<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 March 31, 1996
/ / 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. 1,374,159 shares
of $1.25 (par) common stock were outstanding as of May 6, 1996.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
MARCH 31, 1996
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 - 6
- Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 13
PART II - OTHER INFORMATION 14
-----------------
SIGNATURES 15
</TABLE>
<PAGE> 3
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1996 31, 1995
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks........................................ $ 3,989 $ 4,086
Interest-bearing deposits with other banks..................... 4,142 385
Federal funds sold............................................. 1,100 0
Investment securities:
Held-to-maturity securities, approximate fair value of
$1,056 and $1,062.......................................... 1,045 1,045
Available-for-sale securities carried at fair value.......... 38,636 39,339
Loans, net of unearned income.................................. 109,416 111,831
Allowance for loan losses...................................... 899 912
-------- --------
Net loans.................................................... $108,517 $110,919
Premises and equipment......................................... 5,164 5,082
Accrued interest receivable.................................... 975 850
Other assets................................................... 437 360
-------- --------
TOTAL ASSETS.............................................. $164,005 $162,066
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing......................................... $ 10,467 $ 12,051
Interest bearing............................................. 118,784 116,934
-------- --------
Total Deposits............................................ $129,251 $128,985
Short-term borrowings.......................................... 13,867 12,066
Long-term borrowings........................................... 350 364
Accrued interest and other expenses............................ 901 907
Other liabilities.............................................. 35 232
-------- --------
TOTAL LIABILITIES......................................... $144,404 $142,554
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; Authorized 5,000,000
shares; issued 1996 - 1,374,159, 1995 - 1,372,658 shares..... $ 1,718 $ 1,716
Surplus........................................................ 5,717 5,694
Retained earnings.............................................. 12,093 11,817
Allowance for unrealized gain (loss) on available-for-sale
investment securities, net of taxes ......................... 73 285
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................ $ 19,601 $ 19,512
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $164,005 $162,066
======== ========
</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 THREE
MONTHS ENDING
MARCH 31,
---------
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable........................................................... $ 2,256 $ 2,150
Tax exempt........................................................ 25 45
Interest and dividends on investment securities:
Taxable interest.................................................. 443 400
Tax exempt interest............................................... 118 120
Dividends......................................................... 15 10
Interest on federal funds sold...................................... 8 0
Interest on deposits in other banks................................. 37 9
-------- --------
TOTAL INTEREST INCOME.......................................... $ 2,902 $ 2,734
-------- --------
INTEREST EXPENSE
Interest on deposits................................................ $ 1,213 $ 1,138
Interest on short-term borrowings................................... 165 150
Interest on long-term borrowings.................................... 9 0
-------- --------
TOTAL INTEREST EXPENSE......................................... $ 1,387 $ 1,288
-------- --------
Net interest income................................................. $ 1,515 $ 1,446
Provision for loan losses........................................... 15 24
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............... $ 1,500 $ 1,422
-------- --------
NON-INTEREST INCOME
Service charges and fees............................................ $ 119 $ 118
Trust department income............................................. 18 12
Other income........................................................ 15 1
Investment securities gain (losses) - net........................... 0 0
-------- --------
TOTAL NON-INTEREST INCOME...................................... $ 152 $ 131
-------- --------
NON-INTEREST EXPENSES
Salaries and wages.................................................. $ 418 $ 368
Pensions and other employee benefits................................ 149 130
Occupancy expense, net.............................................. 95 68
Furniture and equipment expense..................................... 81 78
FDIC insurance...................................................... 1 72
Other operating expenses............................................ 348 363
-------- --------
TOTAL NON-INTEREST EXPENSES.................................... $ 1,092 $ 1,079
-------- --------
Income before income taxes.......................................... $ 560 $ 474
Income tax expense.................................................. 147 107
-------- --------
NET INCOME...................................................... $ 413 $ 367
======== ========
NET INCOME PER SHARE................................................ $ .30 $ .27
</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)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDING MARCH 31,
----------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 413 $ 367
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses........................................... 15 24
Provision for depreciation and amortization......................... 88 64
Premium amortization on investment securities....................... 1 3
Discount accretion on investment securities......................... (2) (4)
Deferred income taxes (benefit)..................................... 12 (8)
(Increase) decrease in accrued interest receivable and other assets. (202) (124)
Increase (decrease) in accrued interest and other expenses
and other liabilities............................................. (106) 74
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES......................... $ 219 $ 396
-------- --------
INVESTING ACTIVITIES
Proceeds from sales of investment securities:
Available-for-sale securities........................................ $ 0 $ 0
Proceeds from maturities and redemptions of investment securities
available-for-sale................................................... 6,000 0
Proceeds from maturities and redemptions of held-to-maturity
investment securities................................................ 0 6,000
Purchase of investment securities:
Held-to-maturity securities.......................................... 0 (225)
Available-for-sale securities........................................ (5,617) (13)
Net (increase) decrease in loans....................................... 2,387 (2,074)
Purchases of premises and equipment.................................... (170) (31)
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES............... $ 2,600 $ 3,657
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................................... $ 266 $ 574
Net increase (decrease) in short-term borrowings....................... 1,801 (2,707)
Net increase (decrease) in long-term borrowings........................ (14) 0
Proceeds from sale of stock - dividend reinvestment.................... 25 0
Cash dividends paid.................................................... (137) (137)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............... $ 1,941 $ (2,270)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................. $ 4,760 $ 1,783
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................... 4,471 4,174
-------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.......................... $ 9,231 $ 5,957
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest............................................................. $ 1,397 $ 1,264
Income taxes......................................................... $ 0 $ 14
</TABLE>
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
MARCH 31, 1996
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 three month period ended March 31,
1996 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; 1996 -
1,372,724 shares and 1995 - 1,365,622 shares.
NOTE 5 - LOANS
Loans are stated at their outstanding principal balances, net of any
deferred fees or costs, unearned income, and the allowance for loan
losses. Interest on loans is accrued on the principal amount
outstanding, primarily on an actual day basis. Non-refundable loan
fees and certain direct costs are deferred and amortized over the life
of the loans using the interest method. The amortization is reflected
as an interest yield adjustment, and the deferred portion of the net
fees and costs is reflected as a part of the loan balance.
-4-
<PAGE> 7
Non-Accrual Loans - Generally, a loan (including a loan impaired under
Statement of Financial Accounting Standards No. 114) is classified as
non-accrual, and the accrual of interest on such a 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 non-accrual 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.
Potential problem loans are identified by management as a part of its
loan review process.
Income recognition is in accordance with Statement of Financial
Accounting Standards No. 118. Certain non-accrual loans may continue
to perform, that is, payments are still being received. Generally,
the payments are applied to principal. These loans remain under
constant scrutiny and if performance continues, interest income may be
recorded on a cash basis based on management's judgement as to
collectibility of principal.
Allowance for Loan Losses - The allowance for loan losses is
established through provisions for loan losses charged against income.
Loans deemed to be uncollectible are charged against the allowance for
loan losses, and subsequent recoveries, if any, are credited to the
allowance.
The Corporation adheres to the principles provided by Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan", as amended by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure." Under these standards, the
allowance for loan losses related to loans that are identified for
evaluation in accordance with Statement No. 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.
Statement No. 118 allows the continued use of existing methods for
income recognition on impaired loans and amends disclosure
requirements to require information about the recorded investment in
certain impaired loans and related income recognition on those loans.
The allowance for loan losses is maintained at a level by management
to be adequate to absorb estimated potential loan losses.
Management's periodic evaluation of the adequacy of the allowance for
loan losses is based on the Corporation'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,
composition of the loan portfolio, current economic conditions, and
other 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.
-5-
<PAGE> 8
The following table presents the changes in the allowance for credit
losses:
<TABLE>
<S> <C>
Balance at January 1, 1996............................ $ 912
Provisions charged off................................ 15
Loans charged off..................................... (36)
Recoveries............................................ 8
--------
Balance at March 31, 1996............................. $ 899
========
</TABLE>
At March 31, 1996, the recorded investment in loans that are
considered to be impaired under Statement No. 114 was $13,343, which
were all non-accrual loans. The related allowance for loan losses
for the impaired loans utilizing standards provided in Statement No.
114 is $13,343. No additional charge to operations is required
since the total allowance for loan losses is estimated by management
to be adequate to provide for the loan loss allowance under
Statement No. 114 as well as any other potential loan losses.
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, 1995, 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 THREE MONTHS
---------------------------
ENDED MARCH 31, AT AND FOR THE YEARS ENDED DECEMBER 31,
--------------- ---------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income and Expense:
Interest income....................... $ 2,902 $ 2,734 $ 11,481 $ 10,459 $ 9,914 $ 9,768 $ 10,016
Interest expense...................... 1,387 1,288 5,557 4,785 4,634 5,053 5,707
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 1,515 1,446 5,924 5,674 5,280 4,715 4,309
Loan loss provision................... 15 24 42 160 105 167 190
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after loan loss
provision........................... 1,500 1,422 5,882 5,514 5,175 4,548 4,119
Non-interest income................... 152 131 678 569 568 547 484
Non-interest expense.................. 1,092 1,079 4,374 3,958 3,763 3,468 3,228
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes............ 560 474 2,186 2,125 1,980 1,627 1,375
Income taxes.......................... 147 107 561 560 497 414 346
Change in accounting principle........ 0 0 0 0 196 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................ 413 367 1,625 1,565 1,679 1,213 1,029
========== ========== ========== ========== ========== ========== ==========
Per Share: (1)
Net income after change in accounting
principle (2)....................... $ .30 $ .27 $ 1.19 $ 1.35 $ 1.51 $ 1.09 $ .93
Cash dividends paid................... .10 .10 .45 .42 .40 .33 .30
Average shares outstanding............ 1,372,724 1,365,622 1,367,595 1,163,199 1,109,837 1,109,602 1,109,382
Average Balance Sheet:
Loans................................. $ 110,978 $ 110,480 $ 111,980 $ 100,628 $ 88,347 $ 77,354 $ 73,185
Investments........................... 39,108 36,319 37,063 41,410 42,083 38,534 31,459
Other earning assets.................. 2,793 570 1,727 2,696 3,659 1,360 2,288
Total assets.......................... 162,025 154,719 157,957 151,752 143,096 129,045 114,488
Deposits.............................. 127,769 124,821 116,495 115,071 117,105 103,500 93,228
Other interest-bearing liabilities.... 13,544 11,367 11,766 11,014 12,332 12,390 9,744
Shareholders' equity.................. 19,395 17,535 18,067 13,736 12,739 11,972 10,873
Balance Sheet Data:
Loans................................. 109,416 111,839 111,831 109,800 96,423 82,055 74,155
Investments........................... 39,681 33,872 40,384 39,323 44,542 39,448 34,489
Other earning assets.................. 5,242 5,957 385 4,174 3,491 9,885 2,534
Total assets.......................... 164,005 155,500 162,066 157,124 152,386 139,273 118,558
Deposits.............................. 129,251 127,438 128,985 126,864 124,023 113,291 95,334
Other interest-bearing liabilities.... 14,217 9,977 12,430 11,910 14,317 13,199 10,197
Shareholders' equity.................. 19,601 18,085 19,512 17,650 13,452 12,208 11,361
Ratios: (3)
Return on average assets.............. 1.02% .95% 1.03% 1.03% 1.17% .94% .90%
Return on average equity.............. 8.52% 8.37% 8.99% 11.39% 13.18% 10.13% 9.47%
Dividend payout ratio................. 33.17% 37.33% 34.35% 36.54% 26.44% 30.17% 32.34%
Average equity to average assets ratio 11.97% 11.33% 11.44% 9.05% 8.90% 9.28% 9.50%
</TABLE>
(1) Per share data has been calculated on the weighted average number of shares
outstanding.
(2) Before cumulative effect of change in accounting principle.
(3) The ratios for the three month period ending March 31 are annualized.
-7-
<PAGE> 10
The following discussion and analysis of the financial condition and results of
operations of the Corporation should be read in conjunction with the
consolidated financial statements of the Corporation. The consolidated
financial condition and results of operations of the Corporation 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 1.20% to $164 million at March 31, from $162.1 million
at December 31, 1995. Net income increased 12.53% through March 31, 1996 to
$413,000, or $.30 per share, compared to $367,000, or $.27 per share for the
same three month period ended March 31, 1995. Loans decreased in 1996 by 2.16%
to $109.4 million at March 31, from $111.8 million at December 31, 1995.
Results of Operations - For the Three Months Ended March 31, 1996 and March 31,
1995.
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 potential 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 operational expenses
and income taxes. Each of these major components is reviewed in more detail in
the following discussion.
Net income for the three months ended March 31, 1996 was $413,000, or $.30 per
share, as compared to $367,000, or $.27 per share, for the comparable period in
1995. The principal factor for the increase was due to a general increase in
net interest income, even though the volume of loans declined.
Return on average assets and return on average equity were 1.02% and 8.51%,
respectively, for the three months ended March 31, 1996, as compared to .95%
and 8.52%, respectfully, for the comparable period in 1995.
Net Interest Income
For the three months ended March 31, 1996, net interest income was $1.5 million
as compared to $1.4 million for the comparable period of 1995. The net
interest margin reflected a deminimus decline to 4.14% for the three months
ended March 31, 1996 from 4.15% for the comparable period in 1995. Average
interest earning assets at March 31, 1996 increased by 4.15% over March 31,
1995.
Average loans outstanding increased from $110.5 million to $111 million or
4.51%, for the three months ended March 31, 1996, as compared to the three
months ended March 31, 1996. The outstanding balance of loans at March 31,
1996, however, did decrease from $111.8 at December 31, 1995 to $109.4 at March
31, 1996. A 3.92% increase in income on loans from $2.2 million at March 31,
1995 to $2.3 at March 31, 1996 was attributable to the benefit derived from
adjustable rate mortgage loans and the related indexes used to continually
change interest rates to reflect the "market". In addition and for the future,
senior management has implemented, beginning April 1, 1996, a new variable rate
home equity loan program to attract higher yielding interest attributable to
these loans.
-8-
<PAGE> 11
Shown below is a summary of past due and non-accrual loans:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
MARCH DECEMBER
31, 1996 31, 1995
-------- --------
<S> <C> <C>
Past due and non-accrual:
Days 30 - 89......................................... $ 1,433 $ 1,330
Days 90 plus......................................... 398 397
Non-accrual.......................................... 13 13
-------- --------
$ 1,844 $ 1,740
======== ========
</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 Corporation adheres 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 MARCH DECEMBER
(EXCLUDING THOSE IN NON-ACCRUAL STATUS) 31, 1996 31, 1995
--------------------------------------- -------- --------
<S> <C> <C>
Fixed rate loans & leases with a remaining maturity of:
Three months or less...................................... $ 807 $ 1,847
Over three months through 12 months....................... 2,252 2,997
Over one year through five years.......................... 8,845 14,515
Over five years........................................... 25,281 19,962
-------- --------
Total Fixed Rate Loans and Leases.................... $ 37,185 $ 39,321
-------- --------
Floating rate loans & leases with a repricing frequency of:
Quarterly or more frequently.............................. $ 18,768 $ 7,317
Annually or more frequently, but less frequently than
quarterly............................................... 17,197 0
Every five years or more frequently, but less frequently
than annually........................................... 36,253 65,180
-------- --------
Total Floating Rate Loans and Leases................. $ 72,218 $ 72,497
-------- --------
Total Loans and Leases............................... $109,403 $111,818
======== ========
</TABLE>
Interest income from investment securities reflects a 8.68% increase comparing
$576,000 for the three months ended March 31, 1996, and the $530,000 for the
comparable period of 1995. The Corporation has increased it's yield by
investing in government agencies securities. The average balance of investment
securities for the three months ended March 31, 1996 increased 7.68% to $39.1
million, compared to the $36.3 million for the same period of 1995.
Total interest expense increased $99,000 or 7.69% for the first three months of
1996, as compared to the three months of 1995. This increase in interest
expense reflects the shift from lower yielding money market deposits to higher
yielding certificates of deposit as reflected in the average balance sheet as
well as the effect of a small increase in interest bearing deposits. Interest
on short-term borrowings increased by $15,000 from $150,000 in 1995 to $165,000
in 1996.
-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>
MARCH 1996 MARCH 1995
---------- ----------
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.................................... $ 2,793 $ 37 5.30% $ 570 $ 9 6.32%
Investment securities:
U.S. government securities...................... 26,765 399 5.96% 24,304 347 5.71%
State and municipal obligations (3)............. 8,852 118 8.08% 8,458 120 8.60%
Other securities................................ 3,491 59 6.76% 3,557 63 7.08%
-------- -------- ------ -------- -------- -----
Total Investment Securities....................... $ 39,108 $ 576 5.89% $ 36,319 $ 530 5.84%
Federal funds sold................................ 608 8 5.26% 0 0 .00%
Consumer.......................................... 8,305 203 9.78% 10,807 268 9.92%
Mortgage.......................................... 94,995 1,909 8.04% 83,116 1,573 7.57%
Commercial........................................ 6,021 144 9.57% 13,654 309 9.05%
Tax free (3)...................................... 1,657 25 9.14% 2,903 45 9.39%
-------- -------- ------ -------- -------- -----
Total loans....................................... $110,978 $ 2,281 8.22% $110,480 $ 2,195 7.95%
Total interest earning assets..................... 153,487 2,902 7.56% 147,369 2,734 7.42%
-------- -------- ------ -------- -------- -----
Reserve for loan losses........................... $ (913) $ (945)
Cash and due from banks........................... 1,603 1,535
Other assets...................................... 7,848 6,760
-------- --------
Total assets...................................... $162,025 $154,719
======== ========
LIABILITIES AND CAPITAL:
SUPER NOW deposits................................ $ 19,267 $ 107 2.22% $ 18,962 $ 136 2.87%
IRA............................................... 8,276 103 4.98% 8,214 101 4.92%
Money market deposits............................. 14,090 105 2.98% 20,766 172 3.31%
Savings deposits.................................. 24,835 178 2.87% 25,970 219 3.37%
C/D's over $100,000............................... 9,972 152 6.10% 7,596 100 5.27%
Other time deposits............................... 40,911 568 5.55% 33,114 410 4.95%
-------- -------- ------ -------- -------- -----
Total interest bearing deposits................... $117,351 $ 1,213 4.13% $114,622 $ 1,138 3.97%
-------- -------- ------ -------- -------- -----
Federal funds purchased........................... $ 0 $ 0 .00% $ 0 $ 0 .00%
Other borrowed funds.............................. 550 8 5.82% 1,953 29 5.94%
Long-term borrowings.............................. 350 9 10.29% 0 0 .00%
Repurchase agreements............................. 12,644 157 4.97% 9,414 121 5.14%
-------- -------- ------ -------- -------- -----
Total interest bearing liabilities................ $130,895 $ 1,387 4.24% $125,989 $ 1,288 4.09%
-------- -------- ------ -------- -------- -----
Demand deposits................................... $ 10,418 $ 10,199
Other liabilities................................. 1,317 996
Stockholders' equity.............................. 19,395 17,535
-------- --------
Total liabilities and capital..................... $162,025 $154,719
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4)...... $ 1,515 3.95% $ 1,446 3.92%
TAX EQUIVALENT NET INTEREST INCOME/ ======== ====== ======== =====
NET INTEREST MARGIN (5).......................... $ 1,588 4.14% $ 1,529 4.15%
======== ====== ======== =====
</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
1996 and 1995.
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 three month period ending March 31, 1996, the provision for loan losses
was $15,000, compared to $24,000 for the corresponding period in 1995. 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>
THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees.................................. $ 119 $ 118
Trust department income................................... 18 12
Investment securities gain (loss) - net................... 0 0
Other..................................................... 15 1
-------- --------
Total................................................ $ 152 $ 131
======== ========
</TABLE>
For the three months ended March 31, 1996, total non-interest income increased
$21,000, to $152,000, compared with $131,000 for the three months ended March
31, 1995. The reason for the improvement was due to a positive increase in
trust income of $6,000 and a $12,000 in miscellaneous income of a non-recurring
nature.
-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>
THREE MONTHS ENDED
MARCH 31,
---------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages....................................... $ 412 $ 368
Employee benefits........................................ 156 130
Net occupancy expense.................................... 95 68
Furniture and equipment expense.......................... 81 78
FDIC insurance........................................... 1 72
State shares tax......................................... 32 28
Other expense............................................ 315 335
-------- --------
Total............................................... $ 1,092 $ 1,079
======== ========
</TABLE>
Non-interest expenses totalled $1.1 million for the three months ended March
31, 1996 and 1995. Although there is no increase reflected there were some
changes in the components.
Salary and employee benefits expense increased 9.18% due primarily to addition
of staff, internal promotions and normal merit increases. Occupancy expense
increased in 1996 over 1995 by 3.97% or $27,000 principally due to the harsh
winter of 1996 and the related costs of snow removal and utilities related
thereto.
Conversely, the effect of the nationwide long awaited decreased cost of FDIC
insurance occurred in the first quarter of 1996 and amounted to a decrease in
cost of $71,000 or 98.61% over the same period in 1995. In addition other
expenses decreased to $315,000 in 1996 or 5.97% as compared to 1995.
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>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
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.. 20.54% 4.00% 28.21% 4.00%
Total qualifying capital to
risk-weighted assets.................. 21.48% 8.00% 92.46% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1996 31, 1995
-------- --------
<S> <C> <C>
Tier I capital to total assets.............................. 11.90% 11.86%
Tier II capital to total assets............................. 12.45% 12.39%
</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:
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 1995 Annual
Report and is qualified in its entirety by reference to such 10 SB
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,471
<SECURITIES> 40,384
<RECEIVABLES> 111,832
<ALLOWANCES> (912)
<INVENTORY> 0
<CURRENT-ASSETS> 155,775
<PP&E> 5,082
<DEPRECIATION> 0
<TOTAL-ASSETS> 162,066
<CURRENT-LIABILITIES> 142,554
<BONDS> 0
0
0
<COMMON> 1,716
<OTHER-SE> 17,796
<TOTAL-LIABILITY-AND-EQUITY> 160,066
<SALES> 11,480
<TOTAL-REVENUES> 12,159
<CGS> 5,557
<TOTAL-COSTS> 5,557
<OTHER-EXPENSES> 4,374
<LOSS-PROVISION> 42
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,186
<INCOME-TAX> 561
<INCOME-CONTINUING> 1,625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,625
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
