Second Bancorp (SECD) 8-K Second Bancorp Incorporated

TABLE OF CONTENTS

Item 5. Other Events
Item 7. Financial Statements and Exhibits
	Second Bancorp Financial Highlights Quarterly Data
	Second Bancorp Financial Highlights Year-to-Date Data
	Second Bancorp Consolidated Statements of Income Quarterly Data
	Second Bancorp Consolidated Statements of Income Year-to-Date Data
	Second Bancorp Consolidated Balance Sheets
	Second Bancorp Consolidated Average Balance Sheets For the Quarter Ended
	Second Bancorp Consolidated Average Balance Sheets For the Year-to-date period ended:
	Second Bancorp Financial Highlights - Operating Basis - Excluding Restructuring and Reengineering Charges Quarterly Data
	Second Bancorp Financial Highlights - Operating Basis - Excluding Restructuring and Reengineering Charges Year-to-Date Data
SIGNATURES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: October 20, 2000

Second Bancorp Incorporated
(Exact name of registrant as specified in its charter)

Ohio	0-15624	34-1547453
(State of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

108 Main Avenue S.W., Warren, Ohio	44482-1311
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 330-841-0123

Item 5. Other Events

On October 12, 2000, the Company issued the following press release:

SECOND BANCORP REPORTS EARNINGS,
COMPLETES ANNOUNCED BALANCE SHEET RESTRUCTURING

Warren, Ohio, October 12, 2000—SECOND BANCORP INCORPORATED (Nasdaq “SECD”) reported a loss of $5,545,000 for the third quarter or a diluted fifty-five cents ($.55) per share as the Company completed the major restructuring of its balance sheet originally announced August 14th. Absent the $9,022,000 in after tax restructuring and other charges taken in the third quarter, earnings for the period would have been $3,477,000 or thirty-four cents ($.34) per share compared to $4,412,000 or forty-one cents ($.41) per share for the same period last year. On a year-to-date basis, net income through the end on the quarter was $2,104,000 ($11,126,000 without restructuring costs) or twenty cents ($.20) per share compared to $12,865,000 or $1.20 per share for the first three quarters of 1999.

Page 1 of 13

After tax charges to earnings (losses) during the quarter resulting from the balance sheet restructuring were $1,825,000 on securities sales; $2,836,000 on mortgage loan sales; $2,665,000 on additions to the loan loss reserve to reflect the shift in loan mix; $393,000 on Federal Home Loan Bank advance prepayments; and $1,303,000 on other non-recurring expenses.

Second Bancorp Treasurer David L. Kellerman indicated “One of the effects of our third quarter restructuring and reengineering was to minimally shrink the Company’s balance sheet as we sold off $130 million in below market, fixed rate loan assets and used $100 million of the proceeds to reduce our exposure on higher cost Federal Home Loan Bank advances. Some of the positive net effects of these actions will be to significantly improve balance sheet flexibility and liquidity, reduce the earnings drag caused by our large mortgage loan portfolio, and ease our overall cost of funds. We expect these actions and the continuing redeployment of our resources into higher yielding assets like consumer and commercial loans to positively impact our net interest margin and, as a result, our profitability going forward. It is important to note that the restructuring has been completed without material impact on our capital footings which remain strong and without jeopardizing our dividend which currently yields a strong 4.7%.”

President and Chief Executive Officer R. L. Blossom, commenting on the decision to undertake this significant restructuring and its long-term impact on the Company, stated “Second Bancorp is in transition from a solid franchise with average financial performance to what we fully expect to become a high performing financial holding company. Our top-to-bottom assessment of the organization undertaken since my arrival last December made it clear to us that one of the major conditions restraining our profitability was the persistent impact of a major thrift acquisition in late 1998. That acquisition increased the percentage of mortgage loans in our overall portfolio from just over 14% to an unacceptably high 42% earlier this year and played a major role in depressing our net interest margin to its current 3.31% from 4.34% just prior to the transaction. Though we will continue to aggressively develop our mortgage business, we will service new loan originations but will retain a much smaller percentage of them on our balance sheet.

“Our decision to restructure was based on the recognition that decisive action to deal with this and other persistent conditions was necessary if we were to continue to grow earnings. We believe that a recovering net interest margin produced by adjusting our loan mix and renewed emphasis on core deposit generation; a newly installed state-of-the-art financial information system which will give us real-time budgeting, forecasting and financial management capabilities; improved efficiency; implementation of a culture centered on personal service and customer relationship building; and a heightened focus on the generation of fee income will help us reach our goal.”

Second Bancorp also reported that its Board of Directors has declared a sixteen cents ($.16) per share common dividend payable October 31, 2000 to shareholders of record on October 13. That dividend is unchanged from the second quarter of this year and is 14.3% higher than the dividend paid for the third quarter last year.

Page 2 of 13

This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.

Second Bancorp is a $1.56 billion financial holding company providing a full range of commercial and consumer banking, trust, insurance and investment products and services to communities in a nine county area of Northeastern and East-Central Ohio through subsidiary Second National Bank’s network of 35 retail banking centers.

Additional information about Second Bancorp can be found on the World Wide Web at www.prnewswire.com. Information about products and services offered by Second National Bank can also be accessed at www.secondnationalbank.com.

CONTACT: Christopher Stanitz, Executive Vice President and Secretary, 330.841.0234 or fax, 330.841.0489.

Page 3 of 13

Item 7. Financial Statements and Exhibits

Second Bancorp Incorporated and Subsidiary
Financial Highlights
Quarterly Data
(Dollars in thousands, except per share data)

			Sept. 2000			June 2000			March 2000			Dec. 1999			Sept. 1999
Earnings:
	Net interest income		$	11,606		$	12,645		$	12,418		$	12,286		$	12,348
	Provision for loan losses			4,843			696			687			765			757
	Non-interest income			(28	)		4,102			3,590			3,414			3,890
	Security gains			(2,802	)		(225	)		99			82			55
	Trading account			(28	)		(431	)		114			0			0
	Non-interest expense			13,140			10,431			10,297			10,770			9,618
	Federal income taxes			(3,690	)		1,251			1,301			934			1,506
		Net income	$	(5,545	)	$	3,713		$	3,936		$	3,313		$	4,412
Per share:
	Basic earnings		$	(0.55	)	$	0.36		$	0.38		$	0.32		$	0.41
	Diluted earnings			(0.55	)		0.36			0.38			0.32			0.41
	Common dividends			0.16			0.16			0.16			0.14			0.14
	Book value			11.05			11.31			11.17			11.12			11.31
	Tangible book value			10.88			11.12			10.97			10.92			11.08
	Market value			14.13			15.19			17.50			22.38			27.00
Weighted average shares outstanding:
	Basic			10,161,386			10,318,828			10,406,020			10,501,175			10,657,805
	Diluted			10,161,386			10,340,082			10,439,890			10,557,091			10,728,633
Period end balance sheet:
	Assets		$	1,561,617		$	1,632,913		$	1,592,993		$	1,537,278		$	1,550,247
	Securities			400,176			370,250			384,941			367,587			383,847
	Total loans			1,059,530			1,157,123			1,099,413			1,071,662			1,019,361
	Reserve for loan losses			15,040			11,378			11,354			11,169			12,049
	Deposits			1,084,377			1,105,449			1,095,123			1,097,589			1,106,349
	Total shareholders’ equity			112,019			115,368			115,993			116,347			118,999
	Tier I capital			114,158			122,595			122,595			121,981			121,709
	Tier I ratio			10.2	%		10.8	%		11.3	%		11.8	%		12.1	%
	Total capital			128,193			133,452			133,949			133,150			133,758
	Total capital ratio			11.4	%		11.8	%		12.4	%		12.8	%		13.3	%
	Total risk-adjusted assets			1,122,803			1,133,429			1,082,351			1,036,978			1,007,118
	Tier I leverage ratio			7.3	%		7.5	%		8.0	%		8.2	%		7.9	%
Average balance sheet:
	Assets		$	1,650,501		$	1,603,540		$	1,540,716		$	1,559,356		$	1,513,484
	Earning assets			1,552,441			1,504,564			1,443,262			1,462,789			1,420,449
	Loans			1,173,799			1,125,998			1,070,764			1,051,212			1,008,538
	Deposits			1,110,194			1,103,687			1,098,353			1,105,863			1,090,729
	Shareholders’ equity			116,702			114,132			114,880			117,603			118,556
Key ratios: (%)
	Return on average assets (ROA)			(1.34	)		0.93			1.02			0.85			1.17
	Return on average shareholders’ equity (ROE)			(19.01	)		13.01			13.70			10.92			14.89
	Net interest margin			3.14			3.51			3.61			3.52			3.65
	Net overhead			3.40			1.91			1.83			2.01			1.61
	Efficiency ratio			108.40			63.48			61.61			66.09			57.13
Credit quality:
	Non-accrual loans		$	3,821		$	2,987		$	3,068		$	2,743		$	4,994
	Restructured loans			45			47			0			52			55
	90 day past due and accruing			3,171			2,875			2,082			3,132			2,848
	Other real estate owned			961			1,170			231			281			138
	Charge-offs		$	1,528		$	873		$	719		$	2,015		$	1,120
	Recoveries			348			200			217			370			540
	Net charge-offs		$	1,180		$	673		$	502		$	1,645		$	580
	Reserve for loan losses as a percent of period-end loans (%)			1.42			0.98			1.03			1.04			1.18
	Net charge-offs (annualized) as a percent of average loans (%)			0.40			0.24			0.19			0.63			0.23

Page 4 of 13

Second Bancorp Incorporated and Subsidiary
Financial Highlights
Year-to-Date Data
(Dollars in thousands, except per share data)

			Sept. 2000			June 2000			March 2000			Dec. 1999			Sept. 1999
Earnings:
	Net interest income		$	36,669		$	25,063		$	12,418		$	49,272		$	36,986
	Provision for loan losses			6,226			1,383			687			3,195			2,430
	Non-interest income			7,233			7,578			3,590			14,480			11,066
	Security gains			(2,497	)		(12	)		99			312			230
	Trading account			(345	)		(317	)		114			0			0
	Non-interest expense			33,868			20,728			10,297			39,330			28,560
	Federal income taxes			(1,138	)		2,552			1,301			5,361			4,427
		Net income	$	2,104		$	7,649		$	3,936		$	16,178		$	12,865
Per share:
	Basic earnings		$	0.20		$	0.74		$	0.38		$	1.52		$	1.21
	Diluted earnings			0.20			0.74			0.38			1.51			1.20
	Common dividends			0.48			0.32			0.16			0.56			0.42
	Book value			11.05			11.31			11.17			11.12			11.31
	Tangible book value			10.88			11.12			10.97			10.92			11.08
	Market value			14.13			15.19			17.50			22.38			27.00
Weighted average shares outstanding:
	Basic			10,294,922			10,362,424			10,406,020			10,635,852			10,680,710
	Diluted			10,318,413			10,396,194			10,439,890			10,698,717			10,748,607
Period end balance sheet:
	Assets		$	1,561,617		$	1,632,913		$	1,592,993		$	1,537,278		$	1,550,247
	Securities			400,176			370,250			384,941			367,587			383,847
	Total loans			1,059,530			1,157,123			1,099,413			1,071,662			1,019,361
	Reserve for loan losses			15,040			11,378			11,354			11,169			12,049
	Deposits			1,084,377			1,105,449			1,095,123			1,097,589			1,106,349
	Total shareholders’ equity			112,019			115,368			115,993			116,347			118,999
	Tier I capital			114,158			122,074			122,595			121,981			121,709
	Tier I ratio			10.2	%		10.8	%		11.3	%		11.8	%		12.1	%
	Total capital			128,193			133,452			133,949			133,150			133,758
	Total capital ratio			11.4	%		11.8	%		12.4	%		12.8	%		13.3	%
	Total risk-adjusted assets			1,122,803			1,133,429			1,082,351			1,036,978			1,007,118
	Tier I leverage ratio			7.3	%		7.5	%		8.0	%		8.2	%		7.9	%
Average balance sheet:
	Assets		$	1,598,443		$	1,572,128		$	1,540,716		$	1,498,946		$	1,478,588
	Earning assets			1,500,280			1,473,913			1,443,262			1,405,195			1,385,786
	Loans			1,123,704			1,098,381			1,070,764			1,005,998			990,761
	Deposits			1,104,100			1,101,020			1,098,353			1,092,260			1,087,676
	Shareholders’ equity			115,243			114,506			114,880			121,369			122,638
Key ratios: (%)
	Return on average assets (ROA)			0.18			0.97			1.02			1.08			1.16
	Return on average shareholders’ equity (ROE)			2.43			13.36			13.70			13.33			13.99
	Net interest margin			3.41			3.56			3.61			3.68			3.73
	Net overhead			2.37			1.87			1.83			1.77			1.68
	Efficiency ratio			74.31			62.54			61.61			59.45			57.28
Credit quality:
	Non-accrual loans		$	3,821		$	2,987		$	3,068		$	2,743		$	4,994
	Restructured loans			45			47			0			52			55
	90 day past due and accruing			3,171			2,875			2,082			3,132			2,848
	Other real estate owned			961			1,170			231			281			138
		Charge-offs	$	3,120		$	1,592		$	719		$	4,477		$	1,120
	Recoveries			765			417			217			1,712			540
		Net charge-offs	$	2,355		$	1,175		$	502		$	2,765		$	580
	Reserve for loan losses as a percent of period-end loans (%)			1.42			0.98			1.03			1.04			1.18
	Net charge-offs (annualized) as a percent of average loans (%)			0.28			0.21			0.19			0.27			0.08

Page 5 of 13

Second Bancorp Incorporated and Subsidiary
Consolidated Statements of Income
Quarterly Data
(Dollars in thousands, except per share data)

				Sept. 2000			June 2000			March 2000		Dec. 1999		Sept. 1999
INTEREST INCOME
	Loans (including fees):
		Taxable		$	23,367		$	22,887		$	21,536	$	21,005	$	20,195
		Exempt from federal income taxes			285			238			215		174		148
	Securities:
		Taxable			5,419			5,261			4,709		4,734		4,795
		Exempt from federal income taxes			777			777			882		932		960
	Federal funds sold				46			13			93		406		316
	Trading account				0			3			0		0		0
			Total interest income		29,894			29,179			27,435		27,251		26,414
INTEREST EXPENSE
	Deposits				12,216			11,312			10,879		10,836		10,440
	Federal funds purchased and securities sold under agreements to repurchase				1,440			1,356			1,184		1,467		1,459
	Note Payable				0			0			19		0		0
	Other borrowed funds				46			58			43		102		53
	Federal Home Loan Bank advances				4,586			3,808			2,892		2,560		2,114
			Total interest expense		18,288			16,534			15,017		14,965		14,066
			Net interest income		11,606			12,645			12,418		12,286		12,348
Provision for loan losses					4,843			696			687		765		757
			Net interest income after provision for loan losses		6,763			11,949			11,731		11,521		11,591
NON-INTEREST INCOME
	Service charges on deposit accounts				1,163			1,079			1,054		1,123		1,130
	Trust fees				833			1,049			1,004		894		950
	Gain on sale of loans				(3,191	)		309			391		0		0
	Trading account gains				(28	)		(431	)		114		0		0
	Security gains				(2,802	)		206			99		82		55
	Other operating income				1,167			1,234			1,141		1,397		1,810
			Total non-interest income		(2,858	)		3,446			3,803		3,496		3,945
NON-INTEREST EXPENSE
	Salaries and employee benefits				5,421			5,189			5,316		5,054		4,747
	Net occupancy				1,062			1,037			1,052		1,081		1,032
	Equipment				1,044			959			987		937		784
	Professional services				1,650			698			477		779		535
	Assessment on deposits and other taxes				423			425			413		450		439
	Amortization of goodwill and other intangibles				216			115			116		172		171
	Other operating expenses				3,324			2,008			1,936		2,297		1,910
			Total non-interest expense		13,140			10,431			10,297		10,770		9,618
Income before federal income taxes					(9,235	)		4,964			5,237		4,247		5,918
Income tax expense					(3,690	)		1,251			1,301		934		1,506
Net income				$	(5,545	)	$	3,713		$	3,936	$	3,313	$	4,412
NET INCOME PER COMMON SHARE:
		Basic		$	(0.55	)	$	0.36		$	0.38	$	0.32	$	0.41
		Diluted		$	(0.55	)	$	0.36		$	0.38	$	0.32	$	0.41
Weighted average common shares outstanding:
		Basic			10,161,386			10,318,828			10,406,020		10,501,175		10,656,697
		Diluted			10,161,386			10,340,082			10,436,890		10,557,091		10,728,633

Page 6 of 13

Second Bancorp Incorporated and Subsidiary
Consolidated Statements of Income
Year-to-Date Data
(Dollars in thousands, except per share data)

				Sept. 2000			June 2000			March 2000		Dec. 1999		Sept. 1999
INTEREST INCOME
	Loans (including fees):
		Taxable		$	67,790		$	44,423		$	21,536	$	80,783	$	59,778
		Exempt from federal income taxes			738			453			215		681		507
	Securities:
		Taxable			15,389			9,970			4,709		18,446		13,712
		Exempt from federal income taxes			2,436			1,659			882		3,781		2,849
	Federal funds sold				152			106			93		891		485
	Trading account				3			3			0		0		0
			Total interest income		86,508			56,614			27,435		104,582		77,331
INTEREST EXPENSE
	Deposits				34,407			22,191			10,879		41,938		31,102
	Federal funds purchased and securities sold under agreements to repurchase				3,980			2,540			1,184		5,781		4,314
	Note Payable				19			19			19		0		0
	Other borrowed funds				147			101			43		219		117
	Federal Home Loan Bank advances				11,286			6,700			2,892		7,372		4,812
			Total interest expense		49,839			31,551			15,017		55,310		40,345
			Net interest income		36,669			25,063			12,418		49,272		36,986
Provision for loan losses					6,226			1,383			687		3,195		2,430
			Net interest income after provision for loan losses		30,443			23,680			11,731		46,077		34,556
NON-INTEREST INCOME
	Service charges on deposit accounts				3,296			2,133			1,054		4,309		3,186
	Trust fees				2,886			2,053			1,004		3,534		2,640
	Gain on sale of loans				(2,491	)		700			391		0		0
	Trading account gains				(345	)		(317	)		114		0		0
	Security gains				(2,497	)		305			99		312		230
	Other operating income				3,542			2,375			1,141		6,637		5,240
			Total non-interest income		4,391			7,249			3,803		14,792		11,296
NON-INTEREST EXPENSE
	Salaries and employee benefits				15,926			10,505			5,316		19,054		14,000
	Net occupancy				3,151			2,089			1,052		4,134		3,053
	Equipment				2,990			1,946			987		3,418		2,481
	Professional services				2,825			1,175			477		2,192		1,413
	Assessment on deposits and other taxes				1,261			838			413		1,689		1,239
	Amortization of goodwill and other intangibles				447			231			116		685		513
	Other operating expenses				7,268			3,944			1,936		8,158		5,861
			Total non-interest expense		33,868			20,728			10,297		39,330		28,560
Income before federal income taxes					966			10,201			5,237		21,539		17,292
Income tax expense					(1,138	)		2,552			1,301		5,361		4,427
Net income				$	2,104		$	7,649		$	3,936	$	16,178	$	12,865
NET INCOME PER COMMON SHARE:
			Basic	$	0.20		$	0.74		$	0.38	$	1.55	$	1.23
			Diluted	$	0.20		$	0.74		$	0.38	$	1.54	$	1.22
Weighted average common shares outstanding:
			Basic		10,294,922			10,362,424			10,406,020		10,635,852		10,680,710
			Diluted		10,318,413			10,396,194			10,436,890		10,698,717		10,745,607

Page 7 of 13

Second Bancorp Incorporated and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands)

				September 30			June 30			March 31			December 31			September 30
				2000			2000			2000			1999			1999
ASSETS
Cash and due from banks				$	34,079		$	38,526		$	43,925		$	35,238		$	35,855
Federal funds sold					8,000			0			0			0			50,000
Trading Account					447			944			0			0			0
Securities					400,176			370,250			384,941			367,587			383,847
Loans					1,059,530			1,157,123			1,099,413			1,071,662			1,019,361
Less reserve for loan losses					15,040			11,378			11,354			11,169			12,049
	Net loans				1,044,490			1,145,745			1,088,059			1,060,493			1,007,312
Premises and equipment					17,798			18,119			18,611			18,575			18,147
Accrued interest receivable					10,630			10,508			9,509			9,277			9,072
Goodwill and intangible assets					6,193			5,472			5,739			5,931			6,019
Other assets					39,804			43,349			42,209			40,177			39,995
			Total assets	$	1,561,617		$	1,632,913		$	1,592,993		$	1,537,278		$	1,550,247
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
	Demand — non-interest bearing			$	107,391		$	115,380		$	113,207		$	110,811		$	105,047
	Demand — interest bearing				83,991			88,184			90,465			90,570			89,850
	Savings				262,024			269,925			277,892			270,544			274,245
	Time deposits				630,971			631,960			613,559			625,664			637,207
			Total deposits		1,084,377			1,105,449			1,095,123			1,097,589			1,106,349
Federal funds purchased and securities sold under agreements to repurchase					116,707			124,930			136,640			106,532			122,502
Other borrowed funds					3,622			2,609			2,798			9,739			6,322
Federal Home Loan Bank advances					238,872			276,009			233,144			200,276			187,406
Accrued expenses and other liabilities					6,020			8,548			9,295			6,795			8,669
			Total liabilities		1,449,598			1,517,545			1,477,000			1,420,931			1,431,248
Shareholders’ equity:
	Common stock, no par value; 30,000,000 shares authorized;				36,952			36,974			36,944			36,966			36,931
	Treasury stock				(12,590	)		(11,646	)		(8,943	)		(7,140	)		(5,357	)
	Net unrealized holding gains on available-for-sale securities, net of tax				(3,849	)		(8,631	)		(8,597	)		(7,791	)		(5,038	)
	Retained earnings				91,506			98,671			96,589			94,312			92,463
			Total shareholders’ equity		112,019			115,368			115,993			116,347			118,999
			Total liabilities     and shareholders’ equity	$	1,561,617		$	1,632,913		$	1,592,993		$	1,537,278		$	1,550,247
Miscellaneous data:
	Common shares issued				10,776,870			10,776,870			10,776,470			10,762,950			10,756,950
	Treasury shares				639,920			575,720			393,100			304,500			231,700
	Bank owned life insurance (in other assets)			$	29,527		$	29,163		$	28,819		$	28,438		$	28,090
	Loans serviced for others			$	462,957		$	325,012		$	334,993		$	343,859		$	332,974
	Mortgage servicing rights			$	4,102		$	3,172		$	3,341		$	3,490		$	3,390
	Goodwill				1,213			1,379			1,445			1,511			1,588
	Other intangibles				878			921			953			930			1,041
		Total goodwill and intangibles assets		$	6,193		$	5,472		$	5,739		$	5,931		$	6,019

Page 8 of 13

Second Bancorp Incorporated and Subsidiary
Consolidated Average Balance Sheets
For the Quarter Ended
(Dollars in Thousands)

ASSETS				Sept. 2000			June 2000			March 2000			Dec. 1999			Sept. 1999
Cash and demand balances due from banks				$	34,439		$	34,628		$	34,964		$	37,677		$	37,452
Federal funds sold					2,750			869			7,115			30,411			23,837
Trading Account					811			2,050
Securities					375,081			375,647			365,383			381,166			388,074
Loans:
	Commercial				412,356			401,787			398,897			396,106			391,139
	Consumer				272,322			245,457			221,853			214,383			214,087
	Real estate				489,121			478,754			450,014			440,723			403,312
		Total loans			1,173,799			1,125,998			1,070,764			1,051,212			1,008,538
		Reserve for loan losses			11,578			11,451			11,413			12,288			12,257
		Net loans			1,162,221			1,114,547			1,059,351			1,038,924			996,281
Premises and equipment					18,032			18,493			18,703			18,412			18,343
Goodwill and intangible assets					5,416			5,620			5,808			5,830			5,869
Other					51,751			51,686			49,392			46,936			43,628
		Total assets		$	1,650,501		$	1,603,540		$	1,540,716		$	1,559,356		$	1,513,484
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Demand deposits (non-interest bearing)			$	112,662		$	113,958		$	112,086		$	112,573		$	108,345
	Demand deposits (interest bearing)				85,432			89,531			88,665			92,003			91,304
	Savings				265,319			273,879			275,433			271,970			283,593
	Time deposits				646,781			626,319			622,169			629,317			607,487
		Total deposits			1,110,194			1,103,687			1,098,353			1,105,863			1,090,729
	Federal funds purchased and securities sold under agreements to repurchase				117,645			117,236			110,364			135,311			137,079
	Borrowed funds				2,568			3,470			3,732			2,919			3,048
	Accrued expenses and other liabilities				9,060			9,435			8,409			11,808			8,920
	Federal Home Loan Bank advances				294,332			255,580			204,978			185,852			155,152
		Total liabilities			1,533,799			1,489,408			1,425,836			1,441,753			1,394,928
Shareholders’ equity:
	Common stock				36,962			36,955			36,975			36,967			36,966
	Treasury shares				(12,172	)		(9,931	)		(8,195	)		(6,030	)		(1,995	)
	Net unrealized holding gains				(6,957	)		(10,155	)		(9,085	)		(2,108	)		(5,210	)
	Retained earnings				98,869			97,263			95,185			88,774			88,795
		Total shareholders’ equity			116,702			114,132			114,880			117,603			118,556
			Total liabilities and shareholders’ equity	$	1,650,501		$	1,603,540		$	1,540,716		$	1,559,356		$	1,513,484

Page 9 of 13

Second Bancorp Incorporated and Subsidiary
Consolidated Average Balance Sheets
For the Year-to-date period ended:
(Dollars in Thousands)

ASSETS				Sept. 2000			June 2000			March 2000			Dec. 1999			Sept. 1999
Cash and demand balances due from banks				$	34,676		$	34,796		$	34,964		$	37,045		$	36,832
Federal funds sold					3,575			3,992			7,115			16,215			11,431
Trading Account					953			1,025
Securities					372,048			370,515			365,383			382,982			383,594
Loans:
	Commercial				404,376			400,342			398,897			387,008			383,942
	Consumer				246,638			233,655			221,853			218,819			220,314
	Real estate				472,690			464,384			450,014			400,171			386,505
		Total loans			1,123,704			1,098,381			1,070,764			1,005,998			990,761
		Reserve for loan losses			11,481			11,432			11,413			12,125			12,070
		Net loans			1,112,223			1,086,949			1,059,351			993,873			978,691
Premises and equipment					18,408			18,598			18,703			18,210			18,142
Goodwill and intangible assets					5,614			5,714			5,808			5,756			5,731
Other					50,946			50,539			49,392			44,865			44,167
		Total assets		$	1,598,443		$	1,572,128		$	1,540,716		$	1,498,946		$	1,478,588
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Demand deposits (non-interest bearing)			$	112,901		$	113,022		$	112,086		$	108,778		$	107,499
	Demand deposits (interest bearing)				87,867			89,098			88,665			92,350			92,467
	Savings				271,521			274,656			275,433			279,305			281,777
	Time deposits				631,811			624,244			622,169			611,827			605,933
		Total deposits			1,104,100			1,101,020			1,098,353			1,092,260			1,087,676
	Federal funds purchased and securities sold under agreements to repurchase				115,091			113,800			110,364			136,382			136,743
	Borrowed funds				3,254			3,601			3,732			2,696			2,621
	Accrued expenses and other liabilities				8,969			8,922			8,409			9,755			9,063
	Federal Home Loan Bank advances				251,786			230,279			204,978			136,484			119,847
		Total liabilities			1,483,200			1,457,622			1,425,836			1,377,577			1,355,950
Shareholders’ equity:
	Common stock				36,964			36,965			36,975			36,943			36,935
	Treasury shares				(10,107	)		(9,063	)		(8,195	)		(2,416	)		(1,198	)
	Net unrealized holding gains				(8,726	)		(9,620	)		(9,085	)		(1,698	)		(1,560	)
	Retained earnings				97,112			96,224			95,185			88,540			88,461
		Total shareholders’ equity			115,243			114,506			114,880			121,369			122,638
			Total liabilities and shareholders’ equity	$	1,598,443		$	1,572,128		$	1,540,716		$	1,498,946		$	1,478,588

Page 10 of 13

Second Bancorp Incorporated and Subsidiary
Financial Highlights — Operating Basis — Excluding Restructuring and Reengineering Charges
Quarterly Data

(Dollars in thousands, except per share data)

				Sept. 2000			June 2000			March 2000		Dec. 1999		Sept. 1999
Earnings:
		Net interest income		$	12,258		$	12,645		$	12,418	$	12,286	$	12,348
		Provision for loan losses			743			696			687		765		757
		Non-interest income			3,683			4,102			3,590		3,414		3,890
		Security gains			6			(225	)		99		82		55
	Trading account				(28	)		(431	)		114		0		0
		Non-interest expense			10,531			10,431			10,297		10,770		9,618
		Federal income taxes			1,168			1,251			1,301		934		1,506
			Net income	$	3,477		$	3,713		$	3,936	$	3,313	$	4,412
Per share:
		Basic earnings		$	0.34		$	0.36		$	0.38	$	0.32	$	0.41
		Diluted earnings			0.34			0.36			0.38		0.32		0.41
		Common dividends			0.16			0.16			0.16		0.14		0.14
Key ratios: (%)
Return on average assets (ROA)					0.84			0.93			1.02		0.85		1.17
Return on average shareholders’ equity (ROE)					11.92			13.01			13.70		10.92		14.89
Net interest margin					3.31			3.51			3.61		3.52		3.65
Net overhead					1.77			1.91			1.83		2.01		1.61
Efficiency ratio					66.51			63.48			61.61		66.09		57.13

Second Bancorp Incorporated and Subsidiary
Recap of Restructuring and Reengineering Charges
Quarterly Data
(Dollars in thousands, except per share data)

	Sept. 2000		Description
Interest income	$	652	Net deferred costs on sold mortgages
Provision for loan losses		4,100	Additional provision for specific credits
Loss on sale of loans		3,711	Sale of long-term fixed rate mortgages
Loss on sale of securities		2,808	Sale and reinvestment into higher yielding securities
Other expenses		2,609	Various restructuring and reengineering costs
			including consulting costs, reduction of FHLB
			balances and writedown of OREO property.
Pre-tax total	$	13,880
After-tax total	$	9,022

Page 11 of 13

Second Bancorp Incorporated and Subsidiary
Financial Highlights — Operating Basis — Excluding Restructuring and Reengineering Charges
Year-to-Date Data

(Dollars in thousands, except per share data)

				Sept. 2000			June 2000			March 2000		Dec. 1999		Sept. 1999
Earnings:
		Net interest income		$	37,321		$	25,063		$	12,418	$	49,272	$	36,986
		Provision for loan losses			2,126			1,383			687		3,195		2,430
		Non-interest income			10,944			7,578			3,590		14,480		11,066
		Security gains			311			(12	)		99		312		230
	Trading account				(345	)		(317	)		114		0		0
		Non-interest expense			31,720			20,728			10,297		39,330		28,560
		Federal income taxes			3,720			2,552			1,301		5,361		4,427
			Net income	$	11,126		$	7,649		$	3,936	$	16,178	$	12,865
Per share:
		Basic earnings		$	1.08		$	0.74		$	0.38	$	1.52	$	1.21
		Diluted earnings			1.08			0.74			0.38		1.51		1.20
		Common dividends			0.48			0.32			0.16		0.56		0.42
Key ratios: (%)
		Return on average assets (ROA)			0.93			0.97			1.02		1.08		1.16
		Return on average shareholders’ equity (ROE)			12.87			13.36			13.70		13.33		13.99
		Net interest margin			3.47			3.56			3.61		3.68		3.73
		Net overhead			1.81			1.87			1.83		1.77		1.68
		Efficiency ratio			63.42			62.54			61.61		59.45		57.28

Second Bancorp Incorporated and Subsidiary
Recap of Restructuring and Reengineering Charges
Year-to-Date Data
(Dollars in thousands, except per share data)

		Sept. 20	Description
Interest income	$	652	Net deferred costs on sold mortgages
Provision for loan losses		4,100	Additional provision for specific credits
Loss on sale of loans		3,711	Sale of long-term fixed rate mortgages
Loss on sale of securities		2,808	Sale and reinvestment into higher yielding securities
Other expenses		2,609	Various restructuring and reengineering costs
			including consulting costs, reduction of FHLB
			balances and writedown of OREO property.
Pre-tax total	$	13,880
After-tax total	$	9,022

Page 12 of 13

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Second Bancorp Incorporated
Date:   October 20, 2000	/s/ David L.Kellerman
	David L. Kellerman, Treasurer

Page 13 of 13