FORM 10-Q
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 September 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:
3,009,059 common shares of stock were outstanding as of
November 13, 1995.
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AMBANC CORP.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
September 30, 1995 (unaudited) and
December 31, 1994
Consolidated Statements of Income for
nine months and three months ended
September 30, 1995 and 1994(unaudited)
Consolidated Statements of Cash
Flows for nine months ended
September 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)
September 30, December 31,
1995 1994
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ASSETS
Cash and due from banks $ 14,868 $ 19,595
Federal funds sold 13,699 7,000
Total cash and cash equivalents 28,567 26,595
Interest bearing deposits in other banks 793 1,193
Securities available for sale at market 98,979 112,214
Securities held to maturity(market values of
$40,334 and $38,707 at September 30,
1995, and December 31, 1994) 39,797 39,695
Loans held for sale 5,339 2,664
Loans, net of unearned income 368,346 321,096
Allowance for loan losses (4,179) (3,911)
Loans, net 364,167 317,185
Premises, furniture and equipment, net 6,296 6,487
Accrued interest receivable and other assets 10,095 10,063
TOTAL ASSETS $ 554,033 $ 516,096
LIABILITIES
Noninterest bearing deposits $ 44,539 $ 51,838
Interest bearing deposits 443,742 403,396
Total deposits 488,281 455,234
Short-term borrowings 5,811 5,690
Long-term debt 2,663 3,189
Accrued interest payable and other liabilities 3,012 2,946
TOTAL LIABILITIES 499,767 467,059
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 September 30, 1995,
and December 31, 1994 23,726 23,722
Retained earnings 31,257 28,277
Unrealized gain/(loss) on securities
available for sale (717) (2,962)
TOTAL SHAREHOLDERS' EQUITY 54,266 49,037
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 554,033 $ 516,096
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
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INTEREST INCOME
Interest and fees on loans $ 23,473 $ 18,044 $ 8,321 $ 6,564
Interest and fees on loans
held for sale 209 487 94 59
Interest on securities
Taxable 4,558 5,378 1,421 1,712
Tax exempt 1,652 1,709 550 569
Other interest 391 200 222 55
TOTAL INTEREST INCOME 30,283 25,818 10,608 8,959
INTEREST EXPENSE
Interest on deposits 14,395 11,148 5,257 3,870
Interest on short-term borrowings 206 216 60 87
Interest on long-term debt 122 118 38 45
TOTAL INTEREST EXPENSE 14,723 11,482 5,355 4,002
NET INTEREST INCOME 15,560 14,336 5,253 4,957
Provision for loan losses 425 100 275 50
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 15,135 14,236 4,978 4,907
NONINTEREST INCOME
Income from fiduciary activities 339 294 154 102
Service charges on
deposit accounts 943 832 324 298
Gain/(loss) on securities 5 (4) (1) (1)
Other operating income 685 723 266 193
TOTAL NONINTEREST INCOME 1,972 1,845 743 592
NONINTEREST EXPENSE
Salaries and employees benefits 5,851 5,363 1,865 1,783
Occupancy expenses, net 634 645 214 222
Equipment expenses 652 611 216 211
Data processing expenses 294 341 113 114
FDIC insurance 508 758 (15) 250
Other operating expenses 2,728 2,747 884 855
TOTAL NONINTEREST EXPENSE 10,667 10,465 3,277 3,435
INCOME BEFORE INCOME TAXES 6,440 5,616 2,444 2,064
Taxes 1,973 1,658 769 614
NET INCOME $ 4,467 $ 3,958 $ 1,675 $ 1,450
EARNINGS PER COMMON SHARE(based on 2,372,550 and 2,369,841
average outstanding shares in 1995 and 1994)
Net income per share $ 1.88 $ 1.67 $ .71 $ .61
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except share data)
Nine Months Ended
September 30,
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,467 $ 3,958
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization and discount
accretion on securities 214 355
Depreciation 623 620
Provision for loan losses 425 100
(Gain)/loss on securities (5) 4
Proceeds from sales of loans held for sale 10,441 31,630
Loans held for sale made to customers,
net of payments collected (13,116) (17,860)
Accrued interest receivable
and other assets (32) (1,532)
Accrued interest payable
and other liabilities 2,311 (4,594)
Deferred loan fees net of costs (16) (13)
NET CASH FROM OPERATING ACTIVITIES 5,312 12,668
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale 1,500 9,081
Proceeds from sales of securities
held to maturity -- --
Proceeds from maturities and calls of securities
available for sale 18,515 34,867
Proceeds from maturities and calls of securities
held to maturity 8,665 2,184
Purchases of securities available for sale (6,961) (27,092)
Purchases of securities held to maturity (8,795) (3,646)
Net change in interest bearing deposits
in other banks 400 (503)
Loans made to customers, net of
payments collected (48,169) (37,758)
Loans purchased (4,386) (1,690)
Proceeds from sales of loans 5,164 3,956
Property and equipment expenditures (432) (1,145)
NET CASH FROM INVESTING ACTIVITIES (34,499) (21,746)
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Dollar amounts in thousands, except share data)
Nine Months Ended
September 30,
1995 1994
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CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand deposits
and savings accounts (14,410) (16,280)
Net change in certificates of deposit 47,457 7,882
Net change in short-term borrowings 121 1,018
Payments on long-term debt (597) (338)
Proceeds on long-term debt 71 2,514
Issuance of stock for dividend reinvestment 12 14
Dividends paid (1,495) (1,267)
NET CASH FROM FINANCING ACTIVITIES 31,159 (6,457)
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,972 (15,535)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 26,595 32,510
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,567 $ 16,975
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period ended September 30:
Interest $ 14,076 $ 11,360
Income taxes 2,100 1,830
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
ITEM 1.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated balance sheet as of September 30, 1995,
consolidated statements of income for the nine month
periods ended September 30, 1995 and 1994, and the
consolidated statements of cash flows for the nine month
periods ended September 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 September 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 September 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 nine months ended September 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%.
Nine Months Ended
September 30, Increase
1995 1994 (Decrease)
Interest income $ 30,283 $ 25,818 17.29 %
Adjusted for tax
exempt income 965 997 (3.21)
Tax equivalent
interest income 31,248 26,815 16.53
Interest expense 14,723 11,482 28.23
Net interest income $ 16,525 $ 15,333 7.77 %
Net interest income increased $1,192 or 7.77% for the nine
months ended September 30, 1995, compared to the nine
months ended September 30, 1994. This $1,192 increase was a
combination of a $4,433 increase in interest income and a
$3,241 increase in interest expense. The $4,433 increase in
interest income was composed of an increase of $1,018 due to
increased volume of average interest earning assets and an
increase of $3,415 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 nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
interest earning assets. The $3,241 increase in interest expense
was a combination of an increase of $605 due to increased volume
of average interest bearing liabilities and an increase of
$2,636 due to rate increases on these interest bearing
liabilities.
The Corporation's average assets for the first nine months of
1995 increased $19,536 or 3.83% to $528,979 from $509,443 for the
same period in 1994, but the percent of average earning assets to
total average assets decreased to 94.74% for the first nine
months of 1995 from 95.17% for the first nine months of 1994.
This decrease was in part due to 1995 average assets containing
$1,276 of average goodwill associated with the deposits purchased
(see details on subsequent page). Net interest margin increased
.18% to 4.41% for the first nine months of 1995 from 4.23% for
the first nine 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, increased to 9.00% in February, 1995 and decreased to 8.75%
in July 1995, and averaged 8.86% for the first nine months of
1995. The prime rate for 1994 started at 6.00%, increased four
times to an ending rate of 7.75%, and averaged 6.81% for the
first nine 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 8.34%
for the first nine months of 1995 from 7.39% for the first nine
months of 1994 for an increase of .95%. The cost on average
interest bearing liabilities increased at a slower rate and was
4.58% for the first nine months of 1995 and 3.72% for the first
nine months of 1994 for an increase of .86%. 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 3.76% for the first nine months
of 1995 compared to 3.67% for the first nine months of 1994.
The provision for loan losses was $425 during the first nine
months of 1995 compared to $100 during the first nine 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 September 30, 1995,
was $4,179 or 1.13% of total loans less unearned income as
compared to $3,911 or 1.22% of total loans less unearned income
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
at December 31, 1994. During the first nine months of 1995,
loans charged off were $337 and recoveries from previously
written off loans were $180, thus net charge offs for the first
nine months of 1995 were $157. 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 September
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 September 30, 1995, and December 31, 1994:
September 30,1995 December 31, 1994
Nonaccrual loans .24% .18%
Loans past due 90 days .26% .20%
Performing restructured loans .01% .15%
OREO .11% .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
September 30, 1995, the recorded balance of loans that were
considered to be impaired under FAS 114 was $2,905 of which $510
were on a nonaccrual basis. The average recorded balance for
impaired loans for the three month period ended September 30,
1995, approximated the ending balance. All loans considered to
be impaired at September 30, 1995, had specific allocated
reserves which totaled $393.
A summary of the activity in the allowance for loan losses
account for the first nine months ending September 30, 1995, and
1994 was:
1995 1994
Balance, January 1 $3,911 $3,685
Provision for loan losses 425 100
Loans charged off (337) (334)
Recoveries of loans previously
charged off 180 417
Balance, September 30 $4,179 $3,868
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
Noninterest income for the nine months ended September 30, 1995,
was up $127 or 6.88% to $1,972 as compared to $1,845 for the nine
months ended September 30, 1994. Income from fiduciary services
was up by $45 or 15.31% to $339 in 1995 from $294 in 1994 as a
result of increased fees on trust accounts managed. Service
charges on deposit accounts were up by $111 or 13.34% to $943 in
1995 from $832 in 1994 due to new and increased fees on deposit
accounts. The Corporation had a net gain of $5 on calls and
sales of securities during the first nine months of 1995. Other
operating income decreased $38 or 5.26% to $685 during the nine
months ended September 30, 1995, from $723 during the same nine
months in 1994. This $38 decrease was mainly due to the
reduction of gain on sales of loans held for sale less increases
in income from a new investment service being offered customers,
other nonrecurring income and an increase in insurance commission
income. During the first nine months of 1994 mortgage rates were
increasing and the Corporation sold $31,630 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 $221 related to gains from these sales.
During part of the first nine 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 $10,441 in fixed rate mortgage
loans into the secondary mortgage market and recorded gains of
$124 during the nine months ended September 30, 1995. The
servicing rights on more than 95% of sold fixed rate loans are
retained by the Corporation.
Noninterest expense for the nine months ended September 30, 1995,
was $10,667 as compared to $10,465 for the nine months ended
September 30, 1994, for an increase of $202 or 1.93%. Salaries
and employee benefits are the largest portion of noninterest
expense and increased $488 or 9.10% in the first nine 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 decreased slightly
with an $11 or 1.71% decrease in 1995 from 1994. Equipment
expense was up by $41 or 6.71% to $652 in 1995 from $611 in 1994
due mainly to increases in contract expenses related to new
branches and equipment. The Corporation plans to open two new
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
branches during the fourth quarter of 1995. One branch is being
opened to provide better service to existing customers and the
other branch will provide the Corporation entrance into a new
county and marketing area. The addition of these branches will
increase personnel, occupancy and equipment expenses.
Data processing expense decreased $47 or 13.78% to $294 in 1995
from $341 in 1994 and was due to a reduction in depreciation and
continued efficiencies resulting from consolidating operations.
The Corporation installed 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 in the third quarter of 1995 did increase from third
quarter 1994 because of this change.
All of the Corporation's subsidiary banks have been assigned the
highest classification by the FDIC and as such received a refund
of $281 from the FDIC for the period June 1 through September 30,
1995. This refund was received in September 1995 and had the
effect of reducing the FDIC insurance expense from .23% to .04%
starting June 1, 1995. This reduced FDIC insurance rate will
also be in effect for the remainder of 1995. The FDIC insurance
expense decreased $250 or 32.98% to $502 in 1995 from $758 in
1994. Without the refund discussed, FDIC insurance expense would
have increased and is due to increased deposit balances in 1995
compared to 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 insurance rates.
The $19 or .69% decrease in other operating expenses to $2,728 in
1995 from $2,747 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 $66 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 completed during the fourth quarter of this
year, also under the pooling of interests method.
Income before income taxes was up $824 or 14.67% to $6,440 for
the first nine months of 1995 from $5,616 for the first nine
months of 1994. The net income for the first nine months ended
September 30, 1995, was up $509 or 12.86% to $4,467 as compared
to $3,958 for the nine months ended September 30, 1994. Earnings
per share were $1.88 in 1995 and were $1.67 in 1994. Based upon
annualized net income the return on average assets was 1.13% for
the first nine months of 1995 compared to 1.04% for the same
period in 1994.
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine and three months ended September 30, 1995
(Dollar amounts in thousands, except share data)
The following schedule shows selected financial amounts and ratios for the
nine months and three months ended September 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.
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 528,979 $ 509,443 $ 542,918 $ 507,692
Securities 144,728 174,269 139,194 164,650
Loans 343,665 295,227 357,885 310,346
Allowance for loan losses 3,942 3,776 3,987 3,780
Deposits 467,289 448,322 482,403 447,043
Shareholders' equity 51,327 48,647 53,249 47,591
END OF PERIOD BALANCE SHEET DATA
Total assets $ 554,033 $ 505,599
Securities 138,776 160,544
Loans 368,346 312,676
Allowance for loan losses 4,179 3,868
Deposits 488,281 444,224
Shareholders' equity 54,266 48,751
INCOME DATA
Net interest income(t.e. basis) $ 16,525 $ 15,333 $ 5,576 $ 5,284
Provision for loan losses 425 100 275 50
Noninterest income 1,972 1,845 743 592
Noninterest expense 10,667 10,465 3,277 3,435
Net income 4,467 3,958 1,675 1,450
</TABLE>
PAGE
<PAGE>
<TABLE>
<CAPTION>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine and three months ended September 30, 1995
(Dollar amounts in thousands, except share data)
Nine Months Ended Three Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income $ 1.88 $ 1.67 $ .71 $ .61
Cash dividends before pooling
of interests .63 .63 .21 .21
Book value at end of period 22.87 20.57
Book value at end of period
before FAS 115 23.17 21.50
Tangible book value at end
of period 22.07 20.49
Tangible book value at end of
period before FAS 115 22.37 21.42
Stock price at end of period 32.00 32.81
Weighted average
shares outstanding 2,372,550 2,369,841
SELECTED RATIOS
Return on average assets 1.13% 1.04% 1.22% 1.13%
Return on average equity
before FAS 115 11.22 10.72 12.29 11.66
Net interest margin(t.e.basis) 4.41 4.23 4.32 4.38
Net charge-offs to average loans .05 (.03) .03 (.01)
Allowance for loan losses
to loans 1.13 1.24
Nonaccrual loans to loans .24 .14
Loans past due 90 days or
more to loans .25 .22
Performing restructured loans
to loans .01 .16
OREO to loans .13 .13
Leverage capital(Tier 1
equity/average assets) 10.00 9.94
Tier 1 risk-based capital 12.89 13.75
Total risk-based capital 13.89 14.84
</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. With these purchased
deposits and other growth in deposits, the Corporation's total
assets have increased $37,937 or 7.35% to $554,033 at September
30, 1995, from $516,096 at December 31, 1994. Significant
changes in the balance sheet from December 31, 1994, to September
30, 1995, included inceases in cash and cash equivalents, loans
and loans held for sale and decreases in securities while total
interest bearing deposits inceased and noninterest bearing
deposits decreased for a net total deposit increase.
PAGE
<PAGE>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
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 $1,972 or 7.41% at September 30, 1995,
from year end 1994. Total securities and interest bearing
deposits in other banks decreased $13,533 or 8.84% to $139,569 at
September 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 $3,583 to securities available for sale during the
first nine months of 1995. The FAS 115 negative mark-to-market
adjustment at December 31, 1994, was $4,746 as compared to only
$1,163 at September 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 $16,818
or 14.38% from a combination of maturities and calls and $1,500
of sales during the first nine months of 1995. There were no
sales or transfers of securities classified as held to maturity
during the period ended September 30, 1995. Securities held to
maturity increased $102 or .26% due to purchases exceeding
maturities or calls during the nine months ended September 30,
1995.
The Corporation experienced increased loan demand and total loans
increased $47,250 or 14.72% to $368,346 at September 30, 1995,
from $321,096 at December 31, 1994. Commercial loans increased
$33,037 or 20.66% to $192,951 at September 30, 1995, from
$159,914 at December 31, 1994. Commercial loan demand showed
steady increases all during the nine months ended September 30,
1995. Real estate loans increased $7,742 or 9.74% to $87,206 at
September 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 $6,471 or
7.92% to $88,189 at September 30, 1995, from $81,718 at December
31, 1994. Installment loan demand and volume of new loans has
exceeded maturities during 1995. Loans held for sale also
increased $2,675 or 100.41% at September 30, 1995, to $5,339 from
$2,664 at December 31, 1994.
Total deposits increased $33,047 or 7.26% during the first nine
months of 1995. Noninterest bearing deposits decreased $7,299 or
14.08% to $44,539 at September 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
September 30, 1995. Interest bearing deposits increased $40,346
or 10.00% to $443,742 during the nine months ended September 30,
1995, from $403,396 at December 31, 1994, and was due in part to
PAGE
<PAGE>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 30, 1995
(Dollar amounts in thousands, except share data)
the purchased 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 $526 or
16.49% at September 30, 1995, from December 31, 1994, due to
normal repayments.
Total shareholders' equity, including the unrealized loss on
securities available for sale, increased $5,229 or 10.66% to
$54,266 at September 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 $2,245 or 4.58% of this
increase in total shareholders' equity at September 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 $3,000 or 5.77% to $54,952 at September 30,
1995. This increase was net income of $4,467 less dividends paid
of $1,495 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 nine months ended September 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 September 30, 1995, and December
31, 1994, were:
September 30, 1995 December 31, 1994
Leverage capital ratio 10.00% 10.14%
Tier 1 risk-based capital 12.89% 14.32%
Total risk-based capital 13.89% 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 nine months ended September 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. This merger has been approved by the
shareholders of First Robinson Bancorp and the appropriate
regulatory authorities and became effective November 1, 1995.
PAGE
<PAGE>
AMBANC CORP.
As of and for the nine months ended September 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 September 30, 1995.
(b) No Form 8-K was filed with the SEC during the quarter
ended September 30, 1995.
PAGE
<PAGE>
AMBANC CORP.
As of and for the nine months ended September 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: November 13, 1995 BY: R. Watson
Robert G. Watson, Chairman of
the Board, President and
Chief Executive Officer
DATE: November 13, 1995 BY: Richard E. Welling
Richard E. Welling, Secretary,
Treasurer and C.F.O.
PAGE
<PAGE>
AMBANC CORP.
As of and for the nine months ended September 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 September
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> SEP-30-1995
<CASH> 14,868
<INT-BEARING-DEPOSITS> 793
<FED-FUNDS-SOLD> 13,699
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 98,979
<INVESTMENTS-CARRYING> 39,797
<INVESTMENTS-MARKET> 40,334
<LOANS> 368,346
<ALLOWANCE> 4,179
<TOTAL-ASSETS> 554,033
<DEPOSITS> 488,281
<SHORT-TERM> 5,811
<LIABILITIES-OTHER> 3,012
<LONG-TERM> 2,663
<COMMON> 23,726
0
0
<OTHER-SE> 30,540
<TOTAL-LIABILITIES-AND-EQUITY> 554,033
<INTEREST-LOAN> 8,321
<INTEREST-INVEST> 1,971
<INTEREST-OTHER> 222
<INTEREST-TOTAL> 10,608
<INTEREST-DEPOSIT> 5,257
<INTEREST-EXPENSE> 5,355
<INTEREST-INCOME-NET> 5,253
<LOAN-LOSSES> 275
<SECURITIES-GAINS> (1)
<EXPENSE-OTHER> 3,277
<INCOME-PRETAX> 2,444
<INCOME-PRE-EXTRAORDINARY> 2,444
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,675
<EPS-PRIMARY> .71
<EPS-DILUTED> .70
<YIELD-ACTUAL> 4.03
<LOANS-NON> 876
<LOANS-PAST> 960
<LOANS-TROUBLED> 52
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,911
<CHARGE-OFFS> 146
<RECOVERIES> 42
<ALLOWANCE-CLOSE> 4,179
<ALLOWANCE-DOMESTIC> 1,771
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,408
</TABLE>
