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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from___________ to___________
Commission file number 0-13664
GRANGE NATIONAL BANC CORP
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2314065
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
198 E. TIOGA STREET
TUNKHANNOCK, PENNSYLVANIA
---------------------------------------
(Address of principal executive offices)
(717) 836-2100
---------------------------------------
(Issuer's telephone number)
---------------------------------------
Former name, former address and former fiscal year, if
changed since last report.
Check whether the issuer (1) 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 periods 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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 345,627
Transitional Small Business Disclosure Format (Check one):
Yes / /; No /X/
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GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Page
Unaudited Financial Statements:
Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994.......... 2
Consolidated Statements of Income For the Three
and Nine Months Ended September 30, 1995........... 3
Consolidated Statements of Changes in Stockholders'
Equity For the Nine Months Ended
September 30, 1995 and 1994....................... 4
Consolidated Statements of Cash Flows For the
Nine Months ended September 30, 1995 and 1994..... 5
Notes to Consolidated Financial Statements........ 6-8
ITEM 2. Management's Discussion and Analysis of
Financial Condition........................... 9-12
Results of Operations.............................13-14
PART 11. OTHER INFORMATION:
ITEM 6. Exhibits and Reports on Form 8-K............. 15
1
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GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BUSINESS COMBINATION AND PRINCIPLES
OF CONSOLIDATION:
Grange National Banc Corp. (Company) was organized and incorporated under
the laws of the Commonwealth of Pennsylvania on October 2, 1984, for the
purpose of becoming a bank holding company. On April 30, 1985 the Company
acquired the Grange National Bank of Wyoming County (Bank) pursuant to a
plan of reorganization and merger. The Bank became a wholly owned
subsidiary of the Company, and each outstanding share of Bank common stock
was converted into one share of Company common stock. The accompanying
consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary (Bank) with the reorganization accounted for as
a pooling of interests.
2. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been
prepared in conformity with the accounting principles and practices
reflected in the annual financial statements, and reflect all adjustments
which are normal and recurring and, in the opinion of management, necessary
for a fair presentation of the results of operations for the interim
periods. The results of operations reported in interim financial statements
are not necessarily indicative of results to be expected for the year.
3. CHANGE IN ACCOUNTING PRINCIPLE:
In May 1993 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS No. 115"), which the Company adopted
as of January 1, 1994. SFAS No. 115 requires the Company to classify each
debt and equity security in one of three categories: held to maturity,
available for sale or trading. Investments classified as held to maturity
are reflected at amortized cost. Investments classified as either available
for sale or trading securities are reflected at fair market value.
Unrealized gains or losses for trading securities are included in earnings.
Unrealized gains and losses on available for sale securities are excluded
from earnings and reflected, net of income taxes, in a separate component of
stockholders' equity until realized. All equity and U.S. Treasury securities
are classified as "available for sale" and all other securities are
classified as "held to maturity". Upon implementation on January 1, 1994,
fair market value of available for sale securities exceeded amortized cost
by
2
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$70,000. At September 30, 1995, amortized cost was approximately $4,000
less than fair market value, while amortized cost exceeded fair market value
at September 30, 1994, by $115,000.
4. STOCK SPLIT - RETROACTIVE EFFECT ON FINANCIAL STATEMENTS:
In January 1994, the Board of Directors of the Company voted a three-for-one
split of the Company's common stock, to be effected in the form of a stock
distribution, payable to shareholders of record as of April 1, 1994. The
split was approved by the shareholders as part of an amendment to the
Company's articles of incorporation to increase the number of authorized
shares of common stock from 300,000 to 5,000,000 (an additional 1,000,000
shares of preferred stock of $5 par value was also authorized). The
financial statements have been revised to give retroactive effect of the
stock split as if the additional shares had been outstanding for all periods
presented.
STOCK OPTIONS:
In January 1994, the Board adopted an Employee Stock Option Plan in which
common stock options may be granted to all officers and key employees of the
Company. The aggregate number of shares which may be issued upon exercise
of the options under the plan is 20,000. Options are exercisable up to
one-third in the second year after the date of grant, up to two thirds in
the third year after the date of grant and up to 100% in the fourth year
after the date of grant. Options were granted at various times during 1994,
at prices ranging from $24.00 to $26.25 per share
The Board of Directors also adopted a Stock Option Plan for non-employee
Directors which will be available to all non-employee members of the Board
of Directors. The aggregate number of shares which may be issued upon
exercise of the options under the Director's plan is 20,000 shares and are
exercisable in part from time to time beginning one year after the date of
grant and expiring ten years thereafter. Effective April 1, 1994, options
to purchase 1,000 shares of common stock, at $24.00 per share, were
automatically granted to each non-employee Director under this plan expiring
April 1, 2004.
3
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PUBLIC OFFERING
In 1994 the Company engaged in a stock offering in which 83,334 shares of
common stock were offered and sold at $24.00 per share for a total of
$2,000,016. The net proceeds received from the stock offering after the
offering costs of $100,012 was $1,900,004.
PREFERRED STOCK:
The Company authorized 1,000,000 of preferred stock at $5 par value. At
December 31, 1994 and September 30, 1995, no shares were issued nor
outstanding.
4
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GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
1995 1994
(UNAUDITED) (AUDITED)
----------- ---------
ASSETS:
Cash and due from banks.............. $1,715,036 $1,486,145
Investment securities, held to
maturity (market value 1995,
$17,784,000; 1994, $11,143,000)..... 17,749,807 11,412,673
Investment securities, available
for sale (Note 3)................... 9,919,490 8,619,700
Interest bearing deposits............ 4,954,799 5,501,885
Loans, net of unearned interest...... 51,340,446 46,733,322
Less: allowance for loan losses..... 490,847 479,390
----------- -----------
Loans - net........................ 50,849,599 46,253,932
Bank premises and equipment - net.... 2,291,715 2,201,107
Other real estate.................... 188,764 187,071
Accrued interest and other assets.... 926,590 642,814
----------- -----------
TOTAL ASSETS........................ $88,595,800 $76,305,327
----------- -----------
----------- -----------
LIABILITIES:
Domestic deposits:
Non-interest bearing deposits....... $7,907,490 $7,698,578
Interest bearing deposits........... 69,916,925 59,315,159
----------- -----------
Total deposits..................... 77,824,415 67,013,737
Other borrowed funds................ 1,086,025 772,039
Accrued interest and
other liabilities.................. 490,935 276,539
----------- -----------
Total liabilities.................. 79,401,375 68,062,315
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock authorized
1,000,000 shares of $5 par; None
issued nor outstanding..............
Common stock authorized 5,000,000
shares of $5 par value; 345,654
shares issued and outstanding
(Note 4)............................. 1,728,270 1,728,270
Additional paid-in capital............ 1,483,334 1,483,334
Retained earnings..................... 5,980,598 5,137,944
Unrealized holding gains (losses)
on investment securities (net
of deferred income taxes of
($1,395) and $54,000 in 1995
and 1994, respectively) (Note 4)..... 2,709 (106,000)
----------- -----------
Total............................... 9,194,911 8,243,548
Less: Treasury stock, 23 and 26 shares,
respectively, at cost................. 486 536
----------- -----------
Total stockholders' equity........... 9,194,425 8,243,012
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY................... $88,595,800 $76,305,327
----------- -----------
----------- -----------
See Notes to Consolidated Financial Statements
5
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GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Nine Months
Ended Ended
September 30 September 30
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
Interest Income:
Interest and fees on loans....... $1,278,462 $1,038,108 $3,636,700 $2,944,491
Interest and dividends
on investment securities........ 380,087 264,927 966,641 767,763
Interest on federal funds sold... 3,248 0 14,400
Interest on deposits in banks.... 71,686 76,992 226,509 164,573
--------- --------- --------- ---------
Total interest income........... 1,730,235 1,383,275 4,829,850 3,891,227
--------- --------- --------- ---------
Interest Expense:
Interest on deposits............. 768,561 528,734 2,043,323 1,506,062
Interest on borrowed funds....... 10,544 9,281 29,732 28,719
--------- --------- --------- ---------
Total interest expense.......... 779,105 538,015 2,073,055 1,534,781
--------- --------- --------- ---------
Net interest income............. 951,130 845,260 2,756,795 2,356,446
Provision for loan losses........ 25,000 22,500 55,000 72,500
--------- --------- --------- ---------
Net interest income after
provision for loan losses...... 926,130 822,760 2,701,795 2,283,946
--------- --------- --------- ---------
Other Income:
Service charges and other income. 104,666 84,966 296,742 231,526
--------- --------- --------- ---------
Other Expenses:
Salaries and employee benefits... 261,728 217,762 765,542 659,034
Occupancy expense................ 57,653 42,027 165,069 109,474
Equipment expense................ 49,873 45,088 152,091 135,120
Other operating expense.......... 187,185 152,843 573,055 457,992
--------- --------- --------- ---------
Total other expenses............ 556,439 457,720 1,655,757 1,361,620
--------- --------- --------- ---------
Income before income taxes........ 474,357 450,006 1,342,780 1,153,852
Provision for income taxes........ 157,000 143,000 431,000 357,500
--------- --------- --------- ---------
Net income........................ $317,357 $307,006 $911,780 $796,352
========= ========= ========= =========
Earnings per share (Note 4)....... $0.92 $0.93 $2.64 $2.72
========= ========= ========= =========
Weighted average common shares.... 345,631 331,604 345,631 292,332
See Notes to Consolidated Financial Statements
6
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994
---- ----
STOCKHOLDERS' EQUITY, January 1............... 8,243,012 5,544,147
COMMON STOCK, $5.00 par value
Transfer to common stock due to
3 for 1 stock split.......................... 874,400
Issuance of common stock (83,334 shares)...... 416,670
ADDITIONAL PAID-IN CAPITAL
Transfer to common stock due to 3 for
1 stock split................................ (734,400)
Issuance of common stock (83,334 shares)...... 1,483,334
RETAINED EARNINGS
Transfer to common stock due to 3 for
1 stock split................................ (140,000)
NET INCOME.................................... 911,780 796,352
Cash dividends paid: (69,126) (53,992)
UNREALIZED HOLDING GAINS AND LOSSES
Unrealized holding gains (losses) on
investment securities (net of
deferred income taxes of $5,212
and $35,884 in 1995 and 1994,
respectively)................................ 108,709 (75,706)
TREASURY STOCK
Reissuance of common stock (3 shares each
in 1995 and 1994)............................ 50 50
Purchase of treasury stock
(14 shares at $24.00)........................ (336)
---------- ----------
STOCKHOLDERS' EQUITY, September 30............ $9,194,425 $8,110,519
---------- ----------
---------- ----------
See Notes to Consolidated Financial Statements
7
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 1994
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income.......................................... $911,780 $796,352
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 108,000 100,677
Provision for loan losses......................... 55,000 72,500
Increase (decrease) in deferred income taxes...... 54,001 (3,997)
Changes in operating assets and liabilities:
Increase in accrued interest income and other
assets........................................... (283,776) (59,166)
Increase in accrued interest expense and other
liabilities....................................... 159,001 46,863
---------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES.............................. 1,004,006 953,229
---------- ----------
INVESTING ACTIVITIES:
Purchase bank premises and equipment................ (198,608) (210,005)
Decrease (increase) in other real estate............ (1,693) 31,142
Purchase of securities "available for sale"......... (5,288,158) (4,111,755)
Redemptions of securities "available for sale"...... 4,098,472 3,410,496
Purchase of securities "held to maturity"........... (9,555,844) (3,296,751)
Redemptions of securities "held to maturity"........ 3,130,851 2,353,908
Decrease in mortgage-backed securities.............. 87,859 273,756
Increase in loans to customers...................... (4,650,667) (3,849,076)
Decrease (increase) in deposits in banks............ 547,085 (4,364,918)
---------- ----------
NET CASH USED IN
INVESTING ACTIVITIES.............................. (11,830,703) (9,763,203)
---------- ----------
FINANCING ACTIVITIES:
Increase in deposits before interest credited....... 9,368,387 2,827,742
Interest credited to deposits....................... 1,756,277 1,176,063
Cash dividends paid................................. (69,126) (53,993)
Decrease in treasury stock.......................... 50 (286)
Issuance of common stock............................ 1,900,004
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES.............................. 11,055,588 5,849,530
---------- ----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS.................................... 228,891 (2,960,444)
CASH AND CASH EQUIVALENTS, January 1................. 1,486,145 4,670,674
---------- ----------
CASH AND CASH EQUIVALENTS, September 30.............. $1,715,036 $1,710,230
========== ==========
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION: 228,891 (2,960,444)
Cash paid during the six months for:
Interest........................................... $408,643 $339,782
Income taxes....................................... $417,000 $326,800
Non-cash investing activities:
Unrealized gains (losses) on securities,
net of tax........................................ $108,709 ($114,709)
See Notes to Consolidated Financial Statements
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
Net income for the three and nine months ending September 30, 1995 totaled
$317,000 and $912,000, which are increases of 3.37% and 14.49%, respectively,
over net income for the same periods in 1994. Net interest income for the three
and nine months ending September 30, 1995 increased by $103,000 and $418,000,
which are increases of 12.56% and 18.30% over the same periods in 1994.
Interest income for the three and nine month periods increased by $347,000 and
$939,000 or 25.08% and 24.12%, respectively, while interest expense for the
three and nine periods increased by $241,000 and $538,000 or 44.81% and 35.07%.
The provision for loan losses increased $3,000 or 11.11% for the three month
period, but decreased $18,000, or 24.14% for the nine month period.
Loan income growth continues to be strong with increases of $240,000 and
$692,000, or 23.15% and 23.51%, for the three and nine month periods ending
September 30, 1995, compared to the same periods in 1994. Loan demand leveled
off during the third quarter and management expects it to remain level for the
remainder of 1995.
Income from investment securities increased by $115,000 and $199,000, or 43.47%
and 25.90%, for these same periods, as increased deposits during the third
quarter were invested in securities. Interest on fed funds sold declined to
zero because interest bearing deposits at the Federal Home Loan Bank are
classified as deposits in banks. Interest on deposits in banks declined $5,000
or 6.89% for the three months ended September 30, 1995 because of the declining
rate paid on the Bank's overnight deposits at the Federal Home Loan Bank. The
interest on deposits in banks increased $62,000 or 37.63% for the nine months
ended September 30, 1995, as compared to the same period for 1994. This is a
result of a rising interest rate trend during 1994, as compared to a declining
interest rate trend during 1995. The Bank expects interest income for deposits
in banks for the fourth quarter of 1995 to be lower than the same period in
1994.
The increase in interest expense is due directly to the steady increase in
interest rates during the third and fourth quarters of 1994 and the first
quarter of 1995. Although the average total sources to fund earning assets
increased by $9,248,000 from $68,741,000 at September 30, 1994 to $77,989,000 at
September 30, 1995, the average interest rate increased from 3.49% to 4.28%,
respectively, accounting for the increase in interest expense.
The increase in deposits in the past several years has provided funds for
investment in securities as well as loans. Loan demand was steady during the
third quarter, but is expected to slow during the fourth quarter due to seasonal
fluctuations and a slowing economy. Loan balances increased $4,607,000 or 9.86%
from $46,733,000 at December 31, 1994 to $51,340,000 at September
9
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30, 1995. Balances of investment securities "held to maturity" increased by
$6,337,000 or 55.53%, and balances of investment securities "available for sale"
increased by $1,300,000 or 15.08%, as compared to December 31, 1994. Because
deposits increased faster than loan demand, the bank invested the excess funds
in securities.
During October 1995, the Bank entered in to an agreement with Meridian Bank to
purchase a branch office located in Little Meadows, Pennsylvania. Subject to
regulatory approvals, the Bank expects to take possession of the office at the
end of January 1996. The office currently has approximately $3,700,000 in
deposits. Management believes the office offers opportunity for considerable
growth in both deposits and loans.
As previously noted, the provision for loan loss for the nine month period ended
September 30, 1995 decreased $18,000, while for the three month period ended
September 30, 1995 it increased $3,000, as compared to the same periods in
1994. The overall decrease is due to management's belief that the loan loss
account was adequately funded during the first half of the year, but increases
were needed during the third quarter because of increased loan demand. The
allowance for loan loss at September 30, 1995 and December 31, 1994 was $491,000
and $479,000, respectively. This represents 0.96% and 1.02% of total loans,
213% and 379% of non-performing loans, and 117% and 152% of non-performing
assets for September 30, 1995 and December 31, 1994, respectively. Management
performs a quarterly analysis of the Bank's potential loan losses on a "worst
case" basis. A loan review process is performed by an independent loan review
officer on a continuing basis. This information is closely reviewed by the
Board of Directors and used to evaluate the adequacy of the loan loss reserve in
order to provide coverage for identifiable losses, provide for coverage for
unexpected losses, and to keep the size of the reserve in proportion to the
growing size of the loan portfolio.
The following sets forth loans past due 90 days or more on which interest has
continued to be accrued for September 30, 1995 and December 31, 1994.
September 1995 December 1994
(In thousands)
Real estate mortgages $207 $174
Commercial 3 5
Installment 3 1
---- ----
Total $213 $180
==== ====
Non-accrual loans increased from $126,000 at December 31, 1994 to $231,000 at
September 30, 1995. Other real estate increased from $187,000 at December 31,
1994 to $189,000 at September 30, 1995. The Bank added one property to other
real estate and sold two of the properties during the third quarter. Another
property was added during the fourth quarter, and two properties are expected
10
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to be sold during the fourth quarter. A loss of $10,000 was recognized on one
of the properties during the fourth quarter. This property and another are
expected to be liquidated in 1996 with minimal additional loss to the Bank.
Although the overall quality of the loan portfolio of the Bank is good,
management expects future non-performing assets to increase in proportion to the
increase in the size of the loan portfolio.
Investments in securities "held to maturity" and "available for sale" have
increased, as previously noted. The market value of securities "held to
maturity" is $34,000 greater than the carrying value, and securities "available
for sale" reflect an unrealized gain in value of $109,000 from December 31, 1994
to September 30, 1995. This reflects a gain of $4,000 from the "booked" value
and is reflected as an increase in the Bank's equity of $3,000, net of deferred
tax effects.
The average interest rate on securities "available for sale" increased by 36
basis points, from 4.86% to 5.22% for the nine months ended September 30, 1994
and 1995, respectively. The average interest rate on securities "held to
maturity" increased by 77 basis points, from 5.67% to 6.44% for the same
period. Although these rates reflect increases, interest rates have been
declining during the second and third quarters of 1995, and are expected to
continue to decline. This decline accounts for the gain on the "available for
sale" portfolio. The value of the investment portfolio changes inversely to
changes in interest rates. Management has attempted to "lock in" some higher
rates by purchasing investments with slightly longer maturities. In an
declining rate environment this strategy should enhance the value of the
portfolio.
Management continues to purchase only high quality investments to minimize
credit risk to the value of the Bank's investments. There have been no adverse
credit valuations on any of the investments. Although investment opportunities
exist which will produce higher yields, they generally contain higher credit or
interest rate risk.
Operating expenses have increased during the three and nine months ending
September 30, 1995, compared to the same period in 1994, primarily due to costs
related to the new office in Edwardsville. Salaries and employee benefits have
increased by $44,000 and $107,000, or 20.19% and 16.16% for the three and nine
month periods, respectively. Occupancy expense increased by $16,000 and
$56,000, or 37.18% and 50.78%, for the three and nine months periods,
respectively. Equipment expense increased by $5,000 and $17,000 or 10.61% and
12.56% for the three and nine month periods, and other operating expenses
increased $34,000 and $115,000 or 21.57% and 25.12%, for the three and nine
month periods, respectively.
The Federal Deposit Insurance Corporation announced a reduction in the premium
for the Bank's deposit insurance during the third
11
<PAGE>
quarter of 1995, and made a rebate to the Bank of excess premium paid during the
first and second quarters. The Bank will recognize a total savings of
approximately $80,000 in F.D.I.C. insurance costs for 1995 due to these changes.
Management continues to monitor the Bank's repricing and liquidity by performing
an interest rate analysis and liquidity analysis on a monthly basis. These
reports are reviewed by management and the Board of Directors to determine ways
to improve the Bank's interest rate sensitivity gap and meet liquidity needs.
The Bank continues to place great emphasis on adjustable rate loan products,
such as variable rate home equity loans and annually adjustable mortgage loans
as well as adjustable rate and short to medium term investments, in order to
manage interest rate risk.
Since 1991 the Comptroller of the Currency has required all national banks to
meet certain "Risk Based Capital" standards. These standards weight certain
assets based on the risk of the asset, and also include certain off-balance
sheet items. The table below sets forth the Bank's Tier 1 and Tier 2 capital,
risk adjusted assets (including off-balance sheet items) and the Bank's
risk-based capital ratios under the guidelines, for September 30, 1995 and
December 31, 1994
(In thousands, except ratios) 1995 1994
Tier I capital:
Shareholder's equity........................$9,195 $8,349
Tier II capital:
Loan loss reserve........................... 491 479
------ ------
Total Qualifying Capital......................$9,685 $8,828
====== ======
Risk-adjusted assets (including
off-balance sheet items)...................$51,400 $45,961
Tier I Capital Ratio (4.00% required).........17.89% 18.17%
Total Capital Ratio (8.00% required)..........18.84% 19.21%
12
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GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
(1) Interest Average (1) Interest Average
Average Income/ Interest Average Income/ Interest
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Loans:
Mortgages.............................. $29,762 $708 9.52% $24,493 $588 9.60%
Installment............................ 4,138 115 11.12 4,386 104 9.48
Commercial............................. 16,731 448 10.71 15,366 336 8.75
------- ----- ------ -----
Total loans.......................... 50,631 1,271 10.04 44,245 1,028 9.29
------- ----- ------ -----
Securities available for sale:
U.S. Treasury securities............... 8,991 127 5.65 9,901 119 4.81
Other securities....................... 355 4 4.51 255 4 6.27
------- ----- ------ -----
Total available for sale........... 9,346 131 5.61 10,156 123 4.84
------- ----- ------ -----
Securities held to maturity:
U.S. government agencies............... 13,318 218 6.55 5,912 83 5.62
Municipal bonds........................ 2,321 32 5.51 3,244 48 5.92
Other securities....................... 910 14 6.15 1,538 28 7.28
------- ----- ------ -----
Total held to maturity............... 16,549 264 6.38 10,694 159 5.95
------- ----- ------ -----
Federal funds sold...................... 449 3 2.67
Deposits in banks....................... 6,484 72 4.44 6,527 77 4.72
------- ----- ------ -----
TOTAL.............................. $83,010 1,738 8.37 $72,071 1,390 7.71
======= ===== ====== =====
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW...................... $7,767 40 2.06 $7,193 36 2.00
Savings and money market............... 21,476 153 2.85 21,482 194 3.61
Certificates of deposit................ 38,707 573 5.92 30,108 297 3.95
Other time deposits.................... 200 3 6.00 200 2 4.00
------- ----- ------ -----
Total deposits....................... 68,150 769 4.51 58,983 529 3.59
Other borrowed funds.................... 836 11 5.26 753 9 4.78
------- ----- ------ -----
TOTAL.............................. 68,986 780 4.52 59,736 538 3.60
Non-interest bearing
funds, net (2).......................... 14,024 12,335
------- ----- ------ -----
TOTAL SOURCES TO FUND
EARNING ASSETS........................... $83,010 780 3.76 $72,071 538 2.99
======= ===== ====== =====
NET INTEREST/YIELD....................... $958 4.62% $852 4.73%
===== =====
</TABLE>
(1) Average balances are daily averages. (2) Demand deposits, stockholders's
equity and other non-interest bearing liabilities less non-interest earning
assets.
Non-accrual loans are reflected in the loan balances, but contributing no
interest income.
NOTE - Tax exempt interest income has been converted to a tax equivalent basis
at the U.S. federal income tax rate of 34%.
See Notes to Consolidated Financial Statements
13
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
(1) Interest Average (1) Interest Average
Average Income/ Interest Average Income/ Interest
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Loans:
Mortgages.............................. $29,369 $2,086 9.47% $25,567 $1,807 9.42%
Installment............................ 3,803 320 11.22 3,379 271 10.69
Commercial............................. 16,083 1,241 10.29 12,782 889 9.27
------- ----- ------ -----
Total loans.......................... 49,255 3,647 9.87 41,728 2,967 9.48
------- ----- ------ -----
Securities available for sale:
U.S. Treasury securities............... 7,779 304 5.21 9,793 359 4.89
Other securities....................... 311 13 5.57 250 7 3.73
------- ----- ------ -----
Total available for sale........... 8,090 317 5.22 10,043 366 4.86
------- ----- ------ -----
Securities held to maturity:
U.S. government agencies............... 10,636 523 6.56 5,594 227 5.41
Municipal bonds........................ 2,519 107 5.66 3,570 149 5.56
Other securities....................... 1,055 56 7.08 1,490 77 6.89
------- ----- ------ -----
Total held to maturity............... 14,210 686 6.44 10,654 453 5.67
------- ----- ------ -----
Federal funds sold...................... 468 14 3.99
Deposits in banks....................... 6,434 227 4.70 5,848 165 3.76
------- ----- ------ -----
TOTAL.............................. $77,989 4,877 8.34 $68,741 3,965 7.69
======= ===== ====== =====
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW...................... $7,466 114 2.04 $6,749 102 2.02
Savings and money market............... 21,151 455 2.87 21,026 525 3.33
Certificates of deposit................ 35,070 1,466 5.57 29,927 874 3.89
Other time deposits.................... 200 9 6.00 200 5 3.33
------- ----- ------ -----
Total deposits....................... 63,887 2,044 4.27 57,902 1,506 3.47
Other borrowed funds.................... 775 30 5.16 800 29 4.83
------- ----- ------ -----
TOTAL.............................. 64,662 2,074 4.28 58,702 1,535 3.49
Non-interest bearing
funds, net (2).......................... 13,327 10,039
------- ----- ------ -----
TOTAL SOURCES TO FUND
EARNING ASSETS........................... $77,989 2,074 3.55 $68,741 1,535 2.98
======= ===== ====== =====
NET INTEREST/YIELD..................................... $2,803 4.79% $2,430 4.71%
====== ==== ====== ====
</TABLE>
(1) Average balances are daily averages. (2) Demand deposits, stockholders's
equity and other non-interest bearing liabilities less non-interest earning
assets.
Non-accrual loans are reflected in the loan balances, but contributing no
interest income.
NOTE - Tax exempt interest income has been converted to a tax equivalent basis
at the U.S. federal income tax rate of 34%.
See Notes to Consolidated Financial Statements
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
(ii) Statement re: computation of earnings per share:
Earnings per share are calculated on the basis of the weighted average
number of shares outstanding. The number of shares used to calculate
earnings per share for the periods presented are as indicated in each
period.
During the current fiscal quarter, there have been no events of a nature
required to be filed on Form 8-K.
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.
GRANGE NATIONAL BANC CORP.
(Registrant)
Date Nov. 10, 1995 /s/ Thomas A. McCullough
---------------------
Thomas A. McCullough
President
Chief Executive Officer
Chief Financial Officer
Date Nov. 10, 1995 /s/ Philip O. Farr
---------------------
Philip O. Farr
Chief Accounting Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,715
<INT-BEARING-DEPOSITS> 4,955
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,919
<INVESTMENTS-CARRYING> 17,750
<INVESTMENTS-MARKET> 17,784
<LOANS> 51,340
<ALLOWANCE> 491
<TOTAL-ASSETS> 88,596
<DEPOSITS> 77,824
<SHORT-TERM> 576
<LIABILITIES-OTHER> 491
<LONG-TERM> 510
<COMMON> 3,212
0
0
<OTHER-SE> 5,983
<TOTAL-LIABILITIES-AND-EQUITY> 88,596
<INTEREST-LOAN> 3,637
<INTEREST-INVEST> 967
<INTEREST-OTHER> 227
<INTEREST-TOTAL> 4,830
<INTEREST-DEPOSIT> 2,043
<INTEREST-EXPENSE> 2,073
<INTEREST-INCOME-NET> 2,757
<LOAN-LOSSES> 55
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,656
<INCOME-PRETAX> 1,343
<INCOME-PRE-EXTRAORDINARY> 912
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 912
<EPS-PRIMARY> 2.64
<EPS-DILUTED> 2.64
<YIELD-ACTUAL> 4.79
<LOANS-NON> 231
<LOANS-PAST> 213
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 479
<CHARGE-OFFS> 56
<RECOVERIES> 12
<ALLOWANCE-CLOSE> 491
<ALLOWANCE-DOMESTIC> 491
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
