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8-K - FORM 8-K - CIVISTA BANCSHARES, INC.d761495d8k.htm

Exhibit 99.1

 

LOGO

Sandusky, Ohio, July 18, 2014 – First Citizens Banc Corp (NASDAQ:FCZA) (“First Citizens”) reported net income attributable to common shares of $1.8 million, or $0.24 per share, for the second quarter of 2014, an increase of 34.2% compared with $1.4 million, or $0.18 per share, for the prior year period. For the six-month period ended June 30, 2014, First Citizens reported net income available to common shareholders of $3.9 million or $0.50 per share, an increase of 30.1% compared to $3.0 million, or $0.39 per share, in the same period of 2013.

“During the second quarter, we continued in our efforts to improve our efficiency ratio. To that end, we completed the closure of three branches, began the process of closing a fourth branch and froze our defined benefit pension plan. We were also successful in finding new owners for our former buildings. The one-time net effect of all branch closures will be a gain of $67 thousand. On an annualized basis, we expect cost savings of $450 thousand. The movement of customer transactions from teller based to electronic is changing the way many banks view their branch networks. We continually strive to find a good balance between cost structure and community commitment,” said James O. Miller, President and CEO of First Citizens. “The restructuring of our retirement expenses should initially save $195 thousand, pretax, for 2014.”

Results of Operations:

Net interest income for the second quarter of 2014 increased $485 thousand, or 5.0%, from the prior year’s second quarter and for the six months ended June 30 increased $664 thousand, or 3.4%, when compared to the same period of 2013. The increase in net interest income for the quarter was due both to an increase in interest income of $340 thousand or 3.1% and to a decrease in interest expense of $145 thousand or 11.7%. The increase in net interest income for the year included an increase in interest income of $369 thousand, or 1.7%, as well as a decrease in interest expenses of $295 thousand, or 11.6%. The increase in interest income was due primarily to an increase in average loans outstanding of $46.0 million, or 5.7%, partially offset by decreased yield of 17 basis points on loans, when compared to the six months of 2013. This increase for the second quarter was also due to an increase in average loans outstanding of $48.5 million, or 6.0%, partially offset by decreased yield on loans of 12 basis points, when compared to the same period in 2013. Net interest margin for the six months of 2014 was 3.63%, 12 basis point lower than the same period in 2013. The average balance of interest-bearing deposits relating to tax refund processing was $92.6 million for 2014. Removing the impact of the First Citizen’s tax refund processing, the net interest margin would have been 29 basis points higher for the six months of 2014. For the three months ended June 30, net interest margin was 3.76, 1 basis point lower than the second quarter a year ago. Mr. Miller continued, “Over the past several years we have seen that our Net Interest Income has been stable throughout changes in the interest rate environment. With an increase in average loans, a decrease in deposit rates and changes in our funding mix we have continued to manage through this challenging interest rate environment.”


The provision for loan losses for the second quarter and six months ended 2014 increased $450 thousand, or 150.0%, and $700 thousand, or 87.5%, compared to the three and six-month periods ended 2013, respectively. Net Charge offs totaled $2.6 million for the first six months of 2014. The majority of the charge-offs related to resolution of specific problem credits for which a specific reserve had been allocated. The increase in provision for loan losses in the first half of 2014 is primarily related to the increased size of the loan portfolio compared to a year ago.

Noninterest income increased $549 thousand, or 19.4%, compared to the prior year’s second quarter and increased $2.0 million, or 32.4%, when compared to the six months of 2013. The increases in both the three- and six-month periods were primarily due to an increase fee income related to income tax refund processing. Tax refund processing fees were up $392 thousand, or 852.2% for the second quarter of 2014 compared to the second quarter of 2013 and up $1.9 million, or 443.4% when compared to the six months of 2013, due to increased volume of returns processed. Wealth management revenue increased $160 thousand, or 25.6%, for the three-month period ended June 30 compared to the same period in 2013 and increased $346 thousand, or 28.2%, for the six-month period ended June 30 compared to the same period in 2013. The increase in wealth management revenue is due to both an increase in asset valuations as well as an increase in accounts. These factors were offset by a $ 46.4 million decrease in assets related to out-of-area accounts inherited from a previous acquisition. First Citizens made the decision to better focus our efforts on local accounts and began the process of moving these accounts out of the Bank. Assets under management decreased by 1.2% from the end of 2013, to $462.7 million. The out-of-area accounts were lower yielding accounts and the lost revenue was more than offset by increased revenue related to other assets under management. Mortgage banking revenue for the six months of 2014 decreased $47 thousand or 16.9% compared to the same period in 2013. However, mortgage banking revenue for the second quarter increased $50 thousand, or 64.1% compared to the same period of 2013. Mr. Miller continued, “Mortgage banking has been sluggish for the entire banking industry in 2014. We have continued to see our pipelines and closed business increase as the year progresses. Our Wealth Management business has benefited from an increased amount of cross-selling by our commercial lenders as well as a positive stock market. We are very pleased with the results of our tax refund processing program. We increased the volume of refunds processed and have been very successful in 2014.”

Noninterest expense decreased $367 thousand, or 3.5%, when compared to the prior year’s second quarter and $146 thousand, or 0.7%, when compared to the six months of 2013. For the quarter and six month periods, the decrease in noninterest expense was primarily attributable to a $564 thousand decrease in pension expense for the second quarter and a decrease of $611 thousand for the six month period. The decreases in pension costs were offset by increases in salaries and commissions for the quarter and six month periods of $313 thousand and $430 thousand respectively. As of April 30, 2014, the Company has frozen its pension plan. While the plan still exists, no new participants will be added and no additional benefits will accrue going forward.


Balance Sheet

Total assets increased $19.0 million, or 1.6%, from December 31, 2013 to June 30, 2014 due primarily to an increase in loans of $7.9 million or 0.9% as well as an increase in cash and cash equivalents of $16.0 million.

Total deposits increased $36.6 million, or 3.9%, from December 31, 2013 to June 30, 2014, largely related to cash on deposit from the tax refund processing program. As of June 30, 2014 the balance related to the tax refund processing program was approximately $34.9 million. Total shareholder’s equity decreased $17.1 million, or 13.3%, from December 31, 2013 to June 30, 2014 as a result of the $23.2 million redemption of Series A Preferred Stock, partially offset by retained earnings of $3.5 million and changes to Accumulated Other Comprehensive Income.

Asset Quality

Nonperforming assets decreased $2.9 million, or 11.3%, from December 31, 2013 to June 30, 2014 due to the continuing workout of nonperforming loans with delinquent customers. Total non-accrual loans decreased $2.8 million, or 13.9%, from December 31, 2013 to June 30, 2014. Mr. Miller continued, “We continue to be conservative on how we view asset quality. If we see potential weakness in a credit, we strive to identify it early and reserve appropriately. We continue to see improvements in non-performing assets. When we look back to June 2013, we have reduced non-performing loans by $11.3 million. Non-accrual loans continue to decrease and over 60% of our non-accrual loans are current with their payments.”

First Citizens Banc Corp is a $1.2 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, The Citizens Banking Company, operates 25 locations in Central and North Central Ohio.

First Citizens Banc Corp may be accessed at www.fcza.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “FCZA”. The Company’s depositary shares, each representing a 1/40th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “FCZAP”.

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of First Citizens. For these statements, First Citizens claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about First Citizens, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to


differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in First Citizens’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of First Citizens’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. First Citizens does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

For additional information, contact:

James O. Miller

Chairman, President and CEO

First Citizens Banc Corp

888-645-4121

Todd A. Michel

Senior Vice President and Controller

First Citizens Banc Corp

888-645-4121


First Citizens Banc Corp

Financial Highlights

(dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     (unaudited)     (unaudited)  
     2014     2013     2014     2013  

Interest income

     11,365        11,025        22,680        22,311   

Interest expense

     1,099        1,244        2,248        2,543   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     10,266        9,781        20,432        19,768   

Provision for loan losses

     750        300        1,500        800   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision

     9,516        9,481        18,932        18,968   

Noninterest income

     3,380        2,831        8,004        6,047   

Noninterest expense

     9,979        10,346        20,408        20,554   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     2,917        1,966        6,528        4,461   

Income tax expense

     677        309        1,577        891   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     2,240        1,657        4,951        3,570   

Preferred stock dividends

     406        290        1,061        580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

     1,834        1,367        3,890        2,990   

Dividends per common share

   $ 0.05      $ 0.04      $ 0.09      $ 0.07   

Earnings per common share,

        

basic

   $ 0.24      $ 0.18      $ 0.50      $ 0.39   

diluted

   $ 0.21      $ 0.18      $ 0.43      $ 0.39   

Average shares outstanding,

        

basic

     7,707,917        7,707,917        7,707,917        7,707,917   

diluted

     10,904,848        7,707,917        10,904,848        7,707,917   

Selected financial ratios:

        

Return on average assets

     0.74     0.58     0.78     0.61

Return on average equity

     8.18     6.34     8.84     6.89

Dividend payout ratio

     17.21     18.61     14.01     15.11

Net interest margin (tax equivalent)

     3.76     3.77     3.63     3.75


Selected Balance Sheet Items

 

     June 30,     December 31,  
     2014     2013  
     (unaudited)        

Cash and due from financial institutions

   $ 49,893      $ 33,883   

Investment securities

     197,680        199,613   

Loans held for sale

     2,168        438   

Loans

     867,978        861,241   

Less allowance for loan losses

     15,395        16,528   
  

 

 

   

 

 

 

Net loans

     852,583        844,713   

Other securities

     12,548        15,424   

Fixed assets

     16,158        16,927   

Goodwill and other intangibles

     23,610        24,013   

Bank owned life insurance

     19,400        19,145   

Other assets

     12,463        13,390   
  

 

 

   

 

 

 

Total assets

     1,186,503        1,167,546   
  

 

 

   

 

 

 

Total deposits

     979,136        942,475   

Federal Home Loan Bank advances

     37,500        37,726   

Securities sold under agreements to repurchase

     17,881        20,053   

Subordinated debentures

     29,427        29,427   

Accrued expenses and other liabilities

     11,320        9,489   

Total shareholders’ equity

     111,239        128,376   
  

 

 

   

 

 

 

Toal liabilities and shareholders’ equity

     1,186,503        1,167,546   
  

 

 

   

 

 

 

Shares outstanding at period end

     7,707,917        7,707,917   

Book value per share

   $ 11.43      $ 10.65   

Tangible book value per share

     8.37        7.53   

Equity to asset ratio

     9.38     11.00

Selected asset quality ratios:

    

Allowance for loan losses to total loans

     1.77     1.92

Non-performing assets to total assets

     1.93     2.22

Allowance for loan losses to non-performing loans

     67.95     64.33

Non-performing asset analysis

    

Nonaccrual loans

   $ 17,612      $ 20,458   

Troubled debt restructurings

     5,044        5,234   

Other real estate owned

     282        173   
  

 

 

   

 

 

 

Total

   $ 22,938      $ 25,865   
  

 

 

   

 

 

 


Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

 

     Three Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,  

End of Period Balances

   2014     2014     2013     2013     2013  

Assets

          

Cash and due from banks

   $ 49,893      $ 119,715      $ 33,883      $ 50,093      $ 62,104   

Securities available for sale

     197,680        203,997        199,613        200,356        199,866   

Loans held for sale

     2,168        545        438        4,891        756   

Loans

     867,978        857,368        861,241        819,571        810,106   

Allowance for loan losses

     (15,395     (16,767     (16,528     (17,297     (19,405
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Loans

     852,583        840,601        844,713        802,274        790,701   

Other securities

     12,548        12,414        15,424        15,433        15,540   

Fixed assets

     16,158        16,485        16,927        16,563        16,881   

Goodwill and other intangibles

     23,610        23,811        24,013        24,223        24,435   

Bank owned life insurance

     19,400        19,275        19,145        19,013        18,881   

Other assets

     12,463        14,044        13,390        14,941        14,084   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

   $ 1,186,503      $ 1,250,887      $ 1,167,546      $ 1,147,787      $ 1,143,248   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Total Deposits

   $ 979,136      $ 1,044,820      $ 942,475      $ 942,458      $ 938,205   

Federal Home Loan Bank advances

     37,500        37,717        37,726        37,735        40,244   

Securities sold under agreement to repurchase

     17,881        17,949        20,053        20,810        19,421   

Subordinated debentures

     29,427        29,427        29,427        29,427        29,427   

Accrued expenses and other liabilities

     11,320        12,363        9,489        14,441        13,792   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     1,075,264        1,142,276        1,039,170        1,044,871        1,041,089   

Shareholders’ equity

          

Preferred shares, Series A

     —          —          23,184        23,184        23,184   

Preferred shares, Series B

     23,132        23,132        23,132        —          —     

Common Stock

     114,365        114,365        114,365        114,365        114,365   

Accumulated deficit

     (7,300     (8,747     (10,823     (11,268     (12,544

Treasury stock

     (17,235     (17,235     (17,235     (17,235     (17,235

Accumulated other comprehensive income

     (1,723     (2,904     (4,247     (6,130     (5,611
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     111,239        108,611        128,376        102,916        102,159   

Total liabilities and shareholders’ equity

   $ 1,186,503      $ 1,250,887      $ 1,167,546      $ 1,147,787      $ 1,143,248   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Balances

                              

Assets:

          

Earning assets

   $ 1,171,483      $ 1,211,151      $ 1,091,609      $ 1,091,198      $ 1,102,456   

Securities

     216,999        221,135        216,848        217,078        219,086   

Loans

     857,765        853,642        819,152        813,888        811,761   

Liabilities and shareholders’ equity

          

Total deposits

   $ 1,065,859      $ 1,123,070      $ 965,370      $ 965,556      $ 974,948   

Interest-bearing deposits

     730,367        729,717        731,778        734,013        736,661   

Interest-bearing liabilities

     87,659        91,092        89,496        89,758        90,462   

Total shareholders’ equity

     112,967        116,119        103,563        103,493        104,463   


Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)

 

     Three Months Ended  
     June 30,     March 31,     December 31,     September 30,     June 30,  

Income statement

   2014     2014     2013     2013     2013  

Total interest income

   $ 11,365      $ 11,315      $ 11,443      $ 11,127      $ 11,025   

Total interest expense

     1,099        1,150        1,153        1,210        1,244   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     10,266        10,165        10,290        9,917        9,781   

Provision for loan losses

     750        750        —          300        300   

Noninterest income

     3,380        4,624        2,939        3,077        2,831   

Noninterest expense

     9,979        10,428        12,087        10,745        10,346   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     2,917        3,611        1,142        1,949        1,966   

Income tax expense

     677        899        99        383        309   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,240      $ 2,712      $ 1,043      $ 1,566      $ 1,657   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common stock dividend paid

   $ 385      $ 308      $ 308      $ 308      $ 308   

Preferred stock dividend paid

   $ 406      $ 655      $ 290      $ 290      $ 290   

Per share data

                              

Basic net income per common share

   $ 0.24      $ 0.27      $ 0.10      $ 0.17      $ 0.18   

Diluted net income per common share

     0.21        0.22        0.09        0.17        0.18   

Dividends per common share

     0.05        0.04        0.04        0.04        0.04   

Average common shares outstanding - basic

     7,707,917        7,707,917        7,707,917        7,707,917        7,707,917   

Average common shares outstanding - diluted

     10,904,848        10,904,848        7,821,780        7,707,917        7,707,917   

Asset quality

                              

Allowance for loan losses, beginning of period

   $ 16,767      $ 16,528      $ 17,297      $ 19,405      $ 19,710   

Charge-offs

     (2,332     (652     (1,084     (2,600     (985

Recoveries

     210        141        315        192        380   

Provision

     750        750        —          300        300   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses, end of period

   $ 15,395      $ 16,767      $ 16,528      $ 17,297      $ 19,405   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios

          

Allowance to total loans

     1.77     1.96     1.92     2.11     2.40

Allowance to nonperforming assets

     67.11     62.14     63.90     56.97     56.64

Allowance to nonperforming loans

     67.95     62.60     64.33     57.27     57.22

Nonperforming assets

          

Nonperforming loans

   $ 22,656      $ 26,786      $ 25,692      $ 30,203      $ 33,912   

Other real estate owned

     282        196        173        158        350   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 22,938      $ 26,982      $ 25,865      $ 30,361      $ 34,262   

Capital and liquidity

          

Tier 1 leverage ratio

     9.77     8.58     11.64     9.55     9.38

Tier 1 risk-based capital ratio

     13.67     13.39     15.82     13.26     13.44

Total risk-based capital ratio

     14.92     14.67     17.08     14.66     14.92

Tangible common equity ratio

     5.55     5.03     5.08     4.94     4.87