UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________to______________________
Commission file number 0-18127
AMERICAN BANCORP OF NEVADA
(Exact name of registrant as specified in its charter)
Nevada 94-2792608
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4425 Spring Mountain Road, Las Vegas, Nevada 89102
(Address of principal executive offices) (Zip Code)
(702) 362-7222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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 June 30, 1995:
Common stock, $.05 par value 3,168,293
Class Number of Shares
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Condensed Consolidated Statements of Income
Six Months and Quarters ended June 30, 1995 and 1994 1
Condensed Consolidated Statements of Condition
June 30, 1995 and December 31, 1994 2
Condensed Consolidated Statements of Cash Flows
Six Months ended June 30, 1995 and 1994 3-4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-9
PART II - OTHER INFORMATION
Signatures 10
PART I - FINANCIAL INFORMATION
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS AND QUARTERS ENDED JUNE 30, 1995 AND 1994
(Dollars in thousands except for earnings per share)
(Unaudited)
For the
Six Months For the Quarter
Ended June 30, Ended June 30,
1995 1994 1995 1994
INTEREST INCOME
Interest and Fees on Loans $5,559 $3,724 $2,941 $1,959
Interest on Investment Securities 3,554 2,716 1,893 1,504
Interest on Federal Funds Sold 220 94 134 44
Total Interest Income 9,333 6,534 4,968 3,507
INTEREST EXPENSE
Interest on Deposits 2,446 1,313 1,358 717
Interest on Securities Sold Under
Agreement to Repurchase 406 148 238 74
Total Interest Expense 2,852 1,461 1,596 791
NET INTEREST INCOME 6,481 5,073 3,372 2,716
Provision for Loan Loss (270) (100) (175) (40)
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSS 6,211 4,973 3,197 2,676
TOTAL NON-INTEREST INCOME: 750 862 404 355
TOTAL NON-INTEREST EXPENSE: 4,279 3,931 2,231 1,919
INCOME BEFORE TAXES 2,682 1,904 1,370 1,112
PROVISION FOR INCOME TAXES (731) (465) (358) (255)
NET INCOME $1,951 $1,439 $1,012 $ 857
NET INCOME PER SHARE $ .60 $ .46 $ .31 $ .27
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
AT JUNE 30, 1995 AND DECEMBER 31, 1994
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
1995 1994
ASSETS
Cash and Due From Banks $ 25,462 $ 22,216
Investment Securities 131,037 116,663
Federal Funds Sold 12,600 0
Net Loans and Leases 92,514 75,378
Premises and Fixed Assets, Net 9,477 9,566
Other Assets 3,059 3,596
TOTAL ASSETS $274,149 $227,419
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $218,911 $192,811
Securities Sold Under Agreement to Repurchase 29,714 13,780
Other Liabilities 1,309 697
TOTAL LIABILITIES $249,934 $207,288
STOCKHOLDERS' EQUITY
Unrealized gain (loss) on Available for
Sale Securities $ 80 $ (1,988)
Common Stock 158 119
Surplus 20,110 20,084
Retained Earnings 4,002 2,051
Less Treasury Stock (135) (135)
TOTAL STOCKHOLDERS' EQUITY $ 24,215 $ 20,131
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $274,149 $227,419
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in Thousands)
(Unaudited)
Six Months
Ended June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 8,784 $ 6,436
Other income 702 706
Interest paid (2,840) (1,349)
Cash paid to suppliers and employees (3,665) (2,648)
Income taxes paid (573) (786)
Net cash provided by operating activities 2,408 2,359
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of
investment securities 32,947 53,707
Purchase of investment securities (44,074) (67,792)
Net increase in loans made to customers (17,336) (1,412)
Capital expenditures (239) (181)
Proceeds from sale of R.E.O. 0 208
Other 40 0
Net cash used in investing activities (28,662) (15,470)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits 26,100 24,816
Net increase (decrease) in federal funds
purchased and securities sold under
repurchase agreements 15,934 (2,345)
Other 66 (284)
Net cash provided by financing activities 42,100 22,187
NET INCREASE IN CASH AND DUE FROM BANKS AND
FEDERAL FUNDS SOLD 15,846 9,076
CASH AND DUE FROM BANKS AND FEDERAL FUNDS
SOLD AT JANUARY 1 22,216 22,473
CASH AND DUE FROM BANKS AND FEDERAL FUNDS
SOLD AT JUNE 30 $ 38,062 $ 31,549
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 1,951 $ 1,439
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of property
and equipment 327 328
Amortization of investment security premiums
and accretion of discounts (135) (138)
Provision for loan loss 270 100
Deferred loan fees (111) 214
Loss (Gain) on sale of investment securities 20 (125)
Decrease (increase) in other assets (526) 529
Increase in other liabilities 612 12
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,408 $ 2,359
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollars in Thousands)
(Unaudited)
Six Months
Ended June 30,
1995 1994
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Stock dividends issued $ 3,826
Issuance of common stock for stock split $ 39,600
The accompanying notes are an integral part of these statements.
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
FINANCIAL INFORMATION
NOTE A - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the parent holding
company and its wholly owned subsidiaries, American Bank of
Commerce ("Bank"), AmBank Mortgage Company ("Mortgage Company")
and AmBank Financial Company ("Finance Company"). Material
intercompany balances and transactions have been eliminated.
NOTE B - BASIS OF PRESENTATION
In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair
presentation have been reflected in the financial statements.
The results of operations for the three and six months ended
June 30, 1995, are not necessarily indicative of the results to
be expected for the full year.
NOTE C - INCOME PER SHARE
Net Income per common share is based upon the weighted average
number of common and common equivalent shares outstanding,
3,258,807 and 3,041,409 for June 30, 1995 and 1994, respectively.
The weighted average number of common shares, common shares
outstanding and earnings per share are adjusted to reflect a 4
for 3 stock split declared on March 20, 1995, to stockholders of
record as of April 4, 1995.
ITEM II
AMERICAN BANCORP OF NEVADA AND SUBSIDIARIES
The following is management's discussion and analysis of certain
significant factors which affected the company's financial position and
operating results during the period in the accompanying condensed
consolidated financial statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Six Months ended June 30, 1995
Asset Growth
Total assets increased $46,730,000 or 20.55% during the first six months
of 1995. The primary elements of this growth were a $17,136,000 or 22.73%
increase in Net Loans and Leases, a $14,374,000 or 12.32% increase in
Investment Securities and a $12,600,000 increase in Federal Funds Sold.
Asset growth was driven by the increase in Deposits and Securities Sold
Under Agreements to Repurchase of $42,034,000 or 20.35%. Both deposits
and loans continue to increase as a result of the Bank"s aggressive
business development efforts, successful operation and increased
recognition throughout the business community.
Interest Income
Total interest income increased $2,799,000, or 42.84%, in the first half
of 1995 when compared to the same period of 1994, and increased $1,461,000
or 41.66% for the Quarter ended June 30. It is anticipated that interest
income will continue to increase due to the growth in Securities and Net
Loans and Leases. Total interest income is composed of the following
categories:
Interest and Fees on Loans: Interest and fee income increased by
$1,835,000, or 49.27%, in the first six months of 1995 as compared to the
same period of 1994, and increased $982,000 or 50.13% for the Quarter
ended June 30. The year-to-date increase is composed of a $69,000
increase in fee income and a $1,766,000 increase in interest on loans.
Fee income increased due an increase in loan demand. Interest on loans
increased due to an increase in average loan volume of $20,604,000 to
$85,280,000 and an increase in the yield from 9.19% in 1994 to 11.16 % in
1995, a net increase of 1.97 %. The quarter to date increase is composed
of a $42,000 increase in fee income and a $940,000 increase in loan
interest income. Fee income increased for the quarter due to an increase
in loan demand. Interest on loans increased due to an increase in the
yield from 9.66% for the quarter ended June 30, 1994, to 11.29% for the
same period 1995, a net increase of 1.63%. This represents an increase in
income of $267,000. The average loan volume did increase to $89,381,000
from $65,551,000, an increase of $23,830,000 or 36.35% which represents an
increase in income of $673,000.
Interest on Investment Securities: The Bank continues to invest its excess
funds in interest bearing securities. Interest on investment securities
increased by $838,000, or 30.85%, in the first half of 1995 as compared to
the same period in 1994. This was the result of an increase of $3,989,000
in average volume of investments to $119,464,000, coupled with an increase
in yield from 4.70% to 5.95%. The increase in yeld is attributable to the
reinvestment of maturing securities and paydowns of the mortgage backed
portfolio. The mix of the Bank's investment portfolio remains consistant
with the prior year. The tax-equivalent yield increased from 5.21% to
7.13%. Comparing the quarter ended June 30, 1995 to June 30, 1994,
interest income increased $389,000 or 25.86%. The average volume
increased $2,351,000 to $125,084,000, coupled with an increase in the
yield to 6.05% from 4.90%. The increase in income is composed of a
volume increase of $36,000 and a yield increase of $353,000. The Bank's
current investment strategy is to maintain an investment portfolio with
rather short maturities. At this time the relative flatness of the yield
curve does not warrant increased risk or extending the overall maturity of
the portfolio. We continually monitor these factors when evaluating
investments strategies and asset liability management.
Interest on Federal Funds Sold: Interest earned on Fed Funds Sold
increased $126,000, or 134.04%, in the first half of 1995 as compared to
the first half of 1994. This increase was due to an increase in the
average interest rate from 3.27% to 5.79% for Fed Funds Sold. For the
quarters ended June 30, interest increased $90,000 or 204.55%. This
increase was due to an increase in the average volume of $4,211,000 or
85.02% to $9,164,000. The average yield increased 2.3% or 64.79 %.
Management's goal is to maintain a level of Federal Funds that will enable
the Bank to fund increases in loan demand and to meet depositors' needs.
Interest Expense
Total interest expense increased $1,391,000, or 95.21%, during the first
half of 1995 as compared to the first half of 1994. Interest on deposits
increased by $1,133,000, or 86.29% due to an increase in the average
balances of interest bearing accounts by $18,595,000 to $127,200,000. The
average rate paid on deposits decreased from 2.42% in 1994 to 2.41% in
1995. Interest on securities sold under agreements to repurchase
increased $258,000, or 174.32% as the average volume increased $7,089,000
to $19,194,000 and the average interest rate increased from 2.45% to
4.23%. Interest expense for the quarter ended June 30, 1995, increased
$805,000 or 101.77% when compared to the same period, 1995. Interest on
deposits increased $641,000 or 89.40% due to an increase in the average
balances of $94,455,000 to $210,753,000. The average rate paid on
deposits increased to 2.58% from 2.47%. Interest on securities sold under
agreement to repurchase increased $164,000 or 221.62% as the average
volume increased $9,692,000 to $21,520,000. The average rate paid
increased 1.93%, from 2.49% to 4.42%. Management believes that the
average volume of deposits and repurchase agreements will continue to
increase during 1995, and that interest rates will be higher than 1994's
levels for the foreseeable future.
Interest Rate Risk
Management attempts to protect earnings from wide shifts in interest rates
by employing the following strategies:
Loans: Approximately 90% of the Bank's loan portfolio is written on an
adjustable basis that floats with the Bank's base rate. Thus,
approximately $83,101,000 reprices immediately upon a change in base.
Investments: The majority of the investment portfolio of the Bank is of a
fixed rate nature. This enables Management to provide an underlying level
of income irrespective of changes in rates. Additionally, the average
life of the portfolio is 1.89 years. This strategy of maintaining short
maturities provides maximum flexibility in dealing with fluctuating
interest rates.
Deposits: Management discourages use of long term Certificates of Deposit
by consistently paying at or below market rates and not offering greater
than one year maturities. However, an attempt is currently underway to
recapture some of the jumbo short-term Certificates of Deposit market.
Offering rates for Certificates of Deposit over $100,000 and less than one
year maturity are reviewed weekly for adjustments. The competitive rates
we now offer increased the balances in these accounts by $1,301,000 or
21.95% from December 31, 1994 to June 30, 1995. At June 30, 1995,
approximately 83% of time deposits had a maturity of three months or less.
The above factors, taken into consideration together with the fact that
the Bank's non-interest bearing customer deposits are approximately 36% of
total deposits, provides management the opportunity to maintain favorable
net interest margins under most normal interest rate scenarios.
Provision for Loan Loss
The provision for loan loss in the first half of 1995 was $270,000,
$170,000 more than the first half of 1994. Net charged off loans and
leases were $40,000 through June 30, 1995, and ($47,329) at June 30, 1994.
The allowance for loan loss was 1.02% of loans outstanding, as compared
to 1.19% at the end of the first half of 1994.
At June 30, 1995, no loans were accounted for on a non-accrual basis and
no loans were past due 90 days or more.
At June 30, 1995, Management classified 10 loans as substandard, for an
aggregate of $362,000. This amount represents .39% of outstanding loans.
No losses are anticipated and no loans are classified as doubtful.
The loan portfolio is concentrated in the Southern Nevada area, where the
economy has remained strong with significant increases in the population.
The economic strength of the area has served to keep the sales of new
homes at a high level, which supports the Bank's concentration in
construction as well as commercial real estate financing.
Management reviews portfolio concentration levels on a regular basis and
had previously decreased construction lending on large homes and placed
greater emphasis on the smaller entry-level housing market. Commercial
real estate lending is generally limited to owner-occupied properties.
Management reviews the loan loss analysis on a quarterly basis and
appraisal reviews are performed to support the values at which loans are
carried int he portfolio. Management allocates a percentage of the loan
loss allowance to all classified credits and, since the first quarter 1995
to pass credits as well. Additionally, Management made a conscious
decision to increase the level of allowance as a percentage of net loans.
This is due to the rapid growth of the portfolio and the larger loans
being made. Management believes the current allowance of $957,000 is
adequate and that there is sufficient unallocated allowance to handle
unexpected problems within the portfolio. Management assigns risk
percentages to all classified loans to ensure that the allowance is
adequate and an excess allowance is provided for any unexpected problems
that may arise within the portfolio. Management feels that the current
Allowance for Loan Loss of $957,000 is adequate for the Bank to meet
unanticipated loan losses.
Non-Interest Income
Total non-interest income for the first six months of 1995 decreased
$112,000, or 12.99%, over the same period of 1994. The decrease was
primarily due to a decrease in gain on sale of securities and a decrease
in fee income from mortgage placement services.
Non-Interest Expense
Total non-interest expense increased by $348,000, or 8.85%, during the
first half of 1995 as compared to the first half of 1994. This increase
is due primarily to increased salary and employee benefit expenses due to
normal salary increases.
Liquidity
Management of the Company strives to obtain the highest possible earnings
while maintaining a strong liquidity position. The policy of shorter
maturities in the Bank's security portfolio and the need for cash in
Federal Funds Sold to meet daily cash requirements continues to be met.
Management continuously monitors outstanding loan commitments and letters
of credit for funding needs. At June 30, 1995, outstanding loan
commitments were $38,997,000 and letters of credit were $2,822,000. The
measures of solid liquidity practices such as Total Deposits to Total
Assets and Loans to Deposits are monitored constantly for any adverse
trends. Cash flow from operations continues to remain positive and
Management expects this trend to continue. Cash flow from investing
activities was negative as there was an increase in net loans made to
customers and a sizable increase in the investment in Securities compared
to proceeds from sales and maturities of Securities. Cash flow from
financing activities was positive due to the increase in deposits and this
trend is expected to continue. Management believes that liquidity will
remain strong in both the near-term and the long-term.
Capital Resources
During 1995, Management plans to construct approximately 13,000 square
feet of leasable office space at its headquarters site at Spring Mountain
Road and Arville. The Bank anticipates opening another branch office in
1996, although at this time it has not been decided whether the office
will be owned or leased. In either case, the impact to capital is not
expected to be significant.
At June 30, 1995, the Bank's Tier 1 Core Capital to risk weighted assets
was 9.81%, Total Capital to risk weighted assets was 10.19%, and the
Leverage ratio was 9.46%, all above the current minimum guidelines of
4.0%, 8.00%, and 4.0%, respectively, established by regulatory
authorities.
In addition, the Federal Deposit Insurance Corporation Improvement Act of
1991 (FDICIA) defined five levels of capital for financial institutions:
Well-capitalized, Adequately capitalized, Undercapitalized, Significantly
undercapitalized and Critically undercapitalized. A bank falls into one
of these levels based on its risk-based ratio and leverage ratio. At
June 30, 1995, the Bank falls in the Well-capitalized category.
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN BANCORP OF NEVADA
DATED: 8/10/95 /s/ James V. Bradham
James V. Bradham
Presdident and Chief Executive
Officer
DATED: 8/10/95 /s/ Patricia L. Kirkwood
Patricia L. Kirkwood
Executive Vice President and
Cashier