-----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, MS3KvM2L3AheOvFMLOmM+mfer2ufkbDuSinmLQf+Ocr0ZbDPq3RysPonvH7K4foO ozssKNi39HosAD2QBSKDKg== 0000950152-00-004114.txt : 20000516 0000950152-00-004114.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950152-00-004114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST CITIZENS BANC CORP /OH CENTRAL INDEX KEY: 0000944745 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341558688 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25980 FILM NUMBER: 631833 BUSINESS ADDRESS: STREET 1: 100 EAST WATER ST STREET 2: P O BOX 5016 CITY: SANDUSKY STATE: OH ZIP: 44870 BUSINESS PHONE: 4196254121 MAIL ADDRESS: STREET 1: 100 EAST WATER ST STREET 2: P O BOX 5016 CITY: SANDUSKY STATE: OH ZIP: 44870 10-Q 1 FIRST CITIZENS BANC 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: 0-25980 -------------------- First Citizens Banc Corp ------------------------------------------------------ (Exact name of registrant as specified in its charter) Ohio 34-1558688 --------------------------------- ---------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 100 East Water Street, Sandusky, Ohio 44870 ------------------------------------------------------ (Address of principle executive offices) (Zip Code) Registrant's telephone number, including area code: (419) 625-4121 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. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value Outstanding at May 12, 2000 4,111,119 common shares 2 FIRST CITIZENS BANC CORP Index
PART I. Financial Information ITEM 1. Financial Statements: Consolidated Balance Sheets (unaudited) March 31, 2000 and December 31, 1999.........................................................3 Consolidated Statements of Income (unaudited) Three months ended March 31, 2000 and 1999...................................................4 Consolidated Statement of Shareholders' Equity (unaudited) For the years ended December 31, 1998 and 1999 and three months ended March 31, 2000............................................................5 Consolidated Statement of Cash Flows (unaudited) Three months ended March 31, 2000 and 1999...................................................6 Notes to Consolidated Financial Statements (unaudited)........................................7-14 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................................15-19 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk...................................19-20 PART II. Other Information ITEM 1. Legal Proceedings...............................................................................21 ITEM 2. Changes in Securities and Use of Proceeds.......................................................21 ITEM 3. Defaults Upon Senior Securities.................................................................21 ITEM 4. Submission of Matters to a Vote of Security Holders.............................................21 ITEM 5. Other Information...............................................................................21 ITEM 6. Exhibits and Reports on Form 8-K................................................................21 SIGNATURES ..............................................................................................22
3 FIRST CITIZENS BANC CORP Consolidated Balance Sheets
(Unaudited) March 31, December 31, Assets 2000 1999 ------------- ------------- Cash and due from banks $ 17,950,413 $ 14,598,566 Federal funds sold 8,180,000 4,600,000 Interest-bearing deposits 51,031 51,031 Securities Available-for-sale 145,588,408 150,254,933 Held-to-maturity (Estimated Fair Value of $384,698 at March 31, 2000, and $407,765 at December 31, 1999) 386,386 406,108 ------------- ------------- Total securities 145,974,794 150,661,041 Loans held for sale 2,627,000 2,217,250 Loans 300,246,572 288,719,850 Less: Allowance for loan losses (4,252,233) (4,273,825) ------------- ------------- Net loans 295,994,339 284,446,025 Office premises and equipment, net 7,318,536 7,457,886 Intangible assets 2,116,404 2,197,916 Accrued Interest and other assets 7,261,991 5,990,342 ------------- ------------- Total assets $ 487,474,508 $ 472,220,057 ============= ============= Liabilities Deposits Noninterest-bearing deposits $ 41,385,284 $ 40,246,502 Interest-bearing deposits 384,101,141 362,913,881 ------------- ------------- Total deposits 425,486,425 403,160,383 Federal Home Loan Bank borrowings 1,822,140 1,958,960 Securities sold under agreements to repurchase 9,398,266 12,975,188 U. S. Treasury interest-bearing demand deposit note payable 1,006,037 3,065,681 Accrued interest, taxes and other expenses 2,703,318 2,865,057 ------------- ------------- Total liabilities 440,416,186 424,025,269 Shareholders' Equity Common stock, no par value; 10,000,000 shares authorized, 4,263,401 shares issued 23,257,520 23,257,520 Retained earnings 28,608,848 28,010,371 Treasury stock, 147,282 shares at cost at March 31, 2000, 100,586 shares at cost at December 31, 1999 (4,195,993) (2,877,032) Accumulated other comprehensive income/(loss) (612,053) (196,071) ------------- ------------- Total shareholders' equity 47,058,322 48,194,788 ------------- ------------- Total liabilities and shareholders' equity $ 487,474,508 $ 472,220,057 ============= =============
See notes to interim consolidated financial statements Page 3 4 FIRST CITIZENS BANC CORP Consolidated Statements of Income (Unaudited)
Three months ended March 31, ------------------------------ 2000 1999 INTEREST INCOME: Loans, including fees $ 5,935,049 $5,800,900 Taxable securities 1,515,858 1,721,105 Nontaxable securities 547,126 581,025 Federal funds sold 33,386 175,819 Other 13,619 21,035 ----------- ---------- Total interest income 8,045,038 8,299,884 INTEREST EXPENSE: Deposits 3,441,590 3,649,220 FHLB Borrowings 26,901 163,064 Other 151,910 157,332 ----------- ---------- Total interest expense 3,620,401 3,969,616 ----------- ---------- NET INTEREST INCOME 4,424,637 4,330,268 PROVISION FOR LOAN LOSSES 95,000 68,000 ----------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,329,637 4,262,268 NONINTEREST INCOME: Computer center data processing fees 262,295 509,696 Service charges 452,062 240,641 Net gain/(loss) on sale of securities (1,108) 727,304 Net gain on sale of loans 0 94,518 Other 405,614 332,608 ----------- ---------- Total noninterest income 1,118,863 1,904,767 NONINTEREST EXPENSE: Salaries, wages and benefits 1,647,411 1,780,196 Net occupancy expense 200,023 196,938 Equipment expense 242,153 186,792 FDIC Premiums 17,138 12,245 State franchise tax 147,089 150,756 Professional services 276,955 268,029 Amortization of intangible assets 81,512 81,512 Other operating expenses 1,031,681 906,115 ----------- ---------- Total noninterest expense 3,643,962 3,582,583 ----------- ---------- Income before taxes 1,804,538 2,584,452 Income tax expense 499,164 728,871 ----------- ---------- Net Income $ 1,305,374 $1,855,581 =========== ========== Earnings per share $ 0.32 $ 0.44 Dividends declared $ 0.17 $ 0.16 Wtd. avg. shares during the period 4,138,927 4,263,345
See notes to interim consolidated financial statements Page 4 5 FIRST CITIZENS BANC CORP Condensed Consolidated Statement of Shareholders' Equity (Unaudited) Form 10-Q
Accumulated Common Stock Other Total Outstanding Retained Treasury Comprehensive Shareholders' Shares Amount Earnings Stock Income/(Loss) Equity ----------- ----------- ----------- ----------- ------------- ------------- Balance, January 1, 1998 4,263,401 $23,257,520 $25,514,853 $ 0 $ 2,427,062 $51,199,435 Comprehensive income: Net income 5,760,667 5,760,667 Change in unrealized gain/(loss) on securities available for sale 1,245,085 1,245,085 ----------- Total 7,005,752 Cash paid for fractional shares (3,451) (3,451) Cash dividends ($1.11 per share) (4,368,805) (4,368,805) Cash dividends declared by Farmers, prior to merger (92,000) (92,000) --------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1998 4,263,401 23,257,520 26,811,264 0 3,672,147 53,740,931 Comprehensive Income: Net income 6,062,169 6,062,169 Change in unrealized gain/(loss) on securities available for sale (3,868,218) (3,868,218) ----------- Total 2,193,951 Purchase of treasury stock, at cost (100,586) (2,877,032) (2,877,032) Cash dividends ($1.15 per share) (4,863,062) (4,863,062) --------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 1999 4,162,815 23,257,520 28,010,371 (2,877,032) 196,071 48,194,788 Comprehensive Income: Net income 1,305,374 1,305,374 Change in unrealized gain/(loss) on securities available for sale (415,982) (415,982) ----------- Total 889,392 Purchase of treasury stock, at cost (46,696) (1,318,961) (1,318,961) Cash dividends ($.17 per share) (706,897) (706,897) --------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 2000 4,116,119 $23,257,520 $28,608,848 $(4,195,993) $ (612,053) $47,058,322 --------- ----------- ----------- ----------- ----------- -----------
See notes to interim consolidated financial statements Page 5 6 FIRST CITIZENS BANC CORP Consolidated Statement of Cash Flows (Unaudited)
Three months ended March 31, --------------------------------- 2000 1999 ------------ ------------ Cash flows from operating activities Net Income $ 1,305,374 $ 1,855,581 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization of office premises and equipment 229,062 228,682 Amortization of intangible assets 81,512 81,512 Provision for loan losses 95,000 68,000 Loans originated for sale (409,750) (2,308,150) Proceeds from sale of loans -- 3,447,478 Gain on sale of loans -- (94,518) Security (gains)/losses 1,108 (727,304) Change in deferred loan fees 23,907 (26,725) Net amortization of security premiums and discounts 147,577 155,810 Change in accrued interest and other assets (1,271,648) 1,978,071 Change in accrued interest, taxes and other expenses 52,554 (72,153) ------------ ------------ Net cash from operating activities 254,696 4,586,284 Cash flows from investing activities Maturities and calls of securities, held-to-maturity 19,626 109,419 Maturities and calls of securities, available-for-sale 3,176,856 12,232,503 Purchases of securities, available-for-sale (1,089,006) (6,183,990) Proceeds from sale of securities, available-for-sale 1,799,811 1,209,587 Loans made to customers, net of principal collected (6,575,417) 3,400,560 Loans purchased (5,091,804) -- Change in federal funds sold (3,580,000) 3,680,000 Proceeds from sale of property and equipment 12,585 1,627 Purchases of office premises and equipment (102,298) (152,645) ------------ ------------ Net cash from investing activities (11,429,647) 14,297,061 Cash flows from financing activities Repayment of FHLB borrowings (136,820) (10,875,903) Net change in deposits 22,326,042 (5,822,080) Change in securities sold under agreements to repurchase (3,576,922) (3,431,710) Change in U. S. Treasury interest-bearing demand note payable (2,059,644) (157,015) Purchases of treasury stock (1,318,961) (6,750) Cash dividends paid (706,897) (682,144) ------------ ------------ Net cash from financing activities 14,526,798 (20,975,602) ------------ ------------ Net change in cash and due from banks 3,351,847 (2,092,257) Cash and due from banks at beginning of period 14,598,566 16,443,613 ------------ ------------ Cash and due from banks at end of period $ 17,950,413 $ 14,351,356 ============ ============ Supplemental disclosures: Cash paid during the period for: Interest $ 4,429,456 $ 4,796,761 Income taxes $ 0 $ 0
See notes to interim consolidated financial statements Page 6 7 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- (1) Consolidated Financial Statements The consolidated financial statements include the accounts of First Citizens Banc Corp (First Citizens) and it wholly-owned subsidiaries, The Citizens Banking Company (Citizens), The Castalia Banking Company (Castalia), The Farmers State Bank of New Washington (Farmers), SCC Resources, Inc. (SCC), and R. A. Reynolds Appraisal Service, Inc., (Reynolds), together referred to as the Corporation. All significant intercompany balances and transactions have been eliminated in consolidation. The following reports have been prepared by the Corporation without audit: The consolidated balance sheets as of March 31, 2000; the consolidated statements of income for the three month period ended March 31, 2000 and 1999; the consolidated statement of shareholders' equity for the three months ended March 31, 2000; and the consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation's financial position as of March 31, 2000 and its results of operations and changes in cash flows for the periods ended March 31, 2000 and 1999 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 have been omitted. The results of operations for the period ended March 31, 2000 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 financial statements contained in the Corporation's 1999 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, Marion and Union. 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 real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions. In 2000, SCC provided item processing for 10 financial institutions in addition to the three subsidiary banks. SCC accounted for 4.5% of the Corporation's total revenues. Reynolds provides real estate appraisal services for lending purposes to subsidiary banks and other financial institutions. Reynolds accounts for less than 1.0% of total Corporation revenues. Management considers the Corporation to operate primarily in one reportable segment, banking To prepare financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates Page 7 8 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, fair values of financial instruments, and status of contingencies are particularly subject to change. Income tax expense is based on the effective tax rate expected to be applicable for the entire year. The Corporation follows the liability method of accounting for income taxes. The liability method provides that deferred tax assets and liabilities are recorded at enacted tax rates based on the difference between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as "temporary differences." A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Certain items in the 1999 financial statements have been reclassified to correspond with the 2000 presentation. The Corporation elected to present comprehensive income and the accumulated balance in the Consolidated Statement of Shareholders' Equity for interim reporting purposes. The table below presents the reclassification adjustments related to comprehensive income. Reclassification adjustments are needed when an item is included in the net income in one period and comprehensive income in another accounting period. Other comprehensive income (loss) components and related taxes for the three months ended March 31, 2000 and 1999 are as follows:
Three months ended March 31, 2000 1999 --------- ----------- Unrealized holding gains and (losses) on available for sale securities $(631,383) $ (928,306) Reclassification adjustment for (gains) and losses later recognized in income 1,108 (727,304) --------- ----------- Net unrealized gains and (losses) (630,275) (1,655,610) Tax effect 214,293 562,910 --------- ----------- Other comprehensive income (loss) $(415,982) $(1,092,700) ========= ===========
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging Page 8 9 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- relationship must be highly effective in achieving offsetting changes in fair value or cash flows. SFAS No. 133 does not allow hedging of a security that is classified as held to maturity. Accordingly, upon adoption of SFAS No. 133, companies may reclassify any security from held to maturity to available for sale if they wish to be able to hedge the security in the future. SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years beginning after June 15, 2000 with early adoption encouraged for any fiscal quarter beginning July 1, 1998 or later, with no retroactive application. Management does not expect the adoption of SFAS No. 133 to have a significant impact on the Corporation's financial statements. (2) Securities Securities at March 31, 2000 and December 31, 1999 were as follows:
March 31, 2000 Gross Gross Unrealized Unrealized AVAILABLE FOR SALE Amortized Cost Gains Losses Fair Value -------------- ----------- ------------- ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 61,763,011 $ 18,481 $ (1,277,449) $ 60,504,043 Obligations of state and political subdivisions 52,690,835 234,187 (798,461) 52,126,561 Other securities, including mortgage- backed and equity securities 32,061,913 1,556,765 (660,874) 32,957,804 ------------ ----------- ------------- ------------ $146,515,759 $ 1,809,433 $ (2,736,784) $145,588,408 ============ =========== ============= ============
March 31, 2000 Gross Gross Unrealized Unrealized HELD TO MATURITY Amortized Cost Gains Losses Fair Value -------------- ----------- ------------- ------------ Obligations of state and political subdivisions $232,500 $ 0 $ (1,267) $231,233 Other securities, including mortgage- backed securities 153,886 322 (743) 153,465 -------- ------- --------- -------- $386,386 $ 322 $ (2,010) $384,698 ======== ======= ========= ========
Page 9 10 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - --------------------------------------------------------------------------------
December 31, 1999 Gross Gross Unrealized Unrealized AVAILABLE FOR SALE Amortized Cost Gains Losses Fair Value -------------- ----------- ------------- ------------ U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 64,114,363 $ 32,178 $ (921,945) $ 63,224,596 Obligations of state and political subdivisions 53,004,191 328,583 (727,110) 52,605,664 Other securities, including mortgage- backed securities 33,433,455 1,524,465 (533,247) 34,424,673 ------------ ----------- ------------- ------------ $150,552,009 $ 1,885,226 $ (2,182,302) $150,254,933 ============ =========== ============= ============
December 31, 1999 Gross Gross Unrealized Unrealized HELD TO MATURITY Amortized Cost Gains Losses Fair Value -------------- ----------- ------------- ------------ Obligations of state and political subdivisions $232,500 $ 475 $ (31) $232,944 Other securities, including mortgage- backed securities 173,608 1,343 (130) 174,821 -------- ------- --------- -------- $406,108 $ 1,818 $ (161) $407,765 ======== ======= ========= ========
Page 10 11 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- The amortized cost and fair value of securities at March 31, 2000, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities are shown separately.
AVAILABLE FOR SALE Amortized Cost Fair Value -------------- ------------ Due in one year or less $ 26,045,444 $ 25,945,818 Due after one year through five years 82,579,504 81,039,689 Due after five years through ten years 17,703,254 17,313,921 Due after ten years 570,000 569,504 Mortgage-backed securities 13,287,067 12,860,084 Equity securities 6,330,490 7,859,392 ------------ ------------ Total securities available for sale $146,515,759 $145,588,408 ============ ============
Estimated HELD TO MATURITY Amortized Cost Fair Value -------------- ------------ Due in one year or less $ 77,500 $ 77,490 Due after one year through five years 155,000 153,743 Mortgage-backed securities 153,886 153,465 -------- -------- Total securities held to maturity $386,386 $384,698 ======== ========
Proceeds from the sales of securities available for sale during the three months ended March 31, 2000 totaled $1,799,811 resulting in gross losses of $1,108. Proceeds from the sales of securities available for sale during the three months ended March 31, 1999 totaled $1,209,587 resulting in gross gains of $727,304. No securities were called or settled by the issuer during the three months ended March 31, 2000 or March 31, 1999. Securities with a carrying value of approximately $59,915,000 and $62,614,000 were pledged as of March 31, 2000 and December 31, 1999, respectively, to secure public deposits, other deposits and liabilities as required by law. Page 11 12 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- (3) Loans Loans at March 31, 2000 and December 31, 1999 were as follows:
3/31/2000 12/31/1999 ------------- ------------- Commercial and Agriculture $ 35,030,135 $ 36,310,141 Commercial real estate 53,165,111 48,301,000 Real Estate - mortgage 174,306,838 168,643,326 Real Estate - construction 5,385,755 4,482,294 Consumer 28,325,201 28,105,412 Credit card and other 5,037,374 3,967,453 Deferred loan fees (953,707) (977,613) Unearned interest (50,135) (112,163) ------------- ------------- Total $ 300,246,572 $ 288,719,850 ============= =============
(4) Allowance for Loan Losses A summary of the activity in the allowance for loan losses for the three months ended March 31, 2000 and 1999 was as follows:
2000 1999 ----------- ----------- Balance January 1, $ 4,273,825 $ 4,567,126 Loans charged-off (163,379) (215,949) Recoveries 46,787 56,526 Provision for loan losses 95,000 68,000 ----------- ----------- Balance March 31, $ 4,252,233 $ 4,475,703 =========== ===========
Page 12 13 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- Information regarding impaired loans was as follows for the three months ended March 31.
2000 1999 ---------- ---------- Average investment in impaired loans $3,976,000 $3,685,000 Interest income recognized on impaired loans including interest income recognized on cash basis 80,500 47,556 Interest Income recognized on impaired loans on cash basis 80,500 47,556
Information regarding impaired loans at March 31, 2000 and December 31, 1999 was as follows:
3/31/2000 12/31/99 ---------- ---------- Balance impaired loans $3,792,000 $4,160,000 Less portion for which no allowance for loan losses is allocated -- -- ---------- ---------- Portion of impaired loan balance for which an allowance for credit losses is allocated $3,792,000 $4,160,000 ========== ========== Portion of allowance for loan losses allocated to the impaired loan balace $1,065,000 $1,145,000 ========== ==========
(5) Commitments, Contingencies and Off-Balance Sheet Risk The Bank subsidiaries are parties to financial instruments with off-balance sheet risk in the normal course of business to meet financing needs of their customers. These include commitments to make or purchase loans, undisbursed lines of credit, undisbursed credit card balances and letters of credit. The Banks' exposure to credit loss in the event of nonperformance by the other party to the financial instrument is represented by the contractual amount of those instruments. The Banks follow the same credit policy to make such commitments as they use for loans recorded on the consolidated balance sheets. Since many commitments to make loans expire without being used, the amount does not necessarily represent future cash commitments. Collateral obtained relating to the commitments is determined using management's credit evaluation of the borrower and may include real estate, vehicles, business assets, deposits and other items. The Banks do make fixed rate loan commitments for short periods of time. Fixed rate commitments at December 31, 1999 were $4,484,000 and had interest rates ranging from Page 13 14 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- 3.75% to 10.75% with maturities extended up to 30 years. No material changes in fixed rate loan commitments have occurred in the first quarter of 2000. Commitments to extend credit and letters of credit approximated the following amounts at March 31, 2000 and December 31, 1999.
Contract Amount --------------- March 31, December 31, 2000 1999 ----------- ----------- Commitment to extend credit: Lines of credit and construction loans $23,847,000 $23,982,000 Credit cards 3,618,000 3,078,000 Letters of credit 495,000 507,000 ----------- ----------- $27,960,000 $27,567,000 =========== ===========
The Banks are 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 for the periods ended March 31, 2000 and December 31, 1999 approximated $4,316,000 and $3,065,000. In the normal course of business, the Corporation and its subsidiaries are involved in various legal actions, but in the opinion of management and its legal counsel, ultimate disposition of such legal matters is not expected to have a material adverse effect on the consolidated financial statements. Page 14 15 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- Introduction The following discussion focuses on the consolidated financial condition of First Citizens Banc Corp at March 31, 2000, compared to December 31, 1999 and the consolidated results of operations for the three month periods ending March 31, 2000 compared to the same period in 1999. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q. The registrant is not aware of any trends, events or uncertainties that will have, or are reasonably likely to have, a material effect on the liquidity, capital resources, or operations except as discussed herein. Also, the registrant is not aware of any current recommendation by regulatory authorities, which would have a material effect if implemented. When used in this Form 10-Q or future filings by the Corporation with the Securities and Exchange Commission, in press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "believe," or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, changes in levels of market interest rates, credit risks of lending activities and competitive and regulatory factors, could effect the Corporation's financial performance and could cause the Corporation's actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements. See Exhibit 99, which is incorporated herein by reference. Financial Condition Total assets of the Corporation at March 31, 2000 totaled $487,474,508 compared to $472,220,057 at December 31, 1999. This was an increase of $15,254,451, or 3.2 percent. Within the structure of the assets, net loans have increased $11,548,314, or 4.1 percent since December 31, 1999, primarily in the area of commercial and residential real estate loans. Included in the increase in loans was $5,091,804 of commercial and residential real estate loans purchased by Farmers from another financial institution. The loans were purchased because management did not feel loan demand was as strong as desired. Given similar circumstances, management would consider purchasing loans in the future. Loans held-for-sale increased $409,750, or 18.5 percent Page 15 16 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- from December 31, 1999. At March 31, 2000, the net loan to deposit ratio was 69.6 percent compared to 70.6 percent at December 31, 1999. At March 31, 2000, $145,588,408, or 99.7 percent of the security portfolio was classified as available for sale. The remainder of $386,386 was classified as held to maturity. Securities decreased $4,686,247 from December 31, 1999. Some matured securities were not replaced in order to increase liquidity and partially fund loan growth. For the three months of operations in 2000, $95,000 was placed into the allowance for loan losses from earnings compared to $68,000 for the same period of 1999. The increased provision is a result of loan growth. The calculation of specific reserves, reserves for delinquencies and historical reserve are representative of the reserves necessary for probable losses in the portfolio. The composition and overall level of the loan portfolio and charge-off activity are all factors used to determine provisions to the reserve. Net charge-offs for the first three months of 2000 were $116,592 compared to $159,423 for the same period of 1999. The March 31, 2000 allowance for loan losses as a percent of total loans was 1.42 percent compared to 1.48 percent at December 31, 1999. Office premises and equipment have decreased $139,350 and intangible assets have decreased $81,512 since December 31, 1999. The decrease in office premises and equipment is attributed to new purchases of $102,298, disposals of $12,585 and depreciation of $229,062. Accrued interest and other assets totaled $7,261,991 at March 31, 2000 compared to $5,990,342 at December 31, 1999, an increase of $1,271,649. This increase was primarily due to increases in deferred taxes of $927,865 and interest receivable at the banks of $258,717. Total deposits at March 31, 2000 increased $22,326,042 from year-end 1999. Noninterest-bearing deposits, representing demand deposit balances, increased $1,138,782 from year-end 1999. Interest-bearing deposits, including savings and time deposits, increased $21,187,260 from year-end 1999. Interest-bearing deposits are higher due to municipal deposits on the last day of the quarter. This money was transferred out within two weeks of the deposit. The year to date 2000 average balance of savings deposits has decreased $794,000 compared to the average balance of the same period for 1999. The current average rate of these deposits is 2.37 percent compared to 2.39 percent in 1999. The year to date 2000 average balance of time certificates has decreased $16,411,000 compared to the average balance for the same period for 1999. The average balance of time certificates is down due to efforts to control deposit costs. Such efforts have led to higher priced deposits leaving the banks. The current average rate on these deposits is 4.92 percent compared to 5.13 percent for the same period in 1999. Other borrowed funds have decreased $5,773,386 from December 31, 1999 to March 31, 2000. Federal Home Loan Bank borrowings have decreased $136,820 as a result of scheduled Page 16 17 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- paydowns. Securities sold under agreements to repurchase, which tend to fluctuate, have decreased $3,576,922 and U.S. Treasury Tax Demand Notes have decreased $2,059,644. Shareholders' equity at March 31, 2000 was $47,058,322, which was 9.7 percent of total assets. Shareholders' equity at December 31, 1999 was $48,194,788, which was 10.2 percent of total assets. The decrease in shareholders' equity is represented by earnings of $1,305,374, dividends paid of $706,897, the purchase of treasury stock for $1,318,961 and the decrease in the market value of securities available for sale, net of tax, of $415,982. The Corporation paid a cash dividend on February 1, 2000 at a rate of $.17 per share. Total outstanding shares at March 31, 2000 were 4,116,119. Results of Operations Three Months Ended March 31, 2000 and 1999 Net income for the three months ended March 31, 2000 was $1,305,374, or $.32 per common share compared to $1,855,581, or $.44 per common share for the same period in 1999. This was a decrease of $550,207, or 29.7 percent. Some of the reasons for the changes are explained below. Total interest income for the first three months of 2000 has decreased $254,846, or 3.1 percent compared to the same period in 1999. The average rate on earning assets on a tax equivalent basis for the first three months of 2000 was 7.34 percent and 7.27 percent for the first three months of 1999. A decline in the average balance led to the decrease in interest income. Total interest expense for the first three months of 2000 has decreased $349,215, or 8.8 percent compared to the same period of 1999. This decrease is due mainly to a decrease in interest on deposits of $207,630 and a decrease in interest on FHLB borrowings. Interest on FHLB borrowings is down as a result of balances borrowed being lower in 2000. The Corporation made scheduled balloon payments on two FHLB advances during the second quarter of 1999, and elected not to replace them. The average rate on interest-bearing liabilities for the first three months of 2000 was 3.26 percent compared to 3.37 percent for the same period of 1999. The net interest margin on a tax equivalent basis was 4.08 percent for the three-month period ended March 31, 2000 and 3.90 percent for the same period ended March 31, 1999. Noninterest income for the first three months of 2000 totaled $1,118,863, compared to $1,904,767 for the same period of 1999, a decrease of $785,904. Gain on securities for the first three months of 2000 decreased $728,412 compared to 1999. Revenue from computer operations decreased $247,401 as a result of the sale of SCC's data processing contracts. The last remaining processing customers of SCC converted to Jack Henry and Associates by the end of the second quarter 1999.SCC still provides item processing for 10 financial institutions in addition to the three subsidiary banks Other operating income increased $73,006, due mainly to increased revenue from point-of-sale terminal usage. Service charges on deposit accounts increased Page 17 18 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- $211,421 as a result of a comprehensive review program of all service charges and fees undertaken at all three banks. Gain on the sale of loans decreased $94,518 due to decreased volume of loans sold caused by rising interest rates reducing demand for these products. Noninterest expense for the three months ended March 31, 2000 totaled $3,643,962 compared to $3,582,583 for the same period in 1999. This was an increase of $61,379, or 1.7 percent. Equipment expense increased $55,361 as a result of increased depreciation and maintenance expense. Salaries and benefits decreased $132,785, or 7.5 percent compared to the first three months of 1999 as a result of fewer total employees, on a full-time equivalent basis. The number of employees was reduced through attrition as well as reductions based on staffing needs resulting from SCC's sale of data processing contracts. The reduction of salaries and benefits was offset by an increase in other expenses of $125,566 compared to 1999. Income Tax Expense Income tax expense for the first three months of 2000 totaled $499,164 compared to $728,871 for the first three months of 1999. This was a decrease of $229,707, or 31.5 percent. The decrease in the federal income taxes is a result of the decrease in total income before taxes of $779,914, attributed mostly to reduced income from the sale of equity securities. The effective tax rates were comparable for the three-month periods ended March 31, 2000 and March 31, 1999, at 27.7% and 28.2% respectively. Capital Resources Shareholders' equity totaled $47,058,322 at March 31, 2000 compared to $48,194,788 at December 31, 1999. All of the capital ratios exceed the regulatory minimum guidelines as identified in the following table:
Corporation Ratios Regulatory 3/31/00 12/31/99 Minimums ------- -------- ---------- Tier I Risk Based Capital 15.4% 17.3% 4.0% Total Risk Based Capital 16.6% 18.7% 8.0% Leverage Ratio 9.8% 9.6% 4.0%
The Corporation paid a cash dividend of $.17 per common share on February 1, 2000, compared to $.16 per common share on February 1, 1999. Page 18 19 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- Capital expenditures totaled $102,298 for the first three months of 2000 compared to $152,645 for the same period of 1999. Liquidity Liquidity as it relates to the banking entities of the Corporation is the ability to meet the cash demand and credit needs of its customers. The Banks, through their respective correspondent banks, maintain federal funds borrowing lines totaling $37,360,000 and the Banks have additional borrowing availability at the Federal Home Loan Bank of Cincinnati of $57,641,227 at March 31, 2000. Finally, 99.7% of the Corporation's security portfolio has been classified as available for sale, which provides additional liquidity. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The Corporation's primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. The Banks do not maintain a trading account for any class of financial instrument and the Corporation is not affected by foreign currency exchange rate risk or commodity price risk. Due to the basis in equities held by Farmers being so much less than the current fair value at this time, the Corporation is not subject to significant equity price risk. Interest rate risk is the risk that the Corporation's financial condition will be adversely affected due to movements in interest rates. The Corporation, like other financial institutions, is subject to interest rate risk to the extent that its interest-earning assets reprice differently than interest-bearing liabilities. The income of financial institutions is primarily derived from the excess of interest earned on interest-earning assets over interest paid on interest-bearing liabilities. One of the Corporation's principal financial objectives is to achieve long-term profitability while reducing its exposure to fluctuations in interest rates. Accordingly, the Corporation places great importance on monitoring and controlling interest rate risk. There are several methods employed by the Corporation to monitor and control interest rate risk. One such method is using gap analysis. The gap is defined as the repricing variance between rate sensitive assets and rate sensitive liabilities within certain periods. The repricing can occur due to changes in rates on variable products as well as maturities of interest-earning assets and interest-bearing liabilities. A high ratio of interest sensitive liabilities, generally referred to as a negative gap, tends to benefit net interest income during periods of falling rates as the average rate on interest-bearing liabilities falls faster than the average rate earned on interest-earning assets. The opposite holds true in during periods of rising rates. The Corporation attempts to minimize the interest rate risk through management of the gap in order to achieve consistent shareholder return. The Corporation's Assets and Liability Management Policy is to maintain a laddered gap Page 19 20 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- position. One strategy is to originate variable rate loans tied to market indices. Such loans reprice as the underlying market index changes. Currently, approximately 42.2 percent of the Corporation's loan portfolio reprices on at least an annual basis. The Corporation also invests excess funds in federal funds that mature and reprice daily. The Corporation's 1999 annual report details a table, which provides information about the Banks financial instruments that are sensitive to changes in interest rates as of December 31, 1999. The table is based on information and assumptions set forth in the notes. The Corporation believes the assumptions are reasonable. For loans, securities and liabilities with contractual maturities, the table represents principal cash flows and weighted average interest rate. For variable rate loans the contractual maturity and weighted average interest rate were used with an explanatory footnote as to repricing periods. For liabilities without contractual maturities such as demand and savings deposits, a decay rate was utilized to match their most likely withdrawal behavior. Management believes that no events have occurred since December 31, 1999 which would significantly change the ratio of rate sensitive liabilities for the given time horizon. Page 20 21 First Citizens Banc Corp Other Information Form 10-Q - -------------------------------------------------------------------------------- Part II - Other Information ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None
ITEM 6. (A) EXHIBIT NO. 27 Financial Data Schedule ................. 27 (B) EXHIBIT NO. 99 Safe Harbor under the Private Securities Litigation Reform Act of 1995 (C) REPORTS ON FORM 8-K - Filed on February 10, 2000, announcing 1999 earnings of $1.43 per share compared to $1.35 and $1.04 earnings per share for 1998 and 1997, respectively.
Page 21 22 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, The registrant has caused this report to be signed on its behalf the undersigned thereunto duly authorized. First Citizens Banc Corp /s/ David A. Voight May 12, 2000 - ------------------------ ------------ David A. Voight Date President /s/ James O. Miller May 12, 2000 - ------------------------ ------------ James O. Miller Date Executive Vice President Page 22 23 First Citizens Banc Corp Index to Exhibits Form 10-Q - --------------------------------------------------------------------------------
Exhibit Number Description Page Number - ------- ----------- ----------- 27 Financial Data Schedule 27 99 Safe Harbor Under the Private Securities Incorporated by reference to Exhibit 99 to Litigation Reform Act of 1995 Annual Report on Form 10-K for the Year Ended December 31, 1999 filed by the registrant on March 24, 2000
Page 23 EX-27 2 EXHIBIT 27
9 0000944745 FIRST CITIZENS BANC CORP 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 17,950,413 51,031 8,180,000 0 145,588,408 386,386 384,698 295,994,339 4,252,233 487,474,508 425,486,425 10,404,303 2,703,318 1,822,140 0 0 23,257,520 23,800,802 487,474,508 5,935,049 2,062,984 47,005 8,045,038 3,441,590 3,620,401 4,424,637 95,000 (1,108) 3,643,962 1,804,538 1,305,374 0 0 1,305,374 .32 .32 3.87 1,339,000 787,000 0 0 4,273,825 163,379 46,787 4,252,233 4,252,233 0 1,962,619
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