<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1997 Commission file number: 0-13166
CoBancorp Inc.
(Exact name of registrant as specified in its charter)
Ohio 34-1465382
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1530 West River Road North, Elyria, Ohio 44035
(Address of principal executive offices) (Zip Code)
(216) 329-8000
Registrant's telephone number, including area code
Not applicable
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has 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 periods that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements 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 practical date.
As of June 30, 1997, there were 3,453,824 outstanding common shares, with no par
value, of the Registrant.
<PAGE> 2
INDEX
COBANCORP INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page
<S> <C>
Consolidated balance sheets -- June 30, 1997 and December 31, 1996 3
Consolidated statements of income -- Three months and six months ended
June 30, 1997 and 1996. 4
Consolidated statements of cash flows -- Six months ended June 30, 1997
and 1996
5
Notes to consolidated financial statements -- June 30, 1997
6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
8
PART II. OTHER INFORMATION 13
SIGNATURES
14
EXHIBITS 15
</TABLE>
<PAGE> 3
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------------- --------------------
<S> <C> <C>
ASSETS
Cash and due from banks $33,738,297 $30,555,396
Investment securities available-for-sale 125,314,173 162,460,918
Investment securities held-to-maturity 23,915,620 26,324,836
(market value $24,429,779 and $26,847,437)
Federal funds sold 3,100,000 4,300,000
Loans 431,016,252 340,454,390
Less allowance for loan losses 4,567,323 4,091,592
------------------- --------------------
Net loans 426,448,929 336,362,798
Bank premises and equipment, net 20,804,634 18,787,316
Accrued income and prepaid expenses 5,671,299 4,840,787
Other assets 15,371,779 15,285,663
------------------- --------------------
TOTAL ASSETS $654,364,731 $598,917,714
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Demand-noninterest bearing $85,513,519 $82,842,548
Demand-interest bearing 66,439,650 63,196,979
Savings and other time 419,501,673 368,706,984
------------------- --------------------
Total deposits 571,454,842 514,746,511
Short-term funds 20,139,211 25,520,820
Other liabilities 5,990,839 4,005,766
------------------- --------------------
TOTAL LIABILITIES 597,584,892 544,273,097
Shareholders' equity
Capital stock, no par value
5,000,000 shares authorized
3,453,824 shares issued and outstanding 5,975,066 5,975,066
Capital surplus 18,553,553 18,553,553
Retained earnings 32,050,440 30,296,473
Net unrealized gains (losses) on available-for-sale
investment securities (net of income tax) 200,780 (180,475)
------------------- --------------------
TOTAL SHAREHOLDERS' EQUITY 56,779,839 54,644,617
------------------- --------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $654,364,731 $598,917,714
=================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
JUNE 30, 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1997 1996 1997 1996
------------------ ------------------ -------------------- -------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans (including fees)
Taxable $9,705,912 $7,530,935 $17,988,674 $14,823,531
Tax-exempt 32,997 8,621 66,836 52,654
Investment securities
Taxable 1,712,572 2,523,349 3,705,554 4,205,587
Tax-exempt 763,764 900,223 1,553,856 1,930,675
Federal funds sold 24,771 99,166 62,162 287,613
------------------ ------------------ -------------------- -------------------
TOTAL INTEREST INCOME 12,240,016 11,062,294 23,377,082 21,300,060
INTEREST EXPENSE
Deposits 4,667,925 4,186,094 8,705,607 8,145,467
Short-term borrowed funds 173,216 153,920 374,914 319,539
------------------ ------------------ -------------------- -------------------
TOTAL INTEREST EXPENSE 4,841,141 4,340,014 9,080,521 8,465,006
------------------ ------------------ -------------------- -------------------
NET INTEREST INCOME 7,398,875 6,722,280 14,296,561 12,835,054
PROVISION FOR LOAN LOSSES 75,000 40,000 150,000 100,000
------------------ ------------------ -------------------- -------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,323,875 6,682,280 14,146,561 12,735,054
OTHER INCOME
Service charges on deposit accounts 713,933 788,306 1,471,399 1,422,645
Trust fees 413,751 351,000 827,501 702,000
Other 862,126 705,907 1,177,561 933,622
Securities gains 187,347 4,565 174,116 299,594
------------------ ------------------ -------------------- -------------------
TOTAL OTHER INCOME 2,177,157 1,849,778 3,650,577 3,357,861
OTHER EXPENSES
Salaries, wages and benefits 3,172,623 2,799,226 6,067,277 5,441,387
Occupancy--net 586,487 434,461 1,228,190 863,492
Furniture and equipment 300,433 234,000 563,995 468,000
Taxes, other than income and payroll 168,522 180,008 325,256 360,919
FDIC insurance 28,471 21,995 51,446 42,737
Other 3,112,277 3,055,047 5,861,531 5,585,571
------------------ ------------------ -------------------- -------------------
TOTAL OTHER EXPENSES 7,368,813 6,724,737 14,097,695 12,762,106
------------------ ------------------ -------------------- -------------------
INCOME BEFORE INCOME TAXES 2,132,219 1,807,321 3,699,443 3,330,809
INCOME TAX EXPENSE 455,995 173,000 736,637 411,000
------------------ ------------------ -------------------- -------------------
NET INCOME $1,676,224 $1,634,321 $2,962,806 $2,919,809
================== ================== ==================== ===================
NET INCOME PER SHARE $0.49 $0.47 $0.86 $0.85
DIVIDENDS PER SHARE $0.18 $0.16 $0.35 $0.31
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
------------------ ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,962,806 $2,919,809
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 150,000 100,000
Provision for depreciation and amortization 1,165,418 1,024,015
Accretion of discounts on purchased loans (10,063) (38,978)
Amortization of premiums less accretion of
discounts on held-to-maturity investment securities 68,313 84,437
Amortization of premiums less accretion of
discounts on available-for-sale investment securities 12,962 (38,766)
Realized securities (gains) on available-for-sale securities (173,998) (299,594)
Realized (gains) on sale of loans (402,381) 0
Realized (gains) on sale of fixed assets (6,306) 0
Decrease (increase) in interest receivable 102,081 (738,304)
(Decrease) increase in interest payable (181,507) 653,742
(Increase) in other assets (1,307,882) (9,101,683)
Increase in other liabilities 1,169,943 55,118
------------------ ----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,549,386 (5,380,204)
INVESTING AND LENDING ACTIVITIES
Proceeds from sales of available-for-sale
investment securities 42,207,272 35,860,679
Maturities of available-for-sale investment securities 4,085,335 752,505
Maturities of held-to-maturity investment securities 2,340,903 4,874,398
Purchases of available-for-sale investment securities (5,198,348) (102,915,931)
Purchase of Jefferson Savings, net of cash received (5,531,007) 0
Net decrease in credit card receivables 3,526,311 92,822
Net (increase) in longer-term loans (35,229,874) (10,682,189)
Purchases of premises and equipment,
net of retirements (2,222,849) (3,334,439)
------------------ ----------------
NET CASH PROVIDED BY (USED IN) INVESTING AND LENDING ACTIVITIES 3,977,743 (75,352,155)
DEPOSIT AND FINANCING ACTIVITIES
Net (decrease) increase in demand deposits and savings accounts (7,978,083) 61,140,465
Net increase in certificates of deposit 13,024,302 20,757,354
Net (decrease) increase in short-term funds (5,881,609) 1,486,589
Net (decrease) in FHLB borrowings (3,500,000) 0
Increase in long-term debt 301,946 0
Repayment of long-term debt (301,946) 0
Cash dividends (1,208,838) (1,068,620)
------------------ ----------------
NET CASH (USED IN) PROVIDED BY DEPOSIT AND FINANCING ACTIVITIES (5,544,228) 82,315,788
------------------ ----------------
Increase In Cash and Cash Equivalents 1,982,901 1,583,429
Cash and cash equivalents at beginning of period 34,855,396 29,511,296
------------------ ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $36,838,297 $31,094,725
================== ================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
COBANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
NOTE A -- ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of CoBancorp Inc. (the "Corporation") and its wholly-owned
subsidiaries, PREMIERBank & Trust ("Premier") and Jefferson Savings Bank
("Jefferson"). All material intercompany accounts and transactions have been
eliminated.
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. It is the opinion of management that all adjustments necessary for a
fair presentation have been made and that all adjustments were of a normal
recurring nature.
CASH EQUIVALENTS: For purpose of the Statements of Cash Flows, cash equivalents
include amounts due from banks and federal funds sold. Generally, federal funds
are purchased and sold for periods of less than thirty days.
RECLASSIFICATIONS: Certain amounts in the 1996 consolidated financial statements
have been reclassified to conform to the 1997 presentation.
NOTE B -- ACQUISITION
On February 27, 1997, the Corporation acquired all of the outstanding shares of
Jefferson, an Ohio-chartered savings association located in Jefferson, Ohio,
for cash in the amount of $6,733,000, with additional consideration of $649,000
attributable to certain favorable tax benefits (confirmed by an I.R.S. Private
Letter Ruling dated May 31, 1996). The transaction was accounted for under the
purchase method of accounting. The purchase price allocation, which may be
revised, resulted in a write-up of assets to estimated fair value of
approximately $2,432,000. This amount included approximately $919,000 which was
assigned to goodwill. Jefferson's results of operations are included in the
Corporation's consolidated results of operations since the date of acquisition.
Pro forma results of operations have not been presented because the effect of
the acquisition is not material to the consolidated results of operations.
Jefferson, with assets of approximately $61 million, operates in three branch
locations in Madison County, Ohio. Jefferson remains a separate savings
association subsidiary of the Corporation.
NOTE C -- LOANS
The Corporation applies the provision of FASB Statement No. 114, "Accounting by
Creditors for Impairment of a Loan" (as amended by FASB Statement No. 118). At
June 30, 1997, and December 31, 1996, there were no loans for which the
Corporation was required to establish a valuation allowance under the Statement
114 criteria.
<PAGE> 7
COBANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
NOTE D -- EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which is required to be adopted on December 31, 1997.
At that time, the Corporation will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating basic earnings per share, the dilutive effect
of stock options will be excluded. The impact on basic and fully diluted
earnings per share is not expected to be material.
NOTE E -- REPORTING COMPREHENSIVE INCOME AND DISCLOSING SEGMENT
INFORMATION
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information," both of which will be
effective for fiscal years beginning after December 15, 1997. The Corporation
will adopt Statement No. 130 and Statement No. 131 as of January 1, 1998. The
impact of adopting these Statements is not expected to be material.
<PAGE> 8
COBANCORP INC. AND SUBSIDIARIES
JUNE 30, 1997
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion focuses on information about CoBancorp Inc.'s financial
condition and results of operations which is not otherwise apparent from the
consolidated financial statements attached. In connection with any forward
looking statements made by the Registrant, the following disclosure is made:
Actual results could differ materially from any such forward looking statements
for a variety of factors including sharp and/or rapid changes in interest rates,
significant changes in the economy, or significant changes in accounting, tax or
regulatory practices or requirements.
EARNINGS RESULTS Net income increased slightly over the previous year. For the
first six months of 1997, net income was $2,963,000, compared to $2,920,000 for
the same period in 1996. Earnings per share were $0.86 for the first six months
of 1997 and $0.85 for the same period in 1996. For the second quarter, net
income was $1,676,000 or $0.49 per share compared to $1,634,000 or $0.47 per
share in the prior year. The changes affecting net income are explained in
detail in the following sections.
NET INTEREST INCOME The net interest margin on a fully taxable-equivalent basis
was 5.30 percent for the first six months of 1997, compared to 5.12 percent for
the same period one year ago. Net interest income for the first six months of
1997 amounted to $15,131,000, up significantly from $13,857,000 for the
comparable period in 1996. Second quarter net interest income was $7,792,000 and
$7,186,000 in 1997 and 1996, respectively. These amounts reflect net interest
income adjusted to a fully taxable-equivalent basis by recognizing the tax
effect of interest earned on tax-exempt securities and loans.
The increase in fully-taxable equivalent net interest income of $1,274,000, or
9.2 percent, is due primarily to an increase in interest-earning assets. This
increase was partially offset by an increase in interest-bearing liabilities.
The Corporation also benefitted from an increase in the overall yield on earning
assets, while the cost of interest-bearing liabilities decreased slightly.
Average interest-earning assets were $566,392,000 and $538,862,000 for the first
six months of 1997 and 1996, respectively. Average interest-bearing liabilities
for the same periods were $494,219,000 and $462,747,000, respectively.
The following table sets forth for the periods indicated a summary of the
changes in interest income and interest expense on a fully taxable-equivalent
basis resulting from changes in volume and changes in rates for the major
components of interest-earning assets and interest-bearing liabilities:
<PAGE> 9
SUMMARY OF NET INTEREST INCOME CHANGES
AND AVERAGE BALANCE SHEETS
(RATE/VOLUME VARIANCE)
SIX MONTHS ENDED 6/30/97 VS.6/30/96
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
CHANGE IN
| INTEREST INCOME/EXPENSE DUE TO
CURRENT CURRENT OLD OLD | -------------------------------
VOLUME RATE VOLUME RATE | VOLUME RATE BOTH TOTAL
------ ---- ------ ---- | ------ ---- ---- -----
|
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable securities $111,322 6.66% $131,135 6.41% | $ (641) $ 172 $ (30) ($499)
Nontaxable securities 58,669 8.03% 72,481 8.07% | (557) (17) 3 (571)
Federal funds sold & s/t funds 2,337 5.09% 9,362 6.08% | (213) (46) 31 (228)
Taxable loans: |
Real estate loans 179,536 8.09% 141,912 8.04% | 1,646 (63) (28) 1,555
Commercial loans 159,760 9.47% 136,235 9.38% | 1,104 60 (11) 1,153
Installment loans 49,458 0.03% 41,077 10.11% | 388 2 1 391
Overdrafts 759 0.00% 1,164 0.00% | 0 0 0 0
Checkmate loans 216 7.59% 182 16.48% | 3 1 0 4
Credit card loans 3,017 2.62% 2,806 41.48% | 40 16 6 62
Nontaxable loans: |
Industrial Revenue Bonds (IRBs) 2,242 9.05% 2,508 6.34% | (8) 34 (5) 21
----------- --------- | ---------- ----------- ---------- ---------
TOTAL INTEREST-EARNING ASSETS 567,317 8.53% 538,862 8.26% | 1,762 159 (33) 1,888
|
Noninterest-earning assets: |
Cash and due from banks 31,324 28,986 |
Bank premises and equipment 20,100 13,271 |
Other assets 20,156 20,090 |
Less allowance for loan losses (4,471) (5,989) |
----------- --------- |
Total noninterest-earning assets 67,109 56,358 |
----------- --------- |
|
TOTAL ASSETS $634,426 $595,220 |
=========== ========= |
|
|
Interest-bearing transaction accts: |
NOW/Advantage 50 $69,916 1.59% $62,851 1.83% | 20 (73) 31 (22)
Savings accounts: |
Savings 139,257 2.21% 139,631 2.25% | (13) (30) 1 (42)
IMMAs 19,324 1.99% 23,304 2.02% | (41) (3) 0 (44)
Money Market Index accounts 16,205 4.91% 11,039 4.75% | 120 9 4 133
Time deposits: |
Christmas/vacation club 878 3.99% 1,097 3.92% | (4) 0 (1) (5)
CD under $100,000 156,551 5.40% 133,233 5.45% | 755 (160) (25) 570
CD over $100,000 (regular) 13,492 5.22% 13,313 5.39% | 3 (11) 0 (8)
CD over $100,000 (public funds) 18,399 5.48% 21,532 5.28% | (85) 22 (4) (67)
IRAs 35,192 5.65% 35,411 5.33% | (11) 56 (1) 44
Short-term borrowings: |
Repurchase agreements 1,706 4.75% 3,145 4.74% | (34) 0 (1) (35)
Fed funds purchased 4,878 5.68% 2,089 5.27% | 73 5 5 83
Notes payable TT&L 2,574 5.09% 1,637 5.25% | 24 (1) 0 23
Sweep 15,846 1.64% 14,464 1.98% | 13 (25) (4) (16)
---------- --------- | ---------- ----------- ---------- ---------
TOTAL INTEREST-BEARING LIABILITIES 494,218 3.70% 462,746 3.67% | 820 (211) 5 614
| ---------- ----------- ---------- ---------
|
Noninterest-bearing liabilities: |
Demand deposits 79,230 76,504 |
Other liabilities 5,720 5,255 |
Shareholders equity 55,258 50,715 |
---------- --------- |
TOTAL LIABILITIES AND |
SHAREHOLDERS' EQUITY $634,426 $595,220 |
========== ========= |
|
NET INTEREST INCOME 5.30% 5.12% | $942 $370 ($38) $1,274
| ========== =========== ========== =========
|
YTD FTE net interest income (current year) $15,131
YTD FTE net interest income (prior year) 13,857
----------
Change in FTE net interest income $1,274
==========
</TABLE>
Note: Jefferson's average balances and income are included for four months in
1997. Presented on a fully taxable-equivalent basis, using year-to-date average
balances.
<PAGE> 10
NONINTEREST INCOME Total noninterest income, exclusive of securities gains,
increased $418,000 or 13.7 percent in the first half of 1997 when compared to
the same period in 1996. The second quarter of 1997 represented an increase of
$145,000 or 7.8 percent over the prior year. Jefferson contributed
approximately $85,000 of noninterest income since it was acquired on February
28, 1997. Income from trust activities increased to $828,000 for the six months
ended June 30, 1997, up 17.9 percent from the prior year. Gains and losses on
the sale of investment securities also impact comparisons. Security
transactions resulted in net gains of $174,000 and $300,000 in the first half
of 1997 and 1996, respectively. The comparable amounts for the second quarter
were $187,000 and $5,000 for 1997 and 1996 respectively. During the second
quarter of 1997, Premier sold its credit card portfolio (approximately
$2,605,000 of loans) and realized a gain of approximately $400,000.
NONINTEREST EXPENSE For the first six months of 1997, salaries, wages and
benefits expense increased $626,000 over the same period for 1996. In the
second quarter of 1997, the increase was $373,000, of which approximately 40%
was a result of the Jefferson acquisition, while the remainder is a combination
of added staff for new offices and normal salary adjustments. The increase in
occupancy and furniture and equipment expenses was due to the acquisition of
Jefferson and the opening of additional Premier facilities.
Other significant components of other noninterest expenses are presented in the
following table (in thousands of dollars).
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
1997 1996 1997 1996
-----------------------------------------
<S> <C> <C> <C> <C>
Data processing $ 767 $ 516 $1,474 $1,028
Supplies, printing & postage 324 502 690 875
Outside services 366 344 631 587
Telephone 196 172 404 284
Amortization of intangibles 140 204 278 338
Other 1,319 1,317 2,385 2,474
-----------------------------------------
Total $3,112 $3,055 $5,862 $5,586
=========================================
</TABLE>
LOANS AND ALLOWANCE FOR LOAN LOSSES At June 30,1997, and December 31, 1996,
there were no loans for which a valuation allowance was required under
Statement 114. The allowance for loan losses, therefore, included no allocation
for such loans.
In determining the adequacy of the allowance for loan losses, management
evaluates past loan loss experience, present and anticipated economic conditions
and the credit worthiness of its borrowers. The allowance for loan losses is
increased by provisions charged against income and recoveries of loans
previously charged off. The allowance is decreased by loans that are determined
uncollectable by management and charged against the allowance.
Potential problem loans are those loans which are on the Bank's "watch list."
These loans are, or could become, nonperforming. This "watch list" is reviewed
monthly and adjusted for changing conditions. Loans on the watch list at June
30, 1997, totaled $7.9 million, or 1.8 percent of total outstanding loans.
<PAGE> 11
At June 30, 1997, the allowance for loan losses as a percentage of loans was
1.06 percent compared to 1.20 percent at December 31, 1996. The provision for
loan losses was $150,000 in the six months ended June 30, 1997, and $100,000 for
the six months ended June 30, 1996.
The following table contains information relative to loan loss experience for
the six months ended June 30, 1997, and the year ended December 31, 1996 (in
thousands of dollars):
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1997 December 31, 1996
---------------- -----------------
<S> <C> <C>
Allowance for loan losses at beginning of
period $ 4,092 $ 5,850
Jefferson allowance acquired 501
Loans charged off:
Real estate 1 21
Installment 363 446
Credit card 62 82
Other 6 4
Commercial and collateral 12 163
----------- -----------
444 716
Recoveries on loans charged off:
Real estate 143 5
Installment 84 311
Credit card 9 22
Other 0 1
Commercial and collateral 32 395
----------- -----------
268 733
Net charge-offs (recoveries) 176 (17)
Provision for loan losses 150 (1,775)
=========== ===========
Allowance for loan losses at end of period
$ 4,567 $ 4,092
=========== ===========
Ratio of allowance for loan losses to total
loans at end of period 1.06% 1.20%
=========== ===========
</TABLE>
During the fourth quarter of 1996, the Corporation, based on significant
continued improvement in overall asset quality, and recoveries exceeding
charge-offs for the past three years, returned $1,775,000 of the allowance for
loan losses to income.
<PAGE> 12
NONPERFORMING LOANS Nonaccrual loans at June 30, 1997, totaled $2,503,000,
compared to $1,707,000 at December 31, 1996. This increase includes $1,119,000
in nonaccruing loans attributable to Jefferson. The category of accruing loans
past due 90 days or more totaled $85,000 at June 30, 1997 and $85,000 at
December 31, 1996. Additionally, there was $52,500 in other real estate owned.
The balance in the allowance for loan losses was $4,567,000 at June 30, 1997
compared to $4,092,000 at December 31, 1996.
Except for installment and credit cards, loans on which interest and/or
principal is 90 days or more past due are placed on nonaccrual status and any
previously accrued but uncollected interest is reversed from income. Such loans
remain on a cash basis for recognition of income until both interest and
principal are current. Installment and credit card loans past due greater than
120 days are charged off and previously accrued but uncollected interest is
reversed from income.
The following table summarizes nonaccrual and past due loans (in thousands of
dollars).
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
---------------- -----------------
<S> <C> <C>
Accruing loans past due 90 days or more as to principal or interest:
Loans secured by real estate $ 43 $ 0
Commercial and industrial 0 0
Loans to individuals 42 85
------ ------
$ 85 $ 85
====== ======
Nonaccrual loans:
Loans secured by real estate $2,086 $1,537
Commercial and industrial 367 170
Loans to individuals 50 0
====== ======
$2,503 $1,707
====== ======
</TABLE>
<PAGE> 13
CAPITAL At June 30 1997, Premier's and CoBancorp's risk-based capital ratios
based on Federal Reserve Board guidelines were as follows:
<TABLE>
<CAPTION>
Well
PremierBank CoBancorp capitalized
& Trust Inc. minimums
------- ---- --------
<S> <C> <C> <C>
Tier 1 "core" capital to risk-weighted assets 10.88% 11.99% 6.00%
Total capital to risk-weighted assets 11.93% 13.08% 10.00%
Tier 1 leverage ratio 7.23% 7.77% 5.00%
</TABLE>
These ratios substantially exceed the minimums which are in effect for banks and
bank holding companies, and also exceed the percentages required to be
considered "well-capitalized".
At June 30, 1997, Jefferson Savings' regulatory capital ratios based on the
Office of Thrift Supervision requirements were as follows:
<TABLE>
<CAPTION>
Well-
Jefferson Required capitalized
Savings Minimums Minimums
------- -------- --------
<S> <C> <C> <C>
Tangible Capital 9.60% 1.50% n/a
Tier 1 "core" capital to risk-weighted assets 20.66% n/a 6.00%
Core Capital 8.21% 3.00% 5.00%
Risk-based capital to risk weighted assets 19.43% 8.00% 10.00%
</TABLE>
PART II. OTHER INFORMATION
Except as set forth below, the items of Part II are inapplicable or the answers
thereto are negative and, accordingly, no reference is made to said items in
this report.
Item 4--Submission of matters to a vote of security holders
The annual meeting of shareholders of CoBancorp Inc. was held
April 16, 1997 at 11:00 a.m., at the Lorain County Community
College Spitzer Conferencing Center, 1005 North Abbe Road,
Elyria, Ohio 44035, in accordance with the notice of meeting
and proxy statement mailed to shareholders.
All matters proposed by management in the proxy statement were
approved by the shareholders.
Item 6--Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Earnings per Share
27 Financial Data Schedule
(b) The registrant was not required to file any reports on Form
8-K during the quarter ended June 30, 1997.
<PAGE> 14
COBANCORP INC. AND SUBSIDIARIES
JUNE 30,1997
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.
COBANCORP INC.
(Registrant)
/s/ Timothy W. Esson
Timothy W. Esson
Executive Vice President and
Chief Financial Officer
August 14, 1997
<PAGE> 1
Exhibit 11
COBANCORP INC. AND SUBSIDIARIES
EXHIBIT (11)--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
---------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 3,453,824 3,447,160 3,453,824 3,447,160
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 46,668 28,626 41,267 28,763
---------- ---------- ---------- ----------
Total shares 3,500,492 3,475,786 3,495,091 3,475,923
========== ========== ========== ==========
Net income $1,676,224 $1,634,321 $2,962,806 $2,919,809
========== ========== ========== ==========
Net income per share $ 0.49 $ 0.47 $ 0.86 $ 0.85
========== ========== ========== ==========
Fully diluted:
Average shares outstanding 3,453,824 3,447,160 3,453,824 3,447,160
Net effect of dilutive stock options--
based on the treasury stock method
using the higher of average market
price or ending market price 54,242 29,373 48,135 29,137
---------- ---------- ---------- ----------
Total shares 3,508,066 3,476,533 3,501,959 3,476,297
========== ========== ========== ==========
Net income $1,676,224 $1,634,321 $2,962,806 $2,919,809
========== ========== ========== ==========
Net income per share $ 0.49 $ 0.47 $ 0.86 $ 0.85
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF COBANCORP, INC. AND SUBSIDIARIES AS OF JUNE 30,
1997, AND THE RELATED STATEMENTS OF INCOME, CASH FLOWS AND SHAREHOLDERS' EQUITY
FOR THE QUARTER THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000745276
<NAME> COBANCORP INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 32,101
<INT-BEARING-DEPOSITS> 1,637
<FED-FUNDS-SOLD> 3,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 125,315
<INVESTMENTS-CARRYING> 23,916
<INVESTMENTS-MARKET> 24,430
<LOANS> 431,016
<ALLOWANCE> 4,567
<TOTAL-ASSETS> 654,365
<DEPOSITS> 571,455
<SHORT-TERM> 20,139
<LIABILITIES-OTHER> 5,991
<LONG-TERM> 0
<COMMON> 5,975
0
0
<OTHER-SE> 50,805
<TOTAL-LIABILITIES-AND-EQUITY> 654,365
<INTEREST-LOAN> 18,056
<INTEREST-INVEST> 5,259
<INTEREST-OTHER> 62
<INTEREST-TOTAL> 23,377
<INTEREST-DEPOSIT> 8,706
<INTEREST-EXPENSE> 9,080
<INTEREST-INCOME-NET> 14,297
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 174
<EXPENSE-OTHER> 14,098
<INCOME-PRETAX> 3,699
<INCOME-PRE-EXTRAORDINARY> 3,699
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,963
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
<YIELD-ACTUAL> 5.30
<LOANS-NON> 2,503
<LOANS-PAST> 85
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,593
<CHARGE-OFFS> 444
<RECOVERIES> 268
<ALLOWANCE-CLOSE> 4,567
<ALLOWANCE-DOMESTIC> 4,533
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 34
</TABLE>
