FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the period ended: June 30, 1997
Commission File Number: 0-5893
American Bancorporation
(Exact name of registrant as specified in its charter)
Ohio 31-0724349
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1025 Main Street, Suite 800, Wheeling, WV 26003
(Address of principal executive offices) (Zip Code)
(304) 233-5006
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
July 7, 1997: 1,564,837 shares of Common stock without par value
Number of pages comprising
this report. . . 12
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheet. . . . . . . . . . . 3
Condensed Consolidated Statement of Operations. . . . . . 4
Condensed Consolidated Statement of
Cash Flows . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity. . . . . . . . . . . 6
Notes to the Financial Statements . . . . . . . . . . . . . . 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 7
Part II OTHER INFORMATION
Item 1 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . None
Item 2 Changes in Securities. . . . . . . . . . . . . . . . . . . None
Item 3 Defaults Upon Senior Securities. . . . . . . . . . . . . . None
Item 4 Submission of Matters to a Vote of Security Holders. . . . 11
Item 5 Other Information. . . . . . . . . . . . . . . . . . . . . None
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . None
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
American Bancorporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1997 1996 1996
ASSETS
Cash and due from banks. . . . . $ 12,905,782 $ 9,770,029 $ 11,550,133
Federal funds sold . . . . . . . 904,417 1,023,000 17,870,000
Investment securities
available for sale. . . . . . 157,152,101 125,325,363 143,473,608
Loans, net of unearned income. . 280,247,511 248,260,392 271,449,833
Less allowance for loan losses 3,555,330 3,772,394 3,563,774
276,692,181 244,487,998 267,886,059
Premises and equipment - net . . 10,080,749 8,862,279 9,730,880
Accrued interest receivable. . . 3,150,834 3,093,076 2,985,322
Excess of cost over net
assets purchased. . . . . . . 2,136,678 2,472,154 2,304,416
Other assets . . . . . . . . . . 4,854,866 5,871,777 5,832,008
TOTAL ASSETS. . . . . . . . $467,877,608 $400,905,676 $461,632,426
LIABILITIES
Deposits
Non-interest bearing. . . . . $ 33,923,814 $ 32,651,603 $ 36,744,316
Interest bearing. . . . . . . 301,646,375 278,258,032 283,066,502
TOTAL DEPOSITS. . . . . . 335,570,189 310,909,635 319,810,818
Short-term borrowings . . . . . 93,166,616 55,973,167 104,096,043
Accrued interest payable. . . . 1,626,358 1,156,459 1,488,999
Other liabilities . . . . . . . 5,124,757 3,651,856 4,876,191
Long-term debt. . . . . . . . . 930,835 1,042,034 937,681
TOTAL LIABILITIES. . . . . . 436,418,755 372,733,151 431,209,732
STOCKHOLDERS' EQUITY
Preferred stock. . . . . . . . - - -
Common stock without par value,
stated value $5, authorized
6,500,000 shares, issued and
outstanding 1,564,837 . . . . 7,824,185 7,824,185 7,824,185
Additional paid-in capital . . 10,301,982 10,301,982 10,301,982
Retained earnings. . . . . . . 13,354,283 10,899,747 12,021,258
Unrealized gain (loss) on
securities available
for sale, net. . . . . . . . . (21,597) (853,389) 275,269
TOTAL STOCKHOLDERS' EQUITY . . . 31,458,853 28,172,525 30,422,694
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY. . . . . $467,877,608 $400,905,676 $461,632,426
CONSOLIDATED STATEMENT OF OPERATIONS
Quarter ended June 30, Six Months ended June 30,
1997 1996 1997 1996
INTEREST INCOME
Loans . . . . . . . . . . . .$6,131,933 $5,325,746 $12,106,887 $10,905,203
Investment securities
Taxable interest income. . . 2,445,226 1,638,201 4,998,030 2,727,468
Non-taxable interest income. 23,153 33,600 47,354 68,024
2,468,379 1,671,801 5,045,384 2,795,492
Other short-term investments. 71,117 106,453 180,833 278,594
Total interest income . . . 8,671,429 7,104,000 17,333,104 13,979,289
INTEREST EXPENSE
Deposits. . . . . . . . . . . 3,179,451 2,715,981 6,121,188 5,334,446
Borrowed funds. . . . . . . . 1,194,459 539,925 2,611,169 939,511
Total interest expense. . . 4,373,910 3,255,906 8,732,357 6,273,957
NET INTEREST INCOME . . . 4,297,519 3,848,094 8,600,747 7,705,332
PROVISION FOR LOAN LOSSES. . . - - - -
Net interest income after
provision for loan losses. . 4,297,519 3,848,094 8,600,747 7,705,332
OTHER INCOME
Service charges on
deposit accounts . . . . . . 185,895 220,633 373,246 431,523
Securities gains. . . . . . . - - 4,337 -
Insurance commissions . . . . 25,617 40,099 48,997 65,843
Other income. . . . . . . . . 490,908 378,059 865,240 640,847
Total other income. . . . . 702,420 638,791 1,291,820 1,138,213
OTHER EXPENSE
Salaries and
employee benefits. . . . . . 1,439,747 1,368,460 2,853,240 2,711,609
Occupancy and
equipment expense. . . . . . 610,645 559,840 1,197,377 1,112,737
Other expenses. . . . . . . . 1,222,144 1,156,345 2,476,041 2,242,895
Total other expense . . . . 3,272,536 3,084,645 6,526,658 6,067,241
INCOME BEFORE INCOME TAXES . . 1,727,403 1,402,240 3,365,909 2,776,304
PROVISION FOR INCOME TAXES . . 641,961 510,862 1,250,465 1,014,255
NET INCOME . . . . . . . . . . $1,085,442 $ 891,378 $2,115,444 $1,762,049
Average Shares Outstanding . . 1,564,837 1,564,837 1,564,837 1,564,837
NET INCOME PER SHARE. . . . . $ 0.69 $ 0.57 $ 1.35 $ 1.13
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended June 30,
1997 1996
Operating Activities:
Net Income. . . . . . . . . . . . . . . . . . . . . $ 2,115,444 $ 1,762,049
Charges to operations (using) not using
cash in the current period. . . . . . . . . . . . 2,087,157 (1,144,958)
Net cash provided by operating activities. . . 4,202,601 617,091
Investing Activities:
Purchase of branch assets, net of cash acquired . . - 14,171,001
Investment securities available for sale:
Proceeds from maturities and repayments. . . . . 6,494,608 9,078,236
Proceeds from sales. . . . . . . . . . . . . . . 44,062,484 -
Purchases. . . . . . . . . . . . . . . . . . . . (64,864,425) (68,151,854)
Net (increase) decrease in loans. . . . . . . . . . (8,806,122) 2,280,174
Purchase of premises and equipment. . . . . . . . . (739,757) (473,010)
Net cash used by investing activities. . . . . (23,853,212) (43,095,453)
Financing Activities:
Net decrease in non-interest
bearing demand deposits . . . . . . . . . . . . . (2,820,502) (117,969)
Net decrease in interest bearing
demand and savings deposits . . . . . . . . . . . (2,862,283) (5,556,898)
Net increase in time deposits . . . . . . . . . . . 21,442,156 8,770,065
Net increase (decrease) in short-term borrowings. . (10,929,427) 28,450,501
Principal repayment of long-term debt . . . . . . . (6,848) (5,091)
Cash dividends paid . . . . . . . . . . . . . . . . (782,419) (625,935)
Net cash provided by financing activities . . . 4,040,677 30,914,673
Net Decrease in Cash and Cash Equivalents . . . . . (15,609,934) (11,563,689)
Cash and Cash Equivalents Beginning Balance. . . . . 29,420,133 22,356,718
Cash and Cash Equivalents Ending Balance . . . . . . $13,810,199 $10,793,029
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six months ended June 30, 1997 and 1996
1997 1996
Balance at January 1, . . . . . . . . . . . . $30,422,694 $28,012,422
Net Income . . . . . . . . . . . . . . . . . 2,115,444 1,762,049
Dividends declared ($0.50 per share 1997,
$0.40 per share 1996). . . . . . . . . . . (782,419) (625,935)
Unrealized loss on securities
available for sale . . . . . . . . . . . . (296,866) (976,011)
Balance at June 30, . . . . . . . . . . . . . $31,458,853 $28,172,525
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to a fair
presentation of the financial position and results of operations. All
adjustments are of a normal recurring nature. The notes to the financial
statements contained in the 1996 Annual Report to Stockholders should be read
in conjunction with these statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
SUMMARY
American Bancorporation (the "Company") recognized net income of $2,115,000
($1.35 per share) for the six months ended June 30, 1997, compared to net
income of $1,762,000 ($1.13 per share) for the six months ended June 30, 1996.
The Company's assets totalled $467,878,000 at June 30, 1997, compared to
$400,906,000 at June 30, 1996.
The following is a discussion of significant factors influencing operating
performance and change in financial position during the interim periods
presented. The discussion should be read in connection with the 1996 Annual
Report to Stockholders and the financial statements appearing elsewhere
herein.
RESULTS OF OPERATIONS
SIX MONTH COMPARISON
Net Income. Net income for the six months ended June 30, 1997 amounted to
$2,115,000, compared to $1,762,000 for the six months ended June 30, 1996. The
increase was the result of increases in net interest income and other income
which were partially offset by an increase in other expenses.
Net Interest Income. Net interest income before provision for loan losses
for the six months ended June 30, 1997 amounted to $8,601,000, an increase of
$895,000 or 11.6%, as compared to the six months ended June 30, 1996. The
increase resulted primarily from an $80,258,000 or 22.8% increase in average
interest earning assets which were partially offset by a 40 basis point
decrease in the Company's margin.
Interest Income. Total interest income for the six months ended June 30, 1997
amounted to $17,333,000 an increase of $3,354,000 or 24.0%, as compared to
the same period in 1996. The increase resulted primarily from an $80,258,000
increase in the average volume of earning assets and a 7 basis point increase
in the average yield on earning assets. Average loans outstanding increased
$30,169,000 or 12.2%. Average commercial loans increased $21,774,000 or 31.7%,
average real estate loans increased $14,121,000 or 11.4%, while average
consumer installment loans decreased $5,726,000 or 10.7%. The average yield
on loans decreased from 8.83% in 1996 to 8.74% in 1997. Average investment
securities and other short-term investments outstanding increased $50,089,000
or 47.8% while the average yield increased from 5.86% in 1996 to 6.75% in
1997.
Interest Expense. Total interest expense for the six months ended June 30,
1997 amounted to $8,732,000, an increase of $2,458,000 or 39.2% as compared
to the six months ended June 30, 1996. The increase resulted primarily from
a $78,966,000 or 25.3% increase in the average volume of interest bearing
liabilities and a 44 basis point increase in interest rates paid on such
liabilities. Average NOW, money market and savings accounts decreased
$3,744,000. Average time deposits increased $23,456,000. Average noninterest
bearing accounts increased $1,474,000 and represented 10.2% of average total
deposits in 1997. Average short-term borrowings increased $59,364,000 or
163.7% and the average rate paid on short-term borrowings increased from 4.95%
in 1996 to 5.38% in 1997.
Provision for Loan Losses. There was no loan loss provision for the six
months ended June 30, 1997, or 1996.
Other Income. Other income amounted to $1,292,000 for the six months
ended June 30, 1997, an increase of $154,000 or 13.5%, as compared to the
same period in 1996.
Other Expense. Total other expense for the six months ended June 30, 1997
amounted to $6,527,000, an increase of $459,000 or 7.6%, as compared to the
same period in 1996. Salaries and employee benefits increased $141,000 or
5.2%. Occupancy and equipment expense increased $85,000 or 7.6%. Other
(miscellaneous) expenses increased $233,000 or 10.4%.
Provision for Income Taxes. The provision for income taxes for the six months
ended June 30, 1997 was $1,250,000, an increase of $236,000 or 23.3% as
compared to the same period in 1996. The increase was due to the increase in
the Company's pre-tax income.
RESULTS OF OPERATIONS
QUARTER COMPARISON
Net Income. Net income for the quarter ended June 30, 1997 amounted to
$1,085,000, compared to net income of $891,000 for the quarter ended June 30,
1996. The increase was the result of increases in net interest income and
other income which were partially offset by an increase in other expenses.
Net Interest Income. Net interest income before provision for loan losses for
the quarter ended June 30, 1997 amounted to $4,298,000, an increase of
$449,000 or 11.7%, as compared to the quarter ended June 30, 1996. The
increase resulted primarily from a $66,926,000 or 18.4% increase in average
interest earning assets which was partially offset by a 24 basis point
decrease in the Company's margin.
Interest Income. Total interest income for the quarter ended June 30, 1997
amounted to $8,671,000, an increase of $1,567,000 or 22.1% as compared to the
same period in 1996. The increase resulted primarily from a $66,926,000 or
18.4% increase in the average volume of earning assets and a 24 basis point
increase in the average yield on earning assets. Average loans outstanding
increased $31,744,000 or 12.9%. Average commercial loans increased $19,091,000
or 27.0%, average real estate loans increased $17,927,000 or 14.6%, while
average consumer installment loans decreased $5,274,000 or 10.1%. The average
yield on loans increased from 8.66% in 1996 to 8.83% in 1997. Average
investment securities and other short-term investments outstanding increased
$35,182,000 or 30.0% and the average yield increased from 6.06% in 1996 to
6.66% in 1997.
Interest Expense. Total interest expense for the quarter ended June 30, 1997
amounted to $4,374,000, an increase of $1,118,000 or 34.3%, as compared to the
quarter ended June 30, 1996. The increase resulted primarily from a
$64,378,000 or 19.9% increase in the average volume of interest bearing
liabilities and a 49 basis point increase in interest rates paid on such
liabilities.
Provision for Loan Losses. There was no loan loss provision for the quarter
ended June 30, 1996, or 1997.
Other Income. Other income amounted to $702,000 for the quarter ended June
30, 1997, compared to $639,000 for the same period in 1996. The 1996 amount
includes a gain on other real estate totalling $139,000.
Other Expense. Total other expense for the quarter ended June 30, 1997
amounted to $3,273,000, an increase of $188,000 or 6.1% as compared to the
same period in 1996. Salaries and employee benefits increased $71,000 or
5.2%. Occupancy and equipment expense increased $51,000 or 9.1%. Other
(miscellaneous) expenses increased $66,000 or 5.7%.
Provision for Income Taxes. The provision for income taxes for the quarter
ended June 30, 1997 was $642,000, compared to $511,000 for the same period in
1996. The increase was due to the increase in the Company's pre-tax income.
ASSET QUALITY
Nonperforming loans totalled $2,414,000 or 0.9% of total loans at June 30,
1997, compared to $1,963,000 or 0.7% at December 31, 1996. Nonperforming
loans at June 30, 1997 consisted of nonaccrual loans totalling $493,000, 90
day delinquent loans of $1,295,000, and restructured loans aggregating
$626,000. Other real estate held totalled $647,000 at June 30, 1997, compared
to $607,000 at December 31, 1996.
CAPITAL RESOURCES
Stockholders' equity totalled $31,459,000 at June 30, 1997. The Company's
risk-based capital ratio was 12.2%, of which 10.9% constituted common
stockholder equity, while the risk-based capital ratio for the
Company's bank subsidiary, Wheeling National Bank, was 12.2%, with common
stockholders' equity of 11.0%. At June 30, 1997 the Company's leverage
capital ratio was 6.4%, while the leverage ratio for Wheeling National Bank
was 6.5%.
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1997 1996 1997 1996
Average Yield/ Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate Balance Rate
INTEREST EARNING ASSETS (000's) (000's) (000's) (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Commercial . . . . . . $ 89,872 9.33% $ 70,781 9.23% $ 90,506 9.12% $ 68,732 9.26%
Real estate. . . . . . 140,862 8.06 122,935 7.95 138,530 8.03 124,409 8.25
Installment-net. . . . 47,067 8.82 52,341 8.96 48,002 8.84 53,728 8.98
Total loans . . . . 277,801 8.83 246,057 8.66 277,038 8.74 246,869 8.83
Investment securities
Taxable. . . . . . . . 149,391 6.55 112,179 5.84 150,484 6.64 96,447 5.66
Tax-exempt . . . . . . 1,119 8.28 2,025 6.64 1,149 8.25 2,075 6.56
Total investment
securities . . . . 150,510 6.56 114,204 5.86 151,633 6.65 98,522 5.67
Other short-term
investments. . . . 2,117 13.43 3,241 13.14 3,330 10.86 6,352 8.77
Total interest
earning assets . . . $430,428 8.06 $363,502 7.82 $432,001 8.02 $351,743 7.95
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings & MMDA . $125,943 2.65% $130,305 2.62% $125,879 2.64% $129,623 2.61%
Time. . . . . . . . . 173,880 5.39 148,114 5.03 168,748 5.29 145,292 5.01
Total deposits . . . 299,823 4.24 278,419 3.90 294,627 4.16 274,915 3.88
Short-term borrowings. 87,573 5.36 44,487 4.65 95,628 5.38 36,264 4.95
Long-term debt . . . . 932 8.79 1,043 8.61 933 8.38 1,044 8.19
Total interest
bearing liabilities. $388,328 4.51 $323,949 4.02 $391,188 4.46 $312,223 4.02
MARGIN ANALYSIS
(as a % of earning assets)
Interest income. . . . . . 8.06% 7.82% 8.02% 7.95%
Interest expense . . . . . 4.06 3.58 4.04 3.57
Net interest income. . . . 4.00% 4.24% 3.98% 4.38%
<FN>
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>
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
The Annual Meeting of Shareholders was held May 21, 1997. Proxies were
solicited pursuant to Regulation 14 of the 1934 Act. Shares represented in
person or by proxy totalled 1,382,433 or 88.34% of the shares then
outstanding. Shareholders approved by affirmative vote the following
proposals:
1. To fix the number of positions for director at 9, with 3 vacancies that
may be filled by the Board of Directors:
Vote For: 1,367,252 Against: 10,706 Abstain: 4,475
2. To elect Jay T. McCamic and Robert C. Mead directors for a
three year term:
Vote For Vote Withheld Abstain
Jeremy C. McCamic 1,379,127 3,306 0
Jolyon W. McCamic 1,379,127 3,306 0
Continuing in the position of director were the following:
Term Expiring
Jack O. Cartner 1998
Paul W. Donahie 1998
Jay T. McCamic 1999
Robert C. Mead 1999
Item 6. Exhibits and Reports on Form 8-K
B. Reports on Form 8-K:
Date Item Description
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BANCORPORATION
(Registrant)
Date August 14, 1997 /s/ Jeremy C. McCamic
Jeremy C. McCamic
Chairman and
Chief Executive Officer
Date August 14, 1997 /s/ Brent E. Richmond
Brent E. Richmond
Chief Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-TYPE> 6-MOS
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,905,782
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 904,417
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 157,152,101
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 157,152,101
<LOANS> 280,247,511
<ALLOWANCE> 3,555,330
<TOTAL-ASSETS> 467,877,608
<DEPOSITS> 335,570,189
<SHORT-TERM> 93,166,616
<LIABILITIES-OTHER> 6,751,115
<LONG-TERM> 930,835
<COMMON> 7,824,185
0
0
<OTHER-SE> 23,634,668
<TOTAL-LIABILITIES-AND-EQUITY> 467,877,608
<INTEREST-LOAN> 6,131,933
<INTEREST-INVEST> 2,468,379
<INTEREST-OTHER> 71,117
<INTEREST-TOTAL> 8,671,429
<INTEREST-DEPOSIT> 3,179,451
<INTEREST-EXPENSE> 4,373,910
<INTEREST-INCOME-NET> 4,297,519
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,272,536
<INCOME-PRETAX> 1,727,403
<INCOME-PRE-EXTRAORDINARY> 1,085,442
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,085,442
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
<YIELD-ACTUAL> 0400
<LOANS-NON> 493,000
<LOANS-PAST> 1,095,000
<LOANS-TROUBLED> 626,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
