U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________ TO __________
Commission file number - 33-53596
FC BANC CORP.
_______________________________________________________________
(Exact name of small business issuer as specified in its charter)
OHIO 34-1718070
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Farmers Citizens Bank Building,
105 Washington Square
Box 567, Bucyrus, Ohio 44820-0567
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
(419) 562-7040
__________________________
(Issuer's telephone number)
N/A
______
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
____
As of April 30, 1997, 325,020 shares of Common Stock of the Registrant were
outstanding. There were no preferred shares outstanding.
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
BUCYRUS, OHIO
FORM 10-QSB
INDEX
________________________________________________________________________________
Page Number
<S> <C>
PART I FINANCIAL INFORMATION
Item. 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- 3
March 31, 1997 and December 31, 1996
Condensed consolidated statements of income -- 4
Three months ended March 31, 1997 and 1996
Condensed consolidated statement of cash flows -- 5
Three months ended March 31, 1997 and 1996
Notes to condensed consolidated financial 6
statements -- March 31, 1997, 1996 and December 31, 1996
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED BALANCE SHEETS
____________________________________________________________________________________________
< ---------- Dollars in thousands ----------->
(Unaudited) (Unaudited)
March 31, December 31,
1997 1996
____ ____
<S> <C> <C>
Assets
Cash and Cash equivalents
Cash and due from banks $ 3,379 $ 3,957
Interest-bearing time deposits 0 0
Federal funds sold 2,000 1,100
_______ _______
Total cash and cash equivalents 5,379 5,057
Investment securities available-for-sale,
at fair value 30,252 32,194
Loans (net of unearned interest) 39,716 41,043
Less: Allowance for loan losses (1,255) (1,263)
_______ _______
Loans - net 38,460 39,780
Properties and equipment 1,438 1,476
Accrued income receivable 747 837
Deferred federal income taxes 561 521
Other assets 1,637 1,580
_______ _______
Total assets $78,474 $81,445
_______ _______
Liabilities and Shareholders' Equity
Deposits
Demand accounts 21,456 23,693
Savings accounts 19,169 20,208
Time deposits, $100,000 or over 920 914
Other time deposits 25,496 25,260
_______ _______
Total deposits 67,041 70,074
Borrowed funds 154 186
Accrued interest payable 52 63
Accrued expenses and other liabilities 456 455
_______ _______
Total liabilities $67,703 $70,778
_______ _______
Shareholders' Equity
Common stock -- $ 2.50 par value 832 832
Authorized -- 500,000 shares
Issued -- 332,816 shares
Surplus 1,386 1,377
Retained earnings 9,129 8,944
Treasury stock (7,796 shares in 1997 and 1996) (332) (322)
Unrealized loss on securities available-for-sale,
net of applicable deferred income taxes (244) (164)
_______ _______
Total shareholders' equity 10,771 10,667
_______ _______
Total liabilities and
shareholders' equity $78,474 $81,445
_______ _______
____________________________________________________________________________________________
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF INCOME
____________________________________________________________________________________________
<---------Dollars in thousands, except per share amounts---------->
3 Months Ended
March 31,
1997 1996
____ ____
<S> <C> <C>
Interest income
Interest and fees on loans $ 896 $ 810
Interest on investment securities:
Taxable 370 392
Exempt from federal income tax 75 104
Interest on federal funds sold 10 57
Interest on deposits with banks 0 0
_______ _______
Total interest income 1,351 1,374
_______ _______
Interest expense
Interest on interest-bearing checking accounts 74 86
Interest on savings deposits 132 147
Interest on certificates of deposit 314 338
Interest on borrowed funds 2 16
_______ _______
Total interest expense 522 587
_______ _______
Net interest income 829 787
Provision for loan losses 20 0
_______ _______
Net interest income after
provision for loan loss 809 787
Noninterest income
Service charges on deposit accounts 81 84
Life Insurance 17 26
Net investment security profits or losses 0 0
Other income 22 33
_______ _______
Total noninterest income 120 143
Noninterest expense
Salaries and employee benefits 295 381
Net occupancy expense 103 101
Equipment expense 27 35
FDIC deposit insurance assessment 7 5
State and other taxes 41 40
Other expense 219 206
_______ _______
Total noninterest expense 693 742
_______ _______
Income before income taxes 236 162
Federal income tax expense 52 17
_______ _______
Net Income $ 184 $ 145
____________________________________________________________________________________________
Per share data:
Weighted average shares outstanding 324,412 327,676
Net income per share of common stock 0.57 0.44
____________________________________________________________________________________________
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FC BANC CORP.
Bucyrus, Ohio
CONSOLIDATED STATEMENTS OF CASH FLOWS
_____________________________________________________________________________________________________
<------- Dollars in thousands ------->
3 Months Ended 3 Months Ended
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 185 $ 145
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 67 68
Provision for loan losses 20 0
Provision for deferred taxes 0 0
Gain/Loss on investments 0 0
Gain on loans sold 0 0
Amortization/Accretion - net 17 18
Change in accrued income and other assets (68) (150)
Change in accrued expenses and other liabilities 60 127
_______ _______
Total adjustments 96 63
_______ _______
Net cash provided by operating activities 281 208
Cash flows from investing activities:
Proceeds from maturities of available-for-sale securities 1,805 1,728
Purchase of available-for-sale securities 0 (4,109)
Net change in loans 1,299 1,548
Purchase of premises and equipment (29) (142)
_______ _______
Net cash used in investing activities 3,075 (975)
Cash flows from financing activities:
Net decrease in deposits 3,034 48
Net change in short-term borrowing 0 (1,525)
Purchase of treasury stock 116 42
Sale of treasury stock (116) (357)
_______ _______
Net cash provided by financing activities (3,034) (1,792)
_______ _______
Net decrease in cash and cash equivalents 322 (2,529)
Cash and cash equivalents at beginning of period 5,057 9,529
_______ _______
Cash and cash equivalents at end of period $ 5,379 $ 6,970
_______ _______
_____________________________________________________________________________________________________
Supplemental information:
Interest paid $ 553 $ 626
Net Income taxes paid $ 62 $ 172
_____________________________________________________________________________________________________
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
FC BANC CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997, 1996 and December 31,1996
________________________________________________________________________________
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Corporation a bank holding company whose activities are primarily limited
to holding the stock of the Farmers Citizens Bank, Bucyrus, Ohio, (the
"Company"). The Company conducts a general banking business in north central
Ohio which consists of attracting deposits from the general public and applying
those funds to the origination of loans for residential, consumer and non-
residential purposes. The Company's profitability is significantly dependent
on net interest income which is the difference between interest income generated
from interest-earning assets (i.e., loans and investments) and the interest
expense paid on interest-bearing liabilities (i.e., customer deposits and
borrowed funds). Net interest income is affected by the relative amount of
interest-earning assets and interest-bearing liabilities and interest received
or paid on these balances. The level of interest rates paid or received by the
Company can be significantly influenced by a number of environmental factors,
such as governmental monetary policy, that are outside of management control.
Earnings per common share were computed by dividing net income by the weighted
average number of shares outstanding for both the three-month periods ended
March 31, 1997 and 1996. The weighted average number of shares outstanding for
both the three-month periods ended March 31, 1997 and 1996, were 324,412 and
327,676, respectively.
The consolidated financial information presented herein has been prepared in
accordance with generally accepted accounting principles ("GAAP") and general
accounting practices within the financial services industry. In preparing
consolidated financial statements in accordance with GAAP, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from such estimates.
NOTE B - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-QSB and Article
10 of Regulation S-X and Rule 310 of Regulation SB. Accordingly, they do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have been included.
Operating results are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997.
<PAGE>
FC BANC CORP.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
________________________________________________________________________________
The following focuses on the consolidated financial condition of FC Banc
Corp. at March 31, 1997, compared to December 31, 1996, and the results of
operations for the three-month period ended March 31, 1997, compared to the
same period in 1996. The purpose of this discussion is to provide a better
understanding of the consolidated financial statements and footnotes included
in the Form 10-QSB. The Registrant is not aware of any market or institutional
trend, events or uncertainties that will have or are reasonably likely to have
a material effect on liquidity, capital resources or operations except as
discussed herein. Other than as discussed herein, the Registrant is not aware
of any current recommendations by regulatory authorities which would have such
effect if implemented.
Note Regarding Forward-Looking Statements
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Corporation's operations and the
Corporation's actual results could differ significantly from those discussed
in the forward-looking statements. Some of the factors that could cause or
contribute to such differences are discussed herein but also include changes
in the economy and interest rates in the nation and the Corporation's market
area generally. Some of the forward-looking statements included herein are
the statements regarding the allowance for loan losses.
Financial Condition
Liquidity
Liquidity relates to the Company's ability to meet cash demands of its
customers and their credit needs. Liquidity is provided by the Company's
ability to readily convert assets to cash and readily marketable, short-term
assets such as federal funds sold and deposits in other banks.
Cash, amounts due from banks and federal funds sold totaled $5,379,000 at
March 31, 1997. Investments and mortgage-backed securities available for sale
were $30,252,000 at March 31, 1997. This amount decreased by $720,000 from
December 31, 1996 balances. These assets, as well as anticipated deposit
balance fluctuations, scheduled loan payments and maturing investment
securities, provide the Company with an adequate source of funds for expected
future demand for loans and for fluctuations in deposit volume. They also
provide management with the flexibility to change the composition of interest
earning assets as market conditions change in the future. The Company's
liquidity ratio was 50.17% at March 31, 1997, which exceeded the regulatory
requirements and management's internal guideline of 20.00%.
Liability liquidity relates to the Company's ability to retain existing
deposits, obtain new deposits and borrow in the marketplace. Total deposits
decreased $3,034,000 in the first quarter primarily as a result of the loss of
$2 million of public fund deposits, normal seasonal fluctuations, and
managements decision not to aggressively price deposits. The Company has
experienced some deposit disintermediation during the first three months of
1997 which management attributes primarily to customer awareness of rate
differentiation. Management does not anticipate any significant amount
disintermediation through the end of 1997. Management expects total deposits
to experience some growth during the remainder of 1997 as deposit products are
repriced.
Access to advances from the Federal Reserve Bank (FRB) in the form of
Federal Funds Purchased and Securities Sold Under Agreement to Repurchase
(Repo Agreements) are supplemental sources of cash to meet liquidity needs.
<PAGE>
Capital Resources
Shareholders' equity totaled $10,771,000 at March 31, 1997, compared to
$10,667,000 at December 31, 1996. This increase was primarily due to the
first quarter earnings of $185,000 being offset by net unrealized holding loss
on securities available-for-sale of $80,000. As of March 31, 1997, the ratio
of shareholders' equity to assets was 13.73% compared to 13.10% at December
31, 1996.
Regulatory Capital Requirements
The Company complies with the capital requirements established by the
Federal Reserve System, which are summarized as follows:
<TABLE>
<CAPTION>
Capital Position
Regulatory as of
Minimum March 31, 1997 December 31, 1996
_______________________________________________________________________________________
<S> <C> <C> <C>
Tier I 4.00% 24.35% 22.61%
risk-based
capital......
Total Risk- 8.00% 25.62% 23.88%
Based capital
Tier I 3.00% - 5.00% 13.83% 13.04%
leverage.....
</TABLE>
Under "Prompt Corrective Action" regulations adopted in September 1992,
the Federal Deposit Insurance Corporation (FDIC) has defined five categories
of capitalization (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized). The Company
meets the "Well capitalized" definition, which requires a total risk-based
capital ratio of at least 10%, and a leverage ratio of at least 8%. Under a
current regulatory proposal, interest rate risk would become an additional
element in measuring risk-based capital. This proposed change is not expected
to significantly impact the Company's compliance with capital guidelines.
Changes in Financial Condition
General. The Corporation's consolidated total assets were $78.47 million
at March 31, 1997, reflecting an decrease of $2.97 million, or 3.65%, over the
$81.44 million at December 31, 1996. This decline was primarily attributed to
a decrease in deposits coupled with decreased loan demand, primarily
commercial and real estate, and maturing investment securities.
Cash and Cash Equivalents, Investment Securities, and Mortgage-Backed
Securities. Cash and cash equivalents, investment securities, and mortgage-
backed securities decreased $1.62 million between December 31, 1996 and March
31, 1997. The decline was primarily attributable to maturing investment
securities, $1.81 million, the proceeds of which were utilized to satisfy
depositor withdrawal requests. Dollars invested in overnight funds increased
from $1.1 million at December 31, 1996 to $2.0 million at March 31, 1997.
Balances held in due from bank accounts declined from $3.96 million to $3.38
million at March 31, 1997.
Loans Receivable. Total loans outstanding at March 31, 1997, equaled
$39.72 million, compared to $41.02 million at December 31, 1996, which
represents a decrease of $1.94 million, or 6.03%. Approximately 69.8% of this
decrease was experienced in the real estate and commercial loan portfolios.
Management has initiated an enhanced officer call program and several new loan
products to stimulate the growth of the corporation's loan portfolio.
<PAGE>
Deposits. Total deposits decreased by $3.03 million, or 4.33%, during
the first three months of 1997. Total time deposits increased by $241,000, or
0.92%, while demand and savings deposits decreased a net of $3.28 million, or
7.46%, during the three month period ended March 31, 1997.
Liabilities other than deposits decreased by $41,000. Such decrease was
primarily attributable to the reduction of $31,000 in accrued interest payable
on deposit accounts and $10,000 in accounts payable related to operating
expenses and income taxes.
Results of Operations
General. The Corporation recorded a consolidated net income of $184,000
for the first quarter of 1997, compared to $145,000 for the same quarter in
1996. This growth was primarily attributable to an increase in net interest
income and a reduction on noninterest expenses.
First Quarter 1997 vs First Quarter 1996
Net Interest Income. The Corporation's net interest income for the three
months ended March 31, 1997, increased by 5.34%, from $787,000 to $829,000,
compared to the same period in 1996. The net interest margin, which consists
of net interest income as a percentage of average interest-earning assets,
increased slightly, from 4.28% for the three months ended March 31, 1996, to
4.72% for the same period in 1997, primarily as a result of the decline in
volume of interest-bearing liabilities coupled with a general decrease in the
yield, or interest cost, of each category of interest-bearing liabilities.
During the same period, net interest spread, which reflects average yield on
interest-earning assets less average costs of interest-bearing liabilities,
increased 41 basis points, to 4.47%. Average loans outstanding increased by
$4.3 million as compared to 1996, which contributed approximately $83,000 to
the net interest income while the changes in average yield on loans
outstanding increased the net interest income by approximately $3,000.
Provision for Loan Losses. 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 the risk of loss inherent in the
Corporation's loan portfolio. Loan losses and recoveries are charged or
credited, respectively, to the allowance for loan losses as they occur.
The allowance and provision for loan losses is determined by management
upon consideration of such factors as the size and character of the loan
portfolio, loan loss experience, problem loans and economic conditions in the
Corporation's market area. Management attempts to minimize the risk
associated with each loan by evaluating each loan independently based upon
criteria which include, but are not limited to, (a) the purpose of the loan,
(b) the credit history of the borrower, (c) the borrower's financial standing
and trends, (d) the market value of the collateral involved, and (e) the down
payment received. Quarterly reviews of the loan portfolio are conducted to
identify problem loans and to determine appropriate courses of action on a
loan-by-loan basis. While management believes that it uses the best
information available to determine the allowance for loan losses, unforeseen
market conditions could result in material adjustments, and net earnings could
be significantly adversely affected, if circumstances differ substantially
from the assumptions used in making the final determination. Increases in the
loan portfolio, increases in the types of loans carrying greater risk of loss,
increases in non-performing loans and changes in the local and national
economy all could cause the allowance for loan losses to be insufficient.
The Corporation added $20,000 to the allowance for loan losses during the
quarter ended March 31, 1997, due the results of management's quarterly
evaluation of the loan portfolio. The Corporation also recognized $41,000 in
losses on loans while recovering $13,000 on loans previously charged against
the allowance for loan losses.
Noninterest Income and Expense. Noninterest income was $103,000 for the
three months ended March 31, 1997, compared to $117,000, for the same period
in 1996. This decrease was primarily the result of the decrease in credit
card related fee income of $7,000. Service charges on deposit accounts also
decreased by $3,000 for the three months ended March 31, 1997, compared to the
same period in 1996. Noninterest expense also decreased by $66,000 for the
three months ended March 31, 1997, compared to the same period in 1996. The
decrease was attributed to the decreased costs of employee salaries and
benefit plans, due to the changes in staffing and a reduction in the total
number of employees.
<PAGE>
FC BANC CORP.
PART II - OTHER INFORMATION
________________________________________________________________________________
ITEM 1 - LEGAL PROCEEDINGS
Not Applicable
ITEM 2 - CHANGES IN SECURITIES
Not Applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5 - OTHER INFORMATION
Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit 27: Financial Data Schedule
b. No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FC BANC CORP.
DATE: May 15, 1997 /s/ G. W. Holden
_____________ ____________________________________
G. W. Holden
President and Chief Executive Officer
/s/ Terry L. Gernert
_____________________________________
Terry L. Gernert
Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from the March 31,
1997 & 1996, and December 31, 1996, 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> FC BANC CORP
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 3,379
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,252
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 39,716
<ALLOWANCE> 1,255
<TOTAL-ASSETS> 78,474
<DEPOSITS> 67,041
<SHORT-TERM> 154
<LIABILITIES-OTHER> 508
<LONG-TERM> 0
0
0
<COMMON> 832
<OTHER-SE> 9,939
<TOTAL-LIABILITIES-AND-EQUITY> 78,474
<INTEREST-LOAN> 896
<INTEREST-INVEST> 445
<INTEREST-OTHER> 10
<INTEREST-TOTAL> 1,351
<INTEREST-DEPOSIT> 520
<INTEREST-EXPENSE> 522
<INTEREST-INCOME-NET> 829
<LOAN-LOSSES> 20
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 693
<INCOME-PRETAX> 236
<INCOME-PRE-EXTRAORDINARY> 184
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 184
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 4.72
<LOANS-NON> 621
<LOANS-PAST> 508
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,263
<CHARGE-OFFS> 41
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 1,255
<ALLOWANCE-DOMESTIC> 1,255
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 236
</TABLE>
