Exhibit 99
October 7,
2011
Dear Shareholder:
In light of an
improvement in our earnings and a positive trend in loan loss provisions, the
board of First Citizens Banc Corp. has authorized the payment of a dividend of
$.03 per share on November 1, 2011, to shareholders of record on
October 18, 2011.
Our preliminary
estimate of our earnings for the third quarter 2011 is $1,193,000 or $.15 per
share. This compares to a loss of ($1,393,000) or ($.18) per share for the
third quarter of 2010. Our earnings of $2,469,000 for the year-to-date 2011
compare to a loss of ($1,616,000) for the same period last year.
The improvement in
net income is largely the result of a decrease in the need for loan loss
provisions. During the year-to-date 2011, we have placed $7,700,000 from
earnings into the reserve. For the same time period last year, we placed
$14,400,000 into the reserve.
As we evaluate our
loan portfolio today, we are not seeing same level of the significant
deterioration in our customer’s circumstances that we have seen in the
recent past. However, it will be a long road to recovery for the customers who
have had problems, have survived, and are working to rebuild. A significant
portion of our reserves are allocated to loans of customers who are trying to
work through their problems but have seen serious deterioration in the value of
their collateral – which requires a reserve. Our philosophy is still to
work with our customers who are willing to work with us. It may be a longer
path, but we believe it will lead to less long-term loss for both the customer
and the bank.
We remain pleased
with the core earnings of the bank. Our interest margin at the bank through
June, as reported in the Federal Reserve’s Uniform Bank Performance
Reporting, was 4.14% compared to the margin of 3.79% for banks our size
throughout the country. Our margin is slightly less than 2010 year-to-date
June margin of 4.23%. A reason for the decrease is that our customers continue
to save money and reduce their debt, so it is a challenge for us to put our
cash to work. This is a challenge for the entire banking industry.
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Our lenders and
business development staff have done a nice job in attracting new opportunities
to put this cash to work. You may recall comments from our July letter that total loans at the end of June were
less than the year-end 2010 balances of $767,323,000. At the end of September,
loans totaled $778,251,000. We are pleased with this increase considering the
fact that we receive, each month, approximately $14,000,000 in payments which
reduces total loans.
I am sure you have
seen the recent stories about the big banks and their plans for service
charges. This is a reaction to new regulations that limit service charges and
fees. At Citizens, we have seen a slight decrease in year-to-date service
charge income from $935,000 in 2010 to $911,000 in 2011. We have also
experienced a slight decrease in year-to-date overdraft income from $2,475,000
in 2010 to $2,440,000 in 2011. We believe we should be compensated for the
value of the products we provide our customers, and we look for ways to enhance
our revenue. But we also maintain a long term perspective considering the value
of our relationships with our customers. Many of our customers have
multi-generation relationships with us. We have maintained this by providing
good service at a fair price. It is not our style to overreact to market
changes and implement excessive fees that will alienate our customer base and
destroy valuable long term relationships. Short sighted reactions today will
impact long term deposit, loan, and trust opportunities later. We are working
to take advantage of the actions of the big banks.
You see and read
many of the same news and economic reports we do. It is certainly a roller
coaster of information. One day is up and the next is down with the occasional
crises thrown in. However, we believe that it is time to provide a dividend to
our shareholders after quite a period of economic challenges. We are cautiously
hopeful that the trend in reserve needs will continue and cautiously optimistic
that our communities are economically stable. Let’s hope that everyone
working together can find positive solutions to help improve the economy and
that the European issues, so much in the news today, don’t create
additional problems for our economy.
Very truly yours,
James O. Miller
President & C.E.O.
Cautionary Statement
Regarding Forward-Looking Information
Comments made in this
letter include “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are subject to numerous assumptions, risks and uncertainties.
Although management believes that the expectations reflected in the
forward-looking statements are reasonable, actual results or future events
could differ, possibly materially, from those anticipated in these
forward-looking statements. The forward-looking statements speak only as of the
date of this letter, and First Citizens Banc Corp assumes no duty to update any
forward-looking statements to reflect events or circumstances after the date of
this letter, except to the extent required by law.
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