FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
American Bancorporation
(Exact name of registrant as specified in its charter)
Ohio 31-0724349
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1025 Main Street, Suite 800, Wheeling, WV 26003
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
April 7, 2000: 3,129,674 shares of Common stock without par value
Number of pages comprising
this report. .. . . . 12
1
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Item 1
Financial Statements
Condensed Consolidated Balance Sheets.................... 3
Condensed Consolidated Statements of Income.............. 4
Condensed Consolidated Statements of
Cash Flows..................................... 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity................ 6
Notes to the Financial Statements............................ 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 7
Item 3 Quantitative and Qualitative Disclosures
about Market Risk................................... 11
Part II OTHER INFORMATION
Item 1 Legal Proceedings........................................ None
Item 2 Changes in Securities.................................... None
Item 3 Defaults Upon Senior Securities.......................... None
Item 4 Submission of Matters to a
Vote of Security Holders............................ None
Item 5 Other Information........................................ None
Item 6 Exhibits and Reports on Form 8-K......................... None
SIGNATURES................................................................ 12
2
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
Part 1 Financial Information
Item 1 Financial Statements
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999 1999
<S> <C> <C> <C>
------------- ------------- -------------
ASSETS
Cash and due from banks ....................... $ 10,996,219 $ 15,208,281 $ 11,774,610
Federal funds sold ............................ 1,307,000 8,096,025 4,823,000
Investment securities available for sale ...... 291,469,167 300,929,464 298,153,127
Loans, net of unearned income ................. 396,189,345 307,900,341 371,223,074
Less: Allowance for loan losses ............. 3,198,353 3,028,522 3,079,796
------------- ------------- -------------
392,990,992 304,871,819 368,143,278
Due from broker ............................... -- 17,081,291 --
Premises and equipment - net .................. 10,026,301 9,700,257 10,214,208
Accrued interest receivable ................... 4,432,815 4,064,177 4,469,869
Excess of cost over net assets acquired ....... 1,286,208 1,564,013 1,355,659
Other assets .................................. 12,151,584 6,684,211 12,357,245
------------- ------------- -------------
TOTAL ASSETS ............................. $ 724,660,286 $ 668,199,538 $ 711,290,996
============= ============= =============
LIABILITIES
Deposits
Non-interest bearing ....................... $ 39,638,172 $ 36,682,582 $ 37,959,587
Interest bearing ........................... 418,779,322 393,648,852 411,317,906
------------- ------------- -------------
TOTAL DEPOSITS ......................... 458,417,494 430,331,434 449,277,493
Borrowed funds ................................ 215,223,595 165,223,065 214,593,201
Due to broker ................................. -- 16,026,227 --
Accrued interest payable ...................... 2,653,915 2,375,242 2,511,496
Other liabilities ............................. 5,294,422 5,248,231 4,079,845
Company obligated mandatorily redeemable
trust preferred securities of subsidiary trust
holding solely junior subordinated debentures
of the Company ............................... 12,650,000 12,650,000 12,650,000
------------- ------------- -------------
TOTAL LIABILITIES ......................... 694,239,426 631,854,199 683,112,035
STOCKHOLDERS' EQUITY
Preferred stock ............................. -- -- --
Common stock without par value, stated value
$2.50, authorized 6,500,000 shares, issued
and outstanding 3,129,674 .................. 7,824,185 7,824,185 7,824,185
Additional paid-in capital .................. 10,301,982 10,301,982 10,301,982
Retained earnings ........................... 22,777,532 19,245,310 21,906,156
Accumulated other comprehensive
results, net of tax benefit ............. (10,482,839) (1,026,138) (11,853,362)
------------- ------------- -------------
TOTAL STOCKHOLDERS' EQUITY .................. 30,420,860 36,345,339 28,178,961
------------- ------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................... $ 724,660,286 $ 668,199,538 $ 711,290,996
============= ============= =============
</TABLE>
3
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months ended March 31,
2000 1999
----------- -----------
INTEREST INCOME
Loans ............................................. $ 8,086,983 $ 6,486,015
Investment securities
Taxable interest income .......................... 4,032,817 3,756,007
Non-taxable interest income ...................... 761,232 545,879
----------- -----------
4,794,049 4,301,886
Short-term investments ............................ 60,720 123,373
----------- -----------
Total interest income ........................... 12,941,752 10,911,274
INTEREST EXPENSE
Deposits .......................................... 4,909,847 4,445,526
Borrowed funds .................................... 3,389,850 2,162,026
----------- -----------
Total interest expense .......................... 8,299,697 6,607,552
----------- -----------
NET INTEREST INCOME ........................... 4,642,055 4,303,722
PROVISION FOR LOAN LOSSES .......................... 180,000 75,000
----------- -----------
Net interest income after provision for loan losses 4,462,055 4,228,722
OTHER INCOME
Service charges on deposit accounts ............... 208,797 172,265
Net securities gains .............................. -- 267,812
Net gains on sale of loans ........................ 272,025 405,766
Insurance commissions ............................. 23,765 19,044
Other income ...................................... 298,967 134,753
----------- -----------
Total other income .............................. 803,554 999,640
OTHER EXPENSE
Salaries and employee benefits .................... 1,682,983 1,772,794
Occupancy expense ................................. 672,245 633,692
Other expenses .................................... 1,222,388 1,235,864
----------- -----------
Total other expense ............................. 3,577,616 3,642,350
----------- -----------
INCOME BEFORE INCOME TAXES ......................... 1,687,993 1,586,012
PROVISION FOR INCOME TAXES ......................... 347,166 301,392
----------- -----------
NET INCOME ......................................... $ 1,340,827 $ 1,284,620
=========== ===========
Average Shares Outstanding ....................... 3,129,674 3,129,674
BASIC EARNINGS PER SHARE ....................... $ 0.43 $ 0.41
4
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AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31,
2000 1999
<S> <C> <C>
----------- ------------
Operating Activities:
Net Income................................................................. $ 1,340,827 $ 1,284,620
Adjustments to reconcile net income to net cash from operating activities:
Depreciation........................................................... 230,902 216,623
Amortization of intangibles............................................ 69,451 69,451
Net amortization of premium on investment securities................... 109,292 337,493
Provision for loan losses.............................................. 180,000 75,000
Net gain on sale of investment securities.............................. - (267,812)
Net gain on sale of loans.............................................. (272,025) (405,766)
Net (increase)decrease in accrued interest receivable.................. 37,054 (670,840)
Net increase in accrued interest payable............................... 142,419 68,388
Real estate mortgage loans originated for sale......................... (14,001,804) (26,493,845)
Proceeds from sale of real estate mortgage loans....................... 13,010,450 26,138,924
Net increase in other assets........................................... (661,557) (737,288)
Net increase in other liabilities...................................... 1,214,578 382,127
Net decrease from other operating activities........................... (81,077) (162,966)
----------- ------------
Net cash provided by operating activities............................. 1,318,510 (165,891)
Investing Activities:
Investment securities available for sale:
Proceeds from maturities and repayments.............................. 9,942,609 27,988,859
Proceeds from sales.................................................. - -
Purchases............................................................ (1,157,421) (67,744,083)
Change in loans, net of real estate mortgage loans originated for sale..... (23,764,335) (6,606,510)
Purchase of premises and equipment......................................... (52,995) (181,298)
Proceeds from sale of premises and equipment............................... 118,297 -
-----------
Net cash used by investing activities.................................. (14,913,845) (46,543,039)
Financing Activities:
Net increase (decrease) in non-interest bearing demand deposits............ 1,678,585 (2,815,035)
Net increase in interest bearing demand and savings deposits............... 10,624,127 73,875
Net increase (decrease) in time deposits................................... (3,162,711) 1,832,399
Net increase in borrowed funds............................................. 630,394 41,331,882
Principal repayment of long-term debt...................................... - (3,633)
Cash dividends paid........................................................ (469,451) (469,453)
----------- -----------
Net cash provided by financing activities............................. 9,300,944 39,950,035
----------- -----------
Net Decrease in Cash and Cash Equivalents................................... (4,294,391) (6,758,895)
Cash and Cash Equivalents Beginning Balance.................................. 16,597,610 30,063,201
------------ ------------
Cash and Cash Equivalents Ending Balance.....................................$ 12,303,219 $ 23,304,306
============ ============
Supplemental disclosure of cash-flow information:
Non-cash investing and financial activities:
Securities purchased not settled....................................... - 16,026,227
Securities sold not settled............................................ - 16,813,479
</TABLE>
5
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
Three months ended March 31, 2000 and 1999
2000 1999
----------- -----------
Balance at January 1,............................ $28,178,961 $36,447,493
Comprehensive results:
Net Income...................................... 1,340,827 1,284,620
Unrealized security gain (loss), net of tax..... 1,370,523 (719,971)
Reclassification adjustment, net of tax......... - (197,352)
----------- -----------
Total comprehensive results................... 2,711,350 367,297
Dividends declared ($0.15 per share 2000,
$0.15 per share 1999).................... (469,451) (469,451)
----------- -----------
Balance at March 31,............................. $30,420,860 36,345,339
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim condensed consolidated financial statements reflect
all adjustments which, in the opinion of management, are necessary to a fair
presentation of the financial position and results of operations. All
adjustments are of a normal recurring nature. The notes to the financial
statements contained in the 1999 Annual Report to Stockholders should be read in
conjunction with these statements. Certain prior period amounts have been
reclassified to conform to the current period classification.
6
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
The following is a discussion of significant factors influencing operating
performance and change in financial position during the interim periods
presented. The discussion should be read in connection with the 1999 Annual
Report and the financial statements appearing elsewhere herein.
SUMMARY
American Bancorporation (the "Company") recognized net income of $1,341,000
or $0.43 basic earnings per share, for the three months ended March 31, 2000,
compared to net income of $1,285,000 or $0.41 basic earnings per share, for the
three months ended March 31, 1999. Return on average assets and return on
average equity were 0.74% and 18.71%, respectively, for the three months ended
March 31, 2000 compared to 0.80% and 14.02%, respectively, for the three months
ended March 31, 1999.
Total assets at March 31, 2000 increased to $724,660,000, from $668,200,000
at March 31, 1999, an increase of 8.4%. Loans outstanding at March 31, 2000
increased to $396,189,000 from $307,900,000 at March 31, 1999, an increase of
28.7%. Deposits increased to $458,417,000 at March 31, 2000, from $430,331,000
at March 31, 1999, an increase of 6.5%. Total stockholders' equity was
$30,421,000 at March 31, 2000 compared with $36,345,000 at March 31, 1999, a
decrease of 16.3%. Stockholders' equity, excluding net unrealized gains and
losses, totalled $40,904,000 at March 31, 2000, an increase of $3,532,000 or
9.5% compared to March 31, 1999. The unrealized loss on investment securities
available for sale, a result of market value adjustments, totalled $10,483,000
at March 31, 2000, compared to $1,026,000 at March 31, 1999. If these available
for sale securities are held to maturity, no market value adjustment will be
realized.
RESULTS OF OPERATIONS
QUARTER COMPARISON
Net Income. Net income for the three months ended March 31, 2000 amounted
to $1,341,000, or $0.43 basic earnings per share, compared to net income of
$1,285,000 or $0.41 basic earnings per share, for the three months ended March
31, 1999. The increase was the result of an increase in net interest income and
a decrease in other expense which was partially offset by a decrease in other
income and an increase in provision for loan losses.
Net Interest Income. Net interest income before provision for loan losses
for the three months ended March 31, 2000 amounted to $4,642,000, an increase of
$338,000 or 7.9%, compared to the three months ended March 31, 1999. The
increase resulted primarily from a $73,945,000 increase in average interest
earning assets.
7
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
Total interest income for the three months ended March 31, 2000 amounted to
$12,942,000, an increase of $2,030,000 or 18.6%, compared to the three months
ended March 31, 1999. The increase resulted from the increase in the average
interest earning assets and a 41 basis point increase in the average yield on
earning assets. Average loans outstanding increased $82,777,000 or 27.1% with
average commercial loans increasing $36,260,000 or 29.8%, average real estate
loans increasing $24,624,000 or 18.1% and average consumer installment loans
increasing $21,893,000 or 45.9%. The average yield on loans decreased from 8.50%
in 1999 to 8.34% in 2000. Average investment securities and other short-term
investments outstanding decreased $8,832,000 or 2.9% while the average yield
increased from 5.83% in 1999 to 6.59% in 2000.
Total interest expense for the three months ended March 31, 2000 amounted
to $8,300,000, an increase of $1,692,000 or 25.6%, compared to the three months
ended March 31, 1999. The increase resulted primarily from an $87,981,000 or
15.8% increase in average interest bearing liabilities and a 40 basis point
increase in interest rates paid on such liabilities. Average NOW, money market
and savings accounts decreased $2,114,000 or 1.8%. Average time deposits
increased $34,099,000 or 28.9%. Average time deposits decreased $10,628,000 or
3.9%. Average non-interest bearing accounts increased $2,536,000 or 6.9% and
represented 8.6% of average total deposits for the three months ended March 31,
2000. Average borrowed funds increased $64,519,000 or 42.1%, and the average
rate paid on borrowed funds increased from 4.92% in 1999 to 5.72% in 2000.
Provision for Loan Losses. The loan loss provision for the three months
ended March 31, 2000 was $180,000, compared to $75,000 for the same period in
1999.
Other Income. Other income for the three months ended March 31, 2000
amounted to $804,000, a decrease of $196,000 or 19.6% compared to the three
months ended March 31, 1999. There were no securities gains during the three
months ended March 31, 2000, compared to net gains on sale of investment
securities of $268,000 in 1999. Net gains on sale of loans totalled $272,000 in
2000, compared to $406,000 for the three months ended March 31, 1999, a decrease
of 33.0%. Other (miscellaneous) income in 2000 included a $120,000 gain on sale
of former branch property.
Other Expense. Total other expense for the three months ended March 31,
2000 amounted to $3,578,000, a decrease of $65,000 or 1.8%, compared to the
three months ended March 31, 1999. Salaries and employee benefits decreased
$90,000 or 5.1%. Occupancy and equipment expense increased $39,000 or 6.1%.
Other (miscellaneous) expenses decreased $13,000 or 1.1%.
Provision for Income Taxes. The provision for income taxes for the three
months ended March 31, 2000 was $347,000, compared to $301,000 for the three
months ended March 31, 1999. The increase is primarily the result of additional
taxable income.
8
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
ASSET QUALITY
Nonperforming loans totalled $3,605,000 or 0.9% of total loans at March
31, 2000, compared to $2,730,000 or 0.7% at December 31, 1999. Nonperforming
loans at March 31, 2000 consisted of nonaccrual loans totalling $1,153,000, 90
day delinquent loans of $2,106,000, and restructured loans aggregating $346,000.
Other real estate held totalled $506,000 at March 31, 2000, compared to $536,000
at December 31, 1999.
CAPITAL RESOURCES
Stockholders' equity totalled $30,421,000 at March 31, 2000. The
Company's risk-based capital ratio was 13.8%, of which 13.0% constituted common
stockholder equity, while the risk-based capital ratio for the Company's bank
subsidiary, Wheeling National Bank, was 13.2%, with common stockholders' equity
of 12.4%. At March 31, 2000 the Company's leverage capital ratio was 7.3%, while
the leverage ratio for Wheeling National Bank was 6.9%.
9
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
Three months ended March 31,
2000 1999
Average Yield/ Average Yield/
Balance Rate Balance Rate
INTEREST EARNING ASSETS (000's) (000's)
Loans
Commercial............................. $157,985 8.66% $121,725 8.57%
Real estate............................ 160,502 7.70 135,878 8.14
Installment-net........................ 69,607 8.27 47,714 8.39
-------- --------
Total loans ........................ 388,094 8.34 305,317 8.50
Investment securities
Taxable................................ 234,898 6.87 247,215 6.08
Tax-exempt............................. 56,738 5.37 47,244 4.62
-------- --------
Total investment securities ........ 291,636 6.58 294,459 5.84
Other short-term investments............ 2,998 8.10 9,007 5.48
-------- --------
Total interest earning assets........ $682,728 7.58 $608,783 7.17
======== ========
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings and MMDA................. $152,115 3.31% $118,016 2.26%
Time.................................. 263,556 5.54 274,184 5.51
-------- --------
Total deposits....................... 415,671 4.72 392,200 4.53
Borrowed funds......................... 217,834 5.72 153,315 4.92
Long-term debt......................... 12,650 8.70 12,659 8.71
-------- --------
Total interest
bearing liabilities.............. $646,155 5.14 $558,174 4.74
======== ========
MARGIN ANALYSIS
(as a % of earning assets)
Interest income......................... 7.58% 7.17%
Interest expense........................ 4.86 4.34
---- ----
Net interest income..................... 2.72% 2.83%
==== ====
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.
10
<PAGE>
AMERICAN BANCORPORATION FORM 10-Q Quarterly Report
March 31, 2000
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures about market risk are
presented at December 31, 1999 in Item 7a of the Company's Annual Report on Form
10-K filed with the SEC on March 30, 2000. Management believes there have been
no material changes in the Company's market risk since December 31, 1999.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
B. Reports on Form 8-K:
Date Item Description
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BANCORPORATION
(Registrant)
Date May 15, 2000 /s/ Jeremy C. McCamic
Jeremy C. McCamic
Chairman and
Chief Executive Officer
Date May 15, 2000 /s/ Brent E. Richmond
Brent E. Richmond
Executive Vice President and
Chief Operating Officer
Date May 15, 2000 /s/ Jeffrey A. Baran
Jeffrey A. Baran
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 10,708,543
<INT-BEARING-DEPOSITS> 287,676
<FED-FUNDS-SOLD> 1,307,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 291,469,167
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 396,189,345
<ALLOWANCE> 3,198,353
<TOTAL-ASSETS> 724,660,286
<DEPOSITS> 458,417,494
<SHORT-TERM> 215,223,595
<LIABILITIES-OTHER> 7,948,337
<LONG-TERM> 12,650,000
<COMMON> 7,824,185
0
0
<OTHER-SE> 22,596,675
<TOTAL-LIABILITIES-AND-EQUITY> 724,660,286
<INTEREST-LOAN> 8,086,983
<INTEREST-INVEST> 4,794,049
<INTEREST-OTHER> 60,720
<INTEREST-TOTAL> 12,941,752
<INTEREST-DEPOSIT> 4,909,847
<INTEREST-EXPENSE> 8,299,697
<INTEREST-INCOME-NET> 4,462,055
<LOAN-LOSSES> 180,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,577,616
<INCOME-PRETAX> 1,687,993
<INCOME-PRE-EXTRAORDINARY> 1,340,827
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,340,827
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.43
<YIELD-ACTUAL> 0272
<LOANS-NON> 1,153,000
<LOANS-PAST> 2,106,000
<LOANS-TROUBLED> 346,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
