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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee required] for the fiscal year ended December 31, 2000 or
[_] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No fee Required] for the transition period
from_______________ to________________
Commission file number 0-15261.
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BRYN MAWR BANK CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2434506
- ------------------------------- ---------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
801 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (610) 525-1700
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1 par value)
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period than 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 __________
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
or 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. [_]
The aggregate market value of shares of common stock held by non-affiliates of
Registrant (including fiduciary accounts administered by affiliates*) was
$108,640,576 on February 28, 2001.
As of February 28, 2001, 4,281,402 shares of common stock were outstanding.
Documents Incorporated by Reference: Parts I, II and IV - Portions of
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Registrant's Annual Report to Shareholders for the year ended December 31, 2000,
as indicated, Parts I and III - Definitive Proxy Statement of Registrant filed
with the Commission pursuant to Regulation 14A.
*Registrant does not admit by virtue of the foregoing that its officers and
directors are "affiliates" as defined in Rule 405 and does not admit that it
controls the shares of Registrant's voting stock held by the Trust Department of
its bank subsidiary.
The exhibit index is on pages 47 through 51. There are 158 pages in this
report.
Form 10-K
Bryn Mawr Bank Corporation
Index
Item No. Page
--------
Part I
1. Business.............................................. 1
2. Properties............................................ 35
3. Legal Proceedings..................................... 39
4. Submission of Matters to a Vote of Security Holders... 39
Part II
5. Market for Registrant's Common Equity and Related
Stockholder Matters................................... 40
6. Selected Financial Data............................... 40
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 40
8. Financial Statements and Supplementary Data........... 41
9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 41
Part III
10. Directors and Executive Officers of Registrant........ 42
11. Executive Compensation................................ 46
12. Security Ownership of Certain Beneficial Owners and
Management............................................ 46
13. Certain Relationships and Related Transactions........ 46
Part IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................... 47
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MARCH 1, 2001.
PART I
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ITEM 1. BUSINESS
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GENERAL
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Certain of the matters discussed in this document and the documents
incorporated by reference herein, including matters discussed under the captions
"Management Discussion and Analysis of Financial Condition and Results of
Operations" may constitute forward-looking statements for the purposes of the
Securities Exchange act of 1933, as amended and the Securities Exchange Act of
1934, as amended, and may involve known and unknown risks, uncertainties and
other factors which may cause actual results, performance or achievements of
Bryn Mawr Bank Corporation (the "Corporation") to be materially different from
future results, performance or achievements expressed or implied by such
forward-looking statements. The words "expect," "anticipate," "intended,"
"plan," "believe," "seek," "estimate," and similar expressions are intended to
identify such forward- looking statements. The Corporation's actual results may
differ materially from the results anticipated by the forward looking statement
due to a variety of factors, including without limitations: (a) the effect of
future economic conditions on the Corporation and its customers; (b)
governmental monetary and fiscal policies, as well as legislation and regulatory
changes; (c) the risks of changes in interest rates on the level and composition
of deposits, loan demand, and the value of loan collateral and securities, as
well as interest rate risk; (d) the effects of competition from other commercial
banks, thrifts, mortgage companies, consumer finance companies,
1
credit unions, securities brokerage firms, insurance companies, money-market and
mutual funds and other institutions operating in the Corporation's trade market
area and elsewhere including institutions operating locally, regionally,
nationally and internationally together with such competitors offering banking
products and services by mail, telephone, computer and the internet; and (e) the
failure of assumptions underlying the establishment of reserves for loan losses
and estimates in the value of collateral, and various financial assets and
liabilities and technological changes being more difficult or expensive than
anticipated. All written or oral forward- looking statements attributed to the
Corporation are expressly qualified in their entirety by use of the foregoing
cautionary statements.
BRYN MAWR BANK CORPORATION
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The Corporation, hereinafter sometimes referred to as the Registrant, was
incorporated under the laws of the Commonwealth of Pennsylvania on August 8,
1986. The Corporation is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended (the "Act"). On January 2, 1987, under
a Plan of Reorganization, the Corporation acquired all of the issued and
outstanding shares of The Bryn Mawr Trust Company (the "Bank"), through an
exchange of three shares of the Corporation stock for each share of Bank stock
issued.
THE BRYN MAWR TRUST COMPANY
- ---------------------------
The Bank, the principal subsidiary of the Corporation, is a state chartered
bank subject to the Pennsylvania Banking Code of 1965, as amended, which was
incorporated under the laws of the Commonwealth of Pennsylvania on March 25,
1889. In addition, the Bank is a member of the Federal Reserve System and,
therefore, is subject to the laws and regulations, which govern
2
a Federal Reserve member bank. The Bank is engaged in a general commercial and
retail banking business, providing basic banking services as well as a full
range of trust services.
TAX COUNSELLORS OF BRYN MAWR, INC.
- ----------------------------------
Tax Counsellors of Bryn Mawr, Inc. ("TCBM") was incorporated under the laws
of Pennsylvania on July 1, 1997. Effective December 31, 2000 the net assets of
TCBM were sold to the management of TCBM ("Tax professionals") in exchange for a
note in favor of TCBM. As of December 31, 2000, TCBM is an inactive wholly owned
subsidiary of the Corporation.
INSURANCE COUNSELLORS OF BRYN MAWR, INC.
- ----------------------------------------
Insurance Counsellors of Bryn Mawr, Inc. ("Insurance Counsellors") was
incorporated on December 30, 1997 as a wholly owned subsidiary of the Bank.
Insurance Counsellors began operations on February 1, 1998. The staff of
Insurance Counsellors sells insurance products, including all facets of
casualty, property and allied insurance lines, as well as life insurance,
annuities, medical insurance and accident and health insurance for groups and
individuals.
THE BRYN MAWR TRUST COMPANY (JERSEY), LTD.
- ------------------------------------------
The Bryn Mawr Trust Company (Jersey), Ltd. ("BMTC (Jersey)") was
incorporated on September 3, 1998 as a wholly owned subsidiary of the
Corporation. BMTC (Jersey) was incorporated under the laws of the Island of
Jersey, Channel Islands and maintained an office on the Island of Jersey. BMTC
(Jersey) afforded the Bank's clients the opportunity to make offshore
investments, but due to a lack of business activity, BMTC (Jersey) has ceased
operation and its charter was cancelled in June 2000.
3
BRYN MAWR BROKERAGE CO., INC.
- -----------------------------
Bryn Mawr Brokerage Co., Inc. ("BM Brokerage") was incorporated on October
26, 1998 as a wholly owned subsidiary of the Corporation. BM Brokerage began
operating in January 1999. BM Brokerage offers an array of brokerage related
services to the Corporation's customers, including trading of shares, annuities
and mutual funds.
JOSEPH W. ROSKOS & CO. ,INC.
- ----------------------------
Joseph W. Roskos & Co., Inc. ("JWR&Co") was acquired as of January 1, 1999
as a wholly owned subsidiary of the Corporation. JWR&Co offers high quality
personalized family business office services to high net worth individuals,
including accounting, tax preparation services, consulting and fiduciary support
services.
Bryn Mawr Finance
- -----------------
Bryn Mawr Finance is a wholly owned subsidiary of JWR&Co. Bryn Mawr Finance
provides the Corporation and its subsidiaries alternative financing
opportunities.
CDC CAPITAL MANAGEMENT INC.
- ---------------------------
CDC Capital Management Inc. ("CDC") was acquired in January 1999 as a
wholly owned subsidiary of the Corporation. CDC began operating in January 1999.
CDC provides investment consulting services to retirement plans, foundations,
and high net worth individuals.
4
SUMMARY
- -------
The Corporation will, through its subsidiaries, especially the Bank, seek to
market its services by providing superior banking services. This includes
deposits, lending and trust services, as well as other financial services. These
other services include insurance sales and services through Insurance
Counsellors, brokerage related services through BM Brokerage, family business
office services through JWR&Co and investment advisory services through CDC. The
primary market for these services is in Montgomery, Delaware and Chester
counties of Pennsylvania. These products and services assist in successfully
addressing the other challenges in the ever changing competitive financial
services market.
5
OPERATIONS
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BRYN MAWR BANK CORPORATION
- --------------------------
The Corporation had no active staff as of December 31, 2000 and conducted no
activities other than those activities through its subsidiaries, the Bank,
Insurance Counsellors, BM Brokerage, TCBM, Joseph W. Roskos & Co. and CDC.
A complete list of directors and officers of the Corporation, as of March 1,
2001 is incorporated by reference to page 11 and 12 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 2000.
THE BRYN MAWR TRUST COMPANY
- ---------------------------
The Bank is engaged in general, commercial and retail banking business,
providing basic banking services, including the acceptance of demand, time and
savings deposits and the making of commercial, real estate and consumer loans
and other extensions of credit. The Bank also provides a full range of
investment management and trust services including estate administration,
investment advisory services, pension and profit sharing administration and
personal financial planning, including tax preparation. As of December 31, 2000,
the market value of assets administered by the Bank's Investment Management and
Trust Division was $1,760,000,000. In January 1996, the Bank formed Investment
Counsellors of Bryn Mawr ("ICBM"), as a division of the Bank's Investment
Management and Trust Division. ICBM is dedicated to managing investment
portfolios for high net worth individuals and employee benefit plans.
During 2000 residential mortgage interest rates increased, making residential
mortgage refinancing less attractive to borrowers, compared to
6
similar activity in 1998 and 1999. As of March 1, 2001, the Bank had no
commissioned mortgage originators.
The Bank originated and sold $71,731,000 in residential mortgages to the
secondary market in 2000 compared to $73,921,000 originated and sold in 1999.
Net gains and loan fee income on such transactions amounted to $1,232,000 in
2000 compared to $984,000 in 1999. During 1998 the Bank originated and sold
$134,676,000 in residential mortgage loans, generating $1,647,000 in related net
gains and loan fee income.
The Bank renegotiated its licensing and servicing agreement with FISERV in
1994 for the in-house data processing systems, which commenced operation during
February 1996. That agreement is incorporated by reference into the
Corporation's 10-K, filed with the Commission on March 31, 1995.
At December 31, 2000, the Bank had 223 full time and 30 part time employees,
including 104 officers, equaling 238 full time equivalent staff.
TAX COUNSELLORS OF BRYN MAWR, INC.
- ----------------------------------
TCBM is an independent tax preparation and consulting company. Effective
December 31, 2000, the operations of TCBM were transferred to the Tax
professionals, concurrent with the sale of the net assets of the company. TCBM
is presently an inactive subsidiary of the Corporation, having no employees.
INSURANCE COUNSELLORS OF BRYN MAWR, INC.
- ----------------------------------------
Insurance Counsellors is a full-service insurance agency, which enables the
Bank to offer insurance related products and services to its customer base.
This includes casualty, property and allied insurance lines, as well as life
insurance, annuities, medical insurance and accident and health insurance for
groups and individuals.
Insurance Counsellors employs 2 licensed insurance agents and a support
7
staff of 2 full time people, who have significant expertise in the design, sale
and service of insurance products. Insurance Counsellors offers products from
six major insurance companies for property and casualty, in excess of twenty
life and health companies and has agreements with life agents and employee
benefit companies for specialized insurance needs. Insurance Counsellors
generated $272,000 of revenue during 2000.
BRYN MAWR BROKERAGE CO., INC.
- -----------------------------
BM Brokerage offers securities products, including mutual funds, annuities,
individual stocks and bonds and retirement plans through the Bank's branch
system. BM Brokerage has entered into an agreement with UVEST Financial
Services, Inc., a broker-dealer headquartered in Charlotte, North Carolina to
provide the necessary back office support. As of December 31, 2000, BM Brokerage
had 2 full time employees. BM Brokerage generated $85,000 of revenue during
2000.
CDC CAPITAL MANAGEMENT INC.
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CDC is an investment advisor registered with the United States Securities and
Exchange Commission (the "Commission"). CDC provides investment consulting
services to retirement plans, foundations, and high net worth individuals. As of
December 31, 2000, CDC had 4 full time employees. During 2000 CDC generated
$872,000 of revenues.
JOSEPH W. ROSKOS & CO. INC.
- ---------------------------
JWR&Co provides family business office services to high net worth
individuals. Thus, JWR&Co offers to the clients of all the Bryn Mawr companies
access to high quality personalized financial services such as
8
accounting, tax preparation services, consulting and fiduciary support services
to our customers. As of December 31, 2000 JWR&Co had 24 full-time employees, 2
part-time employees and generated $2,453,000 of revenue during 2000.
9
SOURCES OF THE CORPORATION'S REVENUE
------------------------------------
The following table shows the percentage of consolidated revenues by major
source generated by the Corporation's subsidiaries from the activities indicated
below.
Year Ended December 31,
---------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Commercial Loans 23% 19% 18% 17% 18%
Mortgage and Construction Loans 17 16 16 15 16
Consumer Loans 16 18 21 25 25
Home Equity/Line of Credit 4 2 2 2 2
Securities 3 4 5 6 7
Federal Funds Sold 1 1 2 3 1
--- --- --- --- ---
Total Interest Income 64 60 64 68 70
Trust Services 18 21 23 21 17
Other Income * 18 19 13 11 13
--- --- --- --- ---
Total Revenues * 100% 100% 100% 100% 100%
=== === === === ===
* Revenues were generated by the Bank, JWR&Co, CDC, TCBM, Insurance
Counsellors, and BM Brokerage in 2000 and 1999 by the Bank, TCBM, and Insurance
Counsellors in 1998 and by the Bank and TCMB in 1997. Of the Corporation's total
revenues generated in 2000, JWR&Co, CDC, TCBM, Insurance Counsellors and BM
Brokerage, respectively produced 5%, 1.8%, 1.8%, .5%, and .2% thereof. The 1999
total revenues generated by JWR&Co, CDC, TCBM, Insurance Counsellors and BM
Brokerage were 4%, 2%, 1.5%, 1%, and .4%. Respective revenues generated by TCBM
and Insurance Counsellors aggregated 1.7% and .5% of the Corporation's total
revenues in 1998. TCBM aggregated .4% in 1997. The Bank generated all revenues
during 1996.
10
STATISTICAL INFORMATION
-----------------------
The statistical information required in this Item I is incorporated by
reference to the information appearing in Corporation's Annual Report to
Shareholders for the year ended December 31, 2000, as follows:
Disclosure Required by Industry Reference to the Corporation's
- ------------------------------- ------------------------------
Guide 3 2000 Annual Report
- -------- ------------------
(Financial Section)
-------------------
I. Distribution of Assets, Liabilities
and Stockholders Equity; Interest
Rates and Interest Differential
A. Average balance sheets, interest-
income and expense; average rates
earned/paid........................ Analyses of Interest Rates and
Interest Differential (page 19)
B. Rate/Volume Differentials.......... Rate/Volume Analyses (page 20)
C. Non-Accrual Policy................. Loan Portfolio and Non-
performing Asset Analysis
(page 24)
D. Interest Rate Sensitivity
Analysis........................... Interest Rate Sensitivity
Analysis (page 27)
II. Investment Portfolio
A. Book Values........................ Notes to Consolidated Finan-
cial statements, Note 3
(page 36)
B. Maturities......................... Notes to Consolidated Finan-
cial Statements, Note 3
(page 36)
III. Loan Portfolio
A. Types of Loans..................... Loan Portfolio (page 23)
B. Maturities and Sensitivity to
in Interest Rates.................. Loan Portfolio-Maturity
Distribution (page 23)
Interest Rate Sensitivity
Analysis (page 27)
C. Non-Performing Assets.............. Nonperforming Assets (page 26)
11
Disclosure Required by Industry Reference to the Corporation's
- ------------------------------- ------------------------------
Guide 3 2000 Annual Report
- -------- ------------------
(Financial Section)
-------------------
IV. Summary of Loan Loss Experience
A. Analysis of Loss Experience....... Allowance for Possible Loan
Losses (page 20)
B. Allocation of Allowance for
Loan Losses....................... Allocation of the Allowance
for Possible Loan Losses
(page 21)
V. Deposits
A. Average Deposits.................. Average Daily Balances of
Deposits (Page 25)
B. Maturity tables and outstanding
balances, deposits $100,000 or
more.............................. Maturity of Certificates of
Deposit of $100,000 or
Greater (page 25)
VI. Return on Equity and Assets....... Selected Financial Data
(page 13)
12
COMPETITION
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The Corporation's principal purpose is to hold the stock of the Bank and
the Corporation's other subsidiaries. Therefore, there is presently neither a
market area nor competition for the Corporation since it does not conduct
competitive business activity other than through its subsidiaries.
The Bank's market area is primarily located in portions of Delaware,
Montgomery and Chester Counties in southeastern Pennsylvania. The greatest
concentration of activity is within a limited radius of Bryn Mawr, Pennsylvania,
the site of the Bank's main banking office. The Bank has six full service branch
offices located in Bryn Mawr, Havertown, Wayne, Wynnewood, Paoli, and West
Conshohocken, Pennsylvania. In addition, there are six limited service
facilities located in life care communities in Waverly Heights, Martins Run, the
Quadrangle, Beaumont at Bryn Mawr, Bellingham and White Horse Village. All
facilities are located in Montgomery, Chester or Delaware Counties.
The banking business is highly competitive. The Bank competes not only with
other commercial banks but it also experiences competition from savings and loan
associations, trust companies and credit unions for deposits and loans, as well
as from consumer finance companies, mortgage companies, insurance companies,
stock brokerage companies and other entities providing one or more of the
services and products offered by the Bank. All of those organizations must be
considered competitors of the Bank.
TCBM's market area is primarily located in southeastern Pennsylvania, New
Jersey and Delaware, although the nature of tax consulting services permits
13
TCBM to provide its services anywhere in the United States. TCBM's primary
competition is from accounting and tax preparation firms. TCBM is housed in the
main office building of the Bank, located at 801 Lancaster Avenue, Bryn Mawr,
Pennsylvania. The net assets of TCBM were sold to the Tax Professionals
effective December 31, 2000 for a note in favor of TCBM.
Insurance Counsellors' market area is primarily located in southeastern
Pennsylvania, New Jersey and Delaware, although they are able to market and sell
insurance products and services anywhere in the United States. Insurance
Counsellors is housed in the main office building of the Bank, located at 801
Lancaster Avenue, Bryn Mawr, Pennsylvania. Insurance Counsellors' primary
competition is from insurance agencies and insurance agents.
BM Brokerage's market area is primarily located in southeastern
Pennsylvania, New Jersey and Delaware, although they are able to market and sell
securities related products anywhere in the United States. BM Brokerage is
housed in the main office building of the Bank, located at 801 Lancaster Avenue,
Bryn Mawr, Pennsylvania. BM Brokerage's primary competition is from brokerage
firms, mutual funds and financial institutions offering similar types of
securities related products.
CDC's market area is primarily located in the Pennsylvania, New Jersey and
Delaware. CDC is located at 6 Bryn Mawr Avenue. CDC's main competition is
brokerage firms and other investment advisors.
JWR&Co's primary function is a family business office. Its market area
14
is Pennsylvania and targets individuals and families with substantial assets.
JWR&Co is located in King of Prussia, Pennsylvania at 2011 Renaissance
Boulevard, Suite 200. JWR&Co's primary competition is the wealth management
departments of various banks in the area.
15
SUPERVISION AND REGULATION
--------------------------
Bank holding companies, such as the Corporation, and its subsidiaries,
including the Bank, are subject to extensive regulation under both federal and
state law. To the extent that the following information describes statutory
provisions and regulations which apply to the Corporation and its subsidiaries,
it is qualified in its entirety by reference to those statutory provisions and
regulations.
Regulation of the Corporation
-----------------------------
The Bank Holding Company Act
- ----------------------------
The Corporation, as a bank holding company, is regulated under the Bank
Holding Company Act of 1956, as amended (the "Act"). The Act limits the business
of bank holding companies to banking, managing or controlling banks, performing
certain servicing activities for subsidiaries and engaging in such other
activities as the Federal Reserve Board may determine to be closely related to
banking. The Corporation and its non-bank subsidiaries are subject to the
supervision of the Federal Reserve Board and the Corporation is required to file
with the Federal Reserve Board an annual report and such additional information
as the Federal Reserve Board may require pursuant to the Act and the regulations
which implement the Act. The Federal Reserve Board also conducts inspections of
the Corporation and each of its non-banking subsidiaries.
16
The Act prohibits the Federal Reserve Board from approving a bank holding
company's application to acquire a bank or bank holding company located outside
the state in which the operations of its banking subsidiaries are principally
conducted, unless such acquisition is specifically authorized by statute of the
state in which the bank or bank holding company to be acquired is located.
Pennsylvania law permits bank holding companies located in any state to acquire
Pennsylvania banks and bank holding companies, provided that the home state of
the acquiring company has enacted "reciprocal" legislation. In this context,
reciprocal legislation is generally defined as legislation that expressly
authorizes Pennsylvania bank holding companies to acquire banks or bank holding
companies located in another state on terms and conditions substantially no more
restrictive than those applicable to such an acquisition in Pennsylvania by a
bank holding company located in the other state.
The Act requires each bank holding company to obtain prior approval by the
Federal Reserve Board before it may acquire (i) direct or indirect ownership or
control of more than 5% of the voting shares of any company, including another
bank holding company or a bank, unless it already owns a majority of such voting
shares, or (ii) all, or substantially all, of the assets of any company. The Act
provides that the Federal Reserve Board shall not approve any acquisition by a
bank holding company of more than 5% of the voting shares or substantially all
of the assets of a bank located outside of the state in which the operation of
the holding company's bank subsidiaries are principally conducted, unless such
acquisition is specifically authorized by a statute of the state in which the
bank whose shares are to be acquired is located.
17
The Act also prohibits a bank holding company from engaging in, or from
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any company engaged in non-banking activities unless the Federal
Reserve Board, by order or regulation, has found such activities to be so
closely related to banking or to managing or controlling banks as to be
appropriate. The Federal Reserve Board has by regulation determined that certain
activities are so closely related to banking or to managing or controlling
banks, so as to permit bank holding companies, such as the Corporation, and its
subsidiaries formed for such purposes, to engage in such activities, subject to
obtaining the Federal Reserve Board's approval in certain cases.
The Act further provides that the Federal Reserve Board shall not approve
any such acquisition that would result in a monopoly or would be in furtherance
of any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any part of the country, or that in any other manner
would be in restraint of trade, unless the anti-competitive effects of the
proposed transactions are clearly outweighed by the public interest and the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served.
Under the Act, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension or
provision of credit, lease or sale of property or furnishing any service to a
customer on the condition that the customer provide additional credit or service
to the bank, to its bank holding company or any other subsidiaries of its bank
holding company or on the condition that the
18
customer refrain from obtaining credit or service from a competitor of its bank
holding company. Further, the Bank, as a subsidiary bank of a bank holding
company, such as the Corporation, is subject to certain restrictions on any
extensions of credit it provides to the Corporation or any of its non-bank
subsidiaries, investments in the stock or securities thereof, and on the taking
of such stock or securities as collateral for loans to any borrower.
In addition, the Federal Reserve Board may issue cease and desist orders
against bank holding companies and non-bank subsidiaries to stop actions
believed to present a serious threat to a subsidiary bank. The Federal Reserve
Board also regulates certain debt obligations and changes in control of bank
holding companies.
Under Federal Reserve Board policy, a bank holding company is expected to
act as a source of financial strength to each of its subsidiary banks and to
commit resources, including capital funds during periods of financial stress, to
support each such bank. Although this "source of strength" policy has been
challenged in litigation, the Federal Reserve Board continues to take the
position that it has the authority to enforce it. Consistent with its "source of
strength" policy for subsidiary banks, the Federal Reserve Board has stated
that, as a matter of prudent banking, a bank holding company generally should
not maintain a rate of cash dividends unless its net income available to common
shareholders has been sufficient to fund fully the dividends, and the
prospective rate of earnings retention appears to be consistent with the
company's capital needs, asset quality and overall financial condition.
19
Financial Institutions Reform, Recovery and Enforcement Act
- -----------------------------------------------------------
Following enactment by the United States Congress, on August 9, 1989, the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
became law. Although the more significant provisions of FIRREA relate to
promoting the economic viability of thrift institutions through more stringent
capital requirements and changes to the regulatory structure of such
institutions, FIRREA also contains provisions that directly affect banks and
bank holding companies, such as the Corporation. First, FIRREA abolished the
Federal Savings and Loan Insurance Corporation and required the Federal Deposit
Insurance Corporation (the "FDIC") to establish two separate funds, the Bank
Insurance Fund ("BIF") to insure banks and the Savings Association Insurance
Fund ("SAIF") to insure savings and loan associations. Second, FIRREA amended
the Act to permit bank holding companies to acquire thrift institutions. Prior
to FIRREA, bank holding companies were permitted to acquire only failing thrift
institutions. FIRREA also abolished the restrictions on tandem operations of
acquired thrift institutions and the in-state preference for acquisitions of
failing thrifts. Finally, FIRREA enhanced the authority of the regulatory
authorities over financial institutions, including banks and bank holding
companies, to regulate more effectively with the entire structure of a bank
holding company.
Federal law also grants to federal banking agencies the power to issue cease
and desist orders when a depository institution or a bank holding company or an
officer or director thereof is engaged in or is about to engage in unsafe and
unsound practices. The Federal Reserve Board may
20
require a bank holding company, such as the Corporation, to discontinue certain
of its activities or activities of its other subsidiaries, other than the Bank,
or divest itself of such subsidiaries if such activities cause serious risk to
the Bank and are inconsistent with the Bank Holding Company Act or other
applicable federal banking laws.
Federal Deposit Insurance Corporation Improvement Act of 1991
-------------------------------------------------------------
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
is legislation designed to reform and provide funding for the deposit insurance
system by, among other things, requiring early intervention and closure of
troubled institutions by the regulatory authorities and the resolution of failed
institutions on the least-cost basis.
The FDICIA substantially alters the deposit insurance assessment process. The
requirement that the FDIC provide at least sixty (60) days notice before
requiring changes to the semiannual insurance assessment has been removed and
the FDIC has the ability to change deposit insurance assessment rates much more
rapidly than in the past. FDICIA grants the FDIC the authority to impose special
"emergency" assessments on member banks at any time if necessary to pay interest
or principal on borrowings or for other appropriate purposes. FDICIA also
requires the FDIC to establish a risk-based assessment system for the deposit
insurance funds no later than January 1, 1994. In addition, FDICIA establishes
capital categories, such as, "well-capitalized", adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized. Under the
21
guidelines currently issued by the regulators, the Bank is currently considered
"well-capitalized".
FDICIA also requires the regulators to place a financial institution under
more intense scrutiny if its capital falls into a lower capital category. In
addition, FDICIA restricts the liquidity that is available, through the Federal
Reserve discount window, to troubled financial institutions and increases the
scope of the regulatory authorities supervisory powers over financial
institutions, including the Bank and Corporation.
Pursuant to federal law, federal regulatory authorities review the
performance of the Corporation and their subsidiaries in meeting the credit
needs of the communities served by the Bank. The applicable federal regulatory
authority considers compliance with this law in connection with applications
for, among other things, approval of branches, branch relocations and
acquisitions of banks and bank holding companies.
Pennsylvania Laws Affecting the Corporation
-------------------------------------------
Pennsylvania Anti-Takeover Legislation
- --------------------------------------
The Corporation is also subject to the Pennsylvania Business Corporation Law
of 1988, as amended and the general business and other laws of the Commonwealth
of Pennsylvania regulating corporations.
The Pennsylvania Legislature passed the Pennsylvania Anti-Takeover Law Act 36
of the 1990 Pennsylvania Legislature ("Act 36") on April 27, 1990
22
which adds additional provisions to and amends the law of Pennsylvania
concerning business corporations (the "Corporation Law"). Specifically, Act 36
(i) modifies and limits the fiduciary obligations of a corporation's directors,
withholds voting rights from control shares of corporation stock until consent
of the Corporation's independent shareholders is obtained at a shareholders
meeting, prevents "green mail" by providing for disgorgement of certain profits
by a control person or group within eighteen (18) months after an attempt to
acquire control of a corporation. Act 36 also provides for severance
compensation for certain terminated employees following control share
acquisitions, and regulates the effect of certain business combinations on labor
contracts.
Act 36, which is the Legislature's response to the large volume of hostile
takeovers over recent years, contains provisions which permitted a corporation's
board of directors to "opt-out" of certain provisions of the Act by explicitly
amending the corporation's by-laws on or before July 26, 1990. On July 20,
1990, the Corporation's Board amended the Corporation's by-laws to explicitly
opt-out of the provisions of Act 36 which modify and limit a director's
fiduciary duty to the Corporation, withhold voting rights from "control shares"
of the Corporation stock, and provide for disgorgement of certain profits on
certain shares of the Corporation stock by a control person or group within
eighteen months after an attempt to acquire the Corporation's stock. Because
the Corporation's Board of Directors opted out of the provisions of Act 36
concerning fiduciary duty, control share acquisitions, and disgorgement of
profits, the severance compensation and labor contract provisions of Act 36 are
inapplicable to the Corporation.
The Corporation's Board opted-out of those provisions of the Act by
23
amending the Corporation's by-laws because it believed and continues to believe
that those provisions of the Act were not in the best economic interests of the
Corporation's shareholders. In addition, the Board believes that, without those
provisions of Act 36, the Board has sufficient flexibility under the applicable
law to protect the interest of the shareholders. As outlined in the
Corporation's definitive proxy statement for the 1992 shareholders' meeting, the
Board of Directors recommended that the Corporation's shareholders ratify and
approve the amendment to the Corporation's by-laws opting out of Act 36.
Regulation of the Bank
----------------------
The Corporation's Pennsylvania state chartered Bank, The Bryn Mawr Trust
Company, is regulated and supervised by the Pennsylvania Department of Banking
(the "Department of Banking") and subject to regulation by Federal Reserve Board
and the FDIC. These agencies regularly examine the Bank's reserves, loans,
investments, management practices and other aspects of its operations and the
Bank must furnish periodic reports to these agencies. The Bank is a member of
the Federal Reserve System.
Federal Reserve Board and Department of Banking Regulations
- -----------------------------------------------------------
The Bank's operations are subject to certain requirements and restrictions
under federal and state laws, including requirements to maintain reserves
against deposits, limitations on the interest rates that may be paid on certain
types of deposits, restrictions on the types and
24
amounts of loans that may be granted and the interest that may be charged
thereon, limitations on the types of investments that may be made and the types
of services which may be offered. Various consumer laws and regulations also
affect the operations of the Bank. These regulations and laws are intended
primarily for the protection of the Bank's depositors and customers rather than
holders of the Corporation's stock.
As a bank incorporated under and subject to Pennsylvania banking laws and
insured by the FDIC, the Bank must obtain the prior approval of the Department
of Banking and the Federal Reserve Board before establishing a new branch
banking office. Depending on the type of bank or financial institution, a
merger of banks located in Pennsylvania are subject to the prior approval of one
or more of the following: the Department of Banking, the FDIC, the Federal
Reserve Board and the Office of the Comptroller of the Currency. An approval of
a merger by the appropriate bank regulatory agency would depend upon several
factors, including whether the merged institution is a federally insured state
bank, a member of the Federal Reserve System, or a national bank. Additionally,
any new branch expansion or merger must comply with geographical branching
restrictions provided by state law. Beginning in 1990, the Pennsylvania Banking
Code permitted Pennsylvania banks to establish branches anywhere in the state.
The Bank is insured by the FDIC, which currently insures the Bank's deposits
to a maximum of $100,000 per deposit. For this protection, each insured bank
pays a semiannual statutory insurance assessment and is subject to certain rules
and regulations of the FDIC. The amount of FDIC assessments paid by individual
insured depository institutions, such as the Bank, is based on their relative
risk as measured by regulatory capital
25
ratios and certain other factors. Under this system, in establishing the
insurance premium assessment for each bank, the FDIC will take into
consideration the probability that the deposit insurance fund will incur a loss
with respect to an institution, and will charge an institution with perceived
higher inherent risks a higher insurance premium. The FDIC will also consider
the different categories and concentrations of assets and liabilities of the
institution, the revenue needs of the deposit insurance fund, and any other
factors the FDIC deems relevant. A significant increase in the assessment rate
or a special additional assessment with respect to insured deposits could have
an adverse impact on the results of operations and capital levels of the Bank or
the Corporation.
Regulation of the Corporation-
Government Monetary Policies
----------------------------
The earnings and operations of the Corporation and its subsidiaries are
affected by the policies of regulatory authorities and legislative changes; in
particular, the policies of the Federal Reserve Board in regulating the money
supply and interest rates. Among the instruments used by the Federal Reserve
Board to implement its objectives are open-market operations in U.S. Government
securities, changes in the discount rate for member bank borrowings, changes in
reserve requirements against bank deposits, and changes with respect to
regulations affecting certain borrowing by banks and their affiliates.
The monetary and fiscal policies of the Federal Reserve Board and the
26
other regulatory agencies have had, and will probably continue to have, an
important impact on the operating results of the Bank through their power to
implement national monetary policy in order to, among other things, curb
inflation or combat a recession. The monetary policies of the Federal Reserve
Board may have a major effect upon the levels of the Bank's loans, investments
and deposits through the Federal Reserve Board's open market operations in
United States government securities, through its regulation of, among other
things, the discount rate on borrowing of depository institutions, and the
reserve requirements against depository institution deposits. It is not possible
to predict the nature and impact of future changes in monetary and fiscal
policies.
The earnings of the Bank and therefore, of the Corporation are affected by
domestic economic conditions, particularly those conditions in the trade area as
well as the monetary and fiscal policies of the United States government and its
agencies.
The Federal Reserve Board also has authority to prohibit a bank holding
company from engaging in any activity or transaction deemed by the Federal
Reserve Board to be an unsafe or unsound practice. The payment of dividends
could, depending upon the financial condition of the Bank or Corporation, be
such an unsafe or unsound practice and the regulatory agencies have indicated
their view that it generally would be an unsafe and unsound practice to pay
dividends except out of current operating earnings. The ability of the Bank to
pay dividends in the future is presently and could be further influenced, among
other things, by applicable capital guidelines discussed below or by bank
regulatory and supervisory policies. The ability of the Bank to make funds
available to the Corporation is also subject to
27
restrictions imposed by federal law. The amount of other payments by the Bank to
the Corporation is subject to review by regulatory authorities having
appropriate authority over the Bank or Corporation and to certain legal
limitations.
The passage of additional legislation by Congress, such as FIRREA or FDICIA,
authorizing additional continuing legal and regulatory supervision of financial
institutions, requiring additional disclosure concerning deposit transactions
and permitting more rapid increases in deposit insurance premiums may increase
the cost and the operational expenses even for efficiently run and well-
capitalized financial institutions and may adversely affect the profit margins
of the Bank and the Corporation.
Risk Based Capital Guidelines
- -----------------------------
The Federal Reserve Board has promulgated certain "Risk Based Capital
Guidelines" which more narrowly define bank capital, as it relates to assets,
than do prior regulatory guidelines. Under the new guidelines, various types of
Corporation assets are assigned risk categories and weighted based on their
relative risk. In addition, certain off balance sheet items are translated into
balance sheet equivalents and also weighted according to their potential risk.
The sum of both of these asset categories, referred to as Total Risk Weighted
Assets, is then compared to the Corporation's total capital, providing a Tier I
Capital Ratio, under the new guidelines. A Tier II capital ratio is also
computed for the Corporation, adding an allowable portion of the loan loss
reserve to
28
capital. Both the Tier I and Tier II ratios of the Corporation are in excess of
those minimum capital ratios required. The focus of the guidelines is to measure
the Corporation's capital risk. The guidelines do not explicitly take into
account other risks, such as interest rate changes or liquidity.
The Bank in its normal business originates off-balance sheet items, such as
outstanding loan commitments and standby letters of credit. The Bank makes loan
commitments to borrowers to assure the borrower of financing by the Bank for a
specified period of time and/or at a specified interest rate. The obligation to
the Bank, pursuant to an unfunded loan commitment, is limited by the terms of
the commitment letter issued by the Bank to each borrower. The Bank carefully
reviews outstanding loan commitments on a periodic basis. A standby letter of
credit is an instrument issued by the Bank, which represents an obligation to
make payments on certain transactions of its customers. The Bank carefully
evaluates the creditworthiness of each of its letter of credit customers. The
Corporation carefully monitors its risks as measured by the Risk Capital
Guidelines and seeks to adhere to the Risk Capital Guidelines.
Financial Services Act of 1999
- ------------------------------
On March 11, 2000 the Financial Services Act of 1999 (the "FSA"), sometimes
referred to as the Gramm-Leach-Bliley Act, became effective.
The FSA repeals provisions of the Glass-Steagall Act, which had prohibited
commercial banks and securities firms from affiliating with each
29
other and engaging in each other's businesses. Thus, many of the barriers
prohibiting affiliations between commercial banks and securities firms have been
eliminated.
The FSA amends the Act to allow new "financial holding companies" ("FHC") to
offer banking, insurance, securities and other financial products to consumers.
Specifically, the FSA amends section 4 of the Act in order to provide for a
framework for the engagement in new financial activities. Bank holding
companies may elect to become a financial holding company if all its subsidiary
depository institutions are well-capitalized and well-managed. If these
requirements are met, a bank holding company may file a certification to that
effect with the Federal Reserve Board and declare that it elects to become a
FHC. After the certification and declaration is filed, the FHC may engage
either de novo or through an acquisition in any activity that has been
determined by the Federal Reserve Board to be financial in nature or incidental
to such financial activity. Bank holding companies may engage in financial
activities without prior notice to the Federal Reserve Board if those activities
qualify under the new list in section 4(k) of the Act. However, notice must be
given to the Federal Reserve Board within 30 days after the FHC has commenced
one or more of the financial activities.
Under the FSA, a bank subject to various requirements is permitted to engage
through "financial subsidiaries" in certain financial activities permissible for
affiliates of FHC's. However, to be able to engage in such activities the bank
must continue to be well-capitalized and well-managed and receive at least a
"satisfactory" rating in its most recent Community Reinvestment Act examination.
The Corporation cannot be certain of the
30
effect of the foregoing recently enacted legislation on its business, although
there is likely to be consolidation among financial services institutions and
increased competition for the Corporation.
Privacy of Consumer Financial Information
- -----------------------------------------
The FSA also contains a provision designed to protect the privacy of each
consumer's financial information in a financial institution. Pursuant to the
requirements of the FSA, the financial institution regulators (the "regulators")
have effective November 13,2000, promulgated final regulations (the
"regulations") intended to better protect the privacy of a consumer's financial
information maintained in financial institutions. Compliance with the
regulations is optional until July 1, 2001.
The regulations are designed to prevent financial institutions, such as the
Bank, from disclosing a consumer's nonpublic personal information to third
parties that are not affiliated with the financial institution.
However, financial institutions can share a customer's personal information
or information about business and corporations with their affiliated companies.
The regulations also provide that financial institutions can disclose nonpublic
personal information to nonaffiliated third parties for marketing purposes but
the financial institution must provide a description of its privacy policies to
the consumers and give the consumers an opportunity to opt-out of such
disclosure and, thus, prevent disclosure by the financial institution of the
consumer's nonpublic personal information to nonaffiliated third parties.
31
The regulators, among other things, provide guidance concerning what are
"nonpublic personal information", "consumers", and "customers", as well as about
the required timing for notices to customers and the means by which customers
can exercise their rights to opt-out of disclosure of their personal
information.
These privacy regulations will affect how consumer's information is
transmitted through diversified financial companies and conveyed to outside
vendors. Although it is not possible at this time to assess the impact of the
privacy regulations on financial institutions or the Bank, the Bank does not
believe the privacy regulations will have a material adverse impact on its
operations in the near term. Nevertheless, the implementation of the privacy
regulations has and will continue to require significant effort by the staff for
the Bank and the Corporation.
Consumer Protection Rules - Sale of Insurance Products
In addition, as mandated by the FSA, the regulators have published consumer
protection rules (the "Rules") which apply to the retail sales practices,
solicitation, advertising or offers of insurance products, including annuities,
by depository institutions such as banks and their subsidiaries. The Rules are
proposed to be effective on April 1, 2001.
In very brief summary the Rules provide, that before the sale of insurance
or annuity products can be completed, disclosures must be made that state such
insurance products are not deposits or other obligations of or guaranteed by the
FDIC or any other agency of the United States, the Bank or its affiliates. In
the case of an insurance product, including an
32
annuity, that involves an investment risk, that there is an investment risk
involved with the product, including a possible loss of value.
The Rules also provide that the Bank may not condition an extension of
credit on the consumer's purchase of an insurance product or annuity from the
Bank or its affiliates or on the consumer's agreement not to obtain or a
prohibition on the consumer obtaining an insurance product or annuity from an
unaffiliated entity.
The Rules also requires formal acknowledgement from the consumer that such
disclosures have been received. In addition, to the extent practical, the Bank
must keep insurance and annuity sales activities physically separate from the
areas where retail sales are routinely accepted from the general public.
Government Policies and Future Legislation
- ------------------------------------------
As the enactment of the FSA confirms, from time to time, various proposals
are made in the United States Congress as well as Pennsylvania legislature and
by various bank regulatory authorities which would alter the powers of, and
place restrictions on, different types of bank organizations. Among current
proposals of significance to the Corporation or its subsidiaries are the
continued liberalization of the restrictions on the acquisitions of out-of-state
banks by bank holding companies, the expansion of the powers of banks and thrift
institutions, the liberalization of the restrictions upon the activities in
which bank holding companies may engage, the imposition of limitations on
interest rates and service charges, certain
33
consumer legislation and the requirement to provide certain basic banking
services. It is impossible to predict whether any of the proposals will be
adopted and the impact, if any, of such adoption on the business of the
Corporation or its subsidiaries, especially the Bank.
Subsidiaries of the Corporation
- -------------------------------
The non-bank subsidiaries of the Corporation are also subject to regulation
and examination by the Federal Reserve Board and must file periodic reports with
the Federal Reserve Board.
34
ITEM 2. PROPERTIES
-------------------
The headquarters of the Corporation and the main office of the Bank are
located in a three story stone front office building, consisting of
approximately 37,000 net usable square feet, located at the main intersection of
Bryn Mawr, Pennsylvania, at Lancaster Avenue and Bryn Mawr Avenue. The main
office of the Bank has been located in Bryn Mawr since its founding in 1889.
The Corporation acquired two additional properties during 1988, that is (i) a
property contiguous to the Bank's main office and (ii) a property at 10 Bryn
Mawr Avenue to house the Bank's Investment Management and Trust Division. The
first property which is contiguous to the Bank's main office, houses an expanded
drive-up facility and a meeting room and is subject to a mortgage as outlined in
Note 6 to the Corporation's financial statements, on page 37 of the 2000 Annual
Report. The second property became the location of the Bank's Investment
Management and Trust Division in mid-December, 1989. The real property owned by
the Corporation and the Bank, other than that contiguous to the Bank's main
office is free and clear of all liens and encumbrances. Below is a schedule
of all properties owned or leased by the Corporation or its subsidiaries.
The Bank:
- --------
Date Acquired
Current Banking Office Address or Opened
----------------------- ------- ---------------
Main Office and Principal 801 Lancaster Avenue 1889
Place of Business (owned) Bryn Mawr, PA 19010
Branch Office/Operations 330 E. Lancaster Avenue 1985
Center (owned) Wayne, PA 19087
Branch Office/Admin. 18 W. Eagle Road 1987
Office (owned) Havertown, PA 19083
35
Date Acquired
Current Banking Office Address or Opened
----------------------- ------- --------------
Branch Office (owned) 312 E. Lancaster Avenue 1979
Wynnewood, PA 19096
Branch Office (owned) N.E. Corner of Lancaster 1986
and Greenwood Avenues
Paoli, PA 19301
Branch Office (leased) One Tower Bridge (1) 1995
Through July 31, 2001 West Conshohocken, Pa 19428
Branch Office (leased) The Quadrangle (2) 1989
month to month basis 3300 Darby Road
Haverford, PA 19041-1095
Branch Office (leased) Waverly Heights, Ltd. (2) 1986
month to month basis Life Care Community
Gladwyne, PA 19035
Branch Office (leased) Martins Run (2) 1987
month to month basis Life Care Community
11 Martins Run
Media, PA 19063
Branch Office (leased) Bellingham (2) 1991
through October 31, 2001 1615 East Boot Road
West Chester, PA 19380
Branch Office (leased) Beaumont at Bryn Mawr (2) 1995
through April 16, 2001 Retirement Community
Bryn Mawr, PA 19010
Office Space (leased) Four Tower Bridge (3) 1998
through October 1, 2008 200 Barr Harbor Drive
(Lease terminated West Conshohocken, PA 19428
February 28,2001)
Office Space (leased) 2&6 Bryn Mawr Avenue (6) 1999
through March 1, 2028 Bryn Mawr, Pa. 19010
Branch Office (leased) White Horse Village (2) 2000
Through March 1, 2005 535 Gradyville Road
Newtown Square, PA.
36
The Corporation:
- ----------------
Date Acquired
Other Facilities Address or Opened
- ----------------- ------- --------------
Walk-in Lobby, Drive-up 813 Bryn Mawr Avenue (4) 1988
Windows, Meeting Room Bryn Mawr, PA 19010
(owned)
Office Building (owned) 10 Bryn Mawr Avenue (5) 1988
Bryn Mawr, PA 19010
Joseph W. Roskos, Inc.:
- -----------------------
Office Space (leased) 2011 Renaissance Blvd.(7) 1999
month-to-month basis Suite 200
King of Prussia, PA 19406
(1) This branch is on the lobby level of an office building and has been
established to primarily meet the needs of the occupants of the office
building and the surrounding community. There is an automatic teller
machine located within the facility. The lease is for 705 square feet
and expires on July 31, 2001.
(2) This branch office has been established primarily to meet the needs of
the residents of the Life Care Community in which it is located.
(3) This lease is for 1,250 square feet of office space to house the
Investment Management and Trust Division's Investment Counsellors of
Bryn Mawr ("ICBM"). ICBM was established in January 1996 to provide
investment advisory services to both existing and new clients of the
Investment Management and Trust Division. The lease was terminated
effective February 28, 2001.
(4) This property is contiguous to the Bank's main office, originally housed
a gas station, which was demolished. This property houses a walk-in
lobby, expanded drive-up facility and a meeting room, and was put in
service in August, 1990.
(5) This property became the new location of the Bank's Investment
Management Trust Division, in mid-December, 1989. The Corporation leased
the property to the prior owners on a month-to-month basis through June,
1989.
(6) This lease is for 24,800 square feet of office space to house the
support staff which was formerly located in the Bank's main office at
801 Lancaster Avenue. The support areas currently located at this
37
location are Audit, Human Resources, Marketing, Loan Operations and
Comptrollers.
(7) This lease is for 7,527 square feet of space to house the employees of
JWR&Co which is located in King of Prussia, Pennsylvania. The term of
the lease is for 66 months (5 years and six months) which commenced
February 1999.
38
ITEM 3. LEGAL PROCEEDINGS
--------------------------
Neither the Corporation nor any of its subsidiaries is a party to, nor is
any of their property the subject of, any material legal proceedings other than
ordinary routine litigation incident to their businesses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders which is required to be
disclosed pursuant to the instructions contained in the form for this report.
39
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
-------------------------------------------------
AND RELATED STOCKHOLDER MATTERS
-------------------------------
The information required by this Item 5 is incorporated by reference to the
information appearing under the caption "Price Range of Shares" on page 10 of
the Corporation's Annual Report to Shareholders for the year ended December 31,
2000.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
The information required by this Item 6 is incorporated by reference to the
information appearing under the caption "Selected Financial Data" on page 13 of
the Corporation's Annual Report to Shareholders for the year ended December 31,
2000.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
The information required by this Item 7 is incorporated by reference to the
information appearing under the caption "Management's Discussion and Analysis"
on pages 14 to 29 of the Corporation's Annual Report to Shareholders for the
year ended December 31, 2000.
40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
The financial statements and the auditor's report thereon and supplementary
data required by this Item 8 are incorporated by reference on pages 30 to 48 of
the Corporation's Annual Report to Shareholders for the year ended December 31,
2000.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
--------------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
There were no matters, which are required to be disclosed in this Item 9
pursuant to the instructions contained in the form for this report.
41
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The information with respect to Directors of the Corporation is incorporated
by reference on pages 6 through 9 of the definitive proxy statement of the
Corporation filed with the Securities and Exchange Commission pursuant to
Regulation 14A.
Executive Officers of the Corporation. Below is certain information with
-------------------------------------
respect to the executive officers of the Corporation and Bank as of March 1,
2001:
AGE AS OF OFFICE WITH THE
NAME MARCH 1, 2001 CORPORATION AND/OR BANK
---- ------------- -----------------------
Robert L. Stevens 63 Chairman and Director of
Corporation and Bank
Frederick C. Peters II 51 President and Chief
Executive Officer and
Director of Corporation and
Bank
Joseph W. Rebl 56 Treasurer of Corporation
and Executive Vice
President, Treasurer &
Chief Financial Officer of
Bank
Robert J. Ricciardi 52 Secretary of Corporation
and Executive Vice
President and Secretary of
the Bank, Chief Credit
Policy Officer
Thomas M. Petro 42 Executive Vice President of
Bank-Investment Management
42
AGE AS OF OFFICE WITH THE
NAME MARCH 1, 2001 CORPORATION AND/OR BANK
---- ------------- -----------------------
Joseph G. Keefer 42 Executive Vice President
and Chief Lending Officer
Alison E. Gers 43 Executive Vice President-
Administration and
Operations
Mr. Stevens was employed by the Bank in 1960 and elected an Assistant
Treasurer in 1962. He was elected an Executive Vice President with
responsibility for lending functions in 1968. He was elected a director in 1974
and was elected President and Chief Executive Officer of the Bank, effective
January 1, 1980. Upon the formation of the Corporation in 1986, he was
appointed the President and Chief Executive Officer and a director. In
December, 1995, Mr. Stevens was appointed Chairman, President and Chief
Executive Officer of the Bank and Corporation. In January 2001, Mr. Stevens
resigned as President and Chief Executive Officer of the Corporation and Bank.
Mr. Stevens will remain as Chairman of the Corporation and Bank.
Mr. Peters was elected President and Chief Executive Officer and a Director
of the Corporation and the Bank on January 22, 2001. Prior to that, Mr. Peters
was founder, President and Chief Executive Officer of the 1/st/ Main Line Bank,
a division of National Penn Bank, from May 1995 to January 2001. From 1985 to
1995, Mr. Peters was the founding President and Chief Executive Officer of
National Bank of the Main Line. Prior to 1985, Mr. Peters was employed by
Industrial Valley Bank as a Regional Vice President in a lending capacity.
43
Mr. Rebl was employed by the Bank and elected its Comptroller in 1981. He
was elected Vice President and Comptroller in 1983 and Senior Vice President in
1987. Upon the formation of the Corporation in 1986, Mr. Rebl was elected
Treasurer of the Corporation. In 1992, Mr. Rebl was designated the Bank's
Senior Vice President-Finance. In 1994, Mr. Rebl was designated Treasurer of
the Bank. In 1999, Mr. Rebl was designated Chief Financial Officer of the Bank.
In February 2001, Mr. Rebl was designated Executive Vice President of the Bank.
Mr. Ricciardi was employed by the Bank in 1971 and elected an Assistant
Treasurer in 1973. Mr. Ricciardi was elected an Assistant Vice President of the
Bank in 1976 and a Vice President in 1981. In 1989, Mr. Ricciardi was elected
Senior Vice President of Real Estate Lending. In November, 1993, he was elected
Executive Vice President and assumed responsibility for the Bank's Community
Banking Division. In November 1997, Mr. Ricciardi was named the Bank's Chief
Credit Policy Officer and relinquished responsibility for the Community Banking
Division to Thomas M. Petro. In January 2001, Mr. Ricciardi was named Secretary
of the Corporation and the Bank.
Mr. Petro was appointed a Vice President of the Bank in January 1992 and
Senior Vice President-Information Management in November 1993. In August 1996,
Mr. Petro assumed responsibility for the Bank's marketing function,
relinquishing responsibility for the Bank's banking operations and information
systems. In November 1997, he assumed responsibility for the Bank's Community
Banking Division from Mr. Ricciardi. In January 1999, Mr. Petro was appointed
to the additional role of President and Chief Executive Officer of Bryn Mawr
Brokerage Company, Inc., a newly formed subsidiary of the Corporation. In
December 1999, Mr. Petro assumed responsibility for the Investment Division
44
relinquishing responsibility for the Bank's Community Banking Division. In
January 2000, Mr. Petro was appointed to the additional role of Chairman of CDC
Capital Management, Inc. In February 2001, Mr. Petro was designated Executive
Vice President of the Bank.
Mr. Keefer was employed by the Bank as Vice President in March 1991. He was
promoted to Senior Vice President-Commercial Lending in July, 1994 and was made
the Bank's Chief Lending Officer in December 1997. In February 2001, Mr. Keefer
was designated an Executive Vice President of the Bank. Prior to his employment
by the Bank, Mr. Keefer was employed by First Pennsylvania Bank, NA from June
1980 until March 1991, where he was a Vice President in the commercial lending
division.
Ms. Gers was employed by the Bank as Senior Vice President-Marketing in May
1998. In February 2001, Ms. Gers was designated Executive Vice President of the
Bank, having responsibility for marketing, administrative services and
operations. Prior to her employment by the Bank, she was Executive Vice
President of CoreStates Bank, NA from July 1995 until May 1998, having
responsibility for retail and small business marketing, advertising and product
development. From February 1988 until August 1992, Ms. Gers was Senior Vice
President of Home Unity Savings Bank, having responsibility for retail banking.
From January 1986 to October 1987, she was Marketing Director for Colonial Penn
Group. From February 1983 until January 1986, she was Product Manager for third
party life and health insurance products for National Liberty Marketing.
None of the above executive officers has any family relationship with any
other executive officer or with any director of the Corporation or Bank.
45
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The information required by this Item 11 is incorporated by reference on
pages 9 through 19 of the definitive proxy statement of the Corporation, filed
with the Securities and Exchange Commission pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
--------------------------------------------------
OWNERS AND MANAGEMENT
---------------------
The information required by this Item 12 is incorporated by reference on
page 2, and pages 6 through 8 of the Corporation's definitive proxy statement,
filed with the Securities and Exchange Commission pursuant to Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
There were no relationships or transactions required to be disclosed in
this Item 13 pursuant to the instructions contained in the form for this report,
as discussed on page 16 of the Corporation's definitive proxy statement, filed
with the Securities and Exchange Commission pursuant to Regulation 14A.
46
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------
AND REPORTS ON FORM 8-K
-----------------------
(a) The following exhibits are filed as a part of this report.
EXHIBIT TABLE
- -------------
3 - Articles of Incorporation and By-Laws
- -----------------------------------------
(A) Articles of Incorporation, effective August 8, 1986, are incorporated
by reference to Form S-4 of the Registrant, No. 33-9001.
(B) By-Laws of the Registrant, as amended July 20, 1990, is incorporated
by reference to the Corporation's 10-K, filed with the Securities and
Exchange Commission on March 26, 1991.
4 - Instruments defining the rights of security holders
- -------------------------------------------------------
Articles of Incorporation and By-Laws: See Item 3(A) & (B) above.
10 - Material Contracts
- -----------------------
(A) Agreement dated December 31, 1990, between The Bryn Mawr Trust Company and
Mellon Bank, N.A. is incorporated by reference to the Corporation's 10-K,
filed with the Securities and Exchange Commission on March 26, 1991.
(B) Mortgage dated December 16, 1988 between Fidelity Mutual Life Insurance
Company and Bryn Mawr Bank Corporation is incorporated by reference to the
Corporation's 10-K, filed with the Securities and Exchange Commission on
March 28, 1990.
(C) Mortgage dated May 18, 1988 between John A. Sparta and Helen M. Sparta of
the one part and Bryn Mawr Bank Corporation of the other part, is
incorporated by reference to the Corporation's 10-K, filed
47
with the Securities and Exchange Commissions on March 28, 1990.
(D) Agreement dated December 20, 1990 between Bryn Mawr Bank Corporation and
Profit Research by reference to the Corporation's and Exchange Commission
on Consulting, Inc., is incorporated 10-K, filed with the Securities March
28, 1990.
(E) Letter of Understanding dated December 20, 1990, between Bryn Mawr Bank
Corporation and Profit incorporated by reference to the Securities and
Exchange Research Group, Inc., is Corporation's 10-K, filed with Commission
on March 28, 1990.
(F) License Agreement dated December 20, 1990, between Profit Research
Consulting, Inc. and Profit Research Group, Inc., is incorporated by
reference to the Corporation's 10-K, filed with the Securities and Exchange
Commission on March 20, 1990.
(G) The Bryn Mawr Bank Corporation Amended and Restated 1986 Stock Option and
Stock Appreciation Plan, is hereby incorporated by reference to the
Corporation's Proxy Statement dated March 14, 1994 and filed with the
Commission as Appendix A to the Proxy Statement on March 15, 1994.
(H) License Agreement dated December 30, 1994, between Bryn Mawr Bank
Corporation and FIserv Cir, Inc. is incorporated by reference to the
Corporation's 10-K, filed with the Securities and Exchange Commission on
March 31, 1995.
(I) The Bryn Mawr Bank Corporation Non-Employee Directors Stock Option Plan, is
hereby incorporated by reference to the Corporation's Proxy Statement
dated March 10, 1995 and filed with the Commission as Appendix A to the
Proxy Statement on March 10, 1995.
(J) The Bryn Mawr Bank Corporation in 1998 Stock Option Plan, is hereby
incorporated by reference to the Corporation's Proxy Statement
48
dated March 2, 1998 and filed with the Securities and Exchange Commission
as Exhibit A to the Proxy Statement.
(K) Agreement dated May 2, 1997, between The Bryn Mawr Trust Company and
Marshall services to incorporated Securities and Ilsley the Bank's by
reference and Corporation, Investment to the Exchange to provide Management
Corporation's Commission data processing and Trust 10-K filed on March
Division is with the 30, 1998.
(L) Agreement dated January 1, 1999 between Bryn Mawr Brokerage Company, Inc.
brokerage reference to and UVEST Financial Services Group, Inc., to provide
brokerage support services to BM Brokerage is incorporated by reference to
the Corporation's Form 10-K filed with the Securities and Exchange
Commission on March 30, 1999.
(M) Lease dated March 1, 1999 between The Bryn Mawr Trust Company and Anthony
J. Marcozzi and The Real Viking, Inc. for the property and the buildings
known as 2 and 6 Bryn Mawr Avenue. The term of this lease is for an initial
period of twenty-nine years with the option to extend for one-ten year
period with the same terms and conditions as the initial lease. The lease
is hereby incorporated by reference to the Corporation's Form 10-K, filed
with the Securities and Exchange Commission on March 30, 2000
(N) Employment agreement dated January 11, 2001 between Bryn Mawr Bank
Corporation and Frederick C. Peters II is incorporated by reference into
this filing of the Corporation's Form 10-K.
(O) The Bryn Mawr Bank Corporation 2001 Stock Option Plan, is hereby
incorporated by reference to the Corporation's Proxy Statement dated March
8, 2001 and filed with the Securities and Exchange Commission on March 8,
2001 as Appendix B to the Proxy Statement.
13 - Annual Report to Security Holders
- ---------------------------------------
The Registrant's 2000 Annual Report to Shareholders is attached herewith as
Exhibit 13. Such Annual Report, except for the portions thereof that are
expressly incorporated by reference herein, is only
49
furnished for the information of the Securities and Exchange Commission and is
not deemed to be filed as a part of this Form 10-K.
21 - Subsidiaries of the Registrant
- -----------------------------------
Name State of Incorporation
---- ----------------------
The Bryn Mawr Trust Company Pennsylvania
Bryn Mawr Financial Services, Inc. Pennsylvania
Tax Counsellors of Bryn Mawr, Inc. Pennsylvania
Insurance Counsellors of Bryn Mawr, Inc. Pennsylvania
Bryn Mawr Brokerage Co., Inc. Pennsylvania
Joseph W. Roskos Co., Inc. Pennsylvania
CDC Capital Management, Inc. Pennsylvania
Bryn Mawr Finance Delaware
23 - Consent of Independent Accountants
- ---------------------------------------
Consent of Independent Accountants filed herewith as Exhibit 23.
99 - Portions of the Proxy Statement
- ------------------------------------
Excerpts from the Registrant's Proxy Statement for its 2000 Annual
Meeting to be held on April 17, 2001, were filed with the Securities
and Exchange Commission on March 8, 2000 as Exhibit 99.
(b) A Form 8-K was filed by the Registrant during the quarter ended
March 31, 2001 announcing the appointment of Frederick C. "Ted"
Peters as President and Chief Executive Officer of Bryn
Mawr Bank Corporation and The Bryn Mawr Trust Company.
50
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
-----------------------------------------------------
The report of Independent Certified Public Accountants as pertaining to the
Consolidated Financial Statements of Bryn Mawr Bank Corporation and related
notes is incorporated by reference to page 48 of the Corporation's 2000 Annual
Report to Shareholders.
Consolidated Financial Statements and related notes are incorporated by
reference to the Corporation's 2000 Annual Report to Shareholders, and may be
found on the pages of said Report as indicated in the parenthesis:
Consolidated Balance Sheets, December 31, 2000 and 1999 (page 30)
Consolidated Statements of Income for the years ended December 31, 2000,
1999 and 1998 (page 31)
Consolidated Statements of Comprehensive Income for the years ended
December 31, 2000, 1999, and 1998 (page 33)
Consolidated Statements of Changes in Shareholders' Equity for the years
ended December 31, 2000, 1999 and 1998 (page 33)
Consolidated Statements of Cash Flows for the years ended December 31,
2000, 1999 and 1998 (page 32)
Notes to Financial Statements (pages 34 to 47)
Supplementary Data:
Quarterly Results of Operations are incorporated by reference to the information
under the caption "Selected Quarterly Financial Data (Unaudited)", in Note 18 on
page 45 of the Corporation's Annual Report to Shareholders for the fiscal years
ended December 31, 2000 and 1999.
Financial Statement Schedules are omitted because of the absence of the
conditions under which they are required or because the information called for
is included in the Consolidated Financial Statements or notes thereto.
Exhibits:
For information regarding exhibits, including those incorporated by reference,
see pages 47 through 50 of this report.
51
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Corporation and
in the capacities and on the date indicated.
NAME TITLE DATE
---- ----- ----
/s/ Robert L. Stevens
_______________________ Chairman, and March 28, 2001
Robert L. Stevens Director
/s/ Frederick C. Peters II
_______________________ President March 28, 2001
Frederick C. Peters II and Chief Executive
Officer (Principal
Executive Officer)
and Director
/s/ Joseph W. Rebl
_______________________ Treasurer (Principal March 28, 2001
Joseph W. Rebl Financial and Principal
Accounting Officer)
/s/ Richard B. Cuff
_______________________ Director March 28, 2001
Richard B. Cuff
________________________ Director March , 2001
Warren W. Deakins
________________________ Director March , 2001
John D. Firestone
________________________ Director March , 2001
William Harral, III
________________________ Director March , 2001
Wendell F. Holland
52
NAME TITLE DATE
---- ----- ----
/s/ Phyllis M. Shea
________________________ Director March 28, 2001
Phyllis M. Shea
_________________________ Director March , 2001
B. Loyall Taylor, Jr.
/s/ Nancy J. Vickers
_________________________ Director March 28, 2001
Nancy J. Vickers
/s/ Thomas A. Williams
_________________________ Director March 28, 2001
Thomas A. Williams
53
Commission File No. 0-15261
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________________________________________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Year Ended December 31, 2000
____________________________________________________________
B R Y N M A W R B A N K C O R P O R A T I O N
E X H I B I T S
54