UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period ended December 31, 2000
Commission File Number 333-10639
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DELPHOS CITIZENS BANCORP, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1840187
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
114 East 3rd Street, Delphos, Ohio 45833
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(419) 692-2010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
--------- ---------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class: Outstanding at January 31, 2001
Common stock, $0.01 par value 1,584,783 common shares
DELPHOS CITIZENS BANCORP, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION (UNAUDITED) ----
Item 1. Financial Statements
Consolidated Statements of Financial Condition.................................................. 3
Consolidated Statements of Income............................................................... 4
Consolidated Statements of Comprehensive Income................................................. 5
Condensed Consolidated Statements of Cash Flows................................................. 6
Notes to Consolidated Financial Statements ..................................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................ 12
Item 3. Quantitative and Qualitative Disclosure About Market Risk.................................... 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................................................. 17
Item 2. Changes in Securities and Use of Proceeds..................................................... 17
Item 3. Defaults Upon Senior Securities............................................................... 17
Item 4. Submission of Matters to a Vote of Security Holders........................................... 17
Item 5. Other Information............................................................................. 17
Item 6. Exhibits and Reports on Form 8-K.............................................................. 17
SIGNATURES ........................................................................................... 19
2.
DELPHOS CITIZENS BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
- --------------------------------------------------------------------------------
Item 1. Financial Statements
--------------------
December 31, September 30,
2000 2000
---- ----
ASSETS
Cash and amounts due from depository institutions $ 1,995,543 $ 2,191,658
Interest-bearing deposits in other financial institutions 1,608,293 1,494,893
----------------- -----------------
Total cash and cash equivalents 3,603,836 3,686,551
Securities available for sale 1,223,835 1,309,631
Securities held to maturity (Estimated fair value of
$5,701,171 at December 31, 2000 and
$5,850,415 at September 31, 2000) 5,570,929 5,772,169
Federal Home Loan Bank stock 1,662,000 1,631,300
Loans, net 125,021,395 122,888,483
Premises and equipment, net 602,043 614,292
Accrued interest receivable 654,328 653,799
Other assets 22,746 71,208
----------------- -----------------
Total assets $ 138,361,112 $ 136,627,433
================= =================
LIABILITIES
Deposits $ 83,946,935 $ 79,733,886
Federal Home Loan Bank advances 27,000,000 30,000,000
Escrow accounts 502,776 323,968
Accrued interest payable 246,932 206,091
Other liabilities 435,859 378,289
----------------- -----------------
Total liabilities 112,132,502 110,642,234
----------------- -----------------
SHAREHOLDERS' EQUITY
Preferred Stock, no par value, 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value, 4,000,000 shares authorized,
2,047,631 shares issued 20,476 20,476
Additional paid-in capital 20,199,650 20,161,428
Retained earnings 16,508,265 16,390,549
Treasury stock, at cost 462,848 at December 31, 2000
and September 30, 2000 (8,681,160) (8,681,160)
Unearned employee stock ownership plan shares (1,151,273) (1,175,257)
Unearned recognition and retention plan shares (643,457) (703,817)
Accumulated other comprehensive income (23,891) (27,020)
----------------- -----------------
Total shareholders' equity 26,228,610 25,985,199
----------------- -----------------
Total liabilities and shareholders' equity $ 138,361,112 $ 136,627,433
================= =================
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
3.
DELPHOS CITIZENS BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
December 31,
-----------
2000 1999
---- ----
Interest income
Loans, including fees $ 2,410,138 $ 2,169,787
Securities 133,356 150,909
FHLB stock dividends 30,754 20,544
Interest-bearing deposits 28,999 10,554
-------------- ---------------
2,603,247 2,351,794
-------------- ---------------
Interest expense
Deposits 1,120,767 877,799
FHLB advances 455,347 362,671
-------------- ---------------
1,576,114 1,240,470
-------------- ---------------
Net interest income 1,027,133 1,111,324
Provision for loan losses 9,000 9,000
-------------- ---------------
Net interest income after provision for loan losses 1,018,133 1,102,324
-------------- ---------------
Noninterest income
Other income 12,401 12,511
-------------- ---------------
Noninterest expense
Compensation and benefits 248,207 218,376
Occupancy expense 29,769 21,083
Data processing services 60,959 51,492
Professional fees 215,168 28,744
State franchise taxes 44,204 52,335
Other expenses 53,938 91,508
-------------- ---------------
652,245 463,538
-------------- ---------------
Income before income tax 378,289 651,297
Income tax expense 129,800 227,059
-------------- ---------------
Net income $ 248,489 $ 424,238
============== ===============
Earnings per common share
Basic $ .17 $ .30
Diluted $ .17 $ .29
See accompanying notes to consolidated financial statements.
4.
DELPHOS CITIZENS BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
December 31,
-----------
2000 1999
---- ----
Net income $ 248,489 $ 424,238
Other comprehensive income (loss)
Unrealized holding gains (losses) on
available for sale securities
arising during the period 4,741 (11,550)
Tax effect 1,612 3,927
------------- --------------
Other comprehensive income (loss) 3,129 (7,623)
------------- --------------
Comprehensive income $ 251,618 $ 416,615
============= ==============
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
5.
DELPHOS CITIZENS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
December 31,
------------
2000 1999
---- ----
Net cash from operating activities $ 465,913 $ 862,988
Cash flows from investing activities
Securities available for sale
Proceeds from principal payments 90,163 377,872
Securities held to maturity
Proceeds from maturities and principal payments 203,864 272,555
Purchases of Federal Home Loan Bank stock -- (279,500)
Net increase in loans (2,141,912) (2,348,010)
Premises and equipment expenditures -- (2,143)
--------------- ----------------
Net cash from investing activities (1,847,885) (1,979,226)
--------------- ----------------
Cash flows from financing activities
Net change in deposits 4,213,049 1,361,689
Net change in escrow accounts 178,808 179,211
Net change in short-term advances from FHLB (3,000,000) 3,000,000
Dividends on unallocated ESOP shares 34,183 62,327
Cash dividends paid (126,783) (112,573)
Purchase of treasury stock -- (934,658)
--------------- ----------------
Net cash from financing activities 1,299,257 3,555,996
--------------- ----------------
Net change in cash and cash equivalents (82,715) 2,439,758
Cash and cash equivalents at beginning of period 3,686,551 3,700,277
--------------- ----------------
Cash and cash equivalents at end of period $ 3,603,836 $ 6,140,035
=============== ================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 1,535,273 $ 1,025,243
Income taxes 17,385 1,549
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
6.
DELPHOS CITIZENS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: These interim consolidated financial statements are
- ---------------------
prepared without audit and reflect all adjustments which, in the opinion of
management, are necessary to present fairly the financial position of Delphos
Citizens Bancorp, Inc. at December 31, 2000, and its results of operations and
cash flows for the periods presented. All such adjustments are normal and
recurring in nature. The accompanying consolidated financial statements have
been prepared in accordance with the instructions of Form 10-Q and, therefore,
do not purport to contain all necessary financial disclosures required by
generally accepted accounting principles that might otherwise be necessary in
the circumstances. The annual report for the Company for the year ended
September 30, 2000, contains consolidated financial statements and related notes
that should be read in conjunction with the accompanying unaudited consolidated
financial statements.
Consolidation Policy: The consolidated financial statements include the accounts
- --------------------
of Delphos Citizens Bancorp, Inc. ("Delphos") and its wholly-owned subsidiary,
Citizens Bank of Delphos ("Bank"), together referred to as the Company. All
significant intercompany balances and transactions have been eliminated.
Nature of Operations: The Company is engaged in the business of banking with
- --------------------
operations conducted through its office located in Delphos, Ohio. The Company
originates and holds primarily residential and consumer loans to customers
throughout the Allen and Van Wert County area in Northwest Ohio, which generates
the majority of the Company's income. The Company's primary deposit products are
interest-bearing checking accounts and certificates of deposit. There are no
branch operations.
Business Segment Information: While the Company's chief decision-makers monitor
- ----------------------------
the revenue streams of the Company's various products and services, operations
are managed and financial performance is evaluated on a company-wide basis.
Accordingly, all of the Company's banking operations are considered by
management to be aggregated in one reportable segment.
Use of Estimates: To prepare financial statements in conformity with generally
- ----------------
accepted accounting principals, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future
results could differ. The allowance for loan losses, fair values of financial
instruments and status of contingencies are particularly subject to change.
Income Taxes: Income tax expense is the sum of the current year income tax due
- ------------
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
New Accounting Pronouncements: Beginning October 1, 2000, a new accounting
- -----------------------------
standard required all derivatives to be recorded at fair value. Unless
designated hedges, changes in fair values will be recorded in the income
statement. Fair value changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded. Adoption of this
standard on October 1, 2000 did not have a material effect on the Company's
financial statements as no derivatives are currently held.
- --------------------------------------------------------------------------------
(Continued)
7.
DELPHOS CITIZENS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Common Share: Basic earnings per common share is net income divided
- -------------------------
by the weighted average number of shares outstanding during the period. Employee
Stock Ownership Plan ("ESOP") shares are considered to be outstanding for this
calculation unless unearned. Recognition and Retention Plan ("RRP") shares are
considered outstanding as they become vested. Diluted earnings per common share
includes the dilutive effect of RRP shares and the additional potential common
shares issuable under stock options.
The factors used in the earnings per share computation were as follows:
Three Months Ended
December 31,
-----------
2000 1999
---- ----
Basic earnings per common share
Net income $ 248,489 $ 424,238
============== ==============
Weighted average common shares outstanding 1,584,783 1,606,638
Less: Average unallocated ESOP shares (116,700) (126,293)
Less: Average nonvested RRP shares (34,660) (64,584)
-------------- --------------
Average shares 1,433,423 1,415,761
============== ==============
Basic earnings per common share $ .17 $ .30
============== =============
Diluted earnings per common share
Net income $ 248,489 $ 424,238
============== ==============
Weighted average common shares outstanding for
basic earnings per common shares 1,433,423 1,415,761
Add: Dilutive effects of average nonvested RRP shares -- 4,366
Add: Dilutive effects of stock options -- 19,070
-------------- --------------
Average shares and dilutive potential common shares 1,433,423 1,439,197
============== ==============
Diluted earnings per common share $ .17 $ .29
============== =============
Stock options and RRP shares for 120,048 and 34,660 shares of common stock were
not considered in computing diluted earnings per common share for the three
months ended December 31, 2000, as they were antidilutive. Stock options for
5,097 shares of common stock were not considered in computing diluted earnings
per share for the three months ended December 31, 1999, as they were
antidilutive.
- --------------------------------------------------------------------------------
(Continued)
8.
DELPHOS CITIZENS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES
The amortized cost and fair values of securities were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Loss Value
---- ----- ---- -----
December 31, 2000
Available for sale
Ginnie Mae Certificates $ 564,451 $ 5,396 $ (1,809) $ 568,038
Fannie Mae Certificates 695,583 -- (39,786) 655,797
--------------- -------------- -------------- ---------------
Total $ 1,260,034 $ 5,396 $ (41,595) $ 1,223,835
=============== ============== ============== ===============
Held to maturity
Ginnie Mae Certificates $ 5,548,080 $ 130,219 $ (1,039) $ 5,677,260
Freddie Mac Certificates 22,849 1,062 -- 23,911
--------------- -------------- -------------- ---------------
Total $ 5,570,929 $ 131,281 $ (1,039) $ 2,701,170
=============== ============== ============== ===============
September 30, 2000
Available for sale
Ginnie Mae Certificates $ 567,110 $ 1,725 $ (9,319) $ 559,516
Fannie Mae Certificates 783,461 -- (33,346) 750,115
--------------- -------------- -------------- ---------------
Total $ 1,350,571 $ 1,725 $ (42,665) $ 1,309,631
=============== ============== ==============- ===============
Held to maturity
Ginnie Mae Certificates $ 5,745,376 $ 100,005 $ (22,778) $ 5,822,603
Freddie Mac Certificates 26,793 1,019 -- 27,812
--------------- -------------- -------------- ---------------
Total $ 5,772,169 $ 101,024 $ (22,778) $ 5,850,415
=============== ============== =============== ===============
There were no sales of securities during the three months ended December 31,
2000 or 1999.
- --------------------------------------------------------------------------------
(Continued)
9.
DELPHOS CITIZENS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 3 - LOANS
Loans were as follows:
December 31, September 30,
2000 2000
---- ----
Real estate loans
One- to four- family $ 108,620,779 $ 106,362,753
Multi-family 1,877,193 1,901,537
Commercial real estate 6,753,494 6,621,302
Construction and land 5,425,757 6,937,929
--------------- ----------------
122,677,223 121,823,521
Less:
Mortgage loans in process (2,982,745) (4,137,097)
Net deferred loan origination fees (34,659) (28,980)
--------------- ----------------
119,660,119 117,657,444
Consumer and other loans
Manufactured homes 95,492 97,966
Home equity loans 4,692,820 4,474,024
Unsecured loans 72,155 76,078
Other consumer loans 664,837 747,852
--------------- ----------------
5,525,304 5,395,920
Less: Allowance for loan losses (163,728) (164,881)
--------------- ----------------
$ 125,021,395 $ 122,888,483
=============== ================
Activity in the allowance for loan losses was as follows:
Three Months Ended
December 31,
-----------
2000 1999
---- ----
Beginning balance $ 164,881 $ 133,493
Provision for loan losses 9,000 9,000
Recoveries 250 250
Charge-offs (10,403) --
--------------- ----------------
Ending balance $ 163,728 $ 142,743
=============== ================
Loans considered impaired within the scope of SFAS No. 114 were not significant
at December 31, 2000 and September 30, 2000, and during the three months ended
December 31, 2000 and 1999.
- --------------------------------------------------------------------------------
(Continued)
10.
DELPHOS CITIZENS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 16 - PROPOSED SALE
On August 25, 2000, the Company entered into an Affiliation Agreement with
United Bancshares, Inc. in which each share of Delphos' common stock, $.01 par
value per share, issued and outstanding will be converted into the right to
receive .8749 of a share of United Bancshares, Inc. common stock, without par
value or cash in lieu thereof for fractional shares, if any, and $5.41 in cash.
The transaction will be accounted for as a purchase and is expected to close in
February 2001. On February 7, 2001, the shareholders of Delphos approved the
pending merger at its annual meeting of shareholders.
- --------------------------------------------------------------------------------
11.
DELPHOS CITIZENS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
The following discusses the financial condition of the Company as of December
31, 2000, as compared to September 30, 2000, and the results of operations for
the three months ended December 31, 2000, compared with the same period in 1999.
This discussion should be read in conjunction with the interim financial
statements and footnotes included herein.
Forward Looking Statements
When used in this document, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimated," "projected," or
similar expressions are intended to identify "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Bank's market area, change in policies by regulatory
agencies, fluctuations in interest rates, demand from historical earnings and
those presently anticipated or projected. Factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any statements expressed with respect
to future periods.
The Company does not undertake, and specifically disclaims any obligation, to
publicly revise any forward looking statements to reflect events of
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
Analysis of Financial Condition
The Company's assets totaled $138.4 million at December 31, 2000, an increase of
$1.8 million, or 1.3%, from $136.6 million at September 30, 2000. The growth in
assets was primarily in loans. Such growth was funded by increased deposits.
At December 31, 2000, the Company's securities portfolio was comprised of Ginnie
Mae, Fannie Mae and Freddie Mac fixed and variable rate securities. Management's
strategy emphasizes the investment in mortgage-backed securities guaranteed by
U.S. government agencies in order to minimize risk.
Net loans increased from $122.9 million at September 30, 2000 to $125.0 million
at December 31, 2000. The growth in loans was primarily in one- to four-family
real estate loans, which increased $2.3 million, or 2.1%, during the period.
Growth in total real estate loans is primarily related to growth in the
Company's market area. Changes in other types of loans were not significant.
- --------------------------------------------------------------------------------
12.
DELPHOS CITIZENS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
Total deposits increased $4.2 million, or 5.3%, from $79.7 million at September
30, 2000 to $83.9 million at December 31, 2000. The Corporation experienced
increases in all deposit types. However, no individual type made up a
significant amount of the increase.
Borrowings from the FHLB totaled $27.0 million at December 31, 2000, a decrease
of $3.0 million from September 30, 2000. Management has used advances from the
FHLB as an alternative source of funds in order to continue to meet loan demand
and to leverage the Company's excess capital.
Results of Operations
Operating results of the Company are affected by general economic conditions,
monetary and fiscal policies of federal agencies and policies of agencies
regulating financial institutions. The Company's cost of funds is influenced by
interest rates on competing investments and general market rates of interest.
Lending activities are influenced by demand for real estate loans and other
types of loans which, in turn, is affected by the interest rates at which such
loans are made, general economic conditions and availability of funds for
lending activities.
The Company's net income is primarily dependent on its net interest income (the
difference between interest income generated on interest-earning assets and
interest expense incurred on interest-bearing liabilities). Net income is also
affected by provisions for loan losses, service charges, gains on sale of assets
and other income, noninterest expense and income taxes. The Company's net income
of $248,000 for the three months ended December 31, 2000 represented a decrease
of $176,000 when compared to the same period in 1999. Basic earnings per share
decreased $0.13 per share from $0.30 per share for 1999 to $0.17 per share for
2000.
Net interest income is the largest component of the Company's income and is
affected by the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
totaled $1,027,000 for the three months ended December 31, 2000, compared to
$1,111,000 for the same period in 1999. The Company remains liability sensitive,
whereby its interest-bearing liabilities will generally reprice more quickly
than its interest-earning assets. Therefore, the Company's net interest margin
will generally increase in periods of falling interest rates in the market and
will decrease in periods of rising interest rates. Accordingly, in a rising
interest rate environment, the Company may need to increase rates to attract and
retain deposits. Due to the negative gap position, the rise in interest rates
may not have such an immediate impact on interest-earning assets. This lag could
negatively affect net interest income in future periods.
Interest and fees on loans totaled $2,410,000 for the three months ended
December 31, 2000 compared to $2,170,000 for the three months ended December 31,
1999. The increase in interest and fees on loans was due to an overall increase
in the interest rate environment.
Interest and dividends on securities totaled $133,000 for the three months ended
December 31, 2000, compared to $151,000 for the same period in 1999. The
decrease was primarily due to a decrease in the volume of securities held since
the prior period as the majority of the proceeds from principal payments have
been reinvested in higher yielding loans.
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13.
DELPHOS CITIZENS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
Interest on deposits totaled $1,121,000 for the three months ended December 31,
2000 compared to $878,000 for the three months ended December 31, 1999. The
Company increased the rates paid during the second half of 2000 in order to
attract deposits. The overall increase resulted primarily from a higher average
cost of deposits for the period.
Interest on FHLB advances was $455,000 for the three months ended December 31,
2000 compared to $363,000 for the three months ended December 31, 1999. The
Company has continued to increase its use of FHLB advances as a means to fund
loan growth and to leverage its excess capital. As opportunities arise, the
Company may make additional borrowings to fund future loan demand.
The Company maintains an allowance for loan losses in an amount, which, in
management's judgment, is adequate to absorb probable losses inherent in the
loan portfolio. While management utilizes its best judgment and information
available, ultimate adequacy of the allowance is dependent on a variety of
factors, including performance of the Company's loan portfolio, the economy,
changes in real estate values and interest rates and the view of the regulatory
authorities toward loan classifications. The provision for loan losses is
determined by management as the amount to be added to the allowance for loan
losses after net charge-offs have been deducted to bring the allowance to a
level considered adequate to absorb probable losses in the loan portfolio. The
amount of the provision is based on management's regular review of the loan
portfolio and consideration of such factors as historical loss experience,
general prevailing economic conditions, changes in size and composition of the
loan portfolio and specific borrower considerations, including ability of the
borrower to repay the loan and the estimated value of the underlying collateral.
The provision for loan losses totaled $9,000 during the three months ended
December 31, 2000 and 1999.
Noninterest expense totaled $652,000 for the three months ended December 31,
2000, compared to $464,000 for the same period in 1999. Noninterest expense is
comprised of employee compensation and benefits, occupancy, data processing
services, professional fees, state franchise taxes and miscellaneous other
expenses. Professional fees attributed to most of the increase as the Company
expensed approximately $192,000 directly related to the proposed sale to United
Bancshares, Inc.
The change in income tax expense is primarily attributable to the change in net
income before income taxes. Income tax expense totaled $130,000, or an effective
rate of 34.3%, for the three months ended December 31, 2000, compared to
$227,000, or an effective rate of 34.9%, for the three months ended December 31,
1999.
Liquidity
Federally insured banks are required to maintain minimum levels of liquid
assets. The Bank is currently required to maintain an average daily balance of
liquid assets of at least 4% of the sum of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less. At
December 31, 2000, the Bank complied with this requirement with a liquidity
ratio of 11.4%. Management considers this liquidity position adequate to meet
its expected needs for the foreseeable future.
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14.
DELPHOS CITIZENS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
- --------------------------------------------------------------------------------
Capital Resources
Savings institutions insured by the Federal Deposit Insurance Corporation are
required by federal law to meet three regulatory capital requirements. If a
requirement is not met, regulatory authorities may take legal or administrative
actions, including restrictions on growth or operations or, in extreme cases,
placing the institution in receivership or conservatorship.
The following table summarizes the Bank's regulatory capital requirements and
actual capital at December 31, 2000.
Excess of actual
capital over current
Actual capital Current requirement requirement
--------------------- --------------------- ------------------- Applicable
(Dollars in thousands) Amount Percent Amount Percent Amount Percent Asset Total
------ ------- ------ ------- ------ ------- -----------
Tangible capital $ 16,352 11.8% $ 2,076 1.5% $ 14,276 10.3% $ 138,393
Core capital 16,352 11.8 4,152 3.0 12,200 8.8 138,393
Total risk-based capital 16,516 22.3 5,938 8.0 10,578 14.3 74,221
The Bank's tangible and core capital consists solely of shareholder equity.
Total risk based capital consists of core capital plus general loan loss
allowances less certain assets required to be deducted.
At December 31, 2000, the Bank was considered well capitalized under Prompt
Corrective Action Regulations.
- --------------------------------------------------------------------------------
15.
DELPHOS CITIZENS BANCORP, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
- --------------------------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosure About Market Risk
---------------------------------------------------------
There have been no material changes in the quantitative and qualitative
disclosures about market risk as of December 31, 2000, from that presented in
the Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2000.
- --------------------------------------------------------------------------------
16.
DELPHOS CITIZENS BANCORP, INC.
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Legal Proceedings
-----------------
None
Item 2 - Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3 - Defaults Upon Senior Securities
-------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The annual meeting of shareholders was held on February 7, 2001.
The Board of Directors of the Company solicited proxies for the
meeting pursuant to Regulation 14A of the Securities Exchange Act
of 1934, as amended.
Votes For Votes Against Abstain Broker Non-Vote
-------- ------------- ------- ---------------
1. Approval of Affiliation Agreement,
dated August 25, 2000 by and
between United Bancshares, Inc.
and Delphos Citizens Bancorp, Inc. 1,035,854 128,323 19,814 124,326
2. Election of Directors.
Joseph R. Reinemeyer 1,143,651 164,666 0 0
David P. Roach 1,147,908 160,409 0 0
3. Ratification of the appointment
Crowe, Chizek & Company LLP
as independent auditors of the
Company for the fiscal year
ending September 30, 2001. 1,251,089 38,090 19,138 0
Item 5 - Other Information
-----------------
None
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit Number Description
-------------- -----------
2.1 United Bancshares, Inc. and Delphos
Citizens Bancorp, Inc. Affiliation
Agreement. (1)
3.1 Certificate of Incorporation of Delphos
Citizens Bancorp, Inc. (2)
3.2 Bylaws of Delphos Citizens Bancorp, Inc.
(2)
4.0 Stock Certificate of Delphos Citizens
Bancorp, Inc. (2)
10.1 Form of Employment Agreement between
Citizens Bank of Delphos and the President
and Chief Executive Officer. (2)
10.2 Form of Citizens Bank of Delphos Employee
Stock Ownership Plan. (2)
10.3 Delphos Citizens Bancorp, Inc. Employment
Agreement dated April 27, 1997 and First
Amendment dated December 20, 1999. (3)
10.4 Amended and Restated Delphos Citizens
Bancorp, Inc. Stock Based Incentive Plan.
(4)
11.0 Statement Re: Computation of Per Share
Earnings. (5)
(b) No current reports on Form 8-K were filed by the Registrant
during the quarter ended December 31, 2000.
(1) Incorporated herein by reference from the Exhibit to the
Form 8-K as filed on August 29, 2000.
(2) Incorporation herein by reference from the Exhibits to the
Registration Statement on Form S-1, as amended, filed on
August 22, 1996, Registration No. 333-10639.
(3) Incorporated herein by reference from the Exhibits to the
Quarterly Report on Form 10-Q filed on August 14, 2000.
(4) Incorporated herein by reference from the Registrant's Proxy
Statement for the Registrant' 1999 Annual Meeting of
Shareholders filed with the Commission on December 31, 1998.
(5) Incorporation herein by reference to Note 1 to the
Consolidated Financial Statements.
- --------------------------------------------------------------------------------
17.
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 thereunto duly authorized.
DELPHOS CITIZENS BANCORP, INC.
------------------------------
(Registrant)
Date: February 14, 2001 /s/Joseph R. Reinemeyer
-------------------------- -----------------------------------------
Joseph R. Reinemeyer
President and Chief Executive Officer
(Principal Executive Officer)
- --------------------------------------------------------------------------------
19.