SECURITIES AND EXCHANGE COMMISSION
Wahington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
For the Quarter Ended: September 30, 1997
Commission File Number: 0-18392
Ameriana Bancorp
Indiana 35-1782688
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2118 Bundy Avenue, New Castle, Indiana 47362-1048
- -------------------------------------- ----------
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (765)529-2230
Securities registered pursuant to Section 12(g) of Act:
Common Stock, par value $1.00 per share
---------------------------------------
(Title of Class)
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 XX NO ___
As of November 7, 1997, there were issued and outstanding
3,231,407 shares of the registrant's common stock.
AMERIANA BANCORP AND SUBSIDIARIES
CONTENTS
PART I - FINANCIAL INFORMATION Page No.
ITEM 1 - Financial Statements
Consolidated Statements of Condition as of
September 30, 1997 and December 31, 1996. . . . . . 2
Consolidated Statements of Income for the
Three Months Ended September 30, 1997 and
1996 and the Nine Months Ended September 30,
1997 and 1996 . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements. . . . . 5
ITEM 2 - Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 6
PART II - OTHER INFORMATION . . . . . . . . . . . . . . 10
SIGNATURES. . .. . . . . . . . . . . . . . . . . . . . . 11
PART I - ITEM I
AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
September 30 December 31
1997 1996
------------ -----------
ASSETS
Cash on hand and in other institutions $ 4,940,512 $ 4,939,489
Interest-bearing deposits 3,019,505 4,004,551
Investment securities held to maturity (market
value: 1997--$39,689,000; 1996--$49,794,000) 39,994,829 50,744,304
Stock in Federal Home Loan Bank (at cost, which
approximates market value) 3,394,100 3,311,500
Mortgage-backed securities held to maturity
(market value: 1997--$31,768,000;
1996--$38,710,000) 31,644,218 38,541,544
Loans receivable 298,141,732 283,704,065
Allowance for loan losses (1,093,885) (1,103,513)
------------ ------------
Net loans receivable 297,047,847 282,600,552
Real estate owned 269,896 101,401
Premises and equipment 5,938,381 5,621,332
Mortgage servicing rights 776,250 780,770
Investments in unconsolidated affiliates 1,633,321 1,746,695
Other assets 4,369,362 4,362,968
------------ ------------
$393,028,221 $396,755,106
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $321,639,792 $318,705,367
Advances from Federal Home Loan Bank 19,129,032 26,548,603
Drafts payable 2,330,677 4,557,678
Advances by borrowers for taxes and insurance 1,119,728 951,902
Other liabilities 4,754,852 2,046,765
------------ ------------
Total liabilities 348,974,081 352,810,315
Shareholders' Equity:
Preferred stock (5,000,000 shares
authorized--none issued) -- --
Common stock ($1.00 par value; authorized
15,000,000 shares; issued shares:
1997 - 3,231,407; 1996 - 3,291,319) 3,231,407 3,291,319
Additional paid-in capital 7,547,824 8,645,273
Retained earnings 33,274,909 32,008,199
------------ ------------
Total shareholders' equity 44,054,140 43,944,791
------------ ------------
$393,028,221 $396,755,106
============ ============
See accompanying notes.
2
AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Month Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
Interest Income:
Interest on loans $5,902,426 $ 5,592,139 $17,249,940 $16,377,288
Interest on mortgage-backed securities 561,194 710,564 1,791,159 2,215,866
Interest on investment securities 747,340 840,696 2,659,017 2,138,316
Other interest and dividend income 118,579 144,768 339,125 481,119
---------- ----------- ----------- -----------
Total interest income 7,329,539 7,288,167 22,039,241 21,212,589
Interest Expense:
Interest on deposits 4,098,428 3,832,069 12,023,904 11,252,496
Interest on Federal Home Loan Bank
advances 244,180 448,761 993,965 1,130,896
---------- ----------- ----------- -----------
Total interest expense 4,342,608 4,280,830 13,017,869 12,383,392
---------- ----------- ----------- -----------
Net Interest Income 2,986,931 3,007,337 9,021,372 8,829,197
Provision For Loan Losses 60,000 24,000 147,000 63,000
---------- ----------- ----------- -----------
Net Interest Income After Provision
for Loan Losses 2,926,931 2,983,337 8,874,372 8,766,197
Other Income:
Net loan servicing fees 64,986 80,503 234,248 245,861
Other fees and service charges 183,650 175,786 532,660 484,459
Brokerage and insurance commissions 299,697 301,864 870,801 891,510
Loss on investments in unconsolidated
affiliates (8,810) (28,000) (108,810) (95,526)
Gains on sales of loans 124,926 79,676 336,350 145,783
Other 88,978 7,512 135,876 25,067
---------- ----------- ----------- -----------
Total other income 753,427 617,341 2,001,125 1,697,154
Other Expense:
Salaries and employee benefits 1,263,020 1,179,694 3,757,555 3,383,378
Net occupancy expense 316,179 262,659 944,572 789,962
Federal insurance premium 51,054 176,309 152,960 515,278
Savings Association Insurance Fund
assessment -- 1,878,897 -- 1,878,897
Data processing expense 82,448 78,366 246,071 239,194
Other 462,581 466,267 1,495,367 1,339,187
---------- ----------- ----------- -----------
Total other expense 2,175,282 4,042,192 6,596,525 8,145,896
---------- ----------- ----------- -----------
Income (Loss) Before Income Taxes 1,505,076 (441,514) 4,278,972 2,317,455
Income Taxes (Benefit) 511,078 (207,402) 1,519,167 809,681
---------- ----------- ----------- -----------
Net Income (Loss) $ 993,998 $ (234,112) $ 2,759,805 $ 1,507,774
========== =========== =========== ===========
Earnings (Loss) Per Share $ .31 $ (.07) $ .85 $ .45
========== =========== =========== ===========
Dividends Declared Per Share $ .16 $ .14 $ .46 $ .42
========== =========== =========== ===========
Average Number of Shares Outstanding 3,231,258 3,278,323 3,251,841 3,354,121
========== =========== =========== ===========
See accompanying notes.
3
AMERIANA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30
-----------------
1997 1996
---- ----
Operating Activities
Net income $ 2,759,805 $ 1,507,774
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses on loans and real estate
owned 147,000 63,000
Depreciation and amortization 467,469 433,888
Goodwill amortization 21,240 21,240
Equity in loss of limited partnership 108,810 95,526
Mortgage servicing rights amortization 95,556 95,739
Losses on sales of real estate owned 187 2,109
Increase in other assets (29,536) (907,585)
Decrease in drafts payable (2,227,001) (303,990)
Increase in other liabilities 2,852,634 2,893,542
----------- -----------
Net cash provided by operating activities 4,196,164 3,901,243
Investing Activities
Purchase of investment securities held to maturity (6,000,000) (29,594,706)
Proceeds from calls of securities held to maturity 16,750,000 2,000,000
Principal collected on mortgage-backed securities
held to maturity 6,803,032 6,929,278
Purchase of mortgage-backed securities held to
maturity -- (2,531,581)
Net change in loans (14,989,779) (19,155,303)
Mortgage servicing rights capitalized (91,036) (280,861)
Proceeds from sale of real estate owned 156,400 176,977
Net purchases of premises and equipment (683,823) (934,822)
Other investing activities (53,526) (315,845)
----------- -----------
Net cash provided (used) by investing
activities 1,891,268 (43,706,863)
Financing Activities
Decrease in NOW, MMDA and passbook deposits (2,922,656) (56,719)
Increase in certificates of deposit 5,897,949 14,351,270
Advances from Federal Home Loan Bank 52,700,000 67,100,000
Repayment of Federal Home Loan Bank advances (60,119,571) (37,439,247)
Proceeds from exercise of stock options 153,853 184,406
Purchase of common stock (1,311,214) (3,925,094)
Cash dividends paid (1,469,816) (1,378,191)
----------- -----------
Net cash provided (used) by financing
activities (7,071,455) 38,836,425
----------- -----------
Decrease In Cash And Cash Equivalents (984,023) (969,195)
Cash And Cash Equivalents At Beginning Of Period 8,944,040 9,543,323
----------- -----------
Cash And Cash Equivalents At End Of Period $ 7,960,017 $ 8,574,128
=========== ===========
Supplemental information:
Interest paid $11,168,740 $10,410,918
Income taxes paid 1,010,000 1,575,000
See accompanying notes.
4
AMERIANA BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The unaudited interim consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q
and, therefore, do not include all information and disclosures
required by generally accepted accounting principles for
complete financial statements. In the opinion of management,
the financial statements reflect all adjustments (comprising
only normal recurring accruals) necessary to present fairly the
Company's financial position as of September 30, 1997, results
of operations for the three- and nine-month periods ended
September 30, 1997 and 1996, and cash flows for the nine-month
periods ended September 30, 1997 and 1996. A summary of the
Company's significant accounting policies is set forth in Note 1
of Notes to Consolidated Financial Statements in the Company's
annual report on Form 10-K for the year ended December 31, 1996.
NOTE B -- SHAREHOLDERS' EQUITY
On August 26, 1997, the Board of Directors declared a quarterly
cash dividend of $.16 per share. This dividend was paid on
October 3, 1997, to shareholders of record as of September 12,
1997.
Statement of Financial Accounting Standards No. 128, Earnings
Per Share, is effective for the Company's 1997 annual financial
statements. This statement simplifies the calculations of
earnings per share. The Company does not expect that the new
disclosure from basic earnings per share will be substantially
different from the primary earnings per share as currently
calculated and disclosed. Additional disclosures include
diluted earnings per share, which will reflect the potential
dilution that could occur from unexercised stock options under
the Company's stock option plans.
NOTE C -- RECLASSIFICATIONS
Certain reclassifications of 1996 statements of income and cash
flows amounts have been made to conform with the 1997
presentation.
5
PART I - ITEM II
AMERIANA BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
-------
The largest components of the Company's total revenue and total
expense are interest income and interest expense, respectively.
Consequently, the Company's earnings are primarily dependent on
net interest income, which is determined by (i) the difference
between rates of interest earned on interest-earning assets and
rates paid on interest-bearing liabilities ("interest rate
spread"), and (ii) the relative amounts of interest-earning
assets and interest-bearing liabilities. Net income also is
significantly affected by levels of other income and operating
expenses.
Management believes that interest rate risk, i.e., the
sensitivity of income and net asset values to changes in
interest rates, is one of the most significant determinants of
the Company's ability to generate future earnings. Accordingly,
Ameriana operates under a long-range plan intended to minimize
the effect of changes in interest rates on operations. The
asset and liability management policies of the Company are
designed to stabilize long-term net interest income by managing
the repricing terms, rates and relative amounts of
interest-earning assets and interest-bearing liabilities.
RESULTS OF OPERATIONS
---------------------
In the third quarter and first nine months of 1997, the
Company's lending activities decreased slightly in comparison
with those of the prior year. Loan originations during the
quarter totaled $34,541,186, representing a decrease of 4.6%
from originations of $36,196,859 in the same period of 1996.
Loan originations during the first nine months totaled
$94,145,435, representing a decrease of 3.2% from originations
of $97,291,210 in the same period of 1996. The reduced volume
was attributable to lower mortgage loan and consumer lending
activity. Principal repayments on loans and mortgage-backed
securities increased during 1997 to $22,871,838 and $67,791,237
for the third quarter and year to date, respectively, compared
with $24,665,762 and $75,123,085 in the 1996 periods. The
Company sold fixed-rate mortgage loans into the secondary market
totaling $7,886,404 and $18,167,451 during the quarter and nine
months ended September 30, 1997, respectively, compared with
sales of $6,128,069 and $9,942,100 during the comparable periods
of 1996. The increased sales activity reflected the
establishment of a loan production office by Deer Park Federal
in late 1996.
The Company's net interest spread increased to 2.73% and 2.70%
for the quarter and nine months ended September 30, 1997,
compared with 2.65% and 2.66% in the comparable periods of 1996,
respectively. Ameriana continues to emphasize variable-rate
mortgage loan products, short-term consumer lending and the sale
of long-term fixed-rate mortgage loans, while supplementing its
net interest income through leveraging with borrowed funds.
6
AMERIANA BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Interest income increased .6% and 3.9%, respectively for the
three- and nine-month periods ended September 30, 1997, compared
with the same periods in 1996, reflecting the increased
portfolio yield which was augmented by increased average earning
assets during the nine-month period. The slower rate of growth
in interest income for the third quarter reflected a lower level
of earning assets, caused be the reduction in investment
securities called during the quarter. Interest expense
increased 1.4% and 5.1%, respectively in the third quarter and
year-to-date period ended September 30, 1997, compared with the
preceding year. The slower rate of growth in the third quarter
was attributable to the reduced level of interest-bearing
liabilities.
As a result, net interest income decreased by .7% in the third
quarter to $2,986,931 compared with $3,007,337 in the same
period last year. For the nine-month period in 1997, net
interest income increased 2.2% to $9,021,372 compared with
$8,829,197 in 1996. The changes reflected the reduced level of
interest-earning assets and interest-bearing liabilities during
the quarter and increases for the nine-month period compared
with the year-earlier periods.
The following table summarizes the Company's average net
interest-earning assets and interest rate spreads during the
three- and nine-month periods ended September 30, 1997 and 1996.
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
(Dollars in Thousands)
Interest-earning assets $377,550 $384,036 $381,585 $371,664
Interest-bearing liabilities 344,636 346,586 347,262 333,257
-------- -------- -------- --------
Net interest-earning assets $ 32,914 $ 37,450 $ 34,323 $ 38,407
======== ======== ======== ========
Average yield on:
Interest-earning assets 7.77% 7.59% 7.70% 7.61%
Interest-bearing liabilities 5.04 4.94 5.00 4.95
---- ---- ---- ----
Net interest spread 2.73% 2.65% 2.70% 2.66%
==== ==== ==== ====
7
AMERIANA BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The provisions for loan losses were $60,000 and $147,000 for the
three- and nine-month periods ended September 30, 1997, compared
with $24,000 and $63,000 in the same periods of 1996. Net
charge-offs were $156,628 and $12,077 for the first nine months
of 1997 and 1996, respectively. Total non-performing assets
increased slightly to $1,113,000 at September 30, 1997, from
$1,070,000 at September 30, 1996.
The following table summarizes the Company's non-performing
assets:
September 30 December 31 September 30
1997 1996 1996
------------ ----------- ------------
(Dollars in Thousands)
Loans:
Non-accrual $ 717 $ 721 $ 658
Over 90 days
delinquent 126 315 290
Real estate owned 270 101 122
Total $ 1,113 $1,137 $1,070
======= ====== ======
Management believes the Company has provided sufficient loan
loss reserves in relation to the relatively stable level of
non-performing loans. Such reserves amounted to $1,093,885,
$1,103,513 and $1,126,961 at September 30, 1997, December 31,
1996 and September 30, 1996, respectively, and are deemed
adequate to absorb any losses which may ultimately be incurred
on non-performing loans and the remaining loan portfolio.
Other income for the quarter increased 22.0% to $753,427 from
$617,341 in the same period last year. The increase for the
nine months ended September 30, 1997, was 17.9% with other
income totaling $2,001,125 compared with $1,697,154 in 1996.
These changes from 1996 reflected increases in other fees and
service charges, gains on sale of loans and other income which
were partially offset by reductions in loan servicing fees and
brokerage and insurance commissions. Losses from unconsolidated
affiliates reduced other income by $8,810 and $108,810 in the
quarter and nine months ended September 30, 1997, respectively,
but were offset by federal tax credits for low-income housing
amounting to $63,200 and $133,200, respectively. The
corresponding credits for the 1996 periods were $30,000 and
$79,851, respectively. Other income includes a gain on
the sale of unused land, acquired in connection with the
construction of a new branch office, amounting to $56,793 in the
quarter ended September 30, 1997.
Other expense for the third quarter of 1997 totaled $2,175,282,
down from other expense of $4,042,192 last year. Other expense
totaled $6,596,525 during the first nine months of 1997 compared
with $8,145,896 in 1996. The higher level of expense in 1996
was attributable to the assessment of $1,878,897 by the Savings
Association Insurance Fund, in connection with federal
legislation enacted during the third quarter of 1996. Expenses
other than the assessment and related federal insurance premiums
all increased over the preceding year, and the increases
amounted to 6.9% and 12.0% for the quarter and year to date,
respectively. The increases resulted from costs associated with
the Company's new branch of Ameriana Bank and the loan
production office of Deer Park Federal opened in January 1997
and September 1996, respectively.
8
AMERIANA BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
-------------------
The Company's principal sources of funds are cash generated from
operations, savings deposits and loan principal repayments. In
addition the Company, through its subsidiary institutions, has
the ability to borrow funds from the Federal Home Loan Bank
system. As of September 30, 1997, the Company's cash and
interest-bearing deposits totaled $7,960,017 or 2.0% of total
assets. This compared with $8,944,040 or 2.3% of total assets
at December 31, 1996, and $8,574,128 or 2.2% at September 30,
1996.
During the quarter ended September 30, 1997, securities in the
amount of $6,550,000 were redeemed in accordance with their call
provisions, and the proceeds were used to repay Federal Home
Loan Bank advances and other interest-bearing liabilities.
The combined regulatory liquidity of the Company's banking
subsidiaries, Ameriana Savings Bank and Deer Park Federal
Savings and Loan Association, at September 30, 1997. was 9.8%,
which exceeded the 5.0% required liquidity level set by the
Office of Thrift Supervision, and was invested in overnight
deposits and U. S. government agency and mortgage-backed
securities with maturities of five years or less.
The minimum regulatory requirements for the Company's banking
subsidiaries under the most stringent of the capital regulations
at September 30, 1997, were approximately $14,280,000 and
$3,124,000, respectively. At that date, the institutions had
regulatory capital in excess of the minimum requirement by
approximately $21,358,000 and $2,832,000, respectively.
At September 30, 1997, the Company's commitments for loans in
process totaled $9,903,000, primarily for single-family
residential variable-rate mortgage loans or short-term
fixed-rate construction loans. Management believes that it has
ample resources to fund its commitments through its normal
sources of funds and augmented by its ability to borrow through
the Federal Home Loan Bank system.
OTHER
-----
The Securities and Exchange Commission maintains a Web site that
contains reports, proxy and information statements and other
information regarding registrants that file electronically with
the Commission, including the Company, and the address is
(http://www.sec.gov).
9
PART II - OTHER INFORMATION
AMERIANA BANCORP AND SUBSIDIARIES
ITEM 1 - Legal Proceedings
-----------------
No changes have taken place in regard to the legal
proceedings disclosed in the registrant's report on Form 10-K
for the year ended December 31, 1996.
ITEM 2 - Changes in Securities
---------------------
Not Applicable
ITEM 3 - Defaults in Senior Securities
-----------------------------
Not Applicable
ITEM 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable
ITEM 5 - Other Information
-----------------
Not Applicable
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
Exhibit 27 Financial Data Schedule
10
SIGNATURES
AMERIANA BANCORP AND SUBSIDIARIES
Pursuant to the requirements of Section 13 or 15 (d) 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.
AMERIANA BANCORP
DATE: November 7, 1997 by /s/ Harry J. Bailey
-------------------
Harry J. Bailey
President and
Chief Executive Officer
(Duly Authorized Representative)
DATE: November 7, 1997 by /s/ Howard J. Pruim
----------------------
Howard J. Pruim
Senior Vice President-
Secretary/Treasurer
(Principal Financial Officer
and Accounting Officer)
11