================================================================================
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, 1998.
[ ] 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: 368,248
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. Unaudited Financial Statements
Page
<S> <C> <C>
Consolidated Statements of Financial Position as
of June 30, 1998 and December 31, 1997...................................................2
Consolidated Statements of Income and Comprehensive Income For the
Three and Six Months Ended June 30, 1998 and 1997........................................3
Consolidated Statements of Changes to Stockholder's Equity For the Six Months
Ended June 30, 1998 and 1997.............................................................4
Consolidated Statements of Cash Flows For the Six Months ended
June 30, 1998 and 1997...................................................................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 STATEMENTS OF FINANCIAL POSITION, June 30, 1998
and December 31, 1997
<TABLE>
<CAPTION>
1998 1997
(UNAUDITED) (AUDITED)
------------- -------------
<S> <C> <C>
ASSETS:
Cash and due from banks ...................................................... $ 2,571,805 $ 2,514,202
Interest bearing deposits .................................................... 8,611,303 2,417,987
Investment securities, available for sale (Note 3) ........................... 18,705,136 13,001,723
Investment securities, held to maturity (fair value
1998, $22,376,000; 1997, $25,316,000 ....................................... 22,070,908 25,205,836
Loans, net of unearned interest .............................................. 81,683,761 76,995,428
Less: allowance for loan losses ............................................. 862,414 767,475
------------- -------------
Loans - net ........................................................... 80,821,347 76,227,953
Bank premises and equipment - net ............................................ 2,938,150 3,028,098
Other real estate ............................................................ 127,004 149,795
Accrued interest and other assets ............................................ 1,722,154 1,730,580
Premium on deposits .......................................................... 131,947 140,460
------------- -------------
TOTAL ASSETS ............................................................... $ 137,699,754 $ 124,416,634
============= =============
LIABILITIES:
Domestic deposits:
Non-interest bearing deposits .............................................. $ 17,473,960 $ 14,675,828
Interest bearing deposits .................................................. 101,773,019 94,112,851
------------- -------------
Total deposits ........................................................... 119,246,979 108,788,679
Other borrowed funds ......................................................... 4,141,712 2,279,294
Accrued interest and other liabilities ....................................... 779,858 710,857
------------- -------------
Total liabilities ........................................................ 124,168,549 111,778,830
------------- -------------
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; 368,248 and 363,305 shares issued and
outstanding in 1998 and 1997 (Note 4) ...................................... 1,841,240 1,816,525
Additional paid-in capital ................................................... 2,279,059 2,052,158
Retained earnings ............................................................ 9,303,478 8,685,313
Accumulated other comprehensive income ....................................... 107,500 84,000
------------- -------------
Total .................................................................... 13,531,277 12,637,996
Treasury stock, 3 and 8 shares in 1998 and 1997 at cost .................... (72) (192)
------------- -------------
Total stockholders' equity ............................................... 13,531,205 12,637,804
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................................... $ 137,699,754 $ 124,416,634
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30 June 30
------------------------------ -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans ............................ $ 1,854,471 $ 1,563,868 $ 3,599,587 $ 3,008,913
Interest and dividends
on investment securities ............................ 548,011 534,185 1,137,105 1,042,313
0 0
Interest on deposits in banks ......................... 54,762 49,037 79,186 79,231
----------- ----------- ----------- -----------
Total interest income ......................... 2,457,244 2,147,090 4,815,878 4,130,457
----------- ----------- ----------- -----------
Interest Expense:
Interest on deposits .................................. 1,079,568 911,759 2,094,306 1,750,702
Interest on borrowed funds ............................ 11,090 7,076 34,956 18,399
----------- ----------- ----------- -----------
Total interest expense ........................ 1,090,658 918,835 2,129,262 1,769,101
----------- ----------- ----------- -----------
Net interest income ............................. 1,366,586 1,228,255 2,686,616 2,361,356
----------- ----------- ----------- -----------
Provision for loan losses ......................... 50,000 30,000 125,000 60,000
Net interest income after
provision for loan losses ..................... 1,316,586 1,198,255 2,561,616 2,301,356
----------- ----------- ----------- -----------
Other Income:
Service charges and other income ...................... 194,483 167,334 383,685 300,153
Gain (loss) on sale of other real estate............... (24,961) (24,961)
----------- ----------- ----------- -----------
Total other income ............................ 169,522 167,334 358,724 300,153
----------- ----------- ----------- -----------
Other Expenses:
Salaries and employee benefits ........................ 446,361 398,248 877,651 768,858
Occupancy expense ..................................... 81,362 93,917 171,283 157,679
Equipment expense ..................................... 65,153 63,365 140,590 118,822
Other operating expense ............................... 268,816 232,545 502,430 473,868
----------- ----------- ----------- -----------
Total other expenses .......................... 861,692 788,075 1,691,954 1,519,227
----------- ----------- ----------- -----------
Income before income taxes .............................. 624,416 577,514 1,228,386 1,082,282
Provision for income taxes .............................. 194,000 189,000 384,000 332,000
----------- ----------- ----------- -----------
Net income .............................................. $ 430,416 $ 388,514 $ 844,386 $ 750,282
----------- ----------- ----------- -----------
Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gain (loss) arising during period $ 20,000 $ 67,100 $ 23,500 ($ 8,900)
----------- ----------- ----------- -----------
Other comprehensive income ............................ $ 20,000 $ 67,100 $ 23,500 ($ 8,900)
Comprehensive income .................................... $ 450,416 $ 455,614 $ 867,886 $ 741,382
=========== =========== =========== ===========
Earnings per share (Note 4) ............................. $ 1.07 $ 0.96 $ 2.10 $ 1.87
=========== =========== =========== ===========
Weighted average common shares .......................... 403,578 403,578 401,970 401,970
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
STOCKHOLDERS' EQUITY, January 1 ................................................ $ 12,637,804 $ 10,939,858
COMMON STOCK, $5.00 PAR VALUE
Options exercised .............................................................. 7,850 6,860
Stock dividend $0.62 and $0.42 per share in 1998 and 1997,
plus cash in lieu of fractional shares .................................... 16,865
ADDITIONAL PAID-IN CAPITAL
Options exercised .............................................................. 34,640 25,135
Stock dividend $0.62 and $0.42 per share in 1998 and 1997,
plus cash in lieu of fractional shares .................................... 192,261
RETAINED EARNINGS
Stock dividend $0.62 and $0.42 per share in 1998 and 1997
plus cash in lieu of fractional shares .................................... (209,126) (139,104)
Cash paid in lieu of fractional shares due to stock dividend ................... (17,095) (10,689)
Net income ..................................................................... 844,386 750,282
ACCUMULATED OTHER COMPREHENSIVE INCOME
Other comprehensive income, net of tax ......................................... 23,500 (11,900)
TREASURY STOCK
Reissuance of common stock (5 and 3 shares in 1998 and 1997, respectively ...... 120 244
------------ ------------
STOCKHOLDERS' EQUITY, June 30 .................................................. $ 13,531,205 $ 11,699,790
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30, 1998 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................................ $ 844,386 $ 750,282
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ....................................... 137,700 119,513
Provision for loan losses ........................................... 125,000 60,000
Decrease in deferred income taxes ................................... (119,500) (6,000)
Changes in operating assets and liabilities:
Increase (decrease) in accrued interest income and other assets ...... 89,939 108,884
Increase in accrued interest expense and other liabilities ........... 69,001 (13,236)
------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ................................................ 1,146,526 1,019,443
------------ ------------
INVESTING ACTIVITIES:
Purchase bank premises and equipment .................................. (47,752) (397,833)
Increase in other real estate ......................................... 22,791 (3,300)
Purchase of securities "available for sale" ........................... (6,786,772) (1,531,254)
Decrease in mortgage-backed securities "available for sale ............ 335,826
Redemptions of securities "available for sale" ........................ 817,533 1,484,965
Purchase of securities "held to maturity" ............................. (1,496,875) (1,993,907)
Redemptions of securities "held to maturity" .......................... 4,375,130 2,541,630
Decrease (increase) in mortgage-backed securities "held to maturity"... 256,673 (1,759,005)
Increase in loans to customers ........................................ (4,718,394) (7,493,945)
Increase in deposits in banks ......................................... (6,193,316) (5,786,174)
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES ................................................ (13,435,156) (14,938,823)
------------ ------------
FINANCING ACTIVITIES:
Increase in deposits before interest credited ......................... 8,601,578 12,764,793
Decrease in borrowed funds ............................................ 1,862,418 (646,889)
Interest credited to deposits ......................................... 1,856,722 1,382,650
Cash dividends paid ................................................... (17,095) (10,689)
Decrease in treasury stock ............................................ 120 244
Issuance of common stock .............................................. 42,490 31,995
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ................................................ 12,346,233 13,522,104
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ...................................................... 57,603 (397,276)
CASH AND CASH EQUIVALENTS, January 1 ................................... 2,514,202 2,566,232
------------ ------------
CASH AND CASH EQUIVALENTS, June 30 ..................................... $ 2,571,805 $ 2,168,956
============ ============
SUPPLEMENTARY SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest ............................................................. $ 223,350 $ 162,868
Income taxes ......................................................... $ 378,000 $ 324,000
Non-cash investing activities:
Unrealized gains (losses) on securities .............................. $ 45,000 ($ 18,000)
Stock dividend ....................................................... 209,126 139,104
</TABLE>
See Notes to Consolidated Financial Statements
<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. COMPREHENSIVE INCOME:
In 1997, the Financial Accounting Standards Board issued statement No. 130
- "Reporting Comprehensive Income," which is effective for years beginning
after December 15, 1997. This statement establishes standards for reporting
and display of comprehensive income and its components in a full set of
general-purpose financial statements. The purpose of reporting
comprehensive income is to report a measure of all changes in equity that
result from recognized transactions and other economic events of the period
other than transactions with owners in their capacity as owners. Prior to
the issuance of this statement, some of those changes in equity were
displayed in a statement that reports the results of operations, while
others were included directly in a statement of financial position. The
1997 financial statements have been restated where applicable to reflect
the adoption of SFAS No. 130.
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
<PAGE>
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 $57.50 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. 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, 1998 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 shares of preferred stock at $5 par value.
At December 31, 1997 and June 30, 1998, no shares were issued nor
outstanding.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
Net income for the three months ending June 30, 1998 totaled $430,000 which is a
11% increase over the $389,000 reported for the same period in 1997. Net
interest income for the three months ending June 30, 1998 increased by $139,000
to $1,367,000 compared to $1,228,000 for the same period in 1997. This
constitutes an increase of 11% over the previous year. Interest income for this
period increased by $310,000 or 14% compared to 1997, and interest expense
increased as well by $172,000 or 19% compared to 1997.
The increase in interest income has been principally from interest on loans
which increased $290,000 or 19% compared to the same period last year. Interest
income from investment securities increased by $14,000 or 3% compared to the
same period last year. Interest rates on loans have trended steadily down since
June of 1997. Although the New York prime rate has not changed since March of
1997, competitive pressures have reduced the Bank's spread to the prime on new
loans. Management has increased its purchases of longer term municipal bonds and
purchased some mortgage-backed bonds to increase the yield of the bond
portfolio. The municipal bonds currently being purchased, mostly have maturities
of between eight and ten years, and are classified as "available for sale". If
interest rates increase significantly these bonds could be sold. Interest on
deposits in banks increased by $6,000 from $49,000 to $55,000 due to higher
balances.
The increase in interest expense is due to the increase in interest bearing
deposits during the second quarter of 1998 as compared to the second quarter of
1997, as well as a slight increase in the rate paid to depositors. The average
total sources to fund earning assets increased by $18,707,000, from $106,123,000
to $124,830,000 in 1998, while the average interest rate increased from 3.46% to
3.49%, respectively.
The increase in deposits continues to provide funds for loans and liquidity.
Loan demand during the second quarter was steady as loans increased $4,689,000
or 6% from $76,995,000 in at December 31, 1997 to $81,684,000 at June 30, 1998.
Loan demand has increased and is expected to be strong during the third quarter.
Balances of investment securities increased by $2,568,000 or 7% since December
31, 1997. Interest bearing deposits at banks increased by $6,193,000 to
$8,611,000 from $2,418,000 due to deposits flowing in and redemptions of bonds.
Strong loan demand during the third quarter should use most of these deposits.
The provision for loan loss during the three months ending June 30, 1998 was
$50,000 compared to $30,000 for the same period in 1997, 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 $862,000 and $767,000 at June 30, 1998 and
December 31, 1997, respectively. This represents 1.06% and 1.00% of total loans,
134% and 171% of non-performing loans, and 112% and 128% of non-performing
assets, 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
<PAGE>
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 June 30, 1998 and December 31, 1997.
June 1998 December 1997
(In thousands)
Real estate mortgages $247 $311
Commercial 45 1
Installment 28
---- ----
Total $320 $312
==== ====
Non-accrual loans increased from $136,000 at December 31, 1997 to $325,000 at
June 30, 1998. The overall quality 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 $8,761,000 or 22 %
from December 31, 1997 to June 30, 1998. The average rate earned on available
for sale, held to maturity and deposits in banks were 6.32%, 5.50% and 5.66% for
the three months ended June 30, 1998, as compared to 6.13%, 6.49% and 5.56% for
the three months ended June 30, 1997. As of June 30, 1998, the amortized value
of the Bank's investments classified as held to maturity exceeded their fair
value by $84,000, and the fair value of investments classified as available for
sale exceeded their amortized value by $169,000. This is reflected as an
increase in the Bank's equity of approximately $108,000, net of deferred tax
effects.
Lower interest rates at June 30, 1998 account for the unrealized gain on the
available for sale securities reflected on the balance sheet. Rates are expected
to continue their slow but steady decline. This will result in moderate
increases of 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 short to moderate maturities, generally eight to ten 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 addition of loan, insurance agency and back office employees, along with
annual raises attributed to the increase in salary expense. In addition,
numerous on going expenses associated with the February 1997 opening of the Back
Mountain office and the January 1997 computer upgrade and associated software
conversion did not begin to be expensed until after the first quarter of 1997.
This accounts for the 1998 increase in salary, occupancy, and equipment
expenses. Salaries and employee benefits have increased by $48,000 or 12% from
$398,000 to $446,000, occupancy expense decreased $13,000 or 14% from $94,000 to
$81,000 and
<PAGE>
equipment expense decreased $2,000 or 3% from $65,000 to $63,000, and other
operating expenses increased $36,000 or 15% from $233,000 to $269,000, for the
three months ended June 30, 1997 as compared to the same period for 1996. The
Bank has applied for permission to open an office at the Pine Mall in
Wilkes-Barre, and expects to receive approval during the third quarter. This
should increase expenses during the third and fourth quarters.
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, 1998 and December
31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C>
(In thousands, except ratios) 1998 1997
Tier I capital:
Shareholders' equity.......................................... $13,508 $12,414
Tier II capital:
Loan loss reserve............................................. 862 767
------- -------
Total Qualifying Capital........................................... $14,370 $13,181
======= =======
Risk-adjusted assets (including off balance sheet items).......... $80,829 $76,937
Tier I Capital Ratio (4.00% required)..................................... 16.14% 16.14%
Total Capital Ratio (8.00% required)...................................... 17.14% 17.13%
</TABLE>
<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:
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, 1998 /s/ Thomas A. McCullough
------------------------------ -------------------------
Thomas A. McCullough
President
Chief Executive Officer
Chief Financial Officer
Date August 14, 1998 /s/ Philip O. Farr
------------------------------- -------------------
Philip O. Farr
Chief Accounting Officer
<PAGE>
<TABLE>
<CAPTION>
GRANGE NATIONAL BANC CORP. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND RATES
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1998 JUNE 30, 197
--------------------------- -------------------------
(1) Interest Average (1) Interest Average
Average Income/ Interest Average Income/ Interest
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
------- ------- ------- ------- ------- -------
INTEREST EARNING ASSETS:
Loans:
<S> <C> <C> <C> <C> <C> <C>
Mortgages................. $44,491 $998 8.97% $37,591 $850 9.04%
Installment............... 4,774 131 10.98 5,306 135 10.18
Commercial................ 31,410 742 9.45 24,564 595 9.69
-------- ----- -------- -----
Total loans............. 80,675 1,871 9.28 67,461 1,580 9.37
-------- ----- -------- -----
Securities available for sale:
U.S. Treasury securities.. 7,619 113 5.93 12,044 182 6.04
U.S. government agencies.. 4,850 76 6.27
Municipal bonds........... 3,158 56 7.09
Other securities.......... 642 12 7.48 477 10 8.39
-------- ----- -------- -----
Total available for sa 16,269 257 6.32 12,521 192 6.13
-------- ----- -------- -----
Securities held to maturity:
U.S. government agencies.. 18,240 234 5.13 18,187 293 6.44
Municipal bonds........... 3,510 59 6.72 4,200 70 6.67
Other securities.......... 2,246 37 6.59 227 4 7.05
-------- ----- -------- ------
Total held to maturity.. 23,996 330 5.50 22,614 367 6.49
-------- ----- -------- ------
Deposits in banks.......... 3,890 55 5.66 3,527 49 5.56
-------- ----- -------- ------
TOTAL................. $124,830 2,513 8.05 $106,123 2,188 8.25
======== ----- ======== ------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW......... $10,582 60 2.27 $10,374 55 2.12
Savings and money market.. 28,877 201 2.78 26,403 181 2.74
Certificates of deposit... 58,264 816 5.60 49,479 674 5.45
Other time deposits....... 200 2 4.00 200 2 4.00
-------- ----- -------- ------
Total deposits.......... 97,923 1,079 4.41 86,456 912 4.22
Other borrowed funds....... 1,224 11 3.59 770 7 3.64
-------- ----- -------- ------
TOTAL................. 99,147 1,090 4.40 87,226 919 4.21
Non-interest bearing
funds, net (2)............. 25,683 18,897
-------- ----- -------- ------
TOTAL SOURCES TO FUND
EARNING ASSETS.............. $124,830 1,090 3.49 $106,123 919 3.46
======== ----- ======== ------
NET INTEREST/YIELD.......... $1,423 4.56% $1,269 4.78%
====== ======
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1988 JUNE 30, 1997
------------------------- -------------------------
(1) Interest Average (1) Interest Average
Average Income/ Interest Average Income/ Interest
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
------- ------- -------- ------- ------- --------
INTEREST EARNING ASSETS:
Loans:
<S> <C> <C> <C> <C> <C> <C>
Mortgages................. $44,005 $1,950 8.86% $36,771 $1,645 8.95%
Installment............... 5,557 265 9.54 5,195 269 10.36
Commercial................ 30,520 1,414 9.27 23,975 1,124 9.38
-------- ------ -------- ------
Total loans............. 80,082 3,629 9.06 65,941 3,038 9.21
-------- ------ -------- ------
Securities available for sale:
U.S. Treasury securities.. 7,087 212 5.98 11,730 353 6.02
U.S. government agencies.. 3,837 134 6.98
Municipal bonds........... 2,647 98 7.40
Other securities.......... 602 19 6.31 453 15 6.62
-------- ------ -------- ------
Total available for sa 14,173 463 6.53 12,183 368 6.04
-------- ------ -------- ------
Securities held to maturity:
U.S. government agencies.. 17,423 554 6.36 17,765 573 6.45
Municipal bonds........... 3,898 124 6.36 3,972 140 7.05
Other securities.......... 2,204 72 6.53 306 10 6.54
-------- ------ -------- ------
Total held to maturity.. 23,525 750 6.38 22,043 723 6.56
-------- ------ -------- ------
Deposits in banks.......... 2,671 79 5.92 2,697 79 5.86
-------- ------ -------- ------
TOTAL................. $120,451 4,921 8.17 $102,864 4,208 8.18
======== ------ ======== ------
INTEREST BEARING LIABILITIES:
Deposits:
NOW and super-NOW......... $11,446 118 2.06 $9,825 101 2.06
Savings and money market.. 27,993 380 2.71 25,515 348 2.73
Certificates of deposit... 57,199 1,591 5.56 47,725 1,297 5.44
Other time deposits....... 200 5 5.00 200 5 5.00
-------- ------ -------- ------
Total deposits.......... 96,838 2,094 4.32 83,265 1,751 4.21
Other borrowed funds....... 1,445 35 4.84 797 18 4.52
-------- ------ -------- ------
TOTAL................. 98,283 2,129 4.33 84,062 1,769 4.21
Non-interest bearing
funds, net (2)............. 22,168 18,802
-------- ------ -------- ------
TOTAL SOURCES TO FUND
EARNING ASSETS.............. $120,451 2,129 3.54 $102,864 1,769 3.44
======== ------ ======== ------
NET INTEREST/YIELD.......... $2,792 4.64% $2,439 4.74%
====== ======
</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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OUR JUNE 30,
1998 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US Dollar
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 2,572
<CASH> 8,611
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 18,705
<INVESTMENTS-HELD-FOR-SALE> 22,071
<INVESTMENTS-CARRYING> 22,376
<INVESTMENTS-MARKET> 81,684
<LOANS> 862
<ALLOWANCE> 137,700
<TOTAL-ASSETS> 119,247
<DEPOSITS> 3,142
<SHORT-TERM> 780
<LIABILITIES-OTHER> 1,000
<LONG-TERM> 0
0
4,120
<COMMON> 9,411
<OTHER-SE> 137,700
<TOTAL-LIABILITIES-AND-EQUITY> 1,854
<INTEREST-LOAN> 548
<INTEREST-INVEST> 55
<INTEREST-OTHER> 2,457
<INTEREST-TOTAL> 1,080
<INTEREST-DEPOSIT> 1,091
<INTEREST-EXPENSE> 1,367
<INTEREST-INCOME-NET> 50
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 862
<EXPENSE-OTHER> 624
<INCOME-PRETAX> 624
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 20
<NET-INCOME> 450
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
<YIELD-ACTUAL> 4.56
<LOANS-NON> 325
<LOANS-PAST> 320
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 767
<CHARGE-OFFS> 34
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 862
<ALLOWANCE-DOMESTIC> 862
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
