UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ___________________ to _______________.
Commission File Number 0-181227
AMERICAN BANCORP OF NEVADA
(Exact Name of Registrant as Specified in its Charter)
Nevada 94-2792608
- ------------------------------- ------------------------------------
(State of Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
4425 Spring Mountain Road, Las Vegas, Nevada 89102
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (702) 362-7222
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
None None
Securities registered pursuant to section 12(g) of the Act:
Common, $.05 par value
----------------------
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]
As of March 18, 1996, the aggregate market value of the voting shares
held by nonaffiliates of the Registrant was approximately $59,504,677 computed
using a price of $18.50 per share.
The number of shares of Common Stock, $.05 par value outstanding as of
March 18, 1996, according to the records of registrant's registrar and transfer
agent was 3,216,469. .
DOCUMENTS INCORPORATED BY REFERENCE
Part III - Portions of the registrant's proxy statement to be filed in
conjunction with the annual meeting of the stockholders of the registrant to be
held on April 15, 1996, are incorporated by reference into items 10 through 13
inclusive.
<PAGE>
PART I
ITEM 1 - BUSINESS
a. General Development of Business
American Bancorp of Nevada ("Bancorp") was organized and incorporated under the
laws of the State of Nevada on January 12, 1982, for the purpose of becoming a
bank holding company by acquiring all of the outstanding capital stock of
American Bank of Commerce ("Bank"). The reorganization of Bancorp was completed
on August 5, 1982. Bancorp has three subsidiaries: Bank, a Nevada
state-chartered bank headquartered in Las Vegas, Nevada as of November 26, 1979;
AmBank Financial, Inc. ("Financing Company") and AmBank Mortgage Company
("Mortgage Company"), which were incorporated in late 1982, but did not operate
until January, 1983.
On September 14, 1984, Financing Company ceased operations and the assets and
liabilities were transferred to either Bank or Bancorp. It was not the intent to
dissolve Financing Company, but rather suspend operations while leaving the
initial $150,000 in capital stock intact for possible future use. Subsequently,
$75,000 in capital was returned to Bancorp.
With its inception in early 1983, Mortgage Company was basically the only
operation of its kind in Las Vegas. However, during 1984 competition became very
fierce as other mortgage companies entered the Las Vegas market. This had a
noticeable effect on the growth of the Mortgage Company. During the fourth
quarter of 1985, management determined that the Mortgage Company was no longer a
viable entity that could be counted on to contribute to the progress of the
organization and operations have been substantially suspended since this time.
Bank was incorporated under the laws of the State of Nevada on June 8, 1979, and
was licensed by the Nevada State Banking Department and commenced operations as
a Nevada state-chartered bank on November 26, 1979. Bank is an insured bank
under the Federal Deposit Insurance Act, up to the applicable limits thereof,
but, like many state-chartered banks of its size, it is not a member of the
Federal Reserve System.
The primary services provided by the Bank include commercial, construction, and
real estate financing, and business loans to customers who are predominantly
small- and middle-market businesses. The bank also grants consumer loans to
individuals, offers a full array of depository accounts and provides full trust
and estate administration services.
The Company's business is concentrated in Southern Nevada and is subject to the
general economic conditions of this area.
Bank currently operates out of its head office at 4425 Spring Mountain Road, Las
Vegas, Nevada, 89102. It also operates out of three branch offices, all located
in Las Vegas, Nevada.
b. Financial Information About Industry Segments
Bancorp has no industry segments other than banking related operations.
<PAGE>
c. Narrative Description of Business
Regulation and Supervision of the Holding Company
Upon the reorganization of Bank on August 5, 1982, Bancorp became a bank holding
company within the meaning of the Bank Holding Company Act of 1956, as amended,
(the "Act"), and is subject to the supervision and regulation of the Board of
Governors of the Federal Reserve System, (the "Board"). Bank is currently
subject to regulation by the Superintendent of Banks and by the Federal Deposit
Insurance Corporation ("FDIC"). Bank will remain under the supervision of these
regulatory authorities.
As a bank holding company, Bancorp is required to file annual reports and other
information concerning its business operations and those of its subsidiaries as
the Federal Reserve Board may require pursuant to the Act. Bancorp and its
subsidiaries are also subject to examination by the Board.
Bancorp is required to obtain the prior approval of the Board before it may
acquire all or substantially all of the assets of any bank, or ownership or
control of voting securities of any bank, or ownership or control of voting
securities of any bank if, after giving effect to such acquisition, Bancorp
would own or control more than 5 percent of the voting shares of such bank.
Bancorp is prohibited from acquiring 5 percent or more of a bank's stock if the
bank is located outside the State of Nevada, unless such acquisition is
specifically authorized by the laws of the state in which the bank is located.
Furthermore, Bancorp is prohibited from engaging in or acquiring, directly or
indirectly, control of more than 5 percent of the voting shares of any company
which is engaged in non-banking activities. In making such determinations, the
Board considers whether the performance of such activities by a bank holding
company would offer advantages to the public which outweigh possible adverse
effects. One of the exceptions to this prohibition is the acquisition of shares
of a company, the activities of which the Board has determined to be so closely
related to banking, or managing or controlling banks, as to be a proper incident
thereof.
A bank holding company and its subsidiaries are also prohibited from engaging in
certain tie-in arrangements in connection with extensions of credit, leases,
sales, or the furnishing of services. For example, the banking subsidiaries will
generally be prohibited from extending credit to a customer on the condition
that the customer also obtain other services furnished by the bank, the holding
company, or any of its subsidiaries, or on the condition that the customer
promise not to obtain financial services from a competitor.
Bancorp and any subsidiaries which it may acquire or organize after the
reorganization will be deemed "affiliates" within the meaning of the Federal
Reserve Act. Pursuant thereto, loans by the banking subsidiaries to affiliates,
investments by the Bank in affiliates' stock, and taking affiliates' stock by
the Bank as collateral for loans to any borrower will be generally limited to 10
percent of the Bank's capital, in the case of any one affiliate, and will be
limited to 20 percent of the Bank's capital, in the case of all affiliates.
Bancorp and its subsidiaries will also be subject to certain restrictions with
respect to engaging in the underwriting, public sale and distribution of
securities.
The Nevada Revised Statutes provide that a holding company and its subsidiaries
are subject to regular examination by and may be required to file reports with
the Superintendent of Banks.
<PAGE>
The Board under Regulation "Y" permits bank holding companies to engage in
non-banking activities closely related to banking or managing or controlling
banks, subject to Board approval in individual cases. In making such
determination, the Board considers whether the performance of such activities by
the bank holding company would offer advantages to the public which outweigh
possible adverse effects. Most of these activities are also permitted by Nevada
banks. While the types of permissible activity are subject to change by the
Board, the major non-banking activities which presently may be carried on by a
bank holding company or its affiliates are:
1. Making or acquiring loans and other extensions of credit for its own
account or for the account of others.
2. Operating as an industrial bank, Morris Plan bank, or industrial loan
company, in the manner authorized by state law, so long as the
institution does not accept demand deposits and make commercial loans.
3. Servicing loans and other extensions of credit for any person.
4. Engaging in certain activities performed by a trust company in the
manner authorized by federal or state law, so long as the institution
does not make certain types of loans or investments or accept deposits,
except as permitted by Regulation "Y".
5. Subject to certain limitations, acting as an investment or financial
adviser to investment companies and other persons.
6. Leasing personal and real property or acting as agent, broker, or
adviser in leasing such property, in accordance with various
restrictions contained in Regulation "Y", provided that it is reasonably
anticipated that the transaction will compensate the lessor for not less
than the lessor's full investment in the property, and provided the
lease is a functional equivalent of an extension of credit and meets
certain other requirements.
7. Making equity and debt investments in corporations or projects designed
primarily to promote community welfare.
8. Providing financially-oriented bookkeeping data processing services for
the internal operations of itself and it subsidiaries.
9. Acting as an insurance agent or broker in relation to insurance for
itself and its subsidiaries or for insurance directly related to an
extension of credit or other financial services by a bank or
bank-related firm.
10. Acting as underwriter for credit life insurance and credit accident and
health insurance which is directly related to extensions of credit by
the bank holding company system.
11. Providing management consulting advice to non-affiliated banks, provided
that certain conditions are met.
12. Providing courier services of limited character.
13. Selling cashier's checks, travelers' checks and U.S. Savings Bonds.
14. Providing real estate appraisal services.
15. Commercial real estate equity financing.
16. Underwriting and dealing in government and certain money market
obligations.
17. Providing foreign currency exchange advisory and transactional services.
18. Acting as a futures commission merchant.
19. Providing discount brokerage services.
<PAGE>
Bancorp may also file applications to engage in or acquire businesses other than
those listed above, but the Board will publish a notice of opportunity for
hearing only if it believes that there is a reasonable basis for concurring in
Bancorp's view that the activity applied for is closely related to banking.
There has been litigation from time to time challenging the validity of certain
activities authorized by the Board, and there are various regulations concerning
permissible activities under consideration by the Board.
Bank's operations include the acceptance of checking and savings deposits, and
the making of commercial, real estate, home improvement, construction,
automobile and other vehicle loans, and other consumer loans. Bank also offers
many customary services, including, but not limited to, cashier's checks,
bank-by-mail, automatic check deposit and traveler's checks.
In July of 1985, the Bank began operation of the Financial Services department.
This department has full trust powers, but has specialized in pension and profit
sharing plan administration. To date, the business development efforts in
obtaining accounts has been successful and the Bank anticipates future growth
and profitability from this operation.
The banking business in Nevada, and in the market served by Bank, is highly
competitive. Bank competes for loans and deposits with other commercial banks,
savings banks, finance companies, credit unions, and other financial
institutions. In addition, other entities (both governmental and private
industry) seeking to raise capital through the issuance and sale of debt or
equity securities also provide competition for Bank in the acquisition of
deposits. Larger commercial banks have greater lending limits than Bank and may
perform certain other functions which Bank does not currently offer.
Moreover, federal legislation may result in increased competition. On March 31,
1980, the Depository Institutions Deregulation and Monetary Control Act of 1980
("DIDA") was signed into law. Effective December 31, 1980, DIDA authorized banks
to offer negotiable order of withdrawal ("NOW") accounts. In addition, DIDA
increased the ability of non-banking institutions to compete with banks,
including permitting savings and loan associations and credit unions to offer
NOW accounts, and to make all types of consumer loans. Further, DIDA imposed new
reserve requirements, phased in over an eight year period, on all transaction
accounts (demand deposit accounts, NOW accounts, and savings accounts) subject
to automatic transfers for all depository institutions, including banks,
regardless of whether they are members of the Federal Reserve System. The
Garn-St. Germain Depository Institutions Act of 1982 (the "Act") was signed into
law on October 15, 1982. The Act allows banks and savings and loan associations
to offer accounts directly equivalent to and competitive with money market
funds. These accounts are not subject to an interest rate ceiling, unless the
average balance falls below the minimum balance requirement of $1,000.00
effective January 1, 1985. If this should occur, the NOW account ceiling will be
imposed. The Act allows up to six transfers per month on such accounts, no more
than three of which can be effectuated by draft. The Act also accelerated the
phase-out of the differential between the maximum rate of interest that savings
and loan associations are permitted to pay.
The Act increased the limit on amounts which may be lent by a national bank to
an individual borrower from 10 percent to 15 percent of a bank's unimpaired
capital and unimpaired surplus for unsecured loans and an additional 10 percent
for loans fully secured by readily marketable capital. In addition, federal
savings and loans and savings banks are provided with commercial, agricultural
and corporate lending authority up to 5 percent of assets beginning on the date
of enactment of the bill (7 1/2 percent for federal savings banks) and 10
percent after January 1, 1984. The Act also affected the real estate lending
market, by pre-empting state prohibitions on enforcement of due-on-sale clauses
in mortgages and deeds of trust. In the case of loans originated or assumed
during the period between state action prohibiting such enforcement and the
enactment of the Act, enforcement of any due-on sale clause will be deferred for
three years from date of enactment of the Act. During that three year period,
any state legislature may enact legislation which shortens the three year
deferral period insofar as it applies to loans originated in that state by
lenders other than national banks, federal savings and loan associations,
federal savings banks, and federal credit unions. The effect of the Act has been
to increase the ability of all banks and savings and loan associations to
compete with non-banking institutions by allowing banks and savings and loan
associations to offer accounts equivalent to and competitive with money market
funds. However, such accounts have also increased banks' and savings and loan
associations' cost of funds.
<PAGE>
In order to compete with other financial institutions in its primary service
area, Bank relies principally upon local promotional activities, customer
referrals, personal contact by its officers, directors, employees and
shareholders, extended hours and specialized services. During 1995 and 1994, a
total of four new banks opened in Las Vegas which are targeting Bank's customer
market.
While there are twelve commercial banks in the service area, Bank believes its
emphasis on customer service and personal contact set it apart from its
competitors. Concentrating on the small to medium size business account
effectively limits Bank's direct competition to six other banks.
Regulation and Supervision of the Bank
Bank is a Nevada state-chartered bank with commercial banking powers, and its
deposits are insured up to the maximum legal limit by the FDIC. Bank is subject
to supervision, regulation and regular examination by the State of Nevada
Financial Institutions Division and the FDIC. Although Bank is not a member of
the Federal Reserve System, it is nevertheless, subject to certain regulations
of the Board of Governors of the Federal Reserve System. The statutes and rules
administered by these agencies regulate the investment activities of Bank,
loans, certain of its check-clearing activities, payments of dividends, the
establishment of new branches, as well as numerous other aspects of the banking
business.
Effective January 1994, banks are required to allocate securities held in their
investment portfolios into one of three accounts, each with different accounting
treatments regarding value and affect on earnings or capital. Securities
designated as "held-to-maturity" are treated under the old "Cost Basis" with no
adjustments for market conditions. Securities designated as "available-for-sale"
must be "Marked To Market" and a corresponding adjustment must be made to the
Bank's capital account. Those securities that are placed in a "Trading Account"
are "Marked To Market" with the resulting gains and losses included in that
period's earnings. At December 31, 1995 Bank had unrealized gains of $284,000,
net of tax effect, in its "available-for-sale" portfolio, which increased Bank's
total capital accounts.
Bank regulatory agencies adopted Risk-Based capital guidelines and a new
Leverage ratio which became effective December 31, 1990. The standards redefine
capital which is compared with risk-adjusted assets, representing the value of
assets and off-balance-sheet exposures weighted to reflect relative measures of
risk. At December 31, 1995, Bank's tier 1 Core Capital to risk weighted assets
was 16.8%, Total Capital to risk weighted assets was 17.6% and the Leverage
ratio was 9.8%, all above the current minimum guidelines of 4.0%, 8.0% and 4.0%,
respectively established by regulatory authorities. Bancorp's capital amounts
and ratios are substantially the same as those of the Bank.
In addition, the Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) defined five levels of capital for financial institutions:
Well-capitalized, Adequately capitalized, Undercapitalized, Significantly
undercapitalized and Critically undercapitalized. A bank falls into one of these
levels based on its risk-based ratio and leverage ratio. At December 31, 1995,
Bank falls in the Well-capitalized category.
Government Monetary Policies
The commercial banking business is affected not only by general economic
conditions, but also by the monetary policies of regulatory authorities,
including the Board of Governors of the Federal Reserve System and the FDIC.
These government monetary policies have had a significant effect on the
operating results of commercial banks in general, and are expected to continue
to do so in the future.
The Federal Reserve Board regulates the national supply of bank credit by open
market dealings in United States government securities, changes in the discount
rate on member bank borrowings and changes in reserve requirements against
member bank deposits. The monetary policies of these agencies are influenced by
various factors, including inflation, unemployment, short term and long term
changes in the international trade balance, and the fiscal policies of the
United States government. Future monetary policies, and the affect of such
policies on the future business and earnings of Bancorp and Bank, cannot be
predicted.
<PAGE>
Lending Activities
The following represents the significant categories of loans originated at the
Bank and the related risks associated with each type of lending activity:
Construction Lending: Target market is the small and medium size local builder
developing entry-level or first move up type single family residence tracts.
Bank will typically finance in appropriately sized phases and have pre-sale
requirements. Bank will finance owner-builder single family residence properties
for qualified borrowers. Financing is available on a limited basis for
speculative properties to financially sound borrowers. Voucher control is
required. Risks include over-advance on collateral, environmental hazards,
mis-use of construction funds, project location and quality, and general real
estate market conditions.
Commercial Mortgages: Such loans are used to fund the re-finance or acquisition
of commercial property, which is typically owner occupied, or where owner
occupies a significant portion. These properties are usually of the
office-warehouse configuration. Funding of speculative or income properties is
very limited. Risks include, but not limited to, over-advance on collateral,
single-purpose structure, environmental hazards, and commercial real estate
market conditions.
Business Term: Used to fund equipment purchases and plant expansions. These
loans are usually structured on a fully amortizing basis for term of 3-5 years
and are generally secured by equipment financed. Risks include over-advance on
equipment purchased, insufficient debt service coverage, unique or
single-purpose equipment with a limited re-sale market.
Revolving Lines of Credit: Lines are used to fund short term working capital
needs, finance accounts receivable and inventory purchases. Lines can be secured
or unsecured. Risks include normal credit risks, improper usage, diversion of
funds and the risk of the lines not revolving properly.
Investment Policy
At December 31, 1995, Bancorp had approximately $124,000,000 in its investment
portfolio. As part of Bank's normal operation, deposits not used to fund loans
are invested in a variety of securities offered by the Federal Government and
certain of its agencies, as well as municipalities. The general philosophy of
the Bank is to invest for relatively short periods of time and not try to
outguess the market. The stated policy of the Bank is that 70% of the portfolio
must mature within three years. The policy also stipulates allowable levels of
investments and, in the case of municipal bonds, the acceptable ratings
required. While there is interest rate risk involved with any investment, the
short term nature of the portfolio minimizes Bank's exposure to substantial
fluctuations in interest rates. Additionally, management maintains the majority
of the investment portfolio on a fixed rate basis. When purchasing municipal
bonds, Bank attempts to offset the credit risk by demanding sufficient spreads
to government bonds to compensate for the risk of default. At present, the
portfolio is comprised of approximately 56% Treasuries and Agencies, 15%
Collateralized Mortgage Obligations issued by Government Agencies and 21%
Municipal Bonds.
<PAGE>
Interest Rate Risk
Management attempts to protect earnings from wide shifts in interest rates by
employing the following strategies:
Loans: Approximately 94% of the Bank's loan portfolio is written on an
adjustable basis that floats with the Bank's base rate. Thus, approximately
$88,818,000 reprices immediately upon a change in the base rate.
Investments: Total investments represent approximately 44.92% of total assets at
December 31, 1995. In administering the investment portfolio, management adheres
to the Company's "Investment Portfolio Policy and Guidelines", "Asset/Liability
Policy" and "Interest Rate Risk Policy". These internal policy guidelines
dictate the average life of at least 70% of the investment portfolio to be no
greater than three years. The actual average life of the portfolio at December
31, 1995 was approximately 1.63 years. This strategy of maintaining short
maturities provides maximum flexibility in managing fluctuating interest rates.
Additionally, the majority of the investment portfolio is of a fixed rate
nature. This enables management to provide an underlying level of income,
irrespective of changes in interest rates. Diversification for all areas of
investments is a key element in interest rate risk. Management monitors the
investment portfolio to ensure that an appropriate balance is maintained in
terms of both maturity and type of investment instrument. Monitoring is aided by
the use of a computer program, specializing in Asset/Liability Management and
Interest Rate Risk.
Deposits: Management discourages use of long-term Certificates of Deposit by
consistently paying at or below market rates and not offering greater than
one-year maturities, with the exception of 18 month IRAs and SEPs. At December
31, 1995, approximately 48% of time deposits had a maturity of three months or
less. Due to the large concentration of business accounts, approximately 42% of
all deposits at December 31, 1995 are non-interest bearing.
The above factors provide management the opportunity to maintain favorable net
interest margins under most normal interest rate scenarios.
Employees
Bancorp, together with its subsidiaries, had 113 full-time equivalent employees
as of January 1, 1996.
d. Financial Information About Foreign and Domestic Operations and Export Sales
Not applicable.
ITEM 2 - PROPERTIES
Bancorp operates out of Bank's head office located at 4425 Spring Mountain Road,
Las Vegas, Nevada, 89102. The Bank also operates branch offices located at 727
South 9th Street, Las Vegas, Nevada, 89104, 1690 East Flamingo, Las Vegas,
Nevada, 89119 and at 2980 West Sahara Avenue, Las Vegas, Nevada, 89102. The
Spring Mountain and West Sahara properties are owned by Bank, the construction
of which was provided by internal available funds. The premises for the South
9th and East Flamingo branches are leased. The rental payments for 1995 made for
all premises total $197,894. Leases for the South 9th Street and East Flamingo
offices terminate August 31, 2001 and November 30, 2006, respectively.
<PAGE>
In September 1995, Bancorp began construction on a two-story 17,000 square foot
office complex located adjacent to its site at Spring Mountain Road. The
building offers approximately 13,000 square feet of class "A" leasable office
space. Parking facilities at the site were improved and increased to facilitate
the new building. There are no definite plans for the remaining portion of the
lot. In the third quarter of 1995, the Bank purchased approximately 4.36 acres
of land in the industrial area of North Las Vegas for a new branch location. The
property is located at the southeast corner of Losee and Frehner Roads and will
accommodate a branch facility of approximately 5,000 square feet and two
drive-up windows. Construction of these facilities will be funded by cash flows
from operations.
ITEM 3 - LEGAL PROCEEDINGS
No material legal proceedings are pending against Bancorp or its subsidiaries
other than ordinary, routine litigation incidental to the business of Bancorp
and its subsidiaries.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE>
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
a. Market Information
Bancorp's common stock became listed on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ") on January 18, 1990 and is traded
under the symbol "ABCN". Through January 17, 1990, trading in Bancorp's common
stock was not extensive and such trades could not be characterized as
constituting an active trading market. Bancorp's common stock was traded
over-the counter, was not listed on any exchange, and was not quoted by NASDAQ.
To this extent there was no established public trading market in Bancorp's
securities.
The following table sets forth certain stock quotations for each quarterly
period since January 1, 1994. Stock prices represent the range of high and low
bid quotations from the National Association of Securities Dealers, Inc. Such
market quotations may not represent actual transactions. Amounts have been
adjusted to reflect stock splits and stock dividends.
Stock Price
--------------------------
Quarter Ended High Low
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March, 1996 ..................... $ 16.00 $ 16.00
December, 1995 .................. $ 16.00 $ 12.75
September, 1995 ................. $ 13.00 $ 12.25
June, 1995 ...................... $ 13.00 $ 12.00
March, 1995 ..................... $ 14.50 $ 12.25
December, 1994 .................. $ 9.19 $ 8.81
September, 1994 ................. $ 9.56 $ 7.69
June, 1994 ...................... $ 8.63 $ 8.06
March, 1994 ..................... $ 9.56 $ 8.06
b. Holders
The approximate number of holders of Bancorp's common stock is based on the
number of record holders as of December 31, 1995, and is 650.
c. Dividends
On March 20, 1995, the Board of Directors of Bancorp declared a four-for-three
stock split on the outstanding shares of common stock of Bancorp, payable on
April 11, 1995 to stockholders of record on April 4, 1995. On March 21, 1994 and
March 15, 1993, the Board of Directors of Bancorp declared 15% and 15% stock
dividends on the outstanding shares of common stock of Bancorp, payable on April
12, 1994 and April 6, 1993 to stockholders of record on April 5, 1994 and March
30, 1993, respectively. These transactions increased Bancorp's common stock
issued and outstanding by 791,919, 294,229 and 251,001 shares in 1995, 1994, and
1993 respectively.
It is the policy of Bancorp to pay cash dividends to shareholders only when it
is prudent to do so and Bancorp's performance justifies such action.
Accordingly, no assurance can be given that cash dividends will ever be declared
by Bancorp. It is not the intention of Bancorp to declare cash dividends for the
foreseeable future.
State of Nevada banking regulations restrict distribution of the net assets of
the Bank because such regulations require the sum of the Bank's stockholders'
equity and allowance for loan losses to be at least 6% of the average of the
Bank's total daily deposit liabilities for the preceding 60 days. As a result of
these regulations, approximately $12,367,500 and $11,452,000 of the Bank's
stockholders' equity was restricted at December 31, 1995 and 1994, respectively.
<PAGE>
ITEM 6 - SELECTED FINANCIAL DATA
<TABLE>
At Year-End 1995 1994 1993 1992 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total Investment Securities (2) $ 124,285,842 $ 116,662,509 $ 111,322,628 $ 83,301,300 $ 62,034,019
Total Net Loans ............... 93,244,167 75,378,085 65,057,540 56,123,073 48,133,752
Total Assets .................. 276,690,628 227,419,250 210,463,073 178,243,042 141,617,417
Total Deposits ................ 211,523,839 192,811,233 173,664,075 154,909,321 123,425,267
Total Stockholders' Equity (2) 26,888,923 20,131,146 17,928,913 15,415,916 13,310,480
For the Year
Total Interest Income ......... $ 19,408,247 $ 14,416,296 $ 11,298,826 $ 9,872,039 $ 9,955,689
Total Interest Expense ........ 6,015,423 3,323,811 2,768,571 2,891,802 3,869,565
Net Interest Income ........... 13,392,824 11,092,485 8,530,255 6,980,237 6,086,124
Provision for Loan Loss ....... 570,000 20,000 130,000 150,000 142,053
Securities Gain/(Loss) ........ (19,922) (246,245) 349,066 399,772 199,356
Income before cumulative
effect of change in
accounting principle (1) ..... 4,107,091 3,314,281 2,222,168 1,831,252 1,519,956
Net Income .................... 4,107,091 3,314,281 2,307,168 1,831,252 1,519,956
Per Share Data (4)
Income before cumulative
effect of change in
accounting principle (1) ..... $ 1.26 $ 1.04 $ .73 $ .62 $ .52
Net Income .................... 1.26 1.04 .75 .62 .52
Cash Dividends (none paid)
Book value per share (2) (3) .. 8.37 6.38 5.97 5.24 4.73
<FN>
(1) Federal Income Taxes- Effective January 1, 1993, Bancorp adopted Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for
Income Taxes. The adoption of SFAS 109 changed Bancorp's method of
accounting for income taxes to an asset and liability approach. Prior to
1993, Bancorp accounted for income taxes under Statement of Financial
Accounting Standards No. 96 (SFAS96).
(2) FAS 115 - Book value for 1995 and 1994 reflects an adjustment to total
capital of $284,000 and ($1,987,300) respectively, net of tax effect, as a
result of FAS 115, which requires banks to "Mark to Market" those investment
securities it has designated as "available-for-sale". At December 31, 1995
and 1994, Bank had $124,285,842 and $90,059,304, respectively in its "AFS"
portfolio.
(3) Book value per share is based on the actual number of outstanding shares at
December 31.
(4) Amounts have been adjusted to reflect the effect of stock splits and stock
dividends.
</FN>
</TABLE>
<PAGE>
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY (In Thousands)
<TABLE>
ASSETS 1995
------------------------------------
Average
Balance Interest % Yield/Rate
(1)
-------- -------- ------------
<S> <C> <C> <C>
Loans and Leases (2) (3) ...................... $ 89,663 $ 11,564 12.90
Investment Securities: (4)
Taxable - AFS ............................ 94,278 6,043 6.41
Taxable - HTM ............................ 655 48 7.33
Non-taxable - AFS ........................ 6,108 291 4.76
Non-taxable - HTM ........................ 22,738 1,071 4.71
Federal Funds Sold ............................ 6,735 391 5.81
-------- -------- -----
Total Interest Earning Assets ................. 220,177 19,408 8.81
-------- -------- =====
Cash & Due From Banks ......................... 22,094
Premises and Equipment, net ................... 9,738
Other ......................................... 2,150
--------
Total Non-Interest Earning .................... 33,982
--------
Total Assets .................................. 254,159
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Bearing Demand Deposit ............... $ 98,210 $ 3,889 3.96
Savings Deposits .............................. 17,709 632 3.57
Time Deposits ................................. 11,618 476 4.10
Repurchase Agreements ......................... 24,217 1,018 4.20
-------- -------- -----
Total Interest Bearing Liabilities ............ 151,754 6,015 3.96
-------- -------- =====
Non-Interest Bearing Deposits ................. 78,531
Other ......................................... 1,176
--------
Total Non-Interest Bearing Liabilities ........ 79,707
--------
Stockholders' Equity .......................... 22,698
--------
Total Liabilities and Stockholders' Equity .... 254,159
========
Net Interest Earned ........................... 13,393
=======
Net Yield On Interest Earning Assets .......... 6.08
=====
<FN>
(1)The yield/rate is calculated by dividing interest earned/paid by the average
balance. The presentation is not on a tax equivalent basis.
(2) Loan fees are included in the interest yield calculation. Loan fees for the
year ended December 31, 1995 are $1,623,146. The interest yield excluding
fees is 11.09%.
(3) Non-accrual loans are included in the interest yield calculation. The daily
average of non-accrual loans for 1995 is $158,846.
(4) Yield is calculated by dividing the interest earned by the average
historical cost (not market value) of the securities.
</FN>
</TABLE>
<PAGE>
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY (In Thousands)
ASSETS
<TABLE>
1994
-----------------------------------
Average
Balance Interest % Yield/Rate
(1)
-------- -------- ------------
<S> <C> <C> <C>
Loans and Leases (2) (3) ...................... $ 69,084 $ 8,307 12.02
Investment Securities: (4)
Taxable - AFS ............................ 78,494 4,270 5.44
Taxable - HTM ............................ 807 60 7.43
Non-taxable - AFS ........................ 4,628 211 4.56
Non-taxable - HTM ........................ 32,211 1,376 4.27
Federal Funds Sold ............................ 4,876 192 3.94
-------- -------- -----
Total Interest Earning Assets ................. $190,100 $ 14,416 7.55
-------- -------- =====
Cash & Due From Banks ......................... 21,318
Premises and Equipment, net ................... 9,303
Other ......................................... 1,857
--------
Total Non-Interest Earning .................... 32,478
--------
Total Assets .................................. $222,578
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Bearing Demand Deposits .............. $ 83,469 $ 2,107 2.52
Savings Deposits .............................. 18,095 502 2.77
Time Deposits ................................. 10,814 331 3.06
Repurchase Agreements ......................... 13,785 384 2.79
-------- -------- -----
Total Interest Bearing Liabilities ............ $126,163 $ 3,324 2.63
-------- -------- =====
Non-Interest Bearing Deposits ................. 76,594
Other ......................................... 675
--------
Total Non-Interest Bearing Liabilities ........ 77,269
--------
Stockholders' Equity .......................... 19,146
--------
Total Liabilities and Stockholders' Equity .... $222,578
========
Net Interest Earned ........................... $ 11,092
========
Net Yield On Interest Earning Assets .......... 5.83
=====
<FN>
(1) The yield/rate is calculated by dividing interest earned/paid by the average
balance. The presentation is not on a tax equivalent basis.
(2) Loan fees are included in the interest yield calculation. Loan fees for the
year ended December 31, 1994 are $1,613,131. The interest yield excluding
fees is 9.69%.
(3) Non-accrual loans are included in the interest yield calculation. The daily
average of non-accrual loans for 1994 is $96,073.
(4) Yield is calculated by dividing the interest earned by the average
historical cost (not market value) of the securities.
</FN>
</TABLE>
<PAGE>
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY (In Thousands)
<TABLE>
ASSETS 1993
-----------------------------------
Average
Balance Interest % Yield/Rate
(1)
-------- -------- ------------
<S> <C> <C> <C>
Loans and Leases (2) (3) ...................... $ 61,174 $ 6,208 10.15
Investment Securities: (4)
Taxable .................................. 74,684 3,740 5.01
Non-taxable .............................. 24,358 1,215 4.99
Federal Funds Sold ............................ 4,814 136 2.83
-------- -------- -----
Total Interest Earning Assets ................. $165,030 11,299 6.85
-------- -------- =====
Cash & Due From Banks ......................... 20,314
Premises and Equipment, net ................... 8,582
Other ......................................... 2,067
--------
Total Non-Interest Earning .................... 30,963
--------
Total Assets .................................. $195,993
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Bearing Demand Deposits .............. $ 69,517 $ 1,692 2.43
Savings Deposits .............................. 14,129 384 2.72
Time Deposits ................................. 12,841 425 3.31
Repurchase Agreements ......................... 10,972 268 2.44
-------- -------- -----
Total Interest Bearing Deposits ............... $107,459 2,769 2.58
-------- ------- -----
Non-Interest Bearing Deposits ................. 71,191
Other ......................................... 1,889
--------
Total Non-Interest Bearing Liabilities ........ 73,080
--------
Stockholders' Equity .......................... 15,454
--------
Total Liabilities and Stockholders' Equity .... $195,993
========
Net Interest Earned ........................... $ 8,530
========
Net Yield On Interest Earning Assets .......... 5.17
=====
<FN>
(1) The yield/rate is calculated by dividing interest earned/paid by the average
balance. The presentation is not on a tax equivalent basis.
(2) Loan fees are included in the interest yield calculation. Loan fees for the
year ended December 31, 1993 are $1,201,786. The interest yield excluding
fees is 8.18%.
(3) Non-accrual loans are included in the interest yield calculation. The daily
average of non-accrual loans for 1993 is $129,886
(4) Yield is calculated by dividing the interest earned by the average
historical cost (not market value) of the securities.
</FN>
</TABLE>
<PAGE>
I. INTEREST DIFFERENTIAL (In Thousands)
ASSETS 1995 Compared to 1994
-----------------------------------
Total Volume Yield/Rate
Change Variance Variance
------- -------- ----------
(2)
Loans and Leases (1) .................... $ 3,257 $ 2,475 $ 782
Investment Securities:
Taxable - AFS ...................... 1,773 859 914
Taxable - HTM ...................... (12) (11) (1)
Non-taxable - AFS .................. 80 67 13
Non-taxable - HTM .................. (305) (405) 100
Federal Funds Sold ...................... 199 73 126
------- ------- -------
Total Interest Earning Assets ........... $ 4,992 $ 3,058 $ 1,934
======= ======= =======
LIABILITIES
Interest Bearing Demand Deposits ........ $ 1,782 $ 372 $ 1,410
Savings Deposits ........................ 130 (11) 141
Time Deposits ........................... 145 25 120
Repurchase Agreements ................... 634 291 343
------- ------- -------
Total Interest Bearing Liabilities ...... $ 2,691 $ 677 $ 2,014
======= ======= =======
(1) Interest accrued on all non-accruing loans has been reversed for the current
year and the income accounts adjusted accordingly.
(2) The rate/volume variance is included in the rate variance.
I. INTEREST DIFFERENTIAL (In Thousands)
ASSETS 1994 Compared to 1993
----------------------------------
Total Volume Yield/Rate
Change Variance Variance
------- -------- ----------
(2)
Loans and Leases (1) ................... $ 2,099 $ 803 $ 1,296
Investment Securities:
Taxable ........................... 590 271 319
Non-Taxable ....................... 372 625 (253)
Federal Funds Sold and
Repurchase Agreements ............. 56 2 54
------- ------- -------
Total Interest Earning Assets .......... $ 3,117 $ 1,701 $ 1,416
======= ======= =======
LIABILITIES
Interest Bearing Demand Deposits ........... $ 415 $ 339 $ 76
Savings Deposits ........................... 118 108 10
Time Deposits .............................. (94) (67) (27)
Repurchase Agreements ...................... 116 69 47
------- ------- -------
Total Interest Bearing Liabilities ......... $ 555 $ 449 $ 106
======= ======= =======
(1) Interest accrued on all non-accruing loans has been reversed for the current
year and the income accounts adjusted accordingly.
(2) The rate/volume variance is included in the rate variance.
<PAGE>
II. INVESTMENT PORTFOLIO
The following table shows the contractual maturity distribution by carrying
amount and weighted average yield to maturity of Bancorp's investment portfolio
at December 31, 1995.
<TABLE>
Available for Sale
Less than One Year One through Five Years Five through Ten Year Over Ten Years Total
------------------- ---------------------- ---------------------- ------------------- ------------
Amount %Yield Amount %Yield Amount %Yield Amount %Yield Amount
----------- ------- ------------ ------ ----------- ------ ---------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity securities ..... $ 9,176,482 4.92 $ 0 $ 0 $ 0 $ 9,176,482
U.S. Treasury and
other U.S. govt
agencies and
corporations (1) ...... 17,737,160 6.09 43,388,848 6.25 7,962,550 7.11 498,844 8.99 69,587,402
Obligations of states
and political
subdivisions .......... 6,212,923 4.54 15,731,007 4.81 2,894,003 4.68 1,071,325 4.52 25,909,258
Collateralized Mortgage
obligations ........... 0 514,910 7.50 4,904,378 6.35 13,462,495 5.45 18,881,783
Other securities ...... 0 229,582 5.90 501,335 6.21 0 730,917
----------- ------------ ----------- ----------- ------------
Total ................. $33,126,565 $ 59,864,347 $16,262,266 $15,032,664 $124,285,842
=========== ============ =========== =========== ============
<FN>
Maturities may differ from contractual maturities in collateralized mortgage
obligations because the mortgages underlying the securities may be called or
repaid without penalties. Yields on tax exempt securities are not calculated on
a tax equivalent basis.
(1) Structured notes with a balance of $14,638,900 at December 31, 1995 are
included in U.S. Treasury and other U.S. government agencies and
corporations.
</FN>
</TABLE>
II. INVESTMENT PORTFOLIO
The following table shows the carrying amount of the Company's investment
portfolio at December 31, 1994 and 1993.
1994 1993
Total Total
Amount Amount
---------- -----------
Available for Sale
Equity securities ....................... $ 8,862,134 $ 0
U.S. Treasury and
other U.S. govt
agencies and
corporations ............................ 65,392,565 62,864,768
Obligations of states
and political
subdivisions ............................ 4,692,411 35,342,976
Mortgage backed
securities .............................. 9,917,073 0
Other securities ........................ 1,195,121 13,114,884
------------ ------------
Total ................................... $ 90,059,304 $111,322,628
============ ============
Held to Maturity
Obligations of
states and political
subdivisions ............................ $ 26,603,205
Total ................................... $ 26,603,205
<PAGE>
III.LOAN PORTFOLIO
A. The composition of Bancorp's loan portfolio is as follows:
<TABLE>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Real estate loans:
Construction ........................ $15,113,573 $19,675,572 $12,391,794 $13,053,544 $12,489,307
Residential ......................... 10,643,190 6,907,000 8,983,865 5,972,420 9,000,964
Commercial .......................... 34,627,184 28,164,512 24,716,731 17,175,380 16,093,124
----------- ----------- ----------- ----------- -----------
Total Real Estate Loans .................. 60,383,947 54,747,084 46,092,390 36,201,344 37,583,395
Commercial, financial and industrial loans 24,875,838 17,875,351 16,742,024 18,134,842 9,482,386
Commercial receivables financing ......... 2,396,952 0 0 0 0
Loans to individuals ..................... 7,340,220 4,156,000 3,447,244 2,824,022 1,895,389
----------- ----------- ----------- ----------- -----------
94,996,957 76,778,435 66,281,658 57,160,208 48,961,170
Less unearned net loans fees ............. 510,170 673,451 574,866 512,693 374,495
----------- ----------- ----------- ----------- -----------
Total Loans .............................. $94,486,787 $76,104,984 $65,706,792 $56,647,515 $48,586,675
=========== =========== =========== =========== ===========
</TABLE>
B. Maturities and Sensitivity of Loans to Changes in Interest Rates
The following table shows the balances of commercial, financial and industrial
loans and real estate - construction loans outstanding as of December 31, 1995
by maturities, based on remaining scheduled repayments of principal. Also shown
are the balance of loans due after one year, classified according to sensitivity
to changes in interest rates.
MATURITY
One Year One Through After
1995 or Less Five Years Five Years Total
- ---- ----------- ------------ ---------- -----------
Commercial, Financial
and Industrial ........... $12,092,663 $10,766,502 $2,016,673 $24,875,838
Real Estate - Construction.. 15,113,573 0 0 15,113,573
----------- ----------- ---------- -----------
Total ...................... $27,206,236 $10,766,502 $2,016,673 $39,989,411
=========== =========== ========== ===========
The maturity of certain loans may vary due to the Bank's rollover policy. The
Bank will consider extending the maturity of a loan upon receipt of current
financial information and evaluation of the loan performance, the financial
performance of the business, and overall economic conditions. Loans with
maturities so affected have been revised as appropriate in the above table.
INTEREST SENSITIVITY
The following table represents the total amount of commercial, financial and
industrial loans and real estate construction loans due after one year which (a)
have predetermined interest rates and (b) have floating or adjustable interest
rates.
Loans Due After One Year 1995
- ------------------------ -----------
Fixed or Predetermined Rate ............................. $ 529,103
Floating or Adjustable Rate ............................. 12,254,072
-----------
Total ................................................... $12,783,175
===========
C. Risk Elements
1. The table below shows the aggregate amount of loans accounted for on a
non-accrual basis, accruing loans which are contractually past due 90 days
or more as to principal or interest and loans which are "troubled debt
restructurings" as defined in statement of Financial Accounting Standard No.
15, "Accounting for Debtors and Creditors for Troubled Debt Restructurings"
as of year end for the past five years.
Non-Accrual Past Due 90 Troubled Debt
December 31 Amount Days or More Restructuring
----------- ----------- ------------ -------------
1995 $ 765,961 $ 0 $ 0
1994 0 5,000 0
1993 56,000 0 0
1992 705,000 525,174 0
1991 1,474,000 414,000 0
<PAGE>
Loans are placed on non-accrual status when they go over 90 days delinquent, or
when circumstances indicate that timely collection of interest is doubtful.
Loans over 90 days delinquent may be left on accrual status if a repayment plan
has been negotiated and it appears likely that all interest will be paid.
The gross interest income that would have been recorded on non-accrual loans for
the year ended December 31, 1995 if the loans had been current in accordance
with their original terms is $18,691. The amount of interest income on those
loans that was included in net income for the year ended December 31, 1995 is
$19,099.
2. Potential Problem Loans - As of December 31, 1995 there are no loans
outstanding, excluding those identified in Item III.C.1. above, which causes
management to have serious doubts as to the ability of the borrower to
comply with the loan repayment terms.
3. Foreign Outstandings - The Bancorp did not have any foreign loans
outstanding for the years ended December 31, 1995, 1994, or 1993.
4. Loan Concentrations - The loan portfolio is concentrated in the Southern
Nevada area. Within the portfolio there is a concentration in real estate
lending, with commercial real estate lending representing approximately 37%
of total loans and construction lending at 16%. All real estate loans are
secured with 1st trust deeds with conservative loan-to-value ratios
supported by current appraisals. Commercial real estate loans are on
predominantly owner-occupied properties, or where the owner occupies a
significant portion of the property. Land values in the Las Vegas area
continue to increase as the population of the area reflects strong growth.
Construction loans are primarily for small to medium tracts of SFRs in the
$100M-$135M range. Concentrations are reviewed quarterly to control lending
on speculative projects. Land loans represent a small portion of real estate
lending, are conservatively underwritten, and are often made in connection
with project development.
D. Other Interest Bearing Assets
As of December 31, 1995, Bancorp had no other interest bearing assets that would
be required to be disclosed under Item III.C.1 or III.C.2, if such assets were
loans.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. Analysis of the Allowance for Loan Losses
The following table details the amount of loans charged to reserve and the
additions to the allowance for loan losses for the past five years.
Each month, the Bank's allowance for loan losses is reviewed to determine the
adequacy of reserve balances. All loans whose principal balance is greater than
or equal to $10,000 and which are delinquent for 30 days or more for principal
or interest are selected for detailed study. The appropriate account officers
are notified, and each submits reports of borrowers' financial condition,
adequacy of collateral, and recommended reserves. Senior management then reviews
and determines the necessary adjustment to the allowance for loan loss.
<TABLE>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Allowance for Loan Losses, January 1 ................ $ 726,899 $ 649,252 $ 524,442 $ 452,923 $ 770,651
----------- ----------- ----------- ----------- ------------
Deduct:
Loans Charged Off During the Year .............. (86,409) (14,684) (122,860) (92,595) (484,042)
Less Recoveries of Losses Previously Charged-Off 32,130 72,331 117,670 14,114 24,261
----------- ----------- ----------- ----------- -----------
Net Loans Charged-Off .......................... 54,279 (57,647) 5,190 78,481 459,781
----------- ----------- ----------- ----------- -----------
Allowance Prior to Additions ........................ 672,620 706,899 519,252 374,442 310,870
----------- ----------- ----------- ----------- -----------
Additions to Allowance Charged to Operating Expense . 570,000 20,000 130,000 150,000 142,053
----------- ----------- ----------- ----------- -----------
Allowance for Loan Losses, December 31 .............. $ 1,242,620 $ 726,899 $ 649,252 $ 524,442 $ 452,923
=========== =========== =========== =========== ===========
Ratio of Net Charge-Offs to Average Loans Outstanding .06% (.08%) .01% .16% .95%
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
The schedule below shows the major categories of loan charge-offs and recoveries
for the years 1995, 1994, 1993, 1992 and 1991.
<TABLE>
NET CHARGE-OFFS 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Charge-Offs:
Real estate loans
Construction .................. $ 0 $ 0 $ 28,400 $ 0 $ 0
Residential ................... 0 0 0 0 0
Commercial .................... 0 0 0 0 461,232
Commercial, financial and industrial ... 64,348 12,049 23,874 90,043 15,833
Commercial receivables financing ....... 0 0 0 0 0
Loans to individuals ................... 22,061 2,635 70,585 2,552 6,977
-------- -------- -------- -------- --------
Total .................................. 86,409 14,684 122,860 92,595 484,042
-------- -------- -------- -------- --------
Less Recoveries:
Real estate loans
Construction .................. $ 0 $ 28,400 $ 80,000 $ 0 $ 0
Residential ................... 0 0 0 0 0
Commercial .................... 0 0 0 1,753 1,379
Commercial, financial and industrial 22,545 28,588 27,325 11,300 18,643
Commercial receivables financing ....... 0 0 0 0 0
Loans to individuals ................... 9,585 15,343 10,345 1,061 4,239
-------- -------- -------- -------- --------
Total .................................. 32,130 72,331 117,670 14,114 24,261
-------- -------- -------- -------- --------
Net Charge-Offs ............................. $ 54,279 $(57,647) $ 5,190 $ 78,481 $459,781
======== ======== ======== ======== ========
B. Allocation of the allowance for loan losses
1995 REPORTED PERIOD
% Of Loans In
Balance at End of Each Category
Period Applicable to: Amount To Total Loans
---------- --------------
Real estate loans:
Construction ................................ $ 197,695 15.9%
Residential ................................. 139,220 11.2%
Commercial .................................. 452,944 36.5%
Commercial, financial and industrial loans ....... 325,392 26.2%
Commercial receivables financing ................. 31,354 2.5%
Loans to individuals ............................. 96,015 7.7%
---------- -----
Total ............................................ $1,242,620 100%
========== =====
1994 REPORTED PERIOD
Real estate loans:
Construction ................................ $ 186,278 25.6%
Residential ................................. 65,392 9.0%
Commercial .................................. 266,647 36.7%
Commercial, financial and industrial loans ....... 169,235 23.3%
Commercial receivables financing ................. 0 0.0%
Loans to individuals ............................. 39,347 5.4%
---------- -----
Total ............................................ $ 726,899 100%
========== =====
1993 REPORTED PERIOD
Real estate loans:
Construction ................................ $ 121,382 18.7%
Residential ................................. 88,000 13.6%
Commercial .................................. 242,109 37.3%
Commercial, financial and industrial loans ....... 163,994 25.3%
Commercial receivables financing ................. 0 0.0%
Loans to individuals ............................. 33,767 5.1%
---------- -----
Total ............................................ $ 649,252 100%
========== =====
1992 REPORTED PERIOD
Real estate loans:
Construction ................................ $ 119,766 22.9%
Residential ................................. 54,797 10.4%
Commercial .................................. 157,583 30.0%
Commercial, financial and industrial loans ....... 166,386 31.8%
Commercial receivables financing ................. 0 0.0%
Loans to individuals ............................. 25,910 4.9%
---------- -----
Total ............................................ $ 524,442 100%
========== =====
<PAGE>
1991 REPORTED PERIOD
Real estate loans:
Construction ................................ $ 115,534 25.5%
Residential ................................. 83,265 18.4%
Commercial .................................. 148,872 32.8%
Commercial, financial and industrial loans ....... 87,718 19.4%
Commercial receivables financing ................. 0 0.0%
Loans to individuals ............................. 17,534 3.9%
---------- -----
Total ............................................ $ 452,923 100%
========== =====
V. DEPOSITS
A. The table below shows the average daily balance of deposits by type for the
years ended December 31, 1995, 1994 and 1993.
1995 Average Average
(In Thousands) Balance Rate Paid
------------ ---------
Non-Interest Bearing Demand Deposits .............. $ 78,531 0%
Interest Bearing Demand Deposits .................. 98,210 3.96%
Time Deposits ..................................... 11,618 4.10%
Savings Deposits .................................. 17,709 3.57%
--------
Total ............................................. $206,068
========
1994
---------------------
Average Average
Balance Rate Paid
-------- ---------
Non-Interest Bearing Demand Deposits .............. $ 76,594 0%
Interest Bearing Demand Deposits .................. 83,469 2.52%
Time Deposits ..................................... 10,814 3.06%
Savings Deposits .................................. 18,095 2.77%
--------
Total ............................................. $188,972
========
1993
-----------------------
Average Average
Balance Rate Paid
-------- ---------
Non-Interest Bearing Demand Deposits .............. $ 71,191 0%
Interest Bearing Demand Deposits .................. 69,517 2.43%
Time Deposits ..................................... 12,841 3.31%
Savings Deposits .................................. 14,129 2.72%
--------
Total ............................................. $167,678
========
The Bank's customer base is primarily comprised of small-to-mid-sized businesses
and professionals. The Bank is precluded by regulation from paying interest on a
majority of these business accounts. The Bank does, however, provide services in
the form of computer hardware and software, armored transport and other
ancillary services to certain depositors. During 1995, services of approximately
$197,553 were provided for customers with average balances of approximately
$83,327,935. The value of the services represented .23% of the customers'
average deposit balances. During 1994, services of approximately $193,568 were
provided for customers with average balances of approximately $83,155,178, which
represented .23% of the customers' average deposit balance.
B. Not applicable.
C. Not applicable.
<PAGE>
D. Maturities of time certificates of deposit of $100,000 or more at December
31, 1995.
1995
Maturity ----------
3 Months or Less ......................................... $2,564,720
3 to 6 Months ............................................ 1,887,958
6 to 12 Months ........................................... 440,767
Over 12 Months ........................................... 461,438
----------
Total .......................... $5,354,883
==========
E. Not applicable.
VI. RETURN ON EQUITY AND ASSETS
The table below shows various key ratios including return on equity and return
on assets.
1995 1994 1993
------- ------- ------
Return on Assets
(Net Income Divided by Average Total Assets) ......... 1.61% 1.48% 1.18%
Return on Equity
(Net Income Divided by Average Equity)................ 17.58% 16.83% 14.93%
Dividend Payout Ratio ................................ 0% 0% 0%
Equity to Assets Ratio
(Average Equity Divided by Average Total Assets) ..... 9.16% 8.81% 7.88%
VII. SHORT-TERM BORROWINGS
At December 31, 1995, 1994 and 1993, short-term borrowings were in the form of
repurchase agreements with a one-day maturity.
Weighted-average Average Weighted-average
Balance interest rate balance interest rate
Dec. 31. Dec. 31. for year for year
----------- ----------------- ------------ ----------------
1995 $36,748,550 4.16% $24,217,033 4.20%
1994 $13,779,992 3.30% $13,784,883 2.79%
1993 $18,045,562 2.50% $10,972,000 2.44%
The maximum amount of total outstanding repurchase agreements at any month-end
during the years ended December 31, 1995, 1994 and 1993 is as follows:
Month Amount
-------- -----------
1995 December $36,748,550
1994 August . 19,110,866
1993 November 19,491,838
<PAGE>
ITEM7 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated financial statements of American Bancorp of Nevada. The
consolidated financial statements include American Bancorp of Nevada (the
"Company"), and the accounts of its wholly-owned subsidiaries, American Bank of
Commerce (the "Bank"), AmBank Financial, Inc., and AmBank Mortgage Company.
Liquidity and Liabilities Management
Adequate liquidity and maintenance of an appropriate balance between rate
sensitive earning assets and liabilities are the principal functions of asset
and liability management of a banking organization. Liquidity management
involves the ability to meet the cash flow requirements of customers who are
depositors desiring to withdraw funds or borrowers requiring assurance that
sufficient funds will be available to meet their credit needs. The measures of
solid liquidity practices such as Total Deposits to Total Assets and Loans to
Deposits are monitored constantly for any adverse trends. Historically, the
Bank's loan to deposit ratio has been low when compared to industry norms and,
conversely, its liquidity ratio has been high. At December 31, 1995, the net
loan to deposit ratio was approximately 44%. The Bank's primary sources of
liquidity are core deposits, its investments portfolio and federal funds sold.
The liquidity ratio, which is comprised of cash, federal funds sold and
unpledged securities as a percent of total demand deposits, stood at
approximately 57.85% at December 31, 1995. Interest rate sensitivity management
seeks to avoid fluctuating net interest margins and to enhance consistent growth
of net interest income during periods of changing interest rates. Effective
asset and liability management enabled the Bank to maintain desired levels of
liquidity and capital while protecting against the possible negative impact of
interest rate volatility. The Bank avoids the use of highly sensitive short-term
funds such as brokered deposits and believes its deposits represent funding
sources with safety in respect to both liquidity and earnings, and permits the
maintenance of an appropriate relationship between the cost and maturity of
liabilities and the yield and maturity of assets. Cash flow from operations
continues to remain positive primarily due to favorable interest rate yields and
growth in the loan portfolio. As loan growth continues, the loan to deposit
ratio may rise but there is substantial room to increase loans without impeding
the liquidity ratio. The increase in deposits and securities sold under
agreements to repurchase provide the major funding from financing activities. It
is anticipated that these two items will continue their steady increase as the
Bank opens additional branches and the local economy continues its growth.
Because of principal paydowns from the Bank's investment portfolio and its
relative short average maturity, the cash flow from investing activities was
able to assist in funding the loan growth for 1995. Management expects this will
continue, and favors the opportunity to reinvest its funds in the higher
yielding loan portfolio.
Capital Resources
Capital increases will continue to be provided by earnings. Capital growth,
exclusive of net unrealized gains/losses on available-for-sale securities, for
the year ended December 31, 1995 was 20.28% compared to 23.37% for the same
period of 1994. While there are no definite plans to issue additional common
stock, shareholders approved a four-for-three stock split during 1995 and 15%
stock dividends during both 1994 and 1993. Neither stock splits nor stock
dividends have an effect on total capital. Stockholders' equity, exclusive of
net unrealized gains/losses on available-for-sale securities, of the Company as
a percentage of total assets at December 31, 1995 stood at 9.62%. At year end
1994 and 1993, the ratio was 9.73% and 8.52%, respectively. Riskbased capital
guidelines require banks to maintain an underlying capital base of 8.00% of
"weighted" assets. At December 31, 1995, the Bank was well above the minimum
requirement with a capital base of 16.75% (Tier 1).
<PAGE>
In September 1995, the Company began construction on a two-story 17,000 square
foot office complex located adjacent to its corporate headquarters site at
Spring Mountain Road and Arville. The building offers approximately 13,000
square feet of class "A" leasable office space. Parking facilities at the site
were improved and increased to facilitate the new building. There are no
definite plans for the remaining portion of the lot. In the third quarter of
1995, the Bank purchased approximately 4.36 acres of land in the industrial area
of North Las Vegas for a new branch location. The property is located at the
southeast corner of Lossee and Frehner Roads and will accommodate a branch
facility of approximately 5,000 square feet and two drive-up windows. Management
anticipates to open the branch in the third quarter of 1996. In addition, the
Bank is exploring the possibility of opening another branch office in 1996. This
would make a total of six branches in the Las Vegas Valley area. Construction of
these facilities will be funded by cash flows from operations. No financing is
anticipated. The impact on capital is not significant to date and is not
expected to impede operations.
Effective January 1, 1994, the Company adopted FAS 115 and classified its
investment securities in two categories: available-for-sale ("AFS") and
held-to-maturity ("HTM"). FAS 115 requires an adjustment to capital reflecting
unrealized gains and losses in the AFS portion of the portfolio. On November 15,
1995, the Financial Accounting Standards Board ("FASB") released a Special
Report entitled "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities." This report provided for a
one-time opportunity to reclassify securities between held-to-maturity and
available-for-sale that would not call into question an institution's future
intent to hold other securities to maturity. This one-time transfer was
authorized to take place between November 15, 1995 and December 31, 1995. On
November 27, 1995, the Bank elected to transfer all securities classified as HTM
to the AFS category. This transfer does not in any way indicate that future
purchases may not be placed in the HTM category. As of December 31, 1995, the
capital accounts were increased by $284,000, representing the after tax effect
of the AFS portfolio's increase in value.
Asset Growth
American Bancorp experienced an increase in total assets during 1995 of
$49,271,378 or 21.67% and in 1994 of $16,956,177 or 8.06%. Stronger loan demand
resulted in a $18,381,803 or 24.15% increase in loans in 1995. Accompanying this
increase in loans was an increase of $7,623,333 or 6.53% in investment
securities. The increase in assets was the result of increases in the deposit
base of the Bank of $18,712,606 or 9.71%, coupled with an increase in securities
sold under agreement to repurchase of $22,968,558 or 166.68%. It is anticipated
that total assets will continue to increase during 1996, as the Southern Nevada
economy remains strong and the Bank continues it aggressive business development
efforts and branch expansion.
Interest Income
Total interest income for 1995 totaled $19,408,247 as compared to $14,416,296
for 1994. This increase of $4,991,951 or 34.63% followed the 1994 increase over
1993 of $3,117,470 or 27.59%.
The increase in interest income reflects the changes in yields and volume of
earning assets when comparing one year to another. Average earning assets
increased by approximately $30,260,570 to $221,194,772 and the average yield for
those assets increased to 8.77% from 7.55% in 1994. Average earning assets in
1994 were $25,904,394 above 1993's level of $165,029,808. The 1993 yield was
6.85%. All interest markets, on average, were slightly higher when comparing
1995 to 1994 and 1993. Management anticipates continued growth in earning
assets. The individual components comprising total interest income are interest
and fees on loans, interest on investment securities and interest on federal
funds sold. The yields and related volumes of these components changed
individually as follows:
Interest and Fees on Loans: The income generated by the Company's loan portfolio
increased $3,256,671 or 39.2% in 1995 from an increase of $2,099,005 or 33.81%
in 1994. There was an increase in average loan volume of approximately
$20,578,519 or 29.79% during 1995, and the yield on the loan portfolio increased
to 12.90% in 1995 from 12.02% in 1994. The 1993 yield was 10.15%.
Interest on Investment Securities: Total income from the investment portfolio in
1995 increased $1,536,279 or 25.97 % over 1994. The 1994 increase was $961,589
or 19.41% over 1993.
The average volume of investment securities increased by 6.69% in 1995 following
increases of 18.11% in 1994 and 45.9% in 1993. The tax equivalent yield
increased to 5.97% in 1995 from 5.49% in 1994. The yield was 5.42% in 1993. The
1995 yield on the investment portfolio increased as maturing securities and
mortgage-backed principle paydowns were reinvested in higher yielding
instruments. Management attempts to maximize the benefit from tax-free municipal
bonds and will continue to do so. It is anticipated that any purchases of
investment securities in 1996 will have short-term maturities with higher yields
than those currently maturing.
<PAGE>
Interest on Federal Funds Sold: Total interest on federal funds sold increased
by $199,001 or 103.48% in 1995 following a $56,876 or 42.0% increase in 1994 and
a $10,357 or 7.10% decrease in 1993. There was an increase in average volume of
$1,858,917 or 38.13% in 1995 and an increase in 1994 of $62,279 or 1.29%. The
yield in 1995 increased to 5.81% from 3.94% in 1994. Average yield for 1993 was
2.83%.
Interest Expense
The major components of interest expense are interest on deposits and interest
on securities sold under agreements to repurchase. The average cost of funds
increased to 3.96% in 1995 from 2.63% in 1994. The average cost of funds was
2.58% in 1993. The cost of funds and related volumes of these individual
components were as follows:
Interest on Deposits: Total interest on deposits increased $2,058,261 or 70.02%
in 1995. In 1994 interest on deposits increased $438,990 or 17.56% while in 1993
it decreased $177,113 or 6.61% from 1992. The average volume for interest
bearing deposits increased $15,158,271 or 13.49% during 1995 following an
increase of $15,890,821 in 1994 and an increase of $22,961,412 in 1993. The
average rate increased to 3.92% in 1995. The average rate was 2.62% in 1994 and
2.59 % in 1993. The increased expense in 1995 can be attributed to the
combination of higher rates and volume.
Interest on Securities Sold Under Agreements to Repurchase: A repurchase
agreement is an agreement between the Bank and customer where the Bank sells
U.S. government securities to the customer. On the agreed date, usually the
following day, the Bank repurchases the securities at the same price plus
interest at a predetermined rate. Interest expense paid during the year
increased $633,351 or 164.74%. In 1994 interest expense increased $116,256 or
43.34% and in 1993 it increased $53,882 or 25.14% from 1992. The average volume
for this category increased $10,432,150 or 75.68% to $24,217,033 in 1995 from
$13,784,883 in 1994. The average volume was $10,971,500 in 1993. Average rates
increased to 4.20% in 1995 from 2.79% in 1994. Rates for 1993 averaged 2.45%.
Interest on these accounts are individually negotiated at a rate based on the
Bank's average federal funds rate for the month. Average federal funds rates for
1995 were approximately 1.87% higher than in 1994.
Interest Rate Risk
Management attempts to protect earnings from wide shifts in interest rates by
employing the following strategies:
Loans: Approximately 94% of the Bank's loan portfolio is written on an
adjustable basis that floats with the Bank's base rate. Thus, approximately
$88,818,000 reprices immediately upon a change in the base rate.
Investments: Total investments represent approximately 44.92% of total assets at
December 31, 1995. In administering the investment portfolio, management adheres
to the Company's "Investment Portfolio Policy and Guidelines", "Asset/Liability
Policy" and "Interest Rate Risk Policy". These internal policy guidelines
dictate the average life of at least 70% of the investment portfolio mature
within three years. The actual average life of the portfolio at December 31,
1995 was approximately 1.63 years. This strategy of maintaining short maturities
provides maximum flexibility in managing fluctuating interest rates.
Additionally, the majority of the investment portfolio is of a fixed rate
nature. This enables management to provide an underlying level of income,
irrespective of changes in interest rates. Diversification for all areas of
investments is a key element in interest rate risk. Management monitors the
investment portfolio to ensure that an appropriate balance is maintained in
terms of both maturity and type of investment instrument. Monitoring is aided by
the use of a computer program, specializing in Asset/Liability Management and
Interest Rate Risk.
<PAGE>
Deposits: Management discourages use of long-term Certificates of Deposit by
consistently paying at or below market rates and not offering greater than
one-year maturities, with the exception of 18 month IRAs and SEPs. At December
31, 1995, approximately 48% of time deposits had a maturity of three months or
less. Due to the large concentration of business accounts, approximately 42% of
all deposits at December 31, 1995 are non-interest bearing.
The above factors provide management the opportunity to maintain favorable net
interest margins under most normal interest rate scenarios.
Inter-Bank Risk
One result of the Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) was the publishing of Regulation F by the Federal Reserve Board. This
regulation sets standards to limit risks posed by inter-bank exposure. The rule
requires banks to develop and implement internal policies and procedures to
evaluate and control exposure to the depository institutions with which they do
business, referred to as correspondents. The rule also establishes a limit for
overnight credit exposure based on the correspondents' capital levels.
Management implemented these procedures during 1993 and will restrict the Bank's
overnight exposure to correspondent banks that have a minimum of an adequately
capitalized rating under the FDICIA guidelines.
Allowance for Loan Losses
The purpose of the allowance for loan losses is to maintain reserves at a level
sufficient to cover estimated future loan losses. Management exercises its
judgment in establishing loan loss reserves for existing loans which may become
uncollectible in the future. The Bank's current allowance for loan losses
reflects an ongoing evaluation of the known risks in the loan portfolio and
current economic conditions. The allowance for loan losses was $515,721 or
70.95% more at December 31, 1995 than at December 31, 1994. Management made a
conscious decision in 1995 to substantially increase the allowance for loan
losses in connection with strong loan growth and continued diversification of
the loan portfolio. Expenses for the provision of loan losses were $570,000 in
1995 as compared to $20,000 in 1994. At December 31, 1994 the allowance for loan
losses was $77,647 or 11.96% more than at December 31, 1993.
Net charged off loans and leases in 1995 were $54,279 compared to ($57,647) in
1994 and $5,190 in 1993. Net loan losses increased $111,926 or 194.16% in 1995
and decreased $62,837 or 121.07% in 1994 as compared to 1993. Losses decreased
$73,291 or 93.39% in 1993. Net loans at year end were $93,244,167 in 1995,
$75,378,085 in 1994, and $65,057,540 in 1993. The allowance for loan losses at
year end 1995 was 1.32% and in 1994 was .96% of loans outstanding. The
categories within the allocated portion of the allowance was increased from 3
categories (substandard, doubtful, loss) to 5 (accounts receivable factoring,
pass credits, substandard, doubtful, loss) during 1995. Additionally, special
consideration was given to adequately allocate allowances for the Bank's
track-home borrowers. Management believes construction loans for partially
pre-sold track homes may have the potential to be less risk tolerant than other
types of construction loans. Ongoing evaluation of the loan portfolio and new
loan products are determining factors in maintaining the allocated allowance for
loan losses. The allocated allowance at December 31, 1995 was $592,000 as
compared to $53,000 at December 31, 1994. This increase is the result of the two
additional categories which were added to the allocated portion of the allowance
during 1995.
<PAGE>
At December 31, 1995, approximately $765,961 in loans were accounted for on a
nonaccrual basis. The two non-performing loans that comprise the total are
expected to be paid off during the first half of 1996 with no losses of
principle anticipated. Total non-performing loans represent approximately 62% of
the allowance for loan losses at December 31, 1995. No loans were past due 90
days or more and still accruing interest. The Company has no material loans at
December 31, 1995 which should be classified as impaired loans in accordance
with FASB Statement No. 114 as amended by FASB Statement No. 118.
The loan portfolio is concentrated in the Southern Nevada area. Of total loan
commitments, 52% are in real estate loans, and 67% of real estate loan
commitments are comprised of residential construction loans.
Management places greater emphasis on the entry-level and first move-up housing
market. Additionally, land loans are conservatively underwritten. Management
reviews concentrations in the real estate loan portfolio on a quarterly basis.
Management also performs an analysis of the allowance for loan losses on a
quarterly basis and appraisal reviews are performed to support the values at
which loans are carried in the portfolio. Risk percentages are assigned to all
classified loans to ensure that the reserve is adequate and an excess reserve is
provided for any unexpected problems that may arise within the portfolio. The
Federal Deposit Insurance Corporation (FDIC), as an integral part of their
examination process, periodically reviews the Bank's allowance for loan losses,
and may require the Bank to make additions to the allowance based on their
judgment about information available to them at the time of their examinations.
Management feels that the current allowance for loan losses of $1,242,620 is
adequate for the Bank to meet all anticipated loan losses.
Non-Interest Income
Total non-interest income increased $239,941 or 20.27% during 1995 compared to a
$524,230 or 30.69% decrease during 1994. The main component of the 1994 decrease
was loss on sale of securities. During 1995, security losses were minimal,
thereby decreasing the loss and increasing the income in the general category.
During 1995, there was an increase in trust operations revenue of $59,644, or
22.61% due to increased assets under management. Other accounts affecting
non-interest income were the property rental income account which posted a
decrease of $84,039 or 30.54% due to the Bank's use of previously leased office
space located in its corporate headquarters. Voucher Control fees declined
$67,019 or 19.92% due to the reduction of construction loans made during the
year. Mortgage refinancing waned during the year, reflected in the reduction of
fees for the packaging of these loans. One source of non-interest income came
from a $121,000 F.D.I.C. insurance premium rebate. The Banking Insurance Fund
(BIF) became fully funded during 1995, and rebates were sent to participating
banks.
<PAGE>
Non-Interest Expense
Non-interest expenses are comprised of three major categories: salaries, wages
and employee benefits, occupancy expenses, and all other expenses. Total
non-interest expense increased by $856,470 or 10.82% in 1995 and by $675,887 or
9.34% in 1994. The three components of this category are analyzed as follows:
Salaries, Wages and Employee Benefits: Total salary, wages and employee benefit
expense increased $557,187 or 13.96% in 1995 while there was an increase of
$521,282 or 15.02% over 1993. Full-time equivalent staff increased from 98 in
1994 to 113 in 1995. To properly service a growing client base, the Bank found
it necessary to increase staff during 1995. Positions were added to all areas of
the bank as new products and services were introduced and Bank growth continued.
Planning for branch expansion and maintaining trained, qualified staff, mostly
supervisor staff, was a determining factor in the start-up of an operations
training program.
Salary, wages and employee benefits expenses will increase in 1996 as more
employees are added to staff the North Las Vegas branch.
Occupancy Expenses: Occupancy expenses decreased $115,038 or 7.11% during 1995
followed by a decrease of $31,002 or 1.88% in 1994. The decrease in 1995 was a
result of the majority of tenant improvements becoming fully depreciated. The
decrease in 1994 was a result of the relocation of the Bank's Sahara Office to a
new location.
Other Expenses: Total expenses in this category increased $414,321 or 17.99%
during 1995 compared to an increase of $185,607 or 8.77% in 1994. The increase
resulted primarily from a $295,420 or 131% increase in Directors' compensation.
The majority of this increase is the result of a $242,000 accrual related to the
Directors' portion of the 1995 Stock Appreciation Rights Plan. Additionally,
there was a 20.26% increase in professional fees due to costs associated with
the outsourcing of maintaining the Company's in-house computer system. As of
December 1995, this will now be done by staff employees.
Dividend Policy
It has been the policy of the Company to retain all earnings for the purpose of
supporting growth rather than pay cash dividends to shareholders. The Board of
Directors declared a four-for-three stock split on March 20, 1995 and a 15% and
15% stock dividend on March 21, 1994 and March 15, 1993, respectively.
New Accounting Pronouncements
In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment
of Long- Lived Assets and for Long-Lived Assets to be Disposed of. Statement No.
121 establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles to
be disposed of. Statement No. 121 will first be required for the Company's year
ending December 31, 1996. Based on management's preliminary analysis, the
Company does not anticipate that the adoption of Statement No. 121 will have a
material impact on the consolidated financial statements as of the date of
adoption.
In October 1995, the FASB issued Statement No. 123, Accounting for Stock-Based
Compensation. Statement No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans, such as stock options and
stock purchase plans. The statement generally suggests but does not require
stock-based compensation transactions to be accounted for based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. Statement No. 123 will first be
required for the Company's year ending December 31, 1996. Companies that do not
elect to change their accounting for stock-based compensation are required to
disclose the effect on net income and earnings per share. The Company has
decided not to adopt the accounting provisions of this statement.
<PAGE>
Item 8. Financial Statements and Supplementary Data
AMERICAN BANCORP OF NEVADA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
CONTENTS
- ----------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
- ----------------------------------------------------------------------------
FINANCIAL STATEMENTS
Consolidated balance sheets
Consolidated statements of income
Consolidated statements of stockholders' equity
Consolidated statements of cash flows
Notes to consolidated financial statements
- ----------------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
American Bancorp of Nevada
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheets of American Bancorp
of Nevada and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion of these
financial statements based on our audits. The accompanying consolidated
statements of income, stockholders' equity and cash flows of American Bancorp of
Nevada and subsidiaries for the year ended December 31, 1993, were audited by
other auditors whose report, dated January 19, 1994, expressed an unqualified
opinion on those statements.
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 1995 and 1994 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
American Bancorp of Nevada and subsidiaries as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Las Vegas, Nevada
January 18, 1996
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from banks (Note 2) ............................................$ 36,375,727 $ 22,215,873
Federal funds sold .......................................................... 9,500,000 --
--------------- ---------------
Cash and cash equivalents ................................................ 45,875,727 22,215,873
Available-for-sale securities (Note 3) ..................................... 124,285,842 90,059,304
Held-to-maturity securities (fair value 1994 $26,146,540) (Note 3) ......... -- 26,603,205
Loans (Note 4) .............................................................. 94,486,787 76,104,984
Less allowance for loan losses (Note 5) ..................................... (1,242,620) (726,899)
--------------- --------------
Net loans ........................................................ 93,244,167 75,378,085
Bank premises and equipment, net (Note 6) ................................... 10,509,791 9,565,564
Accrued interest receivable ................................................. 2,051,124 1,791,645
Deferred tax assets, net (Note 7) ........................................... 307,500 1,191,300
Other assets ................................................................ 416,477 614,274
--------------- --------------
Total assets .....................................................$ 276,690,628 $ 227,419,250
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand ..............................................$ 88,386,803 $ 78,165,856
Interest bearing:
Checking ............................................................... 94,601,128 85,112,163
Savings ................................................................ 18,431,473 18,112,723
Time, $100,000 and over ................................................ 5,354,883 6,478,200
Other time ............................................................. 4,749,552 4,942,291
--------------- --------------
Total deposits ................................................... 211,523,839 192,811,233
Securities sold under agreements to repurchase (Note 3) ..................... 36,748,550 13,779,992
Other liabilities ........................................................... 1,529,316 696,879
--------------- --------------
Total liabilities ................................................ 249,801,705 207,288,104
--------------- --------------
Commitments and Contingencies (Notes 8, 11 and 13)
Stockholders' Equity (Notes 3, 9, 10 and 11)
Common stock, $.05 par value, 5,000,000 shares authorized;
shares issued: 1995 3,229,877, 1994 2,381,907; shares
outstanding: 1995 3,213,803, 1994 2,365,658 .............................. 161,494 119,095
Surplus ..................................................................... 20,420,262 20,083,574
Retained earnings ........................................................... 6,156,314 2,050,480
Unrealized gain(loss) on available-for-sale securities, net ................. 284,000 (1,987,500)
--------------- --------------
27,022,070 20,265,649
Less treasury stock, at cost 1995 16,074 shares;
1994 16,249 shares ....................................................... (133,147) (134,503)
--------------- --------------
Total stockholders' equity ....................................... 26,888,923 20,131,146
--------------- --------------
Total liabilities and stockholders' equity .......................$ 276,690,628 $ 227,419,250
=============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans ................... $ 11,563,986 $ 8,307,315 $ 6,208,310
Interest on securities:
Taxable .................................... 6,090,622 4,330,032 3,740,511
Nontaxable ................................. 1,362,338 1,586,649 1,214,581
------------- ------------- ------------
Total interest on securities .................. 7,452,960 5,916,681 4,955,092
Interest on federal funds sold ................ 391,301 192,300 135,424
------------- ------------- ------------
Total interest income .............. 19,408,247 14,416,296 11,298,826
Interest expense:
Interest on deposits .......................... 4,997,620 2,939,359 2,500,369
Interest on securities sold under
agreements to repurchase ................... 1,017,803 384,452 268,202
------------- ------------- ------------
Total interest expense ............. 6,015,423 3,323,811 2,768,571
Net interest income ................ 13,392,824 11,092,485 8,530,255
Provision for loan losses (Note 5) ............... 570,000 20,000 130,000
------------- ------------- ------------
Net interest income after provision
for loan losses .................. 12,822,824 11,072,485 8,400,255
------------- ------------- ------------
Non-interest income:
Service charges on deposit accounts ........... 162,916 176,576 277,733
Gain (loss) on sale of securities, net (Note 3) (19,922) (246,245) 349,066
Other fees .................................... 307,648 312,276 284,674
Property rental ............................... 191,181 275,220 150,319
Trust operations .............................. 323,491 263,847 227,557
Voucher control fees .......................... 269,357 336,376 256,543
Other operating ............................... 189,252 65,932 162,320
------------- ------------- ------------
Total non-interest income .......... 1,423,923 1,183,982 1,708,212
------------- ------------- ------------
Non-interest expense:
Salaries, wages and employee benefits ......... 4,548,705 3,991,518 3,470,236
Occupancy (Note 8) ............................ 1,502,689 1,617,727 1,648,729
FDIC and state assessments .................... 376,026 419,972 363,252
Customer service .............................. 193,828 193,568 284,732
Professional fees ............................. 465,193 386,834 344,405
Advertising and public relations .............. 268,031 253,461 172,667
Directors' compensation ....................... 520,931 225,511 256,231
Other operating ............................... 893,253 823,595 696,047
------------- ------------- ------------
Total non-interest expense ......... $ 8,768,656 $ 7,912,186 $ 7,236,299
------------- ------------- ------------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) Years Ended December 31, 1995,
1994 and 1993
<TABLE>
1995 1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes and cumulative
effect of change in accounting principle . $ 5,478,091 $ 4,344,281 $ 2,872,168
Income tax expense (Note 7) ................. 1,371,000 1,030,000 650,000
------------- -------------- --------------
Income before cumulative
effect of change in
accounting principle ....... 4,107,091 3,314,281 2,222,168
Cumulative effect on prior years of change in
accounting for income taxes (Note 7) ..... -- -- 85,000
------------- -------------- --------------
Net income .................... $ 4,107,091 $ 3,314,281 $ 2,307,168
============= ============== ==============
Income per common and common equivalent
share
Income before cumulative effect of change
in accounting principle .................. $ 1.26 $ 1.04 $ 0.72
Cumulative effect on prior years of change
in accounting for income taxes ........... -- -- 0.03
------------- -------------- --------------
Net income per common and
common equivalent share .... $ 1.26 $ 1.04 $ 0.75
============= ============= ==============
Weighted average common shares outstanding .. 3,251,972 3,171,132 3,061,191
============= ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended December 31, 1995,
1994 and 1993
<TABLE>
Unrealized
Gain/
(Loss) On
Common Stock Securities
------------- Available
Outstanding Retained For Treasury
Shares Amount Surplus Earnings Sale, Net Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1992 ..................... 1,670,083 $ 84,457 $12,343,182 $3,143,288 $ -- $ (155,011) $15,415,916
Net income ...................................... -- -- -- 2,307,168 -- -- 2,307,168
15% stock dividend (Note 9) .................... 251,001 12,550 2,873,961 (2,886,511) -- -- --
Fractional shares issued in cash ................ -- -- -- (1,296) -- -- (1,296)
Stock options exercised (Note 11) ............... 34,595 1,729 161,505 -- -- -- 163,234
Tax effect of stock option transactions (Note 11) -- -- 15,540 -- -- -- 15,540
Sales of treasury stock ......................... 2,625 -- 9,199 -- -- 19,152 28,351
----------------------------------------------------------------------------------
Balances, December 31, 1993 ..................... 1,958,304 98,736 15,403,387 2,562,649 -- (135,859) 17,928,913
Net effect of change in accounting method ....... -- -- -- -- 374,000 -- 374,000
Net income ...................................... -- -- -- 3,314,281 -- -- 3,314,281
15% stock dividend (Note 9) ..................... 294,229 14,711 3,810,266 (3,824,977) -- -- - -
Fractional shares issued in cash ................ -- -- -- (1,473) -- -- (1,473)
Stock options exercised (Note 11) ............... 112,950 5,648 696,646 -- -- -- 702,294
Tax effect of stock option transactions (Note 11) -- -- 172,400 -- -- -- 172,400
Sales of treasury stock ......................... 175 -- 875 -- -- 1,356 2,231
Net change in unrealized loss on
available-for-sale securities, net (Note 3) .. -- -- -- -- (2,361,500) -- (2,361,500)
-----------------------------------------------------------------------------------
Balances, December 31, 1994 ..................... 2,365,658 119,095 20,083,574 2,050,480 (1,987,500) (134,503) 20,131,146
Net income ...................................... -- -- -- 4,107,091 -- -- 4,107,091
Four-for-three stock split (Note 9) ............. 791,919 39,596 (39,596) -- -- -- --
Fractional shares issued in cash ................ -- -- -- (1,257) -- -- (1,257)
Stock options exercised (Note 11) ............... 56,051 2,803 237,386 -- -- -- 240,189
Tax effect of stock option transactions (Note 11) -- -- 137,979 -- -- -- 137,979
Sales of treasury stock ......................... 175 -- 919 -- -- 1,356 2,275
Net change in unrealized loss on
available-for-sale securities, net (Note 3) -- -- -- -- 2,271,500 -- 2,271,500
-----------------------------------------------------------------------------------
Balances, December 31, 1995 ..................... 3,213,803 $161,494 $20,420,262 $6,156,314 $ 284,000 $ (133,147) $26,888,923
===================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 1995, 1994 and
1993
<TABLE>
1995 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Interest and fees on loans ..................... $ 11,192,886 $ 8,270,136 $ 6,200,521
Interest on securities .......................... 7,144,454 5,490,177 5,196,505
Interest on federal funds sold .................. 391,301 192,300 135,424
Other income .................................... 1,443,845 1,430,227 1,324,146
Interest paid on deposits ....................... (4,969,663) (2,920,764) (2,530,812)
Interest paid on agreements to repurchase ....... (1,017,803) (384,452) (268,202)
Cash paid to suppliers and employees ............ (7,464,901) (6,908,629) (6,130,684)
Income taxes paid ............................... (1,158,000) (845,000) (515,000)
------------- -------------- --------------
Net cash provided by operating activities .... 5,562,119 4,323,995 3,411,898
------------- -------------- --------------
Cash Flows From Investing Activities
Proceeds from maturities and sales of
available-for-sale securities (Note 3) ...... 50,775,814 59,402,456 --
Proceeds from maturities of
held-to-maturity securities .................. 32,483,201 37,978,620 --
Purchase of available-for-sale securities ....... (62,202,926) (75,384,827) --
Purchase of held-to-maturity securities ......... (25,000,000) (30,790,986) --
Proceeds from maturities and sales of
securities ................................... -- -- 71,612,949
Purchase of securities .......................... -- -- (99,558,774)
Net increase in loans made to customers ......... (18,272,799) (10,340,545) (9,956,543)
Purchase of bank premises and equipment ......... (1,607,926) (1,030,359) (1,332,964)
Net proceeds from sale of other real estate owned -- -- 1,371,888
------------ -------------- --------------
Net cash used in investing activities ........ (23,824,636) (20,165,641) (37,863,444)
------------ -------------- --------------
Cash Flows From Financing Activities
Net increase in deposits ........................ 18,712,606 19,147,158 18,754,754
Net increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase ..................... 22,968,558 (4,265,570) 10,657,836
Proceeds from issuance of common stock .......... 241,207 702,775 191,585
Other ........................................... -- -- 14,244
------------ -------------- --------------
Net cash provided by financing activities .... 41,922,371 15,584,363 29,618,419
------------ -------------- --------------
Net Increase (Decrease) in Cash and Due from
Banks and Federal Funds Sold .................... 23,659,854 (257,283) (4,833,127)
Cash and Due from Banks and Federal Funds
Sold, Beginning of Year ......................... 22,215,873 22,473,156 27,306,283
------------ -------------- --------------
Cash and Due from Banks and Federal Funds
Sold, End of Year ............................... $ 45,875,727 $ 22,215,873 $ 22,473,156
============ ============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Years Ended December 31, 1995,
1994 and 1993
<TABLE>
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Net income .................................... $ 4,107,091 $ 3,314,281 $ 2,307,168
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of bank
premises and equipment ................... 663,699 708,042 773,232
Amortization of securities and
accretion of discounts ................... (256,843) 197,111 273,563
Provision for loan losses .................. 570,000 20,000 130,000
Gain on sale of real estate owned .......... -- -- (35,000)
(Gain) loss on sale of securities .......... 19,922 246,245 (349,066)
Decrease (increase) in other assets ........ (374,185) (34,040) 17,557
Increase (decrease) in other liabilities ... 832,435 (127,644) 379,444
Cumulative effect of change in accounting
principle ................................ -- -- (85,000)
-------------- ------------ ------------
Net cash provided by operating
activities ..................... $ 5,562,119 $ 4,323,995 $ 3,411,898
============== ============ ============
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Conversion of loans to other real estate owned $ -- $ -- $ 705,000
Stock dividends ............................... $ -- $ 3,824,977 $ 2,886,511
Held-to-maturity securities transferred to
available-for-sale ......................... $ 25,344,511 $ -- $ --
Net change in unrealized gain (loss) on
available-for-sale securities .............. $ 2,271,500 $ (2,361,500) $ --
Four-for-three stock split .................... $ 39,596 $ -- $ --
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
AMERICAN BANCORP OF NEVADA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Note 1. Nature of Business And Significant accounting Policies
Nature of operations
American Bancorp of Nevada (the "Company") is a bank holding company providing a
full range of banking services to commercial and consumer customers through four
branches of its subsidiary, American Bank of Commerce (the "Bank"), located in
Southern Nevada.
The primary services provided by the Bank include commercial, construction and
real estate financing, and business loans to customers who are predominantly
small and middle-market businesses. The Bank also grants consumer loans to
individuals, offers a full array of depository accounts and provides full trust
and estate administration services.
The Company's business is concentrated in Southern Nevada and is subject to the
general economic conditions of this area.
A summary of the Company's significant accounting policies follows:
Use of estimates in the preparation of financial statements
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 and
disclosures of contingent asset and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of consolidation
The consolidated financial statements include the accounts of American Bancorp
of Nevada and its wholly-owned subsidiaries, American Bank of Commerce, AmBank
Mortgage Company and AmBank Financial, Inc. All significant intercompany
accounts and transactions have been eliminated in consolidation. AmBank Mortgage
Company's and AmBank Financial Inc.'s operations have been substantially
curtailed since 1986.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents includes cash on
hand, amounts due from banks (including cash items in process of clearing) and
federal funds sold. Cash flows from loans originated by the Bank, deposits and
federal funds purchased are reported net.
The Bank maintains amounts due from banks which, at times, may exceed federally
insured limits. The Bank has not experienced any losses in such accounts.
Held-to-maturity securities
Securities classified as held-to-maturity are those debt securities the Company
has both the intent and ability to hold to maturity regardless of changes in
market conditions, liquidity needs or changes in general economic conditions.
These securities are carried at cost, adjusted for amortization of premium and
accretion of discount, computed by the interest method over their contractual
lives.
Available-for-sale securities
Securities classified as available-for-sale include all equity securities and
those debt securities that the Company intends to hold for an indefinite period
of time but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of the
Company's assets and liabilities, liquidity needs, regulatory capital
considerations and other similar factors. Securities available-for-sale are
carried at fair value. Unrealized gains or losses are reported as increases or
decreases in stockholders' equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost of specific
securities sold, are included in earnings.
<PAGE>
Loans
Loans are stated at the amount of unpaid principal, reduced by unearned fees and
allowance for loan losses.
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
estimated losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior credit loss experience. This
evaluation also takes into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, review of specific
problem credits and current economic conditions that may affect the borrower's
ability to pay. While management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary if there are
significant changes in economic or other conditions. In addition, the Federal
Deposit Insurance Corporation (FDIC), as an integral part of their examination
process, periodically reviews the Bank's allowance for loan losses, and may
require the Bank to make additions to the allowance based on their judgment
about information available to them at the time of their examinations.
Impaired loans are measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. A loan is impaired when it is
probable the Company will be unable to collect all contractual principal and
interest payments due in accordance with the terms of the loan agreement.
Interest and fees on loans
Interest on loans is recognized over the terms of the loans and is calculated
under the effective interest method. The accrual of interest on impaired loans
is discontinued when, in management's opinion, the borrower may be unable to
meet payments as they become due. When interest accrual is discontinued, all
unpaid accrued interest is reversed. Interest income is subsequently recognized
only to the extent cash payments are received.
Loan origination and commitment fees and certain direct loan origination costs
are deferred and the net amount amortized as an adjustment of the related loan's
yield. The Company is generally amortizing these amounts over the contractual
life. Commitment fees based upon a percentage of a customer unused line of
credit and fees related to standby letters of credit, are recognized over the
commitment period.
Bank premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed principally by the straight-line method
over the following estimated useful lives:
Years
-----
Buildings 30
Equipment and furnishings 3 - 7
Improvements to leased property are amortized over the lesser of the term of the
lease or life of the improvements.
Earnings per common and common equivalent share
Earnings per common and common equivalent share are determined on the basis of
the weighted-average number of common shares and common equivalent shares
outstanding. The weighted average number of common and common equivalent shares
outstanding and earnings per share have been adjusted for all periods presented
to reflect the stock dividends and stock split discussed in Note 9. Common stock
equivalents represent the dilutive effect of outstanding stock options.
Income taxes
Effective January 1, 1993, the Company adopted Financial Accounting Standards
Board Statement No. 109, Accounting for Income Taxes. Under Statement No. 109,
deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effect of changes in tax laws and rates on the date of enactment.
<PAGE>
The Company and its subsidiaries file a consolidated income tax return. The
provision for taxes on income is based upon earnings reported in the
consolidated financial statements.
Advertising costs
Advertising costs are charged to expense as incurred.
Reclassification of certain items
Certain items on the balance sheet as of December 31, 1994 and the statements of
income and cash flows for the years ended December 31, 1994 and 1993 were
reclassified to be consistent with the classifications adopted for the year
ended December 31, 1995.
Fair value of financial instruments
FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value.
Management uses its best judgment in estimating the fair value of the Company's
financial instruments; however, there are inherent weaknesses in any estimation
technique. Therefore, for substantially all financial instruments, the fair
value estimates presented herein are not necessarily indicative of the amounts
the Company could have realized in a sales transaction at either December 31,
1995 or 1994. The estimated fair value amounts for 1995 and 1994 have been
measured as of their respective year ends, and have not been reevaluated or
updated for purposes of these consolidated financial statements subsequent to
those respective dates. As such, the estimated fair values of these financial
instruments subsequent to the respective reporting dates may be different than
the amounts reported at each year end.
The information in Note 14 should not be interpreted as an estimate of the fair
value of the entire Company since a fair value calculation is only required for
a limited portion of the Company's assets.
Due to the wide range of valuation techniques and the degree of subjectivity
used in making the estimate, comparisons between the Company's disclosures and
those of other companies or banks may not be meaningful.
The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:
Cash and due from banks
The carrying amounts reported in the consolidated balance sheets for cash
and due from banks, approximate their fair values.
Federal funds sold
The carrying amounts reported in the consolidated balance sheets for federal
funds sold approximate their fair values.
Securities
Fair values for securities are based on quoted market prices, dealer quotes,
or valuations obtained from securities pricing services offered by various
brokers. Fair values of securities with prepayment risk such as CMO's and
mortgage-backed securities and securities with little or no active trading
market such as certain structured notes and municipal securities do not
necessarily represent the actual trade price which could be obtained on any
given day for any particular security.
Loans
For variable rate loans that reprice frequently and that have experienced no
significant change in credit risk, fair values are based on carrying values.
At December 31, 1995 and 1994, variable rate loans comprised approximately
94% and 90% of the loan portfolio, respectively. The fixed rate loans at
December 31, 1995 have an average maturity of approximately three years and
an average interest rate which approximates market. Management estimates
that the fair values of the Company's fixed rate loans approximate their
carrying values.
Accrued interest receivable
The carrying amounts reported in the consolidated balance sheets for accrued
interest receivable approximate their fair values.
<PAGE>
Deposit liabilities
Fair values disclosed for demand deposits equal their carrying amounts,
which represent the amounts payable on demand. The carrying amounts for
variable-rate, deposit accounts approximate their fair values. Fair values
for fixed-rate certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on
these deposits. Early withdrawals of fixed-rate certificate of deposits are
not expected to be significant.
Securities sold under agreements to repurchase
The fair value of securities sold under agreements to repurchase, all of
which mature within one day, is the amount payable on demand at the
reporting date.
Off-balance-sheet instruments
Fair values for the Company's off-balance-sheet instruments (lending
commitments and standby letters of credit) are based on quoted fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the counterparties' credit standing.
Accounting by Creditors for Impairment of a Loan
On January 1, 1995, the Company adopted Financial Accounting Standards Board
(FASB) Statement No. 114, Accounting by Creditors for Impairment of a Loan, as
amended by FASB Statement No. 118, Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosures. There was no material effect on the
Company's consolidated financial statements for this change, which generally
requires impaired loans to be measured on the present value of expected future
cash flows discounted at the loan's effective interest rate, or as an expedient
at the loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. A loan is impaired when it is probable the
creditor will be unable to collect all contractual principal and interest
payments due in accordance with the terms of the loan agreement.
Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments
Effective January 1, 1995, the Company adopted FASB Statement No. 119,
Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments, which requires the Bank to make disclosures about the purposes of
the investment in derivative financial instruments and about how the instruments
are reported in financial statements. There was no material effect on the
consolidated financial statements relating to this adoption, since the Bank had
no material investments in derivative financial instruments.
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of
In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of. Statement No.
121 establishes accounting standard for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles to
be disposed of. Statement No. 121 will first be required for the Company's year
ending December 31, 1996. Based on management's preliminary analysis, the
Company does not anticipate that the adoption of Statement No. 121 will have a
material impact on the consolidated financial statements.
Accounting for Stock-Based Compensation
In October 1995, the FASB issued Statement No. 123, Accounting for Stock-Based
Compensation. Statement No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans, such as stock options and
stock purchase plans. The statement generally suggests but does not require
stock-based compensation transactions to be accounted for based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. Statement No. 123 will first be
required for the Company's year ending December 31, 1996. Companies that do not
elect to change their accounting for stock-based compensation are required to
disclose the effect on net income and earnings per share as if the provisions of
Statement No. 123 were applied. The Company has decided not to adopt the
accounting provisions of this statement.
Note 2. Restrictions on Cash and Due From Banks
The Company is required to maintain reserve balances in cash or on deposit with
Federal Reserve Banks. The total of those balances was approximately $5,126,000
at December 31, 1995.
<PAGE>
Note 3. Securities
Carrying amounts and fair values of available-for-sale securities as of December
31, 1995 and 1994 are summarized as follows:
<TABLE>
1995
------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------------------------------------------------
<S> <C> <C> <C> <C>
Equity securities ....................... $ 9,176,482 $ -- $ -- $ 9,176,482
Structured notes ........................ 14,939,417 4,673 305,190 14,638,900
Obligations of U. S. Treasury
and U.S. government agencies .......... 54,458,579 570,312 80,389 54,948,502
Obligations of states and
political subdivisions ................ 25,789,251 177,369 57,362 25,909,258
Collateralized mortgage obligations ..... 18,762,190 142,060 22,467 18,881,783
Other securities ........................ 728,923 1,994 -- 730,917
------------ ------------- ----------- ------------
$123,854,842 $ 896,408 $ 465,408 $124,285,842
============ ============= =========== ============
Equity securities ....................... $ 8,862,134 $ -- $ -- $ 8,862,134
Obligations of U. S. Treasury
and U.S. government agencies .......... 67,900,948 47,201 (2,555,584) 65,392,565
Obligations of states and
political subdivisions ................ 4,961,423 15,578 (284,590) 4,692,411
Mortgage-backed securities .............. 10,145,734 14,058 (242,719) 9,917,073
Other securities ........................ 1,200,564 -- (5,443) 1,195,121
------------ ------------- ------------ -------------
$ 93,070,803 76,837 $ (3,088,336) $ 90,059,304
============ ============= ============ =============
</TABLE>
Carrying amount and fair values of held-to-maturity securities as of December
31, 1994 are summarized as follows:
1994
<TABLE>
------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Obligations of states and
political subdivisions $ 26,603,205 $ 117,788 $ (574,453) $ 26,146,540
==================================================================
</TABLE>
The amortized cost and fair value of securities as of December 31, 1995, by
contractual maturities, are shown below. Maturities may differ from contractual
maturities in mortgage-backed securities because the mortgages underlying the
securities may be called or repaid without any penalties. Therefore, these
securities, and equity securities, which have no maturity, are listed separately
in the maturity summary. In addition, securities with amortized cost of
$53,334,426 and fair value of $53,828,808 contain certain call provisions. Given
certain interest rate environments some or all of these securities may be called
by their issuers prior to the scheduled maturities.
Amortized Fair
Cost Value
--------------------------
Due in one year or less ............................ $ 23,858,990 $ 23,950,083
Due after one year through 5 years ................. 59,243,898 59,349,437
Due after 5 years through 10 years ................. 11,367,747 11,357,888
Due after 10 years ................................. 1,445,535 1,570,169
Collateralized mortgage obligations ................ 18,762,190 18,881,783
Equity securities .................................. 9,176,482 9,176,482
------------ ------------
$123,854,842 $124,285,842
============ ============
<PAGE>
Proceeds from sales of available-for-sale securities and the gross gains and
losses realized on those sales during the years ended December 31, 1995, 1994
and 1993 are as follows:
<TABLE>
1995 1994 1993
--------------------------------------
<C> <C> <C>
Proceeds from sales .................... $32,483,201 $37,167,658 $19,791,642
----------- ----------- -----------
Gross realized gains ................... $ 47,561 $ 215,120 $ 397,786
Gross realized losses .................. (67,483) (461,365) (48,720)
----------- ----------- -----------
$ (19,922) $ (246,245) $ 349,066
=========== =========== ===========
</TABLE>
Securities with amortized cost of $63,396,639 and $35,133,553 at December 31,
1995 and 1994, respectively, were pledged to secure public deposits, securities
sold under agreements to repurchase and for other purposes required or permitted
by law.
On November 27, 1995, the Company reassessed the appropriateness of the
classification of all securities in accordance with the issuance of the
Financial Accounting Standards Board's Guide to Implementation of Statement 115
on Accounting for Certain Investments in Debt and Equity Securities. As a
result, the Company transferred $25,344,511 of securities previously classified
as held-to-maturity into available-for-sale securities. The Company did not
recognize an unrealized holding gain or loss as a result of the transfer.
Note 4. Loans
The composition of the Company's loan portfolio at December 31 is as follows:
1995 1994
- --------------------------------------------------------------------------------
Real estate loans:
Construction .................................... $15,113,573 $ 19,675,572
Residential ..................................... 10,643,190 6,907,000
Commercial ...................................... 34,627,184 28,164,512
----------- ------------
60,383,947 54,747,084
Commercial, financial and industrial loans ......... 24,875,838 17,875,351
Commercial receivables financing ................... 2,396,952 --
Loans to individuals ............................... 7,340,220 4,156,000
----------- ------------
94,996,957 76,778,435
Less unearned net loans fees ....................... 510,170 673,451
----------- ------------
$94,486,787 $ 76,104,984
=========== ============
The loans are expected to be repaid from cash flows or proceeds from the sale of
selected assets of the borrowers. The Company's policy for requiring collateral
is to obtain collateral whenever it is available or desirable, depending upon
the degree of risk the Company is willing to take.
The Company's real estate loans are secured by office buildings, land for
development, multifamily residential real estate, single family homes and other
property substantially all of which is in Southern Nevada. Substantially all of
these loans are secured by first liens with an initial loan to value ratio of
generally not more than 70%.
The Company has no material loans at December 31, 1995 which should be
classified as impaired loans in accordance with FASB Statement No. 114 as
amended by FASB Statement No. 118.
<PAGE>
Note 5. Allowance for Loan Losses
Changes in the allowance for loan losses are as follows:
Years Ended December 31,
-----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
Balance, beginning ...................... $ 726,899 $649,252 $524,442
Provision charged to operating expense 570,000 20,000 130,000
Recoveries of amounts charged off .... 32,130 72,331 117,670
Less amounts charged off ............. (86,409) (14,684) (122,860)
---------- -------- --------
Balance, ending ......................... $1,242,620 $726,899 $649,252
========== ======== ========
Note 6. Bank Premises and Equipment
The major classes of bank premises and equipment and the total accumulated
depreciation and amortization at December 31 are as follows:
December 31,
---------------------------
1995 1994
- --------------------------------------------------------------------------------
Land $ 2,902,594 $ 2,297,511
Building and improvements 8,214,022 7,630,022
Equipment and furniture 2,848,658 2,454,880
--------------------------
13,965,274 12,382,413
Less accumulated depreciation and amortization (3,455,483) (2,816,849)
--------------------------
$10,509,791 $ 9,565,564
==========================
Note 7. Federal Income Taxes
As discussed in Note 1, effective January 1, 1993, the Company adopted SFAS 109
on a prospective basis. There was an $85,000 cumulative effect of adopting SFAS
109 on the Company's financial position and results of operations.
The provision for federal income taxes is comprised of the following for the
years ended December 31:
1995 1994 1993
-----------------------------------
Current expense ........................ $1,593,600 $ 964,000 $ 578,691
Deferred tax (benefit)/charge .......... (222,600) 66,000 71,309
---------- ---------- ---------
$1,371,000 $1,030,000 $ 650,000
========== ========== =========
The provision for income taxes differs from the amounts computed by applying the
U. S. federal income tax rate to pretax income for the years ended December 31,
1995, 1994 and 1993 as follows:
<TABLE>
1995 1994 1993
-----------------------------------
<S> <C> <C> <C>
Expected provision for income taxes ................ $1,917,300 $1,520,000 $1,005,000
Tax exempt interest ................................ (476,800) (527,000) (325,000)
Disallowed interest expense ........................ 47,300 34,000 23,000
Dividends received deduction ....................... (51,000) (39,000) (46,000)
Benefit of income taxed at lower rates ............. (41,500) (28,600) (29,000)
Other .............................................. (24,300) 70,600 22,000
---------- ---------- ----------
$1,371,000 $1,030,000 $ 650,000
========== ========== ==========
</TABLE>
<PAGE>
The temporary differences which created deferred tax assets and liabilities at
December 31, 1995 and 1994 are as follows:
1995 1994
-------------------------
Deferred tax assets:
Unrealized loss on available-for-sale
securities $ 0 $1,062,800
Allowance for loan losses ........... 333,100 139,400
Deferred loan fees and expenses ..... 0 42,600
Bank premises and equipment ......... 76,100 51,000
Accrued expenses .................... 86,300 0
Other ............................... 20,200 0
--------- ----------
Total deferred tax assets .............. $ 515,700 $1,295,800
--------- ----------
Deferred tax liabilities:
Unrealized gain on available-for-sale
securities $(147,000) $ 0
Deferred loan fees and expenses ..... (61,200) 0
Accrued income and expenses ......... 0 (104,500)
--------- -----------
Total deferred tax liabilities ......... (208,200) (104,500)
--------- -----------
Net deferred tax assets ................ $ 307,500 $ 1,191,300
========= ===========
Note 8. Commitments and Contingencies
Contingencies
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on the consolidated
financial statements.
Financial instruments with off-balance-sheet risk
The Company is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. They involve, to varying degrees, elements of credit risk in excess
of amounts recognized on the consolidated balance sheets.
The Company's exposure to credit loss in the event of nonperformance by the
other parties to the financial instrument for these commitments is represented
by the contractual amounts of those instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
A summary of the contract amount of the Company's exposure to off-balance-sheet
risk as of December 31, 1995 and 1994 is as follows:
1995 1994
-------------------------
Commitments to extend credit .................. $44,851,447 $44,262,223
Standby letters of credit ..................... 3,391,044 3,193,226
----------- -----------
$48,242,491 $47,455,449
=========== ===========
Commitments to extent credit
Commitments to extend credit 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 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 party. Collateral held varies, but may
include accounts receivable, crops, livestock, inventory, property and
equipment, residential real estate and income-producing commercial properties.
<PAGE>
Standby letters of credit
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held varies
as specified above and is required as the Company deems necessary.
Lease Commitments
The Company leases certain premises under noncancelable operating leases
expiring in various years through 2006. The following is a schedule of future
minimum rental payments under these leases:
1996 $ 203,816
1997 203,816
1998 203,816
1999 203,816
2000 203,816
Thereafter 741,536
----------------
Total $ 1,760,616
================
Total rental expense under these leases and month-to-month leases for the years
ended December 31, 1995, 1994 and 1993 was $197,894, $253,880 and $268,834,
respectively.
Note 9. Common Stock
On March 20, 1995, the Board of Directors of the Company declared a
four-for-three stock split on the outstanding shares of common stock of the
Company, effective on April 11, 1995 for stockholders of record on April 4,
1995. On March 21, 1994 and March 15, 1993, the Board of Directors of the
Company declared 15% stock dividends on the outstanding shares of common stock
of the Company, payable on April 12, 1994 and April 6, 1993 to stockholders of
record on April 5, 1994 and March 30, 1993, respectively.
Note 10. Regulatory Capital
The Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory - and possibly additional discretionary 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 Bank must meet specific
capital guidelines that involve qualitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1995, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1995, the most recent notification from the Federal Deposit
Insurance Corporation (FDIC) categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized the Bank must maintain minimum total risk-based, Tier I risk-based
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since that management believes have changed the Bank's category.
<PAGE>
The Bank's actual capital amounts and ratios are presented in the following
table:
<TABLE>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------- ------------------ -----------------
Amount Ratio Amount Ratio Amount Ratio
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1995:
Total Capital (to Risk-Weighted Assets) ........ $26,253,000 17.6% $11,950,000 8% $14,937,000 10%
Tier I Capital (to Risk-Weighted Assets) ....... $25,021,000 16.8% $ 5,975,000 4% $ 8,962,000 6%
Tier I Capital (to Average Assets) ............. $25,021,000 9.8% 10,207,000 4% $12,759,000 5%
As of December 31, 1994:
Total Capital (to Risk-Weighted Assets) ........ $22,846,000 18.1% $10,042,000 8% $12,553,000 10%
Tier I Capital (to Risk-Weighted Assets) ....... $22,119,000 17.5% $ 5,021,000 4% $ 7,532,000 6%
Tier I Capital (to Average Assets) ............. $22,119,000 9.8% 9,013,000 4% $11,266,000 5%
</TABLE>
The Company's capital amounts and ratios are substantially the same as the
amounts presented above.
Additionally, State of Nevada banking regulations restrict distribution of the
net assets of the Bank because such regulations require the sum of the Bank's
stockholders' equity and allowance for loan losses to be at least 6% of the
average of the Bank's total daily deposit liabilities for the preceding 60 days.
As a result of these regulations, approximately $12,367,500 and $11,452,000 of
the Bank's stockholders' equity was restricted at December 31, 1995 and 1994,
respectively.
Note 11. Stock Options and Stock Appreciation Rights
Stock Options
The Company has granted certain directors, officers and key employees options to
purchase shares of the Company's common stock at prices equal to or greater than
the fair market value at the date of grant. On April 17, 1995, the Company's
shareholders approved the 1995 Stock Option Plan ("1995 Plan"). The 1995 Plan
authorized 350,000 shares of common stock to be provided by shares authorized
but unissued. Options under the 1995 plan become exercisable in annual
installments of 25% of the amount granted per optionee, one year following the
date of grant and expire five years after the date of grant. Options granted
prior to 1995 become exercisable, in annual installments of 20% of the amount
granted per optionee, upon the date of grant. Strike prices of the options range
from $3.85 to $13.50 and are based on the fair market value of the Company's
common stock at the time the option is granted. When options are exercised, the
proceeds and related tax benefits are credited to common stock and capital
surplus.
1995 1994 1993
------------------------------
Under option, beginning of year ................ 123,900 239,050 271,095
Granted ..................................... 123,750 -- 21,750
Granted due to stock split .................. 36,950 -- --
Relinquished ................................ (4,967) (2,200) (19,200)
Exercised ................................... (56,051) (112,950) (34,595)
-------- --------- --------
Under option, end of year ...................... 223,582 123,900 239,050
======== ========= ========
Options exercisable, end of year ............... 75,780 86,850 175,250
Available to grant, end of year ................ 232,000 1,750 10,950
Average price under option, end of year ........ $ 9.98 $ 5.19 $ 4.93
Average price of options granted, during the
year ...................................... $ 13.37 $ -- $ 8.14
<PAGE>
Stock Appreciation Rights
On January 23, 1995, the Company's Board of Directors approved the 1995 Stock
Appreciation Rights Plan ("SAR Plan"). The SAR Plan authorized 350,000 rights to
be granted to certain directors, officers and key employees at the discretion of
the Board of Directors. Each right gives the grantee the right to receive cash
payment from the Company equal to the excess of (a) the fair market value of a
share of the Company's common stock at a date, as determined by the SAR Plan,
approximating the date such right is exercised over (b) the fair market value of
a share of the Company's common stock on the date of grant. Grantees may
exercise their rights at any time between the time a right vests and five years
following the date of grant. Rights granted under the SAR Plan vest in annual
installments of 25% beginning one year following the date of grant. 129,333
rights were granted during the year ended December 31, 1995 at an average price
of $11.48 per right and are outstanding at December 31, 1995. No rights are
exercisable at December 31, 1995. Changes in the market price of the Company's
common stock are reflected as a ratable charge to earnings for each period in
which the rights are outstanding.
Note 12. Trust Department
Assets with a recorded value of $65,557,444 and $45,818,894 were held in trust
for others at December 31, 1995 and 1994, respectively. These assets and the
offsetting liability amounts are not recorded on the consolidated financial
statements.
Note 13. Employee Benefit Plan
The Company has a qualified 401(k) employee benefit plan for all eligible
employees. Each participant is able to defer a maximum of 15% of their annual
compensation subject to Internal Revenue Code maximums. The Company contributes
an amount equal to 100% of each employee's contribution up to the first 3%, and
50% for contributions over 3% but no more than 6% of the employee's annual
compensation. Additionally, the Company may elect to contribute a discretionary
amount each year, but no election was made during 1995, 1994 or 1993. The
Company's total contribution for 1995, 1994 and 1993 was $93,496, $110,279 and
$96,253, respectively.
<PAGE>
Note 14. Fair Value of Financial Instruments
The fair values of the Company's financial instruments at December 31, are as
follows:
<TABLE>
1995 1994
--------------------------- ---------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks .................... $ 36,375,727 $ 36,375,727 $ 22,215,873 $ 22,215,873
Federal funds sold ......................... 9,500,000 9,500,000 -- --
Available-for-sale securities .............. 124,285,842 124,285,842 90,059,304 90,059,304
Held-to-maturity securities ................ -- -- 26,603,205 26,146,540
Loans, net ................................. 93,244,167 93,244,167 75,378,085 75,378,085
Accrued interest receivable ................ 2,051,124 2,051,124 1,791,645 1,791,645
------------ ------------ ------------ ------------
$265,456,860 $265,456,860 $216,048,112 $215,591,447
============ ============ ============ ============
Financial liabilities:
Deposits ................................... $211,523,839 $211,523,839 $192,811,233 $192,811,233
Securities sold under
agreements to repurchase ................ 36,748,550 36,748,550 13,779,992 13,779,992
------------ ------------ ------------ ------------
$248,272,389 $248,272,389 $206,591,225 $206,591,225
------------ ------------ ------------ ------------
Unrecognized financial
instruments:
Commitments to extend credit ............... $ -- $ 370,046 $ -- $ 418,640
Standby letters of credit .................. -- 34,486 -- 32,571
----------- ------------ ------------ ------------
$ -- $ 404,532 $ -- $ 451,211
=========== ============ ============ ============
</TABLE>
Note 15. Condensed Financial Information
Condensed financial information of the Company (parent only) is provided below:
American Bancorp of Nevada (parent only)
Condensed Statements of Financial Condition
December 31, 1995 and 1994
<TABLE>
Assets 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 889,160 $ 827,846
Due from American Bank of Commerce 187,940 -
Investment in American Bank of Commerce 25,305,331 18,571,502
Investment in other subsidiaries 586,107 562,409
Income tax refund claim 206,977 172,400
Deferred tax asset 126,002 15,540
---------------------------------
Total assets $ 27,301,517 $ 20,149,697
================ ================
Liabilities and Stockholders' Equity
- -------------------------------------------------------------------------------------------------------------
Liabilities - Accrued and other liabilities $ 412,594 $ 18,551
---------------------------------
Stockholders' Equity
Common stock 161,494 119,095
Surplus 20,420,262 20,083,574
Retained earnings 6,156,314 2,050,480
Unrealized gain (loss) on available-for-sale securities, net 284,000 (1,987,500)
---------------------------------
27,022,070 20,265,649
Less treasury stock, at cost (133,147) (134,503)
---------------------------------
Total stockholders' equity 26,888,923 20,131,146
---------------------------------
Total liabilities and stockholders'
equity $ 27,301,517 $ 20,149,697
=================================
</TABLE>
<PAGE>
American Bancorp of Nevada (parent only)
Condensed Income Statements
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses ....................................... $ 573,935 $ 160,497 $ 139,003
---------- ---------- -----------
Loss before equity in undistributed earnings of
subsidiaries ................................ (573,935) (160,497) (139,003)
Equity in undistributed earnings of subsidiaries 4,486,026 3,474,778 2,446,171
---------- ---------- ----------
Net income before tax .......................... 3,912,091 3,314,281 2,307,168
Income tax benefit ............................. 195,000 -- --
---------- ---------- ----------
Net income ..................................... $4,107,091 $3,314,281 $2,307,168
========== ========== ==========
</TABLE>
American Bancorp of Nevada (parent only) Statements of Cash Flows Years Ended
December 31, 1995, 1994 and 1993
<TABLE>
1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Other non-interest expense ..................... $ (573,935) $ (160,497) $ (139,003)
Income tax benefit ............................. 195,000 -- --
(Increase) decrease in other assets ............ (145,039) (187,940) 506
(Increase) in due from American Bank
of Commerce ................................. (187,940) -- --
Increase (decrease) in accrued liabilities ..... 394,042 4,682 (11,139)
---------- ----------- -----------
Net cash used in operating activities (317,872) (343,755) (149,636)
---------- ----------- -----------
Cash Flows From Financing Activities
Proceeds from sales of treasury stock .......... 2,275 2,231 28,351
Proceeds from issuance of common stock ......... 240,189 702,294 163,234
Fractional shares issued in cash ............... (1,257) (1,473) (1,296)
Stock option tax credit ........................ 137,979 172,400 15,540
---------- ----------- -----------
Net cash provided by
financing activities ............ 379,186 875,452 205,829
---------- ----------- -----------
Net increase in cash ................ 61,314 531,697 56,193
Cash, Beginning of Year ........................... 827,846 296,149 239,956
---------- ----------- -----------
Cash, End of Year ................................. $ 889,160 $ 827,846 $ 296,149
========== =========== ===========
Reconciliation of Net Income to Net Cash
Used In Operating Activities:
Net income ..................................... $4,107,091 $ 3,314,281 $ 2,307,168
Earnings from subsidiaries ..................... (4,486,026) (3,474,778) (2,446,171)
(Increase) decrease in other assets ............ (145,039) (187,940) 506
Increase (decrease ) in other liabilities ...... 394,042 4,682 (11,139)
(Increase) in due from American Bank of Commerce (187,940) -- --
---------- ----------- -----------
Net cash used in operating activities $ (317,872) $ (343,755) $ (149,636)
========== =========== ===========
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Stock dividends issued ......................... $ -- $ 3,824,977 $ 2,886,511
========== =========== ===========
</TABLE>
<PAGE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Pursuant to Regulation S-K, 229.304, Item 304(a) (1)(I), American Bancorp of
Nevada's (hereinafter referred to as "Company") independent accountant Deloitte
& Touche was dismissed as of March 30, 1994 and replaced with McGladrey & Pullen
LLP, Certified Public Accountants.
None of the principal accountant's reports on the financial statements for
either of the two most recent fiscal years preceding the dismissal contained an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
The decision to change accountants was recommended and approved by the Audit
Committee of the Board of Directors of the Company.
During the Company's two most recent fiscal years and any subsequent interim
period preceding such dismissal, there were no disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreement(s), if
not resolved to the satisfaction of the former accountant, would have caused it
to make reference to the subject matter of the disagreement(s) in connection
with this report.
On or about March 18, 1994, the Company solicited proposals from other
independent certified public accountants. The purpose in seeking proposals was,
amongst other objectives, to locate a firm that had national name recognition.
The Company engaged McGladrey & Pullen, LLP on September 21, 1994.
During the Company's two most recent fiscal years, and any subsequent interim
period prior to engaging that accountant, the registrant has not consulted the
newly engaged accountant regarding (1) either the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on the registrant's financial
statements, and neither a written report was provided to the registrant nor oral
advice was provided that the new accountant concluded was an important factor
considered by the registrant in reaching a decision as to the accounting,
auditing or financial reporting issue; or (2) any matter that was either the
subject of disagreement or a reportable event.
PART III
ITEM 10-13
The information called for by Items 10 through 13 of Part III is incorporated by
reference herein from the Bancorp's Proxy Statement for Annual Meeting of
Shareholders.
PART IV
ITEM 14- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. 1. Financial Statements
See Part II, Item 8 for the index to Consolidated Financial Statements.
2. Financial Statement Schedules
All schedules are omitted for the reason that they are not applicable, or the
required information is shown in the financial statements or notes thereto.
3. Exhibits
(3) Articles of Incorporation are incorporated by reference to Exhibit 5 of
the Registrant's Registration
<PAGE>
Statement on Form S-14 (File No. 2-76974). Registrant's Bylaws are
incorporated by reference to Exhibit 6 of Registrant's Registration Statement
on Form S-14 (File No. 2-76974).
(4) Instruments defining the rights of security holders.
Inapplicable.
(9) Voting Trust Agreement.
Inapplicable.
(10) Material Contracts.
Inapplicable.
(12) Statement re-computation of ratios.
Inapplicable.
(18) Letter re-change in accounting principles.
Inapplicable.
(21) Subsidiaries of the Registrant.
The subsidiaries of Bancorp are as follows:
a. American Bank of Commerce, a Nevada Corporation
b. AmBank Financial, Inc., a Nevada Corporation
c. AmBank Mortgage Company, a Nevada Corporation
(22) Published report regarding matters submitted to vote of security
holders.
Inapplicable.
(23) Independent Auditors' Consent.
23 - 1 Consent of McGladrey & Pullen, LLP
23 - 2 Consent of Deloitte & Touche, LLP
(27) Financial Data Schedule
B. Reports on Form 8-K
During the last quarter of Fiscal Year 1995, the following reports on Form
8-K were filed:
None.
c. Exhibits
See Item A.3 above.
<PAGE>
POWER OF ATTORNEY
American Bancorp of Nevada, and each of the undersigned, do hereby constitute
and appoint James V. Bradham, Robert E. Olson, and Patricia L. Kirkwood, and
each of them individually, as attorney-in-fact, to act as its or their true and
lawful attorneys to execute on behalf of American Bancorp of Nevada and the
undersigned any and all amendments to this Annual Report on Form 10-K and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this form to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated March 18, 1996 AMERICAN BANCORP OF NEVADA (Registrant)
By: /s/ James V. Bradham
-------------------------------------
James V. Bradham
President and Chief Executive Officer
By: /s/ Robert E. Olson
-------------------------------------
Robert E. Olson
Executive Vice President and
Chief Financial Officer
By: /s/ Patricia L. Kirkwood
-------------------------------------
Patricia L. Kirkwood
Executive Vice President and Cashier
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons and in the capacities and on the
dates indicated:
Signature and Title Date
/s/ Claudine Williams March 18, 1996
- ---------------------------------
Claudine Williams
Director, Chairman of the Board
/s/ Keith Ashworth March 18, 1996
- ---------------------------------
Keith Ashworth
Director, Vice Chairman
/s/ James V. Bradham March 18, 1996
- ---------------------------------
James V. Bradham
Director, and President
/s/ Edward D. Smith March 18, 1996
- ---------------------------------
Edward D. Smith
Director, Corporate Secretary
/s/ Vern J. Christensen March 18, 1996
- ---------------------------------
Vern J. Christensen
Director
/s/ Elias F. Ghanem March 18, 1996
- ---------------------------------
Elias F. Ghanem, M.D.
Director
/s/ Nasser F. Ghanem March 18, 1996
- ---------------------------------
Nasser F. Ghanem
Director
/s/ Joel A. Laub March 18, 1996
- ---------------------------------
Joel A. Laub
Director
/s/ Betty Lou Lehman March 18, 1996
- ---------------------------------
Betty Lou Lehman
Director
/s/ Darrell A. Luery March 18, 1996
- ---------------------------------
Darrell A. Luery
Director
Exhibit 23.1
To the Board of Directors
American Bancorp of Nevada
Las Vegas, Nevada
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 dated July 6, 1989, February 27, 1990 and August 28, 1995
of our report, dated January 18, 1996, on the consolidated financial statements
of American Bancorp of Nevada as of and for the years ended December 31, 1995
and 1994, which appears on page 10 of the 1995 Annual Report to Shareholders of
American Bancorp of Nevada and subsidiaries.
/s/ McGladrey & Pullen, LLP
- ---------------------------
March 21, 1996
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-29914, 33-33409 and 33-62217 of American Bancorp of Nevada on Form S-8 of our
report dated January 19, 1994, incorporated by reference in this Annual Report
on Form 10-K of American Bancorp of Nevada for the year ended December 31, 1995.
/s/ Deloitte & Touche LLP
- -------------------------
Las Vegas, Nevada
March 14, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1995 FORM 10-K OF AMERICAN BANCORP OF NEVADA AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 36,376
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 124,286
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 94,487
<ALLOWANCE> 1,243
<TOTAL-ASSETS> 276,691
<DEPOSITS> 211,524
<SHORT-TERM> 36,749
<LIABILITIES-OTHER> 1,529
<LONG-TERM> 0
0
0
<COMMON> 162
<OTHER-SE> 26,727
<TOTAL-LIABILITIES-AND-EQUITY> 276,691
<INTEREST-LOAN> 11,564
<INTEREST-INVEST> 7,453
<INTEREST-OTHER> 391
<INTEREST-TOTAL> 19,408
<INTEREST-DEPOSIT> 4,997
<INTEREST-EXPENSE> 6,015
<INTEREST-INCOME-NET> 13,393
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<SECURITIES-GAINS> (20)
<EXPENSE-OTHER> 8,769
<INCOME-PRETAX> 5,478
<INCOME-PRE-EXTRAORDINARY> 4,107
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<NET-INCOME> 4,107
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
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<ALLOWANCE-DOMESTIC> 1,243
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</TABLE>
