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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 the Quarterly Period Ended March 31, 2001
0-20159
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(Commission File Number)
CROGHAN BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
Ohio 31-1073048
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
323 Croghan Street, Fremont, Ohio 43420
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(Address of principal executive offices) (Zip Code)
(419)-332-7301
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(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 [ ]
1,913,144 Common shares were outstanding as of March 31, 2001.
This document contains 10 pages.
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CROGHAN BANCSHARES, INC.
Index
PART I. Page(s)
Item 1. Financial Statements 3 - 6
Item 2. Management's Discussion and Analysis 7 - 9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk - There have been no material changes from the
information provided in the December 31, 2000 Form 10-K
PART II.
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K:
(a) None
(b) A Form 8-K dated January 26, 2001 was filed on
January 26, 2001 reporting the 2000 annual earnings
for Croghan Bancshares, Inc.
Signatures 10
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CROGHAN BANCSHARES, INC.
Consolidated Balance Sheets (Unaudited)
March 31 December 31,
ASSETS 2001 2000
(Dollars in thousands, except par value)
CASH AND CASH EQUIVALENTS
Cash and due from banks $ 10,824 $ 13,046
Interest-bearing deposits in other banks -- 8
Federal funds sold 11,600 --
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Total cash and cash equivalents 22,424 13,054
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SECURITIES
Available-for sale, at fair value 48,756 53,502
Held-to-maturity, at amortized cost, fair value of $5,677 in 2001
and $5,088 in 2000 5,660 5,123
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Total securities 54,416 58,625
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LOANS 262,337 258,855
Less: Allowance for loan losses 3,338 3,242
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Net loans 258,999 255,613
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PREMISES AND EQUIPMENT, NET 6,734 6,756
ACCRUED INTEREST RECEIVABLE 2,421 2,738
OTHER REAL ESTATE OWNED -- --
GOODWILL 6,592 6,751
OTHER ASSETS 4,504 3,895
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TOTAL ASSETS $ 356,090 $ 347,432
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing $ 34,880 $ 34,865
Savings, NOW and Money Market deposits 115,423 114,993
Time 137,555 134,346
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Total Deposits 287,858 284,204
Federal funds purchased and securities sold under repurchase agreements 10,498 14,009
Federal Home Loan Bank borrowings 16,000 9,000
Dividends payable 402 402
Other liabilities 3,134 2,351
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Total liabilities 317,892 309,966
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STOCKHOLDERS' EQUITY
Common stock, $12.50 par value. Authorized 3,000,000 shares; issued and
outstanding 1,913,144 shares in 2001 and 1,912,458 in 2000 23,914 23,906
Surplus 108 102
Retained Earnings 13,920 13,479
Accumulated other comprehensive income (loss) 256 (21)
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Total stockholders' equity 38,198 37,466
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 356,090 $ 347,432
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See note to consolidated financial statements.
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CROGHAN BANCSHARES, INC.
Consolidated Statements of Operations and Comprehensive Income (Unaudited)
Three months ended
March 31
2001 2000
(Dollars in thousands,
except per share data)
INTEREST INCOME
Interest and fees on loans $5,618 $5,083
Interest and dividends on securities:
U.S. Treasury securities 149 252
Obligations of U.S. Government agencies and corporations 424 501
Obligations of states and political subdivisions 138 160
Other securities 78 74
Interest on federal funds sold 85 18
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Total interest income 6,492 6,088
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INTEREST EXPENSE
Interest on deposits 2,563 2,333
Interest on other borrowings 314 170
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Total interest expense 2,877 2,503
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Net interest income 3,615 3,585
PROVISION FOR LOAN LOSSES 120 75
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Net interest income after provision for loan losses 3,495 3,510
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NON-INTEREST INCOME
Trust income 125 117
Service charges on deposit accounts 222 222
Gain (loss) on sale of securities -- --
Gain (loss) on sale of loans -- --
Other operating income 195 215
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Total non-interest income 542 554
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NON-INTEREST EXPENSES
Salaries, wages and employee benefits 1,550 1,560
Net occupancy expense of premises 167 173
Amortization of goodwill 160 160
Other operating expenses 885 901
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Total non-interest expenses 2,762 2,794
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Income before federal income taxes 1,275 1,270
FEDERAL INCOME TAXES 432 426
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NET INCOME $ 843 $ 844
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Net income per share, based on 1,912,731 shares in 2001 and 1,908,696 shares in 2000 $ 0.44 $ 0.44
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Dividends declared, based on 1,913,144 shares in 2001 and 1,909,215 shares in 2000 $ 0.21 $ 0.20
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COMPREHENSIVE INCOME $1,120 $ 760
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CROGHAN BANCSHARES, INC.
Consolidated Statements of Cash Flows (Unaudited)
Three months ended
March 31
2001 2000
(Dollars in thousands,
except per share data)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 843 $ 844
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 321 315
Provision for loan losses 120 75
Deferred federal income taxes (84) (24)
FHLB stock dividends (28) (26)
Increase in cash value of split dollar life insurance policies (50) (42)
Net amortization of security premiums and discounts 9 27
Loss (gain) on sale of securities -- --
Loss (gain) on sale of loans -- --
Loss (gain) on disposal of equipment -- 1
Decrease (increase) in accrued interest receivable 317 74
Decrease (increase) in other assets (558) (10)
Increase (decrease) in other liabilities 723 405
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Net cash provided by operating activities 1,613 1,639
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities:
Available-for-sale (7,033) (3,000)
Held-to-maturity (514) --
Proceeds from maturities of securities 12,194 6,036
Proceeds from sales of available-for-sale securities -- --
Proceeds from sale of loans -- --
Net decrease (increase) in loans (3,506) (1,660)
Capital expenditures (139) (124)
Proceeds from sale of equipment -- --
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Net cash provided by (used in) investing activities 1,002 1,252
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 3,664 2,936
Increase (decrease) in federal funds purchased and securities sold under repurchase agreements (3,511) (2,748)
Increase (decrease) in borrowed funds 7,000 (3,000)
Proceeds from issuance of common stock 14 25
Cash dividends paid (402) (363)
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Net cash provided by (used in) financing activities 6,755 (3,150)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,370 (259)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,054 15,793
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,424 $ 15,534
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SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest $ 2,647 $ 2,593
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Federal income taxes $ -- $ --
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Transfer of loans to other real estate $ -- $ --
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See notes to consolidated financial statements.
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CROGHAN BANCSHARES, INC.
Note to Consolidated Financial Statements
March 31, 2001
(Unaudited)
(1) Consolidated Financial Statements
The consolidated financial statements have been prepared by Croghan
Bancshares, Inc. (the "Corporation") without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the Corporation's financial
position, results of operations and changes in cash flows have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. The results of operations for
the period ended March 31, 2001 are not necessarily indicative of the
operating results for the full year.
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CROGHAN BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
When or if used in the Corporation's Securities and Exchange Commission filings
or, other public or shareholder communications, or in oral statements made with
the approval of an authorized executive officer, the words or phrases:
"anticipate", "would be", "will allow", "intends to", "will likely result", "are
expected to", "will continue", " is anticipated", "is estimated", "is
projected", or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Any such statements are subject to risks and uncertainties that include
but are not limited to: changes in economic conditions in the Corporation's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Corporation's market area, and
competition. All or some of these factors could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected.
The Corporation cautions readers not to place undue reliance on any such forward
looking statements, which speak only as of the date made, and advises readers
that various factors including regional and national economic conditions,
substantial changes in the levels of market interest rates, credit and other
risks associated with lending and investing activities, and competitive and
regulatory factors could affect the Corporation's financial performance and
could cause the Corporation's actual results for future periods to differ
materially from those anticipated or projected. The Corporation does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences or unanticipated events or
circumstances after the date of such statements.
PERFORMANCE SUMMARY
Assets at March 31, 2001 totalled $356,090,000 compared to $347,432,000 at 2000
year end. Total deposits increased to $287,858,000 from $284,204,000 at year end
and total loans increased to $262,337,000 from $258,855,000 at year end.
Net income for the quarter ended March 31, 2001 was $843,000 or $.44 per common
share compared to $844,000 or $.44 per common share for the same period in 2000.
Operating results for the quarter ended March 31, 2001 were positively impacted
by an increase in loans of $21,381,000 from the quarter ended March 31, 2000.
The earnings were negatively impacted as a result of a decrease in non-interest
income of $12,000, along with additional loan loss provision of $45,000 compared
to the same period in 2000.
DEPOSITS, LOANS, INVESTMENT SECURITIES, AND STOCKHOLDERS' EQUITY
Total deposits at March 31, 2001 increased $3,654,000 or 1.3 percent from 2000
year end. The liquid deposit category (demand, savings, NOW and money market
deposit accounts) increased $445,000 while the time deposit category increased
$3,209,000. Total loans increased $3,482,000 or 1.3 percent from 2000 year end.
Total investment securities decreased $4,209,000 from 2000 year end.
Stockholders' equity at March 31, 2001 increased to $38,198,000 or $19.97 book
value per common share compared to $37,466,000 or $19.59 book value per common
share at December 31, 2000. The balance in stockholders' equity at March 31,
2000 included accumulated other comprehensive income (loss) consisting of the
net unrealized gain (loss) on investment securities classified as
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available-for-sale. At March 31, 2001, Croghan held $48,756,000 in
available-for-sale securities with a net unrealized gain of $256,000 net of
income taxes. This compares to 2000 year-end holdings of $53,502,000 with a net
unrealized loss of $21,000 net of income taxes. Consistent with the
Corporation's quarterly dividend policy, a dividend of $.21 per share was
declared on March 13, 2001 to be distributed on April 30, 2001.
NET INTEREST INCOME
Net interest income, which represents the excess revenue generated from earning
assets over the interest cost of funding those assets, increased $30,000 for the
quarter ended March 31, 2001 compared to the same period in 2000. The net
interest yield (net interest income divided by average earning assets) was 4.56
percent for the quarter ended March 31, 2001 compared to 4.58 percent for the
quarter ended March 31, 2000.
PROVISION FOR LOAN LOSSES AND THE ALLOWANCE FOR LOAN LOSSES
The following table details factors relating to the provision and allowance for
loan losses for the periods noted:
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Three Months Ended Twelve Months Ended
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March 31, December 31,
2001 2000
(Dollars in thousands)
Provision for loan losses charged to expense $ 120 $ 435
Net loan charge-offs 24 389
Net loan charge-offs as a percent of
average outstanding net loans .01% .16%
Nonaccrual loans $1,449 $ 628
Loans past due 90 days or more 1,554 1,144
Potential problem loans, other than those
past due 90 days or more, nonaccrual,
or restructured 1,839 1,602
Allowance for loan losses 3,338 3,242
Allowance for loan losses as a
percent of period-end loans 1.27% 1.25%
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The first quarter 2001 provision for loan losses appearing in the Consolidated
Statements of Operations and Comprehensive Income totalled $120,000. This
provision compares to $75,000 expensed in the first quarter of 2000. Actual net
loan charge offs were $24,000 for the first three months of 2001 compared to
$113,000 during the same period in 2000.
Nonaccrual loans totalled $1,449,000 at March 31, 2001, including one credit of
$831,000, compared to $628,000 at December 31, 2000. Loans past due 90 days or
more increased $410,000 and other potential problem loans increased $237,000
from the December 31, 2000 figures. These negative asset quality trends will
continue to be monitored throughout 2001 to ensure adequate provisions are
calculated and expensed. The Corporation's allowance for loan losses as a
percentage of outstanding loans increased to 1.27 percent at March 31, 2001
compared to 1.25 percent at December 31, 2000. It is the Corporation's policy to
maintain the allowance for loan losses at a level to provide for reasonably
foreseeable losses. To accomplish this objective, a loan review process is
conducted by an outside consulting firm, which facilitates the early
identification of problem loans and
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ensures sound credit decisions. Management considers the allowance at March 31,
2001 to be adequate to provide for losses inherent to the loan portfolio.
NON-INTEREST INCOME
Total non-interest income decreased $12,000 or 2.2 percent for the quarter ended
March 31, 2001. Trust department fee income increased $8,000 between quarterly
periods and service charges on deposit accounts remained unchanged between
comparable quarterly periods.
Other operating income decreased $20,000 or 9.3 percent for the quarter ended
March 31, 2001. The significant component of the decline included a $16,000
(47.1%) reduction in fees generated by the Invest Department, which markets
non-FDIC insured investment products (e.g., mutual funds and annuities).
NON-INTEREST EXPENSES
Total non-interest expenses decreased $32,000 or 1.1 percent for the quarter
ended March 31, 2001 compared to the same period in 2000. Salaries, wages and
employee benefits decreased $10,000 between quarterly periods and net occupancy
expense of bank premises decreased $6,000 between quarterly periods.
Goodwill amortization associated with the August 1, 1996 purchase of Union
Bancshares Corp. was unchanged for the two comparable quarterly periods while
other operating expenses decreased $16,000 or 1.8 percent between quarterly
periods.
FEDERAL INCOME TAX EXPENSE
Federal income tax expense increased $6,000 or 1.4 percent between quarterly
periods due primarily to less tax-exempt income. The Corporation's effective tax
rate for the quarter ended March 31, 2001 increased to 33.9 percent compared to
33.6 percent for the quarter ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
An average federal funds sold position of $6,761,000 was maintained for the
quarterly period ended March 31, 2001. Short-term borrowings of federal funds
purchased and repurchase agreements averaged $10,950,000 for the quarterly
period.
Borrowings from the Federal Home Loan Bank totalled $16,000,000 at March 31,
2001 compared to $9,000,000 at December 31, 2000. The additional borrowings were
used to take advantage of lower cost funding alternatives for the increase in
loan demand and the upcoming maturity of Federal Home Loan Bank borrowings.
Capital expenditures for bank premises and equipment totalled $139,000 for the
quarter ended March 31, 2001. This compares to $124,000 for same period in 2000.
The increase was in part due to the replacement or addition of personal
computers. Projected capital expenditures for the remainder of 2001 approximate
$70,000.
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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.
CROGHAN BANCSHARES, INC
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Registrant
Date: April 23, 2001 /s/ Thomas Hite
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Thomas F. Hite, President
Date: April 23, 2001 /s/ Joseph Berger
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Joseph W. Berger, Treasurer
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