<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, 1997
[ ] 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)
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)
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. 1,382,433 shares
of $1.25 (par) common stock were outstanding as of May 6, 1997.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
MARCH 31, 1997
INDEX 10-QSB
EXHIBIT 27 - FINANCIAL DATA SCHEDULE NO. PAGE
--------
#
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
<PAGE> 3
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1997 31, 1996
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks ........................................ $ 3,715 $ 4,503
Interest-bearing deposits with other banks ..................... 3,289 3,856
Federal funds sold ............................................. 3,000 3,000
Investment securities:
Securities to be held to maturity, estimated fair value of
$728 and $981 .............................................. 720 970
Securities available for sale carried at estimated fair value 36,100 36,437
Loans, net of unearned income .................................. 116,462 115,590
Allowance for loan losses ...................................... 913 911
--------- ---------
Net loans .................................................... $ 115,549 $ 114,679
Premises and equipment ......................................... 5,220 5,294
Accrued interest receivable .................................... 988 965
Other assets ................................................... 624 382
--------- ---------
TOTAL ASSETS .............................................. $ 169,205 $ 170,086
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing ......................................... $ 11,734 $ 12,280
Interest bearing ............................................. 117,248 119,120
--------- ---------
Total Deposits ............................................ $ 128,982 $ 131,400
Short-term borrowings .......................................... 18,050 16,654
Long-term borrowings ........................................... 267 297
Accrued interest and other expenses ............................ 1,066 1,058
Other liabilities .............................................. 41 20
--------- ---------
TOTAL LIABILITIES ......................................... $ 148,406 $ 149,429
========= =========
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; Authorized 5,000,000
shares; issued 1997 - 1,382,433, 1996 - 1,374,159 shares ..... $ 1,728 $ 1,727
Surplus ........................................................ 5,851 5,838
Retained earnings .............................................. 13,352 13,023
Allowance for unrealized gain (loss) on available-for-sale
investment securities, net of taxes .......................... (132) 69
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ................................ $ 20,799 $ 20,657
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................ $ 169,205 $ 170,086
========= =========
</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,
--------------------
1997 1996
------ ------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable ........................................... $2,372 $2,256
Tax exempt ........................................ 35 25
Interest and dividends on investment securities:
Taxable interest .................................. 389 443
Tax exempt interest ............................... 128 118
Dividends ......................................... 15 15
Interest on federal funds sold ...................... 37 8
Interest on deposits in other banks ................. 55 37
------ ------
TOTAL INTEREST INCOME .......................... $3,031 $2,902
------ ------
INTEREST EXPENSE
Interest on deposits ................................ $1,214 $1,213
Interest on short-term borrowings ................... 218 165
Interest on long-term borrowings .................... 4 9
------ ------
TOTAL INTEREST EXPENSE ......................... $1,436 $1,387
------ ------
Net interest income ................................. $1,595 $1,515
Provision for loan losses ........................... 15 15
------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES $1,580 $1,500
------ ------
NON-INTEREST INCOME
Service charges and fees ............................ $ 133 $ 119
Trust department income ............................. 21 18
Other income ........................................ 14 15
------ ------
TOTAL NON-INTEREST INCOME ...................... $ 168 $ 152
------ ------
NON-INTEREST EXPENSES
Salaries and wages .................................. $ 423 $ 412
Pensions and other employee benefits ................ 152 144
Occupancy expense, net .............................. 94 95
Furniture and equipment expense ..................... 103 81
Other operating expenses ............................ 314 360
------ ------
TOTAL NON-INTEREST EXPENSES .................... $1,086 $1,092
------ ------
Income before income taxes .......................... $ 662 $ 560
Income tax expense .................................. 173 147
------ ------
NET INCOME ...................................... $ 489 $ 413
====== ======
NET INCOME PER SHARE ................................ $ .35 $ .30
</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,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................................ $ 489 $ 413
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses .......................................... 15 15
Provision for depreciation and amortization ........................ 92 88
Premium amortization on investment securities ...................... 1 1
Discount accretion on investment securities ........................ (7) (2)
Deferred income taxes (benefit) .................................... 0 12
(Gain) loss on sale of premises and equipment ...................... (2) 0
Loss on impairment of bank premise ................................. 3 0
(Increase) decrease in accrued interest receivable and other assets (162) (202)
Increase (decrease) in accrued interest and other expenses
and other liabilities ............................................ 29 (106)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................ $ 458 $ 219
-------- --------
INVESTING ACTIVITIES
Proceeds from sales, maturities and redemptions of investment
securities available for sale ....................................... $ 5,319 $ 6,000
Proceeds from maturities and redemptions of investment securities
held to maturity .................................................... 250 0
Purchase of investment securities available for sale .................. (5,279) (5,617)
Net (increase) decrease in loans ...................................... (885) 2,387
Purchases of premises and equipment ................................... (31) (170)
Proceeds from sale of premises and equipment .......................... 12 0
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .............. $ (614) $ 2,600
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits ................................... $ (2,418) $ 266
Net increase (decrease) in short-term borrowings ...................... 1,396 1,801
Net increase (decrease) in long-term borrowings ....................... (30) (14)
Proceeds from sale of stock - dividend reinvestment ................... 41 25
Treasury stock acquired and retired ................................... (28) 0
Cash dividends paid ................................................... (160) (137)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES .............. $ (1,199) $ 1,941
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................. $ (1,355) $ 4,760
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................ 11,359 4,471
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................... $ 10,004 $ 9,231
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest ............................................................ $ 1,449 $ 1,397
Income taxes ........................................................ $ 69 $ 0
</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, 1997
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,
1997 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; 1997
- 1,381,751 shares and 1996 - 1,372,724 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 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, 1997 ................................ $911
Provisions charged to operations .......................... 15
Loans charged off ......................................... 23
Recoveries ................................................ 10
----
Balance at March 31, 1997 ................................. $913
====
</TABLE>
At March 31, 1997 no loans were considered impaired as defined by
Statement No. 114. Accordingly, no additional charge to operations
was required since the total allowance for loan losses was 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, 1996, 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,-------------
--------------------------- ---------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income and Expense:
Interest income ...................... $ 3,031 $ 2,902 $ 11,856 $ 11,481 $ 10,459 $ 9,914 $ 9,768
Interest expense ..................... 1,436 1,387 5,588 5,557 4,785 4,634 5,053
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income .................. 1,595 1,515 6,268 5,924 5,674 5,280 4,715
Loan loss provision .................. 15 15 80 42 160 105 167
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after loan loss
provision .......................... 1,580 1,500 6,188 5,882 5,514 5,175 4,548
Non-interest income .................. 168 152 750 678 569 568 547
Non-interest expense ................. 1,086 1,092 4,450 4,374 3,958 3,763 3,468
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes ........... 662 560 2,488 2,186 2,125 1,980 1,627
Income taxes ......................... 173 147 664 561 560 497 414
Change in accounting principle ....... 0 0 0 0 0 196 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income ........................... 489 413 1,824 1,625 1,565 1,679 1,213
========== ========== ========== ========== ========== ========== ==========
Per Share: (1)
Net income after change in accounting
principle (2) ...................... $ .35 $ .30 $ 1.33 $ 1.19 $ 1.35 $ 1.51 $ 1.09
Cash dividends paid .................. .12 .10 .45 .45 .42 .40 .33
Average shares outstanding ........... 1,381,751 1,372,724 1,375,875 1,367,595 1,163,199 1,109,837 1,109,602
Average Balance Sheet:
Loans ................................ $ 116,078 $ 110,978 $ 112,341 $ 111,980 $ 100,628 $ 88,347 $ 77,354
Investments .......................... 35,932 39,108 39,248 37,063 41,410 42,083 38,534
Other earning assets ................. 7,297 2,793 2,849 1,727 2,696 3,659 1,360
Total assets ......................... 167,632 162,025 164,512 157,957 151,752 143,096 129,045
Deposits ............................. 117,525 127,769 117,414 116,495 115,071 117,105 103,500
Other interest-bearing liabilities ... 17,434 13,544 14,860 11,766 11,014 12,332 12,390
Shareholders' equity ................. 20,255 19,395 19,512 18,067 13,736 12,739 11,972
Balance Sheet Data:
Loans ................................ 116,462 109,416 115,590 111,831 109,800 96,423 82,055
Investments .......................... 36,820 39,681 37,407 40,384 39,323 44,542 39,448
Other earning assets ................. 6,289 5,242 6,856 385 4,174 3,491 9,885
Total assets ......................... 169,205 164,005 170,086 162,066 157,124 152,386 139,273
Deposits ............................. 128,982 129,251 131,400 128,985 126,864 124,023 113,291
Other interest-bearing liabilities ... 18,317 14,217 16,951 12,430 11,910 14,317 13,199
Shareholders' equity ................. 20,799 19,601 20,657 19,512 17,650 13,452 12,208
Ratios: (3)
Return on average assets ............. 1.17% 1.02% 1.11% 1.03% 1.03% 1.17% .94%
Return on average equity ............. 9.66% 8.52% 9.35% 8.99% 11.39% 13.18% 10.13%
Dividend payout ratio ................ 32.78% 33.17% 33.95% 34.35% 36.54% 26.44% 30.17%
Average equity to average assets ratio 12.08% 11.97% 11.86% 11.44% 9.05% 8.90% 9.28%
</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 decreased .5% to $169.2 million at March 31, from $170.1 million at
December 31, 1996. Net income increased 18.4% through March 31, 1997 to
$489,000, or $.35 per share, compared to $413,000, or $.30 per share for the
same three month period ended March 31, 1996. Loans increased in 1997 by .75% to
$116.5 million at March 31, from $115.6 million at December 31, 1996.
Results of Operations - For the Three Months Ended March 31, 1997 and March 31,
1996.
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, 1997 was $489,000, or $.35 per
share, as compared to $413,000, or $.30 per share, for the comparable period in
1996. The principal factor for the increase was due to a general increase in net
interest income.
Return on average assets and return on average equity were 1.17% and 9.66%,
respectively, for the three months ended March 31, 1997, as compared to 1.11%
and 9.35%, respectively, for the comparable period in 1996.
Net Interest Income
For the three months ended March 31, 1997, net interest income was $1.6 million
as compared to $1.5 million for the comparable period of 1996. The net interest
margin reflected a favorable increase to 4.22% for the three months ended March
31, 1997 from 4.14% for the comparable period in 1996. Average interest earning
assets at March 31, 1997 increased by 3.79% over March 31, 1996.
Average loans outstanding increased from $111.0 million to $116.1 million or
4.59%, for the three months ended March 31, 1997, as compared to the three
months ended March 31, 1996. The outstanding balance of loans at March 31, 1997,
increased from $115.1 at December 31, 1996 to $116.5 at March 31, 1997. A 4.35%
increase in income on loans from $2.3 million at March 31, 1996 to $2.4 million
at March 31, 1997 was attributable to the benefit derived from adjustable rate
mortgage 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, 1997 31, 1996
-------- --------
<S> <C> <C>
Past due and non-accrual:
Days 30 - 89 ............................. $1,328 $ 949
Days 90 plus ............................. 400 329
Non-accrual .............................. 109 109
-------- --------
$1,837 $1,387
======== ========
</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 principles provided by 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, 1997 31, 1996
--------------------------------------- -------- --------
<S> <C> <C>
Fixed rate loans & leases with a remaining maturity of:
Three months or less ..................................... $ 3,179 $ 2,694
Over three months through 12 months ...................... 7,262 7,327
Over one year through five years ......................... 15,345 25,474
Over five years .......................................... 12,285 3,182
-------- --------
Total Fixed Rate Loans and Leases ................... $ 38,071 $ 38,677
-------- --------
Floating rate loans & leases with a repricing frequency of:
Quarterly or more frequently ............................. $ 22,051 $ 16,061
Annually or more frequently, but less frequently than
quarterly .............................................. 15,342 3,741
Every five years or more frequently, but less frequently
than annually .......................................... 41,350 57,455
-------- --------
Total Floating Rate Loans and Leases ................ $ 78,743 $ 77,257
-------- --------
Total Loans and Leases .............................. $116,814 $115,934
======== ========
</TABLE>
Income from investment securities reflects a 7.64% decrease comparing $532,000
for the three months ended March 31, 1997, and $576,000 for the comparable
period of 1996. The average balance of investment securities for the three
months ended March 31, 1997 decreased 8.18% to $35.9 million, compared to the
$39.1 million for the same period of 1996.
Total interest expense increased $49,000 or 3.53% for the first three months of
1997, as compared to the three months of 1996. 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. In addition
short-term borrowings, consisting mostly of repurchase agreements, increased
8.34% from $16.7 million at March 31, 1996 to $18.1 million at March 31, 1997
resulting in the related interest expense increasing by $53,000 from $165,000 at
March 31, 1996 to $218,000 at March 31, 1997.
-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 1997----------- -----------MARCH 1996------------
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 ............................... $ 4,297 $ 55 5.12% $ 2,793 $ 37 5.30%
Investment securities:
U.S. government securities ................. 24,031 366 6.09% 26,765 399 5.96%
State and municipal obligations (3) ........ 9,473 128 8.19% 8,852 118 8.08%
Other securities ........................... 2,428 38 6.26% 3,491 59 6.76%
-------- ------ ----- -------- ------ ------
Total Investment Securities .................. $ 35,932 $ 532 5.92% $ 39,108 $ 576 5.89%
Federal funds sold ........................... 3,000 37 4.93% 608 8 5.26%
Consumer ..................................... 8,787 204 9.29% 8,305 203 9.78%
Dealer floor plan ............................ 1,648 35 8.50% 0 0 .00%
Mortgage ..................................... 96,846 1,943 8.03% 94,995 1,909 8.04%
Commercial ................................... 6,498 190 11.70% 6,021 144 9.57%
Tax free (3) ................................. 2,299 35 9.23% 1,657 25 9.14%
-------- ------ ----- -------- ------ ------
Total loans .................................. $116,078 $2,407 8.29% $110,978 $2,281 8.22%
Total interest earning assets ................ 159,307 3,031 7.61% 153,487 2,902 7.56%
-------- ------ ----- -------- ------ ------
Reserve for loan losses ...................... $ (914) $ (913)
Cash and due from banks ...................... 1,108 1,603
Other assets ................................. 8,131 7,848
-------- --------
Total assets ................................. $167,632 $162,025
======== ========
LIABILITIES AND CAPITAL:
SUPER NOW deposits ........................... $ 19,216 $ 100 2.08% $ 19,267 $ 107 2.22%
IRA .......................................... 8,080 100 4.95% 8,276 103 4.98%
Money market deposits ........................ 12,901 94 2.91% 14,090 105 2.98%
Savings deposits ............................. 21,875 144 2.63% 24,835 178 2.87%
Time deposits over $100,000 .................. 12,083 175 5.79% 9,972 152 6.10%
Other time deposits .......................... 43,370 601 5.54% 40,911 568 5.55%
-------- ------ ----- -------- ------ ------
Total interest bearing deposits .............. $117,525 $1,214 4.13% $117,351 $1,213 4.13%
-------- ------ ----- -------- ------ ------
Other borrowed funds ......................... 535 7 5.23% 550 8 5.82%
Long-term borrowings ......................... 290 4 5.52% 350 9 10.29%
Repurchase agreements ........................ 16,609 211 5.08% 12,644 157 4.97%
-------- ------ ----- -------- ------ ------
Total interest bearing liabilities ........... $134,959 $1,436 4.26% $130,895 $1,387 4.24%
-------- ------ ----- -------- ------ ------
Demand deposits .............................. $ 11,197 $ 10,418
Other liabilities ............................ 1,221 1,317
Stockholders' equity ......................... 20,255 19,395
-------- --------
Total liabilities and capital ................ $167,632 $162,025
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4) .. $1,595 4.00% $1,515 3.95%
====== ===== ====== ======
TAX EQUIVALENT NET INTEREST INCOME/
NET INTEREST MARGIN (5) ..................... $1,679 4.22% $1,588 4.14%
====== ===== ====== ======
</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
1997 and 1996.
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. 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, 1997, the provision for loan losses
was $15,000, compared to the same amount for the corresponding period in 1996.
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,
------------------
1997 1996
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees ............................. $133 $119
Trust department income .............................. 21 18
Investment securities gain (loss) - net .............. 0 0
Other ................................................ 14 15
---- ----
Total ........................................... $168 $152
==== ====
</TABLE>
For the three months ended March 31, 1997, total non-interest income increased
$16,000, to $168,000, compared with $152,000 for the three months ended March
31, 1996. The reason for the improvement was due to a positive increase in
service charges and fees of $14,000 and trust income of $3,000.
-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,
------------------
1997 1996
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages ............................. $ 423 $ 412
Employee benefits .............................. 152 156
Net occupancy expense .......................... 94 95
Furniture and equipment expense ................ 103 81
FDIC insurance ................................. 5 1
State shares tax ............................... 36 32
Other expense .................................. 273 315
------ ------
Total ..................................... $1,086 $1,092
====== ======
</TABLE>
Non-interest expenses remained comparable at $1.1 million for the periods ending
March 31, 1997 and 1996. Items accounting for major increases were salaries and
wages of $412,000 in 1996 to $423,000 in 1997 and furniture and equipment
expenses of $81,000 in 1996 to $103,000 in 1997. Furniture and equipment expense
increased 27.16% over 1996 for service on equipment and depreciation on newly
acquired data processing equipment and furnishings for new offices.
Other expense, on the other hand, decreased at March 31, 1997 to $273,000 from
$315,000 at March 31, 1996. Major decreases in this category were postage
expense, which decreased $15,000 from $37,000 at March 31, 1996 to $22,000 at
March 31, 1997 and forms and supplies expense, which decreased $17,000 from
$48,000 at March 31, 1996 to $31,000 at March 31, 1997. Both of these decreases
are generally attributable to costs associated with the computer conversion.
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, 1997 DECEMBER 31, 1996
-------------- -----------------
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 22.13% 4.00% 21.74% 4.00%
Total Qualifying Capital to
risk-weighted assets ............... 23.40% 8.00% 22.70% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
MARCH DECEMBER
31, 1997 31, 1996
-------- --------
<S> <C> <C>
Tier I Capital to total assets ............. 11.49% 11.73%
Tier II Capital to total assets ............ 11.98% 12.27%
</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
Columbia County Farmers National Bank has entered into a three year agreement
with INVEST Financial Corporation to provide securities and insurance products
to customers.
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: May 7, 1997
By /s/ Virginia D. Kocher
-------------------------------
Virginia D. Kocher
Treasurer
Date: May 7, 1997
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 1996 Annual
Report and is qualified in its entirety by reference to such 10 KSB.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 11359
<SECURITIES> 37407
<RECEIVABLES> 116555
<ALLOWANCES> 911
<INVENTORY> 0
<CURRENT-ASSETS> 164410
<PP&E> 5295
<DEPRECIATION> 0
<TOTAL-ASSETS> 170086
<CURRENT-LIABILITIES> 149429
<BONDS> 0
0
0
<COMMON> 1727
<OTHER-SE> 18930
<TOTAL-LIABILITY-AND-EQUITY> 170086
<SALES> 11856
<TOTAL-REVENUES> 12606
<CGS> 5588
<TOTAL-COSTS> 5588
<OTHER-EXPENSES> 4450
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2488
<INCOME-TAX> 664
<INCOME-CONTINUING> 1824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1824
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
