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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended September 30, 2002
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period
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Commission File Number 0-49619
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PEOPLES OHIO FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-1795575
----------------------------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
635 South Market Street, Troy, Ohio 45373
----------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, including Area Code (937) 339-5000
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILLED 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
FILLING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
-------------- ---------------
Applicable Only to Corporate Issuers
As of November 7, 2002, there were 7,583,652 common shares of the registrant
issued and outstanding.
1
PEOPLES OHIO FINANCIAL CORPORATION
----------------------------------
INDEX
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PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 2002 and June 30, 2002.
Condensed Consolidated Statements of Income
for the three months ended September 30,
2002 and 2001.
Condensed Consolidated Statement of
Shareholders' Equity for three months ended
September 30, 2002.
Condensed Consolidated Statements of Cash
Flows for the three months ended September
30, 2002 and 2001.
Notes to Condensed Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk.
Item 4. Controls and Procedures.
PART II. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURE PAGE
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SECTION 302 CERTIFICATIONS
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INDEX TO EXHIBITS
- -----------------
2
PEOPLES OHIO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2002 AND JUNE 30, 2002
2002 2002
ASSETS (UNAUDITED)
------
--------------- ---------------
Cash on hand and in other financial institutions $ 16,390,795 $ 5,680,517
Investment securities, held to maturity, (fair value of $954,697 and
$1,174,000 at September 30, 2002 and June 30, 2002) 945,611 1,121,139
Loans, net of allowance for loan losses of $903,120 and $882,067 195,455,341 201,716,051
Office properties and equipment 4,874,002 4,649,712
Federal Home Loan Bank stock 5,112,000 5,051,600
Interest receivable 1,017,644 1,059,550
Other assets 613,381 643,706
--------------- ---------------
Total assets $ 224,408,775 $ 219,922,275
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $ 124,485,667 $ 120,446,602
Federal Home Loan Bank (FHLB) advances 73,921,212 74,174,409
Interest payable 261,036 231,386
Other liabilities 1,656,178 1,494,898
--------------- ---------------
Total liabilities 200,324,094 196,347,295
--------------- ---------------
Commitments and Contingent Liabilities -- --
Equity for ESOP Shares 521,096 468,719
Shareholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized; none issued or outstanding -- --
Common stock, no par value, 15,000,000 shares
authorized; 7,583,652 and 7,439,650 shares issued less
ESOP shares of 142,766 and 139,916 7,440,886 7,299,734
Additional paid-in capital 239,423 203,084
Treasury stock, at cost, 10,426 shares (36,493) 0
Retained earnings 15,919,769 15,603,443
--------------- ---------------
Total shareholders' equity 23,563,585 23,106,261
--------------- ---------------
$ 224,408,775 $ 219,922,275
=============== ===============
See Notes to Condensed Consolidated Financial Statements
1
PEOPLES OHIO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
(unaudited)
2002 2001
---- ----
Interest income
Interest and fees on loans $ 3,783,724 $ 3,928,551
Interest on mortgage-backed securities and other securities 18,436 24,747
Other interest and dividend income 75,645 90,019
--------------- ---------------
Total interest income 3,877,805 4,043,317
--------------- ---------------
Interest expense
Deposits 713,015 962,262
Borrowings 969,322 1,143,435
--------------- ---------------
Total interest expense 1,682,337 2,105,697
--------------- ---------------
Net interest income 2,195,467 1,937,620
Provision for loan losses 45,000 2,000
--------------- ---------------
Net interest income after
provision for loan losses 2,150,467 1,935,620
--------------- ---------------
Other income
Service charges on deposit accounts and other 167,314 142,031
Fiduciary activities 167,719 188,536
Other income 45,952 53,266
--------------- ---------------
Total other income 380,984 383,833
--------------- ---------------
Other expenses
Salaries and employee benefits 707,190 633,379
Net occupancy expenses 110,821 100,663
Equipment expenses 43,223 36,085
Data processing fees 117,674 104,743
State of Ohio franchise taxes 60,250 56,250
Other expenses 413,207 428,687
--------------- ---------------
Total other expenses 1,452,366 1,359,807
--------------- ---------------
Income before Federal income tax 1,079,085 959,646
Federal income tax expense 371,968 330,760
--------------- ---------------
Net income $ 707,117 $ 628,886
=============== ===============
PER SHARES DATA:
Basic Earnings Per Share $ 0.09 $ 0.08
Diluted Earnings Per Share $ 0.09 $ 0.08
Dividends Per Share $ 0.045 $ 0.030
See notes to Condensed Consolidated Financial Statements
2
PEOPLES OHIO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
(unaudited)
2002 2001
---- ----
Operating Activities
Net income $ 707,117 $ 628,884
Adjustments to reconcile net income
to net cash provided by operating activities
Provision for loan losses 45,000 2000
Depreciation and amortization 96,864 91,657
Investment securities amortization (accretion), net (49) (974)
Federal Home Loan Bank stock dividends (60,400) 84,400
Net change in other assets/ other liabilities 478,311 25,837
--------------- ---------------
Net cash provided by operating activities 1,266,843 831,804
--------------- ---------------
Investing Activities
Net change in loans 6,180,855 (1,483,308)
Proceeds from maturities of securities held to maturity 175,624 59,200
Purchases of premises and equipment (321,155) (9,658)
--------------- ---------------
Net cash used
by investing activities 6,035,324 (1,433,766)
--------------- ---------------
Financing Activities
Net change in
Interest-bearing demand and savings deposits 6,409,586 (298,339)
Certificates of deposit (2,370,521) 1,471,596
Proceeds from FHLB advances 32,000,000 99,000,000
Repayment of FHLB advances (32,253,197) (100,553,050)
Cash dividends (341,264) (223,190)
Repuchase of stock (36,493) 0
--------------- ---------------
Net cash provided by
financing activities 3,408,111 (602,983)
--------------- ---------------
Net Change in Cash and Cash Equivalents 10,710,278 (1,204,945)
Cash and cash equivalents, Beginning of Period 5,680,517 5,118,227
--------------- ---------------
Cash and cash equivalents, End of Period $ 16,390,795 $ 3,913,282
=============== ===============
See notes to Condensed Consolidated Financial Statements
3
PEOPLES OHIO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
(Unaudited)
Additional Total
Common paid-in Retained Treasury shareholders'
stock capital earnings Stock equity
-------------- -------------- -------------- -------------- --------------
BALANCE AT JUNE 30, 2002 $ 7,299,734 $ 203,084 $ 15,603,443 $ 0 $ 23,106,261
Net income -- -- 707,118 707,118
Cash dividend declared
on common stock ($.045 per share) -- -- (341,264) (341,264)
Exercise of stock options 144,002 36,339 -- 180,341
Repurchase of stock (36,493) (36,493)
Net change in equity from ESOP
shares (2,850) (49,527) (52,377)
----------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 2002 $ 7,440,886 $ 239,423 $ 15,919,769 $ (36,493) $ 23,563,585
============== ============== ============== ============== ==============
See Notes to Condensed consolidated Financial Statements
4
PEOPLES OHIO FINANCIAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with Form 10-Q instructions and Article 10 of Regulation S-X, and,
in the opinion of management, all adjustments necessary to present fairly the
financial position as of September 30, 2002 and June 30, 2002, the results of
operations and the cash flows for the three-month periods ended September 30,
2002 and 2001.
All adjustments to the financial statements were normal and recurring in nature.
These results have been determined on the basis of accounting principles
generally accepted in the United States of America. The results of operations
for the three months ended September 30, 2002, are not necessarily indicative of
results for the entire fiscal year.
The condensed consolidated balance sheet of the Company as of June 30, 2002 has
been derived from the audited consolidated balance sheet of the Company as of
that date.
The condensed consolidated financial statements are those of the Company and the
Bank. Certain information and footnote disclosures normally included in the
Company's financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted. These condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's 2002 Annual Report to Shareholders.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
General
Peoples Ohio Financial Corporation(the "Company") is based in west central Ohio
and is the parent company of Peoples Savings Bank of Troy (the "Bank"). The
Company was formed during the year ended June 30, 2002 to provide various
benefits to the Bank, as well as, to take advantage of a more effective
structure for expanded financial activities. The Bank, a state chartered savings
bank, was originally chartered in 1890. The Bank is primarily engaged in
attracting deposits from Miami and northern Montgomery counties and originating
mortgage loans throughout those same areas. All references to the Company
include the Bank unless otherwise indicated.
Forward Looking Statements
In addition to historical information, this Form 10-Q may include certain
forward-looking statements based on current management expectations. The
Company's actual results could differ materially from those management
expectations. Factors that could cause future results to vary from current
management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of
the federal government, changes in tax policies, rates and regulations of
federal, state and local tax authorities, changes in interest rates, deposit
flows, the cost of funds, demand for loan products, demand for financial
services, competition, changes in the composition or quality of the Bank's loan
and investment portfolios, changes in accounting principles, policies or
guidelines, and other economic, competitive, governmental and technological
factors affecting the Company's operations, markets, products, services and
prices. A further description of the risks and uncertainties to the business are
included in detail under the caption "Liquidity and Capital Resources of the
Company and the Bank."
5
FINANCIAL CONDITION
Total consolidated assets of the Company at September 30, 2002 were $224,409,000
compared to $219,922,000 at June 30, 2002, an increase of $4,487,000 or 2.0%.
CASH AND CASH EQUIVALENTS increased $10.7 million, from $5.7 million at June 30,
2002 to $16.4 million at September 30, 2002. This increase was the result of
funds provided as maturities and repayments of loans exceeding new loan
originations by $6.3 million, and growth in customer deposits of $4.0 million.
Management uses its uses its short -term "cash accounts" to hold funds generated
from these regular banking activities as it evaluates investment (loan)
alternatives.
NET LOANS declined $6.3 million or 3.1%, from $201.716 million at June 30, 2002,
to $195.455 million at September 30, 2002. The following table illustrates
changes in the Bank's loan portfolio by category for each period presented.
BALANCE BALANCE
SEPTEMBER 30, JUNE 30, CHANGE CHANGE
2002 2002 ($'S) (%)
----- ----- ----- ------
Residential single-family mortgages $ 142,932 $ 149,612 $ (6,680) (4.5)%
Other residential and commercial mortgages 28,276 27,055 1,221 4.5
--------- --------- ---------
Total mortgage loans 171,208 176,667 (5,459) (3.1)
Construction 10,129 14,660 (4,531) (3.1)
Commercial business 5,725 5,529 196 3.5
Consumer 6,190 5,146 1,044 20.3
Home improvement 5,723 5,774 (51) (0.9)
Deposit and other 464 470 (6) (1.3)
--------- --------- ---------
Gross loans 199,439 208,246 (8,807) (4.2)
Deferred loan fees (135) (132) (3)
Undisbursed portion of loans (2,946) (5,516) 2,570
Allowance for loan losses (903) (882) (21)
--------- --------- ---------
Total loans, net $ 195,455 $ 201,716 $ (6,261) 3.1%
========= ========= =========
While the Bank continues to be a strong residential lender throughout the
communities in which it operates, management has been reluctant to portfolio
long-term fixed rate mortgages during this period of historically low interest
rates. As a result, the Bank has seen some decline in its residential
single-family mortgage loan portfolio. Management continues to focus on
shorter-term commercial real estate, commercial business and consumer lending
during the quarter as evidenced by slight increases in these loan types during
the quarter.
THE ALLOWANCE FOR LOAN LOSSES increased from $882,000 at June 30, 2002 to
$903,000 at September 30, 2002 as a result of a provision for loan losses of
$45,000 during the quarter ended September 30, 2002 partially offset by net
charge-offs of $24,000. The allowance for loan losses is maintained to absorb
loan losses based on management's continuing review and evaluation of the loan
portfolio and its judgment regarding the impact of economic conditions on the
portfolio. Non-performing loans, which are loans past due 90 days or more and
non-accruing loans, decreased from $1,290,000 at June 30, 2002, to $1,255,000 at
September 30, 2002. The ratio of the Company's allowance for loan losses to
nonperforming loans was 72.0% and 68.4% at September 30, 2002 and June 30, 2002,
respectively. Management believes that the problems with these loans are
isolated and not indicative of the loan portfolio in total.
6
DEPOSITS increased $4.04 million or 3.4%, from $120.45 at June 30, 2002 to
$124.49 at September 30, 2002. The following table illustrates changes in the
various types of deposits for each period presented.
BALANCE BALANCE
SEPTEMBER 30, JUNE 30, CHANGE CHANGE
2002 2002 ($'S) (%)
---- ---- ----- ---
Noninterest bearing accounts $ 8,506 $ 7,111 $ 1,395 19.6%
NOW accounts 27,211 26,313 898 3.4
Super NOW accounts 533 500 33 6.6
Passbook accounts 21,993 20,302 1,691 8.3
Money market accounts 19,852 17,448 2,404 13.8
Certificates of deposit 46,391 48,772 (2,381) (4.9)
-------- -------- --------
Total deposits $124,486 $120,446 $ 4,040 3.4%
======== ======== ========
Increases in noninterest bearing, NOW, Super NOW and passbook accounts were
primarily attributable to the opening of new accounts. In addition to new
accounts, a portion of the growth in passbook and money market accounts was the
result of customers transferring proceeds from maturing certificates of deposit
into these accounts.
TOTAL STOCKHOLDERS' EQUITY increased $457,000 or 2.0%, from $23.11 million at
June 30, 2002, to $23.56 million at September 30, 2002. The increase was the
result of $707,000 in net earnings and $180,000 related to the exercise of stock
options during the quarter ended September 30, 2002, offset by $341,000 in
dividends paid to the Company's stockholders, $36,000 related to the repurchase
of stock and $52,000 related to the net change in equity related to the
Company's ESOP during the quarter ended September 30, 2002.
RESULTS OF OPERATIONS--COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002
AND 2001
The Company reported earnings of $707,000 for the three months ended September
30, 2002, an increase of $78,000, or 12.4%, above the $629,000 reported for the
same period in 2001. Basic earnings per share increased $0.01 or 12.5% from
$0.08 for the three months ended September 30, 2001 to $0.09 for the three
months ended September 30, 2002. Diluted earnings per share increased $0.09 or
12.5% from $0.08 for the three months ended September 30, 2001 to $0.09 for the
three months ended September 30, 2002. The Company's return on average assets
was 1.27% for the three months ended September 30, 2002 compared to 1.17% for
the same period in 2001 while return on average equity was 11.51% for the three
months ended September 30, 2002 compared to 11.49% for the same period 2001.
Earnings were higher in 2002 as a result of an increase in net interest income
of $257,000, or 13.3%, from $1,938,000 reported for the three months ended
September 30, 2001 to $2,195,000 for three months ended September 30, 2002. This
increase was partially offset by an increase in noninterest expense of $92,000
or 6.8%, from $1,360,000 reported for three months ended September 30, 2001 to
$1,452,000 three months ended September, 2002.
NET INTEREST INCOME was $2,195,000 for the three months ended September 30,
2002, $257,000, or 13.3%, higher than the $1,938,000 reported for three months
ended September 30, 2001. This increase was attributable to a $424,000, or 20.1%
decline in interest expense that was partially offset by a $165,000 decline in
interest income earned during the three months ended September 30, 2002. These
declines were the result of the continuing low interest rate environment
resulting from actions taken by the the Federal Reserve Bank (the Fed). Note,
the Fed's "Open Market Committee" which establishes the Federal funds rate and
the discount rate, lowered these key interest rates a total of 14 times from
July 1, 2000 through September 30, 2002. The interest rates the Bank charges its
borrowers and pays its depositors are significantly influenced by these rates.
Interest income was $3,878,000 for the three months ended September 30, 2002, a
decrease of $165,000 or 4.1%, from $4,043,000 for the three months ended
September 30 2001, as interest income earned on all categories of earning assets
declined in comparison to same period in the previous year. Interest income
earned on loans was $3,784,000 for the three months ended September 30, 2002,
$145,000 or 3.7% less than the $3,929,000 earned the three months ended
September 30, 2001.
7
While, as previously mentioned, average loans outstanding declined from the
three months ended September 30, 2001 to September 30, 2002, the primary reason
for the decline in interest income related to loans was a result of a lower
average yield earned on the Bank's loan portfolio as borrowers continue to
refinance taking advantage of lower interest rates.
Interest expense was $1,682,000 for the three months ended September 30, 2002, a
decrease of $424,000 or 20.1%, $2,106,000 for the three months ended September
30 2001, as interest expense paid on certificates of deposit and FHLB advances
declined significantly in comparison to the same period in the previous year.
Interest expense on certificates of deposit was $332,000, $316,000 or 48.8%
lower than the $648,000 recorded in three months ended September 30, 2001. The
average balance of certificates of deposit declined by $9,095,000, from
$48,066,000 for the three months ended September 2001, to $38,917,000 for three
months ended September 30, 2002. In addition, the average rate paid on those
certificates of deposit decreased by 199 basis points, from 5.39% during the
three months ended September 30 2001, to 3.40% during the three months ended
September 30 2002. Interest expense on FHLB advances was $969,000, $174,000 or
15.2% lower than the $1,143,000 recorded in the three months ended September 30,
2001. The average balance of FHLB advances declined by $7,856,000, from
$83,299,000 for the three months ended September 30, 2001 to $75,433,000 for the
three months ended September 30, 2002. In addition, the average rate paid on
those FHLB advances decreased by 35 basis points, from 5.49% during the three
months ended September 30 2001, to 5.14% during the same period in 2002. These
declines were somewhat offset by slight increases in interest expense on the
Company's demand deposit and savings accounts as depositors chose to invest
proceeds from maturing certificates in these short-term accounts. Accordingly,
the average balance of the Company's interest-bearing NOW and money market
accounts increased $17,063,000, from $35,512,000 for the three months ended
September 30, 2001, to $52,575,000 for the three months ended September 30,
2002, while the average balance of the Company's savings accounts increased
$4,000,000 during the same period in 2001.
THE PROVISION FOR LOAN LOSSES was $45,000 for three months ended September 30,
2002 compared to $2,000 for the same period in 2001. The provision for both
periods reflects management's analysis of the Bank's loan portfolio based on
information that is currently available to it at such time. In particular,
management considers the level of non-performing loans and potential problem
loans. Total charge-offs for three months ended September 2002 were $26,000
compared to $5,000 during the same period in 2001. While management believes
that the allowance for loan losses is sufficient based on information currently
available to it, no assurances can be made that future events, conditions, or
regulatory directives will not result in increased provisions for loan losses
which may adversely effect income.
NONINTEREST EXPENSE was $1,452,000 for three months ended September 30, 2002,
$92,000 or 6.8% higher than the $1,360,000 reported for the three months ended
September 30, 2001. The increase was primarily attributable to increases in
salaries and employee benefits which increased $74,000 or 11.7% due to regular
salary increases and the hiring of a new senior lender and chief financial
officer in July 2002.
TOTAL INCOME TAX EXPENSE was $372,000 (an effective tax rate of 34.5%) for the
three months ended September 30, 2002, compared to $331,000 (an effective tax
rate of 34.5%) during the three months ended September 30, 2001.
8
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY AND THE BANK
Recent legislation repealed the Office of Thrift Supervision's (OTS) minimum
liquidity ratio requirement for the Bank. Regulations now require the Bank to
maintain sufficient liquidity to ensure its safe and sound operation. The Bank's
regulatory liquidity was 13.70% and 3.84% at September 30, 2002 and 2001,
respectively. The primary source of funding for the Company is dividend payments
from the Bank. Dividend payments by the Bank have been used solely by the
Company to pay dividends to its stockholders.
The Bank's liquidity is a product of its operating, investing and financing
activities. The primary investment activity of the Bank is the origination of
mortgage loans and to a lesser extent commercial and consumer loans. The primary
sources of funds are deposits, FHLB borrowings, prepayments and maturities of
outstanding loans, mortgage-backed securities, and investments. While scheduled
payments of loans and mortgage-backed securities and maturing investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by interest rates, economic conditions and competition. The
Bank utilizes FHLB borrowings to leverage its capital base and provide funds for
lending and to better manage its interest rate risk. The sole investment of the
Company is its investment in the Bank's stock.
At September 30, 2002, the Bank had outstanding commitments to originate loans
of $2,946,000, unused lines of credit of $4,744,000 and standby letters of
credit of $383,000. As of September 30, 2002, certificates of deposit scheduled
to mature in one year or less totaled $18,347,000. Based on historical
experience, management believes that a significant portion of maturing deposits
will remain with the Bank. Management anticipates that the Bank will continue to
have sufficient funds, through deposits, borrowings, and normal operations to
meet its commitments.
The Bank is required by OTS regulations to meet certain minimum capital
requirements. At June 30, 2002, the Bank exceeded all of its regulatory capital
requirements with tangible and tier 1 capital both at $2,543,000 or 10.91% of
adjusted total assets, and risk-based capital at $ 25,446,000 or 17.23% of
risk-weighted assets. The required minimum ratios 1.5% for tangible capital to
adjusted total assets, 4.0% for tier 1 capital to adjusted total assets and 8.0%
for risk-based capital to risk-weighted assets.
The Bank's most liquid assets are cash and cash equivalents. The level of cash
and cash equivalents is dependent on the Bank's operating, financing lending and
investing activities during any given period. At September 30, 2002, the Bank's
cash and cash equivalents totaled $16,391,000. The Company's and Bank's future
short -term requirements for cash are not expected to significantly change.
However, in the event that the Bank should require funds in excess of its
ability to generate them internally, additional sources of funds are available,
including additional FHLB advances. With no parent company debt and sound
capital levels, the Company should have many options available for satisfying
its longer-term cash needs such as borrowing funds, raising equity capital and
issuing trust preferred securities.
Management is not aware of any current recommendations or government proposals
which, if implemented would have a material effect on the Company's liquidity,
capital resources or operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in the Company's market risk since June 30,
2002, except as discussed in the Management Discussion and Analysis.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this Form 10-Q, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as defined in Rule 13a-14 of the
Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in this Quarterly Report on Form 10-Q. There
have been no significant changes in the Company's internal controls or in other
factors which could significantly affect internal controls subsequent to the
date the Company carried out its evaluation.
9
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
The Company is involved in various legal actions incident to
its business, none of which is believed by management to be
material to the financial condition of the Company.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a vote of Security Holders
The Annual Meeting of shareholders of Peoples Ohio Financial
Corporation was held on October 22, 2002 at Edison Junior
College in Piqua, Ohio at 3:00 p.m. Proxies were solicited
from shareholders pursuant to Regulation 14A of the Securities
Exchange Act of 1934. The meeting included the following
matters voted upon by shareholders:
1. The election of William J. McGraw, III, Ronald B.
Scott and James S. Wilcox to two-year terms on the
Company's Board of Directors. The vote was 5,435,231
in favor and 104,271 withheld for William J. McGraw,
III, 5,411,115 in favor and 128,387 withheld for
Ronald B. Scott and 5,434,735 in favor and 104,767
withheld for James S. Wilcox. Incumbent Directors who
were not nominees for election at the meeting are:
Donald Cooper, Thomas E. Robinson and Richard W.
Klockner.
2. The ratification of BKD, LLP to serve as the
Company's independent auditors for the fiscal year
ending June 30, 2003. The vote was 5,403,253 in favor
and 78,349 against, with 57,900 abstaining.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1.1 Peoples Ohio Financial Corporation Articles of
Incorporation (incorporated by reference to the Form
8-A filed with the SEC on February 8, 2002 (the "Form
8-A"), Exhibit 2(a))
3.1.2 Peoples Ohio Financial Corporation Amended and
Restated Code of Regulations (Incorporated by
reference to the Form 8-A, Exhibit 2(b))
11.1 Computation of earnings per share
99.1 Certification of Ronald B. Scott, Chief Executive
Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Richard J. Dutton, Chief Financial
Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
10
b. Reports on Form 8-K
1. On August 15, 2002, the Company filed a Current
Report on Form 8-K reporting information under Item
5, incorporating a press release dated August 15,
2002, relating to the Company's earnings for fiscal
year 2002.
2. On September 12, 2002, the Company filed a Current
Report on Form 8-K reporting information under Item
5, incorporating a press release dated September 12,
2002, relating to the authorization and approval by
the Company's board of directors of a stock
repurchase program.
3. On September 13, 2002, the Company filed a Current
Report on Form 8-K reporting information under Item
5, incorporating a press release dated September 13,
2002, relating to the approval of a semi-annual
dividend.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Peoples Ohio Financial Corporation
Dated: November 7, 2002 By /s/ Ronald B. Scott
-----------------------------------------
Ronald B. Scott
President
By /s/ Richard J. Dutton
-------------------------------------
Richard J. Dutton
Vice-President, Chief Financial Officer
12
SECTION 302 CERTIFICATION
I, Ronald B. Scott, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Peoples Ohio Financial
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 7, 2002
/s/ Ronald B. Scott
----------------------------------------------
Ronald B. Scott
Chief Executive Officer
13
SECTION 302 CERTIFICATION
I, Richard J. Dutton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Peoples Ohio Financial
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 7, 2002
/s/ Richard J. Dutton
-----------------------------------------------
Richard J. Dutton
Chief Financial Officer
14
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
----------- -----------------------
3.1 Peoples Ohio Financial Corporation Articles of
Incorporation (incorporated by reference to the
Form 8-A filed with the SEC on February 8, 2002
(the "Form 8-A"), Exhibit 2(a))
3.2 Peoples Ohio Financial Corporation Amended and
Restated Code of Regulations (Incorporated by
reference to the Form 8-A, Exhibit 2(b))
11.1 Computation of earnings per share
99.1 Certification of Ronald B. Scott, Chief Executive
Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Richard J. Dutton, Chief
Financial Officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
15