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, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 0-13664
GRANGE NATIONAL BANC CORP
PENNSYLVANIA 23-2314065
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
198 E. Tioga St., Tunkhannock, Pennsylvania
-------------------------------------------
(Address of principal executive offices)
(717) 836-2100
--------------
(Registrant's telephone number, including area code)
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: 352,021
-----------
Transitional Small Business Disclosure Format (Check one): Yes ; No X
--- ---
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<S> <C>
Unaudited Financial Statements: Page
Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995............................... 2
Consolidated Statements of Income For the Three and Nine Months
Ended September 30, 1996........................................................................ 3
Consolidated Statements of Changes to Stockholder's Equity For the Nine Months
Ended September 30, 1996 and 1995........................................................................ 4
Consolidated Statements of Cash Flows For the Nine Months ended
September 30, 1996 and 1995.............................................................................. 5
Notes to Consolidated Financial Statements........................................................... 6 - 7
ITEM 2. Management's Discussion and Analysis of Financial Condition................................ 8 - 12
PART II. OTHER INFORMATION:
ITEM 6. Exhibits and Reports on Form 8-K............................................................... 13
</TABLE>
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS:
Cash and due from banks .................................. $ 1,848,312 $ 1,793,476
Investment securities, held to maturity (fair
value 1996, $23,517,000; 1995, $21,355,000) ............ 23,722,008 21,155,479
Investment securities, available for sale (Note 3) ....... 11,660,981 10,511,079
Interest bearing deposits ................................ 3,592,061 2,713,768
Loans, net of unearned interest .......................... 59,028,680 52,537,822
Less: allowance for loan losses ......................... 586,139 532,325
------------ -----------
Loans - net ....................................... 58,442,541 52,005,497
Bank premises and equipment - net ........................ 2,405,214 2,236,370
Other real estate ........................................ 0 69,618
Accrued interest and other assets ........................ 1,495,076 1,136,680
------------ -----------
TOTAL ASSETS ........................................... $103,166,193 $91,621,967
============ ===========
LIABILITIES:
Domestic deposits:
Non-interest bearing deposits .......................... $ 12,080,880 $ 8,860,513
Interest bearing deposits .............................. 76,873,027 71,005,086
------------ -----------
Total deposits ....................................... 88,953,907 79,865,599
Other borrowed funds ..................................... 3,199,735 1,712,342
Accrued interest and other liabilities ................... 454,113 521,759
------------ -----------
Total liabilities .................................... 92,607,755 82,099,700
------------ -----------
STOCKHOLDERS' EQUITY:
Preferred stock authorized 1,000,000 shares of $5 par;
None issued
Common stock authorized 5,000,000 shares of
$5 par value; 352,021 and 348,774 shares issued and
outstanding in 1996 and 1995, respectively (Note 4) .... 1,760,105 1,743,870
Additional paid-in capital ............................... 1,653,499 1,559,336
Retained earnings ........................................ 7,190,048 6,154,547
Unrealized holding gains (losses) on investment securities
(net of deferred income taxes of ($26,173) and
$33,000 in 1996 and 1995, respectively) (Note 4) ....... (44,778) 65,000
------------ -----------
Total ................................................ 10,558,874 9,522,753
Treasury stock, 20 and 23 shares,
respectively, at cost .................................. (436) (486)
------------ -----------
Total stockholders' equity ........................... 10,558,438 9,522,267
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................. $103,166,193 $91,621,967
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans ............. $ 1,375,784 $ 1,278,462 $ 3,966,801 $ 3,636,700
Interest and dividends
on investment securities ............. 549,065 380,087 1,583,617 966,641
Interest on deposits in banks .......... 25,694 71,686 96,583 226,509
----------- ----------- ----------- -----------
Total interest income .......... 1,950,543 1,730,235 5,674,001 4,829,850
----------- ----------- ----------- -----------
Interest Expense:
Interest on deposits ................... 803,516 768,561 2,378,821 2,043,323
Interest on borrowed funds ............. 9,541 10,544 32,090 29,732
----------- ----------- ----------- -----------
Total interest expense ......... 813,057 779,105 2,410,911 2,073,055
----------- ----------- ----------- -----------
Net interest income .............. 1,137,486 951,130 3,236,090 2,756,795
Provision for loan losses .......... 35,000 25,000 65,000 55,000
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses ...... 1,102,486 926,130 3,171,090 2,701,795
----------- ----------- ----------- -----------
Other Income:
Service charges and other income ....... 134,307 104,666 389,025 296,742
Gain (loss) on sale of other real estate (2,261) (25,062)
----------- ----------- ----------- -----------
Total other income ............. 132,046 104,666 363,963 296,742
----------- ----------- ----------- -----------
Other Expenses:
Salaries and employee benefits ......... 340,175 261,728 992,506 765,542
Occupancy expense ...................... 80,135 57,653 180,342 165,069
Equipment expense ...................... 57,031 49,873 163,107 152,091
Other operating expense ................ 193,302 187,185 539,021 573,055
----------- ----------- ----------- -----------
Total other expenses ........... 670,643 556,439 1,874,976 1,655,757
----------- ----------- ----------- -----------
Income before income taxes ............... 563,889 474,357 1,660,077 1,342,780
Provision for income taxes ............... 166,000 157,000 506,000 431,000
----------- ----------- ----------- -----------
Net income ............................... $ 397,889 $ 317,357 $ 1,154,077 $ 911,780
=========== =========== =========== ===========
Earnings per share (Note 4) .............. $ 1.13 $ 0.92 $ 3.28 $ 264
=========== =========== =========== ===========
Weighted average common share ............ 352,001 345,631 352,001 345,631
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
STOCKHOLDERS' EQUITY, January 1 ....................... $ 9,522,267 $8,243,012
COMMON STOCK, $5.00 PAR VALUE
Stock dividend $0.34 per share, plus
cash in lieu of fractional shares .................... 16,235
ADDITIONAL PAID-IN CAPITAL
Stock dividend $0.34 per share, plus cash
in lieu of fractional shares ......................... 94,163
RETAINED EARNINGS
Stock dividend $0.34 per share, plus cash in
lieu of fractional shares ............................ (110,398)
Cash paid in lieu of fractional shares
due to stock dividend ................................ (8,178)
NET INCOME ............................................ 1,154,077 911,780
Cash dividend ......................................... (69,126)
UNREALIZED HOLDING GAINS AND LOSSES
Unrealized holding gains (losses) on investment
securities (net of deferred income taxes of ($26,173)
and $5,212 in 1996 and 1995, respectively) .......... (109,778) 108,709
TREASURY STOCK
Reissuance of common stock (3 shares each
in 1996 and 1995) ................................... 50 50
----------- ----------
STOCKHOLDERS' EQUITY, September 30 .................... $10,558,438 $9,194,425
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
GRANGE NATIONAL BANC CORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 1995
- --------------------------------------- ---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ......................................... $ 1,154,077 $ 911,780
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 140,758 108,000
Provision for loan losses ........................ 65,000 55,000
Increase (decrease) in deferred income taxes ..... (57,123) 54,001
Changes in operating assets and liabilities:
Increase in accrued interest
income and other assets .......................... (193,817) (283,776)
Increase in accrued interest expense
and other liabilities ........................... 13,600 159,001
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ............................. 1,122,495 1,004,006
------------ ------------
INVESTING ACTIVITIES:
Purchase bank premises and equipment ............... (309,602) (198,608)
Decrease (increase) in other real estate ........... 69,618 (1,693)
Purchase of securities "available for sale" ........ (4,155,304) (5,288,158)
Redemptions of securities "available for sale" ..... 2,871,501 4,098,472
Purchase of securities "held to maturity" .......... (6,660,973) (9,555,844)
Redemptions of securities "held to maturity" ....... 4,873,223 3,130,851
Decrease (increase) in mortgage-backed securities .. (778,779) 87,859
Increase in loans to customers ..................... (6,502,044) (4,650,667)
Decrease (increase) in deposits in banks ........... (878,293) 547,085
Premium on deposits ................................ (164,579)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES ............................. (11,635,232) (11,830,703)
------------ ------------
FINANCING ACTIVITIES:
Increase in deposits before interest credited ...... 7,255,032 9,054,401
Increase in borrowed funds ......................... 1,487,393 313,986
Interest credited to deposits ...................... 1,833,276 1,756,277
Cash dividends paid ................................ (8,178) (69,126)
Decrease in treasury stock ......................... 50 50
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ............................. 10,567,573 11,055,588
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................... 54,836 228,891
CASH AND CASH EQUIVALENTS, January 1 ................ 1,793,476 1,486,145
------------ ------------
CASH AND CASH EQUIVALENTS, September 30 ............. $ 1,848,312 $ 1,715,036
============ ============
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the six months for:
Interest .......................................... $ 600,664 $ 408,643
Income taxes ...................................... $ 474,000 $ 417,000
Non-cash investing activities:
Unrealized gains (losses) on securities, net of tax ($ 109,778) $ 108,709
Stock dividend .................................... 110,398
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BUSINESS COMBINATION AND PRINCIPLES OF COMBINATION:
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 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 $70,000. At September 30, 1996, amortized
cost exceeded fair market value by approximately $69,000 at September
30, 1995 fair market exceeded amortized cost by $4,000.
6
<PAGE>
4. 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, with options
expiring at the end of ten years 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.
The Board of Directors adopted an additional Stock Option Plan (the
"Plan") in November 1995 covering the employees and directors. The Plan
authorizes the grant of options to purchase not more than 55,000 shares
of Common Stock under the Plan. Options granted under the Plan are
intended to be either incentive stock options or nonstatutory stock
options. As of July 31, 1996 options for 50,160 shares of Common Stock
having an exercise price of $32.50 were outstanding and 4,840 shares
were available for future option grants under the Plan. Of the 50,160
shares of Common Stock outstanding for options, 36,320 shares of Common
Stock were issued as incentive stock options. The remaining shares
outstanding for options were granted to each non-employee director
equally as nonstatutory stock options.
PREFERRED STOCK:
The Company authorized 1,000,000 of preferred stock at $5 par value. At
December 31, 1995 and June 30, 1996, no shares were issued nor
outstanding.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
Net income for the three months ending September 30, 1996 totaled $398,000,
which is a 25% increase from the $317,000 reported for the same period in 1995.
Net interest income for the three months ending September 30, 1996 increased by
$186,000 to $1,137,000 compared to $951,000 for the same period in 1995. This
constitutes an increase of 20% over the same period in 1995. Interest income for
this period increased by $220,000 or 13% compared to 1995, and interest expense
increased by $34,000 or 4% compared to 1995.
The increase in interest income has been primarily from investment income, which
increased $169,000 or 44% compared to the same period last year. This increase
resulted from increased investments in securities due to low loan demand during
most of the first half of the year. During the third quarter loan demand
increased significantly and should begin to produce good returns during 1997.
Interest income from loans increased by 8% during the quarter ended September
30, 1996 compared to the same period last year. Interest on deposits in banks
decreased for this period from $72,000 to $26,000 due to management's efforts to
keep money invested in higher yielding securities.
The increase in interest expense is due primarily to increases in interest
bearing deposits. Average interest bearing liabilities during the third quarter
increased by $9,058,000 from $68,986,000 in 1995 to $78,044,000 in 1996, for an
increase of 13%. Average net, non-interest bearing funds increased from
$14,024,000 to $16,768,000 lowering the average overall rate paid on liabilities
from 3.76% to 3.43% during the quarter.
Loan demand during the third quarter has been strong while deposits have
remained flat, so the Bank has funded loan demand with maturing securities and
short term borrowings from the Federal Home Loan Bank. The Bank has $1,655,000
in investments maturing during the fourth quarter of 1996 to help fund loan
demand. These funds along with deposits anticipated from a new office opened in
Towanda in November 1996, are expected to fund the loan demand. In addition the
Bank has the availability of borrowing over $26,000,000 from the FHLB under
varying terms. Continued short-term borrowings from the FHLB will also be
available to fund additional loan demand until $4,648,000 of investments mature
during the first half of 1997. Management is keeping fewer funds in liquid but
low paying deposits, and instead investing in higher yielding government
securities and borrowing to meet short term needs.
Loans increased by $6,491,000 or 12% from $52,538,000 at December 31, 1995 to
$59,029,000 at September 30, 1996. Balances of investment securities increased
by $3,716,000 or 12%, from $31,667,000 at December 31, 1995, to $35,383,000 at
September 30, 1996.
The provision for loan loss during the three months ending September 30, 1996
was $35,000 compared to $25,000 for the same period in 1995. The allowance for
loan loss was $586,000 and $532,000 at September 30, 1996 and December 31, 1995,
respectively. This represents 1.00% and 1.02% of total loans, 242% and 141% of
both non-performing loans and non-performing assets for September 30, 1996 and
December 31, 1995, respectively. Management performs a
8
<PAGE>
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 coverage for unexpected losses, and to
keep the size of the reserves 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, 1996 and December 31, 1995.
September 1996 December 1995
(In thousands)
Real estate mortgages $0 $194
Commercial 27
--- ----
Installment
Total $0 $221
=== ====
Non-accrual loans increased from $156,000 at December 31, 1995 to $242,000 at
September 30, 1996. The last parcel of other real estate was sold during the
third quarter leaving a zero balance compared to $70,000 at December 31, 1995.
Management expects to acquire a property through foreclosure by the end of the
year, which should be approximately $70,000. Overall the quality of the loan
portfolio remains very good, and management expects non-performing assets to
remain at substantially the same levels as a proportion of loans.
Investments in securities and deposits in banks increased by $4,595,000 or 13
from December 31, 1995 to September 30, 1996. The average rate earned on
available for sale, and held to maturity increased from 5.22% and 6.44% to 5.77%
and 6.59%, respectively due to increases in medium term treasury and municipal
rates. The fair value of the Bank's investments classified as held to maturity
exceeds the amortized value by $205,000. The fair value of investments
classified as available for sale reflect a $69,000 reduction from their
amortized value. This is reflected as a decrease in the Bank's equity of
approximately $45,000 net of deferred tax effects. The rate earned on deposits
in banks increased from 4.70% to 5.32%.
Rising interest rates at the beginning of the year, where they mostly stabilized
through the third quarter, account for the unrealized losses on the securities
portfolios. Rising interest rates make existing bonds less attractive to
investors and thus drive down their market value. Although interest rates began
to slide near the end of the third quarter management expects interest rates to
remain substantially the same. As securities with lower rates mature they are
being replaced with current higher rates. Management strives to keep the average
maturity of the investments short to minimize changes in fair value based on
interest rate risk. 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.
9
<PAGE>
Salaries and employee benefits have increased by $227,000 or 30% from $766,000
to $993,000 due to salary increases and salary costs associated with the
addition of the Little Meadows office. Occupancy and equipment expenses have not
changed significantly, despite the addition of the Little Meadows office, and
other operating expenses have decreased by $34,000, due to the reduction of the
F.D.I.C. premium.
Management performs an interest rate and liquidity analysis on a monthly basis
to monitor the Bank's interest rate sensitivity gap and liquidity needs. These
reports are reviewed by the Board of Directors and used to formulate ways to
improve the Bank's interest rate sensitivity gap. 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 and
short term investments, in order to minimize 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 includes 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, 1996 and
December 31, 1995.
(In thousands, except ratios) 1996 1995
---- ----
Tier I capital:
Shareholders' equity ......................... $ 10,193 $ 9,194
Less: Goodwill ...................... (165)
Total Tier I capital .................................. 10,028
Tier II:
Loan loss reserve .......................... 586 532
-------- --------
Total Qualifying Capital .............................. $ 10,732 $ 9,726
======== ========
Risk-adjusted assets (including off-balance sheet items) $ 61,135 $ 49,771
Tier I Capital Ratio (4.00% required) ................. 16.60% 18.47%
Total Capital Ratio (8.00% required) .................. 17.55% 19.54%
During the second quarter the Bank received approval from the Office of the
Comptroller of the Currency for a branch office located in Trucksville,
Pennsylvania, to be known as the "Back Mountain Office". The building will be
leased and the cost of the interior finish and furnishings to be borne by the
Bank are expected to be approximately $200,000. Management expects to open the
office in early 1997. In September 1996 the Bank received approval from the
Office of the Comptroller of the Currency for a branch office located in
Towanda, Pennsylvania. The Bank purchased a former office of Northern Central
Bank. Total costs for purchase of the property along with renovations and
furnishings will be approximately $175,000. The office opened in November 1996.
10
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
-------------------------------------------------------------------------
(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 ................... $32,884 $ 791 9.62% $29,762 $ 708 9.52%
Installment ................. 5,009 124 9.90 4,138 115 11.12
Commercial .................. 19,100 473 9.91 16,731 448 10.71
------------------- --------------------
Total loans ............... 56,993 1,388 9.74 50,631 1,271 10.04
------------------- --------------------
Securities available for sale:
US Treasury securities ...... 11,454 168 5.87 8,991 127 5.65
Other securities ............ 417 11 10.55 355 4 4.51
------------------- --------------------
Total available for sale 11,871 179 6.03 9,346 131 5.61
------------------- --------------------
Securities held to maturity:
US government agencies ...... 19,354 315 6.51 13,318 218 6.55
Municipal bonds ............. 4,257 71 6.67 2,321 32 5.51
Other securities ............ 389 9 9.25 910 14 6.15
------------------- --------------------
Total held to maturity .... 24,000 395 6.58 16,549 264 6.38
------------------- --------------------
Deposits in banks ............ 1,948 26 5.34 6,484 72 4.44
------------------- --------------------
TOTAL ................... $94,812 1,988 8.39 $83,010 1,738 8.37
=======------------ =======-------------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW ........... $ 8,630 43 1.99 $ 7,767 40 2.06
Savings and money market .... 24,930 172 2.76 21,476 153 2.85
Certificates of deposit ..... 43,366 585 5.40 38,707 573 5.92
Other time deposits ......... 200 4 8.00 200 3 6.00
------------------- -------------------
Total deposits ............ 77,126 804 4.17 68,150 769 4.51
Other borrowed funds .......... 918 9 3.92 836 11 5.26
------------------- -------------------
TOTAL ................... 78,044 813 4.17 68,986 780 4.52
Non-interest bearing
funds, net(2) ................ 16,768 14,024
------------------- --------------------
TOTAL SOURCES TO FUND
EARNING ASSETS ................ $94,812 813 3.43 $83,010 780 3.76
=======------------ =======-------------
NET INTEREST/YIELD ............ $1,175 4.96% $ 958 4.62%
============ =============
</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 US federal income tax rate of 34%.
See Notes to Consolidated Financial Statements.
11
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
-------------------------------------------------------------------------
(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 .................... $31,651 $2,286 9.63% $29,369 $2,086 9.47%
Installment .................. 4,853 359 9.86 3,803 320 11.22
Commercial ................... 17,490 1,342 10.23 16,083 1,241 10.29
------------------ ------------------
Total loans ................ 53,994 3,987 9.85 49,255 3,647 9.87
------------------ ------------------
Securities available for sale:
U.S. Treasury securities ..... 11,351 492 5.78 7,779 304 5.21
Other securities ............. 383 16 5.57 311 13 5.57
------------------ ------------------
Total available for sale . 11,734 508 5.77 8,090 317 5.22
------------------ ------------------
Securities held to maturity:
U.S. government agencies ..... 18,445 915 6.61 10,636 523 6.56
Municipal bonds .............. 4,194 206 6.55 2,519 107 5.66
Other securities ............. 540 25 6.17 1,055 56 7.08
------------------ ------------------
Total held to maturity ..... 23,179 1,146 6.59 14,210 686 6.44
------------------ ------------------
Deposits in banks ............. 2,430 97 5.32 6,434 227 4.70
------------------ ------------------
TOTAL .................... $91,337 5,738 8.38 $77,989 4,877 8.34
=======----------- =======-----------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW ............ $ 8,431 125 1.98 $ 7,466 114 2.04
Savings and money market ..... 23,847 490 2.74 21,151 455 2.87
Certificates of deposit ...... 42,677 1,755 5.48 35,070 1,466 5.57
Other time deposits .......... 200 9 6.00 200 9 6.00
------------------ ------------------
Total deposits ............. 75,155 2,379 4.22 63,887 2,044 4.27
Other borrowed funds .......... 797 32 5.35 775 30 5.16
------------------ ------------------
TOTAL .................... 75,952 2,411 4.23 64,662 2,074 4.28
Non-interest bearing
funds, net(2) ................. 15,385 13,327
------------------ ------------------
TOTAL SOURCES TO FUND
EARNING ASSETS ................. $91,337 2,411 3.52 $77,989 2,074 3.55
=======----------- =======-----------
NET INTEREST/YIELD ............. $3,327 4.86% $2,803 4.79%
=========== ===========
</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
12
<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 November 14, 1996 /s/ Thomas A. McCullough
-------------------------------- -------------------------
Thomas A. McCullough
President
Chief Executive Officer
Chief Financial Officer
Date November 14, 1996 /s/ Philip O. Farr
-------------------------------- -------------------
Philip O. Farr
Chief Accounting Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<CURRENCY> dollar
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,848
<INT-BEARING-DEPOSITS> 3,592
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,661
<INVESTMENTS-CARRYING> 23,722
<INVESTMENTS-MARKET> 23,517
<LOANS> 59,029
<ALLOWANCE> 586
<TOTAL-ASSETS> 103,166
<DEPOSITS> 88,954
<SHORT-TERM> 2,775
<LIABILITIES-OTHER> 454
<LONG-TERM> 425
0
0
<COMMON> 3,414
<OTHER-SE> 7,144
<TOTAL-LIABILITIES-AND-EQUITY> 103,166
<INTEREST-LOAN> 3,967
<INTEREST-INVEST> 1,584
<INTEREST-OTHER> 96
<INTEREST-TOTAL> 5,647
<INTEREST-DEPOSIT> 2,379
<INTEREST-EXPENSE> 2,411
<INTEREST-INCOME-NET> 3,236
<LOAN-LOSSES> 65
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,875
<INCOME-PRETAX> 1,660
<INCOME-PRE-EXTRAORDINARY> 1,660
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,154
<EPS-PRIMARY> 3.28
<EPS-DILUTED> 3.28
<YIELD-ACTUAL> 4.86
<LOANS-NON> 242
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 532
<CHARGE-OFFS> 17
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 586
<ALLOWANCE-DOMESTIC> 586
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
