-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ABHgYLt5a3Zu3JDXwngeFIF30RusGHpnTbiHElTtAbgbjM+i4GcKrd9PpR9WdGrn L2C4Y6HahR6ngx62pQI2Lg== 0000702904-95-000022.txt : 19951119 0000702904-95-000022.hdr.sgml : 19951119 ACCESSION NUMBER: 0000702904-95-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMBANC CORP CENTRAL INDEX KEY: 0000702904 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351525227 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10710 FILM NUMBER: 95591643 BUSINESS ADDRESS: STREET 1: 302 MAIN ST STREET 2: P O BOX 438 CITY: VINCENNES STATE: IN ZIP: 47591 BUSINESS PHONE: 8128823050 MAIL ADDRESS: STREET 1: 302 MAIN STREET CITY: VINCENNES STATE: IN ZIP: 47591 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1995 Commission File Number: 0-10710 AMBANC CORP. (exact name of registrant as specified in its charter) INDIANA 35-1525227 (State or other jurisdiction (I.R.S. Employer ID No.) of incorporation or organization) 302 Main Street P.O. Box 556 Vincennes, Indiana 47591-0556 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (812) 885-6418 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes: X No: 3,009,059 common shares of stock were outstanding as of November 13, 1995. PAGE AMBANC CORP. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at September 30, 1995 (unaudited) and December 31, 1994 Consolidated Statements of Income for nine months and three months ended September 30, 1995 and 1994(unaudited) Consolidated Statements of Cash Flows for nine months ended September 30, 1995 and 1994 (unaudited) Notes to Consolidated Financial Statements (unaudited) Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II. OTHER INFORMATION Item 6. Exhibits and Reports of Form 8-K Signatures Exhibit Index PAGE
AMBANC CORP. CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share data) September 30, December 31, 1995 1994 ASSETS Cash and due from banks $ 14,868 $ 19,595 Federal funds sold 13,699 7,000 Total cash and cash equivalents 28,567 26,595 Interest bearing deposits in other banks 793 1,193 Securities available for sale at market 98,979 112,214 Securities held to maturity(market values of $40,334 and $38,707 at September 30, 1995, and December 31, 1994) 39,797 39,695 Loans held for sale 5,339 2,664 Loans, net of unearned income 368,346 321,096 Allowance for loan losses (4,179) (3,911) Loans, net 364,167 317,185 Premises, furniture and equipment, net 6,296 6,487 Accrued interest receivable and other assets 10,095 10,063 TOTAL ASSETS $ 554,033 $ 516,096 LIABILITIES Noninterest bearing deposits $ 44,539 $ 51,838 Interest bearing deposits 443,742 403,396 Total deposits 488,281 455,234 Short-term borrowings 5,811 5,690 Long-term debt 2,663 3,189 Accrued interest payable and other liabilities 3,012 2,946 TOTAL LIABILITIES 499,767 467,059 SHAREHOLDERS' EQUITY Preferred stock, $10 par value, 200,000 shares authorized, no shares issued or outstanding -- -- Common stock, $10 par value, 5,000,000 shares authorized, 2,372,555 and 2,372,172 shares issued and outstanding at September 30, 1995, and December 31, 1994 23,726 23,722 Retained earnings 31,257 28,277 Unrealized gain/(loss) on securities available for sale (717) (2,962) TOTAL SHAREHOLDERS' EQUITY 54,266 49,037 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 554,033 $ 516,096
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AMBANC CORP. CONSOLIDATED STATEMENTS OF INCOME (Dollar amounts in thousands, except share data) Nine Months Ended Three Months Ended September 30, September 30, 1995 1994 1995 1994 INTEREST INCOME Interest and fees on loans $ 23,473 $ 18,044 $ 8,321 $ 6,564 Interest and fees on loans held for sale 209 487 94 59 Interest on securities Taxable 4,558 5,378 1,421 1,712 Tax exempt 1,652 1,709 550 569 Other interest 391 200 222 55 TOTAL INTEREST INCOME 30,283 25,818 10,608 8,959 INTEREST EXPENSE Interest on deposits 14,395 11,148 5,257 3,870 Interest on short-term borrowings 206 216 60 87 Interest on long-term debt 122 118 38 45 TOTAL INTEREST EXPENSE 14,723 11,482 5,355 4,002 NET INTEREST INCOME 15,560 14,336 5,253 4,957 Provision for loan losses 425 100 275 50 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 15,135 14,236 4,978 4,907 NONINTEREST INCOME Income from fiduciary activities 339 294 154 102 Service charges on deposit accounts 943 832 324 298 Gain/(loss) on securities 5 (4) (1) (1) Other operating income 685 723 266 193 TOTAL NONINTEREST INCOME 1,972 1,845 743 592 NONINTEREST EXPENSE Salaries and employees benefits 5,851 5,363 1,865 1,783 Occupancy expenses, net 634 645 214 222 Equipment expenses 652 611 216 211 Data processing expenses 294 341 113 114 FDIC insurance 508 758 (15) 250 Other operating expenses 2,728 2,747 884 855 TOTAL NONINTEREST EXPENSE 10,667 10,465 3,277 3,435 INCOME BEFORE INCOME TAXES 6,440 5,616 2,444 2,064 Taxes 1,973 1,658 769 614 NET INCOME $ 4,467 $ 3,958 $ 1,675 $ 1,450 EARNINGS PER COMMON SHARE(based on 2,372,550 and 2,369,841 average outstanding shares in 1995 and 1994) Net income per share $ 1.88 $ 1.67 $ .71 $ .61
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AMBANC CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands, except share data) Nine Months Ended September 30, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,467 $ 3,958 Adjustments to reconcile net income to net cash from operating activities: Net premium amortization and discount accretion on securities 214 355 Depreciation 623 620 Provision for loan losses 425 100 (Gain)/loss on securities (5) 4 Proceeds from sales of loans held for sale 10,441 31,630 Loans held for sale made to customers, net of payments collected (13,116) (17,860) Accrued interest receivable and other assets (32) (1,532) Accrued interest payable and other liabilities 2,311 (4,594) Deferred loan fees net of costs (16) (13) NET CASH FROM OPERATING ACTIVITIES 5,312 12,668 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of securities available for sale 1,500 9,081 Proceeds from sales of securities held to maturity -- -- Proceeds from maturities and calls of securities available for sale 18,515 34,867 Proceeds from maturities and calls of securities held to maturity 8,665 2,184 Purchases of securities available for sale (6,961) (27,092) Purchases of securities held to maturity (8,795) (3,646) Net change in interest bearing deposits in other banks 400 (503) Loans made to customers, net of payments collected (48,169) (37,758) Loans purchased (4,386) (1,690) Proceeds from sales of loans 5,164 3,956 Property and equipment expenditures (432) (1,145) NET CASH FROM INVESTING ACTIVITIES (34,499) (21,746)
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AMBANC CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (Dollar amounts in thousands, except share data) Nine Months Ended September 30, 1995 1994 CASH FLOWS FROM FINANCING ACTIVITIES Net change in demand deposits and savings accounts (14,410) (16,280) Net change in certificates of deposit 47,457 7,882 Net change in short-term borrowings 121 1,018 Payments on long-term debt (597) (338) Proceeds on long-term debt 71 2,514 Issuance of stock for dividend reinvestment 12 14 Dividends paid (1,495) (1,267) NET CASH FROM FINANCING ACTIVITIES 31,159 (6,457) NET CHANGE IN CASH AND CASH EQUIVALENTS 1,972 (15,535) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 26,595 32,510 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,567 $ 16,975 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period ended September 30: Interest $ 14,076 $ 11,360 Income taxes 2,100 1,830
PAGE AMBANC CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated balance sheet as of September 30, 1995, consolidated statements of income for the nine month periods ended September 30, 1995 and 1994, and the consolidated statements of cash flows for the nine month periods ended September 30, 1995 and 1994, have been prepared by the Corporation, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows at September 30, 1995, and all periods presented, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Corporation's December 31, 1994, annual report to shareholders. The results of operations for the period ended September 30, 1995, are not necessarily indicative of the operating results for the full year. COMMITMENTS AND CONTINGENT LIABILITIES Other than ordinary routine litigation incidental to the business, there are no material pending legal proceedings to which the Corporation or its subsidiaries are a party or of which any of their property is the subject. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) ITEM 2. RESULTS OF OPERATIONS Net interest income is the principal source of the Corporation's earnings and represents the difference between interest income on loans and securities over interest costs of deposits and borrowed funds. Income from certain earning assets is exempt from federal income tax and as customary in the banking industry, changes in net interest income are analyzed on a fully tax equivalent basis. Under this method, and throughout this discussion, nontaxable income on loans and investments is adjusted to an amount which represents the equivalent earnings if such earnings were subject to federal tax. The marginal tax rate used to restate nontaxable income was 34%. Nine Months Ended September 30, Increase 1995 1994 (Decrease) Interest income $ 30,283 $ 25,818 17.29 % Adjusted for tax exempt income 965 997 (3.21) Tax equivalent interest income 31,248 26,815 16.53 Interest expense 14,723 11,482 28.23 Net interest income $ 16,525 $ 15,333 7.77 % Net interest income increased $1,192 or 7.77% for the nine months ended September 30, 1995, compared to the nine months ended September 30, 1994. This $1,192 increase was a combination of a $4,433 increase in interest income and a $3,241 increase in interest expense. The $4,433 increase in interest income was composed of an increase of $1,018 due to increased volume of average interest earning assets and an increase of $3,415 due to increased rates received on these PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) interest earning assets. The $3,241 increase in interest expense was a combination of an increase of $605 due to increased volume of average interest bearing liabilities and an increase of $2,636 due to rate increases on these interest bearing liabilities. The Corporation's average assets for the first nine months of 1995 increased $19,536 or 3.83% to $528,979 from $509,443 for the same period in 1994, but the percent of average earning assets to total average assets decreased to 94.74% for the first nine months of 1995 from 95.17% for the first nine months of 1994. This decrease was in part due to 1995 average assets containing $1,276 of average goodwill associated with the deposits purchased (see details on subsequent page). Net interest margin increased .18% to 4.41% for the first nine months of 1995 from 4.23% for the first nine months of 1994. This increase was due to the yields on average earning assets increasing faster than the costs on average interest bearing liabilities. The Corporation's yields on loans and investments and costs of deposits, although not completely determined by the prime rate, are influenced by changes in the prime rate. The prime rate started at 8.50% in 1995, increased to 9.00% in February, 1995 and decreased to 8.75% in July 1995, and averaged 8.86% for the first nine months of 1995. The prime rate for 1994 started at 6.00%, increased four times to an ending rate of 7.75%, and averaged 6.81% for the first nine months of 1994. With higher interest rates in 1995 and the fact that rates continued to increase during the last half of 1994, the Corporation was able to maintain a higher spread between interest received on average interest earning assets and interest paid on average interest bearing liabilities. The yield on average interest earning assets increased to 8.34% for the first nine months of 1995 from 7.39% for the first nine months of 1994 for an increase of .95%. The cost on average interest bearing liabilities increased at a slower rate and was 4.58% for the first nine months of 1995 and 3.72% for the first nine months of 1994 for an increase of .86%. This leaves the interest spread which is the mathematical difference between yields on average interest earning assets and costs on average interest bearing liabilities at 3.76% for the first nine months of 1995 compared to 3.67% for the first nine months of 1994. The provision for loan losses was $425 during the first nine months of 1995 compared to $100 during the first nine months of 1994. The provision for loan losses was increased during 1995 because of increased loan volume and not due to loan credit problems. The allowance for loan losses at September 30, 1995, was $4,179 or 1.13% of total loans less unearned income as compared to $3,911 or 1.22% of total loans less unearned income PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) at December 31, 1994. During the first nine months of 1995, loans charged off were $337 and recoveries from previously written off loans were $180, thus net charge offs for the first nine months of 1995 were $157. The adequacy of the allowance for loan losses is analyzed by management of each bank subsidiary based upon review of identified loans with more than a normal degree of risk, historical loan loss percentage by type of loan and present and forecasted economic conditions. Management's analysis indicates that the allowance for loan loss at September 30, 1995, is adequate to cover potential losses on identified loans with credit problems and historical losses on the remaining loan portfolio. The following are ratios of the different types of problem loans as a percent of total loans less unearned income at September 30, 1995, and December 31, 1994: September 30,1995 December 31, 1994 Nonaccrual loans .24% .18% Loans past due 90 days .26% .20% Performing restructured loans .01% .15% OREO .11% .14% Effective January 1, 1995, the Corporation adopted Financial Accounting Standard No. 114, (FAS 114) "Accounting by Creditors for Impairment of a Loan," as amended by Financial Accounting Standard No. 118, (FAS 118) "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures." These statements require that impaired loans be measured based on the present value of expected future cash flows discounted at the loans' effective interest rates or at the fair value of the underlying collateral and allow existing methods for recognizing interest income. The effect of adopting FAS 114 and FAS 118 was not material to the Financial Statements of the Corporation. At September 30, 1995, the recorded balance of loans that were considered to be impaired under FAS 114 was $2,905 of which $510 were on a nonaccrual basis. The average recorded balance for impaired loans for the three month period ended September 30, 1995, approximated the ending balance. All loans considered to be impaired at September 30, 1995, had specific allocated reserves which totaled $393. A summary of the activity in the allowance for loan losses account for the first nine months ending September 30, 1995, and 1994 was: 1995 1994 Balance, January 1 $3,911 $3,685 Provision for loan losses 425 100 Loans charged off (337) (334) Recoveries of loans previously charged off 180 417 Balance, September 30 $4,179 $3,868 PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) With the adoption of FAS 114, the Corporation continued to use its normal methods of identifying loans that are subject to classification as criticized assets. This consists of creating a monthly report containing loans with a more than normal degree of risk. This report includes all such loans with balances of $100 or larger and even includes totals for loans smaller than $100 if they are collateralized by real estate or other specific collateral. Smaller-balance homogeneous loans, like credit cards, moneyline loans which are consumer lines of credit either secured with second mortgages on real estate or unsecured, and consumer installment loans which are secured by vehicles and other specific collateral or unsecured, are not included as loans with a more than normal degree of risk. These loans are specifically covered in the analysis of the adequacy of the allowance for loan losses using historical loss percentages and current delinquency reports. Smaller-balance homogeneous loans are placed on nonaccrual after they are 90 days delinquent and are written down to their collateral value or are charged off when they are determined to be uncollectable. The report of loans with a more than normal degree of risk is the by-product of an ongoing loan review process, the purpose of which is to determine the level of credit risk within the portfolio and to ensure proper adherence to the Corporation's underwriting and documentation standards. The Corporation's report of loans with a more than normal degree of risk is divided into three classifications, other loans especially mentioned, substandard performing loans and substandard non-performing loans. Other loans especially mentioned are loans that are fundamentally sound but exhibit potentially unwarranted credit risks or contain unsatisfactory characteristics. Substandard performing loans are inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral as well as those loans with unsatisfactory characteristics causing more than acceptable levels of risk, but are being serviced by the customer in regards to the timely payment of principal and interest. Substandard non-performing loans show weaknesses inherent in the substandard performing loans but where collection or liquidation in full, on a timely basis, is highly questionable. Substandard non- performing loans are loans that have been placed on nonaccrual when they are 90 days delinquent and there is no evidence to support the continued regular payments required under the loan contract. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) The classification of impaired loans is determined by the analysis of the loan's collateral, repayment capacity of the borrower and other known information to determine that it is probable that the Corporation will be unable to collect all amounts of principle and interest due according to the contractual terms of the loan. Although a loan is on nonaccrual it is possible that the liquidation of collateral will provide for full recovery of all nonaccrued interest and principal on the loan without a significant delay. Loans on nonaccrual that do not meet this criteria are considered to be impaired. Loans that are still on accrual, because the payments are currently being serviced by the customer, but that exhibit or are known to have other circumstances that will make them probable of not being collected in full as to interest and principal, are also considered to be impaired. Specific reserves are assigned to impaired loans when in management's opinion the liquidation of collateral, less selling expenses, will not represent collection in full of principal and interest on the loan. Specific reserves plus a reserve calculation based on historical loan loss experience by type of loan are considered when analyzing the adequacy of the allowance for loan losses. Impaired loans not collateralized, but being repaid from cash flows, are measured based upon the present value of expected future cash flows and any shortfalls are recognized by the reduction of the impaired loan by creating a valuation allowance and a corresponding charge against the allowance for loan losses. The Corporation currently does not have any impaired loans requiring a valuation allowance due to insufficient present value calculations of expected future cash flows. Since the adoption of FAS 114 no unusual additions to the allowance for loan losses have been required due to loans being classified as impaired. Impaired loans on nonaccrual recognize payments or other cash flows from liquidation of collateral first as principal payments. When the principal on these loans is collected in full, subsequent payments are recorded as income until all of the nonaccrued interest income is collected. Since the nonaccrued interest income is not booked until collected, any interest shortfall on nonaccrual loans is never recognized as income. Impaired loans on accrual continue to recognize income on the same basis as all other loans. The method used in recognizing payments and interest income on impaired loans is consistent with those being used by the Corporation for substandard performing loans and substandard non-performing loans before the adoption of FAS 114. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) Noninterest income for the nine months ended September 30, 1995, was up $127 or 6.88% to $1,972 as compared to $1,845 for the nine months ended September 30, 1994. Income from fiduciary services was up by $45 or 15.31% to $339 in 1995 from $294 in 1994 as a result of increased fees on trust accounts managed. Service charges on deposit accounts were up by $111 or 13.34% to $943 in 1995 from $832 in 1994 due to new and increased fees on deposit accounts. The Corporation had a net gain of $5 on calls and sales of securities during the first nine months of 1995. Other operating income decreased $38 or 5.26% to $685 during the nine months ended September 30, 1995, from $723 during the same nine months in 1994. This $38 decrease was mainly due to the reduction of gain on sales of loans held for sale less increases in income from a new investment service being offered customers, other nonrecurring income and an increase in insurance commission income. During the first nine months of 1994 mortgage rates were increasing and the Corporation sold $31,630 of the conforming fixed rate mortgage loans, classified as loans held for sale on the balance sheet, into the secondary mortgage market, and other operating income included $221 related to gains from these sales. During part of the first nine months of 1995, mortgage rates increased to the point that many customers were selecting variable rate mortgage loans which are classified as real estate loans on the balance sheet as compared to fixed rate mortgage loans which are classified as loans held for sale on the balance sheet. The Corporation did sell $10,441 in fixed rate mortgage loans into the secondary mortgage market and recorded gains of $124 during the nine months ended September 30, 1995. The servicing rights on more than 95% of sold fixed rate loans are retained by the Corporation. Noninterest expense for the nine months ended September 30, 1995, was $10,667 as compared to $10,465 for the nine months ended September 30, 1994, for an increase of $202 or 1.93%. Salaries and employee benefits are the largest portion of noninterest expense and increased $488 or 9.10% in the first nine months of 1995 compared to the same time period in 1994. Individual components showed increases in salaries, pension expense and medical insurance expense. Occupancy expense decreased slightly with an $11 or 1.71% decrease in 1995 from 1994. Equipment expense was up by $41 or 6.71% to $652 in 1995 from $611 in 1994 due mainly to increases in contract expenses related to new branches and equipment. The Corporation plans to open two new PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) branches during the fourth quarter of 1995. One branch is being opened to provide better service to existing customers and the other branch will provide the Corporation entrance into a new county and marketing area. The addition of these branches will increase personnel, occupancy and equipment expenses. Data processing expense decreased $47 or 13.78% to $294 in 1995 from $341 in 1994 and was due to a reduction in depreciation and continued efficiencies resulting from consolidating operations. The Corporation installed a larger computer system, during the third quarter of 1995, to provide for better customer service and further consolidation of operations. Data processing expenses starting in the third quarter of 1995 did increase from third quarter 1994 because of this change. All of the Corporation's subsidiary banks have been assigned the highest classification by the FDIC and as such received a refund of $281 from the FDIC for the period June 1 through September 30, 1995. This refund was received in September 1995 and had the effect of reducing the FDIC insurance expense from .23% to .04% starting June 1, 1995. This reduced FDIC insurance rate will also be in effect for the remainder of 1995. The FDIC insurance expense decreased $250 or 32.98% to $502 in 1995 from $758 in 1994. Without the refund discussed, FDIC insurance expense would have increased and is due to increased deposit balances in 1995 compared to 1994. The deposits purchased by the Corporation from a federal savings bank (see financial condition for details) remain subject to the SAIF rather than BIF insurance rates. The $19 or .69% decrease in other operating expenses to $2,728 in 1995 from $2,747 in 1994 was due to a combination of many increases and decreases with large changes in goodwill and professional fees. Other operating expenses for 1995 includes the addition of $66 for goodwill amortization in 1995 related to the deposits purchased on March 17, 1995. Other 1995 operating expenses were lower because of reduced professional fees, due to the inclusion in 1994 of both sides of expenses for a merger completed on June 1, 1994, under the pooling of interests method and the inclusion in 1995 of only the Corporation's merger expenses of a merger completed during the fourth quarter of this year, also under the pooling of interests method. Income before income taxes was up $824 or 14.67% to $6,440 for the first nine months of 1995 from $5,616 for the first nine months of 1994. The net income for the first nine months ended September 30, 1995, was up $509 or 12.86% to $4,467 as compared to $3,958 for the nine months ended September 30, 1994. Earnings per share were $1.88 in 1995 and were $1.67 in 1994. Based upon annualized net income the return on average assets was 1.13% for the first nine months of 1995 compared to 1.04% for the same period in 1994. PAGE
AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine and three months ended September 30, 1995 (Dollar amounts in thousands, except share data) The following schedule shows selected financial amounts and ratios for the nine months and three months ended September 30, 1995 and 1994. The Corporation feels these financial highlights include pertinent information relevant for its results as a company in the financial institutions industry. Nine Months Ended Three Months Ended September 30, September 30, 1995 1994 1995 1994 AVERAGE BALANCE SHEET DATA Total assets $ 528,979 $ 509,443 $ 542,918 $ 507,692 Securities 144,728 174,269 139,194 164,650 Loans 343,665 295,227 357,885 310,346 Allowance for loan losses 3,942 3,776 3,987 3,780 Deposits 467,289 448,322 482,403 447,043 Shareholders' equity 51,327 48,647 53,249 47,591 END OF PERIOD BALANCE SHEET DATA Total assets $ 554,033 $ 505,599 Securities 138,776 160,544 Loans 368,346 312,676 Allowance for loan losses 4,179 3,868 Deposits 488,281 444,224 Shareholders' equity 54,266 48,751 INCOME DATA Net interest income(t.e. basis) $ 16,525 $ 15,333 $ 5,576 $ 5,284 Provision for loan losses 425 100 275 50 Noninterest income 1,972 1,845 743 592 Noninterest expense 10,667 10,465 3,277 3,435 Net income 4,467 3,958 1,675 1,450
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AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine and three months ended September 30, 1995 (Dollar amounts in thousands, except share data) Nine Months Ended Three Months Ended September 30, September 30, 1995 1994 1995 1994 PER SHARE DATA Net income $ 1.88 $ 1.67 $ .71 $ .61 Cash dividends before pooling of interests .63 .63 .21 .21 Book value at end of period 22.87 20.57 Book value at end of period before FAS 115 23.17 21.50 Tangible book value at end of period 22.07 20.49 Tangible book value at end of period before FAS 115 22.37 21.42 Stock price at end of period 32.00 32.81 Weighted average shares outstanding 2,372,550 2,369,841 SELECTED RATIOS Return on average assets 1.13% 1.04% 1.22% 1.13% Return on average equity before FAS 115 11.22 10.72 12.29 11.66 Net interest margin(t.e.basis) 4.41 4.23 4.32 4.38 Net charge-offs to average loans .05 (.03) .03 (.01) Allowance for loan losses to loans 1.13 1.24 Nonaccrual loans to loans .24 .14 Loans past due 90 days or more to loans .25 .22 Performing restructured loans to loans .01 .16 OREO to loans .13 .13 Leverage capital(Tier 1 equity/average assets) 10.00 9.94 Tier 1 risk-based capital 12.89 13.75 Total risk-based capital 13.89 14.84
The Corporation's lead bank, The American National Bank of Vincennes, completed the purchase of $25,462 of deposits from a federal savings bank, on March 17, 1995. With these purchased deposits and other growth in deposits, the Corporation's total assets have increased $37,937 or 7.35% to $554,033 at September 30, 1995, from $516,096 at December 31, 1994. Significant changes in the balance sheet from December 31, 1994, to September 30, 1995, included inceases in cash and cash equivalents, loans and loans held for sale and decreases in securities while total interest bearing deposits inceased and noninterest bearing deposits decreased for a net total deposit increase. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) With the continuing loan demand, as demonstrated in loan growth, the Corporation has retained a portion of the increased deposits purchased in readily available funds, and cash and cash equivalents have increased $1,972 or 7.41% at September 30, 1995, from year end 1994. Total securities and interest bearing deposits in other banks decreased $13,533 or 8.84% to $139,569 at September 30, 1995, from $153,102 at December 31, 1994. The effect of FAS 115 and the mark-to-market of securities available for sale added $3,583 to securities available for sale during the first nine months of 1995. The FAS 115 negative mark-to-market adjustment at December 31, 1994, was $4,746 as compared to only $1,163 at September 30, 1995, and was due to the normal market adjustment when interest rates are stabilizing. Without the FAS 115 adjustment, available for sale securities decreased $16,818 or 14.38% from a combination of maturities and calls and $1,500 of sales during the first nine months of 1995. There were no sales or transfers of securities classified as held to maturity during the period ended September 30, 1995. Securities held to maturity increased $102 or .26% due to purchases exceeding maturities or calls during the nine months ended September 30, 1995. The Corporation experienced increased loan demand and total loans increased $47,250 or 14.72% to $368,346 at September 30, 1995, from $321,096 at December 31, 1994. Commercial loans increased $33,037 or 20.66% to $192,951 at September 30, 1995, from $159,914 at December 31, 1994. Commercial loan demand showed steady increases all during the nine months ended September 30, 1995. Real estate loans increased $7,742 or 9.74% to $87,206 at September 30, 1995, from $79,464 at December 31, 1994. As noted previously, the renewed interest in variable rate mortgage loans caused this increase. Installment loans increased $6,471 or 7.92% to $88,189 at September 30, 1995, from $81,718 at December 31, 1994. Installment loan demand and volume of new loans has exceeded maturities during 1995. Loans held for sale also increased $2,675 or 100.41% at September 30, 1995, to $5,339 from $2,664 at December 31, 1994. Total deposits increased $33,047 or 7.26% during the first nine months of 1995. Noninterest bearing deposits decreased $7,299 or 14.08% to $44,539 at September 30, 1995, from $51,838 at year end 1994, due to normal reductions of institutional public funds that were on deposit at December 31, 1994, and not on deposit at September 30, 1995. Interest bearing deposits increased $40,346 or 10.00% to $443,742 during the nine months ended September 30, 1995, from $403,396 at December 31, 1994, and was due in part to PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) the purchased deposits. Long-term debt, which is mainly borrowings from the Federal Home Loan Bank that were matched off against specific fixed rate lending programs, decreased $526 or 16.49% at September 30, 1995, from December 31, 1994, due to normal repayments. Total shareholders' equity, including the unrealized loss on securities available for sale, increased $5,229 or 10.66% to $54,266 at September 30, 1995, from $49,037 at December 31, 1994. The FAS 115 after tax mark-to-market adjustment on the available for sale securities accounted for $2,245 or 4.58% of this increase in total shareholders' equity at September 30, 1995, from December 31, 1994. The Corporation's regulators have issued guidelines stating that the unrealized loss on securities available for sale, other than those related to mutual funds (FAS 115 adjustments), should not be included in shareholders' equity for capital ratio calculations. Total shareholders' equity, excluding the FAS 115 adjustments, was $51,952 at December 31, 1994, and increased $3,000 or 5.77% to $54,952 at September 30, 1995. This increase was net income of $4,467 less dividends paid of $1,495 plus $16 related to increased mark-to-market on mutual funds and $12 related to sales of the Corporation's common stock for the dividend reinvestment and stock purchase plan. The dividend reinvestment and stock purchase plan was changed to a market only plan, during the second quarter of 1995, and no more shares of common stock will be issued by the Corporation through this plan. Capital adequacy in the banking industry is evaluated primarily by the use of three required capital ratios based on three separate calculations; leverage capital, Tier 1 risk-based capital and total risk-based capital. The leverage capital ratio is defined as total ending Tier 1 capital divided by total average assets less intangible assets and FAS 115 adjustments. Tier 1 risk-based capital is defined as Tier 1 capital divided by risk-weighted assets. Total risk-based capital is defined as Tier 1 capital plus Tier 2 capital divided by risk-weighted assets. Tier 1 capital is the sum of the core capital elements (common shareholders' equity, qualifying perpetual preferred stock and minority interest in the equity accounts of consolidated subsidiaries) less intangible assets and the FAS 115 PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) adjustments. Tier 2 capital consists of the allowance for loan losses (limited to an maximum of 1.25% of risk-weighted assets), perpetual preferred stock and other hybrid capital instruments. Risk-weighted assets are defined to include the assets on the balance sheet and off-balance sheet financial instruments in broad categories that are weighted at 20% to 100% depending on the asset totals within these broad categories. The Corporation's capital ratios at September 30, 1995, and December 31, 1994, were: September 30, 1995 December 31, 1994 Leverage capital ratio 10.00% 10.14% Tier 1 risk-based capital 12.89% 14.32% Total risk-based capital 13.89% 15.41% PENDING CHANGES IN ACCOUNTING PRINCIPLES The Financial Accounting Standards Board has issued Financial Accounting Standard No. 121 (FAS 121), "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of." Under this pronouncement, companies are required to adopt the new method of accounting for the recoverability due to impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used, and for long-lived assets and certain identifiable intangibles to be disposed of. FAS 121 is effective for fiscal years beginning after December 15, 1995. The Corporation has determined that the implementation of this standard will be immaterial to its financial statements. The Financial Accounting Standards Board has issued Financial Accounting Standard No. 122 (FAS 122), "Accounting for Mortgage Servicing Rights." Under this pronouncement, companies are required to implement a new method of accounting for the cost of servicing rights on mortgage loans originated and sold into the secondary mortgage market. The cost of the servicing rights on loans originated and sold, if it is practicable to estimate, would be recognized as a separate asset and amortized in proportion to and over the period of the estimated net servicing rights income. FAS 122 is effective for fiscal years beginning after December 15, 1995. The Corporation has not yet determined the impact of this standard on its financial statements. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the nine months ended September 30, 1995 (Dollar amounts in thousands, except share data) PENDING ACQUISITION On October 12, 1994, the Corporation executed an Agreement of Merger and Plan of Reorganization that provides for the Corporation to acquire First Robinson Bancorp, the holding company for The First National Bank in Robinson, Robinson, Illinois. On June 19, 1995, the original Agreement of Merger and Plan of Reorganization was amended to include the merger of The First National Bank in Robinson and Farmers' State Bank of Palestine, a wholly-owned subsidiary of the Corporation. As a result of the amendment, the combined entity resulting from the merger of First National Bank and Farmers' State Bank will be a wholly-owned subsidiary of the Corporation. The proposed acquisition will be accounted for as a pooling of interests and the Corporation will issue 636,504 shares of its common stock in exchange for the 119,200 currently issued and outstanding shares of First Robinson Bancorp. This merger has been approved by the shareholders of First Robinson Bancorp and the appropriate regulatory authorities and became effective November 1, 1995. PAGE AMBANC CORP. As of and for the nine months ended September 30, 1995 OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11 Statement of Computation of per share earnings. The copy of this exhibit filed as Exhibit 11 to AMBANC's Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by reference. 27 Financial Data Schedule for September 30, 1995. (b) No Form 8-K was filed with the SEC during the quarter ended September 30, 1995. PAGE AMBANC CORP. As of and for the nine months ended September 30, 1995 SIGNATURES Pursuant to the requirements 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. AMBANC CORP. (Registrant) DATE: November 13, 1995 BY: R. Watson Robert G. Watson, Chairman of the Board, President and Chief Executive Officer DATE: November 13, 1995 BY: Richard E. Welling Richard E. Welling, Secretary, Treasurer and C.F.O. PAGE AMBANC CORP. As of and for the nine months ended September 30, 1995 EXHIBIT INDEX EXHIBITS PAGE 11 Statement of Computation of per * share earnings. The copy of this exhibit filed as Exhibit 11 to AMBANC's Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by reference. 27 Financial Data Schedule for September 30, 1995. * Incorporated by reference from previously filed documents. EX-27 2
9 0000702904 AMBANC CORP. 1,000 3-MOS DEC-31-1995 SEP-30-1995 14,868 793 13,699 0 98,979 39,797 40,334 368,346 4,179 554,033 488,281 5,811 3,012 2,663 23,726 0 0 30,540 554,033 8,321 1,971 222 10,608 5,257 5,355 5,253 275 (1) 3,277 2,444 2,444 0 0 1,675 .71 .70 4.03 876 960 52 0 3,911 146 42 4,179 1,771 0 2,408
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