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

November 09, 2009 | About:
10qk

10qk

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First Citizens Banc Corp. (FCZA) filed Quarterly Report for the period ended 2009-09-30.

First Citizens Banc Corp. has a market cap of $44.09 million; its shares were traded at around $5.72 with and P/S ratio of 0.61. The dividend yield of First Citizens Banc Corp. stocks is 1.4%. First Citizens Banc Corp. had an annual average earning growth of 5.4% over the past 5 years.

Highlight of Business Operations:

Total borrowed funds have decreased $17,387 from December 31, 2008 to September 30, 2009. At September 30, 2009, the Corporation had $80,375 in outstanding Federal Home Loan Bank advances compared to $69,982 at December 31, 2008. On March 11, 2009, an FHLB advance in the amount of $2,500 matured. This advance had terms of sixty months with a fixed rate of 3.24%. The advance was not replaced. In addition, during the first quarter of 2009 overnight advances in the amount of $7,000 were paid off. On September 10, 2009 the Corporation executed a strategy to pre-fund replacement funding of $20,000 for a portion of two FHLB Advances coming due in 2010. By doing so, we locked in a relatively low fixed rate on replacement FHLB Advances, while also extending the term. At the same time, we also purchased a like amount of government agency bonds to help offset the cost of the replacement FHLB Advances between now and the maturity dates of the original FHLB advances. The first advance is a $10,000, thirty-seven month advance that has a fixed rate of 1.91%. The second advance is a $10,000, sixty month advance that has a fixed rate of 2.96%. The Corporation paid off notes outstanding with other financial institutions during the first quarter of 2009 totaling $20,500. Securities sold under agreements to repurchase, which tend to fluctuate due to timing of deposits, have decreased $4,762 and U.S. Treasury Tax Demand Notes have decreased $2,518 from December 31, 2008 to September 30, 2009.

Shareholders equity at September 30, 2009 was $100,253, or 9.1 percent of total assets, compared to $76,617 at December 31, 2008, or 7.3 percent of total assets. The increase in shareholders equity resulted from earnings of $1,627, less dividends paid of $2,423 and accretion of the discount on the warrant of $11, and an increase in the market value of securities available for sale, net of tax, of $1,248. Additionally, on January 23, 2009, the Corporation issued $23,184 in preferred stock to the U.S. Treasury. The Corporation paid cash dividends to common shareholders of $.15 per common share on February 1, 2009, $.07 per common share on May 1, 2009 and $.01 per common share on August 1, 2009. The Corporation paid cash dividends to the U.S. Treasury of $71 on February 15, 2009, and $289 each on May 15 and August 15, 2009. The result of the payment of these preferred dividends was a reduction in the earnings available to common shareholders of $.08 per share. The Corporation paid cash dividends of $.28 per common share on each of February 1, 2008 and May 1, 2008 and $.20 per common share on August 1, 2008. Total outstanding common shares at September 30, 2009 and September 30, 2008 were 7,707,917.

Non-interest income for the first nine months of 2009 was $7,141, a decrease of $198 or 2.7 percent from the same period in 2008. Declines in Trust fees of $387 are related to current economic conditions. Service charge fee income for the first nine months of 2009 was $3,589, up $30 or 0.8 percent over the first nine months of 2008. ATM fee income for the first nine months of 2009 was $1,234, up $205 or 19.9 percent over the first nine months of 2008. This increase can be attributed to a change in ATM processing systems. The change resulted in increased interchange income, along with a $125 incentive to switch. Computer center processing fee income for the first nine months of 2009 was $311, down $276 or 47.0 percent over the first nine months of 2008. This decrease is the result of restructuring communication lines, as well as the loss of income related to providing services to one less financial institution in 2009. Other non-interest income for the first nine months of 2009 was $889, up $230 or 34.9 percent over the first nine months of 2008. Other non-interest income of $237, related to the resolution of three loans obtained in the Futura merger, was recorded in the first quarter of 2009. These loans were recorded at fair value at the time of the merger and have subsequently been settled at a higher value. Also, net gain on sale of securities declined in 2009 because of a nonrecurring gain related to the redemption of VISA stock of $183 that was posted in 2008.

Non-interest expense for the first nine months of 2009 was $26,962, a decrease of $1,068 or 3.8 percent, from $28,030 reported for the same period of 2008. Salary and other employee costs were $12,004, down $1,287 or 9.7 percent as compared to the first nine months of 2008. The Corporation has instituted a salary freeze for 2009, which has helped keep salary expenses in line with last year. In addition, the Corporation changed the commission structure and suspended the contribution into its profit sharing 401 (k) plan during 2009 resulting in approximately $883 in savings for the first nine months of 2009. Occupancy and equipment costs were $3,232, down $318 or 9.0 percent compared to the same period of 2008. Computer processing costs were $809, down $135, or 14.3 percent compared to last year as a result of conversion costs associated with acquisitions paid during 2008. State franchise taxes decreased by $128 compared to the same period of 2008. Franchise tax is based on the prior end-of-year capital of the Corporation. The large goodwill impairment charge booked prior to 2008 year end directly led to the decrease in franchise tax. Amortization expense decreased $132, or 12.0 percent from the first nine months of 2008, related to scheduled amortization of intangible assets associated with mergers. FDIC insurance assessments have increased by $1,512 during the first nine months of 2009, as compared to the same period of 2008. The Corporation had been offsetting the FDIC assessment with a One-Time Assessment Credit issued in 2007. This credit was applied over eight quarters and ran out in the first quarter of 2009. Additionally, the increase is due to an increase in the assessment rate charged by the FDIC. Finally, the Corporation accrued $502 during the second quarter for the FDICs special emergency assessment, which was charged to all depository institutions insured by the FDIC. Other operating expenses decreased $508, or 7.1 percent from the first nine months of 2008. A majority of the Corporations other operating expenses declined compared to the first nine months of 2008.

Noninterest expense for the third quarter of 2009 was $8,400, a decrease of $606 or 6.7 percent, from $9,006 reported for the same period in 2008. Salaries and other employee costs were $3,688, down $857 or 18.9 percent as compared to the same period in 2008. The Corporation has instituted a salary freeze for 2009, which has helped keep salary expenses in line with last year. In addition, the Corporation changed the commission structure and suspended the contribution into its profit sharing 401 (k) plan during 2009 resulting in approximately $390 in savings for the third quarter of 2009. Occupancy and equipment costs were $1,006, down $138 or 12.1 percent compared to the same period of 2008. Computer processing costs were $251, up $12 or 5.0 percent compared to last years third quarter. FDIC insurance assessments were $424, up $386 compared to the third quarter of 2008. The Corporation had been offsetting the FDIC assessment with a One-Time Assessment Credit issued in 2007. This credit was applied over eight quarters and ran out in the first quarter of 2009. Additionally, the increase is due to an increase in the assessment rate charged by the FDIC. State franchise taxes increased $71 compared to the third quarter of 2008. Amortization expense in the third quarter decreased $37 or 10.3 percent from the same period of 2008. Finally, other operating expenses were $2,444, down $43 or 1.7 percent as compared to the third quarter of 2008. A majority of the Corporations other operating expenses declined compared to the third quarter of 2008.

Cash from operations for the nine months ended September 30, 2009 was $11,684. This includes net income of $1,627 plus net adjustments of $10,057 to reconcile net earnings to net cash provided by operations. Cash from investing activities was $(47,102) for the nine months ended September 30, 2009. The use of cash from investing activities is primarily due to securities purchases. Cash received from maturing and called securities totaled $78,162. This increase in cash was offset by the purchase of securities of $126,252. Cash from financing activities in the first nine months of 2009 totaled $44,061. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $40,687 in the first nine months of 2009. The large increase in deposits was primarily due to the Corporations participation in the CDARS program, which added $46,453 in deposits during the first nine months of 2009. Cash was used by the decrease in long-term borrowings of $20,500. Cash of $23,184 was provided from the issuance of Senior Preferred Shares to the U.S. Treasury. Cash of $10,500 was provided due to increases in long-term FHLB advances to pre-fund a portion of two FHLB advances coming due in 2010. Cash received from long-term FHLB advances totaled $20,000. This increase was offset by decreases in FHLB overnight funds and a maturity of a FHLB long-term advance of $7,000 and $2,500, respectively. Cash from operating activities and financing activities exceeded cash from investing activities by $8,643. These factors led cash and cash equivalents to increase from $26,649 at December 31, 2008 to $35,292 at September 30, 2009.

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