-----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, LLv1PF/zgsW5D/JrW+bAJdWhNjnVhML+h4ifD5ilpTrjlWDvfJRABLJabYTRLUP3 Uioy8iJsqDxtv938bl49fw== 0000745276-94-000001.txt : 19940518 0000745276-94-000001.hdr.sgml : 19940518 ACCESSION NUMBER: 0000745276-94-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COBANCORP INC CENTRAL INDEX KEY: 0000745276 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 341465382 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13166 FILM NUMBER: 94529051 BUSINESS ADDRESS: STREET 1: 124 MIDDLE AVE STREET 2: PO BOX 4001 CITY: ELYRIA STATE: OH ZIP: 44035-2001 BUSINESS PHONE: 2163298000 MAIL ADDRESS: STREET 1: 124 MIDDLE AVENUE STREET 2: PO BOX 4001 CITY: ELYRIA STATE: OH ZIP: 44035-2001 FORMER COMPANY: FORMER CONFORMED NAME: LCB BANCORP INC DATE OF NAME CHANGE: 19920616 10-Q 1 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 March 31, 1994 Commission file number: 0-13166 CoBancorp Inc. (Exact name of registrant as specified in its charter) Ohio 34-1465382 (State or other jurisidiction of (IRS Employer incorporation or organization) Identification No.) 124 Middle Avenue, Elyria, Ohio 44035 (Address of principal executive offices) (Zip Code) (216) 329-8000 Registrant's telephone number, including area code Not applicable 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 periods 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 classes of common stock, as of the latest practical date. As of March 31, 1994, there were 3,274,083 outstanding common shares, with no par value, of the Registrant. page 1 of 13 INDEX COBANCORP INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Page Consolidated balance sheets--March 31, 1994 and December 31, 1993 3 Consolidated statements of income--Three months ended March 31, 1994 and 1993 4 Consolidated statements of cash flows--Three months ended March 31, 1994 and 1993 5 Notes to consolidated financial statements-- March 31, 1994 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 12 SIGNATURES 13 -2- PART I. FINANCIAL INFORMATION COBANCORP INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) MARCH 31, 1994 March 31 December 31 1994 1993 ASSETS Cash and due from banks $ 27,522,213 $ 29,051,488 Investment securities (market value $143,755,000 at March 31, 1994 and $156,485,000 at December 31, 1993) 142,511,717 152,933,745 Federal funds sold 100,000 3,000,000 Loans 298,281,202 289,448,687 Less allowance for loan losses 5,373,384 5,226,401 ------------ ------------ Net loans 292,907,818 284,222,286 Bank premises and equipment 10,694,232 10,563,830 Accrued income and prepaid expenses 3,986,952 3,433,018 Other assets 9,010,174 8,596,377 ------------ ------------ TOTAL ASSETS $486,733,106 $491,800,744 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Demand--noninterest bearing $ 55,663,813 $ 59,208,379 Demand--interest bearing 57,772,258 58,858,055 Savings and other time 312,926,356 309,519,183 ------------ ------------ Total deposits 426,362,427 427,585,617 Short-term funds 17,026,668 20,245,028 Other liabilities 2,679,163 3,131,672 Employee stock ownership plan obligation 1,024,010 1,105,260 ------------ ------------ Total liabilities 447,092,268 452,067,577 Shareholders' equity Capital stock, without par value 3,500,000 shares authorized 3,274,083 shares outstanding 3,268,488 at December 31, 1993 4,430,367 4,304,345 Capital surplus 16,623,320 16,623,320 Retained earnings 19,611,161 19,910,762 Employee stock ownership plan obligation (1,024,010) (1,105,260) ------------ ------------ Total shareholders' equity 39,640,838 39,733,167 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $486,733,106 $491,800,744 ============ ============ See notes to consolidated financial statements. -3- COBANCORP INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) MARCH 31, 1994 Three months ended March 31 1994 1993 Interest Income Loans (including fees) Taxable $6,187,532 $5,573,228 Tax-exempt 40,194 46,107 Investment securities Taxable 1,289,233 2,367,333 Tax exempt 853,856 584,094 Federal funds sold 23,589 43,435 ---------- ---------- Total interest income 8,394,404 8,614,197 Interest Expense Deposits 2,625,936 2,992,610 Short-term funds 116,995 192,765 ---------- ---------- Total interest expense 2,742,931 3,185,375 ---------- ---------- Net interest income 5,651,473 5,428,822 Provision for Loan and Real Estate Losses 125,000 600,000 ---------- ---------- Net interest income after provision for loan and real estate losses 5,526,473 4,828,822 Other Income Service charges on deposit accounts 401,766 365,770 Trust fees 324,999 282,450 Other 130,923 201,672 Securities gains 291,131 140,716 ---------- ---------- Total other income 1,148,819 990,608 Other Expenses Salaries, wages and benefits 2,313,056 1,898,123 Occupancy--net 358,196 301,750 Furniture and equipment 136,700 139,500 Taxes, other than income and payroll 156,308 132,875 FDIC insurance 239,196 219,549 Other 2,004,845 1,910,228 ---------- ---------- Total other expenses 5,208,301 4,602,025 ---------- ---------- Income before income taxes 1,466,991 1,217,405 Income Tax Expense 250,000 211,000 ---------- ---------- Net Income $1,216,991 $1,006,405 ========== ========== Net Income Per Share $0.36 $0.31 ===== ===== See notes to consolidated financial statements. -4- COBANCORP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) MARCH 31, 1994 Three months ended March 31 1994 1993 Operating Activities Net income $ 1,216,991 $ 1,006,405 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan and real estate losses 125,000 600,000 Provision for depreciation and amortization 279,699 251,683 Amortization of premiums less accretion of discounts on securities 1,156 60,358 Realized securities (gains) (291,131) (140,716) (Increase) in interest receivable (304,889) (215,980) (Decrease) in interest payable (20,327) (115,487) (Increase) decrease in other assets (709,030) 102,985 Increase in other liabilities 127,011 159,366 ----------- ----------- Net Cash Provided by Operating Activities 424,480 1,708,614 Investing Activities Proceeds from sales of investment securities 12,406,524 14,458,456 Paydowns and maturities of investment securities 7,490,121 11,003,840 Purchases of investment securities (10,829,323) (22,498,973) Net decrease in credit card receivables 211,011 258,415 Net (increse) in longer-term loans (9,021,544) (6,731,386) Purchases of premises and equipment, net of retirement (363,913) (205,646) ----------- ----------- Net Cash (Used) by Investing Activities (107,124) (3,715,294) Financing Activities Net (decrease) increase in demand deposits, NOW accounts and savings accounts (3,571,955) 9,717,611 Net increase (decrease) in certificates of deposit 2,348,764 (4,956,105) Net (decrease) increase in short-term funds (3,218,360) 8,854,938 Cash dividends (431,102) (292,087) Dividend investment plan 92,180 61,242 Long-term incentive plan 33,842 ----------- ----------- Net Cash (Used) Provided by Financing Activities (4,746,631) 13,385,599 ----------- ----------- (Decrease) Increase in Cash and Cash Equivalents (4,429,275) 11,378,919 Cash and Cash Equivalents at Beginning of Period 32,051,488 28,968,842 ----------- ----------- Cash and Cash Equivalents at End of Period $27,622,213 $40,347,761 =========== =========== See notes to consolidated financial statements. -5- COBANCORP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1994 NOTE A PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of CoBancorp Inc. and its wholly-owned subsidiary, PremierBank & Trust. All material intercompany accounts and transactions have been eliminated. BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is the opinion of management that all adjustments made to the unaudited interim financial statements were of a normal recurring nature. CASH EQUIVALENTS: For purposes of the Statements of Cash Flows, cash equivalents include amounts due from banks and federal funds sold. Generally, federal funds are purchased and sold for periods of less than thirty days. PER SHARE AMOUNTS: All per share amounts have been adjusted to reflect the four-for-three stock split in February 1994 and the four-for-three stock split in July 1993. RECLASSIFICATIONS: Certain amounts in the 1993 consolidated financial statements have been reclassified to conform to the 1994 presentation. -6- COBANCORP INC. MARCH 31, 1994 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion focuses on information about CoBancorp Inc.'s financial condition and results of operations which is not otherwise apparent from the consolidated financial statements attached. EARNINGS RESULTS Net income increased 20.9 percent to $1,217,000 for the first three months of 1994, from the $1,006,000 earned in the same period of 1993. Earnings per share increased to $.36, up from $.31 per share in the first three months of the prior year. NET INTEREST INCOME The net interest margin on a fully taxable-equivalent basis was 5.50 percent for the first three months of 1994, compared to 5.46 percent one year ago. Net interest income for the first three months of 1996 amounted to $6,112,000 compared to $5,753,000 in 1993. These amounts reflect net interest income adjusted to a fully taxable-equivalent basis by recognizing the tax effect of interest earned on tax-exempt securities and loans. The increase in net interest income of $359,000 is attributable primarily to an increase in earning assets and to lower interest rates on interest-bearing deposits. These factors were partially offset by a decrease in the yield on earning assets and, to a lesser extent, an increase in interest-bearing deposits. The following table sets forth for the periods indicated a summary of the changes in interest income and interest expense on a fully taxable-equivalent basis resulting from changes in volume and changes in rates for the major components of interest-earning assets and interest-bearing liabilities: -7- SUMMARY OF NET INTEREST INCOME CHANGES (RATE/VOLUME VARIANCE) Three months ended 3/31/94 vs. 3/31/93 (in thousands of dollars)
Change in interest Current Current Old Old income/expense due to volume rate volume rate Volume Rate Both Total Taxable securities $ 82,106 6.29% $129,736 7.22% $(860) $(303) $ 86 $(1,077) Nontaxable securities 63,942 8.09 40,540 9.09 532 (101) (22) 409 Federal funds sold 3,077 3.07 5,911 2.98 (21) 1 (20) Taxable loans: Real estate loans 136,668 8.32 101,375 9.04 787 (182) (29) 576 Commercial loans 119,722 7.63 106,589 8.07 261 (117) 15 159 Installment loans 30,826 10.80 32,781 11.94 (58) (92) 7 (142) Overdrafts 192 147 0 Quickline loans 108 18.76 41 19.54 3 0 3 Credit card loans 2,739 35.28 3,093 29.37 (26) 45 (2) 17 Nontaxable loans: IRBs 3,955 6.16 4,490 6.22 (8) (1) (9) -------- -------- ----- ----- ----- ------- TOTAL INTEREST-EARNING ASSETS 443,334 8.01 424,702 8.50 611 (750) 55 (84) Interest-bearing transaction accounts: NOW 26,009 2.09 27,062 2.57 (7) (32) 1 (38) Advantage 50 28,927 2.01 24,207 2.58 30 (34) (7) (10) Savings accounts: Savings 144,405 2.42 117,719 3.03 200 (179) (41) (20) IMMAs 30,142 2.17 33,183 2.64 (20) (39) 4 (55) Time deposits: Christmas/vaction clubs 2,087 4.04 411 3.94 16 17 CDs under $100,000 87,318 3.96 92,204 4.44 (53) (109) 6 (157) CDs over $100,000 (regular) 4,612 4.16 8,036 4.06 (34) 2 (1) (33) CDs over $100,000 (public fund) 10,719 3.16 16,804 3.08 (46) 3 (1) (44) IRAs 30,089 4.36 27,143 5.22 38 (58) (6) (26) Short-term funds: Repurchase agreements 3,156 2.68 15,278 3.15 (94) (18) 14 (98) Federal funds purchased 748 3.52 78 3.62 6 6 Sweep accounts 12,513 2.98 7,796 2.84 1 2 Notes payable TT&L 3,216 2.12 3,146 2.66 31 (11) (6) 14 -------- -------- ----- ----- ---- ------- TOTAL INTEREST-BEARING LIABILITIES 383,940 2.90 373,067 3.46 67 (473) (37) (443) ----- ----- ---- ------- NET INTEREST INCOME 5.50 5.46 $ 544 $(277) $ 92 $ 359 ===== ===== ==== ======= YTD FTE net interest income (current year) $ 6,112 YTD FTE net interest income (prior year) 5,753 ------- Change in FTE net interest income $ 359 ======= Presented on a fully-taxable equivalent basis, using year-to-date average balances.
-8- The trends in various components of the balance sheet and their respective yields and rates which affect interest income and expense are shown in the following table: AVERAGE CONSOLIDATED BALANCE SHEETS, NET INTEREST INCOME AND RATES
Three Months Ended March 31, 1994 Three Months Ended March 31, 1993 Average Interest Average Interest Daily (Annual- Yield/ Daily (Annual- Yield/ Balance ized) Rate Balance ized) Rate ASSETS Interest-earning assets: Loans (including fees) (1) Taxable $290,247 $24,812 8.55% $244,026 $22,603 9.26% Tax-exempt (2) 3,954 243 6.15 4,489 279 6.22 Investment securities Taxable 82,106 5,165 6.29 129,736 9,373 7.22 Tax-exempt (2) 63,942 5,175 8.09 40,540 3,686 9.09 Federal funds sold 3,077 94 3.07 5,911 176 2.98 Total interest-earning -------- ------- - -------- ------- assets (2) 443,326 35,849 8.01 424,702 36,117 8.50 Noninterest-earning assets: Cash and due from banks 23,159 21,877 Bank premises and equipment 10,595 8,315 Other assets 11,994 12,074 Less allowance for loan losses (5,291) (5,347) -------- - -------- TOTAL ASSETS $483,783 $461,621 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Interest-bearing transaction accounts $ 54,935 $ 1,125 2.05 $ 51,270 $ 1,321 2.58 Savings 174,547 4,145 2.37 150,902 4,448 2.95 Time deposits 134,825 5,379 3.99 144,598 6,367 4.40 Short-term funds 19,633 472 2.40 26,298 782 2.97 Total interest-bearing --------- ------- - -------- ------- liablities 383,940 11,121 2.90 373,068 12,918 3.46 Noninterest-bearing liabilities: ------- - -------- Demand deposits 55,471 48,749 Other liabilities 4,731 5,326 Shareholders' equity 39,641 34,478 TOTAL LIABILITIES AND -------- - -------- SHAREHOLDERS' EQUITY $483,783 $461,621 ======== ======== NET INTEREST INCOME $24,368 $23,199 ======= ======= NET YIELD/RATE ON INTEREST- EARNING ASSETS (2) 5.50% 5.46% (1) Nonaccrual loans are included in average loan balance. (2) Presented on a fully tax equivalent basis using a tax rate of 34%. Average interest-earning assets were $443,326,000 and $424,702,000 for the first three months of 1994 and 1993, respectively.
-9- NET OTHER EXPENSES Total net other expense (total other expense less total other income) has increased $448,000, to $4,059,000 for the first three months of 1994, compared to $3,611,000 the previous year. Salaries, wages and benefits, occupancy, and taxes other than income and payroll have increased compared to last year. The Corporation has also experienced increases in professional fees, insurance expense (including FDIC insurance) and data processing costs. These increased expenses have been partially offset by a decrease in the provision for loan losses. Expense containment remains a focus of the bank, in addition to enhancing productivity. NONPERFORMING LOANS Nonaccrual loans were slightly above year-end 1993 levels, and at March 31, 1994, totaled $1,438,000, compared to $1,318,000 at December 31, 1993. The category of accruing loans past due 90 days or more totaled $157,000 at March 31, 1994, and $141,000 at December 31, 1993. The balance in the allowance for loan losses was $5,373,000 at March 31, 1994, compared to $5,226,000 at December 31, 1993. Except for installment and credit cards, loans on which interest and/or principal is 90 days or more past due are placed on nonaccrual status and any previously accrued but uncollected interest is reversed from income. Such loans remain on a cash basis for recognition of income until both interest and principal are current. Installment and credit card loans past due greater than 120 days are charged off and previously accrued but uncollected interest is reversed from income. The following table summarizes nonaccrual, past due and restructured loans (in thousands of dollars). March 31 December 31 1994 1993 Accruing loans past due 90 days or more as to principal or interest: Loans secured by real estate $ 84 $ 58 Loans to individuals 73 57 Commercial and industrial loans 26 ------ ------ $ 157 $ 141 ====== ====== Nonaccrual loans: Loans secured by real estate $ 702 $ 518 Commercial and industrial loans 19 77 All other 717 723 ------ ------ $1,438 $1,318 ====== ====== Restructured loans included above: Commercial and collateral $ 0 $ 0 ====== ====== -10- ALLOWANCE FOR LOAN LOSSES AND LOAN CHARGE-OFFS In determining the adequacy of the allowance for loan losses, management evaluates past loan loss experience, present and anticipated economic conditions and the credit worthiness of its borrowers. The allowance for loan losses is increased by provisions charged against income and recoveries of loans previously charged off. The allowance is decreased by loans that are determined uncollectible by management and charged against the allowance. Potential problem loans are those loans which are on the Bank's "watch list." These loans exhibit characteristics that could cause the loans to become nonperforming or require restructuring in the future. This "watch list" is reviewed monthly and adjusted for changing conditions. At the end of the first three months, the allowance for loan losses as a percentage of loans was 1.80 percent in 1994, and 2.17 percent in 1993. The provision for loan losses was $125,000 in the three months ended March 31, 1994, and $500,000 for the same period of 1993. Additionally, $100,000 was provided in the first quarter of 1993 to establish an allowance for possible losses in other real estate owned. The following table contains information relative to loan loss experience for the three months ended March 31, 1994, and the year ended December 31, 1993. Three months ended Year ended March 31, 1994 December 31, 1993 Allowance for loan losses at beginning of period $5,226 $5,215 Loans charged off: Real estate 7 198 Installment 71 471 Credit card 12 91 Other 2 Commercial and collateral 11 1,384 ------ ------ 101 2,146 Recoveries on loans charged off: Real estate 5 51 Installment 60 330 Credit card 4 16 Other 12 Commercial and collateral 54 928 ------ ------ 123 1,337 ------ ------ Net loans charged off (22) 809 Provision for loan losses 125 820 ------ ------ Allowance for loan losses at end of period $5,373 $5,226 ====== ====== Ratio of allowance for loan losses to total loans at end of period 1.80% 1.81% ====== ====== -11- CAPITAL At March 31, 1994, the Corporation's Tier 1 leverage ratio was 8.16 percent. The Corporation's risk-based capital ratios based on Federal Reserve Board guidelines were as follows: Tier 1 "core" capital to risk-weighted assets 13.53 percent Total capital to risk-weighted assets 14.79 percent These ratios substantially exceed the minimums which are in effect for bank holding companies after the end of 1992. Return on average assets was 0.98 percent for the first quarter of 1994, compared to 0.87 percent for the same period in 1993. Return on average equity was 11.97 percent for the first three months of 1994, compared to 11.68 percent for the first three months of 1993. PART II. OTHER INFORMATION Except as set forth below, the items of Part II are inapplicable or the answers thereto are negative and, accordingly, no reference is made to said items in this report. Item 4--Submission of matters to a vote of security holders None. Item 6--Exhibits and Reports on Form 8-K (a) No exhibits were required to be filed as part of this report. (b) The registrant was not required to file any reports on Form 8-K during the quarter ended March 31, 1994. -12- COBANCORP INC. MARCH 31, 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. COBANCORP INC. (Registrant) 5/11/94 Date Timothy W. Esson Executive Vice President -13- -----END PRIVACY-ENHANCED MESSAGE-----