued on following page)
(Signatures continued from previous page)
Signature Title
------------- --------
Director
- --------------------------------
John J. Ciccarone
Director
- ---------------------------------
M. Robert Clarke
Director
- ---------------------------------
Clifford E. DeBaptiste
Director
- ---------------------------------
John A. Featherman, III
Director
- ---------------------------------
John S. Halsted
Director
- ---------------------------------
J. Carol Hanson
Director
- ---------------------------------
David L. Peirce
Director
- ---------------------------------
John B. Waldron
Index to Exhibits
The following is a list of the exhibits filed with, or incorporated by
reference into, this Report (those exhibits marked with an asterisk are filed
herewith):
3(i). Articles of Incorporation. Copy of the Articles of Incorporation of
--------------------------
the Corporation, as amended, filed as Exhibit 3 i) to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999 is incorporated by
reference.
3(ii). By-Laws of the Corporation. By-Laws of the Corporation, filed as
--------------------------
Exhibit 3 (ii) to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1997 is incorporated by reference.
10. Material contracts.
------------------
(a) Copy of Employment Agreement among the Corporation, the
Bank and Charles E. Swope dated January 1, 1998, filed as Exhibit 10 (a) to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997 is
incorporated by reference.
(b) Copy of the Corporation's Dividend Reinvestment and Stock
Purchase Plan, filed as an exhibit to the Corporation's registration statement
on Form S-3 filed August 8, 1997 (File no. 333-33175) is incorporated herein by
reference.
(c) Copy of the Corporation's Amended and Restated Stock Bonus
Plan, filed as an exhibit to the Corporation's registration statement on Form
S-8 filed August 12, 1997 (File no. 333-33411) is incorporated herein by
reference.
(d) Copy of the Bank's Amended and Restated Supplemental
Benefit Retirement Plan, effective date January 1, 1995, is incorporated herein
by reference to Exhibit 10(g) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994, SEC File number 95084672.
(e) Copy of the Corporation's and the Bank's Directors
Deferred Compensation Plan, effective December 30, 1995, is incorporated herein
by reference to Exhibit 10(h) to the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995, SEC File number 96539681.
(f) Copy of the Corporation's Amended and Restated 1995 Stock
Option Plan, filed as an appendix to the Corporation's Proxy statement for the
2001 Annual Meeting of Shareholders as filed with the SEC via EDGAR is
incorporated herein by reference.
(g) Copy of Employment Agreement between the Bank and James
Duncan Smith (EVP), dated December 1, 1999 is incorporated by reference to
Exhibit 10 (g) to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1999. Kevin C. Quinn, EVP, and Peter J. D'Angelo, EVP, are
also parties to employment agreements with the Bank which are substantially
identical to Mr. Smith's.
* 13. Annual Report to Security Holders, Form 10-Q or Quarterly Report to
------------------------------------
Security Holders. The Corporation's Annual Report to Shareholders for the year
ended December 31, 2000. With the exception of pages 17-61 and the items
referred to in Items 1, 5, 6, 7, 7A, 8 and 16 hereof, the Corporation's 2001
Annual Report to Shareholders is not deemed to be filed as part of this report.
* 21. Subsidiaries of the Corporation. First National Bank of Chester County,
--------------------------------
formerly known as The First National Bank of West Chester, is a banking
institution organized under the banking laws of the United States in December
1863. Turks Head Properties, Inc., formerly known as 323 East Gay Street
Corporation, incorporated in 1996 in the State of Pennsylvania. FNB Insurance
Services, LLC, t/a First National Wealth Advisory Services, a wholly-owned
subsidiary of the Bank, is a limited liability company formed in 2000 under the
laws of Pennsylvania. FNB Properties, LLC, is a wholly owned subsidiary of the
Bank, is a limited liability company formed in 2000 under the laws of
Pennsylvania.
* 23. Consents. Consent of Grant Thornton LLP, dated March 29, 2002.
--------