UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2001 ------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- -------------------- Commission File Number: 0-25980 -------------------------------- First Citizens Banc Corp ------------------------ (Exact name of registrant as specified in its charter) Ohio 34-1558688 ---- ---------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number) 100 East Water Street, Sandusky, Ohio 44870 ------------------------------------- ----------- (Address of principle executive offices) (Zip Code) Registrant's telephone number, including area code: (419) 625-4121 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes ----- No ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value Outstanding at November 13, 2001 4,082,619 common shares
FIRST CITIZENS BANC CORP Index <TABLE> <S> <C> PART I. Financial Information ITEM 1. Financial Statements: Consolidated Balance Sheets (unaudited) September 30, 2001 and December 31, 2000............................. 3 Consolidated Statements of Income (unaudited) Three and nine months ended September 30, 2001 and 2000.............. 4 Consolidated Statements of Comprehensive Income (unaudited) Three and nine months ended September 30, 2001 and 2000.............. 5 Consolidated Statement of Shareholders' Equity (unaudited) For the year ended December 31, 2000 and nine months ended September 30, 2001................................. 6 Consolidated Statement of Cash Flows (unaudited) Nine months ended September 30, 2001 and 2000........................ 7 Notes to Consolidated Financial Statements (unaudited)................... 8-16 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................... 17-23 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk............... 23-25 PART II. Other Information ITEM 1. Legal Proceedings........................................................ 26 ITEM 2. Changes in Securities and Use of Proceeds................................ 26 ITEM 3. Defaults Upon Senior Securities.......................................... 26 ITEM 4. Submission of Matters to a Vote of Security Holders...................... 26 ITEM 5. Other Information........................................................ 26 ITEM 6. Exhibits and Reports on Form 8-K......................................... 26 SIGNATURES........................................................................ 27 </TABLE>
FIRST CITIZENS BANC CORP Consolidated Balance Sheets (In thousands, except share data) <TABLE> <CAPTION> (Unaudited) September 30, December 31, 2001 2000 ------------- ------------ <S> <C> <C> Assets Cash and due from banks $ 21,843 $ 15,735 Federal funds sold 15,100 0 Interest-bearing deposits 0 51 Securities Available-for-sale 115,616 115,514 Held-to-maturity (Estimated Fair Value of $224 at September 30, 2001, and $278 at December 31, 2000) 219 278 ---------- ---------- Total securities 115,835 115,792 Loans held for sale 1,256 571 Loans 338,940 346,089 Less: Allowance for loan losses (4,290) (4,107) ---------- ---------- Net loans 334,650 341,982 Office premises and equipment, net 7,107 7,221 Intangible assets 1,625 1,869 Accrued interest and other assets 6,769 6,038 ---------- ---------- Total assets $ 504,185 $ 489,259 ========== ========== Liabilities Deposits Noninterest-bearing deposits $ 42,639 $ 42,306 Interest-bearing deposits 375,768 349,662 ---------- ---------- Total deposits 418,407 391,968 Federal Home Loan Bank borrowings 960 1,400 Securities sold under agreements to repurchase 13,296 12,946 U. S. Treasury interest-bearing demand deposit note payable 2,812 1,207 Notes payable to other financial institutions 14,000 10,600 Federal funds purchased 0 20,000 Accrued interest, taxes and other expenses 3,637 3,213 ---------- ---------- Total liabilities 453,112 441,334 Shareholders' Equity Common stock, no par value; 10,000,000 shares authorized, 4,263,401 shares issued 23,258 23,258 Retained earnings 30,254 28,614 Treasury stock, 180,782 shares at cost at September 30, 2001, 175,782 shares at cost at December 31, 2000 (4,919) (4,818) Accumulated other comprehensive income 2,480 871 ---------- ---------- Total shareholders' equity 51,073 47,925 ---------- ---------- Total liabilities and shareholders' equity $ 504,185 $ 489,259 ========== ========== </TABLE> See notes to interim consolidated financial statements Page 3
FIRST CITIZENS BANC CORP Consolidated Statements of Income (Unaudited) (In thousands, except share data) <TABLE> <CAPTION> Three months ended Nine months ended September 30, September 30, ------------------------ ------------------------- 2001 2000 2001 2000 ---------- ------------ ----------- ----------- <S> <C> <C> <C> <C> INTEREST INCOME: Loans, including fees $ 7,238 $ 6,923 $ 22,141 $ 19,263 Taxable securities 1,065 1,280 3,317 4,211 Nontaxable securities 416 537 1,304 1,631 Federal funds sold 191 0 352 41 Other 14 10 27 34 ---------- ----------- ----------- ----------- Total interest income 8,924 8,750 27,141 25,180 INTEREST EXPENSE: Deposits 3,467 3,658 10,836 10,528 FHLB Borrowings 15 22 51 74 Other 386 358 1,403 856 ---------- ----------- ----------- ----------- Total interest expense 3,868 4,038 12,290 11,458 ---------- ----------- ----------- ----------- NET INTEREST INCOME 5,056 4,712 14,851 13,722 PROVISION FOR LOAN LOSSES 135 284 656 499 ---------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,921 4,428 14,195 13,223 NONINTEREST INCOME: Computer center data processing fees 283 274 889 837 Service charges 427 450 1,240 1,350 Net gain/(loss) on sale of securities 5 10 5 (34) Net gain/(loss) on sale of loans 148 15 289 (50) Other 559 504 1,398 1,288 Total noninterest income 1,422 1,253 3,821 3,391 NONINTEREST EXPENSE: Salaries, wages and benefits 1,904 1,795 5,822 5,150 Net occupancy expense 209 214 678 611 Equipment expense 291 280 813 801 Data processing expense 186 164 554 518 State franchise tax 190 117 553 419 Professional services 194 110 556 467 Other operating expenses 1,334 1,343 3,713 3,475 ---------- ----------- ----------- ----------- Total noninterest expense 4,308 4,023 12,689 11,441 ---------- ----------- ----------- ----------- Income before taxes 2,035 1,658 5,327 5,173 Income tax expense 531 422 1,482 1,368 ---------- ----------- ----------- ----------- Net Income $ 1,504 $ 1,236 $ 3,845 $ 3,805 ========== =========== =========== =========== Earnings per share $ 0.37 $ 0.30 $ 0.94 $ 0.92 Dividends declared per share $ 0.18 $ 0.17 $ 0.54 $ 0.51 Wtd. avg. shares during the period 4,082,619 4,094,548 4,082,967 4,113,867 </TABLE> See notes to interim consolidated financial statements Page 4
FIRST CITIZENS BANC CORP Consolidated Statements of Comprehensive Income (Unaudited) (In thousands) <TABLE> <CAPTION> Three months ended Nine months ended September 30, September 30, ------------------- ----------------- 2001 2000 2001 2000 -------- --------- ------- ------- <S> <C> <C> <C> <C> Net income $ 1,504 $ 1,236 $ 3,845 $ 3,805 Other Comprehensive Income (Loss): Unrealized holding gains and (losses) on available for sale securities 704 1,566 2,443 1,220 Reclassification adjustment for (gains) and losses (5) (10) (5) 34 -------- -------- ------- ------- later recognized in income Net unrealized gains and (losses) 699 1,556 2,438 1,254 Tax effect (238) (529) (829) (426) -------- -------- ------- ------- Total other comprehensive income (loss) 461 1,027 1,609 828 -------- -------- ------- ------- Comprehensive income $ 1,965 $ 2,263 $ 5,454 $ 4,633 ======== ======== ======= ======= </TABLE> See notes to interim consolidated financial statements Page 5
FIRST CITIZENS BANC CORP Condensed Consolidated Statement of Shareholders' Equity (Unaudited) Form 10-Q (In thousands, except share data) <TABLE> <CAPTION> Common Stock Accumulated ---------------------- Other Total Outstanding Retained Treasury Comprehensive Shareholders' Shares Amount Earnings Stock Income/(Loss) Equity ------------ ------- ---------- --------- -------------- ------------- <S> <C> <C> <C> <C> <C> <C> Balance, January 1, 2000 4,162,815 $23,258 $ 28,010 $(2,877) $ (196) $ 48,195 Net income 5,692 5,692 Change in unrealized gain/(loss) on securities available for sale, net of reclassifications and tax effects 1,067 1,067 Purchase of treasury stock, at cost (75,196) (1,941) (1,941) Cash dividends ($1.24 per share) (5,088) (5,088) --------- ------- -------- ------- ------ -------- Balance, December 31, 2000 4,087,619 23,258 28,614 (4,818) 871 47,925 Net income 3,845 3,845 Change in unrealized gain/(loss) on securities available for sale, net of reclassifications and tax effects 1,609 1,609 Purchase of treasury stock, at cost (5,000) (101) (101) Cash dividends ($.54 per share) (2,205) (2,205) --------- ------- -------- ------- ------ -------- Balance, September 30, 2001 4,082,619 $23,258 $ 30,254 $(4,919) $2,480 $ 51,073 ========= ======= ======== ======= ====== ======== </TABLE> See notes to interim consolidated financial statements Page 6
FIRST CITIZENS BANC CORP Consolidated Statement of Cash Flows (Unaudited) (In thousands) <TABLE> <CAPTION> Nine months ended September 30, ------------------------------- 2001 2000 ------------- ---------- <S> <C> <C> Net cash from operating activities $ 3,955 $ 3,817 Cash flows from investing activities Maturities of deposits held in other institutions 51 - Maturities and calls of securities, held-to-maturity 58 39 Maturities and calls of securities, available-for-sale 18,895 13,614 Purchases of securities, available-for-sale 16,609) (4,551) Proceeds from sale of securities, available-for-sale - 11,688 Loans made to customers, net of principal collected 6,410 (29,901) Loans purchased - (7,364) Change in federal funds sold 15,100) 4,600 Proceeds from sale of property and equipment 5 44 Purchases of office premises and equipment (604) (593) -------- --------- Net cash from investing activities (6,894) (12,424) Cash flows from financing activities Repayment of FHLB borrowings (440) (417) Net change in deposits 26,438 (805) Change in securities sold under agreements to repurchase 349 (3,325) Change in U. S. Treasury interest-bearing demand note payable 1,606 (1,551) Change in federal funds purchased 20,000) 13,700 Change in notes payable 3,400 6,000 Purchases of treasury stock (101) (1,941) Cash dividends paid (2,205) (2,105) -------- --------- Net cash from financing activities 9,047 9,556 -------- --------- Net change in cash and due from banks 6,108 949 Cash and due from banks at beginning of period 15,735 14,599 -------- --------- Cash and due from banks at end of period $ 21,843 $ 15,548 ======== ========= Cash paid during the period for: Interest $ 13,286 $ 12,586 Income taxes $ 1,360 $ 1,178 Supplemental noncash disclosures: Transfer of loans held-for-sale to portfolio $ - $ 2,138 Transfer of loans to other real estate owned $ 372 $ 89 </TABLE> See notes to interim consolidated financial statements Page 7
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - ------------------------------------------------------------------------------- (1) Consolidated Financial Statements The consolidated financial statements include the accounts of First Citizens Banc Corp (First Citizens) and it wholly-owned subsidiaries, The Citizens Banking Company (Citizens), The Castalia Banking Company (Castalia), The Farmers State Bank of New Washington (Farmers), SCC Resources, Inc. (SCC), R. A. Reynolds Appraisal Service, Inc., (Reynolds), Mr. Money Finance Company, (Mr. Money), First Citizens Title Insurance Agency, and First Citizens Insurance Agency, together referred to as the Corporation. All significant inter-company balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared by the Corporation without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Corporation's financial position as of September 30, 2001 and its results of operations and changes in cash flows for the periods ended September 30, 2001 and 2000 have been made. The accompanying consolidated financial statements have been prepared in accordance with instructions of Form 10-Q, and therefore certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The results of operations for the period ended September 30, 2001 are not necessarily indicative of the operating results for the full year. Reference is made to the accounting policies of the Corporation described in the notes to financial statements contained in the Corporation's 2000 annual report. The Corporation has consistently followed these policies in preparing this Form 10-Q. The Corporation provides financial services through its offices in the Ohio counties of Erie, Crawford, Huron, Marion, Ottawa, Richland and Union. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Real estate loans are secured by both residential and commercial real estate. Other financial instruments that potentially represent concentrations of credit risk include deposit accounts in other financial institutions. In 2001, SCC provided item processing for 10 financial institutions in addition to the three subsidiary banks. Through September 30, 2001, SCC accounted for 4.3% of the Corporation's total revenues. Reynolds provides real estate appraisal services for lending purposes to subsidiary banks and other financial institutions. Reynolds accounts for less than 1.0% of total Corporation revenues. Mr. Money provides consumer and real estate financing that the Banks would not normally provide to B and C credits at a rate commensurate with the risk. Mr. Money accounts for 5.1% of total Corporation revenues. In September 2000 the Corporation formed two new affiliates; First Citizens Title Insurance Agency Inc. and First Citizens Insurance Agency Inc. First Citizens Title Insurance Agency Inc. has been formed to provide customers with a seamless mortgage product with improved service. First Citizens Insurance Agency Inc Page 8
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - ------------------------------------------------------------------------------- was formed to allow the Corporation to participate in commission revenue generated through its third party insurance agreement. Insurance commission revenue is less than 1 percent of total revenue for the period ended September 30, 2001. Management considers the Corporation to operate primarily in one reportable segment, banking. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in financial statements and the disclosures provided, and future results could differ. The allowance for loan losses, fair values of financial instruments, and status of contingencies are particularly subject to change. Income tax expense is based on the effective tax rate expected to be applicable for the entire year. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Certain items in the 2000 financial statements have been reclassified to correspond with the 2001 presentation. In September 2000, the Financial Accounting Standards Board issued SFAS No.140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 140 replaces SFAS No. 125 and resolves various implementation issues while carrying forward most of the provisions of SFAS No. 125 without change. SFAS No. 140 revises standards for transfers of financial assets by clarifying criteria and expanding guidance for determining whether the transferor has relinquished control and the transfer is therefore accounted for as a sale. SFAS No. 140 also adopts new accounting requirements for pledged collateral and requires new disclosures about securitizations and pledged collateral. SFAS No. 140 was effective for transfers occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of this standard has not had a material effect on the Corporation's financial statements. In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141. "Business Combinations." SFAS No. 141 requires all business combinations within its scope to be accounted for using the purchase method, rather than the pooling-of-interests method. The provisions of this Statement apply to all business combinations initiated after June 30, 2001. The adoption of this statement will only impact the Company's financial statements if it enters into a business combination. Also in June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets", which addresses the accounting for such assets arising from prior and future business Page 9
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - ------------------------------------------------------------------------------- combinations. Upon the adoption of this Statement, goodwill arising from business combinations will no longer be amortized, but rather will be assessed regularly for impairment, with any such impairment recognized as a reduction to earnings in the period identified. The Company is required to adopt this Statement on January 1, 2002 and early adoption is not permitted. Prior to the adoption of SFAS No. 142, the Corporation's annual amortization of goodwill is $201. (2) Securities Securities at September 30, 2001 and December 31, 2000 were as follows: <TABLE> <CAPTION> September 30, 2001 ------------------------------------------------------- AVAILABLE FOR SALE Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value ----------- ---------- ---------- ----------- <S> <C> <C> <C> <C> U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 44,335 $ 1,375 $ 0 $ 45,710 Obligations of state and political subdivisions 39,918 1,359 0 41,277 Corporate obligations 12,965 95 (18) 13,042 Other securities, including mortgage-backed securities and equity securities 14,640 954 (7) 15,587 --------- --------- ------- ---------- $ 111,858 $ 3,783 $ (25) $ 115,616 ========= ========= ======= ========== </TABLE> <TABLE> <CAPTION> September 30, 2001 ------------------------------------------------------- HELD TO MATURITY Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value ----------- ---------- ---------- ----------- <S> <C> <C> <C> <C> Obligations of state and political subdivisions $ 154 $ 3 $ 0 $ 157 Other securities, including mortgage-backed securities and equity securities 65 2 0 67 ------- ----- ------ ------- $ 219 $ 5 $ 0 $ 224 ======= ===== ====== ======= </TABLE> Page 10
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - ------------------------------------------------------------------------------- <TABLE> <CAPTION> December 31, 2000 ------------------------------------------------------- AVAILABLE FOR SALE Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value ----------- ---------- ---------- ----------- <S> <C> <C> <C> <C> U.S. Treasury securities and obligations of U.S. Government corporations and agencies $ 47,834 $ 325 $ (130) $ 48,029 Obligations of state and political subdivisions 43,500 516 (97) 43,919 Corporate obligations 5,630 9 (226) 5,413 Other securities, including mortgage-backed securities and equity securities 17,230 1,024 (101) 18,153 --------- -------- -------- --------- $ 114,194 $ 1,874 $ (554) $ 115,514 ========= ========= ======== ========= </TABLE> <TABLE> <CAPTION> December 31, 2000 ------------------------------------------------------- HELD TO MATURITY Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value ----------- ---------- ---------- ----------- <S> <C> <C> <C> <C> Obligations of state and political subdivisions $ 155 $ 1 $ 0 $ 156 Other securities, including mortgage-backed securities and equity securities 123 0 (1) 122 ------ ------ ------- ------ $ 278 $ 1 $ (1) $ 278 ====== ====== ======= ====== </TABLE> Page 11
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- The amortized cost and fair value of securities at September 30, 2001, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Securities not due at a single maturity date, primarily mortgage-backed securities and equity securities are shown separately. <TABLE> <CAPTION> AVAILABLE FOR SALE Amortized Cost Fair Value -------------- ---------- <S> <C> <C> Due in one year or less $ 36,488 $ 36,817 Due after one year through five years 52,150 54,228 Due after five years through ten years 8,580 8,984 Due after ten years 0 0 Mortgage-backed securities 8,327 8,521 Equity securities 6,313 7,066 -------- -------- Total securities available for sale $111,858 $115,616 ======== ======== </TABLE> <TABLE> <CAPTION> HELD TO MATURITY Amortized Estimated Cost Fair Value --------- ---------- <S> <C> <C> Due in one year or less $ 77 $ 78 Due after one year through five years 77 79 Mortgage-backed securities 65 67 ---- ---- Total securities held to maturity $219 $224 ==== ==== </TABLE> Proceeds from sales of securities, gross realized gains and gross realized losses were as follows: <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 2001 2000 2001 2000 ------ ------ ------ -------- <S> <C> <C> <C> <C> Proceeds $ -- $ -- $ -- $ 11,688 Gross gains -- 10 -- 33 Gross losses -- -- -- (661) Security gains due to calls prior to maturity 5 -- 5 4 </TABLE> Page 12
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Securities with a carrying value of approximately $69,312 and $58,088 were pledged as of September 30, 2001 and December 31, 2000, respectively, to secure public deposits, other deposits and liabilities as required by law. (3) Loans Loans at September 30, 2001 and December 31, 2000 were as follows: <TABLE> <CAPTION> 9/30/2001 12/31/2000 --------- ---------- <S> <C> <C> Commercial and Agriculture $ 25,791 $ 26,416 Commercial real estate 65,545 60,546 Real Estate - mortgage 209,128 217,344 Real Estate - construction 9,440 9,684 Consumer 27,439 29,509 Credit card and other 1,825 2,979 Leases 638 590 --------- --------- Total loans 339,806 347,068 Allowance for loan losses (4,290) (4,107) Deferred loan fees (852) (957) Unearned interest (14) (22) --------- --------- Net loans $ 334,650 $ 341,982 ========= ========= </TABLE> Page 13
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- (4) Allowance for Loan Losses A summary of the activity in the allowance for loan losses was as follows: <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2001 2000 2001 2000 ------- ------- ------- ------- <S> <C> <C> <C> <C> Balance beginning of period $ 4,353 $ 4,287 $ 4,107 $ 4,274 Loans charged-off (324) (294) (792) (645) Recoveries 126 54 319 203 Provision for loan losses 135 284 656 499 ------- ------- ------- ------- Balance June 30, $ 4,290 $ 4,331 $ 4,290 $ 4,331 ======= ======= ======= ======= </TABLE> Information regarding impaired loans was as follows for the three and nine months ended September 30. <TABLE> <CAPTION> Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2001 2000 2001 2000 ------ ------ ------ ------ <S> <C> <C> <C> <C> Average investment in impaired loans $2,863 $4,186 $2,993 $4,082 Interest income recognized on impaired loans including interest income recognized on cash basis 41 103 142 247 Interest Income recognized on impaired loans on cash basis 41 103 142 247 </TABLE> Page 14
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Information regarding impaired loans at September 30, 2001 and December 31, 2000 was as follows: <TABLE> <CAPTION> 9/30/01 12/31/00 ------- -------- <S> <C> <C> Balance impaired loans $1,968 $5,152 Less portion for which no allowance for loan losses is allocated -- -- ------ ------ Portion of impaired loan balance for which an allowance for credit losses is allocated $1,968 $5,152 ====== ====== Portion of allowance for loan losses allocated to the impaired loan balance $ 296 $1,179 ====== ====== </TABLE> Nonperforming loans were as follows. <TABLE> <CAPTION> September 30, December 31, 2001 2000 ----------------- ---------------- <S> <C> <C> Loans past due over 90 days still on accrual $1,911 $ 558 Nonaccrual 4,818 1,368 </TABLE> Nonperforming loans would include some loans, which are classified as impaired, and smaller balance homogeneous loans, such as residential mortgages and consumer loans, that are collectively evaluated for impairment. (5) Commitments, Contingencies and Off-Balance Sheet Risk Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection are issued to meet customers financing needs. These are agreements to provide credit or to support the credit of others, as long as the conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of commitment. Page 15
First Citizens Banc Corp Notes to Interim Consolidated Financial Statements (Unaudited) Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- The contractual amount of financial instruments with off-balance-sheet risk was as follows for September 30, 2001 and December 31, 2000. <TABLE> <CAPTION> Contract Amount ------------------------------------------ September 30, December 31, 2001 2000 ------------------ ----------------- <S> <C> <C> Commitment to extend credit: Lines of credit and construction loans $ 25,248 $ 28,170 Credit cards 3,645 4,564 Letters of credit 398 339 -------- -------- $ 29,291 $ 33,073 ======== ======== </TABLE> Commitments to make loans are generally made for a period of one year or less. Fixed rate loan commitments included above totaled $4,213 at September 30, 2001 and had interest rates ranging from 4.00% to 12.50% with maturities extended up to 30 years. Fixed rate loan commitments included above totaled $6,064 at December 31, 2000 with interest rates ranging from 5.00% to 12.50% with maturities extended up to 30 years. The Banks are required to maintain certain reserve balances on hand in accordance with the Federal Reserve Board requirements. The average reserve balance maintained in accordance with such requirements for the periods ended September 30, 2001 and December 31, 2000 approximated $4,843 and $4,148. Effective November 2, 2001, the Corporation agreed to acquire Independent Community Banc Corp ("Independent"). The transaction will be accounted for as a purchase. The Corporation will issue approximately 1 million shares of common stock to the shareholders of Independent based upon an exchange ratio of 1.7 shares of the Corporation for each outstanding share of Independent common stock. Independent has total assets of approximately $140 million. The acquisition is expected to close early in the second quarter of 2002. Page 16
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Introduction The following discussion focuses on the consolidated financial condition of First Citizens Banc Corp at September 30, 2001, compared to December 31, 2000 and the consolidated results of operations for the three-month and nine-month periods ending September 30, 2001 compared to the same periods in 2000. This discussion should be read in conjunction with the consolidated financial statements and footnotes included in this Form 10-Q. The registrant is not aware of any trends, events or uncertainties that will have, or are reasonably likely to have, a material effect on the liquidity, capital resources, or operations except as discussed herein. Also, the registrant is not aware of any current recommendation by regulatory authorities, which would have a material effect if implemented. When used in this Form 10-Q or future filings by the Corporation with the Securities and Exchange Commission, in press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "believe," or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, changes in levels of market interest rates, credit risks of lending activities and competitive and regulatory factors, could effect the Corporation's financial performance and could cause the Corporation's actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements. See Exhibit 99, which is incorporated herein by reference. Financial Condition Total assets of the Corporation at September 30, 2001 totaled $504,185 compared to $489,259 at December 31, 2000. This was a increase of $14,925 or 3.1 percent. Within the structure of the assets, net loans have decreased $7,332, or 2.1 percent since December 31, 2000, primarily in the area of residential real estate loans. The Corporation has shifted its focus from seeking residential real estate loans to seeking commercial loan products. This shift in focus will help improve the yield on the Corporation's loan portfolio, as well as reduce the interest rate risk on the loan portfolio. Mr. Money was formed in 2000 to service the needs of B and C credit customers for Page 17
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- consumer and real estate financing that the Banks would not normally provide, and at a rate commensurate with the risk. Mr. Money had loans outstanding of $16,578 at September 30, 2001 compared to $12,143 at December 31, 2000. Loans held for sale increased $685, or 120.00 percent from December 31, 2000. The balance in loans held for sale is a function of the demand for fixed rate mortgages. As rates fell in the first nine months of 2001, the demand for fixed rate mortgages increased. In May of 2001, Farmers State Bank sold $2,613 in fixed rate loans. Farmers State Bank sold the loans in its portfolio to decrease interest rate risk inherent with fixed rate long-term mortgages. In September of 2001, The Citizens Banking Company also sold $4,952 in fixed rate loans. Citizens Banking Company sold the loans for the same reason stated above. At September 30, 2001, the net loan to deposit ratio was 80.0 percent compared to 87.2 percent at December 31, 2000. At September 30, 2001, $115,616 or 99.8 percent of the security portfolio was classified as available for sale. The $219 remainder of the portfolio was classified as held to maturity. Securities increased $43 from December 31, 2000. For the nine months of operations in 2001, $656 was placed into the allowance for loan losses from earnings compared to $499 for the same period of 2000. The increased provision is due to an increase in net charge-offs as well as an increase in nonperforming loans. Additionally, Mr. Money established allowance for loan losses at a higher level than the banks due to the higher credit risks associated with the loans they originate. 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 provisions to the reserve. Charge-offs for the first nine months of 2001 were $792 compared to $645 for the same period of 2000. The September 30, 2001 allowance for loan losses as a percent of total loans was 1.27 percent compared to 1.19 percent at December 31, 2000. Office premises and equipment have decreased $114 and intangible assets have decreased $244 since December 31, 2000. The decrease in office premises and equipment is attributed to new purchases of $603, disposals of $5 and depreciation of $712. Intangible assets decreased due to amortization. Accrued interest and other assets totaled $6,769 at September 30, 2001 compared to $6,038 at December 31, 2000, an increase of $731. This increase was primarily due to increases in other assets at Citizens of $249 and an increase of interest receivable at Mr. Money of $177. The increase in other assets at Citizens was due mainly to an increase in other real estate owned. Mr. Money interest receivable is largely due to timing of receipt of interest payments on loans. Page 18
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Total deposits at September 30, 2001 increased $26,439 from year-end 2000. Noninterest-bearing deposits, representing demand deposit balances, increased $332 from year-end 2000. Interest-bearing deposits, including savings and time deposits, increased $26,106 from year-end 2000. The majority of the total increase in deposits can be explained by the following. Both Citizens and Farmers participated in a program called Bid-Ohio. The program consists of bidding on depository funds from the State Treasurer of Ohio. The two banks successfully received $10,000 of bids during the first nine-months of 2001. These funds were used to decrease the use of fed funds purchased. The two banks also experienced an $8,000 increase in public fund accounts. These balances can and do fluctuate daily. Also, savings balances at the three banks increased $3,000 since December 31, 2000. The year to date 2001 average balance of savings deposits has decreased $5,099 compared to the average balance of the same period for 2000. The growth in deposits was used to reduce the amount of borrowed funds. The current average rate of savings deposits is 2.27 percent compared to 2.36 percent in 2000. The year to date 2001 average balance of time certificates has increased $16,025 compared to the average balance for the same period for 2000. In conjunction with market conditions and in order to remain competitive, the banks have offered special rates on various certificates of deposit. As a result, the banks have experienced shifting toward the special rate certificates of deposit. The current average rate on total interest-bearing deposits is 4.66 percent compared to 5.37 percent for the same period for 2000. Total borrowed funds have decreased $15,085 from December 31, 2000 to September 30, 2001. Federal funds purchased have decreased $20,000 since December 31, 2000. The need for federal funds purchased has decreased, due to increased deposits. However, in the short term, there may still be a need to supplement traditional funding sources with non-deposit funding. In addition, the Corporation has notes outstanding with other financial institutions totaling $14,000 at September 30, 2001. These notes were used to fund the loan growth at Mr. Money. Federal Home Loan Bank borrowings have decreased $440 as a result of scheduled pay downs. Securities sold under agreements to repurchase, which tend to fluctuate, have increased $350 and U.S. Treasury Tax Demand Notes have increased $1,605. Shareholders' equity at September 30, 2001 was $51,073, which was 10.1 percent of total assets. Shareholders' equity at December 31, 2000 was $47,925, which was 9.8 percent of total assets. The increase in shareholders' equity is made up of earnings of $3,845, less dividends paid of $2,205 and the purchase of 5,000 treasury shares for $101, and the increase in the market value of securities available for sale, net of tax, of $1,609. The Corporation paid cash dividends on February 1, 2001, May 1, 2001, and August 1, 2001, each at a rate of $.18 per share. Total outstanding shares at September 30, 2000 were 4,082,619. Page 19
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Results of Operations Nine Months Ended September 30, 2001 and 2000 Net income for the nine months ended September 30, 2001 was $3,845, or $.94 per common share compared to $3,805, or $.92 per common share for the same period in 1999. This was a increase of $40, or 1.0 percent. Some of the reasons for the changes are explained below. Total interest income for the first nine months of 2001 increased $1,961, or 7.8 percent compared to the same period in 2000. The average rate on earning assets on a tax equivalent basis for the first nine months of 2001 was 7.51 percent and 2000 was 7.50 percent. Total interest expense for the first nine months of 2001 has increased $832, or 7.3 percent compared to the same period of 2000. This increase is mainly attributed to an increase in interest on deposits of $308 and an increase in interest on other borrowings of $547. Interest on FHLB borrowings is down $23 due to balances borrowed being lower in 2001. The average rate on interest-bearing liabilities for the first nine months of 2001 was 4.09 percent compared to 4.06 percent for the same period of 2000. The net interest margin on a tax equivalent basis was 4.26 percent for the nine-month period ended September 30, 2001 and 4.08 percent for the same period ended September 30, 2000. Noninterest income for the first nine months of 2001 totaled $3,821, compared to $3,391 for the same period of 2000, an increase of $430, or 12.7 percent. The main reason for the increase was due to gain on sales of loans which were $289 for the nine months ended September 30, 2001, versus a loss of $50 in the prior year due to a write down of loans held for sale to the lower of cost or market. Gain on the sale of loans increased because falling interest rates increased the demand for fixed rate mortgages. This increased the volume of loans sold, including Farmers' sale of $2,613 in fixed rate mortgages and Citizens' sale of $4,952 in fixed rate mortgages. Net gain on securities for the first nine months of 2001 increased $39 compared to 2000. Additionally, revenue from computer operations increased $52. SCC provides item processing for 10 financial institutions in addition to the three subsidiary banks. Other operating income increased $110. This increase was mainly due to a $64 increase in revenues by the corporation's appraisal company. Noninterest expense for the nine months ended September 30, 2001 totaled $12,689 compared to $11,441 for the same period in 2000. This was an increase of $1,248, or 10.9 percent. Salaries and benefits increased $672, or 13.0 percent compared to the first nine months of 2000 as a result of the Corporation adding employees at the affiliates, primarily related to the operation of Mr. Money. Computer processing increased by $36 compared to last year. Also, net occupancy expense increased $67 compared to the first nine months of 2000. The formation of Mr. Money, the relocating of and opening of a new Citizens branch attributed to $81 of the increase of net occupancy expense. SCC experienced a decrease of $13 in net occupancy, primarily due to moving offices from a leased site to the Citizens' downtown offices. Page 20
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Income tax expense for the first nine months of 2001 totaled $1,482 compared to $1,368 for the first nine months of 2000. This was an increase of $114, or 8.3 percent. The increase in the federal income taxes is a result of the increase in total income before taxes of $154. The effective tax rates were comparable for the nine-month periods ended September 30, 2001 and September 30, 2000, at 27.8% and 26.4% respectively. Three Months Ended September 30, 2001 and 2000 Net income for the three months ended September 30, 2001 was $1,504, or $.37 per common share compared to $1,236, or $.30 per common share for the same period in 2000. This was an increase of $268, or 21.7 percent. Some of the reasons for the changes are explained below. Total interest income for the third quarter of 2001 increased $174, or 2.0 percent compared to the same period in 2000. The average rate on earning assets on a tax equivalent basis for the third quarter of 2001 was 7.26 percent and 7.68 percent for the same period of 2000. Total interest expense for the third quarter of 2001 decreased $170, or 4.2 percent compared to the same period of 2000. Interest on deposits decreased $191, primarily due to decreases in the rates paid on the deposits. The average rate on interest-bearing liabilities for the third quarter of 2001 was 3.71 percent compared to 4.24 percent for the same period of 2000. The net interest margin on a tax equivalent basis was 4.34 percent for the three-month period ended September 30, 2001 and 4.12 percent for the same period ended September 30, 2000. Noninterest income for the third quarter of 2001 totaled $1,422, compared to $1,253 for the same period of 2000, an increase of $169. Gain on sale of loans third quarter of 2001 increased $133 compared to 2000. Gain on the sale of loans increased because falling interest rates increased the demand for fixed rate mortgages. Citizens' sale of $4,952 in fixed rate mortgages occurred during the third quarter of 2001. Gain on the sale of securities decreased $5 in the third quarter of 2001. Revenue from computer operations increased $9. Other operating income increased $55. Service charges on deposit accounts decreased $23 as a result of decreased customer overdrafts due to the customers' use of products such as overdraft protection. Noninterest expense for the three months ended September 30, 2001 totaled $4,308 compared to $4,023 for the same period in 2000. This was an increase of $285, or 7.1 percent. Salaries and benefits increased $110, or 6.1 percent compared to the third quarter of 2000 as a result of the Corporation adding employees at the existing affiliates as well as employees at the banks receiving commissions on products that they sell. Other expenses decreased by $9 compared to 2000. Professional fees increased by $84, or 76.4 percent compared to the same period of 2000, due to an increase of $72 in legal and audit fees. Net occupancy expense decreased $5, or 2.3 percent compared to the same period of 2000. Page 21
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- Income tax expense for the third quarter of 2001 totaled $531 compared to $422 for the same period of 2000. This was an increase of $109, or 25.8 percent. The effective tax rates for the three-month periods ended September 30, 2001 and September 30, 2000, were 26.1% and 25.4% respectively. Capital Resources Shareholders' equity totaled $51,073 at September 30, 2001 compared to $47,925 at December 31, 2000. All of the capital ratios exceed the regulatory minimum guidelines as identified in the following table: <TABLE> <CAPTION> Corporation Ratios ---------------------- Regulatory 9/30/01 12/31/00 Minimums ------- -------- ---------- <S> <C> <C> <C> Tier I Risk Based Capital 14.3% 14.1% 4.0% Total Risk Based Capital 15.8% 15.3% 8.0% Leverage Ratio 9.5% 9.3% 4.0% </TABLE> The Corporation paid a cash dividend of $.18 per common share each on February 1, May 1, and August 1, 2001 compared to $.17 per common share each on February 1, May 1, and August 1, 2000. Capital expenditures totaled $604 for the first nine months of 2001 compared to $593 for the same period of 2000. Liquidity Liquidity as it relates to the banking entities of the Corporation is the ability to meet the cash demand and credit needs of its customers. The Banks, through their respective correspondent banks, maintain federal funds borrowing lines totaling $45,261 and the Banks have additional borrowing availability at the Federal Home Loan Bank of Cincinnati of $77,231 at September 30, 2001. Finally, 99.8% of the Corporation's security portfolio has been classified as available for sale, which provides additional liquidity. Page 22
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The Corporation's primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. The Banks do not maintain a trading account for any class of financial instrument and the Corporation is not affected by foreign currency exchange rate risk or commodity price risk. Due to the basis in equities held by Farmers being so much less than the current fair value at this time, the Corporation is not subject to significant equity price risk. Interest rate risk is the risk that the Corporation's financial condition will be adversely affected due to movements in interest rates. The Corporation, like other financial institutions, is subject to interest rate risk to the extent that its interest-earning assets reprice differently than interest-bearing liabilities. The income of financial institutions is primarily derived from the excess of interest earned on interest-earning assets over interest paid on interest-bearing liabilities. One of the Corporation's principal financial objectives is to achieve long-term profitability while reducing its exposure to fluctuations in interest rates. Accordingly, the Corporation places great importance on monitoring and controlling interest rate risk. Several techniques may be used by an institution to minimize interest-rate risk. One approach used by the Corporation is to periodically analyze its assets and liabilities and make future financing and investment decisions based on payment streams, interest rates, contractual maturities, and estimated sensitivity to actual or potential changes in market interest rates. Such activities fall under the broad definition of asset/liability management. The Corporation's primary asset/liability management technique is the measurement of the Corporation's asset/liability gap, that is, the difference between the cash flow amounts of interest sensitive assets and liabilities that will be refinanced (or repriced) during a given period. For example, if the asset amount to be repriced exceeds the corresponding liability amount for a certain day, month, year, or longer period, the institution is in an asset sensitive gap position. In this situation, net interest income would increase if market interest rates rose or decrease if market interest rates fell. If, alternatively, more liabilities than assets will reprice, the institution is in a liability sensitive position. Accordingly, net interest income would decline when rates rose and increase when rates fell. Also, these examples assume that interest rate changes for assets and liabilities are of the same magnitude, whereas actual interest rate changes generally differ in magnitude for assets and liabilities. Several ways an institution can manage interest-rate risk include selling existing assets or repaying certain liabilities; matching repricing periods for new assets and liabilities, for example, by shortening terms of new loans or securities; and hedging existing assets, liabilities, or anticipated transactions. An institution might also invest in more complex financial instruments intended to hedge or otherwise change interest-rate risk. Interest rate swaps, futures contracts, Page 23
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- options on futures, and other such derivative financial instruments often are used for this purpose. Because these instruments are sensitive to interest rate changes, they require management expertise to be effective. Financial institutions are also subject to prepayment risk in falling rate environments. For example, mortgage loans and other financial assets may be prepaid by a debtor so that the debtor may refund its obligations at new, lower rates. The Corporation has not purchased derivative financial instruments in the past and does not intend to purchase such instruments in the near future. Prepayments of assets carrying higher rates reduce the Corporation's interest income and overall asset yields. A large portion of an institution's liabilities may be short term or due on demand, while most of its assets may be invested in long term loans or securities. Accordingly, the Corporation seeks to have in place sources of cash to meet short-term demands. These funds can be obtained by increasing deposits, borrowing, or selling assets. Also, FHLB advances and wholesale borrowings may also be used as important sources of liquidity for the Corporation. Management measures the Corporation's interest rate risk by computing estimated changes in net interest income and the net portfolio value ("NPV") of its cash flows from assets, liabilities and off-balance sheet items in the event of a range of assumed changes in market interest rates. The following tables present an analysis of the potential sensitivity of the Corporation's new present value of its financial instruments to sudden and sustained changes in the prevailing interest rates. NET PORTFOLIO VALUE -- SEPTEMBER 30, 2001 <TABLE> <CAPTION> CHANGE IN RATES $ AMOUNT $ CHANGE % CHANGE --------------- -------- -------- -------- <S> <C> <C> <C> +200 bp $ 40,586 $ (9,945) (20)% +100 bp 45,816 (4,715) (9)% Base 50,531 -- -- -100 bp 55,391 4,860 10% -200 bp 59,496 8,965 18% </TABLE> NET PORTFOLIO VALUE - DECEMBER 31, 2000 <TABLE> <CAPTION> CHANGE IN RATES $ AMOUNT $ CHANGE % CHANGE --------------- -------- -------- -------- <S> <C> <C> <C> +200 bp $ 34,391 $ (7,728) (18)% +100 bp 37,261 (5,627) (13)% Base 42,888 -- -- -100 bp 48,549 5,661 13% -200 bp 53,576 10,668 25% </TABLE> Page 24
First Citizens Banc Corp Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-Q (Amounts in thousands, except share data) - -------------------------------------------------------------------------------- The reduction in the relative change in net portfolio value from December 31, 2000 to September 30, 2001, given the assumed immediate change in interest rates is primarily a result of two factors. First, the reduction in long-term interest rates during 2001 served to increase the base level of net portfolio value due to the corresponding increase in the fair value of loans and investments. In addition, the majority of new loans originated in 2001 have interest rate adjustment features, which lessens the impact of future rate changes. Page 25
First Citizens Banc Corp Other Information Form 10-Q - -------------------------------------------------------------------------------- Part II - Other Information ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. (A) EXHIBIT NO. 99 Safe Harbor under the Private Securities Litigation Reform Act of 1995 (B) REPORTS ON FORM 8-K - None. Page 26
Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, The registrant has caused this report to be signed on its behalf the undersigned thereunto duly authorized. First Citizens Banc Corp /s/ David A. Voight November 14, 2001 - ------------------------------------ ----------------- David A. Voight Date President /s/ James O. Miller November 14, 2001 - ------------------------------------ ----------------- James O. Miller Date Executive Vice President Page 27
First Citizens Banc Corp Index to Exhibits Form 10-Q - -------------------------------------------------------------------------------- <TABLE> <CAPTION> Exhibit Number Description Page Number - ------- ----------- ----------- <S> <C> <C> 99 Safe Harbor Under the Private Incorporated by reference to Securities Litigation Reform Act Exhibit 99 to Annual Report on of 1995 Form 10-K for the Year Ended December 31, 1999 filed by the registrant on March 24, 2000 </TABLE> Page 28