-----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, Qb9sE5TYxnI4X/JKnGMPCd4nrwAsyD2DocV99KFiDPZte8qbbf+Z8SlZ+LtKMHa9 ZljxmH1/HtfmvfdoQf+Kkw== 0000950152-97-007936.txt : 19971113 0000950152-97-007936.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950152-97-007936 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST CITIZENS BANC CORP /OH CENTRAL INDEX KEY: 0000944745 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341558688 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25980 FILM NUMBER: 97715941 BUSINESS ADDRESS: STREET 1: 100 EAST WATER ST STREET 2: P O BOX 5016 CITY: SANDUSKY STATE: OH ZIP: 44870 BUSINESS PHONE: 4196254121 MAIL ADDRESS: STREET 1: 100 EAST WATER ST STREET 2: P O BOX 5016 CITY: SANDUSKY STATE: OH ZIP: 44870 10-Q 1 FIRST CITIZENS BANC CORP 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended:..............................September 30, 1997 [ ] 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 issuers classes of common stock, as of the latest practicable date. Common Stock, no par value Outstanding at November 12, 1997 3,051,504 common shares 2 FIRST CITIZENS BANC CORP Index
PART I. Financial Information ITEM 1. Financial Statements:(Unaudited) Consolidated Balance Sheets September 30, 1997 and December 31, 1996.........................................3 Consolidated Statements of Income Three and nine months ended September 30, 1997 and 1996..........................4 Condensed Consolidated Statements of Shareholders' Equity Three and nine months ended September 30, 1997 and 1996..........................5 Consolidated Statements of Cash Flows Nine months ended September 30, 1997 and 1996....................................6 Notes to Consolidated Financial Statements........................................7-15 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................16-21 PART II. Other Information ITEM 1. Legal Proceedings ..................................................................22 ITEM 2. Changes in Securities ..............................................................22 ITEM 3. Defaults upon Senior Securities ....................................................22 ITEM 4. Submission of Matters to a Vote of Security Holders ................................22 ITEM 5. Other Information ..................................................................22 ITEM 6. (a) Exhibits........................................................................22 (b) Reports on Form 8-K ............................................................22 SIGNATURES ................................................................................23
3 FIRST CITIZENS BANC CORP Consolidated Balance Sheet
(Unaudited) September 30, December 31, Assets 1997 1996 ---------------- ---------------- Cash and due from banks $ 12,314,467 $ 11,615,060 Federal funds sold 7,462,000 8,521,000 Securities Available-for-sale 57,680,659 58,971,155 Held-to-maturity 7,616,683 9,789,977 ------------- ------------- Total securities 65,297,342 68,761,132 Loans 221,491,064 205,127,385 Less: Allowance for possible loan losses (2,809,282) (2,642,000) ------------- ------------- Net Loans 218,681,782 202,485,385 Office premises and equipment, net 7,102,512 6,373,506 Accrued interest receivable 2,212,859 1,823,667 Intangible assets 2,929,023 1,679,465 Other assets 1,876,880 1,518,404 ------------- ------------- Total assets $ 317,876,865 $ 302,777,619 ============= ============= Liabilities Deposits Interest bearing deposits $ 225,943,331 $ 215,873,075 Noninterest bearing deposits 28,304,280 24,624,624 ------------- ------------- Total deposits 254,247,611 240,497,699 Federal Home Loan Bank borrowings 14,790,282 15,671,686 Securities sold under agreements to repurchase 8,793,421 9,157,032 U. S. Treasury interest bearing demand notes payable 2,449,491 1,388,979 Accrued interest, taxes and other expenses 1,491,628 1,634,915 ------------- ------------- Total liabilities 281,772,433 268,350,311 Shareholders' Equity Common stock, no par value; 10,000,000 shares authorized, 3,051,504 shares issued and outstanding 15,257,520 15,257,520 Retained earnings 20,531,292 19,005,014 Unrealized gain on securities available for sale 315,620 164,774 ------------- ------------- Total shareholders' equity 36,104,432 34,427,308 ------------- ------------- Total liabilities and shareholders' equity $ 317,876,865 $ 302,777,619 ============= =============
See notes to interim consolidated financial statements. Page 3 4 FIRST CITIZENS BANC CORP Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended September 30, September 30, --------------------------- ----------------------------- 1997 1996 1997 1996 INTEREST INCOME: Interest and fees on loans $4,725,894 $4,312,625 $13,675,600 $12,741,121 Interest and dividends on securities Taxable 613,331 680,172 1,883,498 2,038,726 Nontaxable 322,132 343,840 994,279 1,086,749 Interest on federal funds sold 114,062 155,447 334,254 372,017 Other interest income 10,464 1,764 24,239 4,006 ---------- ---------- ----------- ----------- Total interest income 5,785,883 5,493,848 16,911,870 16,242,619 INTEREST EXPENSE: Interest on deposits 2,147,006 1,983,765 6,206,641 5,966,755 Interest on FHLB borrowings 214,547 231,010 656,196 704,885 Interest on other borrowings 100,452 107,984 232,850 268,902 ---------- ---------- ----------- ----------- Total interest expense 2,462,005 2,322,759 7,095,687 6,940,542 ---------- ---------- ----------- ----------- NET INTEREST INCOME 3,323,878 3,171,089 9,816,183 9,302,077 PROVISION FOR LOAN LOSSES 118,000 89,500 319,500 238,500 ---------- ---------- ----------- ----------- NET INTEREST INCOME AFTER 3,205,878 3,081,589 9,496,683 9,063,577 PROVISION FOR LOAN LOSSES NONINTEREST INCOME: Computer center service charges and retail sales 543,849 501,171 1,654,239 1,556,407 Service charges on deposit accounts 132,020 127,464 392,659 364,891 Security gain 159,073 2,000 165,323 17,850 Other operating income 312,606 220,420 769,238 589,404 ---------- ---------- ----------- ----------- Total noninterest income 1,147,548 851,055 2,981,459 2,528,552 NONINTEREST EXPENSE: Salaries, wages and benefits 1,443,699 1,315,957 4,283,555 3,932,921 Net occupancy expense 186,162 141,857 477,906 414,045 Equipment 183,877 158,310 545,921 467,120 FDIC Premiums 7,747 1,000 23,229 3,500 Franchise Tax 109,187 100,417 325,286 319,726 Professional Fees 196,122 140,359 483,441 402,290 Other operating expenses 820,812 667,319 2,388,431 1,889,552 ---------- ---------- ----------- ----------- Total noninterest expense 2,947,606 2,525,219 8,527,769 7,429,154 ---------- ---------- ----------- ----------- Income before taxes 1,405,820 1,407,425 3,950,373 4,162,975 Provision for income taxes 426,147 396,825 1,142,463 1,157,584 ---------- ---------- ----------- ----------- Net income $ 979,673 $1,010,600 $ 2,807,910 $ 3,005,391 ========== ========== =========== =========== Per share data (based on 3,051,504 shares) Earnings per share $ 0.32 $ 0.33 $ 0.92 $ 0.98 ========== ========== =========== =========== Dividends declared $ 0.1400 $ 0.1300 $ 0.4200 $ 0.3825 ========== ========== =========== ===========
See notes to interim consolidated financial statements Page 4 5 FIRST CITIZENS BANC CORP Consolidated Statements of Shareholders' Equity (Unaudited)
Three months ended Nine months ended September 30, September 30, ------------------------------- ------------------------------- 1997 1996 1997 1996 Balance at beginning of period $ 35,466,816 $ 34,499,182 $ 34,427,308 $ 33,806,791 Net earnings 979,673 1,010,600 2,807,910 3,005,391 Cash dividends (427,211) (396,696) (1,281,632) (1,167,200) Market adjustment on securities available for sale 85,154 125,695 150,846 (406,201) ------------ ------------ ------------ ------------ Balance at end of period $ 36,104,432 $ 35,238,781 $ 36,104,432 $ 35,238,781 ============ ============ ============ ============
See notes to interim consolidated financial statements Page 5 6 FIRST CITIZENS BANC CORP Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30, -------------------------------- 1997 1996 Cash flows from operating activities: Net Income $ 2,807,910 $ 3,005,391 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of office premises and equipment 506,290 458,325 Gain on disposal of office premises and equipment --- (2,343) Amortization of intangible assets 244,536 151,151 Provision for loan losses 319,500 238,500 Gain on securities (165,323) (17,850) Change in deferred loan fees (51,538) (1,698) Net amortization of security premiums and discounts 83,812 97,783 Change in accrued interest receivable (389,192) 192,322 Change in other assets (358,476) (474,186) Change in accrued interest, taxes and other expenses (248,655) (492,796) ------------ ------------ Net cash from operating activities 2,748,864 3,154,599 Cash flows from investing activities: Maturities and calls of securities, held-to-maturity 2,146,604 5,340,226 Maturities and calls of securities, available-for-sale 12,886,917 7,600,777 Purchases of securities, available-to-sale (11,259,667) (9,891,620) Loans made to customers, net of principal collected (16,464,359) (4,572,736) Change in federal funds sold 1,059,000 (1,535,000) Proceeds from sale of office premises and equipment --- 325,000 Purchases of office premises and equipment (279,151) (527,442) ------------ ------------ Net cash from investing activities (11,910,656) (3,260,795) Cash flows from financing activities: Cash and cash equivalents received from branch acquisition 12,153,945 --- Repayments of FHLB borrowings (881,404) (832,717) Change in deposits (826,611) (3,840,283) Change in securities sold under agreements to repurchase (363,611) 1,065,749 Change in U. S. Treasury interest-bearing demand notes payable 1,060,512 1,538,157 Cash dividends paid (1,281,632) (1,167,200) ------------ ------------ Net cash from financing activities 9,861,199 (3,236,294) ------------ ------------ Net Change in cash and due from banks 699,407 (3,342,490) Cash and due from banks at beginning of period 11,615,060 16,295,910 ------------ ------------ Cash and due from banks at end of period $ 12,314,467 $ 12,953,420 ============ ============ Supplemental disclosures: Cash paid during the period for: Interest $ 7,164,337 $ 7,085,265 ============ ============ Federal Income taxes $ 1,051,000 $ 1,105,000 ============ ============
See notes to interim consolidated financial statements Page 6 7 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- (1) Consolidated Financial Statements The consolidated financial statements include the accounts of First Citizens Banc Corp (Corporation) and it wholly-owned subsidiaries, The Citizens Banking Company (Citizens), The Castalia Banking Company (Castalia), SCC Resources, Inc. (SCC), and R. A. Reynolds Appraisal Service, Inc. (Reynolds). All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated balance sheets as of September 30, 1997 and December 31, 1996; the consolidated statements of income for the three months ended September 30, 1997 and 1996, and for the nine months ended September 30, 1997 and 1996; the condensed consolidated statement of shareholders' equity for the three months ended September 30, 1997 and 1996, and for the nine month periods ended September 30, 1997 and 1996; and the consolidated statement of cash flows for the nine month periods ended September 30, 1997 and 1996 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, 1997 and its results of operations and changes in cash flows for the periods ended September 30, 1997 and 1996 have been made. The accompanying consolidated financial statements have been prepared in accordance with the instructions of Form 10-Q and therefore do not purport to contain all necessary financial disclosures required by generally accepted accounting principles. The results of operations for the period ended September 30, 1997 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 1996 annual report. The Corporation has consistently followed these policies in preparing this form 10-Q. The provision for income taxes is based on the effective tax rate expected to be applicable for the entire year. The corporation follows the liability method of accounting for income taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the difference between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes, using enacted tax rates. Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities",was issued by the Financial Accounting Standards Board ("FASB") in 1996. It revises the accounting for transfers of financial assets, such as loans and securities, and for distinguishing between sales and secured borrowings. It was originally effective for some transactions in 1997 and others Page 7 8 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- in 1998. SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125" was issued in December 1996. SFAS No. 127 defers for one year the effective date of provisions related to securities lending, repurchase agreements and other similar transactions. The remaining portions of SFAS No. 125 will continue to be effective January 1, 1997. SFAS No. 125 did not have a material impact on the Corporation's financial statements. In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share" which is effective for the financial statements for periods ending after December 15, 1997, including interim periods. SFAS No. 128 simplifies the calculation of earnings per share by replacing primary EPS with basic EPS. It also requires dual presentation of basic EPS and diluted EPS for entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in earnings such as stock options, warrants or other common stock equivalents. All prior period EPS data will be restated to conform with the new presentation. In February 1997, the FASB issued SFAS No. 129, "Disclosures of Information about Capital Structure." SFAS No. 129 consolidated existing accounting guidance relating to disclosure about a company's capital structure. Public Companies generally have been required to make disclosures now required by SFAS and, therefore, SFAS No. 129 should have no impact on the Corporation. SFAS No. 129 is effective for financial statements for periods ending after December 15, 1997. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. It does not require a specific format for that financial statement but requires that an enterprise display an amount representing total comprehensive income for the period in that financial statement. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier Page 8 9 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- periods provided for comparative purposes is required. In June 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information." This statement significantly changes the way that the public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about reportable segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. SFAS No. 131 uses a "management approach" to disclose financial and descriptive information about an enterprise's reportable operating segments which is based on reporting information the way that management organizes segments within the enterprise for making operating decisions and assessing performance. For many enterprises, The management approach will likely result in more segments being reported. In addition, the Statement requires that selected information be reported in interim financial statements. SFAS No. 131 is effective for financial statements for the periods beginning after December 15, 1997. (2) Branch Acquisition On January 21, 1997, Citizens acquired from EST National Bank of Elyria, Ohio, certain assets including cash and premises and equipment and assumed certain deposit and other liabilities of two branch banking offices. The transaction was accounted for as a purchase, and accordingly, the acquired assets and liabilities have been recorded based on their respective market values at the date of acquisition. A summary of the assets acquired and the liabilities assumed are as follows:
ASSETS LIABILITIES Cash and cash equivalents $12,153,945 Noninterest bearing deposits $4,559,545 Premises and equipment 956,145 Interest bearing deposits 10,016,978 -------------- Identified intangible assets 1,494,094 Total deposits 14,576,523 -------------- Total assets $14,604,184 ============== Other liabilities 27,661 -------------- Total liabilities $14,604,184 ==============
Page 9 10 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- (3) Securities The amortized cost, gross unrealized gains and losses and estimated fair value of securities, as presented in the consolidated balance sheets at September 30, 1997 and December 31, 1996 are as follows:
September 30, 1997 Gross Gross Amortized Unrealized Unrealized Estimated Fair AVAILABLE FOR SALE Cost Gains Losses Value ----------------- ----------------- ----------------- ------------------ U.S. Treasury securities and obligations of U.S. government corporations and agencies $34,087,736 $67,507 ($102,491) $34,052,752 Obligations of state and political subdivisions 18,396,565 540,050 (26,293) 18,910,322 Other securities, including mortgage- backed securities 4,718,148 --- (563) 4,717,585 ----------------- ----------------- ----------------- ------------------ $57,202,449 $607,557 ($129,347) $57,680,659 =========== ======== ========== ===========
September 30, 1997 Gross Gross Amortized Unrealized Unrealized Estimated Fair HELD TO MATURITY Cost Gains Losses Value ----------------- ----------------- ----------------- ------------------ U.S. Treasury securities and obligations of U.S. government corporations and agencies $1,000,000 $7,813 --- $1,007,813 Obligations of state and political subdivisions 4,712,673 61,520 (3,710) 4,770,483 Other securities, including mortgage- backed securities 1,904,010 9,858 (4,573) 1,909,295 ----------------- ----------------- ----------------- ------------------ $7,616,683 $79,191 ($8,283) $7,687,591 ========== ======= ======== ==========
Page 10 11 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - --------------------------------------------------------------------------------
December 31, 1996 Gross Gross Amortized Unrealized Unrealized Estimated Fair AVAILABLE FOR SALE Cost Gains Losses Value ----------------- ----------------- ----------------- ------------------ U.S. Treasury securities and obligations of U.S. government corporations and agencies $37,000,835 $58,526 ($155,293) $36,904,068 Obligations of state and political subdivisions 18,109,603 433,174 (86,282) 18,456,495 Other securities, including mortgage- backed securities 3,611,060 --- (468) 3,610,592 ----------------- ----------------- ----------------- ------------------ $58,721,498 $491,700 ($242,043) $58,971,155 =========== ======== ========== ===========
December 31, 1996 Gross Gross Amortized Unrealized Unrealized Estimated Fair HELD TO MATURITY Cost Gains Losses Value ----------------- ----------------- ----------------- ------------------ U.S. Treasury securities and obligations of U.S. government corporations and agencies $1,000,000 $23,125 --- $1,023,125 Obligations of states and political subdivisions 6,329,284 141,366 (7,318) 6,463,332 Other securities, including mortgage- backed securities 2,460,693 12,007 (10,648) 2,462,052 ----------------- ----------------- ----------------- ------------------ $9,789,977 $176,498 ($17,966) $9,948,509 ========== ======== ========= ==========
Page 11 12 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- The amortized cost and estimated fair value of securities at September 30, 1997, by contractual maturity , are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.
Estimated Fair Amortized Cost Value AVAILABLE FOR SALE Due in one year or less $18,069,433 $18,043,705 Due after one year through five years 23,778,255 24,063,006 Due after five years through ten years 9,498,755 9,710,016 Due after ten years 1,137,858 1,146,347 Mortgage-backed securities 45,379 44,816 Other securities 4,672,769 4,672,769 ---------------------- ---------------------- Total securities available for sale $57,202,449 $57,680,659 ====================== ====================== HELD TO MATURITY Due in one year or less $4,423,279 $4,463,314 Due after one year through five years 1,289,394 1,314,982 Mortgage-backed securities 1,904,010 1,909,295 ---------------------- ---------------------- Total securities held to maturity $7,616,683 $7,687,591 ====================== ======================
No securities were sold during the nine months ended September 30, 1997 or 1996. Securities called or settled by the issuer in 1996 resulted in gains of $165,323 for the nine months ended September 30, 1997 and $17,850 for the nine months ended September 30, 1996. The increase in gains in 1997 is the result of recoveries on a security that was written off in 1995. Securities with a carrying value of approximately $36,937,000 and $33,650,000 were pledged as of September 30, 1997 and December 31, 1996, respectively, to secure public deposits, other deposits and liabilities as required by law. Page 12 13 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- (4) Loans Loans as presented in the consolidated balance sheets are comprised of the following classifications:
September 30, 1997 December 31, 1996 --------------------------- --------------------------- Commercial & agriculture $44,777,465 $42,038,299 Real estate - mortgage 136,680,705 131,491,632 Real estate - construction 1,647,936 2,079,810 Consumer loans 37,914,585 29,232,380 Credit card and other 1,583,516 1,449,945 Deferred Loan Fees (1,113,143) (1,164,681) --------------------------- --------------------------- Total loans $221,491,064 $205,127,385 ============ ============
(5) Allowance for Loan Losses A summary of the activity in the allowance for loan losses for the nine months ended September 30, 1997 and September 30, 1996 is as follows:
1997 1996 -------------------- --------------------- Balance January 1, $2,642,000 $2,602,000 Loans Charged Off (268,844) (288,831) Recoveries of Loans 116,626 97,196 Provision for loan losses 319,500 238,500 -------------------- --------------------- Balance September 30, $2,809,282 $2,648,865 ========== ==========
Page 13 14 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- Information regarding impaired loans is as follows for the nine months ended September 30.
1997 1996 -------------------- --------------------- Average investment in impaired loans $1,893,998 $1,984,408 Interest income recognized on impaired loans including interest income recognized on cash basis $125,954 $102,421 Interest income recognized on impaired loans $125,954 $102,421 on cash basis
Information regarding impaired loans at September 30, 1997 and December 31, 1996 is as follows:
9/30/97 12/31/96 -------------------- --------------------- Balance impaired loans $1,845,000 $1,982,000 Less portion for which no allowance for loan losses is allocated --- --- -------------------- --------------------- Portion of impaired loan balance for which an allowance for credit losses is allocated $1,845,000 $1,982,000 ========== ========== Portion of allowance for loan losses allocated to $449,000 $495,000 the impaired loan balance ======== ========
(6) Commitments, Contingencies and Off-Balance Sheet Risk The Bank subsidiaries are parties to financial instruments with off-balance sheet risk in the normal course of business to meet financing needs of their customers. These include commitments to make or purchase loans, undisbursed lines of credit, undisbursed credit card balances and letters of credit. The Banks' exposure to credit loss in the event of nonperformance by the other party to the financial instrument is represented by the contractual amount of those instruments. The Banks follow the same credit policy to make such commitments as they use for loans recorded on the balance sheet. Since many commitments to make loans expire without being used, the amount does not necessarily represent future cash commitments. Collateral obtained relating to the commitments is determined using management's credit evaluation of the borrower and may include real estate, vehicles, business Page 14 15 First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q - -------------------------------------------------------------------------------- assets, deposits and other items. The Banks do make fixed rate loan commitments for short periods of time. However, such commitments were immaterial as of September 30, 1997 and December 31, 1996. Commitments to extend credit and letters of credit approximated the following amounts at September 30, 1997 and December 31, 1996.
Contract Amount --------------- September 30, 1997 December 31, 1996 ------------------ ----------------- Commitment to extend credit: Lines of credit and construction loans $17,111,000 $14,081,000 Credit cards 4,262,000 4,235,000 Letters of credit 339,000 62,000 --------------------------- ------------------------ $21,712,000 $18,378,000
Citizens and Castalia are required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The reserve balance maintained in accordance with such requirements for the periods ended September 30, 1997 and December 31, 1996 approximated $2,118,000 and $1,702,000 respectively. In the normal course of business, the Corporation and its subsidiaries are involved in various legal actions, but in the opinion of management and its legal counsel, ultimate disposition of such legal matters is not expected to have a material adverse effect on the consolidated financial statements. Page 15 16 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- Introduction - ------------ The following discussion focuses on the consolidated financial condition of First Citizens Banc Corp at September 30, 1997, compared to December 31, 1996 and the consolidated results of operations for the three and nine months ended September 30, 1997 compared to the same periods in 1996. 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 such effect if implemented. In addition to the historical information contained herein, the following discussion contains forward- looking statements that involve risks and uncertainties. Economic circumstances, the Corporation's operations, and the Corporation's actual results could differ significantly from those disclosed in forward-looking statements. Some of the factors that could cause or contribute to such differences are discussed herein but also include changes in the economy and interest rates in the nation and in the Corporation's general market area. Some of the forward-looking statements included herein are the statements regarding the following: 1. Management's determination of the amount of loan loss allowance and the amount of the loan loss provision; 2. The sufficiency of the Corporation's liquidity and capital reserves. See Exhibit 99, which is incorporated herein by reference. Financial Condition - ------------------- Total assets of the Corporation at September 30, 1997 totaled $317,876,865 compared to $302,777,619 at December 31, 1996. This was an increase of $15,099,246 or 5.0 percent. Within the structure of the assets, net loans have increased $16,196,397 since December 31, 1996. Office premises and equipment have increased $729,006 and intangible assets have increased $1,249,558 since December 31, 1996. The increase in these two areas is attributable to the acquisition of two branches by The Citizens Banking Company. Page 16 17 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- At September 30, 1997, $57,680,659 or 88.3 percent of the securities portfolio was classed as available-for-sale. The remainder, $7,616,683 or 11.7 percent was classified as held-to-maturity. Securities decreased $3,463,790 or 5.0 percent from December 31, 1996. The decrease in the balances of the portfolio is a result of maturities and calls of securities being reinvested in loans rather than entirely in securities. As of September 30, 1997, the net unrealized gain of the available- for-sale portfolio was $478,210 compared to $249,657 at December 31, 1996. The increase in the net unrealized gain reflects changes in market values due to the current interest rate environment. Total loans at September 30, 1997 increased $16,363,679 or 8.0 percent from year-end 1996. At September 30, 1997, the net loan to deposit ratio was 86.0 percent compared to 84.2 percent at December 31, 1996. This increase in the loan to deposit ratio is due partly to loan growth generated by a home equity loan promotion held in conjunction with the local "Home Show"during the second quarter of 1997. At September 30, 1997, the allowance for loan losses as a percent of total loans was 1.27 percent compared to 1.29 percent at December 31, 1996. For the nine months of operations of 1997, $319,500 was placed into the allowance from earnings compared to $238,500 for the same period of 1996. Net charge-offs for the first nine months of 1997 were $152,218 compared to $191,635 for the same period of 1996. Impaired loans at September 30, 1997 totaled $1,845,000 or 0.83 percent of the loan portfolio compared to $1,982,000 or .97 percent of the loan portfolio at December 31, 1996. The majority of the growth relates to branch purchases previously discussed. Total deposits at September 30, 1997 increased $13,749,912 from year-end 1996. Noninterest bearing deposits, representing demand deposit balances, increased $3,679,656 from year-end 1996. Interest bearing deposits, including savings and time deposits, increased $10,070,256 from year-end 1996. The year to date 1997 average balance of savings deposits has increased $1,598,000 compared to the average balance of the same period for 1996. The current average rate of these deposits is 2.80 percent. The year to date 1997 average balance of time certificates has increased $4,462,000 compared to the average balance for the same period for 1996. The current average rate on these deposits is 5.31 percent. Other borrowed funds have decreased $184,503 from December 31, 1996 to September 30, 1997. Federal Home Loan Bank borrowings have decreased $881,404 as a result of scheduled paydowns. Securities sold under agreements to repurchase have decreased $363,611 and U.S. Treasury Tax Demand Notes have increased $1,060,512. Shareholders' equity at September 30, 1997 was $36,104,432 which was 11.4 percent of total assets. Shareholders' equity at December 31, 1996 was $34,427,308 which was also 11.4 percent of total assets. The increase in shareholders' equity was represented by earnings of $2,807,910 less Page 17 18 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- dividends of $1,281,632 and plus the increase in the unrealized gain on securities available for sale, net of tax, of $150,846. Total outstanding shares for the period December 31, 1996 to September 30, 1997 were 3,051,504. The company paid cash dividends on February 1, 1997, May 1, 1997 and on August 1, 1997, each at the rate of $.14 per share. Results of Operations - --------------------- Net income for the quarter ended September 30, 1997 was $979,673 or $.32 per common share, compared to $1,010,600 or $.33 per common share for the same period in 1996. This was a decrease of $30,927 or 3.1 percent. Net earnings for the nine month period ended September 30, 1997 were $2,807,910 or $.92 per common share compared to $3,005,391 or $.98 per common share for the same period in 1996. This was a decrease of $197,481 or 6.6 percent. Net interest income after provision for loan losses for the third quarter 1997 totaled $3,205,878 compared to $3,081,589 for the third quarter of 1996. This was an increase of $124,289 or 4.0 percent. Net interest income after provision for loan losses for the first nine months of 1997 totaled $9,496,683 compared to $9,063,577 for the first nine months of 1996. This was an increase of $433,106 or 4.8 percent. Total interest income for the first nine months of 1997 has increased $669,251 or 4.1 percent compared to the same period of 1996. While the average rate on earning assets on a tax equivalent basis for the first nine months of 1997 has decreased to 7.89 percent compared to 8.06 percent for the same period of 1996, total interest income has increased because of a higher average balance of interest earning assets, largely due to loan growth added since December 31, 1996. Interest expense on deposits for the first nine months of 1997 has increased $239,886 compared to the same period of 1996 due to the additional deposits acquired in the purchase of two branches. Interest expense on FHLB borrowings decreased $48,689 and interest expense on other borrowings decreased $36,052, resulting in a net increase in total interest expense for the first nine months of 1997 of $155,145, or 2.2 percent compared to the same period of 1996 The net interest margin on a tax equivalent basis for the first nine months was 4.68 percent for the period ended September 30, 1997 and 4.74 percent for the period ended September 30, 1996. Noninterest income for the third quarter 1997 totaled $1,147,548 compared to $851,055 for the third quarter 1996. This was an increase of $296,493 or 34.8 percent and is attributed to increased computer center service charges and retail sales of $42,678, increased other operating income of $92,186 and increased gain on securities of $157,073. The increase in gain on securities is a result of recoveries made on a security written off in 1995. Noninterest income for the first nine months of 1997 totaled $2,981,459 compared to $2,528,552 for the same period in 1996. This was an increase of $452,907 or 17.9 percent and is attributed to increases in revenue from the computer operations of $97,832, increased service charge on deposit accounts of $27,768, increased gain on Page 18 19 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- securities of $147,473 and increased other operating income of $179,834. The major factors which make up the increase in other operating income are ATM service fee income and brokerage services income. ATM income increased $77,333 because the Banks instituted a surcharge for foreign-card usage at their ATMs. Brokerage services income increased $30,393 because of an increase in the volume of business in that area. Other operating income increased for the reasons previously mentioned. Noninterest expense for the third quarter 1997 totaled $2,947,606 compared to $2,525,219 for the third quarter 1996. This was an increase of $422,387 or 16.7 percent. Noninterest expense for the first nine months of 1997 totaled $8,527,769 compared to $7,429,154 for the first nine months of 1996. This was an increase of $1,098,615 or 14.8 percent. The largest monetary increase in non-interest expense is in salaries, wages and employee benefits, which increased $350,634 or 8.9 percent for the first nine months of 1997 compared to the same period of 1996. The increase in salaries, wages and employee benefits is due to additional staffing brought on by the acquisition of two branches. Federal Income Taxes - -------------------- The federal income tax expense for the third quarter 1997 totaled $426,147 compared to $396,825 for the third quarter 1996. This was a increase of $29,322 or 7.4 percent. The federal income tax expense for the first nine months of 1997 totaled $1,142,463 compared to $1,157,584 for the same period of 1996. This was a decrease of $15,121 or 1.3 percent. The decrease in the federal income taxes is a result of the decrease in total earnings before taxes of $212,602. Capital Resources - ----------------- Shareholders' equity totaled $36,104,432 at September 30, 1997 compared to $34,427,308 at December 31, 1996. All of the capital ratios exceed the regulatory minimum guidelines as identified in the following table:
Corporation Ratios Regulatory 9/30/97 12/31/96 Minimums ------- -------- -------- Tier I Risk Based Capital 19.30% 20.76% 4.00% Total Risk Based Capital 20.56% 22.20% 8.00% Leverage Ratio 10.23% 10.64% 4.00-5.00%
Page 19 20 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- The Corporation paid cash dividends of $.14 per common share on February 1, 1997, May 1, 1997 and August 1, 1997 compared to $.125 per common share the February 1, 1996, $.1275 per common share on May 1, 1996 and $.14 per common share on August 1, 1996. 1997 year-to-date dividends paid have increased $.0275 per common share from year-to-date 1996. Capital expenditures totaled $1,235,296 for the first nine months of 1997 compared to $527,442 for the same period of 1996. The capital expenditures for the first nine months of 1997 include $956,145 of premises and equipment acquired in the purchase of two branches. First Citizens Banc Corp ("First Citizens") and The Farmers State Bank of New Washington ("Farmers") have signed a definitive agreement for the affiliation of Farmers with First Citizens. Farmers, a commercial bank located in New Washington, Ohio, having total assets at September 30, 1997 of 155,306,000, is expected to become a separate operating subsidiary of First Citizens and operate under its current name and charter. Farmers operates banking offices in New Washington, Tiro and Chatfield in Crawford County; Green Camp in Marion County; and Richwood in Union County. Under the terms of the agreement, First Citizens will exchange 6.5 shares of its common stock for each of the 200,000 shares of Farmers outstanding stock. Based on the closing bid price of First Citizens on July 1, 1997 of $34.50, the transaction would be valued at approximately $44.85 million, or $224.25 per share of Farmers stock. The merger, which will be accounted for as a pooling of interests, is expected to be consummated during February 1998, pending Farmers and First Citizens shareholder approval, regulatory approval and other customary conditions of closing. The transaction is expected to be a tax-free reorganization for federal income tax purposes. First Citizens currently plans to add additional personnel, equipment ATM's and other operating improvements to Farmers. In addition, First Citizens expects to offer additional loan, deposit, security brokerage, and trust products not currently offered to Farmers customers. With the added operating expenditures, and excluding the expected revenue enhancements, First Citizens estimates that the transaction will be neutral to earnings per share in the first year following the acquisition and will improve its earnings growth rate in the future. 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. For the first nine months of 1997 the Banks maintained a federal funds sold position that averaged $8,220,000. In addition, the Banks, through their respective correspondent banks maintain federal funds borrowing lines totaling $11,500,000 and the Banks Page 20 21 First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q - -------------------------------------------------------------------------------- have total borrowing availability at the Federal Home Loan Bank of Cincinnati of $25,800,000, including additional borrowing capacity of $11,009,718 at September 30, 1997. Finally, 88.3 percent of the Corporation's security portfolio has been classified as available for sale which provides additional liquidity. Page 21 22 First Citizens Banc Corp Other Information Form 10-Q - -------------------------------------------------------------------------------- Part II - Other Information ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. (a) EXHIBIT NO. 27 Financial Data Schedule . . . . .25 (b) EXHIBIT NO. 99 Safe Harbor Under the Private Securities Litigation Reform Act of 1995 (b) REPORTS ON FORM 8-K - None Page 22 23 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 12, 1997 - ---------------------------------------- ----------------- David A. Voight Date President /s/ James O. Miller November 12, 1997 - ---------------------------------------- ----------------- James O. Miller Date Senior Vice President Page 23 24 First Citizens Banc Corp Index to Exhibits Form 10-Q - --------------------------------------------------------------------------------
Exhibit Number Description Page Number - ------ ----------- ----------- 27 Financial Data Schedule 25 99 Safe Harbor Under the Private Securities Incorporated by reference to Exhibit Litigation Reform Act of 1995 99 to Annual Report on Form 10-K for the Year Ended December 31, 1996 filed by the registrant on March 21, 1997
Page 24 EX-27 2 EXHIBIT 27
9 0000944745 FIRST CITIZENS BANC CORP 9-MOS DEC-31-1996 JAN-01-1997 SEP-30-1997 12,314,467 0 7,462,000 0 57,680,659 7,616,683 7,687,591 218,681,782 2,809,282 317,876,865 254,247,611 11,242,912 1,491,628 14,790,282 0 0 15,257,520 20,846,912 317,876,865 13,675,600 2,877,777 358,493 16,911,870 6,206,641 7,095,687 9,816,183 319,500 165,323 8,527,769 3,950,373 2,807,910 0 0 2,807,910 .92 .92 4.68 1,258,000 1,654,000 0 0 2,642,000 268,844 116,626 2,809,282 2,809,282 0 1,591,000
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