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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 June 30, 1997.
[ ] 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: 361,004
-------
Transitional Small Business Disclosure Format (Check one): Yes ; No X
--- ---
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<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
ITEM 1. Unaudited Financial Statements
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996................................... 2
Consolidated Statements of Income For the Three and Six Months
Ended June 30, 1997 and 1996............................................................................ 3
Consolidated Statements of Changes to Stockholder's Equity For the Six Months
Ended June 30, 1997 and 1996............................................................................ 4
Consolidated Statements of Cash Flows For the Six Months ended
June 30, 1997 and 1996.................................................................................. 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, JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
ASSETS:
Cash and due from banks .................................. $ 2,168,956 $ 2,566,232
Investment securities, held to maturity (fair
value 1997, $20,870,000; 1996, $22,182,000) ............ 23,481,105 22,269,823
Investment securities, available for sale (Note 3) ....... 11,767,079 11,732,690
Interest bearing deposits ................................ 7,760,816 1,974,642
Loans, net of unearned interest .......................... 69,502,519 62,033,046
Less: allowance for loan losses ......................... 658,349 622,821
------------- -------------
Loans - net ....................................... 68,844,170 61,410,225
Bank premises and equipment - net ........................ 2,967,413 2,680,580
Premium on deposits ...................................... 148,972 157,485
Other real estate ........................................ 3,300 0
Accrued interest and other assets ........................ 1,304,828 1,407,712
------------- -------------
TOTAL ASSETS ........................................... $ 118,446,639 $ 104,199,389
============= =============
LIABILITIES:
Domestic deposits:
Non-interest bearing deposits .......................... $ 14,680,802 $ 12,206,738
Interest bearing deposits .............................. 90,522,039 78,848,660
------------- -------------
Total deposits ....................................... 105,202,841 91,055,398
Other borrowed funds ..................................... 966,271 1,613,160
Accrued interest and other liabilities ................... 577,737 590,973
------------- -------------
Total liabilities .................................... 106,746,849 93,259,531
------------- -------------
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; 369,975 and 355,291 shares issued and
outstanding in 1997 and 1996, respectively (Note 4) .... 1,799,875 1,776,455
Additional paid-in capital ............................... 1,915,628 1,767,949
Retained earnings ........................................ 7,993,379 7,392,890
Unrealized holding gains (losses) on investment securities
(net of deferred income taxes) ......................... (8,900) 3,000
------------- -------------
Total ................................................ 11,699,982 10,940,294
Treasury stock, 8 and 20 shares,
respectively, at cost .................................. (192) (436)
------------- -------------
Total stockholders' equity ........................... 11,699,790 10,939,858
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................. $ 118,446,639 $ 104,199,389
============= =============
</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
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans ............. $ 1,563,868 $ 1,317,847 $ 3,008,913 $ 2,591,017
Interest and dividends
on investment securities ............. 534,185 539,456 1,042,313 1,034,552
Interest on deposits in banks .......... 49,037 32,832 79,231 70,889
----------- ----------- ----------- -----------
Total interest income .......... 2,147,090 1,890,135 4,130,457 3,696,458
----------- ----------- ----------- -----------
Interest Expense:
Interest on deposits ................... 911,759 795,833 1,750,702 1,575,305
Interest on borrowed funds ............. 7,076 12,259 18,399 22,549
----------- ----------- ----------- -----------
Total interest expense ......... 918,835 808,092 1,769,101 1,597,854
----------- ----------- ----------- -----------
Net interest income .............. 1,228,255 1,082,043 2,361,356 2,098,604
Provision for loan losses .......... 30,000 17,000 60,000 30,000
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses ...... 1,198,255 1,065,043 2,301,356 2,068,604
----------- ----------- ----------- -----------
Other Income:
Service charges and other income ....... 167,334 136,495 300,153 254,718
Gain (loss) on sale of other real estate 0 (22,801)
----------- ----------- ----------- -----------
Total other income ............. 167,334 136,495 300,153 231,917
----------- ----------- ----------- -----------
Other Expenses:
Salaries and employee benefits ......... 398,248 340,572 768,858 652,331
Occupancy expense ...................... 93,917 51,435 157,679 100,207
Equipment expense ...................... 63,365 51,146 118,822 106,076
Other operating expense ................ 232,545 197,445 473,868 345,719
----------- ----------- ----------- -----------
Total other expenses ........... 788,075 640,598 1,519,227 1,204,333
----------- ----------- ----------- -----------
Income before income taxes ............... 577,514 560,940 1,082,282 1,096,188
Provision for income taxes ............... 189,000 175,000 332,000 340,000
----------- ----------- ----------- -----------
Net income ............................... $ 388,514 $ 385,940 $ 750,282 $ 756,188
=========== =========== =========== ===========
Earnings per share (Note 4) .............. $ 1.03 $ 1.10 $ 1.99 $ 2.15
=========== =========== =========== ===========
Weighted average common shares ........... 376,566 352,001 376,370 352,001
</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, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
STOCKHOLDERS' EQUITY, January 1 ............................ $ 10,939,858 $ 9,522,267
COMMON STOCK, $5.00 PAR VALUE
Options exercised .......................................... 6,860
Stock dividend $0.42 and $0.34 per share in 1997 and 1996,
plus cash in lieu of fractional shares ................ 16,560 16,235
ADDITIONAL PAID-IN CAPITAL
Options exercised .......................................... 25,135
Stock dividend $0.42 and $0.34 per share in 1997 and 1996,
plus cash in lieu of fractional shares ................ 122,544 94,163
RETAINED EARNINGS
Stock dividend $0.42 and $0.34 per share in 1997 and 1996,
plus cash in lieu of fractional shares ................ (139,104) (110,398)
Cash paid in lieu of fractional shares due to stock dividend (10,689) (8,178)
Net income ................................................. 750,282 756,187
UNREALIZED HOLDING GAINS AND LOSSES
Unrealized holding gains (losses) on investment
securities ............................................... (11,900) (124,638)
TREASURY STOCK
Reissuance of common stock (12 shares and 3 shares
in 1997 and 1996, respectively) .......................... 244 50
============ ============
STOCKHOLDERS' EQUITY, June 30 .............................. $ 11,699,790 $ 10,145,688
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................................. $ 750,282 $ 756,187
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ........................................ 119,513 97,095
Provision for loan losses ............................................ 60,000 30,000
Decrease in deferred income taxes .................................... (6,000) (40,242)
Changes in operating assets and liabilities:
Increase (decrease) in accrued interest income and other assets ....... 108,884 (212,370)
Increase (decrease) in accrued interest expense and other liabilities.. (13,236) (21,726)
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ................................................. 1,019,443 608,944
------------ ------------
INVESTING ACTIVITIES:
Purchase bank premises and equipment ................................... (397,833) (103,147)
Decrease (increase) in other real estate ............................... (3,300) 53,749
Purchase of securities "available for sale" ............................ (1,531,254) (3,661,554)
Redemptions of securities "available for sale" ......................... 1,484,965 1,612,393
Purchase of securities "held to maturity" .............................. (1,993,907) (6,660,973)
Redemptions of securities "held to maturity" ........................... 2,541,630 4,101,911
Decrease (increase) in mortgage-backed securities ...................... (1,759,005) (637,594)
Decrease (increase) in loans to customers .............................. (7,493,945) (1,785,375)
Decrease (increase) in deposits in banks ............................... (5,786,174) (1,226,840)
Premium paid on core deposits .......................................... (170,254)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES ................................................. (14,938,823) (8,477,684)
FINANCING ACTIVITIES:
Increase in deposits before interest credited .......................... 12,764,793 7,533,220
Increase (decrease) in borrowed funds .................................. (646,889) (798,360)
Interest credited to deposits .......................................... 1,382,650 1,193,062
Cash dividends paid .................................................... (10,689) (8,178)
Decrease in treasury stock ............................................. 244 50
Issuance of common stock ............................................... 31,995
------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ................................................. 13,522,104 7,919,794
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ....................................................... (397,276) 51,054
------------ ------------
CASH AND CASH EQUIVALENTS, January 1 .................................... 2,566,232 1,793,476
------------ ------------
CASH AND CASH EQUIVALENTS, June 30 ...................................... $ 2,168,956 $ 1,844,530
============ ============
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest .............................................................. $ 344,555 $ 422,765
Income taxes .......................................................... $ 346,553 $ 324,000
Non-cash investing activities:
Unrealized gains (losses) on securities ............................... ($ 18,000) ($ 37,000)
Stock dividend ........................................................ 139,104 110,398
</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, 1997 and 1996 amortized cost exceeded fair
market value by approximately $15,000 and $60,000, 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. The Plan provides for adjustments
to the number of options to compensate for stock dividends and splits.
Accordingly all effected figures have been adjusted to reflect stock
dividends. Effective April 1, 1994 and 1997, options to purchase 1,029
shares of common stock, at $23.32 and $42.00, per share, respectively, were
automatically granted to each non-employee Director under this plan
expiring April 1, 2004. Of these options, 1,029 have been exercised.
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 56,105 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 April
30, 1997 options for 56,105 shares of Common Stock having an exercise price
of $31.86 were outstanding (1,747 options did not vest and lapsed) and
6,702 shares were available for future option grants under the Plan. Of the
49,403 shares of Common Stock outstanding for options, 37,050 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, 1996 and June 30, 1997, 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, 1997 totaled $389,000 which is
approximately the same as the $386,000 reported for the same period in 1996.
Net interest income for the three months ending June 30, 1997 increased by
$146,000 to $1,228,000 compared to $1,082,000 for the same period in 1996. This
constitutes an increase of 13% over the previous year. Interest income for this
period increased by $257,000 or 14% compared to 1996, and interest expense
increased as well by $111,000 or 14% compared to 1996.
The increase in interest income has been principally from interest on loans
which increased $246,000 or 19% compared to the same period last year. Interest
income from investment securities decreased by $5,000 or 1% compared to the same
period last year. Interest rates on loans were fairly stable through the end of
the first quarter and most of the second quarter. At the end of March the New
York Prime Rate increased by 25 basis points in response to the Federal
Reserve's action increasing the interest rate at the discount window by 25 basis
points. This increased the bank's interest rate spread during the second quarter
because many commercial and consumer loans adjust with the New York Prime Rate.
Interest on deposits in banks increased by $16,000 from $33,000 to $49,000 due
to higher balances and higher rates.
The increase in interest expense is due to the increase in interest bearing
deposits during the second quarter of 1997 as compared to the second quarter of
1996. The average total sources to fund earning assets increased by $13,787,000,
from $92,336,000 to $106,123,000 in 1997, while the average interest rate
increased from 4.19% to 4.21%, respectively.
The increase in deposits continues to provide funds for loans and liquidity.
Loan demand during the second quarter was strong as loans increased $7,434,000
or 12% from $61,410,000 in at December 31, 1996 to $68,844,000 at June 30, 1997.
Loan demand continues to be strong as the third quarter begins. Balances of
investment securities remained stable during the second quarter with an increase
$34,000 since December 31, 1996. Interest bearing deposits at banks increased by
$5,786,000 to $7,761,000 from $1,975,000 due to deposits flowing in and
management holding off on investing the funds due to low rates on securities,
and anticipated loan demand.
The provision for loan loss during the three months ending June 30, 1997 was
$30,000 compared to $17,000 for the same period in 1996, as management tries to
keep the allowance for loan losses in line with the size of the loan portfolio.
The allowance for loan losses was $658,000 and $623,000 at June 30, 1997 and
December 31, 1996, respectively. This represents 0.95% and 1.00% of total loans,
306% and 192% of non-performing loans, respectively, and 302% and 192% of
non-performing assets. 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.
The following sets forth loans past due 90 days or more on which interest has
continued to be
8
<PAGE>
accrued for June 30, 1997 and December 31, 1996.
June 1997 December 1996
(In thousands)
Real estate mortgages $6 $67
Commercial 48 11
Installment -- ---
Total $54 $78
=== ===
Non-accrual loans decreased from $247,000 at December 31, 1996 to $161,000 at
June 30, 1997. The overall quality remains very good, and management expects
non-performing assets to remain at substantially the same levels as a proportion
of loans. Other real estate owned increased to $3,000 with the acquisition of
one property during the second quarter, however, a second property was acquired
just after the end of the second quarter, raising the balance to $84,000.
Managements expects to liquidate the second property by the end of the year.
Investments in securities and deposits in banks increased by $7,032,000 or 20%
from December 31, 1996 to June 30, 1997. The average rate earned on available
for sale, held to maturity and deposits in banks were 6.13%, 6.49% and 5.56% for
the three months ended June 30, 1997, as compared to 5.73%, 5.48% and 4.72% for
the three months ended June 30, 1996. The amortized value of the Bank's
investments classified as held to maturity exceeded their fair value by $76,000,
and the amortized value of investments classified as available for sale exceeded
their fair value by $15,000. This is reflected as a decrease in the Bank's
equity of approximately $9,000, net of deferred tax effects.
Slightly higher interest rates at June 30, 1997 account for the unrealized loss
on the available for sale securities reflected on the balance sheet. Rates are
expected to change from day to day, but remain fairly level. This will result in
minimal impact on the fair value of securities available for sale. As the Bank
extends the length of the securities it purchases, interest rate changes will
have greater impact on the fair value of those securities. This interest rate
risk is offset by higher yields on the securities. The Bank continues to
purchase fairly short maturities, generally five to eight years for fixed rate
securities.
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.
The Bank experienced substantial increased operating expenses associated with
the addition of two new offices and a computer conversion. The Towanda office
opened in November 1996, the Back Mountain office opened in February 1997 and
the computer conversion occurred in January 1997. The Back Mountain office is
leased over a term of 15 years, and renewable at that time, for $70,000 per
year. Salaries and employee benefits have increased by $57,000 or 17%
9
<PAGE>
from $341,000 to $398,000, occupancy expense increased $43,000 or 84% from
$51,000 to $94,000, and other operating expenses increased $35,000 or 18% from
$197,000 to $232,000, for the three months ended June 30, 1997 as compared to
the same period for 1996. The increase in occupancy expenses reflect the cost of
the Back Mountain Office which opened in February 1997. Other operating expenses
were more in line as most of the advertising expenses for the opening of the
Back Mountain were paid during the first quarter.
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 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 rate 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 June 30, 1997 and December
31, 1996.
(In thousands, except ratios)
1997 1996
Tier I capital:
Shareholders' equity ..................... $11,560 $10,780
Tier II capital:
Loan loss reserve ........................ 658 623
------- -------
Total Qualifying Capital ...................... $12,218 $11,403
======= =======
Risk-adjusted assets (including off balance sheet items) $63,324 $61,371
Tier I Capital Ratio (4.00% required) .................. 17.12% 17.57%
Total Capital Ratio (8.00% required) ................... 17.88% 18.58%
10
<PAGE>
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
(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 ................... $ 37,591 $ 850 9.04% $ 31,305 $ 776 9.92%
Installment ................. 5,306 135 10.18 4,765 119 9.99
Commercial .................. 24,564 595 9.69 16,409 427 10.41
-------- -------- -------- --------
Total loans ............... 67,461 1,580 9.37 52,479 1,322 10.08
-------- -------- -------- --------
Securities available for sale:
U.S. Treasury securities .... 12,044 182 6.04 12,338 182 5.90
Other securities ............ 477 10 8.39 377 0 0.00
-------- -------- -------- --------
Total available for sale 12,521 192 6.13 12,715 182 5.73
-------- -------- -------- --------
Securities held to maturity:
U.S. government agencies .... 18,187 293 6.44 19,600 311 6.35
Municipal bonds ............. 4,200 70 6.67 4,308 70 6.50
Other securities ............ 227 4 7.05 438 6 5.48
-------- -------- -------- --------
Total held to maturity .... 22,614 367 6.49 24,346 387 6.36
-------- -------- -------- --------
Deposits in banks ............ 3,527 49 5.56 2,796 33 4.72
-------- -------- -------- --------
TOTAL ................... $106,123 2,188 8.25 $ 92,336 1,924 8.33
======== -------- ======== --------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW ........... $ 10,374 55 2.12 $ 8,571 42 1.96
Savings and money market .... 26,403 181 2.74 24,457 166 2.71
Certificates of deposit ..... 49,479 674 5.45 43,231 585 5.41
Other time deposits ......... 200 2 4.00 200 2 4.00
-------- -------- -------- --------
Total deposits ............ 86,456 912 4.22 76,459 795 4.16
Other borrowed funds ......... 770 7 3.64 675 13 7.70
-------- -------- -------- --------
TOTAL ................... 87,226 919 4.21 77,134 808 4.19
Non-interest bearing
funds, net (2) ............... 18,897 15,202
-------- -------- -------- --------
TOTAL SOURCES TO FUND
EARNING ASSETS ................ $106,123 919 3.46 $ 92,336 808 3.50
======== -------- ======== --------
NET INTEREST/YIELD ............ $ 1,269 4.78% $ 1,116 4.83%
======== ========
</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, 1997 JUNE 30, 1997
--------------------------------------------------------------------------------
(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 ................... $ 36,771 $ 1,645 8.95% $ 31,028 $ 1,495 9.64%
Installment ................. 5,195 269 10.36 4,775 235 9.84
Commercial .................. 23,975 1,124 9.38 16,676 869 10.42
-------- -------- -------- --------
Total loans ............... 65,941 3,038 9.21 52,479 2,599 9.90
-------- -------- -------- --------
Securities available for sale:
U.S. Treasury securities .... 11,730 353 6.02 11,335 324 5.72
Other securities ............ 453 15 6.62 366 5 2.73
-------- -------- -------- --------
Total available for sale 12,183 368 6.04 11,701 329 5.62
-------- -------- -------- --------
Securities held to maturity:
U.S. government agencies .... 17,765 573 6.45 17,986 600 6.67
Municipal bonds ............. 3,972 140 7.05 4,162 135 6.49
Other securities ............ 306 10 6.54 617 16 5.19
-------- -------- -------- --------
Total held to maturity .... 22,043 723 6.56 22,765 751 6.60
-------- -------- -------- --------
Deposits in banks ............ 2,697 79 5.86 2,671 71 5.32
-------- -------- -------- --------
TOTAL ................... $102,864 4,208 8.18 $ 89,616 3,750 8.37
======== -------- ======== --------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW ........... $ 9,825 101 2.06 $ 8,330 82 1.97
Savings and money market .... 25,515 348 2.73 23,299 318 2.73
Certificates of deposit ..... 47,725 1,297 5.44 42,329 1,170 5.53
Other time deposits ......... 200 5 5.00 200 5 5.00
-------- -------- -------- --------
Total deposits ............ 83,265 1,751 4.21 74,158 1,575 4.25
Other borrowed funds ......... 797 18 4.52 736 23 6.25
-------- -------- -------- --------
TOTAL ................... 84,062 1,769 4.21 74,894 1,598 4.27
Non-interest bearing
funds, net (2) ............... 18,802 14,722
-------- --------
TOTAL SOURCES TO FUND
EARNING ASSETS ................ $102,864 1,769 3.44 $ 89,616 1,598 3.57
======== -------- ======== --------
NET INTEREST/YIELD ............ $ 2,439 4.74% $ 2,152 4.80%
======== ========
</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
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:
Primary earnings per share is computed by dividing net income by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the quarter. Stock options are
considered common stock equivalents and are included in the
computation of the number of shares outstanding using the treasury
stock method. 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, 1997 /s/ Thomas A. McCullough
-------------------------------- -------------------------
Thomas A. McCullough
President
Chief Executive Officer
Chief Financial Officer
Date August 14, 1997 /s/ Philip O. Farr
-------------------------------- -------------------
Philip O. Farr
Chief Accounting Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM OUR JUNE 30, 1997 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 2,169
<INT-BEARING-DEPOSITS> 7,761
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,767
<INVESTMENTS-CARRYING> 23,481
<INVESTMENTS-MARKET> 23,405
<LOANS> 69,503
<ALLOWANCE> 658
<TOTAL-ASSETS> 118,447
<DEPOSITS> 105,203
<SHORT-TERM> 605
<LIABILITIES-OTHER> 578
<LONG-TERM> 361
0
0
<COMMON> 3,716
<OTHER-SE> 7,984
<TOTAL-LIABILITIES-AND-EQUITY> 118,447
<INTEREST-LOAN> 1,564
<INTEREST-INVEST> 534
<INTEREST-OTHER> 49
<INTEREST-TOTAL> 2,147
<INTEREST-DEPOSIT> 912
<INTEREST-EXPENSE> 919
<INTEREST-INCOME-NET> 1,228
<LOAN-LOSSES> 30
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 788
<INCOME-PRETAX> 578
<INCOME-PRE-EXTRAORDINARY> 578
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 389
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
<YIELD-ACTUAL> 4.78
<LOANS-NON> 161
<LOANS-PAST> 54
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 623
<CHARGE-OFFS> 28
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 658
<ALLOWANCE-DOMESTIC> 658
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
