-----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, Cz71aj3rGrkpVcOPXBO1TiPo3ehibxLCFrVxSl0H2F4RX7Tmxodm0Q2tdy/9G0i5 s6FVpwZsjsUti0gxBBoLkw== 0000004570-96-000001.txt : 19960402 0000004570-96-000001.hdr.sgml : 19960402 ACCESSION NUMBER: 0000004570-96-000001 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANCORPORATION /WV/ CENTRAL INDEX KEY: 0000004570 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 310724349 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: ARS SEC ACT: 1934 Act SEC FILE NUMBER: 000-05893 FILM NUMBER: 96542809 BUSINESS ADDRESS: STREET 1: 1025 MAIN ST STE 800 CITY: WHEELING STATE: WV ZIP: 26003 BUSINESS PHONE: 3042335006 MAIL ADDRESS: STREET 1: 1025 MAIN STREET STREET 2: SUITE 800 CITY: WHEELING STATE: WV ZIP: 26003 ARS 1 AMERICAN BANCORPORATION 1995 ANNUAL REPORT American Bancorporation and Subsidiaries FINANCIAL HIGHLIGHTS (In thousands, except per share) 1995 1994 1993 Statement of Operations: Net Income. . . . . . . . $ 3,052 $ 1,696 $ 1,770 Net Income per share. . . 1.95 1.13 1.18 Balance Sheet: Assets. . . . . . . . . . . $ 353,995 $ 338,116 $ 276,390 Deposits. . . . . . . . . . 292,665 292,341 248,040 Loans - net . . . . . . . . 246,518 225,129 146,979 Stockholders' equity. . . 28,012 26,193 24,158 Book Value per share . . 17.90 16.74 16.03 QUARTERLY STOCK PRICE RANGES 1995: High Low Fourth. . . . . . . . . 23 1/2 20 1/2 Third . . . . . . . . . . 23 1/2 19 1/2 Second. . . . . . . . . . 21 1/2 14 3/4 First . . . . . . . . . . 15 1/2 13 1/2 1994: High Low Fourth. . . . . . . . . . 18 13 Third . . . . . . . . . . 18 1/2 16 Second. . . . . . . . . . 18 1/2 15 1/2 First . . . . . . . . . . 19 15 1/2 American Bancorporation is traded on the Nasdaq Stock Market under the ticker symbol AMBC.Per share data and stock prices have been retroactively restated to reflect a two for one stock split, which became effective March 16, 1994. CORPORATE PROFILE American Bancorporation (the "Company") is a registered Ohio bank holding company with its headquarters located in Wheeling, West Virginia. The Company was organized in 1966 for the purpose of developing a network of community oriented banks and companies engaged in activities closely related to commercial banking. At December 31, 1995, the Company owned two affiliate banks. The Wheeling National Bank ("WNB") serves its customers through seven full service offices located in Ohio County, Hancock County and Wetzel County, West Virginia. Columbus National Bank, ("CNB") serves its customers through eleven full service offices located in Belmont County, Harrison County, Guernsey County, Jefferson County and Franklin County, Ohio. CNB will be merged into WNB as of March 29, 1996. In addition to the Banks, the Company operates three non-bank subsidiaries: American Bancdata Corporation which provides electronic data processing services to the Company and the affiliate Banks, American Bancservices, Inc., which provides the Company's transfer agent services and American Mortgages, Inc. which originates and services mortgage loans. The approximate number of common stockholders of record was 2,645 on January 31, 1996. CONTENTS Financial Highlights. . . . . . . . See above Quarterly Stock Price Ranges. . . . See above Corporate Profile . . . . . . . . . See above Chairman's Letter . . . . . . . . . 1 Financial Statements. . . . . . . . 2 - 26 Independent Auditors' Report . . 27 Five Year Selected Financial Data . 28 Management's Discussion and Analysis . . 29 - 42 THE CHAIRMAN'S LETTER TO OUR SHAREHOLDERS: For the year 1995 American Bancorporation recognized net income of $3,052,000 or $1.95 per share, compared to net income of $1,696,000 or $1.13 per share in 1994. Total assets at December 31, 1995 were $354 million, compared to $338 million at December 31, 1994. At December 31, 1995 total capital was $28,012,000, compared to $26,193,000 at December 31, 1994 and book value per common share at year end 1995 was $17.90, compared to $16.74 at year end 1994. At December 31, 1995 the allowance for loan losses to loans outstanding was 1.5%. At December 31, 1995 total nonperforming loans as a percentage of total loans stood at 0.8%. 1995 was again a year of growth and accomplishment. At Columbus National Bank, on February 9, 1996, we closed the purchase of the Bank One deposits at Flushing and the Ohio Valley Mall. At Wheeling National Bank we again saw solid growth, an historic high in profits and historic lows in delinquencies and nonperforming assets. At the holding company we settled the Declaratory Judgment action in the U.S. Federal Court and are finishing the recalculation of benefits due retired employees. The merger of Columbus National Bank into Wheeling National Bank will be completed at the close of business Friday, March 29, 1996. We expect 1996 to be an excellent profit year. We deeply appreciate your continued strong support. Sincerely, Jeremy C. McCamic Chairman and Chief Executive Officer CONSOLIDATED BALANCE SHEET American Bancorporation and Subsidiaries December 31, 1995 and 1994 ASSETS 1995 1994 Cash and due from banks. . . . . . . . . . . . .$ 10,887,718 $ 10,704,396 Federal funds sold . . . . . . . . . . . . . . 11,469,000 3,924,000 Investment securities available for sale . . . 68,014,533 3,484,431 Investment securities held to maturity Market value 1994 - $74,419,000 . . - 78,189,252 Loans Commercial, financial and agricultural. . . 64,951,306 52,929,805 Real estate mortgage. . . . . . . . . . . . 128,709,317 119,629,269 Installment - net of unearned income. . . . 56,711,400 56,306,670 250,372,023 228,865,744 Less allowance for loan losses. . . . . . 3,853,633 3,736,994 246,518,390 225,128,750 Premises and equipment - net . . . . . . . . 8,947,284 8,672,714 Accrued interest receivable. . . . . . . . . 2,065,832 2,018,778 Excess of cost over net assets acquired. . . 1,830,170 2,065,475 Other assets . . . . . . . . . . . . . . . . 4,261,848 3,927,839 TOTAL ASSETS. . . . . . . . . . . . . . .$353,994,775 $338,115,635 LIABILITIES Deposits Demand - non-interest bearing . . . . . . . $ 31,792,609 $ 31,208,913 Demand - interest bearing . . . . . . . . . 27,286,771 25,041,613 Savings . . . . . . . . . . . . . . . . . . 98,977,637 117,684,912 Time - under $100,000 . . . . . . . . . . . 116,370,529 104,302,859 Time - over $100,000. . . . . . . . . . . . 18,237,061 14,102,360 TOTAL DEPOSITS. . . . . . . . . . . . . 292,664,607 292,340,657 Short-term borrowings. . . . . . . . . . . . . 27,522,666 13,398,181 Accrued interest payable . . . . . . . . . . . 1,033,315 1,011,323 Other liabilities. . . . . . . . . . . . . . . 3,714,641 3,172,455 Notes payable and other long term debt . . . . 1,047,124 2,000,000 TOTAL LIABILITIES . . . . . . . . . . . 325,982,353 311,922,616 STOCKHOLDERS' EQUITY Preferred stock. . . . . . . . . . . - - Common stock without par value, stated value $5 a share, authorized 6,500,000 shares, issued and outstanding 1,564,837 in 1995 and 1994. . . . . 7,824,185 7,824,185 Additional paid-in capital . . . . . . . . 10,301,982 10,301,982 Retained earnings. . . . . . . . . . . . . 9,763,633 7,806,852 Unrealized gain on securities available for sale, net. . . . . . . . . . . 122,622 260,000 TOTAL STOCKHOLDERS' EQUITY. . . . . . . . 28,012,422 26,193,019 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. $353,994,775 $338,115,635 The accompanying notes are an integral part of these financial statements. CONSOLIDATED STATEMENT OF OPERATIONS Years ended December 31, 1995, 1994 and 1993 1995 1994 1993 INTEREST INCOME Loans . . . . . . . . . . . . . . $ 21,929,265 $ 14,902,482 $ 14,590,143 Investment securities Taxable interest income . . . . . 3,844,393 4,410,109 5,158,483 Non-taxable interest income . . 144,316 163,039 212,519 Dividends . . . . . . . . . . . . 207,773 148,027 142,479 4,196,482 4,721,175 5,513,481 Short-term investments. . . . . . 370,332 511,494 466,737 Total interest income. . . . . 26,496,079 20,135,151 20,570,361 INTEREST EXPENSE Deposits Interest bearing demand . . . . 618,035 586,563 664,620 Savings . . . . . . . . . . . . . 2,872,553 2,690,109 3,018,910 Time - under $100,000 . . . . . . 5,303,309 3,368,774 3,877,336 Time - over $100,000. . . . . . . 1,003,706 384,872 384,225 9,797,603 7,030,318 7,945,091 Borrowings Short-term borrowings . . . . . . . 1,275,187 145,622 63,737 Notes payable and other long-term debt. . . 97,872 13,059 - Total interest expense. . . . . 11,170,662 7,188,999 8,008,828 NET INTEREST INCOME . . . . . . . . 15,325,417 12,946,152 12,561,533 PROVISION FOR LOAN LOSSES. . . . . . 105,000 215,000 844,361 Net interest income after provision for loan losses. . . . . . . . . .15,220,417 12,731,152 11,717,172 OTHER INCOME Service charges on deposit accounts . . . 735,514 661,492 689,656 Insurance commissions . . . . . 119,017 113,619 123,925 Net securities gains. . . . . . 3,261 2,634 219,030 Other income. . . . . . . . . . . 822,467 284,122 416,452 Total other income . . . . . . 1,680,259 1,061,867 1,449,063 OTHER EXPENSE Salaries and employee benefits. . 5,318,929 4,932,526 4,427,945 Occupancy expense . . . . . . . . 1,048,541 843,095 792,907 Furniture and equipment expense . 1,067,046 1,032,268 1,026,620 Other expenses. . . . . . . . . . 4,656,170 4,407,160 4,149,160 Total other expense. . . . . . 12,090,686 11,215,049 10,396,632 INCOME BEFORE INCOME TAXES . . . . . . 4,809,990 2,577,970 2,769,603 PROVISION FOR INCOME TAXES . . . . . . 1,757,823 881,651 999,152 NET INCOME . . . . . . . . . . . . . .$ 3,052,167 $ 1,696,319 $ 1,770,451 Per Share: NET INCOME. . . . . . . . . $ 1.95 $ 1.13 $ 1.18 The accompanying notes are an integral part of these financial statements. American Bancorporation and Subsidiaries CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Years ended December 31, 1995, 1994 and 1993
Unrealized gain Additional on securities Common paid-in Retained available for stock capital earnings sale, net Total Balance at January 1, 1993. . . . $ 7,533,060 $ 9,753,871 $ 5,853,972 $ - $ 23,140,903 Net Income. . . . - - 1,770,451 - 1,770,451 Cash Dividends ($0.50 per share). . - - (753,306) - (753,306) Balance at December 31, 1993 . . . 7,533,060 9,753,871 6,871,117 - 24,158,048 Net Income. . . . - - 1,696,319 - 1,696,319 Cash Dividends ($0.50 per share). - - (760,584) - (760,584) Proceeds from stockholder rights offering (58,225 shares). . . . 291,125 548,111 - - 839,236 Change in unrealized gain on securities available for sale, net - - - 260,000 260,000 Balance at December 31, 1994 . . . 7,824,185 10,301,982 7,806,852 260,000 26,193,019 Net Income. . . . - - 3,052,167 - 3,052,167 Cash Dividends ($0.70 per share). . - - (1,095,386) - (1,095,386) Change in unrealized gain on securities available for sale, net - - - (137,378) (137,378) Balance at December 31, 1995 . . . $ 7,824,185 $ 10,301,982 $ 9,763,633 $ 122,622 $ 28,012,422 The accompanying notes are an integral part of these financial statements.
American Bancorporation and Subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS Years ended December 31, 1995, 1994 and 1993 Operating Activities: 1995 1994 1993 Net income. . . . . . . . . . . . . $ 3,052,167 $ 1,696,319 $ 1,770,451 Adjustments to reconcile net income to net cash from operating activities: Depreciation . . . . . . . . . . 603,798 555,372 563,397 Amortization of intangibles. . . 315,490 128,300 120,801 Net amortization (accretion) of investment securities (74,137) 100,355 146,316 Provision for loan losses. . . . 105,000 215,000 844,360 Gain on sale of premises & equipment . - (2,975) (92,295) Net gains on sale of investment securities (3,261) (2,634) (219,030) Change in assets and liabilities net of effects from the purchase of branch assets: Net (increase) decrease in accrued interest receivable . . . . . (47,054) (323,175) 481,340 Net increase (decrease) in accrued interest payable. 21,992 45,159 (254,603) Net (increase) decrease in other assets.(472,525) (538,102) 670,667 Net increase in other liabilities 414,762 1,449,798 108,279 Net decrease from other operating activities 106,740 346,907 350,619 Net cash provided by operating activities. . . . 4,022,972 3,670,324 4,490,302 Investing Activities: Purchase of branch assets, net of cash acquired. - (4,487,905) - Investment securities held to maturity: Proceeds from maturities and repayments. 19,607,659 33,151,514 39,721,032 Proceeds from sales. - - 19,205,084 Purchases. . . . . . . . . . (8,272,273) (22,380,352)(56,527,280) Investment securities available for sale: Proceeds from maturities and repayments 6,692,533 106,400 - Proceeds from sales. . . . . 8,088,052 3,017,375 - Purchases. . . . . . . . . . . (12,555,150) (1,303,231) - Net (increase) decrease in loans . . (21,494,640) (15,034,412) 7,473,266 Purchase of loans. . . . . - (14,036,899) - Purchase of premises and equipment (828,810) (1,323,607) (586,989) Proceeds from sale of premises and equipment . . - 290,468 428,835 Net cash provided (used) by investing activities . (8,762,629) (22,000,649) 9,713,948 Financing Activities: Net increase in non-interest bearing demand deposits . 583,696 2,038,122 288,329 Net increase (decrease) in interest bearing demand and savings deposits (16,462,117) (9,384,462) 2,420,230 Net increase (decrease) in time deposits . . . 16,202,371 4,596,371 (15,669,736) Net increase (decrease) in short-term borrowings . . . . 14,124,485 11,789,434 (480,962) Principal repayment of long-term debt. . . . . (1,002,433) - - Proceeds from issuance of long-term debt - 2,000,000 - Proceeds from stockholder rights offering - 839,236 - Cash dividends paid. . . . . . . . (978,023) (753,306) (753,306) Net cash provided by (applied to) financing activities . . . . 12,467,979 11,125,395 (14,195,445) Net Increase (Decrease) in Cash and Cash Equivalents . . 7,728,322 (7,204,930) 8,805 Cash and Cash Equivalents Beginning Balance. . . . $14,628,396 $21,833,326 $21,824,521 Cash and Cash Equivalents Ending Balance . . . . . $22,356,718 $14,628,396 $21,833,326 Supplemental schedule of noncash investing and financing activities: The Company purchased certain branch assets and assumed certain liabilities. In conjunction with the acquisition, the assets acquired and the liabilities assumed were as follows: Fair value of assets acquired. . $ - $51,015,184 $ - Cash paid in the acquisition . . . - (4,782,680) - Liabilities assumed. . - (47,148,594) - Excess of liabilities assumed over net assets acquired $ - $ (916,090)$ - Cash paid during the year for: Interest. . . . . . . . . . . . . $11,148,670 $ 7,046,161 $ 8,263,431 Income taxes. . . . . . . . . . $ 1,331,100 $ 1,228,000 $ 661,490 Non-cash investing and financing activities: Loan foreclosures and repossessions . . . . $ 149,810 $ 281,603 $ 1,036,707 Transfer of other real estate owned to premises and equipment $ - $ - $ 279,263 Transfer of premises and equipment to other real estate owned $ - $ 549,566 $ - The accompanying notes are an integral part of these financial statements. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS December 31, 1995, 1994 and 1993 Note A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES American Bancorporation (the "Company"), which was organized in 1966, is a registered Ohio bank holding company with its headquarters located in Wheeling, West Virginia. The Company's wholly owned subsidiaries are Wheeling National Bank, Columbus National Bank, American Bancdata Corporation, American Bancservices, Inc. and American Mortgages, Inc. The Company's subsidiaries primarily engage in commercial banking and mortgage banking. The subsidiary banks branch offices are primarily located in the northern panhandle of West Virginia, and central and eastern Ohio. The accounting and reporting policies of American Bancorporation and Subsidiaries (the "Company") conform to generally accepted accounting principles and with general practice within the banking industry. The following is a description of the significant policies. Principles of Consolidation The consolidated financial statements include the accounts of American Bancorporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Subsidiaries acquired in purchase transactions are included in the consolidated financial statements from the date of acquisition. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks and federal funds sold. Generally, federal funds are sold for one-day periods. Investment Securities The Company has adopted a methodology for the classification of securities at the time of their purchase as either held to maturity or available for sale. If it is management's intent and the Company has the ability to hold such securities until their maturity, these securities are classified as held to maturity and are carried on the Company's books at cost, adjusted for amortization of premium and accretion of discount on a level yield basis. Alternatively, if it is management's intent at the time of purchase to hold securities for an indefinite period of time and/or to use such securities as part of its asset/liability management strategy, the securities are classified as available for sale and are carried at fair value, with net unrealized gains and losses excluded from earnings and reported as a separate component of stockholder's equity, net of applicable income taxes. Investment securities available for sale include securities which may be sold in response to changes in interest rates, resultant prepayment risk and other factors related to interest rate or prepayment risk. Gains and losses on sales of securities are recognized using the specific identification method. The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" in 1994. The initial effect of adopting SFAS No. 115 in 1994 was an increase in shareholders' equity of $468,000, representing the net unrealized gain on securities available for sale. In October 1994, the Financial Accounting Standards Board ("FASB") issued SFAS No. 119, "Disclosures about Financial Instruments and Fair Value of Financial Instruments". The Company adopted SFAS No. 119 as of January 1, 1995. The adoption of SFAS No. 119 had no material impact to the Company's financial position or results of operations. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 On December 1, 1995, the Company reclassified $66,965,000 of investment securities held to maturity to investment securities available for sale. The reclassification was in accordance with the FASB's special report "A Guide to Implementation of Statement 115 on Accounting for Certain Investments in Debt and Equity Securities" that permitted this one-time reassessment. Loans Loans are reported at their principal amounts, net of unearned income and the allowance for loan losses. Interest on loans is computed primarily on the principal balance outstanding. For loans not primarily secured by real estate or in the process of collection, the Company discontinues the accrual of interest when a loan is 90 days past due or collection of the interest is doubtful. Real estate loans are placed on nonaccrual status when, in management's judgement, collection is in doubt or when foreclosure proceedings are initiated, which is generally 180 days past the due date. Income on discounted loans is principally recognized on the sum-of-the-months digits method, which approximates a level yield. Loan origination and commitment fees, as well as certain direct loan origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans via a method which approximates a level yield. The Company grants commercial and industrial loans, commercial and residential mortgages and consumer loans to customers primarily in the northern panhandle of West Virginia, southwestern Pennsylvania and central and eastern Ohio. The Company's loan portfolio can be adversely impacted by downturns in the local economic and real estate markets as well as employment conditions. On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan--Income Recognition and Disclosures." SFAS No. 114 provided guidelines for measuring impairment losses on loans. A loan is considered to be impaired when it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the loan agreement. All of the Company's nonaccrual loans, which totalled $790,000 at December 31, 1995, are considered to be impaired loans. Average impaired loans during 1995 were $818,000. Under SFAS No. 114, impaired loans subject to the statement are required to be measured based upon the present value of expected future cash flows, discounted at the loan's initial effective interest rate, or at the loan's market price or fair value of the collateral if the loan is collateral dependent. If the loan valuation is less than the recorded value of the loan, an impairment reserve must be established for the difference. The impairment reserve is established by either an allocation of the reserve for credit losses or by a provision for credit losses, depending on the adequacy of the reserve for credit losses. Included in impaired loans at December 31, 1995 were $489,000 that had a related impairment reserve of $172,000, and $301,000 that did not have a related reserve as a result of interest payments applied to reduce principal or credit losses previously taken on these loans. SFAS No. 118 permits existing income recognition practices to continue. During the year, the Company recognized $21,000 of interest revenue on impaired loans, all of which was recognized using the cash basis method of income recognition. Allowance for Loan Losses The determination of the balance in the allowance for loan losses is based on an analysis of the portfolio and reflects an amount which, in management's judgement, is adequate to provide for potential losses after giving consideration to the character of the portfolio, current economic conditions, past loss experience and such other factors that deserve current recognition. The regulatory examiners may require the Company to recognize additions to the allowances based upon their judgements about information available to them at the time of their examinations. The provision for loan losses is charged to current operations. Mortgage Loan Servicing Mortgage servicing fees received from permanent investors for servicing their loan portfolios are recorded on the accrual basis. Mortgage loan servicing includes collecting monthly mortgagor payments, forwarding payments and related accounting reports to investors, collecting escrow deposits for the payment of mortgagor property taxes and insurance, and paying taxes and insurance from escrow funds when due. Purchased mortgage servicing rights are capitalized and amortized, as a reduction of servicing income, in proportion to, and over the period of, estimated net servicing revenue (undiscounted servicing revenues in excess of undiscounted servicing costs). In estimating future servicing revenues, management takes into consideration a number of factors including the current rate of anticipated prepayments of the underlying mortgage loans. Changes in the assumptions used could significantly affect management's estimates. If actual results differ significantly from those estimated by management, adjustments to the carrying value of purchased mortgage servicing rights could occur. In May, 1995 the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing Rights". SFAS No. 122 amends SFAS No. 65, "Accounting for Certain Mortgage Banking Activities" by requiring that a mortgage banking enterprise that acquires mortgage servicing rights through either the purchase or origination of mortgage loans recognize those rights as separate assets by allocating the total cost of the mortgage loans to the mortgage servicing rights and the loans (without the mortgage servicing rights) based on their relative fair values. In addition, SFAS No. 122 requires that a mortgage banking enterprise assess its capitalized mortgage servicing rights for impairment based on the fair value of those rights. This pronouncement is to be applied prospectively in fiscal years beginning after December 15, 1995. The Company currently estimates that the effects of the adoption of SFAS No. 122 will not be material to the Company's financial condition or results of operations. Premises and Equipment Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is provided on the straight-line method, distributing the cost of premises over an estimated useful life of twenty to fifty years and the cost of equipment over an estimated useful life of three to fifteen years. Excess of Cost over Net Assets Acquired Excess of cost over net assets acquired include both goodwill and core deposit intangibles. Goodwill is being amortized on a straight-line basis over a period of twelve to thirty years. Core deposit intangibles are being amortized over a period of five to twelve years. Other Real Estate Owned Other real estate owned in connection with loan settlements, including real estate acquired, is stated at the lower of estimated fair value less estimated costs to sell, or the carrying amount of the loan. Declines in market value that might occur between appraisal dates are charged directly to operations. Decreases in fair value between annual appraisals, net gains or losses on the sale of other real estate owned, and net direct operating expense attributable to these assets are included in other income/other expense. Other real estate owned is included in other assets. Income Taxes The Company and its subsidiaries file a consolidated Federal income tax return. The Company retroactively adopted SFAS No. 109, "Accounting for Income Taxes" in 1993. SFAS No.109 required a change from the deferred method of accounting for income taxes of Accounting Principles Bulletin ("APB") Opinion 11 to the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Pension Plan Pension costs, based on actuarial computations, are charged to expense and funded as incurred. (See Note R "Pension Plan and Profit Sharing 401(k) Savings Plan"). Per Share Data Per share data is computed based upon the weighted average number of common shares outstanding. The weighted average number of shares used in the calculation was 1,564,837 for 1995, 1,506,771 in 1994 and 1,506,612 in 1993. Earnings per share, dividends per share and book values per share have been restated to reflect a two for one stock split which was approved by the Board of Directors in February, 1994, and became effective March 16, 1994. Use of Estimates 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, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Estimates are used when accounting for allowance for loan losses, realization of deferred tax assets, fair values of certain assets and liabilities, determination and carrying value of impaired loans, carrying value of other real estate, carrying value and amortization of intangibles, and employee benefit plans. Reclassifications Certain prior year financial information has been reclassified to conform to the presentation in 1995. Note B-BRANCH ACQUISITION On December 8, 1994, the Company, through its subsidiaries Columbus National Bank ("CNB") and American Mortgages, Inc., ("AMI"), acquired certain assets and assumed certain liabilities of Buckeye Savings Bank ("Buckeye"), a wholly owned subsidiary of Crown Bank, F.S.B., headquartered in Casselberry, Florida. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 CNB assumed liabilities totalling $46.5 million, including deposits totalling $46.4 million, and purchased the premises and equipment of the St. Clairsville and Steubenville, Ohio branch offices of Buckeye. CNB also acquired assets with a fair value of $50.2 million, including loans (primarily mortgage loans) totalling $47.9 million, including $0.4 million allowance for loan losses. CNB paid a $916,000 premium based on core deposits. The premium based on core deposits is being amortized over a period of eight years. AMI acquired the mortgage servicing rights to loans totalling $81.6 million for $570,000 and certain fixed assets totalling $210,000. Note C-CASH AND DUE FROM BANKS The subsidiary banks of the Company are required to maintain with a Federal Reserve bank reserve balances based principally on deposits outstanding. Balances maintained are included in cash and due from banks. The required reserves were approximately $300,000 at December 31, 1995 and December 31, 1994. Note D-INVESTMENT SECURITIES Securities Available for Sale The amortized cost and approximate market value of investment securities available for sale at December 31, 1995 and 1994 is summarized as follows: 1995 Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value United States Treasury . . . . . .$18,405,901 $ 37,418 $ 73,818 $18,369,501 United States Federal agencies . . 16,800,763 66,736 88,762 16,778,737 United States agency mortgage- backed securities. 25,891,941 21,305 356,091 25,557,155 States and political subdivisions. 1,882,261 276,089 141 2,158,209 Other. . . . . . . . . . . . . . . . 10,000 - - 10,000 Total Debt Securities . . . . . 62,990,866 401,548 518,812 62,873,602 Equity securities. . . . . . . . . .4,939,431 201,500 - 5,140,931 Total Securities Available for Sale . . $67,930,297 $603,048 $518,812 $68,014,533 1994 Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value Equity securities. . . . . . . . $ 3,224,431 $ 260,000 $ - $ 3,484,431 Total Securities Available for Sale . . . . $ 3,224,431 $ 260,000 $ - $ 3,484,431 NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Securities Held to Maturity The amortized cost and approximate market value of investment securities held to maturity at December 31, 1994 is summarized below. There were no securities held to maturity at December 31, 1995. 1994 Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value United States Treasury . . . . $27,585,550 $ 1,073 $ 959,981 $26,626,642 United States Federal agencies . . 12,594,218 692 641,548 11,953,362 United States agency mortgage- backed securities 35,907,079 1,533 2,328,772 33,579,840 States and political subdivisions. .2,092,405 163,856 6,522 2,249,739 Other. . . . . . . . . . . . . . . 10,000 - 664 9,336 Total Investment Securities . .$78,189,252 $167,154 $3,937,487 $74,418,919 The amortized cost and approximate market value of debt securities at December 31, 1995, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Market Cost Value Due in one year or less . . $11,321,585 $11,365,400 Due after one year through five years 20,644,627 20,551,239 Due after five years through ten years. 15,816,984 15,874,219 Due after ten years . . . . 15,207,670 15,082,744 $62,990,866 $62,873,602 Proceeds from the sale of securities available for sale for the years ended December 31, 1995 and 1994 were $8,088,052 and $3,017,375, respectively. Gross realized gains on the sale of securities available for sale were $33,171 in 1995 and $6,915 in 1994. Gross realized losses on the sale of securities available for sale were $29,910 in 1995 and $4,281 in 1994. There were no sales of investment securities held to maturity in 1995 and 1994. Proceeds from the sale of investment securities held to maturity, gross realized gains and gross realized losses for the year ended December 31, 1993 were $19,205,084, $335,565 and $116,535, respectively. At December 31, 1995 the book value of securities pledged to secure public deposits or for other purposes required or permitted by law aggregated $17,370,000. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Note E-NONPERFORMING ASSETS Nonperforming assets consist of nonaccrual loans, restructured loans, past due loans and other real estate owned. Nonaccrual loans are loans on which interest recognition has been suspended until realized because of doubts as to the borrowers' ability to repay principal or interest. Restructured loans are loans where the terms have been altered to provide a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower. Past due loans are accruing loans which are contractually past due 90 days or more as to interest or principal payments. The following summarizes the nonperforming assets at December 31: 1995 1994 1993 Nonperforming loans Nonaccrual. . . . . . . $ 790,000 $ 1,214,000 $ 2,188,000 90 days past due. . . . 609,000 766,000 601,000 Restructured. . . . . . 666,000 610,000 709,000 $ 2,065,000 $ 2,590,000 $ 3,498,000 Other real estate owned. 575,000 682,000 699,000 Total. . . . . . . . . . .$ 2,640,000 $ 3,272,000 $ 4,197,000 There were no commitments to advance additional funds to such borrowers at December 31, 1995. Gross interest income that would have been recorded if nonaccrual loans and restructured loans had been current and in accordance with their original terms approximated $85,000, $140,000 and $211,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Interest recognized on such loans approximated $21,000, $8,000 and $18,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Note F-RELATED PARTY TRANSACTIONS At December 31, 1995, receivables, both direct and indirect, from persons related to the Company and subsidiaries as directors, executive officers or principal shareholders, exclusive of loans to such persons which in the aggregate do not exceed $60,000, approximated $1,750,000. Other changes reflect loans to persons which no longer exceed $60,000. The following is an analysis of the activity with respect to such loans for the year ended December 31, 1995: Aggregate outstanding balance at January 1, 1995 $ 1,466,000 Additions . . . . . . . . . . . . . . 390,000 Retirements . . . . . . . . . . . . . (200,000) Other changes . . . . . . . . . . . . 94,000 Aggregate outstanding balance at December 31, 1995 $ 1,750,000 NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Note G-ALLOWANCE FOR LOAN LOSSES An analysis of the allowance for loan losses follows: Years ended December 31, 1995 1994 1993 Balance at beginning of year. . . . . $3,736,994 $3,543,743 $3,681,120 Allowance acquired in loan purchase (see Note B) . - 410,763 - Provision for loan losses. . . . . 105,000 215,000 844,361 Loans charged-off. . . . . . . . . (363,381) (837,667) (1,333,960) Less recoveries. . . . . . . . . . 375,020 405,155 352,222 Net loans (charged-off) recovered 11,639 (432,512) (981,738) Balance at end of year. . . . . . . . $3,853,633 $3,736,994 $3,543,743 Note H-MORTGAGE LOAN SERVICING The unamortized cost of purchased mortgage servicing rights totalled $490,000 and $570,000 at December 31, 1995 and 1994, respectively. At December 31, 1995 and 1994 the Company was servicing loans for others amounting to $74,586,000 and $80,374,000, respectively. In connection with these loans serviced for others, the Company held advances by borrowers for taxes and insurance in the amount of $1,311,000 at December 31, 1995 and $1,357,000 at December 31, 1994. Note I-PREMISES AND EQUIPMENT A summary of premises and equipment and accumulated depreciation and amortization follows: December 31, 1995 1994 Premises and Equipment Buildings . . . . . . . . . . . . $ 6,664,298 $ 6,695,479 Equipment . . . . . . . . . . . . 4,681,706 4,282,489 Leasehold improvements. . . . . 743,464 479,556 12,089,468 11,457,524 Less accumulated depreciation and amortization . . . . . . . 5,779,089 5,262,285 6,310,379 6,195,239 Land. . . . . . . . . . . . . . . 2,636,905 2,477,475 $ 8,947,284 $ 8,672,714 Depreciation and amortization of premises and equipment charged to expense for the years ended December 31, 1995, 1994 and 1993 was $604,000, $555,000 and $563,000 respectively. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 At December 31, 1995 the Company and certain subsidiaries were obligated under various noncancellable operating leases for premises and equipment. The leases, expiring at various dates to 2005, generally provide options to renew and to purchase at fair value and require payment of taxes, insurance and maintenance costs. Total rental expense for all operating leases for the years ended December 31, 1995, 1994 and 1993 was $643,000, $477,000 and $408,000 respectively. Future minimum payments under operating leases were as follows at December 31, 1995: 1996. . . . . . . . . . . . $ 535,000 1997. . . . . . . . . . . . 288,000 1998. . . . . . . . . . . . 270,000 1999. . . . . . . . . . . . 144,000 2000. . . . . . . . . . . . 78,000 After 2000. . . . . . . . . 622,000 Total minimum lease payments . . .$1,937,000 Note J-NOTE PAYABLE, SHORT TERM AND LONG TERM BORROWINGS Short Term Borrowings The following summarizes the short term borrowings at December 31: 1995 1994 Securities sold under repurchase ageeements . . . $ 2,355,000 $ - Treasury tax and loan notes . . . . 167,666 998,181 Federal Home Loan Bank advances . . . 25,000,000 12,400,000 Total short term borrowings . . . . . $27,522,666 $13,398,181 Securities subject to repurchase agreements are retained by the Company's custodian under written agreements that recognize the customer's interests in the securities. The subsidiary banks have agreements with their respective Federal Reserve district banks to be authorized treasury tax and loan depositories. The subsidiary banks, Wheeling National Bank ("WNB") and Columbus National Bank ("CNB") are members of the Federal Home Loan Bank (the "FHLB") in the Pittsburgh and Cincinnati districts, respectively. The FHLB advances mature in January, 1996. The following table summarizes information regarding the Federal Home Loan Bank advances: Years ended December 31, 1995 1994 Balance, end of year. . . . . . . . . . $25,000,000 $12,400,000 Weighted average interest rate, end of year . 5.76% 6.45% Average amount outstanding during the year. . . 20,277,006 2,270,137 Weighted average interest rate during the year. . . . 6.08% 5.28% Maximum amount outstanding at any month end . . 25,000,000 12,400,000 NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Notes Payable and Other Long Term Borrowings The following summarizes notes payable and other long term borrowings at December 31: 1995 1994 Variable rate note, due December 1996 . $ 1,000,000 $ 2,000,000 Capitalized lease obligations . . . 47,124 - $ 1,047,124 $ 2,000,000 The variable rate term note had a weighted average interest rate of 7.76% and 9.93% at December 31, 1995 and 1994, respectively. Note K-FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK In the normal course of business the Company enters into contractual commitments involving financial instruments with off-balance-sheet risk. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support financial instruments with off-balance-sheet risk. A summary of off-balance-sheet financial instruments at December 31, 1995 and December 31, 1994 is as follows: Financial instruments whose contract amounts represent credit risk: Contract Amounts 1995 1994 Commitments to extend credit. . . $30,721,000 $21,045,000 Standby letters of credit . . 96,000 96,000 Commercial letters of credit. 778,000 533,000 Commitments to extend credit, approximately $453,000 at December 31, 1995 and $1,013,000 at December 31, 1994, of which are dealer floor plan lines, are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments, except dealer floor plan lines, are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counterparty. A majority of the commitments extended by the Company have either variable interest rates or are revolving credit card commitments which have a fixed interest rate. An adverse movement in market interest rates is not deemed to be a significant risk on the outstanding commitments at December 31, 1995. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Commercial letters of credit are issued by the Company specifically to facilitate trade or commerce. The credit risk involved in issuing letters of credit is essentially the same as that in extending loan facilities to customers. Note L-FAIR VALUE OF FINANCIAL INSTRUMENTS SFAS No. 107 "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values for its financial instruments. Fair value estimates, methods and assumptions are set forth below for the Company's financial instruments. Securities and Federal Funds Sold The carrying amounts for federal funds sold approximate fair value as they mature in 90 days or less. The fair value of investment and mortgage-backed securities is based on quotations from an independent investment portfolio accounting service. Loans Fair values are estimates for portfolios of loans with similar financial characteristics. Loans are segregated by type and include commercial, real estate mortgage and installment loans. Each loan category is further segmented into fixed and adjustable rate terms, for purposes of estimating their fair value. The carrying values approximate fair value for variable rate loans which reprice frequently, provided there has been no change in credit quality since origination. Book value also approximates fair value for loans with a relatively short term to maturity, provided there is little or no risk of default before maturity and the disparity between the current rate and market rate is small. Any mark-to-market adjustment for these short-term loans would be insignificant. This estimation methodology is applied to the Company's demand loans, lines of credit and credit card portfolios. The fair value of all other performing loans is calculated by discounting scheduled cash flows through the estimated maturity using the rates currently offered for loans of similar remaining maturities. The estimate of maturity is based on the Company's historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. The fair value reflects market prepayment estimates. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 The fair value of nonperforming loans is calculated by discounting carrying values adjusted for specific reserve allocations through anticipated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan. The installment loan portfolio includes credit card loans. The fair value estimate of credit card loans is based on the value of existing loans at December 31, 1995. This estimate does not include the value that relates to estimated cash flows from new loans generated from existing cardholders over the remaining life of the portfolio. Deposits and Other Liabilities Under SFAS No. 107, the fair value of deposits with no stated maturity, such as demand and savings accounts, is equal to the amount payable on demand as of December 31, 1995. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. Borrowings The Company's short-term and long-term borrowings are variable rate, thus fair values are based on carrying amounts since these borrowings reprice frequently as market rates change. Off-Balance-Sheet Financial Instruments The Company's off-balance-sheet financial instruments are comprised of commitments to extend credit, 90% of which are lines of credit and credit cards. These commitments to extend credit generally are not sold or traded and estimated fair values are not readily available. The fair value of commitments to extend credit can be estimated by discounting the remaining contractual fees over the term of the commitment using the fees currently charged to enter into similar agreements. Considering the current economic environment and the creditworthiness of the counterparties in the portfolio, the Company believes that such a calculation would not indicate a material calculated fair value. Limitations Fair value estimates are made at a specific point in time, based on relevant market data and information about each financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets that are not considered financial assets include property, plant and equipment. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 The following table represents carrying values and estimated fair values of the Company's financial instruments as of December 31, 1995 and 1994: 1995 1994 Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value FINANCIAL ASSETS Federal Funds Sold. . . $ 11,469,000 $ 11,469,000 $ 3,924,000 $ 3,924,000 Investment Securities available for sale . 68,014,533 68,014,533 3,484,431 3,484,431 Investment Securities held to maturity . . . . - - 78,189,252 74,418,919 Loans Receivable: Commercial . . . . . . 64,951,306 64,410,657 52,929,805 51,997,428 Real Estate Mortgage . 128,709,317 128,561,576 119,629,269 119,113,157 Installment. . . . . . 56,711,400 55,552,463 56,306,670 55,499,243 Total Loans. . . . . 250,372,023 248,524,696 228,865,744 226,609,828 Allowance for Loan Losses. . . . (3,853,633) - (3,736,994) - Net Loans . . . . . 246,518,390 248,524,696 225,128,750 226,609,828 FINANCIAL LIABILITIES Fixed Maturity Deposits (1) Time Deposits . . . . 134,607,590 135,642,531 118,405,219 118,646,212 Short-term Borrowings . . 27,522,666 27,522,666 13,398,181 13,398,181 Notes payable and other long-term debt. 1,047,124 1,047,124 2,000,000 2,000,000 (1) SFAS No. 107 defines the estimated fair value of deposits with no stated maturity, which included demand deposits, money market and other savings accounts, to be equal to the amount payable on demand. Therefore, the balances of the Company's $158.1 million and $173.9 million of such deposits at December 31, 1995, respectively, are not included in this table. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Note M-STOCKHOLDERS' EQUITY The Company has authorized 200,000 shares of $100 par value preferred stock issuable in series. No shares of preferred stock were issued or outstanding at December 31, 1995 and 1994. On December 31, 1994, the Company issued 58,225 shares of common stock through a stockholder rights offering with net proceeds to the Company of $839,000. Note N-DIVIDEND RESTRICTIONS Dividends declared by the Company may be substantially provided from subsidiary bank dividends. The payment of dividends by bank subsidiaries is subject to various restrictions imposed under banking regulations. For national banks, surplus in an amount equal to capital stock is not available for dividends and prior approval of the Comptroller of the Currency is required if total dividends declared exceed the total (defined) net profits from the beginning of the current year to the date of declaration, combined with the retained net profits of the preceding two years. Note O-INCOME TAXES Total income tax provision (benefit) for the three years ended December 31, 1995 was allocated as follows: 1995 1994 1993 Income from operations . . . . . . $1,757,823 $ 881,651 $ 999,152 Shareholders' equity for the tax effect of net unrealized losses on securities available for sale . . . . . . ( 38,349) - - $1,719,474 $ 881,651 $ 999,152 The composition of the provision for income taxes from operations for the three years ended December 31, 1995 follows: 1995 1994 1993 Federal Income Taxes Current . . . . . . . . . . . . $1,216,425 $1,023,837 $ 914,387 Deferred. . . . . . . . . . . 301,680 (302,380) (102,027) Provision for federal income taxes. . . 1,518,105 721,457 812,360 State. . . . . . . . . . . . . . . 239,718 160,194 186,792 Provision for income taxes $1,757,823 $ 881,651 $ 999,152 NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 The following is a reconciliation of federal income tax expense to the amount computed at the statutory rate: 1995 1994 1993 Pre-tax income at statutory rate . . $1,635,397 $ 876,510 $ 941,665 Increase (decrease) resulting from: Tax exempt income . . . . . . . . (45,476) (51,385) (69,066) Dividends received deduction. . . (30,940) (30,940) (30,940) Amortization of goodwill and other intangibles. 40,627 41,161 32,442 State tax provision (net of federal tax benefit) . . . . (81,503) (54,466) (61,741) Other . . . . . . . . . . . - (59,423) - Provision for federal income taxes. $1,518,105 $ 721,457 $ 812,360 The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of December 31, 1995, 1994 and 1993 consist of the following: 1995 1994 1993 Deferred tax assets: Loan loss reserves. . . . . . . . $ 772,573 $ 822,621 $ 896,030 Equity securities . . . . . . . 236,980 217,090 305,490 Investment securities . . . . . 38,349 - - Pension plan. . . . . . . . . . 242,799 207,599 47,799 Cash basis accounting . . . - 55,157 - Real estate owned . . . . . . . 6,967 83,842 - 1,297,668 1,386,309 1,249,319 Deferred tax liabilities: Fixed assets. . . . . . . . . . 169,040 174,513 229,515 Cash basis accounting . . . . . . 125,640 - 7,870 Other . . . . . . . . . . . . . 43,199 8,566 22,684 337,879 183,079 260,069 Net deferred tax asset before valuation allowance . . . . . . . 959,789 1,203,230 989,250 Valuation allowance. . . . . . . 236,980 217,090 305,490 Net deferred tax asset . . . . . . $ 722,809 $ 986,140 $ 683,760 The net deferred tax asset recorded under SFAS No. 109 is expected to be realized through carryback to taxable income in prior years, future reversals of existing taxable temporary differences, and, to a lesser extent, future taxable income. The valuation allowance increased in 1995 by $19,890 as a result of the decrease in equity securities market value. In 1994, the valuation allowance decreased by $88,400 as a result of the increase in equity securities market value. Since no net deferred tax benefit was recorded on the initial writedown of the asset, due to its capital nature, no tax expense was recorded in 1994 on its recovery. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Note P-OTHER EXPENSES Amounts included in other expenses are as follows for the years ended December 31, 1995, 1994 and 1993: 1995 1994 1993 Credit card expenses . . . $ 315,340 $ 281,433 $ 203,519 Data processing. . . . . . 389,533 246,397 277,802 FDIC assessment. . . . . . 429,066 615,326 710,427 Other real estate. . . . . 4,497 387,797 144,232 Postage. . . . . . . . . . 312,186 261,615 247,183 Professional fees. . . . . 640,832 556,158 548,882 Stationery and supplies. . 380,237 309,588 337,541 Taxes other than on income 356,259 266,140 293,922 Telephone. . . . . . . . . 272,546 225,583 216,354 Other (each less than 1% of income) . . . . . 1,555,674 1,257,123 1,169,298 $4,656,170 $4,407,160 $4,149,160 Note Q-CONTINGENCIES The undercapitalized status of the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC") has resulted in the introduction of federal legislation to recapitalize the SAIF. If enacted, the legislation would require Bank Insurance Fund ("BIF") members like CNB, who have participated in FDIC Act Section 5(d)(3) ("Oakar") transactions, to pay a one-time charge of between 75 and 85 basis points on 80% of Oakar deposits as of March 31, 1995. This could result in a one-time assessment, based on total Oakar deposits of $46.5 million at March 31, 1995, of approximately $279,000 to $316,000, which would reduce net income by approximately $184,000 to $209,000. NOTES TO CONSOLIDATED American Bancorporation & Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1993 and 1992 Note R-PENSION PLAN AND PROFIT SHARING 401(K) SAVINGS PLAN Effective January 1, 1989, the Company established the American Bancorporation Pension Plan (the "Plan"). This non-contributory defined benefit plan covers all eligible employees of the Company and its banking and non-banking subsidiaries. Benefits are based on employees' years of service and compensation. The following table sets forth the Plan's funded status as of December 31, 1995 and 1994: 1995 1994 Actuarial present value of accumulated benefits obligation: Vested. . . . . . . . . . . . . . .$ 1,476,327 $ 935,656 Non-vested. . . . . . . . . . . . - - $ 1,476,327 $ 935,656 Plan assets at fair value; primarily marketable securities . . . $ 1,078,502 $ 1,173,289 Projected benefit obligation . . . . . . .1,476,327 935,656 Plan assets (less than) in excess of projected benefit obligation. . . . . (397,825) 237,633 Unrecognized net transition asset. . . - - Prior service cost not yet recognized in net periodic pension cost . . . . . . . . . .- - Unrecognized net loss. . . . . . . . . - 109,419 (Accrued) prepaid pension costs . .$ (397,825) $ 347,052 Net pension costs, for the three years ended December 31, 1995, included the following components: 1995 1994 1993 Service cost - benefits earned during the period . . $ - $ - $ - Interest cost on projected benefit obligation 66,253 65,832 72,392 Actual return on plan assets . . . (41,162) 821 362 Net amortization and deferral. . . (39,854) (83,867) (111,121) Net periodic pension cost. . . . . . $(14,763) $(17,214) $ (38,367) The discount rate used in determining the projected benefit obligation in 1995, 1994 and 1993 was 6.25%, 5.75% and 5.75%, respectively. The expected long-term rate of return on plan assets for each of the years ending in 1995, 1994 and 1993 was 7.00%. The 1994 prepaid pension cost reflects the impact of a plan curtailment, as determined without consideration of any additional benefit obligation due Plan participants as a result of the claim discussed below, resulting from the Company's freezing of benefits of the Plan. Recognition of the prepaid pension cost and any related impact on the Statement of Operations resulting from the curtailment was deferred through December 31, 1994. NOTES TO CONSOLIDATED American Bancorporation & Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1993 and 1992 In 1993, due to the continuation of the claim noted below, the Company notified the plan participants that the planned termination of the Plan was rescinded; however, the amendment to freeze all benefit accruals and fully vest all participants in the benefits accrued to them as of December 31, 1992 remains in effect at December 31, 1995. A claim was made against the Plan during 1992 by a former employee (the "Claimant"), alleging additional benefits due him under the Plan. The Administrator of the Plan denied the claim. The Claimant filed an appeal which was also denied by the Administrator. Because a dispute existed over the computation of benefits, the Plan Administrator commenced a civil action in the United States District Court, seeking a declaratory judgment that the determination of the Plan Administrator that additional benefits were not due under the terms of the Plan was correct. The Claimant filed a Motion for Summary Judgment asserting a claim for additional benefits. The District Court granted the Claimant's Motion for Summary Judgment. The Plan Administrator appealed this decision. Prior to the Court ruling on the appeal, all parties agreed as to the method of computing the benefit due the claimant. The Court found that the computation was made pursuant to the pertinent Plan provisions and approved a joint motion by the parties to dismiss the action. As a result, during 1995 the Plan Administrator disbursed $141,135 to the Claimant to settle the aforementioned claim. No amount of the disbursement was recognized in the 1995 statement of operations as the Company recorded a reserve of $500,000 in 1994 to recognize the liability for additional benefits due to Plan participants as determined based on the application of the Court's decision regarding the method of computing benefits to affected Plan participants. The 1994 funded status as per the preceding table omitted the obligation for the additional liability pending the Court's final ruling. The 1995 funded status includes the obligation for the additional benefits due the remaining effected Plan benefits based on the application of the Court's final ruling. Management believes appropriate liabilities, as reflected in the 1995 funded status have been established to recognize the application of the Court's decision and expects to incur no further expense for this situation. The Company sponsors a profit sharing 401(k) savings plan to which eligible employees are permitted to contribute up to fifteen percent of their salary to the plan each year. The plan provides for matching contributions of the Company equal to 50% of employee contributions up to the first 6% of compensation. The Company may, at its discretion, make profit sharing contributions to the plan. Plan participants are fully and immediately vested in Company matching contributions and fully vested in Company profit sharing contributions after 5 years of service. Company matching contributions for the years ended December 31, 1995, 1994 and 1993 amounted to $67,000, $49,000 and $52,000, respectively. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 Note S-PARENT COMPANY CONDENSED FINANCIAL INFORMATION AMERICAN BANCORPORATION (Parent Company Only) BALANCE SHEET December 31, 1995 and 1994 1995 1994 ASSETS Cash and short-term investments . $ 1,528,487 $ 1,090,778 Due from subsidiaries . . . . . 56,428 107,255 Investment in subsidiaries Banking. . . . . . . . . . . . . 26,732,262 25,508,021 Non-banking. . . . . . . . . . 1,191,487 1,762,945 27,923,749 27,270,966 Premises and equipment - net. . 19,483 15,619 Other assets. . . . . . . . . . 152,855 159,118 Total Assets. . . . . . . . . . .$29,681,002 $28,643,736 LIABILITIES Due to subsidiaries. . . . . . $ 339,251 $ 190,439 Other liabilities. . . . . . . 329,329 260,278 Notes payable . . . . . . . . 1,000,000 2,000,000 Total Liabilities. . . . . . 1,668,580 2,450,717 STOCKHOLDERS' EQUITY. . . . . . . 28,012,422 26,193,019 Total Liabilities and Stockholders' Equity . . . . . $29,681,002 $28,643,736 STATEMENT OF OPERATIONS (Parent Company) Years ended December 31, 1995, 1994 and 1993 1995 1994 1993 INCOME Dividends from banking subsidiaries $2,000,000 $ - $ 470,925 Reimbursement from subsidiaries . 357,984 354,000 327,250 Interest income . . . . . . . . . 25,028 40,481 48,038 Other income . . . . . . . . 443 326 505 Total income. . . . . . . . . . 2,383,455 394,807 846,718 EXPENSE Interest expense . . . . . . . . . 96,363 13,059 - Other expenses . . . . . . . . . . 589,176 682,508 577,218 Total expense . . . . . . . . . 685,539 695,567 577,218 1,697,916 (300,760) 269,500 Credit for income taxes . . . . . (86,863) (81,443) (52,661) 1,784,779 (219,317) 322,161 Equity in undistributed net income of subsidiaries. . . . . . 1,267,388 1,915,636 1,448,290 NET INCOME . . . . . . . . . . . . . $3,052,167 $1,696,319 $1,770,451 NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS-CONTINUED December 31, 1995, 1994 and 1993 STATEMENT OF CASH FLOWS (Parent Company) Years ended December 31, 1995, 1994 and 1993 1995 1994 1993 Operating Activities: Net income. . . . . . . . . . . . . . .$3,052,167 $1,696,319 $1,770,451 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization. . . 51,803 52,305 53,263 Equity in undistributed net income of subsidiaries after dividends . . (1,267,388) (1,915,636) (1,448,290) Net decrease in due from subsidiaries . . . 50,827 (69,219) (1,379) Net change in other assets and other liabilities.. . . . 106,762 24,874 (127,420) Net cash provided (used) by operating activities . . . 1,994,171 (211,357) 246,625 Investing Activities: Purchase of premises and equipment (10,439) (4,266) - Net change in investment in subsidiaries . . . 432,000 (2,570,000) (195,000) Net cash provided (used) by investing activities.. . 421,561 (2,574,266) (195,000) Financing Activities: Cash dividends paid. . . . . . . . . (978,023) (753,306) (753,306) Proceeds from stockholder rights offering - 839,236 - Net increase (decrease) in notes payable . . . (1,000,000) 2,000,000 - Net cash provided by (applied to) financing activities. . . . . (1,978,023) 2,085,930 (753,306) Net increase (decrease) in Cash and Cash Equivalents . . . 437,709 (699,693) (701,681) Cash and Cash Equivalents Beginning Balance. . . 1,090,778 1,790,471 2,492,152 Cash and Cash Equivalents Ending Balance $1,528,487 $1,090,778 $1,790,471 Cash paid during the year for: Interest. . . . . . . . . . . . . . . $ 96,363 $ 13,059 $ - The Parent Company paid no income taxes during 1995, 1994 or 1993. NOTES TO CONSOLIDATED American Bancorporation and Subsidiaries FINANCIAL STATEMENTS December 31, 1995, 1994 and 1993 Note T-SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarters Ended (In thousands, except per share) Mar 31 June 30 Sept 30 Dec 31 Year 1995 Interest income. . . . . . . . .$ 6,425 $ 6,679 $ 6,660 $ 6,732 $ 26,496 Interest expense . . . . . . . . 2,621 2,801 2,855 2,894 11,171 Net interest income . . . . . . 3,804 3,878 3,805 3,838 15,325 Provision for loan losses. . . . 45 45 15 - 105 Net interest income after provision for loan losses. . . 3,759 3,833 3,790 3,838 15,220 Other operating income . . . . . 381 420 441 438 1,680 Other operating expense. . . . . 3,082 3,052 2,925 3,031 12,090 Income before income taxes. . . .1,058 1,201 1,306 1,245 4,810 Provision for income taxes . . 388 439 478 453 1,758 Net income. . . . . . . . . .$ 670 $ 762 $ 828 $ 792 $ 3,052 Per common share Net income . . . . . . . . .$ 0.43 $ 0.49 $ 0.53 $ 0.50 $ 1.95 1994 Interest income. . . . . . . . .$ 4,732 $ 4,800 $ 5,126 $ 5,477 $ 20,135 Interest expense . . . . . . . . 1,718 1,685 1,778 2,008 7,189 Net interest income . . . . . . 3,014 3,115 3,348 3,469 12,946 Provision for loan losses. . . . 80 45 45 45 215 Net interest income after provision for loan losses. . . 2,934 3,070 3,303 3,424 12,731 Other operating income . . . . . 256 238 251 317 1,062 Other operating expense. . . . . 2,535 2,507 2,658 3,515 11,215 Income before income taxes. . . 655 801 896 226 2,578 Provision (credit) for income taxes. . 243 300 344 (5) 882 Net income. . . . . . . . . $ 412 $ 501 $ 552 $ 231 $ 1,696 Per common share Net income . . . . . . . . $ 0.27 $ 0.33 $ 0.37 $ 0.16 $ 1.13 KPMG Peat Marwick LLP Certified Public Accountants One Mellon Bank Center Telephone 412 391 9710 Telefax 412 391 8963 Pittsburgh, PA 15219 Telex 7106642199 PMM & CO PGH Independent Auditors' Report To the Board of Directors and Shareholders of American Bancorporation: We have audited the accompanying consolidated balance sheets of American Bancorporation and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Bancorporation and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in note A to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," in 1994. Pittsburgh, Pennsylvania March 26, 1996 Member Firm of Klynveld Peat Marwick Goerdeler American Bancorporation and Subsidiaries Five Year Selected Financial Data ($ in thousands, except per share data) Consolidated Statement of Operations
For the years ended 1995 1994 1993 1992 1991 Interest income Interest and fees on loans. . . $ 21,929 $ 14,902 $ 14,590 $ 16,903 $ 20,893 Interest on securities. . . . 4,197 4,721 5,513 6,034 5,518 Interest on other short-term investments. . 370 512 467 578 1,090 26,496 20,135 20,570 23,515 27,501 Interest expense Interest on deposits and borrowed funds 11,171 7,189 8,009 11,370 15,307 Net interest income . . . . 15,325 12,946 12,561 12,145 12,194 Provision for loan losses. . . 105 215 844 3,159 2,250 Net interest income after provision for loan losses. . 15,220 12,731 11,717 8,986 9,944 Service charges and other income . . . 1,680 1,062 1,449 1,124 842 Other expenses Salaries and employee benefits 5,319 4,933 4,428 4,368 3,887 Other operating expenses. . . 6,771 6,282 5,969 6,452 6,022 12,090 11,215 10,397 10,820 9,909 Income (loss) before income taxes. . . 4,810 2,578 2,769 (710) 877 Provision (credit) for income taxes . 1,758 882 999 (269) 528 Net income (loss) . . . . $ 3,052 $ 1,696 $ 1,770 $ (441) $ 349 Per common share*: Net income (loss) . . . . $ 1.95 $ 1.13 $ 1.18 $ (0.29) $ 0.23 Cash dividends. . . . . . $ 0.70 $ 0.50 $ 0.50 $ 0.50 $ 0.50 Average common shares outstanding (000's). . 1,565 1,507 1,507 1,507 1,507 Consolidated Balance Sheet Data Balance at year end Total Assets. . . . . . . . . . $353,995 $338,116 $276,390 $288,962 $294,176 Earning Assets. . . . . . . . . 330,136 314,463 256,967 266,748 269,939 Loans, net of unearned income . 250,372 228,866 150,523 158,978 176,965 Deposits. . . . . . . . . . . . 292,665 292,341 248,040 261,001 262,264 Notes payable and other long-term debt. . . 1,047 2,000 - - 1,200 Stockholders' equity. . . . . 28,012 26,193 24,158 23,141 24,336 Average Balances for years ended Total Assets. . . . . . . . . . 348,655 284,845 278,669 293,383 293,937 Earning Assets. . . . . . . . . 323,750 263,178 257,455 270,008 270,401 Loans, net of unearned income . 243,043 164,405 153,277 165,024 182,636 Deposits. . . . . . . . . . . . 293,415 252,916 250,504 262,957 262,215 Long-term debt. . . . . . . . 1,091 167 - 800 1,200 Stockholders' equity. . . . . 27,248 25,188 23,778 24,127 24,524 Consolidated Financial Ratios (as a Percent) Net income to average assets 0.88% 0.60% 0.64% N/A 0.12% Net income to average equity. 11.20 6.73 7.44 N/A 1.42 Dividends to net income . . . 35.89 44.84 42.57 N/A 215.90 Average equity to average assets. . 7.82 8.84 8.53 8.22 8.34 Average debt to average equity. . . 4.00 0.66 0.00 3.32 4.89 *(Per share data has been retroactively restated for a two for one stock split which became effective March 16, 1994.)
Average Balances, Income and Expense, Yields and Rates
($ in thousands) 1995 1994 1993 Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate INTEREST EARNING ASSETS Loans Commercial . . . . . . $ 59,497 $ 5,839 9.81% $ 48,161 $ 4,052 8.41% $ 44,827 $ 3,531 7.88% Real estate. . . . . . 127,107 10,457 8.23 64,114 5,416 8.45 50,956 4,764 9.35 Installment-net. . . 56,439 5,215 9.24 52,130 4,880 9.36 57,494 5,937 10.33 Fees . . . . . . - 418 - - 554 - - 358 - Total loans . . . . . 243,043 21,929 9.02 164,405 14,902 9.06 153,277 14,590 9.52 Investment securities Taxable. . . . . . . 73,644 4,052 5.50 85,509 4,558 5.33 87,918 5,301 6.03 Tax-exempt . . . . . 1,979 145 7.29 2,246 163 7.26 2,603 212 8.16 Total investment securities . 75,623 4,197 5.55 87,755 4,721 5.38 90,521 5,513 6.09 Other short-term investments 5,084 370 7.28 11,018 512 4.64 13,657 467 3.42 Total earning assets. 323,750 26,496 8.18 263,178 20,135 7.65 257,455 20,570 7.99 Non-interest Earning Assets Cash and due from banks . . 10,823 11,024 10,050 Premises and equipment - net. . 8,752 7,992 7,989 Other assets . . . . . 5,330 2,651 3,175 24,905 21,667 21,214 TOTAL ASSETS. . . . . $348,655 $284,845 $278,669 INTEREST BEARING LIABILITIES Deposits NOW, Savings and MMDA . $130,741 $ 3,491 2.67% $127,626 $ 3,277 2.57% $125,950 $ 3,684 2.92% Time. . . . . . . . . 130,742 6,307 4.82 96,392 3,753 3.89 100,270 4,261 4.25 Total deposits. . . 261,483 9,798 3.75 224,018 7,030 3.14 226,220 7,945 3.51 Short-term borrowings. 21,736 1,275 5.87 3,942 146 3.69 1,948 64 3.27 Notes payable and other long-term debt 1,091 98 8.97 167 13 7.84 - - Total interest bearing liabilities. 284,310 11,171 3.93 228,127 7,189 3.15 228,168 8,009 3.51 Non-interest bearing Demand non-interest bearing 31,932 28,898 24,284 Other liabilities . 5,165 2,632 2,439 37,097 31,530 26,723 Stockholders' Equity. . 27,248 25,188 23,778 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . $348,655 $284,845 $278,669 Net interest income $15,325 $12,946 $12,561 Interest rate spread . 4.25% 4.50% 4.48% MARGIN ANALYSIS (as a % of Earning Assets) Interest income 8.18% 7.65% 7.99% Interest expense. 3.45 2.73 3.11 Net interest income . . 4.73% 4.92% 4.88% Averages stated are month end average balances. Installment loans are stated net of unearned income. Average loans include nonaccrual loans. Yields do not reflect tax equivalent adjustments.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS December 31, 1995, 1994 and 1993 Introduction The discussion and analysis, when read in conjunction with the consolidated financial statements and accompanying notes, is designed to provide information relevant to an assessment of financialperformance and management's perception of significant events. Summary American Bancorporation recognized net income of $3,052,000 ($1.95 per share) in 1995, compared to net income of $1,696,000 ($1.13 per share) in 1994. The increase was the result of increases in net interest income and other income and a decrease in the provision for loan losses which were partially offset by an increase in other expenses. At year end, the Company's assets totalled $353,995,000. Deposits totalled $292,665,000 at year end. Stockholders equity aggregated $28,012,000. On December 8, 1994 the Company, through its subsidiaries CNB and AMI, acquired certain assets and assumed certain liabilities of Buckeye Savings Bank, a wholly owned subsidiary of Crown Bank, F.S.B., headquartered in Casselberry, Florida. (See Note B "Branch Acquisition"). MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993 RESULTS OF OPERATIONS The discussion and analysis of the results of operations is focused on the three years ended December 31, 1995 and uses a format of consecutive year comparisons. Volume and rate variances contributing to change in net interest income are analyzed using adjusted month end average balances. Tax equivalency is not imputed in the calculation of yields.
($ in thousands) Years ended December 31 Change 1995 1994 1993 1995 - 1994 1994 - 1993 Amount % Amount % Interest income. . . . . . $ 26,496 $ 20,135 $ 20,570 $ 6,361 31.59% Interest expense . . . . 11,171 7,189 8,009 3,982 55.39 (820) (10.24) Net interest income . . 15,325 12,946 12,561 2,379 18.38 385 3.06 Provision for loan losses. . . 105 215 844 (110) (51.16) (629) (74.54) Net interest income after provision for loan losses. . .15,220 12,731 11,717 2,489 19.55 1,014 8.65 Other operating income . 1,680 1,062 1,449 618 58.24 (387) (26.72) Other operating expense. . 12,090 11,215 10,397 875 7.81 818 7.87 Income before income taxes. .$ 4,810 $ 2,578 $ 2,769 $ 2,232 86.58% $ (191) (6.92)% Average Volume Earning Assets. . . . . . . $323,750 $263,178 $257,455 $60,572 23.02% $5,723 2.22% Interest Bearing Liabilities. 284,310 228,127 228,168 56,183 24.63 (41) (0.02) Yield/Rate Earning Assets. . . . 8.18% 7.65% 7.99% Interest Bearing Liabilities. 3.93 3.15 3.51 Spread. . . . . . . . 4.25 4.50 4.48 Net Interest Margins. 4.73% 4.92% 4.88%
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993
VOLUME AND RATE VARIANCES 1995 - 1994 1994 - 1993 Increase/ (decrease) due to Increase/ (decrease) due to ($ in thousands) Volume Rate Net Volume Rate Net Interest Income Loans . . . . . . . . . . $ 7,096 $ (69) $ 7,027 $ 1,029 $ (717) $ 312 Investment securities Taxable. . . . . . . . (649) 143 (506) (142) (601) (743) Tax-exempt . . . . . . (19) 1 (18) (27) (22) (49) Other short-term investments. (352) 210 (142) (101) 146 45 Total interest income . 6,076 285 6,361 759 (1,194) (435) Interest Expense NOW, Savings and MMDA. . . 81 133 214 48 (455) (407) Time . . . . . . . . . 1,529 1,024 2,553 (161) (347) (508) Total interest expense 2,692 1,290 3,982 (27) (793) (820) Net Interest Income. . . $ 3,384 $(1,005) $ 2,379 $ 786 $ (401) $ 385 The rate-volume variance has been allocated in proportion to the absolute value attributed to each change.
Year ended December 31, 1995 Compared to Year Ended December 31, 1994 Net Income. Net income for the year ended December 31, 1995 amounted to $3,052,000, compared to net income of $1,696,000 for the year ended December 31, 1994. The increase was the result of increases in net interest income and other income and a decrease in the provision for loan losses which were partially offset by an increase in other expenses. Net Interest Income. Net interest income before provision for loan losses for the year ended December 31, 1995 amounted to $15,325,000, an increase of $2,379,000 or 18.4%, as compared to the year ended December 31, 1994. The increase resulted primarily from a $60,572,000 or 23.0% increase in average interest earning assets, which was partially offset by a 19 basis point decrease in the Company's margin. The increase in average interest earning assets was primarily the result of assets acquired from Buckeye. Interest Income. Total interest income for the year ended December 31, 1995 amounted to $26,496,000, an increase of $6,361,000 or 31.6% as compared to the year ended December 31, 1994. The increase resulted primarily from a $60,572,000 increase in the average volume of earning assets and a 53 basis point increase in the average yield on earning assets. Average loans outstanding increased $78,638,000 or 47.8% with average real estate loans increasing $62,993,000 or 98.3%, average commercial loans increasing $11,336,000 or 23.5% and average consumer installment loans increased $4,309,000 or 8.3%. The average yield on loans decreased from 9.06% in 1994 to 9.02% in 1995. Average investment securities and other short-term investments outstanding decreased $18,066,000 or 18.3% while the average yield increased from 5.30% in 1994 to 5.66% in 1995. Interest Expense. Total interest expense for the year ended December 31, 1995 amounted to $11,171,000, an increase of $3,982,000 or 55.4%, as compared to the year ended December 31, 1994. The increase resulted primarily from a $56,183,000 or 24.6% increase in the average volume of interest bearing liabilities and a 78 basis point increase in interest rates paid on such liabilities. The increase in average interest bearing liabilities was primarily the result of liabilities acquired from Buckeye. Average NOW, money market and savings accounts increased $3,116,000 or 2.4%. Average time deposits increased $34,350,000 or 35.6%. Average non-interest bearing accounts increased $3,034,000 or 10.5% and represented 10.9% of average total deposits for the year ended December 31, 1995. Provision for Loan Losses. The provision for loan losses for the year ended December 31, 1995 was $105,000, compared to $215,000 for the year ended December 31, 1994. Net loans recovered were $12,000 in 1995, compared to net loans charged-off of $433,000 in 1994. Other Income. Other income for the year ended December 31, 1995 amounted to $1,680,000, an increase of $618,000 or 58.2%, as compared to the year ended December 31, 1994. Net gains on sale of investment securities totalled $3,000 in 1995 and 1994. Other (miscellaneous) income increased by $618,000, primarily due to increases in customer service fees and fees from mortgage loan servicing. Other Expense. Total other expense for the year ended December 31, 1995 amounted to $12,091,000, an increase of $876,000 or 7.8%, as compared to the year ended December 31, 1994. Salaries and employee benefits increased $387,000, or 7.8%. Occupancy and equipment expense increased $240,000 or 12.8%. Other (miscellaneous) expenses increased $249,000 or 5.7%. Provision for Income Taxes. The provision for income taxes for the year ended December 31, 1995 was $1,758,000, compared to $882,000 for the year ended 1994. The increase was due to the increase in the Company's pre-tax income. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993 Year ended December 31, 1994 Compared to Year Ended December 31, 1993 Net Income. Net income for the year ended December 31, 1994 amounted to $1,696,000, compared to net income of $1,770,000 for the year ended December 31, 1993. The decrease was the result of an increase in other expenses, primarily due to a reserve established for probable pension expense (See Note R "Pension Plan and Profit Sharing 401(k) Savings Plan"), and a decrease in other income which were partially offset by a decrease in the provision for loan losses and an increase in net interest income. Net Interest Income. Net interest income before provision for loan losses for the year ended December 31, 1994 amounted to $12,946,000, an increase of $385,000 or 3.1%, as compared to the year ended December 31, 1993. The increase resulted primarily from a $5,723,000 increase in average interest earning assets. Interest Income. Total interest income for the year ended December 31, 1994 amounted to $20,135,000, a decrease of $435,000 or 2.2% as compared to the year ended December 31, 1993. The decrease resulted primarily from a 34 basis point decline in the average yield on earning assets, which was partially offset by a $5,723,000 increase in the average volume of earning assets. Average loans outstanding increased $11,128,000 or 7.3% with average real estate loans increasing $13,158,000 or 25.8% and average commercial loans increasing $3,334,000 or 7.4%, while average consumer installment loans decreased $5,364,000 or 9.3%, The average yield on loans decreased from 9.52% in 1993 to 9.06% in 1994. Average investment securities and other short-term investments outstanding decreased $5,405,000 or 5.2%, and the average yield decreased from 5.74% in 1993 to 5.30% in 1994. Interest Expense. Total interest expense for the year ended December 31, 1994 amounted to $7,189,000, a decrease of $820,000 or 10.2%, as compared to the year ended December 31, 1993. The decrease resulted primarily from a 36 basis point decline in interest rates paid on interest bearing liabilities. Average NOW, money market and savings accounts increased $1,676,000 or 1.3%. Average time deposits decreased $3,878,000 or 3.9%. Average non-interest bearing accounts increased $4,614,000 or 19.0% and represented 11.4% of average total deposits for the year ended December 31, 1994. Provision for Loan Losses. The provision for loan losses for the year ended December 31, 1994 was $215,000, compared to $844,000 for the year ended December 31, 1993. Net charged-off loans were $433,000 in 1994, compared to $982,000 in 1993, a decrease of 55.9%. Net installment loans charged-off decreased $466,000 and net real estate loans charged-off decreased $123,000 while commercial loans charged-off increased $41,000. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993 Other Income. Other income for the year ended December 31, 1994 amounted to $1,062,000, a decrease of $387,000 or 26.7%, as compared to the year ended December 31, 1993. Net gains on sale of investment securities totalled $3,000 in 1994, compared to $219,000 in 1993. Other (miscellaneous) income declined by $132,000, primarily due to gains on sale of assets recorded in 1993. Other Expense. Total other expense for the year ended December 31, 1994 amounted to $11,215,000, an increase of $818,000 or 7.9%, as compared to the year ended December 31, 1993. Salaries and employee benefits increased $505,000, or 11.4%, primarily due to the establishment of a $500,000 reserve for probable pension costs as previously discussed (See Note R "Pension Plan and Profit Sharing 401(k) Plan"). Occupancy and equipment expense increased $56,000 or 3.1%. Other (miscellaneous) expenses increased $258,000 or 6.2%. Provision for Income Taxes. The provision for income taxes for the year ended December 31, 1994 was $882,000, compared to $999,000 for the year ended 1993. The decrease was due to the decrease in the Company's pre-tax income. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993 FINANCIAL CONDITION Loans The Company's primary earning assets are loans, representing 70.7% of the total assets at December 31, 1995. Loans increased $21,506,000 or 9.4% between 1994 and 1995 primarily due to improved demand in the commercial and real estate lending segments of the portfolio. Loans increased $78,343,000 or 52.0% between 1993 and 1994, primarily due to loans acquired from Buckeye. At December 31, 1995 there were no concentrations of loans in any particular industry or in a group of related industries exceeding 10% of total loans. It is the policy of the Company to review each prospective credit in order to determine an adequate level of security or collateral to obtain prior to making the loan. The type of collateral will vary and ranges from liquid assets to real estate. Commercial business loans are made based on the financial ability of the borrower to repay the obligation and the appraised value of assets used as collateral. Real estate construction loans are made with loan-to-value ratios generally below 75%. Real estate mortgage loans are made with loan-to-value ratios generally below 80% of the appraised value. The real estate is appraised at the time the loan is originated and is reappraised if the loan is placed on a classified status. All consumer installment loan requests are evaluated to determine the prospective borrowers ability and willingness to repay the obligation and their stability as a borrower. Ability to repay is determined by comparing an applicant's monthly debt payment including the proposed loan payment with net monthly income. The resulting debt service to income ratio generally must be below 40%. In addition, for consumer installment loans which require collateral, the Company will make advances up to 90% of the value on certain types of collateral. The table below sets forth loans by category at December 31, 1991 through 1995. TYPES OF LOANS ($ in thousands) 1995 1994 1993 1992 1991 Commercial . . . . . . . . $ 63,082 $ 51,818 $ 42,488 $ 44,697 $ 53,658 Real estate construction . . . 1,869 1,112 1,751 1,795 1,741 Real estate mortgage . . 128,709 119,629 53,417 49,524 50,186 Installment. . . . . . . 56,712 56,307 52,867 62,962 71,380 $250,372 $228,866 $150,523 $158,978 $176,965 Scheduled repayment and rate sensitivity of commercial loans and real estate construction loans is indicated as follows at December 31, 1995: ($ in thousands) One Year One to Over or Less Five Years Five Years Total Commercial . . . . . . . $48,757 $ 4,020 $10,305 $ 63,082 Real estate construction . . 1,402 467 - 1,869 Total . . . . . . . . . $50,159 $ 4,487 $10,305 $ 64,951 For the commercial and real estate construction loans due after one year, $10,292,000 have a predetermined interest rate and $4,500,000 have a floating or adjustable interest rate. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED December 31, 1995, 1994 and 1993 Asset Quality The following presents loans considered nonperforming and consequently detracting from asset quality: NONPERFORMING ASSETS ($ in thousands) 1995 1994 1993 1992 1991 Nonperforming loans Nonaccrual. . . . . . . . . . $ 790 $1,214 $2,188 $4,058 $2,775 90 days past due. . . . . . . 609 766 601 886 4,107 Restructured. . . . . . . . . 666 610 709 509 311 Total nonperforming loans. . $2,065 $2,590 $3,498 $5,453 $7,193 Other nonperforming assets Other real estate owned . . . 575 682 699 1,049 1,540 Total nonperforming assets . $2,640 $3,272 $4,197 $6,502 $8,733 Nonperforming loans as a percent of loans . 0.8% 1.1% 2.3% 3.4% 4.1% Nonperforming assets as a percent of total assets . 0.7% 1.0% 1.5% 2.3% 3.0% The nonaccrual category represents loans on which interest recognition has been suspended until realized because the borrower's ability to repay principal or interest is in doubt. For loans not primarily secured by real estate or in the process of collection, the Company discontinues accrual when a loan is 90 days past due. Real estate loans are placed on nonaccrual status when, in management's judgement, collection is in doubt or when foreclosure proceedings are initiated, which is generally 180 days past the due date. Although nominally performing, nonaccrual treatment may also be accorded on loans when information becomes available which suggests that more than normal risk of collection exists. Restructured loans are loans, the terms of which have been altered, to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. Past due loans are loans contractually past due 90 days or more and not included elsewhere. Total nonperforming loans were $2,065,000 at December 31, 1995, as compared to $2,590,000 at December 31, 1994. Nonaccrual loans, restructured loans and loans 90 days past due, decreased by $525,000, $974,000 and $157,000, respectively. The largest recovered loan at December 31, 1995 was $140,000. Of the $575,000 total other real estate owned, $570,000 represents former banking facilities. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED December 31, 1995, 1994 and 1993 Allowance for Loan Losses The Company's loan loss experience for the five years ended December 31, 1995 is summarized as follows:
SUMMARY OF LOAN LOSS EXPERIENCE ($ in thousands) 1995 1994 1993 1992 1991 Balance at beginning of year . . $ 3,737 $ 3,544 $ 3,681 $ 2,463 $ 1,850 Allowance acquired in loan purchase (See Note B) . . - 411 - - - Provision for loan losses . . 105 215 844 3,159 2,250 Loans charged-off Commercial . . . . . . . . . 63 205 110 798 328 Real estate mortgage . . . . 21 141 283 288 336 Installment. . . . . . . . . 279 491 941 1,093 1,217 Total loans charged-off . . 363 837 1,334 2,179 1,881 Loans recovered Commercial . . . . . . . . . 101 93 39 43 5 Real estate mortgage . . . . 108 25 44 12 27 Installment. . . . . . . . . 166 286 270 183 212 Total loans recovered . . . 375 404 353 238 244 Net loans charged-off (recovered). (12) 433 981 1,941 1,637 Balance at end of year . . . . . $ 3,854 $ 3,737 $ 3,544 $ 3,681 $ 2,463 Loans outstanding at December 31,. $250,372 $228,866 $150,523 $158,978 $176,965 Average loans for the year ended . 243,043 164,405 153,277 165,024 182,636 Ratio of net charge-offs to average loans. . . 0.00% 0.26% 0.64% 1.18% 0.90% Ratio of allowance to loans outstanding 1.54% 1.63% 2.35% 2.32% 1.39% Ratio of provision to average loans. . 0.04% 0.13% 0.55% 1.91% 1.23% The allowance for loan losses was equal to 1.54% of loans outstanding at year end 1995 and in management's judgment is adequate to absorb potential loan losses. While management's on-going analysis includes, among other factors, the financial position of particular borrowers, results of internal loan reviews, past due loans and the Company's historical loss experience, future additions to the allowance may be necessary based on changes in economic conditions. In addition, federal regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.
MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED December 31, 1995, 1994 and 1993 Securities The following table summarizes the carrying value and weighted average yield of securities by type and maturity range at December 31, 1995:
After After One Year Five Years Within But Within But Within After One Year Five Years Ten Years Ten Years Total Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Securities Available for Sale U.S. Treasury Securities . $ 8,913 5.07% $ 9,457 5.16% $ - -% $ - -% $18,370 5.12% Federal agency obligations . . . 2,056 5.54 10,675 5.67 14,926 5.63 14,679 5.49 42,336 5.58 State and Municipal securities 391 8.65 414 6.24 948 9.78 405 8.28 2,158 8.56 Other. . . . . . 5 5.50 5 5.50 - - 5,141 5.61 5,151 5.61 Total Carrying Value. . $11,365 5.28% $20,551 5.45% $15,874 5.88% $20,225 5.58% $68,015 5.55% The after ten year range of Federal agency obligations represents holdings of certificates of participation in pools of residential mortgages. Principal repayment prior to maturity has not been reflected. The after ten year range of equity securities includes securities with no stated maturity. Yields do not reflect tax equivalent adjustments.
Deposits Summarized below are average deposit balances by type for the years ended December 31, 1995, 1994 and 1993. Also presented is the maturity distribution of time deposits in excess of $100,000 at each year end.
AVERAGE DEPOSITS 1995 1994 1993 ($ in thousands) Amount % Rate Amount % Rate Amount % Rate Demand noninterest bearing $ 31,932 10.9% -% $ 28,898 11.4% -% $ 24,284 9.7% -% Interest bearing deposits NOW Accounts. . . . . 26,409 9.0 2.34 24,849 9.8 2.36 24,791 9.9 2.68 MMDA and savings accounts 104,332 35.6 2.75 102,777 40.7 2.62 101,159 40.4 2.98 Time . . . . . . . . 130,742 44.5 4.82 96,392 38.1 3.89 100,270 40.0 4.25 261,483 89.1 3.75 224,018 88.6 3.14 226,220 90.3 3.51 Total. . . . . . . . . $293,415 100.0% 3.34% $252,916 100.0% 2.78% $250,504 100.0% 3.17%
MATURITY OF TIME DEPOSITS OVER $100,000 1995 1994 1993 ($ in thousands) Within three months. . . . . . . . $ 2,814 $ 2,844 $ 1,943 Three to six months. . . . . . . . 5,745 3,586 2,892 Six months to one year . . . . . . 5,625 3,461 2,320 After one year . . . . . . . . . 4,053 4,211 1,871 Total . . . . . . . . . . . . . . $18,237 $14,102 $ 9,026 MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED December 31, 1995, 1994 and 1993 Capital Capital resources represent funds obtained externally through issuance of securities and internally through the retention of earnings. Federal regulatory authorities define core ("Tier 1") capital to include common stockholders' equity and non-cumulative perpetual preferred stock, less certain intangible assets. Supplementary ("Tier 2") capital includes core capital, allowance for loan losses, perpetual preferred stock and qualifying notes and debentures. Capital adequacy is determined after consideration of a range of factors including organizational size, asset quality, consistency of earnings, risk diversification, management expertise and internal controls. Banking organizations are required to meet capital adequacy guidelines established by federal regulators. The Company and the Banks are subject to a risk-based capital framework and a minimum leverage ratio. The regulatory minimum risk-based capital ratio is 8.0% (of which at least 4.0% should be a core component consisting of common stockholders' equity). In addition, the Company and the Banks must meet a leverage capital ratio of 3.0% Tier 1 capital to adjusted total assets. The percentages established are minimums and most banks are required to maintain ratios at levels 100 to 200 basis points above the minimum and under certain circumstances may be required by federal regulators to maintain ratios at higher levels. At December 31, 1995 the Company's total risk-based capital ratio was 12.9% and its Tier 1 risk-based capital ratio was 11.6%, while total risk-based capital ratios for WNB and CNB were 13.6% and 10.9%, respectively, with Tier 1 risk-based capital ratios of 12.3% and 9.6%, respectively. At December 31, 1995 the Company's leverage capital ratio was 7.4%, while the leverage capital ratios for WNB and CNB were 7.9% and 6.1%, respectively. Liquidity In banking, liquidity refers to the ability of an institution to procure or generate cash in order to fund operations, satisfy commitments, provide credit to customers and withstand contraction of deposits during varying economic conditions without disruption of service capabilities. Liquidity depends upon confidence of customers and financial intermediaries and confidence is engendered by financial strength as demonstrated by profitability, asset quality and capitalization. The primary source of funds are deposits and to a lesser extent, amortization and prepayment of outstanding loans, maturing investment securities and borrowings from the FHLB of Pittsburgh and Cincinnati. At December 31, 1995, money market assets and investment securities maturing in one year or less totalled $22.8 million. Short-term borrowings outstanding at December 31, 1995 totalled $27.5 million and certificates of deposit in excess of $100,000, which mature within one year or less, totalled $14.2 million or 4.8% of total deposits. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED December 31, 1995, 1994 and 1993 At December 31, 1995, the Parent Company had outstanding debt totalling $1,000,000 and had $1.5 million in liquid assets. Dividends declared by the Company and funds to support parent company operations may be substantially provided from subsidiary bank dividends. Various legal restrictions limit the ability of a bank subsidiary to finance or otherwise supply funds to its parent or certain of its affiliates (See Note N "Dividend Restrictions" to the consolidated financial statements). Management believes that liquidity in banking and nonbanking operations is sufficient. Asset/Liability Management (Interest Rate Sensitivity) The objective of asset/liability management is to insulate an institution's rate spread from changes in interest rates and thus enable the institution to maintain satisfactory levels of net interest income in both rising and falling interest rate environments. In order to meet this objective, the Company actively monitors the maturity or repricing relationship between its interest earning assets and interest bearing liabilities and endeavors to control the difference between such assets and liabilities maturing or repricing within one year to less than ten percent of its total assets. The difference between rate sensitive assets and rate sensitive liabilities that mature or reprice within a given time period is referred to as the interest rate sensitivity gap. A positive gap exists when rate sensitive assets exceed rate sensitive liabilities. This mismatch generally will enhance earnings in a rising interest rate environment and inhibit earnings when rates decline. Conversely, a negative gap exists when rate sensitive liabilities exceed rate sensitive assets. In this case, a rising interest rate environment generally will inhibit earnings and declining rates generally will enhance earnings. The Company's interest rate sensitivity analysis at December 31, 1995, is presented in the table below. In evaluating the Company's exposure to interest rate risk certain shortcomings inherent in this method of analysis must be considered. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to change in market interest rates. Interest bearing demand deposits and savings deposits are presented as repricing within the earliest period as they are subject to immediate withdrawal and rate change. However, these types of deposits have historically shown relatively stable balances and rates have generally changed in lesser degrees than other interest earning assets and interest bearing liabilities. MANAGEMENT'S DISCUSSION AND American Bancorporation and Subsidiaries ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED December 31, 1995, 1994 and 1993 Days Total INTEREST RATE SENSITIVITY 31 61 91 181 One Year Over ($ in thousands) 30 60 90 180 1 Year or Less One Year Total December 31, 1995 INTEREST EARNING ASSETS Loans. . . . . . . . . $ 69,709 $ 8,214 $ 3,763 $ 11,906 $ 25,429 $ 119,021 $131,351 $250,372 Investment securities. . 998 801 2,017 1,995 5,555 11,366 56,649 68,015 Other short-term investments . . 11,469 - - - - 11,469 - 11,469 Total interest earning assets . . 82,176 9,015 5,780 13,901 30,984 141,856 188,000 329,856 INTEREST BEARING LIABILITIES Deposits Interest bearing demand .27,287 - - - - 27,287 - 27,287 Savings deposits. . 98,978 - - - - 98,978 - 98,978 Time deposits . . . 13,440 7,874 11,196 32,582 38,380 103,472 31,136 134,608 Short-term borrowings 27,523 - - - - 27,523 - 27,523 Long-term debt . . . 1,000 - - - - 1,000 47 1,047 Total interest bearing liabilities . 168,228 7,874 11,196 32,582 38,380 258,260 31,183 289,443 Non Interest Bearing Sources-net. . - - - - - - 40,413 40,413 Total Funding sources . 168,228 7,874 11,196 32,582 38,380 258,260 71,596 329,856 INTEREST SENSITIVITY GAP $(86,052) $ 1,141 $ (5,416) $ (18,681) $ (7,396) $(116,404) $116,404 $ - CUMULATIVE INTEREST SENSITIVITY GAP . .$(86,052) $(84,911) $(90,327) $(109,008) $(116,404) $(116,404) $ - $ - GAP/INTEREST EARNING ASSETS (26.09)% 0.35% (1.64)% (5.66)% (2.24)% (35.29)% 35.29% - CUMULATIVE GAP/INTEREST EARNING ASSETS . . (26.09) (25.74) (27.38) (33.05) (35.29) (35.29) - - At December 31, 1995, there were no outstanding financial futures, options or interest rate swap agreements.
DIRECTORS Jack O. Cartner, President Motrim Inc., Cambridge, OH Paul W. Donahie, President American Bancorporation, Wheeling, WV The Honorable John J. Malik, Jr. Probate Court Judge, Belmont County, OH Jay T. McCamic, Attorney at Law McCamic & McCamic, Wheeling, WV Jeremy C. McCamic, Attorney at Law McCamic & McCamic, Wheeling, WV Jolyon W. McCamic, Attorney at Law McCamic & McCamic, Wheeling, WV Robert C. Mead, President American Mortgages, Inc. John E. Wait, President Columbus National Bank, St. Clairsville, OH OFFICERS Jeremy C. McCamic, Chairman & CEO Jolyon W. McCamic, Vice Chairman/Administration Paul W. Donahie, President Robert C. Mead, Chief Operating Officer Brent E. Richmond, Executive Vice President, Secretary/Treasurer and Chief Financial Officer Jeffrey A. Baran, CPA, Assistant Controller Linda M. Woodfin, Assistant Secretary Paul W. Donahie, President Wheeling National Bank John E. Wait, President Columbus National Bank Robert C. Mead, President American Mortgages, Inc. Gail D. Haun, President American Bancdata Corporation CORPORATE INFORMATION Annual Meeting The annual meeting of shareholders will be held in Wheeling, West Virginia at the corporate offices 1025 Main Street - Suite 800 Wheeling, West Virginia. The meeting will convene at 10:00 A.M. (E.D.S.T.) May 15, 1996. All shareholders are invited to attend. Stock Transfer Agent American Bancservices, Inc. 1025 Main Street - Suite 800 Wheeling, WV 26003 Stock Listing NASDAQ Symbol: AMBC Shares of American Bancorporation common stock are traded on the Nasdaq Stock Market - National List. Primary Market Makers Legg Mason Wood Walker, Inc. Herzog, Heine, Geduld, Inc. Wheat First Securities, Inc. Ferris Baker Watts, Inc. F. J. Morrissey & Co., Inc. Form 10K Stockholders may receive a copy of American Bancorporation's 1995 10K Annual Report as filed with the Securities and Exchange Commission upon written request to Treasurer, American Bancorporation, 1025 Main Street, Suite 800, Wheeling, WV 26003. Independent Certified Public Accountants KPMG Peat Marwick LLP Pittsburgh, PA -----END PRIVACY-ENHANCED MESSAGE-----