EXHIBIT 99
THE DELAWARE COUNTY BANK AND
TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
Lewis Center, Ohio
FINANCIAL STATEMENTS
December 31, 2003 and 2002
Page 5
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM................... 7
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS..................... 8
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS...................................................... 9
NOTES TO FINANCIAL STATEMENTS....................................... 10
SUPPLEMENTARY INFORMATION
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)...... 16
Page 6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees
The Delaware County Bank and Trust Company
Employee 401(k) Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of The Delaware County Bank and Trust Company Employee 401(k) Retirement Plan
(the Plan) as of December 31, 2003 and 2002, and the related statement of
changes in net assets available for benefits for the years ended December 31,
2003 and 2002. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2003 and 2002, and the changes in net assets available for benefits
for the years ended December 31, 2003, and 2002, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basis financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Cincinnati, Ohio
June 25, 2004
Page 7
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2003 and 2002
- --------------------------------------------------------------------------------
2003 2002
---------- ----------
ASSETS
Investments at fair value (Note 4) $4,251,367 $3,827,969
Cash -- 7
Receivables:
Accrued income 1,231 3,148
Employer contributions 4,432 4,624
Employee contributions 14,016 13,048
---------- ----------
Total receivables 19,679 20,820
---------- ----------
Net assets available for benefits $4,271,046 $3,848,796
========== ==========
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Page 8
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years ended December 31, 2003 and 2002
- --------------------------------------------------------------------------------
2003 2002
ADDITIONS ----------- -----------
Additions to net assets attributed to:
Investment income
Net appreciation in fair value of investments (Note 4) $ 403,760 $ 255,387
Interest and dividend income 79,046 78,232
----------- -----------
Total investment income 482,806 333,619
Cash contributions:
Employee 354,561 359,310
Employer 115,967 127,855
----------- -----------
Total contributions 470,528 487,165
----------- -----------
Total additions 953,334 820,784
DEDUCTIONS
Benefits paid directly to participants (531,084) (390,488)
----------- -----------
Net increase 422,250 430,296
Net assets available for benefits
Beginning of year 3,848,796 3,418,500
----------- -----------
End of year $ 4,271,046 $ 3,848,796
=========== ===========
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
Page 9
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN
The following description of The Delaware County Bank and Trust Company Employee
401(k) Retirement Plan (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
GENERAL: The Plan is a defined contribution plan covering all eligible employees
of The Delaware County Bank and Trust Company (the "Company"). All employees who
are at least 20 years of age and complete 6 months of service are eligible to be
in the Plan. Each employee enters the plan on the first day of the plan quarter
following completion of the eligibility requirements. The Plan is subject to the
provisions of the Employee Retirement Security Act of 1974 (ERISA).
CONTRIBUTIONS: Participants may make salary deferral contributions at their
discretion up to 15% of their annual compensation. Participants direct the
investment of their contributions into various investment options offered by the
Plan. At the discretion of the Board of Directors, the Company matches the
participants' contributions up to a maximum of 6% of their annual compensation.
During 2003, the Company's matching contribution was 50% of employee
contributions up to the maximum of 6% of annual compensation. In addition, the
Board of Directors can provide for an additional Company contribution on a
discretionary basis. In 2003 there was no additional discretionary contribution.
PARTICIPANT ACCOUNTS: Each participant's account is credited with the
participant's own contributions, the Company's contributions and plan earnings
and losses. Allocations of the Company contributions are based on participant
compensation and 401(k) contributions. Earnings and losses are allocated based
on account balances. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's account.
RETIREMENT, DEATH AND DISABILITY: A participant is entitled to 100% of his or
her account balance upon retirement, death, or disability.
VESTING: Participants are immediately vested in their salary deferral
contribution and any earnings or losses thereon. Participants vest in Company
contributions and earnings or losses thereon as follows:
YEARS OF SERVICE VESTING PERCENTAGE
---------------- ------------------
Less than 1 0%
1 but less than 2 33%
2 but less than 3 66%
3 or more 100%
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(Continued)
Page 10
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Forfeitures of terminated participants' nonvested account balances are used to
reduce employer contributions. As of December 31, 2003, there were $15,440 of
forfeitures available to reduce future contributions.
PAYMENT OF BENEFITS: On termination of service with the Company, a participant
will receive a lump-sum amount equal to the value of his or her account.
LOAN PROVISIONS: Participants may borrow 50% of their vested account balance up
to a maximum of $50,000 minus any loan amounts repaid in the last 12 months. The
minimum loan request is $1,000 and interest is payable at the than prevailing
interest prime interest rate.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING: The financial statements of the Plan are prepared under the
accrual method of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION: The Plan's investments are stated
at fair value as estimated by the Plan's trustee. If available, quoted market
prices are used to value investments. Common stock of DCB Financial Corp. (the
"Corporation") is listed on the over-the-counter bulletin board. The value of
the Company's common stock is based on the last known transaction prior to the
date of each statement of net assets available for benefits. Stock price
reflects inter-dealer prices, without retail mark-up, mark-down or commissions;
and may not represent actual transactions.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
ESTIMATES: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the plan
administrator to make estimates and assumptions that affect certain reported
amounts and disclosures, and actual results may differ from these estimates. A
significant change may occur in the near term for the estimates of investment
valuation.
PAYMENT OF BENEFITS: Benefits are recorded when paid.
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(Continued)
Page 11
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
- --------------------------------------------------------------------------------
NOTE 3 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the provisions of the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA. In the event of
plan termination, participants would become 100% vested in their employer
contributions.
NOTE 4 - INVESTMENTS
The following table presents investments that represent 5% or more of the Plan's
net assets:
2003 2002
---- ----
INVESTMENTS AT FAIR VALUE AS DETERMINED
BY QUOTED MARKET PRICE:
Automated Cash Management Fund $ 805,577 $ 944,828
Federated Max Cap Fund 260,550 183,128
Federated Stock Trust Fund 314,291 232,571
Federated Stock and Bond Fund 306,570 255,351
INVESTMENTS AT ESTIMATED FAIR VALUE:
DCB Financial Corp common stock 1,736,275 1,637,175
The Plan's investments (including investments bought, sold, as well as held
during the year) appreciated by $403,760 as detailed below:
Common stock $ 86,815
Mutual Funds 316,945
--------
$403,760
========
During 2003, the Plan earned $79,046 of dividend and interest income.
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
Parties-in-interest are defined under Department of Labor (DOL) Regulations as
any fiduciary of the plan, any party rendering services to the plan, the
employer, and certain others. The Delaware County Bank and Trust Company, the
employer, serves as the Plan trustee and is the custodian of the Plan assets.
Transactions during the year with parties-in-interest included investment in the
employer's common stock and contributions made by the employer.
Page 12
At December 31, 2003, the Plan owned 87,250 shares of DCB Financial Corp common
stock, valued at $19.90 per share for a total of $1,736,275. DCB Financial Corp
is deemed a party in interest. At December 31, 2002,the Plan owned 87,316 shares
of DCB Financial Corp common stock, value at $18.75 per share for a total of
$1,637,175. Expenses incurred in the administration of the Plan are paid by the
Company on behalf of the Plan.
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(Continued)
Page 13
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002
- --------------------------------------------------------------------------------
NOTE 6 - TAX STATUS
The Internal Revenue Service has determined and informed the Company by letter
dated January 4, 2000, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
document is in the process of being restated for recent law changes. The Plan
Sponsor believes the Plan, as amended and restated, is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
that the Plan is qualified and the related trust is tax-exempt.
Page 14
SUPPLEMENTARY INFORMATION
Page 15
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
- --------------------------------------------------------------------------------
Name of plan sponsor: THE DELAWARE COUNTY BANK AND TRUST COMPANY
Employer identification number: 31-4376006
Three-digit plan number: 002
(c)
Description of
Investment including
(b) Maturity Date, Rate of (e)
Identity of Issue Interest Collateral, Par (d) Current
(a) or Borrower or Maturity Value Cost Value
- --- ----------- ----------------- ---- -----
Federated Funds Federated Money Market Fund @ $ 87
Investment in 87 shares of a
registered investment company
Federated Funds Federated Investors Auto Cash @ 805,577
Management Fund
Investment in 805,577 shares of a
registered investment company
Federated Funds Federated High Yield Trust Fund @ 36,647
Investment in 6,057 shares of a
registered investment company
Federated Funds Federated Bond Fund @ 78,494
Investment in 8,597 shares of a
registered investment company
Federated Funds Federated Stock Trust Fund @ 314,291
Investment in 9,171 shares of a
registered investment company
Federated Funds Federated Equity Income Fund @ 105,294
Investment in 6,597 shares of a
registered investment company
Federated Funds Federated Equity Funds - Growth @ 166,823
Strategy A
Investment in 6,350 shares of a
registered investment company
* Denotes parties-in-interest to the Plan.
@ Participant-directed investment. Cost basis disclosure not required.
Page 16
THE DELAWARE COUNTY BANK AND TRUST COMPANY
EMPLOYEE 401(k) RETIREMENT PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
- --------------------------------------------------------------------------------
Name of plan sponsor: THE DELAWARE COUNTY BANK AND TRUST COMPANY
Employer identification number: 31-4376006
Three-digit plan number: 002
(c)
Description of
Investment including
(b) Maturity Date, Rate of (e)
Identity of Issue Interest Collateral, Par (d) Current
(a) or Borrower or Maturity Value Cost Value
- --- ----------- ----------------- ---- -----
Federated Funds Federated Kaufmann Fund @ 172,971
Investment in 34,873 shares of a
registered investment company
Federated Funds Federated Equity Fund @ 70,103
Communications Technology Class A
Investment in 13,639 shares of a
registered investment company
Federated Funds Federated Max Cap Fund @ 260,550
Investment in 11,595 shares of a
registered investment company
Federated Funds Federated International Equity Fund @ 101,923
Investment in 6,614 shares of a
registered investment company
Federated Funds Federated Stock & Bond Fund @ 306,570
Investment in 16,984 shares of a
registered investment company
* DCB Financial Corp DCB Financial Corp Common Stock @ 1,736,275
Investment in 87,250 shares of common
stock
* Participant Notes Debt obligations of Plan participants
with interest rates ranging from 6.5%
to 9.5% 95,761
----------
Total $4,251,366
==========
* Denotes parties-in-interest to the Plan.
@ Participant-directed investment. Cost basis disclosure not required.
Page 17