<PAGE> 1
FORM 10-Q -- QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 34-26589, eff. 4/12/89)
United States Securities and Exchange Commission
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the period ended June 30, 1998
----------------------------------------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934.
For the transition period from to Commission File
------------ ------------
Number: 0-13655
-----------------------------------------------------------------
Security Banc Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1133284
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 South Limestone Street, Springfield, OH 45502
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(937) 324-6920
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(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 period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes of
common stock.
Class Outstanding at July 15, 1998
- ------------------------------- ----------------------------
Common Stock, $1.5625 Par Value 12,141,212
<PAGE> 2
SECURITY BANC CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets June 30, 1998
and December 31, l997. 3
Consolidated Condensed Statements of Income for the
three (3) months ended June 30, 1998 and June 30, 1997. 4
Consolidated Condensed Statement of Income for the six
(6) months ended June 30, 1998 and June 30, 1997. 5
Consolidated Condensed Statements of Cash Flows for the six
(6) months ended June 30, 1998 and June 30, 1997. 6
Consolidated Condensed Statements of Shareholders Equity for
the six (6) months ended June 30, 1997 and June 30, 1998. 7
Notes to Consolidated Condensed Financial Statements. 8
Item 2 - Management's Discussion and Analysis of Condition and
Results of Operations 9-14
Part II - Other Information 15
Signature 16
</TABLE>
-2-
<PAGE> 3
PART I ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
June 30 Dec 31
1998 1997
---- ----
(in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 38,401 $ 33,043
Federal funds sold 32,940 52,655
-------- --------
TOTAL CASH AND CASH EQUIVALENT 71,341 85,698
-------- --------
Interest bearing deposits with other banks 2,700 2,700
Investments (Market Value $138,428 @6-30-98,
$149,531 @ 12-31-97) 138,202 149,179
Loans: Commercial and agricultural 270,450 252,053
Real estate and mortgage 236,733 225,791
Consumer 80,014 84,161
-------- --------
TOTAL LOANS 587,197 562,005
Less: Allowance for Loan Losses 6,917 6,254
-------- --------
NET LOANS 580,280 555,751
Premises and Equipment 9,064 8,658
Other Assets 37,305 37,619
-------- --------
TOTAL ASSETS $838,892 $839,605
======== ========
LIABILITIES
Non-interest bearing deposits $116,245 $119,373
Interest bearing demand deposits 140,596 129,351
Savings deposits 156,434 151,119
Time deposits, $100,000 and over 43,268 41,745
Other time deposits 231,042 235,803
-------- --------
TOTAL DEPOSITS 687,585 677,391
Fed funds purchased and securities sold
under agreement to repurchase 26,007 30,746
Federal Home Loan Bank Term Advances 6,790 16,333
Other liabilities 4,669 6,399
-------- --------
TOTAL LIABILITIES $725,051 $730,869
-------- --------
SHAREHOLDERS'S EQUITY
Common Stock (Par Value $1.5625) $ 19,722 $ 19,707
Shares authorized 18,000,000
Shares issued 12,622,412 - 1998
12,598,330 - 1997
Surplus 21,934 21,831
Retained earnings 75,139 70,149
Accumulated other comprehensive income 239 242
Less: Treasury Stock,481,200 shares 3,193 3,193
-------- --------
TOTAL SHAREHOLDERS' EQUITY 113,841 108,736
-------- --------
TOTAL LIABILITIES &
SHAREHOLDER'S EQUITY $838,892 $839,605
======== ========
</TABLE>
See notes to Consolidated Condensed Financial Statements
-3-
<PAGE> 4
PART 1 ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
June 30 June 30
1998 1997
---- ----
(in thousands except
per share data)
<S> <C> <C>
Interest Income $16,029 $15,927
Interest Expense 6,052 6,398
------- -------
NET INTEREST INCOME 9,977 9,529
Provision for loan losses 200 200
------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 9,777 9,329
OTHER OPERATING INCOME
Trust Income 426 377
Service charges on deposit accounts 801 670
Securities, Gains (Losses) 42 50
Other charges, rents and fees 763 464
------- -------
TOTAL OTHER OPERATING INCOME 2,032 1,561
OPERATING EXPENSES
Salaries and employee benefits 2,814 2,737
Equipment and occupancy expense 675 679
Other operating expense 2,231 2,261
------- -------
TOTAL OPERATING EXPENSE 5,720 5,677
INCOME BEFORE TAXES 6,089 5,213
Income taxes (See Note B) 2,086 1,597
------- -------
NET INCOME $ 4,003 $ 3,616
======= =======
Basic earnings per share $ .33 $ .30
Diluted earnings per share $ .33 $ .30
Cash dividends per share $ .12 $ .105
Weighted average shares outstanding 12,138,413 12,116,390
</TABLE>
See notes to Consolidated Condensed Financial Statements.
-4-
<PAGE> 5
<TABLE>
SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30, June 30,
1998 1997
---- ----
(in thousands except
per share data)
<S> <C> <C>
Interest Income $31,722 $30,990
Interest Expense 12,034 12,493
------- -------
NET INTEREST INCOME 19,688 18,497
Provision for loan losses 400 400
------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 19,288 18,097
OTHER OPERATING INCOME
Trust Income 786 767
Service charges on deposit accounts 1,559 1,334
Securities, Gains (Losses) 86 106
Other charges, rents and fees 1,475 993
------- -------
TOTAL OTHER OPERATING INCOME 3,906 3,200
OPERATING EXPENSES
Salaries and employee benefits 5,599 5,439
Equipment and occupancy expense 1,339 1,364
Other operating expense 4,525 4,411
------- -------
TOTAL OPERATING EXPENSE 11,463 11,214
INCOME BEFORE TAXES 11,731 10,083
Income taxes (See Note B) 4,010 3,083
------- -------
NET INCOME $ 7,721 $ 7,000
======= =======
Basic earning per share $ .64 $ .58
Diluted earnings per share $ .63 $ .57
Cash dividends per share $ .225 $ .21
Weighted average shares outstanding 12,135,100 12,113,412
</TABLE>
See notes to Consolidated Condensed Financial Statements.
-5-
<PAGE> 6
PART 1 ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
SECURITY BANC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
June 30 June 30
1998 1997
---- ----
(IN THOUSANDS)
--------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 7,721 $ 7,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 537 507
(Gain)/Loss on sale of the following:
Investment Securities available for sale (86) (107)
Other Assets (15) (21)
Provision for loan losses 400 400
Amortization and accretion, net (229) 48
Amortization and core deposit intangible 337 391
Change in other operating assets and liabilities, net (13,384) (10,660)
-------- ---------
Total Adjustments (12,440) (9,442)
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ (4,719) $ (2,442)
Cash Flows From Investing Activities:
Net increase in interest bearing deposits with other banks 0 3,828
Proceeds from maturities and sales of Investment securities
available for sale 11,286 135,545
Proceeds from maturities of Investments held to maturity 8,284 7,960
Purchase of:
Investment securities available for sale (6,919) (154,564)
Investment securities held to maturity (1,500) (708)
Increase in loans (25,115) (14,785)
Proceeds from sale of other assets 11,978 3,507
Capital expenditures (944) (557)
Net cash used in acquisition 0 (1,298)
Purchase of insurance policies (7) 0
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES (2,937) (21,072)
Cash Flows from Financing Activities:
Net increase in demand deposits, NOW accounts and
savings accounts 13,432 28,943
Net decrease in certificates of deposit (3,238) (9,121)
Net decrease in short-term borrowed funds (14,282) (2,005)
Dividends paid (2,731) (2,544)
Proceeds from exercise of stock options 118 124
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES (6,701) 15,397
Net decrease in cash and cash equivalents (14,357) (8,117)
Cash and cash equivalents at beginning of year 85,698 49,827
-------- ---------
Cash and cash equivalents at June 30 $ 71,341 $ 41,710
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE> 7
<TABLE>
SECURITY BANC CORORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (UNAUDITED)
<CAPTION>
Accumulated
Treasury Other
Common Retained Stock Comprehensive Comprehensive
(dollars in thousands, except per share amounts) Stock Surplus Earnings at Cost Income Income
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $19,658 $21,670 $62,557 $(3,193) $ 102
Net Income 7,000 7,000
Other comprehensive income:
Net unrealized (losses) on securities available
for sale net of income taxes of $86 (160) (160)
-----
Total comprehensive income 6,840
=====
Dividend distributions (3,843)
Exercise of stock options 27 97
===================================================================================================================================
BALANCE AT JUNE 30, 1997 19,685 21,767 65,714 (3,193) (58)
===================================================================================================================================
BALANCE AT DECEMBER 31, 1997 19,707 21,831 70,149 (3,193) 242
Net Income 7,721 7,721
Other comprehensive income:
Net unrealized (losses) on securities available
for sale net of income taxes of $2 (3) (3)
-----
Total comprehensive income 7,718
=====
Cash dividends on Common Shares ($.225 per share) (2,731)
Exercise of stock options 15 103
===================================================================================================================================
BALANCE AT JUNE 30, 1998 19,722 21,934 75,139 (3,193) 239
===================================================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited)
-7-
<PAGE> 8
SECURITY BANC CORPORATION
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- Preparation
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments consisting of normal re-occurring items necessary to
present fairly the financial condition of the company as of June 30, 1998 and
the results of operations and cash flows for the six month periods ended June
30, 1998 and June 30, 1997.
NOTE B -- TAXES
The effective tax rate of 34% is lower than the statutory 35% because of
investments made in tax exempt municipal securities. The subsidiaries of
Security Banc Corporation have approximately $6,902,000 invested in tax exempt
municipal securities.
NOTE C -- SFAS No. 130
As of January 1, 1998, Security Banc Corporation adopted Statement of Financial
Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No.
130 establishes reporting and display standards for comprehensive income and its
components in a full set of general purpose financial statements. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances arising from
non-owner sources. The new statement requires Security's unrealized gains or
losses on securities available-for-sale, which prior to adoption were reported
as a separate component of shareholder's equity, to be included in other
comprehensive income. Since SFAS No. 130 only requires additional information,
it had no impact on Security's financial position or results of operation. Prior
year financial statements have been reclassified to conform with the new
requirements. Comprehensive income is presented in the Statement of Changes in
Shareholders' Equity on page 6.
NOTE D - Common Share Information
All common share information is adjusted for the 2-for-1 stock split effective
May 29, 1998.
8
<PAGE> 9
PART 1 ITEM 2 SECURITY BANC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Registrant's financial condition and results of
operations during the periods included in the consolidated financial statements
enclosed with this filing.
ECONOMIC OUTLOOK
The US economy completed the first half of 1998 on a positive but uncertain
trend. After an extremely strong first quarter, the GDP is expected to slow to a
2% annual rate for the remainder of the year. The effect of the Asian crisis
will continue to widen the trade deficit and cause an inventory adjustment as
demand for domestic products declines. Orders received by manufacturers softened
in April and May as a result of the slowing economy. The housing market remains
strong as new home sale rose to record levels. Low interest rates, low
unemployment, and rising income levels have fueled the housing sector to its
strongest level in 35 years. Retail sales, which accounts for two-thirds of the
domestic economic activity, were flat for June after a strong performance in
May. Unemployment figures remain low as well as inflation. Consumer prices
ticked up in June at the slowest rate in three months led by lower energy and
car prices. On the wholesale level prices decreased overall during June after a
small increase in May. Overall, the economy remains stable and headed for a
slight slowdown.
On the interest rate front the Federal Reserve has left rates unchanged.
Assuming the economy doesn't over accelerate and inflation holds at present
levels, rate stability will continue. The stock market continues to respond
favorably to the interest rate environment and economic stability.
In our market area, a continuing strong economy prevails. Speedway SuperAmerica
recently announced a major increase in employment, Navistar is showing positive
trends and most businesses remain profitable. The effects of the GM strike, if
prolonged, will have a negative effect nationally and locally during the third
quarter.
RESULTS OF OPERATIONS
Net income was $7,721,000 for the first six months of 1998, compared to
$7,000,000 for the same period in 1997. Basic earnings per share were $.64 for
the first six months, a 10% increase over last year's $.58. Diluted earnings per
share were $.63 for the first six months, an 11% increase over last year's $.57.
Total assets were $838,892,000 at June 30, 1998 compared to 1997's assets of
$838,251,000. For the first six months of 1998, return on average equity was
13.83% and return on average assets was 1.85%.
Interest and fees on loans increased to $26,038,000 for the six months ended
June 30, 1998 compared to $24,470,000 for the six months ending June 30, 1997.
Average loans were $570,474,000 and $544,017,000 at June 30, 1998 and 1997
respectively, a 5% increase.
Income from securities decreased to $4,150,000 from $5,773,000 for the six
months ended June 30, 1998 and 1997 respectively. The decrease occurred because
of municipal obligations maturing or being called over the last year. The
average outstanding for securities were $141,996,000 and $194,207,000 at June
30, 1998 and 1997 respectively, a 27% decrease.
Interest income from Fed Funds sold and other interest bearing assets increased
to $1,534,000 at June 30, 1998 compared to $747,000 for the six months ended
June 30, 1997. The average outstanding for Fed Funds and interest bearing
deposits were $54,346,000 and $27,608,000 at June 30, 1998 and 1997
respectively, a 97% increase.
Interest bearing liabilities average outstanding at June 30, 1998 were
$599,629,000 compared to $612,397,000 at June 30, 1997. Interest expense
decreased to $12,034,000 at June 30, 1998 from $12,493,000 at June 30, 1997, a
4% decrease.
Net interest income on a fully taxable equivalent basis for the first six months
of 1998 was $19,878,000 compared to the $19,012,000 realized in the same period
of 1997.
Market value per share was $30.50 at June 30, 1998 as compared to $23.00 at June
30, 1997. Book value per share was $9.38 at June 30, 1998 and $8.58 at June 30,
1997. The efficiency ratio was 47% and 50% respectively for June 30, 1998 and
June 30, 1997.
-9-
<PAGE> 10
PART 1 ITEM 2 (CONT'D.)
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
For Period Ending June 30
1998 (000's) 1997
---- ----
<S> <C> <C>
Balance at beginning of period 6,254 6,827
Charge-offs:
Domestic:
Commercial, financial and agriculture (26) 0
Real estate -- construction 0
Real estate -- mortgage (284) 0
Installment loans to individuals (453) (550)
Lease financing 0 0
------ ------
(763) (550)
Recoveries:
Domestic:
Commercial, financial and agriculture 822 46
Real estate -- construction 0 0
Real estate -- mortgage 50 13
Installment loans to individuals 154 116
Lease financing 0 0
------ ------
1,026 175
Net charge-offs 263 (375)
Additions charged to operations 400 400
------ ------
Balance at end of period $6,917 $6,852
Ratio of net charge-offs during the period of average loans
outstanding during the period .05% (.07%)
</TABLE>
Beginning in 1995, the Company adopted Financial Accounting Standards Board
Statement No. 114, "Accounting by Creditors for Impairment of a Loan". Under the
new standard, the allowance for credit losses related to loans that are
identified for evaluation in accordance with Statement 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. Prior to
1995, the allowance for credit losses related to these loans was based on
undiscounted cash flows or the fair value of the collateral for collateral
dependent loans. The following table presents data concerning loans at risk at
the end of each period. (000s).
<TABLE>
<CAPTION>
December 31
June 30, ------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Non-accrual loans $2,524 $3,417 $4,123 $2,772 $2,598
Accruing loans past due
90 days or more 2,335 1,537 1,709 1,543 561
Restructured loans 329 333 0 0 0
Other real estate owned 1,340 258 256 0 0
</TABLE>
Total other operating income was $3,906,000 and $3,200,000 during the first six
months of 1998 and 1997 respectively. Trust income increased 2%. There was a 17%
increase in service charges on deposits, and a 49% increase in other charges,
rents and fees. Total securities gains for the first six months of 1998 were
$86,000 or $56,000 after tax. Total securities gains for the same period of 1997
were $106,000 or $69,000 after tax.
-10-
<PAGE> 11
PART 1 ITEM 2 - PAGE 2
SECURITY BANC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Total operating expenses increased $249,000 during the first six months, 2% over
the similar period of 1997. Salaries, wages and employee benefits increased 3%
over 1997. Equipment and net occupancy expenses during the first six months were
$1,339,000 and $1,364,000 for 1998 and 1997 respectively, which reflects a 2%
decrease. Other operating expenses decreased $4,000 compared to 1997.
The Corporation continues to look for opportunities to maximize Other Income and
reduce Other Expense, thus enhancing the efficiency ratio.
MATERIAL CHANGES IN FINANCIAL CONDITION
- ---------------------------------------
The material changes (5% or greater) on the consolidated condensed balance
sheets are:
Cash and due from Banks - (increase of 16%) because of anticipation of customer
activity before Fourth of July weekend.
Federal Funds Sold - (decrease of 37%) because of increased loan demand.
Investments - (decrease of 7%) because of maturities and calls of municipal
securities.
Commercial and Agricultural Loans - (increase of 7%) because of strong local
economy and loan officer activity.
Allowance for Loan Loss - (increase of 11%) due to increase in provision and
recoveries exceeding charge offs.
Interest Bearing Demand Deposits - (increase of 9%) due to increase in public
funds money market account dollars.
Fed Funds Purchased and Repos - (decrease of 15%) although the average for 1998
is approximately $2,000,000 higher than 1997.
FHLB Advances - (decrease of 58%) because the subsidiaries of the Corporation
are selling and buying overnight Fed Funds from each other reducing the need to
borrow externally.
Other Liabilities - (decrease 27%) due to decrease in deferred taxes and FIT
payable.
CAPITAL RESOURCES
- -----------------
The table below illustrates the Company's subsidiary banks regulatory capital
ratios at June 30, 1998 under the year end 1992 requirements: (000s)
Tier 1 Capital $101,280
Tier 2 Capital 6,917
--------
TOTAL QUALIFYING CAPITAL $108,197
--------
Risk Adjusted Total Assets (including off balance exposures) $569,748
========
Tier 1 Risk-Based Capital Ratio 17.78%
Total Risk-Based Capital Ratio 18.99%
Tier 1 Leverage Ratio 12.21%
LIQUIDITY
- ---------
The subsidiaries of the Corporation Static Gap analysis is presented on pages
12, 13, and 14.
-11-
<PAGE> 12
<TABLE>
THIRD SAVINGS "NEXT FOUR QUARTERS"
ASSET/LIABILITY MANAGEMENT
STATIC GAP ANALYSIS (000S)
<CAPTION>
IMMEDIATELY
ADJUSTABLE END OF 9/98 END OF 12/98 END OF 3/99 END OF 6/99
RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Investment Securities 1,382 6.30% 499 5.14% 0 0.00% 0 0.00% 0 0.00%
Total Short Term Investment 2,250 5.24% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Net Loans 23,727 9.64% 6,904 8.66% 10,126 8.23% 9,045 8.34% 14,028 8.12%
Total Earning Assets 27,359 9.11% 7,403 8.42% 10,126 8.23% 9,045 8.34% 14,028 8.12%
Total Non-Earning Assets 55 10.79% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Assets 27,414 9.12% 7,403 8.42% 10,126 8.23% 9,045 8.34% 14,028 8.12%
Total Noninterest Bearing Deposits 0 0.00% 3,090 0.00% 0 0.00% 156 0.00% 156 0.00%
Total Interest Bearing Deposits 2,028 5.75% 18,066 5.50% 11,265 5.47% 9,510 5.57% 14,835 5.64%
Total Deposits 2,028 5.75% 21,156 4.69% 11,265 5.47% 9,666 5.48% 14,991 5.58%
Total Other Interest Bearing Liabilities 12,000 5.40% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Other Liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities 14,028 5.45% 21,156 4.69% 11,265 5.47% 9,666 5.48% 14,991 5.58%
Total Equity Capital 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities and Capital 14,028 5.45% 21,156 4.69% 11,265 5.47% 9,666 5.48% 14,991 5.58%
Interval GAP 13,385 (13,753) (1,139) (621) (963)
Cumulative GAP 13,385 (368) (1,507) (2,128) (3,090)
Interval GAP/Total Assets 7.98% (8.20%) (0.68%) (0.37%) (0.57%)
Cumulative GAP/Total Assets 7.98% (0.22%) (0.90%) (1.27%) (1.84%)
Interval GAP/Earning Assets 9.02% (7.21%) (0.77%) (0.31%) (0.55%)
Cumulative GAP/Earning Assets 9.02% 1.80% 1.03% 0.72% 0.17%
Interval Spread: Earning Assets 3.66% 2.93% 2.76% 2.77% 2.49%
Interval Spread: Total Assets 3.67% 3.73% 2.76% 2.86% 2.54%
</TABLE>
-12-
<PAGE> 13
<TABLE>
SECURITY NATIONAL "NEXT FOUR QUARTERS"
ASSET/LIABILITY MANAGEMENT
STATIC GAP ANALYSIS (000S)
<CAPTION>
IMMEDIATELY
ADJUSTABLE END OF 9/98 END OF 12/98 END OF 3/99 END OF 6/99
RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Investment Securities 83 5.44% 0 0.00% 229 4.75% 100,219 5.82% 0 0.00%
Total Short Term Investment 38,300 5.45% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Net Loans 61,485 8.96% 31,359 9.03% 22,757 8.78% 19,018 9.12% 20,313 8.81%
Total Earning Assets 99,868 7.61% 31,359 9.03% 22,986 8.74% 119,237 6.35% 20,313 8.81%
Total Non-Earning Assets 2,024 8.96% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Assets 101,892 7.64% 31,359 9.03% 22,986 8.74% 119,237 6.35% 20,313 8.81%
Total Noninterest Bearing Deposits 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Interest Bearing Deposits 38,400 5.25% 42,768 4.55% 32,356 4.25% 32,398 4.50% 36,350 4.64%
Total Deposits 38,400 5.25% 42,768 4.55% 32,356 4.25% 32,398 4.50% 36,350 4.64%
Total Other Interest Bearing Liabilities 25,401 4.93% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Other Liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities 63,801 5.12% 42,768 4.55% 32,356 4.25% 32,398 4.50% 36,350 4.64%
Total Equity Capital 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities and Capital 63,801 5.12% 42,768 4.55% 32,356 4.25% 32,398 4.50% 36,350 4.64%
Interval GAP 38,091 (11,409) (9,371) 86,840 (16,037)
Cumulative GAP 38,091 26,682 17,311 104,151 88,114
Interval GAP/Total Assets 6.99% (2.09%) (1.72%) 15.93% (2.94%)
Cumulative GAP/Total Assets 6.99% 4.89% 3.18% 19.10% 16.16%
Interval GAP/ Earning Assets 7.27% (2.29%) (1.88%) 17.47% (3.23%)
Cumulative GAP/Earning Assets 7.27% 4.97% 3.09% 20.55% 17.33%
Interval Spread: Earning Assets 2.48% 4.49% 4.48% 1.85% 4.17%
Interval Spread: Total Assets 2.52% 4.49% 4.48% 1.85% 4.17%
</TABLE>
-13-
<PAGE> 14
<TABLE>
CITIZENS NATIONAL "NEXT FOUR QUARTERS"
ASSET/LIABILITY MANAGEMENT
STATIC GAP ANALYSIS (000S)
<CAPTION>
IMMEDIATELY
ADJUSTABLE END OF 9/98 END OF 12/98 END OF 3/99 END OF 6/99
RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE RUNOFFS RATE
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Investment Securities 1,500 5.05% 7,660 4.69% 4,782 5.71% 4,400 5.21% 2,500 5.99%
Total Short Term Investment 5,640 5.50% 0 0.00% 500 6.51% 2,200 6.00% 0 0.00%
Net Loans 22,312 9.10% 3,571 8.52% 3,146 8.63% 7,348 8.26% 2,895 8.30%
Total Earning Assets 29,452 8.20% 11,231 5.91% 8,428 6.85% 13,948 6.94% 5,395 7.23%
Total Non-Earning Assets 445 9.21% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Assets 29,897 8.22% 11,231 5.91% 8,428 6.85% 13,948 6.94% 5,395 7.23%
Total Noninterest Bearing Deposits 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Interest Bearing Deposits 0 0.00% 40,341 3.35% 7,559 5.13% 4,033 5.50% 30,699 2.92%
Total Deposits 0 0.00% 40,341 3.35% 7,559 5.13% 4,033 5.50% 30,699 2.92%
Total Other Interest Bearing Liabilities 700 4.75% 181 3.09% 0 0.00% 0 0.00% 0 0.00%
Total Other Liabilities 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities 700 4.75% 40,522 3.35% 7,559 5.13% 4,033 5.50% 30,699 2.92%
Total Equity Capital 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total Liabilities and Capital 700 4.75% 40,522 3.35% 7,559 5.13% 4,033 5.50% 30,699 2.92%
Interval GAP 29,197 (29,291) 869 9,914 (25,304)
Cumulative GAP 29,197 (94) 775 10,690 (14,614)
Interval GAP/Total Assets 21.31% (21.38%) 0.63% 7.24% (18.47%)
Cumulative GAP/Total Assets 21.31% (0.07%) 0.57% 7.80% (10.67%)
Interval GAP/Earning Assets 23.23% (23.67%) 0.85% 8.01% (20.45%)
Cumulative GAP/Earning Assets 23.23% (0.44%) 0.42% 8.43% (12.02%)
Interval Spread: Earning Assets 3.45% 2.56% 1.64% 1.44% 4.31%
Interval Spread: Total Assets 3.47% 2.56% 1.72% 1.44% 4.31%
</TABLE>
-14-
<PAGE> 15
SECURITY BANC CORPORATION
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings Inapplicable
ITEM 2 Changes in Securities Inapplicable
ITEM 3 Defaults upon Senior Securities Inapplicable
ITEM 4 Submission of Matters to a Vote of Security Holders
The annual meeting of Shareholders of Security Banc Corporation was
held in Springfield, Ohio on April 21, 1998.
Four Directors of Class I were elected to serve until the Annual Meeting
of Shareholders of 2001. Shareholders adopted an amendment to Article IV
of the Company's amended Articles of Incorporation changing the number of
authorized shares of the Company's Common Stock from eleven million
(11,000,000) to eighteen million (18,000,000) shares, changing the par
value for each share to one dollar and fifty-six twenty-five cents
($1.5625) which will permit the Board of Directors to declare the
subsequent two (2) for one (1) stock split for each share owned.
Shareholders also approved the Corporation's 1998 Stock Option Plan.
Voting results related to Article IV were as follows:
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
5,097,204 80 15,806 35,480
Voting results of the Corporation's 1998 Stock Option Plan were as
follows:
FOR AGAINST ABSTAIN
--- ------- -------
5,070,921 34,805 42,844
ITEM 5 Other Information Inapplicable
ITEM 6 Exhibits and Reports on Form 8-K
3(i) - Amendment to Articles of Incorporation
27 - Financial Data Schedule
No reports on Form 8K have been filed during the
quarter for which this report is filed.
-15-
<PAGE> 16
SECURITY BANC CORPORATION
SIGNATURE
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.
SECURITY BANC CORPORATION
By /s/ Thomas L. Miller
-----------------------------
Thomas L. Miller
Vice President/Controller
By /s/ J. William Stapleton
-----------------------------
J. William Stapleton
Executive Vice President/CFO
August 6, 1998
-16-
<PAGE> 1
EXHIBIT 3(i)
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF SECURITY BANC CORPORATION
Harry O. Egger, who is President, and J. William Stapleton, who is Secretary of
the above named Ohio Corporation for profit with its principal location at 40
South Limestone Street, Springfield, Ohio 45502, who hereby certify that at a
meeting of the Shareholders duly called and held on April 21, 1998, at which
meeting a quorum of the Shareholders was present in person or by proxy and by
the affirmative vote of 84% of the holders of shares entitling them to exercise
the voting power of the Corporation, the following Resolution was adopted to
amend the Articles of Incorporation.
Resolved, that Article IV of the Amended Articles of Incorporation of Security
Banc Corporation be and they are hereby amended in their entirety to read as
follows:
The aggregate number of common shares which the Corporation shall have
the authority to issue is eighteen million (18,000,000) shares each of
one dollar and fifty-six twenty-five cents ($1.5625) par value.
The Corporation, through its Board of Directors, shall have the power
to purchase, hold, sell, and transfer the shares of its own capital
stock provided that it does not use its funds or property for the
purchase of its own shares of capital stock when such use will cause
any impairment of its capital, except when otherwise permitted by law,
and provided further that shares of its own capital stock belonging to
it are not voted upon directly or indirectly.
IN WITNESS WHEREOF, the above named officers acting for and on behalf of the
Corporation, have subscribed their names this 21st day of April, 1998.
/s/ Harry O. Egger
------------------------------------------
Harry O. Egger, President
/s/ J. William Stapleton
------------------------------------------
J. William Stapleton, Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 38,401
<INT-BEARING-DEPOSITS> 2,700
<FED-FUNDS-SOLD> 32,940
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 128,287
<INVESTMENTS-CARRYING> 9,915
<INVESTMENTS-MARKET> 10,141
<LOANS> 587,197
<ALLOWANCE> 6,917
<TOTAL-ASSETS> 838,892
<DEPOSITS> 687,585
<SHORT-TERM> 32,797
<LIABILITIES-OTHER> 4,669
<LONG-TERM> 0
0
0
<COMMON> 19,722
<OTHER-SE> 94,119
<TOTAL-LIABILITIES-AND-EQUITY> 838,892
<INTEREST-LOAN> 26,038
<INTEREST-INVEST> 4,150
<INTEREST-OTHER> 1,534
<INTEREST-TOTAL> 31,722
<INTEREST-DEPOSIT> 11,200
<INTEREST-EXPENSE> 12,034
<INTEREST-INCOME-NET> 19,688
<LOAN-LOSSES> 400
<SECURITIES-GAINS> 86
<EXPENSE-OTHER> 11,463
<INCOME-PRETAX> 11,731
<INCOME-PRE-EXTRAORDINARY> 11,731
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,721
<EPS-PRIMARY> .64
<EPS-DILUTED> .63
<YIELD-ACTUAL> 8.37
<LOANS-NON> 2,524
<LOANS-PAST> 2,335
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 7,118
<ALLOWANCE-OPEN> 6,254
<CHARGE-OFFS> 763
<RECOVERIES> 1,026
<ALLOWANCE-CLOSE> 6,917
<ALLOWANCE-DOMESTIC> 4,381
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,536
</TABLE>
