AMERICAN BANCORPORATION
1994 ANNUAL REPORT
American Bancorporation and Subsidiaries
FINANCIAL HIGHLIGHTS
(In thousands, except per share) 1994 1993 1992
Statement of Operations:
Net Income (Loss) . . . . $ 1,696 $ 1,770 $ (441)
Net Income (Loss) per share . . . 1.13 1.18 (0.29)
Balance Sheet:
Assets. . . . . . . . . . . . $ 338,116 $ 276,390 $ 288,962
Deposits. . . . . . . . . . 292,341 248,040 261,001
Loans - net . . . . . . . . 225,129 146,979 155,297
Stockholders' equity. . . 26,193 24,158 23,141
Book Value per share . . 16.74 16.03 15.36
QUARTERLY STOCK PRICE RANGES
1994: High Low
Fourth. . . . . . . . . . 18 13
Third . . . . . . . . . . 18 1/2 16
Second. . . . . . . . . . 18 1/2 15 1/2
First . . . . . . . . . . 19 15 1/2
1993: High Low
Fourth. . . . . . . . . . 18 1/2 16
Third . . . . . . . . . . 17 1/2 13 1/2
Second. . . . . . . . . . 15 11 1/2
First . . . . . . . . . . 13 11
American Bancorporation is traded on the Nasdaq Stock Market under the ticker
symbol AMBC. Per share data and stock prices have been retroactively restated
to reflect a two for one stock split, which became effective March 16, 1994.
CORPORATE PROFILE
American Bancorporation (the "Company") is a registered Ohio bank holding
company with its headquarters located in Wheeling, West Virginia. The Company
was organized in 1966 for the purpose of developing a network of community
oriented banks and companies engaged in activities closely related to commercial
banking. At December 31, 1994, the Company owned two affiliate banks. The
Wheeling National Bank ("WNB") serves its customers through seven full service
offices located in Ohio County, Hancock County and Wetzel County, West Virginia.
Columbus National Bank, ("CNB") serves its customers through eleven full service
offices located in Belmont County, Harrison County, Guernsey County Jefferson
County and Franklin County, Ohio.
In addition to the Banks, the Company operates three non-bank subsidiaries:
American Bancdata Corporation which provides electronic data processing services
to the Company and the affiliate Banks, American Bancservices, Inc., which
provides the Company's transfer agent services and American Mortgages, Inc.
which originates and services mortgage loans.
The approximate number of common stockholders of record was 2,963 on January
31, 1995.
CONTENTS
Financial Highlights. . . . . . . . See above
Quarterly Stock Price Ranges. . . . See above
Corporate Profile . . . . . . . . . See above
Chairman's Letter . . . . . . . . . 1 - 2
Financial Statements. . . . . . . . 3 - 26
Independent Auditors' Report . . 27
Five Year Selected Financial Data . 28
Management's Discussion and Analysis . . 29 - 42
TO OUR SHAREHOLDERS:
For the year 1994 American Bancorporation recognized net income of $1,696,000
or $1.13 per share, compared to net income of $1,770,000 or $1.18 per share
in 1993.
Total assets at December 31, 1994 were $338 million, compared to $276 million
at December 31, 1993.
At December 31, 1994 total capital was $26,193,000, compared to $24,158,000
at December 31, 1993 and book value per common share at year end 1994 was
$16.74, compared to $16.03 at year end 1993.
At December 31, 1994 the allowance for loan losses to loans outstanding was
1.6%.
At December 31, 1994 total nonperforming loans as a percentage of total loans
stood at 1.1%.
1994 was a year of growth and accomplishment.
At Columbus National Bank we opened a new branch at Barnesville which permitted
us to consolidate the branches at Quaker City, Morristown and the old branch at
Barnesville.
The Columbus National Bank downtown branch at 4th and Broad was approved to
accept deposits and is in full swing.
Most importantly we closed the acquisition of Buckeye Savings Bank which added
to Columbus National Bank branches at the Ohio Valley Mall in St. Clairsville
and the Fort Steuben Mall in Steubenville.
As part of the Buckeye acquisition we purchased approximately $47,900,000 in
mortgage loans for the Columbus National Bank loan portfolio.
The effect of the Buckeye acquisition was 1) to grow Columbus National Bank
from $107 million in assets to $158 million and total deposits from $99 million
to $142 million, 2) to add a well staffed and well directed mortgage servicing
and origination capability to the Company's subsidiary, American Mortgages,
Inc., and 3) to add to the Company some excellent personnel.
At Wheeling National Bank we saw solid growth, an historic high in profits and
historic lows in delinquencies and nonperforming assets.
We cannot say enough about the performance of Paul Donahie and his team at
Wheeling National Bank. Their performance has been outstanding in all
categories.
Both banks completed OCC examinations in the first quarter with good results at
Columbus National Bank and outstanding results at Wheeling National Bank.
The Declaratory Judgment action we initiated in the U.S. Federal Court to
determine any unfunded exposure we might have in our pension plan, which was
frozen as of December 31, 1992 when we established our 401(k) program, has been
decided at the District Court level.
We have been hard at work trying to determine the appropriate accruals and have
set up a reserve of $500,000 out of 1994 earnings.
We completed the American Bancorporation Rights Offering and $902,000 in stock
was purchased by our stockholders.
We raised the quarterly dividend from 12.5 cents to 15 cents.
We expect 1995 to be an excellent profit year.
We deeply appreciate your continued strong support.
Sincerely,
Jeremy C. McCamic
Chairman and Chief Executive Officer
CONSOLIDATED BALANCE SHEET American Bancorporation and Subsidiaries
December 31, 1994 and 1993
ASSETS 1994 1993
Cash and due from banks. . . . . $ 10,704,396 $ 9,492,326
Federal funds sold . . . . . . . . . . . . 3,924,000 12,341,000
Securities available for sale. . . . . . . 3,484,431 -
Investment securities
Market value 1994 - $74,418,819, 1993 - $95,367,000 78,189,252 94,103,110
Loans
Commercial, financial and agricultural. . 52,929,805 44,239,025
Real estate mortgage. . . . . . . . . . . 119,629,269 53,417,296
Installment - net of unearned income. . . 56,306,670 52,866,492
228,865,744 150,522,812
Less allowance for loan losses. . . . . 3,736,994 3,543,743
225,128,750 146,979,069
Premises and equipment - net . . . . . . . 8,672,714 7,861,168
Accrued interest receivable. . . . . . . . 2,018,778 1,499,948
Excess of cost over net assets acquired. . 2,065,475 1,277,686
Other assets . . . . . . . . . . . . . . . 3,927,839 2,836,063
TOTAL ASSETS. . . . . . . . . . . . $338,115,635 $276,390,370
LIABILITIES
Deposits
Demand - non-interest bearing . . . . . . $ 31,208,913 $ 25,920,610
Demand - interest bearing . . . . . . . . 25,041,613 24,059,440
Savings . . . . . . . . . . . . . . . . . 117,684,912 103,583,724
Time - under $100,000 . . . . . . . . . . 104,302,859 85,450,235
Time - over $100,000. . . . . . . . . . . 14,102,360 9,025,702
TOTAL DEPOSITS. . . . . . . . . . . . 292,340,657 248,039,711
Short-term borrowings. . . . . . . . . . . . 13,398,181 1,608,747
Accrued interest payable . . . . . . . . . . 1,011,323 868,485
Other liabilities. . . . . . . . . . . . . . 3,172,455 1,715,379
Long term debt . . . . . . . . . . . . . . . 2,000,000 -
TOTAL LIABILITIES . . . . . . . . . . 311,922,616 252,232,322
STOCKHOLDERS' EQUITY
Preferred stock. . . . . . . . . . - -
Common stock without par value, stated value $5 a
share, authorized 6,500,000 shares, issued and outstanding
1,564,837 in 1994 and 1,506,612 in 1993 7,824,185 7,533,060
Additional paid-in capital . . . . . . . 10,301,982 9,753,871
Retained earnings. . . . . . . . 8,066,852 6,871,117
TOTAL STOCKHOLDERS' EQUITY. . . . . . . 26,193,019 24,158,048
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY. . .$338,115,635 $276,390,370
The accompanying notes are an integral part of these financial statements.
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
Years ended December 31, 1994, 1993 and 1992
1994 1993 1992
INTEREST INCOME
Loans . . . . . . . . . . . $ 14,902,482 $ 14,590,143 $ 16,903,196
Securities
Taxable interest income . . 4,410,109 5,158,483 5,673,076
Non-taxable interest income . . .163,039 212,519 218,828
Dividends . . . . . . . 148,027 142,479 142,471
4,721,175 5,513,481 6,034,375
Short-term investments. . . 511,494 466,737 577,754
Total interest income. . 20,135,151 20,570,361 23,515,325
INTEREST EXPENSE
Deposits
Interest bearing demand . 586,563 664,620 886,809
Savings . . . . . . . . . . 2,690,109 3,018,910 3,722,454
Time - under $100,000 . . . 3,368,774 3,877,336 6,065,138
Time - over $100,000. . . 384,872 384,225 512,333
7,030,318 7,945,091 11,186,734
Borrowings
Short-term borrowings . . . 145,622 63,737 100,430
Long-term debt. . . . . . 13,059 - 83,079
Total interest expense. 7,188,999 8,008,828 11,370,243
NET INTEREST INCOME . . . . . 12,946,152 12,561,533 12,145,082
PROVISION FOR LOAN LOSSES. . . 215,000 844,361 3,159,515
Net interest income after provision for
loan losses. . . . . . . . 12,731,152 11,717,172 8,985,567
OTHER INCOME
Service charges on deposit
accounts 661,492 689,656 740,669
Insurance commissions . . 113,619 123,925 206,465
Net securities gains (losses) . . 2,634 219,030 (90,202)
Other income. . . . . . . . 284,122 416,452 267,333
Total other income . . . 1,061,867 1,449,063 1,124,265
OTHER EXPENSE
Salaries and employee benefits.4,932,526 4,427,945 4,367,574
Occupancy expense . . . . 843,095 792,907 821,202
Furniture and equipment
expense 1,032,268 1,026,620 1,167,679
Other expenses. . . . . . . 4,407,160 4,149,160 4,463,197
Total other expense. . . 11,215,049 10,396,632 10,819,652
Income (loss) before
income taxes . . 2,577,970 2,769,603 (709,820)
PROVISION (CREDIT) FOR INCOME TAXES. .881,651 999,152 (268,546)
NET INCOME (LOSS). . . . . . . . .$ 1,696,319 $ 1,770,451 $ (441,274)
Per Share:
NET INCOME (LOSS) . . . $ 1.13 $ 1.18 $ (0.29)
The accompanying notes are an integral part of these financial statements.
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT
OF STOCKHOLDERS' EQUITY
Years ended December 31, 1994, 1993 and 1992
Additional
Common paid-in Retained
stock capital earnings Total
Balance at January 1, 1992. . 7,533,060 9,753,871 7,048,552 24,335,483
Net Loss . . . . . . - - (441,274) (441,274)
Cash dividends ($0.50 per share) - - (753,306) (753,306)
Balance at December 31, 1992 . 7,533,060 9,753,871 5,853,972 23,140,903
Net Income. . . . . . . - - 1,770,451 1,770,451
Cash Dividends ($0.50) per share) - - (753,306) (753,306)
Balance at December 31, 1993 . 7,533,060 9,753,871 6,871,117 24,158,048
Net Income. . . . . . . - - 1,696,319 1,696,319
Cash Dividends ($0.50 per share) - - (760,584) (760,584)
Proceeds from stockholder rights
offering (58,225 shares). . . 291,125 548,111 - 839,236
Unrealized gain on securities
available for sale . . - - 260,000 260,000
Balance at December 31, 1994 . $ 7,824,185$10,301,982$ 8,066,852 $26,193,019
The accompanying notes are an integral part of these financial statements.
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended December 31, 1994, 1993 and 1992
Operating Activities: 1994 1993 1992
Net income (loss) . . . . . . . . $ 1,696,319 $ 1,770,451 $ (441,274)
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation . . . . . . . . . 555,372 563,397 607,928
Amortization of intangibles. . 128,300 120,801 120,801
Net amortization (accretion) of
investment securities. . 100,355 146,316 738,624
Provision for loan losses. . . 215,000 844,360 3,159,515
Gain on sale of premises & equipment . (2,975) (92,295) -
(Gains) losses on sale of securities . (2,634) (219,030) 90,202
Change in assets and liabilities net of effects
from the purchase of branch assets:
Net (increase) decrease in accrued
interest receivable . (323,175) 481,340 552,661
Net increase (decrease) in accrued
interest payable. . . 45,159 (254,603) (718,227)
Net (increase) decrease in other assets.(538,102) 670,667 (539,294)
Net increase (decrease) in other
liabilities . . . 1,449,798 108,279 (275,940)
Net (increase) decrease from other
operating activities. 346,907 350,619 493,799
Net cash provided by
operating activities. . 3,670,324 4,490,302 3,788,795
Investing Activities:
Purchase of branch assets, net of
cash acquired. . (4,487,905) - -
Proceeds from maturities of
investment securities. . 17,700,000 21,210,000 17,753,984
Proceeds from repayment of
investment securities . . 15,451,514 18,511,032 9,146,693
Proceeds from sale of investment
securities available for sale . . . 3,017,375 - -
Proceeds from sale of investment
securities - 19,205,804 3,031,038
Purchase of investment securities
held to maturity . (22,380,352) (56,527,280)(48,966,265)
Purchase of investment securities
available for sale . . . . . . . (1,303,231) - -
Proceeds from redemption of investment
securities available for sale 106,400 - -
Net (increase) decrease in loans (15,034,412) 7,473,266 16,045,229
Purchase of loans. . . . . . . . (14,036,899) - -
Purchase of premises and equipment . .(1,323,607) (586,989) (324,150)
Proceeds from sale of premises
and equipment . . . 290,468 428,835 -
Net cash provided (used)
by investing activities . . . (22,000,649) 9,713,948 (3,313,471)
Financing Activities:
Net increase (decrease) in
non-interest bearing
demand deposits. . . 2,038,122 288,329 4,435,127
Net increase (decrease) in interest
bearing demand and savings deposits (9,384,462) 2,420,230 13,417,417
Net increase (decrease) in
time deposits 4,596,371 (15,669,736)(19,115,384)
Net increase (decrease) in short-term
borrowings . . 11,789,434 (480,962) (563,003)
Principal repayment of long-term debt - - (1,200,000)
Proceeds from issuance of
long-term debt 2,000,000 - -
Proceeds from stockholder
rights offering. . . . . 839,236 - -
Cash dividends paid. . . . . . (753,306) (753,306) (753,306)
Net cash provided by (applied to)
financing activities . . . . 11,125,395 (14,195,445) (3,779,149)
Net Increase (Decrease) in
Cash and Cash Equivalents (7,204,930) 8,805 (3,303,825)
Cash and Cash Equivalents
Beginning Balance. $21,833,326 $21,824,521 $25,128,346
Cash and Cash Equivalents
Ending Balance . . $14,628,396 $21,833,326 $21,824,521
Supplemental schedule of noncash investing and financing activities:
The Company purchased certain branch assets and assumed
certain liabilities. In conjunction with the acquisition,
the assets acquired and the liabilities assumed were as follows:
Fair value of assets acquired. . $51,015,184 $ - $ -
Cash paid in the acquisition . . . (4,782,680) - -
Liabilities assumed. . . . (47,148,594) - -
Excess of liabilities
assumed over net assets
acquired . $ (916,090) $ - $ -
Cash paid during the year for:
Interest. . . . . . . . . . $ 7,046,161 $ 8,263,431 $12,088,470
Income taxes. . . . . . . . $ 1,228,000 $ 661,490 $ 686,705
Non-cash investing and financing activities:
Loan foreclosures and
repossessions $ 281,603 $ 1,036,707 $ 1,147,145
Transfer of other real estate
owned to premises and equipment$ - $ 279,263 $ -
Transfer of premises and equipment
to other real estate owned . $ 549,566 $ - $ -
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
Note A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of American Bancorporation and
Subsidiaries (the "Company") conform to generally accepted accounting principles
and with general practice within the banking industry. The following is a
description of the significant policies.
Principles of Consolidation
The consolidated financial statements include the accounts of American
Bancorporation and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Subsidiaries acquired in purchase
transactions are included in the consolidated financial statements from the
date of acquisition.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks and federal funds sold. Generally, federal funds are sold
for one-day periods.
Investment Securities
The Company has adopted a methodology for the classification of securities at
the time of their purchase as either held to maturity or available for sale.
If it is management's intent and the Company has the ability to hold such
securities until their maturity, these securities are classified as held to
maturity and are carried on the Company's books at cost, adjusted for
amortization of premium and accretion of discount on a level yield basis.
Alternatively, if it is management's intent at the time of purchase to hold
securities for an indefinite period of time and/or to use such securities as
part of its asset/liability management strategy, the securities are classified
as available for sale and are carried at fair value, with unrealized gains and
losses excluded from net earnings and reported as a separate component of
stockholder's equity, net of tax. Investment securities available for sale
include securities which may be sold in response to changes in interest rates,
resultant prepayment risk and other factors related to interest rate or
prepayment risk.
In May, 1993 the Financial Accounting Standards Board ("FASB") released
Statement of Financial Account Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". SFAS No. 115 addresses the
accounting and reporting for investments in equity securities that have
readily determinable fair values and all investment in debt securities.
Investments are to be classified into the following three categories: debt
securities that the enterprise has the positive intent and ability to hold to
maturity are classified as held to maturity securities and reported at
amortized cost; debt and equity securities that are bought and held
principally for the purpose of resale in the near future are classified as
trading securities and reported at fair value, with unrealized gains and losses
included in current period earnings; debt and equity securities not classified
as either held to maturity securities or trading securities are classified as
available for sale securities and reported at fair value, with unrealized gains
and losses, net of tax, excluded from earnings and reported in retained
earnings. The Company adopted SFAS No. 115 in 1994. Gains and losses on the
sale of securities are recognized using the specific identification method.
At December 31, 1994 the Company recorded unrealized gains of $260,000 on
securities available for sale with a corresponding increase in retained
earnings.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
In October 1994 FASB issued SFAS No. 119, "Disclosures about Financial
Instruments and Fair Value of Financial Instruments". SFAS No. 119 requires
disclosure about amounts, nature and terms of derivative financial instruments.
It requires that a distinction be made between financial instruments held or
issued for trading purposes and financial instruments held or issued for
purposes other than trading. SFAS No. 119 is effective for fiscal years ending
after December 15, 1994. The Company has no derivative financial instruments at
December 31, 1994.
Loans
Loans are reported at their principal amounts, net of unearned income and the
allowance for loan losses. Interest on loans is computed primarily on the
principal balance outstanding. For loans not primarily secured by real estate
or in the process of collection, the Company discontinues the accrual of
interest when a loan is 90 days past due or collection of the interest is
doubtful. Real estate loans are placed on nonaccrual status when, in
management's judgement, collection is in doubt or when foreclosure proceedings
are initiated, which is generally 180 days past the due date. Income on
discounted loans is principally recognized on the sum-of-the-months digits
method, which approximates a level yield. Loan origination and commitment fees,
as well as certain direct loan origination costs, are deferred and amortized as
a yield adjustment over the lives of the related loans via a method which
approximates a level yield.
The Company grants commercial and industrial loans, commercial and residential
mortgages and consumer loans to customers primarily in the northern panhandle of
West Virginia, southeastern Pennsylvania and central and eastern Ohio. The
Company's loan portfolio can be adversely impacted by downturns in the local
economic and real estate markets as well as employment conditions.
In May 1993, the FASB released SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan". SFAS No. 114 establishes standards to determine in what
circumstances, if any, a creditor should measure impairment of a loan based on
either the present (discounted) value of expected future cash flows related
to the loan, the market price of the loan or the fair value of the underlying
collateral. This standard became
effective on January 1, 1995.
In October 1994 the FASB amended SFAS No. 114 by issuing SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures". SFAS No. 118 amends the disclosure requirements in SFAS No. 114
to require information about the recorded investment in certain impaired loans
and about how a creditor recognizes interest income related to those impaired
loans. SFAS No. 118 is effective concurrent with the effective date of SFAS No.
114. The Company currently estimates that the effect of the adoption of SFAS
No. 114 and No. 118 will not be material to the Company's financial position or
results of operations.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Allowance for Loan Losses
The determination of the balance in the allowance for loan losses is based on an
analysis of the portfolio and reflects an amount which, in management's
judgement, is adequate to provide for potential losses after giving
consideration to the character of the portfolio, current economic conditions,
past loss experience and such other factors that deserve current recognition.
The regulatory examiners may require the Company to recognize additions to the
allowances based upon their judgements about information available to them at
the time of their examinations. The provision for loan losses is charged to
current operations.
Mortgage Loan Servicing
Mortgage servicing fees received from permanent investors for servicing their
loan portfolios are recorded on the accrual basis. Mortgage loan servicing
includes collecting monthly mortgagor payments, forwarding payments and related
accounting reports to investors, collecting escrow deposits for the payment of
mortgagor property taxes and insurance, and paying taxes and insurance from
escrow funds when due.
Purchased mortgage servicing rights are capitalized and amortized, as a
reduction of servicing income, in proportion to, and over the period of,
estimated net servicing revenue (undiscounted servicing revenues in excess of
undiscounted servicing costs). In estimating future servicing revenues,
management takes into consideration a number of factors including the current
rate of anticipated prepayments of the underlying mortgage loans. Changes in
the assumptions used could significantly affect management's estimates. If
actual results differ significantly from those estimated by management,
adjustments to the carrying value of purchased mortgage servicing rights could
occur.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided on the straight-line method,
distributing the cost of premises over an estimated useful life of twenty to
fifty years and the cost of equipment over an estimated useful life of three
to fifteen years.
Excess of Cost over Net Assets Acquired
Excess of cost over net assets acquired include both goodwill and core deposit
intangibles. Goodwill is being amortized on a straight-line basis over a period
of twelve to thirty years. Core deposit intangibles are being amortized over a
period of five to twelve years.
Other Real Estate Owned
Other real estate owned in connection with loan settlements, including real
estate acquired, is stated at the lower of estimated fair value less estimated
costs to sell, or the carrying amount of the loan. Declines in market value
that might occur between appraisal dates are charged directly to operations.
Decreases in fair value between annual appraisals, net gains or losses on the
sale of other real estate owned, and net direct operating expense attributable
to these assets are included in other income/other expense. Other real estate
owned is included in other assets.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax return.
In February 1992, FASB issued SFAS No. 109, "Accounting for Income Taxes". SFAS
No.109 required a change from the deferred method of accounting for income taxes
of Accounting Principles Bulletin ("APB") Opinion 11 to the asset and liability
method of accounting for income taxes. Under the asset and liability method of
SFAS No. 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The Company adopted SFAS No. 109 in 1993 and has applied the provisions of SFAS
No. 109 retroactively to December 31, 1988.
Pension Plan
Pension costs, based on actuarial computations, are charged to expense and
funded as incurred. (See Note Q "Pension Plan and Profit Sharing 401(k)
Savings Plan").
Commitments and Contingencies
Various outstanding commitments and contingent liabilities incurred in the
normal course of business are not reflected in the accompanying financial
statements as they are not material.
Per Share Data
Per share data is computed based upon the weighted average number of common
shares outstanding.
Earnings per share, dividends per share and book values per share have been
restated to reflect a two for one stock split which was approved by the Board
of Directors in February, 1994, and became effective March 16, 1994.
Reclassifications
Certain prior year financial information has been reclassified to conform
to the presentation in 1994.
Note B-BRANCH ACQUISITION
On December 8, 1994, the Company, through its subsidiaries Columbus National
Bank ("CNB") and American Mortgages, Inc., ("AMI"), acquired certain assets
and assumed certain liabilities of Buckeye Savings Bank ("Buckeye"), a wholly
owned subsidiary of Crown Bank, F.S.B., headquartered in Casselberry, Florida.
CNB assumed liabilities totalling $46.5 million, including deposits totalling
$46.4 million, and purchased the premises and equipment of the St. Clairsville
and Steubenville, Ohio branch offices of Buckeye. CNB also acquired assets
with a fair value of $50.2 million, including loans (primarily mortgage loans)
totalling $47.9 million, including $0.4 million allowance for loan losses.
CNB paid a $916,000 premium based on core deposits.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
AMI acquired the mortgage servicing rights to loans totalling $81.6 million for
$570,000 and certain fixed assets totalling $210,000.
The premium based on core deposits is being amortized over a period of eight
years.
Note C-CASH AND DUE FROM BANKS
The subsidiary banks of the Company are required to maintain with a Federal
Reserve bank reserve balances based principally on deposits outstanding.
Balances maintained are included in cash and due from banks. The required
reserves were approximately $300,000 at December 31, 1994 and December 31, 1993.
Note D-SECURITIES
Investment Securities
The amortized cost and approximate market value of investment securities held
to maturity at December 31, 1994 and 1993 is summarized as follows:
1994
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
United States Treasury . . . . . $27,585,550 $ 1,073 $ 959,981 $26,626,642
United States Federal agencies . 12,594,218 692 641,548 11,953,362
United States agency mortgage-
backed securities. 35,907,079 1,533 2,328,772 33,579,840
States and political
subdivisions. . . 2,092,405 163,856 6,522 2,249,739
Other. . . . . . . . . . . . 10,000 - 664 9,336
Total Investment Securities . $78,189,252 $ 167,154 $3,937,487 $74,418,919
1993
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
United States Treasury . . . . . $27,035,198 $ 309,376 $ 7,502 $27,337,072
United States Federal agencies 21,104,072 227,703 22,661 21,309,114
United States agency mortgage-
backed securities. . 41,499,978 236,357 234,602 41,501,733
States and political
subdivisions. . . 2,421,262 391,799 99 2,812,962
Other. . . . . . . . . . . . 15,000 136 394 14,742
Total Debt Securities . . . . 92,075,510 1,165,371 265,258 92,975,623
Equity securities. . . . . . . 2,027,600 364,000 - 2,391,600
Total Investment Securities. $94,103,110 $1,529,371 $265,258 $95,367,223
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Securities Available for Sale
The amortized cost and approximate market value of securities available for
sale at December 31, 1994 is summarized as follows:
1994
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
Equity securities . . $ 3,224,431 $ 260,000 $ - $ 3,484,431
Total Securities Available
for Sale . . . $ 3,224,431 $ 260,000 $ - $ 3,484,431
The amortized cost and approximate market value of debt securities at December
31, 1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
Book Market
Value Value
Due in one year or less . . $ 5,859,903 $ 5,753,303
Due after one year through five years 33,564,277 31,992,971
Due after five years through ten years. .20,625,534 19,718,801
Due after ten years . . . . 18,139,538 16,953,844
$78,189,252 $74,418,919
Proceeds from the sale of securities available for sale were $3,017,375 in 1994.
Gross realized gains on the sale of securities available for sale were $6,915 in
1994. Gross realized losses on the sale of securities available for sale were
$4,281 in 1994.
There were no sales of investment securities in 1994. Proceeds from the sale of
investment securities for the years ended December 31, 1993 and 1992 were
$19,205,084 and $3,031,038, respectively. Gross realized gains for the years
ended December 31, 1993 and 1992 were $335,565 and $72,826, respectively. Gross
realized losses for 1993 and 1992 amounted to $116,535 and $162,488,
respectively, including losses related to an equity security of $156,000 in
1992.
At December 31, 1994 the book value of securities pledged to secure public
deposits or for other purposes required or permitted by law aggregated
$9,850.00.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Note E-NONPERFORMING ASSETS
Nonperforming assets consist of nonaccrual loans, restructured loans, past due
loans and other real estate owned. Nonaccrual loans are loans on which interest
recognition has been suspended until realized because of doubts as to the
borrowers' ability to repay principal or interest. Restructured loans are loans
where the terms have been altered to provide a reduction or deferral of interest
or principal because of a deterioration in the financial position of the
borrower. Past due loans are accruing loans which are contractually past due
90 days or more as to interest or principal payments. The following summarizes
the nonperforming assets at December 31:
1994 1993 1992
Nonperforming loans
Nonaccrual. . . . . . . . $ 1,214,000 $ 2,188,000 $ 4,058,000
90 days past due. . . . 766,000 601,000 886,000
Restructured. . . . . . 610,000 709,000 509,000
$ 2,590,000 $ 3,498,000 $ 5,453,000
Other real estate owned 682,000 699,000 1,049,000
Total. . . . . . . . . . $ 3,272,000 $ 4,197,000 $ 6,502,000
There were no commitments to advance additional funds to such borrowers at
December 31, 1994. Gross interest income that would have been recorded if
nonaccrual loans and restructured loans had been current and in accordance with
their original terms approximated $140,000, $211,000 and $393,000 for the years
ended December 31, 1994, 1993 and 1992, respectively. Interest recognized on
such loans approximated $8,000, $18,000 and $180,000 for the years ended
December 31, 1994, 1993 and 1992 respectively.
Note F-RELATED PARTY TRANSACTIONS
At December 31, 1994, receivables, both direct and indirect, from persons
related to the Company and subsidiaries as directors, executive officers or
principal shareholders, exclusive of loans to such persons which in the
aggregate do not exceed $60,000, approximated $1,466,000. Other changes reflect
loans to persons which no longer exceed $60,000. The following is an analysis
of the activity with respect to such loans for the year ended December 31, 1994:
Aggregate outstanding balance at January 1, 1994 $ 1,754,000
Additions . . . . . . . . . . . . . . 123,000
Retirements . . . . . . . . . . . . . (373,000)
Other changes . . . . . . . . . . . . (38,000)
Aggregate outstanding balance at December 31, 1994 $ 1,466,000
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Note G-ALLOWANCE FOR LOAN LOSSES
An analysis of the allowance for loan losses follows:
Years ended December 31, 1994 1993 1992
Balance at beginning of year. . . . $ 3,543,743 $ 3,681,120 $ 2,463,138
Allowance acquired in loan
purchase (see Note B) . . . 410,763 - -
Provision for loan losses. . . . . 215,000 844,361 3,159,515
Loans charged-off. . . . . . . . . (837,667) (1,333,960) (2,178,853)
Less recoveries. . . . . . . . . . 405,155 352,222 237,320
Net charged-off loans . . . . . . (432,512) (981,738) (1,941,533)
Balance at end of year. . . . . . . $ 3,736,994 $ 3,543,743 $ 3,681,120
Note H-MORTGAGE LOAN SERVICING
The unamortized cost of purchased mortgage servicing rights totalled $570,000
at December 31, 1994.
At December 31, 1994 the Company was servicing loans for others amounting to
$80,374,000. In connection with these loans serviced for others, the Company
held advances by borrowers for taxes and insurance in the amount of $1,357,000
and December 31, 1994.
Note I-PREMISES AND EQUIPMENT
A summary of premises and equipment and accumulated depreciation and
amortization follows:
December 31, 1994 1993
Premises and Equipment
Buildings . . . . . . . . . . . . $ 6,695,479 $ 6,090,530
Equipment . . . . . . . . . . . . 4,282,489 3,863,342
Leasehold improvements. . . . . 479,556 424,070
11,457,524 10,377,942
Less accumulated depreciation
and amortization . . . . . . . 5,262,285 5,050,584
6,195,239 5,327,358
Land. . . . . . . . . . . . . . . 2,477,475 2,533,810
$ 8,672,714 $ 7,861,168
Depreciation and amortization of premises and equipment charged to expense for
the years ended December 31, 1994, 1993 and 1992 were $555,000, $563,000
and $608,000 respectively.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
At December 31, 1994 the Company and certain subsidiaries were obligated under
various noncancellable operating leases for premises and equipment. The leases,
expiring at various dates to 2005, generally provide options to renew and to
purchase at fair value and require payment of taxes, insurance and maintenance
costs. Total rental expense for all operating leases for the years ended
December 31, 1994, 1993 and 1992 were $477,000, $408,000 and $532,000
respectively. Future minimum payments under operating leases were as follows
at December 31, 1994:
1995. . . . . . . . . . . $ 547,000
1996. . . . . . . . . . . 376,000
1997. . . . . . . . . . . 202,000
1998. . . . . . . . . . . 177,000
1999. . . . . . . . . . 94,000
After 1999. . . . . . . . . 657,000
Total minimum lease payments . . .$2,053,000
Note J-SHORT TERM AND LONG TERM BORROWINGS
During 1994 the Company's subsidiary banks, Wheeling National Bank ("WNB") and
Columbus National Bank, ("CNB") became members of the Federal Home Loan Bank
(the "FHLB"), in the Pittsburgh and Cincinnati districts, respectively.
Membership in the FHLB entitles each subsidiary bank access to various short and
long term funding in the form of collateralized advances. These advances are
secured by the subsidiary bank's stock in the FHLB, qualifying residential
mortgage loans and other mortgage backed securities to the extent that the fair
market value of such pledged collateral must be equal to the notes payable
outstanding. At December 31, 1994 the advances from the respective FHLB banks
totalled $12,400,000 and the average interest rate charged was 6.45%. These
advances are overnight borrowings, with a maximum maturity of one year.
The subsidiary banks have agreements with their respective Federal Reserve
District Banks to be authorized Treasury Tax and Loan Depositories. At December
31, 1994 the balance of Treasury Tax and Loan Notes totalled $998,181. These
notes mature in 1995.
In connection with the acquisition described in Note B "Branch Acquisition",
long-term debt at December 31, 1994 was comprised of a $2,000,000 note held by
a federal savings bank, due in 1996. The terms of the note call for monthly
interest payments based on the two-year FHLB of Atlanta rate plus 2%, adjusted
monthly. The interest rate at December 31, 1994 was 9.93%.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Note K-FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business the Company enters into contractual commitments
involving financial instruments with off-balance-sheet risk. These financial
instruments include commitments to extend credit, commercial letters of credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instruments for commitments to extend credit,
commercial letters of credit and standby letters of credit is represented by
the contractual amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Unless noted otherwise, the Company does not require collateral or other
security to support financial instruments with off-balance-sheet risk. A
summary of off-balance-sheet financial instruments at December31, 1994 is
as follows:
Financial instruments whose contract amounts represent credit risk:
Contract Amounts
1994 1993
Commitments to extend credit. . $21,045,000 $ 16,709,000
Standby letters of credit . . 96,000 192,000
Commercial letters of credit. 533,000 331,000
Commitments to extend credit, approximately $1,013,000 at December 31, 1994 and
$923,000 at December 31, 1993, of which are dealer floor plan lines, are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments, except dealer floor plan lines, are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation of the counterparty. A majority of the
commitments extended by the Company have either variable interest rates or are
revolving credit card commitments which have a fixed interest rate. An adverse
movement in market interest rates is not deemed to be a significant risk on the
outstanding commitments at December 31, 1994.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Commercial letters
of credit are issued by the Company specifically to facilitate trade or
commerce. The credit risk involved in issuing letters of credit is essentially
the same as that in extending loan facilities to customers.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
Note L-FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosures about Fair Value of Financial Instruments", requires
that the Company disclose estimated fair values for its financial instruments.
Fair value estimates, methods and assumptions are set forth below for the
Company's financial instruments.
Securities and Federal Funds Sold
The carrying amounts for federal funds sold approximate fair value as they
mature in 90 days or less. The fair value of investment and mortgage-backed
securities is based on quotations from an independent investment portfolio
accounting service.
Loans
Fair values are estimates for portfolios of loans with similar financial
characteristics. Loans are segregated by type and include commercial, real
estate mortgage and installment loans. Each loan category is further
segmented into fixed and adjustable rate terms, for purposes of estimating
their fair value.
The carrying values approximate fair value for variable rate loans which reprice
frequently, provided there has been no change in credit quality since
origination. Book value also approximates fair value for loans with a
relatively short term to maturity, provided there is little or no risk of
default before maturity and the disparity between the current rate and market
rate is small. Any mark-to-market adjustment for these short-term loans would
be insignificant. This estimation methodology is applied to the Company's
demand loans, lines of credit and credit card portfolios.
The fair value of all other performing loans is calculated by discounting
scheduled cash flows through the estimated maturity using the rates currently
offered for loans of similar remaining maturities. The estimate of maturity is
based on the Company's historical experience with repayments for each loan
classification, modified, as required, by an estimate of the effect of current
economic and lending conditions. The fair value reflects market prepayment
estimates.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
The fair value of nonperforming loans is calculated by discounting carrying
values adjusted for specific reserve allocations through anticipated maturity
using estimated market discount rates that reflect the credit and interest rate
risk inherent in the loan.
The installment loan portfolio includes credit card loans. The fair value
estimate of credit card loans is based on the value of existing loans at
December 31, 1994. This estimate does not include the value that relates
to estimated cash flows from new loans generated from existing cardholders over
the remaining life of the portfolio.
Deposits and Other Liabilities
Under SFAS No. 107, the fair value of deposits with no stated maturity, such as
demand and savings accounts, is equal to the amount payable on demand as of
December 31, 1994. The fair value of time deposits is based on the discounted
value of contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturities.
Borrowings
The Company's short-term and long-term borrowings are variable rate, thus fair
values are based on carrying amounts since these borrowings reprice frequently
as market rates change.
Off-Balance-Sheet Financial Instruments
The Company's off-balance-sheet financial instruments are comprised of
commitments to extend credit, 90% of which are lines of credit and credit cards.
These commitments to extend credit generally are not sold or traded and
estimated fair values are not readily available. The fair value of commitments
to extend credit can be estimated by discounting the remaining contractual fees
over the term of the commitment using the fees currently charged to enter into
similar agreements. Considering the current economic environment and the
creditworthiness of the counterparties in the portfolio, the Company believes
that such a calculation would not indicate a material calculated fair value.
Limitations
Fair value estimates are made at a specific point in time, based on relevant
market data and information about each financial instrument. These estimates
do not reflect any premium or discount that could result from offering for sale
at one time the Company's entire holdings of a particular instrument. Because
no market exists for a significant portion of the Company's financial
instruments, fair value estimates are based on judgments regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments and other factors. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment and,
therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Fair value estimates are based on existing financial instruments without
attempting to estimate the value of anticipated future business and the value
of assets and liabilities that are not considered financial instruments.
Other significant assets that are not considered financial assets include
property, plant and equipment.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
The following table represents carrying values and estimated fair values of the
Company's financial instruments as of December 31, 1994 and 1993:
1994 1993
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
FINANCIAL ASSETS
Federal Funds Sol $ 3,924,000 $ 3,924,000 $ 12,341,000 $ 12,341,000
Investment Securities . . 78,189,252 74,418,919 94,103,110 95,367,223
Securities available
for sale . . . . . 3,484,431 3,484,431 - -
Loans Receivable:
Commercial . . . 52,929,805 51,997,428 44,239,025 42,825,933
Real Estate Mortgage . .119,629,269 119,113,157 53,417,296 53,605,027
Installment. . . . 56,306,670 55,499,243 52,866,491 52,583,912
Total Loans. . . 228,865,744 226,609,828 150,522,812 149,014,872
Allowance for
Loan Losses. (3,736,994) - (3,543,743) -
Net Loans . . . 225,128,750 226,609,828 146,979,069 149,014,872
FINANCIAL LIABILITIES
Fixed Maturity Deposits (1)
Time Deposits . . 118,405,219 118,646,212 94,475,937 95,228,076
Short-term Borrowings 13,398,181 13,398,181 1,608,747 1,608,747
Long-term Borrowings. 2,000,000 2,000,000 - -
(1) SFAS No. 107 defines the estimated fair value of deposits with no stated
maturity, which includes demand deposits, money market, and other savings
accounts to be equal to the amount payable on demand. Therefore, the balances
of the Company's $173.9 million and $153.6 million of such deposits at December
31, 1994 and 1993, respectively, are not included in this table.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
DECEMBER 31, 1994, 1993 and 1992
Note M-STOCKHOLDERS' EQUITY
The Company has authorized 200,000 shares of $100 par value preferred stock
issuable in series. No shares of preferred stock were issued or outstanding
at December 31, 1994 and 1993.
On December 31, 1994, the Company issued 58,225 shares of common stock through
a stockholder rights offering with net proceeds to the Company of $839,000.
Note N-DIVIDEND RESTRICTIONS
Dividends declared by the Company may be substantially provided from subsidiary
bank dividends. The payment of dividends by bank subsidiaries is subject to
various restrictions imposed under banking regulations. For national banks,
surplus in an amount equal to capital stock is not available for dividends and
prior approval of the Comptroller of the Currency is required if total dividends
declared exceed the total (defined) net profits from the beginning of the
current year to the date of declaration, combined with the retained net profits
of the preceding two years.
Note O-INCOME TAXES
The composition of the provision or credit for income taxes for the three years
ended December 31, 1994 follows:
1994 1993 1992
Federal Income Taxes
Current. . . . . . . . . . . $ 1,023,837 $ 914,387 $ 236,801
Deferred . . . . . . . . (302,380) (102,027) (486,747)
Provision (credit) for federal
income taxes. . 721,457 812,360 (249,946)
State. . . . . . . . . . . 160,194 186,792 (18,600)
Provision (credit) for
income taxes. . . $ 881,651 $ 999,152 $(268,546)
The following is a reconciliation of federal income tax expense to the amount
computed at the statutory rate:
Pre-tax income (loss) at
statutory rate $ 876,510 $ 941,665 $(241,339)
Increase (decrease) resulting from:
Tax exempt income. . . (51,385) (69,066) (67,173)
Dividends received deduction . . (30,940) (30,940) (30,940)
Loss on marketable equity security . - - 53,040
Amortization of goodwill and
other intangibles. 41,161 32,442 30,142
State tax (provision) credit
(net of federal tax benefit) . . (54,466) (61,741) 6,324
Other. . . . . . . . . (59,423) - -
Provision (credit) for federal
income taxes. . $ 721,457 $ 812,360 $(249,946)
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities as of December 31, 1994, 1993 and 1992
consist of the following:
1994 1993 1992
Deferred tax assets:
Loan loss reserves. . . .$ 822,621 $ 896,030 $ 950,378
Equity securities . . . 217,090 305,490 305,490
Pension plan. . . . . . 207,599 47,799 45,701
Cash basis accounting . 55,157 - -
Real estate owned . . . . 83,842 - -
1,386,309 1,249,319 1,301,569
Deferred tax liabilities:
Fixed assets. . . . . . . 174,513 229,515 248,977
Cash basis accounting - 7,870 143,134
Other . . . . . . . . . 8,566 22,684 22,235
183,079 260,069 414,346
Net deferred tax asset before
valuation allowance . . . . 1,203,230 989,250 887,223
Valuation allowance. . . . 217,090 305,490 305,490
Net deferred tax asset . . . $ 986,140 $ 683,760 $ 581,733
The net deferred tax asset recorded under SFAS No. 109 is expected to be
realized through carryback to taxable income in prior years, future reversals
of existing taxable temporary differences, and, to a lesser extent, future
taxable income. The valuation allowance decreased in 1994 by $88,400 as a result
of the increase in equity securities market value. Since no net deferred tax
benefit was recorded on the initial writedown of the asset, no tax benefit has
been recorded on its recovery.
Note P-OTHER EXPENSES
Amounts included in other expenses are as follows for the years ended December
31, 1994, 1993 and 1992:
1994 1993 1992
Credit card expenses . . . . $ 281,433 $ 203,519 $ 155,341
Data processing. . . . . . 246,397 277,802 274,414
FDIC assessment. . . . . . 615,326 710,427 644,534
Other real estate. . . . . 387,797 144,232 291,433
Postage. . . . . . . . . . 261,615 247,183 254,221
Professional fees. . . . . 556,158 548,882 540,870
Stationery and supplies. . 309,588 337,541 340,175
Taxes other than on income 266,140 293,922 286,477
Telephone. . . . . . . . . 225,583 216,354 199,048
Other (each less than
1% of income) . . . . . 1,257,123 1,169,298 1,476,684
$4,407,160 $4,149,160 $4,463,197
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
NOTE Q-PENSION PLAN AND PROFIT SHARING 401(K) SAVINGS PLAN
Effective January 1, 1989, the Company established the American Bancorporation
Pension Plan. This non-contributory defined benefit plan covers all eligible
employees of the Company and its banking and non-banking subsidiaries. Benefits
are based on employees' years of service and compensation. The following table
sets forth the Plan's funded status as of December 31, 1994 and 1993:
1994 1993
Actuarial present value of accumulated benefits obligation:
Vested . . . . . . . . . . . . $ 935,656 $ 1,162,782
Non-vested. . . . . . . - -
$ 935,656 $ 1,162,782
Plan assets at fair value;
primarily marketable
securities. $ 1,173,289 $ 1,269,764
Projected benefit obligation. . . . 935,656 1,162,782
Plan assets in excess of
projected benefit obligation . 237,633 106,982
Unrecognized net transition asset . . - -
Prior service cost not yet recognized
in net periodic pension cost. . . . . . . - -
Unrecognized net loss . . . . . . . 109,419 222,856
Prepaid pension costs. . . . . . $ 347,052 $ 329,838
Net pension costs, for the three years ended December 31, 1994, included
the following components:
1994 1993 1992
Service cost - benefits earned
during the period. . . . . $ - $ - $ 115,127
Interest cost on projected
benefit obligation . . . 65,832 72,392 93,248
Actual return on plan assets 821 362 (19,643)
Net amortization and deferral . (83,867) (111,121) (136,184)
Net periodic pension cost. $(17,214) $ (38,367) $ 52,548
The discount rate used in determining the projected benefit obligation in 1994,
1993 and 1992 was 5.75%, 5.75% and 6.50%, respectively. The expected long-term
rate of return on plan assets in 1994, 1993 and 1992 was 7.00%, 7.00% and
7.75%, respectively.
The 1994 and 1993 prepaid pension cost reflects the impact of a plan curtailment
resulting from the Company's freezing of benefits of the plan. Recognition of
the prepaid pension cost and any related impact on the Statement of Operations
has been deferred through December 31, 1994.
NOTES TO CONSOLIDATED American Bancorporation & Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
In 1993, due to the continuation of the claim noted below, the Company notified
the plan participants that the planned termination of the plan was rescinded;
however, the amendment to freeze all benefit accruals and fully vest all
participants in the benefits accrued to them as of December 31, 1992 remains in
effect at December 31, 1994.
A claim was made against the Pension Plan during 1992 by a former employee (the
"Claimant"), alleging additional benefits due him under the Pension Plan. The
Administrator of the Plan denied the claim. The Claimant filed an appeal which
was also denied by the Administrator. Because a dispute existed over the
computation of benefits, the Plan Administrator commenced a civil action in the
United States District Court, seeking a declaratory judgment that the
determination of the Plan Administrator that additional benefits were not due
under the terms of the Plan was correct. The Claimant filed a Motion for
Summary Judgment asserting a claim for additional benefits. The District Court
granted the Claimant's Motion for Summary Judgment. The Plan Administrator has
appealed this decision. Using the Court's Order as a guide, the Plan
Administrator has recalculated the benefits for vested Plan participants and
determined that an additional $500,000 should be reserved for the Plan's
probable additional liability. This has been charged to earnings in the fourth
quarter of 1994.
As of January 1, 1993 the Company initiated a profit sharing 401(k) savings
plan. The savings plan permits eligible employees to contribute up to
seventeen percent of their salary to the plan each year. The plan provides for
matching contributions of the Company equal to 50% of employee contributions up
to the first 6% of compensation. The Company may, at its discretion, make
profit sharing contributions to the plan. Plan participants are fully and
immediately vested in Company matching contributions and fully vested in Company
profit sharing contributions after 5 years of service. Company matching
contributions for the years ended December 31, 1994 and 1993 amounted to
$49,000 and $52,000, respectively.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
NOTE R-PARENT COMPANY CONDENSED FINANCIAL INFORMATION
AMERICAN BANCORPORATION (Parent Company Only)
BALANCE SHEET
December 31, 1994 and 1993 1994 1993
ASSETS
Cash and short-term investments . .$ 1,090,778 $ 1,790,471
Due from subsidiaries
Banking. . . . . . . . . . . . . 104,094 34,875
Non-banking. . . . . . . . . . 3,161 3,161
107,255 38,036
Investment in subsidiaries
Banking. . . . . . . . . . . . . 25,508,021 21,238,314
Non-banking. . . . . . . . . . 1,762,945 1,332,245
27,270,966 22,570,559
Premises and equipment - net. 15,619 18,430
Other assets. . . . . . . . . . 159,118 11,825
Total Assets. . . . . . . . . . $28,643,736 $24,429,321
LIABILITIES
Due to non-banking subsidiaries $ 190,439 $ 60,828
Other liabilities. . . . . . . 260,278 210,445
Long-term debt . . . . . . . . . 2,000,000 -
Total Liabilities. . . . . . . 2,450,717 271,273
STOCKHOLDERS' EQUITY. . . . . . . 26,193,019 24,158,048
Total Liabilities and
Stockholders' Equity $28,643,736 $24,429,321
STATEMENT OF OPERATIONS (Parent Company)
Years ended December 31, 1994, 1993 and 1992
1994 1993 1992
INCOME
Dividends from banking
subsidiaries . $ - $ 470,925 $ -
Reimbursement from banking
subsidiaries . . 354,000 327,250 552,000
Interest income . . . . . . . . 40,481 48,038 90,423
Other income . . . . . . . . 326 505 195
Total income. . . . . . . . . . 394,807 846,718 642,618
EXPENSE
Interest expense . . . . . . . . 13,059 - -
Other expenses . . . . . . . . . . 682,508 577,218 675,478
Total expense . . . . . . . . 695,567 577,218 675,478
(300,760) 269,500 (32,860)
Provision (credit) for income taxes. .(81,443) (52,661) 12,193
(219,317) 322,161 (45,053)
Equity in undistributed net income
(loss) of subsidiaries. . . . . .1,915,636 1,448,290 (396,221)
NET INCOME (LOSS). . . . . . . . . . $1,696,319 $1,770,451 $ (441,274)
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1994, 1993 and 1992
STATEMENT OF CASH FLOWS (Parent Company)
Years ended December 31, 1994, 1993 and 1992
1994 1993 1992
Operating Activities:
Net income (loss) . . . . . . . . . .$ 1,696,319 $ 1,770,451 $ (441,274)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation and amortization. . 52,305 53,263 59,125
Equity in undistributed net
(income) loss of subsidiaries
after dividends . (1,915,636) (1,448,290) 396,221
Net decrease in due from
subsidiaries . . (69,219) (1,379) (9,271)
Net change in other assets and
other liabilities.. . . 24,874 (127,420) 88,587
Net cash provided (used) by
operating activities . . (211,357) 246,625 93,388
Investing Activities:
Purchase of premises and equipment . . . (4,266) - (7,619)
Additional investment in
subsidiaries. . . . (2,570,000) (195,000) -
Net cash used by investing
activities. . (2,574,266) (195,000) (7,619)
Financing Activities:
Cash dividends paid. . . . . . . . . (753,306) (753,306) (753,306)
Proceeds from stockholder
rights offering. . . 839,236 - -
Net increase in long-term debt . . 2,000,000 - -
Net cash applied to
financing activities 2,085,930 (753,306) (753,306)
Net decrease in
Cash and Cash Equivalents. . . (699,693) (701,681) (667,537)
Cash and Cash Equivalents
Beginning Balance. . 1,790,471 2,492,152 3,159,689
Cash and Cash Equivalents
Ending Balance . . . . $ 1,090,778 $ 1,790,471 $ 2,492,152
Cash paid during the year for:
Interest. . . . . . . . . . . . . . .$ 13,059 $ - $ -
The Parent Company paid no income taxes during 1994, 1993 or 1992.
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE S-SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarters Ended (In thousands, except per share)
Mar 31 June 30 Sept 30 Dec 31 Year
1994
Interest income. . . . . . . . $ 4,732 $ 4,800 $ 5,126 $ 5,477 $ 20,135
Interest expense . . . . . . . 1,718 1,685 1,778 2,008 7,189
Net interest income . . . . . 3,014 3,115 3,348 3,469 12,946
Provision for loan losses. . . 80 45 45 45 215
Net interest income after
provision for loan losses. . 2,934 3,070 3,303 3,424 12,731
Other operating income . . . 256 238 251 317 1,062
Other operating expense. . . . 2,535 2,507 2,658 3,515 11,215
Income before income taxes. 655 801 896 226 2,578
Provision (credit)
for income taxes 243 300 344 (5) 882
Net income. . . . . . . . . $ 412 $ 501 $ 552 $ 231 $ 1,696
Per common share
Net income . . . . . . . $ 0.27 $ 0.33 $ 0.37 $ 0.16 $ 1.13
1993
Interest income. . . . . . . . $ 5,325 $ 5,203 $ 5,059 $ 4,983 $20,570
Interest expense . . . . . . . 2,114 2,041 1,987 1,867 8,009
Net interest income . . . . . 3,211 3,162 3,072 3,116 12,561
Provision for loan losses. . . 100 184 240 320 844
Net interest income after
provision for loan losses. . 3,111 2,978 2,832 2,796 11,717
Other operating income . . . . 307 248 357 537 1,449
Other operating expense. . . . 2,613 2,633 2,541 2,610 10,397
Income before income taxes. . 805 593 648 723 2,769
Provision for income taxes . 295 213 233 258 999
Net income . . . . . . . . $ 510 $ 380 $ 415 $ 465 $ 1,770
Per common share
Net income . . . . . . . . $ 0.34 $ 0.25 $ 0.28 $ 0.31 $ 1.18
KPMG Peat Marwick LLP
Certified Public Accountants
One Mellon Bank Center Telephone 412 391 9710 Telefax 412 391 8963
Pittsburgh, PA 15219 Telex 7106642199 PMM & CO PGH
Independent Auditor's Report
To the Board of Directors and Shareholders of
American Bancorporation:
We have audited the accompanying consolidated balance sheets of American
Bancorporation and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31,1994.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American
Bancorporation and subsidiaries at December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in note A to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 109 "Accounting for Income Taxes," and No.
115 "Accounting for Certain Investments in Debt and Equity Securities," in 1993
and 1994, respectively.
Pittsburgh, Pennsylvania
April 4, 1995
Member Firm of
Klynveld Peat Marwick Goerdeler
<TABLE>
American Bancorporation and Subsidiaries
Five Year Selected Financial Data
($ in thousands, except per share data)
Consolidated Statement of Income
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the years ended 1994 1993 1992 1991 1990
Interest income
Interest and fees on loans. . . $ 14,902 $ 14,590 $ 16,903 $ 20,893 $ 21,993
Interest on securities. . . . . 4,721 5,513 6,034 5,518 4,403
Interest on other short-term
investments. . 512 467 578 1,090 1,677
20,135 20,570 23,515 27,501 28,073
Interest expense
Interest on deposits and
borrowed funds . . . 7,189 8,009 11,370 15,307 15,923
Net interest income . . . . . 12,946 12,561 12,145 12,194 12,150
Provision for loan losses. . . . 215 844 3,159 2,250 1,370
Net interest income
after provision for
loan losses. . 12,731 11,717 8,986 9,944 10,780
Service charges and other income . 1,062 1,449 1,124 842 1,019
Other expenses
Salaries and employee benefits. . 4,933 4,428 4,368 3,887 3,928
Other operating expenses. . . . . 6,282 5,969 6,452 6,022 5,312
11,215 10,397 10,820 9,909 9,240
Income (loss) before income taxes. 2,578 2,769 (710) 877 2,559
Provision (credit) for
income taxes . 882 999 (269) 528 904
Net income (loss) . . . . . . $ 1,696 $ 1,770 $ (441) $ 349 $ 1,655
Per common share*:
Net income (loss) . . . . . . $ 1.13 $ 1.18 $ (0.29) $ 0.23 $ 1.10
Cash dividends. . . . . . . . $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 0.50
Average common shares outstanding (000's). . . 1,507 1,507 1,507 1,507 1,507
Consolidated Balance Sheet Data
Balance at year end
Total Assets. . . . . . . . . . . .$338,116 $276,390 $288,962 $294,176 $289,176
Earning Assets. . . . . . . . . . . 314,463 256,967 266,748 269,939 265,326
Loans, net of unearned income . . . 228,866 150,523 158,978 176,965 190,708
Deposits. . . . . . . . . . . . . . 292,341 248,040 261,001 262,264 258,687
Long-term debt. . . . . . . . . . 2,000 - - 1,200 1,200
Stockholders' equity. . . . . . . 26,193 24,158 23,141 24,336 23,998
Average Balances for years ended
Total Assets. . . . . . . . . . . 284,845 278,669 293,383 293,937 279,665
Earning Assets. . . . . . . . . . . 263,178 257,455 270,008 270,401 257,792
Loans, net of unearned income . . . 164,405 153,277 165,024 182,636 185,467
Deposits. . . . . . . . . . . . . . 252,916 250,504 262,957 262,215 250,171
Long-term debt. . . . . . . . . 167 - 800 1,200 1,200
Stockholders' equity. . . . . . . 25,188 23,778 24,127 24,524 23,767
Consolidated Financial Ratios (as a Percent)
Net income to average assets. . 0.60% 0.64% N/A 0.12% 0.59%
Net income to average equity. . 6.73 7.44 N/A 1.42 6.97
Dividends to net income . . . . . 44.84 42.57 N/A 215.90 45.53
Average equity to average assets 8.84 8.53 8.22% 8.34 8.50
Average debt to average equity. 0.66 0.00 3.32 4.89 5.05
<FN>
<F1>
*(Per share data has been retroactively restated for a two for one stock split which became
effective March 16, 1994.)
</FN>
</TABLE>
<TABLE>
Average Balances, Income and Expense, Yields and Rates
<CAPTION>
($ in thousands) 1994 1993 1992
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
INTEREST EARNING ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Commercial . . . . . . $ 48,161 $ 4,052 8.41% $ 44,827 $ 3,531 7.88% $ 49,460 $ 4,046 8.18%
Real estate. . . . . . 64,114 5,416 8.45 50,956 4,764 9.35 49,128 5,044 10.27
Installment-net. . . . 52,130 4,880 9.36 57,494 5,937 10.33 66,436 7,475 11.25
Fees . . . . . . - 554 - - 358 - - 338 -
Total loans . . . . . . 164,405 14,902 9.06 153,277 14,590 9.52 165,024 16,903 10.24
Investment securities
Taxable. . . . . . . . 85,509 4,558 5.33 87,918 5,301 6.03 86,952 5,815 6.69
Tax-exempt . . . . . 2,246 163 7.26 2,603 212 8.16 2,886 219 7.58
Total investment
securities 87,755 4,721 5.38 90,521 5,513 6.09 89,838 6,034 6.72
Other short-term
investments. 11,018 512 4.64 13,657 467 3.42 15,146 578 3.81
Total earning assets. 263,178 20,135 7.65 257,455 20,570 7.99 270,008 23,515 8.71
Non-interest Earning Assets
Cash and due from banks 11,024 10,050 10,045
Premises and equipment-
net. 7,992 7,989 8.302
Other assets . . . . . 2,635 3,175 5,028
21,651 21,214 23,375
TOTAL ASSETS. . . . .$284,829 $278,669 $293,383
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings and MMDA .$127,626 $ 3,277 2.57% $125,950 $ 3,684 2.92% $121,110 $ 4,610 3.81%
Time. . . . . . . . . 96,392 3,753 3.89 100,270 4,261 4.25 118,915 6,577 5.53
Total deposits. . . . 224,018 7,030 3.14 226,220 7,945 3.51 240,025 11,187 4.66
Short-term borrowings. 3,942 146 3.69 1,948 64 3.27 2,568 100 3.91
Long-term debt . . . 167 13 7.84 - - - 800 83 10.38
Total interest
bearing liabilities. 228,127 7,189 3.15 228,168 8,009 3.51 243,393 11,370 4.67
Non-interest bearing
Demand non-interest
bearing 28,898 24,284 22,932
Other liabilities . 2,590 2,439 2,931
31,488 26,723 25,863
Stockholders' Equity. . 25,214 23,778 24,127
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $284,829 $278,669 $293,383
Net interest income . $ 12,946 $ 12,561 $12,145
Interest rate spread 4.50% 4.48% 4.04%
MARGIN ANALYSIS
(as a % of Earning Assets)
Interest income . . 7.65% 7.99% 8.71%
Interest expense. . 2.73 3.11 4.21
Net interest income 4.92% 4.88% 4.50%
<FN>
<F1>
Averages stated are month end average balances. Installment loans are stated net of unearned income. Average
loans include nonaccrual loans. Yields do not reflect tax equivalent adjustments.
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
December 31, 1994, 1993 and 1992
Introduction
The discussion and analysis, when read in conjunction with the consolidated
financial statements and accompanying notes, is designed to provide information
relevant to an assessment of financial performanceand management's perception
of significant events.
Summary
American Bancorporation recognized net income of $1,696,000 ($1.13 per share)
in 1994, compared to net income of $1,770,000 ($1.18 per share) in 1993.
The decrease was the result of an increase in other expenses, primarily due to
a reserve established for pension expense (See Note Q "Pension Plan and Profit
Sharing 401(k) Savings Plan"), and a decrease in other income which were
partially offset by a decrease in the provision for loan losses and an increase
in net interest income.
At year end, the Company's assets totalled $337,926,000, reflecting an increase
of 22.3%. Deposits totalled $292,341,000 at year end, an increase of 17.9%.
On December 8, 1994 the Company , through its subsidiaries CNB and AMI, acquired
certain assets and assumed certain liabilities of Buckeye Savings Bank, a wholly
owned subsidiary of Crown Bank, F.S.B., headquartered in Casselberry, Florida.
<TABLE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
RESULTS OF OPERATIONS
The discussion and analysis of the results of operations is focused on the three
years ended December 31, 1994 and uses a format of consecutive year comparisons.
Volume and rate variances contributing to change in net interest income are
analyzed using adjusted month end average balances. Tax equivalency is not
imputed in the calculation of yields.
<CAPTION>
($ in thousands)
Years ended December 31 Change
1994 1993 1992 1994 - 1993 1993 - 1992
Amount % Amount %
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income. . . . . . $ 20,135 $ 20,570 $ 23,515 $ (435) (2.12)% $ (2,945) (12.52)%
Interest expense . . . . 7,189 8,009 11,370 (820) (10.24) (3,361) (29.56)
Net interest income . . 12,946 12,561 12,145 385 3.06 416 3.43
Provision for loan losses. . 215 844 3,159 (629) (74.54) (2,315) (73.28)
Net interest income after
provision for loan losses. .12,731 11,717 8,986 1,014 8.65 2,731 30.39
Other operating income . 1,062 1,449 1,124 (387) (26.72) 325 29.91
Other operating expense. 11,215 10,397 10,820 818 7.87 (423) (3.91)
Income (loss) before
income taxes . $ 2,578 $ 2,769 (710) $ (191) (6.92)% $ 3,479 490.18%
Average Volume
Earning Assets. . . . . . .$263,178 $257,455 $270,008 $ 5,723 2.22% $(12,553) (4.65)%
Interest Bearing
Liabilities. . 228,127 228,168 243,393 (41) (0.02) (15,225) (6.26)
Yield/Rate
Earning Assets. . . . 7.65% 7.99% 8.71%
Interest Bearing Liabilities. .3.15 3.51 4.67
Spread. . . . . . . . 4.50 4.48 4.04
Net Interest Margins. 4.92% 4.88% 4.50%
</TABLE>
<TABLE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
<CAPTION>
VOLUME AND RATE VARIANCES 1994 - 1993 1993 - 1992
Increase/ (decrease) due to Increase/ (decrease) due to
($ in thousands) Volume Rate Net Volume Rate Net
Interest Income
<S> <C> <C> <C> <C> <C> <C>
Loans . . . . . . . . . . $ 1,029 $ ( 717) $ 312 $(1,161) $(1,152) $(2,313)
Investment securities
Taxable. . . . . . . . (142) (601) (743) 64 (578) (514)
Tax-exempt . . . . . . (27) (22) (49) (23) 16 (7)
Other short-term investments. (101) 146 45 (54) ( 57) (111)
Total interest income 759 (1,194) (435) (1,174) (1,771) (2,945)
Interest Expense
NOW, Savings and MMDA. 48 (455) (407) 178 (1,104) (926)
Time . . . . . . . . . (161) (347) (508) (935) (1,381) (2,316)
Short-term borrowings. 73 9 82 (21) (15) (36)
Long-term debt . . . . 13 - 13 (42) (41) (83)
Total interest expense. . . (27) (793) (820) (820) (2,541) 3,361
Net Interest Income. . . . $ 786 $ (401) $ 385 $ (354) $ 770 $ 416
<FN>
<F1>
The rate-volume variance has been allocated in proportion to the absolute
value attributed to each change.
</FN>
</TABLE>
Year ended December 31, 1994
Compared to Year Ended December 31, 1993
Net Income. Net income for the year ended December 31, 1994 amounted to
$1,696,000, compared to net income of $1,770,000 for the year ended December 31,
1993. The decrease was the result of an increase in other expenses, primarily
due to a reserve established for pension expense (See Note Q "Pension Plan and
Profit Sharing 401(k) Savings Plan"), and a decrease in other income which were
partially offset by a decrease in the provision for loan losses and an increase
in net interest income.
Net Interest Income. Net interest income before provision for loan losses for
the year ended December 31, 1994 amounted to $12,946,000, an increase of
$385,000 or 3.1%, as compared to the year ended December 31, 1993. The increase
resulted primarily from a $5,723,000 increase in average interest earning
assets.
Interest Income. Total interest income for the year ended December 31, 1994
amounted to $20,135,000, a decrease of $435,000 or 2.2% as compared to the year
ended December 31, 1993. The decrease resulted primarily from a 34 basis
point decline in the average yield on earning assets, which was partially offset
by a $5,723,000 increase in the average volume of earning assets. Average
loans outstanding increased $11,128,000 or 7.3% with average real estate loans
increasing $13,158,000 or 25.8% and average commercial loans increasing
$3,334,000 or 7.4%, while average consumer installment loans decreased
$5,364,000 or 9.3%, The average yield on loans decreased from 9.52% in 1993 to
9.06% in 1994. Average investment securities and other short-term investments
outstanding decreased $5,405,000 or 5.2%, and the average yield decreased from
5.74% in 1993 to 5.30% in 1994.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
Interest Expense. Total interest expense for the year ended December 31, 1994
amounted to $7,189,000, a decrease of $820,000 or 10.2%, as compared to the year
ended December 31, 1993. The decrease resulted primarily from a 36 basis
point decline in interest rates paid on interest bearing liabilities Average
NOW, money market and savings accounts increased $1,676,000 or 1.3%. Average
time deposits decreased $3,878,000 or 3.9%. Average non-interest bearing
accounts increased $4,614,000 or 19.0% and represented 11.4% of average total
deposits for the year ended December 31, 1994.
Provision for Loan Losses. The provision for loan losses for the year ended
December 31, 1994 was $215,000, compared to $844,000 for the year ended December
31, 1993. Net charged-off loans were $433,000 in 1994, compared to $982,000 in
1993, a decrease of 55.9%. Net installment loans charged-off decreased $466,000
and net real estate loans charged-off decreased $123,000 while commercial loans
charged-off increased $41,000.
Other Income. Other income for the year ended December 31, 1994 amounted to
$1,062,000, a decrease of $387,000 or 26.7%, as compared to the year ended
December 31, 1993. Net gains on sale of investment securities totalled $3,000
in 1994, compared to $219,000 in 1993. Other (miscellaneous) income declined
by $132,000, primarily due to gains on sale of assets recorded in 1993.
Other Expense. Total other expense for the year ended December 31, 1994 amounted
to $11,215,000, an increase of $818,000 or 7.9%, as compared to the year ended
December 31, 1993. Salaries and employee benefits increased $505,000, or 11.4%,
primarily due to the establishment of a $500,000 reserve for pension costs as
previously discussed (See Note Q "Pension Plan and Profit Sharing 401(k) Plan").
Occupancy and equipment expense increased $56,000 or 3.1%. Other
(miscellaneous) expenses increased $258,000 or 6.2%.
Provision for Income Taxes. The provision for income taxes for the year ended
December 31, 1994 was $882,000, compared to of $999,000 for the year ended 1993.
The decrease was due to the decrease in the Company's pre-tax income.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
Year Ended December 31, 1993
Compared to Year Ended December 31, 1992
Net Income/Net Loss. Net income for the year ended December 31, 1993 amounted
to $1,770,000, compared to a net loss of $441,000 for the year ended December
31, 1992. The increase was the result of decreases in provision for loan losses
and other expenses and an increase in net interest income and other income,
which were partially offset by an increase in income taxes.
Net Interest Income. Net interest income before provision for loan losses for
the year ended December 31, 1993 amounted to $12,561,000, an increase of
$416,000 or 3.4%, as compared to the year ended December 31, 1992. The increase
resulted from a 38 basis point increase in the Company's margin, which was
partially offset by a $12,553,000 or 4.6% decrease in average interest earning
assets.
Interest Income. Total interest income for the year ended December 31, 1993
amounted to $20,570,000, a decrease of $2,945,000 or 12.5%, as compared to the
year ended December 31, 1992. The decrease resulted primarily from a 72 basis
point decline in the average yield on earning assets and a $12,553,000 decrease
in the average volume of earning assets. Average loans outstanding decreased
$11,747,000 or 7.1% with average consumer installment loans decreasing
$8,942,000 or 13.5%, average commercial loans decreasing $4,633,000 or 9.4%,
while average real estate loans increased $1,828,000 or 3.7%. The average yield
on loans decreased from 10.24% to 9.52% in 1993. Average investment securities
and other short-term investments outstanding decreased $806,000 or 0.8%, while
the average yield decreased from 6.30% in 1992 to 5.74% in 1993.
Interest Expense. Total interest expense for the year ended December 31, 1993
amounted to $8,009,000, a decrease of $3,361,000 or 29.6%, as compared to the
year ended December 31, 1992. The decrease resulted primarily from a 116 basis
point decline in interest rates paid on interest bearing liabilities and a
$15,225,000 or 6.3% decrease in the average volume of such liabilities. Average
NOW, money market and savings accounts increased $4,840,000 or 4.0%. Average
time deposits decreased by $18,645,000 or 15.7%. Average non-interest bearing
accounts increased $1,352,000 and represented 9.7% of average total deposits for
the year ended December 31, 1993.
Provision for Loan Losses. The provision for loan losses for the year ended
December 31, 1993 was $844,000, compared to $3,159,000 for the year ended
December 31, 1992. Of the $3,159,000 total 1992 provision for loan losses,
$1,390,000 was due to the establishment of a specific loan loss reserve for a
potential loss on a nonperforming commercial loan. Net charged-off loans were
$982,000 in 1993, compared to $1,942,000 in 1992, a decrease of 49.4%. Net
commercial loans charged-off declined $684,000, net installment loans charged-
off decreased $239,000 and net real estate loans charged-off decreased $37,000.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
Other Income. Other income for the year ended December 31, 1993 amounted to
$1,449,000, an increase of $325,000 or 28.9%, as compared to the year ended
December 31, 1992. Net gains on sale of investment securities totalled
$219,000 in 1993, compared to $66,000 in 1992. During 1992 the Company recorded
a $156,000 writedown on marketable equity securities. Other (miscellaneous)
income increased by $149,000, primarily due to gains on sale of assets.
Other Expense. Total other expense for the year ended December 31, 1993 amounted
to $10,397,000, a decrease of $423,000 or 3.9%, as compared to the year ended
December 31, 1992. Salaries and employee benefits increased $60,000 or 1.4%.
Occupancy and equipment expense decreased $169,000 or 8.5%. Other
(miscellaneous) expenses decreased $314,000 or 7.0%.
Provision/Credit for Income Taxes. The provision for income taxes for the year
ended December 31, 1993 was $999,000, compared to a credit for income taxes of
$269,000 for the year ended 1992. The increase was due to the increase in the
Company's pre-tax income.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1992
FINANCIAL CONDITION
Loans
The Company's primary earning assets are loans, representing 67.7% of the total
assets at December 31, 1994. Loans increased $78,343,000 or 52.0% between 1993
and 1994, primarily due to loans acquired from Buckeye Savings Bank. At
December 31, 1994 there were no concentrations of loans in any particular
industry or in a group of related industries exceeding 10% of total loans.
It is the policy of the Company to review each prospective credit in order to
determine an adequate level of security or collateral to obtain prior to making
the loan. The type of collateral will vary and ranges from liquid assets to
real estate. Commercial business loans are made based on the financial ability
of the borrower to repay the obligation and the appraised value of assets used
as collateral. Real estate construction loans are made with loan-to-value
ratios generally below 75%. Real estate mortgage loans are made with loan-to-
value ratios generally below 80% of the appraised value. The real estate is
appraised at the time the loan is originated and is reappraised if the loan is
placed on a classified status. All consumer installment loan requests are
evaluated to determine the prospective borrowers ability and willingness to
repay the obligation and their stability as a borrower. Ability to repay is
determined by comparing an applicant's monthly debt payment including the
proposed loan payment with net monthly income. The resulting debt service to
income ratio generally must be below 40%. In addition, for consumer installment
loans which require collateral, the Company will make advances up to 90% of the
value on certain types of collateral.
The table below sets forth loans by category at December 31, 1990 through 1994.
TYPES OF LOANS
($ in thousands) 1994 1993 1992 1991 1990
Commercial . . . . . . . . $51,818 $42,488 $44,697 $53,658 $50,448
Real estate construction 1,112 1,751 1,795 1,741 2,118
Real estate mortgage . . . . 119,629 53,417 49,524 50,186 50,465
Installment. . . . . . . . 56,307 52,867 62,962 71,380 87,677
$228,866 $150,523 $158,978 $176,965 $190,708
Scheduled repayment and rate sensitivity of commercial loans and real estate
construction loans is indicated as follows at December 31, 1994:
($ in thousands)
One Year One to Over
or Less Five Years Five Years Total
Commercial . . . . . $ 48,901 $ 2,528 $ 389 $ 51,818
Real estate construction . . 682 430 - 1,112
Total . . . . . . . . $ 49,583 $ 2,958 $ 389 $ 52,930
For the commercial and real estate construction loans due after one year,
$430,000 have a predetermined interest rate and $2,917,000 have a floating
or adjustable interest rate.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1994, 1993 and 1992
Asset Quality
The following presents loans considered nonperforming and consequently
detracting from asset quality:
NONPERFORMING ASSETS
($ in thousands) 1994 1993 1992 1991 1990
Nonperforming loans
Nonaccrual. . . . . . . . $ 1,214 $ 2,188 $ 4,058 $ 2,775 $ 863
90 days past due. . . . . . . 766 601 886 4,107 2,513
Restructured. . . . . . . . . 610 709 509 311 300
Total nonperforming
loans. $ 2,590 $ 3,498 $ 5,453 $ 7,193 $ 3,676
Other nonperforming assets
Other real estate owned . . . 682 699 1,049 1,540 1,166
Total nonperforming
assets . . $ 3,272 $ 4,197 $ 6,502 $ 8,733 $ 4,842
Nonperforming loans as a
percent of loans . 1.1% 2.3% 3.4% 4.1% 1.9%
Nonperforming assets as a
percent of total assets 1.0% 1.5% 2.3% 3.0% 1.7%
The nonaccrual category represents loans on which interest recognition has been
suspended until realized because the borrower's ability to repay principal or
interest is in doubt. For loans not primarily secured by real estate or in the
process of collection, the Company discontinues accrual when a loan is 90 days
past due. Real estate loans are placed on nonaccrual status when, in
management's judgement, collection is indoubt or when foreclosure proceedings
are initiated, which is generally 180 days past the due date. Although
nominally performing, nonaccrual treatment may also be accorded on loans when
information becomes available which suggests that more than normal risk of
collection exists. Restructured loans are loans, the terms of which have been
altered, to provide a reduction or deferral of interest or principal because of
deterioration in the financial position of the borrower. Past due loans are
loans contractually past due 90 days or more and not included elsewhere.
Total nonperforming loans were $2,590,000 at December 31, 1994, as compared to
$3,498,000 at December 31, 1993. Nonaccrual loans and restructured loans
decreased by $974,000 and $99,000 respectively, while loans 90 days past due
increased by $165,000. Of the $682,000 total other real estate owned,
$652,000 represents former banking facilities.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1994, 1993 and 1992
Allowance for Loan Losses
The Company's loan loss experience for the five years ended December 31, 1994
is summarized as follows:
SUMMARY OF LOAN LOSS EXPERIENCE
($ in thousands) 1994 1993 1992 1991 1990
Balance at beginning of year . $ 3,544 $ 3,681 $ 2,463 $ 1,850 $ 1,712
Allowance acquired in loan
purchase (See Note B). 411 - - - -
Provision for loan losses . . 215 844 3,159 2,250 1,370
Loans charged off
Commercial . . . . . . . . . 205 110 798 328 299
Real estate mortgage . . . . 141 283 288 336 152
Installment. . . . . . . . . 491 941 1,093 1,217 897
Total loans charged off . . 837 1,334 2,179 1,881 1,348
Loans recovered
Commercial . . . . . . . . 93 39 43 5 2
Real estate mortgage . . . 25 44 12 27 5
Installment. . . . . . . . . 286 270 183 212 109
Total loans recovered . . 404 353 238 244 116
Net loans charged off. . . 433 981 1,941 1,637 1,232
Balance at end of year . . . . $ 3,737 3,544 $ 3,681 $ 2,463 $ 1,850
Loans outstanding at
December 31,. $228,866 $150,523 $158,978 $176,965 $190,708
Average loans for the
year ended 164,405 153,277 165,024 182,636 185,467
Ratio of net charge-offs
to average loans. 0.26% 0.64% 1.18% 0.90% 0.66%
Ratio of allowance to
loans outstanding. . 1.63% 2.35% 2.32% 1.39% 0.97%
Ratio of provision to
average loans. 0.13% 0.55% 1.91% 1.23% 0.74%
The allowance for loan losses was equal to 1.63% of loans outstanding at year
end 1994 and in management's judgment is adequate to absorb potential loan
losses. While management's on-going analysis includes, among other factors,
the financial position of particular borrowers, results of internal loan
reviews, past due loans and the Company's historical loss experience, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, federal regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the bank to recognize additions to the
allowance based on their judgments about information available to them at the
time of their examination.
<TABLE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1994, 1993 and 1992
Securities
The following table summarizes the carrying value and weighted average yield of
securities by type and maturity range at December 31, 1994:
<CAPTION>
After After
One Year Five Years
Within But Within But Within After
One Year Five Years Ten Years Ten Years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
Securities
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . $ 5,804 4.23% $ 16,943 5.12% $ 4,839 7.32% $ - -% $27,586 5.32%
Federal agency obligations . - - 15,780 5.03 14,937 5.27 17,784 5.52 48,501 5.28
State and Municipal securities 56 5.80 831 6.61 850 9.79 355 8.34 2,092 8.18
Other. . . . . . - - 10 5.50 - - - 10 5.50
Total Carrying Value. . $ 5,860 4.25% $ 33,564 5.51% $20,626 5.94% $18,139 5.58% $78,189 5.37%
Securities Available for Sale
Equity securities $ - - $ - - $ - - $ 3,484 5.41 $ 3,484 5.41%
<CAPTION>
The after ten year range of Federal agency obligations represents holdings of
certificates of participation in pools of residential mortgages. Principal
repayment prior to maturity has not been reflected. The after ten year range of
equity securities includes securities with no stated value. Yields do not
reflect tax equivalent adjustments.
Deposits
Summarized below are average deposit balances by type for the years ended
December 31, 1994, 1993 and 1992. Also presented is the maturity distribution
of time deposits in excess of $100,000 at each year end.
AVERAGE DEPOSITS 1994 1993 1992
($ in thousands) Amount % Rate Amount % Rate Amount % Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand noninterest bearing $ 28,898 11.4% -% $ 24,284 9.7% -% $ 22,932 8.7% -%
Interest bearing deposits
NOW Accounts. . . . . 24,849 9.8 2.36 24,791 9.9 2.68 24,783 9.4 3.58
MMDA and savings accounts . 102,777 40.7 2.62 101,159 40.4 2.98 96,327 36.7 3.86
Time . . . . . . . . 96,392 38.1 3.89 100,270 40.0 4.25 118,915 45.2 5.53
224,018 88.6 3.14 226,220 90.3 3.51 240,025 91.3 4.66
Total. . . . . . . . . . $252,916 100.0% 2.78% $250,504 100.0% 3.17% $262,957 100.0% 4.25%
</TABLE>
MATURITY OF TIME DEPOSITS OVER $100,000 1994 1993 1992
($ in thousands)
Within three months. . . . . . . $ 2,844 $ 1,943 $ 3,200
Three to six months. . . . . . 3,586 2,892 2,572
Six months to one year . . . . 3,461 2,320 3,566
After one year . . . . . . . . 4,211 1,871 1,517
Total . . . . . . . . . . . . . $14,102 $ 9,026 $10,855
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1994, 1993 and 1992
Capital
Capital resources represent funds obtained externally through issuance of
securities and internally hrough the retention of earnings. Federal regulatory
authorities define core ("Tier 1") capital to include ommon stockholders'
equity and non-cumulative perpetual preferred stock, less certain intangible
assets. Supplementary ("Tier 2") capital includes core capital, allowance for
loan losses, perpetual preferred stock and qualifying notes and debentures.
Capital adequacy is determined after consideration of a range of factors
including organizational size, asset quality, consistency of earnings, risk
diversification, management expertise and internal controls.
Banking organizations are required to meet capital adequacy guidelines
established by federal regulators. The Company and the Banks are subject to a
risk-based capital framework and a minimum leverage ratio. The regulatory
minimum risk-based capital ratio is 8.0% (of which at least 4.0% should be a
core component consisting of common stockholders' equity). In addition, the
Company and the Banks must meet a leverage capital ratio of 3.0% Tier 1 capital
to adjusted total assets. The percentages established are minimums and most
banks are required to maintain ratios at levels 100 to 200 basis points above
the minimum and under certain circumstances may be required by federal
regulators to maintain ratios at higher levels.
At December 31, 1994 the Company's total risk-based capital ratio was 12.7% and
its Tier 1 risk-based capital ratio was 11.5%, while total risk-based capital
ratios for WNB and CNB were 15.1% and 10.2%, respectively, with Tier 1 risk-
based capital ratios of 13.8% and 9.0%, respectively. At December 31, 1994
the Company's leverage capital ratio was 6.9%, while the leverage capital ratios
for WNB and CNB were 8.6% and 5.2%, respectively.
Liquidity
In banking, liquidity refers to the ability of an institution to procure or
generate cash in order to fund operations, satisfy commitments, provide credit
to customers and withstand contraction of deposits during varying economic
conditions without disruption of service capabilities.
Liquidity depends upon confidence of customers and financial intermediaries and
confidence is engendered by financial strength as demonstrated by profitability,
asset quality and capitalization. The primary source of funds are deposits and
to a lesser extent, amortization and prepayment of outstanding loans, maturing
investment securities and borrowings from the FHLB of Pittsburgh and Cincinnati.
At December 31, 1994, money market assets and investment securities maturing in
one year or less totalled $9.8 million. Short-term borrowings outstanding at
December 31, 1994 totalled $13.4 million and certificates of deposit in excess
of $100,000, which mature within one year or less, totalled $9.9 million or
3.4% of total deposits.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1994, 1993 and 1992
At December 31, 1994, the Parent Company had outstanding debt totalling
$2,000,000 and had $1.1 million in liquid assets. Dividends declared by the
Company and funds to support parent company operations may be substantially
provided from subsidiary bank dividends. Various legal restrictions limit
the ability of a bank subsidiary to finance or otherwise supply funds to its
parent or certain of its affiliates (See Note N "Dividend Restrictions" to the
consolidated financial statements). Management believes that liquidity in
banking and nonbanking operations is sufficient.
Asset/Liability Management (Interest Rate Sensitivity)
The objective of asset/liability management is to insulate an institution's
rate spread from changes in interest rates and thus enable the institution to
maintain satisfactory levels of net interest income in both rising and falling
interest rate environments. In order to meet this objective, the Company
actively monitors the maturity or repricing relationship between its interest
earning assets and interest bearing liabilities and endeavors to control the
difference between such assets and liabilities maturing or repricing within one
year to less than ten percent of its total assets.
The difference between rate sensitive assets and rate sensitive liabilities that
mature or reprice within a given time period is referred to as the interest
rate sensitivity gap. A positive gap exists when rate sensitive assets exceed
rate sensitive liabilities. This mismatch generally will enhance earnings in a
rising interest rate environment and inhibit earnings when rates decline.
Conversely, a negative gap exists when rate sensitive liabilities exceed rate
sensitive assets. In this case, a rising interest rate environment generally
will inhibit earnings and declining rates generally will enhance earnings. The
Company's interest rate sensitivity analysis at December 31, 1994, is presented
in the table below. In evaluating the Company's exposure to interest rate risk
certain shortcomings inherent in this method of analysis must be considered. For
example, although certain assets and liabilities may have similar maturities or
periods of repricing, they may react in different degrees to change in market
interest rates. Interest bearing demand deposits and savings deposits are
presented as repricing within the earliest period as they are subject to
immediate withdrawal and rate change. However, these types of deposits have
historically shown relatively stable balances and rates have generally changed
in lesser degrees than other interest earning assets and interest bearing
liabilities.
<TABLE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1994, 1993 and 1991
<CAPTION>
Days Total
INTEREST RATE SENSITIVITY 31 61 91 181 One Year Over
($ in thousands) 30 60 90 180 1 year or Less One Year Total
December 31, 1994
INTEREST EARNING ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans. . . . . . . . . $ 54,393 $ 10,919 $ 4,576 $ 13,108 $ 27,676 $ 110,672 $118,194 $228,866
Investment securities. . . 1,185 - 400 1,459 4,001 7,045 74,629 81,674
Other short-term investments . 3,924 - - - - 3,924 - 3,924
Total interest earning assets 59,502 10,919 4,976 14,567 31,677 121,641 192,823 314,464
INTEREST BEARING LIABILITIES
Deposits
Interest bearing demand . . . 25,042 - - - - 25,042 - 25,042
Savings deposits. . . . 117,685 - - - - 117,685 - 117,685
Time deposits . . . . . . 11,202 7,971 7,898 24,764 28,483 80,318 38,087 118,405
Short-term borrowings. . . 13,398 - - - - 13,398 - 13,398
Long-term debt . . . . . 2,000 - - - - 2,000 - 2,000
Total interest bearing
liabilities . . . 169,327 7,971 7,898 24,764 28,483 238,443 38,087 276,530
Non Interest Bearing Sources-net - - - - - - 37,937 37,934
Total Funding sources . 169,327 7,971 7,898 24,764 28,483 238,443 76,021 314,464
INTEREST SENSITIVITY GAP $(109,825)$ 2,948 $ (2,922) $ (10,197) $ 3,194 $(116,802) $117,752 $ -
CUMULATIVE INTEREST
SENSITIVITY GAP . $(109,825) $(106,877) $(109,799) $ (119,996) $(116,802)$(116,802)$ - $ -
GAP/INTEREST EARNING ASSETS. . ..(34.92)% 0.94% (0.93)% (3.24)% (1.02)% (37.14)% 37.14% -
CUMULATIVE GAP/INTEREST
EARNING ASSETS . . . (34.92) (33.99) (34.92) (38.16) (37.14) (37.14) - -
<FN>
<F1>
At December 31, 1994, there were no outstanding financial futures, options or
interest rate swap agreements.
</FN>
</TABLE>
DIRECTORS
Jack O. Cartner, President
Motrim Inc., Cambridge, OH
Paul W. Donahie, President
American Bancorporation, Wheeling, WV
The Honorable John J. Malik, Jr.
Probate Court Judge, Belmont County, OH
Jeremy C. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
Jolyon W. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
Robert C. Mead, President
American Mortgages, Inc.
John E. Wait, President
Columbus National Bank, St. Clairsville, OH
OFFICERS
Jeremy C. McCamic, Chairman & CEO
Jolyon W. McCamic, Vice Chairman/Administration
Paul W. Donahie, President
Robert C. Mead, Chief Operating Officer
Brent E. Richmond, Executive Vice President, Secretary/Treasurer and Chief
Financial Officer
Jeffrey A. Baran, CPA, Assistant Controller
Linda M. Woodfin, Assistant Secretary
Paul W. Donahie, President
Wheeling National Bank
John E. Wait, President
Columbus National Bank
Robert C. Mead, President
American Mortgages, Inc.
Gail D. Haun, President
American Bancdata Corporation
CORPORATE INFORMATION
Annual Meeting
The annual meeting of shareholders will be held in Wheeling, West
Virginia at the corporate offices 1025 Main Street - Suite 800 Wheeling,
West Virginia. The meeting will convene at 10:00 AM, May 18, 1995. All
shareholders are invited to attend.
Stock Transfer Agent
American Bancservices, Inc.
1025 Main Street - Suite 800
Wheeling, WV 26003
Stock Listing
NASDAQ Symbol: AMBC
Shares of American Bancorporation common stock are traded on the Nasdaq Stock
Market - National List.
Primary Market Makers
Legg Mason Wood Walker, Inc. Herzog, Heine, Geduld, Inc.
Wheat First Securities, Inc. Ferris Baker Watts, Inc.
F. J. Morrissey & Co., Inc.
Form 10K
Stockholde rs may receive a copy of American Bancorporation's 1994 10K Annual
Report as filed with the Securities and Exchange Commission upon written
request to Treasurer, American Bancorporation, 1025 Main Street, Suite 800,
Wheeling, WV 26003.
Independent Certified Public Accountants
KPMG Peat Marwick LLP
Pittsburgh, PA
