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 28, 1995.
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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
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AMBANC CORP.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)
June 30, December 31,
1995 1994
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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>
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<CAPTION>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
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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>
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<CAPTION>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except share data)
Six Months Ended
June 30,
1995 1994
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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>
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<CAPTION>
AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Dollar amounts in thousands, except share data)
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>
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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.
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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%.
Six Months Ended
June 30, Increase
1995 1994 (Decrease)
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 %
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
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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
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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:
June 30, 1995 December 31, 1994
Nonaccrual loans .22% .18%
Loans past due 90 days .26% .20%
Performing restructured loans .04% .15%
OREO .12% .14%
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:
1995 1994
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
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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.
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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.
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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.
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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.
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<CAPTION>
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.
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>
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<TABLE>
<CAPTION>
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)
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>
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>
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>
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:
June 30, 1995 December 31, 1994
Leverage capital ratio 9.88% 10.14%
Tier 1 risk-based capital 13.50% 14.32%
Total risk-based capital 14.55% 15.41%
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>
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>
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>
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>
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.
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000702904
<NAME> AMBANC CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 15,784
<INT-BEARING-DEPOSITS> 994
<FED-FUNDS-SOLD> 13,167
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 102,396
<INVESTMENTS-CARRYING> 39,092
<INVESTMENTS-MARKET> 39,488
<LOANS> 347,871
<ALLOWANCE> 4,008
<TOTAL-ASSETS> 538,045
<DEPOSITS> 473,072
<SHORT-TERM> 5,956
<LIABILITIES-OTHER> 3,442
<LONG-TERM> 2,643
<COMMON> 23,726
0
0
<OTHER-SE> 29,206
<TOTAL-LIABILITIES-AND-EQUITY> 538,045
<INTEREST-LOAN> 7,899
<INTEREST-INVEST> 2,085
<INTEREST-OTHER> 103
<INTEREST-TOTAL> 10,160
<INTEREST-DEPOSIT> 4,917
<INTEREST-EXPENSE> 5,005
<INTEREST-INCOME-NET> 5,155
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 3,671
<INCOME-PRETAX> 2,029
<INCOME-PRE-EXTRAORDINARY> 2,029
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,382
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
<YIELD-ACTUAL> 4.12
<LOANS-NON> 781
<LOANS-PAST> 890
<LOANS-TROUBLED> 127
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,911
<CHARGE-OFFS> 98
<RECOVERIES> 75
<ALLOWANCE-CLOSE> 4,008
<ALLOWANCE-DOMESTIC> 1,880
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,128
</TABLE>
