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 SEPTEMBER 30, 1997
[ ]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 Identification No.)
incorporation or organization)
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 [ ]
As of October 30, 1997, 321,188 shares of Common Stock of the Registrant were
outstanding. There were no preferred shares outstanding.
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
BUCYRUS, OHIO
FORM 10-QSB
INDEX
________________________________________________________________________________
Page Number
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- 3
September 30,1997 and December 31,1996
Condensed consolidated statements of income -- 4
Three and nine months ended September 30, 1997 and 1996
Condensed consolidated statement of cash flows -- 5
Nine months ended September 30, 1997 and 1996
Notes to condensed consolidated financial 6
statements -- September 30, 1997, 1996 and December 31, 1996
Item 2. Management's Discussion and Analysis of Financial 7
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED BALANCE SHEETS
_________________________________________________________________________________________________
<--------Dollars in thousands-------->
(Unaudited) (Unaudited)
September 30, December 31,
1997 1996
____ ____
<S> <C> <C>
Assets
Cash and cash equivalents
Cash and due from banks $ 3,775 $ 3,957
Federal funds sold 2,200 1,100
_______ _______
Total cash and cash equivalents 5,975 5,057
Investment securities available-for-sale, at fair value 27,450 32,194
Loans (net of unearned interest) 39,311 41,043
Less: Allowance for loan losses (1,077) (1,263)
_______ _______
Loans - net 38,234 39,780
Properties and equipment 1,324 1,476
Accrued income receivable 758 837
Deferred federal income taxes 469 521
Other assets 1,718 1,580
_______ _______
Total assets $75,928 $81,445
_______ _______
Liabilities and Shareholders' Equity
Deposits
Demand accounts $19,136 $23,692
Savings accounts 18,344 20,208
Time deposits, $100,000 or more 627 914
Other time deposits 25,656 25,260
_______ _______
Total deposits 63,763 70,074
Federal funds purchased 0 0
Accrued interest payable 155 186
Accrued federal income taxes 206 63
Accrued expenses and other liabilities 567 455
_______ _______
Total liabilities 64,691 70,778
_______ _______
Shareholders' Equity
Common share of $ 2.50 par value: 1,000,000 shares authorized; 832 832
332,816 shares issued at September 30, 1997, and
December 31, 1996
Surplus 1,377 1,377
Retained earnings, substantially restricted 9,578 8,944
Unrealized loss on securities available-for-sale, (59) (164)
net applicable deferred income taxes
Less cost of common stock in treasury - 11,628 shares and
7,796 shares at September 30, 1997, and
December 31, 1996, respectively (491) (322)
_______ _______
Total shareholders' equity 11,237 10,667
_______ _______
Total liabilities and shareholders' equity $75,928 $81,445
_______ _______
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF INCOME
____________________________________________________________________________________________________________
<----Dollars in thousands, except per share amounts---->
(Unaudited) (Unaudited)
3 Months Ended 9 Months Ended
September 30, September 30,
1997 1996 1997 1996
____ ____ ____ ____
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $ 965 $ 886 $ 2,770 $ 2,551
Interest on investment securities:
Taxable 341 421 1,080 1,228
Exempt from federal income tax 72 103 220 311
Interest on federal funds sold 21 11 38 91
_______ _______ _______ _______
Total interest income 1,399 1,421 4,108 4,181
_______ _______ _______ _______
Interest expense
Interest on interest-bearing checking accounts 68 82 210 247
Interest on savings deposits 139 141 408 431
Interest on certificates of deposit 332 335 968 1,023
Interest on borrowed funds 0 3 6 20
_______ _______ _______ _______
Total interest expense 539 561 1,592 1,721
_______ _______ _______ _______
Net interest income 860 860 2,516 2,460
Provision for loan losses 0 0 27 0
_______ _______ _______ _______
Net interest income after provision for loan loss 860 860 2,489 2,460
Noninterest income
Service charges on deposit accounts 110 85 274 266
Life insurance 17 16 51 55
Gain (loss) on sale of investment securities 2 0 2 (14)
Loss on sale of real estate owned (25) 0 (25) 0
Gain on loans sold 0 24 0 24
Other income 22 31 75 78
_______ _______ _______ _______
Total noninterest income 126 156 377 409
_______ _______ _______ _______
Noninterst expense
Salaries and employee benefits 295 361 892 1,227
Net occupancy expense 85 91 280 282
Equipment expense 29 25 86 93
FDIC deposit insurance assessment 2 5 16 15
State and other taxes (3) 39 79 121
Other expense 261 187 675 595
_______ _______ _______ _______
Total noninterest expense 669 708 2,028 2,333
_______ _______ _______ _______
Income before income taxes 317 308 838 536
Federal income tax expense 82 70 204 73
_______ _______ _______ _______
Net income $ 235 $ 238 $ 634 $ 463
_______ _______ _______ _______
___________________________________________________________________________________________________________
Per share data:
Net income per share of common stock $0.73 $0.73 $1.96 $1.42
Weighted average shares outstanding 321,188 325,020 322,838 326,031
___________________________________________________________________________________________________________
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF CASH FLOWS
_________________________________________________________________________________________________
<-----Dollars in thousands----->
(Unaudited) (Unaudited)
9 Months Ended 9 Months Ended
September 30, September 30,
1997 1996
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income $ 634 $ 463
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 201 206
Provision for loan losses 27 0
Provision for deferred taxes 0 (2)
Gain (loss) on sale of investments (2) 14
Loss on other real estate 24 0
Gain on loans sold 0 (24)
Amortization/Accretion - net 38 54
Change in other assets (138) (68)
Change in income taxes payable 144 187
Change in interest receivable 79 (73)
Change in interest payable (31) (56)
Change in other liabilities 112 185
_______ _______
Total adjustments 454 423
_______ _______
Net cash provided by operating activities 1,088 886
Cash flows from investing activities:
Proceeds from maturities of available-for-sale securities 4,949 5,026
Purchase of available-for-sale securities (2,307) (7,982)
Net change in loans 1,239 (1,517)
Proceeds from loans sold 0 1,119
Proceeds on sale of available-for-sale securities 2,223 2,422
Purchase of premises and equipment (48) (325)
Proceeds from other real estate owned 254 0
_______ _______
Net cash used in investing activities 6,310 (1,257)
_______ _______
Cash flows from financing activities:
Net decrease in deposits (6,311) (4,004)
Net decrease in short-term borrowing 0 (1,525)
Purchase of treasury stock (169) (315)
_______ _______
Net cash provided by financing activities (6,480) (5,844)
_______ _______
Net increase (decrease) in cash and cash equivalents 918 (6,215)
Cash and cash equivalents at beginning of period 5,057 9,529
_______ _______
Cash and cash equivalents at end of period $ 5,975 $ 3,314
_______ _______
________________________________________________________________________________________________
Supplemental information:
Cash paid for:
Interest $ 1,623 $ 1,777
Net income taxes 61 (113)
________________________________________________________________________________________________
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
FC BANC CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997, 1996 and December 31,1996
________________________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Corporation is a bank holding company whose activities are primarily
limited to holding the stock of the Farmers Citizens Bank, Bucyrus, Ohio, (the
"Company"). The Company conducts a general banking business in north central
Ohio which consists of attracting deposits from the general public and
applying those funds to the origination of loans for residential, consumer and
non-residential purposes. The Company's profitability is significantly
dependent on net interest income which is the difference between interest
income generated from interest-earning assets (i.e., loans and investments)
and the interest expense paid on interest-bearing liabilities (i.e., customer
deposits and borrowed funds). Net interest income is affected by the relative
amount of interest-earning assets and interest-bearing liabilities and
interest received or paid on these balances. The level of interest rates paid
or received by the Company can be significantly influenced by a number of
environmental factors, such as governmental monetary policy, that are outside
of management control.
Earnings per common share were computed by dividing net income by the
weighted-average number of shares outstanding for the three- and nine-month
periods ended September 30, 1997 and 1996. The weighted-average number of
shares outstanding for the three-month periods ended September 30, 1997 and
1996, were 321,188 and 325,020, respectively. The weighted-average number of
shares outstanding for the nine-month periods ended September 30,1997 and
1996, were 322,838 and 326,031, respectively.
The consolidated financial information presented herein has been prepared
in accordance with generally accepted accounting principles ("GAAP") and
general accounting practices within the financial services industry. In
preparing consolidated financial statements in accordance with GAAP,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues
and expenses during the reporting period. Actual results could differ from
such estimates.
NOTE B - 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 instructions to Form 10-QSB and Article
10 of Regulation S-X and Rule 310 of Regulation SB. 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, 1997.
<PAGE>
FC BANC CORP.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
________________________________________________________________________________
The following focuses on the consolidated financial condition of FC Banc
Corp. at September 30, 1997, compared to December 31, 1996, and the results of
operations for the three- and nine-month periods ended September 30, 1997,
compared to the same periods in 1996. 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.
Note Regarding Forward-Looking Statements
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Corporation's operations and the
Corporation's actual results could differ significantly from those discussed
in the forward-looking statements. Some of the factors that could cause or
contribute to such differences are discussed herein but also include changes
in the economy and interest rates in the nation and the Corporation's market
area generally. Some of the forward-looking statements included herein are
the statements regarding the allowance for loan losses.
Financial Condition
Liquidity
Liquidity relates to the Company's ability to meet cash demands of its
customers and their credit needs. Liquidity is provided by the Company'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 $5,975,000 at
September 30, 1997. Investments and mortgage-backed securities
available-for-sale were $27,450,000 at September 30, 1997. These amounts
increased by $580,000 from June 30, 1997 and decreased by $3,826,000 from
December 31, 1996. These assets, as well as anticipated deposit balance
fluctuations, scheduled loan payments and maturing investment securities,
provide the Company 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. The Company's liquidity
ratio was 48% at September 30, 1997, which exceeded the regulatory
requirements and management's internal guideline of 20.00%.
Liability liquidity relates to the Company's ability to retain existing
deposits, obtain new deposits and borrow in the marketplace. Total deposits
increased $484,000 from June 30, 1997 and decreased $6,311,000 from December
31, 1996. These decreases are attributable to the loss of $2 million public
fund deposits, normal seasonal fluctuations, and management's decision not to
aggressively price deposits. The Company has experienced some deposit
disintermediation during 1997 which management attributes primarily to
customer awareness of rate differentiation. Management does not anticipate
any significant amount disintermediation through the end of 1997. Management
expects total deposits to remain steady or experience some additional growth
during the remainder of 1997 as deposit products are repriced.
<PAGE>
Access to advances from the Federal Reserve Bank (FRB) in the form of
Federal Funds Purchased and Securities Sold Under Agreement to Repurchase
(Repo Agreements) are supplemental sources of cash to meet liquidity needs.
Capital Resources
Shareholders' equity totaled $11,237,000 at September 30, 1997, compared
to $10,956,000 at June 30, 1997 and $10,667,000 at December 31, 1996,
respectively. This increase was primarily due to quarterly earnings of
$185,000, $214,000 and $235,000 in the first three quarters of 1997 being
off-set by treasury stock purchases of $169,000 and net unrealized holding
gains on securities available-for-sale of $105,000. As of September 30,
1997, the ratio of shareholders' equity to assets was 14.80% compared to
13.10% at December 31, 1996.
Regulatory Capital Requirements
The Company complies with the capital requirements established by the Federal
Reserve System, which are
summarized as follows:
<TABLE>
<CAPTION>
Capital Position
Regulatory as of
Minimum September 30, 1997 December 31, 1996
______________________________________________________________________
<S> <C> <C> <C>
Tier I 4.00% 26.63% 22.61%
risk-based
capital......
Total Risk- 8.00% 27.90% 23.88%
Based capital
Tier I 3.00% - 5.00% 14.81% 13.04%
leverage.....
</TABLE>
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 Company
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%. Effective
January 1, 1997, the Federal Financial Institutions Examination Council (the
FFIEC) adopted the Uniform Financial Institutions Rating System (the UFIRS).
Under the revised UFIRS interest rate risk became an additional element in
measuring risk-based capital. This change is not expected to significantly
impact the Company's compliance with capital guidelines.
Changes in Financial Condition
General. The Corporation's consolidated total assets were $75.93 million
at September 30, 1997, reflecting an increase of $149,000, or 0.20%, from the
$75.78 million at June 30, 1997, and a decrease of $5.52 million or 6.77%,
from the $81.45 million at December 31, 1996. This decline was primarily
attributed to a decrease of $6.31 million in deposits coupled with decreased
loan demand, primarily real estate loans, and maturing investment
securities.
Cash and Cash Equivalents, Investment Securities, and Mortgage-Backed
Securities. Cash and cash equivalents, investment securities, and
mortgage-backed securities decreased $3.83 million between December 31,
1996 and September 30, 1997. The decline was primarily attributable to $4.87
million in net principal reductions and maturing investment securities, the
proceeds of which were utilized to satisfy depositor withdrawal requests.
Dollars invested in overnight funds increased from $1.1 million at December
31, 1996 to $2.2 million at September 30, 1997.
<PAGE>
Loans Receivable. Total loans outstanding at September 30, 1997, equaled
$39.31 million, compared to $39.96 million and $41.04 million at June 30, 1997
and December 31, 1996, respectively. The increase of $2.99 million in
commercial loans since December 31, 1996 has been partially offset by
decreases in mortgage and consumer based portfolios. However, total loans
have decreased in the third quarter of 1997 by $650 thousand after a second
quarter increase of $245 thousand. The results of managements initiation of
an enhanced officer call program, the addition of two lending specialists and
several new products are beginning to be reflected in the financial statements
of the company.
Deposits. Total deposits increased by $484 thousand, or 0.76%, during
the quarter ended September 30,1997, for a total decrease of $6.31 million
since December 31, 1996. Total demand and savings deposits remained
relatively constant during the third quarter. Demand deposits increased by
$65 thousand and savings deposits declined by $351 thousand which together
accounts for approximately 59.10% of the total deposit decline during the
three months ended September 30, 1997.
The overall decline in deposits for the nine-month period ended September
30, 1997 was $6.31 million or 9.01% of which $6.42 million was attributed to
demand and savings accounts.
Liabilities other than deposits and federal funds purchased decreased by
$616,000 during the third quarter of 1997 after an increase of $881,000 during
the second quarter of 1997. The fluctuations noted in the other liability
account are attributed primarily to the accrual for various operating expenses
such as interest on deposits and federal funds purchased, federal income
taxes, personnel expense, and so forth.
Results of Operations
General. The Corporation recorded a consolidated net income of $235,000
for the third quarter of 1997, compared to $238,000 for the same quarter in
1996. Significant fluctuations were noted in noninterest income, an $18,000
increase before gains and losses on loans and real estate owned sold. Also,
noninterest expense decreased by $39,000 in the third quarter of 1997 compared
to the same quarter in 1996. Year-to-date net income for the nine months
ended September 30,1997 as compared to September 30, 1996 was up by 36.93%, or
$171,000.
Three months ended, September 30, 1997 vs Three months ended, September 30,
1996
Net Interest Income. The Corporation's net interest income for the three
months ended September 30, 1997, remained constant at $860,000, compared to
the same period in 1996. The net interest margin, which consists of net
interest income as a percentage of average interest-earning assets increased
from 3.46% for the three months ended September 30, 1996, to 4.84% for the
same period in 1997, primarily as a result of the decline in volume of
interest-bearing liabilities coupled with minor fluctuations in the yields, or
interest cost, of each category of interest-bearing liabilities. During the
same period, net interest spread, which reflects average yield on
interest-earning assets less costs of interest-bearing liabilities, increased
to 4.01%. Average loans outstanding continued to show an increase over 1996
which contributed approximately $155,000 to the net interest income while the
changes in average yield on loans outstanding increased the net interest
income by approximately $64,000.
Provision for Loan Losses. The allowance for loan losses was established
and is maintained by periodic charges to the provision for loan losses, an
operating expense, in order to provide for the risk of loss inherent in the
Corporation's loan portfolio. Loan losses and recoveries are charged or
credited, respectively, to the allowance for loan losses as they occur.
The allowance and provision for loan losses is determined by management
upon consideration of such factors as the size and character of the loan
portfolio, loan loss experience, problem loans and economic conditions in the
Corporation's market area. Management attempts to minimize the risk
associated with each loan by evaluating each loan independently based upon
criteria which include, but are 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 down
<PAGE>
payment 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. While management believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in material adjustments, and net earnings could
be significantly adversely affected, if circumstances differ substantially
from the assumptions used in making the final determination. Increases in the
loan portfolio, increases in the types of loans carrying greater risk of loss,
increases in non-performing loans and changes in the local and national
economy all could cause the allowance for loan losses to be insufficient.
The Company did not add to the allowance for loan losses during the
quarter ended September 30, 1997, due to the results of management's quarterly
evaluation of the loan portfolio. The Company also recognized $268,000 in
losses on loans while recovering $61,000 on loans previously charged against
the allowance for loan losses.
Noninterest Income and Expense. Noninterest income was $126,000 for the
three months ended September 30, 1997, compared to $156,000, for the same
period in 1996. This decrease was primarily the result of the $25,000 loss
recognized on the sale of other real estate in 1997 and the $24,000 gain on
the sale of loans in 1996. Service charges on deposit accounts increased by
$25,000 in 1997 compared to 1996. Noninterest expense declined $39,000 for
the three months ended September 30, 1997, compared to the same period in
1996. Total personnel costs for the current period decreased $66,000. The
larger personnel costs in 1996 were directly related to staffing changes and
the retirement of long-term employees.
Nine months ended, September 30, 1997 vs Nine months ended, September 30, 1996
Net Interest Income. The Corporation's net interest income for the nine
months ended September 30, 1997, increased 2.28%, or $56,000 over the same
period in 1996. This increase was primarily attributable to the overall
reduction in interest paid on deposits. The net interest margin, which
consists of net interest income as a percentage of average interest-earning
assets, increased from 3.99% to 4.74% for the nine months ended September 30,
1997, as compared to the same period in 1996. This is representative of the
increase in the ratio of average total loans to average total deposits, from
approximately 53% for the nine months ended September 30, 1996 to
approximately 61% for the nine months ended September 30, 1997.
Provision for Loan Losses. The allowance for loan losses was established
and is maintained by periodic charges to the provision for loan losses, an
operating expense, in order to provide for the risk of loss inherent in the
Corporation's loan portfolio. Loan losses and recoveries are charged or
credited, respectively, to the allowance for loan losses as they occur.
The allowance and provision for loan losses is determined by management
upon consideration of such factors as the size and character of the loan
portfolio, loan loss experience, problem loans and economic conditions in the
Corporation's market area. Management attempts to minimize the risk
associated with each loan by evaluating each loan independently based upon
criteria which include, but are 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 down
payment 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. While management believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in material adjustments, and net earnings could
be significantly adversely affected, if circumstances differ substantially
from the assumptions used in making the final determination. Increases in the
loan portfolio, increases in the types of loans carrying greater risk of loss,
increases in non-performing loans and changes in the local and national
economy all could cause the allowance for loan losses to be insufficient.
The Corporation added $27,000 to the allowance for loan losses during the
nine months ended September 30, 1997, due to the results of management's
quarterly evaluation of the loan portfolio. The Corporation also recognized
$331,000 in losses on loans while recovering $117,000 on loans previously
charged against the allowance for loan losses.
<PAGE>
Noninterest Income and Expense. Noninterest income was $377,000 for the
nine months ended September 30, 1997, compared to $409,000, for the same
period in 1996. This decrease was primarily the result of the $25,000 loss
recognized on the sale of real estate owned in 1997 coupled with the $24,000
gain recognized on the sale of loans in 1996. The Corporation recorded a
$2,000 gain on the sale of investment securities in 1997 when it recorded a
loss of $14,000 during the same nine month period in 1996. Service charges on
deposit accounts increased by $8,000 for the nine months ended September 30,
1997, compared to the same period in 1996. Noninterest expense also decreased
by $305,000 for the nine months ended September 30, 1997, compared to the same
period in 1996. The decrease was attributed to the decreased costs of
employee salaries and benefit plans of $335,000, which was due to the changes
in staffing and a reduction in the total number of employees.
<PAGE>
FC BANC CORP.
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
Not Applicable
ITEM 5 - OTHER INFORMATION
Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 27: Financial Data Schedule
b. Exhibit 99: Amended and Restated Articles of Incorporation of
FC Banc Corp.
c. No report on Form 8-K was filed during the quarter ended
September 30, 1997.
<PAGE>
SIGNATURES
In accordance with 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.
FC BANC CORP.
Date /s/ November 13, 1997 /s/ G.W. Holden
_______________________________ ________________________________
G. W. Holden
President and Chief Executive Officer
Date /s/ November 13, 1997 /s/ Terry L. Gernert
______________________________ ________________________________
Terry L. Gernert
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Balance Sheets as of Sept.30,1997 and Dec.31,1996, and the related
Consolidated Income Statements for the three and nine months ended Sept.30,1997
and 1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000893539
<NAME> FC BANC CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 3,775
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 27,450
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 39,311
<ALLOWANCE> 1,077
<TOTAL-ASSETS> 75,928
<DEPOSITS> 63,763
<SHORT-TERM> 0
<LIABILITIES-OTHER> 928
<LONG-TERM> 0
0
0
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</TABLE>
AMENDED AND RESTATED ARTICLES
OF INCORPORATION
OF
FC BANC CORP.
FIRST: The name of the corporation shall be FC Banc Corp.
SECOND: The place in Ohio where the principal office is to be located is the
City of Bucyrus, Crawford County.
THIRD: The purpose or purposes for which it is formed are:
(a) To be a bank holding company under the Bank Holding Company
Act of 1956.
(b) Generally, consistent with the provisions of sect;1701.04(A)
(3) of the Ohio Revised Code, to engage in any lawful act or
activity for which corporations may be formed under sect;
sect;1701.01-1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The maximum number of shares of all classes which the corporation is
authorized to have outstanding is 1,000,000 common shares, no par
value per share.
(a) No holder of any shares of any class of the corporation shall
be entitled to the preemptive rights to subscribe for,
purchase, or receive any part of any new or additional
shares of any class, whether now or hereafter authorized, or
any securities exchangeable for or convertible into such
shares, or any warrants or other instruments evidencing
rights or options to subscribe for, purchase or otherwise
acquire such shares.
(b) The corporation shall not purchase any of the corporation's
voting common shares from any shareholder, or shareholders
acting as a group, who individually or collectively hold(s)
one percent (1%) or more of the corporation's outstanding
common shares, not including any treasury shares
(individually or collectively referred to in this Article
Fourth as the "One Percent Holder(s)") at a price higher than
the then current fair market value of the corporation's
voting common shares, or on terms more favorable, when
considered as a whole, than those otherwise available, unless
(a) the corporation makes an offer to all of its other
shareholders to purchase from each shareholder the same
percentage of that shareholder's voting common shares in the
corporation as the corporation intends to purchase from the
<PAGE>
One Percent Holder(s), at the same price and on the same
terms as the One Percent Holder(s) will receive; or (b) the
holders of a majority of the corporation's outstanding voting
common shares entitled to vote approve of the corporation's
purchase of its voting common shares from the One Percent
Holder(s), at the intended price and upon the intended terms,
with the One Percent Holder(s) not voting on such approval
and the voting common shares in the corporation which is held
by the One Percent Holder(s) not counted as outstanding in
calculating the number of votes required for approval.
(c) No holder of shares of any class shall have the right to vote
cumulatively in the election of directors.
FIFTH: A. The affirmative vote of the holders of not less than 80% of
the outstanding shares of the corporation entitled to vote
shall be required, except as otherwise expressly provided in
this Article Fifth (A) or in Article Fifth (B) in order for
the corporation:
(I) to consolidate or merge with or into another
corporation;
(II) to cause a combination or majority share acquisition
involving the issuance of shares of the corporation;
(III) to sell, transfer, exchange or otherwise dispose of
all, or substantially all, its assets; or
(IV) to dissolve;
to the extent such actions require shareholder approval.
The vote of shareholders specified in this Article Fifth
(A) shall not apply to any action or transaction described in such
paragraph if two-thirds of the Board of Directors of the
corporation shall have approved the action or transaction; in the
event of a conflict between Article Fifth (A) and Article Fifth
(B), Article Fifth (B) applies.
B. The provisions of this Article Fifth (B) shall apply to all
"Business Combinations" (as hereafter defined).
I. The affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding shares of
"Voting Stock" (as hereafter defined) of the
corporation and the affirmative vote of the holders
of not less than sixty-seven percent (67%) of the
outstanding shares of Voting Stock held by
shareholders other than a "Related Party" (as
hereafter defined) shall be required for the approval
or authorization of any Business Combination of the
corporation with any Related Party; provided,
however, that the eighty percent (80%) and the sixty-
seven percent (67%) voting requirements shall not
apply if either of the following two exceptions are
applicable:
a. The "Continuing Directors" of the corporation
(as hereafter defined) by a majority vote
(i) have expressly approved in advance the
<PAGE>
acquisition of outstanding shares of Voting
Stock of the corporation that caused the
Related Party to become a Related Party; or
(ii) have approved the Business Combination
prior to the Related Party involved in the
Business Combination having become a Related
Party; or
b. The cash or fair market value of the property,
securities or other consideration to be
received per share by shareholders of the
corporation in the Business Combination is
not less than the highest per share price
(with appropriate adjustments for recapital-
izations and for stock splits, stock dividends
and like distributions), paid by the Related
person in acquiring any of its holdings in the
appropriation's Common Stock. For purposes of
this Article Fifth (B), the term "other
consideration to be received" shall include,
without limitation, the Common Stock of the
corporation retained by its existing
shareholders in the event of any Business
Combination in which the corporation is the
surviving corporation.
II. For purposes of this Article Fifth (B), the following
terms shall have the following definitions:
a. The term "Business Combination" shall mean (i)
any merger or consolidation of the
corporation or a subsidiary with or into a
Related Party, (ii) any sale, lease, exchange,
transfer or other disposition, including
without limitation a mortgage or any other
security device, of all or any "Substantial
Part" (as hereafter defined) of the assets
either of the corporation (including without
limitation any voting securities of a
subsidiary) or of a subsidiary, to a Related
Party, (iii) any merger or consolidation of
a Related Party with or into the corporation
or a subsidiary of the corporation, (iv) any
sale, lease, exchange, transfer or other
disposition of all or any Substantial Part of
the assets of a Related person to the
corporation or a subsidiary of the
corporation, (v) the issuance of any
securities of the corporation or a subsidiary
of the corporation to a Related Party, (vi)
any recapitalization that would have the
effect of increasing the voting power of a
Related Party, and (vii) any agreement,
contract or other arrangement providing for
any of the transactions described in this
definition of Business Combination.
b. The term "Related Party" shall mean and
include any individual, corporation, partner-
ship or other person or entity which, together
with its "Affiliates" and "Associates" (as
defined at Rule 12b-2 under the Securities
<PAGE>
Exchange Act of 1934), "Beneficially Owns"
(as defined at Rule 13d-3 under the Securities
Exchange Act of 1934) in the aggregate twenty
percent (20%) or more of the outstanding
Voting Stock of the corporation, and any
Affiliate or Associate of any such individual,
corporation, partnership or other person or
entity. Without limitation, any shares of
Common Stock of the corporation that any
Related Party has the right to acquire
pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned
by the Related Party.
c. The term "Continuing Director" shall mean a
Director who was a member of the Board of
Directors of the corporation immediately prior
to the time that the Related Party involved
in a Business Combination became a Related
Party.
d. The term "Substantial Part" shall mean more
than thirty percent (30%) of the fair market
value of the total assets of the corporation,
as of the end of its most recent fiscal year
ending prior to the time of determination is
being made.
e. The term "Voting Stock" shall mean all
outstanding shares of capital stock of the
corporation or another corporation entitled to
vote generally in the election of directors
and each reference to a proportion of shares
of Voting Stock shall refer to such proportion
of the votes entitled to be cast by such
shares.
III. The provisions of this Article Fifth (B) may not be
repealed or amended in any respect unless the action
is approved by the affirmative vote of the holders of
not less than eighty percent (80%) of the outstanding
shares of Voting Stock of the corporation; provided,
however, that if there is a Related Party, such
action must also be approved by the affirmative vote
of holders of not less than sixty-seven percent (67%)
of the outstanding shares of Voting Stock held by
shareholders other than Related Parties. Further
provided, however, that this paragraph III shall not
apply to, and such eighty percent (80%) vote and
sixty-seven percent (67%) vote shall not be required
for any amendment, repeal or adoption recommended by
as majority of the Board of Directors if all of such
directors are Continuing Directors as defined in
paragraph II(c) of this Article Fifth (B).
SIXTH: The Board of Directors is hereby authorized to fix and determine, and
to vary, the amount of working capital of the corporation; to
determine whether any, and, if any, what part of the surplus, however
created or arising, shall be used or disposed of, or declared in
dividends, or paid to shareholders; and without action by the
shareholders, to use and apply such surplus, or any part thereof, or
<PAGE>
such part of the stated capital of the corporation as is permitted
under the provisions of §1701.35 of the Ohio Revised Code, or
any statute of like tenor or effect which is hereinafter enacted, at
any time or from time to time, in the purchase or acquisition of
shares of any class, voting-trust certificates for shares, bonds,
debentures, notes, script, warrants, obligations, evidences of
indebtedness of the corporation, or other securities of the
corporation, to such extent or amount and in such manner and upon
such terms as the Board of Directors shall deem expedient.
SEVENTH: Every statute of the State of Ohio hereafter enacted, whereby the
rights or privileges of shareholders of a corporation organized under
the General Corporation Law of said state are increased, diminished,
or in any way affected, or whereby effect is given to any action
authorized, ratified, or approved by less than all the shareholders
of any such corporation, shall apply to the corporation and shall be
binding upon every shareholder thereof to the same extent as if such
statute had been in force at the date of the filing of these Articles
of Incorporation.
EIGHTH: Each member of the Board of Directors shall have qualified as a
director of The Farmers Citizen Bank of Bucyrus. The Board of
Directors shall be divided into three(3) classes as nearly equal in
number as possible, with the initial term of office of Class I
directors expiring at the annual meeting of shareholders in 1993, of
Class II directors expiring at the annual meeting of shareholders
in 1994, and of Class III directors expiring at the annual meeting of
shareholders in 1995. At each annual meeting of shareholders,
directors chosen to succeed those whose terms then expire shall be
elected for a term of office expiring at the third succeeding annual
meeting of shareholders after their election. Directors may be
removed by the holders of a majority of the shares entitled to vote
at an election of directors only for cause.
NINTH: The shareholders of the corporation may adopt, amend or repeal the
Code of Regulations of the corporation only by the affirmative vote
of the holders of eighty percent (80%) of the outstanding common
shares of the corporation entitled to vote thereon; provided,
however, that if two-thirds (2/3) of the Board of Directors of the
corporation shall have approved such adoption, amendment or repeal,
the Code of Regulations may be adopted, amended or repealed by the
affirmative vote of a majority of the outstanding common shares
entitled to vote thereon.
TENTH: A director or officer of the corporation shall not be disqualified by
his office from dealing or contracting with the corporation as a
vendor, purchaser, employee, agent, or otherwise. No transaction or
contract or act of the corporation shall be void or voidable or in
any way affected or invalidated by reason of the fact that any
director or officer, or any firm of which any director or officer is
a member, or any corporation of which any director or officer is a
shareholder, director, or trustee, or any trust of which any director
or officer is a trustee or beneficiary, is in any way interested in
such transaction or contract or act. No director or officer shall
be accountable or responsible to the corporation for or in respect to
any transaction or contract or act of the corporation or for any
gains or profits directly or indirectly realized by him by reason of
the fact that he or any firm of which he is a member or any
corporation of which he is a shareholder, director, or trustee, or
<PAGE>
any trust of which he is a trustee or beneficiary, is interested in
said transaction, contract or act; provided the fact that such
director or officer or such firm or such corporation or such trust
is so interested shall have been disclosed or shall have been known
to the Board of Directors or such members thereof as shall be present
at any meeting of the Board of Directors at which action upon such
contract or transaction or act shall have been taken. Any director
may be counted in determining the existence of a quorum at any
meeting of the Board of Directors which shall authorize or take
action in respect to any such contract or transaction or act, and may
vote thereat to authorize, ratify, or approve any such contract or
transaction or act, and any officer of the corporation may take any
action within the scope of his authority respecting such contract or
transaction or act with like force and effect as if he or any firm of
which he is a member, or any corporation of which he is a
shareholder, director, trustee, or any trust of which he is a trustee
or beneficiary, were not interested in such transaction or contract
or act. Without limiting or qualifying the foregoing, if in any
judicial or other inquiry, suit, cause, or proceeding, the question
of whether a director or officer of the corporation has acted in good
faith is material, then notwithstanding any statute or rule of law or
of equity to the contrary (if any there be), his good faith shall be
presumed, in the absence of proof to the contrary by clear and
convincing evidence.
ELEVENTH: (1) The corporation will indemnify or agree to indemnify any
person who was or is a party or is threatened to be made a
party, to any threatened, pending, or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of
the corporation, by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or
is or was serving at the request of the corporation as a
director, trustee, officer, employee, or agent of another
corporation (including a subsidiary of this corporation),
domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgements, fines, and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation,
and with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit, or proceeding by
judgement, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself
create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) The corporation will indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a
party to any threatened, pending, or completed action of
suit by or in the right of the corporation to procure a
judgement in its favor by reason of the fact that he is or
was a director, officer, employee, or agent or the
<PAGE>
corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or
agent of another corporation (including a subsidiary of this
corporation), domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise
against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that
no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless, and only
to the extent that the court of common pleas, or the court in
which such action or suit was brought shall determine upon
application that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such
expenses as the court of common pleas or such other court
shall deem proper.
(3) To the extent that a director, trustee, officer, employee, or
agent has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in
sections (1) and (2) of this article, or in defense of any
claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection therewith.
(4) No indemnification under sections (1) and (2) of this
article, unless ordered by a court, shall be made by the
corporation if it is determined in the specific case that
indemnification of the director, trustee, officer, employee
or agent is not proper in the circumstances because he has
not met the applicable standard of conduct set forth in
sections (1) and (2) of this article. Such determination
shall be made (a) by a majority vote of a quorum consisting
of directors of the indemnifying corporation who were not and
are not parties to or threatened with any such action, suit
or proceeding, or (b) if such a quorum is not obtainable or
if a majority vote of a quorum of disinterested directors so
directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it
an attorney, who has been retained by or who has performed
services for the corporation, or any person to be indemnified
within the past five years, or (c) by the shareholders, or
(d) by the court of common pleas or the court in which such
action, suit, or proceeding was brought. Any determination
made by the disinterested directors under section (4)(a) or
by independent legal counsel under section (4)(b) of this
article shall be promptly communicated to the person who
threatened or brought the action or suit by or in the right
of the corporation under section (2) of this article, and
within ten days after receipt of such notification, such
person shall have the right to petition the court of common
pleas or the court in which such action or suit was brought
to review the reasonableness of such determination.
<PAGE>
(5) Expenses, including attorneys' fees, incurred in defending
any action, suit, or proceeding referred to in sections (1)
and (2) of this article, shall be paid by the corporation in
advance of the final disposition of such action, suit, or
proceeding as authorized by the directors in the specific
case upon receipt of a written undertaking by or on behalf of
the director, trustee, officer, employee, or agent to repay
such amount, unless it shall ultimately be determined that
he is entitled to be indemnified by the corporation as
authorized in this article. If a majority vote of a quorum
of disinterested directors so directs by resolution, said
written undertaking need not be submitted to the corporation.
Such a determination that a written undertaking need not be
submitted to the corporation shall in no way affect the
entitlement of indemnification as authorized by this article.
(6) The indemnification provided by this article shall not be
deemed exclusive of any other rights of which those seeking
indemnification may be entitled under the articles or the
regulations or any agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person
who has ceased to be a director, trustee, officer, employee,
or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(7) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request
of the corporation as a director, trustee, officer, employee,
or agent of another corporation (including a subsidiary of
this corporation), domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as
such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(8) As used in this section, references to "the corporation"
include all constituent corporations in a consolidation or
merger and the new or surviving corporation, so that any
person who is or was a director, officer, employee, or agent
of such a constituent corporation, or is or was serving at
the request of such constituent corporation as a director,
trustee, officer, employee or agent of another corporation
(including a subsidiary of this corporation), domestic or
foreign, nonprofit or for profit, partnership, joint venture,
trust, or other enterprise shall stand in the same position
under this article with respect to the new or surviving
corporation as he would if he had served the new or surviving
corporation in the same capacity.
(9) The forgoing provisions of this article do not apply to any
proceeding against any trustee, investment manager or other
fiduciary of an employee benefit plan in such person's
capacity as such, even though such person may also be an
agent of this corporation. The corporation will indemnify
<PAGE>
such named fiduciaries of its employee benefit plans against
all costs and expenses, judgements, fines, settlements or
other amounts actually and reasonably incurred by or imposed
upon said named fiduciary in connection with or arising out
of any claim, demand, action, suit or proceeding in which the
named fiduciary may be made a party by reason of being or
having been a named fiduciary, to the same extent it
indemnifies an agent of the corporation. To the extent that
the corporation does not have the direct legal power to
indemnify, the corporation will contract with the named
fiduciaries of its employee benefit plans to indemnify them
to the same extent as noted above. The corporation may
purchase and maintain insurance on behalf of such named
fiduciary covering any liability to the same extent that it
contracts to indemnify.
TWELFTH: Notwithstanding any provision of any statute of the State of Ohio,
now or hereafter in force, requiring for any purpose the vote of the
holders of shares entitling them to exercise two-thirds or any other
proportion of the voting power of the corporation or of any class or
classes of shares thereof, any action, unless otherwise expressly
required by statute or by these Amended and Restated Articles of
Incorporation, may be taken by the vote of the holders of shares
entitling them to exercise a majority of the voting power of the
corporation or of such class or classes.
THIRTEENTH: A. The corporation reserves the right to amend, alter,
change, or repeal any provision contained in these
Amended and Restated Articles of Incorporation, in the
manner now or hereafter prescribed by statute, and all
rights conferred upon shareholders herein are granted
subject to this reservation and subject to paragraph B.
B. The provisions set forth in these Amended and Restated
Articles may not be repealed or amended in any respect,
unless such action is approved by the affirmative vote
of the holders of not less than eighty percent (80%) of
the outstanding shares of the corporation entitled to
vote, except that such eighty percent (80%) requirement
shall not apply if two-thirds (2/3) of the Board of
Directors of the corporation shall have approved such
amendment or repeal.
C. All actions which are required to be or may be taken by
the shareholders of the corporation shall be taken at a
meeting of the shareholders, duly held and upon proper
notice of at least ten(10) days, may not be taken by
written consent without a meeting, and the power of
shareholders to consent in writing to the taking of any
action is specifically denied.
FOURTEENTH: These Amended and Restated Articles of Incorporation of the
corporation supersede the Amend Articles of Incorporation
existing on the effective date hereof.
