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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:...................................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
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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
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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
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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