<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 30, 1996 0-18925
- --------------------- ----------------------
For the quarter ended Commission file number
ANB CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
INDIANA 35-1612066
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 East Main Street, Muncie, Indiana 47305
----------------------------------------------
Address of principal executive offices
317-747-7575
-----------------------------------------
Registrant's telephone number & area code
- --------------------------------------------------------------------------------
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 _____
As of July 26, 1996 there were outstanding 4,501,497 Common Shares, $1
stated value, of the Registrant.
Page 1 of 15 Pages
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ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Part I - Financial Information:
Item 1 - Financial Statements Page
----
Consolidated Condensed Balance Sheet........... 3
Consolidated Condensed Statement of Income..... 4 - 5
Consolidated Condensed Statement of Changes in
Stockholders' Equity........................... 6
Consolidated Condensed Statement of Cash
Flows.......................................... 7
Notes to Consolidated Condensed Financial
Statements..................................... 8 - 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.. 10 - 13
Part II - Other Information:
Item 4 - Submission of Matters to Vote
of Security Holders............................. 14
Item 6 - Exhibits and Reports on Form 8-K................ 14
Signatures................................................... 15
Page 2 of 15 Pages
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ANB CORPORATION
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
- --------------------------------------------------------------------------------
June 30, December 31,
1996 1995
-------- --------
ASSETS:
Cash and due from banks ......................... $22,158 $23,488
Federal funds sold............................ 1,700 19,800
Interest-bearing deposit accounts............. 9 248
-------- --------
Cash and cash equivalents................... 23,867 43,536
Securities available for sale:
Taxable..................................... 30,536 27,409
Tax exempt.................................. 44,677 43,105
-------- --------
Total securities available for sale....... 75,213 70,514
Loans:
Loans........................................ 355,905 348,913
Less: Allowance for loan losses............. 2,806 2,897
-------- --------
Net loans................................. 353,099 346,016
Loans held for sale ............................ 1,538 129
Premises and equipment.......................... 9,521 9,577
Federal Reserve & Federal Home Loan Bank Stock.. 2,713 2,661
Other real estate............................... 266 341
Interest receivable............................. 4,323 4,081
Goodwill and core deposit intangibles .......... 4,484 4,309
Other assets.................................... 1,822 2,072
-------- --------
Total assets............................... $476,846 $483,236
-------- --------
-------- --------
LIABILITIES
Deposits
Noninterest bearing.......................... $47,312 $52,029
Interest bearing............................ 353,696 363,322
-------- --------
Total deposits 401,008 415,351
Short-term borrowings........................... 12,709 7,749
Federal Home Loan Bank advances................. 8,000 2,395
Interest payable................................ 1,916 1,626
Other liabilities............................... 3,351 6,644
-------- --------
Total liabilities......................... 426,984 433,765
-------- --------
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY
Preferred stock, without par value:
Authorized-250,000 shares, none issued
Common stock, $1 stated value:
Authorized-20,000,000 shares
Issued and outstanding-4,511,198 and
4,530,335 shares........................... 4,511 4,530
Capital surplus................................. 5,795 6,274
Capital surplus-stock options................... 466 466
Less: Prepaid compensation expense........... (36) (68)
Retained earnings............................... 38,300 36,358
Net unrealized gains on securities
available for sale........................... 826 1,911
-------- --------
Total stockholders' equity................ 49,862 49,471
-------- --------
Total liabilities and stockholders' equity $476,846 $483,236
-------- --------
-------- --------
Page 3 of 15 Pages
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ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------ ------ ------- -------
Interest Income
Loans, including fees:
Taxable................... $7,960 $7,507 $15,816 $14,561
Tax exempt................ 35 20 58 38
Securities held to maturity:
Taxable................... 138 282
Tax exempt................ 461 914
Securities available for sale:
Taxable................... 466 316 883 563
Tax exempt................ 669 183 1,314 354
Federal funds sold........... 55 122 242 257
Other interest
income................... 52 48 114 101
Total interest ------ ------ ------- -------
income.............. 9,237 8,795 18,427 17,070
------ ------ ------- -------
Interest Expense
Deposits..................... 3,816 3,711 7,754 7,085
Short-term
borrowings................ 101 141 189 250
Long-term debt............... 74 9 115 30
Total interest ------ ------ ------- -------
expense............. 3,991 3,861 8,058 7,365
------ ------ ------- -------
NET INTEREST INCOME........... 5,246 4,934 10,369 9,705
Provision for loan
losses.................... 66 275 132 392
------ ------ ------- -------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES........ 5,180 4,659 10,237 9,313
Page 4 of 15 Pages
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(continued) ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------ ------ ------ ------
Other Income:
Trust fees.................. 1,109 1,064 2,146 1,989
Service charges on
deposit accounts.......... 337 346 661 664
Other customer fees......... 139 94 241 171
Securities available
for sale gains,
net....................... 12 2
Gains (losses) on
loans held for sale:
Realized................. 35 22 99 40
Unrealized............... (22) (65)
Other operating
income.................... 136 206 302 358
------ ------ ------ ------
Total other
income................. 1,734 1,732 3,396 3,224
------ ------ ------ ------
Other Expenses:
Salaries and
employee benefits......... 2,492 2,527 4,916 4,832
Premises and
equipment expense......... 695 637 1,391 1,312
Advertising................. 144 106 260 218
Printing, supplies
and stationery............ 126 166 295 297
Professional fees........... 80 88 140 157
Deposit insurance
premiums.................. 75 209 140 418
Goodwill and core
deposit intangibles
amortization.............. 98 90 187 180
Other operating
expenses.................. 903 607 1,752 1,247
------ ------ ------ ------
Total other
expenses............... 4,613 4,430 9,081 8,661
------ ------ ------ ------
INCOME BEFORE INCOME
TAX EXPENSE............... 2,301 1,961 4,552 3,876
Income tax expense....... 754 614 1,480 1,199
------ ------ ------ ------
NET INCOME................. $1,547 $1,347 $3,072 $2,677
------ ------ ------ ------
------ ------ ------ ------
Per Share
Net income................ $0.34 $0.30 $0.68 $0.59
Cash dividends............ 0.125 0.105 0.25 0.21
AVERAGE SHARES
OUTSTANDING...............4,512,559 4,562,864 4,518,033 4,561,704
Page 5 of 15 Pages
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ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
- --------------------------------------------------------------------------------
1996 1995
------- -------
Balance, January 1 .............................. $49,471 $44,910
Net income....................................... 3,072 2,677
Cash dividends ($.25 and $.21 per share)......... (1,130) (957)
Stock reacquired ................................ (857) (195)
Stock issued under dividend reinvestment
and stock purchase plan........................ 201 74
Capital surplus allocation for compensatory
stock options.................................. 32 45
Proceeds from stock options exercised............ 124 6
Tax benefit on stock options exercised........... 34
Net change in unrealized gains on securities
available for sale ............................ (1,085) 524
------- -------
Balance, June 30 ................................ $49,862 $47,084
------- -------
------- -------
Page 6 of 15 Pages
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ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
1996 1995
------- -------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income...................................... $3,072 $2,677
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses..................... 132 392
Depreciation.................................. 566 603
Securities amortization....................... 32 13
Amortization of goodwill and fair value
adjustments................................. 187 180
Net change in:
Loans held for sale......................... (1,474) (257)
Interest receivable......................... (242) (252)
Interest payable............................ 290 651
Other adjustments............................. (417) 694
------- -------
Net cash provided by
operating activities...................... 2,146 4,701
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of held to maturity securities...... (3,287)
Proceeds from held to maturity securities
maturities and calls........................ 3,178
Purchases of available for sale securities.... (17,711) (14,405)
Proceeds from available for sale securities
maturities and sales........................ 9,205 9,017
Net increase in loans......................... (7,354) (11,961)
Purchases of premises and equipment........... (515) (251)
------- -------
Net cash used by
investing activities...................... (16,375) (17,709)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in noninterest-bearing,
NOW, money market and savings deposits...... (12,258) (16,767)
Net increase (decrease) in certificates of
deposits and other time deposits............ (2,085) 26,328
Net increase (decrease) in short-term
borrowings.................................. 4,960 (2,880)
Net increase in Federal Home Loan Bank advances. 5,605 1,995
Cash dividends.............................. (1,130) (479)
Stock sold:
Exercise of stock options................... 124 6
Dividend reinvestment and stock purchase plan 201 74
Stock reacquired............................ (857) (195)
------- -------
Net cash provided (used) by
financing activities...................... (5,440) 8,082
------- -------
NET DECREASE IN CASH and CASH EQUIVALENTS (19,669) (4,926)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD..................................... 43,536 26,950
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD........ $23,867 $22,024
------- -------
------- -------
Additional Cash Flows Information:
Interest paid................................. $7,768 $6,714
Income tax paid............................... 1,580 1,107
Dividend payable at end of period............. 479
Page 7 of 15 Pages
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ANB CORPORATION
FORM 10-Q
June 30, 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)
- --------------------------------------------------------------------------------
NOTE 1--GENERAL:
The significant accounting policies followed by ANB Corporation (Company)
and its subsidiaries, American National Bank and Trust Company of Muncie,
American National Trust and Investment Management Company and Peoples Loan &
Trust Bank, (Peoples) Winchester, for interim financial reporting, are
consistent with the accounting policies followed for annual financial
reporting. The accompanying financial statements are unaudited, however, all
adjustments, consisting only of normal recurring adjustments, which are, in
the opinion of management necessary for a fair presentation of the results
for the periods reported, have been included in the accompanying consolidated
condensed financial statements. The results of operations for the six months
and three months ended June 30, 1996 are not necessarily indicative of those
expected for the remainder of the year.
- --------------------------------------------------------------------------------
NOTE 2--INVESTMENT SECURITIES:
<TABLE>
<CAPTION>
1996
----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
June 30 Cost Gains Losses Fair Value
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury.............. $17,729 $86 $146 $17,669
Federal agencies........... 9,147 1 219 8,929
State and municipal........ 42,954 2,013 290 44,677
Mortgage-backed
securities............... 3,454 0 79 3,375
Marketable equity
securities............... 364 364
Corporate obligations...... 200 1 199
----------------------------------------------------
Total investment
securities............. $73,848 $2,100 $735 $75,213
----------------------------------------------------
----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1995
----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
December 31 Cost Gains Losses Fair Value
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury............. $17,950 $226 $3 $18,173
Federal agencies.......... 4,148 8 3 4,153
State and municipal....... 40,118 3,031 44 43,105
Mortgage-backed
securities.............. 3,744 49 3,695
Marketable equity
securities.............. 941 941
Corporate obligations..... 450 3 447
----------------------------------------------------
Total investment
securities............ $67,351 $3,265 $102 $70,514
----------------------------------------------------
----------------------------------------------------
</TABLE>
Page 8 of 15 Pages
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ANB CORPORATION
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3--LOANS AND ALLOWANCE:
June 30, December 31,
1996 1995
-------- ------------
Loans
Commercial and industrial loans............... $78,599 $75,083
Term federal funds sold....................... 1,450 8,784
Real estate loans:
One-to-four family properties............... 137,496 134,488
Other....................................... 96,173 91,581
Individuals' loans for household and other
personal expenditures....................... 39,000 35,736
Tax exempt loans.............................. 2,372 1,630
Other loans................................... 815 1,611
-------- ------------
Total loans.............................. $355,905 $348,913
-------- ------------
-------- ------------
Nonperforming loans
Nonaccruing loans............................. $1,157 $1,184
Accruing loans contractually past due
90 days or more other than nonaccruing...... 243 241
Restructured loans............................ 820 888
-------- ------------
Total nonperforming loans................ $2,220 $2,313
-------- ------------
-------- ------------
Six Months Ended
June 30,
1996 1995
-------- ------------
Allowance for loan losses
Balances, beginning of period................. $2,897 $2,698
Provision for losses.......................... 132 392
Recoveries on loans........................... 42 68
Loans charged off............................. (265) (651)
-------- ------------
Balances, end of period....................... $2,806 $2,507
-------- ------------
-------- ------------
- ------------------------------------------------------------------------------
NOTE 4--DEPOSITS:
June 30, December 31,
1996 1995
-------- ------------
Deposits
Noninterest bearing......................... $47,312 $52,029
NOW accounts................................ 67,590 73,914
Money market deposit accounts............... 40,254 41,075
Savings deposits............................ 28,231 28,627
Certificates and other time deposits
of $100,000 or more....................... 56,209 55,193
Other certificates and time deposits........ 161,412 164,513
-------- ------------
Total deposits........................... $401,008 $415,351
-------- ------------
-------- ------------
Page 9 of 15 Pages
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<PAGE>
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ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
=====================
General
- -------
The following discussion and analysis is designed to provide a more
comprehensive review of the operating results and financial position than
could be obtained from an analysis of the financial statements alone. It
should, however, be read in conjunction with the financial statements and
notes included elsewhere herein. Per share amounts for 1995 have been
adjusted to give effect to the 2 for 1 stock split in December 1995.
Net Income
- ----------
Net income for the first six months of 1996 was $3,072,000 compared to
$2,677,000 for the first six months of 1995, an increase of $395,000 or
14.8%. Net income per share for the first six months of 1996 was $0.68, an
increase of $.09 or 15.3% from the $0.59 which was reported for the first six
months of 1995.
Second quarter 1996 net income improved $200,000 from the $1,347,000
reported for second quarter 1995. Net income per share for second quarter
1996 was higher by $.04 per share or 13.3% when compared to second quarter
1995.
The Company's return on average assets for the first six months of 1996
was 1.33%, an increase of 12 basis points over the first six months of 1995
and a 16 basis point increase over the 1995 year ended return on average
assets of 1.17%.
Return on average equity for the first six months of 1996 was 12.79%
compared to 11.80% for the same period in 1995.
Net Interest Income
- -------------------
Net interest income is the difference between interest and fees earned on
earning assets and interest paid on interest bearing liabililties. It is the
largest and most critical component of the Company's earnings and is impacted
by both rates and volume of earning assets and interest-bearing liabilities.
The Company's net interest income, reported on a full tax equivalent basis
(FTE), increased $620,000 or 6.0% during the six months ended June 30, 1996
when compared to the same six month period last year. Total interest income,
expressed on a full tax-equivalent basis, increased $1,313,000 for the six
months period, while total interest expense of the Company increased
$693,000. Net interest margin (FTE), expressed as a percent of earning
assets, was 5.11% for the first six months of 1996, a slight increase of 4
basis points when compared to the 5.07% net interest margin reported for the
six months ended June 30, 1995. The Company's net interest margin (FTE) for
the year ended December 31, 1995 was 5.02%.
For the second quarter of 1996 net interest income (FTE) increased
$293,000 or 5.6%, when compared to the quarter ended June 30, 1995. Net
interest margin for second quarter 1996 was 5.16%.
Net interest income and margins have continued to benefit from growth in
the Company's loan portfolio and the conversion of federal funds sold to the
loan category of the balance sheet.
Page 10 of 15 Pages
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ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
Provision for Loan Losses
- -------------------------
The Company's provision for loan losses decreased $260,000 for the six
months ended June 30, 1996 when compared to the same period in l995. For the
second quarter of 1996 the provision expense was $66,000 compared to $275,000
for the second quarter of 1995. The Company recorded provision for loan loss
expense based on the 1996 operating plan.
Net chargeoffs during the first six months of 1996 were $223,000 compared
to net chargeoffs of $583,000 for the comparable period in 1995. During the
first quarter of 1995 a large commercial/mortgage loan for approximately
$1,193,000 was written down by $433,000 and the balance was transferred to
nonaccruing loans.
Other Income and Expense
- ------------------------
Other income represents income received which is not directly related to
the Company's interest-earning assets, except for gains and losses on
securities and loans held for sale. Total other income increased $172,000
during the first six months of 1996 compared to 1995. The Company recorded
$157,000 more in trust revenue for the six months in 1996 over 1995, which
accounted for approximately 91% of the increase in total other income.
Service charges on deposit accounts combined with other customer fees
increased $67,000, primarily as a result of greater insurance commissions and
higher ATM fees.
Realized gains on loans sold were $99,000 for the first six months of
1996 compared to $40,000 for the same period in 1995. However, the Company's
portfolio of loans held for sale at June 30, 1996, valued at lower of cost or
market resulted in unrealized losses of $65,000 being recorded.
In the second quarter of 1995 "Other operating income" increased $70,000
due to the Company receiving a refund for previously paid Indiana gross
income tax relating to tax years 1988 and 1989.
Other expenses increased $420,000 in the first six months of 1996
compared to the same period in 1995. Salaries and employee benefits for the
six months ending June 30, 1996 increased $84,000 or 1.7%. Approximately
$71,000 of the increase in salaries and employee benefits relates to greater
costs for the Company's pension plan. Full time equivalent employees have
declined to 256 at June 30, 1996, compared to 273 and 268 for June 30, 1995,
and December 31, 1995 respectively.
As a result of lower assessments, deposit insurance premiums decreased
from $418,000 for the first six months of 1995 to $140,000 for 1996. For the
six months ended June 30, 1996 the Company recorded an expense of $330,000,
included in the "Other operating expenses" category, for expected SAIF
legislation. It now appears that no SAIF assessment legislation will be
enacted in 1996 and, accordingly, no additional expense is expected to be
recorded in 1996.
Income Taxes
- ------------
Income tax expense, including both federal income tax and the Indiana
franchise tax increased by $281,000 for the first six months of 1996 over
1995. Income before income tax increased $676,000 for first six months of
1996 over 1995. The effective tax rate for the first six months of 1996 was
32.5% compared to 30.9% for the first six months of 1995.
Page 11 of 15 Pages
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ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
Balance Sheet
- -------------
The Company's total assets decreased $6.390 million from the level
reported at year end 1995. When compared to June 30, 1995 total assets have
increased $22.836 million or 5.0%.
Cash and cash equivalents decreased $19.669 million at June 30, 1996 from
the level reported at December 31, 1995. Federal funds sold decreased by
$18.1 million from December 31, 1995 while cash and due from banks, including
interest bearing deposit accounts, declined $1.569 million from the levels
reported at year end.
Loans and Deposits
- ------------------
Loans, excluding loans held for sale and term federal funds, were
$353.455 million at June 30, 1996, an increase of $13.326 million over the
year end level of $340.129 million. At June 30, 1995 loans, excluding loans
held for sale and term federal funds, were $335.634 million. Growth in the
Company's loan portfolio from June 30, 1995 to second quarter 1996 has been
$17.821 million or 5.3%. This loan growth has occurred primarily in business
loans and nonfarm nonresidential real estate mortgage loans.
Real estate loans continue to be the largest asset category of the
Company. At June 30, 1996 loans made to individuals on owner occupied
property represented 28.8% of total assets and 58.8% of the Company's
mortgage loan portfolio. At June 30, 1995 loans made to individuals on owner
occupied property represented 29.7% of total assets and 60% of the Company's
mortgage loan portfolio. Most of the growth in the Company's mortgage loan
portfolio has been in the nonfarm nonresidential category. Nonfarm
nonresidential mortgage loans increased $4.592 million from year end 1995 and
$6.224 million from June 30, 1995. Business loans have increased $3.516
million since December 31, 1995.
Loan growth has been achieved under the Company's strategic plan and has
been accomplished in accordance with credit policies designed to ensure
continued strong asset quality.
During the second quarter of 1996, the Company borrowed $6 million from
the Federal Home Loan Bank to take advantage of market opportunities and
expand the mortgage loan portfolio. As a member of the FHLB the Company may
participate in various programs used for the financing of 1-4 family
residential property.
Total deposits of the Company at June 30, 1996 decreased $14.343 million
from levels reported at the year end 1995, but were higher by $11.315 million
from total deposits as reported June 30, 1995. Noninterest bearing deposits
declined by $4.717 million at June 30, 1996 from year end 1995. Year end 1995
noninterest bearing deposits were higher due to municipal temporary funds
being deposited, and an increased level of trust deposits. Declines in
balances at June 30, 1996 for NOW accounts combined with money market
deposits accounted for most of the decrease in interest bearing deposits.
Allowance for Loan Losses and Nonperforming Loans
- -------------------------------------------------
The Company's nonperforming loans, which include nonaccrual, past due 90
days, and restructured loans, decreased $93,000 from December 31, 1995. At
June 30, 1996 total nonperforming loans amounted to $2.220 million or .47% of
total assets, compared to .48% for year end 1995. Total non-performing loans
represented .62% of total loans at June 30, 1996 compared to .64% and .66% at
June 30, 1995 and December 31, 1995 respectively.
The allowance for loan losses at June 30, 1996 decreased $91,000 from
year end 1995. Loans charged off for the period ending June 30, 1996
decreased by $386,000 when compared to the same period in 1995. A large
commercial loan, also secured with real estate, was written down in the
amount of $433,000 during the first quarter of 1995. The allowance for loan
losses equaled 126% of nonperforming loans at June 30, 1996 compared to 101%
and 115% for December 31, 1995 and June 30, 1995 respectively.
Based on the components of the loan portfolio, an analysis of historical
net charge-offs, and other economic considerations, management considers the
allowance for loan losses to be adequate.
Page 12 of 15 Pages
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<PAGE>
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ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
Liquidity and Rate Sensitivity
- ------------------------------
The Company manages liquidity by closely monitoring the funds available
to meet the financial needs and credit demands of its customer base. The
Company expects to have adequate funds available to satisfy loan demand as
provided through both deposit growth and net income. Additionally the Company
has established federal funds lines with correspondent banks and may borrow
from the Federal Reserve Bank or the Federal Home Loan Bank.
The Company's loan to deposit ratio, excluding loans which are held for
sale was 88.1% on June 30, 1996 compared to 86.6% at June 30, 1995.
The Company's interest rate sensitivity position is influenced by the
various maturities of its interest earning assets and interest bearing
liabilities. The Company monitors its maturity distribution of assets and
liabilities to ensure an adequate balance is maintained. Company policy
requires management to keep rate sensitivity positions within pre-established
guidelines, so as to control the interest rate risk exposure.
The Company is liability sensitive at the one-year time frame, indicating
that net interest income could be adversely impacted during periods of
increasing interest rates, since rate sensitive liabilities would be
repricing at a more rapid rate than interest sensitive assets. The Company
measures the impact of changes in interest rates on a regular basis. During
recent years the Company has steadily increased its net interest income and
resulting net interest margin.
Capital Resources
- -----------------
Stockholders' equity increased from $49.471 million at December 31, 1995
to $49.862 million at June 30, 1996. Book value per share was $11.05 at June
30, 1996, compared to $10.92 at year end 1995. Net unrealized gains on
securities available for sale declined $1.085 million or $0.24 a share from
year end 1995. Excluding net unrealized gains on securities available for
sale, per share book value increased $0.37 to $10.87 for the period ended
June 30, 1996. Tangible book value of the Company at June 30, 1996 was $9.87
compared to $9.55 at December 31, 1995 and $9.23 on June 30, 1995. (Tangible
book value is defined as total stockholders' equity less net unrealized gains
on securities available for sale and goodwill.)
On April 27, 1995, the Board of Directors approved a buy back program for
the Company's common stock in an aggregate amount not to exceed 200,000
shares. During the first six months of 1996 48,200 shares have been acquired
under this program, with the total purchase price being $816 thousand. A
total of 117,502 shares have been reacquired by the Company since the buy
back program was approved.
For the quarter ended June 30, 1996 a total of 5,445 shares were issued
through the Company's Dividend Reinvestment and Stock Purchase Plan. A total
of 252 shareholders or 41% of the Company's shareholders of record
participate in the Plan.
At June 30, 1996 the Company's Tier 1 risk based capital ratio was 13.91%
and its leverage capital ratio was 9.66%. The Company and each of its
affiliate banks currently exceed all capital requirements mandated by
regulatory authorities.
Page 13 of 15 Pages
________________________________________________________________________________
<PAGE>
________________________________________________________________________________
ANB CORPORATION
FORM 10-Q
June 30, 1996
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION
--------------------------
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held on April 17, 1996.
The following matters were submitted to the shareholders.
(1) Election of three directors.
The following nominees were elected:
Votes
-----------------------
For Against
--- -------
R. David Hoover 3,687,525 36,100
Donald A. Ross 3,720,801 2,824
Other directors continuing to serve include the following:
Ben E. Delk
William L. Peterson
James R. Schrecongost
Kelly N. Stanley
Chris L. Talley
Leon V. Towne
(2) Approve the ANB Corporation 1996 Directors' Stock Option Plan
Votes
-----------------------
For Against
--- -------
3,540,892 102,762
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) No reports on Form 8-K were filed with respect to events occurring
during the six months ended June 30, 1996.
Page 14 of 15 Pages
________________________________________________________________________________
<PAGE>
________________________________________________________________________________
ANB CORPORATION
FORM 10-Q
June 30, 1996
________________________________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANB CORPORATION
Date: July 29, 1996 BY: ____________________
James R. Schrecongost
President and Chief Executive
Officer
Date: July 29, 1996 BY: ____________________
Larry E. Thomas
Chief Financial Officer and
Principal Accounting Officer
Page 15 of 15 Pages
________________________________________________________________________________
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<PAGE>
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<PERIOD-START> JAN-01-1996
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