First Citizens Banc Corp. Reports Operating Results (10-Q)
First Citizens Banc Corp. has a market cap of $41.08 million; its shares were traded at around $5.33 with and P/S ratio of 0.63.
Highlight of Business Operations:Net loans have decreased $7,886, or 1.0 percent since December 31, 2009. The commercial real estate, real estate construction and other loan portfolios increased by $4,647, $3,410 and $146, respectively. The commercial and agricultural real estate loan portfolios decreased $9,972 and $3,865, respectively, while consumer and lease loan portfolios decreased a total of $835 and $50, respectively. The current increase in commercial real estate loans is mainly due to calling efforts by the commercial lending officers and increased opportunities from our larger markets. The current decrease in commercial and agriculture loans is the result of seasonality. The current decrease in real estate and consumer loans is mainly the result of a decline in the housing market and the Corporations decision to originate and sell the majority of mortgage loans on the secondary market.
For the first three months of operations in 2010, $3,740 was placed into the allowance for loan losses from earnings, compared to $2,102 in the first quarter of 2009. In general, the increase in provision can be attributed to the continued economic downturn and high unemployment rates in our market area, which have impaired the ability of our customers to make payments on their loans. Net charge-offs have increased compared to 2009. Nonperforming loans have increased by $771, of which $2,238 was due to increased loans past due 90 days still accruing, offset by a decrease in loans on nonaccrual status of $1,467. Impaired loans decreased, from $22,736 at December 31, 2009 to $17,963 at March 31, 2010. Each of these factors was considered by management as part of the examination of both the level and mix of the allowance by loan type as well as the overall level of the allowance. Management specifically evaluates loans that are impaired, or graded as doubtful by the internal grading function for estimates of loss. To evaluate the adequacy of the allowance for loan losses to cover probable losses in the portfolio, management considers specific reserve allocations for identified portfolio loans, reserves for delinquencies and historical reserve allocations. The composition and overall level of the loan portfolio and charge-off activity are also factors used to determine the amount of the allowance for loan losses.
Total deposits at March 31, 2010 increased $25,920 from year-end 2009. Noninterest-bearing deposits decreased $7,625 from year-end 2009 while interest-bearing deposits, including savings and time deposits, increased $33,545 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 $21,767 from year end 2009, which included increases of $2,600 in statement savings and $20,600 in public fund money market savings. CDARS accounts increased $12,850 from year end 2009. The year to date average balance of total deposits increased $18,602 compared to the average balance of the same period in 2009. The increase in average balance is mainly due to public money market savings.
Non-interest income for the first quarter of 2010 was $2,292, a decrease of $95 or 4.0 percent from $2,387 in the first quarter of 2009. Service charge fee income for the first quarter of 2010 was $1,065, down $32 or 2.9 percent over the first quarter of 2009. The decline is related to a decline in the number of accounts paying service charges. Trust fee income was $440, up $56 or 14.6 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. Net gain on sale of securities was $15, up $14 over the same period in 2009. ATM fee income for the first quarter of 2010 was $411, up $65 or 18.8 percent over the first quarter 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 quarter of 2010 was $69, down $34 or 33.0 percent over the first quarter of 2009. Bank owned life insurance contributed $120 to non-interest income during the first quarter of 2010. Other non-interest income was $171, down $162 or 48.6 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 quarter of 2010 was $8,996, a decrease of $250 or 2.7 percent, from $9,246 reported for the same quarter of 2009. Salary and other employee costs were $4,256, down $58 or 1.3 percent as compared to the first quarter of 2009. This decrease is mainly due to staff reductions as a result of the merger of SCC with Citizens in June 2009, as well as a change in the commission structure. Occupancy and equipment costs were $1,063, down $97 or 8.4 percent compared to the same period of 2009. Contracted data processing cost were $264, down $19, or 6.7 percent compared to last year. State franchise taxes decreased by $12 compared to the same period of 2009. Amortization expense decreased $17, or 5.3 percent from the first quarter of 2009, as a result of scheduled amortization of intangible assets associated with mergers. FDIC assessments were up by $159 during the first quarter of 2010 compared to the same period of 2009. The increase is due to an increase in the assessment rate charged. Professional service costs were $378, up $91 or 31.7 percent compared to the same period of 2009. The increase is due to consulting services for loan work outs and core banking software analysis. Other operating expenses were $1,834, down $176 or 8.8 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 $44, courier expenses decreased by $37, trust data processing decreased by $48 and fee expense related to CDARS account opening decreased by $15 compared to first quarter 2009.
Cash from operations for the quarter ended March 31, 2010 was $4,000. This includes net income of $36 plus net adjustments of $3,964 to reconcile net earnings to net cash provided by operations. Cash from investing activities was $10,176 for the quarter ended March 31, 2010. The use of cash from investing activities is primarily due to securities purchases. Cash received from maturing and called securities totaled $28,765. This increase in cash was offset by the purchase of securities of $22,299. Cash from financing activities in the first quarter of 2010 totaled $2,276. A major source of cash for financing activities is the net change in deposits. Cash provided by the net change in deposits was $25,920 in the first quarter of 2010. The large increase in deposits was primarily due to public money market savings accounts, which added $20,600 in deposits during the first quarter 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 $16,452. Cash and cash equivalents increased from $26,942 at December 31, 2009 to $43,394 at March 31, 2010 as a result of the increase in cash during the first quarter.
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