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First Citizens Banc Corp. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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First Citizens Banc Corp. (FCZA) filed Quarterly Report for the period ended 2010-06-30.

First Citizens Banc Corp. has a market cap of $35.15 million; its shares were traded at around $4.56 with and P/S ratio of 0.54.

Highlight of Business Operations:

Total deposits at June 30, 2010 increased $32,951 from year-end 2009. Noninterest-bearing deposits decreased $4,175 from year-end 2009 while interest-bearing deposits, including savings and time deposits, increased $37,126 from December 31, 2009. The interest-bearing deposit increase was due to increases in savings accounts and the Corporations participation in the Certificate of Deposit Account Registry Service (CDARS). This service allows the Corporations large depositors to access full FDIC insurance on deposits of up to $50 million. Savings accounts increased $22,703 from year end 2009, which included increases of $3,644 in statement savings, $5,661 in money market savings and $13,713 in public fund money market savings. CDARS accounts increased $20,867 from year end 2009. The year to date average balance of total deposits increased $12,104 compared to the average balance of the same period in 2009. The increase in average balance is mainly due to public money market savings and CDARS accounts.

Non-interest income for the first half of 2010 was $4,712, a decrease of $151 or 3.1 percent from $4,863 in the first half of 2009. Service charge fee income for the first half of 2010 was $2,213, down $106 or 4.6 percent over the first half of 2009. The decline is related to a decline in the number of accounts paying service charges. In addition, the average service charge per account has decreased. Trust fee income was $921, up $184 or 25.0 percent over the same period in 2009. The increase is related to the recoveries in the financial markets and the related effect on assets under management, as well as a general increase in assets under management. ATM fee income for the first half of 2010 was $872, up $50 or 6.1 percent over the first half of 2009. This increase can be attributed to a 25 percent increase in foreign transaction fees charged during the first quarter of 2010. Computer center item processing fee income for the first half of 2010 has declined by $104 or 43.5 percent over the same period of 2009. Less handling of paper items and fewer items processed in general led to this decline. Bank owned life insurance contributed $239 to non-interest income during the first half of 2010. Other non-interest income was $330, down $167 or 33.6 percent over the same period in 2009. This decrease is due to the resolution, during the first quarter in 2009, of three loans obtained in a merger which resulted in income of $237. These loans were recorded at fair value at the time of the merger and subsequently settled at a higher value.

Non-interest expense for the first half of 2010 was $17,951, a decrease of $609 or 3.3 percent, from $18,560 reported for the same period of 2009. Salary and other employee costs were $8,368, down $52 or 0.6 percent as compared to the first half of 2009. This decrease is mainly due to a change in the commission structure, as well as staff reductions related to the merger of SCC with Citizens in June 2009. Occupancy and equipment costs were $2,004, down $222 or 10.0 percent compared to the same period in 2009. Contracted data processing costs were $487, down $71, or 12.7 percent compared to last year. State franchise taxes decreased by $35 compared to the same period of 2009. Amortization expense decreased $35, or 5.4 percent from the first half of 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $377 during the first half of 2010 compared to the same period of 2009. The decrease is due to the Special Emergency Assessment charged in 2009, but not in 2010. Professional service costs were $1,087, up $169 or 18.4 percent compared to the same period in 2009. The increase is due to consulting services for loan work outs and core banking software analysis and an increase related to hiring a consulting firm to assist with the resolution of certain larger collection items. Marketing expense accruals increased this year by $61 to $375 to accommodate planned advertising initiatives. Other operating expenses were $3,347, down $143 or 4.1 percent compared to the same period of 2009. This decrease is mainly the result of the following: losses sustained on the sale of OREO properties decreased by $117, courier expenses decreased by $60, and trust data processing decreased by $35 compared to first half 2009.

Non-interest income for the second quarter of 2010 was $2,420, a decrease of $56 or 2.3 percent from $2,476 in the second quarter of 2009. Service charge fee income for the second quarter of 2010 was $1,148, down $74 or 6.1 percent over the same period of 2009. The decline is related to a decline in the number of accounts paying service charges. In addition, the average service charge per account has decreased. Trust fee income was $481, up $127 or 35.9 percent over the same period in 2009. The increase is related to the recoveries in the financial markets and the related effect on assets under management, as well as a general increase in assets under management. ATM fee income for the second quarter of 2010 was $461, down $15 or 3.2 percent over the second quarter of 2009. The Corporation recorded $125 of nonrecurring incentives in 2009 related to changing ATM processing networks. Except for this item, ATM income increased due to a 25 percent increase in foreign transaction fees charged during the first quarter of 2010. Item processing fee income for the second quarter of 2010 was $66, down $69 or 51.1 percent over the second quarter of 2009. Less handling of paper items and fewer items processed in general led to this decline. Bank owned life insurance contributed $118 to non-interest income during the second quarter of 2010. Other non-interest income was $144, up $34 or 30.9 percent over the same period in 2009.

Non-interest expense for the second quarter of 2010 was $8,955, a decrease of $358 or 3.8 percent, from $9,313 reported for the same quarter of 2009. Salary and other employee costs were $4,113, up $111 or 2.8 percent as compared to the second quarter of 2009. This increase is mainly due to employee insurance, which fluctuates with usage, and commissions. Occupancy costs were $576, up $20 or 3.6 percent compared to the same period of 2009. Equipment expenses were $365, down $144 or 28.3 percent compared to the same period of 2009. Contracted data processing costs were $222, down $53, or 19.3 percent compared to last year. State franchise taxes decreased by $23 compared to the same period in 2009. Amortization expense decreased $17, or 5.3 percent from the second quarter in 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $535 during the second quarter in 2010 compared to the same period in 2009. The decrease is due primarily to the $502 Special Emergency Assessment charged in the second quarter of last year. Professional service costs were $614, up $87 or 16.5 percent compared to the same period in 2009. The increase is due to consulting services for loan work outs. Other operating expenses were $1,743, up $189 or 12.2 percent compared to the same period in 2009. This increase is mainly the result of the following: miscellaneous expenses increased by $72, OREO expenses increased by $25, general insurance expenses increased by $30 compared to first half 2009.

Cash from operations for the quarter ended June 30, 2010 was $12,041. This includes a net loss of $(222) plus net adjustments of $12,263 to reconcile net earnings to net cash provided by operations. Cash from investing activities was $5,887 for the six months ended June 30, 2010. The use of cash from investing activities is primarily due to securities purchases. Cash received from maturing and called securities totaled $55,386. This increase in cash was offset by the purchase of securities of $44,740. Cash from financing activities in the first six months of 2010 totaled $9,634. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $32,951 in the first six months of 2010. The large increase in deposits was primarily due to increases in public money market savings accounts and CDARS accounts, which added $13,713 and $20,867, respectively, in deposits during the first half of 2010. Cash was used by the decreases in FHLB overnight funds and a maturity of a FHLB long-term advance of $5,000 and $15,000, respectively. Cash from operating activities and financing activities exceeded cash from investing activities by $27,562. Cash and cash equivalents increased from $26,942 at December 31, 2009 to $54,504 at June 30, 2010 as a result of the increase in cash during the first six months.

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