Attached files
file | filename |
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EXCEL - IDEA: XBRL DOCUMENT - CIVISTA BANCSHARES, INC. | Financial_Report.xls |
EX-32.1 - EX-32.1 - CIVISTA BANCSHARES, INC. | d759414dex321.htm |
EX-32.2 - EX-32.2 - CIVISTA BANCSHARES, INC. | d759414dex322.htm |
EX-31.2 - EX-31.2 - CIVISTA BANCSHARES, INC. | d759414dex312.htm |
EX-31.1 - EX-31.1 - CIVISTA BANCSHARES, INC. | d759414dex311.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: June 30, 2014
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: 001-36192
First Citizens Banc Corp
(Exact name of registrant as specified in its charter)
Ohio | 34-1558688 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
100 East Water Street, Sandusky, Ohio | 44870 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (419) 625-4121
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. Common Shares, no par value, outstanding at August 7, 2014 - 7,707,917 shares
Table of Contents
FIRST CITIZENS BANC CORP
Table of Contents
Part I Financial Information
ITEM 1. | Financial Statements |
FIRST CITIZENS BANC CORP
Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
ASSETS |
||||||||
Cash and due from financial institutions |
$ | 49,893 | $ | 33,883 | ||||
Securities available for sale |
197,680 | 199,613 | ||||||
Loans held for sale |
2,168 | 438 | ||||||
Loans, net of allowance of $15,395 and $16,528 |
852,583 | 844,713 | ||||||
Other securities |
12,548 | 15,424 | ||||||
Premises and equipment, net |
15,483 | 16,927 | ||||||
Premises and equipment, held for sale |
675 | | ||||||
Accrued interest receivable |
3,555 | 3,881 | ||||||
Goodwill |
21,720 | 21,720 | ||||||
Other intangibles |
1,890 | 2,293 | ||||||
Bank owned life insurance |
19,400 | 19,145 | ||||||
Other assets |
7,535 | 9,509 | ||||||
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|
|
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Total assets |
$ | 1,185,130 | $ | 1,167,546 | ||||
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LIABILITIES |
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Deposits |
||||||||
Noninterest-bearing |
$ | 258,699 | $ | 234,976 | ||||
Interest-bearing |
720,437 | 707,499 | ||||||
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|
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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 |
7,281 | 9,489 | ||||||
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|
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Total liabilities |
1,071,225 | 1,039,170 | ||||||
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SHAREHOLDERS EQUITY |
||||||||
Preferred shares, no par value, 200,000 shares authorized, |
||||||||
Series A Preferred shares, $1,000 liquidation preference, no shares issued June 30, 2014 and 23,184 shares issued December 31, 2013 |
| 23,184 | ||||||
Series B Preferred shares, $1,000 liquidation preference, 25,000 shares issued, net of issuance costs |
23,132 | 23,132 | ||||||
Common shares, no par value, 20,000,000 shares authorized, 8,455,881 shares issued |
114,365 | 114,365 | ||||||
Accumulated deficit |
(7,300 | ) | (10,823 | ) | ||||
Treasury shares, 747,964 shares at cost |
(17,235 | ) | (17,235 | ) | ||||
Accumulated other comprehensive loss |
943 | (4,247 | ) | |||||
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|
|
|
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Total shareholders equity |
113,905 | 128,376 | ||||||
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Total liabilities and shareholders equity |
$ | 1,185,130 | $ | 1,167,546 | ||||
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|
See notes to interim unaudited consolidated financial statements
Page 3
Table of Contents
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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest and dividend income |
||||||||||||||||
Loans, including fees |
$ | 9,850 | $ | 9,537 | $ | 19,632 | $ | 19,250 | ||||||||
Taxable securities |
893 | 920 | 1,765 | 1,925 | ||||||||||||
Tax-exempt securities |
580 | 534 | 1,155 | 1,058 | ||||||||||||
Federal funds sold and other |
42 | 34 | 128 | 78 | ||||||||||||
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Total interest income |
11,365 | 11,025 | 22,680 | 22,311 | ||||||||||||
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Interest expense |
||||||||||||||||
Deposits |
573 | 699 | 1,188 | 1,459 | ||||||||||||
Federal Home Loan Bank advances |
327 | 346 | 651 | 690 | ||||||||||||
Subordinated debentures |
195 | 194 | 399 | 383 | ||||||||||||
Other |
4 | 5 | 10 | 11 | ||||||||||||
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Total interest expense |
1,099 | 1,244 | 2,248 | 2,543 | ||||||||||||
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Net interest income |
10,266 | 9,781 | 20,432 | 19,768 | ||||||||||||
Provision for loan losses |
750 | 300 | 1,500 | 800 | ||||||||||||
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Net interest income after provision for loan losses |
9,516 | 9,481 | 18,932 | 18,968 | ||||||||||||
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Noninterest income |
||||||||||||||||
Service charges |
1,027 | 1,066 | 2,006 | 2,032 | ||||||||||||
Net gain on sale of securities |
107 | 41 | 112 | 58 | ||||||||||||
ATM fees |
514 | 511 | 974 | 972 | ||||||||||||
Trust fees |
786 | 626 | 1,574 | 1,228 | ||||||||||||
Bank owned life insurance |
126 | 144 | 255 | 291 | ||||||||||||
Tax refund processing fees |
438 | 46 | 2,315 | 426 | ||||||||||||
Item processing fees |
70 | 64 | 129 | 125 | ||||||||||||
Other |
312 | 333 | 639 | 915 | ||||||||||||
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Total noninterest income |
3,380 | 2,831 | 8,004 | 6,047 | ||||||||||||
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Noninterest expense |
||||||||||||||||
Salaries, wages and benefits |
5,279 | 5,581 | 11,005 | 11,088 | ||||||||||||
Net occupancy expense |
573 | 553 | 1,262 | 1,164 | ||||||||||||
Equipment expense |
361 | 288 | 703 | 567 | ||||||||||||
Contracted data processing |
306 | 263 | 591 | 525 | ||||||||||||
FDIC assessment |
250 | 286 | 487 | 546 | ||||||||||||
State franchise tax |
230 | 300 | 440 | 564 | ||||||||||||
Professional services |
554 | 691 | 1,128 | 1,433 | ||||||||||||
Amortization of intangible assets |
201 | 212 | 403 | 424 | ||||||||||||
ATM expense |
200 | 161 | 403 | 316 | ||||||||||||
Marketing |
300 | 192 | 600 | 385 | ||||||||||||
Other operating expenses |
1,725 | 1,819 | 3,386 | 3,542 | ||||||||||||
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Total noninterest expense |
9,979 | 10,346 | 20,408 | 20,554 | ||||||||||||
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Income before taxes |
2,917 | 1,966 | 6,528 | 4,461 | ||||||||||||
Income tax expense |
677 | 309 | 1,577 | 891 | ||||||||||||
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Net Income |
2,240 | 1,657 | 4,951 | 3,570 | ||||||||||||
Preferred stock dividends and discount accretion |
406 | 290 | 1,061 | 580 | ||||||||||||
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Net income available to common shareholders |
$ | 1,834 | $ | 1,367 | $ | 3,890 | $ | 2,990 | ||||||||
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Earnings per common share, basic |
$ | 0.24 | $ | 0.18 | $ | 0.50 | $ | 0.39 | ||||||||
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Earnings per common share, diluted |
$ | 0.21 | $ | 0.18 | $ | 0.43 | $ | 0.39 | ||||||||
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See notes to interim unaudited consolidated financial statements
Page 4
Table of Contents
FIRST CITIZENS BANC CORP
Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income |
$ | 2,240 | $ | 1,657 | $ | 4,951 | $ | 3,570 | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Unrealized holding gains (loss) on available for sale securities |
1,807 | (5,662 | ) | 3,802 | (6,286 | ) | ||||||||||
Tax effect |
(614 | ) | 1,925 | (1,292 | ) | 2,137 | ||||||||||
Reclassification adjustment for gain recognized in income |
(107 | ) | (41 | ) | (112 | ) | (58 | ) | ||||||||
Tax effect |
36 | 14 | 38 | 20 | ||||||||||||
Pension liability adjustment |
4,128 | 180 | 4,171 | 338 | ||||||||||||
Tax effect |
(1,403 | ) | (61 | ) | (1,417 | ) | (115 | ) | ||||||||
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Total other comprehensive income (loss) |
3,847 | (3,645 | ) | 5,190 | (3,964 | ) | ||||||||||
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Comprehensive income (loss) |
$ | 6,087 | $ | (1,988 | ) | $ | 10,141 | $ | (394 | ) | ||||||
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See notes to interim unaudited consolidated financial statements
Page 5
Table of Contents
FIRST CITIZENS BANC CORP
Condensed Consolidated Statement of Shareholders Equity (Unaudited)
(In thousands, except share data)
Accumulated Other Comprehensive Loss |
Total Shareholders Equity |
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Preferred Shares | Common Shares | |||||||||||||||||||||||||||||||
Outstanding Shares |
Amount | Outstanding Shares |
Amount | Accumulated Deficit |
Treasury Shares |
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Balance, January 1, 2014 |
48,184 | $ | 46,316 | 7,707,917 | $ | 114,365 | $ | (10,823 | ) | $ | (17,235 | ) | $ | (4,247 | ) | $ | 128,376 | |||||||||||||||
Net Income |
| | | | 4,951 | | | 4,951 | ||||||||||||||||||||||||
Other comprehensive income |
| | | | | | 5,190 | 5,190 | ||||||||||||||||||||||||
Redemption of Series A preferred shares |
(23,184 | ) | (23,184 | ) | | | 327 | | | (22,857 | ) | |||||||||||||||||||||
Cash dividends ($.09 per share) |
| | | | (694 | ) | | | (694 | ) | ||||||||||||||||||||||
Preferred share dividend |
| | | | (1,061 | ) | | | (1,061 | ) | ||||||||||||||||||||||
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Balance, June 30, 2014 |
25,000 | $ | 23,132 | 7,707,917 | $ | 114,365 | $ | (7,300 | ) | $ | (17,235 | ) | $ | 943 | $ | 113,905 | ||||||||||||||||
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See notes to interim unaudited consolidated financial statements
Page 6
Table of Contents
FIRST CITIZENS BANC CORP
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
Six months ended June 30, |
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2014 | 2013 | |||||||
Net cash from operating activities |
$ | 7,990 | $ | 7,926 | ||||
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Cash flows used for investing activities: |
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Maturities and calls of securities, available-for-sale |
29,329 | 32,277 | ||||||
Purchases of securities, available-for-sale |
(42,453 | ) | (43,116 | ) | ||||
Sale of securities available for sale |
18,088 | 7,758 | ||||||
Redemption of Federal Reserve stock |
| 27 | ||||||
Redemption of Federal Home Loan Bank stock |
3,009 | | ||||||
Purchases of FRB stock |
(133 | ) | | |||||
Net loan repayments (originations) |
(7,361 | ) | 4,160 | |||||
Purchases of consumer loans |
(2,159 | ) | | |||||
Proceeds from sale of other real estate owned properties |
95 | 370 | ||||||
Proceeds from sale of premises and equipment |
181 | 118 | ||||||
Purchases of premises and equipment |
(227 | ) | (429 | ) | ||||
Net cash provided by (used for) investing activities |
(1,631 | ) | 1,165 | |||||
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Cash flows from financing activities: |
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Repayment of FHLB advances |
(226 | ) | (17 | ) | ||||
Increase in deposits |
36,661 | 11,816 | ||||||
Decrease in securities sold under repurchase agreements |
(2,172 | ) | (3,798 | ) | ||||
Repayment of series A preferred stock |
(22,857 | ) | | |||||
Cash dividends paid on common shares and preferred shares |
(1,755 | ) | (1,119 | ) | ||||
Net cash provided by financing activities |
9,651 | 6,882 | ||||||
Increase in cash and due from financial institutions |
16,010 | 15,973 | ||||||
Cash and due from financial institutions at beginning of period |
33,883 | 46,131 | ||||||
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Cash and due from financial institutions at end of period |
$ | 49,893 | $ | 62,104 | ||||
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Cash paid during the period for: |
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Interest |
$ | 2,269 | $ | 2,559 | ||||
Income taxes |
$ | 750 | $ | 1,010 | ||||
Supplemental cash flow information: |
||||||||
Transfer of loans from portfolio to other real estate owned |
$ | 195 | $ | 187 | ||||
Transfer of premises to held-for-sale |
$ | 675 | $ | |
See notes to interim unaudited consolidated financial statements
Page 7
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(1) Consolidated Financial Statements
Nature of Operations and Principles of Consolidation: The Consolidated Financial Statements include the accounts of First Citizens Banc Corp (FCBC) and its wholly-owned subsidiaries: The Citizens Banking Company (Citizens), First Citizens Insurance Agency, Inc., Water Street Properties, Inc. (Water St.) and FC Refund Solutions, Inc (FCRS). FCRS was formed to facilitate payment of individual state and federal income tax refunds. First Citizens Capital LLC (FCC) is wholly-owned by Citizens and holds intercompany debt. The operations of FCC are located in Wilmington, Delaware. First Citizens Investments, Inc. (FCI) is wholly-owned by Citizens and holds and manages its securities portfolio. The operations of FCI are located in Wilmington, Delaware. The above companies together are referred to as the Company. Intercompany balances and transactions are eliminated in consolidation.
The consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Companys financial position as of June 30, 2014 and its results of operations and changes in cash flows for the periods ended June 30, 2014 and 2013 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 generally accepted accounting principles in the United States of America have been omitted. The results of operations for the period ended June 30, 2014 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Company described in the notes to the financial statements contained in the Companys 2013 annual report. The Company has consistently followed these policies in preparing this Form 10-Q.
The Company provides financial services through its offices in the Ohio counties of Erie, Crawford, Champaign, Franklin, Logan, Madison, Summit, Huron, Ottawa, and Richland. 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 commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Citizens has one concentration to lessors of residential buildings and dwellings totaling $100,376 million or 11.6 percent of total loans as of June 30, 2014. This portfolio predominantly consists of commercial loans financing multi-family real estate. This segment of the portfolio is stable and has been conservatively underwritten, monitored and managed by experienced commercial lenders. However, the customers ability to repay their loans is dependent on the real estate and general economic conditions in the area. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions and Federal Funds sold.
First Citizens Insurance Agency, Inc. was formed to allow the Company to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue was less than 1.0% of total revenue through June 30, 2014. Water St. revenue was less than 1.0% of total revenue through June 30, 2014. Management considers the Company to operate primarily in one reportable segment, banking.
Page 8
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(2) Significant Accounting Policies
Use of Estimates: 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, impairment of goodwill, fair values of financial instruments, deferred taxes and pension obligations are particularly subject to change.
Income Taxes: 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.
Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.
Derivative Instruments and Hedging Activities: The Company enters into swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. All derivatives are accounted for in accordance with ASC-815, Derivatives and Hedging. The Company mitigates the risk of entering into these agreements by entering into equal and offsetting swap agreements with highly rated third party financial institutions. The swap agreements are free-standing derivatives and are recorded at fair value in the Companys consolidated statements of condition. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of marketable securities, is posted by the counterparty with net liability positions in accordance with contract thresholds.
Effect of Newly Issued but Not Yet Effective Accounting Standards:
In January 2014, FASB issued ASU 2014-01, Investments Equity Method and Join Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those
Page 9
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. Adoption of this Update is not expected to have a significant impact on the Companys financial statements.
In January 2014, the FASB issued ASU 2014-04, Receivables Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU is not expected to have a significant impact on the Companys financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Updates core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.
In June 2014, the FASB issued ASU 2014-10, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be
Page 10
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This Update is not expected to have a significant impact on the Companys financial statements.
In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company is currently evaluating the impact the adoption of the standard will have on the Companys financial position or results of operations.
Page 11
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(3) Securities
The amortized cost and fair market value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | |||||||||||||
June 30, 2014 |
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies |
$ | 45,373 | $ | 144 | $ | (267 | ) | $ | 45,250 | |||||||
Obligations of states and political subdivisions |
81,317 | 3,855 | (568 | ) | 84,604 | |||||||||||
Mortgage-backed securities in government sponsored entities |
66,300 | 1,202 | (183 | ) | 67,319 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total debt securities |
192,990 | 5,201 | (1,018 | ) | 197,173 | |||||||||||
Equity securities in financial institutions |
481 | 26 | | 507 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 193,471 | $ | 5,227 | $ | (1,018 | ) | $ | 197,680 | |||||||
|
|
|
|
|
|
|
|
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | |||||||||||||
December 31, 2013 |
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies |
$ | 52,229 | $ | 95 | $ | (764 | ) | $ | 51,560 | |||||||
Obligations of states and political subdivisions |
79,975 | 2,327 | (1,677 | ) | 80,625 | |||||||||||
Mortgage-backed securities in government sponsored entities |
66,409 | 1,127 | (557 | ) | 66,979 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total debt securities |
198,613 | 3,549 | (2,998 | ) | 199,164 | |||||||||||
Equity securities in financial institutions |
481 | | (32 | ) | 449 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 199,094 | $ | 3,549 | $ | (3,030 | ) | $ | 199,613 | |||||||
|
|
|
|
|
|
|
|
Page 12
Table of Contents
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, 2014, by contractual maturity, is 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 |
$ | 295 | $ | 297 | ||||
Due after one year through five years |
25,614 | 25,649 | ||||||
Due after five years through ten years |
38,867 | 40,087 | ||||||
Due after ten years |
61,914 | 63,821 | ||||||
Mortgage-backed securities |
66,300 | 67,319 | ||||||
Equity securities |
481 | 507 | ||||||
|
|
|
|
|||||
Total securities available for sale |
$ | 193,471 | $ | 197,680 | ||||
|
|
|
|
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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Sale proceeds |
$ | 3,075 | $ | 7,242 | $ | 18,088 | $ | 7,758 | ||||||||
Gross realized gains |
107 | 130 | 112 | 144 | ||||||||||||
Gross realized losses |
| 89 | | 89 | ||||||||||||
Gains from securities called or settled by the issuer |
| | | 3 |
Securities were pledged to secure public deposits, other deposits and liabilities as required by law. The carrying value of pledged securities was approximately $149,589 and $147,625 as of June 30, 2014 and December 31, 2013, respectively.
Page 13
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Securities with unrealized losses at June 30, 2014 and December 31, 2013 not recognized in income, aggregated by investment category and the length of time which the individual securities have been in a loss position, are as follows:
June 30, 2014 |
12 Months or less | More than 12 months | Total | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Description of Securities |
Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies |
$ | 4,004 | $ | (33 | ) | $ | 20,352 | $ | (234 | ) | $ | 24,356 | $ | (267 | ) | |||||||||
Obligations of states and political subdivisions |
6,147 | (269 | ) | 11,665 | (299 | ) | 17,812 | (568 | ) | |||||||||||||||
Mortgage-backed securities in govt sponsored entities |
3,834 | (14 | ) | 15,593 | (169 | ) | 19,427 | (183 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total temporarily impaired |
$ | 13,985 | $ | (316 | ) | $ | 47,610 | $ | (702 | ) | $ | 61,595 | $ | (1,018 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2013 |
12 Months or less | More than 12 months | Total | |||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Description of Securities |
Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies |
$ | 30,800 | $ | (764 | ) | $ | | $ | | $ | 30,800 | $ | (764 | ) | ||||||||||
Obligations of states and political subdivisions |
28,428 | (1,556 | ) | 968 | (121 | ) | 29,396 | (1,677 | ) | |||||||||||||||
Mortgage-backed securities in govt sponsored entities |
32,557 | (553 | ) | 279 | (4 | ) | 32,836 | (557 | ) | |||||||||||||||
Equity securities in financial institutions |
449 | (32 | ) | | | 449 | (32 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total temporarily impaired |
$ | 92,234 | $ | (2,905 | ) | $ | 1,247 | $ | (125 | ) | $ | 93,481 | $ | (3,030 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2014 there were fifty securities in the portfolio with unrealized losses mainly due to higher market rates when compared to the time of purchase. Unrealized losses on securities have not been recognized into income because the issuers securities are of high credit quality, management has the intent and ability to hold these securities for the foreseeable future, and the decline in fair value is largely due to market yields increasing across the municipal sector. The fair value is expected to recover as the securities approach their maturity date or reset date. The Company does not intend to sell until recovery and does not believe selling will be required before recovery.
Page 14
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(4) Loans
Loan balances were as follows:
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
Commercial and agriculture |
$ | 107,769 | $ | 115,875 | ||||
Commercial real estate |
441,263 | 443,846 | ||||||
Residential real estate |
254,672 | 250,691 | ||||||
Real estate construction |
51,243 | 39,964 | ||||||
Consumer and other |
13,031 | 10,865 | ||||||
Total loans |
867,978 | 861,241 | ||||||
Allowance for loan losses |
(15,395 | ) | (16,528 | ) | ||||
Net loans |
$ | 852,583 | $ | 844,713 | ||||
|
|
|
|
Included in total loans above are deferred loan fees of $319 at June 30, 2014 and $365 at December 31, 2013.
(5) Allowance for Loan Losses
Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Historical loss percentages for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. These historical loss percentages are calculated over a two-year period for all portfolio segments. Certain economic factors are also considered for trends which management uses to establish the directionality of changes to the unallocated portion of the reserve. The following economic factors are analyzed:
| Changes in lending policies and procedures |
| Changes in experience and depth of lending and management staff |
| Changes in quality of Citizens credit review system |
| Changes in nature and volume of the loan portfolio |
| Changes in past due, classified and nonaccrual loans and TDRs |
| Changes in economic and business conditions |
| Changes in competition or legal and regulatory requirements |
| Changes in concentrations within the loan portfolio |
| Changes in the underlying collateral for collateral dependent loans |
Page 15
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The total allowance reflects managements estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $15,395 adequate to cover loan losses inherent in the loan portfolio, at June 30, 2014. The following tables present, by portfolio segment, the changes in the allowance for loan losses and the loan balances outstanding for the six months ended June 30, 2014 and 2013.
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
For the six months ended June 30, 2014 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 2,841 | $ | 7,559 | $ | 5,224 | $ | 184 | $ | 214 | $ | 506 | $ | 16,528 | ||||||||||||||
Charge-offs |
(313 | ) | (1,574 | ) | (1,054 | ) | | (43 | ) | | (2,984 | ) | ||||||||||||||||
Recoveries |
95 | 99 | 121 | 3 | 33 | | 351 | |||||||||||||||||||||
Provision |
(556 | ) | 1,904 | 148 | 100 | (8 | ) | (88 | ) | 1,500 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 2,067 | $ | 7,988 | $ | 4,439 | $ | 287 | $ | 196 | $ | 418 | $ | 15,395 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2014, the allowance for Commercial & Agriculture loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the specific reserve required for this type. The net result of these changes was represented as a decrease in the provision. The increase in the allowance for Commercial Real Estate loans was the result of large charge offs, which led to increased general reserves due to an increase in loss rate. The net result of these changes was represented as an increase in the provision. The allowance for Residential Real Estate loans decreased during the period due to charge-offs of loans that had a specific reserve previously applied, a reduction in total loans past due and a reduction in nonaccrual loans. The net result of these changes was represented as a decrease in the provision. The loss rate on Consumer loans decreased for the six months ended June 30, 2014 and is reflected in a negative provision. Overall, we have seen continued improvement in asset quality, leading to a small decrease in unallocated reserves.
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
For the six months ended June 30, 2013 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 2,811 | $ | 10,139 | $ | 5,780 | $ | 349 | $ | 246 | $ | 417 | $ | 19,742 | ||||||||||||||
Charge-offs |
(92 | ) | (631 | ) | (1,021 | ) | | (122 | ) | | (1,866 | ) | ||||||||||||||||
Recoveries |
62 | 223 | 301 | 106 | 37 | | 729 | |||||||||||||||||||||
Provision |
994 | (575 | ) | 109 | (271 | ) | (12 | ) | 555 | 800 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 3,775 | $ | 9,156 | $ | 5,169 | $ | 184 | $ | 149 | $ | 972 | $ | 19,405 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
For the six months ended June 30, 2013, the allowance for Commercial and Agriculture loans increased primarily as a result of reserves on specific loans. There was also an increase related to increased loan balances. The allowance for Commercial Real Estate loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the specific reserve required for this type. The net result of these changes was represented as a decrease in the provision. The allowance for Residential Real Estate loans decreased as a result of charged-off loans for which there had previously been a specific reserve. The allowance for Real Estate Construction loans was reduced as a result of changes to specific reserves required and the historical charge-offs for this type. The result of these changes was represented as a decrease in the provision. The allowance for Consumer loans was reduced as a result of changes to the historical charge-offs for this type. While we saw improvement in asset quality during the period, given the uncertainty in the economy, management determined that it was appropriate to maintain unallocated reserves at a higher level.
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
For the three months ended June 30, 2014 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 2,607 | $ | 7,997 | $ | 5,050 | $ | 295 | $ | 239 | $ | 579 | $ | 16,767 | ||||||||||||||
Charge-offs |
(84 | ) | (1,500 | ) | (737 | ) | | (11 | ) | | (2,332 | ) | ||||||||||||||||
Recoveries |
37 | 82 | 72 | 2 | 17 | | 210 | |||||||||||||||||||||
Provision |
(493 | ) | 1,409 | 54 | (10 | ) | (49 | ) | (161 | ) | 750 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 2,067 | $ | 7,988 | $ | 4,439 | $ | 287 | $ | 196 | $ | 418 | $ | 15,395 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2014, the allowance for Commercial and Agriculture loans decreased both as a result of decreased reserves on specific loans and a decrease in the loss rate. The result of these changes was represented as a decrease in the provision. The allowance for Commercial Real Estate loans was reduced by charge-offs, which was partially offset by an increase in the loss rate. The impact of these two changes was nearly equal and offsetting. The allowance for Residential Real Estate loans was reduced as a result of charge offs, a reduction in total loans past due and a reduction in nonaccrual loans, partially offset by changes related to increased volume. The net result of these changes was represented as a decrease in the provision. We have seen continued improvement in asset quality, leading to a small decrease in unallocated reserves.
Page 17
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
For the three months ended June 30, 2013 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Beginning balance |
$ | 2,937 | $ | 9,924 | $ | 5,414 | $ | 314 | $ | 225 | $ | 896 | $ | 19,710 | ||||||||||||||
Charge-offs |
(92 | ) | (319 | ) | (534 | ) | | (40 | ) | | (985 | ) | ||||||||||||||||
Recoveries |
21 | 133 | 145 | 54 | 27 | | 380 | |||||||||||||||||||||
Provision |
909 | (582 | ) | 144 | (184 | ) | (63 | ) | 76 | 300 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 3,775 | $ | 9,156 | $ | 5,169 | $ | 184 | $ | 149 | $ | 972 | $ | 19,405 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, 2013, the allowance for Commercial and Agriculture loans increased both as a result of increased reserves on specific loans and reserves related to increased loan balances. The allowance for Commercial Real Estate loans was reduced not only by charge-offs, but also due to a decrease in both the loan balances outstanding and the specific reserve required for this type. The allowance for Real Estate Construction loans was reduced as a result of changes to specific reserves required and the historical charge-offs for this type. The allowance for Consumer loans was reduced as a result of changes to the historical charge-offs for this type. The result of these changes for each loan type was represented as a decrease in the provision. While we saw improvement in asset quality during the period, given the uncertainty in the economy, management determined that it was appropriate to maintain unallocated reserves at a higher level.
Page 18
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
June 30, 2014 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated for impairment |
$ | 769 | $ | 175 | $ | 377 | $ | | $ | | $ | | $ | 1,321 | ||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated for impairment |
$ | 1,298 | $ | 7,813 | $ | 4,062 | $ | 287 | $ | 196 | $ | 418 | $ | 14,074 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 2,067 | $ | 7,988 | $ | 4,439 | $ | 287 | $ | 196 | $ | 418 | $ | 15,395 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loan balances outstanding: |
||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated for impairment |
$ | 3,339 | $ | 8,840 | $ | 3,445 | $ | | $ | 6 | $ | 15,630 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated for impairment |
$ | 104,430 | $ | 432,423 | $ | 251,227 | $ | 51,243 | $ | 13,025 | $ | 852,348 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending Balance |
$ | 107,769 | $ | 441,263 | $ | 254,672 | $ | 51,243 | $ | 13,031 | $ | 867,978 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Page 19
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Unallocated | Total | ||||||||||||||||||||||
December 31, 2013 |
||||||||||||||||||||||||||||
Allowance for loan losses: |
||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated for impairment |
$ | 1,262 | $ | 445 | $ | 802 | $ | | $ | | $ | | $ | 2,509 | ||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated for impairment |
$ | 1,579 | $ | 7,114 | $ | 4,422 | $ | 184 | $ | 214 | $ | 506 | $ | 14,019 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ending Balance |
$ | 2,841 | $ | 7,559 | $ | 5,224 | $ | 184 | $ | 214 | $ | 506 | $ | 16,528 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loan balances outstanding: |
||||||||||||||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Individually evaluated for impairment |
$ | 3,869 | $ | 10,175 | $ | 4,005 | $ | | $ | 8 | $ | 18,057 | ||||||||||||||||
Ending balance: |
||||||||||||||||||||||||||||
Collectively evaluated for impairment |
$ | 112,006 | $ | 433,671 | $ | 246,686 | $ | 39,964 | $ | 10,857 | $ | 843,184 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ending Balance |
$ | 115,875 | $ | 443,846 | $ | 250,691 | $ | 39,964 | $ | 10,865 | $ | 861,241 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Page 20
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following tables present credit exposures by internally assigned grades for the periods ended June 30, 2014 and December 31, 2013. The remaining loans in Residential Real Estate, Real Estate Construction and Consumer and Other loans that are not assigned a risk grade are presented in a separate table below. The risk rating analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Companys internal credit risk grading system is based on experiences with similarly graded loans.
The Companys internally assigned grades are as follows:
| Pass loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. |
| Special Mention loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. |
| Substandard loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that Citizens will sustain some loss if the deficiencies are not corrected. |
| Doubtful loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. |
| Loss loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted. |
Generally, Residential Real Estate, Real Estate Construction and Consumer and Other loans are not risk-graded, except when collateral is used for a business purpose.
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Total | |||||||||||||||||||
June 30, 2014 |
||||||||||||||||||||||||
Pass |
$ | 98,393 | $ | 409,690 | $ | 93,980 | $ | 47,389 | $ | 4,081 | $ | 653,533 | ||||||||||||
Special Mention |
3,747 | 15,509 | 899 | 20 | | 20,175 | ||||||||||||||||||
Substandard |
5,629 | 16,064 | 9,843 | 8 | 75 | 31,619 | ||||||||||||||||||
Doubtful |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending Balance |
$ | 107,769 | $ | 441,263 | $ | 104,722 | $ | 47,417 | $ | 4,156 | $ | 705,327 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial & Agriculture |
Commercial Real Estate |
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Total | |||||||||||||||||||
December 31, 2013 |
||||||||||||||||||||||||
Pass |
$ | 107,923 | $ | 415,938 | $ | 98,700 | $ | 35,495 | $ | 2,252 | $ | 660,308 | ||||||||||||
Special Mention |
2,038 | 9,145 | 986 | 21 | | 12,190 | ||||||||||||||||||
Substandard |
5,914 | 18,763 | 8,175 | | 70 | 32,922 | ||||||||||||||||||
Doubtful |
| | 2,349 | | | 2,349 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending Balance |
$ | 115,875 | $ | 443,846 | $ | 110,210 | $ | 35,516 | $ | 2,322 | $ | 707,769 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Page 21
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following tables present performing and nonperforming loans based solely on payment activity for the periods ended June 30, 2014 and December 31, 2013 that have not been assigned an internal risk grade. The types of loans presented here are not assigned a risk grade unless there is evidence of a problem. Payment activity is reviewed by management on a monthly basis to evaluate performance. Loans are considered to be nonperforming when they become 90 days past due or if management thinks that we may not collect all of our principal and interest. Nonperforming loans may also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Companys loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions due to economic status. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrowers sustained repayment performance for a reasonable period, generally six months.
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Total | |||||||||||||
June 30, 2014 |
||||||||||||||||
Performing |
$ | 149,950 | $ | 3,826 | $ | 8,875 | $ | 162,651 | ||||||||
Nonperforming |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 149,950 | $ | 3,826 | $ | 8,875 | $ | 162,651 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Residential Real Estate |
Real Estate Construction |
Consumer and Other |
Total | |||||||||||||
December 31, 2013 |
||||||||||||||||
Performing |
$ | 140,481 | $ | 4,448 | $ | 8,543 | $ | 153,472 | ||||||||
Nonperforming |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 140,481 | $ | 4,448 | $ | 8,543 | $ | 153,472 | ||||||||
|
|
|
|
|
|
|
|
Page 22
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following tables include an aging analysis of the recorded investment of past due loans outstanding as of June 30, 2014 and December 31, 2013.
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current | Total Loans | Past Due 90 Days and Accruing |
||||||||||||||||||||||
June 30, 2014 |
||||||||||||||||||||||||||||
Commercial & Agriculture |
$ | 74 | $ | | $ | 220 | $ | 294 | $ | 107,475 | $ | 107,769 | $ | | ||||||||||||||
Commercial Real Estate |
977 | 53 | 1,570 | 2,600 | 438,663 | 441,263 | | |||||||||||||||||||||
Residential Real Estate |
680 | 1,405 | 4,107 | 6,192 | 248,480 | 254,672 | | |||||||||||||||||||||
Real Estate Construction |
620 | 8 | | 628 | 50,615 | 51,243 | | |||||||||||||||||||||
Consumer and Other |
31 | 21 | 28 | 80 | 12,951 | 13,031 | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 2,382 | $ | 1,487 | $ | 5,925 | $ | 9,794 | $ | 858,184 | $ | 867,978 | $ | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current | Total Loans | Past Due 90 Days and Accruing |
||||||||||||||||||||||
December 31, 2013 |
||||||||||||||||||||||||||||
Commercial & Agriculture |
$ | 105 | $ | | $ | 443 | $ | 548 | $ | 115,327 | $ | 115,875 | $ | | ||||||||||||||
Commercial Real Estate |
655 | 201 | 2,098 | 2,954 | 440,892 | 443,846 | | |||||||||||||||||||||
Residential Real Estate |
3,140 | 1,084 | 5,531 | 9,755 | 240,936 | 250,691 | | |||||||||||||||||||||
Real Estate Construction |
| | | | 39,964 | 39,964 | | |||||||||||||||||||||
Consumer and Other |
170 | 20 | | 190 | 10,675 | 10,865 | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | 4,070 | $ | 1,305 | $ | 8,072 | $ | 13,447 | $ | 847,794 | $ | 861,241 | $ | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. Loans that are not delinquent 90 days or more may still be considered for nonaccrual status if management has recognized one or more weaknesses in a loan that indicate the Company may not be assured of collecting all principal and interest contractually due under terms of the loan. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income.
Page 23
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table presents loans on nonaccrual status as of June 30, 2014 and December 31, 2013.
June 30, 2014 | December 31, 2013 | |||||||
Commercial & Agriculture |
$ | 1,187 | $ | 1,590 | ||||
Commercial Real Estate |
8,468 | 9,609 | ||||||
Residential Real Estate |
7,898 | 9,210 | ||||||
Real Estate Construction |
| | ||||||
Consumer and Other |
59 | 50 | ||||||
|
|
|
|
|||||
Total |
$ | 17,612 | $ | 20,459 | ||||
|
|
|
|
Loan modifications that are considered TDRs completed during the six-month periods ended June 30, 2014 and June 30, 2013 were as follows:
For the Six-Month Period Ended June 30, 2014 |
For the Six-Month Period Ended June 30, 2013 |
|||||||||||||||||||||||
Number of Contracts |
Pre- Modification Outstanding Recorded Investment |
Post- Modification Outstanding Recorded Investment |
Number of Contracts |
Pre- Modification Outstanding Recorded Investment |
Post- Modification Outstanding Recorded Investment |
|||||||||||||||||||
Commercial & Agriculture |
| $ | | $ | | | $ | | $ | | ||||||||||||||
Commercial Real Estate |
| | | 1 | 125 | 125 | ||||||||||||||||||
Residential Real Estate |
2 | 149 | 149 | | | | ||||||||||||||||||
Real Estate Construction |
| | | | | | ||||||||||||||||||
Consumer and Other |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Loan Modifications |
2 | $ | 149 | $ | 149 | 1 | $ | 125 | $ | 125 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
There were no loan modifications that are considered TDRs completed during the quarters ended June 30, 2014 and June 30, 2013.
Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. At June 30, 2014, TDRs accounted for $465 of the allowance for loan losses.
During the six-month period ended June 30, 2014, there were no defaults, on loans which were modified and considered TDRs during the twelve months previous to the six-month period ended June 30, 2014.
During the six-month period ended June 30, 2013, there were two defaults, totaling $66, on loans which were modified and considered TDRs during the twelve months previous to the six-month period ended June 30, 2013.
Page 24
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
During the three-month period ended June 30, 2014, there were no defaults, on loans which were modified and considered TDRs during the twelve months previous to the three-month period ended June 30, 2014.
During the three-month period ended June 30, 2013, there were two defaults, totaling $66, on loans which were modified and considered TDRs during the twelve months previous to the three-month period ended June 30, 2013.
Impaired Loans: Larger Commercial loans and Commercial Real Estate loans or lending relationships at or above $350,000, many of which are 60 days or more past due, are tested for impairment. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. Additionally, if a Residential Real Estate loan or Consumer loan is part of a relationship with a Commercial loan or Commercial Real Estate loan that is impaired, then the Residential Real Estate loan or Consumer loan is considered impaired as well.
Page 25
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table includes the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable, as of June 30, 2014 and December 31, 2013.
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
|||||||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||||||
Commercial & Agriculture |
$ | 1,380 | $ | 1,504 | $ | | $ | 1,525 | $ | 1,657 | $ | | ||||||||||||
Commercial Real Estate |
6,419 | 7,784 | | 5,983 | 6,214 | | ||||||||||||||||||
Residential Real Estate |
1,579 | 2,752 | | 1,202 | 2,263 | | ||||||||||||||||||
Real Estate Construction |
| | | | | | ||||||||||||||||||
Consumer and Other |
6 | 6 | | 8 | 8 | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
9,384 | 12,046 | | 8,718 | 10,142 | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
With an allowance recorded: |
||||||||||||||||||||||||
Commercial & Agriculture |
1,959 | 2,062 | 769 | 2,344 | 2,437 | 1,262 | ||||||||||||||||||
Commercial Real Estate |
2,421 | 2,722 | 175 | 4,192 | 4,496 | 445 | ||||||||||||||||||
Residential Real Estate |
1,866 | 3,808 | 377 | 2,803 | 4,021 | 802 | ||||||||||||||||||
Real Estate Construction |
| | | | | | ||||||||||||||||||
Consumer and Other |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
6,246 | 8,592 | 1,321 | 9,339 | 10,954 | 2,509 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total: |
||||||||||||||||||||||||
Commercial & Agriculture |
3,339 | 3,566 | 769 | 3,869 | 4,094 | 1,262 | ||||||||||||||||||
Commercial Real Estate |
8,840 | 10,506 | 175 | 10,175 | 10,710 | 445 | ||||||||||||||||||
Residential Real Estate |
3,445 | 6,560 | 377 | 4,005 | 6,284 | 802 | ||||||||||||||||||
Real Estate Construction |
| | | | | | ||||||||||||||||||
Consumer and Other |
6 | 6 | | 8 | 8 | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 15,630 | $ | 20,638 | $ | 1,321 | $ | 18,057 | $ | 21,096 | $ | 2,509 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Page 26
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following tables include the average recorded investment and interest income recognized for impaired financing receivables for the three and six-month periods ended June 30, 2014 and 2013.
June 30, 2014 | June 30, 2013 | |||||||||||||||
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
|||||||||||||
For the six months ended: |
||||||||||||||||
Commercial & Agriculture |
$ | 3,986 | $ | 79 | $ | 5,178 | $ | 131 | ||||||||
Commercial Real Estate |
10,034 | 222 | 13,292 | 409 | ||||||||||||
Residential Real Estate |
3,628 | 146 | 5,794 | 269 | ||||||||||||
Real Estate Construction |
| | 503 | 11 | ||||||||||||
Consumer and Other |
7 | | 40 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 17,655 | $ | 447 | $ | 24,807 | $ | 820 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2014 | June 30, 2013 | |||||||||||||||
Average Recorded Investment |
Interest Income Recognized |
Average Recorded Investment |
Interest Income Recognized |
|||||||||||||
For the three months ended: |
||||||||||||||||
Commercial & Agriculture |
$ | 4,045 | $ | 14 | $ | 5,125 | $ | 63 | ||||||||
Commercial Real Estate |
9,907 | 75 | 12,855 | 204 | ||||||||||||
Residential Real Estate |
3,495 | 54 | 5,671 | 126 | ||||||||||||
Real Estate Construction |
| | 483 | 6 | ||||||||||||
Consumer and Other |
7 | | 31 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 17,454 | $ | 143 | $ | 24,165 | $ | 399 | ||||||||
|
|
|
|
|
|
|
|
Page 27
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(6) Other Comprehensive Income
The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the six-month periods ended June 30, 2014 and 2013:
For the Six-Month Period Ended June 30, 2014 |
For the Six-Month Period Ended June 30, 2013 |
|||||||||||||||||||||||
Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total | Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total | |||||||||||||||||||
Beginning balance |
$ | 341 | $ | (4,588 | ) | $ | (4,247 | ) | $ | 5,849 | $ | (7,496 | ) | $ | (1,647 | ) | ||||||||
Other comprehensive income (loss) before reclassifications |
2,510 | 2,666 | 5,176 | (4,149 | ) | | (4,149 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
(74 | ) | 88 | 14 | (38 | ) | 223 | 185 | ||||||||||||||||
Net current-period other comprehensive income (loss) |
2,436 | 2,754 | 5,190 | (4,187 | ) | 223 | (3,964 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending balance |
$ | 2,777 | $ | (1,834 | ) | $ | 943 | $ | 1,662 | $ | (7,273 | ) | $ | (5,611 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in parentheses indicate debits.
Page 28
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the six-month periods ended June 30, 2014 and 2013:
Amout Reclassified from Accumulated Other Comprehensive Income (Loss) (a) |
||||||||||
Details about Accumulated Other Comprehensive Income |
For the six months ended June 30, 2014 |
For the six months ended June 30, 2013 |
Affected Line Item in the Statement Where Net Income is Presented | |||||||
Unrealized gains and losses on available-for-sale securities |
$ | 112 | $ | 58 | Net gain on sale of securities | |||||
Tax effect |
(38 | ) | (20 | ) | Income tax expense | |||||
74 | 38 | Net of tax | ||||||||
Amortization of defined benefit pension items |
||||||||||
Actuarial gains/(losses) |
(132 | )(b) | (338 | )(b) | Salaries, wages and benefits | |||||
Tax effect |
44 | 115 | Income tax expense | |||||||
|
|
|
|
|||||||
(88 | ) | (223 | ) | Net of tax | ||||||
Total reclassifications for the period |
$ | (14 | ) | $ | (185 | ) | Net of tax | |||
|
|
|
|
(a) | Amounts in parentheses indicate debits to profit/loss. |
(b) | These accumulated other comprehensive income components are included in the computation of net periodic pension cost. |
Page 29
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three-month periods ended June 30, 2014 and 2013:
For the Three-Month Period Ended | For the Three-Month Period Ended | |||||||||||||||||||||||
June 30, 2014 | June 30, 2013 | |||||||||||||||||||||||
Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total | Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total | |||||||||||||||||||
Beginning balance |
$ | 1,655 | $ | (4,559 | ) | $ | (2,904 | ) | $ | 5,426 | $ | (7,392 | ) | $ | (1,966 | ) | ||||||||
Other comprehensive income (loss) before reclassifications |
1,193 | 2,666 | 3,859 | (3,737 | ) | | (3,737 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
(71 | ) | 59 | (12 | ) | (27 | ) | 119 | 92 | |||||||||||||||
Net current-period other comprehensive income (loss) |
1,122 | 2,725 | 3,847 | (3,764 | ) | 119 | (3,645 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ending balance |
$ | 2,777 | $ | (1,834 | ) | $ | 943 | $ | 1,662 | $ | (7,273 | ) | $ | (5,611 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in parentheses indicate debits.
Page 30
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three-month periods ended June 30, 2014 and 2013:
Amout Reclassified from Accumulated Other Comprehensive Income (Loss) (a) |
||||||||||
Details about Accumulated Other Comprehensive Income |
For the three months ended June 30, 2014 |
For the three months ended June 30, 2013 |
Affected Line Item in the Statement Where Net Income is Presented | |||||||
Unrealized gains and losses on available-for-sale securities |
$ | 107 | $ | 41 | Net gain on sale of securities | |||||
Tax effect |
(36 | ) | (14 | ) | Income tax expense | |||||
71 | 27 | Net of tax | ||||||||
Amortization of defined benefit pension items |
||||||||||
Actuarial gains/(losses) |
(89 | )(b) | (180 | )(b) | Salaries, wages and benefits | |||||
Tax effect |
30 | 61 | Income tax expense | |||||||
|
|
|
|
|||||||
(59 | ) | (119 | ) | Net of tax | ||||||
|
|
|
|
|||||||
Total reclassifications for the period |
$ | 12 | $ | (92 | ) | Net of tax | ||||
|
|
|
|
(a) | Amounts in parentheses indicate debits to profit/loss. |
(b) | These accumulated other comprehensive (income) loss components are included in the computation of net periodic pension cost. |
Page 31
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(7) Earnings per Common Share
Basic earnings per share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under stock options, computed using the treasury stock method and the impact of the Companys convertible preferred shares using the if converted method.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Basic |
||||||||||||||||
Net income |
$ | 2,240 | $ | 1,657 | $ | 4,951 | $ | 3,570 | ||||||||
Preferred stock dividends and discount accretion |
406 | 290 | 1,061 | 580 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income available to common shareholdersbasic |
$ | 1,834 | $ | 1,367 | $ | 3,890 | $ | 2,990 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding |
7,707,917 | 7,707,917 | 7,707,917 | 7,707,917 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share |
$ | 0.24 | $ | 0.18 | $ | 0.50 | $ | 0.39 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
||||||||||||||||
Net income available to common shareholdersbasic |
$ | 1,834 | $ | 1,367 | $ | 3,890 | $ | 2,990 | ||||||||
Preferred stock dividends on convertible preferred stock |
406 | | 795 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income available to common shareholdersdiluted |
$ | 2,240 | $ | 1,367 | $ | 4,685 | $ | 2,990 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares outstanding for basic earnings per common share |
7,707,917 | 7,707,917 | 7,707,917 | 7,707,917 | ||||||||||||
Add: Dilutive effects of convertible preferred shares |
3,196,931 | | 3,196,931 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Average shares and dilutive potential common shares outstanding |
10,904,848 | 7,707,917 | 10,904,848 | 7,707,917 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per common share |
$ | 0.21 | $ | 0.18 | $ | 0.43 | $ | 0.39 | ||||||||
|
|
|
|
|
|
|
|
Stock options for 10,000 common shares that have an exercise price of $35.00 were not considered in computing diluted earnings per common share for the three- and six-month periods ended June 30, 2013 because they were anti-dilutive. There were no stock options outstanding during the three- and six-month periods ended June 30, 2014.
Page 32
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
For the three- and six-month period ended June 30, 2014 there were 3,196,931 dilutive shares related to the Companys convertible preferred shares. Under the if converted method, all convertible preferred shares are assumed to be converted into common shares at the corresponding conversion rate. These additional shares are then added to the common shares outstanding to calculate diluted earnings per share. Additionally, the dividends paid on the convertible preferred shares are added back to the numerator under this method.
(8) 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 amounts of financial instruments with off-balance-sheet risk were as follows for June 30, 2014 and December 31, 2013:
Contract Amount | ||||||||||||||||
June 30, 2014 | December 31, 2013 | |||||||||||||||
Fixed | Variable | Fixed | Variable | |||||||||||||
Rate | Rate | Rate | Rate | |||||||||||||
Commitment to extend credit: |
||||||||||||||||
Lines of credit and construction loans |
$ | 12,918 | $ | 175,894 | $ | 11,866 | $ | 151,332 | ||||||||
Overdraft protection |
9 | 21,884 | 18 | 21,084 | ||||||||||||
Letters of credit |
200 | 1,022 | 200 | 2,411 | ||||||||||||
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$ | 13,127 | $ | 198,800 | $ | 12,084 | $ | 174,827 | |||||||||
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Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included in the table above had interest rates ranging from 3.05% to 11.75% at June 30, 2014 and 3.05% to 13.75% at December 31, 2013, respectively. Maturities extend up to 30 years.
Citizens is 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 was $4,207 on June 30, 2014 and $2,959 on December 31, 2013.
Page 33
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
(9) Pension Information
The Company sponsors a pension plan which is a noncontributory defined benefit retirement plan for all employees who have attained the age of 20 1⁄2, completed six months of service and work 1,000 or more hours per year. Annual payments, subject to the maximum amount deductible for federal income tax purposes, are made to a pension trust fund. In 2006, the Company amended the pension plan to provide that no employee could be added as a participant to the pension plan after December 31, 2006. In 2014 the Company amended the pension plan again to provide that no additional benefits would accrue beyond April 30, 2014. This curtailment resulted in a reduction to the projected benefit obligation of $4,039. Also, the curtailment resulted in an increase in accumulated other comprehensive income (loss) of $2,666.
Net periodic pension expense was as follows:
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Service cost |
$ | 94 | $ | 310 | $ | 170 | $ | 583 | ||||||||
Interest cost |
201 | 228 | 381 | 428 | ||||||||||||
Expected return on plan assets |
(312 | ) | (249 | ) | (592 | ) | (468 | ) | ||||||||
Other components |
89 | 180 | 132 | 338 | ||||||||||||
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Net periodic pension cost |
$ | 72 | $ | 469 | $ | 91 | $ | 881 | ||||||||
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The total amount of contributions expected to be paid by the Company in 2014 is $765, compared to $4,900 in 2013. The 2013 contribution included $3,000 related to settlements of several retirements.
(10) Stock Options
The Companys 2000 Stock Option and Stock Appreciation Rights Plan (2000 Stock Option Plan) authorized the Company to grant options to buy up to an aggregate of 225,000 common shares of the Company to directors, officers and employees of the Company. The exercise price of stock options granted under the 2000 Stock Option Plan was based on the market price of the Companys common shares at the date of grant, the maximum option term was ten years, and options normally vested after three years. The Stock Option Plan expired in 2010, and no further stock options or other awards may be granted by the Company under the 2000 Stock Option Plan. Additionally, all options outstanding under the plan expired on April 12, 2013.
At the Companys annual meeting of shareholders held on April 15, 2014, the shareholders of the Company approved the First Citizens Banc Corp 2014 Incentive Plan (2014 Incentive Plan and together with the 2000 Stock Option Plan, the Plans). The 2014 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. No options or awards have been granted under the 2014 Incentive Plan.
Page 34
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
A summary of the activity in the Plans is as follows:
Six months ended June 30, 2013 Total options outstanding |
||||||||
Shares | Weighted Average Price Per Share |
|||||||
Outstanding at beginning of year |
10,000 | $ | 35.00 | |||||
Granted |
| | ||||||
Exercised |
| | ||||||
Forfeited |
| | ||||||
Expired |
(10,000 | ) | (35.00 | ) | ||||
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Options outstanding, end of period |
| $ | | |||||
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Options exercisable, end of period |
| $ | | |||||
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The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of our common shares as of the reporting date. As of June 30, 2013, there were no options that had intrinsic value.
(11) Fair Value Measurement
The Company uses a fair value hierarchy to measure fair value. This hierarchy describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices for identical assets in active markets that are identifiable on the measurement date; Level 2: Significant other observable inputs, such as quoted prices for similar assets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data; Level 3: Significant unobservable inputs that reflect the Companys own view about the assumptions that market participants would use in pricing an asset.
Debt securities: The fair values of securities available for sale are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities relationship to other benchmark quoted securities (Level 2 inputs).
Equity securities: The Companys equity securities are not actively traded in an open market. The fair values of these equity securities available for sale is determined by using market data inputs for similar securities that are observable (Level 2 inputs).
Page 35
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Impaired loans: The fair values of impaired loans are determined using the fair values of collateral for collateral dependent loans, or discounted cash flows. The Company uses independent appraisals, discounted cash flow models and other available data to estimate the fair value of collateral (Level 3 inputs).
Other real estate owned: The fair value of other real estate owned is determined using the fair value of collateral. The Company uses appraisals and other available data to estimate the fair value of collateral (Level 3 inputs). The appraised values are discounted to represent an estimated value in a distressed sale. Additionally, estimated costs to sell the property are used to further adjust the value.
Assets measured at fair value are summarized below.
Fair Value Measurements at June 30, 2014 Using: | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: |
||||||||||||
Assets measured at fair value on a recurring basis: |
||||||||||||
U.S. Treasury securities and obligations of U.S. Government agencies |
$ | | $ | 45,250 | $ | | ||||||
Obligations of states and political subdivisions |
| 84,604 | | |||||||||
Mortgage-backed securities in government sponsored entities |
| 67,319 | | |||||||||
Equity securities in financial institutions |
| 507 | | |||||||||
Assets measured at fair value on a nonrecurring basis: |
||||||||||||
Impaired loans |
$ | | $ | | $ | 14,309 | ||||||
Other real estate owned |
| | 282 |
Page 36
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Fair Value Measurements at December 31, 2013 Using: | ||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||
Assets: |
||||||||||||
Assets measured at fair value on a recurring basis: |
||||||||||||
U.S. Treasury securities and obligations of U.S. Government agencies |
$ | | $ | 51,560 | $ | | ||||||
Obligations of states and political subdivisions |
| 80,625 | | |||||||||
Mortgage-backed securities in government sponsored entities |
| 66,979 | | |||||||||
Equity securities in financial institutions |
| 449 | | |||||||||
Assets measured at fair value on a nonrecurring basis: |
||||||||||||
Impaired loans |
$ | | $ | | $ | 15,548 | ||||||
Other real estate owned |
| | 173 |
The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2014.
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
Fair Value Estimate |
Valuation Technique | Unobservable Input | Range | |||||||
June 30, 2014 |
||||||||||
Impaired loans |
$ | 14,309 | Appraisal of collateral | Appraisal adjustments |
10% - 30% | |||||
Liquidation expense | 0% - 10% | |||||||||
Holding period | 0 - 30 months | |||||||||
Discounted cash flows | Discount rates | 3.8% - 8.3% | ||||||||
Other real estate owned |
$ | 282 | Appraisal of collateral | Appraisal adjustments |
10% - 30% | |||||
Liquidation expense | 0% - 10% |
Page 37
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The following table presents quantitative information about the Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2013.
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
Fair Value Estimate |
Valuation Technique | Unobservable Input | Range | |||||||
December 31, 2013 |
||||||||||
Impaired loans |
$ | 15,548 | Appraisal of collateral | Appraisal adjustments |
10% - 30% | |||||
Liquidation expense | 0% - 10% | |||||||||
Holding period | 0 - 30 months | |||||||||
Discounted cash flows | Discount rates | 2% - 8.5% | ||||||||
Other real estate owned |
$ | 173 | Appraisal of collateral | Appraisal adjustments |
10% - 30% | |||||
Liquidation expense | 0% - 10% |
Page 38
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The carrying amount and fair values of financial instruments are as follows.
Carrying Amount |
Total Fair Value |
Level 1 | Level 2 | Level 3 | ||||||||||||||||
June 30, 2014 |
||||||||||||||||||||
Financial Assets: |
||||||||||||||||||||
Cash and due from financial institutions |
$ | 49,893 | $ | 49,893 | $ | 49,893 | $ | | $ | | ||||||||||
Securities available for sale |
197,680 | 197,680 | | 197,680 | | |||||||||||||||
Other securities |
12,548 | 12,548 | 12,548 | | | |||||||||||||||
Loans, held for sale |
2,168 | 2,168 | 2,168 | | | |||||||||||||||
Premises held for sale |
675 | 675 | 675 | | | |||||||||||||||
Loans, net of allowance for loan losses |
852,583 | 867,279 | | | 867,279 | |||||||||||||||
Bank owned life insurance |
19,400 | 19,400 | 19,400 | | | |||||||||||||||
Accrued interest receivable |
3,555 | 3,555 | 3,555 | | | |||||||||||||||
Financial Liabilities: |
||||||||||||||||||||
Nonmaturing deposits |
757,700 | 757,700 | 757,700 | | | |||||||||||||||
Time deposits |
221,436 | 222,770 | | | 222,770 | |||||||||||||||
Federal Home Loan Bank advances |
37,500 | 37,811 | | | 37,811 | |||||||||||||||
Securities sold under agreement to repurchase |
17,881 | 17,881 | 17,881 | | | |||||||||||||||
Subordinated debentures |
29,427 | 23,401 | | | 23,401 | |||||||||||||||
Accrued interest payable |
135 | 135 | 135 | | |
Page 39
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Carrying Amount |
Total Fair Value |
Level 1 | Level 2 | Level 3 | ||||||||||||||||
December 31, 2013 |
||||||||||||||||||||
Financial Assets: |
||||||||||||||||||||
Cash and due from financial institutions |
$ | 33,883 | $ | 33,883 | $ | 33,883 | $ | | $ | | ||||||||||
Securities available for sale |
199,613 | 199,613 | | 199,613 | | |||||||||||||||
Other securities |
15,424 | 15,424 | 15,424 | | | |||||||||||||||
Loans, held for sale |
438 | 438 | 438 | | | |||||||||||||||
Loans, net of allowance for loan losses |
844,713 | 861,252 | | | 861,252 | |||||||||||||||
Bank owned life insurance |
19,145 | 19,145 | 19,145 | | | |||||||||||||||
Accrued interest receivable |
3,881 | 3,881 | 3,881 | | | |||||||||||||||
Financial Liabilities: |
||||||||||||||||||||
Nonmaturing deposits |
706,126 | 706,126 | 706,126 | | | |||||||||||||||
Time deposits |
236,349 | 237,837 | | | 237,837 | |||||||||||||||
Federal Home Loan Bank advances |
37,726 | 38,767 | | | 38,767 | |||||||||||||||
Securities sold under agreement to repurchase |
20,053 | 20,053 | 20,053 | | | |||||||||||||||
Subordinated debentures |
29,427 | 20,605 | | | 20,605 | |||||||||||||||
Accrued interest payable |
156 | 156 | 156 | | |
Page 40
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
Cash and due from financial institutions: The carrying amounts for cash and due from financial institutions approximate fair value because they have original maturities of less than 90 days and do not present unanticipated credit concerns.
Securities available for sale: The fair value of securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for specific securities, but rather by relying on the securities relationship to other benchmark quoted securities (Level 2 inputs). For equity securities, management uses market information related to the value of similar institutions to determine the fair value (Level 2 inputs).
Other securities: The carrying value of regulatory stock approximates fair value based on applicable redemption provisions.
Loans, held-for-sale: Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment to an investor. Because the holding period of such loans is typically short, the carrying value generally approximates the fair value at the time the commitment is received. All loans in the held-for-sale account conform to Fannie Mae underwriting guidelines, with specific intent of the loan being purchased by an investor at the predetermined rate structure.
Loans, net of allowance for loan losses: Fair values for loans, other than impaired, are estimated for portfolios of loans with similar financial characteristics. The fair value of performing loans has been estimated by discounting expected future cash flows of the underlying portfolios. The discount rates used in these calculations are generally derived from the treasury yield curve and are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate inherent in the loan. The estimated maturity is based on the Companys historical experience with repayments for each loan classification. Changes in these significant unobservable inputs used in discounted cash flow analysis, such as the discount rate or prepayment speeds, could lead to changes in the underlying fair value.
Bank owned life insurance: The carrying value of bank owned life insurance approximates the fair value based on applicable redemption provisions.
Accrued interest receivable and payable and securities sold under agreements to repurchase: The carrying amounts for accrued interest receivable, accrued interest payable and securities sold under agreements to repurchase approximate fair value because they are generally received or paid in 90 days or less and do not present unanticipated credit concerns.
Deposits: The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and NOW accounts, and money market accounts, is equal to the amount payable on demand.
The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the current market rates currently offered for deposits of similar remaining maturities.
Page 41
Table of Contents
First Citizens Banc Corp
Notes to Interim Consolidated Financial Statements (Unaudited)
Form 10-Q
(Amounts in thousands, except share data)
The deposits fair value estimates do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.
Federal Home Loan Bank (FHLB) advances: Rates available to the Company for borrowed funds with similar terms and remaining maturities are used to estimate the fair value of borrowed funds.
Subordinated debentures: The fair value of subordinated debentures is based on the discounted value of contractual cash flows of the underlying debt agreements. The discount rate is estimated using the current rate for the borrowing from the FHLB with the most similar terms.
Premises held for sale: The fair value of premises held for sale is based upon independent appraisals.
(12) Preferred Shares
On January 23, 2009, the Company issued and sold to the U.S. Treasury of 23,184 of newly-issued non-voting preferred shares in conjunction with the Companys participation in the Troubled Asset Relief Program (TARP). The Company and the U.S. Treasury entered into a Letter Agreement, dated January 23, 2009, including the Securities Purchase Agreement Standard Terms attached thereto, pursuant to which the Company issued and sold to the U.S. Treasury (1) 23,184 Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without par value and having a liquidation preference of $1,000 per share (Preferred Shares), and (2) a Warrant to purchase 469,312 common shares of the Company, each without par value, at an exercise price of $7.41 per share. The Warrant had a ten-year term. Under the standardized terms of the preferred shares, cumulative dividends on the Preferred Shares accrued on the liquidation preference at a rate of 5% per annum for the first five years, and would have accrued at a rate of 9% per annum thereafter. The Preferred Shares had no maturity date and ranked senior to the common shares with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company. The Preferred Shares qualified as Tier 1 capital for regulatory purposes.
On July 3, 2012, the U.S. Treasury completed the sale of all 23,184 of the Preferred Shares to various investors pursuant to a modified Dutch auction process. On September 5, 2012, the Company completed the repurchase of the Warrant for an aggregate purchase price of $563.
On December 19, 2013, the Company completed the sale of 1,000,000 depositary shares, each representing a 1/40th ownership interest in a 6.50% Noncumulative Redeemable Convertible Perpetual Preferred Share, Series B, of the Company, with a liquidation preference of $1,000 per share (equivalent to $25.00 per depositary share). The Company sold the maximum of 1,000,000 depositary shares in the offering, resulting in gross proceeds to the Company of $25,000.
Using proceeds from the sale of the depositary shares, the Company redeemed all of the Series A Preferred Shares for an aggregate purchase price of $22,857, which redemption was completed as of February 15, 2014.
Page 42
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Introduction
The following discussion focuses on the consolidated financial condition of the Company at June 30, 2014 compared to December 31, 2013, and the consolidated results of operations for the three- and six-month periods ended June 30, 2014, compared to the same periods in 2013. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), relating to such matters as financial condition, anticipated operating results, cash flows, business line results, credit quality expectations, prospects for new lines of business, economic trends (including interest rates) and similar matters. Forward-looking statements reflect our expectations, estimates or projections concerning future results or events. These statements are generally identified by the use of forward-looking words or phrases such as believe, belief, expect, anticipate, may, could, intend, intent, estimate, plan, foresee, likely, will, should or other similar words or phrases. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results, performance or achievements to differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results, performance or achievements to differ from results discussed in the forward-looking statements include, but are not limited to, changes in financial markets or national or local economic conditions; sustained weakness or deterioration in the real estate market; volatility and direction of market interest rates; credit risks of lending activities; changes in the allowance for loan losses; legislation or regulatory changes or actions; increases in Federal Deposit Insurance Corporation (FDIC) insurance premiums and assessments; changes in tax laws; failure of or breach in our information and data processing systems; unforeseen litigation; and other risks identified from time-to-time in the Companys other public documents on file with the SEC, including those risks identified in Item 1A. Risk Factors of Part I of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2013. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Financial Condition
Total assets of the Company at June 30, 2014 were $1,185,130 compared to $1,167,546 at December 31, 2013, an increase of $17,584, or 1.5 percent. The increase in total assets was mainly attributable to an increase in cash and due from banks, loans held for sale and loans, partially offset by a decrease in securities available-for-sale and other securities. Total liabilities at June 30, 2014 were $1,071,225 compared to $1,039,170 at December 31, 2013, an increase of $32,055, or 3.1 percent. The increase in total liabilities was mainly attributable to an increase in total deposits offset by a decrease in securities sold under agreements to repurchase.
Net loans have increased $7,870 or 0.9 percent since December 31, 2013. The Residential Real Estate, Real Estate Construction and Consumer and other loan portfolios increased $3,981, $11,279 and $2,166, respectively, since December 31, 2013, while the commercial and agricultural and commercial real estate loan portfolios decreased $8,106 and $2,583, respectively. The current increase in residential real estate loans is mainly the result of adjustable rate portfolio jumbo loans to physicians and others, mostly in our urban markets. In general, the company originates and sells the majority of its mortgage loans in the secondary market. The current increase in real estate construction loans is mainly due to an increase in the demand for commercial real estate construction loans and advances on existing commercial real estate construction loans in the Columbus and Akron markets, which we serve. The current increase in consumer and other loans is mainly the result of pooled dealer loan purchases. The current decrease in commercial and agricultural loans is the result of the pay down of loan balances on agricultural loans. The current decrease in commercial real estate loans is the result of the pay-down or pay-off of loan balances.
Loans held for sale have increased $1,730 or 395.0 percent since December 31, 2013. At June 30, 2014, the net loan to deposit ratio was 87.1 percent compared to 89.6 percent at December 31, 2013. This ratio has declined in 2014 due to the increase in deposits.
For the six months of operations in 2014, $1,500 was placed into the allowance for loan losses from earnings, compared to $800 in the same period of 2013. While net charge-offs have increased, the increase in provision for loan losses in the first six months of 2014 is primarily related to the increased size of the loan portfolio compared to a year ago. Net charge-offs have increased to $2,633, compared to $1,137 in 2013. The allowance for loan losses as a percent of total loans was 1.77 percent at June 30, 2014 and 1.92 percent at December 31, 2013. For the first six months of 2014, the Company has charged off sixty-one loans. Thirty-eight Real Estate Mortgage loans totaling $933 net of recoveries, nine Commercial Real Estate loans totaling $1,475 net of recoveries, six Commercial and Agriculture loans totaling $218 net of recoveries and zero real estate construction loans totaling ($3) net of recoveries were charged off in the first six months of the year. In addition, eight Consumer and Other loans totaling $10, net of recoveries, were charged off. For each loan category, as well as in total, the percentage of net charge-offs to loans was less than one percent. Nonperforming loans have decreased by $2,847 which was solely due to a decrease in loans on nonaccrual status. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired for estimates of loss. 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 the amount of the allowance for loan losses.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Management analyzes each Commercial and Commercial Real Estate loan, with balances of $350 or larger, on an individual basis and designates a loan as impaired when it is in nonaccrual status or when an analysis of the borrowers operating results and financial condition indicate that underlying cash flows are not adequate to meet its debt service requirements. In addition, loans held for sale are excluded from consideration as impaired. Loans are generally moved to nonaccrual status when 90 days or more past due. Impaired loans, or portions thereof, are charged-off when deemed uncollectible.
The available for sale security portfolio decreased by $1,933, from $199,613 at December 31, 2013 to $197,680 at June 30, 2014. The decrease is mainly the result of the Company not reinvesting proceeds from maturing securities, rather deploying the proceeds in loan growth. As of June 30, 2014, the Company was in compliance with all pledging requirements.
Bank owned life insurance (BOLI) increased $255 from December 31, 2013 to June 30, 2014 due to increases in the cash surrender value of the underlying insurance policies.
Office premises and equipment, net, have decreased $769 from December 31, 2013 to June 30, 2014, as a result of depreciation of $728 and disposals of $181, offset by new purchases of $227. Office premises and equipment, net, held for sale totaled $675 at June 30, 2014. These fixed assets are to be sold in 2014. In addition, office premises and equipment, net, having a value of $135 were transferred to other assets. These assets will be donated during the third quarter of 2014.
Total deposits at June 30, 2014 increased $36,661 from year-end 2013. Noninterest-bearing deposits increased $23,723 from year-end 2013, while interest-bearing deposits, including savings and time deposits, increased $12,938 from December 31, 2013. The primary reason for the increase in noninterest-bearing deposits was due to an increase in commercial accounts related to the Companys participation in a tax refund processing program. The interest-bearing deposit increase was mainly due to increases in savings accounts, including money markets and interest-bearing demand accounts offset by decreases in time certificates, brokered deposits and individual retirement accounts (IRA). Savings accounts increased $10,596 from year-end 2013, which included increases of $4,378 in statement savings and $5,887 in money market savings. Interest-bearing demand deposits increased $17,255 from year end 2013, which included an increases of $19,959 in interest-bearing public funds and $3,622 in interest-bearing checking accounts offset by a decrease of $6,483 in NOW accounts. Time certificates, brokered deposits and IRAs decreased $10,314, $8,139 and $1,959, respectively, from year end 2013. This decrease was offset by an increase in CDARS accounts of $5,499. The year-to-date average balance of total deposits increased $90,911 compared to the average balance of the same period in 2013. The increase in average balance is due to increases of $97,205 in demand deposit accounts and $16,747 in interest- bearing demand and savings accounts, offset by decreases of $23,041 in time deposits.
Page 45
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
FHLB advances decreased $226 from year-end 2013. The Company had a FHLB advance mature during the six months ended June 30, 2014. The advance matured on June 1, 2014, in the amount of $211. This advance had terms of one hundred twenty months with a fixed rate of 4.85%. The advance was not replaced. Securities sold under agreements to repurchase, which tend to fluctuate, have decreased $2,172 from December 31, 2013 to June 30, 2014.
Accrued expenses and other liabilities decreased $2,208 from December 31, 2013 to June 30, 2014. The decrease is primarily the result of a curtailment made to the Companys pension plan resulting in a reduction to the projected benefit obligation of $4,039. This decrease was offset by an increase in the Companys swap liability. In addition, accrued expenses have increased since December 31, 2013.
Shareholders equity at June 30, 2014 was $113,905, or 9.6 percent of total assets, compared to $128,376, or 11.0 percent of total assets, at December 31, 2013. The decrease in shareholders equity resulted from dividends on preferred shares and common shares of $1,061 and $694, respectively, and the redemption of Series A preferred shares of $22,857, offset by net income of $4,951, a decrease in the Companys pension liability, net of tax, of $2,754, an increase in the fair value of securities available for sale, net of tax, of $2,436. Total outstanding common shares at June 30, 2014 and December 31, 2013 were 7,707,917.
Page 46
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Results of Operations
Six Months Ended June 30, 2014 and 2013
The Company had net income of $4,951 for the six months ended June 30, 2014, an increase of $1,381 from net income of $3,570 for the same six months of 2013. Basic earnings per common share were $0.50 for the six months ended June 30, 2014, compared to $0.39 for the same period in 2013. Diluted earnings per common share were $0.43 for the six months ended June 30, 2014, compared to $0.39 for the same period in 2013. The primary reasons for the changes in net income are explained below.
Net interest income for the six months ended June 30, 2014 was $20,432, an increase of $664 from $19,768 in the same six months of 2013. The Companys net interest margin for the six months ended June 30, 2014 and 2013 was 3.63% and 3.75%, respectively. Total interest income for the six months ended June 30, 2014 was $22,680, an increase of $369 from $22,311 in the same three months of 2013. Average earning assets increased 6.3 percent during the six months ended June 30, 2014 as compared to the same period in 2013. Average loans, non-taxable securities and interest-bearing deposits in other banks for the first six months of 2014 increased 5.7 percent, 6.3 percent and 35.1 percent, respectively, compared to the first six months of last year. Interest-bearing deposits in other banks increased due to our tax refund processing program. The timing of cash inflows and outflows from this program leads to large, but temporary, increases in cash on deposit. Although the program was in place during the first six months of 2013, the volume of tax refunds processed, and therefore cash on deposit, increased dramatically in 2014. The yield on earning assets decreased 20 basis points for the first six months of 2014 compared to the first six months of last year. The yield on loans, taxable securities and non-taxable securities decreased 17 basis points, 15 basis points and 13 basis points, respectively, compared to the first six months of 2013. These factors combined resulted in a modest increase in total interest income for the first six months of 2014. Total interest expense for the six months ended June 30, 2014 was $2,248, a decrease of $295 from $2,543 in the same six months of 2013. Interest expense on time deposits decreased $237 or 19.1 percent in the first six months of 2014 compared to the same period in 2013. Average time deposits for the first six months of 2014 decreased 9.1 percent compared to the first six months of 2013. The interest rate paid on time deposits during the first six months of 2014 also decreased by 11 basis points as compared to the same period in 2013.
Page 47
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
The following table presents the condensed average balance sheets for the six months ended June 30, 2014 and 2013. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 34% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.
Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average |
Interest |
Yield/ rate * |
Average |
Interest |
Yield/ |
|||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans |
$ | 857,765 | $ | 19,632 | 4.62 | % | $ | 811,761 | $ | 19,250 | 4.79 | % | ||||||||||||
Taxable securities |
155,487 | 1,765 | 2.31 | % | 161,225 | 1,925 | 2.46 | % | ||||||||||||||||
Non-taxable securities |
61,512 | 1,155 | 5.87 | % | 57,861 | 1,058 | 6.00 | % | ||||||||||||||||
Interest-bearing deposits in other banks |
96,719 | 128 | 0.27 | % | 71,609 | 78 | 0.22 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
$ | 1,171,483 | 22,680 | 4.02 | % | $ | 1,102,456 | 22,311 | 4.22 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Noninterest-earning assets: |
||||||||||||||||||||||||
Cash and due from financial institutions |
50,117 | 26,809 | ||||||||||||||||||||||
Premises and equipment, net |
16,638 | 17,042 | ||||||||||||||||||||||
Accrued interest receivable |
4,112 | 4,165 | ||||||||||||||||||||||
Intangible assets |
23,841 | 24,677 | ||||||||||||||||||||||
Other assets |
8,554 | 9,300 | ||||||||||||||||||||||
Bank owned life insurance |
19,255 | 18,716 | ||||||||||||||||||||||
Less allowance for loan losses |
(16,479 | ) | (19,943 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total Assets |
$ | 1,277,521 | $ | 1,183,222 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Demand and savings |
$ | 499,948 | $ | 185 | 0.08 | % | $ | 483,201 | $ | 219 | 0.09 | % | ||||||||||||
Time |
230,419 | 1,003 | 0.88 | % | 253,460 | 1,240 | 0.99 | % | ||||||||||||||||
FHLB |
37,686 | 651 | 3.48 | % | 40,254 | 689 | 3.45 | % | ||||||||||||||||
Subordinated debentures |
29,427 | 399 | 2.73 | % | 29,427 | 384 | 2.63 | % | ||||||||||||||||
Repurchase Agreements |
20,246 | 10 | 0.10 | % | 20,781 | 11 | 0.11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
$ | 817,726 | 2,248 | 0.55 | % | $ | 827,123 | 2,543 | 0.62 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Noninterest-bearing deposits |
335,492 | 238,287 | ||||||||||||||||||||||
Other liabilities |
11,322 | 13,349 | ||||||||||||||||||||||
Shareholders Equity |
112,981 | 104,463 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total Liabilities and Shareholders Equity |
$ | 1,277,521 | $ | 1,183,222 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income and interest rate spread |
$ | 20,432 | 3.47 | % | $ | 19,768 | 3.60 | % | ||||||||||||||||
Net interest margin |
3.63 | % | 3.75 | % |
* | - All yields and costs are presented on an annualized basis |
Page 48
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the six months ended June 30, 2014 and 2013. The table is presented on a fully tax-equivalent basis.
Increase (decrease) due to: | ||||||||||||
Volume(1) | Rate(1) | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest income: |
||||||||||||
Loans |
$ | 1,067 | $ | (685 | ) | $ | 382 | |||||
Taxable securities |
(69 | ) | (91 | ) | (160 | ) | ||||||
Nontaxable securities |
71 | 26 | 97 | |||||||||
Interest-bearing deposits in other banks |
31 | 19 | 50 | |||||||||
|
|
|
|
|
|
|||||||
Total interest income |
$ | 1,100 | $ | (731 | ) | $ | 369 | |||||
|
|
|
|
|
|
|||||||
Interest expense: |
||||||||||||
Demand and savings |
7 | (41 | ) | (34 | ) | |||||||
Time |
(107 | ) | (130 | ) | (237 | ) | ||||||
FHLB |
(44 | ) | 6 | (38 | ) | |||||||
Subordinated debentures |
| 15 | 15 | |||||||||
Repurchase agreements |
| (1 | ) | (1 | ) | |||||||
|
|
|
|
|
|
|||||||
Total interest expense |
$ | (144 | ) | $ | (151 | ) | $ | (295 | ) | |||
|
|
|
|
|
|
|||||||
Net interest income |
$ | 1,244 | $ | (580 | ) | $ | 664 | |||||
|
|
|
|
|
|
(1) | The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. |
The Company provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provision for loan losses totaled $1,500 for the six months ended June 30, 2014, compared to $800 for the same period in 2013. The increase in provision for loan losses in the first six months of 2014 is related to the increased size of the loan portfolio compared to a year ago. Management believes the overall adequacy of the reserve for loan losses supported an increased provision, compared to June 30, 2013.
Noninterest income for the six months ended June 30, 2014 was $8,004, an increase of $1,957 or 32.4 percent from $6,047 for the same period of 2013. The primary reasons for the increase follow.
Service charge fee income for the period ended June 30, 2014 was $2,006, down $26 or 1.3 percent over the same period of 2013. The decrease is primarily due to a decrease in overdraft fees partially offset by an increase in business service charges.
Page 49
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Trust fee income is comprised of fees earned from the management and administration of trusts and other customer assets. These fees are largely based upon the market value of the assets that we manage and the fee rate charged to customers. Trust fee income increased $346 or 28.2 percent during the first six months of 2014 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. From the end of 2013, assets under management decreased by 1.2%, 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.
BOLI decreased $36 or 12.4 percent during the first six months of 2014 compared to the same period in 2013. The decrease is due to lower yields received in the current year.
Gain on the sale of securities increased $54 during the first six months of 2014 compared to the same period of 2013. Management, from time to time, will reposition the investment portfolio to match liquidity needs of the Company.
The Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors. The third-party vendors pay us a fee for processing the payments. Tax refund processing fees increased $1,889 or 443.4 percent during the first six months of 2014 compared to the same period in 2013. In 2014, the Company added vendors to its tax refund processing program. Additional volume for the first six months of 2014, compared to the same period in 2013, was the main reason for the increase in revenue. This fee income is seasonal in nature, the majority of which is received in the first quarter of the year.
Other noninterest income decreased $276 or 30.2 percent during the first six months of 2014 compared to the same period in 2013. The decrease is due to a decrease in volume of loans sold during the first six months of 2014 as compared to the same period in 2013. Our mortgage banking business was adversely affected by weather in the first quarter of 2014. In addition, gain on the sale of OREO property and gain on the sale of fixed assets have decreased during the first six months of 2014 as compared to the same period of 2013.
Noninterest expense for the six months ended June 30, 2014 was $20,408, a decrease of $146, from $20,554 reported for the same period of 2013. The primary reasons for the increase follow.
Salary and other employee costs were $11,005, down $83 or 0.8 percent as compared to the same period of 2013. The decrease is primarily due to a decrease in pension costs which were offset by increases in salaries and commissions. 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.
Contracted data processing costs were $591, up $66 or 12.6 percent compared to the same period in 2013 due to increases in cost of technology services.
Page 50
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
State franchise taxes decreased by $124 compared to the same period of 2013. Effective January 1, 2014, the State of Ohios corporate franchise tax was replaced with the financial institutions tax (FIT). The new tax is based on equity capital, whereas, the corporate franchise tax was based on net worth. In addition, the new law lowered tax rates.
Amortization expense decreased $21, or 5.0 percent from the same period of 2013, as a result of scheduled amortization of intangible assets associated with mergers.
FDIC assessments were down by $59 during the six months ended June 30, 2014 compared to the same period of 2013 due to a decrease in the assessment rates.
Net occupancy and equipment costs were $1,965, up $234 or 13.5 percent compared to the same period in 2013. The increase was primarily due to increased grounds maintenance and utility expense attributable to harsher winter weather. Building repair and maintenance costs increased for the first six months of 2014 as compared to the same period of 2013. In addition, equipment costs increased due to a policy change within the Company. Equipment purchases of $5 and under are now expensed rather than capitalized. During the first six months of 2013, equipment purchases of $1 and under were expensed.
ATM costs were $403, up $87 or 27.5 percent compared to the same period in 2013. The increase is due to an increase in vendor charges in 2014.
Marketing costs were $600, up $215 or 55.8 percent compared to the same period in 2013. The increase is due to efforts to unify our marketing approach in order to improve the impact of marketing dollars spent.
Professional service costs were $1,128, down $305 or 21.3 percent compared to the same period in 2013. The decrease is mainly due to reduced legal and audit fees during the first six months of 2014 as compared to the same period in 2013.
Other operating expenses were $3,386, down $156 or 4.4 percent compared to the same period in 2013. This decrease was primarily due to SBA expense and telephone expense. SBA expense decreased in the first six months of 2014 due a decrease in SBA loan sales as compared to the first six months of 2013. During the fourth quarter of 2013, the Company installed a new telephone system. As a result, the Company has reduced telephone expenses during the first six months of 2014 as compared to the first six months of 2013.
Income tax expense for the six months ended June 30, 2014 totaled $1,577, up $686 compared to the same period in 2013. The effective tax rates for the six-month periods ended June 30, 2014 and June 30, 2013 were 24.2% and 20.0%, respectively. The difference between the statutory federal income tax rate and the Companys effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income.
Page 51
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Three Months Ended June 30, 2014 and 2013
The Company had net income of $2,240 for the three months ended June 30, 2014, an increase of $583 from net income of $1,657 for the same three months of 2013. Basic earnings per common share were $0.24 for the quarter ended June 30, 2014, compared to $0.18 for the same period in 2013. Diluted earnings per common share were $0.21 for the quarter ended June 30, 2014, compared to $0.18 for the same period in 2013. The primary reasons for the changes in net income are explained below.
Net interest income for the three months ended June 30, 2014 was $10,266, an increase of $485 from $9,781 in the same three months of 2013. The Companys net interest margin for the three months ended June 30, 2014 and 2013 was 3.76% and 3.77%, respectively. Total interest income for the three months ended June 30, 2014 was $11,365, an increase of $340 from $11,025 in the same three months of 2013. Average earning assets increased 4.9 percent during the quarter ended June 30, 2014 as compared to the same period in 2013. Average loans, non-taxable securities and interest-bearing deposits in other banks for the second quarter of 2014 increased 6.0 percent, 6.5 percent and 26.4 percent, respectively, compared to the second quarter of last year. Interest-bearing deposits in other banks increased due to our tax refund processing program. The timing of cash inflows and outflows from this program leads to large, but temporary, increases in cash on deposit. Although the program was in place in both the second quarter of 2013 and 2014, the volume of tax refunds processed, and therefore cash on deposit, increased dramatically in 2014. The yield on earning assets decreased 9 basis points for the second quarter of 2014 compared to the second quarter of last year. The yield on loans and non-taxable securities decreased 12 basis points and 10 basis points, respectively, compared to the second quarter of 2013. These factors combined resulted in a modest increase in total interest income for the second quarter of 2014. Total interest expense for the three months ended June 30, 2014 was $1,099, a decrease of $145 from $1,244 in the same three months of 2013. Interest expense on time deposits decreased $122 or 20.3 percent in the second quarter of 2014 compared to the same period in 2013. Average time deposits for the second quarter of 2014 decreased 9.5 percent compared to the second quarter of 2013. The interest rate paid on time deposits during the second quarter of 2014 also decreased by 12 basis points as compared to the same period in 2013.
Page 52
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
The following table presents the condensed average balance sheets for the three months ended June 30, 2014 and 2013. The daily average loan amounts outstanding are net of unearned income and include loans held for sale and nonaccrual loans. The average balance of securities is computed using the carrying value of securities. Rates are annualized and taxable equivalent yields are computed using a 34% tax rate for tax-exempt interest income. The average yield has been computed using the historical amortized cost average balance for available-for-sale securities.
Three Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average |
Interest |
Yield/ |
Average |
Interest |
Yield/ |
|||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans |
$ | 861,842 | $ | 9,850 | 4.59 | % | $ | 813,386 | $ | 9,537 | 4.71 | % | ||||||||||||
Taxable securities |
151,020 | 893 | 2.40 | % | 162,259 | 920 | 2.33 | % | ||||||||||||||||
Non-taxable securities |
61,889 | 580 | 5.87 | % | 58,110 | 534 | 5.97 | % | ||||||||||||||||
Interest-bearing deposits in other banks |
57,500 | 42 | 0.29 | % | 45,476 | 34 | 0.30 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
$ | 1,132,251 | 11,365 | 4.15 | % | $ | 1,079,231 | 11,025 | 4.24 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Noninterest-earning assets: |
||||||||||||||||||||||||
Cash and due from financial institutions |
25,769 | 21,048 | ||||||||||||||||||||||
Premises and equipment, net |
16,371 | 16,979 | ||||||||||||||||||||||
Accrued interest receivable |
4,332 | 4,395 | ||||||||||||||||||||||
Intangible assets |
23,740 | 24,571 | ||||||||||||||||||||||
Other assets |
9,155 | 9,342 | ||||||||||||||||||||||
Bank owned life insurance |
19,320 | 18,789 | ||||||||||||||||||||||
Less allowance for loan losses |
(16,271 | ) | (19,734 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total Assets |
$ | 1,214,667 | $ | 1,154,621 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Shareholders Equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Demand and savings |
$ | 505,828 | $ | 95 | 0.08 | % | $ | 480,812 | $ | 99 | 0.09 | % | ||||||||||||
Time |
225,182 | 478 | 0.85 | % | 248,730 | 600 | 0.97 | % | ||||||||||||||||
FHLB |
37,649 | 327 | 3.48 | % | 40,250 | 346 | 3.45 | % | ||||||||||||||||
Subordinated debentures |
29,427 | 195 | 2.66 | % | 29,427 | 194 | 2.64 | % | ||||||||||||||||
Repurchase Agreements |
16,590 | 4 | 0.10 | % | 19,187 | 5 | 0.10 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
$ | 814,676 | 1,099 | 0.54 | % | $ | 818,406 | 1,244 | 0.61 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Noninterest-bearing deposits |
278,266 | 218,655 | ||||||||||||||||||||||
Other liabilities |
11,846 | 12,649 | ||||||||||||||||||||||
Shareholders Equity |
109,879 | 104,911 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total Liabilities and Shareholders Equity |
$ | 1,214,667 | $ | 1,154,621 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income and interest rate spread |
$ | 10,266 | 3.61 | % | $ | 9,781 | 3.63 | % | ||||||||||||||||
Net interest margin |
3.76 | % | 3.77 | % |
* | - All yields and costs are presented on an annualized basis |
Page 53
Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. The following table provides an analysis of the changes in interest income and expense between the three months ended June 30, 2014 and 2013. The table is presented on a fully tax-equivalent basis.
Increase (decrease) due to: | ||||||||||||
Volume(1) | Rate(1) | Net | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest income: |
||||||||||||
Loans |
$ | 558 | $ | (245 | ) | $ | 313 | |||||
Taxable securities |
(67 | ) | 40 | (27 | ) | |||||||
Nontaxable securities |
37 | 9 | 46 | |||||||||
Interest-bearing deposits in other banks |
9 | (1 | ) | 8 | ||||||||
|
|
|
|
|
|
|||||||
Total interest income |
$ | 537 | $ | (197 | ) | $ | 340 | |||||
|
|
|
|
|
|
|||||||
Interest expense: |
||||||||||||
Demand and savings |
5 | (9 | ) | (4 | ) | |||||||
Time |
(54 | ) | (68 | ) | (122 | ) | ||||||
FHLB |
(23 | ) | 4 | (19 | ) | |||||||
Subordinated debentures |
| 1 | 1 | |||||||||
Repurchase agreements |
(1 | ) | | (1 | ) | |||||||
|
|
|
|
|
|
|||||||
Total interest expense |
$ | (73 | ) | $ | (72 | ) | $ | (145 | ) | |||
|
|
|
|
|
|
|||||||
Net interest income |
$ | 610 | $ | (125 | ) | $ | 485 | |||||
|
|
|
|
|
|
(1) | The change in interest income and interest expense due to changes in both volume and rate, which cannot be segregated, has been allocated proportionately to the change due to volume and the change due to rate. |
The Company provides for loan losses through regular provisions to the allowance for loan losses. The provision is affected by net charge-offs on loans and changes in specific and general allocations required on the allowance for loan losses. Provision for loan losses totaled $750 for the three months ended June 30, 2014, compared to $300 for the same period in 2013. The increase in provision for loan losses in the second quarter of 2014 is related to the increased size of the loan portfolio compared to a year ago. Management believes the overall adequacy of the reserve for loan losses supported an increased provision, compared to June 30, 2013.
Noninterest income for the three months ended June 30, 2014 was $3,380, an increase of $549 or 19.4 percent from $2,831 for the same period of 2013. The primary reasons for the increase follow.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Service charge fee income for the period ended June 30, 2014 was $1,027, down $39 or 3.7 percent over the same period of 2013. The decrease is primarily due to a decrease in overdraft fees partially offset by an increase in business service charges.
Trust fee income is comprised of fees earned from the management and administration of trusts and other customer assets. These fees are largely based upon the market value of the assets that we manage and the fee rate charged to customers. Trust fee income increased $160 or 25.6 percent during the second quarter of 2014 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 $28.1 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. From the end of 2013, assets under management decreased by 1.8%, 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.
BOLI decreased $18 or 12.5 percent during the second quarter of 2014 compared to the same period in 2013. The decrease is due to lower yields received in the current year.
Gain on the sale of securities increased $66 during the second quarter of 2014 compared to the same period of 2013. Management, from time to time, will reposition the investment portfolio to match liquidity needs of the Company.
The Company processes state and federal income tax refund payments for customers of third-party income tax preparation vendors. The third-party vendors pay us a fee for processing the payments. Tax refund processing fees increased $392 or 852.2 percent during the second quarter of 2014 compared to the same period in 2013. In 2014, the Company added vendors to its tax refund processing program. Additional volume for the second quarter of 2014, compared to the same period in 2013, was the main reason for the increase in revenue. This fee income is seasonal in nature, the majority of which is received in the first quarter of the year.
Other noninterest income decreased $21 or 6.3 percent during the second quarter of 2014 compared to the same period in 2013. The decrease is due to a decrease in gain on the sale of OREO property and gain on the sale of fixed assets during the second quarter of 2014 as compared to the same period of 2013. The decreases were offset by an increase in gain on the sale of loans for the second quarter of 2014.
Noninterest expense for the three months ended June 30, 2014 was $9,979, a decrease of $367, from $10,346 reported for the same period of 2013. The primary reasons for the increase follow.
Salary and other employee costs were $5,279, down $302 or 5.4 percent as compared to the same period of 2013. The decrease is mainly due to a decrease in pension costs for the quarter ended June 30, 2014. The decrease in pension costs was offset by increases in salaries and commissions expense. As of April 30, 2014, the Company froze its pension plan.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Contracted data processing costs were $306, up $43 or 16.3 percent compared to the same period in 2013 due to increases in cost of technology services.
State franchise taxes decreased by $70 compared to the same period of 2013. Effective January 1, 2014, the State of Ohios corporate franchise tax was replaced with the financial institutions tax (FIT). The new tax is based on equity capital, whereas, the corporate franchise tax was based on net worth. In addition, the new law lowered tax rates.
Amortization expense decreased $11, or 5.2 percent from the same period of 2013, as a result of scheduled amortization of intangible assets associated with mergers.
FDIC assessments were down by $36 during the quarter ended June 30, 2014 compared to the same period of 2013 due to a decrease in the assessment rates.
Net occupancy and equipment costs were $934, up $93 or 11.1 percent compared to the same period in 2013. The increase was due to increased building repair and maintenance costs during the second quarter of 2014 as compared to the same period of 2013. In addition, equipment costs increased due to a policy change within the Company. Equipment purchases of $5 and under are now expensed rather than capitalized. During the second quarter of 2013, equipment purchases of $1 and under were expensed.
ATM costs were $200, up $39 or 24.2 percent compared to the same period in 2013. The increase is due to an increase in vendor charges in 2014.
Marketing costs were $300, up $108 or 56.3 percent compared to the same period in 2013. The increase is due to efforts to unify our marketing approach in order to improve the impact of marketing dollars spent.
Professional service costs were $554, down $137 or 19.8 percent compared to the same period in 2013. The decrease is mainly due to reduced legal and audit fees during the second quarter of 2014 as compared to the same period in 2013.
Other operating expenses were $1,725, down $94 or 5.2 percent compared to the same period in 2013. This decrease was primarily due to SBA expense and telephone expense. SBA expense decreased in the second quarter of 2014 due a decrease in SBA loan sales as compared to the second quarter of 2013. During the fourth quarter of 2013, the Company installed a new telephone system. As a result, the Company has reduced telephone expenses during the second quarter of 2014 as compared to the second quarter of 2013.
Income tax expense for the three months ended June 30, 2014 totaled $677, up $368 compared to the same period in 2013. The effective tax rates for the three-month periods ended June 30, 2014 and June 30, 2013 were 23.2% and 15.7%, respectively. The difference between the statutory federal income tax rate and the Companys effective tax rate is the permanent tax differences, primarily consisting of tax-exempt interest income from municipal investments and loans, low income housing tax credits and bank owned life insurance income.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Capital Resources
Shareholders equity totaled $113,905 at June 30, 2014 compared to $128,376 at December 31, 2013. The decrease in shareholders equity resulted from net income of $4,951, a $2,754 net decrease in the Companys pension liability and an increase in the fair value of securities available for sale, net of tax, of $2,436, which were more than offset by dividends on preferred shares and common shares of $1,061 and $694, respectively, and the redemption of Series A preferred shares of $22,857. All of the Companys capital ratios exceeded the regulatory minimum guidelines as of June 30, 2014 and December 31, 2013 as identified in the following table:
Total Risk Based Capital |
Tier I Risk Based Capital |
Leverage Ratio |
||||||||||
Corporation RatiosJune 30, 2014 |
15.1 | % | 13.8 | % | 9.9 | % | ||||||
Corporation RatiosDecember 31, 2013 |
17.1 | % | 15.8 | % | 11.6 | % | ||||||
For Capital Adequacy Purposes |
8.0 | % | 4.0 | % | 4.0 | % | ||||||
To Be Well Capitalized Under Prompt Corrective Action Provisions |
10.0 | % | 6.0 | % | 5.0 | % |
The Company paid a cash dividend of $0.04 per common share on February 1, 2014 and a cash dividend of $0.05 per common share on May 1, 2014. In 2013, the Company paid a cash dividend of $0.03 per common share on February 1 and a cash dividend of $0.04 per common share on May 1. The Company paid the final 5.00% cash dividend on its Series A preferred shares in the amount of approximately $267 at the time of redemption, which was completed on February 15, 2014. The Company also paid a 6.50% cash dividend on its Series B preferred shares in the amount of approximately $388 on March 17, 2014 and a 6.50% cash dividend on its Series B preferred shares in the amount of approximately $388 on June 16, 2014.
Liquidity
The Company maintains a conservative liquidity position. All securities are classified as available for sale. Securities, with maturities of one year or less, totaled $297, or 0.2 percent of the total security portfolio. The available for sale portfolio helps to provide the Company with the ability to meet its funding needs. The Consolidated Statements of Cash Flows (Unaudited) contained in the consolidated financial statements detail the Companys cash flows from operating activities resulting from net earnings.
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Table of Contents
First Citizens Banc Corp
Managements Discussion and Analysis of Financial Condition and Results of Operations
Form 10-Q
(Amounts in thousands, except share data)
Net cash provided by operations for the period ended June 30, 2014 was $7,990. This includes net income of $4,951 plus net adjustments of $3,039 to reconcile net earnings to net cash provided by operations. Cash provided by operations is primarily from proceeds from sale of loans, net change in accrued expenses and provision for loan losses of $15,293, $1,852 and $1,500, respectively. This increase was offset by loans originated for sale of $16,792. Cash used by investing activities was $1,631 for the period ended June 30, 2014. Cash received from investing activities is primarily from maturing and called securities, sold securities and the redemption of FHLB stock of $29,329, $18,088 and $3,009, respectively. This increase in cash was offset by security purchases and net loan repayments of $42,453 and $9,520, respectively. Cash provided from financing activities for the first six months of 2014 totaled $9,651. The increase of cash from financing activities is due to the net change in deposits. The net change in deposits was $36,661 for the first six months of 2014. Noninterest-bearing deposits increased $23,723 from year-end 2013, while interest-bearing deposits, including savings and time deposits, increased $12,938 during the first six months of 2014. Cash of $22,857 was used to repurchase the Companys Series A Preferred Stock during the first quarter of 2014. In addition, securities sold under agreements to repurchase decreased $2,172 and $1,755 was used to pay dividends. Cash and cash equivalents increased from $33,883 at December 31, 2013 to $49,893 at June 30, 2014.
Future loan demand of Citizens may be funded by increases in deposit accounts, proceeds from payments on existing loans, the maturity of securities, and the sale of securities classified as available for sale. Additional sources of funds may also come from borrowing in the Federal Funds market and/or borrowing from the FHLB. Through its correspondent banks, Citizens maintains federal funds borrowing lines totaling $35,000. As of June 30, 2014, Citizens had total credit availability with the FHLB of $140,583, with a remaining borrowing capacity of approximately $79,833.
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Table of Contents
First Citizens Banc Corp
Quantitative and Qualitative Disclosures About Market Risk
Form 10-Q
(Amounts in thousands, except share data)
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Companys primary market risk exposure is interest-rate risk and, to a lesser extent, liquidity risk. All of the Companys transactions are denominated in U.S. dollars with no specific foreign exchange exposure.
Interest-rate risk is the exposure of a banking organizations financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value. However, excessive levels of interest-rate risk can pose a significant threat to the Companys earnings and capital base. Accordingly, effective risk management that maintains interest-rate risk at prudent levels is essential to the Companys safety and soundness.
Evaluating a financial institutions exposure to changes in interest rates includes assessing both the adequacy of the management process used to control interest-rate risk and the organizations quantitative level of exposure. When assessing the interest-rate risk management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain interest-rate risk at prudent levels with consistency and continuity. Evaluating the quantitative level of interest rate risk exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity and, where appropriate, asset quality.
The Federal Reserve Board, together with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Company, adopted a Joint Agency Policy Statement on interest-rate risk, effective June 26, 1996. The policy statement provides guidance to examiners and bankers on sound practices for managing interest-rate risk, which will form the basis for ongoing evaluation of the adequacy of interest-rate risk management at supervised institutions. The policy statement also outlines fundamental elements of sound management that have been identified in prior Federal Reserve guidance and discusses the importance of these elements in the context of managing interest-rate risk. Specifically, the guidance emphasizes the need for active board of director and senior management oversight and a comprehensive risk-management process that effectively identifies, measures, and controls interest-rate risk.
Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institutions assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institutions interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institutions profits could decrease on existing assets because the institution will have either lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.
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Table of Contents
First Citizens Banc Corp
Quantitative and Qualitative Disclosures About Market Risk
Form 10-Q
(Amounts in thousands, except share data)
Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Company is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Companys primary asset/liability management technique is the measurement of the Companys asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities.
Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. The Company has not purchased derivative financial instruments in the past and does not currently intend to purchase such instruments in the near future. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refinance its obligations at new, lower rates. Prepayments of assets carrying higher rates reduce the Companys interest income and overall asset yields. A large portion of an institutions liabilities may be short-term or due on demand, while most of its assets may be invested in long-term loans or securities. Accordingly, the Company seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Company.
The following table provides information about the Companys financial instruments that were sensitive to changes in interest rates as of December 31, 2013 and June 30, 2014, based on certain prepayment and account decay assumptions that management believes are reasonable. The table shows the changes in the Companys net portfolio value (in amount and percent) that would result from hypothetical interest rate increases of 200 basis points and 100 basis points and an interest rate decrease of 100 basis points at June 30, 2014 and December 31, 2013.
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Table of Contents
First Citizens Banc Corp
Quantitative and Qualitative Disclosures About Market Risk
Form 10-Q
(Amounts in thousands, except share data)
The Company had no significant derivative financial instruments or trading portfolio as of December 31, 2013 or June 30, 2014. Expected maturity date values for interest-bearing core deposits were calculated based on estimates of the period over which the deposits would be outstanding. The Companys borrowings were tabulated by contractual maturity dates and without regard to any conversion or repricing dates.
Net Portfolio Value | ||||||||||||||||||||||||
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Change in | Dollar | Dollar | Percent | Dollar | Dollar | Percent | ||||||||||||||||||
Rates |
Amount | Change | Change | Amount | Change | Change | ||||||||||||||||||
+200bp |
164,970 | 15,612 | 10 | % | 154,501 | 8,613 | 6 | % | ||||||||||||||||
+100bp |
159,803 | 10,445 | 7 | % | 151,871 | 5,983 | 4 | % | ||||||||||||||||
Base |
149,358 | | | 145,888 | | | ||||||||||||||||||
-100bp |
152,342 | 2,984 | 2 | % | 160,141 | 14,253 | 10 | % |
The change in net portfolio value from December 31, 2013 to June 30, 2014, can be attributed to two factors. The yield curve has seen a downward, nearly parallel, shift since the end of the year, although the shorter end of the curve shifted less. Additionally, both the mix of assets and funding sources has changed. The mix of assets has shifted away toward loans and cash and away from securities, which leads to less volatility. The funding mix shifted from CDs and borrowed money to deposits, which tends to increase volatility. The shifts in mixes led to the increase in the base. Beyond the change in the base level of net portfolio value, projected movements in rates, up or down, would also lead to changes in market values. The change in the rates up scenarios for both the 100 and 200 basis point movements would lead to a faster decrease in the fair value of liabilities, compared to assets. Accordingly we would see an increase in the net portfolio value. A downward change in rates would lead to an increase in the net portfolio value as the fair value of assets would increase more quickly than the fair value of liabilities.
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Table of Contents
First Citizens Banc Corp
Controls and Procedures
Form 10-Q
(Amounts in thousands, except share data)
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive and our principal financial officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive and our principal financial officers concluded that our disclosure controls and procedures as of June 30, 2014, were effective.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Companys internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Companys most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
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First Citizens Banc Corp
Other Information
Form 10-Q
Part IIOther Information
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Table of Contents
First Citizens Banc Corp
Form 10-Q
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.
First Citizens Banc Corp | ||||
/s/ James O. Miller | August 8, 2014 | |||
James O. Miller | Date | |||
President, Chief Executive Officer | ||||
/s/ Todd A. Michel | August 8, 2014 | |||
Todd A. Michel | Date | |||
Senior Vice President, Controller |
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Table of Contents
First Citizens Banc Corp
Index to Exhibits
Form 10-Q
Exhibits
Exhibit |
Description |
Location | ||
3.1(a) | Articles of Incorporation, as amended, of First Citizens Banc Corp. | Filed as Exhibit 3.1 to First Citizens Banc Corps Annual Report on Form 10-K for the year ended December 31, 2005, filed on March 16, 2006 and incorporated herein by reference. (File No. 0-25980) | ||
3.1(b) | Certificate of Amendment by Shareholders or Members as filed with the Ohio Secretary of State on January 12, 2009, evidencing the adoption by the shareholders of First Citizens Banc Corp on January 5, 2009 of an amendment to Article FOURTH to authorize the issuance of up to 200,000 preferred shares, without par value. | Filed as Exhibit 3.1(b) to First Citizens Banc Corps Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980) | ||
3.1(c) | Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on January 21, 2009, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the Fixed Rate Cumulative Perpetual Preferred Shares, Series A, of First Citizens. | Filed as Exhibit 3.1 to First Citizens Banc Corps Current Report on Form 8-K dated and filed January 26, 2009, and incorporated herein by reference. (File No. 0-25980) | ||
3.1(d) | Certificate of Amendment by Directors or Incorporators to Articles, filed with the Ohio Secretary of State on November 1, 2013, evidencing adoption of an amendment by the Board of Directors of First Citizens Banc Corp to Article FOURTH to establish the express terms of the 6.50% Noncumulative Redeemable Convertible Perpetual Preferred Shares, Series B, of First Citizens Banc Corp. | Filed as Exhibit 3.4 to First Citizens Banc Corps Pre-Effective Amendment No.1 to Form S-1 Registration Statement dated and filed November 1, 2013, and incorporated herein by reference. (File No. 333-191169) | ||
3.2 | Amended and Restated Code of Regulations of First Citizens Banc Corp (adopted April 17, 2007). | Filed as Exhibit 3.2 to First Citizens Banc Corps Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 16, 2009 and incorporated herein by reference. (File No. 0-25980) | ||
31.1 | Rule 13a-14(a)/15-d-14(a) Certification of Chief Executive Officer. | Included herewith | ||
31.2 | Rule 13a-14(a)/15-d-14(a) Certification of Principal Accounting Officer. | Included herewith |
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First Citizens Banc Corp
Index to Exhibits
Form 10-Q
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Included herewith | ||
32.2 | Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Included herewith | ||
101 | The following materials from First Citizens Banc Corps Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, formatted in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets (Unaudited) as of June 30, 2014 and December 31, 2013; (ii) Consolidated Statements of Income (Unaudited) for the three and six months ended June 30, 2014 and 2013; (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2014 and 2013; (iv) Condensed Consolidated Statement of Shareholders Equity (Unaudited) for the three and six months ended June 30, 2014; (v) Condensed Consolidated Statement of Cash Flows (Unaudited) for the three and six months ended June 30, 2014 and 2013; and (vi) Notes to Interim Consolidated Financial Statements (Unaudited). | Included herewith |
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