UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 1, 2002
FIRST CITIZENS BANC CORP
------------------------
(Exact name of Registrant as specified in its charter)
OHIO 0-25980 34-1558688
---- ------- ----------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
100 EAST WATER STREET, P.O. BOX 5016, SANDUSKY, OHIO 44870
----------------------------------------------------------
(Address of principle executive offices)
Registrant's telephone number, including area code: (419) 625-4121
N/A
(Former name or former address, if changed since last report)
Date of report: MAY 13, 2002
------------
This Current Report on Form 8-K/A amends the previous Current Report of Form 8-K
dated April 1, 2002 and filed April 4, 2002 to include the financial information
and pro forma financial information pursuant to First Citizens Banc Corp's
acquisition of Independent Community Banc Corp., which became effective April 1,
2002.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION
(a) Financial Statements of Business Acquired:
(1) Audited consolidated balance sheets of Independent Community
Banc Corp. as of December 31, 2001 and 2000, and the related
consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended.
(b) Pro Forma Information:
(1) Unaudited pro forma condensed combined consolidated balance
sheet of First Citizens Banc Corp as of December 31, 2001,
assuming the merger was completed at that date, and the
unaudited pro forma condensed combined consolidated statement
of income for the year ended December 31, 2001, assuming the
merger with Independent Community Banc Corp. was completed at
the beginning of the year then ended.
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.
First Citizens Banc Corp
/s/ James O. Miller May 13, 2002
- ------------------------------------ -------------------------------------
James O Miller Date
Executive Vice President
INDEPENDENT COMMUNITY BANC CORP.
Norwalk, Ohio
FINANCIAL STATEMENTS
December 31, 2001 and 2000
CONTENTS
REPORT OF INDEPENDENT AUDITORS......................................... 1
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS...................................... 2
CONSOLIDATED STATEMENTS OF INCOME................................ 3
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY........................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS............................ 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS....................... 6
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Independent Community Banc Corp.
Norwalk, Ohio
We have audited the accompanying consolidated balance sheets of Independent
Community Banc Corp. as of December 31, 2001 and 2000, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Independent
Community Banc Corp. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principals generally accepted in the United States of America.
Crowe, Chizek and Company LLP
Columbus, Ohio
February 7, 2002
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1.
INDEPENDENT COMMUNITY BANC CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
2001 2000
------------- -------------
ASSETS
Cash and demand deposits with other financial institutions $ 4,980,986 $ 3,484,947
Federal funds sold 2,400,000 1,400,000
------------- -------------
Total cash and cash equivalents 7,380,986 4,884,947
Time deposits with other financial institutions 990,000 --
Securities available for sale, at fair value 19,492,538 19,538,455
Other securities, at cost 736,200 700,300
Loans 101,714,036 105,528,839
Allowance for loan losses (1,390,833) (1,240,777)
------------- -------------
Loans, net 100,323,203 104,288,062
Premises and equipment, net 1,625,397 1,734,098
Intangibles, net 3,412,350 3,702,954
Accrued interest receivable and other assets 1,666,947 1,755,440
------------- -------------
Total assets $ 135,627,621 $ 136,604,256
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 15,807,245 $ 16,191,734
Interest-bearing 104,341,183 99,590,559
------------- -------------
Total deposits 120,148,428 115,782,293
Securities sold under agreements to repurchase 312,693 300,871
Federal Home Loan Bank short-term advances -- 6,000,000
Other borrowings 2,235,000 2,635,000
Accrued interest payable and other liabilities 1,032,502 893,218
------------- -------------
Total liabilities 123,728,623 125,611,382
Shareholders' equity
Common stock: no par value, 1,400,000 shares
authorized and 629,442 shares issued 1,870,042 1,870,042
Surplus 1,542,894 1,542,894
Retained earnings 8,698,622 8,061,481
Accumulated other comprehensive income
(loss), net of tax 70,631 (167,777)
Treasury stock, at cost: 15,256 shares in 2001
and 17,175 shares in 2000 (283,191) (313,766)
------------- -------------
Total shareholders' equity 11,898,998 10,992,874
------------- -------------
Total liabilities and shareholders' equity $ 135,627,621 $ 136,604,256
============= =============
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
2.
INDEPENDENT COMMUNITY BANC CORP.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2001 and 2000
- -------------------------------------------------------------------------------
2001 2000
----------- -----------
Interest income
Loans, including fees $ 8,853,902 $ 8,595,983
Securities:
Taxable 732,592 1,116,407
Nontaxable 160,350 191,663
Federal funds sold 174,584 19,531
----------- -----------
9,921,428 9,923,584
Interest expense
Deposits 4,604,938 4,331,748
Other 298,860 611,604
----------- -----------
4,903,798 4,943,352
----------- -----------
NET INTEREST INCOME 5,017,630 4,980,232
Provision for loan losses 431,500 373,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,586,130 4,607,232
NONINTEREST INCOME
Service charges on deposit accounts 474,647 482,664
Trust department income 310,539 350,000
Net securities gains (losses) 13,445 (23,036)
Loan origination agent fee income 66,437 56,698
Other operating income 205,209 80,252
----------- -----------
1,070,277 946,578
NONINTEREST EXPENSE
Salaries and employee benefits 1,761,020 1,814,830
Occupancy expense of premises 254,399 275,145
Furniture and equipment expense 305,450 298,864
Legal, professional and examination expense 276,813 271,545
Merger expenses 333,815 --
Other expenses 1,282,775 1,174,464
----------- -----------
4,214,272 3,834,848
----------- -----------
INCOME BEFORE INCOME TAXES 1,442,135 1,718,962
Provision for income taxes 436,905 523,339
----------- -----------
NET INCOME $ 1,005,230 $ 1,195,623
=========== ===========
Earnings per common share:
Basic and diluted $ 1.64 $ 1.97
=========== ===========
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
3.
INDEPENDENT COMMUNITY BANC CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 2001 and 2000
- -------------------------------------------------------------------------------
Accumulated
Other
Common Retained Comprehensive
Stock Surplus Earnings Income (Loss)
----- ------- -------- -------------
Balances at January 1, 2000 $ 1,870,042 $ 1,529,836 $ 7,231,001 $ (767,907)
Comprehensive income:
Net income 1,195,623
Other comprehensive income (loss):
Net change in unrealized gain (loss) on securities
available for sale, net of reclassification adjustments
and tax effects 600,130
Total comprehensive income
Dividends declared ($0.60 per share) (365,143)
Purchase 2 treasury shares
Issue 7,000 treasury shares for exercise of stock options 5,303
Sell 4,967 treasury shares to dividend reinvestment plan 7,755
------------- ------------- ------------- -----------
Balances at December 31, 2000 1,870,042 1,542,894 8,061,481 (167,777)
Comprehensive income:
Net income 1,005,230
Other comprehensive income (loss):
Net change in unrealized gain (loss) on securities
available for sale, net of reclassification adjustments
and tax effects 238,408
Total comprehensive income
Dividends declared ($0.60 per share) (368,089)
Purchase 101 treasury shares
Sell 2,020 treasury shares to dividend reinvestment plan
------------- ------------- ------------- -----------
Balances at December 31, 2001 $ 1,870,042 $ 1,542,894 $ 8,698,622 $ 70,631
============= ============= ============= ===========
Treasury Total
Stock, Shareholders'
At Cost Equity
------- ------
Balances at January 1, 2000 $ (509,379) $ 9,353,593
Comprehensive income:
Net income 1,195,623
Other comprehensive income (loss):
Net change in unrealized gain (loss) on securities
available for sale, net of reclassification adjustments
and tax effects 600,130
--------------
Total comprehensive income 1,795,753
Dividends declared ($0.60 per share) (365,143)
Purchase 2 treasury shares (37) (37)
Issue 7,000 treasury shares for exercise of stock options 113,697 119,000
Sell 4,967 treasury shares to dividend reinvestment plan 81,953 89,708
----------- --------------
Balances at December 31, 2000 (313,766) 10,992,874
Comprehensive income:
Net income 1,005,230
Other comprehensive income (loss):
Net change in unrealized gain (loss) on securities
available for sale, net of reclassification adjustments
and tax effects 238,408
--------------
Total comprehensive income 1,243,638
Dividends declared ($0.60 per share) (368,089)
Purchase 101 treasury shares (2,762) (2,762)
Sell 2,020 treasury shares to dividend reinvestment plan 33,337 33,337
----------- --------------
Balances at December 31, 2001 $ (283,191) $ 11,898,998
=========== ==============
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
4.
INDEPENDENT COMMUNITY BANC CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2001 and 2000
- ------------------------------------------------------------------------------
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,005,230 $ 1,195,623
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 156,754 152,246
Provision for loan losses 431,500 373,000
Change in deferred tax asset 236 (2,314)
Net (accretion) amortization on securities (94,855) 65,765
Amortization of intangibles 290,604 290,604
Loss (gain) on sales and calls of investments (13,445) 23,036
Federal Home Loan Bank stock dividends (35,900) (36,400)
Changes in accrued interest, other assets and
other liabilities 91,279 (457,328)
------------ ------------
Net cash from operating activities 1,831,403 1,604,232
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in time deposits with other financial institutions (990,000) --
Securities available for sale
Purchases (29,377,515) (981,170)
Proceeds from maturities and paydowns 19,462,134 2,724,855
Proceeds from sales and calls 10,444,268 4,271,958
Purchases of loans (950,000) (3,319,128)
Net change in loans 4,483,359 (6,364,798)
Proceeds from sales of premises and equipment -- 1,000,000
Purchase of premises and equipment (48,053) (166,970)
------------ ------------
Net cash from investing activities 3,024,193 (2,835,253)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 4,366,135 (2,699,636)
Net change in securities sold under agreement to repurchase 11,822 (3,880)
Net change in FHLB short-term advances (6,000,000) 5,000,000
Proceeds from borrowings -- 2,735,000
Repayments of borrowings (400,000) (3,100,000)
Cash dividends paid (368,089) (365,143)
Proceeds from exercise of stock options -- 119,000
Proceeds from issuance of treasury stock 33,337 89,708
Acquisition of treasury stock (2,762) (37)
------------ ------------
Net cash from financing activities (2,359,557) 1,775,012
------------ ------------
Net change in cash and cash equivalents 2,496,039 543,991
Cash and cash equivalents at beginning of year 4,884,947 4,340,956
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,380,986 $ 4,884,947
============ ============
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
5.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of Independent Community Banc Corp. and its wholly-owned
subsidiary, The Citizens National Bank of Norwalk (together referred to as "the
Company"). All significant intercompany balances and transactions have been
eliminated in consolidation.
NATURE OF OPERATIONS: The Company grants commercial, real estate, installment
and personal loans to customers primarily in Northern Ohio. Substantially all
loans are secured by specific items of collateral including business assets,
consumer assets and real estate. Commercial loans make up approximately 52% of
the loan portfolio and include loans secured by business assets and commercial
real estate. Commercial loans are expected to be repaid from cash flow from
operations of businesses. Real estate loans make up approximately 17% of the
loan portfolio and are secured by residential real estate. Management considers
the Company to operate in one segment, banking.
USE OF ESTIMATES: To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, 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.
SECURITIES: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in shareholders'
equity, net of tax. Other securities such as Federal Home Loan Bank and Federal
Reserve stock are carried at cost.
Realized gains and losses resulting from the sale of securities are computed by
the specific identification method. Interest and dividend income, adjusted by
amortization of purchase premium or discount, is included in earnings.
Securities are written down to fair value when a decline in fair value is not
temporary.
LOANS: Loans are reported at the principal balance outstanding, net of unearned
interest, deferred loan fees and costs, the allowance for loan losses and
charge-offs. Interest income is reported on the interest method and includes
amortization of net deferred loan fees and costs over the loan term. Interest
income may not be reported when full loan repayment is in doubt, typically when
payments are past due over 90 days. Payments received on such loans are reported
as principal reductions.
- --------------------------------------------------------------------------------
(Continued)
6.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance for probable incurred credit losses, increased by the provision for
loan losses and decreased by charge-offs less recoveries. Management estimates
the allowance balance required based on past loan loss experience, known and
probable risks in the portfolio, information about specific borrower situations
and estimated collateral values, economic conditions, and other factors.
Allocations of the allowance may be made for specific loans, but the entire
allowance is available for any loan that, in management's judgment, should be
charged off.
A loan is impaired when full payment under the loan terms is not expected.
Impairment is evaluated in total for smaller-balance loans of similar nature
such as residential mortgage, consumer, and credit card loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or at the fair
value of collateral if repayment is expected solely from the collateral. Loans
are evaluated for impairment when payments are delayed, typically 90 days or
more, or when it is probable that not all principal and interest amounts will be
collected according to the original terms of the loan.
PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. Depreciation expense is computed on the straight-line
method over asset useful lives. Maintenance and repairs are charged to expense
and improvements are capitalized.
OTHER REAL ESTATE OWNED: Real estate properties, other than Company premises,
acquired in collection of a loan are recorded at fair value at acquisition. Any
reduction to fair value from the carrying value of the related loan at the time
of acquisition is accounted for as a loan loss. After acquisition, a valuation
allowance reduces the reported amount to the lower of the initial amount or fair
value less costs to sell. Expenses, gains and losses on disposition, and changes
in the valuation allowance are reported in other expenses.
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.
SERVICING RIGHTS: Servicing rights represent the allocated value of servicing
rights retained on loans sold. Servicing rights are expensed in proportion to,
and over the period of, estimated net servicing revenues. Impairment is
evaluated based on the fair value of the rights, using groupings of the
underlying loans as to interest rates and then, secondarily, as to geographic
and prepayment characteristics. Any impairment of a grouping is reported as a
valuation allowance.
- --------------------------------------------------------------------------------
(Continued)
7.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTANGIBLE ASSETS: At December 31, 2001, the Company has $3,412,350 of
intangible assets related to a branch banking facility purchased in 1998.
Goodwill and core deposit intangible assets acquired are amortized using the
straight-line method over 15 years.
LONG-TERM ASSETS: These assets are reviewed for impairment when events indicate
the carrying amount may not be recoverable from future undiscounted cash flows.
If impaired, the assets are recorded at discounted amounts.
COMPREHENSIVE INCOME: Comprehensive income consists of net income and other
comprehensive income (loss). Other comprehensive income (loss) includes the net
change in net unrealized gains and losses on securities available for sale, net
of tax, which are also recognized as separate components of equity.
STOCK OPTION PLAN: The Company sponsors a stock option plan for executive
officers. Expense for employee compensation under the stock option plan is based
on Accounting Principles Board ("APB") Opinion 25 with expense reported only if
options are granted below market price at grant date. Proforma disclosures of
net income and earnings per common share are provided as if the fair value
method of Statement of Financial Accounting Standards ("SFAS") No. 123 was used
to measure expense for stock-based compensation. For further discussion see Note
11.
FAIR VALUES OF FINANCIAL INSTRUMENTS: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value estimates involve uncertainties and
matters of significant judgment regarding interest rates, credit risk,
prepayments, and other factors, especially in the absence of broad markets for
particular items. Changes in assumptions or in market conditions could
significantly affect the estimates.
CASH FLOW REPORTING: Cash and cash equivalents include cash on hand, demand
deposits with other financial institutions and federal funds sold. The Company
reports net cash flows for customer loan and deposit transactions,
interest-bearing time deposits with other financial institutions and short-term
borrowings with maturities of 90 days or less. For the years ended December 31,
2001 and 2000, the Company paid interest of $4,929,613 and $4,914,748 and income
taxes of $404,000 and $685,000.
DIVIDEND RESTRICTION: Banking regulations, which require the maintenance of
certain capital levels, may limit the amount of dividends that may be paid. For
regulatory capital requirements, see Note 14.
- --------------------------------------------------------------------------------
(Continued)
8.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
LOSS CONTINGENCIES: Loss contingencies, including claims and legal action
arising in the ordinary course of business, are recorded as liabilities when the
likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.
EARNINGS PER COMMON SHARE: Basic earnings per common share is net income divided
by the weighted average number of shares outstanding during the period. Diluted
earnings per share include the dilutive effect of additional potential common
shares issuable under stock options. The weighted average number of common
shares outstanding for basic and diluted earnings per share was as follows:
2001 2000
---- ----
Weighted average shares outstanding - basic 613,284 607,158
Effect of stock options 740 -
------------ ------------
Weighted average shares outstanding - diluted 614,024 607,158
============ ============
At December 31, 2000, there were 17,000 outstanding options not included in the
weighted average shares outstanding for diluted earnings per share because the
effect of the options was not dilutive.
NEW ACCOUNTING PRONOUNCEMENT: Beginning January 1, 2001, a new accounting
standard required all derivatives to be recorded at fair value. Unless
designated as hedges, changes in these fair values are recorded in the income
statement. Fair value changes involving hedges are generally 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 January 1, 2001 did not have a material effect because the Company
did not hold any derivatives at December 31, 2000 or during 2001.
A new accounting standard requires all business combinations to be recorded
using the purchase method of accounting for any transaction initiated after June
30, 2001. Under the purchase method, all identifiable tangible and intangible
assets and liabilities of the acquired company must be recorded at fair value at
date of acquisition, and the excess of cost over fair value of net assets
acquired is recorded as goodwill. Identifiable intangible assets must be
separated from goodwill. Identifiable intangible assets with finite useful lives
will be amortized under the new standard, whereas goodwill, both amounts
previously recorded and future amounts purchased, will cease being amortized
starting in 2002. Annual impairment testing will be required for goodwill with
impairment being recorded if the carrying amount of goodwill exceeds its implied
fair value. Adoption of this standard on January 1, 2002 will not have a
material effect on the Company's financial statements.
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(Continued)
9.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES
The amortized cost and fair value of securities available for sale as of
December 31 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
2001
U.S. Treasury and U.S.
Government agencies $ 12,003,005 $ 55,679 $ (5,772) $ 12,052,912
Obligations of states and
political subdivisions 4,100,093 41,138 (8,312) 4,132,919
Mortgage-backed securities 3,175,265 7,183 (9,688) 3,172,760
Equity securities 107,158 26,789 -- 133,947
------------ ------------ ------------ ------------
$ 19,385,521 $ 130,789 $ (23,772) $ 19,492,538
============ ============ ============ ============
2000
U.S. Treasury and U.S.
Government agencies $ 12,005,315 $ 10,923 $ (136,446) $ 11,879,792
Obligations of states and
political subdivisions 6,407,674 3,283 (85,124) 6,325,833
Mortgage-backed securities 1,379,674 -- (46,844) 1,332,830
------------ ------------ ------------ ------------
$ 19,792,663 $ 14,206 $ (268,414) $ 19,538,455
============ ============ ============ ============
The amortized cost and fair value of securities available for sale at December
31, 2001, by contractual maturity, are shown below. Equity securities and
securities not due at a single maturity date, primarily mortgage-backed
securities, are shown separately.
Amortized Fair
Cost Value
-------- -----
Due in one year or less $ 10,433,977 $ 10,431,954
Due after one year through five years 3,243,396 3,312,516
Due after five years through ten years 2,255,150 2,277,428
Due after ten years 170,575 163,933
Mortgage-backed securities 3,175,265 3,172,760
Equity securities 107,158 133,947
--------------- ----------------
$ 19,385,521 $ 19,492,538
=============== ================
- --------------------------------------------------------------------------------
(Continued)
10.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES (Continued)
Proceeds from sales and calls of securities available for sale during 2001 were
$10,444,268. Gross gains of $21,754 and gross losses of $8,309 were realized on
those sales. Proceeds from sales and calls of securities available for sale
during 2000 were $4,271,958. Gross gains of $18,643 and gross losses of $41,679
were realized on those sales.
Securities with an amortized cost of approximately $ 8,185,000 and $12,042,000
at December 31, 2001 and 2000 were pledged to secure public deposits and
securities sold under agreements to repurchase.
NOTE 3 - LOANS
Year-end loans are as follows:
2001 2000
---- ----
Business loans $ 58,977,311 $ 54,426,758
Real estate loans 17,236,857 19,317,151
Consumer loans 25,499,868 31,784,930
------------ ------------
Total loans $101,714,036 $105,528,839
============ ============
In the normal course of business, the Company has made loans to certain
directors, executive officers and their associates under terms consistent with
the Company's general lending policies. Loan activity related to these
individuals for 2001 is as follows:
Aggregate balance - January 1, 2001 $ 178,305
New loans 1,842,861
Repayments (145,590)
Other changes 656,121
-----------
Aggregate balance - December 31, 2001 $ 2,531,697
===========
Other changes relate to new individuals becoming a director or executive
officer.
- --------------------------------------------------------------------------------
(Continued)
11.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is as follows:
2001 2000
---- ----
Balance - January 1 $ 1,240,777 $ 1,147,158
Provision for loan losses charged to expense 431,500 373,000
Loans charged-off (469,994) (372,367)
Recoveries 188,550 92,986
----------- -----------
Balance - December 31 $ 1,390,833 $ 1,240,777
=========== ===========
Impaired loans are as follows:
2001 2000
----------- -----------
Year-end loans with allowance for loan losses allocated $ 372,682 $ 219,361
Amount of the allowance allocated 86,117 54,840
Average of impaired loans during the year 293,711 794,668
Loans past due 90 days and still accruing 142,369 26,789
Non-accrual loans 424,746 647,062
At year-ends 2001 and 2000, all impaired loans had allowance for loan losses
allocated. Interest income related to impaired loans recognized during the years
ended December 31, 2001 and 2000 was not material.
NOTE 5 - PREMISES AND EQUIPMENT
Year-end premises and equipment are as follows:
2001 2000
---- ----
Land $ 670,442 $ 670,442
Buildings and improvements 953,700 947,692
Furniture and equipment 1,182,033 1,159,392
Construction in progress -- 23,058
----------- -----------
Total cost 2,806,175 2,800,584
Accumulated depreciation and amortization (1,180,778) (1,066,486)
----------- -----------
$ 1,625,397 $ 1,734,098
=========== ===========
- --------------------------------------------------------------------------------
(Continued)
12.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 6 - DEPOSITS
Time deposits of $100,000 or more were $17,073,440 and $19,373,812 at year-end
2001 and 2000.
At year-end 2001, maturities of interest-bearing time deposits were as follows:
2002 $ 43,983,890
2003 12,754,357
2004 3,096,877
2005 1,456,341
2006 214,746
--------------
$ 61,506,211
==============
NOTE 7 - OTHER BORROWINGS
On July 26, 2000, the Company borrowed $2,735,000 from another financial
institution. At the discretion of the Company, the interest rate is based on
either the current London Interbank Offering Rate (LIBOR) or Prime Rate. If the
LIBOR is elected the rate will adjust every 90 or 180 days, and if Prime Rate is
elected the rate will adjust daily. The rate at December 31, 2001 was 4.25% per
annum, and based on Prime Rate. On December 1, 2000, the Company started making
27 quarterly principle and interest payments with a final balloon payment due at
the end of the loan term. The Company pledged 15,000 shares of common stock of
the Citizens National Bank of Norwalk as collateral for the borrowing. Upon the
consummation of the anticipated change in control during April 2002, as
discussed in Note 16, the entire outstanding balance of this borrowing will be
due immediately. At December 31, 2001, required annual principle payments were
as follows:
2002 $ 200,000
2003 200,000
2004 200,000
2005 200,000
2006 200,000
Thereafter 1,235,000
------------
$ 2,235,000
============
Additionally, a $14 million cash management advance revolving line of credit was
approved with the Federal Home Loan Bank. At December 31, 2001, no advances were
outstanding on the line. At December 31, 2000, $6,000,000 was outstanding on the
line. Collateral for the line and letter of credit consists of a blanket pledge
of all first-mortgage loans secured by one- to four-family residential
properties and all Federal Home Loan Bank stock.
- --------------------------------------------------------------------------------
(Continued)
13.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 8 - COMMITMENTS, CONTINGENCIES, CONCENTRATIONS, AND FINANCIAL
INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
Some financial instruments are used in the normal course of business to meet the
financing needs of customers and to reduce exposure to interest rate changes.
These financial instruments include commitments to extend credit and standby
letters of credit. These involve, to varying degrees, credit and interest-rate
risk more than the amount reported in the consolidated financial statements.
The Company has the following commitments outstanding (at market rate) as of
December 31:
2001 2000
---- ----
Unused commitments $ 16,848,000 $ 15,796,000
Exposure to credit loss if the other party does not perform is represented by
the contractual amount of these items.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment and
generally have fixed expiration dates. Collateral or other security is normally
not obtained for these financial instruments before their use, and many of the
commitments are expected to expire without being used. Standby letters of credit
are conditional commitments to guarantee a customer's performance to a third
party.
The Company is required by the Federal Reserve to maintain reserves consisting
of cash on hand and noninterest-bearing balances on deposit with the Federal
Reserve Bank. The required reserve balance at December 31, 2001 and 2000 was
$733,000 and $686,000.
At December 31, 2001 and 2000, the Company had holdings of $2,440,000 and
$1,454,000 in demand deposits and federal funds sold due from Bank One, N.A.
NOTE 9 - EMPLOYEE BENEFITS
The Bank has established a 401(k) plan covering substantially all employees. The
annual expense of the plan is based on 100% matching voluntary employee
contributions for the first 4% of individual compensation deferred and 50%
matching on the next 2% of voluntary employee compensation deferred. Employee
voluntary and employer matching contributions are vested at all times. In
addition, the employer may elect to make discretionary "Basic" and "Integrated"
contributions, which are fully vested after 5 years of service. The expense
related to this plan was $59,613 and $60,360 for 2001 and 2000.
- --------------------------------------------------------------------------------
(Continued)
14.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 10 - INCOME TAXES
The provision for income taxes is as follows:
2001 2000
---- ----
Federal
Current $ 436,669 $ 525,653
Deferred 236 (2,314)
--------- ---------
$ 436,905 $ 523,339
========= =========
The sources of gross deferred tax assets and
liabilities are as follows:
DECEMBER 31,
-------------------------
2001 2000
--------- ---------
Total deferred tax assets
Allowance for loan losses $ 472,883 $ 421,864
Deferred compensation 128,265 121,379
Net unrealized loss on securities
available for sale -- 86,431
Other 3,732 3,849
Total deferred tax liabilities
FHLB stock dividends (63,376) (51,170)
Depreciation (24,782) (17,931)
Deferred loan fees/cost (4,293) (7,362)
Net unrealized gain on securities
available for sale (36,386) --
Stock received in conversion transaction (36,434) --
Other (8,899) (3,297)
--------- ---------
Net deferred tax asset $ 430,710 $ 553,763
========= =========
The Company has sufficient taxes paid in current and prior years to warrant
recording the full deferred tax asset without a valuation allowance.
- --------------------------------------------------------------------------------
(Continued)
15.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 10 - INCOME TAXES (Continued)
Total provision for federal income tax differs from the expected amounts
computed by applying the statutory federal tax rate of 34% to income before
taxes. The reasons for this difference are as follows:
Years Ended December 31,
-----------------------------------------------------
2001 2000
----------------------- -----------------------
Amount Rate Amount Rate
------------ ------- ------------ ------
Tax provision at statutory rate $ 490,326 34.0% $ 584,447 34.0%
Tax-exempt interest income (44,993) (3.1) (65,135) (3.8)
Other (8,428) (0.6) 4,027 0.2
------------ ------- ------------ ------
Tax provision at effective rate $ 436,905 30.3% $ 523,339 30.4%
============ ======= ============ ======
NOTE 11 - STOCK OPTIONS
In 1997, the shareholders approved an incentive stock option plan for the
Company's executive officers, which provides for issue of up to 25,000 options.
In 2000, shareholders increased the amount of options available for grants to
50,000 options. Exercise price is the market price at the date of grant. The
maximum option term is ten years, and options generally vest over five years or
upon the death or disability of a participant. Option vesting is accelerated in
the event shareholders approve a change in control.
A summary of the activity in the plan is as follows:
2 0 0 1 2 0 0 0
------- -------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
Outstanding at beginning
of year 17,000 $ 19.82 17,800 $ 17.00
Granted -- -- 13,500 20.78
Exercised -- -- (7,000) 17.00
Forfeited -- -- (7,300) 17.41
-------------- -------------
Outstanding at end of year 17,000 19.82 17,000 19.82
============== =============
Options exercisable at
End of year 6,100 $ 18.57 2,700 $ 17.00
- --------------------------------------------------------------------------------
(Continued)
16.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 11 - STOCK OPTIONS (Continued)
Options outstanding at year-end 2001 were as follows.
Outstanding
-------------------------------
Weighted Average
Remaining
Exercise Contractual
Price Number Life (Years) Exercisable
----- ------ ------------ -----------
$ 17.00 4,500 6.2 3,600
20.00 5,500 8.6 1,100
21.50 7,000 8.1 1,400
Had compensation cost for stock options been measured using FASB Statement No.
123, net income and earnings per share would have been the pro forma amounts
indicated below. The pro forma effect may increase in the future if more options
are granted.
2001 2000
---- ----
Net income as reported $ 1,005,230 $ 1,195,623
Pro forma net income 993,313 1,190,665
Basic earnings per common share as reported 1.64 1.97
Proforma basic earnings per common share 1.62 1.96
Diluted earnings per common share as reported 1.64 1.97
Proforma diluted earnings per common share 1.62 1.96
The pro forma effects of options granted in 2000 are computed using
option-pricing models, using the following weighted-average assumptions as of
the grant date.
2000
----
Risk-free interest rate 6.41%
Expected option life 10 years
Dividend yield 3.74%
Expected stock price volatility --
Weighted average fair value of options
Granted during year $3.34
- --------------------------------------------------------------------------------
(Continued)
17.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table shows the estimated fair values and the related carrying
values of the Company's financial instruments at December 31, 2001 and 2000.
Items that are not financial instruments are not included.
2001 2000
---- ----
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- ------------- -------------- ---------------
Financial assets:
Cash and cash equivalents $ 7,380,986 $ 7,381,000 $ 4,884,947 $ 4,885,000
Securities available for sale 19,492,538 19,493,000 19,538,455 19,539,000
Other securities 736,200 736,000 700,300 700,000
Loans, net 100,323,203 101,805,211 104,288,062 103,343,000
Accrued interest receivable 669,213 669,000 936,684 937,000
Financial liabilities:
Demand and savings deposits (58,642,217) (58,642,000) (52,605,424) (52,605,000)
Time deposits (61,506,211) (62,264,000) (63,176,869) (63,296,000)
Securities sold under agreements
to repurchase (312,693) (313,000) (300,871) (301,000)
Federal Home Loan Bank
borrowings -- -- (6,000,000) (6,000,000)
Other borrowings (2,235,000) (2,235,000) (2,635,000) (2,635,000)
Accrued interest payable (451,649) (452,000) (477,464) (477,000)
For purposes of the above disclosures of estimated fair values, the following
assumptions were used. The estimated fair value approximates carrying amount for
all items except those described below. The estimated fair value for securities
available for sale is based on quoted market values for the individual
securities or for equivalent securities. The estimated fair value for loans is
based on estimates of the difference in interest rates the Company would charge
the borrowers for similar such loans with similar maturities, applied for an
estimated time period until the loan is assumed to reprice or be paid. The
estimated fair value for time deposits is based on estimates of the rate the
Company would pay on such deposits, applied for the time period until maturity.
The estimated fair value for other financial instruments and off-balance-sheet
loan commitments approximate cost and is not considered significant to this
presentation.
While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Company to have
disposed of such items, the estimated fair values would necessarily have been
achieved at those dates, since market values may differ depending on various
circumstances. The estimated fair values at December 31, 2001 and 2000 should
not necessarily be considered to apply at subsequent dates.
- --------------------------------------------------------------------------------
(Continued)
18.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
In addition, other assets and liabilities of the Company that are not defined as
financial instruments are not included in the above disclosures, such as
property and equipment and intangibles. In addition, nonfinancial instruments
typically not recognized in the financial statements nevertheless may have value
but are not included in the above disclosures. These include, among other items,
the estimated earnings power of core deposit accounts, the earnings potential of
loan servicing rights, the earnings potential of the Company's trust department,
the trained work force, customer goodwill and similar items.
NOTE 13 - OTHER COMPREHENSIVE INCOME
Other comprehensive income components and related taxes were as follows:
2001 2000
---- ----
Unrealized holding gain on securities
available for sale $ 374,670 $ 886,252
Reclassification adjustments for losses (gains)
included in net income (13,445) 23,036
-------------- --------------
Net unrealized gain 361,225 909,288
Tax effects (122,817) (309,158)
-------------- --------------
Total other comprehensive income $ 238,408 $ 600,130
============== ==============
NOTE 14 - REGULATORY MATTERS
The Bank is subject to regulatory capital requirements administered by federal
banking agencies. Capital adequacy guidelines and prompt corrective-action
regulations involve quantitative and qualitative measures of assets,
liabilities, and certain off-balance-sheet items calculated under regulatory
accounting practices.
The prompt corrective action regulations provide five classifications, including
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If only adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.
- --------------------------------------------------------------------------------
(Continued)
19.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 14 - REGULATORY MATTERS (Continued)
At year-end 2001 and 2000, actual capital levels (in thousands) and minimum
required levels of the Bank were:
Minimum Required
To Be Well
Minimum Required Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Regulations
------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
DECEMBER 31, 2001
- -----------------
Total capital (to risk weighted assets) $ 12,037 12.24% $ 7,868 8.0% $ 9,835 10.0%
Tier 1 capital (to risk weighted assets) 10,646 10.82 3,934 4.0 5,901 6.0
Tier 1 capital (to average assets) 10,646 7.79 5,465 4.0 6,831 5.0
DECEMBER 31, 2000
- -----------------
Total capital (to risk weighted assets) $ 11,329 10.96% $ 8,271 8.0% $ 10,339 10.0%
Tier 1 capital (to risk weighted assets) 10,088 9.76 4,135 4.0 6,203 6.0
Tier 1 capital (to average assets) 10,088 7.84 5,147 4.0 6,433 5.0
At year-end 2001 and 2000, the Bank was categorized as well capitalized.
Management believes that no events have occurred since December 31, 2001 that
would change the capital category.
NOTE 15 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
December 31, 2001 and 2000
2001 2000
----------- -----------
ASSETS
Cash $ 69,189 $ 24,992
Investment in subsidiary bank 14,128,570 13,623,492
----------- -----------
Total assets $14,197,759 $13,648,484
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Borrowings $ 2,235,000 $ 2,635,000
Other liabilities 63,761 20,610
----------- -----------
Total liabilities 2,298,761 2,655,610
Total shareholders' equity 11,898,998 10,992,874
----------- -----------
Total liabilities and shareholders' equity $14,197,759 $13,648,484
=========== ===========
- --------------------------------------------------------------------------------
(Continued)
20.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 15 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS (Continued)
CONDENSED STATEMENTS OF INCOME
Years ended December 31, 2001 and 2000
2001 2000
---- ----
Dividends from subsidiary bank $ 1,069,700 $ 621,500
Other income 659 1,323
-------------- --------------
1,070,359 622,823
Interest expense 163,474 254,264
Operating expenses 5,805 7,101
Merger expenses 333,815 -
-------------- --------------
INCOME BEFORE INCOME TAX BENEFIT AND EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARY BANK 567,265 361,458
Income tax benefit 171,295 88,561
-------------- --------------
INCOME BEFORE EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARY BANK 738,560 450,019
Equity in undistributed income of subsidiary bank 266,670 745,604
-------------- --------------
NET INCOME $ 1,005,230 $ 1,195,623
============== ==============
CONDENSED STATEMENTS OF CASH FLOWS
Years ended December 31, 2001 and 2000
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,005,230 $ 1,195,623
Adjustments to reconcile net income to net cash from
operating activities
Change in other assets and liabilities 43,151 93,411
Equity in undistributed net income of bank subsidiary (266,670) (745,604)
-------------- --------------
Net cash from operating activities 781,711 543,430
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings -- 2,735,000
Repayments of borrowings (400,000) (3,100,000)
Cash dividends paid to shareholders (368,089) (365,143)
Proceeds from sale of treasury stock 33,337 208,708
Acquisition of treasury stock (2,762) (37)
-------------- --------------
Net cash from financing activities (737,514) (521,472)
-------------- --------------
Net change in cash and cash equivalents 44,197 21,958
Cash and cash equivalents at beginning of year 24,992 3,034
-------------- --------------
Cash and cash equivalents at end of year $ 69,189 $ 24,992
============== ==============
- --------------------------------------------------------------------------------
(Continued)
21.
INDEPENDENT COMMUNITY BANC CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000
- --------------------------------------------------------------------------------
NOTE 16 - ACQUISITION
On November 2, 2001, the Company announced that it had entered into an Agreement
and Plan of Merger with First Citizens Banc Corp., Sandusky, Ohio, (First
Citizens). Under terms of the Agreement, the Company would merge with and into
First Citizens. In return, shareholders of the Company would receive 1.7 shares
of First Citizens common stock for each share of the Company's common stock that
they hold. The agreement is subject to approval by regulatory authorities as
well as the shareholders of both First Citizens and the Company. The merger is
anticipated to close in April 2002.
- --------------------------------------------------------------------------------
(Continued)
22.
First Citizens Banc Corp (FCBC)
Independent Community Banc Corporation (ICBC)
Pro Forma Condensed Combined Consolidated Balance Sheet
(Unaudited)
At December 31, 2001 (In thousands except per share data)
Pro Forma
Historical Historical Adjustments Footnote Pro Forma
Debit/
FCBC ICBC (Credit) Reference Combined
---- ---- ---------------- --------- --------
ASSETS
Cash and due from banks $19,227 $4,981 $ - $ 24,208
Federal funds sold 6,025 2,400 - 8,425
Interest-bearing deposits - 990 - 990
Securities available for sale 113,587 19,493 (125) (7) 132,955
Securities held to maturity 139 736 - 875
Loans held for sale 2,307 - - 2,307
Loans, net 331,347 100,323 360 (1) 432,030
Premises and equipment 7,003 1,626 (126) (2) 8,503
Goodwill 672 - 14,947 (3) (7) 15,619
Other identified intangible assets 871 3,412 (1,171) (4) 3,112
Accrued interest and other assets 6,493 1,667 65 (9) 8,225
-------- -------- --------- --------
TOTAL ASSETS $487,671 $135,628 $13,950 $637,249
======== ======== ========= ========
LIABILITIES
Deposits $410,178 $120,148 $ (982) (5) $531,308
Securities sold under repurchase agreements 10,311 313 - 10,624
Other borrowings 15,531 2,235 - 17,766
Accrued expenses and other liabilities 2,924 1,033 (735) (6) 4,692
-------- -------- --------- --------
TOTAL LIABILITIES 438,944 123,729 (1,717) 564,390
SHAREHOLDERS' EQUITY
Common stock 23,258 1,870 (22,262) (8) 47,390
Paid-in capital - 1,543 1,543 (8) -
Retained earnings 28,844 8,698 8,698 (8) 28,844
Treasury stock (4,919) (283) (283) (8) (4,919)
Accumulated other comprehensive income 1,544 71 71 (8) 1,544
-------- -------- --------- --------
TOTAL SHAREHOLDERS' EQUITY 48,727 11,899 (12,233) 72,859
-------- -------- --------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $487,671 $135,628 $ (13,950) $637,249
======== ======== ========= ========
First Citizens Banc Corp (FCBC)
Independent Community Banc Corporation (ICBC)
Pro Forma Condensed Combined Consolidated Income Statement
(Unaudited)
For the Year Ending December 31, 2001 (In thousands except per share data)
Pro Forma
Historical Historical Adjustments Footnote Pro Forma
FCBC ICBC Debit/(Credit) Reference Combined
---------- ---------- -------------- --------- ---------
Interest income $ 35,348 $ 9,921 $ 130 (1) $45,139
Interest expense 15,453 4,904 (693) (5) 19,664
-------- ------- --------- -------
Net interest income 19,895 5,017 (563) 25,475
Provision for loan losses 1,803 431 - 2,234
-------- ------- --------- -------
Net interest income after provision for loan losses 18,092 4,586 (563) 23,241
Noninterest income 6,117 1,070 - 7,187
Noninterest expense 16,933 4,214 377 (2)(4)(9) 21,524
-------- ------- --------- -------
Income before income taxes 7,276 1,442 (187) 8,905
Provision for income taxes 1,983 437 63 (10) 2,483
-------- ------- --------- -------
Net Income $ 5,293 $1,005 $(123) $ 6,421
======= ====== ===== =======
Earnings Per Share:
Basic $ 1.30 $1.64
======= ======
Diluted $ 1.30 $1.64
======= ======
Pro Forma Earnings Per Share
Basic (11) $ 1.25
=======
Diluted (11) $ 1.25
=======
Notes:
(1) Represents the estimated fair value adjustment related to the loan
portfolio and is assumed to amortize into interest income on a level
yield method over the estimated period to maturity or repricing of the
portfolio.
(2) Represents the estimated fair market value adjustment related to land
of ($155) and the office buildings of $29. Office buildings are assumed
to amortize on a straight-line basis over the estimated life of 40
years.
(3) Represents the estimate of the excess of the total direct acquisition
costs over the estimated fair value of the net assets acquired.
(4) Represents the elimination of the historical core deposit intangible
and goodwill of ICBC in the amount of $3,412 and the establishment of
the estimated core deposit intangible related to the acquisition in the
amount of $2,241, which is assumed to amortize into noninterest expense
on an accelerated basis over 10 years.
(5) Represents the estimated fair value adjustment related to deposits and
is assumed to amortize into interest expense on a level yield basis
over the estimated maturity of the deposits.
(6) Represents the accrual of certain estimated acquisition costs of $1,343
and stock issuance costs of $323, the related tax effect of $352 and
deferred taxes related to the purchase accounting adjustments of $579.
(7) Represents an adjustment to reflect the cost of ICBC shares previously
acquired by FCBC as a component of the total transaction cost.
(8) Represents the elimination of ICBC equity on a historical basis and the
issuance of an estimated 1,063,234 shares of FCBC based on an exchange
multiple of 1.7, less stock issuance costs of $323.
(9) Represents estimated value of non-compete agreements of $214 which will
be amortized over their life of 24 months and the elimination of merger
costs paid prior to December 31, 2001 by FCBC of $149.
(10) Represents the income tax effect of the estimated purchase accounting
adjustments using an effective rate of 34%.
(11) Basic and diluted earnings per share for the year ended December 31,
2001 have been computed based on 5,146,363 weighted average shares
outstanding.