U.S. 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, 2001.
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________ TO __________
Commission file number - 000-25616
FC BANC CORP.
--------------
(Exact name of small business issuer as specified in its charter)
OHIO 34-1718070
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Farmers Citizens Bank Building,
105 Washington Square
Box 567, Bucyrus, Ohio 44820-0567
- ------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(419) 562-7040
------------------
(Issuer's telephone number)
N/A
---
(Former name, former address and former fiscal year, if changed since last
Report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ____
-
As of April 30, 2001, 600,497 shares of Common Stock of the Registrant were
outstanding. There were no preferred shares outstanding.
FC BANC CORP.
BUCYRUS, OHIO
FORM 10-QSB
INDEX
================================================================================
Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets 3
March 31, 2001 and December 31, 2000
Condensed consolidated statements of income 4
Three months ended March 31, 2001 and 2000
Condensed consolidated statements of changes in
Shareholders' equity -- Three months ended March 31, 5
2001 and year ended December 31, 2000
Condensed consolidated statement of cash flows 6
Three months ended March 31, 2001 and 2000
Notes to condensed consolidated financial statements 7
March 31, 2001 and December 31, 2000
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
FC BANC CORP.
BUCYRUS, OHIO
CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
(Unaudited)
At March 31, At December 31,
------------ ---------------
2001 2000
---- ----
ASSETS Cash and cash equivalents:
Cash and amounts due from banks $ 3,290 $ 4,311
Federal Funds Sold 5,600 1,200
Interest-bearing demand deposits in other banks 10 10
---------- ----------
Total cash and cash equivalents 8,603 4,885
Investment securities, available-for-sale 26,591 27,977
Loans 63,529 62,679
Allowance for loan losses (1,486) (1,496)
---------- ----------
Net Loans 62,043 61,183
Premises and equipment, net 2,159 2,041
Accrued interest receivable 739 750
Cash surrender value of life insurance 2,519 2,489
Deferred income taxes 425 391
Other assets 465 415
---------- ----------
TOTAL ASSETS $ 103,544 $ 100,131
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing 11,450 11,636
Interest-bearing 71,910 73,291
---------- ----------
Total deposits 83,360 84,927
Borrowed funds 7,159 2,258
Accrued interest payable 199 228
Other liabilities 1,059 942
---------- ----------
TOTAL LIABILITIES 91,777 88,355
SHAREHOLDERS' EQUITY
Common shares, no par value; 4,000,000 shares
authorized; 665,632 shares issued 832 832
Additional paid-in capital 1,366 1,366
Retained earnings 11,311 11,212
Treasury shares, at cost; 65,135 and 60,777 (1,687) (1,560)
Accumulated other comprehensive income ( 55) (74)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 11,767 11,776
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 103,544 $ 100,131
========== ==========
- -------------------------------------------------------------------------------
See accompanying notes.
3
FC BANC CORP.
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF INCOME
- -----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
(Unaudited) (Unaudited)
3 Months Ended 3 Months Ended
March 31, March 31,
--------- ---------
2001 2000
---- ----
INTEREST INCOME
Interest and fees on loans $1,348 $1,195
Interest and dividends on investment securities 379 503
Interest on federal funds sold 52 2
----- ------
TOTAL INTEREST INCOME 1,779 1,700
INTEREST EXPENSE
Interest on deposits 731 651
Interest on borrowed funds 51 8
------ ------
TOTAL INTEREST EXPENSE 782 659
------ ------
NET INTEREST INCOME 997 1,041
Provision for loan losses 0 (34)
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 997 1,075
OTHER INCOME
Service charges 140 122
Life insurance buildup 32 29
Other income 12 2
------ ------
TOTAL OTHER INCOME 184 153
OTHER EXPENSES
Salaries and employee benefits 427 442
Net occupancy and equipment expenses 177 154
Advertising and public relations 21 14
Directors' fees 22 22
Legal and professional 40 35
State taxes 38 35
Supplies 23 28
Other expenses 178 151
------ ------
TOTAL OTHER EXPENSES 926 881
------ ------
NET INCOME BEFORE FEDERAL INCOME TAX EXPENSE 255 347
Federal income tax expense 60 93
------ ------
NET INCOME $ 195 $ 254
====== ======
EARNINGS PER SHARE:
Earnings per common share - basic $ 0.32 $ 0.41
Earnings per common share - diluted $ 0.32 $ 0.40
- --------------------------------------------------------------------------
See accompanying notes.
4
FC BANC CORP.
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------------
Number of Shares Amount
---------------- ------
Additional
Common Treasury Common paid-in Retained Treasury
stock Stock stock capital Earnings Stock
----- ----- ----- ------- -------- -----
Balances at December 31, 1999 665,632 43,441 $832 $1,371 $10,720 $(1,047)
Comprehensive Income
Net Income 886
Other comprehensive income, net of tax:
Change in unrealized
gain (loss) on securities
Available-for-sale, net of
Deferred income tax of $225
Total Comprehensive income
Dividends declared-common ($0.64) per shares (394)
Sale of treasury stock (2,360) (5) 57
Purchase of 19,696 common shares 19,696 (570)
-------- -------- -------- -------- -------- --------
Balances at December 31, 2000 665,632 60,777 832 1,366 11,212 (1,560)
Comprehensive Income
Net Income 195
Other comprehensive income
Change in unrealized
Gain (loss) on securities
Available-for-sale, net of
Deferred income tax of $30
Comprehensive income
Dividends declared -($0.16) per share (96)
Sale of treasury stock
Purchase of common shares 4,358 (127)
-------- -------- -------- -------- -------- --------
Balances at March 31, 2001 665,632 65,135 $832 $1,366 11,311 $(1,687)
======== ======== ======== ======== ======== ========
(Dollars in thousands)
- -----------------------------------------------------------------------------------
Accumulated
other
comprehensive Comprehensive
income income
------ ------
Balances at December 31, 1999 $(523)
Comprehensive Income
Net Income 886
Other comprehensive income, net of tax:
Change in unrealized
gain (loss) on securities
Available-for-sale, net of
Deferred income tax of $225 449 449
---------
Total Comprehensive income 1,335
=========
Dividends declared-common ($0.64) per shares
Sale of treasury stock
Purchase of 19,696 common shares
---------
Balances at December 31, 2000 (74)
Comprehensive Income
Net Income 195
Other comprehensive income
Change in unrealized
Gain (loss) on securities
Available-for-sale, net of
Deferred income tax of $30 19 19
--------
Comprehensive income 214
========
Dividends declared -($0.16) per share
Sale of treasury stock
Purchase of common shares
---------
Balances at March 31, 2001 $ (55)
=========
- -------------------------------------------------------------------------------
See accompanying notes.
5
FC BANC CORP.
BUCYRUS, OHIO
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited) (Unaudited)
3 Months Ended 3 Months Ended
March 31 March 31
-------- --------
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 195 254
Adjustments to reconcile net income to net cash
Provided by operating activities:
Provision for loan losses 0 (34)
Income accrued on life insurance contracts (32) (27)
Depreciation 82 87
Deferred income taxes 0 (2)
Investment securities amortization (accretion), net 16 24
Purchase of loans (526) 0
Net change in:
Accrued interest receivable 11 (142)
Accrued interest payable (29) (32)
Other assets (50) (4)
Other liabilities 117 (3)
------- -------
Net cash provided by (used in) operating activities (216) 121
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available-for-sale (3,151) (71)
Proceeds from maturities of securities available-for-sale 4,549 2,059
Net increase in loans (375) (658)
Purchase of premises and equipment (200) (77)
------- -------
Net cash provided by (used in) investing activities 823 1,253
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in:
Noninterest-bearing, interest bearing, demand, and savings deposits (1,692) (2,656)
Certificates of deposit 125 (434)
Net increase in short-term borrowed funds 2,903 799
Proceeds from long-term FHLB advances 2,000 0
Payments on long-term debts (2) 0
Exercise of stock options 0 51
Purchase of treasury stock (127) (55)
Cash dividends paid (96) (100)
------- -------
Net cash (used in) financing activities 3,111 (2,395)
NET (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,718 (1,021)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,885 4,321
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 8,603 3,300
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for interest 782 691
Cash paid during the period for income taxes 0 59
See accompany notes.
6
FC BANC CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001, and December 31, 2000
(Unaudited)
================================================================================
NOTE 1. BASIS OF PRESENTATION
In the opinion of Management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary for a fair presentation of FC Banc
Corp.'s ("Company" or "Bancorp") financial position as of March 31, 2001, and
December 31, 2000, and the results of operations for the three months ended
March 31, 2001 and 2000, and the cash flows for the three months ended March 31,
2000 and 2001. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB. The results of operations for the three months ended March 31, 2001, are
not necessarily indicative of the results which may be expected for the entire
fiscal year.
NOTE 2. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows:
(Dollars in thousands)
Three months ended Year ended
March 31, December 31,
2001 2000
---- ----
Balance, beginning of period $ 1,496 $ 1,732
Provision for loan losses 0 (134)
Recoveries 14 81
Charge-offs (24) (183)
---------- ----------
Balance, end of period $ 1,486 $ 1,496
---------- ----------
7
NOTE 3. BORROWED FUNDS
Borrowed funds balances at March 31, 2001 and December 31, 2000 are summarized
as follows:
(Dollars in thousands)
2001 2000
---- ----
Repurchase agreements $5,138 $2,235
Note payable 21 23
Long-term FHLB advances 2000 0
------ ------
Total borrowed funds $7,159 2,258
====== ======
NOTE 4. REGULATORY CAPITAL
The following table illustrates the compliance by the Bank with currently
applicable regulatory capital requirements at March 31, 2001.
(Dollars in thousands)
Categorized as "Well
Capitalized" Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------ ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
Total Risk-Based Capital $ 12,407 19.54% $5,081 8.00% $6,351 10.00%
(To Risk-Weighted Assets)
Tier I Capital 11,605 18.28% 2,540 4.00% 3,810 6.00%
(To Risk-Weighted Assets)
Tier I Capital 11,605 11.51% 4,033 4.00% 4,768 5.00%
(To Total Assets)
Tangible Capital 11,605 11.51% 4,033 4.00% N/A N/A
(To Total Assets)
8
NOTE 5. EARNINGS PER SHARE
Earnings per share ("EPS") is computed in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share," which was adopted
by the Company as of December 31, 1997. Common stock equivalents include shares
granted under the Stock Option Plan ("SOP"). Following is a reconciliation of
the numerators and denominators of the basic and diluted EPS calculations.
For the Three Months Ended March 31, 2001
------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic EPS $195,194 600,606 $0.32
Income available to
common shareholders
Effect of dilutive securities: None 9,482 ($0.00)
-------- --------
Diluted EPS Income available to $195,194 610,088 $ 0.32
common shareholders + ======== ======== ========
assumed conversions
For the Three Months Ended March 31, 2000
------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic EPS $253,715 623,079 $ 0.41
Income available to
common shareholders
Effect of dilutive securities: None 9,758 ($0.01)
-------- -------- --------
Diluted EPS Income available to $253,715 632,837 $ 0.40
common shareholders + ======== ======== ========
assumed conversions
NOTE 6. RECLASSIFICATIONS
Certain amounts in the prior period's financial statements have been
reclassified to be consistent with the current period's presentation. The
reclassifications have no effect on net income.
9
FC BANC CORP.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
================================================================================
Safe Harbor Clause
This report contains certain "forward-looking statements." The Company
desires to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 and is including this statement for the
express purpose of availing itself of the protection of such safe harbor with
respect to all such forward-looking statements. These forward-looking
statements, which are included in Management's Discussion and Analysis, describe
future plans or strategies and include the Company's expectations of future
financial results. The words "believe," "expect," "anticipate," "estimate,"
"project," and similar expressions identify forward-looking statements. The
Company's ability to predict results or the effect of future plans or strategies
is inherently uncertain. Factors which could affect actual results include
interest rate trends, the general economic climate in the Company's market area
and the country as a whole, loan delinquency rates, and changes in federal and
state regulations. These factors should be considered in evaluating the forward-
looking statements, and undue reliance should not be placed on such statements.
General
The Company is a bank holding company whose activities are primarily
limited to holding the stock of The Farmers Citizens Bank, Bucyrus, Ohio,
("Bank"). The Bank conducts a general banking business in North Central Ohio
that consists of attracting deposits from the general public and applying those
funds to the origination of loans for residential, consumer and non-residential
purposes. The Bank's profitability is significantly dependent on net interest
income, that is, the difference between interest income generated from interest-
earning assets (i.e., loans and investments) and the interest expense paid on
interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net
interest income is affected by the relative amount of interest-earning assets
and interest-bearing liabilities and interest received or paid on these
balances. The level of interest rates paid or received by the Bank can be
significantly influenced by a number of environmental factors, such as
governmental monetary policy, that are outside of management control.
Earnings per common share were computed by dividing net income by the
weighted-average number of shares outstanding for the three-month periods ended
March 31, 2001 and 2000.
The consolidated financial information presented herein has been prepared
in accordance with generally accepted accounting principles ("GAAP") and general
accounting practices within the financial services industry. In preparing
consolidated financial statements in accordance with GAAP, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from such estimates.
The Company is subject to regulation by the Board of Governors of the
Federal Reserve System, which limits the activities in which the Company and the
Bank may engage. The Bank is supervised by the State of Ohio, Division of
Financial Institutions and its deposits are insured up to applicable limits
under the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation ("FDIC"). The Bank is a member of the Federal Reserve System and is
subject to its supervision. The Company and the Bank must file with the U.S.
Securities and Exchange Commission and the Federal Reserve Board the prescribed
periodic reports containing full and accurate statements of its affairs.
10
The Bank has five banking offices located in Crawford, Morrow and Knox
Counties, Ohio. The primary market area of the Bank is North Central Ohio that
includes Crawford, Morrow, Knox and contiguous counties. In February 2001,
demolition began on the Bank's Main Office located at 105 Washington Square,
Bucyrus, Ohio. A groundbreaking ceremony for the new Main Office was held on
March 27, 2001 with construction to commence in early May. Completion is
scheduled for late first quarter 2002. The new facility will allow the bank to
better serve its customers, improve operating efficiencies, and provide a better
work environment for employees.
The Bank continues to focus on providing FirstoClass Banking(TM) to its
customers. In May 2001, the Bank will introduce internet banking which allows
customers to access their bank account information 24 hours a day and handle
transfers as well as loan payments.
Changes in Financial Condition
At March 31, 2001, the consolidated assets of the Company totaled $103.5
million, an increase of $3.4 million, or 3.40%, from $100.1 million at December
31, 2000. The increase in total assets resulted primarily from a $2.0 million
advance from the Federal Home Loan Bank(FHLB).
Net loans receivable increased by $0.9 million, or 1.47%, to $62.0 million
at March 31, 2001, compared to $61.1 million at December 31, 2000. Loans secured
by real estate and consumer loans increased $0.2 million and $0.9 million,
respectively. Somewhat offsetting these increases was a decline in Commercial
loans of $0.2 million. The decline in commercial loans resulted primarily from
reductions in agricultural operating lines of credit that will be drawn upon in
the second quarter of 2001.
Investment securities declined by $1.4 million, or 5.00% to $26.6 million
at March 31, 2001, compared to $28.0 million at December 31, 2000. The decline
was used to fund loan growth and other operations of the Bank.
Cash and amounts due from banks declined by $0.7 million to $3.0 million at
March 31, 2001, compared to $3.7 million at December 31, 2000. The decline was
attributable to the better cash controls.
Deposit liabilities decreased by $1.5 million, or 1.77%, to $83.4 million
at March 31, 2001, from $84.9 million at December 31, 2000. The decline was
attributable to the transfer of public fund deposits into sweep accounts and
repurchase agreements. Money market, NOW, savings and demand deposits declined
by $0.1 million, $0.8 million, $0.6 million, and $0.2 million, respectively.
Total shareholders' equity remained at $11.8 million at March 31, 2001 as
compared to December 31, 2000. During the first three months of 2001 the Bank
earned net income of $0.2 million that was offset by the payment of dividends of
$0.1 million and the purchase of treasury stock of $0.1 million.
The Bank's liquidity, primarily represented by cash and cash equivalents,
is a result of its operating, investing and financing activities. Principal
sources of funds are deposits, loan and mortgage-backed security repayments,
maturities of securities and other funds provided by operations. The Bank also
has the ability to borrow from the Federal Home Bank of Cincinnati ("FHLB") as
well as the Federal Reserve Bank of Cleveland ("FRB" or "Fed"). While scheduled
loan repayments and maturing investments are relatively predictable, deposit
flows and early loan and mortgage-backed security prepayments are more
influenced by interest rates, general economic conditions and competition. The
Bank maintains investments in liquid assets based upon management's assessment
of (i) the need for funds, (ii) expected deposit flows, (iii) the yields
available on short-term liquid assets and (iv) the objectives of the
asset/liability management program. In the ordinary course of business, part of
such liquid investments is composed of deposits at correspondent banks.
11
Although the amount on deposit at such banks often exceeds the $100,000 limit
covered by FDIC insurance, the Bank monitors the capital and financial condition
of such institutions to ensure that such deposits do not expose the Bank to
undue risk of loss.
The Asset/Liability Management Committee of the Bank is responsible for
liquidity management. This committee, which is comprised of various managers,
has an Asset/Liability Policy that covers all assets and liabilities, as well as
off-balance sheet items that are potential sources and uses of liquidity. The
Bank's liquidity management objective is to maintain the ability to meet
commitments to fund loans and to purchase securities, as well as to repay
deposits and other liabilities in accordance with their terms. The Bank's
overall approach to liquidity management is to ensure that sources of liquidity
are sufficient in amounts and diversity to accommodate changes in loan demand
and deposit fluctuations without a material adverse impact on net income. The
Committee monitors the Bank's liquidity needs on an ongoing basis. Currently the
Bank has several sources available for both short- and long-term liquidity
needs. These include, but are not restricted to advances from the FHLB, Federal
Funds and borrowings from the Fed and other correspondent banks.
The Bank is subject to various regulatory capital requirements administered
by its primary federal regulator, the FRB. Failure to meet minimum capital
requirements can initiate certain mandatory and possible additional
discretionary actions by regulators that, if undertaken, could have a material
affect on the Company and the consolidated financial statements. Under the
regulatory capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Bank's capital amounts and classification under the prompt corrective action
guidelines are also subject to qualitative judgements by the regulators about
components, risk-weighing, and other factors.
Qualitative measures established by regulation to ensure capital adequacy
requires the Bank to maintain minimum amounts and ratios of: total risk-based
capital and Tier I capital to risk-weighted assets (as defined by the
regulations), and Tier I capital to average assets (as defined). Management
believes, as of March 31, 2001, that the Bank meets all of the capital adequacy
requirements to which it is subject.
As of December 31, 2000, the most recent notification from the FDIC, the
Bank was categorized as well capitalized under the regulatory framework for
prompt corrective action. To remain categorized as well capitalized, the Bank
will have to maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as disclosed in Note 4 - Regulatory Capital. There are no
conditions or events since the most recent notification that management believes
have changed the Bank's prompt corrective action category.
At March 31, 2001, FC Banc Corp. had approximately $2.7 million in
commitments for capital expenditures, primarily for construction of the new main
office in Bucyrus.
Results of Operations
Comparison of Three Months Ended March 31, 2001 and 2000
General. Net income decreased during the first quarter of 2001 as compared
to the same three-month period ended March 31, 2000. Net income amounted to $195
thousand versus $254 thousand, a decrease of $59 thousand, or 23.2%. The
decrease was primarily attributed to a decrease in net interest income and an
increase in other expenses. The decrease was partially offset by increases in
other income, and a decrease in accrued tax expense.
12
Interest Income. The increase in cost of funds was the primary contributing
factor to the decrease in net interest income of $78 thousand, or 7.26%, for the
three months ended March 31, 2001 compared to 2000. Loan interest and fee income
increased by $153 thousand resulting primarily from an increase in loans
receivable. Loans receivable as of March 31, 2001 were $63.5 million up $6.9
million as compared to March 31, 2000. The Bank increased its loan to deposit
ratio from 67.42% at March 31, 2000 to 73.66% at March 31, 2001. Also, income
from federal funds sold increased by $50 thousand. Interest and dividends on
investment securities decreased by $125 thousand.
Interest Expense. Interest expense on deposit liabilities increased by $123
thousand, or 18.66% for the three months ended March 31, 2001, as compared to
the same period in 2000. Total deposits decreased by $0.5 million comparing
March 31, 2001, to 2000. In addition, short-term borrowings increased by $6.3
million at March 31, 2001 as compared to March 31, 2000. Comparing the first
quarter of 2000 to the first quarter of 2001 the average yield on earning assets
increased from 7.51% to 7.63% or 12 basis points. The Bank's average cost of
funds (including short-term borrowings) for the first three months of 2001 was
3.55%, as compared to 3.11% for the same period in 2000.
Provision for Loan Losses. The Bank recorded net chargeoffs of $10 thousand
during the three months ended March 31, 2001, compared to net chargeoffs of $33
thousand during the same period in 2000. Based upon continued strong credit
quality the Bank recorded no provision for loan losses during the first quarter
in 2001 as compared to a negative provision of $34 thousand for the first
quarter of 2000. No provision was based upon the results of ongoing loan reviews
and composition of the loan portfolio, primarily loans secured by one- to four-
family residential properties and other forms of collateral, which are
considered to have less risk.
Non-Interest Income. Non-interest income increased by $31 thousand, or
20.26%, to $184 thousand for the three months ended March 31, 2001, from $153
thousand for the three months ended March 31, 2000. The increase was primarily
attributable to increases in service charge income and commissions on sales of
credit life and disability insurance. No security gains or losses were
recognized for the periods ended March 31, 2001 and 2000.
Non-Interest Expense. Non-interest expense increased by $45 thousand, or
5.11%, to $926 thousand for the three months ended March 31, 2001, from $881
thousand in the comparable period in 2000. This increase was mostly attributable
to increases in maintenance and repair (improvements to the temporary main
office facility), equipment leasing (lease of the Fredericktown building), and
dealer participation expense (due to increase in automobile dealer loans). The
non-interest expense to revenue ratio measured 74.19% and 72.09% for the three
months ended March 31, 2001 and 2000, respectively. The NIE/Revenue ratio
reflects the investment costs associated with upgrading the Bank's
infrastructure as it expands into new markets.
Income Taxes. The provision for income taxes decreased by $33 thousand for
the three months ended March 31, 2001, compared with the prior year, primarily
as a result of lower taxable income for the quarter.
13
FC BANC CORP.
PART II - OTHER INFORMATION
================================================================================
ITEM 1 - LEGAL PROCEEDINGS
Not Applicable
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On March 28, 2001, the Corporation held its Annual Meeting of
Shareholders. Six matters were submitted to the shareholders, for
which the following votes were cast:
1. Each of the three directors nominated were elected to terms
of three (3) years expiring in 2004 by the following votes:
Terry L. Gernert For: 399,848 Withheld: 34,646
------- -------
G.W. Holden For: 426,694 Withheld: 7,800
------- -------
John O. Spreng, Jr. For: 428,153 Withheld: 6,341
------- -------
The directors whose term of office continued after the meeting
are David G. Dostal, Patrick J. Drouhard, Samuel J. Harvey,
Robert D. Hord, Charles W. Kimerline, and Joan C. Stemen.
2. To amend Article Four of FC Banc Corp's Amended and Restated
Articles of Incorporation, removing the provision having to
do with the terms on which FC Banc Corp. may repurchase
shares from a holder of 1% or more of FC Banc Corp's shares
For: 400,420 Against: 19,477 Abstain: 14,597 Broker non-votes: 21,727
------- ------ ------ ------
3. To change the director qualification requirement in Article
Eight of FC Banc Corp's Amended and Restated Articles of
Incorporation and in Section 2.2 of FC Banc Corp's Code of
Regulations, which currently states that every director of
FC Banc Corp must also be qualified as a director of Farmers
Citizens Bank.
For: 422,781 Against: 1,190 Abstain: 10,523 Broker non-votes: 21,727
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14
4. To amend FC Banc Corp's Code of Regulations, Section 3.2,
paragraph two, having to do with reimbursement by officers
of FC Banc Corp. for any portion of their compensation that
is non-deductible.
For: 416,786 Against: 5,756 Abstain: 11,952 Broker nonvotes: 21,727
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5. To approve the form and use of indemnification agreements
for directors.
For: 380,287 Against: 5,323 Abstain: 48,884 Broker nonvotes: 21,727
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6. To ratify the appointment of Dixon, Francis, Davis & Company
as independent auditor of FC Banc Corp for the fiscal year
ending December 31, 2001.
For: 430,691 Against: 415 Abstain: 3,388
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ITEM 5 - OTHER INFORMATION
Not Applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Articles of Incorporation of
FC Banc Corp.
3.2 Code of Regulations of FC Banc Corp.
23 Consent of Dixon, Francis, Davis & Company
99.1 Form of Director Indemnification Agreement
Report under Form 8-K filed on March 28, 2001, announced the commencement
of a stock repurchase program.
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SIGNATURES
In accordance with 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.
FC BANC CORP.
Date May 15, 2001 /s/ G.W. Holden
-------------------------------- --------------------------------------
G. W. Holden
President and Chief Executive Officer
Date May 15, 2001 /s/ Jeffrey Wise
-------------------------------- --------------------------------------
Jeffrey Wise
Principal Financial Officer
Principal Accounting Officer
16