ChoiceOne Financial Services
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ChoiceOne Financial Services - 10-Q quarterly report FY


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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 June 30, 2001

 

 

[   ]

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: 1-9202


ChoiceOne Financial Services, Inc.
(Exact Name of Registrant as Specified in its Charter)

Michigan
(State or Other Jurisdiction of
Incorporation or Organization)

 

38-2659066
(I.R.S. Employer Identification No.)

 

 

 

109 East Division
Sparta, Michigan

(Address of Principal Executive Offices)

 


49345
(Zip Code)


(616) 887-7366
(Registrant's Telephone Number, including Area Code)


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.          Yes    X             No        

As of July 31, 2001, the Registrant had 1,463,160 shares of common stock outstanding.







CHOICEONE FINANCIAL SERVICES, INC.
INDEX TO FORM 10-Q

 

 

 

Page
Number


PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

 

 

Consolidated Balance Sheets

3

 

 

 

 

 

 

Consolidated Statements of Income

4

 

 

 

 

 

 

Consolidated Statements of Changes in Shareholders' Equity

5

 

 

 

 

 

 

Consolidated Statements of Cash Flows

6

 

 

 

 

 

 

Notes to Consolidated Financial Statements

7-9

 

 

 

 

 

Item 2.

Management's Discussion and Analysis of Financial

 

 

 

Condition and Results of Operations

9-16

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

17

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

Item 2.

Changes in Securities and Use of Proceeds

19

 

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

19

 

 

 

 

 

Item 6.

Exhibits and Reports on Form 8-K

19

 

 

 

 

 

 

 

 

SIGNATURES

20






2


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

ChoiceOne Financial Services, Inc.
CONSOLIDATED BALANCE SHEETS

 

 

June 30,
2001


 

 

December 31,
2000


 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

   Cash and due from banks

$

9,043,000

 

$

4,896,000

 

   Securities available for sale

 

11,307,000

 

 

11,533,000

 

   Other securities

 

2,620,000

 

 

2,620,000

 

   Loans held for sale

 

0

 

 

458,000

 

   Loans, net

 

170,460,000

 

 

173,217,000

 

   Premises and equipment, net

 

5,087,000

 

 

5,365,000

 

   Other assets

 

3,161,000


 

 

3,105,000


 

      Total assets

$

201,678,000


 

$

201,194,000


 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

   Deposits - noninterest bearing

$

15,477,000

 

$

13,155,000

 

   Deposits - interest bearing

 

117,123,000

 

 

124,549,000

 

   Federal funds purchased and repurchase agreements

 

4,950,000

 

 

7,549,000

 

   Federal Home Loan Bank advances

 

43,032,000

 

 

36,207,000

 

   Mandatory redeemable shares under Employee Stock
      Ownership Plan

 


13,000

 

 


6,000

 

   Other liabilities

 

3,099,000


 

 

2,139,000


 

      Total liabilities

 

183,694,000

 

 

183,605,000

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

   Preferred stock: 100,000 shares authorized; 0 issued
      and outstanding

 


0

 

 


0

 

   Common stock: 4,000,000 shares authorized;
      1,463,146 issued and outstanding at June 30, 2001
      and 1,385,609 at December 31, 2000 (after reduction
      for 486 mandatory redeemable shares under
      Employee Stock Ownership Plan)

 





13,413,000

 

 





13,317,000

 

   Unallocated shares held by 401(k) and Employee Stock
      Ownership Plan

 


(73,000


)

 


(82,000


)

   Retained earnings

 

4,430,000

 

 

4,222,000

 

   Accumulated other comprehensive income

 

214,000


 

 

132,000


 

      Total shareholders' equity

 

17,984,000


 

 

17,589,000


 

      Total liabilities and shareholders' equity

$

201,678,000


 

$

201,194,000


 


See accompanying notes to consolidated financial statements.






3


ChoiceOne Financial Services, Inc.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

 

Three Months Ended
June 30,


 

 

Six Months Ended
June 30,


 

 

 

2001


 

 

2000


 

 

2001


 

 

2000


 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

   Loans, including fees

$

3,859,000

 

$

3,968,000

 

$

7,856,000

 

$

7,803,000

 

   Securities:

 

 

 

 

 

 

 

 

 

 

 

 

      Taxable

 

96,000

 

 

117,000

 

 

202,000

 

 

246,000

 

      Nontaxable

 

97,000

 

 

93,000

 

 

198,000

 

 

188,000

 

   Other

 

21,000


 

 

0


 

 

32,000


 

 

1,000


 

         Total interest income

 

4,073,000


 

 

4,178,000


 

 

8,288,000


 

 

8,238,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

   Deposits

 

1,522,000

 

 

1,462,000

 

 

3,150,000

 

 

2,829,000

 

   Federal Home Loan Bank advances

 

632,000

 

 

601,000

 

 

1,261,000

 

 

1,182,000

 

   Other

 

43,000


 

 

119,000


 

 

99,000


 

 

249,000


 

         Total interest expense

 

2,197,000


 

 

2,182,000


 

 

4,510,000


 

 

4,260,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

1,876,000

 

 

1,996,000

 

 

3,778,000

 

 

3,978,000

 

Provision for loan losses

 

300,000


 

 

150,000


 

 

450,000


 

 

325,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after

 

 

 

 

 

 

 

 

 

 

 

 

   provision for loan losses

 

1,576,000

 

 

1,846,000

 

 

3,328,000

 

 

3,653,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

   Customer service fees

 

179,000

 

 

140,000

 

 

334,000

 

 

286,000

 

   Insurance commission income

 

324,000

 

 

312,000

 

 

620,000

 

 

606,000

 

   Net gains on sales of securities

 

8,000

 

 

0

 

 

8,000

 

 

0

 

   Mortgage loan sales and servicing

 

91,000

 

 

45,000

 

 

137,000

 

 

73,000

 

   Other income

 

38,000


 

 

61,000


 

 

128,000


 

 

140,000


 

         Total noninterest income

 

640,000

 

 

558,000

 

 

1,227,000

 

 

1,105,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

   Salaries and benefits

 

850,000

 

 

812,000

 

 

1,686,000

 

 

1,653,000

 

   Occupancy expense

 

341,000

 

 

321,000

 

 

703,000

 

 

634,000

 

   Computer service expense

 

45,000

 

 

47,000

 

 

91,000

 

 

92,000

 

   Other expense

 

590,000


 

 

536,000


 

 

1,079,000


 

 

991,000


 

         Total noninterest expense

 

1,826,000


 

 

1,716,000


 

 

3,559,000


 

 

3,370,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

390,000

 

 

688,000

 

 

996,000

 

 

1,388,000

 

Income tax expense

 

109,000


 

 

205,000


 

 

290,000


 

 

422,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

281,000


 

$

483,000


 

$

706,000


 

$

966,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

$

268,000


 

$

512,000


 

$

788,000


 

$

936,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

$

0.19


 

$

0.33


 

$

0.49


 

$

0.67


 


See accompanying notes to consolidated financial statements.





4


ChoiceOne Financial Services, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)

 

 



Common
Stock


 



Unallocated
Shares


 

 



Retained
Earnings


 

Accumulated
Other
Comprehensive
Income


 

 




Total


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2000

$

13,264,000

$

--

 

$

3,677,000

$

(53,000

)

$

16,888,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

  Net income

 

 

 

 

 

 

966,000

 

 

 

 

966,000

 

  Change in unrealized gains (losses)

 

 

 

 

 

 

 

 

(30,000

)

 

(30,000


)

    Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

936,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,716 shares of issued to employee
  benefit plans and directors

 


118,000

 

 

 

 

 

 

 

 

 


118,000

 

3,700 shares of stock purchased by
  401(k) and Employee Stock
  Ownership Plan

 

 

 



(91,000



)

 

 

 

 

 

 



(91,000



)

Fractional shares paid on five-for-
  four stock split

 


(4,000


)

 

 

 

 

 

 

 

 


(4,000


)

1,494 shares repurchased

 

(30,000

)

 

 

 

 

 

 

 

 

(30,000

)

Cash dividends

 

 


 

 


 

 

(482,000


)

 


 

 

(482,000


)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2000

$

13,348,000


$

(91,000


)

$

4,161,000


$

(83,000


)

$

17,335,000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2001

$

13,317,000

$

(82,000

)

$

4,222,000

$

132,000

 

$

17,589,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

  Net income

 

 

 

 

 

 

706,000

 

 

 

 

706,000

 

  Change in unrealized gains (losses)

 

 

 

 

 

 

 

 

82,000

 

 

82,000


 

    Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

788,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,117 shares issued to employee
  benefit plans and directors

 


113,000

 

 

 

 

 

 

 

 

 


113,000

 

486 shares committed to be
  released under Employee Stock
  Ownership Plan

 



(9,000



)



9,000

 

 

 

 

 

 

 



0

 

Fractional shares paid for 5% stock
  dividend

 


(3,000


)

 

 

 

 

 

 

 

 


(3,000


)

332 shares repurchased

 

(5,000

)

 

 

 

 

 

 

 

 

(5,000

)

Cash dividends

 

 


 

 


 

 

(498,000


)

 


 

 

(498,000


)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2001

$

13,413,000


$

(73,000


)

$

4,430,000


$

214,000


 

$

17,984,000


 



See accompanying notes to consolidated financial statements.





5


ChoiceOne Financial Services, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

 

Six Months Ended
June 30,


 

 

 

2001


 

 

2000


 

Cash flows from operating activities

 

 

 

 

 

 

   Net income

$

706,000

 

$

966,000

 

   Reconciling items:

 

 

 

 

 

 

      Depreciation

 

389,000

 

 

340,000

 

      Amortization

 

17,000

 

 

25,000

 

      Provision for loan losses

 

450,000

 

 

325,000

 

      Gain on sales of securities

 

(8,000

)

 

0

 

      Gain on sales of loans

 

(112,000

)

 

(36,000

)

      Loans originated for sale

 

(7,920,000

)

 

(2,694,000

)

      Proceeds from loan sales

 

8,490,000

 

 

2,296,000

 

      Changes in:

 

 

 

 

 

 

         Interest receivable and other assets

 

(56,000

)

 

75,000

 

         Interest payable and other liabilities

 

925,000


 

 

(35,000


)

            Net cash provided by operating activities

 

2,881,000

 

 

1,262,000

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

   Purchases of securities available for sale

 

(1,874,000

)

 

(1,100,000

)

   Proceeds from sales of securities available for sale

 

1,788,000

 

 

0

 

   Principal paydowns on securities available for sale

 

427,000

 

 

1,697,000

 

   Net change in loans

 

2,307,000

 

 

(3,989,000

)

   Premises and equipment expenditures, net

 

(111,000


)

 

(548,000


)

            Net cash provided by/(used in) investing activities

 

2,537,000

 

 

(3,940,000

)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

   Net change in deposits

 

(5,104,000

)

 

6,317,000

 

   Net change in short-term borrowings

 

(2,599,000

)

 

(3,472,000

)

   Proceeds from Federal Home Loan Bank advances

 

9,250,000

 

 

4,000,000

 

   Payments on Federal Home Loan Bank advances

 

(2,425,000

)

 

(3,859,000

)

   Payments on long-term debt

 

0

 

 

(28,000

)

   Issuance of common stock

 

113,000

 

 

118,000

 

   Repurchase of common stock

 

(5,000

)

 

(121,000

)

   Cash dividends and fractional shares from stock dividends

 

(501,000


)

 

(486,000


)

            Net cash (used in)/provided by financing activities

 

(1,271,000


)

 

2,469,000


 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

4,147,000

 

 

(209,000

)

Beginning cash and cash equivalents

 

4,896,000


 

 

3,998,000


 

 

 

 

 

 

 

 

Ending cash and cash equivalents

$

9,043,000


 

$

3,789,000


 

 

 

 

 

 

 

 

Cash paid for interest

$

4,596,000

 

$

4,245,000

 

Cash paid for income taxes

$

210,000

 

$

460,000

 



See accompanying notes to consolidated financial statements.





6


ChoiceOne Financial Services, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include ChoiceOne Financial Services, Inc. (the "Registrant") and its direct and indirect wholly owned subsidiaries, ChoiceOne Bank (the "Bank"), ChoiceOne Insurance Agencies, Inc. (the "Insurance Agency") and ChoiceOne Travel, Inc. (the "Travel Agency"). Intercompany transactions and balances have been eliminated in consolidation. Effective April 1, 2001, the Registrant's management closed the Travel Agency which did not have a material impact upon the consolidated financial statements for the three and six months ended June 30, 2001.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, prevailing practices within the banking industry, Rule 10-01 of Regulation S-X and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The accompanying consolidated financial statements reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of the Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000, the Consolidated Statements of Income for the three- and six-month periods ended June 30, 2001 and June 30, 2000, the Consolidated Statements of Changes in Shareholders' Equity for the six-month periods ended June 30, 2001 and June 30, 2000, and the Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2001 and June 30, 2000. Operating results for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001.

The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Registrant's Annual Report on Form 10-K for the year ended December 31, 2000.

Stock Transactions, Earnings and Cash Dividends Per Share

On April 18, 2001, the Registrant's Board of Directors declared a 5% stock dividend to shareholders of record as of May 22, 2001. The stock dividend was paid on June 12, 2001 and caused 69,290 shares to be issued to shareholders.

On February 16, 2000, the Registrant's Board of Directors declared a five-for-four stock split on the Registrant's common stock. The stock split caused one additional share of common stock to be issued for each four shares outstanding. The stock split was payable to shareholders of record as of April 27, 2000, and was paid on May 22, 2000.

A total of 2,781 shares of common stock were issued to the Registrant's Board of Directors for a cash price of $39,000 under the terms of the Directors' Stock Purchase Plan in the first two quarters of 2001. A total of 2,692 shares of common stock were sold to the Bank's 401(k) savings and retirement plan in the second quarter of 2001. A total of 2,644 shares of common stock were issued to shareholders for a cash price of $35,000 under the Dividend Reinvestment and Supplemental Purchase Plan. The Registrant repurchased 332 shares from shareholders in the first six months of 2001.





7


Earnings per share are based on the weighted average number of shares outstanding during the period. The weighted average number of shares has been adjusted for the 5% stock dividend paid in June 2001 and the five-for-four stock split paid in May 2000. Cash dividends per share are based on the number of shares outstanding at the time the dividend was paid and have also been adjusted for the 5% stock dividend paid in June 2001 and the five-for-four stock split paid in May 2000.

Reclassifications

Certain amounts presented in prior periods have been reclassified to conform to the 2001 presentation.

NOTE 2 - ALLOWANCE FOR LOAN LOSSES

An analysis of changes in the allowance for loan losses follows:

 

 

For the three months ended
June 30, 2001


 

 

For the six months ended
June 30, 2001


 

 

 

2001


 

 

2000


 

 

2001


 

 

2000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

2,177,000

 

$

1,925,000

 

$

2,101,000

 

$

1,907,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision charged to expense

 

300,000

 

 

150,000

 

 

450,000

 

 

325,000

 

Recoveries of charged-off loans

 

53,000

 

 

42,000

 

 

99,000

 

 

61,000

 

Loans charged-off

 

(520,000


)

 

(154,000


)

 

(640,000


)

 

(330,000


)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at end of period

$

2,010,000


 

$

1,963,000


 

$

2,010,000


 

$

1,963,000


 


Information regarding impaired loans follows:

 

 

June 30,
2001


 

December 31,
2000


 

 

 

 

 

 

 

Loans with no allowance allocated

$

287,000

$

289,000

 

Loans with allowance allocated

 

0

 

635,000

 

Amount of allowance for loan losses allocated

 

0

 

189,000

 















8


 

 

Six Months ended
June 30,


 

 

 

2001


 

2000


 

 

 

 

 

 

 

Average balance during the period

$

711,000

$

1,200,000

 

Interest income recognized thereon

 

9,000

 

44,000

 

Cash basis interest income recognized

 

9,000

 

39,000

 



NOTE 3 - EARNINGS PER SHARE

A computation of basic earnings per share and diluted earnings per share follows:

 

 

Three Months Ended
June 30,


 

Six Months Ended
June 30,


 

 

 

2001


 

2000


 

2001


 

2000


 

Basic Earnings Per Share

 

 

 

 

 

 

 

 

 

   Net income available to common

 

 

 

 

 

 

 

 

 

     shareholders

$

281,000


$

483,000


$

706,000


$

966,000


 

 

 

 

 

 

 

 

 

 

 

   Weighted average common shares
     outstanding

 


1,458,088


 


1,446,912


 


1,455,309


 


1,449,712


 

 

 

 

 

 

 

 

 

 

 

   Basic earnings per share

$

0.19


$

0.33


$

0.49


$

0.67


 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

   Net income available to common

 

 

 

 

 

 

 

 

 

     shareholders

$

281,000


$

483,000


$

706,000


$

966,000


 

 

 

 

 

 

 

 

 

 

 

   Weighted average common shares
     outstanding

 


1,458,088

 


1,446,912

 


1,455,309

 


1,449,712

 

   Plus dilutive stock options

 

99


 

2,829


 

0


 

2,956


 

 

 

 

 

 

 

 

 

 

 

   Weighted average common shares
     outstanding and potentially dilutive

 

 

 

 

 

 

 

 

 

     shares

 

1,458,187


 

1,449,741


 

1,455,309


 

1,452,668


 

 

 

 

 

 

 

 

 

 

 

   Diluted earnings per share

$

0.19


$

0.33


$

0.49


$

0.67


 


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is designed to provide a review of the consolidated financial condition and results of operations of ChoiceOne Financial Services, Inc. (the "Registrant" or "ChoiceOne") and its direct and indirect wholly owned subsidiaries, ChoiceOne Bank (the "Bank"), ChoiceOne Insurance Agencies, Inc. (the "Insurance Agency") and ChoiceOne Travel, Inc. (the "Travel Agency"). This discussion should be read in conjunction with the consolidated financial statements and related footnotes.

Effective April 1, 2001, the Registrant's management closed ChoiceOne Travel, Inc. The effect of the closing of ChoiceOne Travel and its operations up to the date of closing had an immaterial impact on the consolidated financial statements.





9


FORWARD-LOOKING STATEMENTS

This discussion and other sections of this report contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates, and projections about the financial services industry, the economy, and about the Registrant itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, the Registrant undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a resu lt of new information, future events, or otherwise.

Risk factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national economy. These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.


RESULTS OF OPERATIONS

Net Income and Return on Average Assets and Shareholders' Equity

Net income decreased $202,000 or 42% in the second quarter of 2001 compared to the same period in the prior year. Net income in the first six months of 2001 decreased $260,000, or 27% from the same period in the prior year. Reduced net interest income, an increased provision for loan losses, and higher noninterest expenses were partially offset by higher noninterest income for the quarter ended June 30, 2001.

The decrease in net interest income for the three months and six months ended June 30, 2001 was primarily due to interest-earning assets repricing downward faster than interest-bearing deposits. A larger loan loss provision was made during the second quarter of 2001 to increase the allowance for loan losses to the balance required. The growth in noninterest expense for the quarter and year-to-date resulted primarily from higher occupancy costs due to the remodeling of the Bank's main office and two branch offices and from higher other noninterest expenses. Also, increased consulting fees and collection costs on nonperforming assets were charged in the six months ended 2001 versus 2000. Noninterest income received a boost during the quarter ended June 30, 2001 from increased mortgage refinancing activity, more deposit service fees, and a modest gain from the sale of some investment securities.

Return on average assets was 0.71% for the first six months of 2001, compared to 1.00% for the same period in 2000. Return on average shareholders' equity was 7.97% for the first half of 2001, compared to 11.34% for the comparable period of 2000.






10


Cash and Stock Dividends

Cash dividends declared in the second quarter of 2001 were $248,000, or $0.17 per common share, which represented no change from the amount declared for the second quarter of 2000. The cash dividends paid in the first six months of 2001 were $498,000 or $0.35 per common share, which was $0.02 or 6% greater than dividends paid in the same period in 2000. Dividends per share have been adjusted for the 5% stock dividend in 2001 and five-for-four stock split in 2000. The cash dividend payout percentage was 71% in the first six months of 2001, compared to 50% in the same period of 2000.

The Registrant declared a 5% stock dividend payable on the Registrant's common stock on April 18, 2001. The dividend, payable to shareholders of record as of May 22, 2001, was paid on June 12, 2001.

Interest Income and Expense

Tables 1 and 2 on the following pages provide information regarding interest income and expense for the six-month periods ended June 30, 2001 and June 30, 2000. Table 1 documents average balances and interest income and expense, as well as the average rates earned or paid on assets and liabilities. Table 2 documents the effect on interest income and expense of changes in volume (average balance) and interest rates. These tables are referred to in the discussion of interest income, interest expense and net interest income below.



















11


Table 1 - Average Balances and Tax Equivalent Interest Rates (Dollars in Thousands)

 

 

For the Six Months Ended June 30,


 

 

 

2001


 

 

2000


 

 

 

Average
Balance


 


Interest


 

Average
Rate


 

 

Average
Balance


 


Interest


 

Average
Rate


 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Loans (1)

$

171,589

$

7,864

 

9.17

%

$

169,926

$

7,811

 

9.19

%

   Taxable securities (2)

 

5,775

 

202

 

7.00

 

 

6,997

 

246

 

7.01

 

   Nontaxable securities (1)(2)

 

8,259

 

300

 

7.26

 

 

7,424

 

285

 

7.52

 

   Other

 

1,687


 

32


 

3.79

 

 

71


 

1


 

2.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Interest-earning assets

 

187,310

 

8,398


 

8.97

 

 

184,418

 

8,343


 

9.05

 

   Noninterest-earning assets

 

12,566


 

 

 

 

 

 

11,305


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Total assets

$

199,876


 

 

 

 

 

$

195,723


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Interest-bearing demand deposits

$

26,444

 

424

 

3.21

%

$

25,768

 

430

 

3.34

%

   Savings deposits

 

7,743

 

46

 

1.19

 

 

7,723

 

45

 

1.17

 

   Time deposits

 

86,643

 

2,680

 

6.19

 

 

82,902

 

2,354

 

5.68

 

   Federal Home Loan Bank advances

 

39,720

 

1,260

 

6.34

 

 

36,809

 

1,182

 

6.42

 

   Other

 

4,980


 

99


 

3.98

 

 

8,509


 

249


 

5.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Interest-bearing liabilities

 

165,530

 

4,509


 

5.45


 

 

161,711

 

4,260


 

5.27


 

   Demand deposits

 

14,512

 

 

 

 

 

 

14,978

 

 

 

 

 

   Other noninterest-bearing liabilities

 

2,282

 

 

 

 

 

 

1,896

 

 

 

 

 

   Shareholders' equity

 

17,552


 

 

 

 

 

 

17,138


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Total liabilities and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         shareholders' equity

$

199,876


 

 

 

 

 

$

195,723


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (tax-equivalent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   basis) - interest spread

 

 

 

3,889

 

3.52


%

 

 

 

4,083

 

3.78


%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustment (1)

 

 

 

(111


)

 

 

 

 

 

(105


)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

3,778


 

 

 

 

 

$

3,978


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income as a percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   earning assets (tax-equivalent basis)

 

 

 

 

 

4.15


%

 

 

 

 

 

4.43


%

________________________

(1)

Interest on nontaxable securities and loans has been adjusted to a fully tax-equivalent basis to facilitate comparison to the taxable interest-earning assets. The adjustment uses an incremental tax rate of 34% for the periods presented.

 

 

(2)

The average balance includes the effect of unrealized appreciation/depreciation on securities, while the average rate was computed on the average amortized cost of the securities.







12


Table 2 - Changes in Tax Equivalent Net Interest Income (Dollars in Thousands)

 

 

Six Months Ended June 30,


 

 

 

2001 Over 2000


 

 

 

Total


 

 

Volume


 

 

Rate


 

Increase (decrease) in interest income (1)

 

 

 

 

 

 

 

 

 

   Loans (2)

$

53

 

$

58

 

$

(5

)

   Taxable securities

 

(44

)

 

(32

)

 

(12

)

   Nontaxable securities (2)

 

15

 

 

20

 

 

(5

)

   Other

 

31


 

 

19


 

 

12


 

 

 

 

 

 

 

 

 

 

 

      Net change in tax-equivalent income

 

55

 

 

65

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in interest expense (1)

 

 

 

 

 

 

 

 

 

   Interest-bearing transaction accounts

 

(6

)

 

10

 

 

(16

)

   Savings deposits

 

1

 

 

0

 

 

1

 

   Time deposits

 

326

 

 

127

 

 

199

 

   Federal Home Loan Bank advances

 

78

 

 

91

 

 

(13

)

   Other

 

(150


)

 

(58


)

 

(92


)

 

 

 

 

 

 

 

 

 

 

      Net change in interest expense

 

249


 

 

170


 

 

79


 

 

 

 

 

 

 

 

 

 

 

      Net change in tax-equivalent net interest income

$

(194


)

$

(105


)

$

(89


)

________________________

(1)

The volume variance is computed as the change in volume (average balance) multiplied by the previous year's interest rate. The rate variance is computed as the change in interest rate multiplied by the previous year's volume (average balance). The change in interest due to both volume and rate has been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

 

 

(2)

Interest on nontaxable investment securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 34% for the periods presented.


Net Interest Income

As shown in Tables 1 and 2, tax equivalent net interest income decreased $194,000 in the first six months of 2001 compared to the same period in 2000. Tax-equivalent net interest income decreased $116,000 in the three months ended June 30, 2001 and dropped $78,000 for the three months ended March 31, 2001. This is largely attributable to the massive cuts in short-term interest rates by the Federal Reserve in the first six months of 2001 and the Bank's assets repricing much faster than its deposits and other funding sources.

Significantly higher rates paid on time deposits along with a $3.7 million increase in average time deposit balances caused net interest income to drop $326,000 in 2001 versus 2000. A $2.9 million increase in average advances from the Federal Home Loan Bank caused net interest income to decrease $78,000. A substantial drop of $3.5 million in other interest-bearing balances (federal funds purchased and security repurchase agreements) and the significant short-term interest rate relief helped offset the reduction in net interest income by $150,000.

The average balance of loans increased $1.7 million in the first half of 2001 causing net interest income to increase $53,000 in 2001 versus 2000. Lower average balances and yields caused interest income from total investment



13


securities to be slightly lower due to both volume and rate. A higher average balance of other interest-bearing assets (primarily federal funds sold) caused net interest income to rise slightly in 2001 versus 2000.

Table 1 shows that the net interest income spread was 3.52% for the first six months of 2001, compared to 3.78% for the first half of 2000. The net interest income spread was 3.40% for the first quarter of 2001, so the Registrant's margin improved during the second quarter of 2001. The increase in the spread from the first quarter of 2001 was due to a steady rate on interest-earning assets while the Registrant continued to reduce rates paid on interest-bearing liabilities. The Registrant's management expects this trend of lower-cost funding to continue for the remainder of 2001. The average rate on interest-earning assets was 8.97% for both the first quarter and first six months of 2001, compared to 9.05% for the first half of 2000. The average rate on interest-bearing liabilities was 5.45% for the first six months of 2001, compared to 5.56% for the first quarter of 2001 and 5.27% for the first half of 2000. The extreme drop in short-term rates affected the Registrant's assets more than its liabilities be cause assets repriced more frequently than its liabilities during the period from January 1, 2001 to June 30, 2001.

The Federal Reserve Bank's Open Market Committee (the "FOMC") has slashed the federal funds interest rate 275 basis points since the beginning of 2001. Many banks, including the Registrant, have dropped their prime lending rate each time that the federal funds rate has been reduced. Management believes that there is a possibility that the FOMC may continue with its rate reductions until the national economy shows signs of improving.

Although it is uncertain as to whether the FOMC may cut the federal funds interest rate in the second half of 2001, downward pressures on rates earned on loans and investments are expected to continue. Falling rates on interest-earning liabilities and steady rates on interest-bearing assets may slow or reverse the contraction in the Registrant's net interest margin. Management plans to replace maturities in its brokered time deposits and Federal Home Loan Bank advances with growth of its local deposits, which carry a lower average interest rate. Management intends to emphasize growth in the commercial and consumer loan portfolios and build the investment securities portfolio in an attempt to improve the net interest margin.

Provision and Allowance for Loan Losses

The provision for loan losses was $125,000 higher in the first six months of 2001 than in the same period of 2000. The allowance for loan losses decreased $167,000 from March 31, 2001 to June 30, 2001 and has decreased $91,000 since the end of 2000. The allowance was 1.17% of total loans as of June 30, 2001, compared to 1.25% at March 31, 2001, and 1.25% at December 31, 2000. The allowance for loan losses as a percentage of nonperforming loans was 84% as of June 30, 2001, compared to 98% as of March 31, 2001, and 76% as of December 31, 2000.

Charge-offs and recoveries of charged-off loans for the six-month periods ended June 30 were:

 

 

2001


 

 

2000


 

 

 

Charge-offs


 

 

Recoveries


 

 

Charge-offs


 

 

Recoveries


 

Commercial

$

285,000

 

$

5,000

 

$

89,000

 

$

2,000

 

Consumer

 

242,000

 

 

94,000

 

 

241,000

 

 

59,000

 

Mortgage

 

113,000


 

 

0


 

 

0


 

 

0


 

 

$

640,000


 

$

99,000


 

$

330,000


 

$

61,000


 


The increase was due to several commercial loans and one significant construction mortgage loan charged-off during the second quarter of 2001. Consumer loans charged-off in the first six months of 2001 were consistent with the level charged-off through the same period in 2000. Recoveries on consumer loans increased in 2001 due to additional personnel that is focusing on recovery activities. The Registrant's management expects that the



14


amount of loan charge-offs in the remainder of 2001 will be dependent on the extent to which business and consumer borrowers are affected by the local economy and other economic factors. As loan charge-offs, changes in the level of nonperforming loans, and changes within the composition of the loan portfolio occur in the remainder of 2001, the provision and allowance for loan losses will be adjusted as necessary.

Noninterest Income

Total noninterest income increased $82,000 in the second quarter and $122,000 in the first six months of 2001 compared to the same periods in the prior year. Mortgage loans sales and servicing income rose $46,000 in the second quarter of 2001 and $64,000 in the first half of 2001 compared to the prior year. The Bank's mortgage lenders anticipate more refinancing activity for the remainder of 2001. Higher service charges on deposit accounts contributed $39,000 and $48,000 for the quarter and six months ended June 30, 2001, respectively. Slightly more commissions from the Insurance Agency and a minor gain from the sale of securities also helped noninterest income grow in the first six months of 2001 versus 2000.

Noninterest Expense

Total noninterest expense increased $110,000 in the second quarter of 2001 and $189,000 in the first six months of 2001 compared to 2000. Occupancy expenses were higher in each period due to depreciation and other costs related to the remodeling of the Bank's main office and two branch offices, which caused part of the growth in 2001. Higher consulting expense and the write-off of uncollectible insurance premium receivables at the Insurance Agency also contributed to the increase in the second quarter of 2001 compared to 2000.

FINANCIAL CONDITION

Securities

The investment securities portfolio decreased $174,000 in the second quarter of 2001 and has decreased $226,000 since the end of 2000. The slight decrease was primarily caused by principal paydowns on mortgage-backed securities. The Bank purchased two corporate bonds and sold several mortgage-backed securities for a gain of $8,000 in the second quarter of 2001. The Bank's Investment Committee continues to monitor the securities portfolio and plans to purchase securities when prudent. The Bank uses certain securities as collateral for repurchase agreements and plans to continue this practice as a low-cost source of funding. Securities also serve as a source of liquidity for deposit needs.

Loans

The total loan portfolio decreased $851,000 in the second quarter of 2001 and $3.2 million since December 31, 2000. Commercial loans dropped $400,000 in the quarter ended June 30, 2001 and $2.0 million since December 31, 2000. The Registrant's commercial loans balance has been affected by some large paydowns in 2001. Commercial loan demand has also been lessened by uncertainties regarding the local economy. Consumer loans increased $500,000 for the three months ended June 30, 2001, but have declined $700,000 since the end of 2000. The decrease in consumer loans in the first half of 2001 resulted from less reliance on indirect automobile loans. Mortgage loans have dropped $1.0 million in the second quarter of 2001 and $600,000 for the year. Most of the decrease in mortgage loans was due to wholesale mortgages. The Registrant discontinued the purchase of wholesale mortgages in late 2000. As a result, the balance of wholesale mortgages has fallen approximately $1.0 million since the end of 2000 to $5,052,000 as of June 30, 2001.

The Registrant's management believes that growth in all of the loan categories will continue to be a challenge in the second half of 2001. Borrower concerns about the local economy may continue to affect demand for both



15


business and personal loans. The Bank's commercial loan officers plan to use a calling program to attempt to stimulate commercial loan demand. The consumer loan officers plan to promote home equity loans in the third and fourth quarters of 2001 to aid demand for direct consumer loans. The balance of the Registrant's mortgage loans may continue to decrease slightly in the remainder of 2001 since the Registrant plans to sell the majority of its loan originations in the secondary market.

Information regarding impaired loans can be found in Note 2 to the consolidated financial statements included in this report. In addition to its review of the loan portfolio for impaired loans, management also monitors other nonperforming assets. These are comprised of: (1) loans accounted for on a nonaccrual basis; (2) loans, not included in nonaccrual loans, which are contractually past due 90 days or more as to interest or principal payments; (3) loans, not included in nonaccrual or loans past due 90 days or more, which are considered troubled debt restructurings; and (4) foreclosed real estate owned by the Bank. Balances of these nonperforming categories are as follows:

 

 

June 30,
2001


 

December 31,
2000


Loans accounted for on a nonaccrual basis

$

831,000

$

1,019,000

Loans, not included in nonaccrual loans, which are contractually

 

 

 

 

   past due 90 days or more as to interest or principal payments

 

826,000

 

1,053,000

Loans, not included in nonaccrual or loans past due 90 days or

 

 

 

 

   more, which are considered troubled debt restructurings

 

111,000

 

108,000

Other real estate owned

 

622,000


 

126,000


 

 

 

 

 

Total

$

2,390,000


$

2,049,000



The increase in the balance of other real estate owned resulted from the transfer of one commercial loan and three real estate mortgage loans from nonperforming loans to other real estate owned in the second quarter of 2001.

Management maintains a list of loans that are not classified as nonperforming loans but where some concern exists as to the borrowers' abilities to comply with the original loan terms. The total balance of these loans was $4,145,000 as of June 30, 2001, compared to $3,034,000 as of March 31, 2001 and $2,216,000 as of December 31, 2000. Approximately $1,600,000 of the increase from March 31, 2001 to June 30, 2001 was due to one loan added to the list due to concerns about the borrower's financial condition. No portion of the allowance for loan losses had been specifically allocated to these loans at June 30, 2001. However, the allowance for loan losses that has not been specifically allocated to individual loans is available for these potential problem loans.

Deposits and Other Funding Sources

Total deposits decreased $2.1 million in the second quarter of 2001 and $5.1 million since December 31, 2000. The reason for the change in total deposits was a decrease in brokered time deposits in the first two quarters of 2001. Brokered time deposits dropped $3.7 million in the second quarter of 2001 and have fallen $8.0 million since the end of 2000. The decrease in brokered time deposits reflects management's desire to replace its maturing wholesale funding with retail deposits as retail deposits carry a lower interest rate. Management has also emphasized non-time deposit products in the first half of 2001 in an attempt to attract lower-cost retail deposits. As a result, demand deposits and savings deposits have grown $1.7 million since the end of 2000. Management also plans to introduce a new checking account product in the third quarter of 2001 in an attempt to build demand deposits.






16


Outstanding advances from the Federal Home Loan Bank increased $2.3 million from March 31, 2001 and $6.8 million since December 31, 2000. The Bank has several long-term fixed-rate advances with maturities ranging from 2001 to 2005 and plans to replace these borrowings with local time deposits. The Bank cannot retire the advances without incurring significant prepayment penalties.

Shareholders' Equity

Total shareholders' equity increased $52,000 in the second quarter of 2001 and has grown $395,000 since the end of 2000. Equity growth resulted from retained earnings and $113,000 received from the issuance of common stock and an $82,000 increase in the balance of accumulated other comprehensive income. Total shareholders' equity as a percentage of assets was 8.91% as of June 30, 2001, compared to 8.93% as of March 31, 2001 and 8.75% as of December 31, 2000. Based on risk-based capital guidelines established by the Bank's regulators, the Registrant's risk-based capital was categorized as well capitalized at June 30, 2001.

Capital Resources

The Registrant's management does not currently have any plans that will utilize significant amounts of the Registrant's capital. Management believes that the current level of capital is adequate to take advantage of potential opportunities that may arise for the Registrant or the Bank.

Liquidity and Rate Sensitivity

Cash and cash equivalents increased $1.6 million in the second quarter of 2001 and $4.1 million since the end of 2000. Management believes that the current level of liquidity is sufficient to meet the Bank's normal operating needs. This belief is based upon the availability of deposit growth from both the local and national markets, maturities of securities, normal loan repayments, income retention, federal funds that can be purchased from correspondent banks, and advances available from the Federal Home Loan Bank. The Bank has available a secured line of credit with the Federal Reserve Bank of Chicago. The line is secured by commercial loans. As of June 30, 2001, the Bank had $25,000,000 available under this line of credit. The Bank does not anticipate that the line of credit will be used for normal operating needs, but could be used for liquidity purposes in special circumstances.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

The information concerning quantitative and qualitative disclosures about market risk contained under the caption "Liquidity and Interest Rate Risk" on pages 33 and 34 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2000 is here incorporated by reference. Such Annual Report was previously filed as Exhibit 13 to the Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.

The Bank's sensitivity to changes in interest rates is monitored by the Asset & Liability Management Committee (the "Committee"). The Committee uses a simulation model to subject rate-sensitive assets and liabilities to interest rate shocks. Assets and liabilities are subject to an immediate 200 basis point shock and the effect on net income and shareholders' equity is measured. The rate shock computation as of June 30, 2001 caused net income to increase 3.3% if rates increased 200 basis points and to decrease 22.7% if rates decreased 200 basis points. The market value of shareholders' equity experienced an insignificant change in both a rising and declining interest rate environment. The Committee continues to monitor the effect of changes in interest rates upon the Registrant's financial condition.

The Registrant's management does not believe that there has been a material change in the nature or categories of the Registrant's primary market risk exposures, or the particular markets that present the primary risk of loss to the




17


Registrant. As of the date of this report, the Registrant's management does not know of or expect there to be any material change in the general nature of its primary market risk exposure in the near term. The methods by which the Registrant manages its primary market risk exposures, as described in the sections of its Annual Report to Shareholders incorporated by reference in response to this item, have not changed materially since the end of 2000. As of the date of this report, the Registrant's management does not expect to make material changes in those methods in the near term. The Registrant may change those methods in the future to adapt to changes in circumstances or to implement new techniques.

The Registrant's market risk exposure is mainly comprised of its vulnerability to interest rate risk. Prevailing interest rates and interest rate relationships are primarily determined by market factors that are beyond the Registrant's control. All information provided in response to this item consists of forward-looking statements. Reference is made to the section captioned "Forward-Looking Statements" in Item 2 of this report for a discussion of the limitations on the Registrant's responsibility for such statements. In this discussion, "near term" means a period of one year following the date of the most recent balance sheet contained in this report.























18


PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

On April 30, 2001, the Registrant issued 1,698 shares of common stock to the directors of the Registrant pursuant to the Directors' Stock Purchase Plan for an aggregate cash price of $24,000. The Registrant relied on the exemption contained in Section 4(6) of the Securities Act of 1933 in connection with this sale.

Item 4.  Submission of Matters to a Vote of Security Holders

On May 1, 2001, the Annual Meeting of Shareholders of the Registrant was held. The following directors were elected by the shareholders to serve until the Annual Meeting for the respective term indicated:

 


Term Expiring


 


Votes For


 


Votes Withheld


 

Broker
Non-Votes


Frank G. Berris

2004

 

1,147,293

 

10,592

 

0

Lawrence D. Bradford

2004

 

1,148,080

 

9,805

 

0

Lewis G. Emmons

2004

 

1,118,503

 

39,382

 

0

Stuart Goodfellow

2004

 

1,148,080

 

9,805

 

0

Bruce A. Johnson

2002

 

1,147,293

 

10,592

 

0


Directors Jon E. Pike and Linda R. Pitsch continue their term through the 2002 Annual Meeting. Directors William F. Cutler, Paul L Johnson, and Andrew W. Zamiara continue their term until the 2003 Annual Meeting

Item 6.  Exhibits and Reports on Form 8-K.

 

1.

Exhibits. The following exhibits are filed or incorporated by reference as part of this report:

 

 

 

 

 

 Exhibit
Number

 


Document

 

 

 

 

 

3.1

 

Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 2000. Here incorporated by reference.

 

 

 

 

 

3.2

 

Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended September 30, 1998. Here incorporated by reference.

 

 

 

 

 

 

 

 

 

2.

Reports on Form 8-K. One report on Form 8-K was filed during the three months ended June 30, 2001 as follows:


 

Date


 

Items Reported


 

Financial Statements


 

 

 

 

 

 

 

April 30, 2001

 

9

 

None





19


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

 

CHOICEONE FINANCIAL SERVICES, INC.

 

 

 

Date August 14, 2001

 

/s/ James A. Bosserd


James A. Bosserd
President and Chief Executive Officer
(Principal Executive Officer)

 

 

 

Date August 14, 2001

 

/s/ Thomas L. Lampen


Thomas L. Lampen
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)






















20


INDEX TO EXHIBITS



The following exhibits are filed or incorporated by reference as part of this report:

 

Exhibit
Number

 


Document

 

 

 

 

 

3.1

 

Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 2000. Here incorporated by reference.

 

 

 

 

 

3.2

 

Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended September 30, 1998. Here incorporated by reference.