<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, 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 August 5, 1997 there were outstanding 4,512,046 Common Shares,
$1 stated value, of the Registrant.
Page 1 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 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 4 - Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . . . . 14
Item 6 - Exhibits and Reports on Form 8-K. . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Page 2 of 15 Pages
<PAGE>
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,
1997 1996
ASSETS: ------- --------
Cash and due from banks. . . . . . . . . . . . . $21,880 $21,835
Federal funds sold . . . . . . . . . . . . . . . 2,475
Interest-bearing deposit accounts. . . . . . . . 229 74
-------- --------
Cash and cash equivalents. . . . . . . . . . . 22,109 24,384
Securities available for sale:
Taxable. . . . . . . . . . . . . . . . . . . . 27,181 29,778
Tax exempt . . . . . . . . . . . . . . . . . . 43,592 44,166
-------- --------
Total securities available for sale. . . . . 70,773 73,944
Loans:
Loans. . . . . . . . . . . . . . . . . . . . . 388,659 376,081
Allowance for loan losses. . . . . . . . . . (3,244) (3,400)
-------- --------
Net loans. . . . . . . . . . . . . . . . . . 385,415 372,681
Loans held for sale. . . . . . . . . . . . . . . 508 204
Premises and equipment . . . . . . . . . . . . . 10,174 9,345
Federal Reserve & Federal Home Loan Bank Stock . 3,053 2,713
Other real estate. . . . . . . . . . . . . . . . 488 516
Interest receivable. . . . . . . . . . . . . . . 4,278 4,159
Goodwill and core deposit intangibles. . . . . . 4,998 4,306
Other assets . . . . . . . . . . . . . . . . . . 1,800 1,595
-------- --------
Total assets . . . . . . . . . . . . . . . . $503,596 $493,847
======== ========
LIABILITIES
Deposits
Noninterest bearing. . . . . . . . . . . . . . $55,330 $50,256
Interest bearing . . . . . . . . . . . . . . . 351,921 355,589
-------- --------
Total deposits . . . . . . . . . . . . . . . 407,251 405,845
Short-term borrowings. . . . . . . . . . . . . . 20,126 17,676
Federal Home Loan Bank advances. . . . . . . . . 17,500 14,000
Interest payable . . . . . . . . . . . . . . . . 1,750 1,391
Other liabilities. . . . . . . . . . . . . . . . 3,204 3,594
-------- --------
Total liabilities. . . . . . . . . . . . . . 449,831 442,506
-------- --------
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-4,510,538 and
4,490,556 shares . . . . . . . . . . . . . . 4,511 4,491
Capital surplus. . . . . . . . . . . . . . . . . 7,169 6,930
Capital surplus-stock options. . . . . . . . . . 396 397
Retained earnings. . . . . . . . . . . . . . . . 40,480 38,325
Net unrealized gains on securities
available for sale . . . . . . . . . . . . . . 1,209 1,198
-------- --------
Total stockholders' equity . . . . . . . . . 53,765 51,341
-------- --------
Total liabilities and stockholders' equity . $503,596 $493,847
======== ========
Page 3 of 15 Pages
<PAGE>
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,
1997 1996 1997 1996
Interest Income ---- ---- ---- ----
Loans, including fees:
Taxable. . . . . . . . . $8,642 $7,960 $16,913 $15,816
Tax exempt . . . . . . . 29 35 55 58
Securities available for sale:
Taxable. . . . . . . . . 409 466 845 883
Tax exempt . . . . . . . 652 669 1,296 1,314
Federal funds sold . . . . 23 55 77 242
Other interest
income . . . . . . . . . 73 52 116 114
Total interest ------ ------ ------ ------
income. . . . . . . 9,828 9,237 19,302 18,427
------ ------ ------ ------
Interest Expense
Deposits . . . . . . . . . 3,831 3,816 7,546 7,754
Short-term
borrowings . . . . . . . 155 101 277 189
FHLB advances. . . . . . . 252 74 505 115
Total interest ------ ------ ------ ------
expense . . . . . . . 4,238 3,991 8,328 8,058
------ ------ ------ ------
NET INTEREST INCOME. . . . . 5,590 5,246 10,974 10,369
Provision for loan
losses . . . . . . . . . 233 66 510 132
------ ------ ------ ------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES. . . . . . . 5,357 5,180 10,464 10,237
Page 4 of 15 Pages
<PAGE>
(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,
1997 1996 1997 1996
---- ---- ---- ----
Other Income:
Trust fees . . . . . . . . 1,254 1,109 2,429 2,146
Service charges on
deposit accounts . . . . 368 337 696 661
Other customer fees. . . . 128 139 234 241
Securities available
for sale gains,
net. . . . . . . . . . . (1) 5 12
Gains (losses) on
loans held for sale:
Realized. . . . . . . 24 35 45 99
Unrealized. . . . . . (22) (65)
Other operating
income . . . . . . . . . 136 136 272 302
Total other ------ ------ ------ ------
income. . . . . . . 1,909 1,734 3,681 3,396
------ ------ ------ ------
Other Expenses:
Salaries and
employee benefits. . . . 2,570 2,492 5,026 4,916
Premises and
equipment expense. . . . 656 695 1,368 1,391
Advertising. . . . . . . . 132 144 256 260
Printing, supplies
and stationery . . . . . 149 126 286 295
Professional fees. . . . . 119 80 233 140
Deposit insurance
premiums . . . . . . . . 9 240 14 470
Goodwill and core
deposit intangibles
amortization . . . . . . 104 98 198 187
Other operating
expenses . . . . . . . . 802 738 1,490 1,422
Total other ------ ------ ------ ------
expenses. . . . . . 4,541 4,613 8,871 9,081
------ ------ ------ ------
INCOME BEFORE INCOME
TAX EXPENSE. . . . . . . . 2,725 2,301 5,274 4,552
Income tax expense . . .. 919 754 1,765 1,480
------ ------ ------ ------
NET INCOME . . . . . . . . . $1,806 $1,547 $3,509 $3,072
======= ======= ====== ======
Per Share
Net income . . . . . . . . $0.40 $0.34 $0.78 $0.68
Cash dividends . . . . . . 0.15 0.125 $0.30 $0.25
AVERAGE SHARES
OUTSTANDING. . . . . . . . 4,503,452 4,512,559 4,498,038 4,518,033
Page 5 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
- --------------------------------------------------------------------------------
1997 1996
---- ----
Balance, January 1 . . . . . . . . . . . . . . . $51,341 $49,471
Net income . . . . . . . . . . . . . . . . . . . 3,509 3,072
Cash dividends ($.30 and $.25 per share) . . . . (1,350) (1,130)
Net change in unrealized gains on securities
available for sale . . . . . . . . . . . . . . 11 (1,085)
Exercise of stock options. . . . . . . . . . . . 91 124
Stock tendered in exercise of stock options. . . (111) (41)
Capital surplus allocation for compensatory
stock options. . . . . . . . . . . . . . . . . 32
Tax benefit on stock options exercised . . . . . 63 34
Stock repurchases. . . . . . . . . . . . . . . . (816)
Stock issued under dividend reinvestment
and stock purchase plan. . . . . . . . . . . . 211 201
------- -------
Balance, June 30 . . . . . . . . . . . . . . . . $53,765 $49,862
======= =======
Page 6 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
1997 1996
OPERATING ACTIVITIES: ---- ----
Net income . . . . . . . . . . . . . . . . . . . . . $3,509 $3,072
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses . . . . . . . . . . . 510 132
Depreciation. . . . . . . . . . . . . . . . . . 602 566
Securities amortization . . . . . . . . . . . . 21 32
Amortization of goodwill, other intangibles
and fair value adjustments. . . . . . . . . . 198 187
Net change in:
Loans held for sale . . . . . . . . . . . . . (304) (1,474)
Interest receivable . . . . . . . . . . . . . (119) (242)
Interest payable. . . . . . . . . . . . . . . 359 290
Other adjustments . . . . . . . . . . . . . . . (816) (451)
----- -----
Net cash provided by operating activities. . 3,960 2,112
----- -----
INVESTING ACTIVITIES:
Purchases of available for sale securities . . . . . (4,231) (17,711)
Proceeds from available for sale securities
maturities and sales . . . . . . . . . . . . . . . 7,558 9,205
Net increase in loans. . . . . . . . . . . . . . . . (13,179) (7,354)
Purchases of premises and equipment. . . . . . . . . (1,424) (515)
Cash received in branch acquisition. . . . . . . . . 7,852
------ ------
Net cash used by investing activities . . . . (3,424) (16,375)
------ ------
FINANCING ACTIVITIES:
Net change in noninterest-bearing,
NOW, money market and savings deposits . . . . . . 9,286 (12,258)
Net change in certificates of
deposits and other time deposits . . . . . . . . . (16,951) (2,085)
Net change in short-term borrowings. . . . . . . . . 2,450 4,960
Net change in Federal Home Loan Bank advances. . . . 3,500 5,605
Cash dividends . . . . . . . . . . . . . . . . . . . (1,350) (1,130)
Stock sold:
Exercise of stock options. . . . . . . . . . . . . 43 117
Dividend reinvestment and stock purchase plan. . . 211 201
Stock repurchases. . . . . . . . . . . . . . . . . . (816)
------ ------
Net cash used by financing activities . . . . (2,811) (5,406)
------ ------
NET CHANGE IN CASH AND CASH EQUIVALENTS. . . . . . . (2,275) (19,669)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . 24,384 43,536
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . $22,109 $23,867
======= =======
Additional Cash Flows Information:
Interest paid. . . . . . . . . . . . . . . . . . . . $7,969 $7,768
Income tax paid. . . . . . . . . . . . . . . . . . . 2,035 1,580
Page 7 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 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, 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, 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
June 30 Cost Gains Losses Value
- --------------------------------------------------------------------------------
Available for sale:
U.S. Treasury. . . . . $16,786 $55 $31 $16,810
Federal agencies . . . 6,747 2 73 6,676
State and municipal. . 41,515 2,129 52 43,592
Mortgage-backed
securities . . . . . 2,812 28 2,784
Marketable equity
securities . . . . . 811 811
Corporate obligations 100 100
--------------------------------------------------
Total investment
securities. . . . $68,771 $2,186 $184 $70,773
==================================================
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 obligations. 200 200
--------------------------------------------------
Total investment
securities. . . . $71,961 $2,287 $304 $73,944
==================================================
Page 8 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3--LOANS AND ALLOWANCE:
June 30, December 31,
1997 1996
---- ----
Loans
Commercial and industrial loans. . . . . . . $89,453 $81,142
Term federal funds sold. . . . . . . . . . . 1,029 5,500
Real estate loans:
One-to-four family properties. . . . . . . 152,510 144,749
Other. . . . . . . . . . . . . . . . . . . 102,598 98,366
Individuals' loans for household and other
personal expenditures. . . . . . . . . . . 39,395 42,507
Tax exempt loans . . . . . . . . . . . . . . 2,685 2,432
Other loans. . . . . . . . . . . . . . . . . 989 1,385
-------- --------
Total loans. . . . . . . . . . . . . . . $388,659 $376,081
======== ========
Nonperforming loans
Nonaccruing loans. . . . . . . . . . . . . . $723 $1,326
Accruing loans contractually past due
90 days or more other than nonaccruing . . 402 472
Restructured loans . . . . . . . . . . . . . 562 63
------ ------
Total nonperforming loans. . . . . . . . . $1,687 $1,861
====== ======
Six Months Ended
June 30,
1997 1996
Allowance for loan losses ------ ------
Balances, beginning of period. . . . . . . . $3,400 $2,897
Provision for losses . . . . . . . . . . . . 510 132
Recoveries on loans. . . . . . . . . . . . . 171 42
Loans charged off. . . . . . . . . . . . . . (837) (265)
------ ------
Balances, end of period. . . . . . . . . . . $3,244 $2,806
====== ======
- --------------------------------------------------------------------------------
NOTE 4--DEPOSITS:
June 30, December 31,
1997 1996
Deposits ---- ----
Noninterest bearing. . . . . . . . . . . . $55,330 $50,256
NOW accounts . . . . . . . . . . . . . . . 75,090 75,174
Money market deposit accounts. . . . . . . 46,774 37,751
Savings deposits . . . . . . . . . . . . . 26,614 26,727
Certificates and other time deposits
of $100,000 or more . . . . . . . . . . 42,755 57,674
Other certificates and time deposits . . . 160,688 158,263
-------- --------
Total deposits. . . . . . . . . . . . . $407,251 $405,845
======== ========
Page 9 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 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 six months of 1997 was $3.509 million compared to
$3.072 million for the first six months of 1996, an increase of $437 thousand or
14.2%. Net income per share for the first six months of 1997 was $0.78 an
increase of $0.10 or 14.7% from the $0.68 which was reported for the first six
months of 1996.
Second quarter 1997 net income improved $259 thousand from the $1.547
million reported for second quarter 1996. Net income per share for second
quarter 1997 was higher by $.06 per share or 17.6% when compared to second
quarter of 1996.
The Company's return on average assets for the first six months of 1997 was
1.45%, an increase of 12 basis points over the first six months of 1996 and a 18
basis point increase over the 1996 year ended return on average assets of 1.27%.
Return on average equity for the first six months of 1997 was 13.79%
compared to 12.79% for the same period in 1996.
The company's cash or tangible earnings per share (net income per share
excluding the amortization per share of goodwill and core deposit intangibles)
for the first six months of 1997 was $0.82 compared to $0.72 per share for the
comparable period in 1996. Cash or tangible earnings per share for the second
quarter of 1997 was $0.42 compared to $0.36 for the same period in 1996.
Statement of Financial Accounting Standards No. 128, Earnings Per Share, is
effective for the Company's 1997 annual financial statements. This statement
simplifies the calculations for earnings per share. The Company does not
expect that the new disclosure for basic earnings per share will be substan-
tially different from the primary earnings per share as currently calculated
and disclosed. Additional disclosures include diluted earnings per share, which
will reflect the potential dilution that could occur from unexercised stock
options under the Company's stock option plans.
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 $544 thousand or 4.9% for the six months ended June 30, 1997 when
compared to the same six month period last year. Total interest income,
expressed on a FTE basis increased $814 thousand for the six month period, while
total interest expense of the Company increased $270 thousand. Net interest
margin (FTE), expressed as a percent of earning assets, was 5.13% for the first
six months of 1997, a slight increase of 2 basis points when compared to the
5.11% net interest margin reported for the six months ended June 30, 1996. The
Company's net interest margin (FTE) for the year ended December 31, 1996 was
5.07%.
For the second quarter of 1997, net interest income (FTE) increased $317
thousand or 5.7% when compared to the quarter ended June 30,1996. Net interest
margin (FTE) for second quarter 1997 was 5.16%.
Higher net interest income and continuing net interest margins (FTE) in
excess of the 5.00% level can in part be attributable to the continuing
increased level of lending activity and the higher volume of interest income
received related to the strong loan demands which have been experienced.
Attractive opportunities to make quality loans continue to exist.
Page 10 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 1997
- -------------------------------------------------------------------------------
Provision For Loan Losses
- -------------------------
The Company's provision for loan losses increased $378 thousand for the
six months ended June 30, 1997 when compared to the same period in 1996. For
the second quarter of 1997 the provision expense was $233 thousand compared to
$66 thousand for the second quarter of 1996.
Increases in the Company's provision for loan losses were required to
partially replenish the allowance for loan losses for charge-offs recorded
during the first six months of 1997.
Net charge-offs during the first six months of 1997 were $666 thousand
compared to net charge-offs of $223 thousand for the comparable period in
1996. During the first quarter of 1997, a large commercial loan of
approximately $725 thousand was written down by $379 thousand and the balance
was transferred to nonaccruing loans. Net charged-off loans as a percentage of
average loans was .18% at June 30, 1997 as compared to .06% for the same six
month period in 1996.
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 $285 thousand during the
first six months of 1997 compared to the same period one year ago. Fees
generated from fiduciary activities increased $283 thousand, or 13.1%, while
service charges and other customer fees rose $28 thousand, or 3.1% for the six
month period. "Other operating income" declined by $30 thousand for the six
months ended June 30, 1997 when compared to 1996. For 1996 "other operating
income" included a recovery of a prior period loss amounting to approximately
$38 thousand.
For the second quarter of 1997 other income increased $175 thousand,
with most of the higher results due to greater fees earned related to fiduciary
activities.
Total other expenses declined $210 thousand in the first six months of 1997
compared to the same period in 1996. Salaries and employee benefits increased
$110 thousand or 2.2%. Full time equivalent employees increased by 14 from the
level reported at June 30, 1996, to 270. The Company's recent purchase of two
branch locations has added 7 full time equivalent employees.
Professional fees for the first six months of 1997 were higher by $93
thousand when compared to the first six months of 1996. During 1997, additional
professional fees were recorded relating to the Company's purchase of two
branches, including deposits and real estate. Also, during 1997 fees relating
to merger/acquisition activities increased this category.
Deposit insurance expense declined from $470 thousand for the first six
months of 1996 to only $14 thousand for first six months of 1997, a reduction of
$456 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 $330 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 $285 thousand for the first six months of 1997 over
1996. Income before income tax increased $722 thousand or 15.9% for the first
six months of 1997 over 1996. The effective tax rate for the period ending June
30, 1997 was 33.5% compared to 32.5% for the first six months of 1996.
Page 11 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 1997
- --------------------------------------------------------------------------------
Balance Sheet
- -------------
The Company's total assets increased $9.749 million from the level reported
at year end 1996. When compared to June 30, 1996 total assets have increased
$26.750 million or 5.6%. For the second quarter in 1997 average assets were
$489.467 million compared to $465.980 million for the second quarter of 1996.
Cash and cash equivalents decreased $2.275 million at June 30, 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, increased $200 thousand from the levels reported at
year end.
Loans And Deposits
- ------------------
Loans, excluding loans held for sale and term federal funds, were $387.630
million at June 30, 1997, an increase of $17.049 million over the year end level
of $370.581 million. At June 30, 1996, loans, excluding loans held for sale and
term federal funds, were $354.455 million. Growth in the Company's loan
portfolio from June 30, 1996 to June 30, 1997 has been $33.175 million or 9.4%.
This loan growth has occured in all major categories of the portfolio, with
$21.439 million, or 65% of the total growth experienced during the past twelve
months, having occurred in the mortgage loan component of the loan portfolio.
Real estate loans continue to be the largest asset category of the Company.
At June 30, 1997 loans made to individuals on owner occupied property
represented 30.3% of total assets and 59.8% of the Company's mortgage loan
portfolio. 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. Loans made on owner occupied property have increased $7.761
million from year end 1996 and $15.014 million from June 30, 1996 while
commercial mortgage loans have increased $6.425 million for the period beginning
June 30, 1996 and ending June 30, 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 June 30, 1997 increased $1.406 million
from levels reported at year end 1996. Noninterest-bearing deposits increased by
$5.074 million at June 30, 1997 as measured against year end, while total
interest bearing deposits declined $3.668 million.
During the second quarter of 1997, the Company purchased two branches,
including deposits of approximately $9,071, from another financial institution.
The purchase price included goodwill/core deposit intangibles to be amortized of
$890 thousand.
Allowance For Loan Losses And Nonperforming Loans
- -------------------------------------------------
The Company's nonperforming loans, which include nonaccrual, past due
90 days, and restructured loans, decreased $174 thousand from year end 1996. At
June 30, 1997 total nonperforming loans amounted to $1.687 million or .33% of
total assets, compared to .38% at year end 1996. Total non-performing loans
represented .43% of total loans at June 30, 1997 compared to .62% and .49% at
June 30, 1996 and December 31, 1996 respectively.
The allowance for loan losses at June 30, 1997 decreased $156 thousand
from year end 1996. Loans charged off for the period ending June 30, 1997
increased by $572 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 192% of nonperforming loans at June 30, 1997 compared to 183% and 126%
for December 31, 1996 and June 30, 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
June 30, 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 95% on June 30, 1997 compared to 88% at June 30, 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, including net unrealized gains on securities
available for sale, increased from $51.341 million at December 31, 1996 to
$53.765 million on June 30, 1997. Book value per share was $11.92 at June 30,
1997 compared to $11.43 at year end 1996. Excluding net unrealized gains on
securities available for sale, per share book value increased $0.49 a share to
$11.65 at June 30, 1997 from year end 1996. Tangible book value per share on
June 30, 1997 was $10.65 compared to $10.24 for the year end 1996 and $9.91 on
June 30, 1996. (Tangible book value per share is defined as total stockholders'
equity less net unrealized gains on securities available for sale and
goodwill/core deposit intangibles divided by total outstanding shares.)
For the six months ended June 30, 1997 a total of 11,136 shares have been
issued through the Company's Dividend Reinvestment and Stock Purchase Plan A
total of 296 shareholders or 46% of the Company's shareholders of record
participate in the Plan.
At June 30, 1997 the Company's Tier 1 risk based capital ratio was 13.56%
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
June 30, 1997
- -------------------------------------------------------------------------------
PART II. OTHER INFORMATION
--------------------------
Item 4. Submission of Matters to a Vote of Security Holders
The Annmual Meeting of Shareholders was held on April 16, 1997.
The following matter was submitted to the shareholders.
(1) Election of three directors.
The following nominees were elected:
Votes
-----------------------
For Against
--- -------
William L. Peterson 3,654,570 544
James R. Schrecongost 3,654,770 344
Chris L. Talley 3,654,770 344
Other directors continuing to serve include the following:
Ben E. Delk
Madelyn K. Ferris
R. David Hoover
Donald A. Ross
Kelly N. Stanley
Leon V. Towne
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 June 30,
1997.
Page 14 of 15 Pages
<PAGE>
ANB CORPORATION
FORM 10-Q
June 30, 1997
- -------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANB CORPORATION
/s/ James R. Schrecongost
Date: August 5, 1997 BY: ____________________
James R. Schrecongost
Vice Chariman, President & CEO
/s/ Larry E. Thomas
Date: August 5, 1997 BY: ____________________
Larry E. Thomas
Chief Financial Officer and
Principal Accounting Officer
Page 15 of 15 Pages
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<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 21880
<INT-BEARING-DEPOSITS> 229
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<LONG-TERM> 2000
0
0
<COMMON> 4511
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