<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 June 30, 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 July 30, 1997.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
JUNE 30, 1997
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>
JUNE DECEMBER
30, 1997 31, 1996
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks......................................... $ 4,468 $ 4,503
Interest-bearing deposits with other banks...................... 1,831 3,856
Federal funds sold.............................................. 2,000 3,000
Investment securities:
Securities to be held to maturity, estimated fair value of
$727 and $981............................................... 720 970
Securities available for sale carried at estimated fair value. 39,985 36,437
Loans, net of unearned income................................... 116,495 115,590
Allowance for loan losses....................................... 907 911
-------- --------
Net loans..................................................... $115,588 $114,679
Premises and equipment.......................................... 5,184 5,294
Accrued interest receivable..................................... 916 965
Other assets.................................................... 563 382
-------- --------
TOTAL ASSETS............................................... $171,255 $170,086
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing.......................................... $ 12,604 $ 12,280
Interest bearing.............................................. 116,216 119,120
-------- --------
Total Deposits............................................. $128,820 $131,400
Short-term borrowings........................................... 19,889 16,654
Long-term borrowings............................................ 250 297
Accrued interest and other expenses............................. 982 1,058
Other liabilities............................................... 63 20
-------- --------
TOTAL LIABILITIES.......................................... $150,004 $149,429
-------- --------
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; Authorized 5,000,000
shares; issued 1997 - 1,382,433 of which 1 share is in
treasury, 1996 - 1,374,159 shares............................. $ 1,728 $ 1,727
Surplus......................................................... 5,851 5,838
Retained earnings............................................... 13,671 13,023
Less treasury stock, 1 share at a cost of $20 in 1997 and
0 shares in 1996.............................................. 0 0
Allowance for unrealized gain (loss) on available-for-sale
investment securities, net of taxes .......................... 1 69
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................. $ 21,251 $ 20,657
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $171,255 $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 SIX FOR THE THREE
MONTHS ENDING MONTHS ENDING
JUNE 30, JUNE 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable....................................... $ 4,774 $ 4,505 $ 2,402 $ 2,249
Tax exempt.................................... 72 49 37 24
Interest and dividends on investment securities:
Taxable interest.............................. 844 903 455 460
Tax exempt interest........................... 250 248 122 130
Dividends..................................... 30 29 15 14
Interest on federal funds sold.................. 74 22 37 14
Interest on deposits in other banks............. 90 78 35 41
------- ------- ------- -------
TOTAL INTEREST INCOME...................... $ 6,134 $ 5,834 $ 3,103 $ 2,932
------- ------- ------- -------
INTEREST EXPENSE
Interest on deposits............................ $ 2,444 $ 2,415 $ 1,230 $ 1,202
Interest on short-term borrowings............... 463 333 245 168
Interest on long-term borrowings................ 9 14 5 5
------- ------- ------- -------
TOTAL INTEREST EXPENSE..................... $ 2,916 $ 2,762 $ 1,480 $ 1,375
------- ------- ------- -------
Net interest income............................. $ 3,218 $ 3,072 $ 1,623 $ 1,557
Provision for loan losses....................... 30 30 15 15
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES................................. $ 3,188 $ 3,042 $ 1,608 $ 1,542
------- ------- ------- -------
NON-INTEREST INCOME
Service charges and fees........................ $ 270 $ 270 $ 137 $ 151
Trust department income......................... 44 34 23 16
Other income.................................... 33 70 19 55
------- ------- ------- -------
TOTAL NON-INTEREST INCOME.................. $ 347 $ 374 $ 179 $ 222
------- ------- ------- -------
NON-INTEREST EXPENSES
Salaries and wages.............................. $ 851 $ 835 $ 428 $ 423
Pensions and other employee benefits............ 301 286 149 142
Occupancy expense, net.......................... 184 190 90 95
Furniture and equipment expense................. 209 189 106 108
Other operating expenses........................ 671 713 357 353
------- ------- ------- -------
TOTAL NON-INTEREST EXPENSES................ $ 2,216 $ 2,213 $ 1,130 $ 1,121
------- ------- ------- -------
Income before income taxes...................... $ 1,319 $ 1,203 $ 657 $ 643
Income tax expense.............................. 350 315 177 168
------- ------- ------- -------
NET INCOME.................................. $ 969 $ 888 $ 480 $ 475
======= ======= ======= =======
NET INCOME PER SHARE............................ $ .70 $ .65 $ .35 $ .35
</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 SIX MONTHS
ENDING JUNE 30,
---------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income............................................................. $ 969 $ 888
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses........................................... 30 30
Provision for depreciation and amortization......................... 183 187
Premium amortization on investment securities....................... 4 1
Discount accretion on investment securities......................... (12) (6)
Deferred income taxes (benefit)..................................... 4 22
(Gain) loss on sale of other real estate owned...................... 0 (54)
(Gain) loss on sale of premises and equipment....................... 3 0
Loss on impairment of bank premise.................................. 9 0
(Increase) decrease in accrued interest receivable and other assets. (102) (161)
Increase (decrease) in accrued interest and other expenses
and other liabilities............................................. (33) (83)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES......................... $ 1,055 $ 824
-------- --------
INVESTING ACTIVITIES
Proceeds from sales, maturities and redemptions of investment
securities available for sale........................................ $ 7,195 $ 9,564
Proceeds from maturities and redemptions of investment securities
held to maturity..................................................... 250 0
Purchase of investment securities available for sale................... (10,839) (9,313)
Net (increase) decrease in loans....................................... (939) 718
Purchases of premises and equipment.................................... (94) (411)
Proceeds from sale of other real estate owned.......................... 0 54
Proceeds from sale of premises and equipment........................... 12 0
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES............... $ (4,415) $ 612
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................................... $ (2,580) $ (949)
Net increase (decrease) in short-term borrowings....................... 3,235 2,277
Net increase (decrease) in long-term borrowings........................ (47) (31)
Proceeds from sale of stock - dividend reinvestment.................... 74 69
Treasury stock acquired and retired.................................... (61) 0
Cash dividends paid.................................................... (321) (275)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES............... $ 300 $ 1,091
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................. $ (3,060) $ 2,527
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................... 11,359 4,471
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................ $ 8,299 $ 6,998
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest............................................................. $ 2,939 $ 2,755
Income taxes......................................................... $ 414 $ 239
</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
JUNE 30, 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, 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 six month period ended June 30, 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 -
1,382,094 shares and 1996 - 1,373,498 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...................... 30
Loans charged off..................................... (60)
Recoveries............................................ 26
--------
Balance at June 30, 1997.............................. $ 907
========
</TABLE>
At June 30, 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 SIX MONTHS
-------------------------
ENDED JUNE 30, ---------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....................... $ 6,134 $ 5,834 $ 11,856 $ 11,481 $ 10,459 $ 9,914 $ 9,768
Interest expense...................... 2,916 2,762 5,588 5,557 4,785 4,634 5,053
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 3,218 3,072 6,268 5,924 5,674 5,280 4,715
Loan loss provision................... 30 30 80 42 160 105 167
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after loan loss
provision........................... 3,188 3,042 6,188 5,882 5,514 5,175 4,548
Non-interest income................... 347 374 750 678 569 568 547
Non-interest expense.................. 2,216 2,213 4,450 4,374 3,958 3,763 3,468
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes............ 1,319 1,203 2,488 2,186 2,125 1,980 1,627
Income taxes.......................... 350 315 664 561 560 497 414
Change in accounting principle........ 0 0 0 0 0 196 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............................ 969 888 1,824 1,625 1,565 1,679 1,213
========== ========== ========== ========== ========== ========== ==========
Per Share: (1)
Net income after change in accounting
principle (2)....................... $ .70 $ .65 $ 1.33 $ 1.19 $ 1.35 $ 1.51 $ 1.09
Cash dividends paid................... .232 .20 .45 .45 .42 .40 .33
Average shares outstanding............ 1,374,159 1,376,726 1,375,875 1,367,595 1,163,199 1,109,837 1,109,602
Average Balance Sheet:
Loans................................. $ 116,428 $ 110,636 $ 112,341 $ 111,980 $ 100,628 $ 88,347 $ 77,354
Investments........................... 37,743 39,854 39,248 37,063 41,410 42,083 38,534
Other earning assets.................. 6,189 3,842 2,849 1,727 2,696 3,659 1,360
Total assets.......................... 169,009 163,179 164,512 157,957 151,752 143,096 129,045
Deposits.............................. 129,371 128,661 117,414 116,495 115,071 117,105 103,500
Other interest-bearing liabilities.... 18,168 13,821 14,860 11,766 11,014 12,332 12,390
Shareholders' equity.................. 20,306 19,430 19,512 18,067 13,736 12,739 11,972
Balance Sheet Data:
Loans................................. 116,495 111,052 115,590 111,831 109,800 96,423 82,055
Investments........................... 40,705 38,419 37,407 40,384 39,323 44,542 39,448
Other earning assets.................. 3,831 3,103 6,856 385 4,174 3,491 9,885
Total assets.......................... 171,255 163,415 170,086 162,066 157,124 152,386 139,273
Deposits.............................. 128,820 128,036 131,400 128,985 126,864 124,023 113,291
Other interest-bearing liabilities.... 20,139 13,676 16,951 12,430 11,910 14,317 13,199
Shareholders' equity.................. 21,251 19,749 20,657 19,512 17,650 13,452 12,208
Ratios: (3)
Return on average assets.............. 1.15% 1.09% 1.11% 1.03% 1.03% 1.17% .94%
Return on average equity.............. 9.54% 9.14% 9.35% 8.99% 11.39% 13.18% 10.13%
Dividend payout ratio................. 32.90% 30.97% 33.95% 34.35% 36.54% 26.44% 30.17%
Average equity to average assets ratio 12.01% 11.91% 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 six month period ending June 30 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 .7% to $171.3 million at June 30, from $170.1 million at
December 31, 1996. Net income increased 9.1% through June 30, 1997 to
$969,000, or $.70 per share, compared to $888,000, or $.65 per share for the
same six month period ended June 30, 1996. Loans increased in 1997 by .78% to
$116.5 million at June 30, from $115.6 million at December 31, 1996.
Results of Operations - For the Six Months Ended June 30, 1997 and June 30,
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 six months ended June 30, 1997 was $969,000, or $.70 per
share, as compared to $888,000, or $.65 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 1.15% and 9.54%,
respectively, for the six months ended June 30, 1997, as compared to 1.09% and
9.14%, respectively, for the comparable period in 1996.
Net Interest Income
For the six months ended June 30, 1997, net interest income was $3.2 million as
compared to $3.0 million for the comparable period of 1996. The net interest
margin reflected a favorable increase to 4.22% for the six months ended June
30, 1997 from 4.18% for the comparable period in 1996. Average interest
earning assets at June 30, 1997 increased by 3.91% over June 30, 1996.
Average loans outstanding increased from $111.0 million to $116.4 million or
4.86%, for the six months ended June 30, 1997, as compared to the six months
ended June 30, 1996. The outstanding balance of loans at June 30, 1997,
increased from $115.1 million at December 31, 1996 to $116.5 million at June
30, 1997. A 4.35% increase in income on loans from $4.6 million at June 30,
1996 to $4.8 million at June 30, 1997 was attributable to the addition of two
new loan products, namely, Home Equity Line and Dealer Floor Plan representing
an increase in income on loans of $179,000 on these two loan products comparing
June 1996 to June 1997.
-8-
<PAGE> 11
Shown below is a summary of past due and non-accrual loans:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
JUNE DECEMBER
Past due and non-accrual: 30, 1997 31, 1996
-------- --------
<S> <C> <C>
Days 30 - 89......................................... $ 1,431 $ 949
Days 90 plus......................................... 489 329
Non-accrual.......................................... 108 109
-------- --------
$ 2,028 $ 1,387
======== ========
</TABLE>
Past due and non-accrual loans increased 42.86% from $1.4 million at December
31, 1996 to $2.0 million at June 30, 1997. The largest increase occurred in
real estate loans accounting for 74% of the increase. These real estate
delinquencies mainly fall into the 60 day and below category.
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 schedule of loan maturities/interest rate
sensitivities. This schedule reflects a new format effective June 30, 1997 for
reporting repricing and maturity as required by the FFIEC:
<TABLE>
<CAPTION>
IN THOUSANDS
OF DOLLARS
----------
JUNE
MATURITY AND REPRICING DATA FOR LOANS AND LEASES 30, 1997
--------
<S> <C>
Closed-end loans secured by first liens on 1-4 family residential
properties with a remaining maturity or repricing frequency of:
(1) Three months or less........................................... $ 855
(2) Over three months through 12 months............................ 7,566
(3) Over one year through three years.............................. 36,236
(4) Over three years through five years............................ 2,963
(5) Over five years through 15 years............................... 13,448
(6) Over 15 years.................................................. 159
All loans and leases other than closed-end loans secured by first
liens on 1-4 family residential properties with a remaining maturity
or repricing frequency of:
(1) Three months or less........................................... 17,742
(2) Over three months through 12 months............................ 9,525
(3) Over one year through three years.............................. 13,155
(4) Over three years through five years............................ 4,946
(5) Over five years through 15 years............................... 9,255
(6) Over 15 years.................................................. 968
--------
Sub-total....................................................... $116,818
Add nonaccrual loans not included above................................ 108
Less unearned income................................................... (431)
--------
Total Loans and Leases.......................................... $116,495
========
</TABLE>
-9-
<PAGE> 12
Income from investment securities reflects a 4.75% decrease comparing
$1,124,000 for the six months ended June 30, 1997, and $1,180,000 for the
comparable period of 1996. The average balance of investment securities for
the six months ended June 30, 1997 decreased 5.51% to $37.7 million, compared
to the $39.9 million for the same period of 1996.
Total interest expense increased $154,000 or 5.58% for the first six months of
1997, as compared to the first six 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 39.16% from $14.3 million at June 30, 1996 to $19.9 million at June
30, 1997 resulting in the related interest expense increasing by $130,000 from
$333,000 at June 30, 1996 to $463,000 at June 30, 1997.
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.
<TABLE>
<CAPTION>
Average Balance Sheet and Rate Analysis
(Dollars in Thousands)
-----------JUNE 1997---------- -----------JUNE 1996----------
--------- ---------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE(2) RATE BALANCE(1) EXPENSE(2) RATE
---------- ---------- ---- ---------- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest bearing deposits with other
financial institutions.......................... $ 3,438 $ 90 5.24% $ 2,988 $ 78 5.22%
Investment securities:
U.S. government securities...................... 25,913 796 6.14% 27,239 822 6.04%
State and municipal obligations (3)............. 9,396 251 8.09% 9,311 248 8.07%
Other securities................................ 2,434 77 6.33% 3,304 110 6.66%
-------- -------- ----- -------- -------- -----
Total Investment Securities....................... $ 37,743 $ 1,124 5.96% $ 39,854 $ 1,180 5.92%
Federal funds sold................................ 2,751 74 5.38% 854 22 5.15%
Consumer.......................................... 8,727 398 9.12% 8,307 399 9.61%
Dealer floor plan................................. 1,677 71 8.47% 0 0 0.00%
Mortgage.......................................... 97,106 3,992 8.22% 94,465 3,809 8.06%
Commercial........................................ 6,479 313 9.66% 6,200 296 9.55%
Tax free (3)...................................... 2,439 72 8.94% 1,664 50 9.10%
-------- -------- ----- -------- -------- -----
Total loans....................................... $116,428 $ 4,846 8.32% $110,636 $ 4,554 8.23%
Total interest earning assets..................... 160,360 6,134 7.65% 154,332 5,834 7.56%
-------- -------- ----- -------- -------- -----
Reserve for loan losses........................... $ (913) $ (918)
Cash and due from banks........................... 1,224 1,628
Other assets...................................... 8,338 8,137
-------- --------
Total Assets................................. $169,009 $163,179
======== ========
</TABLE>
-10-
<PAGE> 13
<TABLE>
<CAPTION>
-----------JUNE 1997---------- -----------JUNE 1996----------
--------- ---------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE(2) RATE BALANCE(1) EXPENSE(2) RATE
---------- ---------- ---- ---------- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND CAPITAL:
SUPER NOW deposits................................ $ 19,429 $ 203 2.09% $ 19,690 $ 214 2.17%
IRA............................................... 8,181 203 4.96% 8,390 209 4.98%
Money market deposits............................. 12,591 184 2.92% 14,004 205 2.93%
Savings deposits.................................. 21,812 289 2.65% 24,391 338 2.77%
Time deposits over $100,000....................... 11,737 342 5.83% 9,998 291 5.82%
Other time deposits............................... 43,882 1,223 5.57% 41,315 1,158 5.61%
-------- -------- ----- -------- -------- -----
Total interest bearing deposits................... $117,632 $ 2,444 4.16% $117,788 $ 2,415 4.10%
-------- -------- ----- -------- -------- -----
FHLB.............................................. 0 0 0.00% 0 0 0.00%
Other borrowed funds.............................. 591 15 5.08% 536 13 4.85%
Long-term borrowings.............................. 275 8 5.82% 345 14 8.12%
Repurchase agreements............................. 17,302 449 5.19% 12,940 320 4.95%
-------- -------- ----- -------- -------- -----
Total interest bearing liabilities................ $135,800 $ 2,916 4.29% $131,609 $ 2,762 4.20%
-------- -------- ----- -------- -------- -----
Demand deposits................................... $ 11,739 $ 10,873
Other liabilities................................. 1,164 1,267
Stockholders' equity.............................. 20,306 19,430
-------- --------
Total Liabilities and Capital................ $169,009 $163,179
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4)....... $ 3,218 4.01% $ 3,072 3.98%
TAX EQUIVALENT NET INTEREST INCOME/ ======== ===== ======== =====
NET INTEREST MARGIN (5).......................... $ 3,384 4.22% $ 3,225 4.18%
======== ===== ======== =====
</TABLE>
(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 six month period ending June 30, 1997, the provision for loan losses
was $30,000, compared to the same amount for the corresponding period in 1996.
-11-
<PAGE> 14
Non-Interest Income
The following table sets forth, for the periods indicated, the major components
of non-interest income:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------
1997 1996
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees.................................. $ 270 $ 270
Trust department income................................... 44 34
Investment securities gain (loss) - net................... 0 0
Other..................................................... 33 70
-------- --------
Total................................................ $ 347 $ 374
======== ========
</TABLE>
For the six months ended June 30, 1997, total non-interest income decreased
$27,000, to $347,000, compared with $374,000 for the six months ended June 30,
1996. During the first six months of 1996 $54,000 was realized as a gain on
the sale of other real estate owned. Without this gain non-interest income
would show an increase of $27,000 from $320,000 (exclusive of the $54,000 gain
on OREO) at June 30, 1996 compared to $347,000 at June 30, 1997 or 8.44%. Both
trust income and other fees reflect an increase for this time period.
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>
SIX MONTHS ENDED
JUNE 30,
--------
1997 1996
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages....................................... $ 851 $ 835
Employee benefits........................................ 301 286
Net occupancy expense.................................... 184 190
Furniture and equipment expense.......................... 209 189
Other expense............................................ 671 713
-------- --------
Total............................................... $ 2,216 $ 2,213
======== ========
</TABLE>
Non-interest expenses remained comparable at $2.2 million for the periods
ending June 30, 1997 and 1996. Items accounting for major increases were
salaries, wages and related benefits of $1,121,000 in 1996 to $1,152,000 in
1997 and service on equipment of $40,000 at June 30, 1996 to $67,000 at June
30, 1997.
Other expenses, on the other hand, decreased at June 30, 1997 to $671,000 from
$713,000 at June 30, 1996. The major decrease was stationery and supplies
expense which decreased $31,000 from $68,000 at June 30, 1996 to $99,000 at
June 30, 1997.
-12-
<PAGE> 15
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.
The Company exceeds all minimum capital requirements as reflected in the
following table:
<TABLE>
<CAPTION>
JUNE 30, 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.. 20.56% 4.00% 21.74% 4.00%
Total Qualifying Capital to
risk-weighted assets.................. 21.43% 8.00% 22.70% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
JUNE DECEMBER
30, 1997 31, 1996
-------- --------
<S> <C> <C>
Tier I Capital to total assets.............................. 12.41% 11.73%
Tier II Capital to total assets............................. 12.94% 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
During the second quarter 1997 the Company amended its dividend reinvestment
and stock purchase plan. The change in the plan allows the Company, in its
sole discretion, to direct the purchase of authorized but unissued or treasury
shares of common stock directly from the Company or direct the purchase of
shares in market transactions. The entire amendment was filed with the SEC via
EDGAR during the second quarter of 1997.
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: August 5, 1997
By /s/ Virginia D. Kocher
-------------------------------
Virginia D. Kocher
Treasurer
Date: August 5, 1997
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 10,004
<SECURITIES> 36,820
<RECEIVABLES> 118,074
<ALLOWANCES> 913
<INVENTORY> 0
<CURRENT-ASSETS> 163,985
<PP&E> 5,220
<DEPRECIATION> 0
<TOTAL-ASSETS> 169,205
<CURRENT-LIABILITIES> 148,406
<BONDS> 0
0
0
<COMMON> 1,728
<OTHER-SE> 19,071
<TOTAL-LIABILITY-AND-EQUITY> 169,205
<SALES> 3,031
<TOTAL-REVENUES> 3,199
<CGS> 1,214
<TOTAL-COSTS> 1,214
<OTHER-EXPENSES> 1,086
<LOSS-PROVISION> 15
<INTEREST-EXPENSE> 222
<INCOME-PRETAX> 662
<INCOME-TAX> 173
<INCOME-CONTINUING> 489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 489
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
