<PAGE> 1
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, 1995
/ / TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
-------------- -------------
Commission file number 0-19028
CCFNB BANCORP, INC.
(Name of small business Issuer in its charter)
<TABLE>
<S> <C>
PENNSYLVANIA 23-2254643
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
232 East Street, Bloomsburg, PA 17815
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number, including area code: (717) 784-4400
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer was required to
file such reports), and (2) has been subject to such filing requirings 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. 1,370,311 shares
of $1.25 (par) common stock were outstanding as of November 3, 1995.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
SEPTEMBER 30, 1995
INDEX 10-QSB
<TABLE>
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE NO PAGE
<S> <C>
#
PART I - FINANCIAL INFORMATION:
- Consolidated Balance Sheets 1
- Consolidated Statements of Income 2
- Consolidated Statements of Cash Flows 3
- Notes to Consolidated Financial Statements 4 - 5
- Management's Discussion and Analysis of Financial Condition
and Results of Operations 6 - 13
PART II - OTHER INFORMATION 14
SIGNATURES 15
</TABLE>
<PAGE> 3
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 1995 31, 1994
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks........................................ $ 3,843 $ 4,170
Interest-bearing deposits with other banks..................... 2,159 4
Investment securities:
Held-to-maturity securities, approximate fair value of
$14,437 and $25,566........................................ 14,160 25,894
Available-for-sale securities carried at fair value.......... 26,559 13,429
Loans, net of unearned income.................................. 110,833 109,800
Allowance for loan losses...................................... 920 943
-------- --------
Net loans.................................................... $109,913 $108,857
Premises and equipment......................................... 3,902 3,290
Accrued interest receivable.................................... 928 843
Other assets................................................... 522 637
-------- --------
TOTAL ASSETS.............................................. $161,986 $157,124
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing......................................... $ 10,712 $ 11,678
Interest bearing............................................. 116,610 115,186
-------- --------
Total Deposits............................................ $127,322 $126,864
Short-term borrowings:
Federal funds purchased and securities sold under agreements
to repurchase.............................................. 13,903 9,769
Other........................................................ 985 2,140
Accrued interest and other expenses............................ 757 678
Other liabilities.............................................. 18 23
-------- --------
TOTAL LIABILITIES......................................... $142,985 $139,474
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; Authorized 5,000,000
shares; issued 1995 - 1,370,311, 1994 - 1,365,622 shares..... $ 1,713 $ 1,707
Surplus........................................................ 5,670 5,626
Retained earnings.............................................. 11,626 10,808
Allowance for unrealized gain (loss) on available-for-sale
investment securities, net of deferred tax of 1995 - $4,
1994 - $253.................................................. (8) (491)
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................ $ 19,001 $ 17,650
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $161,986 $157,124
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-1-
<PAGE> 4
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE FOR THE THREE
MONTHS ENDING MONTHS ENDING
SEPTEMBER 30, SEPTEMBER 30,
------------- --------------
1995 1994 1995 1994
----- ------- ------ -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable........................................ $ 6,575 $ 5,868 $ 2,217 $ 2,016
Tax exempt..................................... 106 55 28 18
Interest and dividends on investment securities:
Taxable interest............................... 1,294 1,193 485 405
Tax exempt interest............................ 366 354 125 124
Dividends...................................... 38 28 13 9
Interest on federal funds sold................... 46 18 19 10
Interest on deposits in other banks.............. 73 73 20 26
------- ------- ------- -------
TOTAL INTEREST INCOME....................... $ 8,498 $ 7,589 $ 2,907 $ 2,608
------- ------- ------- -------
INTEREST EXPENSE
Interest on deposits............................. $ 3,661 $ 3,203 $ 1,263 $ 1,111
Interest on short-term borrowings................ 456 310 172 117
------- ------- ------- -------
TOTAL INTEREST EXPENSE...................... $ 4,117 $ 3,513 $ 1,435 $ 1,228
------- ------- ------- -------
Net interest income.............................. $ 4,381 $ 4,076 $ 1,472 $ 1,380
Provision for loan losses........................ (32) (90) 0 (30)
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES.................................. $ 4,349 $ 3,986 $ 1,472 $ 1,350
------- ------- ------- -------
NON-INTEREST INCOME
Service charges and fees......................... $ 395 $ 316 $ 158 $ 109
Trust department income.......................... 36 32 13 3
Other income..................................... 32 30 5 5
Investment securities gain (losses) - net........ 0 63 0 0
------- ------- ------- -------
TOTAL NON-INTEREST INCOME................... $ 463 $ 441 $ 176 $ 117
------- ------- ------- -------
NON-INTEREST EXPENSES
Salaries and wages............................... $ 1,118 $ 1,017 $ 380 $ 347
Pensions and other employee benefits............. 381 356 127 117
Occupancy expense, net........................... 192 213 64 65
Furniture and equipment expense.................. 230 230 76 76
FDIC insurance................................... 191 208 47 70
Other operating expenses......................... 1,060 937 363 308
------- ------- ------- -------
TOTAL NON-INTEREST EXPENSES................. $ 3,172 $ 2,961 $ 1,057 $ 983
------- ------- ------- -------
Income before income taxes....................... $ 1,640 $ 1,466 $ 591 $ 484
Income tax expense............................... 412 375 148 125
------- ------- ------- -------
NET INCOME................................... $ 1,228 $ 1,091 $ 443 $ 359
======= ======= ======= =======
NET INCOME PER SHARE............................. $ .90 $ .98 $ .32 $ .32
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-2-
<PAGE> 5
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED FOR THE NINE MONTHS
ENDING SEPTEMBER 30,
--------------------
1995 1994
----- ------
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 1,228 $ 1,091
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses........................................... 32 90
Provision for depreciation and amortization......................... 192 178
Premium amortization on investment securities....................... 8 18
Discount accretion on investment securities......................... (8) (7)
Deferred income taxes (benefit)..................................... 4 14
(Gain) loss on sales of investment securities....................... 0 (63)
(Increase) decrease in accrued interest receivable and other assets. (223) (103)
Increase (decrease) in accrued interest and other expenses
and other liabilities............................................. 74 82
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES......................... $ 1,307 $ 1,300
------- -------
INVESTING ACTIVITIES
Proceeds from sales of investment securities:
Available-for-sale securities........................................ $ 3,997 $ 1,069
Proceeds from maturities and redemptions of held-to-maturity
investment securities................................................ 12,611 17,393
Purchase of investment securities:
Held-to-maturity securities.......................................... (608) (13,164)
Available-for-sale securities........................................ (16,664) (3,913)
Net (increase) decrease in loans....................................... (1,088) (7,287)
Purchases of premises and equipment.................................... (804) (111)
Proceeds from sale of premises and equipment........................... 0 6
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES............... $(2,556) $(6,007)
------- -------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................................... $ 458 $ 4,107
Net increase (decrease) in short-term borrowings....................... 2,979 (2,032)
Proceeds from sale of treasury stock................................... 0 18
Acquisition of treasury stock.......................................... 0 (18)
Proceeds from sale of stock - dividend reinvestment.................... 50 0
Proceeds received during "rights offering" prior to issuance
of common stock subscribed........................................... 0 359
Costs related to stock offering to be capitalized when stock is issued. 0 (88)
Cash dividends paid.................................................... (410) (333)
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............... $ 3,077 $ 2,013
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................. $ 1,828 $(2,694)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................... 4,174 7,764
------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR.......................... $ 6,002 $ 5,070
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest............................................................. $ 4,199 $ 3,499
Income taxes......................................................... $ 411 $ 338
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY
In accordance with FASB #115, certain investment securities are classified
as available-for-sale and those investments so classified are required to be
carried at fair value. Accordingly, the required adjustment to reflect fair
value for the current year through September 30, 1995 resulted in an increase
to the available-for-sale investments in the amount of $732 thousand which was
transferred to an allowance for unrealized loss as an equity adjustment in the
net amount of $483 thousand after giving effect to the related deferred tax of
$249 thousand.
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE> 6
CCFNB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
UNAUDITED
BASIS OF PRESENTATION
NOTE 1 - The accounting and reporting policies of CCFNB Bancorp and its
subsidiary conform to generally accepted accounting principles and to
general practices within the banking industry. These consolidated
interim financial statements include the accounts of CCFNB Bancorp,
Inc. and its wholly owned subsidiary, Columbia County Farmers National
Bank. All significant inter-company balances have been eliminated.
NOTE 2 - The accompanying consolidated interim financial statements are
unaudited. In management's opinion, the consolidated interim
financial statements reflect a fair presentation of the consolidated
financial position of CCFNB Bancorp, Inc. and Subsidiary, and the
results of their operations and their cash flows for the interim
periods presented. Further, the consolidated interim financial
statements reflect all adjustments, which are in the opinion of
management, necessary to present fairly the consolidated financial
condition and consolidated results of operations and cash flows for
the interim period presented and that all such adjustments to the
consolidated financial statements are of a normal recurring nature.
NOTE 3 - The results of operations for the nine month period ended September
30, 1995 are not necessarily indicative of the results to be expected
for the full year.
NOTE 4 - Net income per share of common stock for the interim periods is based
on the weighted average number of shares for each period; 1995 -
1,366,646 shares and 1994 - 1,109,867 shares.
NOTE 5 - Loans - Loans generally are stated at their outstanding unpaid
principal balances net of any deferred fees or costs on originated
loans, or unamortized premiums or discounts on purchased loans.
Interest income is accrued on the unpaid principal balance. Discounts
and premiums are amortized to income using the interest method. Loan
origination fees net of certain direct origination costs are deferred
and recognized as an adjustment of the yield (interest income) of the
related loans.
-4-
<PAGE> 7
Nonaccrual loans - Generally, a loan (including a loan impaired under
Statement 114) is classified as nonaccrual and the accrual of interest
on such loan is discontinued when the contractual payment of principal
or interest has become 90 days past due or management has serious
doubts about further collectibility of principal or interest, even
though the loan currently is performing. A loan may remain on accrual
status if it is in the process of collection and is either guaranteed
or well secured. When a loan is placed on nonaccrual status, unpaid
interest credited to income in the current year is reversed and unpaid
interest accrued in prior years is charged against the allowance for
credit losses. Interest received on nonaccrual loans generally is
applied against principal. Generally, loans are restored to accrual
status when the obligation is brought current, has performed in
accordance with the contractual terms for a reasonable period of time
and the ultimate collectibility of the total contractual principal and
interest is no longer in doubt.
Allowance for Credit Losses - The allowance for credit losses is
established through provisions for credit losses charged charged
against income. Loans deemed to be uncollectible are charged against
the allowance for credit losses, and subsequent recoveries, if any,
are credited to the allowance. Beginning in 1995, the Company adopted
Financial Accounting Standards Board Statement No. 114, "Accounting by
Creditors for Impairment of a Loan." Under the new standards, the
1995 allowance for credit losses related to loans that are identified
for evaluation in accordance with Statement 114 is based on discounted
cash flows using the loan's initial effective interest rate or the
fair value of the collateral for certain collateral dependent loans.
Prior to 1995, the allowance for credit losses related to these loans
was based on undiscounted cash flows or the fair value of the
collateral for collateral dependent loans.
The allowance for credit losses is maintained at a level believed
adequate by management to absorb estimated probable credit losses.
Management's periodic evaluation of the adequacy of the allowance is
based on the Company's past loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the
borrower's ability to repay (including the timing of future payments),
the estimated value of any underlying collateral, relevant factors.
This evaluation is inherently subjective as it requires material
estimates including the amounts and timing of future cash flows
expected to be received on impaired loans that may be susceptible to
significant change.
The following table presents changes in the allowance for credit
losses:
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Balance at January 1, 1995................................ $ 943
Provision charged to operations........................... 32
Recoveries................................................ 30
Charge offs............................................... (85)
-------
Balance at September 30, 1995............................. $ 920
=======
</TABLE>
At September 30, 1995, there was a total principal balance outstanding
in the amount of $13,402 for impaired (non accrual) loans as
determined under FASB 114. Since the collateral value was far in
excess of the unpaid balance, there is no allowance for credit losses
attributable to loans covered by FASB 114.
-5-
<PAGE> 8
The total allowance for loan losses is $920,000 at September 30, 1995,
and in management's opinion it is more than adequate to cover all
other foreseeable possible losses. Accordingly, no additional
allowance is required to provide for the impact of adoption of FASB
114 in 1995 to date.
Foreclosed Assets - Foreclosed assets are comprised of property
acquired through a foreclosure proceeding or acceptance of a
deed-in-lieu of foreclosure and loans classified as in-substance
foreclosure. In accordance with Statement 114, a loan is classified
as in-substance foreclosure when the Company has taken possession of
the collateral regardless of whether formal foreclosure proceedings
take place. Loans previously classified as in-substance foreclosure
but for which the Company has not taken possession of the collateral
are reclassified to loans. The reclassification did not impact the
Company's financial condition or results of operations. Foreclosed
assets initially are recorded at fair value at the date of foreclosure
establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at
the lower of (1) or (2) fair value minus estimated costs to sell.
Revenue and expenses from operations and changes in the valuation
allowance are included in loss on foreclosed real estate.
NOTE 6 - The consolidated interim financial statements have been prepared in
accordance with requirements of Form 10-QSB and therefore do not
include all the disclosures normally required by generally accepted
accounting principles, or those normally made in the Corporation's
annual 10-KSB filing. The reader of these consolidated interim
financial statements may wish to refer to the Corporation's annual
report on Form 10-KSB for the period ended December 31, 1994, filed
with the Securities and Exchange Commission.
-6-
<PAGE> 9
CCFNB BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consolidated Summary of Operations
(Dollars in Thousands, except for per share data)
<TABLE>
<CAPTION>
AT AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, AT AND FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income....................... $ 8,498 $ 7,589 $ 10,459 $ 9,838 $ 9,701 $ 9,946 $ 9,949
Interest expense...................... 4,117 3,513 4,785 4,634 5,053 5,707 6,066
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... $ 4,381 $ 4,076 $ 5,674 $ 5,204 $ 4,648 $ 4,239 $ 3,883
Provision for loan losses............. (32) (90) (160) (105) (167) (190) (165)
Non-interest income................... 463 441 569 644 614 554 772
Non-interest expense.................. 3,172 2,961 3,958 3,763 3,468 3,228 2,750
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes and
cumulative effect of a change in
accounting principle................ $ 1,640 $ 1,466 $ 2,125 $ 1,980 $ 1,627 $ 1,375 $ 1,740
Income tax expense.................... 412 375 560 497 414 346 439
Cumulative effect of a change in
accounting principle................ 0 0 0 196 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................ $ 1,228 $ 1,091 $ 1,565 $ 1,679 $ 1,213 $ 1,029 $ 1,301
========== ========== ========== ========== ========== ========== ==========
Per Share:(1)
Net income(2)......................... $ .90 $ .98 $ 1.35 $ 1.34 $ 1.09 $ .93 $ 1.18
Cash dividends paid................... .30 .30 .42 .40 .33 .30 .30
Weighted average number of shares
outstanding........................... 1,366,646 1,109,867 1,163,199 1,109,837 1,109,602 1,109,382 1,103,101
Balance Sheet Data:
Total assets.......................... $ 161,986 $ 157,124 $ 157,124 $ 152,386 $ 139,273 $ 118,558 $ 109,526
Investment securities................. 40,719 39,323 39,323 44,542 39,448 34,489 29,399
Loans, net of unearned income......... 109,913 108,857 109,800 96,423 82,055 74,155 70,771
Deposits.............................. 127,322 126,864 126,864 124,023 113,291 95,334 88,567
Stockholders' equity.................. 19,001 17,650 17,650 13,452 12,208 11,361 10,667
Book value per share (1).............. 13.65 12.34 12.92 12.12 11.00 10.24 9.61
Number of shares outstanding.......... 1,370,311 1,110,262 1,365,622 1,110,262 1,109,602 1,109,613 1,109,841
Ratios: (3)
Return on average assets (2).......... 1.03% .97% 1.03% 1.04% .94% .90% 1.18%
Return on average stockholders' equity(2) 9.08 10.75 11.39 11.64 10.13 9.47 12.37
Dividend payout....................... 33.38 30.53 36.54 26.44 30.17 32.34 25.38
</TABLE>
(1) Per share data has been calculated on the weighted average number of shares
outstanding, except for the book value per share which was calculated on the
actual number of shares outstanding at the end of the period.
(2) Before cumulative effect of change in accounting principle.
(3) The ratios for the nine month periods ending September 30 are annualized.
-7-
<PAGE> 10
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the consolidated
financial statements of the Company. The consolidated financial condition and
results of operations of the Company are essentially those of the Bank.
Therefore, the discussion and analysis that follows is directed primarily at
the performance of the Bank.
Overview
Total assets increased 3.1% in 1995 to $162.0 million at September 30, from
$157.1 million at December 31, 1994. Net income increased 12.6% through
September 30, 1995 to $1.2 million, or $.90 per share, compared to $1.1
million, or $.98 per share for the same nine month period ended September 30,
1994. Loans increased in 1995 by .94% to $110.8 million at September 30, from
$109.8 million at December 31, 1994.
Results of Operations - For the Nine Months Ended September 30, 1995 and
September 30, 1994
Net income is affected by five major components: net interest income or the
difference between interest income earned on loans and investments and interest
expense paid on deposits and borrowed funds; the provision for loan losses,
which is the amount charged against net interest income and added to the
allowance for loan losses to provide a reserve for future loan losses; other
non-interest income, which is made up of certain fees, gains and losses from
the sale of investment securities, trust department income and other items; and
other non-interest expenses, which consist primarily of salaries and benefits,
general overhead expenses, other operating expenses and income taxes. Each of
these major components is reviewed in more detail in the following discussion.
Net income for the nine months ended September 30, 1995 was $1,228,000, or $.90
per share, as compared to $1,091,000, or $.98 per share, for the comparable
period in 1994. The principal factor for the increase was due to greater loan
interest income resulting in more net interest income.
Return on assets and return on equity were 1.01% and 8.62%, respectively, for
the nine months ended September 30, 1995, as compared with .93% and 8.24%,
respectively, for the comparable period in 1994.
Net Interest Income
For the nine months ended September 30, 1995, net interest income was $4.4
million as compared to $4.1 million for the comparable period of 1994. The net
interest margin increased to 4.09% for the nine months ended September 30, 1995
from 3.99% for the comparable period in 1994. Average interest earning assets
at September 30, 1995 increased by 5.7% over September 30, 1994.
Average loans outstanding grew from $98.7 million to $110.9 million or 12.4%,
for the nine months ended September 30, 1995, as compared to the nine months
ended September 30, 1994. This growth, in addition to rising interest rates,
resulted in a 12.8% increase in interest income from loans, from $5.9 million
to $6.7 million, for the nine months ended September 30, 1995 and September 30,
1994, respectively.
-8-
<PAGE> 11
Shown below is a summary of past due and non-accrual loans:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
SEPTEMBER DECEMBER
30, 1995 31, 1994
--------- ---------
<S> <C> <C>
Past due and non-accrual:
Days 30 - 89.............................................. $ 1,514 $ 875
Days 90 plus.............................................. 327 304
Non-accrual............................................... 13 24
-------- --------
$ 1,854 $ 1,203
======== ========
</TABLE>
Any loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been disclosed under Industry Guide 3 do not (i)
represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity, or capital
resources, or (ii) represent material credits about which management is aware
of any information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.
The company was required to adopt Financial Accounting Standards Board
Statement No. 114, "Accounting by Creditors for Impairment of a Loan" - Refer
to Note 5 above for other details.
The following analysis provides a comparative schedule of loan
maturities/interest rate sensitivities including a schedule of all loans due
after one year by fixed and variable rate categories:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
MATURITY AND REPRICING DATA FOR LOANS AND LEASES SEPTEMBER DECEMBER
(EXCLUDING THOSE IN NON-ACCRUAL STATUS) 30, 1995 31, 1994
--------------------------------------- --------- --------
<S> <C> <C>
Fixed rate loans & leases with a remaining maturity of:
Three months or less...................................... $ 2,326 $ 1,826
Over three months through 12 months....................... 5,544 4,608
Over one year through five years.......................... 9,758 8,117
Over five years........................................... 24,432 19,751
-------- --------
Total Fixed Rate Loans and Leases.................... $ 42,060 $ 34,302
Floating rate loans & leases with a repricing frequency of:
Quarterly or more frequently.............................. 6,140 11,378
Annually or more frequently, but less frequently than
quarterly............................................... 0 0
Every five years or more frequently, but less frequently
than annually........................................... 63,218 64,512
-------- --------
Total Floating Rate Loans and Leases................. $ 69,358 $ 75,890
-------- --------
Total Loans and Leases............................... $111,418 $110,192
======== ========
</TABLE>
Interest income from investment securities reflects a 7.8% increase comparing
$1.7 million for the nine months ended September 30, 1995, and the $1.6 million
for the comparable period of 1994. The Company typically invests in U.S.
Government securities. The average balance of investment securities for the
nine months ended September 30, 1995 decreased 8.80% to $37.8 million, compared
to the $41.5 million for the same period of 1994. A better yield on those
investments held, however resulted in an increase in income.
Total interest expense increased $604,000 or 17.2% for the first nine months of
1995, as compared to the nine months of 1994. This increase in interest
expense reflects the higher rates paid on deposit accounts since June 30, 1994
as calculated on the increased deposit volume. Interest on short-term
borrowings increased by $146,000 from $310,000 in 1994 to $456,000 in 1995
principally due to the Company being in a "borrowed position" early in 1995 as
well as increased interest rates.
-9-
<PAGE> 12
The following table sets forth, for the periods indicated, information
regarding: (1) the total dollar amount of interest income from interest-earning
assets and the resultant average yields; (2) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average
cost; (3) net interest income; (4) net interest margin; (5) tax equivalent net
interest income; and (6) tax equivalent net interest margin. Information is
based on average daily balances during the indicated periods.
Average Balance Sheet and Rate Analysis
(Dollars in Thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------------ ------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
ASSETS: BALANCE(1) EXPENSE(2) RATE BALANCE(1) EXPENSE(2) RATE
---------- ---------- ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits with other financial
institutions.................................... $ 1,728 $ 73 5.63% $ 2,542 $ 72 3.78%
Investment securities:
U.S. government securities...................... 25,505 1,137 5.94 29,036 1,003 4.61
State and municipal obligations................. 8,693 367 8.53 8,350 354 8.56
Other securities................................ 3,633 193 7.08 4,093 219 7.13
-------- -------- ----- -------- -------- -----
Total Investment Securities....................... 37,831 1,697 5.98 41,479 1,576 5.07
Federal funds sold................................ 1,034 46 5.93 616 18 3.90
Consumer.......................................... 8,122 844 13.86 8,753 664 10.11
Mortgage.......................................... 95,190 5,422 7.59 76,051 4,447 7.74
Commercial........................................ 5,254 410 10.40 12,760 787 8.22
Tax free (3)...................................... 2,328 31 2.69 1,092 55 10.17
-------- -------- ----- -------- -------- -----
Total loans....................................... 110,894 6,707 8.06 98,656 5,923 8.00
Total interest earning assets..................... 151,487 8,523 7.50 143,293 7,589 7.06
-------- -------- ----- -------- -------- -----
Reserve for loan losses........................... (938) (880)
Cash and due from banks........................... 3,471 1,735
Other assets...................................... 5,004 6,489
-------- --------
Total assets...................................... $159,024 $150,637
======== ========
LIABILITIES AND CAPITAL:
SUPER NOW deposits................................ $ 19,113 $ 404 2.82% $ 17,918 $ 387 2.88%
IRA............................................... 8,268 310 5.00 8,023 300 4.99
Money market deposits............................. 18,496 457 3.29 28,206 705 3.33
Savings deposits.................................. 26,066 655 3.35 25,615 653 3.40
C/D's over $100,000............................... 8,513 346 5.42 5,503 184 4.46
Other time deposits............................... 37,076 1,494 5.37 29,162 976 4.46
-------- -------- ----- -------- -------- -----
Total interest bearing deposits................... 117,532 3,666 4.16 114,427 3,205 3.73
-------- -------- ----- -------- -------- -----
Federal funds purchased........................... 496 0 0.00 0 0 0.00
Other borrowed funds.............................. 618 48 10.36 526 14 3.55
Repurchase agreements............................. 10,681 408 5.09 10,564 296 3.74
-------- -------- ----- -------- -------- -----
Total interest bearing liabilities................ 129,327 4,122 125,517 3,515
-------- -------- -------- --------
Demand deposits................................... 10,693 10,686
Other liabilities................................. 974 906
Stockholders' equity.............................. 18,030 13,528
-------- --------
Total liabilities and capital..................... $159,024 $150,637
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4)...... 4,401 3.87 4,074 3.79
TAX EQUIVALENT NET INTEREST INCOME/ ======== ==== ======== ====
NET INTEREST MARGIN (5).......................... 4,645 4.09 4,285 3.99
======== ==== ======== ====
</TABLE>
-10-
<PAGE> 13
(1) Average volume information was computed using daily averages.
(2) Interest on loans includes fee income.
(3) Yield on tax-exempt obligations has been computed on a tax-equivalent
basis.
(4) Net interest margin is computed by dividing net interest income by total
interest earning assets.
(5) Interest and yield are presented on a tax equivalent basis using 34% for
1995 and 1994.
Provision for Loan Losses
The provision for loan losses is based on management's evaluation of the
allowance for loan losses in relation to the credit risk inherent in the loan
portfolio. In establishing the amount of the provision required, management
considers a variety of factors, including but not limited to, general economic
conditions, volumes of various types of loans, collateral adequacy and
potential losses from significant borrowers. The Company strengthened its
internal loan review process in 1987 by implementing stringent analytical
standards in the review procedure. On a monthly basis, the Board of Directors
and the Credit Administration Committee review information regarding specific
loans and the total loan portfolio in general in order to determine the amount
to be charged to the provision for loan losses.
For the nine month period ending September 30, 1995, the provision for loan
losses was $32,000, compared to $90,000 for the corresponding period in 1994.
The primary reason for the decrease in the provision for loan losses was due to
the low non-accrual and past due components of the loan portfolio.
Non-Interest Income
The following table sets forth, for the periods indicated, the major components
of non-interest income:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees.................................. $ 395 $ 316
Trust department income................................... 36 32
Investment securities gain (loss) - net................... 0 63
Other..................................................... 32 30
-------- --------
Total................................................ $ 463 $ 441
======== ========
</TABLE>
For the nine months ended September 30, 1995, total non-interest income
increased $22,000, to $463,000, compared with $441,000 for the nine months
ended September 30, 1994. The principal reasons for the increase is due to a
$79,000 increase in service fees offset by a $63,000 decrease in gains from
sale of investment securities.
-11-
<PAGE> 14
Non-Interest Expenses
Generally, non-interest expense accounts for the costs of maintaining
facilities, providing salaries and necessary benefits to employees, and general
operating costs such as insurance, supplies, advertising, data processing
services, taxes and other related expenses. Some of the costs and expenses are
variable while others are fixed. To the extent possible, the Company utilizes
budgets and related measures to control variable expenses. The following table
sets forth, for the periods indicated, the major components of non-interest
expenses:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages....................................... $ 1,118 $ 1,017
Employee benefits........................................ 381 356
Net occupancy expense.................................... 192 213
Furniture and equipment expense.......................... 230 230
FDIC insurance........................................... 191 208
State shares tax......................................... 86 78
Other expense............................................ 974 859
-------- --------
Total............................................... $ 3,172 $ 2,961
======== ========
</TABLE>
Non-interest expenses totalled $3.2 million for the nine months ended September
30, 1995, representing an increase of $211,000, or 7.2% from the $3.0 million
in non-interest expenses incurred for the same period in 1994.
Salary and wage expense increased 10.0% due primarily to internal promotions
and normal merit increases and senior management deferred compensation plan
costs. Employee benefits expense increased 7.0% due primarily to increased
health insurance premiums, occupancy expense decreased in 1995 by $21,000
principally due to the reduction of utilities and related expenses due to the
milder 1995 winter.
Other expenses increased by $115,000 when comparing 1995 to 1994. The
principal factor for the increase is the termination fee paid to the former
data processing center whose services ceased at the end of the third quarter
1995. The total fee paid was $130,000 and is being amortized throughout 1995
with an accumulated accrual at September 30, 1995 of $91,000.
Capital
A major strength of a financial institution is a strong capital position. This
capital is very critical as it must provide growth, payment to shareholders,
and absorption of unforeseen losses. The federal regulators provide standards
that must be met. These standards measure "risk-adjusted" assets against
different categories of capital. The "risk-adjusted" assets reflect off
balance sheet items, such as commitments to make loans, and also place balance
sheet assets on a "risk" basis for collectibility. The adjusted assets are
measured against Tier I Capital and Total Qualifying Capital. Tier I capital
is common stockholders' equity and Tier II Capital includes the allowance for
loan losses. Allowance for loan losses must be lower than or equal to common
stockholders' equity to be eligible for Total Qualifying Capital.
-12-
<PAGE> 15
The Company exceeds all minimum capital requirements as reflected in the
following table:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
MINIMUM MINIMUM
CALCULATED STANDARD CALCULATED STANDARD
RATIOS RATIOS RATIOS RATIOS
------ ------ ------ ------
<S> <C> <C> <C> <C>
Risk Based Ratios:
Tier I capital to risk-weighted assets.. 20.67% 4.00% 20.19% 4.00%
Total qualifying capital to
risk-weighted assets.................. 21.67% 8.00% 21.24% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 1995 31, 1994
-------- --------
<S> <C> <C>
Tier I capital to total assets.............................. 11.74% 11.55%
Tier II capital to total assets............................. 12.31% 12.15%
</TABLE>
Management believes that the Bank's current capital position and liquidity
positions are strong and that its capital position is adequate to support its
operations.
-13-
<PAGE> 16
PART II - Other Information:
Item 1. Legal Proceedings
Management and the Corporation's legal counsel are not aware of any litigation
that would have a material adverse effect on the consolidated financial
position of the Corporation. There are no proceedings pending other than the
ordinary routine litigation incident to the business of the Corporation and its
subsidiary, Columbia County Farmers National Bank. In addition, no material
proceedings are pending or are known to be threatened or contemplated against
the Corporation and the Bank by government authorities.
Item 2. Changes in Securities - Nothing to report.
Item 3. Defaults Upon Senior Securities - Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders - Nothing to
report.
Item 5. Other Information - Nothing to report.
Item 6. Exhibits and Reports on Form 8-K - Nothing to report.
-14-
<PAGE> 17
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.
CCFNB BANCORP, INC.
(Registrant)
By /s/ Paul E. Reichart
-------------------------------
Paul E. Reichart
President & CEO
Date:
By /s/ Virginia D. Kocher
-------------------------------
Virginia D. Kocher
Treasurer
Date: November 10, 1995
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 11,301
<SECURITIES> 38,470
<RECEIVABLES> 111,944
<ALLOWANCES> (936)
<INVENTORY> 0
<CURRENT-ASSETS> 160,779
<PP&E> 3,426
<DEPRECIATION> 0
<TOTAL-ASSETS> 164,205
<CURRENT-LIABILITIES> 145,551
<BONDS> 0
<COMMON> 1,710
0
0
<OTHER-SE> 16,944
<TOTAL-LIABILITY-AND-EQUITY> 164,205
<SALES> 5,591
<TOTAL-REVENUES> 5,878
<CGS> 2,682
<TOTAL-COSTS> 2,682
<OTHER-EXPENSES> 2,115
<LOSS-PROVISION> 32
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,049
<INCOME-TAX> 264
<INCOME-CONTINUING> 785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 785
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
