<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2000
[ ] 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: (570) 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. 1,346,450 shares of $1.25
(par) common stock were outstanding as of October 27, 2000.
<PAGE> 2
CCFNB BANCORP, INC. AND SUBSIDIARY
SEPTEMBER 30, 2000
INDEX 10-Q
<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 - 10
- Report of Independent Certified Public Accountants 11
- Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations 12 - 18
PART II - OTHER INFORMATION 19
SIGNATURES 20
</TABLE>
<PAGE> 3
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 2000 31, 1999
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks ............................................. $ 5,708 $ 5,855
Interest-bearing deposits with other banks .......................... 5,276 217
Federal funds sold .................................................. 2,000 0
Investment securities:
Securities Available-for-Sale ..................................... 46,068 48,904
Securities to be Held-to-Maturity (estimated
fair value 1999, $200) .......................................... 0 200
Loans, net of unearned income ....................................... 134,701 134,423
Allowance for loan losses ........................................... 1,005 985
--------- ---------
Net loans ......................................................... $ 133,696 $ 133,438
Premises and equipment .............................................. 5,020 5,274
Accrued interest receivable ......................................... 1,021 1,002
Other assets ........................................................ 1,127 1,232
--------- ---------
TOTAL ASSETS ................................................... $ 199,916 $ 196,122
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing .............................................. $ 15,229 $ 13,672
Interest bearing .................................................. 123,845 124,934
--------- ---------
Total Deposits ................................................. $ 139,074 $ 138,606
Short-term borrowings ............................................... 22,181 30,881
Long-term borrowings ................................................ 13,337 2,343
Accrued interest and other expenses ................................. 1,192 1,231
Other liabilities ................................................... 21 14
--------- ---------
TOTAL LIABILITIES .............................................. $ 175,805 $ 173,075
========= =========
STOCKHOLDERS' EQUITY
Common stock, par value $1.25 per share; authorized 5,000,000 shares;
issued 1,348,450 shares in 2000 and
1,367,651 shares in 1999 .......................................... $ 1,686 $ 1,710
Surplus ............................................................. 5,179 5,483
Retained earnings ................................................... 17,930 17,014
Accumulated other comprehensive income (loss) ....................... (684) (1,160)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ..................................... $ 24,111 $ 23,047
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................... $ 199,916 $ 196,122
========= =========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-1-
<PAGE> 4
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE FOR THE THREE
MONTHS ENDING MONTHS ENDING
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans:
Taxable ...................................................... $ 7,840 $ 7,060 $ 2,666 $ 2,422
Tax-exempt ................................................... 97 90 34 30
Interest and dividends on investment securities:
Taxable interest ............................................. 1,461 1,508 470 527
Tax-exempt interest .......................................... 544 507 181 173
Dividends .................................................... 64 60 22 21
Interest on federal funds sold ................................. 0 39 0 9
Interest on deposits in other banks ............................ 23 129 15 16
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME ..................................... $ 10,029 $ 9,393 $ 3,388 $ 3,198
---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits ........................................... $ 3,806 $ 3,707 $ 1,289 $ 1,241
Interest on short-term borrowings .............................. 839 700 262 235
Interest on long-term borrowings ............................... 366 97 161 33
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE .................................... $ 5,011 $ 4,504 $ 1,712 $ 1,509
---------- ---------- ---------- ----------
Net interest income ............................................ $ 5,018 $ 4,889 $ 1,676 $ 1,689
Provision for loan losses ...................................... 47 59 8 20
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES .................................................. $ 4,971 $ 4,830 $ 1,668 $ 1,669
---------- ---------- ---------- ----------
NON-INTEREST INCOME
Service charges and fees ....................................... $ 447 $ 454 $ 152 $ 156
Trust department income ........................................ 121 129 39 44
Securities gains - net ......................................... 0 39 0 8
Other income ................................................... 182 162 59 53
---------- ---------- ---------- ----------
TOTAL NON-INTEREST INCOME ................................. $ 750 $ 784 $ 250 $ 261
---------- ---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages ............................................. $ 1,513 $ 1,415 $ 501 $ 478
Pensions and other employee benefits ........................... 486 471 156 155
Occupancy expense, net ......................................... 249 259 79 90
Furniture and equipment expense ................................ 466 450 154 157
Other operating expenses ....................................... 1,049 1,026 337 336
---------- ---------- ---------- ----------
TOTAL NON-INTEREST EXPENSES ............................... $ 3,763 $ 3,621 $ 1,227 $ 1,216
---------- ---------- ---------- ----------
Income before income taxes ..................................... $ 1,958 $ 1,993 $ 691 $ 714
Income tax expense ............................................. 473 503 167 183
---------- ---------- ---------- ----------
NET INCOME ................................................. $ 1,485 $ 1,490 $ 524 $ 531
========== ========== ========== ==========
PER SHARE DATA
Net income ..................................................... $ 1.09 $ 1.08 $ .39 $ .39
Cash dividends ................................................. .42 .38 .14 .13
Weighted average shares outstanding ............................ 1,358,633 1,377,041 1,358,633 1,377,041
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-2-
<PAGE> 5
CCFNB BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDING SEPTEMBER 30,
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ................................................................................... $ 1,485 $ 1,490
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses ................................................................. 47 59
Provision for depreciation and amortization ............................................... 400 398
Premium amortization on investment securities ............................................. 27 62
Discount accretion on investment securities ............................................... (13) (18)
(Gain) on sales of investment securities Available-for-Sale ............................... 0 (39)
Deferred income taxes (benefit) ........................................................... (10) 21
(Gain) on sale of other real estate ....................................................... 0 (2)
(Increase) in accrued interest receivable and other assets ................................ (146) (308)
(Decrease) in accrued interest, other expenses and other
liabilities ............................................................................. (32) (53)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................... $ 1,758 $ 1,610
-------- --------
INVESTING ACTIVITIES
Proceeds from sales, maturities and redemptions of investment
securities Available-for-Sale .............................................................. $ 3,540 $ 11,195
Proceeds from maturities and redemptions of Held-to-Maturity
investment securities ...................................................................... 200 365
Purchase of investment securities Available-for-Sale ......................................... 0 (15,647)
Net (increase) in loans ...................................................................... (305) (6,027)
Purchases of premises and equipment .......................................................... (146) (80)
Proceeds from sale of other real estate ...................................................... 0 26
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ..................................... $ 3,289 $(10,168)
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in deposits .......................................................... $ 468 $ (521)
Net increase (decrease) in short-term borrowings ............................................. (8,700) 1,059
Net increase in long-term borrowings ......................................................... 10,994 55
Proceeds from issuance of common stock ....................................................... 117 109
Acquisition of treasury stock ................................................................ (445) (37)
Proceeds from sale of treasury stock ......................................................... 0 13
Cash dividends paid .......................................................................... (569) (518)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES ............................................... $ 1,865 $ 160
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........................................ $ 6,912 $ (8,398)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................................. 6,072 12,486
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................................. $ 12,984 $ 4,088
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest ................................................................................... $ 5,028 $ 4,513
Income taxes ............................................................................... $ 516 $ 514
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-3-
<PAGE> 6
CCFNB BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of CCFNB Bancorp, Inc. and
Subsidiary (the "Corporation") are in accordance with generally
accepted accounting principles and conform to common practices within
the banking industry. The more significant policies follow:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of CCFNB
Bancorp, Inc. and its wholly owned subsidiary, Columbia County Farmers
National Bank (the "Bank"). All significant inter-company balances and
transactions have been eliminated in consolidation.
NATURE OF OPERATIONS & LINES OF BUSINESS
The Corporation provides full banking services, including trust
services, through the Bank, to individuals and corporate customers.
The Bank has six offices covering an area of approximately 484 square
miles in Northeastern Pennsylvania. The Corporation and its banking
subsidiary are subject to regulation of the Office of the Comptroller
of the Currency, the Federal Deposit Insurance Corporation and the
Federal Reserve Bank of Philadelphia.
Gathering deposits and making loans are the major lines of business.
The deposits are mainly deposits of individuals and small businesses
and the loans are mainly real estate loans covering primary residences
and small business enterprises. The trust services, under the name of
CCFNB and Co., include administration of various estates, pension
plans, self-directed IRA's and other services. A third-party brokerage
arrangement, Invest, is also resident in the main branch, namely
Bloomsburg. This Invest Financial Service offers a full line of
stocks, bonds and other non-insured financial services.
USE OF ESTIMATES
The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of these consolidated financial statements
and the reported amounts of income and expenses during the reporting
periods. Actual results could differ from those estimates.
INVESTMENT SECURITIES
The Corporation classifies its investment securities as either
"Held-to-Maturity" or "Available-for-Sale" at the time of purchase.
Debt securities are classified as Held-to-Maturity when the
Corporation has the ability and positive intent to hold the securities
to maturity. Investment securities Held-to-Maturity are carried at
cost adjusted for amortization of premiums and accretion of discounts
to maturity.
-4-
<PAGE> 7
Debt securities not classified as Held-to-Maturity and equity
securities included in the Available-for-Sale category, are carried at
fair value, and the amount of any unrealized gain or loss net of the
effect of deferred income taxes is reported as a component of
Stockholders' Equity. Management's decision to sell Available-for-Sale
securities is based on changes in economic conditions controlling the
sources and uses of funds, terms, availability of and yield of
alternative investments, interest rate risk, and the need for
liquidity.
The cost of debt securities classified as Held-to-Maturity or
Available-for-Sale is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization and accretion,
as well as interest and dividends, is included in interest income from
investments. Realized gains and losses are included in net investment
securities gains. The cost of investment securities sold, redeemed or
matured is based on the specific identification method.
LOANS
Loans are stated at their outstanding principal balances, net of
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.
NON-ACCRUAL LOANS - Generally, a loan is classified as non-accrual,
with the accrual of interest on such a loan 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. Certain
non-accrual loans may continue to perform, that is, payments are still
being received with those payments generally applied to principal.
Non-accrual 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.
A factor in estimating the allowance for loan losses is the
measurement of impaired loans. A loan is considered impaired when,
based on current information and events, it is probable that the
Corporation will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Under current accounting
standards, the allowance for loan losses related to impaired loans is
based on discounted cash flows using the loan's effective interest
rate or the fair value of the collateral for certain collateral
dependent loans.
-5-
<PAGE> 8
The allowance for loan losses is maintained at a level established 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.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated
depreciation computed principally on the straight-line method over the
estimated useful lives of the assets. Maintenance and minor repairs
are charged to operations as incurred. The cost and accumulated
depreciation of the premises and equipment retired or sold are
eliminated from the property accounts at the time of retirement or
sale, and the resulting gain or loss is reflected in current
operations.
OTHER REAL ESTATE OWNED
Other real estate owned is comprised of property acquired through a
foreclosure proceeding or acceptance of a deed-in-lieu of foreclosure
and loans classified as in-substance foreclosure. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 114, a loan is
classified as in-substance foreclosure when the Corporation has taken
possession of the collateral regardless of whether formal foreclosure
proceedings take place. Other real estate owned is recorded at fair
value at the date of foreclosure, establishing a new cost basis. After
foreclosure, valuations are periodically performed by management, and
the real estate is carried at the lower of (1) cost or (2) fair value
minus estimated costs to sell. Income and expenses from operations of
other real estate owned and changes in the valuation allowance are
included in loss on other real estate owned.
INCOME TAXES
The provision for income taxes is based on the results of operations,
adjusted primarily for tax-exempt income. Certain items of income and
expense are reported in different periods for financial reporting and
tax return purposes. Deferred tax assets and liabilities are
determined based on the differences between the consolidated financial
statement and income tax bases of assets and liabilities measured by
using the enacted tax rates and laws expected to be in effect when the
timing differences are expected to reverse. Deferred tax expense or
benefit is based on the difference between deferred tax asset or
liability from period to period.
PER SHARE DATA
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share", requires dual presentation of basic and diluted earnings
per share. Basic earnings per share is calculated by dividing net
income by the weighted average number of shares of common stock
outstanding at the end of each period. Diluted earnings per share is
calculated by increasing the denominator for the assumed conversion of
all potentially dilutive securities. The Corporation does not have any
securities which have or will have a dilutive effect, accordingly,
basic and diluted per share data is the same.
-6-
<PAGE> 9
CASH FLOW INFORMATION
For purposes of reporting consolidated cash flows, cash and cash
equivalents include cash on hand and due from banks, interest-bearing
deposits in other banks and federal funds sold. The Corporation
considers cash classified as interest-bearing deposits with other
banks as a cash equivalent because they are represented by cash
accounts essentially on a demand basis. Federal funds are also
included as a cash equivalent because they are generally purchased and
sold for one-day periods.
TRUST ASSETS AND INCOME
Property held by the Corporation in a fiduciary or agency capacity for
its customers is not included in the accompanying consolidated
financial statements because such items are not assets of the
Corporation. Trust Department income is recognized on a cash basis and
is not materially different than if it was reported on an accrual
basis.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 133 (as amended
by SFAS No. 137), "Accounting for Derivative Instruments and Hedging
Activities", becomes effective for financial reporting periods
beginning after June 15, 2000. SFAS No. 133 requires fair value
accounting for all stand-alone derivatives and many derivatives
embedded in other instruments and contracts. Since the Corporation
does not enter into transactions involving derivatives described in
the standard and does not engage in hedging activities, the standard
is not expected to have a significant impact on the Corporation's
consolidated financial condition or results of operations.
NOTE 2 - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the periods ended
September 30, 2000 and September 30, 1999 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
----------------------
2000 1999
-------- --------
<S> <C> <C>
Balance, beginning of year......................... $ 985 $ 954
Provision charged to operations.................... 47 59
Loans charged-off.................................. (68) (62)
Recoveries......................................... 41 29
-------- --------
Balance, September 30.............................. $ 1,005 $ 980
======== ========
</TABLE>
At September 30, 2000 the recorded investment in loans that are
considered to be impaired as defined by SFAS No. 114 was $384,005. No
additional charge to operations was required to provide for the
impaired loans since the total allowance for loan losses is estimated
by management to be adequate to provide for the loan loss allowance
required by SFAS No. 114 along with any other potential losses.
At September 30, 2000, there were no significant commitments to lend
additional funds with respect to non-accrual and restructured loans.
-7-
<PAGE> 10
NOTE 3 - SHORT-TERM BORROWINGS
Federal funds purchased, securities sold under agreements to
repurchase, and Federal Home Loan Bank advances generally represented
overnight or less than 30-day borrowings. U.S. Treasury tax and loan
notes for collections made by the Bank were payable on demand.
NOTE 4 - LONG-TERM BORROWINGS
Long-term borrowings are comprised of advances from the Federal Home
Loan Bank.
NOTE 5 - STOCKHOLDERS' EQUITY
Changes in stockholders' equity for the period ended September 30,
2000 were as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS, EXCEPT COMMON SHARE DATA)
ACCUMULATED
OTHER
COMPREHENSIVE COMPREHENSIVE
COMMON COMMON INCOME RETAINED INCOME
SHARES STOCK SURPLUS (LOSS) EARNINGS (LOSS)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 ........ 1,367,651 $ 1,710 $ 5,483 $ 0 $ 17,014 $ (1,160)
Comprehensive Income:
Net income ....................... 0 0 0 1,485 1,485 0
Change in unrealized gain (loss)
on investment securities
available-for-sale net of
reclassification adjustment
and tax effects ................. 0 0 0 476 0 476
-----
TOTAL COMPREHENSIVE INCOME $ 1,961
=====
Issuance of 6,899 shares of common
stock under dividend reinvestment
and stock purchase plans ........ 6,899 8 109 0 0
Purchase of 26,100 shares of
treasury stock .................. 0 0 0 0 0
Retirement of 26,100 shares of
treasury stock .................. (26,100) (32) (413) 0 0
Cash dividends $.42 per share ..... 0 0 0 (569) 0
--------- ---------- ---------- ---------- ----------
Balance at September 30, 2000 ..... 1,348,450 $ 1,686 $ 5,179 $ 17,930 $ (684)
========= ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
TREASURY
STOCK TOTAL
<S> <C> <C>
Balance at January 1, 2000 ........ $ 0 $ 23,047
Comprehensive Income:
Net income ....................... 0 1,485
Change in unrealized gain (loss)
on investment securities
available-for-sale net of
reclassification adjustment
and tax effects ................. 0 476
TOTAL COMPREHENSIVE INCOME
Issuance of 6,899 shares of common
stock under dividend reinvestment
and stock purchase plans ........ 0 117
Purchase of 26,100 shares of
treasury stock .................. (445) (445)
Retirement of 26,100 shares of
treasury stock .................. 445 0
Cash dividends $.42 per share ..... 0 (569)
---------- ----------
Balance at September 30, 2000 ..... $ 0 $ 24,111
========== ==========
</TABLE>
-8-
<PAGE> 11
NOTE 6 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF
CREDIT RISK
The Corporation is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit, standby letters of credit and commercial
letters of credit. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. The contract or
notional amounts of those instruments reflect the extent of
involvement the Corporation has in particular classes of financial
instruments. The Corporation does not engage in trading activities
with respect to any of its financial instruments with off-balance
sheet risk.
The Corporation may require collateral or other security to support
financial instruments with off-balance sheet credit risk. The contract
or notional amounts at September 30, 2000 and December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
----------------------
SEPTEMBER DECEMBER
30, 2000 31, 1999
-------- --------
<S> <C> <C>
FINANCIAL INSTRUMENTS WHOSE CONTRACT AMOUNTS REPRESENT
CREDIT RISK:
Commitments to extend credit........................ $ 11,694 $ 10,342
Financial standby letters of credit................. 615 639
Performance standby letters of credit............... 18 11
Dealer floor plans.................................. 1,612 991
</TABLE>
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Because many of
the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Corporation upon extension of
credit, is based on management's credit evaluation of the
counter-party. Collateral held varies but may include accounts
receivable, inventory, property, plant, equipment and income-producing
commercial properties.
Standby letters of credit and commercial letters of credit are
conditional commitments issued by the Corporation to guarantee the
performance of a customer to a third party. The credit risk involved
in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Corporation holds
collateral supporting those commitments for which collateral is deemed
necessary.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and letters of credit is represented by
the contractual notional amount of those instruments. The Corporation
uses the same credit policies in making commitments and conditional
obligations, as it does for on-balance sheet instruments.
-9-
<PAGE> 12
The Corporation granted commercial, consumer and residential loans to
customers within Pennsylvania. Of the total loan portfolio at
September 30, 2000, 77.3% was for real estate loans, principally
residential. It was the opinion of management that the high
concentration did not pose an adverse credit risk. Further, it was
management's opinion that the remainder of the loan portfolio was
balanced and diversified to the extent necessary to avoid any
significant concentration of credit.
NOTE 7 - MANAGEMENT'S ASSERTIONS AND COMMENTS REQUIRED TO BE PROVIDED WITH FORM
10Q FILING
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.
The results of operations for the nine-month period ended September
30, 2000 are not necessarily indicative of the results to be expected
for the full year.
These consolidated interim financial statements have been prepared in
accordance with requirements of Form 10Q and therefore do not include
all disclosures normally required by generally accepted accounting
principles applicable to financial institutions as included with
consolidated financial statements included in the Corporation's annual
Form 10K filing. The reader of these consolidated interim financial
statements may wish to refer to the Corporation's annual report or
Form 10K for the period ended December 31, 1999, filed with the
Securities and Exchange Commission.
NOTE 8 - AMENDMENT OF RULE 10-01 OF REGULATION S-X REQUIRING REVIEWED QUARTERLY
FINANCIAL STATEMENTS
In accordance with the new amendment effective for the period ended
September 30, 2000 the accompanying consolidated financial statements
have been reviewed by Independent Certified Public Accountants whose
report is being submitted as an integral part of this Form 10Q filing.
-10-
<PAGE> 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders of CCFNB Bancorp, Inc.:
We have reviewed the accompanying consolidated balance sheet of CCFNB Bancorp,
Inc. and Subsidiary as of September 30, 2000, and the related consolidated
statements of income and cash flows for the three and nine-month periods then
ended. These consolidated financial statements are the responsibility of the
management of CCFNB Bancorp, Inc. and Subsidiary.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the September 30, 2000 financial statements for them to be in
conformity with generally accepted accounting principles.
The accompanying balance sheet of CCFNB Bancorp, Inc. and Subsidiary for the
year ended December 31, 1999, was audited by us as part of our audit of the
financial statements for the year ended December 31, 1999 taken as a whole and
we expressed an unqualified opinion on them in our report dated January 18,
2000, but we have not performed any auditing procedures since that date.
The accompanying statements of income and cash flows of CCFNB Bancorp, Inc. and
Subsidiary for the three and nine-month periods ended September 30, 1999 were
not audited by us and, accordingly, we do not express an opinion on them.
/s/ J.H. Williams & Co., LLP
J.H. Williams & Co., LLP
Kingston, Pennsylvania
October 17, 2000
-11-
<PAGE> 14
CCFNB BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consolidated Summary of Operations
(Dollars in Thousands, except for per share data)
<TABLE>
<CAPTION>
AT AND FOR THE NINE MONTHS
--------------------------
ENDED SEPTEMBER 30, AT AND FOR THE YEARS ENDED DECEMBER 31,
------------------- ---------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income and Expense:
Interest income ...................... $ 10,029 $ 9,393 $ 12,669 $ 12,444 $ 12,498 $ 11,844 $ 11,466
Interest expense ..................... 5,011 4,504 6,099 6,072 5,976 5,588 5,557
--------- --------- --------- --------- --------- --------- ---------
Net interest income .................. 5,018 4,889 $ 6,570 $ 6,372 6,522 6,256 5,909
Loan loss provision .................. 47 59 78 78 60 80 42
--------- --------- --------- --------- --------- --------- ---------
Net interest income after loan loss
provision .......................... 4,971 4,830 6,492 6,294 6,462 6,176 5,867
Non-interest income .................. 750 784 1,050 981 804 762 693
Non-interest expense ................. 3,763 3,621 4,818 4,739 4,492 4,450 4,374
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes ........... 1,958 1,993 2,724 2,536 2,774 2,488 2,186
Income taxes ......................... 473 503 685 634 749 664 561
--------- --------- --------- --------- --------- --------- ---------
Net income ........................... 1,485 1,490 2,039 1,902 2,025 1,824 1,625
========= ========= ========= ========= ========= ========= =========
Per Share: (1)
Net income ........................... $ 1.09 $ 1.08 $ 1.48 $ 1.38 $ 1.47 $ 1.33 $ 1.19
Cash dividends paid .................. .42 .376 .51 .46 .46 .45 .45
Average shares outstanding ........... 1,358,633 1,377,041 1,375,572 1,378,339 1,381,800 1,375,875 1,367,595
Average Balance Sheet:
Loans ................................ $ 133,350 $ 120,883 $ 123,185 $ 116,490 $ 116,771 $ 112,341 $ 111,980
Investments .......................... 47,164 50,093 49,827 45,878 40,307 39,248 37,063
Other earning assets ................. 482 3,596 2,739 4,952 5,053 3,739 1,727
Total assets ......................... 191,531 185,509 186,597 177,643 171,159 164,512 157,957
Deposits ............................. 138,766 138,796 138,963 131,366 117,086 117,414 116,495
Other interest-bearing liabilities ... 28,591 22,219 22,874 22,660 20,198 14,860 11,766
Stockholders' equity ................. 22,925 23,177 22,874 22,264 20,690 19,512 18,067
Balance Sheet Data:
Loans ................................ 134,701 124,484 134,423 118,558 119,045 115,590 111,831
Investments .......................... 46,068 50,188 49,104 48,151 43,862 37,407 40,384
Other earning assets ................. 7,276 215 217 6,105 582 6,856 385
Total assets ......................... 199,916 185,325 196,122 185,258 173,866 170,086 162,066
Deposits ............................. 139,074 137,158 138,606 137,679 127,719 131,400 128,985
Other interest-bearing liabilities ... 35,518 23,823 33,224 22,709 22,802 16,951 12,430
Stockholders' equity ................. 24,111 23,188 23,047 23,480 22,105 20,657 19,512
Ratios: (2)
Return on average assets ............. 1.03% 1.07% 1.09% 1.07% 1.18% 1.11% 1.03%
Return on average equity ............. 8.64% 8.57% 8.91% 8.54% 9.79% 9.35% 8.99%
Dividend payout ratio ................ 38.33% 34.77% 33.59% 33.59% 31.65% 33.95% 34.35%
Average equity to average assets ratio 11.97% 12.49% 11.75% 12.53% 12.71% 11.86% 11.44%
</TABLE>
(1) Per share data has been calculated on the weighted average number of shares
outstanding.
(2) The ratios for the nine month period ending September 30, 2000 are
annualized.
-12-
<PAGE> 15
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 1.9% to $199.9 at September 30, 2000 from $196.1 at
December 31, 1999. Net income decreased .3% through September 30, 2000 to
$1,485,000 or $1.09 per share, compared to $1,490,000 or $1.08 per share for the
same nine month period ended September 30, 1999. Loans increased in 2000 by .2%
to $134.7 million at September 30, 2000 from $134.4 million at December 31,
1999.
Results of Operations - For the Nine Months Ended September 30, 2000 and
September 30, 1999.
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 nine months ended September 30, was $1,485,000 or $1.09 per
share, as compared to $1,490,000 or $1.08 per share, for the comparable period
in 1999. Interest income increased $636,000, interest expense increased
$507,000, non-interest income increased $5,000, non-interest expense increased
$100,000 and a $39,000 gain on sale of securities in 1999 with no security gain
in 2000 were the contributing factors for the $5,000 decrease in net income
comparing September 30, 1999 to September 30, 2000.
Return on average assets and return on average equity were 1.03% and 8.64%,
respectively, for the nine months ended September 30, 2000, as compared to 1.07%
and 8.57%, respectively for the comparable period in 1999.
Net Interest Income
For the nine months ended September 30, 1999 and 2000, net interest income was
$4.9 and $5.0 million respectively. The net interest margin was 3.94% for the
nine months ended September 30, 2000 and September 30, 1999. Average interest
earning assets at September 30, 2000 increased by 3.0% over September 30, 1999
to $181.0 million from $175.7 million.
Average loans outstanding increased from $120.9 million to $133.4 million or
10.3% for the nine months ended September 30, 1999, as compared to the nine
months ended September 30, 2000. The outstanding balance of loans at September
30, 2000 increased from $134.4 million at December 31, 1999 to $134.7 million at
September 30, 2000.
-13-
<PAGE> 16
Shown below is a summary of past due and non-accrual loans:
<TABLE>
<CAPTION>
IN THOUSANDS OF DOLLARS
-----------------------
SEPTEMBER DECEMBER
30, 2000 31, 1999
------------ ---------
<S> <C> <C>
Past due and non-accrual:
Days 30 - 89......................................... $ 2,016 $ 665
Days 90 plus......................................... 272 173
Non-accrual.......................................... 418 199
-------- --------
$ 2,706 $ 1,037
======== ========
</TABLE>
Past due and non-accrual loans increased to $2.7 million at September 30, 2000
from $1.0 million at December 31, 1999. The major portion of increase is due to
four commercial loans 30-45 days past due totalling $1.3 million. The balance of
the increase is due to nonperforming secured residential mortgages.
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 2 above for other details.
The following analysis provides a schedule of loan maturities/interest rate
sensitivities. This schedule presents a repricing and maturity analysis as
required by the FFIEC:
<TABLE>
<CAPTION>
IN THOUSANDS
OF DOLLARS
----------
SEPTEMBER
MATURITY AND REPRICING DATA FOR LOANS AND LEASES 30, 2000
----------
<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........................................... $ 2,341
(2) Over three months through 12 months............................ 11,498
(3) Over one year through three years.............................. 32,103
(4) Over three years through five years............................ 3,076
(5) Over five years through 15 years............................... 8,745
(6) Over 15 years.................................................. 2,121
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........................................... 16,566
(2) Over three months through 12 months............................ 14,815
(3) Over one year through three years.............................. 15,148
(4) Over three years through five years............................ 9,355
(5) Over five years through 15 years............................... 14,348
(6) Over 15 years.................................................. 4,720
--------
Sub-total....................................................... $134,836
Add: non-accrual loans not included above............................. 418
Less: unearned income................................................. (553)
--------
Total Loans and Leases.......................................... $134,701
========
</TABLE>
-14-
<PAGE> 17
Interest income from investment securities reflects a .3% decrease comparing
$2,069,000 for the nine months ended September 30, 2000, and the $2,075,000 for
the comparable period of 1999. The average balance of investment securities for
the nine months ended September 30, 2000 decreased 5.8% to $47.2 million,
compared to the $50.1 million for the same period of 1999.
Total interest expense increased $507,000 or 11.3% for the first nine months of
2000, as compared to the first nine months of 1999.
Average short term borrowings increased from $19.9 million at September 30, 1999
to $20.5 million at September 30, 2000. This 3.0% increase reflects a decrease
in depositor repurchase agreements from an average $19.4 million at September
30, 1999 to $15.6 million at September 30, 2000. Conversely, short term
borrowings from Federal Home Loan Bank averaged $34,000 at September 30, 1999
and $4.4 million at September 30, 2000.
Long term borrowings from Federal Home Loan Bank also increased from an average
$2.3 million at September 30, 1999 to $8.1 million at September 30, 2000.
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>
SEPTEMBER 2000 SEPTEMBER 1999
---------------------------------- ---------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE(1) EXPENSE(2) RATE BALANCE(1) EXPENSE(2) RATE
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits with other financial
institutions ........................................ $ 467 $ 23 6.57% $ 3,596 $ 129 4.78%
Investment securities:
U.S. government securities .......................... 31,507 1,461 6.18% 34,528 1,508 5.82%
State and municipal obligations (3) ................. 14,516 544 7.57% 14,183 507 7.22%
Other securities .................................... 1,141 64 7.48% 1,382 60 5.79%
--------- --------- ---- --------- --------- ----
Total Investment Securities ........................... $ 47,164 $ 2,069 5.85% $ 50,093 $ 2,075 5.52%
Federal funds sold .................................... 15 0 .00% 1,103 39 4.71%
Consumer .............................................. 12,538 760 8.08% 10,316 640 8.27%
Dealer floor plan ..................................... 5,429 353 8.67% 2,572 153 7.93%
Mortgage .............................................. 103,452 6,038 7.78% 98,226 5,767 7.83%
Commercial ............................................ 9,462 689 9.71% 7,492 500 8.90%
Tax free (3) .......................................... 2,469 97 7.94% 2,277 90 7.98%
--------- --------- ---- --------- --------- ----
Total loans ........................................... $ 133,350 $ 7,937 7.94% $ 120,883 $ 7,150 7.89%
Total interest earning assets ......................... 180,996 10,029 7.39% 175,675 9,393 7.13%
--------- --------- ---- --------- --------- ----
Reserve for loan losses ............................... $ (1,020) $ (986)
Cash and due from banks ............................... 2,040 1,683
Other assets .......................................... 9,515 9,137
--------- ---------
Total assets .......................................... $ 191,531 $ 185,509
========= =========
</TABLE>
-15-
<PAGE> 18
<TABLE>
<CAPTION>
SEPTEMBER 2000 SEPTEMBER 1999
------------------------------------ ----------------------------------
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 ................................... $ 21,654 $ 209 1.29% $ 21,867 $ 221 1.35%
IRA's under $100,000 ................................. 8,209 323 5.25% 8,335 308 4.93%
Money market deposits ................................ 9,579 196 2.73% 11,018 228 2.76%
Savings deposits ..................................... 21,659 416 2.56% 21,901 418 2.54%
Time deposits including IRA's over $100,000 .......... 16,427 747 6.06% 13,631 587 5.74%
Other time deposits under $100,000 ................... 47,689 1,915 5.35% 48,879 1,945 5.31%
-------- -------- ---- -------- -------- ----
Total interest-bearing deposits ...................... $125,217 $ 3,806 4.05% $125,631 $ 3,707 3.93%
-------- -------- ---- -------- -------- ----
U.S. treasury short-term borrowings .................. 464 21 6.03% 447 15 4.47%
Short-term borrowings - other ........................ 4,400 202 6.12% 34 2 7.84%
Long-term borrowings ................................. 8,114 366 6.01% 2,315 97 5.59%
Repurchase agreements ................................ 15,613 616 5.26% 19,423 683 4.69%
-------- -------- ---- -------- -------- ----
Total interest-bearing liabilities ................... $153,808 $ 5,011 4.34% $147,850 $ 4,504 4.06%
-------- -------- ---- -------- -------- ----
Demand deposits ...................................... $ 13,549 $ 13,165
Other liabilities .................................... 1,249 1,317
Stockholders' equity ................................. 22,925 23,177
-------- --------
Total liabilities and capital ........................ $191,531 $185,509
======== ========
NET INTEREST INCOME/NET INTEREST MARGIN (4) .......... $ 5,018 3.70% $ 4,889 3.71%
======== ==== ======== ====
TAX EQUIVALENT NET INTEREST INCOME/
NET INTEREST MARGIN (5) ............................. $ 5,348 3.94% $ 5,196 3.94%
======== ==== ======== ====
</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
2000 and 1999.
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 nine month period ending September 30, 2000 and 1999, the provision for
loan losses was $47,000 and $59,000 respectively.
-16-
<PAGE> 19
Non-Interest Income
The following table sets forth, for the periods indicated, the major
components of non-interest income:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
2000 1999
---- ----
(Dollars in Thousands)
<S> <C> <C>
Service charges and fees ........................... $447 $454
Trust department income ............................ 121 129
Investment securities gain - net ................... 0 39
Invest income ...................................... 77 75
Other .............................................. 105 87
---- ----
Total ......................................... $750 $784
==== ====
</TABLE>
For the nine months ended September 30, 2000, total non-interest income
decreased $34,000 to $750,000 compared with $784,000 for the nine months ended
September 30, 1999. Service charges and fees decreased $7,000 from $454,000 at
September 30, 1999 to $447,000 at September 30, 2000. Trust Department income
decreased 6.2% from $129,000 at September 30, 1999 to $121,000 at September 30,
2000. Invest income reflected a $2,000 increase comparing September 30, 1999 to
September 30, 2000. Other non-interest income increased from $87,000 at
September 30, 1999 to $105,000 at September 30, 2000. This $18,000 increase was
generally accounted for by an increase in loan documentation preparation fees
and penalties on CD's. Investment securities gain reflected $39,000 at September
30, 1999 compared to $0 at September 30, 2000.
Non-Interest Expenses
Generally, non-interest expense accounts for the cost of maintaining facilities,
providing salaries and necessary benefits to employees, and general operating
costs such as insurance, supplies, advertising, data processing services, taxes
and other related expenses. Some of the costs and expenses are variable while
others are fixed. To the extent possible, the Company utilizes budgets and
related measures to control variable expenses. The following table sets forth,
for the periods indicated, the major components of non-interest expenses:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------
2000 1999
---- ----
(Dollars in Thousands)
<S> <C> <C>
Salaries and wages ............................... $1,513 $1,415
Employee benefits ................................ 486 471
Net occupancy expense ............................ 249 259
Furniture and equipment expense .................. 466 450
FDIC insurance ................................... 21 12
State shares tax ................................. 164 146
Other expense .................................... 864 868
------ ------
Total ....................................... $3,763 $3,621
====== ======
</TABLE>
Non-interest expenses increased 5.6% from $3.6 million at September 30, 1999 to
$3.8 million at September 30, 2000.
-17-
<PAGE> 20
Salaries increased 7.1% from $1.4 million at September 30, 1999 to $1.5 million
at September 30, 2000. A 3.2% increase was reflected in employee benefits from
$471,000 at September 30, 1999 to $486,000 at September 30, 2000. Normal merit
increases and higher starting wages for new employees in the current employee
market are responsible for the salary increases. Increased cost of employee
benefits, specifically health coverage, accounts for the increase in employee
benefits.
Occupancy expense and furniture and equipment expense reflects a $6,000 increase
for the first nine months of 1999 compared to the first nine months of 2000.
Fluctuation occurred in the following expense categories: fire insurance changes
reflect a $5,000 savings, maintenance and repair on buildings is $5,000 less
than September 30, 1999, and service on equipment rose 16.8% from $113,000 at
September 30, 1999 to $132,000 at September 30, 2000, mainly due to new
services, such as telephone and internet banking increasing our maintenance
fees.
FDIC insurance increased 75% for 2000 from $12,000 at September 30, 1999 to
$21,000 at September 30, 2000. Shares tax also increased 12.3% from $450,000 at
September 30, 1999 to $466,000 at September 30, 2000.
Other expenses remained stable at $868,000 at September 30, 1999 and $864,000 at
September 30, 2000.
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 stockholders, 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>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
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.. 19.76% 4.00% 17.94% 4.00%
Total Qualifying Capital to
risk-weighted assets.................. 20.56% 8.00% 18.68% 8.00%
</TABLE>
Additionally, certain other ratios also provide capital analysis as follows:
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
30, 2000 31, 1999
--------- --------
<S> <C> <C>
Tier I Capital to average assets........................... 12.89% 12.94%
</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.
-18-
<PAGE> 21
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.
-19-
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CCFNB BANCORP, INC.
(Registrant)
By /s/ Paul E. Reichart
Paul E. Reichart
President & CEO
Date:
By /s/ Virginia D. Kocher
Virginia D. Kocher
Treasurer
Date: November 9, 2000
-20-
