UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
September 30, 2003.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934 for the transition period from
________________ to ______________.
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
(Former name, former address and former fiscal year,
if changed since last report)
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 by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)
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 November 14, 2003
$0.50 par value 4,434,321
INDEX TO FORM 10-Q
Page
PART I FINANCIAL INFORMATION
Item 1 Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 2003 and December 31, 2002 1
Consolidated Statements of Income for the Three
Months Ended September 30, 2003 and 2002 2
Consolidated Statements of Income for the Nine
Months Ended September 30, 2003 and 2002 3
Consolidated Statements of Cash Flows for the Nine
Months Ended September 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 II OTHER INFORMATION
Item 1 Legal Proceedings NONE
Item 2 Changes in Securities and Use of Proceeds NONE
Item 3 Defaults upon Senior Securities NONE
Item 4 Submission of Matters to a Vote of Security Holders NONE
Item 5 Other Information NONE
Exhibit 99.1 Certification
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 18
Certifications 19
Jeffersonville Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2003 2002
ASSETS
Cash and due from banks $ 17,849,000 $ 12,874,000
Securities available for sale, at fair value 130,236,000 117,942,000
Securities held to maturity, estimated fair value of $6,698,000
at September 30, 2003 and $4,789,000 at December 31, 2002 6,653,000 4,673,000
Loans, net of allowance for loan losses of $3,076,000
at September 30, 2003 and $3,068,000 at December 31, 2002 183,682,000 168,909,000
Accrued interest receivable 2,294,000 1,933,000
Premises and equipment, net 3,255,000 3,230,000
Federal Home Loan Bank stock 2,400,000 1,900,000
Other real estate owned 67,000 126,000
Cash surrender value of bank-owned life insurance 12,150,000 11,734,000
Other assets 2,530,000 1,704,000
------------ ------------
TOTAL ASSETS $361,116,000 $325,025,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand deposits (non-interest bearing) $ 55,704,000 $ 49,675,000
NOW and super NOW accounts 38,815,000 35,630,000
Savings and insured money market deposits 86,580,000 79,094,000
Time deposits 87,615,000 88,393,000
------------ ------------
TOTAL DEPOSITS 268,714,000 252,792,000
Federal Home Loan Bank borrowings 30,000,000 30,000,000
Short-term debt 23,337,000 6,433,000
Accrued expenses and other liabilities 4,196,000 3,303,000
------------ ------------
TOTAL LIABILITIES 326,247,000 292,528,000
------------ ------------
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 September 30, 2003
and 1,589,262 shares issued at December 31, 2002 2,384,000 795,000
Paid-in capital 6,483,000 8,072,000
Treasury stock, at cost; 333,465 shares at September 30, 2003
and 111,155 shares at December 31, 2002 (1,108,000) (1,108,000)
Retained earnings 27,026,000 23,664,000
Accumulated other comprehensive income 84,000 1,074,000
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 34,869,000 32,497,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $361,116,000 $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 September 30,
2003 2002
---------- ----------
INTEREST INCOME
Loan interest and fees $3,581,000 $3,481,000
Securities:
Taxable 996,000 1,427,000
Non-taxable 525,000 348,000
Federal funds sold 1,000 20,000
---------- ----------
TOTAL INTEREST INCOME 5,103,000 5,276,000
---------- ----------
INTEREST EXPENSE
Deposits 642,000 974,000
Federal Home Loan Bank borrowings 341,000 322,000
Other 31,000 12,000
---------- ----------
TOTAL INTEREST EXPENSE 1,014,000 1,308,000
---------- ----------
NET INTEREST INCOME 4,089,000 3,968,000
Provision for loan losses (30,000) (300,000)
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,059,000 3,668,000
---------- ----------
NON-INTEREST INCOME
Service charges 479,000 441,000
Increase in cash surrender value
of bank-owned life insurance 126,000 87,000
Net security gains(losses) (10,000) (3,000)
Other non-interest income 312,000 299,000
---------- ----------
TOTAL NON-INTEREST INCOME 907,000 824,000
---------- ----------
NON-INTEREST EXPENSES
Salaries and employee benefits 1,585,000 1,384,000
Occupancy and equipment expenses 552,000 482,000
Other real estate owned expenses (income), net 27,000 (70,000)
Other non-interest expenses 711,000 668,000
---------- ----------
TOTAL NON-INTEREST EXPENSES 2,875,000 2,464,000
---------- ----------
Income before income tax expense 2,091,000 2,028,000
Income tax expense (545,000) (615,000)
---------- ----------
NET INCOME $1,546,000 $1,413,000
========== ==========
Basic earnings per common share $ 0.35 $ 0.32
========== ==========
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
distributed on June 17, 2003.
See accompanying notes to unaudited consolidated interim financial statements.
2
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
For the Nine Months
Ended September 30,
2003 2002
----------- -----------
INTEREST INCOME
Loan interest and fees $10,622,000 $10,246,000
Securities:
Taxable 2,866,000 4,275,000
Non-taxable 1,457,000 845,000
Federal funds sold 21,000 55,000
----------- -----------
TOTAL INTEREST INCOME 14,966,000 15,421,000
----------- -----------
INTEREST EXPENSE
Deposits 2,067,000 3,114,000
Federal Home Loan Bank borrowings 990,000 971,000
Other 38,000 32,000
----------- -----------
TOTAL INTEREST EXPENSE 3,095,000 4,117,000
----------- -----------
NET INTEREST INCOME 11,871,000 11,304,000
Provision for loan losses (290,000) (600,000)
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 11,581,000 10,704,000
----------- -----------
NON-INTEREST INCOME
Service charges 1,462,000 1,304,000
Increase in cash surrender value
of bank-owned life insurance 416,000 278,000
Net security gains 144,000 1,000
Other non-interest income 799,000 726,000
------------ ------------
TOTAL NON-INTEREST INCOME 2,821,000 2,309,000
------------ ------------
NON-INTEREST EXPENSES
Salaries and employee benefits 4,754,000 4,334,000
Occupancy and equipment expenses 1,525,000 1,204,000
Other real estate owned expenses (income), net 63,000 (221,000)
Other non-interest expenses 2,125,000 1,965,000
----------- -----------
TOTAL NON-INTEREST EXPENSES 8,467,000 7,282,000
----------- -----------
Income before income tax expense 5,935,000 5,731,000
Income tax expense (1,568,000) (1,762,000)
----------- -----------
NET INCOME $ 4,367,000 $ 3,969,000
----------- -----------
Basic earnings per common share $ 0.98 $ 0.90
----------- -----------
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
distributed on June 17, 2003.
See accompanying notes to unaudited consolidated interim financial statements.
3
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months
Ended September 30,
2003 2002
------------ ------------
OPERATING ACTIVITIES
Net income $ 4,367,000 $ 3,969,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 290,000 600,000
Write down of other real estate owned -- 70,000
Gain on sales of other real estate owned (165,000) (613,000)
Depreciation and amortization 516,000 539,000
Net increase in cash surrender value
of bank-owned life insurance (416,000) (278,000)
Net security gains (144,000) (1,000)
(Increase) decrease in accrued interest receivable (361,000) 66,000
(Increase) decrease in other assets (144,000) (708,000)
Increase in accrued
expenses and other liabilities 893,000 84,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,836,000 3,728,000
------------ ------------
INVESTING ACTIVITIES
Proceeds from maturities and calls:
Securities available for sale 49,985,000 42,094,000
Securities held to maturity 985,000 2,568,000
Proceeds from sales of securities
available for sale 11,900,000 10,336,000
Purchases:
Securities available for sale (75,707,000) (66,842,000)
Securities held to maturity (2,965,000) (1,543,000)
Net purchases of FHLB stock (500,000) --
Disbursements for loan originations, net of
principal collections (15,173,000) (5,939,000)
Net purchases of premises and equipment (541,000) (1,063,000)
Proceeds from sales of other real estate owned 334,000 1,780,000
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (31,682,000) (18,609,000)
------------ ------------
FINANCING ACTIVITIES
Net increase in deposits 15,922,000 15,981,000
Increase in short-term debt 16,904,000 3,399,000
Cash dividends paid (1,005,000) (887,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 31,821,000 18,493,000
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,975,000 3,612,000
Cash and cash equivalents at beginning of period 12,874,000 10,844,000
------------ ------------
Cash and cash equivalents at end of period $ 17,849,000 $ 14,456,000
============ ============
(Continued)
Jeffersonville Bancorp and Subsidiary
Consolidated Statements of Cash Flows, Continued
(Unaudited)
For the Nine Months
Ended September 30,
2003 2002
------------ ------------
Supplemental imformation:
Cash paid for:
Interest $ 3,182,000 $ 4,219,000
Income taxes 1,053,000 1,620,000
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
September 30, 2003
(Unaudited)
A. Financial Statement Basis of Presentation
The accompanying unaudited interim consolidated financial 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 September 30, 2003 and December 31, 2002, the
results of operations for the three and nine month periods ended September
30, 2003 and 2002, and the cash flows for the nine month periods ended
September 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 nine
month periods ended September 30, 2003 and 2002 based on weighted average
common shares outstanding of 4,434,321. There were no dilutive securities
during any of the periods. Earnings per share were $0.35 for the quarter
ended September 30, 2003, as compared to $0.32 per share for the same period
in 2002. Earnings per share were $0.98 for the nine months ended September
30, 2003, as compared to $0.90 for the same period in 2002.
C. Comprehensive Income
Comprehensive income for the three-month periods ended September 30,
2003 and 2002 was $493,000 and $2,107,000, respectively. Comprehensive income
for the nine-month periods ended September 30, 2003 and 2002 was $3,377,000
and $5,670,000, respectively. The following summarizes the components of the
Company's other comprehensive income (loss) for the nine-month periods:
Nine Months Ended September 30, 2003
Net unrealized holding losses arising during the period,
net of tax (pre-tax amount of $1,528,000) $(905,000)
Reclassification adjustment for net gains realized in net
income during the period, net of tax (pre-tax amount of $144,000) $ (85,000)
---------
Other comprehensive loss $(990,000)
=========
Nine Months Ended September 30, 2002
Net unrealized holding gains arising during the period,
net of tax (pre-tax amount of $2,875,000) $1,702,000
Reclassification adjustment for net gains realized in net
income during the period, net of tax (pre-tax amount of $1,000) $ (1,000)
----------
Other comprehensive income $1,701,000
==========
5
D. New Accounting Pronouncements
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 ending
after December 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 did not 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 did not have any effect on the Company's consolidated
financial statements.
E. Stock Split
On May 14, 2003 the Board of Directors of the Company declared a
three-for-one stock split which was distributed on June 17, 2003. All share
and per share data have been restated to reflect the split.
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 $661,000 at September 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 September 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 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 nine-month period from December 31, 2002 to September 30,
2003, total assets increased $36,091,000 or 11.1%. Securities available for
sale increased by $12,294,000 or 10.4% due to purchases. Net loans increased
from $168,909,000 at year end 2002 to $183,682,000 at September 30, 2003, an
increase of $14,773,000 or 8.7%.
Deposits increased from $252,792,000 at December 31, 2002 to
$268,714,000 at September 30, 2003, an increase of $15,922,000 or 6.3%.
Growth occurred in all deposit categories except time deposits. Low rates
offered on time deposits accounted for the lack of growth. Demand deposits
increased from $49,675,000 at December 31, 2002 to $55,704,000 at September
30, 2003, an increase of $6,029,000 or 12.1%. Savings and insured money
market deposits increased from $79,094,000 at December 31, 2002 to
$86,580,000 at September 30, 2002, an increase of $7,486,000 or 9.5%
Total stockholders' equity increased $2,372,000 or 7.3% from $32,497,000
at December 31, 2002 to $34,869,000 at September 30, 2003. This increase was
the result of net income of $4,367,000, less a decrease of $990,000 in
accumulated other comprehensive income, less cash dividends of $1,005,000.
Loan Portfolio Composition
September 30, 2003 December 31, 2003
Amount Percent Amount Percent
(in thousands) (in thousands)
REAL ESTATE LOANS
Residential $ 74,772 39.8% $ 72,559 41.7%
Commercial 52,708 28.0 44,807 25.7
Home Equity 17,959 9.5 14,825 8.5
Farm Land 2,937 1.6 1,828 1.1
Construction 3,326 1.8 3,414 2.0
-------- ----- -------- -----
$151,702 80.7% $137,433 79.0%
-------- ----- -------- -----
OTHER LOANS
Commercial Loans $ 16,468 8.7 $ 17,445 10.0
Consumer Install Loans 16,882 9.0 17,314 9.9
Other Consumer Loans 2,761 1.4 1,537 0.9
Agriculture 301 0.2 375 0.2
-------- ----- -------- -----
36,412 19.3 36,671 21.0
-------- ----- -------- -----
Total Loans $188,114 100.0% $174,104 100.0%
-------- ----- -------- -----
Unearned Discounts (1,356) (2,127)
Allowance for Loan Losses (3,076) (3,068)
-------- --------
Total Loans, Net $183,682 $168,909
7
B. Allowance for Loan Losses
The allowance for loan losses reflects management's assessment of the
losses 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 $290,000 for the nine months ended September 30, 2003 and $600,000
for the nine months ended September 30, 2002. Total charge offs for the nine
month period ended September 30, 2003 were $416,000 compared to $585,000 for
the same period in the prior year, while recoveries increased from $116,000
for the 2002 period to 134,000 for the 2003 period. The amounts represent a
net charge-off of $282,000 in the first nine months of 2003 versus a net
charge-off of $469,000 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 nine month periods ended September 30:
2003 2002
---- ----
Balance at beginning of period $3,068,000 $2,614,000
Provision for loan losses 290,000 600,000
Loans charged off (416,000) (585,000)
Recoveries 134,000 116,000
---------- ----------
Balance at end of period $3,076,000 $2,745,000
========== ==========
Annualized net charge-offs as a percentage
of average outstanding loans
Allowance for loan losses to:
Total loans 1.65% 1.63%
Total non-performing loans 85.3% 120.0%
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 Sept 30:
Non-accrual loans $ 949,000 $1,644,000
Loans past due 90 days or more
and still accruing interest. 2,126,000 643,000
---------- ----------
Total non-performing loans $3,075,000 $2,287,000
---------- ----------
Non-performing loans as a percentage
of total loans 1.6% 1.4%
---------- ----------
The increase in loans past due 90 days or more and still accruing
interest was primarily due to a single credit in the amount of $1.2 million.
As of September 30, 2003 and 2002, the recorded investment in loans
considered to be impaired under Statement of Financial Accounting Standards
("SFAS") No.114 totaled $887,000 and $1,059,000, respectively. Included in
the impaired loan balance at September 30, 2003 was approximately $149,000 of
impaired loans for which the related allowance for loan losses was
approximately $82,000. In addition, included in total impaired loans at
September 30, 2003 was approximately $738,000 of impaired loans that,
primarily due to prior charge-offs and the adequacy of collateral values, did
not require an allowance for loan losses in accordance with SFAS No. 114 at
September 30, 2002, 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, $7,440,655 in loans that warrant
increased attention as of September 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 September 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 2003, the Board of Directors authorized $1,000,000 for the
repurchase of common stock on the open market. During the nine months ended
September 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 16.7% and total risk-based capital was 17.9% of
risk-weighted assets at September 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 10.4% at September 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 September 30, 2003.
TIER I CAPITAL
Stockholders' equity, excluding
accumulated other comprehensive income $ 34,785,000
TIER II CAPITAL
Allowance for loan losses 1 2,580,000
Total risk-based capital 37,365,000
------------
Risk-weighted assets 2 208,374,000
------------
Average assets 335,688,000
------------
RATIOS
Tier I risk-based capital (minimum 4.0%) 16.7%
Total risk-based capital (minimum 8.0%) 17.9%
Leverage (minimum 4.0%) 10.4%
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 September 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 75,507 22.49% 2,866 5.06%
TAX EXEMPT SECURITIES 43,729 13.03% 2,208 6.73%
-------- ------ ------
TOTAL SECURITIES 119,236 35.52% 5,074 5.67%
-------- ------ ------
SHORT TERM INVESTMENTS 2,234 0.67% 21 1.25%
LOANS
REAL ESTATE MORTGAGES 134,783 40.15% 7,550 7.47%
HOME EQUITY LOANS 16,343 4.87% 786 6.41%
TIME AND DEMAND LOANS 14,375 4.28% 712 6.60%
INSTALLMENT LOANS 17,297 5.15% 1,348 10.39%
OTHER LOANS 2,614 0.78% 226 11.53%
-------- ------ ------
TOTAL LOANS185,412 55.23% 10,622 7.64%
-------- ------ ------
TOTAL INTEREST EARNING ASSETS 306,882 91.42% 15,717 6.83%
ALLOWANCE FOR LOAN LOSSES (3,113) (0.93)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 2,335 0.70%
CASH AND DUE FROM BANKS (DEMAND) 11,519 3.43%
OTHER ASSETS 18,065 5.38%
-------- ------
TOTAL ASSETS $335,688 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 36,794 10.96% 125 0.45%
SAVINGS AND INSURED MONEY MARKET 85,676 25.52% 398 0.62%
TIME DEPOSITS 87,993 26.21% 1,544 2.34%
-------- ------ ------
TOTAL INTEREST BEARING DEPOSITS 210,463 62.69% 2,067 1.31%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 4,568 1.36% 38 1.11%
LONG TERM DEBT 30,000 8.94% 990 4.40%
-------- ------ ------
TOTAL INTEREST BEARING LIABILITIES 245,031 72.99% 3,095 1.68%
-------- ------ ------
DEMAND DEPOSITS 54,362 16.20%
OTHER LIABILITIES 3,928 1.17%
-------- ------
TOTAL LIABILITIES 303,321 90.36%
STOCKHOLDERS EQUITY 32,367 9.64%
-------- ------
TOTAL LIABILITIES AND EQUITY $335,688 100.00%
======== ======
NET INTEREST INCOME $12,622
=======
NET INTEREST SPREAD 5.15%
=====
NET INTEREST MARGIN5.48%
=====
For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income statement.
However, the nonaccrual loan balances are included in the average amount
outstanding.
Computed by dividing net interest income by total interest earning
assets.
Yields on securities available for sale are based on amortized cost.
10
Consolidated Average Balance Sheet as of September 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 94,192 30.49% 4,275 6.05%
TAX EXEMPT SECURITIES 22,747 7.36% 1,280 7.50%
-------- ------ -------
TOTAL SECURITIES 116,939 37.85% 5,555 6.33%
-------- ------ -------
SHORT TERM INVESTMENTS 4,625 1.50% 55 1.59%
LOANS
REAL ESTATE MORTGAGES 116,642 37.75% 7,135 8.16%
HOME EQUITY LOANS 13,746 4.45% 732 7.10%
TIME AND DEMAND LOANS 13,087 4.24% 662 6.74%
INSTALLMENT LOANS 18,397 5.95% 1,513 10.97%
OTHER LOANS 2,225 0.72% 204 12.22%
-------- ------ -------
TOTAL LOANS164,097 53.11% 10,246 8.33%
-------- ------ -------
TOTAL INTEREST EARNING ASSETS 285,661 92.46% 15,856 7.40%
-------- ------ -------
ALLOWANCE FOR LOAN LOSSES (2,597) (0.84)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 1,144 0.37%
CASH AND DUE FROM BANKS (DEMAND) 10,537 3.41%
OTHER ASSETS 14,207 4.60%
-------- ------
TOTAL ASSETS $308,952 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 33,300 10.78% 186 0.74%
SAVINGS AND INSURED MONEY MARKET 71,098 23.01% 582 1.09%
TIME DEPOSITS 93,579 30.29% 2,346 3.34%
-------- ------ -------
TOTAL INTEREST BEARING DEPOSITS 197,977 64.08% 3,114 2.10%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 476 0.15% 32 8.96%
LONG TERM DEBT 30,000 9.71% 971 4.32%
-------- ------ -------
TOTAL INTEREST BEARING LIABILITIES 228,453 73.94% 4,117 2.40%
-------- ------ -------
DEMAND DEPOSITS 48,253 15.62%
OTHER LIABILITIES 2,686 0.87%
-------- ------
TOTAL LIABILITIES 279,392 90.43%
STOCKHOLDERS EQUITY 29,560 9.57%
-------- ------
TOTAL LIABILITIES AND EQUITY $308,952 100.00%
======== ======
NET INTEREST INCOME $11,739
=======
NET INTEREST SPREAD 5.00%
=====
NET INTEREST MARGIN5.48%
=====
For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income statement.
However, the nonaccrual loan balances are included in the average amount
outstanding.
Computed by dividing net interest income by total interest earning
assets.
Yields on securities available for sale are based on amortized cost.
11
Consolidated Average Balance Sheet for the three months ended September 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 83,543 23.73% 996 4.77%
TAX EXEMPT SECURITIES 48,874 13.88% 796 6.51%
-------- ------ -----
TOTAL SECURITIES 132,417 37.61% 1,792 5.41%
-------- ------ -----
SHORT TERM INVESTMENTS 357 0.10% 1 1.12%
LOANS
REAL ESTATE MORTGAGES 140,182 39.81% 2,530 7.22%
HOME EQUITY LOANS 17,422 4.95% 303 6.96%
TIME AND DEMAND LOANS 14,412 4.09% 274 7.60%
INSTALLMENT LOANS 17,507 4.97% 392 8.96%
OTHER LOANS 2,832 0.81% 82 11.58%
-------- ------ -----
TOTAL LOANS192,355 54.63% 3,581 7.45%
-------- ------ -----
TOTAL INTEREST EARNING ASSETS 325,129 92.34% 5,374 6.61%
-------- ------ -----
ALLOWANCE FOR LOAN LOSSES (3,115) (0.88)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 670 0.19%
CASH AND DUE FROM BANKS (DEMAND) 11,737 3.33%
OTHER ASSETS 17,692 5.02%
-------- ------
TOTAL ASSETS $352,113 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 36,993 10.51% 41 0.44%
SAVINGS AND INSURED MONEY MARKET 89,086 25.30% 114 0.51%
TIME DEPOSITS 89,459 25.41% 487 2.18%
-------- ------ -----
TOTAL INTEREST BEARING DEPOSITS 215,538 61.22% 642 1.19%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 11,196 3.18% 31 1.11%
LONG TERM DEBT 30,330 8.61% 341 4.50%
-------- ------ -----
TOTAL INTEREST BEARING LIABILITIES 257,064 73.01% 1,014 1.58%
-------- ------ -----
DEMAND DEPOSITS 58,912 16.73%
OTHER LIABILITIES 5,334 1.51%
-------- ------
TOTAL LIABILITIES 321,310 91.25%
STOCKHOLDERS EQUITY 30,803 8.75%
-------- ------
TOTAL LIABILITIES AND EQUITY $352,113 100.00%
======== ======
NET INTEREST INCOME $ 4,360
=======
NET INTEREST SPREAD 5.03%
=====
NET INTEREST MARGIN5.36%
=====
For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income statement.
However, the nonaccrual loan balances are included in the average amount
outstanding.
Computed by dividing net interest income by total interest earning
assets.
Yields on securities available for sale are based on amortized cost.
12
Consolidated Average Balance Sheet for the three months ended September 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 97,465 30.51% 1,427 5.86%
TAX EXEMPT SECURITIES 29,008 9.08% 527 7.27%
-------- ------ ------
TOTAL SECURITIES 126,473 39.59% 1,954 6.18%
-------- ------ ------
SHORT TERM INVESTMENTS 5,454 1.71% 20 1.47%
LOANS
REAL ESTATE MORTGAGES 119,099 37.28% 2,439 8.19%
HOME EQUITY LOANS 14,239 4.46% 249 6.99%
TIME AND DEMAND LOANS 13,052 4.09% 225 6.90%
INSTALLMENT LOANS 18,080 5.66% 506 11.19%
OTHER LOANS 2,279 0.71% 62 10.88%
-------- ------ ------
TOTAL LOANS166,749 52.20% 3,481 8.35%
-------- ------ ------
TOTAL INTEREST EARNING ASSETS 298,676 93.50% 5,455 7.31%
ALLOWANCE FOR LOAN LOSSES (2,580) (0.81)%
UNREALIZED GAINS AND LOSSES ON PORTFOLIO 2,368 0.74%
CASH AND DUE FROM BANKS (DEMAND) 11,516 3.60%
OTHER ASSETS 9,502 2.97%
-------- ------
TOTAL ASSETS $319,482 100.00%
======== ======
LIABILITIES AND EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 33,859 10.60% 63 0.74%
SAVINGS AND INSURED MONEY MARKET 76,289 23.88% 203 1.06%
TIME DEPOSITS 93,653 29.31% 708 3.02%
-------- ------ ------
TOTAL INTEREST BEARING DEPOSITS 203,801 63.79% 974 1.91%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 441 0.14% 12 10.88%
LONG TERM DEBT 30,330 9.49% 322 4.25%
-------- ------ ------
TOTAL INTEREST BEARING LIABILITIES 234,572 73.42% 1,308 2.23%
-------- ------ ------
DEMAND DEPOSITS 53,151 16.64%
OTHER LIABILITIES 468 0.15%
-------- ------
TOTAL LIABILITIES 288,191 90.21%
STOCKHOLDERS EQUITY 31,291 9.79%
-------- ------
TOTAL LIABILITIES AND EQUITY $319,482 100.00%
======== ======
NET INTEREST INCOME $4,147
======
NET INTEREST SPREAD 5.08%
=====
NET INTEREST MARGIN5.55%
=====
For purpose of this schedule, interest in nonaccruing loans has been
included only to the extent reflected in the consolidated income
statement. However, the nonaccrual loan balances are included in the
average amount outstanding.
Computed by dividing net interest income by total interest earning
assets.
Yields on securities available for sale are based on amortized cost.
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 $31.9 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 $4.8
million and cash provided by financing activities amounted to $31.8 million.
These amounts were offset by amounts used in investing activities of $31.7
million, resulting in a net increase in cash and cash equivalents of
approximately $5.0 million. 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 $ 8,598,000
Over three months through six months 5,472,000
Over six months through twelve months 4,187,000
Over twelve months 1,999,000
-----------
$20,256,000
===========
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 September 30, 2003 increased by
$133,000 to $1,546,000 compared to $1,413,000 for the corresponding period in
2002. The Company's annualized return on average assets was 1.8% and 1.8% for
the quarters ended September 30, 2003 and 2002, respectively. The annualized
return on average stockholders' equity was 20.1% and 18.1% for the third
quarter of 2003 and 2002, respectively.
Total interest income for the third quarter of 2003 decreased $173,000
or 3.3% from the corresponding period in 2002 and total interest expense
decreased $294,000 or 22.5% from the corresponding period in 2002. Net
interest income increased $121,000 or 3.1% from the prior year period.
Non-interest income for the third quarter of 2003 increased $83,000 or 10.1%
from the corresponding period in 2002, while total non-interest expense
increased $411,000 or 16.7% from the third 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 $325,129,000 for the three month period ended September 30, 2003
compared to $298,676,000 for the corresponding period in 2002, an increase of
$26,453,000 or 8.9%. An increase in average loans of $25,606,000 and an
increase in average investments of $5,944,000 offset by a decrease in average
short term investments of $5,097,000 accounted for this increase. The yield
on interest earning assets decreased by 70 basis points from 7.31% for the
three month period ended September 30, 2002 to 6.61% for the three month
period ended September 30, 2003. This decrease was primarily due to a 77
basis point decrease in the yield on investment securities from 6.18% for the
quarter ended September 30, 2002 to 5.41% for the quarter ended September 30,
2003 and a 97 basis point decrease in the yield on real estate mortgage loans
from 8.19% for the quarter ended September 30, 2002 to 7.22% for the quarter
ended September 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 $257,064,000 for the three month period
ended September 30, 2003 compared to $234,572,000 for the corresponding
period in 2002, an increase of $22,492,000 or 9.6%. The yield on interest
bearing liabilities decreased by 65 basis points from 2.23% for the three
month period ended September 30, 2002 to 1.58% for the three month period
ended September 30, 2003.
14
Non-interest income was $907,000 for the three month period ended
September 30, 2003 compared to $824,000 for the corresponding period in 2002,
an increase of $83,000 or 10.1%. This increase was primarily due to an
increase in deposit account service charges.
Non-interest expenses were $2,875,000 for the three month period ended
September 30, 2003 compared to $2,464,000 for the corresponding period in
2002, an increase of $411,000 or 16.7%. Occupancy and equipment expense
increased $70,000 from last year. Net other real estate owned expenses
increased by $97,000 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 September 30, 2003 the Company owns 7 units in
the condominium project. There was an increase of $43,000 or 6.4% in other
non-interest expenses.
Income tax expense was $545,000 for the three month period ended
September 30, 2003 compared to $615,000 for the corresponding period in 2002,
a decrease of $70,000 or 11.4%. The Company's effective tax rates were 26.1%
and 30.3% for the three month periods ended September 30, 2003 and 2002,
respectively. This decrease was primarily due to an increase in tax-exempt
securities
Comparison of the nine month periods September 30, 2002 and 2003
Net income for the first nine months of 2003 increased by $398,000 to
$4,367,000 compared to $3,969,000 for the same period in 2002. The Company's
annualized return on average assets was 1.7% in the nine month period
compared to 1.7% in the same period last year. The return on average
stockholders' equity was 18.0% and 17.9% for the first nine 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 $306,882,000 for the nine month period ended September 30, 2003
compared to $285,661,000 for the same nine month period in 2002, an increase
of $21,221,000 or 7.4%. An increase in average loans of $21,315,000 and an
increase in average investments of $2,297,000 offset by a $2,391,000 decrease
in average short term investments accounted for this increase. The yield on
investment securities decreased 66 basis points from 6.33% in 2002 to 5.67%
in 2003. The yield on the total loan portfolio decreased by 69 basis points
in the nine months ended September 30, 2003 compared to the first nine months
of 2002. Commercial, home equity and real estate mortgage loan yields
decreased during the nine months ended September 30, 2003 compared to the
first nine months of 2002. The average yield on real estate mortgage loans,
the major portion of the loan portfolio, decreased 69 basis points to 7.47%
from 8.16% during the nine months ended September 30, 2003 compared to the
first nine months of 2002. The overall yield on interest earning assets
decreased 57 basis points from 7.40% for the nine months ended September 30,
2002 to 6.83% for the same period in 2003.
The yield on interest bearing liabilities decreased by 72 basis points
for the nine month period from 2.40% in 2002 to 1.68% in 2003. The overall
net interest margin was 5.48% in both the nine month periods ended September
30, 2003 and 2002.
Non-interest income was $2,821,000 for the nine month period ended
September 30, 2003 compared to $2,309,000 for the corresponding period in
2002, an increase of $512,000 or 22.2%. 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 $8,467,000 for the first nine months of 2003
compared to $7,282,000 for the same period in 2002, an increase of $1,185,000
or 16.3%. Occupancy and equipment expense increased by $321,000 for the nine
months ended September 30, 2003 as a result of implementing new software and
costs of a new disaster recovery location. A $420,000 increase in
compensation and benefits costs was primarily due to higher employee benefit
costs and normal salary adjustments. Net other real estate owned expenses
were $63,000 in 2003 versus income of $221,000 in 2002. In 2003 there were no
gains on sales of foreclosed condominium units. In 2002, there were gains of
$630,000. The 7 remaining condominium units have a cost basis of $0. Other
non-interest expenses increased by $160,000.
Income tax expense was $1,568,000 for the nine month period ended
September 30, 2003 compared to $1,762,000 for the corresponding period in
2002, a decrease of $194,000 or 11.0%. The Company's effective tax rates were
26.4% and 30.7% for nine month periods ended September 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) Not applicable
(b) Not applicable
(c) Not applicable
(d) Not applicable
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
Not applicable
17
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
November 14, 2003
18
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: November 14, 2003
/s/ Raymond Walter
-----------------------
Raymond Walter
President and Chief Executive Officer
19
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: November 14, 2003
/s/ Charles E. Burnett
-----------------------
Charles E. Burnett
Chief Financial Officer and Treasurer
20
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 September 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)
or 15 (d) 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
November 14, 2003
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 September 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)
or 15 (d) 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
November 14, 2003
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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