UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____ to _____.
Commission file number: 0-28648
Ohio State Bancshares, Inc.
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(Exact name of small business issuer as specified in its charter)
Ohio 34-1816546
- --------------------------------- --------------------------------------
(State or other jurisdiction of I.R.S. Employer Identification Number)
incorporation or organization)
111 South Main Street, Marion, Ohio 43302
-----------------------------------------
(Address of principal executive offices)
(740) 387-2265
---------------------------
(Issuer's telephone number)
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common stock, $10.00 par value 190,000 common shares
outstanding at May 10, 2003
Transitional Small Business Disclosure Format (check one):
Yes No X
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OHIO STATE BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2003
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets ........................ 3
Condensed Consolidated Statements of Income................... 4
Condensed Consolidated Statements of Changes in
Shareholders' Equity ....................................... 5
Condensed Consolidated Statements of Cash Flows .............. 6
Notes to the Condensed Consolidated Financial Statements ..... 7
Item 2. Management's Discussion and Analysis........................... 10
Item 3. Controls and Procedures........................................ 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................. 15
Item 2. Changes in Securities......................................... 15
Item 3. Defaults Upon Senior Securities............................... 15
Item 4. Submission of Matters to a Vote of Security Holders........... 15
Item 5. Other Information............................................. 15
Item 6. Exhibits and Reports on Form 8-K.............................. 15
SIGNATURES .......................................................... 16
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2003 2002
------------ ------------
ASSETS
Cash and due from financial institutions $ 3,126,419 $ 3,636,558
Interest-earning demand deposits 2,195,741 2,135,048
Federal funds sold 577,000 1,661,000
------------ ------------
Cash and cash equivalents 5,899,160 7,432,606
Interest-earning deposits 771,621 866,270
Securities available for sale 28,495,942 26,671,576
Securities held to maturity (fair value March 31, 2003 -
$5,998,758, December 31, 2002 - $6,016,890) 5,794,621 5,792,660
Loans, net 61,833,674 60,544,867
Premises and equipment, net 1,432,107 1,358,832
Accrued interest receivable 690,990 607,688
Other assets 1,424,015 1,458,422
------------ ------------
$106,342,130 $104,732,921
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 8,344,835 $ 6,813,332
Interest-bearing 78,308,827 78,076,143
------------ ------------
Total 86,653,662 84,889,475
Borrowings 8,851,695 8,928,208
Accrued interest payable 130,083 123,714
Other liabilities 335,792 572,438
------------ ------------
Total liabilities 95,971,232 94,513,835
Shareholders' equity
Common stock, $10.00 par value; 500,000 shares authorized;
190,000 shares issued and outstanding 1,900,000 1,900,000
Additional paid-in capital 5,045,227 5,045,227
Retained earnings 3,217,490 2,997,492
Accumulated other comprehensive income 208,181 276,367
------------ ------------
Total shareholders' equity 10,370,898 10,219,086
------------ ------------
$106,342,130 $104,732,921
============ ============
See accompanying notes to the consolidated financial statements.
3.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
---------
2003 2002
---------- ----------
Interest and dividend income
Loans, including fees $1,171,611 $1,223,446
Taxable securities 273,483 235,383
Nontaxable securities 77,475 58,435
Federal funds sold and other 20,921 14,364
---------- ----------
Total interest and dividend income 1,543,490 1,531,628
Interest expense
Deposits 471,795 548,910
Other borrowings 87,074 24,097
---------- ----------
Total interest expense 558,869 573,007
---------- ----------
Net interest income 984,621 958,621
Provision for loan losses 105,000 100,000
---------- ----------
Net interest income after provision for loan losses 879,621 858,621
Noninterest income
Fees for customer services 138,400 119,414
Other 26,350 19,860
---------- ----------
Total noninterest income 164,750 139,274
Noninterest expense
Salaries and employee benefits 379,706 340,650
Occupancy and equipment 137,584 128,259
Office supplies 39,043 36,998
Professional fees 25,255 35,808
Advertising and public relations 27,467 16,994
Taxes, other than income 25,400 17,750
Loan collection and repossessions 28,029 18,314
Credit card processing 21,054 18,929
Director expenses 12,869 12,480
Other 72,169 73,557
---------- ----------
Total noninterest expense 768,576 699,739
---------- ----------
Income before income taxes 275,795 298,156
Income tax expense 55,797 83,144
---------- ----------
Net income $ 219,998 $ 215,012
========== ==========
Basic and diluted earnings per share $ 1.16 $ 1.47
========== ==========
Weighted average shares outstanding 190,000 146,000
See accompanying notes to the condensed consolidated financial statements.
4.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Unaudited)
Three Months Ended
March 31,
---------
2003 2002
------------ ------------
Balance at beginning of period $ 10,219,086 $ 6,215,009
Comprehensive income:
Net income 219,998 215,012
Change in net unrealized gain (loss) on
securities available for sale, net of
reclassification and tax effects (68,186) (98,464)
------------ ------------
Total comprehensive income 151,812 116,548
------------ ------------
Balance at end of period $ 10,370,898 $ 6,331,557
============ ============
See accompanying notes to the condensed consolidated financial statements.
5.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
---------
2003 2002
----------- -----------
Cash flows from operating activities
Net income $ 219,998 $ 215,012
Adjustments to reconcile net income to net cash from
operating activities
Net amortization of securities 54,830 12,304
Provision for loan losses 105,000 100,000
Depreciation and amortization 55,724 52,808
Federal Home Loan Bank stock dividends (5,100) (3,200)
Change in deferred loan costs 10,331 2,224
Change in accrued interest receivable (83,302) (64,500)
Change in accrued interest payable 6,369 (36,291)
Change in other assets and other liabilities (148,413) 25,008
----------- -----------
Net cash from operating activities 215,437 303,365
Cash flows from investing activities Securities available for sale:
Purchases (6,350,230) (1,012,349)
Maturities, prepayments and calls 4,364,494 567,317
Securities held to maturity:
Purchases -- (534,133)
Loan originations and payments, net (1,422,838) (445,867)
Maturity of certificate of deposit 101,016 --
Purchases of premises and equipment (128,999) (31,017)
----------- -----------
Net cash from investing activities (3,436,557) (1,456,049)
Cash flows from financing activities
Net change in deposits 1,764,187 (585,607)
Principle repayments of long-term borrowings (76,513) (1,006,663)
----------- -----------
Net cash from financing activities 1,687,674 (1,592,270)
----------- -----------
Net change in cash and cash equivalents (1,533,446) (2,744,954)
Cash and cash equivalents at beginning of period 7,432,606 8,202,396
----------- -----------
Cash and cash equivalents at end of period $ 5,899,160 $ 5,457,442
=========== ===========
Supplemental cash flow information:
Interest paid $ 552,500 $ 609,298
Income taxes paid 315,000 60,000
Supplemental noncash disclosures:
Transfers from loans to other real estate owned and repossessions $ 18,700 $ 37,455
See accompanying notes to the condensed consolidated financial statements.
6.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements are prepared without audit and reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the consolidated financial position of Ohio State Bancshares, Inc. at March 31,
2003, and its results of operations and cash flows for the periods presented.
All such adjustments are normal and recurring in nature. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions of Form 10-QSB and, therefore, do not purport to contain all
necessary financial disclosures required by accounting principles generally
accepted in the United States of America that might otherwise be necessary in
the circumstances, and should be read in conjunction with the consolidated
financial statements and notes thereto of Ohio State Bancshares, Inc. for the
year ended December 31, 2002, included in its 2002 Annual Report. Reference is
made to the accounting policies of Ohio State Bancshares, Inc. described in the
notes to consolidated financial statements contained in its 2002 Annual Report.
Ohio State Bancshares, Inc. ("Corporation") has consistently followed these
policies in preparing this Form 10-QSB. Income tax expense is based on the
effective tax rate expected to be applicable for the entire year.
NOTE 2 - SECURITIES
Securities at March 31, 2003 and December 31, 2002 were as follows:
March 31, 2003
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Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
AVAILABLE FOR SALE
U.S. Treasury $ 100,811 $ 6,705 $ -- $ 107,516
U.S. government and federal agencies 10,838,688 164,432 (22,275) 10,980,845
Mortgage-backed 14,755,166 211,088 (19,814) 14,946,440
Corporate 1,986,810 3,699 (28,408) 1,962,101
----------- ----------- ----------- -----------
Total debt securities 27,681,475 385,924 (70,497) 27,996,902
Other securities 499,040 -- -- 499,040
----------- ----------- ----------- -----------
Total $28,180,515 $ 385,924 $ (70,497) $28,495,942
=========== =========== =========== ===========
Gross Gross
Carrying Unrecognized Unrecognized Fair
Amount Gains Losses Value
HELD TO MATURITY
State and municipal $ 5,794,621 $ 215,248 $ (11,111) $ 5,998,758
----------- ----------- ----------- -----------
(Continued)
7.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - SECURITIES (Continued)
December 31, 2002
----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
AVAILABLE FOR SALE
U.S. Treasury $ 100,831 $ 7,674 $ -- $ 108,505
U.S. government and federal agencies 7,976,371 189,449 (725) 8,165,095
Mortgage-backed 16,228,816 235,214 (5,041) 16,458,989
Corporate 1,452,881 115 (7,949) 1,445,047
----------- ----------- ----------- -----------
Total debt securities 25,758,899 432,452 (13,715) 26,177,636
Other securities 493,940 -- -- 493,940
----------- ----------- ----------- -----------
Total $26,252,839 $ 432,452 $ (13,715) $26,671,576
=========== =========== =========== ===========
Gross Gross
Carrying Unrecognized Unrecognized Fair
Amount Gains Losses Value
HELD TO MATURITY
State and municipal $ 5,792,660 $ 232,171 $ (7,941) $ 6,016,890
=========== =========== =========== ===========
NOTE 3 - LOANS
Loans at March 31, 2003 and December 31, 2002 were as follows:
March 31, December 31,
2003 2002
------------ ------------
Commercial $ 8,485,122 $ 8,261,356
Installment 22,696,781 23,107,796
Real estate 30,209,491 28,587,569
Credit card 713,379 791,877
Other 32,378 50,295
------------ ------------
62,137,151 60,798,893
Net deferred loan costs 528,961 539,292
Allowance for loan losses (832,438) (793,318)
------------ ------------
$ 61,833,674 $ 60,544,867
============ ============
(Continued)
8.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION; ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - LOANS (Continued)
Activity in the allowance for loan losses for the three months ended March 31,
2003 and 2002 was as follows:
2003 2002
--------- ---------
Balance - January 1 $ 793,318 $ 713,988
Loans charged-off (87,958) (116,308)
Recoveries 22,078 15,412
Provision for loan losses 105,000 100,000
--------- ---------
Balance - March 31 $ 832,438 $ 713,092
========= =========
Impaired loans were as follows:
March 31, December 31,
2003 2002
-------- --------
Balance of impaired loans with allocated allowance $629,395 $624,886
Amount of allowance allocated 31,470 31,244
Balance of accrued interest on impaired loans 41,538 35,804
Impaired loans at both dates shown above represent loans to a single borrower.
Due to the collateral position of these loans, management has not placed these
loans on nonaccrual status.
Nonperforming loans were as follows:
March 31, December 31,
2003 2002
-------- --------
Loans past due over 90 days still on accrual $780,766 $706,505
Loans on nonaccrual 302,180 227,801
Nonperforming loans include both smaller balance homogeneous loans that are
collectively evaluated for impairment and individually classified impaired
loans.
9.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
The following discussion focuses on the consolidated financial condition of Ohio
State Bancshares, Inc. at March 31, 2003, compared to December 31, 2002, and the
consolidated results of operations for the three months ended March 31, 2003,
compared to the same period in 2002. The purpose of this discussion is to
provide the reader with a more thorough understanding of the consolidated
financial statements than what could be obtained from an examination of the
financial statements alone. This discussion should be read in conjunction with
the interim consolidated financial statements and related footnotes.
When used in this Form 10-QSB or in future filings by the Corporation with the
Securities and Exchange Commission, in press releases or other public or
shareholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project,"
"believe," or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Corporation wishes to caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date made,
and to advise readers that various factors, including regional and national
economic conditions, changes in levels of market interest rates, credit risks of
lending 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 publicly release the result of any revisions which may be made to
any forward-looking statements to reflect occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
See Exhibit 99, which is incorporated herein by reference.
The Corporation is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on the liquidity,
capital resources or operations except as discussed herein.
FINANCIAL CONDITION
The Corporation has experienced a 1.54% increase in total assets since December
31, 2002, as total assets increased $1,609,000 from $104,733,000 at December 31,
2002 to $106,342,000 at March 31, 2003. Most of this growth is attributable to a
$1,824,000, or 6.84%, increase in securities available for sale and a
$1,289,000, or 2.13%, increase in net loans partially offset by a decrease in
cash and cash equivalents of $1,533,000, or 20.63%. Funding this net growth in
assets was a $1,764,000, or 2.08%, increase in total deposits.
Securities available for sale and securities held to maturity increased
$1,826,000, or 5.63%, from December 31, 2002 through March 31, 2003. This
increase is almost entirely from securities available for sale. Management has
moved liquidity out of the federal funds market and from cash flows on the
mortgage-backed security portfolio and invested in short-term U.S. government
and federal agency securities. This move was done to maintain a high level of
liquidity and receive a higher yield than obtained through federal funds. During
the first quarter of 2003, federal funds carried an average rate of 1.24% prior
to correspondent bank transaction costs.
Net loans increased $1,289,000, or 2.13%, during the period from December 31,
2002 to March 31, 2003. This is primarily due to an increase of $1,621,000 in
real estate loans partially offset by a decrease in installment loans of
$411,000. The increase in real estate loans is the result of management's effort
to increase its holdings in commercial real estate.
Total deposits increased $1,764,000, or 2.08%, from December 31, 2002 to March
31, 2003. The increase in deposits was primarily due to the increase in
noninterest-bearing transaction accounts.
10.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The operating results of the Corporation are affected by general economic
conditions, the monetary and fiscal policies of federal agencies and the
regulatory policies of agencies that regulate financial institutions. The
Corporation's cost of funds is influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
influenced by consumer and business demand, which, in turn, is affected by the
interest rates at which such loans are made, general economic conditions and the
availability of funds for lending activities.
The Corporation's net income is primarily dependent upon its net interest
income, which is the difference between interest income generated on
interest-earning assets and interest expense incurred on interest-bearing
liabilities. Provisions for loan losses, service charges, gains on the sale of
assets and other income, noninterest expense and income taxes also affect net
income.
Net income for the three months ended March 31, 2003 was $220,000, or $5,000
more than the same period in 2002. The reason for the increase in earnings was
primarily due to an increase in net interest income of $26,000, noninterest
income of $26,000, and a decrease in federal income taxes of $27,000 partially
offset by an increase in provisions for loan losses of $5,000 and an increase in
noninterest expense of $69,000.
Net interest income is the largest component of the Corporation's income and is
affected by the interest rate environment and the volume and composition of
interest-earning assets and interest-bearing liabilities. Net interest income
increased by $26,000, or 2.71% for the three months ended March 31, 2003
compared to the same period in 2002. The increase in net interest income is
attributable to increased average earning asset balances, partially offset by a
decrease in the net yield on interest-earning assets. The decrease in the net
yield on interest earning assets is due to a shorter duration of
interest-earning assets compared to highly competitive certificate of deposit
rates used to encourage customers to invest in longer term deposit products. The
following table shows the average balances and net yields on interest-earning
assets for the three months ended March 31, 2003 and 2002.
1st Quarter 1st Quarter
2003 2002
---- ----
(A) Average interest-earning assets $99,772,000 $82,794,000
(B) Annualized net interest income 3,993,000 3,888,000
Net Yield on interest-earning assets (B/A) 4.00% 4.70%
Noninterest income was up $26,000, or 18.29%, for the three months ended March
31, 2003 versus the same period in 2002. $19,000 of the increase is attributable
to fees for customer services. This is the result of growth in the number of
deposit accounts opened along with the continuing success of the Bounce
Protection program.
Noninterest expense was up $69,000, or 9.84%, for the three months ended March
31, 2003 versus the same period in 2002. The differences were due to increases
in salaries and employee benefits, occupancy and equipment, advertising, and
loan collection expenses partially offset by a decrease in professional fees.
Salaries and employee benefits increased by $39,000, or 11.47%, due to the
increase of middle management positions since March 31, 2002, higher health care
and retirement expenses, and normal raises. Occupancy and equipment was up
$9,000, or 7.27%, and advertising was up $10,000, or 61.63%, both due to the
general growth of the Corporation. Loan collection expenses rose $10,000, or
53.05%, due to higher attorney fees relating to commercial and commercial real
estate collections. In periods when collection procedures involve consumer loans
only, collection costs are considerably less. The decrease in professional fees
is due to the added middle management personnel which lessons the need for the
outsourcing of professional services.
11.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Federal income taxes decreased by $27,000 and the effective tax rate fell from
27.89% to 20.23% for the three months ended March 31, 2002 and 2003. The reason
for this decrease in the effective tax rate was due to an increase in nontaxable
interest income of 32.58% for the two periods being compared. Also, with
decreasing costs of interest-bearing liabilities, a higher percentage of this
nontaxable interest income is permanently excluded for federal income tax
purposes.
CAPITAL RESOURCES
The Bank is subject to regulatory capital requirements administered by federal
banking agencies. Capital adequacy guidelines and prompt corrective action
regulations involve quantitative measures of assets, liabilities and certain
off-balance-sheet items calculated under regulatory accounting practices.
Capital amounts and classifications are also subject to qualitative judgments by
regulators about components, risk weightings and other factors, and regulators
can lower classifications in certain cases. Failure to meet various capital
requirements can initiate regulatory action having a direct material affect on
the operations of the Bank.
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 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. The minimum
requirements are:
Capital to risk-
weighted assets
--------------- Tier 1 capital
Total Tier 1 to average assets
----- ------ -----------------
Well capitalized 10% 6% 5%
Adequately capitalized 8% 4% 4%
Undercapitalized 6% 3% 3%
At March 31, 2003 and December 31, 2002, the actual capital ratios for the Bank
were:
March 31, December 31,
2003 2002
--------- ------------
Total capital to risk-weighted assets 12.7% 12.7%
Tier 1 capital to risk-weighted assets 11.5 11.5
Tier 1 capital to average assets 7.3 7.3
At March 31, 2003 and December 31, 2002, the Bank was categorized as well
capitalized.
12.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY
Liquidity management focuses on the ability to have funds available to meet the
loan and depository transaction needs of the Bank's customers and the
Corporation's other financial commitments. Cash and cash equivalent assets
(which include deposits this Bank maintains at other banks, federal funds sold
and other short-term investments) totaled $5,899,000 at March 31, 2003 and
$7,433,000 at December 31, 2002. These assets provide the primary source of
funds for loan demand and deposit balance fluctuations. Additional sources of
liquidity are securities classified as available for sale and access to Federal
Home Loan Bank advances, as the Bank is a member of the Federal Home Loan Bank
of Cincinnati.
Taking into account the capital adequacy, profitability and reputation
maintained by the Corporation, available liquidity sources are considered
adequate to meet current and projected needs. See the Condensed Consolidated
Statements of Cash Flows for a more detailed review of the Corporation's sources
and uses of cash.
13.
OHIO STATE BANCSHARES, INC.
PART I - FINANCIAL INFORMATION;
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, the Corporation
carried out an evaluation, under the supervision and with the participation of
the Corporation's management, including the Corporation's President and Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Corporation's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14(c) and 15d-14(c). Based upon that
evaluation, the President and Chief Executive Officer and Chief Financial
Officer concluded that the Corporation's disclosure controls and procedures are,
to the best of their knowledge, effective to ensure that information required to
be disclosed by the Corporation in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that there were no significant changes in
the Corporation's internal controls or in other factors that could significantly
affect its internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
14.
OHIO STATE BANCSHARES, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 2003
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
-----------------
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
---------------------
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
-------------------------------
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders: There
are no matters required to be reported under this item.
Item 5 - Other Information:
-----------------
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibit 99 - Safe Harbor Under Private Securities
Litigation Reform Act of 1995.
(b) Exhibit 99.1 - Chief Executive Officer Certification
(c) Exhibit 99.2 - Chief Financial Officer Certification
(d) No current reports on Form 8-K were filed by the small
business issuer during the quarter ended March 31, 2003.
15.
OHIO STATE BANCSHARES, INC.
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.
OHIO STATE BANCSHARES, INC.
-------------------------------------------
(Registrant)
Date: May 10, 2003 /s/ Gary E. Pendleton
---------------------- -------------------------------------------
(Signature)
Gary E. Pendleton
President and Chief Executive Officer
Date: May 10, 2003 /s/ Todd M. Wanner
---------------------- -------------------------------------------
(Signature)
Todd M. Wanner
Vice President and Chief Financial Officer
16.
OHIO STATE BANCSHARES, INC.
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Gary E. Pendleton, President and Chief Executive Officer of Ohio State
Bancshares, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ohio State
Bancshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors:
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date or our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ Gary E. Pendleton
- ---------------------------
Gary E. Pendleton
Chief Executive Officer
May 10, 2003
17.
OHIO STATE BANCSHARES, INC.
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Todd M. Wanner, Chief Financial Officer of Ohio State Bancshares, Inc.,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Ohio State
Bancshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors:
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date or our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ Todd M. Wanner
- ------------------------------
Todd M. Wanner
Chief Financial Officer
May 10, 2003
18.
OHIO STATE BANCSHARES, INC.
Index to Exhibits
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
- -------------- ----------- -----------
99 Safe Harbor Under the Private Incorporated by reference to
Securities Litigation Reform Act Exhibit 99 to Annual Report
of 1995 on Form 10-KSB for the year ended
December 31, 1999 filed by the Small
Business Issuer on March 29, 2000.
99.1 Section 906 certification of the Attached
Sarbanes-Oxley Act of 2002 -
Chief Executive Officer
99.2 Section 906 certification of the Attached
Sarbanes-Oxley Act of 2002 -
Chief Financial Officer
19.