FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________
Commission file number 33-24649
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ATCORP, INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2911209
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 Sagemore Drive, Marlton, New Jersey 08053
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(Address of principal executive offices)
(zip code)
(609) 983-4000
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(Registrant's telephone number, including area code)
Not Applicable
(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 required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes____No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding as of
Class June 30, 1996
------ -------------
Common Stock, par value $5.00 per share 771,750
ATCORP, INC. AND SUBSIDIARIES
INDEX
Part I: Financial Information Page
Item 1: Financial Statements:
Consolidated Balance Sheets -
June 30, 1996 (unaudited) and
December 31, 1995 3
Consolidated Statements of Income -
Three and Six Months Ended June 30, 1996
and 1995 (unaudited) 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996
and 1995 (unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II: Other Information
Item 6: Exhibits and Reports on Form 8-K 15
Signatures 16
Part I -- Financial Information
ATCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
June 30, December 31,
ASSETS 1996 1995
---- ----
CASH AND DUE FROM BANKS $ 4,662 $ 4,865
FEDERAL FUNDS SOLD 6,920 775
Interest-bearing deposits with other banks 1,414 124
INVESTMENT SECURITIES
Held to maturity (market value of
$250 in 1996 and $250 in 1995) 250 250
Available for sale (cost of $70,622 in
1996 and $49,266 in 1995) 70,282 50,087
--------- ---------
70,532 50,337
LOANS HELD FOR SALE 470 1,467
LOANS 115,284 96,129
Less-- Allowance for loan losses (1,356) (1,283)
--------- ---------
Net loans 113,928 94,846
Bank Premises & Equipment, net 2,983 2,950
Accrued Interest Receivable 2,125 1,610
Other Assets 1,179 801
--------- ---------
TOTAL ASSETS $ 204,213 $ 157,775
========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
DEPOSITS
Demand $ 22,134 $ 19,812
Interest-bearing demand 66,386 46,355
Savings 21,602 21,155
Certificates of deposit over $100,000 18,019 8,495
Other time deposits 58,227 49,477
--------- ---------
TOTAL DEPOSITS 186,368 145,294
Borrowed Funds 5,000 --
Accrued Interest Payable 1,099 521
Other Liabilities 1,294 1,492
--------- ---------
Total Liabilities 193,761 147,307
SHAREHOLDERS' EQUITY
Preferred stock, $5 par value per share;
1,000,000 shares authorized, none
issued and outstanding -- --
Common stock, $5 par value per share;
2,000,000 shares authorized, 780,266
issued and 771,750 outstanding in 1996
and 1995 3,902 3,902
ADDITIONAL PAID-IN CAPITAL 3,804 3,804
RETAINED EARNINGS 3,015 2,265
NET UNREALIZED HOLDING GAIN
(LOSS) ON SECURITIES (224) 542
TREASURY STOCK, at cost (8,516 shares) (45) (45)
--------- ---------
Total shareholders' equity 10,452 10,468
--------- ---------
Total liabilities and shareholders' equity $ 204,213 $ 157,775
========= =========
The accompanying notes are an integral part of these statements.
ATCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INTEREST INCOME
Interest and fees on loans $ 2,573 $ 1,962 $ 4,955 $ 3,659
Interest on federal funds sold 23 29 30 111
Interest on interest-bearing deposits 8 6 20 7
Interest on investment securities-taxable 1,097 537 1,949 1,035
Interest on investment securities-tax exempt 84 77 168 132
----------- ------------ ------------ -----------
Total interest income 3,785 2,611 7,122 4,944
INTEREST EXPENSE
Interest on deposits 1,689 1,152 3,182 2,114
Interest on other borrowed funds 151 --- 247 5
----------- ------------ ------------ -----------
Total interest expense 1,840 1,152 3,429 2,119
Net interest income 1,945 1,459 3,693 2,825
PROVISION FOR LOAN LOSSES 43 --- 43 60
Net interest income after provision for loan
losses 1,902 1,459 3,650 2,765
NONINTEREST OPERATING INCOME
Service charges, commissions and fees 94 98 219 207
Securities gains (losses) --- 147 2 111
Other income 35 52 92 114
----------- ------------ ------------ -----------
Total noninterest operating income 129 297 313 432
NONINTEREST OPERATING EXPENSE
Salaries and employee benefits 688 617 1,410 1,229
Occupancy expense 182 122 372 249
Furniture and equipment expense 132 85 256 166
Professional fees 58 95 117 189
F.D.I.C. assessment 1 57 1 114
Other expense 389 318 775 603
----------- ------------ ------------ -----------
Total noninterest operating expense 1,450 1,294 2,931 2,550
Income before income taxes 581 462 1,032 647
INCOME TAXES 159 132 283 178
----------- ------------ ------------ -----------
NET INCOME $ 422 $ 330 $ 749 $ 469
=========== ============ ============ ===========
EARNINGS PER SHARE $0.55 $0.43 $0.97 $0.61
=========== ============ ============ ===========
The accompanying notes are an integral part of these statements.
ATCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
1996 1995
-------- --------
(in thousands)
CASH FLOW FROM OPERATING ACTIVITIES:
Net income .................................................... $ 749 $ 469
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization ...................... 234 185
Provision for loan losses .......................... 43 60
Provision for ORE losses ........................... 17 --
Provision for deferred taxes ....................... 22 127
Gain on sale of securities ......................... (2) (111)
Gain on sale of SBA loans .......................... (15) --
Increase in accrued interest receivable ............ (515) (104)
(Increase) decrease in other assets ............... (101) 65
Decrease in other liabilities ...................... (198) (293)
Increase in interest payable ....................... 578 162
-------- --------
Total adjustments .................................. 63 91
-------- --------
Net cash provided by operating activities ............... 812 560
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) decrease in deposits with other banks ... (1,290) 56
Purchases of investment securities ................. (27,718) (20,140)
Proceeds from sales of securities available for sale 4,185 18,401
Proceeds from maturities of investments ............ 2,180 836
Purchases of premises and equipment, net ........... (267) (435)
Net increase in loans .............................. (19,125) (15,198)
Proceeds from sale of SBA loans .................... 1,012 --
Proceeds from sale of other real estate owned ...... 79 --
-------- --------
Net cash used in investing activities ................... (40,944) (16,480)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase (decrease) in savings and
demand deposit accounts ........................... 22,800 (227)
Net increase in time deposits ...................... 18,274 14,986
Advances from Federal Home Loan Bank ............... 5,000 --
-------- --------
Net cash provided by financing activities ............... 46,074 14,759
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................. 5,942 (1,161)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD .................... 5,640 9,474
-------- --------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD .......................... $ 11,582 $ 8,313
======== ========
The accompanying notes are an integral part of these statements.
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared pursuant to the instructions to Form 10-Q and Rule 10-1 of Regulation
S-X. Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Management, all adjustments, including normal recurring
accruals, considered necessary for a fair presentation have been included. All
adjustments made to the unaudited financial statements were of a normal
recurring nature. Operating results for the three month and six month periods
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information, refer
to the consolidated financial statements and notes thereto included in the
annual report on Form 10-K for the year ended December 31, 1995.
NOTE B - Earnings Per Share
Earnings per share are based upon the average number of shares
outstanding and are adjusted retroactively for the stock dividend of 5 shares
for every 100 shares held which was paid February 26, 1996. The average number
of shares outstanding amounted to 771,750 in the three month and six month
periods ended June 30, 1996 and June 30, 1995, respectively.
NOTE C - Statement No. 115 "Accounting for Certain Investments in Debt and
Equity Securities"
SFAS No. 115 requires that securities "available for sale" be carried
at fair value with valuation adjustments (after tax) included in a separate
component of shareholders' equity. Debt securities acquired as investments that
are intended to be "held to maturity" are stated at cost adjusted for
amortization of premiums and accretion of discounts using the level yield
method. Realized securities gains and losses are recorded as they may occur.
The amortized cost and estimated values of investment securities as of
June 30, 1996 are as follows:
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
HELD TO MATURITY COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------------
Debt securities issued by foreign
governments 250 --- --- $ 250
- ---------------------------------------------------------------------------------------------------
TOTALS $ 250 $ --- $ --- $ 250
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
AVAILABLE FOR SALE COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------------
U.S. Treasury Securities $ 9,526 $ 51 $ (3) $ 9,574
U.S. Agency Securities 8,301 20 (94) 8,227
Obligations of States &
Political subdivisions 6,981 69 (18) 7,032
Corporate debt securities 4,329 50 (41) 4,338
Mortgage-backed securities 14,519 21 (216) 14,324
SBA Pools 25,176 31 (222) 24,985
Equity securities 1,790 12 --- 1,802
- ---------------------------------------------------------------------------------------------------
TOTALS $ 70,622 $ 254 $ (594) $70,282
NOTE D - SUBSEQUENT EVENT
On July 18, 1996, with the approval of the Board of Directors, Atcorp, Inc.
entered into an Agreement and Plan of Affiliation (the Agreement) with
Susquehanna Bancshares, Inc. (Susquehanna). The agreement provides, among other
things, that Susquehanna will acquire Atcorp, Inc. and its subsidiaries for
approximately 771,750 shares of Susquehanna common stock, or one share of
Susquehanna common stock for each Atcorp, Inc. fully diluted share. The
acquisition is subject to federal and state regulatory approvals as well as
approval of the shareholders of Atcorp, Inc. and other conditions including,
among other things, the transaction qualifying for pooling-of-interests
accounting.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following analysis by the management of the Company summarizes the
significant changes in the results of operations presented in the consolidated
statements of income for the three and six months ended June 30, 1996 and 1995,
and presents an analysis of the financial condition of the Company at June 30,
1996. The financial statements and accompanying notes included in the Company's
December 31, 1995 Annual Report on Form 10-K should be read in conjunction with
this analysis.
Financial Condition
Management believes that the financial condition of the Company has
improved over the past year. Nonperforming assets have been reduced. The Bank
continues to be well capitalized. Loan demand has continued strong but very rate
competitive. The local economy continues to improve at a modest pace. Deposit
rates increased substantially in 1995 which has put pressure on net interest
margin. Interest margins have improved on an absolute basis as a result of asset
and deposit growth from the branch expansion into Cherry Hill. However, rates
paid have been higher in order to attract deposits recently which may result in
reducing the interest spread.
Asset quality improved since the end of 1995 with classified loans at
1.17% of total loans at the end of the first six months compared with 1.99% at
December 31, 1995. Table 3 shows nonperforming assets decreased $619,000 from
$1,554,000 at December 31, 1995 to $935,000 on June 30, 1996.
The allowance for possible loan losses increased $73,000 from $1,283,000
at December 31, 1995 to $1,356,000 at June 30, 1996 after recoveries of $60,000,
a provision of $43,000 and losses of $30,000 for the first six months. The
allowance for loan losses was 1.18% of gross loans at June 30, 1996 compared
with 1.33% of gross loans at December 31, 1995. Table 4 shows an analysis of the
allowance and calculations based on period-end loans and leases net of the
allowance. Management believes the reserve to be adequate. The Bank's mix of
loans includes a substantial amount of guaranteed SBA loans. In addition, the
portfolio includes a large percentage of construction loans to individuals for
which permanent financing has been provided by others.
Table 5 presents the interest rate sensitivity at June 30, 1996. The
table indicates that we are negatively gapped both periodic and cumulative in
the less than one year periods. If maturing rate sensitive assets exceed
maturing rate sensitive liabilities, the financial institution is said to be
asset sensitive or have a positive gap. In this case, interest rate changes will
be reflected more rapidly in asset yields than in liability rates and, in a
period of rising interest rates, net interest income will increase. Conversely,
in a declining rate environment, net interest income would decrease. If a
financial institution is liability sensitive, it is considered to have a
negative gap as is the case for the Company and the Bank. In this case declining
interest rates will produce higher net interest income. As mentioned above, if
deposit rates increase faster than asset rates net interest margin will tighten.
Overall capital adequacy remained stable during the quarter. Based upon
the risk based capital requirements of risk based capital of 8.00%, Tier I
capital of 4.00% and leverage ratio of 4.00%, the Bank was in excess of all of
these minimum requirements. At June 30, 1996 the Bank had total risk based
capital ratio of 10.55%, Tier I capital of 9.34% and a leverage ratio of 5.36%.
Currently, the Company and the Bank are considered well-capitalized.
Results of Operations for the Three Months ended June 30, 1996 and 1995
The majority of the Company income is generated from loans and
investments or interest income. Deposits and borrowed funds which create
interest expense are employed to make loans and fund investments. Table 1
presents average balances, taxable equivalent interest income and expenses and
yields earned or paid on these assets and liabilities. In order to present
taxable equivalent income, tax-exempt interest has been adjusted using a
marginal tax rate of 35% to equate the yield to that of taxable rates. Net
interest income as a percentage of the sum of net interest income and
noninterest income was 97% and 90% for the second quarters ended June 30, 1996
and 1995, respectively and was 96% and 92% for the six months ended June 30,
1996 and 1995, respectively. This indicates that net income is more dependent on
interest rate related assets and liabilities than fee income.
Interest income increased $1,174,000 from $2,611,000 in the second
quarter of 1995 to $3,785,000 in the second quarter of 1996 or 45%. This
increase was a result of an increase in interest and fees on loans of $611,000
(31%), a decrease in interest on federal funds sold of $6,000, an increase in
interest on deposits with other bank's of $2,000, an increase in interest on
taxable securities of $560,000 (104%), and an increase in interest on tax-exempt
securities of $7,000. The decrease in interest on Federal funds sold was the
result of increased use of funds for loans and investments. Increases in
investments and loans were from increased deposits from the branch expansion
program and borrowed funds.
Interest expense on deposits increased $537,000 from $1,152,000 in the
second quarter of 1995 to $1,689,000 in the second quarter of 1996 or 47%.
Interest expense on borrowed funds increased $151,000 during the second quarter
of 1996 from none during the same period in 1995. The increase in interest on
deposits in 1996 relates to growth in money manager accounts and certificates of
deposit which have paid slightly higher rates than savings instruments and
similar certificates offered locally. Net interest income increased $486,000 or
33% which is approximately 40% of the improvement in interest income which was
offset by the higher cost of funds.
The provision for loan losses increased $43,000 from the second quarter
of 1995 as no provision was required in the second quarter of 1995. Although
growth in the portfolio has been largely in SBA loans, the majority of which is
guaranteed, normal loan growth in traditional products has begun to accelerate.
In addition, the Bank experienced net recoveries in 1995 which is not expected
under normal conditions. Management continues to review the Bank's loan
portfolio and analyze the allowance for possible loan losses on a quarterly
basis and believes that the allowance is adequate.
Noninterest operating income decreased $168,000 or 57% from $297,000 in
the second quarter of 1995 to $129,000 in the second quarter of 1996. Of this
decrease, $4,000 represented a decrease in service charges, commissions and
fees, $147,000 represented a decrease in gains from the sale of securities, and
$17,000 represented a decrease in other income.
Noninterest operating expense increased $156,000 from $1,294,000 in the
second quarter of 1995 to $1,450,000 in the second quarter of 1996 or 12%.
Salaries and benefits increased $71,000 from $617,000 in the second quarter of
1995 to $688,000 in the second quarter of 1996 or 12% which was due to an
increase in staff for the new Cherry Hill office and normal salary increases for
existing personnel which averaged approximately 4% over the past year. Occupancy
expense increased $60,000 to $182,000 in the second quarter of 1996 from
$122,000 in the second quarter of 1995 due to costs of Cherry Hill and increased
maintenance costs. Furniture & equipment expense increased $47,000 from $85,000
in the second quarter of 1995 to $124,000 in 1996 as a result of depreciation on
new furniture and equipment for Cherry Hill and Marlton together with increased
maintenance of older equipment in operations and the branches. Professional fees
decreased $37,000 as a result of fewer loan collection efforts. FDIC assessment
decreased $56,000 as a result of the insurance fund becoming fully restored,
Other expense increased $71,000 from $318,000 in the second quarter of 1995 to
$389,000 in the second quarter of 1996. The major components of the increase in
other expense were $17,000 in provision for other real estate losses for erosion
of appraised values, $8,000 in advertising and public relations, $8,000 in
advisory fees for network and consulting projects, $11,000 in stationery and
supplies representing increased paper costs and volume, $8,000 in processing
costs at correspondents, $7,000 in dues, memberships and subscriptions
reflecting costs that increase with asset size, and $7,000 in postage costs as
well as small increases in many other categories, many of which increase with
growth in assets.
With the improved net interest margin, and decreased noninterest income
and also increases in noninterest operating expense, income before income taxes
increased $119,000 or 26% from $462,000 in the second quarter of 1995 to
$581,000 in the second quarter of 1996.
The Company's provision for Federal and State income taxes for the
quarter is approximately 27% of income before taxes which is lower than the
statutory rate as a result of tax exempt income.
Net income for the second quarter of 1996 was $422,000 compared with
$330,000 for the second quarter of 1995. Expressed on a per share basis, the
Company earned $0.55 per share in the second quarter of 1996 compared with
earnings of $0.43 per share in the second quarter of 1995.
Results of Operations for the First Six Months Ended June 30, 1996 and 1995
Interest income increased $2,178,000 or 44% from $4,944,000 in the first half of
1995 to $7,122,000 in the first six months of 1996. Interest income increased in
all categories except federal funds sold as funds were invested in higher
yielding loans and investment securities.
Interest expense increased $1,310,000 or 62% from $2,119,000 in the first six
months of 1995 to $3,429,000 in the first six months of 1996. Interest expense
increased at a higher rate than interest income as new deposits were
concentrated in higher cost money manager accounts and certificates of deposit
reflecting competitive conditions.
As a result of the increased interest income and expense, net interest income
improved $868,000 or 31% from $2,825,000 in the first six months of 1995 to
$3,693,000 in the first six months of 1996. The provision for possible loan
losses decreased $17,000 from $60,000 in the first half of 1995 to $43,000 in
the first six months of 1996. This combined with the increase in net interest
income produced an improvement in net interest margin of $885,000 or 32%.
Noninterest income decreased $119,000 or 28% from $432,000 in the first six
months of 1995 to $313,000 in the first six months of 1996. This was the result
of a reduction in securities gains of $109,000 from $111,000 in the first half
of 1995 to $2,000 in the first six months of 1996 and a decrease in other income
of $22,000 in 1996.
Noninterest expense increased $381,000 or 15% from $2,550,000 in the first six
months of 1995 to $2,931,000 in the first six months of 1996. The increase in
this category was made up of increases in salaries and benefits of $181,000,
occupancy expense of $123,000, furniture and equipment expense of $90,000 and
other expense of $172,000. These increases were partially offset by decreases in
professional fees of $72,000 and FDIC Assessment of $113,000. The increase in
salaries and benefits reflected staffing for the Cherry Hill office which opened
in July of 1995 as well as normal increases in wages and benefits for the
remaining staff. Increases in occupancy and furniture and equipment also
reflected added costs for the Cherry Hill office as well as higher than normal
winter snow removal costs and maintenance of both buildings and equipment. Other
operating expenses showing large increases were advertising of $34,000, FRB
processing of $14,000, advisory services of $25,000, office supplies of $15,000,
EDP supplies of $23,000, postage of $12,000, travel & entertainment of $9,000
and telephone of $10,000. All of these items were impacted by the Bank's growth.
Income before income taxes increased $385,000 from $647,000 in the first six
months of 1995 to $1,032,000 in the first six months of 1996 or an improvement
of 60%. Income taxes increased $105,000 or 59% to $283,000 in the first six
months of 1996. Net income improved $280,000 (60%) to $749,000 in the first six
months of 1996.
Earnings per share increased $0.36 from $0.61 per share in the first six months
of 1995 to $0.97 per share in the first half of 1996.
Atcorp, Inc. and subsidiaries
TABLE 1 - DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL - TAX EQUIVALENT BASIS
For the quarter ended For the quarter ended
(In thousands) June 30, 1996 June 30, 1995
Average Average
Balance Interest Rate(%) Balance Interest Rate(%)
--------------------------------------------------------------
ASSETS
Short-term investments $ 2,290 $ 31 5.41% $ 2,378 $ 35 5.89%
Investment securities
Taxable 64,193 1,097 6.84% 32,156 537 6.68%
Tax-advantaged 7,042 129 7.34% 6,889 118 6.88%
---------------------------------------------------------------
Total investment securities 71,235 1,226 6.89% 39,045 655 6.71%
Loans and leases, (net):
Taxable 109,473 2,565 9.37% 78,340 1,943 9.92%
Tax-advantaged 498 12 9.89% 1,261 29 9.27%
---------------------------------------------------------------
Total loans and leases 109,971 2,577 9.37% 79,601 1,972 9.91%
---------------------------------------------------------------
Total interest-earning assets 183,496 3,835 8.36% 121,024 2,663 8.80%
Allowance for loan and lease
losses (1,296) (1,219)
Other non-earning assets 11,007 8,192
----------- ----------
Total assets $193,207 $127,997
LIABILITIES
Deposits:
Interest-bearing demand 49,841 449 3.60% 25,953 240 3.70%
Savings 21,354 168 3.15% 23,671 199 3.36%
Time 85,157 1,072 5.04% 51,914 713 5.49%
Short-term borrowings 5,937 151 10.17% 21 0 0%
---------------------------------------------------------------
Total interest-bearing
liabilities 162,289 1,840 4.54% 101,559 1,152 4.54%
Demand deposits 19,400 17,142
Other liabilities 1,398 429
----------- ----------
Total liabilities 183,087 119,130
Stockholders' equity 10,120 8,867
----------- ----------
Total liabilities and
equity $193,207 $127,997
Net interest income/yield on
average earning assets $1,995 4.13% $1,511 4.72%
--------------------- ---------------------
[RESTUBBED FROM ABOVE TABLE]
For the Six Month Period Ended For the Six Month Period Ended
(In thousands) June 30, 1996 June 30, 1995
Average Average
Balance Interest Rate (%) Balance Interest Rate (%)
----------------------------------------------------------------
ASSETS
Short-term investments $ 2,261 $ 50 4.42% $ 4,187 $ 118 5.64%
Investment securities
Taxable 58,023 1,949 6.72% 31,556 1,035 6.56%
Tax-advantaged 7,032 258 7.35% 5,704 203 7.12%
----------------------------------------------------------------
Total investment securities 65,055 2,207 6.79% 37,260 1,238 6.65%
Loans and leases, (net):
Taxable 105,725 4,937 9.34% 75,955 3,619 9.53%
Tax-advantaged 578 28 9.58% 1,234 62 9.97%
----------------------------------------------------------------
Total loans and leases 106,303 4,965 9.34% 77,189 3,681 9.54%
----------------------------------------------------------------
Total interest-earning assets 173,619 $7,222 8.32% 118,636 5,037 8.49%
Allowance for loan and lease
losses (1,284) (1,200)
Other non-earning assets 10,605 7,634
----------- -----------
Total assets $182,940 $125,070
LIABILITIES
Deposits:
Interest-bearing demand 48,141 896 3.72% 24,797 421 3.40%
Savings 21,242 336 3.16% 25,088 416 3.32%
Time 76,222 1,950 5.12% 48,499 1,277 5.27%
Short-term borrowings 5,746 247 8.60% 161 5 6.21%
----------------------------------------------------------------
Total interest-bearing 151,351 3,429 4.53% 98,545 2,119 4.30%
liabilities
Demand deposits 20,628 16,883
Other liabilities 604 769
----------- -----------
Total liabilities 173,403 116,197
Stockholders' equity 10,357 8,873
-----------
-----------
Total liabilities and $182,940 $125,070
equity
-----------
Net interest income/yield on
average earning assets $3,793 4.13% $2,918 4.67%
--------------------- ---------------------
- --------------------------------------------------------------------------------
For purposes of calculating loan yields, the average loan volume includes
non-accrual loans. For purposes of calculating yields on non-taxable interest
income, the taxable equivalent adjustment is made to equate non-taxable interest
on the same basis as taxable interest. The marginal tax rate is 35%.
Atcorp, Inc. and subsidiaries
TABLE 2 - STATEMENTS OF CHANGES IN INCOME AND EXPENSES
Three months ended Six months ended
June 30, 1996 compared June 30, 1996 compared
to June 30, 1995 to June 30, 1995
(In thousands) Average Volumes Income/Expense Average Volumes Income/Expense
-------------------------------------------------------------------------------------
ASSETS $ % $ % $ % $ %
-------------------------------------------------------------------------------------
Loans and leases 30,370 38.15% 605 30.68% 29,114 37.72% 1,284 34.88%
Investments 32,190 82.44% 571 87.18% 27,795 74.60% 969 78.27%
Short-term investments (88) (3.70)% (4) (11.43)% (1,926) (46.00)% (68) (57.63)%
=================================================================================
Total 62,472 51.62% 1,172 44.01% 54,983 46.35% 2,185 43.38%
=================================================================================
LIABILITIES
Interest-bearing demand 23,888 92.04% 209 87.08% 23,344 94.14% 475 112.82%
Savings (2,317) (9.78)% (31) (15.57)% (3,846) (15.33)% (80) (19.23)%
Time 33,243 64.03% 359 50.35% 27,723 57.16% 673 52.70%
Short-term borrowings 5,916 n/a 151 151.00% 5,585 n/a 242 n/a
=================================================================================
Total 60,730 59.80% 688 59.72% 52,806 52.75% 1,310 61.62%
=================================================================================
Net interest income 486 33.31% 868 30.73%
Provision for loan and lease losses 43 143.00% (17) (28.33)%
--------------- ----------------
Net interest income after provision for
loan and lease losses 443 30.36% 885 32.01%
Investment security gains/losses (147) (100.00)% (109) (98.20)%
Other operating income (21) (14.00)% (10) (3.11)%
--------------- ----------------
Income before operating expenses 275 14.17% 766 24.21%
Salaries and employee benefits 71 11.51% 181 14.73%
Net occupancy and equipment 107 51.69% 213 51.32%
Other operating expense (22) (4.68)% (13) (1.43)%
--------------- ----------------
Total operating expenses 156 12.06% 381 14.94%
Income before income taxes 119 25.76% 385 59.51%
Provision for income taxes 27 20.45% 105 58.99%
--------------- ----------------
Net income 92 27.88% 280 59.70%
============== ================
Atcorp, Inc. and subsidiaries
TABLE 3 - RISK ASSETS
(Dollars in thousands)
June 30, December 31, June 30,
1996 1995 1995
Nonperforming assets:
Nonaccrual loans and leases $ 567 $1,090 $1,320
Restructured accrual loans --
Other real estate owned 368 464 38
-----------------------------------
Total nonperforming assets $ 935 $1,554 $1,358
As a percent of period-end loans and leases and
other real estate owned 0.811% 1.617% 1.587%
Loans and leases contractually past due 90 days and
still accruing $ 75 $ 52 $ 210
TABLE 4 - ALLOWANCE FOR LOAN AND LEASE LOSSES
(Dollars in thousands)
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
---------------------------------------------------------------
Balance - Beginning of period $ 1,253 $ 1,215 $ 1,283 $ 1,152
Additions charged to operating expense 43 -- 43 60
---------------------------------------------------------------
1,296 1,215 1,326 1,212
Charge-offs -- (8) (30) (10)
Recoveries 60 33 60 38
---------------------------------------------------------------
Net charge-offs 60 25 30 28
Balance - End of period $ 1,356 $ 1,240 $ 1,356 $ 1,240
Net charge-offs as a percent of average loans and
leases (annualized) 0.055% 0.031% 0.029% 0.037%
Allowance as a percent of period-end loans and
leases 1.176% 1.449% 1.176% 1.449%
Average loans and leases $ 109,971 $ 81,194 $ 104,902 $ 75,989
Period-end loans and leases $ 115,284 $ 85,596 $ 115,284 $ 85,596
Atcorp, Inc. and subsidiaries
TABLE 5 CONSOLIDATED INTEREST RATE SENSITIVITY
AS OF JUNE 30, 1996
(In thousands)
1 - 90 91 - 180 181 - 365 1 year
days days days or more TOTAL
ASSETS
Short-term investments $ 8,334 $ 8,334
Investment securities 27,764 2,228 3,461 37,079 70,532
Loans and leases, net of unearned income* 41,756 4,686 3,235 66,975 116,652
----------------------------------------------------------------------
Total $ 77,854 $ 6,914 $ 6,696 $104,054 $195,518
LIABILITIES
Deposits:
Interest-bearing demand $ 66,386 $ 66,386
Savings 21,602 21,602
Time 17,769 17,665 18,884 3,909 58,227
Time in denominations of $100 or more 7,118 4,202 6,598 101 18,019
Short-term borrowings 5,000 5,000
----------------------------------------------------------------------
Total $117,875 $ 21,867 $ 25,482 $ 4,010 $169,234
INTEREST SENSITIVITY GAP:
Periodic $(40,021) $(14,953) $(18,786) $100,044 $26,284
Cumulative $(54,974) $(73,760) $ 26,284
CUMULATIVE GAP AS A PERCENTAGE OF EARNING ASSETS -20.5% -28.1% -37.7% 13.4%
*Does not include nonaccruing loans and leases.
Part II--Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits--None
b. Reports on Form 8-K
There were no reports filed on Form 8-K for
the three months ended June 30, 1996.
On July 30, 1996, the Company filed a
Current Report on Form 8-K describing its
execution on July 18, 1996 of an agreement
to be acquired by Susquehanna Bancshares,
Inc. A copy of such agreement was filed as
an exhibit to the Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATCORP, INC.
(Registrant)
August 14, 1996 (s) Marc L. Reitzes
- ----------------------- -------------------------------
Date Marc L. Reitzes
Chairman & Chief Executive Officer
August 14, 1996 (s) Stewart A. Collins
- ----------------------- -------------------------------
Date Stewart A. Collins
Senior Vice President, Secretary/
Treasurer (Principal Accounting
Officer)