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, 1995 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 X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. April 10, 1995: 1,564,837 shares of Common stock without par value Number of pages comprising this report. . . . . . 11 TABLE OF CONTENTS Part I FINANCIAL INFORMATION Item 1 Financial Statements Condensed Consolidated Balance Sheet 3 Condensed Consolidated Statement of Operations 4 Condensed Consolidated Statement of Cash Flows 5 Condensed Consolidated Statement of Changes in Stockholders' Equity 6 Notes to the Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 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 11 American Bancorporation and Subsidiaries CONSOLIDATED BALANCE SHEET March 31, December 31, 1995 1994 1994 ASSETS Cash and due from banks. . . . . . $ 11,129,137 $ 9,640,028 $ 10,704,396 Federal funds sold . . . . . . . . 3,971,000 18,229,000 3,924,000 Securities available for sale. . . . 4,693,430 2,495,600 3,484,431 Investment securities. . . . . . . . 75,115,516 91,454,537 78,189,252 Loans, net of unearned income. . . .239,144,153 146,824,329 228,865,744 Less allowance for loan losses . 3,785,678 3,414,083 3,736,994 235,358,475 143,410,246 225,128,750 Premises and equipment - net . . . 8,649,528 7,904,352 8,672,714 Accrued interest receivable. . . . 1,822,568 1,512,552 2,018,778 Excess of cost over net assets purchased . . . 2,006,649 1,247,486 2,065,475 Other assets . . . . . . . . . . . 5,879,201 3,004,797 3,927,839 TOTAL ASSETS. . . . . . . . . $348,625,504 $278,898,598 $338,115,635 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest bearing. . . . . . $ 31,847,265 $ 29,022,652 $ 31,208,913 Interest bearing. . . . . . . . .262,717,795 221,418,734 261,131,744 TOTAL DEPOSITS. . . . . . . .294,565,060 250,441,386 292,340,657 Short-term borrowings . . . . . . . 20,129,973 977,746 13,398,181 Accrued interest payable. . . . . 1,227,563 818,097 1,011,323 Other liabilities . . . . . . . . 5,133,012 1,811,324 3,172,455 Long term debt. . . . . . . . . . 1,000,000 - 2,000,000 TOTAL LIABILITIES. . . . . . . .322,055,608 254,048,553 311,922,616 STOCKHOLDERS' EQUITY Preferred stock. . . . . . . - - - Common stock without par value, stated value $5, authorized 6,500,000 shares, issued and outstanding 1,564,837 at March 31, 1995 and December 31, 1994, and 1,506,612 at March 31, 1994 . . . . . . 7,824,185 7,533,060 7,824,185 Additional paid-in capital . . . . 10,301,982 9,753,871 10,301,982 Retained earnings. . . . . . . . 8,242,229 7,095,114 7,806,852 Unrealized gain on securities available for sale . . . 201,500 468,000 260,0000 TOTAL STOCKHOLDERS' EQUITY . . . 26,569,896 24,850,045 26,193,019 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $348,625,504 $278,898,598 $338,115,635 American Bancorporation and Subsidiaries CONSOLIDATED STATEMENT OF OPERATIONS Three Months ended March 31, 1995 1994 INTEREST INCOME Loans . . . . . . . . . . . . . $ 5,245,583 $ 3,397,649 Investment securities Taxable interest income. . . . 1,059,916 1,205,843 Non-taxable interest income. 37,277 44,727 1,097,193 1,250,570 Other short-term investments. 82,480 83,966 Total interest income . . . . 6,425,256 4,732,185 INTEREST EXPENSE Deposits. . . . . . . . . . . . 2,278,894 1,710,588 Borrowed funds. . . . . . . . 341,525 7,594 Total interest expense. . . 2,620,419 1,718,182 NET INTEREST INCOME . . . . 3,804,837 3,014,003 PROVISION FOR LOAN LOSSES. . . 45,000 80,000 Net interest income after provision for loan losses. . 3,759,837 2,934,003 OTHER INCOME Service charges on deposit accounts .150,611 158,405 Securities gains. . . . . - 2,634 Insurance commissions . . . . 30,780 30,909 Other income. . . . . . . . . 199,531 63,817 Total other income. . . . . 380,922 255,765 OTHER EXPENSE Salaries and employee benefits. 1,396,765 1,102,283 Occupancy and equipment expense . . .533,279 460,518 Other expenses. . . . . . . . 1,152,254 971,944 Total other expense . . . . 3,082,298 2,534,745 Income before income taxes. . 1,058,461 655,023 PROVISION FOR INCOME TAXES . . 388,358 242,700 NET INCOME . . . . . . . . . . $ 670,103 $ 412,323 Average Shares Outstanding . . 1,564,837 1,506,612 NET INCOME PER SHARE . . . $ 0.43 $ 0.27 American Bancorporation and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS Three months ended March 31, 1995 1994 Operating Activities: Net Income. . . . . . . . . . . $ 670,103 $ 412,323 Charges to operations not using cash in the current period . . 624,546 154,160 Net cash provided by operating activities 1,294,649 566,483 Investing Activities: Proceeds from maturities of investment securities . . . . . 2,002,500 8,215,000 Proceeds from repayment of investment securities. . . . . . 1,076,608 5,604,080 Proceeds from sales of securities available for sale. - 3,017,375 Proceeds from redemption of investment securities available for sale . . . . .55,200 - Purchase of securities available for sale . . (1,322,700) - Purchase of investment securities . . . - (16,263,683) Net change in loans . . . . . . . . (10,274,725) 3,488,823 Purchase of premises and equipment (120,381) (174,724) Net cash provided by (applied to) investing activities . . . . (8,583,498) 3,886,871 Financing Activities: Net increase in non-interest bearing demand deposits. . . . . . . . 638,352 3,102,042 Net increase (decrease) in interest bearing demand and savings deposits . (6,822,693) 257,322 Net increase (decrease) in certificates of deposit. . . . . 8,408,744 (957,689) Net increase (decrease) in short- term borrowings. . . . . . 6,731,792 (631,001) Principal repayment of long-term debt . (1,000,000) - Cash dividends paid . . . . . . . (195,605) (188,326) Net cash provided by financing activities. . . . . . . 7,760,590 1,582,348 Net Increase in Cash and Cash Equivalents. . . 471,741 6,035,702 Cash and Cash Equivalents Beginning Balance. . . 14,628,396 21,833,326 Cash and Cash Equivalents Ending Balance . . . . . $15,100,137 $27,869,028 American Bancorporation and Subsidiaries CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Three months ended March 31, 1995 and 1994 1995 1994 Balance at January 1, . . . . . . . . . . $26,193,019 $24,158,048 Net Income . . . . . . . . . . . . . . 670,103 412,323 Dividends declared ($0.15 per share 1995, $0.125 per share 1994) . . . . (234,726) (188,326) Unrealized gain/(loss) on securities available for sale (58,500) 468,000 Balance at March 31,. . . . . . . . . . . .$26,569,896 $24,850,045 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 1994 Annual Report to Stockholders should be read in conjunction with these statements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS SUMMARY American Bancorporation (the "Company") recognized net income of $670,000 ($0.43 per share) for the three months ended March 31, 1995, compared to net income of $412,000 ($0.27 per share) for the three months ended March 31, 1994. The Company's assets totalled $348,626,000 at March 31, 1995, compared to $278,899,000 at March 31, 1994. 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 1994 Annual Report and the financial statements appearing elsewhere herein. RESULTS OF OPERATIONS QUARTER COMPARISON Net Income. Net income for the three months ended March 31, 1995 amounted to $670,000, compared to net income of $412,000 for the three months ended March 31, 1994. The increase was the result of increases in net interest income and other income which were partially offset by an increase in other expenses. Net Interest Income. Net interest income before provision for loan losses for the three months ended March 31, 1995 amounted to $3,805,000, an increase of $791,000 or 26.2% as compared to the three months ended March 31, 1994. The increase resulted primarily from a $68,939,000 or 27.2% increase in average interest earnings assets. Interest Income. Total interest income for the three months ended March 31, 1995 amounted to $6,425,000, an increase of $1,693,000 or 35.8% as compared to the same period in 1994. The increase resulted primarily from a $68,939,000 or 27.2% increase in the average volume of earning assets and a 51 basis point increase in the average yield on earning assets. Average loans outstanding increased $89,004,000 or 60.0%. Average real estate loans increased $71,007,000 or 132.4%, average commercial loans increased $13,396,000 or 30.4% and average installment loans increased $4,601,000 or 9.1%. The average yield on loans decreased from 9.16% in 1994 to 8.84% in 1995. Average investment securities and other short-term investments outstanding decreased $20,065,000 or 19.1% while the average yield increased from 5.09% in 1994 to 5.57% in 1995. Interest Expense. Total interest expense for the three months ended March 31, 1995 amounted to $2,620,000, an increase of $902,000 or 52.5%, as compared to the three months ended March 31, 1994. The increase resulted primarily from a $63,817,000 or 28.9% increase in the average volume of interest bearing liabilities and a 57 basis point increase in interest rates paid on such liabilities. Average NOW, money market and savings accounts increased $10,928,000. Average time deposits increased $30,075,000. Average noninterest bearing accounts increased $2,873,000 and represented 10.5% of average total deposits in 1995. Average borrowings increased $22,814,000. Provision for Loan Losses. The loan loss provision was $45,000 for the three months ended March 31, 1995, compared to $80,000 for the same period in 1994. Other Income. Other income amounted to $381,000 for the three months ended March 31, 1995, compared to $256,000 for the same period in 1994. Other Expense. Total other expense for the three months ended March 31, 1995 amounted to $3,082,000, an increase of $548,000 or 21.6% as compared to the same period in 1994. Salaries and employee benefits increased $295,000 or 26.7%. Occupancy and equipment expense increased $73,000 or 15.8%. Other (miscellaneous) expenses increased $180,000 or 18.6%. Provision for Income Taxes. The provision for income taxes for the three months ended March 31, 1995 was $388,000, compared to $243,000 for the same period in 1994. The increase was due to the increase in the Company's pre-tax income. ASSET QUALITY Nonperforming loans totalled $1,900,000 or 0.8% of total loans at March 31, 1995, compared to $2,590,000 or 1.1% at December 31, 1994. Nonperforming loans at March 31, 1995 consisted of nonaccrual loans totalling $932,000, 90 day delinquent loans of $414,000, and restructured loans aggregating $554,000. Other real estate held totalled $605,000 at March 31, 1995, compared to $682,000 at December 31, 1994. CAPITAL RESOURCES Stockholders' equity totalled $26,570,000 at March 31, 1995. The Company's risk-based capital ratio was 12.6%, of which 11.4% constituted common stockholder equity, while risk-based capital ratios for the Company's two bank subsidiaries, Wheeling National Bank and Columbus National Bank, were 14.1% and 10.3%, respectively, with common stockholders' equity of 12.8% and 9.0%, respectively. At March 31, 1995 the Company's leverage capital ratio was 6.9%, while the leverage ratios for Wheeling National Bank and Columbus National Bank were 8.1% and 5.2%, respectively. Three months ended March 31, 1995 1994 Average Yield/ Average Yield/ Balance Rate Balance Rate INTEREST EARNING ASSETS (000's) (000's) Loans Commercial . . . . . . . $ 57,421 10.12% $ 44,025 8.30% Real estate. . . . . . . 124,643 7.68 53,636 8.63 Installment-net. . . . . 55,389 9.43 50,788 9.64 Total loans . . . . . 237,453 8.84 148,449 9.16 Investment securities Taxable. . . . . . . . . 78,739 5.38 92,991 5.19 Tax-exempt . . . . . . 2,046 7.29 2,452 7.30 Total investment securities 80,785 5.55 95,443 5.24 Other short-term investments. 3,988 5.91 9,395 3.57 Total interest earning assets $322,226 7.98 $253,287 7.47 INTEREST BEARING LIABILITIES Deposits NOW, Savings and MMDA . . $137,365 2.71 $126,437 2.57% Time. . . . . . . . . . 123,773 4.36 93,698 3.84 Total deposits . . . . 261,138 3.49 220,135 3.11 Short-term borrowings. . 22,336 5.53 855 3.55 Long-term debt . . . . 1,333 9.86 - 0.00 Total interest bearing liabilities. $284,807 3.68 $220,990 3.11 MARGIN ANALYSIS (as a % of earning assets) Interest income . . . . 7.98% 7.47% Interest expense. . . . 3.26 2.71 Net interest income . . 4.72% 4.76% 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 6. Exhibits and Reports on Form 8-K B. Reports on Form 8-K: Date Item 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 11, 1995 /s/ Jeremy C. McCamic Jeremy C. McCamic Chairman and Chief Executive Officer Date May 11, 1995 /s/ Brent E. Richmond Brent E. Richmond Chief Financial and Accounting Officer