FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the period ended March 31, 2001
Commission File Number: 0-5893
American Bancorporation (Exact name of registrant as specified in its charter)
Ohio 31-0724349
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1025 Main Street, Suite 800, Wheeling, WV 26003 (Address of principal executive offices) (Zip Code)
(304) 233-5006
(Registrant's telephone number, including area code)Indicate by check mark whether the registrant (1) has 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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes XNo
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
April 6, 2001: 3,129,674 shares of Common stock without par value
Number of pages comprising
this report. . . . . . . . . 12
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of
Cash Flows 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity 6
Notes to the Consolidated Financial Statements (Unaudited) 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3 Quantitative and Qualitative Disclosures
about Market Risk 11
Part II OTHER INFORMATION
Item 1 Legal Proceedings None
Item 2 Changes in Securities None
Item 3 Defaults Upon Senior Securities None
Item 4 Submission of Matters to a
Vote of Security Holders None
Item 5 Other Information None
Item 6 Exhibits and Reports on Form 8-K None
SIGNATURES 12
Part 1 Financial Information
Item 1 Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31,
2001 2000 2000
ASSETS
Cash and due from banks$ 8,741,043 $ 10,996,219 $ 9,962,874
Federal funds sold 16,628,000 1,307,000 4,530,000
Investment securities available for sale 256,571,088 291,469,167 272,045,286
Loans, net of unearned income378,611,117 396,189,345 389,524,004
Less allowance for loan losses 3,218,150 3,198,353 3,252,073
375,392,967 392,990,992 386,271,931
Due from broker7,434,920--
Premises and equipment - net 9,397,966 10,026,301 9,538,072
Accrued interest receivable4,402,113 4,432,815 4,736,395
Excess of cost over net assets acquired1,559,133 1,286,208 1,643,066
Other assets 15,735,357 12,151,584 16,488,437
TOTAL ASSETS$695,862,587 $724,660,286 $705,216,061
LIABILITIES
Deposits
Non-interest bearing$ 38,780,494 $ 39,638,172 $ 41,213,045
Interest bearing 453,515,377 418,779,322 454,935,807
TOTAL DEPOSITS492,295,871 458,417,494 496,148,852
Borrowed funds140,228,414 215,223,595 149,376,008
Accrued interest payable3,631,844 2,653,915 3,578,923
Other liabilities 3,244,212 5,294,422 2,900,945
Company obligated mandatorily redeemable
trust preferred securities of subsidiary trust
holding solely junior subordinated debentures
of the Company 12,650,000 12,650,000 12,650,000
TOTAL LIABILITIES652,050,341 694,239,426 664,654,728
STOCKHOLDERS' EQUITY
Preferred stock - - -
Common stock without par value, stated value
$2.50, authorized 6,500,000 shares, issued
and outstanding 3,129,6747,824,185 7,824,185 7,824,185
Additional paid-in capital10,301,982 10,301,982 10,301,982
Retained earnings25,284,509 22,777,532 24,733,853
Accumulated other comprehensive
results, net of tax benefit 401,570
(10,482,839
) (2,298,687
)
TOTAL STOCKHOLDERS' EQUITY 43,812,246 30,420,860 40,561,333
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY$695,862,587 $724,660,286 $705,216,061
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months ended March 31,
2001 2000
INTEREST INCOME
Loans$ 8,194,290 $8,086,983
Investment securities
Taxable interest income3,420,956 4,032,817
Non-taxable interest income 758,709 761,232
4,179,665 4,794,049
Short-term investments 75,699 60,720
Total interest income12,449,654 12,941,752
INTEREST EXPENSE
Deposits5,953,172 4,909,847
Borrowed funds 2,423,474 3,389,850
Total interest expense 8,376,646 8,299,697
NET INTEREST INCOME4,073,008 4,642,055
PROVISION FOR LOAN LOSSES 225,000 180,000
Net interest income after provision for loan losses3,848,008 4,462,055
OTHER INCOME
Service charges on deposit accounts224,046 208,797
Net securities gains 130,573 -
Net gains on sale of loans 39,029 272,025
Insurance commissions17,528 23,765
Other income 284,884 298,967
Total other income696,060 803,554
OTHER EXPENSE
Salaries and employee benefits1,496,024 1,682,983
Occupancy expense629,846 672,245
Other expenses 1,248,007 1,222,388
Total other expense 3,373,877 3,577,616
INCOME BEFORE INCOME TAXES1,170,191 1,687,993
PROVISION FOR INCOME TAXES 150,084 347,166
NET INCOME$ 1,020,107 $ 1,340,827
Average Shares Outstanding3,129,674 3,129,674
BASIC EARNINGS PER SHARE$ 0.33 $ 0.43
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
2001 2000
Operating Activities:
Net Income$ 1,020,107 $ 1,340,827
Adjustments to reconcile net income to net cash from operating activities:
Depreciation216,154 230,902
Amortization of intangibles83,933 69,451
Net amortization of premium on investment securities 108,034 109,292
Provision for loan losses225,000 180,000
Net gain on sale of investment securities(130,573
) -
Net gain on sale of loans(39,029
) (272,025
)
Net decrease in accrued interest receivable 334,282
37,054
Net increase in accrued interest payable 52,921 142,419
Real estate mortgage loans originated for sale (2,876,187
) (14,001,804
)
Proceeds from sale of real estate mortgage loans originated for sale 2,878,583
13,010,450
Net increase in other assets(657,807
) (661,557
)
Net increase in other liabilities 97,144 1,214,578
Net increase (decrease) from other operating activities 2,015
(81,077
)
Net cash provided by operating activities 1,314,577
1,318,510
Investing Activities:
Investment securities available for sale:
Proceeds from maturities and repayments 7,875,724 9,942,609
Proceeds from sales 17,020,562 -
Purchases(12,479,217
) (1,157,421
)
Change in loans, net of real estate mortgage loans originated for sale 10,690,597
(23,764,335
)
Purchase of premises and equipment(76,048
) (52,995
)
Proceeds from sale of premises and equipment - 118,297
Net cash provided by (used) in investing activities 23,031,618
(14,913,845
)
Financing Activities:
Net increase (decrease) in non-interest bearing demand deposits(2,432,551
) 1,678,585
Net increase (decrease) in interest bearing demand and savings deposits(6,946,423
) 10,624,127
Net increase (decrease) in time deposits 5,525,993
(3,162,711
)
Net increase (decrease) in borrowed funds (9,147,594
) 630,394
Principal repayment of long-term debt -
-
Cash dividends paid (469,451
) (469,451
)
Net cash provided (used) by financing activities (13,470,026
) 9,300,944
Net Increase (Decrease) in Cash and Cash Equivalents10,876,169
(4,294,391
)
Cash and Cash Equivalents Beginning Balance 14,492,874 16,597,610
Cash and Cash Equivalents Ending Balance $ 25,369,043 $ 12,303,219
Supplemental disclosure of cash-flow information:
Non-cash investing and financial activities:
Securities sold not settled 7,434,920 -
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Three months ended March 31, 2001 and 2000
2001 2000
Balance at January 1, $40,561,333 $28,178,961
Comprehensive results:
Net Income 1,020,107 1,340,827
Unrealized security gain, net of tax2,700,257 1,370,523
Reclassification adjustment, net of tax -
-
Total comprehensive results 3,720,364 2,711,350
Dividends declared ($0.15 per share 2001,
$0.15 per share 2000) (469,451
) (469,451
)
Balance at March 31, $43,812,246 $30,420,860
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The unaudited interim condensed consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary to a fair presentation of the financial position and results of operations. All adjustments are of a normal recurring nature. The notes to the financial statements contained in the 2000 Annual Report to Stockholders should be read in conjunction with these statements.
NOTE A - AGREEMENT AND PLAN OF MERGER
On February 22, 2001 the Company announced entering into a definitive Agreement and Plan of Merger (the "Agreement") with WesBanco, Inc. ("WesBanco") providing for the merger of the Company with and into a wholly-owned subsidiary of WesBanco to be formed for the purpose of effecting the merger, and the simultaneous merger of the Company's banking subsidiary, Wheeling National Bank, with and into WesBanco affiliate, WesBanco Bank, Inc. The transaction will be accounted for using the purchase method of accounting. Under the terms of the Agreement, WesBanco will exchange WesBanco common stock based upon a fixed exchange ratio of 1.1 shares of WesBanco common stock for each share of American Bancorporation common stock outstanding. The transaction is subject to approvals of the appropriate banking regulatory authorities and the shareholders of the Company. The Company granted an option to WesBanco to purchase 622,805 shares of its common stock at $18.00 per share. It is expected that the transaction will be completed during the third quarter of 2001.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The discussion and analysis, when read in conjunction with the consolidated financial statements and accompanying notes, is designed to provide information relevant to an assessment of financial performance and management's perception of significant events.
The following is a discussion of significant factors influencing operating performance and change in financial position during the interim periods presented. The discussion should be read in connection with the 2000 Annual Report and the financial statements appearing elsewhere herein.
SUMMARY
American Bancorporation (the "Company") recognized net income of $1,020,000 or $0.33 basic earnings per share, for the three months ended March 31, 2001, compared to net income of $1,341,000 or $0.43 basic earnings per share, for the three months ended March 31, 2000. Return on average assets and return on average equity were 0.59% and 9.55%, respectively, for the three months ended March 31, 2001 compared to 0.74% and 18.71%, respectively, for the three months ended March 31, 2000.
Total assets at March 31, 2001 decreased to $695,863,000, from $724,660,000 at March 31, 2000, a decrease of 4.0%. Loans outstanding at March 31, 2001 decreased to $378,611,000 from $396,321,000 at March 31, 2000, a decrease of 4.5%. Deposits increased to $492,296,000 at March 31, 2001, from $458,417,000 at March 31, 2000, an increase of 7.4%. Total stockholders' equity was $43,812,000 at March 31, 2001.Stockholders' equity, excluding net unrealized gains and losses, totalled $43,411,000 at March 31, 2001, an increase of $2,507,000 or 6.1% compared to March 31, 2000. The unrealized gain on investment securities available for sale, a result of market value adjustments, totalled $402,000 at March 31, 2001, compared to an unrealized loss of $10,483,000 at March 31, 2000. If these available for sale securities are held to maturity, no market value adjustment will be realized.
RESULTS OF OPERATIONS
QUARTER COMPARISON
Net Income. Net income for the three months ended March 31, 2001 amounted to $1,020,000, or $0.33 basic earnings per share, compared to net income of $1,341,000 or $0.43 basic earnings per share, for the three months ended March 31, 2000. The decrease was the result of decreases in net interest income and other income and an increase in the provision for loan loss which was partially offset by a decrease in other expenses.
Net Interest Income. Net interest income before provision for loan losses for the three months ended March 31, 2001 amounted to $4,073,000, a decrease of $569,000 or 12.3%, compared to the three months ended March 31, 2000. The decrease resulted primarily from a 24 basis point decrease in the Company's net interest margin.
Total interest income for the three months ended March 31, 2001 amounted to $12,450,000, a decrease of $492,000 or 3.8%, compared to the three months ended March 31, 2000. The decrease resulted primarily from a $25,274,000 decrease in average interest earning assets. Average loans outstanding decreased $6,860,000 or 1.8% with average commercial loans decreasing $3,406,000 or 2.2%, average real estate loans decreasing $5,788,000 or 3.6% and average consumer installment loans increasing $2,334,000 or 3.4%. The average yield on loans increased from 8.34% in 2000 to 8.60% in 2001. Average investment securities and other short-term investments outstanding decreased $18,414,000 or 6.2% while the average yield decreased from 6.59% in 2000 to 6.16% in 2001.
Total interest expense for the three months ended March 31, 2001 amounted to $8,377,000, an increase of $77,000 or 1.0%, compared to the three months ended March 31, 2000. The increase resulted primarily from a 37 basis point increase in interest rates paid on interest bearing liabilities which was partially offset by a $37,836,000 or 5.9% decrease in interest bearing liabilities. Average NOW, money market and savings accounts decreased $1,545,000 or 1.0%. Average time deposits increased $37,036,000 or 14.1%. Averagenon-interest bearing accounts increased $923,000 or 2.4% and represented 8.2% of average total deposits for the three months ended March 31, 2001. Average borrowed funds decreased $73,326,000 or 33.7%, while the average rate paid on borrowed funds increased from 5.72% in 2000 to 5.95% in 2001.
Provision for Loan Losses. The loan loss provision for the three months ended March 31, 2001 was $225,000, compared to $180,000 for the same period in 2000. Net loans charged off totalled $259,000 for the three months ended March 31, 2001, compared to $64,000 for the three months ended March 31, 2000. The increase in the loan loss provision reflects management's assessment of the loan portfolio, general economic conditions and past loan experience.
Other Income. Other income for the three months ended March 31, 2001 amounted to $696,000, a decrease of $107,000 or 13.4% compared to the three months ended March 31, 2000. Securities gains totalled $131,000 during the three months ended March 31, 2001, compared to no gains on sale of investment securities in 2000. Net gains on sale of loans totalled $39,000 in 2001, compared to $272,000 for the three months ended March 31, 2000, a decrease of 85.7%. Other (miscellaneous) income in 2000 included a $120,000 gain on sale of former branch property.
Other Expense. Total other expense for the three months ended March 31, 2001 amounted to $3,374,000, a decrease of $204,000 or 5.7%, compared to the three months ended March 31, 2000. Salaries and employee benefits decreased $187,000 or 11.1%. Occupancy and equipment expense decreased $43,000 or 6.3%. Other (miscellaneous) expenses increased $26,000 or 2.1%.
Provision for Income Taxes. The provision for income taxes for the three months ended March 31, 2001 was $150,000, compared to $347,000 for the three months ended March 31, 2000. The decrease is primarily the result of a decrease in income before taxes.
ASSET QUALITY
Nonperforming loans totalled $2,632,000 or 0.7% of total loans at March 31, 2001, compared to $3,297,000 or 0.8% at December 31, 2000. Nonperforming loans at March 31, 2001 consisted of nonaccrual loans totalling $765,000, 90 day delinquent loans of $1,603,000, and restructured loans aggregating $264,000. Other real estate held totalled $442,000 at March 31, 2001, compared to $444,000 at December 31, 2000.
CAPITAL RESOURCES
Stockholders' equity totalled $43,812,000 at March 31, 2001. The Company's risk-based capital ratio was 14.2%, of which 13.4% constituted common stockholder equity, while the risk-based capital ratio for the Company's bank subsidiary, Wheeling National Bank, was 13.5%, with common stockholders' equity of 12.7%. At March 31, 2001 the Company's leverage capital ratio was 7.8%, while the leverage ratio for Wheeling National Bank was 7.5%.
Three months ended March 31,
2001 2000
Average Yield/ Average Yield/
Balance RateBalance Rate
INTEREST EARNING ASSETS(000's) (000's)
Loans
Commercial$154,579 9.02
% $157,985 8.66
%
Real estate154,714 7.89 160,502 7.70
Installment-net 71,9418.46 69,607 8.27
Total loans381,2348.60 388,094 8.34
Investment securities
Taxable204,636 6.69 234,898 6.87
Tax-exempt 62,8944.83 56,738 5.37
Total investment securities267,530 6.25 291,636 6.58
Other short-term investments 8,6903.48 2,998 8.10
Total interest earning assets$657,4547.57 $682,728 7.58
INTEREST BEARING LIABILITIES
Deposits
NOW, Savings and MMDA$150,5703.48
% $152,115 3.31
%
Time 300,5926.18 263,556 5.54
Total deposits451,162 5.28 415,671 4.72
Borrowed funds 144,507 5.95 217,834 5.72
Long-term debt 12,650 8.70 12,650 8.70
Total interest
bearing liabilities$608,319 5.51 $646,155 5.14
MARGIN ANALYSIS
(as a % of earning assets)
Interest income7.57
% 7.58
%
Interest expense5.09 4.86
Net interest income2.48
% 2.72
%
Averages stated are month end average balances. Installment loans are stated net of unearned income.
Average loans include nonaccrual loans. Yields do not reflect tax equivalent adjustments.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures about market risk are presented at December 31, 2000 in Item 7a of the Company's Annual Report on Form 10-K filed with the SEC on April 2, 2001. Management believes there have been no material changes in the Company's market risk since December 31, 2000.
PART II - OTHER INFORMATION
Item 6.Exhibits and Reports on Form 8-K
B. Reports on Form 8-K:
DateItem Description
None
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.
AMERICAN BANCORPORATION
(Registrant)
Date May 15, 2001 /s/ Jeremy C. McCamic
Jeremy C. McCamic
Chairman and
Chief Executive Officer
Date May 15, 2001 /s/ Brent E. Richmond
Brent E. Richmond
President and
Chief Operating Officer
Date May 15, 2001 /s/ Jeffrey A. Baran
Jeffrey A. Baran
Chief Financial Officer
