-----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, GQWV7PCkmJHHmDiQ7zzWwPneex5/Hlz3Juqj7Oh0AgNM2xSZ2n7KwguWclTPcK7l YNJyGnwm523+QGI52uF2jA== 0000950115-97-000694.txt : 19970507 0000950115-97-000694.hdr.sgml : 19970507 ACCESSION NUMBER: 0000950115-97-000694 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACNB CORP CENTRAL INDEX KEY: 0000715579 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 97596120 BUSINESS ADDRESS: STREET 1: 675 OLD HARRISBURG RD STREET 2: P O BOX 3129 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 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 -------------- OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ____________________ Commission file number 0-11783 ------- ACNB CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2233457 - -------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 675 OLD HARRISBURG ROAD, GETTYSBURG, PA 17325 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (717) 334-3161 -------------------------------------------------- (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ____ No ____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class - Common Stock ($2.50 par value) Outstanding at March 31, 1997 - 5,253,278 ACNB CORPORATION INDEX Page No. -------- Part I. Financial Information Consolidated Condensed Balance Sheets March 31, 1997 and December 31, 1996 and March 31, 1996 3 Consolidated Condensed Statements of Income Three Months Ended March 31, 1997 and 1996 4 Consolidated Statements of Cash Flows Three Months Ended March 31, 1997 and 1996 5 Notes to Consolidated Condensed Financial Statements 6-7 Management's Discussion and Analysis of Financial Condition and Results of Operation 8-11 Part II. Other Information 11 Page 2 PART I FINANCIAL INFORMATION ACNB CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CONDITION
March 31 December 31 March 31 1997 1996 1996 -------- ----------- -------- ASSETS (000 omitted) Cash and Due from Banks 12,250 22,078 27,553 Investment Securities Securities Held to Maturity 59,829 79,855 102,946 Securities Available for Sale 49,156 36,641 0 --------- --------- --------- Total Investment Securities 108,985 116,496 102,946 Federal Funds Sold 100 100 100 Loans 331,593 324,927 320,354 Less: Reserve for Loan Losses (3,168) (3,183) (3,253) --------- --------- --------- Net Loans 328,425 321,744 317,101 Premises and Equipment 5,278 5,415 5,653 Other Real Estate 916 1,015 682 Other Assets 6,545 5,597 6,531 --------- --------- --------- TOTAL ASSETS $ 462,499 $ 472,445 $ 460,566 ========= ========= ========= LIABILITIES Deposits Noninterest Bearing 43,409 52,666 41,263 Interest Bearing 351,584 350,461 354,998 --------- --------- --------- Total Deposits 394,993 403,127 396,261 Securities Sold Under Agreement To Repurchase 13,207 16,736 13,236 Borrowing Federal Home Loan Bank 0 0 0 Demand Notes U.S. Treasury 450 450 450 Other Liabilities 4,533 2,696 3,785 --------- --------- --------- TOTAL LIABILITIES 413,183 423,009 413,732 SHAREHOLDERS EQUITY Common Stock ($2.50 par value) 20,000,000 shares authorized: 5,253,278 shares issued and outstanding at 3/31/97 13,133 13,196 13,269 Surplus 3,647 3,994 4,396 Retained Earnings 32,649 31,889 29,169 Net unrealized gains on securities available for sale (113) 357 0 --------- --------- --------- TOTAL SHAREHOLDERS EQUITY 49,316 49,436 46,834 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 462,499 $ 472,445 $ 460,566 ========= ========= =========
See accompanying notes to financial statements. Page 3 ACNB CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31 1997 1996 ---- ---- (000 omitted) INTEREST INCOME Loan Interest and Fees 6,675 6,567 Interest and Dividends on Investment Securities 1,877 1,352 Interest on Federal Funds Sold 1 1 Interest on Balances with Depository Institutions 59 202 ------ ------ TOTAL INTEREST INCOME 8,612 8,122 INTEREST EXPENSE Deposits 3,473 3,565 Other Borrowed Funds 171 134 ------ ------ TOTAL INTEREST EXPENSE 3,644 3,699 NET INTEREST INCOME 4,968 4,423 Provision for Loan Losses 30 0 NET INTEREST INCOME AFTER PROVISION _____ _____ FOR LOAN LOSSES 4,938 4,423 OTHER INCOME Trust Department 96 103 Service Charges on Deposit Accounts 189 176 Other Operating Income 167 126 Securities Gains 0 0 ------ ------ TOTAL OTHER INCOME 452 405 OTHER EXPENSES Salaries and Employee Benefits 1,749 1,482 Premises and Fixed Assets 433 420 Other Expenses 663 575 ------ ------ TOTAL OTHER EXPENSE 2,845 2,477 INCOME BEFORE INCOME TAX 2,545 2,351 Applicable Income Tax 839 770 ------ ------ NET INCOME $1,706 $1,581 ====== ====== EARNINGS PER SHARE* $ 0.32 $ 0.30 DIVIDENDS PER SHARE* 0.18 1.17 *Based on 5,258,537 shares outstanding in 1997 and 5,307,756 in 1996 See accompanying notes to financial statements. Page 4 ACNB CORPORATION AND SUBSIDIARY STATEMENT OF CASH FLOWS Three months ended March 31 ------------------ 1997 1996 ---- ---- (000 omitted) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Interest and Dividends Received 7,717 7,755 Fees and Commissions Received 570 497 Interest Paid (3,044) (3,020) Cash Paid to Suppliers and Employees (2,925) (4,047) Income Taxes Paid 0 4 Net Cash Provided by Operating Activities 2,318 1,189 Cash Flows from Investing Activities: Proceeds from Maturities of Investment Securities and Interest Bearing Balances with Other Banks 21,071 19,066 Purchase of Investment Securities and Interest Bearing Balances with Other Banks (13,560) (17,290) Principal Collected on Loans 17,853 19,682 Loans Made to Customers (24,465) (16,049) Capital Expenditures (26) (37) Net Cash Used in Investing Activities 873 5,372 Cash Flow from Financing Activities: Net Increase in Demand Deposits, NOW Accounts, and Savings Accounts (3,943) (2,143) Proceeds from Sale of Certificates of Deposit 9,859 12,527 Payments for Maturing Certificates of Deposit (17,579) (6,333) Dividends Paid (946) (6,210) Increase (Decrease) in Borrowings 0 251 Repurchase of Common Stock (410) 0 Net Cash Provided by Financing Activities (13,019) (1,908) Net Increase in Cash and Cash Equivalents (9,828) 4,653 Cash and Cash Equivalents: Beginning of Period 22,178 23,000 End of Period 12,350 27,653 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Net Income 1,706 1,581 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 163 152 Provision for Possible Credit Losses 30 0 Provision for Deferred Taxes 0 87 Amortization of Investment Securities Premiums 0 120 Increase (Decrease) in Taxes Payable 839 687 (Increase) Decrease in Interest Receivable (423) (567) Increase (Decrease) in Interest Payable 600 679 Increase (Decrease) in Accrued Expenses 282 175 (Increase) Decrease in Other Assets (525) (1,896) Increase (Decrease) in Other Liabilities (354) 171 Net Cash Provided by Operating Activities 2,318 1,189 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. Page 5 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 March 31, 1997 and 1996 and December 31, 1996 and the results of its operations for the three months ended March 31, 1997 and 1996 and changes in financial position for the three 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 1996 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 March 31, 1997 and December 31, 1996 were as follows:
3/31/97 12/31/96 Amortized Fair Amortized Fair Cost Value Cost Value --------- ----- --------- ----- (000 omitted) U.S. Treasury and U.S. Government Agencies (held to maturity) 58,947 58,698 78,930 79,020 State and Municipal (held to maturity) 882 882 925 926 U.S. Government Agencies (available for sale) 46,466 46,295 33,530 34,071 Other Investments (avail for sale) 2,861 2,861 2,570 2,570 -------- -------- -------- -------- TOTAL $109,156 $108,736 $115,955 $116,587
Income earned on investment securities was as follows: Three Months Ended March 31 --------------------------- 1997 1996 ---- ---- (000 omitted) U.S. Treasury 410 631 U.S. Government Agencies 1,414 664 State and Municipal 14 16 Other Investments 39 41 ----- ----- 1,877 1,352 Page 6 3. Gross loans are summarized as follows: March 31 December 31 -------- ----------- (000 omitted) Real Estate 296,208 288,588 Real Estate Construction 11,030 11,207 Commercial and Industrial 9,539 9,866 Consumer 14,816 15,266 ------- ------- Total Loans $331,593 $324,927 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 three month periods ended March 31, 1997 and 1996 were 5,258,537 and 5,307,756 respectively. 5. Dividends per share were $.18 and $1.17 for the three month periods ended March 31, 1997 and 1996 respectively. This represented a 56% payout of net income in 1997 and a 390% payout in 1996. The 1996 dividend includes a $1.00 special dividend paid in January 1996. 6. The results of operations for the three month periods ended March 31, 1997 and 1996 are not necessarily indicative of the results to be expected for the full year. Page 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following is management's discussion and analysis of the significant changes in the results of operations, capital resources and liquidity presented in its accompanying consolidated financial statements for ACNB Corporation, a bank holding company (the Corporation), and its wholly-owned subsidiary, Adams County National Bank (the Bank). The Corporation's consolidated financial condition and results of operations consist almost entirely of the Bank's financial condition and results of operations. This discussion should be read in conjunction with the 1996 Annual Report. Current performance does not guarantee, assure, or is necessarily indicative of similar performance in the future. In addition to historical information, this Form 10-Q contains forward-looking statements. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Important factors that might cause such a difference include, but are not limited to, those discussed in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations". Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Corporation undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in other documents the Corporation files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q to be filed by the Corporation in 1997 and 1998, and any Current Reports on Form 8-K filed by the Corporation. Three months ended March 31,1997 compared to three months ended March 31, 1996 Net Income for the first three months of 1997 was $1,706,000, up $125,000 or 8% above the first quarter of 1996. The increase in net income was due primarily to a six (6%) percent improvement in Total Interest Income. Net income per share, for the first quarter, was $.32, up $.02 or 6% above the $.30 earned in the comparable period in 1996. An explanation of the factors and trends that caused changes between the two periods, by major earnings category, follows. Total interest income for the first three month period of 1997 was $8,612,000, up $490,000 or 6% above the $8,122,000 earned in the same period of 1996. The $490,000 increase in interest income was due primarily to a larger volume of earning assets, principally investments in the securities portfolio. The average volume of securities available-for-sale was $35.2 million more in the current quarter than in the comparable quarter of 1996, when there were none. In an effort to manage interest rate risk, the Bank purchased $35 million of mortgage backed securities classified as available-for-sale over the last nine months. Income from loans during the current period was also improved by loan growth of approximately $6.3 million. Total interest expense for the first three month period of 1997 was $3,644,000, down $55,000 or 1% below the $3,697,000 incurred for the same period in 1996. The $55,000 decrease in interest expense was due primarily to a slight falloff in cost of interest bearing deposits. This happened in spite of the fact that the average volume of interest bearing liabilities was $3.3 million higher in the current quarter compared to the same quarter in 1996. Page 8 Net interest income after provision for loan losses for the first three month period of 1997 was $4,938,000, up $515,000 or 11.6% above the $4,423,000 earned in the same period of 1996. The increase in current period net interest income was achieved from a larger average volume of earning assets and improvement in yield on securities. Total non-interest income for the first three month period of 1997 at $452,000, was $47,000 or 11.6% greater than the same quarter in 1996. This was due to increased service charges on deposit accounts of $13,000 and greater miscellaneous fees of $47,000. Total non-interest expense for the first three month period of 1997 was $2,845,000, up $368,000 or 14.9% greater than the $2,477,000 incurred for the third quarter of 1996. Most of the increase was in salaries and benefits which were up $267,000 or 18%. The provision for income taxes in the first quarter increased $69,000 or 9.0% due to a higher level of pretax earnings. INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS Three Months Ended -------------------- 3/31/97 3/31/96 Rate Rate ------- ------- Earning Assets 7.81% 7.48% Interest Bearing Liabilities 4.03% 4.10% Interest Rate Spread 3.78% 3.38% ---- ---- Net Yield on Earning Assets 4.47% 4.07% 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 Net Yield on Earning 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 three months of 1997, was up 40 basis points compared to the same period in 1996. This is a result of improved yields on government securities and a larger volume of earning assets. PROVISION AND RESERVE FOR POSSIBLE LOAN LOSSES Reserve for Possible Loan Losses (In Thousands) Three Months Ended -------------------- 3/31/97 3/31/96 ------- ------- Balance at Beginning of Period 3,183 3,274 Provision Charged to Expense 30 0 Loans Charged Off 50 26 Recoveries 5 5 ----- ----- Balance at End of Period 3,168 3,253 Page 9 Ratios: Net Charge-offs to: Net Income 2.64% 1.33% Total Loans .01% .01% Reserve for Possible Loan Losses 1.42% .65% Reserve for Possible Loan Losses to: Total Loans .96% 1.02% The Reserve for Possible Loan Losses at March 31, 1997 totaled $3,168,000 (.96% of Total Loans), a decrease of $85,000 from $3,253,000 (1.02% of Total Loans) at the end of the first three months of 1996. Loans past due 90 days and still accruing amounted to $2,407,000 and non-accrual loans totaled $1,001,000 as of 3/31/97. The ratio of non-performing assets plus other real estate owned to total assets was .93% at 3/31/97. All 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 $2,175,000 at year end 1996 while non-accruals stood at $994,000. 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 $998,000 in non-accrual loans, was approximately $22,000 for the first three months of 1997. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than its recorded investment a creditor must recognize an impairment by creating, or adjusting, a valuation allowance with a corresponding charge to loan loss expense. The Corporation uses the cash basis method to recognize interest income on loans that are impaired. All of the Corporation's impaired loans were on a non-accrual status for all reported periods. CAPITAL MANAGEMENT Total Shareholders' Equity amounted to $49,316,000 at 3/31/97 compared to $46,834,000 at 3/31/96, an increase of $2,482,000 or 5% over that period. The ratio of Total Shareholders' Equity to Total Assets was 10.66% at 3/31/96, 10.46% at 12/31/96, and 10.17% at 3/31/97. The total risk-based capital ratio was 19.18% at 3/31/97. Capital at ACNB Corporation remains strong even with a 56% dividend payout ratio. See Note #5 for information regarding dividends paid during 1997. LIQUIDITY AND INTEREST RATE SENSITIVITY The Corporation's liquidity is adequate. Liquid assets (cash and due from banks, federal funds sold, money market instruments, available for sale securities and hold to maturity investment securities maturing within one year) equal 17.7% of total assets at 3/31/97. This mix of assets would be readily available for funding any cash requirements. In addition, the Bank has an approved line of credit of $223,738,000 at the Federal Home Loan Bank of Pittsburgh with $0 outstanding at 3/31/97. Page 10 As of 3/31/97, the cumulative asset sensitive gap was 10.1% of total assets at one month, 12.0% at six months, and 22.0% at one year. Adjustable rate mortgages, which have an annual interest rate cap of 2%, are considered rate sensitive. Passbook savings and NOW accounts are carried in the one to five year category while half of money market deposit accounts are spread over the four to twelve month category and the other half are shown to mature in the one to three year category. There are no known trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way. Aside from those matters described above, management does not currently believe that there are any known trends or uncertainties which would have a material impact on future operating results, liquidity or capital resources nor is it aware of any current recommendations by the regulatory authorities which if they were to be implemented would have such an effect, although the general cost of compliance with numerous and multiple federal and state laws and regulation does have and in the future may have a negative impact on the corporation's results of operations. PART II. OTHER INFORMATION Item 1. Legal Proceedings Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position of the Corporation. There are no proceedings pending other than the ordinary routine litigation incident to the business of the Corporation and its subsidiary. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Corporation and the Bank by government authorities. Item 2. Changes in Securities - Nothing to report. Item 3. Defaults Upon Senior Securities - Nothing to report. Item 4. Submission of Matters to a Vote of Security Holders - Nothing to report. Item 5. Change of composition of Board of Directors - Nothing to report. Item 6. Exhibits and Reports on Form 8-K - Nothing to report. 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 /s/ Ronald L. Hankey --------------------------- Ronald L. Hankey, President April 30, 1997 (Date) /s/ John W. Krichten --------------------------- John W. Krichten, Secretary/Treasurer Page 11 EX-27 2 FDS --
9 1,000 3-MOS DEC-31-1996 JAN-01-1997 MAR-31-1997 12,250 0 100 0 49,156 59,829 59,580 331,593 3,168 462,499 394,993 13,657 4,533 0 0 0 13,133 36,183 462,499 6,675 1,877 60 8,612 3,473 3,644 4,968 30 0 2,845 2,545 2,545 0 0 1,706 .32 .32 4.47 1,001 2,407 0 3,408 3,183 50 5 3,168 3,168 0 0
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