-----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, MMyBmz21PBtsZ0hGhUnSiv2fASmqRuQv5s3GBi1wcoKguQ6chtVgKUUPAZ/JRxPT Vm73WpabzORES28iFgcocw== 0000950152-02-008586.txt : 20021118 0000950152-02-008586.hdr.sgml : 20021118 20021114202732 ACCESSION NUMBER: 0000950152-02-008586 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 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: 1934 Act SEC FILE NUMBER: 000-25980 FILM NUMBER: 02828074 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 l96642ae10vq.txt FIRST CITIZENS BANC CORP. 10-Q/QTR END 9-30-02 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:...............................September 30, 2002 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 of incorporation (I.R.S. Employer 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 November 14, 2002 5,033,203 common shares FIRST CITIZENS BANC CORP Index PART I. Financial Information ITEM 1. Financial Statements: Consolidated Balance Sheets (unaudited) September 30, 2002 and December 31, 2001........................... 3 Consolidated Statements of Income (unaudited) Three and nine months ended September 30, 2002 and 2001............ 4 Consolidated Statements of Comprehensive Income (unaudited) Three and nine months ended September 30, 2002 and 2001............ 5 Consolidated Statement of Shareholders' Equity (unaudited) Nine months ended September 30, 2002 and 2001...................... 6 Condensed Consolidated Statement of Cash Flows (unaudited) Nine months ended September 30, 2002 and 2001...................... 7 Notes to Consolidated Financial Statements (unaudited)................. 8-18 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................. 19-24 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk............. 25-26 ITEM 4. Controls and Procedures................................................ 27 PART II. Other Information ITEM 1. Legal Proceedings...................................................... 28 ITEM 2. Changes in Securities and Use of Proceeds.............................. 28 ITEM 3. Defaults upon Senior Securities........................................ 28 ITEM 4. Submission of Matters to a Vote of Security Holders.................... 28 ITEM 5. Other Information...................................................... 28 ITEM 6. Exhibits and Reports on Form 8-K....................................... 28 SIGNATURES...................................................................... 29 Certifications.................................................................. 30-34
FIRST CITIZENS BANC CORP Consolidated Balance Sheets (In thousands, except share data)
September 30, December 31, Assets 2002 2001 --------- --------- Cash and due from financial institutions $ 22,291 $ 19,227 Federal Funds Sold 30,400 6,025 Securities available-for-sale 143,941 108,230 Securities held-to-maturity (Estimated Fair Value of $125 at September 30, 2002, and $143 at December 31, 2001) 121 139 Federal Home Loan Bank, Federal Reserve, and Independent State Bank of Ohio stock 6,283 5,357 Loans held for sale 1,233 2,307 Loans, net 421,683 331,347 Office premises and equipment, net 8,198 7,003 Goodwill 15,052 672 Other intangible assets 3,098 871 Accrued interest and other assets 8,922 6,493 --------- --------- Total assets $ 661,222 $ 487,671 ========= ========= Liabilities Deposits Noninterest-bearing 64,843 44,612 Interest-bearing 480,279 365,566 --------- --------- Total deposits 545,122 410,178 Federal Home Loan Bank advances 342 811 Securities sold under agreements to repurchase 15,413 10,311 U. S. Treasury interest-bearing demand note payable 3,889 720 Notes payable 14,000 14,000 Obligated mandatory redeemable capital securities of subsidiary trust 5,000 -- Accrued interest, taxes and other expenses 3,837 2,924 --------- --------- Total liabilities 587,603 438,944 Shareholders' Equity Common stock, no par value; 10,000,000 shares authorized, 5,326,441 shares issued at September 30, 2002 and 4,263,401 shares issued at December 31, 2001 47,370 23,258 Retained earnings 30,923 28,844 Treasury stock, 293,238 shares at cost at September 30, 2002, 180,782 shares at cost at December 31, 2001 (7,241) (4,919) Accumulated other comprehensive income 2,567 1,544 --------- --------- Total shareholders' equity 73,619 48,727 --------- --------- Total liabilities and shareholders' equity $ 661,222 $ 487,671 ========= =========
See notes to interim consolidated financial statements Page 3 Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
Three months ended Nine months ended September 30, September 30, 2002 2001 2002 2001 ---------- ---------- ---------- ---------- INTEREST INCOME: Loans, including fees $ 7,959 $ 7,238 $ 22,156 $ 22,141 Taxable securities 1,092 1,065 3,112 3,317 Nontaxable securities 408 416 1,196 1,304 Federal funds sold and other 170 205 381 379 ---------- ---------- ---------- ---------- Total interest income 9,629 8,924 26,845 27,141 INTEREST EXPENSE: Deposits 2,796 3,467 8,365 10,836 FHLB Borrowings 4 15 23 51 Other 216 386 636 1,403 ---------- ---------- ---------- ---------- Total interest expense 3,016 3,868 9,024 12,290 ---------- ---------- ---------- ---------- NET INTEREST INCOME 6,613 5,056 17,821 14,851 PROVISION FOR LOAN LOSSES 238 135 624 656 ---------- ---------- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,375 4,921 17,197 14,195 NONINTEREST INCOME: Computer center data processing fees 280 283 886 889 Service charges 765 427 2,089 1,240 Net gain (loss) on sale of securities 2 5 4 5 Net gain (loss) on sale of loans 91 148 190 289 Other 699 559 1,775 1,398 ---------- ---------- ---------- ---------- Total noninterest income 1,837 1,422 4,944 3,821 NONINTEREST EXPENSE: Salaries, wages and benefits 2,309 1,904 6,737 5,822 Net occupancy expense 270 209 776 678 Equipment expense 309 291 912 813 Data processing expense 233 186 647 554 State franchise tax 178 190 494 553 Professional services 264 194 643 556 Other operating expenses 1,594 1,334 4,322 3,713 ---------- ---------- ---------- ---------- Total noninterest expense 5,157 4,308 14,531 12,689 ---------- ---------- ---------- ---------- Income before taxes 3,055 2,035 7,610 5,327 Income tax expense 983 531 2,218 1,482 ---------- ---------- ---------- ---------- Net Income $ 2,072 $ 1,504 $ 5,392 $ 3,845 ========== ========== ========== ========== Basic and diluted earnings per share $ 0.41 $ 0.37 $ 1.14 $ 0.94 Dividends declared per share $ 0.25 $ 0.18 $ 0.69 $ 0.54 Wtd. avg. shares during the period - basic 5,033,203 4,082,619 4,736,909 4,082,967 Wtd. avg. shares during the period - dilutive 5,035,077 4,082,619 4,737,303 4,082,967
See notes to interim consolidated financial statements Page 4 FIRST CITIZENS BANC CORP Consolidated Comprehensive Income Statements (Unaudited) (In thousands)
Three months ended Nine months ended September 30, September 30, 2002 2001 2002 2001 ------- ------- ------- ------- Net income $ 2,072 $ 1,504 $ 5,392 $ 3,845 Other Comprehensive Income: Unrealized holding gains on available for sale securities 877 704 1,554 2,443 Reclassification adjustment for gains later recognized in income (2) (5) (4) (5) ------- ------- ------- ------- Net unrealized gains 875 699 1,550 2,438 Tax effect (297) (238) (527) (829) ------- ------- ------- ------- Total other comprehensive income 578 461 1,023 1,609 ------- ------- ------- ------- Comprehensive income $ 2,650 $ 1,965 $ 6,415 $ 5,454 ======= ======= ======= =======
See notes to interim consolidated financial statements Page 5 FIRST CITIZENS BANC CORP Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (In thousands, except share data)
Accumulated Common Stock Other Total Outstanding Retained Treasury Comprehensive Shareholders' Shares Amount Earnings Stock Income Equity ---------- ---------- ---------- ---------- ---------- ---------- Balance, January 1, 2001 4,087,619 $ 23,258 $ 28,614 $ (4,818) $ 871 $ 47,925 Net income -- -- 3,845 -- -- 3,845 Change in unrealized gain on securities available for sale, net of reclassifications and tax effects -- -- -- -- 1,609 1,609 Purchase of treasury stock, at cost (5,000) -- -- (101) -- (101) Cash dividends ($.54 per share) -- -- (2,205) -- -- (2,205) ---------- ---------- ---------- ---------- ---------- ---------- Balance, September 30, 2001 4,082,619 23,258 30,254 (4,919) 2,480 51,073 ========== ========== ========== ========== ========== ========== Balance, January 1, 2002 4,082,619 $ 23,258 $ 28,844 $ (4,919) $ 1,544 $ 48,727 Net income -- -- 5,392 -- -- 5,392 Change in unrealized gain on securities available for sale, net of reclassifications and tax effects -- -- -- -- 1,023 1,023 Issuance of common shares for merger, net of issuance costs 1,063,040 24,116 -- -- -- 24,116 Cash paid for fractional shares (4) (4) Purchase of treasury stock, at cost (112,456) -- -- (2,322) -- (2,322) Cash dividends ($.69 per share) -- -- (3,313) -- -- (3,313) ---------- ---------- ---------- ---------- ---------- ---------- Balance, September 30, 2002 5,033,203 47,370 30,923 (7,241) 2,567 73,619 ========== ========== ========== ========== ========== ==========
See notes to interim consolidated financial statements Page 6 FIRST CITIZENS BANC CORP Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands)
Nine months ended September 30, ------------------------------ 2002 2001 -------- -------- Net cash from operating activities $ 6,130 $ 3,955 Cash flows from investing activities Net cash received in acquisition 3,078 -- Maturities of deposits held in other institutions -- 51 Maturities and calls of securities, held-to-maturity 17 58 Maturities and calls of securities, available-for-sale 43,293 18,895 Purchases of securities, available-for-sale (62,913) (16,609) Proceeds from sale of securities, available-for-sale 4 -- Loans made to customers, net of principal collected 7,105 6,410 Change in federal funds sold (19,875) (15,100) Proceeds from sale of property and equipment 2 5 Purchases of office premises and equipment (440) (604) -------- -------- Net cash from investing activities (29,729) (6,894) Cash flows from financing activities Repayment of FHLB borrowings (468) (440) Net change in deposits 21,995 26,438 Change in securities sold under agreements to repurchase 4,786 349 Change in U.S. Treasury interest-bearing demand note payable 3,170 1,606 Change in notes payable (2,185) 3,400 Change in federal funds purchased -- (20,000) Proceeds from issuance of mandatorily redeemable capital securities of subsidiary trust 5,000 -- Purchases of treasury stock (2,322) (101) Cash dividends paid (3,313) (2,205) -------- -------- Net cash from financing activities 26,663 9,047 -------- -------- Net change in cash and due from banks 3,064 6,108 Cash and due from banks at beginning of period 19,227 15,735 -------- -------- Cash and due from banks at end of period $ 22,291 $ 21,843 ======== ======== Cash paid during the period for: Interest $ 10,825 $ 13,286 Income taxes $ 1,778 $ 1,360
See notes to interim consolidated financial statements Page 7 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- (1) Consolidated Financial Statements The consolidated financial statements include the accounts of First Citizens Banc Corp (First Citizens) and its 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), R. A. Reynolds Appraisal Service, Inc., (Reynolds), Mr. Money Finance Company (Mr. Money), First Citizens Title Insurance Agency, First Citizens Insurance Agency and First Citizens Statutory Trust, together referred to as the Corporation. All significant inter-company balances and transactions have been 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 Corporation's financial position as of September 30, 2002 and its results of operations and changes in cash flows for the periods ended September 30, 2002 and 2001 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 accounting principles generally accepted in the United States of America have been omitted. The results of operations for the period ended September 30, 2002 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 2001 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, Huron, Marion, Ottawa, 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 2002, SCC provided item processing for 9 financial institutions in addition to the three subsidiary banks. Through September 30, 2002, SCC accounted for approximately 2.8% of the Corporation's total consolidated 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 consolidated revenues. Mr. Money provides consumer and real estate financing that the Banks would not normally provide to B and C credits at a rate commensurate with the risk. Mr. Money accounted for 4.5% of total Corporation revenues. First Citizens Title Insurance Agency Inc. has been formed to provide customers with a seamless mortgage product with improved service. First Citizens Insurance Agency Inc was formed to allow the Corporation to Page 8 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue is less than 1.0% of total revenue for the period ended September 30, 2002. 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, 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. 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. Certain items in the 2001 financial statements have been reclassified to correspond with the 2002 presentation. In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", which addresses the accounting for such assets arising from prior and future business combinations. Upon the adoption of this Statement, goodwill arising from business combinations will no longer be amortized, but rather will be assessed regularly for impairment, with any such impairment recognized as a reduction to earnings in the period identified. The Corporation was required to adopt this Statement on January 1, 2002. Prior to the adoption of SFAS No. 142, the Corporation's annual amortization of goodwill was $201. The previously reported net income adjusted to eliminate prior period goodwill is as follows:
Three months Nine months ended ended September 30, 2001 September 30, 2001 ------------------ ------------------ Reported net income $1,504 $3,845 Add back: goodwill amortization 50 151 ------ ------ Adjusted net income $1,554 $3,996 ====== ====== Basic and diluted earnings per share as adjusted $ 0.38 $ 0.98 ====== ======
Page 9 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which amends SFAS No. 121 by addressing business segments accounted for as a discontinued operation under Accounting Principles Board Opinion No. 30. This Statement was effective beginning after January 1, 2002. The effect of this Statement on the financial position and results of operations of the Corporation was not material. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendments of FASB Statement No. 13, and Technical Corrections". This Statement eliminates inconsistency between the required accounting for certain lease modifications that have economic effects similar to sale-leaseback transactions and sale-leaseback transactions. The Corporation does not believe this statement will have a material effect on its financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". This Statement addresses the timing of recognition of a liability for exit and disposal cost at the time a liability is incurred, rather than at a plan commitment date, as previously required. Exit or disposal costs will be measured at fair value, and the recorded liability will be subsequently adjusted for changes in estimated cash flows. This Statement is required to be effective for exit or disposal activities entered after December 31, 2002, and early adoption is encouraged. The Corporation does not believe this statement will have a material effect on its financial position or results of operations. SFAS No. 147, "Acquisitions of Certain Financial Institutions" became effective October 1, 2002. This standard requires any unidentifiable intangible asset previously recorded as the result of a business combination to be reclassified as goodwill and the amortization of this asset will cease. The effect of this standard on the financial position and results of operations of the Corporation is not expected to be material. Page 10 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- (2) Securities Securities at September 30, 2002 and December 31, 2001 were as follows:
September 30, 2002 Gross Gross AVAILABLE FOR SALE Amortized Unrealized Unrealized Cost Gains Losses Fair Value --------- --------- --------- --------- U.S. Treasury securities and obligations of U.S. government agencies $ 82,165 $ 1,596 $ (2) $ 83,759 Obligations of state and political subdivisions 43,044 2,014 (15) 45,043 Corporate bonds 2,438 51 -- 2,489 Other securities, including mortgage-backed securities and equity securities 12,405 247 (2) 12,650 --------- --------- --------- --------- $ 140,052 $ 3,908 $ (19) $ 143,941 ========= ========= ========= =========
September 30, 2002 Gross Gross HELD TO MATURITY Amortized Unrealized Unrealized Cost Gains Losses Fair Value ---- ----- ------ ---------- Obligations of state and political subdivisions $ 77 $ 1 $ -- $ 78 Other securities, including mortgage- backed securities 44 3 -- 47 ---- ---- ---- ---- $121 $ 4 $ -- $125 ==== ==== ==== ====
Page 11 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - --------------------------------------------------------------------------------
December 31, 2001 Gross Gross AVAILABLE FOR SALE Amortized Unrealized Unrealized Cost Gains Losses Fair Value --------- --------- --------- --------- U.S. Treasury securities and obligations of U.S. government agencies $ 54,106 $ 1,263 $ (7) $ 55,362 Obligations of state and political subdivisions 37,627 931 (7) 38,551 Corporate bonds 4,567 59 (8) 4,618 Mortgage-backed securities 9,591 122 (14) 9,699 --------- --------- --------- --------- $ 105,891 $ 2,375 $ (36) $ 108,230 ========= ========= ========= =========
December 31, 2001 Gross Gross HELD TO MATURITY Amortized Unrealized Unrealized Cost Gains Losses Fair Value ---- ----- ------ ---------- Obligations of state and political subdivisions $ 78 $ 2 $ -- $ 80 Other securities, including mortgage-backed securities 61 2 -- 63 ---- ---- ---- ---- $139 $ 4 $ -- $143 ==== ==== ==== ====
Page 12 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- The amortized cost and fair value of securities at September 30, 2002, 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 $ 49,385 $ 49,982 Due after one year through five years 69,446 71,886 Due after five years through ten years 6,988 7,561 Due after ten years 1,828 1,862 Mortgage-backed securities 11,967 12,142 Equity securities 438 508 -------- -------- Total securities available for sale $140,052 $143,941 ======== ========
Estimated Fair HELD TO MATURITY Amortized Cost Value -------------- ---- Due in one year or less $ 77 $ 78 Mortgage-backed securities 44 47 ---- ---- Total securities held to maturity $121 $125 ==== ====
Proceeds from sales of securities, gross realized gains and gross realized losses were as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2002 2001 2002 2001 ---- ---- ---- ---- Proceeds $ - $ - $ - $ - Gross gains - - - - Gross losses - - - - Security gains due to calls prior to maturity 2 5 4 5
Securities with a carrying value of approximately $92,223 and $71,106 were pledged as of September 30, 2002 and December 31, 2001, respectively, to secure public deposits, other deposits and liabilities as required by law. Page 13 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- (3) Loans Loans at September 30, 2002 and December 31, 2001 were as follows:
9/30/2002 12/31/2001 --------- ---------- Commercial and Agriculture $ 44,302 $ 26,708 Commercial real estate 122,674 70,616 Real Estate - mortgage 212,009 204,496 Real Estate - construction 12,360 9,402 Consumer 32,359 23,100 Credit card and other 3,409 2,315 Leases 1,420 435 --------- --------- Total loans 428,533 337,072 Allowance for loan losses (6,299) (4,865) Deferred loan fees (543) (848) Unearned interest (8) (12) --------- --------- Net loans $ 421,683 $ 331,347 ========= =========
(4) Allowance for Loan Losses A summary of the activity in the allowance for loan losses was as follows:
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2002 2001 2002 2001 ------- ------- ------- ------- Balance beginning of period $ 6,359 $ 4,353 $ 4,865 $ 4,107 Acquisitions -- -- 1,426 -- Loans charged-off (428) (324) (941) (792) Recoveries 130 126 325 319 Provision for loan losses 238 135 624 656 ------- ------- ------- ------- Balance September 30, $ 6,299 $ 4,290 $ 6,299 $ 4,290 ======= ======= ======= =======
Information regarding impaired loans was as follows for the three and nine months ended September 30. Page 14 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - --------------------------------------------------------------------------------
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Average investment in impaired loans $6,867 $2,863 $5,227 $2,993 Interest income recognized on impaired loans including interest income recognized on cash basis 100 41 251 142 Interest income recognized on impaired loans on cash basis 100 41 251 142
Information regarding impaired loans at September 30, 2002 and December 31, 2001 was as follows:
9/30/02 12/31/01 ------- -------- Balance impaired loans $7,015 $1,592 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 $7,015 $1,592 ====== ====== Portion of allowance for loan losses allocated to the impaired loan balance $1,734 $ 544 ====== ======
Nonperforming loans were as follows:
9/30/02 12/31/01 ------- -------- Loans past due over 90 days still on accrual $2,771 $2,818 Nonaccrual $3,001 $2,413
Nonperforming loans include some loans, which are classified as impaired and smaller balance homogeneous loans, such as residential mortgages and consumer loans that are collectively evaluated for impairment. Page 15 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- (5) Commitments, Contingencies and Off-Balance Sheet Risk 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 September 30, 2002 and December 31, 2001.
Contract Amount --------------- 9/30/2002 12/31/2001 --------- ---------- Commitment to extend credit: Lines of credit and construction loans $53,550 $36,828 Credit cards 6,144 7,005 Letters of credit 1,112 888 ------- ------- $60,806 $44,721 ======= =======
Commitments to make loans are generally made for a period of one year or less. Fixed-rate loan commitments included above totaled $7,060 at September 30, 2002 and had interest rates ranging from 2.50% to 11.00% with maturities extended up to 30 years. Fixed-rate loan commitments included above totaled $7,277 at December 31, 2001 with interest rates ranging from 4.75% to 10.00% with maturities extended up to 30 years. 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 September 30, 2002 and December 31, 2001 approximated $6,966 and $4,670. (6) Obligated Mandatorily Redeemable Capital Securities In March 2002, FCBC issued $5,000 of 5.59% floating rate obligated mandatorily redeemable capital securities through a special purpose subsidiary as part of a pooled transaction. The Corporation's obligated mandatorily redeemable capital securities may be redeemed by the Corporation, in whole but not in part, prior to March 26, 2007 and subject to the occurrence and continuation of a special event, at a redemption price of 107.50% of the face value of the Page 16 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- capital securities. On or after March 26, 2007, the capital securities may be redeemed at face value. The Corporation's mandatorily redeemable capital securities are considered Tier I capital for regulatory reporting purposes. (7) Merger On April 1, 2002, the Corporation completed the merger of Independent Community Banc Corp. ("ICBC") which was announced November 1, 2001. ICBC merged with and into the Corporation and ICBC's subsidiary, The Citizens National Bank of Norwalk, was merged with and into Citizens. The Corporation issued 1,063,040 shares of common stock valued at approximately $24,450 less stock issuance costs of $338. Total assets of ICBC prior to the merger were $127,713, including $97,623 in loans and $111,968 in deposits. The transaction was recorded as a purchase and, accordingly, the operating results of ICBC have been included in the Corporation's consolidated financial statements since the date of the merger. The aggregate of the purchase price over the fair value of the net assets acquired of approximately $13,495 is being evaluated for impairment on an annual basis. The following summarizes pro forma financial information for the three and nine months ended September 30, 2002 and 2001, assuming the ICBC Merger occurred as of January 2001.
Three months ended Nine months ended September 30, September 30, ------------- ------------- 2002 2001 2002 2001 ---- ---- ---- ---- Net interest income after provision for loan losses $ 6,375 $ 6,155 $18,487 $17,858 Net income 2,072 1,809 5,660 4,744 Basic and diluted earnings per share 0.41 0.35 0.98 0.93
These amounts include ICBC's actual results in 2001 and for the first three months of 2002 prior to the merger and actual results for the six months in 2002 after the merger. The pro forma results do not necessarily represent results which would have occurred if the merger had taken place on the basis assumed above, nor are they indicative of the results of future combined operations. Page 17 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.
At April 1, 2002 ($000s) Current Assets $ 122,380 Property, plant, and equipment 1,509 Intangible Assets 2,454 Goodwill 11,039 --------- Total assets acquired 137,382 Current Liabilities (114,396) Long-Term Debt (2,185) --------- Total assets assumed (116,581) Net assets acquired 20,801
This acquisition provided The Corporation and its affiliate, Citizens, the opportunity to expand south from Erie County into contiguous Huron County and the City of Norwalk. The acquisition also provided the existing Citizens access to trust services through ICBC's trust department. (8) Stock Option Plan The Corporation's shareholders approved a stock option plan on April 18, 2000. A total of 225,000 common shares are available for grant under the plan. The number of shares may be adjusted by the Board in the event of an increase or decrease in the number of common shares outstanding resulting from dividend payments, stock splits, recapitalization, merger, share exchange acquisition, combination or reclassification. The Corporation granted 30,700 options to senior management of the Corporation on July 2, 2002. The options vest in three years from the date of grant. Each option entitles the holder to purchase a share of common stock at the price of $20.50 per share and will expire ten years from the date of issuance. Page 18 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Introduction The following discussion focuses on the consolidated financial condition of First Citizens Banc Corp at September 30, 2002, compared to December 31, 2001 and the consolidated results of operations for the three-month and nine-month periods ending September 30, 2002 compared to the same periods in 2001. 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 September 30, 2002 totaled $661,222 compared to $487,671 at December 31, 2001. This was an increase of $173,551, or 35.6 percent. The increase is primarily the result of the acquisition of Independent Community Banc Corp. ("ICBC") on April 1, 2002. ICBC had assets of $127,713 at March 31, 2002. Within the structure of the assets, net loans have increased $90,336, or 27.3 percent since December 31, 2001. This includes ICBC's loan balance of $97,623. The commercial real estate portfolio increased by $52,058, while residential real estate loans increased by $7,513, commercial and agriculture loans increased by $17,594 and consumer loans increased by $9,259. ICBC's balances for these items were $24,734 in commercial, $36,658 in residential real estate, $18,911 in Page 19 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- commercial and agriculture and $15,811 in consumer loans. The Corporation's focus continues to be toward commercial loans and away from residential real estate and consumer loans. In the current low interest rate environment, the greatest demand for residential real estate loans has been for a fixed-rate loan. Rather than add these loans to the portfolio, the Corporation has generally sold these loans on the secondary market. This has allowed for additional funding to be used for commercial lending. In the current rate environment, there has been pressure on the margin, but management believes the loan portfolio is being positioned for the future. Mr. Money was formed to service the needs of B and C credit customers for consumer and real estate financing that the Banks would not normally provide, and at a rate commensurate with the risk. Mr. Money had loans outstanding of $14,002 at September 30, 2002. Loans held-for-sale decreased $1,074, or 46.6 percent from December 31, 2001. At September 30, 2002, the net loan to deposit ratio was 77.4 percent compared to 80.8 percent at December 31, 2001. For the nine months of operations in 2002, $624 was placed into the allowance for loan losses from earnings compared to $656 for the same period of 2001. Impaired loans have increased, which include those acquired in ICBC's portfolio. ICBC already had specific allowances in place for its impaired loans; therefore, management felt the allowance was adequate with no additional provision for these loans. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific allowance allocations for identified portfolio loans, allowances for delinquencies, historical allowance allocations and general trends in the economy. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine provisions to the allowance. Net charge-offs for the first nine months of 2002 were $616 compared to $473 for the same period of 2001. This increase is the result of increased net charge-offs at Citizens and Mr. Money. The September 30, 2002 allowance for loan losses as a percent of total loans was 1.49 percent compared to 1.42 percent at December 31, 2001. At September 30, 2002, $143,941 or 99.9 percent of the security portfolio was classified as available for sale. The $121 remainder of the portfolio was classified as held to maturity. Securities increased $35,693 from December 31, 2001. The balance of the ICBC investment portfolio at March 31, 2002 was $15,412. Purchases of investments were made to meet additional pledging requirements and to try to gain additional yield compared to federal funds sold, which are the excess funds provided by deposits and other borrowings that were not utilized for loans. Office premises and equipment have increased $1,195 and intangible assets have increased $16,607 since December 31, 2001. The increase in office premises and equipment is attributed to new purchases of $440 and depreciation of $751, along with the addition of ICBC's fixed assets of $1,510. The intangibles increased as a result of the purchase accounting entries for goodwill and core deposit intangible related to the merger. Page 20 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Accrued interest and other assets totaled $8,922 at September 30, 2002 compared to $6,493 at December 31, 2001, an increase of $2,429. This increase was due to increases in deferred tax assets of $465, an increase in receivables of $1,187, and an increase in accrued interest of $1,242. The increase in deferred tax assets and accrued interest can be attributed to the ICBC merger. Total deposits at September 30, 2002 increased $134,944 from year-end 2001. Noninterest-bearing deposits, representing demand deposit balances, increased $20,231 from year-end 2001, including $14,417 of ICBC balances. Interest-bearing deposits, including savings and time deposits, increased $114,713 from year-end 2001, including $97,551 of ICBC balances. The year to date 2002 average balance of savings deposits has increased $29,452 compared to the average balance of the same period for 2001. The current average rate of these deposits is 1.67 percent compared to 2.27 percent in 2001. The year to date 2002 average balance of time certificates has increased $11,576 compared to the average balance for the same period for 2001. Under current market conditions, the Banks have been less aggressive in their efforts to attract deposits. However, depositors seem to be looking for shorter term, more liquid products to invest their money. As a result, the banks have seen an increase in deposits, particularly in the savings and money market products. Total borrowed funds have increased $12,802 from December 31, 2001 to September 30, 2002. The Corporation has notes outstanding with other financial institutions totaling $14,000 at September 30, 2002. These notes were primarily used to fund the loan growth at Mr. Money. Additionally, the Corporation has $5,000 in long-term borrowings due to the issuance of an obligated mandatorily redeemable capital security. This borrowing is a 30-year issuance. Federal Home Loan Bank borrowings have decreased $469 as a result of scheduled pay downs. Securities sold under agreements to repurchase, which tend to fluctuate, have increased $5,102. U.S. Treasury Tax Demand Notes, which also tend to fluctuate, have increased $3,169. Shareholders' equity at September 30, 2002 was $73,619, or 11.1 percent of total assets, compared to $48,727 at December 31, 2001, or 10.0 percent of total assets. The change in shareholders' equity is made up of earnings of $5,392, less dividends paid of $3,313, less the purchase of 112,456 treasury shares for $2,322 and the increase in the market value of securities available for sale, net of tax, of $1,023. The merger with ICBC also resulted in an increase to capital of $24,112. The Corporation paid a cash dividend on February 1, 2002 at a rate of $.19 per share, and on May 1, 2002 and August 1, 2002, each at a rate of $.25 per share. Total outstanding shares at September 30, 2002 were 5,033,203. Page 21 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Results of Operations Nine Months Ended September 30, 2002 and 2001 Net income for the nine months ended September 30, 2002 was $5,392, or $1.14 per common share compared to $3,845, or $.94 per common share for the same period in 2001. This was an increase of $1,547, or 40.2 percent. Some of the reasons for the changes are explained below. Total interest income for the first nine months of 2002 decreased $296, or 1.1 percent compared to the same period in 2001. The average rate on earning assets on a tax equivalent basis for the first nine months of 2002 was 6.38 percent and 7.51 percent for the first nine months of 2001. Total interest expense for the first nine months of 2002 has decreased $3,266, or 26.6 percent compared to the same period of 2001. The decrease in both interest income and interest expense can be attributed to the rate environment we are currently experiencing. Specifically, interest on deposits is down $2,471, interest on other borrowings is down $767 and interest on FHLB borrowings is down $28. The average rate on interest-bearing liabilities for the first nine months of 2002 was 2.62 percent compared to 4.09 percent for the same period of 2001. The net interest margin on a tax equivalent basis was 4.36 percent for the nine-month period ended September 30, 2002 and 4.26 percent for the same period ended September 30, 2001. Noninterest income for the first nine months of 2002 totaled $4,944, compared to $3,821 for the same period of 2001, an increase of $1,123. The majority of the increase resulted from the acquisition of ICBC. Also, the Banks introduced new deposit products which generated $430 of additional fee income. Other operating income increased $377. The Corporation's appraisal company increased revenues by $20. Noninterest expense for the nine months ended September 30, 2002 totaled $14,531 compared to $12,689 for the same period in 2001. This was an increase of $1,842, or 14.5 percent. Salaries and benefits increased $915, or 15.7 percent compared to the first nine months of 2001. Occupancy expense increased $98, equipment expense increased $99, computer processing expense increased by $93 and professional fees increased $87 compared to last year. All of these changes are largely attributed to the acquisition of ICBC. Income tax expense for the first nine months of 2002 totaled $2,218 compared to $1,482 for the first nine months of 2001. This was an increase of $736, or 49.7 percent. The increase in federal income taxes is a result of increased income before taxes. The effective tax rates for the nine-month periods ended September 30, 2002 and September 30, 2001, were 29.1% and 27.8% respectively. The primary reasons for the increase in the effective tax rate were a decrease in nontaxable securities and interest income, and the nondeductability of the purchase accounting adjustments in the ICBC acquisition. Page 22 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Three Months Ended September 30, 2002 and 2001 Net income for the three months ended September 30, 2002 was $2,072 or $.41 per common share compared to $1,504, or $.37 per common share for the same period in 2001. This was an increase of $568, or 37.8 percent. Some of the reasons for the changes are explained below. Total interest income for the third quarter of 2002 increased $705, or 7.9 percent compared to the same period in 2001. Interest on fees and loans increased $721, or 10.0 percent compared to the same period in 2001. This increase is mainly due to increased loan volume associated with the acquisition of ICBC. The average rate on earning assets on a tax equivalent basis for the third quarter of 2002 was 6.24 percent and 7.26 percent for the same period of 2001. The increase in volume more than offset the decrease in yield. Total interest expense for the third quarter of 2002 decreased $852, or 22.0 percent compared to the same period of 2001. The average rate on interest-bearing liabilities for the third quarter of 2002 was 2.50 percent compared to 3.71 percent for the same period of 2001. The 121 basis point decrease in average rate offset any increase in interest expense related to additional volume from the ICBC purchase and additional volume related to growth. The net interest margin on a tax equivalent basis was 4.33 percent for the three-month period ended September 30, 2002 and 4.34 percent for the same period ended September 30, 2001. Noninterest income for the third quarter of 2002 totaled $1,837, compared to $1,422 for the same period of 2001, an increase of $415. The Banks introduced new deposit products which generated $185 of additional fee income for the quarter. Other service charges increased $153 compared to the third quarter 2001, with the majority of the increases resulting from the acquisition of ICBC. Other operating income increased $140, including $64 in Trust income and $62 in commission on origination of wholesale mortgages for outside firms. Noninterest expense for the quarter ended September 30, 2002 totaled $5,157 compared to $4,308 for the same period in 2001. This was an increase of $849, or 19.7 percent. Salaries and benefits increased $405, or 21.3 percent compared to the third quarter of 2001. Occupancy expense increased $61, equipment expense increased $18, and computer processing expense increased by $47 compared to the third quarter last year. All of these changes are largely attributed to the acquisition of ICBC. Income tax expense for the third quarter totaled $983 compared to $531 for the same period in 2001. This was an increase of $452, or 85.1 percent. The effective tax rate was 32.2% for the three-month period ended September 30, 2002, and 26.1% for the three-month period ended September 30, 2001. The provision for income taxes increased during the third quarter 2002 based on management's estimate of the Corporation's year-end effective tax rate. Page 23 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Capital Resources Shareholders' equity totaled $73,619, at September 30, 2002 compared to $48,727 at December 31, 2001. All of the capital ratios exceed the regulatory minimum guidelines as identified in the following table:
To Be Well Capitalized Under Prompt For Capital Corrective Corporation Ratios Adequacy Action 9/30/02 12/31/01 Purposes Provisions ------- -------- -------- ---------- Tier I Risk Based Capital 12.8% 14.7% 4.0% 6.0% Total Risk Based Capital 14.0% 16.0% 8.0% 10.0% Leverage Ratio 8.3% 9.1% 4.0% 5.0%
The Corporation paid a cash dividend of $.19 per common share on February 1, 2002, and $.25 per common share on both May 1, 2002 and August 1, 2002 compared to $.18 per common share each on February 1, 2001, May 1, 2001, and August 1, 2001. 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 $50,931 and the Banks have additional borrowing availability at the Federal Home Loan Bank of Cincinnati of $80,890 at September 30, 2002. Finally, 99.9% of the Corporation's security portfolio has been classified as available for sale, which provides additional liquidity. Page 24 First Citizens Banc Corp Quantitative and Qualitative Disclosures about Market Risk Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- 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. 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 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 position. One strategy is to originate variable rate loans tied to market indices. Such loans reprice as the underlying market index changes. Currently, approximately 62.7 percent of the Corporation's loan portfolio reprices on at least an annual basis. The Corporation's usual practice is to invest excess funds in federal funds that mature and reprice daily. The following table provides information about the Corporation's financial instruments that are sensitive to changes in interest rates as of September 30, 2002 and December 31, 2001, based on certain prepayment and account decay assumptions that management believes are reasonable. The Corporation had no derivative financial instruments or trading portfolio as of September 30, 2002 or December 31, 2001. Page 25 First Citizens Banc Corp Quantitative and Qualitative Disclosures about Market Risk Form 10-Q (Amounts in thousands, except share data) - --------------------------------------------------------------------------------
Net Portfolio Value September 30, 2002 December 31, 2001 ----------------------------------- ----------------------------- Change in Dollar Dollar Percent Dollar Dollar Percent Rates Amount Change Change Amount Change Change ----- ------ ------ ------ ------ ------ ------ +400 bp 54,231 (17,789) -25% 33,305 (18,807) -36% +300 bp 58,218 (13,802) -19% 37,548 (14,564) -28% +200 bp 62,698 (9,322) -13% 42,491 (9,621) -18% +100 bp 68,337 (3,683) -5% 47,743 (4,369) -8% Base 72,020 - - 52,112 - - - -100 bp 75,986 3,966 6% 56,594 4,482 9%
The reduction in the relative change in net portfolio value from 2001 to 2002, given the assumed immediate change in interest rates is primarily a result of two factors. First, long-term interest rates have decreased only slightly during 2002. The Corporation has seen an increase in the base level of net portfolio value due to a slight increase in the fair value of loans and investments, as well as a decrease in the fair value of certificates of deposits. In addition, the majority of new loans originated in 2002 have interest rate adjustment features, which lessens the impact of future rate changes. Page 26 First Citizens Banc Corp Controls and Procedures Disclosures Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- ITEM 4. Controls and Procedures Disclosure Within the 90-day period prior to the filing date of this report, an evaluation was carried out under the supervision and with the participation of First Citizens Banc Corp's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are, to the best of their knowledge, effective to ensure that information required to be disclosed by First Citizens Banc Corp in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that there were no significant changes in First Citizens Banc Corp's internal control or in other factors that could significantly affect its internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. Page 27 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. 99 - Safe Harbor under the Private Securities Litigation Reform Act of 1995. (B) EXHIBIT NO. 99.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (C) EXHIBIT NO. 99.2 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (D) REPORTS ON FORM 8-K - None Page 28 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 November 14, 2002 - ------------------------------------ ----------------- David A. Voight Date President /s/ James O. Miller November 14, 2002 - ------------------------------------ ----------------- James O. Miller Date Executive Vice President Page 29 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS FOR QUARTERLY REPORT ON FORM 10-Q I, David A. Voight, certify that: 1) I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp; 2) Based on my knowledge, this quarterly 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 quarterly report; 3) Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report; 4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a). designed such disclosure controls and procedures 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 quarterly report is being prepared; b). evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c). presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a). all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b). any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6) The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Signature and Title: /s/ David A. Voight, Chief Executive Officer Date: November 14, 2002 Page 30 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS FOR QUARTERLY REPORT ON FORM 10-Q I, Todd A. Michel, certify that: 1) I have reviewed this quarterly report on Form 10-Q of First Citizens Banc Corp; 2) Based on my knowledge, this quarterly 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 quarterly report; 3) Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report; 4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a). designed such disclosure controls and procedures 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 quarterly report is being prepared; b). evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c). presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): d). all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and e). any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6) The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Signature and Title: /s/ Todd A. Michel, Chief Financial Officer Date: November 14, 2002 Page 31 First Citizens Banc Corp Index to Exhibits Form 10-Q - --------------------------------------------------------------------------------
Exhibit Number Description Page Number - ------ ----------- ----------- 99 Safe Harbor Under the Private Securities Incorporated by reference to Exhibit 99 to Annual Litigation Reform Act of 1995 Report for the Year Ended December 31, 1999 filed by the registrant on March 24, 2000. 99.1 Certification pursuant to 18 U.S.C. 33 Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification pursuant to 18 U.S.C. 34 Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Page 32 EX-99.1 3 l96642aexv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of First Citizens Banc Corp (the "Corporation") on Form 10-Q for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David A. Voight, Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (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/ David A. Voight David A. Voight Chief Executive Officer November 14, 2002 Page 33 EX-99.2 4 l96642aexv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of First Citizens Banc Corp (the "Corporation") on Form 10-Q for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Todd A. Michel, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted purSuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (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 Todd A. Michel Chief Financial Officer November 14, 2002 Page 34 -----END PRIVACY-ENHANCED MESSAGE-----