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, 1997
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:
6,653,647 common shares of stock were outstanding as of
November 14, 1997.
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AMBANC CORP.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
September 30, 1997 (unaudited) and
December 31, 1996
Consolidated Statements of Income for
Nine and three months ended September 30, 1997
and 1996(unaudited)
Consolidated Statements of Cash
Flows for nine months ended
September 30, 1997 and 1996 (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 1. Legal Preceedings
Item 6. Exhibits and Reports of Form 8-K
Signatures
Exhibit Index
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMBANC CORP.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)
September 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and due from banks $ 26,448 $ 26,409
Federal funds sold -- 5,875
Total cash and cash equivalents 26,448 32,284
Interest bearing deposits in other banks 397 590
Securities available for sale at market 158,421 170,724
Loans held for sale 2,137 2,350
Loans, net of unearned income 531,090 494,467
Allowance for loan losses (5,670) (5,630)
Loans, net 525,420 488,837
Premises, furniture and equipment, net 12,878 11,184
Accrued interest receivable and other assets 14,908 12,785
TOTAL ASSETS $ 740,609 $ 718,754
LIABILITIES
Noninterest bearing deposits $ 55,870 $ 61,518
Interest bearing deposits 589,574 571,940
Total deposits 645,444 633,458
Short-term borrowings 10,349 5,286
Long-term debt 1,981 2,309
Accrued interest payable and other liabilities 6,153 5,518
TOTAL LIABILITIES 663,927 646,571
SHAREHOLDERS' EQUITY
Preferred stock, $10 par value, 200,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $10 par value, 10,000,000
shares authorized, 6,653,647 and
3,316,267 shares issued and outstanding at
September 30, 1997, and December 31, 1996 66,536 33,163
Treasury stock (768 and 724 shares at cost) (19) (21)
Retained earnings 9,336 38,731
Unrealized gain/(loss) on securities
available for sale, net of deferred taxes 829 310
TOTAL SHAREHOLDERS' EQUITY 76,682 72,183
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 740,609 $ 718,754
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 11,819 $ 10,676 $ 34,156 $ 31,061
Interest and fees on loans
held for sale 49 58 119 350
Interest on securities
Taxable 1,638 2,006 5,079 5,889
Tax exempt 716 701 2,174 2,109
Other interest income 44 47 277 550
TOTAL INTEREST INCOME 14,266 13,488 41,805 39,959
INTEREST EXPENSE
Interest on deposits 7,110 6,648 20,857 19,849
Interest on short-term borrowings 73 118 235 297
Interest on long-term debt 32 34 98 108
TOTAL INTEREST EXPENSE 7,215 6,800 21,190 20,254
NET INTEREST INCOME 7,051 6,688 20,615 19,705
Provision for loan losses 315 100 945 666
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,736 6,588 19,670 19,039
NONINTEREST INCOME
Income from fiduciary activities 193 125 564 462
Service charges on
deposit accounts 434 401 1,254 1,161
Gain/(loss) on sales of securities -- 10 74 3
Other operating income 444 201 1,353 1,009
TOTAL NONINTEREST INCOME 1,071 737 3,245 2,635
NONINTEREST EXPENSE
Salaries and employee benefits 2,872 2,433 8,093 7,337
Occupancy expenses, net 386 319 1,078 911
Equipment expenses 386 310 1,045 888
Data processing expenses 116 132 352 355
FDIC insurance 24 213 57 256
Other operating expenses 1,152 1,276 3,493 3,641
TOTAL NONINTEREST EXPENSE 4,936 4,683 14,118 13,388
INCOME BEFORE INCOME TAXES 2,871 2,642 8,797 8,286
Income taxes 864 770 2,663 2,394
NET INCOME $ 2,007 $ 1,872 $ 6,134 $ 5,892
EARNINGS PER AVERAGE COMMON SHARE
Net income per share $ .30 $ .28 $ .92 $ .89
Weighted average outstanding shares 6,633,646 6,630,912 6,632,562 6,632,819
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands, except share data)
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,134 $ 5,892
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization and discount
accretion on securities 249 260
Depreciation 919 784
Provision for loan losses 945 666
(Gain)/loss on securities (74) (3)
Gain on sales of assets (1) --
(Gain) on sales of loans (425) (227)
Proceeds from sales of loans held for sale 19,606 24,761
Loans held for sale made to customers,
net of payments collected (18,968) (20,615)
Accrued interest receivable
and other assets (2,123) (3,235)
Accrued interest payable
and other liabilities 345 1,387
Deferred loan fees net of costs (148) (65)
NET CASH FROM OPERATING ACTIVITIES 6,459 9,605
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale 6,207 11,028
Proceeds from maturities and calls of securities
available for sale 14,692 37,262
Purchases of securities available for sale (7,962) (54,334)
Net change in interest bearing deposits
in other banks 193 102
Loans made to customers, net of
payments collected (38,559) (44,342)
Loans purchased -- (8)
Proceeds from sales of loans 1,179 4,904
Property and equipment expenditures (2,612) (1,841)
NET CASH FROM INVESTING ACTIVITIES (26,862) (47,229)
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AMBANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Dollar amounts in thousands, except share data)
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 11,986 19,221
Net change in short-term borrowings 5,063 992
Payments on long-term debt (400) (484)
Proceeds on long-term debt 72 73
Net change in treasury stock 2 (6)
Dividends paid (2,156) (1,989)
NET CASH FROM FINANCING ACTIVITIES 14,567 17,807
NET CHANGE IN CASH AND CASH EQUIVALENTS (5,836) (19,817)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 32,284 43,173
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,448 $ 23,356
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period:
Interest $ 20,971 $ 19,639
Income taxes 3,463 2,950
Noncash activities during the period:
Reclassification of loans held for sale
to real estate loans -- 940
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the nine months ended September 30, 1997
(Dollar amounts in thousands, except share data)
The consolidated balance sheet as of September 30, 1997,
consolidated statements of income for the three month and nine
month periods ended September 30, 1997 and 1996, and the
consolidated statements of cash flows for the nine month periods
ended September 30, 1997 and 1996, 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, 1997, and
all periods presented, have been made.
All per share calculations have been restated to reflect the
issuance of 3,316,267 common shares in the 2-for-1 stock split
paid on August 29, 1997, to shareholders of record on August 18,
1997. The Corporation also issued 21,113 common shares with the
exercise of stock options on September 25, 1997. The ending
outstanding common shares were 6,653,647 at September 30, 1997.
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 consolidated financial statements and notes thereto
included in the Corporation's December 31, 1996, annual report to
shareholders. The results of operations for the period
ended September 30, 1997, are not necessarily indicative
of the operating results for the full year.
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AMBANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of and for the nine months ended September 30, 1997
(Dollar amounts in thousands, except share data)
NEW ACCOUNTING PRONOUNCEMENTS
The Corporation adopted Statement of Financial Accounting
Standards (FAS) 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," effective
January 1, 1997. The adoption of FAS 125 had no effect on the
Corporation's consolidated financial statements.
FAS 128, "Earnings per Share," was issued in February 1997 and
establishes new standards for computing and presenting earnings
per share (EPS). Specifically FAS 128 replaces the presentation
of primary EPS with a presentation of basic EPS, requires dual
presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the
diluted EPS computation. FAS 128 is effective for both interim
and annual fiscal periods ending after December 15, 1997.
Earlier application is not permitted. Management has determined
that the adoption of FAS 128 will not have a material effect on
the consolidated financial statements.
FAS 130, "Comprehensive Income", was issued in September 1997,
becomes effective for fiscal years beginning after December 15,
1997, and requires reclassification of earlier financial
statements for comparative purposes. It requires that changes in
the amounts of certain items, including foreign currency
translation adjustments and gains and losses on certain
securities, be shown in the financial statements. FAS 130 does
not require a specific format for the financial statement in
which comprehensive income is reported, but does require that an
amount representing total comprehensive income be reported in
that statement. Management has not yet determined the effect, if
any, of FAS 130 on the consolidated financial statements.
FAS 131, "Disclosures about Segments of an Enterprise and Related
Information", was issued in September 1997. This statement is
effective for fiscal years beginning after December 15, 1997, and
will change the way corporations report information about
products, services and segments of their business in their annual
financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders.
Management has not yet determined the effect, if any, of FAS 131
on the consolidated financial statements.
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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, 1997
(Dollar amounts in thousands, except share data)
FINANCIAL STATEMENT RECLASSIFICATIONS
Certain items in the prior years consolidated financial
statements have been reclassified to correspond with the current
presentation.
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 is customary in the banking industry, changes in
net interest income are analyzed on a fully tax equivalent
basis. Under this method, and throughout this discussion,
nontaxable income on loans and 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
1997 1996 (Decrease)
Interest income $ 41,805 $ 39,959 4.62 %
Adjusted for tax
exempt income 1,245 1,209 2.98
Tax equivalent
interest income 43,050 41,168 4.57
Interest expense 21,190 20,254 4.62
Net interest income $ 21,860 $ 20,914 4.52 %
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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, 1997
(Dollar amounts in thousands, except share data)
Net interest income increased $946 or 4.52% for the nine
months ended September 30, 1997, compared to the nine months
ended September 30, 1996. This $946 increase was a combination
of a $1,882 increase in interest income offset by a $936 increase
in interest expense. The $1,882 increase in interest income was
composed of an increase of $1,322 due to increased volume of
average interest earning assets and an increase of $560 due to
increased rates received on these interest earning assets. The
$936 increase in interest expense was a combination of an
increase of $692 due to increased volume of average interest
bearing liabilities and an increase of $244 due to rate increases
on these interest bearing liabilities.
The Corporation's average assets for the first nine months of
1997 increased $23,937 or 3.43% to $720,938 from $697,001 for the
first nine months of 1996. The percentage of average earning
assets to total average assets has decreased to 94.81% or
$683,542 for the first nine months of 1997 from 95.06% or
$662,559 for the first nine months of 1996.
Net interest margin increased .06% to 4.28% for the first nine
months of 1997 from 4.22% for the first nine months of 1996.
This increase is due to the cost of average interest bearing
liabilities increasing .06% from 4.76% for the first nine months
of 1996 to 4.82% for the first nine months of 1997 while the
yield on average earning assets increased .12% from 8.30% for the
first nine months of 1996 to 8.42% for the first nine months of
1997. Although the Corporation continues to place emphasis on
increasing the net interest margin, it has proven increasingly
difficult with increased emphasis on rates by the competition.
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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, 1997
(Dollar amounts in thousands, except share data)
The provision for loan losses was increased $279 or 41.89% to
$945 during the first nine months of 1997 compared to $666 during
the first nine months of 1996. This increase was due to
outstanding loans increasing $36,623 or 7.41% in the first nine
months of 1997 and as a replacement for net loan charge offs of
$905 in 1997 compared to net loan charge offs of $320 in 1996.
The allowance for loan losses at September 30, 1997, was $5,670
or 1.07% of total loans less unearned income as compared to
$5,630 or 1.14% of total loans less unearned income at December
31, 1996. During the first nine months of 1997, loans charged
off were $1,126 and recoveries from previously written off loans
were $221, thus net charge offs for the first nine months of 1997
were $905. The adequacy of the allowance for loan losses is
analyzed by management of both subsidiary banks based upon review
of identified loans with more than a normal degree of risk,
historical loan loss percentage by type of loan and by present
and forecasted economic conditions. Management's analysis
indicates that the allowance for loan loss at September 30, 1997,
is adequate to cover potential losses on identified loans with
credit problems and historical losses on the remaining loan
portfolio. The following are the different types of problem
loans with their outstanding balances and percentage of total
loans less unearned income at September 30, 1997, and December
31, 1996:
September 30, 1997 December 31, 1996
Nonaccrual loans $1,042 .20% $1,421 .29%
Loans past due 90 days 1,855 .35 1,313 .27
Performing restructured loans 2,318 .44 3,089 .62
OREO 912 .17 324 .07
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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, 1997
(Dollar amounts in thousands, except share data)
A summary of the activity in the allowance for loan losses
account for the nine months ending September 30, 1997 and
1996 was:
1997 1996
Balance, January 1 $5,630 $5,022
Provision for loan losses 945 666
Loans charged off (1,126) (673)
Recoveries of loans previously
charged off 221 353
Balance, September 30 $5,670 $5,368
Noninterest income for the nine months ended September 30, 1997,
increased 23.15% or $610 to $3,245 from $2,635 in 1996. Income
from fiduciary services increased $102 or 22.08% to $564 from
$462 in 1996. This increase is due to increased business and to
trust fees being partially determined by market valuation, on
certain trust accounts, and to the influence from the increased
stock market in 1997 over 1996. The commissions for selling
securities through an affiliation with PrimeVest are included in
fiduciary activities income in 1997. This service is being
provided to customers at both bank subsidiaries for the first
time in 1997. Service charges on deposit accounts increased $93
or 8.01% to $1,254 in 1997 compared to $1,161 in 1996 and is
mainly due to increased charges on non-sufficient fund checks.
Security gains were up $71 for the first nine months of 1997
compared to the first nine months of 1996. During the first half
of 1997, the Corporation instituted a plan for selling small
investment pieces to reduce carrying expenses and to extending
maturities on securities that would mature within the next year.
Securities due to mature in 1997, and having market gains were
also sold during the second quarter of 1997 to provide liquidity
and take advantage of the gains. Other operating income
increased 34.09% or $344 to $1,353 for the nine months ended
September 30, 1997, from $1,009 for the same nine months in 1996.
This increase is due primarily to increases in insurance
commissions and gains on sales of loans to the secondary mortgage
market. See the Financial Condition section of this report for
further details on loans sold to the secondary market.
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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, 1997
(Dollar amounts in thousands, except share data)
Noninterest expense for the nine months ended September 30, 1997,
was $14,118 as compared to $13,388 for the nine months ended
September 30, 1996, for an increase of $730 or 5.45%. Salaries
and employee benefits are the largest portion of noninterest
expense and increased $756 or 10.30% in the first nine months of
1997 compared to the same period in 1996. This increase is due
in part to increased salaries related to the Corporation having
three new branches in operation during the first nine months of
1997 as compared to the same period in 1996. The Corporation has
also experienced large increases in medical insurance due to
recent claims experience and has had increased expenses related
to the increase in value of stock appreciation rights (SARs).
The SARs expense increase is due to the significant increase in
the Corporation's stock price during the first nine months of
1997.
Occupancy expenses were up $167 or 18.33% and equipment expenses
were up $157 or 17.68% in the first nine months of 1997 compared
to 1996. The addition of the three branches during 1997 added to
these expenses. The Corporation opened two branches during the
second quarter of 1997. One of these branches is a replacement
for an existing drive-in branch and the other is the addition of
a new in-store Wal-Mart branch. The Corporation entered the new
market area of Evansville, Indiana on January 1, 1997, and added
this Wal-Mart branch to that market area in May 1997. Land has
been purchased in Terre Haute, Indiana in Vigo County for
construction of a full service branch. This branch is expected
to be completed in the first quarter of 1998 and will complement
the Wal-Mart branch opened in that city in late 1995. The
addition of these branches can be expected to have incremental
increases on noninterest expenses of the Corporation.
Data processing expenses have decreased slightly in 1997 to $352
from $355. The completion of consolidation of data processing
operations by the Corporation in 1996 is providing anticipated
savings. The 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) and the Savings Association Insurance Fund
(SAIF). The $199 decrease in FDIC expense for the nine months
ended September 30, 1997, as compared to the same period in 1996
was due to a $191 one-time SAIF assessment incurred during the
third quarter of 1996 plus an $8 decrease due to a reduction in
insurance rates. These rates are set to remain constant until
the year 2000 and are .0129% for BIF and .0243% for SAIF.
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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, 1997
(Dollar amounts in thousands, except share data)
Other operating expenses decreased $148 or 4.06% to $3,493 for
the first nine months of 1997 from $3,641 for the same period in
1996. This decrease is due primarily to the expense of the name
change for all subsidiary banks incurred in 1996, lower non-
sufficient fund expenses in 1997, offset by increased loan
collection expenses related to increased loan charge offs in 1997
and the increased number of branches and expenses related to
entering a new market area with denovo branches in Evansville
during 1997.
Income before income taxes was up $511 or 6.17% to $8,797 for the
first nine months of 1997 from $8,286 for the first nine months
of 1996. The net income for the first nine months ended
September 30, 1997, was up $242 or 4.11% to $6,134 as compared to
$5,892 for the nine months ended September 30, 1996. Earnings
per share were $.30 and $.28 for the quarters ending September
30, 1997 and 1996 and were $.92 and $.89 for the first nine
months of 1997 and 1996. Based upon annualized net income the
return on average assets for the first nine months of 1997 was
1.14% as compared to 1.13% for the first nine months of 1996.
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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, 1997
(Dollar amounts in thousands, except share data)
The following schedule shows selected financial amounts and ratios for the
three months and nine months ended September 30, 1997 and 1996. The
Corporation feels these financial highlights include pertinent information
relevant for its results as a company in the financial institutions
industry.
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
AVERAGE BALANCE SHEET DATA
Total assets $ 725,107 $ 700,601 $ 720,938 $ 697,001
Earning assets 688,441 665,509 683,542 662,559
Securities 160,399 179,939 164,266 181,619
Loans 523,233 477,496 510,591 461,078
Allowance for loan losses 5,433 5,371 5,411 5,185
Goodwill 1,655 1,825 1,696 1,870
Deposits 640,810 614,537 635,034 612,683
Shareholders' equity 75,035 68,655 73,437 68,238
END OF PERIOD BALANCE SHEET DATA
Total assets $ 740,609 $ 705,766
Securities 158,421 176,953
Loans 531,090 481,848
Allowance for loan losses 5,670 5,368
Goodwill 1,639 1,808
Deposits 645,444 619,748
Shareholders' equity 76,682 70,145
INCOME DATA
Net interest income(t.e. basis) $ 7,466 $ 7,088 $ 21,860 $ 20,914
Provision for loan losses 315 100 945 666
Noninterest income 1,071 737 3,245 2,635
Noninterest expense 4,936 4,683 14,118 13,388
Net income 2,007 1,872 6,134 5,892
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<CAPTION>
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
As of and for the nine months ended September 30, 1997
(Dollar amounts in thousands, except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income $ .30 $ .28 $ .92 $ .89
Cash dividends .11 .10 .32 .30
Book value at end of period 11.53 10.57
Tangible book value at end
of period 11.28 10.30
Stock price at end of period 25.75 15.36
Weighted average
shares 6,633,911 6,633,818 6,632,998 6,633,818
Weighted average
treasury shares 265 2,906 436 999
SELECTED RATIOS
Return on average assets 1.10% 1.06% 1.14% 1.13%
Return on average equity 10.61 10.85 11.17 11.58
Net interest margin(t.e. basis) 4.30 4.24 4.28 4.22
Efficiency ratio 60.77 63.07 59.17 59.93
Net charge-offs to average loans .02 .03 .18 .07
Allowance for loan losses
to loans 1.07 1.11
Nonaccrual loans to loans .20 .80
Loans past due 90 days or
more to loans .35 .34
Performing restructured loans
to loans .44 .02
OREO to loans .17 .07
Tier 1 leverage capital 10.30 9.86
Tier 1 capital 13.46 13.31
Total capital 14.48 14.36
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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, 1997
(Dollar amounts in thousands, except share data)
FINANCIAL CONDITION
Total assets have increased $21,855 or 3.04% to $740,609 at
September 30, 1997, from $718,754 at December 31, 1996. Total
noninterest bearing deposits have decreased $5,648 or 9.18% and
interest bearing deposits have increased $17,634 or 3.08% at
September 30, 1997, from December 31, 1996, for a total deposit
increase of $11,986 or 1.89%. Securities available for sale
before the mark-to-market have decreased $13,112 or 7.70% to
$157,137 at September 30, 1997, from $170,249 at December 31,
1996. The Corporation sold small investment pieces to eliminate
carrying costs, but the major portion of the decrease in
securities was due to normal maturities and calls. Securities
available for sale at market indicates a decrease of $12,303 or
7.21% to $158,421 at September 30, 1997, from $170,724 at
December 31, 1996. This decrease includes the mark-to-market on
securities which went to a positive $1,284 at September 30, 1997,
from a positive $475 at December 31, 1996. This market valuation
increase of $809 is the result of normal repricing of investment
securities in different rate environments and offsets the
decrease in the valuation of securities available for sale on the
balance sheet.
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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, 1997
(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
nine months ended September 30, 1997. Current market rate
competition on these loans is making it necessary to sell them as
soon as they are consummated. The following is the detail of
activity in the loans held for sale between year end and
September 30, 1997:
Balance December 31, 1996 $ 2,350
New loans booked (net of payments) 18,968
Loans sold (19,181)
Total at September 30, 1997 $ 2,137
The sale of loans to the secondary market has provided $425 of
net gains on sales during the first nine months of 1997 compared
to $227 during the same period in 1996. The Corporation is
servicing $106,083 of real estate loans sold to the secondary
market as of September 30, 1997. These serviced loans are not
included in loans on the balance sheet.
Loans have increased $36,623 or 7.41% at September 30, 1997, from
December 31, 1996. The following shows the balance and
percentage of total by loan classification as of the end of the
periods:
9-30-97 12-31-96
% of % of
Balance Total Balance Total
Commercial $214,009 40.30% $201,092 40.67%
Agricultural 55,723 10.49 55,404 11.20
Real estate 146,429 27.57 129,116 26.11
Installment 111,587 21.01 105,169 21.27
Credit cards 3,342 .63 3,686 .75
Total $531,090 $494,467
The types of loans outstanding as a percentage of total loans has
remained very consistent between year end 1996 and September 30,
1997. The demand for new commercial loans has been the strongest
since the outstanding balance reflects payoffs for large
commercial loans during the first nine months of 1997 that were
not anticipated. Agricultural loans have increased slightly in
amount but have decreased as a percentage of the total loans.
The Corporation continues to see major competition from the
governmental operation, Farm Credit Services, which makes
agricultural loans. The increase in the percentage of real
estate loans to total loans is due to a special program for
variable rate loans during 1997 at one of our bank subsidiaries.
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, 1997
(Dollar amounts in thousands, except share data)
Total shareholders' equity, including the unrealized gain on
securities available for sale, increased $4,499 or 6.23% to
$76,682 at September 30, 1997, from $72,183 at December 31, 1996.
The change in the adjustment for securities available for sale
caused total equity at September 30, 1997, to increase $519 or
.72% of total equity at December 31, 1996. This increase is the
after tax effect of the mark-to-market adjustment on securities
available for sale which was a positive $829 at September 30,
1997, and a positive $310 at December 31, 1996. 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 $71,757 at December 31, 1996, and increased
$3,982 or 5.55% to $75,739 at September 30, 1997. This increase
was due to net income of $6,134 less dividends paid of $2,156
plus $2 related to the decrease in treasury stock and $2 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: Tier 1 Leverage Capital, Tier 1 Capital
and Total Capital. The Corporation's capital ratios at September
30, 1997, and December 31, 1996, were:
September 30, 1997 December 31, 1996
Tier 1 Leverage Capital 10.30% 10.00%
Tier 1 Capital 13.46% 13.26%
Total Capital 14.48% 14.33%
PENDING CHANGES
On October 24, 1997, the Board of Directors declared a 5% stock
dividend payable on December 8, 1997, to shareholders of record
on November 26, 1997. This is the third year that a 5% stock
dividend has been declared and paid in the fourth quarter.
PAGE
<PAGE>
AMBANC CORP.
As of and for the nine months ended September 30, 1997
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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.
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, 1996,
is incorporated herein by reference.
27 Financial Data Schedule for September 30, 1997.
(b) No Form 8-K was filed with the SEC during the quarter
ended September 30, 1997.
PAGE
<PAGE>
AMBANC CORP.
As of and for the nine months ended September 30, 1997
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 14, 1997 BY: R. Watson
Robert G. Watson, Chairman of
the Board, President and
Chief Executive Officer
DATE: November 14, 1997 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, 1997
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, 1996,
is incorporated herein by reference.
27 Financial Data Schedule for September
30, 1997.
* Incorporated by reference from previously filed
documents.
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