UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1995
Commission file number 0-17912
First Citizens Financial Corporation
22 Firstfield Road
Gaithersburg, Maryland 20878
(301) 527-2400
Incorporated in the State of Delaware
IRS Employer Identification Number 52-1638667
Securities registered pursuant to Section 12(b) of the Act: (Not applicable)
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 8, 1996 was $38,560,827.
At March 8, 1996, the Registrant had 2,649,182 shares of $.01 par value common
stock outstanding.
Portions of the definitive proxy statement for the annual meeting of
stockholders to be held on April 19, 1996 are incorporated by reference into
Part III.
FIRST CITIZENS FINANCIAL CORPORATION 1995 Annual Report AND FORM 10-K Citizens
Savings Bank f.s.b.
Corporate Profile
First Citizens Financial Corporation is the holding company (formed in 1989) for
Citizens Savings Bank f.s.b. ("Citizens" or the "Bank"). At December 31, 1995,
Citizens had total assets of $607.6 million and operated through 16 offices
located in Montgomery and Frederick Counties in Maryland.
The common stock of First Citizens Financial Corporation is traded
over-the-counter on Nasdaq's National Market under the symbol "FCIT". All
depositor accounts of the Bank are insured up to $100,000 by the Savings
Association Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation.
Citizens' message for 1996 is YOUR COMMUNITY BANK. Citizens has been serving its
community since 1929. Our employees actively participate in community projects,
live in your neighborhood and are here to serve you, our customers.
Table of Contents
Financial Highlights ......................... 1
Letter to Stockholders ....................... 2
Your Community Bank .......................... 4
Selected Consolidated Financial and Other Data 8
Management's Discussion and Analysis ......... 10
Consolidated Financial Statements ............ 18
Independent Auditors' Reports ................ 37
Report of Management ......................... 38
Selected Quarterly Financial Data ............ 38
Form 10-K .................................... 39
Investor Services Directory .................. 53
Citizens Savings Bank f.s.b. Locations ....... 53
Board of Directors and Corporate Officers .... 54
Financial Highlights
(Dollars in thousands except per share data)
Year ended December 31,
Increase
1995 1994 (Decrease)
Net interest income ........................ $ 17,723 $ 17,485 1.4%
(Recovery of) provision for loan losses .... (28) (635) (95.6)
Other income ............................... 2,643 2,547 3.8
Loss from real estate, net ................. 99 1,810 (94.5)
Other expense .............................. 14,202 13,525 5.0
Net income ................................. 4,107 3,635 13.0
Earnings per share of common stock ......... 1.43 1.28 11.7
At December 31,
Increase
1995 1994 (Decrease)
Total assets ............................................. $607,429 $558,288 8.8%
Loans receivable, net .................................... 412,603 427,445 (3.5)
Investment securities, net .............................. 119,655 88,436 35.3
Real estate owned, net ................................... 13,269 14,826 (10.5)
Deposits ................................................. 487,097 457,007 6.6
Stockholders' equity ..................................... 38,641 34,036 13.5
Total loan originations .................................. 144,433 179,765 (19.7)
Allowance for losses on loans and real estate ............ 8,435 9,224 (8.6)
Charge-offs, net of recoveries ........................... 1,135 6,994 (83.8)
Book value per common share .............................. 14.69 13.18 11.5
Nonperforming assets, net, as a percentage of total assets 2.5% 4.4% (43.2)
Stockholders' equity as a percentage of total assets ..... 6.4 6.1 4.9
Stock Traded on Nasdaq-First Citizens Financial Corporation's (the "Company")
common stock trades on Nasdaq's National Market under the symbol "FCIT". As of
December 31, 1995, First Citizens Financial Corporation had approximately 901
stockholders of record and 2,629,576 outstanding shares of common stock. The
Company has not paid any cash dividends to holders of its common stock. It is
not expected that cash dividends will be paid to holders of its common stock in
the foreseeable future. See Notes 9 and 13 to the Consolidated Financial
Statements for restrictions on the payment of dividends by Citizens Savings Bank
f.s.b. to the Company. The following table sets forth the high, low and closing
market price information for the common stock of the Company for the periods
indicated.
Calendar Quarter Ended:
High Low Close
1995:
December 31. $20.00 $15.50 $19.00
September 30 18.63 17.25 18.50
June 30 .... 18.75 13.18 17.75
March 31 (a) 14.32 10.91 13.58
1994: (a)
December 31. $15.91 $11.36 $11.82
September 30 16.36 11.82 15.91
June 30 .... 12.50 10.39 11.59
March 31 (b) 12.34 9.74 10.17
<FN>
(a) Adjusted for a 10% stock dividend declared April 21, 1995.
(b) Adjusted for a 5% stock dividend declared April 20, 1994.
</FN>
To Our Stockholders:
For 1995, First Citizens Financial Corporation (the "Company") reported record
net income and year-end stockholders' equity. Net income totaled $4.1 million,
or $1.43 per share, in 1995, an increase of 13% over the prior year's net income
of $3.6 million, or $1.28 per share. Stockholders' equity reached a record high
of $38.6 million at December 31, 1995, up from the $34.0 million reported at
year-end 1994. This was the fourth consecutive year during which stockholders'
equity has increased since the $21.5 million reported at December 31, 1991.
Net interest income before (recoveries of) loan loss provisions of the Company's
principal subsidiary, Citizens Savings Bank f.s.b. (the "Bank") increased
slightly to $17.7 million for 1995 from $17.5 million for 1994. Due to an
increase in deposit rates during 1995, the Bank's net interest margin decreased
to 3.15% in 1995, compared to 3.37% in 1994. However, average interest-earning
assets increased $46.6 million, to $550.4 million at December 31, 1995, from
$503.8 million at December 31, 1994, which more than offset the decline in net
interest margin.
Operating expenses decreased $1.0 million, to $14.3 million in 1995 from $15.3
million in 1994. During 1995, loss from real estate, net, amounted to $99,000 as
compared to net losses of $1.8 million in 1994. This decrease resulted primarily
from a $1.0 million reduction in the provision for losses on real estate owned.
The Bank also recognized net gains of $.7 million from the sale of real estate
owned in 1995 compared to a net loss on the sale of real estate owned of $.1
million in 1994.
The market price of the Company's stock increased to $19.00 per share at
December 31, 1995, from $11.82 per share at December 31, 1994, a 60.7% increase
over the prior year's close, after adjustment for a 10% stock dividend. The
Company paid a 10% stock dividend to stockholders on June 5, 1995, the fourth
stock dividend declared by the Board of Directors over the past several years
and a doubling of the amount of the stock dividend (5%) declared in 1994 and in
prior years.
The Bank experienced continued success in reducing its nonperforming assets, net
(including real estate owned) in 1995, decreasing these assets to $15.1 million,
or 2.5% of total assets, compared to $24.7 million, or 4.4% of total assets, as
of December 31, 1994. Classified assets, net, decreased by approximately 33%, to
$20.6 million in 1995, compared to $30.7 million in 1994. These reductions
reflect management's continued commitment to further reduce the levels of
nonperforming and classified assets.
A year ago we announced to you, our stockholders, our belief that many of the
burdens of the past years are now behind us and that management had begun to
turn its focus toward strengthening the image and position of the Bank in our
community for the future. We set out in 1995 to redefine the Bank's position as
a true "Community Bank", expanding its relationships with local middle-market
companies and placing renewed emphasis on strengthening our banking
relationships through individualized attention, responsiveness to changes in our
customers' needs and targeting new markets for future growth and development. We
committed ourselves to providing the highest level of professional service and
new and innovative products, and rededicated ourselves to the people within our
community and to our stockholders, whose needs and interests remain our foremost
priority and our most valued commodity.
1995 signaled the beginning of this renewed emphasis, and our performance over
the past year reflects well upon the results of this effort. In an era of rapid
change and uncertainty in the financial industry, we remain solidly committed to
the traditional values upon which the Bank and the Company were first founded
while at the same time positioning the Bank to compete in the future. As a
"Community Bank", we believe the value of the services we provide and the
strength of the relationships we establish are enhanced by our proximity and
accessibility to our customer base. While many competitors offer similar
services and products from distant locations, we provide individualized
attention and personal banking relationships from within our market community.
An indication of our belief that we will be better able to serve our customer
base was the addition of several new products such as "the merchant card", "the
MasterMoneyTM direct debit card" and the commercial "Cash Management system".
These new and innovative products not only make banking more convenient but also
generate fee income for the Bank. We have also established quarterly "economic
breakfasts" targeted at local middle-market companies in order to foster the
development of new relationships with these businesses. These meetings feature a
guest speaker who discusses the current economic climate and outlook at
community, regional and national levels. Also symbolic of the new direction
which the Bank began in 1995 was the relocation for our corporate headquarters
to Gaithersburg, Maryland, in March 1995. This relocation increases the
visibility and proximity of the Bank to the commercial enterprises and markets
we have targeted as we continue to develop business and customer relationships.
This new emphasis and direction are the foundations from which we will build our
future. The cornerstone of our efforts will be to continue to focus on expanding
and growing our relationships with local middle-market companies, developing a
broader network of services and products to offer our customers, while
continuing to provide the traditional banking relationships which are the heart
and soul of a "Community Bank".
We will continue to build upon the success we have experienced in these areas to
further enhance the Company's profitability, maximize its value and reward the
faithful support and continued confidence of you, our stockholders.
Very truly yours,
Herbert W. Jorgensen
Chairman of the Board and
Chief Executive Officer
Enos K. Fry
Vice Chairman of the Board
and President
Your Community Bank
Although much has changed at Citizens Savings Bank f.s.b. since we opened our
doors for business in 1929, one thing remains the same -- our fine tradition of
community service.
Community Service [ ]
Our extraordinary growth in assets is a product of our belief that we are
partners with our customers and our community. Our commitment to service extends
beyond Citizens Savings Bank branches and offices. Because of this partnership
with our community, our staff members are active volunteer leaders in a broad
range of civic endeavors. These volunteer services range from business and
economic development to health and youth organizations.
One example of this participation in the business community is our involvement
in the Montgomery Housing Partnership, Inc.'s (MHPI) Naples Manor project. MHPI
was created to work with local county government with the goal of providing
affordable housing in our community. Citizens has not only provided financial
donations to support MHPI but has also opened a line of credit for MHPI designed
to facilitate the purchase of additional housing units.
For over 66 years, we have remained a community bank, committed to helping our
customers achieve their financial goals by providing them with the best possible
savings and lending products while demonstrating our commitment to customer
service on a daily basis. Because we are partners with our community, we make