UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 2004.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
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)
(845) 482-4000
----------------------------------------------------
(Registrant's telephone number, including area code)
- ------------------------------------------------------------------------------
(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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] 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 for each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock (par value $ .50) 4,434,321
- ---------------------------------------- ------------------------------------
Class Outstanding at November 12, 2004
INDEX TO FORM 10-Q
Page
Part 1
Item 1 Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
September 30, 2004 and December 31, 2003 1
Consolidated Statements of Income for the Three
Months Ended September 30, 2004 and 2003 2
Consolidated Statements of Income for the Nine
Months Ended September 30, 2004 and 2003 3
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2004 and 2003 4
Notes to Consolidated Interim Financial Statements 5-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-25
Item 3 Quantitative and Qualitative Disclosures about Market Risk 26
Item 4 Controls and Procedures 26
Part 2
Item 6 Exhibits 27
Signatures 28
Jeffersonville Bancorp and Subsidiary
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2004 2003
--------------- ---------------
ASSETS
Cash and due from banks $ 12,906,000 $ 15,992,000
Securities available for sale, at fair value 107,145,000 115,564,000
Securities held to maturity, estimated fair value of $6,419,000
at September 30, 2004 and $5,947,000 at December 31, 2003 6,355,000 5,916,000
Loans, net of allowance for loan losses of $3,600,000
at September 30, 2004 and $3,569,000 at December 31, 2003 215,362,000 193,106,000
Accrued interest receivable 2,270,000 2,301,000
Premises and equipment, net 2,976,000 3,063,000
Federal Home Loan Bank stock 1,350,000 1,600,000
Other real estate owned 43,000 43,000
Cash surrender value of bank-owned life insurance 12,605,000 12,268,000
Other assets 2,747,000 2,351,000
--------------- ---------------
TOTAL ASSETS $ 363,759,000 $ 352,204,000
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Demand deposits $ 66,405,000 $ 59,189,000
NOW and super NOW accounts 37,135,000 38,290,000
Savings and money market deposits 86,999,000 80,768,000
Time deposits 104,950,000 101,980,000
--------------- ---------------
TOTAL DEPOSITS 295,489,000 280,227,000
Federal Home Loan Bank borrowings 22,000,000 27,000,000
Short-term borrowings 2,363,000 5,521,000
Accrued expenses and other liabilities 4,651,000 3,670,000
--------------- ---------------
TOTAL LIABILITIES 324,503,000 316,418,000
--------------- ---------------
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, 2004 and December 31, 2003 2,384,000 2,384,000
Paid-in capital 6,483,000 6,483,000
Treasury stock, at cost; 333,465 shares at September 30, 2004
and December 31, 2003 (1,108,000) (1,108,000)
Retained earnings 31,335,000 27,947,000
Accumulated other comprehensive income 162,000 80,000
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 39,256,000 35,786,000
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 363,759,000 $ 352,204,000
=============== ===============
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,
--------------------------------------------------------
2004 2003
------------------------- ------------------------
INTEREST INCOME
Loan interest and fees $ 3,934,000 $ 3,581,000
Securities:
Taxable 822,000 996,000
Non-taxable 499,000 525,000
Federal funds sold 7,000 1,000
------------------------- ------------------------
TOTAL INTEREST INCOME 5,262,000 5,103,000
------------------------- ------------------------
INTEREST EXPENSE
Deposits 732,000 642,000
Federal Home Loan Bank borrowings 298,000 341,000
Other 1,000 31,000
------------------------- ------------------------
TOTAL INTEREST EXPENSE 1,031,000 1,014,000
------------------------- ------------------------
NET INTEREST INCOME 4,231,000 4,089,000
Provision for loan losses (90,000) (30,000)
------------------------- ------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,141,000 4,059,000
------------------------- ------------------------
NON-INTEREST INCOME
Service charges 551,000 479,000
Increase in cash surrender value
of bank-owned life insurance 119,000 126,000
Net security gains(losses) 5,000 (10,000)
Other non-interest income 371,000 312,000
------------------------- ------------------------
TOTAL NON-INTEREST INCOME 1,046,000 907,000
------------------------- ------------------------
NON-INTEREST EXPENSES
Salaries and employee benefits 1,834,000 1,585,000
Occupancy and equipment expenses 433,000 552,000
Other real estate owned expenses (income), net (2,000) 27,000
Other non-interest expenses 845,000 711,000
------------------------- ------------------------
TOTAL NON-INTEREST EXPENSES 3,110,000 2,875,000
------------------------- ------------------------
Income before income tax expense 2,077,000 2,091,000
Income tax expense (545,000) (545,000)
------------------------- ------------------------
NET INCOME $ 1,532,000 $ 1,546,000
========================= ========================
Basic earnings per common share $ 0.35 $ 0.35
========================= ========================
Weighted average common shares outstanding 4,434,000 4,434,000
========================= ========================
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,
------------------------------------------------------
2004 2003
------------------------ -----------------------
INTEREST INCOME
Loan interest and fees $ 11,352,000 $ 10,622,000
Securities:
Taxable 2,631,000 2,866,000
Non-taxable 1,511,000 1,457,000
Federal funds sold 14,000 21,000
------------------------ -----------------------
TOTAL INTEREST INCOME 15,508,000 14,966,000
------------------------ -----------------------
INTEREST EXPENSE
Deposits 2,112,000 2,067,000
Federal Home Loan Bank borrowings 875,000 990,000
Other 9,000 38,000
------------------------ -----------------------
TOTAL INTEREST EXPENSE 2,996,000 3,095,000
------------------------ -----------------------
NET INTEREST INCOME 12,512,000 11,871,000
Provision for loan losses (270,000) (290,000)
------------------------ -----------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 12,242,000 11,581,000
------------------------ -----------------------
NON-INTEREST INCOME
Service charges 1,663,000 1,462,000
Increase in cash surrender value
of bank-owned life insurance 377,000 416,000
Net security gains 11,000 144,000
Other non-interest income 894,000 799,000
------------------------ -----------------------
TOTAL NON-INTEREST INCOME 2,945,000 2,821,000
------------------------ -----------------------
NON-INTEREST EXPENSES
Salaries and employee benefits 5,304,000 4,754,000
Occupancy and equipment expenses 1,326,000 1,525,000
Other real estate owned expenses (income), net (22,000) 63,000
Other non-interest expenses 2,350,000 2,125,000
------------------------ -----------------------
TOTAL NON-INTEREST EXPENSES 8,958,000 8,467,000
------------------------ -----------------------
Income before income tax expense 6,229,000 5,935,000
Income tax expense (1,643,000) (1,568,000)
------------------------ -----------------------
NET INCOME $ 4,586,000 $ 4,367,000
======================== =======================
Basic earnings per common share $ 1.03 $ 0.98
======================== =======================
Weighted average common shares outstanding 4,434,000 4,434,000
======================== =======================
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,
---------------------------------
2004 2003
------------- -------------
OPERATING ACTIVITIES
Net income $ 4,586,000 $ 4,367,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for loan losses 270,000 290,000
Net gain on sales of other real estate owned (67,000) (165,000)
Depreciation and amortization 516,000 516,000
Net increase in cash surrender value
of bank-owned life insurance (337,000) (416,000)
Net security gains (11,000) (144,000)
(Decrease) increase in accrued interest receivable 31,000 (361,000)
Increase in other assets (451,000) (144,000)
Increase in accrued
expenses and other liabilities 981,000 893,000
------------- -------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 5,518,000 4,836,000
------------- -------------
INVESTING ACTIVITIES
Proceeds from maturities and calls:
Securities available for sale 16,042,000 49,985,000
Securities held to maturity 574,000 985,000
Proceeds from sales of securities
available for sale -- 11,900,000
Purchases:
Securities available for sale (7,475,000) (75,707,000)
Securities held to maturity (1,013,000) (2,965,000)
Net redemption (purchase) of FHLB stock 250,000 (500,000)
Disbursements for loan originations, net of
principal collections (22,526,000) (15,173,000)
Net purchases of premises and equipment (429,000) (541,000)
Proceeds from sales of other real estate owned 67,000 334,000
------------- -------------
NET CASH USED IN
INVESTING ACTIVITIES (14,510,000) (31,682,000)
------------- -------------
FINANCING ACTIVITIES
Net increase in deposits 15,262,000 15,922,000
(Decrease) increase in short-term debt (3,158,000) 16,904,000
Repayments of Federal Home Loan Bank borrowings (5,000,000) --
Cash dividends paid (1,198,000) (1,005,000)
------------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,906,000 31,821,000
------------- -------------
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (3,086,000) 4,975,000
Cash and cash equivalents at beginning of period 15,992,000 12,874,000
------------- -------------
Cash and cash equivalents at end of period $ 12,906,000 $ 17,849,000
============= =============
Supplemental information:
Cash paid for:
Interest $ 2,981,000 $ 3,182,000
Income taxes 1,532,000 1,053,000
Transfer of loans to other real estate owned -- 110,000
See accompanying notes to unaudited consolidated interim financial statements.
4
JEFFERSONVILLE BANCORP
AND SUBSIDIARY
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2004
(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, 2004 and December 31, 2003, the
results of operations for the three and nine month periods ended September
30, 2004 and 2003, and the cash flows for the nine month periods ended
September 30, 2004 and 2003. 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 2003 Annual Report on Form
10-K.
5
B. Earnings per Share
Basic earnings per share amounts were calculated for the three and nine
month periods ended September 30, 2004 and 2003 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 both the quarter
ended September 30, 2004 and the quarter ended September 30, 2003. Earnings
per share were $1.03 for the nine months ended September 30, 2004, as
compared to $0.98 for the same period in 2003.
C. Comprehensive Income
Comprehensive income for the three-month periods ended September 30,
2004 and 2003 was $3,316,000 and $493,000, respectively. Comprehensive income
for the nine-month periods ended September 30, 2004 and 2003 was $4,668,000
and $3,377,000, respectively. The following summarizes the components of the
Company's other comprehensive income (loss) for the nine-month periods:
Nine Months Ended September 30, 2004
Net unrealized holding gains
arising during the period,
net of tax (pre-tax amount of $148,000) $ 89,000
Reclassification adjustment for net gains
realized in net income during the period,
net of tax (pre-tax amount of $11,000) $ (7,000)
------------
Other comprehensive income $ 82,000
============
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)
============
6
D. Pension and Other Postretirement Benefits
The Company has a noncontributory defined benefit pension plan covering
substantially all of its employees. The Company also sponsors postretirement
medical and life insurance benefit plans for retirees in the pension plan.
The components of the net periodic benefit cost for these plans were as
follows for the nine month periods ended September 30:
Pension benefits Postretirement benefits
----------------------- -----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Service cost $ 201,000 $ 189,000 $ 183,000 $ 114,000
Interest cost 282,000 255,000 156,000 111,000
Expected return on plan assets (240,000) (207,000) -- --
Amortization of prior service cost 18,000 18,000 -- --
Amortization of transition (asset) obligation (3,000) (3,000) 12,000 12,000
Recognized net actuarial loss 99,000 81,000 45,000 6,000
--------- --------- --------- ---------
Net periodic benefit cost $ 357,000 $ 333,000 $ 396,000 $ 243,000
========= ========= ========= =========
The components of the net periodic benefit cost for these plans were as
follows for the three month periods ended September 30:
Pension benefits Postretirement benefits
----------------------- -----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Service cost $ 67,000 $ 63,000 $ 61,000 $ 38,000
Interest cost 94,000 85,000 52,000 37,000
Expected return on plan assets (80,000) (69,000) -- --
Amortization of prior service cost 6,000 6,000 -- --
Amortization of transition (asset) obligation (1,000) (1,000) 4,000 4,000
Recognized net actuarial loss 33,000 27,000 15,000 2,000
--------- --------- --------- ---------
Net periodic benefit cost $ 119,000 $ 111,000 $ 132,000 $ 81,000
========= ========= ========= =========
The Company previously disclosed in its consolidated financial
statements for the year ended December 31, 2003, that it expected to
contribute $488,000 to its pension plan and $80,000 to its other
postretirement benefits plan in 2004. As of September 30, 2004, $488,000 of
contributions have been made to the pension plan and $31,000 of contributions
have been made to the other postretirement benefits plan.
7
E. Guarantees
FASB Interpretation No. 45 (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" requires certain
disclosures and 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 $784,000 at September 30, 2004 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, 2004 was
insignificant.
8
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.
9
A. Overview - Financial Condition
During the nine-month period from December 31, 2003 to September 30,
2004, total assets increased $11,555,000 or 3.3%. Securities available for
sale decreased by $8,419,000 or 7.3% due to maturities and calls. Net loans
increased from $193,106,000 at year end 2003 to $215,362,000 at September 30,
2004, an increase of $22,256,000 or 11.5%.
Deposits increased from $280,227,000 at December 31, 2003 to
$295,489,000 at September 30, 2004, an increase of $15,262,000 or 5.4%.
Growth occurred in all deposit categories except NOW and Super NOW deposits.
Demand deposits increased from $59,189,000 at December 31, 2003 to
$66,405,000 at September 30, 2004, an increase of $7,216,000 or 12.2%.
Savings and insured money market deposits increased from $80,768,000 at
December 31, 2003 to $86,999,000 at September 30, 2004, an increase of
$6,231,000 or 7.7%.
Total stockholders' equity increased $3,470,000 or 9.7% from $35,786,000
at December 31, 2003 to $39,256,000 at September 30, 2004. This increase was
the result of net income of $4,586,000, plus an increase of $82,000 in
accumulated other comprehensive income, less cash dividends of $1,198,000.
10
The following table sets forth the composition of the Company's loan
portfolio at the dates indicated.
September 30, 2004 December 31,2003
------------------------ ------------------------
Amount Amount
(in thousands) Percent (in thousands) Percent
-------------- ------- -------------- -------
REAL ESTATE LOANS
Residential $ 83,051 37.8% $ 78,339 39.6%
Commercial 71,063 32.3 59,799 30.2
Home Equity 20,836 9.5 18,337 9.3
Farm Land 2,952 1.3 2,872 1.4
Construction 5,097 2.3 4,102 2.1
-------- ----- -------- -----
$182,999 83.2% $163,449 82.6%
-------- ----- -------- -----
OTHER LOANS
Commercial Loans $20,677 9.4% $ 17,157 8.7%
Consumer Installment Loans 15,232 6.9 15,350 7.7
Other Consumer Loans 696 0.3 1,488 0.8
Agriculture 346 0.2 403 0.2
-------- ----- -------- -----
36,951 16.8 34,398 17.4
-------- ----- -------- -----
Total Loans $219,950 100.0% $197,847 100.0%
======== ===== ======== =====
Unearned Discounts (988) (1,172)
Allowance for Loan Losses (3,600) (3,569)
-------- --------
$215,362 $193,106
======== ========
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 $270,000 for the nine months ended September 30, 2004 and $290,000
for the nine months ended September 30, 2003. Total charge offs for the nine
month period ended September 30, 2004 were $352,000 compared to $416,000 for
the same period in the prior year, while recoveries decreased from $134,000
for the 2003 period to $113,000 for the 2004 period. The amounts represent a
net charge-off of $239,000 in the first nine months of 2004 versus a net
charge-off of $282,000 for the same period in the prior year. Based on
management's analysis of the loan portfolio, management believes the current
level of the allowance for loan losses is adequate.
11
Changes in the allowance for loan losses are summarized as follows for
the nine month periods ended September 30:
2004 2003
----------- -----------
Balance at beginning of period $ 3,569,000 $ 3,068,000
Provision for loan losses 270,000 290,000
Loans charged off (352,000) (416,000)
Recoveries 113,000 134,000
----------- -----------
Balance at end of period $ 3,600,000 $ 3,076,000
=========== ===========
Annualized net charge-offs as a percentage
of average outstanding loans 0.15% 0.20%
Allowance for loan losses to:
Total loans 1.64% 1.65%
Total non-performing loans 224.2% 85.3%
12
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 September 30:
2004 2003
----------- -----------
Non-accrual loans $ 1,022,000 $ 949,000
Loans past due 90 days or more and still accruing interest 584,000 2,126,000
----------- -----------
Total non-performing loans $ 1,606,000 $ 3,075,000
----------- -----------
Non-performing loans as a percentage of total loans 0.7% 1.6%
----------- -----------
The decrease in loans past due 90 days or more and still accruing
interest was due to the improvement of a single credit in the amount of
$1.2 million.
As of September 30, 2004 and 2003, the recorded investment in loans
considered to be impaired under Statement of Financial Accounting Standards
("SFAS") No.114 totaled $672,000 and $887,000, 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. There was no allowance for loan impairment under
Statement 114 at September 30, 2004, primarily due to prior charge-offs and
the adequacy of collateral values on these loans.
13
In addition to the non-performing loans, we have identified through
normal internal credit review procedures, approximately $9,732,000 in loans
that warrant increased attention as of September 30, 2004 compared to
$7,597,000 as of December 31, 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 these
non-performing loans.
D. Capital
Under the Federal Reserve Bank's risk-based capital rules, the Company's
Tier I risk-based capital was 17.0% and total risk-based capital was 18.3% of
risk-weighted assets at September 30, 2004. 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 10.6% at September 30, 2004 is well above the 4.0% minimum
regulatory requirement.
14
The following table shows the Company's actual capital measurements
compared to the minimum regulatory requirements at September 30, 2004.
TIER I CAPITAL
Stockholders' equity, excluding accumulated
other comprehensive income $ 39,094,000
TIER II CAPITAL
Allowance for loan losses(1) 2,860,000
-------------
Total risk-based capital 41,954,000
-------------
Risk-weighted assets(2) 229,327,000
-------------
Average assets 368,699,000
-------------
RATIOS
Tier I risk-based capital (minimum 4.0%) 17.0%
Total risk-based capital (minimum 8.0%) 18.3%
Leverage (minimum 4.0%) 10.6%
(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
15
Consolidated Average Balance Sheet as of September 30, 2004 Year to Date
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS EARNED/PAID YIELD/RATE
--------- ------ ----------- ----------
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES $ 68,253 19.07% $ 2,631 5.14%
TAX EXEMPT SECURITIES 49,651 13.87% 2,288 6.14%
--------- ------ --------
TOTAL SECURITIES 117,904 32.94% 4,919 5.56%
--------- ------ --------
SHORT TERM INVESTMENTS 2,031 0.57% 14 0.92%
LOANS (NET OF UNEARNED DISCOUNT)
REAL ESTATE MORTGAGES 150,703 42.10% 8,049 7.12%
HOME EQUITY LOANS 19,301 5.39% 896 6.19%
TIME AND DEMAND LOANS 17,998 5.03% 877 6.50%
INSTALLMENT LOANS 17,176 4.80% 1,305 10.13%
OTHER LOANS 3,169 0.89% 225 9.47%
--------- ------ --------
TOTAL LOANS208,347 58.21% 11,352 7.26%
--------- ------ --------
TOTAL INTEREST EARNING ASSETS 328,282 91.71% 16,285 6.61%
--------- ------ --------
RESERVE FOR LOAN LOSSES (3,535) (0.99)%
NET UNREALIZED GAINS AND LOSSES ON PORTFOLIO 195 0.05%
CASH AND DUE FROM BANKS (DEMAND) 12,932 3.61%
FIXED ASSETS (NET) 3,065 0.86%
BANK OWNED LIFE INSURANCE 12,434 3.47%
OTHER ASSETS 4,598 1.28%
--------- ------
TOTAL ASSETS $ 357,971 100.00%
========= ======
LIABILITIES AND STOCKHOLDERS' EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 39,438 11.02% 79 0.27%
SAVINGS AND INSURED MONEY MARKET 84,093 23.49% 381 0.60%
TIME DEPOSITS 103,673 28.96% 1,652 2.12%
--------- ------ --------
TOTAL INTEREST BEARING DEPOSITS 227,204 63.47% 2,112 1.24%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 1,050 0.29% 9 1.14%
LONG TERM DEBT 26,197 7.32% 875 4.45%
--------- ------ --------
TOTAL INTEREST BEARING LIABILITIES 254,451 71.08% 2,996 1.57%
--------- ------ --------
DEMAND DEPOSITS 62,508 17.46%
OTHER LIABILITIES 4,507 1.26%
--------- ------
TOTAL LIABILITIES 321,466 89.80%
STOCKHOLDERS EQUITY 36,505 10.20%
--------- ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 357,971 100.00%
========= ======
--------
NET INTEREST INCOME $ 13,289
========
NET INTEREST SPREAD 5.04%
=====
NET INTEREST MARGIN5.40%
=====
Yields on securities available for sale are based on amortized cost.
Computed by dividing net interest income by total interest earning
assets.
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.
16
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 EARNED/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%
=====
Yields on securities available for sale are based on amortized cost.
Computed by dividing net interest income by total interest earning
assets.
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.
17
Consolidated Average Balance Sheet for the three months ended September 30, 2004
(Dollars in Thousands, Fully Taxable Equivalent)
AVERAGE % OF INTEREST AVERAGE
CONSOLIDATED AVERAGE BALANCE SHEET BALANCE ASSETS EARNED/PAID YIELD/RATE
--------- ------ ----------- ----------
ASSETS:
INVESTMENT SECURITIES
TAXABLE SECURITIES $ 67,092 18.20% $ 822 4.90%
TAX EXEMPT SECURITIES 49,735 13.49% 755 6.07%
--------- ------ -------
TOTAL SECURITIES 116,827 31.69% 1,577 5.40%
--------- ------ -------
SHORT TERM INVESTMENTS 2,584 0.70% 7 1.08%
LOANS (NET OF UNEARNED DISCOUNT)
REAL ESTATE MORTGAGES 157,857 42.82% 2,773 7.03%
HOME EQUITY LOANS 20,331 5.51% 311 6.12%
TIME AND DEMAND LOANS 20,002 5.43% 346 6.92%
INSTALLMENT LOANS 17,301 4.69% 431 9.97%
OTHER LOANS 3,186 0.86% 73 9.17%
--------- ------ -------
TOTAL LOANS218,677 59.31% 3,934 7.20%
--------- ------ -------
TOTAL INTEREST EARNING ASSETS 338,088 91.70% 5,518 6.53%
--------- ------ -------
ALLOWANCE FOR LOAN LOSSES (3,620) (0.98)%
NET UNREALIZED GAINS AND LOSSES ON PORTFOLIO (766) (0.21)%
CASH AND DUE FROM BANKS (DEMAND) 13,649 3.70%
FIXED ASSETS (NET) 3,069 0.83%
BANK OWNED LIFE INSURANCE 12,680 3.44%
OTHER ASSETS 5,599 1.52%
--------- ------
TOTAL ASSETS $ 368,699 100.00%
========= ======
LIABILITIES AND EQUITY STOCKHOLDERS' EQUITY:
NOW AND SUPER NOW ACCOUNTS $ 38,662 10.49% 70 0.72%
SAVINGS AND INSURED MONEY MARKET 88,068 23.89% 204 0.93%
TIME DEPOSITS 105,500 28.61% 458 1.74%
--------- ------ -------
TOTAL INTEREST BEARING DEPOSITS 232,230 62.99% 732 1.26%
FEDERAL FUNDS PURCHASED AND
OTHER SHORT TERM DEBT 437 0.12% 1 0.92%
LONG TERM DEBT 24,888 6.75% 298 4.79%
--------- ------ -------
TOTAL INTEREST BEARING LIABILITIES 257,555 69.86% 1,031 1.60%
--------- ------ -------
DEMAND DEPOSITS 68,637 18.62%
OTHER LIABILITIES 4,545 1.23%
--------- ------
TOTAL LIABILITIES 330,737 89.70%
STOCKHOLDERS EQUITY 37,962 10.30%
--------- ------
TOTAL LIABILITIES AND
STOCKHOLERS' EQUITY: $ 368,699 100.00%
========= ======
-------
NET INTEREST INCOME $ 4,487
=======
NET INTEREST SPREAD4.93%
====
NET INTEREST MARGIN 5.31%
====
Yields on securities available for sale are based on amortized cost.
Computed by dividing net interest income by total interest earning
assets.
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.
18
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 EARNED/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% 2,557 7.3%
HOME EQUITY LOANS 17,422 4.95% 276 6.34%
TIME AND DEMAND LOANS 14,412 4.09% 227 6.30%
INSTALLMENT LOANS 17,507 4.97% 445 10.17%
OTHER LOANS 2,832 0.81% 76 10.73%
--------- ------ -------
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%
=====
Yields on securities available for sale are based on amortized cost.
Computed by dividing net interest income by total interest earning
assets.
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.
19
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 $6.3 million, which may
be used to meet unforeseen liquidity demands. Five separate FHLB term
advances totaling $22.0 million at September 30, 2004 were being used to fund
securities leverage transactions.
In 2004, cash generated from operating activities amounted to $5.5
million and cash provided by financing activities amounted to $5.9 million.
These amounts were offset by amounts used in investing activities of $14.5
million, resulting in a net decrease in cash and cash equivalents of
approximately $3.1 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 $ 7,385,000
Over three months through six months 3,058,000
Over six months through twelve months 8,057,000
Over twelve months 5,668,000
------------
$ 24,168,000
============
Management anticipates much of these maturing deposits to rollover at
maturity, and that liquidity will be adequate to meet funding requirements.
20
E. Result of Operations
Net income for the quarter ended September 30, 2004 decreased by $14,000
to $1,532,000 compared to $1,546,000 for the corresponding period in 2003.
The Company's annualized return on average assets was 1.7% and 1.8% for the
quarters ended September 30, 2004 and 2003, respectively. The annualized
return on average stockholders' equity was 16.1 % and 20.1% for the third
quarter of 2004 and 2003, respectively.
Total interest income for the third quarter of 2004 increased $159,000
or 3.1% from the corresponding period in 2003 and total interest expense
increased $17,000 or 1.7% from the corresponding period in 2003. Net interest
income increased $142,000 or 3.5% from the prior year period. Non-interest
income for the third quarter of 2004 increased $139,000 or 15.3% from the
corresponding period in 2003, while total non-interest expense increased
$235,000 or 8.2% from the third quarter of 2003.
Total interest income increased as a result of an increase in average
earning assets which was partially offset by a decrease in the overall yield
on average interest earning assets. The total average balance for interest
earning assets was $338,088,000 for the three month period ended September
30, 2004 compared to $325,129,000 for the corresponding period in 2003, an
increase of $12,959,000 or 4.0%. An increase in average loans of $26,322,000
and an increase in average short term investments of $2,227,000 offset by a
decrease in average investments of $15,590,000 accounted for this increase.
The yield on interest earning assets decreased by 8 basis points from 6.61%
for the three month period ended September 30, 2003 to 6.53% for the three
month period ended September 30, 2004. This decrease was primarily due to a
19 basis point decrease in the yield on real estate mortgage loans from 7.22%
for the quarter ended September 30, 2003 to 7.03% for the quarter ended
September 30, 2004.
21
Total interest expense increased slightly as a result of a increase in
the overall yield on interest bearing liabilities. The total average balance
for interest bearing liabilities was $257,555,000 for the three month period
ended September 30, 2004 compared to $257,064,000 for the corresponding
period in 2003, an increase of $491,000 or 0.2%. The yield on interest
bearing liabilities increased by 2 basis points from 1.58% for the three
month period ended September 30, 2003 to 1.60% for the three month period
ended September 30, 2004.
Non-interest income was $1,046,000 for the three month period ended
September 30, 2004 compared to $907,000 for the corresponding period in 2003,
an increase of $139,000 or 15.3%. This increase was primarily due to an
increase in deposit account service charges.
Non-interest expenses were $3,110,000 for the three month period ended
September 30, 2004 compared to $2,875,000 for the corresponding period in
2003, an increase of $235,000 or 8.2%. Salary and employee benefit expense
increased by $249,000 from last year, an increase of 15.7%. This is the
result of normal salary increases and increases in health care benefits.
Occupancy and equipment expense decreased $119,000 from last year. There was
an increase of $134,000 or 18.8% in other non-interest expenses primarily due
to primarily due to higher telephone expenses due to the Company's upgrade of
its data lines and additional consulting fees relates to the Company's
required fiscal year 2005 implementation of Section 404 of the Sarbanes-Oxley
Act of 2002.
Income tax expense was $545,000 for both the three month period ended
September 30, 2004 and the corresponding period in 2003. The Company's
effective tax rates were 26.2% and 26.1% for the three month periods ended
September 30, 2004 and 2003, respectively.
22
Comparison of the nine month periods September 30, 2004 and 2003
Net income for the first nine months of 2004 increased by $219,000 to
$4,586,000 compared to $4,367,000 for the same period in 2003. The Company's
annualized return on average assets was 1.7% for both nine month periods. The
return on average stockholders' equity was 16.8% and 18.0% for the first nine
months of 2004 and 2003, respectively.
Total interest income increased as a result of an increase in average
earning assets which was partially offset by a decrease in the overall yield
on average interest earning assets. The total average balance for interest
earning assets was $328,282,000 for the nine month period ended September 30,
2004 compared to $306,882,000 for the same nine month period in 2003, an
increase of $21,400,000 or 7.0%. An increase in average loans of $22,935,000
offset by a $1,332,000 decrease in average investments accounted for this
increase. The yield on investment securities decreased 11 basis points from
5.67% in 2003 to 5.56% in 2004. The yield on the total loan portfolio
decreased by 38 basis points in the nine months ended September 30, 2004
compared to the first nine months of 2003. Yields on all loan categories
decreased during the nine months ended September 30, 2004 compared to the
first nine months of 2003. The average yield on real estate mortgage loans,
the major portion of the loan portfolio, decreased 35 basis points to 7.12%
from 7.47% during the nine months ended September 30, 2004 compared to the
first nine months of 2003. The overall yield on interest earning assets
decreased 22 basis points from 6.83% for the nine months ended September 30,
2003 to 6.61% for the same period in 2004.
The yield on interest bearing liabilities decreased by 11 basis points
for the nine month period from 1.68% in 2003 to 1.57% in 2004. The overall
net interest margin was 5.40% in the nine month period ended September 30,
2004 as compared to 5.48% for the same period in 2003.
23
Non-interest income was $2,945,000 for the nine month period ended
September 30, 2004 compared to $2,821,000 for the corresponding period in
2003, an increase of $124,000 or 4.4%. This increase was primarily due to
increases in deposit account service charges and an increase in other
non-interest income offset by decreases in the cash surrender value of
bank-owned life insurance and net security gains.
Non-interest expenses were $8,958,000 for the first nine months of 2004
compared to $8,467,000 for the same period in 2003, an increase of $491,000
or 5.8%. Occupancy and equipment expense decreased by $199,000 for the nine
months ended September 30, 2004 as a result of implementing cost control
measures. A $550,000 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 ($22,000) in 2004 versus $63,000 in
2003. Other non-interest expenses increased by $225,000 primarily due to
higher telephone expenses due to the Company's upgrade of its data lines and
additional consulting fees relates to the Company's required fiscal year 2005
implementation of Section 404 of the Sarbanes-Oxley Act of 2002.
Income tax expense was $1,643,000 for the nine month period ended
September 30, 2004 compared to $1,568,000 for the corresponding period in
2003, a decrease of $75,000 or 4.8%. The Company's effective tax rates were
26.4% for both nine month periods ended.
24
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.
25
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, 2003. 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.
26
PART II - OTHER INFORMATION
Item 6. 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
27
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 12, 2004
28