U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________
Commission file number - 33-53596
FC BANC CORP.
(Exact name of small business issuer as specified in its charter)
OHIO 34-1718070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Farmers Citizens Bank Building,
105 Washington Square
Box 567,
Bucyrus, Ohio 44820-0567
(Address of principal executive offices) (Zip Code)
(419) 562-7040
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
Yes X No . . .
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes . . No . .
Applicable only to corporate issuers
As of April 30, 1996, 325,020 shares of Common Stock of the Registrant were
outstanding. There were no preferred shares outstanding.
Transitional Small Business Disclosure Format
(Check one): Yes . . No X
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FC BANC CORP.
BUCYRUS, OHIO
FORM 10-QSB
INDEX
<CAPTION>
Page Number
<S>
PART I FINANCIAL INFORMATION
Item. 1. Financial Statements (Unaudited) <C>
Condensed consolidated balance sheets -- 3
March 31, 1996 and December 31, 1995
Condensed consolidated statements of income -- 4
Three months ended March 31, 1996 and 1995
Condensed consolidated statements of changes 5
in shareholders' equity --
Three months ended March 31, 1996 and 1995
Condensed consolidated statements of cash flows -- 6
Three months ended March 31, 1996 and 1995
Notes to condensed consolidated financial 7
statements -- March 31, 1996
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED BALANCE SHEETS
______________________________________________________________________________
<CAPTION>
( Dollars in thousands )
(Unaudited) (Unaudited)
March 31, December 31,
1996 1995
<S> <C> <C>
Assets
Cash and due from banks $ 4,770 $ 5,329
Interest-bearing time deposits -0- -0-
Federal funds sold 2,200 4,200
Securities being held to maturity -0- -0-
Securities available for sale, at fair value 36,112 33,869
Loans (net of unearned interest) 35,652 37,179
Less: Allowance for loan losses (1,318) (1,297)
_______ _______
Loans - net 34,334 35,882
Properties and equipment 1,480 1,406
Accrued income receivable 827 769
Deferred federal income taxes 506 467
Other assets 1,679 1,776
_______ _______
Total assets $81,908 $83,698
Liabilities
Demand deposit $10,080 $10,765
NOW accounts 12,940 13,609
Savings 20,886 21,541
Time, $100,000 or over 844 837
Other time deposits 26,189 24,139
_______ _______
Total deposits 70,939 70,891
Borrowed funds -0- 1,525
Accrued interest payable 174 212
Accrued expenses and other liabilities 285 310
_______ _______
Total liabilities $71,398 $72,938
Shareholders' equity
Common stock -- $ 2.50 par value 832 832
Authorized -- 500,000 shares
Issued -- 332,816 shares
Surplus 1,372 1,370
Retained earnings 8,798 8,653
Treasury stock (7,796 shares in 1996 and (317) -0-
-0- shares in 1995)
Unrealized gain (loss) on securities
available-for-sale (175) (95)
_______ _______
Total equity 10,510 10,760
_______ _______
Total liabilities and
shareholders' equity $81,908 $83,698
<FN>
______________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
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FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF INCOME
______________________________________________________________________________
( Dollars in thousands, except per share amounts )
<CAPTION>
(Unaudited)
3 Months Ended
March 31,
1996 1995
<S>
Interest income <C> <C>
Interest and fees on loans $ 821 $1,810
Interest on investment securities:
Taxable 392 421
Exempt from federal income tax 104 122
Interest on federal funds sold 57 30
Interest on deposits with banks -0- 4
_______ _______
Total interest income 1,374 1,387
Interest expense
Interest on deposits 571 584
Interest on federal funds purchased and
purchased under agreement to repurchase 16 12
_______ _______
Total interest expense 587 596
Net interest income 787 791
Provision for loan losses -0- 204
_______ _______
Net interest income after
provision for loan loss 787 587
Other income
Service charges on deposit accounts 84 83
Net investment security profits or losses -0- -0-
Other income 59 37
_______ _______
Total other income 143 120
Other expense
Salaries and employee benefits 381 322
Net occupancy expense 101 73
Equipment expense 35 12
FDIC deposit insurance expense 5 32
State & other taxes 40 41
Other expense 206 172
_______ _______
Total other expense 768 652
_______ _______
Income before income taxes 162 55
Income tax expense 17 (22)
______ ______
Net Income $ 145 $ 77
______________________________________________________________________________
Per share data:
Net income per share of common stock $ .44 $ .23
<FN>
______________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
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FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
______________________________________________________________________________
( Dollars in thousands )
(Unaudited)
<CAPTION>
Unrealized
Gain/Loss
on Total
Securities Share-
Capital Retained Treasury Available holders'
Stock Surplus Earnings Stock For Sale Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at 12/31/94 $ 832 $1,370 $8,510 $ -0- $ (893) $ 9,819
Net income 77 77
Change in unrealized
gain/loss on securities
available-for-sale 356 356
_______ ______ ______ ______ _______ _______
Balance at 3/31/95 $ 832 $1,370 $8,587 $ -0- $ (537) $10,252
Balance at 12/31/95 $ 832 $1,370 $8,653 $ -0- $ (95) $10,760
Net income 145 145
Purchase of 8,772
treasury shares (357) (357)
Sale of 976 treasury shares 2 40 42
Change in unrealized
gain/loss on securities
available-for-sale (80) ( 80)
_______ ______ ______ ______ ______ _______
Balance at 3/31/96 $ 832 $1,372 $8,798 $ (317) $(175) $10,510
<FN>
______________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
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FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENT OF CASH FLOWS
______________________________________________________________________________
( Dollars in thousands )
<CAPTION>
3 Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 145 $ 77
Adjustments to reconcile net
income to next cash
provided by operating activities:
Depreciation 68 47
Provision for loan losses -0- 204
Provision for deferred taxes -0- (7)
Provision for security loss -0- -0-
Gain/Loss on investments -0- -0-
Amortization/Accretion - net 18 (12)
Change in accrued income and
other assets (150) (293)
Change in accrued expenses
and other liabilities 127 (65)
______ ______
Total adjustments 63 (126)
______ ______
Net cash provided by operating activities 208 (49)
Cash flows from investing activities:
Net change in certificate of deposits -0- -0-
Net change in federal funds sold 2,000 1,700
Securities held to maturity:
Proceeds from maturities -0- 900
Proceeds from sales -0- -0-
Purchases -0- (100)
Securities available for sale:
Proceeds from maturities 1,728 179
Proceeds from sales -0- -0-
Purchases (4,109) -0-
Net change in loans 1,548 (530)
Capital purchases (142) (34)
______ ______
Net cash used in investing activities 1,025 2,115
Cash flows from financing activities:
Net change in deposits 48 (2,221)
Net change in short-term borrowing (1,525) (550)
Purchase of treasury stock 42 -0-
Dividends paid (357) -0-
______ ______
Net cash provided by financing activities (1,792) (2,771)
Net decrease in cash and cash equivalents (559) (705)
Cash and cash equivalents at beginning of year 5,329 5,018
______ ______
Cash and cash equivalents at end of year $ 4,770 $ 4,313
Supplemental information:
Interest paid $ 626 $ 624
Net income taxes paid 172 34
<FN>
______________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
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FC BANC CORP.
BUCYRUS, OHIO
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
______________________________________________________________________________
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1995.
<PAGE>
FC BANC CORP.
BUCYRUS, OHIO
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
______________________________________________________________________________
The following focuses on the consolidated financial condition of F C Banc
Corp. at March 31, 1996, compared to December 31, 1995, and the results of
operations for the three month period ended March 31, 1996, compared to the same
periods in 1995. The purpose of this discussion is to provide a better
understanding of the consolidated financial statements and footnotes included
in the Form 10-QSB. The Registrant is not aware of any market or
institutional trend, events or uncertainties that will have or are reasonably
likely to have a material effect on liquidity, capital resources or operations
except as discussed herein. Other than as discussed herein, the Registrant
is not aware of any current recommendations by regulatory authorities which
would have such effect if implemented.
Financial Condition
Liquidity
Liquidity relates to the Corporation's ability to meet cash demands of its
customers and their credit needs. Liquidity is provided by the Corporation's
ability to readily convert assets to cash and readily marketable, short-term
assets such as federal funds sold and deposits in other banks.
Cash, amounts due from banks and federal funds sold totaled $6,970,000 at
March 31, 1996. Investments and mortgage-backed securities available for sale
were $36,112,000 at March 31, 1996. This amount increased by $316,000 from
December 31, 1995 balances. These assets, as well as anticipated deposit
growth d scheduled loan payments and maturing investment securities, provide
the Corporation with an adequate source of funds for expected future demand for
loans and for fluctuations in deposit volume. They also provide management
with the flexibility to change the composition of interest earning assets as
market conditions change in the future.
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Liability liquidity relates to the Corporation's ability to retain existing
deposits, obtain new deposits and borrow in the marketplace. Total deposits
remained relatively constant decreasing by $48,000 for the three months ended
March 31, 1996. The Corporation has experienced some deposit disintermediation
during the first three months of 1996. This is evidenced by the reductions
in demand deposit and NOW account and savings account balances of $1,354,000
and $655,000 respectively being offset by increases in time accounts balances
of $2,057,000. Management anticipates some continued disintermediation with
total deposits to experience moderate growth or remain stable during the rest
of the year.
Access to advances from the Federal Reserve Bank (FRB) in the form of
Federal Funds Purchased is a supplemental source of cash to meet liquidity
needs.
Capital Resources
Shareholders' equity totaled $10,510,000 at March 31, 1996, compared to
$10,760,000 at December 31, 1995. This decrease was primarily due to the
acquisition of 7,796 shares of treasury stock and a net unrealized holding
loss on securities available-for-sale of $80,000. As of March 31, 1996, the
ratio of shareholders' equity to assets was 12.83% compared to 12.86% at
December 31, 1995.
Regulatory Capital Requirements
The Corporation complies with the capital requirements established by the
Federal Reserve System, which bare summarized as follows:
Capital Position
Regulatory as of
Minimum March 31, 1996 December 31, 1995
Tier I 4.00% 23.72% 22.61%
risk-based
capital......
Total Risk- 8.00% 22.45% 23.88%
Based capital
Tier I 3.00% - 5.00% 12.83% 13.04%
leverage.....
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Under "Prompt Corrective Action" regulations adopted in September 1992,
the Federal Deposit Insurance Corporation (FDIC) has defined five categories
of capitalization (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized). The
Corporation meets the "Well capitalized" definition, which requires a total
risk-based capital ratio of at least 10%, and a leverage ratio of at least 8%.
Under a current regulatory proposal, interest rate risk would become an
additional element in measuring risk-based capital. This proposed change is
not expected to significantly impact the Corporation's compliance with
capital guidelines.
Changes in Financial Condition
Consolidated total assets were $81,908,000 at the end of the current period
reflecting a decrease of $1,790,000 or 2.14% during the first three months
of 1996. This reduction was funded primarily by the federal funds sold of
$2,000,000 and payment and maturities in the loan portfolio of $1,548,000.
Approximately $2,323,000 was utilized to fund security purchases, $1,525,000
to reduce short-term borrowings, and the remainder to fund treasury stock
acquisitions.
Investment Portfolio
The total investments outstanding increased during the first quarter
primarily due to the allocation of short-term funds in an effort to increase
yields. The valuation of the investment portfolio, which is all classified
as available-for-sale, continues to remain relatively stable as shown by the
aggregate market value decline for the first quarter of 1996 of $119,000, or
less than 50 basis points since December 31, 1995.
Allowance for Loan Loss
The allowance for loan losses was established and is maintained by periodic
charges to the provision for loan loss, an operating expense, in order to
provide for losses inherent in the Bank's loan portfolio. Loan losses and
recoveries are charged or credited respectively to the allowance for loan
losses as they occur.
The allowance/provision for loan losses is determined by management by
considering such factors as the size and character of the loan portfolio,
loan loss experience, problem loans, and economic conditions in the Bank's
market area. The risk associated with the lending operation can be
minimized by evaluating each loan independently based upon criteria which
includes, but is not limited to, (a) the purpose of the loan, (b) the credit
history of the borrower, (c) the borrower's financial standing and trends,
(d) the market value of the collateral involved, and (e) the downpayment
received.
Quarterly reviews of the loan portfolio are conducted to identify problem
loans and to determine appropriate courses of action on a loan by loan basis.
Collection policies have been developed to monitor the status of all loans.
Collection procedures are being activated when a loan becomes past due.
Current internal loan review procedures provide for the analysis of a
borrower's operating data, tax returns and financial statement performance
ratios for all significant commercial loans, regulatory classified loans,
past due loans and internally identified "watch" loans. Specifically these
procedures include; 1) the designation of an individual to function primarily
as a loan reviewer, 2) placing the loan reviewer under the direct supervision
of the senior lending officer, 3) utilization of a "loan risk rating system"
which prioritize the loans to be reviewed, 4) review of all new credits by
the senior lending officer, 5) revision of the "watch list" with formal
presentation to the Board each quarter, and 6) utilization of the services
of an outside consulting firm to supplement the review function.
The entire allowance for loan losses is available to absorb any particular
loan loss. However, for analytical purposes, the allowance could be allocated
based upon net historical charge-offs of each type of loan for the last five
years. Currently, the losses experienced combined with the type and market
value of the collateral securing the loan portfolio and the current financial
standing of certain borrowers are the primary factors for the larger percentage
allocation.
Management believes significant factors affecting the allowance are being
reviewed regularly and that the allowance is adequate to cover potentially
uncollectible loans as of March 31, 1996. The Bank has no exposure from
troubled debt to lesser developed countries.
Results of Operations - First Quarter 1996 vs First Quarter 1995
Consolidated net income of $145,000 for the first quarter of 1996 was 88%
more than the $77,000 recorded for the first quarter of 1995. Expressed as
annualized returns on average assets and average shareholders' equity, net
income for 1996 was 0.76% and 5.59% compared to 0.45% and 3.61% for 1995.
Earnings per share increased $.21 to $.44 per share for the first quarter
1996 compared to the same period in 1995.
The increased level of net income for the first quarter of 1996 compared
to the first quarter of 1995, resulted primarily from lower provision for loan
losses. This was partially off-set by a $116,000 increase in other expenses
and the increased income tax provision of $39,000.
Net interest income was almost the same for both the first quarter of
1996 and 1995. Total interest income decreased by $13,000 and total interest
expenses decreased by $4,000. This occurred primarily as a result of decreasing
yields on interest earning assets and the restructuring of the deposit
portfolio.
The decrease in the provision for loan losses is attributed primarily to
those factors previously discussed above.
Net occupancy and equipment expenses increased primarily as a result of
the installation of a new computer system and the physical expansion of the
Bank's main office facility.
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FC BANC CORP.
BUCYRUS, OHIO
PART II
OTHER INFORMATION
______________________________________________________________________________
ITEM 1 - LEGAL PROCEEDINGS
Not Applicable
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
On April 24, 1996 the Company held its annual meeting of Shareholders
and approved the following:
1. Electing three (3) class I directors to the Board of Directors
for terms of three (3) years and until their successors are
elected and qualified.
2. Ratification of the appointment of the Company's Independent
Accountants for the fiscal year ending December 31, 1996.
ITEM 5 - OTHER INFORMATION
Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1993,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FC BANC CORP.
Date: May 14, 1996 Robert L. Morton
Robert L. Morton
President and Chief Executive Officer
Date: May 14, 1996 Phillip W. Gerber
Phillip W. Gerber
Executive Vice President,
Secretary and Treasurer
