File No. 33-61065
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
AMBANC CORP.
(Exact name of Registrant as specified in its charter)
INDIANA
(State or other jurisdiction of
incorporation or organization)
6711
(Primary Standard Industrial
Classification Code Number)
35-1525227
(I.R.S. Employer Identification No.)
302 MAIN STREET, BOX 556
VINCENNES, INDIANA 47591-0556; (812) 885-6418
(Address, including Zip Code, and telephone number,
including area code, of registrant's principal
executive offices)
ROBERT G. WATSON, PRESIDENT
AMBANC CORP.
302 MAIN STREET, BOX 556
VINCENNES, INDIANA 47591-0556; (812) 885-6418
(Name, address, including Zip Code,
and telephone number, including
area code, of agent for service)
Copy to:
John R. Zerkle, Esq.
Leagre & Barnes
9100 Keystone Crossing
Suite 800
P. O. Box 40609
Indianapolis, Indiana 46240-0609
<PAGE>
<PAGE>2
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
<PAGE>3
AMBANC CORP.
Cross Reference Sheet
A. Information about the Transaction
Item 1 - Forepart of
Registration Statement
and Outside Front Cover
Page of Prospectus Outside Front Cover Page
Item 2 - Inside Front
and Outside Back Cover
Pages of Prospectus Available Information, Table of
Contents
Item 3 - Risk Factors,
Ratio of Earnings to
Fixed Charges and Other
Information Prospectus Summary
Item 4 - Terms of the
Transaction Description of AMBANC Capital
Stock; Comparison of Robinson
Common Stock and AMBANC Common
Stock
Item 5 - Pro Forma
Financial Information Pro Forma Financial Data
Item 6 - Material
Contracts with the
Company Being Acquired The Merger -- Background and
Reasons for the Merger
Item 7 - Additional
Information Required for
Reoffering by Persons
and Parties Deemed to be
Underwriters *
Item 8 - Interests of
Named Experts and
Counsel Experts
Item 9 - Disclosure of
Commission Position on
Indemnification for
Securities Act
Liabilities *
<PAGE>
<PAGE>4
B. Information about the Registrant
Item 10 - Information
with Respect to S-3
Registrants *
Item 11 - Incorporation
of Certain Information
by Reference *
Item 12 - Information
with Respect to S-2 or
S-3 Registrants Information About AMBANC
Item 13 - Incorporation
of Certain Information
by Reference Incorporation of Certain Documents
by Reference
Item 14 - Information
with Respect to Other
Than S-3 or S-2
Registrants *
C. Information about The Company Being Acquired
Item 15 - Information
with Respect to S-3
Companies *
Item 16 - Information
with Respect to S-2
and S-3 Companies *
Item 17 - Information
with Respect to
Companies Other Than
S-3 or S-2 Companies Information About Robinson
D. Voting and Management Information
Item 18 - Information
if Proxies, Consents
or Authorizations are
to be Solicited Information Concerning the Special
Meeting; THE MERGER -- Management
of AMBANC After the Merger; Rights
of Dissenting Shareholders;
Information About AMBANC;
Information About Robinson;
Incorporation of Certain Documents
by Reference<PAGE>
<PAGE>5
Item 19 - Information
if Proxies, Consents
or Authorizations are
not to be Solicited in
an Exchange Offer *
* Omitted because item is inapplicable or answer to item is
negative
<PAGE>
<PAGE>6
FIRST ROBINSON BANCORP
300 WEST MAIN STREET
ROBINSON, ILLINOIS 62454
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 1995
Notice is hereby given that a Special Meeting of
Shareholders of First Robinson Bancorp ("Robinson") will be held
at the principal office of The First National Bank in Robinson,
300 West Main Street, Robinson, Illinois 62454, on ,
, 1995, at .m. Robinson time (the "Special
Meeting"), for the following purposes:
l. To consider and vote upon a proposal to approve and
adopt an Amended Agreement of Merger and Plan of
Reorganization dated June 19, 1995, among AMBANC Corp. and
Robinson and certain of their subsidiaries (the "Agreement
of Merger"), and a Merger Agreement between Robinson and FRB
Corp., a wholly owned subsidiary of AMBANC Corp., and joined
in by AMBANC Corp., in the form attached to the Agreement of
Merger as Appendix A, and to approve the transactions
contemplated thereby, including the merger of Robinson with
and into FRB Corp. (the "Merger").
2. To transact such other business as may properly
come before the Special Meeting or any adjournment or
adjournments thereof.
Notice also is hereby given that Robinson shareholders have
rights of dissent pursuant to the Illinois Business Corporation
Act of 1983, as amended. The procedures for perfecting rights of
dissent are set forth in section 11.70 Of the Illinois Business
Corporation Act. Robinson shareholders who do not vote in favor
of the Merger and who demand payment for their shares of Robinson
Common Stock in accordance with Section 11.70 of the Illinois
Business Corporation Act may receive payment for the fair value
of their shares of Robinson Common Stock as determined pursuant
to Section 11.70. A copy of Section 11.70 of the Illinois
Business Corporation Act is attached as Appendix B to this
Prospectus/Proxy Statement.
Holders of Robinson Common Stock of record at the close of
business on August , 1995, are entitled to notice of and to vote
at the Special Meeting or any adjournment or adjournments
thereof.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
ALL SHAREHOLDERS, EVEN IF THEY PLAN TO ATTEND THE MEETING, ARE
REQUESTED TO COMPLETE, SIGN, AND DATE THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE<PAGE>
<PAGE>7
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Musgrave, President
August , 1995
Robinson, Illinois<PAGE>
<PAGE>8
AMBANC CORP.
PROSPECTUS
FIRST ROBINSON BANCORP
PROXY STATEMENT
This Prospectus/Proxy Statement relates to the proposed
merger (the "Merger") of First Robinson Bancorp, Robinson,
Illinois ("Robinson"), into FRB Corp., a wholly owned subsidiary
of AMBANC Corp., Vincennes, Indiana ("AMBANC"), pursuant to and
in accordance with an Amended Agreement of Merger and Plan of
Reorganization, dated June 19, 1995, among AMBANC, Robinson, FRB
Corp., The First National Bank in Robinson and Farmers' State
Bank of Palestine. AMBANC is the parent company of The American
National Bank of Vincennes, Indiana, Citizens' National Bank of
Linton, Indiana; Farmers' State Bank of Palestine, Illinois
("Farmers'"); and Bank of Casey, Illinois. Robinson is the
parent company of The First National Bank in Robinson, Illinois
("First National"). Immediately prior to and as an integral part
of the Merger, Farmers' will merge with and into First National.
In addition, following the Merger, FRB Corp. will be merged into
AMBANC, with the result that First National will become a wholly
owned subsidiary of AMBANC.
If the proposed Merger is consummated, each outstanding
share of common stock of Robinson, no par value per share
("Robinson Common Stock"), other than shares as to which
dissenters' rights under the Illinois Business Corporation Act
have been perfected, will be converted into the right to receive
5.3398 shares of Common Stock of AMBANC, $10.00 par value per
share ("AMBANC Common Stock"). No fractional shares of AMBANC
Common Stock will be issued. Robinson shareholders will receive
in lieu of any fractional share interest to which they otherwise
would be entitled an amount in cash equal to the product of the
fractional share interest multiplied by $32.00. The most recent
sales transaction in AMBANC Common Stock, as reported on NASDAQ,
was on , 1995 at $ per share. The Merger is subject
to the approval of the holders of two-thirds of the shares of the
Robinson Common Stock eligible to vote thereon and to the
satisfaction of certain other conditions, including obtaining
various regulatory approvals. For a more complete description of
the Merger, see "THE MERGER."
The Special Meeting of the shareholders of Robinson will be
held at the principal office of The First National Bank in
Robinson, 300 West Main Street,<PAGE>
<PAGE>9
Illinois 62454, at .m., Robinson time, on , ,
1995 to (a) consider the Merger proposal, and (b) transact such
other business as may properly come before the meeting. This
Prospectus/Proxy Statement constitutes both a Prospectus of
AMBANC covering the AMBANC Common Stock to be issued by it
pursuant to the Merger and a Proxy Statement in connection with
the solicitation by the Board of Directors of Robinson of proxies
to be voted at the Special Meeting.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus/Proxy Statement is August ,
1995.
<PAGE>
<PAGE>10
AVAILABLE INFORMATION
AMBANC is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act").
Accordingly, AMBANC files proxy statements, annual and quarterly
reports, and other information with the Securities and Exchange
Commission (the "Commission"). Those proxy statements, reports,
and other information may be inspected and copied at prescribed
rates, at the public reference facilities maintained by the
Commission at the addresses set forth below.
AMBANC has filed with the Commission a Registration
Statement under the Securities Act of 1933, as amended (the "1933
Act"), covering the shares of AMBANC Common Stock to be issued in
connection with the Merger. This Proxy Statement also
constitutes the Prospectus of AMBANC filed as part of that
Registration Statement. This Proxy Statement does not contain
all of the information set forth in the Registration Statement.
The Registration Statement and the exhibits thereto can be
inspected at the Commission's public reference room, Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
as well as the Commission's regional offices located at: 7 World
Trade Center, Suite 1300, New York, New York 10048; and Suite
1400, 500 West Madison Street, Chicago, Illinois 60661.
-------------------------------
SOURCES OF INFORMATION
The information in the above-described Registration
Statement, including this Prospectus/Proxy Statement, concerning
AMBANC and its affiliates, on the one hand, and concerning
Robinson and its affiliates, on the other hand, has been supplied
by management of the respective companies.
-------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS/PROXY
STATEMENT IN CONNECTION WITH THE SOLICITATION OR OFFERING MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AMBANC OR
ROBINSON. THIS PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION
IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS<PAGE>
<PAGE>11
PROSPECTUS/PROXY STATEMENT NOR ANY DISTRIBUTION OF THE SECURITIES
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
INFERENCE OR IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE AFFAIRS OF AMBANC OR ROBINSON SINCE THE DATE HEREOF.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
AMBANC's 1994 Annual Report to Shareholders is being
delivered with this prospectus and AMBANC's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 is included as
Appendix D to this Prospectus/Proxy Statement. Copies of the
AMBANC 1994 Annual Report to Shareholders were forwarded to the
Commission for receipt on April 3, 1995. The following documents
are incorporated by reference into this Prospectus/Proxy
Statment: (1) Pages 4, 6, 7 through 47, and 49 through 50 of
AMBANC's 1994 Annual Report to Shareholders; (2) AMBANC's Annual
Report on Form 10-K for the year ended December 31, 1994, which
was filed on March 31, 1995, as amended and filed on August 29,
1995,; (3) AMBANC's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995, which was filed on May 11, 1995, as amended
and filed on August 28, 1995; (4) AMBANC's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, which was filed on
August 11, 1995, as amended and filed on August 28, 1995;
(5) AMBANC's Current Report on Form 8-K, dated March 27, 1995,
which was filed on April 3, 1995; and (6) AMBANC's Current Report
on Form 8-K, dated June 19, 1995, which was filed on June 28,
1995. Except as set forth in this Prospectus/Proxy Statement,
there have been no material changes in the information set forth
in such Reports.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus/Proxy
Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as modified or superseded, to constitute a
part of this Prospectus/Proxy Statement.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES BY REFERENCE
DOCUMENTS RELATING TO AMBANC WHICH ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS (EXCLUDING UNINCORPORATED
EXHIBITS) ARE AVAILABLE WITHOUT CHARGE TO EACH PERSON (INCLUDING
ANY BENEFICIAL OWNER) TO WHOM THIS PROXY STATEMENT IS DELIVERED
UPON WRITTEN OR ORAL REQUEST TO INVESTOR RELATIONS, AMBANC CORP.,
302 MAIN STREET, BOX 556, VINCENNES, INDIANA 47591-0556 (812)
885-6418. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1995.
<PAGE>
<PAGE>12
TABLE OF CONTENTS
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . 10
SOURCES OF INFORMATION. . . . . . . . . . . . . . . . . . . . 10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . 11
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 16
SUMMARY OF PROSPECTUS/PROXY STATEMENT . . . . . . . . . . . . 18
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . 18
PARTIES TO THE MERGER. . . . . . . . . . . . . . . . . . . . 18
AMBANC. . . . . . . . . . . . . . . . . . . . . . . . . . 18
FRB CORP. . . . . . . . . . . . . . . . . . . . . . . . . 19
ROBINSON. . . . . . . . . . . . . . . . . . . . . . . . . 19
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 20
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 20
MERGER CONSIDERATION. . . . . . . . . . . . . . . . . . . 20
THE BANK MERGER . . . . . . . . . . . . . . . . . . . . . 21
OPINION OF FINANCIAL ADVISOR. . . . . . . . . . . . . . . 21
RIGHTS OF DISSENTING SHAREHOLDERS . . . . . . . . . . . . 22
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER . . . . . . 22
REGULATORY APPROVAL . . . . . . . . . . . . . . . . . . . 23
VOTES REQUIRED FOR APPROVAL . . . . . . . . . . . . . . . 23
MARKET DATA FOR COMMON STOCK. . . . . . . . . . . . . . . 24
SUMMARY SELECTED FINANCIAL INFORMATION. . . . . . . . . . 25
INFORMATION CONCERNING THE SPECIAL MEETING. . . . . . . . . . 30
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
VOTES REQUIRED . . . . . . . . . . . . . . . . . . . . . . . 30
PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SOLICITATION OF PROXIES. . . . . . . . . . . . . . . . . . . 31
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . 31
BACKGROUND AND REASONS FOR THE MERGER. . . . . . . . . . . . 31
RECOMMENDATION OF THE BOARD OF DIRECTORS . . . . . . . . . . 34
THE ACQUISITION AGREEMENTS . . . . . . . . . . . . . . . . . 35
EFFECT OF THE MERGER. . . . . . . . . . . . . . . . . . . 35
TERMS OF THE MERGER . . . . . . . . . . . . . . . . . . . 36
CONVERSION OF ROBINSON COMMON STOCK . . . . . . . . . . 36
SURRENDER OF CERTIFICATES . . . . . . . . . . . . . . . 36
RIGHTS DETERMINED AT EFFECTIVE TIME . . . . . . . . . . 37
MAINTENANCE OF FIRST NATIONAL AS A SEPARATE ENTITY. . . 38
FIRST NATIONAL EMPLOYEES. . . . . . . . . . . . . . . . 38
EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . 38
CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . 39
TERMINATION OF ACQUISITION AGREEMENTS . . . . . . . . . . 39
ACCOUNTING TREATMENT . . . . . . . . . . . . . . . . . . . . 41
FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . 41
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . 42
TRANSFER RESTRICTIONS. . . . . . . . . . . . . . . . . . . . 43
MANAGEMENT OF AMBANC AFTER THE MERGER. . . . . . . . . . . . 43
<PAGE>
<PAGE>13
REGULATORY MATTERS . . . . . . . . . . . . . . . . . . . . . 43
RIGHTS OF DISSENTING SHAREHOLDERS. . . . . . . . . . . . . . 44
OPINION OF FINANCIAL ADVISOR TO ROBINSON . . . . . . . . . . 45
PRO FORMA FINANCIAL DATA -- AMBANC AND ROBINSON . . . . . . . 53
INFORMATION ABOUT AMBANC. . . . . . . . . . . . . . . . . . . 60
INFORMATION ABOUT ROBINSON. . . . . . . . . . . . . . . . . . 60
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . 61
COMPETITION. . . . . . . . . . . . . . . . . . . . . . . . . 61
REGULATION AND SUPERVISION . . . . . . . . . . . . . . . . . 61
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . 62
DESCRIPTION OF ROBINSON CAPITAL STOCK. . . . . . . . . . . . 63
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 63
MARKET PRICE. . . . . . . . . . . . . . . . . . . . . . . 63
DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . 64
STOCK OWNERSHIP OF, AND EFFECT OF MERGER ON, MANAGEMENT AND
PRINCIPAL SHAREHOLDERS. . . . . . . . . . . . . . . . . . 64
FIRST ROBINSON BANCORP -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . 67
DESCRIPTION OF AMBANC CAPITAL STOCK . . . . . . . . . . . . . 89
AUTHORIZED BUT UNISSUED SHARES . . . . . . . . . . . . . . . 89
COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . 89
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . 89
DIVIDEND RIGHTS . . . . . . . . . . . . . . . . . . . . . 90
LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . 91
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . 91
PREFERRED STOCK. . . . . . . . . . . . . . . . . . . . . . . 91
ANTI-TAKEOVER PROVISIONS . . . . . . . . . . . . . . . . . . 92
POSSIBLE ISSUANCE OF COMMON STOCK . . . . . . . . . . . . 92
POSSIBLE ISSUANCE OF PREFERRED STOCK. . . . . . . . . . . 93
SUPERMAJORITY VOTE AND MINIMUM PRICE REQUIRED FOR
BUSINESS COMBINATIONS . . . . . . . . . . . . . . . . . 93
CLASSIFIED BOARD. . . . . . . . . . . . . . . . . . . . . 94
REMOVAL OF DIRECTORS. . . . . . . . . . . . . . . . . . . 95
AMENDMENT, CHANGE, OR REPEAL OF CERTAIN ARTICLES. . . . . 95
CONTROL SHARE RESTRICTIONS. . . . . . . . . . . . . . . . 95
POTENTIAL DISADVANTAGES TO SHAREHOLDERS . . . . . . . . . 96
COMPARISON OF ROBINSON COMMON STOCK AND AMBANC COMMON STOCK . 96
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 96
NUMBER OF SHARES AUTHORIZED BUT UNISSUED . . . . . . . . . . 97
PREFERRED STOCK. . . . . . . . . . . . . . . . . . . . . . . 97
DIVIDEND RIGHTS. . . . . . . . . . . . . . . . . . . . . . . 97
VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . 98
LIQUIDATION RIGHTS . . . . . . . . . . . . . . . . . . . . . 99
ABSENCE OF PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . 99
ANTI-TAKEOVER PROVISIONS . . . . . . . . . . . . . . . . . . 99
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . .100
<PAGE>
<PAGE>14
APPENDICES:
APPENDIX A --Amended Agreement of Merger and Plan of
Reorganization (including Merger Agreements
attached thereto as Appendix A)
APPENDIX B --Provisions of Section 11.70 of the Illinois
Business Corporation Act Governing Dissenters'
Rights
APPENDIX C --Fairness Opinion of Kemper Securities, Inc.
APPENDIX D --Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1995
MATERIALS DELIVERED WITH PROSPECTUS/PROXY STATEMENT:
AMBANC Corp. 1994 Annual Report to Shareholders
(AMBANC's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, is included as Appendix D in this Prospectus/Proxy
Statement.)
<PAGE>
<PAGE>15
MERGER OF
FIRST ROBINSON BANCORP
INTO
FRB CORP.,
A SUBSIDIARY OF
AMBANC CORP.
SPECIAL MEETING OF
SHAREHOLDERS OF
FIRST ROBINSON BANCORP
TO BE HELD ON , 1995
INTRODUCTION
This Prospectus/Proxy Statement is being furnished to
shareholders of First Robinson Bancorp ("Robinson") in connection
with the solicitation of proxies by the Board of Directors of
Robinson to be voted at the Special Meeting of Shareholders to be
held on , , 1995, at .m., Robinson, Illinois
time, at the principal office of The First National Bank in
Robinson ("First National"), 300 West Main Street, Robinson,
Illinois 62454 (the "Special Meeting"). The purpose of the
Special Meeting is to consider and vote upon a proposal to merge
Robinson into FRB Corp., a wholly-owned subsidiary of AMBANC
Corp. ("AMBANC") (which transaction is hereafter referred to as
the "Merger").
The Merger proposal is in accordance with the Amended
Agreement of Merger and Plan of Reorganization, dated June 19,
1995, among Robinson, AMBANC, FRB Corp., First National, and
Farmers' State Bank of Palestine ("Farmers'") (the "Agreement of
Merger") and the Merger Agreement between Robinson and FRB Corp.
and joined in by AMBANC (the "Merger Agreement") (which
agreements are sometimes hereinafter collectively referred to as
the "Acquisition Agreements").
If the enclosed proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been
exercised. The proxy may be revoked by (a) delivering to 300
West Main Street, Robinson, Illinois 62454, (i) a written
instrument revoking the proxy or (ii) a subsequently dated proxy,
or (b) attending the Special Meeting and voting in person. <PAGE>
<PAGE>16
Unless revoked, the proxy will be voted at the meeting in
accordance with the instructions of the shareholder as indicated
on the proxy. If no instructions are given, the shares will be
voted FOR the Merger and on other matters that may come before
the meeting as recommended by the Directors.
Consummation of the Merger is subject to approval by the
vote of the holders of two-thirds of the outstanding shares of
the common stock of Robinson ("Robinson Common Stock"). THE
BOARD OF DIRECTORS OF ROBINSON BELIEVES THAT THE MERGER IS IN THE
BEST INTEREST OF ROBINSON AND ITS SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
ACQUISITION AGREEMENTS. For information concerning the reasons
for this recommendation see "THE MERGER."
<PAGE>
<PAGE>17
SUMMARY OF PROSPECTUS/PROXY STATEMENT
The following is a brief summary of certain information
contained in this Prospectus/Proxy Statement. This summary is
not intended to be complete and is qualified in all respects by
the more detailed information appearing elsewhere in this
Prospectus/Proxy Statement. Shareholders are urged to review
carefully the entire Prospectus/Proxy Statement, including the
Appendices and other documents referred to herein.
THE SPECIAL MEETING The Special Meeting is scheduled to be
held on , , 1995, at the
principal office of First National at
.m., to consider and vote upon
adoption of the Acquisition Agreements.
Only shareholders of record at the
close of business on August , 1995,
will be entitled to vote at the Special
Meeting. On such date, there were
119,200 shares of Robinson Common Stock
outstanding. Each share of Robinson
Common Stock will be entitled to one
vote on all matters to be voted on at
the Special Meeting. Approval of the
Agreements requires the affirmative
vote of the holders of two-thirds of
the outstanding shares of Robinson
Common Stock. See "INFORMATION
CONCERNING THE SPECIAL MEETING."
PARTIES TO THE MERGER
AMBANC . . . . . . . AMBANC is a multibank holding company
incorporated under Indiana law in 1982
that owns all the stock of (i) The
American National Bank of Vincennes,
Indiana, (ii) Citizens' National Bank
of Linton, Indiana, (iii) Farmers',
(iv) Bank of Casey, Illinois and
(v) American<PAGE>
<PAGE>18
National Realty Corp., a corporation
that holds title to certain real estate
that is or will be used for banking
offices. At June 30, 1995, AMBANC had
total assets of approximately
$538,045,000, total liabilities of
approximately $485,113,000 and
shareholders' equity of approximately
$52,932,000. AMBANC's net income for
the twelve months ended December 31,
1994, was approximately $5,443,000 and
for the six months ended June 30, 1995
was $2,792,000. The mailing address and
telephone number of the principal
executive offices of AMBANC are 302 Main
Street, Vincennes, Indiana 47591;
812/882-6418. See "INFORMATION ABOUT
AMBANC."
FRB CORP.. . . . . . FRB Corp., an Indiana corporation and a
wholly owned subsidiary of AMBANC, was
formed by AMBANC solely for the purpose
of facilitating AMBANC's acquisition of
Robinson. The mailing address and
telephone number of FRB Corp. are 302
Main Street, Vincennes, Indiana 47591;
812/885-6418.
ROBINSON . . . . . . Robinson is an Illinois corporation
that owns all of the issued and
outstanding shares of First National, a
national banking association that was
originally chartered in 1932. Robinson
was incorporated in 1982. Robinson's
principal executive offices are located
at 300 West Main Street, Robinson,
Illinois 62454 and its telephone number
is 618/544-8686. At June 30, 1995,
Robinson had total assets of<PAGE>
<PAGE>19
approximately $106,791,000, and
shareholders' equity of approximately
$10,526,000.
THE MERGER
GENERAL. . . . . . . The Acquisition Agreements, which have
been approved unanimously by the Boards
of Directors of Robinson and AMBANC,
provide that Robinson will be merged
into FRB Corp., with FRB being the
surviving corporation. As a result of
the Merger, the separate corporate
existence of Robinson will cease. The
Acquisition Agreements also provide
that immediately prior to the Merger,
Farmers' State Bank of Palestine,
Palestine, Illinois, a wholly owned
banking subsidiary of AMBANC, will be
merged into First National with First
National surviving the Merger.
Immediately subsequent to the Merger,
FRB Corp. will be merged into AMBANC,
with AMBANC surviving the merger. As a
consequence of the Merger and the
merger of Farmers' State Bank of
Palestine into First National, First
National will become a direct, wholly
owned banking subsidiary of AMBANC.
See "THE MERGER--The Acquisition
Agreements." The Acquisition
Agreements are hereby incorporated into
this Prospectus/Proxy Statement by
reference.
MERGER
CONSIDERATION. . . . On the effective date of the Merger
(the "Effective Time"), each share of
Robinson Common Stock then outstanding,
other than shares held by shareholders
of Robinson who perfect dissenters'
rights with<PAGE>
<PAGE>20
respect to the Merger under Section
11.70 of the Illinois Business
Corporation Act, will be converted into
the right to receive 5.3398 shares of
AMBANC Common Stock (the "Exchange
Ratio"). In lieu of fractional shares,
Robinson shareholders will receive cash
for fractional share interests, and the
amount of cash to be received will be
the product of the fractional share
interest multiplied by $32.00. See "THE
MERGER--Terms of the Merger--Conversion
of Robinson Common Stock."
THE BANK MERGER. . . Immediately prior to the Merger,
Farmers', a wholly owned banking
subsidiary of AMBANC, will be merged
into First National (the "Bank
Merger"). The bank surviving the Bank
Merger will retain the name "The First
National Bank in Robinson" and will
operate as a nationally chartered bank
under the Articles of Association and
Bylaws of First National that were in
effect immediately prior to the Bank
Merger. The main office of Farmers'
will become a branch of First National.
As a consequence of the Merger and the
Bank Merger, First National will become
a wholly-owned subsidiary of AMBANC.
First National and Farmers' have
applied to the Comptroller of the
Currency for approval of the Bank
Merger and the approval of the Bank
Merger [has/has not yet] been received.
OPINION OF FINANCIAL
ADVISOR. . . . . . . Robinson has received an opinion of
Kemper Securities that the Exchange
Ratio in the Merger is fair, from a
financial point of view, to the holders
of Robinson Common Stock. See "THE
MERGER--Opinion of Financial Advisor to
Robinson" and the opinion of Kemper
Securities attached hereto as Appendix
C.
<PAGE>
<PAGE>21
RIGHTS OF DISSENTING
SHAREHOLDERS . . . . Subject to certain conditions, a
shareholder of Robinson who (a) before
the time the vote is taken on the
Merger at the Special Meeting, delivers
to Robinson a written demand for
payment of his or her shares of
Robinson Common Stock, and (b) does not
vote in favor of the Merger, will have
the right to receive in cash the fair
value of his or her shares of Robinson
Common Stock as determined pursuant to
Section 11.70 of the Illinois Business
Corporation Act. See "THE
MERGER--Rights of Dissenting
Shareholders" and Appendix B to this
Prospectus/Proxy Statement.
FEDERAL INCOME TAX
CONSEQUENCES OF
THE MERGER . . . . . The Merger will constitute a tax-free
reorganization to Robinson, AMBANC, and
FRB Corp. Shareholders of Robinson
will recognize no gain or loss upon the
exchange of shares of Robinson for
shares of AMBANC Common Stock.
Shareholders of Robinson who receive
cash in exchange for shares of Robinson
Common Stock either in lieu of a
fractional shares or because they have
perfected dissenters' rights under the
Illinois Business Corporation Act will
recognize gain or loss upon the receipt
of cash for their shares. Cash
received by shareholders receiving cash
in lieu of fractional share interests
and cash received by shareholders
perfecting dissenters' rights will be
treated as a distribution in full
payment of such fractional share
interests, or shares surrendered in
exercise of dissenters' rights,
resulting in capital gain or loss or
ordinary income or loss, as the case
may be, depending upon each
shareholder's particular situation.
See "THE MERGER -- Federal Income Tax
Consequences." Each shareholder is
urged to consult his or her own tax
advisors regarding the specific tax
consequences of the Merger to him or
her.
<PAGE>22
REGULATORY
APPROVAL . . . . . . The Merger is subject to approval by
the Illinois Commissioner of Banks &
Trust Companies ("ICB&TC"). AMBANC has
filed an application for approval of
the Merger with the ICB&TC. AMBANC
also has filed a notice regarding the
Merger with the Federal Reserve Bank of
St. Louis. As of the date of this
Prospectus, the ICB&TC [has/has not
yet] approved the Merger. The Bank
Merger is subject to the approval of
the Office of the Comptroller of the
Currency (the "OCC"). As of the date
of this Prospectus, the OCC [has/has
not yet] approved the Bank Merger.
VOTES REQUIRED
FOR APPROVAL . . . . The affirmative vote of the holders of
two-thirds of the outstanding shares of
Robinson Common Stock is required to
approve the Merger. All of the
Directors of Robinson have agreed to
vote the shares of Robinson Common
Stock beneficially owned by them in
favor of approval of the Acquisition
Agreements. At August 15, 1995,
Robinson Common Stock beneficially
owned by Directors and executive
officers represented approximately 52.8
percent of the shares entitled to vote
at the Special Meeting. The
affirmative vote of AMBANC, the sole
shareholder of FRB Corp., is also
required to approve the Acquisition
Agreements. No vote of the
shareholders of AMBANC is required to
approve the Acquisition Agreements.
See "INFORMATION CONCERNING THE SPECIAL
MEETING--Votes Required."
<PAGE>
<PAGE>23
MARKET DATA FOR
COMMON STOCK . . . . AMBANC Common Stock became listed on
NASDAQ for the first time on
December 4, 1992. The most recent
sales transaction prior to the public
announcement of the Merger, as reported
on NASDAQ, occurred on October 5, 1995,
at a price of $32.125 per share, and
the most recent sales transaction prior
to the date of this Prospectus occurred
at a price of $ per share. The
most recent sales transaction prior to
June 19, 1995, the date of the
Acquisition Agreements, as reported on
NASDAQ, occurred on June 16, 1995, at
$32.50. At August 15, 1995, AMBANC
Common Stock was held of record by
approximately 1,330 shareholders. See
"INFORMATION ABOUT AMBANC--Market and
Dividend Information for AMBANC Common
Stock."
There is no established trading market
for Robinson Common Stock. To the best
knowledge of Robinson management, there
were no sales transactions in 1994 and
there have been no sales transactions
in 1995 prior to the date of this
Prospectus/Proxy Statement. The most
recent sales transactions prior to the
date of this Prospectus and the
announcement of the Merger occurred on
and involved sales
transactions totalling shares
at a price of $ per share. See
"INFORMATION ABOUT ROBINSON--
Description of Robinson Capital Stock."
At August 15, 1995, Robinson Common
Stock was held of record by
approximately 146 shareholders.
<PAGE>
<PAGE>24
SUMMARY SELECTED
FINANCIAL
INFORMATION. . . . . The following tables set forth (a)
summary pro forma financial information
for Robinson and AMBANC combined as of
and for the years ended December 31,
1994, 1993 and 1992, and for the six
months ended June 30, 1995,
(b) historical pro forma and equivalent
pro forma net income, cash dividends
and book value of Robinson and AMBANC
on a per share basis as of such dates
and for such periods, and
(c) information on the market value of
AMBANC Common Stock and Robinson Common
Stock as of October 11, 1995, the date
preceding public announcement of the
proposed acquisition. This information
is derived from and should be read in
conjunction with the historical
financial statements of AMBANC and
Robinson that appear elsewhere in this
Prospectus and with the pro forma
consolidated condensed financial
statements of AMBANC, which give effect
to the Merger and which appear in this
Prospectus under the caption "PRO FORMA
FINANCIAL INFORMATION." The pro forma
consolidated condensed financial
information has been prepared based on
the "pooling of interest" method of
accounting and on the assumptions that
636,504 shares of AMBANC Common Stock
will be issued and that no Robinson
shareholder will exercise dissenters'
rights. The historical financial
information of AMBANC and Robinson has
been combined for each period
presented. The equivalent pro forma
per<PAGE>
<PAGE>25
share information for Robinson has been
determined by multiplying the AMBANC
pro forma per share information by an
assumed exchange ratio of 5.3398.
Shareholders will be resolicited with
pro forma data prepared assuming the
purchase method of accounting in the
event that the proposed Merger of
AMBANC and Robinson does not qualify
under the pooling-of-interest method of
accounting and this condition to the
Merger is waived.
<PAGE>
<PAGE>26
<TABLE>
AMBANC CORP.
PRO FORMA CONSOLIDATED SELECTED FINANCIAL DATA
(Dollar amounts in thousands, except share and per share data)
<CAPTION>
END OF PERIOD June 30, December 31, December 31, December 31,
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Total assets $644,710 $625,240 $622,364 $610,407
Loans, net 413,545 386,790 355,631 318,481
Deposits 564,846 550,844 550,350 544,098
Total shareholders'
equity 63,354 58,210 57,722 52,552
OPERATING RESULTS
Interest income $23,767 $43,053 $41,758 $44,722
Net interest income12,514 23,899 22,751 22,335
Provision for loan
losses 286 338 1,492 1,495
Income before
cumulative effect
of accounting
change 3,210 6,502 5,910 5,818
Dividends paid 1,093 1,951 1,703 1,581
PER SHARE DATA (A)
Income before
cumulative effect
of accounting
change $1.07 $ 2.16 $ 1.97 $ 1.94
Dividends paid .36 0.65 0.57 0.53
Shareholders' equity21.05 19.35 19.20 17.48
Weighted
average shares
outstanding 3,009,051 3,006,508 3,006,288 3,006,288
Ending shares
outstanding 3,009,059 3,008,676 3,006,288 3,006,288
</TABLE>
(A) --
Calculated assuming that 636,504 shares of AMBANC Corp.
common stock will be issued to First Robinson Bancorp
stockholders.
<PAGE>
<PAGE>27
<TABLE>
HISTORICAL AND PRO FORMA PER SHARE DATA
<CAPTION>
First Robinson
AMBANC First Bancorp.
AMBANC Corp. Robinson Equivalent
Corp. Pro Forma (A)Bancorp. Pro Forma (A)
<S> <C> <C> <C> <C>
June 30, 1995
Net income $1.18 $1.07 $4.38 $5.70
Dividends paid .42 .36 .82 1.94
Shareholders'
equity 22.31 21.05 88.31 112.43
December 31, 1994
Net income $2.30 $2.16 $8.89 $11.55
Dividends paid 0.75 0.65 1.55 3.47
Shareholders'
equity 20.69 19.35 76.96 103.31
December 31, 1993
Income before
cumulative effect
of accounting
change $2.18 $1.97 $6.22 $10.50
Dividends paid 0.65 0.57 1.43 3.02
Shareholders'
equity 20.66 19.20 73.51 102.53
December 31, 1992
Net income $2.08 $1.94 $7.38 $10.33
Dividends paid 0.60 0.53 1.31 2.81
Shareholders'
equity 18.71 17.48 68.72 93.34
</TABLE>
(A) --Calculated assuming that 636,504 shares of AMBANC Corp.
common stock will be issued to First Robinson Bancorp
stockholders.
<PAGE>
<PAGE>28
The following table presents information as to the
market value of AMBANC Common Stock and Robinson Common
Stock as of October 11, 1994, the date immediately
prior to the date of the public announcement of the
Merger:
<TABLE>
MARKET VALUE OF COMMON STOCK
ROBINSON
<CAPTION> AMBANC (1) Historical (2) Equivalent
<S> <C> <C>
$32.125 $73.39 $171.54
</TABLE>
(1) Based on last trade reported on NASDAQ prior to
October 11, 1994.
(2) Based on book value as of September 30, 1994, the
most recent date prior to October 11, 1994 for
which information is available.
<PAGE>
<PAGE>29
INFORMATION CONCERNING THE SPECIAL MEETING
GENERAL
Each copy of this Prospectus/Proxy Statement
mailed to a Robinson Shareholder is accompanied by a
proxy, which is solicited by the Board of Directors of
Robinson for use at the Special Meeting that will be
held at the principal office of First National, 300
West Main Street, Robinson, Illinois, at .m.,
Robinson time, on , , 1995, and at any
adjournment or adjournments thereof. Shareholders of
Robinson who are the owners of Robinson Common Stock of
record at the close of business on , 1995, will
be entitled to vote at the Special Meeting. On such
date, there were 119,200 shares of Robinson Common
Stock outstanding and entitled to vote, with each such
share entitled to one vote.
VOTES REQUIRED
The presence at the Special Meeting, in person or
by proxy, of the holders of a two-thirds of the
outstanding shares of Robinson Common Stock will
constitute a quorum. Each share of Robinson Common
Stock is entitled to one vote on any matter to come
before the Special Meeting.
The affirmative vote of the holders of two-thirds
of the outstanding shares of Robinson Common Stock
entitled to vote at the Special Meeting (at least
79,467 of the 119,200 shares of Robinson Common Stock
outstanding) is required for approval and adoption of
the Acquisition Agreements. Proxies marked as
abstentions and shares held in street name that are
designated by brokers on proxy cards as not voted will
not be counted as votes cast and, as a result, will
have the same effect as a vote against approval of the
Acquisition Agreements. Proxies marked as abstentions
or as broker non-votes, however, will be treated as
shares present for the purpose of determining whether a
quorum is present. All of the members of the Board of
Directors of Robinson have agreed to vote all shares
beneficially owned by them in favor of approval and
adoption of the Acquisition Agreements at the Special
Meeting. At August 15, 1995, the Directors and
executive officers of Robinson beneficially owned an
aggregate of 62,881 shares of Robinson Common Stock, or
52.8 percent of the outstanding shares thereof.
Accordingly, the vote of an additional 16,586 shares
would be required to approve the Merger.
The affirmative vote of AMBANC, the sole
shareholder of FRB Corp., is also required for adoption
of the Acquisition Agreements. AMBANC has agreed to <PAGE>
<PAGE>30
vote all shares it holds of FRB Corp. in favor of the
Merger. No vote of the shareholders of AMBANC is
required to approve the Acquisition Agreements.
PROXIES
If the enclosed proxy is executed and returned, it
may nevertheless be revoked at any time insofar as it
has not been exercised. The proxy may be revoked by
(a) giving written notice of revocation to Robinson at
(300 West Main Street, Robinson, Illinois 62454), (b)
executing a subsequently dated proxy, or (c) attending
the Special Meeting and voting in person. Unless
revoked, the proxy will be voted at the meeting in
accordance with the instructions of the shareholder as
indicated on the proxy. If no instructions are given,
the shares will be voted FOR the Merger and, on other
matters that come before the meeting, as recommended by
the Directors.
SOLICITATION OF PROXIES
In addition to the use of the mails, Directors,
officers, and certain employees of Robinson and First
National may, without additional compensation therefor,
solicit proxies in person or by telephone. Robinson
and AMBANC will bear the cost of soliciting proxies
from shareholders of Robinson and the expense of
preparing and printing this Prospectus/Proxy Statement.
See "THE MERGER--The Acquisition Agreements--Terms of
the Merger--Expenses." Brokers and other custodians,
nominees, and fiduciaries are requested to forward
proxies and proxy soliciting materials to the
beneficial owners of shares held of record by such
persons and will be reimbursed for their reasonable
expenses in so doing.
THE MERGER
BACKGROUND AND REASONS FOR THE MERGER
For the past several years, AMBANC has carefully
been seeking out various acquisition alternatives as a
means of expanding its customer base and enhancing
shareholder value. This strategic plan led to the
acquisition of Citizens' National Bank of Linton in
August 1990; the merger of Patoka National Bank into
The American National Bank of Vincennes ("American
National") in January 1992; the acquisition of Farmers'
in June 1993; the acquisition of Lincolnland
Bancshares, Inc., the holding company for the Bank of
Casey, in June 1994; and the acquisition by American
National of a thrift branch in Princeton, Indiana in
March 1995.<PAGE>
<PAGE>31
AMBANC's management was generally familiar with
the business and management of Robinson. The main
office of Robinson and First National is located
approximately six miles from Farmers', which AMBANC
acquired in June 1993. In December 1993 Robert G.
Watson, Chairman of the Board and President of AMBANC,
initiated informal discussions with key management
officials of Robinson. Mr. Watson was not, and never
has been, affiliated with Robinson.
After business investigations by AMBANC and
Robinson of each other, and Board approval of the
transaction, AMBANC and Robinson executed an Agreement
and Plan of Merger on October 12, 1994. Subsequently,
AMBANC's management decided that it could best serve
Crawford County, Illinois, in which both Farmers' and
First National have their main offices, by combining
the two banks into a single bank. Therefore, on
June 19, 1995, AMBANC and Robinson, together with
certain of their subsidiaries, entered into the
Acquisition Agreements, which provide for the merger of
Farmers' into First National, with First National
surviving the merger, immediately prior to the merger
of Robinson into FRB Corp.
The terms of the Merger, including the Exchange
Ratio, were the result of arms'-length negotiations
between members of the management of Robinson and
AMBANC and their legal and financial advisors. In the
course of reaching its decision to approve the Merger,
the Board of Directors of Robinson consulted with its
legal advisors, attorneys with the law firm of
Hinshaw & Culbertson, Chicago, Illinois, and its
financial advisor, Kemper Securities, Inc., Chicago,
Illinois. Robinson paid Hinshaw & Culbertson
approximately $20,000 for services provided in
connection with the Merger negotiations. Robinson paid
Kemper Securities, Inc. $5,000 upon the signing of the
Acquisition Agreements and $10,000 upon the delivery of
the oral fairness opinion, which is discussed below
under the heading "OPINION OF FINANCIAL ADVISOR TO
ROBINSON." In reaching its decision to approve the
Merger, the Robinson Board of Directors also consulted
with management of Robinson. In addition to
consultations with Robinson's management and Robinson's
legal and financial advisors, the Robinson Board
considered numerous factors, without assigning any
relative or specific weights, including, but not
limited to, the following:
(1) The Merger would result in a tax deferred
gain to Robinson's shareholders.
<PAGE>
<PAGE>32
(2) The Acquisition Agreements contain a "walk-
away" right that would permit Robinson to
terminate the Merger if the AMBANC stock
price declined below $29.00.
(3) A business combination with a larger bank
holding company such as AMBANC would provide
both greater short-term and long-term value
to Robinson's shareholders than other
alternatives available. Such a business
combination would enhance Robinson's
competitiveness and its ability to serve its
depositors, customers and the communities in
which it operates. The increased competitive
advantage would result primarily from the
ability of Robinson to offer new and enhanced
products and services already developed and
tested by AMBANC, the cost savings from
combining operations and support functions,
and the increased access to capital. Such an
increased competitive advantage would be
likely to result in an increase of the value
of First National and be reflected in the
value of the AMBANC Common Stock that will
have been received by the former Robinson
shareholders.
(4) The economic conditions and prospects for the
market in which Robinson operates, and
competitive pressures in the financial
services industry in general and the banking
industry in particular, constituted an
additional factor.
(5) The Merger offered Robinson's shareholders
the prospect for higher dividends, a higher
current trading value for their shares,
greater liquidity for their shares and better
prospects for future growth than if Robinson
were to remain independent.
(6) Another factor was the current regulatory
environment. Recent changes in state and
federal banking laws have greatly enhanced
expansion opportunities. In the past several
years, large out-of-state bank holding
companies have acquired Illinois banks and
bank holding companies in Crawford County and
nearby counties in southeastern Illinois.
Deregulation in the financial services
industry also has increased competition for
the products and services offered by banks.
The increases in competition, together with
increased bank regulatory reporting and other
requirements, have made it more difficult for<PAGE>
<PAGE>33
unaffiliated community banks such as First
National to compete with the banking
affiliates of much larger institutions with
respect to the range of products and services
offered and the costs which such products and
services can be offered. AMBANC's philosophy
of allowing each of its banks to continue to
operate as community banks with their own
local identities and focused on serving the
needs of their particular communities
provided an opportunity for First National to
compete more effectively with larger
institutions but still maintain its community
bank approach.
(7) The Board considered the business, results of
operations, asset quality and financial
condition of AMBANC, the future growth
prospects of AMBANC and Robinson following
the Merger. The Merger presents the
opportunity for potential synergies and cost
savings. Cost savings are expected to result
from economies of scale that will be achieved
by integrating the responsibilities for
functions such as the following: product
development; training in product sales and
customer service; internal audit, loan review
and compliance training; and shareholder
record keeping and communications. AMBANC
also is considering the possible conversion
of First National's IBM Model 36 computer
system to AMBANC's in-house computer system
running on an IBM Model 400 using computer
software from FISERV.
(8) The presentation of Robinson's financial
advisor, Kemper Securities, and the opinion
rendered by Kemper Securities to the effect
that the Exchange Ratio was fair, from a
financial point of view, to the holders of
Robinson's Common Stock. See "THE MERGER --
Opinion of Financial Advisor to Robinson."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF ROBINSON HAS UNANIMOUSLY
APPROVED THE ACQUISITION AGREEMENTS AND UNANIMOUSLY
RECOMMENDS TO THE SHAREHOLDERS OF ROBINSON THAT THEY
VOTE TO APPROVE SUCH PROPOSALS.<PAGE>
<PAGE>34
Pursuant to the Agreement of Merger, when the
Merger becomes effective two officers and/or directors
of Robinson will be added to the AMBANC Board of
Directors and one officer and/or director of AMBANC
will be added to the First National Board of Directors.
The persons who will be added to the First National and
AMBANC Board of Directors will be selected by the
mutual agreement of the respective Boards of Directors.
THE ACQUISITION AGREEMENTS
The following summary of the terms of the
Acquisition Agreements does not purport to be complete
and is qualified in its entirety by reference to the
Acquisition Agreements, which are incorporated herein
by reference and attached as Appendix A to this
Prospectus.
If approved by the shareholders of Robinson, and
if all other conditions to the consummation of the
Merger specified by the Acquisition Agreements are
satisfied or waived, and unless the Acquisition
Agreements are terminated as provided therein, the
Merger will be consummated and become effective upon
the later of the time of the filing of the Merger
Agreement with the Office of the Illinois Secretary of
State or the Indiana Secretary of State (the "Effective
Time"). Although no assurances can be given, it is
anticipated that the Effective Time will occur on or
before October 31, 1995. Immediately prior to the
Merger, Farmers' will be merged into First National.
The resulting bank will continue operation under the
name "The First National Bank in Robinson."
EFFECT OF THE MERGER
At the Effective Time of the Merger, the separate
corporate existence of Robinson will cease and Robinson
will be merged into and become a part of FRB Corp.,
which will survive the Merger. Immediately subsequent
to the effectiveness of the Merger, FRB Corp. will be
merged into AMBANC, with AMBANC surviving the merger.
The affairs of the surviving corporation will be
governed by the Articles and Bylaws of AMBANC.
Following the Merger, shareholders of Robinson who
do not perfect their dissenters' rights under Section
11.70 of the Illinois Business Corporation Act (see
"THE MERGER--Rights of Dissenting Shareholders") will,
upon surrender of the certificates for their shares of
Robinson Common Stock or other evidence of ownership of
such shares acceptable to AMBANC, receive the Merger
Consideration as further discussed below.<PAGE>
<PAGE>35
TERMS OF THE MERGER
CONVERSION OF ROBINSON COMMON STOCK
Pursuant to the Merger, AMBANC will acquire all
119,200 issued and outstanding shares of Robinson
Common Stock with each share of Robinson Common Stock
being converted into the right to receive 5.3398 shares
of AMBANC Common Stock (at times herein the shares of
AMBANC Common Stock to be received in exchange for the
shares of Robinson Common Stock will be referred to as
the "Merger Consideration").
The Acquisition Agreements may be terminated by
Robinson if the weighted average of the prices of all
actual trades of AMBANC Common Stock, as reported on
the NASDAQ Small Cap Market System for the twenty (20)
trading days on which actual trades were made as of and
including the fifth (5th) trading day prior to the
Closing Date, is less than $29.00 per share and the
Acquisition Agreements may be terminated by AMBANC if
such weighted average of the prices is greater than
$35.00 per share (unless such price has increased to a
price greater than $35.00 per share as the result of
the public announcement of an unrelated third party's
intention to acquire AMBANC).
No fractional shares of AMBANC Common Stock will
be issued and, in lieu thereof, holders of shares of
Robinson Common Stock who would otherwise be entitled
to a fractional share interest (after taking into
account all shares of Robinson Common Stock held by
such holder) shall be paid an amount in cash equal to
the product of such fractional share interest
multiplied by $32.00.
Any Robinson shareholders who perfect their
dissenters' rights under the Illinois Business
Corporation Act would receive cash for their shares of
Robinson Common Stock rather than shares of AMBANC's
Common Stock.
SURRENDER OF CERTIFICATES
As soon as reasonably practicable after the
Effective Time, AMBANC or its designated exchange agent
(the "Exchange Agent") shall mail to each record holder
of Robinson Common Stock a letter of transmittal (each
such letter, the "Merger Letter of Transmittal") and
instructions for use in effecting the surrender of each
Robinson stock certificate (the "Certificate") in
exchange for the Merger Consideration. As soon as
reasonably practicable after surrender to the Exchange
Agent of a Certificate, together with a Merger Letter<PAGE>
<PAGE>36
of Transmittal duly executed and any other required
documents, the Exchange Agent shall transmit to the
holder of such Certificate the Merger Consideration.
No dividends that are otherwise payable on shares
of AMBANC Common Stock constituting the Merger
Consideration shall be paid to persons entitled to
receive such shares of AMBANC Common Stock until such
persons surrender their Certificates. Upon such
surrender, there shall be paid to the person in whose
name the shares of AMBANC Common Stock shall be issued
any dividends which shall have become payable with
respect to such shares of AMBANC Common Stock (without
interest and less the amount of taxes, if any, which
may have been imposed thereon) between the Effective
Time and the time of such surrender.
If the Merger Consideration is to be issued to a
person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of
issuance that the surrendered Certificate shall be
properly endorsed or otherwise in proper form for
transfer and that the person requesting such issuance
shall pay to the Exchange Agent any required transfer
or other taxes or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not
applicable. AMBANC reserves the right in all cases
involving more than twenty-five shares of Robinson
Common Stock to require that a surety bond on terms and
in an amount satisfactory to AMBANC be provided to
AMBANC at the expense of the Robinson Shareholder in
the event that such shareholder claims loss of a
Certificate for Robinson Common Stock and requests that
AMBANC waive the requirement for surrender of such
Certificate.
RIGHTS DETERMINED AT EFFECTIVE TIME
Robinson will provide to AMBANC a certified list
of the Robinson shareholders from Robinson's stock
records at the Effective Time. Persons who are not
identified as registered holders of Robinson Common
Stock on the records of Robinson as of the Effective
Time but who have acquired beneficial interests in such
shares of Common Stock and desire to register the
transfer of those rights after the Effective Time will
not be entitled to do so on the books of Robinson.
Instead, such persons must present to AMBANC
appropriate instruments of transfer signed by the
registered holder of such shares as of the Effective
Time satisfactory to AMBANC to obtain registration in
their name of the Merger Consideration issuable by
AMBANC.<PAGE>
<PAGE>37
MAINTENANCE OF FIRST NATIONAL AS A SEPARATE ENTITY
As provided in the Agreement of Merger, it is
AMBANC's intention that subsequent to the Effective
Time of the Merger that the directors and officers of
First National in office at the Effective Time,
together with certain directors of Farmers', will
continue to manage and operate First National as a
separate banking entity, with such assistance, advise
and support from AMBANC and its other banking
affiliates as shall be appropriate. At the Effective
Time, one officer and/or director of AMBANC will be
added to the Board of Directors of First National, and
two officers and/or directors of Robinson will be added
to the Board of Directors of AMBANC. AMBANC has agreed
that for a period of three years after the Effective
Time, First National will retain the name "The First
National Bank in Robinson" as the name pursuant to
which it does business; provided, however, that a
majority of the directors of First National who served
as directors of First National immediately prior to the
Effective Time of the Merger will have the authority to
reduce this three-year period at any time after the
Effective Time at their discretion.
FIRST NATIONAL EMPLOYEES
The Agreement of Merger provides that it is
AMBANC's intention that the employees of First National
will continue to be employees of First National with no
change in employment solely as a result of the Merger,
but such intention to retain employees should not be
interpreted as creating any contractual or other rights
of continued employment with First National, AMBANC, or
any of AMBANC's subsidiaries. Pursuant to the
Agreement of Merger, subsequent to the Effective Time
of the Merger, active employees of First National will
participate in AMBANC employee benefit plans and
receive employee benefits, including pension benefits,
health insurance, long-term disability coverage and
life insurance coverage, that are no less favorable
than those generally available to employees of AMBANC
and its subsidiaries.
EXPENSES
All costs and expenses incurred in connection with
the transactions contemplated by the Acquisition
Agreements will be paid by the party incurring the
expenses. However, if the Agreement of Merger is
terminated because one party has knowingly materially
breached any of that party's representations and
warranties made in the Agreement of Merger and the<PAGE>
<PAGE>38
breach is not cured within thirty (30) days of a
written notice to cure the breach, then the non-
breaching party may recover appropriate damages from
the breaching party.
CONDITIONS
Consummation of the Merger is subject to the
satisfaction, at or prior to the Closing, of each of
the following conditions precedent:
(a) The Merger shall have been approved by the
holders of two-thirds of the outstanding shares of
Robinson and by AMBANC as the sole shareholder of
FRB Corp.;
(b) All required regulatory approvals shall have
been obtained;
(c) As of the Effective Time, the shareholders'
equity of Robinson shall not be less than
$9,699,185 (as calculated pursuant to Section
6.01(i) of the Agreement of Merger);
(d) Robinson shall have received from Kemper
Securities, Inc. an opinion that the terms of the
Merger are fair to Robinson's shareholders from a
financial point of view (the opinion is attached
as Appendix C to this Prospectus/Proxy Statement),
which opinion shall not have been amended or
withdrawn prior to the Effective Time;
(e) AMBANC shall have received a letter, dated as
of the Effective Time, from its independent public
accountants to the effect that the Merger
qualifies for "pooling of interests" accounting
treatment; and
(f) Other customary conditions and obligations of
the parties set forth in the Acquisition
Agreements shall have been satisfied.
Prior to the Effective Time, the conditions to the
consummation of the Agreement of Merger may be waived
in writing by the party entitled to the benefits
thereof.
TERMINATION OF ACQUISITION AGREEMENTS
The Acquisition Agreements may be terminated as
follows:
<PAGE>
<PAGE>39
(a) By Robinson or AMBANC, if the other party
fails to comply with the conditions set forth in
the Acquisition Agreements;
(b) By Robinson or AMBANC, if the Merger is not
consummated by November 30, 1995;
(c) By mutual agreement of AMBANC and Robinson;
(d) By AMBANC or Robinson in the event of a
material breach by the other party of any of its
representations and warranties or agreements under
the Acquisition Agreements and such breach is not
cured within thirty (30) days after notice to cure
such breach is given by non-breaching party; and
(e) By AMBANC or Robinson, if the Merger Agreement
and consummation of the Merger are not approved by
the affirmative vote of the holders of at least a
two-thirds of the outstanding shares of Robinson
Common Stock entitled to vote at the Special
Meeting.
The Acquisition Agreements also provide that
AMBANC may terminate the Acquisition Agreements if the
environmental inspection reports on all real property
owned or leased by Robinson provided to AMBANC by
Robinson pursuant to the Agreement of Merger disclose
any contamination or presence of hazardous wastes, the
estimated remedial and corrective costs of which exceed
$100,000, as reasonably estimated by an environmental
expert retained for such purpose by AMBANC and
reasonably acceptable to Robinson, or if the cost of
such actions and measures cannot be so reasonably
estimated by such expert with any reasonable degree of
certainty; provided, however, that AMBANC must exercise
such termination right within five (5) business days
following receipt of such estimate or indication that
the cost of such actions and measures cannot be so
reasonably estimated. The environmental inspection
reports furnished by Robinson to AMBANC pursuant to the
provisions of the Acquisition Agreements have not
indicated any basis for terminating the Acquisition
Agreements pursuant to the environmental termination
provision.
<PAGE>
<PAGE>40
In addition, if any regulatory application filed in
connection with the Merger is finally denied or
disapproved by the respective regulatory authority,
then the Acquisition Agreements shall be deemed
terminated and cancelled.
Also, as discussed above, Robinson may terminate
the Acquisition Agreements if the average trading price
of AMBANC Common Stock falls below $ 29.00 per share
and AMBANC may terminate the Acquisition Agreements if
the average trading price of AMBANC Common Stock
increases above $35.00 per share. AMBANC may not
terminate the Acquisition Agreements, however, if the
price has increased to above $35.00 per share as the
result of the public announcement of an unrelated third
party's intention to acquire AMBANC. See the
discussion in "THE MERGER -- THE ACQUISITION
AGREEMENTS."
Upon termination, each party to the Acquisition
Agreements will bear its own costs and expenses related
to the Merger, with the exception that a breaching
party must pay the reasonable expenses of the
non-breaching party should the Acquisition Agreements
be terminated by either party for any reason other than
those stated.
ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling"
for accounting and financial reporting purposes. It is
a condition of the Merger that AMBANC shall have
received a letter from its independent accountants to
the effect that the Merger will qualify as a pooling of
interests transaction under generally accepted
accounting principles. In order for the Merger to
qualify for "pooling of interests" accounting
treatment, generally accepted accounting principles
require that not more than 10 percent of Robinson's
shares of Common Stock (or 11,920 shares based of
119,200 shares of Robinson Common Stock presently
outstanding) may exercise dissenters' rights and demand
payment in cash for the value of their shares of Common
Shares under Section 11.70 of the Illinois Business
Corporation Act.
FEDERAL INCOME TAX CONSEQUENCES
The Merger will qualify as a reorganization under
Section 368(a) of the Code. Except for cash received
by any shareholders who perfect their dissenters'
rights and cash received by shareholders in lieu of a
fractional share interest in AMBANC Common Stock, the
holders of shares of Robinson Common Stock will
recognize no gain or loss on the receipt of AMBANC<PAGE>
<PAGE>41
Common Stock in the Merger, their aggregate basis in
the shares of AMBANC Common Stock received in the
Merger will be the same as their aggregate basis in
their shares of Robinson Common Stock converted in the
Merger, and, provided the shares surrendered are held
as a capital asset, the holding period of the AMBANC
Common Stock received by them will include the holding
period of their shares of Robinson Common Stock
converted in the Merger. Cash received by shareholders
receiving cash in lieu of fractional share interests
and cash received by shareholders exercising their
dissenters' rights will be treated as a distribution in
full payment of such fractional share interests, or
shares surrendered in exercise of dissenters' rights,
resulting in capital gain or loss or ordinary income or
loss, as the case may be, depending upon each
shareholder's particular situation.
Leagre & Barnes, counsel for AMBANC, has delivered
an opinion to AMBANC upon which AMBANC has relied in
preparing the above summary of the federal income tax
consequences of the Merger. The opinion and a
Representation Certificate of AMBANC and Robinson upon
which Leagre & Barnes has relied as to certain factual
matters in rendering its opinion are filed as an
exhibit to the Registration Statement. The Merger also
is conditioned upon Robinson's receipt of an opinion to
the same effect from Hinshaw & Culbertson, which will
be delivered at the Closing. The Merger is conditioned
upon receipt of opinions dated as of the Effective
Time, confirming as of the Effective Time the opinions
expressed in the opinion set forth above.
THE FOREGOING IS ONLY A GENERAL DESCRIPTION OF THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
AND DOES NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF
ANY PARTICULAR ROBINSON SHAREHOLDER'S SITUATION. EACH
ROBINSON SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO THE SPECIFIC LEGAL AND TAX
CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS.
REGISTRATION STATEMENT
AMBANC has filed a Registration Statement on Form
S-4 with the Securities and Exchange Commission
registering under the 1933 Act the shares of AMBANC
Common Stock to be issued pursuant to the Merger.
AMBANC intends to rely upon exemptions from the
statutory registration requirements of the several
states in which shareholders of Robinson reside and has
not taken any steps to register the AMBANC Common Stock
under those statutes.
<PAGE>
<PAGE>42
TRANSFER RESTRICTIONS
The AMBANC Common Stock received by Robinson
shareholders in the Merger will be freely transferable,
except that "affiliates" of Robinson as of the date of
the Special Meeting, as that term is defined in the
rules and regulations under the Securities Act, may
sell any AMBANC Common Stock held by them during the
three year period following the Merger (two years
provided AMBANC remains current in its reporting
obligations under the Securities Exchange Act of 1934)
only (a) in accordance with the provisions of Rule
145(d) under the Securities Act, (b) pursuant to an
effective Registration Statement under the Securities
Act, or (c) in transactions otherwise exempt from
registration thereunder. In addition, Robinson
shareholders who may become "affiliates" of AMBANC will
be subject to similar sale restrictions for so long as
they remain affiliates of AMBANC and also will be
subject to prohibitions on sales until financial
results covering at least 30 days of post-Merger
combined operations have been published. Generally,
persons who are not officers, Directors, or greater
than ten percent shareholders of Robinson will not be
considered "affiliates" in the absence of other factors
indicating a control relationship.
MANAGEMENT OF AMBANC AFTER THE MERGER
The Agreement of Merger provides that when the
Merger becomes effective two officers and/or directors
of Robinson will be appointed to the AMBANC Board of
Directors and one officer or Director of AMBANC will be
appointed to the First National Board of Directors.
Following the Effective Time, AMBANC and each of
its banking subsidiaries, including its new subsidiary
First National, will continue to be subject to
regulation and supervision by federal and state bank
regulatory authorities. See "INFORMATION ABOUT
AMBANC--Regulation and Supervision" and "INFORMATION
ABOUT ROBINSON--Regulation and Supervision." AMBANC
does not anticipate that consummation of the Merger
will have any effect on such regulation or supervision.
REGULATORY MATTERS
AMBANC has filed an application for approval of
the acquisition of Robinson pursuant to Section 3.071
of the Illinois Banking Holding Company Act. The
Application [has/has not yet] been approved. The
receipt of approval from the Illinois Commissioner of<PAGE>
<PAGE>43
Banks and Trust Companies is a condition precedent to
the consummation of the Merger.
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to Section 11.65 of the Illinois Business
Corporation Act, shareholders of Robinson have
dissenters' rights with respect to the Merger. The
procedures for perfecting dissenters' rights, which are
set forth in Section 11.70 of the Illinois Business
Corporation Act, provide that a shareholder who
perfects dissenters' rights with respect to his or her
shares of Robinson Common Stock may receive in cash the
fair value of his or her Robinson Common Stock,
exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together,
if applicable, with a fair rate of interest. If a
dissenting shareholder does not agree with the amount
of the payment offered as the estimated fair value of
the shareholder's shares of Robinson Common Stock, the
Crawford County Circuit Court will determined the value
of the shares and any interest due. In order to
exercise dissenters' rights, a shareholder must comply
with the requirements set forth in Section 11.70.
Section 11.70 includes the requirements that a
shareholder demanding dissenters' rights do the
following:
(a) Deliver to Robinson prior to the
taking of the vote on the Merger a written
demand for payment of his or her shares of
Robinson Common Stock, and
(b) Not vote in favor of the Merger at
the Special Meeting.
A vote against approval of the Acquisition Agreements
will not satisfy the requirement of delivery of a
written demand for approval.
Within ten (10) days of the Effective Time of the
Merger or thirty (30) days after delivery of written<PAGE>
<PAGE>44
demand for payment, whichever is later, each
shareholder who has delivered a written demand for
payment and who has not voted in favor of the Merger as
required by Section 11.70 of the Illinois Business
Corporation Act of the date on which the Merger became
effective will receive a statement setting forth an
estimated fair value of such holder's shares of
Robinson Common Stock and the other information
required by Section 11.70.
See the full text of Section 11.70 set forth in
Appendix B to this Prospectus/Proxy Statement.
TO PERFECT RIGHTS OF DISSENT, A SHAREHOLDER MUST
NOT VOTE IN FAVOR OF THE MERGER AND MUST DELIVER A
WRITTEN DEMAND FOR PAYMENT IN ACCORDANCE WITH THE
REQUIREMENTS OF SECTION 11.70 OF THE ILLINOIS BUSINESS
CORPORATION ACT.
THIS SUMMARY OF THE DISSENTERS' RIGHTS OF ROBINSON
SHAREHOLDERS DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY THE STATUTORY PROVISIONS
ATTACHED TO THIS PROSPECTUS AS APPENDIX B. ANY
INDIVIDUAL CONSIDERING EXERCISING RIGHTS OF DISSENT
SHOULD CAREFULLY READ AND CONSIDER THE INFORMATION
DISCLOSED IN APPENDIX B AND CONSULT WITH AN INDEPENDENT
INVESTMENT ADVISOR BEFORE EXERCISING RIGHTS OF DISSENT.
OPINION OF FINANCIAL ADVISOR TO ROBINSON
Kemper Securities, Inc. has provided the following
disclosures for inclusion in this Prospectus/Proxy
Statement:
Kemper Securities has delivered its written
opinion to Robinson's Board of Directors that, as of
the date of this Prospectus/Proxy Statement, the
Exchange Ratio in the Merger is fair, from a financial
point of view, to the holders of Robinson Common Stock.
See "THE MERGER - TERMS OF THE MERGER." Kemper
Securities' written opinion essentially confirms its
oral opinion provided to Robinson's Board of Directors
on October 11, 1994, prior to the execution of the
Agreement, and its written opinion dated as of the date
of the Agreement, and its oral opinion on June 19,
1995, prior to the execution of the amendment to the
Agreement.<PAGE>
<PAGE>45
THE FULL TEXT OF THE OPINION OF KEMPER SECURITIES
DATED AS OF THE DATE OF THIS PROSPECTUS/PROXY
STATEMENT, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND LIMITS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX C TO THIS
PROSPECTUS/PROXY STATEMENT. ROBINSON'S SHAREHOLDERS
ARE URGED TO READ KEMPER SECURITIES' OPINION IN ITS
ENTIRETY. KEMPER SECURITIES' OPINION IS DIRECTED TO
THE BOARD OF DIRECTORS OF ROBINSON ONLY AND IS DIRECTED
ONLY TO THE EXCHANGE RATIO IN THE MERGER AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY ROBINSON SHAREHOLDER
AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL
MEETING. THE SUMMARY OF KEMPER SECURITIES' OPINION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
In connection with its opinion, Kemper Securities,
among other things: (i) reviewed drafts of AMBANC's
and Robinson's joint Prospectus/Proxy Statement dated
August [ ], 1995, (ii) reviewed the Agreement; (iii)
reviewed Robinson's financial statements and certain
internal management reports and certain publicly
available financial and other data with respect to
Robinson and AMBANC including financial statements for
recent years and interim periods to date and certain
other relevant financial and operating data relating to
AMBANC made available to it from published sources;
(iv) discussed Robinson's history, operations, service
areas, asset/liability structure and quality, financial
condition and performance, and prospects, among other
factors, with members of Robinson's management;
(v) compared Robinson and AMBANC from a financial point
of view with certain other companies in the financial
services industry which it deemed relevant; (vi)
reviewed the reported price and trading activity for
Robinson Shares and AMBANC common stock; (vii) reviewed
the financial terms of certain recent business
combinations in the commercial banking industry
specifically; (viii) discussed the Merger and the
Agreement with Robinson's counsel; and (ix) performed
such other studies and analyses as it considered
appropriate. Kemper Securities also took into account
general economic, market, and financial conditions as
well as our experience in other transactions, knowledge
of the commercial banking industry, and experience in
securities valuation.
Kemper Securities relied without independent
verification upon the accuracy and completeness of the
foregoing financial and other information reviewed by
it for purposes of its opinion. Kemper Securities also
assumed that there has been no material change in
Robinson's or AMBANC's assets, financial condition,
results of operations, business, or prospects since the<PAGE>
<PAGE>46
date of the last financial statements made available
to it for Robinson or AMBANC, respectively. In
addition, Kemper Securities did not make an independent
evaluation, appraisal, or physical inspection of the
assets or individual properties of Robinson or AMBANC,
nor was Kemper Securities furnished with such
appraisals. Further, Kemper Securities' opinion is
based on economic, monetary, and market conditions
existing as of the date of this Prospectus/Proxy
Statement. No limitations were imposed by Robinson
upon Kemper Securities on the scope of its
investigation nor were any specific instructions given
to Kemper Securities in connection with its fairness
opinion.
Kemper Securities was retained by Robinson on the
basis of the firm's reputation, experience, and
familiarity with the commercial banking industry and
with merger and acquisition transactions. As part of
its investment banking services, Kemper Securities is
regularly engaged in the valuation of businesses and
their securities in connection with merger and
acquisition transactions, public offerings, private
placements, recapitalizations, and other purposes.
Pursuant to its agreement with Kemper Securities,
Robinson has thus far paid Kemper Securities for its
services $15,000 as follows: $5,000 upon signing of
its agreement with Kemper Securities and $10,000 upon
delivery of Kemper Securities' oral fairness opinion.
Upon circulation of this joint Prospectus/Proxy
Statement, Robinson will pay Kemper Securities an
additional $10,000 and its reasonable out-of-pocket
expenses.
For the purposes of its opinion, Kemper Securities
believes it is independent of Robinson and AMBANC.
Other than its service to Robinson in connection with
the fairness opinion, Kemper Securities has provided no
other professional services to either Robinson or
AMBANC.
SUMMARY OF FINANCIAL ANALYSES
The following is a summary of the principal
matters considered and financial analyses utilized by
Kemper Securities in connection with providing its
written opinion dated October 11, 1994 to Robinson's
Board of Directors but does not purport to be a
complete description of the analyses performed by
Kemper Securities. Kemper Securities reviewed the
following matters and financial analyses with
Robinson's Board of Directors on August 17, 1994.
<PAGE>
<PAGE>47
STATUS OF THE SECURITIES MARKETS. Kemper
Securities examined selected indicators of equity
markets since December 1991. Specifically, monthly
observations of stock price indices comprised of
actively traded commercial banks and bank holding
companies located in the Midwest ("Midwest Banks"), all
banks traded in the NASDAQ system ("OTC Banks"), and
all publicly traded banks nationally ("All Banks") were
compared to each other and to the Dow Jones Industrial
Average (the "Dow"). This analysis indicated that over
the period the stocks of Midwest Banks had increased in
price to a lesser extent than did those of All Banks,
but that stocks of OTC Banks had increased in price to
a greater extent than All Banks, and that the stocks of
all of the foregoing financial institutions had
increased in price to a greater extent than those
comprising the Dow.
BANK ACQUISITION PRICE TRENDS. Kemper Securities
reviewed the pricing relationships associated with bank
merger and acquisition transactions both nationally and
regionally (i.e., in the Midwest) for the past several
calendar quarters ended June 30, 1994. The analysis
indicated that the median price-earnings multiple of
bank acquisitions nationally had decreased to 13.0x for
the quarter ended June 30, 1994 from 16.1x for the
quarter ended March 31, 1994. Prior to this, the
median price-earnings multiples of bank acquisitions
had fluctuated in a range from 14.1x to 16.5x for the
quarters between March 31, 1993 and March 31, 1994.
Another analysis indicated that the median price-
earnings multiple of bank acquisitions in the Midwest
had decreased to 13.0x for the quarter ended June 30,
1994 from 16.1x for the quarter ended March 31, 1994.
Prior to this the median price-earnings multiple of
bank acquisitions in the Midwest was 14.1x for the
quarter ended December 31, 1993 and 13.8x for the
quarter ended September 30, 1993. Kemper Securities
observed that the price-earnings multiple in the Merger
was 22.6x. A third analysis indicated that the median
price-book value ratio of bank acquisitions nationally
had increased to 182% for the quarter ended June 30,
1994 from 172% for the quarter ended March 31, 1993.
During the prior four quarters the average price-book
value of bank acquisitions had fluctuated from a low of
158% to a high of 175%. A fourth analysis indicated
that the median price-book value ratio of bank
acquisitions in the Midwest were 168%, 164%, 169%, and
169% for the quarters ending June 30, 1994, March 31,
1994, December 31, 1994, and September 30, 1993
respectively, which where lower than the 184% price-
book value ratio for the quarter ended June 30, 1993.
Kemper Securities observed that the price-book value
ratio in the Merger was 210.0%<PAGE>
<PAGE>48
ANALYSIS OF COMPARABLE TRANSACTIONS. Kemper
Securities reviewed the financial terms of certain bank
merger and acquisition transactions which involved the
purchase of banks and bank holding companies located in
the Midwest with total assets between $30 million and
$500 million that were pending at August 5, 1994 or had
been completed within approximately two years prior
thereto. Pending and completed transactions were
analyzed using information available both at the
announcement date and at the earlier of August 5, 1994
or the completion date.
Kemper Securities calculated, reviewed, and
compared selected financial data and ratios for the
approximately thirty-five banks and bank holding
companies involved in pending and completed merger and
acquisition transactions (the "Comparative Group")
using information as of the most recently available
date. The approximately thirty-three variables
summarized in the analysis pertained to size,
profitability, growth, capital adequacy, portfolio
composition, and asset quality. Such analysis
indicated that, with respect to the median value of the
Comparative Group: (i) Robinson's total assets and
total equity were $109.5 million and $9.3 million,
respectively, corresponding to $89.5 million and $8.7
million for the Comparative Group; (ii) Robinson's net
interest margin, return on average assets, and "core"
return on average assets (i.e., excluding net gains on
sales of assets and other non-recurring items) were
4.42%, 0.71%, and 0.64%, respectively, corresponding to
4.26%, 0.92%, and 0.79%, for the Comparative Group;
(iii) Robinson's annual asset, loan, and deposit growth
rates were 5.28%, 20.95%, and 5.40%, corresponding to
0.84%, 0.04%, and 0.82% for the Comparative Group; (iv)
Robinson's ratio of equity to total assets was 8.52%,
corresponding to 8.60% for the Comparative Group; (v)
Robinson's ratio of real estate, commercial,
agricultural, and consumer loans was 52.97%, 16.15%,
6.69%, and 23.04%, respectively, compared to 64.50%,
13.47%, 1.20%, and 12.90% for the Comparative Group;
(vi) Robinson's ratio of non-performing assets to total
assets was 0.46%, corresponding to 0.45% for the
Comparative Group; and (vii) Robinson's reserves as a
percentage of non-performing loans was 112.90%
corresponding to 162.32% for the Comparative Group.
With respect to the median of Comparative Group
merger and acquisition transactions based on
information available at the earlier of August 5, 1994
or the completion date, the analysis indicated that:
(i) the price-earnings multiple for Robinson in the
Merger was 22.6x, corresponding to 16.9x and 17.7x,
respectively, for pending and completed transactions;<PAGE>
<PAGE>49
(ii) the price-"core" earnings multiple for Robinson
in the Merger was 23.2x, corresponding to 16.1x and
17.6x, respectively, for pending and completed
transactions; (iii) the price-book value ratio for
Robinson in the Merger was 210.0%, corresponding to
186.8% and 163.8%, respectively, for pending and
completed transactions; and (iv) the price-tangible
book value ratio for Robinson in the Merger was 212.2%,
corresponding to 186.8% and 168.6%, respectively, for
pending and completed transactions.
In addition, Kemper Securities calculated the
multiple of the "adjusted offer value" to "normalized
core earnings" and ratio of "adjusted offer value" to
"normalized tangible book value" for each Comparative
Group merger and acquisition transaction. Kemper
Securities assumed "normalized tangible book value" to
be the acquired company's actual tangible equity less
an assumed dividend that would result in tangible
equity equal to 7.0% of tangible assets, "adjusted
offer value" to be the actual offer value minus the
difference between the acquired company's actual
tangible equity and "normalized tangible book value,"
and "normalized core earnings" to be "core" earnings
less assumed earnings on the difference between the
acquired company's actual tangible equity and
"normalized tangible book value." With respect to the
median of Comparative Group transactions based on
information available at the earlier of August 5, 1994
or the completion date, the analysis indicated that:
(i) the adjusted offer value to normalized core
earnings multiple for Robinson in the Merger was 24.3x,
corresponding to 14.9x and 19.1x, respectively, for
pending and completed transactions and (ii) the
adjusted offer value to normalized tangible book value
ratio for Robinson in the Merger was 235.2%,
corresponding to 211.2% and 176.3%, respectively, for
pending and completed transactions.
STOCK CONSIDERATION. Kemper Securities compared
selected market valuation, balance sheet, income
statement, and asset quality data of AMBANC to the
corresponding publicly available data of ten Midwest
bank holding companies with total assets between $300
million and $700 million that are located in a
Illinois, Indiana, and Ohio: Premier Financial
Services, Inc.; Princeton National Bancorp; ANB
Corporation; First Merchants Corp.; GAB Bancorp;
Indiana United Bancorp; National City Bancshares;
Citizens Bancshares, Inc.; Peoples Bancorp; and Second
Bancorp (collectively, the "AMBANC Comparable Group").
The analysis indicated that, with respect to median
value and ranking within this group of ten companies:
(i) AMBANC's total assets were $409.0 million<PAGE>
<PAGE>50
corresponding to $531.8 million, or the fourth largest
in the AMBANC Comparable Group; (ii) AMBANC's return on
average assets and return on average equity were 1.06%
and 11.19%, respectively, corresponding to 1.09% and
11.77%, or fifth and sixth highest in the AMBANC
Comparable Group; (iii) AMBANC's average equity to
assets ratio was 9.69% corresponding to 9.48%, or sixth
highest in the AMBANC Comparable Group; and (iv)
AMBANC's ratio of non-performing assets to total assets
was 0.32% corresponding to 0.53%, or fifth highest in
the AMBANC Comparable Group. The analysis also
indicated that AMBANC's price-earnings multiple and
price-book value ratios were 13.6x and 149.0%,
respectively, corresponding to medians of 12.2x and
141.0%, or eighth and eighth highest in the AMBANC
Comparable Group.
Kemper Securities also presented an historical
analysis of AMBANC's stock price, AMBANC's stock price
in relation to AMBANC's historical earnings and book
value, and AMBANC's stock price in comparison to a
stock price index consisting of the AMBANC Comparable
Group. The first analysis showed AMBANC's stock price
since it began trading in the NASDAQ in December 1992.
The analysis showed that the stock was trading at $33
1/2 at the month ending December 1992 and had traded as
high as $37 1/2 at month-end June 1993. Since June
1993, AMBANC stock price had generally trended downward
and was trading at $32 1/4 at August 5, 1994. The
second analysis of AMBANC's historical stock price
indicated that for each month end since July 1993,
AMBANC's multiple of stock price to latest twelve-month
earnings exceeded 13.2x and, with two exceptions,
AMBANC's ratio of stock price to book value was 150% or
higher. The third analysis of AMBANC's historical
total stock return indicated that for the period from
December 1992 to August 1994, the total stock return of
the AMBANC Comparable Group was greater than that of
AMBANC.
PRO FORMA ANALYSIS. Kemper Securities calculated
historical earnings per share and book value per share
for AMBANC giving effect to the Merger. The pro forma
analysis assumed the Conversion Ratio, an AMBANC stock
price of $32 per share, and no Merger-related savings
or expenses. With respect to the historical six months
ended June 30, 1994, the pro forma analysis indicated
that the Merger would be dilutive to AMBANC's earnings
per share by approximately 1.0% and would be dilutive
to AMBANC's book value per share by approximately 5.2%.
GENERAL. The foregoing is a summary of the
principal financial analyses performed by Kemper
Securities but does not purport to be a complete
description of the analyses performed by Kemper<PAGE>
<PAGE>51
Securities. The preparation of a fairness opinion is
a complex process and is not necessarily susceptible to
partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth
above, without considering the analysis as a whole,
could create an incomplete view of the processes
underlying Kemper Securities' opinion. In arriving at
its fairness determination, Kemper Securities
considered the results of all of such analyses. No
specific Comparative Group institution is identical to
Robinson, and no selected Comparative Group merger and
acquisition transaction is identical to the Merger.
Accordingly, Kemper Securities indicated to Robinson's
Board of Directors that analyses of the results
described above are not mathematical, but rather
involve complex considerations and judgments concerning
differences in operating and financial characteristics.
The above analyses do not purport to be appraisals nor
do they necessarily reflect the prices at which
Robinson or its securities actually may be sold.
<PAGE>
<PAGE>52
PRO FORMA FINANCIAL DATA
AMBANC AND ROBINSON
Following are unaudited pro forma condensed
consolidated balance sheets as of June 30, 1995, and
December 31, 1994, and unaudited pro forma condensed
consolidated statements of income for the six months
ended June 30, 1995 and each of the years ended
December 31, 1994, 1993 and 1992.
The historical financial information of AMBANC and
Robinson has been combined for each period presented.
The pro forma consolidated condensed financial data and
consolidated balance sheets and income statements have
been prepared based on the pooling of interest method
of accounting and the issuance of 636,504 shares of
AMBANC Common Stock and that no Robinson shareholder
will dissent. This information will vary if any
shareholders dissent. The equivalent pro forma per
share information for Robinson has been determined by
multiplying the AMBANC pro forma per share information
by the exchange ratio of 5.3398 shares of AMBANC for
each share of Robinson.
The pro forma information gives effect to the
proposed merger of AMBANC and Robinson under the
pooling-of-interest method of accounting, which is a
condition to the Merger. Shareholders will be
resolicited with pro forma data prepared assuming the
purchase method of accounting in the event that the
proposed Merger does not qualify under the pooling-of-
interest method of accounting and this condition to the
Merger is waived by AMBANC and Robinson.
The unaudited pro forma condensed consolidated
balance sheets are not necessarily indicative of the
combined financial position had the transaction been
effective at such dates. The unaudited pro forma
condensed consolidated statements of income are not
necessarily indicative of the results of operations
that would have occurred had the transaction been
effective at the beginning of the periods indicated, or
of the future results of operations of AMBANC. These
pro forma financial statements should be read in
conjunction with the historical financial statements
and the related notes presented elsewhere in this
Prospectus/Proxy Statement.
<PAGE>
<PAGE>53
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1995
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
Corp. BancorpAdjustmentsConsolidated
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks$15,784 $2,160 $17,944
Federal funds sold 13,167 2,100 15,267
Interest bearing
deposits in banks 894 0 894
Investment in subsidiary $10,526 (A) 0
(10,526)(B)
Securities available for
sale 102,396 34,270 136,666
Securities held to
maturity 39,092 500 39,592
Loans, net 349,737 63,808 413,545
Premises and equipment 6,378 2,387 8,765
Other assets 10,597 1,566 (126) (D) 12,037
Total assets $538,045 $106,791 $(126) $644,710
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits $473,072 $91,774 $564,846
Other liabilities 12,041 4,491 $(22) (D) 16,510
Total liabilities 485,113 96,265 (22) 581,356
Common stock 23,726 600 6,365 (A) 30,091
(600)(B)
Surplus 3,455 2,200 (3,603)(A) 0
(2,200)(B)
148 (C)
Treasury stock 0 (38) 38 (B) 0
Retained earnings 26,627 7,361 7,118 (A) 33,736
(7,118)(B)
(148)(C)
(104)(D)
Unrealized gain/(loss)
on securities
available for sale (876) 403 403 (A) (473)
(403)(B)
Total shareholders'
equity 52,932 10,526 (104) 63,354
Total liabilities and
shareholders' equity$538,045$106,791 $(126) $644,710
</TABLE>
ADJUSTMENTS:
(A) --Issuance of 636,504 common shares of AMBANC Corp. in exchange for the
119,200 common shares of First Robinson Bancorp
(B) --Eliminate investment in First Robinson Bancorp
(C) --To restate surplus to zero.
(D) --Expense First Robinson Bancorp merger expenses capitalized.
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>54
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1994
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
Corp. BancorpAdjustmentsConsolidated
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $19,595 $2,936 $22,531
Federal funds sold 7,000 0 7,000
Interest bearing deposits in banks1,1930 1,193
Investment in subsidiary $9,173 (A) 0
(9,173)(B)
Securities available for sale112,21434,382 146,596
Securities held to maturity39,695 584 40,279
Loans, net 319,849 66,941 386,790
Premises and equipment 6,487 2,401 8,888
Other assets 10,063 1,900 11,963
Total assets $516,096$109,144 $0 $625,240
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $455,234 $95,610 $550,844
Other liabilities 11,825 4,361 16,186
Total liabilities 467,059 99,971 $0 567,030
Common stock 23,722 600 6,365 (A) 30,087
(600)(B)
Surplus 3,447 2,200 (3,603)(A) 0
(2,200)(B)
156
Treasury stock 0 (38) 38 (B) 0
Retained earnings 24,830 6,937 6,937 (A) 31,611
(6,937)(B)
(156)(C)
Unrealized gain/(loss) on securities
available for sale (2,962) (526) (526)(A) (3,488)
526 (B)
Total shareholders' equity49,037 9,173 $0 58,210
Total liabilities and shareholders'
equity $516,096$109,144 $0 $625,240
</TABLE>
ADJUSTMENTS:
(A) --Issuance of 636,504 common shares of AMBANC Corp. in exchange for the
119,200 common shares of First Robinson Bancorp.
(B) --Eliminate investment in First Robinson Bancorp.
(C) --To restate surplus to zero.
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>55
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
June 30, 1995
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
INTEREST INCOME Corp. Bancorp AdjustmentsConsolidated
<S> <C> <C> <C> <C>
Interest and fees
on loans $15,267 $2,909 $18,176
Interest on securities4,239 1,154 5,393
Other interest income 169 29 198
Total interest income19,675 4,092 0 23,767
INTEREST EXPENSE
Interest on deposits 9,138 1,807 10,945
Other interest expense 230 78 308
Total interest expense9,368 1,885 0 11,253
Net interest income10,307 2,207 0 12,514
Provision for loan losses150 136 286
Net interest income
after provision for
loan losses 10,157 2,071 0 12,228
Noninterest income 1,229 237 1,466
Noninterest expense 7,390 1,630 126 (A) 9,146
Income before income
taxes 3,996 678 (126) 4,548
Income taxes 1,204 156 (22)(A) 1,338
Net income $2,792 $522 $(104) $3,210
EARNINGS PER SHARE
Net income per share $1.18 $4.38 $1.07
Weighted average number
of shares outstanding2,372,547119,200 3,009,051
</TABLE>
ADJUSTMENTS:
(A) --Expense First Robinson Bancorp merger expenses capitalized.
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>56
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
December 31, 1994
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
INTEREST INCOME Corp. Bancorp AdjustmentsConsolidated
<S> <C> <C> <C> <C>
Interest and fees on loans$25,417 $5,795 $31,212
Interest on securities 9,309 2,162 11,471
Other interest income 297 73 370
Total interest income35,023 8,030 $0 43,053
INTEREST EXPENSE
Interest on deposits 15,140 3,428 18,568
Other interest expense 460 126 586
Total interest expense15,600 3,554 0 19,154
Net interest income 19,423 4,476 0 23,899
Provision for loan losses 100 238 338
Net interest income after
provision for loan
losses 19,323 4,238 0 23,561
Noninterest income 2,391 493 2,884
Noninterest expense 14,018 3,301 17,319
Income before income
taxes 7,696 1,430 0 9,126
Income taxes 2,253 371 2,624
Net income $5,443 $1,059 $0 $6,502
EARNINGS PER SHARE
Net income per share $2.30 $8.89 $2.16
Weighted average number
of shares outstanding2,370,004 119,200 3,006,508
</TABLE>
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>57
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
December 31, 1993
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
INTEREST INCOME Corp. BancorpAdjustmentsConsolidated
<S> <C> <C> <C> <C>
Interest and fees on loans$23,528 $4,989 $28,517
Interest on securities 10,054 2,687 12,741
Other interest income 455 45 500
Total interest income34,037 7,721 $0 41,758
INTEREST EXPENSE
Interest on deposits 15,513 3,199 18,712
Other interest expense 207 88 295
Total interest expense15,720 3,287 0 19,007
Net interest income 18,317 4,434 0 22,751
Provision for loan losses 470 1,022 1,492
Net interest income
after provision for
loan losses 17,847 3,412 0 21,259
Noninterest income 2,587 512 3,099
Noninterest expense 13,326 3,048 16,374
Income before income taxes
and cumulative effect of
accounting change 7,108 876 0 7,984
Income taxes 1,941 133 2,074
Income before cumulative
effect of accounting
change $5,167 $743 $0 $5,910
EARNINGS PER SHARE
Income per share before
cumulative effect of
accounting change $2.18 $6.22 $1.97
Weighted average number
of shares outstanding2,369,784 119,518 3,006,288
</TABLE>
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>58
<TABLE>
AMBANC CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
December 31, 1992
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
<CAPTION>
First
AMBANC Robinson Pro Forma
INTEREST INCOME Corp. Bancorp AdjustmentsConsolidated
<S> <C> <C> <C> <C>
Interest and fees on
loans $25,198 $4,061 $29,259
Interest on securities 11,263 3,433 14,696
Other interest income 684 83 767
Total interest income37,145 7,577 $0 44,722
INTEREST EXPENSE
Interest on deposits 18,218 3,840 22,058
Other interest expense 248 81 329
Total interest expense18,466 3,921 0 22,387
Net interest income 18,679 3,656 0 22,335
Provision for loan losses1,375 120 1,495
Net interest income
after provision for
loan losses 17,304 3,536 0 20,840
Noninterest income 2,152 483 2,635
Noninterest expense 12,611 2,848 15,459
Income before income
taxes 6,845 1,171 0 8,016
Income taxes 1,909 289 2,198
Net income $4,936 $882 $0 $5,818
EARNINGS PER SHARE
Net income per share $2.08 $7.38 $1.94
Weighted average number
of shares outstanding2,369,784119,600 3,006,288
</TABLE>
NOTE: No adjustments to these pro forma financial statements were necessary
to conform accounting methods as contemplated by APB Opinion No. 16.
<PAGE>
<PAGE>59
INFORMATION ABOUT AMBANC
AMBANC is a bank holding company registered with
the Board of Governors of the Federal Reserve System
(the "FRB") pursuant to the Bank Holding Company Act of
1956, as amended. AMBANC was organized as an Indiana
corporation on January 7, 1982. AMBANC's principal
business has been the ownership of the Common Stock of
The American National Bank of Vincennes, Vincennes,
Indiana ("American National") (since October 1, 1982);
Citizens' National Bank of Linton, Linton, Indiana
("Citizens'") (since September 1, 1990); Farmers'
(since June 1, 1993); and Bank of Casey, Casey,
Illinois (since June 1, 1994). In addition to pursuing
the Merger, AMBANC is continuing to explore and
evaluate other affiliation prospects, but AMBANC has no
oral or written understandings with respect to any
other possible acquisitions.
At June 30, 1995, AMBANC had total assets of
approximately $538,045,000 and total liabilities of
approximately $485,113,000. AMBANC's principal
executive offices are located at 302 Main Street,
Vincennes, Indiana 47591, and its telephone number is
(812) 885-6418.
This Prospectus/Proxy Statement is accompanied by
AMBANC's Annual Report to Shareholders for the year
ended December 31, 1994, and its Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, portions
of which documents are incorporated herein by
reference. Additional information concerning AMBANC is
contained in the following documents, which are
incorporated in this Prospectus/Proxy Statement by
reference: AMBANC's Annual Report on Form 10-K for the
year ended December 31, 1994, as amended; AMBANC's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995; and AMBANC's Current Reports on form 8-
K dated March 27, 1995 and June 28, 1995. These
documents are available without charge upon written
request to Investor Relations, AMBANC Corp., 302 Main
Street, Box 556, Vincennes, Indiana 47591-0556 (812)
885-6418. In order to assure timely delivery of these
documents, any requests should be made by ,
1995.
INFORMATION ABOUT ROBINSON
GENERAL
Robinson was organized as an Illinois corporation
in 1982 to serve as the holding company for First
National, which was organized as a national banking
<PAGE>
<PAGE>60
association in 1932. The principal executive offices
of Robinson are located at 300 West Main Street,
Robinson, Illinois 62454. Robinson, through First
National, conducts its business from its principal
office and from three branch offices located in
Robinson and Flat Rock in Crawford County and Mt.
Carmel in Wabash County, Illinois.
Robinson, through First National, engages in a
wide range of commercial and personal banking
activities, including accepting demand deposits, time
deposits, and savings accounts, making secured and
unsecured loans to corporations, individuals, and
others, issuing letters of credit, and offering trust-
related and safekeeping services. First National's
lending services include commercial, real estate,
agricultural, and installment loans.
EMPLOYEES
Robinson does not have any employees. At
August 15, 1995, First National employed 54 full-time
and 13 part-time employees. First National is not a
party to any collective bargaining agreement, and
employee relations are considered to be good.
COMPETITION
The banking business is highly competitive. First
National's market area principally consists of
Crawford, Lawrence and Wabash Counties in Illinois.
First National also competes with other financial
institutions in the counties in Illinois and Indiana
contiguous to Crawford, Lawrence and Wabash Counties
and in other areas in obtaining deposits and providing
many types of financial services. At June 30, 1994,
the most recent date for which published data is
available, First National ranked first in deposit size
among the five commercial banks headquartered in
Crawford County. At that date, First National had
total deposits of approximately $168,720,000.
REGULATION AND SUPERVISION
Robinson is subject to the Bank Holding Company
Act of 1956, as amended. As a bank holding company,
Robinson is required to file with the FRB annual
reports and such additional information as the FRB may
require. The FRB also may make examinations or
inspections of Robinson and First National. First
National is supervised and regulated by the Comptroller
of the Currency. Regulation and examination by banking
regulatory agencies are primarily for the benefit of
depositors rather than shareholders.
<PAGE>
<PAGE>61
The earnings of commercial banks are affected not
only by general economic conditions but also by the
policies of various governmental regulatory
authorities. In particular, the FRB regulates money
and credit conditions and interest rates in order to
influence general economic conditions, primarily
through open-market operations in U.S. Government
securities, varying the discount rate on bank
borrowings, and setting reserve requirements against
bank deposits. These policies have a significant
influence on overall growth and distribution of bank
loans, investments and deposits, and affect interest
rates charged on loans and earned on investments or
paid for time and savings deposits. FRB monetary
policies have had a significant effect on the operating
results of commercial banks in the past, and this is
expected to continue in the future.
In January 1995, the Board of Directors of the
Federal Deposit Insurance Corporation ("FDIC") voted
unanimously to propose a reduction in the deposit
insurance premiums paid by banks when the Bank
Insurance Fund ("BIF") reaches its recapitalization
target of $1.25 for every $100 of insured deposits.
This recapitalization target apparently was reached
during the second quarter of 1995. Under the FDIC
proposal, institutions insured through BIF would pay an
average of 4.5 cents per $100 of domestic deposits and
institutions that are insured through the Savings
Association Insurance Fund ("SAIF") would continue to
pay an average premium of 23 cents per $100 of
deposits. The FDIC has not yet acted upon the
proposal. All of AMBANC's banking subsidiaries are
BIF-insured institutions (the deposits acquired from
the Princeton branch of First Indiana Bank on March 17,
1995, however, remain insured through SAIF). AMBANC's
banking subsidiaries would benefit from any deposit
insurance premium reduction, as would other BIF-insured
institutions.
PROPERTIES
First National conducts its operations from its
main office at 300 West Main Street in Robinson,
Illinois, and from three branches in Illinois: the
Westgate Branch at 1302 West Main Street in Robinson;
the Flat Rock Branch at First and Main Streets in Flat
Rock; and the Mt. Carmel Branch at 9th and Mulberry
Street in Mt. Carmel. The building that houses First
National's main office is a three-level brick building
containing approximately 24,800 square feet, all of
which is occupied by First National. The Westgate
Branch is located in the one-story Westgate Shopping
Center and occupies approximately 312 square feet. The
<PAGE>
<PAGE>62
Flat Rock Branch occupies all 980 square feet of a
single-story wooden building. The Mt. Carmel Branch
occupies all of a single-story brick building
consisting of approximately 5,600 square feet. The
main office and the Flat Rock and Mt. Carmel Branches
have drive-up facilities. Robinson owns all of its
facilities except for the Westgate Branch facility
which is located in, and leased from, the IGA Grocery
Store, Robinson, Illinois.
DESCRIPTION OF ROBINSON CAPITAL STOCK
GENERAL
Robinson's authorized capital stock consists of
240,000 shares of Common Stock, 119,200 shares of which
were issued and outstanding at July 1, 1995. Robinson
Common Stock was held of record by approximately 146
shareholders at August 15, 1995.
MARKET PRICE
Robinson Common Stock is not traded on any
established market, and there are no regularly
published bid and asked quotations. To the best of the
knowledge of Robinson management, there were no sales
transactions in 1994 and there have not been any sales
transactions in 1995 prior to the date of this
Prospectus/Proxy Statement.
<PAGE>
<PAGE>63
DIVIDENDS
Robinson historically has paid dividends on a
quarterly basis. During 1993, Robinson paid quarterly
dividend of 35 cents for an annual total of $ 1.40 and
during 1994, Robinson paid a quarterly dividend of 38
cents for an annual toal of $ 1.52. During 1995 and
prior to the date of this Prospectus/Proxy Statement,
Robinson has paid three quarterly dividends of 41 cents
each, for a total of $1.23. The Acquisition Agreements
provide that Robinson may continue to pay its regular
dividend consistent with past practice in amount and
timing until consummation of the Merger, except that
Robinson may not pay a dividend during the quarter that
the Merger is consummated if Robinson's shareholders
would be entitled to receive a dividend from AMBANC
during that quarter.
Substantially all of Robinson's cash income is
derived from First National. As a national bank, First
National is subject to certain restrictions imposed by
its primary regulator, the Comptroller of the Currency,
with respect to the payment of dividends to Robinson.
First National must obtain the prior approval of the
Comptroller of the Currency if the total of all
dividends declared in any calendar year would exceed
net income for the preceding two calendar years.
STOCK OWNERSHIP OF, AND EFFECT OF MERGER
ON, MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth the number of
shares and percentage of Robinson Common Stock
beneficially owned at August 15, 1995, by, and the
effect of the Merger on such ownership amounts and
percentages of, each person known to be the beneficial
owner of more than five percent of the outstanding
Robinson Common Stock, each Director, and all Directors
and executive officers as a group.
<PAGE>
<PAGE>64
<TABLE>
<CAPTION>
Number of Percentage of
Number of Shares of Percentage of Shares of
Name of Shares of AMBANC Shares of AMBANC
Beneficial OwnerRobinson CommonCommon Robinson Common Common
and Position Stock Owned Stock Owned Stock Owned Stock Owned
with RobinsonBefore MergerAfter Merger Before MergerAfter Merger(1)
<S> <C> <C> <C> <C>
Robert M. Berty 1,630(2) 8,703 1.4% 0.3%
Chairman of the
Board of Robinson
Robert Bowen, Jr. 17,080 91,305(3) 14.3% 3.0%
Director
3031 Tidewater Circle
Madison, MS 39110
Max V. Fulling 1,000 10,479(4) 0.8% 0.2%
Vice Chairman of
the Board
Rebecca Allen Kaley22,400(5)119,611 18.8% 4.0%
Director
1871 Burlewood Drive
St. Louis, MO 63146
Larry H. Lewis 930 4,966 0.8% 0.2%
Director
David L. Musgrave2,430(6) 12,975 2.0% 0.4%
President, Director
Clark P. Pulliam5,745(7) 30,677 4.8% 1.0%
Director
G. William Rosborough500 2,669 0.4% 0.1%
Director
Randy J. Schutte1,000(8) 5,339 0.8% 0.2%
Director
Frank J. Weber, 9,816(9)54,534(10) 8.2% 2.3%
Secretary/Treasurer,
Director
503 Mission Drive
Robinson, IL 62454
Mark R. Weber 900 4,805 0.8% 0.2%
Director
All Directors and 62,881 335,764 52.8% 11.2%
executive officers
as a group
(14 persons)
</TABLE>
(1) Assumes that 636,504 shares of AMBANC Common Stock
will be issued in exchange for all outstanding
shares of Robinson Common Stock and that no
Robinson shareholders will exercise dissenters'<PAGE>
<PAGE>65
rights. There are no greater-than-five-percent
shareholders known to management other than
certain Directors whose share holdings are
included in the table. Addresses are included in
the table for those persons who hold more than
five percent of Robinson's Common Stock.
(2) Includes 722 shares held by Mr. Berty's wife and
200 shares held by a corporation controlled by
Mr. Berty.
(3) Includes 102 shares of AMBANC Common Stock held by
Mr. Bowen prior to the Merger.
(4) Includes 100 shares held by Mr. Fulling prior to
the Merger, and 5,040 shares owned by
Mr. Fulling's mother and for which shares
Mr. Fulling holds a power of attorney.
(5) Includes 18,420 shares held by the estate of
Ms. Kaley's father for which Ms. Kaley serves as
executor, 1,010 shares held by Ms. Kaley's step-
mother, 390 shares held by Ms. Kaley's children,
10 shares held by her daughter-in-law and 10
shares held by her grandchild.
(6) Represents 1,630 shares held jointly by
Mr. Musgrave and his wife and 800 shares with
respect to which Mr. Musgrave has an agreement to
purchase from his mother.
(7) Includes 188 shares held by Mr. Pulliam's wife.
(8) Represents shares held jointly by Mr. Schutte and
his wife.
(9) Includes 100 shares held by Mr. Weber's spouse;
1,000 shares held by Mr. Weber's children; 6,560
shares held by trusts for which Mr. Weber serves
as trustee; and 1,000 shares held by a profit-
sharing plan for which Mr. Weber serves as plan
administrator.
(10)Includes 2,119 shares of AMBANC Common Stock that
Mr. Weber acquired in AMBANC's acquisition of
Farmers' in June 1993.
<PAGE>
<PAGE>66
FIRST ROBINSON BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents an analysis of the consolidated
balance sheets of First Robinson Bancorp (Robinson) and
it's 100.00% owned subsidiary, The First National Bank
in Robinson (First National) Robinson, Illinois at
December 31, 1994 and 1993 and June 30, 1995 and 1994
and the consolidated statements of income for the years
ended December 31, 1994, 1993 and 1992 and for the six
months ended June 30, 1995 and 1994. This review
should be read in conjunction with the consolidated
financial statements, notes to consolidated financial
statements and other financial data presented elsewhere
in this Prospectus/Proxy. Robinson has presented
interest income in this discussion and analysis on a
fully taxable equivalent (FTE) basis.
(ALL DOLLAR AMOUNTS USED HEREIN ARE
IN THOUSANDS, EXCEPT PER SHARE DATA)
RESULTS OF OPERATIONS
Net income for 1994 was $1,059 or $8.89 per share
compared to $743 or $6.22 per share in 1993 and $882 or
$7.38 per share in 1992. The following is an analysis
of the primary components of net income for the six
months ending June 30, 1995 and for the years 1994,
1993 and 1992 with discussion and analysis on the
contrasts between these periods and the effect of
previous trends on anticipated future earnings.
NET INTEREST INCOME
Net interest income is the principal source of
Robinson's earnings and represents the difference
between interest income on loans and investments over
the interest cost of deposits and borrowed funds. The
following schedule provides details concerning interest
income, average balances and the related interest rates
for the past three years.
Net interest income increased $772 or 21.15% from 1992
to 1993 due to increased loans that were funded by a
reduction in investment securities which have a lower
yield than loans. Net interest income increased $61 or
1.38% from 1993 to 1994 due to a stronger loan demand
weakened by a combination of a reduction in investment
security yields and increased cost of deposits. Net
interest margin or net interest income to average
earning assets increased from 3.94% in 1992 to 4.47% in
1993 then decreased to 4.31% in 1994. From 1994 to
June 30, 1995, net interest margin decreased .01% to
4.30%. The decrease in the net interest margin in 1994
<PAGE>
<PAGE>67
is attributed to the effects of increasing market rates
during 1994 and the Bank's increasing negative interest
rate sensitivity position. The increasing net
interest margin at June 30, 1995 is a result of
decreasing market rates through the first half of 1995.
Total average earning assets increased $6,302 or 6.80%
from 1992 to 1993 while average rates decreased from
8.17% to 7.79%. Total average earning assets increased
$5,743 or 5.80% from 1993 to 1994 while average rates
continued to decrease from 7.79% to 7.68%,
respectively. Total average earning assets decreased
$3,824 or 3.65% from 1994 to June 30, 1995 while
average rates increased by .36%.
Total interest bearing liabilities increased $4,606 or
5.51% from 1992 to 1993 due to increased savings and
demand deposit accounts offset by a decrease in time
deposits as customers moved funds from declining rate
environment. At the same time average interest rates
on savings and demand deposits decreased from 4.30% to
2.99% due to a dramatic decline in overall market
interest rates. From 1993 to 1994 interest rates on
deposits increased from 3.72% to 3.83% while interest
bearing liabilities increased $4,437 or 5.03%. These
changes were caused by the rise of time deposit and
short term borrowing rates and the inflow of time
deposits from other investment vehicles available to
depositors. From 1994 to June 30, 1995 interest rates
on deposits continued to increase from 3.84% to 4.31%
while interest bearing liabilities decreased $5,513 or
6.15%.
<PAGE>
<PAGE>68
<TABLE>
Interest Rates on Earning Assets and Interest Bearing Liabilities
Six Months ended June 30, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
<CAPTION>
June 30,
1995 1994
Interest Interest
Average Income Average Income/
Balance Expenses Rate Balance ExpensesRate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Investment securities:
U.S. Govt., agencies
& mtg-backed $ 23,230 $ 781 6.78%$ 22,536 $ 702 6.28%
State & municipal
obligations 9,303 286 6.20% 9,159 281 6.19%
Other 2,377 86 7.30% 2,596 90 6.99%
ALLOW FOR UNREALIZED
GN/LS AFS (371) 351
Total investment
securities 34,539 1,153 6.73% 34,642 1,073 6.25%
Interest bearing
deposits in other
banks 0 0 0 0
Total loans, less
unearned 65,372 2,857 8.81% 67,478 2,768 8.27%
Federal funds sold
and securities
purchased under
agreements to resell1,022 29 5.72% 2,448 42 3.46%
Total earning
assets and
interest income100,933$4,039 8.07%104,568 $3,883 7.49%
Noninterest earnings assets
Cash and due from banks1,930 2,114
Premises and equipment,
net 2,384 2,449
Other assets 1,760 1,684
Less allowance for loan
losses (639) (581)
Total assets $106,368 $110,234
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest bearing
liabilities:
Savings and demand
deposits $ 33,549 512 3.08%$ 38,996 581 3.00%
Time deposits 50,640 1,288 5.13% 50,461 1,079 4.31%
Total savings &
time deposits 84,189 1,800 4.31% 89,457 1,660 3.74%
Short term borrowings3,447 89 5.21% 3,015 58 3.88%
Total interest
bearing liabilities
and interest
expense $ 87,636 $ 1,889 4.35% 92,472$ 1,718 3.75%
<PAGE>
<PAGE>69
Non-interest bearing
liabilities:
Demand deposits 8,092 7,487
Other 1,064 1,127
Shareholders' equity9,576 9,148
Total liabilities
and shareholders'
equity $106,368 $110,234
Interest margin recap:
Interest income/
earning assets 8.07% 7.49%
Interest expense/
earning assets 3.77% 3.31%
Net interest income
to earning assets 4.30% 4.18%
</TABLE>
<TABLE>
Interest Rates on Earning Assets and Interest Bearing Liabilities
Year ended December 31, 1994, 1993 and 1992
(Dollar amounts in thousands, except share and per share data)
<CAPTION>
December 31,
1994 1993 1992
Interest Interest Interest
AverageIncome/ Average Income/ Average Income/
BalanceExpensesRate BalanceExpensesRateBalanceExpensesRate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Investment securities:
U.S. Govt.,
agencies &
mtg-backed $22,530$1,415 6.28% $28,212 $1,8586.59%$35,206$2,512 7.14%
State & municipal
obligations 9,184 563 6.13% 9,543 583 6.11%8,445 517 6.12%
Other 2,662 184 6.91% 3,249 241 7.41%5,205 404 7.76%
ALLOW FOR UNREALIZED
GN/LS AFS 229 (48) (134)
Total investment
securities 34,605 2,162 6.24% 40,956 2,6826.55%48,722 3,433 7.05%
Interest bearing
deposits in
other banks 0 0 0
Total loans, less
unearned 68,279 5,807 8.50% 56,590 4,9848.81%41,680 4,056 9.73%
Federal funds sold
and securities
purchased under
agreements to
resale 1,873 73 3.90% 1,468 45 3.07%2,310 82 3.55%
<PAGE>
<PAGE>70
Total earning
assets and
interest income104,757$8,0427.71%99,014 $7,7117.79%92,712 $7,571 8.17%
Noninterest
earnings assets
Cash and due
from banks 2,141 2,169 1,997
Premises and
equipment, net2,431 2,407 2,271
Other assets 1,715 1,641 1,679
Less allowance
for loan losses(578) (585) (626)
Total assets $110,466 $104,646 $98,033
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest bearing
liabilities:
Savings and
demand deposits$38,649$1,1532.98%$38,412 $1,1502.99%$31,846$1,370 4.30%
Time deposits 51,053 2,279 4.46% 47,537 2,0514.31%50,010 2,470 4.94%
Total savings &
time deposits89,702 3,432 3.83% 85,948 3,2013.72%81,856 3,840 4.69%
Short term
borrowings 2,880 126 4.38% 2,196 88 4.01%1,683 81 4.81%
Total interest bearing
liabilities and
interest expense92,582$3,5583.84%88,145 $3,2893.73%83,539 $3,921 4.69%
Non-interest bearing
liabilities:
Demand deposits 7,367 6,827 5,896
Other 1,188 864 875
Shareholders' equity9,329 8,810 7,723
Total liabilities
and shareholders'
equity $110,466 $104,646 $98,033
Interest margin recap:
Interest income/
earning assets 7.71% 7.79% 8.17%
Interest expense/
earning assets 3.40% 3.32% 4.23%
Net interest income
to earning assets 4.31% 4.47% 3.94%
</TABLE>
Net interest income is affected both by volume and rate
of both earning assets and interest bearing
liabilities. The following table depicts the dollar
effect of volume and rate changes since 1992 for
different types of earning assets and interest bearing
liabilities and the resultant change in interest income
and interest expense. Variances which were not
specifically attributable to volume or rate were
allocated proportionately between each based on the
<PAGE>
<PAGE>71
overall effect of each to the total. Non-performing
loans are included with loans in the table.
<TABLE>
<CAPTION>
June 30,
1995 compared 1994
Volume Rate Total
<S> <C> <C> <C>
Changes in Net Interest Income
Increase/(Decrease) due to
change in:
Interest Income:
Loans $(93) $182 $89
Investment securities:
U.S. Govt. & its agencies and
mortgage backed securities 24 55 79
State and municipalities 4 1 5
Other (8) 4 (4)
Total investment securities (3) 83 80
Federal funds sold (41) 28 (13)
Total Interest Income (137) 293 156
Interest Expense:
Deposits:
Interest bearing demand
and savings: (84) 15 (69)
Time 4 205 209
Short term borrowings 11 20 31
Total interest expense (69) 240 171
Net Interest Income $ (68) $ 53 $ (15)
</TABLE>
<TABLE>
<CAPTION>
December 31,
1994 compared 1993 1993 compared 1992
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Changes in Net
Interest Income
Increase/(Decrease)
due to change in:
Interest Income:
Loans $994 $(171) $823 $1,313 $(385) $928
Interest bearing
deposits with
other banks 0 0 0 0 0 0
Investment securities:
U.S. Govt. & its
agencies and
mortgage backed
securities (357) (86) (443) (461) (193) (654)
State and
municipalities (22) 2 (20) 67 (1) 66
Other (40) (17) (57) (145) (18) (163)
<PAGE>
<PAGE>72
Total investment
securities (395) (125) (520) (509) (242) (751)
Federal funds sold 15 13 28 (26) (11) (37)
Total Interest Income614(283) 331 778 (638) 140
Interest Expense:
Deposits:
Interest bearing
demand and
savings: 7 (4) 3 197 (417) (220)
Time 157 71 228 (107) (312) (419)
Short term borrowings30 8 38 20 (13) 7
Total interest expense194 75 269 110 (742) (632)
Net Interest Income$420 $(358) $62 $668 $104 $772
</TABLE>
Rate differences accounted for $104 increase in net
interest income from 1992 to 1993 and volume
differences accounted for $668 increase for a total
increase in net interest income of $772.
Rate differences accounted for $358 decrease in net
interest income from 1993 to 1994 and volume
differences accounted for $420 increase for a total
increase in net interest income of $62.
Rate differences accounted for $53 increase in net
interest income from June 30, 1994 to June 30, 1995 and
volume differences accounted for $68 decrease for a
total decrease in net interest income of $15.
PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses provides a reserve (the
allowance for loan losses) to which loan losses are
charged as those losses become evident. Management
determines the appropriate level of the allowance for
loan losses on a quarterly basis utilizing a report
containing loans with a more than normal degree of
risk.
The provision for loan losses for June 30, 1995 was
$136 as compared to $238, $1,022 and $119 for
1994,1993 and 1992, respectively. Net charge-offs
(loan losses charged against the allowance for loan
losses less recoveries of prior charge-offs) for those
periods were $110, $171, $1,127 and $49 while the year
end allowance for loan losses was $646 for June 30,
1995 as compared to $620 in 1994, $553 in 1993 and $658
in 1992. The year end allowance for losses as a
<PAGE>
<PAGE>73
percent of loans, less unearned income, was .92%, .84%
and 1.38% for the years 1994, 1993 and 1992. The ratio
of net loans charged off as a percentage of total
average loans less unearned interest was .17% for June
30, 1995, .25% in 1994, 1.90% in 1993 and .12% in 1992.
During the year 1993, Robinson experienced
significantly higher net charge-offs of which 80%
consisted of the losses on one business. This business
was a veal production and processing operation which
borrowed nearly $1 million from Robinson before closing
its operations by filing Chapter 11 bankruptcy. The
main collateral for the debt, veal inventory, was sold
without the knowledge and approval of Robinson. There
is still a slight possibility of minimal recoveries.
Robinson has targeted it's allowance for loan losses at
1% of gross loans but also closely monitors and
classifies loans by credit risk in its review of the
adequacy of the allowance for loan losses. Credit
risks associated with concentrations of credit are
minimal with the residential mortgages comprising the
largest category of the loan portfolio while also
representing the least portion of charge-offs and non-
performing loans. Robinson's monthly analysis of its
allowance for loan losses identifies and classifies
loans by credit risk into categories of substandard,
doubtful and reserve for loan loss. Robinson
anticipates the charge-offs for the next full year of
operation to be a reflection of June 30, 1995
annualized amounts. The following is a breakdown by
category of the charge-offs:
Mortgages Commercial Installments
$2,000 $135,000 $188,000
<PAGE>
<PAGE>74
A five year summary and an interim comparison of loan
loss experience is set forth below:
<TABLE>
<CAPTION>
Analysis of the
allowance for June 30, December 31,
loan losses 1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning
of period $620 $553 $553 $658 $588 $481 $485
Loans charged-off:
Commercial 66 44 96 1,115 28 32 45
Real estate 1 1 1 7 45 51 99
Installment 91 66 173 71 49 14 29
Total Charge-offs158 111 270 1,193 122 97 173
Charge-offs recovered:
Commercial 15 8 48 20 25 7 5
Real estate 1 11 17 25 19 3 16
Installment 32 18 34 21 29 14 11
Total Recoveries48 37 99 66 73 24 32
Net loans
charged-off 110 74 171 1,127 49 73 141
Current period
provision 136 90 238 1,022 119 180 137
Balance at end
of period 646 569 620 553 658 588 481
Loans, less
unearned at
end of period$64,454$69,056$67,489$65,777$47,679$39,168$43,978
Ratio of allowance
to loans,
less unearned1.00% .82% .92% .84% 1.38% 1.50% 1.09%
Loans, less
unearned,
daily average$65,372$67,478$69,549$59,166$42,281$41,155$41,994
Ratio of net loans
charged off to
average loans,
less unearned.17% .11% .25% 1.90% .12% .18% .34%
</TABLE>
<PAGE>
<PAGE>75
Non-performing assets are defined as loans delinquent
over 90 days, non-accrual loans and restructured loans.
Once a loan becomes 90 days past due in the payment of
either interest or principal, the loan will be placed
on a non accrual status. After 120 days past due, the
loan will be given to bank counsel to begin legal
action. They do not necessarily represent future
losses to Robinson since underlying collateral can be
sold and the financial condition of the borrowers can
improve. The following table sets forth the detail of
non-performing loans and their percentage of loans, net
of unearned income:
<TABLE>
<CAPTION>
Non-Performing
Loans June 30, December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Non-accrual loans$384 $18 $79 $187 $257 $433 $439
Restructured 90
days or more
past due 498 468 683 297 553 377 415
Total 882 486 $762 484 810 810 854
Percent of total
net loans 1.37% .70% 1.13% .73% 1.69% 2.06% 1.94%
Loans, net
of unearned
income $64,454 $69,056$67,561$65,862 $47,801$39,269 $44,103
</TABLE>
The following table compares the allowance for loan
losses and the total non-performing assets at period
end:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance for
loan losses $646 $569 $620 $553 $658 $588 $481
Non-performing
assets 882 486 762 484 810 810 854
Allowance as a
percent of
non-performing
assets 73% 117% 81% 114% 81% 73% 56%
</TABLE>
Based upon Robinson's review, considering remaining
collateral and/or financial condition of identified
loans with more than a normal degree of risk, including
non-performing loans, historical loan loss percentage
<PAGE>
<PAGE>76
and economic conditions, it is management's belief that
the $136 of provision for loan losses during 1995 and
the $646 of allowance for loan losses at June 30, 1995,
is adequate to cover future possible losses.
<TABLE>
<CAPTION>
Composition of Loan
Portfolio by TypeJune 30, December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial 28% 29% 22% 23% 25% 23% 23%
Real estate mortgage56%53% 57% 54% 54% 60% 54%
Installments 11% 14% 14% 16% 14% 10% 11%
Other 5% 4% 7% 7% 7% 7% 12%
100% 100% 100% 100% 100% 100% 100%
</TABLE>
NON INTEREST INCOME
The balance of earnings of a banking institution are
typically generated through non interest income from
fees and service charges. The following table outlines
the components of this income source.
<TABLE>
<CAPTION>
Non-interest % Change from
Income AnalysisJune 30, December 31, Prior Year
1995 1994 1994 1993 1992 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Deposit service
charges 75 78 158 151 99 5% 53%
Fiduciary Income135 138 159 142 163 12% (13)%
Other operating
income 22 70 140 140 70 0% 100%
Subtotal 232 286 457 433 332 6% 30%
Security gains 5 27 35 80 151
Total non-interest
income 237 313 492 513 483
</TABLE>
As noted on the preceding schedule, non interest income
excluding securities gains increased 6% from 1993 to
1994.
Although securities are purchased to be held to their
maturities and Robinson does not engage in trading
activities, the investment portfolio was repositioned
in 1992 by selling certain investments and buying
mortgage backed securities. These transactions
resulted in securities gains and are expected to
enhance future earnings by improving Robinson's
sensitivity position. Security gains represented a
significant portion of non interest income in 1992.
<PAGE>
<PAGE>77
NON INTEREST EXPENSE
Non interest expense increased $200 or 7% from 1992 to
1993 and $252 or 8.26% from 1993 to 1994. Occupancy
expenses increased 11 % during 1993 due to renovation
of Robinson's Mt. Carmel and Westgate facility.
<TABLE>
<CAPTION>
Non-interest % Change from
Expense AnalysisJune 30, December 31, Prior Year
1995 1994 1994 1993 1992 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries employees
benefits $822 $808 $1,609 $1,493 $1,400 8% 7%
Occupancy expense,
net 122 131 253 235 212 8% 11%
Other operating
expenses 686 731 1,438 1,320 1,236 9% 7%
Total non-interest
expense $1,630 $1,670 $3,300 $3,048 $2,848 8% 7%
</TABLE>
INCOME TAX
Robinson's effective tax rate, computed as a percentage
of income taxes to income before income taxes, is lower
than the federal tax rate of 34% due to income
generated on tax exempt investment securities,
accretion income on investment securities, directors
deferred compensation, and tax credit carryforwards.
The relationship of tax exempt income before income
taxes is reflected in the following table:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Tax-exempt income/
income taxes
Income before income tax $677 $787 $1,431 $876 $1,172
Tax exempt income $321 $323 $640 $870 $620
Percent of tax exempt income
to income before taxes 47% 41% 45% 76% 53%
</TABLE>
Effective January 1, 1992 Robinson adopted Statement of
Financial Accounting Standards No. 109, Accounting for
Income Taxes. The cumulative effect of the change in
accounting principle is included in determining net
income for 1992. The effect of this change was
immaterial to the 1992 financial statements.
At December 31, 1994 Robinson had an alternative
minimum tax credit carryforward of $262,384.
<PAGE>
<PAGE>78
FINANCIAL CONDITION
INVESTMENTS
Robinson's holdings of short term investments, defined
as federal funds sold and interest bearing deposits in
other banks, serve as a source of liquidity to meet
depositor and borrower fund requirements. Short term
investments had a combined average outstanding balances
of $1,873 and $1,468 for the years 1994 and 1993.
The following table shows the components of total
investment securities at June 30, 1995 and 1994 and at
December 31, 1994, 1993, and 1992.
<TABLE>
<CAPTION>
Investment Securities
Book Values June 30, December 31,
1995 1994 1994 1993 1992
<S> <C> <C> <C> <C> <C>
U.S. Government &
its agencies 15,040 14,111$15,542 $13,106 $22,054
States & political
subdivisions 9,279 9,080 9,312 9,179 9,598
Mortgage backed
securities 7,833 8,952 8,470 9,866 12,229
Other debt securities1,0091,569 1,393 1,305 1,546
Equity securities1,151 1,000 1,000 1,021 1,028
Total $34,312 $34,712$35,717 $34,477 $46,455
</TABLE>
The market value of total investment securities was
$34,770 at June 30, 1995, $34,936 at December 31,
1994, $35,867 at December 31, 1993, and $47,546 at
December 31, 1992. The unrealized net market value
appreciation of $853 at June 30, 1995 is comprised of a
net unrealized market decline of $244 and a net
unrealized market appreciation of $609. The unrealized
net market value appreciation of $1,390 at December 31,
1994 is comprised of a net unrealized market decline of
$53 and a net unrealized market appreciation of $1,443.
The decrease in the investment portfolio from 1992 to
1993 reflects the strong loan demand and the move into
the Mt. Carmel market area. Short term investments
purchased from the acquired deposits have been used to
help fund the loan growth. Prepayment of mortgage
backed securities has slowed in the first quarter of
1995 due to a decrease in refinancing of mortgages
caused by higher interest rates. Although loan demand
has not been strong in the first quarter of 1995, the
investment portfolio has not shown growth due to the
continued decline in Bank deposits.
<PAGE>
<PAGE>79
In an effort to meet any changing liquidity or capital
adequacy needs as a result of any changes in economic
or financial conditions as they relate to Robinson's
overall interest rate risk, Robinson has categorized
$34,421 of its investment portfolio at June 30, 1995 as
Available for Sale as defined by FASB 115.
LOANS
The loan portfolio constitutes the major earning asset
of most bank holding corporations and offers the best
alternative for obtaining maximum interest spread above
the cost of funds. Robinson's total average loans were
$65,372 through June 30, 1995, a decrease of $2,907 or
4.26% from 1994. Robinson's total average loans were
$68,279 in 1994, an increase of $1,527 or 20.66% from
1993. Robinson had total average loans of $56,590 in
1993, an decrease of $14,910 or 35.77% from 1992. The
following table presents loans outstanding at interim
and at year end.
<TABLE>
<CAPTION>
Loans
OutstandingJune 30, December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial$19,691$21,792$20,489 $21,284 $16,432 $12,901$11,499
Real estate36,079 36,399 37,147 34,557 25,449 23,094 23,435
Installment9,621 12,197 11,045 11,342 6,859 3,760 4,808
Bankers
acceptance 0 0 0 0 0 0 4,939
Subtotal 65,391 70,388 68,681 67,183 48,740 39,755 44,681
Less:
Unearned
discount 937 1,332 1,120 1,321 939 486 578
Total $65,454 $69,056$67,561 $65,862 $47,801 $39,269$44,103
</TABLE>
Loan demand in all loan categories has increased 53.19%
from 1990 to 1994 due to Robinson's commitment to
community reinvestment and through the offering of
competitive lending packages.
DEPOSITS
The deposit base provides the major funding source for
earning assets of most bank holding corporations.
Robinson's average deposit base funded 92.66% and 93.7%
of the average earning assets for 1994 and 1993,
respectively. Robinson's total average deposits were
$97,069 in 1994, a increase of $4,294 or 4.6% from
1993. Robinson's total average deposits were $92,775
in 1993, a increase of $5,023 or 5.7% from 1992, during
which the total average deposits were $87,752. The
<PAGE>
<PAGE>80
change in 1992's deposit mix versus 1991 was due to the
purchase of the Olympic Federal Savings, Mt. Carmel
branch of which the majority of deposits were in time
and savings deposits. During 1994 with the continued
lower interest rates and increased competition from
nonbank financial services, depositors moved some of
their deposits to other investment vehicles outside
First National. Generally, repurchase agreements and
other short term deposits are more subject to interest
variations and thus, are not included in the core
deposit base.
The following table indicates the mix and levels of
deposits at interim and at year end.
<TABLE>
<CAPTION>
Deposits at, June 30, December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Noninterest
bearing$10,904 $8,965$10,888 $11,690 $10,111 $7,474 $8,188
Interest
bearing
demand 17,297 18,637 18,932 18,804 18,265 16,017 13,778
Time and
savings63,573 67,937 65,790 67,234 64,251 55,986 52,201
Total $91,774 $95,539$95,610 $97,728 $92,627 $79,477$74,167
</TABLE>
Management expects the deposit mix to remain relatively
stable as interest rates stabilize. The interest rate
differential between short term deposits, (defined as
interest bearing demand deposits) and time deposits was
narrower, resulting in a shift to more short term
deposits. Total deposits decreased $2,118 or 2.17%
during 1994 and increased $5101 or 5.51% during 1993.
Financial institutions industry as a whole are
experiencing the trend of customers being more rate
conscious, which will have the effect of placing
increased pressure on maintaining historic levels of
net interest margin.
SHORT-TERM BORROWINGS
Short-term borrowings of Robinson consist of repurchase
agreements, which are subject to interest rate
variations. Robinson's total average short-term
borrowings were $2,880 in 1994, an increase of $684 or
31.15% from 1993. Robinson's average short-term
borrowings were $2,196 in 1993, an increase of $513 or
30.48% from 1992, during which the total average short-
term borrowings were $1,683.
<PAGE>
<PAGE>81
LIQUIDITY
Cash flows for Robinson occur within the operating,
investing and financing categories as follows: Cash
flows from operating activities emanate primarily from
net interest margin and fee income less overhead.
Investing activities generate or use cash flows through
the origination, purchase and principal collection of
loans, the purchase, maturity and sale of investments
and acquisition of property and equipment. Cash flows
from financing activities occur from deposits and
withdrawals of deposit accounts, increases or decreases
in short term borrowings, and dividends paid to
shareholders.
Robinson's activity in components of the balance sheet
can be determined from the changes in average balances
of funding sources and average balances of funding
uses. The following table summarizes funding sources
and funding uses which includes average balances,
amount of dollar change and the percentage change.
<TABLE>
<CAPTION>
June 30,
1995 1994
Average Increase/(Decrease) Average
Balance Decrease Percent Balance
<S> <C> <C> <C> <C>
Funding uses:
Total loans, net of
unearned income $65,372 $(2,106) (3.12)% $67,478
Taxable investment
securities 25,123 (360) (1.41) 25,483
Tax-exempt investment
securities 9,303 144 1.57 9,159
Federal funds sold 1,022 (1,426) (58.25) 2,448
Total Uses $100,820 $(3,748) (3.58)% $104,568
Funding Sources:
Noninterest-bearing
deposits $8,092 $605 8.08% $7,487
Interest-bearing demand
and savings deposits33,549 (5,446) (13.97) 38,995
Time deposits 50,640 179 .35 50,461
Short-term borrowings 3,446 431 14.30 3,015
Total Sources $95,727 $(4,231) (4.23)% $99,958
</TABLE>
(table continued on next page)
<PAGE>
<PAGE>82
<TABLE>
<CAPTION>
December 31,
1994 1993
AverageIncrease/(Decrease)AverageIncrease/(Decrease)
BalanceDecrease PercentBalanceDecrease Percent
<S> <C> <C> <C> <C> <C> <C>
Funding uses:
Total loans,
net of unearned
income $68,279 $11,689 20.66% $56,590 $14,910 35.77%
Taxable investment
securities 25,421 (5,992) (19.07) 31,413 (8,864) (22.01)
Tax-exempt
investment
securities 9,184 (359) (3.76) 9,543 1,098 13.00
Federal funds
sold 1,873 405 27.59 1,468 (842)(36.45)%
Total Uses $104,757 $5,743 5.80% $99,014 $6,302 6.80%
Funding Sources:
Noninterest-bearing
deposits $7,367 $540 .79% $6,827 $931 15.79%
Interest-bearing
demand and
savings deposits38,649 237 .62 38,412 6,566 20.62
Time deposits 51,053 3,516 7.40 47,537 (2,473) 4.95
Short-term
borrowings 2,880 684 31.15 2,196 513 30.48
Total Sources $99,949 $4,977 4.73% $94,972 $5,537 6.19%
</TABLE>
Robinson does not foresee any unusual demands on funds
for capital outlays or liquidity needs in the
foreseeable future.
Outstanding loan commitments, credit card arrangements,
letters of credit and customers' unused credit lines
amounted to $13,934 at June 30, 1995, $12,264 at June
30, 1994, $13,865 at December 31, 1994 and $15,226 at
December 31, 1993. To the extent, however, that
letters of credit, credit card arrangements, loan
commitments and customers' unused lines of credit
require funding, these obligations will be met by the
normal conversion of short term investments.
An aspect of asset/liability management strategy is the
maintenance of adequate liquidity. Liquidity
management is the process by which Robinson provides
the
<PAGE>
<PAGE>83
continuing flow of funds necessary to meet all of its
financial commitments on a timely basis. These
commitments include meeting depositor withdrawals,
funding credit commitments to borrowers, repaying debt
when due and paying operating expenses and dividends.
Liquidity can be provided, in part in the normal course
of business from cash flows generated from interest and
fee income, maturing assets and new deposits.
INTEREST RATE SENSITIVITY
Monitoring of the interest sensitivity position is
another aspect of the asset/liability management
strategy. Interest rate sensitivity occurs when assets
or liabilities are subject to rate sensitivity
position, or gap, is determined by the difference in
the amount of rate sensitive assets and rate sensitive
liabilities at various maturity intervals. The
management of the gap position is required to protect
the net interest rates and to assure a greater degree
of earnings stability.
The following table shows the interest rate sensitivity
gaps for four different time periods and the cumulative
interest rate sensitivity gaps for the same periods as
of June 30, 1995.
<TABLE>
<CAPTION> Total
0-30 31-90 91-180 181-365 0-365
Days Days Days Days Days
($ in Thousands)
<S> <C> <C> <C> <C> <C>
Interest-Earning Assets 14,496 5,400 7,436 14,290 41,622
Interest-Bearing Liabilities42,8785,682 11,069 11,373 71,002
Interest:
Sensitivity Gap (28,382) (282) (3,633) 2,917 (29,380)
Cumulative Gap (28,382)(28,664)(32,297)(29,380)
</TABLE>
The following table shows maturity and repricing data
for investment securities outstanding:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Due in one year or less $ 7,718 $9,918
Due from one to five years 14,664 12,249
Due from five to ten years 10,414 9,690
Due after ten years 1,516 3,860
$34,312 $35,717
</TABLE>
<PAGE>
<PAGE>84
Final loan maturities and rate sensitivity of the loan
portfolio at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Within One thru After
One YearFive Years Five Years Total
<S> <C> <C> <C> <C>
Domestic Operations:
Commercial $16,201 $4,031 $257 $20,489
Real Estate 13,166 23,313 668 37,147
Consumer
installment 3,460 7,585 -- 11,045
$32,827 $34,929 $925 $68,681
Loans at fixed
interest rates$6,657 $11,364 $421 $18,442
Loans at variable
interest rates26,170 23,565 504 50,239
$32,827 $34,929 $925 $68,681
</TABLE>
Final loan maturities and rate sensitivity of the loan
portfolio at June 30, 1995 are as follows:
<TABLE>
<CAPTION>
Within One thru After
One YearFive Years Five Years Total
<S> <C> <C> <C> <C>
Domestic Operations:
Commercial $15,929 $3,110 $652 $19,691
Real Estate 15,486 9,015 11,578 36,079
Consumer
installment 1,404 8,130 87 9,621
$32,819 $20,255 $12,317 $65,391
Loans at fixed
interest rates$5,181 $10,552 $247 $15,980
Loans at variable
interest rates26,941 21,981 489 49,411
$32,122 $32,533 $736 $65,391
</TABLE>
<PAGE>
<PAGE>85
Maturities of certificates of deposit $100,000 or over
are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Three months or less $2,846 $2,807
Three through six months 3,499 3,016
Six through twelve months 1,660 1,432
Over one year 2,061 3,808
$10,066 $11,063
</TABLE>
Robinson manages its rate sensitivity position through
the use of floating rate loans and by matching funds
acquired having a specific maturity with loans,
securities, or money market investments with similar
maturities. The rate sensitivity position is computed
for various repricing intervals by calculating rate
sensitivity gaps. Although the rate sensitivity gap
constantly changes as funds are acquired and invested,
Robinson's negative gap at one year or less of $29,380
at June 30, 1995 and $22,795 at December 31, 1994 was
approximately (29.14)% and (21.76)% of the earning
assets at June 30, 1995 and December 31, 1994,
respectively.
CAPITAL
The capital of Robinson is determined by the changes in
the level of net income and the payout of dividends.
The capital ratios are also affected by changes in
total capital and total assets. The strength of its
capital position determines the ability of a financial
institution to take advantage of growth opportunities
and handle unforeseen financial difficulties.
Robinson's stockholders' equity at June 30, 1995 was
$10,526 an increase of 14.75% from December 31, 1994.
Robinson's stockholders' equity at December 31, 1994
was $9,173, an increase of 4.69% from the December 31,
1993 total of $8,762.
Robinson's subsidiary, The First National Bank in
Robinson (First National), is subject to the issuance
of capital adequacy guidelines by its regulators; the
Federal Reserve, the Office of the Comptroller of the
Currency, and the Federal Deposit Insurance
Corporation; all of which have issued similar
guidelines for the measurement of capital adequacy.
One measure is the leverage capital ratio, which equals
the ratio of ending capital less intangible assets to
average total assets less intangible assets. The
leverage ratio must be more than 3%. The regulators
have also issued similar risk-
<PAGE>
<PAGE>86
based capital guidelines for all U.S. banks and bank
holding companies modeled after the Basle Accord which
has been adopted by the central banks of major
industrialized nations in an effort to harmonize bank
capital standards. The guidelines include a definition
of capital and provide a framework for calculating
risk-weighted assets by assigning assets and off-
balance sheet instruments to broad risk categories.
The standards, which must now be met, are a minimum
ratio of total capital to risk-weighted assets with a
minimum of 4% when using Tier 1 capital and a minimum
of 8% when using Tier 2 capital. Tier 1 capital is the
sum of the core capital elements (common shareholders'
equity, qualifying perpetual preferred stock and
minority interest in the equity accounts of
consolidated subsidiaries) less intangible assets.
Tier 2 capital is the same as Tier 1 capital plus the
allowance for loan losses limited to a maximum of 1.25%
of risk-weighted assets. The First National Bank in
Robinson's capital level significantly exceeds the
minimum standards and is summarized in the following
table.
<TABLE>
<CAPTION>
Regulatory
June 30,December 31,December 31,Minimum
1995 1994 1993 Guidelines
<S> <C> <C> <C> <C>
Capital Components
Tier 1 capital $9,475 $9,271 $8,481
Tier 2 capital 10,121 9,891 9,035
Assets
Risk weighted assets
and off-balance
sheet instruments 76,333 70,288 74,101
Capital Ratios
Leverage 9.68% 8.54% 8.11% 3.00%
Tier 1 risk-based capital12.41% 13.19% 11.45% 4.00%
Tier 2 risk-based capital13.26% 14.07% 12.19% 8.00%
</TABLE>
INFLATION
For a financial institution, effects of price changes
and inflation vary considerably from an industrial
organization. Changes in prices of goods and services
are the primary determinant of an industrial company's
profit, whereas changes in interest rates have a major
impact on a financial institution's profitability.
Inflation affects the growth of total assets, but it is
difficult to assess it impact because neither the
timing nor magnitude of the changes in the consumer
price index directly coincide with changes in interest
rates.
<PAGE>
<PAGE>87
During periods of high inflation there are normally
increases in the money supply. During such times,
financial institutions often experience above average
growth in loans and deposits. Also, general increases
in the prices of goods and services will result in
increased operational expenses. Over the past few
years the rate of inflation has been relatively low,
and its impact on the balance sheet and levels of
income and expense has been nominal.
PENDING CHANGES
For calendar year 1995, the Bank will be subject to
Financial Accounting Standard No. 114, as amended by
SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan." Under this standard if the measured value
or expected future cash flows of an impaired loan is
less than the loan balance, the loan should be written
down. The Bank has determined that the impact of this
standard is immaterial to its financial statements.
<PAGE>
<PAGE>88
DESCRIPTION OF AMBANC CAPITAL STOCK
AUTHORIZED BUT UNISSUED SHARES
AMBANC's Articles of Incorporation authorize the
issuance of 5,000,000 shares of AMBANC Common Stock, of
which 2,372,555 shares were issued and outstanding at
August 15, 1995, and 200,000 shares of Preferred Stock,
$10.00 par value, of which no shares were issued and
outstanding at August 15, 1995. The Board of Directors
has the power to determine the relative rights and
restriction of any series of Preferred Stock it may
authorize in the future and may provide terms upon
which Preferred Stock may be converted into shares of
any other class of stock. AMBANC has reserved up to
24,000 shares of AMBANC Common Stock that may be issued
pursuant to options granted under a previously existing
stock option plan.
COMMON STOCK
VOTING RIGHTS
Each share of AMBANC Common Stock entitles the
holder thereof to one vote on all matters on which the
holders of shares of AMBANC Common Stock are entitled
to vote. The affirmative vote of the holders of the
majority of the votes cast at a meeting at which a
quorum is present is sufficient to approve matters
submitted for shareholder approval, except in the
following circumstances: (a) pursuant to the Indiana
Business Corporation Law, Directors are elected by a
plurality of the votes cast; (b) AMBANC's Articles of
Incorporation provide that Business Combinations (such
as mergers or sales or other transfers of a substantial
part of AMBANC's assets) involving Related Persons
(such as an individual or entity that owns 10 percent
or more of AMBANC's Common Stock), must be approved by
80 percent of the outstanding voting stock (excluding
shares held by the Related Person) unless the Business
Combination has been approved by the vote of two-thirds
of the members of the Board of Directors who are not
associated with the Related Person; (c) AMBANC's
Articles of Incorporation provide that any amendment,
change or repeal of the Articles relating to Business
Combinations with Related Persons must be approved by
at least 80 percent of the outstanding shares unless
such amendment, change or repeal has been approved by
two-thirds of the Board of Directors (excluding members
of the Board of Directors associated with the Related
Person if the amendment, change or repeal is proposed
by or on behalf of the Related Person); (d) the Indiana
Business Corporation Law provides that holders of the
<PAGE>
<PAGE>89
outstanding shares of a class are entitled to vote as a
separate voting group on a proposed amendment to the
Articles of Incorporation if the amendment would affect
their rights as a class, such as by increasing or
decreasing the number of authorized shares of the
class, effecting an exchange or reclassification of the
class, or changing the designation, rights, preferences
or limitations of all or part of the shares of the
class. For more information on Business Combinations,
including the definitions of "Business Combination" and
"Related Person," see "Description of AMBANC Capital
Stock -- Supermajority Vote and Minimum Price Required
for Business Combinations" below. Shareholders do not
have cumulative voting rights for the election of
Directors. Directors may be removed, with or without
cause, only by the vote of 80 percent of the shares
entitled to vote at an election of Directors.
DIVIDEND RIGHTS
Subject to any preferential dividend rights of a
series of shares of Preferred Stock, the holders of
AMBANC Common Stock are entitled to receive dividends
as and when declared by the Board of Directors from
funds legally available for their payment. A dividend
may be paid by AMBANC only if, after paying such
dividend, (1) AMBANC would be able to pay its debts as
they become due in the usual course of business, and<PAGE>
<PAGE>90
(2) AMBANC total assets would not be less than the sum
of its total liabilities (and without regard to any
amounts that would be needed, if AMBANC were to be
dissolved at the time of the dividend, to satisfy the
preferential rights upon dissolution of any
shareholders whose preferential rights are superior to
those receiving the dividend, unless the Board provides
otherwise by means of an amendment to the Articles of
Incorporation that designates the terms of the shares
having such preferential rights). Furthermore, because
funds for the payment of dividends by AMBANC must come
primarily from the earnings of its four subsidiary
banks and restrictions on the amount of dividends that
the subsidiary banks may pay also restrict the amount
of funds available for payment of dividends by AMBANC.
LIQUIDATION
Upon any liquidation, dissolution, or winding up
of the affairs of AMBANC, the holders of AMBANC Common
Stock are entitled to share ratably in the assets
legally available for distribution to the holders of
AMBANC Common Stock after satisfaction in full of any
liquidation preference to which holders of Preferred
Stock, if any, may then be entitled.
OTHER MATTERS
Holders of AMBANC Common Stock do not have
preemptive or conversion rights with respect to any
securities of AMBANC. There are no sinking fund
provisions applicable to shares of AMBANC Common Stock.
All outstanding shares of AMBANC Common Stock are,
and the shares offered hereby will be, when issued,
fully paid and nonassessable. Such shares are not
redeemable at the option of AMBANC or holders thereof.
Bank One, Indianapolis, N.A. serves as the
transfer agent of AMBANC Common Stock.
PREFERRED STOCK
AMBANC's Articles of Incorporation authorize the
Board of Directors, without further shareholder
approval, to establish the relative rights,
designations, preferences, and limitations or
restrictions of the shares of Preferred Stock prior to
the issuance thereof, including without limitation,
dividend rights, conversion rights, voting rights,
liquidation preferences, redemption rights, division
into series, sinking fund provisions, and similar
matters. Thus, the Board of Directors may authorize a<PAGE>
<PAGE>91
series of Preferred Stock with rights and preferences
that are superior to those of AMBANC Common Stock, the
issuance of which could adversely affect the voting
power of the holders of AMBANC Common Stock.
The availability of Preferred Stock with
unspecified voting rights and possibly other rights,
such as a required approval of mergers or other
extraordinary corporate transactions, could be used by
management to create voting impediments or to deter
persons seeking to effect a merger or otherwise to gain
control of AMBANC.
Preferred Stock may also be issued at some future
time in connection with an acquisition by AMBANC of an
additional company or companies or some other business
permitted to be acquired by AMBANC. However, no such
future issuances are presently planned or contemplated.
ANTI-TAKEOVER PROVISIONS
AMBANC's Articles of Incorporation and Bylaws
contain certain anti-takeover provisions described
below. These provisions may discourage or prevent
tender or exchange offers by a corporation or group
that intends to use the acquisition of a substantial
number of shares of AMBANC to initiate a takeover
culminating in a merger or other business combination.
In recent years a number of other companies have
adopted similar charter or bylaw provisions for the
same or similar reasons. These provisions may also
have the effect of making the removal of current
management more difficult.
POSSIBLE ISSUANCE OF COMMON STOCK
As of August 15, 1995, there were 5,000,000
authorized shares of AMBANC Common Stock of which
2,372,555 shares were outstanding and 24,000 shares
were reserved for future issuance. Upon consummation
of the Merger, assuming that all Robinson shareholders
elect to receive shares of AMBANC Common Stock as the
Merger Consideration and assuming no Robinson
shareholders dissent, it is estimated that
approximately 3,009,059 shares of AMBANC Common Stock
will be outstanding and not reflecting the payment of
cash for fractional share interests), with
shares reserved for future issuance. The Board could
use the authorized but unissued shares at its
discretion to resist the consummation of certain
takeover attempts by, for example, diluting the
ownership interest of a substantial shareholder or<PAGE>
<PAGE>92
substantially increasing the amount of consideration
necessary for a shareholder to obtain control.
POSSIBLE ISSUANCE OF PREFERRED STOCK
AMBANC's Articles of Incorporation authorize the
Board of Directors to issue up to 200,000 shares of
Preferred Stock in one or more series. The Board is
authorized to fix the number of shares to be included
in the new series, the designation, powers,
preferences, and voting and other rights of each such
series, and the qualifications, limitations, or
restrictions thereof. The Board could use the
Preferred Stock at its discretion to resist the
consummation of certain takeover attempts.
SUPERMAJORITY VOTE AND MINIMUM PRICE REQUIRED FOR
BUSINESS COMBINATIONS
The Articles of Incorporation of AMBANC include a
provision imposing certain supermajority vote and
minimum price requirements on any "Business
Combination" with a "Related Person" unless the
combination has been approved by the vote of two-thirds
of certain members of the Board of Directors of AMBANC
who are not associated with the Related Person. This
provision defines "Business Combination" very broadly
to include, subject to certain conditions, (i) any
merger or consolidation of AMBANC or any of its
subsidiaries into or with a Related Person, its
affiliates or associates; (ii) any sale, exchange,
lease, transfer or other disposition by AMBANC or any
of its subsidiaries of all or any substantial part of
its or their assets or businesses to or with a Related
Person, its affiliates or associates; (iii) the
purchase, exchange, lease or acquisition by AMBANC or
any of its subsidiaries of all or any substantial part
of the assets or business of a Related Person, its
affiliates or associates; (iv) any reclassification of
securities, recapitalization or other transaction that
has the effect of increasing the proportionate amount
of AMBANC's Common Stock (or other voting capital
security) beneficially owned by a Related Person; (v)
any partial or complete liquidation, spinoff or split
up of AMBANC or any of its subsidiaries; and (vi) the
acquisition by a Related Person of beneficial ownership
upon issuance of Common Stock (or other voting capital
shares) of AMBANC or any of its subsidiaries or any
securities convertible into, or any rights, warrants or
options to acquire, any such shares. "Related Person"
also is defined broadly to mean any person (which
includes any individual, corporation or entity other
than AMBANC or its subsidiaries) who (i) beneficially<PAGE>
<PAGE>93
owns ten percent or more of AMBANC Common Stock (or
other voting capital security) (a "Ten Percent
Shareholder"); (ii) any person who within the preceding
two-year period has been a Ten Percent Shareholder and
who directly or indirectly controls, is controlled by,
or is under common control with AMBANC; or (iii) any
person who has received, other than pursuant to or in a
series of transactions involving a public offering
within the meaning of the Securities Act of 1933,
AMBANC Common Stock (or other voting capital security)
that has been owned by a Related Person within the
preceding two-year period. In the absence of approval
by the AMBANC Directors who are not associated with the
Related Person or, in the alternative, the agreement by
the Related Person to pay all other shareholders a
certain minimum price for their shares, a Business
Combination with a Related Person would require the
approval of 80 percent of the outstanding voting stock
plus the approval of a majority of the outstanding
shares that are not controlled by the Related Person.
In general terms, the restrictions apply to mergers or
consolidations of AMBANC or any subsidiary with any
Related Person, transfers or encumbrances of all or
substantially all of the assets of AMBANC to a Related
Person, the adoption of any plan of liquidation
proposed by a Related Person or any transaction which
would have the effect, directly or indirectly, of
increasing the proportionate share of any class of
equity securities of AMBANC or any shareholder
(including affiliates and associates) who is the
beneficial owner of more than 10 percent of the voting
power of the then outstanding shares entitled to vote
generally in the election of Directors of AMBANC.
Absent the provision regulating Business Combinations,
mergers, consolidations, and sales of all or
substantially all assets would require only the
approval of a majority of the Board of Directors and
(subject to the rights of any Preferred Stock issued in
the future) the affirmative vote of a majority of the
total number of outstanding shares of AMBANC entitled
to vote on the matter.
CLASSIFIED BOARD
The Articles also permit the Bylaws, when the
Board consists of at least nine members, to provide for
the Board to be divided into two or three equal (or as
nearly equal as possible) classes of Directors serving
staggered two or three-year terms. As a result,
approximately one-half or one-third of the Board would
be elected each year. Initially, members of all<PAGE>
<PAGE>94
classes would be elected at an annual meeting of
shareholders. Directors then elected to Class I would
serve until the annual meeting of shareholders held one
year later. If the Board is divided into three
classes, Directors initially elected to Classes II and
III would serve until the annual meetings held two or
three years later, respectively. Commencing with the
reelection of Directors to Class I one year after the
initial election of all three classes, each class of
Directors elected at an annual meeting would be elected
to three-year terms. In addition, the Bylaws provide
that any vacancy shall be filled by a majority vote of
the remaining Directors. Any Director elected to fill
such vacancy shall hold office for an unexpired term of
the class of which he is a member. The Board of
Directors of AMBANC is currently divided into three
classes.
REMOVAL OF DIRECTORS
The Articles provide that any Director may be
removed only by an 80 percent affirmative vote of the
outstanding voting power at a shareholders' meeting
called for that purpose, with or without good cause.
AMENDMENT, CHANGE, OR REPEAL OF CERTAIN ARTICLES
The Articles provide that any amendment, change,
or repeal of certain of the articles of the Articles of
Incorporation described above would require the
approval of (a) at least 80 percent of the outstanding
voting power, and (b) in the case of an amendment,
change, or repeal of any of the above-stated provisions
proposed by or on behalf of a Related Person, the
approval by a majority of the shares not controlled by
the Related Person. However, in the event that an
amendment, change, or repeal of those provisions is
approved by two-thirds of the Board of Directors, and,
if the amendment is proposed by or on behalf of a
Related Person, by the favorable vote of two-thirds of
certain Directors who are not associated with the
Related Person, the affirmative vote of a majority of
the outstanding voting power would be sufficient to
approve any such amendment, change, or repeal.
CONTROL SHARE RESTRICTIONS
AMBANC has elected not to be governed by Chapter
42 of the Indiana Business Corporation Law. Chapter
42, which deals with Control Share Acquisitions, was
adopted by the Indiana Legislature in 1986 and provides
that shares acquired by a person or a group in excess
of certain percentages of the total outstanding shares<PAGE>
<PAGE>95
(20 percent, 33-1/3 percent, and 50 percent) have only
such voting rights as are approved by certain
disinterested shareholders. In order to obtain
shareholder approval of voting rights for the excess
control shares, the acquiring person or group must give
written notice of the control share acquisition and
request a special shareholders' meeting. Because of
the inflexibility of the statute, many corporations,
including AMBANC, have decided not to be subject to
Chapter 42 but instead to rely on the anti-takeover
provisions in their Articles of Incorporation to
protect them against unwanted takeovers or other
hostile maneuvering that would not be in the best
interest of their shareholders.
POTENTIAL DISADVANTAGES TO SHAREHOLDERS
Although the purpose of these provisions is to
insure fair treatment of all shareholders in the event
of certain mergers, tender offers, or other attempts to
acquire control of AMBANC (a "takeover"), the
provisions regarding Business Combinations (as well as
the voting requirements regarding the removal of
directors) and the classified board provisions may have
certain adverse effects in that they may make more
difficult the accomplishment of certain takeovers at
prices or on terms that some shareholders may consider
beneficial, impede the assumption of control by
principal shareholders in some cases, or make more
difficult the removal of current management even if
favored by a majority of the shareholders.
COMPARISON OF ROBINSON COMMON STOCK
AND AMBANC COMMON STOCK
GENERAL
The Robinson Common Stock is similar in many
respects to the AMBANC Common Stock to be issued
pursuant to the Merger. Certain differences exist,
however, because Robinson's Articles of Incorporation
differs from the Articles of Incorporation of AMBANC,
and the provisions of the Illinois Business Corporation
Act (under which Robinson is organized) differ from the
provisions of the Indiana Business Corporation Law
(under which AMBANC is organized). The following is a
comparison of Robinson Common Stock with AMBANC Common
Stock and a description of certain material differences
between them.
<PAGE>
<PAGE>96
NUMBER OF SHARES
AUTHORIZED BUT UNISSUED
The Articles of Incorporation of Robinson
authorize the issuance of 240,000 shares of Robinson
Common Stock, no par value per share. As of August 15,
1995, 119,200 shares of Robinson Common Stock were
issued and outstanding. The Articles of Incorporation
of AMBANC authorize the issuance of 5,000,000 shares of
Common Stock, $10.00 par value, of which 2,372,555
shares were issued and outstanding as of August 15,
1995, and of which 24,000 shares have been reserved for
future issuance pursuant to options granted pursuant to
a previously existing stock option plan, and 200,000
shares of Preferred Stock, $10.00 par value, of which
no shares were issued and outstanding as of August 15,
1995. Upon consummation of the Merger, it is estimated
that approximately 3,009,059 shares of AMBANC Common
Stock will be issued and outstanding (assuming no
dissenting shareholders). The remaining shares of
AMBANC Common Stock will remain authorized but unissued
and may be issued by the Board of Directors of AMBANC
without further shareholder approval for any proper
corporate purpose, including possible issuance in
connection with mergers and acquisitions. Such shares
could be issued either to existing shareholders of
AMBANC or to persons who are not then shareholders of
AMBANC. The Board of Directors has no present plans to
issue the shares of AMBANC Common Stock that will be
authorized but unissued after the Merger except the
shares which have been reserved for future issuance as
previously stated.
PREFERRED STOCK
Unlike the Articles of Incorporation of Robinson,
which provides only for the issuance of common stock,
the Articles of Incorporation of AMBANC authorize the
Board of Directors to issue 200,000 shares of Preferred
Stock, $10.00 par value. The Articles give the AMBANC
Board of Directors the authority to establish the
relative rights, preferences, restrictions and
limitations of rights of the Preferred Stock. Such
Preferred Stock has no voting rights except on matters
to which it is entitled to vote as a class under the
Indiana Business Corporation Law. The AMBANC Board of
Directors presently has no plans to issue any of the
authorized shares of Preferred Stock.
DIVIDEND RIGHTS
Holders of Robinson Common Stock and AMBANC Common
Stock each have the right to receive, pro rata, such<PAGE>
<PAGE>97
dividends as are declared by the Board of Directors out
of funds legally available. Robinson's and AMBANC's
ability to pay dividends is dependent upon their
receipt of dividends from their respective bank
subsidiaries. The amount of dividends paid by AMBANC's
subsidiaries Casey and Farmers' is subject to the
provisions of the Illinois Banking Act, which limit the
amount of dividends an Illinois-chartered bank may pay
to the amount of net profits on hand less losses and
bad debts. The National Banking Act restricts the
amount of dividends national banks, including American
National and Citizens', can pay. Prior approval of the
Comptroller of the Currency is required if the total of
all dividends declared by American National or
Citizens' in any calendar year would exceed net income
for the preceding two calendar years. As a practical
matter, the amount of dividends payable by Robinson's
and AMBANC's banking subsidiaries is restricted to a
lesser amount than legally permissible because of the
need for the banks to maintain adequate capital.
Robinson's and AMBANC's ability to pay dividends is
also restricted by the state corporation laws under
which they were organized. Pursuant to the Illinois
Business Corporation Act, to which Robinson is subject,
and the Indiana Business Corporation Law, to which
AMBANC is subject, generally the payment of dividends
is prohibited if, after giving effect to the payment,
either the corporation would not be able to pay its
debts as they come due in the usual course of business
or the corporation's total assets would be less than
the sum of its liabilities plus preferential rights
payable upon dissolution.
VOTING RIGHTS
Each holder of Robinson Common Stock and AMBANC
Common Stock is entitled to one vote per share on most
matters submitted to a vote of shareholders. The
shareholders of AMBANC and Robinson do not have
cumulative voting rights on the election of Directors,
which means that the Directors standing for election at
a particular meeting can be elected by a simple
plurality of the votes cast.
The affirmative vote of the holders of a majority
of the shares entitled to vote is sufficient to approve
most matters submitted to a shareholder vote of either
corporation. Under the Indiana Business Corporation
Law, a merger, consolidation, or sale of substantially
all of a corporation's assets must be approved by the
holders of a majority of the outstanding shares of
Robinson Common Stock. In contrast, the Illinois
Business Corporation Act requires that mergers,<PAGE>
<PAGE>98
consolidations, and sales of substantially all of a
corporation's assets be approved by holders of two-
thirds of the outstanding shares. The Articles of
Incorporation of AMBANC in addition contain certain
anti-takeover provisions which, among other things,
require a supermajority vote of shareholders in certain
circumstances. See "DESCRIPTION OF AMBANC CAPITAL
STOCK--Anti-Takeover Provisions."
LIQUIDATION RIGHTS
In the event of liquidation of Robinson or AMBANC,
the holders of common stock will be entitled to
receive, pro rata, all of the assets remaining for
distribution to shareholders.
ABSENCE OF PREEMPTIVE RIGHTS
Neither the holders of Robinson Common Stock nor
the holders of AMBANC Common Stock have preemptive
rights to purchase their proportionate share of any
future offering of common stock by Robinson or AMBANC.
ANTI-TAKEOVER PROVISIONS
The Articles of Incorporation of Robinson does not
contain any provision that might deter the takeover or
change-in-control of Robinson. Unlike the Articles of
Incorporation of Robinson, the Articles of
Incorporation of AMBANC contain certain anti-takeover
provisions. See "DESCRIPTION OF AMBANC CAPITAL
STOCK--Anti-Takeover Provisions."
EXPERTS
The financial statements of Robinson for the years
1994 and 1993 have been examined by Kemper CPA Group,
L.L.C., independent certified public accountants, for
the periods indicated in their reports thereon, which
appear elsewhere herein, and have been included herein
in reliance upon their reports given upon their
authority as experts in accounting and auditing. The
financial statements of AMBANC for the years 1994,
1993, and 1992, which are incorporated by reference
herein, have been examined by Crowe, Chizek & Company,
which served as AMBANC's independent certified public
accountants until the completion of the 1994 audit, for
the periods indicated in their reports therein and have
been included therein in reliance upon their reports
given upon their authority as experts in accounting and
auditing.
<PAGE>
<PAGE>99
LEGAL OPINIONS AND INTEREST OF COUNSEL
Certain legal matters relating to the Merger,
certain federal income tax consequences of the Merger
and the legality of the securities offered hereby have
been passed upon for AMBANC by Leagre & Barnes, 9100
Keystone Crossing, Suite 800, Indianapolis, Indiana.
As of the date of this Prospectus/Proxy Statement,
partners of Leagre & Barnes beneficially own
approximately 6,200 shares of AMBANC Common Stock.
OTHER MATTERS
The Board of Directors of Robinson does not know
of any other matters that may come before the Special
Meeting of Shareholders.
<PAGE>
<PAGE> F-1
FIRST ROBINSON BANCORP
AND SUBSIDIARY
ROBINSON, ILLINOIS
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<PAGE> F-2
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
<CAPTION>
<S> <C>
Page
Consolidated Financial Statements
Independent Auditors' Report F-3
Consolidated Balance Sheets F-4
Consolidated Statements of Income F-5
Consolidated Statements of Changes in
Stockholders' Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Financial Statements F-9
Reviewed Financial Statements
Accountants' Report F-24
Consolidated Balance Sheets as of
June 30, 1995 and 1994 F-25
Consolidated Statements of Income
for the Six Months Ended
June 30, 1995 and 1994 F-26
Consolidated Statements of Changes in
Stockholders' Equity for the Six Months
Ended June 30, 1995 and 1994 F-27
Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1995 and 1994 F-28
Selected Information - Substantially
All Disclosures Required by Generally
Accepted Accounting Principles are not
Included - June 30, 1995 and 1994 F-30
/TABLE
<PAGE>
<PAGE> F-3
302 East Walnut Street
Robinson, Illinois 62454
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
First Robinson Bancorp
Robinson, Illinois
We have audited the accompanying consolidated balance
sheets of First Robinson Bancorp and Subsidiary as of
December 31, 1994 and 1993, and the related
consolidated statements of income, changes in
stockholders' equity and cash flows for the years ended
December 31, 1994, 1993 and 1992. These consolidated
financial statements are the responsibility of the
Bank's management. Our responsibility is to express an
opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
consolidated financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material
respects, the financial position of First Robinson
Bancorp and Subsidiary as of December 31, 1994 and
1993, and the results of their operations and their
cash flows for the years ended December 31, 1994, 1993
and 1992 in conformity with generally accepted
accounting principles.
KEMPER CPA GROUP L.L.C.
Certified Public Accountants
January 20, 1995<PAGE>
<PAGE> F-4
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
Cash and due from banks $2,935,758 $2,027,826
Federal funds sold -- 3,700,000
Securities held to maturity (approximate
market value of $554,000 in 1994 and
$35,867,065 in 1993) 584,000 34,477,069
Securities available for sale at market 34,381,711 --
Loans, net of unearned discount of $1,120,188
in 1994 and $1,321,078 in 1993 and net
allowance for loan losses of $620,000 in 1994
and $553,354 in 1993 66,941,368 65,308,523
Bank premises and equipment, net of accumulated
depreciation of $1,945,528 in 1994 and
$1,804,176 in 1993 2,401,019 2,460,891
Interest receivable on loans and investments1,108,371 941,951
Other intangible assets 464,691 355,452
Income tax receivable 48,117 204,550
Other real estate owned -- 60,000
Other assets 327,444 339,843
TOTAL ASSETS $109,192,479 $109,876,105
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits - non-interest bearing$10,887,897 $11,690,207
Demand deposits - interest bearing 18,931,689 18,803,731
Time and savings deposits 65,790,431 67,234,049
Total deposits 95,610,017 97,727,987
Federal funds purchased and securities sold
under agreements to repurchase 3,146,950 2,234,762
Deferred income taxes 467,103 472,665
Accounts payable and accrued expenses 426,314 377,558
Other liabilities 368,884 301,203
Total liabilities 100,019,268 101,114,175
Stockholders' equity
Common Stock (no par value: authorized
240,000 shares, issued 120,000 shares;
Outstanding 119,200) 600,000 600,000
Capital Surplus 2,200,000 2,200,000
Retained Earnings 6,937,141 6,062,769
Less treasury stock (800 shares at cost) (37,956) (37,956)
Unrealized depreciation on securities
available for sale (525,974) --
Less unrealized loss on equity securities -- (62,883)
Total stockholders' equity 9,173,211 8,761,930
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $109,192,479 $109,876,105
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>
<PAGE> F-5
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $5,795,345 $4,989,232 $4,061,320
Interest on investment securities
U.S. Treasury Securities 534,365 706,462 960,414
Obligations of other U.S. government
agencies and corporations1,064,607 1,397,053 1,695,455
Obligations of state and political
subdivisions 562,695 583,182 517,088
Other securities -- -- 259,871
Interest on federal funds sold 73,483 44,710 81,673
Interest on deposits in bank -- -- 862
Total interest income 8,030,495 7,720,639 7,576,683
Interest expense
Interest on deposits 3,428,346 3,198,402 3,840,380
Interest on federal funds purchased
and securities sold under agreements
to repurchase 126,429 88,263 80,702
Total interest expense 3,554,775 3,286,665 3,921,082
Net interest income 4,475,720 4,433,974 3,655,601
Provision for loan losses (238,172)(1,022,194) (119,635)
Net interest income after provision
for loan losses 4,237,548 3,411,780 3,535,966
Other income
Commissions and fees from fiduciary
activities 158,716 142,173 162,782
Service charges on deposit accounts158,457151,113 99,056
Other service charges and fees 65,852 63,223 56,329
Net investment securities gains 34,992 79,746 151,179
Other income 74,849 76,417 13,906
Total other income 492,866 512,672 483,252
Other expenses
Salaries and employee benefits1,608,708 1,492,644 1,400,318
Equipment expense 190,653 190,289 171,331
Net occupancy expense of premises252,855 234,968 212,036
Net cost of operation of other
real estate 10,631 5,331 16,348
FDIC Assessment 216,836 204,287 191,732
Legal and accounting fees 106,086 90,330 103,339
Directors' fees 200,197 165,839 109,460
Printing and office supplies 126,656 136,113 144,578
Other expenses 587,272 528,382 498,546
Total other expenses 3,299,894 3,048,183 2,847,688
Income before income taxes 1,430,520 876,269 1,171,530
Income tax provision (371,388) (133,026) (289,121)
Net income $1,059,132 $743,243 $882,409
Earnings per common share $8.89 $6.22 $7.38
Average shares outstanding 119,200 119,518 119,600
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>
<PAGE> F-6
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
Unrealized
Depreciation Unrealized
On Securities Loss on
Common Capital RetainedTreasury Available Marketable
Stock Surplus Earnings Stock for Sale Securities Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1991$600,000 $(2,200,000) $4,764,670 $(15,400) $-- $(178,539)$7,370,731
Net income for 1992 -- -- 882,409 -- -- -- 882,409
Cash dividends paid
$1.31 per share -- -- (156,677) -- -- -- (156,677)
Unrealized loss on
marketable
securities -- -- -- -- -- 122,419 122,419
Balance at
December 31, 1992$600,000 $(2,200,000) $5,490,402 $(15,400) $-- $(56,120)$8,218,882
Net income for 1993 -- -- 743,243 -- -- -- 743,243
Cash dividends paid
$1.43 per share -- -- (170,876) -- -- -- (170,876)
Unrealized loss on
marketable
securities -- -- -- -- -- (6,763) (6,763)
400 Shares of
Treasury Stock
purchased at
$56.39 per share -- -- -- (22,556) -- -- (22,556)
Balance at
December 31, 1993$600,000 $(2,200,000) $6,062,769 $(37,956) $-- $(62,883)$8,761,930
Net income for 1994 -- -- 1,059,132 -- -- -- 1,059,132
Cash dividends paid
$1.55 per share -- -- (184,760) -- -- -- (184,760)
Unrealized
depreciation
on securities
available for sale -- -- -- -- -- 62,883 62,883
Unrealized recovery
on marketable
securities -- -- -- -- (525,974) (525,974)
Balance at
December 31, 1994$600,000 $(2,200,000) $6,937,141 $(37,956) $(525,974) $--$9,173,211
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.<PAGE>
<PAGE> F-7
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
Cash flows from operating activities: 1994 1993 1992
<S> <C> <C> <C>
Net income $1,059,132 $743,243 $882,409
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 174,409 170,608 127,054
Provision for credit losses 238,172 1,022,194 119,635
Provision for deferred taxes 85,605 7,108 (75,152)
Net investment securities gains (34,992) (79,746) (151,179)
Gain on sale of fixed assets (768) -- --
Increase in accrued income (203,260) (181,161) (119,333
Increase in accrued expenses 417,308 138,659 3,651
Net cash provided by operating activities1,735,6061,820,905787,085
Cash flows from investing activities:
Net decrease in deposits at other banks -- -- 100,000
Net (increase) decrease in federal
funds sold 3,700,000 (400,000)(1,500,000)
Purchases of investment securities(10,278,050)(4,305,309)(28,467,300)
Proceeds from sales of investment
securities 5,617,640 7,420,215 17,487,595
Proceeds from maturities of investments3,385,5658,788,5505,728,582
Accretion and amortization of investments72,056 143,826 1,007,585
Net increase in loans (1,699,491)(19,188,051)(8,580,485)
Purchases of properties and equipment(90,352) (217,814) (358,558)
Proceeds of properties and equipment 5,500 -- 23,508
Net cash provided (used) by
investing activities 712,868 (7,758,583)(14,559,073)
Cash flows from financing activities:
Net increase (decrease) in demand,
savings and NOW deposits (2,862,859) 2,096,280 9,031,744
Net increase in time deposits 744,889 3,004,757 4,118,149
Net increase in repurchase agreements762,188 117,719 297,221
Purchase of treasury stock -- (22,556) --
Dividends paid (184,760) (170,876) (156,677)
Net cash provided (used) by financing
activities (1,540,542) 5,025,324 13,290,437
Net increase (decrease) in cash and
due from banks 907,932 (912,354) (481,551)
Cash and due from banks at Beginning
of Year 2,027,826 2,940,180 3,421,731
Cash and due from banks at End of Year$2,935,758$2,027,826$2,940,180
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>
<PAGE> F-8
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Other disclosures:
Interest paid $3,501,234 $3,304,497$3,921,559
Income taxes paid $300,000 $340,000 $351,199
Supplemental schedule of non-cash
investing activities:
Total increase in unrealized
depreciation on securities available
for sale $525,974 $-- $--
Unrealized recovery (loss) on marketable
equity securities $62,883 $(6,763) $122,419
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>
<PAGE> F-9
FIRST ROBINSON BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
Note 1: Summary of Significant Accounting Policies
The accounting and reporting policies of First Robinson Bancorp
conform to generally accepted accounting principles and to
general practice within the banking and mortgage banking
industries. The following is a description of the more
significant accounting policies.
Formation of Robinson Bancorp
On September 2, 1983, First Robinson Bancorp completed the
exchange of their shares for the outstanding common stock of the
First National Bank in Robinson. First Robinson Bancorp issued
60,000 shares of its common stock for 60,000 shares of the First
National Bank in Robinson common stock. A subsequent stock split
on one-for-one basis was effective to shareholders of record on
December 17, 1983. The consolidation has been accounted for
using the pooling of interest method of accounting for financial
statement purposes.
Basis of Consolidation
The consolidated financial statements of First Robinson Bancorp
(the Bank) include the accounts of the Bank and its wholly owned
subsidiary, the First National Bank in Robinson, which owns all
of the Bank's premises. Significant intercompany transactions and
amounts have been eliminated.
Securities
On January 1, 1994, the Bank adopted Financial Accounting
Standard No. 115 (FAS 115), "Accounting for Certain Investments
in Debt and Equity Securities." Prior to adoption of FAS 115,
all securities were carried at amortized cost (cost adjusted for
amortization of premiums or accretion of discounts), because
management had the intent and ability to hold them for the
foreseeable future. Upon adoption of FAS 115, securities were
classified by management as available for sale or held to
maturity. The adoption of FAS 115 in 1994 had no effect on net
income, earnings per share or retained earnings, but did decrease
shareholders' equity by $525,974 as of December 31, 1994, which
is a market adjustment of $(751,391) less $225,417 in deferred
taxes. The unrealized depreciation on securities available for
sale is reflected as a separate component of equity on the
balance sheet.<PAGE>
<PAGE> F-10
FIRST ROBINSON BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Securities classified as available for sale are securities that
the Corporation intends to hold for an indefinite period of time,
but not necessarily until maturity and include securities that
management might use as part of its asset-liability strategy, or
that may be sold in response to changes in interest rates,
changes in prepayment risk, the need to increase regulatory
capital or other similar factors, and which are carried at market
value. Securities classified as held to maturity are securities
that the Corporation has both the ability and positive intent to
hold to maturity and are carried at cost adjusted for
amortization of premium or accretion of discount using the level
yield basis. Gains and losses on securities are computed on a
specific identification basis.
Allowance for Credit Losses
The allowance is maintained at a level adequate to absorb
probable losses. Management determines the adequacy of the
allowance based upon reviews of individual credits, recent loss
experience, current economic conditions, the risk characteristics
of the various categories of loans and other pertinent factors.
Credits deemed uncollectible are charged to the allowance.
Provisions for credit losses and recoveries on loans previously
charged off are added to the allowance.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated
depreciation. The provision for depreciation is computed
principally by the straight line method over the estimated useful
lives of the assets.
Organizational Cost
The Bank has incurred organizational costs arising from the
proposed merger which have been capitalized. Due to continuing
current costs, amortization has not commenced as of December 31,
1994.
<PAGE>
<PAGE> F-11
Interest Income on Loans
Interest on loans is accrued and credited to income based on the
principal amount outstanding. The accrual of interest on loans
is discontinued when, in the opinion of management, there is an
indication that the borrower may be unable to meet payments as
they become due. Upon such discontinuance, all unpaid accrued
interest is reversed.
<PAGE>
<PAGE> F-12
FIRST ROBINSON BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Loan Origination Fees and Costs
First Robinson Bancorp has not implemented Statement of Financial
Accounting Standards Statement 91, "Accounting for Nonrefundable
Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases." This amount has been determined
to be immaterial.
Retirement Plan
Retirement plan costs are charged to salaries and employee
benefits expense and are funded as accrued.
Other Real Estate Owned
Real estate acquired by foreclosure is carried at the lower of
the recorded investment in the property or its fair market value.
Prior to foreclosure, the value of the underlying loan is written
down to the fair market value of the real estate to be acquired
by a charge to the allowance for credit losses, if necessary.
Any subsequent write downs are charged against operating
expenses. Operating expenses of such properties, net of related
income, and gains and losses on their disposition are included in
other expenses.
Income Taxes
Provisions for income taxes are based on amounts reported in the
statements of income (after exclusion of non-taxable income such
as interest on state and municipal securities) and include
deferred taxes on temporary differences in the recognition of
income and expense for tax and financial statement purposes.
Deferred taxes are computed on the liability method as prescribed
in SFAS No. 109, "Accounting for Income Taxes."
Net Income Per Share of Common Stock
Net income per share of common stock is computed by dividing net
income by the weighted average number of shares of common stock
outstanding during the period.
<PAGE>
<PAGE> F-13
Off-Balance-Sheet Financial Instruments
In the ordinary course of business the Bank has entered into
off-balance sheet financial instruments consisting of commitments
to extend credit, commitments under credit card arrangements,
commercial letters of credit and standby letters of credit. Such
financial instruments are recorded in the financial statements
when they become payable.
<PAGE>
<PAGE> F-14
FIRST ROBINSON BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
For the purpose of presentation in the Statements of Cash Flows,
cash and cash equivalents are defined as those amounts included
in the balance sheet caption "Cash and Due from Banks."
Note 2: Restricted Cash Balances
Aggregate reserves (in the form of deposits with the Federal
Reserve Bank) of $346,000 and $893,000 were maintained to
satisfy Federal regulatory requirements at December 31, 1994 and
1993, respectively. As compensation for check clearing services,
compensating balance of $10,500 was required to be maintained
with correspondent banks at December 31, 1994 and 1993,
respectively.
Note 3: Investment Securities
The carrying amounts of investment securities as shown in the
consolidated balance sheets of the Bank and their estimated
market values at December 31 were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
AmortizedUnrealizedUnrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
December 31, 1994:
Securities Available for Sale
U.S. Government and
agency securities $15,042,015 $7,225 $(438,190)$14,611,050
State and municipal securities9,312,054169,582(50,000) 9,431,636
Corporate debt securities 1,308,772 24,154 (4,601) 1,328,325
Mortgage-backed securities 8,470,261 40,704 (334,057) 8,176,908
Other securities 1,000,000 -- (166,208) 833,792
Total $35,133,102$241,665$(993,056)$34,381,711
Securities held to maturity
U.S. Government and agency
securities $500,000 $-- $(30,000) $470,000
Federal Reserve Stock 84,000 -- -- 84,000
Total $584,000 $-- $(30,000) $554,000
</TABLE>
<PAGE>
<PAGE> F-15
FIRST ROBINSON BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(Continued)
Note 3: Investment Securities (Continued)
<TABLE>
<S> <C> <C> <C> <C>
December 31, 1993:
U.S. Government and
agency securities $13,106,109 $358,105 $-- $13,464,214
State and municipal
securities 9,179,295 715,785 -- 9,895,080
Corporate debt securities1,304,420 98,630 -- 1,403,050
Mortgage-backed securities9,866,128270,018 (52,551) 10,083,595
Other securities 1,021,117 -- -- 1,021,117
$34,477,069$1,442,538$(52,551) $35,867,056
</TABLE>
Assets, principally securities, with a carrying amount
and market value of $17,670,394 and $17,061,337 were
pledged to secure public deposits and for other
purposes required or permitted by law at December 31,
1994. Pledgings at December 31, 1993 had a carrying
amount and market value of $17,783,394 and $18,253,961,
respectively. Included in other securities are two
marketable equity securities with an original cost of
$1,000,000 and market values of $833,792 at December
31, 1994 and $937,117 at December 31, 1993.
Gross realized gains and gross realized losses on sales
of securities were:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
U.S. Government and agency
securities $34,992 $58,268 $185,918
State and municipal
securities -- 7,406 --
Corporate debt securities -- 8,910 --
Mortgage-backed securities -- 5,162 127,432
Other securities -- -- (162,171)
$34,992 $79,746 $151,179
</TABLE>
The amortized cost and estimated market value of
securities at December 31, 1994 and 1993, by
contractual maturity are shown below. Expected
maturities will differ from contractual maturities
because borrowers may have the right to call or prepay
obligations with or without call or prepayment
penalties.
<PAGE>
<PAGE> F-16
<TABLE>
<CAPTION> 1994
Available For Sale Held To Maturity
Estimated Estimated
Amortized Market AmortizedMarket
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in 1 year or less$2,636,353$2,640,140 $-- $--
Due after 1 year
through 5 years 13,640,884 13,315,082 -- --
Due after 5 years
through 10 years 8,100,429 8,111,119 500,000 470,000
Due after 10 years 1,285,174 1,305,670 -- --
Subtotal 25,662,840 25,372,011 500,000 470,000
Mortgage-backed
securities 8,470,262 8,175,908 -- --
Open ended mutual funds1,000,000 833,792 -- --
Federal Reserve stocks -- -- 84,000 84,000
Total $35,133,102$34,381,711$584,000$554,000
</TABLE>
<PAGE>
<PAGE> F-17
Note 3: Investment Securities (Continued)
<TABLE>
<CAPTION>
1993
Carrying Market
Amount Value
<S> <C> <C>
Due in one year or less $4,592,443 $4,691,575
Due from one to five years 12,530,285 12,950,693
Due from five to ten years 7,195,369 7,755,551
Due after ten years 10,158,972 10,469,237
$34,477,069 $35,867,056
</TABLE>
Note 4: Loans
The components of loans in the consolidated balance
sheets were as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Commercial $20,489,111 $21,284,225
Real estate 37,147,222 34,557,041
Consumer installment 11,045,223 11,341,689
68,681,556 67,182,955
Unearned discount (1,120,188) (1,321,078)
Reserve for credit losses (620,000) (553,354)
$66,941,368 $65,308,523
</TABLE>
Final loan maturities and rate sensitivity of the loan
portfolio at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
Within One thru After
One Year Five YearsFive Years Total
<S> <C> <C> <C> <C>
Domestic Operations:
Commercial $16,201,201 $4,030,664 $257,246$20,489,111
Real estate 13,165,874 23,313,527 667,821 37,147,222
Consumer installment3,460,0097,585,214 -- 11,045,223
$32,827,084$34,929,405 $925,067$68,681,556
Loans at fixed
interest rates$6,657,296$11,364,099 $420,715$18,442,110
Loans at variable
interest rates26,169,788 23,565,306 504,352 50,239,446
$32,827,084$34,929,405 $925,067$68,681,556
</TABLE>
<PAGE>
<PAGE> F-18
Note 4: Loans (Continued)
Loans on which the accrual of interest has been
discontinued or reduced amounted to $79,380 and
$186,948 at December 31, 1994 and 1993, respectively.
If interest on those loans had been accrued, such
income would have approximated $3,528, $10,928, and
$31,783 for 1994, 1993 and 1992, respectively.
Interest income on those loans, which is recorded only
when received, amounted to $0, $419, and $4,271, for
1994, 1993 and 1992, respectively.
Note 5: Allowance for Credit Losses
An analysis of the change in the allowance for credit
losses follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Balance, beginning of year$553,354 $658,497 $587,656
Provision charged to operations238,1721,022,194119,635
Recoveries credited to reserve98,473 65,744 73,364
Losses charged to reserve(269,999)(1,193,081)(122,158)
Balance, end of year $620,000 $553,354 $658,497
</TABLE>
Note 6: Loans to Related Parties
Loans are made in the normal course of business to
officers and directors, their immediate families or
affiliated companies and principal stockholders of the
Bank. Such transactions were made in the ordinary
course of business on substantially the same terms and
conditions, including interest rates and collateral, as
those prevailing at the same time for comparable
transactions with other customers, and did not, in the
opinion of management, involve more than normal credit
risk or present other unfavorable features. The
aggregate amount of loans to such related parties at
December 31, 1994 and 1993, was $1,632,118 and
$1,561,916, respectively. During 1994 and 1993, new
loans to such related parties amounted to $526,557 and
$100,000, and repayments amounted to $456,355 and
$492,522, respectively.
Note 7: Bank Premises and Equipment
Components of premises and equipment included in the
consolidated balance sheet at December 31, 1994 and
1993 were as follows:
<PAGE>
<PAGE> F-19
Note 7: Bank Premises and Equipment (Continued)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Cost:
Bank Premises $2,723,257 $2,675,270
Furniture and Equipment 1,623,290 1,589,797
Total Cost 4,346,547 4,265,067
Less Accumulated Depreciation(1,945,528) (1,804,176)
Net Book Value $2,401,019 $2,460,891
</TABLE>
The banking house structure and improvements are being depreciated
straight-line over a 50 or 15 year life. Equipment is depreciated
on useful lives of ten years or less. Depreciation expense for
1994, 1993 and 1992 was $145,492, $141,691, and $127,054,
respectively.
Note 8: Time and Savings Deposits
Included in time and savings deposits are certificates of deposit
issued by domestic offices in amounts of $100,000 or more. These
certificates and their remaining maturities at December 31, 1994
and 1993 are as follow:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Three months or less $2,806,904 $2,447,435
Four through twelve months 3,925,955 6,611,951
One through five years 4,330,326 1,510,619
$11,063,185 $10,570,005
</TABLE>
Note 9: Employee Benefits
The Bank has a defined contribution 401 (k) profit sharing plan
for substantially all full-time employees. The Bank contributions
to the plan are composed of matching contributions equal to 50% of
the first 6% of employee contributions and discretionary profit
sharing contributions. Participants may make voluntary
contributions to the plan up to 10% of their compensation (as
defined). Costs of matching contributions for the years ended
December 31, 1994, 1993 and 1992 amounted to $21,955, $16,800, and
$16,800, respectively. There were no discretionary profit sharing
contributions for 1994 or 1993. A discretionary profit sharing
contribution of $25,000 was made in 1992.
<PAGE>
<PAGE> F-20
The Bank also has a defined contribution money purchase pension
plan which covers substantially all full-time employees. The plan
provides for contributions by the Bank of 5% of eligible
compensation (as defined). Contributions of $62,659, $39,600, and
$29,700 were made for the years ended December 31, 1994, 1993 and
1992, respectively.
The Bank also maintains nonqualified deferred compensation plans
with six of its directors. Benefits accrue based upon directors'
fees deferred, increased by annual interest on the balance or are
increased systematically based on expected benefits to be paid.
Interest is based upon on eight percent. Balances in the accounts
are $333,923 and $258,901 at December 31, 1994 and 1993,
respectively. Amounts charged to expense, including increases on
accounts, were $68,497, $63,638 and $26,761 in 1994, 1993 and
1992, respectively.
Note 10: Income Taxes
The consolidated provision for income taxes consisted of the
following:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Statutory federal income tax
Current tax liability $285,783$125,225 $213,969
Deferred tax provision 85,605 7,801 75,152
Current tax provision $371,388$133,026 $289,121
</TABLE>
At December 31, 1994 and 1993, the Bank had a deferred
tax asset of $383,410 and $249,160, net of a valuation
allowance of $211,763 and $128,768 included in other
intangible assets. A deferred tax liability of
$467,103 and $472,665 existed at December 31, 1994 and
1993, respectively.
The components of deferred income taxes were
principally related to the allowance for credit losses,
depreciation, accretion, and deferred directors fees.
The provision for federal income taxes is less than
that computed by applying the federal statutory rate of
34% in 1994, 1993 and 1992, as indicated in the
following analysis:
<PAGE>
<PAGE> F-21
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Tax based on
statutory rate$486,377 34.00%$297,931 34.00% $398,320 34.00%
Effect of:
Tax gain on
assets sold -- -- 1,235 .14 9,645 .82
Non-deductible
expenses 47,717 3.34 45,636 5.21 36,124 3.08
Accretion (7,500) (.52)(15,456) (1.76) (19,956) (1.70)
Tax-Exempt Income(217,824)(15.23)(227,656)(25.98)(210,680)(17.98)
Depreciation (18,327) (1.28)(18,049) (2.06) (11,594) (.99)
Bad Debts 22,659 1.58(35,749) (4.08) -- --
Other -- -- (187) (.02) (12) --
Benefit of
graduated rates -- --(19,958) (2.28) -- --
Alternative
Minimum Tax (27,319) (1.91) 97,478 11.12 12,122 1.03
$285,783 19.98%$125,225 14.29% $213,969 18.26%
</TABLE>
First Robinson Bancorp and First National Bank in
Robinson file consolidated state and federal tax
returns. Income tax expense is calculated on each
entities individual income. First Robinson Bancorp had
pretax losses of $32,043, $19,662, and $21,749 for
1994, 1993 and 1992, respectively, therefore, receiving
tax benefits based on expenses paid.
The Bank also have an alternative minimum tax credit
carryforward of $262,384. This amount is available to
reduce future regular tax due.
Note 10: Income Taxes (Continued)
Consolidated income tax expense allocations are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Federal income tax currently payable
First Robinson Bancorp $(7,036)$(3,540) $(4,357)
First National Bank in Robinson292,819128,765 218,326
Federal income tax deferred
First Robinson Bancorp -- -- --
First National Bank in Robinson85,605 7,801 75,152
Consolidated income tax expense$371,388$133,026$289,121
</TABLE>
The related income tax due to First National Bank in
Robinson from First Robinson Bancorp at December 31,
1994 and 1993 was $33,185 and $196,654, respectively.
The related income tax due from First National Bank in
Robinson to First Robinson Bancorp was $35,330 at
December 31, 1992.
<PAGE>
<PAGE> F-22
Note 11: Commitments, Contingent Liabilities
The Bank's consolidated financial statements do not
reflect various commitments and contingent liabilities
which arise in the normal course of business and which
involve elements of credit risk, interest rate risk
and liquidity risk. These commitments and contingent
liabilities are commitments to extend credit and
letters of credit. A summary of the Bank's
commitments and contingent liabilities at December 31,
1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Commitments to extend credit $9,572,200 $10,851,788
Credit card arrangements 4,284,000 4,121,193
Letters of credit 8,700 252,560
$13,864,900 $15,225,541
</TABLE>
Commitments to extend credit, credit card arrangements,
and letters of credit all include exposure to some
credit loss in the event of nonperformance of the
customer. The Bank's credit policies and procedures
for credit commitments and financial guarantees are the
same as those for extension of credit that are recorded
on the consolidated statements of condition. Because
these instruments have fixed maturity dates, and
because many of them expire without being drawn upon,
they do not generally present any significant liquidity
risk to the Bank. The Bank's experience has been that
approximately eighty-five percent of loan commitments
are drawn upon by customers. The Bank has not been
required to perform on any financial guarantees during
the past three years. The Bank has not incurred any
losses on its commitments in either 1994, 1993 or 1992.
The Bank and its subsidiaries are parties to litigation
and claims arising in the normal course of business.
Management, after consultation with legal counsel,
believes that the liabilities, if any, arising from
such litigation and claims will not be material to the
consolidated financial position.
Note 12: Concentrations of Credit
All of the Bank's loans, commitments, and letters of
credit have been granted to customers in the Bank's
market area. Investments in state and municipal
securities also involve governmental entities within
the Bank's market area. The concentrations of credit
by type of loan are set forth in Note 4. The
distribution of commitments to extend credit were
granted primarily to commercial borrowers.<PAGE>
<PAGE> F-23
Note 13: Regulatory Matters
The First National Bank of Robinson, as a National
Bank, is subject to the dividend restrictions set forth
by the Comptroller of the Currency. Under such
restrictions, the Bank may not, without the prior
approval of the Comptroller of the Currency, declare
dividends in excess of the sum of the current year's
earnings (as defined) plus the retained earnings (as
defined) from the prior two years. The dividends, as
of December 31, 1994, that the Bank could declare,
without the approval of the Comptroller of the
Currency, amounted to approximately $2,743,291. The
Bank is also required to maintain minimum amounts of
capital to total "risk weighted" assets, as defined by
the banking regulators. At December 31, 1994, the Bank
is required to have minimum Tier 1 and Total capital
ratios of 4.00% and 8.00%, respectively. The Bank's
actual ratios at that date were 13.19% and 14.07%,
respectively.
Note 14: Business Combination
On March 27, 1992, the Bank acquired the deposits of
Olympic Federal Savings in Mt. Carmel, Illinois. The
total purchase price was $13,210,835 and comprised of
$13,060,775 in cash and liabilities assumed. An
intangible asset of core deposits valued at $150,060 is
being amortized over six years on a straight line
basis.
Note 15: Proposed Merger
On October 12, 1994, an Agreement and Plan of Merger
was entered into between Ambanc Corporation and First
Robinson Bancorp. The agreement outlines a share for
share exchange for common stock. Consummation of the
transaction is subject to regulatory approval.<PAGE>
<PAGE> F-24
302 East Walnut Street
Robinson, Illinois 62454
To the Board of Directors and Stockholders
First Robinson Bancorp
Robinson, Illinois
We have reviewed the accompanying consolidated balance sheets of
First Robinson Bancorp and Subsidiary as of June 30, 1995 and 1994,
and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the six months then ended,
in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial
statements is the representation of the management of First
Robinson Bancorp.
A review consists principally of inquiries of Bank personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
Management has elected to omit substantially all of the disclosures
required by generally accepted accounting principles. If the
omitted disclosures were included in the financial statements, they
might influence the user's conclusions about the Bank's financial
position, results of operations, and cash flows. Accordingly,
these financial statements are not designed for those who are not
informed about such matters.
KEMPER CPA GROUP L.L.C.
Certified Public Accountants
August 16, 1995
<PAGE>
<PAGE> F-25
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $2,160,469 $1,885,198
Federal funds sold 2,100,000 500,000
Securities held to maturity 500,000 500,000
Securities available for sale at market 34,270,431 34,471,888
Loans, net of unearned discount of $1,043,359
in 1995 and $1,288,092 in 1994 and net
allowance for loan losses of $645,212 in
1995 and $587,137 in 1994 63,807,612 68,486,405
Bank premises and equipment, net of accumulated
depreciation of $1,983,028 in 1995 and
$1,840,176 in 1994 2,386,882 2,425,152
Interest receivable on loans and investments 977,603 966,027
Other intangible assets 233,607 353,691
Other real estate owned -- --
Other assets 354,410 210,167
TOTAL ASSETS $106,791,014 $109,798,528
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits - non-interest bearing $10,904,349 $8,964,573
Demand deposits - interest bearing 17,296,834 18,637,302
Time and savings deposits 63,573,043 67,937,204
Total deposits 91,774,226 95,539,079
Federal funds purchased and securities
sold under agreements to repurchase 2,548,468 3,012,143
Deferred income taxes 677,051 575,950
Accounts payable and accrued expenses 449,298 414,968
Other short-term borrowings 441,081 407,408
Other liabilities 375,368 331,292
Total liabilities 96,265,492 100,280,840
Stockholders' equity
Common Stock, (no par value: authorized
240,000 shares, issued 120,000 shares;
Outstanding 119,200) 600,000 600,000
Capital Surplus 2,200,000 2,200,000
Retained Earnings 7,361,218 6,584,268
Less treasury stock (800 shares at cost) (37,956) (37,956)
Unrealized appreciation on securities
available for sale 402,260 171,376
Less unrealized loss on equity securities -- (62,889)
Total stockholders' equity 10,525,522 9,517,688
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$106,791,014$109,798,528
</TABLE>
See accompanying selected information and accountant's report.
<PAGE>
<PAGE> F-26
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION>
1995 1994
<S> <C> <C>
Interest Income
Interest and fees on loans $2,908,854 $2,833,182
Interest on investment securities
U.S. Treasury Securities 223,154 273,187
Obligations of other U.S. government
agencies and corporations 557,818 428,503
Obligations of state and political
subdivisions 285,930 280,859
Other securities 86,653 89,643
Interest on federal funds sold 29,160 42,104
Total interest income 4,091,569 3,947,478
Interest expense
Interest on deposits 1,806,658 1,665,054
Interest on federal funds purchased
and securities sold under agreements
to repurchase 78,146 50,934
Total interest expense 1,884,804 1,715,988
Net interest income 2,206,765 2,231,490
Provision for loan losses (136,471) (89,525)
Net interest income after provision
for loan losses 2,070,294 2,141,965
Other income
Commissions and fees from fiduciary
activities 135,201 137,602
Service charges on deposit accounts 75,062 77,793
Other service charges and fees 15,421 12,997
Net investment securities gains 5,016 26,729
Other income 6,684 57,976
Total other income 237,384 313,097
Other expenses
Salaries and employee benefits 822,184 808,162
Equipment expense 97,824 97,524
Net occupancy expense of premises 121,579 131,068
Net cost of operation of other
real estate -- 7,372
FDIC Assessment 108,379 108,142
Legal and accounting fees 55,538 58,411
Directors' fees 68,828 92,719
Printing and office supplies 69,663 70,186
Other expenses 286,356 300,381
Total other expenses 1,630,351 1,670,965
Income before income taxes 677,327 784,097
Income tax provision 155,500 172,000
Net income $521,827 $612,097
Earnings per common share $4.38 $5.14
Average shares outstanding 119,200 119,200
</TABLE>
See accompanying selected information and accountants report.<PAGE>
<PAGE> F-27
<TABLE>
FIRST ROBINSON BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30,
<CAPTION> Unrealized
DepreciationUnrealized
On SecuritiesLoss on
Common Capital Retained Treasury AvailableMarketable
Stock Surplus Earnings Stock for Sale Securities Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993$600,000 $2,200,000 $6,062,769 $(37,956) $-$(62,889) $8,761,924
Net income through June 30, 1994 -- -- 612,097 -- -- -- 612,097
Cash dividends paid $.76 per share-- -- (90,598) -- -- -- (90,598)
Transfer of unrealized loss on
marketable securities to
unrealized appreciation on
securities available for sale -- -- -- -- (62,889) 62,889 --
Unrealized appreciation on
securities available for sale -- -- -- -- 234,265 -- 234,265
Balance at June 30, 1994 $600,000 $2,200,000 $6,584,268 $(37,956) $171,376 $-- $9,517,688
Balance at December 31, 1994$600,000 $2,200,000 $6,937,141 $(37,956) $(525,974) $-- $9,173,211
Net income through June 30, 1995 -- -- 521,827 -- -- -- 521,827
Cash dividends paid $.82 per share-- -- (97,750) -- -- -- (97,750)
Unrealized appreciation on
securities available for sale -- -- -- -- 928,234 -- 928,234
Balance at June 30, 1995 $600,000 $2,200,000 $7,361,218 $(37,956) $402,260 $--$10,525,522
</TABLE>
See accompanying selected information and accountant's report.
<PAGE>
<PAGE> F-28
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1995
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $521,827 $612,097
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 84,943 86,459
Provision for credit losses 136,471 89,525
Provision for deferred taxes 2,500 12,500
Net investment securities gains (5,016) (26,729)
(Increase) Decrease in accrued
income and other assets 320,428 152,902
Increase in accounts payable
and accrued expenses 56,375 149,963
(Decrease) in other liabilities (354,207) 122,086
Net cash provided by operating activities763,321 1,198,803
Cash flows from investing activities:
Net (increase) decrease in federal funds sold(2,100,000)3,200,000
Purchases of investment securities (3,032,156) (5,543,430)
Proceeds from sales of investment securities2,010,7653,037,645
Proceeds from maturities of investments2,547,641 2,302,301
Accretion and amortization of investments35,145 60,438
Net increase in loans 2,997,285 (3,267,407)
Purchases of properties and equipment (56,348) (36,261)
Net cash provided (used) by investing
activities 2,402,332 (246,714)
Cash flows from financing activities:
Net increase (decrease) in demand deposits
Non-interest bearing 369,651 (2,132,329)
Interest bearing (1,634,855) (166,429)
Net increase in time and savings deposits(2,217,388) 703,155
Net increase (decrease) in repurchase
agreements (448,482) 777,381
Net increase (decrease) in other
short-term borrowings 87,882 (185,897)
Dividends paid (97,750) (90,598)
Net cash provided (used) by financing
activities (3,940,942) (1,094,717)
Net increase (decrease) in cash and due
from banks (775,289) (142,628)
Cash and due from banks at Beginning of Year2,935,7582,027,826
Cash and due from banks at Six Months
Ended June 30, $2,160,469 $1,885,198
</TABLE>
See accompanying selected information and accountant's report.
<PAGE>
<PAGE> F-29
<TABLE>
FIRST ROBINSON BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
<CAPTION>
1995 1994
<S> <C> <C>
Other disclosures:
Interest paid $1,905,267 $1,703,289
Income taxes paid $118,883 $130,000
Supplemental schedule of non-cash
investing activities:
Total increase in unrealized
(depreciation) appreciation, on
securities available for sale $928,234 $234,265
</TABLE>
See accompanying selected information and accountant's report.<PAGE>
<PAGE> F-30
FIRST ROBINSON BANCORP AND SUBSIDIARY
SELECTED INFORMATION
(SUBSTANTIALLY ALL DISCLOSURES REQUIRED BY GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES ARE NOT INCLUDED)
JUNE 30, 1995 AND 1994
Note 1 - Basis of Consolidation
The consolidated balance sheets as of June 30, 1995 and 1994, and
the consolidated statements of income for the six month periods
ended June 30, 1995 and 1994, and the consolidated statements of
cash flows for the six month periods ended June 30, 1995 and 1994,
have been prepared by the Bank, without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows at June 30, 1995
and 1994, and all periods presented, have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in
conjunction with the financial statements and notes thereto
included in the Bank's December 31, 1994 annual report to
shareholders. The results of operations for the periods ended
June 30, 1995 and 1994, are not necessarily indicative of the
operating results for the full year.
Note 2 - Commitments and Contingent Liabilities
Other than ordinary routine litigation incidental to the business,
there are no material pending legal proceedings to which the Bank
or its subsidiary are a party or of which any of their property is
the subject as of June 30, 1995.
Note 3 - Proposed Merger
On October 12, 1994, an Agreement and Plan of Merger was entered
into between Ambanc Corporation and First Robinson Bancorp. The
agreement outlines a share for share exchange for common stock.
Consummation of the transaction is subject to regulatory approval.
<PAGE>
<PAGE> F-31
<TABLE>
SUMMARY OF SELECTED FINANCIAL DATA
FIRST ROBINSON BANCORP
(Dollars in thousands except per share data)
The following summary sets forth selected consolidated
financial information relating to First Robinson Bancorp. This
information should read in conjunction with the financial
statements and notes incorporated herein by reference.
<CAPTION>
Six Months Ended
June 30, Twelve Months Ended December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
(Taxable equivalent
basis)
Interest income4,091 3,948 8,030 7,721 7,577 7,792 7,736
Interest expense1,8851,716 3,555 3,287 3,921 4,541 4,825
Net interest income2,2062,2324,476 4,434 3,656 3,251 2,911
Provision for
loan losses 136 90 238 1,022 119 180 137
Net interest income
after provision
for loan losses2,0702,142 4,237 3,412 3,537 3,071 2,774
Noninterest income237 313 493 512 483 368 313
Noninterest expense1,6301,6713,300 3,048 2,848 2,283 2,082
Income before income
taxes and
extraordinary
credit 677 784 1,430 876 1,172 1,156 1,005
Income tax expense155 172 371 133 289 348 261
Net income before
extraordinary
credit 522 612 1,059 743 883 808 744
Extraordinary CreditN/AN/A N/A N/A N/A N/A 6
Net Income 522 612 1,059 743 883 808 750
Balance Sheet Data
(Period End)
Total Assets 106,791109,799109,192109,876103,76489,54085,801
Total Loans -net63,80868,48666,94165,309 47,801 39,26944,103
Investments 34,77034,972 34,966 34,477 48,455 41,93934,513
Total Deposits91,77495,539 95,610 97,728 92,627 79,47774,167
Shareholders'
equity 10,526 9,518 9,173 8,762 8,219 7,371 6,551
Per Share Data
Net Income 4.38 5.14 8.89 6.22 7.38 6.74 6.33
Cash dividend paid0.820.76 1.55 1.43 1.31 1.22 1.09
Book value at
year-end/
Average Shares
Outstanding 88.30 79.85 76.96 73.31 68.72 61.54 54.59
<PAGE>
<PAGE> F-32
Selected Ratios:
Profitability
Return on average
assets 0.98% 1.11% 0.96% 0.71% 0.90% 1.15% 0.90%
Return on average
equity 10.90%13.38% 11.35% 8.43% 15.18% 11.74% 9.72%
Average equity to
average assets9.00%8.30% 8.45% 8.42% 7.88% 7.90% 7.90%
Net interest margin4.30%4.18%4.31% 4.47% 3.94% 3.81% 3.74%
Capital
Tier 1 12.41%11.73% 13.19% 11.45% 13.70% 15.54%13.92%
Tier 2 13.26%12.48% 14.07% 12.19% 14.83% 16.83%14.95%
Credit
Net charge-offs
to average loans0.17%0.11%0.25% 1.90% 0.12% 0.18% 0.34%
Non-performing
loans to year-
end loans 1.37% 0.70% 1.13% 0.73% 1.69% 2.63% 1.94%
Allowance for
loan losses to
total year-end
loans 1.00% 0.82% 0.92% 0.84% 1.38% 1.50% 1.09%
</TABLE>
<PAGE>
<PAGE> A-1
AMENDED AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
BY AND AMONG
AMBANC CORP.,
AN INDIANA CORPORATION,
FIRST ROBINSON BANCORP,
AN ILLINOIS CORPORATION,
FRB CORP.,
AN INDIANA CORPORATION,
THE FIRST NATIONAL BANK IN ROBINSON,
A NATIONAL BANKING ASSOCIATION,
AND
FARMERS' STATE BANK OF PALESTINE,
AN ILLINOIS STATE-CHARTERED COMMERCIAL BANK
Dated: June 19, 1995
APPENDIX A
<PAGE>
<PAGE> A-2
TABLE OF CONTENTS
Page
ARTICLE ONE
TERMS OF THE MERGERS . . . . . . . . . . . . . . . 8
SECTION 1.01. TERMS OF THE BANK MERGER. . . . 8
SECTION 1.02. EFFECT OF THE BANK MERGER . . . 9
SECTION 1.03. CONVERSION AND EXCHANGE OF
SHARES: THE BANK MERGER. . . . . . . . . 13
SECTION 1.04. TERMS OF THE HOLDING COMPANY
MERGER. . . . . . . . . . . . . . . . . . 13
SECTION 1.05. EFFECT OF THE HOLDING COMPANY
MERGER. . . . . . . . . . . . . . . . . . 13
SECTION 1.06. CONVERSION AND EXCHANGE OF
SHARES: THE HOLDING COMPANY MERGER . . . 15
ARTICLE TWO
REPRESENTATIONS OF ROBINSON. . . . . . . . . . . . 15
SECTION 2.01. ORGANIZATION AND CAPITAL
STOCK . . . . . . . . . . . . . . . . . . 16
SECTION 2.02. AUTHORIZATION; NO DEFAULTS. . . 18
SECTION 2.03. SUBSIDIARY. . . . . . . . . . . 20
SECTION 2.04. FINANCIAL INFORMATION . . . . . 22
SECTION 2.05. ABSENCE OF CHANGES. . . . . . . 24
SECTION 2.06. AGREEMENTS WITH BANKING
AUTHORITIES . . . . . . . . . . . . . . . 24
SECTION 2.07. TAX MATTERS . . . . . . . . . . 26
SECTION 2.08. LITIGATION. . . . . . . . . . . 26
SECTION 2.09. EMPLOYMENT AGREEMENTS . . . . . 28
SECTION 2.10. REPORTS . . . . . . . . . . . . 28
SECTION 2.11. INVESTMENT PORTFOLIO. . . . . . 30
SECTION 2.12. LOAN PORTFOLIO. . . . . . . . . 32
SECTION 2.13. EMPLOYEE MATTERS AND ERISA. . . 33
SECTION 2.14. TITLE TO PROPERTIES;
INSURANCE . . . . . . . . . . . . . . . . 35
SECTION 2.15. ENVIRONMENTAL MATTERS . . . . . 36
SECTION 2.16. COMPLIANCE WITH AMERICANS WITH
DISABILITIES ACT. . . . . . . . . . . . . 38
SECTION 2.17. COMPLIANCE WITH LAW . . . . . . 38
SECTION 2.18. BROKERAGE . . . . . . . . . . . 38
SECTION 2.19. MATERIAL CONTRACTS. . . . . . . 39
SECTION 2.20. STATEMENTS TRUE AND CORRECT . . 40
SECTION 2.21. ROBINSON'S KNOWLEDGE. . . . . . 40
ARTICLE THREE
REPRESENTATIONS OF AMBANC. . . . . . . . . . . . . 41
SECTION 3.01. ORGANIZATION AND CAPITAL
STOCK . . . . . . . . . . . . . . . . . . 41
SECTION 3.02. AUTHORIZATION . . . . . . . . . 42
SECTION 3.03. SUBSIDIARIES. . . . . . . . . . 44
SECTION 3.04. FINANCIAL INFORMATION . . . . . 44<PAGE>
<PAGE> A-3
SECTION 3.05. ABSENCE OF CHANGES. . . . . . . 45
SECTION 3.06. REPORTS . . . . . . . . . . . . 46
SECTION 3.07. LITIGATION. . . . . . . . . . . 46
SECTION 3.08. AGREEMENTS WITH BANKING
AUTHORITIES . . . . . . . . . . . . . . . 47
SECTION 3.09. TITLE TO PROPERTIES;
INSURANCE . . . . . . . . . . . . . . . . 47
SECTION 3.10. ENVIRONMENTAL MATTERS . . . . . 49
SECTION 3.11. COMPLIANCE WITH LAW . . . . . . 50
SECTION 3.12. TAX/ERISA MATTERS . . . . . . . 50
SECTION 3.13. STATEMENTS TRUE AND CORRECT . . 51
ARTICLE FOUR
AGREEMENTS OF ROBINSON . . . . . . . . . . . . . . 52
SECTION 4.01. CONDUCT OF BUSINESS . . . . . . 52
SECTION 4.02. BREACHES. . . . . . . . . . . . 58
SECTION 4.03. SUBMISSION TO SHAREHOLDERS. . . 58
SECTION 4.04. CONSUMMATION OF AGREEMENT . . . 59
SECTION 4.05. ENVIRONMENTAL REPORTS . . . . . 60
SECTION 4.06. RESTRICTION ON RESALES. . . . . 61
SECTION 4.07. ACCESS TO INFORMATION . . . . . 62
ARTICLE FIVE
AGREEMENTS OF AMBANC . . . . . . . . . . . . . . . 64
SECTION 5.01. REGULATORY APPROVALS AND
REGISTRATION STATEMENT. . . . . . . . . . 64
SECTION 5.02. BREACHES. . . . . . . . . . . . 65
SECTION 5.03. CONSUMMATION OF AGREEMENT . . . 66
SECTION 5.04. ACCESS TO INFORMATION . . . . . 66
SECTION 5.05. SEPARATE ENTITY . . . . . . . . 67
SECTION 5.06. DIRECTOR AND OFFICER
INSURANCE . . . . . . . . . . . . . . . . 68
SECTION 5.07. EMPLOYEE BENEFITS . . . . . . . 68
SECTION 5.08. FURTHER MATTERS . . . . . . . . 69
ARTICLE SIX
CONDITIONS PRECEDENT TO THE HOLDING COMPANY MERGER 70
SECTION 6.01. CONDITIONS OF AMBANC'S
OBLIGATIONS . . . . . . . . . . . . . . . 70
SECTION 6.02. CONDITIONS OF ROBINSON'S
OBLIGATION. . . . . . . . . . . . . . . . 73
ARTICLE SEVEN
TERMINATION OR ABANDONMENT . . . . . . . . . . . . 76
SECTION 7.01. MUTUAL AGREEMENT. . . . . . . . 76
SECTION 7.02. BREACH OF REPRESENTATIONS OR
AGREEMENTS. . . . . . . . . . . . . . . . 76
SECTION 7.03. ENVIRONMENTAL REPORTS . . . . . 77
SECTION 7.04. FAILURE OF CONDITIONS . . . . . 77
SECTION 7.05. APPROVAL DENIED . . . . . . . . 77
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL . . 78
SECTION 7.07. LAPSE OF TIME . . . . . . . . . 78
SECTION 7.08. PRICE OF AMBANC STOCK . . . . . 78<PAGE>
<PAGE> A-4
ARTICLE EIGHT
THE CLOSING OF THE BANK MERGER AND HOLDING COMPANY
MERGER . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.01. THE CLOSING . . . . . . . . . . 79
SECTION 8.02. THE CLOSING DATE. . . . . . . . 80
SECTION 8.03. ACTIONS AT CLOSING. . . . . . . 80
ARTICLE NINE
GENERAL PROVISIONS . . . . . . . . . . . . . . . . 83
SECTION 9.01. CONFIDENTIAL INFORMATION. . . . 83
SECTION 9.02. RETURN OF DOCUMENTS . . . . . . 84
SECTION 9.03. LIABILITIES . . . . . . . . . . 84
SECTION 9.04. NOTICES . . . . . . . . . . . . 85
SECTION 9.05. NONSURVIVAL OF REPRESENTATIONS
AND AGREEMENTS. . . . . . . . . . . . . . 87
SECTION 9.06. ENTIRE AGREEMENT. . . . . . . . 87
SECTION 9.07. HEADINGS AND CAPTIONS . . . . . 87
SECTION 9.08. WAIVER, AMENDMENT OR
MODIFICATION. . . . . . . . . . . . . . . 88
SECTION 9.09. RULES OF CONSTRUCTION . . . . . 88
SECTION 9.10. COUNTERPARTS. . . . . . . . . . 88
SECTION 9.11. SUCCESSORS AND ASSIGNS. . . . . 88
SECTION 9.12. GOVERNING LAW; ASSIGNMENT . . . 88
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . 143
APPENDICES
Appendix A (Merger Agreement)
EXHIBITS
Exhibit 8.07(a)(v) (Robinson Counsel Legal
Opinion)
Exhibit 8.07(b)(vi) (AMBANC Counsel Legal Opinion)
<PAGE>
<PAGE> A-5
AMENDED AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AMENDED AGREEMENT OF MERGER AND PLAN OF
REORGANIZATION (this "Agreement"), made June 19, 1995
by and among AMBANC CORP., an Indiana corporation
("AMBANC"), FIRST ROBINSON BANCORP., an Illinois
corporation ("Robinson"), FRB CORP., an Indiana
corporation, THE FIRST NATIONAL BANK IN ROBINSON, a
national banking organization ("First National"), and
FARMERS' STATE BANK OF PALESTINE, an Illinois state-
chartered commercial bank ("Farmers'):
WITNESSETH:
WHEREAS, AMBANC is a corporation duly organized
and existing under the laws of the State of Indiana and
a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, holding one
hundred percent of the issued and outstanding shares of
common stock of both Farmers' and FRB Corp., with its
principal place of business in Vincennes, Indiana; and
WHEREAS, Robinson is a corporation duly organized
and existing under the laws of the State of Illinois
and a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, holding one
hundred percent of the issued and outstanding shares of
common stock of First National, with its principal
place of business in Robinson, Illinois; and
<PAGE>
<PAGE> A-6
WHEREAS, FRB Corp. is a corporation duly organized
and existing under the laws of the State of Indiana as
a wholly-owned subsidiary of AMBANC, organized for the
sole purpose of facilitating the transactions
contemplated by this Agreement; and
WHEREAS, First National is a national banking
association duly organized and existing under the laws
of the United States of America with its principal
banking office located in Robinson, Illinois; and
WHEREAS, Farmers' is a banking institution duly
organized and existing under the laws of the State of
Illinois with its principal banking office in
Palestine, Illinois; and
WHEREAS, on October 12, 1994, AMBANC and Robinson
entered into an Agreement and Plan of Merger providing
for the merger of Robinson with and into FRB Corp.; and
WHEREAS, it is the desire of AMBANC, Robinson, FRB
Corp., First National, and Farmers' to modify the
above-described transaction to effect a transaction
whereby Farmers' will be merged with and into First
National and immediately thereafter Robinson will be
merged with and into FRB Corp.; and<PAGE>
<PAGE> A-7
WHEREAS, a majority of all of the entire Boards of
Directors of AMBANC, Robinson, FRB Corp., First
National and Farmers', respectively, have approved this
Agreement and authorized its execution;
NOW, THEREFORE, in consideration of the premises
and the mutual terms and provisions set forth in this
Agreement, the parties agree as follows:
ARTICLE ONE
TERMS OF THE MERGERS
SECTION 1.01. TERMS OF THE BANK MERGER. Subject
to the terms and provisions of this Agreement and the
National Bank Act, Farmers' shall be merged,
immediately prior to the Holding Company Merger (as
defined below), with and into First National. First
National shall be the "Continuing Bank" and shall
continue its corporate existence under the laws of the
United States of America, pursuant to the provisions of
the National Bank Act and particularly Section 215a of
Title 12 of the United States Code, as amended, and
under the Illinois Banking Act and in particular
Section 20, Article 5 of Chapter 205 of the Illinois
Code, as amended (hereinafter such merger shall be
referred to as the "Bank Merger").
<PAGE>
<PAGE> A-8
SECTION 1.02. EFFECT OF THE BANK MERGER.
(a) GENERAL DESCRIPTION. Upon the effectiveness
of the Bank Merger, the separate existence of Farmers'
shall cease and the Continuing Bank shall possess all
of the rights, privileges, immunities, powers and
franchises and shall be subject to all of the duties
and liabilities of a bank organized and existing under
the laws of the United States of America and shall be a
wholly owned subsidiary of AMBANC.
(b) NAME AND OFFICES. The name of the Continuing
Bank shall be "The First National Bank in Robinson."
Its principal banking office shall be located at 300
West Main Street, Robinson, Illinois 62454. All
branches of First National and Farmers' shall become
legally established branches of the Continuing Bank.
(c) BOARD OF DIRECTORS. The Board of the
Directors of the Continuing Bank shall consist of the
same individuals that served as the Board of Directors
of First National immediately prior to the Effective
Date of the Bank Merger, until such time as their
successors have been elected and have been qualified;
provided, that, after the effective time of the Bank
Merger, the Board of Directors of First National
intends to add additional directors to the Board, at
its discretion, from those persons currently serving as
directors of Farmers' State Bank of Palestine.<PAGE>
<PAGE> A-9
(d) STRUCTURE. The amount of capital stock of
the Continuing Bank shall not be less than $600,000
divided into 60,000 common shares of stock, $10.00 par
value per share. The surplus of the Continuing Bank
shall be not less than $2,200,000, and the undivided
profits of the Continuing Bank shall not be less than
$6,961,000.
(e) ARTICLES OF ASSOCIATION AND BYLAWS. The
Articles of Association and Bylaws of First National in
effect immediately prior to the effectiveness of the
Bank Merger shall be and remain the Articles of
Association and Bylaws of the Continuing Bank, until
the same shall be amended or replaced as therein
provided.
(f) ASSETS, LIABILITIES, AND OBLIGATIONS. All
assets and all rights, franchises and interests of
First National and Farmers', respectively, in and to
every type of property, all debts due on whatever
account and all chooses in action shall be taken and be
deemed transferred to and vest in the Continuing Bank
by virtue of the Bank Merger without any order or other
action on the part of any court or otherwise, and the
Continuing Bank shall be responsible for all
liabilities and obligations of First National and
Farmers', respectively, by virtue of the Bank Merger,
all with the effect provided in 12 U.S.C. Section 215a.<PAGE>
<PAGE> A-10
SECTION 1.03. CONVERSION AND EXCHANGE OF SHARES:
THE BANK MERGER. AMBANC shall be allocated all the
issued and outstanding common stock of the Continuing
Bank, with the effect that the Bank Merger will not
change the shares of issued and outstanding stock of
First National.
SECTION 1.04. TERMS OF THE HOLDING COMPANY
MERGER. Subject to the terms and conditions of this
Agreement and the Merger Agreement attached hereto as
Appendix A (the "Merger Agreement"), and the Illinois
Business Corporation Act of 1993 and the Indiana
Business Corporation Law (referred to herein
collectively as the "Acts"), Robinson shall merge,
immediately subsequent to the Bank Merger, with and
into, FRB Corp., which shall be the "Continuing
Company" and shall continue its corporate existence
under the laws of the State of Indiana pursuant to the
provisions of and with the effect provided in the Acts
(hereinafter such merger is referred to as the "Holding
Company Merger") (the Bank merger and the Holding
Company Merger shall hereafter collectively be referred
to as the "Mergers").
SECTION 1.05. EFFECT OF THE HOLDING COMPANY
MERGER. At the Effective Time (as defined in the
Merger Agreement) of the Holding Company Merger, the
separate existence of Robinson shall cease, and the<PAGE>
<PAGE> A-11
Continuing Company shall possess of the rights,
privileges, immunities, powers and franchises, and
shall be subject to all of the duties and liabilities
of a corporation organized and existing under the laws
of the State of Indiana and shall be a wholly-owned
subsidiary of AMBANC.
SECTION 1.06. CONVERSION AND EXCHANGE OF SHARES:
THE HOLDING COMPANY MERGER. At the Effective Time of
the Holding Company Merger, each share of common stock,
no par value, of Robinson (the "Robinson Common Stock")
issued and outstanding immediately prior to the
Effective Time, other than the shares the holders of
which have duly exercised and perfected their
dissenters' rights, by virtue of the Holding Company
Merger and without any action on the part of the
holders thereof, shall be converted into the rights to
receive that number of shares of AMBANC Common Stock,
$10 par value per share (the "AMBANC Common Stock"), as
set forth in the Merger Agreement and subject to all
terms and provisions therein.
ARTICLE TWO
REPRESENTATIONS OF ROBINSON
Robinson hereby makes the following
representations and warranties:
<PAGE>
<PAGE> A-12
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
(a) Robinson is a corporation duly incorporated
and in good standing under the laws of the State of
Illinois, is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended, and
has the corporate power and authority to own all of its
property and assets, to incur all of its liabilities
and to carry on its business as now being conducted.
(b) Robinson has authorized capital stock of
240,000 shares of common stock, no par value per share
("Robinson Common"), 119,200 shares of which are issued
and outstanding and 800 shares of which are held by
Robinson as treasury stock. All of the issued and
outstanding shares of Robinson Common are duly and
validly issued and outstanding, fully paid and non-
assessable. None of the outstanding shares of Robinson
Common has been issued in violation of any preemptive
rights of the current or past shareholders of Robinson
or in violation of any applicable federal or state
securities laws or regulations.
(c) Except as set forth in subsection 2.01(b)
there are no shares of capital stock or other equity
securities of Robinson outstanding and no outstanding
options, warrants, rights to subscribe for, calls, or
commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable<PAGE>
<PAGE> A-13
for, shares of the capital stock of Robinson or
contracts, commitments, understandings or arrangements
by which Robinson is or may be obligated to issue
additional shares of its capital stock or options,
warrants or rights to purchase or acquire any
additional shares of its capital stock.
SECTION 2.02. AUTHORIZATION; NO DEFAULTS. The
Boards of Directors of Robinson and First National has
each, by all appropriate action, approved this
Agreement and the Mergers and has authorized the
execution of this Agreement on its behalf by its duly
authorized officers and the performance, respectively,
by Robinson and First National of its obligations
hereunder. Nothing in the Articles of Incorporation or
Bylaws of Robinson, as amended, in the Charter or
Bylaws of First National, or in any agreement,
instrument, decree, proceeding, law or regulation
(except as specifically referred to in or contemplated
by this Agreement) by or to which Robinson or First
National is bound or subject, would prohibit either
Robinson or First National from entering into and
consummating, or would be violated or breached by
Robinson's or First National's consummation of, this
Agreement and the transactions contemplated herein and
the Mergers on the terms and conditions herein
contained. This Agreement has been duly and validly<PAGE>
<PAGE> A-14
executed and delivered by Robinson and First National
and constitutes a legal, valid and binding obligation
of Robinson and First National, enforceable against
Robinson and First National in accordance with its
terms, and, except for the approval by Robinson, as the
sole shareholder of First National, and Robinson's
shareholders, no other corporate acts or proceedings
are required to be taken by Robinson or First National
to authorize the execution, delivery and performance of
this Agreement. Robinson or First National is not, and
will not be by reason of the consummation of the
transactions contemplated herein, in material default
under or in material violation of any provision of, nor
will the consummation of the transactions contemplated
herein afford any party a right to accelerate any
indebtedness under, Robinson's Articles of
Incorporation or Bylaws or First National's Charter or
Bylaws, any material promissory note, indenture or
other evidence of indebtedness or security therefor, or
any material lease, contract, or other commitment or
agreement to which Robinson or First National is a
party or by which Robinson or First National or their
property is bound.
SECTION 2.03. SUBSIDIARY. First National is duly
organized and validly existing under the laws of the
United States and has the corporate power to own its<PAGE>
<PAGE> A-15
properties and assets, to incur its liabilities and to
carry on its business as now being conducted.
Robinson owns of record and beneficially free and clear
of all liens and encumbrances all of the 60,000
outstanding shares of the capital stock of First
National.
SECTION 2.04. FINANCIAL INFORMATION. The audited
consolidated balance sheets of Robinson and First
National as of December 31, 1994, and 1993, and the
related audited consolidated statements of income,
changes in equity capital, and cash flows, for the
three years ended December 31, 1994, together with the
notes thereto; and the quarterly Reports of Condition
and Income of First National as filed with the
Comptroller of the Currency (the "OCC") for the quarter
ended March 31, 1995, (the "First National Reports");
all of which have been previously furnished by Robinson
to AMBANC (collectively the "Robinson Financial
Statements"), together with all subsequent financial
statements filed with the OCC prior to the Effective
Date, shall have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis (except as disclosed therein and
except for regulatory reporting differences required
with respect to First National's Reports) and fairly
present the consolidated financial position and the<PAGE>
<PAGE> A-16
consolidated results of operations, changes in
shareholders' equity and cash flows of Robinson and
First National in all material respects as of the dates
and for the periods indicated (subject, in the case of
interim financial statements, to normal recurring year-
end adjustments, none of which are material). Robinson
and First National each does not have any material
liability, fixed or contingent, except to the extent
set forth in the Robinson Financial Statements or
incurred in the ordinary course of business since the
date of the most recent Robinson Financial Statement.
SECTION 2.05. ABSENCE OF CHANGES. Since June 30,
1994, there has not been any material adverse change in
the financial condition, the results of operations, or
the business of Robinson or First National taken as a
whole.
SECTION 2.06. AGREEMENTS WITH BANKING
AUTHORITIES. Except as otherwise disclosed in Section
2.06 of a confidential writing delivered by Robinson to
AMBANC and executed by Robinson and AMBANC concurrently
with the execution and delivery of this Agreement (the
"Disclosure Schedule"), neither Robinson nor First
National is subject to any order (other than orders
applicable to banks generally) or is a party to any
agreement or memorandum of understanding with any
federal or state agency charged with the supervision or<PAGE>
<PAGE> A-17
regulation of banks or bank holding companies,
including without limitation the OCC, the Federal
Deposit Insurance Corporation ("FDIC"), and the Board
of Governors of the Federal Reserve System and its
delegates (the "FRB").
SECTION 2.07. TAX MATTERS. Robinson and First
National have filed all federal, state and local tax
returns due in respect of its business and properties
in a timely fashion and have paid or made provision for
all amounts shown due on such returns. All such
returns fairly reflect the information required to be
presented therein in all material respects. All
provisions for accrued but unpaid taxes contained in
the Robinson Financial Statements were made in
accordance with generally accepted accounting
principles. Except as set forth in Section 2.07 of the
Disclosure Schedule, Robinson and First National have
filed all forms and reports required to be filed with
respect to its pension plan or plans in a timely
fashion, and all such forms and reports fairly reflect
the information required to be presented therein in all
material respects.
SECTION 2.08. LITIGATION. Except as set forth in
Section 2.08 of the Disclosure Schedule, there is no
material litigation, claim or other proceeding pending
or, to the knowledge of Robinson, threatened, before<PAGE>
<PAGE> A-18
any judicial, administrative or regulatory agency or
tribunal against Robinson or First National, or to
which any of the properties of Robinson or First
National is subject.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Except as
set forth in Section 2.09 of the Disclosure Schedule,
neither Robinson nor First National is a party to or
bound by any material written contract for the
employment, retention or engagement of any officer,
employee, agent, consultant or other person or entity
which, by its terms, is not terminable by Robinson or
First National on thirty (30) days' written notice or
less without the payment of any amount by reason of
such termination.
SECTION 2.10. REPORTS. Since January 1, 1994,
Robinson and First National have filed all reports,
notices and other statements, together with any
amendments required to be made with respect thereto, if
any, that they were required to file with (i) the
Securities and Exchange Commission ("SEC"), (ii) the
FRB, (iii) the FDIC, (iv) the OCC, and (v) any other
governmental authority with jurisdiction over Robinson
or First National. Except as set forth in Section 2.10
of the Disclosure Schedule, as of their respective
dates, each of such reports and documents, including
the financial statements, exhibits and schedules<PAGE>
<PAGE> A-19
thereto, complied in all material respects with the
relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they
were filed.
SECTION 2.11. INVESTMENT PORTFOLIO. All United
States Treasury securities, obligations of other United
States Government agencies and corporations,
obligations of States of the United States and their
political subdivisions, and other investment securities
classified as "held to maturity" held by Robinson and
First National, as reflected in the latest balance
sheet in the Robinson Financial Statements, are carried
in the aggregate at no more than cost adjusted for
amortization of premiums and accretion of discounts.
All United States Treasury securities, obligations of
other United States Government agencies and
corporations, obligations of States of the United
States and their political subdivisions, and other
investment securities classified as "available for
sale" held by Robinson and First National, as reflected
in the latest balance sheet in the Robinson Financial
Statements, are carried in the aggregate at market
value. Provisions for losses have been made on all
such securities which have had a decline in value
deemed "other than temporary" as defined in SEC Staff
Accounting Bulletin No. 59.<PAGE>
<PAGE> A-20
SECTION 2.12. LOAN PORTFOLIO. All loans and
discounts shown in the Robinson Financial Statements at
December 31, 1994, or which were entered into after
December 31, 1994, but before the Closing Date, were
and will be made in all material respects for good,
valuable and adequate consideration in the ordinary
course of the business of Robinson and First National,
in accordance in all material respects with sound
banking practices, and are not subject to any material
defenses, set offs or counterclaims, including without
limitation any such as are afforded by usury or truth
in lending laws, except as may be provided by
bankruptcy, insolvency or similar laws or by general
principles of equity. Except as set forth in Section
2.12 of the Disclosure Schedule, the notes or other
evidences of indebtedness evidencing such loans and all
forms of pledges, mortgages and other collateral
documents and security agreements are and will be, in
all material respects, enforceable, valid, true and
genuine and what they purport to be. Robinson and
First National have complied, and will prior to the
Closing Date comply, with all laws and regulations
relating to such loans, or to the extent there has not
been such compliance, such failure to comply will not
materially interfere with the collection of any such
loan. Except as set forth in Section 2.12 of the
Disclosure Schedule, Robinson and First National have
not sold, purchased or entered into any loan<PAGE>
<PAGE> A-21
participation arrangement except where such
participation is on a pro rata basis according to the
respective contributions of the participants to such
loan amount. Except as set forth in Section 2.12 of
the Disclosure Schedule, Robinson has no knowledge that
any condition of property in which First National has
an interest as collateral to secure a loan violates the
Environmental Laws (defined in Section 2.15) in any
material respect or obligates First National or the
owner or operator of such property to remedy,
stabilize, neutralize or otherwise alter the
environmental condition of such property.
SECTION 2.13. EMPLOYEE MATTERS AND ERISA.
(a) Neither Robinson nor First National has
entered into any collective bargaining agreement with
any labor organizations with respect to any group of
employees of Robinson or First National, and to the
knowledge of Robinson there is no present effort nor
existing proposal to attempt to unionize any group of
employees of Robinson or First National.
(b) Except as set forth in Section 2.13 of the
Disclosure Schedule, (i) Robinson and First National
are and have been in material compliance with all
applicable laws respecting employment and employment
practices, terms and conditions of employment and wages
and hours, including, without limitation, any such laws
respecting employment discrimination and occupational
safety and health requirements, and neither Robinson<PAGE>
<PAGE> A-22
nor First National is engaged in any unfair labor
practice; (ii) there is no unfair labor practice
complaint against Robinson or First National pending
or, to the knowledge of Robinson, threatened before the
National Labor Relations Board; (iii) there is no labor
dispute, strike, slowdown or stoppage actually pending
or, to the knowledge of Robinson, threatened against or
directly affecting Robinson or First National; and (iv)
neither Robinson nor First National has experienced any
material work stoppage or other material labor
difficulty during the past five years.
(c) Except as set forth in Section 2.13 of the
Disclosure Schedule, neither Robinson nor First
National maintains, nor has either ever maintained,
any qualified pension plans as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974,
as amended. Except with respect to those employee
benefit plans described in Section 2.13 of the
Disclosure Schedule, neither Robinson nor First
National maintains, contributes to or participates in
or has any liability under any nonqualified employee
benefit plans or any deferred compensation, bonus,
stock or incentive plans, or other employee benefit or
fringe benefit programs for the benefit of former or
current employees or Directors of Robinson or First
National (the "Employee Plans"). Except as described
<PAGE>
<PAGE> A-23
in Section 2.13 of the Disclosure Schedule, neither
Robinson nor First National maintains, contributes to,
or participates in or has any liability under any plan
that provides health, major medical, disability or life
insurance benefits to former employees of Robinson or
First National.
SECTION 2.14. TITLE TO PROPERTIES; INSURANCE.
Except as described in Section 2.14 of the Disclosure
Schedule, Robinson and First National have marketable
title, insurable at standard rates, free and clear of
all liens, charges and encumbrances (except taxes which
are a lien but not yet payable and liens, charges or
encumbrances reflected in the Robinson Financial
Statements and easements, rights-of-way, and other
restrictions which are not material and, in the case of
Other Real Estate Owned, as such real estate is
internally classified on the books of Robinson or First
National, rights of redemption under applicable law) to
all real properties reflected on the Robinson Financial
Statements as being owned by Robinson or First
National. All material leasehold interests used by
Robinson and First National in their banking operations
are held pursuant to lease agreements that are valid
and enforceable in accordance with their terms. All
such properties comply in all material respects with
all applicable private agreements, zoning requirements
<PAGE>
<PAGE> A-24
and other governmental laws and regulations relating
thereto and there are no condemnation proceedings
pending or, to the knowledge of Robinson, threatened
with respect to such properties. Robinson and First
National have valid title or other ownership rights
under licenses to all material intangible personal or
intellectual property used by Robinson or First
National in their respective businesses free and clear
of any claim, defense or right of any other person or
entity which is material to such property, subject only
to rights of the licensor pursuant to applicable
license agreements, which rights do not materially
adversely interfere with the use or enjoyment of such
property. All insurable properties owned or held by
Robinson and First National are insured in such
amounts, and against fire and other risks insured
against by extended coverage and public liability
insurance, as is customary with companies of the same
size and in the same business.
SECTION 2.15. ENVIRONMENTAL MATTERS.
(a) As used in this Agreement, "Environmental
Laws" means all local, state and federal environmental,
health and safety laws and regulations in all
jurisdictions in which the parties hereto have done
business or owned property, including, without
limitation, the Federal Resource Conservation and
<PAGE>
<PAGE> A-25
Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal
Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Health Act.
(b) Except as set forth in Section 2.15 of the
Disclosure Schedule, neither the conduct nor operation
of Robinson or First National nor any condition of any
property owned by Robinson or First National within the
past ten (10) years and used in its business
operations, or to the knowledge of Robinson, the
condition of any property owned by Robinson or First
National within the past ten (10) years but not used in
its business operations, violates or violated
Environmental Laws in any material respect, and no
condition or event has occurred with respect to it or
any such property that, with notice or the passage of
time, or both, would constitute a material violation of
Environmental Laws or obligate Robinson or First
National to remedy, stabilize, neutralize or otherwise
alter the environmental condition of any such property.
Except as set forth in Section 2.15 of the Disclosure
Schedule, neither Robinson nor First National has
received any notice from any person or entity that
Robinson or First National or the operation of any
facilities or any property owned by Robinson or First
National is or was in violation of any Environmental
<PAGE>
<PAGE> A-26
Laws or that Robinson or First National is responsible
for the cleanup of any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at,
on or beneath any such property.
SECTION 2.16. COMPLIANCE WITH AMERICANS WITH
DISABILITIES ACT. Except as set forth in Section 2.16
of the Disclosure Schedule, Robinson and First National
are in compliance with all applicable provisions of the
Americans with Disabilities Act (the "ADA") and no
action under the ADA against Robinson or First National
or any of their properties has been initiated, or to
the knowledge of Robinson, has been threatened or
contemplated.
SECTION 2.17. COMPLIANCE WITH LAW. Robinson and
First National have all material licenses, franchises,
permits and other governmental authorizations that are
legally required to enable them to conduct their
respective businesses as presently conducted and are in
compliance in all material respects with all applicable
laws and regulations.
SECTION 2.18. BROKERAGE. Except for a fee
payable to Kemper Securities, Inc. in connection with
the issuance of a fairness opinion, there are no
existing claims or agreements for brokerage
commissions, finders' fees, investment banking fees, or<PAGE>
<PAGE> A-27
similar compensation in connection with the Holding
Company Merger payable by Robinson or First National.
SECTION 2.19. MATERIAL CONTRACTS. Except as set
forth in Section 2.19 of the Disclosure Schedule,
neither Robinson nor First National is a party to or
bound by any oral or written (i) material agreement,
contract or indenture under which it has borrowed or
will borrow money (not including federal funds and
money deposited, including without limitation, checking
and savings accounts and certificates of deposit); (ii)
material guaranty of any obligation for the borrowing
of money or otherwise, excluding endorsements made for
collection and guarantees made in the ordinary course
of business and letters of credit issued in the
ordinary course of business; (iii) material agreement
with any present or former officer, director or
shareholder (except for deposit or loan agreements
entered into in the ordinary course of business); (iv)
license, whether as licensor or licensee; (v) contract
or commitment for the purchase of materials, supplies
or other real or personal property in an amount in
excess of $10,000 or for the performance of services
over a period of more than thirty (30) days and
involving an amount in excess of $10,000; (vi) joint
venture or partnership agreement or arrangement; or
<PAGE>
<PAGE> A-28
(vii) contract, agreement or other commitment not made
in the ordinary course of business.
SECTION 2.20. STATEMENTS TRUE AND CORRECT. None
of the information supplied or to be supplied by
Robinson or First National for inclusion in any
documents to be filed with the FRB, OCC, SEC, or any
other regulatory authority in connection with the
Mergers will, at the respective times such documents
are filed, be false or misleading with respect to any
material fact or omit to state any material fact
necessary in order to make the statements therein not
misleading.
SECTION 2.21. ROBINSON'S KNOWLEDGE. With respect
to representations and warranties herein that are made
or qualified as being made "to the knowledge of
Robinson" or words of similar import, it is understood
and agreed that matters within the knowledge of the
directors and the officers of Robinson or First
National, respectively, shall be considered to be
within the knowledge of Robinson.
<PAGE>
<PAGE> A-29
ARTICLE THREE
REPRESENTATIONS OF AMBANC
AMBANC hereby makes the following representations
and warranties:
SECTION 3.01. ORGANIZATION AND CAPITAL STOCK.
(a) AMBANC is a corporation duly incorporated and
validly existing under the laws of the State of
Indiana, is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, and has
the corporate power and authority to own all of its
property and assets, to incur all of its liabilities,
and to carry on its business as it is now being
conducted.
(b) AMBANC has authorized capital stock of (i)
5,000,000 shares of common stock, $10.00 par value per
share ("AMBANC Common"), of which, as of the date of
this Agreement, 2,372,555 shares are issued and
outstanding, and (ii) 200,000 shares of preferred
stock, $10.00 par value per share, of which no shares
are issued and outstanding. All of the issued and
outstanding shares of AMBANC Common are duly and
validly issued and outstanding, fully paid and non-
assessable. None of the outstanding shares of AMBANC
Common has been issued in violation of any preemptive
rights of the current or past shareholders of AMBANC or
<PAGE>
<PAGE> A-30
in violation of any applicable federal or state
securities laws or regulations.
(c) The shares of AMBANC Common that are to be
issued to the shareholders of Robinson pursuant to the
Holding Company Merger have been duly authorized and,
when issued in accordance with the terms of this
Agreement, will be validly issued and outstanding,
fully paid and non-assessable, and will be listed and
authorized for quotation on the NASDAQ Small Caps
Market System.
SECTION 3.02. AUTHORIZATION. The Boards of
Directors of AMBANC, FRB Corp. and Farmers' has each,
by all appropriate action, approved this Agreement and
the Mergers and has authorized the execution of this
Agreement on its behalf by its respective duly
authorized officers and the performance, respectively,
by AMBANC and Farmers' of its respective obligations
hereunder. Nothing in the Articles of Incorporation or
Bylaws of AMBANC, as amended, or in the Charter or
Bylaws of Farmers, or in any agreement, instrument,
decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this
Agreement) by or to which AMBANC or any of its
subsidiaries is bound or subject would prohibit either
AMBANC or Farmers' from entering into and consummating,
or would be violated or breached by AMBANC's or
<PAGE>
<PAGE> A-31
Farmers' consummation of this Agreement and the
transactions contemplated herein and the Mergers on the
terms and conditions herein contained. This Agreement
has been duly and validly executed and delivered by
AMBANC and Farmers' and constitutes a legal, valid and
binding obligation of AMBANC and Farmers', enforceable
against AMBANC and Farmers' in accordance with its
terms, and no other corporate acts or proceedings are
required to be taken by AMBANC or Farmers' to authorize
the execution, delivery and performance of this
Agreement. AMBANC or Farmers' is not, and will not be
by reason of the consummation of the transactions
contemplated herein, in material default under or in
material violation of any provision of, nor will the
consummation of the transactions contemplated herein
afford any party a right to accelerate any indebtedness
under, AMBANC's Articles of Incorporation or Bylaws or
Farmers' Charter or Bylaws, any material promissory
note, indenture, or other evidence of indebtedness or
security therefore, or any material lease, contract, or
other commitment or agreement to which AMBANC or
Farmers' is a party or by which AMBANC or Farmers' or
their property is bound. Except for the requisite
approvals of and filings with the FRB and the OCC and
the filing of a registration statement with the SEC and
certain state securities regulatory agencies, no notice
<PAGE>
<PAGE> A-32
to, filing with, authorization by, or consent or
approval of, any federal or state regulatory authority
is necessary for the execution and delivery of this
Agreement or the consummation of the Mergers by AMBANC
and Farmers'.
SECTION 3.03. SUBSIDIARIES. Each of AMBANC's
subsidiaries is duly organized and validly existing
under the laws of the jurisdiction of its incorporation
and has the corporate power to own its respective
properties and assets, to incur its respective
liabilities and to carry on its respective business as
now being conducted. AMBANC owns of record and
beneficially free and clear of all liens and
encumbrances all outstanding shares of stock of all of
its subsidiaries.
SECTION 3.04. FINANCIAL INFORMATION. The audited
consolidated balance sheets of AMBANC and its
subsidiaries as of December 31, 1994 and 1993 and
related consolidated statements of income, changes in
shareholders' equity and cash flows for the three years
ended December 31, 1994, together with the notes
thereto, included in AMBANC's most recent 10-K, as
filed with the SEC, and the unaudited consolidated
balance sheet of AMBANC and its subsidiaries as of
March 31, 1995, and the related unaudited consolidated
statement of income, changes in shareholders' equity
<PAGE>
<PAGE> A-33
and cash flows for the period then ended included in
AMBANC's Quarterly Report on Form 10-Q as filed with
the SEC (collectively, the "AMBANC Financial
Statements"), all of which have been previously
furnished by AMBANC to Robinson, together with all
subsequent financial statements and reports filed with
the SEC prior to the Effective Date, shall have been
prepared in accordance with generally accepted
accounting principles applied on a consistent basis
(except as disclosed therein) and fairly present the
consolidated financial position and the consolidated
results of operations, changes in shareholders' equity
and cash flows of AMBANC and its consolidated
subsidiaries as of the dates and for the periods
indicated (subject, in the case of interim financial
statements, to normal recurring year-end adjustments,
none of which will be material). AMBANC and its
subsidiaries each does not have any material liability,
fixed or contingent, except as set forth in the AMBANC
Financial Statements or incurred in the ordinary course
of business since the date of the most recent AMBANC
Financial Statement.
SECTION 3.05. ABSENCE OF CHANGES. Since June 30,
1994, there has not been any material adverse change in
the financial condition, the results of operations or
<PAGE>
<PAGE> A-34
the business of AMBANC and its subsidiaries taken as a
whole.
SECTION 3.06. REPORTS. Since January 1, 1994
(or, in the case of subsidiaries of AMBANC, the date of
acquisition thereof by AMBANC, if later) AMBANC and
each of its subsidiaries has filed all reports, notices
and other statements, together with any amendments
required to be made with respect thereto, that it was
required to file with (i) the SEC, (ii) the FRB, or
(iii) any applicable state securities or banking
authorities, and (iv) any other governmental authority
with jurisdiction over AMBANC or any of its
subsidiaries. As of their respective dates, each of
such reports and documents, as amended, including the
financial statements, exhibits and schedules thereto,
complied in all material respects with the relevant
statutes, rules and regulations enforced or promulgated
by the regulatory authority with which they were filed,
and did not contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.07. LITIGATION. There is no material
litigation, claim or other proceeding pending or, to
the knowledge of AMBANC, threatened, before any
<PAGE>
<PAGE> A-35
judicial, administrative or regulatory agency or
tribunal against AMBANC or any of its subsidiaries, or
to which the property of AMBANC or any of its
subsidiaries is subject, which can reasonably be
expected to result in any material adverse change in
the financial condition, operations, or business of
AMBANC and its subsidiaries taken as a whole.
SECTION 3.08. AGREEMENTS WITH BANKING
AUTHORITIES. Neither AMBANC nor any of its
subsidiaries is subject to any order (other than orders
applicable to banks generally) or is a party to any
agreement or memorandum of understanding with any
federal or state agency charged with the supervision or
regulation of banks or bank holding companies,
including without limitation the FDIC, the Indiana
Department of Financial Institutions, the Illinois
Commissioner of Banks and Trust Companies (the
"ICB&TC"), and the FRB.
SECTION 3.09. TITLE TO PROPERTIES; INSURANCE.
AMBANC and each of its subsidiaries has marketable
title, insurable at standard rates, free and clear of
all liens, charges and encumbrances (except taxes which
are a lien but not yet payable and liens, charges or
encumbrances reflected in the AMBANC Financial
Statements and easements, rights-of-way, and other
restrictions which are not material and, in the case of
<PAGE>
<PAGE> A-36
Other Real Estate Owned, as such real estate is
internally classified on the books of AMBANC or any of
its subsidiaries, rights of redemption under applicable
law) to all real properties reflected on the AMBANC
Financial Statements as being owned by AMBANC or any of
its subsidiaries. All material leasehold interests
used by AMBANC in its banking operations are held
pursuant to lease agreements which are valid and
enforceable in accordance with their terms. All such
properties comply in all material respects with all
applicable private agreements, zoning requirements and
other governmental laws and regulations relating
thereto and there are no condemnation proceedings
pending or, to the knowledge of AMBANC, threatened with
respect to such properties. AMBANC and each of its
subsidiaries has valid title or other ownership rights
under licenses to all material intangible personal or
intellectual property used by AMBANC or any of its
subsidiaries in its business free and clear of any
claim, defense or right of any other person or entity
which is material to such property, subject only to
rights of the licensor pursuant to applicable license
agreements, which rights do not materially adversely
interfere with the use or enjoyment of such property.
All insurable properties owned or held by AMBANC and
each of its subsidiaries are insured in such amounts,
<PAGE>
<PAGE> A-37
and against fire and other risks insured against by
extended coverage and public liability insurance, as is
customary with companies of the same size and in the
same business.
SECTION 3.10. ENVIRONMENTAL MATTERS.
(a) Neither the conduct nor operation of AMBANC
or any of its subsidiaries nor any condition of any
property owned by AMBANC or any of its subsidiaries
within the past ten (10) years and used in its business
operations, or to the knowledge of AMBANC, the
condition of any property owned by AMBANC or any of its
subsidiaries within the past ten (10) years but not
used in its business operations, violates or violated
Environmental Laws in any material respect, and no
condition or event has occurred with respect to it or
any such property that, with notice or the passage of
time, or both, would constitute a material violation of
Environmental Laws or obligate AMBANC or any of its
subsidiaries to remedy, stabilize, neutralize or
otherwise alter the environmental condition of any such
property. Neither AMBANC nor any of its subsidiaries
has received any notice from any person or entity that
AMBANC or any of its subsidiaries or the operation of
any facilities or any property owned by AMBANC or any
of its subsidiaries is or was in violation of any
Environmental Laws or that AMBANC or any of its
<PAGE>
<PAGE> A-38
subsidiaries is responsible for the cleanup of any
pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such
property.
(b) To the extent that AMBANC had requested or
obtained environmental investigations on certain
parcels of real property in connection with its prior
acquisitions of other banking organizations that are
now subsidiaries of AMBANC, AMBANC believes that all
such investigations revealed no facts that would
constitute a material violation of Environmental Laws
or obligate AMBANC or any of its subsidiaries to
remedy, stabilize, neutralize, or otherwise alter the
environmental condition of any such property.
SECTION 3.11. COMPLIANCE WITH LAW. AMBANC and
each of its subsidiaries has all material licenses,
franchises, permits and other governmental
authorizations that are legally required to enable them
to conduct their respective businesses as presently
conducted and are in compliance in all material
respects with all applicable laws and regulations.
SECTION 3.12. TAX/ERISA MATTERS. AMBANC and all
of its subsidiaries have filed all federal, state, and
local tax returns due in respect of their business and
properties in a timely fashion and have paid or made
provision for all amounts due on such returns, and all
<PAGE>
<PAGE> A-39
such returns fairly reflect the information required to
be presented therein in all material respects. AMBANC
and its subsidiaries are and have been in material
compliance with all applicable laws respecting
employment and employment practices, terms, and
conditions of employment in wages and hours, including,
without limitation, any such laws respecting employment
discrimination and occupational safety and health
requirements, and neither AMBANC nor any of its
subsidiaries is engaged in any unfair labor practice.
SECTION 3.13. STATEMENTS TRUE AND CORRECT. None
of the information supplied or to be supplied by AMBANC
for inclusion in (i) the Registration Statement (as
defined in Section 4.04), (ii) the Proxy
Statement/Prospectus (as defined in Section 4.03) and
(iii) any other documents to be filed with the SEC, the
FRB, the OCC or any other regulatory authority in
connection with the Mergers, will, at the respective
times such documents are filed, and, in the case of the
Registration Statement, when it becomes effective, and
with respect to the Proxy Statement/Prospectus, when
first mailed to the shareholders of Robinson, be false
or misleading with respect to any material fact, or
omit to state any material fact necessary in order to
make the statements therein not misleading, or in the
case of the Proxy Statement/Prospectus or any amendment
<PAGE>
<PAGE> A-40
thereof or supplement thereto, also at the time of the
shareholders' meeting of the Robinson shareholders
called to vote on the Holding Company Merger, be false
or misleading with respect to any material fact, or
omit to state any material fact necessary to correct
any statement in any earlier communication with respect
to the solicitation of any proxy for the shareholders'
meeting. All documents that AMBANC is responsible for
filing with the SEC or any other regulatory authority
in connection with the Mergers will comply as to form
in all material respects with the provisions of
applicable law and any rules and regulations
thereunder.
ARTICLE FOUR
AGREEMENTS OF ROBINSON
SECTION 4.01. CONDUCT OF BUSINESS.
(a) Robinson and First National shall continue to
carry on its business and the discharge or incurrence
of its obligations and liabilities only in the ordinary
course of business as heretofore conducted and, by way
of amplification and not limitation with respect to
such obligation, Robinson and First National will not,
without the prior written consent of AMBANC:
(i) declare or pay any dividend or make any
other distribution to shareholders, whether in
<PAGE>
<PAGE> A-41
cash, stock or other property, except that
Robinson may continue to pay its regular dividend
or dividends to its shareholders consistent with
past practice in amount and timing until
consummation of the Holding Company Merger,
provided that Robinson may not pay a dividend
during the quarter that the Holding Company Merger
is consummated if Robinson's shareholders would be
entitled to receive a dividend from AMBANC during
that quarter (specifically, if the Closing Date
does not occur on or before the ex-dividend date
for the payment by AMBANC for its dividend on
AMBANC Common for the third quarter of 1995, then
the Board of Directors of Robinson may declare and
pay on Robinson Common a dividend for the third
quarter of 1995 to its shareholders of record on
such ex-dividend date in an amount not to exceed
$0.41 per share; or
(ii) issue any common or other capital stock
or any options, warrants or other rights to
subscribe for or purchase common or any other
capital stock or any securities convertible into
or exchangeable for any capital stock; or
(iii) directly or indirectly redeem,
purchase or otherwise acquire (except for shares
acquired in satisfaction of a debt previously
<PAGE>
<PAGE> A-42
contracted) any of their own common or any other
capital stock; or
(iv) effect a split, reverse split,
reclassification, or other similar change in or of
any common or other capital stock or otherwise
reorganize or recapitalize; or
(v) change their Articles of
Incorporation/Charter or Bylaws; or
(vi) except in the ordinary course of
business consistent with past practices, pay or
agree to pay, conditionally or otherwise, any
additional compensation or severance benefit or
otherwise make any changes out of the ordinary
course of business with respect to the fees or
compensation payable or to become payable to
management consultants, directors, officers or
salaried employees or, except as required by law
or contemplated by this Agreement, adopt or make
any change in any Employee Plan or other
arrangement or payment made to, for or with any of
such consultants, directors, officers or
employees; or
(vii) except in the ordinary course of
business, borrow or agree to borrow any material
amount of funds or directly or indirectly
guarantee or agree to guarantee any material
<PAGE>
<PAGE> A-43
obligations of others except in the ordinary
course of business or pursuant to outstanding
letters of credit; or
(viii) purchase or otherwise acquire any
investment security for their own account other
than U.S. treasury or other governmental
obligations or asset-backed securities issued or
guaranteed by United States governmental or other
governmental agencies, in either case having an
average remaining life of three years or less, or
sell any investment security owned by them other
than sales made in the ordinary course of business
as previously conducted during the past three
years and in accordance with applicable law and
regulations or engage in any activity that would
be inconsistent with the classification of
investment securities as either "held to maturity"
or "available for sale"; or
(ix) enter into or amend any agreement,
contract or commitment out of the ordinary course
of business; or
(x) except in the ordinary course of
business, place on any of their assets or
properties any mortgage, pledge, lien, charge, or
other encumbrance; or
<PAGE>
<PAGE> A-44
(xi) except in the ordinary course of
business, cancel, release, compromise or
accelerate any material indebtedness owing to
Robinson or First National or any claims which
Robinson or First National may possess, or
voluntarily waive any material rights with respect
thereto; or
(xii) sell or otherwise dispose of any real
property or any material amount of any personal
property other than properties acquired in
foreclosure or otherwise in the ordinary course of
collection of indebtedness to Robinson or First
National; or
(xiii) foreclose upon or otherwise take
title to or possession or control of, any real
property without first obtaining a Phase One
environmental report thereon, prepared by a
reliable and qualified person or firm acceptable
to AMBANC, which indicates that the property is
free of pollutants, contaminants or hazardous or
toxic waste materials; provided, however, that
neither Robinson nor First Robinson shall be
required to obtain such a report with respect to
single family, non-agricultural residential
property of one acre or less to be foreclosed upon
unless Robinson has reason to believe that such
<PAGE>
<PAGE> A-45
property might contain such materials or otherwise
might be contaminated; or
(xiv) commit any act or fail to do any act
which will cause a material breach of any material
agreement, contract or commitment; or
(xv) knowingly violate any law, statute,
rule, governmental regulation or order, which
violation might have a material adverse effect on
their business, financial condition, or earnings;
or
(b) Neither Robinson nor First National shall,
without the prior written consent of AMBANC, engage in
any transaction or take any action that would render
untrue in any material respect any of the
representations and warranties of Robinson contained in
Article Two hereof if such representations and
warranties were given as of the date of such
transaction or action.
(c) Robinson shall promptly notify AMBANC in
writing of the occurrence of any matter or event known
to and involving Robinson or First National that is
materially adverse to the business, operations,
properties, assets or condition (financial or
otherwise) of Robinson or First National taken as a
whole.
<PAGE>
<PAGE> A-46
(d) Robinson shall not, on or before the earlier
of the Closing Date or the date of termination of this
Agreement, solicit or encourage, or, subject to the
fiduciary duties of its directors as advised by
counsel, hold discussions or negotiations with or
provide any information to, any person in connection
with any proposal from any person for the acquisition
of all or any substantial portion of the business,
assets, shares of Robinson Common or other securities
of Robinson or First National.
SECTION 4.02. BREACHES. Robinson shall, in the
event it has knowledge of the occurrence of any event
or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such
event occurred or been known prior to the date of this
Agreement) of any of its representations or agreements
contained or referred to in this Agreement, give prompt
notice thereof to AMBANC and use its best efforts to
prevent or promptly remedy the same.
SECTION 4.03. SUBMISSION TO SHAREHOLDERS.
Robinson shall cause to be duly called and held, on a
date mutually selected by AMBANC and Robinson, a
special meeting of its shareholders (the "Shareholders'
Meeting") for submission of this Agreement and the
Holding Company Merger for approval of such
shareholders as required by the Acts. In connection
<PAGE>
<PAGE> A-47
with the Shareholders' Meeting, (i) Robinson shall
cooperate and assist AMBANC in preparing and filing a
Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") with the SEC, and Robinson shall
mail it to its shareholders, (ii) Robinson shall
furnish AMBANC all information concerning itself and
First National that AMBANC may reasonably request in
connection with such Proxy Statement/Prospectus, and
(iii) the Board of Directors of Robinson shall (subject
to compliance with its fiduciary duties as advised by
counsel) recommend to its shareholders the approval of
this Agreement and the Holding Company Merger
contemplated hereby and use its best efforts to obtain
such shareholder approval.
SECTION 4.04. CONSUMMATION OF AGREEMENT.
Robinson and First National shall use their best
efforts to perform and fulfill all conditions and
obligations on their part to be performed or fulfilled
under this Agreement and to effect the Mergers in
accordance with the terms and provisions hereof.
Robinson shall furnish to AMBANC in a timely manner all
information, data and documents in the possession of
Robinson and First National requested by AMBANC as may
be required to obtain any necessary regulatory or other
approvals of the Mergers or to file with the SEC a
registration statement on Form S-4 (the "Registration
<PAGE>
<PAGE> A-48
Statement") relating to the shares of AMBANC Common to
be issued to the shareholders of Robinson pursuant to
the Holding Company Merger and this Agreement and shall
otherwise cooperate fully with AMBANC to carry out the
purpose and intent of this Agreement.
SECTION 4.05. ENVIRONMENTAL REPORTS. Robinson
shall provide to AMBANC, as soon as reasonably
practical but not later than sixty (60) days after the
date of this Agreement, a report of a Phase One
environmental investigation on all real property owned
or leased by Robinson or First National (including
Other Real Estate Owned) as of the date of this
Agreement and within ten (10) days after the
acquisition or lease of any real property acquired or
leased by Robinson or First National after the date of
this Agreement, except as otherwise provided in Section
4.01(a)(xiii). If required by the Phase One
investigation in AMBANC's reasonable opinion, Robinson
shall, at the written request of AMBANC delivered to
Robinson within five (5) days of AMBANC's receipt of
any such Phase One report, provide to AMBANC a report
of a Phase Two investigation on properties requiring
such additional study. AMBANC shall have five (5)
business days from the receipt of any such
investigation report to notify Robinson in writing of
any material environmental concerns. Within forty-five
<PAGE>
<PAGE> A-49
(45) days of the delivery of such notification, AMBANC
shall obtain an estimate or indication as described
below regarding the cost of taking remedial and
corrective actions or the inability to make such an
estimate. Should the cost of taking all remedial and
corrective actions and measures (i) required by
applicable law, or (ii) recommended or suggested by
such report or reports and prudent in light of the
findings of such report, in the aggregate, exceed the
sum of $100,000, as reasonably estimated by an
environmental expert promptly retained for such purpose
by AMBANC and reasonably acceptable to Robinson, or if
the cost of such actions and measures cannot be so
reasonably estimated by such expert with any
reasonable degree of certainty, then AMBANC shall have
the right pursuant to Section 7.03 hereof, for a period
of five (5) business days following receipt of such
estimate or indication that the cost of such actions
and measures cannot be so reasonably estimated, to
terminate this Agreement by providing written notice to
Robinson within such five-day period.
SECTION 4.06. RESTRICTION ON RESALES. Robinson
shall obtain and deliver to AMBANC prior to the Closing
Date signed representations, in form reasonably
acceptable to AMBANC, of any person who may reasonably
be deemed an "affiliate" of Robinson as of the date of
<PAGE>
<PAGE> A-50
the Shareholders' Meeting within the meaning of such
term as used in Rule 145 under the Securities Act of
1933, as amended (the "Securities Act"), regarding
their prospective compliance with the provisions of
such Rule 145. Robinson shall also obtain and deliver
to AMBANC prior to the Closing Date, the signed
agreements of each shareholder who may reasonably be
deemed an "affiliate" (as such term is described in the
preceding sentence) of Robinson as of the date of the
Shareholders' Meeting agreeing not to sell any shares
of AMBANC Common or otherwise reduce his or her risk
relative to such shares, until such time as financial
results covering at least thirty (30) days of post-
Merger combined operations have been made available to
the general public.
SECTION 4.07. ACCESS TO INFORMATION. Robinson
shall permit AMBANC reasonable access, in a manner
which will avoid undue disruption or interference with
Robinson's normal operations, to Robinson's and First
National's properties and shall disclose and make
available to AMBANC all books, documents, papers and
records relating to Robinson's and First National's
assets, stock, ownership, properties, operations,
obligations and liabilities, including, but not limited
to, all books of account (including general ledgers),
tax records, minute books of directors' and
<PAGE>
<PAGE> A-51
shareholders' meetings, organizational documents,
material contracts and agreements, loan files, filings
with any regulatory authority, litigation files, plans
affecting employees, and any other business activities
or prospects in which AMBANC may have a reasonable and
legitimate interest in light of the transactions
contemplated by this Agreement. During the period from
the date of this Agreement to the Effective Time,
Robinson will cause one or more of Robinson's
designated representatives to confer on a regular basis
with the President of AMBANC, or any other person
designated in a written notice given to Robinson by
AMBANC pursuant to this Agreement, to report the
general status of the ongoing operations of Robinson
and First National. Robinson and First National will
promptly notify AMBANC of any material change in the
normal course of the operation of its business or
properties and of any regulatory complaints,
investigations or hearings (or communications
indicating that the same may be contemplated), or the
institution or the threat of significant litigation
involving Robinson or First National and will keep
AMBANC fully informed of such events. AMBANC will hold
any such information which is nonpublic in confidence
in accordance with the provisions of Section 8.01
hereof.
<PAGE>
<PAGE> A-52
ARTICLE FIVE
AGREEMENTS OF AMBANC
SECTION 5.01. REGULATORY APPROVALS AND
REGISTRATION STATEMENT. AMBANC shall promptly file all
regulatory applications required in order to consummate
the Mergers, including the necessary applications for
the prior approval of the FRB and the OCC. AMBANC
shall keep Robinson reasonably informed as to the
status of such applications and provide Robinson copies
of such applications and supplementally filed materials
prior to their filing. AMBANC shall file with the SEC
the Registration Statement relating to the shares of
AMBANC Common to be issued to the shareholders of
Robinson pursuant to this Agreement, and shall use its
best efforts to cause the Registration Statement to
become effective as soon as practicable. At the time
the Registration Statement becomes effective, the
Registration Statement shall comply in all material
respects with the provisions of the Securities Act and
the published rules and regulations thereunder, and
shall not contain any untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary to make the statements
therein not false or misleading; and at the time of the
mailing thereof to the shareholders of Robinson, at the
time of the Shareholders' Meeting, and at the Effective
<PAGE>
<PAGE> A-53
Time, the Proxy Statement/Prospectus included as part
of the Registration Statement, as amended or
supplemented by any amendment or supplement, shall not
contain any untrue statement of a material fact or omit
to state any material fact regarding AMBANC or the
Holding Company Merger necessary to make the statements
therein not false or misleading. AMBANC shall timely
file all documents required to obtain all necessary
Blue Sky permits and approvals, if any, required to
carry out the Holding Company Merger, shall pay all
expenses incident thereto and shall use its best
efforts to obtain such permits and approvals on a
timely basis. AMBANC shall promptly and properly
prepare and file any other filings required under the
Securities Exchange Act of 1934 (the "Exchange Act")
relating to the Holding Company Merger.
SECTION 5.02. BREACHES. AMBANC shall, in the
event it has knowledge of the occurrence of any event
or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such
event occurred or been known prior to the date of this
Agreement) of any of its representations or agreements
contained or referred to in this Agreement, give prompt
notice thereof to Robinson and use its best efforts to
prevent or promptly remedy the same.
<PAGE>
<PAGE> A-54
SECTION 5.03. CONSUMMATION OF AGREEMENT. AMBANC
shall use its best efforts to perform and fulfill all
conditions and obligations on its part to be performed
or fulfilled under this Agreement and to effect the
Mergers in accordance with the terms and conditions of
this Agreement, and to cause the Effective Time to
occur on or before November 30, 1995.
SECTION 5.04. ACCESS TO INFORMATION. AMBANC
shall permit Robinson reasonable access, in a manner
which will avoid undue disruption or interference with
AMBANC's normal operations, to AMBANC's and any of its
subsidiaries' properties and shall disclose and make
available to Robinson all books, documents, papers and
records relating to AMBANC's and any of its
subsidiaries' assets, stock, ownership, properties,
operations, obligations and liabilities, including, but
not limited to, all books of account (including general
ledgers), tax records, minute books of directors' and
shareholders' meetings, organizational documents,
material contracts and agreements, loan files, filings
with any regulatory authority, litigation files, plans
affecting employees, and any other business activities
or prospects in which Robinson may have a reasonable
and legitimate interest in light of the transactions
contemplated by this Agreement. AMBANC and each of its
subsidiaries will promptly notify Robinson of any
<PAGE>
<PAGE> A-55
material change in the normal course of the operation
of its business or properties and of any regulatory
complaints, investigations or hearings (or
communications indicating that the same may be
contemplated), or the institution or the threat of
significant litigation involving AMBANC or any of its
subsidiaries and will keep Robinson fully informed of
such events. Robinson will hold any such information
which is nonpublic in confidence in accordance with the
provisions of Section 8.01 hereof.
SECTION 5.05. SEPARATE ENTITY. It is AMBANC's
intent that the directors and officers of First
National in office at the Effective Time will continue
after the Effective Time to manage and operate First
National as a separate banking entity, with such
assistance, advice, and support from AMBANC and its
other banking affiliates as shall be appropriate. At
the Effective Time, one officer or director of AMBANC
shall be added to the Board of Directors of First
National, and two officers or directors of Robinson
shall be added to the Board of Directors of AMBANC.
The persons to become directors of AMBANC and First
National shall be selected by mutual agreement of the
respective Boards of Directors. AMBANC agrees that,
for a period of three years after the Effective Time,
it will retain the name "The First National Bank in
<PAGE>
<PAGE> A-56
Robinson" as the name pursuant to which First National
does business; provided, however, that a majority of
the Directors of First National who served as Directors
prior to the Effective Time shall have the authority to
reduce this three-year period at any time after the
Effective Time at their discretion.
SECTION 5.06. DIRECTOR AND OFFICER INSURANCE.
AMBANC agrees that all rights to indemnification
existing in favor of the directors, officers, and
employees of Robinson and First National, as provided
in its Articles, Bylaws, or otherwise in effect on the
date of this Agreement shall survive the Effective Time
and shall continue in full force and effect with
respect to matters occurring prior to the Effective
Time.
SECTION 5.07. EMPLOYEE BENEFITS. Upon the
Closing Date, it is intended that the employees of
First National shall continue to be employees of First
National with no change in employment solely as a
result of the transactions contemplated herein;
provided, nothing herein shall be interpreted as
creating a contractual or other right to continued
employment of an employee subsequent to the Closing
Date. It is the intent of AMBANC that, after the
Effective Time, the active employees of First National
will be added to and become part of the AMBANC employee
<PAGE>
<PAGE> A-57
benefits plans and receive employee benefits (including
without limitation, pension benefits, health insurance,
long-term disability coverage and life insurance
coverage) that are no less favorable than those
generally available to employees at AMBANC and its
subsidiaries. In that event, individuals who are
actively employed by First National on the Closing Date
shall be given full credit for all purposes under any
and all employee benefit plans, programs or policies
maintained or hereafter established by AMBANC for prior
years of employment with First National.
Notwithstanding anything to the contrary above, it is
the intention of AMBANC that the employees of First
National as a group will suffer no material net loss in
the value of the total employee benefits package
currently enjoyed by them by reason of the Holding
Company Merger.
SECTION 5.08. FURTHER MATTERS. Neither AMBANC
nor any of its subsidiaries shall, without the prior
written consent of Robinson, engage in any transaction
or take any action that would render untrue in any
material respect any of the representations and
warranties of AMBANC contained in Article Three hereof
if such representations and warranties were given as of
the date of such transaction or action. AMBANC shall
promptly notify Robinson in writing of the occurrence
<PAGE>
<PAGE> A-58
of any matter or event known to and involving AMBANC or
any of its subsidiaries that is materially adverse to
the business, operations, properties, assets, or
condition (financial or otherwise) of AMBANC or its
subsidiaries taken as a whole.
ARTICLE SIX
CONDITIONS PRECEDENT TO THE HOLDING COMPANY MERGER
SECTION 6.01. CONDITIONS OF AMBANC'S OBLIGATIONS.
AMBANC's obligations to effect the Mergers shall be
subject to the satisfaction (or waiver by AMBANC) prior
to or on the Closing Date of the following conditions:
(a) The representations and warranties made by
Robinson in this Agreement shall be true in all
material respects on and as of the Closing Date with
the same effect as though such representations and
warranties had been made or given on and as of the
Closing Date.
(b) Robinson and First National each shall have
performed and complied in all material respects with
all of its obligations and agreements required to be
performed prior to the Closing Date under this
Agreement.
(c) No temporary restraining order, preliminary
or permanent injunction or other order issued by any
court of competent jurisdiction or other legal
<PAGE>
<PAGE> A-59
restraint or prohibition preventing the consummation of
the Mergers shall be in effect, nor shall any
proceeding by any bank regulatory authority,
governmental agency or other person seeking any of the
foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the
Mergers which makes the consummation of the Mergers
illegal.
(d) All necessary regulatory approvals, consents,
authorizations and other approvals required by law for
consummation of the Mergers shall have been obtained
and all waiting periods required by law shall have
expired.
(e) AMBANC shall have received the environmental
reports required by Sections 4.05 and 4.01(a)(xiii)
hereof and shall not have elected, pursuant to Section
4.05 hereof, to terminate and cancel this Agreement.
(f) AMBANC shall have received all documents
required to be received from Robinson and First
National on or prior to the Closing Date, all in form
and substance reasonably satisfactory to AMBANC.
(g) The Registration Statement shall be effective
under the Securities Act and no stop orders suspending
the effectiveness of the Registration Statement shall
<PAGE>
<PAGE> A-60
be in effect or proceedings for such purpose pending
before or threatened by the SEC.
(h) AMBANC shall have received from its counsel,
Leagre & Barnes, an opinion to the effect that if the
Mergers are consummated in accordance with the terms
set forth in this Agreement, (i) the Mergers will
constitute a reorganization within the meaning of
Section 368(a) of the Code; (ii) no gain or loss will
be recognized by the holders of shares of Robinson
Common upon receipt of AMBANC Common (except for cash
received in lieu of fractional shares); (iii) the basis
of shares of AMBANC Common received by the shareholders
of Robinson will be the same as the basis of shares of
Robinson Common exchanged therefor; and (iv) the
holding period of shares AMBANC Common received by the
shareholders of Robinson will include the holding
period of the shares of Robinson Common exchanged
therefor, provided such shares were held as capital
assets of the Effective Time; and
(i) The aggregate amount of the Consolidated
Shareholders' Equity of Robinson at the Effective Time,
as shown by and reflected in its books and records of
accounts prepared in accordance with generally accepted
accounting principles, consistently applied, shall not
be less than $9,699,185, and Robinson shall have
delivered to AMBANC a certificate, dated as of the
<PAGE>
<PAGE> A-61
Effective Time and signed by Robinson's President and
Secretary to such effect. As used in the preceding
sentence, "Consolidated Shareholders' Equity" of
Robinson shall mean its common stock, capital surplus,
and retained earnings, as fully accrued to reflect all
provisions to its allowance for loan losses (the
balance of which the parties agree shall, at the
Effective Time, be at least equal to one percent (1%)
of its total loan portfolio as set forth in its
statement of condition for the most recent month end
prior to the Effective Time) and the charge-off of all
bad debts prior to the Effective Time and the accrual
of all other expenses associated with the Mergers, all
in accordance with applicable bank regulatory
guidelines and in conformity with generally accepted
accounting principles consistently applied.
(j) AMBANC shall have received an opinion from
its independent auditors that the Holding Company
Merger shall be accounted for as a pooling of interests
pursuant to the appropriate accounting standards then
in effect.
SECTION 6.02. CONDITIONS OF ROBINSON'S
OBLIGATION. Robinson's obligation to effect the
Mergers shall be subject to the satisfaction (or waiver
by Robinson) prior to or on the Closing Date of the
following conditions:
<PAGE>
<PAGE> A-62
(a) The representations and warranties made by
AMBANC in this Agreement shall be true in all material
respects on and as of the Closing Date with the same
effect as though such representations and warranties
had been made or given on and as of the Closing Date.
(b) AMBANC shall have performed and complied in
all material respects with all of its obligations and
agreements required to be performed prior to the
Closing Date under this Agreement.
(c) No temporary restraining order, preliminary
or permanent injunction or other order issued by any
court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of
the Mergers shall be in effect, nor shall any
proceeding by any bank regulatory authority, other
governmental agency or other person seeking any of the
foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order
enacted, enforced or deemed applicable to the Mergers
which makes the consummation of the Mergers illegal.
(d) All necessary regulatory approvals, consents,
authorizations and other approvals required by law for
consummation of the Mergers, including the requisite
approval of the Mergers by the shareholders of
Robinson, shall have been obtained and all waiting
periods required by law shall have expired.
<PAGE>
<PAGE> A-63
(e) Robinson shall have received all documents
required to be received from AMBANC on or prior to the
Closing Date, all in form and substance reasonably
satisfactory to Robinson.
(f) The Registration Statement shall be effective
under the Securities Act and no stop orders suspending
the effectiveness of the Registration Statement shall
be in effect or proceedings for such purpose pending
before or threatened by the SEC.
(g) Robinson shall have received from its
counsel, Hinshaw & Culbertson , an opinion reasonably
satisfactory to Robinson to the effect that if the
Mergers are consummated in accordance with the terms
set forth in this Agreement, (i) the Mergers will
constitute a reorganization within the meaning of
Section 368(a) of the Code; (ii) no gain or loss will
be recognized by the holders of shares of Robinson
Common upon receipt of AMBANC Common (except for cash
received in lieu of fractional shares); (iii) the basis
of shares of AMBANC Common received by the shareholders
of Robinson will be the same as the basis of shares of
Robinson Common exchanged therefor; and (iv) the
holding period of shares AMBANC Common received by the
shareholders of Robinson will include the holding
period of the shares of Robinson Common exchanged
<PAGE>
<PAGE> A-64
therefor, provided such shares were held as capital
assets of the Effective Time; and
(h) Robinson shall have received an opinion of
Kemper Securities, Inc. or another qualified investment
banking firm or other qualified financial expert to the
effect that, as of the date of the mailing of the Proxy
Statement/Prospectus to the shareholders of Robinson,
the Holding Company Merger was fair to the shareholders
of Robinson from a financial point of view and such
opinion shall not have been amended or withdrawn on or
prior to the Closing Date.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
SECTION 7.01. MUTUAL AGREEMENT. This Agreement
may be terminated by the mutual written agreement of
the parties at any time prior to the Closing Date,
regardless of whether shareholder approval of this
Agreement and the Holding Company Merger by the
shareholders of Robinson shall have been previously
obtained.
SECTION 7.02. BREACH OF REPRESENTATIONS OR
AGREEMENTS. In the event that there is a material
breach in any of the representations and warranties or
agreements of AMBANC or Robinson which breach is not
cured within thirty (30) days after written notice to
<PAGE>
<PAGE> A-65
cure such breach is given by the non-breaching party,
then the non-breaching party, regardless of whether
shareholder approval of this Agreement and the Holding
Company Merger shall have been previously obtained, may
terminate and cancel this Agreement by providing
written notice thereof within ten (10) days after such
thirty (30) day period to the other party hereto.
SECTION 7.03. ENVIRONMENTAL REPORTS. AMBANC may
terminate this Agreement to the extent provided by
Section 4.05 by giving written notice thereof to
Robinson.
SECTION 7.04. FAILURE OF CONDITIONS. In the
event any of the conditions to the obligations of
either party are not satisfied or waived on or prior to
the Closing Date, and if any applicable cure period
provided in Section 7.02 hereof has lapsed, then such
party may, regardless of whether shareholder approval
of this Agreement and the Holding Company Merger shall
have been previously obtained, terminate and cancel
this Agreement on the Closing Date by delivery of
written notice thereof to the other party on such date.
SECTION 7.05. APPROVAL DENIED. If any regulatory
application filed pursuant to Section 5.01 hereof
should be finally denied or disapproved by the
respective regulatory authority, then this Agreement
thereupon shall be deemed terminated and canceled.
<PAGE>
<PAGE> A-66
However, it is understood that a request for additional
information or undertaking by AMBANC, as a condition
for approval, shall not be deemed to be a denial or
disapproval so long as AMBANC diligently provides the
requested information or, in its sole discretion,
accepts such undertaking. In the event an application
is denied subject to the right of an appeal, petition
for review, or similar such act on the part of AMBANC
(hereinafter referred to as the "appeal"), then the
application will be deemed denied unless AMBANC
promptly and diligently prepares and files such appeal
and continues the appellate process for purposes of
obtaining the necessary approval.
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL. If
this Agreement and consummation of the Holding Company
Merger is not approved by the shareholders of Robinson
at the Shareholders' Meeting, then either party may
terminate this Agreement by giving written notice
thereof to the other party.
SECTION 7.07. LAPSE OF TIME. If the Closing Date
does not occur on or prior to November 30, 1995, then
this Agreement may be terminated by either party by
giving written notice thereof to the other party.
SECTION 7.08. PRICE OF AMBANC STOCK. Robinson
may terminate this Agreement if the weighted average of
the prices of all actual trades of AMBANC Common, as
<PAGE>
<PAGE> A-67
reported on the NASDAQ Small Cap Market System for the
twenty (20) trading days during which actual trades
were made ending on the fifth (5th) trading day prior
to the Closing Date, shall be less than $29.00 per
share. AMBANC may terminate this Agreement if the
weighted average of the prices of all actual trades of
AMBANC Common, as reported on the NASDAQ Small Cap
Market System for the twenty (20) trading days during
which actual trades were made ending on the fifth (5th)
day prior to the Closing Date, shall be greater than
$35.00 per share. Notwithstanding anything herein to
the contrary, AMBANC may not terminate this Agreement
pursuant to the immediately preceding sentence if the
price of AMBANC Common, as calculated pursuant to the
immediately preceding sentence, has increased to a
price of greater than $35.00 per share as the result of
the public announcement of an unrelated third party's
intention to acquire AMBANC.
ARTICLE EIGHT
THE CLOSING OF THE BANK MERGER AND HOLDING COMPANY
MERGER
SECTION 8.01. THE CLOSING. The closing of the
Bank Merger and the Holding Company Merger (the
"Closing') shall take place at the corporate office of
Robinson at 10:00 A.M. Central Standard Time on the
<PAGE>
<PAGE> A-68
Closing Date described in Section 8.02 of this
Agreement.
SECTION 8.02. THE CLOSING DATE. The Closing
shall take place on the first business day of the month
following the month during which each of the conditions
in Sections 6.01(d) and 6.02(d) is satisfied or waived
by the appropriate party or on such later date as
Robinson and AMBANC may agree (the "Closing Date").
The Bank Merger shall become effective at the time
specified in the certificate to be issued by the Office
of the Comptroller of the Currency approving the Bank
Merger. The Holding Company Merger shall be effective
upon the later to occur of (i) the filing of the Merger
Agreement in the Office of the Indiana Secretary of
State, or (ii) the filing of the Merger Agreement in
the Office of the Illinois Secretary of State (the
"Effective Time"), which the parties shall cause to
occur after the effectiveness of the Bank Merger and on
the Closing Date.
SECTION 8.03. ACTIONS AT CLOSING.
(a) At the Closing, Robinson shall deliver to
AMBANC:
(i) certified copies of the Articles of
Incorporation and Bylaws of Robinson and the
Charter and the Bylaws of The First National Bank
in Robinson, as amended;
<PAGE>
<PAGE> A-69
(ii) a certificate or certificates signed by
the Chief Executive Officer of Robinson stating,
to the best of his knowledge and belief, after due
inquiry, that (A) each of the representations and
warranties contained in Article Two hereof is true
and correct in all material respects at the time
of the Closing with the same force and effect as
if such representations and warranties had been
made at Closing, and (B) Robinson has performed
and complied in all material respects, unless
waived by AMBANC, with all of its obligations and
agreements required to be performed hereunder
prior to the Closing Date;
(iii) certified copies of the resolutions
of Robinson's Board of Directors and shareholders,
approving and authorizing the execution of this
Agreement, the Merger Agreement, and authorizing
the consummation of the Mergers;
(iv) certified copies of the resolutions of
First National's Board of Directors and
shareholder, approving and authorizing the
execution of this Agreement and authorizing the
consummation of the Bank Merger;
(v) the legal opinion of Hinshaw &
Culbertson, counsel for Robinson, in the form
attached hereto as Exhibit 8.07(a);
<PAGE>
<PAGE> A-70
(b) At the Closing, AMBANC shall deliver to
Robinson:
(i) certified copies of the Articles of
Incorporation/Charters and Bylaws of AMBANC and
each of its subsidiaries, as amended;
(ii) a Certificate signed by the Chief
Executive Officer of AMBANC stating, to the best
of his knowledge and belief, after due inquiry,
that (A) each of the representations and
warranties contained in Article Three is true and
correct in all material respects at the time of
the Closing with the same force and effect as if
such representations and warranties had been made
at Closing and (B) AMBANC has performed and
complied in all material respects, unless waived
by Robinson, with all of its obligations and
agreements required to be performed hereunder
prior to the Closing Date;
(iii) certified copies of the resolutions of
AMBANC's Board of Directors authorizing the
execution of this Agreement, the Merger Agreement,
and the consummation of the Mergers;
(iv) certified copies of the resolutions of
Farmer's Board of Directors authorizing the
execution of this Agreement and the consummation
of the Bank Merger;
<PAGE>
<PAGE> A-71
(v) certified copies of the resolutions of
FRB Corp.'s Board of Directors and shareholder, as
required for valid approval of the execution of
the Merger Agreement and the consummation of the
Holding Company Merger; and
(vi) the legal opinion of Leagre & Barnes,
counsel for AMBANC, in the form attached hereto as
Exhibit 8.07(b).
(c) At the Closing, the parties shall execute
and/or deliver to one another such other documents and
instruments and take such actions as shall be necessary
or appropriate to consummate the Mergers.
ARTICLE NINE
GENERAL PROVISIONS
SECTION 9.01. CONFIDENTIAL INFORMATION. The
parties acknowledge the confidential and proprietary
nature of "Information" (as hereinafter described)
which has heretofore been exchanged and which will be
received from each other hereunder and agree to hold
and keep the same confidential. Such Information will
include any and all financial, technical, commercial,
marketing, customer or other information concerning the
business, operations and affairs of a party that may be
provided to the other, irrespective of the form of the
communications, by such party's employees or agents.
<PAGE>
<PAGE> A-72
Such Information shall not include information which is
or becomes generally available to the public other than
as a result of a disclosure by a party or its
representatives in violation of this Agreement. The
parties agree that the Information will be used solely
for the purposes contemplated by this Agreement and
that such Information will not be disclosed to any
person other than employees and agents of a party who
are directly involved in evaluating the transaction
contemplated herein. The Information shall not be used
in any way detrimental to a party, including use
directly or indirectly in the conduct of the party's
business or any business or enterprise in which such
party may have an interest, now or in the future, and
whether or not now in competition with such other
party.
SECTION 9.02. RETURN OF DOCUMENTS. Upon
termination of this Agreement without the Holding
Company Merger becoming effective, each party shall
deliver to the other originals and all copies of all
Information made available to such party and will not
retain any copies, extracts or other reproductions in
whole or in part of such Information.
SECTION 9.03. LIABILITIES. In the event that
this Agreement is terminated or the Bank Merger or the
Holding Company Merger is abandoned pursuant to the
<PAGE>
<PAGE> A-73
provisions of Article VII hereof, no party hereto shall
have any liability to any other party for costs,
expenses, damages or otherwise; provided, however,
that, notwithstanding the foregoing, in the event that
this Agreement is terminated pursuant to Section 7.02
hereof on account of a knowing breach of any of the
representations and warranties set forth herein or any
willful or deliberate breach of the agreements or
covenants set forth herein, then the terminating party
shall be entitled to recover appropriate damages from
the other party; provided, further that, in addition to
the foregoing, if this Agreement is terminated by
Robinson because of the knowing breach by AMBANC of any
of the representations and warranties set forth herein
or any willful or deliberate breach by AMBANC of any of
the agreements or covenants set forth herein, then
AMBANC will pay Robinson one-half of the cost of any
Phase One environmental reports that were effected
pursuant to Section 4.05 (xiii) or Section 4.05.
SECTION 9.04. NOTICES. Any notice or other
communication hereunder shall be in writing and shall
be deemed to have been given or made (a) on the date of
delivery, in the case of hand delivery, or (b) three
(3) business days after deposit in the United States
Registered or Certified Mail, with mailing receipt
postmarked by the Postal Service to show date of
mailing, postage prepaid, (c) on the next business day
after deposit with a reputable overnight carrier, or<PAGE>
<PAGE> A-74
(d) upon actual receipt if transmitted during business
hours by fax (but only if receipt of a legible copy of
such transmission is confirmed by the recipient);
addressed (in any case) as follows:
(a) If to AMBANC:
AMBANC Corp.
302 Main Street
Box 556
Vincennes, Indiana 47591
Attn: Robert G. Watson, Chairman of the
Board
FAX: (812) 885-6403
with a copy to:
Leagre & Barnes
9100 Keystone Crossing
Suite 800
P. O. Box 40609
Indianapolis, Indiana 46240-0609
Attn: John R. Zerkle
FAX: (317) 846-7900
and
(b) If to Robinson:
First Robinson Bancorp
300 West Main Street
Robinson, Illinois 62454
Attn: David L. Musgrave, President
FAX: (618) 546-5282
with a copy to:
Hinshaw & Culbertson
222 North LaSalle Street
Suite 300
Chicago, Illinois 60601-1081
Attn: Thomas B. Hart
Timothy M. Sullivan
FAX: (312) 704-3001
or to such other address as any party may from time to
time designate by notice to the other.
<PAGE>
<PAGE> A-75
SECTION 9.05. NONSURVIVAL OF REPRESENTATIONS AND
AGREEMENTS. (a) Except as specifically provided below,
no representation, warranty, agreement, or covenant
contained in this Agreement shall survive (and no
claims for the breach or nonperformance thereof may be
brought after) the Effective Time, except those matters
addressed in Sections 5.05, 5.06, and 5.07 and the
provisions in the Merger Agreement attached hereto
regarding the issuance of the AMBANC Common to the
shareholders of Robinson), and (b) no representation,
warranty, agreement, or covenant contained in this
Agreement shall survive (and no claims for the breach
or nonperformance thereof may be brought after) the
termination of this Agreement pursuant to Article Seven
hereof, except those matters addressed in Sections
9.01, 9.02 and 9.03 hereof.
SECTION 9.06. ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement between the parties
and supersedes and cancels any and all prior
discussions, negotiations, undertakings and agreements
between the parties relating to the subject matter
hereof.
SECTION 9.07. HEADINGS AND CAPTIONS. The
captions of Articles, Sections and Subsections hereof
are for convenience only and shall not control or
affect the meaning or construction of any of the
provisions of this Agreement.<PAGE>
<PAGE> A-76
SECTION 9.08. WAIVER, AMENDMENT OR MODIFICATION.
The conditions of this Agreement which may be waived
may only be waived by written notice to the other party
waiving such condition. The failure of any party at
any time or times to require performance of any
provision hereof shall in no manner affect the right at
later time to enforce the same. This Agreement may not
be amended or modified except by a written document
duly executed by the parties hereto.
SECTION 9.09. RULES OF CONSTRUCTION. Unless the
context otherwise requires (a) a term used herein has
the meaning assigned to it, and (b) an accounting term
not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting
principles.
SECTION 9.10. COUNTERPARTS. This Agreement may
be executed in two or more counterparts, each of which
shall be deemed an original and all of which shall be
deemed one and the same instrument.
SECTION 9.11. SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns. There shall be no third party
beneficiaries hereof.
SECTION 9.12. GOVERNING LAW; ASSIGNMENT. This
Agreement shall be governed by the laws of the State of<PAGE>
<PAGE> A-77
Indiana. This Agreement may not be assigned by either
of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first
above written.
AMBANC CORP.
By /S/ Robert G. Watson
Robert G. Watson
Chairman of the Board
FIRST ROBINSON BANCORP
By /S/ David L. Musgrave
David L. Musgrave
President
FRB CORP.
By /S/ Robert G. Watson
Robert G. Watson
President
THE FIRST NATIONAL BANK
IN ROBINSON
By /S/ David L. Musgrave
David L. Musgrave
President
FARMERS' STATE BANK OF
PALESTINE
By /S/ Judith K. Adams
Judith K. Adams
President<PAGE>
<PAGE> A-78
Appendix A to Agreement and
Plan of Merger dated as of
June 19, 1995
MERGER AGREEMENT
AMONG
FIRST ROBINSON BANCORP
(AN ILLINOIS CORPORATION)
AND
FRB CORP.
(AN INDIANA CORPORATION)
AND JOINED IN BY
AMBANC CORP.
(AN INDIANA CORPORATION)
June 19, 1995<PAGE>
<PAGE> A-79
THIS MERGER AGREEMENT made and entered into as of
June 19, 1995, between First Robinson Bancorp, an
Illinois corporation located at 300 West Main Street,
Robinson, Crawford County, Illinois 62454 ("Robinson"),
and FRB Corp., an Indiana corporation located at 302
Main Street, Vincennes, Knox County, Indiana 47591, and
joined by AMBANC Corp., an Indiana corporation
("AMBANC"),
W I T N E S S E T H:
WHEREAS, FRB Corp. is a wholly owned subsidiary of
AMBANC; and
WHEREAS, Robinson, AMBANC and FRB Corp. deem it
advisable for their benefit respectively, and for the
benefit of their respective shareholders, for Robinson
to merge with and into FRB Corp. pursuant to this
Merger Agreement in accordance with the Acts (as
defined in Section 1.01); and
WHEREAS, the Boards of Directors of Robinson and
AMBANC have approved an Agreement and Plan of Merger
that was executed and delivered as of June 19, 1994
between them (the "Agreement and Plan of Merger");
NOW, THEREFORE, the parties hereby agree as
follows:
ARTICLE ONE
THE HOLDING COMPANY MERGER
SECTION 1.01. THE HOLDING COMPANY MERGER.
Pursuant to the terms and provisions of this Merger
Agreement and the Illinois Bank Holding Company Act of
1957, the Illinois Business Corporation Act of 1993
("Illinois Law"), and the Indiana Business Corporation
<PAGE> A-80
Law ("Indiana Law") (referred to herein collectively as
the "Acts"), Robinson shall merge with and into FRB
Corp. (the "Holding Company Merger"). The Holding
Company Merger shall be effective upon the later to
occur of (i) the filing of this Merger Agreement in the
Office of the Indiana Secretary of State, or (ii) the
filing of this Merger Agreement in the Office of the
Illinois Secretary of State (the "Effective Time").
SECTION 1.02. MERGING CORPORATION. Robinson
shall be the merging corporation under the Holding
Company Merger and its corporate identity and
existence, separate and apart from FRB Corp., shall
cease on consummation of the Holding Company Merger.
SECTION 1.03. SURVIVING CORPORATION. FRB Corp.
shall be the surviving corporation in the Holding
Company Merger and the Articles of Incorporation and
Bylaws of FRB Corp. in effect prior to the Holding
Company Merger shall be the Articles of Incorporation
and Bylaws of the Surviving Corporation.
ARTICLE TWO
TERMS OF THE HOLDING COMPANY MERGER
AND CONVERSION OF SHARES
SECTION 2.01. EFFECT OF THE HOLDING COMPANY
MERGER. The Holding Company Merger shall have all of
the effects provided by the Acts.
SECTION 2.02. CONVERSION OF SHARES.
(a) At the Effective Time, each share of common
stock, no par value, of Robinson (the "Robinson
Common") issued and outstanding immediately prior to
the Effective Time, other than shares the holders of
<PAGE> A-81
which have duly exercised and perfected their
dissenters' rights under the Acts, by virtue of the
Holding Company Merger and without any action on the
part of the holders thereof, shall be converted into
the right to receive 5.3398 shares of AMBANC Common
Stock, $10.00 par value per share (the "AMBANC Common),
subject to Section 2.03 regarding the payment of cash
in lieu of fractional shares (the "Merger
Consideration").
(b) At the Effective Time, each holder of any
certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of
Robinson Common (the "Certificates") shall thereafter
cease to have any rights with respect to such shares,
except the right of such holders to receive, without
interest, the Merger Consideration upon the surrender
of such Certificate or Certificates in accordance with
Section 2.04.
(c) If between the date of the Agreement and Plan
of Merger and the Effective Time a share of AMBANC
Common shall be changed into a different number of
shares of AMBANC Common or a different class of shares
by reason of any reclassification, recapitalization or
split-up or if a stock dividend thereon shall be
declared with a record date within such period, then
the number of shares of AMBANC Common into which a
share of Robinson Common shall be converted pursuant to
subsection (a) above shall be appropriately and
proportionately adjusted so that each shareholder of
Robinson shall be entitled to receive such number of
shares of AMBANC Common as such shareholder would have
received pursuant to such reclassification,
recapitalization, or split up or as a result of such
stock dividend had the record date therefor been
<PAGE> A-82
immediately following the Effective Time of the Holding
Company Merger.
(d) If any holders of Robinson Common dissent
from the Holding Company Merger and demand appraisal of
their shares under Illinois Law, any issued and
outstanding shares of Robinson Common held by such
dissenting holders shall not be converted as described
in this Section 2.02 but shall from and after the
Effective Time represent only the right to receive such
consideration as may be determined to be due to such
dissenting holder pursuant to Illinois Law; provided,
however, that each share of Robinson Common outstanding
immediately prior to the Effective Time and held by a
dissenting holder who shall, after the Effective Time,
withdraw his or her demand for appraisal or lose his or
her right of appraisal shall have only such rights
provided under the Illinois Law.
SECTION 2.03. FRACTIONAL SHARES. No fractional
shares of AMBANC Common shall be issued and, in lieu
thereof, holders of shares of Robinson Common who would
otherwise be entitled to a fractional share interest
(after taking into account all shares of Robinson
Common held by such holder) shall be paid an amount in
cash equal to the product of such fractional share
interest multiplied by $32.00.
SECTION 2.04. EXCHANGE PROCEDURES; SURRENDER OF
CERTIFICATES.
(a) Bank One, N.A., Indianapolis, shall act as
Exchange Agent in the Holding Company Merger (the
"Exchange Agent"). Prior to the Effective Time, AMBANC
shall deliver to Robinson for its review a copy of any
agreement or agreements
<PAGE> A-83
pursuant to which the Exchange Agent agrees to serve as
such.
(b) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each
record holder of any Certificate or Certificates whose
shares were converted into the right to receive the
Merger Consideration a letter of transmittal (which
shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such
other provisions as AMBANC may reasonably specify)
(each such letter, the "Merger Letter of Transmittal")
and instructions for use in effecting the surrender of
the Certificates in exchange for the Merger
Consideration. As soon as reasonably practical after
surrender to the Exchange Agent of a Certificate,
together with a Merger Letter of Transmittal duly
executed and any other required documents, the Exchange
Agent shall transmit to the holder of such Certificate
the Merger Consideration. No interest on the Merger
Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit
of holders of Certificates. If the Merger Consideration
is to be issued to a person other than a person in
whose name a surrendered Certificate is registered, it
shall be a condition of issuance that the surrendered
Certificate shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting
such issuance shall pay to the Exchange Agent any
required transfer or other taxes or establish to the
satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. AMBANC reserves the
right in all cases involving more than twenty-five (25)
shares of Robinson Common to require that a surety bond
<PAGE> A-84
on terms and in an amount satisfactory to AMBANC be
provided to AMBANC at the expense of the Robinson
shareholder in the event that such shareholder claims
loss of a Certificate for Robinson Common and requests
that AMBANC waive the requirement for surrender of such
Certificate.
(c) No dividends that are otherwise payable on
shares of AMBANC Common constituting the Merger
Consideration shall be paid to persons entitled to
receive such shares of AMBANC Common until such persons
surrender their Certificates. Upon such surrender,
there shall be paid to the person in whose name the
shares of AMBANC Common shall be issued any dividends
which shall have become payable with respect to such
shares of AMBANC Common (without interest and less the
amount of taxes, if any, which may have been imposed
thereon) between the Effective Time and the time of
such surrender.
ARTICLE THREE
AMENDMENT; TERMINATION; ASSIGNMENT
SECTION 3.01. AMENDMENT. At any time prior to
the Effective Time, the parties to this Agreement by
mutual written agreement authorized by their respective
Boards of Directors (and whether before or after the
shareholders of FRB and Robinson have approved and
adopted this Agreement) may amend this Agreement;
provided, however, that if the shareholders of FRB and
Robinson have approved and adopted this Agreement, any
such amendment shall not have a material adverse effect
on the shareholders of Robinson.
SECTION 3.02. TERMINATION. This Merger Agreement
may be terminated by the parties hereto prior to the
<PAGE> A-85
Effective Time under the circumstances provided in, and
strictly in accordance with, the provisions of the
Agreement and Plan of Merger.
SECTION 3.03. SUCCESSORS AND ASSIGNS. This
Merger Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted
assigns, but none of the provisions hereof shall inure
to the benefit of any other person, firm, or
corporation whomsoever. Neither this Merger Agreement
nor any of the rights, interests, or obligations
hereunder shall be assigned or transferred by operation
of law or otherwise by either of the parties hereto
without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have
executed this Merger Agreement as of the day and year
first above written.
<PAGE>
<PAGE> A-86
FIRST ROBINSON BANCORP
By /S/ David L. Musgrave
David L. Musgrave,
President
Attest
FRB CORP.
By /S/ Robert G. Watson
Robert G. Watson,
President
Attest
AMBANC Corp. hereby joins in the foregoing Merger
Agreement and understands that it will be bound
thereby.
AMBANC CORP.
By /S/ Robert G. Watson
Robert G. Watson,
President
Attest
<PAGE>
<PAGE> A-87
EXHIBIT 8.07(a)
LEGAL OPINION OF HINSHAW & CULBERTSON
<PAGE>
<PAGE> A-88
[HINSHAW & CULBERTSON LETTERHEAD]
, 1995
AMBANC Corp.
302 Main Street
Vincennes, Indiana 47591
Gentlemen:
We have acted as counsel for First Robinson
Bancorp, an Illinois corporation ("Robinson") and The
First National Bank in Robinson, a national banking
association ("First National"), in connection with the
Amended Agreement of Merger and Plan of Reorganization
dated June 19, 1995 (the "Agreement of Merger"), among
Robinson, AMBANC Corp., an Indiana corporation
("AMBANC"), FRB Corp., an Indiana corporation, and
Farmers State Bank of Palestine, an Illinois state-
chartered commercial bank, and the Merger Agreement
dated June 19, 1995 (the "Merger Agreement"), between
Robinson and FRB Corp., and joined in by AMBANC (the
Agreement of Merger and the Merger Agreement are
referred to collectively herein as the "Agreements").
This opinion is being delivered to you pursuant to
Section 1.07(a) of the Agreement of Merger. Terms used
herein that are defined in the Agreements shall have
the meaning set forth therein unless otherwise defined
herein.
In connection with this opinion, we have examined
the Agreements, the Articles of Incorporation and
Bylaws of Robinson, the Charter and Bylaws of The First
National Bank in Robinson ("First National"), officers'
certificates, and such other corporate documents and
records of Robinson and First National and public
documents and records as we have deemed necessary or
appropriate for this opinion. As to questions of fact
material to our opinion, we have relied upon
representations of (a) officers of Robinson and First
National, and (b) public officials, none of which
representations has been independently verified by us.
In our examination, we have assumed the genuineness of
all signatures, the legal capacity of natural persons,
the authenticity of all documents submitted to us as
originals and conformity to the original documents of
all documents submitted to us as certified or
photostatic copies, the authenticity of the originals
of the latter documents, and the due authorization,
execution and delivery of all documents by parties
other than Robinson and First National.
<PAGE> A-89
Based solely on the foregoing and subject to the
assumptions, limitations and qualifications set forth
herein, we are of the opinion that:
1. Robinson is a corporation duly incorporated
and in good standing under the laws of the State of
Illinois, and First National is a national banking
association duly organized and in good standing under
the laws of the United States of America. Robinson and
First National each have all requisite corporate power
and authority and all licenses, permits, and
authorizations necessary to own and operate its
properties and assets, to incur all of its liabilities,
and to carry on its business as it now is being
conducted. Robinson and First National have all
requisite corporate power and authority to enter into
the Agreements and to consummate the transactions
contemplated by the Agreements.
2. To the best of our knowledge after due
inquiry, Robinson holds all of the issued and
outstanding shares of capital stock of First National
free and clear of any claims, liens, pledges and other
encumbrances.
3. All corporate acts and other proceedings
required to be taken by Robinson and First National to
authorize the execution, delivery and performance of
the Agreements have been duly taken. The Agreements
have been duly executed and delivered by Robinson and
First National and constitute legal, valid, and binding
obligations of Robinson and First National enforceable
against Robinson and First National in accordance with
their terms, subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium, or similar laws affecting the
enforceability of creditors' rights generally from time
to time in effect and equitable principles relating to
the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
4. To the best of our knowledge after due
inquiry, neither the execution and the delivery by
Robinson and First National of the Agreements nor the
consummation of the transaction contemplated by the
Agreement will constitute a default under or a material
violation of any provision of, nor will the
consummation of the transaction contemplated by the
Agreement afford any party a right to accelerate any
indebtedness under, the Articles of Incorporation or
Bylaws of Robinson, the Charter or Bylaws of First
National, any material promissory note, indenture or
other evidence of indebtedness or security therefor, or
any material lease, contract, or other commitment or
agreement to which Robinson or First National is a
<PAGE> A-90
party or by which either Robinson or First National or
its property is bound, any statute, regulation, or
rules, or any judgment, order, or decree against
Robinson or First National.
5. Except as set forth in the Agreements or the
Disclosure Schedule and to the best of our knowledge
after due inquiry, no consent, approval, order or
authorization of, or registration, declaration or
filing with or notice to any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, or any other
governmental entity or entities is required to be
obtained or made by Robinson or First National in
connection with the execution and delivery of the
Agreements or the consummation by Robinson or First
National of the transaction contemplated by the
Agreement.
6. Robinson's authorized capital stock consists
of 240,000 shares of common stock, no par value per
share (the "Robinson Common"). To the best of our
knowledge after due inquiry, 119,200 of such shares
are issued and outstanding, and 800 shares of such
shares are being held by Robinson as Treasury stock.
To the best of our knowledge, none of the shares of
Robinson Common has been issued in violation of the
preemptive or subscription rights of any person. To
the best of our knowledge after due inquiry, there are
no outstanding options, warrants, rights to subscribe
for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into
or exchangeable for, shares of the capital stock of
Robinson or contracts, commitments, understandings or
arrangements by which Robinson is or may be obligated
to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any
additional shares of its capital stock. To the best of
our knowledge, Robinson has no obligation, contingent
or otherwise, to reacquire any shares of Robinson
Common.
7. First National's authorized capital stock
consists of 60,000 shares of common stock, $10.00 par
value per share (the "First National Common"). To the
best of our knowledge after due inquiry, all 60,000 of
such shares are issued and outstanding. To the best of
our knowledge, none of the shares of First National
Common has been issued in violation of the preemptive
or subscription rights of any person. To the best of
our knowledge after due inquiry, there are no
outstanding options, warrants, rights to subscribe for,
calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into
or exchangeable for, shares of the capital stock of
<PAGE> A-91
First National or contracts, commitments,
understandings or arrangements by which First National
is or may be obligated to issue additional shares of
its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its
capital stock. To the best of our knowledge, First
National has no obligation, contingent or otherwise, to
reacquire any shares of First National Common.
8. Except as disclosed in the Disclosure Schedule
and to the best of our knowledge after due inquiry,
there is no material litigation, claim or other
proceeding pending or threatened before any judicial,
administrative or regulatory agency or tribunal against
Robinson or First National, or to which the property of
Robinson or First National are subject, which can
reasonably be expected to result in any material
adverse change in the financial condition, operations,
or business of Robinson and First National taken as a
whole. We have not made any particular investigation
with respect to the subject matter of this paragraph of
any court, agency or other governmental records and
have relied upon certification of officers of Robinson
and First National verifying certain factual
information therein.
The foregoing opinions are based on and are
limited to the laws of the State of Illinois, and the
laws of the United States of America, and we express no
opinion with respect to the laws of any other
jurisdiction.
This opinion is solely for the benefit of the
addressee hereof in connection with the closing of the
transactions contemplated by the Agreements, and no
other person or entity may rely upon this opinion
without the prior, express written consent of this
firm. This opinion is based on our knowledge of the
law and facts as of the date hereof, and we assume no
duty to communicate with you with respect to any matter
that comes to our attention hereafter.
Very truly yours,
Hinshaw & Culbertson<PAGE>
<PAGE> A-92
EXHIBIT 8.07(b)
LEGAL OPINION OF LEAGRE & BARNES
<PAGE>
<PAGE> A-93
[LEAGRE & BARNES LETTERHEAD]
, 1995
First Robinson Bancorp
300 West Main Street
Robinson, Illinois 62454
Gentlemen:
We have acted as counsel for AMBANC Corp., an
Indiana corporation ("AMBANC"), and Farmers' State Bank
of Palestine, an Illinois state-chartered commercial
bank ("Farmers'"), in connection with the Agreement of
Merger and Plan of Reorganization dated June 19, 1995
(the "Agreement of Merger"), among First Robinson
Bancorp, an Illinois corporation ("Robinson"), AMBANC,
FRB Corp., an Indiana corporation, The First National
Bank in Robinson, a national banking association, and
Farmers, and the Merger Agreement dated June 19, 1995
("the Merger Agreement") between Robinson and FRB Corp.
and joined in by AMBANC (the Agreement of Merger and
the Merger Agreement are referred to collectively
herein as the "Agreements"). This opinion is being
delivered to you pursuant to Section 1.07(b) of the
Agreement of Merger. Terms used herein that are
defined in the Agreements shall have the meaning set
forth therein unless otherwise defined herein.
In connection with this opinion, we have examined
and relied upon the Agreements, the Articles of
Incorporation and Bylaws of AMBANC and FRB Corp. and
the Charter and Bylaws of Farmers', officers'
certificates, and such other corporate documents and
records of AMBANC, FRB Corp., and Farmers' and public
documents and records as we have deemed necessary or
appropriate for this opinion. As to questions of fact
material to our opinion, we have relied upon
representations of offices of AMBANC and Farmers', and
public officials, none of which representations have
been independently verified by us. In our examination,
we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of
all documents submitted to us as originals and
conformity to the original documents of all documents
submitted to us as certified or photostatic copies, the
authenticity of the originals of the latter documents,
and the due authorization, execution and delivery of
all documents by parties other than AMBANC, FRB Corp.,
and Farmers'.
<PAGE> A-94
Based solely on the foregoing and subject to the
assumptions, limitations and qualifications set forth
herein, we are of the opinion that:
1. AMBANC is a corporation duly incorporated and
validly existing under the laws of the State of
Indiana, FRB Corp. is a corporation duly incorporated
and in good standing under the laws of the State of
Indiana, and Farmers' is a commercial banking
corporation duly incorporated and validly existing
under the laws of the State of Illinois. AMBANC, FRB
Corp. and Farmers' each has all requisite corporate
power and authority and all licenses, permits, and
authorizations necessary to own and operate its
properties and assets, to incur all of its liabilities,
and to carry on its business as it is now being
conducted. AMBANC, FRB Corp. and Farmers' each has all
requisite corporate power and authority to enter into
the Agreements, to merge Farmers' with First National
and to merge FRB Corp. with Robinson in accordance with
the terms of the Agreements, and to consummate the
transactions contemplated by the Agreements.
2. To the best of our knowledge after due
inquiry, AMBANC holds all of the issued and outstanding
shares of capital stock of FRB Corp., and Farmers' free
and clear of any claims, liens, pledges and other
encumbrances.
3. All corporate acts and other proceedings
required to be taken by AMBANC, FRB Corp. and Farmers'
to authorize the execution, delivery and performance of
the Agreements have been duly taken. The Agreements
have been duly executed and delivered by AMBANC, FRB
Corp. and Farmers' and constitute legal, valid, and
binding obligations of each of AMBANC, FRB Corp. and
Farmers' enforceable against each in accordance with
their terms, subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium, or similar laws affecting the
enforceability of creditors' rights generally from time
to time in effect and equitable principles relating to
the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
4. Each of AMBANC's subsidiaries is duly
organized and validly existing under the laws of the
jurisdiction of its incorporation and has the corporate
power to own its respective properties and assets, to
incur its respective liabilities and to carry on its
respective business as now being conducted.
5. To the best of our knowledge after due
inquiry, neither the execution and the delivery by
AMBANC, FRB Corp. or Farmers' of the Agreements nor the
<PAGE> A-95
consummation of the transaction contemplated by the
Agreements will constitute a default under or a
material violation of any provision of, nor will the
consummation of the transaction contemplated by the
Agreements afford any party a right to accelerate any
indebtedness under, the Articles of Incorporation or
Bylaws of AMBANC or FRB Corp., any material promissory
note, indenture or other evidence of indebtedness or
security therefor, or any material lease, contract, or
other commitment or agreement to which AMBANC, FRB
Corp., or Farmers' is a party or by which either
AMBANC, FRB Corp., or Farmers' or its property is
bound, any statute, regulation, or rules, or any
judgment, order, or decree against AMBANC, FRB Corp.,
or Farmers'.
6. Except as set forth in the Agreements and to
the best of our knowledge after due inquiry, no
consent, approval, order or authorization of, or
registration, declaration or filing with or notice to
any court, administrative agency, or commission or
other governmental authority or instrumentality,
domestic or foreign, or any other governmental entity
or entities is required to be obtained or made by
AMBANC, FRB Corp., or Farmers' in connection with the
execution and delivery of the Agreements or the
consummation by AMBANC, FRB Corp., or Farmers' of the
transaction contemplated by the Agreement.
7. AMBANC's authorized capital stock consists of
5,000,000 shares of common stock, $10 par value per
share ("AMBANC Common"), and 200,000 shares of
preferred stock, no par value. To the best of our
knowledge after due inquiry, shares of AMBANC
Common are issued and outstanding, and no shares of
preferred stock have been issued.
8. The shares of AMBANC Common that are to be
issued to the security holders of Robinson pursuant to
the Holding Company Merger have been duly authorized
and, when so issued in accordance with the terms of the
Agreements, will be validly issued and outstanding,
fully paid and nonassessable.
9. To the best of our knowledge after due
inquiry, there is no material litigation, claim or
other proceeding pending or threatened before any
judicial, administrative or regulatory agency or
tribunal against AMBANC or any of its subsidiaries, or
to which the property of AMBANC or any of its
subsidiaries is subject, which can reasonably be
expected to result in any material adverse change in
the financial condition, operations, or business of
AMBANC and its subsidiaries taken as a whole.
<PAGE> A-96
The foregoing opinions are based on and are
limited to the laws of the State of Indiana and
Illinois, and the laws of the United States of America,
and we express no opinion with regard to the laws of
any other jurisdiction.
This opinion is solely for the benefit of the
addressee hereof in connection with the closing of the
transactions contemplated by the Agreements, and no
person or entity may rely upon this opinion without the
prior, express written consent of this firm. This
opinion is based on our knowledge of the law and facts
as of the date hereof, and we assume no duty to
communicate with you with respect to any matter that
comes to our attention hereafter.
Very truly yours,
LEAGRE & BARNES<PAGE>
<PAGE> A-97
AGREEMENT OF DIRECTORS CONCERNING
AGREEMENT OF MERGER
Each of the undersigned, being all of the
Directors of First Robinson Bancorp ("Robinson"),
having voted as such Director for the approval and
adoption by Robinson of that certain Amended Agreement
of Merger and Plan of Reorganization among Robinson,
AMBANC Corp. ("AMBANC"), The First National Bank in
Robinson, FRB Corp., and Farmers' State Bank in
Palestine whereby AMBANC will acquire all of the
outstanding capital stock of Robinson in exchange for
common stock of AMBANC (the "Holding Company Merger"),
in consideration of the benefits to be derived from the
consummation of such Merger and in consideration of the
mutual agreements made herein, and in order to induce
AMBANC to execute and deliver the Agreement of Merger
and Plan of Reorganization to Robinson and to proceed
with the consummation of the Holding Company Merger and
to incur the expenses required in connection therewith,
hereby irrevocably covenants and agrees with one
another and with each of the parties to such Amended
Agreement of Merger and Plan of Reorganization that the
undersigned: (a) will support the consummation of the
Holding Company Merger and, subject to fiduciary
duties, will recommend the Holding Company Merger for
approval and adoption by the shareholders of Robinson;
(b) will vote all shares of common stock of Robinson
("FRB Common") now or hereafter beneficially owned by
him or her, in person or by proxy, at any meeting of
the shareholders of Robinson or adjournments thereof,
in favor of the approval and adoption of the Amended
Agreement of Merger and Plan of Reorganization; and
(c) until such time as the Holding Company Merger has
been consummated or the Amended Agreement and Plan of
Reorganization of Merger has been duly terminated in
accordance with the provisions thereof, will not
transfer any shares of FRB Common, or any right or
option with respect thereto or any interest therein,
without first obtaining from the transferee thereof and
furnishing to AMBANC a written agreement of such
transferee substantially to the effect of the
agreements herein made and in form and substance
acceptable to AMBANC.
The undersigned represents and warrants that he or
she (except to the extent indicated below) is the sole
record and beneficial owner of (and has sole rights to
vote and to dispose of) the number of shares of FRB
Common indicated beside his or her signature below.
<PAGE>
<PAGE> A-98
EXECUTED AND DELIVERED as of June 19, 1995.
/s/ Robert M. Berty (1,630 shares)
Robert M. Berty
/s/ Robert Bowen, Jr. (17,080 shares)
Robert Bowen, Jr.
/s/ Max V. Fulling (1,000 shares)
Max V. Fulling
/s/ Rebecca Allen Kaley (22,400 shares)
Rebecca Allen Kaley
/s/ Larry H. Lewis (930 shares)
Larry H. Lewis
/s/ David L. Musgrave (2,430 shares)
David L. Musgrave
/s/ Clark P. Pulliam (5,745 shares)
Clark P. Pulliam
/s/ G. William Rosborough (500 shares)
G. William Rosborough
/s/ Randy J. Schutte (1,000 shares)
Randy J. Schutte
/s/ Frank J. Weber (9,816 shares)
Frank J. Weber
/s/ Mark R. Weber (900 shares)
Mark R. Weber
<PAGE>
<PAGE> B-1
APPENDIX B
SECTION 11.70 OF THE
ILLINOIS BUSINESS CORPORATION LAW
5/11.70. PROCEDURE TO DISSENT
Section 11.70. Procedure to Dissent. (a) If the
corporate action giving rise to the right to dissent is
to be approved at a meeting of shareholders, the notice
of meeting shall inform the shareholders of their right
to dissent and the procedure to dissent. If, prior to
the meeting, the corporation furnishes to the
shareholders material information with respect to the
transaction that will objectively enable a shareholder
to vote on the transaction and to determine whether or
not to exercise dissenters' rights, a shareholder may
assert dissenters' rights only if the shareholder
delivers to the corporation before the vote is taken a
written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder
does not vote in favor of the proposed action.
(b) If the corporation action giving rise to the
right to dissent is not to be approved at a meeting of
shareholders, the notice to shareholders describing the
action taken under Section 11.30 or Section 7.10 shall
inform the shareholders of their right to dissent and
the procedure to dissent. If, prior to or concurrently
with the notice, the corporation furnishes to the
shareholders material information with respect to the
transaction that will objectively enable a shareholder
to determine whether or not to exercise dissenters'
rights, a shareholder may assert dissenter's rights
only if he or she delivers to the corporation within 30
days from the date of mailing the notice a written
demand for payment for his or her shares.
(c) Within 10 days after the date on which the
corporate action giving rise to the right to dissent is
effective or 30 days after the shareholder delivers to
the corporation the written demand for payment,
whichever is later, the corporation shall send each
shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the
corporation as to the estimated fair value of the
shares, the corporation's latest balance sheet as of
the end of a fiscal year ending not earlier than 16
months before the delivery of the statement, together
with the statement of income for that year and the
latest available interim financial statements, and
either a commitment to pay for the shares of the
dissenting shareholder at the estimated fair value
thereof upon transmittal to the corporation of the
certificate or certificates, or other evidence of<PAGE>
<PAGE> B-2
ownership, with respect to the shares, or instructions
to the dissenting shareholder to sell his or her shares
within 10 days after delivery of the corporation's
statement to the shareholder. The corporation may
instruct the shareholder to sell only if there is a
public market for the shares at which the shares may be
readily sold. If the shareholder does not sell within
that 10 day period after being so instructed by the
corporation, for purposes of this Section the
shareholder shall be deemed to have sold his or her
shares at the average closing price of the shares, if
listed on a national exchange, or the average of the
bid and asked priced with respect to the shares quoted
by a principal market maker, if not listed on a
national exchange, during that 10 day period.
(d) A shareholder who makes written demand for
payment under this Section retains all other rights of
a shareholder until those rights are cancelled or
modified by the consummation of the proposed corporate
action. Upon consummation of that action, the
corporation shall pay to each dissenter who transmits
to the corporation the certificate or other evidence of
ownership of the shares the amount the corporation
estimates to be the fair value of the shares, plus
accrued interest, accompanied by a written explanation
of how the interest was calculated.
(e) If the shareholder does not agree with the
opinion of the corporation as to the estimated fair
value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the
corporation's statement of value, shall notify the
corporation in writing of the shareholder's estimated
fair value and amount of interest due and demand
payment for the difference between the shareholder's
estimate of fair value and interest due and the amount
of the payment by the corporation or the proceeds of
sale by the shareholder, whichever is applicable
because of the procedure for which the corporation
opted pursuant to subsection (c).
(f) If, within 60 days from delivery to the
corporation of the shareholder notification of estimate
of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not
agreed in writing upon the fair value of the shares and
interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with
interest, or file a petition in the circuit court of
the county in which either the registered office or the
principal office of the corporation is located,
requesting the court to determine the fair value of the
shares and interest due. The corporation shall make
all dissenters, whether or not residents of this State,<PAGE>
<PAGE> B-3
whose demands remain unsettled parties to the
proceeding as an action against their shares and all
parties shall be served with a copy of the petition.
Nonresidents may be served by registered or certified
mail or by publication as provided by law. Failure of
the corporation to commence an action pursuant to this
Section shall not limit or affect the right of the
dissenting shareholders to otherwise commence an action
as permitted by law.
(g) The jurisdiction of the court in which the
proceeding is commenced under subsection (f) by a
corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive
evidence and recommend decision on the question of fair
value. The appraisers have the power described in the
order appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding
is entitled to judgment for the amount, if any, by
which the court finds that the fair value of his or her
shares, plus interest, exceeds the amount paid by the
corporation or the proceeds of sale by the shareholder,
whichever amount is applicable.
(i) The court, in a proceeding commenced under
subsection (f), shall determine all costs of the
proceeding, including the reasonable compensation and
expenses of the appraisers, if any, appointed by the
court under subsection (g), but shall exclude the fees
and expenses of counsel and experts for the respective
parties. If the fair value of the shares as determined
by the court materially exceeds the amount which the
corporation estimated to be the fair value of the
shares or if no estimate was made in accordance with
subsection (c), then all or any part of the costs may
be assessed against the corporation. If the amount
which any dissenter estimated to be the fair value of
the shares materially exceeds the fair value of the
shares as determined by the court, then all or any part
of the costs may be assessed against that dissenter.
The court may also assess the fees and expenses of
counsel and experts for the respective parties, in
amounts the court finds equitable, as follows:
(1) Against the corporation
and in favor of any or
all dissenters if the
court finds that the
corporation did not
substantially comply with
the requirements of
subsections (a), (b),
(c), (d), or (f).
<PAGE>
<PAGE> B-3
(2) Against either the
corporation or a
dissenter and in favor of
any other party if the
court finds that the
party against whom the
fees and expenses are
assessed acted
arbitrarily, vexatiously,
or not in good faith with
respect to the rights
provided by this Section.
If the court finds that the services of counsel
for any dissenter were of substantial benefit to other
dissenters similarly situated and that the fees for
those services should not be assessed against the
corporation, the court may award to that counsel
reasonable fees to be paid out of the amounts awarded
to the dissenters who are benefited. Except as
otherwise provided in this Section, the practice,
procedure, judgment and costs shall be governed by the
Code of Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with
respect to a dissenter's
shares, means the value
of the shares immediately
before the consummation
of the corporate action
to which the dissenter
objects excluding any
appreciation or
depreciation in
anticipation of the
corporate action, unless
exclusion would be
inequitable.
(2) "Interest" means interest
from the effective date
of the corporate action
until the date of
payment, at the average
rate currently paid by
the corporation on its
principal bank loans or,
if none, at a rate that
is fair and equitable
under all the
circumstances.
<PAGE>
<PAGE> C-1
[KEMPER SECURITIES, INC. LETTERHEAD]
DRAFT
July [ ], 1995
Board of Directors
First Robinson Bancorp
300 West Main Street
Robinson, Illinois 62454
Members of the Board:
We understand that First Robinson Bancorp, an
Illinois corporation ("Robinson"), and AMBANC Corp.
("AMBANC") have entered into an Agreement and Plan of
Merger dated October 11, 1994, as amended June 19, 1995
(the "Agreement"), pursuant to which Robinson will be
merged into FRB Corp., a wholly owned subsidiary of
AMBANC (the "Merger"). Immediately prior to, and as an
integral part of the Merger, Farmer's State Bank of
Palestine, a wholly owned subsidiary of AMBANC, will
merge with and into First National Bank in Robinson, a
wholly owned subsidiary of Robinson. In addition,
following the Merger, FRB Corp. will be merged into
AMBANC, with the result that First National Bank of
Robinson will become a wholly owned subsidiary of
AMBANC. Pursuant to the Merger, as more fully
described in the Agreement, each of the outstanding
shares of Robinson Common Stock (the "Robinson Shares")
will be exchanged for 5.3398 (the "Exchange Ratio")
shares of common stock of AMBANC.
You have requested our opinion as to whether the
Exchange Ratio in the Merger is fair, from a financial
point of view, to the holders of the Robinson Shares,
as of the date hereof.
Kemper Securities, Inc. ("Kemper Securities"), as
part of its investment banking services, is regularly
engaged in the valuation of businesses and their
securities in connection with merger and acquisition
transactions, public offerings, private placements,
recapitalizations, and other purposes. Kemper
Securities publishes Equity Roundup, a monthly review
of the economy and securities markets, selected
industries, and selected individual stocks. Our
research analysts publish regular reports on individual
banks, thrifts, and their holding companies, as well as
other financial institutions. Our firm makes principal
markets in approximately 150 financial institution
stocks, including banks, thrifts, and their holding
companies, and we have managed public offerings for
APPENDIX C<PAGE>
<PAGE> C-2
Board of Directors
First Robinson Bancorp
July [ ], 1995
Page 2
banks, thrifts, and their holding companies, as well as
other financial institutions. With particular regard
to our qualifications for rendering an opinion as to
the fairness, from a financial point of view, to
holders of the Robinson Shares of the Exchange Ratio in
the Merger, Kemper Securities has rendered fairness
opinions for many other significant capital
transactions involving financial institutions.
For the purposes of this fairness opinion, we
believe we are independent of Robinson and AMBANC.
Other than our service to Robinson in connection with
the Merger and fairness opinion given hereby, we have
provided no other professional services to either
Robinson or AMBANC.
In arriving at our opinion, we have, among other
things: (i) reviewed AMBANC's and Robinson's joint
Prospectus/Proxy Statement dated July [ ], 1995;
(ii) reviewed the Agreement; (iii) reviewed Robinson's
financial statements and certain internal management
reports and certain publicly available financial and
other data with respect to Robinson and AMBANC
including financial statements for recent years and
interim periods to date and certain other relevant
financial and operating data relating to AMBANC made
available to us from published sources; (iv) discussed
Robinson's history, operations, service areas,
asset/liability structure and quality, financial
condition and performance, and prospects, among other
factors, with members of Robinson's management;
(v) compared Robinson and AMBANC from a financial point
of view with certain other companies in the financial
services industry which we deemed relevant; (vi)
reviewed the reported price and trading activity for
Robinson Shares and AMBANC common stock;
(vii) reviewed the financial terms of certain recent
business combinations in the commercial banking
industry specifically; (viii) discussed the Merger and
the Agreement with Robinson's counsel; and
(ix) performed such other studies and analyses as we
considered appropriate. We have also taken into
account general economic, market, and financial
conditions as well as our experience in other
transactions, our knowledge of the commercial banking
industry, and our experience in securities valuation.
<PAGE>
<PAGE> C-3
Board of Directors
First Robinson Bancorp
July [ ], 1995
Page 2
In rendering this opinion, we have relied without
independent verification upon the accuracy and
completeness of the foregoing financial and other
information. We have also assumed that there has been
no material change in Robinson's or AMBANC's assets,
financial condition, results of operations, business,
or prospects since the date of the last financial
statements made available to us for Robinson or AMBANC,
respectively. In addition, we have not made an
independent evaluation, appraisal, or physical
inspection of the assets or individual properties of
Robinson or AMBANC, nor have we been furnished with
such appraisals. Further, our opinion is based on
economic, monetary, and market conditions existing as
of the date hereof.
We hereby consent to the inclusion of this opinion
as an exhibit to a proxy, information, registration, or
other such statement. Further, we consent to the use
of our firm's name and references to this opinion in
such information, proxy, registration, or other such
statement, with such uses and references being subject
to our prior approval.
Based upon and subject to the foregoing and such
other matters as we consider relevant, it is our
opinion as of the date hereof that the Exchange Ratio
in the Merger is fair, from a financial point of view,
to holders of the Robinson Shares.
Sincerely,
KEMPER SECURITIES, INC.
<PAGE>
<PAGE> D-1
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
Commission File Number: 0-10710
AMBANC CORP.
(exact name of registrant as specified in its charter)
INDIANA 35-1525227
(State or other jurisdiction (I.R.S. Employer ID No.)
of incorporation or
organization)
302 Main Street
P.O. Box 556
Vincennes, Indiana 47591-0556
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code (812) 885-6418
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:
2,372,555 common shares of stock were outstanding as of
August 10, 1995.
<PAGE>
<PAGE> D-2
AMBANC CORP.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
June 30, 1995 (unaudited) and
December 31, 1994
Consolidated Statements of Income
six months ended
June 30, 1995 and 1994(unaudited)
Consolidated Statements of Cash
Flows for six months ended
June 30, 1995 and 1994 (unaudited)
Notes to Consolidated Financial
Statements (unaudited)
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial
Condition
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K
Signatures
Exhibit Index
<PAGE>
<PAGE> D-3
<TABLE>
AMBANC CORP.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 15,784 $ 19,595
Federal funds sold 13,167 7,000
Total cash and cash equivalents 28,951 26,595
Interest bearing deposits in other banks 894 1,193
Securities available for sale at market 102,396 112,214
Securities held to maturity(market values of
$39,488 and $38,707 at June 30,
1995, and December 31, 1994) 39,092 39,695
Loans held for sale 5,874 2,664
Loans, net of unearned income 347,871 321,096
Allowance for loan losses (4,008) (3,911)
Loans, net 343,863 317,185
Premises, furniture and equipment, net 6,378 6,487
Accrued interest receivable and other assets 10,597 10,063
TOTAL ASSETS $ 538,045 $ 516,096
LIABILITIES
Noninterest bearing deposits $ 46,720 $ 51,838
Interest bearing deposits 426,352 403,396
Total deposits 473,072 455,234
Short-term borrowings 5,956 5,690
Long-term debt 2,643 3,189
Accrued interest payable and other liabilities 3,442 2,946
TOTAL LIABILITIES 485,113 467,059
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value, 200,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $10 par value, 5,000,000 shares
authorized, 2,372,555 and 2,372,172 shares
issued and outstanding at June 30, 1995,
and December 31, 1994 23,726 23,722
Retained earnings 30,082 28,277
Unrealized gain/(loss) on securities
available for sale (876) (2,962)
TOTAL SHAREHOLDERS' EQUITY 52,932 49,037
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 538,045 $ 516,096
</TABLE>
<PAGE>
<PAGE> D-4
<TABLE>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 15,152 $ 11,480 $ 7,899 $ 5,981
Interest and fees on loans
held for sale 115 428 73 150
Interest on securities
Taxable 3,137 3,666 1,538 1,804
Tax exempt 1,102 1,140 547 574
Other interest 169 145 103 45
TOTAL INTEREST INCOME 19,675 16,859 10,160 8,554
INTEREST EXPENSE
Interest on deposits 9,138 7,278 4,917 3,681
Interest on short-term borrowings 146 129 48 87
Interest on long-term debt 84 73 40 46
TOTAL INTEREST EXPENSE 9,368 7,480 5,005 3,814
NET INTEREST INCOME 10,307 9,379 5,155 4,740
Provision for loan losses 150 50 75 --
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,157 9,329 5,080 4,740
NONINTEREST INCOME
Income from fiduciary activities 185 192 84 72
Service charges on
deposit accounts 619 534 320 279
Gain/(loss) on securities 6 (3) 6 2
Other operating income 419 530 210 207
TOTAL NONINTEREST INCOME 1,229 1,253 620 560
NONINTEREST EXPENSE
Salaries and employees benefits 3,986 3,580 2,000 1,790
Occupancy expenses, net 420 423 207 223
Equipment expenses 436 400 226 204
Data processing expenses 181 227 91 117
FDIC insurance 523 508 267 255
Other operating expenses 1,844 1,892 880 920
TOTAL NONINTEREST EXPENSE 7,390 7,030 3,671 3,509
INCOME BEFORE INCOME TAXES 3,996 3,552 2,029 1,791
Taxes 1,204 1,044 647 519
NET INCOME $ 2,792 $ 2,508 $ 1,382 $ 1,272
EARNINGS PER COMMON SHARE(based on 2,372,542 and 2,369,784
average outstanding shares in 1995 and 1994)
Net income per share $ 1.18 $ 1.06 $ .58 $ .54
</TABLE>
<PAGE>
<PAGE> D-5
<TABLE>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except share data)
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,792 $ 2,508
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization and discount
accretion on securities 145 257
Depreciation 339 410
Provision for loan losses 150 50
(Gain)/loss on securities (6) 3
Proceeds from sales of loans held for sale 5,081 29,389
Loans held for sale made to customers,
net of payments collected (8,291) (16,513)
Accrued interest receivable
and other assets (534) (2,053)
Accrued interest payable
and other liabilities 2,582 (2,895)
Deferred loan fees net of costs (3) 6
NET CASH FROM OPERATING ACTIVITIES 2,255 11,162
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale 1,500 7,369
Proceeds from sales of securities
held to maturity -- --
Proceeds from maturities and calls of securities
available for sale 10,178 26,076
Proceeds from maturities and calls of securities
held to maturity 8,444 2,183
Purchases of securities available for sale (1,980) (23,775)
Purchases of securities held to maturity (7,860) (3,445)
Net change in interest bearing deposits
in other banks 299 (987)
Loans made to customers, net of
payments collected (29,224) (30,090)
Loans purchased (986) (1,690)
Proceeds from sales of loans 3,385 2,192
Property and equipment expenditures (230) (897)
NET CASH FROM INVESTING ACTIVITIES (16,474) (23,064)
</TABLE>
<PAGE>
<PAGE> D-6
<TABLE>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Dollar amounts in thousands, except share data)
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand deposits
and savings accounts (15,584) 527
Net change in certificates of deposit 33,422 (9,039)
Net change in short-term borrowings 266 3,269
Payments on long-term debt (597) 2,162
Proceeds on long-term debt 51 --
Issuance of stock for dividend reinvestment 12 --
Dividends paid (995) (771)
NET CASH FROM FINANCING ACTIVITIES 16,575 (3,852)
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,356 (15,754)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 26,595 32,510
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,951 $ 16,756
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period ended June 30:
Interest $ 8,881 $ 7,499
Income taxes 1,475 1,196
</TABLE>
<PAGE>
<PAGE> D-7
AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
ITEM 1.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated balance sheet as of June 30, 1995,
consolidated statements of income for the six month
periods ended June 30, 1995 and 1994, and the
consolidated statements of cash flows for the six month
periods ended June 30, 1995 and 1994, have been
prepared by the Corporation, without audit. In the
opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes
in cash flows at June 30, 1995, and all periods
presented, have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in
the Corporation's December 31, 1994, annual report to
shareholders. The results of operations for the period
ended June 30, 1995, are not necessarily indicative
of the operating results for the full year.
COMMITMENTS AND CONTINGENT LIABILITIES
Other than ordinary routine litigation incidental to the
business, there are no material pending legal proceedings
to which the Corporation or its subsidiaries are a party
or of which any of their property is the subject.
<PAGE>
<PAGE> D-8
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
ITEM 2.
RESULTS OF OPERATIONS
Net interest income is the principal source of the
Corporation's earnings and represents the difference
between interest income on loans and securities over
interest costs of deposits and borrowed funds. Income
from certain earning assets is exempt from federal income
tax and as customary in the banking industry, changes in
net interest income are analyzed on a fully tax equivalent
basis. Under this method, and throughout this discussion,
nontaxable income on loans and investments is adjusted to
an amount which represents the equivalent earnings if such
earnings were subject to federal tax. The marginal tax
rate used to restate nontaxable income was 34%.
<TABLE>
Six Months Ended
June 30, Increase
<CAPTION>
1995 1994 (Decrease)
<S> <C> <C> <C>
Interest income $ 19,675 $ 16,859 16.70 %
Adjusted for tax
exempt income 642 670 (4.18)
Tax equivalent
interest income 20,317 17,529 15.91
Interest expense 9,368 7,480 25.24
Net interest income $ 10,949 $ 10,049 8.96 %
</TABLE>
Net interest income increased $900 or 8.96% for the six
months ended June 30, 1995, compared to the six
months ended June 30, 1994. This $900 increase was a
combination of a $2,788 increase in interest income and a
$1,888 increase in interest expense. The $2,788 increase in
interest income was composed of an increase of $309 due to
increased volume of average interest earning assets and an
increase of $2,479 due to increased rates received on these
<PAGE>
<PAGE> D-9
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
interest earning assets. The $1,888 increase in interest expense
was a combination of an increase of $254 due to increased volume
of average interest bearing liabilities and an increase of
$1,634 due to rate increases on these interest bearing
liabilities.
The Corporation's average assets for the first six months of 1995
increased $11,561 or 2.27% to $521,894 from $510,333 for the same
period in 1994, but the percent of average earning assets to
total average assets decreased to 94.46% for the first six months
of 1995 from 95.13% for the first six months of 1994. This
decrease was in part due to 1995 average assets containing $1,034
of average goodwill associated with the deposits purchased (see
details on subsequent page). Net interest margin increased .31%
to 4.48% for the first six months of 1995 from 4.17% for the
first six months of 1994. This increase was due to the yields on
average earning assets increasing faster than the costs on
average interest bearing liabilities. The Corporation's yields
on loans and investments and costs of deposits, although not
completely determined by the prime rate, are influenced by
changes in the prime rate. The prime rate started at 8.50% in
1995 and increased to 9.00% in February, 1995, and averaged 8.91%
for the first six months of 1995. The prime rate for 1994
started at 6.00%, increased three times to an ending rate of
7.25%, and averaged 6.46% for the first six months of 1994. With
higher interest rates in 1995 and the fact that rates continued
to increase during the last half of 1994, the Corporation was
able to maintain a higher spread between interest received on
average interest earning assets and interest paid on average
interest bearing liabilities. The yield on average interest
earning assets increased to 8.31% for the first six months of
1995 from 7.28% for the first six months of 1994 for an increase
of 1.03%. The cost on average interest bearing liabilities
increased at a slower rate and was 4.46% for the first six months
of 1995 and 3.66% for the first six months of 1994 for an
increase of .80%. This leaves the interest spread which is the
mathematical difference between yields on average interest
earning assets and costs on average interest bearing liabilities
at 3.85% for the first six months of 1995 compared to 3.62% for
the first six months of 1994.
The provision for loan losses was $150 during the first six
months of 1995 compared to $50 during the first six months of
1994. The provision for loan losses was increased during 1995
because of increased loan volume and not due to loan credit
problems. The allowance for loan losses at June 30, 1995, was
$4,008 or 1.15% of total loans less unearned income as compared
to $3,911 or 1.22% of total loans less unearned income at
<PAGE>
<PAGE> D-10
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
December 31, 1994. During the first six months of 1995, loans
charged off were $191 and recoveries from previously written off
loans were $138, thus net charge offs for the first six months of
1995 were $53. The adequacy of the allowance for loan losses is
analyzed by management of each bank subsidiary based upon review
of identified loans with more than a normal degree of risk,
historical loan loss percentage by type of loan and present and
forecasted economic conditions. Management's analysis indicates
that the allowance for loan loss at June 30, 1995, is adequate to
cover potential losses on identified loans with credit problems
and historical losses on the remaining loan portfolio. The
following are ratios of the different types of problem loans as a
percent of total loans less unearned income at June 30, 1995, and
December 31, 1994:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
<S> <C> <C>
Nonaccrual loans .22% .18%
Loans past due 90 days .26% .20%
Performing restructured loans .04% .15%
OREO .12% .14%
</TABLE>
Effective January 1, 1995, the Corporation adopted Financial
Accounting Standard No. 114, (FAS 114) "Accounting by Creditors
for Impairment of a Loan," as amended by Financial Accounting
Standard No. 118, (FAS 118) "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures." These
statements require that impaired loans be measured based on the
present value of expected future cash flows discounted at the
loans' effective interest rates or at the fair value of the
underlying collateral and allow existing methods for recognizing
interest income. The effect of adopting FAS 114 and FAS 118 was
not material to the Financial Statements of the Corporation. At
June 30, 1995, the recorded balance of loans that were
considered to be impaired under FAS 114 was $2,848 of which $651
were on a nonaccrual basis. The average recorded balance for
impaired loans for the three month period ended June 30, 1995,
approximated the ending balance. Included in this amount were
$2,482 of impaired loans for which the related specific allocated
reserve for credit losses was $331, and $366 of impaired loans
that did not have a specific allocated reserve at June 30, 1995.
A summary of the activity in the allowance for loan losses
account for the first six months ending June 30, 1995, and
1994 was:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Balance, January 1 $3,911 $3,685
Provision for loan losses 150 50
Loans charged off (191) (214)
Recoveries of loans previously
charged off 138 264
Balance, June 30 $4,008 $3,785<PAGE>
<PAGE> D-11
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
With the adoption of FAS 114, the Corporation continued to use
its normal methods of identifying loans that are subject to
classification as criticized assets. This consists of creating a
monthly report containing loans with a more than normal degree of
risk. This report includes all such loans with balances of $100
or larger and even includes totals for loans smaller than $100 if
they are collateralized by real estate or other specific
collateral. Smaller-balance homogeneous loans, like credit
cards, moneyline loans which are consumer lines of credit either
secured with second mortgages on real estate or unsecured, and
consumer installment loans which are secured by vehicles and
other specific collateral or unsecured, are not included as loans
with a more than normal degree of risk. These loans are
specifically covered in the analysis of the adequacy of the
allowance for loan losses using historical loss percentages and
current delinquency reports. Smaller-balance homogeneous loans
are placed on nonaccrual after they are 90 days delinquent and
are written down to their collateral value or are charged off
when they are determined to be uncollectable. The report of
loans with a more than normal degree of risk is the by-product of
an ongoing loan review process, the purpose of which is to
determine the level of credit risk within the portfolio and to
ensure proper adherence to the Corporation's underwriting and
documentation standards.
The Corporation's report of loans with a more than normal degree
of risk is divided into three classifications, other loans
especially mentioned, substandard performing loans and
substandard non-performing loans. Other loans especially
mentioned are loans that are fundamentally sound but exhibit
potentially unwarranted credit risks or contain unsatisfactory
characteristics. Substandard performing loans are inadequately
protected by current sound net worth, paying capacity of the
obligor, or pledged collateral as well as those loans with
unsatisfactory characteristics causing more than acceptable
levels of risk, but are being serviced by the customer in regards
to the timely payment of principal and interest. Substandard
non-performing loans show weaknesses inherent in the substandard
performing loans but where collection or liquidation in full, on
a timely basis, is highly questionable. Substandard non-
performing loans are loans that have been placed on nonaccrual
when they are 90 days delinquent and there is no evidence to
support the continued regular payments required under the loan
contract.
<PAGE>
<PAGE> D-12
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
The classification of impaired loans is determined by the
analysis of the loan's collateral, repayment capacity of the
borrower and other known information to determine that it is
probable that the Corporation will be unable to collect all
amounts of principle and interest due according to the
contractual terms of the loan. Although a loan is on nonaccrual
it is possible that the liquidation of collateral will provide
for full recovery of all nonaccrued interest and principal on the
loan without a significant delay. Loans on nonaccrual that do
not meet this criteria are considered to be impaired. Loans that
are still on accrual, because the payments are currently being
serviced by the customer, but that exhibit or are known to have
other circumstances that will make them probable of not being
collected in full as to interest and principal, are also
considered to be impaired. Specific reserves are assigned to
impaired loans when in management's opinion the liquidation of
collateral, less selling expenses, will not represent collection
in full of principal and interest on the loan. Specific reserves
plus a reserve calculation based on historical loan loss
experience by type of loan are considered when analyzing the
adequacy of the allowance for loan losses. Impaired loans not
collateralized, but being repaid from cash flows, are measured
based upon the present value of expected future cash flows and
any shortfalls are recognized by the reduction of the impaired
loan by creating a valuation allowance and a corresponding charge
against the allowance for loan losses. The Corporation currently
does not have any impaired loans requiring a valuation allowance
due to insufficient present value calculations of expected future
cash flows. Since the adoption of FAS 114 no unusual additions
to the allowance for loan losses have been required due to loans
being classified as impaired.
Impaired loans on nonaccrual recognize payments or other cash
flows from liquidation of collateral first as principal payments.
When the principal on these loans is collected in full,
subsequent payments are recorded as income until all of the
nonaccrued interest income is collected. Since the nonaccrued
interest income is not booked until collected, any interest
shortfall on nonaccrual loans is never recognized as income.
Impaired loans on accrual continue to recognize income on the
same basis as all other loans. The method used in recognizing
payments and interest income on impaired loans is consistent with
those being used by the Corporation for substandard performing
loans and substandard non-performing loans before the adoption of
FAS 114.
<PAGE>
<PAGE> D-13
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
Noninterest income for the six months ended June 30, 1995, was
down $24 or 1.92% to $1,229 as compared to $1,253 for the six
months ended June 30, 1994. Income from fiduciary services was
down by $7 or 3.65% to $185 in 1995 from $192 in 1994 as a result
of decreased fees on trust accounts managed. Service charges on
deposit accounts were up by $85 or 15.92% to $619 in 1995 from
$534 in 1994 due to new and increased fees on deposit accounts.
The Corporation had a net gain of $6 on calls and sales of
securities during the first six months of 1995. Other operating
income decreased $111 or 20.94% to $419 during the six months
ended June 30, 1995, from $530 during the same six months in
1994. This $111 decrease was mainly due to the reduction of gain
on sales of loans held for sale and a small reduction of customer
service fee income less increases in income from a new investment
service being offered customers, other nonrecurring income and a
small increase in insurance commission income. During the first
six months of 1994 mortgage rates were increasing and the
Corporation sold $29,389 of the conforming fixed rate mortgage
loans, classified as loans held for sale on the balance sheet,
into the secondary mortgage market, and other operating income
included $197 related to gains from these sales. During part of
the first six months of 1995, mortgage rates increased to the
point that many customers were selecting variable rate mortgage
loans which are classified as real estate loans on the balance
sheet as compared to fixed rate mortgage loans which are
classified as loans held for sale on the balance sheet. The
Corporation did sell $5,081 in fixed rate mortgage loans into the
secondary mortgage market and recorded gains of $46 during the
six months ended June 30, 1995. The servicing rights on more
than 95% of sold fixed rate loans are retained by the
Corporation.
Noninterest expense for the six months ended June 30, 1995, was
$7,390 as compared to $7,030 for the six months ended June 30,
1994, for an increase of $360 or 5.12%. Salaries and employee
benefits are the largest portion of noninterest expense and
increased $406 or 11.34% in the first six months of 1995 compared
to the same time period in 1994. Individual components showed
increases in salaries, pension expense and medical insurance
expense. Occupancy expense remained steady with only a $3 or
.71% decrease in 1995 from 1994. Equipment expense was up by $36
or 9.00% to $436 in 1995 from $400 in 1994 due mainly to
increases in contract expenses related to new branches and
equipment.
<PAGE>
<PAGE> D-14
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
Data processing expense decreased $46 or 20.26% to $181 in 1995
from $227 in 1994 and was due to a reduction in depreciation and
continued efficiencies resulting from consolidating operations.
The Corporation will be installing a larger computer system,
during the third quarter of 1995, to provide for better customer
service and further consolidation of operations. Data processing
expenses starting during the third quarter of 1995 are expected
to increase because of this change. The FDIC insurance increased
only $15 or 2.95% and is due to increased deposit balances. The
Corporation's subsidiary banks have all been assigned the highest
classification by the FDIC and as such continue to pay the lowest
possible FDIC deposit insurance rates in both 1995 and 1994. The
deposits purchased by the Corporation from a federal savings bank
(see financial condition for details) remain subject to the SAIF
rather than BIF deposit insurance rates. The $48 or 2.54%
decrease in other operating expenses to $1,844 in 1995 from
$1,892 in 1994 was due to a combination of many increases and
decreases with large changes in goodwill and professional fees.
Other operating expenses for 1995 includes the addition of $35
for goodwill amortization in 1995 related to the deposits
purchased on March 17, 1995. Other 1995 operating expenses were
lower because of reduced professional fees, due to the inclusion
in 1994 of both sides of expenses for a merger completed on June
1, 1994, under the pooling of interests method and the inclusion
in 1995 of only the Corporation's merger expenses of a merger
expected to be completed during this year, also under the pooling
of interests method. Income before income taxes was up $444 or
12.50% to $3,996 for the first six months of 1995 from $3,552 for
the first six months of 1994. The net income for the first six
months ended June 30, 1995, was up $284 or 11.32% to $2,792 as
compared to $2,508 for the six months ended June 30, 1994.
Earnings per share were $1.18 in 1995 and were $1.06 in 1994.
Based upon annualized net income the return on average assets was
1.08% for the first six months of 1995 compared to .99% for the
same period in 1994.
<PAGE>
<PAGE> D-15
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
The following schedule shows selected financial amounts and ratios for
the three months ended and six months ended June 30, 1995 and 1994. The
Corporation feels these financial highlights include pertinent
information relevant for its results as a company in the financial
institutions industry.
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 531,145 $ 511,229 $ 521,894 $ 510,333
Securities 145,591 178,642 147,541 179,158
Loans 345,765 296,820 336,437 287,542
Allowance for loan losses 3,946 3,812 3,919 3,774
Deposits 469,450 448,081 459,607 448,972
Shareholders' equity 51,241 49,329 50,350 49,184
END OF PERIOD BALANCE SHEET DATA
Total assets $ 538,045 $ 508,453
Securities 141,488 167,629
Loans 347,871 306,720
Allowance for loan losses 4,008 3,785
Deposits 473,072 444,110
Shareholders' equity 52,932 48,225
INCOME DATA
Net interest income(t.e. basis) $ 5,477 $ 5,079 $ 10,949 $ 10,049
Provision for loan losses 75 -- 150 50
Noninterest income 620 560 1,229 1,253
Noninterest expense 3,671 3,509 7,390 7,030
Net income 1,382 1,272 2,792 2,508
/TABLE
<PAGE>
<PAGE> D-16
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income $ .58 $ .54 $ 1.18 $ 1.06
Cash dividends before pooling
of interests .21 .21 .42 .42
Book value at end of period 22.31 20.35
Book value at end of period
before FAS 115 22.68 21.09
Tangible book value at end
of period 21.49 20.27
Tangible book value at end of
period before FAS 115 21.86 21.01
Stock price at end of period
Weighted average 32.81 32.25
shares outstanding 2,372,547 2,369,784
SELECTED RATIOS
Return on average assets 1.04% 1.00% 1.08% .99%
Return on average equity
before FAS 115 10.82 10.34 10.39 10.23
Net interest margin(t.e.basis) 4.38 4.18 4.48 4.17
Net charge-offs to average loans .01 .01 .02 (.02)
Allowance for loan losses
to loans 1.15 1.23
Nonaccrual loans to loans .22 .23
Loans past due 90 days or
more to loans .26 .18
Performing restructured loans
to loans .04 .18
OREO to loans .12 .14
Leverage capital(Tier 1
equity/average assets) 9.88 9.75
Tier 1 risk-based capital 13.50 14.39
Total risk-based capital 14.55 15.54
</TABLE>
The Corporation's lead bank, The American National Bank of
Vincennes, completed the purchase of $25,462 of deposits from a
federal savings bank, on March 17, 1995. The Corporation has
historically had a decrease in total assets during the first six
months of each year due to the year end total assets including
institutional public funds on deposit that are not in the June
30th deposits. With these purchased deposits, total assets
increased by $21,949 or 4.25% to $538,045 at June 30, 1995, from
$516,096 at December 31, 1994. Significant changes in assets
from December 31, 1994, to June 30, 1995, included an increase in
<PAGE>
<PAGE> D-17
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
cash and cash equivalents, loans and loans held for sale and
decreases in securities and interest bearing deposits in other
banks.
With the continuing loan demand, as demonstrated in loan growth,
the Corporation has retained a portion of the increased deposits
purchased in readily available funds, and cash and cash
equivalents have increased $2,356 or 8.86% at June 30, 1995, from
year end 1994. Total securities and interest bearing deposits in
other banks decreased $10,720 or 7.00% to $142,382 at June 30,
1995, from $153,102 at December 31, 1994. The effect of FAS 115
and the mark-to-market of securities available for sale added
$3,324 to securities available for sale during the first six
months of 1995. The FAS 115 negative mark-to-market adjustment
at December 31, 1994, was $4,746 as compared to only $1,422 at
June 30, 1995, and was due to the normal market adjustment when
interest rates are stabilizing. Without the FAS 115 adjustment,
available for sale securities decreased $13,142 or 11.24% from
maturities and calls and $1,500 of sales during the first six
months of 1995. There were no sales or transfers of securities
classified as held to maturity during the period ended June 30,
1995. Securities held to maturity decreased $603 or 1.52% due to
maturities or calls during the six months ended June 30, 1995.
The Corporation experienced increased loan demand and total loans
increased $26,775 or 8.34% to $347,871 at June 30, 1995, from
$321,096 at December 31, 1994. Commercial loans increased
$17,744 or 11.10% to $177,658 at June 30, 1995, from $159,914 at
December 31, 1994. Commercial loan demand showed steady
increases all during the six months ended June 30, 1995. Real
estate loans increased $5,187 or 6.53% to $84,651 at June 30,
1995, from $79,464 at December 31, 1994. As noted previously,
the renewed interest in variable rate mortgage loans caused this
increase. Installment loans increased $3,844 or 4.70% to $85,562
at June 30, 1995, from $81,718 at December 31, 1994. Loans held
for sale also increased $3,210 or 120.50% at June 30, 1995, to
$5,874 from $2,664 at December 31, 1994.
Total deposits increased $17,838 or 3.92% during the first six
months of 1995. Noninterest bearing deposits decreased $5,118 or
9.87% to $46,720 at June 30, 1995, from $51,838 at year end 1994,
due to normal reductions of institutional public funds that were
on deposit at December 31, 1994, and not on deposit at June 30,
1995. Interest bearing deposits increased $22,956 or 5.69% to
$426,352 during the six months ended June 30, 1995, from $403,396
at December 31, 1994, and was due in part to the purchased
<PAGE>
<PAGE> D-18
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
deposits. Long-term debt, which is mainly borrowings from the
Federal Home Loan Bank that were matched off against specific
fixed rate lending programs, decreased $546 or 17.12% at June 30,
1995, from December 31, 1994, due to normal repayments.
Total shareholders' equity, including the unrealized loss on
securities available for sale, increased $3,895 or 7.94% to
$52,932 at June 30, 1995, from $49,037 at December 31, 1994. The
FAS 115 after tax mark-to-market adjustment on the available for
sale securities accounted for $2,086 or 4.25% of this increase in
total shareholders' equity at June 30, 1995, from December 31,
1994. The Corporation's regulators have issued guidelines
stating that the unrealized loss on securities available for
sale, other than those related to mutual funds (FAS 115
adjustments), should not be included in shareholders' equity for
capital ratio calculations. Total shareholders' equity,
excluding the FAS 115 adjustments, was $51,952 at December 31,
1994, and increased $1,825 or 3.51% to $53,777 at June 30, 1995.
This increase was net income of $2,792 less dividends paid of
$995 plus $16 related to increased mark-to-market on mutual funds
and $12 related to sales of the Corporation's common stock for
the dividend reinvestment and stock purchase plan. The dividend
reinvestment and stock purchase plan was changed to a market only
plan, during the second quarter of 1995, and no more shares of
common stock will be issued by the Corporation through this plan.
Capital adequacy in the banking industry is evaluated primarily
by the use of three required capital ratios based on three
separate calculations; leverage capital, Tier 1 risk-based
capital and total risk-based capital. The leverage capital ratio
is defined as total ending Tier 1 capital divided by total
average assets less intangible assets and FAS 115 adjustments.
Tier 1 risk-based capital is defined as Tier 1 capital divided by
risk-weighted assets. Total risk-based capital is defined as
Tier 1 capital plus Tier 2 capital divided by risk-weighted
assets. Tier 1 capital is the sum of the core capital elements
(common shareholders' equity, qualifying perpetual preferred
stock and minority interest in the equity accounts of
consolidated subsidiaries) less intangible assets and the FAS 115
<PAGE>
<PAGE> D-19
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
adjustments. Tier 2 capital consists of the allowance for loan
losses (limited to an maximum of 1.25% of risk-weighted assets),
perpetual preferred stock and other hybrid capital instruments.
Risk-weighted assets are defined to include the assets on the
balance sheet and off-balance sheet financial instruments in
broad categories that are weighted at 20% to 100% depending on
the asset totals within these broad categories. The
Corporation's capital ratios at June 30, 1995, and December 31,
1994, were:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
<S> <C> <C>
Leverage capital ratio 9.88% 10.14%
Tier 1 risk-based capital 13.50% 14.32%
Total risk-based capital 14.55% 15.41%
</TABLE>
PENDING CHANGES IN ACCOUNTING PRINCIPLES
The Financial Accounting Standards Board has issued Financial
Accounting Standard No. 121 (FAS 121), "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be
Disposed Of." Under this pronouncement, companies are required
to adopt the new method of accounting for the recoverability due
to 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. FAS 121 is effective for fiscal
years beginning after December 15, 1995. The Corporation has
determined that the implementation of this standard will be
immaterial to its financial statements.
The Financial Accounting Standards Board has issued Financial
Accounting Standard No. 122 (FAS 122), "Accounting for Mortgage
Servicing Rights." Under this pronouncement, companies are
required to implement a new method of accounting for the cost of
servicing rights on mortgage loans originated and sold into the
secondary mortgage market. The cost of the servicing rights on
loans originated and sold, if it is practicable to estimate,
would be recognized as a separate asset and amortized in
proportion to and over the period of the estimated net servicing
rights income. FAS 122 is effective for fiscal years beginning
after December 15, 1995. The Corporation has not yet determined
the impact of this standard on its financial statements.
<PAGE>
<PAGE> D-20
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the six months ended June 30, 1995
(Dollar amounts in thousands, except share data)
PENDING ACQUISITION
On October 12, 1994, the Corporation executed an Agreement of
Merger and Plan of Reorganization that provides for the
Corporation to acquire First Robinson Bancorp, the holding
company for The First National Bank in Robinson, Robinson,
Illinois. On June 19, 1995, the original Agreement of Merger and
Plan of Reorganization was amended to include the merger of The
First National Bank in Robinson and Farmers' State Bank of
Palestine, a wholly-owned subsidiary of the Corporation. As a
result of the amendment, the combined entity resulting from the
merger of First National Bank and Farmers' State Bank will be a
wholly-owned subsidiary of the Corporation. The proposed
acquisition will be accounted for as a pooling of interests and
the Corporation will issue 636,504 shares of its common stock in
exchange for the 119,200 currently issued and outstanding shares
of First Robinson Bancorp.
<PAGE>
<PAGE> D-21
AMBANC CORP.
As of and for the six months ended June 30, 1995
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement of Computation of per share
earnings. The copy of this exhibit filed as
Exhibit 11 to AMBANC's Annual Report on Form
10-K for the year ended December 31, 1994,
is incorporated herein by reference.
27 Financial Data Schedule for June 30, 1995.
(b) A Form 8-K was filed with the SEC on June 28, 1995,
for the June 19, 1995, execution of the Amended
Agreement of Merger and Plan of Reorganization
("Amended Agreement") that provides for the
Corporation's acquisition of First Robinson Bancorp,
the holding company for The First National Bank in
Robinson, Robinson , Illinois, and the merger of
Farmers' State Bank of Palestine, Palestine, Illinois,
a wholly-owned subsidiary of the Corporation, into the
First National Bank in Robinson. The Amended Agreement
provides that each share of First Robinson Bancorp
common stock will be exchanged for 5.3398 shares of the
Corporation's common stock. The acquisition will
continue to be accounted for as a pooling of interests
transaction.
<PAGE>
<PAGE> D-22
AMBANC CORP.
As of and for the six months ended June 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
AMBANC CORP.
(Registrant)
DATE: August 28, 1995 BY: R. Watson
Robert G. Watson, Chairman of
the Board, President and
Chief Executive Officer
DATE: August 28, 1995 BY: Richard E. Welling
Richard E. Welling, Secretary,
Treasurer and C.F.O.
<PAGE>
<PAGE> D-23
AMBANC CORP.
As of and for the six months ended June 30, 1995
EXHIBIT INDEX
EXHIBITS PAGE
11 Statement of Computation of per *
share earnings. The copy of this
exhibit filed as Exhibit 11 to
AMBANC's Annual Report on Form 10-K
for the year ended December 31, 1994,
is incorporated herein by reference.
27 Financial Data Schedule for June 30,
1995.
* Incorporated by reference from previously filed
documents.
<PAGE>
<PAGE> II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Under the Indiana Business Corporation Law and Article IV of
AMBANC's Restated Bylaws, AMBANC's officers, Directors, and
employees are entitled to indemnification against all liability
and expense with respect to any civil or criminal claim, action,
suit or proceeding in which they are wholly successful. If they
are not wholly successful and even if they are adjudged liable or
guilty, they are entitled to indemnification if it is determined,
with respect to a civil action, by disinterested Directors, a
special legal counsel, or a majority vote of the shares of
AMBANC's voting stock held by disinterested shareholders, that
they acted in good faith in what they reasonably believed to be
the best interests of AMBANC. With respect to any criminal
action, it must also be determined that they had no reasonable
cause to believe their conduct unlawful.
Under the Indiana Business Corporation Law, a Director of
AMBANC cannot be held liable for actions that do not constitute
wilful misconduct or recklessness. In addition, the Articles of
Incorporation of AMBANC provide that Directors of AMBANC shall be
immune from personal liability for any action taken as a
Director, or any failure to take any action, to the fullest
extent permitted by the applicable provisions of the Indiana
Business Corporation Law from time to time in effect and by
general principles of corporate law. In addition, a Director of
AMBANC against whom a shareholders' derivative suit has been
filed cannot be held liable if a committee of disinterested
Directors of AMBANC, after a good faith investigation, determines
either that the shareholder has no right or remedy or that
pursuit of that right or remedy will not serve the best interests
of AMBANC.
At present, there are no claims, actions, suits or
proceedings pending where indemnification would be required under
the above, and AMBANC does not know of any threatened claims,
actions, suits or proceedings which may result in a request for
such indemnification.
In addition, officers and Directors of AMBANC are entitled
to indemnification under an insurance policy of AMBANC for
expenditures incurred by them in connection with certain acts in
their capacities as such, and providing reimbursement to AMBANC
for expenditures in indemnifying such Directors and officers for
such acts. The maximum aggregate coverage for AMBANC and insured
individuals is $ per policy year, with the policies
subject to self-retention and deductible provisions.
Item 21. Exhibits and Financial Statement.
The exhibits described in the Exhibit List immediately
following the "Signatures" page of this Registration Statement
(which Exhibit List is incorporated by reference) is hereby filed
as part of this Registration Statement.
<PAGE>
<PAGE> II-2
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other Items of
the applicable form.
The registrant undertakes that every prospectus (i) that is
filed pursuant to the paragraph immediately proceeding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of the
Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a Director, officer, or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer, or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and Robinson being acquired involved therein, that
was not the subject of and included in the Registration Statement
when it became effective.
The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration
statement through the date of responding to the request.
<PAGE>
<PAGE> II-3
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include
any financial statements required by Rule 3-19 of Regulation S-X
at the start of any delayed offering or throughout a continuous
offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vincennes,
State of Indiana, on August 28, 1995.
AMBANC CORP.
By /s/ Robert G. Watson
Robert G. Watson, Chairman of
the Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed on August 28, 1995 by
the following persons in the capacities indicated.
Principal Executive Officer:
/s/ Robert G. Watson Chairman of
Robert G. Watson the Board,
President
and Chief
Executive
Officer
Principal Financial and
Accounting Officer:
/s/ Richard E. Welling Secretary,
Richard E. Welling Treasurer
and Chief
Financial
Officer
* Director
Glen G. Apple
* Director
Paul E. Brocksmith
* Director
Robert D. Green
/s/ Rolland L. Helmling Director
Rolland L. Helmling
* Director
Gerry M. Hippensteel
* Director
Owen M. Landrith
* Director
Bernard G. Niehaus
/s/ Richard H. Schaffer Director
Richard H. Schaffer
* Director
Robert E. Seed
* Director
John A. Stachura, Jr.
* Director
Phillip M. Summers
* Director
Howard R. Wright
*By: /s/ Robert G. Watson
Robert G. Watson,
Attorney-in-Fact and agent
<PAGE>
<PAGE> II-6
EXHIBIT INDEX
Exhibit
Number Description Page No.
2 Amended Agreement of Merger and Plan of N/A
Reorganization and Merger Agreement (included
as Appendix A to the Prospectus/Proxy
Statement).
3.1 Restated Articles of Incorporation of AMBANCN/A
Corp., as amended to date. The copy of this
Exhibit filed as Exhibit 3.1 to AMBANC's
Registration Statement on Form S-4 (File No.
35-57296), filed February 22, 1993, is
incorporated by reference.
3.2 Bylaws of AMBANC Corp., as amended to date.N/A
The copy of this Exhibit filed as Exhibit 3
to AMBANC Corp.'s Annual Report on Form 10-K
for the year ended December 31, 1993, is
incorporated by reference.
5* Opinion of Leagre & Barnes regarding legality of
securities being offered, including consent.
8 Opinion of Leagre & Barnes regarding federal
income tax consequences, including consent and
with Representation Certificate attached.
10.1* Employment Agreement executed January 15, 1985,
and reexecuted December 21, 1988, between
American National and Robert G. Watson.
10.2* 1988 AMBANC Corp. Nonqualified Stock Option
Plan, as amended.
10.3* Letter from AMBANC to Robert G. Watson, dated
November 8, 1988, granting a stock option.
10.4* Letter from AMBANC to Robert G. Watson, dated
May 16, 1989, granting stock appreciation rights.
10.5* Letter from AMBANC to Raymond E. Mott, dated
November 8, 1988, granting a stock option.
10.6* Letter from AMBANC to Raymond E. Mott, dated
May 16, 1989, granting stock appreciation rights.
10.7* Supplemental Retirement Benefits Agreement between
AMBANC and Robert G. Watson dated June 20, 1989.
11 Statement of Computation of per share earnings.N/A
The copy of this Exhibit filed as Exhibit 11 to
AMBANC's Annual Report on Form 10-K for the year
ended December 31, 1994, is incorporated by
reference.
13* AMBANC Corp. 1994 Annual Report to Shareholders.
22 Subsidiaries of AMBANC. The copy of this ExhibitN/A
filed as Exhibit 22 to AMBANC's Annual Report on
Form 10-K for the year ended December 31, 1994,
is incorporated by reference.<PAGE>
<PAGE> II-7
23.1 Consent of Crowe, Chizek & Company.
23.2 Consent of Kemper CPA Group.
23.3* Consents of counsel filed as part of Exhibits N/A
5 and 8 to this Registration Statement.
23.4 Consent of Kemper Securities, Inc.
23.5 Consent of Kemper CPA Group
23.6 Consent of McGladrey & Pullen, LLP
24 Power of Attorney (included on signature page)N/A
99.1* Form of Proxy.
99.2 Cover Letter to Shareholders.
*Filed as an exhibit to the original Registration Statement on July 17, 1995
and not refiled as part of this Amendment No. 1.
EXHIBIT 10-H
LIST OF EXECUTIVE COMPENSATION
PLANS AND ARRANGEMENTS
The Corporation's Chief Executive Officer, Robert G. Watson,
who is the only named executive officer, participates in the
following compensatory plans and arrangements:
EMPLOYMENT AGREEMENT.
Employment Agreement executed January 15, 1985, and re-executed
December 21, 1988, between the Corporation and Robert G. Watson.
This document was filed as Exhibit 10-A to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1989.
STOCK OPTION PLAN AND OPTION/SAR GRANTS.
1988 AMBANC Corp. Nonqualified Stock Option Plan, as amended. This
document was filed as Exhibit 10-B to the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1989.
Letter from AMBANC to Robert G. Watson, dated November 8, 1988,
granting a stock option. This document was filed as Exhibit 10-C
to the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1989.
Letter from AMBANC to Robert G. Watson, dated May 16, 1989,
granting stock appreciation rights. This document was filed as
Exhibit 13-D to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1989.
SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT.
Supplemental Retirement Benefits Agreement between the Corporation
and Robert G. Watson dated June 20, 1989. This document was filed
as Exhibit 10-G to the Company's Annual Report on Form 10-K for the
year ended December 31, 1989.
Exhibit 11
AMBANC Corp.
Computation of Per Share Earnings
with Common Stock Options Outstanding
(Treasury Stock Method)
<TABLE>
<CAPTION>
1994 1993(1) 1992(1)
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
<S> <C> <C> <C> <C> <C> <C>
Average Shares
Outstanding
Common Stock 2,370,004 2,372,172 2,369,784 2,369,784 2,369,784 2,369,784
Common Stock
Equivalents:
Stock Options 24,000 24,000 24,000 24,000 24,000 24,000
Assumed Repurchase
of Treasury
Shares (14,670) (15,484) (14,015) (13,061) (21,968) (15,118)
Average Common
and Common
Equivalent
Shares
Outstanding 2,379,334 2,380,688 2,379,769 2,380,723 2,371,816 2,378,666
Net Income
in $1,000 5,443 5,443 5,419 5,419 4,936 4,936
Earnings Per
Common and
Common
Equivalent
Share 2.29 2.29 2.28 2.28 2.08 2.08
</TABLE>
(1) The above schedule has been restated to reflect 108,000 AMBANC Corp.
shares issued on January 1, 1992, 395,090 AMBANC Corp. shares issued on
June 1, 1993, and 542,338 AMBANC Corp. shares issued on June 1, 1994,
and the effect on net income of these merger transactions booked under
the pooling of interest method of accounting, and a two-for-one stock
split-up issued to shareholders of record on August 31, 1992.
EXHIBIT 13
AMBANC Corp.
Pages 6 through 26 and 28 through 47 and 49 are
incorporated by reference
1994 Annual Report to Shareholders
[Comparable pages in EDGAR version:
Pages 8 through 31 and 33 through 62 and 64]
<PAGE>
[Picture of Flag]
the ambanc corp.
ANNUAL
REPORT
1994
<PAGE>
TABLE OF CONTENTS
1 Financial Highlights
2-3 Letter to the Shareholders
4 AMBANC Directors
5 The AMBANC Mission
6 Report of Independent Auditors
7 Consolidated Balance Sheets
8 Consolidated Statements of
Income
9 Consolidated Statements of
Changes in Shareholders'
Equity
10 Consolidated Statements of
Cash flows
11-26 Notes
27 Management's Report
28-47 Management's Discussion and
Analysis
48 AMBANC Service Area
49 Five-Year Summary
50 Financial Trends
51-52 Corporate Organization and
Banking Locations
53 Investor Information
ON THE COVER
Throughout 1994
AMBANC continued to
remain a solid, growing,
bank holding company
dedicated to its
stockholders, customers
and community.
Our philosophy of business
and community involvement
is synonymous with all
for which the American
flag represents.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
1994 1993
(Dollar amounts in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA
Total interest income $35,023 $34,037
Total interest expense 15,600 15,720
Net interest income after
provision for loan losses 19,323 17,847
Total noninterest income 2,391 2,587
Total noninterest expense 14,018 13,326
Net income after income taxes and
cumulative effective of an accounting
change 5,443 5,419
BALANCE SHEET DATA 1994 1993
Total assets $516,096 $512,692
Total liabilities 467,059 463,732
Total shareholders' equity 49,037 48,960
Total liabilities and shareholders'
equity 516,096 512,692
EARNINGS PER SHARE 1994 1993 [picture of flag]
Income per share before cumulative ANNUAL MEETING
effect of an accounting change $2.30 $2.18 Friday
April 21, 1995
Cumulative effect of accounting change--- .11 10:30 a.m.
Isaac K. Beckes
Net income per share 2.30 2.29 Student Union
Vincennes University
Vincennes, Indiana
</TABLE>
<PAGE>
LETTER TO THE
SHAREHOLDERS
To our shareholders:
1994 saw AMBANC Corp. continue on the path of excellence. We
remained focused on profitability and controlled growth, as
evidenced by our annual financial statements. Earnings from
operations were $5,443,000, or $2.30 per share for the year ended
December 31, 1994, compared to $5,167,000, or $2.18 per share for
the same period in 1993. The first quarter of 1993 did include
the cumulative effect of an accounting change and net income for
1993 was $5,419,000, or $2.29 per share, compared to $5,443,000,
or $2.30 per share in 1994.
Total assets at December 31, 1994, were $516,096,000 and total
shareholders' equity was $49,037,000 with FAX 115. Shareholders'
equity without FAX 115 increased $3,735,000, or 7.75% to
$51,952,000 at December 31, 1994, from $48,217,000 at December 31,
1993.
We are strong believers in our growth strategy of merging with
other community banks that fit the AMBANC mold. Not every bank is
an ideal fit, so we are careful to ensure each is best for all
parties and, most importantly, for you, the shareholders. We use
the term "merger" rather than "acquisition" because we realize the
importance of our subsidiary banks. We provide an environment in
which our subsidiary banks can remain autonomous but still give us
their insight and input. 1994 was no exception to this
philosophy. We were pleased to announce the pending purchase and
transfer of deposits from Mid-West Federal in Princeton, Indiana
to American National Bank. The acquisition of deposits will
enable us to increase our presence in the Gibson County market.
An additional highlight to the year was the announcement of the
pending merger of First National Bank in Robinson, IL, a
subsidiary of First Robinson Bancorp., into the AMBANC Corp. David
Musgrave, president of the bank, and his staff will be an ideal
match with the AMBANC tradition of bringing our customers the
finest in community banking products and services.
On the operational side, we have taken strides this past year to
take advantage of some economies of scale that have come to us as
a result of our merger activity. One such stride was to
centralize our marketing efforts to ensure uniformity, continuity
and, most of all, efficiency. Other such measures include the
<PAGE>
consolidation of statement processing, human resource and audit
functions within AMBANC Corp. These measures will enable us to
streamline our operations, ensuring higher efficiency and
profitability.
While we hold strongly to the principles of a traditional bank, we
realize the importance of monitoring the banking environment and
keeping an eye on the future. To that end, we feel it is
important to establish a modern look to our company as we approach
the 21st century. A prime example of this effort can be seen in
our 1994 annual report. We have incorporated a fresher look to
the report along with our new corporate logo, which was developed
to enhance recognition of the AMBANC Corp. name. As we continue
to grow, it is crucial that our subsidiaries, while maintaining
their respective banking names and strong presence in their
individual communities, also are recognized as members of AMBANC
Corp.
We have taken steps this year to revise our Dividend Reinvestment
Program to make it more attractive to all shareholders of the
company. Participants in the plan will be able to reinvest their
dividends quarterly on the open market at the current price, thus
simplifying the process and increasing liquidity in the stock. We
are extremely pleased with the revised plan and hope it generates
more participation. If you have any questions or would like more
information on the plan, please contact our shareholder relations
department at AMBANC.
Our task at AMBANC is to run the company to the best of our
ability in order to give you, the shareholders, the greatest
possible return on your investment. While we have made tremendous
strides over the past year, we will continually strive to ready
the company to meet new challenges in the upcoming year and even
into the next century. We know with your continued loyalty and
support, we will be able to meet those challenges and continue to
position ourselves as a leader in the banking industry, providing
the finest in community banking products and services.
Sincerely,
/s/ Robert G. Watson
Robert G. Watson /
Chairman of the Board,
President and Chief Executive Officer
[picture
of flag]
<PAGE>
AMBANC DIRECTORS
[Picture of Directors]
DIRECTORS
Standing (left to right):
Owen M. Landrith Chairman of the Board,
Farmers'
State Bank
Sherman L. Anderson Chairman of the Board,
President and C.E.O.,
Citizens' National Bank
Rolland L. Helmling President, Harold's
Supermarkets, Inc.
Glen G. Apple Farmer
John A. Stachura, Jr. Superintendent, Solar Sources
Underground
Robert G. Watson Chairman of the Board,
President and C.E.O., AMBANC
Corp. and American National
Bank
Richard H. Schaffer Retired
Paul E. Brocksmith, D.V.M. Retired
Seated (left to right):
[picture ofPhillip M. Summers, Ph.D.President, Vincennes
University
Robert E. Seed] Howard R. Wright Retired
Gerry M. Hippensteel, M.D. Physician
Robert D. Green President, R D Services, Inc.
Bernard G. Niehaus President, Niehaus Lumber Co.,
Inc.
ROBERT E. SEED
Chairman of the Board,
President and C.E.O.,
Bank of Casey
<PAGE>
THE AMBANC MISSION
Our business purpose is to optimize
the long-range return on shareholders' equity
by enhancing our stock price.
To accomplish this, it is necessary
to acquire and maintain strong,
profitable banking institutions that
focus upon and serve the financial needs
of our customers as well as provide
socially responsive community leadership
in our market areas.
Whenever possible, our affiliate banks
will operate as autonomous units
within their respective market areas.
[Picture of Flag]
<PAGE>
[CROWE CHIZEK LOGO]
Board of Directors and
Shareholders
AMBANC Corp.
Vincennes, Indiana
REPORT OF INDEPENDENT AUDITORS (in thousands)
We have audited the accompanying consolidated balance sheets of
AMBANC Corp. as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in shareholders'
equity, and cash flows for the years ended December 31, 1994,
1993 and 1992. These financial statements are the responsibility
of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
The consolidated balance sheet as of December 31, 1993, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for the years ended December 31, 1993 and 1992 have been restated to
reflect the pooling of interests in 1994 and 1993, as described in Notes 1 and
2. Separate financial statements for the other companies included in the 1993
and 1992 restated financial statements were audited and reported on by other
auditors, which statements reflect total assets of $93,092 and total
liabilities of $84,302 at December 31, 1993, and net income of $862 and $1,491
for the years ended December 31, 1993 and 1992, respectively.
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, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of AMBANC Corp. as of December 31,
1994 and 1993, and the results of its operations and its cash flows for the
years ended December 31, 1994, 1993 and 1992, in conformity with generally
accepted accounting principles.
As disclosed in Notes 1 and 11 to the consolidated financial statements, in
1993 the Corporation changed its method of accounting for income taxes,
postretirement benefits and certain securities.
/s/ CROWE, CHIZEK AND COMPANY
Crowe, Chizek and Company
Indianapolis, Indiana
January 27, 1995
<PAGE>
[Picture of Flag]
1994
AMBANC CORP.
FINANCIALS
<PAGE>
AMBANC CORP.
Consolidated Balance Sheets
December 31, 1994 and 1993
(Dollar amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
Cash and due from banks (Note 14).................... $ 19,595 $ 17,164
Federal funds sold................................... 7,000 15,346
Total cash and cash equivalents (Note 1)........... 26,595 32,510
Interest bearing deposits in other banks............. 1,193 890
Securities available for sale at market (Note 3)..... 112,214 137,440
Securities held to maturity (Note 3)
(market values of $38,707 and $40,734
in 1994 and 1993).................................. 39,695 38,857
Loans held for sale.................................. 2,664 16,919
Loans, net of unearned income (Note 4)............... 321,096 277,088
Allowance for loan losses (Note 5)................... (3,911) (3,685)
Loans, net......................................... 317,185 273,403
Premises, furniture and equipment, net (Note 6)...... 6,487 6,204
Accrued interest receivable and other assets......... 10,063 6,469
Total assets................................... $ 516,096 $ 512,692
LIABILITIES
Noninterest bearing deposits......................... $ 51,838 $ 50,455
Interest bearing deposits (Note 7)................... 403,396 402,167
Total deposits..................................... 455,234 452,622
Short-term borrowings (Note 8)....................... 5,690 6,979
Long-term debt (Notes 9 and 10)...................... 3,189 1,000
Accrued interest payable and
other liabilities (Note 11)........................ 2,946 3,131
Total liabilities.............................. 467,059 463,732
Commitments and contingent liabilities(Note 14)
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value, 200,000 shares
authorized, no shares issued or outstanding........ -- --
Common stock, $10 par value, 5,000,000
shares authorized, 2,372,172 and 2,369,784 shares
issued and outstanding at December 31, 1994 and
1993 (Note 15)..................................... 23,722 23,698
Retained earnings (Note 16).......................... 28,277 24,550
Unrealized gain/(loss) on securities available for
sale, net of tax of ($1,784) and $420.............. (2,962) 712
Total shareholders' equity..................... 49,037 48,960
Total liabilities and shareholders' equity..... $ 516,096 $ 512,692
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMBANC CORP.
Consolidated Statements of Income
For the years ended December 31, 1994, 1993 and 1992
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans...................$ 24,881 $ 22,248 $ 24,181
Interest and fees on loans held for sale..... 536 1,280 1,017
Interest on securities
Taxable.................................... 7,030 7,685 9,225
Tax exempt................................. 2,279 2,369 2,038
Other interest............................... 297 455 684
Total interest income...................... 35,023 34,037 37,145
INTEREST EXPENSE
Interest on deposits......................... 15,140 15,513 18,218
Interest on short-term borrowings............ 283 175 245
Interest on long-term debt................... 177 32 3
Total interest expense..................... 15,600 15,720 18,466
Net interest income...................... 19,423 18,317 18,679
Provision for loan losses (Note 5)........... 100 470 1,375
Net interest income after
provision for loan losses.............. 19,323 17,847 17,304
NONINTEREST INCOME
Income from fiduciary activities.............. 387 419 383
Service charges on deposit accounts........... 1,116 1,174 1,149
Net realized gain/(loss) on securities........ (6) 13 72
Other operating income........................ 894 981 548
Total noninterest income.................... 2,391 2,587 2,152
NONINTEREST EXPENSE
Salaries and employee benefits
(Notes 10, 11 and 12). 7,168 6,920 6,536
Occupancy expenses, net....................... 854 779 757
Equipment expenses............................ 847 853 767
Data processing expenses...................... 442 583 682
FDIC insurance................................ 1,008 987 961
Other operating expenses...................... 3,699 3,204 2,908
Total noninterest expense................... 14,018 13,326 12,611
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE.. 7,696 7,108 6,845
Income taxes (Note 13)........................ 2,253 1,941 1,909
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE..................... 5,443 5,167 4,936
Cumulative effect on prior years of changing to a
different method of accounting for
income taxes (Note 1)....................... -- 252 --
NET INCOME.......................... . $ 5,443 $ 5,419 $ 4,936
EARNINGS PER SHARE (Note 15)
Income per share before cumulative
effect of accounting change................. $ 2.30 $ 2.18 $ 2.08
Cumulative effect of accounting change...... -- .11 --
Net income per share........................ $ 2.30 $ 2.29 $ 2.08
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMBANC CORP.
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31, 1994, 1993 and 1992
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Unrealized
Gain/(Loss)
Common Retained on Total
Stock Earnings Securities Equity
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 as
previously reported............. $ 9,137 $ 24,575 $ 33,712
Adjusted for pooling of
interest (Note 2)............... 2,712 4,425 $ (17) 7,120
BALANCE, JANUARY 1, 1992 as
restated........................ 11,849 29,000 (17) 40,832
Net Income for 1992............... 4,936 4,936
Cash dividends ($.60 per common
share) (Note 15)................ (1,424) (1,424)
Stock split....................... 11,849 (11,849) --
Net change in unrealized loss on
marketable liquidity mutual
funds........................... (11) (11)
BALANCE, DECEMBER 31, 1992........ 23,698 20,663 (28) 44,333
Net income for 1993............... 5,419 5,419
Cash dividends ($.65 per common
share) (Note 15)................ (1,532) (1,532)
Net change in unrealized gain on
securities available
for sale........................ 740 740
BALANCE, DECEMBER 31, 1993........ 23,698 24,550 712 48,960
Net income for 1994............... 5,443 5,443
Cash dividends ($.75 per common
share) (Note 15)................ (1,766) (1,766)
Net change in unrealized loss
on securities available
for sale........................ (3,674) (3,674)
Issuance of stock for dividend
reinvestment and stock
purchase plan (Note 15)......... 24 50 74
BALANCE, DECEMBER 31, 1994........ $ 23,722 $ 28,277 $ (2,962) $ 49,037
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMBANC CORP.
Consolidated Statements of Cash Flows
For the years ended December 31, 1994, 1993 and 1992
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income......................................... $ 5,443 $ 5,419 $ 4,936
Adjustments to reconcile net income to net
cash from operating activities:
Net premium amortization and discount
accretion on securities...................... 371 352 510
Depreciation................................... 927 1,021 923
Provision for loan losses...................... 100 470 1,375
(Gain)/Loss on securities...................... 6 (13) (72)
Net change in loans held for sale.............. 14,255 (5,366) 645
Accrued interest receivable
and other assets............................. (3,594) (71) 1,338
Accrued interest payable
and other liabilities........................ 2,019 (538) (758)
Deferred loan fees net of costs................ (33) (119) (43)
Net cash from operating activities........... 19,494 1,155 8,854
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale............................... 9,451 -- --
Proceeds from sales of securities held to maturity. -- -- 3,128
Proceeds from maturities and calls of securities
available for sale............................... 37,328 -- --
Proceeds from maturities and calls of securities
held to maturity................................. 3,232 60,760 67,025
Purchases of securities available for sale......... (27,858) -- --
Purchases of securities held to maturity........... (4,020) (71,247) (75,756)
Net change in interest bearing deposits
in other banks................................... (303) (8) 1,408
Loans made to customers, net of payments collected. (49,507) (18,452) 1,131
Loans purchased.................................... (1,187) (1,150) (1,856)
Proceeds from sales of loans....................... 6,845 5,633 2,100
Property and equipment expenditures................ (1,210) (810) (1,038)
Net cash from investing activities........... (27,229) (25,274) (3,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand deposit
and savings accounts............................. (3,693) 10,212 38,516
Net change in certificates of deposit.............. 6,305 (9,730) (18,982)
Net change in short-term borrowings................ (1,289) 372 587
Payments on long-term debt......................... (338) (200) (573)
Proceeds from long-term debt....................... 2,527 1,000 --
Issuance of stock for dividend reinvestment
and stock purchase plan.......................... 74 -- --
Dividends paid..................................... (1,766) (1,532) (1,424)
Net cash from financing activities........... 1,820 122 18,124
NET CHANGE IN CASH AND CASH EQUIVALENTS.............. (5,915) (23,997) 23,120
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR....... 32,510 56,507 33,387
CASH AND CASH EQUIVALENTS AT END OF YEAR............. $ 26,595 $ 32,510 $ 56,507
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest......................................... $ 15,475 $ 16,092 $ 19,058
Income taxes..................................... 2,422 1,846 2,137
</TABLE>
See accompanying notes to consolidated financial statements.
AMBANC CORP.
Notes To Consolidated Financial Statements
December 31, 1994, 1993 and 1992
(Dollar amounts in thousands, except share and per share data)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Reporting
The consolidated financial statements include the accounts
of AMBANC Corp. (Corporation), and its wholly owned
subsidiaries, The American National Bank of Vincennes
(ANB), Citizens' National Bank of Linton (CNB), Farmers'
State Bank of Palestine (FSB), Bank of Casey (BOC),
American National Realty Corp and Lincolnland Insurance
Agency & Investments, Inc. (LIA). Upon consolidation, all
significant intercompany accounts and transactions have
been eliminated. As discussed in Note 2, AMBANC Corp.
acquired FSB on June 1, 1993, and BOC on June 1, 1994, both
under the pooling of interests method of accounting. These
consolidated financial statements have been restated to
reflect the accounts of FSB and BOC for all periods
presented.
Description of Business
ANB, CNB, FSB and BOC operate primarily in the banking
industry, which accounts for more than 90 percent of the
Corporation's revenues, operating income and assets. ANB,
CNB, FSB and BOC generate commercial, real estate mortgage
and installment loans and receive deposits from customers
located in Greene, Knox, Gibson and surrounding counties in
Indiana and Crawford, Clark and surrounding counties in
Illinois. Although the overall loan portfolio is
diversified, the economy of these counties is heavily
dependent upon the agricultural industry. The majority of
the loans are secured by specific items of collateral
including business assets, real property and consumer
assets.
American National Realty Corp. owns various real estate,
most of which is leased to ANB for normal banking
activities, such as parking, drive-in banking and branch
banking facilities.
Securities
On December 31, 1993, the Corporation adopted Financial
Accounting Standard No. 115 (FAS 115), "Accounting for
Certain Investments in Debt and Equity Securities." Prior
to adoption of FAS 115, all debt securities were carried at
amortized cost (cost adjusted for amortization of premiums
or accretion of discounts), because management had the
intent and ability to hold them for the foreseeable future.
All marketable liquidity mutual funds were carried at the
lower of cost or market value with any unrealized loss due
to temporary market fluctuations recorded as a separate
component of equity. Upon the adoption of FAS 115, all
securities were classified by management as available for
sale or held to maturity. The adoption of FAS 115 in 1993
had no effect on net income, earnings per share or retained
earnings. The unrealized gain/(loss) on securities
available for sale is reflected as a separate component of
equity, net of tax on the balance sheet.
Securities classified as available for sale are marketable
liquidity mutual funds and debt securities that the
Corporation intends to hold for an indefinite period of
time, but not necessarily until maturity. Securities
available for sale include securities that management might
use as part of its asset-liability strategy, or that may be<PAGE>
sold in response to changes in interest rates, changes in
prepayment risk or other similar factors, and which are
carried at market value. Securities classified as held to
maturity are securities that the Corporation has both the
ability and positive intent to hold to maturity and are
carried at cost adjusted for amortization of premium or
accretion of discount using the level yield basis.
Realized gains and losses on securities are computed on a
specific identification basis. Interest and dividend
income, adjusted by amortization of purchase premium or
discount, is included in earnings.
Loans Held for Sale
Loans held for sale consist of fixed rate mortgage loans
conforming to established guidelines and held for sale to
the secondary mortgage market. Mortgage loans held for
sale are carried at the lower of cost or market value
determined on an aggregate basis. Gains and losses on the
sale of these mortgage loans are included in other
noninterest income.
Interest Income on Loans
Interest on real estate, commercial and installment loans
is accrued over the term of the loans on a level yield
basis. The recognition of interest income is discontinued
when, in management's judgment, the interest will not be
collectible in the normal course of business.
Loan Fees and Costs
The Corporation defers loan fees, net of certain direct
loan origination costs. The net amount deferred is
reported on the balance sheets as part of loans and is
recognized into interest income over the term of the loan
on a level yield basis.
Allowance for Loan Losses
The balance in the allowance and the amount of the annual
provision charged to expense are judgmentally determined
based upon a number of factors. Estimating the risk of
loss and the amount of loss on any loan is necessarily
subjective. Accordingly, the allowance is maintained by
management at a level considered adequate to cover possible
losses that are currently anticipated based on past loss
experience, general economic conditions, information about
specific borrower situations, including their financial
position and collateral values, and other factors and
estimates which are subject to change over time. While
management may periodically allocate portions of the
allowance for specific problem loan situations, the whole
allowance is available for any loan charge-offs which
occur. Increases to the allowance are recorded by a
provision for possible loan losses charged to expense. A
loan is charged off by management as a loss when deemed
uncollectible, although collection efforts continue and
future recoveries may occur.
Premises, Furniture and Equipment
Premises, furniture and equipment are stated at cost less
accumulated depreciation. Premises, furniture and
equipment are depreciated over the estimated useful lives
of the assets, principally on the straight-line method.
Maintenance and repairs are expensed, and major
improvements are capitalized.
Other Real Estate
Real estate acquired through foreclosure or acceptance of a
deed in lieu of foreclosure is recorded at the lower of
cost (fair value at date of foreclosure) or fair value less
estimated selling costs. The costs of holding the real
estate are charged to operations while major improvements
are capitalized.
Income Taxes
Effective January 1, 1993, the Corporation adopted
Financial Accounting Standard No. 109 (FAS 109),
"Accounting for Income Taxes", which requires an asset and
liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between
the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are
expected to affect taxable income. Income tax expense is
the tax payable or refundable for the period plus or minus
the change during the period in deferred tax assets and
liabilities. In years prior, the Corporation recorded tax
expense based on the effect of timing differences on
taxable income during the year the timing differences arose
or reversed.
The cumulative effect of the accounting change on years
prior to January 1, 1993, of $252 is shown on the 1993
income statement.
The Corporation and its subsidiaries file consolidated tax
returns. Each entity is charged or credited for taxes as
if separate returns were filed.
Fiduciary Activities
Trust Department income is recognized on the cash basis
method, which in this circumstance does not materially
differ from the accrual method.
Statements of Cash Flows
Cash and cash equivalents is defined to include cash on
hand, noninterest bearing amounts due from other banks and
federal funds sold. Generally, federal funds are sold for
one-day periods. The Corporation reports net cash flows
for loans held for sale, customer loan transactions,
deposit transactions and deposits made with other financial
institutions.
Financial Statement Presentation
Certain items in the 1993 and 1992 financial statements
have been reclassified to correspond with the 1994
presentation.
Note 2 - BUSINESS COMBINATIONS
On June 1, 1993, the Corporation issued 395,090 shares of
its common stock in exchange for all of the outstanding
common stock of Farmers' State Bank of Palestine (FSB). On
June 1, 1994, the Corporation issued 542,338 shares of its
common stock in exchange for all of the outstanding common
stock of Lincolnland Bancshares, Inc. (LBI), the parent
holding company of BOC and LIA. LBI was then merged into
the Corporation. These acquisitions were accounted for
under the pooling of interests method. Accordingly, the
Corporation's financial statements and financial data have
been retroactively restated to include the accounts and
operations of FSB and LBI for all periods presented.
Certain reclassifications have been made to FSB's and LBI's
historical financial statements to conform to the
Corporation's presentation.
Interest income and net income of the Corporation, FSB and
LBI for the periods prior to the acquisition were as
follows.
<TABLE>
<CAPTION>
Five
Months Ended Year Ended Year Ended
May 31, December 31, December 31,
1994 1993 1992
<S> <C> <C> <C>
Interest income
Previously reported... $ 11,347 $ 27,701 $ 25,785
FSB................... N/A N/A 4,436
LBI................... 2,598 6,336 6,924
Total............... $ 13,945 $ 34,037 $ 37,145
Net interest income
Previously reported... $ 6,352 $ 15,002 $ 13,397
FSB................... N/A N/A 1,986
LBI................... 1,385 3,315 3,296
Total............... $ 7,737 $ 18,317 $ 18,679
Net income
Previously reported... $ 1,777 $ 4,557 $ 3,445
FSB................... N/A N/A 617
LBI................... 282 862 874
Total............... $ 2,059 $ 5,419 $ 4,936
</TABLE>
Note 3 - SECURITIES
The amortized cost and estimated market value of securities
are as follows.
<TABLE>
<CAPTION> December 31, 1994
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Government and its agencies..... $ 93,273 $ 66 $ (3,968) $ 89,371
Taxable states and
political subdivisions............. 1,863 9 (38) 1,834
Corporate obligations................ 3,592 -- (39) 3,553
Collateralized mortgage obligations.. 17,843 7 (712) 17,138
Mutual funds......................... 389 -- (71) 318
Total.............................. $ 116,960 $ 82 $ (4,828) $ 112,214
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities held to maturity
Nontaxable states and
political subdivisions....... $ 39,695 $ 433 $ (1,421) $ 38,707
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Government and
its agencies.................. $ 100,650 $ 1,294 $ (295) $ 101,649
Taxable states and
political subdivisions..... 2,397 74 -- 2,471
Corporate obligations........ 7,533 93 (6) 7,620
Collateralized mortgage
obligations................... 25,338 103 (100) 25,341
Mutual funds.................... 390 -- (31) 359
Total....................... $ 136,308 $ 1,564 $ (432) $ 137,440
</TABLE>
<TABLE>
<CAPTION>
December 31, 1993
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities held to maturity
Nontaxable states and
political subdivisions........ $ 38,857 $ 1,937 $ (60) $ 40,734
</TABLE>
Investments in states and political subdivisions and corporate
obligations are made within policy standards, which call for these
securities to be investment grade or better as established by
national rating organizations. These securities are actively
traded and have a readily available market valuation. Ratings and
market values of these securities are reviewed monthly with market
values being obtained from an independent rating service or
broker.
The amortized cost and estimated market value of securities at
December 31, 1994, by contractual maturity are shown below.
Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
<PAGE>
<TABLE>
<CAPTION>
Available for SaleHeld to Maturity
EstimatedEstimated
AmortizedMarketAmortizedMarket
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in 1 year or less...............$ 14,588$ 14,459$ 2,562$ 2,601
Due after 1 year through 5 years....45,32343,278 12,712 12,908
Due after 5 years through 10 years..9,957 9,228 20,795 19,916
Due after 10 years..................1,452 1,438 3,626 3,282
Subtotal..........................71,32068,403 39,695 38,707
Collateralized mortgage obligations.17,84317,138 -- --
U.S. agency mortgage-backed
securities........................27,40826,355 -- --
Mutual funds........................389 318 -- --
Total.............................$ 116,960$ 112,214$ 39,695$ 38,707
</TABLE>
Proceeds from sales of securities available for
sale were $9,451 in 1994 and $0 in 1993 and 1992.
Proceeds from sales of securities held to
maturity were $0 in 1994 and 1993 and $3,128 in
1992. Sales and calls of securities available
for sale during 1994 resulted in gross gains of
$43 and gross losses of $49. Sales and calls of
securities held to maturity resulted in gross
gains and gross losses of $62 and $49 in 1993 and
$100 and $28 in 1992, respectively.
Securities with a carrying value of $28,024 and
$27,912 at December 31, 1994 and 1993, were
pledged to secure public deposits and for other
purposes required or permitted by law.
Note 4 - LOANS
Loans as presented on the balance sheets are
comprised of the following.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Commercial loans........... $ 159,914 $ 144,047
Real estate loans.......... 79,464 61,364
Installment loans.......... 82,606 72,606
Total loans.............. 321,984 278,017
Unearned income............ (888)
(929)
Total loans, net......... $ 321,096 $ 277,088
</TABLE>
At December 31, 1994, 1993 and 1992, non-accrual loans
totalled $571, $891 and $1,355. Income recorded on
these loans during 1994, 1993 and 1992 totalled $17,
$17 and $25. Income which would have been recorded on
these loans during 1994, 1993 and 1992, had they been
accruing all year, was $51, $94 and $150.
Certain loans have been restructured in a manner that
grants a concession to the borrower because of the
borrower's financial difficulties. At December 31,
1994, 1993 and 1992, these loans totalled $490, $565
and $265. Interest income recorded on these loans was
$39, $40 and $15 during 1994, 1993 and 1992. Interest
income which would have been recorded under the
original terms of the loans was $44, $48 and $24 during
1994, 1993 and 1992.
Directors and executive officers of the Corporation and
its wholly owned subsidiaries were customers of, and
had other transactions with, the banking subsidiaries
in the ordinary course of business. A schedule of the
aggregate activity involving loans to related parties
follows.
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1994............. $ 11,171
New loans............................. 6,097
Loan reductions....................... (7,593)
Balance, December 31, 1994............$ 9,675
</TABLE>
Note 5 - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is as
follows.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Balance, January 1....... $3,685 $3,510 $3,369
Provision charged
to operations.......... 100 470 1,375
Loans charged off........ (538) (561) (1,479)
Recoveries............... 664 266 245
Balance, December 31..... $3,911 $3,685 $3,510
</TABLE>
Note 6 - PREMISES, FURNITURE AND EQUIPMENT
Premises, furniture and equipment as presented on the
balance sheets are comprised of the following.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Land and improvements...........$ 891 $ 918
Buildings and improvements........7,729 7,171
Furniture and equipment...........6,947 6,386
Total cost...................15,567 14,475
Accumulated depreciation.........(9,080) (8,271)
Total, net.................$ 6,487 $ 6,204
</TABLE>
Depreciation expense for the years ended December 31,
1994, 1993 and 1992, totalled $927, $1,021 and $923.
<PAGE>
Note 7 - INTEREST BEARING DEPOSITS
Interest bearing deposits issued in denominations of
$100 or greater totalled $46,086 and $42,889 at
December 31, 1994 and 1993.
Note 8 - SHORT-TERM BORROWINGS
Short-term borrowings included:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Federal funds purchased
and repurchase agreements.......$ 4,060 $ 2,377
Demand notes issued to the
U.S. Treasury..................... 1,630 4,602
Total...........................$ 5,690 $ 6,979
</TABLE>
Federal funds purchased generally mature daily. Borrowings under
the Federal Reserve Bank note option plan are collateralized by
certain securities and are reduced at the discretion of the U.S.
Treasury.
Note 9 - LONG-TERM DEBT
Long-term debt is comprised of a deferred compensation plan of $27
as discussed in Note 10 and two Federal Home Loan Bank Mortgage
Advances totalling $3,162. Thesedvances have an average rate of
5.65%, interest payable monthly and principal payable in annual
installments with the final payment due March 15, 2004. These
loan advances are secured by various securities. The principal
maturities of debt in each of the five years after December 31,
1994, will be $587, $484, $400, $332 and $211.
Note 10 - EMPLOYEE BENEFITS
ANB, CNB and FSB maintain a retirement savings plan (Plan)
covering substantially all employees. The Plan requires employees
to complete one year of service and be 21 years of age before
entering the Plan. Employee contributions are limited to a
maximum of 12% of their salary. The Plan allows for a matching of
the first 4% of employee salary contributions and an annual
discretionary contribution. The Corporation's contributions to
the Plan are vested by employees at 20% per year starting with the
second year of service and become 100% vested after six years of
service. The Corporation's total 401(k) contributions were $350,
$312 and $305 for 1994, 1993 and 1992.
Prior to December 31, 1994, BOC sponsored a defined benefit
pension plan covering substantially all employees. Benefits were
based primarily on years of service and on the employees' average
compensation during their period of employment. BOC's funding
policy was to contribute the minimum amount required by applicable
regulations. Plan assets consist primarily of investments in
interest bearing balances with financial institutions, U.S.
government bonds and marketable equity mutual funds.
BOC elected to eliminate the accrual of benefits for services
under the plan effective December 31, 1994, and intends to
terminate the plan on April 30, 1995. The effect of eliminating
the accrual of benefits is accounted for as a plan curtailment in
accordance with FAS No. 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits."
On December 31, 1994, the projected benefit obligation was $1,318
and accumulated plan benefits totalled $895, of which $871 was
vested. The fair value of plan assets available for benefits was
$925. The effect of curtailing the Plan was to recognize a
decrease in the projected benefit obligation of $215, to currently
recognize the transition obligation of $472, and to recognize a
gain of $208 at December 31, 1994. This net $49 curtailment loss
is included with pension costs in the consolidated statement of
income.
The following sets forth the Plan's funded status and amount
recognized in the financial statements at December 31 (amounts
computed as of December 31, 1994, and November 30, 1993).
<PAGE>
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Actuarial present value of accumulated
benefit obligations
Vested.................................... $ (1,090) $ (774)
Nonvested................................. (13) (30)
Total................................... (1,103) (804)
Additional benefits based on future
compensation levels....................... -- (341)
Projected benefit obligation for services
rendered to date.......................... (1,103) (1,145)
Plan assets at fair value................... 925 802
Plan assets in excess of projected
benefit obligation........................ (178) (343)
Items not yet recognized in income
Unrecognized gain......................... (81) (271)
Unrecognized transition obligation........ -- 502
Accrued pension liability................... $ (97) $ (112)
</TABLE>
Net pension expense included the following.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service cost-benefits earned................ $ 93 $ 76 $ 58
Interest cost on projected
benefit obligation........................ 84 79 67
Actual return on plan assets................ (35) (43) (39)
Net amortization and deferral............... 6 (4) (2)
Effect of curtailment loss.................. 49 -- --
Net pension expense....................... $ 197 $ 108 $ 84
</TABLE>
The weighted-average discount rate used in determining the
actuarial present value of projected benefit obligations was 5% in
1994 and 8% in 1993 and 1992. dditionally, the rate of increase
in future compensation assumed was 4% for 1994, 1993 and 1992.
The expected long-term rate of return on plan assets was 8% in
1994, 1993 and 1992.
During 1994 the Corporation implemented a deferred compensation
plan for the benefit of certain executive officers. In return for
relinquishing the right to a portion of their current
compensation, the Corporation agrees to pay the participants at
retirement or termination, in the form of 120 monthly payments or
one lump-sum payment, the amount deferred plus any interest earned
during the deferral period. Interest is paid annually at prime
rate and the liability of $27 is included with long-term debt on
the December 31, 1994, balance sheet. During 1994 the Corporation
accrued approximately $1 of interest expense towards its bligation
under the plan.
Note 11 - POSTRETIREMENT BENEFITS
As of January 1, 1993, the Corporation adopted the Financial
Accounting Standard No. 106 (FAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The Corporation
sponsors a postretirement benefit plan which provides defined
medical and death benefits. Employees hired before April 1990 who
retire after January 1, 1993, are eligible to receive
postretirement medical benefits for themselves, if they have
completed 20 years of service and attained age 62. Existing
retirees as of December 31, 1992, will receive postretirement
medical benefits for themselves and their spouses and death
benefits. Prior to the attainment of age 65 medical coverage is
provided under the Corporation's group major medical insurance
plan. At age 65 coverage is provided under a medicare supplement
plan.
The plan is contributory. Participants who were retired as of
December 31, 1992, are required to contribute an amount equal to
the amount they paid as of December 31, 1992, plus any future
increase in the applicable premium to provide the coverage.
Participants who retired on or after January 1, 1993, are required
to contribute an amount equal to the entire applicable premium to
provide the coverage, less sixty dollars or fifty percent,
whichever is lower, paid monthly by the Corporation.
The following sets forth the plans' funded status and amounts
recognized in the financial statements at December 31, 1994 and
1993.
Accumulated postretirement benefit obligations:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Retirees..........................$ (318) $ (377)
Fully eligible active
participants...................... (7) (16)
Other active plan participants.... (131) (182)
Accumulated postretirement benefit
obligation in excess of plan
assets.......................... (456) (575)
Unrecognized transition
obligation........................ 398 552
Accrued postretirement
benefit liability...........$ (58) $ (23)
</TABLE>
Net periodic postretirement benefit cost for the years
ended December 31, 1994 and 1993, included the
following components:
<TABLE>
<S> <C> <C>
Service cost-benefits
attributed to service
during the period............... $ 11 $ 10
Interest cost on
accumulated post-
retirement benefit
obligation...................... 40 41
Amortization of transition
obligation over 20 years........ 29 29
Post-retirement benefit
cost...................... $ 80 $ 80
</TABLE>
Benefit payments of $45 and $57 were made for postretirement
medical benefits in 1994 and 1993.
For measurement purposes, a 16% annual rate of increase in the per
capital cost of covered health care benefits was assumed for 1994
and 1993 with the rate gradually decreasing to 6% after 25 years.
The health care cost trend assumption has a significant effect on
the amounts reported. An increase in the assumed health care cost
trend rates by 1% in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1994 and
1993, by approximately $14 and would have virtually no effect on
the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1994 and 1993.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 6% and 7% at
December 31, 1994 and 1993.
<PAGE>
Note 12 - STOCK OPTION PLAN
The Corporation had a Nonqualified Stock Option Plan which expired
in April 1993. Under the terms of the plan, optionswere granted
at amounts not less than the fair market value of the shares at
the date of the grant and any options granted must be exercised
within ten years of the grant. As of December 31, 1994, 1993 and
1992, fully vested options for 24,000 shares at an option price of
$20 per share were outstanding.
Additionally, under provisions of the Nonqualified Stock Option
Plan, stock appreciation rights have been granted coinciding with
the number of stock options granted. The value of each stock
appreciation right at any time is equal to 50% of the excess of
the fair market value of one share of common stock of the
Corporation over the exercise price of the option to which it
relates. Employee benefits charged/(credited) to operations in
1994 and 1993 includes $(69) and $60 related to stock appreciation
rights.
Note 13 - INCOME TAXES
Income taxes consist of the following.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Income taxes
Current payable........................... $ 1,973 $ 2,314 $ 2,027
Deferred income taxes (benefits).......... 280 (373) (118)
Income taxes.............................. $ 2,253 $ 1,941 $ 1,909
</TABLE>
Income taxes applicable to securities transactions were
$3, $4 and $24 in 1994, 1993 and 1992.
The following is a reconciliation of income tax expense
and the amount computed by applying the statutory
federal income tax rate of 34% to income before income
taxes.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Statutory rate applied to income............ $ 2,617 $ 2,417 $ 2,327
Adjustments
Tax exempt interest income................ (868) (918) (835)
Non-deductible interest................... 108 107 140
Merger expenses........................... 66 48 1
State income taxes........................ 333 306 289
Surtax exemption and other................ (3) (19) (13)
Total income taxes...................... $ 2,253 $ 1,941 $ 1,909
</TABLE>
The source and related tax effect of significant timing
differences are as follows.
<TABLE>
<CAPTION>
1992
<S> <C>
Provision for loan losses............... $ (65)
Accretion of securities discount........ 9
Employee benefits....................... (33)
Other................................... (29)
Total................................ $ (118)
</TABLE>
The net deferred tax asset in the accompanying balance sheet
includes the following amounts of deferred tax assets and
liabilities at December 31.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Deferred tax asset................. $ 2,336 $ 706
Deferred tax (liability)........... (364) (658)
Valuation allowance................ -- --
Net deferred tax asset........... $ 1,972 $ 48
</TABLE>
The effects of principal temporary differences are shown in the
following table.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Allowance for loan loss............ $ 227 $ 219
Mark to market adjustment on loans
held for sale.................... (92) 165
Accrued employee benefits.......... 171 143
Unrealized loss/(gain) on
securities available for sale.... 1,784 (420)
Accretion of securities discount... (36) (61)
Depreciation....................... (125) (107)
Other.............................. 43 109
Total............................ $ 1,972 $ 48
</TABLE>
Note 14 - COMMITMENTS AND CONTINGENT LIABILITIES
The Corporation leases various facilities and equipment. These
leases expire at various times during the years 1995 through 2008
with renewal options through the year 2038. Certain of these
leases are with companies controlled by directors of the
Corporation and its subsidiaries and had total lease payments of
$41, $22 and $9 in 1994, 1993 and 1992. Total rental expense for
all leases for the years 1994, 1993 and 1992, was $87, $64 and
$29. The following is a schedule of future minimum lease
payments.
<TABLE>
<CAPTION>
<S> <C>
1995............ $ 81
1996............ 76
1997............ 69
1998............ 51
1999............ 30
Thereafter...... 328
Total......... $ 635
</TABLE>
In the ordinary course of business, the Corporation's banking
subsidiaries have loans, commitments and contingent liabilities,
such as guarantees and commitments to extend credit, which are not
reflected in the consolidated balance sheets. The Corporation's
exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to make
loans and standby letters of credit is represented by the
contractual amount of those instruments. The Corporation uses the
same credit policy to make such commitments as is used for
on-balance sheet items. Outstanding loan commitments and
customers' unused lines of credit amounted to $62,056 and $51,890
at December 31, 1994 and 1993. Outstanding standby letters of
credit were $6,408 and $5,674 at December 31, 1994 and 1993.
Since many commitments to make loans expire without being used,
the outstanding amount of commitments does not necessarily
represent future cash commitments. Collateral obtained upon
exercise of the commitment is determined using management's credit
evaluation of the borrower and may include accounts receivable,
inventory, property, land and other items.
The Corporation was required to have $6,295 and $6,720 at December
31, 1994 and 1993, on deposit with the Federal Reserve or as cash
on hand or on deposit with other banks. These reserves do not
earn interest.
Note 15 - SHAREHOLDERS' EQUITY
All share and per share amounts have been retroactively adjusted
to reflect the effect of the shares issued in the business
combinations discussed in Note 2, as though these shares had been
outstanding for all periods presented. Earnings per share amounts
are based on average outstanding shares of 2,370,004 for 1994 and
2,369,784 for 1993 and 1992.
In 1993 the directors of the Corporation approved the
establishment of a Dividend Reinvestment and Stock Purchase Plan
(Plan) to provide shareholders a method of purchasing additional
shares of the Corporation's common stock by reinvesting their cash
dividends or making optional cash payments into the Plan. Shares
will be credited to the participant's account at the market value
of the Corporation's stock at the date of the monthly purchase by
the Plan. The directors of the Corporation reserved 50,000 shares
for the Plan and issued 2,388 shares to the Plan in 1994.
Note 16 - DIVIDEND RESTRICTIONS
The Corporation and its wholly owned subsidiary banks are subject
to regulations which require the maintenance of certain capital
levels and, as a result, limit the amount of dividends which may
be paid by the banks. ANB and CNB are regulated by the
Comptroller of the Currency, FSB and BOC are regulated by the
Commissioner of Banks and Trust Companies in Illinois, while the
Corporation is regulated by the Federal Reserve Board. The most
restrictive of the regulations generally requires the banks to
maintain a minimum leverage capital to total asset ratio. As a
result of this limitation, approximately $25,220 of the $48,006
equity of the banks was restricted and unavailable for the payment
of dividends to the Corporation at December 31, 1994.
Additionally, the amount of dividends the banks may pay to the
Corporation in a single year without approval from regulators is
limited by regulation. Under the most restrictive regulations,
approximately $6,087 of undistributed earnings of the banks was
available for distribution to the Corporation at December 31,
1994. As a practical matter dividends are ordinarily restricted
to a lesser amount because of the need to maintain an adequate
capital structure.
Note 17 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table shows the carrying amount and estimated fair
value of financial instruments held by the Corporation at December
31, 1994 and 1993.
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Cash and cash equivalents..... $ 26,595 $ 26,595 $ 32,510 $ 32,510
Interest bearing deposits
in other banks.............. 1,193 1,196 890 915
Securities available for sale. 112,214 112,214 137,440 137,440
Securities held to maturity.... 39,695 38,707 38,857 40,734
Loans held for sale............ 2,664 2,675 16,919 17,709
Loans, less allowance for
loan losses................. 317,185 316,748 273,403 275,764
Demand and savings deposits... (236,808) (236,808) (240,499) (240,499)
Time deposits................. (218,426) (219,882) (212,123) (215,070)
Short-term borrowings......... (5,690) (5,690) (6,979) (6,979)
Long-term debt................. (3,189) (2,997) (1,000) (976)
</TABLE>
For purposes of the above disclosures of estimated fair value, the
following assumptions were used as of December 31, 1994 and 1993.
The estimated fair value for cash and cash equivalents is
considered to approximate cost. The estimated fair value for
securities is based on quoted market values for the individual
securities or for equivalent securities. The estimated fair value
for commercial loans is based on estimates of the difference in
interest rate the bank would charge the borrowers for similar
loans with similar maturities applied for an estimated time period
until the loan is assumed to reprice or be paid. The estimated
fair value for other loans is based on estimates of the rate the
bank would charge for similar such loans applied for the time
period until estimated repayment. The estimated fair value for
demand and savings deposits is based on their carrying value. The
estimated fair value for time deposits is based on estimates of
the rate the bank would pay on such deposits applied for the time
period until maturity. The estimated fair value for short-term
borrowings is considered to approximate cost. Rates currently
available to the Corporation for debt with similar terms and
remaining maturities are used to estimate fair value of existing
long-term debt. The estimated fair value for other financial
nstruments and off-balance sheet loan commitments approximate cost
and are not considered significant to this presentation because
the majority of these items are primarily at variable rates and
are not made for long term periods.
While these estimates of fair value are based on management's
judgment of the most appropriate factors, there is no assurance
that were the Corporation to have disposed of such items at
December 31, 1994 and 1993, the estimated fair values would
necessarily have been achieved at that date, since market values
may differ depending on various circumstances. The estimated fair
values at December 31, 1994 and 1993, should not necessarily be
considered to apply at subsequent dates.
In addition, other assets and liabilities of the Corporation that
are not defined as financial instruments are not included in the
above disclosures, such as property and equipment. Also, non-
financial instruments typically not recognized in financial
statements nevertheless may have value but are not included in the
above disclosures. These include, among other items, the
estimated earnings power of core deposit accounts, the earnings
potential of loan servicing rights, the earnings potential of the
bank's trust department, the trained work force, customer goodwill
and similar items.
<PAGE>
Note 18 - PARENT COMPANY STATEMENTS
Presented below are condensed balance sheets, statements of income
and cash flowsfor the parent company.
<TABLE>
<CAPTION>
Condensed Balance Sheets
December 31, 1994 and 1993
1994 1993
<S> <C> <C>
ASSETS
Cash on deposit with subsidiaries............. $ 570 $ 163
Investment in bank subsidiaries................ 48,006 48,143
Investment in non-bank subsidiaries............ 197 183
Premises, furniture and equipment, net......... 30 97
Other assets................................ 403 391
Total assets................................. $ 49,206 $ 48,977
LIABILITIES
Other liabilities...............................$ 169 $ 17
SHAREHOLDERS' EQUITY
Common stock.................................... 23,722 23,698
Retained earnings............................... 28,277 24,550
Unrealized gain/(loss) on securities
available for sale, net of tax............. (2,962) 712
Total shareholders' equity.................... 49,037 48,960
Total liabilities and shareholders' equity....$ 49,206 $ 48,977
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Condensed Statements Of Income
For the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
<S> <C> <C> <C>
OPERATING INCOME
Dividends received from bank subsidiaries....... $ 3,364 $ 2,093 $ 1,722
Rental income................................... 240 240 240
Other income.................................... 28 23 24
Total operating income............... 3,632 2,356 1,986
OPERATING EXPENSE
Other expenses.................................. 967 700 589
INCOME BEFORE INCOME TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF SUBSIDIARIES.......... 2,665 1,656 1,397
Income tax credit................................. (174) (116) (110)
INCOME BEFORE EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES........................ 2,839 1,772 1,507
Equity in undistributed earnings
of subsidiaries................................. 2,604 3,647 3,429
NET INCOME........................................ $ 5,443 $ 5,419 $ 4,936
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements Of Cash Flows
For the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................... $ 5,443 $ 5,419 $ 4,936
Adjustments to reconcile net income to
net cash from operating activities
Depreciation........................... 100 198 207
Equity in undistributed income of
subsidiaries...................... (2,604) (3,647) (3,429)
Other liabilities....................... 152 120 (119)
Other assets............................ (12) (82) 40
Net cash from operating activities.... 3,079 2,008 1,635
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows - Continued
For the years ended December 31, 1994, 1993 and 1992
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary.......................$ (947) $ -- $ --
Purchase of furniture and equipment............ (33) -- --
Net cash from investing activities... (980) -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt..................... -- (392) (284)
Dividends paid................................. (1,766) (1,532) (1,424)
Issuance of stock for dividend reinvestment
and stock purchase plan...................... 74 -- --
Net cash from financing activities........... (1,692) (1,924) (1,708)
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... 407 84 (73)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR... 163 79 152
CASH AND CASH EQUIVALENTS AT END OF YEAR......... $ 570 $ 163 $ 79
</TABLE>
<PAGE>
Note 19 - PENDING CHANGES IN ACCOUNTING PRINCIPLE
The Financial Accounting Standards Board had issued Financial
Accounting Standard No. 114, "Accounting by Creditors for
Impairment of a Loan." Under this pronouncement, companies are
required to adopt the new method of accounting for impaired loans
in 1995. The Corporation has determined that the implementation
of this standard will be immaterial to the financial statements.
Note 20 - PROPOSED ACQUISITION
On October 12, 1994, the Corporation entered into a definitive
agreement to acquire First Robinson Bancorp (FRB), the parent
holding company for The First National Bank in Robinson, Illinois.
Pursuant to the proposed acquisition, the Corporation has offered
between 555,075 and 666,090 shares of its common stock for the
outstanding shares of FRB. The actual number of shares of the
Corporation to be issued for FRB will be based upon the actual
market value of the Corporation's stock immediately prior to the
consummation of the transaction. The transaction will be
accounted for under the pooling of interests method. Consummation
of the transaction is subject to regulatory and FRB shareholders'
approval. FRB had total assets of $109,144 and total liabilities
of $99,971 at December 31, 1994, and net income of $1,059 for the
twelve months ended December 31, 1994.
On September 26, 1994, ANB entered into a definitive purchase and
assumption agreement with First Indiana Bank, a Federal Savings
Bank, to purchase the building and the outstanding deposits at the
date of closing, of their Princeton, Indiana branch. The
transaction will be accounted for as a purchase and consummation
of the transaction is subject to regulatory approval. Total
deposits of the First Indiana Bank branch to be acquired were
$26,021 as of December 31, 1994.
<PAGE>
MANAGEMENT'S REPORT
The management of AMBANC Corp. is responsible for the integrity of
all information contained in the accompanying financial statements
and other sections of this annual report. The statements have
been prepared in conformity with generally accepted accounting
principles and include amounts that are based on management's best
estimates and judgment.
In meeting its responsibility, management relies on the systems of
internal control which are designed to provide reasonable
assurance that assets are safeguarded and that transactions are
properly executed and recorded. The development and dissemination
of written policies and procedures, appropriate segregation of
duties and responsibilities and the conducting of a continuing
comprehensive program of internal audits provide further
enhancements to the systems of internal control.
The Audit Committee of the Board of Directors, consisting solely
of outside Directors, meets periodically with management, the
internal auditors and the independent auditors to review audits,
financial reporting and other related matters. The internal
auditors and the independent auditors have full and free access to
the Audit Committee to further assure their independence.
The financial statements have been audited by Crowe, Chizek and
Company, independent auditors. They were engaged to audit the
financial statements and to express an opinion thereon. Their
audit was conducted in accordance with generally accepted auditing
standards.
/s/ Robert G. Watson /s/ Richard E. Welling
Robert G. Watson Richard E. Welling, CPA
Chairman of the Board, Secretary, Treasurer and
C.F.O.
President and C.E.O.
<PAGE>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents an analysis of the consolidated financial condition of
AMBANC Corp. (Corporation) and its wholly-owned subsidiaries, The American
National Bank of Vincennes (ANB), Citizens' National Bank of Linton (CNB),
Farmers' State Bank of Palestine (FSB), Bank of Casey (BOC) (Collectively, the
"Banks") and American National Realty Corp. and Lincolnland Insurance Agency &
Investments, Inc. (LIA) at December 31, 1994 and 1993, and the consolidated
results of operations for the years ended December 31, 1994, 1993 and 1992.
This review should be read in conjunction with the consolidated financial
statements, notes to consolidated financial statements and other financial
data presented elsewhere in this Annual Report.
On June 1, 1993, the Corporation issued 395,090 shares of its common stock in
exchange for all of the outstanding common stock of FSB. On June 1, 1994, the
Corporation issued 542,338 shares of its common stock in exchange for all of
the outstanding common stock of Lincolnland Bancshares, Inc. (LBI), the parent
holding company of BOC and LIA. LBI was then merged into the Corporation.
These acquisitions were accounted for under the pooling of interests method.
Accordingly, the Corporation's financial statements and financial data have
been retroactively restated to include the accounts and operations of FSB and
LBI for all periods presented. Certain reclassifications have been made to
FSB's and LBI's historical financial statements to conform to the
Corporation's presentation.
RESULTS OF OPERATIONS
(Dollar amounts in thousands, except share and per share data)
Net income for 1994 was $5,443 or $2.30 per share compared to $5,419 or $2.29
per share in 1993 and $4,936 or $2.08 per share in 1992. Included in net
income for 1993 was an adjustment of $252, resulting from the adoption of
Financial Accounting Standard No. 109, "Accounting for Income Taxes." This
adjustment is shown on the income statement as the cumulative effect on prior
years of changing to a different method of accounting for income taxes.
Earnings per share for 1993 before this accounting change was $2.18. Earnings
expressed as a percent of average assets and average equity were:
<TABLE>
<CAPTION>
Percent of Percent of
Average Assets Average Equity
1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Income before cumulative
effect of accounting change. 1.07 % 1.04 % 1.02 % 11.16 % 11.19 % 11.51 %
Cumulative effect of
accounting change........... -- .05 -- -- .55 --
Net income.................. 1.07 % 1.09 % 1.02 % 11.16 % 11.74 % 11.51 %
</TABLE>
The following is an analysis of the critical components of net income for the
years 1994, 1993 and 1992 with discussion and analysis of the contrasts
between these periods and the effect of previous trends on anticipated future
earnings performance.
Net Interest Income
Net interest income is the principal source of the Corporation's earnings and
represents the difference between interest income on interest earning assets
and the interest cost of interest bearing liabilities. Income on certain
interest earning assets is exempt from federal income tax and, as is customary
in the banking industry, changes in net interest income are analyzed on a
fully tax equivalent basis. Under this method, and throughout this
discussion, nontaxable income on loans and securities is adjusted to an amount
which represents the equivalent earnings if such earnings were subject to
federal tax. The marginal tax rate used to restate nontaxable income was 34%
for 1994, 1993 and 1992.
<PAGE>
The yield on average interest earning assets and the rate paid on average
interest bearing liabilities is based upon three major factors: the
yield/rate received or paid, the mix of the individual components and the
volume of interest earning assets and interest bearing liabilities. While the
national prime rate is not the only indicator for yields received on assets or
the rates paid on liabilities by the Corporation, it does indicate a general
trend of current rates being received on assets and paid on liabilities. The
national prime rate averaged 6.26% in 1992, decreased to 6.00% all during 1993
and increased to an average of 7.14% during 1994. Yields received and rates
paid by the Corporation are a blend of current and past year's interest rates
due to the lag effect of the repricing of both long-term assets and long-term
liabilities. The following table shows the average balances, interest income
or expense and average yields and rates on interest earning assets and
interest bearing liabilities by type. It also shows the calculation of net
interest margin for 1994, 1993 and 1992.
<PAGE>
Consolidated Average Balance Sheets and Interest Rates
Years ended December 31, 1994, 1993 and 1992
(Dollar amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
1 9 9 4
Interest
Average Income/ Average
Balance Expense Average Balance
(Note A) (Note B) Rate (Note A)
<S> <C> <C> <C> <C>
ASSETS
Interest earning assets
Securities
U.S. Government................... $103,316 $ 5,449 5.27% $ 97,366
State and municipal
obligations..................... 42,027 3,621 8.62 39,809
Other............................. 26,464 1,413 5.34 36,194
Total securities................. 171,807 10,483 6.10 173,369
Interest bearing deposits
in other banks.................... 1,548 75 4.85 838
Loans held for sale................ 6,849 536 7.83 15,133
Total loans, less unearned
(Notes A and C).................. 299,919 25,034 8.35 268,954
Federal funds sold................. 5,551 222 4.00 13,266
Total interest earning assets and
interest income................. 485,674 $ 36,350 7.48% 471,560
Noninterest earning assets
Cash and due from banks............ 15,185 15,359
Premises and equipment, net........ 6,613 6,553
Other assets....................... 7,149 6,681
Allowance for loan losses.......... (3,799) (3,567)
Unrealized loss on securities
available for sale............... (1,748) --
Total assets..................... $509,074 $496,586
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities
Savings and demand deposits........ $186,631 $ 5,336 2.86% $181,563
Time deposits...................... 215,645 9,804 4.55 216,739
Total savings and
time deposits.................. 402,276 15,140 3.76 398,302
Short-term borrowings.............. 6,769 283 4.18 4,943
Long-term debt..................... 2,924 177 6.05 674
Total interest bearing
liabilities and
interest expense.............. 411,969 $ 15,600 3.79% 403,919
Noninterest bearing liabilities
Demand deposits.................... 46,048 43,370
Other.............................. 2,273 3,140
Shareholders' equity................ 48,784 46,157
Total liabilities and
shareholders' equity............ $509,074 $496,586
Interest margin recap
Interest income/interest
earning assets................... $ 36,350 7.48%
Interest expense/interest
earning assets................... 15,600 3.21
Net interest income/interest
earning assets................. $ 20,750 4.27%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 9 9 3 1 9 9 2
Interest Interest
Income/ Average Income/
Expense Average Balance Expense Average
(Note B) Rate (Note A) (Note B) Rate
<S> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Securities
U.S. Government.............. $ 5,659 5.81% $ 93,033 $ 6,551 7.04%
State and municipal
obligations................ 3,753 9.43 30,998 3,239 10.45
Other........................ 1,862 5.14 38,094 2,513 6.60
Total securities............ 11,274 6.50 162,125 12,303 7.59
Interest bearing deposits
in other banks.............. 58 6.92 1,878 129 6.87
Loans held for sale........... 1,280 8.46 10,511 1,017 9.68
Total loans, less unearned
(Notes A and C)............. 22,430 8.34 269,843 24,390 9.04
Federal funds sold............ 397 2.99 16,797 564 3.36
Total interest earning
assets and interest income. $ 35,439 7.52% 461,154 $ 38,403 8.33%
Noninterest earning assets
Cash and due from banks....... 13,578
Premises and equipment, net... 6,499
Other assets.................. 6,679
Allowance for loan losses..... (3,340)
Unrealized loss on securities
available for sale.......... --
Total assets................ $484,570
LIABILITIES AND SHAREHOLDERS'
EQUITY
Interest bearing liabilities
Savings and demand deposits...$ 5,420 2.99% $159,999 $ 5,628 3.52%
Time deposits.................. 10,101 4.66 232,603 12,599 5.42
Total savings and
time deposits............. 15,521 3.90 392,602 18,227 4.64
Short-term borrowings......... 167 3.38 5,598 236 4.22
Long-term debt................ 32 4.75 41 3 7.32
Total interest bearing
liabilities and
interest expense......... $ 15,720 3.89% 398,241 $ 18,466 4.64%
Noninterest bearing liabilities
Demand deposits............... 39,680
Other......................... 3,757
Shareholders' equity........... 42,892
Total liabilities and
shareholders' equity....... $484,570
Interest margin recap
Interest income/interest
earning assets.............. $ 35,439 7.52% $ 38,403 8.33%
Interest expense/interest
earning assets.............. 15,720 3.33 18,466 4.01
Net interest income/interest
earning assets............ $ 19,719 4.19% $ 19,937 4.32%
</TABLE>
Note A -Included in total loans are non-accrual loans.
Note B -Interest income includes the effects of taxable
equivalent adjustments using a marginal federal tax rate
of 34% for 1994, 1993 and 1992. The total adjustment to
convert tax exempt loans and securities to a fully tax
equivalent basis was $1,327, $1,402 and $1,258 for 1994,
1993 and 1992.
Note C -Net loan fees and costs included in interest income
on loans amounted to $706, $428 and $355, for the years 1994,
1993 and 1992.
Net interest income in 1994 increased $1,031 or 5.23% from 1993,
and the percent of net interest margin, or net interest income to
average interest earning assets, increased to 4.27% in 1994 from
4.18% in 1993. This increase in net interest income was due to
favorable rate and volume changes during 1994 when compared to
1993. During 1994 yields on average interest earning assets
decreased more slowly than rates on average interest bearing
liabilities. Yields on interest earning assets decreased .04% to
7.48% from 7.52% in 1993 while rates on interest bearing
liabilities decreased .10% to 3.79% in 1994 from 3.89% in 1993.
As illustrated below, total average interest earning assets also
increased $12,366 or 2.62% in 1994 from 1993 while average
interest bearing liabilities increased $8,050 or 1.99% in 1994
from 1993.
Net interest income in 1993 decreased $218 or 1.09% from 1992,
and the percent of net interest margin, or net interest income to
average interest earning assets, decreased to 4.19% in 1993 from
4.32% in 1992. This decrease in net interest income was due to
unfavorable rate changes offset by favorable volume changes
during 1993 when compared to 1992. During 1993 yields on average
interest earning assets decreased faster than rates on average
interest bearing liabilities. Rates on interest earning assets
decreased .81% to 7.52% in 1993 from 8.33% in 1992 while rates on
interest bearing liabilities decreased .75% to 3.89% in 1993 from
4.64% in 1992. The total average interest earning assets did
increase $10,406 or 2.26% in 1993 from 1992 while average
interest bearing liabilities increased $5,678 or 1.43% in 1993
from 1992.
The following table illustrates the total average interest
earning assets and average interest bearing liabilities and net
interest earning assets for 1994, 1993 and 1992.
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Average interest earning assets....... $483,926 $471,560 $461,154
Average interest bearing liabilities.. 411,969 403,919 398,241
Net interest earning assets........... $ 71,957 $ 67,641 $ 62,913
</TABLE>
Net interest income is also affected by volume and rate of
average interest earning assets and average interest bearing
liabilities. The following table depicts the dollar effect of
volume and rate changes from year to year for the different types
of interest earning assets and interest bearing liabilities and
the resultant change in interest income and interest expense from
volume and rate changes from year to year. Variances which were
not specifically attributable to volume or rate were allocated
proportionately between each based on the overall effect of each
to the total. Non-performing loans are included with loans in
the table.
Changes in Net Interest Income
<TABLE>
<CAPTION>
1994 compared to 1993 1993 compared to 1992
Increase/(decrease) Increase/(decrease)
due to change in due to change in
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Interest income
Loans................... $2,585 $ 19 $ 2,604 $ (74)$(1,886) $(1,960)
Loans held for sale..... (648) (96) (744) 391 (128) 263
Interest bearing deposits
with other banks...... 34 (17) 17 (72) 1 (71)
Securities
U.S. Govt. & its
agencies.............. 314 (524) (210) 252 (1,144) (892)
State and
municipalities........ 191 (323) (132) 831 (317) 514
Other................. (520) 71 (449) (98) (553) (651)
Total securities...... (15) (776) (791) 985 (2,014) (1,029)
Federal funds sold...... (308) 133 (175) (106) (61) (167)
Total interest income. 1,648 (737) 911 1,124 (4,088) (2,964)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1994 compared to 1993 1993 compared to 1992
Increase/(decrease) Increase/(decrease)
due to change in due to change in
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Interest expense
Deposits
Interest bearing demand
and savings............. $ 145 $ (229) $ (84) $ 644 $ (852) $ (208)
Time...................... (50) (247) (297) (739) (1,759) (2,498)
Short-term borrowings....... 76 40 116 (22) (47) (69)
Long-term debt.............. 137 8 145 30 (1) 29
Total interest expense.. 308 (428) (120) (87) (2,659) (2,746)
Net interest income... $1,340 $ (309) $ 1,031 $ 1,211 $(1,429)$ (218)
</TABLE>
As stated previously, general interest rates increased in 1994
from 1993 and the Corporation's average interest earning assets
and interest bearing liabilities both increased. The volume
increase added $1,648 interest income on average interest bearing
assets and increased interest cost on average interest bearing
liabilities by only $308 for a total net interest income increase
of $1,340 due to volume changes. The rate increases in 1994 were
offset by the lag effect of lower rates on long-term assets and
liabilities and left the Corporation's interest income being
reduced $737 on average interest bearing assets and reduced
interest cost by $428 on average interest bearing liabilities for
a total decrease of $309 in net interest income due to rate
changes. The volume increase and rate decrease combined to
provide the $1,031 increase in net interest income for 1994 when
compared to 1993.
Rates actually reduced slightly in 1993 from 1992 while the
Corporation's volume of interest earning assets and interest
bearing liabilities increased. The volume increase added $1,124
to interest income on average interest earning assets and reduced
the interest expense on average interest bearing liabilities by
$87 for a total increase of $1,211 to net interest income due to
volume. The interest expense reduction from volume is
contradictory to an overall increase in average interest bearing
liabilities but is explained by the large decrease in average
time deposits during 1993. Time deposits historically have been
at higher rates than other types of deposits and their volume
reduction more than offset any expense increase due to volume
increases on the other deposit products of the Corporation during
1993. The slight rate decrease in 1993 from 1992 plus the lag
effect of older higher rates on assets and liabilities running
off caused a $4,088 reduction in interest income from average
interest earning assets and a reduction of $2,659 from interest
expense on average interest bearing liabilities for a total
decrease of $1,429 in net interest income during 1993. The
volume increase offset by a higher rate reductions combined to
provide the $218 decrease in net interest income for 1993 when
compared to 1992.
Provision for Loan Losses
<PAGE>
The provision for loan losses provides a reserve (the allowance
for loan losses) to which loan losses are charged as those losses
become evident. Management of each bank determines the
appropriate level of the allowance for loan losses on a quarterly
basis utilizing a report containing loans with a more than normal
degree of risk. This report is the by-product of an ongoing loan
review process, the purpose of which is to determine the level of
credit risk within the portfolio and to ensure proper adherence
to underwriting and documentation standards. Utilizing this
report, a specific portion of the reserve is allocated to those
loans which are considered to represent significant exposure to
risk. In addition, estimates are made for potential losses on
consumer loans, residential mortgage loans and commercial loans
not specifically reviewed based on historical loan loss
experience and other factors and trends.
The provision for loan losses for 1994 was only $100 compared to
$470 in 1993 and $1,375 in 1992. The reduced provision during
1994 was the result of a continued overall improvement in the
credit quality of the loan portfolio and additional recoveries of
loans previously charged off. Total loan charge-offs for 1994
decreased $23 to $538 from $561 in 1993 and nonperforming loans
decreased $293 to $1,703 in 1994 from $1,996 in 1993 and were
only .53% of total loans at year end 1994. The 1993 provision
was also lower than 1992 due to overall improvements in the loan
portfolio and the fact that net loan charge-offs in 1993 were
only $295 compared to $1,234 in 1992. Total nonperforming loans
at year end 1993 were also reduced to .72% of total loans from
.85% of total loans at year end 1992. The ending allowance for
loan losses as a percent of loans decreased to 1.22% at 1994 from
1.33% at 1993 and 1992. The ratio of net loans charged off as a
percent of total average loans has remained well below 1% and was
(.04)% in 1994, .11% in 1993 and .46% in 1992.
<PAGE>
An analysis of the allowance for loan losses for the past five
years follows.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Balance at beginning
of year................. $ 3,685 $ 3,510 $ 3,369 $ 3,746 $ 3,839
Loans charged off
Commercial and
agricultural......... 256 212 749 1,319 861
Real estate............ 31 105 270 194 370
Installment............ 192 195 410 511 504
Other.................. 59 49 50 59 93
Total charge-offs.. 538 561 1,479 2,083 1,828
Charge-offs recovered
Commercial and
agricultural......... 500 157 127 191 182
Real estate............ 54 18 26 38 122
Installment............ 102 84 86 158 125
Other.................. 8 7 6 2 4
Total recoveries... 664 266 245 389 433
Net loans charged off.... (126) 295 1,234 1,694 1,395
Current year provision... 100 470 1,375 1,317 1,302
Balance at end of year... $ 3,911 $ 3,685 $ 3,510 $ 3,369 $ 3,746
Loans at year end........ $321,096 $277,088 $263,296 $265,861 $275,575
Ratio of allowance
to loans at year end... 1.22 % 1.33 % 1.33 % 1.27 % 1.36 %
Average loans............ $299,919 $268,954 $269,843 $268,780 $265,828
Ratio of net loans
charged off to
average loans.......... (.04)% .11 % .46 % .63 % .52 %
</TABLE>
As noted above, total charge-offs decreased to $538 in 1994 from
$561 in 1993 and $1,479 in 1992. The improved economy plus
excellent farm crops during the past three years lead to the
reduction of loan charge-offs.
Nonperforming assets are defined as nonaccrual loans for which
the ultimate collectibility of interest is uncertain, but for
which the principal is considered collectible; restructured loans
which have had an alteration to the original interest rate,
repayment terms or principal balance because of a deterioration
in the financial condition of the borrower; and loans past due
over 90 days but still accruing interest because the interest is
ultimately considered collectible. Nonperforming assets also
include other real estate owned which has been acquired through
foreclosure or acceptance of a deed in lieu of foreclosure.
Other real estate owned is carried at the lower of cost or fair
value less estimated selling costs, and is actively being
marketed for sale. The following table sets forth the components
of nonperforming assets and their percentage to loans at the year
end for the past five years.<PAGE>
<TABLE>
<CAPTION>
Nonperforming Assets at December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Nonaccrual loans........ $ 571 $ 891 $ 1,355 $ 2,222 $ 3,534
Restructured............ 490 565 265 447 1,010
90 days or more past
due.................... 642 540 626 1,165 586
Total nonperforming
loans.............. $ 1,703 $ 1,996 $ 2,246 $ 3,834 $ 5,130
Percent of loans........ .53 % .72 % .85 % 1.44 % 1.86 %
Other real estate owned. $ 439 $ 367 $ 728 $ 720 $ 555
Percent of loans........ .14 % .13 % .28 % .27 % .20 %
</TABLE>
The following table compares the allowance for loan losses and
the total nonperforming loans at year end for the past three
years.
<TABLE>
<CAPTION>
December 31,
1994 1993 1992
<S> <C> <C> <C>
Allowance for loan losses..................... $ 3,911 $ 3,685 $ 3,510
Nonperforming loans........................... 1,703 1,996 2,246
Allowance as a percent of nonperforming
loans........................................ 230 % 185 % 156 %
</TABLE>
Assets considered to be nonperforming are reviewed more
frequently by management for repayment probability and residual
collateral values. All restructured loans shown above for 1994,
1993, 1992 and 1991 have been performing within the terms of
their restructured agreements. The level of nonperforming loans
decreased $1,588 or 41.42% between 1991 and 1992. The decrease
was primarily attributable to two commercial loan customers
totaling $974 that were on nonaccrual at the end of 1991 but
which had payoffs or were liquidated by the end of 1992. The
decrease between 1990 and 1991 is due to nonperforming loans
being charged off.
In addition to the nonperforming loans, there are other loans in
the portfolio that have been identified by management or through
an ongoing loan review process as having more than a normal
degree of risk. These loans are reviewed quarterly by management
and totalled $5,924 or 1.84% of total loans at December 31, 1994.
Based upon the Corporation's review, considering remaining
collateral and/or financial condition of identified loans with a
more than normal degree of risk, including nonperforming loans,
historical loan loss percentages and economic conditions, it is
management's belief that the $100 of provision for loan losses
during 1994 and the $3,911 of allowance for loan losses at
December 31, 1994, is adequate to cover future possible losses.
<PAGE>
Allocation of allowance for loan losses at December 31,
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Commercial and
agricultural............. $ 965 $ 1,083 $ 1,140 $ 1,431 $ 1,741
Real estate............... 203 227 112 325 507
Installment............... 603 412 359 564 479
Unallocated............... 2,140 1,963 1,899 1,049 1,019
Total.................. $ 3,911 $ 3,685 $ 3,510 $ 3,369 $ 3,746
</TABLE>
Composition of loan portfolio by type at December 31,
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Commercial and
agricultural......... 49.80 % 51.98 % 50.52 % 52.17 % 49.38 %
Real estate............. 24.75 22.15 26.36 25.43 27.31
Installment............. 25.45 25.87 23.12 22.40 23.31
Total................100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
</TABLE>
The allowance for loan loss allocation is based upon the
management's assessment of specific allocation to loan types and
to historical loan loss percentages by loan type. The above
shows a large portion of the allowance for loan loss at year end
1994, 1993 and 1992 that is unallocated and available to cover
unidentified risks in the portfolio due to possible economic
problems and continued loan growth.
The Corporation's loan growth of 15.88% during 1994, including an
11.02% increase in commercial loans, has not added any unusual
risk to the loan portfolio. The market areas served, customers
and types of loans included in the 1994 loan growth were
consistent with those serviced by the Corporation in prior years.
Noninterest Income
A bank typically generates noninterest income through fees and
service charges. The following table outlines the components of
noninterest income for the years 1994, 1993 and 1992.
<TABLE>
<CAPTION>
% Change From
Noninterest Income Analysis Prior Year
1994 1993 1992 1994 1993
<S> <C> <C> <C> <C> <C>
Fiduciary income.............. $ 387 $ 419 $ 383 (7.64)% 9.40 %
Deposit service charges....... 1,116 1,174 1,149 (4.94) 2.18
Other operating income........ 894 981 548 (8.87) 79.01
Subtotal.................... 2,397 2,574 2,080 (6.88)% 23.75 %
Security gains/(losses)....... (6) 13 72
Total noninterest income.... $ 2,391 $ 2,587 $ 2,152
</TABLE>
<PAGE>
Noninterest income in 1994, excluding security gains and losses,
decreased $177 or 6.88% from 1993. Fiduciary income decreased
$32 or 7.64% due to decreases in trust business and lower profits
due to the general increase in the investment market rates. A
portion of the trust business derives profits based on a
percentage of profits of individual trust accounts invested in
different market instruments which were valued lower due to the
general rate increase of the market. Deposit service charges
were down $58 or 4.94% due to an overall reduction of fees during
1994 when compared to 1993. Other operating income decreased $87
or 8.87% in 1994 from 1993 due to land sales in 1993 and not in
1994, reduced gains in 1994 on sales of loans held for sale when
compared to 1993 offset by increases in other service charges and
insurance commission income. Noninterest income in 1993,
excluding security gains and losses, increased $494 or 23.75%
from 1992. Fiduciary income increased $36 or 9.40% due to growth
in the trust business during 1993 and generally lower rates in
the investment markets. Deposit service charges stayed almost
the same with only a $25 or 2.18% increase. Other operating
income increased $433 or 79.01% in 1993 from 1992. This growth
is mainly due to increases in customer service charges, insurance
commission income, gain on sale of excess land, gain on sale of
loans held for sale and earnings on cash surrender value of life
insurance.
<TABLE>
<CAPTION>
Noninterest Expense
% Change From
Noninterest Expense Analysis Prior Year
1994 1993 1992 1994 1993
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits.. $ 7,168 $ 6,920 $ 6,536 3.58 % 5.88 %
Occupancy expenses.............. 854 779 757 9.63 2.91
Equipment expenses.............. 847 853 767 (.70) 11.21
Data processing expenses........ 442 583 682 (24.19) (14.52)
FDIC insurance.................. 1,008 987 961 2.13 2.71
Other operating expenses........ 3,699 3,204 2,908 15.45 10.18
Total noninterest expense.... $ 14,018 $ 13,326 $ 12,611 5.19 % 5.67 %
</TABLE>
Noninterest expense increased $692 or 5.19% in 1994 from 1993 and
increased $715 or 5.67% in 1993 from 1992. Salaries and benefits
increased $248 or 3.58% in 1994 from 1993 with increases in
salaries and related taxes offset by reductions in medical
insurance, life insurance and expenses related to stock
appreciation rights granted to certain key employees. The
decrease in the market value of the Corporation's stock during
1994 decreased the expense related to the stock appreciation
rights by $69 in 1994. Salary and benefits increased $384 or
5.88% in 1993 from 1992 with increases in salaries and related
taxes, medical insurance, pension expense, education expense and
expense related to the stock appreciation rights which was $60
for 1993.
The increases in occupancy expense of $75 or 9.63% in 1994 from
1993 were related to the Corporation opening a new branch,
acquiring another branch and making needed repairs to several
branches during 1994. The change in occupancy expense in 1993
from 1992 was slight with an increase of only $22 or 2.91%.
Equipment expense decreased only $6 in 1994 from 1993 which had
increased $86 or 11.21% from 1992. The equipment expense
increases in 1993 are due mainly to additional depreciation and
contract expense related to continued increases in the use of
technology by the Corporation.
Data processing expenses decreased $141 or 24.19% in 1994 from
1993 and decreased $99 or 14.52% in 1993 from 1992. The
Corporation has continued to seek efficiencies by combining the
data processing operations of its affiliate banks. FSB was
converted to ANB's in-house data processing system in 1993 and
CNB and another bank now operated by ANB were converted in 1992.
With the elimination of the outside service bureaus and the
conversion expenses, data processing expenses continue to
decrease.
The FDIC deposit insurance premium rate paid by the Corporation
to provide insurance on customers' deposits was .23% in 1994,
1993 and 1992. The increases in FDIC insurance for 1994, 1993
and 1992 are due entirely to increased insured deposit balances.
The Banks have all been assigned the classification of least risk
by the FDIC and as such will be subject to the lowest possible
FDIC, deposit insurance rates in 1995. With the FDIC fund
approaching its required 1.25% of insured deposits, it is
anticipated that the Corporation's cost for FDIC insurance will
be reduced to .04% sometime during 1995.
Other operating expenses increased $495 or 15.45% in 1994 from
1993. Major increases were professional and legal fees related
to acquisition activities, supplies, telephone, bank processing
fees as the Corporation paid hard dollar charges verses soft
dollar charges, advertising, director fees, other real estate
owned expenses and officer travel expenses offset by reductions
in charitable contributions and loan collection and repossession
expenses. Other operating expenses increased $296 or 10.18% in
1993 from 1992. Major increases were professional and legal fees
related to acquisition activities, supplies, telephone, bank
processing fees, advertising, director fees, publications and
subscriptions, other real estate owned expense offset by
reductions in charitable contributions and loan collection and
repossession expenses.
Income Tax
Effective January 1, 1993, the Corporation adopted Financial
Accounting Standard No. 109 (FAS 109), "Accounting for Income
Taxes." FAS 109 is an asset and liability approach that requires
the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of assets and liabilities.
In estimating future tax consequences, FAS 109 generally
considers all expected future events other than enactments of
changes in the tax law or rates. The effect of adopting FAS 109
in 1993 was to increase net income by $252 which is shown as the
cumulative effect on prior years of changing to a different
<PAGE>
method of accounting for income taxes on the 1993 income
statement.
The Corporation's effective tax rate was 29.27%, 27.31% and
27.89% in 1994, 1993 and 1992. The major differences between the
effective tax rate on the financial statements and the federal
statutory rate of 34% is interest income on tax exempt securities
and loans offset by nondeductible interest, nondeductible merger
expenses and state taxes. The Corporation had tax exempt income
of $2,576, $2,722 and $2,443 for 1994, 1993 and 1992. Note 13 to
the consolidated financial statements contains additional details
of the differences between the statutory taxes and taxes shown on
the consolidated financial statements.
Investments
The Corporation's holdings of short-term investments and
securities serve as a source of liquidity to meet depositor and
borrower funding requirements, in addition to being a significant
element of total interest income. Short-term investments,
defined as federal funds sold and interest bearing deposits in
other banks, had combined average outstanding balances of $7,099,
$14,104 and $18,675 for the years 1994, 1993 and 1992. The year
end outstanding balances of short-term investments were $8,193,
$16,236 and $39,892 for 1994, 1993 and 1992. The decreases in
short-term investments is due to large fluctuations in deposits
from public and governmental institutions which are invested in
federal funds sold at year end.
Effective December 31, 1993, the Corporation adopted Financial
Accounting Standard No. 115 (FAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." With the adoption of
FAS 115, all securities were classified by management into one of
two categories either available for sale or held to maturity.
The Corporation does not maintain any securities that are held
for trading. Securities classified as available for sale are
securities that the Corporation intends to hold for an indefinite
period of time, but not necessarily until maturity. These
securities might be used by the Corporation as part of its asset-
liability strategy, or may be sold in response to changes in
interest rates, changes in prepayment risk or other similar
factors. Securities available for sale are carried at market
value with market adjustments, net of related deferred taxes,
being recorded in shareholders' equity as unrealized gain or loss
on securities. The decrease in market value of securities
available for sale during 1994 resulted in a decrease of $4,746
to the carrying value of securities and a $2,962 unrealized loss
on securities in shareholders' equity, which is net of the
deferred taxes of $1,783. The increase in market value of
securities available for sale in 1993 increased the carrying
value of securities by $1,132 and caused an unrealized gain on
securities of $712 in shareholders' equity, net of deferred taxes
of $420. The change in carrying value from 1993 to 1994 of
$5,877 for securities available for sale was caused by the market
change in investment products during 1994. Should rates continue
to increase during 1995 the portfolio will be subject to further
market valuation declines. Prior to December 31, 1993, and the
adoption of FAS 115, all securities owned by the Corporation were
classified as held to maturity. The following table shows the
detail of securities held by the Corporation at year end for the
past three years.
<TABLE>
<CAPTION>
Securities at December 31,
1994 1993 1992
<S> <C> <C> <C>
Securities available for sale
U.S. Government and its agencies................ $ 89,371 $101,649 $ --
States and political subdivisions............... 1,834 2,471 --
Corporate obligations........................... 3,553 7,620 --
Collateralized mortgage obligations............. 17,138 25,341 --
Mutual funds.................................... 318 359 --
Total securities available for sale.......... 112,214 137,440 --
Securities held to maturity
U.S. Government and its agencies................ -- -- 89,522
States and political subdivisions............... 39,695 38,857 37,072
Corporate obligations........................... -- -- 12,441
Collateralized mortgage obligations............. -- -- 25,706
Total securities held to maturity............ 39,695 38,857 164,741
Total securities............................. $151,909 $176,297 $164,741
</TABLE>
The market value of securities held to maturity was $38,707,
$40,734 and $168,031 for 1994, 1993 and 1992. The unrecognized
net market appreciation of securities held to maturity at
December 31, 1994, was comprised of securities with a book value
of $24,689 having a market value of $23,268, or a net unrealized
market decline of $1,421, and securities with a book value of
$15,006 having a market value of $15,439, or a net unrealized
market appreciation of $433.
The Corporation sold $9,451 with net losses of $6, had maturities
and calls of $37,328 and purchased $27,858 for a net book value
decrease of $19,348 in securities available for sale during 1994.
Maturities and calls of $3,232 and purchases of $4,020 resulted
in an increase to securities held to maturity of $838 during
1994. Total net proceeds from securities of $18,127 were used to
fund increased loans during 1994. Securities held to maturity
contain no material unrealized losses as of December 31, 1994.
None of the unrealized losses on securities are deemed to be
other than temporary declines in market values. Other than U.S.
Government and its agencies, there are no concentrations of
securities over 10% of shareholders' equity to any single issuer.
Loans
The loan portfolio constitutes the major earning asset of most
bank holding companies and typically offers the best alternative
for obtaining the maximum interest spread above the cost of
funds. The overall economic strength of any bank holding company
generally parallels the quality and yield of its loan portfolio.
The Corporation's total average loans were $299,919 in 1994 an
increase of $30,965 or 11.51% from 1993. The Corporation had
<PAGE>
total average loans of $268,954 in 1993 a decrease of $889 or
.33% from the 1992 total average loans of $269,843. The
following table presents loans outstanding at year end for the
preceding five years.
<TABLE>
<CAPTION>
Loans Outstanding at December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Commercial and agricultural....... $159,914 $144,047 $133,011 $138,713 $136,073
Real estate....................... 79,464 61,364 69,410 67,607 75,261
Installment....................... 82,606 72,606 61,677 60,243 64,861
Total loans..................... 321,984 278,017 264,098 266,563 276,195
Unearned income................... (888) (929) (802) (702)
(620)
Total loans, net................ $321,096 $277,088 $263,296 $265,861 $275,575
</TABLE>
Commercial and agricultural loans increased $15,867 or 11.02% in
1994 from 1993 and increased $11,036 or 8.30% in 1993 from 1992.
The economy began to rebound in late 1992, and the Corporation
experienced a corresponding increase in new commercial and
agricultural loans starting in mid 1993 and continuing through
1994.
During 1991 the Corporation began originating and/or selling real
estate loans to the secondary mortgage market and established a
new asset category on the balance sheet, loans held for sale,
with balances of $2,664, $16,919, $11,553 and $12,198 at year end
1994, 1993, 1992 and 1991. These conforming fixed rate mortgage
loans could be sold to the secondary market with the Corporation
retaining more than 95% of the servicing rights on these loans
sold. This practice of originating and selling to the secondary
mortgage market was begun because of low interest rates on
mortgage loans which increased consumer demand for fixed rate
loans as opposed to adjustable rate mortgages loans. The
Corporation's strategy has been to hold fixed rate loans during
periods of decreasing rates and sell them during periods of
increasing rates to realize a gain. The portfolio of loans held
for sale at the end of 1993 plus new qualifying loans made during
1994 provided for total sales of $35,676 of these loans with a
corresponding net gain of $229. The Corporation also sold
$39,591, $19,873 and $1,027 of these real estate loans held for
sale in 1993, 1992 and 1991 with corresponding net gains of $265,
$109 and $5. With the drastic increase in fixed mortgage rates
consumers started to request variable rate mortgage loans in 1994
and real estate loans increased $18,100 or 29.50% in 1994 from
1993. During 1993 and prior years real estate loans were
reducing because almost all new loans and loans refinanced were
fixed rate loans and were included with loans held for sale.
Installment loans increased $10,000 or 13.77% in 1994 from 1993
and $10,929 or 17.71% in 1993 from 1992. These increases were
largely attributable to an overall increase in volume of consumer
loans during the period. Consumer lending relates directly to
consumer confidence in the economy which increased in the last
quarter of 1992 and continued to improve in 1993 and 1994.<PAGE>
The loan portfolio contains no loans to foreign governments,
foreign enterprises or foreign operations of domestic
corporations. Other than loans for real estate, equipment and
operating lines to farmers engaged in the agricultural industry,
the Corporation has no concentrations of loans in the same or
similar industries that exceed 10% of total loans.
Deposits
The deposit base provides the major funding source for earning
assets of most bank holding companies. Generally, demand,
savings and time certificates less than $100 are recognized as
the core base of deposits while certificates in excess of $100
and public funds are more subject to interest variations and,
thus, are not included in the core deposit base. Because of
these factors, management views the growth of demand, savings and
time certificates less than $100 as more stable growth. The
Corporation's total average core deposits were $404,766 in 1994,
$392,200 in 1993 and $383,053 in 1992. Total average deposits
were $448,324, $441,672 and $432,282 during 1994, 1993 and 1992.
The following table indicates the mix and levels of deposits at
year end for the preceding five years.
<TABLE>
<CAPTION>
Deposits at December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Noninterest bearing............... $ 51,838 $ 50,455 $ 48,373 $ 41,054 $ 41,653
Interest bearing demand
and savings..................... 184,970 190,044 182,164 148,044 154,699
Time, less than $100.............. 172,340 169,234 179,020 193,701 194,025
Time, $100 or more................ 46,086 42,889 41,914 48,227 41,504
Total.......................... $455,234 $452,622 $451,471 $431,026 $431,881
</TABLE>
Year end total deposits increased only $2,612 or .58% in 1994
from 1993 and only $1,151 or .25% in 1993 from 1992. During the
last quarter of 1994 with rates increasing, the Corporation
experienced deposit customers returning to the Banks from the
nonbanking institutions such as brokerage firms and insurance
companies. Despite the increase in the demand for deposit
dollars from other banks in the area, the Banks are trying to
increase net interest margin by keeping rates as low as possible.
As a result, the December 31, 1994, deposits saw only a $1,383 or
2.74% increase in noninterest bearing deposits, a decrease of
$5,074 or 2.67% in interest bearing demand and savings, a $3,106
or 1.84% increase in time deposits less than $100 and a $3,197 or
7.45% increase in time deposits over $100 when compared to
December 31, 1993. As stated above, average total deposits
increased $6,652 or 1.51% during 1994 when compared to 1993. At
the end of 1993 rates were still low and the Banks were
experiencing continued competition for deposits from nonbanking
institutions. The December 31, 1993, deposits saw an increase of
$2,082 or 4.30% in noninterest bearing deposits, a $7,880 or
4.33% increase in interest bearing demand and savings, a decrease
of $9,786 or 5.47% in time deposits less than $100 and an
increase of $975 or 2.33% in time deposits over $100 when
compared to December 31, 1992. Average deposits for 1993
increased $9,390 or 2.17% when compared to 1992. The year end
balances for 1991 and 1990 remained almost constant but did show
a $20,445 or 4.74% increase at year end 1992 compared to 1991.
As the economy was softening and rates were declining in 1991 and
1992 the Corporation saw customers becoming more rate conscious
and moving deposit balances to interest bearing deposits.
Average deposits increased $7,179 or 1.69% to $432,282 in 1992
compared to 1991 and increased $16,376 or 4.01% to $425,103 in
1991 from 1990. It should also be noted that the Corporation has
historically had a build up of deposits at year end due to an
influx of public funds.
As discussed in Note 20 to the consolidated financial statements,
ANB has entered into a definitive agreement to purchase the total
branch deposits of a Federal Savings Bank in Princeton, Indiana.
This purchase is anticipated to be completed during the first
quarter of 1995 and should provide the Corporation with a
substantial increase in market share and liquidity through
deposit growth during 1995. Deposits of the Federal Savings Bank
branch being acquired were $26,021 at December 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
(Dollar amounts in thousands, except share and per share data)
Liquidity and Rate Sensitivity
Cash flows for the Corporation occur within the operating,
investing and financing categories as follows: Cash flows from
operating activities emanate primarily from interest income and
fees reduced by interest expense and overhead expense. Investing
activities generate or use cash flows through the origination,
purchase and principal collections of loans; the purchase,
maturities and sales of investments; and the acquisition of
property and equipment for the Corporation. Cash flows from
financing activities occur from deposits and withdrawals of
deposit accounts, increases or decreases in short-term borrowings
and long-term debt, and dividends paid by the Corporation.
The Corporation's use and source of funds can be determined by
the changes in average balances of assets and liabilities. The
following table summarizes funding uses and sources for 1994 and
1993, showing average balances, amount of dollar change from
prior year and the percent change from the prior year.
<PAGE>
<TABLE>
<CAPTION>
1994
Average Increase/(decrease)
Balance Amount Percent
<S> <C> <C> <C>
Funding uses
Loans held for sale................... $ 6,849 $ (8,284) (54.74)%
Taxable loans, net of unearned income. 294,741 32,158 12.25
Tax exempt loans...................... 5,178 (1,193) (18.73)
Taxable securities.................... 121,307 (14,201) (10.48)
Tax exempt securities................. 48,752 10,891 28.77
Interest bearing deposits in other
banks............................... 1,548 710 84.73
Federal funds sold.................... 5,551 (7,715) (58.16)
Total uses.......................... $ 483,926 $ 12,366 2.62 %
Funding sources
Noninterest bearing deposits.......... $ 46,048 $ 2,678 6.18 %
Interest bearing demand and
savings deposits.................... 186,631 5,068 2.79
Time deposits......................... 215,645 (1,094) (.50)
Short-term borrowings................. 6,769 1,826 36.94
Long-term debt........................ 2,924 2,250 333.83
Other................................. 25,909 1,638 6.75
Total sources....................... $ 483,926 $ 12,366 2.62 %
1993
Average Increase/(decrease)
Balance Amount Percent
<S> <C> <C> <C>
Funding uses
Loans held for sale................... $ 15,133 $ 4,622 43.97 %
Taxable loans, net of unearned income. 262,583 (335) (.13)
Tax exempt loans...................... 6,371 (554) (8.00)
Taxable securities.................... 135,508 2,661 2.00
Tax exempt securities................. 37,861 8,583 29.32
Interest bearing deposits in other
banks............................... 838 (1,040) (55.38)
Federal funds sold.................... 13,266 (3,531) (21.02)
Total uses.......................... $ 471,560 $ 10,406 2.26 %
Funding sources
Noninterest bearing deposits.......... $ 43,370 $ 3,690 9.30 %
Interest bearing demand and
savings deposits.................... 181,563 21,564 13.48
Time deposits......................... 216,739 (15,864) (6.82)
Short-term borrowings................. 4,943 (655) (11.70)
Long-term debt........................ 674 633 1,543.90
Other................................. 24,271 1,038 4.47
Total sources....................... $ 471,560 $ 10,406 2.26 %
</TABLE>
<PAGE>
Because of the fluctuation of interest rates on fixed rate
mortgage loans, carried as loans held for sale, the Corporation
sold $35,676 in 1994 and $39,591 in 1993 to the secondary
mortgage market and retained servicing rights on more the 95% of
the loans. As rates on fixed rate mortgage loans increase the
Corporation sells them to the secondary mortgage market to
eliminate the possibility of holding long-term loans at a below
market rate. Mortgage rates increased during 1994 and the
Corporation saw the volume of financing and refinancing of homes
decrease. With this volume decrease and the increase in rates,
the Corporation had a $6,849 decrease in average loans held for
sale during 1994 after having an increase of $15,133 during 1993
when rates were still increasing or remaining more stable.
Average taxable loans increased substantially during 1994
compared to 1993 after remaining almost constant during 1993
compared to 1992. The economy strengthened during 1993 and
continued into 1994 and consumer and commercial confidence
increased resulting in increases of $18,097 or 13.88% in average
commercial loans, $10,553 or 15.99% in average consumer loans and
$3,508 or 5.31% in average real estate loans during 1994 compared
to 1993. Average tax exempt loans decreased during 1994 and 1993
due to paydowns and payoffs and little demand as rates were
decreasing. Average taxable securities decreased during 1994 due
to maturities and calls and these cash flows being used by the
Corporation to fund loan growth. Average tax exempt securities
increased during both 1994 and 1993 as the Corporation had need
for tax exempt income in its tax planning and the tax equivalent
rates were higher than taxable securities. The Corporation did
have need for funds during parts of 1994 and 1993 and average
federal funds sold decreased in 1994 from 1993 and in 1993 from
1992. Federal funds sold represent overnight investments of
funds from known short-term depositors such as public and
government entities and short-term borrowings which are mainly
treasury tax deposits plus other excess cash waiting to be
invested in loans or securities. The total of all of the above
resulted in average funding uses increasing $12,366 during 1994
compared to 1993 and $10,406 or 2.26% in 1993 compared to 1992.
Average noninterest bearing deposits and average interest bearing
demand and savings deposits both increased in 1994 and 1993 as
the Corporation saw customers holding more cash in these accounts
due to the economic rebound and more activity. As rates began to
rebound in 1994 customers were hesitant to make deposits to time
deposits hoping that rates would continue to climb and average
time deposits decreased slightly in 1994 from 1993. While rates
remained low during 1993 and the Banks had great competition from
nonbank financial institutions, average time deposits decreased
compared to 1992. Short-term borrowings are a minor source of
funds and consist of customers' treasury tax deposits with the
government controlling when these funds are drawn down. During
1993 ANB became a member of the Federal Home Loan Bank of
Indianapolis (FHLB) and long-term debt is almost entirely from
the FHLB. These borrowings are at a fixed rate and are used for
specific fixed rate lending programs. Long-term debt also
includes deferred compensation as discussed in Note 10. Average
long-term debt increased in both 1994 and 1993 due to borrowings
from the FHLB and deferred compensation during 1994.
The Corporation does anticipate a continued loan demand for 1995
but expects to be able to meet this demand with the increase in
deposits as discussed. Other than this, the Corporation does not
foresee any unusual demands on funds for capital outlays or
liquidity needs in the foreseeable future.
Outstanding loan commitments and customers' unused lines of
credit were $62,056 at December 31, 1994, which was an increase
of $10,166 or 19.59% from $51,890 at year end 1993. Standby
letters of credit outstanding at December 31, 1994, increased
$734 or 12.94% to $6,408 from $5,674 at year end 1993. Letters
of credit typically are not funded. To the extent, however, that
letters of credit, loan commitments and customers' unused lines
of credit require funding, these obligations will be met by the
normal conversion of short-term investments, which totalled
$8,193 at year end 1994, and the sale of loans held for sale plus
the increase in deposits discussed. Further liquidity, if
required, would be provided by conversion of securities available
for sale or other assets into cash or accessing sources of
incremental funding such as repurchase agreements or federal
funds purchased.
Two basic aspects of asset-liability management strategy are the
maintenance of adequate liquidity and the monitoring of the
interest sensitivity position.
Liquidity management is the process by which the Corporation
provides the continuing flow of funds necessary to meet all of
its financial commitments on a timely basis. These commitments
include meeting depositor withdrawals, funding credit commitments
to borrowers, repaying debt when due and paying operating
expenses and dividends. Liquidity can be provided, in part, in
the normal course of business from cash flows generated from
interest and fee income, maturing assets and new deposits.
The table below illustrates certain relationships used to measure
the liquidity position of a financial institution and relates
these indices to the Corporation for 1994 and 1993.
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Short-term investments as a % of total assets......... 13.78 % 17.47 %
Volatile liability dependence - %..................... (6.10) (12.29)
</TABLE>
Short-term investments consist of federal funds sold, interest
bearing deposits in other banks and securities that will mature
or reprice within one year. The ratio of short-term investments
to total assets measures the liquidity of the Corporation over a
one year time interval. The 1994 decrease in the short-term
investments ratio was due to a combination of a decrease of
$8,346 or 54.39% in federal funds sold, a decrease of $9,943 or
13.54% in securities and a decrease of $195 or 24.68% in interest
bearing deposits in other banks for a total decrease of $18,484
or 20.63% at December 31, 1994 from 1993 compared to a $3,404 or
<PAGE>
.66% increase in total assets at year end 1994 from 1993. The
volatile liability dependence ratio is defined as certificates of
deposit in denominations of $100 or more less short-term
investments divided by total loans plus long-term investments.
The Corporation has a negative volatile liability dependence
ratio, which indicates the existence of excess liquidity. In
contrast, a positive ratio would indicate a possible need for
liquidity. The 1994 increase in the volatile liability
dependence ratio from 1993 was due to an increase of $3,197 or
7.45% in certificates of deposits with balances of $100 or more
and a decrease of $18,484 or 20.63% in short-term investments as
described above while loans increased $44,008 or 15.88% and long-
term investments decreased $13,947 or 13.55% at December 31, 1994
from 1993.
Interest rate sensitivity occurs when assets or liabilities are
subject to rate and yield changes within a designated time
period. The rate sensitivity position, or gap, is determined by
the difference in the amount of rate sensitive assets and rate
sensitive liabilities at various maturity intervals. The
management of this gap position is required to protect the net
interest rates and to assure a greater degree of earnings
stability. Provided below is various repricing information
relative to securities, loans and deposits at December 31, 1994.
<PAGE>
<TABLE>
<CAPTION>
Maturities and Average Yields at December 31, 1994
1 Year and Less 1 - 5 Years 5 - 10 Years
Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury............. $ 8,113 4.62 % $ 11,389 5.18 % $ -- -- %
Federal agencies.......... 17,235 5.70 41,021 5.43 8,340 5.96
State and municipal....... 4,729 10.42 13,311 8.71 22,183 7.45
Corporate obligations..... 1,454 5.22 927 5.32 -- --
Collateralized
mortgage obligations.... 3,429 5.87 9,497 6.06 -- --
Mutual funds.............. -- -- -- -- -- --
Total.................. $ 34,960 6.07 % $ 76,145 6.02 % $ 30,523 7.02 %
Over 10 Years Total
Amount Yield Amount Yield
<S> <C> <C> <C> <C>
U.S. Treasury............. $ -- -- % $ 19,502 4.95 %
Federal agencies.......... 3,273 5.47 69,869 5.56
State and municipal....... 1,306 7.39 41,529 8.19
Corporate obligations..... 1,172 6.76 3,553 5.75
Collateralized
mortgage obligations.... 4,212 6.75 17,138 6.19
Mutual funds.............. 318 6.60 318 6.60
Total.................. $ 10,281 6.42 % $151,909 6.26 %
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity Ranges of Time Deposits
with Balances of $100 or More at December 31,
1994 1993 1992
<S> <C> <C> <C>
Three months or less.................... $ 21,630 $ 16,529 $ 18,475
Three through six months................ 9,542 6,762 8,703
Six through twelve months............... 6,901 7,313 7,719
Over twelve months...................... 8,013 12,285 7,017
Total................................ $ 46,086 $ 42,889 $ 41,914
Loan Maturities at December 31, 1994
1 Year 1 - 5 Over 5
and less Years Years Total
<S> <C> <C> <C> <C>
Commercial and agricultural.....$107,962 $ 40,030 $ 10,995 $158,987
Economic development bonds...... 505 305 117 927
Total selected loans.........$108,467 $ 40,335 $ 11,112 $159,914
</TABLE>
There were no material real estate construction loans outstanding
at December 31, 1994.
Interest rate sensitivity of above loans maturing after one year
follows.
<TABLE>
<CAPTION>
<S> <C>
Fixed rate.......................... $ 21,808
Variable rate....................... 29,639
Total selected loans............. $ 51,447
</TABLE>
<TABLE>
<CAPTION>
Liquidity and Interest Rate
Sensitivity at December 31, 1994
0 - 90 91 - 365 1 - 5
Days Days Years
<S> <C> <C> <C>
Interest earning assets
Loans...................................... $ 84,972 $ 91,082 $ 126,006
Securities................................. 38,393 25,111 42,872
Other...................................... 7,198 397 497
Total................................... $ 130,563 $ 116,590 $ 169,375
Interest bearing liabilities
Savings and demand deposits................ $ 184,970 $ -- $ --
Time, less than $100....................... 61,583 61,012 46,657
Time, $100 or more......................... 25,552 13,523 6,208
Other...................................... 5,694 587 1,427
Total................................... $ 277,799 $ 75,122 $ 54,292
Rate sensitive gap............................ $(147,236) $ 41,468 $ 115,083
Rate sensitive cumulative gap................. (147,236) (105,768) 9,315
Percent to total assets....................... (28.53)% (20.49)% 1.80 %
</TABLE>
Rate sensitive gap is defined as the difference between the
repricing of interest earning assets and the repricing of
interest bearing liabilities within certain defined time frames.
Rate sensitive gap is also expressed as a percentage of total
assets based upon the accumulation of the defined time frame gap
<PAGE>
calculation. Rate sensitive gaps constantly change as funds are
acquired and invested and the Corporation's analysis as of
December 31, 1994, is shown above. As of year end 1994, the
Corporation had a negative gap of $105,768 and 20.49% during the
next one year period with a negative gap of $147,236 and 28.53%
relating to the first quarter of 1995. The effect of these
negative gaps may result in a negative impact on earnings in 1995
if interest rates increase, but could result in a positive impact
on earnings if interest rates decline in 1995. The above rate
sensitivity analysis is significantly impacted by the inclusion
of savings and demand deposits in the first quarter of the gap
analysis. These deposits have historically not exhibited the
same degree of sensitivity to rate changes as other liabilities
because deposit rates are set by the Corporation. If the above
analysis were changed to reflect the Corporations' actual
historical results, the savings and demand deposits would be
moved to the one to five year time frame. With this change the
Corporation would have a positive gap of $79,202 or 15.35% during
the next one year period and a positive gap of $37,734 or 7.31%
relating to the first quarter of 1995.
Capital
The Corporation's shareholders' equity at December 31, 1994, was
$49,037, an increase of $77 or .16% from the December 31, 1993,
total of $48,960. With the adoption of FAS 115, as disclosed in
Note 1 of the consolidated financial statements, the Corporation
had a mark-to-market adjustment for securities available for sale
of a negative $2,962 at December 31, 1994, and a positive $712 at
December 31, 1993, which are included in shareholders' equity as
unrealized gain or loss on securities available for sale. The
Corporation's regulators have issued guidelines stating that this
unrealized gain or loss on securities, other than those related
to mutual funds (FAS 115 adjustments), should not be included in
shareholders' equity for capital ratio calculations. The
Corporation's shareholders' equity, as defined by its regulators,
increased $3,735 or 7.75% to $51,952 at December 31, 1994, from
$48,217 at December 31, 1993.
Capital adequacy in the banking industry is evaluated primarily
by the use of three required capital ratios based on three
separate calculations; leverage capital, Tier 1 risk-based
capital and total risk-based capital. The leverage capital ratio
is defined as total ending Tier 1 capital divided by total
average assets less intangible assets and FAS 115 adjustments.
Tier 1 risk-based capital is defined as Tier 1 capital divided by
risk-weighted assets. Total risk-based capital is defined as
Tier 1 capital plus Tier 2 capital divided by risk-weighted
assets. Tier 1 capital is the sum of the core capital elements
(common shareholders equity, qualifying perpetual preferred stock
and minority interest in the equity accounts of consolidated
subsidiaries) less intangible assets and the FAS 115 adjustments.
Tier 2 capital consists of the allowance for loan losses (limited
to a maximum of 1.25% of risk-weighted assets), perpetual
preferred stock, and other hybrid capital instruments. Risk-
weighted assets are defined to include the assets on the balance
sheet and off-balance sheet financial instruments in broad risk
categories that are weighted at 20% to 100% depending on the
asset totals within these defined broad categories.
A well capitalized institution is defined as an institution with
a leverage capital ratio of 5% or better, and an adequately
capitalized institution is defined as an institution with a
leverage capital ratio of 4%. The Corporation currently meets
the well capitalized classification and intends to maintain
capital to remain in this classification. The minimum Tier 1
capital ratio standard for an institution is defined at 4% and
the minimum total capital ratio is defined to be 8%. As shown
below the Corporation's capital adequacy exceeds the required
capital ratios as defined by its regulators.
<TABLE>
<CAPTION>
Under Guidelines
Effective
1994
<S> <C>
Capital components
Tier 1 capital.............................. $ 51,764
Total capital............................... 55,675
Assets
Risk-weighted assets and
off-balance sheet instruments............. $ 361,374
Intangible assets........................... 188
Capital ratios
Leverage.................................... 10.14 %
Tier 1 risk-based capital................... 14.32
Total risk-based capital.................... 15.41
Minimum guidelines (adequately capitalized)
Leverage.................................... 4.00 %
Tier 1 risk-based capital................... 4.00
Total risk-based capital.................... 8.00
Capital ratios in excess of
minimum guidelines
Leverage.................................... 6.14 %
Tier 1 risk-based capital................... 10.32
Total risk-based capital.................... 7.41
</TABLE>
INTERIM FINANCIAL DATA
(Dollar amounts in thousands, except share and per share data)
The following table sets forth the quarterly results of
operations and per share information for the years ended December
31, 1994 and 1993.
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended
December September June March
1994 31 30 30 31
<S> <C> <C> <C> <C>
Interest Income....................... $ 9,205 $ 8,959 $ 8,567 $ 8,292
Interest expense...................... 4,118 4,002 3,811 3,669
Net interest income................. 5,087 4,957 4,756 4,623
Provision for loan losses............. -- 50 -- 50
Noninterest income.................... 546 592 543 710
Noninterest expense................... 3,553 3,435 3,506 3,524
Income before income taxes.......... 2,080 2,064 1,793 1,759
Income taxes.......................... 595 614 521 523
Net income.......................... $ 1,485 $ 1,450 $ 1,272 $ 1,236
Per share
Net income.......................... $ .63 $ .61 $ .54 $ .52
Stock price (Note A)................ 31.00 31.50 32.25 32.25
Weighted average shares............... 2,370,350 2,370,085 2,369,784 2,369,784
1993
Interest Income....................... $ 8,369 $ 8,525 $ 8,589 $ 8,554
Interest expense...................... 3,815 3,921 3,938 4,046
Net interest income................. 4,554 4,604 4,651 4,508
Provision for loan losses............. 135 95 115 125
Noninterest income.................... 705 636 605 641
Noninterest expense................... 3,481 3,424 3,186 3,235
Income before income taxes
and cumulative effect of
accounting change................. 1,643 1,721 1,955 1,789
Income taxes.......................... 439 457 552 493
Income before cumulative effect
of accounting change ............. 1,204 1,264 1,403 1,296
Cumulative effect on prior years of
changing to a different method of
accounting for income taxes......... -- -- -- 252
Net income.......................... $ 1,204 $ 1,264 $ 1,403 $ 1,548
Per share
Income before cumulative effect of
accounting change ................ $ .51 $ .53 $ .59 $ .55
Net income.......................... .51 .53 .59 .66
Stock price (Note A)................ 36.75 33.50 33.00 33.00
Weighted average shares............... 2,369,784 2,369,784 2,369,784 2,369,784
</TABLE>
Note A - The stock price above represents the sales
price of the last actual trade in each respective
quarter as reported in the Wall Street Journal.
PENDING ACQUISITIONS
(Dollar amounts in thousands, except share and per share data)
As described in Note 20 to the consolidated financial statements,
the Corporation has entered into a definitive agreement to
acquire First Robinson Bancorp (FRB), the parent holding company
for the First National Bank in Robinson, Illinois. Consummation
of the transaction remains subject to the receipt of the
appropriate regulatory approvals, approval by shareholders of FRB
and satisfaction of other conditions. The transaction will be
accounted for under the pooling of interests method, and
accordingly, the future consolidated financial statements of the
Corporation will be retroactively restated to include the assets,
liabilities, equity, income and expenses of FRB for all prior
periods. The Corporation has offered between 555,075 and 666,090
shares of its common stock for all of the outstanding shares of
FRB. The actual number of shares of the Corporation's stock to
be issued for FRB will be based upon the actual market value of
the Corporation's stock immediately prior to the consummation of
the transaction.
The following table sets forth net income per share and
shareholders equity per share on a pro forma basis as if the FRB
acquisition had occurred as of January 1, 1994. The pro forma
information is prepared based upon the issuance of 610,582 (the
mean between 555,075 plus 666,090) common shares of the
Corporation in exchange for all common shares of FRB.
<TABLE>
<CAPTION>
AMBANC Corp.
AMBANC Corp. Pro Forma
<S> <C> <C>
Net income per share for 1994......... $ 2.30 $ 2.18
Shareholders' equity per share at
December 31, 1994................... 20.67 19.53
</TABLE>
The pro forma 1994 data may not be indicative of the results that
actually would have occurred if the FRB acquisition had occurred
at the beginning of 1994, or that may be obtained in the future.
Management anticipates that the FRB acquisition will initially be
dilutive to earnings per share, however, management also believes
that this dilution will be recovered through strategic advantages
to the Corporation in future years.
As described in Note 20 to the consolidated financial statements,
ANB entered into a definitive purchase and assumption agreement
with a Federal Savings Bank to purchase the building and the
outstanding deposits at the date of closing, of their Princeton,
Indiana branch. The transaction is anticipated to be completed
during the first quarter of 1995 and will be accounted for as a
purchase. The transaction will create approximately $1,850 of
goodwill which will be amortized to expense over the next fifteen
years. Total deposits of the Federal Savings Bank branch to be
acquired were $26,021 as of December 31, 1994.
PENDING CHANGES
As described in Note 19 to the consolidated financial statements,
the Corporation will be subject to Financial Accounting Standard
No. 114, "Accounting by Creditors for Impairment of a Loan"
starting in 1995. Under this standard if the measured value of
expected future cash flows of an impaired loan is less than the
loan balance, the loan should be written down. The Corporation
has determined that the impact of this standard will be
immaterial to its financial statements.
INFLATION
For a financial institution, effects of price changes and
inflation vary considerably from an industrial organization.
Changes in the prices of goods and services are the primary
determinant of an industrial company's profit, whereas changes in
interest rates have a major impact on a financial institution's
profitability. Inflation affects the growth of total assets, but
it is difficult to assess its impact because neither the timing
nor the magnitude of the changes in the consumer price index
directly coincide with changes in interest rates.
During periods of high inflation there are normally corresponding
increases in the money supply. During such times financial
institutions often experience above average growth in loans and
deposits. Also, general increases in the prices of goods and
services will result in increased operation expenses. Over the
past few years the rate of inflation has been relatively low, and
its impact on the growth in the balance sheets and increased
levels of income and expense has been nominal.
Market Price of AMBANC Corp. Common Stock and
Related Shareholder Matters
(Dollar amounts in thousands, except share and per share data)
The Corporation's common stock is traded on The Nasdaq Small-Cap
Market (NASDAQ) under the symbol AMBK. The quarterly range of
the low and high bid prices per share of the Corporation's common
stock, as reported by NASDAQ, are shown below. This information
represents prices between dealers and does not include
adjustments for mark-ups, mark-downs or commissions and does not
necessarily represent actual prices on transactions.
<TABLE>
<CAPTION>
1994 1993
Stock Range Stock Range
<S> <C> <C>
1st Quarter............. $ 32.75 - 37.00 $ 31.25 - 33.50
2nd Quarter............. 30.25 - 33.00 32.50 - 35.50
3rd Quarter............. 30.25 - 33.00 31.50 - 34.25
4th Quarter............. 30.25 - 32.50 32.00 - 35.25
</TABLE>
As of December 31, 1994, there were approximately 1,380
shareholders of record. The Corporation pays cash dividends on a
quarterly basis. Cash dividends paid by the Corporation were
$.84 per share in 1994 and $.80 per share in 1993 and 1992. Cash
dividends, as restated to reflect the acquisitions of FSB and BOC
under the pooling of interests method of accounting were $.75,
$.65 and $.60 for the years 1994, 1993 and 1992. Refer to Note
16 to the consolidated financial statements for information
concerning restrictions on dividends.
All share and per share amounts have been retroactively adjusted
to reflect the effect of the shares issued in the business
combinations discussed in Note 2 to the consolidated financial
statements, as though the shares had been outstanding for all
periods presented. Earnings per share amounts are based on
average outstanding shares of 2,370,004 in 1994 and 2,369,784 in
1993 and 1992.
<PAGE>
AMBANC SERVICE AREA
[Sections of Illinois/Indiana maps pointing out
Bank of Casey, Farmers' State Bank, Citizens' National Bank of
Linton and American National Bank of Vincennes]
<PAGE>
<TABLE>
<CAPTION> AMBANC CORP. AND SUBSIDIARIES
FIVE YEAR SUMMARY
(Dollar amounts in thousands, except per share data)
1994(a) 1993(a) 1992 1991 1990
<S> <C> <C> <C> <C> <C>
AT PERIOD END
Actual balances
Assets..................... $ 516,096 $ 512,692 $ 506,643 $ 484,352 $ 482,863
Securities................. 151,909 176,297 164,741 159,577 151,433
Loans...................... 321,096 277,088 263,296 265,861 275,575
Allowance for loan losses.. 3,911 3,685 3,510 3,369 3,746
Deposits................... 455,234 452,622 451,471 431,026 431,881
Shareholders' equity....... 49,037 48,960 44,333 40,832 37,560
Daily averages
Assets..................... $ 509,074 $ 496,586 $ 484,570 $ 475,904 $ 462,967
Securities................. 170,059 173,369 162,125 159,059 151,118
Loans...................... 299,919 268,954 269,843 268,780 265,828
Allowance for loan losses.. 3,799 3,567 3,340 3,431 3,660
Deposits................... 448,324 441,672 432,282 425,103 408,727
Shareholders' equity....... 48,784 46,157 42,892 39,017 36,411
OPERATING RESULTS
Interest income.............. $ 35,023 $ 34,037 $ 37,145 $ 42,419 $ 43,718
Net interest income.......... 19,423 18,317 18,679 17,685 16,550
Provision for loan losses.... 100 470 1,375 1,317 1,302
Income before cumulative
effect of accounting change 5,443 5,167 4,936 4,601 3,931
Net income................... 5,443 5,419 4,936 4,601 3,931
Dividends paid on
common stock............... 1,766 1,532 1,424 1,352 1,231
PER SHARE DATA
Income before cumulative
effect of accounting change $ 2.30 $ 2.18 $ 2.08 $ 1.94 $ 1.66
Cumulative effect of
accounting change.......... -- .11 -- -- --
Net income................... 2.30 2.29 2.08 1.94 1.66
Cash dividends before
pooling of interests....... .84 .80 .80 .80 .80
Cash dividends restated for
pooling of interests....... .75 .65 .60 .57 .52
Book value at end of period.. 20.69 20.66 18.71 17.23 15.85
Book value at end of period
before FAS 115............. 21.92 20.35 18.71 17.23 15.85
Tangible book value at
end of period.............. 20.61 20.64 18.68 17.20 15.82
Tangible book value at end
of period before FAS 115... 21.84 20.33 18.68 17.20 15.82
Weighted average
shares outstanding......... 2,370,004 2,369,784 2,369,784 2,369,784 2,369,784
RATIOS
Return on average assets..... 1.07 % 1.09 % 1.02 % .97 % .85 %
Return on average equity..... 11.16 11.74 11.51 11.79 10.80
Dividends paid as a
percent of net income...... 32.46 28.27 28.85 29.39 31.32
Leverage capital (Tier 1
equity/average
tangible assets)............ 10.14 9.70 9.14 8.57 8.10
Efficiency ratio............. 64.26 63.75 60.54 62.40 63.61
</TABLE>
(a) - reflects FAS 115 adjustments.<PAGE>
FINANCIAL TRENDS
Graph showing Income per share before accounting change:
1990: $1.66
1991: $1.94
1992: $2.08
1993: $2.18
1994: $2.30
Graph showing Tangible book value per share before FAS 115:
1990: $15.82
1991: $17.20
1992: $18.68
1993: $20.33
1994: $21.84
Graph showing Leverage capital:
1990: 8.10%
1991: 8.57%
1992: 9.14%
1993: 9.70%
1994: 10.14%
[picture
of flag]
"We confide in our
strength, without
boasting of it;
we respect that
of others, without
fearing it"
- Thomas Jefferson
<PAGE>
CORPORATION ORGANIZATION
AND BANKING LOCATIONS
THE AMERICAN NATIONAL BANK OF VINCENNES
DIRECTORS:
Robert G. Watson Chairman of the Board, President and C.E.O.
Glen G. Apple Farmer
Paul E. Brocksmith, D.V.M. Retired
Christina M. Ernst President, Miller Construction Company
Robert D. green President, R D Services, Inc.
Rolland L. Helmling President, Harold's Supermarkets, Inc.
Gerry M. Hippensteel, M.D. Physician
Ray J. Lankford Co-Owner, WRAY Radio Station
Bernard G. Niehaus President, Niehaus Lumber Co., Inc.
John A. Stachura, Jr. Superintendent, Solar Sources Underground
Phillip M. Summers, Ph.D. President, Vincennes University
Howard R. Wright Retired
BANKING LOCATIONS:
Main Office 302 Main Street, Vincennes, Indiana
Vigo Drive-In 33 South 3rd Street, Vincennes, Indiana
North Branch 2202 North 6th Street, Vincennes, Indiana
Bicknell Branch 201 North Main Street, Bicknell, Indiana
Bicknell Drive-In Highway 67 West and Mason Street, Bicknell,
Indiana
Sandborn Branch Anderson and College Streets, Sandborn,
Indiana
Monroe City Branch 1st and Breckinridge Streets, Monroe City,
Indiana
Princeton Branch 1910 West Broadway, Princeton, Indiana
Patoka Branch 416 West Grave Street, Patoka, Indiana
CITIZENS' NATIONAL BANK OF LINTON
DIRECTORS:
Sherman L. Anderson Chairman of the Board, President and C.E.O.
E. Joe Angell Owner, E & W Foods and Angell Leasing
Glen G. Apple Farmer
Donald R. Gregg Vice President, A.M. Risher Trucking, and
Owner, Park Inn
William R. Powers, M.D. Physician
Dan J. Robinson Executive Vice President, American National
Bank
George Williams Retired
William Witherspoon, D.D.S. Retired
BANKING LOCATIONS:
Main Office 89 West Vincennes Street, Linton, Indiana
Linton Shopping Center 1600 A Street N.E., Linton, Indiana
<PAGE>
FARMERS' STATE BANK OF PALESTINE
DIRECTORS:
Owen M. Landrith Chairman of the Board
Judith K. Adams President, Trust Officer and C.E.O.
Paul E. Brocksmith, D.V.M. Retired
Wendel Goodwin Retired
James M. Goodwine Owner, Goodwine Funeral Homes
Donald K. Magill Owners, Magill Home Furnishings
G. Kent Philips Retired
Paul W. Postlewaite Farmer
Richard E. Welling Secretary, Treasurer and C.F.O.,
AMBANC Corp.
BANKING LOCATION:
Main Office 101 North Main Street, Palestine,
Illinois
BANK OF CASEY
DIRECTORS:
Robert E. Seed Chairman of the Board, President and C.E.O.
T. W. Ahrens Owners, Casey Foods, Inc.
Bill Crouch Farmer, and Secretary/Treasurer, Casey
Fertilizer, Inc.
Joan Finkbiner Owner, Century 21 Crossroads Realty
Dale Huisinga Farmer, and President, Huisinga Grain, Inc.
Denzel Melton Retired
William F. Perry Senior Vice President, American
National Bank
P. A. Tranbrug Retired
BANKING LOCATIONS:
Main Office 101 W. Alabama Street, Casey, Illinois
Martinsville Branch 55 W. Cumberland Street, Martinsville,
Illinois
West Union Branch Rt. 1 South, West Union, Illinois
Westfield Branch 103 E. State Street, Westfield, Illinois
[picture
of flag]
"Build for your team a feeling of oneness, of dependence on one another and
of strength to be derived by unity.
- Vince Lombardi
<PAGE>
INVESTOR INFORMATION
EXCHANGE
NASDAQ Small-Cap Market
SYMBOL
AMBK
MARKET MAKERS
J. J. B. Hilliard, W. L. Lyons, Inc.
(812) 886-6310 or (800) 688-6310
Howe Barnes Investments, Inc.
(312) 655-2959 or (800) 800-4693
David A. Noyes & Company
(317) 633-1743 or (800) 285-1700
Raffensperger, Hughes & Co., Inc.
(800) 382-1126 Indianapolis or (800) 321-7442
Evansville
TRANSFER AGENT
Shareholders should direct inquiries concerning their
shareholder records to:
Bank One Indianapolis, N.A.
Bank One Center/Tower
Attn: Harriett M. Neer
Suite 1611
111 Monument Circle
Indianapolis, IN 46277
(317) 321-7627 or (800) 735-7107
Upon written request, the Corporation will provide to
each shareholder, without charge, a copy of the
Corporation's Annual Report on Form 10-K for 1994,
including the financial statements thereto but omitting
exhibits. Requests should be addressed to:
Dennis M. Flack, Investor Relations
AMBANC Corp.
302 Main Street
P. O. Box 556
[picture Vincennes, IN 47591-0556
of flag] (812) 885-6418
<PAGE>
[picture
of flag]
DESIGN
Advertising Visions, Inc./
CAVUdesign
PRINTING
Ewing Printing, Inc.
<PAGE>
[back cover]
[picture of flag]AMBANC
CORP.
302 Main Street
Post Office Box 556
Vincennes, Indiana 47591-0556
EXHIBIT 22
AMBANC CORP. LIST OF SUBSIDIARIES
1. The American National Bank of Vincennes, Indiana is a wholly-
owned subsidiary of AMBANC Corp. and is a national banking
association.
2. Citizens' National Bank of Linton, Indiana is a wholly-owned
subsidiary of AMBANC Corp. and is a national banking
association.
3. Farmers' State Bank of Palestine, Illinois, is a wholly-owned
subsidiary of AMBANC Corp. and is an Illinois state-chartered
banking association.
4. Bank of Casey, Illinois, is a wholly-owned subsidiary of
AMBANC Corp. and is an Illinois state-chartered banking
association.
5. American National Realty Corp. is a wholly-owned subsidiary of
AMBANC Corp. and is incorporated under the laws of the State
of Indiana.
6. Lincolnland Insurance Agency & Investments, Inc., is a wholly-
owned, non-operating subsidiary of AMBANC Corp., which was
acquired in connection with the Bank of Casey acquisition.
Exhibit 23
Consent of Independent Accountants
We consent to the incorporation by reference in the
Prospectus constituting part of the Registration
Statement on Form S-8 of AMBANC Corp. of our report
dated January 27, 1995 on the 1994, 1993, and 1992
consolidated financial statements of AMBANC Corp. which
report is incorporated by reference in this Form 10-K.
We also consent to the reference to us under the
heading "Experts" in the Prospectus.
/s/ Crowe, Chizek and Company
Crowe, Chizek and Company
Indianapolis, Indiana
March 30, 1995
0002\10\s-4\10kaexh.23
Exhibit 99.1
Summit
[Kemper [logo] International
CPA Group Associates
Letterhead] Inc.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Farmers' State Bank of Palestine
Palestine, Illinois
We have audited the accompanying Statements of
Condition of Farmers' State Bank of Palestine as of
December 31, 1992 and 1991, and the related statements
of income, changes in stockholders' equity and cash
flows for the years then ended. These financial
statements are the responsibility of the Bank's
management. Our responsibility is to express an
opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audits 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 of our opinion.
In our opinion the financial statements referred to in
the first paragraph present fairly, in all material
respects, the financial position of Farmers' State Bank
of Palestine as of December 31, 1992 and 1991, and the
results of its operations for the years then ended in
conformity with generally accepted accounting
principles.
KEMPER CPA GROUP
Certified Public Accountants
January 26, 1993
0002\10\s-4\10kaexh.991
Exhibit 99.2
[McGladrey & Pullen, LLP letterhead]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Lincolnland Bancshares, Inc.
Casey, Illinois
We have audited the accompanying consolidated
balance sheets of Lincolnland Bancshares, Inc. and
subsidiaries as of December 31, 1993 and 1992, 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 on these
financial statements based on our audits.
We conducted our audits in accordance with
generally accepted accounting standards. Those
standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all
material respects, the financial position of
Lincolnland Bancshares, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the results of their
operations and their cash flows for the years then
ended in conformity with generally accepted accounting
principles.
As described in Note 4 to the financial
statements, the Company changed its method of
accounting for investment securities in 1993.
/s/ McGladrey & Pullen LLP
Champaign, Illinois
January 7, 1994
0002\10\s-4\10kaexh.992
