<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 |
| |
| |
| March 31, 1997 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 May 6, 1997 there were outstanding 4,502,705 Common Shares, |
|$1 stated value, of the Registrant. |
| |
| Page 1 of 15 Pages |
|______________________________________________________________________________|
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_______________________________________________________________________________
| |
| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
| |
|------------------------------------------------------------------------------|
| 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 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) |
|-----------------------------------------------------------------------------|
| March 31, December 31, |
| 1997 1996 |
|ASSETS: ------- -------- |
| Cash and due from banks ...................... $20,658 $21,835 |
| Federal funds sold............................ 2,475 |
| Interest-bearing deposit accounts............. 74 |
| -------- -------- |
| Cash and cash equivalents.................. 20,658 24,384 |
| |
| Securities available for sale: |
| Taxable.................................... 27,036 29,778 |
| Tax exempt................................. 42,370 44,166 |
| -------- -------- |
| Total securities available for sale....... 69,406 73,944 |
| |
| Loans: |
| Loans...................................... 375,582 376,081 |
| Allowance for loan losses................ (3,334) (3,400) |
| -------- -------- |
| Net loans................................. 372,248 372,681 |
| |
| Loans held for sale .......................... 41 204 |
| Premises and equipment........................ 9,533 9,345 |
| Federal Reserve & Federal Home Loan Bank Stock 3,053 2,713 |
| Other real estate............................. 523 516 |
| Interest receivable........................... 3,730 4,159 |
| Goodwill and core deposit intangibles ........ 4,212 4,306 |
| Other assets.................................. 1,844 1,595 |
| -------- -------- |
| Total assets.............................. $485,248 $493,847 |
| ======== ======== |
|LIABILITIES |
| Deposits |
| Noninterest bearing........................ $46,784 $50,256 |
| Interest bearing........................... 348,821 355,589 |
| -------- -------- |
| Total deposits 395,605 405,845 |
| Short-term borrowings......................... 13,104 17,676 |
| Federal Home Loan Bank advances............... 19,000 14,000 |
| Interest payable.............................. 1,580 1,391 |
| Other liabilities............................. 3,671 3,594 |
| -------- -------- |
| Total liabilities......................... 432,960 442,506 |
| -------- -------- |
| 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-4,502,705 and |
| 4,490,556 shares......................... 4,503 4,491 |
| Capital surplus............................... 7,072 6,930 |
| Capital surplus-stock options................. 397 397 |
| Retained earnings............................. 39,348 38,325 |
| Net unrealized gains on securities |
| available for sale......................... 968 1,198 |
| -------- -------- |
| Total stockholders' equity................ 52,288 51,341 |
| -------- -------- |
| Total liabilities and stockholders' equity $485,248 $493,847 |
| ======== ======== |
| 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|
| March 31, |
| 1997 1996 |
|Interest Income ---- ---- |
| Loans, including fees: |
| Taxable............................................ $8,271 $7,856 |
| Tax exempt......................................... 26 23 |
| Securities available for sale: |
| Taxable............................................ 436 417 |
| Tax exempt......................................... 644 645 |
| Federal funds sold.................................... 54 187 |
| Other interest |
| income............................................. 43 62 |
| Total interest ------ ------ |
| income......................................... 9,474 9,190 |
| ------ ------ |
|Interest Expense |
| Deposits.............................................. 3,715 3,938 |
| Short-term |
| borrowings......................................... 122 88 |
| FHLB advances......................................... 253 41 |
| Total interest ------ ------ |
| expense........................................ 4,090 4,067 |
| ------ ------ |
|NET INTEREST INCOME...................................... 5,384 5,123 |
| Provision for loan |
| losses............................................. 277 66 |
| ------ ------ |
|NET INTEREST INCOME |
| AFTER PROVISION FOR |
| LOAN LOSSES........................................ 5,107 5,057 |
| |
| |
| 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 |
| March 31, |
| 1997 1996 |
| ---- ---- |
|Other Income: |
| Trust fees.................................... 1,175 1,037 |
| Service charges on |
| deposit accounts............................ 328 324 |
| Other customer fees........................... 106 102 |
| Securities available |
| for sale gains, |
| net........................................ 6 12 |
| Gains (losses) on |
| loans held for sale: |
| Realized............................ 21 64 |
| Unrealized................................ (43)|
| Other operating |
| income..................................... 136 166 |
| Total other ------ ------ |
| income................................. 1,772 1,662 |
| ------ ------ |
|Other Expenses: |
| Salaries and |
| employee benefits.......................... 2,456 2,424 |
| Premises and |
| equipment expense.......................... 712 696 |
| Advertising................................... 124 116 |
| Printing, supplies |
| and stationery............................. 137 169 |
| Professional fees............................. 114 60 |
| Deposit insurance |
| premiums................................... 5 231 |
| Goodwill and core |
| deposit intangibles |
| amortization................................ 94 89 |
| Other operating |
| expenses................................... 688 683 |
| Total other ------ ------ |
| expenses................................. 4,330 4,468 |
| ------ ------ |
|INCOME BEFORE INCOME |
| TAX EXPENSE................................. 2,549 2,251 |
| Income tax expense.......................... 846 726 |
| ------ ------ |
|NET INCOME....................................... $1,703 $1,525 |
| ====== ====== |
|Per Share |
| Net income.................................... $0.38 $0.34 |
| Cash dividends................................ $0.15 $0.125 |
|AVERAGE SHARES |
| OUTSTANDING................................... 4,492,565 4,523,506 |
| |
| 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) |
|______________________________________________________________________________|
| |
| 1997 1996 |
| ---- ---- |
|Balance, January 1 ..................................... $51,341 $49,471 |
| |
|Net income....................................... 1,703 1,525 |
| |
|Cash dividends ($.15 and $.125 per share)......... (675) (565)|
| |
|Stock reacquired ................................ (60) (367)|
| |
|Stock issued under dividend reinvestment |
| and stock purchase plan........................ 112 106 |
| |
|Capital surplus allocation for compensatory |
| stock options.................................. 19 |
| |
|Proceeds from stock options exercised............ 54 35 |
| |
|Tax benefit on stock options exercised........... 43 |
| |
|Net change in unrealized gains on securities |
| available for sale ............................ (230) (506)|
| ------- ------- |
|Balance, March 31 ...................................... $52,288 $49,718 |
| ======= ======= |
| |
| Page 6 of 15 Pages |
|______________________________________________________________________________|
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| ANB CORPORATION |
| FORM 10-Q |
| CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS |
| (Dollars in Thousands) |
| (Unaudited) |
|_____________________________________________________________________________|
| Three Months Ended |
| March 31, |
| 1997 1996 |
|CASH FLOW FROM OPERATING ACTIVITIES: ---- ---- |
| Net income...................................... $1,703 $1,525 |
|Adjustments to reconcile net income to net cash |
| provided by operating activities: |
| Provision for loan losses....................... 277 66 |
| Depreciation.................................... 293 285 |
| Securities amortization......................... 12 22 |
| Amortization of goodwill and fair value |
| adjustments................................... 94 89 |
| Net change in: |
| Loans held for sale.......................... 163 (1,673) |
| Interest receivable.......................... 429 303 |
| Interest payable............................. 189 96 |
| Other adjustments............................... (292) (1,372) |
| Net cash provided (used) ----- ----- |
| by operating activities..................... 2,868 (659) |
| ----- ----- |
|CASH FLOW FROM INVESTING ACTIVITIES: |
| Purchases of available for sale securities...... (1,899) (10,129) |
| Proceeds from available for sale securities |
| maturities and sales......................... 6,009 3,621 |
| Net increase in loans........................... 156 589 |
| Purchases of premises and equipment............. (479) (250) |
| Acquisition costs, net of cash acquired......... (375) |
| Net cash provided (used) ------ ------ |
| by investing activities..................... 3,787 (6,544) |
| ------ ------ |
|CASH FLOWS FROM FINANCING ACTIVITIES: |
| Net decrease in noninterest-bearing, |
| NOW, money market and savings deposits........ (4,496) (10,895) |
| Net decrease in certificates of |
| deposits and other time deposits.............. (5,744) (6,821) |
| Net increase (decrease) in short-term |
| borrowings.................................... (4,572) 386 |
| Net increase in Federal Home Loan Bank advances. 5,000 |
| Cash dividends.................................. (675) (565) |
| Stock sold: |
| Exercise of stock options..................... 54 35 |
| Dividend reinvestment and stock purchase plan 112 106 |
| Stock reacquired................................ (60) (367) |
| Net cash used by ------ ------ |
| financing activities........................ (10,381) (18,121) |
| ------ ------ |
|NET DECREASE IN CASH and CASH EQUIVALENTS (3,726) (25,324) |
|CASH AND CASH EQUIVALENTS, BEGINNING |
| OF PERIOD....................................... 24,384 43,536 |
| ------- ------- |
|CASH AND CASH EQUIVALENTS, END OF PERIOD.......... $20,658 $18,212 |
| ======= ======= |
|Additional Cash Flows Information: |
| Interest paid................................... $3,901 $3,970 |
| Income tax paid................................. 285 190 |
| |
| |
| Page 7 of 15 Pages |
|_____________________________________________________________________________|
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______________________________________________________________________________
| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
| 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 three months ended March 31, 1997 are not necessarily indicative of those |
|expected for the remainder of the year. |
| |
|------------------------------------------------------------------------------|
| |
|NOTE 2--INVESTMENT SECURITIES: |
| 1997 |
| --------------------------------------------------|
| Gross Gross |
| Amortized Unrealized Unrealized Fair |
|March 31 Cost Gains Losses Value |
|------------------------------------------------------------------------------|
|Available for sale: |
| U.S. Treasury........ $16,880 $45 $106 $16,819|
| Federal agencies.... 6,747 144 6,603|
| State and municipal. 40,515 2,000 145 42,370|
| Mortgage-backed |
| securities........ 2,957 47 2,910|
| Marketable equity |
| securities........ 605 605|
| Corporate obligation. 100 1 99|
| -------------------------------------------------|
| Total investment |
| securities....... $67,804 $2,045 $443 $69,406|
| =================================================|
| |
| |
| 1996 |
| --------------------------------------------------|
| Gross Gross |
| Amortized Unrealized Unrealized Fair |
|December 31 Cost Gains Losses Value |
|------------------------------------------------------------------------------|
|Available for sale: |
| U.S. Treasury........ $17,763 $106 $31 $17,838|
| Federal agencies.... 8,047 3 78 7,972|
| State and municipal. 42,138 2,178 150 44,166|
| Mortgage-backed |
| securities........ 3,123 45 3,078|
| Marketable equity |
| securities........ 690 690|
| Corporate obligation. 200 200|
| -------------------------------------------------|
| Total investment |
| securities....... $71,961 $2,287 $304 $73,944|
| =================================================|
| |
| |
| |
| 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: |
| March 31, December 31, |
| 1997 1996 |
|Loans ---- ---- |
| Commercial and industrial loans............... $82,089 $81,142 |
| Term federal funds sold....................... 3,625 5,500 |
| Real estate loans: |
| One-to-four family properties............... 146,073 144,749 |
| Other....................................... 98,526 98,366 |
| Individuals' loans for household and other |
| personal expenditures....................... 41,910 42,507 |
| Tax exempt loans.............................. 2,551 2,432 |
| Other loans................................... 808 1,385 |
| -------- -------- |
| Total loans.............................. $375,582 $376,081 |
| ======== ======== |
|Nonperforming loans |
| Nonaccruing loans............................. $942 $1,326 |
| Accruing loans contractually past due |
| 90 days or more other than nonaccruing...... 73 472 |
| Restructured loans............................ 571 63 |
| ------ ------ |
| Total nonperforming loans................ $1,586 $1,861 |
| ====== ====== |
| |
| Three Months Ended |
| March 31, |
| 1997 1996 |
|Allowance for loan losses ------ ------ |
| Balances, beginning of period................. $3,400 $2,897 |
| Provision for losses.......................... 277 66 |
| Recoveries on loans........................... 138 31 |
| Loans charged off............................. (481) (90) |
| ------ ------ |
| Balances, end of period....................... $3,334 $2,904 |
| ====== ====== |
|------------------------------------------------------------------------------|
| |
|NOTE 4--DEPOSITS: |
| March 31, December 31, |
| 1997 1996 |
| Deposits ---- ---- |
| Noninterest bearing......................... $46,784 $50,256 |
| NOW accounts................................ 73,895 75,174 |
| Money market deposit accounts............... 37,133 37,751 |
| Savings deposits............................ 27,600 26,727 |
| Certificates and other time deposits |
| of $100,000 or more....................... 49,348 57,674 |
| Other certificates and time deposits........ 160,845 158,263 |
| -------- -------- |
| Total deposits........................... $395,605 $405,845 |
| ======== ======== |
| |
| Page 9 of 15 Pages |
|______________________________________________________________________________|
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| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
|------------------------------------------------------------------------------|
| 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. |
| |
|Net Income |
|---------- |
| |
| Net income for the first three months of 1997 was $1.703 million compared |
|to $1.525 million for the first three months of 1996, an increase of $178 |
|thousand or 11.7%. Net income per share for the first three months of 1997 |
|was $.38, an increase of $.04 or 11.8% from the $0.34 which was reported for |
|the first three months of 1996. |
| |
| The Company's return on average assets for the first three months of 1997 |
|was 1.43%, an increase of 11 basis points over the first three months of |
|1996 and a 16 basis point improvement over the 1996 year ended return on |
|average assets of 1.27%. |
| |
| Return on average equity for the first three months of 1997 was 13.62% |
|compared to 12.80% for the same period in 1996. |
| |
| Factors which impacted the Company's net income during the first three |
|months of 1997 are discussed in the "Net Interest Income" and "Other Income |
|and Expense" sections. |
| |
|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 $227 thousand or 4.17% during the three |
|months ended March 31, 1997 when compared to the same three month period |
|last year. For the quarter ended March 31, 1997 total interest income, |
|expressed as on a full tax equivalent basis, increased by $250 thousand |
|when compared to first quarter of 1996. Total interest expense of the |
|Company increased only $23 thousand from the amount reported for first |
|quarter 1996. |
| |
| Net interest margin (FTE) expressed as a percent of earning assets, |
|was 5.08% for the first three months of 1997. There was no change in the |
|level of net interest margin (FTE) for the quarter ended March 31, 1997, |
|when compared to the same period for 1996. The Company's net interest |
|margin (FTE) has exceeded the 5.00% level at year end for both 1995 |
|and 1996. |
| |
| Higher net interest income and continuing net interest margins (FTE) |
|in excess of the 5.00% level can in part be attributable to the increased |
|loan volume generated. Opportunities to make quality loans continue to |
|exist, thereby providing future growth in the loan portfolio and the |
|resulting loan interest income component of total interest income. |
| |
| |
| Page 10 of 15 Pages |
|______________________________________________________________________________|
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| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
|------------------------------------------------------------------------------|
|Provision for Loan Losses |
|------------------------- |
| |
| The Company's provision for loan losses expense increased $211 thousand |
|for the three months ended March 31, 1997 when compared to the same period |
|in 1996. For the first quarter of 1997 the provision was $277 thousand |
|compared to $66 thousand for the first quarter of 1996. The Company |
|recorded provision for loan loss expense based on the 1997 operating plan. |
| |
| Net charge-offs during the first three months of 1997 were $343 thousand |
|compared to net charge-offs of $59 thousand for the comparable period in |
|1996. During the first quarter of 1997, a large commercial loan for approxi- |
|mately $725 thousand was written down by $379 thousand 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 |
|$110 thousand for the quarter ended March 31, 1997 when compared to the |
|first quarter a year ago. Fees generated from fiduciary activities |
|increased by $138 thousand. Service charges on deposit accounts combined |
|with other customer fees were $8 thousand higher while security gains |
|declined $6 thousand for first quarter 1997 over 1996. "Other operating |
|income" declined by $30 thousand for first quarter 1997 over 1996. For |
|1996 "other operating income" included a recovery of a prior period loss |
|amounting to approximately $38 thousand. |
| |
| Total other expenses declined $138 thousand in the first three months of |
|1997 compared to the same period in 1996. Salaries and employee benefits |
|for the three months ending March 31, 1997 increased $32 thousand or 1.3%. |
|Full time equivalent employees at March 31, 1997 were 257 down 2 from the |
|259 reported at first quarter end in 1996. |
| |
| Professional fees for first quarter of 1997 were higher by $54 thousand |
|when compared to first quarter 1996. For 1997 professional fees relating |
|to the Company's purchase of two existing branches, including deposits |
|and real estate, increased this category. In addition matters requiring |
|outside legal and accounting expertise increased in first quarter 1997 |
|when compared to first quarter 1996. |
| |
| Deposit insurance expense declined from $231 thousand for the first |
|quarter of 1996 to only $5 thousand for first quarter 1997, a reduction |
|of $226 thousand. In 1996 the Company, anticipating a special Federal |
|Deposit Insurance Corporation (FDIC) assessment on Savings Association |
|Insurance Fund ("SAIF") deposits which it had acquired in 1991, had expensed |
|$165 thousand for this one-time non-recuring special item. In addition, |
|for 1997, the FDIC lowered the rate assessed on deposits insured by the |
|Bank Insurance Fund. |
| |
|Income Taxes |
|------------ |
| |
| Income tax expense, including both federal income tax and the Indiana |
|franchise tax increased by $120 thousand for the first three months of 1997 |
|over 1996. Income before income tax increased $298 thousand for the first |
|three months of 1997 over 1996. The effective tax rate for the first three |
|months of 1997 was 33.2% compared to 32.3% for the first three months of 1996.|
| |
| Page 11 of 15 Pages |
|______________________________________________________________________________|
<PAGE>
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| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
|------------------------------------------------------------------------------|
|Balance Sheet |
|------------- |
| |
| The Company's total assets decreased $8.599 million from the level |
|reported at year end 1996. When compared to March 31, 1996 total assets |
|have increased $21.159 million or 4.6%. For the first quarter in 1997 |
|average assets were $483.677 million compared to $464.018 million for the |
|first quarter of 1996. |
| |
| Cash and cash equivalents decreased $3.726 million at March 31, 1997 |
|from the level reported at December 31, 1996. Federal funds sold decreased |
|by $2.475 million from December 31, 1996 while cash and due from banks, |
|including interest bearing deposit accounts, declined $1.251 million from |
|the levels reported at year end. |
| |
|Loans and Deposits |
|------------------ |
| |
| Loans, excluding loans held for sale and term federal funds, were $371.957 |
|million at March 31, 1997, an increase of $1.376 million over the year |
|end level of $370.581 million. At March 31, 1996, loans, excluding loans |
|held for sale and term federal funds, were $343.038 million. Growth in the |
|Company's loan portfolio from March 31, 1996 to first quarter 1997 has |
|been $28.919 million or 8.4%. This loan growth has occured in all major |
|categories of the portfolio, with $19.391 million, or 67% of the total |
|growth experienced during the past twelve months, having occured in the |
|mortgage loan component of the loan portfolio. |
| |
| Real estate loans continue to be the largest asset category of the Company.|
|At March 31, 1997 loans made to individuals on owner occupied property |
|represented 30.1% of total assets and 59.7% of the Company's mortgage loan |
|portfolio. At March 31, 1996 loans made to individuals on owner occupied |
|property represented 28.6% of total assets and 59% of the Company's mortgage |
|loan portfolio. Loans made on owner occupied property have increased $1.324 |
|million from year end 1996 and $13.256 million from March 31, 1996, while |
|commercial mortgage loans have increased $6.135 million for the time period |
|beginning March 31, 1996 and ending March 31, 1997. |
| |
| 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. |
| |
| Total deposits of the Company at March 31, 1997 declined $10.240 million |
|from levels reported at year end 1996. Noninterest-bearing deposits declined |
|by $3.472 million at March 31, 1997 as measured against year end. Year end |
|noninterest-bearing deposits were higher due to temporary municipal funds |
|being deposited. Certificates of deposit written for $100 thousand or |
|more decreased $8.326 million from the level at year end. All other |
|categories of interest-bearing deposits combined, increased $1.558 million |
|for the quarter ended March 31, 1997 when compared to December 31, 1996. |
| |
| During the first quarter of 1997, the Company increased its borrowings |
|from the Federal Home Loan Bank by $5 million from the amount reported |
|for year end 1996. Short-term borrowings consisting of daily federal |
|funds and repurchase agreements declined by $4.572 from the level reported |
|at year end. |
| |
|Allowance for Loan Losses and Nonperforming Loans |
|------------------------------------------------- |
| |
| The Company's nonperforming loans, which include nonaccrual, past due |
|90 days, and restructured loans, decreased $275 thousand from year end |
|1996. At March 31, 1997 total nonperforming loans amounted to $1.586 million |
|or .33% of total assets, compared to .38% at year end 1996. Total non- |
|performing loans represented .42% of total loans at March 31, 1997 |
|compared to .65% and .49% at March 31, 1996 and December 31, 1996 |
|respectively. |
| |
| The allowance for loan losses at March 31, 1997 decreased $66 thousand |
|from year end 1996. Loans charged off for the period ending March 31, 1997 |
|increased by $391 thousand when compared to the same period in 1996. A large |
|commercial loan was written down by $379 thousand and the balance transferred |
|to nonaccruing during the first quarter of 1997. The allowance for loan |
|losses equaled 210% of nonperforming loans at March 31, 1997 compared to |
|183% and 128% for December 31, 1996 and March 31, 1996 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 |
|______________________________________________________________________________|
<PAGE>
________________________________________________________________________________
| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
|------------------------------------------------------------------------------|
|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 94% on March 31, 1997 compared to 87% at March 31, 1996. |
| |
| 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 fully taxable equivalent net interest margin. |
| |
|Capital Resources |
|----------------- |
| |
| Stockholders' equity increased from $51.341 million at December 31, 1996 |
|to $52.288 million at March 31, 1997. Book value per share was $11.61 |
|at March 31, 1997, compared to $11.43 at year end 1996. Net unrealized |
|gains on securities available for sale declined $230 thousand or $0.05 a |
|share from year end 1996. Excluding net unrealized gains on securities |
|available for sale, per share book value increased $0.23 to $11.40 for the |
|period ended March 31, 1997. Tangible book value per share for the |
|Company at March 31, 1997 was $10.46 compared to $10.21 for year end 1996 |
|and $9.71 on March 31, 1996. (Tangible book value per share is defined as |
|total stockholders' equity less unrealized gains on securities available for |
|sale and goodwill; divided by total outstanding shares.) |
| |
| For the quarter ended March 31, 1997 a total of 5,902 shares were |
|issued through the Company's Dividend Reinvestment and Stock Purchase Plan. |
|A total of 286 shareholders or 45% of the Company's shareholders of record |
|participate in the Plan. |
| |
| At March 31, 1997 the Company's Tier 1 risk based capital ratio was |
|14.00% and its leverage capital ratio was 9.82%. 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 |
| March 31, 1997 |
|------------------------------------------------------------------------------|
| |
| PART II. OTHER INFORMATION |
| -------------------------- |
|Item 6. Exhibits and Reports on Form 8-K |
| |
| (a) Exhibits |
| |
| Exhibit 27, Financial Data Schedule |
| |
| (b) No reports on Form 8-K were filed with respect to events |
| occurring during the three months ended March 31, 1997. |
| |
| |
| Page 14 of 15 Pages |
|______________________________________________________________________________|
<PAGE>
_______________________________________________________________________________
| |
| ANB CORPORATION |
| FORM 10-Q |
| March 31, 1997 |
| |
|______________________________________________________________________________|
| |
| SIGNATURES |
| |
|Pursuant to the requirements of the Securities Exchange Act of 1934, the |
|Registrant has duly caused this report to be signed on its behalf by the |
|undersigned, thereunto duly authorized. |
| |
| ANB CORPORATION |
| |
| /s/ James R. Schrecongost |
|Date: May 6, 1997 BY: ____________________ |
| James R. Schrecongost |
| |
| President and Chief Executive Officer|
| |
| |
| /s/ Larry E. Thomas |
|Date: May 6, 1997 BY: ____________________ |
| Larry E. Thomas |
| |
| Chief Financial Officer and |
| Principal Accounting Officer |
| |
| |
| |
| Page 15 of 15 Pages |
| |
|______________________________________________________________________________|
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 20,658
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 69,406
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 375,582
<ALLOWANCE> 3,334
<TOTAL-ASSETS> 485,248
<DEPOSITS> 395,605
<SHORT-TERM> 13,104
<LIABILITIES-OTHER> 22,251
<LONG-TERM> 2,000
0
0
<COMMON> 4,503
<OTHER-SE> 47,785
<TOTAL-LIABILITIES-AND-EQUITY> 485,248
<INTEREST-LOAN> 8,297
<INTEREST-INVEST> 1,080
<INTEREST-OTHER> 97
<INTEREST-TOTAL> 9,474
<INTEREST-DEPOSIT> 3,715
<INTEREST-EXPENSE> 4,090
<INTEREST-INCOME-NET> 5,384
<LOAN-LOSSES> 277
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 4,330
<INCOME-PRETAX> 2,549
<INCOME-PRE-EXTRAORDINARY> 1,703
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,703
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
<YIELD-ACTUAL> 5.08
<LOANS-NON> 942
<LOANS-PAST> 73
<LOANS-TROUBLED> 571
<LOANS-PROBLEM> 517
<ALLOWANCE-OPEN> 3,400
<CHARGE-OFFS> 481
<RECOVERIES> 138
<ALLOWANCE-CLOSE> 3,334
<ALLOWANCE-DOMESTIC> 3,334
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
