-----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, B25CAMUtEsuUR93C5BTI2ucI/eoWuk8XAN4UdRzxJfxjCSlQTgOCnBSZsqFhn8D5 P8PaQYxpRtBLwfg0c8gGsA== 0000950152-00-003986.txt : 20000515 0000950152-00-003986.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950152-00-003986 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANCFIRST OHIO CORP CENTRAL INDEX KEY: 0000868572 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 311294136 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18840 FILM NUMBER: 628187 BUSINESS ADDRESS: STREET 1: 422 MAIN ST CITY: ZANESVILLE STATE: OH ZIP: 43702 BUSINESS PHONE: 6144528444 MAIL ADDRESS: STREET 1: 422 MAIN STREET CITY: ZANESVILLE STATE: OH ZIP: 43701 FORMER COMPANY: FORMER CONFORMED NAME: BANCFIRST CORP /OH/ DATE OF NAME CHANGE: 19600201 10-Q 1 BANCFIRST OHIO CORP. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 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 0-18840 BancFirst Ohio Corp. (Exact name of registrant as specified in its charter) Ohio 31-1294136 ---- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 422 Main Street Zanesville, Ohio 43701 (Address of principal executive offices) (Zip Code) (740) 452-8444 (Registrant's telephone number, including area code) N/A (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 --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding as of May 11, 2000 ----- ------------------------------ Common Stock, No Par Value 7,455,000 1 2 INDEX BANCFIRST OHIO CORP. PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Financial Statements Consolidated Balance Sheet............................ 3 Consolidated Statement of Income...................... 4 Consolidated Statement of Cash Flows.................. 5 Notes to Consolidated Financial Statements............ 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 8-19 Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 20 PART II. OTHER INFORMATION Other Information.............................................. 21 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits on Item 601 of Regulation S-K (b) Exhibit 27: Financial Data Schedule (c) Reports on Form 8-K Signatures.............................................................. 22 2 3 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS BANCFIRST OHIO CORP. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
March 31, 2000 (Unaudited) December 31, 1999 ----------- ----------------- ASSETS: Cash and due from banks $ 26,657 $ 32,191 Federal funds sold 193 183 Securities held-to-maturity, at amortized cost (approximate fair value of $19,809 and $20,601 in 2000 and 1999, respectively) 20,033 20,786 Securities available-for-sale, at fair value 330,017 310,449 ---------- ---------- Total securities 350,050 331,235 ---------- ---------- Loans, net of unearned income 881,911 849,767 Allowance for possible loan losses (7,761) (7,431) ---------- ---------- Net loans 874,150 842,336 ---------- ---------- Bank premises and equipment, net 14,997 14,789 Accrued interest receivable 8,565 8,260 Intangible assets 12,255 12,606 Other assets 34,169 32,606 ---------- ---------- Total assets $1,321,036 $1,274,206 ========== ========== LIABILITIES: Deposits: Non-interest-bearing deposits $ 66,445 $ 65,086 Interest-bearing deposits 740,922 734,090 ---------- ---------- Total deposits 807,367 799,176 Federal funds purchased 26,200 24,100 Federal Home Loan Bank advances and other borrowings 396,898 361,398 Accrued interest payable 3,960 3,618 Other liabilities 7,525 5,806 ---------- ---------- Total liabilities 1,241,950 1,194,098 SHAREHOLDERS' EQUITY: Common stock, no par value, 20,000,000 shares authorized, 8,180,033 and 8,164,807 shares issued in 2000 and 1999, respectively 66,313 66,318 Retained earnings 37,798 35,795 Accumulated other comprehensive income - unrealized holding losses on securities available-for-sale, net (8,466) (8,334) Treasury stock, 712,537 and 569,628 shares, at cost, in 2000 and 1999, respectively (16,559) (13,671) ---------- ---------- Total shareholders' equity 79,086 80,108 ---------- ---------- Total liabilities and shareholders' equity $1,321,036 $1,274,206 ========== ==========
The accompanying notes are an integral part of the financial statements. 3 4 BANCFIRST OHIO CORP. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATE)
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 ------- ------- INTEREST INCOME: Interest and fees on loans $18,025 $16,192 Interest and dividends on securities: Taxable 5,606 4,744 Tax-exempt 421 412 Other interest income 3 23 ------- ------- Total interest income 24,055 21,371 ------- ------- Interest expense: Deposits 8,256 8,051 Borrowings 6,188 3,919 ------- ------- Total interest expense 14,444 11,970 ------- ------- Net interest income 9,611 9,401 Provision for possible loan losses 450 350 ------- ------- Net interest income after provision for possible loan losses 9,161 9,051 ------- ------- Other income: Trust and custodian fees 650 566 Customer service fees 528 530 Gain on sale of loans 615 604 Other 1,180 459 Investment securities gains, net -- 124 ------- ------- Total other income 2,973 2,283 ------- ------- Other expense: Salaries and employee benefits 4,417 4,054 Net occupancy expense 527 410 Amortization of intangibles 351 339 Other 2,390 2,374 ------- ------- Total other expense 7,685 7,177 ------- ------- Income before income taxes 4,449 4,157 Provision for Federal income taxes 1,375 1,316 ------- ------- Net income $ 3,074 $ 2,841 ======= ======= Basic and diluted earnings per share $ 0.41 $ 0.36 ======= ======= Weighted average common shares outstanding: Basic 7,560 7,881 ======= ======= Diluted 7,574 7,893 ======= ======= Cash dividends per common share $ 0.145 $ 0.140 ======= =======
The accompanying notes are an integral part of the financial statements. 4 5 BANCFIRST OHIO CORP. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ------------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income $ 3,074 $ 2,841 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,407 1,315 Provision for possible loan losses 450 350 Gain on sale of assets (694) (728) Increase in interest receivable (305) (462) Increase in other assets (1,820) (698) Increase in interest payable 342 38 Increase in other liabilities 1,719 1,154 FHLB stock dividend (279) (296) -------- -------- Net cash provided by operating activities 3,894 3,514 -------- -------- Cash flows from investing activities: (Increase) decrease in federal funds sold and short term investments (10) 155 Proceeds from maturities of securities held-to-maturity 757 1,860 Proceeds from maturities and sales of securities available-for-sale 4,359 25,776 Purchase of securities available-for-sale (24,067) (18,179) Increase in loans, net (42,022) (31,241) Purchases of equipment and other assets (535) (1,066) Proceeds from sale of loans 10,263 21,758 -------- -------- Net cash used in investing activities (51,255) (937) -------- -------- Cash flows from financing activities: Increase in federal funds purchased 2,100 -- Increase (decrease) in Federal Home Loan Bank advances and other borrowings 35,500 (6,500) Net increase (decrease) in deposits 8,191 (1,038) Cash dividends paid (1,095) (1,102) Issuance (purchase) of stock, net (2,869) (1,010) -------- -------- Net cash provided by (used in) financing activities 41,827 (9,650) -------- -------- Net decrease in cash and due from banks (5,534) (7,073) Cash and due from banks, beginning of period 32,191 28,731 -------- -------- Cash and due from banks, end of period $ 26,657 $ 21,658 ======== ======== Supplemental cash flow disclosures: Income taxes paid $ -- $ -- ======== ======== Interest paid $ 14,102 $ 11,932 ======== ========
The accompanying notes are an integral part of the financial statements 5 6 BANCFIRST OHIO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 (UNAUDITED) The consolidated financial statements for interim periods are unaudited; however, in the opinion of management of BancFirst Ohio Corp. ("Company"), the accompanying consolidated financial statements contain all material adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by generally accepted accounting principles. Reference should be made to the Company's consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1999 for additional disclosures, including a summary of the Company's accounting policies. The results of operations for the three-month period ended March 31, 2000 are not necessarily indicative of the results to be expected for the full year. 1) BASIS OF PRESENTATION: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. 2) NEW ACCOUNTING PRONOUNCEMENTS In June 1998, SFAS No., 133, "Accounting for Derivative Instruments and Hedging Activities" was issued. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000 and establishes accounting and reporting standards for derivative instruments and for hedging activities. The provisions of this statement will primarily impact the accounting for the Company's interest rate swap transactions which had a total notional amount of $54,375 at March 31, 2000. The Company does not anticipate that this standard will have a significant impact on its financial statements. 3) PENDING ACQUISITION On January 13, 2000 the Company entered into an agreement to acquire Milton Federal Financial Corporation ("Milton") whereby Milton would be merged into the Company. Under the terms of the agreement, the Company will exchange .444 shares of its common stock and $6.80 for each of the issued and outstanding shares of Milton. It will also redeem Milton's outstanding stock options for cash equal to the acquisition price per share less the exercise price of the options prior to closing. Based on the Company's closing price of $20.375 per share on January 12, 2000, the transaction would be valued at approximately $33 million. The Company will account for the merger as a purchase and expects to consummate the merger in the second quarter of 2000, pending approval by Milton's shareholders and other customary conditions of closing. Regulatory approvals of this acquisition have been obtained. 6 7 4) COMPUTATION OF EARNINGS PER SHARE The computation of earnings per share is as follows:
THREE MONTHS ENDED MARCH 31, ------------------------------------- 2000 1999 ------ ------ (In thousands, expect per share data) Actual weighted average common shares outstanding 7,560 7,881 Dilutive common stock equivalents: Stock options -- 6 Bonus shares - Company match 14 6 ------ ------ Weighted average common shares outstanding adjusted for dilutive common stock equivalents 7,574 7,893 ====== ====== Net income $3,074 $2,841 ====== ====== Basic earnings per share $ 0.41 $ 0.36 ====== ====== Diluted earnings per share $ 0.41 $ 0.36 ====== ======
5) COMPREHENSIVE INCOME The Company's comprehensive income, determined in accordance with SFAS No. 130, was $2,942 and $2,832 for the three months ended March 31, 2000 and 1999, respectively. 7 8 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BANCFIRST OHIO CORP. For a comprehensive understanding of the Company's financial condition and performance, this discussion should be considered in conjunction with the Company's Consolidated Financial Statements, accompanying notes, and other information contained elsewhere herein. This discussion contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involves risks and uncertainties. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which the Company and its Banking Subsidiary operate); competition for the Company's customers from other providers of financial services; government legislation and regulation (which changes from time to time and over which the Company has no control); changes in interest rates; prepayments of loans and securities; material unforeseen changes in the liquidity, results of operations, or other financial position of the Company's customers; and other risks detailed in the Company's Form 10-K for the year ended December 31, 1999 and its other filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. 8 9 BANCFIRST OHIO CORP. SELECTED FINANCIAL DATA: (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
AT OR FOR THE THREE MONTHS ENDED MARCH 31, 2000 1999 ---------- ---------- STATEMENT OF INCOME DATA Interest Income $ 24,055 $ 21,371 Interest expense 14,444 11,970 ---------- ---------- Net interest income 9,611 9,401 Provision for possible loan losses 450 350 Non-interest income 2,973 2,283 Non-interest expense 7,685 7,177 ---------- ---------- Income before income taxes 4,449 4,157 Provision for Federal Income taxes 1,375 1,316 ---------- ---------- Net income $ 3,074 $ 2,841 ========== ========== PER SHARE DATA: Basic earnings per share 0.41 $ 0.36 Diluted earnings per share 0.41 0.36 Dividends 0.15 0.14 Book value 10.59 11.23 Tangible book value 8.95 9.76 BALANCE SHEET DATA: Total assets $1,321,036 $1,175,380 Loans 881,911 786,985 Allowance for possible loan losses 7,761 6,701 Securities 350,050 318,216 Deposits 807,367 788,584 Borrowings 423,098 290,250 Shareholders' equity 79,086 88,255 PERFORMANCE RATIOS (1): Return on average assets 0.96% 0.97% Return on average equity 15.52 13.02 Tangible return on average tangible equity 20.14 16.50 Net interest margin 3.30 3.51 Interest rate spread 3.01 3.14 Non-interest income to average assets 0.93 0.74 Non-interest expense to average assets 2.30 2.35 Efficiency ratio (2) 57.19 57.96 ASSET QUALITY RATIOS: Non-performing loans to total loans 0.73% 0.47% Non-performing assets to total assets 0.51 0.36 Allowance for possible loan losses to total loans 0.88 0.85 Allowance for possible loan losses to non-performing loans 119.9 181.4 Net charge-offs to average loans (1) 0.06 0.15 CAPITAL RATIOS: Shareholders' equity to total assets 5.99% 7.51% Tier 1 capital to total assets 7.48 6.57 Tier 1 capital to risk-weighted assets 10.74 10.06
(1) Ratios are stated on an annualized basis. (2) The efficiency ratio is equal to non-interest expense (excluding amortization expense) divided by net interest income on a fully tax equivalent basis plus non-interest income excluding gains on sales of securities. 9 10 OVERVIEW The reported results of the Company primarily reflect the operations of the Company's bank subsidiary. The Company's results of operations are dependent on a variety of factors, including the general interest rate environment, competitive conditions in the industry, governmental policies and regulations and conditions in the markets for financial assets. Like most financial institutions, the primary contributor to the Company's income is net interest income, which is defined as the difference between the interest the Company earns on interest-earning assets, such as loans and securities, and the interest the Company pays on interest-bearing liabilities, such as deposits and borrowings. The Company's operations are also affected by non-interest income, such as checking account and trust fees and gains from sales of loans. The Company's principal operating expenses, aside from interest expense, consist of salaries and employee benefits, occupancy costs, and other general and administrative expenses. AVERAGE BALANCES AND YIELDS The following table presents, for each of the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and percentage rates, and the net interest margin. Net interest margin is calculated on a fully tax equivalent basis ("FTE") by total interest-earning assets. The net interest margin is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities. FTE income includes tax-exempt income, restated to a pre-tax equivalent, based on the statutory federal income tax rate. All average balances are daily average balances. Non-accruing loans are included in average loan balances. 10 11
THREE MONTHS ENDED MARCH 31, 2000 1999 ------------------------------------- ------------------------------------- Average Income/ Yield/ Average Income/ Yield/ Balance Expenses Cost (1) Balance Expenses Cost (1) ---------- -------- -------- ---------- -------- -------- (Dollars in thousands) SECURITIES: Taxable $ 303,849 $ 5,605 7.42% $ 294,713 $ 4,744 6.53% Tax-exempt (3) 29,869 647 8.71% 32,673 633 7.86% ---------- ------- ---------- ------- Total securities 333,718 6,252 7.53% 327,386 5,377 6.66% LOANS (2): Commercial 425,356 9,466 8.95% 339,845 7,802 9.31% Real Estate 336,158 6,362 7.61% 352,503 6,535 7.52% Consumer 104,302 2,212 8.53% 92,070 1,873 8.25% ---------- ------- ---------- ------- Total loans 865,816 18,040 8.38% 784,418 16,210 8.38% Federal funds sold 163 3 7.40% 2,065 23 4.52% ---------- ------- ---------- ------- Total earning assets (3) 1,199,697 $24,295 8.14% 1,113,869 $21,610 7.87% ------- ------- Non-interest earning assets 85,005 68,675 ---------- --------- Total assets $1,284,702 $1,182,544 ========== ========== INTEREST-BEARING DEPOSITS: Demand and savings deposits $ 230,144 $ 1,614 2.82% $ 231,884 $ 1,464 2.56% Time deposits 492,702 6,642 5.42% 499,127 6,587 5.35% ---------- ------- ---------- ------- Total deposits 722,846 8,256 4.59% 731,011 8,051 4.47% Borrowings 409,548 6,188 6.08% 294,642 3,919 5.39% ---------- ------- ---------- ------- Total interest-bearing liabilities 1,132,394 14,444 5.13% 1,025,653 11,970 4.73% ------- ------- Non interest-bearing deposits 63,743 61,376 ---------- ---------- Subtotal 1,196,137 1,087,029 Accrued expenses and other liabilities 8,881 7,016 ---------- ---------- Total liabilities 1,205,018 1,094,045 Shareholders' equity 79,684 88,499 ---------- ---------- Total liabilities and shareholders' equity 1,284,702 $1,182,544 ========== ========== Net interest income and interest rate spread (4) $ 9,851 3.01% $ 9,640 3.14% ======= ==== ======= ==== Net interest margin (5) 3.30% 3.51% ==== ==== Average interest-earning assets to average interest-bearing liabilities 105.9% 108.6% ========== ==========
(1) Calculated on an annualized basis. (2) Non-accrual loans are included in the average loan balances. (3) Interest income is computed on a fully tax equivalent (FTE) basis, using a tax rate of 35%. (4) Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (5) The net interest margin represents net interest income as a percentage of average interest-earning assets. 11 12 RATE AND VOLUME VARIANCES Net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table discloses the dollar changes in the Company's net interest income attributable to changes in levels of interest-earning assets or interest-bearing liabilities (volume), changes in average yields on interest-earning assets and average rates on interest-bearing liabilities (rate) and the combined volume and rate effects (total). For the purposes of this table, the change in interest due to both rate and volume has been allocated to volume and rate change in proportion to the relationship of the dollar amounts of the change in each. In general, this table provides an analysis of the effect on income of balance sheet changes which occurred during the periods and the changes in interest rate levels.
THREE MONTHS ENDED MARCH 31, 2000 VS. 1999 (IN THOUSANDS) INCREASE (DECREASE) ----------------------------------- ------ ----- ------ VOLUME RATE TOTAL ------ ----- ------ Interest-earning assets: Securities: Taxable $ 159 $ 702 $ 861 Non-taxable (55) 69 14 ------ ----- ------ Total securities 104 771 875 ------ ----- ------ Loans: Commercial 1,971 (307) 1,664 Real estate (266) 93 (173) Consumer 270 69 339 ------ ----- ------ Total loans 1,975 (145) 1,830 ------ ----- ------ Federal funds sold (29) 9 (20) ------ ----- ------ Total interest-earning assets (1) 2,050 635 2,685 ------ ----- ------ Interest-bearing liabilities: Deposits: Demand and savings deposits (10) 160 150 Time deposits (59) 114 55 ------ ----- ------ Total interest-bearing deposits (69) 274 205 Borrowings 1,713 556 2,269 ------ ----- ------ Total interest-bearing liabilities 1,644 830 2,474 ------ ----- ------ Net interest income $ 406 $(195) $ 211 ====== ===== ======
(1) Computed on a fully tax-equivalent basis, assuming a tax rate of 35%. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Net Income. Net income for the three months ended March 31, 2000 increased 8.2% to $3.1 million compared to net income of $2.8 million for the three months ended March 31, 1999. Basic and diluted earnings per share in the first quarter of 2000 equaled $0.41, compared to $0.36 for the same period in 1999. Net interest income increased 2.2% in the three months ended March 31, 2000, as compared to the same period in 1999 while the provision for possible loan losses and non-interest expense increased 28.6% and 7.1%, respectively. Non-interest income increased 30.2% from the comparative period. The Company's net interest margin decreased to 3.30% for the first quarter of 2000, compared to 3.51% for the same period in 1999. The increase in non-interest income related primarily to higher levels of trust and custodian fees and other fee income. Non-interest expense increased primarily due to additional loan production and other fee income generating activities. The Company's return on average assets and return on average equity were 0.96% and 15.52%, respectively, in the first quarter of 2000, compared to 0.97% and 13.02%, respectively, in the first quarter of 1999. 12 13 Interest Income. Total interest income increased 12.6% to $24.1 million for the three months ended March 31, 2000, compared to $21.4 million for the first quarter of 1999. This increase was attributed to an $85.8 million, or 7.7%, increase in average earning assets as well as a 27 basis point increase in the average yield on interest-earning assets. The Company's yield on average loans was 8.38% for both periods. Increases in yields resulting from higher market interest rates have been offset by competitive pressures on loan rates. Yields on the investment portfolio increased from 6.66% during the first quarter of 1999 to 7.53% during the first quarter of 2000, benefiting primarily from increased market interest rates. Interest Expense. Total interest expense increased 20.7% to $14.4 million for the three months ended March 31, 2000, compared to $12.0 million for the three months ended March 31, 1999. Interest expense increased due to a 10.4% increase in the average balance of interest-bearing liabilities as well as a 40 basis point increase in the Company's cost of funds. The Company's cost of funds increased to 5.13% in the three months ended March 31, 2000 compared to 4.73% in the same period of 1999. The increase in the cost of funds resulted from increases in short-term interest rates and the repricing of maturing certificates of deposit at higher rates. Also, higher cost borrowings represented 36.2% of interest-bearing liabilities during the first quarter of 2000 compared to 28.7% during the year ago period. Provision for Possible Loan Losses. The provision for possible loan losses was $450,000 for the three months ended March 31, 2000, compared to $350,000 in the first quarter of 1999. The provision for possible loan losses was considered sufficient by management for maintaining an adequate allowance for possible loan losses. The increased provision in 2000 resulted primarily from continued increases in, as well as a change in the mix of, the loan portfolio. Non-Interest Income. Total non-interest income increased $690,000 for the three months ended March 31, 2000, compared to the same period a year ago. The following table sets forth the Company's non-interest income for the periods indicated:
THREE MONTHS ENDED MARCH 31, -------------------- 2000 1999 ------ ------ Trust and custodian fees $ 650 $ 566 Customer service fees 528 530 Investment securities gains -- 124 Gains on sales of loans 615 604 Other 1,180 459 ------ ------ Total $2,973 $2,283 ====== ======
Trust and custodian fees increased 14.8% to $650,000 in the first quarter of 2000 from $566,000 in the first quarter of 1999. Growth in trust income continued to result primarily from the expansion of the customer base as well as higher asset values. Customer service fees, representing service charges on deposits and fees for other banking services, decreased slightly to $528,000 in the first quarter of 2000 from $530,000 in the first quarter of 1999. Gains on sales of loans totaled $615,000 for the three months ended March 31, 2000 compared to $604,000 for the three months ended March 31, 1999. During the first quarter of 2000, the Company sold $8.6 million of the guaranteed portion of its SBA and other government guarantee loan originations in the secondary market compared to $4.4 million during the first quarter of 1999, realizing gains of $600,000 in 2000 compared to $342,000 in 1999. Also, the Company recorded gains of $15,000 from the sales of residential loans during the first quarter of 2000 compared to $262,000 in 1999. Loan origination and sale activity during 2000 has declined due to the higher interest rate environment. The Company intends to continue to place emphasis on its small business lending activities, including the evaluation of expansion into new markets. The nature of the political climate in Washington, D.C. may subject existing government programs to much scrutiny and possible cutbacks. It is not currently known whether the SBA program will be impacted. Management believes that any such cutbacks could negatively affect the Company's activities in the SBA lending programs as well as the planned expansion of such activities. 13 14 Other income increased $721,000 to $1.2 million in the first quarter of 2000 compared to $459,000 in the first quarter of 1999. This increase was primarily attributed to financial planning fee income which totaled $347,000 in 2000 with no comparable amount in 1999, SBA net servicing income which increased $120,000 due primarily to a decrease in amortization of servicing assets caused by lower prepayment levels and a $99,000 increase in earnings on bank-owned life insurance. Non-Interest Expense. Total non-interest expense increased $507,000 to $7.7 million in the three months ended March 31, 2000, compared to $7.2 million in the three months ended March 31, 1999. The following table sets forth the Company's non-interest expense for the periods indicated:
THREE MONTHS ENDED MARCH 31, -------------------- 2000 1999 ------ ------ (IN THOUSANDS) Salaries and employee benefits $4,417 $4,054 Net occupancy expense 527 410 Furniture, fixtures and equipment 242 223 Data processing 314 312 Taxes other than income taxes 238 244 Federal deposit insurance 42 69 Amortization of goodwill and other intangibles 351 339 Other 1,554 1,526 ------ ------ Total $7,685 $7,177 ====== ======
Salaries and employee benefits increased 9.0% to $4.4 million and represented approximately 60.2% of total operating expenses (non-interest expense less amortization of intangibles) in the three months ended March 31, 2000 compared to 59.3% in the first quarter of 1999. The average full time equivalent staff decreased 2% from 386 in 1999 to 378 in 2000. Net occupancy expense increased to $117,000 in the first quarter of 2000 from $410,000 in the first quarter of 1999. This increase resulted from higher costs associated with a new branch facility opened in May 1999 and rent expense associated with the Company's training and technology center which commenced in November 1999. Furniture, fixtures and equipment expense increased $19,000, for the first quarter of 2000. The increase was due principally to higher depreciation and maintenance costs. Federal deposit insurance expense decreased $27,000 to $42,000 in 2000 from $69,000 in the first quarter of 1999, reflecting lower premium rates in effect for 2000. Amortization of goodwill and other intangible assets increased $12,000 in the first quarter of 2000 compared to the year ago period as a result of additional amortization resulting from the acquisition of a financial planning company in April 1999. Other non-interest expenses increased 1.8% to $1.6 million during the first quarter of 2000 compared to $1.5 million in the first quarter of 1999. The efficiency ratio is one method used in the banking industry to assess profitability. It is defined as non-interest expense less amortization expense divided by the net revenue stream, which is the sum of net interest income on a tax-equivalent basis and non-interest income excluding net investment securities gains or losses. The Company's efficiency ratio was 57.2% for the first quarter of 2000, compared to 58.0% for the comparable period in 1999. Controlling 14 15 costs and improving productivity, as measured by the efficiency ratio, is considered by management a primary factor in enhancing performance. Provision for Income Taxes. The Company's provision for Federal income taxes was $1.4 million, or 30.9% of pretax income, for the three months ended March 31, 2000 compared to $1.3 million, or 31.7% of pretax income, for the three months ended March 31, 1999. The effective tax rate for each period differed from the federal statutory rate principally as a result of tax-exempt income from obligations of states and political subdivisions and non-taxable loans, the non-deductibility, for tax purposes, of goodwill and core deposit intangible amortization expense, and earnings on bank owned life insurance. ASSET QUALITY Non-performing Assets. To maintain the level of credit risk of the loan portfolio at an appropriate level, management sets underwriting standards and internal lending limits and provides for proper diversification of the portfolio by placing constraints on the concentration of credits within the portfolio. In monitoring the level of credit risk within the loan portfolio, management utilizes a formal loan review process to monitor, review, and consider relevant factors in evaluating specific credits in determining the adequacy of the allowance for possible loan losses. The Company's banking subsidiary formally documents its evaluation of the adequacy of the allowance for possible loan losses on a quarterly basis and the evaluation is reviewed and discussed with its board of directors. Failure to receive principal and interest payments when due on any loan results in efforts to restore such loan to current status. Loans are classified as non-accrual when, in the opinion of management, full collection of principal and accrued interest is in doubt. Continued unsuccessful collection efforts generally lead to initiation of foreclosure or other legal proceedings. Property acquired by the Company as a result of foreclosure or by deed in lieu of foreclosure is classified as "other real estate owned" until such time as it is sold or otherwise disposed of. The Company owned $240,000 of such property at March 31, 2000 compared to $545,000 at March 31, 1999. Non-performing loans totaled $6.5 million, or 0.73% of total loans, at March 31, 2000, compared to $3.7 million, or 0.47% of total loans, at March 31, 1999. Non-performing assets totaled $6.7 million, or 0.51% of total assets at March 31, 2000, compared to $4.2 million, or 0.36% of total assets at March 31, 1999. The increase in non-performing loans from March 31, 1999 resulted primarily from increases in non-performing single-family residential mortgage loans and one matured commercial loan totaling $625,000 that is expected to be renewed at prevailing market terms. The following is an analysis of the composition of non-performing assets and restructured loans: 15 16
MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- (DOLLARS IN THOUSANDS) Non-accrual $3,234 $1,195 Accruing loans 90 days or more past due 3,240 2,500 ------ ------ Total non-performing loans 6,474 3,695 Other real estate owned 240 545 ------ ------ Total non-performing assets $6,714 $4,240 ====== ====== Restructured loans $2,988 $ -- ====== ====== Non-performing loans to total loans 0.73% 0.47% Non-performing assets to total assets 0.51% 0.36% Non-performing loans plus restructured loans to total loans 1.07% 0.47%
Restructured loans consist of one loan that was restructured in May 1999. At March 31, 2000, this loan was performing in accordance with its restructured terms. Allowance for Possible Loan Losses. The Company records a provision necessary to maintain the allowance for possible loan losses at a level sufficient to provide for potential future credit losses. The provision is charged against earnings when it is established. An allowance for possible loan losses is established based on management's best judgment, which involves a continuing review of prevailing national and local economic conditions, changes in the size and composition of the portfolio and review of individual problem credits. Growth of the loan portfolio, loss experience, economic conditions, delinquency levels, credit mix, and selected credits are factors that affect judgments concerning the adequacy of the allowance. Actual losses on loans are charged against the allowance. The following table summarizes the Company's loan loss experience, and provides a breakdown of the charge-off, recovery and other activity for the periods indicated.
THREE MONTHS ENDED MARCH 31, -------------------------- 2000 1999 -------- -------- (DOLLARS IN THOUSANDS) Balance at beginning of period $ 7,431 $ 6,643 Provision charged to expense 450 350 Loans charged-off (252) (441) Recoveries of loans previously charged-off 132 149 -------- -------- Balance at end of period $ 7,761 $ 6,701 ======== ======== Loans outstanding at end of period $881,911 $786,985 Average loans outstanding 865,816 784,418 Allowance as a percent of loans outstanding 0.88% 0.85% Net charge-offs to average loans (annualized) 0.06% 0.15% Allowance for possible loans losses to non- performing loans 119.9% 181.4%
The allowance for possible loan losses totaled $7.8 million at March 31, 2000, representing 0.88% of total loans, compared to $6.7 million at March 31, 1999, or 0.85% of total loans. Charge-offs represent the amount of loans actually removed as earning assets from the balance sheet due to uncollectibility. Amounts recovered on previously charged-off assets are netted against charge-offs, resulting in net charge-offs for the period. Net loan charge-offs for the three months ended March 31, 2000 were $120,000, compared to net charge-offs of $292,000 for the same period in 1999. 16 17 Charge-offs have been made in accordance with the Company's standard policy and have occurred primarily in the commercial and consumer loan portfolios. The allowance for possible loan losses as a percentage of non-performing loans ("coverage ratio"), was 119.9% at March 31, 2000, compared to 181.4% at March 31, 1999. Although used as a general indicator, the coverage ratio is not a primary factor in the determination of the adequacy of the allowance by management. Total non-performing loans as a percentage of total loans remained a relatively low 0.73% of total loans at March 31, 2000. COMPARISON OF MARCH 31, 2000 AND DECEMBER 31, 1999 FINANCIAL CONDITION Total assets amounted to $1.32 billion at March 31, 2000, an increase of $46.8 million, or 3.7%, from December 31, 1999. Total investment securities increased by $18.8 million to $350.1 million. The Company's general investment strategy is to manage the portfolio to include rate sensitive assets, matched against interest sensitive liabilities to reduce interest rate risk. In recognition of this strategy, as well as to provide a secondary source of liquidity to accommodate loan demand and possible deposit withdrawals, the Company has chosen to classify the majority of its investment securities as available-for-sale. At March 31, 2000, 94.3% of the total investment portfolio was classified as available-for-sale, while those securities which the Company intends to hold to maturity represented the remaining 5.7%. This compares to 93.7% and 6.3% classified as available-for-sale and held to maturity, respectively, at December 31, 1999. Total loans increased $32.2 million to $881.9 million at March 31, 2000. This increase reflects the Company's continued emphasis on increasing the loan portfolio in order to improve overall earning asset yields. Premises and equipment increased from $14.8 million at December 31, 1999 to $15.0 million at March 31, 2000. Other assets increased from $32.6 million at December 31, 1999 to $34.2 million at March 31, 2000 primarily as a result of increases in loan servicing assets, prepaid expenses and cash surrender value of bank owned life insurance. Total deposits increased to $807.4 million at March 31, 2000 from $799.2 million at December 31, 1999. The Company continues to emphasize growth in its existing retail deposit base provided incremental deposit growth is cost effective compared to alternative funding sources. Total interest-bearing deposits accounted for 91.7% of total deposits at March 31, 2000, compared to 91.9% at December 31, 1999. Total borrowings, including federal funds purchased, increased $37.6 million to $423.1 million at March 31, 2000, compared to $385.5 million at December 31, 1999. This increase resulted primarily from funding needs associated with increases in the loan portfolio. LIQUIDITY AND CAPITAL RESOURCES The objective of liquidity management is to ensure the availability of funds to accommodate customer loan demand as well as deposit withdrawals while continuously seeking higher yields from longer term lending and investing opportunities. This is accomplished principally by maintaining sufficient cash flows and liquid assets along with consistent stable core deposits and the capacity to maintain immediate access to funds. These immediately accessible funds may include federal funds sold, unpledged marketable securities, reverse repurchase agreements or available lines of credit from the Federal Reserve Bank, Federal Home Loan Bank (FHLB), or other financial institutions. An important factor in the preservation of liquidity is the maintenance of public confidence, as this facilitates the retention and growth of a large, stable supply of core deposits in funds. The Company's principal source of funds to satisfy short-term liquidity needs comes from cash, due from banks, federal funds sold and borrowing capabilities through the FHLB as well as other sources. Changes in the balance of cash and due from banks are due to changes in volumes of federal funds sold, and the float and reserves related to deposit accounts, which may fluctuate significantly on a day-to-day basis. The investment portfolio serves as an additional source of liquidity for the Company. Securities with a market value of $330.0 million were classified as available-for-sale as of March 31, 2000, representing 94.3% of the total investment portfolio. Classification of securities as available-for-sale provides for flexibility in managing net interest margin, interest rate risk, and liquidity. 17 18 The Company's bank subsidiary is a member of the FHLB. Membership provides an opportunity to control the bank's cost of funds by providing alternative funding sources, to provide flexibility in the management of interest rate risk through the wide range of available funding sources, to manage liquidity via immediate access to such funds, and to provide flexibility through utilization of customized funding products to fund various loan and investment products and strategies. The Company obtained a $15 million term loan with a financial institution in order to partially fund the acquisition of County Savings Bank. This loan had an outstanding balance of $3.8 million at March 31, 2000. Under the terms of the loan agreement, the Company is required to make quarterly interest payments and annual principal payments, based on a ten-year amortization, which commenced in February 1998. The unpaid loan balance is due in full September 1, 2003. At March 31, 2000, the Company has pledged 67% of the stock of FNB as security for the loan. The loan agreement contains certain financial covenants which requires that (i) the Company maintain a minimum ratio of total capital to risk-weighted assets of 10%; (ii) each of the Company's banking subsidiaries, which represent greater than 10% of the Company's consolidated capital, maintain a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, Tier 1 capital to average assets of 5.0% and total capital to risk-weighted assets of 10.0%; (iii) the Company maintain, on a consolidated basis, a minimum annualized return on average assets of not less than 0.75%, and (iv) the Company maintain, on a consolidated basis, a ratio of non-performing loans to equity capital of less than 25.0% and a minimum ratio of allowance for possible loan losses to non-performing loans of 75.0%. At March 31, 2000, the Company was in compliance with each of these financial covenants. The loan agreement also restricts the Company's ability to sell assets, grant security interests in the stock of its banking subsidiaries, merge or consolidate, and engage in business activity unrelated to banking. Shareholders' equity at March 31, 2000 was $79.1 million, compared to shareholders' equity at December 31, 1999 of $80.1 million, a decrease of $1.0 million. This decrease resulted primarily from purchases of treasury stock (net) totaling $2.9 million, offset in part by the retention of earnings (net of dividends paid). Under the risk-based capital guidelines, a minimum capital to risk-weighted assets ratio of 8.0% is required, of which, at least 4.0% must consist of Tier 1 capital (equity capital net of goodwill). Additionally, a minimum leverage ratio (Tier 1 capital to total assets) of 3.0% must be maintained. At March 31, 2000, the Company had a total risk-based capital ratio of 11.6%, of which 10.7% consisted of Tier 1 capital. The leverage ratio for the Company at March 31, 2000, was 7.5%. Cash dividends declared to shareholders of the Company totaled $1.1 million, or $0.145 per share, during the first three months of 2000. This compares to dividends of $1.1 million, or $0.14 per share, for the same period in 1999. Cash dividends paid as a percentage of net income amounted to 35.4% and 38.8% for the three months ended March 31, 2000 and 1999, respectively. On October 18, 1999, the Company completed an offering of $20.0 million aggregate liquidation amount of 9.875% Capital Securities, Series A, due 2029. These securities represent preferred beneficial interests in BFOH Capital Trust I, a special purpose trust formed for the purpose of the offering. The proceeds from the offering were used by the Trust to purchase Junior Subordinated Deferrable Interest Debentures ("Debentures") from the Company. Under Federal Reserve Board regulations, these Capital Securities may represent up to 25% of a bank holding company's Tier 1 capital. The holders of the Capital Securities are entitled to receive cumulative cash distributions at the annual rate of 9.875% of the liquidation amount. Distributions are payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2000. The Company has fully and unconditionally guaranteed the payment of the Capital Securities, and payment of distributions on the Capital Securities. The Trust is required to redeem the Capital Securities on or, in certain circumstances, prior to October 15, 2029. There are no significant covenants or limitations with respect to the business of the Company that are contained in the instruments which govern the Capital Securities and the Debentures. The Company's Board of Directors and management intend to seek continued controlled growth of the organization through selective acquisitions which fit the Company's strategic objectives of growth, diversification and market expansion and which provide the potential for enhanced shareholder value. At the present time, the Company does not have any understanding or agreements for any acquisition or combination, except for the acquisition of Milton, previously discussed. Considering the Company's capital adequacy, profitability, available liquidity sources and funding sources, the Company's liquidity is considered by management to be adequate to meet current and projected needs. 18 19 CONTINGENCIES AND UNCERTAINTIES - YEAR 2000 During the periods leading up to January 1, 2000, the Company addressed the potential problems associated with the possibility that the computers that control or operate the Company's information technology system and infrastructure may not have been programmed to read four-digit date codes and, upon arrival of the year 2000, may have recognized the two-digit code "00" as the year 1900, causing systems to fail to function or generate erroneous data. The Company experienced no significant problems related to its information technology systems upon arrival of the Year 2000, nor was there any interruption in service to its customers of any kind. The Company could incur losses if Year 2000 issues adversely affect its depositors or borrowers. Such problems could include delayed loan payments due to Year 2000 problems affecting any significant borrowers or impairing the payroll systems of large employers in the Company's primary market areas. Because the company's loan portfolio is highly diversified with regard to individual borrowers and types of businesses, the Company does not expect, and to date has not realized, any significant or prolonged difficulties that will affect net earnings or cash flow. 19 20 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For a discussion of the Company's asset and liability management policies as well as the potential impact of interest rate changes upon the market value of the Company's portfolio equity, see "Management's Discussion and Analysis - Interest Rate Risk Management" in the Company's 1999 Form 10-K for the year ended December 31, 1999. The following summarizes the Company's simulations of net interest income and net present value (NPV) as of December 31, 1999, the most recent period for which this information is available:
PROJECTED CHANGE FROM % CHANGE FROM CHANGE IN INTEREST RATES AMOUNT BASE BASE Net Interest Income: 200 basis point increase $39,754 $ (1,756) (4.2)% Base scenario-no change 41,509 N/A N/A 200 basis point decrease 43,011 1,502 3.6 NPV: 200 basis point increase 60,310 (26,049) (30.2) Base scenario 86,359 N/A N/A 200 basis point decrease 93,335 6,976 8.1
20 21 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits on Item 601 of Regulation S-K Exhibit 3(a) - Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to Company's Form 10-K for year ended December 31, 1991, Exhibit 3.3 to the Company's Form 10-K for the year ended December 31, 1992 and Exhibit 3.6 to the Company's Form 10-K for the year ended December 31, 1994). Exhibit 3(b) - Code of Regulations, as amended (incorporated by reference to Exhibit 3.2 to the Company's Form 10-K for the year ended December 3,1, 1991, Exhibit 3.4 to the Company's Form 10-K for the year ended December 31, 1992 and Exhibit 3.5 to the Company's Form 10-K for the year ended December 31, 1993). Exhibit 10 - Form of BancFirst Ohio Corp. Executive Retension Plan, effective August 19, 1999. (b) Exhibit 27: Financial Data Schedule (c) Reports on Form 8-K Report on Form 8-K date January 13, 2000 regarding the Company entering into an Agreement and Plan of Reorganization with Milton Federal Financial Corporation ("MFFC") to merge MFFC with and into the Company. 21 22 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. BancFirst Ohio Corp. (Registrant) Date May 11, 2000 (Signed) /s/ Gary N. Fields -------------------- ------------------------------- Gary N. Fields President and Chief Executive Officer Date May 11, 2000 (Signed) /s/ Kim M. Taylor -------------------- ------------------------------- Kim M. Taylor Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 22 EX-10 2 EXHIBIT 10 1 BANCFIRST OHIO CORP. EXECUTIVE RETENTION PLAN Effective August 19, 1999, BancFirst Ohio Corp. adopts this Plan to provide additional compensation to eligible management and highly compensated employees whose employment is terminated under circumstances described in Section 2.01. ARTICLE I DEFINITIONS Whenever used in this Plan, the following words and phrases will have the meaning given below. Also, the form of each term will include any other form, the singular form of any term will include the plural, the plural form will include the singular, the masculine pronoun will include the feminine and the feminine pronoun will include the masculine. Other words and phrases also may be defined in the Plan text. Affiliate means any entity which, together with the Company, is a member of a controlled group of corporations or of a commonly controlled group of trades or businesses [as defined in Code ss.ss.414(b) and (c), as modified by Code ss.415(h)] or of an affiliated service group [as defined in Code ss.414(m)] or other organization described in Code ss.414(o). Beneficiary means the person designated by a Participant to receive any death benefits payable under Section 2.02. This designation may be made in any form acceptable to the Company. If a Participant does not name a Beneficiary, any death benefit payable under this Plan will be distributed to the Participant's surviving spouse or, if there is no surviving spouse, to the Participant's estate. Board of Directors or Board means the Company's board of directors. Cause means: (a) Any unauthorized disclosure by a Participant of the Company's business practices or accounts to a competitor that results in serious damage to the Company; (b) Any willful and wrongful misappropriation by a Participant of funds, property or rights of the Company that results in serious damage to the Company; (c) Any willful and wrongful destruction of business records or other property by a Participant which results in serious damage to the Company; (d) The conviction of a Participant of a felony involving moral turpitude or, as the result of a plea bargain, conviction of the Participant of a misdemeanor, provided the Participant was originally charged with a felony involving moral turpitude; (e) Gross and willful misconduct by the Participant which results in serious damage to the Company; or 1 2 (f) The Participant's material breach of duties and responsibilities associated with his or her employment. Change of Control means: (a) The acquisition by any entity or person ("Person") [within the meaning of Rules 13d-3 or 14(d)(2) issued under the Securities Exchange Act of 1934, as amended] of direct or beneficial ownership of 25 percent or more of the combined voting power of the Company's outstanding securities then entitled to vote generally in the election of directors ("Voting Securities"); provided, however, that the following acquisitions will not constitute a Change of Control: (i) any acquisition by the Company, (ii) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate or (iii) any acquisition by any Person who on the Effective Date was the beneficial owner of 20 percent or more of the combined voting power of the Voting Securities outstanding on that date; (b) The adoption of a plan of complete liquidation of the Company or of an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company's assets; (c) Adoption of any plan of reorganization, merger or consolidation, other than a reorganization, merger or consolidation after which the voting Securities outstanding immediately before the plan is adopted continue to represent at least 60 percent of the Voting Securities (or those of the surviving entity) immediately after the reorganization, merger or consolidation. (d) A change in the majority of the Board of Directors within a 12-month period; provided, however, that any new director whose nomination for election by the Company's shareholders was approved, or who was appointed or elected to the Board of Directors by, the vote of two-thirds of the directors then still in office who were in office at the beginning of the 12 month period will not be counted when determining if there has been a change in the majority of the Board of Directors. Code means the Internal Revenue Code of 1986, as amended. Company means BancFirst Ohio Corp. Compensation means a Participant's annual base salary payable by the Company in effect on or immediately before the date a Participant Terminates. Effective Date means August 19, 1999. Employee means an individual who is performing services for the Company or an Affiliate on the date that a Change of Control occurs. 2 3 Participant means an Employee to whom the Board extends the benefits described in Section 2.01 of this Plan. The Board will notify each Participant of his or her participation in this Plan and will give each Participant a copy of this document and of any subsequent Plan amendments. Plan means the BancFirst Ohio Corp. Executive Retention Plan, as described in this document and any amendments to it that are subsequently adopted. Termination means, after a Change of Control: (a) A complete severance of the employment relationship between a Participant and the Company; (b) A reduction of the Participant's base salary for any reason other than in connection with the complete severance of his or her employment relationship with the Company; (c) A material reduction of the value of the fringe benefits provided to the Participant immediately before the Change of Control or below the level of fringe benefits provided generally to other actively employed similarly situated Employees, unless the Company agrees to fully compensate the Participant for any this material reduction; (d) Any material breach by the Company of any other employment related agreement between it and the Participant, including the Company's failure or inability to discharge its obligations to the Participant. ARTICLE II RETENTION BENEFITS 2.01 Amount of Benefit A Participant whose employment is Terminated (other than for Cause) within 24 months after a Change of Control occurs will receive a benefit under this Plan equal to the smaller of (a) 200 percent of his or her Compensation or (b) the maximum amount that may be distributed without incurring an excise tax under Code ss.ss.280G and 4999. This benefit will be in addition to any other benefits or amounts to which the Participant is entitled on account of his or her termination of employment. 2.02 Time and Method of Payment The benefit described in Section 2.01 (and adjusted as described in Section 2.03) will be paid to the Participant in a single lump sum amount within five days after it becomes due. However, if the Participant dies between the date that he or she Terminates and the date that he or she receives the benefit provided under Section 2.01, the benefit will be paid to the deceased Participant's Beneficiary. 2.03 Payment of Taxes 3 4 Before it is distributed, the Company will withhold any income and employment taxes due from the Participant or Beneficiary on account of any benefit payable under Section 2.01 and will pay those withheld taxes to the appropriate taxing authority. 2.04 No Multiple Benefits No Participant is entitled to multiple benefits under Section 2.01, even if there have been multiple Changes of Control. However, the amount and entitlement to a benefit under Section 2.01 will be calculated separately from each Change of Control. If there have been multiple Changes of Control within a single 24-month period, the Participant will be entitled to the largest benefit produced under Section 2.01 even if the amount of that benefit is larger than the amount that would be due on account of another Change of Control occurring during a single 24-month period. ARTICLE III ADMINISTRATION 3.01 Administration This Plan will be administered by the Company. Subject to Section 3.02, all actions taken by the Company in connection with this Plan (including the exercise of any discretionary matters contemplated by the Plan) will be conclusive, final and binding under all Participants and upon all persons, including Beneficiaries, claiming any rights under the Plan. 3.02 Claims Procedure (a) Any Participant or Beneficiary who believes that he or she is entitled to a Plan benefit may file a claim with the Company. (b) If a claim is wholly or partially denied, the Company will send a written notice of denial to the claimant. This notice must be written in a manner calculated to be understood by the claimant and must include: (i) The specific reason or reasons for which the claim was denied; (ii) Specific reference to pertinent Plan provisions, rules, procedures or protocols upon which the Company relied to deny the claim; (iii) A description of any additional material or information that the claimant may file to perfect the claim and an explanation of why this material or information is necessary; and (iv) A description of the steps the claimant may take to appeal an adverse determination The Company will render its decision within 90 days of receiving a benefit claim. However, if special circumstances (such as the need for more information) require additional time, this decision will be rendered as soon as possible, but, not later than 180 days after receipt of the claim and only if the Company notifies the claimant, in writing, that it needs more time to 4 5 review a claim and why that additional time is needed. If the Company does not issue its decision within this period, the claim will be deemed to have been denied. (c) If a claim has been wholly or partially denied, the affected claimant, or his or her authorized representative may: (i) Request that the Company reconsider its initial denial by filing a written appeal no more than 60 days after receiving written notice that all or part of the initial claim was denied; (ii) Review pertinent documents and other material upon which the Company relied when denying the initial claim; and (iii) Submit a written description of the reasons for which the claimant disagrees with the Company's initial adverse decision. An appeal of an initial denial of benefits and all supporting material must be made in writing and directed to the Company. The Company is solely responsible for reviewing all benefit claims and appeals and taking all appropriate steps to implement its decision. The Company's decision on review will be sent to the claimant in writing and will include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions, rules, procedures or protocols upon which the Company relied to deny the appeal. The Company will render its decision within 60 days of receiving a benefit appeal. However, if special circumstances (such as the need to hold a hearing on any matter pertaining to the denied claim) require additional time, this decision will be rendered as soon as possible, but not later than 120 days after receipt of the claimant's written appeal and only if the Company notifies the claimant, in writing, that it needs more time to review an appeal and why that additional time is needed. If the Company does not issue its decision within this period, the claim will be deemed to have been denied. ARTICLE IV AMENDMENT TO AND TERMINATION OF THE PLAN 4.01 Right to Amend The Company may modify, alter or amend the Plan at any time. However, no amendment may affect any Participant's or Beneficiary's right to receive the benefit described in Article II without the Participant's (or Beneficiary's) consent and the Plan may not be amended in any respect after a Change of Control. 4.02 Right to Terminate Unless it is renewed by the Board of Directors, this Plan will automatically terminate at the end of the twelfth calendar month beginning after the Effective Date ("Expiration Date") and on each anniversary of the Expiration Date. However if a Change of Control occurs while the Plan is in effect, the Plan will continue (with or without action by the Board) for the longer of 24 months after the Change of Control or the date that all benefits due under Section 2.01 have been paid. 5 6 4.03 Plan Merger and Consolidation If the Plan is merged into or consolidated with any other plan, each affected Participant will be entitled to a benefit immediately after the merger, consolidation or transfer (determined as if the surviving plan had then terminated) at least equal to the benefit he or she had accrued immediately before the merger or consolidation (determined as if the Plan terminated immediately before that merger or consolidation). 4.04 Successor Employer If the Company dissolves into, reorganizes, merges into or consolidates with another business entity, provision may be made by which the successor will continue the Plan, in which case the successor will be substituted for the Company under the terms and provision of this Plan. The substitution of the successor for the Company will constitute an assumption by the successor of all Plan liabilities and the successor will have all of the powers, duties and responsibilities of the Company under the Plan. ARTICLE V MISCELLANEOUS 5.01 Non-alienation of Benefits The right of a Participant, Beneficiary or any other person to receive Plan benefits may not be assigned, transferred, pledged or encumbered except as provided in the Participant's Beneficiary designation, by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber a Plan benefit will be null and void and of no legal effect. 5.02 Inability to Receive Benefits Any Plan benefit payable to a Participant or Beneficiary who is declared incompetent will be paid to the guardian, conservator or other person legally charged with the care of his or her person or estate. Also, if the Company, in its sole discretion, concludes that a Participant or Beneficiary is unable to manage his or her financial affairs, it may but is not required to, distribute Plan benefits to the Participant's or Beneficiary's spouse, lineal ascendants or descendants or other close living relatives who demonstrates to the satisfaction of the Company the propriety of those distributions. Any payment made under this Section will completely discharge the Plan's liability with respect to that payment. This Company is not required to see to the application of any distribution made to any person. 5.03 Lost Participants Each participant is obliged to keep the Company apprised of his or her current mailing address and that of his or her Beneficiary. The Company's obligation to search for any Participant or Beneficiary is limited to sending a registered or certified letter to the Participant's or Beneficiary's last known address. Any amounts credited to the Accounts or any Participant or Beneficiary who does not file a claim for benefits with the Company will be forfeited no later than 12 months after benefits are otherwise payable. However, this forfeited benefit will be restored and paid if the Company subsequently approves a claim for benefits under the procedures described in Section 3.02. 6 7 5.04 Limitation of Rights Nothing in the Plan, expressed or implied, is intended to confer, or may be construed as conferring, upon or giving to any person, firm or association (other than the Company, an Affiliate, Participants, their Beneficiaries and their successors in interest) any right, remedy or claim under or by reason of this Plan. 5.05 Invalid Provision If any provision of this Plan is held to be illegal or invalid for any reason, the Plan will be construed and enforced as if the offending provision has not been included in the Plan. However, that determination will not affect the legality or validity of the remaining parts of this Plan. 5.06 One Plan This Plan may be executed in any number of counterparts, each of which will be deemed to be an original. 5.07 Governing Law The Plan will be governed by and construed in accordance with the laws of the United States and, to the extent applicable, the laws of Ohio. BANCFIRST OHIO CORP. By: ----------------------------------- Print Name: --------------------------- Title: -------------------------------- Date: ---------------- 7 EX-27 3 EXHIBIT 27
9 1,000 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 26,657 0 193 0 330,017 20,033 19,809 881,911 (7,761) 1,321,036 807,367 26,200 11,485 396,898 0 0 66,313 12,773 1,321,036 18,025 6,027 3 24,055 8,256 14,444 9,611 450 0 7,685 4,449 3,074 0 0 3,074 .41 .41 8.14 3,234 3,240 0 0 7,431 (252) 132 7,761 7,761 0 0
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