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 March 31, 2004
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 0-13270
Unizan Financial Corp.
(Exact name of registrant as specified in its charter)
| Ohio | 34-1442295 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
220 Market Avenue South, Canton, Ohio 44702
(Address of principal executive offices)
(Zip Code)
(330) 438-1118
(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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
| Class |
Outstanding as of April 30, 2004 | |
| Common Stock, $1.00 Stated Value | 21,758,794 |
UNIZAN FINANCIAL CORP.
| PAGE NO. | ||||
| PART I. |
FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements |
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| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5-10 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11-18 | ||
| Item 3. |
19-20 | |||
| Item 4. |
20 | |||
| PART II. |
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| 21-23 | ||||
| Item 1. Legal Proceedings |
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| Item 3. Defaults upon Senior Securities |
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| Item 5. Other Information |
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| Item 6. Exhibits and Reports on Form 8-K |
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| 23 | ||||
CONSOLIDATED BALANCE SHEETS
| (Unaudited, except December 31, 2003) (In thousands except per share data) |
March 31, 2004 |
December 31, 2003 |
||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 71,924 | $ | 56,558 | ||||
| Federal funds sold |
250 | — | ||||||
| Interest bearing deposits with banks |
4,830 | 1,942 | ||||||
| Securities held-to-maturity, (Fair value: $2,678 and $2,982, respectively) |
2,556 | 2,861 | ||||||
| Securities available-for-sale, at fair value |
484,760 | 471,775 | ||||||
| Federal Home Loan Bank stock, at cost |
35,061 | 34,716 | ||||||
| Loans originated and held for sale |
4,744 | 2,679 | ||||||
| Loans: |
||||||||
| Commercial, financial and agricultural |
258,677 | 261,167 | ||||||
| Aircraft |
134,889 | 133,277 | ||||||
| Commercial real estate |
662,289 | 658,699 | ||||||
| Residential real estate |
449,057 | 450,398 | ||||||
| Consumer |
464,323 | 464,943 | ||||||
| Total loans |
1,969,235 | 1,968,484 | ||||||
| Less allowance for loan losses |
(24,611 | ) | (24,611 | ) | ||||
| Net loans |
1,944,624 | 1,943,873 | ||||||
| Premises and equipment, net |
24,641 | 25,353 | ||||||
| Goodwill |
91,971 | 91,971 | ||||||
| Other intangible assets |
17,836 | 18,661 | ||||||
| Accrued interest receivable and other assets |
77,987 | 76,860 | ||||||
| Total Assets |
$ | 2,761,184 | $ | 2,727,249 | ||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Noninterest bearing deposits |
$ | 214,844 | $ | 206,501 | ||||
| Interest bearing deposits |
1,731,299 | 1,769,291 | ||||||
| Total deposits |
1,946,143 | 1,975,792 | ||||||
| Short-term borrowings |
59,364 | 56,413 | ||||||
| Other borrowings |
403,110 | 344,853 | ||||||
| Subordinated note |
20,619 | 20,619 | ||||||
| Accrued taxes, expenses and other liabilities |
25,262 | 26,749 | ||||||
| Total Liabilities |
2,454,498 | 2,424,426 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock ($1.00 stated value, 100,000,000 shares authorized and 22,123,069 shares issued) |
22,123 | 22,123 | ||||||
| Additional paid-in capital |
224,722 | 223,613 | ||||||
| Retained earnings |
74,461 | 74,993 | ||||||
| Stock held by deferred compensation plan, 118,616 and 118,616 shares at cost |
(2,016 | ) | (2,016 | ) | ||||
| Treasury stock, 368,389 and 440,276 shares at cost |
(10,308 | ) | (11,515 | ) | ||||
| Accumulated other comprehensive loss |
(2,296 | ) | (4,375 | ) | ||||
| Total Shareholders’ Equity |
306,686 | 302,823 | ||||||
| Total Liabilities and Shareholders’ Equity |
$ | 2,761,184 | $ | 2,727,249 | ||||
See Notes to the Consolidated Financial Statements
1
CONSOLIDATED STATEMENTS OF INCOME
| (Unaudited) (In thousands except per share data) |
Three Months Ended March 31, | |||||
| 2004 |
2003 | |||||
| Interest income: |
||||||
| Interest and fees on loans: |
||||||
| Taxable |
$ | 27,642 | $ | 31,355 | ||
| Tax exempt |
32 | 42 | ||||
| Interest and dividends on securities |
||||||
| Taxable |
4,121 | 5,516 | ||||
| Tax exempt |
476 | 418 | ||||
| Interest on bank deposits and federal funds sold |
8 | 9 | ||||
| Total interest income |
32,279 | 37,340 | ||||
| Interest expense: |
||||||
| Interest on deposits |
9,150 | 11,051 | ||||
| Interest on subordinated note |
505 | — | ||||
| Interest on company obligated mandatorily redeemable trust preferred |
— | 505 | ||||
| Interest on borrowings |
3,832 | 4,493 | ||||
| Total interest expense |
13,487 | 16,049 | ||||
| Net interest income |
18,792 | 21,291 | ||||
| Provision for loan losses |
1,000 | 1,269 | ||||
| Net interest income after provision for loan losses |
17,792 | 20,022 | ||||
| Other income: |
||||||
| Trust, financial planning, brokerage and insurance sales |
1,870 | 1,712 | ||||
| Customer service fees |
1,844 | 1,553 | ||||
| Gains on sale of loans |
1,245 | 2,130 | ||||
| Security gains, net |
71 | — | ||||
| Other operating income |
1,984 | 1,557 | ||||
| Total other income |
7,014 | 6,952 | ||||
| Other expenses: |
||||||
| Salaries, wages, pension and benefits |
12,774 | 8,932 | ||||
| Occupancy expense |
867 | 911 | ||||
| Furniture, equipment and data processing expense |
1,438 | 1,428 | ||||
| Taxes other than income taxes |
630 | 517 | ||||
| Other intangible amortization expense |
825 | 858 | ||||
| Other operating expense |
4,880 | 4,064 | ||||
| Total other expenses |
21,414 | 16,710 | ||||
| Income before income taxes |
3,392 | 10,264 | ||||
| Provision for income taxes |
980 | 3,228 | ||||
| Net income |
$ | 2,412 | $ | 7,036 | ||
| Earnings per share: |
||||||
| Basic |
$ | 0.11 | $ | 0.32 | ||
| Diluted |
$ | 0.11 | $ | 0.32 | ||
| Dividends per share |
$ | 0.135 | $ | 0.135 | ||
| Weighted average shares outstanding: |
||||||
| Basic |
21,733,289 | 21,831,377 | ||||
| Diluted |
21,972,349 | 22,290,839 | ||||
See Notes to the Consolidated Financial Statements
2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended March 31, |
||||||||
| (Unaudited) (In thousands) |
2004 |
2003 |
||||||
| Net Income |
$ | 2,412 | $ | 7,036 | ||||
| Unrealized holding gains/(losses) on available-for-sale securities |
3,530 | (201 | ) | |||||
| Reclassification adjustment for gains on securities included in net income |
(71 | ) | — | |||||
| Net |
3,459 | (201 | ) | |||||
| Unrealized losses on cash flow hedges |
(676 | ) | (307 | ) | ||||
| Reclassification adjustment for losses on cash flow hedges included in net income |
415 | 354 | ||||||
| Net |
(261 | ) | 47 | |||||
| Total |
3,198 | (154 | ) | |||||
| Tax (expense)/benefit |
(1,119 | ) | 54 | |||||
| Other comprehensive income (loss), net of tax |
2,079 | (100 | ) | |||||
| Comprehensive income |
$ | 4,491 | $ | 6,936 | ||||
See Notes to the Consolidated Financial Statements
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three months ended March 31, |
||||||||
| (Unaudited) (In thousands) |
2004 |
2003 |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 2,412 | $ | 7,036 | ||||
| Adjustments to reconcile net income to net cash from operating activities: |
||||||||
| Depreciation and amortization |
1,881 | (867 | ) | |||||
| Provision for loan losses |
1,000 | 1,269 | ||||||
| Net securities gains |
(71 | ) | — | |||||
| Loans originated for resale |
(18,219 | ) | (50,835 | ) | ||||
| Proceeds from sale of loan originations |
17,140 | 58,516 | ||||||
| Gains from sale of loans originated for sale |
(986 | ) | (1,274 | ) | ||||
| Gains from sale of residential real estate loans from portfolio |
(259 | ) | (856 | ) | ||||
| Federal Home Loan Bank stock dividend |
(345 | ) | (329 | ) | ||||
| Net increase in bank owned life insurance |
(673 | ) | (576 | ) | ||||
| Changes in: |
||||||||
| Interest receivable |
(89 | ) | (357 | ) | ||||
| Interest payable |
218 | 287 | ||||||
| Other assets and liabilities, net |
(2,625 | ) | (7,203 | ) | ||||
| Net cash from operating activities |
(616 | ) | 4,811 | |||||
| Cash flows from investing activities: |
& | |||||||