…continued deposits dropped compared to the prior year. Although deposits went up, we also increased our borrowings substantially to fund loan growth. As a result, the interest expense on borrowed funds rose by $56,000. In all, net interest income increased by 4.94%. During the first quarter of 2014, we successfully introduced “eWards Checking”. This no minimum balance account is designed to appeal to those clients that will actively use their JBT debit card, on-line banking, bill pay and receive their monthly statements electronically. Qualifying accounts earn an above market interest rate on their checking account balance. With this account we are able to leverage today’s checking account user’s preferences and increase our efficiency in delivering this product. Although it’s early in the lifecycle of this product, the results of new and converted accounts are very encouraging. We anticipate that this will become our most popular checking account going forward. We have also continued with our strategy of investing in our client facilities to better represent our brand. At the end of February, work began in our Cleona office to renovate the branch and commercial lending portions of the building. As of this writing the work is nearly complete and the results have been positively received by our clients. Renovations are planned to continue with work at the Quentin office later this year. Board of Directors Executive Officers Richard J. Newmaster, Jr. Chairman and President Troy A. Peters Chief Executive Officer Jeffrey L. Bohn Vice Chairman Roger W. Jeremiah Senior Vice President, Lending Edward L. Anspach Second Vice Chairman Secretary Lloyd A. Deaven, Jr. Edwin C. Hostetter II Richard S. Miller Larry P. Minnich Sallie A. Neuin Lee W. Sholly Eric A. Trainer C. William Roth Senior Vice President, Chief Financial Officer Theresa L. Resanovich Vice President, Senior Trust Officer Edward T. Martel, Jr. Senior Vice President, Sales & Marketing, Branch Administration Timothy D. Gingrich Vice President, Operations & InformationTechnology Glenn T. Wenger Thank you for your continued interest and investment in JBT. Chairman/President Chief Executive Officer First Q uarter R eport P.O. Box 717 Two West Market Street Jonestown, PA 17038-0717 Executive Offices: 717-865-4246 Fax: 717-865-0349 Email: [email protected] bankjbt.com March 31, 2014 To Our Shareholders We are pleased to report that the Board of Directors has declared a first quarter dividend of $.23 per share to shareholders of record as of April 22, 2014 and payable on April 30, 2014. The Bank produced first quarter earnings of $956,419 or $.63 per share, down 10.5% from $1,068,514 or $.70 per share in the prior year. Our first quarter earnings were above our budgeted expectations as we anticipated a large reduction in income related to the selling of residential mortgages into the secondary market. This decrease was expected due to the change in the rate environment relative to these loans. For example, the commonly used 30-year mortgage rate increased from a low of 3.625% in the first quarter of 2013 to a high of 4.625% at the end of the first quarter in 2014. This increase effectively brought an end to the mortgage refinancing boom of the past two years and our income in this area declined by over 88%. Some of this income was offset by the growth in other types of loans. We were particularly successful executing our strategy to grow our commercial loan portfolio. Net loans increased by $43,305,000 or 13.1%. Deposits also grew by 7.7% and the overall costs of continued… Return on assets Return on equity Book value Earnings per share 0.89% 9.11% Assets 2013 1.10% 10.82% $25.31 $23.78 $0.63 $0.70 2014 21,022 2013 (Dollars in thousands except per share amounts) Interest Income 2014 2013 3,974 3,859 Cash and due from banks $ Federal funds sold 0 Loans receivable $ Total cash and equivalents 21,022 10,409 Taxable securities 108 89 Securities available for sale 33,999 33,079 Tax-exempt securities 84 91 Securities held to maturity 673 947 Loans held for sale 0 0 Loans receivable net of the allowance for loan losses and unearned discounts 372,539 329,234 Premises/equipment, net 3,559 3,352 Accrued interest receivable and other assets 15,823 19,821 Total Assets $ 447,615 0 $ 10,409 $ 396,842 Liabilities and Shareholders’ Equity Other 19 5 4,185 4,044 Deposits 449 535 Borrowed funds 102 46 Total interest expense 551 581 3,634 3,463 Total Interest Income Net Interest Income Provision for loan losses Liabilities Net Interest Income After Deposits: Provision for Loan Losses Non-interest bearing $ Interest bearing 42,111 $ 36,426 312,137 Total Deposits 375,436 348,563 Short-term borrowed funds 7,937 0 Long-term debt 19,457 5,193 Accrued interest payable and other liabilities Total Liabilities Shareholders’ Equity Preferred stock, 4,000,000 authorized 4000 issued and outstanding shares 333,325 2,091 2,891 404,921 356,647 4,000 Common stock: Par value $2.00 per share, 6,000,000 authorized shares, issued and outstanding 1,528,176 shares 3,056 4,000 3,045 3,565 3,418 31,858 29,705 Accumulated other comprehensive income 215 27 Total Shareholders’ Equity 42,694 40,195 Total Liabilities and Shareholders’ Equity $ Interest Expense Undivided profits Selected Financial Data 2014 Income Statement for the 3 Months Ending March 31, 2014 (Dollars in thousands) Surplus Jonestown Bank & Trust Co. March 31, Balance Sheet as of March 31, 2014 $ 447,615 230 250 3,404 3,213 Other Income Trust department income 72 50 Service charges on deposits 213 221 Other income 366 579 Total other income 651 850 Other Expenses Salaries/employee benefits 1,412 1,352 Occupancy 250 223 Equipment 269 190 Marketing 55 48 Other operating expenses 725 731 Total other expenses 2,711 2,544 Income Before Income Taxes 1,344 1,519 Federal income taxes 388 451 Net income $ 956 $ Net income per Share 1,068 $ 396,842 $0.63 $0.70