AMERICAN
BANCORPORATION
1999
ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
American Bancorporation and Subsidiaries
FINANCIAL HIGHLIGHTS
(In thousands, except per share) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Statement of Income:
Net Income .................... $ 5,354 $ 5,202 $ 4,509 $ 3,666 $3,052
Basic Earnings Per Share ...... 1.71 1.66 1.44 1.17 0.98
Balance Sheet:
Assets ........................ $711,291 $611,405 $484,606 $461,632 $353,995
Loans - net ................... 368,143 297,580 283,407 267,886 246,518
Deposits ...................... 449,277 431,240 355,734 319,811 292,665
Stockholders' equity .......... 28,179 36,447 33,694 30,423 28,012
Book Value per share .......... 9.00 11.65 10.77 9.72 8.95
<CAPTION>
QUARTERLY PRICE RANGES AND DIVIDENDS
Common Shares Trust Preferred
1999: High Low Dividends High Low
<S> <C> <C> <C> <C> <C>
Fourth..................... 19 1/4 13 1/8 $ 0.15 10 1/4 7 1/4
Third...................... 22 1/2 17 0.15 10 1/2 9 1/4
Second..................... 22 3/4 16 7/8 0.15 10 1/2 9 3/4
First...................... 23 16 1/2 0.15 10 1/2 9 7/8
1998: High Low Dividends High Low
Fourth.................... 27 1/2 18 7/8 $ 0.15 10 1/2 9 7/8
Third..................... 25 7/8 21 0.14 10 1/2 10
Second.................... 27 1/2 22 0.14 10 1/2 10
First..................... 30 1/2 25 0.125 N/A N/A
</TABLE>
American Bancorporation's common stock is traded on the Nasdaq Stock Market
under the ticker symbol AMBC. Per share data, stock prices and dividends have
been retroactively restated to reflect a two for one stock split which became
effective October 23, 1997. American Bancorporation's Capital Trust I preferred
securities are traded on the Nasdaq Stock Market under the ticker symbol AMBCP.
Prior to April 21, 1998 no trust preferred securities were issued. Interest,
rather than dividends, is paid on trust preferred securities.
CORPORATE PROFILE
American Bancorporation (the "Company"), is a registered Ohio bank holding
company headquartered in Wheeling, West Virginia. The Company was organized in
1966. At December 31, 1999, the Company owned one affiliate bank, Wheeling
National Bank, which serves its customers through twenty full service offices
located in Ohio County, Hancock County and Wetzel County, West Virginia and
Belmont County, Harrison County, Guernsey County, Jefferson County and Franklin
County, Ohio, and a Loan Production Office located in Washington County,
Pennsylvania.
In addition to the banking offices, the Company operates four non-bank
subsidiaries: American Mortgages, Inc. which originates and services mortgage
loans, American Bancdata Corporation which provides electronic data processing
services to the Company and Wheeling National Bank, American Bancservices, Inc.,
which provides the Company's transfer agent services, and American
Bancorporation Capital Trust I, a Delaware statutory business trust.
The approximate number of common stockholders of record was 2,479 on January 31,
2000.
CONTENTS
Financial Highlights.............................................. See above
Quarterly Stock Price Ranges...................................... See above
Corporate Profile......................... ....................... See above
Chairman's Letter........................... ..................... 1 - 2
Financial Statements.............................................. 3 - 29
Independent Auditors' Report ................................... 30
Five Year Selected Financial Data................................. 31
Management's Discussion and Analysis
of Financial Condition and Results of Operations................. 31 - 47
<PAGE>
THE CHAIRMAN'S LETTER
TO OUR SHAREHOLDERS:
In 1999 American Bancorporation continued to carry out its basic strategy
of prudent growth.
Assets grew 16.3% from $611 million at year end 1998 to $711 million at
year end 1999.
Deposits grew 4.2% from $431 million at year end 1998 to $449 million at
year end 1999.
Earnings grew 2.9% from $5.2 million at year end 1998 to $5.4 million at
year end 1999.
This represents $1.71 basic earnings per share for 1999 compared to $1.66
basic earnings per share for 1998.
Your Company grew its loan portfolio in 1999 23.5% from $301 million at
year end 1998 to $371 million at year end 1999. This loan growth was across the
board in consumer, mortgage, and particularly commercial, where our Columbus,
Ohio cluster, consisting of branches at Reynoldsburg, Gahanna, Stone Ridge and
4th and Broad, now approaches $100 million in commercial loans outstanding.
Our net charge-offs ratio of .11% compares very favorably to the national
average of more than .20%.
Our application for a branch at New Albany is in the works and we expect
approval at any time. This addition to our Columbus cluster should put our
deposits well over $100 million in that cluster in a short time.
Coming east, in May we will close on approximately $13 million in
deposits purchased from Sky Bank in Barnesville, Ohio. The Cambridge cluster,
consisting of Cambridge, Barnesville, Flushing and Freeport, will then have over
$100 million in deposits.
Our application to make our new LPO at Washington, Pennsylvania a full
service branch has been approved and our Washington-Weirton cluster of branches
at Washington, Pennsylvania, Weirton, West Virginia, and Steubenville, Ohio
should be over $100 million in deposits very shortly.
1
<PAGE>
Our Wheeling-St. Clairsville cluster, consisting of Wheeling, New
Martinsville and Pine Grove, West Virginia, and St. Clairsville and Shadyside,
Ohio, has well over $200 million in deposits.
Our strategy of making our excess deposits in our 3 eastern clusters
available for lending in Columbus has been a great success.
We have recently completed an exhaustive OCC examination successfully.
As we predicted, Y2K was a non-event.
We look forward to a year of slow but steady growth and intense
concentration on improving every phase of our operation.
We deeply appreciate your continued strong support.
Sincerely,
Jeremy C. McCamic
Chairman and Chief Executive Officer
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS American Bancorporation and Subsidiaries
December 31, 1999 and 1998
ASSETS 1999 1998
<S> <C> <C>
Cash and due from banks ....................................... $ 11,774,610 $ 12,316,176
Federal funds sold ............................................ 4,823,000 17,747,025
Investment securities available for sale ...................... 298,153,127 263,827,239
Loans
Commercial, financial and agricultural ..................... 147,701,968 113,622,577
Real estate mortgage ....................................... 158,127,638 138,050,626
Installment ................................................ 65,393,468 48,948,681
------------- -------------
371,223,074 300,621,884
Less allowance for loan losses ............................. 3,079,796 3,042,269
------------- -------------
368,143,278 297,579,615
Premises and equipment - net .................................. 10,214,208 9,735,582
Accrued interest receivable ................................... 4,469,869 3,393,337
Excess of cost over net assets acquired ....................... 1,355,659 1,633,464
Other assets .................................................. 12,357,245 5,173,024
------------- -------------
TOTAL ASSETS ........................................... $ 711,290,996 $ 611,405,462
============= =============
LIABILITIES
Deposits
Demand - non-interest bearing .............................. $ 37,959,587 $ 39,497,617
Demand - interest bearing .................................. 23,965,759 26,291,654
Savings .................................................... 120,976,630 93,605,716
Time - under $100,000 ...................................... 203,924,631 216,310,149
Time - over $100,000 ....................................... 62,450,886 55,535,059
------------- -------------
TOTAL DEPOSITS ......................................... 449,277,493 431,240,195
Borrowed funds ................................................ 214,593,201 123,891,183
Accrued interest payable ...................................... 2,511,496 2,306,854
Other liabilities ............................................. 4,079,845 4,869,737
Company obligated mandatorily redeemable trust
preferred securities of subsidiary trust holding solely junior
subordinated debentures of the Company ....................... 12,650,000 12,650,000
------------- -------------
TOTAL LIABILITIES ...................................... 683,112,035 574,957,969
STOCKHOLDERS' EQUITY
Preferred stock ........................................... -- --
Common stock without par value, stated value $2.50 a
share, authorized 6,500,000 shares, issued and
outstanding 3,129,674 ................................... 7,824,185 7,824,185
Additional paid-in capital ................................ 10,301,982 10,301,982
Retained earnings ......................................... 21,906,156 18,430,141
Accumulated other comprehensive loss, net of tax
benefit of $7,264,963 in 1999 and $176,544 in 1998 ....... (11,853,362) (108,815)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY ............................... 28,178,961 36,447,493
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............... $ 711,290,996 $ 611,405,462
============= =============
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
American Bancorporation and Subsidiaries
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1999, 1998 and 1997
1999 1998 1997
<S> <C> <C> <C>
Loans ........................................... $28,501,782 $25,759,177 $24,890,709
Investment securities
Taxable interest income ....................... 15,330,699 13,003,297 9,718,745
Non-taxable interest income ................... 2,771,283 398,051 90,386
Dividends ..................................... 649,083 384,316 491,420
----------- ----------- -----------
18,751,065 13,785,664 10,300,551
Short-term investments .......................... 365,400 755,802 347,905
----------- ----------- -----------
Total interest income ...................... 47,618,247 40,300,643 35,539,165
INTEREST EXPENSE
Deposits
Interest bearing demand ....................... 413,588 609,938 628,799
Savings ....................................... 2,792,845 2,584,443 2,686,435
Time - under $100,000 ......................... 11,472,173 11,255,479 7,767,168
Time - over $100,000 .......................... 3,221,631 3,131,532 2,101,660
----------- ----------- -----------
17,900,237 17,581,392 13,184,062
Borrowings
Borrowed funds .................................. 10,169,583 5,047,018 5,005,959
Notes payable and other long-term debt .......... 1,101,412 811,571 87,634
----------- ----------- -----------
Total interest expense ...................... 29,171,232 23,439,981 18,277,655
----------- ----------- -----------
NET INTEREST INCOME ............................. 18,447,015 16,860,662 17,261,510
PROVISION FOR LOAN LOSSES .......................... 420,000 240,000 --
----------- ----------- -----------
Net interest income after provision for loan losses 18,027,015 16,620,662 17,261,510
OTHER INCOME
Service charges on deposit accounts ........... 896,191 716,512 749,680
Insurance commissions ......................... 80,714 90,938 87,592
Net gains on sale of loans .................... 1,524,509 2,178,609 1,303,363
Net securities gains .......................... 342,967 946,742 34,336
Other income .................................. 659,607 761,680 750,873
----------- ----------- -----------
Total other income ......................... 3,503,988 4,694,481 2,925,844
OTHER EXPENSE
Salaries and employee benefits ................ 6,920,404 6,677,506 5,910,116
Occupancy expense ............................. 1,317,634 1,241,005 1,261,026
Furniture and equipment expense ............... 1,274,460 1,133,690 1,128,188
Other expenses ................................ 5,137,784 5,291,035 4,801,750
----------- ----------- -----------
Total other expense ........................ 14,650,282 14,343,236 13,101,080
----------- ----------- -----------
INCOME BEFORE INCOME TAXES ......................... 6,880,721 6,971,907 7,086,274
PROVISION FOR INCOME TAXES ......................... 1,526,902 1,770,025 2,577,467
----------- ----------- -----------
NET INCOME ......................................... $ 5,353,819 $ 5,201,882 $ 4,508,807
=========== =========== ===========
Basic Earnings Per Share .................... $ 1.71 $ 1.66 $ 1.44
=========== =========== ===========
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
American Bancorporation and Subsidiaries
CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Accumulated
other
Additional comprehensive Total
Common paid-in Retained income (loss), stockholders'
Stock capital earnings net of tax equity
<S> <C> <C> <C> <C> <C>
Balance at January 31, 1997 .... 7,824,185 10,301,982 12,021,258 275,269 30,422,694
Comprehensive results:
Net Income ................... -- -- 4,508,807 -- 4,508,807
Other comprehensive income,
net of tax of $218,121 ...... -- -- -- 327,182 327,182
------------ ------------
Total comprehensive results .. -- -- 4,508,807 327,182 4,835,989
Dividends ($0.50 per share) .. -- -- (1,564,837) -- (1,564,837)
------------ ------------ ------------
Balance at December 31, 1997 ... 7,824,185 10,301,982 14,965,228 602,451 33,693,846
------------ ------------ ------------ ------------ ------------
Comprehensive results:
Net Income ................... -- -- 5,201,882 -- 5,201,882
Other comprehensive loss,
net of tax of ($302,004) .... -- -- -- (343,504) (343,504)
Reclassification adjustment,
net of tax of ($141,841) ... -- -- -- (367,762) (367,762)
------------ ------------ ------------
Total comprehensive results .. -- -- 5,201,882 (711,266) 4,490,616
Dividends ($0.555 per share) . -- -- (1,736,969) -- (1,736,969)
------------ ------------ ------------
Balance at December 31, 1998 ... 7,824,185 10,301,982 18,430,141 (108,815) 36,447,493
------------ ------------ ------------ ------------ ------------
Comprehensive results:
Net Income .................. -- -- 5,353,819 -- 5,353,819
Other comprehensive loss,
net of tax of ($7,050,970) -- -- -- (11,532,374) (11,532,374)
Reclassification adjustment,
net of tax of ($37,449) .. -- -- -- (212,173) (212,173)
------------ ------------
Total comprehensive results -- -- 5,353,819 (11,744,547) (6,390,728)
Dividends ($0.60) per share) -- -- (1,877,804) -- (1,877,804)
------------ ------------ ------------
Balance at December 31, 1999 ... $ 7,824,185 $ 10,301,982 $ 21,906,156 $(11,853,362) $ 28,178,961
============ ============ ============ ============ ============
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
American Bancorporation and Subsidiaries
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended
December 31, 1999, 1998 and 1997
<S> <C> <C> <C>
Operating Activities: 1999 1998 1997
Net income ................................................................... $ 5,353,819 $ 5,201,882 $ 4,508,807
Adjustments to reconcile net income to net cash from operating activities:
Depreciation ............................................................... 907,350 843,842 805,499
Amortization of intangibles ................................................ 277,805 335,476 335,476
Net amortization of investment securities .................................. 929,776 662,117 336,384
Provision for loan losses .................................................. 420,000 240,000 --
Net gain on sale of investment securities .................................. (342,967) (946,742) (34,336)
Net gain on sale of loans .................................................. (1,524,509) (2,178,609) (1,303,363)
Change in assets and liabilities net of effects from the purchase of branch
assets:
Net (increase) decrease in accrued interest receivable ..................... (1,076,532) (680,097) 272,082
Net increase in accrued interest payable ................................... 204,642 524,186 293,669
Real estate mortgage loans originated for sale ............................. (98,409,845) (132,774,915) (79,808,277)
Proceeds from sale of real estate mortgage loans ........................... 101,049,167 128,848,539 77,953,379
Net (increase) decrease in other assets .................................... 257,055 (1,220,484) 1,632,174
Net increase (decrease) in other liabilities ............................... (778,651) 650,877 (697,637)
Net (increase) decrease from other operating activities .................... (352,857) 62,427 449,035
------------- ------------- -----------
Net cash provided (used) by operating activities ..................... 6,914,254 (431,501) 4,742,892
Investing Activities:
Investment securities available for sale:
Proceeds from maturities and repayments .............................. 84,908,012 148,926,057 39,638,162
Proceeds from sales .................................................. 37,800,556 19,978,365 54,567,143
Purchases ............................................................ (176,454,231) (264,426,160) (119,664,429)
Net increase in loans ...................................................... (72,098,476) (8,307,917) (12,362,393)
Purchase of premises and equipment ......................................... (1,385,976) (520,842) (1,222,909)
Proceeds from sale of premises and equipment ............................... -- 2,085 --
------------- ------------ ------------
Net cash used by investing activities ................................ (127,230,115) (104,348,412) (39,044,426)
Financing Activities:
Net increase (decrease) in non-interest bearing demand deposits ............ (1,538,030) 5,984,905 (3,231,604)
Net increase (decrease) in interest bearing demand and savings deposits .... 25,045,019 395,823 (9,890,172)
Net increase (decrease) in time deposits ................................... (5,469,691) 69,125,135 49,045,290
Net increase (decrease) in borrowed funds .................................. 90,702,018 36,317,031 (16,521,891)
Principal repayment of long-term debt ...................................... (11,242) (2,413,558) (11,931)
Proceeds from issuance of long-term debt ................................... -- 13,650,000 499,050
Cash dividends paid ........................................................ (1,877,804) (1,658,726) (1,564,837)
------------- ------------- -------------
Net cash provided by financing activities ............................ 106,850,270 121,400,610 18,323,905
------------- ------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents ......................... (13,465,591) 16,620,697 (15,977,629)
Cash and Cash Equivalents Beginning Balance .................................. $ 30,063,201 $ 13,442,504 $ 29,420,133
------------- ------------- -------------
Cash and Cash Equivalents Ending Balance ..................................... $ 16,597,610 $ 30,063,201 $ 13,442,504
============= ============= =============
Supplemental information:
Cash paid during the year for:
Interest ................................................................ $ 28,966,590 $ 22,915,795 $ 17,983,986
Income taxes ............................................................ $ 1,320,000 $ 2,105,000 $ 2,630,000
Non-cash investing and financing activities:
Loan foreclosures and repossessions ..................................... $ 1,309,224 $ 1,026,117 $ 427,339
Transfer of premises and equipment to other real estate owned ........... $ - $ - $ 77,913
<FN>
<F1>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
Note A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Bancorporation (the "Company"), which was organized in 1966, is a
registered Ohio bank holding company with its headquarters located in Wheeling,
West Virginia. The Company's wholly owned subsidiaries are Wheeling National
Bank ("WNB"), American Bancdata Corporation, American Bancservices, Inc.,
American Mortgages, Inc. ("AMI") and American Bancorporation Capital Trust I
(the "Trust"). The Company's subsidiaries primarily engage in commercial banking
and mortgage banking. The subsidiary bank branch offices are primarily located
in the northern panhandle of West Virginia, and central and eastern Ohio.
The accounting and reporting policies of American Bancorporation and
Subsidiaries 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 net unrealized gains
and losses excluded from earnings and reported as a separate component of
accumulated other comprehensive income or loss, net of applicable income taxes.
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. Gains and losses on sales
of securities are recognized using the specific identification method.
Loans
Loans are reported at their principal amounts, net of any deferred
origination fees and costs 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
7
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
initiated, which is generally 180 days past the due date. 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 north eastern
West Virginia, southwestern 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.
A loan is considered to be impaired when it is probable that the Company
will be unable to collect all principal and interest amounts due according to
the original contractual terms of the loan agreement. All of the Company's
nonaccrual loans, excluding consumer and single family residential loans, are
considered to be impaired loans. Large groups of smaller homogenous loans, such
as loans secured by first and second liens on residential properties and other
consumer loans, are evaluated collectively for impairment. Impaired loans are
measured based upon the present value of expected future cash flows, discounted
at the loan's initial effective interest rate, or at the loan's market price or
fair value of the collateral if the loan is collateral dependent. If the loan
valuation is less than the recorded value of the loan, an impairment reserve
must be established for the difference. The impairment reserve is established by
provision for loan losses. Interest receipts on nonaccrual and impaired loans
are recognized as interest revenue or are applied to principal when management
believes the ultimate collectibility of principal is in doubt.
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 appropriate to provide for probable 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
On January 1, 1997 the Company adopted SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
SFAS No. 125 establishes the criteria for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings.
SFAS No. 125 supersedes several accounting standards including SFAS No.
122, "Accounting for Mortgage Servicing Rights." Adoption of this statement was
immaterial to the Company's financial position and results of operations.
8
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
The Company measures the impairment of the mortgage servicing rights based
on their current fair value. Current fair value is determined through the
discounted present value of the estimated future net servicing cashflows using a
risk-based discount rate and assumptions based upon market estimates for future
servicing revenues and expenses (including prepayment expectations, servicing
costs, default rates and interest earnings on escrows). For impairment
measurement purposes, servicing rights are stratified by interest rate. If the
carrying value of an individual stratum exceeds its fair value, a valuation
allowance is established.
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 eight years. Such assets are periodically evaluated for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
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. 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.
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases using enacted tax laws and rates.
Pension Plan
Pension costs, based on actuarial computations, are charged to expense and
funded as required by minimum Internal Revenue Service standards. (See Note R
"Pension Plan and Profit Sharing 401(k) Savings Plan").
9
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Earnings Per Common Share
Basic EPS is computed by dividing net income applicable to common stock by
the weighted average number of common shares outstanding during the period,
without considering any dilutive items. Diluted EPS is computed by dividing net
income applicable to common stock by the weighted average number of common
shares and common stock equivalents for items that are dilutive, net of shares
assumed to be repurchased using the treasury stock method using the average
share price for the Company's common stock during the period. Common stock
equivalents arise from the assumed conversion of outstanding stock options,
warrants and convertible capital notes. During the years 1999, 1998 and 1997 the
Company had no common stock equivalents. The weighted average number of shares
used in the calculation of basic earnings per share was 3,129,674 for 1999, 1998
and 1997.
Comprehensive Results
Comprehensive income is defined as net income, as currently reported, as
well as unrealized gains and losses on assets available for sale and certain
other items not currently included in the income statement. In complying with
the reporting requirements the Company retitled the line item in 1998 in the
Consolidated Balance Sheet and the Statement of Changes in Stockholders' Equity
from "Unrealized gain (loss) on securities available for sale, net" to
"Accumulated other comprehensive income (loss), net of tax". Other comprehensive
income (loss) includes unrealized gains (losses) on investment securities
available for sale.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Estimates
are used when accounting for allowance for loan losses, realization of deferred
tax assets, fair values of certain assets and liabilities, determination and
carrying value of impaired loans, carrying value of other real estate, carrying
value and amortization of intangibles, employee benefit plans and other areas.
Reclassifications
Certain prior year financial information has been reclassified to conform
to the presentation in 1999.
Note B-CASH AND DUE FROM BANKS
The Company's banking subsidiary is 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 $150,000 at December 31, 1999 and 1998.
10
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note C-INVESTMENT SECURITIES
Securities Available for Sale
The amortized cost and approximate market value of investment securities
available for sale as of December 31, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
1999
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
United States Treasury ........................ $ 999,956 $ 354 $ -- $ 1,000,310
United States Federal agencies ................ 27,025,553 4,985 1,770,953 25,259,585
States and political subdivisions ............. 63,182,636 15,656 7,102,241 56,096,051
------------ ------------ ------------ ------------
Total Debt Securities ...................... 305,266,849 42,645 19,160,967 286,148,527
Equity securities ............................. 12,004,600 -- -- 12,004,600
------------ ------------ ------------ ------------
Total Securities Available for Sale ... $317,271,449 $ 42,645 $ 19,160,967 $298,153,127
============ ============ ============ ============
1998
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
United States Treasury......................... $ 2,257,757 $ 15,450 $ - $ 2,273,207
United States Federal agencies................. 8,441,989 19,785 7,259 8,454,515
United States agency mortgage-backed securities 212,590,075 406,732 736,304 212,260,503
States and political subdivisions.............. 34,173,178 124,090 263,854 34,033,414
------------- ---------- ------------ ------------
Total Debt Securities....................... 257,462,999 566,057 1,007,417 257,021,639
Equity securities.............................. 6,649,600 156,000 - 6,805,600
------------- ---------- ------------ ------------
Total Securities Available for Sale ... $264,112,599 $ 722,057 $1,007,417 $263,827,239
============ ========== ========== ============
</TABLE>
Included in equity securities at December 31,1999 are Federal Home Loan
Bank and Federal Reserve Bank stock of $11,725,000 and $279,600, respectively.
At December 31, 1998 these stock investments were $5,950,000 and $279,600,
respectively.
11
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
The amortized cost and approximate market value of debt securities at
December 31, 1999, 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.
Amortized Market
Cost Value
Due in one year or less ................... $ 999,956 $ 1,000,310
Due after one year through five years...... 7,747,516 7,687,198
Due after five years through ten years..... 21,155,205 20,218,024
Due after ten years ....................... 275,364,172 257,242,995
------------ ------------
$305,266,849 $286,148,527
============ ============
Proceeds from the sale of securities available for sale for the years
ended December 31, 1999, 1998 and 1997 were $37,800,556, $19,978,365 and
$54,567,143, respectively. Gross realized gains on the sale of securities
available for sale were $342,967 in 1999, $946,825 in 1998 and $156,591 in 1997.
Gross realized losses on the sale of securities available for sale were $0 in
1999, $83 in 1998 and $122,255 in 1997.
At December 31, 1999 the amortized cost of securities pledged to secure
public deposits or for other purposes required or permitted by law aggregated
$163,370,000.
12
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note D-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 as of December 31:
1999 1998 1997
Nonperforming loans
Nonaccrual .......... $1,248,000 $1,347,000 $ 815,000
90 days past due .... 1,122,000 1,271,000 1,277,000
Restructured ........ 360,000 342,000 566,000
---------- ---------- ----------
$2,730,000 $2,960,000 $2,658,000
Other real estate owned 536,000 183,000 236,000
---------- ---------- ----------
Total ............... $3,266,000 $3,143,000 $2,894,000
========== ========== ==========
There were no commitments to advance additional funds to such borrowers at
December 31, 1999. 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 $193,000, $130,000 and $72,000 for the years
ended December 31, 1999, 1998 and 1997, respectively. Interest recognized on
such loans approximated $79,000, $64,000 and $33,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
Impaired loans totalled $1,248,000 and $1,347,000 at December 31, 1999 and
1998, respectively. Impaired loans totalling $810,000 and $196,000 at the end of
1999 and 1998, respectively, had a corresponding specific allowance for credit
losses of $132,000 and $68,000. The average balance of impaired loans was
$1,119,000 in 1999, $899,000 in 1998 and $558,000 in 1997. Interest income
recognized on impaired loans totalled $79,000, $64,000 and $33,000 in 1999, 1998
and 1997, respectively.
Note E-RELATED PARTY TRANSACTIONS
At December 31, 1999, 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 $1,672,000. Other changes reflect
related party loans which were less than $60,000 in the aggregate at December
31, 1998 and exceeded the $60,000 threshold in 1999. The following is an
analysis of the activity with respect to such loans for the year ended December
31, 1999:
Aggregate outstanding balance at January 1, 1999 . $ 990,000
Additions ..................................... 808,000
Retirements ................................... (288,000)
Other changes ................................. 162,000
-----------
Aggregate outstanding balance at December 31, 1999 $ 1,672,000
13
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note F-ALLOWANCE FOR LOAN LOSSES
An analysis of the allowance for loan losses follows:
Years ended December 31, 1999 1998 1997
Balance at beginning of year $ 3,042,269 $ 3,284,338 $ 3,563,774
Provision for loan losses . 420,000 240,000 --
Loans charged-off ......... (527,481) (733,361) (578,184)
Less recoveries ........... 145,008 251,292 298,748
----------- ----------- -----------
Net loans charged-off .... (382,473) (482,069) (279,436)
----------- ----------- -----------
Balance at end of year ..... $ 3,079,796 $ 3,042,269 $ 3,284,338
=========== =========== ===========
Note G-MORTGAGE LOAN SERVICING
At December 31, 1999, 1998 and 1997, the Company was servicing approximately
1,700, 1,800 and 1,700 mortgage loans for various investors with aggregate
balances of approximately $137,337,000, $137,437,000 and $109,647,000,
respectively.
Originated mortgage servicing rights capitalized during 1999 and 1998
totalled $327,000 and $845,000 respectively. At December 31, 1999 and 1998 the
Company had capitalized mortgage servicing rights of $1,570,000 and $1,512,000
respectively, which related to approximately $136 million and $137 million,
respectively, in loans serviced.
In connection with these loans serviced for others, the Company held
advances by borrowers for taxes and insurance in the amount of $1,586,000 and
$1,854,000 at December 31, 1999 and 1998, respectively.
The fair value of the capitalized mortgage servicing rights at December 31,
1999 and 1998 approximated $1,828,000 and $1,662,000, respectively. The fair
value of the mortgage servicing rights not subject to capitalization due to the
loans being originated or sold prior to the adoption of SFAS No. 122
approximated $28,000 at December 31, 1997. The impairment valuation allowance
based on the fair value of the designated strata for the capitalized mortgage
servicing rights was $0 and $58,000 at December 31, 1999 and 1998, respectively.
The Company amortizes the capitalized mortgage servicing rights in
proportion to, and over the period of, the estimated net servicing income. The
amortization for the years ending December 31, 1999, 1998 and 1997 was $309,000,
$370,000 and $147,000, respectively.
Mortgage loans originated for sale totalled $98,410,000, $132,775,000 and
$79,808,000 during 1999, 1998 and 1997, respectively. Mortgage loans sold during
1999, 1998 and 1997 totalled $101,049,000, $128,849,000 and $77,953,000,
respectively. Net gains on mortgage loans sold aggregated $1,525,000, $2,179,000
and $1,303,000 during 1999, 1998 and 1997, respectively. Mortgage loans
available for sale, which are carried at lower cost or market value on a net
aggregate basis included in real estate mortgage loans, totalled $2,214,000,
$7,142,000 and $4,082,000 at December 31, 1999, 1998 and 1997, respectively.
14
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1998, 1997 and 1996
Note H-PREMISES AND EQUIPMENT
A summary of premises and equipment and accumulated depreciation and
amortization follows:
December 31, 1999 1998
Premises and Equipment
Buildings .................... $ 7,267,559 $ 7,164,406
Equipment .................... 7,429,847 6,689,076
Leasehold improvements ....... 875,315 855,484
----------- -----------
15,572,721 14,708,966
Less accumulated depreciation
and amortization ......... 8,570,945 7,663,595
----------- -----------
7,001,776 7,045,371
Land ......................... 3,212,431 2,690,211
----------- -----------
$10,214,208 $ 9,735,582
=========== ===========
Depreciation and amortization of premises and equipment charged to expense
for the years ended December 31, 1999, 1998 and 1997 was $907,000, $844,000 and
$806,000 respectively.
At December 31, 1999 the Company and certain subsidiaries were obligated
under various noncancellable operating leases for premises and equipment. The
leases, expiring at various dates to 2009, 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, 1999, 1998 and 1997 was $856,000, $742,000 and $715,000
respectively. Future minimum payments under operating leases were as follows at
December 31, 1999:
2000 ........................ $ 517,000
2001 ........................ 441,000
2002 ........................ 349,000
2003 ........................ 246,000
2004 ........................ 156,000
After 2004 .................. 717,000
----------
Total minimum lease payments $2,426,000
==========
Note I - DEPOSITS
At December 31, 1999, the scheduled maturity of time deposits for the years
2000 through 2004 are as follows: $176,912,000, $65,495,000, $14,875,000,
$6,908,000 and $2,186,000, respectively.
15
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note J-BORROWED FUNDS
The following summarizes borrowed funds at December 31:
1999 1998
Securities sold under repurchase agreements $ 831,944 $ 3,118,888
Treasury tax and loan notes ............... 1,442,801 288,750
Warehouse revolving line of credit ........ 1,318,456 1,483,545
Federal Home Loan Bank advances ........... 211,000,000 119,000,000
------------ ------------
Total borrowed funds .................... $214,593,201 $123,891,183
============ ============
The Company utilizes a warehouse revolving line of credit with a regional
bank for purposes of funding loan originations. Under the terms of this loan,
the Company may borrow up to $6,000,000 at any one time at an interest rate of
prime (8.50% at December 31, 1999). The Company pledges a security interest in
the originated mortgage loans as collateral. Proceeds from the sale of the
originated mortgage loans in the secondary market are used to repay the
warehouse loan which expires in 2000, subject to extension.
Securities sold under repurchase agreements are retained by the Company's
custodian under written agreements that recognize the customer's interests in
the securities. The subsidiary bank has an agreement with its Federal Reserve
district bank to be an authorized treasury tax and loan depository.
WNB is a member of the Federal Home Loan Bank of Pittsburgh (the "FHLB").
Under a blanket collateral pledge agreement, WNB has pledged, as collateral for
advances from the FHLB, all stock in the Federal Home Loan Bank and certain
other qualifying collateral, such as investment securities, mortgage-backed
securities and loans. The remaining maximum borrowing capacity with the FHLB at
December 31, 1999 is $76,056,000.
Included in Federal Home Loan Bank advances are FHLB "RepoPlus" advances and
FHLB "Convertible Select" advances. FHLB "RepoPlus" Advances are short-term
borrowings maturing within one day to one year, bear a fixed interest rate and
are subject to prepayment penalty. Although no specific collateral is required
to be pledged for these borrowings, "RepoPlus" Advances are secured under the
blanket collateral agreement. The daily average balance during 1999 and 1998 was
$102,462,000 and $20,973,000, respectively, and the daily average interest rate
was 5.24% and 5.58%, respectively, with an average interest rate at fiscal
year-end 1999 of 5.63% and fiscal year-end of 5.31%. The maximum amount
outstanding at any month-end during 1999 and 1998 was $145,000,000 and
$55,000,000, respectively. The interest expense incurred on the FHLB "RepoPlus"
Advances during 1999 and 1998 was $5,373,000 and $1,171,000, respectively.
16
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
FHLB "Convertible Select" Advances are long-term borrowings with terms of up
to ten years, and which have a fixed rate for the first three months to five
years of the term. After the fixed rate term expires, and quarterly thereafter,
the FHLB may convert the advance to an adjustable-rate advance at their option.
If the advance is converted to an adjustable-rate advance, WNB has the option at
the conversion date, and quarterly thereafter, to prepay the advance with no
prepayment fee. The daily average balance during 1999 and 1998 was $79,863,000
and $61,370,000, respectively. The daily average interest rate during 1999 and
1998 was 5.64% and 5.61%, respectively. The maximum amount outstanding at any
month end during 1999 and 1998 was $100,000,000 and $75,000,000, respectively.
The interest expense incurred on the FHLB "Convertible Select" Advances during
1999 and 1998 was $4,507,000 and $3,441,000, respectively.
The contractual maturities of Federal Home Loan Bank advances as of December
31, 1999 and 1998 are as follows:
Current December 31,
Interest Rate 1999 1998
Repo Plus Advances:
Due within one year ..... 5.63% $111,000,000 $ 44,000,000
Convertible Select Advances
February 14, 2002 ....... -- -- 25,000,000
April 7, 2003 ........... 5.65% 25,000,000 25,000,000
April 15, 2005 .......... 5.65% 25,000,000 25,000,000
October 27, 2009 ........ 5.65% 25,000,000 --
October 27, 2009 ........ 5.57% 25,000,000 --
------------ -------------
Total FHLB Advances ....... $211,000,000 $119,000,000
============ =============
17
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note K-GUARANTEED PREFERRED BENEFICIAL INTEREST IN SUBORDINATED DEBT
On April 27, 1998, the Trust, a statutory business trust created under
Delaware law issued $12,650,000 of 8.5% Trust Preferred Securities ("Preferred
Securities") with a stated value and liquidation preference of $10 per share.
The Trust's obligations under the Preferred Securities issued are fully and
unconditionally guaranteed by the Company. The proceeds from the sale of the
Preferred Securities of the Trust, as well as proceeds from the issuance of
common securities to the Company, were utilized by the Trust to invest in
$13,041,000 of 8.5% Junior Subordinated Debentures (the "Debentures") of the
Company. The Debentures are unsecured and rank subordinate and junior in right
of payment to all indebtedness, liabilities and obligations of the Company. The
Debentures represent the sole assets of the Trust. Interest on the Preferred
Securities is cumulative and payable quarterly in arrears. The Company has the
right to optionally redeem the Debentures prior to the maturity date of April
30, 2028, on or after April 30, 2003, at 100% of the stated liquidation amount,
plus accrued and unpaid distributions, if any, to the redemption date. Under the
occurrence of certain events, specifically, a Tax Event, Investment Company
Event or Capital Treatment Event as more fully defined in the ABC Capital Trust
I Prospectus dated April 21, 1998, the Company may redeem in whole, but not in
part, the Debentures prior to April 30, 2003. Proceeds from any redemption of
the Debentures would cause a mandatory redemption of the Preferred Securities
and the common securities having an aggregate liquidation amount equal to the
principal amount of the Debentures redeemed.
The interest incurred on these Preferred Securities amounted to $1,100,826
and $809,260 for the years ended December 31, 1999 and 1998, respectively.
The Trust is a wholly owned subsidiary of the Company, has no independent
operations and has issued securities that contain a full and unconditional
guarantee of its parent, the Company. Accordingly, on October 21, 1998, the
Securities and Exchange Commission exempted the Trust from the reporting
requirements of the Securities Exchange Act of 1934.
Note L-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.
18
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
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 December 31, 1999 and 1998 is as
follows:
Financial instruments whose contract amounts represent credit risk:
Contract Amounts
1999 1998
Commitments to extend credit... $63,569,000 $46,587,000
Standby letters of credit...... -- --
Commercial letters of credit... 6,407,000 816,000
Commitments to extend credit, approximately $725,000 at December 31, 1999
and $685,000 at December 31, 1998, 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 variable interest rates. An adverse
movement in market interest rates is not deemed to be a significant risk on the
outstanding commitments at December 31, 1999.
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.
Note M-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.
19
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
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.
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.
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, 1999 and 1998. 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.
Borrowed Funds
The fair values of the Company's short-term and long-term borrowings with
variable rates are based on carrying amounts since these borrowings reprice
frequently as market rates change. The fair value of long-term fixed rate
borrowed funds is based on the discounted value of contractual cash flows. The
discount rate is estimated using the rates currently offered for similar
remaining maturities. The fair value of the Company's Preferred Securities is
based on the issue's quoted market price.
Off-Balance-Sheet Financial Instruments
The Company's off-balance-sheet financial instruments are comprised of
commitments to extend credit, 52% of which are lines of credit. 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
20
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
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 premises and
equipment. The following table represents carrying values and estimated fair
values of the Company's financial instruments as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Federal Funds Sold ...................... $ 4,823,000 $ 4,823,000 $ 17,747,000 $ 17,747,000
Investment Securities available for sale 298,153,000 298,153,000 263,827,000 263,827,000
Loans Receivable, net of allowance ...... 368,143,000 364,474,000 297,580,000 306,394,000
FINANCIAL LIABILITIES
Fixed Maturity Deposits (1)
Time Deposits ......................... 266,376,000 266,509,000 271,845,000 277,051,000
Borrowed funds .......................... 214,593,000 209,736,000 123,902,000 125,889,000
Guaranteed preferred beneficial interest
in subordinated debt ................. 12,650,000 9,962,000 12,650,000 13,283,000
<FN>
<F1>
(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 $182.9 million and $159.4 million of such
deposits at December 31, 1999 and 1998 respectively, are not included in
this table.
</FN>
</TABLE>
Note N-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, 1999 and 1998.
Note O-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.
At December 31, 1999, WNB's retained earnings available for the payment of
dividends was $16,499,000.
In addition, dividends paid by WNB to the Company would be prohibited if the
effect thereof would cause WNB's capital to be reduced below acceptable minimum
capital requirements.
21
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1998, 1997 and 1996
Note P-INCOME TAXES
Total income tax provision(benefit)for the three years ended December
31, 1999 was allocated as follows:
1999 1998 1997
Income from operations ................ $ 1,526,902 $ 1,770,025 $ 2,577,467
Shareholders' equity for the tax effect
of net unrealized gain (loss) on
securities available for sale ....... (7,088,419) (443,845) 225,560
----------- ----------- -----------
$(5,561,517) $ 1,326,180 $ 2,803,027
=========== =========== ===========
The composition of the provision for income taxes from operations for the
three years ended December 31, 1999 follows:
1999 1998 1997
Federal Income Taxes
Current........................... $ 1,347,227 $ 1,879,953 $ 2,260,156
Deferred ......................... 163,550 222,334 38,551
----------- ----------- -----------
Provision for federal income taxes 1,510,777 2,102,287 2,298,707
State ............................... 16,125 (332,262) 278,760
----------- ----------- -----------
Provision for income taxes ....... $ 1,526,902 $ 1,770,025 $ 2,577,467
=========== =========== ===========
The following is a reconciliation of federal income tax expense to the amount
computed at the statutory rate:
1999 1998 1997
Pre-tax income at statutory rate .......$ 2,339,446 $ 2,370,449 $ 2,409,334
Increase (decrease) resulting from:
Tax exempt income ..................... (784,724) (141,212) (25,489)
Dividends received deduction .......... (1,785) (17,606) (30,940)
Amortization of goodwill
and other intangibles............... 21,464 21,467 40,579
State tax provision
(net of federal tax benefit)........ (5,483) 112,969 (94,777)
Change in valuation allowance ......... (14,093) (187,340) --
Other ................................. (44,048) (56,440) --
----------- ---------- ----------
Provision for federal income taxes . $ 1,510,777 $ 2,102,287 $ 2,298,707
=========== =========== ===========
The state tax benefit during 1998 resulted from the Company receiving state
refunds from prior years. These refunds are due to the Company's use of a more
advantageous method of filing their state income tax returns that was not
previously available.
The Company has determined that the deferred tax assets recorded under SFAS
No. 109 are 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 1999
by $16,580 as a result of the sale of equity securities. Since no net deferred
tax benefit was recorded on the initial writedown of the asset, due to its
capital nature, no tax expense or benefit was recorded in 1999 on its recovery.
22
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of December 31, 1999, 1998
and 1997 consist of the following:
1999 1998 1997
Deferred tax assets:
Loan loss reserves ......... $ 710,388 $ 687,447 $ 746,960
Equity securities .......... -- 16,580 236,980
Investment securities ...... 7,264,963 176,544 --
Pension plan ............... 150,959 184,724 199,753
Real estate owned .......... 2,415 10,597 10,597
Cash basis accounting ...... -- 29,336 --
Other ...................... 180,552 143,413 163,554
---------- ---------- ----------
8,309,277 1,248,641 1,357,844
Deferred tax liabilities:
Fixed assets ............... 198,187 249,462 252,384
Cash basis accounting ...... 199,380 -- 22,384
Mortgage servicing rights .. 454,105 449,863 267,941
Investment securities ...... -- -- 267,301
---------- ---------- ----------
851,672 699,325 809,638
Net deferred tax asset before
valuation allowance ....... 7,457,605 549,316 548,206
Valuation allowance ......... -- 16,580 236,980
---------- ---------- ----------
Net deferred tax asset ...... $7,457,605 $ 532,736 $ 311,226
========== ========== ==========
23
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note Q-OTHER EXPENSES
Amounts included in other expenses are as follows for the years ended
December 31, 1999, 1998 and 1997:
1999 1998 1997
Advertising............................ $ 457,582 $ 378,478 $ 302,031
Data processing ........................ 462,833 462,951 467,963
FDIC assessment ........................ 219,108 185,875 171,218
Postage ................................ 265,301 270,842 276,092
Professional fees ...................... 823,286 702,627 601,638
Stationery and supplies ................ 360,586 421,189 368,439
Taxes other than on income ............. 455,704 276,826 375,516
Other (each less than
1% of income) ..................... 2,093,384 2,592,247 2,238,853
---------- ---------- ----------
$5,137,784 $5,291,035 $4,801,750
========== ========== ==========
Note R-PENSION PLAN AND PROFIT SHARING 401(K) SAVINGS PLAN
Effective January 1, 1989, the Company established the American
Bancorporation Pension Plan (the "Plan"). This non-contributory defined benefit
plan covers certain 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 changes in the Plan's benefit
obligation and Plan assets for the year ended December 31, 1999 and 1998:
1999 1998
Change in benefit obligation:
Benefit obligation at beginning of year $ 1,048,250 $ 917,286
Interest cost ......................... 56,578 57,651
Actuarial loss (gain) ................. (125,273) 144,088
Benefits paid ......................... (53,880) (70,775)
----------- -----------
Benefit obligation at end of year ..... $ 925,675 $ 1,048,250
=========== ===========
Changes in plan assets:
Plan assets at beginning of year....... $ 733,512 $ 744,832
Actual return on plan assets .......... 10,560 37,540
Employer contributions ................ 49,479 22,005
Benefits paid ......................... (53,880) (70,775)
--------- ---------
Plan assets at end of year ............ $ 739,671 $ 733,512
========= =========
24
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
As of December 31, 1999 and 1998, the Company's accrued pension costs were
$397,000 and $461,000, respectively. Net periodic pension cost for the years
ended December 31, 1999, 1998 and 1997 were insignificant.
The discount rate used in determining the projected benefit obligation in
1999, 1998 and 1997 was 6.50%, 5.50% and 6.50%, respectively. The expected
long-term rate of return on plan assets was 6.50%, 6.50% and 7.00% for the years
ending in 1999, 1998 and 1997, respectively.
In 1993, due to the continuation of a claim discussed below, the Company
notified the Plan participants that the planned termination of the Plan was
rescinded; however, an 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, 1999 due to an additional claim made against the Plan
during 1996.
A claim was made against the Plan during 1992 by a former employee (the
"Claimant"), alleging additional benefits due him under the Plan and litigation
between the parties ensued. Prior to the Court's final ruling, all parties
agreed as to the method of computing the benefit due the claimant. The Court
found that the computation was made pursuant to the pertinent Plan provisions
and approved a joint motion by the parties to dismiss the action. As a result,
the Plan Administrator disbursed $141,135 to the Claimant during 1995 to settle
the claim and approximately $215,000 in 1996 to other affected Plan participants
as determined based on the application of the Court's final ruling. No amount of
the disbursements were recognized in the 1996 or 1995 statement of operations as
the Company recorded a reserve in 1994 to recognize the liability for additional
benefits due to Plan participants as determined based on the application of the
Court's decision regarding the method of computing benefits to affected Plan
participants. Management believes appropriate liabilities have been established
to recognize the application of the Court's decision and expects to incur no
further expense for this situation.
An additional claim was made against the Plan during 1996 by former
employees alleging further additional benefits due them under the Plan. The
Administrator of the Plan denied the claim and the claimants' subsequent appeal
and believes the former employees have no further rights to appeal the denial of
the claim. The Company does not expect that any additional provision need be
made in the consolidated financial statements for this matter.
The Company sponsors a profit sharing 401(k) savings plan to which eligible
employees are permitted to contribute up to fifteen 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, 1999, 1998 and 1997 amounted to $88,000, $84,000 and $76,000, respectively.
25
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note S - REGULATORY CAPITAL REQUIREMENTS
The Company and WNB are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain actions by regulators that, if undertaken,
could have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the entities must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities and certain off-balance sheet
items as calculated under regulatory accounting practices. The entities' capital
amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.
Tier I and Total capital are expressed as a percentage of risk-adjusted
assets which include various credit risk-weighted percentages of on-balance
sheet exposures. The Leverage capital ratio evaluates capital adequacy on the
basis of the ratio of Tier I capital to quarterly average total assets as
reported on the Company's regulatory financial statements, net of the loan loss
reserve, goodwill and certain other intangibles. To be categorized
well-capitalized, the Company's banking subsidiary must maintain minimum Tier I,
Total and Leverage capital ratios of 6%, 10% and 5%, respectively. At December
31, 1999, the Company and its subsidiary bank, WNB, exceeded the regulatory
minimums and met the regulatory definition of well capitalized.
The following table summarizes the Company's and WNB's actual consolidated
capital amounts and ratios as of December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Company WNB
December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Tier I Capital......................... $ 51,365 $ 47,179 $ 48,397 $ 39,888
Total Qualifying Capital............... $ 54,445 $ 50,737 $ 51,477 $ 43,000
Risk-Adjusted Assets................... $381,874 $303,127 $377,566 $299,420
Regulatory Requirements
Well-
Minimum Capitalized
Capital Ratios
Tier I Capital Ratio.............. 4.00% 6.00% 13.45% 15.56% 12.82% 13.99%
Total Capital Ratio............... 8.00 10.00 14.26 16.74 13.63 15.03
Leverage Capital Ratio............ 3.00 5.00 7.34 7.99 6.80 7.36
</TABLE>
Note T - CONTINGENT LIABILITIES
The Company and its subsidiaries, in the normal course of business, are
subject, from time to time to various asserted and unasserted claims. Management
believes that the aggregate liability, if any, resulting from such pending and
threatened actions and proceedings will not have a material adverse effect on
the Company's financial statements.
26
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note U-PARENT COMPANY CONDENSED FINANCIAL INFORMATION
AMERICAN BANCORPORATION (Parent Company Only)
BALANCE SHEET
December 31, 1999 and 1998 1999 1998
ASSETS
Cash and short-term investments ............ $ 516,965 $ 3,800,777
Due from subsidiaries ...................... 28,921 6,720
Investment in subsidiaries
Banking ................................... 37,899,664 43,413,518
Non-banking ............................... 1,238,246 1,334,430
----------- -----------
39,137,910 44,747,948
Premises and equipment - net ............... 21,829 17,906
Other assets ............................... 1,775,404 1,584,462
----------- -----------
Total Assets ............................. $41,481,029 $50,157,813
=========== ===========
LIABILITIES
Due to subsidiaries ....................... $ 41,887 $ 41,887
Other liabilities ......................... 610,181 1,018,433
Notes payable ............................. 12,650,000 12,650,000
----------- -----------
Total Liabilities ....................... 13,302,068 13,710,320
STOCKHOLDERS' EQUITY ....................... 28,178,961 36,447,493
----------- -----------
Total Liabilities and Stockholders' Equity $41,481,029 $50,157,813
=========== ===========
STATEMENT OF INCOME (Parent Company Only) Years ended December 31, 1999, 1998
and 1997
1999 1998 1997
INCOME
Dividends from banking subsidiaries ... $ - $ - $ -
Dividends from non-banking subsidiaries - - 100,000
Reimbursement from subsidiaries ....... 625,000 355,000 355,000
Interest income ....................... 92,985 233,730 16,747
Other income .......................... 412 374 521
----------- --------- --------
Total income ........................ 718,397 589,104 472,268
EXPENSE
Interest expense ....................... 1,100,825 809,260 84,842
Other expenses ......................... 970,077 909,846 801,955
----------- --------- --------
Total expense ....................... 2,070,902 1,719,106 886,797
----------- --------- --------
(1,352,505) (1,130,002) (414,529)
Credit for income taxes ............... (526,588) (689,911) (156,442)
----------- --------- --------
(825,917) (440,091) (258,087)
Equity in undistributed net income
of subsidiaries ................ 6,179,736 5,641,973 4,766,894
----------- --------- ---------
NET INCOME ............................. $ 5,353,819 $5,201,882 $4,508,807
=========== ========== ==========
26
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (Parent Company Only)
Years ended December 31, 1999, 1998 and 1997 1999 1998 1997
<S> <C> <C> <C>
Operating Activities:
Net income ........................................ $ 5,353,819 $ 5,201,882 $ 4,508,807
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization .................... 51,603 50,206 50,503
Equity in undistributed net income of subsidiaries (6,179,736) (5,641,973) (4,766,894)
Net (increase) decrease in due from subsidiaries . (22,201) (3,989) 68,064
Net change in other assets and other liabilities . (599,196) (1,224,221) (32,881)
------------ ------------ ------------
Net cash used by operating activities ........ (6,749,530) (1,618,095) (172,401)
Investing Activities:
Purchase of premises and equipment ............... (10,297) (9,885) (1,069)
Net change in investment in subsidiaries ......... -- (4,200,000) --
------------ ------------ ------------
Net cash used by investing activities ........ (10,297) (4,209,885) (1,069)
Financing Activities:
Cash dividends paid .............................. (1,877,804) (1,658,727) (1,564,837)
Net increase in notes payable .................... -- 11,250,950 499,050
------------ ------------ ------------
Net cash provided by (applied to)
financing activities ...................... (1,877,804) 9,592,223 (1,065,787)
------------ ------------ ------------
Net increase (decrease) in
Cash and Cash Equivalents ....................... (3,283,812) 3,764,243 (1,239,257)
Cash and Cash Equivalents Beginning Balance ........ 3,800,777 36,534 1,275,791
------------ ------------ ------------
Cash and Cash Equivalents Ending Balance ........... $ 516,965 $ 3,800,777 $ 36,534
============ ============ ============
Cash paid during the year for:
Interest .......................................... $ 1,075,250 $ 719,656 $ 84,842
<FN>
<F1>
The Parent Company paid no income taxes during 1999, 1998 or 1997.
</FN>
</TABLE>
Note V - SEGMENT REPORTING
In 1998 the Company adopted SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information", which requires disclosures about
reportable segments of an enterprise. The determination of these segments is
based upon the manner in which the decision makers of an enterprise evaluates
its financial information.
American Bancorporation, through its wholly owned subsidiaries Wheeling
national Bank, American Bancdata Corporation, American Mortgages, Inc. and
American Bancorporation Capital Trust I, performs traditional banking services.
These financial services include making loans to individuals and businesses,
offering an array of deposit products and investment in marketable securities.
The retail network of offices is located throughout the northern panhandle of
West Virginia, central and eastern Ohio, and southwestern Pennsylvania. These
market areas all possess similar characteristics. The operating results of the
Company as a single entity are used by management in making operating decisions.
Therefore, the consolidated financial statements, as presented, represent the
results of a single financial services segment.
28
<PAGE>
NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries
FINANCIAL STATEMENTS-CONTINUED
December 31, 1999, 1998 and 1997
Note W-SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarters Ended (In thousands, except per share)
Mar 31 June 30 Sept 30 Dec 31 Year
1999
Interest income............. $10,911 $11,615 $12,339 $12,753 $47,618
Interest expense ........... 6,608 6,962 7,582 8,019 29,171
------- ------- ------- ------- -------
Net interest income ........ 4,303 4,653 4,757 4,734 18,447
Provision for loan losses ... 75 75 120 150 420
------- ------- ------- ------- -------
Net interest income after
provision for loan losses . 4,228 4,578 4,637 4,584 18,027
Other operating income ...... 1,000 958 818 728 3,504
Other operating expense ..... 3,642 3,800 3,712 3,496 14,650
------- ------- ------- ------- -------
Income before income taxes . 1,586 1,736 1,743 1,816 6,881
Provision for income taxes 301 389 392 445 1,527
------- ------- ------- ------- -------
Net income................ $ 1,285 $ 1,347 $ 1,351 $ 1,371 $ 5,354
======= ======= ======= ======= =======
Basic earnings per share....$ 0.41 $ 0.43 $ 0.43 $ 0.44 $ 1.71
1998
Interest income ............... $ 9,328 $ 9,974 $10,362 $10,637 $40,301
Interest expense .............. 5,064 5,764 6,234 6,378 23,440
------- ------- ------- ------- -------
Net interest income .......... 4,264 4,210 4,128 4,259 16,861
Provision for loan losses ..... 60 60 60 60 240
------- ------- ------- ------- -------
Net interest income after
provision for loan losses ... 4,204 4,150 4,068 4,199 16,621
Other operating income ........ 996 1,195 1,395 1,108 4,694
Other operating expense ....... 3,392 3,587 3,649 3,715 14,343
------- ------- ------- ------- -------
Income before income taxes ... 1,808 1,758 1,814 1,592 6,972
Provision for income taxes .. 554 471 499 246 1,770
------- ------- ------- ------- -------
Net income ................. $ 1,254 $ 1,287 $ 1,315 $ 1,346 $ 5,202
======= ======= ======= ======= =======
Basic earnings per share .. $ 0.40 $ 0.41 $ 0.42 $ 0.43 $ 1.66
29
<PAGE>
KPMG
One Mellon Bank Center Telephone 412 391 9710
Pittsburgh, PA 15219 Fax 412 391 8963
Independent Auditors' 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, 1999 and 1998, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1999. 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 as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
Pittsburgh, Pennsylvania
March 24, 2000
| KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is
a member of KPMG International, a Swiss association
30
<PAGE>
American Bancorporation and Subsidiaries Five Year Selected Financial Data
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Consolidated Statement of Income
For the years ended 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Interest income
Interest and fees on loans ................ $ 28,502 $ 25,759 $ 24,891 $ 22,500 $ 21,929
Interest on securities .................... 18,751 13,786 10,300 6,967 4,197
Interest on other short-term investments .. 365 756 348 418 370
-------- -------- -------- -------- --------
47,618 40,301 35,539 29,885 26,496
Interest expense
Interest on deposits and borrowed funds ... 29,171 23,440 18,278 13,802 11,171
-------- -------- -------- -------- --------
Net interest income ................... 18,447 16,861 17,261 16,083 15,325
Provision for loan losses .................. 420 240 -- -- 105
-------- -------- -------- -------- --------
Net interest income
after provision for loan losses ...... 18,027 16,621 17,261 16,083 15,220
Service charges and other income ........... 3,504 4,694 2,926 2,392 1,680
Other expenses
Salaries and employee benefits ............ 6,920 6,677 5,910 5,590 5,319
Other operating expenses .................. 7,730 7,666 7,191 7,117 6,771
-------- -------- -------- -------- --------
14,650 14,343 13,101 12,707 12,090
-------- -------- -------- -------- --------
Income before income taxes ................. 6,881 6,972 7,086 5,768 4,810
Provision for income taxes ................ 1,527 1,770 2,577 2,102 1,758
-------- -------- -------- -------- --------
Net income ................................. $ 5,354 $ 5,202 $ 4,509 $ 3,666 $ 3,052
======== ======== ======== ======== ========
Per common share*:
Basic earnings per share .............. $ 1.71 $ 1.66 $ 1.44 $ 1.17 $ 0.98
Dividends ............................. $ 0.60 $ 0.555 $ 0.50 $ 0.45 $ 0.35
Average common shares outstanding (000's) .. 3,130 3,130 3,130 3,130 3,130
Consolidated Balance Sheet Data
Balance at year end
Total Assets .............................. $711,291 $611,405 $484,606 $461,632 $353,995
Earning Assets ............................ 674,338 582,196 458,282 432,793 330,136
Loans ..................................... 371,223 300,622 286,691 271,450 250,372
Deposits .................................. 449,277 431,240 355,734 319,811 292,665
Borrowed funds ............................ 214,593 123,891 87,574 104,096 27,523
Notes payable and other long-term debt .... 12,650 12,661 1,425 938 1,047
Stockholders' equity ...................... 28,179 36,447 33,694 30,423 28,012
Average Balances for years ended
Total Assets .............................. 680,254 550,452 468,163 400,866 348,655
Earning Assets ............................ 646,685 521,241 439,549 373,874 323,750
Loans ..................................... 336,518 292,662 281,738 254,397 243,043
Deposits .................................. 435,265 404,906 337,684 310,746 293,415
Borrowed funds ............................ 192,909 92,786 90,676 54,644 21,736
Notes payable and other long-term debt .... 12,654 9,988 1,055 1,033 1,091
Stockholders' equity ...................... 33,076 35,544 31,866 29,045 27,248
Consolidated Financial Ratios (as a Percent)
Net income to average assets .............. 0.79% 0.95% 0.96% 0.91% 0.88%
Net income to average equity .............. 16.19 14.64 14.15 12.62 11.20
Dividends to net income ................... 35.07 33.39 34.71 38.42 35.89
Average equity to average assets .......... 4.86 6.46 6.81 7.25 7.82
Average debt to average equity ............ 38.26 28.10 3.31 3.56 4.00
<FN>
<F1>
*(Per share data has been retroactively restated for the adoption of SFAS
No. 128 and a two for one stock split which became effective October 23, 1997.)
</FN>
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Average Balances, Income and Expense, Yields and Rates
($ in thousands) 1999 1998 1997
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........................... $135,013 $ 11,792 8.73% $100,415 $ 9,219 9.18% $ 91,729 $ 8,560 9.33%
Real estate.......................... 145,892 11,527 7.90 142,272 11,767 8.27 141,642 11,495 8.12
Installment-net...................... 55,613 4,619 8.31 49,975 4,231 8.47 48,367 4,259 8.81
Fees................................. - 564 - - 542 - - 577 -
Total loans......................... 336,518 28,502 8.47 292,662 25,759 8.80 281,738 24,891 8.83
Investment securities
Taxable.............................. 248,665 15,980 6.43 209,153 13,388 6.40 153,658 10,210 6.64
Tax-exempt........................... 54,944 2,771 5.04 8,968 398 4.44 1,083 90 8.35
Total investment securities......... 303,609 18,751 6.18 218,121 13,786 6.32 154,741 10,300 6.66
Other short-term investments.......... 6,558 365 5.57 10,458 756 7.23 3,070 348 11.33
Total earning assets................ 646,685 47,618 7.36 521,241 40,301 7.73 439,549 35,539 8.09
Non-interest Earning Assets
Cash and due from banks............... 11,518 12,297 11,164
Premises and equipment - net.......... 9,765 9,856 10,053
Other assets........................... 12,286 7,058 7,397
33,569 29,211 28,614
TOTAL ASSETS........................ $680,254 $550,452 $468,163
======== ======== ========
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings and MMDA............... $126,694 $ 3,206 2.53% $119,373 $ 3,194 2.68% $123,879 $ 3,315 2.68%
Time................................ 270,117 14,694 5.44 250,623 14,387 5.74 180,561 9,869 5.47
Total deposits.................... 396,811 17,900 4.51 369,996 17,581 4.75 304,440 13,184 4.33
Borrowed funds........................ 192,909 10,170 5.27 92,786 5,047 5.44 90,676 5,006 5.52
Notes payable and
other long-term debt .............. 12,654 1,101 8.70 9,988 812 8.13 1,055 88 8.30
Total interest
bearing liabilities................ 602,373 29,171 4.84 472,770 23,440 4.96 396,171 18,278 4.62
Non-interest bearing
Demand non-interest bearing......... 38,454 34,910 33,244
Other liabilities................... 6,351 7,228 6,882
44,805 42,138 40,126
Stockholders' Equity.................. 33,076 35,544 31,866
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY............. $680,254 $550,452 $468,163
======== ======== ========
Net interest income............... $18,447 $16,861 $17,262
======= ======= =======
Interest rate spread............. 2.52% 2.77% 3.47%
==== ==== ====
MARGIN ANALYSIS
(as a % of Earning Assets)
Interest income....................... 7.36% 7.73% 8.09%
Interest expense...................... 4.51 4.50 4.16
Net interest income................... 2.85% 3.23% 3.93%
==== ==== =====
<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>
32
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
December 31, 1999, 1998 and 1997
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 performance and management's perception
of significant events.
When used in filings by the Company with the Securities and Exchange
Commission, in the Company's press releases or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result", "are expected to",
"will continue", "is anticipated", "estimate", "project" or similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties including changes in economic conditions in the
Company's market area, changes in policies by regulatory agencies, fluctuations
in interest rates, demand for loans in the Company's market area and competition
that could cause actual results to differ materially from historical earnings
and those presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. The Company wishes to advise readers that
the factors listed above could affect the Company's financial performance and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements.
Summary
American Bancorporation recognized net income of $5,354,000 or $1.71 basic
earnings per share, in 1999, compared to net income of $5,202,000 or $1.66 basic
earnings per share, in 1998. The 2.9% increase in net income was primarily the
result of an increase in net interest income and a decrease in income taxes
which were partially offset by a decrease in other income and increases in other
expenses and provision for loan losses. Net income for the year ended December
31, 1997 totalled $4,509,000 or $1.44 basic earnings per share. Return on
average assets and return on average equity were 0.79% and 16.19%, respectively,
for the year ended December 31, 1999 compared to 0.95% and 14.64%, respectively,
for the year ended December 31, 1998 and 0.96% and 14.15%, respectively, for the
year ended December 31, 1997.
Total assets at December 31, 1999 increased to $711,291,000 from
$611,405,000 at December 31, 1998, an increase of 16.3%. Loans increased to
$371,223,000 at December 31, 1999 from $300,622,000 at December 31, 1998, an
increase of 23.5%. Deposits increased to $449,277,000 at December 31, 1999 from
$431,240,000 at December 31, 1998, an increase of 4.2%. Total stockholders'
equity was $28,179,000 at December 31, 1999 compared $36,447,000 at December 31,
1998, a decrease of 22.7%.
33
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
RESULTS OF OPERATIONS
The discussion and analysis of the results of operations is focused on the
three years ended December 31, 1999 and uses a format of consecutive year
comparisons. Volume and rate variances contributing to change in net interest
income are analyzed using adjusted month end average balances. Tax equivalency
is not imputed in the calculation of yields.
<TABLE>
<CAPTION>
($ in thousands)
Years ended December 31 Change
1999 1998 1997 1999 - 1998 1998 - 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Amount % Amount %
Interest income.......................... $ 47,618 $ 40,301 $ 35,539 $ 7,317 18.16% $ 4,762 13.40%
Interest expense......................... 29,171 23,440 18,278 5,731 24.45 5,162 28.24
Net interest income...................... 18,447 16,861 17,261 1,586 9.41 (400) (2.32)
Provision for loan losses................ 420 240 - 180 75.00 240 100.00
Net interest income after
provision for loan losses.............. 18,027 16,621 17,261 1,406 8.46 (640) (3.71)
Other operating income................... 3,504 4,694 2,926 (1,190) (25.35) 1,768 60.42
Other operating expense.................. 14,650 14,343 13,101 307 2.14 1,242 9.48
Income before income taxes..............$ 6,881 $ 6,972 $ 7,086 $ (91) (1.31)% $ (114) (1.61)%
Average Balance
Earning Assets.......................... $646,685 $521,241 $439,549 $125,444 24.07% $81,692 18.59%
Interest Bearing Liabilities............ 602,373 472,770 396,171 129,603 27.41 76,599 19.33
Yield/Rate
Earning Assets.......................... 7.36% 7.73% 8.09%
Interest Bearing Liabilities............ 4.84 4.96 4.62
Interest Rate Spread.................... 2.52 2.77 3.47
Net Interest Margin..................... 2.85 3.23 3.93
</TABLE>
34
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
VOLUME AND RATE VARIANCES
1999 vs 1998 1998 vs 1997
Increase/(decrease) due to Increase/(decrease) due to
($ in thousands) Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans ...................... $ 3,744 $(1,001) $ 2,743 $ 962 $ (93) $ 869
Investment securities
Taxable ................... 2,539 53 2,592 3,564 (387) 3,177
Tax-exempt ................ 2,312 61 2,373 369 (61) 308
Other short-term investments (242) (148) (390) 574 (166) 408
------- ------- ------- ------- ------- -------
Total interest income .... 8,353 (1,035) 7,318 5,469 (707) 4,762
Interest Expense
NOW, Savings and MMDA ..... 190 (178) 12 (121) -- (121)
Time ...................... 1,084 (777) 307 4,000 518 4,518
Short-term borrowings ..... 5,283 (160) 5,123 115 (74) 41
Long-term debt ............ 229 61 290 726 (2) 724
------- ------- ------- ------- -------
Total interest expense ... 6,786 (1,054) 5,732 4,720 442 5,162
------- ------- ------- ------- ------- -------
Net Interest Income ....... $1,567 $ 19 $ 1,586 $ 749 $(1,149) $ (400)
======= ======= ======= ======= ======= =======
<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, 1999
Compared to Year Ended December 31, 1998
Net Income. Net income for the year ended December 31, 1999 amounted to
$5,354,000 or $1.71 basic earnings per share, compared to net income of
$5,202,000 or $1.66 basic earnings per share for the year ended December 31,
1998. The increase was primarily the result of an increase in net interest
income and a decrease in income taxes which were partially offset by a decrease
in other income and increases in other expenses and provision for loan losses.
Net Interest Income. Net interest income represents the amount by which
interest income on interest-earning assets, including investment securities and
loans, exceeds interest paid on interest-bearing liabilities, including deposits
and other borrowed funds. Net interest income is the principal source of the
Company's earnings. Interest rate fluctuations, as well as changes in the amount
and type of interest earning assets and liabilities, combine to affect net
interest income.
Net interest income before provision for loan losses for the year ended
December 31, 1999 amounted to $18,447,000, an increase of $1,586,000 or 9.4%,
compared to the year ended December 31, 1998. The increase resulted primarily
from a $125,444,000 or 24.1% increase in average interest earning assets, which
was partially offset by a 38 basis point decrease in the Company's net interest
margin.
Total interest income for the year ended December 31, 1999 amounted to
$47,618,000, an increase of $7,318,000 or 18.2%, compared to the year ended
December 31, 1998. The increase resulted primarily from the increase in the
average interest earning assets which was partially offset by a 37 basis point
decrease in the average yield on earning assets. Average
35
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
loans outstanding increased $43,856,000 or 15.0% with average commercial loans
increasing $34,598,000 or 34.5%, average consumer installment loans increased
$5,638,000 or 11.3% and average real estate loans increased $3,620,000 or 2.5%,,
primarily due to increased demand. The average yield on loans decreased from
8.80% in 1998 to 8.47% in 1999. Average investment securities and other
short-term investments outstanding increased $81,588,000 or 35.7% and the
average yield decreased from 6.36% in 1998 to 6.17% in 1999. The increase in
investment securities is primarily due to growth strategies utilizing increases
in both FHLB advances and time deposits. These strategies leveraged the
Company's capital thereby enhancing its return on equity and earnings.
Total interest expense for the year ended December 31, 1999 amounted to
$29,171,000, an increase of $5,731,000 or 24.5%, compared to the year ended
December 31, 1998. The increase resulted primarily from a $129,603,000 or 27.4%
increase in average interest bearing liabilities which was partially offset by a
12 basis point decrease in interest rates paid on such liabilities. Average NOW,
money market and savings accounts increased $7,321,000 or 6.1%. Average time
deposits increased $19,494,000 or 7.8%. Average non-interest bearing accounts
increased $3,544,000 or 10.2% and represented 8.8% of average total deposits for
the year ended December 31, 1999. Average borrowed funds, primarily FHLB
advances, increased $100,123,000 or 107.9%. The average rate paid on borrowed
funds decreased from 5.44% in 1998 to 5.27% in 1999.
Provision for Loan Losses. The loan loss provision for the year ended
December 31, 1999 was $420,000, compared to $240,000 for the year ended December
31, 1998. Net loans charged-off totalled $382,000 in 1999, compared to net loans
charged-off of $482,000 in 1998.
Other Income. Other income for the year ended December 31, 1999 amounted to
$3,504,000, a decrease of $1,190,000 or 25.4%, compared to the year ended
December 31, 1998. Net gains on sale of loans totalled $1,525,000 for the year
ended December 31, 1999, compared to net gains of $2,179,000 for the year ended
December 31, 1998, including a $297,000 gain on sale of the Company's credit
card portfolio. The remainder of net gains on sale of loans is primarily the
result of sales of residential mortgages loans generated for sale to secondary
markets. Net gains on sale of investment securities totalled $343,000 in 1999,
compared to $947,000 in 1998.
Other Expense. Total other expense for the year ended December 31, 1999
amounted to $14,650,000, an increase of $307,000 or 2.1%, compared to the year
ended December 31, 1998. Salaries and employee benefits increased $243,000 or
3.6%. Occupancy and equipment expense decreased $217,000 or 9.2%. Other
(miscellaneous) expense decreased $153,000 or 2.9%.
Provision for Income Taxes. The provision for income taxes for the year
ended December 31, 1999 was $1,527,000, compared to $1,770,000 for the year
ended 1998. The decrease is primarily the result of additional tax-exempt income
in 1999.
36
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
Year ended December 31, 1998
Compared to Year Ended December 31, 1997
Net Income. Net income for the year ended December 31, 1998 amounted to
$5,202,000 or $1.66 basic earnings per share, compared to net income of
$4,509,000 or $1.44 basic earnings per share for the year ended December 31,
1997. The increase was primarily the result of an increase in other income which
was partially offset by a decrease in net interest income and increases in other
expenses and provision for loan losses.
Net Interest Income. Net interest income represents the amount by which
interest income on interest-earning assets, including investment securities and
loans, exceeds interest paid on interest-bearing liabilities, including deposits
and other borrowed funds. Net interest income is the principal source of the
Company's earnings. Interest rate fluctuations, as well as changes in the amount
and type of interest earning assets and liabilities, combine to affect net
interest income.
Net interest income before provision for loan losses for the year ended
December 31, 1998 amounted to $16,861,000, a decrease of $401,000 or 2.3%,
compared to the year ended December 31, 1997. The decrease resulted primarily
from a 70 basis point decrease in the Company's margin, which was partially
offset by a $81,692,000 or 18.6% increase in average interest earning assets.
Total interest income for the year ended December 31, 1998 amounted to
$40,301,000, an increase of $4,762,000 or 13.4%, compared to the year ended
December 31, 1997. The increase resulted primarily from the increase in the
average interest earning assets which was partially offset by a 36 basis point
decrease in the average yield on earning assets. Average loans outstanding
increased $10,924,000 or 3.9% with average commercial loans increasing
$8,686,000 or 9.5%, average real estate loans increased $630,000 or 0.4%, and
average consumer installment loans increased $1,608,000 or 3.3%, primarily due
to increased demand. The average yield on loans decreased from 8.83% in 1997 to
8.80% in 1998. Average investment securities and other short-term investments
outstanding increased $70,768,000 or 44.8% and the average yield decreased from
6.75% in 1997 to 6.36% in 1998. The increase in investment securities is
primarily due to growth strategies utilizing increases in both FHLB advances and
time deposits. These strategies leveraged the Company's capital thereby
enhancing its return on equity and earnings.
Total interest expense for the year ended December 31, 1998 amounted to
$23,440,000, an increase of $5,162,000 or 28.2%, compared to the year ended
December 31, 1997. The increase resulted primarily from a $76,599,000 or 19.3%
increase in average interest bearing liabilities and a 34 basis point increase
in interest rates paid on such liabilities. Average NOW, money market and
savings accounts decreased $4,506,000 or 3.6%. Average time deposits increased
$70,062,000 or 38.8%, primarily the result of increased marketing efforts.
Average non-interest bearing accounts increased $1,666,000 or 5.0% and
represented 8.6% of average total deposits for the year ended December 31, 1998.
Average short-term borrowings increased $2,110,000 or 2.3%. The average rate
paid on short-term borrowings decreased from 5.52% in 1997 to 5.44% in 1998.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
Provision for Loan Losses. The loan loss provision for the year ended
December 31, 1998 was $240,000. There was no loan loss provision for the year
ended December 31, 1997. Net loans charged-off totalled $482,000 in 1998,
compared to net loans charged-off of $279,000 in 1997.
Other Income. Other income for the year ended December 31, 1998 amounted to
$4,694,000, an increase of $1,769,000 or 60.4%, compared to the year ended
December 31, 1997. Net gains on sale of loans totalled $2,179,000 for the year
ended December 31, 1998, including a $297,000 gain on the sale of the Company's
credit card portfolio, compared to net gains of $1,303,000 for the year ended
December 31, 1997. The remainder of the increase is primarily the result of
increased residential mortgages loans generated for sale to secondary markets.
Net gains on sale of investment securities totalled $947,000 in 1998, compared
to $34,000 in 1997.
Other Expense. Total other expense for the year ended December 31, 1998
amounted to $14,343,000, an increase of $1,242,000 or 9.5%, compared to the year
ended December 31, 1997. Salaries and employee benefits increased $767,000 or
13.0%. Occupancy and equipment expense decreased $15,000 or 0.6%. Other
(miscellaneous) expense increased $489,000 or 10.2%.
Provision for Income Taxes. The provision for income taxes for the year
ended December 31, 1998 was $1,770,000, compared to $2,577,000 for the year
ended 1997.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
December 31, 1999, 1998 and 1997
FINANCIAL CONDITION
Loans
The Company's primary earning assets are loans, representing 52.2% of the
total assets at December 31, 1999. Loans outstanding were $371,223,000 at
December 31, 1999, an increase of $70,601,000 or 23.5% between 1998 and 1999.
The increase was primarily due to improved demand in the commercial lending
segment of the portfolio. At December 31, 1999 there were no concentrations of
loans in any particular industry or in a group of related industries exceeding
10% of total loans. The table below sets forth loans by category at December 31,
1995 through 1999.
<TABLE>
<CAPTION>
TYPES OF LOANS
($ in thousands) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Commercial............................... $ 142,257 $112,563 $ 92,295 $ 82,792 $ 63,082
Real estate construction................. 5,445 1,060 1,024 1,816 1,869
Real estate mortgage..................... 158,128 138,050 144,179 136,488 128,709
Installment.............................. 65,393 48,949 49,193 50,353 56,712
--------- -------- -------- -------- --------
$371,223 $300,622 $286,691 $271,449 $250,372
======== ======== ======== ======== ========
</TABLE>
It is the policy of the Company to review each prospective credit in order
to determine an adequate level of security or collateral to obtain prior to
making the loan. The type of collateral will vary and ranges from liquid assets
to real estate. Commercial business loans are made based on the financial
ability of the borrower to repay the obligation and the appraised value of
assets used as collateral. Real estate construction loans are made with
loan-to-value ratios generally below 75%. Real estate mortgage loans are made
with loan-to-value ratios generally below 80% of the appraised value. The real
estate is appraised at the time the loan is originated and is reappraised if the
loan is placed on a classified status. All consumer installment loan requests
are evaluated to determine the prospective borrowers ability and willingness to
repay the obligation and their stability as a borrower. Ability to repay is
determined by comparing an applicant's monthly debt payment including the
proposed loan payment with net monthly income. The resulting debt
service-to-income ratio generally must be below 40%. In addition, for consumer
installment loans which require collateral, the Company will make advances up to
100% of the value on certain types of collateral.
Scheduled maturity of commercial loans and real estate construction loans
is indicated as follows at December 31, 1999:
($ in thousands) One Year One to Over
or Less Five Years Five Years Total
Commercial.......................... $27,689 $42,995 $71,573 $142,257
Real estate construction............ 2,075 3,370 - 5,445
------- ------- ------- --------
Total.............................. $29,764 $46,365 $71,573 $147,702
======= ======= ======= ========
For the commercial and real estate construction loans due after one year,
$52,038,000 have a predetermined interest rate and $65,900,000 have a floating
or adjustable interest rate.
39
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
Asset Quality
Total nonperforming loans were $2,730,000 at December 31, 1999, compared to
$2,960,000 at December 31, 1998. Nonaccrual loans decreased by $99,000 while
loans 90 days past due decreased $149,000, and restructured loans increased by
$18,000. Of the $536,000 total other real estate owned, $78,000 represents
former branch office facilities.
The following presents loans considered nonperforming:
NONPERFORMING ASSETS
($ in thousands)
1999 1998 1997 1996 1995
Nonperforming loans
Nonaccrual ................... $1,248 $1,347 $ 815 $ 547 $ 790
90 days past due ............. 1,122 1,271 1,277 744 609
Restructured ................. 360 342 566 672 666
------ ------ ------ ------ ------
Total nonperforming loans . $2,730 $2,960 $2,658 $1,963 $2,065
Other nonperforming assets
Other real estate owned ...... 536 183 236 607 575
------ ------ ------ ------ ------
Total nonperforming assets . $3,266 $3,143 $2,894 $2,570 $2,640
====== ====== ====== ====== ======
Nonperforming loans
as a percent of loans .... 0.7% 1.0% 0.9% 0.7% 0.8%
Nonperforming assets
as a percent of total assets 0.5% 0.5% 0.6% 0.6% 0.7%
The nonaccrual category represents loans on which interest recognition has
been suspended until realized because the borrower's ability to repay principal
or interest is in doubt. For loans not primarily secured by real estate or in
the process of collection, the Company discontinues accrual when a loan is 90
days past due. Real estate loans are placed on nonaccrual status when, in
management's judgement, collection is in doubt or when foreclosure proceedings
are initiated, which is generally 180 days past the due date. Although nominally
performing, nonaccrual treatment may also be accorded on loans when information
becomes available which suggests that more than normal risk of default exists.
Restructured loans are loans, the terms of which have been altered, to provide a
reduction or deferral of interest or principal because of deterioration in the
financial position of the borrower. Past due loans are loans contractually past
due 90 days or more and are not on nonaccrual status or restructured.
40
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
Allowance for Loan Losses
The Company's loan loss experience for the five years ended December 31, 1999
is summarized as follows:
<TABLE>
<CAPTION>
SUMMARY OF LOAN LOSS EXPERIENCE
($ in thousands) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Balance at beginning of year ............ $ 3,042 $ 3,284 $ 3,564 $ 3,854 $ 3,737
Provision for loan losses .............. 420 240 -- -- 105
Loans charged-off
Commercial ............................ 68 228 26 54 63
Real estate mortgage .................. 188 183 111 66 21
Installment ........................... 271 322 441 308 279
--------- --------- -------- --------- ---------
Total loans charged-off .............. 527 733 578 428 363
Loans recovered
Commercial ............................ 6 121 162 3 101
Real estate mortgage .................. 30 19 16 16 108
Installment ........................... 109 111 120 119 166
--------- --------- -------- --------- ---------
Total loans recovered ................ 145 251 298 138 375
--------- --------- -------- --------- ---------
Net loans charged-off (recovered) ... 382 482 280 290 (12)
--------- --------- --------- ---------
Balance at end of year .................. $ 3,080 $ 3,042 $ 3,284 $ 3,564 $ 3,854
========= ========= ======== ========= =========
Loans outstanding end of year ........... $ 371,223 $ 300,622 $ 286,691 $ 271,450 $ 250,372
Average loans for the year ended ........ 336,518 292,662 281,738 254,397 243,043
Ratio of net charge-offs to average loans 0.11% 0.16% 0.10% 0.11% 0.00%
Ratio of allowance to loans outstanding . 0.83% 1.01% 1.15% 1.31% 1.54%
Ratio of provision to average loans ..... 0.12% 0.08% 0.00% 0.00% 0.04%
</TABLE>
The allowance for loan losses was equal to 0.83% of loans outstanding at
year end 1999 and in management's judgment is appropriate to absorb probable
loan losses. Based on management's analysis of the allowance for loan losses,
the Company increased the allowance with a $420,000 charge to the provision for
bad debts in 1999 and a $240,000 charge to the provision for bad debts in 1998.
There was no provision made for 1997. While management's on-going analysis
includes, among other factors, the financial position of particular borrowers,
results of internal loan reviews, past due loans and the Company's historical
loss experience, future additions to the allowance may be necessary based on
changes in economic conditions. In addition, federal regulatory agencies, as an
integral part of their examination process, periodically review the Company's
allowance for loan losses. Such agencies may require the Company to recognize
additions to the allowance based on their judgments about information available
to them at the time of their examination.
41
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
Securities
The following table summarizes the carrying value and weighted average
yield of securities by type and maturity range as of December 31, 1999:
<TABLE>
<CAPTION>
After After
One Year Five Years
Within But Within But Within After
One Year Five Years Ten Years Ten Years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities Available for Sale
United States Treasury...............$ 1,000 5.53% $ - -% $ - -% $ - -% $ 1,000 5.57%
United States Federal agencies... - - 1,612 6.42 13,751 6.63 9,897 6.66 25,260 6.59
United States agency
mortgage-backed securities.... - - 5,591 6.59 6,378 7.10 191,823 6.66 203,792 6.83
States and political subdivisions - - 484 5.42 89 6.42 55,523 4.80 56,096 4.80
Other........................... - - - - - - 12,005 6.38 12,005 6.38
Total Carrying Value..............$ 1,000 5.53% $ 7,687 6.48% $20,218 6.78% $269,248 6.26% $298,153 6.41%
======= ======= ======= ======== ========
</TABLE>
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
other securities includes securities with no stated maturity. Yields do not
reflect tax equivalent adjustments.
Deposits
Summarized below are average deposit balances by type for the years ended
December 31, 1999, 1998 and 1997. Also presented is the maturity distribution of
time deposits in excess of $100,000 at each year end.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS 1999 1998 1997
($ in thousands) Amount % Rate Amount % Rate Amount % Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Demand noninterest bearing.......... $ 38,454 8.8% -% $ 34,910 8.6% -% $ 33,244 9.8% -%
Interest bearing deposits
NOW Accounts...................... 23,646 5.4 1.75 26,146 6.5 2.33 26,648 7.9 2.36
MMDA and savings accounts.......... 103,048 23.7 2.71 93,227 23.0 2.77 97,231 28.8 2.76
Time .............................. 270,117 62.1 5.44 250,623 61.9 5.74 180,561 53.5 5.47
-------- ----- ------- ----- -------- -----
396,811 91.2 4.51 369,996 91.4 4.75 304,440 90.2 4.33
--------- ------ -------- --- -- -------- -----
Total................................ $435,265 100.0% 4.10% $404,906 100.0% 4.34% $337,684 100.0% 3.90%
======== ===== ======== ===== ======== =====
</TABLE>
MATURITY OF TIME DEPOSITS OVER $100,000
1999 1998 1997
($ in thousands)
Within three months .. $19,228 $13,785 $13,753
Three to six months .. 17,182 14,282 6,447
Six months to one year 10,529 13,185 11,727
After one year ....... 15,512 14,283 12,807
------- ------- -------
Total ............... $62,451 $55,535 $44,734
======= ======= =======
42
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
Capital
Capital resources represent funds obtained externally through issuance of
securities and internally through the retention of earnings. Federal regulatory
authorities define core ("Tier 1") capital to include common 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 Bank are subject to a
risk-based capital framework and a minimum leverage ratio. Bank regulatory
authorities in the United States have issued risk-based capital standards by
which all bank holding companies and banks will be evaluated in terms of capital
adequacy. These guidelines relate to banking company's capital to the risk
profile of its assets. Tier 1 capital includes common stockholder's equity and
qualifying perpetual preferred stock together with related surpluses and
retained earnings. Tier 2 capital may be comprised of limited life preferred
stock, qualifying debt instruments, and the reserves for credit losses. Banking
regulators have also issued leverage ratio requirements. The leverage ratio
requirement is measured as the ratio of Tier 1 capital to adjusted 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.
The following table summarizes the Company's and WNB's actual consolidated
capital amounts and ratios as of December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Company WNB
December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Tier I Capital........................ $ 51,365 $ 47,179 $ 48,397 $ 39,888
Total Qualifying Capital.............. $ 54,445 $ 50,737 $ 51,477 $ 43,000
Risk-Adjusted Assets.................. $381,874 $303,127 $377,566 $299,420
Regulatory Requirements
Well-
Minimum Capitalized
Capital Ratios
Tier I Capital Ratio.............. 4.00% 6.00% 13.45% 15.56% 12.82% 13.99%
Total Capital Ratio............... 8.00 10.00 14.26 16.74 13.63 15.03
Leverage Capital Ratio............ 3.00 5.00 7.34 7.99 6.80 7.36
</TABLE>
43
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
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 advances from the FHLB of Pittsburgh.
Core deposits, representing the Company's largest, most stable source of
funds, totalled $386,827,000 at December 31, 1999, an increase of $11,121,000 or
3.0% as compared to December 31, 1998. At December 31, 1999 core deposits
represented 104.2% of loans, compared to 125.0% at December 31, 1998. Such
deposits generally represent a more stable alternative to more volatile money
market sources such as short-term borrowings and time deposits over $100,000.
The Company has no brokered deposits.
Cash and cash equivalents (cash and due from banks and Federal funds sold),
are the Company's most liquid assets. At December 31, 1999, cash and cash
equivalents totalled $16,598,000, a decrease of $13,466,000 or 44.8% from
December 31, 1998. Additionally, the Company has secondary sources of liquidity
in investment securities available for sale totalling $298,153,000 at December
31, 1999, compared to $263,827,000 at December 31, 1998, as well as maturities
and repayments of loans.
The Company utilizes FHLB advances as a low cost funding source for
implementing investment security growth strategies. FHLB advances totalled
$211,000,000 at December 31, 1999. Management views FHLB advances as a stable
secondary funding source.
Management believes that the Company's liquidity position is sufficient
based on its level of cash, cash equivalents, core deposits and the stability of
its other funding.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
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.
The Company uses financial modeling to measure the impact of changes in
interest rates on the net interest margin. Modeling techniques are a more
relevant method of measuring interest rate risk than the less sophisticated
interest rate sensitivity gap table shown on page 46. Assumptions are made
regarding loan prepayments and amortization rates of passbook and NOW account
withdrawal rates. Because it is difficult to accurately project the market
reaction of depositors and borrowers, the effects of actual changes in interest
on these assumptions may differ from simulated results.
The Company has established the following guidelines for assuming interest
rate risk:
Net interest margin simulation. Given a 200 basis point increase or decrease
in interest rates, the estimated net interest margin may not change by more than
10% for a one-year period.
Market value of equity simulation. The market value of the Company's equity
is the net present value of the Company's assets and liabilities. Given a 200
basis point increase or decrease in interest rates, equity may not change by
more than 30% of total stockholder equity.
The following table illustrates the simulated analysis of the impact of a
200 basis point upward or downward movement in interest rates on net interest
revenue, return on common stockholders' equity and basic earnings per share. The
analysis was prepared assuming that interest-earning assets at December 31, 1999
remain constant. The impact of the rate movements was computed by simulating the
effect of an immediate and sustained shift in interest rates over a twelve-month
period from the December 31, 1999 levels.
Interest rate simulation sensitivity analysis
Movements in interest rates from December 31, 1999 rates
Compared with December 31, 1999:
Net interest income decrease (3.30)% (2.60)%
Return on average equity decrease (130)bp (100)bp
Basic earnings per share decrease $(0.14) $(0.11)
45
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
The difference between rate sensitive assets and rate sensitive liabilities
that mature or reprice within a given time period is referred to as the interest
rate sensitivity gap. A positive gap exists when rate sensitive assets exceed
rate sensitive liabilities. This mismatch generally will enhance earnings in a
rising interest rate environment and inhibit earnings when rates decline.
Conversely, a negative gap exists when rate sensitive liabilities exceed rate
sensitive assets. In this case, a rising interest rate environment generally
will inhibit earnings and declining rates generally will enhance earnings. The
Company's interest rate sensitivity analysis at December 31, 1999, is presented
in the following table. In evaluating the Company's exposure to interest rate
risk certain shortcomings inherent in this method of analysis must be
considered. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may react in different degrees
to change in market interest rates. Interest bearing demand deposits and savings
deposits are presented as repricing within the earliest period as they are
subject to immediate withdrawal and rate change. However, these types of
deposits have historically shown relatively stable balances and rates have
generally changed in lesser degrees than other interest earning assets and
interest bearing liabilities.
At December 31, 1999, there were no outstanding financial futures,
options or interest rate swap agreements.
<TABLE>
<CAPTION>
December 31, 1999 Days Total
INTEREST RATE SENSITIVITY 31 61 91 181 One Year Over
($ in thousands) 0 to 30 to 60 to 90 to 180 to 1 year or Less One Year Total
========== ====== ===== ====== ========= ======== ======== =====
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS
Loans.............................. $ 53,445 $ 1,983 $ 7,728 $ 12,365 $ 29,763 $ 112,447 $258,776 $371,223
Investment securities.............. - 1,000 - - - 1,000 297,153 298,153
Other short-term investments....... 4,823 - - - - 4,823 - 4,823
Total interest earning assets..... 65,431 2,983 7,728 12,365 29,763 118,270 555,929 674,199
INTEREST BEARING LIABILITIES
Deposits
Interest bearing demand........... 23,966 - - - - 23,966 - 23,966
Savings deposits.................. 120,977 - - - - 120,977 - 120,977
Time deposits..................... 25,212 25,644 16,314 53,072 56,491 176,733 89,643 266,376
Borrowed funds..................... 114,593 - - - - 114,593 100,000 214,593
Long-term debt..................... - - - - - - 12,650 12,650
Total interest bearing liabilities... 284,748 25,644 16,314 53,072 56,491 436,269 202,293 638,562
Non Interest Bearing Sources-net... - - - - - - 35,637 35,637
Total Funding sources............. $ 284,748 $ 25,644 $ 16,314 $ 53,072 $ 56,491 $ 436,269 $237,930 $674,199
INTEREST SENSITIVITY GAP............. $(219,317) $ (22,661) $ (8,586) $ (40,707) $(26,728) $(317,999) $317,999 -
CUMULATIVE INTEREST
SENSITIVITY GAP............... $(219,317) $(241,978) $(250,564) $(291,271) $(317,999) $(317,999) $ - $ -
GAP/INTEREST EARNING ASSETS.......... (47.86)% (4.94)% (1.87)% (8.88)% (5.83)% (69.39)% 69.39% -
CUMULATIVE GAP/INTEREST
EARNING ASSETS............... (47.86) (52.80) (54.67) (63.56) (69.39) (69.39) - -
</TABLE>
46
<PAGE>
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS-CONTINUED
December 31, 1999, 1998 and 1997
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standard Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities on the balance sheet and measure those instruments at fair value.
This statement, as amended, is effective January 1, 2001, and need not be
applied retroactively to financial statements of prior periods. The statement
may be adopted early, as of the beginning of any quarter. The company intends to
adopt this statement on January 1, 2001. The company is currently evaluating the
impact that this statement will have on its financial position and results of
operations, but it is not expected to be material.
Year 2000 Compliance
Like many financial institutions, the Company relies on computers to conduct
business and information systems processing. Industry experts were concerned
that on January 1, 2000, some computers might not be able to interpret the new
year properly, causing computer malfunctions. Some banking industry experts
remain concerned that some computers may not be able to interpret additional
dates in the Year 2000 properly. We have operated and evaluated our computer
operating systems following January 1, 2000 and have not identified any errors
or experienced any computer system malfunctions. We will continue to monitor our
information systems to assess whether our systems are at risk of misinterpreting
any future dates and will develop appropriate contingency plans to prevent any
potential system malfunction or correct any system failures. The Company has not
been informed of any such problem experienced by its vendors or its customers,
nor by any of the municipal agencies that provide services to the Company.
Nevertheless, it is too soon to conclude that there will not be any problems
arising from the Year 2000 problem, particularly at some of the Company's
vendors. The Company will continue to monitor its significant vendors of goods
and services with respect to Year 2000 problems they may encounter as those
issues affect the Company's ability to continue operations, or might adversely
affect the Company's ability to continue operations, or might adversely affect
the Company's financial position, results of operations and cash flows. The
Company does not believe at this time that these potential problems will
materially impact the ability of the Company to continue its operations;
however, no assurance can be given that this will be the case.
47
<PAGE>
DIRECTORS
Jack O. Cartner, President
Motrim Inc., Cambridge, OH
Paul W. Donahie, President
American Bancorporation, Wheeling, WV
Abigail McCamic Feinknopf
Feinknopf Photography, Columbus, OH
Jay T. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
Jeffrey W. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
Jeremy C. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
Jolyon W. McCamic, Attorney at Law
McCamic & McCamic, Wheeling, WV
The Honorable John J. Malik, Jr., Retired
Probate Court Judge, Belmont County, Ohio
OFFICERS
Jeremy C. McCamic, Chairman & CEO
Jolyon W. McCamic, Vice Chairman/Administration
Paul W. Donahie, President
Brent E. Richmond, Executive Vice President, Chief Operating Officer
Jeffrey A. Baran, CPA, Chief Financial Officer
John H. Och, IV, CPA, Controller
Linda M. Woodfin, Secretary
Paul W. Donahie, President
Wheeling National Bank
Mark D. Krupinski, President
American Bancdata Corporation
John J. Rataiczak, President
American Mortgages, Inc.
48
<PAGE>
CORPORATE INFORMATION
Annual Meeting
The annual meeting of shareholders will be held in Wheeling, West Virginia
at the corporate offices, located at Suite 800, Mull Center, 1025 Main Street.
The meeting will convene at 10:00 A.M. (E.D.S.T.) May 17, 2000. All shareholders
are invited to attend.
Stock Transfer Agent
American Bancservices, Inc.
1025 Main Street - Suite 800
Wheeling, WV 26003
Stock Listing
American Bancorporation's common stock trades on The Nasdaq Stock Market
under the symbol AMBC. Shares of American Bancorporation's Capital Trust
Preferred trade on The Nasdaq Stock Market under the symbol AMBCP.
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
Stockholders may receive a copy of American Bancorporation's 1999Annual
Report on Form 10K, as filed with the Securities Exchange Commission, upon
written request to the Secretary, American Bancorporation, 1025 Main Street,
Suite 800, Wheeling, WV
26003.
Independent Certified Public Accountants
KPMG LLP
Pittsburgh, PA
Securities Counsel
Maloney & Knox LLP
Washington, DC
49
<PAGE>
AMERICAN BANCORPORATION
1025 MAIN STREET
SUITE 800, MULL CENTER
WHEELING, WV 26003
(304) 233-5006
AMERICAN MORTGAGES, INC. AMERICAN BANCDATA CORP.
2B ELM GROVE CROSSING 1025 MAIN STREET
WHEELING, WV 26003 SUITE 800, MULL CENTER
(304) 242-1010 WHEELING, WV 26003
(304) 232-0957
WHEELING NATIONAL BANK
Ohio Locations
BARNESVILLE CAMBRIDGE DOWNTOWN COLUMBUS
(740) 425-3696 (740) 439-4444 (614) 228-0070
FLUSHING FREEPORT GAHANNA
(740) 968-3541 (740) 658-3370 (614) 475-6162
GAHANNA -
STONE RIDGE PLAZA REYNOLDSBURG SHADYSIDE
(614) 337-1200 (614) 759-0400 (740) 676-1110
ST. CLAIRSVILLE MALL ST. CLAIRSVILLE STEUBENVILLE
(740) 695-4361 (740) 695-3291 (740) 266-2361
West Virginia Locations
ELM GROVE NEW MARTINSVILLE PINE GROVE
(304) 242-9401 (304) 455-2000 (304) 889-2500
THREE SPRINGS DRIVE WEIRTON WHEELING - MARKET ST.
(304) 723-4105 (304) 748-1717 (304) 232-0110
WHEELING - MAIN ST. WHEELING ISLAND
(304) 233-3136 (304) 232-2760
Pennsylvania Locations
WASHINGTON (Loan Production Office)
(724) 225-4220
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 11,774,610
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,823,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 298,153,127
<INVESTMENTS-CARRYING> 298,153,127
<INVESTMENTS-MARKET> 298,153,127
<LOANS> 371,223,074
<ALLOWANCE> 3,079,796
<TOTAL-ASSETS> 711,290,996
<DEPOSITS> 449,277,493
<SHORT-TERM> 214,593,201
<LIABILITIES-OTHER> 2,511,496
<LONG-TERM> 4,079,845
<COMMON> 7,824,185
0
0
<OTHER-SE> 20,354,776
<TOTAL-LIABILITIES-AND-EQUITY> 711,290,996
<INTEREST-LOAN> 28,501,782
<INTEREST-INVEST> 18,751,065
<INTEREST-OTHER> 365,400
<INTEREST-TOTAL> 47,618,247
<INTEREST-DEPOSIT> 17,900,237
<INTEREST-EXPENSE> 29,171,232
<INTEREST-INCOME-NET> 18,447,015
<LOAN-LOSSES> 420,000
<SECURITIES-GAINS> 342,967
<EXPENSE-OTHER> 14,650,282
<INCOME-PRETAX> 6,880,721
<INCOME-PRE-EXTRAORDINARY> 5,353,819
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,353,819
<EPS-BASIC> 1.71
<EPS-DILUTED> 1.71
<YIELD-ACTUAL> 0285
<LOANS-NON> 1,248,000
<LOANS-PAST> 1,122,000
<LOANS-TROUBLED> 360,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,042,269
<CHARGE-OFFS> 527,481
<RECOVERIES> 145,008
<ALLOWANCE-CLOSE> 3,079,796
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
