First Citizens Banc: Results Of Operations


The following excerpt is from the company's SEC filing.

Net interest income for the second quarter of 2014 increased $485 thousand, or 5.0%, from the prior year’s second quarter and for the six months ended June 30 increased $664 thousand, or 3.4%, when compared to the same period of 2013. The increase in net interest income for the quarter was due both to an increase in interest income of $340 thousand or 3.1% and to a decrease in interest expense of $145 thousand or 11.7%. The increase in net interest income for the year included an increase in interest income of $369 thousand, or 1.7%, as well as a decrease in interest expenses of $295 thousand, or 11.6%. The increas e in interest income was due primarily to an increase in average loans outstanding of $46.0 million, or 5.7%, partially offset by decreased yield of 17 basis points on loans, when compared to the six months of 2013. This increase for the second quarter was also due to an increase in average loans outstanding of $48.5 million, or 6.0%, partially offset by decreased yield on loans of 12 basis points, when compared to the same period in 2013. Net interest margin for the six months of 2014 was 3.63%, 12 basis point lower than the same period in 2013. The average balance of interest-bearing deposits relating to tax refund processing was $92.6 million for 2014. Removing the impact of the First Citizen’s tax refund processing, the net interest margin would have been 29 basis points higher for the six months of 2014. For the three months ended June 30, net interest margin was 3.76, 1 basis point lower than the second quarter a year ago. Mr. Miller continued, “Over the past several years we have seen that our Net Interest Income has been stable throughout changes in the interest rate environment. With an increase in average loans, a decrease in deposit rates and changes in our funding mix we have continued to manage through this challenging interest rate environment.”

The provision for loan losses for the second quarter and six months ended 2014 increased $450 thousand, or 150.0%, and $700 thousand, or 87.5%, compared to the three and six-month periods ended 2013, respectively. Net Charge offs totaled $2.6 million for the first six months of 2014. The majority of the charge-offs related to resolution of specific problem credits for which a specific reserve had been allocated. The increase in provision for loan losses in the first half of 2014 is primarily related to the increased size of the loan portfolio compared to a year ago.

Noninterest income increased $549 thousand, or 19.4%, compared to the prior year’s second quarter and increased $2.0 million, or 32.4%, when compared to the six months of 2013. The increases in both the three- and six-month periods were primarily due to an increase fee income related to income tax refund processing. Tax refund processing fees were up $392 thousand, or 852.2% for the second quarter of 2014 compared to the second quarter of 2013 and up $1.9 million, or 443.4% when compared to the six months of 2013, due to increased volume of returns processed. Wealth management revenue increased $160 thousand, or 25.6%, for the three-month period ended June 30 compared to the same period in 2013 and increased $346 thousand, or 28.2%, for the six-month period ended June 30 compared to the same period in 2013. The increase in wealth management revenue is due to both an increase in asset valuations as well as an increase in accounts. These factors were offset by a $ 46.4 million decrease in assets related to out-of-area accounts inherited from a previous acquisition. First Citizens made the decision to better focus our efforts on local accounts and began the process of moving these accounts out of the Bank. Assets under management decreased by 1.2% from the end of 2013, to $462.7 million. The out-of-area accounts were lower yielding accounts and the lost revenue was more than offset by increased revenue related to other assets under management. Mortgage banking revenue for the six months of 2014 decreased $47 thousand or 16.9% compared to the same period in 2013. However, mortgage banking revenue for the second quarter increased $50 thousand, or 64.1% compared to the same period of 2013. Mr. Miller continued, “Mortgage banking has been sluggish for the entire banking industry in 2014. We have continued to see our pipelines and closed business increase as the year progresses. Our Wealth Management business has benefited from an increased amount of cross-selling by our commercial lenders as well as a positive stock market. We are very pleased with the results of our tax refund processing program. We increased the volume of refunds processed and have been very successful in 2014.”

Noninterest expense decreased $367 thousand, or 3.5%, when compared to the prior year’s second quarter and $146 thousand, or 0.7%, when compared to the six months of 2013. For the quarter and six month periods, the decrease in noninterest expense was primarily attributable to a $564 thousand decrease in pension expense for the second quarter and a decrease of $611 thousand for the six month period. The decreases in pension costs were offset by increases in salaries and commissions for the quarter and six month periods of $313 thousand and $430 thousand respectively. As of April 30, 2014, the Company has frozen its pension plan. While the plan still exists, no new participants will be added and no additional benefits will accrue going forward.

Total assets increased $19.0 million, or 1.6%, from December 31, 2013 to June 30, 2014 due primarily to an increase in loans of $7.9 million or 0.9% as well as an increase in cash and cash equivalents of $16.0 million.

Total deposits increased $36.6 million, or 3.9%, from December 31, 2013 to June 30, 2014, largely related to cash on deposit from the tax refund processing program. As of June 30, 2014 the balance related to the tax refund processing program was approximately $34.9 million. Total shareholder’s equity decreased $17.1 million, or 13.3%, from December 31, 2013 to June 30, 2014 as a result of the $23.2 million redemption of Series A Preferred Stock, partially offset by retained earnings of $3.5 million and changes to Accumulated Other Comprehensive Income.

Nonperforming assets decreased $2.9 million, or 11.3%, from December 31, 2013 to June 30, 2014 due to the continuing workout of nonperforming loans with delinquent customers. Total non-accrual loans decreased $2.8 million, or 13.9%, from December 31, 2013 to June 30, 2014. Mr. Miller continued, “We continue to be conservative on how we view asset quality. If we see potential weakness in a credit, we strive to identify it early and reserve appropriately. We continue to see improvements in non-performing assets. When we look back to June 2013, we have reduced non-performing loans by $11.3 million. Non-accrual loans continue to decrease and over 60% of our non-accrual loans are current with their payments.”

First Citizens Banc Corp may be accessed at www.fcza.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “FCZA”. The Company’s depositary shares, each representing a 1/40th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “FCZAP”.

differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in First Citizens’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of First Citizens’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. First Citizens does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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