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 June 30, 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:
3,157,461 common shares of stock were outstanding as of
August 14, 1996.
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AMBANC CORP.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
June 30, 1996 (unaudited) and
December 31, 1995
Consolidated Statements of Income for
six months and three months ended
June 30, 1996 and 1995(unaudited)
Consolidated Statements of Cash
Flows for six months ended
June 30, 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)
June 30, December 31,
1996 1995
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ASSETS
Cash and due from banks $ 27,592 $ 20,520
Federal funds sold 8,770 22,653
Total cash and cash equivalents 36,362 43,173
Interest bearing deposits in other banks 591 692
Securities available for sale at market 182,924 173,469
Loans held for sale 4,336 6,727
Loans, net of unearned income 471,615 442,657
Allowance for loan losses (5,431) (5,022)
Loans, net 466,184 437,635
Premises, furniture and equipment, net 10,067 9,398
Accrued interest receivable and other assets 12,122 11,253
TOTAL ASSETS $ 712,586 $ 682,347
LIABILITIES
Noninterest bearing deposits $ 74,917 $ 63,116
Interest bearing deposits 552,192 536,953
Total deposits 627,109 600,069
Short-term borrowings 8,708 6,788
Long-term debt 2,246 2,677
Accrued interest payable and other liabilities 6,118 5,101
TOTAL LIABILITIES 644,181 614,635
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value, 200,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $10 par value, 10,000,000 and
5,000,000 shares authorized, 3,158,961 and
3,158,961 shares issued at June 30, 1996,
and December 31, 1995 31,590 31,590
Treasury stock (1,000 shares at cost) (30) --
Retained earnings 37,701 35,009
Unrealized gain/(loss) on securities
available for sale, net of deferred taxes (856) 1,113
TOTAL SHAREHOLDERS' EQUITY 68,405 67,712
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 712,586 $ 682,347
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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,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 20,606 $ 18,050 $ 10,293 $ 9,347
Interest and fees on loans
held for sale 292 122 168 77
Interest on securities
Taxable 3,883 4,004 1,994 1,973
Tax exempt 1,408 1,388 715 690
Other interest 503 198 166 128
TOTAL INTEREST INCOME 26,692 23,762 13,336 12,215
INTEREST EXPENSE
Interest on deposits 13,201 10,936 6,610 5,832
Interest on short-term borrowings 179 236 88 89
Interest on long-term debt 74 84 35 40
TOTAL INTEREST EXPENSE 13,454 11,256 6,733 5,961
NET INTEREST INCOME 13,238 12,506 6,603 6,254
Provision for loan losses 566 286 299 140
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 12,672 12,220 6,304 6,114
NONINTEREST INCOME
Income from fiduciary activities 337 320 207 107
Service charges on
deposit accounts 726 710 380 367
Gain/(loss) on securities (7) 11 (8) 6
Other operating income 638 434 396 223
TOTAL NONINTEREST INCOME 1,694 1,475 975 703
NONINTEREST EXPENSE
Salaries and employees benefits 4,904 4,820 2,443 2,402
Occupancy expenses, net 592 526 307 262
Equipment expenses 569 534 272 274
Data processing expenses 254 182 107 91
FDIC insurance 43 631 22 321
Other operating expenses 2,360 2,324 1,265 1,134
TOTAL NONINTEREST EXPENSE 8,722 9,017 4,416 4,484
INCOME BEFORE INCOME TAXES 5,644 4,678 2,863 2,333
Income taxes 1,624 1,360 824 725
NET INCOME $ 4,020 $ 3,318 $ 2,039 $ 1,608
EARNINGS PER COMMON SHARE
Net income per share $ 1.27 $ 1.05 $ .64 $ .51
Weighted average outstanding shares 3,158,945 3,158,955 3,158,928 3,158,961
</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,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,020 $ 3,318
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization and discount
accretion on securities 174 156
Depreciation 519 409
Provision for loan losses 566 286
(Gain)/loss on securities 7 (11)
(Gain) on sales of loans (216) (50)
Proceeds from sales of loans held for sale 12,740 5,131
Loans held for sale made to customers,
net of payments collected (15,353) (8,356)
Accrued interest receivable
and other assets (869) 57
Accrued interest payable
and other liabilities 2,166 (1,102)
Deferred loan fees net of costs (23) (3)
NET CASH FROM OPERATING ACTIVITIES 3,731 (165)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale 5,152 3,511
Proceeds from maturities and calls of securities
available for sale 24,995 14,400
Proceeds from maturities and calls of securities
held to maturity -- 8,944
Purchases of securities available for sale (42,901) (3,987)
Purchases of securities held to maturity -- (7,860)
Net change in interest bearing deposits
in other banks 101 299
Loans made to customers, net of
payments collected (27,268) (26,860)
Loans purchased (8) (986)
Proceeds from sales of loans 3,404 3,985
Property and equipment expenditures (1,188) (286)
NET CASH FROM INVESTING ACTIVITIES (37,713) (8,840)
</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,
1996 1995
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 27,040 14,431
Net change in short-term borrowings 1,920 (265)
Payments on long-term debt (484) (597)
Proceeds on long-term debt 53 51
Issuance of stock for dividend reinvestment -- 12
Purchase of treasury stock (30) --
Dividends paid (1,328) (1,102)
NET CASH FROM FINANCING ACTIVITIES 27,171 12,530
NET CHANGE IN CASH AND CASH EQUIVALENTS (6,811) 3,525
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 43,173 29,531
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 36,362 $ 33,056
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest $ 12,756 $ 10,838
Income taxes 2,000 1,594
Noncash activities during the period:
Reclassification of loans held for sale
to real estate loans 5,220 --
</TABLE>
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the six months ended June 30, 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 six months ended June 30, 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 six months income statement for
the previous AMBANC Corp. and FRB at June 30, 1995.
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<CAPTION>
AMBANC CORP.
CONSOLIDATED STATEMENT OF INCOME
(Dollar amounts in thousands, except share data)
Six Months Ended
June 30, 1995
AMBANC FRB Consolidated
<S> <C> <C> <C>
Total interest income $19,675 $ 4,087 $ 23,762
Total interest expense 9,368 1,888 11,256
Net interest income before
provision for loan losses 10,307 2,199 12,506
Provision for loan losses 150 136 286
Net interest income after
provision for loan losses 10,157 2,063 12,220
Total other income 1,229 246 1,475
Total other expense 7,390 1,627 9,017
Income before income taxes 3,996 682 4,678
Income taxes 1,204 156 1,360
Net income $ 2,792 $ 526 $ 3,318
Earnings per common share (based on
3,158,948 average outstanding shares) $ 1.05
</TABLE>
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the six months ended June 30, 1996
(Dollar amounts in thousands, except share data)
The Consolidated balance sheet as of June 30, 1996,
consolidated statements of income for the six months and three
months periods ended June 30, 1996 and 1995, and the
consolidated statements of cash flows for the six months
periods ended June 30, 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 June 30, 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 June 30, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the six months ended June 30, 1996
(Dollar amounts in thousands, except share data)
NEW ACCOUNTING PRONOUNCEMENTS
The Corporation adopted Statement of Financial Accounting
Standards (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.
The Corporation adopted 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
recording an asset for servicing rights of $106 on $8,861 of
qualifying fixed rate mortgages sold to the secondary mortgage
market. The Corporation retains servicing rights and this asset
relates only to mortgage loans originated and sold since the
adoption of 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. The servicing rights are being amortized against
future service fee income based upon the anticipated life of each
loan.
FAS 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" was issued in June,
1996 and provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments
of liabilities. FAS 125 applies to transactions occurring after
December 31, 1996. Management has not yet quantified the effect
of this new standard on the consolidated financial statements.
FINANCIAL STATEMENT RECLASSIFICATIONS
Certain items in the prior years financial statements have been
reclassified to correspond with the current presentation.
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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, 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%.
Six Months Ended
June 30, Increase
1996 1995 (Decrease)
Interest income $ 26,692 $ 23,762 12.33 %
Adjusted for tax
exempt income 809 808 (.12)
Tax equivalent
interest income 27,501 24,570 11.93
Interest expense 13,454 11,256 19.53
Net interest income $ 14,047 $ 13,314 5.51 %
Net interest income increased $733 or 5.51% for the six
months ended June 30, 1996, compared to the six
months ended June 30, 1995. This $733 increase was a
combination of a $2,931 increase in interest income and a
$2,198 increase in interest expense. The $2,931 increase in
interest income was composed of an increase of $2,657 due to
increased volume of average interest earning assets and an
increase of $274 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, 1996
(Dollar amounts in thousands, except share data)
interest earning assets. The $2,198 increase in interest expense
was a combination of an increase of $1,368 due to increased
volume of average interest bearing liabilities and an increase of
$830 due to rate increases on these interest bearing
liabilities.
The Corporation's average assets for the first six months of 1996
increased $67,069 or 10.68% to $695,181 from $628,112 for the
first six months of 1995. The percent of average earning assets
to total average assets has stayed consistent at 95.25% for the
first six months of 1996 and 95.24% for the first six months of
1995.
Net interest margin decreased .22% to 4.27% for the first six
months of 1996 from 4.49% for the first six 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 8.35% for the first six months of 1996 from
8.28% for the first six months of 1995 for an increase of .07%.
The cost on average interest bearing liabilities increased at a
faster rate and was 4.77% for the first six months of 1996 and
4.45% for the first six months of 1995 for an increase of .32%.
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 .03% during
the first six months of 1996 compared to the last quarter of
1995. The commercial loan fees received during the first six
months of 1996 are higher than normal. If 1996 loan fees were
reduced to the same level as in 1995, net interest margin would
have been lowered to 4.22% or .05% less 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 3.58% for the first six
months of 1996 compared to 3.83% for the first six 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 six months ended June 30, 1996
(Dollar amounts in thousands, except share data)
The provision for loan losses was increased during 1996 because
of increased loan volume, agricultural conditions and because of
an increase in nonaccrual loans. Loans have increased 6.54%
since December 31, 1995 and a portion of the 1996 provision is
attributable to this increase. The Corporation has a large
agricultural customer base and as of the end of the quarter the
crop planting for 1996 was still questionable because of weather
conditions. Since June 30, 1996, the weather conditions have
improved and planting for 1996 has been complete. The
agricultural community did lose most of the 1996 wheat crop but
current outlook for all other crops has improved dramatically
since the end of the quarter. The increase in nonaccrual loans
is due primarily to commercial loans to one customer. This
customer's real estate secured loans were placed on nonaccural at
the end of the second quarter and all unpaid accrued interest was
written off. These loans are currently protected by an adequate
appraisal and the ultimate outcome of negotiations can not be
determined at this time. The allowance for loan losses at June
30, 1996, was $5,431 or 1.15% 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 six months of
1996, loans charged off were $431 and recoveries from previously
written off loans were $274, thus net charge offs for the first
six months of 1996 were $157. The adequacy of the allowance for
loan losses is analyzed by management of each subsidiary bank
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,
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
June 30, 1996, and December 31, 1995:
June 30,1996 December 31, 1995
Nonaccrual loans .84% .22%
Loans past due 90 days .37 .29
Performing restructured loans .02 .01
OREO .06 .06
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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, 1996
(Dollar amounts in thousands, except share data)
A summary of the activity in the allowance for loan losses
account for the first six months ending June 30, 1996, and
1995 was:
1996 1995
Balance, January 1 $5,022 $4,531
Provision for loan losses 566 286
Loans charged off (431) (348)
Recoveries of loans previously
charged off 274 185
Balance, June 30 $5,431 $4,654
Noninterest income for the six months ended June 30, 1996, was up
$219 or 14.85% to $1,694 as compared to $1,475 for the six months
ended June 30, 1995. Income from fiduciary services was up by
$17 or 5.31% to $337 in 1996 from $320 in 1995. Service charges
on deposit accounts remained consistent with an increase of $16
or 2.25% in 1996 compared to 1995. Other operating income
increased $204 or 47.00% to $638 for the six months ended June
30, 1996, from $434 for the same six months in 1995. This
increase 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 gains on
sales of loans held for sale were $106 higher due to the effect
of adopting FAS 122. Such gains were offset by amortization of
the related servicing rights asset totaling $2 for the six month
period ended June 30, 1996.
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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, 1996
(Dollar amounts in thousands, except share data)
Noninterest expense for the six months ended June 30, 1996, was
$8,722 as compared to $9,017 for the six months ended June 30,
1995, for a decrease of $295 or 3.27%. Salaries and employee
benefits are the largest portion of noninterest expense and
increased $84 or 1.74% in the first six months of 1996 compared
to the same period in 1995. Individual major components showed
increases in salaries and related taxes, life insurance and
employee relocation expense 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 $66 or 12.55% and equipment
expenses were up $35 or 6.55% in the first six months of 1996
compared to 1995. The Corporation has added four branches since
June 30, 1995, and these expenses have increased accordingly.
Data processing expenses have increased due to the upgrading of
the computer system. The $72 or 39.56% increase in data
processing expenses during the first six months 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 subsidiary bank 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 lowest 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
$43 in the first six months of 1996 from $631 during the first
six 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 six months ended June 30, 1996
(Dollar amounts in thousands, except share data)
Other operating expenses increased $36 or 1.55% to $2,360 for the
first six months of 1996 from $2,324 for the same period in 1995.
This increase is due to many increases and decreases with major
changes being an increase in goodwill amortization and a decrease
in professional fees in 1996. Due to purchased deposits in March
1995, the related goodwill amortization was included during all
of 1996 but only for three and one-half months in 1995. The
Corporation finalized a merger on November 1, 1995, and
professional fees have decreased in 1996 without those related to
this merger. Other operating expenses in 1996 also includes
$100 of accrued expenses for the name change of all subsidiary
banks. (See pending changes for further details.)
Income before income taxes was up $966 or 20.65% to $5,644 for
the first six months of 1996 from $4,678 for the first six months
of 1995. As previously noted, $588 is due to the reduction in
FDIC expense. The net income for the first six months ended June
30, 1996, was up $702 or 21.16% to $4,020 as compared to $3,318
for the six months ended June 30, 1995. Earnings per share were
$1.27 in 1996 and were $1.05 in 1995. Based upon annualized net
income the return on average assets was 1.16% for the first six
months of 1996 compared to 1.07% 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 six months ended June 30, 1996
(Dollar amounts in thousands, except share data)
The following schedule shows selected financial amounts and ratios for the
three months and six months ended June 30, 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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 699,245 $ 619,135 $ 695,181 $ 628,112
Securities 185,106 183,991 182,322 182,079
Loans 459,058 393,647 452,779 401,854
Allowance for loan losses 5,162 4,527 5,091 4,558
Deposits 615,858 542,494 611,746 551,821
Shareholders' equity 67,959 58,742 68,027 60,011
END OF PERIOD BALANCE SHEET DATA
Total assets $ 712,586 $ 644,057
Securities 182,924 175,793
Loans 471,615 412,358
Allowance for loan losses 5,431 4,654
Deposits 627,109 564,818
Shareholders' equity 68,405 63,047
INCOME DATA
Net interest income(t.e. basis) $ 7,012 $ 6,659 $ 14,047 $ 13,314
Provision for loan losses 299 140 566 286
Noninterest income 975 703 1,694 1,475
Noninterest expense 4 416 4,484 8,722 9,017
Net income 2,039 1,608 4,020 3,318
</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, 1996
(Dollar amounts in thousands, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income $ .64 $ .54 $ 1.27 $ 1.05
Cash dividends before pooling
of interests .21 .20 .42 .40
Book value at end of period 21.65 20.95
Book value at end of period
before FAS 115 21.97 21.28
Tangible book value at end
of period 21.07 20.28
Tangible book value at end of
period before FAS 115 21.39 20.61
Stock price at end of period 28.75 31.25
Weighted average
shares 3,158,961 3,158,961 3,158,961 3,158,955
Weighted average
treasury shares 33 -- 16 --
SELECTED RATIOS
Return on average assets 1.17% 1.01% 1.16% 1.07%
Return on average equity
before FAS 115 12.05 10.20 11.97 10.71
Net interest margin(t.e.basis) 4.23 4.41 4.27 4.49
Efficiency ratio 58.27 64.45 58.41 64.49
Net charge-offs to average loans -- .02 .03 .04
Allowance for loan losses
to loans 1.15 1.13
Nonaccrual loans to loans .84 .28
Loans past due 90 days or
more to loans .37 .34
Performing restructured loans
to loans .02 .03
OREO to loans .06 .12
Leverage capital(Tier 1
equity/average assets) 9.71 9.80
Tier 1 risk-based capital 13.31 13.74
Total risk-based capital 14.38 14.78
</TABLE>
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, 1996
(Dollar amounts in thousands, except share data)
FINANCIAL CONDITION
Total assets have increased $30,239 or 4.43% to $712,586 at June
30, 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 $27,040 or 4.51% to $627,109 at June 30, 1996,
from $600,069 at December 31, 1995. Noninterest bearing deposits
increased $11,801 or 18.70% while interest bearing deposits
increased $15,239 or 2.84%. The total cash and cash equivalents
have decreased $6,811 or 15.78% at June 30, 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 and loans during the six months ended June
30, 1996.
Investments increased $9,455 or 5.45% to $182,924 at June 30,
1996, from $173,469 at December 31, 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 $1,393 at the end of June 1996. This
swing is the result of normal repricing of investment securities
in a rising rate environment which occurred during the first six
months of 1996. Without this mark to market swing of $3,118,
investments would have increased $12,573 or 7.32% between
December 31, 1995, and June 30, 1996.
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, 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 were low enough that
the Corporation has experienced demand for these loans during the
six months ended June 30, 1996. The balance has actually
decreased $2,391 but this is due to selling loans into the
secondary market and to transferring loans held for sale to real
estate loans in both the first and second quarter. During the
first quarter, 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 was selling to the secondary
market and were transferred to real estate loans. During the
second quarter, loans totaling $4,280 with a weighted average
rate of 7.49% were transferred to real estate loans because these
rates were felt to give the Corporation an acceptable long term
yield. The sale of $12,524 of loans held for sale in 1996 has
provided a net gain on sales of $216 including the increased
gains of $106 due to the adoption of FAS 122 mentioned
previously. The following is the detail of activity in the loans
held for sale between year end and June 30, 1996:
Balance December 31, 1995 $ 6,727
New loans booked (net of payments) 15,353
Loans transferred (5,220)
Loans sold (12,524)
Total at June 30, 1996 $ 4,336
The Corporation services $86,001 of real estate loans sold to the
secondary market as of June 30, 1996.
Loans have increased $28,958 or 6.54% at June 30, 1996, from
December 31, 1995. The following shows the balance by loan
classification as of the end of the periods:
6-30-96 12-31-95
Commercial $240,798 $230,077
Real estate 127,719 115,067
Installment 99,629 93,791
Credit cards 3,469 3,722
Total $471,615 $442,657
The Corporation has seen increased demand for commercial loans as
the economy continues its steady to slightly increased movement
and commercial loans have increased $10,721 or 4.66%. Real
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, 1996
(Dollar amounts in thousands, except share data)
estate loans have increased $12,652 or 11.00% but has been
effected by the previously mentioned $5,220 transfer into real
estate loans from loans held for sale. Excluding this transfer
real estate loans increased $7,432 or 6.18% at June 30, 1996.
Installment loans have increased $5,838 or 6.22% due to the
steady economy and consistent demand. The demand for consumer
loans seems to have a direct correlation with the consumer's
confidence in the economy.
Total shareholders' equity, including the unrealized loss on
securities available for sale, increased $693 or 1.02% to $68,405
at June 30, 1996, from $67,712 at December 31, 1995. The change
in the adjustment for securities available for sale caused total
equity to decrease $1,969 or 2.91% at June 30, 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 $856 at June 30, 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 $2,627 or 3.95% to $69,137 at June 30, 1996.
This increase was net income of $4,020 less dividends paid of
$1,328 less $35 related to a decrease in the mark-to-market on
mutual funds and $30 related to treasury stock. The treasury
stock was purchased and will be issued for payment of the
Corporation's fees to Directors. The Director stock grant plan
was approved by the shareholders at the annual meeting in April
1996 and treasury stock thus appears for the first time on the
balance sheet at June 30, 1996.
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
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, 1996
(Dollar amounts in thousands, except share data)
(common shareholders' equity, qualifying perpetual preferred
stock and minority interest in the equity accounts of
consolidated subsidiaries) less intangible assets and the FAS 115
adjustments. Tier 2 capital consists of the allowance for loan
losses (limited to 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, 1996, and December 31,
1995, were:
June 30, 1996 December 31, 1995
Leverage capital ratio 9.71% 10.01%
Tier 1 risk-based capital 13.31% 13.61%
Total risk-based capital 14.38% 14.67%
PENDING CHANGES
The following two changes were approved by the appropriate
regulators and became effective on July 1, 1996. These are both
major changes by the Corporation and were implemented for long-
term benefits.
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.
PAGE
<PAGE>
AMBANC CORP.
As of and for the six months ended June 30, 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 June 30, 1996.
(b) No Form 8-K was filed with the SEC during the quarter
ended June 30, 1996.
PAGE
<PAGE>
AMBANC CORP.
As of and for the six months ended June 30, 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: August 14, 1996 BY: R. Watson
Robert G. Watson, Chairman of
the Board, President and
Chief Executive Officer
DATE: August 14, 1996 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, 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 June
30, 1996.
* 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 27,592
<INT-BEARING-DEPOSITS> 591
<FED-FUNDS-SOLD> 8,770
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 182,924
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 471,615
<ALLOWANCE> 5,431
<TOTAL-ASSETS> 712,586
<DEPOSITS> 627,109
<SHORT-TERM> 8,708
<LIABILITIES-OTHER> 6,118
<LONG-TERM> 2,246
0
0
<COMMON> 31,590
<OTHER-SE> 36,815
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<INTEREST-LOAN> 10,293
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<INTEREST-OTHER> 166
<INTEREST-TOTAL> 13,336
<INTEREST-DEPOSIT> 6,610
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<INTEREST-INCOME-NET> 6,603
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<EXPENSE-OTHER> 4,416
<INCOME-PRETAX> 2,863
<INCOME-PRE-EXTRAORDINARY> 2,863
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<NET-INCOME> 2,039
<EPS-PRIMARY> .64
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