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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 [FEE REQUIRED]
For the fiscal year ended December 31, 1995, OR
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission File No. 0-12870
FIRST WEST CHESTER CORPORATION
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(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) (Zip Code)
Registrant's telephone number, including area code (610) 692-3000
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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
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(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, 1996, was approximately $42,889,000.
The number of shares outstanding of Common Stock of the Registrant as of March
1, 1996, was 1,712,491.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Report to Shareholders for the year ended December 31,
1995, is incorporated by reference into Parts I and II hereof. The Registrant's
definitive Proxy Statement for its 1996 Annual Meeting of Shareholders is
incorporated by reference into Part III hereof.
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I: Item 1 - Business 1
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 8 - Financial Statements and Supplementary Data 19
Item 9 - Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure 19
PART III: Item 10 - Directors and Executive Officers of the Corporation 19
Item 11 - Executive Compensation 19
Item 12 - Security Ownership of Certain Beneficial Owners
and Management 19
Item 13 - Certain Relationships and Related Transactions 19
PART IV: Item 14 - Exhibits, Financial Statement Schedules and Reports on
Form 8-K 20
SIGNATURES 23
PART I
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Item 1. Business.
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GENERAL
First West Chester Corporation (the "Corporation") is a Pennsylvania
business corporation and a bank holding company registered under the federal
Bank Holding Corporation 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 principal purpose of becoming a registered bank holding
company pursuant to the BHC Act and acquiring 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 in a one-for-one
exchange of common shares of the Bank for common shares of the Corporation. 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
323 East Gay Street Corp., a Pennsylvania corporation ("EGSC"), which holds a
62% general partnership interest in WCP Partnership, a Pennsylvania general
partnership ("WCP") that owns foreclosed real property located in West Chester,
Pennsylvania (the "West Chester Property"). At December 31, 1995, the
Corporation had consolidated total assets of approximately $389 million, total
deposits of approximately $344 million and stockholders' equity of approximately
$31 million.
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 six banking offices located in
Chester County, Pennsylvania, including its main office. In addition, the Bank
operates four limited service ATM facilities. The Bank is a member of the
Federal Reserve System. At December 31, 1995, the Bank had total assets of
approximately $388 million, total loans of approximately $243 million, total
deposits of approximately $344 million and employed 182 full-time equivalent
persons.
The Bank is a full service commercial bank offering a broad range of retail
banking, commercial banking and trust 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 (formerly, the Trust
Department) provides a broad range of personal and corporate trust services. It
administers and provides investment management services for estates, trusts,
agency accounts and employee benefit plans. At December 31, 1995, the Bank's
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Financial Management Services Department administered or provided investment
management for 698 accounts, which possessed assets with an aggregate market
value of approximately $256 million. For the year ended December 31, 1995, gross
income from the Bank's Financial Management Services Department and related
activities amounted to approximately $1.8 million and accounted for 5.7% of the
total of interest income and other income of the Bank for such period.
COMPETITION
The Bank's service area consists primarily of greater Chester County,
including West Chester and Kennett Square, as well as the 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 competes with banking and financial branching systems,
some from out of state, which are substantially larger and have greater
financial resources than the Bank. There are branches of approximately 23
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 $388 million as of December
31, 1995.
The Bank competes for deposits with various other commercial banks, savings
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 traditional services available 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.
BUSINESS OF EGSC
EGSC was formed in 1994 to hold the Bank's partnership interest in WCP
Partnership. WCP Partnership was formed to facilitate the acquisition, necessary
repairs, required environmental remediation and other actions necessary to sell
the West Chester property at fair market value. EGSC purchased a 62% interest in
the mortgage on the West Chester property in 1995 from the Bank at book value
and immediately contributed the interest in the mortgage to WCP Partnership as
capital. Another financial institution contributed the remaining 38% interest in
the mortgage to WCP Partnership. WCP Partnership foreclosed on West Chester
property in 1995 and is progressing towards an eventual sale.
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 and regulation by the Office of the Comptroller
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of the Currency ("OCC"), the Federal Deposit Insurance Corporation ("FDIC") and
the Pennsylvania Department of Banking (the "Department").
Government Regulation
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 Department. 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. See "Interstate Banking."
Capital adequacy guidelines may impede a bank holding company's ability to
consummate acquisitions involving consideration with a cash component. For a
description of certain applicable guidelines, see "Capital," "Federal Deposit
Insurance Corporation Improvement Act of 1991" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial
Condition."
The BHC Act also restricts the types of businesses and operations in which
a bank holding company and its subsidiaries may engage. Generally, permissible
activities are limited to banking and activities found by the Federal Reserve
Board to be so closely related to banking as to be a proper incident thereto.
The business of owning a partnership interest in the West Chester Property
(through EGSC) as a result of an underlying foreclosure action is a permissible
activity, however, Federal Reserve Board approval is required to hold the West
Chester Property beyond March 1997.
The operations of the Bank are subject to requirements and restrictions
under federal and state law, 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. Various consumer laws and
regulations also affect the operations of the Bank. Approval of the OCC is
required for branching by Bank and for bank mergers in which the continuing bank
is a national bank.
Development and Regulatory Improvement
On September 23, 1994, the President signed into law the "Riegle Community
Development and Regulatory Improvement Act of 1994" (the "Development Act"). The
Development Act established a $382 million fund (the "Fund") to promote economic
development and credit availability in underserved communities by providing
financial and technical assistance to community development financial
institutions ("CDFI's").
CDFI's include banks, savings associations and bank holding companies which
have a primary mission of promoting community development. Institutions
receiving monies from the Fund will be required to provide matching funds dollar
for dollar. Under the Fund, a CDFI may receive up to $5 million over a 3-year
period, with affiliates in other states not presently served eligible to receive
up to an additional $3.75 million over 3 years.
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One-third of the Fund will be used to finance the Bank Enterprise Act, an
existing but previously unfunded incentive program designed to encourage
depository institutions to increase funding in distressed neighborhoods.
The Development Act contains provisions relating to small business capital
formation, small business loan securitization, consumer protection for "reserve
mortgages," paperwork reduction and reform of the national flood insurance
program.
The foregoing is a summary and general description of certain provisions of
the Development Act and does not purport to be complete. Many of the provisions
of the Development Act will be implemented through the adoption of regulations
by the various federal banking agencies. Moreover, many of the significant
provisions of the legislation have not yet become effective. As of the date
hereof, the Corporation is continuing to study the legislation and regulations
relating to the legislation but cannot yet assess its impact on the Corporation.
Interstate Banking
The Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act") authorizes interstate banking and branching. Effective
September 29, 1995, subject to approval by the Federal Reserve Board and other
restrictions set forth in the Interstate Act, bank holding companies may engage
in interstate acquisitions of banks, without geographic limitations,
notwithstanding state law to the contrary.
The Interstate Act permits (i) adequately managed bank holding companies to
engage in interstate acquisitions of banks, (ii) interstate branching through
interstate bank mergers and acquisitions beginning June 1, 1997 (subject to the
ability of states to permit or prohibit such mergers and acquisitions earlier)
and (iii) other interstate branching through the establishment of de novo
branches if authorized by state law.
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 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. National banks can only pay dividends to the
extent that retained net profits (including the portion transferred to surplus)
exceed bad debts (as defined).
Payment of dividends by the Bank will be prohibited under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") in the event
that the Bank would become "undercapitalized" under the guidelines described
below as a result of such distribution.
Under the above-mentioned restrictions, the Bank, without affirmative
governmental approvals, could declare aggregate dividends in 1996 of
approximately $2.7 million, plus an amount approximately equal to
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the net income, if any, earned by the Bank for the period from January 1, 1996,
through the date of declaration less dividends previously paid in 1996, subject
to the limitations described elsewhere herein.
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
authority may require that such bank or bank holding company cease and desist
from such practice, or require the bank or bank holding company to limit
dividends in the future. The Federal Reserve Board, the OCC and the FDIC have
issued policy statements which provide that insured banks and bank holding
companies should generally only pay dividends out of current operating earnings.
Finally, as described elsewhere herein, the regulatory authorities have
established guidelines and under FDICIA have adopted regulations (and may in the
future adopt additional 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.
Borrowings by the Corporation
Federal law prevents the Corporation from borrowing from the Bank, unless
such borrowings are secured by specified amounts and types of collateral.
Additionally, such secured loans are generally limited to 10% of the Bank's
capital and surplus. Further, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property or furnishing of services.
Capital
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 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%. At
least half of the total capital must be common equity and qualifying perpetual
preferred stock, less goodwill ("Tier I capital"). The remainder ("Tier II
capital") may consist of mandatory convertible debt securities, a designated
amount of qualifying subordinated debt, other preferred stock and a portion of
the reserve for possible credit losses.
In addition to the Risk Based Capital Standards imposed on bank holding
companies, the banking regulators also believe that every institution must
maintain an absolute minimum level of equity. 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 1 to 2 percentage 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. The
guidelines also indicate that, when appropriate, including when a bank holding
company is undertaking expansion, engaging in new activities or otherwise facing
unusual or abnormal risk, the Federal Reserve Board will consider a "tangible
Tier I leverage ratio" (deducting all intangibles) in making an overall
assessment of capital adequacy. 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
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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. As described below under "FDICIA," the federal
banking agencies have established certain minimum levels of capital which are
consistent with statutory requirements. As of December 31, 1995, 1994 and 1993,
the Corporation and the Bank had capital in excess of all regulatory minimums.
The Federal Reserve Board, the FDIC and the OCC have adopted a rule to
implement the requirement under FDICIA that risk-based capital standards take
account of interest rate risk. The rule focuses on institutions having
relatively high levels of measured interest rate risk, and considers the effect
that changing interest rates would have upon the value of an institution's
assets, liabilities, and off balance-sheet positions. It is anticipated that
this new rule will not have a significant adverse impact on the capital ratios
or operations of the Corporation or the Bank.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
Upon its enactment in December 1991, FDICIA substantially revised the bank
regulatory and funding provisions of the Federal Deposit Insurance Act and made
revisions to several other federal banking statutes.
FDICIA requires the federal banking agencies to take "prompt corrective
action" in respect of depository institutions that do not meet minimum capital
requirements in order to minimize losses to the FDIC. FDICIA establishes five
capital classifications: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized" and imposes significant restrictions on the operations of a
bank that is not at least adequately capitalized. 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, 1995, the Corporation
and the Bank were "well capitalized" as defined under FDICIA. See Part II, Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financial Condition" and "-- Capital Adequacy."
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized institutions are subject to growth
limitations and prohibitions on the payment of interest rates on deposits in
excess of 75 basis points above the average market yields for comparable
deposits. Such institutions must submit a capital restoration plan which is
acceptable to applicable federal banking agencies and which must include a
guarantee from the parent holding company that the institution will comply with
such plan.
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Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets or to cease accepting deposits from correspondent banks and restrictions
on senior executive compensation and on inter-affiliate transactions. Critically
undercapitalized institutions are subject to a number of additional
restrictions, including the appointment of a receiver or conservator.
Regulations promulgated under FDICIA also require that an institution
monitor its capital levels closely and notify its appropriate federal banking
regulators within 15 days of any material events that affect the capital
position of the institution. FDICIA also contains a variety of other provisions
that affect the operations of the Corporation, 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
state-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.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth and
quality, a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book value for
publicly traded shares (if feasible) and such other standards as the agency
deems appropriate.
Finally, FDICIA limits the discretion of the FDIC with respect to deposit
insurance coverage by requiring that, except in very limited circumstances, the
FDIC's course of action in resolving a problem bank must constitute the "least
costly resolution" for the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"), as the case me be. The FDIC has interpreted
this standard as requiring it not to protect deposits exceeding the $100,000
insurance limit in more situations than was previously the case. FDICIA also
prohibits payments by the FDIC on uninsured deposits in foreign branches of U.S.
banks, and severely limits the "too big to fail" doctrine under which the FDIC
formerly protected deposits exceeding the $100,000 insurance limit in certain
failed banking institutions.
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989
Under the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA"), a depository institution insured by the FDIC can be held liable
for any loss incurred by, or reasonably expected to be incurred by, the FDIC
after August 9, 1989, in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to commonly controlled FDIC-insured depository institution in danger
of default. The term "default" is defined generally as the appointment of a
conservator or receiver and the phrase "in danger of default" is defined
generally as the existence of certain conditions indicating that a "default" is
likely to occur in the absence of regulatory assistance. FIRREA and the Crime
Control Act of 1990 (the "Crime Control Act") expand the enforcement powers
available to federal banking regulators, including providing greater flexibility
to impose enforcement action, expanding the category of persons dealing with a
bank who are subject to enforcement action, and increasing the potential civil
and criminal penalties. In the event of a holding company insolvency, the Crime
Control Act affords a priority in respect of capital commitments made by the
holding company on behalf of its subsidiary bank.
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Annual Insurance Assessments
Under FIRREA, the Federal Savings and Loan Insurance Corporation, which
insured savings and loan associations and federal savings banks, was replaced by
the SAIF, which is administered by the FDIC. A separate fund, the BIF, which was
essentially a continuation of the FDIC's then existing fund, was established for
banks and state savings banks. The Bank is subject to deposit insurance
assessments by the 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 or SAIF 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). Well capitalized Subgroup B and
Subgroup C institutions are assigned assessment rates per $100 of insured
deposits ranging from 0.03% per annum to 0.27% per annum. As of January 1, 1996,
well capitalized Subgroup A institutions will pay only the statutory annual
minimum of $2,000 for FDIC Insurance. These BIF assessment rates represent a
significant decrease from rates in effect in prior years.
Other Matters
The Corporation's Common Stock is registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). As a result, the Corporation is
subject to the regulations promulgated under the Exchange Act regarding the
filing of public reports, the solicitation of proxies, the disclosure of
beneficial ownership of certain securities, short swing profits and the conduct
of tender offers.
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.
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ACCOUNTING CHANGES
Accounting For Income Taxes
The Corporation adopted SFAS No. 109, "Accounting for Income Taxes,"
effective January 1, 1993. See Note A-8 in Notes to Consolidated Financial
Statements, included in the Corporation's 1995 Annual Report to Shareholders,
incorporated by reference.
Accounting For Investment Securities
The Corporation adopted SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" effective January 1, 1994. See Note A-3 in Notes
to Consolidated Financial Statements included in the Corporation's 1995 Annual
Report to Shareholders, incorporated by reference.
Accounting for Contributions
The Corporation adopted SFAS No. 116, "Accounting for Contributions
Received and Contributions Made" effective January 1, 1995. See Note A-7 in
Notes to Consolidated Financial Statements included in the Corporation's 1995
Annual Report to Shareholders, incorporated by reference.
Accounting for Impairment of a Loan
The Corporation adopted SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan", as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures" effective January 1,
1995. See Note A-4 in Notes to Consolidated Financial Statements included in the
Corporation's 1995 Annual Report to Shareholders, incorporated by reference.
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 1995 Annual Report to Shareholders,
incorporated herein by reference.
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FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
RATE VOLUME ANALYSIS
Increase (decrease) in net interest income due to:
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Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- -----
(Dollars in thousands) 1995 Compared to 1994 1994 Compared to 1993
---------------------------------- ----------------------------------
INTEREST INCOME
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Federal funds sold $278 $210 $488 ($231) $36 ($195)
Investment securities
Taxable (209) 540 331 765 (592) 173
Tax-exempt (18) (41) (59) (30) 39 9
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Total investment securities (227) 499 272 735 (553) 182
Loans
Taxable 1,342 1,981 3,323 1,064 (79) 985
Tax-exempt (51) 42 (9) (99) 7 (92)
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Total loans 1,291 2,023 3,314 965 (72) 893
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Total interest income 1,342 2,732 4,074 1,469 (589) 880
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INTEREST EXPENSE
- ----------------
Savings, NOW and money market deposits (431) 780 349 (301) (729) (1,030)
Certificates of deposits and other time 1,281 1,039 2,320 878 (568) 310
-------- ------ -------- -------- -------- --------
Total interest bearing deposits 850 1,819 2,669 577 (1,297) (720)
Securities sold under repurchase
agreements 39 95 134 52 (34) 18
Other borrowings 27 15 42 19 (3) 16
-------- ------ -------- -------- -------- --------
Total Interest expense 916 1,929 2,845 648 (1,334) (686)
-------- ------ -------- -------- -------- --------
Net Interest income $426 $803 $1,229 $821 $745 $1,566
====== ====== ======== ====== ====== ======
NOTES:
- ------
(1) The indicated changes are presented on a tax equivalent basis.
(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) 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.
(4) The related average balance sheets can be found on page 12 of the
Corporation's 1995 Annual Report to Shareholders.
-10-
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO BY TYPE AT DECEMBER 31,
(Dollars in thousands) 1995 1994 1993 1992 1991
-------------- --------------- --------------- ---------------- --------------
Amount % Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ - ------ -
Commercial loans $86,686 36% $87,689 37% $88,632 40% $82,602 39% $80,351 40%
Real estate - construction 9,372 4% 4,607 2% 6,327 3% 3,724 2% 5,813 3%
Real estate - other 100,814 41% 101,589 42% 87,389 40% 85,555 40% 75,713 38%
Consumer loans (1) 33,836 14% 32,984 14% 27,414 12% 29,815 14% 30,513 15%
Lease financing receivables 11,879 5% 12,257 5% 11,671 5% 10,879 5% 7,929 4%
-------- -------- -------- -------- --------
Total gross loans 242,587 100% 239,126 100% 221,433 100% 212,575 100% 200,319 100%
Allowance for possible loan
losses (4,506) (3,303) (2,839) (2,300) (1,850)
---------- --------- --------- --------- ---------
Total loans $238,081 $235,823 $218,594 $210,275 $198,469
======== ======== ======== ======== ========
NOTES:
- ------
(1) Consumer loans include open-end home equity lines of credit and credit card
receivables.
(2) At December 31, 1995 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.
(3) The Corporation does not breakdown the allowance for possible loan losses
by area, industry or type of loan because the evaluation process used to
determine the adequacy of the reserve is based on the portfolio as a whole.
Management believes such an allocation would not be meaningful. See pages
16-18 of the Corporation's 1995 Annual Report to Shareholders for
additional information.
-11-
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
MATURITIES AND RATE SENSITIVITY OF LOANS DUE TO CHANGES IN
INTEREST RATES AT DECEMBER 31, 1995
Maturing
Maturing After 1 Year Maturing
Within And Within After
(Dollars in thousands) 1 Year 5 Years 5 Years Total
- ---------------------- ------ ------- ------- -----
Commercial loans $67,093 $4,903 $14,690 $86,686
Real Estate - construction 9,372 -- -- 9,372
------- ------- ------- --------
Total $76,465 $4,903 $14,690 $ 96,058
======= ====== ======= =======
Loans maturing after 1 year with:
- ---------------------------------
Fixed interest rates $4,903 $14,690
Variable interest rates -- --
------ -------
Total $4,903 $14,690
====== =======
NOTES:
- ------
(1) 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.
(2) Determination of maturities included in the above 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.
(3) This data excludes real estate-other loans, consumer loans and lease
financing receivables.
-12-
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
INVESTMENT SECURITIES YIELD BY MATURITY AT DECEMBER 31, 1995
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 -- 1,473 -- -- 1,473
U.S. Government agency 500 1,001 -- -- 1,501
Mortgage-backed securities -- 1,384 1,132 169 2,685
State and municipal 1,055 3,289 390 25 4,759
Corporate securities 7,804 4,002 -- -- 11,806
Asset-backed -- 462 -- 362 824
----- ------ ----- ------ ------
9,359 11,611 1,522 556 23,048
----- ------ ----- ------ ------
Available-for-Sale
- ------------------
U.S. Treasury 7,525 5,495 -- -- 13,020
U.S. Government agency -- 12,011 -- -- 12,011
Mortgage-backed securities -- 5,574 7,826 21,259 34,659
State and municipal -- -- -- 254 254
Corporate securities 1,079 -- -- -- 1,079
Mutual Funds -- -- -- 8,000 8,000
Other equity securities -- -- -- 1,540 1,540
------ -------- ------- ------ ------
8,604 23,080 7,826 31,053 70,563
----- ------ ----- ------ ------
Total Investment securities $17,963 $34,691 $9,348 $31,609 $93,611
======= ======= ====== ======= =======
Percent of portfolio 19.19% 37.06% 9.99% 33.77% 100.00%
====== ====== ===== ====== =======
Weighted average yield 5.96% 6.10% 6.36% 5.37% 5.85%
===== ===== ===== ===== =====
NOTES:
- ------
(1) 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.
(2) Other equity securities having no stated maturity (including the Federated
ARMs Fund) have been included in "Due over 10 years."
(3) Mortgage-backed and Asset-backed securities are included in the above table
based on their contractual maturity.
(4) As of December 31, 1995, the Corporation held securities from one issuer,
The Federated ARMs Fund, in excess of 10% of stockholders' equity. The
Corporation's investment in the Federated ARMs Fund was $8,000,000 with a
market value of $7,733,000. This fund concentrates at least 65% of its
value in adjustable and floating rate mortgage securities which are issued
or guaranteed as to payment of principal and interest by the U.S.
Government or its agencies.
-13-
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
INVESTMENT SECURITIES AT DECEMBER 31,
1995 1994 1993
---------------------- ----------------------- ----------------------
Book Market Book Market Book Market
(Dollars in thousands) Value Value Value Value Value Value
----- ----- ----- ----- ----- -----
Held-to-Maturity
- ----------------
U.S. Treasury $1,473 $1,485 $1,464 $1,365 $11,491 $11,678
U.S. Government agency 1,501 1,496 1,500 1,416 1,499 1,534
Mortgage-backed securities 2,685 2,689 3,223 3,039 33,049 33,100
State and municipal 4,759 4,862 5,603 5,525 5,387 5,564
Corporate securities 11,806 11,867 15,455 15,130 24,903 25,674
Asset-backed 824 814 2,122 2,053 4,993 5,019
Mutual funds -- -- -- -- 9,901 9,901
Other equity securities -- -- -- -- 1,606 1,649
--------- --------- --------- --------- ------- -------
$23,048 $23,213 $29,367 $28,528 $92,829 $94,119
======= ======= ======= ======= ======= =======
Available-for-Sale
- ------------------
U.S. Treasury $13,091 $13,091 $12,761 $12,761 $ -- $ --
U.S. Government agency 12,176 12,176 -- -- -- --
Mortgage-backed securities 34,475 34,475 23,446 23,446 -- --
State and municipal 281 281 268 268 -- --
Corporate securities 1,079 1,079 3,081 3,081 -- --
Asset-backed -- -- 107 107 -- --
Mutual Funds 7,733 7,733 7,764 7,764 -- --
Other equity securities 1,628 1,628 1,595 1,595 -- --
------- ------- ------- ------- ---------- ----------
$70,463 $70,463 $49,022 $49,022 $ -- $ --
======= ======= ======= ======= ========== ==========
MATURITIES OF CERTIFICATES OF DEPOSIT AND OTHER TIME DEPOSITS,
$100,000 OR MORE, AT DECEMBER 31, 1995
Due Within Over 3 Months Over 6 Months Due Over
(Dollars in thousands) 3 Months Through 6 Months Through 12 Months 12 Months Total
----------- ---------------- ----------------- --------- -----
Certifcates of Deposit
$100,000 or more $ 948 $ 3,332 $ 3,109 $ 4,090 $11,479
-14-
FIRST WEST CHESTER CORPORATION AND SUBSIDIARIES
EFFECT OF NONACCRUING LOANS ON INTEREST FOR
YEARS ENDED DECEMBER 31,
(Dollars in thousands) 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Interest income which would
have been recorded $103 $432 $225 $61 $39
Interest income that was
received from customer 172 -- -- -- 16
---- ---- ---- --- ----
($69) $432 $225 $61 $23
===== ==== ==== === ===
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.
-15-
Item 2. Properties.
- ------- -----------
The Bank owns seven 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 and the Exton Offices. EGSC owns a
62% interest in WCP Partnership which owns the West Chester Property described
in Item 1 above. 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 the Corporation, and other properties owned by the Bank and the
Corporation which may serve as future sites for branch offices.
Current
Banking Date Acquired
Offices Address or Opened
- ------- ------- ---------
Main Office 9 North High Street December 1863
and Corporate West Chester, Pennsylvania
Headquarters
Walk-In Facility 17 East Market Street February 1978
West Chester, Pennsylvania
Westtown-Thornbury Route 202 and Route 926 May 1994
Westtown, Pennsylvania
Goshen 311 North Five Points Road September 1956
West Goshen, Pennsylvania
Kennett Square 126 West Cypress Street February 1987
Kennett Square, Pennsylvania
Exton Route 100 and Boot Road August 1995
West Chester, Pennsylvania
Other Date Acquired
Properties Address or Opened
- ---------- ------- ---------
Operations 202 Carter Drive July 1988
Center West Chester, Pennsylvania
Paoli Pike 1104 Paoli Pike July 1963
West Chester, Pennsylvania
Kennett Square 124 West Cypress Street July 1986
Kennett Square, Pennsylvania
Westtown 1039 Wilmington Pike February 1965
Westtown, Pennsylvania
Former Commonwealth High & Market Streets July 1995
Building West Chester, Pennsylvania
-16-
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 EGSC 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 not listed or traded on a recognized
securities exchange. There is no established public trading market for the
Corporation's Common Stock and trading is sporadic. Information regarding high
and low bid quotations is incorporated herein by reference from the
Corporation's 1995 Annual Report to Shareholders, attached as an exhibit hereto.
As of March 1, 1996, there were approximately 830 shareholders of record of the
Corporation's Common Stock.
The Corporation instituted a stock bonus plan (the "Stock Bonus Plan")
during 1991, the purpose of which is to promote the interests of the Corporation
by encouraging and enabling its employees and the employees of the Bank to
acquire financial interests in the Corporation through the acquisition of shares
of the Corporation's Common Stock. Under the Stock Bonus Plan, the Corporation
may grant bonuses to its employees consisting of (i) shares of its Common Stock
or (ii) shares of Common Stock and cash. The shares of Common Stock constituting
the stock bonuses under the Stock Bonus Plan are purchased by the Corporation on
the open market through an independent agent specified by the Corporation's
Board of Directors. As of March 1, 1996, approximately $293,000 in cash bonuses
were granted under the Stock Bonus Plan for services rendered by the executive
officers and other employees of the Bank during 1995.
The Corporation instituted a dividend reinvestment and stock purchase plan
in 1990 ("DRIP"), the purpose of which is to provide the shareholders of the
Corporation with a convenient method of investing cash dividends and optional
cash payments in additional shares of the Corporation's Common Stock. As of
December 31, 1995, 433 shareholders of the Corporation, representing
approximately 53,000 shares of the Corporation's Common Stock, were participants
in the DRIP. The DRIP purchased approximately $336,000 worth of the
Corporation's Common Stock during the year ended December 31, 1995.
The Corporation adopted a stock repurchase plan in 1995 to purchase up to
105,000 shares of the Common Stock of the Corporation through open market or
privately negotiated transactions in order to increase shareholder value in the
remaining outstanding shares of Common Stock. As of March 1, 1996, the
Corporation had repurchased 75,000 shares of Common Stock in two privately
negotiated transactions and 12,000 shares in the open market.
The Corporation instituted a stock option plan in 1995 (the "1995 Stock
Option Plan"), the purpose of which is to provide additional incentive to key
employees and directors of the Corporation and the Bank to enter into or remain
in the service or employ of the Corporation or the Bank by providing them with
an opportunity to acquire or increase their proprietary interest in the
Corporation through receipt of options to
-17-
acquire the Common Stock of the Corporation. Under the 1995 Stock Option Plan,
which was ratified by the shareholders of the Corporation on March 19, 1996,
146,250 shares of Common Stock of the Corporation were reserved for issuance to
key employees of the Corporation and the Bank, and 41,250 shares of such Common
Stock were reserved for issuance to directors of the Corporation and the Bank.
On September 18, 1995, pursuant to the 1995 Stock Option Plan, options to
purchase 750 shares of Common Stock were granted to each then current Director
of the Corporation and the Bank, an option to purchase 3,000 shares of Common
Stock was granted to the President of the Corporation and options to purchase
1,500 shares of Common Stock were granted to nine executive officers of the
Corporation and the Bank. The grant of such options was subject to and
subsequently ratified by the shareholders of the Corporation on March 19, 1996.
The Corporation declared cash dividends per share on its Common Stock
during each quarter of the fiscal years ended December 31, 1995 and 1994, as set
forth in the following table (which have been adjusted for the stock split which
occurred in October, 1995):
Dividends
---------
Amount Per Share
----------------
1995 1994
---- ----
First Quarter............................................. $0.20 $0.18
Second Quarter............................................ 0.20 0.18
Third Quarter............................................. 0.23 0.20
Fourth Quarter............................................ 0.26 0.21
------ -------
Total................................................... $0.89 $0.77
===== =====
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. See Part I, Item 1, "Supervision and Regulation" for information
concerning limitations on the payment of dividends by the Bank and the
Corporation and on the ability of the Corporation to otherwise obtain funds from
the Bank.
Item 6. Selected Financial Data.
- ------- ------------------------
Selected financial data concerning the Corporation and the Bank is
incorporated by reference from the Corporation's 1995 Annual Report to
Shareholders, attached as an exhibit hereto. See Part II, Item 5, for data
concerning the payment of cash dividends on Common Stock.
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 by reference from the Corporation's 1995 Annual
Report to Shareholders, attached as an exhibit hereto.
-18-
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
Consolidated financial statements of the Corporation and the Report of
Independent Certified Public Accountants thereon are incorporated by reference
from the Corporation's 1995 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 28, 1996, for its 1996
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 28, 1996, for its 1996
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 28, 1996, for its 1996
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 28, 1996, for its 1996
Annual Meeting of Shareholders.
-19-
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 21
at December 31, 1995 and
1994
Consolidated Statements of Page 22
Income for the years ended
December 31, 1995, 1994
and 1993
Consolidated Statement of Page 23
Changes In Stockholders'
Equity for the years
ended December 31, 1995,
1994 and 1993
Consolidated Statements of Page 24
Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Pages 25 to 40
Financial Statements
Report of Independent Certified
Public Accountants Page 41
The Consolidated Financial Statements listed in the above index, together
with the report thereon of Grant Thornton LLP dated January 25, 1996, which are
included in the Corporation's Annual Report to Shareholders for the year ended
December 31, 1995, are hereby incorporated by reference.
(a) 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.
-20-
(a) 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(a). Certificate of Incorporation.
-----------------------------
(i) Copy of the Corporation's Certificate of Incorporation,
filed on March 9, 1984, is incorporated by reference to Exhibit 3(a)(iii) to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1988.
(ii) Copy of the Corporation's Certificate of Amendment to
Certificate of Incorporation filed with the Secretary of the Commonwealth of
Pennsylvania on March 23, 1984, is incorporated by reference to Exhibit 3(a)(ii)
to the Corporation's Annual Report on Form 10-K for the year ended December 31,
1988.
(iii) Copy of the Corporation's Certificate of Amendment to
Certificate of Incorporation filed with the Secretary of the Commonwealth of
Pennsylvania on April 2, 1986, is incorporated by reference to Exhibit 3(a)(i)
to the Corporation's Annual Report on Form 10-K for the year ended December 31,
1988.
3(b). Bylaws of the Corporation, as amended. Copy of the Corporation's
-----------------------------------------------------------------
Bylaws, as amended, is incorporated by reference to Exhibit 3(b) to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1988.
10. Material contracts.
-------------------
(a) Copy of Executive Deferred Compensation Plan, adopted by
the Bank on December 16, 1988, is incorporated by reference to Exhibit 10(a) to
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1988.
(b) Copy of Employment Agreement among the Corporation, the
Bank and Charles E. Swope dated December 31, 1994, is incorporated by reference
to Exhibit 10(b) to the Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994.
(c) Copy of the Bank's 401(k) Plan and Trust, dated July 15,
1988, is incorporated by reference to Exhibit 4 to the Corporation's
Registration Statement on Form S-8, filed with the Securities and Exchange
Commission on January 4, 1989 (Commission File No. 33-26325).
(d) Copy of the Corporation's Dividend Reinvestment Plan is
incorporated by reference to Exhibit 10(d) to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1990.
(e) Copy of the Bank's amended and restated 401(k) Plan,
effective date July 1, 1989, is incorporated by reference to Exhibit 10(e) to
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1990.
(f) Copy of the Corporation's Stock Bonus Plan, adopted by the
Corporation in 1991 and ratified by the shareholders of the Corporation on March
17, 1992, is incorporated by reference to Exhibit 10(f) to the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1991.
-21-
(g) Copy of the Bank's Supplemental Benefit Retirement Plan,
effective date January 1, 1994, is incorporated by reference to Exhibit 10(g) to
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1994.
(h) Copy of the Corporation's and the Bank's Directors
Deferred Compensation Plan, effective December 30, 1994, is incorporated by
reference to Exhibit 10(h) to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1994.
*(i) Copy of the Corporation's 1995 Stock Option Plan, adopted
by the Corporation in 1995 and ratified by the shareholders of the Corporation
on March 19, 1996.
* 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, 1995. With the exception of the pages listed in the Index to
Consolidated Financial Statements and the items referred to in Items 1, 5, 6, 7
and 8 hereof, the Corporation's 1995 Annual Report to Shareholders is not deemed
to be filed as part of this Report.
21. Subsidiaries of the Corporation. The First National Bank of West
--------------------------------
Chester, a banking institution organized under the banking laws of the United
States in December 1863.
* 23. Consents of experts and counsel. Consent of Grant Thornton LLP,
-------------------------------
dated March 28, 1996.
* 27. Financial Data Schedule. A Financial Data Schedule is being
-------------------------
submitted with the Corporation's 1995 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(c) of Regulation S-K.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Corporation
-------------------
during the quarter ended December 31, 1995.
-22-
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 WEST CHESTER CORPORATION
/s/ Charles E. Swope
By:___________________________
Charles E. Swope,
President
Date: March 29, 1996
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, 1996.
Signature Title
--------- -----
/s/ Charles E. Swope
President, Chief Executive
Charles E. Swope Officer and Chairman of the
Board of Directors
/s/ J. Duncan Smith
______________________________ Treasurer (Principal
J. Duncan Smith Accounting and Financial Officer)
(Signatures continued on following page)
-23-
(Signatures continued from previous page)
Signature Title
--------- -----
/s/ Richard M. Armstrong
_________________________________ Director
Richard M. Armstrong
/s/ John J. Ciccarone
_________________________________ Director
John J. Ciccarone
/s/ M. Robert Clarke
_________________________________ Director
M. Robert Clarke
/s/ Edward J. Cotter
_________________________________ Secretary and Director
Edward J. Cotter
/s/ Clifford E. DeBaptiste
_________________________________ Director
Clifford E. DeBaptiste
/s/ John A. Featherman, III
_________________________________ Director
John A. Featherman, III
/s/ J. Carol Hanson
_________________________________ Director
J. Carol Hanson
/s/ John S. Halsted
_________________________________ Director
John S. Halsted
/s/ Devere Kauffman
_________________________________ Director
Devere Kauffman
/s/ David L. Peirce
_________________________________ Director
David L. Peirce
/s/ John B. Waldron
_________________________________ Director
John B. Waldron
-24-
Index to Exhibits
Exhibits
- --------
10(i) Copy of the Corporation's 1995 Stock Option Plan, adopted by the
Corporation in 1995 and ratified by the shareholders of the
Corporation on March 19, 1996.
13 The Corporation's Annual Report to Shareholders for the year ended
December 31, 1995.
23 Consent of Grant Thornton LLP.
27 Financial Data Schedule.
-25-