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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-26086
YARDVILLE NATIONAL BANCORP
--------------------------
(Exact Name of Registrant as specified in its Charter)
New Jersey 22-2670267
---------- ----------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
3111 Qakerbridge Road, Trenton, New Jersey 08619
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(609) 585-5100
--------------
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Indicate by checkmark whether the issuer: (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2)has been subject to such filing
requirements for the past 90 days. Yes x No
---- -----
Indicate by checkmark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-k[x]
Aggregate market value of voting stock held by non-affiliates (computed by
using the average of the closing bid and asked prices on march 12, 1997, in the
NASDAQ National Market System: $47,345,890.
Number of shares of common stock, no par value, outstanding as of march 12,
1997: 2,447,664.
(Continued)
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K into
Document which document is incorporated
-------- ------------------------------
Annual Report to Stockholders for Fiscal
year ended December 31, 1996 II
Definitive proxy statement for the 1996
Annual Meeting of Stockholders to be held
on April 24, 1997 III
FORM 10-K
INDEX
PART I PAGE
Item 1. Business 1
Item 2. Properties 22
Item 3. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 22
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters 23
Item 6. Selected Financial Data 24
Item 7. Management's Discussion and Analysis of Financial
Condition or Plan of Operations 24
Item 8. Financial Statements and Supplementary Data 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 25
PART III
Item 10. Directors and Executive Officers of the Registrant 25
Item 11. Executive Compensation 25
Item 12. Security Ownership of Certain Beneficial Owners and
Management 25
Item 13. Certain Relationships and Related Transactions 25
PART IV
Item 14. Exhibits and Reports on Form 8-K 25
Signatures 26
Index to Exhibits E-1
YARDVILLE NATIONAL BANCORP
FORM 10-K
PART I
ITEM 1. BUSINESS.
General
Yardville National Bancorp (the "Company") is a bank holding
company registered with the Board of Governors of the Federal Reserve System
(the "FRB") under the Bank Holding Company Act of 1956 (the "Holding Company
Act"). The Company's business is the ownership and management of The
Yardville National Bank, a national banking association and the Company's sole
banking subsidiary (the "Bank"). The Company was incorporated under the laws
of New Jersey and became the holding company of the Bank in 1985. At December
31, 1996, the Company had total assets of approximately $490,545,000,
deposits of approximately $364,445,000 and stockholders' equity of
approximately $35,230,000.
The Bank
The Bank received its charter from The Office of the Comptroller of
the Currency (the "OCC") in 1924 and commenced operations as a commercial
bank in 1925. The Bank currently operates nine full-service banking offices
in Mercer County, New Jersey, five in Hamilton Township, two in Ewing
Township, one in East Windsor Township and one in Trenton. The branch offices
in Ewing Township were established in 1994 and in the third quarter of 1996,
respectively. The branch office in East Windsor was established in the first
quarter of 1995, and the branch office in Trenton was established in the
second quarter of 1995. The bank opened its fifth branch office in Hamilton
Township in the second quarter of 1996.
The Bank's principal executive offices are located at 3111
Quakerbridge Road, Trenton, New Jersey.
The Bank conducts a general commercial and retail banking business.
The principal focus of the Bank has been to provide a full range of
traditional commercial and retail banking services, including savings and time
deposits, letters of credit, checking accounts and commercial, real estate and
consumer loans, for individuals and small and medium size businesses in each of
the local communities that it serves.
1
The Bank has one wholly-owned non-bank subsidiary, Yardville National
Investment Corporation, which was incorporated in 1985. Yardville National
Investment Corporation was formed to separate a portion of the Bank's
investment portfolio functions and responsibilities from its regular banking
operations and to increase the net yield of the investment portfolio.
Supervision and Regulation
Supervision and Regulation of the Company
Bank holding companies, banks and their operations are extensively
regulated under both Federal and state laws. Bank holding companies and banks
may be subject to potential enforcement actions by the FRB, the OCC or the
Federal Deposit Insurance Corporation (the "FDIC") for unsafe or unsound
practices in conducting their businesses, or for violations of any law, rule or
regulation, any cease-and-desist or consent order, any condition imposed in
writing by the agency or any written agreement with the agency. Because the
Company is a "bank holding company" under the Bank Holding Company Act, the FRB,
acting through the Federal Reserve Bank of Philadelphia ("FRBP") is the
primary supervisory authority for, and examines, the Company and any non-bank
subsidiaries which are not subsidiaries of the Bank. Because the Bank is a
national bank, the primary supervisory authority for the Bank and its
subsidiaries is the OCC, which regularly examines the Bank. The FDIC and the
FRB (because the Bank is a member of the Federal Reserve System) also
regulate, supervise and have power to examine the Bank and its subsidiaries.
Enforcement actions may include the imposition of a conservator or
receiver, cease-and-desist orders and written agreements, the termination of
insurance on deposits, the imposition of civil money penalties and removal
and prohibition orders. If any enforcement action is taken by a banking
regulator, the value of an equity investment in the Company could be
substantially reduced or eliminated.
Bank Holding Company Act
The Bank Holding Company Act requires a "bank holding company" such
as the Company to secure the prior approval of the FRB before it owns or
controls, directly or indirectly, more than five percent (5%) of the voting
shares or substantially all of the assets of any bank. Subject to changes
recently enacted in the Interstate Banking Act (see discussion below),
it also prohibits acquisition by any bank holding company of more than five
percent (5%) of the voting shares of, or interest in, or all or substantially
all of the assets of, any bank located outside of the state in which a current
bank subsidiary is located unless such acquisition is specifically authorized
by laws of the state in which such bank is located. A bank holding
2
is prohibited from engaging in or acquiring direct or indirect control of
more than five percent (5%) of the voting shares of any company engaged in
non-banking activities unless the FRB, by order or regulation, has found
such activities to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In making this determination, the
FRB considers whether the performance of these activities by a bank holding
company would offer benefits to the public that outweigh possible adverse
effects. Applications under the Bank Holding Company Act and the Change in
Control Act (see discussion below) are subject to review based upon the
record of compliance of the applicant with the Community Reinvestment Act of
1977 ("CRA") as discussed below.
The Company is required to file an annual report with the FRB and
any additional information that the FRB may require pursuant to the Bank
Holding Company Act. The FRB may also make examinations of the Company and any
or all of its subsidiaries. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit or provision of credit or provision
of any property or services. The so-called 'anti-tie-in' provisions state
generally that a bank may not condition the pricing or provision of certain
products and services on a requirement that the customer provide certain
products or services to the bank holding company or bank, or any other
subsidiary of the bank holding company, or that the customer not obtain certain
products or services from competitors, or that the customer also obtain
certain other products or services from the bank, its bank holding company or
any other subsidiary of the bank holding company. There is an exception to the
tie-in prohibition for "traditional" banking products and services.
The FRB permits bank holding companies to engage in non-banking
activities so closely related to banking or managing or controlling banks as to
be a proper incident thereto. A number of activities are authorized by FRB
regulation, while other activities require prior FRB approval. The types of
permissible activities are subject to change by the FRB.
FRB regulations require a bank holding company to serve as a source of
financial and managerial strength to its subsidiary banks. The FRB has, in some
cases, entered orders for bank holding companies to take affirmative action to
strengthen the finances or management of subsidiary banks.
3
Change in Bank Control Act
Under the Change in Bank Control Act of 1978 ("Change in Control
Act"), no person, acting directly or indirectly or through or in concert with
one or more other persons, may acquire "control" of any federally insured
depository institution unless the appropriate Federal banking agency has been
given 60 days' prior written notice of the proposed acquisition and within
that period has not issued a notice disapproving of the proposed acquisition
or has issued written notice of its intent not to disapprove the action. For
this purpose, "control" is generally defined as the power, directly, or
indirectly, to direct the management or policies of an institution or to vote
25% or more of any class of its voting securities. The period for the
agency's disapproval may be extended by the agency. Upon receiving such
notice, the Federal agency is required to provide a copy to the appropriate
state regulatory agency if the institution of which control is to be acquired
is state chartered, and the Federal agency is obligated to give due
consideration to the views and recommendations of the state agency. Upon
receiving a notice, the Federal agency is also required to conduct an
investigation of each person involved in the proposed acquisition. Notice
of such proposal is to be published and public comment solicited thereon. A
proposal may be disapproved by the Federal agency if the proposal would have
anti-competitive effects, if the proposal would jeopardize the financial
stability of the institution to be acquired or prejudice the interests of
its depositors, if the competence, experience or integrity of any acquiring
person or proposed management personnel indicates that it would not be in
the interest of depositors or the public to permit such person to control the
institution, if any acquiring person fails to furnish the Federal agency with
all information required by the agency, or if the Federal agency determines
that the proposed transaction would result in an adverse effect on a deposit
insurance fund. In addition, the Change in Control Act requires that,
whenever any federally insured depository institution makes a loan or loans
secured, or to be secured, by 25% or more of the outstanding voting stock of
a federally insured depository institution, the president or chief executive
officer of the lending bank must promptly report such fact to the appropriate
Federal banking agency regulating the institution whose stock secures the
loan or loans.
4
Supervision and Regulation of the Bank
The operations of the Bank are subject to Federal and state statutes
applicable to banks chartered under the banking laws of the United States, to
members of the Federal Reserve System and to banks whose deposits are insured
by the FDIC. Bank operations are also subject to regulations of the OCC, the
FRB and the FDIC.
The primary supervisory authority of the Bank is the OCC (also its
primary Federal regulator), which regularly examines the Bank. The OCC has the
authority to prevent a national bank from engaging in an unsafe or unsound
practice in conducting its business.
Federal and state banking laws and regulations govern, among other
things, the scope of a bank's business, the investments a bank may make, the
reserves against deposits a bank must maintain, loans a bank makes and
collateral it takes, the activities of a bank with respect to mergers and
consolidations and the establishment of branches. All nationally and
state-chartered banks in New Jersey are permitted to maintain branch offices in
any county of the state. National bank branches may be established only after
approval by the OCC. It is the general policy of the OCC to approve
applications to establish and operate domestic branches, including ATM's and
other automated devices that take deposits, provided that approval would not
violate applicable Federal or state laws regarding the establishment of such
branches. The OCC reserves the right to deny an application or grant
approval subject to conditions if (1) there are significant supervisory
concerns with respect to the application or affiliated organizations,
(2) in accordance with CRA, the applicant's record of helping meet the
credit needs of its entire community, including low and moderate income
neighborhoods, consistent with safe and sound operation, is less than
satisfactory, or (3) any financial or other business arrangement, direct or
indirect, involving the proposed branch or device and bank "insiders"
(directors, officers, employees and 10%-or-greater stockholders) involves terms
and conditions more favorable to the insiders than would be available in a
comparable transaction with unrelated parties. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), the FDIC's prior
approval is also required for any new branch applications of a bank which
is ranked in any of the three "undercapitalized" categories established by
FDICIA.
5
Under the Federal Deposit Insurance Act, the OCC possesses the power
to prohibit institutions regulated by it (such as the Bank) from engaging in
any activity that would be an unsafe and unsound banking practice and in
violation of the law. Moreover, Federal law enactments have expanded the
circumstances under which officers or directors of a bank may be removed by the
institution's Federal supervisory agency, restricted and further regulated
lending by a bank to its executive officers, directors, principal stockholders
or related interests thereof and restricted management personnel of a bank
from serving as directors or in other management positions with certain
depository institutions whose assets exceed a specified amount or which
have an office within a specified geographic area, and restricts management
personnel from borrowing from another institution that has a correspondent
relationship with their bank.
The Bank, as a member of the Federal Reserve System, is
subject to certain restrictions imposed by the Federal Reserve Act on any
extensions of credit to the bank holding company or its subsidiaries, on
investments in the stock or other securities of the bank holding company or its
subsidiaries and on taking such stock or securities as collateral for loans.
The Federal Reserve Act and FRB regulations also place certain limitations and
reporting requirements on extensions of credit by the Bank to principal
stockholders of its parent holding company, among others, and to related
interests of such principal stockholders. Such legislation and regulations may
affect the terms upon which any person becoming a principal stockholder of a
holding company may obtain credit from banks with which the subsidiary bank
maintains a correspondent relationship.
In addition, as a bank whose deposits are insured by the FDIC, the
Bank may not pay dividends or distribute any of its capital assets while it
remains in default of any assessment due to the FDIC. The Bank is not in
default under any of its obligations to the FDIC. The FDIC also has
authority under the Federal Deposit Insurance Act to prohibit an insured bank
from engaging in conduct which, in the FDIC's opinion, constitutes an unsafe
or unsound practice in conducting its business. It is possible, depending upon
the financial condition of the Bank and other factors, that the FDIC could
claim that the payment of dividends or other payments might, under some
circumstances, be an unsafe or unsound banking practice.
6
Under the Bank Secrecy Act ("BSA"), the Bank is required to report to
the Internal Revenue Service currency transactions of more than $10,000 or
multiple transactions of which the Bank is aware in any one day that aggregate
in excess of $10,000. Civil and criminal penalties are provided under the BSA
for failure to file a required report, for failure to supply information
required by the BSA or for filing a false or fraudulent report.
Under CRA, the record of a bank holding company and its subsidiary
banks must be considered by the appropriate Federal banking agencies in
reviewing and approving or disapproving a variety of regulatory applications
including approval of a branch or other deposit facility, office relocation, a
merger and certain acquisitions of bank shares. Federal banking agencies have
recently denied applications more frequently based on unsatisfactory CRA
performance, and news reports indicate that community groups have begun to
focus more closely on CRA compliance of small institutions such as the
Bank. Regulators are required to assess the record of the Company and the
Bank to determine if they are meeting the credit needs of the community
(including low and moderate neighborhoods) they serve. Regulators make publicly
available an evaluation of banks' records in meeting credit needs in their
communities, including a descriptive rating and a statement describing the
basis for the rating.
In addition, the Bank is subject to a variety of banking laws and
regulations governing consumer protection (including the Truth in Lending Act
("TILA"), the Truth in Savings Act, the Equal Credit Opportunity Act, the Home
Mortgage Disclosure Act, the Electronic Funds Transfer Act, and the Real Estate
Settlement Procedures Act ("RESPA")), FDIC deposit insurance regulations, and
FRB regulations governing such matters as reserve requirements for deposits,
securities margin lending, collection of checks and other items and
availability of deposits for withdrawal by customers, security procedures, and
prohibitions of payment of interest on demand deposits. Under the Americans
With Disabilities Act ("ADA"), certain bank facilities are identified as
"public accommodations" and are subject to regulation to promote accessibility
of their facilities for disabled persons.
7
Capital Rules
Federal banking agencies have issued "risk-based capital" guidelines,
which supplement other capital requirements. In addition, the OCC imposes
certain "leverage" requirements on national banks such as the Bank. Banking
regulators have authority to require higher minimum capital ratios for an
individual bank or bank holding company in view of its circumstances.
The risk-based guidelines require all banks and bank holding companies
to maintain two "risk-weighted assets" ratios. The first is a minimum ratio of
total capital ("Tier 1" and "Tier 2" capital) to risk-weighted assets equal to
8.00%; the second is a minimum ratio of "Tier 1" capital to risk-weighted
assets equal to 4.00%. Assets are assigned to five risk categories, with higher
levels of capital being required for the categories perceived as representing
greater risk. In making the calculation, certain intangible assets must be
deducted from the capital base. The risk-based capital rules are designed to
make regulatory capital requirements more sensitive to differences in risk
profiles among banks and bank holding companies and to minimize disincentives
for holding liquid assets.
The risk-based capital rules also account for interest rate risk.
Institutions with interest rate risk exposure above a normal level are required
to hold extra capital in proportion to that risk. A bank's exposure to declines
in the economic value of its capital due to changes in interest rates is a
factor that the banking agencies will consider in evaluating a bank's capital
adequacy. The rule does not codify an explicit minimum capital charge for
interest rate risk. The Bank currently monitors and manages its assets and
liabilities for interest rate risk, and management believes that the interest
rate risk rules will not materially adversely affect the Bank's operations.
The OCC "leverage" ratio rules require national banks which are rated
the highest by the OCC in the composite areas of capital, asset quality,
management, earnings and liquidity to maintain a ratio of "Tier 1" capital to
"adjusted total assets" (equal to the bank's average total assets as stated in
its most recent quarterly call report filed with the OCC, minus end-of-quarter
intangible assets that are deducted from Tier 1 capital) of not less than 3.00%.
For banks which are not the most highly rated, the minimum "leverage" ratio
will range from 4.00% to 5.00%, or higher at the discretion of the OCC, and is
required to be at a level commensurate with the nature of the riskiness of the
bank's condition and activities.
8
For purposes of the capital requirements, "Tier 1" or "core" capital
is defined to include common stockholders equity and certain noncumulative
perpetual preferred stock and related surplus. "Tier 2" or "qualifying
supplementary" capital is defined to include a bank's allowance for loan and
lease losses up to 1.25% of risk-weighted assets, plus certain types of
preferred stock and related surplus, certain "hybrid capital instruments" and
certain term subordinated debt instruments.
The Bank is in compliance with each of these capital rules and as of
December 31, 1996 and December 31, 1995 the required ratios and the Bank's
actual ratios are as follows:
Bank Bank
Capital Required 12/31/96 12/31/95
Rule Ratio Ratio Ratio
------- ----- -------- -------
Tier 1 Leverage Ratio 4.00% 7.8% 9.1%
Tier 1 Risk-Based Capital 4.00% 10.2% 12.0%
Total (Tiers 1 and 2)
Risk-Based Capital 8.00% 11.4% 13.2%
FRB leverage ratio rules also require bank holding companies to
maintain a minimum level of "primary capital" to total assets of 5.5% and a
minimum level of "total capital" to assets of 6%. For this purpose, (1)
"primary capital" includes, among other items, common stock, contingency and
other capital reserves, and the allowance for loan and lease losses, (2)
"total capital" includes, among other things, certain subordinated debt, and
"total assets" is increased by the allowance for loan and lease losses. The
Company is in compliance with each of these capital rules and as of December
31, 1996 and December 31, 1995 the required ratios and the Company's actual
ratios are as follows:
Company Company
Capital Required 12/31/96 12/31/95
Rule Ratio Ratio Ratio
------- -------- -------- --------
Primary Capital 5.50% 8.2% 8.7%
Total Capital 6.00% 8.1% 8.7%
9
1996 Federal Banking Legislation
The Economic Growth And Regulatory Paperwork Reduction Act of 1996
(the "1996 Banking Law"), enacted as Title II of the Omnibus
Consolidated Appropriations Act for Fiscal Year 1997 was signed into Law on
September 30, 1996, implemented a wide range of regulatory relief provisions
affecting federal insured depository institutions. Among the supervisory
provisions of the 1996 Banking Law which may affect the Bank, the 1996 Banking
Law included the following: per branch capital requirement for national banks
were eliminated; ATM's and other remote service units were excluded from the
definition of "branch" for purposes of certain branch approval requirements
and geographic restrictions; the law permits well-capitalized banks rated
CAMEL 1 or 2 to invest in bank premises in amounts up to 150 percent of the
bank's capital and surplus with only a 30-day after-the-fact notice and
establishes expedited procedures to permit certain bank holding companies to
engage in permissible nonbanking activities, except for acquisitions of thrifts;
exempted from the insider lending restrictions a bank's company-wide benefit or
compensation plans that are widely available to employees of the bank and that
do not give preference to any officer, director, or principal shareholder
(or related interests) over other employees of the bank; permits the Federal
banking agencies to raise the asset limit for an 18-month examination
cycle from $175,000,000 to $250,000,000 for banks with a CAMEL 2 rating;
permits the OCC to waive the State residency requirement for directors of
national banks; eliminates the independent auditor attestation requirement
for compliance with safety and soundness laws; authorizes the Federal banking
agencies to permit a bank's independent audit committee to include some inside
directors if the bank is unable to find competent outside directors, provided
a majority of the committee is still made up of outside directors; requires
FRB and the U.S. Department of Housing and Urban Development, within 6 months
of enactment, to simplify and improve RESPA and TILA disclosures and provide
a single format for such disclosures; makes a number of changes to RESPA's
disclosure requirements; generally provides that, if a bank or a third party
self-tests for compliance under the Equal Credit Opportunity Act and the
Fair Housing Act, the test results will not be used against the bank if
the bank identifies possible violations and is taking appropriate corrective
actions, and if the bank is not using the results in its defense; sunsets
the Truth-in-Savings Act's civil liability provision in five years;
recapitalizes the Savings Association Insurance Fund ("SAIF") as of
October 1, 1996; requires banks after December 31, 1996 to pay 20% of the
interest on the bonds that funded the initial capitalization of SAIF
("FICO bonds") but banks would be required to pay a full pro-rata share of the
interest obligation beginning after the earlier of December 31, 1999 or
the date on which the last savings association ceases to exist; merges SAIF
and the Bank Insurance Fund ("BIF") on January 1, 1999, but only if no
10
insured depository institution is a savings association on that date; requires
the Department of Treasury to conduct a study by March 31, 1997 on the
development of a common charter for all insured depository institutions;
substantially amends the Fair Credit Reporting Act ("FCRA"); prohibits the
Federal banking agencies from examining for compliance with FCRA unless there
has been a complaint about a violation or the agency otherwise has knowledge of
a violation; and amends the Comprehensive Environmental Response, Compensation,
and Liability Act to clarify that a lender is not liable for environmental
cleanups of property securing a loan unless the lender, among other things,
participates in day-to-day decision making over the operations of the property
or has control over environmental compliance and provides that lenders that
foreclose on property may take certain post-foreclosure actions without
incurring liability for environmental cleanup if the lender did not participate
in management of the property prior to foreclosure and the lender seeks to
dispose of the property as soon as it is commercially reasonable.
Deposit Insurance Assessments
Deposits of the Bank are insured by the FDIC through BIF. Deposits of
certain savings associations are insured by the FDIC through SAIF. The FDIC
sets deposit insurance assessment rates on a semiannual basis and will
increase deposit insurance assessments whenever the ratio of reserves to
insured deposits in a fund is less than 1.25. The insurance assessments paid
by an institution are to be based on the probability that the fund will incur
a loss with respect to the institution. The rate at which institutions pay
assessments is based principally on two measures of risk. These measures
involve capital and supervisory factors.
For the capital measure, institutions are assigned semiannually to one of
three capital groups according to their levels of supervisory capital as
reported on their call reports: "well capitalized" (group 1), "adequately
capitalized" (group 2) and "undercapitalized" (group 3). The capital ratio
standards for classifying an institution in one of these three groups are total
risk-based capital ratio (10 percent or greater for group 1, and between 8 and
10 percent for group 2), the Tier 1 risk-based capital ratio (6 percent or
greater for group 1, and between 4 and 6 percent for group 2), and the leverage
capital ratio (5 percent or greater for group 1, between 4 and 5 percent for
group 2).
Within each capital group, institutions are assigned to one of three
supervisory risk subgroups--subgroup A, B, or C depending upon an assessment of
the institution's perceived risk based upon the results of its most recent
examination and other information available to regulators. Subgroup A will
11
consist of financially sound institutions with only a few minor weaknesses.
Subgroup B will consist of institutions that demonstrate weaknesses which,
if not corrected, could result in significant deterioration of the institution
and increased risk of loss to BIF. Subgroup C will consist of institutions
that pose a substantial probability of loss to the deposit insurance fund
unless effective corrective action is taken. Thus, there are nine possible
classifications to which varying assessment rates are applicable. The
regulation generally prohibits institutions from disclosing their subgroup
assignments or assessment risk classifications without FDIC authorization.
An institution's semiannual assessment is computed primarily by
multiplying its "average assessment base" (generally, total insurable domestic
deposits) for the prior semiannual period by one-half the annual assessment
rate applicable to that institution depending upon its category.
On December 6, 1996, the FDIC continued in effect for the first six months
of 1997 the downward adjustment in deposit insurance assessment rates
applicable to BIF member institutions, but eliminated the statutory minimum
assessment of $1,000 due to the 1996 Banking Law, which repealed that minimum.
The following table sets forth the new schedule of BIF assessment
rates by capital group and supervisory risk subgroup for the semi-annual
assessment period beginning January 1, 1997 (with no minimum assessment amount):
Capital Group Supervisory subgroup
------------- ---------------------
A B C
1 0 3 17
2 3 10 24
3 10 24 27
On November 22, 1996, the Federal Financing Corporation ("FICO")
adopted a regulation pursuant to the 1996 Banking Law which obligates all
federally insured depository institutions to pay special assessments toward the
funding of interest payments on FICO bonds, which were issued in 1989 to fund
the savings and loan bailout. The special assessments, which are effective for
periods commencing January 1, 1997, will be calculated on a deposit-by-deposit
basis and differ depending upon whether a deposit is insured by SAIF or BIF.
For the period commencing January 1, 1997, the special assessment rates are
expected to be 6.4 basis points on all SAIF-assessable deposits and 20% of
that rate, or approximately 1.3 basis points, on all BIF-assessable
deposits---regardless of whether an institution is a "bank" or a "savings
association". After December 31, 1999 (or when the last savings
association ceases to exist, if earlier), all assessable
12
deposits at all institutions will be assessed at the same rates in order to pay
FICO bond interest. These special assessments are in addition to the semi-
annual assessments for BIF member institutions or BIF assessable deposits.
Prompt Corrective Action
Federal law mandates certain "prompt corrective actions" which Federal
banking agencies are required to take, and certain actions which they have
discretion to take, based upon the capital category into which a federally
regulated depository institution falls. Regulations set forth detailed
procedures and criteria for implementing prompt corrective action in the case
of any institution which is not adequately capitalized. Under the rules,
an institution will be deemed to be "adequately capitalized" or better if
it exceeds the minimum Federal regulatory capital requirements. However, it
will be deemed "undercapitalized" if it fails to meet the minimum capital
requirements, "significantly undercapitalized" if it has a total risk-based
capital ratio that is less than 6.0 percent, a Tier 1 risk-based capital
ratio that is less than 3.0 percent, or a leverage ratio that is less than 3.0
percent, and "critically undercapitalized" if the institution has a ratio
of tangible equity to total assets that is equal to or less than 2.0
percent. The rules require an undercapitalized institution to file a
written capital restoration plan, along with a performance guaranty by its
holding company or a third party. In addition, an undercapitalized
institution becomes subject to certain automatic restrictions including a
prohibition on payment of dividends, a limitation on asset growth and
expansion, in certain cases, a limitation on the payment of bonuses or
raises to senior executive officers, and a prohibition on the payment of
certain "management fees" to any "controlling person". Institutions that are
classified as undercapitalized are also subject to certain additional
supervisory actions, including increased reporting burdens and regulatory
monitoring, a limitation on the institution's ability to make acquisitions,
open new branch offices, or engage in new lines of business, obligations to
raise additional capital, restrictions on transactions with affiliates, and
restrictions on interest rates paid by the institution on deposits. In certain
cases, bank regulatory agencies may require replacement of senior executive
officers or directors, or sale of the institution to a willing purchaser. If an
institution is deemed to be "critically undercapitalized" and continues in
that category for four quarters, the statute requires, with certain narrowly
limited exceptions, that the institution be placed in receivership.
13
Limitations on Payment of Dividends; Regulatory Agreement
Under national banking laws, a national bank must obtain the approval
of the OCC before declaring any dividend which, together with all other
dividends declared by the national bank in the same calendar year will exceed
the total of the bank's net profits of that year combined with its retained net
profits of the preceding 2 years, less any required transfers to surplus or a
fund for the retirement of any preferred stock. Net profits are to be
calculated without adding back any provision to the bank's allowance for loan
and lease losses. These restrictions would not prevent the Bank from paying
dividends from current earnings to the Company at this time. FDICIA prohibits
FDIC-insured institutions from paying dividends or making capital distributions
that would cause the institution to fail to meet minimum capital requirements.
The FDICIA restrictions would not prevent the Bank from paying dividends from
current earnings to the Company at this time. The Bank in 1991 entered into
a written agreement with the OCC (the "Regulatory Agreement") to, among other
things, create a Compliance Committee, implement a plan to correct any
compliance deficiencies, and reduce its classified assets and to maintain the
Bank's common stockholders' equity at 5% of total assets. In 1991, in
connection with the Regulatory Agreement and at the recommendation of the
FRBP, the Board of Directors of the Company adopted a resolution, under
which the Board could not declare a dividend to the Company's stockholders
except with 10 days' prior written notice to the FRBP. The Regulatory
Agreement was terminated on October 18, 1993, and on December 21, 1994, the
Board of Directors of the Company rescinded its resolution with the
permission of the FRBP, which was granted on November 30, 1994.
New Jersey Banking Laws
Provisions of the New Jersey Banking Act of 1948 with supplements (the
"New Jersey Banking Act") may apply to national banking associations with their
principal offices in New Jersey, subject to pre-emption by applicable Federal
laws. The merger of a national bank into a state bank requires approval of the
New Jersey Commissioner of Banking; however, a state bank may merge into a
national bank without such prior approval. The New Jersey Banking Act also
purports to regulate certain aspects of bank business, including small loans
and certain deposit accounts. New Jersey has opted into early interstate
banking and branching. See the discussion under "Interstate Banking", below.
Under New Jersey law, a corporation is not permitted to
pay dividends on its capital stock if, following the payment of the
dividend, (i) the corporation would be unable to pay its debts as they become
due in the usual course of business or (ii) the
14
corporation's total assets would be less than its total liabilities.
Determinations under clause (ii) above may be based upon (i) financial
statements prepared on the basis of generally accepted accounting principles,
(ii) financial statements prepared on the basis of other accounting principles
that are reasonable under the circumstances, or (iii) a fair valuation of other
method that is reasonable in the circumstances.
Interstate Banking
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (the "Interstate Banking Act"), enacted on September 29, 1994, permits
bank holding companies to acquire banks in any state one year after enactment
of the legislation. State laws which require the acquiror to have been in
existence for a specified minimum period of time are preserved, but only
up to a maximum existence requirement of 5 years. Except for initial entry
into a state, after an acquisition the acquiror may not control more than 10%
of total insured deposits in the U. S. or more than 30% of insured deposits in
the acquiror's home state. Stricter state deposit concentration caps
apply if they are nondiscriminatory. Effective June 1, 1997, acquired banks
in different states may be merged into a single bank, subject to any necessary
regulatory approvals and provided the banks are adequately capitalized. Once a
bank has established branches in a host state through an interstate merger
transaction, it may establish and acquire additional branches anywhere in the
host state where the acquiree could have branched. States may enact laws
opting-out of interstate branching during periods before June 1, 1997, but if
so, domestic institutions will also be prohibited from branching interstate.
States may also enact laws permitting interstate merger transactions and
interstate de novo branching before June 1, 1997. On April 17, 1996, New
Jersey enacted legislation to opt-in with respect to earlier interstate
banking and branching and the entry into New Jersey of foreign country banks.
New Jersey did not authorize de novo branching into the state. In contrast
to interstate acquisitions and mergers, the Interstate Banking Act
permits acquisition of less than all of the branches of an insured bank only
of the state's laws permit it. Unless expressly determined to be pre-empted,
state laws regarding community reinvestment, consumer protection
(including applicable usury ceilings), fair lending, and
establishment of intrastate branches apply to local branches of interstate
organizations to the same extent they apply to a branch of a domestic state
bank. In evaluating applications, Federal banking agencies must consider CRA
performance in each state in which an acquiring institution maintains branches,
15
as well as applicable State community reinvestment laws. Bank management
anticipates that the Interstate Banking Act will increase competitive pressures
in the Bank's market by permitting entry of additional competitors.
Other Laws and Regulations
The Company and the Bank are subject to a variety of laws and
regulations which are not limited to banking organizations. In lending to
commercial and consumer borrowers, and in owning and operating its own property,
the Bank is subject to regulations and risks under state and Federal
environmental laws.
Compliance
While the expense of compliance is increasing and has an adverse
effect on the net income on all regulated institutions such as the Bank,
management believes the Company and the Bank are in compliance with
applicable laws and regulations in all material respects.
Legislation and Regulatory Changes
Legislation and regulations may be enacted which increase the cost of
doing business, limiting or expanding permissible activities or affecting the
competitive balance between banks and other financial services providers.
Proposals to change the laws and regulations governing the operations and
taxation of banks, bank holding companies, and other financial institutions are
frequently made in Congress and before various bank regulatory agencies. No
prediction can be made as to the likelihood of any major changes or the impact
such changes might have on the Company and the Bank.
Effect of Government Monetary Policies
The earnings of the Company are and will be affected by domestic
economic conditions and the monetary and fiscal policies of the United States
government and its agencies. The FRB has had, and will likely continue to have,
an important impact on the operating results of commercial banks through its
power to implement national monetary policy in order, among other things, to
curb inflation or combat a recession. The FRB has a major effect upon the
levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation
of, among other things, the discount rate on borrowings of member banks
and the reserve requirements against member banks' deposits. It is not
possible to predict the nature and impact of future changes in monetary and
fiscal policies.
16
Competition
The Bank is subject to vigorous competition in all aspects of its
business from other financial institutions such as commercial banks, savings
banks, savings and loan associations, credit unions, insurance companies and
finance and mortgage companies. Within the direct market area of the Bank there
are a significant number of offices of competing financial institutions. The
Bank competes in its market area with a number of larger commercial banks that
have substantially greater resources, higher lending limits, larger branch
systems and provide a wider array of banking services. Money market funds also
actively compete with banks for deposits. Savings banks, savings and loan
associations and credit unions also actively compete for deposits and for
various types of loans. In its lending business, the Bank is subject to
increasing competition from consumer finance companies and mortgage companies,
which are not subject to the same kind of regulatory restrictions as banks. The
effect of liberalized branching and acquisition laws, especially after the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, has been to
lower barriers to entry into the banking business and increase competition for
banking business, as well as to increase both competition for and opportunities
to acquire other financial institutions. The Company anticipates that the
Interstate Banking Act will increase competitive pressures in the Bank's market
by permitting entry of additional competitors. Financial institutions compete
generally on the basis of rates and service. Financial institutions are
intensely competitive in the interest rates they offer, especially for time
deposits. In addition, finance companies, which are not subject to the same
regulation as banks, are becoming increasingly significant competitors because
they can often offer lower loan rates than banks. Finally, a number of the
Bank's competitors provide a wider array of services (such as trust and
international services, which the Bank does not provide) and, by virtue of
their greater financial resources, have higher lending limits and larger
branch systems.
Employees
At December 31, 1996, the Company employed 160 full-time employees and
11 part-time employees.
17
Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
Statistical disclosure information regarding the distribution of assets,
liabilities and stockholders' equity, interest rates and interest differential
is included in the Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations, which is incorporated by
reference to the Company's Annual Report to Stockholders (see Part II, Item 6
below).
Investment Portfolio
Statistical disclosure information regarding securities is included in the
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations, which is incorporated by reference to the Company's
Annual Report to Stockholders. Additional disclosure information follows.
The following table presents the amortized cost and market values of the
Company's securities available for sale portfolio as of December 31, 1996, 1995
and 1994.
December 31,
-------------------------------------------------------------------------------------
1996 1995 1994
----------------------- ------------------------ ---------------------
(in thousands) Book Market Book Market Book Market
Value Value Value Value Value Value
----- ------ ----- ------ ------ ------
U.S. Treasury and
other federal agencies $ 31,951 $ 31,942 $ 17,795 $ 17,823 $ 6,366 $ 6,150
Mortgage-backed securities 59,441 59,182 78,725 78,874 18,358 16,755
Federal Reserve Bank stock 572 572 512 512 173 173
Federal Home Loan Bank 1,975 1,975 1,260 1,260 1,074 1,074
stock ----------- ---------- ---------- ------------ ---------- -----------
Total $ 93,939 $ 93,671 $ 98,292 $ 98,469 $ 25,971 $ 24,152
=========== ========== ========== ============ ========== ===========
All mortgage-backed securities are FHLMC, FNMA or GNMA agency named at
December 31, 1996.
18
The following table presents the amortized cost and market values of the
Company's investment securities portfolio as of December 31, 1996, 1995 and
1994.
December 31,
-------------------------------------------------------------------------------------
1996 1995 1994
----------------------- ------------------------- ---------------------
(in thousands) Book Market Book Market Book Market
Value Value Value Value Value Value
------ ------ ----- ------ ----- ------
Obligations of state and
political subdivisions $ 9,070 $ 9,108 $ 8,630 $ 8,659 $ 8,392 $ 7,777
Mortgage-backed securities 22,226 21,770 26,754 26,378 30,691 27,972
-------- ---------- -------- --------- --------- ---------
Total $ 31,296 $ 30,878 $ 35,384 $ 35,037 $ 39,083 $ 35,749
======== ========== ======== ========= ========= =========
All mortgage-backed securities are FHLMC, FNMA or GNMA agency named at
December 31, 1996.
Loan Portfolio
Statistical disclosure information regarding the loan portfolio is
included in the Management's Discussion and Analysis, which is incorporated by
reference to the Company's Annual Report to Stockholders. Additional
disclosure information follows.
The following table provides information concerning the maturity and
interest rate sensitivity of the Company's commercial, agricultural and real
estate-construction loan portfolio for the year presented.
December 31, 1996
---------------------------------------------------------------------
After One After
Within But Within Five
(in thousands) One Year Five Years Years Total
----------- ----------- ----------- ------------
Maturities:
Commercial and agricultural $ 24,634 $ 30,244 $ 8,548 $ 63,426
Real estate - construction 17,575 5,365 3,018 25,958
----------- ------------ ------------ -----------
Total $ 42,209 $ 35,609 $ 11,566 $ 89,384
=========== =========== ============ ===========
Type:
Fixed rate loans $ 4,134 $ 17,990 $ 3,697 $ 25,821
Floating rate loans 38,075 17,619 7,869 63,563
----------- ----------- ----------- -----------
Total $ 42,209 $ 35,609 $ 11,566 $ 89,384
=========== =========== =========== ===========
19
Summary of Loan Loss Experience
Statistical disclosure information regarding the summary of loan loss
experience is included in the Management's Discussion and Analysis, which is
incorporated by reference to the Company's Annual Report to Stockholders.
Additional disclosure information follows.
The following tables describe the allocation for loan losses among various
categories of loans and certain other information as of the dates indicated.
December 31, 1994 December 31, 1993
--------------------------------------- -----------------------------------
Percent of Percent of
Reserve Percent of Loans to Reserve Percent of Loans to
(in thousands) Amount Allowance Total Loans Amount Allowance Total Loans
----------- ------------ ------------ ---------- ----------- -----------
Commercial, financial and agricultural $ 1,137 39.0 % 13.5% $ 933 34.5 % 13.1
Real estate - mortgage 1,152 39.6 70.4 1,415 52.3 72.5
Real estate - construction 398 13.7 7.9 237 8.8 7.2
Consumer 141 4.8 5.6 86 3.2 5.5
Other loans 84 2.9 2.6 32 1.2 1.7
-------------------------------------- ----------------------------------
Totals $ 2,912 100.0 % 100.0% $ 2,703 100.0 % 100.0
====================================== ==================================
December 31, 1992
---------------------------------------------
Percent of
Reserve Percent of Loans to
Amount Allowance Total Loans
Commercial, financial and agricultural $ 1,002 34.1 % 14.1%
Real estate - mortgage 1,443 49.1 75.2
Real estate - construction 204 6.9 4.0
Consumer 73 2.5 6.0
Other loans 218 7.4 0.7
-------------------------------------------
Totals $ 2,940 100.0 % 100.0%
===========================================
20
Deposits
Statistical disclosure information regarding deposits is included in the
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations, which is incorporated by reference to the Company's
Annual Report to Stockholders.
Return on Equity and Assets
Statistical disclosure information regarding deposits is included in the
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations, which is incorporated by reference to the Company's
Annual Report to Stockholders.
Short-Term Borrowings
Statistical disclosure information regarding deposits is included in the
Management's Discussion and Analysis of Consolidated Financial Condition and
Results of Operations, which is incorporated by reference to the Company's
Annual Report to Stockholders. Additional disclosure information follows.
December 31,
(in thousands) 1994
- -------------------------------------------------------------
Securities sold under
agreements to repurchase $ -
FHLB advances -
Other 1,215
-----------------------------------------------------------
Total $ 1,215
-----------------------------------------------------------
Maximum amount outstanding
at any month end $ 7,264
Average interest rate on
year end balance 4.50%
Average amount outstanding
during the year $ 2,248
Average interest rate for
the year 4.23%
------------------------------------------------------------
21
ITEM 2. PROPERTIES.
The principal executive offices of the Company are located at 3111
Quakerbridge Road, Trenton, New Jersey in a building owned by the Bank and the
management and staff of the Company utilize the facilities and equipment of the
Bank. The Bank owns its principal executive offices, where it also has a
banking office, in Yardville, New Jersey, and three additional banking offices
in Hamilton Township, New Jersey. The Bank leases its banking office in Ewing
Township, New Jersey. The lease provides for a term of five years ending in
1999, renewable for three 5- year periods, and a base monthly rental of
$2,333.34 during the initial term. The Bank also leases its banking office in
East Windsor Township, New Jersey. The lease provides for a term of five years
ending in 1999, renewable for three 5-year periods, and provides for a base
monthly rental of $2,457.92 during the initial term. The Bank also leases its
banking office in Trenton. The lease provides for a term of five years ending
in 1999, renewable for three 5-year periods, and provides for a base monthly
rental of $1,875.00. The Bank also leases its banking office in Hamilton
Square, New Jersey, which opened in the second quarter of 1996. The Bank
assumed a 20 year lease effective April 1, 1996. The lease commenced on
October 1, 1991 and ends on September 30, 2011 and is renewable for 5-year
periods, and provides for a base monthly rental of $5,573.53 during the
initial term. The Bank purchased a building and property in Ewing Township and
opened its ninth branch in the third quarter of 1996. Yardville National
Investment Corporation leases space from the Bank at the Bank's principal
executive offices.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party to various legal actions as of December 31,
1996, arising out of the ordinary course of business. Management of the Company
does not deem any of the claims against the Company in such matters are
material in relation to the Company's financial condition, results of
operations or liquidity based on information currently available to the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1996, through the
solicitation of proxies or otherwise.
22
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Market Information
The Common Stock began trading on the NASDAQ National Market on June
9, 1995. Prior to June 9, 1995 there was no active public trading market
for the Common Stock, although the Common Stock was traded sporadically
in the over-the-counter market. The following table shows the range of
high and low closing bid prices of the Common Stock in the NASDAQ National
Market commencing with the second quarter of 1995 and as reported by the
National Quotation Bureau for the periods prior to the second quarter of
1995. The price quotations reflect inter-dealer quotations without adjustment
for retail markup, markdown or commission, and may not represent actual
transactions.
Bid Price
High Low
Year Ended December 31, 1995:
First Quarter $12 1/4 $11 3/4
Second Quarter 15 14 1/4
Third Quarter 17 1/2 17
Fourth Quarter 16 1/2 15 3/4
Year Ended December 31, 1996:
First Quarter $16 1/8 $ 16
Second Quarter 16 1/4 15 7/8
Third Quarter 18 1/4 18
Fourth Quarter 19 3/4 19 1/4
Holders
As of December 31, 1996, the Company had approximately 552 holders of
record of the Common Stock.
23
Dividends
In 1995, the Company paid cash dividends on the Common Stock in the
aggregate amount of $738,000. In 1996, the Company paid cash dividends on the
Common Stock in the aggregate amount of $1,083,000. In the first quarter of
1997, the Company paid a cash dividend in the amount of $.12 per share on the
Common Stock. Because substantially all of the funds available for the payment
of cash dividends are derived from the Bank, future cash dividends will depend
primarily upon the Bank's earnings, financial condition, need for funds, and
government policies and regulations applicable to both the Bank and the Company.
As of December 31, 1996, the net profits of the Bank available for distribution
to the Company as dividends without regulatory approval were approximately
$5,651,000. The Company expects to pay quarterly cash dividends in 1997 to
holders of Common Stock, subject to the Company's financial condition.
ITEMS 6, 7 AND 8
Information required by items 6, 7 and 8 is provided in the Company's 1996
Annual Report to Stockholders under the captions and on the pages indicated
below, and is incorporated by reference:
PAGES IN 1996
ANNUAL REPORT
CAPTION IN 1996 ANNUAL REPORT TO STOCKHOLDERS TO STOCKHOLDERS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 11-29
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS 30-45
INDEPENDENT AUDITORS' REPORT 46
The Company is not required to provide selected quarterly financial
data in response to Item 8 and, therefore, such data has been omitted from the
1996 Annual Report to Stockholders.
24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEMS 10 THROUGH 13
Information required by Items 9 through 12 is provided in the
Company's definitive proxy statement to be filed with the Securities and
Exchange Commission in connection with its annual meeting of stockholders
to be held April 24, 1997. Such information is incorporated by reference. The
information contained in the Company's definitive proxy statement under
the caption "Organization and Compensation Committee Report" shall not be
deemed to be incorporated by reference herein.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed or incorporated by reference as a part of this
report are listed in the Index to Exhibits which appears at page E-1 and are
incorporated by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1996.
25
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has caused this annual report to be signed
on its behalf by the undersigned thereunto duly authorized on march 27, 1997.
YARDVILLE NATIONAL BANCORP
By: Patrick M. Ryan
----------------------------------
Patrick M. Ryan, President and
Chief Executive Officer
Signatures Title
Jay G. Destribats
- ------------------------- Chairman of the Board
Jay G. Destribats and director
Patrick M. Ryan
- ------------------------- Director, President and
Patrick M. Ryan Chief Executive Officer
Stephen F. Carman
- ------------------------- Treasurer, Secretary,
Stephen F. Carman Principal Financial Officer
and Principal Accounting Officer
C. West Ayres
- ------------------------- Director
C. West Ayres
Elbert G. Basolis, Jr.
- ------------------------- Director
Elbert G. Basolis, Jr.
Lorraine Buklad
- ------------------------- Director
Lorraine Buklad
Anthony M. Giampetro
- ------------------------- Director
Anthony M. Giampetro
Sidney L. Hofing
- ------------------------- Director
Sidney L. Hofing
James J. Kelly
- ------------------------- Director
James J. Kelly
26
SIGNATURES TITLE
Gilbert W. Lugossy
- ------------------------- Director
Gilbert W. Lugossy
Louis R. Matlack
- ------------------------- Director
Louis R. Matlack
Weldon J. McDaniel, Jr.
- ------------------------- Director
Weldon J. McDaniel, Jr.
F. Kevin Tylus
- ------------------------- Director
F. Kevin Yylus
27
INDEX TO EXHIBITS
Exhibit
Number Description PAGE
* 3.1 Restated Certificate of Incorporation of the Company ..........
** 3.2 By-Laws of the Company.........................................
** 4.1 Specimen Share of Common Stock.................................
** 4.2 Form of Class A Warrant........................................
10.1 Employment Contract Between Registrant and Patrick M. Ryan..... E-3
10.2 employment contract Between Registrant and Jay G. Destribats... e-11
*10.3 Employment Contract Between Registrant and Stephen F. Carman...
*10.4 Employment Contract Between Registrant and James F. Doran......
*10.5 Employment Contract Between Registrant and Richard A. Kauffman.
*10.6 Employment Contract Between Registrant and Mary C. O'Donnell...
*10.7 Employment Contract Between Registrant and Frank Durand III....
10.8 Salary Continuation Plan for the Benefit of Patrick M. Ryan.... e-18
10.9 salary continuation plan for the benefit of Jay G. Destribats.. e-23
*10.10 1988 Stock Option Plan.........................................
*10.11 1994 Stock Option Plan.........................................
*10.12 Directors' Deferred Compensation Plan..........................
**10.13 Lease Agreement between Jim Cramer and the Bank dated November
3, 1993.......................................................
*10.14 Lease between Richardson Realty Company and the Bank dated
November 18, 1994.............................................
*10.15 Agreement between the Lalor Urban Renewal Limited Partnership
and the BAnk dated October, 1994..............................
***10.16 Survivor Income Plan for the Benefit of Stephen F. Carman......
***10.17 Lease Agreement between Devon Inc. and the Bank dated as of
February 9, 1996
11 Statement Re Computation of Per Share Earnings................. E-28
13.1 1996 Annual Report to Stockholders............................. E-30
**21 List of Subsidiaries of the Registrant.........................
23.1 Consent of KPMG Peat Marwick LLP .............................. E-82
27.1 Financial Data Schedules....................................... E-83
(continued)
E-1
* Incorporated by reference to the Registrant's Annual Report on Rorm 10-KSB
for the fiscal year ended December 31, 1994, as amended by Form 10-KSB/A
filed on July 25, 1995.
** Incorporated by reference to the Registrant's Registration Statement on
Form SB-2 (Registration No. 33-78050)
*** Incorporated by Reference to the Registrant's Annual Report on Form 10-KSB
for the Fiscal year ended December 31, 1995.