-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OLxCRki7uiqUwtxyOi45l1/F7ThBw3izMijAuWWDU/nSUGW9g7zM1EoWD7XUFNGF 6sfzpxPZ3TSa+oZBalzlqA== 0000950109-94-001406.txt : 19940811 0000950109-94-001406.hdr.sgml : 19940811 ACCESSION NUMBER: 0000950109-94-001406 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACNB CORP CENTRAL INDEX KEY: 0000715579 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 232233457 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11783 FILM NUMBER: 94542270 BUSINESS ADDRESS: STREET 1: 675 OLD HARRISBURG RD CITY: GETTYSBURG STATE: PA ZIP: 17325 BUSINESS PHONE: 7173343161 MAIL ADDRESS: STREET 1: P O BOX 3129 STREET 2: 675 OLD HARRISBURG RD CITY: GETTYSBURG STATE: PA ZIP: 17325 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For quarter ended June 30, 1994 Commission file no. 0-11783 ------------------ ACNB CORPORATION (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2233457 (state or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 675 OLD HARRISBURG ROAD, GETTYSBURG, PA 17325 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 717-334-3161 Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes--X No--. Indicate the number of shares outstanding of each of the issuer's class of common stock, as of the latest practicable date. CLASS OUTSTANDING AT JUNE 30, 1994 Common Stock ($5.00 par value) 2,673,918 ACNB CORPORATION INDEX Page No. Part I. Financial Information Consolidated Condensed Balance Sheets June 30, 1994 and December 31, 1993 and June 30, 1993 3 Consolidated Condensed Statements of Income Six Months Ended June 30, 1994 and 1993 4 Consolidated Statements of Cash Flows Six Months Ended June 30, 1994 and 1993 5 Notes to Consolidated Condensed Financial Statements 6-7 Management's Discussion and Analysis of the Financial Condition and Results of Operations 8-10 Part II.Other Information 11 PART I FINANCIAL INFORMATION ACNB CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CONDITION
June 30 December 31 June 30 1994 1993 1993 (000 omitted) ASSETS Cash and Due from Banks 12,983 15,970 10,626 Investment Securities U.S. Treasury 98,011 118,982 101,294 U.S. Government Agencies and Corporations 46,001 23,787 17,098 State and Municipal 2,635 1,296 1,347 Other Investments 2,728 3,737 5,351 -------- -------- -------- Total Investment Securities 149,375 147,802 125,090 Federal Funds Sold 15,100 17,060 23,150 Loans 284,893 283,298 288,903 Less: Reserve for Loan Losses (3,397) (3,581) (3,533) -------- -------- -------- Net Loans 281,496 279,717 285,370 Premises and Equipment 5,828 5,384 4,603 Other Real Estate 565 850 843 Other Assets 4,721 4,632 4,691 -------- -------- -------- TOTAL ASSETS $470,068 $471,415 $454,373 ======== ======== ======== LIABILITIES Deposits Noninterest Bearing 37,415 37,042 31,859 Interest Bearing 374,987 375,644 371,284 -------- -------- -------- Total Deposits 412,402 412,686 403,143 Securities Sold Under Agreement To Repurchase 7,919 10,802 4,823 Demand Notes U.S. Treasury 450 450 450 Other Liabilities 1,582 1,615 1,819 -------- -------- -------- TOTAL LIABILITIES 422,353 425,553 410,235 SHAREHOLDERS EQUITY Common Stock ($5 par value) 10,000,000 shares authorized: 2,673,918 shares issued and outstanding at 6/30/94 13,370 13,370 13,370 Surplus 5,002 5,002 5,002 Retained Earnings 29,343 27,490 25,766 -------- -------- -------- TOTAL SHAREHOLDERS EQUITY 47,715 45,862 44,138 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $470,068 $471,415 $454,373 ======== ======== ========
See accompanying notes to financial statements. ACNB CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME
Three Months End Six Months Ended June 30 June 30 1994 1993 1994 1993 (000 omitted) (000 omitted) INTEREST INCOME Loan Interest and Fees 5,631 6,360 11,300 12,666 Interest and Dividends on Investment Securities 1,849 1,625 3,604 3,328 Interest on Federal Funds Sold 112 135 258 256 Interest on Balances with Depository Institutions 36 45 74 93 ----- ----- ------ ------ TOTAL INTEREST INCOME 7,628 8,165 15,236 16,343 INTEREST EXPENSE Deposits 2,959 3,458 6,029 7,010 Other Borrowed Funds 69 45 146 79 ----- ----- ----- ------ TOTAL INTEREST EXPENSE 3,028 3,503 6,175 7,089 NET INTEREST INCOME 4,600 4,662 9,061 9,254 Provision for Loan Losses 0 105 0 210 NET INTEREST INCOME AFTER PROVISION ----- ----- ----- ------ FOR LOAN LOSSES 4,600 4,557 9,061 9,044 OTHER INCOME Trust Department 74 51 139 95 Service Charges on Deposit Accounts 171 146 291 288 Other Operating Income 75 150 315 319 Securities Gains 0 0 0 93 ----- ----- ----- ------ TOTAL OTHER INCOME 320 347 745 795 OTHER EXPENSES Salaries and Employee Benefits 1,267 1,240 2,558 2,449 Premises and Fixed Assets 322 291 691 576 Other Expenses 770 731 1,519 1,456 ----- ----- ----- ------ TOTAL OTHER EXPENSE 2,359 2,262 4,768 4,481 INCOME BEFORE INCOME TAX 2,561 2,642 5,038 5,358 Applicable Income Tax 852 894 1,634 1,807 ----- ----- ----- ------ NET INCOME $1,709 $1,748 $3,404 $3,551 ===== ===== ===== ====== EARNINGS PER SHARE* $0.64 $0.65 $1.27 $1.33 DIVIDENDS PER SHARE* 0.29 0.27 $0.58 0.54
*Based on 2,673,918 shares outstanding in 1994 and 1993. See accompanying notes to financial statements. ACNB CORPORATION AND SUBSIDIARY STATEMENT OF CASH FLOWS
Six months ended June 30 1994 1993 (000 omitted) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Interest and Dividends Received 15,902 17,251 Fees and Commissions Received 954 1,061 Interest Paid (6,339) (7,255) Cash Paid to Suppliers and Employees (4,445) (4,315) Income Taxes Paid (1,565) (1,885) Net Cash Provided by Operating Activities 4,507 4,857 Cash Flows from Investing Activities: Proceeds from Maturities of Investment Securities and Interest Bearing Balances with Other Banks 33,032 32,605 Purchase of Investment Securities and Interest Bearing Balances with Other Banks (35,610) (37,270) Principal Collected on Loans 46,611 51,729 Loans Made to Customers (48,111) (52,662) Capital Expenditures (658) (641) Net Cash Used in Investing Activities (4,736) (6,239) Cash Flow from Financing Activities: Net Increase in Demand Deposits, NOW Accounts, and Savings Accounts 6,153 15,749 Proceeds from Sale of Certificates of Deposit 5,758 7,015 Payments for Maturing Certificates of Deposit (15,078) (21,525) Dividends Paid (1,551) (1,444) Net Cash Provided by Financing Activities (4,718) (205) Net Increase in Cash and Cash Equivalents (4,947) (1,587) Cash and Cash Equivalents: Beginning of Period 33,030 35,363 End of Period 28,083 33,776 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Income 3,404 3,551 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 220 200 Provision for Possible Credit Losses 0 210 Provision for Deferred Taxes (67) 18 Amortization of Investment Securities Premiums 989 920 Increase (Decrease) in Taxes Payable 136 (96) (Increase) Decrease in Interest Receivable (114) 254 Increase (Decrease) in Interest Payable (164) (166) Increase (Decrease) in Accrued Expenses 196 101 (Increase) Decrease in Other Assets (87) (109) Increase (Decrease) in Deferred Loan Production Costs (6) (26) Net Cash Provided by Operating Activities 4,507 4,857
DISCLOSURE OF ACCOUNTING POLICY For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. ACNB CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly ACNB Corporation's financial position as of June 30, 1994 and 1993 and December 31, 1993 and the results of its operations for the six months ended June 30, 1994 and 1993 and changes in financial position for the six months then ended. All such adjustments are of a normal recurring nature. The accounting policies followed by the company are set forth in Note A to the company's financial statements in the 1993 ACNB Corporation Annual Report and Form 10-K filed with the Securities and Exchange Commission under file no. 0-11783. 2. The book and approximate market values of securities owned at June 30, 1994 and December 31, 1993 were as follows:
6/30/94 12/31/93 Amortized Fair Amortized Fair Cost Value Cost Value (000 omitted) U.S. Treasury 98,011 96,230 118,982 119,379 U.S. Government Agencies and Corporations 46,001 45,101 23,787 23,821 State and Municipal 2,635 2,627 1,296 1,301 Other Investments 2,728 2,731 3,737 3,767 ------- ------- ------- ------- TOTAL $149,375 $146,689 $147,802 $148,268 ======= ======= ======= =======
Income earned on investment securities was as follows:
Six Months Ended June 30 1994 1993 (000 omitted) U.S. Treasury 2,566 2,574 U.S. Government Agencies and Corporations 917 490 State and Municipal 55 43 Other Investments 66 221 ------ ------ $3,604 $3,328 ====== ======
3. Gross loans are summarized as follows:
June 30 December 31 1994 1993 (000 omitted) Real Estate 254,555 250,242 Real Estate Construction 4,701 4,791 Commercial and Industrial 12,340 14,100 Consumer 17,067 17,950 -------- -------- Gross Loans 288,663 287,083 Less: Unearned Discount 3,770 3,785 -------- -------- Total Loans $284,893 $283,298 ======== ========
4. Earnings per share are based on the weighted average number of shares of stock outstanding during each period. Weighted average shares outstanding for the six month periods ended June 30, 1994 and 1993 were 2,673,918. 5. Dividends per share were $0.58 and $0.54 for the six month periods ended June 30, 1994 and 1993 respectively. This represented a 45.7% payout of net income in 1994 and a 40.6% payout in 1993. 6. The results of operations for the six month periods ended June 30, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Corporation's net income for the first six months of 1994 was $3,404,000, a decrease of 4.1% from $3,551,000 in 1993. Return on Average Total Assets was 1.44% for the first six months of 1994 compared with 1.58% for the same period of 1993. Return on Average Shareholders Equity was 14.48% for the six months ended June 30, 1994 compared with 16.37% for 1993. The decline in 1994 earnings, compared to the same period in 1993, is due to weaker net interest income, lack of securities gains, and increased other expenses. Net interest income is down $193,000 for the first six months of 1994 compared to 1993, securities gains are down $93,000 from last year's total, and other expenses (salaries and fixed assets) are up $287,000. The Corporation is facing intensified competition in its search for residential mortgages and has been unable to increase loan totals for the past several years. This has taken its toll on net interest margin and that measure has dropped 31 basis points compared to the first half of 1993. This, coupled with a lack of securities gains and increased expenses, will continue to put pressure on earnings throughout 1994. Earnings per share was $1.27 in 1994 and $1.33 in 1993, while the dividend increased from $.54 to $.58 in 1994. INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS (Taxable equivalent) Six months Ended 6/30/94 6/30/93 Rate Rate Earning Assets 6.71% 7.59% Interest Bearing Liabilities 3.18 3.82 Interest Rate Spread 3.53 3.77 Interest Expense as a % of earning assets 2.71 3.28 Net Yield on Earning Assets 4.00 4.31 Net Yield on Earning Assets is the difference, stated in percentages, between the interest earned on loans and other investments and the interest paid on deposits and other sources of funds. The rate on earning assets is adjusted to a "taxable equivalent" basis to recognize the income tax savings on tax exempt items such as interest on municipal securities. The Net Yield on Earnings Assets is one of the best analytical tools available to demonstrate the effect of interest rate changes on the Corporation's earning capacity. The Net Yield on Earning Assets for the first six months of 1994 was down 31 basis points compared to the same period in 1993. This is a direct result of lower loan demand and increased competition in the Corporation's home mortgage market. Until loan volume recovers, and the bank can book higher yielding assets, net yield on earning assets will remain under pressure. PROVISION AND RESERVE FOR POSSIBLE LOAN LOSSES Reserve for Possible Loan Losses (In thousands) Six Months Ended 6/30/94 6/30/93 Balance at Beginning of Period 3,581 3,417 Provision Charged to Expense 0 210 Loans Charged Off 218 112 Recoveries 34 18 Balance at End of Period 3,397 3,533 Ratios: Net Charge-offs to: Net Income 5.41% 2.65% Total Loans .06 .03 Reserve for Possible Loan Losses 5.42 2.66 Reserve for Possible Loan Losses to: Total Loans 1.19 1.22 The Reserve for Possible Loan Losses at June 30, 1994 totaled $3,397,000 (1.19% of Total Loans), a decrease of $136,000 from $3,533,000 (1.22% of Total Loans) at the end of the first six months of 1993. Loans past due 90 days and still accruing amounted to $1,798,000 and non-accrual loans totaled $1,014,000 as of 6/30/94. The ratio of non-performing assets plus other real estate owned to total assets was .72% at 6/30/94. $454,000 of the bank's other real estate total of $565,000 has been sold and represents interest paying loans but are carried here for regulatory purposes. All other properties are carried at the lower of market or book value and are not considered to represent significant threat of loss to the bank. Loans past due 90 days and still accruing were $2,614,000 at yearend 1993 while non-accruals stood at $977,000. The bulk of the Corporation's real estate loans are in owner occupied dwellings but it is hoped that internal loan review procedures will be effective in recognizing and helping correct any real estate lending problems that may occur due to current economic conditions. Interest not accrued, due to an average of $1,008,000 in non-accrual loans, was approximately $40,000 for the first six months of 1994. CAPITAL MANAGEMENT Total Shareholders' Equity amounted to $47,715,000 at 6/30/94 compared to $44,138,000 at 6/30/93, an increase of $3,577,000 or 8.1% over that period. The ratio of Total Shareholders' Equity to Total Assets was 9.71% at 6/30/93, 9.73% at 12/31/93, and 10.15% at 6/30/94. The leverage ratio was 10.06% at 6/30/94 while the total risk-based capital ratio was 22.51% at year end 1993. LIQUIDITY AND INTEREST RATE SENSITIVITY The Corporation's liquidity is adequate. Liquid assets (cash and due from banks, federal funds sold, money market instruments, and investment securities maturing within one year) equal 22.5% of total assets at 6/30/94. This mix of assets would be readily available for funding any cash requirements. As of 6/30/94 rate sensitive assets were 108% of rate sensitive liabilities at one month, 96% at six months, and 121% at one year. Adjustable rate mortgages, which have an annual interest rate cap of 2%, are considered rate sensitive. The core deposit portion of passbook savings and NOW accounts are carried in the over one year category while the rate sensitive amount is spread over the one month and six month categories. PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (b) There were no reports on Form 8-K filed for the three month period ended June 30, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ACNB CORPORATION August 2, 1994 ------------------------------ (date) Ronald L. Hankey President ------------------------------ John W. Krichten Secretary/Treasurer -----END PRIVACY-ENHANCED MESSAGE-----