Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 2003 Commission File Number: 0-19212
JEFFERSONVILLE BANCORP
(Exact name of Registrant as specified in its charter)
New York 22-2385448
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
P. O. Box 398, Jeffersonville, New York 12748
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (845) 482-4000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
Registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date:
Number of Shares Outstanding
Class of Common Stock as of August 13, 2003
$0.50 par value 4,434,321
INDEX TO FORM 10-Q
Page
Part 1
Item 1 Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
June 30, 2003 and December 31, 2002 1
Consolidated Statements of Income for the Three
Months Ended June 30, 2003 and 2002 2
Consolidated Statements of Income for the
Six Months Ended June 30, 2003 and 2002 3
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2003 and 2002 4
Notes to Consolidated Interim Financial Statements 5-6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-16
Item 3 Quantitative and Qualitative Disclosures about
Market Risk 16
Item 4 Controls and Procedures 16
Part 2
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Signatures 19
Index to Exhibits
Jeffersonville Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2003 2002
------------ ------------
ASSETS
Cash and due from banks $ 12,180,000 $ 12,874,000
Securities available for sale, at fair value 114,920,000 117,942,000
Securities held to maturity, estimated fair value of $4,176,672
at June 30, 2003 and $4,789,000 at December 31, 2002 4,025,000 4,673,000
Loans, net of allowance for loan losses of $3,144,000
at June 30, 2003 and $3,068,000 at December 31, 2002 181,152,000 168,909,000
Accrued interest receivable 1,586,000 1,933,000
Premises and equipment, net 3,117,000 3,230,000
Federal Home Loan Bank stock 1,700,000 1,900,000
Other real estate owned 176,000 126,000
Cash surrender value of bank-owned life insurance 12,024,000 11,734,000
Other assets 1,886,000 1,704,000
------------ ------------
TOTAL ASSETS $332,766,000 $325,025,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand deposits (non-interest bearing) $ 55,576,000 $ 49,675,000
NOW and super NOW accounts 35,000,000 35,630,000
Savings and insured money market deposits 84,376,000 79,094,000
Time deposits 88,728,000 88,393,000
------------ ------------
TOTAL DEPOSITS 263,680,000 252,792,000
Federal Home Loan Bank borrowings 30,000,000 30,000,000
Short-term debt 427,000 6,433,000
Accrued expenses and other liabilities 3,929,000 3,303,000
------------ ------------
TOTAL LIABILITIES 298,036,000 292,528,000
------------ ------------
Stockholders' equity:
Series A preferred stock, no par value:
2,000,000 shares authorized, none issued -- --
Common stock, $0.50 par value; 11,250,000 shares
authorized ; 4,767,786 shares
issued at June 30, 2003 and December 31, 2002 2,384,000 795,000
Paid-in capital 6,482,000 8,072,000
Treasury stock, at cost; 333,465 shares at June 30, 2003
and at December 31, 2002 (1,108,000) (1,108,000)
Retained earnings 25,835,000 23,664,000
Accumulated other comprehensive income 1,137,000 1,074,000
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 34,730,000 32,497,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $332,766,000 $325,025,000
============ ============
See accompanying notes to unaudited consolidated interim financial
statements.
1
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Three Months
Ended June 30,
2003 2002
---------- ----------
INTEREST INCOME
Loan interest and fees $3,591,000 $3,385,000
Securities:
Taxable 839,000 1,479,000
Non-taxable 494,000 255,000
Federal funds sold 9,000 16,000
---------- ----------
TOTAL INTEREST INCOME 4,933,000 5,135,000
---------- ----------
INTEREST EXPENSE
Deposits 693,000 1,024,000
Federal Home Loan Bank borrowings 326,000 329,000
Other 4,000 12,000
---------- ----------
TOTAL INTEREST EXPENSE 1,023,000 1,365,000
---------- ----------
NET INTEREST INCOME 3,910,000 3,770,000
Provision for loan losses 110,000 200,000
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,800,000 3,570,000
---------- ----------
NON-INTEREST INCOME
Service charges 497,000 420,000
Increase in cash surrender value
of bank-owned life insurance 139,000 93,000
Net security gains 5,000 --
Other non-interest income 279,000 219,000
---------- ----------
TOTAL NON-INTEREST INCOME 920,000 732,000
---------- ----------
NON-INTEREST EXPENSES
Salaries and employee benefits 1,685,000 1,692,000
Occupancy and equipment expenses 506,000 319,000
Other real estate owned (income) expenses, net -- (183,000)
Other non-interest expenses 712,000 549,000
---------- ----------
TOTAL NON-INTEREST EXPENSES 2,903,000 2,377,000
---------- ----------
Income before income tax expense 1,817,000 1,925,000
Income tax expense (422,000) (617,000)
---------- ----------
NET INCOME $1,395,000 $1,308,000
========== ==========
Basic earnings per common share $ 0.31 $ 0.29
========== ==========
Weighted average common shares outstanding 4,434,000 4,434,000
========== ==========
Share and per share data has been restated for a 3 for 1 stock split in 2003.
See accompanying notes to unaudited consolidated interim financial
statements.
2
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Six Months
Ended June 30,
2003 2002
------------ -----------
INTEREST INCOME
Loan interest and fees $ 7,041,000 $ 6,765,000
Securities:
Taxable 1,870,000 2,848,000
Non-taxable 932,000 497,000
Federal funds sold 20,000 35,000
----------- -----------
TOTAL INTEREST INCOME 9,863,000 10,145,000
----------- -----------
INTEREST EXPENSE
Deposits 1,425,000 2,140,000
Federal Home Loan Bank borrowings 649,000 649,000
Other 7,000 20,000
----------- -----------
TOTAL INTEREST EXPENSE 2,081,000 2,809,000
----------- -----------
NET INTEREST INCOME 7,782,000 7,336,000
Provision for loan losses 260,000 300,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,522,000 7,036,000
----------- -----------
NON-INTEREST INCOME
Service charges 983,000 863,000
Increase in cash surrender value
of bank-owned life insurance 290,000 191,000
Net security gains 154,000 4,000
Other non-interest income 487,000 427,000
----------- -----------
TOTAL NON-INTEREST INCOME 1,914,000 1,485,000
----------- -----------
NON-INTEREST EXPENSES
Salaries and employee benefits 3,169,000 2,950,000
Occupancy and equipment expenses 973,000 722,000
Other real estate owned (income) expenses, net 36,000 (151,000)
Other non-interest expenses 1,414,000 1,297,000
----------- -----------
TOTAL NON-INTEREST EXPENSES 5,592,000 4,818,000
----------- -----------
Income before income tax expense 3,844,000 3,703,000
Income tax expense (1,023,000) (1,147,000)
----------- -----------
NET INCOME $ 2,821,000 $ 2,556,000
=========== ===========
Basic earnings per common share $ 0.64 $ 0.58
=========== ===========
Weighted average common shares outstanding 4,434,000 4,434,000
=========== ===========
Share and per share data has been restated for a 3 for 1 stock split in 2003.
See accompanying notes to unaudited consolidated interim financial
statements.
3
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months
Ended June 30,
2003 2002
------------ -------------
OPERATING ACTIVITIES
Net income $ 2,821,000 $ 2,556,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for loan losses 260,000 300,000
Write down of other real estate owned -- 70,000
Gain on sales of other real estate owned (56,000) (411,000)
Depreciation and amortization 330,000 374,000
Net increase in cash surrender value
of bank-owned life insurance (290,000) (191,000)
Net security gains (154,000) (4,000)
Decrease in accrued interest receivable 347,000 144,000
Decrease (increase) in other assets 702,000 (332,000)
Decrease in accrued
expenses and other liabilities (260,000) (115,000)
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,700,000 2,391,000
------------ ------------
INVESTING ACTIVITIES
Proceeds from maturities and calls:
Securities available for sale 31,453,000 15,356,000
Securities held to maturity 773,000 2,122,000
Proceeds from sales of securities available for sale 11,900,000 5,336,000
Purchases :
Securities available for sale (40,024,000) (29,729,000)
Securities held to maturity (125,000) (1,413,000)
Disbursements for loan originations, net of
principal collections (12,503,000) (938,000)
Net purchases of premises and equipment (217,000) (697,000)
Proceeds from sales of other real estate owned 116,000 1,527,000
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (8,627,000) (8,436,000)
------------ ------------
FINANCING ACTIVITIES
Net increase in deposits 10,888,000 9,801,000
(Decrease) increase in short-term debt (6,006,000) 362,000
Cash dividends paid (649,000) (592,000)
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 4,233,000 9,571,000
------------ ------------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (694,000) 3,526,000
Cash and cash equivalents at beginning of period 12,874,000 10,844,000
------------ ------------
Cash and cash equivalents at end of period $ 12,180,000 $ 14,370,000
============ ============
(Continued)
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Cash Flows, Continued
(Unaudited)
For the Six Months
Ended June 30,
2003 2002
------------ -------------
Supplemental information:
Cash paid for:
Interest $ 3,735,000 $ 2,874,000
Income taxes 581,000 907,000
Transfer of loans to other real estate owned 110,000 59,000
See accompanying notes to unaudited consolidated interim
financial statements.
4
JEFFERSONVILLE BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
A. Financial Statement Basis of Presentation
The accompanying unaudited interim consolidated statements include the
accounts of Jeffersonville Bancorp (the "Company") and its wholly owned
subsidiary, The First National Bank of Jeffersonville (collectively, the
Company and its subsidiary are referred to herein as the Company). In the
opinion of Management of the Company, the accompanying unaudited consolidated
interim financial statements contain all adjustments necessary to present the
financial position as of June 30, 2003 and December 31, 2002, the results of
operations for the three and six month periods ended June 30, 2003 and 2002,
and the cash flows for the six month periods ended June 30, 2003 and 2002.
All adjustments are normal and recurring. The accompanying unaudited
consolidated interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X and should be read in conjunction with the
Company's consolidated year-end financial statements, including notes
thereto, which are included in the 2002 Annual Report on Form 10-K.
B. Earnings per Share
Basic earnings per share amounts were calculated for the three and six month
periods ended June 30, 2003 and 2002 based on weighted average common shares
outstanding of 4,434,000. There were no dilutive securities during any of the
periods. Earnings per share were $0.31 for the quarter ended June 30, 2003,
as compared to $0.29 per share for the same period in 2002. Earnings per
share were $0.64 for the six months ended June 30, 2003, as compared to $0.58
for the same period in 2002.
C. Comprehensive Income
Comprehensive income for the three-month periods ended June 30, 2003 and 2002
was $1,866,000 and $2,804,000, respectively. Comprehensive income for the
six-month periods ended June 30, 2003 and 2002 was $2,884,000 and $3,563,000,
respectively. The following summarizes the components of the Company's other
comprehensive income for the six-month periods:
Six Months Ended June 30, 2003:
Net unrealized holding gains arising during the
period, net of tax (pre-tax amount of $261,000) $154,000
Reclassification adjustment for net gains
realized in net income during the period, net
of pre-tax amount of $154,000) $(91,000)
--------
Other comprehensive income $ 63,000
========
Six Months Ended June 30, 2002:
Net unrealized holding gains arising during the
period, net of tax (pre-tax amount of $1,708,000) $1,010,000
Reclassification adjustment for net gains
realized in net income during the period, net
of pre-tax amount of $4,000) $ (3,000)
----------
Other comprehensive income $1,007,000
==========
D. New Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)". This statement is
effective for exit or disposal activities initiated after December 31, 2002.
The Company will review the impact of applying this standard to any exit or
disposal activities initiated after December 31, 2002.
5
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement No.
123", to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure requirements
of SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. This
statement is effective for fiscal years ending after December 15, 2002 and
was adopted by the Company on January 1, 2003. Accordingly, the adoption of
this statement did not have an impact on the Company's consolidated financial
statements. The Company has no stock based employee compensation arrangements
covered by this statement.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN No. 46")
"Consolidation of Variable Interest Entities." The objective of this
interpretation is to provide guidance on how to identify variable interest
entities and how to determine whether or not those entities should be
consolidated. The interpretation requires the primary beneficiaries of
variable interest entities to consolidate the variable interest entities if
they are subject to a majority of the risk of loss or are entitled to receive
a majority of the residual returns. It also requires that both the primary
beneficiary and all other enterprises with a significant variable interest in
a variable interest entity make certain disclosures. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003, and
to variable interest entities in which an enterprise obtains an interest
after that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1,
2003. The provisions of FIN No. 46 are not expected to have a material impact
on the Company's consolidated financial statements.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
This statement is generally effective for contracts entered into or modified
after June 30, 2003, and for hedging relationships designated after June 30,
2003. The adoption of this statement is not expected to have any effect on
the Company's consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This
statement establishes standards for how an issuer clarifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This statement is generally effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at
the beginning of the first interim period after June 15, 2003. The adoption
of this statement is not expected to have any effect on the Company's
consolidated financial statements.
E. Notes Related to Stock Split
On May 14, 2003 the Board of Directors of the Company declared a
three-for-one stock split and quarterly dividend.
F. Guarantees
In November 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others; an interpretation of FASB Statements No. 5, 57, and
107 and rescission of FASB Interpretation No. 34". FIN No. 45 requires
certain new disclosures and potential liability recognition for the fair
value at issuance of guarantees that fall within its scope. Under FIN No. 45,
the Company does not issue any guarantees that would require liability
recognition or disclosure, other than its standby letters of credit. Standby
letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Standby letters of
credit generally arise in connection with lending relationships. The credit
risk involved in issuing these instruments is essentially the same as that
involved in extending loans to customers. Contingent obligations under
standby letters of credit totaled approximately $463,000 at June 30, 2003 and
represent the maximum potential future payments the Company could be required
to make. Typically, these instruments have terms of twelve months or less and
expire unused; therefore, the total amounts do not necessarily represent
future cash requirements. Each customer is evaluated individually for
creditworthiness under the same underwriting standards used for commitments
to extend credit and on-balance sheet instruments. Company policies governing
loan collateral apply to standby letters of credit at the time of credit
extension. Loan-to-value ratios are generally consistent with loan-to-value
requirements for other commercial loans secured by similar types of
collateral. The fair value of the Company's standby letters of credit at June
30, 2003 was insignificant.
6
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Forward Looking Statements
In addition to historical information, this report includes certain
forward-looking statements with respect to the financial condition, results
of operations and business of the Parent Company and the Bank based on
current management's expectations. The Company's ability to predict results
or the effect of future plans and strategies is inherently uncertain and
actual results, performance or achievements could differ materially from
those management expectations. Factors that could cause future results to
vary from current management expectations include, but are not limited to,
general economic conditions, legislative and regulatory changes, monetary and
fiscal policies of the federal government, changes in tax policies, rates and
regulations, changes in interest rates, deposit flows, the cost of funds,
demand for loan products, demand for financial services, competition, changes
in the quality or composition of the Bank's loan and securities portfolios,
changes in accounting principles, and other economic, competitive,
governmental, and technological factors affecting the Company's operations,
markets, products, services and prices.
A. Overview - Financial Condition
During the period from December 31, 2002 to June 30, 2003, total assets
increased $7,741,000 or 2.4%. Securities available for sale decreased by
$3,022,000 or 2.6% primarily due to maturities and sales. Net loans increased
from $168,909,000 at year end 2002 to $181,152,000 at June 30, 2003, an
increase of $12,243,000 or 7.3%.
Deposits increased from $252,792,000 at December 31, 2002 to $263,680,000 at
June 30, 2003, an increase of $10,888,000 or 4.3%. Growth occurred in all
deposit categories except NOW and super NOW accounts. Demand deposits
increased from $49,675,000 at December 31, 2002 to $55,576,000 at June 30,
2003, an increase of $5,901,000 or 11.9%. Savings deposits increased from
$79,094,000 at December 31, 2002 to $84,376,000 at June 30, 2002, an increase
of $5,282,000 or 6.7%
Total stockholders' equity increased $2,233,000 or 6.9% from $32,497,000 at
December 31, 2002 to $34,730,000 at June 30, 2003. This increase was the
result of net income of $2,821,000, plus an increase of $63,000 in
accumulated other comprehensive income, less cash dividends of $649,000.
Loan Portfolio Composition
June 30, 2003 March 31, 2003
Amount Percent Amount Percent
(in thousands) (in thousands)
REAL ESTATE LOANS
Residential $ 75,054 40.4% $ 74,428 41.9%
Commercial 52,145 28.1 46,745 23.3
Home Equity 17,110 9.2 15,639 8.8
Farm Land 2,588 1.4 2,016 1.1
Construction 4,155 2.2 3,416 1.9
-------- ----- -------- -----
$151,052 81.3% $142,244 80.1%
-------- ----- -------- -----
OTHER LOANS
Commercial Loans $ 16,782 9.0 $ 16,997 9.6
Consumer Install Loans 16,272 8.8 16,837 9.5
Other Consumer Loans 1,472 0.8 1,267 0.7
Agriculture 240 0.1 253 0.2
-------- ----- -------- -----
34,766 18.7 35,354 19.9
-------- ----- -------- -----
Total Loans $185,818 100.0% $177,598 100.0%
-------- ----- -------- -----
Unearned Discounts (1,522) (1,770)
Allowance for Loan Losses (3,144) (3,168)
-------- --------
Total Loans, Net $181,152 $172,660
7
B. Allowance for Loan Losses
The allowance for loan losses reflects management's assessment of the risk
inherent in the loan portfolio, which includes factors such as the general
state of the economy and past loan experience. The provision for loan losses
was $260,000 for the six months ended June 30, 2003 and $300,000 for the six
months ended June 30, 2002. Total charge offs for the six month period ended
June 30, 2003 were $255,000 compared to $574,000 for the same period in the
prior year, while recoveries decreased from $93,000 for the 2002 period to
$71,000 for the 2003 period. The amounts represent a net charge-off of
$184,000 in the first six months of 2003 versus a net charge-off of $481,000
for the same period in the prior year. The higher rate of charge offs in 2002
was related to a single commercial loan. Based on management's analysis of
the loan portfolio, management believes the current level of the allowance
for loan losses is adequate.
Changes in the allowance for loan losses are summarized as follows for the six
month periods ended June 30:
2003 2002
Balance at beginning of period $3,068,000 $2,614,000
Provision for loan losses 260,000 300,000
Loans charged off (255,000) (574,000)
Recoveries 71,000 93,000
---------- ----------
Balance at end of period $3,144,000 $2,433,000
========== ==========
Annualized net charge-offs as a percentage
of average outstanding loans 0.20% 0.29%
Allowance for loan losses to:
Total loans 1.71% 1.49%
Total non-performing loans 152.6% 95.3%
C. Non Accrual and Past Due Loans
The Company places a loan on nonaccrual status when collectability of
principal or interest is doubtful, or when either principal or interest is 90
days or more past due, and collectability is in doubt. Interest payments
received on nonaccrual loans are applied as a reduction of the principal
balance when concern exists as to the ultimate collection of principal.
Non-performing loans are summarized as follows at June 30:
Non-accrual loans $ 957,000 $1,874,000
Loans past due 90 days or more and
still accruing interest 1,103,000 678,000
---------- ----------
Total non-performing loans $2,060,000 $2,552,000
---------- ----------
Non-performing loans as a percentage
of total loans 1.1% 1.6%
---------- ----------
As of June 30, 2003 and 2002, the recorded investment in loans considered to
be impaired under Statement of Financial Accounting Standards ("SFAS") No.114
totaled $1,112,000 and $1,544,000, respectively. There was no allowance for
loan impairment under Statement No.114 at either date, primarily due to prior
charge offs and the adequacy of collateral values on these loans.
In addition to the non-performing loans, we have identified through normal
internal credit review procedures, $8,034,385 in loans that warrant increased
attention as of June 30, 2003. These loans are classified as substandard as
they exhibit certain risk factors, which have the potential to cause them to
become non-performing. Accordingly, these credits are reviewed on at least a
quarterly basis and were considered in our evaluation of the allowance for
loan losses at June 30, 2003. None of these loans was considered impaired and
as such, no specific impairment allowance was established for these loans.
8
D. Capital
In January 200s, the Board of Directors allocated $1,000,000 for the
repurchase of common stock on the open market. During the six months ended
June 30, 2003, no shares have been purchased under this repurchase plan.
Under the Federal Reserve Bank's risk-based capital rules, the Company's Tier
I risk-based capital was 17.3% and total risk-based capital was 18.5% of
risk-weighted assets at June 30, 2003. These risk-based capital ratios are
well above the minimum regulatory requirements of 4.0% for Tier I capital and
8.0% for total capital. The Company's leverage ratio (Tier I capital to
average assets) of 10.2% at June 30, 2003 is well above the 4.0% minimum
regulatory requirement.
The following table shows the Company's actual capital measurements compared
to the minimum regulatory requirements at June 30, 2003.
TIER I CAPITAL
Stockholders' equity, excluding accumulated
other comprehensive income $ 33,593,000
TIER II CAPITAL
Allowance for loan losses 1 2,426,000
------------
Total risk-based capital $ 36,019,000
------------
Risk-weighted assets 2 $194,291,000
------------
Average assets $329,285,000
------------
RATIOS
Tier I risk-based capital (minimum 4.0%) 17.3%
Total risk-based capital (minimum 8.0%) 18.5%
Leverage (minimum 4.0%) 10.2%
1 The allowance for loan losses is limited to 1.25% of
risk-weighted assets for the purpose of this calculation.
2 Risk-weighted assets have been reduced for excess allowance for
loan losses excluded from total risk-based capital
9
Consolidated Average Balance Sheet as of June 30, 2003 Year to Date
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS PAID YIELD
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES 71,884 21.83% 1,870 5.20%
TAX EXEMPT SECURITIES 41,384 12.57% 1,412 6.82%
-------- ------ ------ -----
TOTAL SECURITIES 113,268 34.40% 3,282 5.80%
-------- ------ ------ -----
SHORT TERM INVESTMENTS 3,525 1.07% 20 1.13%
LOANS
REAL ESTATE MORTGAGES 132,813 40.33% 5,020 7.56%
HOME EQUITY LOANS 15,891 4.83% 483 6.08%
TIME AND DEMAND LOANS 14,436 4.38% 438 6.07%
INSTALLMENT LOANS 17,287 5.25% 956 11.06%
OTHER LOANS 2,519 0.76% 144 11.43%
-------- ------ ------ -----
TOTAL LOANS 182,946 55.56% 7,041 7.70%
-------- ------ ------ -----
TOTAL INTEREST EARNING ASSETS 299,739 91.03% 10,343 6.90%
-------- ------ ------ -----
ALLOWANCE FOR LOAN LOSSES (3,129) (0.95)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 3,185 0.97%
CASH AND DUE FROM BANKS (DEMAND) 11,473 3.48%
FIXED ASSETS (NET) 3,198 0.97%
BANK OWNED LIFE INSURANCE 11,872 3.61%
OTHER ASSETS 2,947 0.89%
======== ======
TOTAL ASSETS $329,285 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 36,897 11.21% 84 0.46%
SAVINGS AND INSURED MONEY MARKET 84,435 25.64% 284 0.67%
TIME DEPOSITS 87,742 26.65% 1,057 2.41%
-------- ------ ------ -----
TOTAL INTEREST BEARING DEPOSITS 209,074 63.49% 1,425 1.36%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 1,261 0.38% 7 1.11%
LONG TERM DEBT 30,000 9.11% 649 4.33%
-------- ------ ------ -----
TOTAL INTEREST BEARING LIABILITIES 240,335 72.99% 2,081 1.73%
-------- ------ ------ -----
DEMAND DEPOSITS 52,375 15.91%
OTHER LIABILITIES 3,243 0.98%
-------- ------
TOTAL LIABILITIES 295,953 89.88%
STOCKHOLDERS EQUITY 33,332 10.12%
======== ======
TOTAL LIABILITIES AND EQUITY $329,285 100.00%
======== ======
NET INTEREST INCOME $8,262
======
NET INTEREST SPREAD 5.17%
=====
NET INTEREST MARGIN 5.51%
=====
10
Consolidated Average Balance Sheet as of June 30, 2002 Year to Date
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS PAID YIELD
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES 93,067 30.48% 2,848 6.12%
TAX EXEMPT SECURITIES 19,725 6.46% 753 7.63%
-------- ------ ------ -----
TOTAL SECURITIES 112,792 36.94% 3,601 6.39%
-------- ------ ------ -----
SHORT TERM INVESTMENTS 4,234 1.39% 35 1.65%
LOANS
REAL ESTATE MORTGAGES 116,051 38.00% 4,696 8.09%
HOME EQUITY LOANS 13,574 4.45% 483 7.12%
TIME AND DEMAND LOANS 13,177 4.32% 437 6.63%
INSTALLMENT LOANS 18,658 6.11% 1,007 10.79%
OTHER LOANS 2,210 0.72% 142 12.85%
-------- ------ ------ -----
TOTAL LOANS 163,670 53.60% 6,765 8.27%
-------- ------ ------ -----
TOTAL INTEREST EARNING ASSETS 280,696 91.92% 10,401 7.41%
-------- ------ ------ -----
ALLOWANCE FOR LOAN LOSSES (2,620) (0.86)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 535 0.18%
CASH AND DUE FROM BANKS (DEMAND) 10,103 3.31%
FIXED ASSETS (NET) 2,941 0.96%
BANK OWNED LIFE INSURANCE 7,439 2.44%
OTHER ASSETS 6,271 2.05%
-------- ------
TOTAL ASSETS $305,365 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 33,203 10.87% 123 0.74%
SAVINGS AND INSURED MONEY MARKET 68,881 22.56% 379 1.10%
TIME DEPOSITS 94,059 30.80% 1,638 3.48%
-------- ------ ------ -----
TOTAL INTEREST BEARING DEPOSITS 196,143 64.23% 2,140 2.18%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 496 0.16% 20 8.06%
LONG TERM DEBT 30,000 9.82% 649 4.33%
-------- ------ ------ -----
TOTAL INTEREST BEARING LIABILITIES 226,639 74.22% 2,809 2.48%
-------- ------ ------ -----
DEMAND DEPOSITS 46,057 15.08%
OTHER LIABILITIES 3,816 1.25%
-------- ------
TOTAL LIABILITIES 276,512 90.55%
STOCKHOLDERS EQUITY 28,853 9.45%
======== ======
TOTAL LIABILITIES AND EQUITY $305,365 100.00%
======== ======
NET INTEREST INCOME $ 7,592
=======
NET INTEREST SPREAD 4.93%
=====
NET INTEREST MARGIN 5.41%
=====
11
Consolidated Average Balance Sheet for the three months ended June 30, 2003
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS PAID YIELD
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES 69,077 20.35% 839 4.86%
TAX EXEMPT SECURITIES 45,251 13.33% 682 6.03%
-------- ------ ------ -----
TOTAL SECURITIES 114,328 33.69% 1,521 5.32%
-------- ------ ------ -----
SHORT TERM INVESTMENTS 2,378 0.70% 9 1.51%
LOANS
REAL ESTATE MORTGAGES 142,391 41.95% 2,548 7.16%
HOME EQUITY LOANS 16,763 4.94% 236 5.63%
TIME AND DEMAND LOANS 14,604 4.30% 229 6.27%
INSTALLMENT LOANS 17,547 5.17% 507 11.56%
OTHER LOANS 2,411 0.71% 71 11.78%
-------- ------ ------ -----
TOTAL LOANS 193,716 57.08% 3,591 7.41%
-------- ------ ------ -----
TOTAL INTEREST EARNING ASSETS 310,422 91.46% 5,121 6.60%
-------- ------ ------ -----
ALLOWANCE FOR LOAN LOSSES (3,196) (0.94)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 3,200 0.94%
CASH AND DUE FROM BANKS (DEMAND) 11,231 3.31%
OTHER ASSETS 17,740 5.23%
======== ======
TOTAL ASSETS $339,397 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 36,214 10.67% 40 0.44%
SAVINGS AND INSURED MONEY MARKET 90,911 26.79% 139 0.61%
TIME DEPOSITS 88,953 26.21% 514 2.31%
-------- ------ ------ -----
TOTAL INTEREST BEARING DEPOSITS 216,078 63.67% 693 1.28%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 1,521 0.45% 4 1.05%
LONG TERM DEBT 30,333 8.94% 326 4.30%
-------- ------ ------ -----
TOTAL INTEREST BEARING LIABILITIES 247,932 73.05% 1,023 1.65%
-------- ------ ------ -----
DEMAND DEPOSITS 53,610 15.80%
OTHER LIABILITIES 3,422 1.01%
-------- ------
TOTAL LIABILITIES 304,964 89.85%
STOCKHOLDERS EQUITY 34,433 10.15%
======== ======
TOTAL LIABILITIES AND EQUITY $339,397 100.00%
======== ======
NET INTEREST INCOME $4,098
======
NET INTEREST SPREAD 4.95%
=====
NET INTEREST MARGIN 5.28%
=====
12
Consolidated Average Balance Sheet for the three months ended June 30, 2002
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS PAID YIELD
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES 95,152 30.63% 1,479 6.22%
TAX EXEMPT SECURITIES 20,499 6.60% 386 7.53%
------- ------ ----- -----
TOTAL SECURITIES 115,651 37.23% 1,865 6.45%
------- ------ ----- -----
SHORT TERM INVESTMENTS 3,920 1.26% 16 1.63%
LOANS
REAL ESTATE MORTGAGES 118,059 38.00% 2,371 8.03%
HOME EQUITY LOANS 13,890 4.47% 246 7.08%
TIME AND DEMAND LOANS 13,223 4.26% 197 5.96%
INSTALLMENT LOANS 18,496 5.95% 499 10.79%
OTHER LOANS 2,182 0.70% 72 13.20%
------- ------ ----- -----
TOTAL LOANS 165,850 53.39% 3,385 8.16%
------- ------ ----- -----
TOTAL INTEREST EARNING ASSETS 285,421 91.88% 5,266 7.38%
------- ------ ----- -----
ALLOWANCE FOR LOAN LOSSES (2,623) (0.84)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 427 0.14%
CASH AND DUE FROM BANKS (DEMAND) 9,987 3.21%
OTHER ASSETS 17,439 5.61%
======== ======
TOTAL ASSETS $310,651 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 32,284 10.39% 60 0.74%
SAVINGS AND INSURED MONEY MARKET 71,633 23.06% 193 1.08%
TIME DEPOSITS 94,492 30.42% 771 3.26%
------- ------ ----- -----
TOTAL INTEREST BEARING DEPOSITS 198,409 63.87% 1,024 2.06%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 342 0.11% 12 14.04%
LONG TERM DEBT 30,333 9.76% 329 4.34%
------- ------ ----- -----
TOTAL INTEREST BEARING LIABILITIES 229,084 73.74% 1,365 2.38%
------- ------ ----- -----
DEMAND DEPOSITS 47,329 15.24%
OTHER LIABILITIES 4,840 1.56%
------- ------
TOTAL LIABILITIES 281,253 90.54%
STOCKHOLDERS EQUITY 29,398 9.46%
======== ======
TOTAL LIABILITIES AND EQUITY $310,651 100.00%
======== ======
NET INTEREST INCOME $3,901
======
NET INTEREST SPREAD 5.00%
=====
NET INTEREST MARGIN 5.47%
=====
13
Liquidity
Liquidity is the ability to provide sufficient cash flow to meet financial
commitments such as additional loan demand and withdrawals of existing
deposits. The Company's primary sources of liquidity are dividends from the
Bank, its deposit base; FHLB borrowings; repayments and maturities on loans;
short-term assets such as federal funds and short-term interest bearing
deposits in banks; and maturities and sales of securities available for sale.
These sources are available in amounts sufficient to provide liquidity to
meet the Company's ongoing funding requirements. The ability of the Bank to
pay dividends is subject to various regulatory limitations. The Bank's
membership in the FHLB of New York enhances liquidity in the form of
overnight and 30 day lines of credit of approximately $29.9 million, which
may be used to meet unforeseen liquidity demands. Six separate FHLB term
advances totaling $30.0 million at June 30, 2003 were being used to fund
securities leverage transactions.
In 2003, cash generated from operating activities amounted to $3.7 million
and cash provided by financing activities amounted to $4.2 million. These
amounts were offset by amounts used in investing activities of $8.6 million,
resulting in a net decrease in cash and cash equivalents of approximately
$700,000. See the Consolidated Statements of Cash Flows for additional
information.
Maturity Schedule of Time Deposits of $100,000 or More
Deposits
Due three months or less $10,714,000
Over three months through six months 2,856,000
Over six months through twelve months 2,407,000
Over twelve months 4,803,000
-----------
$20,780,000
===========
Management anticipates much of these maturing deposits to rollover at
maturity, and that liquidity will be adequate to meet funding requirements.
E. Result of Operations
Net income for the quarter ended June 30, 2003 increased by $87,000 to
$1,395,000 compared to $1,308,000 for the corresponding period in 2002. The
Company's annualized return on average assets was 1.6% and 1.7% for the
quarters ended June 30, 2003 and 2002, respectively. The annualized return on
average stockholders' equity was 16.2% and 17.8% for the second quarter of
2003 and 2002, respectively.
Total interest income for the second quarter of 2003 decreased $202,000 or
3.9% from the corresponding period in 2002 and total interest expense
decreased $342,000 or 25.1% from the corresponding period in 2002. Net
interest income increased $140,000 or 3.7% from the prior year period.
Non-interest income for the second quarter of 2003 increased $188,000 or
25.7% from the corresponding period in 2002, while total non-interest expense
increased $526,000 or 22.1% from the second quarter of 2002.
Total interest income decreased as a result of a decrease in the overall
yield on interest earning assets which was somewhat offset by an increase in
interest earning assets. The total average balance for interest earning
assets was $310,421,000 for the three month period ended June 30, 2003
compared to $285,422,000 for the corresponding period in 2002, an increase of
$24,999,000 or 8.8%. A decrease in average investments of $1,323,000 and a
decrease in average short term investments of $1,542,000 offset by an
increase in average loans of $27,865,000 accounted for this increase. The
yield on interest earning assets decreased by 78 basis points from 7.38% for
the three month period ended June 30, 2002 to 6.60% for the three month
period ended June 30, 2003. This decrease was primarily due to a 113 basis
point decrease in the yield on investment securities from 6.45% for the
quarter ended June 30, 2002 to 5.32% for the quarter ended June 30, 2003 and
a 87 basis point decrease in the yield on real estate mortgage loans from
8.03% for the quarter ended June 30, 2002 to 7.16% for the quarter ended June
30, 2003.
Total interest expense decreased as a result of a decrease in the overall
yield on interest bearing liabilities. The total average balance for interest
bearing liabilities was $247,932,000 for the three month period ended June
30, 2003 compared to $229,084,000 for the corresponding period in 2002, an
increase of $18,848,000 or 8.2%. The yield on interest bearing liabilities
decreased by 73 basis points from 2.38% for the three month period ended June
30, 2002 to 1.65% for the three month period ended June 30, 2003.
14
Non-interest income was $920,000 for the three month period ended June 30,
2003 compared to $732,000 for the corresponding period in 2002, an increase
of $188,000 or 25.7%. This increase was primarily due to an increase in
deposit account service charges.
Non-interest expenses were $2,903,000 for the three month period ended June
30, 2003 compared to $2,377,000 for the corresponding period in 2002, an
increase of $526,000 or 22.1%. Occupancy and equipment expense increased
$187,000 from last year. This increase was due to increases in several
occupancy and equipment expense categories. Net other real estate owned
expenses increased by $183,000 primarily as a result of no gains on sales of
units at an 81 unit condominium project which the Company took possession of
in the third quarter of 2000. As of June 30, 2003 the Company owns 7 units in
the condominium project. There was an increase of $163,000 or 29.7% in other
non-interest expenses.
Income tax expense was $422,000 for the three month period ended June 30,
2003 compared to $617,000 for the corresponding period in 2002, a decrease of
$195,000 or 31.6%. The Company's effective tax rates were 23.2% and 32.1% for
the three month periods ended June 30, 2003 and 2002, respectively. This
decrease was primarily due to an increase in tax-exempt securities and other
tax reduction strategies.
Comparison of the six month periods June 30, 2002 and 2003
Net income for the first six months of 2003 increased by $265,000 to
$2,821,000 compared to $2,556,000 for the same period in 2002. The Company's
annualized return on average assets was 1.7% in the six month period compared
to 1.7% in the same period last year. The return on average stockholders'
equity was 16.9% and 17.7% for the first six months of 2003 and 2002,
respectively.
Total interest income decreased as a result of a decrease in the overall
yield on interest earning assets which was somewhat offset by an increase in
interest earning assets. The total average balance for interest earning
assets was $299,739,000 for the six month period ended June 30, 2003 compared
to $280,696,000 for the same six month period in 2002, an increase of
$19,043,000 or 6.8%. An increase in average loans of $19,276,000 and an
increase in average investments of $476,000 offset by a $709,000 decrease in
average short term investments accounted for this increase. The yield on
investment securities decreased 59 basis points from 6.39% in 2002 to 5.80%
in 2003. The yield on the total loan portfolio decreased by 57 basis points
in the six months ended June 30, 2003 compared to the first six months of
2002. Commercial, home equity and real estate mortgage loan yields decreased
during the six months ended June 30, 2003 compared to the first six months of
2002. The average yield on real estate mortgage loans, the major portion of
the loan portfolio, decreased 53 basis points to 7.56% from 8.09% during the
six months ended June 30, 2003 compared to the first six months of 2002. The
overall yield on interest earning assets decreased 51 basis points from 7.41%
for the six months ended June 30, 2002 to 6.90% for the same period in 2003.
The yield on interest bearing liabilities decreased by 75 basis points for
the six month period from 2.48% in 2002 to 1.73% in 2003. The overall net
interest margin increased 10 basis points from 5.41% in the first half of
2002 to 5.51% in the first half of 2003.
Non-interest income was $1,914,000 for the six month period ended June 30,
2003 compared to $1,485,000 for the corresponding period in 2002, an increase
of $429,000 or 28.9%. This increase was primarily due to increases in net
security gains, deposit account service charges and an increase in the cash
surrender value of bank-owned life insurance.
Non-interest expenses were $5,592,000 for the first six months of 2002
compared to $4,818,000 for the same period in 2002, a increase of $774,000 or
16.1%. Occupancy and equipment expense increased by $251,000 for the six
months ended June 30, 2003 as a result of implementing new software and an
onsite disaster recovery center. A $219,000 increase in compensation and
benefits costs was primarily due to higher employee benefit costs and normal
salary adjustments. Net other real estate owned expenses increased by
$187,000 primarily due to no gains on sales of units at a condominium project
in which the Company owns 7 units. Other non-interest expenses increased by
$117,000.
Income tax expense was $1,023,000 for the six month period ended June 30,
2003 compared to $1,147,000 for the corresponding period in 2002, a increase
of $124,000 or 10.8%. The Company's effective tax rates were 26.6% and 31.0%
for six month periods ended June 30, 2003 and 2002, respectively. This
decrease was primarily due to an increase in tax-exempt securities and other
tax reduction strategies.
15
F. Critical Accounting Policies
Management of the Company considers the accounting policy relating to the
allowance for loan losses to be a critical accounting policy given the
inherent uncertainty in evaluating the levels of the allowance required to
cover credit losses in the portfolio and the material effect that such
judgments can have on the results of operations. The allowance for loan
losses is maintained at a level deemed adequate by management based on an
evaluation of such factors as economic conditions in the Company's market
area, past loan loss experience, the financial condition of individual
borrowers, and underlying collateral values based on independent appraisals.
While management uses available information to recognize losses on loans,
future additions to the allowance for loan losses may be necessary based on
changes in economic conditions and values of real estate particularly in
Sullivan County. In the event that the casino gambling proposals do not
progress, collateral underlying certain real estate loans could lose value
which could lead to future additions to the allowance for loan losses. In
addition, Federal regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for loan
losses and may require the Company to recognize additions to the allowance
based on their judgments about information available to them at the time of
their examination, which may not be currently available to management. There
are no new accounting standards that are expected to have a material impact
on the Company's consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's most significant form of market risk is interest rate risk, as
the majority of the assets and liabilities are sensitive to changes in
interest rates. There have been no material changes in the Company's interest
rate risk position since December 31, 2002. Other types of market risk, such
as foreign exchange rate risk and commodity price risk, do not arise in the
normal course of the Company's business activities.
Item 4. Controls and Procedures
The Company's management, including the Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of
the Company's disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) (the "Exchange Act") as of the end of the period covered by this
report. Based upon that evaluation, the Company's management, including the
Chief Executive Officer and Chief Financial Officer, concluded that, the
Company's disclosure controls and procedures are effective in timely alerting
them to any material information relating to the Company and its subsidiaries
required to be included in the Company's Exchange Act filings.
There were no significant changes made in the Company's internal controls
over financial reporting that occurred during the Company's most recent
fiscal quarters that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company or any of its
subsidiaries is a party or which their property is subject.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on April 29, 2003.
(b) The Following individuals were elected as directors at the annual meeting
for three year terms:
John W. Galligan
Solomon Katzoff
Arthur E. Kessler
Raymond Walter
Earle A. Wilde
The other continuing directors are: John K. Gempler, Douglas A. Heinle,
Kenneth C. Klein, Gibson E. McKean, James F. Roche and Edward T. Sykes.
(c) The following matters were voted upon and approved by the Registrant's
shareholders at the 2003 Annual Meeting of Shareholders on April 29, 2003:
(i) the election of five directors to serve for three-year
terms (Proposal 1)
(ii) adoption of an amendment to the Certificate of
Incorporation to increase the number of authorized shares
(Proposal 2); and
(iii) the ratification of the appointment of KPMG LLP as
independent auditors of the Company for the Fiscal Year ending
December 31, 2003 (Proposal 3).
The votes for the above-listed proposals were as follows:
Proposal 1
John W. Galligan received 1,124,880 votes for election and
0 votes were withheld;
Solomon Katzoff received 1,124,729 votes for election and
151 votes were withheld;
Arthur E. Kessler received 1,124,729 votes for election and
151 votes were withheld;
Raymond Walter received 1,124,729 votes for election and 151
votes were withheld; and
Earle A. Wilde received 1,124,729 votes for election and 151
votes were withheld.
***[There were no abstentions or broker non-votes for any of the
nominees.]
Proposal 2
Shareholders cast 1,082,933 votes for, 21,517 votes against and
20,427 abstentions.
Proposal 3
Shareholders cast 1,124,517 votes for, 95 votes against and 267
abstentions.
(d) Not applicable.
17
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
Sarbanes-Oxley of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 24, 2002
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 15, 2003.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JEFFERSONVILLE BANCORP
/s/ Raymond Walter
Raymond Walter
President and Chief Executive Officer
/s/ Charles E. Burnett
Charles E. Burnett
Chief Financial Officer and Treasurer
August 13, 2003
19
Exhibit 31.1
CERTIFICATIONS
I, Raymond Walter, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Jeffersonville
Bancorp;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report
based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/ Raymond Walter
-----------------------
Raymond Walter
President and Chief Executive Officer
20
Exhibit 31.2
CERTIFICATIONS
I, Charles E. Burnett, Jr., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Jeffersonville
Bancorp;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report
based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/ Charles E. Burnett
-----------------------
Charles E. Burnett
Chief Financial Officer and Treasurer
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Exhibit 32.1
Written Statement of Principal Executive Officer Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Jeffersonville Bancorp (the
Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned hereby certifies to his knowledge on the date hereof, that:
1. The Report fully complies with the requirements of section 13(a) of the
Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Company.
/s/ Raymond Walter
Raymond Walter
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Jeffersonville Bancorp and will be retained by Jeffersonville
Bancorp and furnished to the Securities and Exchange Commission or its staff
upon request.
- -----------------------------------------------------------------------------
Exhibit 32.2
Written Statement of Principal Financial Officer Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Jeffersonville Bancorp (the
"Company") on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned hereby certifies to his knowledge on the date hereof, that:
1. The Report fully complies with the requirements of section 13(a) of the
Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/ Charles E. Burnett
Charles E. Burnett
Chief Financial Officer and Treasurer
A signed original of this written statement required by Section 906 has been
provided to Jeffersonville Bancorp and will be retained by Jeffersonville
Bancorp and furnished to the Securities and Exchange Commission or its staff
upon request.
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