<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended June 30, 1996
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
------------------------
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
(IRS 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
------------------- ----------------------------
Common Stock, $1 par value 1,800,000
<PAGE> 2
TWENTIETH BANCORP, INC.
FORM 10-Q
INDEX
For The Quarter Ended June 30, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements: (Unaudited)
Consolidated Balance Sheets - June 30, 1996 and 1995
and December 31, 1995 3
Consolidated Statements of Income - Three Months Ended
and Six Months Ended - June 30, 1996 and 1995 4
Consolidated Statements of Changes In Shareholders' Equity -
June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
Notes To Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION 21
Item 6. Exhibits and Reports On Form 8-K:
There were no reports on Form 8-K filed during the
three months ended June 30, 1996.
Signatures 22
Financial Data Schedule 23
<PAGE> 3
FINANCIAL STATEMENTS
TWENTIETH BANCORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 14,557,811 $ 14,591,436 $ 15,453,327
Federal Funds Sold and Securities
Purchased under Reverse Repurchase
Agreements 2,350,000 13,000,000 2,275,000
Securities Held to Maturity
(note 4) 24,159,544 38,685,478 32,890,143
Securities Available for Sale
(note 4) 78,639,171 42,814,420 63,108,750
----------- ----------- -----------
Total Investment Securities 102,798,715 81,499,898 95,998,893
----------- ----------- -----------
Loans, net of unearned discount
(note 5) 185,119,844 197,719,989 194,167,638
Less: Allowance for loan losses
(note 5) 2,525,000 2,000,000 2,000,000
----------- ----------- -----------
Net Loans 182,594,844 195,719,989 192,167,638
----------- ----------- -----------
Bank Premises and Equipment 6,933,856 6,788,345 7,090,256
Other Assets 4,800,044 4,365,435 4,323,292
----------- ----------- -----------
Total $314,035,270 $315,965,103 $317,308,406
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-Bearing 41,087,379 42,243,079 41,969,972
Interest-Bearing Demand 45,038,624 47,191,615 46,660,054
Savings 73,211,598 80,439,231 76,713,234
Time 116,111,259 110,235,667 114,914,010
----------- ----------- -----------
Total Deposits 275,448,860 280,109,592 280,257,270
Federal Funds Purchased & Securities
Sold under Repurchase Agreements
(note 6) 3,035,000 2,015,000 1,245,000
Long Term Debt 124,174 142,722 130,987
Other Liabilities 2,376,469 1,972,125 2,399,333
----------- ----------- -----------
Total Liabilities 280,984,503 284,239,439 284,032,590
----------- ----------- -----------
SHAREHOLDERS' EQUITY
Common Stock, $1.00 par value;
3,600,000 shares authorized,
1,800,000 issued and outstanding 1,800,000 1,800,000 1,800,000
Surplus 7,500,000 7,500,000 7,500,000
Retained Earnings 24,235,557 22,439,546 23,590,848
Net Unrealized Gains (Losses) on
Investment Securities -
Available for Sale (484,790) ( 13,882) 384,968
----------- ----------- -----------
Total Shareholders' Equity 33,050,767 31,725,664 33,275,816
----------- ----------- -----------
TOTAL $314,035,270 $315,965,103 $317,308,406
============ ============ ============
</TABLE>
[CAPTION]
See accompanying notes to consolidated financial statements.
<PAGE> 4
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $4,141,442 $4,574,865 $8,429,669 $9,031,404
Interest on Securities:
Taxable 1,390,809 1,096,408 2,681,791 2,245,728
Tax Exempt 124,587 69,815 223,775 148,792
Other Interest Income:
Federal Funds Sold
and Repurchase Agreements 132,545 179,474 289,478 220,364
--------- --------- ---------- ---------
TOTAL INTEREST INCOME 5,789,383 5,920,562 11,624,713 11,646,288
--------- --------- ---------- ---------
INTEREST EXPENSE
Interest on Deposits 2,227,906 2,277,456 4,467,513 4,234,319
Interest on Federal Funds
Purchased and Securities Sold
under Repurchase Agreements 37,208 24,212 78,239 76,395
Interest on Long Term Debt 1,882 2,158 3,810 4,362
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 2,266,996 2,303,826 4,549,562 4,315,076
--------- --------- --------- ---------
Net Interest Income 3,522,387 3,616,736 7,075,151 7,331,212
Provision for Loan Losses
(note 4) 471,203 198,188 852,344 488,191
--------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,051,184 3,418,548 6,222,807 6,843,021
OTHER INCOME
Trust Department Fees 97,178 102,752 204,905 231,829
Service Charges 243,741 222,482 468,990 413,547
Securities Gains (Losses) ( 53,497) -- ( 53,497) --
Other Income 64,736 56,785 212,152 175,710
--------- --------- --------- ---------
TOTAL OTHER INCOME 352,158 382,019 832,550 821,086
--------- --------- --------- ---------
OTHER EXPENSE
Salaries and
Employee Benefits 1,054,659 1,115,336 2,225,816 2,221,140
Occupancy and
Equipment Expense 280,847 280,091 545,425 545,244
Other Operating Expense 1,266,847 1,047,101 2,353,433 2,005,054
--------- --------- --------- ---------
TOTAL OTHER EXPENSE 2,602,353 2,442,528 5,124,674 4,771,438
--------- --------- --------- ---------
Income Before Income Taxes 800,989 1,358,039 1,930,683 2,892,669
Applicable Income Taxes 328,206 540,502 745,974 1,172,533
--------- --------- --------- ---------
NET INCOME $ 472,783 $ 817,537 $1,184,709 $1,720,136
========= ========= ========= =========
Net Income Per Share .26 .46 .66 .96
==== ==== ==== ====
</TABLE>
[CAPTION]
See accompanying notes to consolidated financial statements.
<PAGE> 5
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK Shares outstanding were 1,800,000 June 1996 and
1,800,000 June 1995
Net
Retained Unrealized
Amount Surplus Earnings Gain (Loss) Total
<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 1,184,709 1,184,709
Dividends declared ( 540,000) -- ( 540,000)
Net Unrealized Gains
(Losses) on Invest-
ment Securities -
Available for Sale,
net of taxes of
$249,741 ( 869,758) ( 869,758)
Treasury shares:
Acquired --
Sold --
--------- --------- ---------- ---------- ----------
Balance, June
30, 1996 $1,800,000 $7,500,000 $24,235,557 $( 484,790)$33,050,767
========== ========== =========== =========== ===========
Balance, December
31, 1994 $1,500,000 $7,500,000 $21,559,410 $(1,249,841)$29,309,569
Net Income 1,720,136 1,720,136
Dividends paid ( 540,000) ( 540,000)
Change in Net
Unrealized Gains
(Losses) on Invest-
ment Securities -
Available for Sale,
net of taxes of
$7,151 1,235,959 1,235,959
Treasury shares:
Acquired (562,118)
Sold 562,118
Stock Split/Dividend
(3-for-1) 300,000 (300,000) --
-------- --------- ---------- ---------- ----------
Balance, June
30, 1995 $1,800,000 $7,500,000 $22,439,546 $( 13,882)$31,725,664
========== ========== =========== =========== ===========
</TABLE>
[CAPTION]
See accompanying notes to consolidated financial statements.
<PAGE> 6
TWENTIETH BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest received $11,748,965 $12,023,116
Fees, commissions and other income 900,438 811,398
Bad debt recoveries 382,828 134,160
Interest paid ( 4,753,961) (3,661,062)
Cash paid for operating expenses ( 4,525,549) (4,637,725)
Income tax paid ( 853,761) ( 897,649)
---------- ----------
Net cash provided by operating activities $ 2,898,960 $ 3,772,238
----------- -----------
Cash flows from investing activities:
Purchase of securities to be held to maturity ( 3,685,395) (5,189,233)
Proceeds from maturities and early call of
securities to be held to maturity 12,365,000 7,810,000
Purchase of securities available for sale (24,254,387) (1,966,875)
Proceeds from sales of securities
available for sale 3,196,875 --
Proceeds from maturities and early call of
securities available for sale 4,107,482 1,580,880
Net decrease in loans 8,196,645 7,113,145
Capital expenditures ( 109,631) ( 174,369)
Proceeds from sale of premises and equipment 25,762 --
Proceeds from sale of other real estate 12,000 30,251
---------- ----------
Net cash (used in) provided by
investing activities ( 145,649) 9,203,799
---------- ----------
Cash flows from financing activities:
Net decrease in noninterest
bearing demand deposits ( 1,522,215) ( 3,238,794)
Net decrease in interest
bearing demand deposits and savings ( 4,492,048) (21,023,772)
Net increase in certificates of
deposit, individual retirement accounts,
and other time deposits 1,197,249 25,310,328
Net increase (decrease) in federal funds
purchased and securities sold under
repurchase agreements 1,790,000 (1,210,000)
Repayment of borrowed funds ( 6,813) ( 6,266)
Payment of dividends ( 540,000) ( 540,000)
Purchase of treasury stock -- ( 562,118)
Proceeds from sale of treasury stock -- 562,118
---------- ----------
Net cash used in
financing activities ( 3,573,827) ( 708,504)
---------- ----------
Net (decrease) increase in cash and cash
equivalents ( 820,516) 12,267,533
Cash and cash equivalents at beginning of year 17,728,327 15,323,903
---------- ----------
Cash and cash equivalents at end of period $16,907,811 $27,591,436
=========== ===========
</TABLE>
<PAGE> 7
Consolidated Statements of Cash Flows (continued)
Reconciliation of net income to net cash provided by operating
activities:
<TABLE>
<S> <C> <C>
Net Income $ 1,184,709 $ 1,720,136
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 246,842 246,842
Amortization and accretions 166,958 323,345
Provision for bad debts 1,235,172 622,351
Provision for deferred income taxes ( 146,100) 2,250
Loss on sale of securities available for sale 53,497 --
(Gain) Loss on sale of other real estate
and fixed assets-net ( 6,573) 6,500
Increase in other assets ( 289,754) ( 306,098)
Decrease in accrued income 25,375 97,486
Increase in accrued expenses 484,681 132,778
Increase in income taxes payable 148,552 272,634
(Decrease) increase in reserve for interest ( 204,399) 654,014
--------- --------
1,714,251 2,052,102
--------- ---------
$ 2,898,960 $ 3,772,238
=========== ===========
Supplemental Disclosures -
Unrealized losses on securities available
for sale:
(Decrease) increase in securities
available for sale ( 1,317,815) 1,872,666
(Decrease) increase in deferred tax benefit 448,057 ( 636,707)
Increase (decrease) in shareholders' equity ( 869,758) 1,235,959
<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>
[CAPTION]
See accompanying notes to consolidated financial statements.
<PAGE> 8
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 and six months ended June 30, 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 Company's 1995 Form
10K of the 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. The 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. A special
shareholders meeting is scheduled for August 13, 1996. Regulatory approvals
have been obtained and everything is on schedule.
Twentieth Street Bank will operate as a wholly-owned subsidiary of Horizon
Bancorp. Horizon Bancorp had total assets of $617,969,000 total deposits of
$519,165,000 and shareholders equity of $72,174,000 at June 30, 1996.
NOTE 3. SALE OF HARTS BRANCH
The Twentieth Street Bank, the subsidiary of Twentieth Bancorp,Inc.,
has entered into an agreement to sell the Harts Branch to Logan Bank and
Trust a subsidiary of the Logan County Bancshares, Inc.. The transaction is
subject to regulatory approvals. Consummation is anticipated by October 15,
1996.
NOTE 4. 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, with the
unrealized gains and losses, net of deferred income taxes, reported in a
separate component of shareholders' equity. 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 investment securities for trading
purposes.
<PAGE> 9
SECURITIES - HELD TO MATURITY
June 30, 1996
(Unaudited)
The amortized cost (carrying values) and estimated market values of securities
held to maturity at June 30, 1996 and June 30, 1995, respectively follow:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U. S. Treasury Securities 17,011,352 -- 13,092 16,998,260
Federal Agency Securities 999,627 -- 2,127 997,500
States and Political
Subdivision Securities 6,048,565 136,657 -- 6,185,222
Other Securities - Debt 100,000 -- -- 100,000
---------- ------- ------- ----------
Total $24,159,544 $136,657 $ 15,219 $24,280,982
=========== ======== ======== ===========
SECURITIES - HELD TO MATURITY
June 30, 1995
(Unaudited)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U. S. Treasury Securities 33,189,648 55,472 -- 33,245,120
Federal Agency Securities 1,952,388 21,972 -- 1,974,360
States and Political
Subdivision Securities 3,443,442 324,881 -- 3,768,323
Other Securities - Debt 100,000 -- -- 100,000
---------- ------- ------- ----------
Total $38,685,478 $402,325 $ -- $39,087,803
=========== ======== ======== ===========
SECURITIES - AVAILABLE FOR SALE
June 30, 1996
(Unaudited)
The amortized cost and estimated market value (carrying values) of securities
available for sale at June 30, 1996 and June 30, 1995, respectively follow:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U. S. Treasury Securities 39,403,130 -- 168,720 39,234,410
Federal Agency Securities 35,615,050 -- 385,691 35,229,359
States and Political
Subdivision Securities 4,286,212 -- 180,120 4,106,092
Other Securities - Equity 69,310 -- -- 69,310
---------- ------- ------- ----------
Total $79,373,702 $ -- $734,531 $78,639,171
=========== ======== ======== ===========
<PAGE> 10
SECURITIES - AVAILABLE FOR SALE
June 30, 1995
(Unaudited)
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U. S. Treasury Securities 18,476,621 180,869 -- 18,657,490
Federal Agency Securities 24,289,522 -- 201,902 24,087,620
Other Securities - Equity 69,310 -- -- 69,310
---------- ------- ------- ----------
Total $42,835,453 $180,869 $201,902 $42,814,420
=========== ======== ======== ===========
NOTE 5. LOANS
Loans (in thousands)
June 30,
1996 1995
---- ----
Commercial, Financial and Other 70,022 75,511
Real Estate - Construction 115 1,372
Real Estate - Mortgage 43,601 45,798
Consumer 71,382 75,039
------- -------
Total Loans $185,120 $197,720
======== ========
NOTE 6. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER REPURCHASE
AGREEMENTS
(In thousands)
1996 1995
---- ----
Federal Funds Purchased $1,755 $ 900
Securities Sold under Repurchase Agreements 1,280 1,115
----- -----
Total Federal Funds Purchased and
Securities Sold Under Repurchase Agreements $3,035 $2,015
====== ======
<PAGE> 11
TWENTIETH BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
PERFORMANCE SUMMARY
Twentieth Bancorp, Inc.'s net income for the three months ended June 30, 1996
was $472,783 or $.26 per share, based on 1,800,000 average shares outstanding
at the end of the period. This compares to $817,537 or $.46 per share for
the same period of 1995 based on 1,793,346 average shares outstanding. Net
income for the six months ended June 30, 1996 was $1,184,709 or $.66 per share,
based on 1,800,000 average shares outstanding at the end of the period. This
compares to $1,720,136 or $.96 per share for the same period of 1995, based
on 1,796,601 average shares outstanding.
Net income decreased $344,754 or 42.17% for three months ended June 30, 1996
from net income reported in the second quarter of 1995. For the six months
ended June 30, 1996 net income decreased $535,427 or $31.13% from net income
reported year to date in 1995. Total interest income decreased $131,179 or
2.22% and interest expense decreased $36,830 or 1.60% for the same quarter
last year. Total interest income decreased $21,575 or .19% and total interest
expense increased $234,486 or 5.43% for the six months ended June 30, 1996 as
compared to the same period in 1995. Total other expense increased $353,236
or 7.40% for the six months ended June 30, 1996 over 1995 primarily due to
Investment Banking fees related to the Horizon merger.
Total assets decreased $1,929,833 or 0.61% for the first six months of 1996
over the same period in 1995. Loans net of unearned discount decreased
$12,600,145 or 6.37% in the first half of 1996 as compared to the same period
in 1995. Total loans have decreased $9,047,794 since December 31, 1995.
Total investment securities increased $21,298,817 or 26.13% and federal funds
sold decreased $10,650,000 or 81.92% for the first six months of 1996 as
compared to the same period in 1995, while securities increased $6,799,822
since December 31, 1995. The shift out of the loan portfolio and federal
funds sold into the investment portfolio was primarily due to lower loan
demand. The loan-to-deposit ratio has dropped to 67.21% as of June 30, 1996
as compared to 70.59% reported a year earlier. Total deposits have decreased
$4,660,732 or $1.66% for the first six months of 1996 as compared to the same
period in 1995. The change in net unrealized holding gains (losses) on
available-for-sale securities since the beginning of the year is $869,758
due to a shift in market rates. In 1995 the bond market rebounded and the
unrealized loss reflected in the equity section of the balance sheet improved
some $1,236,000. Earnings to date have increased total equity to $33,050,767
as of June 30, 1996 as compared to $31,725,664 in 1995.
Twentieth Bancorp paid dividends of $.30 per share on 1,800,000 shares
outstanding totaling $540,000 in June, 1996 and 1995, respectively.
Shareholders equity increased $1,325,103 or 4.18%. The increase is due to
strong undistributed earnings since June of 1995. While net unrealized losses
on securities available for sale increased $470,908 from $13,882 to $484,790.
<PAGE> 12
NET INTEREST INCOME AND INTEREST MARGIN
The most significant component of earnings is net interest income. This
category of income is very sensitive to changes in the volume, and interest
yield/rate of earning assets, and interest bearing liabilities. Net interest
income on a federal tax-equivalent basis (FTE) decreased by $71,965 to
$3,589,125 for the second quarter of 1996 as compared to $3,661,090 earned
during the same period in 1995. The net interest margin for the second quarter
was 4.89%, a reduction of 18 basis points from the margin recorded in the
second quarter of 1995. The net interest margin for the six months ended was
4.90%, a reduction of 30 basis points from the margin recorded in the six
months ended June 30, 1995. The reduction was due to changes in the composition
and yield of balance sheet earning assets and interest bearing liabilities.
The net interest margin for year-end 1995 was 5.20%. Total earning assets
yield decreased to 7.98% from 8.26% for the second quarter of 1996 over the
comparable period for 1995.
The average total earning asset yield for the six months ended was 8.00% a
reduction of 23 basis points from the yield recorded in the six months ended
June 30, 1995. Total average loans decreased $13,920,510 or 6.99% when
compared to 1995 second quarter average balances and $12,861,599 or 6.41% for
the six months ended June 30, 1996 compared to June 30, 1995. Average
installment loans decreased $6,190,210 or 8.01% for the six months ended June
30, 1996 from prior year totals.
Average total earning assets increased to a balance of $295,460,669 for the
first six months of 1996 as compared to a balance of $287,847,308 for the same
period in 1995. Total average earning assets for the three months ending June
30, 1996, increased to a balance of $295,385,705 compared to a balance of
$289,828,691 for the same period in 1995. Average total interest bearing
deposits for the six months ending June 30, 1996 increased to a balance of
$235,041,818 as compared to $232,005,873 for the same period in 1995.
Average total interest bearing deposits for the second quarter increased to
$234,639,350 as compared to $233,487,585 for the same period in 1995. Average
time deposits for second quarter 1996 increased $10,412,214 to $115,588,242, a
9.90% increase over second quarter 1995 average balances. Average time
deposits increased $17,444,725 for the six months ended June 30, 1996 to
$114,954,691, a 17.89% increase over the same period in 1995. A new 9 month
certificate was funded by customers transferring from savings accounts and
attracting customers from outside institutions. Average savings deposits
decreased $8,369,954 to $85,173,928, a 8.95% decrease over second quarter
1995 average balances. Average savings deposits decreased $12,759,927 for
the six months ended June 30, 1996 to $86,266,500, a 12.89% decrease over the
same period in 1995. Because the bond market has reversed from 1995, the
unrealized loss reflected in the equity section of the balance sheet has
decreased some $870,000 since the beginning of the year. Total average
capital for the second quarter 1996 has increased $2,413,015 to $33,647,789,
a 7.73% increase over the same period in 1995. Average total capital has
increased $2,837,458 for the six months ended June 30, 1996 to $33,532,272,
a 9.24% increase over the same period in 1995.
The yield on average loans decreased 23 basis points from the second quarter
of 1995, to 9.01%. The yield on average loans for the six months ended
June 30, 1996 also decreased 6 basis points over the same period in 1995.
Average yield on federal funds sold decreased 82 basis points from the
second quarter 1996 over the same period in 1995, and 63 basis points for
the six months ended June 30, 1996 over the same period in 1995.
<PAGE> 13
<TABLE>
TWENTIETH BANCORP, INC.
CONSOLIDATED AVERAGE BALANCE SHEET
AND INTEREST MARGIN ANALYSIS
<CAPTION>
Three Months Ended Three Months Ended
1996 1995
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial * $ 71,222,085 $1,581,681 8.93% $ 75,502,345 $ 1,827,805 9.71%
Real Estate 43,833,235 923,723 8.48% 47,613,968 1,028,470 8.66%
Installment 70,291,022 1,645,595 9.42% 76,150,539 1,731,978 9.12%
----------- --------- ----------- ---------
Total Loans-net
of unearned (2) 185,346,342 4,150,999 9.01% 199,266,852 4,588,253 9.24%
----------- --------- ----------- ---------
Taxable 91,227,553 1,390,809 6.03% 74,942,921 1,096,408 5.87%
Tax Exempt (1) 8,582,140 188,768 8.70% 3,514,522 105,781 12.07%
----------- --------- ----------- ---------
Total
Securities (1) 99,809,693 1,579,577 6.26% 78,457,443 1,202,189 6.15%
----------- --------- ----------- ---------
Federal Funds
Sold & Securities
Purchased under
Agreements to
Resell 10,229,670 132,545 5.13% 12,104,396 179,474 5.95%
----------- --------- ----------- ----------
Total Earning
Assets 295,385,705 5,863,121 7.98% 289,828,691 5,969,916 8.26%
----------- --------- ----------- ----------
Non-Earning
Assets:
Cash and Due
From Banks 11,148,269 10,479,856
Premises &
Equipment, net 6,972,187 6,796,268
Other Assets 4,212,005 4,495,284
Reserve for Loan
Losses (2,452,427) (2,021,813)
---------- -----------
Total Non-earning
Assets 19,880,034 19,749,595
----------- -----------
TOTAL ASSETS 315,265,739 309,578,286
=========== ===========
<PAGE> 14
<CAPTION>
Three Months Ended Three Months Ended
1996 1995
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest Bearing
Liabilities:
Savings
Deposits 85,173,928 564,538 2.67% 93,543,882 674,276 2.89%
Demand Deposits 33,877,180 189,369 2.25% 34,767,675 208,514 2.41%
Time Deposits 115,588,242 1,480,878 5.15% 105,176,028 1,353,378 5.16%
----------- --------- ----------- ---------
Total Savings
and Time
Deposits (2) 234,639,350 2,234,785 233,487,585 2,236,168
----------- -----------
Purchased
Funds (2) 3,337,033 37,323 4.50% 2,112,418 24,260 4.61%
Long-Term
debt (2) 125,398 1,888 6.06% 143,883 2,162 6.09%
Other Int. Paid -- 46,236
----------- --------- ----------- ---------
Total Interest
Bearing
Liabilities 238,101,781 2,273,996 3.84% 235,743,886 2,308,826 3.93%
Non-Interest
Bearing
Liabilities:
Demand Deposits 41,064,828 40,460,478
Accrued
Expenses
& Other 2,451,341 2,139,148
----------- -----------
Total
Liabilities 281,617,950 278,343,512
----------- -----------
Capital 33,647,789 31,234,774
TOTAL
LIABILITIES
& CAPITAL 315,265,739 309,578,286
=========== ===========
NET INTEREST
INCOME/MARGIN 295,385,705 3,589,125 4.89% 289,828,691 3,661,090 5.07%
=========== ========= ==== =========== ========= ====
<FN>
<F1>
(1) Nonaccrual loans are included in average balances.
(2) Computed on a Fully Tax-Equivalent Basis Assuming a Tax Rate of 34%.
</FN>
</TABLE>
<PAGE> 15
Consolidated Average Balance Sheet and Interest Margin Analysis (continued)
<TABLE>
Six Months Ended
June 30, 1996 June 30, 1995
<CAPTION>
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans:
Commercial (1) $ 72,217,496 $3,254,989 9.06% $ 75,801,001 $3,616,553 9.62%
Real Estate 44,456,433 1,894,483 8.57% 47,544,317 1,994,205 8.46%
Installment 71,045,332 3,301,023 9.34% 77,235,542 3,446,633 9.00%
---------- --------- ---------- ---------
Total Loans-net
of unearned (2) 187,719,261 8,450,495 9.05% 200,580,860 9,057,391 9.11%
----------- --------- ----------- ---------
Taxable 89,183,331 2,681,791 6.05% 76,034,134 2,245,728 5.96%
Tax Exempt (1) 7,560,275 339,053 9.02% 3,727,065 225,442 12.20%
----------- --------- ---------- ---------
Total
Securities (2) 96,743,606 3,020,844 6.25% 79,761,199 2,471,170 6.25%
----------- --------- ----------- ---------
Fed Funds Sold
and Securities
Purchased under
Agreements to
Resell 10,997,802 289,478 5.29% 7,505,249 220,364 5.92%
----------- ---------- ----------- ----------
Total Earning
Assets 295,460,669 11,760,817 8.00% 287,847,308 11,748,925 8.23%
----------- ---------- ----------- ----------
Non-Earning
Assets:
Cash and Due
From Banks 11,190,091 10,352,510
Premises &
Equipment, net 7,010,666 6,817,851
Other Assets 3,911,222 4,599,940
Reserve for Loan
Losses (2,275,267) (1,969,874)
----------- ----------
Total Non-earning
Assets 19,836,712 19,800,427
----------- -----------
TOTAL ASSETS 315,297,381 307,647,735
=========== ===========
<PAGE> 16
<CAPTION>
Six Months Ended
June 30, 1996 June 30, 1995
<CAPTION>
Interest Average Interest Average
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates Balances Expense Rates
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest Bearing
Liabilities:
Savings Deposits 86,266,500 1,149,264 2.68% 99,026,427 1,426,935 2.91%
Demand Deposits 33,820,627 382,701 2.28% 35,469,480 420,215 2.39%
Time Deposits 114,954,691 2,949,295 5.16% 97,509,966 2,350,746 4.86%
----------- --------- ----------- ---------
Total Savings
and Time
Deposits (2) 235,041,818 4,481,260 232,005,873 4,197,896
Purchased
Funds (2) 3,498,049 78,480 4.51% 2,953,450 76,572 5.23%
Long Term
Debt (2) 127,123 3,822 6.05% 145,403 4,372 6.06%
Other Int. Paid 46,236
---------- --------- ----------- ---------
Total Interest
Bearing * 238,666,990 4,563,562 3.85% 235,104,726 4,325,076 3.71%
----------- --------- ----------- ---------
Non-Interest
Bearing
Liabilities
& Capital:
Demand Deposits 40,631,307 39,935,831
Accrued expenses
& Other 2,466,812 1,912,364
----------- -----------
Total
Liabilities 281,765,109 276 952,921
Capital 33,532,272 30,694,814
----------- -----------
TOTAL
LIABILITIES
& CAPITAL 315,297,381 307,647,735
=========== ===========
Net Interest
Income/Margin 295,460,669 7,197,255 4.90% 287,847,307 7,423,849 5.20%
=========== ========= =========== =========
<FN>
<F1>
1 Computed on a Fully Tax-equivalent Basis Assuming a Tax Rate of 34%.
2 Indicates earning asset or interest-bearing liability.
3 Nonaccrual loans are included in the average loan balances and
income on such loans is recognized on a cash basis.
</FN>
</TABLE>
<PAGE> 17
<TABLE>
COMPARATIVE OPERATING DATA
(Fully Taxable Equivalent Basis)
For Three Months Ended June 30, 1996 and 1995
<CAPTION>
1996 1995 Change %
<S> <C> <C> <C> <C>
Interest Income $5,863,121 $5,969,916 $(106,795 ( 1.79)%
Interest Expense 2,273,996 2,308,826 ( 34,830) ( 1.51)
--------- --------- -------
Net Interest Income 3,589,125 3,661,090 ( 71,965) ( 1.97)
Provision for Loan Losses 471,203 198,188 273,015 137.76
--------- --------- -------
Net Interest Income After
Provision for Loan Losses 3,117,922 3,462,902 (344,980) ( 9.96)
Other Income 352,158 382,019 ( 29,861) ( 7.82)
Other Expenses 2,602,353 2,442,528 159,825 6.54
--------- --------- -------
Income Before Income Tax 867,727 1,402,393 (534,666) (38.13)
--------- --------- -------
Income Taxes:
Current and Deferred Taxes 328,206 540,502 (212,296) (39.28)
Tax Equivalent Adjustment 66,738 44,354 22,384 50.47
--------- --------- -------
Net Income $ 472,783 $ 817,537 $(344,754) (42.17)
========= ========= ========
Per Share Net Income .26 .46 ( 0.20) (43.48)
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
For Six Months Ended June 30, 1996 and 1995
1996 1995 Change %
<S> <C> <C> <C> <C>
Interest Income $11,760,817 $11,748,925 $ 11,892 .10 %
Interest Expense 4,563,562 4,325,076 238,486 5.51
---------- ---------- ---------
Net Interest Income 7,197,255 7,423,849 (226,594) ( 3.05)
Provision for Loan Losses 852,344 488,191 364,153 74.59
---------- ---------- ---------
Net Interest Income After
Provision for Loan Losses 6,344,911 6,935,658 (590,747) ( 8.52)
Other Income 832,550 821,086 11,464 1.40
Other Expenses 5,124,674 4,771,438 353,236 7.40
--------- --------- ---------
Income Before Income Tax 2,052,787 2,985,306 (932,519) (31.24)
Income Taxes:
Current & Deferred Taxes 745,974 1,172,533 (426,559) (36.38)
Tax Equivalent Adjustment 122,104 92,637 29,467 31.81
--------- --------- ---------
Net Income $1,184,709 $1,720,136 $(535,427) (31.13)
========== ========== =========
PER SHARE
Net Income .66 .96 (.30) (31.25)
=== === ===
</TABLE>
<PAGE> 18
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 $852,344
for the six months ended June 30, 1996, up from the $488,191 reported in 1995.
The increase is due to additional exposure on commercial borrowers identified
during the first quarter of 1996. For the same period of 1995 the increase to
allowance was $175,000.
The allowance for loan losses was $2,525,000 at June 30, 1996, compared to
$2,000,000 at June 30, 1996. Expressed as a percentage of total loans, net of
unearned income, the allowance for loan losses was 1.36% at June 30, 1996, and
1.01% at June 30, 1995. The reason for this increase was to more accurately
reflect peer as a percentage of total loans outstanding.
Net charge-offs totaled $327 thousand in the first six months of 1996, compared
to $313 thousand in the comparable period in 1995. Charge-offs in commercial
loans for the first six months increased $161 thousand while recoveries on
commercial loans increased $233 thousand leaving net charge-offs in commercial
loans at $94 thousand as compared to $166 thousand a year earlier. Single
payment installment loan charge-offs increased in the first six months of 1996
$99 thousand to $345 thousand from $246 thousand while recoveries were $12
thousand leaving a net increase in charge-offs of installment loans at $87,000.
There were no charge-offs or recoveries in mortgage loans in 1996 or 1995.
Credit cards remained the same in 1996 and 1995.
ALLOWANCE FOR LOAN LOSSES
(in thousands)
Transactions in the consolidated allowance for loan losses for the six months
ended June 30 were:
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Balance at Beginning of Period $ 2,000 $ 1,825
Amounts charged off (710) (447)
Recoveries on amounts charged off 383 134
----- -----
Net charge-offs (327) (313)
Provision for Loan and
Lease Losses 852 488
----- -----
Balance at End of Period $ 2,525 $ 2,000
======= =======
Allowance for loan losses as
a percent of total loans 1.36% 1.01%
Earnings coverage of
net charge-offs 3.62x 5.50x
</TABLE>
At June 30, 1996 the recorded investment in loans that are considered to be
impaired under statement 114 was not material.
<PAGE> 19
NON-PERFORMING ASSETS
Total non-performing assets on June 30, 1996 were $3.965 million compared to
$2.898 million on June 30, 1995. Total non-performing loans were $3.795
million on June 30, 1996 compared to $2.674 million on June 30, 1995. The
increase is primarily from five commercial credits totaling $1.545 million
all of which are in various stages of collection. Total non-performing
assets as a percent of total loans was 2.14% compared to 1.46% for the six
months ended June 1996 and 1995, respectively. Other real estate owned
decreased to $170 thousand as of June 30, 1996 from $224 thousand on June 30,
1995. The Alum Creek property was sold in July, 1995 for $175,000, resulting
in a $25,000 loss to other operating expenses. In July, 1996 other real
estate owned was reduced by $127,000.
Non-Performing Assets
(in thousands) 1996 1995
---- ----
<TABLE>
<S> <C> <C>
Non-accrual Loans $ 2,743 $ 759
Loans 90 Days Past Due
and Still Accruing 1,052 1,915
----- -----
Total Non-Performing Loans 3,795 2,674
Other Real Estate Owned 170 224
----- ----
Total Non-Performing Assets $ 3,965 $ 2,898
======= =======
Non-Performing Loans % Total Loans 2.05% 1.35%
Non-Performing Assets % Total
Loans and Other Real Estate Owned 2.14% 1.46%
</TABLE>
NONINTEREST INCOME
Excluding securities gains and losses (net of tax benefit), noninterest income
totaled $405,695 in the second quarter of 1996, a $23,637 or 6.19% increase
over the second quarter of 1995. Noninterest income consists of service
charges on deposit accounts, trust department income and other fee income
accounts. Trust department income decreased $5,574 or 5.42% over the second
quarter of 1995. For the six months ended June 30, 1996 trust department
income decreased $26,924 or 11.61% over the same period in 1995. Larger than
usual number of accounts have terminated not yet offset by new business.
Therefore, not as much fee income was recorded. Service charges increased
$21,259 or 9.56% for the second quarter of 1996, and for the six months ended
June 30, 1996 increased $55,443 or 13.41% over the comparable period in 1995.
The security losses in June, 1996 were due to management selling three
structured notes of its bond portfolio available-for-sale to improve the
quality of the Bancorp's investment portfolio. There were no sales of
investments held for sale in 1995.
NONINTEREST EXPENSES
Noninterest expense increased $159,826 or 6.54% for the second quarter 1996
over 1995. The six months ended June 30, 1996 increase was $353,236 or 7.40%.
The increase was primarily due to $514,140 in fees expensed in the first half
of 1996 for our financial advisor, Baxter Fentriss and Company in connection
with our pending merger with Horizon Bancorp. Insurance and bonds includes
$168 thousand of FDIC Insurance premiums which were included in 1995
operations, however, this amount was refunded in the third quarter of 1995.
Control of other expense accounts on the subsidiary level has contributed to
the narrowing of this loss.
<PAGE> 20
APPLICABLE INCOME TAXES
The applicable income tax for six months ended June 30, 1996 represents
$892,074 in current and ($146,100) in deferred taxes as compared to $1,170,283
in current and $2,250 in deferred for the same period in 1995. The effective
tax rate on income before taxes decreased 1.89% to 38.64% in 1996 from 40.53%
in 1995.
LIQUIDITY
As of June 30, 1996, the Bancorp's cash and cash equivalents totaled
$16,907,811 compared to $17,728,327 on December 31, 1995.
SHAREHOLDERS' EQUITY
On June 30, 1996, total shareholders' equity was $33,050,767 compared to
$31,725,664 on June 30, 1995. This increase of $1,325,103 or 4.18% was
primarily due to an increase in profits retained. Net Unrealized Losses
on Investment Securities of $484,790 and $13,882, respectively, represent
the net unrealized losses (after tax effect) of the available for sale
securities for the quarters ended June 30, 1996 and 1995. On June 30,
1996 and 1995 there were no shares being held in treasury.
FINANCIAL RATIOS AND ANALYSIS
FOR SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
1996 1995
(In thousands)
FINANCIAL RATIOS
<S> <C> <C>
Net Income $1,185 $1,720
Return on Average Assets .76% 1.13%
Return on Average Equity 7.10% 11.30%
Dividend Payout Ratio 0.46 :1 0.31 :1
Equity to Assets 10.52% 10.04%
Capital Adequacy Ratio 10.99% 10.33%
Primary Capital Ratio 11.24% 10.61%
Total Risk Based Capital Ratio 17.48% 16.38%
Tier I Risk Based Capital Ratio 16.23% 15.38%
Leverage Ratio 9.82% 9.97%
</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 -
KNOW ALL PERSONS BY THESE PRESENTS, that I (we) the undersigned
shareholder(s) of TWENTIETH BANCORP, INC., ("Twentieth"), Huntington, West
Virginia, does (do) hereby nominate, constitute, and appoint Robert M. Levy,
William K. Ward and Thomas L. McGinnis, or any one of them, as my (our) true
and lawful Attorney(s) with full power of substitution, for me (us) and in my
(our) name, place, and stead to vote all the capital stock of said corporation
standing in my (our) name on its books at the close of business on June 29,
1996, at the Special Meeting of Shareholders to be held August 13, 1996, at
2:00 p.m., Local Time, in the Third Floor Auditorium of The Twentieth Street
Bank, 1900 Third Avenue, Huntington, West Virginia, or at any adjournment or
adjournments of said meeting, with all the powers the undersigned would possess
if personally present, as follows:
(1) A proposal to approve and ratify the proposed merger of Twentieth
Bancorp, Inc. with and into Horizon Bancorp, Inc. ("Horizon") in accordance
with the terms and conditions of the Plan of Merger and Reorganization by and
between Twentieth and Horizon dated February 6, 1996.
(2) Any other business which may properly be brought before the meeting
or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED. IF NO SPECIFICATION IS MADE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED "FOR" THE MERGER OF TWENTIETH BANCORP, INC. WITH AND INTO
HORIZON BANCORP, INC..
THIS BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
THIS PROXY IS SOLICITED BY MANAGEMENT AT THE DIRECTION OF THE BOARD OF
DIRECTORS OF TWENTIETH BANCORP, INC., AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
Item 5. Other Information - not applicable
Item 6. Exhibits and reports for 8-K - not applicable
<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: August 12, 1996 B. C. McGINNIS, III
B. C. McGINNIS, III
PRESIDENT
Date: August 12, 1996 THOMAS L. McGINNIS
THOMAS L. McGINNIS
VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 14,557,811
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,350,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 78,639,171
<INVESTMENTS-CARRYING> 24,159,544
<INVESTMENTS-MARKET> 24,280,982
<LOANS> 185,119,844
<ALLOWANCE> 2,525,000
<TOTAL-ASSETS> 314,035,270
<DEPOSITS> 275,448,860
<SHORT-TERM> 3,035,000
<LIABILITIES-OTHER> 2,376,469
<LONG-TERM> 124,174
<COMMON> 1,800,000
0
0
<OTHER-SE> 24,235,557
<TOTAL-LIABILITIES-AND-EQUITY> 314,035,270
<INTEREST-LOAN> 8,429,669
<INTEREST-INVEST> 2,905,566
<INTEREST-OTHER> 289,478
<INTEREST-TOTAL> 11,624,713
<INTEREST-DEPOSIT> 4,467,513
<INTEREST-EXPENSE> 82,049
<INTEREST-INCOME-NET> 7,075,151
<LOAN-LOSSES> 852,344
<SECURITIES-GAINS> (53,497)
<EXPENSE-OTHER> 5,124,674
<INCOME-PRETAX> 1,930,683
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,184,709
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<YIELD-ACTUAL> 3.19
<LOANS-NON> 2,743,000
<LOANS-PAST> 1,052,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,000,000
<CHARGE-OFFS> 710,000
<RECOVERIES> 383,000
<ALLOWANCE-CLOSE> 2,525,000
<ALLOWANCE-DOMESTIC> 2,525,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
