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 March 31, 1996
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:
3,158,961 common shares of stock were outstanding as of
May 10, 1996.
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AMBANC CORP.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
March 31, 1996 (unaudited) and
December 31, 1995
Consolidated Statements of Income for
three months ended
March 31, 1996 and 1995(unaudited)
Consolidated Statements of Cash
Flows for three months ended
March 31, 1996 and 1995 (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)
March 31, December 31,
1996 1995
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ASSETS
Cash and due from banks $ 19,455 $ 20,520
Federal funds sold 19,737 22,653
Total cash and cash equivalents 39,192 43,173
Interest bearing deposits in other banks 691 692
Securities available for sale at market 186,186 173,469
Loans held for sale 7,702 6,727
Loans, net of unearned income 451,023 442,657
Allowance for loan losses (5,139) (5,022)
Loans, net 445,884 437,635
Premises, furniture and equipment, net 9,928 9,398
Accrued interest receivable and other assets 11,686 11,253
TOTAL ASSETS $ 701,269 $ 682,347
LIABILITIES
Noninterest bearing deposits $ 53,663 $ 63,116
Interest bearing deposits 564,748 536,953
Total deposits 618,411 600,069
Short-term borrowings 7,873 6,788
Long-term debt 2,402 2,677
Accrued interest payable and other liabilities 4,965 5,101
TOTAL LIABILITIES 633,651 614,635
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, 3,158,961 and 3,158,961 shares
issued and outstanding at March 31, 1996,
and December 31, 1995 31,590 31,590
Retained earnings 36,327 35,009
Unrealized gain/(loss) on securities
available for sale (299) 1,113
TOTAL SHAREHOLDERS' EQUITY 67,618 67,712
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 701,269 $ 682,347
</TABLE>
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
Three Months Ended
March 31,
1996 1995
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INTEREST INCOME
Interest and fees on loans $ 10,313 $ 8,703
Interest and fees on loans
held for sale 124 45
Interest on securities
Taxable 1,889 2,031
Tax exempt 693 698
Other interest 337 70
TOTAL INTEREST INCOME 13,356 11,547
INTEREST EXPENSE
Interest on deposits 6,591 5,104
Interest on short-term borrowings 91 147
Interest on long-term debt 39 44
TOTAL INTEREST EXPENSE 6,721 5,295
NET INTEREST INCOME 6,635 6,252
Provision for loan losses 267 146
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,368 6,106
NONINTEREST INCOME
Income from fiduciary activities 130 213
Service charges on
deposit accounts 346 343
Gain/(loss) on securities 1 5
Other operating income 242 211
TOTAL NONINTEREST INCOME 719 772
NONINTEREST EXPENSE
Salaries and employees benefits 2,461 2,418
Occupancy expenses, net 285 264
Equipment expenses 297 260
Data processing expenses 147 91
FDIC insurance 21 310
Other operating expenses 1,095 1,190
TOTAL NONINTEREST EXPENSE 4,306 4,533
INCOME BEFORE INCOME TAXES 2,781 2,345
Taxes 800 635
NET INCOME $ 1,981 $ 1,710
EARNINGS PER COMMON SHARE(based on 3,158,610 and 3,158,948
average outstanding shares in 1996 and 1995)
Net income per share $ .63 $ .54
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except share data)
Three Months Ended
March 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,981 $ 1,710
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization and discount
accretion on securities 75 95
Depreciation 258 241
Provision for loan losses 267 146
(Gain)/loss on securities (1) (5)
Proceeds from sales of loans held for sale 6,967 2,739
Loans held for sale made to customers,
net of payments collected (7,942) (2,915)
Accrued interest receivable
and other assets (433) 330
Accrued interest payable
and other liabilities 687 (1,109)
Deferred loan fees net of costs 13 29
NET CASH FROM OPERATING ACTIVITIES 1,872 1,261
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale -- 995
Proceeds from maturities and calls of securities
available for sale 15,125 10,032
Proceeds from maturities and calls of securities
held to maturity -- 1,724
Purchases of securities available for sale (30,151) (3,476)
Purchases of securities held to maturity -- (3,220)
Net change in interest bearing deposits
in other banks 1 199
Loans made to customers, net of
payments collected (9,933) (22,249)
Loans purchased (1,000) --
Proceeds from sales of loans 2,404 3,110
Property and equipment expenditures (788) (66)
NET CASH FROM INVESTING ACTIVITIES (24,342) (12,951)
</TABLE>
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Dollar amounts in thousands, except share data)
Three Months Ended
March 31,
1996 1995
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CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 18,342 13,450
Net change in short-term borrowings 1,085 (3,246)
Payments on long-term debt (300) (339)
Proceeds on long-term debt 25 20
Issuance of stock for dividend reinvestment -- 12
Dividends paid (663) (550)
NET CASH FROM FINANCING ACTIVITIES 18,489 9,347
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,981) (2,343)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 43,173 29,531
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 39,192 $ 27,188
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period ended March 31:
Interest $ 6,237 $ 5,095
Income taxes 165 124
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
ITEM 1.
CONSOLIDATED FINANCIAL STATEMENTS
Effective November 1, 1995, AMBANC Corp. completed the
acquisition of First Robinson Bancorp (FRB) of Robinson, Illinois
in Crawford county. The acquisition, which has been accounted
for as a pooling of interests, involved the issuance of 668,329
shares of AMBANC Corp. common stock in exchange for the 119,200
shares of outstanding common stock of FRB. No fractional shares
were issued and AMBANC Corp. paid $3 for 94 equivalent fractional
shares and issued 668,235 common shares in the FRB acquisition.
At the conclusion of the acquisition, FRB was merged into AMBANC
Corp. and its wholly owned subsidiary, First National Bank in
Robinson, Robinson, Illinois in Crawford county became a direct,
wholly owned subsidiary of AMBANC Corp.
The consolidated balance sheet at December 31, 1995, and the
consolidated statement of income and consolidated statement of
cash flows for three months ended March 31, 1995, represent the
retroactive restatement, under the pooling of interests basis, of
information for FRB and the previous AMBANC Corp. The following
page presents the consolidated three month income statement for
the previous AMBANC Corp. and FRB at March 31, 1995.
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<CAPTION>
AMBANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Dollar amounts in thousands, except share data)
Three Months Ended
March 31, 1995
AMBANC FRB Consolidated
<S> <C> <C> <C>
Total interest income $ 9,515 $ 2,032 $ 11,547
Total interest expense 4,363 932 5,295
Net interest income before
provision for loan losses 5,152 1,100 6,252
Provision for loan losses 75 71 146
Net interest income after
provision for loan losses 5,077 1,029 6,106
Total other income 609 163 772
Total other expense 3,719 814 4,533
Income taxes 557 78 635
Net income $ 1,410 $ 300 $ 1,710
Earnings per common share (based on
3,158,948 average outstanding shares) $ .54
</TABLE>
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
The Consolidated balance sheet as of March 31, 1996,
consolidated statements of income for the three month
periods ended March 31, 1996 and 1995, and the
consolidated statements of cash flows for the three month
periods ended March 31, 1996 and 1995, 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 March 31, 1996, 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, 1995, annual report to
shareholders. The results of operations for the period
ended March 31, 1996, 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 three months ended March 31, 1996
(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%.
Three Months Ended
March 31, Increase
1996 1995 (Decrease)
Interest income $ 13,356 $ 11,547 15.67 %
Adjusted for tax
exempt income 400 403 (.74)
Tax equivalent
interest income 13,756 11,950 15.11
Interest expense 6,721 5,295 26.93
Net interest income $ 7,035 $ 6,655 5.71 %
Net interest income increased $380 or 5.71% for the three
months ended March 31, 1996, compared to the three
months ended March 31, 1995. This $380 increase was a
combination of a $1,806 increase in interest income and a
$1,426 increase in interest expense. The $1,806 increase in
interest income was composed of an increase of $1,367 due to
increased volume of average interest earning assets and an
increase of $439 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 three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
interest earning assets. The $1,426 increase in interest expense
was a combination of an increase of $724 due to increased volume
of average interest bearing liabilities and an increase of
$702 due to rate increases on these interest bearing
liabilities.
The Corporation's average assets for the first three months of
1996 increased $71,982 or 11.63% to $691,117 from $619,135 for
the first three months of 1995, but the percent of average
earning assets to total average assets decreased to 94.88% for
the first three months of 1996 from 95.39% for the first three
months of 1995. This decrease is partially explained by the fact
that 1996 average assets contained $1,914 average nonearning
goodwill while 1995 only contained $566 average nonearning
goodwill. This increase is due to the purchase of $25,462 of
deposits on March 17, 1995, and the related goodwill associated
with the purchased deposits. This goodwill, originally booked at
$1,777, was only included in average assets for 15 days in 1995
but is included for the complete quarter in 1996. The nonearning
assets of the Corporation are also lower due to average premises,
furniture and equipment, net of depreciation, increasing $887 to
$10,006 for the first quarter of 1996 compared to $9,119 for the
first quarter of 1995. This average increase is due to the
opening of four new branches since March 31, 1995.
Net interest margin decreased .25% to 4.32% for the first three
months of 1996 from 4.57% for the first three months of 1995.
This decrease is due to the fact that costs on average interest
bearing liabilities are increasing faster than rates on average
interest earning assets. The yield on average interest earning
assets increased to 8.44% for the first three months of 1996 from
8.21% for the first three months of 1995 for an increase of .23%.
The cost on average interest bearing liabilities increased at a
faster rate and was 4.81% for the first three months of 1996 and
4.28% for the first three months of 1995 for an increase of .53%.
The net interest margin started out the first quarter of 1995 at
its best rate and decreased each subsequent quarter ending at
4.38% for all of 1995. The net interest margin for the fourth
quarter of 1995 was 4.24% and thus actually increased .08% during
the first quarter of 1996 compared to the last quarter of 1995.
The commercial loan fees received during the first quarter of
1996 were higher than normal. Without these higher loan fees,
the net interest margin for the first quarter of 1996 would have
been only 4.21% or .11% lower than actual. The interest spread,
which is the mathematical difference between yields on average
interest earning assets and costs on average interest bearing
liabilities was at 3.63% for the first three months of 1996
compared to 3.93% for the first three months of 1995.
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
The provision for loan losses was $267 during the first three
months of 1996 compared to $146 during the first three months of
1995. The provision for loan losses was increased during 1996
because of increased loan volume and not due to loan credit
problems. The allowance for loan losses at March 31, 1996, was
$5,139 or 1.14% of total loans less unearned income as compared
to $5,022 or 1.13% of total loans less unearned income at
December 31, 1995. During the first three months of 1996, loans
charged off were $277 and recoveries from previously written off
loans were $127, thus net charge offs for the first three months
of 1996 were $150. 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 March 31, 1996, 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
March 31, 1996, and December 31, 1995:
March 31,1996 December 31, 1995
Nonaccrual loans .22% .22%
Loans past due 90 days .38 .29
Performing restructured loans .01 .01
OREO .06 .06
A summary of the activity in the allowance for loan losses
account for the first three months ending March 31, 1996, and
1995 was:
1996 1995
Balance, January 1 $5,022 $4,531
Provision for loan losses 267 146
Loans charged off (277) (162)
Recoveries of loans previously
charged off 127 85
Balance, March 31 $5,139 $4,600
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Noninterest income for the three months ended March 31, 1996, was
down $53 or 6.87% to $719 as compared to $772 for the three
months ended March 31, 1995. Income from fiduciary services was
down by $83 or 38.97% to $130 in 1996 from $213 in 1995. While
trust fees were up at the lead bank, the newest subsidiary bank's
fees were down drastically due to annual billings not being
completed in the first quarter of 1996 as had been the case in
1995. Service charges on deposit accounts remained consistent
and the Corporation had net gains of $1 on calls of securities.
Other operating income increased $31 or 14.69% to $242 for the
three months ended March 31, 1996, from $211 for the same three
months in 1995. This $31 is due to several factors with customer
service charges and insurance commissions decreasing but being
offset by increased gains on the sale of loans held for sale.
The Corporation adopted Statement of Financial Accounting
Standards (FAS) 122, "Accounting for Mortgage Servicing Rights",
effective January 1, 1996, and with it the gains on sales of
mortgages to the secondary mortgage market increased. The
adoption of FAS 122 resulted in the Corporation booking servicing
rights of $50 on $4,142 of qualifying fixed rate mortgages sold
to the secondary mortgage market with the Corporation retaining
servicing rights. The adoption of FAS 122 effected only those
mortgage loans booked and sold during the first quarter of 1996.
The gains on sales of loans were also $50 higher due to the
effect of adopting and booking FAS 122. The book value of the
sold real estate loans is reduced for the amount assigned to
these servicing rights and the gain on the sale of these loans is
increased accordingly. Booked servicing rights are being
amortized against future service fee income based upon the
anticipated life of each loan.
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Noninterest expense for the three months ended March 31, 1996,
was $4,306 as compared to $4,533 for the three months ended March
31, 1995, for a decrease of $227 or 5.01%. Salaries and employee
benefits are the largest portion of noninterest expense and
increased $43 or 1.78% in the first three months of 1996 compared
to the same period in 1995. Individual major components showed
increases in salaries and related taxes and decreases in medical
and pension expense. One of the affiliate banks was funding a
defined benefit pension plan in 1995 and not in 1996. This
pension plan was curtailed in 1994 and final funding was
completed during 1995. Occupancy expenses were up $21 or 7.95%
and equipment expenses were up $37 or 14.23% in the first three
months of 1996 compared to 1995. As mentioned earlier, the
Corporation has added four branches since March 31, 1995, and
these expenses have increased accordingly. Data processing
expenses have increased due to the upgrading of the computer
system. The $56 or 38.10% increase in data processing expenses
during the first quarter of 1996, are the result of a decision to
add short term expenses that will benefit the Corporation with
reduced data processing expenses in the future. The upgrading of
the data processing system in late 1995 and the conversion of
another subsidiary bank to this system during the first quarter
of 1996 will provide for long term expense reduction. The
conversion of the last bank subsidiary to the in-house data
processing system is anticipated to be complete during the last
quarter of 1996.
All of the Corporation's subsidiary banks have been assigned the
classification of least risk by the FDIC and as such are subject
to the lowest deposit insurance rates available from the Bank
Insurance Fund (BIF). Because of excess funding, the FDIC set
its BIF premium rate at 0% with a minimum of $2 per subsidiary
bank effective January 1, 1996. This 0% rate for FDIC insurance
will exist as long as BIF remains at or above the 1.25% of total
insured deposits set by law. Two of the subsidiary banks
purchased deposits from savings and loans in the past and thus
must continue to pay the Savings Association Insurance Fund
(SAIF) rather than the BIF rate on these deposits. The SAIF rate
is .23% of insured deposits. With these changes, the Corporation
has seen FDIC insurance expense reduce to only $21 in the first
quarter of 1996 from $310 during the first quarter of 1995.
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Other operating expenses decreased $95 or 7.98% to $1,095 for the
first three months of 1996 from $1,190 for the same period in
1995. This decrease is due to many increases and decreases with
major changes being increased amortization of goodwill in 1996
due to the purchased deposits being included in the whole quarter
of 1996 and only during a fifteen day period of 1995 offset by a
large decrease in professional fees because 1995 contained merger
expenses and 1996 does not.
The Corporation adopted FAS 121, "Accounting for the Impairment
of Long-Lived Assets or for Long-Lived Assets to be Disposed of",
effective January 1, 1996. The adoption of FAS 121 had no effect
on the Corporation because no assets, liabilities or intangibles
of the Corporation were effected by this new FAS.
Income before income taxes was up $436 or 18.59% to $2,781 for
the first three months of 1996 from $2,345 for the first three
months of 1995. As noted on previous page, $289 is due to the
reduction in FDIC expense. The net income for the first three
months ended March 31, 1996, was up $271 or 15.85% to $1,981 as
compared to $1,710 for the three months ended March 31, 1995.
Earnings per share were $.63 in 1996 and were $.54 in 1995.
Based upon annualized net income the return on average assets was
1.15% for the first three months of 1996 compared to 1.12% for
the same period in 1995.
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<CAPTION>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
The following schedule shows selected financial amounts and ratios for the
three months ended March 31, 1996 and 1995. The Corporation feels these
financial highlights include pertinent information relevant for its results
as a company in the financial institutions industry.
Three Months Ended
March 31,
1996 1995
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AVERAGE BALANCE SHEET DATA
Total assets $ 691,117 $ 619,135
Securities 179,538 183,991
Loans 446,500 393,647
Allowance for loan losses 5,020 4,527
Deposits 607,634 542,494
Shareholders' equity 68,095 58,742
END OF PERIOD BALANCE SHEET DATA
Total assets $ 701,269 $ 637,716
Securities 186,186 183,258
Loans 451,023 407,690
Allowance for loan losses 5,139 4,600
Deposits 618,411 563,837
Shareholders' equity 67,618 61,023
INCOME DATA
Net interest income(t.e. basis) $ 7,035 $ 6,655
Provision for loan losses 267 146
Noninterest income 719 772
Noninterest expense 4 306 4,533
Net income 1,981 1,710
</TABLE>
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<CAPTION>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
PER SHARE DATA
Net income $ .63 $ .54
Cash dividends before pooling
of interests .21 .20
Book value at end of period 21.41 19.32
Book value at end of period
before FAS 115 21.53 19.94
Tangible book value at end
of period 20.80 18.67
Tangible book value at end of
period before FAS 115 20.93 19.30
Stock price at end of period 30.50 29.52
Weighted average
shares outstanding 3,158,961 3,158,948
SELECTED RATIOS
Return on average assets 1.15% 1.12%
Return on average equity
before FAS 115 11.88 11.24
Net interest margin(t.e.basis) 4.32 4.57
Net charge-offs to average loans .03 .02
Allowance for loan losses
to loans 1.14 1.13
Nonaccrual loans to loans .22 .27
Loans past due 90 days or
more to loans .38 .18
Performing restructured loans
to loans .01 .12
OREO to loans .06 .10
Leverage capital(Tier 1
equity/average assets) 9.59 9.73
Tier 1 risk-based capital 13.39 13.45
Total risk-based capital 14.44 14.47
</TABLE>
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AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
FINANCIAL CONDITION
Total assets have increased $18,922 or 2.77% to $701,269 at March
31, 1996, from $682,347 at December 31, 1995. This growth is
mostly attributable to the opening of two new branch locations in
Wal-Mart Supercenters and the resulting increased deposits. The
rates paid on deposits were set to attract new customers and
business but actually increased deposits more than was budgeted.
This deposit growth is also affected by the fact that rates paid
on bank deposits are coming closer to investment rates paid by
brokerage firms and the Corporation has seen customers returning
deposits to the banks.
Deposits increased $18,342 or 3.06% to $618,411 at March 31,
1996, from $600,069 at December 31, 1995. Noninterest bearing
deposits actually decreased $9,453 or 14.98% while interest
bearing deposits increased $27,795 or 5.18%. The decrease in
noninterest bearing deposits during the first quarter is due to
normal reductions of institutional public funds on deposit at
December 31, 1995, and not on deposit at March 31, 1996. The
total cash and cash equivalents have decreased $3,981 or 9.22% at
March 31, 1996, from December 31, 1995, and have provided an
additional source for investing by the Corporation. These
increased cash flows were mostly used to increase investments,
loans held for sale and loans during the quarter ended March 31,
1996.
Investments increased $12,717 or 7.33% to $186,186 at quarter
ended March 31, 1996, from $173,469 at year end 1995. This is
the book balance of securities available for sale which are
presented after being adjusted to market value. The market value
adjustment for these securities went from a positive $1,725 at
year end 1995 to a negative $510 at the end of March 1996. This
swing is the result of normal repricing of investment securities
in a rising rate environment which occurred during the first
quarter of 1996. Without this mark to market swing of $2,235,
investments would have increased $14,952 or 8.71% between
December 31, 1995, and March 31, 1996.
PAGE
<PAGE>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Loans held for sale represent qualifying fixed rate mortgage
loans that are available for sale into the secondary market.
Fixed rate real estate mortgage loan rates where low enough that
the Corporation experienced demand for these loans during the
quarter and the balance increased $975 or 14.49% during the
quarter. This increase is after sales of loans held for sale
during the quarter totaling $6,967 which provided a gain on sale
of $117 including the increased gains of $50 due to the adoption
of FAS 122. New loans net of loan payments and transferred loans
totaled $7,942 during the quarter and the ending balance equaled
$7,702. Loans totaling $940 and classified as loans held for
sale at December 31, 1995, were determined not to fit the
criteria of loans the Corporation is currently selling to the
secondary market and were transferred to real estate loans during
the first quarter of 1996.
The $8,366 or 1.89% increase in loans at March 31, 1996, from
December 31, 1995, is composed of an increase of $7,206 in
commercial loans, a decrease of $52 in installment loans and a
$1,212 increase in real estate loans. The Corporation has seen
increased demand for commercial loans as the economy continues
its steady to slightly increased movement. The demand for
installment loans is just steady and is running slightly behind
principal paydowns on installment loans. Real estate loans,
which currently only includes new variable rate loans, have shown
an increase of $1,212 but this includes the transfer from loans
held for sale discussed previously. These changes in loans are
after a reclassification of approximately $17,000 of real estate
loans to commercial loans during the quarter. The newest bank
affiliate was converted to the Corporation's data processing
system on February 17, 1996, and with that conversion these loans
were reclassified. This reclassification was made to conform
loans to the same classifications as being used by the other
subsidiary banks.
PAGE
<PAGE>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the three months ended March 31, 1996
(Dollar amounts in thousands, except share data)
Total shareholders' equity, including the unrealized loss on
securities available for sale, decreased $94 or .14% to $67,618
at March 31, 1996, from $67,712 at December 31, 1995. The change
in the adjustment for securities available for sale caused total
equity to decrease $1,412 or 2.09% at March 31, 1996, from
December 31, 1995. This decrease is the after tax effect of the
mark-to-market adjustment on securities available for sale which
was a negative $299 at March 31, 1996, and was a positive $1,113
at December 31, 1995. The Corporation's regulators have issued
guidelines stating that the unrealized gain or 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 $66,510 at December 31,
1995, and increased $1,296 or 1.95% to $67,806 at March 31, 1996.
This increase was net income of $1,981 less dividends paid of
$663 less $22 related to a decrease in the mark-to-market on
mutual funds.
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 three months ended March 31, 1996
(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 March 31, 1996, and December 31,
1995, were:
March 31, 1996 December 31, 1995
Leverage capital ratio 9.59% 10.01%
Tier 1 risk-based capital 13.39% 13.61%
Total risk-based capital 14.44% 14.67%
PENDING CHANGES
The Corporation has approved the merger of two of our subsidiary
banks. These banks, The American National Bank of Vincennes and
Citizens' National Bank of Linton, are both domiciled in Indiana.
This merger will mean that all of the Corporation's banking
operations in Indiana will be performed by one legal entity.
The Corporation has also approved a name change for all of the
subsidiary banks. The banks will all be named "AmBank" and will
use consistent signage and advertisements. The name change is
anticipated to bring several efficiencies and will provide for
more exposure and recognition with all banks using the same name.
This name change is also anticipated to bring more exposure to
the Corporation since the new name for the banks will be very
similar to our corporate name, "AMBANC Corp." and "AMBK" our
NASDAQ symbol.
The above two pending changes will require approval from various
regulators. The approval of the appropriate regulators has been
applied for and if received, the Corporation will complete the
above two changes effective July 1, 1996.
PAGE
<PAGE>
AMBANC CORP.
As of and for the three months ended March 31, 1996
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, 1995,
is incorporated herein by reference.
27 Financial Data Schedule for March 31, 1996.
(b) No Form 8-K was filed with the SEC during the quarter
ended March 31, 1996.
PAGE
<PAGE>
AMBANC CORP.
As of and for the three months ended March 31, 1996
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: May 10, 1996 BY: R. Watson
Robert G. Watson, Chairman of
the Board, President and
Chief Executive Officer
DATE: May 10, 1996 BY: Richard E. Welling
Richard E. Welling, Secretary,
Treasurer and C.F.O.
PAGE
<PAGE>
AMBANC CORP.
As of and for the three months ended March 31, 1996
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, 1995,
is incorporated herein by reference.
27 Financial Data Schedule for March
31, 1996.
* Incorporated by reference from previously filed
documents.
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