-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LyShFwkbijYhdkjw+NISwqVubIxtGvKwpd5mpLjbALTTvK5FBK9aLVUeA9wphbGX i+JhcVLJQ9WjxSg/gtD1Lg== 0001000301-00-000010.txt : 20000516 0001000301-00-000010.hdr.sgml : 20000516 ACCESSION NUMBER: 0001000301-00-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMBANC HOLDING CO INC CENTRAL INDEX KEY: 0001000301 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 141783770 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27036 FILM NUMBER: 631692 BUSINESS ADDRESS: STREET 1: 11 DIVISION ST CITY: AMSTERDAM STATE: NY ZIP: 12010 BUSINESS PHONE: 5188427200 MAIL ADDRESS: STREET 1: PO BOX 669 CITY: AMSTERDAM STATE: NY ZIP: 12010 10-Q 1 FOR THE THREE MONTHS ENDED 3/31/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934. For the quarterly period ended March 31, 2000 -------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from to . ----------- ----------- Commission File Number: 0-27036 ------- Ambanc Holding Co., Inc. ----------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 14-1783770 - ------------------------------------- -------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11 Division Street, Amsterdam, New York 12010-4303 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (518)842-7200 ----------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest practicable date. Class Outstanding at May 12, 2000 - ----------------------------- ----------------------------------- Common Stock, $.01 Par Value 4,893,648 AMBANC HOLDING CO., INC. AND SUBSIDIARIES FORM 10-Q March 31, 1999 Table of Contents Part I. FINANCIAL INFORMATION Item 1. Consolidated Interim Financial Statements (unaudited): Consolidated Interim Statements of Financial Condition at March 31, 2000 and December 31, 1999........................... 3 Consolidated Interim Statements of Income for the three months ended March 31, 2000 and 1999.................................. 4 Consolidated Interim Statements of Cash Flows for the three months ended March 31, 2000 and 1999........................... 5 Notes to Unaudited Interim Consolidated Financial Statements... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................8 Item 3. Quantitative and Qualitative Disclosures About Market Risk.....20 Part II. OTHER INFORMATION..................................................20 Item 6. Exhibits and Reports on Form 8-K...................................20 SIGNATURES....................................................................21 3 Part I. Financial Information Item 1. Financial Statements AMBANC HOLDING CO., INC. AND SUBSIDIARIES Consolidated Statements of Financial Condition (unaudited) (dollars in thousands, except per share amounts) March 31, December 31, 2000 1999 Assets ---------- ---------- Cash and due from banks ............................... $ 11,488 $ 26,380 Interest-bearing deposits ............................. 1,572 3,231 ---------- ---------- Cash and cash equivalents ........................ 13,060 29,611 Securities available for sale, at fair value .......... 208,221 212,145 Federal Home Loan Bank of New York stock, at cost ..... 8,748 8,748 Loans receivable ...................................... 472,775 470,986 Allowance for loan losses ........................ (5,506) (5,509) ---------- ---------- Loans receivable, net ............................ 467,269 465,477 Accrued interest receivable ........................... 4,491 4,411 Premises and equipment, net ........................... 5,602 5,593 Real estate owned and repossessed assets .............. 353 322 Goodwill .............................................. 7,257 7,390 Other assets .......................................... 6,289 6,975 ---------- ---------- Total assets ..................................... $ 721,290 $ 740,672 ========== ========== Liabilities and Shareholders' Equity Liabilities: Deposits ........................................... $ 464,297 $ 450,134 Federal Home Loan Bank short-term borrowings ....... 51,300 71,200 Federal Home Loan Bank long-term advances .......... 35,686 20,965 Securities sold under agreements to repurchase ..... 87,740 112,740 Advances from borrowers for taxes and insurance .... 2,728 3,641 Accrued interest payable ........................... 1,221 1,508 Accrued expenses and other liabilities ............. 2,873 4,891 ---------- ---------- Total liabilities ................................ 645,845 665,079 ---------- ---------- Shareholders' equity: Preferred stock $.01 par value. Authorized 5,000,000 shares; none issued at March 31, 2000 and December 31, 1999 ................................. -- -- Common stock $.01 par value. Authorized 15,000,000 shares; 5,432,245 issued at March 31, 2000 and December 31, 1999 ............................. 54 54 Additional paid-in capital ......................... 63,355 63,314 Retained earnings,substantially restricted ......... 29,317 28,879 Treasury stock, at cost (522,773 shares at March 31, 2000 and 465,155 shares at December 31, 1999) ... (8,237) (7,486) Unallocated common stock held by ESOP .............. (2,240) (2,353) Unearned RRP shares ................................ (489) (443) Accumulated other comprehensive loss ............... (6,315) (6,372) ---------- ---------- Total shareholders' equity ....................... 75,445 75,593 ---------- ---------- Total liabilities and shareholders' equity ....... $ 721,290 $ 740,672 ========== ========== See accompanying notes to unaudited interim consolidated financial statements. 3 AMBANC HOLDING CO., INC. AND SUBSIDIARIES Consolidated Interim Statements of Income (unaudited) (dollars in thousands, except per share amounts) Three Months Ended March 31, 2000 1999 Interest and dividend income: ------- ------- Loans receivable ..................................... $ 8,697 $ 7,781 Securities available for sale ........................ 3,667 3,792 Federal funds sold and interest-bearing deposits ..... 33 272 Federal Home Loan Bank stock ......................... 147 119 ------- ------- Total interest and dividend income ................. 12,544 11,964 ------- ------- Interest expense: Deposits ............................................. 4,364 4,212 Borrowings ........................................... 2,664 2,359 ------- ------- Total interest expense ............................. 7,028 6,571 ------- ------- Net interest income ................................ 5,516 5,393 Provision for loan losses ............................... 120 255 ------- ------- Net interest income after provision for loan losses 5,396 5,138 ------- ------- Non-interest income: Service charges on deposit accounts .................. 335 333 Other ................................................ 154 91 ------- ------- Total non-interest income .......................... 489 424 ------- ------- Non-interest expenses: Salaries, wages and benefits ......................... 2,102 1,838 Occupancy and equipment .............................. 598 629 Data processing ...................................... 387 235 Real estate owned and repossessed assets expenses, net 3 26 Professional fees .................................... 90 88 Amortization of goodwill ............................. 133 133 Other ................................................ 865 797 ------- ------- Total non-interest expenses ........................ 4,178 3,746 ------- ------- Income before taxes .................................... 1,707 1,816 Income tax expense ...................................... 723 781 ------- ------- Net income ......................................... $ 984 $ 1,035 ======= ======= Basic earnings per share $ 0.21 $ 0.21 ======= ======= Diluted earnings per share $ 0.21 $ 0.20 ======= ======= See accompanying notes to unaudited interim consolidated financial statements. 4 AMBANC HOLDING CO., INC. AND SUBSIDIARIES Consolidated Interim Statements of Cash Flows (unaudited) (dollars in thousands) Three months ended March 31, 2000 1999 -------- ------- Increase (decrease) in cash and cash equivalents: Cash flows from operating activities: Net income ........................................ $ 984 $ 1,035 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment .............................. 223 238 Amortization of goodwill ........................ 133 133 Net amortization of premium on securities ....... 73 301 Provision for loan losses ....................... 120 255 Provision for losses and writedowns on real estate owned and repossessed assets ........ 3 1 Net (gains) losses on sales of real estate owned and repossessed assets ..................... (12) 1 ESOP compensation expense ....................... 154 188 RRP expense ..................................... 121 79 Decrease (increase) in accrued interest receivable and other assets ................ 569 (98) (Decrease) increase in accrued interest payable, accrued expenses and and other liabilities ...................... (2,305) 2,334 -------- ------- Net cash provided by operating activities ........... 63 4,467 Cash flows from investing activities: Proceeds from sales and redemptions of securities available for sale .............. -- 7,000 Purchases of securities available for sale ...... (77) (43,140) Proceeds from principal paydowns and maturities of securities available for sale 4,022 24,751 Net (increase) decrease in loans made to customers .............................. (2,017) 673 Purchases of premises and equipment ............. (232) (281) Proceeds from sales of real estate owned and repossessed assets ......................... 83 125 -------- ------- Net cash provided by (used in) investing activities ........... 1,779 (10,872) (continued) 5 AMBANC HOLDING CO., INC. AND SUBSIDIARIES Consolidated Interim Statements of Cash Flows (unaudited) (continued) (dollars in thousands) Three months ended March 31, 2000 1999 -------- ------- Cash flows from financing activities: Net increase (decrease) in deposits .............. $ 14,163 $ (2,785) Net decrease in FHLB short-term borrowings ....... (19,900) -- Proceeds from FHLB long-term advances ............ 15,000 -- Repayments of FHLB long-term advances ............ (279) (111) Repayments of repurchase agreements .............. (25,000) -- Decrease in advances from borrowers for taxes and insurance .................... (913) (504) Purchase of treasury stock ....................... (922) (1,557) Excercises of stock options ...................... -- 34 Dividends paid ................................... (542) (374) -------- ------- Net cash used in financing activities ...... (18,393) (5,297) Net decrease in cash and cash equivalents ............ (16,551) (11,702) Cash and cash equivalents at beginning of period ..... 29,611 42,815 -------- ------- Cash and cash equivalents at end of period ........... $ 13,060 $ 31,113 ======== ======= Supplemental disclosures of cash flow information - cash paid during the period for: Interest ............................................. $ 7,315 $ 6,621 ======== ======= Income taxes ......................................... -- -- ======== ======= Noncash investing and financing activities: Net transfer of loans to real estate owned and repossessed assets .......................... $ 105 $ 50 ======== ======= See accompanying notes to unaudited interim consolidated financial statements. 6 NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (1) In management's opinion, the financial information included herein, which is unaudited, reflects all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the financial information as of and for the three month periods ended March 31, 2000 and 1999, in conformity with generally accepted accounting principles. These consolidated financial statements should be read in conjunction with Ambanc Holding Co., Inc.'s ("the Company" herein) 1999 Annual Report on Form 10-K. The results of operations for the 2000 interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year ended December 31, 2000. (2) Amounts in the prior periods' unaudited interim consolidated financial statements are reclassified whenever necessary to conform to current periods' presentation. (3) Earnings per Share Basic earnings per share (EPS) excludes dilution and is calculated by dividing net income available to common shareholders by the weighted average number of shares outstanding during the period. Unallocated ESOP shares are not considered outstanding for purposes of computing EPS. Shares of restricted stock (RRP shares) are considered outstanding common shares and included in the computation of basic EPS when they become fully vested. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as the Company's stock options and unvested RRP shares) were exercised into common stock or resulted in the issuance or vesting of common stock. The calculation of basic EPS and diluted EPS is as follows: Net Weighted Income Average Per Share (in thousands) Shares Amount For the quarter ended March 31, 2000 ------------ ---------- --------- Basic EPS Net income available to common shareholders $ 984 4,669,625 $0.21 ====== ===== Effect of dilutive securities: Stock options 5,651 Unvested RRP shares 16,700 --------- Diluted EPS Net income available to common shareholders plus assumed conversions $ 984 4,691,976 $0.21 ====== ========= ===== For the quarter ended March 31, 1999 Basic EPS Net income available to common shareholders $1,035 5,009,031 $0.21 ====== ===== Effect of dilutive securities: Stock options 31,603 Unvested RRP shares 20,201 --------- Diluted EPS Net income available to common shareholders plus assumed conversions $1,035 5,060,835 $0.20 ====== ========= ===== 7 (4) Comprehensive Income Comprehensive income represents the sum of net income and items of other comprehensive income or loss, which are reported directly in shareholders' equity, net of tax, such as the change in the net unrealized gain or loss on securities available for sale. Accumulated other comprehensive income or loss, which is included in shareholders' equity, net of tax, represents the net unrealized gain or loss on securities available for sale. Comprehensive income for the three-month periods ended March 31, 2000 and 1999 was $1.0 million and $514,000, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Ambanc Holding Co., Inc. ("Ambanc" or the "Company") is a unitary savings and loan holding company. Ambanc was formed as a Delaware Corporation to act as the holding company for the former Amsterdam Savings Bank, FSB (now known as Mohawk Community Bank) upon the completion of Amsterdam Savings Bank's conversion from the mutual to stock form on December 26, 1995 (the "Conversion"). Mohawk Community Bank's (the "Bank"'s) results of operations are primarily dependent on its net interest income, which is the difference between the interest and dividend income earned on its assets, primarily loans and securities, and the interest expense on its liabilities, primarily deposits and borrowings. Net interest income may be affected significantly by general economic and competitive conditions and policies of regulatory agencies, particularly those with respect to market interest rates. The results of operations are also significantly influenced by the level of non-interest expenses, such as employee salaries and benefits, non-interest income, such as fees on deposit-related services, the provision for loan losses, and income taxes. 8 The Bank has been, and intends to continue to be, a community-oriented financial institution offering a variety of financial services. Management's strategy has been to try to achieve a high loan to asset ratio with emphasis on originating traditional one- to four-family residential mortgage and home equity loans in its primary market area. At March 31, 2000, the Bank's loans receivable, net, to assets ratio was 64.8%, up from 62.8% at December 31, 1999. The Bank's portfolio of one- to four-family residential mortgage and home equity loans was 85.2% of total loans at March 31, 2000. Forward-Looking Statements When used in this Form 10-Q, in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected, including, but not limited to, changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake - and specifically disclaims any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Financial Condition Comparison of Financial Condition at March 31, 2000 and December 31, 1999. Total assets decreased by $19.4 million, or 2.6%, to $721.3 million at March 31, 2000 from $740.7 million at December 31, 1999, primarily due to decreases in cash and cash equivalents and securities available for sale of $16.6 million and $3.9 million, respectively, partially offset by an increase in loans receivable, net of $1.8 million. Cash and cash equivalents decreased by $16.6 million, or 55.9%, to $13.1 million at March 31, 2000 from $29.6 million at December 31, 1999. This decrease was primarily due to a decrease in cash and due from banks of $14.9 million, or 56.5%, from $26.4 million at December 31, 1999 to $11.5 million at March 31, 2000, in addition to a decrease in interest-bearing deposits from $3.2 million at December 31, 1999 to $1.6 million at March 31, 2000. The decrease in cash and due from banks is the result of the Company's decision to temporarily increase vault cash in preparation for potential year 2000 liquidity needs of depositors at year end. However, early in the first quarter of 2000, vault cash returned to 9 more normal levels. Securities available for sale decreased $3.9 million, or 1.8%, to $208.2 million at March 31, 2000 from $212.1 million at December 31, 1999 resulting primarily from the maturities and calls of securities and the reinvestment of the proceeds in the loan portfolio. Loans receivable, net increased $1.8 million from $465.5 million at December 31, 1999, to $467.3 million at March 31, 2000 due to increased loan activity primarily in residential mortgage and commercial loans. Deposits increased by $14.2 million, or 3.1%, to $464.3 million at March 31, 2000 from $450.1 million at December 31, 1999 primarily due to various marketing promotions offered during the quarter. Securities repurchase agreements decreased $25.0 million, or 22.2%, to $87.7 million at March 31, 2000 from $112.7 million at December 31, 1999, due primarily to the maturity of repurchase agreements. Short-term borrowings from the FHLB decreased by $19.9 million, or 27.9%, to $51.3 million at March 31, 2000. These funding reductions were replaced in part with a combination of long-term advances from the FHLB and increased deposits. Long-term advances from the FHLB increased $14.7 million, or 70.2%, to $35.7 million at March 31, 2000 from $21.0 million at December 31, 1999. Accrued expenses and other liabilities decreased $2.0 million, or 41.3%, to $2.9 million at March 31, 2000, primarily due to a change in processing of teller drafts and money orders. Shareholders' equity decreased $148 thousand, or 0.2%, from $75.6 million at December 31, 1999 to $75.4 million at March 31, 2000, due primarily to the repurchases of treasury stock and the payment of cash dividends of $922 thousand and $542 thousand, respectively, partially offset by net income of $984 thousand for the quarter. Other items impacting shareholders' equity during the first quarter of 2000 were the release of ESOP shares, the grant of RRP shares in lieu of Directors' Board fees, the amortization of unearned RRP shares, and the after-tax impact of the change in the net unrealized losses on securities available for sale. Consolidated Average Balances, Interest Rates & Yields The following table presents for the periods indicated the total dollar amount of interest and dividend income earned on average earning assets and the resultant yields, as well as the total dollar amount of interest expense incurred on average interest-bearing liabilities and the resultant rates. No tax equivalent adjustments were made. All average balances are daily average balances. Non-accruing loans have been included in the table as loans with interest earned on a cash basis only. Securities available for sale are included at amortized cost. 10
Three months ended March 31, 2000 1999 ------------------------------------ ------------------------------------- Average Interest Yield/ Average Interest Yield/ Balance Inc./Exp. Rate Balance Inc./Exp. Rate Earning assets (Dollars in thousands) Loans receivable $471,035 $8,697 7.43% $425,163 $7,781 7.42% Securities available for sale (AFS) 220,860 3,667 6.68% 244,726 3,792 6.28% Federal Home Loan Bank stock 8,748 147 6.76% 7,215 119 6.69% Federal funds sold & interest-bearing deposits 2,566 33 5.17% 23,983 272 4.60% -------------- --------- -------- ------------ --------- -------- Total earning assets 703,209 12,544 7.17% 701,087 11,964 6.92% -------------- --------- -------- ------------ --------- -------- Allowance for loan losses (5,530) (4,983) Unrealized gain/(loss) on AFS securities (10,537) 355 Other assets 36,129 30,538 --------------- ------------ Total assets $723,271 $726,997 =============== ============ Interest-bearing liabilities Savings deposits 128,524 878 2.75% 138,831 992 2.90% NOW deposits 35,962 110 1.12% 33,010 144 1.77% Certificates of deposit 231,923 3,103 5.38% 227,743 2,861 5.09% Money market accounts 28,617 273 3.84% 22,402 215 3.89% Borrowed funds 181,999 2,664 5.89% 173,746 2,359 5.51% -------------- --------- -------- ------------ --------- -------- Total interest-bearing liabilities 607,025 7,028 4.66% 595,732 6,571 4.47% -------------- --------- -------- ------------ --------- -------- Demand deposits 35,358 36,903 Other liabilities 5,221 8,775 --------------- ------------ Total liabilities 647,604 641,410 --------------- ------------ Stockholders' equity 75,667 85,587 --------------- ------------ Total liabilities & equity $723,271 $726,997 =============== ============ Net interest income $5,516 $5,393 Interest rate spread 2.51% 2.45% Net earning assets $ 96,184 $105,355 Net interest margin 3.15% 3.12% Average earning assets/Average interest-bearing liabilities 115.85% 117.68%
11 Consolidated Rate/Volume Analysis of Net Interest Income The following table presents the dollar amount of changes in interest and dividend income and interest expense for major components of earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and the changes due to changes in interest rates. For each category of earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e. changes in volume multiplied by old rate) and (ii) changes in rate (i.e. changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate. Three months ended March 31, 2000 vs. 1999 ------------------------------- Increase (Decrease) Due to Total --------------------- Increase Volume Rate (Decrease) --------- -------- -------- Earning assets (Dollars in thousands) Loans receivable .......................... $ 912 $ 4 $ 916 Securities available for sale ............. (350) 225 (125) Federal Home Loan Bank stock .............. 27 1 28 Federal funds sold and interest-bearing deposits ............................... (277) 38 (239) --------- -------- -------- Total earning assets .................. 312 268 580 --------- -------- -------- Interest-bearing liabilities Savings deposits .......................... (67) (47) (114) NOW deposits ............................. 14 (48) (34) Certificates of deposit ................... 60 182 242 Money market accounts ..................... 61 (3) 58 Borrowed funds ............................ 124 181 305 --------- -------- -------- Total interest-bearing liabilities .... 192 265 457 --------- -------- -------- Net interest income ..................... $ 120 $ 3 $ 123 ========= ======== ======== 12 Comparison of Operating Results for the Three Months Ended March 31, 2000 and 1999. Net Income. Net income decreased by $51 thousand, or 4.9%, for the three months ended March 31, 2000 to $984 thousand from $1.0 million for the three months ended March 31, 1999. Net income for the three months ended March 31, 2000 was reduced primarily as a result of increased non-interest expenses, offset in part by a decrease in the provision for loan losses and increases in net interest income and non-interest income. These and other changes are discussed in more detail below. Net Interest Income. Net interest income increased $123 thousand, or 2.3%, to $5.5 million for the three months ended March 31, 2000 from $5.4 million for the three months ended March 31, 1999. The increase in net interest income was primarily due to an increase of $2.1 million in the average balance of earning assets, in addition to an increase in the interest rate spread from 2.45% for the three months ended March 31, 1999 to 2.51% for the three months ended March 31, 2000. This was partially offset by an increase in the average balance of interest-bearing liabilities of $11.3 million, or 1.9%. Earning assets consist of loans receivable, securities available for sale, federal funds sold, interest-bearing deposits, and FHLB of New York stock. Interest-bearing liabilities consist of interest-bearing deposits, FHLB advances and securities repurchase agreements. The interest rate spread, which is the difference between the yield on average earning assets and the cost of average interest-bearing liabilities, increased to 2.51% for the three months ended March 31, 2000, from 2.45% for the three months ended March 31, 1999. The increase in the interest rate spread was due primarily to the Company redeploying assets from lower-yielding federal funds sold and securities available for sale to the higher-yielding loan portfolio. Primarily due to this shift in asset mix, the average yield on earning assets increased from 6.92% for the three months ended March 31, 1999 to 7.17% for the three months ended March 31, 2000. The impact of this increase was partially offset by increases in the average balance of the higher costing certificates of deposit and borrowed funds of $4.2 million and $8.3 million, respectively. Likewise, for the three months ended March 31, 2000 the average rate paid on certificates of deposit and borrowed funds increased 29 basis points, to 5.38%, and 38 basis points, to 5.89%, respectively. Many of the Company's securities repurchase agreements contain call features. If these repurchase agreements are called (which is likely if interest rates continue to increase) and the Company cannot replace the funding at a similar or lower interest rate, the interest rate spread is likely to decrease. The Company operates in an environment of intense competition for deposits and loans. The competition in today's environment is not limited to other local banks and thrifts, but also includes a myriad of financial services providers that are located both within and outside the Company's local market area. Due to this heightened level of competition to attract and retain customers, the Company must continue to offer competitive interest rates on loans and deposits. As a consequence of these competitive pressures, from time-to-time, the relative spreads between interest rates earned and interest rates paid will tighten, exerting downward pressure on net interest income, the interest rate spread and the net interest margin. This is especially true during periods when the growth in earning assets lags behind the growth in interest-bearing liabilities. 13 However, management does not want to discourage, by offering noncompetitive interest rates, the creation of new customer relationships or jeopardize existing relationships thereby curtailing the Company's customer base and loan growth and the attendant benefits to be derived from them. Management believes that the longer-term benefits to be derived from this position will outweigh the shorter-term costs associated with attracting, cross-selling and retaining an expanding customer base. The growing customer base provides the Company with the potential for future, profitable customer relationships, which should in turn increase the value of the franchise. Interest and Dividend Income. Interest and dividend income increased by $580 thousand, or 4.8%, to $12.5 million for the three months ended March 31, 2000 from $12.0 million for the three months March 31, 1999. The increase was largely the result of the increase and shift in the average balance of earning assets from federal fund sold and securities available for sale to loans receivable (and, to a much lesser extent, FHLB stock.) This shift consisted primarily of increases in the average balance of loans receivable of $45.9 million, or 10.8%, and FHLB stock of $1.5 million, or 21.2 %, substantially offset by decreases in securities available for sale of $23.9 million, or 9.8%, and federal funds sold and interest-bearing deposits of $21.4 million, or 89.3%. In addition to the increase in the average balance of earning assets was a 25 basis point increase in the average yield on total earning assets. The yield on the average balance of earning assets was 7.17% and 6.92% for the three months ended March 31, 2000 and 1999, respectively. Interest and fees on loans increased $916 thousand, or 11.8%, to $8.7 million for the three months ended March 31, 2000. This increase was primarily the result of an increase in the average balance of net loans receivable of $45.9 million, or 10.8%, to $471.0 million for the three months ended March 31, 2000 from $425.2 million for the three months ended March 31, 1999. Interest income on securities available for sale decreased $125 thousand, or 3.3%, to $3.7 million for the three months ended March 31, 2000 from $3.8 million for the previous period. This decrease is primarily the result of a decrease in the average balance of securities available for sale of $23.9 million offset in part by a 40 basis point increase in the average yield on these securities. Interest income of federal funds sold and interest-bearing deposits decreased $239 thousand, or 87.9%, to $33 thousand for the three months ended March 31, 2000 from $272 thousand for the same quarter of the previous year primarily due to a decrease in the average balance of federal funds sold and interest-bearing deposits of $21.4 million, or 89.3%, resulting from the shift in assets from lower yielding federal funds sold and interest-bearing deposits to higher yielding loans receivable. Interest Expense. Total interest expense increased by $457 thousand, or 7.0%, to $7.0 million for the three months ended March 31, 2000 from $6.6 million for the three months ended March 31, 1999. Total average interest-bearing liabilities increased by $11.3 million, or 1.9%, to $607.0 million for the first quarter of 2000 compared to $595.7 million for the same period of the previous year primarily due to the funding of loan activity during 1999. Also, a portion of this increase was due to higher vault cash balances maintained during January 2000 as a result of potential year 2000 liquidity needs of depositors at year 14 end. During the same periods, the average rate paid on interest-bearing liabilities increased by 19 basis points to 4.66% from 4.47%. Total interest expense for the three months ended March 31, 2000 increased primarily due to an increase of 38 basis points, to 5.89%, in the average rate paid on total borrowed funds during the period, consistent with the general increase in market interest rates. In addition, the average balance on these funds increased to $182.0 million for the three months ended March 31, 2000, from $173.7 million for the previous period. Likewise, interest expense relative to certificates of deposit and money market accounts increased as a result of increases in the average balances on these deposit accounts. Moreover, the increase in interest on certificates of deposit was primarily due to increases in the average cost of these deposit accounts from 5.09% for the three months ended March 31, 1999 to 5.38% for the three months ended March 31, 2000. Provision for Loan Losses. The Company's provision for loan losses is based upon management's analysis of the adequacy of the allowance for loan losses. The allowance is increased by a charge to the provision for loan losses, the amount of which depends upon an analysis of the changing risks inherent in the loan portfolio. Management determines the adequacy of the allowance for loan losses based upon its analysis of risk factors in the loan portfolio. This analysis includes evaluation of credit risk, historical loss experience, current economic conditions, estimated fair value of underlying collateral, delinquencies, and other factors. The provision for loan losses for the three months ended March 31, 2000 decreased $135 thousand to $120 thousand from $255 thousand for the three months ended March 31, 1999. The Bank's ratio of non-performing loans to total loans was 0.68% and 0.89% at March 31, 2000 and December 31, 1999, respectively. Non-Interest Income. Total non-interest income increased by $65 thousand, or 15.3%, to $489 thousand for the three months ended March 31, 2000 from $424 thousand for the three months ended March 31, 1999. This increase was primarily due to the increase in fees charged for cashing non-customer tax refund checks, in addition to fees associated with the purchase of bank checks and money orders. Moreover, the Bank now charges an ATM fee for non-customer transactions made at the Bank's ATM machines. Also included in other non-interest income during the first quarter 2000 was the recognition of income for an experience refund from an insurance carrier on consumer loans in the amount of $11 thousand. Non-Interest Expenses. Non-interest expenses increased $432 thousand, or 11.5%, to $4.2 million for the three months ended March 31, 2000 from $3.7 million for the three months ended March 31, 1999 primarily due to increased costs associated with salaries, wages and benefits and data processing. Also impacting non-interest expenses during the first quarter of 1999 were the acceleration of depreciation and amortization of equipment and leasehold improvements due to the closing of a branch. These and other changes are discussed in more detail below. 15 Salaries, wages and benefits expense increased by $264 thousand, or 14.4%, for the first quarter of 2000 primarily due to an increase in salaries and wages associated with the increase in staff in the commercial loan department as a result of the Company's decision to increase emphasis in growing the commercial loan portfolio, coupled with the establishment of the Senior Management Salary Incentive Plan during the second quarter of 1999. Also contributing to this increase was the general cost of living and merit raises given to employees at the beginning of 2000. In addition, during the first quarter of 1999, salaries, wages and benefits expense was reduced due to the reversal of an accrual associated with severance offered to an employee terminated at the time of the merger which was not accepted. Management believes that salaries, wages and benefits expenses may fluctuate in future periods as costs related to the Company's ESOP are dependent on the Company's average stock price. The expense related to the ESOP for the first quarter of 2000 was $34 thousand lower than the comparable quarter in 1999 due to the lower stock price in 2000 relative to 1999. Occupancy and equipment decreased $31 thousand, or 4.9%, to $598 thousand for the three months ended March 31, 2000, from $629 thousand in 1999 primarily due to the acceleration of depreciation and amortization of equipment and leasehold improvements, during the first quarter of 1999, on a branch being closed as a result of the acquisition of AFSALA Bancorp, Inc. Offsetting these decreases was an increase in depreciation of furniture, fixtures and equipment primarily resulting from computer hardware and software upgrades related to year 2000 compliance subsequent to the first quarter of 1999. Data processing increased $152 thousand, or 64.7%, from $235 thousand in 1999 to $387 thousand for the three months ended March 31, 2000. During the first quarter of 1999, at the time of the initial conversion of the core application data system, the Bank received credits from the new data center totaling approximately $92 thousand to be applied against data processing fees in the first quarter of 1999. No such credits were received in the 2000 period. Other non-interest expense increased $68 thousand, or 8.5%, to $865 thousand for the three months ended March 31, 2000 when compared to the previous period. This increase was primarily due to expenses associated with the promotion and advertising of time deposit products offered during the quarter ended March 31, 2000. Income Tax Expense. Income tax expense decreased by $58 thousand, or 7.4%, to $723 thousand for the three months ended March 31, 2000 from $781 thousand for the three months ended March 31, 1999. The decrease was primarily the result of the decrease in income before taxes. 16 ASSET QUALITY Non-Performing Assets The table below sets forth the amounts and categories of non-performing assets at the dates indicated. March 31, December 31, 2000 1999 ------ ------ (Dollars in thousands) Non-accruing loans: One-to four-family (1) ........... $1,424 $1,570 Commercial real estate ........... 85 274 Consumer ......................... 292 434 Commercial business .............. 287 298 ------ ------ Total .......................... 2,088 2,576 ------ ------ Accruing loans delinquent more than 90 days: One-to four-family (1) ........... 383 372 Commercial real estate ........... 131 685 Consumer ......................... 51 11 ------ ------ Total .......................... 565 1,068 ------ ------ Troubled debt restructured loans: One-to four-family (1) ........... 84 84 Commercial real estate ........... 470 475 Commercial business .............. 5 7 ------ ------ Total .......................... 559 566 ------ ------ Total non-performing loans ..... 3,212 4,210 ------ ------ Foreclosed assets: One-to four-family (1) ........... 154 126 Commercial real estate ........... 142 142 Consumer ......................... 57 54 ------ ------ Total .......................... 353 322 ------ ------ Total non-performing assets ......... $3,565 $4,532 ====== ====== Non-performing loans as a percentage of total loans 0.68% 0.89% Non-performing assets as a percentage of total assets ...................... 0.49% 0.61% (1) Includes home equity loans. 17 Allowance for Loan Losses The allowance for loan losses is established through a provision for loan losses based on management's evaluation of the risks inherent in the Bank's loan portfolio and changes in the nature and volume of its loan activity, including those loans that are being specifically monitored by management. Such evaluation, which includes a review of loans for which full collectibility may not be reasonably assured, considers, among other matters, the estimated fair value of the underlying collateral for collateral dependent loans, the net present value of estimated future cash flows if the loan is not collateral dependent, economic conditions, historical loan loss experience, and other factors that warrant recognition in providing for an adequate loan loss allowance. The following table sets forth an analysis of the Company's allowance for loan losses. For the three months ended March 31, 2000 1999 ------- ------- (Dollars in thousands) Balance at beginning of period ........ $ 5,509 $ 4,891 Charge-offs: One- to four-family (1) .......... (1) (10) Consumer ......................... (132) (34) ------- ------- Total charge-offs ............. (133) (44) ------- ------- Recoveries: Commercial real estate ........... -- 25 Consumer ......................... 6 11 Commercial business .............. 4 12 ------- ------- Total recoveries .............. 10 48 ------- ------- Net (charge-offs) recoveries .......... (123) 4 Provisions charged to operations ...... 120 255 ------- ------- Balance at end of period .............. $5,506 $5,150 ======= ======= Ratio of allowance for loan losses to total loans (period end) .... 1.16% 1.21% Ratio of allowance for loan losses to non-performing loans (at period end) 171.42% 170.53% Ratio of net charge-offs (recoveries) during the period to average loans outstanding during period (annualized) 0.11% (0.00%) (1) Includes home equity loans. 18 Liquidity and Capital Resources The Bank is required by OTS regulations to maintain, for each calendar month, a daily average balance of cash and eligible liquid investments of not less than 4% of the average daily balance of its net withdrawable savings and borrowings (due in one year or less) during the preceding calendar month. This liquidity requirement may be changed from time to time by the OTS to any amount within the range of 4% to 10%. The Bank's average liquidity ratio was 26.92% and 28.36% at March 31, 2000 and December 31, 1999, respectively. The Company's sources of liquidity include cash flows from operations, principal and interest payments on loans, mortgage-backed securities and collateralized mortgage obligations, maturities of securities, deposit inflows, borrowings from the FHLB of New York and proceeds from the sale of securities sold under agreements to repurchase. While maturities and scheduled amortization of loans and securities are, in general, a predictable source of funds, deposit flows and prepayments on loans and securities are greatly influenced by general interest rates, economic conditions and competition. In addition, the Bank invests excess funds in overnight deposits which provide liquidity to meet lending requirements. In addition to deposit growth, the Company borrows funds from the FHLB of New York or may utilize other types of borrowed funds to supplement its cash flows. At March 31, 2000 and December 31, 1999, the Company had $87.0 million and $92.2 million, respectively, in outstanding borrowings from the FHLB and $87.7 million and $112.7 million, respectively, in securities repurchase agreements, the vast majority of which are also with the FHLB. As of March 31, 2000 and December 31, 1999, the Company had $208.2 million and $212.1 million, respectively, of securities classified as available for sale. The liquidity of the securities available for sale portfolio provides the Company with additional potential cash flows to meet loan growth and deposit flows. Liquidity may be adversely affected by unexpected deposit outflows, excessive interest rates paid by competitors, adverse publicity relating to the savings and loan industry, and similar matters. Management monitors projected liquidity needs and determines the level desirable, based in part on the Company's commitment to make loans and management's assessment of the Company's ability to generate funds. The Bank is subject to federal regulations that impose certain minimum capital requirements. At March 31, 2000, the Bank's capital exceeded each of the regulatory capital requirements of the OTS. The Bank is "well capitalized" at March 31, 2000 according to regulatory definition. At March 31, 2000, the Bank's tangible and core capital levels were both $67.1 million (9.44% of total adjusted assets) and its total risk-based capital level was $71.4 million (20.48% of total risk-weighted assets). The minimum regulatory capital ratio requirements of the Bank are 1.5% for tangible capital, 4.0% for core capital, and 8.0% for total risk-based capital. 19 During the first three months of 2000, the Company repurchased 68,400 shares of its common stock in open-market transactions at a total cost of $922 thousand. Effect of Inflation and Changing Prices The Company's consolidated financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Unlike industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or with the same magnitude as the prices of goods and services. Recent Accounting Pronouncement In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. As amended, this Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Management is currently evaluating what impact, if any, this Statement will have on the Company's consolidated financial statements. Item 3. Quantitative And Qualitative Disclosures About Market Risk There have been no material changes in the Company's interest rate risk position since December 31, 1999. Other types of market risk, such as foreign exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities. Part II - Other Information Item 1. Exhibits and Reports on Form 8-K (a) Exhibits as required by Item 601 of Regulation S-K. Financial data schedule, Exhibit #27 (b) Reports on Form 8-K During the quarter under report, a Form 8-K (item 5 and 7) was filed on February 8, 2000. 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMBANC HOLDING CO., INC. John M. Lisicki President and Chief Executive Officer (Principal Executive Officer) Date: May 15, 2000 James J. Alescio Senior Vice President, CFO and Treasurer (Principal Financial and Accounting Officer) Date: May 15, 2000 21 EX-27 2 FDS -- 03/31/00
9 THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 OF AMBANC HOLDING CO., INC. AND ITS SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 3-mos DEC-31-2000 MAR-31-2000 11488 1572 0 0 208221 0 0 472775 5506 721290 464297 51300 6822 123426 0 0 54 75391 721290 8697 3667 180 12544 4364 7028 5516 120 0 4178 1707 1707 0 0 984 0.21 0.21 3.15 2088 565 559 2041 5509 133 10 5506 5506 0 0
-----END PRIVACY-ENHANCED MESSAGE-----