-----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, BiK0yFnIFknQEKkfVcfnXad536MU79iPxnMBaDfvIEycvy1gHa8gwONQWfryR4Ze JGYSTCet1s3ADZi+iaqTRg== 0000702904-96-000004.txt : 19960816 0000702904-96-000004.hdr.sgml : 19960816 ACCESSION NUMBER: 0000702904-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMBANC CORP CENTRAL INDEX KEY: 0000702904 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] 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: 96612169 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 June 30, 1996 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: 3,157,461 common shares of stock were outstanding as of August 14, 1996. PAGE AMBANC CORP. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at June 30, 1996 (unaudited) and December 31, 1995 Consolidated Statements of Income for six months and three months ended June 30, 1996 and 1995(unaudited) Consolidated Statements of Cash Flows for six months ended June 30, 1996 and 1995 (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) June 30, December 31, 1996 1995 ASSETS Cash and due from banks $ 27,592 $ 20,520 Federal funds sold 8,770 22,653 Total cash and cash equivalents 36,362 43,173 Interest bearing deposits in other banks 591 692 Securities available for sale at market 182,924 173,469 Loans held for sale 4,336 6,727 Loans, net of unearned income 471,615 442,657 Allowance for loan losses (5,431) (5,022) Loans, net 466,184 437,635 Premises, furniture and equipment, net 10,067 9,398 Accrued interest receivable and other assets 12,122 11,253 TOTAL ASSETS $ 712,586 $ 682,347 LIABILITIES Noninterest bearing deposits $ 74,917 $ 63,116 Interest bearing deposits 552,192 536,953 Total deposits 627,109 600,069 Short-term borrowings 8,708 6,788 Long-term debt 2,246 2,677 Accrued interest payable and other liabilities 6,118 5,101 TOTAL LIABILITIES 644,181 614,635 SHAREHOLDERS' EQUITY Preferred stock, $10 par value, 200,000 shares authorized, no shares issued or outstanding -- -- Common stock, $10 par value, 10,000,000 and 5,000,000 shares authorized, 3,158,961 and 3,158,961 shares issued at June 30, 1996, and December 31, 1995 31,590 31,590 Treasury stock (1,000 shares at cost) (30) -- Retained earnings 37,701 35,009 Unrealized gain/(loss) on securities available for sale, net of deferred taxes (856) 1,113 TOTAL SHAREHOLDERS' EQUITY 68,405 67,712 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 712,586 $ 682,347
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AMBANC CORP. CONSOLIDATED STATEMENTS OF INCOME (Dollar amounts in thousands, except share data) Six Months Ended Three Months Ended June 30, June 30, 1996 1995 1996 1995 INTEREST INCOME Interest and fees on loans $ 20,606 $ 18,050 $ 10,293 $ 9,347 Interest and fees on loans held for sale 292 122 168 77 Interest on securities Taxable 3,883 4,004 1,994 1,973 Tax exempt 1,408 1,388 715 690 Other interest 503 198 166 128 TOTAL INTEREST INCOME 26,692 23,762 13,336 12,215 INTEREST EXPENSE Interest on deposits 13,201 10,936 6,610 5,832 Interest on short-term borrowings 179 236 88 89 Interest on long-term debt 74 84 35 40 TOTAL INTEREST EXPENSE 13,454 11,256 6,733 5,961 NET INTEREST INCOME 13,238 12,506 6,603 6,254 Provision for loan losses 566 286 299 140 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 12,672 12,220 6,304 6,114 NONINTEREST INCOME Income from fiduciary activities 337 320 207 107 Service charges on deposit accounts 726 710 380 367 Gain/(loss) on securities (7) 11 (8) 6 Other operating income 638 434 396 223 TOTAL NONINTEREST INCOME 1,694 1,475 975 703 NONINTEREST EXPENSE Salaries and employees benefits 4,904 4,820 2,443 2,402 Occupancy expenses, net 592 526 307 262 Equipment expenses 569 534 272 274 Data processing expenses 254 182 107 91 FDIC insurance 43 631 22 321 Other operating expenses 2,360 2,324 1,265 1,134 TOTAL NONINTEREST EXPENSE 8,722 9,017 4,416 4,484 INCOME BEFORE INCOME TAXES 5,644 4,678 2,863 2,333 Income taxes 1,624 1,360 824 725 NET INCOME $ 4,020 $ 3,318 $ 2,039 $ 1,608 EARNINGS PER COMMON SHARE Net income per share $ 1.27 $ 1.05 $ .64 $ .51 Weighted average outstanding shares 3,158,945 3,158,955 3,158,928 3,158,961
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AMBANC CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands, except share data) Six Months Ended June 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,020 $ 3,318 Adjustments to reconcile net income to net cash from operating activities: Net premium amortization and discount accretion on securities 174 156 Depreciation 519 409 Provision for loan losses 566 286 (Gain)/loss on securities 7 (11) (Gain) on sales of loans (216) (50) Proceeds from sales of loans held for sale 12,740 5,131 Loans held for sale made to customers, net of payments collected (15,353) (8,356) Accrued interest receivable and other assets (869) 57 Accrued interest payable and other liabilities 2,166 (1,102) Deferred loan fees net of costs (23) (3) NET CASH FROM OPERATING ACTIVITIES 3,731 (165) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of securities available for sale 5,152 3,511 Proceeds from maturities and calls of securities available for sale 24,995 14,400 Proceeds from maturities and calls of securities held to maturity -- 8,944 Purchases of securities available for sale (42,901) (3,987) Purchases of securities held to maturity -- (7,860) Net change in interest bearing deposits in other banks 101 299 Loans made to customers, net of payments collected (27,268) (26,860) Loans purchased (8) (986) Proceeds from sales of loans 3,404 3,985 Property and equipment expenditures (1,188) (286) NET CASH FROM INVESTING ACTIVITIES (37,713) (8,840)
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AMBANC CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (Dollar amounts in thousands, except share data) Six Months Ended June 30, 1996 1995 CASH FLOWS FROM FINANCING ACTIVITIES Net change in deposits 27,040 14,431 Net change in short-term borrowings 1,920 (265) Payments on long-term debt (484) (597) Proceeds on long-term debt 53 51 Issuance of stock for dividend reinvestment -- 12 Purchase of treasury stock (30) -- Dividends paid (1,328) (1,102) NET CASH FROM FINANCING ACTIVITIES 27,171 12,530 NET CHANGE IN CASH AND CASH EQUIVALENTS (6,811) 3,525 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 43,173 29,531 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 36,362 $ 33,056 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period: Interest $ 12,756 $ 10,838 Income taxes 2,000 1,594 Noncash activities during the period: Reclassification of loans held for sale to real estate loans 5,220 --
PAGE AMBANC CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS Effective November 1, 1995, AMBANC Corp. completed the acquisition of First Robinson Bancorp (FRB) of Robinson, Illinois in Crawford county. The acquisition, which has been accounted for as a pooling of interests, involved the issuance of 668,329 shares of AMBANC Corp. common stock in exchange for the 119,200 shares of outstanding common stock of FRB. No fractional shares were issued and AMBANC Corp. paid $3 for 94 equivalent fractional shares and issued 668,235 common shares in the FRB acquisition. At the conclusion of the acquisition, FRB was merged into AMBANC Corp. and its wholly owned subsidiary, First National Bank in Robinson, Robinson, Illinois in Crawford county became a direct, wholly owned subsidiary of AMBANC Corp. The consolidated balance sheet at December 31, 1995, and the consolidated statement of income and consolidated statement of cash flows for six months ended June 30, 1995, represent the retroactive restatement, under the pooling of interests basis, of information for FRB and the previous AMBANC Corp. The following page presents the consolidated six months income statement for the previous AMBANC Corp. and FRB at June 30, 1995. PAGE
AMBANC CORP. CONSOLIDATED STATEMENT OF INCOME (Dollar amounts in thousands, except share data) Six Months Ended June 30, 1995 AMBANC FRB Consolidated Total interest income $19,675 $ 4,087 $ 23,762 Total interest expense 9,368 1,888 11,256 Net interest income before provision for loan losses 10,307 2,199 12,506 Provision for loan losses 150 136 286 Net interest income after provision for loan losses 10,157 2,063 12,220 Total other income 1,229 246 1,475 Total other expense 7,390 1,627 9,017 Income before income taxes 3,996 682 4,678 Income taxes 1,204 156 1,360 Net income $ 2,792 $ 526 $ 3,318 Earnings per common share (based on 3,158,948 average outstanding shares) $ 1.05
PAGE AMBANC CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) The Consolidated balance sheet as of June 30, 1996, consolidated statements of income for the six months and three months periods ended June 30, 1996 and 1995, and the consolidated statements of cash flows for the six months periods ended June 30, 1996 and 1995, 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 June 30, 1996, 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, 1995, annual report to shareholders. The results of operations for the period ended June 30, 1996, 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. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) NEW ACCOUNTING PRONOUNCEMENTS The Corporation adopted Statement of Financial Accounting Standards (FAS) 121, "Accounting for the Impairment of Long-Lived Assets or for Long-Lived Assets to be Disposed of", effective January 1, 1996. The adoption of FAS 121 had no effect on the Corporation because no assets, liabilities or intangibles of the Corporation were effected by this new FAS. The Corporation adopted FAS 122, "Accounting for Mortgage Servicing Rights", effective January 1, 1996, and with it the gains on sales of mortgages to the secondary mortgage market increased. The adoption of FAS 122 resulted in the Corporation recording an asset for servicing rights of $106 on $8,861 of qualifying fixed rate mortgages sold to the secondary mortgage market. The Corporation retains servicing rights and this asset relates only to mortgage loans originated and sold since the adoption of FAS 122. The book value of the sold real estate loans is reduced for the amount assigned to these servicing rights and the gain on the sale of these loans is increased accordingly. The servicing rights are being amortized against future service fee income based upon the anticipated life of each loan. FAS 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" was issued in June, 1996 and provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. FAS 125 applies to transactions occurring after December 31, 1996. Management has not yet quantified the effect of this new standard on the consolidated financial statements. FINANCIAL STATEMENT RECLASSIFICATIONS Certain items in the prior years financial statements have been reclassified to correspond with the current presentation. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (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%. Six Months Ended June 30, Increase 1996 1995 (Decrease) Interest income $ 26,692 $ 23,762 12.33 % Adjusted for tax exempt income 809 808 (.12) Tax equivalent interest income 27,501 24,570 11.93 Interest expense 13,454 11,256 19.53 Net interest income $ 14,047 $ 13,314 5.51 % Net interest income increased $733 or 5.51% for the six months ended June 30, 1996, compared to the six months ended June 30, 1995. This $733 increase was a combination of a $2,931 increase in interest income and a $2,198 increase in interest expense. The $2,931 increase in interest income was composed of an increase of $2,657 due to increased volume of average interest earning assets and an increase of $274 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 six months ended June 30, 1996 (Dollar amounts in thousands, except share data) interest earning assets. The $2,198 increase in interest expense was a combination of an increase of $1,368 due to increased volume of average interest bearing liabilities and an increase of $830 due to rate increases on these interest bearing liabilities. The Corporation's average assets for the first six months of 1996 increased $67,069 or 10.68% to $695,181 from $628,112 for the first six months of 1995. The percent of average earning assets to total average assets has stayed consistent at 95.25% for the first six months of 1996 and 95.24% for the first six months of 1995. Net interest margin decreased .22% to 4.27% for the first six months of 1996 from 4.49% for the first six months of 1995. This decrease is due to the fact that costs on average interest bearing liabilities are increasing faster than rates on average interest earning assets. The yield on average interest earning assets increased to 8.35% for the first six months of 1996 from 8.28% for the first six months of 1995 for an increase of .07%. The cost on average interest bearing liabilities increased at a faster rate and was 4.77% for the first six months of 1996 and 4.45% for the first six months of 1995 for an increase of .32%. The net interest margin started out the first quarter of 1995 at its best rate and decreased each subsequent quarter ending at 4.38% for all of 1995. The net interest margin for the fourth quarter of 1995 was 4.24% and thus actually increased .03% during the first six months of 1996 compared to the last quarter of 1995. The commercial loan fees received during the first six months of 1996 are higher than normal. If 1996 loan fees were reduced to the same level as in 1995, net interest margin would have been lowered to 4.22% or .05% less than actual. The interest spread, which is the mathematical difference between yields on average interest earning assets and costs on average interest bearing liabilities was at 3.58% for the first six months of 1996 compared to 3.83% for the first six months of 1995. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) The provision for loan losses was increased during 1996 because of increased loan volume, agricultural conditions and because of an increase in nonaccrual loans. Loans have increased 6.54% since December 31, 1995 and a portion of the 1996 provision is attributable to this increase. The Corporation has a large agricultural customer base and as of the end of the quarter the crop planting for 1996 was still questionable because of weather conditions. Since June 30, 1996, the weather conditions have improved and planting for 1996 has been complete. The agricultural community did lose most of the 1996 wheat crop but current outlook for all other crops has improved dramatically since the end of the quarter. The increase in nonaccrual loans is due primarily to commercial loans to one customer. This customer's real estate secured loans were placed on nonaccural at the end of the second quarter and all unpaid accrued interest was written off. These loans are currently protected by an adequate appraisal and the ultimate outcome of negotiations can not be determined at this time. The allowance for loan losses at June 30, 1996, was $5,431 or 1.15% of total loans less unearned income as compared to $5,022 or 1.13% of total loans less unearned income at December 31, 1995. During the first six months of 1996, loans charged off were $431 and recoveries from previously written off loans were $274, thus net charge offs for the first six months of 1996 were $157. The adequacy of the allowance for loan losses is analyzed by management of each subsidiary bank 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 June 30, 1996, 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 June 30, 1996, and December 31, 1995: June 30,1996 December 31, 1995 Nonaccrual loans .84% .22% Loans past due 90 days .37 .29 Performing restructured loans .02 .01 OREO .06 .06 PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) A summary of the activity in the allowance for loan losses account for the first six months ending June 30, 1996, and 1995 was: 1996 1995 Balance, January 1 $5,022 $4,531 Provision for loan losses 566 286 Loans charged off (431) (348) Recoveries of loans previously charged off 274 185 Balance, June 30 $5,431 $4,654 Noninterest income for the six months ended June 30, 1996, was up $219 or 14.85% to $1,694 as compared to $1,475 for the six months ended June 30, 1995. Income from fiduciary services was up by $17 or 5.31% to $337 in 1996 from $320 in 1995. Service charges on deposit accounts remained consistent with an increase of $16 or 2.25% in 1996 compared to 1995. Other operating income increased $204 or 47.00% to $638 for the six months ended June 30, 1996, from $434 for the same six months in 1995. This increase is due to several factors with customer service charges and insurance commissions decreasing but being offset by increased gains on the sale of loans held for sale. The gains on sales of loans held for sale were $106 higher due to the effect of adopting FAS 122. Such gains were offset by amortization of the related servicing rights asset totaling $2 for the six month period ended June 30, 1996. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) Noninterest expense for the six months ended June 30, 1996, was $8,722 as compared to $9,017 for the six months ended June 30, 1995, for a decrease of $295 or 3.27%. Salaries and employee benefits are the largest portion of noninterest expense and increased $84 or 1.74% in the first six months of 1996 compared to the same period in 1995. Individual major components showed increases in salaries and related taxes, life insurance and employee relocation expense and decreases in medical and pension expense. One of the affiliate banks was funding a defined benefit pension plan in 1995 and not in 1996. This pension plan was curtailed in 1994 and final funding was completed during 1995. Occupancy expenses were up $66 or 12.55% and equipment expenses were up $35 or 6.55% in the first six months of 1996 compared to 1995. The Corporation has added four branches since June 30, 1995, and these expenses have increased accordingly. Data processing expenses have increased due to the upgrading of the computer system. The $72 or 39.56% increase in data processing expenses during the first six months of 1996, are the result of a decision to add short term expenses that will benefit the Corporation with reduced data processing expenses in the future. The upgrading of the data processing system in late 1995 and the conversion of another subsidiary bank to this system during the first quarter of 1996 will provide for long term expense reduction. The conversion of the last subsidiary bank to the in-house data processing system is anticipated to be complete during the last quarter of 1996. All of the Corporation's subsidiary banks have been assigned the classification of least risk by the FDIC and as such are subject to the lowest deposit insurance rates available from the Bank Insurance Fund (BIF). Because of excess funding, the FDIC set its lowest BIF premium rate at 0% with a minimum of $2 per subsidiary bank effective January 1, 1996. This 0% rate for FDIC insurance will exist as long as BIF remains at or above the 1.25% of total insured deposits set by law. Two of the subsidiary banks purchased deposits from savings and loans in the past and thus must continue to pay the Savings Association Insurance Fund (SAIF) rather than the BIF rate on these deposits. The SAIF rate is .23% of insured deposits. With these changes, the Corporation has seen FDIC insurance expense reduce to only $43 in the first six months of 1996 from $631 during the first six months of 1995. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) Other operating expenses increased $36 or 1.55% to $2,360 for the first six months of 1996 from $2,324 for the same period in 1995. This increase is due to many increases and decreases with major changes being an increase in goodwill amortization and a decrease in professional fees in 1996. Due to purchased deposits in March 1995, the related goodwill amortization was included during all of 1996 but only for three and one-half months in 1995. The Corporation finalized a merger on November 1, 1995, and professional fees have decreased in 1996 without those related to this merger. Other operating expenses in 1996 also includes $100 of accrued expenses for the name change of all subsidiary banks. (See pending changes for further details.) Income before income taxes was up $966 or 20.65% to $5,644 for the first six months of 1996 from $4,678 for the first six months of 1995. As previously noted, $588 is due to the reduction in FDIC expense. The net income for the first six months ended June 30, 1996, was up $702 or 21.16% to $4,020 as compared to $3,318 for the six months ended June 30, 1995. Earnings per share were $1.27 in 1996 and were $1.05 in 1995. Based upon annualized net income the return on average assets was 1.16% for the first six months of 1996 compared to 1.07% for the same period in 1995. PAGE
AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) The following schedule shows selected financial amounts and ratios for the three months and six months ended June 30, 1996 and 1995. The Corporation feels these financial highlights include pertinent information relevant for its results as a company in the financial institutions industry. Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 AVERAGE BALANCE SHEET DATA Total assets $ 699,245 $ 619,135 $ 695,181 $ 628,112 Securities 185,106 183,991 182,322 182,079 Loans 459,058 393,647 452,779 401,854 Allowance for loan losses 5,162 4,527 5,091 4,558 Deposits 615,858 542,494 611,746 551,821 Shareholders' equity 67,959 58,742 68,027 60,011 END OF PERIOD BALANCE SHEET DATA Total assets $ 712,586 $ 644,057 Securities 182,924 175,793 Loans 471,615 412,358 Allowance for loan losses 5,431 4,654 Deposits 627,109 564,818 Shareholders' equity 68,405 63,047 INCOME DATA Net interest income(t.e. basis) $ 7,012 $ 6,659 $ 14,047 $ 13,314 Provision for loan losses 299 140 566 286 Noninterest income 975 703 1,694 1,475 Noninterest expense 4 416 4,484 8,722 9,017 Net income 2,039 1,608 4,020 3,318
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AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 PER SHARE DATA Net income $ .64 $ .54 $ 1.27 $ 1.05 Cash dividends before pooling of interests .21 .20 .42 .40 Book value at end of period 21.65 20.95 Book value at end of period before FAS 115 21.97 21.28 Tangible book value at end of period 21.07 20.28 Tangible book value at end of period before FAS 115 21.39 20.61 Stock price at end of period 28.75 31.25 Weighted average shares 3,158,961 3,158,961 3,158,961 3,158,955 Weighted average treasury shares 33 -- 16 -- SELECTED RATIOS Return on average assets 1.17% 1.01% 1.16% 1.07% Return on average equity before FAS 115 12.05 10.20 11.97 10.71 Net interest margin(t.e.basis) 4.23 4.41 4.27 4.49 Efficiency ratio 58.27 64.45 58.41 64.49 Net charge-offs to average loans -- .02 .03 .04 Allowance for loan losses to loans 1.15 1.13 Nonaccrual loans to loans .84 .28 Loans past due 90 days or more to loans .37 .34 Performing restructured loans to loans .02 .03 OREO to loans .06 .12 Leverage capital(Tier 1 equity/average assets) 9.71 9.80 Tier 1 risk-based capital 13.31 13.74 Total risk-based capital 14.38 14.78
PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) FINANCIAL CONDITION Total assets have increased $30,239 or 4.43% to $712,586 at June 30, 1996, from $682,347 at December 31, 1995. This growth is mostly attributable to the opening of two new branch locations in Wal-Mart Supercenters and the resulting increased deposits. The rates paid on deposits were set to attract new customers and business but actually increased deposits more than was budgeted. This deposit growth is also affected by the fact that rates paid on bank deposits are coming closer to investment rates paid by brokerage firms and the Corporation has seen customers returning deposits to the banks. Deposits increased $27,040 or 4.51% to $627,109 at June 30, 1996, from $600,069 at December 31, 1995. Noninterest bearing deposits increased $11,801 or 18.70% while interest bearing deposits increased $15,239 or 2.84%. The total cash and cash equivalents have decreased $6,811 or 15.78% at June 30, 1996, from December 31, 1995, and have provided an additional source for investing by the Corporation. These increased cash flows were mostly used to increase investments and loans during the six months ended June 30, 1996. Investments increased $9,455 or 5.45% to $182,924 at June 30, 1996, from $173,469 at December 31, 1995. This is the book balance of securities available for sale which are presented after being adjusted to market value. The market value adjustment for these securities went from a positive $1,725 at year end 1995 to a negative $1,393 at the end of June 1996. This swing is the result of normal repricing of investment securities in a rising rate environment which occurred during the first six months of 1996. Without this mark to market swing of $3,118, investments would have increased $12,573 or 7.32% between December 31, 1995, and June 30, 1996. PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) Loans held for sale represent qualifying fixed rate mortgage loans that are available for sale into the secondary market. Fixed rate real estate mortgage loan rates were low enough that the Corporation has experienced demand for these loans during the six months ended June 30, 1996. The balance has actually decreased $2,391 but this is due to selling loans into the secondary market and to transferring loans held for sale to real estate loans in both the first and second quarter. During the first quarter, loans totaling $940 and classified as loans held for sale at December 31, 1995, were determined not to fit the criteria of loans the Corporation was selling to the secondary market and were transferred to real estate loans. During the second quarter, loans totaling $4,280 with a weighted average rate of 7.49% were transferred to real estate loans because these rates were felt to give the Corporation an acceptable long term yield. The sale of $12,524 of loans held for sale in 1996 has provided a net gain on sales of $216 including the increased gains of $106 due to the adoption of FAS 122 mentioned previously. The following is the detail of activity in the loans held for sale between year end and June 30, 1996: Balance December 31, 1995 $ 6,727 New loans booked (net of payments) 15,353 Loans transferred (5,220) Loans sold (12,524) Total at June 30, 1996 $ 4,336 The Corporation services $86,001 of real estate loans sold to the secondary market as of June 30, 1996. Loans have increased $28,958 or 6.54% at June 30, 1996, from December 31, 1995. The following shows the balance by loan classification as of the end of the periods: 6-30-96 12-31-95 Commercial $240,798 $230,077 Real estate 127,719 115,067 Installment 99,629 93,791 Credit cards 3,469 3,722 Total $471,615 $442,657 The Corporation has seen increased demand for commercial loans as the economy continues its steady to slightly increased movement and commercial loans have increased $10,721 or 4.66%. Real PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) estate loans have increased $12,652 or 11.00% but has been effected by the previously mentioned $5,220 transfer into real estate loans from loans held for sale. Excluding this transfer real estate loans increased $7,432 or 6.18% at June 30, 1996. Installment loans have increased $5,838 or 6.22% due to the steady economy and consistent demand. The demand for consumer loans seems to have a direct correlation with the consumer's confidence in the economy. Total shareholders' equity, including the unrealized loss on securities available for sale, increased $693 or 1.02% to $68,405 at June 30, 1996, from $67,712 at December 31, 1995. The change in the adjustment for securities available for sale caused total equity to decrease $1,969 or 2.91% at June 30, 1996, from December 31, 1995. This decrease is the after tax effect of the mark-to-market adjustment on securities available for sale which was a negative $856 at June 30, 1996, and was a positive $1,113 at December 31, 1995. The Corporation's regulators have issued guidelines stating that the unrealized gain or 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 $66,510 at December 31, 1995, and increased $2,627 or 3.95% to $69,137 at June 30, 1996. This increase was net income of $4,020 less dividends paid of $1,328 less $35 related to a decrease in the mark-to-market on mutual funds and $30 related to treasury stock. The treasury stock was purchased and will be issued for payment of the Corporation's fees to Directors. The Director stock grant plan was approved by the shareholders at the annual meeting in April 1996 and treasury stock thus appears for the first time on the balance sheet at June 30, 1996. 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 PAGE AMBANC CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION As of and for the six months ended June 30, 1996 (Dollar amounts in thousands, except share data) (common shareholders' equity, qualifying perpetual preferred stock and minority interest in the equity accounts of consolidated subsidiaries) less intangible assets and the FAS 115 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 June 30, 1996, and December 31, 1995, were: June 30, 1996 December 31, 1995 Leverage capital ratio 9.71% 10.01% Tier 1 risk-based capital 13.31% 13.61% Total risk-based capital 14.38% 14.67% PENDING CHANGES The following two changes were approved by the appropriate regulators and became effective on July 1, 1996. These are both major changes by the Corporation and were implemented for long- term benefits. The Corporation has approved the merger of two of our subsidiary banks. These banks, The American National Bank of Vincennes and Citizens' National Bank of Linton, are both domiciled in Indiana. This merger will mean that all of the Corporation's banking operations in Indiana will be performed by one legal entity. The Corporation has also approved a name change for all of the subsidiary banks. The banks will all be named "AmBank" and will use consistent signage and advertisements. The name change is anticipated to bring several efficiencies and will provide for more exposure and recognition with all banks using the same name. This name change is also anticipated to bring more exposure to the Corporation since the new name for the banks will be very similar to our corporate name, "AMBANC Corp." and "AMBK" our NASDAQ symbol. PAGE AMBANC CORP. As of and for the six months ended June 30, 1996 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, 1995, is incorporated herein by reference. 27 Financial Data Schedule for June 30, 1996. (b) No Form 8-K was filed with the SEC during the quarter ended June 30, 1996. PAGE AMBANC CORP. As of and for the six months ended June 30, 1996 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: August 14, 1996 BY: R. Watson Robert G. Watson, Chairman of the Board, President and Chief Executive Officer DATE: August 14, 1996 BY: Richard E. Welling Richard E. Welling, Secretary, Treasurer and C.F.O. PAGE AMBANC CORP. As of and for the six months ended June 30, 1996 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, 1995, is incorporated herein by reference. 27 Financial Data Schedule for June 30, 1996. * Incorporated by reference from previously filed documents. EX-27 2
9 0000702904 AMBANC CORP. 1,000 3-MOS DEC-31-1996 JUN-30-1996 27,592 591 8,770 0 182,924 0 0 471,615 5,431 712,586 627,109 8,708 6,118 2,246 0 0 31,590 36,815 712,586 10,293 2,709 166 13,336 6,610 6,733 6,603 299 (8) 4,416 2,863 2,863 0 0 2,039 .64 .64 3.99 3,952 1,726 85 0 5,139 154 147 5,431 2,511 0 2,920
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