-----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, DDsT1fCyt+G64uLVdan7iiu9okW8XYdG1bgzVDA6ItEtATzJKd4unP9ZW/26WTMx xb3ADCzukJs8kK+nKGhTgQ== 0000950152-03-007695.txt : 20030814 0000950152-03-007695.hdr.sgml : 20030814 20030814102827 ACCESSION NUMBER: 0000950152-03-007695 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 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: 03843908 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 l01988ae10vq.txt FIRST CITIZENS BANC CORP 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:...................................June 30, 2003 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. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of Exchange Act). Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value Outstanding at August 12, 2003 5,033,203 common shares FIRST CITIZENS BANC CORP Index PART I. Financial Information ITEM 1. Financial Statements: Consolidated Balance Sheets (unaudited) June 30, 2003 and December 31, 2002..........................................................3 Consolidated Statements of Income (unaudited) Three and six months ended June 30, 2003 and 2002............................................4 Consolidated Statements of Comprehensive Income (unaudited) Three and six months ended June 30, 2003 and 2002............................................5 Condensed Consolidated Statement of Shareholders' Equity (unaudited) Six months ended June 30, 2003 and 2002......................................................6 Condensed Consolidated Statement of Cash Flows (unaudited) Six months ended June 30, 2003 and 2002......................................................7 Notes to Interim Consolidated Financial Statements (unaudited)................................8-17 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................................18-24 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk...................................24-25 ITEM 4. Controls and Procedures......................................................................25-26 PART II. Other Information ITEM 1. Legal Proceedings...............................................................................27 ITEM 2. Changes in Securities and Use of Proceeds.......................................................27 ITEM 3. Defaults upon Senior Securities.................................................................27 ITEM 4. Submission of Matters to a Vote of Security Holders..........................................27-28 ITEM 5. Other Information...............................................................................28 ITEM 6. Exhibits and Reports on Form 8-K................................................................28 Signatures .............................................................................................29
FIRST CITIZENS BANC CORP Consolidated Balance Sheets (Unaudited) (In thousands, except share data)
June 30, December 31, 2003 2002 --------- --------- ASSETS Cash and due from financial institutions $ 26,917 $ 23,797 Federal funds sold - 12,700 Securities available for sale 137,930 155,168 Securities held to maturity (Fair value of $31 in 2003 and $44 in 2002) 30 42 Loans held for sale 3,064 1,390 Loans, net 436,829 415,682 FHLB, FRB and GLBB stock 7,062 6,752 Premises and equipment, net 8,584 8,219 Goodwill 15,052 15,052 Core deposit and other intangibles 2,764 3,000 Other assets 7,882 9,832 --------- --------- Total assets $ 646,114 $ 651,634 ========= ========= LIABILITIES Deposits Noninterest-bearing $ 71,205 $ 70,527 Interest-bearing 452,472 469,372 --------- --------- Total deposits 523,677 539,899 Federal Home Loan Bank advances - 183 Securities sold under agreements to repurchase 12,935 13,509 U. S. Treasury interest-bearing demand note payable 3,183 5,000 Federal funds purchased 8,530 - Notes payable 10,000 13,000 Trust preferred securities 12,500 5,000 Accrued expenses and other liabilities 2,800 3,354 --------- --------- Total liabilities 573,625 579,945 SHAREHOLDERS' EQUITY Common stock, no par value, 10,000,000 shares authorized, 5,326,441 shares issued 47,370 47,370 Retained earnings 30,524 29,588 Treasury stock, 293,238 shares at cost (7,241) (7,241) Accumulated other comprehensive income 1,836 1,972 --------- --------- Total shareholders' equity 72,489 71,689 --------- --------- Total liabilities and shareholders' equity $ 646,114 $ 651,634 ========= =========
See notes to interim consolidated financial statements Page 3 FIRST CITIZENS BANC CORP Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
Three months ended Six months ended June 30, June 30, ---------------------------- ---------------------------- 2003 2002 2003 2002 Interest and dividend income Loans, including fees $ 7,092 $ 7,940 $ 14,133 $ 14,197 Taxable securities 972 1,024 2,093 2,020 Tax-exempt securities 392 404 778 788 Federal funds sold 33 134 78 201 Other 1 4 2 10 ---------- ---------- ---------- ---------- Total interest income 8,490 9,506 17,084 17,216 Interest expense Deposits 1,912 2,977 4,041 5,569 Federal Home Loan Bank Advances - 8 2 19 Trust preferred securities 152 71 214 71 Other 122 178 263 349 ---------- ---------- ---------- ---------- Total interest expense 2,186 3,234 4,520 6,008 ---------- ---------- ---------- ---------- Net interest income 6,304 6,272 12,564 11,208 Provision for loan losses 255 181 470 386 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 6,049 6,091 12,094 10,822 Noninterest income Computer center data processing fees 307 288 595 606 Service charges 776 718 1,538 1,324 Net gain on sale/calls of securities 2 2 291 2 Net gain on sale of loans 196 56 350 99 Other 696 635 1,343 1,076 ---------- ---------- ---------- ---------- Total noninterest income 1,977 1,699 4,117 3,107 Noninterest expense Salaries, wages and benefits 2,661 2,428 5,231 4,428 Net occupancy expense 305 288 627 506 Equipment expense 318 329 611 603 Contracted data processing 231 221 468 414 State franchise tax 198 193 410 316 Professional services 197 196 483 379 Amortization of intangible assets 128 98 236 129 Other operating expenses 1,597 1,450 3,136 2,599 ---------- ---------- ---------- ---------- Total noninterest expense 5,635 5,203 11,202 9,374 ---------- ---------- ---------- ---------- Income before taxes 2,391 2,587 5,009 4,555 Income tax expense 688 686 1,456 1,235 ---------- ---------- ---------- ---------- Net Income $ 1,703 $ 1,901 $ 3,553 $ 3,320 ========== ========== ========== ========== Earnings per share, basic $ 0.34 $ 0.37 $ 0.71 $ 0.72 Weighted average basic common shares 5,033,203 5,089,293 5,033,203 4,586,306 Earnings per share, diluted $ 0.34 $ 0.37 $ 0.70 $ 0.72 Weighted average diluted common shares 5,043,624 5,089,293 5,042,427 4,586,306
See notes to interim consolidated financial statements Page 4 FIRST CITIZENS BANC CORP Consolidated Comprehensive Income Statements (Unaudited) (In thousands)
Three months ended Six months ended June 30, June 30, 2003 2002 2003 2002 ---- ---- ---- ---- Net income $ 1,703 $ 1,901 $ 3,553 $ 3,320 Unrealized holding gains and (losses) on available for sale securities 548 1,150 84 677 Reclassification adjustment for (gains) and losses later recognized in income (2) (2) (291) (2) ------- ------- ------- ------- Net unrealized gains and (losses) 546 1,148 (207) 675 Tax effect (185) (391) 71 (230) ------- ------- ------- ------- Total other comprehensive income (loss) 361 757 (136) 445 ------- ------- ------- ------- Comprehensive income $ 2,064 $ 2,658 $ 3,417 $ 3,765 ======= ======= ======= =======
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/(Loss) Equity ---------- ---------- ---------- ---------- ---------- ---------- Balance, January 1, 2002 4,082,619 $ 23,258 $ 28,844 $ (4,919) $ 1,544 $ 48,727 Net income - - 3,320 - - 3,320 Change in unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects - - - - 445 445 Issuance of common shares for merger, net of issuance costs 1,063,040 24,112 - - - 24,112 Purchase of treasury stock, at cost (112,456) - - (2,322) - (2,322) Cash dividends ($.44 per share) - - (2,057) - - (2,057) ---------- ---------- ---------- ---------- ---------- ---------- Balance, June 30, 2002 5,033,203 47,370 30,107 (7,241) 1,989 72,225 ========== ========== ========== ========== ========== ========== Balance, January 1, 2003 5,033,203 $ 47,370 $ 29,588 $ (7,241) $ 1,972 $ 71,689 Net income - - 3,553 - - 3,553 Change in unrealized gain (loss) on securities available for sale, net of reclassifications and tax effects - - - - (136) (136) Cash dividends ($.52 per share) - - (2,617) - - (2,617) ---------- ---------- ---------- ---------- ---------- ---------- Balance, June 30, 2003 5,033,203 47,370 30,524 (7,241) 1,836 72,489 ========== ========== ========== ========== ========== ==========
See notes to interim consolidated financial statements Page 6 FIRST CITIZENS BANC CORP Condensed Consolidated Statement of Cash Flows (Unaudited) (In thousands)
Six months ended June 30, ------------------------- 2003 2002 -------- -------- Net cash from operating activities $ 5,216 $ 4,637 Cash flows from investing activities Maturities and calls of securities, held-to-maturity 12 15 Maturities and calls of securities, available-for-sale 37,182 32,764 Purchases of securities, available-for-sale (27,787) (31,873) Proceeds from sale of securities, available-for-sale 7,124 4 Purchases of FRB Stock (195) - Loans made to customers, net of principal collected (21,682) 6,324 Change in federal funds sold 12,700 (24,020) Proceeds from sale of property and equipment 5 1 Net purchases of office premises and equipment (837) (291) -------- -------- Net cash from investing activities 6,522 (17,076) Cash flows from financing activities Net cash received in acquisition - 3,083 Repayment of FHLB borrowings (183) (308) Net change in deposits (16,222) 11,195 Change in securities sold under agreements to repurchase (574) (1,785) Change in U. S. Treasury interest-bearing demand note payable (1,817) 1,003 Changes in notes payable (3,000) - Changes in fed funds purchased 8,530 Purchases of treasury stock - (2,322) Net proceeds from obligated mandatorily redeemable capital securities 7,265 4,849 Cash dividends paid (2,617) (2,057) -------- -------- Net cash from financing activities (8,618) 13,658 -------- -------- Net change in cash and due from banks 3,120 1,219 Cash and due from banks at beginning of period 23,797 19,227 -------- -------- Cash and due from banks at end of period $ 26,917 $ 20,446 ======== ======== Cash paid during the period for: Interest $ 4,836 $ 5,870 Income taxes $ 1,373 $ 1,148
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 it wholly-owned subsidiaries: The Citizens Banking Company (Citizens), 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, Inc. (Title Agency), First Citizens Insurance Agency, Inc. (Insurance Agency), First Citizens Statutory Trust I (Trust I), and First Citizens Statutory Trust II (Trust II) together referred to as the Corporation. Citizens and Farmers are collectively referred to as the Banks. As of January 2, 2003, another wholly owned subsidiary, The Castalia Banking Company, was merged into Citizens. 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 June 30, 2003 and its results of operations and changes in cash flows for the periods ended June 30, 2003 and 2002 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 June 30, 2003 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 2002 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, Richland 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 2003, SCC provided item processing for nine financial institutions in addition to the two subsidiary banks. SCC accounted for 2.8% of the Corporation's total revenues through June 30, 2003. Reynolds provides real estate appraisal services for lending purposes to subsidiary banks and other financial institutions. Reynolds accounted for 1.1% of total Corporation 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 3.8% of total Corporation revenues. First Citizens Title Insurance Agency Inc. was formed to provide customers with a seamless mortgage product with improved service. Commission revenue was less than 1 percent of Page 8 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- total revenue for the period ended June 30, 2003. First Citizens Insurance Agency Inc. was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue is less than 1 percent of total revenue for the period ended June 30, 2003. First Citizens Statutory Trust I, formed in 2002, and First Citizens Statutory Trust II, formed in March 2003, are special purpose entities for the purpose of issuing floating rate obligated mandatorily redeemable capital securities as part of a pooled transaction. Trust I was a $5,000, 5.59% issuance while Trust II was a $7,500, 4.41% issuance. Management considers the Corporation to operate primarily in one reportable segment, banking. 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. Page 9 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- On December 31, 2002, SFAS No. 148, "Accounting for Stock-Based Compensation" was issued and amended SFAS No. 123. Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of SFAS No. 148. No stock options were granted prior to July 2, 2002. As a result, pro forma expense disclosures for the three and six months ended June 30, 2002 are not applicable.
Three months ended Six months ended June 30, 2003 June 30, 2003 ------------------ ---------------- Net income as reported $ 1,703 $ 3,553 Deduct: Stock-based compensation expense determined under fair value based method 14 22 --------- --------- Pro forma net income 1,689 3,531 ========= ========= Basic earnings per share as reported $ 0.34 $ 0.71 Pro forma basic earnings per share 0.34 0.70 Diluted earnings per share as reported $ 0.34 $ 0.70 Pro forma diluted earnings per share 0.34 0.70
The Corporation granted an additional 16,000 options at an exercise price of $35 on April 15, 2003. The following weighted-average assumptions were used to compute the pro forma effects of the April 15, 2003 grant. The options vest three years after the date of grant.
2003 ---- Risk-free interest rate 3.98% Expected option life 10 years Expected stock price volatility 22.62% Dividend yield 2.97% Calculated fair value $ 8.23
The Financial Accounting Standards Board (FASB) recently issued two new accounting standards, Statement 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, and Statement 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, both of which generally become effective in the Page 10 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- quarter beginning July 1, 2003. Management determined that, upon adopting the new standards, they will not materially affect the Company's operating results or financial condition. (2) Securities Securities at June 30, 2003 and December 31, 2002 were as follows:
June 30, 2003 Gross Gross Unrealized Unrealized AVAILABLE FOR SALE Fair Value Gains Losses ---------------- --------------- --------------- U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 80,900 $ 1,270 $ (18) Corporate Bonds 1,888 23 (2) Obligations of states and political subdivisions 43,093 2,033 (7) Other securities, including mortgage-backed securities and equity securities 12,049 260 - -------- -------- -------- $137,930 $ 3,586 $ (27) ======== ======== ========
June 30, 2003 Gross Gross Amortized Unrecognized Unrecognized HELD TO MATURITY Cost Gains Losses Fair Value ---------- ----------- ---------- ---------- Mortgage-backed securities $30 $ 1 $ - $31 === === === ===
Page 11 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - --------------------------------------------------------------------------------
December 31, 2002 Gross Gross Unrealized Unrealized AVAILABLE FOR SALE Fair Value Gains Losses ---------- ---------- ---------- U.S. Treasury securities and obligations of U.S. government corporations and agencies $102,780 $ 1,822 $ - Corporate Bonds 2,475 45 - Obligations of states and political subdivisions 41,458 1,688 (36) Other securities, including mortgage-backed securities and equity securities 8,455 247 - -------- -------- -------- $155,168 $ 3,802 $ (36) ======== ======== ========
December 31, 2002 Gross Gross Amortized Unrecognized Unrecognized HELD TO MATURITY Cost Gains Losses Fair Value ---------- ----------- ---------- ---------- Mortgage-backed securities $ 42 $ 2 $ - $ 44 ===== ==== ==== =====
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 June 30, 2003, 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 $ 66,398 $ 67,152 Due after one year through five years 47,955 49,953 Due after five years through ten years 6,046 6,549 Due after ten years 2,183 2,227 Mortgage-backed securities 11,199 11,355 Equity securities 590 694 -------- -------- Total securities available for sale $134,371 $137,930 ======== ========
Estimated Fair HELD TO MATURITY Amortized Cost Value -------------- -------------- Mortgage-backed securities $ 30 $ 31 ===== =====
Proceeds from sales of securities, gross realized gains and gross realized losses were as follows:
Three Months Ended Six Months Ended June 30, June 30, ------------------ -------------------- 2003 2002 2003 2002 ------ ------ ------ ------ Proceeds $ - $ - $7,124 $ 4 Gross gains - - 289 - Gross losses - - - - Security gains due to calls prior to maturity 2 2 2 2
Securities with a carrying value of approximately $98,301 and $102,072 were pledged as of June 30, 2003 and December 31, 2002, 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 June 30, 2003 and December 31, 2002 were as follows:
6/30/2003 12/31/2002 --------- ---------- Commercial and Agriculture $ 50,822 $ 46,495 Commercial real estate 149,478 116,674 Real Estate - mortgage 194,656 210,931 Real Estate - construction 14,352 13,179 Consumer 28,017 30,278 Credit card and other 3,129 3,700 Leases 2,775 1,302 --------- --------- Total loans 443,229 422,559 Allowance for loan losses (5,857) (6,325) Deferred loan fees (538) (546) Unearned interest (5) (6) --------- --------- Net loans $ 436,829 $ 415,682 ========= =========
(4) Allowance for Loan Losses A summary of the activity in the allowance for loan losses was as follows:
Three Months Ended Six Months Ended June 30, June 30, ----------------------- ----------------------- 2003 2002 2003 2002 ------- ------- ------- ------- Balance beginning of period $ 5,970 $ 4,887 $ 6,325 $ 4,865 Balance from acquisition - 1,426 - 1,426 Loans charged-off (459) (215) (1,096) (513) Recoveries 91 80 158 195 Provision for loan losses 255 181 470 386 ------- ------- ------- ------- Balance June 30, $ 5,857 $ 6,359 $ 5,857 $ 6,359 ======= ======= ======= =======
Page 14 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Information regarding impaired loans was as follows for the three and six months ended June 30.
Three Months Six Months Ended June 30, Ended June 30, -------------------- -------------------- 2003 2002 2003 2002 ------ ------ ------ ------ Average investment in impaired loans $5,929 $6,150 $5,952 $4,631 Interest income recognized on impaired loans including interest income recognized on cash basis 89 97 187 151 Interest income recognized on impaired loans on cash basis 89 97 187 151
Information regarding impaired loans at June 30, 2003 and December 31, 2002 was as follows:
6/30/03 12/31/02 ------- -------- Balance impaired loans $5,687 $5,999 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 $5,687 $5,999 ====== ====== Portion of allowance for loan losses allocated to the impaired loan balance $ 870 $1,033 ====== ======
Nonperforming loans were as follows.
6/30/03 12/31/02 ------- -------- Loans past due over 90 days still on accrual $3,458 $2,414 Nonaccrual $3,043 $3,468
Nonperforming loans include both smaller balance homogeneous loans, such as residential mortgage and consumer loans, that are collectively evaluated for impairment and individual classified impaired loans. 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 June 30, 2003 and December 31, 2002.
Contract Amount --------------- 6/30/2003 12/31/2002 --------- ---------- Commitment to extend credit: Lines of credit $57,703 $53,175 Construction loans 4,163 3,292 Credit cards 4,952 6,127 Overdraft protection 6,602 5,258 Letters of credit 3,402 547 ------- ------- $76,822 $68,399 ======= =======
Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included above totaled $6,936 at June 30, 2003 and had interest rates ranging from 3.75% to 8.00% with maturities extended up to 30 years. Fixed rate loan commitments included above totaled $8,078 at December 31, 2002 with interest rates ranging from 3.25% to 10.50% 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 June 30, 2003 and December 31, 2002 approximated $7,990 and $6,843. (6) Trust Preferred Securities FCBC issued $5,000 of 5.59% floating rate trust preferred securities in March 2002, and $7,500 of 4.41% floating rate trust preferred securities in March 2003 through special purpose subsidiaries, each as part of a pooled transaction. As of June 30, 2003, the rate on the Trust I Page 16 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- issuance was 4.89% while the rate on the Trust II issuance was 4.41%. The Corporation's trust preferred securities may be redeemed by the Corporation, in whole but not in part, prior to March 26, 2007 for Trust I and March 26, 2008 for Trust II, subject to the occurrence and continuation of a special event, at a redemption price of 107.50% of the face value of the capital securities. On or after March 26, 2007 and March 26, 2008, the trust preferred securities may be redeemed at face value. The Corporation's trust preferred securities are considered Tier II capital for regulatory reporting purposes. Debt issuance costs of $151 and $235 are being amortized over the term of the securities. Page 17 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 June 30, 2003, compared to December 31, 2002 and the consolidated results of operations for the three month and six month periods ending June 30, 2003 compared to the same periods in 2002. 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 June 30, 2003 totaled $646,114 compared to $651,634 at December 31, 2002. This was a decrease of $5,520, or 0.8 percent. Within the structure of the assets, net loans have increased $21,147, or 5.1 percent since December 31, 2002. The commercial real estate portfolio increased by $32,804 and the commercial and agriculture portfolio increased $4,327, while residential real estate and consumer loans decreased by $16,275 and $2,261 respectively. This is reflective of a shift in focus by the Corporation 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 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) - -------------------------------------------------------------------------------- has generally sold these loans on the secondary market. This has allowed for additional funding to be used for commercial lending. This shift in focus has also helped improve the yield the Corporation earned on its loan portfolio, as well as reducing the interest rate risk on the loan portfolio. Additionally, the Corporation has entered into new markets this year. These markets have allowed the Corporation to continue to grow the commercial loan portfolio. 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 $13,443 at June 30, 2003 compared to $13,728 at December 31, 2002. Loans held-for-sale increased $1,674, or 120.4 percent from December 31, 2002, as customers continued the recent trend of refinancing real estate mortgages. At June 30, 2003, the net loan to deposit ratio was 83.5 percent compared to 77.0 percent at December 31, 2002. For the six months of operations in 2003, $470 was placed into the allowance for loan losses from earnings compared to $386 for the same period of 2002. Impaired loans have decreased slightly since year end. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine provisions to the reserve. Net charge-offs for the first six months of 2003 were $938, compared to $318 for the same period of 2002. Independent Community Bank Corp. (ICBC), which was acquired in April 2002, already had specific reserves in place for its impaired loans at the time of the merger; therefore, management felt the reserve was adequate with no additional provision for these loans. The June 30, 2003 allowance for loan losses as a percent of total loans was 1.32 percent compared to 1.50 percent at December 31, 2002. At June 30, 2003, available for sale securities totaled $137,930 compared to $155,168 at December 31, 2002, a decrease of $17,238. The decrease in securities was due to paydowns, calls, maturities and sales of its portfolio. Funds not used to replace these securities were used to fund other assets, such as loans. Bank stocks increased $310 from December 31, 2002, due to a purchase of $195 in FRB stock and $115 in FHLB stock dividends. Office premises and equipment have increased $365 and intangible assets have decreased $236 since December 31, 2002. The increase in office premises and equipment is attributed to new purchases of $837, depreciation of $467, and disposals of $5. Intangible assets decreased due to amortization of the core deposit premium and noncompete agreement. Total deposits at June 30, 2003 decreased $16,222 from year-end 2002. Noninterest-bearing deposits, representing demand deposit balances, increased $678 from year-end 2002. Interest-bearing deposits, including savings and time deposits, decreased $16,900 from year-end 2002. The decline in interest-bearing deposits is primarily attributable to a decrease in public fund entity balances. These balances fluctuate throughout the year. The year to date 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) - -------------------------------------------------------------------------------- average balance of total deposits increased $70,294 compared to the average balance of the same period 2002. This increase in average balance was primarily due to the merger of ICBC in April 2002. ICBC's deposit balances totaled $111,968 at March 31, 2002. The year to date 2003 average balance of savings deposits has increased $15,136 compared to the average balance of the same period for 2002. The current average rate of these deposits is 0.50 percent compared to 1.74 percent in 2002. The year to date 2003 average balance of time certificates has increased $3,436 compared to the average balance for the same period for 2002. Additionally, the year to date 2003 average balances compared to the same period in 2002 of Demand Deposits increased $17,911, while N.O.W. accounts increased $1,558, and Money Market Savings increased $32,253. Total borrowed funds have increased $10,456 from December 31, 2002 to June 30, 2003. The Corporation has notes outstanding with other financial institutions totaling $10,000 at June 30, 2003 compared to $13,000 at December 31, 2002. These notes were primarily used to fund the loan growth at Mr. Money. Additionally, the Corporation increased its Obligated Mandatorily Redeemable Capital Securities by $7,500. This security, as well as the security of $5,000 in 2002, is a 30-year issuance. These issuances were used to pay down a note used for funding Mr. Money loans and stock repurchases. Additionally, a pool of low cost funds was created at First Citizens which may be used for funding Mr. Money loan growth, continued stock repurchases, as well as any other opportunities which may present themselves in the future. Federal Home Loan Bank borrowings have decreased $183 as a result of scheduled pay downs. In May, the last of the FHLB borrowings were paid off. Securities sold under agreements to repurchase, which tend to fluctuate, have decreased $573, U.S. Treasury Tax Demand Notes have decreased $1,817, and Federal funds purchased increased $8,530. The increase in borrowing partially offset the decline in deposits. Shareholders' equity at June 30, 2003 was $72,489, or 11.2 percent of total assets, compared to $71,689 at December 31, 2002, or 11.0 percent of total assets. The change in shareholders' equity is made up of earnings of $3,553, less dividends paid of $2,617 and the decrease in the market value of securities available for sale, net of tax, of $136. The Corporation paid a cash dividend on February 1, 2003 and May 1, 2003 at a rate of $.26 per share. Total outstanding shares at June 30, 2003 were 5,033,203. Results of Operations - --------------------- Six Months Ended June 30, 2003 and 2002 Net income for the six months ended June 30, 2003 was $3,553, or $.70 per diluted share compared to $3,320 or $.72 per diluted share for the same period in 2002. This was an increase of $233, or 7.0 percent. Some of the reasons for the changes are explained below. Total interest income for the first six months of 2003 decreased $132, or 0.8 percent compared 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) - -------------------------------------------------------------------------------- to the same period in 2002. The average rate on earning assets on a tax equivalent basis for the first six months of 2003 was 5.57 percent and 6.46 percent for the first six months of 2002. The decrease in yield is a reflection of the rate environment we continue to experience. Total interest expense for the first six months of 2003 has decreased by $1,488, or 24.8 percent compared to the same period of 2002. This decrease is mainly attributed to a decrease in interest on deposits of $1,528, a decrease in interest on FHLB borrowings of $17, a decrease in interest on other borrowings of $86, partially offset by an increase of $143 on Trust preferred securities. Interest on other borrowings decreased due to the continued decline in interest rates on the borrowings. Interest on FHLB borrowings is down due to balances borrowed being lower in 2003. The average rate on interest-bearing liabilities for the first six months of 2003 was 1.61 percent compared to 2.70 percent for the same period of 2002. The net interest margin on a tax equivalent basis was 4.38 percent for both the six months ended June 30, 2003 and June 30, 2002. Noninterest income for the first six months of 2003 totaled $4,117, compared to $3,107 for the same period of 2002, an increase of $1,010. Service charges on deposit accounts increased $214 in 2003 compared to the same period in 2002. Check Protect generated an additional $171 in service charge income in the first six months of the year 2003 compared to the same period in 2002, due to the additional customer base created through the ICBC merger. Revenue from computer operations decreased $11 and other operating income increased $267. Within other operating income, Citizens increased its commission from the origination of wholesale mortgages in 2003 to $286 compared to the first six months in 2002. Additionally, Citizens, through the merger with ICBC, increased Trust income $70 in 2003 compared to the 2002. Gain on the sale of loans increased $251 as loan customers continued to refinance into fixed rate mortgages, which the Corporation typically sells on the secondary market. Gains on sale of securities increased $289 due to sales at Citizens. In the current low interest rate environment, Citizens was able to sell certain securities at a gain and reinvest the proceeds back into the investment portfolio without a significant change in the book yield or weighted average maturity of the portfolio. Noninterest expense for the six months ended June 30, 2003 totaled $11,202 compared to $9,374 for the same period in 2002. This was an increase of $1,828, or 19.5 percent. Salaries and benefits increased $803, or 18.1 percent compared to the first six months of 2002. This increase is attributed to the addition of new Citizens branches created by the merger, as well as Farmers and Mr. Money expanding their offices to new areas in 2003. Occupancy expense increased $121 compared to 2002 due to the same reasons salaries and benefits increased. Equipment expense increased $8 and computer processing expense increased by $54. State franchise taxes increased $94 compared to the first six months in 2002. This increase was due to the addition of ICBC, the addition of the Title Agency and the Insurance Agency, and two refunds received by FCBC in 2002. Professional fees increased $104 and other operating expenses increased $537 compared to last year. The increase in other operating expenses, such as a $28 increase in stationery and supplies, was primarily due to the addition of ICBC and the expenses associated with operating additional branches from the merger and the 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) - -------------------------------------------------------------------------------- additional branches added with Farmers and Mr. Money expanding their offices. The Corporation continues to aggressively market its affiliates, as exhibited by a $34 increase in advertising expense through the first six months of the year. With continuing to expand into new markets, the Corporation wants to ensure that the new markets know that we have the ability to serve their financial needs. Income tax expense for the first six months of 2003 totaled $1,456 compared to $1,235 for the first six months of 2002. This was an increase of $221, or 17.9 percent. The increase in the federal income taxes is a result of the increase in total income before taxes of $454 The effective tax rates were comparable for the six-month periods ended June 30, 2003 and June 30, 2002, at 29.1% and 27.1%, respectively. Three Months Ended June 30, 2003 and 2002 Net income for the three months ended June 30, 2003 was $1,703 or $.34 per diluted share compared to $1,901, or $.37 per diluted share for the same period in 2002. This was a decrease of $198, or 10.4 percent. Some of the reasons for the changes are explained below. Total interest income for the second quarter of 2003 decreased $1,016, or 10.7 percent compared to the same period in 2002. Interest on fees and loans decreased $848, or 10.7 percent compared to the same period in 2002. This decrease is mainly due to the continued decline in rate of the loan portfolio. The average rate on earning assets on a tax equivalent basis for the second quarter of 2003 was 5.59 percent and 6.40 percent for the same period of 2002. Total interest expense for the second quarter of 2003 decreased $1,048, or 32.4 percent compared to the same period of 2002. The average rate on interest-bearing liabilities for the second quarter of 2003 was 1.66 percent compared to 2.58 percent for the same period of 2002. The net interest margin on a tax equivalent basis was 4.42 percent for the three-month periods ended June 30, 2003 and 2002. Noninterest income for the second quarter of 2003 totaled $1,977, compared to $1,699 for the same period of 2002, an increase of $278. Service charge fees increased $58 in the second quarter 2003 compared to the same period in 2002. Check Protect generated an additional $63 in service charge income. Service fees and Check Protect grew primarily because to the additional customer base added through the merger of ICBC. Computer processing fees increased $19 compared to the second quarter 2002. Gains on sale of loans increased $140 as customers continued to refinance into fixed rate mortgages during the quarter. Other operating income increased $61, including $4 in Trust income and $135 in gain on wholesale mortgages. Noninterest expense for the quarter ended June 30, 2003 totaled $5,635 compared to $5,203 for the same period in 2002. This was an increase of $432, or 8.3 percent. Salaries and benefits increased $233, or 9.6 percent compared to the second quarter of 2002, due primarily 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) - -------------------------------------------------------------------------------- to Farmers and Mr. Money expanding their offices to new areas in 2003. Occupancy expense increased $17, equipment expense decreased $11, and computer processing expense increased by $10 compared to the second quarter last year. Other operating expenses increased $147 primarily due to the expenses related to operating the new branches opened in 2003. Income tax expense for the second quarter totaled $688 compared to $686 for the same period in 2002. This was an increase of $2, or 0.3 percent. The effective tax rates were comparable for the three-month periods ended June 30, 2003 and June 30, 2002, were 28.8% and 26.5%, respectively. Capital Resources - ----------------- Shareholders' equity totaled $72,489, at June 30, 2003 compared to $71,689 at December 31, 2002. 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 6/30/2003 12/31/02 Purposes Provisions ---------------- ---------------- ------------------- ------------------ Tier I Risk Based Capital 11.5% 12.5% 4.0% 6.0% Total Risk Based Capital 15.5% 14.9% 8.0% 10.0% Leverage Ratio 8.3% 8.0% 4.0% 5.0%
FCBC issued $5,000 of 5.59% floating rate trust preferred securities in March 2002 and $7,500 of 4.41% floating rate trust preferred securities in March 2003 through special purpose subsidiaries, each as part of a pooled transaction. The Corporation's trust preferred securities are considered Tier II capital for regulatory reporting purposes. The Corporation paid a cash dividend of $.26 per common share on February 1, 2003 and May 1, 2003 compared to $.19 per common share on February 1, 2002 and $.25 per common share May 1, 2002. 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 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) - -------------------------------------------------------------------------------- correspondent banks, maintain federal funds borrowing lines totaling $50,750 and the Banks have additional borrowing availability at the Federal Home Loan Bank of Cincinnati of $81,393 at June 30, 2003. Liquidity is also evidenced by all but $30 of its security portfolio being classified as available for sale. 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 60.7 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 June 30, 2003 and December 31, 2002, based on Page 24 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) - -------------------------------------------------------------------------------- certain prepayment and account decay assumptions that management believes are reasonable. The Corporation had no derivative financial instruments or trading portfolio as of June 30, 2003 or December 31, 2002. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. From a risk management perspective, the Corporation believes that repricing dates for adjustable-rate instruments, as opposed to expected maturity dates, may be a more relevant measure in analyzing the value of such instruments. The Corporation's borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates. Net Portfolio Value
June 30, 2003 December 31, 2002 -------------------------------------------- -------------------------------------------- Change in Dollar Dollar Percent Dollar Dollar Percent Rates Amount Change Change Amount Change Change - ---------------- -------------------------------------------- -------------------------------------------- +400 bp 50,393 (21,992) -30% 55,141 (20,038) -27% +300 bp 55,643 (16,742) -23% 60,093 (15,086) -20% +200bp 61,137 (11,248) -16% 64,806 (10,373) -14% +100bp 68,210 (4,175) -6% 70,702 (4,477) -6% Base 72,385 - - 75,179 - - -100bp 81,154 8,769 12% 79,921 4,742 6%
The relatively minor change in net portfolio value from December 31, 2002 to June 30, 2003, is primarily a result of two factors. First, long-term interest rates have decreased only slightly during 2003. 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. 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 Page 25 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) - -------------------------------------------------------------------------------- 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 26 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 First Citizens Banc Corp held its annual meeting on April 15, 2003, for the purpose of considering and voting on the following: 1.) To elect five Class III directors to serve terms of three years or until their successors are elected and qualified. 2.) To approve and adopt an amendment to the Corporation's Code of Regulations that would require advance notice of shareholder proposals. 3.) To approve and adopt an amendment to the Corporation's Code of Regulations that would describe the terms under which the Corporation would indemnify its directors, officers, and employees. 4.) To amend and restate the Corporation's Code of Regulations for the purpose of updating certain provisions so that they conform to Ohio law, and clarifying and correcting other provisions to eliminate inconsistencies and duplicative language. The summary of the voting of common shares outstanding was as follows:
Director Candidate For Withheld ------------------------ ------------ ------------ Blythe A. Friedley 4,206,796.71 50,541.97 Dean S. Lucal 4,191,559.62 65,779.06 W. Patrick Murray 4,210,723.71 46,614.97 Robert L. Ransom 4,210,237.62 47,101.06 Daniel J. White 4,167,164.47 90,174.20
The following directors' terms of office continued after the meeting: John L. Bacon, Robert L. Bordner, Mary Lee G. Close, Richard B. Fuller, H. Lowell Hoffman, M.D., George L. Mylander, Paul H. Phieffer, Leslie D.Stoneham, and David A. Voight Page 27 First Citizens Banc Corp Other Information Form 10-Q - -------------------------------------------------------------------------------- Approval and adoption of amendment for advance notice of shareholder proposals: - -------------------------------------------------------------------------------
For Against Abstain Delivered/Not Voted 3,217,262.59 110,454.29 30,468.80 899,153.00
Approval and adoption of amendment to describe how to indemnify directors, - -------------------------------------------------------------------------- officers, and employees: - ------------------------
For Against Abstain 4,145,651.78 74,824.44 36,862.46
Amending and restating code to clarify and correct provisions: - --------------------------------------------------------------
For Against Abstain Delivered/Not Voted 3,250,329.74 77,919.44 29,936.50 899,153.00
ITEM 5. OTHER INFORMATION None ITEM 6. (a) EXHIBIT NO. 3 (i) Articles of Incorporation, as amended, of First Citizens Banc Corp. (b) EXHIBIT NO. 3 (ii) Code of Regulations of First Citizens Banc Corp. (c) EXHIBIT NO. 4 Certificate for Registrant's Common Stock. (d) EXHIBIT NO. 23 Consent of Independent Accountants (e) EXHIBIT NO. 31.1 Certification of Chief Executive Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002. (f) EXHIBIT NO. 31.2 Certification of Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002. (g) EXHIBIT NO. 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (h) EXHIBIT NO. 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (i) EXHIBIT NO. 99 Safe Harbor under the Private Securities Litigation Reform Act of 1995. (j) 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 August 12, 2003 - ------------------------------------ --------------- David A. Voight Date President /s/ James O. Miller August 12, 2003 - ------------------------------------ --------------- James O. Miller Date Executive Vice President Page 29 First Citizens Banc Corp Index to Exhibits Form 10-Q - -------------------------------------------------------------------------------- EXHIBITS (3)(i) Articles of Incorporation, as amended, of First Citizens Banc Corp are incorporated by reference to First Citizens Banc Corp's Form 10-K for the year ended December 31, 2000, filed on March 24, 2001. (3)(ii) Code of Regulations of First Citizens Banc Corp is incorporated by reference to First Citizens Banc Corp's Form 10-K for the year ended December 31, 2000, filed on March 24, 2001. (4) Certificate for Registrant's Common Stock is incorporated by reference to First Citizens Banc Corp's Form 10-K for the year ended December 31, 2000, filed on March 24, 2001. (23) Consent of Independent Accountants is incorporated by reference to First Citizens Banc Corp's Form 10-K for the year ended December 31, 2002, filed on March 17, 2003. (31.1) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31.2) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32.1) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (32.2) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (99) Safe Harbor under private Securities Litigation Reform Act of 1995 is incorporated by reference to Exhibit 99 of First Citizens Banc Corp's Annual Report for the year ended December 31, 1999, filed on March 24, 2000. Page 30 EX-31.1 3 l01988aexv31w1.txt EX-31.1 CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.1 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 report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Signature and Title: /s/ David A. Voight, President, Chief Executive Officer --------------------------------------------------------- Date: August 12, 2003 -------------------------- Page 31 EX-31.2 4 l01988aexv31w2.txt EX-31.2 CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 31.2 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 report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Signature and Title: /s/ Todd A. Michel, Senior Vice President, Controller -------------------------------------------------------- Date: August 12, 2003 -------------------------- Page 32 EX-32.1 5 l01988aexv32w1.txt EX-32.1 CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 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 June 30, 2003, 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 August 12, 2003 Page 33 EX-32.2 6 l01988aexv32w2.txt EX-32.2 CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.2 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 June 30, 2003, 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 August 12, 2003 Page 34 -----END PRIVACY-ENHANCED MESSAGE-----