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 quarterly period ended March 31, 1996
[ ]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 33-60230
Albion Banc Corp.
(Exact name of registrant as specified in its charter)
Delaware 16-1435160
(State or other jurisdiction (IRS Employer
of incorporation or organization Identification
No.)
48 North Main Street, Albion, New York 14411-0396
(Address of principal executive offices) (Zip Code)
(716) 589-5501
(Registrants telephone number, including area code)
___________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports 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.
X Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as ot the latest practicable date.
Class Outstanding as of May 8, 1996
Common Stock, $.01 par value 258,714 shares
ALBION BANC CORP.
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition
March 31, 1996 (unaudited)and December 31, 1995 1
Consolidated Statements of Income (unaudited)
Three months ended March 31, 1996 and 1995 2
Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31, 1996 and 1995 3
Notes to Consolidated Financial Information 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information 9
Signatures 10
ALBION BANC CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, December 31,
1996 1995
Assets (unaudited)
Cash and due from banks $ 845,311 $ 1,047,018
Fed funds sold 250,000 1,350,000
Investment securities:
Available for sale, 3,817,600 4,137,800
Held to maturity 3,287,251 3,279,551
Loans 45,552,337 44,292,708
Less-Allowance for loan losses (251,707) (244,100)
Net Loans 45,300,630 44,048,608
Accrued interest receivable 416,188 384,237
Federal Home Loan Bank stock 475,000 475,000
Premises and equipment, net 2,183,184 2,191,147
Other assets 118,325 175,518
Total Assets $56,692,289 $57,088,879
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 1,085,822 $ 1,086,601
Interest-bearing 45,390,050 45,472,828
Total deposits 46,475,872 46,559,429
FHLB advances and other borrowings 3,293,188 3,298,782
Advances from borrowers for taxes 774,127 968,711
Other liabilities 76,818 172,837
Total Liabilities $50,620,005 $50,999,759
Shareholders' equity:
Common stock, $.01 par value
3,000,000 shares authorized,
260,714 shares outstanding 2,607 2,607
Capital surplus 2,310,211 2,305,975
Retained earnings 3,811,386 3,833,811
Unearned ESOP shares (91,100) (97,617)
Unrealized gain on securities 39,180 44,344
Total shareholders' equity 6,072,284 6,089,120
Total Liabilities and Shareholders'
Equity $56,692,289 $57,088,879
ALBION BANC CORP.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended
March 31,
1996 1995
Interest income:
Interest and fees on loans $ 938,231 $ 951,335
Interest on investment securities 125,710 95,457
Interest on federal funds sold 15,658 13,476
Total interest income 1,079,599 1,060,268
Interest expense:
Interest on deposits 557,753 412,889
Interest on borrowed funds 44,652 141,698
Total interest expense 602,405 554,587
Net interest income 477,194 505,681
Provision for loan losses 9,000 9,000
Net interest income after
provision for loan losses 468,194 496,681
Noninterest income:
Gain on sale of mortgage loans and investments 0 0
Other noninterest income 88,245 38,677
Total noninterest income 88,245 38,677
Noninterest expense:
Salaries and employee benefits 223,701 203,808
Occupancy expenses 75,708 56,442
Deposit insurance premiums 29,662 22,373
Professional fees 34,730 54,715
Data processing fees 50,679 32,471
Other operating expenses 60,958 71,316
Total noninterest expense 475,438 441,125
Income before income taxes 81,001 94,233
Provision for income taxes 27,319 32,100
Net Income $ 53,682 $ 62,133
Earnings per common and common
equivalent share $0.21 $0.25
ALBION BANC CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net Income $ 53,682 $ 62,133
Depreciation, amortization and accretion 40,468 13,526
Provision for loan losses 9,000 9,000
Provision for deferred taxes 0 7,400
Net gain on sale of real estate owned (27,537) 0
ESOP expense 10,753 8,310
Changes in operating assets and liabilities-
Other assets 5,977 54,468
Accrued income taxes and other liabilities (96,019) 44,907
Net cash provided by operating activities $ (3,676) $ 199,744
Cash flows from investing activities:
Proceeds from the sale of foreclosed real estate 47,992 0
Proceeds from maturities of investment securities 0 1,200,000
Purchases of investment securities 0 (982,294)
Principal payments on mortgage-backed securities 306,580 131,419
Net decrease (increase) in federal funds sold 1,100,000 (2,400,000)
Net (increase) decrease in loans receivable (1,261,022) 223,717
Redemption of FHLB stock 47,500
Net purchase of fixed assets (30,791) (122,276)
Net cash used in investing activities 162,759 (1,901,934)
Cash flows from financing activities:
Net increase in demand deposits, NOW accounts
and money market accounts (779) 128,815
Net (decrease) increase in time deposits (82,778) 2,822,335
Repayment of borrowings (5,594) (480,140)
Net increase in advances from borrowers for
taxes and insurance (194,584) (346,568)
Dividends paid (77,055) (76,100)
Net cash provided by financing activities (360,790) 2,048,342
Net (decrease) increase in cash and cash equivalents (201,707) 346,152
Cash and cash equivalents at beginning of period 1,047,018 660,261
Cash and cash equivalents at end of period $ 845,311 $1,006,413
Cash paid during the period for:
Interest $ 602,405 $ 554,587
Income taxes 11,000 25,500
ALBION BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
MARCH 31, 1996
NOTE 1 - BASIS OF PRESENTATION:
The unaudited interim financial information includes the accounts of the
Company, the Association and New Frontier of Albion Corp. The financial
information has been prepared in accordance with the Summary of Significant
Accounting Policies as outlined in the Company's Annual Report for the year
ended December 31, 1995, and in the opinion of management, contains all
adjustments necessary to present fairly the Company's financial position as
of March 31, 1996 and December 31, 1995, and its results of operations and
cash flows for the three month period ended March 31, 1996 and 1995. All
adjustments made to the unaudited interim financial information were of a
recurring nature.
Certain prior year balances have been reclassified to conform with the
current year presentation.
Note 2 - INVESTMENT SECURITIES AVAILABLE FOR SALE:
The amortized cost and estimated market value of investment securities are
as follows:
March 31, 1996 December 31, 1995
Amortized Market Amortized Market
Cost Value Cost Value
Federal Home Loan Mortgage $1,620,798 $1,644,200 $1,707,785 $1,727,500
Corporation
Federal National Mortgage 1,689,004 1,721,300 1,891,894 1,935,000
Corporation
Government National Mortgage 442,555 452,100 461,691 475,300
Corporation
$3,752,357 $3,817,600 $4,061,370 $4,137,800
Note 3 - INVESTMENT SECURITIES HELD TO MATURITY:
The amortized cost and estimated market value of investment securities held
to maturity are as follows:
March 31, 1996 December 31, 1995
Amortized Market Amortized Market
Cost Value Cost Value
U.S. Treasury Securities $2,295,500 $2,300,300 $2,286,858 $2,300,300
State and political
subdivision securities 390,914 394,300 391,443 396,600
Corporate obligations 600,837 606,300 601,250 611,000
$3,287,251 $3,300,900 $3,279,551 $3,307,900
NOTE 4 - LOANS RECEIVABLE:
Loans consist of the following:
March 31, December 31,
1996 1995
(Unaudited)
Real estate loans:
Secured by one-to-four family property $37,342,741 $36,122,461
Secured by other properties 2,829,921 2,594,168
Construction loans 826,181 651,649
40,998,843 39,368,278
Other loans:
Automobile loans 203,752 228,544
Home improvement loans 3,904,979 3,996,860
Other 1,111,936 1,187,811
5,220,667 5,413,215
Less:
Undisbursed portion of loans (661,691) (487,913)
Net deferred loan origination fees (5,482) (872)
(667,173) (488,785)
$45,552,337 $44,292,708
NOTE 6 - ALLOWANCE FOR LOAN LOSSES:
An analysis of changes in the allowance for loan losses is as follows:
Three-months ended
March 31,
1996 1995
Balance at beginning of period $244,077 $224,000
Provision expense 9,000 9,000
Charge-offs 1,370 0
Balance at end of period $251,707 $233,000
NOTE 7- INCOME TAXES:
The Company files a consolidated federal income tax return. The provision
for income taxes is based on income as recorded in the consolidated
financial statements. This provision differs from amounts currently
payable because of temporary differences in the recognition of certain
income and expense items for financial and tax purposes. The Company
accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes". SFAS
109 requires that a deferred tax liability or asset be adjusted for the
effect of changes in tax laws or rates in the period of enactment.
NOTE 8 - EARNINGS PER SHARE:
Earnings per share is determined by dividing income for the period by the
weighted average number of common and common equivalent shares. Stock
options are regarded as common stock equivalents, whereas ESOP shares not
committed to be released are not considered outstanding for purposes of
calculating earnings per share. The weighted average number of shares used
in the computation of earnings per share was 259,050 and 251,445 at March
31, 1996 and March 31, 1995, respectively. There is no material difference
between primary and fully diluted earnings per share.
ALBION BANC CORP.
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1996
Financial Condition
Total assets of Albion Banc Corp. (the "Company") were 56.7 million as of
March 31, 1996, a decrease of $.4 million or .7% under total assets as of
December 31, 1995. Deposits, the Company's primary source of funds,
decreased $.1 million or .2% to $46.5 million at March 31, 1996. Borrowings
from the Federal Home Loan Bank of New York were $3.0 million at March 31,
1996,unchanged from the $3.0 million at December 31, 1995.
Investment securities held for sale, primarily mortgage-backed securities,
decreased from $4.1 million at December 31, 1995 to $3.8 million at March
31, 1996. This decrease can be attributed to normal principal paydowns of
mortgage-backed securities. Proceeds from principal paydowns were
reinvested primarily in real estate loans.
Investment securities held to maturity, primarily U.S. Treasury Securities,
Corporate Bonds and Municipal obligations, remained unchanged at $3.3
million.
Total loans outstanding as of March 31, 1996 were $45.6 million, an
increase of $1.3 million over total loans at December 31, 1995. The
majority of this increase occurred in real estate loans secured by one-
to-four family property, which increased by $1.2 million over the
respective balance at December 31, 1995. Real estate loans secured by
other properties, including construction loans as of March 31, 1996,
increased by $.4 million during the period.
Consumer loans, primarily home equity and personal loans decreased $192,548
during this period. This can be attributed to the normal principal
paydowns of these loans.
The Company's shareholders' equity decreased $16,836 or .3%, from
$6,089,120 at December 31, 1995 to $6,072,284 at March 31, 1996. This
decrease is due primarily to a stock dividend payment in the first quarter
and the resulting decrease in equity. The Company's equity as a percentage
of total assets at March 31, 1996 was 10.7% and exceeds all regulatory
requirements.
Liquidity measures the ability of the Company to meet its maturing
obligations and existing commitments, to withstand fluctuations in deposit
levels, to fund its operations and to provide for customers credit needs.
The Company's principal sources of funds are customer deposits, advances
from the Federal Home Loan Bank of New York and principal and interest
payments on loans, mortgage-backed securities and investments. Under
current federal regulations, Albion Federal is required to maintain
specified liquid assets in an amount equal to at least 5% of its net
withdrawable liabilities plus short-term borrowings. The Company has
generally maintained liquidity levels well above those required by
regulation. At March 31, 1996, Albion Federal's liquidity ratio was 9.2%,
exceeding the minimum required. Federal Funds sold at March 31, 1996
amounted to $250,000. These funds are available immediately to meet
upcoming obligations. The Company has not sold any investments prior to
maturity and has not transferred any securities between its available for
sale and held to maturity categories.
Comparison of Operating Results for the Three Months Ended March 31, 1996
and 1995
Net Income. Net income of $53,682 for the three months ended March 31,
1996 represents a decrease of $8,451 or 13.6% from the $62,133 earned in
the comparable period ended March 31, 1995.
Net Interest Income. Net interest income decreased to $477,194 for the
three months ended March 31, 1996, down 5.6% from $505,681 earned during
the three month period ended March 31, 1995. This decrease is primarily
due to an increase in interest rates paid on deposits and a significant
increase in the average balance outstanding. Total interest income
increased 1.8% or $19,331 during the period while total interest expense
increased 8.6% or $47,818.
Provision for Loan Losses. The provision for possible loan losses, the
charge to earnings for potential credit losses associated with lending
activities, was $9,000 for the three months ended March 31, 1996, the same
as the comparable period in 1995. Management charges earnings for an
amount necessary to maintain the allowance for loan losses at a level
considered adequate to absorb potential losses in loan portfolio. The
level of the allowance is based on management's evaluation of individual
loans, past loan loss experience, the assessment of prevailing conditions
and anticipated economic conditions and other relevant factors. The
allowance for possible loan losses of the Association at March 31, 1996 was
$251,707 or .55% of total loans and represents and increase of 3.1% over
the allowance at December 31, 1995. The increase in the allowance for
possible loan losses was due primarily to management's quarterly analysis
of the Association's loan portfolio.
Noninterest Income. Noninterest income for the three month period ended
March 31, 1996 was $88,245 compared with $38,677 during the same period in
the prior year. This increase was attributable primarily to a loan
recovery that resulted in a gain of $27,000. Also, this increase is
attributable to increased fee income from depository transaction accounts
and fee income from New Frontier of Albion Corp.
Noninterest Expense. Noninterest expense for the three month period ended
March 31, 1996 was $475,438 an increase of 7.8% over the $441,125 recorded
for the same period in the prior year. This increase is a result of
increases in the following: salaries and employee benefits expense of
$19,893 or 9.8%; occupancy expenses of $19,266 or 34.1%; and Data
processing fees of $18,208 or 56.1%. These increases are primarily the
result of general increases in overall business volume and operations and
expenses associated with the operation of the new branch facility in
Clarkson, New York.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
Periodically, there have been various claims and lawsuits
involving the Company, mainly as a defendant, such as claims
to enforce liens, condemnation proceedings on properties in
which the Company holds security interests, claims involving
the making and servicing of real property loans and other
issues incident to the Company's business. The Company is not
a party to any pending legal proceedings that it believes
would have a material adverse effect on the financial
condition or operation of the Company.
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
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 therunto duly authorized.
Albion Banc Corp.
(Registrant)
Dated: May 10, 1996 \s\Jeff S Rheinwald
Jeffrey S. Rheinwald
President and C.E.O.
Dated: May 10, 1996 \s\Mark F. Reed
Mark F. Reed
Vice President and C.F.O.