-----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, A28BxTIKzKOGecuPBmHfw0maG/k7OrnjeaXrJ1uzlcUkXj1maDVyU2XP1wyczuX3 62jCHDpLTdQWyVf8N8D2bA== 0001157523-04-010406.txt : 20041105 0001157523-04-010406.hdr.sgml : 20041105 20041105102120 ACCESSION NUMBER: 0001157523-04-010406 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041105 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041105 DATE AS OF CHANGE: 20041105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO LEGACY CORP CENTRAL INDEX KEY: 0001096654 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 341903890 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-31673 FILM NUMBER: 041121351 BUSINESS ADDRESS: STREET 1: 305 WEST LIBERTY STREET CITY: WOOSTER STATE: OH ZIP: 44691 BUSINESS PHONE: 3302620437 MAIL ADDRESS: STREET 1: P O BOX 959 CITY: WOOSTER STATE: OH ZIP: 44691 8-K 1 a4759346.txt OHIO LEGACY CORP. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 5, 2004 ---------------- OHIO LEGACY CORP ---------------- (Exact name of registrant as specified in its charter) OHIO 000-31673 34-1903890 ---- --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 305 West Liberty Street, Wooster, Ohio 44691 -------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (330) 263-1955 ------------- N/A --- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On November 5, 2004, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Any statement in the attached press release that is not a statement of historical fact may be deemed to be a forward-looking statement, which involves known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially and significantly different from any future results, performance or achievements expressed or implied by such forward-looking statements. The information in this Current Report is being furnished and shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description ------ ----------- 99.1 Press release dated November 5, 2004 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 hereunto duly authorized. OHIO LEGACY CORP ---------------- (Registrant) Date: November 5, 2004 ----------------- /s/ ERIC S. NADEAU ------------------------------------- Eric S. Nadeau Chief Financial Officer and Treasurer EX-99.1 2 a4759346ex991.txt PRESS RELEASE EXHIBIT 99.1 Ohio Legacy Corp Announces Third Quarter Results WOOSTER, Ohio--(BUSINESS WIRE)--Nov. 5, 2004--Ohio Legacy Corp (Nasdaq:OLCB), the parent of Ohio Legacy Bank, N.A., today reported net earnings for the three months ended September 30, 2004, of $400,000 or $0.19 per share, compared to $125,000, or $0.06 per share, during the third quarter of 2003. At September 30, 2004, assets totaled $182.8 million. Key factors impacting the Company's results of operations during the three months ended September 30, 2004, are summarized below: -- Net income increased 77% from the second quarter of 2004 and 220% over the third quarter of 2003; -- Net interest income increased 11% over the second quarter of 2004 and 46% over the third quarter last year; -- Margin improved 24 basis points (bp) over the second quarter of 2004, driven by a 21 bp decline in our cost of funds due to significant maturities of high-costing certificates of deposit (CDs); -- The efficiency ratio improved over the second quarter and last year as increases in net interest margin and other income outweighed increases in noninterest expense; -- Annualized return on equity improved to 9.86%; and, -- The Bank's primary regulator terminated its regulatory order against the Bank, which previously placed significant restrictions on the Company's operations. Impact of branch acquisition - The following section includes forward-looking statements based on management's estimates. Actual results may differ materially from these expectations. The Bank purchased a full-service office in Wooster in late August 2004 and only one month of its impact is reported in the third quarter. This branch addition should improve customer service and attract new customers by providing another banking location in a thriving retail district. Deposits acquired in the purchase transaction totaled $15.3 million. The core deposit intangible asset acquired totaled $327,000. Amortization of this intangible was $9,000 during the third quarter. Additionally, the $10.6 million CD portfolio acquired was recorded at fair value. This resulted in an adjustment of $211,000, which will be amortized through interest expense over the life of the portfolio as a yield adjustment. Amortization of the fair value adjustment totaled $17,000 during the third quarter and lowered spread and margin by 4 bp. Amortization of both adjustments in the fourth quarter of 2004 should be $76,000. Management believes the quarterly noninterest expense impact of the branch, excluding intangible asset and fair value amortization, will be $100,000. Net Interest Income - During the three months ended September 30, 2004, net interest income increased to $1.5 million compared to $1.0 million during the third quarter of 2003, primarily as a result of a higher average balance of interest-earning assets and a shift in asset composition to higher yielding loans from securities. During the quarter ended September 30, 2004, average loans as a percent of average interest-earning assets was 76% compared to 69% during the third quarter of 2003. The shift in asset mix helped to offset a lower overall yield on assets. During the third quarter of 2004, interest rate spread increased to 3.21% compared to 2.72% in 2003 and 3.01% during the second quarter of 2004. Net interest margin increased to 3.52% in 2004 compared to 3.06% in the third quarter of 2003 and 3.28% during the second quarter of 2004. Noninterest Income - Excluding gains and losses on sales of securities, noninterest income increased $21,000, or 22% during the third quarter of 2004 compared to 2003. The Bank did not have a borrowing facility in place with the Federal Home Loan Bank until late 2003 and instead sold securities to fund loan growth in 2003. The increase in overdraft fees and other service charges on deposit accounts was due to higher volume of deposit customers and the related fees associated with those accounts in 2004. Noninterest Expense - Total noninterest expense increased 28% for the three months ended September 30, 2004, compared to the three months ending September 30, 2003, and 5% over the second quarter of 2004. The efficiency ratio improved to 71% during the third quarter of 2004 compared to 80% during the third quarter of 2003 and 75% during the second quarter of 2004. Annualized noninterest expense as a percent of average assets was 2.58% during the third quarter of 2004 compared to 2.54% during the third quarter of 2003 and 2.56% during the second quarter of 2004. Salaries and benefits were higher during the third quarter of 2004, reflecting a higher level of employment. The branch acquisition increased salaries and benefits by $15,000 during the third quarter and will add approximately $50,000 of compensation expense per quarter. Management expects salaries and benefits expense to continue to increase in 2005 as a number of sales and back office positions need to be filled in order to meet the Company's growth objectives, implement and monitor sections of the Sarbanes-Oxley Act of 2002 and to ensure safe and sound management of operational, credit and interest rate risks. Occupancy and equipment expense was higher in 2004 due to rent expense from the addition of an operations center in late 2003 and the branch acquisition in August 2004. These transactions also increased depreciation expense through related leasehold improvements. The Company is planning to launch another banking office in the Stark County Region in 2005, which will require capital expenditures and result in additional depreciation expense. The Company's current strategy is to launch or acquire at least one banking office each fiscal year. Data processing costs are higher in 2004 due to an increase in the volume of transactions and accounts resulting from the growth in our loan and deposit portfolios. Additional data processing expenses were incurred during the third quarter of 2004 in connection with the branch acquisition. Loans and Asset Quality - At September 30, 2004, the loan portfolio (excluding the allowance for loan losses) was $130.7 million, an increase of $20.8 million, or 19%, from December 31, 2003. The strongest increases during the nine months of 2004 came in the commercial real estate and residential real estate categories, with each increasing 38% and 16%, respectively. Demand for loans subsided during the third quarter of 2004 and a large construction project was completed and the related loan matured. The loan portfolio increased $1.3 million, net, during the third quarter of 2004. Nearly 59% of the growth in the residential real estate loan category during the first nine months of 2004 is attributable to commercial credits secured by residential real estate, which are mostly variable rate and currently yield 100 basis points higher than conventional owner-occupied residential real estate loans in the Bank's portfolio. At September 30, 2004, the allowance for loan losses was $1.3 million or 0.98% of total loans, an increase from $1.1 million, or 1.02% of loans at December 31, 2003. Nonperforming loans (nonaccrual and impaired loans) totaled $273,000, or 0.21% of total loans, compared to $154,000 at December 31, 2003. Annualized net charge-offs during the first nine months of 2004 equated to 0.15% of average loans during that period. Deposits - Deposits increased $19.1 million during 2004 to $142.2 million at September 30, 2004. Purchased deposits totaled $15.3 million. Organically, deposits increased $3.8 million during the first nine months of 2004 despite the loss of $8.0 million of CDs during June and August. Those balances were primarily part of a large pool of a single CD product that began to mature early in the second quarter of 2004. At September 30, 2004, approximately $1.6 million of this product remained in the CD portfolio. At December 31, 2003, this product totaled $27.1 million. Core deposits (checking and savings accounts) increased $400,000 during the third quarter of 2004 and by $8.0 million year to date. Excluding the core deposits acquired in the branch purchase, growth totaled $3.1 million during the first nine months of 2004. The increase in core deposit balances in 2004 has been driven by interest-bearing checking accounts. Organic growth in noninterest checking accounts this year has been offset by decreases in savings account balances. However, such a shift to lower-costing deposits serves to improve interest rate spread and margin. Regulatory Matters - On June 18, 2002, the Bank and its primary regulator, the OCC, entered into an agreement to address certain issues identified during the OCC's examination of the Bank in January 2002. While under the agreement, the Bank's average asset growth was restricted to no greater than 22% and the Bank was required to meet higher minimum capital requirements in addition to other regulatory restrictions. On October 1, 2004, the OCC terminated the agreement as the Bank was found to be materially in compliance with the agreement's requirements. As of that date, the Bank was no longer bound by the restrictions imposed by the OCC Agreement. ABOUT OHIO LEGACY CORP Ohio Legacy Corp is a bank holding company headquartered in Wooster, Ohio. Its subsidiary, Ohio Legacy Bank, N.A., provides financial services to small businesses and consumers though four full-service banking locations in Canton, Millersburg and Wooster, Ohio. FORWARD-LOOKING STATEMENTS DISCLOSURE This release contains certain forward-looking statements related to the future performance and financial condition of Ohio Legacy Corp. These statements, which are subject to numerous risks and uncertainties, are presented in good faith based on the Company's current condition and management's understanding, expectations, and assumptions regarding its future prospects as of the date of this release. Actual results could differ materially from those projected or implied by the statements contained herein. The factors that could affect the Company's future results are set forth in the periodic reports and registration statements filed by the Company with the Securities and Exchange Commission. OHIO LEGACY CORP CONSOLIDATED BALANCE SHEETS As of September 30, 2004, and December 31, 2003 September 30, December 31, 2004 2003 ------------- ------------- (unaudited) ASSETS Cash and due from banks $ 4,020,858 $ 4,370,383 Federal funds sold and interest-bearing deposits in financial institutions 10,735,371 3,814,436 ------------- ------------- Cash and cash equivalents 14,756,229 8,184,819 Securities available for sale 32,872,940 38,054,644 Securities held to maturity (fair value of $649,423) 649,423 - Loans, net 129,457,491 108,792,368 Federal bank stock 1,366,950 1,039,200 Premises and equipment, net 2,169,768 2,036,544 Other real estate owned - 70,000 Intangible asset 317,750 - Accrued interest receivable and other assets 1,225,813 880,904 ------------- ------------- Total assets $182,816,364 $159,058,479 ============= ============= LIABILITIES Deposits: Noninterest-bearing demand $ 11,621,269 $ 7,133,620 Interest-bearing demand 13,160,954 8,962,743 Savings 38,940,343 39,667,717 Certificates of deposit, net 78,565,210 67,387,021 ------------- ------------- Total deposits 142,287,776 123,151,101 Federal Home Loan Bank advances 18,664,432 14,759,314 Subordinated debentures 3,325,000 3,325,000 Capital lease obligations 970,812 976,643 Accrued interest payable and other liabilities 701,498 801,954 ------------- ------------- Total liabilities 165,949,518 143,014,012 SHAREHOLDERS' EQUITY Preferred stock, no par value, 500,000 shares authorized, none outstanding - - Common stock, no par value, 5,000,000 shares authorized, 2,120,720 and 2,118,000 shares issued and outstanding at September 30, 2004, and December 31, 2003, respectively 17,729,155 17,701,955 Accumulated deficit (707,585) (1,555,585) Accumulated other comprehensive income (loss) (154,724) (101,903) ------------- ------------- Total shareholders' equity 16,866,846 16,044,467 ------------- ------------- Total liabilities and shareholders' equity $182,816,364 $159,058,479 ============= ============= OHIO LEGACY CORP CONSOLIDATED STATEMENTS OF OPERATIONS For the three and nine months ended September 30, 2004 and 2003 For the three months ended For the nine months ended September 30, September 30, -------------------------- ------------------------- 2004 2003 2004 2003 ------------- ------------ ------------ ------------ Interest income: Loans, including fees $ 2,075,429 $ 1,621,437 $ 5,862,717 $ 4,566,173 Securities 311,123 278,570 981,559 1,072,785 Interest-bearing deposits and federal funds sold 40,240 23,664 91,048 87,180 ------------- ------------ ------------ ------------ Total interest income 2,426,792 1,923,671 6,935,324 5,726,138 Interest expense: Deposits 672,052 770,067 2,142,855 2,397,339 Other borrowings 237,229 111,346 659,076 331,063 ------------- ------------ ------------ ------------ Total interest expense 909,281 881,413 2,801,931 2,728,402 ------------- ------------ ------------ ------------ Net interest income 1,517,511 1,042,258 4,133,393 2,997,736 Provision for loan losses 71,000 146,000 306,000 303,500 ------------- ------------ ------------ ------------ Net interest income after provision for loan losses 1,446,511 896,258 3,827,393 2,694,236 Noninterest income: Service charges and other fees 110,335 89,094 310,700 241,350 Gain (loss) on sales of securities, net (5,237) 41,753 7,910 116,242 Other income 2,610 3,145 7,167 8,121 ------------- ------------ ------------ ------------ Total noninterest income 107,708 133,992 325,777 365,713 Noninterest expense: Salaries and benefits 531,797 423,008 1,482,402 1,159,050 Occupancy and equipment 166,591 143,459 468,051 420,430 Professional fees 109,288 80,707 305,911 290,512 Franchise tax 56,034 44,921 177,440 139,918 Data processing 111,819 84,616 323,311 237,192 Marketing and advertising 38,416 22,860 122,069 76,757 Stationery and supplies 28,756 21,299 67,717 61,394 Amortization of intangible asset 9,042 - 9,042 - Other expenses 102,476 84,380 349,227 253,696 ------------- ------------ ------------ ------------ Total noninterest expense 1,154,219 905,250 3,305,170 2,638,949 ------------- ------------ ------------ ------------ Earnings before income tax expense 400,000 125,000 848,000 421,000 Income tax expense - - - - ------------- ------------ ------------ ------------ Net earnings $ 400,000 $ 125,000 $ 848,000 $ 421,000 ============= ============ ============ ============ Basic earnings per share $ 0.19 $ 0.06 $ 0.40 $ 0.20 Diluted earnings per share $ 0.19 $ 0.06 $ 0.39 $ 0.20 Basic weighted average shares outstanding 2,120,720 2,115,700 2,119,540 2,106,359 Diluted weighted average shares outstanding 2,156,897 2,119,627 2,172,605 2,108,479 OHIO LEGACY CORP QUARTERLY BALANCE SHEETS (Dollars in thousands) 2004 2003 ----------------------------- ------------------- Sept. 30 June 30 March 31 Dec. 31 Sept. 30 --------- --------- --------- --------- --------- Cash and cash equivalents $ 14,756 $ 6,760 $ 11,541 $ 8,185 $ 13,533 Securities 33,522 33,054 36,754 38,055 29,972 Loans, net of fees 130,745 129,405 117,463 109,914 100,536 Allowance for loan losses (1,288) (1,226) (1,189) (1,122) (1,063) Premises and equipment, net 2,170 1,935 1,988 2,036 2,066 Core deposit intangible 318 - - - - Other assets 2,593 2,603 2,293 1,990 1,920 --------- --------- --------- --------- --------- Total assets $182,816 $172,531 $168,850 $159,058 $146,964 ========= ========= ========= ========= ========= Noninterest-bearing demand $ 11,621 $ 7,800 $ 7,095 $ 7,133 $ 6,028 Interest-bearing demand 13,161 11,702 9,214 8,963 8,622 Savings 38,941 38,987 38,443 39,668 42,361 Certificates of deposit 78,565 70,228 73,071 67,387 64,227 --------- --------- --------- --------- --------- Total deposits 142,288 128,717 127,823 123,151 121,238 Other borrowings 22,960 27,329 23,697 19,061 9,304 Other liabilities 701 685 777 802 673 --------- --------- --------- --------- --------- Total liabilities 165,949 156,731 152,297 143,014 131,215 Shareholders' equity 16,867 15,800 16,553 16,044 15,749 --------- --------- --------- --------- --------- Total liabilities and shareholders' equity $182,816 $172,531 $168,850 $159,058 $146,964 ========= ========= ========= ========= ========= LOAN PORTFOLIO: - --------------- Commercial $ 11,751 $ 11,733 $ 11,491 $ 12,699 $ 12,600 Residential real estate 49,459 48,449 43,865 42,511 38,564 Multifamily residential 10,119 10,049 9,690 8,121 6,255 Commercial real estate 33,856 32,338 28,206 24,457 23,342 Construction 13,591 15,331 13,104 11,791 8,990 Consumer and home equity 12,127 11,677 11,286 10,511 10,952 Net deferred loan fees (158) (172) (179) (176) (167) --------- --------- --------- --------- --------- Loans $130,745 $129,405 $117,463 $109,914 $100,536 ========= ========= ========= ========= ========= QUARTERLY AVERAGES: - ------------------- Fed funds and securities (1) $ 40,794 $ 40,745 $ 43,815 $ 36,135 $ 41,890 Loans 131,248 125,102 111,273 106,260 93,287 Total interest- earning assets 172,042 165,847 155,088 142,395 135,177 Total assets 178,296 172,672 161,396 148,516 142,019 Total assets, year to date 170,997 167,036 161,396 141,946 139,617 Interest-bearing deposits 124,158 123,176 117,658 115,275 113,942 Other borrowings and leases 27,982 25,203 19,903 10,682 4,694 Total interest- bearing liabilities 152,140 148,379 137,561 125,957 118,636 Shareholders' equity 16,235 16,093 16,182 15,856 16,394 Shareholders' equity, year to date 16,167 16,139 16,182 16,007 16,057 (1) Includes federal agency stock not classified in securities on the consolidated balance sheets and interest-earning deposits in financial institutions OHIO LEGACY CORP QUARTERLY STATEMENTS OF OPERATIONS (In thousands, except per share data and ratios) 2004 2003 -------------------------- ---------------- For the three months ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 -------- -------- -------- ------- -------- Interest income $ 2,427 $ 2,321 $ 2,188 $2,071 $ 1,923 Interest expense (910) (956) (937) (898) (881) -------- -------- -------- ------- -------- Net interest income 1,517 1,365 1,251 1,173 1,042 Provision for loan losses (71) (150) (85) (114) (146) Gain (Loss) on sales of securities (5) - 13 (3) 42 Noninterest income 113 115 90 105 92 Noninterest expense (1,154) (1,104) (1,047) (973) (905) -------- -------- -------- ------- -------- Net income $ 400 $ 226 $ 222 $ 188 $ 125 ======== ======== ======== ======= ======== Income per share, diluted $ 0.19 $ 0.10 $ 0.10 $ 0.08 $ 0.06 Common and dilutive shares, avg. 2,157 2,181 2,181 2,178 2,120 SELECTED RATIOS: - ---------------- Net interest margin (1) 3.52% 3.28% 3.23% 3.28% 3.06% Yield on interest-earning assets 5.58 5.59 5.66 5.77 5.67 Cost of funds 2.37 2.58 2.73 2.84 2.95 Interest rate spread (2) 3.21 3.01 2.93 2.93 2.72 Efficiency ratio (3) 70.80 74.59 78.09 76.00 79.70 Allowance as a percent of loans 0.98 0.95 1.01 1.02 1.06 Net loans as a percent of deposits 90.98 99.58 90.96 88.34 82.00 Annualized net charge-offs to loans 0.03 0.36 0.06 0.21 0.20 Annualized noninterest income to average assets (4) 0.25 0.27 0.22 0.29 0.26 Annualized noninterest expense to average assets 2.58 2.56 2.60 2.61 2.54 Annualized return on average assets 0.89 0.52 0.55 0.51 0.35 Annualized return on average equity 9.86 5.62 5.49 4.74 3.05 (1) Net interest income, annualized, divided by average interest-earning assets for the period (2) Difference between the yield on interest-earning assets and the cost of funds (3) Noninterest expense divided by net interest income and noninterest income, excluding gains on securities sales (4) Excludes gains on securities sales CONTACT: Ohio Legacy Corp L. Dwight Douce or Eric S. Nadeau, 330-263-1955 http://www.ohiolegacycorp.com -----END PRIVACY-ENHANCED MESSAGE-----