<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996, 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 2-71332
-------------------------
TWENTIETH BANCORP, INC.
(Exact name of registrant as specified in its charter)
WEST VIRGINIA
(State or other jurisdiction of
incorporation or organization)
1900 THIRD AVENUE
HUNTINGTON, WEST VIRGINIA
(Address of principal executive offices)
55-0634729
(I.R.S. Employer Identification Number)
25703-0527
(Zip code)
(304) 526-6200
(Registrant's telephone number, including area code)
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, and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
The number of shares outstanding of each of the issuer's classes
of common stock was 1,800,000 shares of common stock, par value
$1.00, outstanding as of May 10, 1996.
<PAGE> 2
FINANCIAL STATEMENTS
TWENTIETH BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 12,942,308 $ 12,792,140 $ 15,453,327
Federal Funds Sold and Securities
Purchased under Reverse Repurchase
Agreements 10,525,000 750,000 2,275,000
Investment Securities: (Note 3)
Held to Maturity 27,851,003 40,204,775 32,890,143
Available for Sale 68,936,083 40,370,283 63,108,750
----------- ----------- -----------
Total Investment Securities 96,787,086 80,575,058 95,998,893
----------- ----------- -----------
Loans, net of unearned discount 186,819,336 200,239,305 194,167,638
Less: Allowance for Loan Losses 2,275,000 2,000,000 2,000,000
----------- ----------- -----------
Net Loans 184,544,336 198,239,305 192,167,638
----------- ----------- -----------
Bank Premises and Equipment 7,010,426 6,811,257 7,090,256
Other Assets 4,385,199 4,802,202 4,323,292
----------- ----------- -----------
Total $316,194,355 $303,969,962 $317,308,406
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-Bearing 40,348,949 39,979,372 41,969,972
Interest-Bearing Demand 44,735,439 47,377,233 46,660,054
Savings 76,768,114 88,902,882 76,713,234
Time 114,506,675 91,789,804 114,914,010
----------- ----------- -----------
Total Deposits 276,359,177 268,049,291 280,257,270
Federal Funds Purchased and Securities
Sold under Repurchase Agreements 3,730,000 3,045,000 1,245,000
Long Term Debt 127,606 145,879 130,987
Other Liabilities 2,392,434 1,831,974 2,399,333
----------- ----------- -----------
Total Liabilities 282,609,217 273,072,144 284,032,590
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common Stock, $1.00 par value;
3,600,000 shares authorized,
1,800,000 shares outstanding at
March 31, 1996 and December 31,
1995; and $2.50 par value;
1,200,000 shares authorized;
and 600,000 shares outstanding
at March 31, 1995 1,800,000 1,500,000 1,800,000
Surplus 7,500,000 7,500,000 7,500,000
Retained Earnings 24,302,774 22,462,008 23,590,848
Net Unrealized Gains (Losses) on
Investment Securities -
Available for Sale, Net of taxes ( 17,636) (564,190) 384,968
----------- ----------- -----------
Total Shareholders' Equity 33,585,138 30,897,818 33,275,816
----------- ----------- -----------
TOTAL $316,194,355 $303,969,962 $317,308,406
============ ============ ============
<FN>
* Outstanding shares from periods prior to May 15, 1995 had Common Stock
of $2.50 par value and 600,000 shares issued and outstanding.
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
MARCH 31,
1996 1995
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $4,288,227 $4,456,539
Interest on Securities:
Taxable 1,290,982 1,149,320
Tax Exempt 99,188 78,976
Other Interest Income:
Federal Funds Sold and Repurchase Agreements 156,933 40,890
--------- ---------
TOTAL INTEREST INCOME 5,835,330 5,725,725
--------- ---------
INTEREST EXPENSE
Interest on Demand Deposits 192,741 211,176
Interest on Savings 582,938 750,793
Interest on Time Certificates
of Deposit $100,000 or more 121,701 119,404
Interest on all other Time Deposits 1,342,227 875,490
--------- ---------
Total Interest on Deposits 2,239,607 1,956,863
--------- ---------
Interest on Federal Funds Purchased and
Securities Sold under Repurchase Agreements 41,031 52,183
Interest on Long Term Debt 1,928 2,204
--------- ---------
TOTAL INTEREST EXPENSE 2,282,566 2,011,250
--------- ---------
Net Interest Income 3,552,764 3,714,475
Provision for Loan Losses 381,141 290,003
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,171,623 3,424,472
OTHER INCOME
Trust Department Fees 107,727 129,077
Service Charges on Deposit Accounts 225,249 191,065
Securities Gains (Losses) -- --
Other Income 147,416 118,925
--------- ---------
TOTAL OTHER INCOME 480,392 439,067
--------- ---------
OTHER EXPENSE
Salaries and Employee Benefits 1,171,157 1,105,804
Occupancy and Equipment Expense 264,578 265,153
Other Operating Expense 1,086,586 957,953
--------- ---------
TOTAL OTHER EXPENSE 2,522,321 2,328,910
--------- ---------
Income Before Income Taxes 1,129,694 1,534,629
Applicable Income Taxes 417,768 632,031
--------- ---------
NET INCOME $ 711,926 $ 902,598
========= =========
Net Income Per Share * .40 .50
==== ====
<FN>
* All per share date has been adjusted to reflect the three-for-one (3-for-1)
stock split on May 15, 1995.
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock shares outstanding were 1,800,000 March 1996 and
600,000 March 1995.
Net
Retained Unrealized
Amount Surplus Earnings Gain (Loss) Total
Investment
Securities
Available
for Sale
<S> <C> <C> <C> <C> <C>
Balance, December
31, 1995 $1,800,000 $7,500,000 $23,590,848 384,968 $33,275,816
Net Income 711,926 711,926
Dividends Declared -- --
Net Unrealized
Gains (Losses)
on Investment
Securities -
Available for
Sale, net of
taxes of $207,401 (402,604) (402,604)
Treasury shares:
Acquired -- --
Sold -- --
--------- --------- ---------- ---------- ----------
Balance, March
31, 1996 $1,800,000 $7,500,000 $24,302,774 $( 17,636) $33,585,138
========== ========== =========== =========== ===========
Balance, December
31, 1994 $1,500,000 $7,500,000 $21,559,410 $(1,249,841) $29,309,569
Net Income 902,598 902,598
Dividends Declared -- --
Net Unrealized
Gains (Losses)
on Investment
Securities -
Available for
Sale, net of
taxes of $353,215 685,651 685,651
Treasury shares:
Acquired (31,080) (31,080)
Sold 31,080 31,080
--------- --------- ---------- ---------- ----------
Balance, March
31, 1995 $1,500,000 $7,500,000 $22,462,008 $( 564,190) $30,897,818
========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 5,960,866 $ 5,831,833
Fees, commissions and other income 496,100 404,563
Bad debt recoveries 64,742 59,985
Interest paid (2,973,091) (1,827,720)
Cash paid for operating expenses (1,935,895) (2,309,511)
Income tax paid -- --
--------- ---------
Net cash provided by operating activities $ 1,612,722 $ 2,159,150
--------- ---------
Cash flows from investing activities:
Purchase of securities to be held to maturity -- --
Proceeds from maturities and early calls of
securities held to maturity 5,000,000 1,200,000
Purchase of securities available for sale (7,976,574) --
Proceeds from sales of securities
available for sale -- --
Proceeds from maturities and early calls of
securities available for sale 1,516,107 1,244,090
Net decrease (increase) in loans 7,043,430 4,874,180
Capital expenditures ( 43,591) ( 73,860)
Proceeds from sale of other real estate 12,000 12,250
--------- ---------
Net cash provided by investing activities 5,551,372 7,256,660
---------- ----------
Cash flows from financing activities:
Net increase (decrease) in noninterest
bearing demand deposits ( 1,891,350) ( 5,502,501)
Net increase (decrease in interest bearing
demand deposits and savings ( 1,608,047) (12,376,427)
Net increase (decrease) in certificates of
deposit, individual retirement accounts,
and other time deposits ( 407,335) 6,864,465
Net increase (decrease) in federal funds
purchased and securities sold under
repurchase agreements 2,485,000 ( 180,000)
Repayment of borrowed funds ( 3,381) ( 3,110)
Payment of dividends -- --
Purchase of treasury stock -- ( 31,080)
Proceeds from sale of treasury stock -- 31,080
---------- ----------
Net cash provided by (used in)
financing activities ( 1,425,113) (11,197,573)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 5,738,981 ( 1,781,763)
Cash and cash equivalents at beginning of year 17,728,327 15,323,903
---------- ----------
Cash and cash equivalents at end of quarter $23,467,308 $13,542,140
=========== ===========
</TABLE>
<PAGE> 6
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
1996 1995
---- ----
Reconciliation of net income to net cash provided by operating activities:
<S> <C> <C>
Net Income $ 711,926 $ 902,598
---------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 123,421 123,421
Amortization and accretions 96,102 170,234
Provision for bad debts 445,883 349,988
Provision for deferred income taxes ( 92,050) 1,125
Loss on sale of securities available for sale -- --
Loss on sale of other real estate
and fixed assets, net -- --
Decrease (increase) in other assets 15,036 (237,633)
Decrease (increase) in accrued income 71,988 ( 71,784)
Increase (decrease) in accrued expenses 421,123 106,765
Increase (decrease) in income taxes payable 509,818 630,906
Increase (decrease) in reserve for interest ( 690,525) 183,530
---------- ----------
900,796 1,256,552
---------- ----------
$ 1,612,722 $ 2,159,150
=========== ===========
Supplemental Disclosures -
Unrealized losses on securities available
for sale:
Increase (decrease) in securities
available for sale $( 610,005) $ 1,038,866
Increase (decrease) in deferred tax benefit 207,401 ( 353,215)
Increase (decrease) in shareholders equity ( 402,604) 685,651
See accompanying notes to consolidated financial statements.
<FN>
<F1>
Disclosure of accounting policy:
For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks, food coupons and federal funds sold.
Generally, federal funds are purchased and sold for one-day periods.
</FN>
</TABLE>
<PAGE> 7
TWENTIETH BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for the interim
financial information and with the instructions to Form 10Q and rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1996. For further information, refer to the consolidated financial statements
and notes thereto included in the 1995 Form 10K of Twentieth Bancorp, Inc.
NOTE 2. PENDING MERGER
On February 6, 1996, The Twentieth Bancorp, Inc. entered into a definitive
agreement to be merged into the Horizon Bancorp, Inc. with its primary office
located in Beckley, West Virginia. This merger is expected to be completed in
the third quarter of 1996 and will be accounted for as a pooling-of interest.
The agreement calls for shareholders of Twentieth Bancorp, Inc. ("Twentieth") to
receive a fixed exchange ratio of 1.010 shares of stock of Horizon Bancorp, Inc.
("Horizon") for each 1,800,000 outstanding shares of the Twentieth Bancorp
common stock. The transaction is subject to usual conditions, representations,
and warranties including shareholder and regulatory approvals. The Horizon
Bancorp is listed on the NASDAQ Stock Exchange.
Twentieth Bancorp will operate as a wholly-owned subsidiary of Horizon Bancorp.
Horizon Bancorp, a bank holding company, headquartered in Beckley, West Virginia
had total assets of $616,248, total deposits of $520,637 and shareholders equity
of $71,778 at March 31, 1996.
NOTE 3. INVESTMENT SECURITIES
Management determines the appropriate classification of securities at the time
of purchase. Securities to be Held to Maturity represent bond, notes and
debentures for which Twentieth has the positive intent and ability to hold to
maturity are reported at cost, adjusted for amortization of premiums and
accretion of discounts which are recognized in interest income using the
interest method over the period to maturity. Securities Available for Sale
represent bonds, notes, debentures and certain equity securities not
classified as securities to be held to maturity and are carried at fair value.
Management has decided to place securities in available for sale when purchased
that have maturities over two and one half years. Twentieth does not hold
securities for trading purposes.
<PAGE> 8
<TABLE>
<CAPTION>
SECURITIES - HELD TO MATURITY
March 31, 1996
(Unaudited)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $24,021,085 $ 56,025 $ -- $24,077,110
U. S. Government Agencies 999,550 3,730 -- 1,003,280
State and Political
Subdivision Securities 2,730,368 282,899 -- 3,013,267
Other Securities - Debt 100,000 -- -- 100,000
---------- ------- ------- ----------
Total $27,851,003 $342,654 $ -- $28,193,657
=========== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SECURITIES - HELD TO MATURITY
March 31, 1995
(Unaudited)
<S> <C> <C> <C> <C>
U. S. Treasury Securities $36,278,629 $ -- $171,229 $36,107,400
States and Political
Subdivision Securities 3,826,146 302,877 -- 4,129,023
Other Securities - Debt 100,000 -- -- 100,000
---------- ------- ------- ----------
Total $40,204,775 $302,877 $171,229 $40,336,423
=========== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
SECURITIES - AVAILABLE FOR SALE
March 31, 1996
(Unaudited)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $27,382,088 $150,653 $ -- $27,532,741
Federal Agency Securities 37,224,251 -- 107,901 37,116,350
State and Political
Subdivision Securities 4,287,155 -- 69,473 4,217,682
Other Securities - Equity 69,310 -- -- 69,310
---------- ------- ------- ----------
Total $68,962,804 $150,653 $177,374 $68,936,083
=========== ======== ======== ===========
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
SECURITIES - AVAILABLE FOR SALE
March 31, 1995
(Unaudited)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $16,521,256 $ -- $240,816 $16,280,440
Federal Agency Securities 24,634,550 -- 614,017 24,020,533
Other Securities - Equity 69,310 -- -- 69,310
---------- ------- ------- ----------
Total $41,225,116 $ -- $854,833 $40,370,283
=========== ======== ======== ===========
</TABLE>
NOTE 4. SUMMARY OF LOANS
(in thousands)
<TABLE> MARCH 31,
1996 1995
---- ----
<S> <C> <C>
Commercial, Financial and Other $ 72,134 $ 75,956
Real Estate - Construction 77 1,080
Real Estate - Mortgage 44,381 46,290
Consumer 70,227 76,913
------- -------
Total Loans $186,819 $200,239
======== ========
</TABLE>
Unearned discount was $145. and $604. at March 31, 1996 and 1995, respectively;
and $236. at December 31, 1995.
NOTE 5. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD
UNDER REPURCHASE AGREEMENTS
(in thousands)
<TABLE>
<CAPTION>
March 31,
1996 1995
---- ----
<S> <C> <C>
Federal Funds Purchased $ 2,535 $ 2,345
Securities Sold Under
Repurchase Agreements 1,195 700
------ ------
Total Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements $ 3,730 $ 3,045
====== ======
</TABLE>
<PAGE> 10
TWENTIETH BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
March 31, 1996
PERFORMANCE SUMMARY
Twentieth Bancorp, Inc. net income for the three months ended March 31, 1996
was $711,926 or $.40 per share, compared to $902,598 or $.50 per share, for
the same period of 1995.
Net income decreased $190,672 or 21.12% for three months ended March 31, 1996
from net income reported in the first quarter of 1995. This decrease was
primarily due to $250,000 in fees expensed in the first quarter for our
financial advisor, Baxter Fentriss and Company in connection with the merger
and the increase in the provision for loan losses of $91,138. Total interest
income increased $109,605 or 1.91%, and interest expense increased $271,316 or
13.49% from the same period last year as stabilized interest rates narrow the
interest margins.
Total assets increased $12,224,393 or 4.02% for the comparative quarterly
periods. Total deposits were up $8,309,886 or 3.10% for the comparative
quarterly periods and down $3,898,093 or 1.39% for March 31, 1996 compared
to December 31, 1995. Growth in deposits after March, 1995, was substantially
attributed to the nine month certificate of deposit introduced in April and May,
1995 at 6.50%. Since that time the rate has been lowered to 5.30%, annual
percentage yield, in line with our market competiveness on traditional deposit
instruments. The decline in demand deposits is the primary reason for the
decline in deposits since the beginning of 1996.
Shareholders equity increased $2,687,320 or 8.70%. The increase is due to
strong undistributed earnings since March of 1995 along with a $546,554
reduction in net unrealized losses on securities available for sale.
NET INTEREST INCOME
The most significant component of earnings is net interest income. This
category of income is very sensitive to changes in the volume, mix and
interest yield/rate of earning assets, and interest bearing liabilities. Net
interest income on a federal tax-equivalent basis (FTE) decreased by $154,629
to $3,608,130 for the first quarter of 1996 as compared to $3,762,759 earned
during the same period in 1995. Interest income increased $118,687 or 2.05%
while interest expense also increased $273,316 for the first quarter of 1996
as compared to the first quarter of 1995. The net interest margin decreased
to 4.91% for the first quarter of 1996 as compared to 5.34% for the first
quarter of 1995. Gross earning assets yield decreased to 8.03% from 8.20%
for the first quarter of 1996 over the comparable period for 1995. Yields
paid on interest bearing liabilities increased to 3.85% for the first quarter
of 1996 as compared to 3.49% for the same period in 1995.
Average total earning assets increased to a balance of $295,534,634 for the
first quarter of 1996 as compared to a balance of $285,843,908 for the same
period in 1995. Average total interest bearing liabilities increased to a
balance of $239,232,198 for the first quarter of 1996 as compared to
$234,458,465 for the same period in 1995.
The average quarterly volume, at the carrying value, of investment securities
increased $12,598,079 while the loan portfolio decreased $11,817,288 for the
first quarter of 1996 over the same period in 1995. This is a result of lack of
loan demand. This was the opposite of 1995 over 1994 when maturing securities
funds were reinvesting in the loan portfolio. The average volume of Federal
<PAGE> 11
Funds Sold also increased $8,910,935 in the first quarter of 1996 as compared to
first quarter of 1995.
The average quarterly volume of time deposits increased $24,562,415 for the
first quarter of 1996 from the same period of 1995 while the average quarterly
volume of savings deposits decreased $17,210,817 for the same period. The
shift from savings to time deposits was primarily due to higher yields paid
on certificates of deposits.
<PAGE> 12
<TABLE>
TWENTIETH BANCORP, INC.
CONSOLIDATED AVERAGE BALANCE SHEET
AND INTEREST MARGIN ANALYSIS
Three Months Ended March 31, 1996
<CAPTION>
Interest Average
Average Income/ Yields/
ASSETS Balances Expense Rates
<S> <C> <C> <C>
Earning Assets:
Loans:
Commercial * $ 73,212,908 $1,673,308 9.19%
Real Estate 45,079,630 970,760 8.66%
Installment 71,799,643 1,655,428 9.27%
----------- ---------
Total Loans 190,092,181 4,299,496 9.10%
----------- ---------
Taxable 87,139,108 1,290,982 5.96%
Tax Exempt * 6,538,411 150,285 9.24%
----------- ---------
Total Securities 93,677,519 1,441,267 6.19%
----------- ---------
Federal Funds Sold and
Securities Purchased under
Agreements to Resell 11,765,934 156,933 5.28%
----------- ---------
Total Earning Assets 295,535,634 5,897,696 8.03%
----------- ---------
Non-Earning Assets:
Cash and Due From Banks 11,231,914
Premises & Equipment, net 7,049,145
Other Assets 3,831,093
Reserve for Loan Losses (2,098,109)
-----------
Total Non-earning Assets 20,014,043
-----------
TOTAL ASSETS 315,549,677
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest Bearing Liabilities:
Savings Deposits 87,359,071 584,726 2.69%
Demand Deposits 33,764,074 193,332 2.30%
Time Deposits 114,321,140 1,468,417 5.17%
Purchased Funds 3,659,066 41,157 4.52%
Long-Term debt 128,847 1,934 6.04%
----------- ---------
Total Interest Bearing* 239,232,198 2,289,566 3.85%
----------- ---------
Non-Interest Bearing
Liabilities & Capital:
Demand Deposits 40,199,571
Accrued Expenses & Other 2,533,775
Capital 33,584,133
-----------
Total Non-Interest Bearing 76,317,479
-----------
TOTAL LIABILITIES & CAPITAL 315,549,677
===========
NET INTEREST INCOME/MARGIN 3,608,130 4.91%
========= ====
<FN>
<F1>
*Computed on a Fully Tax-Equivalent Basis Assuming a Tax Rate of 34%
</FN>
</TABLE>
<PAGE> 13
<TABLE>
TWENTIETH BANCORP, INC.
CONSOLIDATED AVERAGE BALANCE SHEET
AND INTEREST MARGIN ANALYSIS
Three Months Ended March 31, 1995
<CAPTION>
Interest Average
Average Income/ Yields/
ASSETS Balances Expense Rates
<S> <C> <C> <C>
Earning Assets:
Loans:
Commercial * $ 76,102,975 $1,788,748 9.53%
Real Estate 47,473,892 965,735 8.25%
Installment 78,332,602 1,714,655 8.88%
----------- ---------
Total Loans 201,909,469 4,469,138 8.98%
----------- ---------
Taxable 77,137,471 1,149,320 6.04%
Tax Exempt * 3,941,969 119,661 12.14%
----------- ---------
Total Securities 81,079,440 1,268,981 6.35%
----------- ---------
Federal Funds Sold and
Securities Purchased under
Agreements to Resell 2,854,999 40,890 5.81%
----------- ---------
Total Earning Assets 285,843,908 5,779,009 8.20%
----------- ---------
Non-Earning Assets:
Cash and Due From Banks 10,254,357
Premises & Equipment, net 6,839,639
Other Assets 4,669,716
Reserve for Loan Losses (1,917,357)
-----------
Total Non-earning Assets 19,846,355
-----------
TOTAL ASSETS 305,690,263
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest Bearing Liabilities:
Savings Deposits 104,569,888 752,659 2.92%
Demand Deposits 36,179,083 211,701 2.37%
Time Deposits 89,758,725 997,368 4.51%
Purchased Funds 3,803,827 52,312 5.58%
Long-Term debt 146,942 2,210 6.10%
----------- ---------
Total Interest Bearing* 234,458,465 2,016,250 3.49%
----------- ---------
Non-Interest Bearing
Liabilities & Capital:
Demand Deposits 39,485,592
Accrued Expenses & Other 1,673,545
Capital 30,072,661
-----------
Total Non-Interest Bearing 71,231,798
-----------
TOTAL LIABILITIES & CAPITAL 305,690,263
===========
NET INTEREST INCOME/MARGIN 3,762,759 5.34%
========= ====
<FN>
<F1>
*Computed on a Fully Tax-Equivalent Basis Assuming a Tax Rate of 34%
</FN>
</TABLE>
<PAGE> 14
<TABLE>
TWENTIETH BANCORP, INC.
COMPARATIVE OPERATING DATA
(Fully Taxable Equivalent Basis)
For Three Months Ended March 31, 1996 and 1995
<CAPTION>
Increase
Three Months Ended (Decrease)
1996 1995 Amount Percent
<S> <C> <C> <C> <C>
Interest Income $5,897,696 $5,779,009 $ 118,687 2.05%
Interest Expense 2,289,566 2,016,250 273,316 13.56
--------- --------- -------
Net Interest Income 3,608,130 3,762,759 (154,629) ( 4.11)
Provision for Loan Losses 381,141 290,003 91,138 31.43
--------- --------- -------
Net Interest Income After
Provision for Loan Losses 3,226,989 3,472,756 (245,767) ( 7.08)
Other Income 480,392 439,067 41,325 9.41
Other Expenses 2,522,321 2,328,910 193,411 8.30
--------- --------- -------
Income Before Income Tax 1,185,060 1,582,913 (397,853) (25.13)
--------- --------- -------
Income Taxes:
Current and Deferred Taxes 417,768 632,031 (214,263) (33.90)
Tax Equivalent Adjustment 55,366 48,284 7,082 14,67
--------- --------- -------
Net Income $ 711,926 $ 902,598 ($190,672) (21.12)
========= ========= ========
Per Share Net Income .40 .50 ( 0.10) (20.00)
==== ==== ====
</TABLE>
<PAGE> 15
RISK EXPOSURES AND CREDIT QUALITY
Twentieth Bancorp provides for credit losses through the provision for loan
losses. The allowance and provision for loan losses is based on management's
evaluation of the loan portfolio. The provision for loan losses was $381,141
for the three months ended March 31, 1996. For the same period of 1995 the
provision was $290,003. The increase is due to additional exposure on
commercial borrowers identified during the first quarter of 1996.
The allowance for loan losses was $2,275,000 at March 31, 1996, compared to
$2,000,000 at March 31, 1995. Expressed as a percentage of total loans, net
of unearned income, the allowance for loan losses was 1.22% at March 31, 1996,
and 1.00% at March 31, 1995.
For the first quarter ended March 31, 1996, charge-offs have decreased $4,000 or
2.29% from the same period in 1995. Management had no charge-offs in the first
quarter of 1996 in Commercial loans as compared to $30,000 in 1995. Credit
cards charge-offs reduced to $8,000 from $15,000 a year earlier. While our
single payment, installment loans charge-offs increased in the first quarter
of 1996 to $163,000 from $130,000 for the same period in 1995. Recoveries
remain stable.
ALLOWANCE FOR LOAN LOSSES
(in thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance at Beginning of Period $ 2,000 $ 1,825
Amounts charged off (171) (175)
Recoveries on amounts charged off 65 60
----- -----
Net charge-offs (106) (115)
Provision for Loan and
Lease Losses 381 290
----- -----
Balance at End of Period $ 2,275 $ 2,000
======= =======
</TABLE>
<PAGE> 16
Twentieth Bancorp adopted SFAS 114 as of January 1, 1995 and impaired loans
totalled $290,202. Impaired loans and the applicable valuation allowances at
March 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
March 31, March 31,
Loan Balance Related Valuation
Balance
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Impaired with specific
valuation allowance $1,631,973 $ 264,297 $ 465,540 $ 122,371
Impaired without specific
valuation allowance -- -- -- --
--------- -------- ------- -------
Total Impaired Loans $1,631,973 $ 264,297 $ 465,540 $ 122,371
========== ========= ========= =========
</TABLE>
The average recorded investments in impaired loans, the amount of interest
income recognized on a cash basis during the quarter were as follows:
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
1996 1995
---- ----
<S> <C> <C>
Average recorded investment in
impaired loans $1,724,254 $ 280,486
Interest income recognized during
impairment $ 2,798 $ --
Interest income recognized on a
cash basis during impairment $ 2,798 $ --
</TABLE>
NON-PERFORMING ASSETS
Total non-performing assets on March 31, 1996 were $2.794 million compared to
$2.323 million on December 31, 1995 and $2.393 million on March 31, 1995. Loans
90 days or more past due increased from $76,000 on December 31, 1995 to $545,000
on March 31, 1996. The majority of this increase came from one loan with a
balance of $430,000. This loan is currently a 60 day past due credit. Non
accrual loans decreased $113,000 from December 31, 1995 to March 31, 1996.
Total non-performing loans were $2.624 million on March 31, 1996 compared to
$2.145 million on March 31, 1995. Total non-performing assets as a percent
of total loans was 1.40% on March 31, 1996 compared to 1.17% for year end
December 31, 1995 and 1.07% for three months ended March 1995. Other real
estate owned increased to $170 thousand as of March 31, 1996 from $55 thousand
on December 31, 1996. This increase is due to one commercial real estate
foreclosure.
<PAGE> 17
<TABLE>
<CAPTION>
Non-Performing Assets
(in thousands) March 31, March 31, December 31,
1996 1995 1995
<S> <C> <C> <C>
Non-accrual Loans $ 2,079 $ 471 $ 2,192
Loans 90 Days Past Due
and Still Accruing 545 1,674 76
----- ----- -----
Total Non-Performing Loans 2,624 2,145 2,268
Other Real Estate Owned 170 248 55
----- ----- -----
Total Non-Performing Assets $ 2,794 $ 2,393 $ 2,323
======= ======= ========
Non-Performing Loans % Total Loans 1.40% 1.07% 1.17%
Non-Performing Assets % Total
Loans and Other Real Estate Owned 1.49% 1.19% 1.20%
</TABLE>
NONINTEREST INCOME
Excluding securities gains and losses (net of tax benefit), noninterest income
totaled $480,392 in the first quarter of 1996, a $41,325 or 9.41% increase over
the first quarter of 1995. Trust Department income decreased $21,350 or
16.54%. Larger than usual number of accounts have terminated not yet offset
by new business. Therefore, not as much fee income recorded. Service charges
increased $34,184 or 17.89% for the first quarter of 1996. Security gains and
losses are taken in accordance with investment strategies for improving the
quality, liquidity, or average yield of the investment portfolio. There were
no sales of investments held for sale during 1996 or 1995.
NONINTEREST EXPENSES
Noninterest expense increased $193,411 or 8.30% for the first quarter of 1996
when compared to the same period of 1995, totaling $2,522,321 for the three
month period ending March 31, 1996 versus $2,328,910 for the same period in
1995.
This increase was primarily due to $250,000 in fees expensed in the first
quarter for our financial advisor, Baxter Fentriss and Company in connection
with the pending merger with Horizon Bancorp. Our control of other expense
accounts on the subsidiary level has contributed to the narrowing of this loss.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Bank Liquidity is a measure of the ability to generate and maintain sufficient
cash flows to fund operations and to meet financial obligations to depositors
and borrowers promptly and in a cost-effective manner. Liquidity is provided
through securities available for sale, federal funds sold, maturing loans and
securities, and the ability to generate new deposits or borrowing as needed.
Bancorp's liquidity position is measured on a daily basis, and monitored
regularly by the Asset/Liability Management Committee. The objective is to
optimize net interest income within the constraints of prudent capital
adequacy, liquidity needs, the interest rate and economic outlook, market
opportunities, and customer requirements. General strategies to accomplish
this objective include maintaining a strong balance sheet, achieving solid
core deposit growth, accepting manageable interest rate risk, adhering to
<PAGE> 18
conservative financial management principles and practicing prudent dividend
policies.
As of March 31, 1996, Bancorp's cash and cash equivalents totaled
$23,467,308 compared to $17,728,327 on December 31, 1995 as a result of an
increase in federal funds sold stemming from lack of loan demand. On March 31,
1996, total shareholders' equity was $33,585,138 compared to $30,897,818 on
March 31, 1995. This increase of $2,687,320 or 8.7% was primarily due to
retention of profits since April 1, 1995 and the change in the net unrealized
gain/loss position from a $564,190 net unrealized loss at March 31, 1995 to a
$17,636 unrealized loss on March 31, 1996 on investment securities
available-for-sale.
Asset and liability management consists of planning, implementing, and
controlling the process for determining the mix and maturities of assets
relative to the interest margin. The primary method for achieving this is
through managing the gap position of rate sensitive assets and rate sensitive
liabilities, which is presented in the table below.
<PAGE> 19
Asset and Liability Maturity and Rate Sensitivity
$ (thousands)
<TABLE>
<CAPTION>
0-30 31-90 91-180 181-365 Total Non-
Days Days Days Days 1 Year Sensitive Total
<S> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans (1) $ 81,960 $ 8,914 $12,559 $20,168 $123,601 $61,139 $184,740
Investments 6,001 6,612 6,026 15,752 34,391 62,396 96,787
Fed Funds Sold 10,525 -- -- -- 10,525 -- 10,525
------- ------- ------- ------ ------- ------ -------
Total Earning
Assets 98,486 15,526 18,585 35,920 168,517 123,535 292,052
======= ====== ====== ====== ======= ======= =======
Deposits:
Noninterest-
bearing demand $ -- $ -- $ -- $ -- $ -- $ 40,349 $ 40,349
(2) ======= ====== ====== ====== ======= ======= =======
Interest Bearing
Liabilities:
Deposits:
Interest-bearing
demand $ 33,869 $ -- $ -- $ -- $ 33,869 $ -- $ 33,869
Money market
deposit accounts 10,866 -- -- -- 10,866 -- 10,866
All other savings
deposits 76,768 -- -- -- 76,768 -- 76,768
CD's $100,000
& Over 822 1,639 4,111 8,824 15,396 980 16,376
Interest bearing
time deposits 7,554 13,180 19,700 44,803 85,237 12,894 98,131
------- ------- ------- ------ ------- ------ -------
Total Interest-
Bearing Deposits 129,879 14,819 23,811 53,627 222,136 13,874 236,010
Short-term
borrowings 3,730 -- -- -- 3,730 -- 3,730
Long-term
borrowings 1 2 3 7 13 115 128
------- ------ ------ ------ ------- ------ -------
Total Interest-
Bearing
Liabilities 133,610 14,821 23,814 53,634 225,879 13,989 239,868
======= ====== ======= ======= ======== ====== ========
Interest
Sensitivity Gap (35,124) 705 ( 5,229)(17,714) (57,362)
Cumulative Gap (35,124) (34,419)(39,648)(57,362)
Percentage of
Earning
Assets - 1996 (35.66%) 4.54% (28.14%)(49.32%) (34.04%)
Ratio of
Interest-Sensitive
Assets to
Interest-Sensitive
Liabilities 73.71% 104.76% 78.04% 66.97% 74.60%
Ratio of One Year
Cumulative Gap
to Total Assets on
March 31, 1996 (18.14%)
(1) Nonaccrual loans of $2,079 are not included.
(2) Demand deposits do not bear interest.
</TABLE>
<PAGE> 20
APPLICABLE INCOME TAXES
The effective tax rate on income before taxes decreased 4.20% to 36.98% in 1996
from 41.18% in 1995. This decrease is attributable primarily to the differences
between book and taxable income items through March 31 of each year.
SHAREHOLDERS' EQUITY
On March 31, 1996, total shareholders' equity was $33,585,138 compared to
$30,897,818 on March 31, 1995. This increase of $2,687,320 or 8.70% was
primarily due to an increase in profits retained. The impact of SFAS 115 also
increased equity $546,554 resulting from declines in net unrealized losses on
Securities Available for Sale, after giving effect for taxes, for the period
between March 31, 1996 and 1995. On March 31, 1996 and 1995 there were no
shares being held in treasury.
PROFITABILITY MEASURE AND CAPITAL RESOURCES
Twentieth Bancorp's earnings in the first quarter of 1996 resulted in a decline
in the key profitability measures when compared to the same period in 1995.
This decrease was primarily due to $250,000 in fees expensed in the first
quarter for our financial advisor, Baxter Fentriss and Company in connection
with the pending merger and the increase in the allowance for loan loss of
$275,000. Return on average assets was .91% in the first quarter of 1996
compared to 1.20% for the same period in 1995. Return on average assets was
8.53% in the first quarter of 1996 compared to 12.17% for the same period in
1995. For the first quarter of 1996 Average Equity to Average Assets was
10.64%, compared to 9.84% reported a year earlier. Equity to assets of 10.62%
for the first quarter of 1996 increased 46 basis points from 10.16% in the
first quarter of 1995.
Risk-based capital ratios are another measure of capital adequacy. At March
31, 1996, the consolidated risk-adjusted capital ratios were 15.49% for
Tier 1 and 16.57% for Total Capital, well above the required minimums of 4.0%
and 8.0%, respectively. The Tier 1 leverage ratio of 10.40% at March 31,
1996 also was significantly above the regulatory minimum of 3.0%. Twentieth
Bancorp's subsidiary bank was considered "well capitalized" as of March 31,
1996, the highest category of capitalization defined by regulatory
authorities.
<TABLE>
TWENTIETH BANCORP, INC.
FINANCIAL RATIOS AND ANALYSIS
FOR THREE MONTHS ENDED MARCH 31, 1996 and 1995
<CAPTION>
MARCH 31, MARCH 31,
1996 1995
FINANCIAL RATIOS
<S> <C> <C>
Return on Average Assets .91% 1.20%
Return on Average Equity 8.53% 12.17%
Average Equity to Average Assets 10.64% 9.84%
Dividend Payout Ratio 0.00% :1 0.00% :1
Equity to Assets 10.62% 10.16%
Capital Adequacy Ratio 11.01% 10.46%
Primary Capital Ratio 11.26% 10.75%
Total Risk Based Capital Ratio 16.57% 16.26%
Tier I Risk Based Capital Ratio 15.49% 15.26%
Leverage Ratio 10.40% 9.96%
</TABLE>
<PAGE> 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - not applicable
Item 2. Changes in Securities - not applicable
Item 3. Defaults upon Senior securities - not applicable
Item 4. Submission of matters to a vote of Security Holders -
Date and type of meeting - Twentieth Bancorp, Inc.
"Notice of Special Meeting of Shareholders".
The special meeting of the shareholders of Twentieth Bancorp, Inc.,
Huntington, West Virginia, located at 1900 Third Avenue, on Tuesday,
March 26, 1996, at 2:00 p.m., E.S.T. for the purpose of considering and
voting upon the following matter:
1. Resolved, that ARTICLE I, Section 1 of the by-laws of this corporation by
amended, so that the date for the Annual Meeting of the Shareholders of
this corporation is changed to the last Thursday in September of each
year, commencing with the year 1996.
<TABLE>
<CAPTION>
For Against Abstaining
<S> <C> <C> <C>
1. Change of Annual Meeting Date
Shares voted 1,277,021 2,100 0
% of outstanding shares 70.95% 1.12% 0%
</TABLE>
Item 5. Other Information - not applicable.
Item 6. Exhibits and reports for 8-K - Report of 8-K was filed with the
Securities and Exchange Commission on February 23, 1996 in regards
to the pending merger with the Horizon Bancorp, Inc.
<PAGE> 22
TWENTIETH BANCORP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TWENTIETH BANCORP, INC.
Date: May 10, 1996 /S/ B. C. McGINNIS, III
------------------------
B. C. McGINNIS, III
PRESIDENT
Date: May 10, 1996 /S/ THOMAS L. McGINNIS
-----------------------
THOMAS L. McGINNIS
VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,942,308
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,525,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,936,083
<INVESTMENTS-CARRYING> 27,851,003
<INVESTMENTS-MARKET> 28,193,657
<LOANS> 186,819,336
<ALLOWANCE> 2,275,000
<TOTAL-ASSETS> 316,194,355
<DEPOSITS> 276,359,177
<SHORT-TERM> 3,730,000
<LIABILITIES-OTHER> 2,392,434
<LONG-TERM> 127,606
<COMMON> 1,800,000
0
0
<OTHER-SE> 31,785,138
<TOTAL-LIABILITIES-AND-EQUITY> 316,194,355
<INTEREST-LOAN> 4,288,227
<INTEREST-INVEST> 1,390,170
<INTEREST-OTHER> 156,933
<INTEREST-TOTAL> 5,835,330
<INTEREST-DEPOSIT> 2,239,607
<INTEREST-EXPENSE> 42,959
<INTEREST-INCOME-NET> 3,552,764
<LOAN-LOSSES> 381,141
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,522,321
<INCOME-PRETAX> 1,129,694
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 711,926
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
<YIELD-ACTUAL> 8.04
<LOANS-NON> 2,079,000
<LOANS-PAST> 545,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,000,000
<CHARGE-OFFS> 171,000
<RECOVERIES> 65,000
<ALLOWANCE-CLOSE> 2,275,000
<ALLOWANCE-DOMESTIC> 2,275,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
