EXHIBIT 13
EXCERPTS FROM ANNUAL REPORT TO SHAREHOLDERS
AMBANC CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents an analysis of the consolidated
financial condition of AMBANC Corp. (Corporation) and its
wholly-owned subsidiaries, AmBank Indiana, N.A. (IND),
AmBank Illinois, N.A. (ROB), AmBank Illinois (CAS),
American National Realty Corp. (ANR) at December 31, 1996
and 1995, and the consolidated results of operations for
the years ended December 31, 1996, 1995 and 1994. This
review should be read in conjunction with the
consolidated financial statements, notes to consolidated
financial statements and other financial data presented
elsewhere in this Annual Report.
On November 1, 1995, the Corporation issued 701,647
shares of its common stock in exchange for all of the
outstanding common stock of First Robinson Bancorp (FRB),
the parent holding company of ROB. FRB was then merged
into the Corporation. This acquisition was accounted for
under the pooling of interests method. Accordingly, the
Corporation's financial statements and financial data
have been retroactively restated to include the accounts
and operations of FRB for all periods presented. Certain
reclassifications have been made to FRB's historical
financial statements to conform to the Corporation's
presentation. A 5% stock dividend was paid on December
2, 1996 and November 30, 1995. All share and per share
amounts have been retroactively restated to reflect the
5% stock dividends and the shares issued for FRB.
Earnings per share amounts are based on average
outstanding shares of 3,315,808 for 1996, 3,316,264 for
1995 and 3,313,716 for 1994.
2
RESULTS OF OPERATIONS
(Dollar amounts in thousands, except share and per
share data)
Net income for 1996 was $7,966 or $2.40 per share
compared to $7,045 or $2.12 per share in 1995 and $6,502
or $1.96 per share in 1994. Earnings expressed as a
percent of average assets and average equity were:
Table I
Percent of Percent of
Average Assets Average Equity
1996 1995 1994 1996 1995 1994
Net income 1.14% 1.09% 1.05% 11.58% 11.30% 11.19%
The following is an analysis of the critical components
of net income for the years 1996, 1995 and 1994 with
discussion and analysis of the contrasts between these
periods and the effect of previous trends on anticipated
future earnings performance.
Net Interest Income
Net interest income is the principal source of the
Corporation's earnings and represents the difference
between interest income on interest earning assets and
the interest cost of interest bearing liabilities.
Income on certain interest earning assets is exempt from
federal income tax and, as is customary in the banking
industry, changes in net interest income are analyzed on
a fully tax equivalent basis. Under this method, and
throughout this discussion, nontaxable income on loans
and securities is adjusted to an amount which represents
the equivalent earnings if such earnings were subject to
federal tax. The marginal tax rate used to restate
nontaxable income was 34% for 1996, 1995 and 1994.
The yield on average interest earning assets and the rate
paid on average interest bearing liabilities is based
upon three major factors: the yield/rate received or
paid, the mix of the individual components and the volume
of interest earning assets and interest bearing
liabilities. While the national prime rate is not the
only indicator for yields received on assets or the rates
paid on liabilities by the Corporation, it does indicate
a general trend of current rates being received on assets
and paid on liabilities. The national prime rate
averaged 7.14% during 1994, increased to an average of
8.83% during 1995 and decreased to an average of 8.27%
during 1996. Yields received and rates paid by the
Corporation are a blend of current and past year's
interest rates due to the lag effect of the repricing of
both long-term assets and long-term liabilities.
3
Tables II, III and IV illustrate the components of net
interest income for the last three years. Table II shows
the average balances, interest income or expense and
average yields and rates on interest earning assets and
interest bearing liabilities by type. It also shows the
calculation of net interest margin for 1996, 1995 and
1994. Table III shows the change from year to year for
average interest earning assets and average interest
bearing liabilities and the resulting net interest
earning assets. Table IV shows the change in net interest
income from year to year and the allocation of that
yearly change between volume and rate by type of interest
earning asset and interest bearing liability.
4
RESULTS OF OPERATIONS - Continued
Table II
Consolidated Average Balance Sheets and Interest Rates
Years ended December 31, 1996, 1995 and 1994
(Dollar amounts in thousands, except share and per share data)
1 9 9 6 1 9 9 5 1 9 9 4
Interest Interest Interest
Average Income/ Average Income/ Average Income/
Balance Expense Average Balance Expense Average Balance Expense Average
ASSETS (Note A) (Note B) Rate (Note A) (Note B) Rate (Note A) (Note B) Rate
Interest earning assets
Securities
U.S. Government $111,473 $ 6,756 6.06% $107,553 $ 6,166 5.73% $125,846 $ 6,864 5.45%
State and municipal
obligations 52,493 4,325 8.24 50,112 4,298 8.58 51,211 4,474 8.74
Other 15,889 979 6.16 22,113 1,396 6.31 29,126 1,597 5.48
Total securities 179,855 12,060 6.71 179,778 11,860 6.60 206,183 12,935 6.27
Interest bearing deposits
in other banks 628 38 6.05 914 54 5.91 1,548 75 4.85
Loans held for sale 5,441 389 7.15 4,307 326 7.57 6,849 536 7.83
Total loans, less unearned
(Notes A and C) 467,509 42,725 9.14 416,489 38,073 9.14 368,198 30,882 8.39
Federal funds sold 13,076 710 5.43 11,842 685 5.78 7,424 295 3.97
Total interest earning assets and
interest income 666,509 $ 55,922 8.39% 613,330 $ 50,998 8.32% 590,202 $ 44,723 7.58%
Noninterest earning assets
Cash and due from banks 18,325 18,372 17,326
Premises and equipment, net 10,249 8,877 9,044
Other assets 11,954 10,906 8,864
Allowance for loan losses (5,237) (4,636) (4,377)
Unrealized loss on securities
available for sale (214) (2,393) (1,519)
Total assets $701,586 $644,456 $619,540
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities
Savings and demand deposits $218,090 $ 6,709 3.08% $212,092 $ 6,662 3.14% $225,280 $ 6,485 2.88%
Time deposits 344,388 20,052 5.82 299,794 16,931 5.65 266,698 12,083 4.53
Total savings and
time deposits 562,478 26,761 4.76 511,886 23,593 4.61 491,978 18,568 3.77
Short-term borrowings 7,383 385 5.22 8,129 437 5.38 9,649 409 4.24
Long-term debt 2,373 142 5.98 2,804 161 5.74 2,924 177 6.05
Total interest bearing
liabilities and
interest expense 572,234 $ 27,288 4.77% 522,819 $ 24,191 4.63% 504,551 $ 19,154 3.80%
Noninterest bearing liabilities
Demand deposits 54,730 55,527 53,415
Other 5,850 3,766 3,461
Shareholders' equity 68,772 62,344 58,113
Total liabilities and
shareholders' equity $701,586 $644,456 $619,540
Interest margin recap
Interest income/interest
earning assets $ 55,922 8.39% $ 50,998 8.32% $ 44,723 7.58%
Interest expense/interest
earning assets 27,288 4.09 24,191 3.95 19,154 3.25
Net interest income/interest
earning assets $ 28,634 4.30% $ 26,807 4.37% $ 25,569 4.33%
Note A - Included in total loans are nonaccrual loans
averaging $2,495, $1,127 and $818 for the years 1996,
1995 and 1994.
Note B - Interest income includes the effects of tax
equivalent adjustments using a marginal federal tax rate
of 34% for 1996, 1995 and 1994. The total adjustment to
convert tax exempt loans and securities to a fully tax
equivalent basis was $1,611, $1,606 and $1,670 for 1996,
1995 and 1994.
5
Note C - Net loan fees and costs included in interest
income on loans amounted to $1,275, $866 and $769, for
the years 1996, 1995 and 1994.
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Table III
Changes in Net Interest Earning Assets
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
Average interest
earning assets $666,509 $53,179 8.67% $613,330 $23,128 3.92% $590,202
Average interest bearing
liabilities 572,234 49,415 9.45 522,819 18,268 3.62 504,551
Net interest
earning assets $ 94,275 $ 3,764 4.16% $ 90,511 $ 4,860 5.67% $ 85,651
Table IV
Changes in Net Interest Income
1996 compared to 1995 1995 compared to 1994
increase/(decrease) increase/(decrease)
due to change in due to change in
Volume Rate Total Volume Rate Total
Interest income
Loans $4,663 $ (11) $ 4,652 $ 4,414 $ 2,777 $ 7,191
Loans held for sale 81 (18) 63 (193) (17) (210)
Interest bearing deposits
with other banks (17) 1 (16) (37) 16 (21)
Securities
U.S. Government 237 353 590 (1,049) 351 (698)
State and municipal
obligations 196 (169) 27 (94) (82) (176)
Other (383) (34) (417) (443) 242 (201)
Total securities 50 150 200 (1,586) 511 (1,075)
Federal funds sold 67 (42) 25 256 134 390
Total interest income 4,844 80 4,924 2,854 3,421 6,275
Interest expense
Savings and demand deposits 185 (138) 47 (414) 591 177
Time deposits 2,597 524 3,121 1,869 2,979 4,848
Short-term borrowings (39) (13) (52) (82) 110 28
Long-term debt (26) 7 (19) (7) (9) (16)
Total interest expense 2,717 380 3,097 1,366 3,671 5,037
Net interest income $2,127 $ (300) $ 1,827 $ 1,488 $ (250)$ 1,238
6
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Net interest income in 1996 increased $1,827 or 6.82%
from 1995, and the percent of net interest margin, or net
interest income to average interest earning assets,
decreased to 4.30% in 1996 from 4.37% in 1995. This
increase in net interest income was due to an increase of
$3,764 or 4.16% in net interest earning assets during
1996 from 1995 and the increase in rates for both
interest earning assets and interest bearing liabilities.
The allocation of the yearly difference shows that $2,127
of the 1996 increase was due to volume changes while rate
changes reduced the net interest income by $300. Rates
on both interest earning assets and interest bearing
liabilities increased in 1996, but the rate allocation
shows the .14% increase in the rates on interest bearing
liabilities exceeded the .07% increase in rates on
interest earning assets.
Net interest income in 1995 increased $1,238 or 4.84%
from 1994, and the percent of net interest margin
increased to 4.37% in 1995 from 4.33% in 1994. This
increase in net interest income was due to an increase of
$4,860 or 5.67% in net interest earning assets during
1995 from 1994 and the increase in rates for both average
interest earning assets and average interest bearing
liabilities. The allocation of the yearly difference
shows that $1,488 of the 1995 increase was due to volume
changes while rate changes reduced the net interest
income by $250. Rates on both interest earning assets
and interest bearing liabilities increased in 1995, but
the rate allocation shows the .83% increase in rates on
interest bearing labilities exceeded the .74% increase in
rates on interest earning assets.
Provision and Allowance for Loan Losses
The provision for loan losses expense on the income
statement provides a reserve called the allowance for
loan losses (a contra asset on the balance sheet) to
which loan losses are charged as those losses become
evident. Management of each bank determines the
appropriate level of the allowance for loan losses on a
quarterly basis utilizing a report containing loans with
a more than normal degree of risk. This report is the
by-product of an ongoing loan review process, the purpose
of which is to determine the level of credit risk within
the portfolio and to ensure proper adherence to
underwriting and documentation standards. Utilizing this
report, a specific portion of the reserve is allocated to
those loans which are considered to represent significant
exposure to risk. In addition, estimates are made for
potential losses on commercial, agricultural, real
estate, installment, credit cards and other loans not
specifically reviewed based on historical loan loss
experience and other factors and trends. Table V shows
the provision and allowance for loan losses for the last
five years. Table VI includes the specific allocation
7
for loan losses at year end for the last five years.
8
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Table V
Analysis of Allowance for Loan Losses
1996 1995 1994 1993 1992
Balance at beginning
of year $ 5,022 $ 4,531 $ 4,238 $ 4,168 $ 3,957
Loans charged off
Commercial 329 349 352 1,327 777
Agricultural -- -- (a) (a) (a)
Real estate 106 11 32 112 315
Installment 586 537 365 266 460
Credit cards 219 108 (a) (a) (a)
Other 26 14 59 49 50
Total charge-offs 1,266 1,019 808 1,754 1,602
Charge-offs recovered
Commercial 196 115 548 177 152
Agricultural 70 78 (a) (a) (a)
Real estate 29 6 71 43 45
Installment 195 117 136 105 115
Credit cards 11 7 (a) (a) (a)
Other 7 5 8 7 6
Total recoveries 508 328 763 332 318
Net loans
charged off 758 691 45 1,422 1,284
Current year provision 1,366 1,182 338 1,492 1,495
Balance at
end of year $ 5,630 $ 5,022 $ 4,531 $ 4,238 $ 4,168
Loans at year end $494,467 $442,657 $388,657 $342,950 $311,097
Ratio of allowance
to loans at year end 1.14 % 1.13 % 1.17 % 1.24 % 1.34 %
Average loans $467,509 $416,489 $368,198 $325,544 $311,523
Ratio of net loans
charged off to
average loans .16 % .17 % .01 % .44 % .41 %
(a) Unavailable but included in another classification.
Table VI
Allocation of Allowance for Loan Losses
1996 1995 1994 1993 1992
Commercial $ 1,305 $ 1,231 $ 936 $ 954 $ 1,061
Agricultural 94 424 213 329 321
Real estate 223 212 204 223 105
Installment 350 451 674 457 412
Credit cards 109 18 25 17 14
Unallocated 3,549 2,686 2,479 2,258 2,255
Total $ 5,630 $ 5,022 $ 4,531 $ 4,238 $ 4,168
9
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Nonperforming Assets
Nonperforming assets are defined as nonaccrual loans for
which the ultimate collectibility of interest is
uncertain, but for which the principal is considered
collectible; restructured loans which have had an
alteration to the original interest rate, repayment terms
or principal balance because of a deterioration in the
financial condition of the borrower; and loans past due
over 90 days but still accruing interest because the
interest is ultimately considered collectible. Impaired
loans covered in FAS 114 and 118 are defined by the
Corporation to be nonaccrual loans. Nonperforming assets
also include other real estate owned which has been
acquired through foreclosure or acceptance of a deed in
lieu of foreclosure. Other real estate owned is carried
at the lower of cost or fair value less estimated selling
costs, and is actively being marketed for sale. Table
VII sets forth the components of nonperforming assets and
their percentage to loans and the allowance for loan
losses as a percent of nonperforming assets at December
31, for the past five years.
Table VII
Nonperforming Assets at December 31,
1996 1995 1994 1993 1992
Nonaccrual loans $ 1,421 $ 983 $ 650 $ 1,078 $ 1,612
Restructured 3,089 45 490 565 265
90 days or more past
due 1,313 1,272 1,325 837 1,179
Total nonperforming
loans $ 5,823 $ 2,300 $ 2,465 $ 2,480 $ 3,056
Percent of loans 1.18 % .52 % .63 % .72 % .98 %
Allowance as a percent
of nonperforming loans 97 % 218 % 184 % 171 % 136 %
Other real estate owned $ 324 $ 280 $ 72 $ 145 $ 215
Percent of loans .07 % .06 % .02 % .04 % .07 %
Assets considered to be nonperforming are reviewed more
frequently by management for repayment probability and
residual collateral values. All restructured loans shown
above have been performing within the terms of their
restructured agreements. In addition to the
nonperforming loans, there are other loans in the
portfolio that have been identified by management or
through an ongoing loan review process as having more
than a normal degree of risk. These loans are reviewed
10
quarterly by management and totaled $12,922 or 2.61% of
total loans at December 31, 1996.
The provision for loan losses for 1996, 1995 and 1994 was
$1,366, $1,182 and $338 while net charge-offs were $758,
$691 and $45. The increase in the provision in 1996 and
1995 was due in part to the increase of loans outstanding
and also to anticipated credit problems in the loan
portfolio. Loans at December 31, 1996, were up $51,810
or 11.70% to $494,467 while nonperforming loans showed an
increase in both amount and percent of ending loans.
Nonperforming loans at December 31, 1996, were up $3,523
or 153.17% to $5,823 from $2,300 at December 31, 1995.
Nonperforming loans were also up to 1.18% of loans at
December 31, 1996, from .52% at December 31, 1995. The
Corporation had one large commercial loan for $3,012
which was restructured during the fourth quarter of 1996.
This loan restructure added collateral, was made at a
market interest rate but did involve deferral of
principal payments. The nonaccrual loans also includes
one commercial loan for $582 that has a specific reserve
allocation of $325 at year end. Without the inclusion of
these two loans, the total nonperforming loans would be
only $2,229 and .45% of outstanding loans as of year end
1996.
Based upon the Corporation's review, considering
remaining collateral and/or financial condition of
identified loans with a more than normal degree of risk,
including nonperforming loans, historical loan loss
percentages and economic conditions, it is management's
belief that the $1,366 of provision for loan losses
during 1996 and the $5,630 of allowance for loan losses
at December 31, 1996, is adequate to cover future
possible losses.
11
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Noninterest Income
Table VIII
Changes in Noninterest Income
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
Fiduciary income $ 654 $ 52 8.64 % $ 602 $ 56 10.26 % $ 546
Deposit service charges 1,586 66 4.34 1,520 246 19.31 1,274
Other operating income 1,122 132 13.33 990 (45) (4.35) 1,035
Security gains/(losses) 28 (13) (31.71) 41 12 41.38 29
Total noninterest income $3,390 $ 237 7.52 % $3,153 $ 269 9.33 % $2,884
As shown in Table VIII noninterest income was up in both
1996 and 1995. Fiduciary income increased both years due
to the trust departments' having more assets under
management and due to the increase in the market
valuation of investments managed. Deposit service
charges increased in both 1996 and 1995 and was due
mainly to increases in fees from nonsufficient and return
check charges. These fees increased more dramatically in
1995 than in 1996. Other operating income is composed of
many different items but the major reason for the
increase in 1996 was due to increased gains on sales of
loans held for sale and increased insurance commissions.
The 1995 decrease was also mainly due to decreases in
gains on sales of loans held for sale. Loans held for
sale (see loan discussion) realized net gains of $409,
$191 and $229 in the years 1996, 1995 and 1994.
12
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Noninterest Expense
Table IX
Changes in Noninterest Expense
1996 change 1995 change
from 1995 from 1994
1996 Dollar Percent 1995 Dollar Percent 1994
Salaries and
employee benefits $ 9,633 $ 183 1.94 % $ 9,450 $ 673 7.67 % $ 8,777
Occupancy expenses 1,218 167 15.89 1,051 (56) (5.06) 1,107
Equipment expenses 1,220 103 9.22 1,117 79 7.61 1,038
Data processing expenses 480 92 23.71 388 (54) (12.22) 442
FDIC insurance 270 (420) (60.87) 690 (535) (43.67) 1,225
Other operating expenses 4,978 172 3.58 4,806 76 1.61 4,730
Total noninterest expense $17,799 $ 297 1.70 % $17,502 $ 183 1.06 % $17,319
The largest component of noninterest expense is salaries
and employee benefits which increased $183 in 1996 due to
$440 of salary increases offset by reductions of $257 in
employee benefits. The employee benefits decreases were
the result of lower medical claims incurred, the 1995
curtailment of the CAS pension plan and lower education
expenses offset by increases in payroll taxes. The
increase of $673 in salaries and employee benefits in
1995 was due to salary increases of $466 and employee
benefits increases of $207 due to increases in payroll
taxes, medical claims incurred and the CAS pension plan
curtailment. Occupancy expense increased in 1996 after
decreasing during 1995. The Corporation opened two new
branches in 1996 and two new branches in the latter part
of 1995 which caused this 1996 increase and also
influenced the salary increases in 1996. The Corporation
had opened a new branch and made major repairs to several
other branches in 1994. These 1994 expenditures caused
the occupancy expense to be down in 1995, but the new
branch did influence the salaries increase in 1995. The
Corporation opened a new full service branch in
Vanderburgh county in Indiana during January 1997 and
will open a new instore Wal-Mart branch in that same
county during the second quarter of 1997. These two new
branches will increase salaries, occupancy and equipment
expenses in future years. Equipment expense increased in
both 1996 and 1995 and was due in part to new branches
and to expenses related to the continued increase in the
use of technology. Data processing expenses increased in
1996 after decreasing in 1995. All subsidiary banks are
now using one computer system which was installed during
the latter part of 1995. Having this new data processing
system during all of 1996 caused data processing expenses
to increase.
13
The FDIC deposit insurance premium paid by the
Corporation for Bank Insurance Funds (BIF) was at a 0%
rate with a minimum annual payment of $2 per subsidiary
bank starting in 1996. The banks have all been assigned
the classification of least risk by the FDIC and as such
are subject to the lowest deposit insurance rates
available from BIF. The Corporation had $30,383 of
deposits as of December 31, 1996, purchased from savings
and loans by two of its subsidiary banks. These deposits
(adjusted to a consistent percent of current deposits)
remain insured by the Savings Association Insurance Fund
(SAIF) rather than BIF. The cost of SAIF to the
Corporation for these savings and loan deposits was .23%
for 1996 and 1995. At September 30, 1996, a special one
time assessment was signed into law and charged on all
SAIF insured deposits. This special assessment amounted
to .657% times 80% of SAIF deposits as of March 31, 1995,
and totaled $191 in 1996 for the Corporation. This
special assessment was $118 after tax and had the effect
of reducing earnings per share for 1996 by $.04. The
cost of BIF and SAIF fees through 1999 will be .0129% and
.0644%. Starting in the year 2000 it is anticipated that
the insurance expense on all deposits will be
approximately .0243%.
Other operating expenses increased both in 1996 and 1995.
The largest increases in 1996 were in telephone,
supplies, advertising, ATM charges, goodwill amortization
and outside labor less decreases in professional fees.
Most of these increases can be explained by the changing
of the name of all subsidiary banks to AmBank effective
July 1, 1996, the opening of new branches in 1996 and
1995 and the fact that 1996 did not have professional
fees related to an acquisition. The goodwill increase
resulted from 1996 containing a full year of goodwill
amortization from deposits purchased in 1995. The
largest increases in 1995 were in professional fees
related to acquisitions and increased goodwill
amortization related to purchased deposits.
14
RESULTS OF OPERATIONS - Continued
(Dollar amounts in thousands, except share and per
share data)
Income Tax
The Corporation's effective tax rate was 29.18%, 27.15%
and 28.75% in 1996, 1995 and 1994. The higher rates in
1996 and 1994 were due to 1995 having a lower effective
tax rate because of a reversal of an allowance relating
to the realization of alternative minimum tax credits of
$212. Management determined that these credits would be
realized and the allowance was reversed during 1995. The
major differences between the effective tax rate on the
financial statements and the federal statutory rate of
34% is interest income on tax exempt securities and loans
offset by nondeductible interest, nondeductible merger
expenses and state taxes. The Corporation had tax exempt
income of $3,128, $3,118 and $3,218 for 1996, 1995 and
1994. Note 14 to the consolidated financial statements
contains additional details of the differences between
the statutory taxes and taxes shown on the consolidated
financial statements.
15
FINANCIAL CONDITION
(Dollar amounts in thousands, except share and per
share data)
Investments
The Corporation's holdings of short-term investments and
securities serve as a source of liquidity to meet
depositor and borrower funding requirements, in addition
to being a significant element of total interest income.
Short-term investments, defined as federal funds sold and
interest bearing deposits in other banks, had combined
average outstanding balances of $13,704, $12,756 and
$8,972 for the years 1996, 1995 and 1994. The year end
outstanding balances of short-term investments were
$6,465, $23,346 and $8,193 for 1996, 1995 and 1994. The
significant changes in the amounts in short-term
investments from year to year is due to large
fluctuations in deposits from public and governmental
institutions which are invested in federal funds sold at
year end. These deposits were being kept liquid to fund
commercial loan commitments at year end 1995 and for
possible liquidity needs of institutional deposits.
Effective December 31, 1993, the Corporation adopted FAS
115, "Accounting for Certain Investments in Debt and
Equity Securities". With the adoption of FAS 115, all
securities were classified by management into one of two
categories, available for sale or held to maturity. The
Corporation does not maintain any securities that are
held for trading. Securities classified as available for
sale are securities that the Corporation intends to hold
for an indefinite period of time, but not necessarily
until maturity. Securities available for sale are
carried at fair value with market adjustments, net of
related deferred taxes, being recorded in shareholders'
equity as unrealized gain or loss on securities.
Securities classified as held to maturity are carried at
amortized cost, calculated by using the level yield
method. In November 1995 the Financial Accounting
Standards Board allowed a one time reclassification of
all securities without calling into question the intent
of an enterprise to hold other securities to maturity in
the future. The Corporation reclassified all held to
maturity securities to available for sale securities in
December 1995. This reclassification was made to allow
for all securities to be sold in response to changes in
interest rates, changes in prepayment risk or other
requirements of liquidity. Since the original adoption
of FAS 115, and starting in December 1994, the equity
adjustment for mark to market of available for sale
securities has been deleted from inclusion in the
regulatory capital ratio calculations. The mark to
market for available for sale securities at December 31,
1996, included market gains of $1,907 and market losses
of $1,432 for a net increase due to the mark to market of
$475 on securities with an amortized cost of $170,249.
The after tax effect of these available for sale
securities accounted for $310 of the total equity at
December 31, 1996. The mark to market for available for
16
sale securities at December 31, 1995, included market
gains of $2,684 and market losses of $959 for a net
increase due to the mark to market of $1,725 on
securities with an amortized cost of $171,744 at December
31, 1995. The after tax effect on these available for
sale securities accounted for a positive $1,113 of the
total equity at December 31, 1995. The effect on the
total change in equity of the Corporation at December 31,
1996, from December 31, 1995, was a total decrease of
$803 due to this mark to market of available for sale
securities. The difference between the mark to market
adjustment at December 31, 1996 and 1995, was due to the
difference in the market yields at these two year ends
when compared to the yields on the investments of the
Corporation classified as available for sale. Sales of
available for sale securities in 1996 were $16,938 and
resulted in net gains of $28 while sales of $4,559
resulted in net gains of $18 in 1995 and sales of $14,999
resulted in net gains of $29 in 1994. Calls and
maturities of held to maturity securities accounted for
net gains of $23 in 1995. Other than U.S. Government
securities, there are no concentrations of securities
over 10% of shareholders' equity to any single issuer.
Table X presents securities outstanding at year end for
the preceding three years.
17
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
Table X
Securities at December 31,
1996 1995 1994
Securities available for sale
U.S. Government and its agencies $101,819 $101,710 $112,007
States and political subdivisions 55,776 51,837 11,266
Corporate obligations 1,823 3,590 4,965
Collateralized mortgage obligations 9,166 15,516 17,290
Mutual funds 2,140 816 1,152
Total securities available for sale 170,724 173,469 146,680
Securities held to maturity
U.S. Government and its agencies -- -- 500
States and political subdivisions -- -- 39,695
Corporate obligations -- -- --
Collateralized mortgage obligations -- -- --
Mutual funds -- -- --
Total securities held to maturity -- -- 40,195
Total securities $170,724 $173,469 $186,875
The market value of securities held to maturity was
$39,177 for 1994.
Loans
The loan portfolio constitutes the major earning asset of
most bank holding companies and typically offers the best
alternative for obtaining the maximum interest spread
above the cost of funds. The overall economic strength
of any bank holding company generally parallels the
quality and yield of its loan portfolio. The
Corporation's total average loans were $467,509 in 1996,
an increase of $51,020 or 12.25% from 1995. The
Corporation had total average loans of $416,489 in 1995,
an increase of $48,291 or 13.12% from the 1994 total
average loans of $368,198. Table XI presents loans
outstanding at year end for the preceding five years.
Table XI
Loans at December 31,
1996 1995 1994 1993 1992
Commercial $201,092 $172,782 $151,027 $126,738 $117,156
Agricultural 55,404 65,239 44,876 52,569 51,953
Real estate 129,116 107,123 101,111 81,945 75,193
Installment 105,464 94,784 90,300 80,909 66,344
Credit cards 3,686 3,722 3,351 3,039 2,192
Total loans 494,762 443,650 390,665 345,200 312,838
Unearned income (295) (993) (2,008) (2,250) (1,741)
Total loans, net $494,467 $442,657 $388,657 $342,950 $311,097
Loans held for sale $ 2,350 $ 6,727 $ 2,664 $ 16,919 $ 11,553
Composition of loan portfolio at December 31,
Commercial 40.67 % 39.03 % 38.86 % 36.95 % 37.66 %
Agricultural 11.20 14.74 11.55 15.33 16.70
Real estate 26.11 24.20 26.01 23.89 24.17
Installment 21.27 21.19 22.72 22.94 20.77
Credit cards .75 .84 .86 .89 .70
/TABLE
19
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
The economy rebounded in late 1992 and has continued
steady to strong through 1996. The Corporation has
placed added efforts to take advantage of the increased
demand in commercial loans. Commercial loans increased
$28,310 or 16.38% in 1996 from 1995, increased $21,755 or
14.40% in 1995 from 1994 and increased $24,289 or 19.16%
in 1994 from 1993. While commercial loans have shown the
largest increases over the last five years, real estate
and installment loans have also increased during 1996.
As shown in Table XI the percentage of loans to total
loans for commercial, real estate, installment and credit
cards have remained very similar for 1995 and 1996 with
only agricultural loans having a change over 2%.
Agricultural loans actually decreased $9,835 or 15.08% in
1996 from 1995 after having increased $20,363 or 45.38%
in 1995 from 1994. The government, through Farm Credit
Services, has become a major competitor in agricultural
lending.
Real estate loans shown in Table XI are mainly variable
rate loans. These loans have increased $21,993 or 20.53%
in 1996 from 1995 and increased $6,012 or 5.95% in 1995
from 1994. During these years the Corporation has placed
added emphasis on serving the real estate mortgage needs
of our customers. The balance of real estate loans was
directly affected by the current rates on variable and
fixed rate mortgages. As rates increase customers tend
to prefer variable rate mortgages and as rates decrease
customers tend to prefer fixed rate mortgages. The
Corporation also makes conforming fixed rate mortgage
loans that can be sold into the secondary market with the
Corporation retaining more than 95% of the MSRs. These
fixed rate mortgage loans are shown separately in Table
XI and on the balance sheet as loans held for sale. The
Corporation's strategy has been to hold fixed rate loans
during periods of decreasing rates and sell them during
periods of increasing rates to realize a gain. The
balance of loans held for sale at year end fluctuates a
great deal depending upon the variations of rates during
the year and the amount of these loans that are sold into
the secondary market. Sales of loans held for sale were
$30,385, $16,231 and $35,676 for 1996, 1995 and 1994 with
corresponding net gains of $409, $191 and $229. At
December 31, 1996, the Corporation serviced $97,606 of
loans for others which it sold into the secondary market.
This was a 22.02% increase from $79,990 of sold loans
serviced for others as of December 31, 1995. As included
in Note 1 and 6 to the consolidated financial statements,
the Corporation adopted FAS 122 as of January 1, 1996,
and capitalized $307 of MSRs during 1996 and amortized to
expense $16 of these MSRs for a net carrying value of
$291 at December 31, 1996. These loans serviced for
others were not included in the financial statements.
20
Installment loans increased $10,680 or 11.27% in 1996
over 1995, $4,484 or 4.97% in 1995 over 1994 and $9,391
or 11.61% in 1994 over 1993. The level of consumer
lending normally relates directly to consumer confidence
in the economy, but the Corporation has seen increased
charge-offs of installment loans starting in 1995 and
1994 over 1993. A lag effect does exist in charge-offs
and the Corporation has increased its lending criteria
for consumer loans starting in 1995. The composition of
installment loans at December 31, 1996, was $97,735 of
vehicle and other secured loans, $4,564 of money lines
tied to second mortgages on real estate and $3,165 of
unsecured loans.
The loan portfolio contains no loans to foreign
governments, foreign enterprises or foreign operations of
domestic corporations. Other than loans for real estate,
equipment and operating lines to farmers engaged in the
agricultural industry, the Corporation has no
concentrations of loans in the same or similar industries
that exceed 10% of total loans.
Deposits
The deposit base provides the major funding source for
earning assets of most bank holding companies.
Generally, demand, savings and time certificates less
than $100 are recognized as the core base of deposits
while certificates in excess of $100 and public funds are
more subject to interest variations and, thus, are not
included in the core deposit base. Because of these
factors, management views the growth of demand, savings
and time certificates less than $100 as more stable
growth. The Corporation's total average core deposits
were $541,704 in 1996, $519,453 in 1995 and $500,103 in
1994. Total average deposits were $617,208, $567,413 and
$545,393 during 1996, 1995 and 1994. Table XII indicates
the mix and levels of deposits at year end for the
preceding five years.
21
FINANCIAL CONDITION - Continued
(Dollar amounts in thousands, except share and per
share data)
Table XII
Deposits at December 31,
1996 1995 1994 1993 1992
Noninterest bearing $ 61,518 $ 63,116 $ 62,269 $ 62,145 $ 58,484
Interest bearing demand
and savings 219,730 211,971 218,896 226,030 217,633
Time, less than $100 275,262 258,335 212,073 208,716 217,801
Time, $100 or more 76,948 66,647 57,149 53,459 50,180
Total deposits $633,458 $600,069 $550,387 $550,350 $544,098
The Corporation opened new branches in 1996 and 1995 and
purchased $25,462 of deposits from a savings and loan
association in March 1995. These new branches and
purchased deposits plus lower interest rates and the
general trend of consumers returning deposits to banks
from nonbanking institutions saw total deposits increase
$33,389 or 5.56% in 1996 from 1995 and $49,682 or 9.03%
in 1995 from 1994. The largest growth in 1996 from 1995
was in time deposits both under and over $100 and
accounted for $27,228 of the increase while time deposits
increased $55,760 in 1995 from 1994. Interest bearing
demand and savings deposits increased $7,759 in 1996 but
decreased $6,925 in 1995 and $7,134 in 1994. Noninterest
bearing deposits decreased $1,598 in 1996, increased $847
in 1995 and remained constant in 1994.
22
LIQUIDITY AND CAPITAL RESOURCES
(Dollar amounts in thousands, except share and per
share data)
Liquidity and Rate Sensitivity
Cash flows for the Corporation occur within the
operating, investing and financing categories as follows:
Cash flows from operating activities emanate primarily
from interest income and fees reduced by interest expense
and overhead expense. Investing activities generate or
use cash flows through the origination, purchase and
principal collection of loans; the purchase, maturity and
sale of investments; and the acquisition of property and
equipment for the Corporation. Cash flows from financing
activities occur from deposits and withdrawals of deposit
accounts, increases or decreases in short-term borrowings
and long-term debt, and dividends paid by the
Corporation.
The Corporation's use and source of funds can be
determined by the changes in average balances of assets
and liabilities. Table XIII summarizes funding uses and
sources for 1996 and 1995, showing average balances,
amount of dollar change from prior year and the percent
change from the prior year.
Table XIII
1996 1995
Average Increase/(decrease) Average Increase/(decrease)
Balance Dollar Percent Balance Dollar Percent
Funding uses
Loans held for sale $ 5,441 $ 1,134 26.33 % $ 4,307 $ (2,542) (37.12)%
Taxable loans, net of unearned income 462,391 51,545 12.55 410,846 49,053 13.56
Tax exempt loans 5,118 (525) (9.30) 5,643 (762) (11.90)
Taxable securities 127,521 (1,325) (1.03) 128,846 (17,882) (12.19)
Tax exempt securities 52,120 3,581 7.38 48,539 (9,397) (16.22)
Interest bearing deposits in other
banks 628 (286) (31.29) 914 (634) (40.96)
Federal funds sold 13,076 1,234 10.42 11,842 4,418 59.51
Total uses $ 666,295 $ 55,358 9.06 % $ 610,937 $ 22,254 3.78 %
Funding sources
Noninterest bearing deposits $ 54,730 $ (797) (1.44)% $ 55,527 $ 2,112 3.95 %
Interest bearing demand and
savings deposits 218,090 5,998 2.83 212,092 (13,188) (5.85)
Time deposits 344,388 44,594 14.88 299,794 33,096 12.41
Short-term borrowings 7,383 (746) (9.18) 8,129 (1,520) (15.75)
Long-term debt 2,373 (431) (15.37) 2,804 (120) (4.10)
Other 39,331 6,740 20.68 32,591 1,874 6.10
Total sources $ 666,295 $ 55,358 9.06 % $ 610,937 $ 22,254 3.78 %
Total average loans increased $51,020 or 12.25% to
$467,509 in 1996 from $416,489 in 1995. In 1996
commercial loans averaged $238,462, real estate loans
averaged $125,978, installment loans averaged $99,459 and
credit cards averaged $3,610. The average increase in
loans in 1996 was funded mainly by $5,998 of increased
average demand and savings deposits and $44,594 of
increased average time deposits. The increase in the
average balances of these deposits was due to opening new
branches and offering more competitive rates for these
deposit products. With more competitive rates, deposits
23
were returned to the banks that had previously been taken
to nonbanking institutions.
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per
share data)
The Corporation anticipates an increase in loan demand
during 1997. It is anticipated that this increase in
loan demand will be funded through deposits increases at
the new branches opened in 1997 or through the conversion
of assets as discussed in the next paragraph.
Outstanding loan commitments and customers' unused lines
of credit totaled $100,546 at December 31, 1996, which
was an increase of $25,767 or 34.46% from $74,779 at
December 31, 1995. Standby letters of credit outstanding
at December 31, 1996, increased $3,270 or 53.98% to
$9,328 from $6,058 at December 31, 1995. Letters of
credit typically are not funded. To the extent, however,
that letters of credit, loan commitments and customers'
unused lines of credit require funding, these obligations
will be met by the normal conversion of short-term
investments, which totaled $6,465 at December 31, 1996,
investments with maturities of one year or less, which
totaled $39,058 at December 31, 1996, the sale of loans
held for sale plus the increase in deposits discussed.
IND is a member of the Federal Home Loan Bank of
Indianapolis and through this membership has the capacity
to borrow funds. IND has approved borrowings up to
$50,000 as of February 1997, but used only a small
portion, $2,091, of this available funding as of December
31, 1996. See Note 10 of the consolidated financial
statements for details. This additional funding from the
Federal Home Loan Bank could be activated easily and
might be used in 1997 for a source of funding if
required. Further liquidity, if required, would be
provided by conversion of securities available for sale
or other assets into cash or accessing sources of
incremental funding such as repurchase agreements or
federal funds purchased.
Interest rate sensitivity occurs when assets or
liabilities are subject to rate and yield changes within
a designated time period. The rate sensitivity position,
or gap, is determined by the difference in the amount of
rate sensitive assets and rate sensitive liabilities at
various maturity intervals. The management of this gap
position is required to protect the net interest rates
and to assure a greater degree of earnings stability.
Provided in Tables XIV through XVI are various repricing
information relative to securities, loans and deposits at
December 31, 1996.
24
Table XIV
Maturities and Average Yields at December 31, 1996
1 Year and Less 1 - 5 Years 5 - 10 Years Over 10 Years Total
Dollar Yield Dollar Yield Dollar Yield Dollar Yield Dollar Yield
U.S. Government and its agencies $ 32,273 6.07% $ 56,361 6.11% $ 3,199 7.51% $ 9,986 7.26% $101,819 6.25%
State and political subdivisions 5,232 9.31 27,068 8.31 21,839 7.80 1,637 8.22 55,776 8.20
Corporate obligations -- -- 326 9.10 -- -- 1,497 7.56 1,823 7.83
Collateralized
mortgage obligations 628 5.38 2,203 5.64 271 5.67 6,064 6.84 9,166 6.41
Mutual funds 925 5.67 -- -- -- -- 1,215 6.50 2,140 6.17
Total $ 39,058 6.50 % $ 85,958 6.77 % $ 25,309 7.74 % $ 20,399 7.18 % $170,724 6.90 %
Table XV
Maturity Ranges of Time Deposits
with Balances of $100 or More at December 31,
1996 1995 1994
Three months or less $ 33,781 $ 29,372 $ 24,437
Over three through six months 17,572 11,460 12,558
Over six through twelve months 11,991 9,315 8,333
Over twelve months 13,604 16,500 11,821
Total $ 76,948 $ 66,647 $ 57,149
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per share data)
Table XVI
Loan Maturities at December 31, 1996
1 Year 1 - 5 Over 5
and Less Years Years Total
Commercial $147,936 $ 44,461 $ 8,695 $201,092
Agricultural 42,548 12,084 772 55,404
There were no material real estate construction loans
outstanding at December 31, 1996.
Interest Rate Sensitivity of Above Loans Maturing After One Year
Commercial Agricultural
Fixed rate $ 18,112 $ 4,158
Variable rate 35,044 8,698
Total selected loans $ 53,156 $ 12,856
25
Table XVII
Liquidity and Interest Rate Sensitivity at December 31, 1996
0 - 90 91 - 365 1 - 5
Days Days Years
Interest earning assets
Loans $ 131,266 $ 134,362 $ 194,645
Securities 23,417 21,624 40,619
Other 5,970 197 298
Total $ 160,653 $ 156,183 $ 235,562
Interest bearing liabilities
Savings and demand deposits $ 219,730 $ -- $ --
Time, less than $100 103,190 94,304 78,806
Time, $100 or more 34,771 28,272 13,198
Other 5,553 133 1,046
Rate sensitive gap $(202,591) $ 33,474 $ 142,512
Rate sensitive cumulative gap (202,591) (169,117) (26,605)
Percent to total assets (28.19)% (23.53)% (3.70)%
Rate sensitive gap as shown in Table XVII is defined as
the difference between the repricing of interest earning
assets and the repricing of interest bearing liabilities
within certain defined time frames. Rate sensitive gap
is also expressed as a percentage of total assets based
upon the accumulation of the defined time frame gap
calculation. Rate sensitive gaps constantly change as
funds are acquired and invested and the Corporation's
analysis as of December 31, 1996, is shown above. As of
December 31, 1996, the Corporation had a negative gap of
$169,117 and 23.53% during the next one year period with
a negative gap of $202,591 and 28.19% relating to the
first quarter of 1997. The effect of these negative gaps
may result in a negative impact on earnings in 1997 if
interest rates increase, but could result in a positive
impact on earnings if interest rates decline in 1997.
The above rate sensitivity analysis is significantly
impacted by the inclusion of savings and demand deposits
in the first quarter of the gap analysis. These deposits
have historically not exhibited the same degree of
sensitivity to rate changes as other liabilities because
deposit rates are set by the Corporation. If the above
analysis were changed to reflect the Corporation's actual
historical results, the savings and demand deposits would
be moved to the one to five year time frame. With this
change the Corporation would have a positive gap of
$50,613 or 7.04% during the next one year period and a
positive gap of $17,139 or 2.38% relating to the first
quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES - Continued
(Dollar amounts in thousands, except share and per
share data)
Shareholders' Equity
Total shareholders' equity at December 31, 1996,
increased $4,471 or 6.60% to $72,183 from $67,712 at
December 31, 1995. The change in the mark to market on
the unrealized gain on securities available for sale
between December 31, 1995 and 1996, resulted in
shareholders' equity decreasing $803. Without this net
change in unrealized gain on securities available for
26
sale, shareholders' equity would have increased $5,274 or
7.92% at December 31, 1996, from December 31, 1995.
Shareholders' equity contains a new caption, Treasury
stock, for the first time at December 31, 1996. These
724 treasury shares were purchased on the market for
future payments of director fees under the Director Stock
Grant Plan as approved by the shareholders in 1996.
These treasury shares are purchased routinely and
reissued to the directors each quarter. See Note 17 to
the consolidated financial statements for description of
the capital requirements for the Corporation and its
subsidiary banks. By all measurements the Corporation
and its subsidiary banks were considered well
capitalized. At December 31, 1996, the Corporation had
a Total Capital ratio of 14.33%, a Tier 1 Capital ratio
of 13.26% and a Tier 1 Leverage Capital ratio of 10.00%.
INTERIM FINANCIAL DATA
Table XVIII sets forth the condensed quarterly results of
operations and per share information for the years ended
December 31, 1996 and 1995.
Table XVIII
Quarter Ended
December September June March
31 30 30 31
1996
Interest income $ 14,059 $ 13,512 $ 13,276 $ 13,294
Interest expense 7,034 6,800 6,733 6,721
Net interest income 7,025 6,712 6,543 6,573
Provision for loan losses 700 100 299 267
Noninterest income 1,048 712 1,028 772
Noninterest expense 4,411 4,682 4,409 4,297
Income before income taxes 2,962 2,642 2,863 2,781
Income taxes 888 770 824 800
Net income $ 2,074 $ 1,872 $ 2,039 $ 1,981
Per share
Net income $ .63 $ .56 $ .61 $ .60
Stock price (Note A) 28.50 30.71 27.38 29.05
Weighted average outstanding shares 3,315,929 3,314,814 3,316,232 3,316,267
1995
Interest Income $ 12,924 $ 12,631 $ 12,153 $ 11,482
Interest expense 6,609 6,326 5,961 5,295
Net interest income 6,315 6,305 6,192 6,187
Provision for loan losses 535 361 140 146
Noninterest income 873 896 756 830
Noninterest expense 4,408 4,093 4,475 4,526
Income before income taxes 2,245 2,747 2,333 2,345
Income taxes 397 868 725 635
Net income $ 1,848 $ 1,879 $ 1,608 $ 1,710
Per share
Net income $ .56 $ .57 $ .48 $ .51
Stock price (Note A) 29.05 29.03 29.76 28.11
Weighted average outstanding shares 3,316,267 3,316,267 3,316,267 3,316,254
27
Note A - The stock price above represents the sales price
of the last actual trade in each respective quarter as
reported in the Wall Street Journal restated for a 5%
stock dividend paid on December 2, 1996 and November 30,
1995.
INFLATION
(Dollar amounts in thousands, except share and per
share data)
For a financial institution, effects of price changes and
inflation vary considerably from an industrial
organization. Changes in the prices of goods and
services are the primary determinant of an industrial
company's profit, whereas changes in interest rates have
a major impact on a financial institution's
profitability. Inflation affects the growth of total
assets, but it is difficult to assess its impact because
neither the timing nor the magnitude of the changes in
the consumer price index directly coincide with changes
in interest rates.
During periods of high inflation there are normally
corresponding increases in the money supply. During such
times financial institutions often experience above
average growth in loans and deposits. Also, general
increases in the price of goods and services will result
in increased operation expenses. Over the past few years
the rate of inflation has been relatively low, and its
impact on the growth in the balance sheets and increased
levels of income and expense has been nominal.
Market Price of AMBANC Corp. Common Stock and
Related Shareholder Matters
The Corporation's common stock is traded on The Nasdaq
Small-Cap Market (NASDAQ) under the symbol AMBK. The
quarterly range of the low and high trade prices per
share of the Corporation's common stock, as reported by
NASDAQ, is shown in Table XIX. This information
represents prices between dealers and does not include
adjustments for mark-ups, mark-downs or commissions and
does not necessarily represent actual prices on
transactions.
Table XIX
1996 1995
Stock Range Stock Range
1st Quarter $ 28.10 - 30.95 $ 27.44 - 29.93
2nd Quarter 27.38 - 30.00 28.11 - 29.93
3rd Quarter 27.14 - 30.95 27.67 - 30.84
4th Quarter 27.50 - 30.95 28.57 - 30.71
/TABLE
28
As of December 31, 1996, there were approximately 1,503
shareholders of record. The Corporation pays cash
dividends on a quarterly basis. Cash dividends paid by
the Corporation were $.80 per share in 1996 and $.76 per
share in 1995 and 1994. Cash dividends, as restated to
reflect the acquisition of FRB under the pooling of
interests method of accounting, were $.65 and $.59 for
the years 1995 and 1994. Refer to Note 17 to the
consolidated financial statements for information
concerning restrictions on dividends.
FIVE YEAR SUMMARY
(Dollar amounts in thousands, except per share data)
1996(a) 1995(a) 1994(a) 1993(a) 1992
AT PERIOD END
Actual balances
Assets $ 718,754 $ 682,347 $ 625,240 $ 622,568 $ 610,407
Securities 170,724 173,469 186,875 210,774 211,196
Loans 494,467 442,657 388,657 342,950 311,097
Allowance for loan losses 5,630 5,022 4,531 4,238 4,168
Deposits 633,458 600,069 550,387 550,350 544,098
Shareholders' equity 72,183 67,712 58,210 57,722 52,552
Daily averages
Assets $ 701,586 $ 644,456 $ 619,540 $ 601,232 $ 582,603
Securities 179,641 177,385 204,664 214,325 210,847
Loans 467,509 416,489 368,198 325,544 311,523
Allowance for loan losses 5,441 4,636 4,377 4,152 3,966
Deposits 617,208 567,413 545,393 534,448 520,034
Shareholders' equity 68,772 62,344 58,113 54,967 50,615
OPERATING RESULTS
Interest income $ 54,311 $ 49,392 $ 43,053 $ 41,758 $ 44,722
Net interest income 27,023 25,201 23,899 22,751 22,335
Provision for loan losses 1,366 1,182 338 1,492 1,495
Income before cumulative
effect of accounting change 7,966 7,045 6,502 5,910 5,818
Net income 7,966 7,045 6,502 6,162 5,818
Dividends paid on
common stock 2,653 2,144 1,947 1,701 1,581
PER SHARE DATA
Income before cumulative
effect of accounting change $ 2.40 $ 2.12 $ 1.96 $ 1.78 $ 1.76
Cumulative effect of
accounting change -- -- -- .08 --
Net income 2.40 2.12 1.96 1.86 1.76
Cash dividends before
pooling of interests .80 .76 .76 .72 .72
Cash dividends restated for
pooling of interests .80 .65 .59 .51 .48
Book value at end of period 21.77 20.42 17.55 17.42 15.86
Book value at end of period
before FAS 115 21.68 20.08 18.61 17.20 15.86
Tangible book value at
end of period 21.24 19.83 17.47 17.37 15.80
Tangible book value at end
of period before FAS 115 21.15 19.50 18.52 17.15 15.80
Weighted average
outstanding shares 3,315,808 3,316,264 3,313,716 3,313,496 3,313,496
RATIOS
Return on average assets 1.14 % 1.09 % 1.05 % 1.02 % 1.00 %
Return on average equity 11.58 11.30 11.19 11.21 11.50
Dividends paid as a
percent of net income 33.30 30.43 29.95 27.61 27.17
Tier 1 Leverage Capital 10.00 10.01 9.87 9.45 8.99
Efficiency ratio 58.52 61.73 64.66 67.56 64.38
(a) - reflects FAS 115 adjustments.