U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 or 15(d) of
THE SECURITIES EXCHANGE ACT of 1934
For the fiscal year ended December 31, 1996
Commission File Number 0-25616
_____________________
FC BANC CORP.
(name of small business issuer in its charter)
Ohio 34-1718070
(State or other Jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
Farmers Citizens Bank Building, Box 567, Bucyrus, Ohio 44820
(Address of principal executive offices) (zip code)
Issuer's telephone number (419) 562-4070
_____________________
not applicable
Securities registered under Section 12(g) of the Exchange Act:
Common Shares ($2.50 Par Value)
Preferred Shares ($25.00 Par Value)
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 ___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information state-
ments incorporated by reference in Part III of this Form 10- KSB or any amend-
ment to this Form 10-KSB. [ X ]
Securities registered under Section 12(b) of the Exchange Act:
State issuer's revenues for the most recent fiscal year. $6,088,000.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of March 1, 1997, 332,816 shares of Common Stock of the Registrant
were outstanding. The aggregate market value of the voting stock held by non-
affiliates was $12,223,640 based upon the trading price of $44.00 per share.
Documents Incorporated by References
Part III: Proxy Statement, dated March 24, 1997, of Registrant
Transitional Small Business Disclosure Format YES ___ NO _X_
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FC BANC CORP.
Cross Reference Sheet
Pursuant to Regulation ss 240.12b-23
________________________________________________________________________________
<S> <C> <C>
FORM 10-KSB EXHIBIT
PART I
Page No. Page No.
ITEM 1. Description of
Business 2
ITEM 2. Description of
Property 3
ITEM 3. Legal Proceedings 3
ITEM 4. Submission of
Matters to a Vote
of Security Holders Not Applicable
PART II
ITEM 5. Market for Common
Equity and Related
Stockholder Matters 4
ITEM 6. Management Discussion
and Analysis or Plan
of Operation 5 B,C
ITEM 7. Financial Statements A-2
ITEM 8. Changes In and Disagreements
With Accountants on
Accounting and Not Applicable
Financial Disclosures
PART III
ITEM 9. Directors, Executive Officers,
Promoters and Control
Person: Compliance With
Section 16(a) D-3
of the Exchange Act D-3
ITEM 10. Executive Compensation D-7
ITEM 11. Security Ownership of Certain
Beneficial Owners and
Management D-3
ITEM 12. Certain Relationships and A-11
Related Transactions D-17
ITEM 13. Exhibits and Reports on Exhibit A-Financial Statements
Form 8-K Exhibit B-MD & A
Exhibit C-Statistical Tables
Exhibit D- Proxy Statement as filed
on or before March 24, 1997
Form 8-K dated December 10, 1996
Exhibit E-Article 9 FDS (Exhibit 27)
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<PAGE>
PART I
ITEM 1. Description of Business
Business
FC Banc Corp. (the "Holding Company") was organized as an Ohio corporation
and incorporated by directors of The Farmers Citizens Bank (the "Bank") under
Ohio law on August 20, 1992, at the direction of the Board of Directors of the
Bank for purpose of becoming a bank holding company by acquiring all of the out-
standing shares of Bank Common Stock. The Holding Company acquired the Bank
effective January 31, 1994. The Holding Company has authorized 500,000 common
shares, par value $2.50 per share, of which 332,816 shares are currently issued
and 325,020 are outstanding.
The Holding Company also has authorized 750 preferred shares, par value
$25.00 per share without designating the terms of the preferred shares. No
preferred shares are currently outstanding or presently intended to be issued.
FC Banc Corp. is a bank holding company engaged in the business of commer-
cial and retail banking through its subsidiary The Farmers Citizens Bank, which
accounts for substantially all of the revenues, operating income, and assets.
The Holding Company may in the future acquire or form additional subsidiaries,
including other banks, to the extent permitted by law.
The Bank conducts a general banking business embracing the usual functions
of a commercial, retail and savings bank, including: time, savings, money
market and demand deposit accounts; commercial, industrial, agricultural, real
estate, consumer installment and credit card lending; safe deposit box rental,
automated teller machines, and other services tailored to individual customers.
The Bank makes and services secured and unsecured loans to individuals, firms
and corporations. The Bank continuously searches for new products and services
for new products and services which are made available to their customers in
order that they remain competitive in the market place.
The Holding Company is subject to regulation by the Board ofGovernors of
the Federal Reserve System (the "Federal Reserve Board") which limits the
activities in which the Holding Company and the Bank may engage. The Bank is
supervised by the State of Ohio, Division of Financial Institutions. The Bank
is a member of the Federal Reserve System and is subject to its supervision.
The Bank is also a member of the Federal Deposit Insurance Corporation (the
"FDIC"). As such, the Bank is subject to periodic examination by the Ohio
Division of Banks and the Federal Reserve Board. The Holding Company and the
Bank must file with the U. S. Securities and Exchange Commission, the Federal
Reserve Board and Ohio Division of Financial Institutions the prescribed
periodic reports containing full and accurate statements of its affairs.
Effect of Government Monetary Policies
The earnings of the Bank are affected by domestic economic conditions and
the monetary and fiscal policies of the United States government and its
agencies.
The Federal Reserve Board, through its monetary policies, regulates the
money supply, credit conditions and interest rates in order to influence the
general economic conditions. This is accomplished primarily by their open
market operations through the acquisition and disposition of United States
Government securities, varying the discount rate (rate charged on member bank
borrowings), targeting Federal Funds rates, and adjusting the reserve require-
ments of member and nonmember bank deposits. As a result the Federal Reserve
Board's monetary policies have had a significant effect on the interest income
and interest expense of commercial banks and are expected to continue to do so
in the future.
Employees
As of December 31, 1996, the Bank had 44 full-time and two part-time
employees. Currently the Holding Company has no paid employees.
<PAGE>
Competition
The Bank competes with two area banks and two savings and loan associations,
various finance companies, credit corporations, and both local and Federal
governments for sources and uses of funds. The Bank is the fourth largest
financial institution located in Crawford County, Ohio.
Competitive factors among financial institutions can be classified into
two categories, competitive rates and competitive services. With the advent
of deregulation, rates have become more competitive, especially in the area
of time deposits. From a service standpoint, financial institutions compete
against each other in types of service such as costs, banking hours and similar
features. The Bank is generally competitive with competing financial institu-
tions in its primary service area with respect to interest rates paid on time
and savings deposits, charges on deposit accounts and interest rates charged
on loans. With respect to services, the Bank offers extended banking hours
and operates two ATM's.
Pursuant to state regulations, the Bank is limited to the amount that it
may lend to a single borrower. As of December 31, 1996 and 1995, the legal
lending limits were approximately $1,781,000 and $1,822,000, respectively.
As of December 31, 1996 and 1995, no loans were over the legal lending limit.
ITEM 2. Properties
The Bank's principal office is located at 105 Washington Square, Bucyrus,
Ohio 44820. The Bank's two branches are located at 233 North Sandusky Avenue,
Bucyrus, Ohio, and 1605 Marion Road, Bucyrus, Ohio. All of the above properties
are owned by the Bank. The Bank currently supplies the Holding Company a
minimal office space at no cost.
ITEM 3. Legal Proceedings
The nature of the Bank's business generates a certain amount of litigation
involving matters arising in the ordinary course of business. However, in the
opinion of Management of the Bank, there are no proceedings pending to which
the Bank is a party or to which its property is subject, which, if determined
adversely to the Bank, would be material in relation to the Bank's undivided
profits or financial condition, nor are there any proceedings pending other
than ordinary routine litigation incident to the business of the Bank.
Memorandum of Understanding
On February 14, 1995, The Farmers Citizens Bank (the "Bank"), the wholly
owned subsidiary of the Company, entered into a Memorandum of Understanding
(the "MOU") with the Federal Reserve Bank of Cleveland (the "FRB") and the
Superintendent of the Ohio Division of Banks (the "Superintendent"). The MOU
requires the Bank, among other things, to:
(i) retain an independent bank management consultant to conduct a
complete management review to aid in the development of a manage-
ment structure suitable to the Bank's needs that is adequately
staffed by qualified and trained personnel, and upon the
conclusion of such review, to submit to the FRB and the
Superintendent a written management plan describing specific
actions to be taken by the Bank to strengthen Bank management
and improve the Board of Directors' supervision over the officers;
(ii) submit a written business plan to the FRB and the Superintendent;
(iii) eliminate from its books, by charge-off or collection, all assets
classified as "loss" in the joint report of examination of the
FRB and the Superintendent, dated September 30, 1994, and to
maintain an adequate valuation reserve for loan losses;
(iv) develop an amended loan policy, written loan review procedures
and a written plan to improve the Bank's position on past due
loans in excess of $100,000; and
<PAGE>
(v) develop an amended investment policy, including specific
objectives and goals for investments in structured note
securities and collateralized-mortgage obligations.
On December 12, 1996, the Bank was officially notified that based upon the
improved overall condition of the organization, the existing Memorandum of
Understanding was terminated.
In addition, no other material proceedings are pending or are known to be
threatened or contemplated against the bank by government authorities or others.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Part II
ITEM 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
Market Prices and Dividends
At December 31, 1996, the Holding Company had approximately 506 shareholders
of record. There is no established public trading market for the outstanding
shares of Holding Company Common Stock, although there have been a limited
number of private transactions known to the management of the Holding Company.
Based solely on information made available to the Holding Company from a
limited number of buyers and sellers, shares of the Holding Company Common
Stock that have actually been traded in private transactions since December
31, 1994 were all traded between $40.00 and $44.00. There may, however, have
been other transactions at other prices not known to management of the Holding
Company.
Payment of dividends by the Bank is subject to regulatory limitations and
Ohio banking law. Because cash available for dividend distribution to share-
holders of the Holding Company will initially only come from dividends paid by
the Bank to the Holding Company, these regulatory limitations on dividends by
the Bank will affect the amount of funds available for dividends by the Holding
Company.
Dividends by the Bank may be declared by the Bank by its Board of Directors
out of surplus. An Ohio bank must generally maintain surplus in an amount which
is at least equal to the amount of its capital. In addition to other limita-
tions under Ohio law with respect to the payment of dividends, the approval of
the Division is required for the declaration of dividends by an Ohio bank if
the total of all dividends declared by such bank in any year exceeds the total
of its net profits (as defined in Section 1117.02 of the Ohio Revised Code)
for that year combined with its retained net profits for the preceding two
years, less any required transfers to surplus or a fund for the retirement of
any preferred stock or capital securities.
In 1996 the Holding Company declared cash dividends of $1.20 per share
payable on December 13, 1996 to shareholders of record on December 6, 1996.
In 1995 the Holding Company declared cash dividends of $1.17 per share payable
on December 15, 1995 to shareholders of record on December 8, 1995. In 1994
the Holding Company declared cash dividends of $1.15 per share payable on
December 15, 1994 to shareholders of record December 7, 1994.
Dividends paid by the Holding Company necessarily depend upon earnings,
financial condition, appropriate legal restrictions and other factors relevant
at the time the Board of Directors of the Holding Company considers dividend
payment. Under the Ohio Revised Code, the Holding Company is prohibited from
paying dividends if either the Holding Company would be unable to pay its debts
as they become due, or the Holding Company's total assets would be less than
its total liabilities plus an amount needed to satisfy any preferential rights
of shareholders. The Holding Company may only pay dividends out of surplus.
Surplus is defined as the excess of a corporation's assets over its liabilities
plus stated capital. Total assets and liabilities are determined by the Board
of Directors, which may base its determination on such factors as it considers
<PAGE>
relevant, including without limitation: (i) the book values of the assets and
liabilities of the Holding Company, as reflected on its books and records; and
(ii) unrealized appreciation and depreciation of the assets of the Holding
Company.
If, in the opinion of the applicable federal bank regulatory authority, a
bank under its jurisdiction is engaged in or is about to engage in an unsafe
or unsound practice (which, depending on the financial condition of the bank,
could include the payment of dividends), such authority may require, after
notice and hearing, that such bank cease and desist from such practice. The
Federal Reserve Board has similar authority with respect to bank holding
companies. In addition, the Federal Reserve Bank and the FDIC have issued
policy statements which provide that insured banks and bank holding companies
should generally only pay dividends out of current operating earnings.
In 1993 the Bank had declared equivalent cash dividends of $1.15 per share
payable on December 6, 1993 to shareholders of record on November 30, 1993.
The Bank has declared regular cash dividends on the Bank Common Stock in each
of the past five years. In 1992, the Bank had declared cash dividends of $1.11
per share payable on December 4, 1992 to shareholders of record on November
20, 1992.
Finally, the federal bank regulatory authorities have established guidelines
with respect to the maintenance of appropriate levels of capital by a bank or
bank holding company under their jurisdiction. Compliance with the standards
set forth in such policy statements and guidelines could limit the amounts
which subsidiaries can pay as dividends and the amount of dividends which the
Holding Company and its subsidiaries may pay.
ITEM 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Refer to Exhibits B and C.
ITEM 7. Financial Statements and Supplementary Data
Refer to Exhibit A.
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
ITEM 9. Directors and Executive Officers of the Registrant
The information set forth under the caption "INFORMATION REGARDING NOMINEES
AND CONTINUING DIRECTORS" of the Proxy Statement of the Holding Company to be
filed prior to March 26, 1996 with the United States Securities and Exchange
Commission is incorporated by reference herein.
The information set forth in the Exhibit captioned "INFORMATION ABOUT
EXECUTIVE OFFICERS" is incorporated by reference herein.
ITEM 10. Executive Compensation
The information set forth under the caption "EXECUTIVE COMPENSATION" of the
Proxy Statement of the Holding Company to be filed prior to March 24, 1997 with
the United States Securities and Exchange Commission is incorporated by refer-
ence herein.
<PAGE>
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "INFORMATION REGARDING NOMINEES
AND CONTINUING DIRECTORS" of the Proxy Statement of the Holding Company to be
filed prior to March 24, 1997 with the United States Securities and Exchange
Commission is incorporated by reference herein.
<PAGE>
The information set forth in the Exhibit captioned "INFORMATION ABOUT
EXECUTIVE OFFICERS" is incorporated by reference herein.
ITEM 12. Certain Relationships and Related Transactions
The information set forth under the caption "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS" of the Proxy Statement of the Holding Company to be filed
prior to March 24, 1997 with the United States Securities and Exchange
Commission is incorporated by reference herein.
ITEM 13. Exhibits, Financial Statements, and Reports on Form 8-K
(a) The following documents are filed as a part of this Report:
1. Exhibit A - Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets - As of December 31, 1996 and 1995
Consolidated Statements of Income - Years Ended December 31, 1996,
1995 and 1994
Consolidated Statement of Changes in Shareholders' Equity - Years
Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - For the Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. Exhibit B - Management Discussion and Analysis
3. Exhibit C - Statistical Tables
All schedules, except those included in Items 6 and 7, are omitted
because they are inapplicable, not required, or the information
is included in the financial statements or the notes thereto, or
the proxy statement.
4. Exhibit D - Proxy Statement
Proxy Statement of the Holding Company to be filed prior to March
24, 1997 with the United States Securities and Exchange Commission.
5. Reports on Form 8-K
The Holding Company filed one report on Form 8-K during the last
quarter of 1996 which detailed the changes in the Company's senior
management.
6. Exhibit E - Article 9 FDS (Exhibit 27)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 OR 15 (d) 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 in the City of
Bucyrus, State of Ohio on the xxth day of March, 1997.
FC BANC CORP.
s/G. W. Holden
_____________________________
G. W. Holden
President and Chief Executive Officer
s/Terry L. Gernert
_____________________________
Terry L. Gernert
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following Directors in the capacities indicated
on March xx, 1997.
s/ Robert D. Hord s/ David G. Dostal
____________________________ _____________________________
Robert D. Hord, Chairman David G. Dostal, Director
s/G. W. Holden s/Charles W. Kimerline
____________________________ _____________________________
G. W. Holden, Director Charles W. Kimerline, Director
s/Terry L. Gernert s/James A. Spreng
____________________________ _____________________________
Terry L. Gernert, Director James A. Spreng, Director
s/Jerry Harrer s/Joan C. Stemen
____________________________ _____________________________
Jerry Harrer, Director Joan C. Stemen, Director
s/James B. Pigman
____________________________
James B. Pigman, Director
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
FC Banc Corp. and Subsidiary
Bucyrus, Ohio
We have audited the accompanying balance sheets of FC Banc Corp. and
Subsidiary as of December 31, 1996 and 1995, and the related statements of
income, changes in shareholders' equity and cash flows for the years ended
December 31, 1996, 1995, and 1994. These financial statements are the re-
sponsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FC Banc Corp. and Subsidiary
as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years ended December 31, 1996, 1995 and 1994 in conformity
with generally accepted accounting principles.
ROBB, DIXON
FRANCIS, DAVIS, ONESON
& COMPANY
Granville, Ohio
February 7, 1997
<PAGE>
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FC BANC CORP. AND SUBSIDIARY
BUCYRUS, OHIO
CONSOLIDATED BALANCE SHEETS
________________________________________________________________________________________________
(Dollars in thousands)
December 31,
1996 1995
____ ____
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ASSETS
Cash and cash equivalents
Cash and amounts due from depository institutions $ 3,957 $ 5,329
Federal funds sold 1,100 4,200
_______ _______
Total cash and cash equivalents 5,057 9,529
Investment securities
Securities available-for-sale 32,128 33,803
Loans, net 39,780 35,882
Accrued interest receivable 837 769
Premises and equipment, net 1,476 1,406
Investments required by law-
stock in Federal Reserve Bank 66 66
Cash surrender value of life insurance 1,397 1,326
Deferred income taxes 521 467
Other assets 183 450
_______ _______
TOTAL ASSETS $81,445 $83,698
LIABILITIES
Deposits $70,074 $70,891
Borrowed funds 119 1,525
Accrued interest payable 186 212
Other liabilities 399 310
_______ _______
TOTAL LIABILITIES 70,778 72,938
SHAREHOLDERS' EQUITY
Preferred stock of $25 par value; 750 shares
authorized, no shares issued and outstanding 0 0
Common stock of $2.50 par value; 500,000 shares
authorized; 332,816 shares issued and outstanding 832 832
Additional paid-in capital 1,377 1,370
Retained earnings 8,944 8,653
Treasury stock, at cost; 7,796 and 0 shares (322) 0
Unrealized loss on securities available-for-sale,
net of applicable deferred income taxes (164) (95)
_______ _______
TOTAL SHAREHOLDERS' EQUITY 10,667 10,760
_______ _______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $81,445 $83,698
_______ _______
See accompanying notes.
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FC BANC CORP. AND SUBSIDIARY
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF INCOME
_______________________________________________________________________________________________________
(Dollars in thousands, except per share data)
(Dollars in thousands)
1996 1995 1994
____ ____ ____
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INTEREST INCOME
Interest and fees on loans $3,500 $3,354 $3,286
Interest on taxable investment securities 1,607 1,550 1,458
Interest on taxfree investment securities 398 468 552
Dividends on investment securities 4 4 4
Interest on federal funds sold 108 179 131
Other interest income 2 9 17
______ ______ ______
TOTAL INTEREST INCOME 5,619 5,564 5,448
INTEREST EXPENSE
Interest on interest-bearing checking accounts 328 400 434
Interest on passbook accounts 571 712 781
Interest on certificates of deposits 1,357 1,291 1,038
Interest on borrowed funds 21 39 28
______ ______ ______
TOTAL INTEREST EXPENSE 2,277 2,442 2,281
______ ______ ______
NET INTEREST INCOME 3,342 3,122 3,167
Provision for loan losses 0 204 1,015
______ ______ ______
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,342 2,918 2,152
OTHER INCOME
Service charges 336 323 321
Gain from sales of investment securities, net (13) 3 38
Other 146 102 166
______ ______ ______
TOTAL OTHER INCOME 469 428 525
OTHER EXPENSES
Salaries and employee benefits 1,468 1,367 1,225
Net occupancy and equipment expense 505 440 305
Other operating expenses 1,017 1,040 928
______ ______ ______
TOTAL OTHER EXPENSES 2,990 2,847 2,458
INCOME BEFORE FEDERAL INCOME
TAX EXPENSE 821 499 219
Federal income tax expense 140 (34) (116)
______ ______ ______
NET INCOME $ 681 $ 533 $ 335
______ ______ ______
PER SHARE DATA:
Net income $ 2.09 $ 1.61 $ 1.01
______ ______ ______
See accompanying notes.
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FC BANC CORP. AND SUBSIDIARY
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
_________________________________________________________________________________________________
(Dollars in thousands)
Unrealized
Gain (Loss) Total
On Securities Share-
Common Retained Treasury Available holders'
Stock Surplus Earnings Stock For-sale Equity
_____ _______ ________ _____ ________ ______
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Balances at 12/31/93 $ 832 $1,370 $8,557 $ 0 $ 0 $10,759
Net income 335 335
Cash dividends declared
($1.15 per share) (383) (383)
Cumulative effect to
adopt SFAS No. 115 211 211
Change in unrealized
gain/loss on securities
available-for-sale (1,104) (1,104)
Purchase of 475 shares
of treasury stock (15) (15)
Sale of 475 shares
of treasury stock 15 15
______ ______ ______ ______ ______ _______
Balances at 12/31/94 832 1,370 8,509 0 (893) 9,818
Net income 533 533
Cash dividends declared
($1.17 per share) (389) (389)
Change in unrealized
gain/loss on securities
available-for-sale 798 798
Purchase of 56,658
shares of treasury stock (57) (57)
Sale of 56,658 shares
of treasury stock 57 57
______ ______ ______ _____ ______ _______
Balances at 12/31/95 832 1,370 8,653 0 (95) 10,760
Net income 681 681
Cash dividends declared
($1.20 per share) (390) (390)
Change in unrealized
gain/loss on securities
available-for-sale (69) (69)
Purchase of 10,105
shares of treasury stock (416) (416)
Sale of 2,309 shares of
treasury stock 7 94 101
______ ______ ______ _____ ______ _______
Balances at 12/31/96 $ 832 $1,377 $8,944 $(322) $ (164) $10,667
______ ______ ______ _____ ______ _______
See accompanying notes.
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FC BANC CORP. AND SUBSIDIARY
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF CASH FLOWS
___________________________________________________________________________________________________
(Dollars in thousands)
Years ending December 31,
1996 1995 1994
____ ____ ____
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 681 $ 533 $ 335
Adjustments to reconcile net income to net cash
provided by operating activities:
Premium amortization net of discount accretion 114 53 95
Provision for loan losses 0 204 1,015
Loss (gain) from sales of investment securities, net 13 (3) (38)
Gain from sale of loans (23) 0 0
Income accrued on life insurance contracts (71) (46) (20)
Depreciation 273 247 137
Deferred income taxes (20) (30) (308)
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest receivable (68) 46 4
(Increase) decrease in other assets 231 (274) (16)
Increase (decrease) in accrued interest payable (26) 19 10
Increase in other liabilities 89 91 7
______ ______ ______
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,193 840 1,221
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in time certificates of deposit 0 200 194
Purchases of held-to-maturity securities 0 (499) (4,709)
Proceeds from maturities of held-to-maturity securities 0 4,655 5,447
Proceeds from sales of held-to-maturity securities 0 600 0
Purchases of available-for-sale securities (9,256) (5,705) (10,699)
Proceeds from sales of available-for-sale securities 2,420 3,442 7,515
Proceeds from maturities of available-for-sale securities 8,280 2,194 1,218
Proceeds from sale of loans 1,097 0 0
Purchase of loans (2,889) 0 0
Net (increase) decrease in loans (2,046) (2,768) 522
Purchases of premises and equipment (343) (141) (728)
Purchase of life insurance contracts 0 0 (807)
Death benefits received from life insurance contracts 0 0 228
______ ______ ______
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (2,737) 1,978 (1,819)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits (817) (893) 141
Net increase (decrease) in borrowed funds (1,406) 275 975
Payment on long term debt 0 0 (70)
Purchase of treasury stock (416) (57) (15)
Sale of treasury stock 101 57 15
Dividends paid (390) (389) (383)
______ ______ ______
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,928) (1,007) 663
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (4,472) 1,811 65
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 9,529 7,718 7,653
______ ______ ______
CASH AND CASH EQUIVALENTS AT END OF YEAR $5,057 $9,529 $7,718
______ ______ ______
See accompanying notes.
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FC BANC CORP. AND SUBSIDIARY
BUCYRUS, OHIO
Notes to Consolidated Financial Statements
______________________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of FC Banc Corp. and
its wholly-owned subsidiary, The Farmers Citizens Bank. All material inter-
company balances and transactions have been eliminated in consolidation.
Nature of Operations
The Bank provides a variety of financial services to individuals and corporate
customers, through its three branches in Bucyrus, Ohio, which is primarily a
small business and agricultural area. The Bank's primary source of revenue is
interest and fee income on loans.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans and the
valuation of real estate. In connection with the determination of the estimated
losses on loans and foreclosed real estate, management obtains independent
appraisals for significant properties.
A majority of the Bank's loan portfolio consist of commercial and residential
mortgage loans in the Crawford County, Ohio area. The regional economy depends
heavily on the agricultural industry. Accordingly, the ultimate collectibility
of a substantial portion of the Bank's loan portfolio and the recovery of a
substantial portion of the carrying amount of foreclosed real estate are
susceptible to changes in local market conditions.
While management uses available information to recognize losses on loans and
foreclosed real estate, further reductions in the carrying amounts of loans
and foreclosed assets may be necessary based on changes in local economic
conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the estimated losses on loans and fore-
closed real estate. Such agencies may require the Bank to recognize additional
losses based on their judgments about information available to them at the
time of their examination. Because of these factors, it is reasonably possible
that the allowances for losses on loans and foreclosed real estate may change
materially in the near term. However the amount of the change that is
reasonably possible cannot be estimated.
Investment Securities
All investment securities are classified as available-for-sale. Unrealized
holding gains and losses, net of tax, on available-for-sale securities are
reported as a net amount in a separate component of shareholders' equity until
realized. Gains and losses on the sale of available-for-sale securities are
determined using the specific-identification method. The amortization of
premiums and the accretion of discounts are recognized in interest income
using methods approximating the interest method over the period of maturity.
Declines in the fair value of individual securities below their cost that are
other than temporary result in write-downs of the individual securities to their
fair value. The related write-downs are included in earnings as realized
losses.
Loans
Loans are stated at unpaid principal balances, less the allowance for loan
losses and unearned discounts.
Unearned discounts on installment loans are recognized as income over the
term of the loans using a method that approximates the interest method.
<PAGE>
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest payments received on such
loans are applied as a reduction of the loan principal balance. Interest
income on other nonaccrual loans is not recognized until all principal payments
have been made in full.
The allowance for loan losses is maintained at a level which, in management's
judgment, is adequate to absorb credit losses inherent in the loan portfolio.
The amount of the allowance is based on management's evaluation of the
collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific impaired
loans, and economic conditions and other risks inherent in the portfolio.
Allowances for impaired loans are generally determined based on collateral
values or the present value of estimated cash flows. The allowance is increased
by a provision for loan losses, which is charged to expense, and reduced by
and reduced by charge-offs, net of recoveries.
Premises and Equipment
Land is carried at cost. Other premises and equipment are recorded at cost
and are depreciated on the straight-line method. Depreciation is provided
over the estimated useful lives of the respective assets.
Foreclosed Real Estate
Foreclosed real estate includes both formally foreclosed property and in-
substance foreclosed property. In-substance foreclosed properties are those
properties for which the institution has taken physical possession, regardless
of whether formal foreclosure proceedings have taken place.
At the time of foreclosure, foreclosed real estate is recorded at the lower of
the carrying amount or fair value less cost to sell, which becomes the
property's new basis. Any write-downs based on the asset's fair value at date
of acquisition are charged to the allowance for loan losses. After foreclosure,
these assets are carried at the lower of their new cost basis or fair value
less cost to sell. Costs incurred in maintaining foreclosed real estate and
subsequent adjustments to the carrying amount of the property are included in
income (loss) on foreclosed real estate.
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of available-for-sale
securities, allowance for loan losses, income on nonaccrual loans, accumulated
depreciation, deferred compensation, and accretion income for financial and
income tax reporting. The deferred tax assets and liabilities represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred tax assets and liabilities are reflected at income tax rates
applicable to the period in which the deferred tax assets and liabilities are
expected to be realized or settled. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes.
Pension Plan
The Bank has a pension plan covering substantially all employees. It is the
policy of the Bank to fund the maximum amount that can be deducted for federal
income tax purposes but in amounts not less than the minimum amounts required
by law.
Statements of Cash Flows
The Bank considers all cash and demand amounts due from depository institutions,
interest-bearing deposits in other Banks, and federal funds sold to be cash
equivalents for purposes of the statements of cash flows. The following is
supplemental information supporting the statements of cash flows for the years
ended December 31, 1996, 1995 and 1994, respectively:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Cash paid during the year for interest $2,304 $2,423 $2,271
Cash paid during the year for income taxes (106) 165 265
</TABLE>
<PAGE>
Fair Values of Financial Instruments
Statement of Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments, requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet.
In cases where quoted market prices are not available, fair values are based
on estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. In that regard, the derived
fair value estimates cannot be substantiated by comparison to independent
markets and, in many cases, could not be realized in immediate settlement of
the instruments. Statement No. 107 excluded certain financial instruments and
all nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Bank.
The following methods and assumptions were used by the Bank in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the balance
sheets for cash and cash equivalents approximate those assets' fair values.
Investment securities: Fair values for investment securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and commercial
and industrial loans) are estimated using discounted cash flow analysis,
based on interest rates currently being offered for loans with similar terms
to borrowers of similar credit quality. Loan fair value estimates include
judgments regarding future expected loss experience and risk characteristics.
Fair values for impaired loans are extimated using discounted cash flow
flow analysis or underlying collateral values, where applicable. The carrying
amount of accrued interest receivable approximates its fair value.
Deposits: The fair values disclosed for demand deposits are, by definition,
equal to the amount payable on demand at the reporting date (that is, their
carrying amounts). The carrying amounts of variable-rate, fixed-term money-
market accounts and certificates of deposit approximate their fair values.
Fair values for fixed -rate certificates of deposit are estimates using a
discounted cash flow calculation that applies interest rates currently offered
on certificates to a schedule of aggregated contractual expected monthly
maturities on time deposits. The carrying amount of accrued interest pay-
able approximates fair value.
Short-term borrowings: The carrying amounts of short-term borrowings
approximate their fair values.
Postretirement Benefits
Postretirement health care and life insurance benefits are charged to salaries
and employee benefits expense when paid. In December, 1990, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions. Under SFAS No. 106, beginning in 1995, postretirement benefits other
than pensions were accounted for in a manner similar to current standards for
accounting for pensions. SFAS No. 106 requires that the accumulated postretire-
ment benefit obligation be either charged in the income statement as a
cumulative effect of a change in accounting in the period of adoption or delayed
and amortized over future periods as part of future postretirement benefits
costs.
Net Income Per Share of Common Stock
Net income per share of common stock is computed by dividing net income by
the weighted average number of shares of common stock outstanding during the
period.
Off-Balance Sheet Financial Instruments
In the ordinary course of business the Bank has entered into off balance sheet
financial instruments consisting of commitments to extend credit, commitments
under credit card arrangements, and standby letters of credit. Such financial
instruments are recorded in the financial statements when they become payable.
Advertising
Advertising costs are changed to operations when incurred.
<PAGE>
Reclassifications
Certain amounts in 1994 and 1995 have been reclassified to conform with the
1996 presentation.
NOTE B - RESERVE BALANCE REQUIREMENTS
The Bank is required to maintain certain cash and due from bank reserve balances
daily in accordance with regulatory requirements. The balance maintained under
such requirements was $641,000 at December 31, 1996.
NOTE C - INVESTMENT SECURITIES
Investment securities have been classified according to management's intent.
The amortized cost of securities and their approximate fair values are as
follows:
<TABLE>
<CAPTION>
Securities available-for-sale
_____________________________
(Dollars in thousands)
December 31, 1996 December 31, 1995
__________________________________________ __________________________________________
Gross Gross Gross Gross
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
____ _____ ______ _____ ____ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S.
government
& federal
agencies $24,239 $ 39 $(349) $23,929 $23,757 $ 93 $(306) $23,544
State & local
governments 6,887 88 (25) 6,950 9,423 123 (55) 9,491
Corporate debt
securities 1,239 1 0 1,240 756 3 0 759
Equity
securities 9 0 0 9 9 0 0 9
_______ ____ _____ _______ _______ ____ _____ _______
$32,374 $128 $(374) $32,128 $33,945 $219 $(361) $33,803
_______ ____ _____ _______ _______ ____ _____ _______
</TABLE>
The following is a summary of maturities of securities as of December 31, 1996:
<TABLE>
<CAPTION>
(Dollars in thousands)
Amounts maturing in: Amortized Fair
Cost Value
____ _____
<S> <C> <C>
One year or less $ 4,265 $ 4,238
After one year through five years 14,924 14,893
After five years through ten years 8,661 8,613
After ten years 4,515 4,375
Equity securities 9 9
_______ _______
$32,374 $32,128
_______ _______
</TABLE>
The amortized cost and fair value of mortgage-backed securities are presented
by contractual maturity in the preceding table. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations without call or prepayment penalties.
During 1996, the Bank sold securities for total proceeds of approximately
<PAGE>
$2,420,000 resulting in gross realized gains of approximately $2,000 and
gross realized losses of approximately $15,000. During 1995 the Bank sold
securities for total proceeds of approximately $4,042,000, resulting in gross
realized gains of approximately $15,000 and gross realized losses of approx-
imately $12,000. During 1994 the Bank sold securities for total proceeds of
approximately $7,515,000, resulting in gross realized gains of approximately
$59,000 and gross realized losses of approximately $21,000.
There were no securities transferred between classifications during 1996. In
1995, debt securities with an amortized cost of $8,278,000 were transferred
from held-to-maturity to available-for-sale because of favorable state tax
treatment on securities classified ad available-for-sale. The securities had
an unrealized loss of approximately $72,000. There were no securities trans-
ferred between classification during 1994.
Investment securities with a carrying amount of approximately $6,900,000 and
$8,497,000 were pledged to secure deposits as required or permitted by law at
December 31, 1996 and 1995, respectively.
NOTE D - LOANS
Loans at December 31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Commercial $12,749 $13,449
Real estate construction 1,168 994
Commercial real estate 7,440 3,981
Residential real estate, including farmland 14,002 11,032
Consumer 5,356 6,345
Term federal funds sold 0 1,000
Tax-exempt 315 378
Other 13 1
_______ _______
41,043 37,180
Unearned discounts on installment loans 0 (1)
Allowance for loans losses (1,263) (1,297)
_______ _______
Total $39,780 $35,882
_______ _______
</TABLE>
An analysis of the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Balance, beginning of year $1,297 $1,600 $ 618
Loans charged off (116) (574) (139)
Recoveries 8 67 106
Provision for losses 0 204 1,015
______ ______ ______
Balance, end of year $1,263 $1,297 $1,600
______ ______ ______
</TABLE>
At December 31, 1996 and 1995, the total recorded investment in impaired loans,
all of which had allowances determined in accordance with SFAS No. 114 and
No. 118, amounted to approximately $1,340,000 and $1,151,000, respectively.
The average recorded investment in impaired loans amounted to approximately
$1,245,00 and $1,588,000 for the years ended December 31, 1996 and 1995,
respectively. The allowance for loan losses related to impaired loans amounted
to approximately $372,000 and $259,000 at December 31, 1996 and 1995,
respectively. Interest income on impaired loans of $139,000 and $85,000 was
recognized for cash payments received in 1996 and 1995, respectively.
The Bank has no commitments to loan additional funds to the borrowers whose
loans have been classified as impaired.
<PAGE>
In the ordinary course of business, the Bank has and expects to continue to
have transactions, including borrowings, with its officers, directors, share-
holders, and their affiliates. In the opinion of management, such transactions
were on substantially the same terms, including interest rates and collateral,
as those prevailing at the time of comparable transactions with other persons
and did not involve more than a normal risk of collectibility or present any
other unfavorable features to the Bank. Loans to such borrowers are summarized
as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
Balance, December 31, 1995 $3,118
New loans 4,921
Payments (4,293)
______
Balance, December 31, 1996 $3,746
______
</TABLE>
No loans were transferred to foreclosed real estate in 1996, 1995 or in 1994.
NOTE E - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1996 and 1995 follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Land $ 221 $ 219
Buildings and improvements 1,116 921
Furniture, fixtures, and equipment 1,628 1,684
Construction in process 21 13
_______ _______
2,986 2,837
Accumulated depreciation and amortization (1,510) (1,431)
_______ _______
Total $ 1,476 $ 1,406
_______ _______
</TABLE>
NOTE F - CASH SURRENDER VALUE OF LIFE INSURANCE
The Bank is the beneficiary of insurance policies on the lives of four of its
past or present officers. At December 31, 1996 and 1995, there were no notes
payable to the insurance company.
NOTE G - DEPOSITS
Deposit account balances at December 31, 1996 and 1995, are summarized as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
Amount % Amount %
______ _____ ______ _____
<S> <C> <C> <C> <C>
Non-interest bearing checking accounts $11,296 16.1% $10,766 15.4%
Now and money market accounts 12,397 17.7 13,609 19.1
Savings accounts 20,208 28.8 21,541 30.3
Certificates of deposit 26,173 37.4 24,975 35.2
_______ _____ _______ _____
$70,074 100.0% $70,891 100.0%
_______ _____ _______ _____
</TABLE>
<PAGE>
The aggregate amount of short-term jumbo certificates of deposit with a minimum
denomination of $100,000 was approximately $4,469,000 and $2,210,000 at December
31, 1996 and 1995.
At December 31, 1996, scheduled maturities of certificates of deposit are as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
1997 $21,467
1998 4,135
1999 529
2000 32
2001 and thereafter 10
_______
$26,173
</TABLE>
The Bank held deposits of approximately $688,000 for related parties at
December 31, 1996.
Overdrawn demand deposits reclassified as loans totaled $13,000 and $5,000 at
December 31, 1996 and 1995, respectively.
NOTE H - BORROWED FUNDS
Borrowed funds balances at December 31, 1996 and 1995 are summarized as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Securities sold under agreement to repurchase and
federal funds purchased $ 0 $1,525
Note payable 119 0
______ ______
$ 119 $1,525
______ ______
</TABLE>
Securities sold under agreement to repurchase generally mature within one to
four days from the transaction date. The securities underlying the agreements
were maintained under the Bank's control at all times. The following applied
during 1996 and 1995 for securities sold under agreement to repurchase and
federal funds purchased:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Interest rates at year end 0.00% 3.23%
Highest month end amount outstanding during the year 2,375 2,898
Average amount outstanding during the year 405 2,112
Average rate of interest paid during the year 5.19% 3.25%
Securities underlying the agreements at year end:
Carrying value $ 0 $2,974
Market value $ 0 $2,975
</TABLE>
The notes payable had a weighted average interest rate of 4.72% at December
31, 1996. The future annual principal payment on the notes payable are as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
1997 $ 43
1998 38
1999 38
____
$119
____
</TABLE>
<PAGE>
NOTE I - FEDERAL INCOME TAXES
The Bank and Subsidiary file a consolidated federal income tax return. The
consolidated provision for income taxes for 1996, 1995 and 1994 consists of
the following:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Current federal tax expense $ 160 $ (4) $ 192
Deferred federal tax expense (20) (30) (308)
_____ _____ _____
$ 140 $ (34) $(116)
_____ _____ _____
</TABLE>
The provision for federal income taxes differs from that computed by applying
federal statutory rates to income before federal income tax expense, as
indicated in the following analysis:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995 1994
____ ____ ____
Amount % Amount % Amount %
______ _____ ______ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C>
Expected tax provision at a 34% rate $ 279 34.0% $ 170 34.0% $ 75 34.0%
Effect of tax-exempt income on municipals (142) (17.3) (165) (33.1) (198) (90.4)
Life insurance income (25) (3.0) (16) (3.2) (19) (8.7)
Interest and other non-deductible expenses 19 2.3 22 4.4 28 12.8
Other, net 9 1.0 (45) (8.9) (2) (.7)
_____ ____ _____ ____ _____ ____
$ 140 17.0% $ (34) (6.8%) $(116) (53.0%)
_____ ____ _____ ____ _____ ____
</TABLE>
The components of the deferred tax assets and liabilities consisted of the
following at December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Unrealized loss on securities available-for-sale $ 82 $ 47
Allowance for loan losses 288 299
Nonaccrual loan interest 60 41
Deferred compensation 89 51
Alternate minimum tax credit 90 91
_____ _____
Deferred tax assets 609 529
_____ _____
Security accretion (9) (8)
Accumulated depreciation (79) (54)
_____ _____
Deferred tax liabilities (88) (62)
_____ _____
Net deferred tax asset $ 521 $ 467
_____ _____
</TABLE>
NOTE J - DIVIDEND RESTRICTION
The Bank as State Bank is subject to the dividend restrictions set forth by
the State Division of Financial Institutions. Under such restrictions, the
bank may not, without the prior approval of the State Division of Financial
Institutions, declare dividends in excess of the sum of the current year's
earnings (as defined) plus the retained earnings (as defined) from the prior
two years. The dividends as of December 31, 1996, that the Bank could declare,
without the approval of the State Division of Financial Institutions, amounted
to approximately $1,032,000.
<PAGE>
NOTE K - PENSION PLAN
In 1989, the Bank initiated a 401K retirement savings plan, with all employees
eligible for inclusion in the plan. Participants may make salary savings
contributions up to 15% of the compensation, a portion of which will be matched
by the Company. Contributions by the Farmers Citizens Bank charged to
operations were $20,000, 20,000 and $18,000 for the years ended December 31,
1996, 1995 and 1994, respectively.
The Bank also has a profit sharing plan that covers employees who have one
year of service and have attained the age of 21. Contributions to the plan
are at the discretion of the Board of Directors. During 1996, 1995 and 1994,
contributions to the plan charged to operations were $0, $95,000 and $85,000,
respectively.
NOTE L - POSTRETIREMENT BENEFITS
The Company sponsors two defined benefit postretirement plans. One plan
provides health care coverage and the other provides life insurance benefits.
Both plans are noncontributory. The Company's funding policy is to contribute
as billed with their normal health care plan. For 1996 and 1995, the
aggregate contributions were $1,000 and $13,000, respectively.
The following table sets forth the plan's funded status reconciled with the
amount shown in the Company's balance sheet at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(258) $(204)
Fully eligible active plan participants 0 (117)
Other active plan participants (69) (220)
_____ _____
(327) (541)
_____ _____
Plan assets at fair value 0 0
_____ _____
Accumulated postretirement benefit
obligation in excess of plan assets (327) (541)
Unrecognized net loss from past experience
different from that assumed and effects of
any changes in assumptions 42 90
Unrecognized transition obligation,
net of amortization 157 393
_____ _____
Accrued postretirement cost in the
balance sheet $(128) $ (58)
_____ _____
</TABLE>
Postretirement expense for 1996 and 1995 includes the following components:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Service cost $ 31 $ 18
Interest cost on accumulated benefit obligation 37 32
Amortization of transition obligation over 20 years 23 21
____ ____
Net periodic postretirement expense $ 91 $ 71
____ ____
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1996 by $7,000 and the aggregate of the
service and interest cost components of postretirement expense for the year
then ended by $1,000.
<PAGE>
For measurement purposes, a 11.0% and 9.50% annual rate of increase in the
per capita cost of covered health care benefits for those under and over 65,
respectively, was assumed for 1996, the rate was assumed to decrease gradually
to 5.5% at 2005 and remain at that level thereafter.
The weighted average discount rate used in determining the accumulated post
retirement benefit obligation was 7.25%.
NOTE M - REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by its primary federal regulator, the Federal Deposit Insurance Corporation
(FDIC). Failure to meet minimum capital requirements can initiate certain
mandatory, and possible additional discretionary actions by regulators that,
if undertaken, could have a direct material affect on the Bank and the con-
solidated financial statements. Under the regulatory capital adequacy guide-
lines and the regulatory framework for prompt corrective action, the Bank must
meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification under the prompt corrective action guidelines are also subject
to qualitative judgements by the regulators about components, risk weightings,
and other factors.
Qualitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of: total risk-based
capital and Tier I capital to risk-weighted assets (as defined in the regula-
tions), and Tier I capital to adjusted average assets (as defined). As dis-
cussed in greater detail below, as of December 31, 1996, the Bank meets all of
the capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the FDIC, the Bank
was categorized as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as adequately capitalized, the Bank has
to maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the table below. There are no conditions or events
since the most recent notification that management believes have changed the
Bank's category.
<TABLE>
<CAPTION>
(Dollars in thousands)
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
___________________ ___________________ ___________________
Amount Ratio Amount Ratio Amount Ratio
______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Risk-Based Capital
(to Risk Weighted Assets) $11,228 23.1% $ 3,882 8.0% $ 4,852 10.0%
Tier I Capital
(to Risk Weighted Assets) 10,613 21.9 1,941 4.0 2,912 6.0
Tier I Capital
(to Average Assets) 10,613 13.1 3,239 4.0 4,049 5.0
As of December 31, 1995:
Total Risk-Based Capital
(to Risk Weighted Assets) $11,221 23.1% $ 3,759 8.0% $ 4,699 10.0%
Tier I Capital
(to Risk Weighted Assets) 10,625 21.9 1,880 4.0 2,912 6.0
Tier I Capital
(to Average Assets) 10,625 13.1 3,259 4.0 4,074 5.0
</TABLE>
<PAGE>
NOTE N - COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank has various outstanding commitments
and contingent liabilities that are not reflected in the accompanying consoli-
dated financial statements. The principal commitments of the Bank are as
follows:
The Bank had outstanding commitments to originate loans as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
____ ____
<S> <C> <C>
Home equity lines of credit $ 557 $ 369
Credit card lines 1,045 959
Other loan commitments 2,253 2,635
______ ______
$3,855 $3,963
</TABLE>
Commitments under standby letters of credit totaled approximately $761,000 and
$665,000 at December 31, 1996 and 1995, respectively (see NOTE O).
In addition, the Bank periodically is a defendant in various legal proceedings
arising in connection with its business. It is the best judgment of management
that neither the financial position nor results of operations of the Bank will
be materially affected by the final outcome of these legal proceedings.
NOTE O - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
consolidated statements of financial condition.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instruments for commitments to extend credit and standby
letters of credit is represented by the contractual notional amount of those
instruments (see NOTE N). The Bank uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount and type of collateral obtained,
if deemed necessary by the Bank upon extension of credit, varies and is based
on management's credit evaluation of the counterparty.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Standby letters of
credit generally have fixed expiration dates or other termination clauses and
may require payment of a fee. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities
to customers. The Bank's policy for obtaining collateral, and the nature of
such collateral, is essentially the same as that involved in makeing commit-
ments to extend credit.
The Bank has not been required to perform on any financial guarantees during
the past two years. The Bank has not incurred any losses on its commitments
in either 1996 or 1995.
The Bank had due from bank balances in excess of $100,000 with the following
correspondent bank as of December 31, 1996:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
Federal Reserve Bank $ 2,449
</TABLE>
<PAGE>
NOTE P - FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are as
follows:
<TABLE>
<CAPTION>
1996 1995
____________________ ____________________
Carrying Fair Carrying Fair
Amount Value Amount Value
______ _____ ______ _____
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 5,057 $ 5,057 $ 9,529 $ 9,529
Investment securities 32,128 32,128 33,803 33,803
Loans 39,780 39,728 35,882 36,129
Accrued interest receivable 837 837 769 769
Cash surrender value of life
insurance 1,476 1,476 1,326 1,326
Financial liabilities:
Deposits 70,074 70,110 70,891 70,954
Borrowed funds 119 119 1,525 1,525
Accrued interest payable 186 186 212 212
</TABLE>
The carrying amounts in the preceding table are included in the balance sheet
under the applicable captions. The contract or notional amounts of the Bank's
financial instruments with off-balance-sheet risk are disclosed in NOTE N.
No derivatives were held by the Bank for trading purposes. It is not practi-
cable to estimate the fair value of Federal Reserve Bank stock because it is
not marketable. The carrying amount of that investment in reported in the
consolidated balance sheets.
NOTE Q - OTHER EXPENSE
Components of other expense included in the consolidated statements of income
for the years ended December 31, 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Advertising & public relations $ 91 $ 88 $ 98
FDIC insurance 21 91 156
Directors fees 84 53 58
Legal and professional 217 162 23
State taxes 158 164 163
Supplies 99 99 80
Other 347 383 350
______ ______ ______
Total $1,017 $1,040 $ 928
______ ______ ______
</TABLE>
<PAGE>
NOTE R - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
<TABLE>
<CAPTION>
Condensed balance sheets
________________________
(Dollars in thousands)
December 31,
1996 1995
____ ____
<S> <C> <C>
Assets
Cash and due from banks $ 48 $ 9
Investment in subsidiary 10,449 10,530
Other assets 170 221
_______ _______
Total assets $10,667 $10,760
_______ _______
Shareholders' equity $10,667 $10,760
_______ _______
<CAPTION>
Condensed statements of income
(Dollars in thousands)
Year ended December 31,
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Income
Dividends from subsidiary $ 726 $ 604 $ 458
Expenses
Directors fees 8 5 5
Legal and professional 22 41 9
Supplies 5 5 0
Other 15 13 11
_______ _______ _______
Total expenses 50 64 25
Income before income tax benefit
and equity in undistributed net
income of subsidiary 676 540 433
Income tax benefit 17 21 8
_______ _______ _______
693 561 441
Equity in undistributed net income of subsidiary (12) (28) (106)
_______ _______ _______
Net income $ 681 $ 533 $ 335
_______ _______ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
Condensed statements of cash flows
__________________________________
(Dollars in thousands)
Year ended December 31,
1996 1995 1994
____ ____ ____
<S> <C> <C> <C>
Operating activities
Net income $ 681 $ 533 $ 335
Adjustments to reconcile net
income to net cash provided
by operating activities:
Change in other assets 51 (166) (9)
Equity in undistributed income
of subsidiary 12 28 106
_______ _______ _______
Net cash provided by operating activities 744 395 432
_______ _______ _______
Investing activities
Purchase of subsidiary 0 0 30
_______ _______ _______
Financing activities
Payments on long-term debt 0 0 (70)
Purchase of treasury stock (416) (57) (15)
Redemption of common stock 0 0 (7)
Sale of treasury stock 101 57 15
Cash dividends paid (390) (389) (383)
_______ _______ _______
Net cash used in financing activities (705) (389) (460)
Net increase in cash and due from banks 39 6 2
Cash and due from banks at beginning of year 9 3 1
_______ _______ _______
Cash and due from banks at end of year $ 48 $ 9 $ 3
_______ _______ _______
</TABLE>
NOTE S - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)
1996
_______________________________________________
4th 3rd 2nd 1st
___ ___ ___ ___
<S> <C> <C> <C> <C>
Interest income $1,490 $1,401 $1,368 $1,360
Interest expense 556 561 573 587
Net interest income 934 840 795 773
Provision for loan loss 0 0 0 0
Security gains, net 1 0 (14) 0
Net income 218 238 80 145
Earnings per share .68 .73 .24 .44
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
(Dollars in thousands, except per share data)
1995
_________________________________________________
4th 3rd 2nd 1st
___ ___ ___ ___
<S> <C> <C> <C> <C>
Interest income $1,437 $1,375 $1,365 $1,387
Interest expense 608 625 613 596
Net interest income 829 750 752 791
Provision for loan loss 0 0 0 204
Security gains, net 1 4 (2) 0
Net income 147 161 148 77
Earnings per share .46 .48 .44 .23
</TABLE>
<PAGE>
FC BANC CORP.
1996 ANNUAL REPORT
INTRODUCTION
FC Banc Corp. (the "Holding Company") was organized as an Ohio corporation
and incorporated by the board of directors of The Farmers Citizens Bank (the
"Bank") under Ohio law on August 20, 1992, for the purpose of becoming a bank
holding company owning all the outstanding shares of the Bank. The Holding
Company acquired the Bank on January 31, 1994, and as of December 31, 1996 has
combined assets of $81,445,000, total shareholders' equity of $10,667,000, and
total deposits of $70,074,000. The Bank is suject to supervision, examination
and regulation by the Division fo Financial Institutions of the State of Ohio.
The deposit accounts of the Bank are insured by the Federal Deposit Insurance
Corporation (FDIC), and the Bank is a member of the Federal Reserve System.
Both the Bank and the Holding Company are subject to regulation of the Federal
Reserve System through the Federal Reserve Bank of Cleveland, Cleveland, Ohio.
Selected financial data on the Holding Company's condition and operations is
filed with the United States Securities and Exchange Commission (Form 10-KSB
and Form 10-QSB) and the Board of Governors of the Federal Reserve System
(Form FRY-9). Selected financial data on the subsidiary Bank's condition and
operations is filed quarterly with the State of Ohio Division of Financial
Institutions, FDIC and the Federal Reserve System.
FC Banc Corp. is a bank holding company engaged in the business of
commercial and retail banking through its subsidiary The Farmers Citizens Bank,
which accounts for substantially all of its revenues, operating income, and
assets. The following discussion is intended to focus on and highlight
certain financial information regarding FC Banc Corp. and should be read in
conjunction with the financial statements and related notes which have been
prepared by the management of FC Banc Corp. in conformity with generally
accepted accounting principles. The Audit Committee of the Board of Directors
engaged Robb, Dixon, Francis, Davis, Oneson and Company, independent auditors,
to audit the financial statements. The auditors' report is included as a
part of the 1996 Annual Report. To assist in understanding and evaluating
major changes in the Holding Company's financial position and results of
operations, two, three and five year comparisons are provided in tabular form
for ease of comparison.
Three major areas of discussion that follow are an analysis of (a) assets
and liabilities including liquidity and interest rate sensitivity, (b) share-
holders' equity including dividends and risk-based capital, and (c) 1996 results
of operations.
I - FINANCIAL CONDITION
Loan Portfolio
Loans, as a component of earning assets, represent a significant portion of
earning assets at December 31, 1996. At December 31, 1996, the Bank's real
estate loans secured by farmland and loans to finance agricultural production
and other loans to farmers were $10,983,000. As noted in Note D, of the Notes
to Consolidated Financial Statements, the Bank also was a creditor for
$3,746,000 of loans from related parties.
Average loans increased 4.38% in 1996 to represent 50% of average earning
assets compared to 48% in 1995 and 46% in 1994. Year-end total real estate
loans of $22,596,000 represent approximately 55% of the total loans outstanding
compared to 43% for the previous year-end. As the total dollars outstanding
of loans fluctuated, decreasing from 1990 through 1993 and then increasing
through 1996, real estate loans had remained relatively constant at 33% of the
loans outstanding until 1994, when they increased to 37% and 43% at year-end
<PAGE>
1995. Installment loans to individuals have continued to decline steadily
since 1990 from 27% of loans outstanding to 13% at December 31, 1996. The
dollar amounts of commercial loans increased from 38% of loans outstanding in
1990 to 45% of loans outstanding in 1992 and 1993, then declined to 43%, 39%
and 31% of loans outstanding at December 31, 1994 , 1995, and 1996,
respectively. Table 3 provides a five year loan history.
During 1996 the Bank decreased the interest rates on deposits while loan
rates were relatively constant primarily due to competitive market conditions
electing to fund loans with the proceeds from maturing investment securities.
Total deposits at year-end 1996 compared to year-end 1995 were down $817,000,
while the average deposit base decreased approximately $342,000. The Bank has
the ability to obtain funds through Repurchase Agreements, the sale of
securities under agreement to repurchase at a later date. At December 31,1996
there were no open and active repurchase agreements. Total borrowed funds
decreased from $1,525,000 at December 31, 1995 to $119,000 at December 31,
1996. The average amount of borrowed funds was $405,000 in 1996 compared to
$759,000 in 1995.
These factors, combined with the aforementioned changes in the composition
of the loan portfolio, contributed to the increase in the net interest margin
in 1996 (the difference between the yield on interest-earning assets and the
yield on interest-bearing liabilities). The yield on interest-earning assets
of 7.64% compared to the yield on interest-bearing liabilities of 3.76%
produced an interest spread of 3.88% for 1996 as compared to an interest spread
of 3.58% for 1995 and 3.60% for 1994. The net interest margin or net interest-
earning assets increased to 4.61% for 1996 compared to 4.37% and 4.40% for
1995 and 1994 respectively. Table 1 provides a summary of average balances
and interest rates for the years 1996, 1995, and 1994. Table 16 summarizes the
results of changes in both rates and volume for the years ended December 31,
1996 and 1995.
In addition to the loans reported in Table 3, there are certain off-balance
sheet products such as letters of credit and loan commitments which are offered
under the same credit standards as the loan portfolio. Since the possibility
of a liability exists, generally accepted accounting principles require that
these financial instruments be disclosed but treated as contingent liabilities
and thus, not reflected in the accompanying financial statements. Management
closely monitors the financial condition of potential creditors throughout the
term of the instruments to assure that they maintain credit standards. Refer
to Note N and O for additional information on off-balance sheet financial
instruments.
Non-Performing Assets
While the Bank has experienced an increase in non-performing assets, loans
accounted for as non-accrual and accruing loans which are contractually past
due 90 days more, Management believes that the Allowance for Loan Losses is
adequate to cover any potential losses in the loan portfolio at December 31,
1996. Refer to the section entitled "Analysis of the Allowance/Provision for
Loan Loss" for additional detail.
Table 4 provides a five year summary of non-performing assets which are
defined as: loans accounted for on a non-accrual basis, accruing loans that are
contractually past due 90 days or more as to principal or interest payments,
renegotiated troubled debt, and other real estate obtained through loan fore-
closure.
A loan is placed on non-accrual when payment terms have been seriously
violated (principal and/or interest payments are 90 days or more past due,
deterioration of the borrower's ability to repay, or significant decrease in
value of the underlying loan collateral) and stays on non-accrual until the loan
is brought current as to principal and interest. The classification of a loan
or other asset as non- accruing does not indicate that loan principal and
interest will not be collectible. The Bank adheres to the policy of the
Federal Reserve that banks may not accrue interest on any loan when the
principal or interest is due and has remained unpaid for 90 days or more unless
the loan is both well secured and in the process of collection.
A loan is considered restructured or renegotiated when either the rate is
<PAGE>
reduced below current market rate for that type of risk, principal or interest
is forgiven, or the term is extended beyond that which the Bank would accept
for loans with comparable risk. Property obtained from foreclosing on loans
secured by real estate are adjusted to market value prior to being capitalized
in an "Other Real Estate" account for possible resale. Regulatory provisions
on other real estate are such that after five years, or ten years under special
circumstances, property must be charged-off. This period gives the Bank
adequate time to make provisions for disposing of any real estate property.
Loans accounted for on a non-accrual basis increased $365,000 as of year-
end 1996. Non-performing assets at December 31, 1996 totaled $1,119,000 or
1.37% of total assets. This represents an increase of $779,000 or 229% from
December 31, 1995. See Table 4 for a five year summary of non-performing loans.
This increase is attributable to both the amount of loans charged-off in
1996, 1995 and 1994, or $116,000, $574,000 and $139,000, respectively, coupled
with the amount of recoveries on charged-off loans which amounted to $82,000,
$67,000 and $106,000 in 1996, 1995 and 1994, respectively. Please refer to
the following section entitled "Analysis of the Allowance/Provision for Loan
Loss" for additional explanation.
Analysis of the Allowance/Provision for Loan
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. See Table 5 for a five year summary.
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 on 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 down payment received.
Management utilizes an internal loan review procedure to provide for
analysis of 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. The Bank's examiners and
independent auditors will periodically perform independent credit reviews of
the Bank's borrowers and evaluate the adequacy of the allowance for loan losses
account based upon the results of their review and other factors.
The results of the quarterly credit reviews in conjunction with independent
collateral evaluations are used by management and the board of directors in
determining the adequacy of the allowance for loan loss account on a quarterly
basis.
There were no provisions for possible loan losses during 1996 as compared
to the $204,000 provision recorded in 1995. The absence of a provision was
based upon the results of the management's quarterly reviews of the loan
portfolio to identify problem loans and to determine appropriate courses of
action on a loan by loan basis. Collection procedures are being activated when
a loan becomes past due.
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. The losses experienced combined with the type and market value of the
collateral securing the loan portfolio and the financial standing of certain
borrowers due to economic trends in their related businesses or farming
operations is the primary criteria used to determine the percentage allocation.
Approximately 90% of the Bank's total loans are secured by deeds of trust
on real property, security agreements on personal property, or through full
faith and credit of government agencies.
<PAGE>
Management believes significant factors affecting the allowance are being
reviewed regularly and that the allowance is adequate to cover potentially
uncollectible loans as of December 31, 1996. The Bank has no exposure from
troubled debt to lesser developed countries.
The average allowance to average loans outstanding ratio decreased to 3.46%
in 1996 from 4.60% and 2.54% in 1995 and 1994, respectively. This decrease was
due primarily to the increase in the loan portfolio coupled with the absence
of additional provisions in 1996. Whereas, the increase in 1995 was due
primarily to the additional provisions in 1994 as directed by the regulatory
agencies.
Net charge-offs in 1996 of $34,000 decreased $473,000 from $507,000 in 1995.
Net charge-offs in 1995 increased $474,000 from $33,000 in 1994. The net charge
- - -offs in 1996 of $34,000 represent 2.80% of the total net charge-offs for the
five years presented. The yearly average net charge-offs for the same five
year period were $243,000. See Table 5 for a five year summary.
Investments
Investments represent the second largest use of financial resources. The
investment portfolio, shown in Table 6 includes United States securities,
state and municipal obligations, other equity securities, and equity securities
of the Federal Reserve Bank.
Investment debt securities are those securities which the Bank has the
ability and intent to hold to maturity. These securities are stated at cost
adjusted for amortization of premium and accretion of discount, and computed
by the interest method. The investment marketable equity securities are carried
at the lower of cost or market value. In May 1993 the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards (SFAS) No.
115, Accounting for Certain Investments in Debt and Equity Securities. Under
SFAS No. 115, beginning in 1994 debt and equity securities not classified as
as either held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
and losses excluded from earnings and reported in a separate component of share-
holders' equity.
On January 1, 1994 the Bank adopted SFAS No. 115. The effect of adopting
SFAS No. 115 was to increase shareholders' equity $189,000 at January 1, 1994
and decrease shareholders' equity $893,000 at December 31, 1994. Effective
November 15, 1995, the FASB permitted a one-time opportunity for institutions
to reassess the appropriateness of the designations of all securities held upon
initial application of the Special Report. Any resulting redesignations had
to be made in conjunction with the implementation of the FASB's supplemental
guidance (FASB Special Report, "A Guide to Implementation of Statement 115 on
Accounting for Certain Investments in Debt and Equity Securities,") and had to
occur no later than December 31, 1995. After a detailed assessment of the
Bank's investment portfolio management concluded that it was in the best
interest to the institution to designate (i.e. reclassify) the entire portfolio
as "Available-For-Sale". The effect of designating securities as "Available-
For-Sale" was to decrease shareholders' equity by $95,000 at December 31, 1995.
The net increase in shareholders' equity of $798,000 at December 31, 1995
is a direct result of the redesignation of securities as "Available-For-Sale"
and the change in the market value of those securities held as "available for
sale" in the Bank's investment portfolio. In general, the replacement of older
higher yielding maturing securities with those at current interest rates, the
increase in market value (as a result of changing market rates) of those
investments classified as "available for sale", and the designation of the
securities as "Available-For-Sale" are the several of the underlying reasons
reasons for the increase in shareholders' equity.
Investment securities by year-end 1996 had decreased by $1,675,000 or 4.96%
from year-end 1995. Federal funds sold decreased by 73.81% to $1,100,000 during
fiscal 1996, and cash and due from banks balances decreased by $1,372,000 in
the same period. The decrease in cash balances was primarily attributable to
items in process of collection which were not investable as federal funds sold
until January 2, 1996. Federal funds sold are consistently maintained at levels
<PAGE>
that will cover the short-term liquidity needs of the Bank. Because of
decreasing interest rates, the related decrease in local loan demand, the
the purchase of loans on the open market, and the relative stability of deposit
liabilities, the excess available funds were invested primarily in federal
funds.
Securities categorized as "available-for-sale" can and will be sold prior
to maturity to meet liquidity or other funding needs. It is management's
intent to hold those securities categorized as "held-to- maturity" until their
maturity unless they are subject to an earlier redemption via a "call feature".
At December 31, 1996 the Bank's entire investment portfolio was classified as
available-for-sale.
The Bank utilizes a number of outside sources to analyze, evaluate, and
obtain advice relative to the management of its investment portfolio. The Bank
does not invest in any one type of security over another. Funds allocated to
the investment portfolio are constantly monitored by management to ensure that
a proper ratio of liquidity and earnings is maintained.
The Bank's investment portfolio includes approximately $2.7 million of
agency structured notes (step-ups, dual-indexed bonds, and a p.s.a. indexed
bond) which represents cash flows dependent on one or more indices in ways that
create risk characteristics similar to forwards or options. The risks inherent
in these types of securities include secondary liquidity risk (that is,
inability to resell the securities if needed for liquidity), price volatility
due to the uncertainty and unpredictability of the cash flow from the invest-
ment, and interest rate risk. Specific goals and objectives for investments
of this type, have been included in the investment policy of the Bank.
Memorandum of Understanding
On February 14, 1995, The Farmers Citizens Bank (the "Bank"), the wholly
owned subsidiary of the Company, entered into a Memorandum of Understanding
(the "MOU") with the Federal Reserve Bank of Cleveland (the "FRB") and the
Superintendent of the Ohio Division of Banks (the "Superintendent"). The MOU
required the Bank, among other things, to:
(i) retain an independent bank management consultant to conduct a
complete management review to aid in the development of a
management structure suitable to the Bank's needs that is
adequately staffed by qualified and trained personnel, and upon
the conclusion of such review, to submit to the FRB and the
Superintendent a written management plan describing specific
actions to be taken by the Bank to strengthen Bank management
and improve the Board of Directors' supervision over the officers;
(ii) submit a written business plan to the FRB and the Superintendent;
(iii) eliminate from its books, by charge-off or collection, all assets
classified as "loss" in the joint report of examination of the
FRB and the Superintendent, dated September 30, 1994, and to
maintain an adequate valuation reserve for loan losses;
(iv) develop an amended loan policy, written loan review procedures
and a written plan to improve the Bank's position on past due
loans in excess of $100,000; and
(v) develop an amended investment policy, including specific
objectives and goals for investments in structured note securities
and collateralized-mortgage obligations.
On December 12, 1996, the Bank was officially notified that based upon the
improved overall condition of the organization, the existing Memorandum of
Understanding was terminated.
<PAGE>
Deposits
Table 9 highlights average deposits and interest rates during the last
three years. Average deposits in 1996 have decreased by approximately $342,000
or 0.49% over 1995 which had decreased $378,000 or 0.54% over 1994. The average
cost of deposits for the bank was approximately 3.23% for the year ended
December 31, 1996 compared to 3.43% and 3.81% for 1995 and 1994, respectively.
Shareholders' Equity
Maintaining a strong capital position in order to absorb inherent risk is
one of management's top priorities. Selected capital ratios for the last three
years, presented in Table 10, "Capital Resources", reveals that the Bank has
been able to maintain an average equity to average asset ratio of greater than
12% for the past three years. It should be noted that this ratio has increased
by 19 basis points in 1996 to 13.03% and decreased by 9 basis points in 1995.
It should also be noted that the return on average assets increased in 1996
and 1995. This is due primarily to the decrease in provision for possible loan
losses in both 1996 and 1995, and the increase in interest margin in 1996.
The yield (interest expense) on interest earning liabilities decreased more
rapidly than the yield (interest income) on interest earning assets, resulting
in an improvement in the bank's interest margin in 1996, thus offsetting the
decline experienced in 1995. As indicated earlier, the average allowance to
average loans outstanding decreased to 3.46% in 1996 compared to 4.60% in 1995
and increased compared to 2.54% in 1994, respectively. Management believes
that the overall quality of the loan portfolio has improved significantly in
1996. In late 1994 and early 1995, management noted that the status of
collateral securing the loans within the portfolio and less favorable financial
standing of certain borrowers (due to economic trends in their related
businesses or farming operations), were the primary cause for a significant
increase in the bank's provision for possible loan losses in 1994 and 1995.
Banking regulations in 1989 established minimum capital ratios for banks.
The primary purpose of these requirements is to assess the riskiness of a
financial institution's balance sheet and off balance sheet financial
instruments in relation to adjusted capital. A minimum total qualifying capital
ratio of at least 8% with at least 4% of capital composed of Tier I (core)
capital had to be maintained. Tier I capital includes common equity, non-
cumulative perpetual preferred stock, and minority interest less goodwill and
other disallowed intangibles. Tier II (supplementary) capital includes
subordinate debt, intermediate term preferred stock, the allowance for loan
losses and preferred stock not qualifying for Tier I capital. Tier II capital
is limited to 100% of Tier I capital. At December 31, 1996 the Bank's risk-
based capital ratio for Tier I and Tier II capital is 21.87% and 23.14%,
respectively, thus meeting the required 4% and 8% for Tier I and Tier II
capital. Table 11 is a summary of both the Bank's risk-based capital and
leverage components and ratios.
II - RESULTS OF OPERATIONS
Consolidated net income was $681,000 or $2.09 per share, for the year ended
December 31, 1996 as compared to $533,000 or $1.61 per share for 1995 and
$335,000 or $1.01 per share for 1994. Return on average assets (ROA) was 0.84%,
0.65% and 0.41% in 1996, 1995, and 1994, respectively.
Net interest income
Net interest income, the income received on investments in loans,
securities, due from banks, and federal funds less interest paid to depository
and short-term creditors to fund these investments is the Bank's primary source
of revenue. The following discussion and analysis of the Bank's net interest
income is based primarily on Table 1, "Average Balances and Interest Rates",
Table 15, "Net Interest Income", Table 16, "Rate/Volume Analysis of Changes
in Interest Income and Interest Expense", and on Table 19, "Interest Sensitive
Assets and Liabilities" for all years presented using the Federal statutory
rate of 34%. Tables 1, 15 and 16 have been prepared on a tax-equivalent basis.
The stated (pre-tax) yield on tax-exempt loans and securities is lower than
<PAGE>
yield on taxable assets of similar risk and maturity. The average balances
were calculated on a monthly basis.
The net yield on interest-earning assets has increased to 4.61% in 1996
from 4.37% and 4.40% in 1995 and 1994, respectively. Net interest earnings
(on a fully tax equivalent basis) increased $196,000 or 5.97% in 1996 while
net income increased $148,000 or 27.77% in 1996 (See Table 13) and $198,000 or
59.10% in 1995 from $335,000 in 1994. Table 16 analyzes the reason for the
changes in interest income by applying either volume or rate changes to
interest sensitive assets and liabilities. The volume of both assets and
liabilities increased in 1996 and resulted in increased net interest income of
$40,000. Rates decreased for all categories of assets and liabilities which
resulted in a net increase of $156,000 in net interest income due to a change
in rates.
Net loan income increased $146,000 or 4.35% over the prior year primarily
as a result of the increased volume resulting from the increased credit demand,
competition from financial and non-financial sources, and management's
strengthening of loan underwriting standards. Average loan yields have
remained unchanged in 1996 after a 19 basis point decline in 1995. As of year-
end 1996 approximately $15,082,000 or 37% of the loan portfolio was maturing
or repricing in the next year. Variable rates and short-term maturities are
two tools management is using to achieve greater flexibility in a changing
rate environment.
Weighted average interest rates on investments and interest-bearing balances
with banks have decreased 10 basis points in 1996 resulting in a $36,000
decrease in taxable-equivalent income due to rates. An additional $1,000
increase in income due to the decreased volume accounts for the $35,000 total
decrease in investment income. Approximately $8,280,000 of securities matured
in 1996. Reinvestment yields on approximately $6,638,000 of maturing securities
in 1997 will be used to determine appropriate maturities or alternative
investments.
Federal funds sold income decreased $71,000 or 39.66% in 1996 after a
$48,000 or 36.64% increase in 1995. Volume decreased earnings $66,000 and
rates decreased earnings $5,000 in 1996. Federal funds are primarily used as
an investment mechanism for short-term liquidity purposes.
Interest-bearing deposit income decreased $9,000 or 100% in 1996 after an
$8,000 or 47.06% decrease in 1995. The decrease in earnings is attributed to
the decreased volume in 1996.
Interest-bearing deposit expense declined $147,000 or approximately 6.12%
in 1996 after a $150,000 or 11.97% increase in 1995. The volume increase caused
interest expense to increase $51,000 while decreasing rates caused a $198,000
decrease in interest expense in 1996. Rates paid on Savings / NOW / insured
earnings and time deposits decreased 53 and 7 basis points respectively, in
1996 which had decreased 32 and increased 96 basis points respectively, in
1995. An increase in average time deposit accounts coupled with a similar
decrease in Savings / NOW / insured earnings has occurred as a result of the
restructuring of interest rates in an effort to improve the bank's interest
margins. Also, competition from non-financial institutions has resulted in a
shifting of depositors resources.
Short-term borrowing expense, consisting primarily of securities sold
under agreement to repurchase expense, decreased in 1996 by $18,000. This
decrease is attributable to the decline in volume of $354,000.
In summary, Table 16, "Rate Volume Analysis of Changes in Interest Income
and Interest Expense", discloses the reasons for changes in interest income
and interest expense. It should be noted that the changes, or restructuring,
in the Bank's interest earning assets (loans and investments) and the interest-
bearing liabilities (deposits and borrowed funds) combined with the repricing
of each resulted in an increase in interest margins.
The increase in interest-earning asset volumes and the increase in interest-
bearing liability volumes in 1996, coupled with repricing of both interest-
earning assets and interest-bearing liabilities, resulted in a net increase of
$196,000 in net interest income. Changes in volume accounted for a $40,000
<PAGE>
increase in net interest income while changes in rates increased net interest
income $156,000.
The increases in both asset volume and interest rates in 1995 had less of
an effect on the net interest margin ($125,000 increase) than the increase in
liability interest rates ($139,000 increase). The increase in liability volumes
had less of an effect ($22,000) on the net interest margin in 1995.
Other Income and Other Expense
Total other income is comprised of operating income attributed to providing
deposit accounts for bank customers, the disposition of investment securities
prior to their maturity (which are classified as available for sale), and fees
from banking services.
Total other expense is comprised of operating expense attributed to staffing
(personnel costs), operation and maintenance of bank buildings and equipment,
banking service promotion, taxes and assessments, and other operating expenses.
Table 18, "Other Income and Other Expenses", contains a summary of these items
for the years ended December 31, 1996, 1995, and 1994.
Income Taxes
Applicable income taxes of $140,000 in 1996 consist of federal taxes only.
For the previous two years the federal tax rate was 34%.
Impacting the tax provisions for the three years covered in this report is
the level of the provision for possible loan losses ($ 0 in 1996, $204,000 in
1995, and $1,015,000 in 1994) and the level of tax-exempt income on securities
which was $398,000, $468,000 and $552,000 for the years 1996, 1995, and 1994,
respectively. Due to the general decline in values of collateral securing the
loan portfolio and less favorable financial standing of certain borrowers due
to economic trends in their related businesses or farming operations, manage-
ment chose to increase significantly the Bank's provision for possible loan
losses during the fiscal year 1994.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard (SFAS) No. 109, "Accounting for Income Taxes" in February
1992. This statement, effective for fiscal years beginning after December 15,
1992, amends or supersedes existing pronouncements relating to the accounting
for income taxes. The Bank adopted the Statement in 1993. SFAS No. 109
requires a liability approach to accounting for income taxes as opposed to a
deferred approach. The liability approach places emphasis on the accuracy of
the balance sheet while the deferred approach emphasizes the income statement.
Under the liability approach, deferred taxes are computed based on the tax
rates in effect for the periods in which temporary differences are expected
to reverse. An annual adjustment of the deferred tax liability or asset is
made for any subsequent change in tax rates.
Effects of Inflation/Changing Prices
The effects of inflation on operations of the Bank occurs through increased
operating costs which can be recovered through increased prices for services.
Virtually all of the Bank's assets and liabilities are monetary in nature and
can be repriced on a more frequent basis than in other industries. Every effort
is being made through interest sensitivity management to monitor products and
interest rates and their impact on future earnings.
Liquidity and Interest Rate Sensitivity Management
Management utilizes several tools currently available to monitor and ensure
that liquid funds are available to satisfy the normal loan and deposit needs
of its customers while taking advantage of investment opportunities as they
arise in order to maintain consistent growth and interest income. Cash and
<PAGE>
due from banks, marketable investment securities with maximum one year
maturities, and federal funds sold are the principal components of asset
liquidity. Referring to Table 19, the Bank is in a liabiity sensitive position
up to one year which ismore beneficial in a period of declining interest rates
since liabilities can be repriced at lower rates. In periods of rising interest
rates, interest sensitive assets are more favorable since they allow adjustment
of interest sensitive assets prior to maturing interest sensitive liabilities.
The three month category of interest sensitive liabilities includes approx-
imately $32,605,000 consisting of Savings, NOW accounts, and insured earnings
which can be adjusted in any one category at any time to offset any positive
gap in a declining rate environment.
Management utilizes variable rate loans (on a limited basis) and adjustable
rate deposits to maintain desired net interest margins. A procedural process
has been developed to monitor changes in market rates on interest sensitive
assets and liabilities with appropriate action being taken when warranted.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
________________________________________________________________________________________________________
Dollars in thousands, except per share data
For the year: 1996 1995 Increase / (Decrease)
____________ ____________ ________________________________
<S> <C> <C> <C> <C>
Net income $ 681 $ 533 $ 148 27.8 %
Dividends on common stock 390 389 1 0.3
Averages shares outstanding 325,797 331,756
Per Common Share:
Net income $ 2.09 $ 1.61 $ .48 29.8 %
Dividends Declared 1.20 1.17 .03 2.6
Book value at year-end 32.74 32.33 .41 1.3
At year-end:
Total assets $ 81,445 $ 83,698 $ (2,253) (2.7)%
Deposits 70,074 70,891 (817) (1.2)
Net loans 39,780 35,882 3,898 10.9
Investment and mortgage-backed
securities available-for-sale 32,128 33,803 (1,675) (5.0)
Shareholders' equity 10,667 10,760 (93) (0.9)
Average for the year:
Total assets $ 81,411 $ 81,742 $ (331) (0.4)%
Deposits 69,743 70,085 (342) (0.5)
Net loans 37,715 36,131 1,584 4.4
Shareholders' equity 10,609 10,496 113 1.1
Performance ratios:
Return on average assets 0.84% 0.65%
Return on average equity 6.42% 5.08%
Average loans as a percent of
average deposits 54.07% 51.55%
Average shareholders' equity
to average assets 13.03% 12.84%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
Average Balances and Interest Rates
On a Fully Taxable-Equivalent Basis
(Dollar Amounts in Thousands)
1996 1995 1994
---- ---- ----
Balance Int. Yield Balance Int. Yield Balance Int. Yield
------- --- ----- ------- ---- ----- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets:
Loans, net of unearned income $37,715 $ 3,500 9.28% $36,131 $ 3,354 9.28% $34,700 $ 3,286 9.47%
Investment securities:
U.S. Treasury & Government
agency securities 26,398 1,609 6.10% 25,293 1,550 6.13% 25,576 1,458 5.70%
State and municipal obligations 9,179 533 5.81% 10,279 627 6.10% 11,853 702 5.92%
Equity securities 75 4 5.33% 75 4 5.33% 75 4 5.33%
Federal funds sold 1,987 108 5.44% 3,138 179 5.70% 2,990 131 4.38%
Due from banks 0 0 0.00% 110 9 8.18% 229 17 7.42%
______ ______ _____ ______ ______ _____ ______ ______ _____
Total Interest-Earning Assets $75,354 $ 5,754 7.64% $75,026 $ 5,723 7.63% $75,423 $ 5,598 7.42%
Non-interest-earning assets:
Cash and due from banks 2,808 3,852 4,344
Bank premises and equipment,
net 1,491 1,465 1,097
Other assets 3,062 3,062 2,205
Less allowance for loan losses (1,304) (1,663) (882)
______ ______ ______
Total Assets $81,411 $81,742 $82,187
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Savings/NOW accounts/
Insured earnings 33,562 899 2.68% 34,660 1,112 3.21% 34,443 1,215 3.53%
Time deposits 26,616 1,357 5.10% 24,950 1,291 5.17% 24,655 1,038 4.21%
Borrowed funds 405 21 5.19% 759 39 5.14% 685 28 4.09%
______ ______ _____ ______ ______ _____ ______ ______ _____
Total Interest-Bearing
Liabilities $60,583 $ 2,277 3.76% $60,369 $ 2,442 4.05% $59,783 $ 2,281 3.82%
Non-interest-bearing liabilities:
Demand deposits 9,565 10,475 11,365
Other 654 402 416
Shareholders' equity 10,609 10,496 10,623
______ ______ ______
Total Liabilities and
Shareholders' Equity $81,411 $81,742 $82,187
_______ _______ _______
Net interest earnings $ 3,477 $ 3,281 $ 3,317
_______ _______ _______
Net yield on interest
earning assets <F1> 4.61% 4.37% 4.40%
_____ _____ _____
<FN>
<F1>
(1) Net yield is calculated by dividing net interest earnings by total interest-earning assets.
The table above includes non-performing loans in average amounts outstanding.
</FN>
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 2
1996 1995 1994
____ ____ ____
Increase Increase
Funding Uses and Sources Average (Decrease) Average (Decrease) Average
(Dollar Amounts in Thousands) Balance Amount Percent Balance Amount Percent Balance
_______ ______ _______ _______ ______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Funding uses:
Loans $37,715 $ 1,584 4.4% $36,131 $ 1,431 4.1% $34,700
Taxable investment securities 26,398 1,105 4.4 25,293 (283) (1.1) 25,576
Nontaxable investment securities 9,179 (1,100) (10.7) 10,279 (1,574) (13.3) 11,853
Equity securities 75 0 0.0 75 0 0.0 75
Federal funds sold 1,987 (1,151) (36.7 3,138 148 4.9 2,990
Interest bearing deposits 0 (110) (100.0) 110 (119) (52.0) 229
Other 6,057 (659) (9.8) 6,716 (48) (0.7) 6,764
______ ______ ______ ______ ______ _____ ______
Total Uses $81,411 (331) (0.4%) $81,742 (445) (0.5%) $82,187
_______ ______ ______ _______ ______ _____ _______
Funding sources:
Demand deposits $ 9,565 (910) (8.7%) $10,475 (890) (7.8%) $11,365
Savings deposits 33,562 (1,098) (3.2) 34,660 217 0.6 34,443
Time deposits 26,616 1,666 6.7 24,950 295 1.2 24,655
Borrowed funds 405 (354) (46.6) 759 74 10.8 685
Other 11,263 365 3.3 10,898 (141) (1.3) 11,039
______ ______ ______ ______ ______ _____ ______
Total Sources $81,411 (331) (0.4%) $81,742 (445) (0.5%) $82,187
_______ ______ ______ _______ ______ _____ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 3
Loan Portfolio
(Dollar Amounts in Thousands)
December 31,
1996 1995 1994 1993 1992
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Commercial $12,749 $14,449 $14,902 $16,073 $16,423
Installment loans to
individuals 5,356 6,345 6,630 6,663 7,305
Residential/commercial
real estate mortgages 22,610 16,007 13,051 11,795 12,097
All other 328 379 338 970 451
_______ _______ _______ _______ _______
Total Gross Loans $41,043 $37,180 $34,921 $35,501 $36,276
_______ _______ _______ _______ _______
<FN>
The following table shows the scheduled repricing of principal categorized by type of loan. All
variable rate loans are included in the within one year category.
</FN>
<CAPTION>
Repricing
_________
After One
Within But Within After
One Year Five Years Five Years Total
________ __________ __________ _____
<S> <C> <C> <C> <C>
Fixed rate:
Commercial $ 5,012 $ 4,320 $0 $ 9,332
Installment loans to
individuals 2,869 2,487 0 5,356
Residential/commercial
real estate mortgages 3,456 4,738 14,416 22,610
All other 328 0 0 328
_______ _______ _______ _______
Total fixed rate $11,665 $11,545 $14,416 $37,626
_______ _______ _______ _______
Variable rate:
Commercial 3,417 - - 3,417
_______ _______ _______ _______
Total loans $15,082 $11,545 $14,416 $41,043
_______ _______ _______ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 4
Non-performing loans
The following table shows information regarding past-due, non-accrual, and renegotiated troubled debt.
(Dollar Amounts in Thousands)
1996 1995 1994 1993 1992
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis $ 692 $ 327 $ 285 $ 697 $ 726
Accruing loans which are contractually past
due 90 days or more as to principal
or interest payments 427 13 97 158 566
Renegotiated troubled debt 0 0 0 0 0
Other real estate 0 0 0 0 0
Non-performing assets to:
Total assets 1.37% 0.41% 0.46% 1.03% 1.53%
Total loans and other real estate 2.73% 0.95% 1.15% 2.41% 3.56%
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 5
Analysis of the Allowance for Loan Losses
(Dollar Amounts in Thousands)
Year Ended December 31
1996 1995 1994 1993 1992
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Allowance for loan losses at
beginning of year $ 1,297 $ 1,600 $ 618 $ 657 $ 696
Loans charged off:
Real estate loans 0 0 0 0 63
Installment loans 11 23 9 3 30
Credit card loans 7 13 5 0 30
Commercial and all other loans 98 538 125 306 277
______ ______ ______ ______ ______
Total Charge-offs 116 574 139 309 400
______ ______ ______ ______ ______
Recovery of loans charged off:
Real estate loans 0 7 0 1 0
Installment loans 6 3 7 8 10
Credit card loans 3 2 1 1 7
Commercial and all other loans 73 55 98 10 33
______ ______ ______ ______ ______
Total Recoveries 82 67 106 20 50
______ ______ ______ ______ ______
Net (charge-offs) recoveries (34) (507) (33) (289) (350)
Provisions charged to operations 0 204 1,015 250 311
______ ______ ______ ______ ______
Balance at end of period $ 1,263 $ 1,297 $ 1,600 $ 618 $ 657
Ratio of net (charge-offs)
recoveries during the period
to average loans outstanding
during that period (0.09%) (1.40%) (0.10%) (0.81%) (0.96%)
Average allowance to average
loans outstanding 3.46% 4.60% 2.54% 1.86% 1.97%
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 6
Security Maturities and Yields
(Dollar Amounts in Thousands)
Securities Available for Sale
Maturity Schedule
After One After Five
Within But Within But Within After
One Year Five Years Ten Years Ten Years
_________________ _________________ _______________ ______________
Par Par Par Par Par Par Par Par
Value Yield Value Yield Value Yield Value Yield
_____ _____ _____ _____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government agency
securities $ 2,113 6.45% $10,135 6.07% $ 7,668 6.37% $ 4,322 5.77%
State and municipal
obligations 1,641 4.33% 4,060 5.54% 992 5.47% 193 6.25%
Equity investments 501 7.08% 738 6.79% 0 0.00% 75 5.31%
_______ _______ _______ _______
Total $ 4,255 $14,933 $ 8,660 $ 4,590
_______ _______ _______ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 7
Agency Structured Notes
(Dollar Amounts in Thousands)
1996
_________________________________________________________________________________________________________________
Gross Gross Net
MARKET Unrealized Unrealized Unrealized
COST % VALUE % Gains Losses Gains/Losses %
_________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMOs $ 5,926 18.3% $ 5,821 18.1% $ 5 $ (110) $ (105) 42.7%
Dual Indexed Bond 2,000 6.2 1,937 6.0 0 (63) (63) 25.6
PSA Indexed Bonds 500 1.5 488 1.5 0 (12) (12) 4.9
Step-Up Bonds 250 0.8 249 0.8 0 (1) (1) 0.4
_______ ______ _______ ______ _____ _______ _______ ______
Sub Total $ 8,676 26.8% $ 8,495 26.4% $ 5 $ (186) $ (181) 73.6%
All Other 23,698 73.6 23,633 73.6 123 (188) (65) 26.4
_______ ______ _______ ______ _____ _______ _______ ______
Total $32,374 100.0% $32,128 100.0% $ 128 $ (374) $ (246) 100.0%
_______ ______ _______ ______ _____ _______ _______ ______
Indices
Dual Indexed Bonds - Floats with 3 month LIBOR plus 25 basis points 10 year CMT minus 25 basis points
PSA Indexed Bonds - 5.83% interest rate, payments determined by underlying mortgage pool
<CAPTION>
1995
_____________________________________________________________________________________________________________________
Gross Gross Net
MARKET Unrealized Unrealized Unrealized
COST % VALUE % Gains Losses Gains/Losses %
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMOs $ 7,597 22.3% $ 7,496 22.1% $ 27 $ (128) $ (101) 71.1%
Dual Indexed Bonds 2,886 8.5 2,779 8.2 0 (107) (107) 75.4
PSA Indexed Bonds 500 1.5 500 1.5 0 0 0 0.0
Step-Up Bonds 250 0.7 250 0.7 0 0 0 0.0
_______ ______ _______ ______ _____ ______ ______ ______
Sub Total $11,233 33.0% $11,025 33.0% $ 27 $ (235) $ (208) 146.5%
All Other 22,778 67.0 22,844 67.5 192 (126) 66 (46.5)
_______ ______ _______ ______ _____ ______ ______ ______
Total $34,011 100.0% $33,869 100.0% $ 219 $ (361) $ (142) 100.0%
_______ ______ _______ ______ _____ ______ ______ ______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 8
Agency Structured Notes Maturity
(Dollar Amounts in Thousands)
1996
___________________________________________________________
Due in Due in Due in Due in
One Year One to Five Five to Ten Over
or Less Years Years Ten Years
___________________________________________________________
<S> <C> <C> <C> <C>
CMO's $ 0 $ 2,197 $ 1,159 $ 2,570
Dual Indexed Bonds 0 0 2,000 0
PSA Indexed Bonds 0 0 500 0
Step-Up Bonds 0 250 0 0
______ _______ ______ ______
Sub-Total 0 2,447 3,659 2,570
All Other 4,255 12,486 5,5001 2,020
______ _______ ______ ______
Total $ 4,255 $14,933 $ 8,660 $ 4,590
______ _______ ______ ______
Weighted average lives used to determine maturities of CMO's
<CAPTION>
1995
___________________________________________________________
Due in Due in Due in Due in
One Year One to Five Five to Ten Over
or Less Years Years Ten Years
___________________________________________________________
<S> <C> <C> <C> <C>
CMO's $ 0 $ 5,279 $ 1,819 $ 499
Dual Indexed Bonds 0 0 2,886 0
PSA Indexed Bonds 0 0 500 0
Step-Up Bonds 0 0 250 0
______ ______ ______ ______
Sub-Total 0 5,279 5,455 499
All Other 6,890 5,135 5,443 5,310
______ ______ ______ ______
Total $ 6,890 $10,414 $10,898 $ 5,809
______ ______ ______ ______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 9
Deposits
The monthly average amount of deposits are summarized below:
(Dollar Amounts in Thousands)
Year Ended December 31,
<1996> <1995> <1994>
__________________ __________________ __________________
Cost of Cost of Cost of
Amount Funds Amount Funds Amount Funds
______ _______ ______ _______ ______ _______
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing deposits $ 9,565 0.00% $10,475 0.00% $11,365 0.00%
Interest bearing demand deposits 10,826 2.52 10,719 2.93 10,441 3.08
Money market deposits 2,193 2.51 2,914 2.99 3,738 3.00
Savings deposits 20,543 2.78 21,027 3.39 20,264 3.85
Time deposits 26,616 5.10 24,950 5.17 24,655 4.21
_______ ______ _______ ______ _______ ______
Total Deposits $69,743 3.23% $70,085 3.43% $70,463 3.81%
_______ ______ _______ ______ _______ ______
Maturities of time deposits of $100,000 or more (in thousands) outstanding are summarized as follows:
<CAPTION>
December 31, 1996
<S> <C>
3 months or less $ 2,823
Over 3 through 12 months 1,030
Over one year through 5 years 616
Over 5 years 0
______
$ 4,469
______
</TABLE>
<TABLE>
<CAPTION>
TABLE 10
Capital Resources
Year Ended December 31,
1996 1995 1994
______ ______ ______
<S> <C> <C> <C>
Return on average assets 0.84% 0.65% 0.41%
Dividend payout ratio 57.33% 72.98% 114.33%
Average equity to average assets ratio 13.03% 12.84% 12.93%
Return on average equity 6.42% 5.08% 3.15%
Times
Earnings retained 42.67% 27.02% (14.33%)
Equals
Internal capital growth 2.74% 1.37% (0.45%)
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 11
Risk Based Capital
(Dollar Amounts in Thousands)
December 31,
1996 1995
______ ______
<S> <C> <C>
Tier I Capital:
Common stock and surplus of subsidiary bank $ 2,202 $ 2,202
Undivided profits of subsidiary bank 8,411 8,423
_______ _______
Total Tier I Capital 10,613 10,625
Eligible amount of the allowance for loan losses 615 596
_______ _______
Total Tier II Capital $11,228 $11,221
_______ _______
Risk adjusted assets $48,524 $46,991
Average assets $80,972 $81,742
Risk-based capital ratios:
Tier I 21.87% 22.61%
Tier II 23.14% 23.88%
_______ _______
Tier I leverage ratio 13.11% 13.04%
_______ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 12
STOCK PRICES
<1996> <1995>
__________________ ___________________
High Low High Low
______ ______ ______ ______
<S> <C> <C> <C> <C>
First Quarter $44.00 $40.50 $40.00 $40.00
Second Quarter 44.00 44.00 40.00 40.00
Third Quarter 44.00 44.00 42.00 42.00
Fourth Quarter 44.00 44.00 42.00 42.00
<CAPTION>
DIVIDEND DECLARED AND PAID
<1996> <1995>
__________________ __________________
Declared Paid Declared Paid
________ ______ ________ ______
<S> <C> <C> <C> <C>
First Quarter $ 0.00 $ 0.00 $ 0.00 $ 0.00
Second Quarter 0.00 0.00 0.00 0.00
Third Quarter 0.00 0.00 0.00 0.00
Fourth Quarter 1.20 1.20 1.17 1.17
------ ------ ------ ------
$ 1.20 $ 1.20 $ 1.17 $ 1.17
------ ------ ------ ------
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 13
Selected Financial Data
Five Year Comparative Financial Information
(In Thousands, Except per Share Data)
DECEMBER 31,
Summary of Operations 1996 1995 1994 1993 1992
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 3,500 $ 3,354 $ 3,286 $ 3,405 $ 3,754
Interest on investment securities:
Taxable 1,611 1,554 1,462 1,617 1,751
Tax-exempt 398 468 552 559 567
Interest on federal funds sold 108 179 131 100 89
Interest on deposits at other banks 2 9 17 30 104
_______ _______ _______ _______ _______
Total Interest Income 5,619 5,564 5,448 5,711 6,265
_______ _______ _______ _______ _______
Interest expense:
Interest on deposits 2,256 2,403 2,253 2,384 2,912
Interest on borrowed funds 21 39 28 14 0
_______ _______ _______ _______ _______
Total Interest Expense 2,277 2,442 2,281 2,398 2,912
_______ _______ _______ _______ _______
Net Interest Income 3,342 3,122 3,167 3,313 3,353
Provision for loan losses 0 204 1,015 250 311
_______ _______ _______ _______ _______
Net interest income after provision
for loan losses 3,342 2,918 2,152 3,063 3,042
Other income <F1> 469 428 525 577 530
Other expense (2,990) (2,847) (2,458) (2,321) (2,138)
Applicable income taxes (140) 34 116 (263) (310)
Cumulative effect of accounting
change <F2> 0 0 0 15 0
_______ _______ ______ ______ _______
Net Income $ 681 $ 533 $ 335 $ 1,071 $ 1,124
_______ _______ _______ _______ _______
Per share data: <F3>
Net income $ 2.09 $ 1.61 $ 1.01 $ 3.22 $ 3.38
Dividends declared 1.20 1.17 1.15 1.15 1.11
Shareholders' equity, end of year 32.74 32.33 29.50 32.33 30.26
Financial Highlights:
Total assets $81,445 $83,698 $83,264 $83,141 $84,179
Total deposits $70,074 $70,891 $71,784 $71,643 $73,783
Total shareholders' equity $10,667 $10,760 $ 9,818 $10,759 $10,071
Return on average assets 0.84% 0.65% 0.41% 1.31% 1.42%
Return on average shareholders'
equity 6.42% 5.08% 3.15% 10.16% 11.49%
Dividend payment ratio on
common stock 57.33% 72.98% 114.33% 35.76% 32.92%
Average equity to average assets
ratio 13.03% 12.84% 12.93% 12.91% 12.39%
<FN>
<F1>
Note 1 - Includes gains (losses) from securities transactions of $(13) in 1996, $3 in 1995, $38 in 1994, $113 in 1993,
and $107 in 1992.
<F2>
Note 2 - To adopt SFAS No. 109 for income tax purposes.
<F3>
Note 3 - Per share data was calculated using a weighted average of 325,797 in 1996, 331,756 in 1995, 332,816 in 1994,
332,816 in 1993, and 332,816 in 1992. Years 1992 and 1993 were restated to reflect the corporate reorganization
in 1994 resulting in a four for one stock exchange.
</FN>
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 14
Selected Financial Data
Quarterly Earnings Summary
The following is a summary of the quarterly results of operations for the years ended December 31, 1996 and 1995:
(In Thousands, Except per Share Amounts)
March 31, June 30, September 30, December 31,
1996 1995 1996 1995 1996 1995 1996 1995
____ ____ ____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income:
Interest and fees
on loans $ 802 $ 810 $ 820 $ 816 $ 877 $ 859 $1,001 $ 869
Interest on investment
securities:
Taxable 392 421 415 404 421 349 385 380
Tax-exempt 109 122 110 119 92 115 87 112
Interest on federal
funds sold 57 30 23 24 11 49 17 76
Interest on deposits
in other banks 0 4 0 2 0 3 0 0
______ ______ ______ ______ ______ ______ ______ ______
Total Interest Income $1,360 $1,387 $1,368 $1,365 $1,401 $1,375 $1,490 $1,437
Interest Expense:
Interest on deposits 571 584 572 605 558 621 555 593
Interest on borrowed funds 16 12 1 8 3 4 1 15
______ ______ ______ ______ ______ ______ ______ ______
Total Interest Expense 587 596 573 613 561 625 556 608
______ ______ ______ ______ ______ ______ ______ ______
Net interest income 773 791 795 752 840 750 934 829
Provision for loan losses 0 204 0 0 0 0 0 0
______ ______ ______ ______ ______ ______ ______ ______
Net interest income after
provision for loan losses 773 587 795 752 840 750 934 829
Net gain/losses on
investment securities 0 0 (14) (2) 0 4 1 1
Other income 130 120 127 125 161 127 64 53
Other expense 741 652 825 711 690 696 734 788
______ ______ ______ ______ ______ ______ ______ ______
Income before income taxes 162 55 83 164 311 185 265 95
Applicable income tax 17 (22) 3 16 73 24 47 (52)
______ ______ ______ ______ ______ ______ ______ ______
Net Income $ 145 $ 77 $ 80 $ 148 $ 238 $ 161 $ 218 $ 147
______ ______ ______ ______ ______ ______ ______ ______
Per share:
Net income $ 0.44 $ 0.23 $ 0.24 $ 0.44 $ 0.73 $ 0.48 $ 0.68 $ 0.47
Dividends declared 0.00 0.00 0.00 0.00 0.00 0.00 1.20 1.17
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 15
Net Interest Income (Taxable-Equivalent Basis)
(Dollar Amounts in Thousands)
Year Ended December 31,
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
Interest income per summary of
operations $ 5,619 $ 5,564 $ 5,448 $ 5,711 $ 6,265
Adjustment to fully taxable basis 135 159 150 152 154
_______ _______ _______ _______ _______
Adjusted interest income 5,754 5,723 5,598 5,863 6,419
Interest expense 2,277 2,442 2,281 2,398 2,912
_______ _______ _______ _______ _______
Net interest income adjusted to a
fully taxable-equivalent basis <F1> $ 3,477 $ 3,281 $ 3,317 $ 3,465 $ 3,507
_______ _______ _______ _______ _______
<FN>
<F1>
1. The adjustment to fully taxable basis for income on tax-exempt obligations has been computed assuming a
federal tax rate of 34% for the years 1992 through 1996.
</FN>
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 16
Rate/Volume Analysis of Changes in Interest Income and
Interest Expense on a Fully Taxable-Equivalent Basis
(Dollar Amounts in Thousands)
1996 Compared to 1995 1995 Compared to 1994
________________________ ________________________
Volume Rate Net Volume Rate Net
______ ____ ____ ______ ____ ____
<S> <C> <C> <C> <C> <C> <C>
Income earned on:
Loans $ 147 $ (1) $ 146 $ 135 $ (67) $ 68
Investment securities:
Taxable 68 (9) 59 (16) 108 92
Tax-exempt (67) (27) (94) (93) 18 (75)
Federal funds sold (66) (5) (71) 6 42 48
Interest bearing deposits
with other banks (9) 0 (9) (8) 0 (8)
_____ _____ _____ _____ _____ ____
Total Interest-Earning
Assets 73 (42) 31 24 101 125
_____ _____ _____ _____ _____ ____
Interest paid on:
Savings and NOW
accounts (35) (178) (213) 7 (110) (103)
Time deposits 86 (20) 66 12 241 253
Borrowed funds (18) 0 (18) 3 8 11
_____ _____ _____ _____ _____ ____
Total Interest-Bearing
Liabilities 33 (198) (165) 22 139 161
_____ _____ _____ _____ _____ ____
Changes in Net
Interest Income $ 40 $ 156 $ 196 $ 2 $ (38) $(36)
_____ _____ _____ _____ _____ ____
<FN>
The analysis of year-to-year changes in net interest income is segregated into amounts attributable to both volume and rate
variances. In calculating the variances, the changes are first segregated into (1) changes in volume (change in volume times
old rate), (2) changes in rate (change in rate times new volume), and (3) changes in rate/volume (change in rate times the
change in volume). The latter change in rate/volume has been allocated 100% to the change in rate variances.
</FN>
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 17
The major sources of per share earnings increases and decreases are shown below:
Changes in: 1996/1995 1995/1994
_________ _________
<S> <C> <C>
Net interest income $ 0.68 $ (0.14)
Provision for loan loss 0.63 2.44
Investment security gains (0.05) (0.11)
Other income 0.17 (0.19)
Salaries and benefits (0.29) (0.43)
Occupancy and equipment (0.20) (0.40)
Other expense 0.07 (0.33)
Applicable income tax (0.53) (0.24)
_______ _______
Net Income $ 0.48 $ 0.60
_______ _______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 18
Other Income and Other Expenses
A summary of items included in other income and other expenses is listed below:
(Dollar Amounts in Thousands)
Other Income: 1996 1995 1994
______ ______ ______
<S> <C> <C> <C>
Service charges on deposit accounts $ 336 $ 323 $ 321
Net investment security profits or losses (13) 3 38
Other income 146 102 166
______ ______ ______
Total Other Income $ 469 $ 428 $ 525
______ ______ ______
<CAPTION>
Other Expenses: 1996 1995 1994
______ ______ ______
<S> <C> <C> <C>
Salaries and employee benefits $1,468 $1,367 $1,225
Net occupancy and equipment 505 440 305
Advertising and public relations 91 88 98
Directors' fees 84 53 58
FDIC assessments 21 91 156
Legal and professional 217 162 23
Franchise and other taxes 158 164 163
Supplies 99 99 80
Other expense (each less than 1% of total income) 347 383 350
______ ______ ______
Total Other Expense $2,990 $2,847 $2,458
______ ______ ______
</TABLE>
<TABLE>
<PAGE>
<CAPTION>
TABLE 19
Interest-Sensitive Assets and Liabilities
(Dollar Amounts in Thousands)
December 31, 1996
Over Three After
Within Through One Over
Three Twelve Through Five
Months Months Five Year Years Total
______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C>
Interest-Earning Assets
Loans $ 8,273 $ 6,809 $11,545 $14,416 $41,043
Investment securities
Taxable 2,689 2,308 10,833 9,648 25,478
Non-taxable 0 1,641 4,060 1,186 6,887
Federal funds sold 1,100 - - - 1,100
_______ _______ _______ _______ _______
Total Interest-Earning Assets $12,062 $10,758 $26,438 $25,250 $74,508
_______ _______ _______ _______ _______
Interest-Bearing Liabilities
Interest-bearing demand deposits $12,397 - - - $12,397
Savings deposits 20,208 - - - 20,208
Time deposits 12,369 9,098 4,696 10 26,173
Borrowed funds 43 - 76 - 119
_______ _______ _______ _______ _______
Total Interest-Bearing Liabilities $45,017 $ 9,098 $ 4,772 $ 10 $58,897
_______ _______ _______ _______ _______
Interest Sensitivity Gap (32,955) 1,660 21,666 25,240 15,611
Cumulative Interest Sensitivity Gap (32,955) (31,295) (9,629) 15,611
Cumulative Gap Ratio 0.27 0.42 0.84 1.27
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 & 1995, AND SEPTEMBER 30, 1996 & 1995, CONSOLIDATED
STATEMENTS OF CONDITION AND CONSOLIDATED STATEMENTS OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000893539
<NAME> F C BANC CORP
<MULTIPLIER> 1000
<CURRENCY> U S DOLLARS
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1996 DEC-31-1995
<PERIOD-START> OCT-01-1996 OCT-01-1995 JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995 DEC-31-1996 DEC-31-1995
<EXCHANGE-RATE> 1 1 1 1
<CASH> 3,957 5,329 3,957 5,329
<INT-BEARING-DEPOSITS> 0 0 0 0
<FED-FUNDS-SOLD> 1,100 4,200 1,100 4,200
<TRADING-ASSETS> 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 32,194 33,869 32,194 33,869
<INVESTMENTS-CARRYING> 0 0 0 0
<INVESTMENTS-MARKET> 0 0 0 0
<LOANS> 41,043 37,179 41,043 37,179
<ALLOWANCE> (1,263) (1,297) (1,263) (1,297)
<TOTAL-ASSETS> 81,445 83,698 81,445 83,698
<DEPOSITS> 70,074 70,891 70,074 70,891
<SHORT-TERM> 119 1,525 119 1,525
<LIABILITIES-OTHER> 585 522 585 522
<LONG-TERM> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 832 832 832 832
<OTHER-SE> 9,835 9,928 9,835 9,928
<TOTAL-LIABILITIES-AND-EQUITY> 81,445 83,698 81,445 83,698
<INTEREST-LOAN> 1,001 869 3,500 3,354
<INTEREST-INVEST> 472 483 2,009 2,022
<INTEREST-OTHER> 17 85 110 188
<INTEREST-TOTAL> 1,490 1,437 5,619 5,564
<INTEREST-DEPOSIT> 555 593 2,256 2,403
<INTEREST-EXPENSE> 1 15 21 39
<INTEREST-INCOME-NET> 934 829 3,343 3,122
<LOAN-LOSSES> 0 0 0 204
<SECURITIES-GAINS> 1 1 (13) 3
<EXPENSE-OTHER> 734 847 2,990 2,906
<INCOME-PRETAX> 265 95 821 499
<INCOME-PRE-EXTRAORDINARY> 218 147 681 533
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 218 147 681 533
<EPS-PRIMARY> 0.68 0.00 2.09 1.61
<EPS-DILUTED> 0.68 0.00 2.09 1.61
<YIELD-ACTUAL> 0.00 0.00 4.61 4.37
<LOANS-NON> 692 0 691 327
<LOANS-PAST> 427 0 427 13
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 1,323 1,805 1,297 1,600
<CHARGE-OFFS> 77 509 116 574
<RECOVERIES> 17 32 82 98
<ALLOWANCE-CLOSE> 1,263 1,297 1,263 1,297
<ALLOWANCE-DOMESTIC> 1,263 0 1,263 1,297
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 215 377 215 377
</TABLE>
