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

November 09, 2010 | About:
10qk

10qk

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First Citizens Banc Corp. (FCZA) filed Quarterly Report for the period ended 2010-09-30.

First Citizens Banc Corp. has a market cap of $33.8 million; its shares were traded at around $4.39 with and P/S ratio of 0.5.

Highlight of Business Operations:

Total deposits at September 30, 2010 increased $46,869 from year-end 2009. Noninterest-bearing deposits increased $12,859 from year-end 2009 while interest-bearing deposits, including savings and time deposits, increased $34,010 from December 31, 2009. The interest-bearing deposit increase was due to increases in interest-bearing demand accounts, 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 Federal Deposit Insurance Corp. (FDIC) insurance on deposits of up to $50 million. Interest-bearing demand accounts increased $4,730 from year end 2009, mainly in interest-bearing public funds. Savings accounts increased $29,277 from year end 2009, which included increases of $4,198 in statement savings, $9,919 in money market savings and $16,990 in public fund money market savings. CDARS accounts increased $7,199 from year end 2009. The year to date average balance of total deposits increased $17,257 compared to the average balance of the same period in 2009. The increase in average balance is due to increases of $15,832 in demand deposit accounts, $8,479 in statement savings accounts, $14,275 in money market savings, $13,331 in CDARS accounts and $17,655 in public fund money market savings offset by decreases of $18,665 in time certificates and $24,609 in brokered deposits.

Non-interest income for the first nine months of 2010 was $7,268, a decrease of $178 or 2.4 percent from $7,446 for the same period of 2009. Service charge fee income for the first nine months of 2010 was $3,410, down $179 or 5.0 percent over the same period of 2009. The decline is related to a reduced number of accounts using our overdraft services resulting in a decrease in overdraft income. Additionally, there was a decrease in the average fees collected per account. Trust fee income was $1,378, up $260 or 23.3 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 nine months of 2010 was $1,344, up $110 or 8.9 percent over the first nine months 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 nine months of 2010 has declined by $116 or 37.3 percent over the same period of 2009. Fewer items processed in general, and fewer paper items processed, led to this decline. Bank owned life insurance contributed $354 to non-interest income during the first nine months of 2010. Net gain on sale of securities was $22, down $50, or 69.5 percent over the same period of 2009. Other non-interest income was $565, down $197 or 25.9 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 nine months of 2010 was $27,254, a decrease of $13, from $27,267 reported for the same period of 2009. Salary and other employee costs were $12,958, up $954 or 8.0 percent as compared to the same period of 2009. This increase is mainly due to a change in staffing and higher health care costs for the first nine months of 2010. The number of full-time equivalent employees increased during the first nine months of 2010 to 294.59, up 8.25, compared to the same period of 2009. Occupancy and equipment costs were $2,973, down $259 or 8.0 percent compared to the same period in 2009. Contracted data processing costs were $687, down $122, or 15.1 percent compared to last year. State franchise taxes decreased by $63 compared to the same period of 2009. Amortization expense decreased $53, or 5.5 percent from the nine months of 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $406 during the first nine months of 2010 compared to the same period of 2009. The decrease is due to the Special Emergency Assessment charged by the FDIC in 2009, but not in 2010. Professional service costs were $1,776, up $421 or 31.1 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 $92 to $563 to accommodate planned advertising initiatives. ATM expenses were $537, down $15 or 2.7 percent compared to the same period in 2009. Other operating expenses were $4,899, down $562 or 10.3 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 $254, courier expenses decreased by $105, and trust data processing decreased by $27 compared to the first nine months of 2009.

Non-interest income for the third quarter of 2010 was $2,520, an increase of $81 or 3.3 percent from $2,439 in the third quarter of 2009. Service charge fee income for the third quarter of 2010 was $1,197, down $73 or 5.7 percent over the same period of 2009. The decline is related to a reduced number of accounts using our overdraft services resulting in a decrease in overdraft income. Additionally, there was a decrease in the average fees collected per account. Trust fee income was $457, up $76 or 19.9 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 third quarter of 2010 was $472, up $61 or 14.8 percent over the third quarter of 2009. 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 third quarter of 2010 was $61, down $11 or 15.3 percent over the third quarter of 2009. Fewer items processed in general, and fewer paper items processed, led to this decline. Bank owned life insurance contributed $116 to non-interest income during the third quarter of 2010. Net gain on sale of securities was $7, down $12, or 63.2 percent over the same period of 2009. Other non-interest income was $210, up $41 over the same period in 2009.

Non-interest expense for the third quarter of 2010 was $9,266, an increase of $703 or 8.2 percent, from $8,563 reported for the same quarter of 2009. Salary and other employee costs were $4,590, up $902 or 24.5 percent as compared to the third quarter of 2009. This increase is mainly due to a change in staffing and higher health care costs for the first nine months of 2010. Occupancy costs were $604, up $24 or 4.1 percent compared to the same period of 2009. Equipment expenses were $365, down $61 or 14.3 percent compared to the same period of 2009. Contracted data processing costs were $200, down $51, or 20.3 percent compared to last year, due to renegotiated rates on our core processing system. State franchise taxes decreased by $28 compared to the same period in 2009. Amortization expense decreased $17, or 5.3 percent from the third quarter in 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were down by $29 during the third quarter in 2010 compared to the same period in 2009. Professional service costs were $689, up $252 or 57.7 percent compared to the same period in 2009. The increase is due to consulting services related to core processing system assessment and contract renegotiations. Other operating expenses were $1,881, down $289 or 13.3 percent compared to the same period in 2009. This decrease is mainly the result of the following: telephone expenses decreased by $27, OREO expenses decreased by $148, courier expenses decreased by $45 compared to first nine months of 2009.

Cash from operations for the quarter ended September 30, 2010 was $13,093. This includes a net loss of $1,616 plus net adjustments of $14,709 to reconcile net earnings to net cash provided by operations. Cash from investing activities was $18,050 for the nine months ended September 30, 2010. The use of cash from investing activities is primarily due to securities purchases. Cash received from maturing and called securities totaled $81,010. This increase in cash was offset by the purchase of securities of $59,386 and loans made to customers, net of principal collected of $4,713. Cash from financing activities in the first nine months of 2010 totaled $10,020. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $46,869 in the first nine months of 2010. The large increase in deposits was primarily due to increases in noninterest-bearing deposits, money market savings accounts, public money market savings accounts and CDARS accounts, which added $12,859, $9,919, $16,990 and $7,199, respectively, in deposits during the first nine months of 2010. Cash was used mainly by the decreases in FHLB overnight funds and a maturity of two FHLB long-term advances of $5,000 and $30,000, respectively. Cash from operating activities and financing activities exceeded cash from investing activities by $5,063. Cash and cash equivalents increased from $26,942 at December 31, 2009 to $68,105 at September 30, 2010 as a result of the increase in cash during the first nine months.

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