UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT 1934. For the quarterly period ended March 31, 1997
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 For the transition period from to .
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Commission File Number: 0-27036
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Ambanc Holding Co., Inc.
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(Exact name of registrant as specified in its charter)
Delaware 14-1783770
- ------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11 Division Street, Amsterdam, New York 12010-4303
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518)842-7200
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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. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's class
of common stock, as of the latest practicable date.
Class Outstanding at May 14, 1997
- ----------------------------- -----------------------------------
Common Stock, $.01 Par Value 4,392,023
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
FORM 10-Q
March 31, 1997
Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Interim Financial Statements(unaudited):
Consolidated Interim Statements of Income for the three months
ended March 31, 1997 and 1996.................................. 3
Consolidated Interim Statements of Financial Condition at
March 31, 1997 and December 31, 1996........................... 4
Consolidated Interim Statements of Cash Flows for the three
months ended March 31, 1997 and 1996........................... 5
Summarized Notes to Consolidated Interim Financial Statements.. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 8
Part II. OTHER INFORMATION..................................................16
Item 6. Exhibits and Reports on Form 8-K...............................16
SIGNATURES....................................................................17
EXHIBITS INDEX................................................................18
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Income (unaudited)
(dollars in thousands, except per share amounts)
The Three Months
Ended March 31,
1997 1996
------- -------
Interest and dividend income:
Loans ................................................. $ 4,891 $ 5,049
Securities available for sale ......................... 3,659 1,220
Federal Funds Sold .................................... 88 614
Federal Home Loan Bank stock .......................... 37 32
------- -------
Total interest income ............................... 8,675 6,915
------- -------
Interest Expense:
Deposits .............................................. 3,103 3,262
Borrowings ............................................ 1,552 --
------- -------
Total interest expense .............................. 4,655 3,262
------- -------
Net interest income ................................. 4,020 3,653
Provision for loan losses ................................ 363 1,628
------- -------
Net interest income after provision
for loan losses ................................... 3,657 2,025
------- -------
Non-interest income:
Service charges on deposit accounts ................... 181 176
Net losses on securities transactions ................. (1) (98)
Other ................................................. 54 54
------- -------
Total other income .................................. 234 132
------- -------
Non-interest expense:
Salaries, wages and benefits .......................... 1,346 1,254
Occupancy and equipment ............................... 334 341
Data processing ....................................... 232 221
Federal deposit insurance premium ..................... 9 1
Correspondent bank processing fees .................... 34 28
Real estate owned and repossessed assets expenses, net 110 127
Professional fees ..................................... 109 140
Other ................................................. 641 580
------- -------
Total other expenses ................................ 2,815 2,692
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Income (loss) before taxes .............................. 1,076 (535)
Income tax expense (benefit) ............................. 424 (221)
------- -------
Net income (loss) ................................... $ 652 ($ 314)
======= =======
Net income (loss) per common share (4,011,349 and 4,988,924 weighted average
number of shares issued and outstanding, for the three months
ended March 31, 1997 and 1996, respectively) ........... $ 0.16 ($ 0.06)
See accompanying notes to consolidated interim financial statements
3
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Financial Condition (unaudited)
(dollars in thousands)
March 31 Dec. 31,
1997 1996
--------- ---------
Assets
------
Cash and due from banks .............................. $ 5,608 $ 6,387
Federal funds sold ................................... 6,700 4,500
--------- ---------
Cash and cash equivalents ....................... 12,308 10,887
Securities available for sale, at fair value ......... 202,733 200,539
Loans receivable, net of unamortized fees ............ 251,792 251,532
Allowance for loan losses ....................... (3,712) (3,438)
--------- ---------
Loans receivable, net ........................... 248,080 248,094
Accrued interest receivable .......................... 3,274 3,201
Premises and equipment, net .......................... 2,818 2,784
Federal Home Loan Bank of New York stock, at cost .... 3,291 2,029
Real estate owned and repossessed assets ............. 663 715
Other assets ......................................... 4,950 4,172
--------- ---------
Total assets .................................... $ 478,117 $ 472,421
========= =========
Liabilities and Shareholders' Equity
------------------------------------
Liabilities:
Deposits .......................................... $ 311,471 $ 298,082
Advances from borrowers for taxes and insurance ... 1,111 1,703
Advances from FHLB ................................ -- 6,000
Other borrowed funds .............................. 102,310 102,780
Accrued interest payable .......................... 1,037 1,077
Accrued expenses and other liabilities ............ 1,369 1,261
--------- ---------
Total liabilities ............................... 417,298 410,903
Shareholders' equity:
Preferred stock $.01 par value.Authorized 5,000,000
shares; none outstanding at March 31, 1997 and
December 31, 1996 .................................. -- --
Common stock $.01 par value. Authorized 15,000,000
shares; 5,422,250 shares issued
at March 31, 1997 and December 31, 1996 ......... 54 54
Additional paid in capital ......................... 52,166 52,128
Retained earnings,substantially restricted ......... 25,088 24,436
Treasury Stock, at cost (1,030,227 shares at March
31,1997 and December (11,208) (11,208)
Common stock acquired by ESOP ...................... (3,680) (3,812)
Net unrealized loss on securities available for sale (1,601) (80)
--------- ---------
Total shareholders' equity ....................... 60,819 61,518
Total liabilities and shareholders' equity ....... $ 478,117 $ 472,421
======== ========
See accompanying notes to consolidated interim financial statements
4
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Cash Flows (unaudited)
(dollars in thousands) For the Three months
Ended March 31
1997 1996
------- --------
Increase (decrease) in cash and cash equivalents: Cash flows provided (used) by
operating activities:
Net income (loss) ................................... $ 652 ($ 314)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation ..................................... 118 111
Amortization of computer software costs .......... 11 16
Provision for loan losses ........................ 363 1,628
ESOP Compensation Expense ........................ 170 109
Net loss (gains) on sale and redemptions of
securities available for sale ................ 1 98
Net loss on sale and writedowns of other real
estate owned and other repossessed assets ... 65 31
Net amortization on securities .................. 86 107
Decrease in accrued interest receivable
and other assets ............................ 180 16,858
Increase (Decrease) in accrued expenses and
other liabilities ............................ 68 (43,790)
Increase (decrease) in advances from
borrowers for taxes and insurance ............ (592) (541)
-------- --------
Net cash provided (used) by
operating activities .............. 1,122 (25,687)
Cash flows from investing activities:
Proceeds from sales and redemptions of
securities available for sale .................... 2,467 15,299
Purchases of securities available for sale .......... (12,529) (60,055)
Proceeds from principal paydowns and
maturities of securities available for sale ..... 5,232 10,234
Purchase of FHLB stock .............................. (1,262) (137)
Net (increase) decrease in loans made to
customers ....................................... (424) 3,277
Capital Expenditures ................................ (152) (109)
Expenditures Computer Software ...................... (14) 0
Proceeds from Sale of other real estate owned and
otherhrepossessedsassetset ....................... 62 159
-------- --------
Net cash used by investing
activities .................... (6,620) (31,332)
(Continued)
5
<PAGE>
AMBANC HOLDING CO., INC. AND SUBSIDIARIES
Consolidated Interim Statements of Cash Flows, Continued (unaudited)
(dollars in thousands)
For the Three months
Ended March 31
1997 1996
-------- --------
Cash flows from financing activities:
Net increase (decrease) in deposits ................. 13,389 (1,908)
Repayments on FHLB borrowings, net ................. (6,000) --
Decrease in other borrowed funds .................... (470) --
-------- -------
Net cash provided by financing activities ........... 6,919 (1,908)
------- -------
Net increase (decrease) in cash and cash equivalents .... 1,421 (58,927)
Cash and cash equivalents at beginning of year .......... 10,887 84,613
------- -------
Cash and cash equivalents at end of period .............. $ 12,308 $ 25,686
======= =======
Supplemental disclosures of cash flow information- cash paid during the year
for:
Interest ....................................... $ 4,698 $ 3,250
======= =======
Income Taxes ................................... $ 270 $ 447
======= =======
Noncash investing activity:
Net reduction in loans receivable resulting from the transfer to real estate
owned and other repossessed
assets ................................................. $ 75 $ 914
======= =======
Net decrease in unrealized loss on investment
securities and mortgage-backed securities,
available for sale, net of deferred tax effect ..... ($ 1,521) ($ 582)
======= =======
See accompanying notes to consolidated interim financial statements
6
<PAGE>
SUMMARIZED NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(1) In management's opinion, the financial information, which is unaudited,
reflects all adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of the financial information as of and for the
three month periods ended March 31, 1997 and March 31, 1996 in conformity with
generally accepted accounting principles. These consolidated financial
statements should be read in conjunction with Ambanc Holding Co., Inc.'s ("the
Company" herein) 1996 Annual Report on Form 10-K. The results of operations for
the interim periods are not necessarily indicative of the results of operations
to be expected for the full fiscal year ended December 31, 1997.
(2) Amounts in the prior periods' consolidated interim financial statements are
reclassified whenever necessary to conform to current period presentations.
(3) Earnings per Share
Earnings or loss per share are computed based on the weighted average
number of shares outstanding, less unreleased employee stock ownership shares,
during the period. The weighted average number of shares outstanding were
4,011,349 and 4,988,924 for the three months ended March 31, 1997 and 1996,
respectively.
(4) In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" (Statement 128),
which establishes standards for computing and presenting earnings per share
(EPS). This Statement simplifies the standards for computing EPS making them
comparable to international EPS standards and supersedes Accounting Principals
Board Opinion No. 15, "Earnings per Share" and related interpretations.
Statement 128 replaces the presentation of primary EPS with the presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the diluted
EPS computation.
Basic EPS excludes dilution and is computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock, or resulted in the issuance of common
stock that then shared in the earnings of the entity. This Statement is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. Earlier application is not permitted. This
Statement requires restatement of all prior-period EPS data presented.
The Company will present its EPS information in accordance with Statement
128 as of December 31, 1997. Management anticipates that the effect of the
adoption of this Statement will not have a material effect on the Company's
consolidated financial statements.
7
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with
the unaudited consolidated interim financial statements and related notes and
with the statistical information and consolidated financial data appearing in
this report as well as the Company's 1996 Annual Report on Form 10-K.
When used in this quarterly Report on Form 10-Q, the words or phrases
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties -- including, changes in economic conditions in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market area and competition,
that could cause actual results to differ materially from historical earnings or
losses and those presently anticipated or projected. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company wishes to advise
readers that the factors listed above could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements.
The Company does not undertake -- and specifically disclaims any
obligation -- to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
General
The results of operations of the Company's subsidiary Bank are dependent
primarily on net interest income, which is the difference between the income
earned on its loans and securities and its cost of funds, consisting of the
interest paid on deposits and borrowings. Results of operations are also
affected by the Bank's provision for loan losses, net expenses on foreclosed
assets and by general economic and competitive conditions, particularly changes
in interest rates, government policies and actions of regulatory authorities.
Future changes in applicable law, regulations or government policies may
materially impact the financial condition and results of operations of the
Company and the Bank.
Ambanc recorded net income of $652,000, or $0.16 per common share, for the
quarter ended March 31, 1997. These results compare to a net loss of $314,000,
or $0.06 per share, for the comparable period in 1996. The net loss recorded in
the 1996 period was attributable to an initial $1.5 million provision for loan
losses related to the Chapter 11 bankruptcy filing on March 29, 1996, by the
Bennett Funding Group, Inc. ("Bennett" herein), a lease financing company that
had a $3.6 million aggregate loan relationship with the Company's wholly owned
8
<PAGE>
subsidiary bank, Amsterdam Savings Bank, FSB, as of the bankruptcy filing date.
Excluding the Bennett provision, the Company would have earned approximately
$593,000, or $0.12 per share, for the three months ended March 31, 1996.
Non-performing assets, which included $1.9 million for Bennett (in the
fourth quarter of 1996, the Company recorded a partial charge-off of $1.7
million against the original loan balance of $3.6 million), improved to $5.1
million at March 31, 1997, from $5.6 million at December 31, 1996. At March 31,
1997, non-performing assets were 1.06% of total assets compared to 1.18% at
December 31, 1996. The Company's allowance for loan losses to non-performing
loans and to total loans at March 31, 1997, were 83.87% and 1.47%, respectively,
compared to 70.47 % and 1.37 %, respectively, at December 31, 1996. See "Asset
Quality" herein.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income before provision for loan losses for the three months
ended March 31, 1997, was $4.0 million, an increase of $367,000, or 10.0%,
compared to the same period in 1996. The improvement in net interest income was
attributable to an increase of $87.3 million, or 23.3%, in average interest
earning assets in the quarter ended March 31, 1997 compared to the prior year,
partially offset by a narrowing in the average net interest margin by 39 basis
points to 3.53% for the quarter ended March 31, 1997, from 3.92% for the same
quarter in 1996. The growth in average interest earning assets was primarily the
result of an increase in securities available for sale ("securities AFS" herein)
of $125.6 million to $201.5 million, partially offset by a decrease of $39.1
million in federal funds sold.
The narrowing in the Company's average net interest margin was
attributable primarily to a change in the composition or mix of the Company's
average interest-bearing liabilities as a percentage of its total average
funding mix, which is composed of interest-bearing liabilities and non-interest
bearing funds. During the quarter ended March 31, 1996, the Company had no
borrowed funds as part of its funding mix. However, as part of the Company's
strategy to increase earnings, the Company initiated a program subsequent to
March 31, 1996, in which it borrowed funds to purchase securities AFS and
simultaneously pledged the bulk of these securities as securities sold under
agreements to repurchase ("reverse repos" herein). As a result of this program,
average borrowed funds for the quarter ended March 31, 1997, increased to $104.7
million at an average rate of 5.93%, primarily reverse repos, which increased to
$102.5 million. Mainly as a result of these borrowings, average interest-bearing
liabilities for the three months ended March 31, 1997, increased to 83.9% of the
Company's total average funding mix compared to 77.2% for the comparable 1996
period.
Provision for loan losses
Provision for loan losses declined by $1.3 million to $363,000 for the
three months ended March 31, 1997, from $1.6 million in 1996. The decrease was
attributable to the initial $1.5 million Bennett provision recorded in the
quarter ended March 31, 1996. See "--General" and "--Asset Quality" herein.
9
<PAGE>
Non-interest income
Total non- interest income increased by $102,000 to $234,000, primarily
due to a reduction in net losses on securities sold of $97,000. In late 1995,
the Bank's securities portfolio was yielding below market rates . On the basis
of its projection that the losses on the sales would be recovered in a
relatively short period of time, management decided to sell most of its below
market holdings in early January 1996 and reinvest the proceeds in higher
yielding securities .
Non-interest expense
Total non-interest expenses increased $123,000, or 4.6%, to $2.8 million
for the three months ended March 31, 1997, compared to the same period in 1996.
The increase primarily resulted from an increase in salaries, wages and benefits
by $92,000, $81,000 of which resulted from increased accruals for the Company's
ESOP and other stock based compensation during the quarter ended March 31, 1997.
Excluding salaries, wages and benefits, the net increase in all other
non-interest expenses was $31,000, or 2.2%, when compared to the 1996 quarter.
Increases in data processing, FDIC deposit insurance premiums, correspondent
bank processing fees and other non-interest expenses were partially offset by
declines in the expenses related to occupancy and equipment, real estate owned
and repossessed assets, and professional fees.
Income Taxes
For the quarter ended March 31, 1997, the Company recorded an income tax
expense of $424,000, an increase of $645,000, compared to an income tax benefit
of $221,000 in 1996. The increase resulted from the Company's return to a
profitable position for the three months ended March 31, 1997, with net income
before taxes improving to $1.1 million compared to a net loss before taxes of
$535,000 in the corresponding 1996 period.
FINANCIAL CONDITION
The Company's total assets at March 31, 1997, were $478.1 million, an
increase of $5.7 million, or 1.2%, compared to total assets of $472.4 million at
December 31, 1996. The growth in total assets was primarily attributable to
increases in securities AFS and federal funds sold, each of which increased by
$2.2 million, and an increase of $1.3 million in the amount of Federal Home Loan
Bank of New York stock that the Bank is required by regulation to own as a
member institution of the Federal Home Loan Bank System.
Total shareholders' equity decreased $699,000 to $60.8 million, primarily
due to tax-effected unrealized losses on available for sale securities of $1.6
million at March 31, 1997, compared to $80,000 at December 31, 1996, partially
offset by net income from operations of $652,000 for the three months ended
March 31, 1997. Including unreleased ESOP shares as outstanding, at March 31,
1997, the book value per share was $13.85 compared to $14.01 at December 31,
1996. Excluding the tax-effected unrealized losses on securities AFS, the book
value per share at March 31, 1997, was $14.21 compared to $14.02 at December 31,
1996.
10
<PAGE>
The primary factor responsible for the increase in net tax-effected
unrealized losses on securities available for sale was the general increase in
market interest rates that occurred during the three months ended March 31,
1997. If market interest rates continue to increase, the Company would evaluate
whether it would be more advantageous to sell the below market securities at a
loss and reinvest the proceeds in higher yielding securities and/or loans if the
losses on such sales could be recovered in a relatively short time period.
Moreover, the sales of securities at a loss could adversely affect the Company's
net earnings in the year of the sales. Conversely, if the Company decided not to
sell the below market securities if market interest rates continue to rise, net
interest income could be adversely affected as the Company's average cost of
funds would probably increase.
However, if market interest rates decline in the future, the Company's
consolidated unrealized losses would decrease. Furthermore, depending on the
magnitude of any future interest rate declines, the Company's available for sale
securities could produce unrealized gains. Additionally, net interest income
could increase as the Company's average cost to fund these interest-earning
assets would probably be decreasing.
Liquidity and Funding
The Company's primary sources of funds for operations are deposits from
its market area, principal and interest payments on loans and securities
available for sale, proceeds from the sale and maturity of securities available
for sale, advances from the FHLB of New York, and securities sold under
agreements to repurchase. While maturities and scheduled amortization of loans
and securities are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions, and competition.
The primary investing activities of the Company are the origination of
loans and the purchase of securities. During the quarter ended March 31, 1997,
the Bank's loan originations totaled $15.4 million. The Company purchased
securities available for sale during the same quarter of $12.5 million.
The primary financing activity of the Bank is the attraction of deposits.
During the quarter ended March 31, 1997, the Bank's deposits increased by $13.4
million from December 31, 1996, primarily certificates of deposit, which
increased $11.7 million. Management believes that the increase in deposits
during the three months ended March 31, 1997, resulted primarily from increases
in market interest rates by the Company and other local banks on certificates of
deposit.
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which may be varied by the OTS
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term borrowings. The required minimum liquidity ratio is
currently 5% and the short-term liquidity ratio is 1%. The Bank's average daily
liquidity ratio for the month of March 1997 was 9.3%, and its short-term
liquidity ratio for the same month was 3.1%.
The Bank's most liquid assets are cash and cash equivalents, which include
federal funds sold and bank deposits. The level of these assets is dependent on
the Bank's operation, financing, and investing activities during any given
period. At March 31, 1997, cash and cash equivalents totaled $12.3 million,
11
<PAGE>
compared to $10.9 million at December 31, 1996. The increase resulted from an
increase of $2.2 million in federal funds sold, partially offset by a decline in
cash and bank deposits.
The Bank anticipates that it will have sufficient funds available to meet
its current commitments. At March 31, 1997, the Bank had commitments to
originate loans of $6.8 million as well as undrawn commitments of $6.2 million
on home equity and other lines of credit. Certificates of deposit that are
scheduled to mature in one year or less at March 31, 1997, totaled $96.6
million. Management believes that a significant portion of such deposits will
remain with the Bank. However, if the Bank is not able to maintain its
historical retention rate on maturing certificates of deposit, it may consider
employing one or more of the following strategies: increase its borrowed funds
position to compensate for the deposit outflows; increase the rates it offers on
these deposits in order to maintain or increase the retention rate on maturing
CDs and/or to attract new deposits; or, attempt to increase certificates of
deposit through the use of deposit brokers. Depending on the level of market
interest rates at the CD renewal dates, the implementation of one or a
combination of these strategies could result in higher or lower levels of net
interest income and net earnings.
The Company also has a need for, and sources of, liquidity. Liquidity is
required to fund its operating expenses, as well as for the payment of any
dividends to stockholders. The primary source of liquidity on an ongoing basis
is dividends from the Bank. To date, no dividends have been paid from the Bank
to the Company.
Capital
Federally insured savings institutions are required to maintain a minimum
level of regulatory capital. The OTS has established capital standards,
including a tangible capital requirement, a leverage ratio (or core capital)
requirement and a risk-based capital requirement applicable to such savings
associations. These capital requirements must be generally as stringent as the
comparable capital requirements for national banks. The OTS is also authorized
to impose capital requirements in excess of these standards on individual
associations on a case-by-case basis.
At March 31, 1997, the Bank had $46.9 million of tangible and core
capital, respectively, or 10.0% of adjusted total assets, which was
approximately $39.9 million and $32.9 million above the minimum requirements of
1.5% and 3.0%, respectively, of the adjusted total assets in effect on that
date. On March 31, 1997, the Bank had risk-based capital of $49.4 million
(including $46.9 million in core capital and $2.5 million in qualifying
supplementary capital) or 24.9% of risk-weighted assets of $198.2 million. The
Bank's risk-weighted capital was $33.6 million above the 8.0% requirement in
effect on that date.
12
<PAGE>
ASSET QUALITY
Non-Performing Assets
The table below sets forth the amounts and categories of non-performing
assets in the Company's loan portfolio at the dates indicated. Generally, loans
are placed on non-accrual status when the loan is 90 days or more delinquent or
when management has determined that the collection of principal and/or interest
in full has become doubtful. When loans are designated as non-accrual, all
accrued but unpaid interest is reversed against current period income and, as
long as the loan remains on non-accrual status, interest is recognized only when
received. Accruing loans delinquent 90 days or more include FHA insured loans,
VA guaranteed loans, and loans that are in the process of negotiating a
restructuring with the Bank, excluding troubled debt restructurings (TDRs), or
where the Bank has been notified by the borrower that the outstanding loan
balance plus accrued interest and late fees will be paid-in-full within a
relatively short period of time from the date of such notification. Foreclosed
assets include assets acquired in settlement of loans.
March 31 Dec.31
1997 1996
------ ------
(In thousands)
Non-accruing loans:
One-to four-family ..................................... $ 93 $ 259
Multi-family ........................................... -- --
Commercial real estate ................................. 234 339
Consumer ............................................... 313 256
Commercial Business .................................... 2,202 2,269
------ ------
Total ................................................ 2,842 3,123
------ ------
Accruing loans delinquent more than 90 days:
One-to four-family ..................................... 110 151
Multi-family ........................................... -- --
Commercial real estate ................................. 329 568
Consumer ............................................... 6 6
Commercial Business .................................... 120 --
------ ------
Total ................................................ 565 725
------ ------
Troubled debt restructured loans:
One-to four-family ..................................... 87 88
Multi-family ........................................... 37 38
Commercial real estate ................................. 777 781
Consumer ............................................... 54 56
Commercial Business .................................... 64 68
------ ------
Total ................................................ 1,019 1,031
------ ------
Total non-performing loans ................................ 4,426 4,879
------ ------
Foreclosed assets:
One-to four-family ..................................... 200 194
Multi-family ........................................... 312 282
Commercial real estate ................................. -- --
Consumer ............................................... 151 239
Commercial Business .................................... -- --
------ ------
Total ................................................ 663 715
------ ------
Total non-performing assets ............................... $5,089 $5,594
====== ======
Total as a percentage of total assets ..................... 1.06% 1.18%
13
<PAGE>
There were no material changes in non-performing assets since December 31,
1996. However, as previously mentioned, the Company has an aggregate lending
relationship with the Bennett Funding Group, Inc. of $1.9 million, a $1.7
million reduction from the original balance of $3.6 million as the result of a
partial charge-off in the fourth quarter of 1996. A settlement agreement has
been proposed with the bankruptcy Trustee and closing documents for the initial
settlement payment of approximately $1.2 million are in process. If the closing
documents are acceptable to the Trustee, the initial payment is expected by May
31, 1997. On the basis of the terms specified under the proposed settlement
agreement, management believes that no additional provisions or charge-offs on
this relationship will be necessary.
In addition, as of March 31, 1997, the Company had foreclosed multi-family
assets of $312,000, $282,000 of which pertains to a three-story, 54-unit,
student housing project located in Morrisville, New York. In the Company's 1996
Annual Report on Form 10-K, the Company had indicated that a sales contract on
this property had been accepted and that a closing was expected to take place in
April 1997. However, subsequent to the filing of the Company's 1996 Annual
Report on Form 10-K, the contract for the sale was canceled, ostensibly due to a
property encroachment dispute. The Company's attorneys are engaged in
negotiations with the owner of the adjoining property in order to resolve this
encroachment issue. The Company is continuing its efforts to market this
property.
14
<PAGE>
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan
losses based on management's evaluation of the risks inherent in its loan
portfolio and changes in the nature and volume of its loan activity, including
those loans that are being specifically monitored by management. Such
evaluation, which includes a review of loans for which full collectibility may
not be reasonably assured, considers, among other matters, the estimated fair
value of the underlying collateral for collateral dependent loans, the net
present value of estimated future cash flows if the loan is not collateral
dependent, economic conditions, historical loan loss experience, and other
factors that warrant recognition in providing for an adequate loan loss
allowance. The following table sets forth an analysis of the Company's allowance
for loan losses.
For the Three months
Ended March 31,
1997 1996
------ ------
(In thousands)
Balance at beginning of period ...................... $ 3,438 $ 2,647
Charge-offs:
One- to four-family ............................ -- (117)
Multi Family ................................... -- --
Commercial Real Estate ......................... -- (28)
Consumer ....................................... (108) (77)
Commercial Business ............................ --- --
------ ------
Total Charge offs ........................... (108) (222)
Recoveries:
One- to four-family ............................ -- 9
Multi Family ................................... -- --
Commercial Real Estate ......................... 4 --
Consumer ....................................... 9 10
Commercial Business ............................ 6 --
------ ------
Total Recoveries ............................ 19 19
Net Charge-offs ..................................... (89) (203)
Provisions charged to operations .................... 363 1,628
------ ------
Balance at end of period ............................ 3,712 4,072
====== ======
Ratio of net charge-offs during
the period to average loans
outstanding during period ........................... 0.04% 0.08%
Ratio of net charge-offs during
the period to average
non-performing assets ............................... 1.68% 1.48%
15
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits as required by Item 601 of Regulation S-K.
Financial data schedule, Exhibit #27
(b) Reports on Form 8-K
May 1, 1997, press release announcing earnings for the quarter ended
March 31, 1997.
16
<PAGE>
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.
AMBANC HOLDING CO., INC.
Robert J. Brittain
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 14, 1997
Harold A. Baylor, Jr.
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: May 14, 1997
17
<PAGE>
EXHIBITS INDEX
EXHIBIT DESCRIPTION
EX-27 Financial Data Schedule
18
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997 OF
AMBANC HOLDING CO., INC. AND ITS SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFRENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2359
<INT-BEARING-DEPOSITS> 3249
<FED-FUNDS-SOLD> 6700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 202733
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 251792
<ALLOWANCE> 3712
<TOTAL-ASSETS> 478117
<DEPOSITS> 311471
<SHORT-TERM> 51810
<LIABILITIES-OTHER> 3517
<LONG-TERM> 50500
0
0
<COMMON> 54
<OTHER-SE> 60765
<TOTAL-LIABILITIES-AND-EQUITY> 478117
<INTEREST-LOAN> 4891
<INTEREST-INVEST> 3659
<INTEREST-OTHER> 125
<INTEREST-TOTAL> 8675
<INTEREST-DEPOSIT> 3103
<INTEREST-EXPENSE> 4655
<INTEREST-INCOME-NET> 4020
<LOAN-LOSSES> 363
<SECURITIES-GAINS> (1)
<EXPENSE-OTHER> 2815
<INCOME-PRETAX> 1076
<INCOME-PRE-EXTRAORDINARY> 1076
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 652
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
<YIELD-ACTUAL> 3.53
<LOANS-NON> 2842
<LOANS-PAST> 565
<LOANS-TROUBLED> 1019
<LOANS-PROBLEM> 7214
<ALLOWANCE-OPEN> 3438
<CHARGE-OFFS> 108
<RECOVERIES> 19
<ALLOWANCE-CLOSE> 3712
<ALLOWANCE-DOMESTIC> 3712
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
