U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
___ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______ to _________
Commission File Number 333-67435
CITIZENS FIRST CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
Kentucky 61-0912615
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1805 Campbell Lane, Bowling Green, Kentucky 42101
(Address of principal executive offices)
Issuer's telephone number, including area code: (270) 393-0700
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ___
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at November 13, 2000
Common Stock, no par value 643,053
Transitional Small Disclosure Format: Yes ___ No X
---
<PAGE>
CITIZENS FIRST CORPORATION
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements 3-8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibits 15-18
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
September 30, 2000 December 31, 1999
Assets
<S> <C> <C>
Cash and due from banks ....................................... $ 1,879,098 $ 2,175,135
Interest-bearing deposits with banks .......................... 26,174 20,204
Federal funds sold ............................................ 1,200,000 3,475,000
Securities available for sale (amortized cost of $5,862,463 as
of September 30, 2000; $4,472,022 as of December 31, 1999) 5,860,393 4,389,787
Mortgage loans held for sale ................................... 99,000 114,000
Loans ......................................................... 53,136,745 34,126,628
Less allowance for loan losses ................................ 706,620 400,920
------------ ------------
Net loans .................................................. 52,430,125 33,725,708
Premises and equipment, net ................................... 1,534,881 1,641,257
Other assets .................................................. 625,131 432,219
------------ ------------
Total assets ............................................... $ 63,654,802 $ 45,973,310
============ ============
Liabilities and Shareholders' Equity
Deposits:
Demand deposits ............................................. $ 3,421,385 $ 2,877,867
Savings, NOW and money market deposits ...................... 8,984,775 7,675,636
Time deposits ............................................... 40,151,111 26,576,818
------------ ------------
Total deposits .............................................. 52,557,271 37,130,321
Securities sold under agreements to repurchase ................ 2,011,110 1,487,878
Other short-term borrowings ................................... 1,924,000 --
Other liabilities ............................................. 584,383 506,463
------------ ------------
Total liabilities .......................................... 57,076,764 39,124,662
Shareholders' equity:
Preferred stock, no par value authorized 500 shares; issued
and outstanding 0 and 0, respectively -- --
Common stock, no par value authorized 1,000,000
shares; issued and outstanding 643,053 shares, respectively 7,357,477 7,357,477
Retained earnings ........................................... (778,073) (454,554)
Accumulated other comprehensive income ..................... (1,366) (54,275)
------------ ------------
Total shareholders' equity ................................. 6,578,038 6,848,648
------------ ------------
Total liabilities
and shareholders' equity ................................. $ 63,654,802 $ 45,973,310
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Income
(Unaudited)
For the three months ended September 30:
<CAPTION>
2000 1999
----- ----
<S> <C> <C>
Interest income
Loans, including fees ............... $ 1,211,847 $ 367,712
Federal funds sold .................. 6,648 35,355
Securities available for sale ....... 93,407 57,178
Interest-bearing deposits with banks 531 529
----------- ---------
Total interest income ............... 1,312,433 460,774
Interest expense
Deposits ............................ 675,129 173,344
Other short-term borrowings ......... 26,974 7,165
----------- ---------
Total interest expense .............. 702,103 180,509
----------- ---------
Net interest income ................... 610,330 280,265
Provision for loan losses ........... 126,000 120,000
Net interest income after
provision for loan losses ........... 484,330 160,265
Non-interest income
Service charges on deposit accounts . 62,132 17,794
Gains (losses) on sales of securities
available for sale, net ............. (127) --
Other ............................... 14,783 16,929
------------ ----------
Total non-interest income ........... 76,788 34,723
Non-interest expenses
Compensation and benefits ........... 305,514 305,214
Net occupancy expense ............... 43,229 40,495
Furniture and equipment expense ..... 55,574 53,168
Professional fees ................... 13,625 38,567
Postage, printing and supplies ...... 18,876 15,608
Bank franchise and license tax ...... 24,000 25,132
Processing fees ..................... 39,144 25,304
Advertising ......................... 24,468 9,760
Other ............................... 52,289 37,704
------------ ----------
Total non-interest expenses ......... 576,719 550,952
------------ ----------
Income (loss) before income taxes ..... $ (15,601) $(355,964)
Income tax expense .................... -- (2,788)
------------ ----------
Net income (loss) ..................... $ (15,601) $(353,176)
============ ==========
Diluted earnings (loss) per share ...... $ (0.02) $ (0.55)
Basic earnings (loss) per share ........ $ (0.02) $ (0.55)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Income
(Unaudited)
<CAPTION>
For the nine months ended September 30: 2000 1999
----- ----
<S> <C> <C>
Interest income
Loans, including fees .............. $ 3,045,253 $ 545,787
Federal funds sold ................. 73,220 101,002
Securities available for sale ...... 283,117 111,291
Interest-bearing deposits with banks 5,578 6,601
----------- -----------
Total interest income .............. 3,407,168 764,681
Interest expense
Deposits ........................... 1,700,489 253,194
Other short-term borrowings ........ 58,651 19,383
----------- -----------
Total interest expense ............. 1,759,140 272,577
----------- -----------
Net interest income .................. 1,648,028 492,104
Provision for loan losses .......... 333,000 242,500
Net interest income after
provision for loan losses .......... 1,315,028 249,604
Non-interest income
Service charges on deposit accounts 155,559 26,366
Gain (loss) on sales of securities
available for sale, net ............ (6,827) 889,245
Other .............................. 35,023 53,053
---------- -----------
Total non-interest income .......... 183,755 968,664
Non-interest expenses
Compensation and benefits .......... 1,004,332 838,400
Net occupancy expense .............. 118,539 109,710
Furniture and equipment expense .... 154,750 136,655
Professional fees .................. 77,371 86,863
Postage, printing and supplies ..... 46,606 62,195
Bank franchise and license tax ..... 72,356 59,507
Processing fees .................... 107,569 58,395
Advertising ........................ 83,983 64,054
Other .............................. 156,796 109,857
----------- -----------
Total non-interest expenses ........ 1,822,302 1,525,636
----------- -----------
Income (loss) before income taxes .... (323,519) (307,368)
Income tax expense ................... -- 60,757
------------ ------------
Net income (loss) .................... $ (323,519) $ (368,125)
============ ============
Diluted earnings (loss) per share .... $ (0.50) $ (0.67)
Basic earnings (loss) per share ...... $ (0.50) $ (0.67)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
For the nine months ended September 30: 2000 1999
---- ----
Balance January 1 ............................ $ 6,848,648 $ 725,042
Net income (loss) .......................... (323,519) (368,125)
Other comprehensive income (loss) net of tax 52,909 (573,282)
Issuance of common stock ................... -- 7,336,935
----------- -----------
Balance at end of period ..................... $ 6,578,038 $ 7,120,570
=========== ===========
See accompanying notes to consolidated financial statements.
Consolidated Statements of Comprehensive Income
(Unaudited)
For the nine months ended September 30: 2000 1999
---- ----
Net income (loss) ................................. $(323,519) $(368,125)
Unrealized holding gains on available for sale
securities arising during the period ...... 48,402 13,619
Reclassification adjustments for gains
on securities included in net income 4,507 (586,901)
--------- ----------
Total other comprehensive income (loss), Net of tax 52,909 (573,282)
--------- ----------
Comprehensive income (loss) ....................... $(270,610) $(941,407)
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended September 30:
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .............................................. $ (323,519) $ (368,125)
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses ............................. 333,000 242,500
(Gain) loss on sale of securities available for sale .. 6,827 (889,245)
Depreciation and amortization of fixed assets ......... 166,116 158,521
Increase in accrued interest receivable ................. (254,865) (187,375)
Decrease (increase) in other assets ..................... 12,086 (93,188)
Increase in accrued interest payable .................... 126,847 62,094
Decrease in other liabilities ........................... (76,003) (326,761)
------------ ------------
Net cash used in operating activities ................ (9,511) (1,401,579)
Cash flows from investing activities:
Net increase in interest-bearing deposits with banks ... (5,970) (8,766)
Net decrease (increase) in federal funds sold .......... 2,275,000 (2,900,000)
Proceeds from sale of securities available for sale ..... 808,300 971,596
Proceeds from maturities of securities available for sale 3,271,719 969,463
Purchase of securities available for sale ............... (5,463,270) (5,389,819)
Net increase in loans ................................... (19,022,417) (19,846,267)
Disposal of premises and equipment ....................... 1,491 --
Purchases of premises and equipment ..................... (25,562) (697,370)
------------ ------------
Net cash used in investing activities ................. (18,160,709) (26,901,163)
Cash flows from financing activities:
Net increase in deposits ................................ 15,426,951 21,857,713
Net increase in short-term borrowings ................... 2,447,232 119,532
Proceeds from issuance of common stock .................. -- 7,336,935
------------ ------------
Net cash provided by financing activities ............. 17,874,183 29,314,180
------------ ------------
Net increase (decrease ) in cash and cash equivalents ... (296,037) 1,011,438
Cash and cash equivalents at beginning of period ........ 2,175,135 16,817
------------ ------------
Cash and cash equivalents at end of period .............. $ 1,879,098 $ 1,028,255
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of Citizens First
Corporation (the "Company") and its subsidiary Citizens First Bank,
Inc. (the "Bank") conform to generally accepted accounting principles
and general practices within the banking industry. The consolidated
financial statements include the accounts of the Company and the Bank.
All significant intercompany transactions and accounts have been
eliminated in consolidation.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Estimates used in
the preparation of the financial statements are based on various
factors including the current interest rate environment and the general
strength of the local economy. Changes in the overall interest rate
environment can significantly affect the Company's net interest income
and the value of its recorded assets and liabilities. Actual results
could differ from those estimates used in the preparation of the
financial statements.
The financial information presented has been prepared from the
books and records of the Company and is not audited. The accompanying
consolidated financial statements have been prepared in accordance with
the instructions to Form 10-QSB and do not include all of the
information and the footnotes required by generally accepted accounting
principles for complete statements.
In the opinion of management, all adjustments considered necessary
for a fair presentation have been reflected in the accompanying
unaudited financial statements. Results of interim periods are not
necessarily indicative of results to be expected for the full year.
(2) Stock Split
On February 5, 1999 the Company's Board of Directors declared a
stock split of 1.043 to 1. All of the per share calculations and
amounts of outstanding shares included herein for all periods presented
have been restated to give retroactive effect to the stock split.
(3) Reclassification of Initial Public Offering Proceeds
On February 17, 1999 the Company completed the initial public
offering for the sale of 536,667 shares of its no par value common
stock. The proceeds from this offering as well as the proceeds from
common stock outstanding prior to the public offering have been
reflected as a component of common stock on the balance sheet. These
amounts were previously reported as a component of additional paid-in
capital. The reclassification has no impact on equity, net income or
total assets as of or for the quarter ended September 30, 1999.
(4) State Corporate Income Taxes
The Company incurred a state corporate income tax benefit of
$2,788 for the quarter ended September 30, 1999 and tax expense of
$60,757 for the nine-month period then ended because the losses of the
Bank are not deductible for state corporate income tax purposes. Banks
in the state of Kentucky are not assessed corporate income taxes, but
are instead taxed based on the value of their capital accounts.
Accordingly, the income or loss from bank subsidiaries of a holding
company is not included in the calculation of corporate income tax. The
Company had taxable income primarily as the result of gains of $889,245
on the sale of marketable securities in the nine-month period ended
September 30, 1999. The Company had no federal income tax liability for
the three-month or nine-month periods ended September 30, 2000 based on
its consolidated results of operations.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The Company was incorporated under the laws of the
Commonwealth of Kentucky on December 24, 1975 for the purpose of
conducting business as an investment club, and is headquartered in
Bowling Green, Kentucky. In late 1998 and early 1999, the Company filed
the appropriate regulatory applications and received regulatory
approval to become a bank holding company under the Bank Holding
Company Act of 1956, as amended, through its organization and ownership
of its only subsidiary, the Bank. On February 17, 1999, the Company
completed the initial public offering for the sale of 536,667 shares of
its no par value common stock. The proceeds of the sale of the stock
were used to pay start up expenses, liquidate short-term borrowings,
and capitalize the Bank. The Bank opened for business on February 18,
1999.
The Company follows a corporate strategy that focuses on
providing the Bank's customers with high quality, personal banking
services. The Bank offers a range of products designed to meet the
needs of its customers that include individuals, small businesses,
partnerships and corporations.
The Bank offers a full range of deposit services. Checking
account services include regular non-interest bearing checking accounts
as well as interest bearing negotiable order of withdrawal ("NOW")
accounts. Savings and certificate of deposit accounts include accounts
ranging from a daily maturity (regular savings and also money market
accounts) to longer term certificates as authorized by law. In
addition, retirement accounts such as IRA's (Individual Retirement
Accounts) are available. All deposit accounts are insured by the
Federal Deposit Insurance Corporation to the full amount permitted by
law. Deposit accounts are solicited from individuals, businesses,
professional organizations and governmental authorities.
Lending services include a full range of commercial, personal,
and mortgage loans. The Bank's primary lending focus is on business
lending. The types of commercial loans that are available include both
secured and unsecured loans for working capital (including inventory
and receivables), business expansion (including acquisition of real
estate and improvements) and purchase of machinery and equipment. The
types of personal loans that are available include secured and
unsecured loans for such purposes as financing automobiles, home
improvements, education and personal investments. The Bank originates,
processes and closes residential real estate loans which are then sold
on the secondary market (each individually) to a correspondent.
The Bank offers credit cards (through correspondent banking
services) including MasterCard (TM) and Visa(TM) as well as a personal
checking account related line of credit. The line of credit is
available for both protection against unexpected overdrafts and also
for the convenience of having a pre-arranged loan that can be activated
simply by a check drawn on a personal checking account. Other services
offered include, but are not limited to, safe deposit boxes, letters of
credit, travelers checks, direct deposit of payroll, social security
and dividend payments and automatic payment of insurance premiums and
mortgage loans. The Bank does not have a proprietary automated teller
machine but participates in a national ATM network through the FiServ
EFT network and then through the Visa Debit Card Program.
The Bank operates in two locations. The main office is located
at 1805 Campbell Lane, and the one branch office, which opened on March
22, 1999, is located at 901 Lehman Avenue.
Results of Operations
For the three months ended September 30, 2000, the Company
reported a net loss of $15,601, or $0.02 per diluted share, compared to
a net loss of $353,176, or $0.55 per diluted share, for the same period
ended September 30, 1999.
For the nine months ended September 30, 2000, the Company
reported a net loss of $323,519, or $0.50 per diluted share, compared
to a net loss of $368,125, or $0.67 per diluted share, for the same
period ended September 30, 1999. Net loss includes a loss of $6,827
during the first nine months of 2000, and a gain of $889,245 during the
same period in 1999, each from the sale of investment securities.
Excluding these securities transactions and the related tax effect, the
net loss for the first nine months of 2000 would have been $316,692, or
$0.49 per diluted share, compared to a net loss of $1,196,613, or $2.18
per diluted share, during the same period of 1999.
Net Interest Income
Net interest income was $610,330 in the third quarter of 2000,
compared with $280,265 in the comparable 1999 period. Third quarter
2000 interest income of $1,312,433, an increase of $851,659 over the
same period in 1999, includes $1,211,847 income on loans, $93,407
income on investment securities, and $7,179 income on federal funds
sold and interest-bearing deposits with banks. Interest income of
$460,774 during the third quarter of 1999 included $367,712 of income
on loans, $57,178 income on investment securities, and $35,884 income
on federal funds sold and interest-bearing deposits with banks.
Interest expense of $702,103 for third quarter 2000 includes interest
on deposits of $675,129, and $26,974 of other short-term borrowings.
Third quarter 1999 interest expense of $180,509 consists primarily of
interest on deposits. The growth of the balance sheet, particularly
loans and deposits, over this period contributed significantly to the
increase of net interest income.
Net interest income was $1,648,028 for the nine months ended
September 30, 2000, an increase of $1,155,924 over the total of
$492,104 for the same period of 1999. Interest income of $3,407,168 for
the first nine months of 2000 included $3,045,253 income on loans,
$283,117 income on investment securities, and $78,798 income on federal
funds sold and interest-bearing deposits with banks. Total interest
income of $764,681 for the first nine months of 1999 consisted of
$545,787 income on loans, $111,291 income on investment securities, and
$107,603 income on federal funds sold and interest-bearing deposits
with banks. Interest expense for the first nine months of 2000 totaled
$1,759,140, composed of $1,700,489 interest on deposits, and $58,651
interest on other short-term borrowings. The comparable period of 1999
had interest expense of $272,577, of which $253,194 was interest on
deposits, and $19,383 was interest on other short-term borrowings.
Non-Interest Income
Non-interest income for the three months ended September 30,
2000 and 1999, respectively, was $76,788 and $34,723. Service charges
on deposit accounts comprised the largest part of non-interest income
for both time periods, totaling $62,132 during the third quarter of
2000, and $17,794 for the same period of 1999.
Non-interest income was $183,755 versus $968,664 for the nine
months ended September 30, 2000 and 1999, respectively. Non-interest
income for the first nine months of 2000 includes a loss of $6,827 on
the sale of investment securities. This loss is due to an investment
that was sold and replaced with a higher-yielding security, and to an
investment sold to help fund loan growth. Non-interest income for the
same period in 1999 included a gain on the sale of investment
securities of $889,245. Some of this gain was from investments sold in
part so that additional capital would be available to be contributed to
the Bank, in order to meet minimum capital requirements of the Federal
Deposit Insurance Corporation. In addition, at December 31, 1998, the
investment securities owned by the Company included concentrations in
the stocks of certain publicly traded companies. The sale of some of
these securities in early 1999 was an effort to reduce the Company's
exposure to loss.
Non-Interest Expense
Non-interest expense was $576,719 in the third quarter of
2000, up from $550,952 in the same quarter of 1999, an increase of
$25,767 or 4.7%. Non-interest expense for the nine months ended
September 30, 2000 and 1999, respectively, was $1,822,302 and
$1,525,636, an increase of $296,666 or 19.4%. Expenses for the first
three quarters of 2000 include the costs of a full nine months of
operations of the Bank, compared to the comparable period in 1999,
during which the Bank opened on February 18, 1999. The majority of the
year-to-year increase is in compensation and benefits expenses, which
increased $165,932, or 19.8%, from $838,400 in 1999 to $1,004,332 in
2000, mainly as a result of a full nine months of operations in 2000.
Income Taxes
Income tax expense has been calculated based on the Company's
expected annual rate. Deferred tax liabilities and assets are
recognized for the tax effects of differences between the financial
statement and tax bases of assets and liabilities. A valuation
allowance is established to reduce deferred tax assets if it is more
likely than not that a deferred tax asset will not be realized.
Balance Sheet Review
Overview
Total assets at September 30, 2000 were $63,654,802, up from
$45,973,310 at December 31,1999, and up from $30,502,183 a year ago.
Average total assets for the third quarter of 2000 were $59,730,856, up
$33,265,873 from the third quarter of 1999 average of $26,464,983.
Loans
The Bank experienced annualized loan growth of 74% from
December 31, 1999 to September 30, 2000. At September 30, 2000 loans
(excluding mortgage loans held for sale) totaled $53,136,745 compared
with $34,126,628 at December 31, 1999 and $19,846,267 a year ago.
Asset Quality
The allowance for loan losses was $706,620 at September 30,
2000, an increase of $305,700, or 76% over the December 31, 1999 level
of $400,920. The allowance represents 1.33% of period-end loans, up
from 1.17% of loans as of December 31, 1999.
The Bank had non-performing loans totaling $518,000 at
September 30, 2000, compared to none at December 31, 1999 or September
30, 1999. Included in the non-performing loan total are two loans to
one customer, totaling $141,000, that were placed on non-accrual status
during the third quarter of 2000. These loans are secured by partially
developed real estate. The remaining $377,000 of non-performing loans
are comprised of four loans, to the same customer previously mentioned,
that are accruing but past due 90 days or more. These four loans are
secured by residential real estate. In management's estimation, the
potential loss to the Bank on these six non-performing loans is less
than $50,000. Non-performing loans are defined as non-accrual loans,
loans accruing but past due 90 days or more, and restructured loans.
The Bank had non-performing assets of $518,000, comprised of the above
mentioned non-performing loans, at the end of the third quarter of
2000. Non-performing assets are defined as non-performing loans,
foreclosed real estate, and other foreclosed property. The bank had no
non-performing assets as of December 31, 1999 or September 30, 1999.
The allowance for loan losses is established through a
provision for loan losses charged to expense. The level of the
allowance is based on management's and the Company Board of Directors
Loan Committee's ongoing review and evaluation of the loan portfolio
and general economic conditions on a monthly basis and by the full
Board of Directors on a quarterly basis. Management's review and
evaluation of the allowance for loan losses is based on an analysis of
historical trends, significant problem loans, current market value of
real estate or collateral and certain economic and other factors
affecting loans and real estate or collateral securing these loans.
Loans are charged off when, in the opinion of management, they are
deemed to be uncollectible. Recognized losses are charged against the
allowance and subsequent recoveries are added to the allowance. While
management uses the best information available to make evaluations,
future adjustments to the allowance may be necessary if economic
conditions differ substantially from the assumptions used in making the
evaluation. The allowance for loan losses is reviewed internally by
personnel independent of the loan department. In addition, the
allowance is subject to periodic evaluation by various regulatory
authorities and may be subject to adjustment based upon information
that is available to them at the time of their examination.
The provision for loan losses was $333,000 for the first nine
months of 2000. The provision for losses on loans is established to
provide for losses inherent in the Bank's portfolio and reflects
management's evaluation of the risk in the loan portfolio.
Securities Available for Sale
Securities (all classified as available for sale) increased
from $4,389,787 at December 31, 1999 to $5,860,393 at September 30,
2000. At September 30, 1999 securities totaled $4,956,621.
Deposits and Borrowed Funds
Total deposits averaged $50,613,318 in the third quarter of
2000, an increase of $32,606,257 from the comparable 1999 quarterly
average of $18,007,061. As of September 30, 2000, total deposits were
$52,557,271, and included $49,135,886 of interest bearing deposits.
This compares to total deposits of $37,130,321 at December 31, 1999,
which included $34,252,454 of interest bearing deposits. Total deposits
at September 30, 1999, were $21,857,713, and interest bearing deposits
were $20,131,670.
The Bank had $2,011,110 of deposits secured by securities sold
under agreements to repurchase as of September 30, 2000. These
obligations, which mature in one business day, are swept daily from
customers' demand deposit accounts. The balance averaged $1,283,968 for
the first nine months of 2000.
Capital Resources and Liquidity
The Board of Governors of the Federal Reserve System has
adopted risk based capital and leverage ratio requirements for bank
holding companies. The table below sets forth the Company's capital
ratios as of September 30, 2000, December 31, 1999 and September 30,
1999; the regulatory minimum capital ratios; and the regulatory minimum
capital ratios for well-capitalized companies:
<TABLE>
<CAPTION>
September 30, December 31, September 30,
2000 1999 1999
----- ---- ----
<S> <C> <C> <C>
Tier 1 risk based ........... 12.31% 18.82% 24.61%
Regulatory minimum ..... 4.00 4.00 4.00
Well-capitalized minimum 6.00 6.00 6.00
Total risk based ............ 13.56% 19.91% 25.48%
Regulatory minimum ..... 8.00 8.00 8.00
Well-capitalized minimum 10.00 10.00 10.00
Leverage .................... 10.34% 15.00% 22.69%
Regulatory minimum ..... 3.00 3.00 3.00
Well-capitalized minimum 5.00 5.00 5.00
</TABLE>
The decrease in capital levels is due in part to the growth in
the Company's total assets, which increases the denominator in the
capital calculation formula. In addition, net operating losses decrease
capital levels, and hence also serve to decrease the capital ratios.
The Company's primary cash requirements are expected to be met
by the anticipated growth of customers' deposits, and through the sale
of investment securities. The Bank has also established federal funds
guidelines with correspondent banks, giving it short-term borrowing
availability, and has established a program allowing it to sell
investment securities under an agreement to repurchase at a later date.
In addition, the Bank has borrowing capabilities through the Federal
Home Loan Bank of Cincinnati. Other than these sources, the Company
does not anticipate the need to raise additional funds in the next
twelve months. Property and equipment needed for the operation of the
Bank have been purchased and no additional significant purchases or
sales of plant and equipment are planned. The Company and the Bank are
fully staffed and no significant changes in the number of employees are
planned.
Liquidity is the measure of the Bank's ability to fund
customer's needs for borrowings and deposit withdrawals. In the first
nine months of 2000, the Company's principal source of funds has been
the acquisition of customers' deposits, repayment of loans, and other
funds from bank operations. In the same nine months of 1999, the
principal source of liquidity was the proceeds from the initial public
offering in the February 1999, coupled with the acquisition of
customer's deposits.
Forward-Looking Statements
This report contains certain forward-looking statements,
either expressed or implied, which are provided to assist the reader in
making judgments about the Company's possible future financial
performance. Such statements are subject to certain risks and
uncertainties, including without limitation changes in economic
conditions in the Company's market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans
in the Company's market area, competition, and those risks and
uncertainties discussed under the heading "Risk Factors" in the
Company's Registration Statement on Form SB-2 as filed with the
Securities and Exchange Commission. The factors listed above could
affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from
any opinions or statements expressed or implied with respect to future
periods in any current statements.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed on the Exhibit Index of this Form 10-QSB are
filed as a part of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30,2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CITIZENS FIRST CORPORATION
Date: November 13, 2000 /s/ Mary D. Cohron
------------------
President and Chief Executive Officer
(Principal Executive Officer)
November 13, 2000 /s/ Bill D. Wright
------------------
Bill D. Wright
Vice-President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
Exhibits
3.1 Articles of Restatement and Amendment to Articles of Incorporation of
Bowling Green Investors, Ltd. (now Citizens First Corporation)
(incorporated by reference to Exhibit 3.1 of the corporation's
Registration Statement on Form SB-2 [No. 333-67435]).
3.3 Articles of Amendment to Articles of Restatement and Amendment to
Articles of Incorporation of Citizens First Corporation (incorporated by
reference to Exhibit 3.3 of the corporation's Registration Statement on
Form SB-2 [No. 333-67435]).
3.4 Articles of Amendment to Restated Articles of Incorporation of Citizens
First Corporation (incorporated by reference to Exhibit 4.1 of the
corporation's Form 10-QSB dated June 30,2000).
4 Articles of Restatement and Amendment to Articles of Incorporation of
Bowling Green Investors, Ltd.(now Citizens First Corporation)
(incorporated by reference to Exhibit 4 of
the corporation's Registration Statement on Form SB-2 [No. 333-67435]).
4.1 Articles of Amendment to Restated Articles of Incorporation of Citizens
First Corporation.(incorporated by reference to Exhibit 4.1 of the
corporation's Form 10-QSB dated June 30,2000).
10.17 First Amendment to Employment Agreement between Citizens First
Corporation and Matthew Todd Kanipe.
11 Statement re: Computation of per share earnings.
27 Financial Data Schedule for the quarter ended September 30, 2000
(for SEC use only).
