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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, 1997 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
- --------------------------------------------- -------------
(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
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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
$106,348,081 on March 13, 1998.
As of March 13, 1998, 2,170,369 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, 1997,
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 41 through 44. There are 128 pages in this report.
PART I
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ITEM 1. BUSINESS
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GENERAL
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BRYN MAWR BANK CORPORATION
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Bryn Mawr Bank Corporation (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 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. TCBM is a wholly owned subsidiary
1
of the Corporation. TCBM offers tax planning services to clients in the general
market area 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
causality, property and allied insurance lines, as well as life insurance,
annuities, medical insurance and accident and health insurance for groups and
individuals.
OPERATIONS OF BRYN MAWR FINANCIAL SERVICES, INC. AND PROFIT RESEARCH CONSULTING,
INC. ARE DISCONTINUED.
Bryn Mawr Financial Services, Inc. ("BMFS") and Profit Research Consulting
Inc. ("PRC") were formed to provide counter-cyclical fee income to the
Corporation of a different nature than the predominately interest income earned
by the Bank. During 1992 the Corporation's management evaluated the financial
performance and the current and estimated future additional capital requirements
of these entities. Based on that evaluation, the Corporation's management
determined to dissolve PRC and discontinue the operations of BMFS. However, the
Corporation may again commence the operations of BMFS at a future time.
SUMMARY
- -------
The Corporation will concentrate its resources to expand the Bank's market
penetration by providing superior banking services, including deposit, lending
and trust services, as well as other financial services, including tax planning
services through TCBM and insurance sales and services through Insurance
Counsellors, to its existing customers
2
and obtain additional customers in its market in Montgomery, Delaware and
Chester counties of Pennsylvania and to successfully address the other
challenges in the Bank's ever changing competitive market.
3
OPERATIONS
----------
BRYN MAWR BANK CORPORATION
- --------------------------
The Corporation had no active staff as of December 31, 1997 and conducted
no activities other than those activities through its subsidiaries, the Bank and
TCBM.
A complete list of directors and officers of the Corporation, as of March
2, 1998 is incorporated by reference to page 11 and 12 of the Corporation's
Annual Report to Shareholders for the year ended December 31, 1997.
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 trust
services including estate administration, investment advisory services, pension
and profit sharing administration and personal financial planning, including tax
preparation. As of December 31, 1997, the market value of assets administered
by the Bank's Investment Management and Trust Division was $1,666,472,000. 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 1997, residential mortgage interest rates decreased enough to make
refinancing attractive to borrowers. In 1996, residential mortgage interest
rates increased from 1995 levels causing a reduction in
4
refinancing activity, compared to similar activity in 1995. As of March 2, 1998,
the Bank had no commissioned mortgage originators.
The Bank originated and sold $75,874,000 in residential mortgages to the
secondary market in 1997 compared to $55,276,000 originated and sold in 1996.
Net gains and loan fee income on such transactions amounted to $758,000 in 1997
compared to $615,000 in 1996. During 1995 the Bank originated and sold
$67,826,000 in residential mortgage loans, generating $918,000 in related net
gains and loan fee income.
The operations and data processing support for the banking services
provided by the Bank were supplied by Financial Institution Outsourcing, a
division of Mellon Bank, N. A. under a five-year servicing contract, which
expired on December 31, 1995 and which is incorporated by reference into the
Corporation's 10-K, filed with the Securities and Exchange Commission (the
"Commission") on March 26, 1991. In November 1993, Mellon Bank sold its
outsourcing division to FISERV, Inc., an outsourcing data processing company
located in Brookfield, IL. 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. This agreement is incorporated by
reference into the Corporation's 10-K, filed with the Commission on March 31,
1995.
At December 31, 1997, the Bank had 198 full time and 44 part time
employees, including 95 officers, equalling 220 full time equivalent staff.
TAX COUNSELLORS OF BRYN MAWR, INC.
- ----------------------------------
TCBM employs two CPAs (the "Tax Professionals"), having significant tax
planning and preparation background and formerly employed by a "Big Six"
accounting firm. The Tax professionals, on behalf of TCBM, provide tax
planning and consulting services to both TCBM's and the Bank's
5
customer base. As a part of the formation of TCBM, a profit sharing agreement
was developed that allows the Tax Professionals to retain the net revenues
generated by existing clients brought to TCBM.
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.
Insurance Counsellors employs two licensed insurance agents and supporting
staff, which have significant expertise about the sale and servicing of
insurance products. Insurance Counsellors' agents and staff provide a broad
scope of insurance sales and services to the Bank's clients and others.
Insurance Counsellors has entered into an agreement with The Simkiss Agency,
Inc., a duly licensed insurance agency to facilitate the offering of insurance
products by Insurance Counsellors, pursuant to which The Simkiss Agency, Inc.
will provide insurance support services, such as billing and collection of
premiums, monthly reports concerning insurance activities and customer policy
services to Insurance Counsellors and their clients.
6
SOURCES OF THE CORPORATION'S REVENUE
------------------------------------
The following table shows the percentage of consolidated revenues by major
source generated by the Bank from the activities indicated below.
Year Ended December 31,
----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Commercial Loans 17% 18% 16% 14% 12%
Mortgage and Construction Loans 15 16 16 15 16
Consumer Loans 25 25 25 25 24
Home Equity/Line of Credit 2 3 3 3 2
Securities 6 7 10 13 12
Federal Funds Sold 3 1 2 1 1
--- --- --- -- ---
Total Interest Income 68 70 72 71 67
Trust Services 21 17 17 16 15
Other Income * 11 13 11 13 18
--- --- --- --- ---
Total Revenues * 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
* Revenues were generated by the Bank and TCBM in 1997. Revenues generated by
TCBM aggregated .4% in 1997. There were no revenues generated by BMFS and PRC
during 1997, 1996, 1995, 1994 or 1993. All revenues were generated by the Bank
during 1996, 1995, 1994 and 1993.
7
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, 1997, as follows:
Disclosure Required by Industry Reference to the Corporation's
- ------------------------------- ------------------------------
Guide 3 1997 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 5)
B. Rate/Volume Differentials . . . . . Rate/Volume Analyses (page 6)
C. Non-Accrual Policy. . . . . . . . . Loan Portfolio and Non-
performing Asset Analysis
(page 10)
D. Interest Rate Sensitivity
Analysis. . . . . . . . . . . . . . Interest Rate Sensitivity
Analysis (page 13)
II. Investment Portfolio
A. Book Values . . . . . . . . . . . . Notes to Consolidated Financial
Statements, Note 3 (page 23)
B. Maturities. . . . . . . . . . . . . Notes to Consolidated Financial
Statements, Note 3 (page 23)
III. Loan Portfolio
A. Types of Loans. . . . . . . . . . . Loan Portfolio (page 10)
B. Maturities and Sensitivity to
changes in Interest Rates . . . . . Loan Portfolio - Maturity
distribution (page 10)
Interest Rate Sensitivity
Analysis (page 13)
C. Non-Performing assets . . . . . . . Non-Performing Assets (page 13)
8
Disclosure Required by Industry Reference to the Corporation's
- ------------------------------- ------------------------------
Guide 3 1997 Annual Report
- ------- ------------------
(Financial Section)
-------------------
IV. Summary of Loan Loss Experience
A. Analysis of Loss Experience . . . Allowance for Possible Loan
Losses (page 7)
B. Allocation of Allowance for
Loan Losses . . . . . . . . . . . Allocation of the Allowance
for Possible Loan Losses
(page 7)
V. Deposits
A. Average Deposits . . . . . . . . . Average Daily Balances of
Deposits (Page 11)
B. Maturity tables and outstanding
balances, deposits $100,000 or
more . . . . . . . . . . . . . . . Maturity of Certificates of
Deposit of $100,000 or
Greater (page 12)
VI. Return on Equity and Assets . . . . . . Selected Financial Data
(page 1)
9
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 no 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 four full service
branch offices located in Havertown, Wayne, Wynnewood and Paoli, Pennsylvania.
In addition, there are five limited service facilities located in life care
communities in Waverly Heights, Martins Run, the Quadrangle, Beaumont at Bryn
Mawr and Bellingham and two limited service branches located in Radnor Corporate
Center and One Tower Bridge in West Conshohocken. The Bank's Investment
Management and Trust Division leases facilities at Two Tower Bridge. There is
also an automatic teller machine location at Villanova University. All
facilities are located in either Montgomery, Chester or Delaware Counties.
The banking business is highly competitive and the Bank competes not only
with other commercial banks but it also experiences competition from savings and
loan associations 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
10
permits TCBM to provide its services anywhere in the United States. TCBM leases
office space in Ardmore Pennsylvania. TCBM's primary competition is from
accounting and tax preparation firms.
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 of the Bank, located at 801 Lancaster
Avenue, Bryn Mawr, Pennsylvania. Insurance Counsellors' primary competition is
from insurance agencies and insurance agents.
11
SUPERVISION AND REGULATION
--------------------------
Bank holding companies, such as the Corporation, and its subsidiaries,
including the Bank, are extensively regulated 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 deter mine to be closely
related to banking. The Corporation and its 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.
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
12
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 or the bank is failing. 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 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.
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
13
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. These activities include operating a mortgage, consumer finance, credit
card or factoring company, servicing and brokering loans and other extensions of
credit, providing certain investment and financial consulting advice, leasing
personal property, providing certain bookkeeping or financially oriented data
processing services, acting as an insurance agent for certain types of credit-
related insurance and discount brokerage.
The Act further provides that the Federal Reserve Board shall not approve any
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
14
company or any other subsidiaries of its bank holding company or on the
condition that the 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.
15
The Corporation is a legal entity separate and distinct from its subsidiary
bank and its nonbank subsidiary. Accordingly, the right of the Corporation, and
consequently the right of creditors and shareholders of the Corporation, to
participate in any distribution of the assets or earnings of any subsidiary is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Corporation in its capacity as creditor may be
recognized. The principal source of the Corporation's revenue and cash flow is
dividends from its subsidiary bank. There are legal limitations on the extent
to which its subsidiary bank can finance or otherwise supply funds to the
Corporation and its nonbank subsidiary.
The Act currently permits bank holding companies from any state to acquire
banks and bank holding companies located in any other state, subject to certain
conditions, including certain nationwide and state-imposed concentration limits.
Effective June 1, 1997, the Corporation's subsidiary Bank will have the ability,
subject to certain restrictions, including state opt-out provisions, to
consolidate with one another or to acquire by acquisition or merger branches
outside their home states. States may affirmatively opt-in to permit these
transactions earlier, which Delaware, New Jersey and Pennsylvania, among other
states, have done. The establishment of new interstate branches also will be
possible in those states with laws that expressly permit it. Interstate
branches will be subject to certain laws of the states in which they are
located. Competition may increase further as banks branch across state lines
and enter new markets.
16
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. 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 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.
17
Federal Deposit Insurance Corporation Improvement Act of 1991
-------------------------------------------------------------
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
is 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. The
FDICIA also requires the FDIC to establish a risk-based assessment system for
the deposit insurance funds. In addition, the FDICIA establishes capital
categories, such as, "well-capitalized", adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized. Under the guidelines currently issued by the regulators, the
Bank is 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
18
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 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
19
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 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
20
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, became a member of the Federal Reserve System in May 1995 and is
regulated and supervised by the Pennsylvania Department of Banking (the
"Department of Banking") and the Federal Reserve Board. 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.
Department of Banking and Federal Reserve Board Regulations
- -----------------------------------------------------------
The Bank's operations are subject to certain requirements and restrictions
under state and federal 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 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 a
member bank of the Federal Reserve System, the Bank must obtain the prior
approval of the Department of Banking and the Federal Reserve
21
authorities 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 requirements provided by state
law. The Pennsylvania Banking Code permits 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 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. Under existing
regulations the Bank, as well capitalized financial institution, in 1997 paid
aggregate FDIC insurance premiums of $36,000.
22
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.
Deposit Insurance Assessment
As a "well capitalized" financial institution the Bank was not assessed any
BIF deposit premiums in 1996 by the FDIC. The Deposit Insurance Act of 1996
(the "Deposit Act") was enacted on September 30, 1996 to recapitalize the SAIF
and requires banks, such as the Bank, which are well capitalized and insured by
the BIF to share the burden of repaying certain outstanding bonds issued by SAIF
in the late 1980s to address the savings and loan crisis. The Deposit Act
mandates that the Bank, and the other BIF insured financial institutions,
starting in 1997 must pay as a special deposit assessment of 4.2 basis points of
its deposits until 2000 and then a special deposit insurance assessment of 2.4
basis points of its deposits from 2000 until 2017. The Bank estimates that its
BIF insurance premium for 1997 will be $40,000.
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
23
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 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
24
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 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, similar to 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
25
computed for the Corporation, adding an allowable portion of the loan loss
reserve to capital. Both the Tier I and Tier II ratios of the Corporation are in
excess of those minimum capital ratios required as of December 31, 1997 by the
regulators. 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.
Governmental Policies and Future Legislation
--------------------------------------------
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
26
proposals of significance to the Corporation or its subsidiaries are the
continued liberalization of the restrictions on the acquisition 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 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 and Bank
- ----------------------------------------
Corporation Subsidiaries
BMFS is an inactive wholly owned subsidiary of the Corporation, but is
subject to regulation and examination by the Federal Reserve Board. the Federal
Reserve Board.
TCBM is a wholly owned subsidiary of the Corporation, which provides tax
planning and tax consulting services, and is subject to regulation and
inspection by the Federal Reserve Board. Please refer to pages 4 and 5 of this
Form 10-K for additional information about TCBM.
Bank Subsidiary
Insurance Counsellors is a wholly owned subsidiary of the Bank, which
sells insurance products, including all facets of casualty, property and allied
insurance lines, as well as life insurance, annuities, medical insurance,
accident and health insurance for groups and individuals and is subject to
regulation and examination by the
27
Pennsylvania Insurance Department and the Pennsylvania Department of Banking.
Please refer to page 5 of this Form 10-K for additional information about
Insurance Counsellors.
28
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 new meeting room and was subject to a mortgage as
outlined in Note 6 to the Corporation's financial statements, on page 31 of its
1996 Annual Report. The second property became the location of the Bank's
Investment Management and Trust Division in mid-December, 1989. A mortgage loan
on the property at 10 Bryn Mawr Avenue, Bryn Mawr, Pennsylvania was paid off in
March, 1997. 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
29
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) The Quadrangle (1) 1989
month to month basis 3300 Darby Road
Haverford, PA 19041-1095
Branch Office (leased) Waverly Heights, Ltd. (1) 1986
month to month basis Life Care Community
Gladwyne, PA 19035
Branch Office (leased) Martins Run (1) 1987
month to month basis Life Care Community
11 Martins Run
Media, PA 19063
Branch Office (leased) Bellingham (1) 1991
through October 31, 1998 1615 East Boot Road
West Chester, PA 19380
Temporary Agency Remote Villanova University 1969
Facility Campus (2)
Villanova, PA 19085
Branch Office (leased) Radnor Corporate Center (3) 1990
through December 18, 1998 Three Radnor Corporate Center
Radnor, PA 19087
Branch Office (leased) Beaumont at Bryn Mawr (1) 1995
through April 16, 1998 Retirement Community
Bryn Mawr, PA 19010
Branch Office (leased) One Tower Bridge (6) 1995
through July 31, 1998 100 Front Street
West Conshohocken, PA 19428
Office Space (leased) Two Tower Bridge (7) 1996
through January 15, 1999 One Fayette Street
Conshohocken, PA 19428
30
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
Tax Counsellors of Bryn Mawr, Inc.:
- -------------------------------------
Office Space (leased) 90 Cricket Avenue (8) 1995
month-to-month basis Ardmore, PA 19010
(1) This branch office has been established primarily to meet the needs
of the residents of the Life Care Community in which it is located.
(2) This temporary agency remote facility consists of two automatic
teller machines primarily for the use of staff and students.
(3) This limited service branch is on the lobby level of a building located
in a five building office complex and has been established primarily to
meet the needs of the occupants of this office building complex. The
lease was renegotiated in 1995 and the square footage was reduced to 551
square feet. The lease expires on December 18, 1998.
(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 new meeting room, put in service
in August, 1990.
(5) This property became the new location of the Bank's 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 limited service 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. There is an automatic teller machine located within
the facility. The lease is for 380 square feet and expires on August 1,
1998.
(7) 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 expires on January 15, 1999.
(8) This lease is for 350 square feet of office space to house TCBM's staff.
The lease is on a month-to-month basis.
31
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 pro ceedings other than
ordinary routine litigation incident to their business.
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.
32
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 32 of
the Financial Section of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1997.
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 1 of
the Financial Section of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1997.
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 of
Financial Condition and Result of Operations" on pages 2 to 16 of the Financial
Section of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1997.
33
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 17 to 31 of
the Financial Section of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1997.
34
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.
35
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 2,
1998:
AGE AS OF OFFICE WITH THE
NAME MARCH 2, 1998 CORPORATION AND/OR BANK
---- ------------- -----------------------
Robert L. Stevens 60 Chairman, President and
Chief Executive Officer
Director of Corporation
and Bank
Samuel C. Wasson, Jr. 59 Secretary and Director of
Corporation and Bank and
Vice Chairman of Bank
Joseph W. Rebl 53 Treasurer of Corporation
and Senior Vice
President- Finance and
Treasurer of Bank
Robert J. Ricciardi 49 Vice President of the
Corporation and Executive
Vice President and Chief
Credit Policy Officer
Paul M. Kistler, Jr. 61 Senior Vice President of
Bank- Banking Operations,
Human Resources,
Facilities and
Information Systems
Thomas M. Petro 39 Senior Vice President of
Bank- Community Banking
36
AGE AS OF OFFICE WITH THE
NAME MARCH 2, 1998 CORPORATION AND/OR BANK
---- ------------- -----------------------
Peter H. Havens 43 Executive Vice President
of Bank- Investment
Management and Trust and
Director of Bank and
Corporation
Leo M. Stenson 47 Senior Vice President and
Auditor of Bank
Joseph G. Keefer 39 Senior Vice President
and Chief Lending Officer
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.
Mr. Wasson was employed by the Bank in 1966. Later that year he was
elected an Assistant Treasurer. He was elected a Vice President in 1969 and in
1980 was elected Treasurer of the Bank. In 1981, Mr. Wasson was elected a
Senior Vice President and elected a director of the Bank and upon the formation
of the Corporation in 1986, he was elected a Vice President and director of the
Corporation. In January, 1992, he was elected Secretary of the Corporation and
Bank and relinquished the title of Vice President of the Corporation. In
November, 1993, he was elected Executive Vice President of the Bank. In
November 1997, he was elected Vice Chairman and assumed responsibility for the
day-to-day operation of the Bank.
37
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.
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.
Mr. Kistler was retained by the Bank as a human resources consultant in
November 1992 and was appointed Senior Vice President of Human Resources,
Facilities in January 1993, in April 1993 assumed responsibility for the Bank's
marketing function and in August, 1996, Mr. Kistler assumed responsibility for
the information systems and banking operations and turned over responsibility
for the Bank's marketing function to Mr. Petro. From 1976 to 1992, Mr. Kistler
was employed by Philadelphia National Bank (now merged into CoreStates Bank,
N.A.) in various capacities including Senior Vice President- Human Resource
Manager, Secretary of the Board of Directors, CoreStates Financial Corporation
as Manager and CoreSearch as a consultant.
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 and
turned over responsibility for the Bank's banking operations and information
systems to Mr. Kistler. In November, 1997, he assumed responsibility for the
38
Bank's Community Banking Division from Mr. Ricciardi. Mr. Petro was the
President of PRC from its formation in June 1990 until it ceased operations in
December, 1992. Formerly, since August 1986, Mr. Petro was Assistant Vice
President and Manager - Banking Group of Management Science Associates, Inc.
From November 1981 to August 1986, Mr. Petro was Product Manager for Mellon
Bank's DataCenter.
Mr. Havens was employed by the Bank on May 1, 1995 as the Executive Vice
President in charge of the Investment Management and Trust Division of the Bank.
Prior to joining the Bank, Mr. Havens was manager of Kewanee Enterprises, a
private investment company since April of 1982. Mr. Havens has been a director
of the Bank and the Corporation since 1986.
Mr. Stenson was employed by the Bank as Auditor in 1982, was elected Vice
President and Auditor in 1987 and was formerly an Assistant Vice President of
Western Savings Bank. In December, 1996, Mr. Stenson was elected Senior Vice
President and Auditor.
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. Prior to his employment
by the Bank, Mr. Keefer was employed by First Pennsylvania Bank, NA from June,
1980 until March, 1991, when he was a Vice President in the commercial lending
division.
None of the above executive officers has any family relationship with any
other executive officer or with any director of the Corporation or Bank.
39
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The information required by this Item 11 is incorporated by reference on
pages 8 through 18 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.
40
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 incorpo rated
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 with the
Securities and Exchange Commissions on March 28, 1990.
(D) Agreement dated December 20, 1990 between Bryn Mawr Bank Corporation
and Profit Research Consulting, Inc., is incorporated
41
by reference to the Corporation's 10-K, filed with the Securities and
Exchange Commissions on March 28, 1990.
(E) Letter of Understanding dated December 20, 1990, between Bryn Mawr
Bank Corporation and Profit Research Group, Inc., is incorporated by
reference to the Corporation's 10-K, filed with the Securities and
Exchange Commissions 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 Commissions on March 28, 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 1998 Stock Option Plan, is hereby
incorporated by reference to the Corporation's Proxy Statement dated
March 2, 1998 and filed with the Commission as Exhibit A to the Proxy
Statement.
(K) Agreement dated May 2, 1997, between The Bryn Mawr Trust Company and
Marshall and Ilsley Corporation, to provide data processing services
to the Bank's Investment Management and Trust Division is incorporated
by reference into this filing of the Corporation's Form 10-K.
42
13. - Annual Report to Security Holders
---------------------------------
The Registrant's 1997 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 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.
22 - 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
23 - Consent of Experts
------------------
Consent of Independent Accountants filed herewith as Exhibit 23.
99 - Portions of the Proxy Statement
-------------------------------
Excerpts from the Registrant's Proxy Statement for its 1998 Annual
Meeting to be held on April 21, 1998 are filed herewith as Exhibit 99.
(b) On November 12, 1997, the Corporation filed a Form 8-K with the Securities
and Exchange Commission indicating that, on October 27, 1997, the Bank sold
its interest in a commercial property for a pre-tax gain of $255,000 or
twelve cents a share.
43
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 31 of the Financial Section of
the Corporation's 1997 Annual Report to Shareholders.
Consolidated Financial Statements and related notes are incorporated by
reference to the Financial Section of the Corporation's 1997 Annual Report
to Shareholders, and may be found on the pages of said Report as indicated
in the parenthesis:
Balance Sheets, December 31, 1997 and 1996 (page 17)
Statements of Income for the years ended December 31, 1997, 1996 and
1995 (page 18)
Statements of Changes in Shareholders' Equity for the years ended
December 31, 1997, 1996 and 1995 (page 20)
Statements of Cash Flows for the years ended December 31, 1997, 1996
and 1995 (page 19)
Notes to Financial Statements (pages 21 to 30)
Supplementary Data:
Quarterly Results of Operations are incorporated by reference to the in
formation under the caption "Selected quarterly financial data (unaudited)"
in Note 14 on page 29 of the Financial Section of the Corporation's Annual
Report to Shareholders for the fiscal years ended December 31, 1997 and
1996.
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 41 through 44 of this report.
44
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, President and March 19, 1998
Robert L. Stevens Chief Executive
Officer (Principal Executive
Officer) and Director
/s/ Joseph W. Rebl
- ----------------------- Treasurer (Principal March 19, 1998
Joseph W. Rebl Financial and Principal
Accounting Officer)
/s/ Darrell J. Bell
- ----------------------- Director March 19, 1998
Darrell J. Bell
/s/ Richard B. Cuff
- ----------------------- Director March 19, 1998
Richard B. Cuff
- ----------------------- Director March __, 1998
Warren W. Deakins
/s/ William Harral III
- ----------------------- Director March 20, 1998
William Harral III
/s/ Wendell F. Holland
- ----------------------- Director March 19, 1998
Wendell F. Holland
/s/ Peter H. Havens
- ----------------------- Director March 19, 1998
Peter H. Havens
/s/ Sherman R. Reed III
- ----------------------- Director March 20, 1998
Sherman R. Reed, 3rd
45
NAME TITLE DATE
---- ----- ----
- ------------------------ Director March __, 1998
Phyllis M. Shea
/s/ B. Loyall Taylor, Jr.
- ------------------------- Director March 20, 1998
B. Loyall Taylor, Jr.
/s/ Samuel C. Wasson, Jr.
- ------------------------- Director March 19, 1998
Samuel C. Wasson, Jr.
/s/ Thomas A. Williams
- ------------------------- Director March 19, 1998
Thomas A. Williams
46
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, 1997
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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
47