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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[_] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-23182
AMB FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 35-1905382
-------- ----------
(State or other jurisdiction I.R.S. Employer
of incorporation or Identification
organization) Number
8230 HOHMAN AVENUE, MUNSTER, INDIANA 46321-1578
------------------------------------ ----------
(Address of Principle executive offices) (Zip Code)
Registrant telephone number, include are code: (219) 836-5870
--------------
Check whether the issuer (1) has filed all reports required to be filed by
Section 130 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [_]
As of October 24, 2002 there were 1,686,169 shares of the Registrant's
common stock issued and 798,463 shares outstanding.
Transitional Small Business Disclosure Format (check one) : Yes [_] No [X]
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AMB FINANCIAL CORP.
FORM 10-Q
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Financial Condition at
September 30, 2002 (Unaudited) and December 31, 2001 3
Consolidated Statements of Earnings for the three
and nine months ended September 30, 2002 and 2001
(unaudited) 4
Consolidated Statements of Changes in
Stockholders Equity, nine months ended
September 30, 2002 (unaudited) 5
Consolidated Statements of Cash Flows for the
nine months ended September 30, 2002 and 2001
(unaudited) 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-23
Part II. OTHER INFORMATION 24
Signatures 25
Rule 13a-14 Certification 26-27
Index of Exhibits 28
Earnings Per Share Analysis (Exhibit 11) 29
Section 906 Certification (Exhibit 99) 30
2
AMB FINANCIAL CORP.
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
September December 31,
2002 2001
------------ ------------
unaudited
ASSETS
- ------
Cash and amounts due from depository institutions 3,760,636 2,552,568
Interest-bearing deposits 6,424,603 6,410,091
------------ ------------
Total cash and cash equivalents 10,185,239 8,962,659
Investment securities, available for sale, at fair value 6,175,252 3,483,478
Trading securities 539,834 583,246
Mortgage backed securities, available for sale, at fair value 2,641,201 3,022,898
Loans receivable (net of allowance for loan losses:
$722,273 at September 30, 2002 and
$766,465 at December 31, 2001) 115,005,855 114,513,114
Real estate owned -- 190,581
Investment in LTD Partnership 1,064,533 1,130,283
Stock in Federal Home Loan Bank of Indianapolis 1,624,400 1,624,400
Accrued interest receivable 696,258 688,090
Office properties and equipment- net 2,225,544 2,176,767
Prepaid expenses and other assets 6,405,133 5,272,733
------------ ------------
Total assets 146,563,249 141,648,249
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities
- -----------
Deposits 105,563,189 102,210,145
Borrowed money 20,350,630 23,955,838
Notes Payable 930,322 1,086,150
Advance payments by borrowers for taxes and insurance 639,777 452,818
Other liabilities 2,327,165 2,225,858
------------ ------------
Total liabilities 129,811,083 129,930,809
------------ ------------
Guaranteed preferred beneficial interest in AMB Financial's
junior subordinated debentures 5,000,000 --
Stockholders' Equity
Preferred stock, $.01 par value; authorized
100,000 shares; none outstanding -- --
Common Stock, $.01 par value; authorized 1,900,000 shares;
1,686,169 shares issued and 803,663 shares outstanding
at September 30, 2002 and 861,063 shares outstanding
at December 31, 2001 16,862 16,862
Additional paid- in capital 10,908,171 10,864,371
Retained earnings, substantially restricted 9,732,223 9,110,986
Accumulated other comprehensive income, net of income taxes 172,241 128,439
Treasury stock, at cost (882,506 shares at September 30, 2002
and 825,106 shares at December 31, 2001) (8,717,611) (8,043,498)
Common stock acquired by Employee Stock Ownership Plan (359,720) (359,720)
------------ ------------
Total stockholders' equity 11,752,166 11,717,440
------------ ------------
Total liabilities and stockholders' equity 146,563,249 141,648,249
============ ============
3
AMB FINANCIAL CORP.
AND SUBSIDIARIES
Consolidated Statement of Earnings
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
unaudited unaudited unaudited unaudited
Interest income
Loans 2,066,089 2,141,867 6,221,055 6,644,657
Mortgage-backed securities 49,580 64,535 154,669 188,239
Investment securities 70,578 50,301 197,920 169,686
Interest-bearing deposits 41,315 35,429 111,416 123,664
Dividends on FHLB stock 25,590 29,685 74,934 93,114
---------- ---------- ---------- ----------
Total interest income 2,253,152 2,321,817 6,759,994 7,219,360
---------- ---------- ---------- ----------
Interest expense
Deposits 772,578 1,169,508 2,536,384 3,652,181
Borrowings 367,083 373,073 1,048,295 1,208,988
---------- ---------- ---------- ----------
Total interest expense 1,139,661 1,542,581 3,584,679 4,861,169
---------- ---------- ---------- ----------
Net interest income before
provision for loan losses 1,113,491 779,236 3,175,315 2,358,191
Provision for loan losses 56,203 51,209 331,040 112,809
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 1,057,288 728,027 2,844,275 2,245,382
---------- ---------- ---------- ----------
Non-interest income:
Loan fees and service charges 45,796 36,807 122,946 101,501
Commission income 13,508 7,580 31,694 58,785
Deposit related fees 123,729 110,594 353,405 322,873
Rental Income 20,553 80,706 149,951 221,577
Gain on sale of investment
securities available for sale -- -- -- 17,781
Gain on sale of trading securities -- 4,612 21,562 67,033
Unrealized gain on trading
securities (5,164) (15,792) 10,026 69,725
Loss from investment in limited
partnership (18,000) (9,000) (65,750) (64,100)
Loss on sale of REO -- -- (28,114) --
Other income 115,393 67,026 287,117 195,103
---------- ---------- ---------- ----------
Total non-interest income 295,815 282,533 882,837 990,278
---------- ---------- ---------- ----------
Non-interest expense:
Staffing costs 468,529 397,538 1,312,483 1,185,047
Advertising 30,662 9,808 70,939 40,895
Occupancy and equipment expense 98,712 117,698 317,050 351,938
Data processing 132,597 115,136 364,224 335,966
Federal deposit insurance premiums 4,695 4,601 13,759 13,590
Other operating expenses 232,441 170,541 609,974 570,832
---------- ---------- ---------- ----------
Total non-interest expense 967,636 815,322 2,688,429 2,498,268
---------- ---------- ---------- ----------
Net income before income taxes 385,467 195,238 1,038,683 737,392
Provision for federal and state
income taxes 109,455 31,367 272,504 155,299
---------- ---------- ---------- ----------
Net income 276,012 163,871 766,179 582,093
========== ========== ========== ==========
Earnings per share- basic $ 0.35 $ 0.20 $ 0.96 $ 0.72
Earnings per share- diluted $ 0.33 $ 0.20 $ 0.92 $ 0.70
See accompanying notes to consolidated financial statements.
4
AMB FINANCIAL CORP.
AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholder's Equity
(Unaudited)
ACCUMULATED COMMON
ADDITIONAL OTHER STOCK
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY ACQUIRED
STOCK CAPITAL EARNINGS INCOME STOCK BY ESOP TOTAL
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 2001 $ 16,862 10,864,371 9,110,986 128,439 (8,043,498) (359,720) 11,717,440
----------- ----------- ----------- ----------- ----------- ----------- -----------
Comprehensive income:
Net income 766,179 766,179
Other comprehensive income,
net of income taxes:
Unrealized holding gain
during the period 43,802 43,802
----------- ----------- -----------
Total comprehensive income 766,179 43,802 809,981
Purchase treasury stock (57,400
shares) (674,113) (674,113)
ESOP compensation adjustment 43,800 43,800
Dividends declared on common stock
($.18 per share) (144,942) (144,942)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30, 2002 $ 16,862 10,908,171 9,732,223 172,241 (8,717,611) (359,720) 11,752,166
=========== =========== =========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements
5
AMB FINANCIAL CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
2002 2001
-------------- --------------
(unaudited)
Cash flows from operating activities:
Net income $ 766,179 587,726
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 134,782 150,573
Amortization of cost of stock benefit plans -- 86,839
Amortization of premiums and accretion of discounts 8,683 4,544
Provision for loan losses 331,040 112,809
Increase in deferred compensation 65,796 63,482
ESOP compensation 43,800 30,600
Increase in cash surrender value of life insurance (120,933) (116,865)
Gain on sale of investment securities available for sale -- (17,781)
Gain on sale of trading account securities (21,562) (67,033)
Unrealized gain on trading account securities (10,026) (69,725)
Proceeds from sales of trading account securities 75,000 419,713
Loss from limited partnership 65,750 64,100
Increase (decrease) in deferred income on loans (9,482) 3,274
Increase (decrease) in accrued interest receivable (8,168) 25,148
Increase in purchased accounts receivable (663,549) (331,733)
Decrease in accrued interest payable (10,443) (9,096)
Change in current and deferred federal income tax 132,504 34,055
Change in prepaid and accured items, net (290,455) (105,050)
-------------- --------------
Net cash provided by operating activities 488,916 865,580
-------------- --------------
Cash flows from investing activities:
Proceeds fom maturity and early redemption of
investment securities 2,750,000 --
Proceeds from sale of investment securities -- 519,933
Purchase of investment securities (5,409,332) (5,962)
Proceeds from repayments of mortgage-backed securities 929,099 595,670
Purchase of mortgaged-back securities (498,157) (499,941)
Purchase of loans (10,565,283) (10,341,295)
Disbursements for loans (24,413,481) (18,469,033)
Loan repayments 34,164,465 26,404,788
Property and equipment expenditures (183,559) (71,993)
-------------- --------------
Net cash provided for investing activities (3,226,248) (1,867,833)
-------------- --------------
Cash flows from financing activities:
Deposit account receipts 176,170,457 145,647,801
Deposit account withdrawals (175,042,360) (139,353,420)
Interest credited to deposit accounts 2,224,947 3,146,912
Proceeds from borrowed money -- 11,500,000
Repayment of borrowed money (3,605,208) (16,101,944)
Repayment of note payable (155,828) (170,688)
Increase in advance payments by borrowers
for taxes and insurance 186,959 213,679
Proceeds from issuance of trust preferred securities 5,000,000 --
Purchase of treasury stock (674,113) (700,606)
Dividend paid on common stock (144,942) (146,097)
-------------- --------------
Net cash provided by financing activities 3,959,912 4,035,637
-------------- --------------
Net change in cash and cash equivalents 1,222,580 3,033,384
Cash and cash equivalents at beginning of period 8,962,659 4,614,532
-------------- --------------
Cash and cash equivalents at end of period $ 10,185,239 7,647,916
============== ==============
Cash paid during the period for:
Interest $ 3,595,122 4,870,265
Income taxes 140,000 125,000
See notes to consolidated financial statements.
6
AMB FINANCIAL CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT OF INFORMATION FURNISHED
----------------------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and Article 10 of
Regulation S-X, and in the opinion of management contains all adjustments
(all of which are normal and recurring in nature) necessary to present
fairly the financial position as of September 30, 2002, the results of
operations for the three and nine months ended September 30, 2002 and 2001
and cash flows for the nine months ended September 30, 2002 and 2001. These
results have been determined on the basis of generally accepted accounting
principles. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The attached consolidated statements are those of AMB Financial
Corp. (the "Holding Company") and its consolidated subsidiaries American
Savings, FSB (the "Bank"), the Bank's wholly owned subsidiary NIFCO, Inc.,
and the wholly owned subsidiary of NIFCO, Inc., Ridge Management, Inc. The
results of operations for the three and nine months ended September 30, 2002
are not necessarily indicative of results that may be expected for the year
ending December 31, 2002.
2. MUTUAL TO STOCK CONVERSION
--------------------------
On March 29, 1996, the Holding Company issued 1,124,125 shares of $.01 par
value common stock at $10.00 per share, for an aggregate purchase price of
$11,241,250 in connection with the Bank's mutual to stock conversion (the
"Conversion"). Net proceeds to the Company, after conversion expenses,
totaled approximately $10,658,000.
3. EARNINGS PER SHARE
------------------
Earnings per share for the three and nine month periods ended September 30,
2002 and 2001 were determined by dividing net income for the periods by the
weighted average number of both basic and diluted shares of common stock and
common stock equivalents outstanding (see Exhibit 11 attached). Stock
options are regarded as common stock equivalents and are considered in
diluted earnings per share calculations. Common stock equivalents are
computed using the treasury stock method. ESOP shares not committed to be
released to participants are not considered outstanding for purposes of
computing earnings per share amounts.
7
4. INDUSTRY SEGMENTS
-----------------
The Company operates principally in the banking industry through its
subsidiary bank. As such, substantially all of the Company's revenues, net
income, identifiable assets and capital expenditures are related to banking
operations.
5. TRUST PREFERRED CAPITAL SECURITIES
----------------------------------
In March of 2002, the Company formed AMB Financial Statutory Trust I (the
"Trust"). The Trust is a statutory business trust and is wholly owned by the
Company. The Trust issued $5.0 million of Trust Preferred Capital Securities
as a participant in a pooled Trust Preferred Securities offering and
$155,000 of Common Securities to the Company. The Company issued
subordinated debentures aggregating $5.155 million to the Trust. The junior
subordinated debentures are the sole assets of the Trust. The junior
subordinated debentures and the Trust Preferred Capital Securities pay
interest and dividends, respectively, on a quarterly basis. The junior
subordinated debentures and the Trust Preferred Capital Securities bear
interest at a rate of 3-month LIBOR plus 3.60%, mature on March 26, 2032 and
are non-callable for five years and, after that period, the Trust Preferred
Securities may be called at any quarterly interest payment date at par.
Dividends on the Trust Preferred Capital Securities are recorded as interest
expense. Costs associated with the issuance of the securities totaling
$192,000 were capitalized and are being amortized over the estimated life of
the securities.
6. IMPACT OF NEW ACCOUNTING STANDARDS
----------------------------------
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 addresses the financial accounting and reporting
for obligations related to the retirement of tangible long-lived assets and
the related asset retirement costs. SFAS No. 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. Adoption
of this statement is not expected to have a material effect on the Company's
consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
and Disposal of Long-Term Assets". This statement supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," as well as the accounting and reporting of the
Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions".
This statement eliminates the allocation of goodwill to long-lived assets to
be tested for impairment and details both a probability-weighted and
"primary-asset" approach to estimate cash flows in testing for impairment of
long-lived assets. The Company does not expect these provisions to have a
material impact on its consolidated financial statements.
8
In April 2002, the FASB issued SFAS No. 145, "Recession of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds SFAS No. 4, "Reporting Gains and
Losses from Extinguishment of Debt", and an amendment of that Statement,
SFAS NO. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". This Statement also rescinds SFAS No. 44, "Accounting for
Intangible Assets of Motor Carriers". This Statement amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. This
Statement is effective for fiscal years beginning after May 15, 2002.
Adoption of this statement is not expected to have a material effect on the
Company's consolidated financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". This Statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". This Statement is effective for exit or disposal activities
are initiated after December 31, 2002. Adoption of this statement is not
expected to have a material effect on the Company's consolidated financial
statements.
7. RECLASSIFICATION OF CERTAIN LINE ITEMS ON CONSOLIDATED STATEMENT OF EARNINGS
----------------------------------------------------------------------------
Certain line item amounts on the consolidated statement of earnings have
been reclassified from the prior year periods to conform with current
presentation. The reclassification is the result of determining that service
fee income on the Company's purchased accounts receivable should be
classified as other income and not as interest on loans receivable. All
affected amounts and ratios, including loan yield, interest rate spreads and
net interest margin discussed in Form 10-Q have been properly restated to
reflect this reclassification. This change has no impact on current or
previously issued consolidated statements of financial condition or results
of operations, including net earnings and earnings per share.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
----------------------------------------------------------
This report, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere, contains, and other periodic
reports and press releases of the Company may contain, certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1973, as amended, and Section 21E of the Securities
Exchanged Act of 1934, as amended. The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of
1995, and is including this statement for purposes of invoking these safe
harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Company are generally identifiable by the words "believe, intend,
anticipate, estimate, project, plan", or similar expressions. The Company's
ability to predict results or the actual effect of future plans or
strategies is inherently uncertain and actual results may differ from those
predicted. Factors which could have a material adverse effect on the
operations and future prospects of the Company and the subsidiaries include,
but are not limited to changes in interest rates, general economic
conditions, legislative/regulatory changes, monetary and fiscal policies of
the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board, the level of interest rates and the shape of the related
yield curve, the quality or composition of the Company's loan or investment
portfolios, demand for loan products, deposit flows, cost and availability
of borrowings, competition, demand for financial services in the Company's
market area, real estate values in the Company's primary market area, the
possible short-term dilutive effect of potential acquisitions, and tax and
financial accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.
10
FINANCIAL CONDITION
-------------------
SEPTEMBER 30, 2002 COMPARED TO DECEMBER 31, 2001
Total assets of the Company were $146.6 million at September 30, 2002 an
increase of $5.0 million, or 3.5% from $141.6 million at December 31, 2001. The
increase is primarily due to increases in cash and interest-bearing deposits,
investment securities and loans receivable offset by a decline in
mortgage-backed securities, funded primarily by the issuance of trust preferred
capital securities.
Cash and short term investments increased by $1.2 million to $10.2 million at
September 30, 2002 from a combined $9.0 million at December 31, 2001.
Investment securities available for sale increased by $2.7 million to $6.2
million at September 30, 2002. The increase is due to purchases of agency and
corporate debt securities. The increased investment securities purchase activity
in the current period is due, in part, to the Company's issuance of trust
preferred securities during the first quarter of 2002. Gross unrealized gains in
the available for sale portfolio were $137,000 at September 30, 2002 compared to
gross unrealized gains of $91,000 at December 31, 2001.
Trading account securities declined by $43,000 to $540,000 at September 30,
2002. The decrease is attributable to stock sales in the amount of $53,000
offset by a decline in unrealized losses in the portfolio of $10,000.
Mortgage-backed securities available for sale decreased by $382,000 to $2.6
million at September 30, 2002. The decrease is due to prepayments and
amortization of $906,000 offset by purchases of $498,000 and an increase in
unrealized gains of $26,000. Gross unrealized gains in the available for sale
portfolio were $150,000 at September 30, 2002 compared to gross unrealized gains
of $124,000 at December 31, 2001.
The balance of loans receivable at September 30, 2002 amounted to $115.0
million, compared to $114.5 million at December 31, 2001, an increase of
$500,000. The Bank originated both residential and non-residential loans of
$24.4 million and purchased loans totaling $10.5 million during the nine month
period ended September 30, 2002, compared to $18.5 million of originations and
$10.3 million of purchases during the prior year period. The higher loan
origination volume was primarily due to continued mortgage refinance activity as
interest rates have decreased compared to the prior year period. Offsetting
originations and purchases were amortization and prepayments totaling $34.2
million and $26.4 million for the nine month periods ended September 30, 2002
and 2001.
The allowance for loan losses totaled $722,000, a decrease of $44,000 from the
balance at December 31, 2001, due to net charge-offs for the period. The Bank's
allowance for loan losses to net loans receivable was .57% at September 30,
2002,
11
compared to .61% at December 31, 2001. Non-performing loans decreased to
$992,000 or .68% of total assets at September 30, 2002, compared to $1.4
million, or 1.02% of total assets at December 31, 2001. The ratio of allowance
for loan losses to non-performing loans was 70.7% at September 30, 2002 compared
to 58.7% at December 31, 2001.
Deposits increased $3.4 million, to $105.6 million at September 30, 2002. The
increase is due to a $5.0 million increase in non-certificate accounts offset by
a $1.6 million decrease in certificates of deposit. At September 30, 2002, the
Bank's passbook, checking and money market accounts comprised $35.0 million, or
33% of deposits, compared to $30.0 million, or 29% of deposits at December 31,
2001. After consideration of interest of $2.2 million credited to accounts
during the nine months ended September 30, 2002, actual cash inflows were $1.2
million.
Borrowed money, which consists of FHLB of Indianapolis advances, decreased
during the period by $3.6 million to $20.4 million at September 30, 2002.
Currently, there is $5.0 million of FHLB advances maturing over the next twelve
month period at a weighted average rate of 5.34%.
In March 2002, the Company completed an issuance of $5.0 million of trust
preferred securities. The securities were issued by a special purpose business
trust owned by the Company and sold to a pooled investment vehicle. The
securities have a maturity of 30 years and the holders are entitled to receive
cumulative cash distributions at a variable annual rate, reset quarterly, equal
to three month LIBOR plus 3.60%. In general, the securities will not be
redeemable for five years except in the event of certain special redemption
events.
Total stockholders' equity increased by $35,000 to $11.8 million at September
30, 2002 from the balance at December 31, 2001. This increase was due to net
income of $766,000, an increase in net unrealized gain on securities available
for sale in the amount of $44,000 and normal amortization of ESOP benefits of
$44,000 offset by the payment of dividends on common stock of $145,000 and
repurchase of common stock in the amount of $674,000. The Company is no longer
subject to regulatory limitations on stock repurchases and intends to continue
modest repurchases of stock, subject to market conditions.
COMPARISON OF OPERATING RESULTS FOR THE QUARTERS ENDED SEPTEMBER 30, 2002 AND
2001
NET INCOME
The Company's net income for the three months ended September 30, 2002 was
$276,000, an increase of $112,000 compared to the three months ended September
30, 2001. This increase was due to an increase in net interest income of
$372,000 offset by an increase in the provision for loan losses of $5,000, a
decrease in non-
12
interest income of $24,000, an increase in non-interest expense of $153,000 and
an increase in income taxes of $78,000.
INTEREST INCOME
Total interest income decreased $69,000 or 3.0%, for the three months ended
September 30, 2002 compared to the prior year as a result of a 66 basis point
decline in the average yield, offset by an $8.4 million increase in the average
volume of interest earning assets. For the three months ended September 30, 2002
and 2001, the Company's average yield on interest earning assets was 6.67% and
7.32%, respectively, while the Company's average interest earning assets were
$135.2 million and $126.8 million. The decrease in yield is primarily
attributable to loans receivable resulting from both current originations at
lower interest rates and prepayments of high interest rate loans due to
declining interest rates. The higher volume is primarily due to interest-bearing
deposits that remained higher than normal due to the trust preferred securities
issuance that occurred at the end of the first quarter as well as strong deposit
flows during the second half of 2001. Interest income from loans decreased
$76,000 as a result of a 32 basis point decline to 7.17% in the average yield on
loans receivable.
INTEREST EXPENSE.
Total interest expense decreased $403,000, or 26.1% to $1.1 million for the
third quarter of 2002, due to a 155 basis point decrease in the average cost of
interest-bearing liabilities compared to the prior year quarter, offset by an
$8.8 million increase in average interest-bearing liabilities. For the three
months ended September 30, 2002 and 2001, the Company's average cost on
interest-bearing liabilities was 3.44% and 4.99%, respectively, while average
interest-bearing liabilities were $132.4 million and $123.6 million.
Interest on deposits decreased by $396,000 to $773,000, as a result of a 187
basis point decrease in average cost offset in part by an increase of $8.0
million in the average balance of deposits. The decrease in the average cost of
deposits is primarily due to the downward repricing of maturing certificates of
deposit during the last twelve months, as well as reductions in interest rates
paid on the Bank's non-certificate deposit products. The Bank expects the
average cost of deposits to trend slightly lower throughout the remainder of
2002.
Interest on borrowings, including the recently issued trust preferred
securities, decreased $6,000 to $367,000, as a result of a 25 basis point
decrease in average cost offset by a $788,000 increase in the average balance.
The decrease in the average rates has been due to maturing higher rate FHLB of
Indianapolis advances that have been refinanced with lower coupons or paid off.
While the average balance of the recently issued trust preferred securities is
at $5.0 million, the average balance of FHLB of Indianapolis advances declined
by $4.2 million. Slower growth in loans
13
receivable balances due to higher prepayments, as well as increased deposit
balances has enabled the Bank to repay maturing FHLB advances as they matured.
PROVISION FOR LOAN LOSSES.
The determination of the allowance for loan losses involves material estimates
that are susceptible to significant change in the near term. The allowance for
loan losses is maintained at a level deemed adequate to provide for probable
accrued losses through charges to operating expense. The allowance is based upon
past loss experience and other factors, which, in management's judgment, deserve
current recognition in estimating losses. Such other factors considered by
management include growth and composition of the loan portfolio, the
relationship of the allowance for losses to outstanding loans, and economic
conditions.
A provision for loan losses of $56,000 was recorded during the three months
ended September 30, 2002 as compared to $51,000 for the 2001 three month period.
There were no changes in estimation method or assumptions that impacted the
provision for loan loss during the quarter. Net charge-offs during the 2002
quarter were $10,000 compared to $2,000 in net loan recoveries for the three
months ended September 30, 2001. Management believes that the total general loan
loss allowance of $652,000 on total net loans of $115.0 million at September 30,
2002, is adequate given the area economic conditions, the level of impaired and
non-performing loans, and the composition of the loan portfolio. At September
30, 2002, the Company was aware of no regulatory directives or suggestions that
the Company make additional provisions for losses on loans.
The Bank will continue to review its allowance for probable accrued loan losses
and make future provisions as economic and regulatory conditions dictate.
Although the Bank maintains its allowance for loan losses at a level that it
considers adequate to provide for probable accrued losses, there can be no
assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods.
NON-INTEREST INCOME
Non-interest income increased to $296,000 in the current quarter, compared to
$282,000 reported in last year's third quarter. The increase in non-interest
income is primarily due to a $38,000 increase in service fee income related to
the Company's program to purchase and manage the accounts receivable of
credit-worthy merchants, increases of $13,000 in deposit related fees, $9,000 in
loan related fees and service charges, $6,000 in commission income on the sale
of annuity products and $12,000 in other miscellaneous income. Offsetting these
increases in non-interest income was a $60,000 decline in rental income at the
Dyer branch office location which was previously leased to a third party. The
Company has begun to remodel this space to use, in part, to expand office
operations, and to lease the remaining space to an unrelated tenant. In
addition, the Company also incurred a loss of $18,000 in the
14
current quarter compared to a loss of $9,000 in the prior year's quarter,
related to an investment in a low-income housing joint venture. As a result of
this investment, the Company recorded an offsetting of $35,000 in federal income
tax credits during both periods which resulted in the reduction of the Company's
effective income tax rate.
NON-INTEREST EXPENSE.
The Company's non-interest expense increased $153,000 to $968,000 for the three
months ended September 30, 2002 compared to $815,000 for the three months ended
September 30, 2001. Compensation and benefits expense increased by $71,000 in
the current quarter due to both normal compensation increases and higher pension
benefit costs, while data processing costs increased by $18,000 due in part to
mortgage document imaging as well as increased transaction activity. Advertising
costs also increased by $21,000 as a result of increased product and promotional
efforts. In addition, other operating expenses increased by $62,000 from the
prior year's quarter as a result of comparable increases in insurance, office
supplies, professional fees and seminars and meeting expenses. These increases
were offset by a decline of $19,000 in occupancy and equipment costs, primarily
reduced depreciation and maintenance charges.
INCOME TAXES.
For the three months ended September 30, 2002, income tax expense totaled
$109,000, or an effective tax rate of 28.3 %, compared to $31,000, or an
effective tax rate of 15.9%, for the three months ended September 30, 2001. Both
periods were positively impacted by the recognition of approximately $35,000 in
low-income housing tax credits provided through an investment in a limited
partnership organized to build, own and operate a 56 unit low-income housing
apartment complex.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND
2001
NET INCOME
The Company's net income for the nine months ended September 30, 2002 was
$766,000, an increase of $184,000 compared to the nine months ended September
30, 2001. This increase was due to an increase in net interest income of
$891,000, offset by an increase in the provision for loan losses of $218,000, a
decrease in non-interest income of $181,000, an increase in non-interest expense
of $190,000 and an increase in income taxes of $118,000.
15
INTEREST INCOME
Total interest income decreased $459,000 or 6.4%, for the nine month period
ended September 30, 2002 compared to the nine months ended September 30, 2001.
Of this decrease, $423,000 is attributable to interest earned on loans
receivable. The Bank's average yield on loans receivable declined by 52 basis
points over the prior year period while the average balance of loans receivable
increased a mere $500,000. The decline in the average rate, as well as the
minimal increase in average balance, were due to the impact of declining
interest rates and the downward repricing of the Company's loan portfolio since
last year, as lower interest rates increased loan prepayments, and driven down
new origination rates. Interest income on mortgage-backed securities decreased
by $33,000 due to a decline of $600,000 in the average balance primarily due to
normal prepayments offset by a 18 basis point increase in average yield. The
$28,000 increase in interest income on investment securities is due to a $1.3
million increase in the average balance to $6.0 million, primarily from
purchases occurring during 2002, offset by a 26 basis point decline in average
yield. The $13,000 decrease in interest income on interest-bearing deposits for
the nine months ended September 30, 2002 was due to a decline in the average
yield of 273 basis points as short term interest rates declined significantly
between the periods, offset by a $5.1 million increase in the average balance.
This increase in balances is due to the Company's issuance of $5.0 million in
trust preferred securities as well as increased deposit flows during the period
and higher than normal loan prepayments.
INTEREST EXPENSE.
Total interest expense on interest-bearing liabilities decreased $1.3 million,
or 26.3% for the nine months ended September 30, 2002 compared to the prior year
period. For the nine months ended September 30, 2002 and 2001, the Company's
average interest bearing liabilities were $130.9 million and $124.5 million,
respectively, while the average cost on interest bearing liabilities was 3.65%
and 5.20%. Interest expense on deposits decreased $1.1 million, primarily due to
a 181 basis point decrease in the average cost of deposits offset by an $8.1
million increase in the balance of average deposits. The decrease in deposit
costs were primarily due to the downward repricing of certificates of deposit
and an increase in lower cost non-certificate deposits. Interest on borrowings,
including the recently issued trust preferred securities, decreased $161,000,
reflecting a $1.7 million decrease in the average balance of borrowed funds,
primarily advances from the FHLB of Indianapolis, and a 44 basis point decline
in average cost.
PROVISION FOR LOAN LOSSES.
The Bank made a $331,000 loan loss provision for the nine months ended September
30, 2002 compared to $113,000 for the nine months ended September 30, 2001. The
increased provision relates to the Bank's charge-off during the 2002 second
quarter of $370,000 of medical lease loans.
16
The Bank will continue to review its allowance for probable accrued loan losses
and make future provisions as economic and regulatory conditions dictate.
Although the Bank maintains its allowance for loan losses at a level that it
considers adequate to provide for probable accrued losses, there can be no
assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required in future periods.
NON-INTEREST INCOME
The Company's non-interest income decreased $107,000 to $883,000 for the nine
months ended September 30, 2002 compared to $990,000 for the nine months ended
September 30, 2001, primarily reflecting decreased gains on trading account
securities. Both realized and unrealized gains on trading account securities was
$32,000 for the nine months ended September 30, 2002, compared to $137,000 for
the nine months ended September 30, 2001, a decrease of $105,000. Trading
account securities sales were $75,000 during the current period, resulting in
realized gains of $22,000, compared to $420,000 in sales during the prior nine
month period, resulting in realized gains of $67,000. In addition, unrealized
gains on market adjustments of these securities was $10,000 for the nine months
ended September 30, 2002 compared to $70,000 in the prior year period.
During the current nine month period, the Company incurred a loss on the sale of
real estate owned properties in the amount of $28,000, which did not occur in
the prior year period. The Company also recorded reduced commission income on
the sale of financial products of $27,000 and reduced rental income of $71,000
due to the relocation of a major tenant at the Dyer branch office. The Company
is currently remodeling the vacated rental area in anticipation of utilizing a
portion of this space and renting out the remainder. These declines were offset
by increased deposit related fee income of $31,000 due to increased minimum
balance and ATM fee charges and increased service fee income of $73,000
resulting from the Company's expansion in the purchase and management of
accounts receivable of credit-worthy merchants. At September 30, 2002, the
balance of purchased accounts receivable stood at $2.0 million compared to
$900,000 at September 30, 2001 and $1.3 million at December 31, 2001. In
addition, the Company also recorded a loss of $66,000 during the nine month
period ended September 30, 2002 as compared to a loss of $64,000 reported in the
year ago period, related to an investment in a low-income housing joint venture.
As a result of this investment, the Company recorded an offsetting $105,000 in
federal income tax credits during both periods which resulted in the reduction
of the Company's effective income tax rates.
NON-INTEREST EXPENSE.
The Company's non-interest expense increased $190,000 to $2.7 million for the
nine months ended September 30, 2002 compared to the same period a year ago. The
increase resulted primarily from increased staffing costs of $127,000, due to
normal
17
salary and benefit increases, primarily pension benefit costs. Advertising costs
increased by $30,000 due to increased spending related to mortgage and deposit
product promotion while data processing costs increased by $28,000 due to
increased transaction activity. In addition, other operating expenses increased
by $39,000, due primarily to increased professional fees and higher insurance
costs. These increases were offset by a reduction in occupancy and equipment
expenses of $35,000, primarily in depreciation and maintenance charges.
INCOME TAXES.
The Company recorded a provision for income taxes of $273,000 for the nine
months ended September 30, 2002, or an effective income tax rate of 26.3%,
compared to $155,000 for the nine months ended September 30, 2001, or an
effective income tax rate of 21.0%. Both periods were positively impacted by the
recognition of low-income housing tax credits of $105,000 provided through an
investment in a limited partnership organized to build, own and operate a 56
until low-income housing apartment complex.
REGULATION AND SUPERVISION
--------------------------
As a federally chartered savings bank, the Bank's deposits are insured up to the
applicable limits by the Federal Deposits Insurance Corporation ("FDIC"). The
Bank is a member of the Federal Home Loan Bank ("FHLB") of Indianapolis, which
is one of the twelve regional banks for federally insured savings institutions
comprising the FHLB system. The Bank is regulated by the Office of Thrift
Supervision ("OTS") and the FDIC. The Bank is further regulated by the Board of
Governors of the Federal Reserve System as to reserves required to be maintained
against deposits and certain other matters. Such regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the insurance fund and
depositors. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities. Any change in such regulation, whether by the OTS, the FDIC or
Congress could have a material impact on the Company and its operations.
CAPITAL STANDARDS
Savings associations must meet three capital requirements: core and tangible
capital to total assets ratios as well as a regulatory capital to total
risk-weighted assets ratio.
CORE CAPITAL REQUIREMENT
The core capital requirement, or the required "leverage limit", currently
requires a savings institution to maintain core capital of not less than 3% of
adjusted total assets. For the Bank, core capital generally includes common
stockholders' equity (including
18
retained earnings), and minority interests in the equity accounts of fully
consolidated subsidiaries, less intangibles other than certain servicing rights.
Investments in and advances to subsidiaries engaged in activities not
permissible for national banks are also required to be deducted in computing
core total capital.
TANGIBLE CAPITAL REQUIREMENT
Under OTS regulation, savings institutions are required to meet a tangible
capital requirement of 1.5% of adjusted total assets. Tangible capital is
defined as core capital less any intangible assets, plus purchased
mortgage-servicing rights in an amount includable in core capital.
RISK-BASED CAPITAL REQUIREMENT
The risk-based capital requirement provides that savings institutions maintain
total capital equal to not less than 8% of total risk-weighted assets. For
purposes of the risk-based capital computation, total capital is defined as core
capital, as defined above, plus supplementary capital, primarily general loan
loss reserves (limited to a maximum of 1.25% of total risk-weighted assets.)
Supplementary capital included in total capital cannot exceed 100% of core
capital.
19
CAPITAL REQUIREMENT
At September 30, 2002, the Bank was in compliance with all of its capital
requirements as follows:
SEPTEMBER 30, 2002 DECEMBER 31, 2001
------------------------ ------------------------
PERCENT PERCENT
AMOUNT OF ASSETS AMOUNT OF ASSETS
------------ ------- ------------ -------
Stockholder's equity of the Bank $ 10,884,084 7.64% $ 9,929,945 7.10%
------------ ------- ------------ -------
Tangible capital $ 10,722,876 7.53% $ 9,801,506 7.01%
Tangible capital requirement 2,136,000 1.50 2,097,000 1.50
------------ ------- ------------ -------
Excess $ 8,586,876 6.03% $ 7,704,506 5.51%
============ ======= ============ =======
Core capital $ 10,722,876 7.53% $ 9,802,506 7.01%
Core capital requirement 4,272,000 3.00 4,193,000 3.00
------------ ------- ------------ -------
Excess $ 6,450,876 4.53% $ 5,609,506 4.01%
============ ======= ============ =======
Core and supplementary capital $ 11,360,149 13.47% $ 10,482,971 12.60%
Risk-based capital requirement 6,745,000 8.00 6,654,000 8.00
------------ ------- ------------ -------
Excess $ 4,615,149 5.47% $ 3,828,971 4.60%
============ ======= ============ =======
Total Bank assets $142,550,000 $139,903,000
Adjusted total Bank assets $142,389,000 $139,774,000
Total risk-weighted assets $ 84,310,000 $ 83,176,000
A reconciliation of consolidated stockholders' equity of the Bank for financial
reporting purposes to capital available to the Bank to meet regulatory capital
requirements is as follows:
September 30, 2002 December 31, 2001
------------ ------------
Stockholder's equity of the Bank $ 10,884,084 9,929,945
Regulatory capital adjustment
for available for sale securities (161,208) (128,439)
------------ ------------
Tangible and core capital 10,722,876 9,801,506
General loan loss reserves 652,273 696,465
Direct equity investments (15,000) (15,000)
------------ ------------
Core and supplementary capital $ 11,360,149 10,482,971
============ ============
20
NON-PERFORMING ASSETS
---------------------
The following table sets forth the amounts and categories of non-performing
assets in the Company's portfolio. Loans are reviewed monthly and any loan whose
collectivity is doubtful is placed on non-accrual status. Loans are placed on
non-accrual status when principal and interest is 90 days or more past due,
unless, in the judgment of management, the loan is well collateralized and in
the process of collection. Interest accrued and unpaid at the time a loan is
placed on non-accrual status is charged against interest income. Subsequent
payments are either applied to the outstanding principal balance or recorded as
interest income, depending on the assessment of the ultimate collectivity of the
loan. Restructured loans include troubled debt restructuring (which involved
forgiving a portion of interest principal on any loans or making loans at a rate
materially less than the market). As of both of the dates below, the Company had
no accruing loans which were 90 days or more delinquent.
September 30, December 31,
2002 2001
-------------------- --------------------
(Dollars in thousands) (Dollars in thousands)
Non- accruing loans:
One to four family 477 714
Multi- family --- ---
Non- residential 470 463
Commercial Business --- 66
Construction --- ---
Consumer 45 13
--------- ---------
Total 992 1256
--------- ---------
Foreclosed assets:
One to four family --- 191
Multi-family --- ---
Non-residential --- ---
Construction --- ---
Consumer --- ---
--------- ---------
Total 0 191
--------- ---------
Total non- performing assets 992 1447
========= =========
Total as a percentage of total assets .68% 1.02%
21
For the nine months period ended September 30, 2002, gross interest which would
have been recorded had the non-accruing loans been current in accordance with
their original terms amounted to $48,000.
In addition to the non-performing assets set forth in the table above, as of
September 30, 2002, there were no other loans with respect to which known
information about the possible credit problems of the borrowers or the cash
flows of the security properties have caused management to have concerns as to
the ability of the borrowers to comply with present loan repayment terms and
which may result in the future inclusion of such items in the non-performing
asset categories.
Management has considered the Company's non-performing and "of concern" assets
in establishing its allowance for loan losses.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's principal sources of funds are cash dividends paid by the Bank and
liquidity generated by investments or borrowings. The Company's principal uses
of funds are cash dividends to shareholders as well as investment purchases and
stock repurchases with excess cash flow. During the nine months ended September
30, 2002, the Company repurchased 57,400 shares of its common stock at an
average price of $11.74 per share, for a total of $674,000.
The Bank's principal sources of funds are deposits, advances from the FHLB of
Indianapolis, principal repayments on loans and mortgage-backed securities,
proceeds from the sale or maturity of investment securities and funds provided
by operations. While scheduled loan and mortgage-backed securities amortization
and maturing investment securities are a relatively predictable source of funds,
deposit flows and loan and mortgage-backed securities prepayments are greatly
influenced by economic conditions, the general level of interest rates and
competition. The Bank utilizes particular sources of funds based on comparative
costs and availability. The Bank generally manages the pricing of its deposits
to maintain a steady deposit balance, but has from time to time decided not to
pay rates on deposits as high as its competition and to supplement deposits with
longer term and/or less expensive alternative sources of funds.
During the nine months ended September 30, 2002, the Bank originated and
purchased loans totaling $34.9 million compared with $28.7 million during the
same period a year ago. At September 30, 2002, the Bank had outstanding
commitments to originate loans of $3.5 million and unused lines of credit
totaling $4.3 million. At September 30, 2002, the Company believes it has
sufficient cash to fund its outstanding commitments or will be able to obtain
the necessary funds from outside sources to meet its cash requirements.
22
DISCLOSURE AND INTERNAL CONTROLS
--------------------------------
The Company has adopted interim disclosure controls and procedures designed to
facilitate the Company's financial reporting. The interim disclosure controls
currently consist of communications between the Chief Executive Officer and each
department head to identify any new transactions, events, trends or
contingencies which may be material to the Company's operations. The Company has
evaluated the effectiveness of these interim disclosure controls within the 90
days of the filing of this report.
The Company maintains internal controls and has evaluated such controls within
90 days of the filing of this report. There have not been any significant
changes in such internal controls subsequent to the date of their evaluation.
23
RECENT DEVELOPMENTS
- -------------------
On October 23, 2002 the Company declared a cash dividend of $.06 per share,
payable on November 22, 2002 to shareholders of record on November 8, 2002.
PART 11 - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
-----------------
From time to time, the Bank is a party to legal proceedings in the
ordinary course of business, wherein it enforces its security
interest. The Company and the Bank are not engaged in any legal
proceedings of a material nature at the present time.
Item 2. CHANGES IN SECURITIES
---------------------
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
Item 5. OTHER INFORMATION
-----------------
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Computation of earnings per share (Exhibit 11 filed herewith)
(b) The Company filed a Form 8-K dated July 24, 2002 attaching
its press release announcing the results of operations for
the quarter ended June 30, 2002.
(c) The Company filed a Form 8-K dated August 13, 2002 attaching
its press release announcing the completion of stock
repurchase program and intention to initiate stock repurchase
program
24
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMB FINANCIAL CORP.
-------------------
Registrant
Date: October 24, 2002
By: Clement B. Knapp, Jr.
---------------------------------------------
President and Chief Executive Officer
(DULY AUTHORIZED REPRESENTATIVE)
By: Daniel T. Poludniak
---------------------------------------------
Vice President and Chief Financial Officer
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
25
CERTIFICATION FOR QUARTERLY REPORTS ON FORM 10-Q
------------------------------------------------
I, Clement B. Knapp Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of AMB FINANCIAL CORP.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: October 24, 2002
-------------------------------------
Clement B. Knapp, Jr.
President and Chief Executive Officer
26
CERTIFICATION FOR QUARTERLY REPORTS ON FORM 10-Q
------------------------------------------------
I, Daniel T. Poludniak, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AMB FINANCIAL CORP.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: October 24, 2002
-----------------------------------
Daniel T. Poludniak
Vice President and Chief Financial
Officer
27
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. PAGE NO.
- ----------- --------
11 Statement re: Computation of Earnings Per Share 29
99.1 Section 906 Certification for CEO 30
99.1 Section 906 Certification for CFO 30
28