þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio | 34-1558688 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
100 East Water Street, Sandusky, Ohio | 44870 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if smaller reporting company) |
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
8-30 | ||||||||
31-37 | ||||||||
38-40 | ||||||||
41 | ||||||||
42 | ||||||||
42 | ||||||||
42 | ||||||||
42 | ||||||||
42 | ||||||||
42 | ||||||||
42 | ||||||||
43 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
ITEM 1. | Financial Statements |
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Cash and due from financial institutions |
$ | 93,843 | $ | 79,030 | ||||
Securities available for sale |
199,779 | 184,952 | ||||||
Loans, net of allowance of $23,656 and $21,768 |
728,513 | 745,555 | ||||||
Other securities |
15,267 | 15,344 | ||||||
Premises and equipment, net |
18,028 | 18,129 | ||||||
Accrued interest receivable |
5,345 | 4,382 | ||||||
Goodwill |
21,720 | 21,720 | ||||||
Core deposit and other intangibles |
4,984 | 5,275 | ||||||
Bank owned life insurance |
17,455 | 12,320 | ||||||
Other assets |
13,663 | 13,915 | ||||||
Total assets |
$ | 1,118,597 | $ | 1,100,622 | ||||
LIABILITIES |
||||||||
Deposits |
||||||||
Noninterest-bearing |
$ | 172,467 | $ | 157,529 | ||||
Interest-bearing |
735,155 | 734,934 | ||||||
Total deposits |
907,622 | 892,463 | ||||||
Federal Home Loan Bank advances |
50,319 | 50,327 | ||||||
Securities sold under agreements to repurchase |
21,484 | 21,842 | ||||||
U. S. Treasury interest-bearing demand note payable |
1,392 | 2,008 | ||||||
Subordinated debentures |
29,427 | 29,427 | ||||||
Accrued expenses and other liabilities |
10,248 | 7,605 | ||||||
Total liabilities |
1,020,492 | 1,003,672 | ||||||
SHAREHOLDERS EQUITY |
||||||||
Preferred stock, no par value, 200,000 shares authorized,
23,184 shares issued |
23,138 | 23,134 | ||||||
Common stock, no par value, 20,000,000 shares authorized,
8,455,881 shares issued |
114,447 | 114,447 | ||||||
Retained deficit |
(19,759 | ) | (20,218 | ) | ||||
Treasury stock, 747,964 shares at cost |
(17,235 | ) | (17,235 | ) | ||||
Accumulated other comprehensive loss |
(2,486 | ) | (3,178 | ) | ||||
Total shareholders equity |
98,105 | 96,950 | ||||||
Total liabilities and shareholders equity |
$ | 1,118,597 | $ | 1,100,622 | ||||
Page 3
Three months ended March 31, | ||||||||
2011 | 2010 | |||||||
Interest and dividend income |
||||||||
Loans, including fees |
$ | 10,573 | $ | 11,107 | ||||
Taxable securities |
1,398 | 1,593 | ||||||
Tax-exempt securities |
427 | 470 | ||||||
Federal funds sold and other |
16 | 3 | ||||||
Total interest income |
12,414 | 13,173 | ||||||
Interest expense |
||||||||
Deposits |
1,423 | 1,996 | ||||||
Federal Home Loan Bank advances |
412 | 744 | ||||||
Subordinated debentures |
195 | 208 | ||||||
Other |
12 | 25 | ||||||
Total interest expense |
2,042 | 2,973 | ||||||
Net interest income |
10,372 | 10,200 | ||||||
Provision for loan losses |
3,000 | 3,740 | ||||||
Net interest income after provision for loan losses |
7,372 | 6,460 | ||||||
Noninterest income |
||||||||
Service charges |
1,029 | 1,065 | ||||||
Net gain on sale of securities |
| 15 | ||||||
ATM fees |
432 | 411 | ||||||
Trust fees |
552 | 440 | ||||||
Bank owned life insurance |
135 | 120 | ||||||
Computer center item processing fees |
68 | 69 | ||||||
Other |
452 | 172 | ||||||
Total non-interest income |
2,668 | 2,292 | ||||||
Noninterest expense |
||||||||
Salaries, wages and benefits |
4,556 | 4,256 | ||||||
Net occupancy expense |
634 | 661 | ||||||
Equipment expense |
320 | 402 | ||||||
Contracted data processing |
208 | 264 | ||||||
State franchise tax |
241 | 277 | ||||||
Professional services |
302 | 378 | ||||||
Amortization of intangible assets |
290 | 305 | ||||||
FDIC assessment |
355 | 391 | ||||||
ATM expense |
144 | 177 | ||||||
Other real estate owned expense |
| 51 | ||||||
Other operating expenses |
2,138 | 1,834 | ||||||
Total noninterest expense |
9,188 | 8,996 | ||||||
Income (loss) before income taxes |
852 | (244 | ) | |||||
Income tax expense (benefit) |
99 | (280 | ) | |||||
Net income |
$ | 753 | $ | 36 | ||||
Preferred stock dividends |
290 | 290 | ||||||
Net income (loss) available to common shareholders |
$ | 463 | $ | (254 | ) | |||
Earnings (loss) per common share, basic and diluted |
$ | 0.06 | $ | (0.03 | ) | |||
Weighted average basic common shares |
7,707,917 | 7,707,917 | ||||||
Weighted average diluted common shares |
7,707,917 | 7,707,917 | ||||||
Page 4
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net income |
$ | 753 | $ | 36 | ||||
Unrealized holding gains on available for sale securities |
1,049 | 1,215 | ||||||
Reclassification adjustment for gains later recognized in income |
| (15 | ) | |||||
Net unrealized gains |
1,049 | 1,200 | ||||||
Tax effect |
(357 | ) | (408 | ) | ||||
Total other comprehensive income |
692 | 792 | ||||||
Comprehensive income |
$ | 1,445 | $ | 828 | ||||
Page 5
Accumulated | ||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Other | Total | |||||||||||||||||||||||||||||
Outstanding | Outstanding | Retained | Treasury | Comprehensive | Shareholders | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Stock | Income/(Loss) | Equity | |||||||||||||||||||||||||
Balance, January 1, 2011 |
23,184 | $ | 23,134 | 7,707,917 | $ | 114,447 | $ | (20,218 | ) | $ | (17,235 | ) | $ | (3,178 | ) | $ | 96,950 | |||||||||||||||
Net Income |
| | | | 753 | | | 753 | ||||||||||||||||||||||||
Change in unrealized
gain/(loss) on
securities available
for sale, net of
reclassifications and
tax effects |
| | | | | | 692 | 692 | ||||||||||||||||||||||||
Amortization of discount on preferred stock |
| 4 | | | (4 | ) | | | | |||||||||||||||||||||||
Preferred stock dividend |
| | | | (290 | ) | | | (290 | ) | ||||||||||||||||||||||
Balance, March 31, 2011 |
23,184 | $ | 23,138 | 7,707,917 | $ | 114,447 | $ | (19,759 | ) | $ | (17,235 | ) | $ | (2,486 | ) | $ | 98,105 | |||||||||||||||
Page 6
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net cash from operating activities |
$ | 5,907 | $ | 4,000 | ||||
Cash flows from investing activities |
||||||||
Maturities and calls of securities, available-for-sale |
15,130 | 22,900 | ||||||
Purchases of securities, available-for-sale |
(28,782 | ) | (22,299 | ) | ||||
Security sales |
300 | 5,865 | ||||||
Redemption of FRB stock |
83 | | ||||||
Purchases of FRB stock |
(6 | ) | | |||||
Purchase of bank owned life insurance |
(5,000 | ) | | |||||
Loans made to customers, net of principal collected |
13,401 | 3,657 | ||||||
Proceeds from sale of OREO properties |
150 | 258 | ||||||
Proceeds from sale of property |
| 37 | ||||||
Net purchases of office premises and equipment |
(257 | ) | (242 | ) | ||||
Net cash from investing activities |
(4,981 | ) | 10,176 | |||||
Cash flows from financing activities |
||||||||
Repayment of FHLB borrowings |
(8 | ) | (11 | ) | ||||
Net change in short-term FHLB advances |
| (5,000 | ) | |||||
Repayment of long-term FHLB advances |
(22,500 | ) | (15,000 | ) | ||||
Proceeds from long-term FHLB advances |
22,500 | | ||||||
Net change in deposits |
15,159 | 25,920 | ||||||
Change in securities sold under agreements to repurchase |
(358 | ) | (2,277 | ) | ||||
Change in U. S. Treasury interest-bearing demand note payable |
(616 | ) | (1,066 | ) | ||||
Dividends paid |
(290 | ) | (290 | ) | ||||
Net cash from financing activities |
13,887 | 2,276 | ||||||
Net change in cash and due from banks |
14,813 | 16,452 | ||||||
Cash and cash equivalents at beginning of period |
79,030 | 26,942 | ||||||
Cash and cash equivalents at end of period |
$ | 93,843 | $ | 43,394 | ||||
Cash paid during the period for: |
||||||||
Interest |
$ | 2,049 | $ | 2,753 | ||||
Income taxes |
$ | | $ | | ||||
Supplemental cash flow information: |
||||||||
Transfer of loans from portfolio to other real estate owned |
$ | 452 | $ | 393 |
Page 7
Nature of Operations and Principles of Consolidation: The Consolidated Financial
Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned
subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency,
Inc., and Water Street Properties, Inc. (Water St.). First Citizens Capital LLC (FCC) is
wholly-owned by Citizens and holds inter-company debt. The operations of FCC are located in
Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens
and holds and manages Citizens securities portfolio. The operations of FCI are located in
Wilmington, Delaware. The above companies together are referred to as the Corporation.
Intercompany balances and transactions are eliminated in consolidation. |
The consolidated financial statements have been prepared by the Corporation without audit.
In the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the Corporations financial position as of March
31, 2011 and its results of operations and changes in cash flows for the periods ended March
31, 2011 and 2010 have been made. The accompanying consolidated financial statements have
been prepared in accordance with instructions of Form 10-Q, and therefore certain
information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles in the United States of America
have been omitted. The results of operations for the period ended March 31, 2011 are not
necessarily indicative of the operating results for the full year. Reference is made to the
accounting policies of the Corporation described in the notes to the financial statements
contained in the Corporations 2010 annual report. The Corporation has consistently followed
these policies in preparing this Form 10-Q. |
The Corporation provides financial services through its offices in the Ohio counties of
Erie, Crawford, Champaign, Franklin, Logan, Summit, Huron, Ottawa, and Richland. Its
primary deposit products are checking, savings, and term certificate accounts, and its
primary lending products are residential mortgage, commercial, and installment loans.
Substantially all loans are secured by specific items of collateral including business
assets, consumer assets and commercial and residential real estate. Commercial loans are
expected to be repaid from cash flow from operations of businesses. There are no
significant concentrations of loans to any one industry or customer. However, the
customers ability to repay their loans is dependent on the real estate and general economic
conditions in the area. Other financial instruments that potentially represent
concentrations of credit risk include deposit accounts in other financial institutions and
Federal Funds sold. First Citizens Insurance Agency Inc. was formed to allow the
Corporation to participate in commission revenue generated through its third party insurance
agreement. Insurance commission revenue is less than 1.0% of total revenue through March
31, 2011. Water St. revenue was less than 1.0% of total revenue through March 31, 2011.
Management considers the Corporation to operate primarily in one reportable segment,
banking. |
Page 8
Use of Estimates: To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, management makes estimates
and assumptions based on available information. These estimates and assumptions affect the
amounts reported in financial statements and the disclosures provided, and future results
could differ. The allowance for loan losses, impairment of goodwill, fair values of
financial instruments, deferred taxes and pension obligations are particularly subject to
change. |
Income Taxes: Income tax expense is based on the effective tax rate
expected to be applicable for the entire year. Income tax expense is the total of the
current year income tax due or refundable and the change in deferred tax assets and
liabilities. Deferred tax assets and liabilities are the expected future tax amounts for
the temporary differences between carrying amounts and tax basis of assets and liabilities,
computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax
assets to the amount expected to be realized. |
New Accounting Pronouncements: |
In April 2010, the FASB issued ASU 2010-13, Compensation Stock Compensation (Topic 718):
Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of
the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on
the classification of a share-based payment award as either equity or a liability. A
share-based payment that contains a condition that is not a market, performance, or service
condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal
years and interim periods within those fiscal years beginning on or after December 15, 2010
and adoption did not have a significant impact on the Corporations financial statements. |
In July 2010, FASB issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses. ASU 2010-20 is
intended to provide additional information to assist financial statement users in assessing
an entitys credit risk exposures and evaluating the adequacy of its allowance for credit
losses. The disclosures as of the end of a reporting period are effective for interim and
annual reporting periods ending on or after December 15, 2010. The disclosures about
activity that occurs during a reporting period are effective for interim and annual
reporting periods beginning on or after December 15, 2010. The amendments in ASU 2010-20
encourage, but do not require, comparative disclosures for earlier reporting periods that
ended before initial adoption. However, an entity should provide comparative disclosures for
those reporting periods ending after initial adoption. Adoption of the standard did not
have a significant impact on the Corporations financial position or results of operations. |
In December, 2010, the FASB issued ASU 2010-28, When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This ASU
modifies Step 1 of the goodwill impairment test for reporting units with zero or negative
carrying amounts. For those reporting units, an entity is required to perform Step 2 of the
goodwill impairment test if it is more likely than not that a goodwill impairment exists.
In determining whether it is more likely than not that goodwill impairment exists, an entity
should consider
whether there are any adverse qualitative factors indicating that impairment may exist. The
qualitative factors are consistent with the existing guidance, which requires that goodwill
of a reporting unit be tested for impairment between annual tests if an event occurs or
circumstances change that would more likely than not reduce the fair value of a reporting
unit below its carrying amount. For public entities, the amendments in this Update are
effective for fiscal year, and interim periods within those years, beginning after December
15, 2010. Early adoption is not permitted. For nonpublic entities, the amendments are
effective for fiscal years, and interim periods within those years, beginning after December
15, 2011. This ASU is not expected to have a significant impact on the Corporations
financial statements. |
Page 9
In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma
Information for Business Combinations. The amendments in this Update specify that if a
public entity presents comparative financial statements, the entity should disclose revenue
and earnings of the combined entity as though the business combination(s) that occurred
during the current year had occurred as of the beginning of the comparable prior annual
reporting period only. The amendments also expand the supplemental pro forma disclosures
under Topic 805 to include a description of the nature and amount of material, nonrecurring
pro forma adjustments directly attributable to the business combination included in the
reported pro forma revenue and earnings. The amendments in this Update are effective
prospectively for business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December 15, 2010.
Early adoption is permitted. This ASU is not expected to have a significant impact on the
Corporations financial statements. |
Impact of Not Yet Effective Authoritative Accounting Pronouncements |
In August, 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various
SEC Rules and Schedules. This ASU amends various SEC paragraphs pursuant to the issuance of
Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules, and Codification of
Financial Reporting Policies and is not expected to have a significant impact on the
Corporations financial statements. |
In August, 2010, the FASB issued ASU 2010-22, Technical Corrections to SEC Paragraphs An
announcement made by the staff of the U.S. Securities and Exchange Commission. This ASU
amends various SEC paragraphs based on external comments received and the issuance of SAB
112, which amends or rescinds portions of certain SAB topics and is not expected to have a
significant impact on the Corporations financial statements. |
In September, 2010, the FASB issued ASU 2010-25, Plan Accounting Defined Contribution
Pension Plans. The amendments in this ASU require that participant loans be classified as
notes receivable from participants, which are segregated from plan investments and measured
at their unpaid principal balance plus any accrued but unpaid interest. The amendments in
this Update are effective for fiscal years ending after December 15, 2010 and are not
expected to have a significant impact on the Corporations financial statements. |
Page 10
In October, 2010, the FASB issued ASU 2010-26, Accounting for Costs Associated with
Acquiring or Renewing Insurance Contracts. This ASU addresses the diversity in practice
regarding the interpretation of which costs relating to the acquisition of new or renewal
insurance contracts qualify for deferral. The amendments are effective for fiscal years and
interim periods within those fiscal years, beginning after December 15, 2011 and are not
expected to have a significant impact on the Corporations financial statements. |
In January 2011, the FASB issued ASU 2011-01, Receivables (Topic 310): Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. The
amendments in this Update temporarily delay the effective date of the disclosures about
troubled debt restructurings in Update 2010-20, enabling public-entity creditors to provide
those disclosures after the FASB clarifies the guidance for determining what constitutes a
troubled debt restructuring. The deferral in this Update will result in more consistent
disclosures about troubled debt restructurings. This amendment does not defer the effective
date of the other disclosure requirements in Update 2010-20. In the proposed Update for
determining what constitutes a troubled debt restructuring, the FASB proposed that the
clarifications would be effective for interim and annual periods ending after June 15, 2011.
For the new disclosures about troubled debt restructurings in Update 2010-20, those
clarifications would be applied retrospectively to the beginning of the fiscal year in which
the proposal is adopted. The adoption of this guidance in not expected to have a
significant impact on the Corporations financial statements. |
In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310): A Creditors
Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The amendments
in this Update provide additional guidance or clarification to help creditors in determining
whether a creditor has granted a concession and whether a debtor is experiencing financial
difficulties for purposes of determining whether a restructuring constitutes a troubled debt
restructuring. The amendments in this Update are effective for the first interim or annual
reporting period beginning on or after June 15, 2011, and should be applied retrospectively
to the beginning annual period of adoption. As a result of applying these amendments, an
entity may identify receivables that are newly considered impaired. For purposes of
measuring impairment of those receivables, an entity should apply the amendments
prospectively for the first interim or annual period beginning on or after June 15, 2011.
The Corporation is currently evaluating the impact the adoption of the standard will have on
the Corporations financial position or results of operations. |
Page 11
Available for sale securities at March 31, 2011 and December 31, 2010 were as follows: |
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
March 31, 2011 | Cost | Gains | Losses | Fair Value | ||||||||||||
U.S. Treasury securities and obligations of
U.S. government agencies |
$ | 60,054 | $ | 475 | $ | (308 | ) | $ | 60,221 | |||||||
Obligations of states and political subdivisions |
61,067 | 949 | (660 | ) | 61,356 | |||||||||||
Mortgage-backed securities in
government sponsored entities |
75,374 | 2,198 | (46 | ) | 77,526 | |||||||||||
Total debt securities |
196,495 | 3,622 | (1,014 | ) | 199,103 | |||||||||||
Equity securities in financial institutions |
481 | 195 | | 676 | ||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | ||||||||||||||
December 31, 2010 | Cost | Gains | Losses | Fair Value | ||||||||||||
U.S. Treasury securities and obligations of
U.S. government agencies |
$ | 55,398 | $ | 616 | $ | (307 | ) | $ | 55,707 | |||||||
Obligations of states and political subdivisions |
61,401 | 483 | (1,415 | ) | 60,469 | |||||||||||
Mortgage-backed securities in government sponsored entities |
65,917 | 2,236 | (53 | ) | 68,100 | |||||||||||
Total debt securities |
182,716 | 3,335 | (1,775 | ) | 184,276 | |||||||||||
Equity securities in financial institutions |
481 | 195 | | 676 | ||||||||||||
Page 12
Available for sale | Fair Value | |||
Due in one year or less |
$ | 779 | ||
Due after one year through five years |
14,245 | |||
Due after five years through ten years |
14,038 | |||
Due after ten years |
92,515 | |||
Mortgage-backed securities |
77,526 | |||
Equity securities |
676 | |||
Total securities available for sale |
$ | 199,779 | ||
Page 13
12 Months or less | More than 12 months | Total | ||||||||||||||||||||||
March 31, 2011 | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
Description of Securities | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Treasury securities and
obligations of U.S.
government agencies |
$ | 14,081 | $ | (308 | ) | $ | | $ | | $ | 14,081 | $ | (308 | ) | ||||||||||
Obligations of states and
political subdivisions |
24,001 | (619 | ) | 2,448 | (41 | ) | 26,449 | (660 | ) | |||||||||||||||
Mortgage-backed securities
in govt sponsored entities |
3,622 | (44 | ) | 1,039 | (2 | ) | 4,661 | (46 | ) | |||||||||||||||
Total temporarily impaired |
$ | 41,704 | $ | (971 | ) | $ | 3,487 | $ | (43 | ) | $ | 45,191 | $ | (1,014 | ) | |||||||||
12 Months or less | More than 12 months | Total | ||||||||||||||||||||||
December 31, 2010 | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
Description of Securities | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Treasury securities and
obligations of U.S.
government agencies |
$ | 10,257 | $ | (307 | ) | $ | | $ | | $ | 10,257 | $ | (307 | ) | ||||||||||
Obligations of states and
political subdivisions |
34,938 | (1,359 | ) | 2,256 | (56 | ) | 37,194 | (1,415 | ) | |||||||||||||||
Mortgage-backed securities
in govt sponsored entities |
9,696 | (53 | ) | | | 9,696 | (53 | ) | ||||||||||||||||
Total temporarily impaired |
$ | 54,891 | $ | (1,719 | ) | $ | 2,256 | $ | (56 | ) | $ | 57,147 | $ | (1,775 | ) | |||||||||
Page 14
Loan balances were as follows: |
March 30, | December 31, | |||||||
2011 | 2010 | |||||||
Commercial and agriculture |
$ | 78,564 | $ | 84,913 | ||||
Commercial real estate |
338,239 | 336,251 | ||||||
Real estate mortgage |
287,563 | 295,038 | ||||||
Real estate construction |
36,639 | 39,341 | ||||||
Consumer |
10,992 | 11,590 | ||||||
Other |
172 | 190 | ||||||
Total loans |
752,169 | 767,323 | ||||||
Allowance for loan losses |
(23,656 | ) | (21,768 | ) | ||||
Net loans |
$ | 728,513 | $ | 745,555 | ||||
Management has an established methodology to determine the adequacy of the allowance for
loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes
of determining the allowance for loan losses, the Corporation has segmented certain loans in
the portfolio by product type. Loans are segmented into the following pools: Commercial and
Agricultural loans, Commercial Real Estate loans, Real Estate mortgage loans, Real Estate
Construction loans and Consumer loans. Historical loss percentages for each risk category
are calculated and used as the basis for calculating allowance allocations. These
historical loss percentages are calculated over a three year period for all portfolio
segments. Certain economic factors are also considered for trends which management uses to
establish the directionality of changes to the unallocated portion of the reserve. The
following economic factors are analyzed: |
| Changes in economic and business conditions |
| Changes in lending policies and procedures |
| Changes in experience and depth of lending and management staff |
| Changes in concentrations within the loan portfolio |
| Changes in past due,
classified and nonaccrual loans and Troubled Debt Restructurings (TDRs) |
| Changes in quality of Banks credit review system |
| Changes in competition or legal and regulatory requirements |
Page 15
2010 | ||||
Balance January 1, |
$ | 15,271 | ||
Loans charged-off |
(2,516 | ) | ||
Recoveries |
144 | |||
Provision for loan losses |
3,740 | |||
Balance March 31, |
$ | 16,639 | ||
The total allowance reflects managements estimate of loan losses inherent in the loan
portfolio at the balance sheet date. The Corporation considers the allowance for loan
losses of $23,656 adequate to cover loan losses inherent in the loan portfolio, at March 31,
2011. The following tables present by portfolio segment, the changes in the allowance for
loan losses and the loan balances outstanding for the period ended
March 31, 2011 and
December 31, 2010. Management has reviewed its analysis of the allowance for loan losses
and made modifications to the beginning balances of this table. The analysis at December 31, 2010
was based on information available at the time. Since then, we have improved our information systems and
management reporting tools to allow us to better segregate the portfolio. In order to consistently
provide this information, we have adjusted the beginning balances to correspond to our current
methodology. The allowance for Real estate construction was reduced not only by
charge-offs, but also due to a decrease in both the loan balances outstanding and the historical
charge-offs for this type. The net result of which was a reduction in the allowance. The allowance
related to the unallocated segment was also reduced. While the segment itself is lower, the
reduction was the effect of distributing the impact of economic factors among the loan segments as
an adjustment to the historical loss factor. |
Commercial | Commercial | Residential | Real Estate | |||||||||||||||||||||||||
& Agriculture | Real Estate | Real Estate | Construction | Consumer | Unallocated | Total | ||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 3,639 | $ | 9,827 | $ | 4,569 | $ | 2,139 | $ | 726 | $ | 868 | $ | 21,768 | ||||||||||||||
Charge-offs |
(184 | ) | (130 | ) | (712 | ) | (249 | ) | (71 | ) | | (1,346 | ) | |||||||||||||||
Recoveries |
54 | 67 | 86 | | 27 | | 234 | |||||||||||||||||||||
Provision |
| 1,916 | 2,028 | (178 | ) | 8 | (774 | ) | 3,000 | |||||||||||||||||||
Ending Balance |
$ | 3,509 | $ | 11,680 | $ | 5,971 | $ | 1,712 | $ | 690 | $ | 94 | $ | 23,656 | ||||||||||||||
Page 16
Commercial | Commercial | Residential | Real Estate | |||||||||||||||||||||||||
March 31, 2011 | & Agriculture | Real Estate | Real Estate | Construction | Consumer | Unallocated | Total | |||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 1,304 | $ | 3,369 | $ | 1,067 | $ | 616 | $ | 385 | $ | | $ | 6,741 | ||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated
for impairment |
$ | 2,205 | $ | 8,311 | $ | 4,904 | $ | 1,096 | $ | 305 | $ | 94 | $ | 16,915 | ||||||||||||||
Loan balances outstanding: |
||||||||||||||||||||||||||||
Ending Balance |
$ | 78,564 | $ | 338,239 | $ | 287,563 | $ | 36,639 | $ | 11,164 | $ | 752,169 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 5,823 | $ | 12,339 | $ | 3,210 | $ | 2,719 | $ | 1,183 | $ | 25,274 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated
for impairment |
$ | 72,741 | $ | 325,900 | $ | 284,353 | $ | 33,920 | $ | 9,981 | $ | 726,895 | ||||||||||||||||
Page 17
Commercial | Commercial | Residential | Real Estate | |||||||||||||||||||||||||
December 31, 2010 | & Agriculture | Real Estate | Real Estate | Construction | Consumer | Unallocated | Total | |||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 1,322 | $ | 1,384 | $ | 355 | $ | 375 | $ | 427 | $ | | $ | 3,863 | ||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated
for impairment |
$ | 3,055 | $ | 4,220 | $ | 8,307 | $ | 1,156 | $ | 299 | $ | 868 | $ | 17,905 | ||||||||||||||
Loan balances outstanding: |
||||||||||||||||||||||||||||
Ending Balance |
$ | 84,913 | $ | 336,251 | $ | 295,038 | $ | 39,341 | $ | 11,780 | $ | 767,323 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated
for impairment |
$ | 5,925 | $ | 7,814 | $ | 2,347 | $ | 1,821 | $ | 1,266 | $ | 19,173 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated
for impairment |
$ | 78,988 | $ | 328,437 | $ | 292,691 | $ | 37,520 | $ | 10,514 | $ | 748,150 | ||||||||||||||||
The following table represents credit exposures by internally assigned grades for the
period ended March 31, 2011 and December 31, 2010. The grading analysis estimates the
capability of the borrower to repay the contractual obligations of the loan agreements as
scheduled or at all. The Corporations internal credit risk grading system is based on
experiences with similarly graded loans. |
The Corporations internally assigned grades are as follows: |
| Pass loans which are protected by the current net worth and paying
capacity of the obligor or by the value of the underlying collateral. |
| Special Mention loans where a potential weakness or risk exists,
which could cause a more serious problem if not corrected. |
| Substandard loans that have a well-defined weakness based on
objective evidence and are characterized by the distinct possibility that the Bank
will sustain some loss if the deficiencies are not corrected. |
| Doubtful loans classified as doubtful have all the weaknesses
inherent in a substandard asset. In addition, these weaknesses make collection or
liquidation in full highly questionable and improbable, based on existing
circumstances. |
| Loss loans classified as a loss are considered uncollectible, or of
such value that continuance as an asset is not warranted. |
| Unrated Generally, consumer loans are not risk-graded, except when
collateral is used for a business purpose |
Page 18
Commercial | ||||||||||||||||||||||||
& | Commercial | Residential | Real Estate | |||||||||||||||||||||
March 31, 2011 | Agriculture | Real Estate | Real Estate | Construction | Consumer | Total | ||||||||||||||||||
Pass |
$ | 65,619 | $ | 288,348 | $ | 106,342 | $ | 26,110 | $ | 559 | $ | 486,978 | ||||||||||||
Special Mention |
2,962 | 12,020 | 3,269 | 953 | | 19,204 | ||||||||||||||||||
Substandard |
9,964 | 37,793 | 14,212 | 7,285 | | 69,254 | ||||||||||||||||||
Doubtful |
| 78 | | | | 78 | ||||||||||||||||||
Loss |
| | | | | | ||||||||||||||||||
Ending Balance |
$ | 78,545 | $ | 338,239 | $ | 123,823 | $ | 34,348 | $ | 559 | $ | 575,514 | ||||||||||||
Commercial | ||||||||||||||||||||||||
& | Commercial | Residential | Real Estate | |||||||||||||||||||||
December 31, 2010 | Agriculture | Real Estate | Real Estate | Construction | Consumer | Total | ||||||||||||||||||
Pass |
$ | 70,825 | $ | 284,083 | $ | 111,248 | $ | 28,815 | $ | 556 | $ | 495,527 | ||||||||||||
Special Mention |
2,972 | 12,674 | 2,821 | 937 | | 19,404 | ||||||||||||||||||
Substandard |
11,116 | 39,416 | 16,482 | 7,492 | 44 | 74,550 | ||||||||||||||||||
Doubtful |
| 78 | | | | 78 | ||||||||||||||||||
Loss |
| | | | | | ||||||||||||||||||
Ending Balance |
$ | 84,913 | $ | 336,251 | $ | 130,551 | $ | 37,244 | $ | 600 | $ | 589,559 | ||||||||||||
The following table present performing and nonperforming consumer loans based solely on
payment activity for the period ended March 31, 2011 and December 31, 2010. Payment
activity is reviewed by management on a monthly basis to determine how loans are performing.
Loans are considered to be nonperforming when they become 90 days past due. Nonperforming
loans also include certain loans that have been modified in TDRs where economic concessions
have been granted to borrowers who have experienced or are expected to experience financial
difficulties. These concessions typically result from the Corporations loss mitigation
activities and could include reductions in the interest rate, payment extensions,
forgiveness of principal, forbearance or other actions. Certain TDRs are classified as
nonperforming at the time of restructure and may only be returned to performing status after
considering the borrowers sustained repayment performance for a reasonable period,
generally six months. |
Residential | Real Estate | |||||||||||||||
March 31, 2011 | Real Estate | Construction | Consumer | Total | ||||||||||||
Performing |
$ | 162,183 | $ | 2,291 | $ | 10,605 | $ | 175,079 | ||||||||
Nonperforming |
1,557 | | | 1,557 | ||||||||||||
Total |
$ | 163,740 | $ | 2,291 | $ | 10,605 | $ | 176,636 | ||||||||
Page 19
Residential | Real Estate | |||||||||||||||
December 31, 2010 | Real Estate | Construction | Consumer | Total | ||||||||||||
Performing |
$ | 162,702 | $ | 2,097 | $ | 11,169 | $ | 175,968 | ||||||||
Nonperforming |
1,785 | | 11 | 1,796 | ||||||||||||
Total |
$ | 164,487 | $ | 2,097 | $ | 11,180 | $ | 177,764 | ||||||||
Following is a table which includes an aging analysis of the recorded investment of
past due loans outstanding as of March 31, 2011 and December 31, 2010. |
30-59 | 60-89 | 90 Days | ||||||||||||||||||||||||||
Days | Days | or | Total | Total | ||||||||||||||||||||||||
March 31, 2011 | Past Due | Past Due | Greater | Past Due | Current | Nonaccrual | Loans | |||||||||||||||||||||
Commericial & Agriculture |
$ | 504 | $ | 497 | $ | 499 | $ | 1,500 | $ | 74,651 | $ | 2,413 | $ | 78,564 | ||||||||||||||
Commercial Real Estate |
5,081 | 817 | 348 | 6,246 | 319,093 | 12,900 | 338,239 | |||||||||||||||||||||
Residential Real Estate |
2,271 | 280 | 415 | 2,966 | 275,758 | 8,839 | 287,563 | |||||||||||||||||||||
Real Estate Construction |
45 | 604 | | 649 | 33,457 | 2,533 | 36,639 | |||||||||||||||||||||
Consumer and Other |
82 | 21 | | 103 | 11,061 | | 11,164 | |||||||||||||||||||||
Total |
$ | 7,983 | $ | 2,219 | $ | 1,262 | $ | 11,464 | $ | 714,020 | $ | 26,685 | $ | 752,169 | ||||||||||||||
30-59 | 60-89 | 90 Days | ||||||||||||||||||||||||||
Days | Days | or | Total | Total | ||||||||||||||||||||||||
December 31, 2010 | Past Due | Past Due | Greater | Past Due | Current | Nonaccrual | Loans | |||||||||||||||||||||
Commericial & Agriculture |
$ | 471 | $ | 309 | $ | 904 | $ | 1,684 | $ | 80,568 | $ | 2,661 | $ | 84,913 | ||||||||||||||
Commercial Real Estate |
3,467 | 39 | 349 | 3,855 | 324,337 | 8,059 | 336,251 | |||||||||||||||||||||
Residential Real Estate |
3,042 | 340 | 382 | 3,764 | 281,688 | 9,586 | 295,038 | |||||||||||||||||||||
Real Estate Construction |
258 | 246 | 581 | 1,085 | 36,387 | 1,869 | 39,341 | |||||||||||||||||||||
Consumer and Other |
118 | 39 | 25 | 182 | 11,598 | | 11,780 | |||||||||||||||||||||
Total |
$ | 7,356 | $ | 973 | $ | 2,241 | $ | 10,570 | $ | 734,578 | $ | 22,175 | $ | 767,323 | ||||||||||||||
Impaired Loans: Larger (greater than $350) commercial loans and commercial
real estate loans, many of which are 60 days or more past due, are tested for impairment.
These loans are analyzed to determine if it is probable that all amounts will not be
collected according to the contractual terms of the loan agreement. If management
determines that the value of the impaired loan is less than the recorded investment in the
loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or
discount), impairment is recognized through an allowance estimate or a charge-off to the
allowance. |
Page 20
Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days
delinquency, unless the loan is well secured and in the process of collection, although the
Corporation may be receiving partial payments of interest and partial repayments of
principal on such loans. When a loan is placed on nonaccrual status, previously accrued but
unpaid interest is deducted from interest income. |
The following table includes the recorded investment and unpaid principal balances for
impaired financing receivables with the associated allowance amount, if applicable as of
March 31, 2011 and December 31, 2010. |
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
March 31, 2011 | Investment | Balance | Allowance | Investment | Recognized | |||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 2,255 | $ | 2,255 | $ | | $ | 2,457 | $ | 6 | ||||||||||
Commercial Real Estate |
1,649 | 1,649 | | 1,749 | 77 | |||||||||||||||
Residential Real Estate |
833 | 833 | | 734 | 16 | |||||||||||||||
Real Estate Construction |
622 | 622 | | 550 | | |||||||||||||||
Consumer and Other |
129 | 129 | | 127 | 2 | |||||||||||||||
With an allowance recorded: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 2,652 | $ | 3,568 | $ | 1,304 | $ | 3,000 | $ | 61 | ||||||||||
Commercial Real Estate |
7,321 | 10,690 | 3,369 | 5,952 | 197 | |||||||||||||||
Residential Real Estate |
1,310 | 2,377 | 1,067 | 1,334 | 32 | |||||||||||||||
Real Estate Construction |
1,481 | 2,097 | 616 | 1,225 | 29 | |||||||||||||||
Consumer and Other |
1,058 | 1,054 | 385 | 1,052 | 9 | |||||||||||||||
Total: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 4,907 | $ | 5,823 | $ | 1,304 | $ | 5,457 | $ | 67 | ||||||||||
Commercial Real Estate |
8,970 | 12,339 | 3,369 | 7,701 | 274 | |||||||||||||||
Residential Real Estate |
2,143 | 3,210 | 1,067 | 2,068 | 48 | |||||||||||||||
Real Estate Construction |
2,103 | 2,719 | 616 | 1,775 | 29 | |||||||||||||||
Consumer and Other |
1,187 | 1,183 | 385 | 1,179 | 11 |
Page 21
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
December 31, 2010 | Investment | Balance | Allowance | Investment | Recognized | |||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 2,659 | $ | 2,259 | $ | | $ | 3,129 | $ | 24 | ||||||||||
Commercial Real Estate |
1,849 | 1,849 | | 5,579 | 11 | |||||||||||||||
Residential Real Estate |
635 | 635 | | 2,035 | 31 | |||||||||||||||
Real Estate Construction |
477 | 477 | | 293 | 34 | |||||||||||||||
Consumer and Other |
125 | 125 | | 125 | | |||||||||||||||
With an allowance recorded: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 3,346 | $ | 3,665 | $ | 1,322 | $ | 1,612 | $ | 191 | ||||||||||
Commercial Real Estate |
4,582 | 5,966 | 1,384 | 4,569 | 256 | |||||||||||||||
Residential Real Estate |
1,357 | 1,712 | 355 | 1,146 | 69 | |||||||||||||||
Real Estate Construction |
969 | 1,344 | 375 | 1,377 | 7 | |||||||||||||||
Consumer and Other |
1,145 | 1,141 | 427 | 1,145 | 31 | |||||||||||||||
Total: |
||||||||||||||||||||
Commericial & Agriculture |
$ | 6,005 | $ | 5,924 | $ | 1,322 | $ | 4,741 | $ | 215 | ||||||||||
Commercial Real Estate |
6,431 | 7,815 | 1,384 | 10,148 | 267 | |||||||||||||||
Residential Real Estate |
1,992 | 2,347 | 355 | 3,181 | 100 | |||||||||||||||
Real Estate Construction |
1,446 | 1,821 | 375 | 1,670 | 41 | |||||||||||||||
Consumer and Other |
1,270 | 1,266 | 427 | 1,270 | 31 |
Page 22
Basic earnings per share are net income available to common shareholders divided by the
weighted average number of common shares outstanding during the period. Diluted earnings
per common share include the dilutive effect of additional potential common shares issuable
under stock options, computed using the treasury stock method. |
Three months ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Basic |
||||||||
Net Income |
$ | 753 | $ | 36 | ||||
Preferred stock dividends |
290 | 290 | ||||||
Net Income (loss) available to common shareholders |
$ | 463 | $ | (254 | ) | |||
Weighted average common shares outstanding |
7,707,917 | 7,707,917 | ||||||
Basic earnings (loss) per common share |
$ | 0.06 | $ | (0.03 | ) | |||
Diluted |
||||||||
Net Income |
$ | 753 | $ | 36 | ||||
Preferred stock dividends |
290 | 290 | ||||||
Net Income (loss) available to common shareholders |
$ | 463 | $ | (254 | ) | |||
Weighted average common shares outstanding
for basic earnings per common share |
7,707,917 | 7,707,917 | ||||||
Add: Dilutive effects of assumed exercises of
stock options |
| | ||||||
Average shares and dilutive potential
common shares outstanding |
7,707,917 | 7,707,917 | ||||||
Diluted earnings (loss) per common share |
$ | 0.06 | $ | (0.03 | ) | |||
Stock options for 29,500 shares of common stock and warrants for 469,312 shares of common
stock were not considered in computing diluted earnings per common share for the three-month
periods ended March 31, 2011 and March 31, 2010 because they were anti-dilutive. |
Page 23
Some financial instruments, such as loan commitments, credit lines, letters of credit and
overdraft protection are issued to meet customers financing needs. These are agreements to
provide credit or to support the credit of others, as long as the conditions established in
the contract are met, and usually have expiration dates. Commitments may expire without
being used. Off-balance-sheet risk of credit loss exists up to the face amount of these
instruments, although material losses are not anticipated. The same credit policies are
used to make such commitments as are used for loans, including obtaining collateral at
exercise of commitment. The contractual amount of financial instruments with
off-balance-sheet risk was as follows for March 31, 2011 and December 31, 2010: |
Contract Amount | ||||||||||||||||
March 31, 2011 | December 31, 2010 | |||||||||||||||
Fixed | Variable | Fixed | Variable | |||||||||||||
Rate | Rate | Rate | Rate | |||||||||||||
Commitment to extend credit: |
||||||||||||||||
Lines of credit and construction loans |
$ | 3,323 | $ | 105,722 | $ | 3,161 | $ | 98,083 | ||||||||
Overdraft protection |
| 12,504 | | 12,500 | ||||||||||||
Letters of credit |
275 | 670 | 275 | 1,288 | ||||||||||||
$ | 3,598 | $ | 118,896 | $ | 3,436 | $ | 111,871 | |||||||||
Commitments to make loans are generally made for a period of one year or less. Fixed rate
loan commitments included in the table above had interest rates ranging from 3.25% to 9.50%
at March 31, 2011 and December 31, 2010. Maturities extend up to 30 years. |
Citizens is required to maintain certain reserve balances on hand in accordance with the
Federal Reserve Board requirements. The average reserve balance maintained in accordance
with such requirements was $4,848 on March 31, 2011 and $3,585 on December 31, 2010. |
Page 24
Net periodic pension expense was as follows: |
Three months ended | ||||||||
March 31 | ||||||||
2011 | 2010 | |||||||
Service cost |
$ | 212 | $ | 210 | ||||
Interest cost |
204 | 190 | ||||||
Expected return on plan assets |
(207 | ) | (151 | ) | ||||
Other components |
86 | 65 | ||||||
Net periodic pension cost |
$ | 295 | $ | 314 | ||||
The total amount of contributions expected to be paid by the Corporation in 2011 total
$1,152, compared to $2,016 in 2010. |
Options to buy stock may be granted to directors, officers and employees under the
Corporations Stock Option and Stock Appreciation Rights Plan, which provided for issue of
up to 225,000 options. The exercise price of stock options is determined based on the
market price of the Corporations common stock at the date of grant. The maximum option
term is ten years, and options normally vest after three years. |
The Corporation did not grant any stock options during the first three months of 2011 and
2010, nor did any no stock options become vested during the first three months of 2011 and
2010. The Corporations Stock Option and Stock Appreciation Rights Plan expired in 2010,
and no further stock options or other awards may be granted by the Corporation under such
plan. |
Page 25
Three months ended | Three months ended | |||||||||||||||
March 31, 2011 | March 31, 2010 | |||||||||||||||
Total options | Total options | |||||||||||||||
outstanding | outstanding | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Price | Price | |||||||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||||
Outstanding at beginning of year |
29,500 | $ | 25.42 | 29,500 | $ | 25.42 | ||||||||||
Granted |
| | | | ||||||||||||
Exercised |
| | | | ||||||||||||
Forfeited |
| | | | ||||||||||||
Options outstanding, end of period |
29,500 | $ | 25.42 | 29,500 | $ | 25.42 | ||||||||||
Options exercisable, end of period |
29,500 | $ | 25.42 | 29,500 | $ | 25.42 | ||||||||||
Page 26
Outstanding Options | ||||||||||
Weighted | ||||||||||
Average | Weighted | |||||||||
Remaining | Average | |||||||||
Contractual | Exercise | |||||||||
Exercise price | Number | Life | Price | |||||||
$20.50 |
19,500 | 1 yr. 3 mos. | $ | 20.50 | ||||||
$35.00 |
10,000 | 2 yrs. 0.5 mos. | 35.00 | |||||||
Outstanding at quarter-end |
29,500 | 1 yr. 6 mos. | $ | 25.42 | ||||||
Page 27
Fair Value Measurements at March 31, 2011 Using: | ||||||||||||
Quoted Prices in | Significant | |||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||
Assets: | (Level 1) | (Level 2) | (Level 3) | |||||||||
Assets measured at fair value on a recurring basis: |
||||||||||||
U.S. Treasury securities and obligations
of U.S. Government agencies |
$ | | $ | 60,221 | $ | | ||||||
Obligations of states and political
subdivisions |
| 60,814 | 542 | |||||||||
Mortgage-backed securities |
| 77,526 | | |||||||||
Equity securities |
676 | | | |||||||||
Assets measured at fair value on a
nonrecurring basis: |
||||||||||||
Impaired loans |
$ | | $ | | $ | 12,569 | ||||||
Other real estate owned |
| 1,832 | | |||||||||
Mortgage servicing rights |
| 3 | | |||||||||
Fair Value Measurements at December 31, 2010 Using: | ||||||||||||
Quoted Prices in | Significant | |||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||
Assets: | (Level 1) | (Level 2) | (Level 3) | |||||||||
Assets measured at fair value on a recurring basis: |
||||||||||||
U.S. Treasury securities and obligations
of U.S. Government agencies |
$ | | $ | 55,707 | $ | | ||||||
Obligations of states and political
subdivisions |
| 59,909 | 560 | |||||||||
Mortgage-backed securities |
| 68,100 | | |||||||||
Equity securities |
676 | | | |||||||||
Assets measured at fair value on a nonrecurring basis: |
||||||||||||
Impaired loans |
$ | | $ | | $ | 13,281 | ||||||
Other real estate owned |
| 1,795 | | |||||||||
Mortgage Servicing Rights |
| 3 | |
Page 28
March 31, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Financial Assets: |
||||||||||||||||
Cash and due from financial institutions |
$ | 93,843 | $ | 93,843 | $ | 79,030 | $ | 79,030 | ||||||||
Loans, net of allowance for loan losses |
728,513 | 747,418 | 745,555 | 763,768 | ||||||||||||
Accrued interest receivable |
5,345 | 5,345 | 4,382 | 4,382 | ||||||||||||
Financial Liabilities: |
||||||||||||||||
Deposits |
907,622 | 907,161 | 892,463 | 895,950 | ||||||||||||
Federal Home Loan Bank advances |
50,319 | 52,895 | 50,327 | 53,162 | ||||||||||||
U.S. Treasury interest-bearing demand
note payable |
1,392 | 1,392 | 2,008 | 2,008 | ||||||||||||
Securities sold under agreement
to repurchase |
21,484 | 21,484 | 21,842 | 21,842 | ||||||||||||
Subordinated debentures |
29,427 | 13,716 | 29,427 | 15,883 | ||||||||||||
Accrued interest payable |
355 | 355 | 362 | 362 |
Page 29
Page 30
ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of
Operations |
Page 31
Page 32
Page 33
Page 34
Page 35
Total Risk | ||||||||||||
Based | Tier I Risk | Leverage | ||||||||||
Capital | Based Capital | Ratio | ||||||||||
Corporation Ratios March 31, 2011 |
14.9 | % | 13.0 | % | 8.7 | % | ||||||
Corporation Ratios December 31, 2010 |
15.1 | % | 13.8 | % | 9.3 | % | ||||||
For Capital Adequacy Purposes |
8.0 | % | 4.0 | % | 4.0 | % | ||||||
To Be Well Capitalized Under Prompt
Corrective Action Provisions |
10.0 | % | 6.0 | % | 5.0 | % |
Page 36
Page 37
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk |
Page 38
Page 39
March 31, 2010 | December 31, 2010 | |||||||||||||||||||||||
Dollar | Dollar | Percent | Dollar | Dollar | Percent | |||||||||||||||||||
Change in Rates | Amount | Change | Change | Amount | Change | Change | ||||||||||||||||||
+200bp |
145,939 | 2,062 | 1 | % | 145,476 | 160 | 0 | % | ||||||||||||||||
+100bp |
148,079 | 4,202 | 3 | % | 150,062 | 4,746 | 3 | % | ||||||||||||||||
Base |
143,877 | | | 145,316 | | | ||||||||||||||||||
-100bp |
152,253 | 8,376 | 6 | % | 154,728 | 9,412 | 6 | % |
Page 40
ITEM 4. | Controls and Procedures Disclosure |
Page 41
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | [Removed and Reserved] |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit No. 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
|
Exhibit No. 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
|
Exhibit No. 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
Exhibit No. 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Page 42
First Citizens Banc Corp |
||||||
/s/ James O. Miller
|
May 10, 2011
|
|||||
President, Chief Executive Officer |
||||||
/s/ Todd A. Michel
|
May 10, 2011
|
|||||
Senior Vice President, Controller |
Page 43
Exhibit | Description | Location | ||||
3.1 | (a) | Articles of Incorporation, as
amended, of First Citizens
Banc Corp.
|
Filed as Exhibit 3.1 to First Citizens Banc Corps Form 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference. (File No. 0-25980) | |||
3.1 | (b) | Certificate of Amendment by
Shareholders or Members as
filed with the Ohio Secretary
of State on January 12, 2009,
evidencing the adoption by
the shareholders of First
Citizens Banc Corp on January
5, 2009 of an amendment to
Article FOURTH to authorize
the issuance of up to 200,000
preferred shares, without par
value.
|
Filed as Exhibit 3.1(b) to First Citizens Banc Corps Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980) | |||
3.1 | (c) | Certificate of Amendment by
Directors or Incorporators to
Articles, filed with the Ohio
Secretary of State on January
21, 2009, evidencing adoption
of an amendment by the Board
of Directors of First
Citizens Banc Corp to Article
FOURTH to establish the
express terms of the Fixed
Rate Cumulative Perpetual
Preferred Shares, Series A,
of First Citizens.
|
Filed as Exhibit 3.1 to First Citizens Banc Corps Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference. (File No. 0-25980) | |||
3.2 | Amended and Restated Code of
Regulations of First Citizens
Banc Corp (adopted April 17,
2007).
|
Filed as Exhibit 3.2 to First Citizens Banc Corps Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980) | ||||
31.1 | Rule 13a-14(a)/15-d-14(a)
Certification of Chief
Executive Officer.
|
Included herewith | ||||
31.2 | Rule 13a-14(a)/15-d-14(a)
Certification of Chief
Financial Officer.
|
Included herewith | ||||
32.1 | Certification of Chief
Executive Officer pursuant to
18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
|
Included herewith | ||||
32.2 | Certification of Chief
Financial Officer pursuant to
18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.
|
Included herewith |
Page 44
1. | I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and |
d. | Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
b. | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting. |
Signature and Title:
|
/s/ James O. Miller, President, Chief Executive Officer
|
Date: May 10, 2011 |
1. | I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and |
d. | disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
b. | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting. |
Signature and Title:
|
/s/ Todd A. Michel, Senior Vice President, Controller
|
Date: May 10, 2011 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Corporation. |
/s/ James O. Miller
|
||
Chief Executive Officer |
||
May 10, 2011 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Corporation. |
/s/ Todd A. Michel
|
||
Senior Vice President and Controller |
||
May 10, 2011 |