Item 1 Business - ------ --------
Description of Business - -----------------------
BT Financial Corporation ("BT" or the "Registrant") is a bank holding company located in Johnstown, Pennsylvania, which was incorporated under the laws of the Commonwealth of Pennsylvania on December 16, 1982.
At the close of business, October 10, 1997, BT adopted a single bank charter for its three affiliate banks. Laurel Bank and Fayette Bank ("Fayette") merged with and into Johnstown Bank and Trust Company ("Bank and Trust"). At the same time, the corporate title of Bank and Trust was changed to Laurel Bank. Additionally, the corporate names of two other non-bank affiliates were changed from BT Management Trust Company to Laurel Trust Company and from Moxham Community Development Corporation to Laurel Community Development Corporation.
BT's single banking subsidiary, Laurel Bank ("Laurel"), is headquartered in Johnstown, Pennsylvania. BT has three non-bank subsidiaries, Bedford Associates, Inc., which holds and leases property used by Laurel in its banking operations, Laurel Trust Company, a trust company which provides trust and investment services, and Laurel Community Development Corporation, a corporation which conducts community development activities. At December 31, 1997 the Registrant had total assets of $1.6 billion.
On June 25, 1996, BT completed a merger with Moxham Bank Corporation (Moxham) whereby Moxham was merged directly into BT. In connection with the merger, each share of Moxham common stock (other than shares held by BT) was converted into 1.15 shares of BT common stock, resulting in the issuance of 1,038,519 shares of BT Common Stock. In addition, 88,550 shares of BT common stock were exchanged for all 14,000 outstanding shares of Moxham Series A $8.00 cumulative convertible non-voting preferred stock. The merger has been accounted for as a pooling-of- interests and accordingly BT's consolidated financial statements have been restated retroactively to include the accounts and operations of Moxham for all periods prior to the merger. Moxham's banking subsidiaries included the Moxham National Bank and The First National Bank of Garrett. Moxham also held the Moxham Community Development Corporation. Upon consummation of the merger, Moxham's banking subsidiaries were merged into Bank and Trust on June 25, 1996. At the time of the merger, Moxham had assets of approximately $235 million and operated 12 branches in Cambria, Somerset, and Westmoreland counties.
Laurel Bank conducts business through a network of 72 full- service offices located throughout southwestern Pennsylvania. Laurel operates under the management of its own officers and directors, although certain financial and administrative functions, including auditing, marketing, human resources, investment, accounting, data processing and credit review, are coordinated through the Registrant. In addition, Laurel operates 53 automated teller machines located on bank premises and off- premise sites.
Laurel Bank is engaged in the business of commercial and retail banking. Laurel provides a full range of financial services to individuals, businesses and governmental bodies, including accepting demand, savings and time deposits, safe deposit facilities, electronic banking services, debit cards, money transfer services, and other banking services. Laurel also offers lending services, including consumer, real estate, commercial and industrial loans. Laurel Trust Company offers a wide range of corporate and personal trust services as well as pension and fiduciary services.
Laurel Bank's predecessor, Bank and Trust, was formed in 1934 through the consolidation of five banks. It is a Pennsylvania bank and trust company and member of the Federal Reserve System with offices in Allegheny, Armstrong, Bedford, Blair, Butler, Cambria, Fayette, Greene, Indiana, Somerset, Washington, and Westmoreland Counties. At December 31, 1997, its assets totaled $1.5 billion.
Laurel Trust Company, formerly known as BT Management Trust Company, is located in Johnstown, Pennsylvania. It is a Pennsylvania-chartered trust company formed on April 30, 1990. Laurel Trust Company resulted from the consolidation of the trust business of Bank and Trust, the former Laurel Bank and Fayette.
Laurel Community Development Corporation, formerly known as Moxham Community Development Corporation, was organized in 1992 to conduct community development activities. It is a for-profit Pennsylvania corporation conducting activities consisting of equity investments as a limited partner in various housing developments.
Competition - -----------
The business of commercial and retail banking and banking- related services is highly competitive. The Registrant, Laurel Bank and Laurel Trust Company are subject to competition in all aspects of their businesses from banks as well as other financial institutions, including savings and loan associations, savings banks, finance companies, credit unions, money market mutual funds, brokerage firms, investment companies, credit companies and insurance companies. They also compete with nonfinancial institutions, including retail stores that maintain their own credit programs, and with governmental agencies that make loans
available to certain borrowers. Some of the Registrant's competitors are larger and have greater financial resources and facilities than the Registrant. The management of BT and its subsidiaries regularly reviews its product mix, services, fee structure, and locations in the evaluation of its competitive position. Additionally, acquisition prospects are considered periodically to maintain and strengthen BT's competitive position.
Employees - ---------
As of December 31, 1997, the Registrant, Laurel, Laurel Trust Company and the Registrant's other subsidiaries had a total of 787 full time equivalent banking and administrative employees. Management considers its relationship with its employees to be satisfactory. The Registrant's executive offices are located at 551 Main Street, P.O. Box 1146, Johnstown, Pennsylvania 15907- 1146. The telephone number is (814) 532-3801.
Supervision and Regulation - --------------------------
BT is a bank holding company as defined in the Bank Holding Company Act of 1956, as amended ("BHCA"). As such, BT is subject to supervision and examination by the Board of Governors of the Federal Reserve System ("FRB") and is required to file reports with the FRB and provide such additional information as required by the FRB. BT may not, without prior approval of the FRB, acquire 5% or more of the voting shares of another bank. The BHCA and the Federal Reserve Act place restrictions on transactions between BT and its affiliates, including certain restrictions relevant to intercompany loans, dividends, and investments. BT, subject to approval of the FRB, may acquire (1) banks throughout the United States, and (2) branches of established banks throughout the United States, except in Texas and Montana, which have opted out of interstate banking. Satisfactory Community Reinvestment Act and capital ratios ratings are generally required to obtain FRB approval of acquisitions.
Laurel, as a state chartered bank, is subject to supervision, periodic examination and regulations of the Pennsylvania Department of Banking. Laurel, as an insured bank, is also subject to regulation by the Federal Deposit Insurance Corporation ("FDIC"). Laurel's deposits are insured by the FDIC to the maximum amount legally permitted, currently $100,000. Laurel is also a member of the Federal Reserve System and is subject to regulations of the Board of Governors of the Federal Reserve System.
BT and its subsidiaries are subject to examination at the discretion of supervisory authorities. BT is under the jurisdiction of the Securities and Exchange Commission ("SEC") with respect to engaging in the offering and public sale and distribution of its securities. BT is also subject to SEC rules
regarding insider trading, proxy statements and periodic reporting to shareholders.
Recent and Pending Acquisitions - -------------------------------
Merger and acquisition activities of the registrant are detailed in "Note 3-Acquisitions" of the "Notes to Consolidated Financial Statements" included on pages 20 and 21 of the 1997 Annual Report, which is incorporated herein by reference.
Item 2
Item 2 Properties - ------ ----------
The executive offices of the Registrant are located at 551 Main Street, Johnstown, Pennsylvania, in an office building owned by Bedford Associates, Inc. The building is occupied by the Registrant, Laurel Trust Company, and other unrelated business concerns.
Laurel operates 72 full-service banking offices located throughout southwestern Pennsylvania, 54 of which are owned by Laurel free of liens and encumbrances. All properties and buildings are in good condition and are continually maintained against normal wear and tear. The remaining 18 offices are operated under leases which, including renewal options, expire at various times between 1998 and 2025. Bedford Associates, Inc. owns 4 of the 18 leased properties, which are leased to Laurel as community banking offices. On June 6, 1997, three banking offices were purchased from National City Bank of Pennsylvania.
Item 3
Item 3 Legal Proceedings - ------ -----------------
Information required to be furnished pursuant to this Item is set forth on page 26 of the 1997 Annual Report in Note 11 of the "Notes to Consolidated Financial Statements" under the caption "Litigation" which is incorporated herein by reference.
Item 4
Item 4 Submission of Matters to a Vote of Security Holders - ------ --------------------------------------------------- None.
Executive Officers of the Registrant - ------------------------------------
Set forth below are the names of and certain information with respect to the executive officers of the Registrant. Pursuant to the Registrant's By-Laws, officers serve at the pleasure of the Board. There are no family relationships between any such persons.
Name Age Positions and Offices Held ---- --- --------------------------
John H. Anderson 47 Chairman, Chief Executive Officer and Director of the Registrant and of Laurel.
Steven C. Ackmann 46 President and Chief Operating Officer of the Registrant.
Eric F. Rummel 45 Vice Chairman of the Registrant, President of Laurel.
J. William Smith 50 Vice Chairman of the Registrant.
Mark L. Sollenberger 44 Executive Vice President, Treasurer and Assistant Secretary of the Registrant. Executive Vice President and Treasurer of Laurel. Treasurer and Assistant Secretary of Laurel Trust Company.
Laura L. Roth 35 Corporate Secretary and Assistant Treasurer of the Registrant, Laurel and Laurel Trust Company.
Brian H. Lehman 43 Vice President and Controller ofthe Registrant.
John H. Anderson has served as Chairman and Chief Executive Officer ---------------- of the Registrant since 1995. He served as Chairman, President and Chief Executive Officer of the Registrant from 1993 to 1995. He served as President and Chief Operating Officer of the Registrant from 1992 to 1993 and as Vice Chairman from 1991 to 1992. He served as President of Bank and Trust from 1990 to 1991. He served as Executive Vice President of the Registrant during 1989. From 1986 to 1989 he served as Executive Vice President of Bank and Trust.
Steven C. Ackmann has served as President and Chief Operating ------------------- Officer of the Registrant since 1995. He served as a Vice Chairman of the Registrant from 1992 to 1995. He served as Executive Vice President of the Registrant from 1990 to 1992. He served as Senior Vice President of Fayette from 1988 to 1990.
Eric F. Rummel has served as Vice Chairman of the Registrant since -------------- 1996 and President of Laurel since 1997. He served as President of Bank and Trust from 1995 to 1997. He served as President of the former Laurel Bank from 1991 to 1995. He served as Executive Vice President of the Registrant in 1991 and of Bank and Trust from 1989 to 1991. He served as Senior Vice President of Bank and Trust from 1988 to 1989.
J. William Smith has served as Vice Chairman of the Registrant ------------------ since 1996. He served as President and Chief Executive Officer of the former Moxham Bank Corporation from 1986 to 1996.
Mark L. Sollenberger has served as Executive Vice President, ---------------------- Treasurer and Assistant Secretary of the Registrant since 1995 and Executive Vice President and Treasurer of Laurel since 1997. He served as Executive Vice President and Treasurer of the Registrant from 1992 to 1995 and of Bank and Trust from 1992 to 1997. He served as Senior Vice President and Comptroller of the Registrant from 1991 to 1992. He has served as Treasurer and Assistant Secretary of Laurel Trust Company since 1992.
Laura L. Roth has served as Corporate Secretary and Assistant --------------- Treasurer of the Registrant and Laurel Trust Company since 1995 and of Laurel since 1997. She served as Secretary and Assistant Treasurer of Bank and Trust from 1995 to 1997. She served as Assistant Secretary and Assistant Treasurer of the Registrant from 1991 to 1995. She served as Assistant Secretary of the Registrant and of Bank and Trust from 1986 to 1991.
Brian H. Lehman has served as Vice President and Controller of the --------------- Registrant and Laurel since 1997. Prior to that time he was a Special Projects Director for Zamias Services, Inc. from 1996 to 1997 and a Vice President for L. Robert Kimball and Associates, Inc. from 1989 to 1996. He has been a Certified Public Accountant since 1979.
Part II
Information required to be furnished pursuant to Part II of this report is set forth in the 1997 Annual Report under the captions and on the pages indicated below, and is incorporated herein by reference. Certain statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" constitute "forward-looking" statements with respect to the Registrant and its subsidiaries. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the financial condition and results of operations of the Registrant and its subsidiaries to be materially different from any future financial condition or results of operations suggested or implied by such forward-looking statements. The Registrant undertakes no obligation to update any forward-looking statements made herein. The factors that may cause actual results to differ materially from the forward-looking statements include: interest rate, market and monetary fluctuations, monetary and fiscal policies, changes in laws and regulations, inflation, general economic conditions, competition and economic conditions in the geographic region an industries in which the Registrant conducts its operations, introduction and acceptance of new products and enhancements, mergers and acquisitions and their integration into the Registrant, and management's ability to manage these and other risks.
Page in 1997 Caption in 1997 Annual Report Annual Report ----------------------------- -------------
Item 5
Item 5 Market for the Registrant's Common - ------ Equity and Related Stockholder Matters --------------------------------------
Market Price and Cash Dividends 33
Dividend Restrictions 27
Two-for-One Stock Split - -----------------------
On March 25, 1998, BT's Board of Directors declared a two- for-one stock split in the form of a stock dividend to be distributed on May 1, 1998 to shareholders of record as of April 8, 1998. The stock split will increase common shares outstanding to 12,500,872 from 6,250,436. BT's earnings per share amounts for the years ended December 31, 1997, 1996 and 1995, restated for the two-for-one stock split, are presented below.
Years ended December 31, 1997 1996 1995 ------------------------ ---- ---- ---- Basic earnings per share $1.37 $1.13 $1.10 Diluted earnings per share 1.37 1.12 1.09
Note: Data has been adjusted to reflect the 10% stock dividends distributed on October 22, 1996 and September 15, 1997 and the two-for-one stock split to be distributed on May 1, 1998.
Page in 1997 Caption in 1997 Annual Report Annual Report ----------------------------- -------------
Item 6
Item 6 Selected Financial Data - ------ -----------------------
Selected Consolidated Financial Data 32
Item 7
Item 7 Management's Discussion and Analysis - ------ of Financial Condition and Results of Operations -------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of Operations 33-44
Item 8
Item 8 Financial Statements and Supplementary Data - ------ -------------------------------------------
Report of Independent Accountants 13
Consolidated Balance Sheet 14
Consolidated Statement of Income 15
Consolidated Statement of Cash Flows 16
Consolidated Statement of Changes in Shareholders' Equity 17
Notes to Consolidated Financial Statements 18-30
Supplemental Financial Data 31
Item 9
Item 9 Changes in and Disagreements with Accountants on - ------ Accounting and Financial Disclosure ----------------------------------- None
Part III
Item 10
Item 10 Directors and Executive Officers of the Registrant - ------- --------------------------------------------------
Information required to be furnished pursuant to this Item regarding directors of the Registrant is set forth in the 1998 Proxy Statement under the caption "Election of Directors," and is incorporated herein by reference. Information required to be furnished pursuant to this Item regarding delinquent filers is set forth in the 1998 Proxy Statement under the caption "Compliance with Section 16 (a) of the Securities Exchange Act of 1934," and is incorporated herein by reference. Information required to be furnished pursuant to this Item regarding executive officers of the Registrant is set forth in Part I of this Report and is incorporated herein by reference.
Item 11
Item 11 Executive Compensation - ------- ----------------------
Information required to be furnished pursuant to this Item is set forth in the 1998 Proxy Statement under the captions "Executive Compensation" and "Election of Directors -- Directors' Compensation," and is incorporated herein by reference. The "Executive Committee Report on Compensation" set forth in the 1998 Proxy Statement is specifically not incorporated herein by reference.
Item 12
Item 12 Security Ownership of Certain - ------- Beneficial Owners and Management --------------------------------
Information required to be furnished pursuant to this Item is set forth in the 1998 Proxy Statement under the captions "Election of Directors," "Executive Compensation" and "Stock Ownership" and is incorporated herein by reference.
Item 13
Item 13 Certain Relationships and Related Transactions - ------- ----------------------------------------------
Information required to be furnished pursuant to this Item is set forth in the 1998 Proxy Statement under the caption "Certain Relationships and Transactions" and is incorporated herein by reference.
Part IV
Item 14
Item 14 Exhibits, Financial Statement - ------- Schedules and Reports on Form 8-K ---------------------------------
(a) (1) Financial Statements --------------------
The consolidated financial statements of BT Financial Corporation and affiliates together with the report of Coopers & Lybrand LLP dated January 28, 1998, are described herein in Part II, Item 8 - Financial Statements and Supplementary Data and appear on pages 14 through 31 of the 1997 Annual Report and are incorporated herein by reference.
(2) Financial Statement Schedules -----------------------------
All financial statement schedules are omitted because they are not required, are not applicable or the required information is given in the consolidated financial statements or notes thereto.
(3) Exhibits: --------
The index to exhibits is on page 16.
(b) Reports on Form 8-K: -------------------
No reports on Form 8-K have been filed by the Registrant during the quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BT FINANCIAL CORPORATION ------------------------- (Registrant)
By: /s/ John H. Anderson Date: March 25, 1998 ----------------------------- ---------------- John H. Anderson Chairman, and Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
/s/ John H. Anderson Date: March 25, 1998 ----------------------------- ---------------- John H. Anderson Chairman, and Chief Executive Officer and Director
Principal Financial Officer:
/s/ Mark L. Sollenberger Date: March 25, 1998 ----------------------------- ---------------- Mark L. Sollenberger Executive Vice President, Treasurer, and Assistant Secretary
Principal Accounting Officer:
/s/ Brian H. Lehman Date: March 25, 1998 ---------------------------- ---------------- Brian H. Lehman Vice President and Controller
Directors:
/s/ G. Scott Baton II Date: March 25, 1998 - ------------------------------ ---------------- G. Scott Baton II
/s/ Martin L. Bearer Date: March 25, 1998 - ------------------------------ ---------------- Martin L. Bearer
Date: March 25, 1998 - ------------------------------ ---------------- John C. Cwik, M.D.
/s/ Louis G. Galliker Date: March 25, 1998 - ------------------------------ ---------------- Louis G. Galliker
/s/ William B. Kania Date: March 25, 1998 - ------------------------------ ---------------- William B. Kania
/s/ Edward L. Mears Date: March 25, 1998 - ------------------------------ ---------------- Edward L. Mears
/s/ Roger S. Nave Date: March 25, 1998 - ------------------------------ ---------------- Roger S. Nave
/s/ Ethel J. Otrosina Date: March 25, 1998 - ------------------------------ ---------------- Ethel J. Otrosina
Date: March 25, 1998 - ------------------------------ ---------------- Robert G. Salathe, Jr.
Date: March 25, 1998 - ------------------------------ ---------------- William R. Snoddy
/s/ Gerald W. Swatsworth Date: March 25, 1998 - ------------------------------ ---------------- Gerald W. Swatsworth
/s/ W. A. Thomas Date: March 25, 1998 - ------------------------------ ---------------- W. A. Thomas
/s/ Rowland H. Tibbott, Jr. Date: March 25, 1998 - ------------------------------ ---------------- Rowland H. Tibbott, Jr.
/s/ Thomas A. Young Date: March 25, 1998 - ------------------------------ ---------------- Thomas A. Young
EXHIBIT INDEX -----
The following Exhibits are filed as a part of this Report. Documents other than those designated as being filed herewith are incorporated herein by reference. Documents incorporated by reference to an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q are at Securities and Exchange Commission File No. 0- 12377.
Prior Filing or Exhibit Sequential Page Number Description No. Herein - ------- ----------- ---------------
2.1 Agreement and Plan of Incorporated by reference Reorganization dated as to Exhibit 2.1 to BT of October 24, 1995 by and Financial Corporation among BT Financial Registration Statement on Corporation, Johnstown Bank Form S-4 (No. 333-01797). and Trust Company and The Armstrong County Trust Company.
2.2 Agreement and Plan of Incorporated by reference Reorganization by and to Exhibit 2 to current between BT Financial Report on Form 8-K dated Corporation and Moxham January 12, 1996. Bank Corporation.
3.1 Amended and Restated Incorporated by reference Articles of Incorporation to BT Financial Corporation of BT Financial Registration Statement on Corporation. Form S-4 (No. 33-69112).
3.2 By-Laws of BT Financial Incorporated by reference Corporation. to BT Financial Corporation Registration Statement on Form S-4 (No. 33-69112).
4.1 Loan Agreement dated Not filed. In accordance December 14, 1995, between with paragraph (b)(4)(iii)(A) Mellon Bank, N.A. and BT of Item 601 of Regulation S-K, Financial Corporation. BT Financial Corporation hereby agrees to furnish a copy of this instrument to the Commission upon request.
10.1 BT Financial Corporation Filed herewith. Supplemental Executive Benefit Plan dated July 23, 1997.*
Prior Filing or Exhibit Sequential Page Number Description No. Herein - ------ ----------- ---------------
10.2 Key Employee Incentive Incorporated by reference to Compensation Plan to BT Exhibit 10.2 to BT Financial Financial Corporation Corporation's Annual Report dated July 24, 1996.* on Form 10-K for the year ended December 31, 1996.
10.3 Moxham Bank Corporation Incorporated by reference to Executive Retirement Plan Exhibit 10.3 to BT Financial dated January 1, 1987, as Corporation's Annual Report amended and restated.* on Form 10-K for the year ended December 31, 1996.
13.1 All portions of the BT Filed herewith. Financial Corporation 1997 Annual Report to Shareholders that are incorporated herein by reference.
21.1 Subsidiaries of the Filed herewith. Registrant.
23.1 Consent of Coopers & Filed herewith. Lybrand LLP,independent accountants for the Registrant.
23.2 Consent of Barnes, Saly & Filed herewith. Company, independent Accountants for the former Moxham Bank Corporation.
27.1 Financial Data Schedule Filed herewith.
99.1 Report of Barnes, Saly & Filed herewith. Company on Moxham Bank Corporation's Financial Statements as of December 31, 1995 and for the year ended December 31, 1995.
* Indicates exhibit is a management contract or compensation plan or arrangement.
The Registrant will furnish to requesting shareholders a copy of any exhibit(s) listed above upon payment of $5.00 plus $0.10 per page to cover Registrant's expenses in furnishing such exhibit(s). Requests should be directed in writing to Laura L. Roth, Corporate Secretary, BT Financial Corporation, 551 Main Street, P. O. Box 1146, Johnstown, Pennsylvania 15907-1146.