<PAGE> 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________________
to _________________________
Commission File No. 0-10710
AMBANC CORP.
(Exact name of Registrant as specified in its charter)
INDIANA 35-1525227
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
302 Main Street, Vincennes, Indiana 47591
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number,
including area code: (812) 885-6418
Securities registered pursuant to Section 12(b) of the
Act:
Title of each class Name of each
exchange on
which registered
None None
Securities registered pursuant to Section 12(g) of the
Act:
Common Shares, $10.00 par value
(Title of Class)
[Cover page 1 of 2 pages]<PAGE>
<PAGE> 2
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405
of this chapter) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting shares held by
non-affiliates of the Registrant is $111,067,275. Solely
for purposes of this computation, it has been assumed
that officers and directors are "affiliates" and the
price of $37.50 as reported on NASDAQ as the last trade
on March 14, 1997, was the fair market value of the
shares.
Number of Common Shares outstanding at March 14, 1997:
3,316,003
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF PARTS II AND IV ARE INCORPORATED BY REFERENCE
FROM THE REGISTRANT'S 1996 ANNUAL REPORT TO SHAREHOLDERS
AND A PORTION OF PART III IS INCORPORATED BY REFERENCE
FROM THE REGISTRANT'S PROXY STATEMENT PURSUANT TO
REGULATION 14A DATED MARCH 21, 1997, FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD APRIL 18, 1997.
EXCEPT FOR THOSE PORTIONS OF THE 1996 ANNUAL REPORT
INCORPORATED BY REFERENCE, THE ANNUAL REPORT IS NOT
DEEMED FILED AS PART OF THIS REPORT.
[Cover page 2 of 2 pages]
<PAGE>
<PAGE> 3
AMBANC CORP.
VINCENNES, INDIANA
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
December 31, 1996
PART I
ITEM 1. BUSINESS
GENERAL
AMBANC Corp. (the "Corporation") is a registered
bank holding company. The Corporation's banking
subsidiaries recently have been combined to form two
principal subsidiaries, AmBank Indiana, N.A. and AmBank
Illinois, N.A. Effective July 1, 1996, Citizens'
National Bank of Linton, Indiana, was merged into The
American National Bank of Vincennes, Indiana, and the
name of the resulting bank was changed to AmBank Indiana,
N.A. ("AmBank Indiana"). Also during 1996, the name of
Bank of Casey, Illinois, was changed to AmBank Illinois,
and the name of The First National Bank in Robinson,
Illinois, was changed to AmBank Illinois, N.A. Effective
March 1, 1997, AmBank Illinois was merged into AmBank
Illinois, N.A. (the bank resulting from the merger is
referred to hereinafter as "AmBank Illinois")
(collectively AmBank Indiana and AmBank Illinois are
referred to herein as the "Banks").
The Corporation was organized as an Indiana
corporation on January 7, 1982. Since October 1, 1982,
the Corporation's principal business has been the
ownership of the stock of its banking subsidiaries. The
Corporation's Common Stock is listed on the NASDAQ Small
Cap Market and is traded under the symbol "AMBK."
As a bank holding company, the Corporation engages
in commercial banking through its banking subsidiaries
and can engage in certain non-banking businesses closely
related to banking and own certain other business
corporations that are not banks, subject to applicable
laws and regulations. In addition to the Banks, the
Corporation has as a subsidiary American National Realty
Corp., which owns various real estate, which is leased to
AmBank Indiana for normal banking activities.
Lincolnland Insurance Agency & Investments, Inc., a non-
operating shell corporation that the Corporation acquired
in connection with a 1994 Illinois acquisition, was
dissolved in 1996. The Corporation's principal executive
offices are located at 302 Main Street, Vincennes,
Indiana 47591, and its telephone number is (812) 885-
6418.
<PAGE> 4
OPERATIONS
The Banks engage in a wide range of commercial,
agricultural and personal banking activities, including
accepting demand deposits; accepting savings and time
deposits and money market accounts; making secured and
unsecured loans to corporations, individuals and others;
issuing letters of credit; offering safekeeping services;
and providing financial counseling for institutions and
individuals. The Banks' lending services include
commercial, agricultural, real estate, installment loans
and credit cards. Revenues from the Banks' lending
activities comprise the largest component of the Banks'
operating revenues.
The Banks provides a wide range of personal and
corporate trust and trust-related services, including
serving as executor of estates, as trustee under
testamentary and inter vivos trusts and various pension
and other employee benefit plans, as guardian of the
estates of minors and incompetents, as escrow agent under
various agreements, and as financial advisor to and
custodian for individuals, corporations and others.
EMPLOYEES
At December 31, 1996, the Corporation and the Banks
had 295 employees on a full-time equivalent basis.
Neither the Corporation nor the Banks are a party to any
collective bargaining agreement. Employee relations are
considered to be good.
REGULATION AND SUPERVISION
General
The Corporation is subject to the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and is
required to file with the Board of Governors of the
Federal Reserve System ("FRB") annual reports and such
additional information as the FRB may require. The FRB
also may make examinations or inspections of the
Corporation.
The BHC Act prohibits a bank holding company from
engaging in, or acquiring direct or indirect control of
more than 5 percent of the voting shares of any company
engaged in, non-banking activities. One of the principal
exceptions to this prohibition is for activities deemed
by the FRB to be "closely related to banking." Under
current regulations, bank holding companies and their
subsidiaries are permitted to engage in such
banking-related business ventures as sales and consumer
finance, equipment leasing, computer service bureau and
<PAGE> 5
software operations, and mortgage banking.
As national banks, AmBank Indiana and AmBank
Illinois are under the supervision of and subject to
examination by the Comptroller of the Currency.
Regulation and examination by banking regulatory agencies
are primarily for the benefit of depositors rather than
shareholders.
Regulation of Expansion
Under the BHC Act, the Corporation must receive the
prior written approval of the FRB or its delegate before
it may acquire ownership or control of more than five
percent of the voting shares of another bank, and under
Indiana law it may not acquire 25 percent or more of the
voting shares of another bank without the prior approval
of the Indiana Department of Financial Institutions.
Furthermore, the Corporation's acquisition of a bank
located outside the State of Indiana is not permitted
unless the acquisition is specifically authorized by the
laws of the state in which such bank is located.
Illinois law expressly authorizes the acquisition of an
Illinois bank by bank holding companies in other states,
such as Indiana, the laws of which expressly authorize
Illinois bank holding companies to acquire banks in such
other states. Since July 1, 1992, bank holding companies
outside of Indiana have been permitted under Indiana law
to acquire Indiana banks and bank holding companies,
subject to certain restrictions such as the existence of
reciprocal legislation in the state of the acquiring bank
holding company.
The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act") provides
for nationwide interstate banking and branching. Since
September 30, 1995, well-capitalized bank holding
companies have been authorized, pursuant to the
legislation, to acquire banks and bank holding companies
in any state. The Interstate Act also permits banks to
merge across state lines, thereby creating a main bank in
one state with branches in other states. Interstate
branching by merger provisions will become effective on
June 1, 1997, unless a state takes legislative action
prior to that date. States may pass laws to either "opt
in" before June 1, 1997 or to "opt-out" by expressly
prohibiting merger transactions involving out-of-state
banks, providing the legislative action is taken before
June 1, 1997. Effective March 14, 1996, Indiana "opted
in" to the interstate branching provisions of the
Interstate Act. Illinois has adopted legislation that
will permit interstate branching by acquisition effective
June 1, 1997.
<PAGE> 6
Regulation of Capital Adequacy
The Federal Reserve Board, the Office of the
Comptroller of the Currency and the Federal Deposit
Insurance Corporation, each has issued similar risk-based
capital guidelines for all U.S. banks and bank holding
companies. The guidelines include a definition of
capital and provide a framework for calculating weighted
risk assets by assigning assets and off-balance sheet
items to broad risk categories. The guidelines also
provide a schedule for achieving a minimum supervisory
standard for the ratio of qualifying capital to weighted
risk assets. All banks must have a minimum ratio of
total capital to risk-weighted assets of 8.0 percent. As
of December 31, 1996, the Corporation was in compliance
with the risk-based capital guidelines. For a detailed
discussion of regulatory capital requirements and the
Banks' compliance with such requirements, see Note 17 of
the Notes to Consolidated Financial Statements.
Deposit Insurance
The Bank's deposits are insured up to a maximum of
$100,000 per insured account by the FDIC through the Bank
Insurance Fund ("BIF"). Since BIF reached its required
1.25 reserve ratio in 1995, the FDIC has reduced deposit
insurance assessment rates to historic low levels. The
assessment rates in effect for the first six months of
1997 range from zero to $.27 per $100 of insured
deposits, with the healthiest banks, including the Banks,
not being required to pay any deposit insurance premiums
for the period. Legislation enacted in September 1996
included provisions for the recapitalization of the
Savings Association Insurance Fund ("SAIF"). As a result
of this legislation, rates for financial institutions
insured through SAIF have been brought into parity with
BIF rates. All of the Corporation's banking subsidiaries
are BIF-insured institutions (the deposits that AmBank
Indiana acquired from the Princeton branch of First
Indiana Bank on March 17, 1995, however, remain insured
through SAIF). See Note 17 to the Notes to Consolidated
Financial Statements and the discussion of "Noninterest
Expense" in the Results of Operations section of
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Dividends
The Corporation is a legal entity separate and
distinct from the Banks. Substantially all of the
Corporation's cash income, including funds for the
satisfaction of the Corporation's debt service
requirements, for the payment of its operating expenses,
<PAGE> 7
and for the payment of Corporation dividends, is derived
from dividends paid by the Banks. There are statutory
and regulatory limitations on the amount of dividends
that may be paid to the Corporation by the Banks. The
prior approval of appropriate regulatory authorities is
required if the total of all dividends declared by AmBank
Indiana or AmBank Illinois in any calendar year would
exceed net income for the preceding two calendar years.
For discussion of the Banks' ability to pay dividends to
the Corporation, see Note 17 of the Notes to the
Consolidated Financial Statements.
COMPETITION
The banking business is highly competitive. The
Banks' market area consists principally of Knox, Greene,
Gibson and Eastern Sullivan Counties in Indiana, and
Crawford, Clark, Lawrence and Wabash Counties in
Illinois, although the Banks also compete with other
financial institutions in those counties and in
surrounding counties in Indiana and Illinois in obtaining
deposits and providing many types of financial services.
The Banks compete with larger banks in other areas for
the business of local and regional offices of companies
located in the Banks' market area and are aggressively
seeking and have acquired commercial loan customers from
the Indianapolis, Indiana and Evansville, Indiana areas.
The Banks also compete with savings and loan
associations, credit unions, production credit
associations and federal land banks and with finance
companies, personal loan companies, money market funds
and other non-depository financial intermediaries. Many
of these financial institutions have resources many times
greater than those of the Banks. In addition, new
financial intermediaries such as money-market mutual
funds and large retailers are not subject to the same
regulations and laws that govern the operation of
traditional depository institutions.
Recent changes in federal and state law have
resulted in and are expected to continue to result in
increased competition. The reductions in legal barriers
to the acquisition of banks by out-of-state bank holding
companies resulting from implementation of the Interstate
Act and other recent and proposed changes are expected to
continue to further stimulate competition in the markets
in which the Banks operate, although it is not possible
to predict the extent or timing of such increased
competition.
<PAGE>
<PAGE> 8
EFFECTS OF GOVERNMENT MONETARY POLICIES
The earnings of commercial banks are affected not
only by general economic conditions but also by the
policies of various governmental regulatory authorities.
In particular, the FRB regulates money and credit
conditions and interest rates in order to influence
general economic conditions, primarily through
open-market operations in U.S. Government securities,
varying the discount rate on bank borrowings, and setting
reserve requirements against bank deposits. These
policies have a significant influence on overall growth
and distribution of bank loans, investments and deposits,
and affect interest rates charged on loans and earned on
investments or paid for deposits. FRB monetary policies
have had a significant effect on the operating results of
commercial banks in the past and such policies are
expected to continue to have a significant effect in the
future. The general effect, if any, of such policies
upon the future business and earnings of the Corporation
and the Banks cannot accurately be predicted.
FORWARD-LOOKING STATEMENTS
This Form 10-K and future filings made by the
Corporation with the Securities and Exchange Commission,
as well as other filings, reports and press releases made
or issued by the Corporation and the Banks, and oral
statements made by executive officers of the Corporation
and Banks, may include forward-looking statements
relating to such matters as (a) assumptions concerning
future economic and business conditions and their effect
on the economy in general and on the markets in which the
Banks do business, and (b) expectations regarding future
revenues and earnings for the Corporation and Banks,
acquisitions, deposit and loan volume and possible new
products or services. Such forward-looking statements
are based on assumptions rather than historical or
current facts and, therefore, are inherently uncertain
and subject to risk.
To comply with the terms of a "safe harbor" provided
by the Private Securities Litigation Reform Act of 1995
that protects the making of such forward-looking
statements from liability under certain circumstances,
the Corporation notes that a variety of factors could
cause the actual results or experience to differ
materially from the anticipated results or other
expectations described or implied by such forward-looking
statements. The risks and uncertainties that may affect
the operations, performance, development and results of
the Corporation's and Banks' business include the<PAGE>
<PAGE> 9
following: (a) the risk of adverse changes in business
conditions in the banking industry generally and in the
specific markets in which the Banks operate; (b) changes
in the legislative and regulatory environment that
negatively impact the Corporation and Banks through
increased operating expenses; (c) increased competition
from other financial and non-financial institutions; (d)
the impact of technological advances; and (e) other risks
detailed from time to time in the Corporation's filings
with the Securities and Exchange Commission. The
Corporation and Banks do not undertake any obligation to
update or revise any forward-looking statements
subsequent to the date on which they are made.
ITEM 2. PROPERTIES
The Banks conduct their operations from 25 banking
offices located in Vincennes, Bicknell, Evansville,
Sandborn, Monroe City, Linton, Patoka, Princeton and
Terre Haute in Indiana, and Robinson, Palestine, Casey,
Mt. Carmel, Flat Rock, Martinsville, Westfield and West
Union in Illinois. In addition, the Banks have a total
of 25 automated teller machines.
AmBank Indiana's main banking office is located at
302 Main Street, Vincennes. The main office building
contains approximately 80,000 square feet and the
Corporation occupies approximately 80 percent of the
space. The remaining space is leased to third parties.
All of the parcels of real estate and buildings utilized
as banking offices of AmBank Indiana are owned by either
AmBank Indiana or American National Realty Corp., except
for five branches that are leased.
The Corporation also owns the main offices and
branch locations of AmBank Illinois, except for one
branch that is leased.
ITEM 3. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not Applicable.
<PAGE>
<PAGE> 10
SPECIAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information
relating to the executive officers of the Corporation as
of March 1, 1997.
Name Age Offices Held
Robert G. Watson 61 Chairman of the Board,
President and Chief
Executive Officer of the
Corporation and AmBank
Indiana
Richard E. Welling 51 Secretary, Treasurer, and
Chief Financial Officer of
the Corporation
Richard A. Fox 54 Director of Human
Resources of the
Corporation
Chris D. Melton 47 Senior Vice President of
AmBank Indiana
David K. Milligan 41 Senior Vice President and
Cashier of AmBank Indiana
Raymond E. Mott 57 Senior Vice President of
AmBank Indiana
William F. Perry 48 Senior Vice President of
AmBank Indiana
Dan J. Robinson 49 Executive Vice President
of AmBank Indiana
Robert E. Seed 62 President, C.E.O. and a
Director of AmBank
Illinois, N.A.; Vice
President of the
Corporation
Officers are elected annually by the Board of
Directors and serve for a one-year period and until their
successors are elected. No officers have employment
contracts except Robert G. Watson, whose employment
contract is incorporated by reference as Exhibit 10-A to
this Report. There are no family relationships between
or among the persons named. Except as indicated below,
each of the officers has held the same or similar
position with the Corporation or the Banks for the past
five years.
<PAGE> 11
Mr. Fox has been employed as the Corporation's
Director of Human Resources since 1993. Prior to that
date he had served as General Manager and Corporate
Secretary of Green Construction of Indiana, Inc.
Mr. Melton has been employed by AmBank Indiana since
October 1994. From September 1978 to August 1994, he was
employed by The National City Bank of Evansville,
Evansville, Indiana.
Mr. Mott has been employed by AmBank Indiana since
1987 and has served as Senior Vice President since 1993.
He served as a Director of the Corporation from 1989
through 1990 and as a Director of AmBank Indiana from
1989 through 1993.
Mr. Perry has been employed by AmBank Indiana since
September 1986, serving as Senior Loan Officer. He was
elected Senior Vice President of AmBank Indiana in April
1987.
Mr. Robinson was in charge of the Administrative
Division of AmBank Indiana until 1993 when he was elected
Executive Vice President.
Mr. Seed was Chief Executive Officer and President
of Bank of Casey prior to its name change in 1996 to
AmBank Illinois and its merger, effective March 1, 1997,
into AmBank Illinois, N.A., at which time he became Vice
President and a Director of the Corporation.
For information concerning the Directors of the
Corporation, see the Corporation's Proxy Statement.
PART II
Information for Items 5 through 8 of this Report
appears in the 1996 Annual Report to Shareholders as
indicated in the following tables and is incorporated
herein by reference from the Annual Report to
Shareholders:
ITEM 5. MARKET FOR THE CORPORATION'S COMMON SHARES AND
RELATED SECURITY HOLDER MATTERS
Annual Report to
Shareholders
Page
(a) Market 48
(b) Holders 48
(c) Dividends 48<PAGE>
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA
Annual Report to
Shareholders
Page
Selected Financial Data 49
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Annual Report to
Shareholders
Page
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 29-48
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Annual Report to
Shareholders
Page
Financial Statements and
Supplementary Data 5-27
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
Except as set forth below in "Directors and
Executive Officers of the Corporation," the information
for Items 10 through 13 of this Report is incorporated
herein by reference from the Corporation's definitive
Proxy Statement for its Annual Meeting of Shareholders to
be held April 18, 1997, which was filed with the
Commission pursuant to Regulation 14A on March 26, 1997.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
CORPORATION
The information required by this item relating to
Executive Officers is found under the heading "Special<PAGE>
<PAGE> 13
Item. Executive Officers of the Registrant" in Part I of
this Report and the information required by this item
relating to Directors is included under the caption
"Election of Directors" in the Corporation's definitive
Proxy Statement for its Annual Meeting of Shareholders to
be held April 18, 1997, which has been filed with the
Commission and is incorporated herein by reference in
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included
under the caption "Executive Compensation" in the
Corporation's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held April 18, 1997, which
has been filed with the Commission and is incorporated by
reference in this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information required by this item is included
under the caption "Election of Directors" in the
Corporation's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held April 18, 1997, which
has been filed with the Commission and is incorporated by
reference in this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included
under the caption "Certain Transactions" in the
Corporation's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held April 18, 1997, which
has been filed with the Commission and is incorporated by
reference in this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
The documents listed below are either filed as a
part of this Report or incorporated by reference from the
Annual Report to Shareholders or the Corporation's
Registration Statement as indicated.
<PAGE>
<PAGE> 14
(a)1. Financial Statements.
Annual Report to
Shareholders
Page
Independent Auditors' Report 4
Consolidated Balance Sheets as of
December 31, 1996 and 1995 5
Consolidated Statements of Income for
the years ended December 31, 1996,
1995 and 1994 6
Consolidated Statements of Changes
in Shareholders' Equity for the
years ended December 31, 1996,
1995 and 1994 7
Consolidated Statements of Cash Flows
for the years ended December 31,
1996 and 1995 and 1994 8
Notes to Consolidated Financial
Statements 9-27
All other schedules have been omitted because the
required information is either inapplicable or has been
included in the Corporation's consolidated financial
statement or notes thereto.
(a)2. Schedules.
All schedules have been omitted because the required
information is either inapplicable or has been included
in the Corporation's consolidated financial statements or
notes thereto.
(a)3. Exhibits.
The exhibits filed as part of this Report on Form
10-K are identified in the Exhibit Index, which Exhibit
Index specifically identifies those exhibits that
describe or evidence all management contracts and
compensatory plans or arrangements required to be filed
as exhibits to this Report. Such Exhibit Index is
incorporated herein by reference,
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended December 31, 1996.<PAGE>
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Corporation
has duly caused this amended reprot to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMBANC CORP.
Date: March 31, 1997 By /s/ Richard E. Welling
Richard E. Welling
Secretary, Treasurer and Chief
Financial Officer
<PAGE>
<PAGE> 16
EXHIBIT INDEX
Exhibits
3-A Restated Articles of Incorporation of the
Corporation. The copy of this Exhibit filed
as Exhibit 3.1 to the Registration Statement
Under the Securities Act of 1933 on Form S-4
filed by the Corporation on January 22, 1993
(File No. 33-57296), is incorporated herein by
reference.
3-B Bylaws of the Corporation, as amended to date.
The copy of this Exhibit filed as Exhibit 3-B
to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1993, is
incorporated herein by reference.
10-A Employment Agreement executed January 15,
1985, and re-executed December 21, 1988,
between the Corporation and Robert G. Watson.
The copy of this Exhibit filed as Exhibit 10.1
to the Corporation's Registration Statement on
Form S-4 (File No. 33-61065) filed July 17,
1995, is incorporated herein by reference.*
10-B 1988 AMBANC Corp. Nonqualified Stock Option
Plan, as amended. The copy of this Exhibit
filed as Exhibit 10.2 to the Corporation's
Registration Statement on Form S-4 (File No.
33-61065) filed July 17, 1995, is incorporated
herein by reference.*
10-C Letter from AMBANC to Robert G. Watson, dated
November 8, 1988, granting a stock option.
The copy of this Exhibit filed as Exhibit 10.3
to the Corporation's Registration Statement on
Form S-4 (File No. 33-61065) filed July 17,
1995, is incorporated herein by reference.*
10-D Letter from AMBANC to Robert G. Watson, dated
May 16, 1989, granting stock appreciation
rights. The copy of this Exhibit filed as
Exhibit 10.4 to the Corporation's Registration
Statement on Form S-4 (File No. 33-61065)
filed July 17, 1995, is incorporated herein by
reference.*
10-E Letter from AMBANC to Raymond E. Mott, dated
November 8, 1988, granting a stock option.
The copy of this Exhibit filed as Exhibit 10.5
to the Corporation's Registration Statement on
Form S-4 (File No. 33-61065) filed July 17,
<PAGE> 17
1995, is incorporated herein by reference.*
10-F Letter from AMBANC to Raymond E. Mott, dated
May 16, 1989, granting stock appreciation
rights. The copy of this Exhibit filed as
Exhibit 10.6 to the Corporation's Registration
Statement on Form S-4 (File No. 33-61065)
filed July 17, 1995, is incorporated herein by
reference.*
10-G Amended and Restated Supplemental Retirement
Benefits Agreement between the Corporation and
Robert G. Watson dated March 16, 1995. The
copy of this Exhibit filed as Exhibit 10-G to
the Registrant's Annual Report on Form 10-L
for the year ended December 31, 1995, is
incorporated herein by reference.*
10-H AMBANC Corp. Director Stock Grant Plan. The
copy of this Exhibit filed as Exhibit 10-A to
the Registrant's Report on Form 10-Q for the
Quarter ended June 30, 1996, is incorporated
herein by reference.*
10-I AMBANC Corp. and Affiliates Director Deferred
Compensation Plan. The copy of this Exhibit
filed as Exhibit 10-B to the Registrant's
Report on Form 10-Q for the Quarter ended June
30, 1996, is incorporated herein by
reference.*
10-J List of Executive Compensation Plans and
Arrangements.*
11 Statement of Computation of per share
earnings.
13 Copy of the portions of the Corporation's
Annual Report to Shareholders for the year
ended December 31, 1996, that are incorporated
by reference herein. This exhibit, except for
portions thereof that have expressly been
incorporated by reference into this Report, is
furnished for the information of the
Commission and shall not be deemed "filed" as
part hereof.
21 List of Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
<PAGE> 18
27 Financial Data Schedule.
99.1 Report of Crowe, Chizek & Company.
99.2 Reports of Kemper CPA Group L.L.C.
*Indicates an exhibit that describes or evidences a
management contract or compensatory plan or arrangement
required to be filed as an exhibit.
EXHIBIT 10-J
LIST OF EXECUTIVE COMPENSATION
PLANS AND ARRANGEMENTS
The Corporation's Chief Executive Officer, Robert G. Watson,
who is the only named executive officer, participates in the
following compensatory plans and arrangements:
EMPLOYMENT AGREEMENT.
Employment Agreement executed January 15, 1985, and re-executed
December 21, 1988, between the Corporation and Robert G. Watson.
This document was filed as Exhibit 10.1 to the Corporation's
Registration Statement on Form S-4 (File No. 33-61065) filed
July 17, 1995.
STOCK OPTION PLAN AND OPTION/SAR GRANTS.
1988 AMBANC Corp. Nonqualified Stock Option Plan, as amended. This
document was filed as Exhibit 10.2 to the Corporation's
Registration Statement on Form S-4 (File No. 33-61065) filed
July 17, 1995.
Letter from AMBANC to Robert G. Watson, dated November 8, 1988,
granting a stock option. This document was filed as Exhibit 10.3
to the Corporation's Registration Statement on Form S-4 (File No.
33-61065) filed July 17, 1995.
Letter from AMBANC to Robert G. Watson, dated May 16, 1989,
granting stock appreciation rights. This document was filed as
Exhibit 10.4 to the Corporation's Registration Statement on Form
S-4 (File No. 33-61065) filed July 17, 1995.
AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT.
Amended and Restated Supplemental Retirement Benefits Agreement
among the Corporation, The American National Bank of Vincennes, and
Robert G. Watson dated March 16, 1995.
EXHIBIT 11
<TABLE>
AMBANC Corp.
Computation of Earnings Per Share Earnings
with Common Stock Options Outstanding
(Treasury Stock Method)
<CAPTION>
1996(a) 1995(a) 1994(a)
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
<S> <C> <C> <C> <C> <C> <C>
Average Shares:
Outstanding Common Shares 3,315,808 3,315,543 3,316,264 3,316,267 3,313,716 3,315,844
Common Stock Equivalents:
Stock Options 26,460 26,460 26,460 26,460 26,460 26,460
Assumed Repurchase of
Treasury Shares (16,707) (16,707)(b) (16,349) (16,349)(b) (16,222) (16,222)(b)
Average Common and Common
Equivalent Shares Outstanding 3,325,561 3,325,296 3,326,375 3,326,378 3,323,954 3,326,122
Net Income in $1,000 7,966 7,966 7,045 7,045 6,502 6,502
Earnings Per Common and
Common Equivalent Share $2.40 $2.40 $2.12 $2.12 $1.96 $1.95
</TABLE>
(a) The above schedule has been restated to reflect
AMBANC Corp. shares issued in merger transactions
consisting of 569,454 on June 1, 1994, and 668,235
on November 1, 1995, and the effect on net income
of these merger transactions booked under the
pooling of interests method of accounting and 5%
stock dividends issued to shareholders on December
2, 1996 and November 30, 1995.
(b) Because it was higher, average price not ending
price was used for repurchase assumption.
AM\9610KAMB.11
EXHIBIT 13
EXCERPTS FROM ANNUAL REPORT TO SHAREHOLDERS
Board of Directors and Shareholders of
AMBANC Corp.
Vincennes, Indiana
We have audited the consolidated balance sheets of AMBANC Corp.
as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in shareholders' equity, and cash
flows for each of the two years in the period ended December 31,
1996. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an
opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of AMBANC Corp. as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the
two years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements give
retroactive effect to the 1995 merger of AMBANC Corp. and First
Robinson Bancorp (FRB), which has been accounted for as a pooling
of interests as described in Note 2 to the consolidated financial
statements.
Other auditors previously audited and reported on the consolidated
statements of income, changes in shareholders' equity and cash
flows of AMBANC Corp. for the year ended December 31, 1994, prior
to their restatement for the 1995 pooling of interests, and their
report dated January 27, 1995, expressed an unqualified opinion on
those statements and included an explanatory paragraph that
described the restatement of the 1994 financial statements to
reflect a 1994 pooling of interests. The financial statements of
FRB for the year ended December 31, 1994, were audited by other
auditors, whose report dated January 20, 1995, expressed an
unqualified opinion. We audited the combination of the related
consolidated statements of income, changes in shareholders' equity
and cash flows for the year ended December 31, 1994, after
restatement for the 1995 pooling of interests; in our opinion,
such consolidated statements have been properly combined on the
basis described in Note 2 to the consolidated financial
statements.
As discussed in Note 1 to the consolidated financial statements,
the Corporation adopted the provisions of Statement of Accounting
Standards No. 122, Accounting for Mortgage Servicing Rights, on
January 1, 1996.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
January 17, 1997
<PAGE>
<PAGE> 2
<TABLE>
AMBANC CORP.
Consolidated Balance Sheets
December 31, 1996 and 1995
(Dollar amounts in thousands, except share and per share data)
<CAPTION>
1996 1995
<S>
ASSETS <C> <C>
Cash and due from banks $ 26,409 $ 20,520
Federal funds sold 5,875 22,653
Total cash and cash equivalents 32,284 43,173
Interest bearing deposits in other banks 590 692
Securities available for sale-at fair value
(amortized cost 1996-$170,249 and 1995-$171,744) 170,724 173,469
Loans held for sale-at cost
(fair value 1996-$2,404 and 1995-$7,141) 2,350 6,727
Loans, net of unearned income 494,467 442,657
Allowance for loan losses (5,630) (5,022)
Loans, net 488,837 437,635
Premises, furniture and equipment, net 11,184 9,398
Accrued interest receivable and other assets 12,785 11,253
Total assets $ 718,754 $ 682,347
LIABILITIES
Noninterest bearing deposits $ 61,518 $ 63,116
Interest bearing deposits 571,940 536,953
Total deposits 633,458 600,069
Short-term borrowings 5,286 6,788
Long-term debt 2,309 2,677
Accrued interest payable and other liabilities 5,518 5,101
Total liabilities 646,571 614,635
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 at December 31, 1996 and 1995,
3,316,267 and 3,158,961 shares issued and
outstanding at December 31, 1996 and 1995 33,163 31,590
Treasury stock, 724 shares at cost (21)
Retained earnings 38,731 35,009
Unrealized gain/(loss) on securities available for
sale, net of deferred taxes of $165 and $612 310 1,113
Total shareholders' equity 72,183 67,712
Total liabilities and shareholders' equity $ 718,754 $ 682,347
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGEE> 3
<TABLE> AMBANC CORP.
Consolidated Statements of Income
For the years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except per share data)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 42,560 $ 37,888 $ 30,676
Interest and fees on loans held for sale 389 326 536
Interest on securities
Taxable 7,805 7,680 8,629
Tax exempt 2,809 2,759 2,842
Other interest 748 739 370
Total interest income 54,311 49,392 43,053
INTEREST EXPENSE
Interest on deposits 26,761 23,593 18,568
Interest on short-term borrowings 385 437 409
Interest on long-term debt 142 161 177
Total interest expense 27,288 24,191 19,154
Net interest income 27,023 25,201 23,899
Provision for loan losses 1,366 1,182 338
Net interest income after
provision for loan losses 25,657 24,019 23,561
NONINTEREST INCOME
Income from fiduciary activities 654 602 546
Service charges on deposit accounts 1,586 1,520 1,274
Net realized gain on securities 28 41 29
Other operating income 1,122 990 1,035
Total noninterest income 3,390 3,153 2,884
NONINTEREST EXPENSE
Salaries and employee benefits 9,633 9,450 8,777
Occupancy expenses, net 1,218 1,051 1,107
Equipment expenses 1,220 1,117 1,038
Data processing expenses 480 388 442
FDIC insurance 270 690 1,225
Other operating expenses 4,978 4,806 4,730
Total noninterest expense 17,799 17,502 17,319
INCOME BEFORE INCOME TAXES 11,248 9,670 9,126
Income taxes 3,282 2,625 2,624
NET INCOME $ 7,966 $ 7,045 $ 6,502
EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING $ 2.40 $ 2.12 $ 1.96
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 4
<TABLE>
AMBANC CORP.
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except per share data)
<CAPTION>
Unrealized
Gain/(Loss) Total
Common Retained Treasury on Shareholders'
Stock Earnings Stock Securities Equity
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 30,062 $ 27,048 $ (37)$ 649 $ 57,722
Net income for 1994 6,502 6,502
Cash dividends ($.59 per common
share) (1,947) (1,947)
Net change in unrealized
gain/(loss) on securities
available for sale (4,137) (4,137)
Issuance of stock for dividend
reinvestment and stock
purchase plan 24 50 74
Fractional shares paid for
acquisition (4) (4)
BALANCE, DECEMBER 31, 1994 30,086 31,649 (37) (3,488) 58,210
Net income for 1995 7,045 7,045
Cash dividends ($.65 per common
share) (2,144) (2,144)
Net change in unrealized
gain/(loss) on securities
available for sale 4,601 4,601
Issuance of stock for dividend
reinvestment and stock
purchase plan 4 8 12
Fractional shares paid for
acquisition and stock dividend (12) (12)
Retired treasury stock (37) 37
5% stock dividend 1,500 (1,500)
BALANCE, DECEMBER 31, 1995 31,590 35,009 -- 1,113 67,712
Net income for 1996 7,966 7,966
Cash dividends ($.80 per common
share) (2,653) (2,653)
Net change in unrealized
gain/(loss) on securities
available for sale (803) (803)
Net change in treasury stock (21) (21)
Fractional shares paid for
stock dividend (18) (18)
5% stock dividend 1,573 (1,573)
BALANCE, DECEMBER 31, 1996 $ 33,163 $ 38,731 $ (21)$ 310 $ 72,183
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE> 5
<TABLE> AMBANC CORP.
Consolidated Statements of Cash Flows
For the years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands)
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,966 $ 7,045 $ 6,502
Adjustments to reconcile net income to net
cash from operating activities:
Net premium amortization and discount
accretion on securities 319 374 443
Depreciation 1,081 987 1,072
Provision for loan losses 1,366 1,182 338
Deferred income tax provision (337) (621) 365
Gain on securities (28) (41) (29)
Gain on sale of loans held for sale (409) (191) (229)
Proceeds from sales of loans held for sale 30,385 16,231 35,676
Loans held for sale made to customers,
net of payments collected (25,599) (20,103) (21,192)
Accrued interest receivable
and other assets (748) (1,290) (4,047)
Accrued interest payable
and other liabilities 417 941 2,436
Deferred loan fees, net of costs (48) (81) (33)
Net cash from operating activities 14,365 4,433 21,302
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
available for sale 16,893 4,559 14,999
Proceeds from maturities and calls of securities
available for sale 40,395 31,453 40,783
Proceeds from maturities and calls of securities
held to maturity -- 4,037 3,232
Purchases of securities available for sale (56,084) (15,816) (38,136)
Purchases of securities held to maturity -- (3,938) (4,020)
Net change in interest bearing deposits
in other banks 102 501 (303)
Loans made to customers, net of payments collected (58,662) (54,028) (51,206)
Loans purchased (8) (7,386) (1,187)
Proceeds from sales of loans 6,150 6,804 6,845
Property and equipment expenditures (2,867) (1,497) (1,295)
Net cash from investing activities (54,081) (35,311) (30,288)
/TABLE
<PAGE>
<PAGE> 6
<TABLE> AMBANC CORP.
Consolidated Statements of Cash Flows - continued
For the years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 33,389 49,682 494
Net change in short-term borrowings (1,502) (2,506) (527)
Payments on long-term debt (484) (597) (338)
Proceeds from long-term debt 116 85 2,527
Purchase of treasury stock (21) -- --
Payment for fractional shares (18) (12) (4)
Issuance of stock for dividend reinvestment
and stock purchase plan -- 12 74
Dividends paid (2,653) (2,144) (1,947)
Net cash from financing activities 28,827 44,520 279
NET CHANGE IN CASH AND CASH EQUIVALENTS (10,889) 13,642 (8,707)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 43,173 29,531 38,238
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 32,284 $ 43,173 $ 29,531
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 26,343 $ 22,371 $ 18,976
Income taxes 3,850 2,981 2,722
</TABLE>
Noncash activities occurred consisting of the reclassification of
$40,080 from the held to maturity securities portfolio to the
available for sale securities portfolio in 1995.
See accompanying notes to consolidated financial
statements.<PAGE>
<PAGE> 7
AMBANC CORP.
Notes To Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Reporting
The consolidated financial statements include the accounts of
AMBANC Corp. (Corporation), and its wholly owned subsidiaries,
AmBank Indiana, N.A. (IND), AmBank Illinois, N.A. (ROB), AmBank
Illinois (CAS) and American National Realty Corp. (ANR). On June
30, 1996, The American National Bank of Vincennes and Citizens'
National Bank of Linton were merged and renamed AmBank Indiana,
N.A. The First National Bank in Robinson and Bank of Casey were
also renamed to AmBank Illinois, N.A. and AmBank Illinois,
respectively, on June 30, 1996. On September 30, 1996,
Lincolnland Insurance Agency & Investments, Inc., previously a
wholly owned subsidiary of the Corporation, was dissolved. Upon
consolidation, all significant intercompany accounts and
transactions have been eliminated. As discussed in Note 2, AMBANC
Corp. acquired First Robinson Bancorp (FRB) on November 1, 1995,
under the pooling of interests method of accounting. These
consolidated financial statements have been restated to reflect
the accounts of FRB for all periods presented.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
Description of Business
IND, ROB and CAS operate primarily in the banking industry, which
accounts for more than 90 percent of the Corporation's revenues,
operating income and assets. IND, ROB and CAS generate
commercial, real estate mortgage and installment loans and receive
deposits from customers located in Greene, Knox, Gibson, Vigo and
surrounding counties in Indiana and Crawford, Clark, Wabash and
surrounding counties in Illinois. Although the overall loan
portfolio is diversified, the economy of these counties is heavily
dependent upon the agricultural industry. The majority of the
loans are secured by specific items of collateral including
business assets, real property and consumer assets.
ANR owns various real estate, which is leased to IND for normal
banking activities, such as parking, drive-in banking and branch
banking facilities.
Securities
Statement of Financial Accounting Standards (FAS) 115, "Accounting
for Certain Investments in Debt and Equity Securities", requires
securities to be classified as held to maturity, available for
sale or trading. Only those securities classified as held to
maturity, which management has the intent and ability to hold to
maturity, are reported at amortized cost. Available for sale
securities are reported at fair value with unrealized after tax
gains and losses included in shareholders' equity. The
Corporation does not maintain any securities classified as
trading. Realized securities gains or losses are reported in the
Consolidated Statements of Income. The cost of securities sold is
based on the specific identification method.
In November 1995 the Financial Accounting Standards Board allowed
a one time reclassification of all securities. In December 1995
the Corporation reclassified all held to maturity securities to
available for sale securities.<PAGE>
<PAGE> 8
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Loans Held for Sale
Loans held for sale consist of fixed rate mortgage loans conforming
to established guidelines and held for sale to the secondary
mortgage market. Mortgage loans held for sale are carried at the
lower of cost or fair value determined on an aggregate basis. Gains
and losses on the sale of these mortgage loans are included in other
noninterest income.
The Corporation adopted FAS 122, "Accounting for Mortgage Servicing
Rights" (MSRs), on January 1, 1996. FAS 122 requires that the
Corporation recognize as separate assets, rights to service mortgage
loans for others that have been acquired through either the purchase
or origination of a loan. An entity that sells or securitizes those
loans with servicing rights retained should allocate the total cost
of the mortgage loans to the MSRs and the loans based on their
relative fair values. These costs are initially capitalized and
subsequently amortized in proportion to, and over the period of,
estimated net loan servicing income. Additionally, FAS 122 requires
that MSRs be reported on the Consolidated Balance Sheet at the lower
of cost or fair value. The Corporation is required to assess its
capitalized MSRs for impairment based upon the fair value of the
rights. MSRs are stratified based upon one or more of the
predominant risk characteristics of the underlying loans.
Impairment is recognized through a valuation allowance for each
impaired stratum. The provisions of FAS 122 were applied
prospectively beginning in fiscal 1996. The ongoing impact of FAS
122 is dependent upon, among other things, the volume of loan
originations, the general levels of market interest rates and the
rate of estimated loan prepayments. Accordingly, management is
unable to predict with any reasonable certainty what effect FAS 122
will have on the Corporation's future results of operations or its
financial condition. FAS 122 prohibits restatement of prior years'
financial statements.
Loans
Loans are stated at the principal amount outstanding adjusted for
unearned discounts, unamortized premiums and net deferred fees. The
Corporation defers loan fees, net of certain direct loan origination
costs. The net amount deferred is reported on the balance sheets as
part of loans and is recognized into interest income over the term
of the loan on a level yield basis. Any unamortized fees on loans
sold are credited to gain on sale of loans at time of sale.
Interest on real estate, commercial and installment loans is accrued
over the term of the loans on a level yield basis. The recognition
of interest income is discontinued when, in management's judgment,
the interest will not be collectible in the normal course of
business.
The Corporation adopted FAS 114 and 118, "Accounting by Creditors
for Impairment of a Loan and Income Recognition and Disclosures", as
amended, effective January 1, 1995. These statements require that
impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate
or the fair value of the underlying collateral, and specifies
alternative methods for recognizing interest income on loans that
are impaired or for which there are credit concerns. For purposes
of applying this standard, impaired loans have been defined as all
nonaccrual loans. The Corporation's policy for income recognition
was not affected by adoption of the standard. The adoption of FAS
114 and 118 did not have any effect on the total reserve for credit
losses or related provision.<PAGE>
<PAGE> 9
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Allowance for Loan Losses
The balance in the allowance and the amount of the annual
provision charged to expense are judgmentally determined based
upon a number of factors. The allowance is maintained by
management at a level considered adequate to cover possible losses
that are currently anticipated based on past loss experience,
general economic conditions, information about specific borrower
situations, including their financial position and collateral
values, and other factors that are particularly susceptible to
changes that could result in a material adjustment in the near
term. While management endeavors to use the best information
available in making its evaluations, future allowance adjustments
may be necessary if economic conditions change substantially from
the assumptions used in making the evaluations. While management
may periodically allocate portions of the allowance for specific
problem loan situations, the entire allowance is available for any
loan charge-offs which occur. Increases to the allowance are
recorded by a provision for possible loan losses charged to
expense. A loan is charged off by management as a loss when
deemed uncollectible, although collection efforts continue and
future recoveries may occur.
Premises, Furniture and Equipment
Premises, furniture and equipment are stated at cost less
accumulated depreciation and are depreciated over the estimated
useful lives of the assets ranging from 3 to 40 years, principally
on the straight-line method. Maintenance and repairs are
expensed, and major improvements are capitalized.
Intangible Assets
Goodwill and other intangible assets are amortized on a straight-
line basis generally over a period of 15 years. Management
reviews intangible assets for possible impairment if there is a
significant event that detrimentally affects operations.
Impairment is measured using estimates of the future earnings
potential of the entity or assets acquired.
Other Real Estate
Real estate acquired through foreclosure or acceptance of a deed
in lieu of foreclosure is recorded at the lower of cost (fair
value at date of foreclosure) or fair value less estimated selling
costs. The costs of holding the real estate are charged to
operations while major improvements are capitalized.
Income Taxes
The Corporation and its subsidiaries file consolidated tax
returns. Each entity is charged or credited for taxes as if
separate returns were filed. Deferred income tax assets and
liabilities reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes
and basis of such assets and liabilities as measured by tax laws
and regulations.
Fiduciary Activities
Trust Department income is recognized on the cash basis method,
which in this circumstance does not materially differ from the
accrual method.
<PAGE>
<PAGE> 10
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Statements of Cash Flows
Cash and cash equivalents is defined to include cash on hand,
noninterest bearing amounts due from other banks and federal funds
sold. Generally, federal funds are sold for one-day periods. The
Corporation reports net cash flows for loans held for sale,
customer loan transactions, deposit transactions and deposits made
with other financial institutions.
New Accounting Pronouncements
FAS 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities", is effective for
fiscal years beginning after December 31, 1996. FAS 125 provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. The effects
of FAS 125 on the future financial position and results of
operations of the Corporation cannot be readily determined.
Financial Statement Presentation
Certain items in the 1995 and 1994 financial statements have been
reclassified to correspond with the 1996 presentation.
<PAGE>
<PAGE> 11
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 2 - BUSINESS COMBINATION
<TABLE>
<CAPTION>
Common
Shares Method of
Date Completed Issued Accounting
<S> <C> <C> <C>
First Robinson Bancorp (FRB) November 1, 1995 701,647 Pooling
</TABLE>
The Consolidated Financial Statements have been restated to
include the accounts and operations of FRB, parent holding company
of ROB for all periods presented. FRB was merged into the
Corporation and ceased to exist at the conclusion of the merger.
The contribution of FRB to consolidated interest income, net
interest income and net income for the periods prior to the merger
was as follows.
<TABLE>
<CAPTION> <S> <C> <C>
Ten
Months Ended Year Ended
October 31, December 31,
1995 1994
Interest income
Previously reported $ 33,967 $ 35,023
FRB 6,826 8,030
Total $ 40,793 $ 43,053
Net interest income
Previously reported $ 17,362 $ 19,423
FRB 3,624 4,476
Total $ 20,986 $ 23,899
Net income
Previously reported $ 5,042 $ 5,443
FRB 678 1,059
Total $ 5,720 $ 6,502
</TABLE>
Note 3 - SECURITIES
The amortized cost and estimated fair value of securities
are as follows.
<TABLE><CAPTION>
December 31, 1996
<S> <C> <C> <C> <C>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale
U.S. Government and its agencies $ 102,163 $ 670 $ (1,014) $ 101,819
States and political subdivisions 54,696 1,235 (155) 55,776
Corporate obligations 1,823 -- -- 1,823
Collateralized mortgage obligations 9,253 2 (89) 9,166
Mutual funds 2,314 -- (174) 2,140
Total $ 170,249 $ 1,907 $ (1,432) $ 170,724
</TABLE> <PAGE>
<PAGE> 12
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 3 - SECURITIES - Continued
<TABLE>
<CAPTIONS>
December 31, 1995
<S> <C> <C> <C> <C>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale
U.S. Government and
its agencies $ 101,483 $ 891 $ (664) $ 101,710
States and political
subdivisions 50,216 1,705 (84) 51,837
Corporate obligations 3,550 43 (3) 3,590
Collateralized mortgage
obligations 15,544 45 (73) 15,516
Mutual funds 951 -- (135) 816
Total $ 171,744 $ 2,684 $ (959) $ 173,469
</TABLE>
The one time reclassification under FAS 115 occurred in
December 1995 and reclassified securities with amortized cost of
$40,080 from held to maturity to available for sale. The unrealized
gain at the time of the transfer was $1,628.
Investments in states and political subdivisions and
corporate obligations are made within policy standards, which call
for these securities to be investment grade or better as established
by national rating organizations. These securities are actively
traded and have a readily available market valuation. Ratings and
fair values of these securities are reviewed monthly with fair
values being obtained from an independent rating service or broker.
<PAGE>
<PAGE> 13
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 3 - SECURITIES - Continued
The amortized cost and estimated fair value of
securities at December 31, 1996, by contractual maturity are shown
in the following schedule. Expected maturities will differ from
contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Available for Sale
<S> <C> <C>
Estimated
Amortized Fair
Cost Value
Due in 1 year or less $ 15,175 $ 15,179
Due after 1 year through 5 years 60,574 60,741
Due after 5 years through 10 years 54,085 54,320
Due after 10 years 9,938 9,990
Subtotal 139,772 140,230
Collateralized mortgage obligations 9,253 9,166
U.S. agency mortgage-backed
securities 18,910 19,188
Mutual funds 2,314 2,140
Total $ 170,249 $ 170,724
</TABLE>
Proceeds from sales of securities available for sale
were $16,893 in 1996, $4,559 in 1995 and $14,999 in 1994. Sales
and calls of securities available for sale resulted in gross gains
and gross losses of $56 and $28 in 1996, $21 and $3 in 1995 and
$78 and $49 in 1994. Sales and calls of securities held to
maturity resulted in gross gains and gross losses of $0 and $0 in
1996, $24 and $1 in 1995, and $0 and $0 in 1994.
Securities with a carrying value of $50,609 and $47,631 at
December 31, 1996 and 1995, were pledged to secure public deposits
and for other purposes required or permitted by law.
<PAGE>
<PAGE> 14
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 4 - LOANS
Loans as presented on the balance sheets are comprised of the
following.
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Commercial $ 201,092 $ 172,782
Agricultural 55,404 65,239
Real estate 129,116 107,123
Installment 105,464 94,784
Credit cards 3,686 3,722
Total loans 494,762 443,650
Unearned income (295) (993)
Total loans, net $ 494,467 $ 442,657
</TABLE>
Certain loans have been restructured in a manner that
grants a concession to the borrower because of the borrower's
financial difficulties. At December 31, 1996, 1995 and 1994, these
loans totaled $3,089, $45 and $490. Interest income recorded on
these loans was $310, $3 and $39 during 1996, 1995 and 1994.
Interest income which would have been recorded under the original
terms of the loans was $310, $4 and $44 during 1996, 1995 and 1994.
Directors and executive officers of the Corporation and its wholly
owned subsidiaries were customers of, and had other transactions
with, the banking subsidiaries in the ordinary course of business.
A schedule of the aggregate activity involving loans to related
parties follows.
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1996 $ 19,309
New loans 6,442
Loan reductions (14,222)
Balance, December 31, 1996 $ 11,529
/TABLE
<PAGE>
<PAGE> 15
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 5 - ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses is as follows.
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance, January 1 $ 5,022 $ 4,531 $ 4,238
Provision charged to operations 1,366 1,182 338
Loans charged off (1,266) (1,019) (808)
Recoveries 508 328 763
Balance, December 31 $ 5,630 $ 5,022 $ 4,531
</TABLE>
<TABLE>
<CAPTION>
Impaired loan information under FAS 114 and 118 at December 31,
1996 1995
<S> <C> <C>
Impaired loans with a valuation reserve $ 843 $ 160
Impaired loans with no valuation reserve 578 823
Total impaired loans $ 1,421 $ 983
Valuation reserve on impaired loans $ 469 $ 50
Average impaired loans 2,495 1,127
</TABLE>
Income recorded on these loans during 1996, 1995 and 1994 totaled
$89, $18 and $17. Income which would have been recorded on these
loans during 1996, 1995 and 1994, had they been accruing all year,
was $149, $41 and $55.
Note 6 - MORTGAGE BANKING ACTIVITIES
Loans serviced for others, amounting to $97,606, $79,990 and $73,748
at December 31, 1996, 1995 and 1994, are not included in the
consolidated financial statements. Net gain on sales of loans was
$409, $191 and $229 for the years ended December 31, 1996, 1995 and
1994. Servicing loans for others generally consists of collecting
mortgage payments, maintaining escrow accounts, disbursing payments
to investors and foreclosure processing. Loan servicing income
includes servicing fees from investors and certain charges collected
from borrowers, such as late payment fees.
The following analysis reflects the changes in MSRs acquired for the
year ended December 31, 1996.
<TABLE> <S> <C>
Carrying Value January 1, 1996 $ --
Additions 307
Amortization (16)
Net change in valuation allowance --
Carrying Value December 31, 1996 $ 291
</TABLE>
The fair value of MSRs as of December 31, 1996, was $291. Fair
value is estimated by discounting the net servicing income to be
received over the estimated servicing term using a current market
rate. The significant risk characteristic of the underlying loans
used to stratify MSRs for impairment measurement was term and note
of rate. No valuation allowance existed for the year ended December
31, 1996.
<PAGE>
<PAGE> 16
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 7 - PREMISES, FURNITURE AND EQUIPMENT
Premises, furniture and equipment as presented on the balance
sheets are comprised of the following.
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land and improvements $ 1,351 $ 1,346
Buildings and improvements 12,133 10,751
Furniture and equipment 10,340 8,973
Total cost 23,824 21,070
Accumulated depreciation (12,640) (11,672)
Total, net $ 11,184 $ 9,398
</TABLE>
Depreciation expense for the years ended December 31, 1996, 1995
and 1994, totaled $1,081, $987 and $1,072.
Note 8 - INTEREST BEARING DEPOSITS
Interest bearing deposits issued in denominations of $100 or
greater totaled $76,948 and $66,647 at December 31, 1996 and 1995.
Note 9 - SHORT-TERM BORROWINGS
Short-term borrowings is comprised of the following.
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Repurchase agreements $ 3,049 $ 5,385
Demand notes issued to the U.S. Treasury 2,237 1,403
Total $ 5,286 $ 6,788
</TABLE>
Borrowings under the Federal Reserve Bank note option plan are
collateralized by certain securities and are reduced at the
discretion of the U.S. Treasury.
<PAGE>
<PAGE> 17
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 10 - LONG-TERM DEBT
Long-term debt is comprised of a deferred compensation plan of
$218 and $102 in 1996 and 1995 as discussed in Note 11 and two
Federal Home Loan Bank Mortgage Advances (Advances) totaling
$2,091 and $2,575 in 1996 and 1995. The Advances have an average
rate of 5.84% and 5.68% at December 31, 1996 and 1995, interest
payable monthly and principal payable in annual installments with
the final payment due March 15, 2004, and are secured by various
securities. The principal maturities of these Advances in each of
the five years after December 31, 1996, will be $400, $332, $211,
$188 and $167.
Note 11 - EMPLOYEE BENEFITS
The Corporation maintains a retirement savings plan covering
substantially all employees. To be eligible to participate, the
Plan requires employees to complete one year of service and be 21
years of age. The Plan covers all employees and allows for the
matching of 50% of the first 4% of employee salary contributions
and an annual discretionary contribution. The Corporation's
contributions to the Plan are vested by employees at 20% per year
starting with the second year of service and become 100% vested
after six years. Prior to 1996, ROB employees were eligible to
participate in a separate defined contribution money purchase
pension plan. The Corporation's total contributions were $615,
$473 and $435 for 1996, 1995 and 1994.
Prior to December 31, 1994, CAS sponsored a defined benefit
pension plan covering substantially all employees. Benefits were
based primarily on years of service and on the employees' average
compensation during their period of employment. CAS's funding
policy was to contribute the minimum amount required by applicable
regulations. In 1994, a curtailment occurred which was accounted
for in accordance with FAS 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits". During 1996, a final distribution of
$929 was made of the plan assets, which had a fair value of $978,
resulting in a net gain to the Corporation of $49. Net pension
(benefit)/expense was $(49), $(11) and $197 for the years ended
December 31, 1996, 1995 and 1994.
The Corporation has a deferred compensation plan for the benefit
of certain executive officers. In return for the officers'
relinquishing the right to a portion of their current
compensation, the Corporation agrees to pay the participants at
retirement or termination, in the form of 120 monthly payments or
one lump-sum payment, the amount deferred plus any interest earned
during the deferral period. Interest is paid annually at prime
rate and the liability of $218 and $102 is included with long-term
debt on the December 31, 1996 and 1995, balance sheets. During
1996, 1995 and 1994 the Corporation accrued approximately $13, $6
and $1 of interest expense towards its obligation under the plan.
<PAGE>
<PAGE> 18
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 12 - POSTRETIREMENT BENEFITS
The Corporation sponsors an unfunded postretirement benefit plan
which provides defined medical and death benefits to certain
eligible employees. Retirees as of December 31, 1992, receive
postretirement medical benefits and death benefits for themselves
and medical benefits for their spouses. These medical expenses
were fixed in 1992 and all future increases are passed on to the
retirees. Employees hired before April 1990 who retire after
January 1, 1993, are eligible to receive a postretirement medical
benefit for themselves, if they have completed 20 years of service
and attained age 62. This benefit is sixty dollars per month to
pay up to fifty percent of the retirees' medical benefits provided
under the Corporation's group major medical insurance plan until
age 65 and then under a medicare supplement plan.
<TABLE>
<CAPTION>
Accumulated postretirement benefit obligations at December 31,
1996 1995
<S> <C> <C>
Retirees $ (411) $ (394)
Fully eligible active participants (30) (31)
Other active plan participants (306) (294)
Accumulated postretirement benefit
obligation (747) (719)
Unrecognized prior service cost 142 154
Unrecognized loss (20) (20)
Unrecognized transition obligation 465 494
Accrued postretirement
benefit liability $ (160) $ (91)
</TABLE>
<TABLE>
<CAPTION>
Net periodic postretirement benefit cost for the years ended December 31:
1996 1995 1994
<S> <C> <C> <C>
Service cost-benefits attributed to
service during the period $ 23 $ 13 $ 11
Interest cost on accumulated
postretirement benefit obligation 49 39 40
Amortization of transition
obligation over 20 years 29 29 29
Amortization of unrecognized
prior service cost 12 -- --
Postretirement benefit cost $ 113 $ 81 $ 80
</TABLE>
Benefit payments of $45, $48 and $45 were made for postretirement
medical benefits in 1996, 1995 and 1994.
<PAGE>
<PAGE> 19
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 12 - POSTRETIREMENT BENEFITS - Continued
For measurement purposes, the annual rate of increase in the per
capita cost of covered health care benefits was assumed to be 9.5%
for 1996 and 1995 and 16% for 1994 with the rate gradually
decreasing to 6% after 15 years. The health care cost trend
assumption has a significant effect on the amounts reported. An
increase in the assumed health care cost trend rates by 1% in each
year would increase the accumulated postretirement benefit
obligation as of December 31, 1996, 1995 and 1994, by
approximately $14 and would have virtually no effect on the
aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1996, 1995 and 1994.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7%, 7% and 6% at
December 31, 1996, 1995 and 1994.
Note 13 - STOCK OPTION PLAN
The Corporation had a Nonqualified Stock Option Plan which expired
in April 1993. Under the terms of the plan, options were granted
at amounts not less than the fair value of the shares at the date
of the grant and any options granted must be exercised within ten
years of the grant. As of December 31, 1996, 1995 and 1994, fully
vested options for 26,460 shares at an option price of $18.14 per
share were outstanding.
Additionally, under provisions of the Nonqualified Stock Option
Plan, stock appreciation rights have been granted coinciding with
the number of stock options granted. The value of each stock
appreciation right at any time is equal to 50% of the excess of
the fair value of one share of common stock of the Corporation
over the exercise price of the option to which it relates.
Employee benefits charged/(credited) to operations in 1996, 1995
and 1994 includes $(1), $12 and $(69) related to stock
appreciation rights.
<PAGE>
<PAGE> 20
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 14 - INCOME TAXES
Income taxes consist of the following.
1996 1995 1994
Current payable $ 3,619 $ 3,246 $ 2,259
Deferred income taxes/(benefits) (337) (409) 365
Change in valuation allowance -- (212) --
Income taxes $ 3,282 $ 2,625 $ 2,624
Income taxes applicable to security transactions were
$18, $14 and $17 in 1996, 1995 and 1994.
The following is a reconciliation of income
tax expense and the amount computed by
applying the statutory federal income tax rate
of 34% to income before income taxes.
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Statutory rate applied to income $ 3,824 $ 3,288 $ 3,103
Adjustments
Tax exempt interest income (1,053) (1,048) (1,086)
Non-deductible interest 160 144 156
Merger expenses -- 111 66
State income taxes 531 374 333
Alternative minimum tax (93) -- (27)
Surtax exemption and other (87) (32) 79
Change in valuation allowance -- (212) --
Total income taxes $ 3,282 $ 2,625 $ 2,624
</TABLE>
The Corporation's deferred income tax assets and liabilities consist
of the following.
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets
Allowance for loan losses $ 959 $ 563
Accrued employee benefits 519 392
Alternative minimum tax carryforward 166 259
Other 18 4
1,662 1,218
Deferred tax liabilities
Depreciation 684 605
Unrealized gain on securities
available for sale 165 612
Mark to market adjustment on
loans held for sale 10 1
Accretion of securites discount 131 112
990 1,330
Net deferred tax asset/(liability) $ 672 $ (112)
/TABLE
<PAGE>
<PAGE> 21
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 15 - COMMITMENTS AND CONTINGENT LIABILITIES
The Corporation leases various facilities and equipment. These
leases expire at various times during the years 1997 through 2008
with renewal options through the year 2038. Certain of these leases
are with companies controlled by directors of the Corporation and
its subsidiaries which had total lease payments of $30, $42 and $41
in 1996, 1995 and 1994. Total rental expense for all leases for the
years 1996, 1995 and 1994, was $308, $166 and $94. The following is
a schedule of future minimum lease payments.
<TABLE>
<S> <C>
1997 $ 360
1998 287
1999 179
2000 169
2001 127
Thereafter 1,427
Total $ 2,549
</TABLE>
In the ordinary course of business, the Corporation's banking
subsidiaries have loans, commitments and contingent liabilities,
such as guarantees and commitments to extend credit, which are not
reflected in the consolidated balance sheets. The Corporation's
exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to make loans and
standby letters of credit is represented by the contractual amount
of those instruments. The Corporation uses the same credit policy
to make such commitments as is used for on-balance sheet items.
Outstanding loan commitments and customers' unused lines of credit
amounted to $100,546 and $74,779 at December 31, 1996 and 1995.
Outstanding standby letters of credit were $9,328 and $6,058 at
December 31, 1996 and 1995. Since many commitments to make loans
expire without being used, the outstanding amount of commitments
does not necessarily represent future cash commitments. Collateral
obtained upon exercise of the commitment is determined using
management's credit evaluation of the borrower and may include
accounts receivable, inventory, property, land and other items.
The Corporation was required to have $8,137 and $7,018 at December
31, 1996 and 1995, on deposit with the Federal Reserve or as cash on
hand or on deposit with other banks. These reserves do not earn
interest.
Note 16 - SHAREHOLDERS' EQUITY
All share and per share amounts have been retroactively adjusted to
reflect the effect of the shares issued in the business combination
discussed in Note 2 as though these shares had been outstanding for
all periods presented. A 5% stock dividend was paid on December 2,
1996, and November 30, 1995, and all average share and per share
amounts have been retroactively adjusted to reflect these stock
dividends. Earnings per share amounts are based on average
outstanding shares of 3,315,808 for 1996, 3,316,264 for 1995 and
3,313,716 for 1994.
In 1993 the directors of the Corporation approved the establishment
of a Dividend Reinvestment and Stock Purchase Plan (Plan) to provide
shareholders a method of purchasing additional shares of the
Corporation's common stock by reinvesting their cash dividends or
making optional cash payments into the Plan. Shares are credited to
the participant's account at the fair value of the Corporation's<PAGE>
<PAGE> 22
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 16 - SHAREHOLDERS' EQUITY - Countinued
stock at the date of the monthly purchase by the Plan. The
directors of the Corporation reserved 50,000 shares for the Plan and
issued 383 shares in 1995 and 2,388 shares in 1994 to the Plan. The
Plan was changed to a market only plan during the second quarter of
1995 and no more shares of common stock are reserved or will be
issued by the Corporation through this Plan.
The directors of the Corporation are being paid in stock per the
Director Stock Grant Plan approved by the shareholders in 1996. The
Corporation's stock is purchased routinely on the market and held as
treasury stock until it is reissued as payment of director fees each
quarter.<PAGE>
<PAGE> 23
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 17 - REGULATORY MATTERS
The Corporation is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure
to meet minimum capital requirements can initiate certain mandatory
- - and possible additional discretionary - actions by regulators
that, if undertaken, could have a direct material effect on the
Corporation's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective
action, the Corporation must meet specific capital guidelines that
involve quantitative measures of the Corporation's assets,
liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. The Corporation's capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Corporation to maintain minimum amounts and
ratios (set forth in the table below) of Total and Tier 1 Capital
(as defined in the regulations) to risk-weighted assets (as
defined), and of Tier 1 Leverage Capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996
and 1995, that the Corporation met all capital adequacy requirements
to which it is subject.
As of December 31, 1996, the most recent notifications from the
Office of Comptroller of Currency and the Commissioner of Banks and
Trust Companies in Illinois categorized the bank subsidiaries as
well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the
Corporation must maintain minimum Total Capital, Tier 1 Capital,
Tier 1 Leverage Capital ratios as set forth in the table. There are
no conditions or events since that notification that management
believes have changed the institutions' categories.
The Corporation's consolidated and individual banking subsidiaries'
actual capital amounts and ratios are also presented in the table.
<TABLE>
<CAPTION>
To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996
Total Capital (to Risk Weighted Assets)
Consolidated $ 75,594 14.33% $ 42,195 8.00% $ 52,744 10.00%
AmBank Indiana, N.A. 43,308 12.82 27,024 8.00 33,780 10.00
AmBank Illinois, N.A. 19,035 16.90 9,010 8.00 11,263 10.00
AmBank Illinois 12,165 15.87 6,131 8.00 7,663 10.00
Tier 1 Capital (to Risk Weighted Assets)
Consolidated $ 69,964 13.26% $ 21,098 4.00% $ 31,646 6.00%
AmBank Indiana, N.A. 39,823 11.79 13,512 4.00 20,268 6.00
AmBank Illinois, N.A. 17,627 15.65 4,505 4.00 6,758 6.00
AmBank Illinois 11,445 14.94 3,065 4.00 4,598 6.00
Tier 1 Leverage Capital (to Average Assets)
Consolidated $ 69,964 10.00% $ 27,993 4.00% $ 34,992 5.00%
AmBank Indiana, N.A. 39,823 9.37 16,997 4.00 21,247 5.00
AmBank Illinois, N.A. 17,627 10.63 6,633 4.00 8,291 5.00
AmBank Illinois 11,445 10.42 4,395 4.00 5,494 5.00
/TABLE
<PAGE>
<PAGE> 24
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 17 - REGULATORY MATTERS- Continued
<TABLE>
<CAPTION> To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1995
Total Capital (to Risk Weighted Assets)
Consolidated $ 69,595 14.67% $ 37,961 8.00% $ 47,452 10.00%
AmBank Indiana, N.A. 39,606 13.19 24,027 8.00 30,034 10.00
AmBank Illinois, N.A. 18,015 17.56 8,208 8.00 10,260 10.00
AmBank Illinois 11,163 15.63 5,715 8.00 7,143 10.00
Tier 1 Capital (to Risk Weighted Assets)
Consolidated $ 64,573 13.61% $ 18,981 4.00% $ 28,471 6.00%
AmBank Indiana, N.A. 36,462 12.14 12,014 4.00 18,020 6.00
AmBank Illinois, N.A. 16,824 16.40 4,104 4.00 6,156 6.00
AmBank Illinois 10,476 14.67 2,857 4.00 4,286 6.00
Tier 1 Leverage Capital (to Average Assets)
Consolidated $ 64,573 10.01% $ 25,794 4.00% $ 32,243 5.00%
AmBank Indiana, N.A. 36,462 9.63 15,149 4.00 18,936 5.00
AmBank Illinois, N.A. 16,824 10.20 6,596 4.00 8,245 5.00
AmBank Illinois 10,476 10.17 4,120 4.00 5,150 5.00
</TABLE>
The Corporation and its wholly owned subsidiary banks are
subject to regulations which require the maintenance of
certain capital levels and, as a result, limit the amount of
dividends which may be paid by the banks. IND and ROB are
regulated by the Comptroller of the Currency, CAS is
regulated by the Commissioner of Banks and Trust Companies in
Illinois, while the Corporation is regulated by the Federal
Reserve Board. The most restrictive of the regulations
generally requires the banks to maintain a minimum leverage
capital to total asset ratio. As a result of this limitation,
approximately $21,303 of the $71,114 equity of the banks was
restricted and unavailable for the payment of dividends to the
Corporation at December 31, 1996.
Additionally, the amount of dividends the banks may pay to the
Corporation in a single year without approval from regulators
is limited by regulation. Under the most restrictive
regulations, approximately $10,318 of undistributed earnings
of the banks was available for distribution to the Corporation
at December 31, 1996. As a practical matter, dividends are
ordinarily restricted to a lesser amount because of the need
to maintain an adequate capital structure.
On September 30, 1996, the President signed into law an
omnibus appropriations act for fiscal year 1997 that included,
among other things, the recapitalization of the Savings
Association Insurance Fund (SAIF) in a section entitled, "The
Deposit Insurance Funds Act of 1996" (the Act). The Act
included a provision where all insured depository institutions
would be charged a one-time special assessment on their SAIF
assessable deposits as of March 31, 1995. The Corporation
recorded a pre-tax charge of $191 during the year ended
December 31, 1996, which represented 65.7 basis points of the
March 31, 1995, assessable deposits.
<PAGE>
<PAGE> 25
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share
data)
Note 18 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table shows the carrying amount and
estimated fair value of financial instruments held by
the Corporation at December 31, 1996 and 1995.
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 32,284 $ 32,284 $ 43,173 $ 43,173
Interest bearing deposits
in other banks 590 590 692 692
Securities available for sale 170,724 170,724 173,469 173,469
Loans held for sale 2,350 2,404 6,727 7,141
Loans, less allowance for
loan losses 488,837 488,033 437,635 429,848
Demand and savings deposits 281,248 281,248 275,087 275,087
Time deposits 352,210 353,556 324,982 320,921
Short-term borrowings 5,286 5,286 6,788 6,788
Long-term debt 2,309 2,309 2,677 2,677
</TABLE>
For purposes of the above disclosures of estimated fair
value, the following assumptions were used as of December 31, 1996 and
1995. The estimated fair value for cash and cash equivalents is
considered to approximate cost. The estimated fair value for
securities is based on quoted market values for the individual
securities or for equivalent securities. The estimated fair value for
commercial loans is based on estimates of the difference in interest
rates the bank would charge the borrowers for similar loans with
similar maturities applied for an estimated time period until the loan
is assumed to reprice or be paid. The estimated fair value for other
loans is based on estimates of the rates the bank would charge for
similar such loans applied for the time period until estimated
repayment. The estimated fair value for demand and savings deposits
is based on their carrying value. The estimated fair value for time
deposits is based on estimates of the rates the bank would pay on such
deposits applied for the time period until maturity. The estimated
fair value for short-term borrowings is considered to approximate
cost. Rates currently available to the Corporation for debt with
similar terms and remaining maturities are used to estimate the fair
value of existing long-term debt. The estimated fair value for other
financial instruments and off-balance sheet loan commitments
approximate cost and are not considered significant to this
presentation because the majority of these items are primarily at
variable rates and are not made for long term periods.
While these estimates of fair value are based on
management's judgment of the most appropriate factors, there is no
assurance that were the Corporation to have disposed of such items at
December 31, 1996 and 1995, the estimated fair values would
necessarily have been achieved at that date, since market values may
differ depending on various circumstances. The estimated fair values
at December 31, 1996 and 1995, should not necessarily be considered
to apply at subsequent dates.
In addition, other assets and liabilities of the
Corporation that are not defined as financial instruments are not
included in the above disclosures, such as property and equipment.
Also, non-financial instruments typically not recognized in financial
statements nevertheless may have value but are not included in the
above disclosures. These include, among other items, the estimated
earnings power of core deposit accounts, the earnings potential of
loan servicing rights, the earnings potential of trust departments,
a trained work force, customer goodwill and similar items.
<PAGE>
<PAGE> 26
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
Note 19 - PARENT COMPANY STATEMENTS
Presented below are condensed balance
sheets, statements of income and cash flows for the
parent company.
<TABLE>
<CAPTION>
Condensed Balance Sheets
December 31, 1996 and 1995
1996 1995
<S> <C> <C>
ASSETS
Cash on deposit with subsidiaries $ 806 $ 673
Investment in bank subsidiaries 71,114 66,901
Investment in non-bank subsidiaries 494 454
Premises, furniture and equipment, net 178 158
Other assets 243 276
Total assets $ 72,835 $ 68,462
LIABILITIES
Other liabilities $ 652 $ 750
SHAREHOLDERS' EQUITY
Common stock 33,163 31,590
Treasury stock (21) --
Retained earnings 38,731 35,009
Unrealized gain/(loss) on securities
available for sale, net of deferred tax 310 1,113
Total shareholders' equity 72,183 67,712
Total liabilities and
shareholders' equity $ 72,835 $ 68,462
</TABLE>
<TABLE>
<CAPTION>
Condensed Statements Of Income
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
OPERATING INCOME
Dividends received from bank subsidiaries $ 3,450 $ 2,678 $ 3,526
Rental income -- -- 240
Other income 8 35 32
Total operating income 3,458 2,713 3,798
OPERATING EXPENSE
Other expenses 1,871 2,315 1,003
INCOME BEFORE INCOME TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF SUBSIDIARIES 1,587 398 2,795
Income tax credit (354) (351) (181)
INCOME BEFORE EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 1,941 749 2,976
Equity in undistributed earnings
of subsidiaries 6,025 6,296 3,526
NET INCOME $ 7,966 $ 7,045 $ 6,502
</TABLE>
<PAGE>
<PAGE> 27
AMBANC CORP.
Notes To Consolidated Financial Statements-Continued
December 31, 1995, 1994 and 1993
(Dollar amounts in thousands, except share and per share data)
Note 19 - PARENT COMPANY STATEMENTS - Continued
<TABLE>
<CAPTION> Condensed Statements Of Cash Flows
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,966 $ 7,045 $ 6,50 Adjustments to reconcile net income
to
net cash from operating activities
Depreciation 47 19 100
Equity in undistributed income of
subsidiaries (3,450) (2,678) (3,526)
ther liabilities (98) 547 (11)
Other assets 33 13 78
Net cash from operating activities 4,498 4,946 3,143
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiaries (1,643) (2,664) (893)
Purchase of furniture and equipment (30) (147) (33)
Net cash from investing activities (1,673) (2,811) (926)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (2,653) (2,144) (1,947)
Payment for fractional shares (18) (12) (4)
Treasury stock (21) 37 --
Issuance of stock for dividend reinvestment
and stock purchase plan -- 12 74
Net cash from financing activities (2,692) (2,107) (1,877)
NET CHANGE IN CASH AND CASH EQUIVALENTS 133 28 340
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 673 645 305
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 806 $ 673 $ 645
</TABLE>
NOTE 20 - SUBSEQUENT EVENT
An application has been made to merge the Illinois banks,
ROB and CAS, under the ROB National Bank charter. It is anticipated
that the Comptroller of the Currency will approve this merger for
completion during the first quarter of 1997.
<PAGE>
<PAGE> 28
The management of AMBANC Corp. is responsible for the integrity of all
information contained in the accompanying financial statements and
other sections of this annual report. The statements have been
prepared in conformity with generally accepted accounting principles
and include amounts that are based on management's best estimates and
judgment.
In meeting its responsibility, management relies on the systems of
internal control which are designed to provide reasonable assurance
that assets are safeguarded and that transactions are properly
executed and recorded. The development and dissemination of written
policies and procedures, appropriate segregation of duties and
responsibilities and the conducting of a continuing comprehensive
program of internal audits provide further enhancements to the systems
of internal control.
The Audit Committee of the Board of Directors, consisting solely of
outside directors, meets periodically with management, the internal
auditors and the independent auditors to review audits, financial
reporting and other related matters. The internal auditors and the
independent auditors have full and free access to the Audit Committee
to further assure their independence.
The financial statements have been audited by Deloitte & Touche LLP,
independent auditors for the years ended December 31, 1996 and 1995.
They were engaged to audit the financial statements and to express an
opinion thereon. Their audit was conducted in accordance with
generally accepted auditing standards.
Robert G. Watson Richard E.
Welling, CPA
Chairman of the Board, Secretary,
Treasurer and C.F.O.
President and C.E.O.
<PAGE>
<PAGE> 29
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents an analysis of the consolidated financial
condition of AMBANC Corp. (Corporation) and its wholly-owned
subsidiaries, AmBank Indiana, N.A. (IND), AmBank Illinois, N.A.
(ROB), AmBank Illinois (CAS), American National Realty Corp. (ANR)
at December 31, 1996 and 1995, and the consolidated results of
operations for the years ended December 31, 1996, 1995 and 1994.
This review should be read in conjunction with the consolidated
financial statements, notes to consolidated financial statements
and other financial data presented elsewhere in this Annual Report.
On November 1, 1995, the Corporation issued 701,647 shares of its
common stock in exchange for all of the outstanding common stock of
First Robinson Bancorp (FRB), the parent holding company of ROB.
FRB was then merged into the Corporation. This acquisition was
accounted for under the pooling of interests method. Accordingly,
the Corporation's financial statements and financial data have been
retroactively restated to include the accounts and operations of
FRB for all periods presented. Certain reclassifications have been
made to FRB's historical financial statements to conform to the
Corporation's presentation. A 5% stock dividend was paid on
December 2, 1996 and November 30, 1995. All share and per share
amounts have been retroactively restated to reflect the 5% stock
dividends and the shares issued for FRB. Earnings per share
amounts are based on average outstanding shares of 3,315,808 for
1996, 3,316,264 for 1995 and 3,313,716 for 1994.
<PAGE>
<PAGE> 30
RESULTS OF OPERATIONS
(Dollar amounts in thousands, except share and per share
data)
Net income for 1996 was $7,966 or $2.40 per share compared to $7,045
or $2.12 per share in 1995 and $6,502 or $1.96 per share in 1994.
Earnings expressed as a percent of average assets and average equity
were:
<TABLE>
<CAPTION>
Table I
Percent of Percent of
Average Assets Average Equity
<S> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1996 1995 1994
Net income 1.14% 1.09% 1.05% 11.58% 11.30% 11.19%
</TABLE>
The following is an analysis of the critical components
of net income for the years 1996, 1995 and 1994 with
discussion and analysis of the contrasts between these
periods and the effect of previous trends on anticipated
future earnings performance.
Net Interest Income
Net interest income is the principal source of the
Corporation's earnings and represents the difference
between interest income on interest earning assets and
the interest cost of interest bearing liabilities.
Income on certain interest 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 securities 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% for 1996, 1995 and 1994.
The yield on average interest earning assets and the rate
paid on average interest bearing liabilities is based
upon three major factors: the yield/rate received or
paid, the mix of the individual components and the volume
of interest earning assets and interest bearing
liabilities. While the national prime rate is not the
only indicator for yields received on assets or the rates
paid on liabilities by the Corporation, it does indicate
a general trend of current rates being received on assets
and paid on liabilities. The national prime rate
averaged 7.14% during 1994, increased to an average of
8.83% during 1995 and decreased to an average of 8.27%
during 1996. Yields received and rates paid by the
Corporation are a blend of current and past year's
interest rates due to the lag effect of the repricing of
both long-term assets and long-term liabilities. <PAGE>
<PAGE> 31
Tables II, III and IV illustrate the components of net
interest income for the last three years. Table II shows
the average balances, interest income or expense and
average yields and rates on interest earning assets and
interest bearing liabilities by type. It also shows the
calculation of net interest margin for 1996, 1995 and
1994. Table III shows the change from year to year for
average interest earning assets and average interest
bearing liabilities and the resulting net interest
earning assets. Table IV shows the change in net interest
income from year to year and the allocation of that
yearly change between volume and rate by type of interest
earning asset and interest bearing liability.
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS - Continued
Table II
Consolidated Average Balance Sheets and Interest Rates
Years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
1 9 9 6 1 9 9 5 1 9 9 4
Interest Interest Interest
Average Income/ Average Income/ Average Income/
Balance Expense Average Balance Expense Average Balance Expense Average
ASSETS (Note A) (Note B) Rate (Note A) (Note B) Rate (Note A) (Note B) Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets
Securities
U.S. Government $111,473 $ 6,756 6.06% $107,553 $ 6,166 5.73% $125,846 $ 6,864 5.45%
State and municipal
obligations 52,493 4,325 8.24 50,112 4,298 8.58 51,211 4,474 8.74
Other 15,889 979 6.16 22,113 1,396 6.31 29,126 1,597 5.48
Total securities 179,855 12,060 6.71 179,778 11,860 6.60 206,183 12,935 6.27
Interest bearing deposits
in other banks 628 38 6.05 914 54 5.91 1,548 75 4.85
Loans held for sale 5,441 389 7.15 4,307 326 7.57 6,849 536 7.83
Total loans, less unearned
(Notes A and C) 467,509 42,725 9.14 416,489 38,073 9.14 368,198 30,882 8.39
Federal funds sold 13,076 710 5.43 11,842 685 5.78 7,424 295 3.97
Total interest earning assets and
interest income 666,509 $ 55,922 8.39% 613,330 $ 50,998 8.32% 590,202 $ 44,723 7.58%
Noninterest earning assets
Cash and due from banks 18,325 18,372 17,326
Premises and equipment, net 10,249 8,877 9,044
Other assets 11,954 10,906 8,864
Allowance for loan losses (5,237) (4,636) (4,377)
Unrealized loss on securities
available for sale (214) (2,393) (1,519)
Total assets $701,586 $644,456 $619,540
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities
Savings and demand deposits $218,090 $ 6,709 3.08% $212,092 $ 6,662 3.14% $225,280 $ 6,485 2.88%
Time deposits 344,388 20,052 5.82 299,794 16,931 5.65 266,698 12,083 4.53
Total savings and
time deposits 562,478 26,761 4.76 511,886 23,593 4.61 491,978 18,568 3.77
Short-term borrowings 7,383 385 5.22 8,129 437 5.38 9,649 409 4.24
Long-term debt 2,373 142 5.98 2,804 161 5.74 2,924 177 6.05
Total interest bearing
liabilities and
interest expense 572,234 $ 27,288 4.77% 522,819 $ 24,191 4.63% 504,551 $ 19,154 3.80%
Noninterest bearing liabilities
Demand deposits 54,730 55,527 53,415
Other 5,850 3,766 3,461
Shareholders' equity 68,772 62,344 58,113
Total liabilities and
shareholders' equity $701,586 $644,456 $619,540
Interest margin recap
Interest income/interest
earning assets $ 55,922 8.39% $ 50,998 8.32% $ 44,723 7.58%
Interest expense/interest
earning assets 27,288 4.09 24,191 3.95 19,154 3.25
Net interest income/interest
earning assets $ 28,634 4.30% $ 26,807 4.37% $ 25,569 4.33%
</TABLE>
<PAGE>
<PAGE> 33
Note A - Included in total loans are nonaccrual loans
averaging $2,495, $1,127 and $818 for the years 1996,
1995 and 1994.
Note B - Interest income includes the effects of tax
equivalent adjustments using a marginal federal tax rate
of 34% for 1996, 1995 and 1994. The total adjustment to
convert tax exempt loans and securities to a fully tax
equivalent basis was $1,611, $1,606 and $1,670 for 1996,
1995 and 1994.
Note C - Net loan fees and costs included in interest
income on loans amounted to $1,275, $866 and $769, for
the years 1996, 1995 and 1994.
<PAGE>
<PAGE> 34
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
<TABLE>
<CAPTION>
Table III
Changes in Net Interest Earning Assets
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Average interest
earning assets $666,509 $53,179 8.67% $613,330 $23,128 3.92% $590,202
Average interest bearing
liabilities 572,234 49,415 9.45 522,819 18,268 3.62 504,551
Net interest
earning assets $ 94,275 $ 3,764 4.16% $ 90,511 $ 4,860 5.67% $ 85,651
</TABLE>
<TABLE>
Table IV
Changes in Net Interest Income
1996 compared to 1995 1995 compared to 1994
increase/(decrease) increase/(decrease)
due to change in due to change in
Volume Rate Total Volume Rate Total
<S> <C> <C> <C> <C> <C> <C>
Interest income
Loans $4,663 $ (11) $ 4,652 $ 4,414 $ 2,777 $ 7,191
Loans held for sale 81 (18) 63 (193) (17) (210)
Interest bearing deposits
with other banks (17) 1 (16) (37) 16 (21)
Securities
U.S. Government 237 353 590 (1,049) 351 (698)
State and municipal
obligations 196 (169) 27 (94) (82) (176)
Other (383) (34) (417) (443) 242 (201)
Total securities 50 150 200 (1,586) 511 (1,075)
Federal funds sold 67 (42) 25 256 134 390
Total interest income 4,844 80 4,924 2,854 3,421 6,275
Interest expense
Savings and demand deposits 185 (138) 47 (414) 591 177
Time deposits 2,597 524 3,121 1,869 2,979 4,848
Short-term borrowings (39) (13) (52) (82) 110 28
Long-term debt (26) 7 (19) (7) (9) (16)
Total interest expense 2,717 380 3,097 1,366 3,671 5,037
Net interest income $2,127 $ (300) $ 1,827 $ 1,488 $ (250)$ 1,238
</TABLE>
<PAGE>
<PAGE> 35
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Net interest income in 1996 increased $1,827 or 6.82%
from 1995, and the percent of net interest margin, or net
interest income to average interest earning assets,
decreased to 4.30% in 1996 from 4.37% in 1995. This
increase in net interest income was due to an increase of
$3,764 or 4.16% in net interest earning assets during
1996 from 1995 and the increase in rates for both
interest earning assets and interest bearing liabilities.
The allocation of the yearly difference shows that $2,127
of the 1996 increase was due to volume changes while rate
changes reduced the net interest income by $300. Rates
on both interest earning assets and interest bearing
liabilities increased in 1996, but the rate allocation
shows the .14% increase in the rates on interest bearing
liabilities exceeded the .07% increase in rates on
interest earning assets.
Net interest income in 1995 increased $1,238 or 4.84%
from 1994, and the percent of net interest margin
increased to 4.37% in 1995 from 4.33% in 1994. This
increase in net interest income was due to an increase of
$4,860 or 5.67% in net interest earning assets during
1995 from 1994 and the increase in rates for both average
interest earning assets and average interest bearing
liabilities. The allocation of the yearly difference
shows that $1,488 of the 1995 increase was due to volume
changes while rate changes reduced the net interest
income by $250. Rates on both interest earning assets
and interest bearing liabilities increased in 1995, but
the rate allocation shows the .83% increase in rates on
interest bearing labilities exceeded the .74% increase in
rates on interest earning assets.
Provision and Allowance for Loan Losses
The provision for loan losses expense on the income
statement provides a reserve called the allowance for
loan losses (a contra asset on the balance sheet) to
which loan losses are charged as those losses become
evident. Management of each bank determines the
appropriate level of the allowance for loan losses on a
quarterly basis utilizing a report containing loans with
a more than normal degree of risk. This report is the
by-product of an ongoing loan review process, the purpose
of which is to determine the level of credit risk within
the portfolio and to ensure proper adherence to
underwriting and documentation standards. Utilizing this<PAGE>
<PAGE> 36
report, a specific portion of the reserve is allocated to
those loans which are considered to represent significant
exposure to risk. In addition, estimates are made for
potential losses on commercial, agricultural, real
estate, installment, credit cards and other loans not
specifically reviewed based on historical loan loss
experience and other factors and trends. Table V shows
the provision and allowance for loan losses for the last
five years. Table VI includes the specific allocation
For loan losses at year end for the last five years.<PAGE>
<PAGE> 37
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
<TABLE>
<CAPTION>
Table V
Analysis of Allowance for Loan Losses
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Balance at beginning
of year $ 5,022 $ 4,531 $ 4,238 $ 4,168 $ 3,957
Loans charged off
Commercial 329 349 352 1,327 777
Agricultural -- -- (a) (a) (a)
Real estate 106 11 32 112 315
Installment 586 537 365 266 460
Credit cards 219 108 (a) (a) (a)
Other 26 14 59 49 50
Total charge-offs 1,266 1,019 808 1,754 1,602
Charge-offs recovered
Commercial 196 115 548 177 152
Agricultural 70 78 (a) (a) (a)
Real estate 29 6 71 43 45
Installment 195 117 136 105 115
Credit cards 11 7 (a) (a) (a)
Other 7 5 8 7 6
Total recoveries 508 328 763 332 318
Net loans
charged off 758 691 45 1,422 1,284
Current year provision 1,366 1,182 338 1,492 1,495
Balance at
end of year $ 5,630 $ 5,022 $ 4,531 $ 4,238 $ 4,168
Loans at year end $494,467 $442,657 $388,657 $342,950 $311,097
Ratio of allowance
to loans at year end 1.14 % 1.13 % 1.17 % 1.24 % 1.34 %
Average loans $467,509 $416,489 $368,198 $325,544 $311,523
Ratio of net loans
charged off to
average loans .16 % .17 % .01 % .44 % .41 %
(a) Unavailable but included in another classification.
</TABLE>
<TABLE>
<CAPTION>
Table VI
Allocation of Allowance for Loan Losses
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Commercial $ 1,305 $ 1,231 $ 936 $ 954 $ 1,061
Agricultural 94 424 213 329 321
Real estate 223 212 204 223 105
Installment 350 451 674 457 412
Credit cards 109 18 25 17 14
Unallocated 3,549 2,686 2,479 2,258 2,255
Total $ 5,630 $ 5,022 $ 4,531 $ 4,238 $ 4,168
</TABLE>
<PAGE>
<PAGE> 38
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Nonperforming Assets
Nonperforming assets are defined as nonaccrual loans for
which the ultimate collectibility of interest is
uncertain, but for which the principal is considered
collectible; restructured loans which have had an
alteration to the original interest rate, repayment terms
or principal balance because of a deterioration in the
financial condition of the borrower; and loans past due
over 90 days but still accruing interest because the
interest is ultimately considered collectible. Impaired
loans covered in FAS 114 and 118 are defined by the
Corporation to be nonaccrual loans. Nonperforming assets
also include other real estate owned which has been
acquired through foreclosure or acceptance of a deed in
lieu of foreclosure. Other real estate owned is carried
at the lower of cost or fair value less estimated selling
costs, and is actively being marketed for sale. Table
VII sets forth the components of nonperforming assets and
their percentage to loans and the allowance for loan
losses as a percent of nonperforming assets at December
31, for the past five years.
<PAGE>
<PAGE> 39
<TABLE><CAPTION>
Table VII
Nonperforming Assets at December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 1,421 $ 983 $ 650 $ 1,078 $ 1,612
Restructured 3,089 45 490 565 265
90 days or more past
due 1,313 1,272 1,325 837 1,179
Total nonperforming
loans $ 5,823 $ 2,300 $ 2,465 $ 2,480 $ 3,056
Percent of loans 1.18 % .52 % .63 % .72 % .98 %
Allowance as a percent
of nonperforming loans 97 % 218 % 184 % 171 % 136 %
Other real estate owned $ 324 $ 280 $ 72 $ 145 $ 215
Percent of loans .07 % .06 % .02 % .04 % .07 %
</TABLE>
Assets considered to be nonperforming are reviewed more
frequently by management for repayment probability and
residual collateral values. All restructured loans shown
above have been performing within the terms of their
restructured agreements. In addition to the
nonperforming loans, there are other loans in the
portfolio that have been identified by management or
through an ongoing loan review process as having more
than a normal degree of risk. These loans are reviewed
quarterly by management and totaled $12,922 or 2.61% of
total loans at December 31, 1996.
The provision for loan losses for 1996, 1995 and 1994 was
$1,366, $1,182 and $338 while net charge-offs were $758,
$691 and $45. The increase in the provision in 1996 and
1995 was due in part to the increase of loans outstanding
and also to anticipated credit problems in the loan
portfolio. Loans at December 31, 1996, were up $51,810
or 11.70% to $494,467 while nonperforming loans showed an
increase in both amount and percent of ending loans.
Nonperforming loans at December 31, 1996, were up $3,523
or 153.17% to $5,823 from $2,300 at December 31, 1995.
Nonperforming loans were also up to 1.18% of loans at
December 31, 1996, from .52% at December 31, 1995. The
Corporation had one large commercial loan for $3,012
which was restructured during the fourth quarter of 1996.
This loan restructure added collateral, was made at a
market interest rate but did involve deferral of
principal payments. The nonaccrual loans also includes
one commercial loan for $582 that has a specific reserve
allocation of $325 at year end. Without the inclusion of
these two loans, the total nonperforming loans would be
only $2,229 and .45% of outstanding loans as of year end
1996.
<PAGE> 40
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Based upon the Corporation's review, considering
remaining collateral and/or financial condition of
identified loans with a more than normal degree of risk,
including nonperforming loans, historical loan loss
percentages and economic conditions, it is management's
belief that the $1,366 of provision for loan losses
during 1996 and the $5,630 of allowance for loan losses
at December 31, 1996, is adequate to cover future
possible losses.
Noninterest Income
<TABLE>
<CAPTION>
Table VIII
Changes in Noninterest Income
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Fiduciary income $ 654 $ 52 8.64 % $ 602 $ 56 10.26 % $ 546
Deposit service charges 1,586 66 4.34 1,520 246 19.31 1,274
Other operating income 1,122 132 13.33 990 (45) (4.35) 1,035
Security gains/(losses) 28 (13) (31.71) 41 12 41.38 29
Total noninterest income $3,390 $ 237 7.52 % $3,153 $ 269 9.33 % $2,884
</TABLE>
As shown in Table VIII noninterest income was up in both
1996 and 1995. Fiduciary income increased both years due
to the trust departments' having more assets under
management and due to the increase in the market
valuation of investments managed. Deposit service
charges increased in both 1996 and 1995 and was due
mainly to increases in fees from nonsufficient and return
check charges. These fees increased more dramatically in
1995 than in 1996. Other operating income is composed of
many different items but the major reason for the
increase in 1996 was due to increased gains on sales of
loans held for sale and increased insurance commissions.
The 1995 decrease was also mainly due to decreases in
gains on sales of loans held for sale. Loans held for
sale (see loan discussion) realized net gains of $409,
$191 and $229 in the years 1996, 1995 and 1994.
<PAGE>
<PAGE> 41
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Noninterest Expense
<TABLE>
<CAPTION>
Table IX
Changes in Noninterest Expense
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and
employee benefits $ 9,633 $ 183 1.94 % $ 9,450 $ 673 7.67 % $ 8,777
Occupancy expenses 1,218 167 15.89 1,051 (56) (5.06) 1,107
Equipment expenses 1,220 103 9.22 1,117 79 7.61 1,038
Data processing expenses 480 92 23.71 388 (54) (12.22) 442
FDIC insurance 270 (420) (60.87) 690 (535) (43.67) 1,225
Other operating expenses 4,978 172 3.58 4,806 76 1.61 4,730
Total noninterest expense $17,799 $ 297 1.70 % $17,502 $ 183 1.06 % $17,319
</TABLE>
The largest component of noninterest expense is salaries
and employee benefits which increased $183 in 1996 due to
$440 of salary increases offset by reductions of $257 in
employee benefits. The employee benefits decreases were
the result of lower medical claims incurred, the 1995
curtailment of the CAS pension plan and lower education
expenses offset by increases in payroll taxes. The
increase of $673 in salaries and employee benefits in
1995 was due to salary increases of $466 and employee
benefits increases of $207 due to increases in payroll
taxes, medical claims incurred and the CAS pension plan
curtailment. Occupancy expense increased in 1996 after
decreasing during 1995. The Corporation opened two new
branches in 1996 and two new branches in the latter part
of 1995 which caused this 1996 increase and also
influenced the salary increases in 1996. The Corporation
had opened a new branch and made major repairs to several
other branches in 1994. These 1994 expenditures caused
the occupancy expense to be down in 1995, but the new
branch did influence the salaries increase in 1995. The
Corporation opened a new full service branch in
Vanderburgh county in Indiana during January 1997 and
will open a new instore Wal-Mart branch in that same
county during the second quarter of 1997. These two new
branches will increase salaries, occupancy and equipment
expenses in future years. Equipment expense increased in
both 1996 and 1995 and was due in part to new branches
and to expenses related to the continued increase in the<PAGE>
<PAGE> 42
use of technology. Data processing expenses increased in
1996 after decreasing in 1995. All subsidiary banks are
now using one computer system which was installed during
the latter part of 1995. Having this new data processing
system during all of 1996 caused data processing expenses
to increase.
The FDIC deposit insurance premium paid by the
Corporation for Bank Insurance Funds (BIF) was at a 0%
rate with a minimum annual payment of $2 per subsidiary
bank starting in 1996. The banks have all been assigned
the classification of least risk by the FDIC and as such
are subject to the lowest deposit insurance rates
available from BIF. The Corporation had $30,383 of
deposits as of December 31, 1996, purchased from savings
and loans by two of its subsidiary banks. These deposits
(adjusted to a consistent percent of current deposits)
remain insured by the Savings Association Insurance Fund
(SAIF) rather than BIF. The cost of SAIF to the
Corporation for these savings and loan deposits was .23%
for 1996 and 1995. At September 30, 1996, a special one
time assessment was signed into law and charged on all
SAIF insured deposits. This special assessment amounted
to .657% times 80% of SAIF deposits as of March 31, 1995,
and totaled $191 in 1996 for the Corporation. This
special assessment was $118 after tax and had the effect
of reducing earnings per share for 1996 by $.04. The
cost of BIF and SAIF fees through 1999 will be .0129% and
.0644%. Starting in the year 2000 it is anticipated that
the insurance expense on all deposits will be
approximately .0243%.
Other operating expenses increased both in 1996 and 1995.
The largest increases in 1996 were in telephone,
supplies, advertising, ATM charges, goodwill amortization
and outside labor less decreases in professional fees.
Most of these increases can be explained by the changing
of the name of all subsidiary banks to AmBank effective
July 1, 1996, the opening of new branches in 1996 and
1995 and the fact that 1996 did not have professional
fees related to an acquisition. The goodwill increase
resulted from 1996 containing a full year of goodwill
amortization from deposits purchased in 1995. The
largest increases in 1995 were in professional fees
related to acquisitions and increased goodwill
amortization related to purchased deposits.
<PAGE>
<PAGE> 43
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Income Tax
The Corporation's effective tax rate was 29.18%, 27.15%
and 28.75% in 1996, 1995 and 1994. The higher rates in
1996 and 1994 were due to 1995 having a lower effective
tax rate because of a reversal of an allowance relating
to the realization of alternative minimum tax credits of
$212. Management determined that these credits would be
realized and the allowance was reversed during 1995. The
major differences between the effective tax rate on the
financial statements and the federal statutory rate of
34% is interest income on tax exempt securities and loans
offset by nondeductible interest, nondeductible merger
expenses and state taxes. The Corporation had tax exempt
income of $3,128, $3,118 and $3,218 for 1996, 1995 and
1994. Note 14 to the consolidated financial statements
contains additional details of the differences between
the statutory taxes and taxes shown on the consolidated
financial statements.
<PAGE>
<PAGE> 44
FINANCIAL CONDITION
(Dollar amounts in thousands, except share and per
share data)
Investments
The Corporation's holdings of short-term investments and
securities serve as a source of liquidity to meet
depositor and borrower funding requirements, in addition
to being a significant element of total interest income.
Short-term investments, defined as federal funds sold and
interest bearing deposits in other banks, had combined
average outstanding balances of $13,704, $12,756 and
$8,972 for the years 1996, 1995 and 1994. The year end
outstanding balances of short-term investments were
$6,465, $23,346 and $8,193 for 1996, 1995 and 1994. The
significant changes in the amounts in short-term
investments from year to year is due to large
fluctuations in deposits from public and governmental
institutions which are invested in federal funds sold at
year end. These deposits were being kept liquid to fund
commercial loan commitments at year end 1995 and for
possible liquidity needs of institutional deposits.
Effective December 31, 1993, the Corporation adopted FAS
115, "Accounting for Certain Investments in Debt and
Equity Securities". With the adoption of FAS 115, all
securities were classified by management into one of two
categories, available for sale or held to maturity. The
Corporation does not maintain any securities that are
held for trading. Securities classified as available for
sale are securities that the Corporation intends to hold
for an indefinite period of time, but not necessarily
until maturity. Securities available for sale are
carried at fair value with market adjustments, net of
related deferred taxes, being recorded in shareholders'
equity as unrealized gain or loss on securities.
Securities classified as held to maturity are carried at
amortized cost, calculated by using the level yield
method. In November 1995 the Financial Accounting
Standards Board allowed a one time reclassification of
all securities without calling into question the intent
of an enterprise to hold other securities to maturity in
the future. The Corporation reclassified all held to
maturity securities to available for sale securities in
December 1995. This reclassification was made to allow
for all securities to be sold in response to changes in
interest rates, changes in prepayment risk or other
requirements of liquidity. Since the original adoption
of FAS 115, and starting in December 1994, the equity
adjustment for mark to market of available for sale
securities has been deleted from inclusion in the<PAGE>
<PAGE> 45
regulatory capital ratio calculations. The mark to
market for available for sale securities at December 31,
1996, included market gains of $1,907 and market losses
of $1,432 for a net increase due to the mark to market of
$475 on securities with an amortized cost of $170,249.
The after tax effect of these available for sale
securities accounted for $310 of the total equity at
December 31, 1996. The mark to market for available for
sale securities at December 31, 1995, included market
gains of $2,684 and market losses of $959 for a net
increase due to the mark to market of $1,725 on
securities with an amortized cost of $171,744 at December
31, 1995. The after tax effect on these available for
sale securities accounted for a positive $1,113 of the
total equity at December 31, 1995. The effect on the
total change in equity of the Corporation at December 31,
1996, from December 31, 1995, was a total decrease of
$803 due to this mark to market of available for sale
securities. The difference between the mark to market
adjustment at December 31, 1996 and 1995, was due to the
difference in the market yields at these two year ends
when compared to the yields on the investments of the
Corporation classified as available for sale. Sales of
available for sale securities in 1996 were $16,938 and
resulted in net gains of $28 while sales of $4,559
resulted in net gains of $18 in 1995 and sales of $14,999
resulted in net gains of $29 in 1994. Calls and
maturities of held to maturity securities accounted for
net gains of $23 in 1995. Other than U.S. Government
securities, there are no concentrations of securities
over 10% of shareholders' equity to any single issuer.
Table X presents securities outstanding at year end for
the preceding three years.
<PAGE>
<PAGE> 46
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
<TABLE>
<CAPTION>
Table X
Securities at December 31,
1996 1995 1994
<S> <C> <C> <C>
Securities available for sale
U.S. Government and its agencies $101,819 $101,710 $112,007
States and political subdivisions 55,776 51,837 11,266
Corporate obligations 1,823 3,590 4,965
Collateralized mortgage obligations 9,166 15,516 17,290
Mutual funds 2,140 816 1,152
Total securities available for sale 170,724 173,469 146,680
Securities held to maturity
U.S. Government and its agencies -- -- 500
States and political subdivisions -- -- 39,695
Corporate obligations -- -- --
Collateralized mortgage obligations -- -- --
Mutual funds -- -- --
Total securities held to maturity -- -- 40,195
Total securities $170,724 $173,469 $186,875
</TABLE>
The market value of securities held to maturity was
$39,177 for 1994.
Loans
The loan portfolio constitutes the major earning asset of
most bank holding companies and typically offers the best
alternative for obtaining the maximum interest spread
above the cost of funds. The overall economic strength
of any bank holding company generally parallels the
quality and yield of its loan portfolio. The
Corporation's total average loans were $467,509 in 1996,
an increase of $51,020 or 12.25% from 1995. The
Corporation had total average loans of $416,489 in 1995,
an increase of $48,291 or 13.12% from the 1994 total
average loans of $368,198. Table XI presents loans
outstanding at year end for the preceding five years.
<PAGE>
<PAGE> 47
<TABLE>
<CAPTION>
Table XI
Loans at December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Commercial $201,092 $172,782 $151,027 $126,738 $117,156
Agricultural 55,404 65,239 44,876 52,569 51,953
Real estate 129,116 107,123 101,111 81,945 75,193
Installment 105,464 94,784 90,300 80,909 66,344
Credit cards 3,686 3,722 3,351 3,039 2,192
Total loans 494,762 443,650 390,665 345,200 312,838
Unearned income (295) (993) (2,008) (2,250) (1,741)
Total loans, net $494,467 $442,657 $388,657 $342,950 $311,097
Loans held for sale $ 2,350 $ 6,727 $ 2,664 $ 16,919 $ 11,553
Composition of loan portfolio at December 31,
Commercial 40.67 % 39.03 % 38.86 % 36.95 % 37.66 %
Agricultural 11.20 14.74 11.55 15.33 16.70
Real estate 26.11 24.20 26.01 23.89 24.17
Installment 21.27 21.19 22.72 22.94 20.77
Credit cards .75 .84 .86 .89 .70
/TABLE
<PAGE>
<PAGE> 48
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
The economy rebounded in late 1992 and has continued
steady to strong through 1996. The Corporation has
placed added efforts to take advantage of the increased
demand in commercial loans. Commercial loans increased
$28,310 or 16.38% in 1996 from 1995, increased $21,755 or
14.40% in 1995 from 1994 and increased $24,289 or 19.16%
in 1994 from 1993. While commercial loans have shown the
largest increases over the last five years, real estate
and installment loans have also increased during 1996.
As shown in Table XI the percentage of loans to total
loans for commercial, real estate, installment and credit
cards have remained very similar for 1995 and 1996 with
only agricultural loans having a change over 2%.
Agricultural loans actually decreased $9,835 or 15.08% in
1996 from 1995 after having increased $20,363 or 45.38%
in 1995 from 1994. The government, through Farm Credit
Services, has become a major competitor in agricultural
lending.
Real estate loans shown in Table XI are mainly variable
rate loans. These loans have increased $21,993 or 20.53%
in 1996 from 1995 and increased $6,012 or 5.95% in 1995
from 1994. During these years the Corporation has placed
added emphasis on serving the real estate mortgage needs
of our customers. The balance of real estate loans was
directly affected by the current rates on variable and
fixed rate mortgages. As rates increase customers tend
to prefer variable rate mortgages and as rates decrease
customers tend to prefer fixed rate mortgages. The
Corporation also makes conforming fixed rate mortgage
loans that can be sold into the secondary market with the
Corporation retaining more than 95% of the MSRs. These
fixed rate mortgage loans are shown separately in Table
XI and on the balance sheet as loans held for sale. The
Corporation's strategy has been to hold fixed rate loans
during periods of decreasing rates and sell them during
periods of increasing rates to realize a gain. The
balance of loans held for sale at year end fluctuates a
great deal depending upon the variations of rates during
the year and the amount of these loans that are sold into
the secondary market. Sales of loans held for sale were
$30,385, $16,231 and $35,676 for 1996, 1995 and 1994 with
corresponding net gains of $409, $191 and $229. At
December 31, 1996, the Corporation serviced $97,606 of
loans for others which it sold into the secondary market.
This was a 22.02% increase from $79,990 of sold loans
serviced for others as of December 31, 1995. As included
in Note 1 and 6 to the consolidated financial statements,
the Corporation adopted FAS 122 as of January 1, 1996,
and capitalized $307 of MSRs during 1996 and amortized to
expense $16 of these MSRs for a net carrying value of
$291 at December 31, 1996. These loans serviced for
others were not included in the financial statements.
Installment loans increased $10,680 or 11.27% in 1996
over 1995, $4,484 or 4.97% in 1995 over 1994 and $9,391
or 11.61% in 1994 over 1993. The level of consumer
lending normally relates directly to consumer confidence
in the economy, but the Corporation has seen increased
charge-offs of installment loans starting in 1995 and
1994 over 1993. A lag effect does exist in charge-offs
and the Corporation has increased its lending criteria
for consumer loans starting in 1995. The composition of
installment loans at December 31, 1996, was $97,735 of
vehicle and other secured loans, $4,564 of money lines
tied to second mortgages on real estate and $3,165 of
unsecured loans.
The loan portfolio contains no loans to foreign
governments, foreign enterprises or foreign operations of
domestic corporations. Other than loans for real estate,
equipment and operating lines to farmers engaged in the
agricultural industry, the Corporation has no
concentrations of loans in the same or similar industries
that exceed 10% of total loans.
Deposits
The deposit base provides the major funding source for
earning assets of most bank holding companies.
Generally, demand, savings and time certificates less
than $100 are recognized as the core base of deposits
while certificates in excess of $100 and public funds are
more subject to interest variations and, thus, are not
included in the core deposit base. Because of these
factors, management views the growth of demand, savings
and time certificates less than $100 as more stable
growth. The Corporation's total average core deposits
were $541,704 in 1996, $519,453 in 1995 and $500,103 in
1994. Total average deposits were $617,208, $567,413 and
$545,393 during 1996, 1995 and 1994. Table XII indicates
the mix and levels of deposits at year end for the
preceding five years.
<PAGE>
<PAGE> 49
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
<TABLE>
<CAPTION>
Table XII
Deposits at December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Noninterest bearing $ 61,518 $ 63,116 $ 62,269 $ 62,145 $ 58,484
Interest bearing demand
and savings 219,730 211,971 218,896 226,030 217,633
Time, less than $100 275,262 258,335 212,073 208,716 217,801
Time, $100 or more 76,948 66,647 57,149 53,459 50,180
Total deposits $633,458 $600,069 $550,387 $550,350 $544,098
</TABLE>
The Corporation opened new branches in 1996 and 1995 and
purchased $25,462 of deposits from a savings and loan
association in March 1995. These new branches and
purchased deposits plus lower interest rates and the
general trend of consumers returning deposits to banks
from nonbanking institutions saw total deposits increase
$33,389 or 5.56% in 1996 from 1995 and $49,682 or 9.03%
in 1995 from 1994. The largest growth in 1996 from 1995
was in time deposits both under and over $100 and
accounted for $27,228 of the increase while time deposits
increased $55,760 in 1995 from 1994. Interest bearing
demand and savings deposits increased $7,759 in 1996 but
decreased $6,925 in 1995 and $7,134 in 1994. Noninterest
bearing deposits decreased $1,598 in 1996, increased $847
in 1995 and remained constant in 1994.
<PAGE>
<PAGE> 50
LIQUIDITY AND CAPITAL RESOURCES
(Dollar amounts in thousands, except share and per
share data)
Liquidity and Rate Sensitivity
Cash flows for the Corporation occur within the
operating, investing and financing categories as follows:
Cash flows from operating activities emanate primarily
from interest income and fees reduced by interest expense
and overhead expense. Investing activities generate or
use cash flows through the origination, purchase and
principal collection of loans; the purchase, maturity and
sale of investments; and the acquisition of property and
equipment for the Corporation. Cash flows from financing
activities occur from deposits and withdrawals of deposit
accounts, increases or decreases in short-term borrowings
and long-term debt, and dividends paid by the
Corporation.
The Corporation's use and source of funds can be
determined by the changes in average balances of assets
and liabilities. Table XIII summarizes funding uses and
sources for 1996 and 1995, showing average balances,
amount of dollar change from prior year and the percent
change from the prior year.
<TABLE>
<CAPTION>
Table XIII
1996 1995
Average Increase/(decrease) Average Increase/(decrease)
Balance Dollar Percent Balance Dollar Percent
Funding uses
<S> <C> <C> <C> <C> <C>
Loans held for sale $ 5,441 $ 1,134 26.33 % $ 4,307 $ (2,542) (37.12)%
Taxable loans, net of unearned income 462,391 51,545 12.55 410,846 49,053 13.56
Tax exempt loans 5,118 (525) (9.30) 5,643 (762) (11.90)
Taxable securities 127,521 (1,325) (1.03) 128,846 (17,882) (12.19)
Tax exempt securities 52,120 3,581 7.38 48,539 (9,397) (16.22)
Interest bearing deposits in other
banks 628 (286) (31.29) 914 (634) (40.96)
Federal funds sold 13,076 1,234 10.42 11,842 4,418 59.51
Total uses $ 666,295 $ 55,358 9.06 % $ 610,937 $ 22,254 3.78 %
Funding sources
Noninterest bearing deposits $ 54,730 $ (797) (1.44)% $ 55,527 $ 2,112 3.95 %
Interest bearing demand and
savings deposits 218,090 5,998 2.83 212,092 (13,188) (5.85)
Time deposits 344,388 44,594 14.88 299,794 33,096 12.41
Short-term borrowings 7,383 (746) (9.18) 8,129 (1,520) (15.75)
Long-term debt 2,373 (431) (15.37) 2,804 (120) (4.10)
Other 39,331 6,740 20.68 32,591 1,874 6.10
Total sources $ 666,295 $ 55,358 9.06 % $ 610,937 $ 22,254 3.78 %
</TABLE>
<PAGE>
<PAGE> 51
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per
share data)
Total average loans increased $51,020 or 12.25% to
$467,509 in 1996 from $416,489 in 1995. In 1996
commercial loans averaged $238,462, real estate loans
averaged $125,978, installment loans averaged $99,459 and
credit cards averaged $3,610. The average increase in
loans in 1996 was funded mainly by $5,998 of increased
average demand and savings deposits and $44,594 of
increased average time deposits. The increase in the
average balances of these deposits was due to opening new
branches and offering more competitive rates for these
deposit products. With more competitive rates, deposits
were returned to the banks that had previously been taken
to nonbanking institutions.
The Corporation anticipates an increase in loan demand
during 1997. It is anticipated that this increase in
loan demand will be funded through deposits increases at
the new branches opened in 1997 or through the conversion
of assets as discussed in the next paragraph.
Outstanding loan commitments and customers' unused lines
of credit totaled $100,546 at December 31, 1996, which
was an increase of $25,767 or 34.46% from $74,779 at
December 31, 1995. Standby letters of credit outstanding
at December 31, 1996, increased $3,270 or 53.98% to
$9,328 from $6,058 at December 31, 1995. Letters of
credit typically are not funded. To the extent, however,
that letters of credit, loan commitments and customers'
unused lines of credit require funding, these obligations
will be met by the normal conversion of short-term
investments, which totaled $6,465 at December 31, 1996,
investments with maturities of one year or less, which
totaled $39,058 at December 31, 1996, the sale of loans
held for sale plus the increase in deposits discussed.
IND is a member of the Federal Home Loan Bank of
Indianapolis and through this membership has the capacity
to borrow funds. IND has approved borrowings up to
$50,000 as of February 1997, but used only a small
portion, $2,091, of this available funding as of December
31, 1996. See Note 10 of the consolidated financial
statements for details. This additional funding from the
Federal Home Loan Bank could be activated easily and
might be used in 1997 for a source of funding if
required. Further liquidity, if required, would be
provided by conversion of securities available for sale
or other assets into cash or accessing sources of<PAGE>
<PAGE> 52
incremental funding such as repurchase agreements or
federal funds purchased.
Interest rate sensitivity occurs when assets or
liabilities are subject to rate and yield changes within
a designated time period. The rate sensitivity position,
or gap, is determined by the difference in the amount of
rate sensitive assets and rate sensitive liabilities at
various maturity intervals. The management of this gap
position is required to protect the net interest rates
and to assure a greater degree of earnings stability.
Provided in Tables XIV through XVI are various repricing
information relative to securities, loans and deposits at
December 31, 1996.
<PAGE>
<PAGE> 53
<TABLE>
<CAPTION>
Table XIV
Maturities and Average Yields at December 31, 1996
1 Year and Less 1 - 5 Years 5 - 10 Years Over 10 Years Total
Dollar Yield Dollar Yield Dollar Yield Dollar Yield Dollar Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and its agencies $ 32,273 6.07% $ 56,361 6.11% $ 3,199 7.51% $ 9,986 7.26% $101,819 6.25%
State and political subdivisions 5,232 9.31 27,068 8.31 21,839 7.80 1,637 8.22 55,776 8.20
Corporate obligations -- -- 326 9.10 -- -- 1,497 7.56 1,823 7.83
Collateralized
mortgage obligations 628 5.38 2,203 5.64 271 5.67 6,064 6.84 9,166 6.41
Mutual funds 925 5.67 -- -- -- -- 1,215 6.50 2,140 6.17
Total $ 39,058 6.50 % $ 85,958 6.77 % $ 25,309 7.74 % $ 20,399 7.18 % $170,724 6.90 %
</TABLE>
<TABLE>
<CAPTION>
Table XV
Maturity Ranges of Time Deposits
with Balances of $100 or More at December 31,
1996 1995 1994
<S> <C> <C> <C>
Three months or less $ 33,781 $ 29,372 $ 24,437
Over three through six months 17,572 11,460 12,558
Over six through twelve months 11,991 9,315 8,333
Over twelve months 13,604 16,500 11,821
Total $ 76,948 $ 66,647 $ 57,149
</TABLE>
<TABLE>
<CAPTION>
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per share data)
Table XVI
Loan Maturities at December 31, 1996
1 Year 1 - 5 Over 5
and Less Years Years Total
<S> <C> <C> <C> <C>
Commercial $147,936 $ 44,461 $ 8,695 $201,092
Agricultural 42,548 12,084 772 55,404
</TABLE>
There were no material real estate construction loans
outstanding at December 31, 1996.
<TABLE>
<CAPTION>
Interest Rate Sensitivity of Above Loans Maturing After One Year
Commercial Agricultural
<S> <C> <C>
Fixed rate $ 18,112 $ 4,158
Variable rate 35,044 8,698
Total selected loans $ 53,156 $ 12,856
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
Table XVII
Liquidity and Interest Rate Sensitivity at December 31, 1996
0 - 90 91 - 365 1 - 5
Days Days Years
Interest earning assets
<S> <C> <C> <C>
Loans $ 131,266 $ 134,362 $ 194,645
Securities 23,417 21,624 40,619
Other 5,970 197 298
Total $ 160,653 $ 156,183 $ 235,562
Interest bearing liabilities
Savings and demand deposits $ 219,730 $ -- $ --
Time, less than $100 103,190 94,304 78,806
Time, $100 or more 34,771 28,272 13,198
Other 5,553 133 1,046
Rate sensitive gap $(202,591) $ 33,474 $ 142,512
Rate sensitive cumulative gap (202,591) (169,117) (26,605)
Percent to total assets (28.19)% (23.53)% (3.70)%
</TABLE>
Rate sensitive gap as shown in Table XVII is defined as
the difference between the repricing of interest earning
assets and the repricing of interest bearing liabilities
within certain defined time frames. Rate sensitive gap
is also expressed as a percentage of total assets based
upon the accumulation of the defined time frame gap
calculation. Rate sensitive gaps constantly change as
funds are acquired and invested and the Corporation's
analysis as of December 31, 1996, is shown above. As of
December 31, 1996, the Corporation had a negative gap of
$169,117 and 23.53% during the next one year period with
a negative gap of $202,591 and 28.19% relating to the
first quarter of 1997. The effect of these negative gaps
may result in a negative impact on earnings in 1997 if
interest rates increase, but could result in a positive
impact on earnings if interest rates decline in 1997.
The above rate sensitivity analysis is significantly
impacted by the inclusion of savings and demand deposits
in the first quarter of the gap analysis. These deposits
have historically not exhibited the same degree of
sensitivity to rate changes as other liabilities because
deposit rates are set by the Corporation. If the above
analysis were changed to reflect the Corporation's actual
historical results, the savings and demand deposits would
be moved to the one to five year time frame. With this
change the Corporation would have a positive gap of
$50,613 or 7.04% during the next one year period and a
positive gap of $17,139 or 2.38% relating to the first
quarter of 1997.
<PAGE>
<PAGE> 55
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per
share data)
Shareholders' Equity
Total shareholders' equity at December 31, 1996,
increased $4,471 or 6.60% to $72,183 from $67,712 at
December 31, 1995. The change in the mark to market on
the unrealized gain on securities available for sale
between December 31, 1995 and 1996, resulted in
shareholders' equity decreasing $803. Without this net
change in unrealized gain on securities available for
Sale, shareholders' equity would have increased $5,274 or
7.92% at December 31, 1996, from December 31, 1995.
Shareholders' equity contains a new caption, Treasury
stock, for the first time at December 31, 1996. These
724 treasury shares were purchased on the market for
future payments of director fees under the Director Stock
Grant Plan as approved by the shareholders in 1996.
These treasury shares are purchased routinely and
reissued to the directors each quarter. See Note 17 to
the consolidated financial statements for description of
the capital requirements for the Corporation and its
subsidiary banks. By all measurements the Corporation
and its subsidiary banks were considered well
capitalized. At December 31, 1996, the Corporation had
a Total Capital ratio of 14.33%, a Tier 1 Capital ratio
of 13.26% and a Tier 1 Leverage Capital ratio of 10.00%.
<PAGE>
<PAGE> 56
INTERIM FINANCIAL DATA
Table XVIII sets forth the condensed quarterly results of
operations and per share information for the years ended
December 31, 1996 and 1995.
<TABLE>
<CAPTION>
Table XVIII
Quarter Ended
December September June March
31 30 30 31
<S>
1996 <C> <C> <C> <C>
Interest income $ 14,059 $ 13,512 $ 13,276 $ 13,294
Interest expense 7,034 6,800 6,733 6,721
Net interest income 7,025 6,712 6,543 6,573
Provision for loan losses 700 100 299 267
Noninterest income 1,048 712 1,028 772
Noninterest expense 4,411 4,682 4,409 4,297
Income before income taxes 2,962 2,642 2,863 2,781
Income taxes 888 770 824 800
Net income $ 2,074 $ 1,872 $ 2,039 $ 1,981
Per share
Net income $ .63 $ .56 $ .61 $ .60
Stock price (Note A) 28.50 30.71 27.38 29.05
Weighted average outstanding shares 3,315,929 3,314,814 3,316,232 3,316,267
1995
Interest Income $ 12,924 $ 12,631 $ 12,153 $ 11,482
Interest expense 6,609 6,326 5,961 5,295
Net interest income 6,315 6,305 6,192 6,187
Provision for loan losses 535 361 140 146
Noninterest income 873 896 756 830
Noninterest expense 4,408 4,093 4,475 4,526
Income before income taxes 2,245 2,747 2,333 2,345
Income taxes 397 868 725 635
Net income $ 1,848 $ 1,879 $ 1,608 $ 1,710
Per share
Net income $ .56 $ .57 $ .48 $ .51
Stock price (Note A) 29.05 29.03 29.76 28.11
Weighted average outstanding shares 3,316,267 3,316,267 3,316,267 3,316,254
</TABLE>
<PAGE>
<PAGE> 57
Note A - The stock price above represents the sales price
of the last actual trade in each respective quarter as
reported in the Wall Street Journal restated for a 5%
stock dividend paid on December 2, 1996 and November 30,
1995.
INFLATION
(Dollar amounts in thousands, except share and per
share data)
For a financial institution, effects of price changes and
inflation vary considerably from an industrial
organization. Changes in the prices of goods and
services are the primary determinant of an industrial
company's profit, whereas changes in interest rates have
a major impact on a financial institution's
profitability. Inflation affects the growth of total
assets, but it is difficult to assess its impact because
neither the timing nor the magnitude of the changes in
the consumer price index directly coincide with changes
in interest rates.
During periods of high inflation there are normally
corresponding increases in the money supply. During such
times financial institutions often experience above
average growth in loans and deposits. Also, general
increases in the price of goods and services will result
in increased operation expenses. Over the past few years
the rate of inflation has been relatively low, and its
impact on the growth in the balance sheets and increased
levels of income and expense has been nominal.
Market Price of AMBANC Corp. Common Stock and
Related Shareholder Matters
The Corporation's common stock is traded on The Nasdaq
Small-Cap Market (NASDAQ) under the symbol AMBK. The
quarterly range of the low and high trade prices per
share of the Corporation's common stock, as reported by
NASDAQ, is shown in Table XIX. This information
represents prices between dealers and does not include
adjustments for mark-ups, mark-downs or commissions and
does not necessarily represent actual prices on
transactions.
<PAGE>
<PAGE> 58
<TABLE>
<CAPTION>
Table XIX
1996 1995
Stock Range Stock Range
<S> <C> <C>
1st Quarter $ 28.10 - 30.95 $ 27.44 - 29.93
2nd Quarter 27.38 - 30.00 28.11 - 29.93
3rd Quarter 27.14 - 30.95 27.67 - 30.84
4th Quarter 27.50 - 30.95 28.57 - 30.71
</TABLE>
As of December 31, 1996, there were approximately 1,503
shareholders of record. The Corporation pays cash
dividends on a quarterly basis. Cash dividends paid by
the Corporation were $.80 per share in 1996 and $.76 per
share in 1995 and 1994. Cash dividends, as restated to
reflect the acquisition of FRB under the pooling of
interests method of accounting, were $.65 and $.59 for
the years 1995 and 1994. Refer to Note 17 to the
consolidated financial statements for information
concerning restrictions on dividends.
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY
(Dollar amounts in thousands, except per share data)
1996(a) 1995(a) 1994(a) 1993(a) 1992
<S> <C> <C> <C> <C> <C>
AT PERIOD END
Actual balances
Assets $ 718,754 $ 682,347 $ 625,240 $ 622,568 $ 610,407
Securities 170,724 173,469 186,875 210,774 211,196
Loans 494,467 442,657 388,657 342,950 311,097
Allowance for loan losses 5,630 5,022 4,531 4,238 4,168
Deposits 633,458 600,069 550,387 550,350 544,098
Shareholders' equity 72,183 67,712 58,210 57,722 52,552
Daily averages
Assets $ 701,586 $ 644,456 $ 619,540 $ 601,232 $ 582,603
Securities 179,641 177,385 204,664 214,325 210,847
Loans 467,509 416,489 368,198 325,544 311,523
Allowance for loan losses 5,441 4,636 4,377 4,152 3,966
Deposits 617,208 567,413 545,393 534,448 520,034
Shareholders' equity 68,772 62,344 58,113 54,967 50,615
OPERATING RESULTS
Interest income $ 54,311 $ 49,392 $ 43,053 $ 41,758 $ 44,722
Net interest income 27,023 25,201 23,899 22,751 22,335
Provision for loan losses 1,366 1,182 338 1,492 1,495
Income before cumulative
effect of accounting change 7,966 7,045 6,502 5,910 5,818
Net income 7,966 7,045 6,502 6,162 5,818
Dividends paid on
common stock 2,653 2,144 1,947 1,701 1,581
PER SHARE DATA
Income before cumulative
effect of accounting change $ 2.40 $ 2.12 $ 1.96 $ 1.78 $ 1.76
Cumulative effect of
accounting change -- -- -- .08 --
Net income 2.40 2.12 1.96 1.86 1.76
Cash dividends before
pooling of interests .80 .76 .76 .72 .72
Cash dividends restated for
pooling of interests .80 .65 .59 .51 .48
Book value at end of period 21.77 20.42 17.55 17.42 15.86
Book value at end of period
before FAS 115 21.68 20.08 18.61 17.20 15.86
Tangible book value at
end of period 21.24 19.83 17.47 17.37 15.80
Tangible book value at end
of period before FAS 115 21.15 19.50 18.52 17.15 15.80
Weighted average
outstanding shares 3,315,808 3,316,264 3,313,716 3,313,496 3,313,496
RATIOS
Return on average assets 1.14 % 1.09 % 1.05 % 1.02 % 1.00 %
Return on average equity 11.58 11.30 11.19 11.21 11.50
Dividends paid as a
percent of net income 33.30 30.43 29.95 27.61 27.17
Tier 1 Leverage Capital 10.00 10.01 9.87 9.45 8.99
Efficiency ratio 58.52 61.73 64.66 67.56 64.38
</TABLE>
(a) - reflects FAS 115 adjustments.
EXHIBIT 21
AMBANC CORP. LIST OF SUBSIDIARIES
1. AmBank Indiana, N.A., Vincennes, Indiana, is a wholly owned
subsidiary of AMBANC Corp. and is a national banking
association.
2. AmBank Illinois, N.A., Robinson, Illinois, is a wholly owned
subsidiary of AMBANC Corp. and is a national banking
association.
3. American National Realty Corp. is a wholly owned subsidiary of
AMBANC Corp. and is incorporated under the laws of the State
of Indiana.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-42949 and No. 333-02807 of AMBANC Corp. on Form
S-8 of our report dated January 17, 1997, appearing in this
Annual Report on Form 10-K of AMBANC Corp. for the year ended
December 31, 1996.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
March 28, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FILER'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000702904
<NAME> AMBANC CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 26,409
<INT-BEARING-DEPOSITS> 590
<FED-FUNDS-SOLD> 5,875
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 170,249
<INVESTMENTS-MARKET> 170,724
<LOANS> 494,467
<ALLOWANCE> 5,630
<TOTAL-ASSETS> 718,754
<DEPOSITS> 633,458
<SHORT-TERM> 5,286
<LIABILITIES-OTHER> 5,518
<LONG-TERM> 2,309
0
0
<COMMON> 33,142
<OTHER-SE> 39,041
<TOTAL-LIABILITIES-AND-EQUITY> 718,754
<INTEREST-LOAN> 42,560
<INTEREST-INVEST> 10,614
<INTEREST-OTHER> 748
<INTEREST-TOTAL> 54,311
<INTEREST-DEPOSIT> 26,761
<INTEREST-EXPENSE> 27,288
<INTEREST-INCOME-NET> 27,023
<LOAN-LOSSES> 1,366
<SECURITIES-GAINS> 28
<EXPENSE-OTHER> 17,799
<INCOME-PRETAX> 11,248
<INCOME-PRE-EXTRAORDINARY> 11,248
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,966
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.40
<YIELD-ACTUAL> 4.30
<LOANS-NON> 1,421
<LOANS-PAST> 1,313
<LOANS-TROUBLED> 3,089
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,022
<CHARGE-OFFS> 1,266
<RECOVERIES> 508
<ALLOWANCE-CLOSE> 5,630
<ALLOWANCE-DOMESTIC> 2,081
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,549
</TABLE>
CROWE CHIZEK
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
AMBANC Corp.
Vincennes, Indiana
We have audited the consolidated statements of income,
changes in shareholders' equity and cash flows of AMBANC
Corp. for the year ended December 31, 1994, prior to the
subsequent restatement for the 1995 pooling of interests.
These financial statements are the responsibility of the
Corporation's management. Our responsibility is to
express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material
respects, the results of operations and cash flows of
AMBANC Corp. for the year ended December 31, 1994, prior
to the subsequent restatement for the 1995 pooling of
interest, in conformity with generally accepted
accounting principles.
/s/ Crowe, Chizek and Company, LLP
Crowe, Chizek and Company LLP
Indianapolis, Indiana
January 27, 1995
KEMPER CPA GROUP, LLC
Certified Public Accountants and Consultants
302 East Walnut Street
Robinson, Illinois 62454
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
First Robinson Bancorp
Robinson, Illinois
We have audited the accompanying consolidated balance
sheet of First Robinson Bancorp and Subsidiary as of
December 31, 1994, and the related consolidated
statements of income, changes in stockholders' equity and
cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Bank's
management. Our responsibility is to express an opinion
on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above presents fairly, in all material
respects, the financial position of First Robinson
Bancorp and Subsidiary as of December 31, 1994 and the
results of their operations and their cash flows for the
year then ended, in conformity with generally accepted
accounting principles.
/s/ Kemper CPA Group L.L.C.
KEMPER CPA GROUP L.L.C.
Certified Public Accountants
January 20, 1995
