<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997.
Commission file number 0-15839
EMPIRE BANC CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
1227 E. Front Street
Traverse City, Michigan
----------------------------------------
(Address of principal executive offices)
38-2727982
------------------------------------
(IRS Employer Identification Number)
49686-2928
----------
(Zip code)
(616) 922-2111
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
--------------------------------------------------------------------
(Former name, address and 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, and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock was 1,757,584 shares of common stock, par value $5, outstanding as
of September 30, 1997.
<PAGE> 2
Empire Banc Corporation - Consolidated Balance Sheet
<TABLE>
<CAPTION>
(In thousands, except share data) September 30 December 31 September 30
1997 1996 1996
<S> <C> <C> <C>
Assets
Cash and due from banks $ 18,126 $ 22,603 $ 16,403
Federal funds sold 6,700 -- --
-------- -------- --------
Cash and cash equivalents 24,826 22,603 16,403
Securities
Available for sale, at fair value 38,762 34,572 34,466
Held to maturity 31,544 36,804 38,212
(fair value: 9/30/97-$31,783,
12/31/96-$37,038, 9/30/96-$38,340)
Mortgage-backed securities
Available for sale, at fair value 26,128 27,202 27,518
Loans 297,409 272,182 268,031
Less: allowance for loan losses (3,800) (3,525) (3,692)
-------- -------- --------
Net loans 293,609 268,657 264,339
Premises and equipment, net 4,484 3,985 3,919
Other real estate -- -- 5
Accrued income and other assets 6,910 6,996 6,982
-------- -------- --------
Total assets $426,263 $400,819 $391,844
======== ======== ========
Liabilities
Deposits
Non-interest-bearing $ 56,488 $ 54,556 $ 49,778
Interest-bearing 315,268 289,798 286,762
-------- -------- --------
Total deposits 371,756 344,354 336,540
Federal funds purchased -- 5,500 --
Federal Home Loan Bank advances 12,000 12,000 17,000
Accrued expense and other liabilities 7,416 6,292 6,607
-------- -------- --------
Total liabilities 391,172 368,146 360,147
Shareholders' equity
Preferred stock-$1 par value,
2,000,000 shares authorized, none outstanding
Common stock-$5 par value, 5,000,000 shares authorized,
shares outstanding: 9/30/97-1,757,584; 12/31/96-
1,746,009; 9/30/96-1,740,683 8,788 8,730 8,703
Paid-in-capital 12,608 12,350 12,210
Retained earnings 13,371 11,419 10,781
Net unrealized gain on securities, net of tax 324 174 3
-------- -------- --------
Total shareholders' equity 35,091 32,673 31,697
-------- -------- --------
Total liabilities and shareholders' equity $426,263 $400,819 $391,844
======== ======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 3
Empire Banc Corporation - Consolidated Statement of Income
<TABLE>
<CAPTION>
(In thousands, except share data) Quarter Ending Year to Date
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 6,950 $ 6,140 $ 19,887 $ 18,302
Taxable securities
Available for sale 1,021 957 2,936 2,572
Held to maturity 432 466 1,330 1,350
Tax-exempt securities-held to maturity 60 66 182 177
Federal funds sold 106 161 174 351
------- ------- ------- ------
Total interest income 8,569 7,790 24,509 22,752
Interest expense
Deposits 3,685 3,332 10,575 9,693
Federal funds purchased 1 -- 37 20
Federal Home Loan Bank advances 176 252 543 743
------- ------- -------- -------
Total interest expense 3,862 3,584 11,155 10,456
------- ------- -------- -------
Net interest income 4,707 4,206 13,354 12,296
Provision for loan losses 188 416 981 877
------- ------- -------- -------
Net interest income after
provision for loan losses 4,519 3,790 12,373 11,419
Non-interest income
Mortgage sales and servicing 456 408 1,178 1,061
Service charges on deposit accounts 380 326 1,056 953
Trust income 672 515 1,964 1,555
Other service charges and fees 228 155 497 393
Other income 91 95 264 288
Security gains(losses) -- -- (6) --
------- ------- -------- ------
Total non-interest income 1,827 1,499 4,953 4,250
Non-interest expense
Salaries and employee benefits 2,805 2,116 7,199 6,426
Occupancy 283 258 798 777
Furniture and equipment 225 188 659 612
Other 996 963 2,995 2,883
------- ------- ------- ------
Total non-interest expense 4,309 3,525 11,651 10,698
------- ------- ------- ------
Income before federal income taxes 2,037 1,764 5,675 4,971
Federal income taxes 676 583 1,881 1,643
------- ------- ------- ------
Net income $ 1,361 $ 1,181 $ 3,794 $ 3,328
======= ======= ======= =======
- ----------------------------------------------------------------------------------------
Earnings per share $ .72 $ .63 $ 2.00 $ 1.78
Average shares outstanding 1,895,816 1,876,514 1,894,771 1,873,692
- ----------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
<PAGE> 4
Empire Banc Corporation - Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
(In thousands) Year to Date September 30
1997 1996
<S> <C> <C>
Operating activities
Net income $ 3,794 $ 3,328
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 527 537
Provision for loan losses 981 877
Mortgage loans originated for sale (40,647) (47,712)
Sale of mortgage loans 37,842 46,277
Net realized loss on securities 6 --
Net amortization/accretion on securities 91 285
Increase in deferred income taxes 281 34
Increase (decrease) in accrued interest receivable 70 (87)
Increase in accrued expense and other liabilities 1,120 736
Decrease in other assets (342) (43)
------- -------
Total adjustments (71) 904
------- -------
Net cash from operating activities 3,723 4,232
Investing activities
Securities available for sale
Proceeds from sales 992 --
Proceeds from maturities 11,220 15,672
Purchases (15,146) (30,507)
Securities held to maturity
Proceeds from sales 1,986 --
Proceeds from maturities 7,261 12,073
Purchases (4,039) (13,908)
Loans granted net of repayments (23,128) (7,879)
Premises and equipment expenditures (1,065) (833)
Proceeds from disposal of assets 39 --
------- -------
Net cash from investing activities (21,880) (25,382)
Financing activities
Net increase in deposits 27,402 17,000
Net decrease in federal funds purchased (5,500) --
Cash dividends paid (1,838) (1,489)
Issuance of common stock 316 184
------- -------
Net cash from financing activities 20,380 15,695
------- -------
Net change in cash and cash equivalents 2,223 (5,455)
Cash and cash equivalents at January 1 22,603 21,858
------- -------
Cash and cash equivalents at September 30 $24,826 $16,403
======= =======
- ------------------------------------------------------------------------------------------
Interest paid $ 11,049 $10,395
Income taxes paid 1,834 1,825
- ------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
<PAGE> 5
Empire Banc Corporation - Consolidated Statement of Changes in
Shareholders' Equity
<TABLE>
<CAPTION>
(In thousands) 1997 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Balance January 1 $32,673 $30,005
Net income 3,794 3,328
Common stock issued 316 184
Dividends declared (1,842) (1,489)
Net change in security valuation 150 (331)
------- -------
Balance September 30 $35,091 $31,697
======= =======
</TABLE>
Notes to Consolidated Financial Statements
Note-1 The consolidated financial statements include the accounts of Empire
Banc Corporation and its wholly-owned subsidiary, Empire National Bank, after
elimination of significant inter-company transactions and accounts. The
statements have been prepared by management without audit by independent
certified public accountants. However, these statements reflect all
adjustments (consisting of normal recurring accruals) and disclosures which
are, in the opinion of management, necessary for a fair presentation of the
results for the interim periods presented and should be read in conjunction
with the notes to financial statements included in the Empire Banc
Corporation's Form 10-K for the year ended December 31, 1996.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.
Because the results of operations are so closely related to and responsive
to changes in economic conditions, the results for any interim period are
not necessarily indicative of the results that can be expected for the
entire year.
Note-2 Earnings per share of common stock is computed by dividing net
income by the weighted average number of common stock and common stock
equivalents outstanding during the period. Common stock equivalents
consist of common stock issuable under the assumed exercise of stock
options granted under the Corporation's stock option plan, using the
treasury stock method.
In October 1997 the Board of Directors of the Corporation declared a
ten percent stock dividend to be paid in November 1997. Earnings per
share data after restatement for the declared dividend for the year to
date periods ending September 30, 1997 and 1996, would be $1.82 and $1.61.
Restatement of per share amounts for the quarterly periods ending
September 30, 1997 and 1996 would be $.65 and $.57.
<PAGE> 6
Empire Banc Corporation
Financial Review
Third Quarter 1997
Compared with
Third Quarter 1996
Summary
Empire Banc Corporation's 1997 third quarter earnings were $1,361,000,
a 15% increase over 1996 third quarter results. Earnings per share
increased from $.63 per share in 1996 to $.72 in 1997. The return
on assets was 1.29% for the quarter versus 1.21% in 1996. The return on
equity was 15.75% compared to 15.15% in the prior year quarter.
The current quarter's results reflect the impact of an increase of 12%
in net interest income, attributable to a 7% growth in average earning
assets. Total loans and deposits have increased approximately 11% to
$297 million and $372 million during the last twelve months. Non-interest
income increased 22% in the quarter-to-quarter comparison, with
substantial growth in trust fees, loan fee income and deposit related
fees. In addition, income from service charges increased significantly
during the quarter due to the assessment of fees for ATM usage to non-bank
customers. Non-interest expense increased 22%, primarily due to increased
personnel costs and computer-related depreciation expense.
The provision for loan losses for the third quarter of 1997 decreased
$228,000 from the prior year quarter as a significant portion of the net
charge-offs for the quarter were due to a credit previously reserved for.
Total shareholders' equity increased 11% during the last twelve months
to $35.1 million, improving book value per share to $19.97 from the
$18.21 at September 30, 1996.
<PAGE> 7
<TABLE>
<CAPTION>
Net Interest Income
Quarter Ending Nine Months Ending
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Interest income $8,569 $7,790 $24,509 $22,752
Taxable equivalent adjustment 34 32 96 90
------ ------ ------- -------
Interest income (TE) 8,603 7,822 24,605 22,842
Interest expense 3,862 3,584 11,155 10,456
------ ------ ------- -------
Net interest income (TE) $4,741 $4,238 $13,450 $12,386
====== ====== ======= =======
Increase (decrease) due to change in:
Volume $ 481 $ 245 $ 1,260 $ 734
Rate 22 49 (196) 343
------ ------ ------- -------
Total $ 503 $ 294 $ 1,064 $ 1,077
====== ====== ======= =======
- ----------------------------------------------------------------------------------
</TABLE>
Third quarter net interest income on a taxable equivalent ("TE")
basis was $4.7 million, a 12% increase from the $4.2 million earned
in the year ago quarter. Average earning assets increased 7% or
$26.4 million while net interest margin, the other principal determinant
of net interest income, increased from 4.58% to 4.77% in the quarter to
quarter comparison.
Average loans increased $31.4 million or 12%, to $291.5 million for the
current quarter. The mortgage portfolio grew 17% or $11.3 million, the
commercial portfolio grew 7% or $7.8 million and average consumer loans
increased 17% or $12.3 million. The average rate earned on the loan
portfolio increased 8 basis points ("bp") to average 9.47% in the current
quarter.
The security portfolio remained comparable to the prior year quarter
while the rate earned increased 26 bp to average 6.47%. Average overnight
funds sold decreased $4.6 million or 37% and the rate earned increased
26 bp from the prior year's third quarter.
Incremental funding for the earning asset growth came mainly from the
$19.2 million or 6.3% growth in interest bearing funds. Consumer
certificates of deposits grew $1.7 million, money market accounts
increased $22.0 million, and Federal Home Loan Bank advances decreased
$5.0 million. The average rate paid on interest bearing funds was 4.75%,
comparable to the 4.70% average in the third quarter of 1996.
Non-interest bearing funds supporting earning assets increased 11% or
$7.2 million compared to the last year's quarter.
<PAGE> 8
Net Interest Income
Average Balances, Interest Income/Expense, Average Rates
<TABLE>
<CAPTION>
Quarter Ending September 30, 1997 1996
- ------------------------------------------------------------------------------------------
Average Average
(Taxable equivalent, Balance Interest Rate Balance Interest Rate
in thousands) --------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans, including fees*,** $291,543 $6,956 9.47% $260,182 $6,144 9.39%
Securities
Taxable 90,238 1,453 6.44 90,312 1,424 6.31
Tax-exempt* 4,986 88 7.07 5,320 93 7.03
-------- ------ -------- ------
Total 95,224 1,541 6.47 95,632 1,517 6.21
Federal funds sold 7,622 106 5.43 12,181 161 5.17
-------- ------ -------- ------
Total earning assets\
interest income 394,389 8,603 8.65% 367,995 7,822 8.46%
Cash and due from banks 16,038 14,393
Other assets 11,483 9,093
-------- --------
Total $421,910 $391,481
======== ========
Liabilities and Equity
CDs over $100,000 $ 11,191 153 5.34% $ 11,531 148 5.02%
Savings & interest checking 64,535 368 2.26 63,769 349 2.18
Money market deposits 100,774 1,128 4.44 78,749 819 4.14
Consumer CDs 133,882 2,036 6.03 132,207 2,016 6.07
-------- ------ -------- ------
Total 310,382 3,685 4.71 286,256 3,332 4.63
Federal funds purchased 70 1 5.87 -- -- --
FHLB advances 12,000 176 5.83 17,000 252 5.90
-------- ------ -------- ------
Total interest-bearing
funds/interest expense 322,452 3,862 4.75% 303,256 3,584 4.70%
-------- ------ -------- ------
Demand deposits 57,936 50,638
Other liabilities 6,949 6,410
Shareholders' equity 34,573 31,177
-------- --------
Total $421,910 $391,481
======== ========
Net interest spread (TE) 3.90% 3.76%
==== ====
Net interest income (TE) $4,741 $4,238
====== ======
Net interest margin (TE) 4.77% 4.58%
==== ====
- ------------------------------------------------------------------------------------------
* Interest income on tax-exempt securities and certain tax-exempt
loans has been adjusted to a tax-equivalent basis.
** Non-accrual loans are excluded.
</TABLE>
<PAGE> 9
Net Interest Income
Average Balances, Interest Income/Expense, Average Rates
<TABLE>
<CAPTION>
Year to date September 30, 1997 1996
- ------------------------------------------------------------------------------------------
Average Average
(Taxable equivalent, Balance Interest Rate Balance Interest Rate
in thousands) --------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans, including fees*,** $283,283 $19,902 9.39% $256,694 $18,313 9.53%
Securities
Taxable 88,672 4,266 6.41 84,756 3,923 6.17
Tax-exempt* 4,928 263 7.13 4,659 255 7.30
-------- ------- -------- -------
Total 93,600 4,529 6.45 89,415 4,178 6.14
Federal funds sold 4,276 174 5.37 8,890 351 5.19
-------- ------- -------- -------
Total earning assets\
interest income 381,159 24,605 8.63% 354,999 22,842 8.60%
Cash and due from banks 14,537 12,895
Other assets 11,219 9,202
-------- --------
Total $406,915 $377,096
======== ========
Liabilities and Equity
CDs over $100,000 $ 10,810 428 5.22% $ 11,718 473 5.31%
Savings & interest checking 63,745 1,053 2.21 61,666 1,005 2.18
Money market deposits 93,438 3,037 4.35 75,647 2,345 4.14
Consumer CDs 134,279 6,057 6.03 129,203 5,870 6.07
-------- ------- -------- -------
Total 302,272 10,575 4.67 278,234 9,693 4.65
Federal funds purchased 870 37 5.65 462 20 5.77
FHLB advances 12,293 543 5.91 16,617 743 5.97
-------- ------- -------- -------
Total interest-bearing
funds/interest expense 315,435 11,155 4.73% 295,313 10,456 4.73%
-------- ------- -------- -------
Demand deposits 51,203 45,015
Other liabilities 6,625 6,021
Shareholders' equity 33,652 30,747
-------- --------
Total $406,915 $377,096
======== ========
Net interest spread (TE) 3.90% 3.87%
==== ====
Net interest income (TE) $13,450 $12,386
======= =======
Net interest margin (TE) 4.72% 4.66%
==== ====
- ------------------------------------------------------------------------------------------
* Interest income on tax-exempt securities and certain tax-exempt
loans has been adjusted to a tax-equivalent basis.
** Non-accrual loans are excluded.
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Non-Interest Income
Quarter Ending Nine Months Ending
September 30 September 30
Increase (decrease) Increase (decrease)
Amount % Amount %
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
(In thousands)
Mortgage sales and servicing $ 48 12% $ 117 11%
Service charges on deposit accounts 54 17 103 11
Trust income 157 30 409 26
Other service charges and fees 73 47 104 26
Other income (4) (4) (24) (8)
Securities (losses) gains -- -- (6) --
------ ---- ------ ----
$ 328 22% $ 703 17%
====== ==== ====== ====
</TABLE>
Non-interest income for the third quarter totaled $1.8 million, a $328,000
or 22% increase from the third quarter of 1996. Income from trust
activities continued its strong growth pattern, with a 30% increase in fee
income in the quarter to quarter comparison. In addition, fees collected
for providing other services to customers increased $73,000 or 47%.
<TABLE>
<CAPTION>
Non-Interest Expense
Quarter Ending Nine Months Ending
September 30 September 30
Increase (decrease) Increase (decrease)
Amount % Amount %
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
(In thousands)
Salaries and employee benefits $ 689 33% $ 773 12%
Occupancy 25 10 21 3
Furniture and equipment 37 20 47 8
Other 33 3 112 4
------ ---- ------ ----
$ 784 22% $ 953 9%
====== ==== ====== ====
</TABLE>
Non-interest expenses for the third quarter totaled $4.3 million, an
increase of $784,000, or 22%, from the third quarter of 1996. The majority
of the increase is attributable to personnel related expenses, which grew
by $689,000 or 33%.
<PAGE> 11
Asset Quality
<TABLE>
<CAPTION>
Non-Performing Assets
9/30/97 12/31/96 9/30/96
------- -------- -------
<S> <C> <C> <C>
(In thousands)
Non-accrual loans $1,136 $2,131 $ 732
Renegotiated loans 112 408 596
------ ------ ------
Total non-performing loans 1,248 2,539 1,328
Other real estate -- -- 5
------ ------ ------
Total non-performing assets $1,248 $2,539 $1,333
====== ====== ======
Non-performing assets as a percent of total loans .42% .93% .50%
Accruing loans 90 days or more past due $ 478 $ 172 $ 13
</TABLE>
Total non-performing assets at September 30, 1997 decreased $85,000 or
6% from September of 1996, with increases in non-accrual loans of $404,000
offset by decreases in renegotiated loans of $484,000. As previously
reported in the December 31, 1996 Annual Report on Form 10-K, an increase
in problem loans at in 1996 was due to one long term credit relationship.
In the fourth quarter of 1996 the credit was classified non-accrual and
with a subsequent charge to operations of approximately $1.1 million, the
carrying value was reduced and the established reserve was substantially
increased. In the third quarter of 1997 this credit was resolved with a
new borrower within the reserves established in 1996. As a result,
non-performing assets are .42% of total loans at September 30, 1997, the
lowest in the history of the Corporation.
Loans identified as potential problem loans totaled $2.4 million at
September 30, 1997, $2.1 million at December 31, 1996 and $5.0 million
at September 30, 1996.
<PAGE> 12
<TABLE>
<CAPTION>
Allowance for Loan Losses
Quarter Ending Nine Months Ending
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
(In thousands)
Balance beginning of period $ 4,075 $ 3,375 $ 3,525 $ 3,200
Charge-offs 542 154 888 530
Recoveries 79 55 182 145
------- ------- ------- -------
Net charge-offs 463 99 706 385
Provision charged to operations 188 416 981 877
------- ------- ------- -------
Balance September 30 $ 3,800 $ 3,692 $ 3,800 $ 3,692
======= ======= ======= =======
- --------------------------------------------------------------------------------------
9/30/97 12/31/96 9/30/96
------- -------- -------
Net loan losses as a percent of average loans .33% .52% .20%
Allowance for loan losses as a percent of end
of period loans 1.28% 1.30% 1.38%
- ---------------------------------------------------------------------------------------
</TABLE>
For the current quarter, net charge-offs increased $364,000 from the same
period in 1996, primarily due to the loss, previously reserved for in 1996,
on the credit discussed on page 11 within the Non-Performing Assets
section. The allowance for loan losses increased $108,000 over the last
twelve months and was 1.28% of total loans and 305% of non-performing
assets as of September 30, 1997. The increase in the allowance for loan
losses is due to the growth in loans over the last twelve months.
Under accounting guidance regarding impaired loans, at September 30,
1997 there were $1.01 million in impaired loans with $505,000 for which
an allowance for credit losses is allocated. Impaired loans totaled
$2.42 million and $951,000 at December 31, 1996 and September 30, 1996.
<PAGE> 13
Investment Securities
The following is a summary of investment securities, held-to-maturity and
available-for-sale, at September 30, 1997.
<TABLE>
<CAPTION>
Held-to-maturity
Unrealized
Cost Gain Loss Fair Value
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
U.S. government and agency $12,512 $ 94 $ -- $12,606
State and municipal 8,206 91 -- 8,297
Corporate notes 10,826 57 2 10,881
------- ----- ----- -------
Total $31,544 $ 242 $ 2 $31,784
======= ===== ===== =======
</TABLE>
<TABLE>
<CAPTION>
Available-for-sale
Unrealized
Cost Gain Loss Fair Value
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
U.S. government and agency $35,117 $ 206 $ 30 $35,293
Commercial paper 993 -- -- 993
Equity 2,329 147 -- 2,476
------- ---- ----- -------
Total $38,439 $ 353 $ 30 $38,762
======= ===== ===== =======
Mortgage-backed $25,960 $ 197 $ 29 $26,128
======= ===== ===== =======
</TABLE>
A gross realized loss of $7,000 was recognized, with proceeds of $992,000
on the sale of available-for-sale securities during the nine months ended
September 30, 1997. A gross realized gain of $1,000 was recognized on the
sale of a held to maturity security with proceeds of $1,986,000 during the
first nine months of 1997. There were no sales of securities during the
nine months ended September 30, 1996.
<PAGE> 14
Shareholders' Equity and Capital Resources
Total equity at September 30, 1997 was $35.1 million, compared to
$32.7 million and $31.7 million at December 31, 1996 and September
30, 1996. The Corporation declared $615,000, or $.35 per share,
in dividends for the third quarter of 1997 as compared to $497,000,
or $.30 per share in the third quarter of 1996.
<TABLE>
<CAPTION>
The following is a summary of risk-based capital amounts and ratios:
Risk-based capital amounts
(In thousands)
Regulatory
Capital Standards
Well Capitalized Actual
----------------- --------------------------------
9/30/97 9/30/97 12/31/96 9/30/96
----------------- -------- -------- --------
<S> <C> <C> <C> <C>
Tier 1 leverage $ 21,070 $ 34,400 $ 32,102 $ 31,287
Tier 1 risk-based 18,120 34,400 32,102 31,287
Total risk-based 30,201 38,175 35,611 34,698
Risk-weighted assets 302,011 280,705 272,639
Quarterly average assets 421,408 396,033 391,074
Risk-based ratios
Tier 1 leverage 5% 8.16% 8.11% 8.00%
Tier 1 risk-based 6% 11.39% 11.44% 11.48%
Total risk-based 10% 12.64% 12.69% 12.73%
</TABLE>
Risk-based capital ratios for the Corporation continue to be well above
the guidelines established for well-capitalized institutions, which is
the highest capital standard.
<PAGE> 15
- ---------------------------------------------------------------------------
Nine months ended September 30, 1997 compared with 1996
- ---------------------------------------------------------------------------
Net income for the nine months ended September 30, 1997 is $3,794,000 or
$2.00 per share compared to the $3,328,000 or $1.78 per share earned in the
same period of 1996, a 14% increase. Return on average assets for the first
nine months of 1997 was 1.24%, as compared to 1.18% in the previous year.
The return on average equity was 15.03%, in comparison to the 14.43% earned
in the first nine months of 1996.
Net interest income (FTE) has increased $1.1 million, or 8.6% to $13.5
million for the first nine months of 1997 as average earning assets
increased $26.2 million from 1996. The year to date net interest margin
is 4.72% for 1997 as compared to 4.66% for the first nine months of 1996.
The average rate earned on assets has increased 3 basis points (bp) to
8.63% and the average rate paid on interest-bearing funds of 4.73% has
remained unchanged from the prior year period. Average outstanding loans
have increased $26.6 million and securities $4.2 million from 1996.
Average total deposits are $353.5 million for the first nine months of
1997, an increase of $30.2 million. Money market investment deposits have
grown by $17.8 million, consumer CDs $5.1 million and demand deposits $6.2
million while funding from Federal Home Loan Bank advances has decreased
on average $4.3 million.
The provision for loan losses was $981,000 and net loan charge-offs were
$706,000 for the first nine months of 1997 compared to a provision of
$877,000 and net charge-offs of $385,000 in 1996. The allowance for loan
losses has been increased by $108,000 over the last twelve months and was
1.28% of total loans at September 30, 1997.
Non-interest income has grown $703,000, or 17%, for the first nine months
of 1997, mainly due to the $409,000 or 26% increase in trust fee income,
$117,000 or 11% increase in fees earned from the origination and sale of
mortgage loans.
Non-interest expense increased $953,000 or 9% from the comparable prior
period essentially due to greater personnel costs increasing $773,000,
or 12%, as well as higher expenses, an increase of $130,000, associated
with non-earning loans.
Total cash dividends for the first nine months of 1997 were $1.05 per share
compared to $.86 per share in 1996, a 22% increase. Shareholders' equity
increased 10.7% from September of 1996 and at $35.1 million for September
of 1997, represents 8.2% of assets. Total risk-based capital in September
of 1997 was 12.6% compared to the 12.7% in September of 1996.
Recorded in stockholders' equity were unrealized gains of $150,000 during
1997 and unrealized losses of $331,000 in 1996. The unrealized gains and
losses of the investment portfolio are not expected to cause a material
change in future income or investment yields.
<PAGE> 16
Empire Banc Corporation
Part II - Other Information
Item 4. Submission of matters to a vote of security holders
(a) none
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
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.
Empire Banc Corporation
-----------------------
(Registrant)
<TABLE>
<S> <C>
Date: November 7, 1997
/s/ James E. Dutmers, Jr.
---------------------------------------
James E. Dutmers, Jr.
Chairman and Chief Executive Officer
Date: November 7, 1997
/s/ William T. Fitzgerald, Jr.
---------------------------------------
William T. Fitzgerald, Jr.
Secretary, Treasurer & Chief Financial
Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,968
<INT-BEARING-DEPOSITS> 158
<FED-FUNDS-SOLD> 6,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 64,890
<INVESTMENTS-CARRYING> 31,544
<INVESTMENTS-MARKET> 31,783
<LOANS> 297,409
<ALLOWANCE> 3,800
<TOTAL-ASSETS> 426,263
<DEPOSITS> 371,756
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 7,416
<LONG-TERM> 7,000
0
0
<COMMON> 8,788
<OTHER-SE> 26,303
<TOTAL-LIABILITIES-AND-EQUITY> 426,263
<INTEREST-LOAN> 19,887
<INTEREST-INVEST> 4,448
<INTEREST-OTHER> 174
<INTEREST-TOTAL> 24,509
<INTEREST-DEPOSIT> 10,575
<INTEREST-EXPENSE> 11,155
<INTEREST-INCOME-NET> 13,354
<LOAN-LOSSES> 981
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 11,651
<INCOME-PRETAX> 5,675
<INCOME-PRE-EXTRAORDINARY> 5,675
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,794
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 2.00
<YIELD-ACTUAL> 4.72
<LOANS-NON> 1,136
<LOANS-PAST> 478
<LOANS-TROUBLED> 112
<LOANS-PROBLEM> 2,432
<ALLOWANCE-OPEN> 3,525
<CHARGE-OFFS> 888
<RECOVERIES> 182
<ALLOWANCE-CLOSE> 3,800
<ALLOWANCE-DOMESTIC> 2,330
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,470
</TABLE>
