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FORM 10-Q -- QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AS LAST AMENDED IN REL. NO. 34-26589, EFF. 4/12/89)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the period ended Sept. 30, 1995
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934.
For the transition period from to
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Commission File Number: 0-13655
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Security Banc Corporation
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(Exact name of registrant as specified in its charter)
Ohio 31-1133284
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 South Limestone Street, Springfield, OH 45502
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(Address of principal executive offices) (Zip Code)
(513) 324-6920
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes
of common stock.
Class Outstanding at Oct. 17, 1995
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Common Stock, $3.125 Par Value 5,106,134
(10Q-1)
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SECURITY BANC CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets
Sept. 30, 1995 and December 31, 1994 3
Consolidated Condensed Statements of Income
for the three (3) months ended Sept. 30, 1995
and Sept. 30, 1994 4
Consolidated Condensed Statements
of Income for the nine (9) months ended Sept. 30, 1995
and Sept. 30, 1994 5
Consolidated Condensed Statements of Cash
Flows for the nine (9) months ended Sept. 30,
1995 and Sept. 30, 1994 6
Notes to Consolidated Condensed Financial
Statements. 7
Item 2 - Management's Discussion and Analysis of
Condition and Results of Operations 8-9
Part II - Other Information 10
Signature 11
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(10Q-2)
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PART I ITEM 1 - FINANCIAL STATEMENTS
SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
Sept. 30 Dec 31
1995 1994
-------- --------
(in thousands)
ASSETS
Cash and due from banks $21,621 $24,839
Federal funds sold 21,250 4,250
-------- --------
TOTAL CASH AND CASH EQUIVALENT 42,871 29,089
-------- --------
Interest bearing deposits 0 686
Investments (Market Value $151,389 @ 9-30-95
$164,318 @ 12-31-94) 149,378 162,289
Loans: Commercial and agricultural 149,427 145,942
Real estate and mortgage 86,940 89,091
Consumer 78,564 79,018
-------- --------
TOTAL LOANS 314,931 314,051
Less: Allowance for Loan Losses 3,891 3,546
-------- --------
NET LOANS 311,040 310,505
Premises & Equipment 5,301 5,136
Other Assets 11,641 13,276
-------- --------
TOTAL ASSETS $520,231 $520,981
======== ========
LIABILITIES
Non-interest bearing deposits $75,346 $79,532
Interest bearing demand deposits 69,423 79,751
Savings deposits 103,729 112,696
Time deposits, $100,000 and over 20,262 16,567
Other time deposits 148,545 138,221
-------- --------
TOTAL DEPOSITS 417,305 426,767
Fed funds purchased and securities sold
under agreement to repurchase 29,822 27,284
Other liabilities 2,222 2,734
-------- --------
TOTAL LIABILITIES $449,349 $456,785
-------- --------
SHAREHOLDERS'S EQUITY
Common Stock ($3.125 Par Value, 1995; $6.25 Par Value, 1994) $16,708 $16,693
Shares authorized 11,000,000
Shares issued 5,346,734 - 1995
2,670,182 - 1994
Surplus 17,880 17,842
Retained earnings 39,482 33,823
Net unrealized gain (loss) on investment securities classified
as available for sale (net of income tax) 5 (969)
Less: Treasury Stock, 240,600 shares in 1995
and 120,300 in 1994 3,193 3,193
-------- --------
TOTAL SHAREHOLDERS' EQUITY 70,882 64,196
-------- --------
TOTAL LIABILITIES &
SHAREHOLDER'S EQUITY $520,231 $520,981
======== ========
See notes to Consolidated Condensed Financial Statements
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(10Q-3)
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SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended
Sept 30, Sept 30,
1995 1994
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(in thousands except
per share data)
Interest Income $10,110 $9,011
Interest Expense 3,640 2,925
------- -------
NET INTEREST INCOME 6,470 6,086
Provision for loan losses 200 200
------- -------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 6,270 5,886
OTHER OPERATING INCOME
Trust Income 335 298
Service charges on deposit accounts 555 606
Securities, Gains 106 0
Other charges, rents and fees 192 138
------- -------
TOTAL OTHER OPERATING INCOME 1,188 1,042
OPERATING EXPENSES
Salaries and employee benefits 1,629 1,513
Equipment and occupancy expense 365 339
Other operating expense 1,143 1,336
------- -------
TOTAL OPERATING EXPENSE 3,137 3,188
INCOME BEFORE TAXES 4,321 3,740
Income taxes (See Note 1) 1,255 1,044
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NET INCOME 3,066 2,696
------- -------
Per share* $ .60 $ .53
Cash dividends
per share $ .17 $ .15
<FN>
*Earnings per common share, adjusted for the 2 for 1 stock split, is
calculated using weighted average shares outstanding of 5,106,134 for 1995 and
5,099,764 for 1994.
See notes to Consolidated Condensed Financial Statements.
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(10Q-4)
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SECURITY BANC CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(UNAUDITED)
Nine Months Ended
Sept. 30 Sept. 30
1995 1994
--------- ---------
(In thousands except
per share data)
Interest Income $29,532 $26,069
Interest Expense 10,484 8,310
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NET INTEREST INCOME 19,048 17,759
Provision for loan losses 600 600
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NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 18,448 17,159
OTHER OPERATING INCOME
Trust Income 935 856
Service charges on deposit accounts 1,599 1,658
Securities, Gains 10 316
Other charges, rents and fees 536 532
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TOTAL OTHER OPERATING INCOME 3,080 3,362
OPERATING EXPENSES
Salaries and employee benefits 4,902 4,697
Equipment and occupancy expense 1,041 1,000
Other operating expense 4,014 4,349
--------- ---------
TOTAL OPERATING EXPENSE 9,957 10,046
INCOME BEFORE TAXES 11,571 10,475
Income taxes (See Note 1) 3,308 2,927
--------- ---------
NET INCOME $8,263 $7,548
========= =========
Per share* $1.62 $1.49
Cash dividends per share** $.51 $.45
<FN>
*Earnings per common share adjusted for the 2 for 1 stock split, is calculated
using weighted average shares outstanding of 5,104,474 for 1995 and 5,085,728
for 1994.
See notes to Consolidated Condensed Financial Statements.
**Cash dividend per share adjusted for the 2 for 1 stock split of record
May 31, 1995.
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(10Q-4)
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SECURITY BANC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
Sept. 30 Sept. 30
1995 1994
------- -------
(IN THOUSANDS)
Cash Flows From Operating Activities:
Net income $8,263 $7,548
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 397 353
(Gain)/loss on sale of the following:
Investment securities available for sale (10) (316)
Loans (1) (15)
Fixed Assets 10 (2)
Provisions for loan losses 600 600
Amortization and accretion, Net (716) 1,182
Amortization of core deposit intangibles 53 211
Decrease in interest receivable 1,703 26
Increase in other assets (668) (236)
Decrease in interest payable (801) (93)
Increase in other liabilities 334 89
------- -------
Total adjustments 901 1,799
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,164 9,347
Cash Flows from Investing Activities:
Net decrease in interest bearing
deposits with other banks 686 484
Proceeds from maturities of invest. securities 43,866 5,622
Proceeds from sales of investment securities 190,658 31,403
Purchase of investment securities (219,412) (31,652)
Net increase in loans (1,411) (34,039)
Proceeds from sale of loans 277 1,899
Capital expenditures (586) (455)
Proceeds from sale of fixed assets 14 9
------- -------
NET CASH USED IN INVESTING ACTIVITIES 14,092 (26,729)
Cash Flows from Financing Activities:
Net decrease in demand deposits, NOW
accounts and savings accounts (23,481) (18,713)
Net increase in certificates of deposit 14,019 20,291
Net increase in short term
borrowed funds 2,538 5,087
Dividends paid (2,603) (2,288)
Proceeds from exercise of stock option 53 297
Purchase of Treasury Stock 0 (13)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES (9,474) 4,661
------- -------
Net increase in cash and cash equivalents 13,782 (12,721)
Cash and cash equivalents at beginning of year 29,089 35,628
------- -------
Cash and Cash Equivalents at Sept. 30 $42,871 $22,907
======= =======
See Notes to Consolidated Financial Statements.
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(10Q-6)
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SECURITY BANC CORPORATION
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - PREPARATION OF FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments consisting of normal re-occurring items necessary to
present fairly the financial condition of the company as of Sept. 30, 1995 and
the results of operations and cash flows for the nine month periods ended Sept.
30, 1995 and Sept. 30, 1994.
NOTE B - TAXES
The effective tax rate of 29% is considerably lower than the statutory 35%
because of investments made in tax exempt municipal securities. Security
National Bank has approximately $27,559,000.00 invested in tax exempt municipal
securities.
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(10Q7)
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SECURITY BANC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Registrant's financial condition and results of
operations during the periods included in the consolidated financial statements
enclosed with this filing.
RESULTS OF OPERATIONS
Net income was $8,263,000 for the first nine months of 1995, compared to
$7,548,000 for the same period in 1994. Earnings per share were $1.62 for the
first nine months, a 9% increase over last year's $1.49.
Total assets were $520,231,000 at Sept. 30, 1995 compared to 1994's assets of
$513,920,000. For the first nine months of 1995, return on average equity was
16.30% and return on average assets was 2.13%.
Net interest income on a fully taxable equivalent basis for the first nine
months of 1995 was $20,093,000 a 6% increase over the $19,003,000 realized in
the same period of 1994. This increase resulted from a 1% increase in average
earning assets and an increase of 24 basis points in the net interest margin.
The allowance for loan losses was $3,891,000 in the first nine months of 1995
and $3,542,000 in the first nine months of 1994. The allowance for losses as
a percent of loans and leases outstanding was 1.24% at Sept. 30, 1995 and 1.14%
at Sept. 30, 1994.
Beginning in 1995, the Company adopted Financial Accounting Standards Board
Statement No. 114, "Accounting by Creditors for Impairment of a Loan". Under
the new standard, the 1995 allowance for credit losses related to loans that
are identified for evaluation in accordance with Statement 114 is based on
discounted cash flows using the loan's initial effective interest rate or the
fair value of the collateral for certain collateral dependent loans. Prior to
1995, the allowance for credit losses related to these loans was based on
undiscounted cash flows or the fair value of the collateral for collateral
dependent loans. The following table presents data concerning loans at risk at
the end of each period. (000s).
December 31
Sept. 30, -----------------------------------------
1995 1994 1993 1992 1991
-------- ---- ---- ---- ----
Non-accrual loans $2,527 $2,592 $2,035 $1,734 $2,400
Accruing loans past due
90 days or more 1,826 558 243 280 461
Restructured loans 0 0 0 97 104
Total other operating income was $3,080,000 and $3,362,000 during the first
nine months of 1995 and 1994 respectively. There was a 9% gain in trust
income, a 4% decrease in service charges on deposits, and a 1% increase in
other charges, rents and fees. Total securities gains for the first nine
months of 1995 were $10,000 or $6,500 after tax. Total securities gains for
the same period of 1994 were $316,000 or $209,000 after tax.
(10Q8) -8-
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PART 1 ITEM 2 - PAGE 2
SECURITY BANC CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Total operating expenses decreased during the first six months, 1% over the
similar period of 1994. Salaries, wages and employee benefits increased 4%
over 1994. Equipment and net occupancy expenses during the first nine months
were $1,041,000 and $1,000,000 for 1995 and 1994 respectively, which reflects a
4% increase. Other operating expenses decreased 8% compared to 1994.
MATERIAL CHANGES IN FINANCIAL CONDITION
The material changes that have occurred in the Registrant's financial condition
during 1995 are as follows (000s):
Sept. 30, Dec 31,
1995 1994 $+/- %+/-
------- ------- ------- ----
Cash and due from banks $21,621 $24,839 (3,218) (13)
Securities 149,378 162,289 (12,911) (8)
Federal funds sold 21,250 4,250 17,000 400
Loans and leases 314,931 314,051 880 0
Funds purchased and repos 29,822 27,284 2,538 9
Deposits
Non interest bearing 75,346 79,532 (4,186) (5)
Interest bearing demand 69,423 79,751 (10,328) (13)
Savings 103,729 112,696 (8,967) (8)
Time 168,807 154,788 14,019 9
LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity is necessary to ensure that
sufficient funds are available to meet customers' loan demand and deposit
withdrawals. The Corporation's liquidity sources consist of short term
marketable securities, maturing loans and Federal Funds sold. The Corporation
has a net asset position of $59,213,000 at the one year interval or a
sensitivity ratio of 1.32.
CAPITAL RESOURCES
The table below illustrates the Company's regulatory capital ratios at Sept. 30,
1995 under the year end 1992 requirements: (000s)
Tier 1 Capital $70,691
Tier 2 Capital 3,891
--------
TOTAL QUALIFYING CAPITAL $74,582
--------
Risk Adjusted Total Assets (including off balance exposures) $339,358
========
Tier 1 Risk-Based Capital Ratio 20.83%
Total Risk-Based Capital Ratio 21.98%
Leverage Ratio 13.59%
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(10Q9)
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SECURITY BANC CORPORATION
PART II - OTHER INFORMATION
ITEM 1 - Inapplicable
ITEM 2 - Inapplicable
ITEM 3 - Inapplicable
ITEM 4 - Inapplicable
ITEM 5 - Inapplicable
ITEM 6a - Inapplicable
ITEM 6b - Financial Data Schedules
-10-
(10Q10)
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SECURITY BANC CORPORATION
SIGNATURE
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.
SECURITY BANC CORPORATION
By /s/ Thomas L. Miller
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Thomas L. Miller
Controller
By /s/ J. William Stapleton
-------------------------------
J. William Stapleton
Vice President/CFO
Sept. 24, 1995
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(10Q11)