<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF
1934 For quarter ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the transition period ..... to .....
Commission file number: 0-15624
-------
SECOND BANCORP, INCORPORATED
(exact name of registrant as specified in its charter)
Ohio 34-1547453
- -------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
in Company or organization) Identification No.)
108 Main Ave. Warren, Ohio 44482-1311
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(Address of principal executive offices) (Zip Code)
(216) 841-0123
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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.
Common Stock, without par value -- 6,874,492 shares outstanding as of July 31,
1998.
Page 1 of 14
<PAGE> 2
SECOND BANCORP, INC. AND SUBSIDIARY
INDEX Page
Number
------
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated balance sheets -
June 30, 1998 and 1997 and December 31, 1997........................... 3
Consolidated statements of income -
Three months and six months ended June 30, 1998 and 1997 4
Consolidated statements of cash flows -
Six months ended June 30, 1998 and 1997...................... 5
Consolidated statement of shareholders' equity -
Six months ended June 30, 1998 and 1997...................... 6
Notes to consolidated financial statements - June 30, 1998............ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...... 8-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................. 11
Item 2. Changes in Securities .............................. 11
Item 3. Defaults upon Senior Securities .................... 11
Item 4. Submission of Matters to a Vote of Security
Holders............................................. 11
Item 5. Other Information .................................. 11
Item 6. Exhibits and Reports on Form 8-K.................... 11
SIGNATURES ................................................. 12
Statement 11 Re: Computation of Earnings Per Share .......... 13
Schedule 27 ................................................. 14
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<PAGE> 3
<TABLE>
<CAPTION>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
Second Bancorp, Inc. and Subsidiary
June 30 December 31 June 30
---------------------------------------------------------
(Dollars in thousands) 1998 1997 1997
- -------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $32,276 $24,367 $31,341
Federal funds sold 12,000 10,000 2,500
Securities (at market value) 302,007 280,010 251,701
Loans 590,387 566,492 586,416
Less reserve for loan losses 7,230 6,855 7,067
---------------------------------------------------------
Net loans 583,157 559,637 579,349
Premises and equipment 9,796 9,924 9,879
Accrued interest receivable 6,430 6,188 6,289
Goodwill and intangible assets 2,945 3,221 3,497
Other assets 18,864 20,133 19,937
---------------------------------------------------------
Total assets $967,475 $913,480 $904,493
=========================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------
Deposits:
Demand - non-interest bearing $85,403 $93,080 $80,068
Demand - interest bearing 66,410 64,796 61,924
Savings 145,237 155,127 148,647
Time deposits 378,412 390,263 357,505
---------------------------------------------------------
Total deposits 675,462 703,266 648,144
Federal funds purchased and securities sold under
agreements to repurchase 145,718 111,327 136,017
Note payable 0 0 2,500
Other borrowed funds 6,091 3,492 6,177
Federal Home Loan Bank advances 49,844 9,864 33,454
Accrued expenses and other liabilities 6,525 6,103 5,792
---------------------------------------------------------
Total liabilities 883,640 834,052 832,084
Shareholders' equity:
Preferred stock, no par value;
Series A: 1,500,000 shares authorized 0 0 0
Series B: 1,500,000 shares authorized 0 0 0
Common stock, no par value; 20,000,000 shares
authorized; 6,913,192, 6,850,663 and 6,797,536
shares, respectively 30,745 29,302 28,245
Treasury stock, 50,400 shares (793) (793) (793)
Accumulated other comprehensive income 2,685 3,016 61
Retained earnings 51,198 47,903 44,896
---------------------------------------------------------
Total shareholders' equity 83,835 79,428 72,409
---------------------------------------------------------
Total liabilities and shareholders' equity $967,475 $913,480 $904,493
=========================================================
</TABLE>
See notes to consolidated financial statements.
Certain reclassifications have been made to amounts previously reported in order
to conform with current year presentation.
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Consolidated Statements of Income
Second Bancorp, Inc. and Subsidiary
For the Three Months For the Six Months
Ended June 30 Ended June 30
(Dollars in thousands, -------------------------------- ---------------------------
except per share data) 1998 1997 1998 1997
- -------------------------------------------------------------------------------------- ---------------------------
INTEREST INCOME
- ------------------------------------------------------
<S> <C> <C> <C> <C>
Loans (including fees):
Taxable $12,895 $12,924 $25,597 $25,496
Exempt from federal income taxes 240 134 362 304
Securities:
Taxable 3,436 3,090 7,086 5,967
Exempt from federal income taxes 821 700 1,611 1,354
Federal funds sold 85 52 127 143
-------------------------------- ---------------------------
Total interest income 17,477 16,900 34,783 33,264
INTEREST EXPENSE
- ------------------------------------------------------
Deposits 6,360 6,274 12,885 12,586
Federal funds purchased and securities
sold under agreements to repurchase 1,429 1,288 2,908 2,349
Note payable 0 97 0 187
Other borrowed funds 47 45 78 82
Federal Home Loan Bank advances 688 492 1,078 934
-------------------------------- ---------------------------
Total interest expense 8,524 8,196 16,949 16,138
-------------------------------- ---------------------------
Net interest income 8,953 8,704 17,834 17,126
Provision for loan losses 806 782 1,591 1,543
-------------------------------- ---------------------------
Net interest income after provision for loan
losses 8,147 7,922 16,243 15,583
NON-INTEREST INCOME
- ------------------------------------------------------
Service charges on deposit accounts 713 789 1,388 1,519
Trust fees 677 609 1,355 1,218
Security gains 35 16 163 47
Other operating income 969 716 1,729 1,393
-------------------------------- ---------------------------
Total non-interest income 2,394 2,130 4,635 4,177
NON-INTEREST EXPENSE
- ------------------------------------------------------
Salaries and employee benefits 3,635 3,377 7,190 6,779
Net occupancy 794 764 1,591 1,550
Equipment 620 486 1,251 1,009
Professional services 338 443 706 780
Assessment on deposits and other taxes 209 237 453 472
Amortization of goodwill and other intangibles 164 188 327 376
Other operating expenses 1,451 1,896 2,815 3,355
-------------------------------- ---------------------------
Total non-interest expense 7,211 7,391 14,333 14,321
-------------------------------- ---------------------------
Income before federal income taxes 3,330 2,661 6,545 5,439
Income tax expense 742 470 1,468 1,098
-------------------------------- ---------------------------
Net income $2,588 $2,191 $5,077 $4,341
================================ ===========================
NET INCOME PER COMMON SHARE:
Basic $0.38 $0.33 $0.74 $0.65
Diluted $0.37 $0.32 $0.73 $0.64
Weighted average common shares outstanding:
Basic 6,853,161 6,734,104 6,837,407 6,716,961
Diluted 6,947,459 6,789,982 6,935,124 6,795,602
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
Second Bancorp, Inc. and Subsidiary Accumulated
Other
Preferred Common Treasury Comprehen- Retained Comprehen-
(Dollars in thousands) Stock Stock Stock sive Income Earnings Total sive Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 6 $ 27,398 $ (319) $ (24) $ 42,176 $ 69,237
Comprehensive income:
Net income 4,341 4,341 $ 4,341
Other comprehensive income, net of tax
Change in unrealized market value
adjustment on securities
available-for-sale, net of tax 85 85 85
--------
Comprehensive income $ 4,426
========
Cash dividends declared:
Common stock ($.24 per share) (1,621) (1,621)
Exercise of stock options 596 596
Common stock issued - dividend reinvestment plan 247 247
Conversion of preferred stock to common stock (6) 4 (2)
Purchase of treasury stock (474) (474)
------------------------------------------------------------------------
Balance, June 30, 1997 $ -- $ 28,245 $ (793) $ 61 $ 44,896 $ 72,409
========================================================================
Balance, January 1, 1998 $ -- $ 29,302 $ (793) $ 3,016 $ 47,903 $ 79,428
Comprehensive income:
Net income 5,077 5,077 $ 5,077
Other comprehensive income, net of tax
Change in unrealized market value
adjustment on securities
available-for-sale, net of tax (331) (331) (331)
--------
Comprehensive income $ 4,746
========
Cash dividends declared: common ($.26 per (1,782) (1,782)
share)
Exercise of stock options 254 254
Common stock issued - dividend reinvestment
plan 1,189 1,189
-------------------------------------------------------------------------
Balance, June 30, 1998 $ -- $ 30,745 $ (793) $ 2,685 $ 51,198 $ 83,835
==========================================================================
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Second Bancorp, Inc. and Subsidiary
For the Six Months Ended June 30
--------------------------------
(Dollars in Thousands) 1998 1997
- ---------------------- ---- ----
OPERATING ACTIVITIES
- --------------------------------------------------------
<S> <C> <C>
Net income $ 5,077 $ 4,341
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 1,591 1,543
Provision for depreciation 985 801
Provision for amortization of intangibles 276 376
Amortization of investment discount and premium (555) 4
Deferred income taxes (76) 53
Securities gains (163) (47)
Other (gains) losses, net (647) 112
Increase in interest receivable (242) (1,203)
Increase (decrease) in interest payable 325 (181)
Originations of loans held-for-sale (17,758) (5,986)
Proceeds from sale of loans held-for-sale 18,405 6,345
Decrease in other assets 1,516 1,673
Increase (decrease) in other liabilities 97 (339)
-----------------------------------------
Net cash provided by operating activities 8,831 7,492
INVESTING ACTIVITIES
- -----------------------------------------------------
Proceeds from maturities of securities - available-for-sale 49,909 25,028
Proceeds from sales of securities - available-for-sale 36,429 9,842
Purchases of securities - available-for-sale (108,119) (55,547)
Net increase in revolving credit receivables (560) (2,852)
Net increase in loans (24,551) (19,603)
Net increase in premises and equipment (857) (1,761)
------------------------------------------
Net cash used by investing activities (47,749) (44,893)
FINANCING ACTIVITIES
- -----------------------------------------
Net decrease in demand deposits, insured money market
and interest checking accounts, and savings deposits (15,953) (15,195)
Net decrease in time deposits (11,851) (6,058)
Net increase in federal funds purchased and
securities sold under agreements to repurchase 34,391 49,230
Decrease in note payable 0 (2,500)
Net increase in borrowings 2,599 2,188
Net advances from Federal Home Loan Bank 39,980 6,897
Cash dividends (1,782) (1,621)
Conversion/redemption preferred stock 0 (2)
Purchase of treasury stock 0 (474)
Issuance of common stock 1,443 843
-----------------------------------------
Net cash provided by financing activities 48,827 33,308
-----------------------------------------
Increase (decrease) in cash and cash equivalents 9,909 (4,093)
-----------------------------------------
Cash and cash equivalents at beginning of year 34,367 37,934
-----------------------------------------
Cash and cash equivalents at end of period $ 44,276 $ 33,841
=========================================
</TABLE>
Supplementary Cash Flow Information:
Cash paid for 1) Federal Income taxes - $1,526,000 and $1,370,000 for the six
months ended June 30, 1998 and 1997, respectively and 2) Interest -
$17,105,000 and $16,319,000 for the six months ended June 30, 1998 and 1997,
respectively.
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<PAGE> 7
Second Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements (unaudited)
June 30, 1998
NOTE A - BASIS OF PRESENTATIONThe 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 and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three- or
six-month periods ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1998. Certain
reclassifications have been made to amounts previously reported in order to
conform to current period presentations. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE B - PER SHARE DATA
The per share data is based upon the weighted average number of shares,
including common stock equivalents, outstanding during the period, as restated
for the two for one stock split effective May 1, 1997.
NOTE C - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 130, "Reporting Comprehensive Income". SFAS No. 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. SFAS No. 130 requires unrealized
gains or losses on the Company's available-for-sale securities to be included in
other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
During the first six months of 1998 and 1997, total comprehensive income
amounted to $4,746 and $4,426. The components of comprehensive income, net of
tax, for the six-month periods ended June 30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
------------------
<S> <C> <C>
Net income $ 5,077 $ 4,341
Unrealized losses on available-for-sale securities (331) 85
--------------------
Comprehensive income $ 4,746 $ 4,426
====================
</TABLE>
Accumulated other comprehensive income, net of related tax, at June 30, 1998 and
December 31, 1997 totaled $2,685 and $3,016, respectively and were comprised
entirely of accumulated changes in unrealized market value adjustments on
securities available-for-sale, net of tax.
Disclosure of reclassification amounts:
<TABLE>
<CAPTION>
January 1 to January 1 to
June 30, 1998 June 30, 1997
-------------------------------
<S> <C> <C>
Unrealized holding (losses) gains arising during the period $(168) $ 132
Less: reclassification for gains included in net income (163) (47)
------------------------
Net unrealized (losses) gains on available-for-sale securities $(331) $ 85
========================
</TABLE>
-7-
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Second Bancorp, Incorporated, (the "Company") is a one-bank holding company
which owns The Second National Bank of Warren (the "Bank"), a Warren, Ohio based
commercial bank. Operating through twenty-six branches and one loan production
office, the Bank offers a wide range of commercial and consumer banking and
trust services primarily to business and individual customers in various
communities in a five county area in northeastern Ohio. The Bank has received
approval to open a twenty-seventh office in Medina, Ohio. The branch is
scheduled to open August 17, 1998.
The Bank focuses its marketing efforts primarily on local independent and
professional firms and individuals that are the owners and principals of such
firms. The Bank has emphasized commercial lending and market area expansion.
Financial Condition
At June 30, 1998, the Company had consolidated total assets of $967 million,
deposits of $675 million and shareholders' equity of $84 million. Since June 30,
1997, total assets have grown by 7.0%. Asset growth has primarily centered in
the category of securities as total loan growth has moderated over the past
year. Securities have increased by 20% over the past year to $302 million at the
end of the second quarter of 1998. Net loans now total $583 million, an increase
of $4 million from a year ago. Within the loan totals, real estate loan balances
have increased by 32% to $104 million as of June 30, 1998 while consumer lending
has declined by $34 million to $168 million as of the same date. The decline in
consumer loan balances reflects the Bank's reduced focus on indirect automobile
lending and commitment to improved credit quality within that portfolio.
Funding growth has primarily been generated through advances from the Federal
Home Loan Bank and increases in time deposits. Time deposits have increased to
over $378 million as of June 30, 1998 versus $358 million as of the same date in
1997. Federal Home Loan Bank advances have shown similar growth, increasing by
$17 million over the past year to total $50 at the end of the most recent
quarter.
Results of Operations
General. The Company achieved net income of $2,588,000 for the second quarter of
1998, 18% greater than the $2,191,000 earned during the same period last year.
On a per share basis, diluted earnings for the quarter were $.37, 15.6% greater
than the $.32 per share reported for the second quarter of 1997. Return on
average assets (ROA) and return on average total shareholders' equity (ROE) were
1.12% and 12.53%, respectively for the second quarter of 1998 compared to 1.00%
and 12.52% for last year's second quarter. Net interest income increased by 2.9%
to $8,953,000 for the second quarter of 1998. Non-interest income increased
12.4% from a year ago with increases in income from trust services, security
gains and other operating income all posting positive results. Non-interest
expenses declined 2.4% from the same period a year ago, indicating the Company's
continued successful efforts to contain and reduce costs.
For the first six months, the Company achieved net income of $5,077,000, 17%
greater than the $4,341,000 earned during the same period last year. On a per
share basis, diluted earnings were $.73, 14.1% greater than the $.64 per share
reported for the first six months of 1997. Return on average assets (ROA) and
return on average total shareholders' equity (ROE) were 1.10% and 12.43%,
respectively for the first half of 1998 compared to .99% and 12.43% for the same
period last year. Net interest income increased by 4.1% to $17,834,000 for the
first half of 1998. Non-interest income increased 11.0% from a year ago with
increases in income from trust services, security gains and other operating
income all posting positive results. Non-interest expenses remained virtually
unchanged from a year ago.
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<PAGE> 9
Asset Quality. The reserve for loan losses was 1.22% of total loans at the end
of the second quarter of 1998. The reserve was 1.21% of total loans at June 30,
1997. Non-performing loans have declined significantly over the past year and
total $5,363,000 as of June 30, 1998 versus $9,413,000 as of the same date last
year. Net charge-offs averaged an annualized .44% of average loans for the
second quarter, which represents a substantial decrease from the level of .61%
of average loans for the second quarter of 1997. Similarly, net charge-offs
averaged .42% of average loans for the first half of 1998, down from .62% for
the same period in 1997. A $2.4 million receivable due the Bank that was
reclassified from loans to other assets at the end of 1997 was substantially
recovered during the first quarter of 1998 and further indicates an improved
credit quality position.
Net Interest Income. Net interest income for the second quarter of 1998
increased by 2.9% from the same period last year to $8,953,000. The increase was
derived from an increase of 5.3% in average earning assets to $870 million. The
net interest margin was marginally lower in the second quarter of 1998 at 4.37%,
compared to 4.42% for the same period in 1997. Similarly, net interest income
for the first half of 1998 increased by 4.1% from the same period last year to
$17,834,000. The increase was derived from an increase of 5.9% in average
earning assets to $866 million. The net interest margin was marginally lower in
the first half of 1998 at 4.35%, compared to 4.40% for the same period in 1997.
A decrease in the loan to asset ratio is primarily responsible for the slight
decline in the net interest margin. Loan represent 60% of total assets at the
end of the second quarter 1998, compared to 64% a year earlier.
Non-interest Income. Non-interest income showed significant improvement over the
past year. For the second quarter of 1998, fees from trust services increased by
$68,000, or 11%, over the second quarter of 1997. Other income totaled $969,000
for the second quarter of 1998 versus $716,000 for the same period in 1997.
Sales of SBA and real estate loans as well as sales of alternative investment
products helped generate the increase in other income. Security sales for the
quarter generated $35,000 in income versus $16,000 in gains for the second
quarter of 1997. For the first half of 1998, non-interest income totaled
$4,635,000, or 11.0% greater than the same period in 1998. Fees from trust
services increased by $137,000, or 11%, over the first half of 1997. Other
income totaled $1,729,000 for the first half of 1998 versus $1,393,000 for the
same period in 1997. Sales of SBA and real estate loans as well as sales of
alternative investment products helped generate the increase in other income.
Security sales for the first half of 1998 generated $163,000 in income versus
$47,000 in gains for the first half of 1997.
Non-interest Expense. The expenses for the second quarter of 1998 were 2.4%
lower than for the same period in 1997. Increases in salaries and employee
benefits (7.6%) along with equipment expense (27.5%) related to the companies
migration of data processing and information management systems to an in-house
environment and were the primary factors affecting the increase in expenses.
Professional services, assessments on deposits and other taxes, amortization of
goodwill and other intangibles and other operating expenses were lower from a
year ago. For the first six months of 1998, total non-interest expenses are
virtually unchanged from the same period of the prior year.
Liquidity and Capital Resources. The Company provides funds for asset growth,
deposit withdrawals and other liability maturities through maturing securities,
payments made on loans, and through the acquisition of new deposits. The Company
also has the ability to borrow in excess of $20 million in overnight funds
through correspondent banks to satisfy short-term liquidity needs. The Company
also uses advances from the Federal Home Loan Bank to provide funding for
growth. The Company also has available to it $15 million in lines of credit from
other financial institutions.
Shareholders' equity has increased by 15.8% over the past year, with retained
earnings also increasing by 14%. Accumulated other comprehensive income, which
consists of unrealized gains on available-for-sale securities, totaled
$2,685,000 as of June 30, 1998. The tier I leverage ratio was 8.46% as of June
30, 1998, up from 7.80% as of the same date in 1997. Similarly, the risk- based
capital ratio increased from 12.03% as of June 30, 1997 to 13.18% as of the end
of the most recent quarter.
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<PAGE> 10
Forward-looking statements:
The section that follows contains certain forward-looking statements (as defined
in the Private Securities Litigation Reform Act of 1995). These forward-looking
statements may involve significant risks and uncertainties. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, actual results may differ materially from the expectations discussed
in these forward-looking statements.
Year 2000:
Due to the approach of the Year 2000, the Company is exposed to risks that
equipment or software applications will not be able to distinguish the year 2000
from the year 1900 and will not function properly. To address the issue, the
Company has initiated the process of preparing its computer systems and
applications for the Year 2000. This process involves modifying or replacing
certain hardware and software used by the Company. The software utilized is
primarily originated and serviced by external providers. The Company is
communicating with those providers to ensure that appropriate steps are being
taken to remedy any Year 2000 issues. The Company has in place a steering
committee to oversee the Year 2000 readiness effort and has a formal plan in
place addressing the issue. Contingency planning efforts are part of the plan
are substantially completed for all major operations and functions of the
Company. Company-wide in-house testing has begun and is ongoing. The Company is
also in contact with its corporate customers, communicating the issues involved
with the Year 2000 issue and assessing their state of readiness. The total
anticipated capital expenditure associated with Year 2000 readiness is expected
to be approximately $1.3 million. Of this amount, approximately $50,000 has been
expended to date. Operating expenses are estimated to be minimal, including two
full time employees dedicated to the project. Operating expenses incurred for
the first six months of 1998 are approximately $35,000 with an additional
$50,000 expected through completion of the project.
-10-
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS -
The Company is subject to various pending and threatened lawsuits in which
claims for monetary damages are asserted in the ordinary course of business.
While any litigation involves an element of uncertainty, in the opinion of
management, liabilities, if any, arising from such litigation or threat thereof
will not have a material impact on the financial position or results of
operations of the Company.
ITEM 2. CHANGES IN SECURITIES - Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
(a) - (d) Second Bancorp, Incorporated's Annual Shareholders Meeting was held on
May 12, 1998. The results of the votes on the matters presented to shareholders
are as follows: Of the 6,881,089 issued and outstanding shares eligible to vote,
5,961,810 were represented at the meeting. Mssrs. Alan G. Brant, John A.
Anderson, John C. Gibson and Robert, J. Webster were elected Directors of the
Company for a two year term with votes "for" of 5,882,653; 5,885,565; 5,880,436
and 5,877,581, respectively. The vote on issue 1 for fixing the number of
directors at 7 was "for" 5,872,818, "against" 45,848 and "abstaining" 34,313.
The vote approving the Second Bancorp, Incorporated 1998 Non-qualified Stock
Plan was "for" 4,670,282, "against" 292,243 and "abstaining" 212,423. The vote
ratifying the appointment of Ernst & Young LLP as the independent Certified
Public Accountants of Second Bancorp, Incorporated was "for" 5,887,006,
"against" 13,456 and "abstaining" 52,518.
ITEM 5. OTHER INFORMATION - Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
The following exhibits are included herein:
(11) Statement re: computation of earnings per share
(27) Financial Data Schedule
The Company filed a Form 8-K on April 17, 1998 in conjunction with the
announcement of the acquisition of Enfin, Inc. by Second Bancorp, Incorporated,
The Company also filed a Form 8-K on May 7, 1998 in conjunction with the
announcement of the acquisition of Trumbull Financial Corporation by Second
Bancorp, Incorporated.
-11-
<PAGE> 12
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.
SECOND BANCORP, INC.
Date: August 14, 1998 /s/ David L. Kellerman
----------------------------------------------------------
David L. Kellerman, Treasurer
Signing on behalf of the registrant and as principal accounting officer and
principal financial officer.
-12-
<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 11
Statement 11 Re: Computation of Earnings Per Share
Second Bancorp, Inc. and Subsidiary
For the Three Months Ended For the Six Months Ended
-----------------------------------------------------------------
June 30 June 30 June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in thousands, except per share data)
BASIC:
<S> <C> <C> <C> <C>
Weighted average shares issued 6,903,561 6,784,504 6,887,807 6,763,719
Less: Treasury shares (50,400) (50,400) (50,400) (46,758)
-----------------------------------------------------------------
Net Weighted average shares outstanding 6,853,161 6,734,104 6,837,407 6,716,961
=================================================================
Net income $2,588 $2,191 $5,077 $4,341
=================================================================
Basic Earnings Per Share $0.38 $0.32 $0.74 $0.64
DILUTED:
Weighted average shares issued 6,903,561 6,784,504 6,887,807 6,763,719
Less: Treasury shares (50,400) (50,400) (50,400) (46,758)
Net effect of dilutive stock options -
based on the treasury stock method
using average market price 94,298 55,878 97,717 78,528
Assumed conversion of $1.50 Preferred
Stock Series A-1 0 0 0 113
-----------------------------------------------------------------
6,947,459 6,789,982 6,935,124 6,795,602
=================================================================
Net income $2,588 $2,150 $5,077 $4,341
Diluted Earnings Per Share $0.37 $0.32 $0.73 $0.64
</TABLE>
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