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 June 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
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
Unaudited Financial Statements: Page
<S> <C> <C>
Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995.........................2
Consolidated Statements of Income For the Three and Six Months Ended June 30, 1996............3
Consolidated Statements of Changes to Stockholder's Equity For the Six Months
Ended June 30, 1996 and 1995..................................................................4
Consolidated Statements of Cash Flows For the Six Months ended
June 30, 1996 and 1995........................................................................5
Notes to Consolidated Financial Statements................................................6 - 7
ITEM 2. Management's Discussion and Analysis of Financial Condition.....................8 - 13
PART II. OTHER INFORMATION:
ITEM 6. Exhibits and Reports on Form 8-K....................................................14
</TABLE>
1
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
1996 1995
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 1,844,530 $ 1,793,476
Investment securities, held to maturity (fair
value 1996, $24,021,000; 1995, $21,355,000) 24,352,135 21,155,479
Investment securities, available for sale (Note 3) 12,403,822 10,511,079
Interest bearing deposits 3,940,608 2,713,768
Loans, net of unearned interest 54,319,579 52,537,822
Less: allowance for loan losses 558,707 532,325
------------- -------------
Loans - net 53,760,872 52,005,497
Bank premises and equipment - net 2,245,259 2,236,370
Other real estate 15,869 69,618
Accrued interest and other assets 1,516,467 1,136,680
------------- -------------
TOTAL ASSETS $ 100,079,562 $ 91,621,967
============= =============
LIABILITIES:
Domestic deposits:
Non-interest bearing deposits $ 11,878,580 $ 8,860,513
Interest bearing deposits 76,713,301 71,005,086
------------- -------------
Total deposits 88,591,881 79,865,599
Other borrowed funds 913,982 1,712,342
Accrued interest and other liabilities 428,011 521,759
------------- -------------
Total liabilities 89,933,874 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 6,792,158 6,154,547
Unrealized holding gains (losses) on investment securities
(net of deferred income taxes of ($31,780) and
$33,000 in 1996 and 1995, respectively) (Note 4) (59,638) 65,000
------------- -------------
Total 10,146,124 9,522,753
Treasury stock, 20 and 23 shares,
respectively, at cost (436) (486)
------------- -------------
Total stockholders' equity 10,145,688 9,522,267
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 100,079,562 $ 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 Six Months
Ended Ended
June 30 June 30
---------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 1,317,847 $ 1,215,709 $ 2,591,017 $ 2,358,238
Interest and dividends
on investment securities 539,456 298,737 1,034,552 586,554
Interest on deposits in banks 32,832 87,851 70,889 154,823
----------- ----------- ----------- -----------
Total interest income 1,890,135 1,602,297 3,696,458 3,099,615
----------- ----------- ----------- -----------
Interest Expense:
Interest on deposits 795,833 681,570 1,575,305 1,274,762
Interest on borrowed funds 12,259 9,020 22,549 19,188
----------- ----------- ----------- -----------
Total interest expense 808,092 690,590 1,597,854 1,293,950
----------- ----------- ----------- -----------
Net interest income 1,082,043 911,707 2,098,604 1,805,665
Provision for loan losses 17,000 15,000 30,000 30,000
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 1,065,043 896,707 2,068,604 1,775,665
----------- ----------- ----------- -----------
Other Income:
Service charges and other income 136,495 97,985 254,718 192,076
Gain (loss) on sale of other real estate (22,801)
----------- ----------- ----------- -----------
Total other income 136,495 97,985 231,917 192,076
----------- ----------- ----------- -----------
Other Expenses:
Salaries and employee benefits 340,572 257,890 652,331 503,814
Occupancy expense 51,435 45,125 100,207 107,416
Equipment expense 51,146 51,970 106,076 102,218
Other operating expense 197,445 201,397 345,719 385,870
----------- ----------- ----------- -----------
Total other expenses 640,598 556,382 1,204,333 1,099,318
----------- ----------- ----------- -----------
Income before income taxes 560,940 438,310 1,096,188 868,423
Provision for income taxes 175,000 136,000 340,000 274,000
----------- ----------- ----------- -----------
Net income $ 385,940 $ 302,310 $ 756,188 $ 594,423
=========== =========== =========== ===========
Earnings per share (Note 4) $ 1.10 $ 0.87 $ 2.15 $ 1.72
=========== =========== =========== ===========
Weighted average common shares 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 SIX MONTHS ENDED JUNE 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 756,187 594,423
Cash dividend (69,126)
UNREALIZED HOLDING GAINS AND LOSSES
Unrealized holding gains (losses) on investment
securities (net of deferred income taxes of ($31,700)
and $33,000 in 1996 and 1995, respectively) (124,638) 95,884
TREASURY STOCK
Reissuance of common stock (3 shares each
in 1996 and 1995) 50 50
------------ ------------
STOCKHOLDERS' EQUITY, June 30 $ 10,145,688 $ 8,864,243
============ ============
</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 SIX MONTHS ENDED JUNE 30, 1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 756,187 $ 594,423
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 94,258 72,000
Provision for loan losses 30,000 30,000
Increase (decrease) in deferred income taxes (40,242) 48,788
Changes in operating assets and liabilities:
Increase in accrued interest income and other assets (212,370) (144,188)
Increase (decrease) in accrued interest expense and other liabilities (21,726) 67,777
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 606,107 668,800
------------ ------------
INVESTING ACTIVITIES:
Purchase bank premises and equipment (103,147) (154,280)
Decrease (increase) in other real estate 53,749 (45,193)
Purchase of securities "available for sale" (3,661,554) (2,041,878)
Redemptions of securities "available for sale" 1,612,393 3,099,974
Purchase of securities "held to maturity" (6,660,973) (4,990,982)
Redemptions of securities "held to maturity" 4,101,911 2,292,362
Decrease (increase) in mortgage-backed securities (637,594) 48,956
Decrease (increase) in loans to customers (1,785,375) (3,194,598)
Decrease (increase) in deposits in banks (1,226,840) (3,063,811)
Premium on deposits (167,417)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (8,474,847) (8,049,450)
------------ ------------
FINANCING ACTIVITIES:
Increase in deposits before interest credited 7,533,220 6,390,318
Increase (decrease) in borrowed funds (798,360) 74,526
Interest credited to deposits 1,193,062 1,150,338
Cash dividends paid (8,178) (69,126)
Decrease in treasury stock 50 50
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 7,919,794 7,546,106
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 51,054 165,456
CASH AND CASH EQUIVALENTS, January 1 1,793,476 1,486,145
------------ ------------
CASH AND CASH EQUIVALENTS, June 30 $ 1,777,486 $ 1,651,601
============ ============
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the six months for:
Interest $ 422,765 $ 250,677
Income taxes $ 324,000 $ 268,000
Non-cash investing activities:
Unrealized gains (losses) on securities, net of tax $ (59,638) $ 95,884
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 June 30, 1996 and 1995,
amortized cost exceeded fair market value by approximately $60,000 and
$15,000, respectively.
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 June 30, 1996 totaled $386,000, which is
a 28% increase from the $302,000 reported for the same period in 1995. Net
interest income for the three months ending June 30, 1996 increased by $170,000
to $1,082,000 compared to $912,000 for the same period in 1995. This constitutes
an increase of 19% over the same period in 1995. Interest income for this period
increased by $288,000 or 18% compared to 1995, and interest expense increased by
$117,000 or 17% compared to 1995.
The increase in interest income has been principally from investment income,
which increased $240,000 or 80% 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. Interest income from loans
only increased by 8% during the same period last year. Interest on deposits in
banks decreased from $88,000 to $33,000 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 second quarter
increased by $13,332,000 from $63,802,000 in 1995 to $77,134,000 in 1996, for an
increase of 21%. The average interest rate paid on these liabilities remained
fairly steady, declining from 3.60% in the second quarter of 1995, to 3.50% in
the second quarter of 1996.
The increase in deposits has largely provided funds for investment in
securities, as loan demand had been weak until the end of the first half of the
year. As loan demand begins to pick-up our growing deposit base and maturing
securities will supply the needed funds. The Bank purchased an office in Little
Meadows, Pennsylvania, from Meridian Bank during March of this year, and the
nearly $3,000,000 of deposits were invested into securities. This office is
beginning to generate healthy loan demand along with the Edwardsville office.
Loans increased by $1,782,000 or 3% from $52,537,000 at December 31, 1995 to
$54,320,000 at June 30, 1996. Balances of investment securities increased by
$5,089,000 or 16%, from $31,667,000 at December 31, 1995, to $36,756,000 at June
30, 1996.
The provision for loan loss during the three months ending June 30, 1996 was
$17,000 compared to $15,00 for the same period in 1995. The allowance for loan
loss was $559,000 and $532,000 at June 30, 1996 and December 31, 1995,
respectively. This represents 1.06% and 1.02% of total loans, 211% and 141% of
non-performing loans and 199% and 119% of non-performing assets for June 30,
1996 and December 31, 1995, 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 coverage for unexpected losses, and to
keep the size of the reserves in proportion to the growing size of the loan
portfolio.
8
<PAGE>
The following sets forth loans past due 90 days or more on which interest has
continued to be accrued for June 30, 1996 and December 31, 1995.
June 1996 December 1995
(In thousands)
Real estate mortgages $194
Commercial $ 6 27
Installment 5
---- ----
Total $11 $221
==== ====
Non-accrual loans increased from $156,000 at December 31, 1995 to $254,000 at
June 30, 1996. Other real estate decreased to $16,000 at June 30, 1996 from
$70,000 at December 31, 1995. The Bank has one parcel of other real estate left
and a signed sales contract with a buyer. The transaction should be consummated
by the fourth quarter. 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 $6,317,000 or 18%
from December 31, 1995 to June 30, 1996. The average rate earned on available
for sale, and held to maturity increased from 4.99% and 6.54% to 5.62% and
6.60%, respectively due to increases in medium term treasury and municipal
rates. The book value of the Bank's investments classified as held to maturity
exceeds the fair value by $329,000, while the fair value of investments
classified as available for sale reflect a $91,000 reduction from their
amortized value. This is reflected as a decrease in the Bank's equity of
approximately $60,000 net of deferred tax effects.
The rate earned on deposits in banks decreased from 5.68% to 5.32% due to
fluctuating overnight rates at the Federal Home Loan Bank and time deposits at
higher rates maturing, resulting in lower yields on deposits at other banks.
Rising interest rates at the beginning of the year, where they have mostly
stabilized, account for the unrealized losses on the securities portfolios..
Management expects interest rates to remain substantially the same for most of
the rest of the year, due to both economic and political factors. 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.
Salaries and employee benefits have increased by $148,000 or 29% from $504,000
to $652,000 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 $40,000, due to the reduction of the
F.D.I.C. premium.
9
<PAGE>
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 minize 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 June 30, 1996 and December
31, 1995.
(In thousands, except ratios) 1996 1995
Tier I capital:
Shareholders' equity $10,039 $ 9,194
Tier II:
Loan loss reserve 559 532
------- -------
Total Qualifying Capital $10,705 $ 9,726
======= =======
Risk-adjusted assets (including
off-balance sheet items) $56,353 $49,771
Tier I Capital Ratio (4.00% required) 18.00% 18.47%
Total Capital Ratio (8.00% required) 19.00% 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.
10
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
===============================================================================
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1996 JUNE 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 $31,305 $ 776 9.92% $29,401 $ 701 9.54%
Installment 4,765 119 9.99 3,719 105 11.29
Commercial 16,409 427 10.41 16,680 421 10.10
------- ------- ------- -------
Total loans 52,479 1,322 10.08 49,800 1,227 9.86
------- ------- ------- -------
Securities available for sale:
U.S. Treasury securities 12,338 182 5.90 6,766 72 4.26
Other securities 377 315 9 11.43
------- ------- ------- -------
Total available for sale 12,715 182 5.73 7,081 81 4.58
------- ------- ------- -------
Securities held to maturity:
U.S. government agencies 19,600 311 6.35 10,227 170 6.65
Municipal bonds 4,308 70 6.50 2,305 32 5.55
Other securities 438 6 5.48 1,118 25 8.94
------- ------- ------- -------
Total held to maturity 24,346 387 6.36 13,650 227 6.65
------- ------- ------- -------
Deposits in banks 2,796 33 4.72 6,216 88 5.66
------- ------- ------- -------
TOTAL $92,336 1,924 8.33 $76,747 1,623 8.46
======= ------- ======= -------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW $ 8,571 42 1.96 $ 7,517 38 2.02
Savings and money market 24,457 166 2.71 21,006 151 2.88
Certificates of deposit 43,231 585 5.41 34,380 490 5.70
Other time deposits 200 2 4.00 200 3 6.00
------- ------- ------- -------
Total deposits 76,459 795 4.16 63,103 682 4.32
Other borrowed funds 675 13 7.70 699 9 5.15
------- ------- ------- -------
TOTAL 77,134 808 4.19 63,802 691 4.33
Non-interest bearing
funds, net (2) 15,202 12,945
------- ------- ------- -------
TOTAL SOURCES TO FUND
EARNING ASSETS $92,336 808 3.50 $76,747 691 3.60
======= ------- ======= -------
NET INTEREST/YIELD $ 1,116 4.83% $ 932 4.86%
======= =======
</TABLE>
(1) Average balances are daily averages. (2) Demand deposits, stockholders'
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
11
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30,1996 JUNE 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 $31,028 $ 1,495 9.64% $29,169 $ 1,378 9.45%
Installment 4,775 235 9.84 3,634 205 11.28
Commercial 16,676 869 10.42 15,534 793 10.21
------- ------- ------- -------
Total loans 52,479 2,599 9.90 48,337 2,376 9.83
------- ------- ------- -------
Securities available for sale:
U.S. Treasury securities 11,335 324 5.72 7,163 177 4.94
Other securities 366 5 2.73 289 9 6.23
------- ------- ------- -------
Total available for sale 11,701 329 5.62 7,452 186 4.99
------- ------- ------- -------
Securities held to maturity:
U.S. government agencies 17,986 600 6.67 9,272 305 6.58
Municipal bonds 4,162 135 6.49 2,620 75 5.73
Other securities 617 16 5.19 1,128 46 8.16
------- ------- ------- -------
Total held to maturity 22,765 751 6.60 13,020 426 6.54
------- ------- ------- -------
Deposits in banks 2,671 71 5.32 5,461 155 5.68
TOTAL $89,616 3,750 8.37 $74,270 3,143 8.46
======= ------- ======= -------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW $ 8,330 82 1.97 $ 6,749 74 2.19
Savings and money market 23,299 318 2.73 21,026 302 2.87
Certificates of deposit 42,329 1,170 5.53 29,927 893 5.97
Other time deposits 200 5 5.00 200 6 6.00
------- ------- ------- -------
Total deposits 74,158 1,575 4.25 57,902 1,275 4.40
Other borrowed funds 736 23 6.25 800 19 4.75
------- ------- ------- -------
TOTAL 74,894 1,598 4.27 58,702 1,294 4.41
Non-interest bearing
funds, net (2) 14,722 15,568
------- ------- ------- -------
TOTAL SOURCES TO FUND
EARNING ASSETS $89,616 1,598 3.57 $74,270 1,294 3.48
======= ------- ======= -------
NET INTEREST/YIELD $ 2,152 4.80% $ 1,849 4.98%
======= =======
</TABLE>
(1) Average balances are daily averages.
(2) Demand deposits, stockholders' 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 August 14, 1996 /s/ Thomas A. McCullough
-------------------------------- -------------------------
Thomas A. McCullough
President
Chief Executive Officer
Chief Financial Officer
Date August 14, 1996 /s/ Philip O. Farr
-------------------------------- -------------------
Philip O. Farr
Chief Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM OUR
JUNE 30, 1996 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,845
<INT-BEARING-DEPOSITS> 3,941
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,404
<INVESTMENTS-CARRYING> 24,352
<INVESTMENTS-MARKET> 24,021
<LOANS> 54,320
<ALLOWANCE> 559
<TOTAL-ASSETS> 100,080
<DEPOSITS> 88,592
<SHORT-TERM> 472
<LIABILITIES-OTHER> 428
<LONG-TERM> 442
0
0
<COMMON> 3,414
<OTHER-SE> 6,732
<TOTAL-LIABILITIES-AND-EQUITY> 100,080
<INTEREST-LOAN> 2,591
<INTEREST-INVEST> 1,035
<INTEREST-OTHER> 71
<INTEREST-TOTAL> 3,696
<INTEREST-DEPOSIT> 1,575
<INTEREST-EXPENSE> 1,598
<INTEREST-INCOME-NET> 2,099
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,204
<INCOME-PRETAX> 1,096
<INCOME-PRE-EXTRAORDINARY> 756
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 756
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.10
<YIELD-ACTUAL> 4.80
<LOANS-NON> 256
<LOANS-PAST> 11
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 532
<CHARGE-OFFS> 9
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 559
<ALLOWANCE-DOMESTIC> 559
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
