1
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: March 27, 2001
SECOND BANCORP INCORPORATED
(Exact name of registrant as specified in its charter)
Ohio 0-15624 34-1547453
- --------------------------------------------------------------------------------
(State of incorporation) (Commission (IRS Employer
File Number) 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 January 25, 2001, the Company issued the following press release:
SECOND BANCORP'S FOURTH QUARTER EARNINGS INCREASE 22%
Warren, Ohio, January 25, 2001--SECOND BANCORP INCORPORATED (Nasdaq "SECD")
announced that earnings for the recently completed fourth quarter were
significantly improved over results reported for the same period last year. Net
income for the quarter was $4,030,000, up from $3,313,000 a year ago. On a per
share basis, diluted earnings for the quarter were similarly improved to $.40
from $.32 for the final quarter of 1999. For the full year, earnings were
negatively impacted by significant restructuring charges taken in the third
quarter. Including those charges, net income for 2000 was $6,134,000 ($.60 per
share) compared to $16,178,000 ($1.51 per share) a year ago. Excluding
restructuring charges, earnings for the year were $15,156,000 or $1.48 per
share.
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Second Bancorp's return on average assets (ROA) for the fourth quarter improved
to 1.05% from .85% a year ago and return on average equity (ROE) was similarly
improved to 14.28% from 11.27% for the same quarter in 1999. For the year,
Company ROA was .39% (.96% excluding restructuring charges) compared to 1.08% in
1999 and ROE was 5.35% (13.22% excluding restructuring charges) versus 13.33%
last year.
Rick L. Blossom, Second Bancorp's President and Chief Executive Officer, stated
that "The year was one of transition for Second Bancorp. In the thirteen months
since my arrival, we have taken numerous steps to streamline, reengineer and
redefine the entire organization. That process has not, however, been without
cost as the third quarter restructuring charges indicate. The fourth quarter
rebound in earnings is, we believe, the beginning of a trend which will take us
to a new level of performance next year and into the future."
Second Bancorp's efficiency ratio for the year excluding the third quarter
restructuring charge slipped to 62.17% from 59.45% as higher non-interest
expenses incurred throughout the year in conjunction with the Company's
reorganization exceeded growth in non-interest income. With those expenses now
largely behind the Company, its efficiency ratio showed improvement during the
fourth quarter as it trended downward to 60.77% compared to 66.09% for the same
period last year. Similarly improved during the fourth quarter was the Company's
net interest margin which rose to 3.65% compared to 3.51% (excluding the third
quarter restructuring) for the entire year. That improvement was primarily the
result of third quarter adjustments to the Company's balance sheet.
Credit quality continued to be a focus of the Company. While year-end
non-accrual loans ($4.7 million) were significantly higher than year-ago levels,
net charge-offs as a percentage of total loans for the year were substantially
unchanged and the Company's period-end loan loss reserve was a healthy 1.42% of
total loans compared to 1.04% at the conclusion of 1999. Second Bancorp
Treasurer David L. Kellerman, indicated "Though we believe that credit quality
is controlled, we also expect that, as the local and national economies continue
to seek their equilibrium, normal course additions to the loan loss reserve
equaling or exceeding charge-offs will be necessary."
Second Bancorp also reported that its Board of Directors has declared a sixteen
cents ($.16) per share common dividend payable January 31, 2001 to shareholders
of record on January 15. That dividend is unchanged from the third quarter of
this year and is 14.3% higher than the dividend paid for the year-ago quarter.
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.
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Second Bancorp is a $1.55 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 34 retail
banking centers.
Additional information about Second Bancorp and information about products and
services offered by Second National Bank can be found on the World Wide Web at
www.secondnationalbank.com.
CONTACT: Christopher Stanitz, Executive Vice President and Secretary,
330.841.0234 or fax, 330.841.0489.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
SECOND BANCORP INCORPORATED AND SUBSIDIARY
FINANCIAL HIGHLIGHTS
QUARTERLY DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
------------------------------------------------------------------------------
EARNINGS:
Net interest income $ 12,708 $ 11,606 $ 12,645 $ 12,418 $ 12,286
Provision for loan losses 903 4,843 696 687 765
Non-interest income 3,776 (28) 4,102 3,590 3,414
Security gains 98 (2,802) (225) 99 82
Trading account 10 (28) (431) 114 0
Non-interest expense 10,345 13,140 10,431 10,297 10,770
Federal income taxes 1,314 (3,690) 1,251 1,301 934
------ ------- ------ ------ ---
NET INCOME $ 4,030 ($5,545) $ 3,713 $ 3,936 $ 3,313
======= ======== ======= ======= ======
PER SHARE:
Basic earnings $ 0.40 ($0.55) $ 0.36 $ 0.38 $ 0.32
Diluted earnings 0.40 (0.55) 0.36 0.38 0.32
Common dividends 0.16 0.16 0.16 0.16 0.14
Book value 11.65 11.05 11.31 11.17 11.12
Tangible book value 11.49 10.88 11.12 10.97 10.92
Market value 14.50 14.13 15.19 17.50 22.38
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 10,050,177 10,161,386 10,318,828 10,406,020 10,501,175
Diluted 10,069,215 10,161,386 10,340,082 10,439,890 10,557,091
PERIOD END BALANCE SHEET:
Assets $ 1,546,290 $ 1,561,617 $ 1,632,913 $ 1,592,993 $ 1,537,278
Securities 382,098 400,176 370,250 384,941 367,587
Total loans 1,070,089 1,059,530 1,157,123 1,099,413 1,071,662
Reserve for loan losses 15,217 15,040 11,378 11,354 11,169
Deposits 1,036,135 1,084,377 1,105,449 1,095,123 1,097,589
Total shareholders' equity 117,197 112,019 115,368 115,993 116,347
Tier I capital 115,315 114,158 122,595 122,595 121,981
Tier I ratio 10.3% 10.2% 10.8% 11.3% 11.8%
Total capital 129,366 128,193 133,452 133,949 133,150
Total capital ratio 11.5% 11.4% 11.8% 12.4% 12.8%
Total risk-adjusted assets 1,124,076 1,122,803 1,133,429 1,082,351 1,036,978
Tier I leverage ratio 7.5% 7.3% 7.5% 8.0% 8.2%
AVERAGE BALANCE SHEET:
Assets $ 1,541,049 $ 1,650,501 $ 1,603,540 $ 1,540,716 $ 1,559,356
Earning assets 1,452,756 1,552,441 1,504,564 1,443,262 1,462,789
Loans 1,061,023 1,173,799 1,125,998 1,070,764 1,051,212
Deposits 1,053,740 1,110,194 1,103,687 1,098,353 1,105,863
Shareholders' equity 112,892 116,702 114,132 114,880 117,603
KEY RATIOS: (%)
Return on average assets (ROA) 1.05 (1.34) 0.93 1.02 0.85
Return on average
shareholders' equity (ROE) 14.28 (19.01) 13.01 13.70 11.27
Net interest margin 3.65 3.14 3.51 3.61 3.52
Net overhead 1.81 3.40 1.91 1.83 2.01
Efficiency ratio 60.77 108.40 63.48 61.61 66.09
CREDIT QUALITY:
Non-accrual loans $ 4,699 $ 3,821 $ 2,987 $ 3,068 $ 2,743
Restructured loans 43 45 47 0 52
90 day past due and accruing 3,238 3,171 2,875 2,082 3,132
Other real estate owned 902 961 1,170 231 281
Charge-offs $ 939 $ 1,528 $ 873 $ 719 $ 2,015
Recoveries 213 348 200 217 370
--------------------------------------------------------------------------------
Net charge-offs $ 726 $ 1,180 $ 673 $ 502 $ 1,645
================================================================================
Reserve for loan losses as a percent
of period-end loans (%) 1.42 1.42 0.98 1.03 1.04
Net charge-offs (annualized) as a percent
of average loans (%) 0.27 0.40 0.24 0.19 0.63
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
QUARTERLY DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
------------------------------------------------------------------------
INTEREST INCOME
- -----------------------------------------
Loans (including fees):
Taxable $23,029 $23,367 $22,887 $21,536 $21,005
Exempt from federal income taxes 276 285 238 215 174
Securities:
Taxable 5,581 5,419 5,261 4,709 4,734
Exempt from federal income taxes 773 777 777 882 932
Federal funds sold 131 46 13 93 406
Trading account 0 0 3 0 0
------------------------------------------------------------------------
Total interest income 29,790 29,894 29,179 27,435 27,251
INTEREST EXPENSE
- -----------------------------------------
Deposits 11,829 12,216 11,312 10,879 10,836
Federal funds purchased and securities
sold under agreements to repurchase 1,560 1,440 1,356 1,184 1,467
Note Payable 6 0 0 19 0
Other borrowed funds 25 46 58 43 102
Federal Home Loan Bank advances 3,662 4,586 3,808 2,892 2,560
------------------------------------------------------------------------
Total interest expense 17,082 18,288 16,534 15,017 14,965
------------------------------------------------------------------------
Net interest income 12,708 11,606 12,645 12,418 12,286
Provision for loan losses 903 4,843 696 687 765
------------------------------------------------------------------------
Net interest income after
provision for loan losses 11,805 6,763 11,949 11,731 11,521
NON-INTEREST INCOME
- -----------------------------------------
Service charges on deposit accounts 1,110 1,163 1,079 1,054 1,123
Trust fees 1,012 833 1,049 1,004 894
Gain on sale of loans 490 (3,191) 309 391 0
Trading account gains 10 (28) (431) 114 0
Security gains 98 (2,802) 206 99 82
Other operating income 1,164 1,167 1,234 1,141 1,397
------------------------------------------------------------------------
Total non-interest income 3,884 (2,858) 3,446 3,803 3,496
NON-INTEREST EXPENSE
- -----------------------------------------
Salaries and employee benefits 4,891 5,421 5,189 5,316 5,054
Net occupancy 1,040 1,062 1,037 1,052 1,081
Equipment 995 1,044 959 987 937
Professional services 651 1,650 698 477 779
Assessment on deposits and other taxes 423 423 425 413 450
Amortization of goodwill and other intangibles 108 216 115 116 172
Other operating expenses 2,237 3,324 2,008 1,936 2,297
------------------------------------------------------------------------
Total non-interest expense 10,345 13,140 10,431 10,297 10,770
------------------------------------------------------------------------
Income before federal income taxes 5,344 (9,235) 4,964 5,237 4,247
Income tax expense 1,314 (3,690) 1,251 1,301 934
------------------------------------------------------------------------
Net income $4,030 ($5,545) $3,713 $3,936 $3,313
========================================================================
NET INCOME PER COMMON SHARE:
Basic $0.40 ($0.55) $0.36 $0.38 $0.32
Diluted $0.40 ($0.55) $0.36 $0.38 $0.32
Weighted average common shares outstanding:
Basic 10,050,177 10,161,386 10,318,828 10,406,020 10,501,175
Diluted 10,069,215 10,161,386 10,340,082 10,436,890 10,557,091
Page 5 of 13
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS
FOR THE QUARTER ENDED
(Dollars in Thousands)
ASSETS Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
- --------------------------------------------------------------------------------------------------------------
Cash and demand balances
due from banks $31,139 $34,439 $34,628 $34,964 $37,677
Federal funds sold 7,979 2,750 869 7,115 30,411
Trading Account 161 811 2,050
Securities 383,593 375,081 375,647 365,383 381,166
Loans:
Commercial 419,442 412,356 401,787 398,897 396,106
Consumer 295,209 272,322 245,457 221,853 214,383
Real estate 346,372 489,121 478,754 450,014 440,723
-------- -------- -------- -------- -------
Total loans 1,061,023 1,173,799 1,125,998 1,070,764 1,051,212
Reserve for loan losses 15,129 11,578 11,451 11,413 12,288
------- ------- ------- ------- ------
Net loans 1,045,894 1,162,221 1,114,547 1,059,351 1,038,924
Premises and equipment 17,867 18,032 18,493 18,703 18,412
Goodwill and intangible assets 6,111 5,416 5,620 5,808 5,830
Other 48,305 51,751 51,686 49,392 46,936
------- ------- ------- ------- ------
Total assets $1,541,049 $1,650,501 $1,603,540 $1,540,716 $1,559,356
=========== =========== =========== =========== ==========
- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Liabilities:
Demand deposits (non-interest
bearing) $110,053 $112,662 $113,958 $112,086 $112,573
Demand deposits (interest
bearing) 83,694 85,432 89,531 88,665 92,003
Savings 252,990 265,319 273,879 275,433 271,970
Time deposits 607,003 646,781 626,319 622,169 629,317
-------- -------- -------- -------- -------
Total deposits 1,053,740 1,110,194 1,103,687 1,098,353 1,105,863
Federal funds purchased and
securities sold under
agreements to repurchase 126,942 117,645 117,236 110,364 135,311
Note payable 292 0 0 879 0
Borrowed funds 1,251 2,568 3,470 2,853 2,919
Accrued expenses and other
liabilities 6,630 9,060 9,435 8,409 11,808
Federal Home Loan Bank advances 239,302 294,332 255,580 204,978 185,852
-------- -------- -------- -------- -------
Total liabilities 1,428,157 1,533,799 1,489,408 1,425,836 1,441,753
Shareholders' equity:
Common stock 36,936 36,962 36,955 36,975 36,967
Treasury shares (13,174) (12,172) (9,931) (8,195) (6,030)
Net unrealized holding gains (3,268) (6,957) (10,155) (9,085) (2,108)
Retained earnings 92,398 98,869 97,263 95,185 88,774
------- ------- ------- ------- ------
Total shareholders' equity 112,892 116,702 114,132 114,880 117,603
-------- -------- -------- -------- -------
Total liabilities and
shareholders' equity $1,541,049 $1,650,501 $1,603,540 $1,540,716 $1,559,356
=========== =========== =========== =========== ==========
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31 September 30 June 30 March 31 December 31
------------------------------------------------------------------------------------
2000 2000 2000 2000 1999
------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------
Cash and due from banks $35,272 $34,079 $38,526 $43,925 $35,238
Federal funds sold 0 8,000 0 0 0
Trading Account 328 447 944 0 0
Securities 382,098 400,176 370,250 384,941 367,587
Loans 1,070,089 1,059,530 1,157,123 1,099,413 1,071,662
Less reserve for loan losses 15,217 15,040 11,378 11,354 11,169
------------------------------------------------------------------------------------
Net loans 1,054,872 1,044,490 1,145,745 1,088,059 1,060,493
Premises and equipment 18,039 17,798 18,119 18,611 18,575
Accrued interest receivable 11,181 10,630 10,508 9,509 9,277
Goodwill and intangible assets 6,038 6,193 5,472 5,739 5,931
Other assets 38,462 39,804 43,349 42,209 40,177
------------------------------------------------------------------------------------
Total assets $1,546,290 $1,561,617 $1,632,913 $1,592,993 $1,537,278
====================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------
Deposits:
Demand - non-interest bearing $110,045 $107,391 $115,380 $113,207 $110,811
Demand - interest bearing 87,268 83,991 88,184 90,465 90,570
Savings 246,056 262,024 269,925 277,892 270,544
Time deposits 592,766 630,971 631,960 613,559 625,664
------------------------------------------------------------------------------------
Total deposits 1,036,135 1,084,377 1,105,449 1,095,123 1,097,589
Federal funds purchased and securities sold under
agreements to repurchase 129,895 116,707 124,930 136,640 106,532
Note payable 1,000 0 0 0 0
Other borrowed funds 2,163 3,622 2,609 2,798 9,739
Federal Home Loan Bank advances 251,733 238,872 276,009 233,144 200,276
Accrued expenses and other liabilities 8,167 6,020 8,548 9,295 6,795
------------------------------------------------------------------------------------
Total liabilities 1,429,093 1,449,598 1,517,545 1,477,000 1,420,931
Shareholders' equity:
Common stock, no par value; 30,000,000 shares
authorized; 36,935 36,952 36,974 36,944 36,966
Treasury stock (13,947) (12,590) (11,646) (8,943) (7,140)
Net unrealized holding gains on
available-for-sale securities, net of tax 281 (3,849) (8,631) (8,597) (7,791)
Retained earnings 93,928 91,506 98,671 96,589 94,312
------------------------------------------------------------------------------------
Total shareholders' equity 117,197 112,019 115,368 115,993 116,347
------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $1,546,290 $1,561,617 $1,632,913 $1,592,993 $1,537,278
====================================================================================
Miscellaneous data:
Common shares issued 10,787,310 10,776,870 10,776,870 10,776,470 10,762,950
Treasury shares 730,200 639,920 575,720 393,100 304,500
Bank owned life insurance (in other assets) $29,895 $29,527 $29,163 $28,819 $28,438
Loans serviced for others $472,120 $462,957 $325,012 $334,993 $343,859
Mortgage servicing rights $4,065 $4,102 $3,172 $3,341 $3,490
Goodwill 1,154 1,213 1,379 1,445 1,511
Other intangibles 819 878 921 953 930
------------------------------------------------------------------------------------
Total goodwill and intangibles assets $6,038 $6,193 $5,472 $5,739 $5,931
====================================================================================
Page 7 of 13
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
FINANCIAL HIGHLIGHTS - OPERATING BASIS - EXCLUDING THIRD QUARTER
RESTRUCUTRING AND REENGINEERING CHARGES
QUARTERLY DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
----------------------------------------------------------------
EARNINGS:
Net interest income $12,708 $12,258 $12,645 $12,418 $12,286
Provision for loan losses 903 743 696 687 765
Non-interest income 3,776 3,683 4,102 3,590 3,414
Security gains 98 6 (225) 99 82
Trading account 10 (28) (431) 114 0
Non-interest expense 10,345 10,531 10,431 10,297 10,770
Federal income taxes 1,314 1,168 1,251 1,301 934
------ ------ ------ ------ ---
NET INCOME $4,030 $3,477 $3,713 $3,936 $3,313
======= ======= ======= ======= ======
PER SHARE:
Basic earnings $0.40 $0.34 $0.36 $0.38 $0.32
Diluted earnings 0.40 0.34 0.36 0.38 0.32
Common dividends 0.16 0.16 0.16 0.16 0.14
KEY RATIOS: (%)
Return on average assets (ROA) 1.05 0.84 0.93 1.02 0.85
Return on average
shareholders' equity (ROE) 14.28 11.92 13.01 13.70 11.27
Net interest margin 3.65 3.31 3.51 3.61 3.52
Net overhead 1.81 1.77 1.91 1.83 2.01
Efficiency ratio 60.77 66.51 63.48 61.61 66.09
SECOND BANCORP INCORPORATED AND SUBSIDIARY
RECAP OF RESTRUCUTRING 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 8 of 13
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
FINANCIAL HIGHLIGHTS
YEAR-TO-DATE DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
----------------------------------------------------------------------------
EARNINGS:
Net interest income $49,377 $36,669 $25,063 $12,418 $49,272
Provision for loan losses 7,129 6,226 1,383 687 3,195
Non-interest income 11,009 7,233 7,578 3,590 14,480
Security gains (2,399) (2,497) (12) 99 312
Trading account (335) (345) (317) 114 0
Non-interest expense 44,213 33,868 20,728 10,297 39,330
Federal income taxes 176 (1,138) 2,552 1,301 5,361
------- ------- ------- ------- -------
NET INCOME $6,134 $2,104 $7,649 $3,936 $16,178
======= ======= ======= ======= =======
PER SHARE:
Basic earnings $0.60 $0.20 $0.74 $0.38 $1.52
Diluted earnings 0.60 0.20 0.74 0.38 1.51
Common dividends 0.64 0.48 0.32 0.16 0.56
Book value 11.65 11.05 11.31 11.17 11.12
Tangible book value 11.46 10.88 11.12 10.97 10.92
Market value 14.50 14.13 15.19 17.50 22.38
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 10,247,025 10,294,922 10,362,424 10,406,020 10,635,852
Diluted 10,271,548 10,318,413 10,396,194 10,439,890 10,698,717
PERIOD END BALANCE SHEET:
Assets $1,546,290 $1,561,617 $1,632,913 $1,592,993 $1,537,278
Securities 382,098 400,176 370,250 384,941 367,587
Total loans 1,070,089 1,059,530 1,157,123 1,099,413 1,071,662
Reserve for loan losses 15,217 15,040 11,378 11,354 11,169
Deposits 1,036,135 1,084,377 1,105,449 1,095,123 1,097,589
Total shareholders' equity 117,197 112,019 115,368 115,993 116,347
Tier I capital 115,315 114,158 122,074 122,595 121,981
Tier I ratio 10.3% 10.2% 10.8% 11.3% 11.8%
Total capital 129,366 128,193 133,452 133,949 133,150
Total capital ratio 11.5% 11.4% 11.8% 12.4% 12.8%
Total risk-adjusted assets 1,124,076 1,122,803 1,133,429 1,082,351 1,036,978
Tier I leverage ratio 7.5% 7.3% 7.5% 8.0% 8.2%
AVERAGE BALANCE SHEET:
Assets $1,584,016 $1,598,443 $1,572,128 $1,540,716 $1,498,946
Earning assets 1,488,334 1,500,280 1,473,913 1,443,262 1,405,195
Loans 1,107,948 1,123,704 1,098,381 1,070,764 1,005,998
Deposits 1,091,441 1,104,100 1,101,020 1,098,353 1,092,260
Shareholders' equity 114,652 115,243 114,506 114,880 121,369
KEY RATIOS: (%)
Return on average assets (ROA) 0.39 0.18 0.97 1.02 1.08
Return on average
shareholders' equity (ROE) 5.35 2.43 13.36 13.70 13.33
Net interest margin 3.46 3.41 3.56 3.61 3.68
Net overhead 2.23 2.37 1.87 1.83 1.77
Efficiency ratio 70.67 74.31 62.54 61.61 59.45
CREDIT QUALITY:
Non-accrual loans $4,699 $3,821 $2,987 $3,068 $2,743
Restructured loans 43 45 47 0 52
90 day past due and accruing 3,238 3,171 2,875 2,082 3,132
Other real estate owned 902 961 1,170 231 281
Charge-offs $4,059 $3,120 $1,592 $719 $4,477
Recoveries 978 765 417 217 1,712
-----------------------------------------------------------------------------------
Net charge-offs $3,081 $2,355 $1,175 $502 $2,765
===================================================================================
Reserve for loan losses as a percent
of period-end loans (%) 1.42 1.42 0.98 1.03 1.04
Net charge-offs (annualized) as a percent
of average loans (%) 0.28 0.28 0.21 0.19 0.27
Page 9 of 13
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SECOND BANCORP INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEAR-TO-DATE DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
- -------------------------------------
Loans (including fees):
Taxable $90,819 $67,790 $44,423 $21,536 $80,783
Exempt from federal income taxes 1,014 738 453 215 681
Securities:
Taxable 20,970 15,389 9,970 4,709 18,446
Exempt from federal income taxes 3,209 2,436 1,659 882 3,781
Federal funds sold 283 152 106 93 891
Trading account 3 3 3 0 0
-----------------------------------------------------------------------------------
Total interest income 116,298 86,508 56,614 27,435 104,582
INTEREST EXPENSE
- -------------------------------------
Deposits 46,236 34,407 22,191 10,879 41,938
Federal funds purchased and securities
sold under agreements to repurchase 5,540 3,980 2,540 1,184 5,781
Note Payable 25 19 19 19 0
Other borrowed funds 172 147 101 43 219
Federal Home Loan Bank advances 14,948 11,286 6,700 2,892 7,372
-----------------------------------------------------------------------------------
Total interest expense 66,921 49,839 31,551 15,017 55,310
-----------------------------------------------------------------------------------
Net interest income 49,377 36,669 25,063 12,418 49,272
Provision for loan losses 7,129 6,226 1,383 687 3,195
-----------------------------------------------------------------------------------
Net interest income after
provision for loan losses 42,248 30,443 23,680 11,731 46,077
NON-INTEREST INCOME
- -------------------------------------
Service charges on deposit accounts 4,406 3,296 2,133 1,054 4,309
Trust fees 3,898 2,886 2,053 1,004 3,534
Gain on sale of loans (2,001) (2,491) 700 391 0
Trading account gains (335) (345) (317) 114 0
Security gains (2,399) (2,497) 305 99 312
Other operating income 4,706 3,542 2,375 1,141 6,637
-----------------------------------------------------------------------------------
Total non-interest income 8,275 4,391 7,249 3,803 14,792
NON-INTEREST EXPENSE
- -------------------------------------
Salaries and employee benefits 20,817 15,926 10,505 5,316 19,054
Net occupancy 4,191 3,151 2,089 1,052 4,134
Equipment 3,985 2,990 1,946 987 3,418
Professional services 3,476 2,825 1,175 477 2,192
Assessment on deposits and other taxes 1,684 1,261 838 413 1,689
Amortization of goodwill and other intangibles 555 447 231 116 685
Other operating expenses 9,505 7,268 3,944 1,936 8,158
-----------------------------------------------------------------------------------
Total non-interest expense 44,213 33,868 20,728 10,297 39,330
-----------------------------------------------------------------------------------
Income before federal income taxes 6,310 966 10,201 5,237 21,539
Income tax expense 176 (1,138) 2,552 1,301 5,361
-----------------------------------------------------------------------------------
Net income $6,134 $2,104 $7,649 $3,936 $16,178
===================================================================================
NET INCOME PER COMMON SHARE:
Basic $0.60 $0.20 $0.74 $0.38 $1.52
Diluted $0.60 $0.20 $0.74 $0.38 $1.51
Weighted average common shares outstanding:
Basic 10,247,025 10,294,922 10,362,424 10,406,020 10,635,852
Diluted 10,271,548 10,318,413 10,396,194 10,436,890 10,698,717
Page 10 of 13
11
SECOND BANCORP INCORPORATED AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS
FOR THE YEAR-TO-DATE PERIOD ENDED:
(Dollars in Thousands)
ASSETS Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
- --------------------------------------------------------------------------------------------------------------
Cash and demand balances
due from banks $33,787 $34,676 $34,796 $34,964 $37,045
Federal funds sold 4,682 3,575 3,992 7,115 16,215
Trading Account 754 953 1,025
Securities 374,950 372,048 370,515 365,383 382,982
Loans:
Commercial 408,163 404,376 400,342 398,897 387,008
Consumer 258,847 246,638 233,655 221,853 218,819
Real estate 440,938 472,690 464,384 450,014 400,171
-------- -------- -------- -------- -------
Total loans 1,107,948 1,123,704 1,098,381 1,070,764 1,005,998
Reserve for loan losses 12,398 11,481 11,432 11,413 12,125
------- ------- ------- ------- ------
Net loans 1,095,550 1,112,223 1,086,949 1,059,351 993,873
Premises and equipment 18,272 18,408 18,598 18,703 18,210
Goodwill and intangible assets 5,739 5,614 5,714 5,808 5,756
Other 50,282 50,946 50,539 49,392 44,865
------- ------- ------- ------- ------
Total assets $1,584,016 $1,598,443 $1,572,128 $1,540,716 $1,498,946
=========== =========== =========== =========== ==========
- --------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Liabilities:
Demand deposits (non-interest
bearing) $112,185 $112,901 $113,022 $112,086 $108,778
Demand deposits (interest
bearing) 86,818 87,867 89,098 88,665 92,350
Savings 266,863 271,521 274,656 275,433 279,305
Time deposits 625,575 631,811 624,244 622,169 611,827
-------- -------- -------- -------- -------
Total deposits 1,091,441 1,104,100 1,101,020 1,098,353 1,092,260
Federal funds purchased and
securities sold under
agreements to repurchase 118,070 115,091 113,800 110,364 136,382
Note payable 292 293 440 879 0
Borrowed funds 2,532 2,961 3,161 2,853 2,696
Accrued expenses and other
liabilities 8,381 8,969 8,922 8,409 9,755
Federal Home Loan Bank advances 248,648 251,786 230,279 204,978 136,484
-------- -------- -------- -------- -------
Total liabilities 1,469,364 1,483,200 1,457,622 1,425,836 1,377,577
Shareholders' equity:
Common stock 36,957 36,964 36,965 36,975 36,943
Treasury shares (10,878) (10,107) (9,063) (8,195) (2,416)
Net unrealized holding gains (7,354) (8,726) (9,620) (9,085) (1,698)
Retained earnings 95,927 97,112 96,224 95,185 88,540
------- ------- ------- ------- ------
Total shareholders' equity 114,652 115,243 114,506 114,880 121,369
-------- -------- -------- -------- -------
Total liabilities and
shareholders' equity $1,584,016 $1,598,443 $1,572,128 $1,540,716 $1,498,946
=========== =========== =========== =========== ==========
Page 11 of 13
12
SECOND BANCORP INCORPORATED AND SUBSIDIARY
FINANCIAL HIGHLIGHTS - OPERATING BASIS - EXCLUDING THIRD QUARTER RESTRUCUTRING
AND REENGINEERING CHARGES
YEAR-TO-DATE DATA
(Dollars in thousands, except per share data)
Dec. 2000 Sept. 2000 June 2000 March 2000 Dec. 1999
----------------------------------------------------------------
EARNINGS:
Net interest income $50,029 $37,321 $25,063 $12,418 $49,272
Provision for loan losses 3,029 2,126 1,383 687 3,195
Non-interest income 14,720 10,944 7,578 3,590 14,480
Security gains 409 311 (12) 99 312
Trading account (335) (345) (317) 114 0
Non-interest expense 41,604 31,259 20,728 10,297 39,330
Federal income taxes 5,034 3,720 2,552 1,301 5,361
------ ------ ------ ------ -----
NET INCOME $15,156 $11,126 $7,649 $3,936 $16,178
======== ======== ======= ======= =======
PER SHARE:
Basic earnings $1.48 $1.08 $0.74 $0.38 $1.52
Diluted earnings 1.48 1.08 0.74 0.38 1.51
Common dividends 0.64 0.48 0.32 0.16 0.56
KEY RATIOS: (%)
Return on average assets (ROA) 0.96 0.93 0.97 1.02 1.08
Return on average
shareholders' equity (ROE) 13.22 12.87 13.36 13.70 13.33
Net interest margin 3.51 3.47 3.56 3.61 3.68
Net overhead 1.81 1.81 1.87 1.83 1.77
Efficiency ratio 62.17 63.42 62.54 61.61 59.45
SECOND BANCORP INCORPORATED AND SUBSIDIARY
RECAP OF RESTRUCUTRING AND REENGINEERING CHARGES
YEAR-TO-DATE 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 12 of 13
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: March 27, 2001 /s/ David L. Kellerman
-----------------------------
David L. Kellerman, Treasurer
Page 13 of 13